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Tax Cases Weekly Round-Up: 12 June To 18 June, 2022

Mariya Paliwala
19 Jun 2022 6:00 AM GMT
Tax Cases Weekly Round-Up: 12 June To 18 June, 2022
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Delhi High CourtDelhi High Court Quashes Assessment Order For Not Giving Opportunity To File Objection To SCN Case Title: Jindal Exports and Imports Private Limited Vs DCIT The Delhi High Court bench of Justice Manmohan and Justice Dinesh Kumar Sharma has quashed the assessment order as the assessee was not given an opportunity to file an objection to the show...

Delhi High Court

Delhi High Court Quashes Assessment Order For Not Giving Opportunity To File Objection To SCN

Case Title: Jindal Exports and Imports Private Limited Vs DCIT

The Delhi High Court bench of Justice Manmohan and Justice Dinesh Kumar Sharma has quashed the assessment order as the assessee was not given an opportunity to file an objection to the show cause notice.

Underreporting Of Income Due To Re-Computation Of Disallowance By The AO, Does Not Amount To Misreporting Of Income: Delhi High Court

Case Title: Prem Brothers Infrastructure LLP. versus National Faceless Assessment Centre & Anr.

Citation: 2022 LiveLaw (Del) 568

The Delhi High Court has ruled that where the underreporting of income allegedly done by the assessee is due to the re-computation of the disallowance under Section 14A of the Income Tax Act, 1961 by the Assessing Officer, it would not amount to misreporting of income.

The Bench, consisting of Justices Manmohan and Manmeet Pritam Singh Arora, observed that the underreporting of income by the assessee was due to the increase in the disallowance made under Section 14A, which was voluntarily estimated by the assessee and later recalculated by the Assessing Officer on the basis of the same material.

Notice Issued Under Section 148 Of The Income Tax Act Against A Deceased Assessee Is Invalid : Reiterates Delhi High Court

Case Title: Davinder Singh Thapar versus Assistant Commissioner of Income Tax & Anr.

Citation: 2022 LiveLaw (Del) 575

The Delhi High Court has reiterated that a notice issued under Section 148 of the Income Tax Act, 1961, on the ground of escapement of income from assessment, against a deceased assessee is invalid in law.

The Division Bench of Justices Jyoti Singh and Anoop Kumar Mendirattaobserved that though the notices were issued by the revenue authorities pursuant to an order of the Supreme Court, however, the said order did not deal with the issue of whether the notices could be issued against the deceased assesses. Therefore, the Court quashed the notices issued by the revenue authorities against the deceased assessee.

Bombay High Court

Services Rendered Abroad Amounts to Export Of Services, No GST Applicable: Bombay High Court

Case Title: Jar Productions Private Limited Versus The Union of India & Ors.

The Bombay High Court has held that GST does not apply to the services rendered abroad as they amount to the export of services.

The division bench of Justice S.V. Gangapurwala and Justice M.G. Sewlikar has allowed the GST refund to the petitioner/assessee as the department has failed to establish that the incidence of tax was passed on to the client amounted to unjust enrichment.

Madras High Court

Order Of ITAT Is Based On Evidence, Findings Based On Facts,Madras High Court Dismisses Tax Appeal

The Madras High Court recently dismissed a tax appeal observing that there were no substantial question of law arisen for consideration.

The bench of Justice R Mahadevan and Justice Sathya Narayana Prasad were of the opinion that the order passed by the Commissioner of Income Tax (Appeals) which was confirmed by the Income Tax Appellate Tribunal was based on the evidence adduced before the same. "Such well-considered findings of the appellate authorities do not warrant any interference at the hands of this court", it observed.

Royalty Income Should Be Excluded From Business Profits For Calculating Deductions U/S 80 HHC Of Income Tax Act: Madras High Court

Case Title: M/s. Fenner (India) Limited v. The Assistant Commissioner of Income Tax

Citation: 2022 LiveLaw (Mad) 251

The Madras High Court recently upheld the decision of the Income Tax Appellate Tribunal directing the assessing officer to exclude the royalty income from the business profits for the purpose of calculation of deductions under Section 80HHC of the Income Tax Act.

Justice R Mahadevan and Justice Sathya Narayana Prasad observed that the appellant could not produce concrete evidence to assert that the royalty income received from a subsidiary company was related to export business. Thus, the decision of the tribunal did not warrant any interference.

Failure Of Proper Officer Detaining Vehicle To Issue Notice: Madras High Court Directs Release Of Vehicle And Goods

Case Title: Tvt.LAF Enterprises Versus Commissioner of Commercial Tax

The Madras High Court bench of Justice Anitha Sumanth has held that Section 129 of the CGST Act provides for the detention and seizure of the vehicle upon condition that an order of detention/seizure shall be passed at the time of detention/seizure and duly served upon the person transporting the goods.

Period Of Limitation Under S.153 Of Income Tax Act Applies To Remand Proceedings : Madras HC

Case Title: The Commissioner of Income Tax and Anr v. M/s. Roca Bathroom Products Private Limited

Citation: 2022 LiveLaw (Mad) 252

The Madras High Court recently observed that the period of limitation under the Sections 153 (2A) or 153 (3) was applicable even for remad proceedings before the Assessing Officer, Transfer Pricing Officer or the Dispute Resolution Panel. The entire proceedings had to be conducted within a period of 9 months as contemplated under Section 144C (12) of the Income Tax Act.

The bench of Justice R Mahadevan and Justice Sathya Narayana Prasad further observed that in matters of transfer pricing, when the matter was remanded to the DRP, the Assessing Officer had to pass a denova draft and complete the entire proceedings within 12 months as otherwise the very purpose of extension would become meaningless.

Himachal Pradesh High Court

AO Failed To Consider Genuine Purchases And Sales Entered In The Books Of Account: Himachal Pradesh High Court Deletes Addition

Case Title: PCIT Vs Smart Value Products And Services Ltd.

The Himachal Pradesh High Court bench of Justice Sabina and Justice Satyen Vaidya has deleted the addition on the grounds that the Assessing Officer (AO) has failed to consider genuine purchases and sales entered in the books of account.

Gujarat High Court

Order Passed On The Same Day When Notice Was Issued Led To The Violation Of Principle Of Natural Justice: Gujarat High Court

Case Title: M/s MBR Flexibles Ltd. Versus Deputy Commissioner Of State Tax

The Gujarat High Court bench of Justice A.J. Desai and Justice Bhargav D. Karia has quashed the order under GST on the grounds that the notice as well as the order were passed on the same date, denying the opportunity of hearing to the assessee.

Rajasthan High Court

Definition Of 'Resident' Under Income Tax Act Designed For Including Persons In Tax Net, Not For Determining Citizenship: Rajasthan High Court

Case Title: Smt Kamla v. Hindustan Petroleum Corp. Ltd & Ors.

Citation: 2022 LiveLaw (Raj) 189

The Rajasthan High Court has observed that the condition imposed by the Income Tax Act that a person residing in India for a continuous period of 180 days would be considered to be a resident of India, is for the purpose of bringing such person within the purview of the Income Tax Act.

Calcutta High Court

No Cess Applicable On Coal Used As An Input For Manufacturing Finished Goods Used For Domestic Supply:Calcutta High Court

Case Title: Electrosteel Castings Limited Versus The Assistant Commissioner

Citation: 2022 LiveLaw (Cal) 240

The Calcutta High Court has ruled that cess is not applicable on the coal used as an input for manufacturing finished goods for the domestic supply.

The single bench of Justice Md. Nizamuddin has observed that goods which are subject to a nil rate of cess would be construed as exempt supplies for purposes of the formula prescribed in Rule 89 (4) of the CGST Rules. Therefore, it deserves to be excluded from the calculation of adjusted total turnover.

Nowhere It Appears That Petitioners' Request For A Personal Hearing Was Considered Or Rejected: Calcutta High Court sets aside GST adjudication order

Case Title: Raj Kumar Singh & Anr. versus Assistant Commissioner

The Calcutta High Court bench of Justice Md. Nizamuddin has held that the GST order passed without giving an opportunity of personal hearing is against the principles of natural justice.

Madhya Pradesh High Court

Cryptic Reasons For Denying Refund Claim Does Not Render The Order Non-Speaking: Madhya Pradesh High Court

Case Title: Prism Johnson Limited Versus UOI

The Madhya Pradesh High Court has held that the claim for refund has been declined by assigning reasons which may be cryptic on bare perusal but are sufficient to enable the assessee to know the exact cause for the rejection of the claim for refund.

The division bench of Justice Sheel Nagu and Justice Maninder S. Bhatti has observed that the reasons assigned for declining the refund claim cannot categorise the orders as being non-speaking. The order does not dissuade the assessee from knowing the mind of the adjudicating authority or dissuade him from filing an appeal.

Jharkhand High Court

Recovery Proceeding Deemed To Be Stayed If Appellant Pays 10% Of Disputed Tax Amount During Pendency Of Appeal: Jharkhand High Court

Case Title: M/s Sri Ram Construction Versus UOI

The Jharkhand High Court bench of Justice Aparesh Kumar Singh and Justice Deepak Roshan has held that upon deposit of 10% of the disputed tax amount during the pendency of appeals, recovery of any remaining balance is deemed to have been stayed in view of Section 107 Sub-section (6) and (7) of the CGST Act, 2017.

ITAT

Subsidy Received From The Government In The Form Of Refund Of VAT And CST, To Encourage Industrial Growth, Is A Capital Receipt: Pune ITAT

Case Title: DCIT versus Haldex India Pvt. Ltd.

The Pune Bench of ITAT has ruled that a subsidy granted by the State of Maharashtra, with the objective of encouraging industrial growth in less developed areas of the State, is a capital receipt even though the said subsidy is disbursed in the form of refund of Value Added Tax (VAT) and Central Sales Tax (CST).

The Bench, consisting of S. S. Viswanethra Ravi (Judicial Member) and Inturi Rama Rao (Accountant Member), reiterated that for considering whether a subsidy is a capital receipt or a revenue receipt, the purpose for which the subsidy has been granted has to be considered and not the manner of its disbursal.

Notice For Reopening Of Assessment Against Dead Person Is Invalid: ITAT Quashes Re-Assessment Order

Case Title: Neelam Dhingra, (through husband and legal heir- Vinod Dhingra) Versus DCIT

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the notice for reopening of the assessment against the dead person is invalid.

The two-member bench of Kul Bharat (Judicial Member) and Pradeep Kumar (Accountant Member) has observed that the Assessing Officer has accentuated the legal fallacy by continuing to proceed against the dead person by issuing notice under Section 143 (2) and Section 142(1) of the Income Tax Act. The re-assessment order passed pursuant to invalid notices for the purposes of reopening the assessment and for assumption of jurisdiction for carrying out the assessment is bad in law and has no legal sanctity.

Depreciation To Be Carried Forward For Set Off In Succeeding Assessment Years: ITAT

Case Title: ACIT Versus Nimit Kumar Aneja

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) headed by G.S. Pannu (President) and C.N. Prasad (Judicial Member) has ruled that in case the depreciation exceeds the business income, then the Assessing Officer should allow the depreciation to be carried forward for set off in succeeding assessment years.

ITAT Deletes Additions As Assessee Proved Genuineness Of Purchases By Documentary Evidence

Case Title: Garg Acrylics Ltd Versus ACIT

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the additions on the grounds that the assessee proved the genuineness of the purchases through documentary evidence.

The two-member bench of Yogesh Kumar US (Judicial Member) and Pradeep Kumar Khedia (Accountant Member) has excluded the statement of the witness of the department as no opportunity of cross-examination was accorded to the assessee.

Non-Service Of Notice On Assessee: ITAT Quashes Reassessment Order

Case Title: Abhinav Sehgal Versus ITO

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has quashed the reassessment order on the grounds that the notice was not served on the assessee.

The bench of Challa Nagendra Prasad (Judicial Member) found that the department failed to prove proper service of the reassessment notice on the assessee.

Appeal Filed By A Struck Off Company Against The Revenue Department Is Maintainable: ITAT Delhi

Case Title: M/s Dwarka Portfolio Pvt. Ltd. versus Assistant Commissioner of Income Tax

The Delhi Bench of ITAT has ruled that an appeal filed by a Company against the order passed by the revenue department does not become infructuous if, thereafter, the Company has been struck off from the Register of Companies.

The Bench, consisting of Yogesh Kumar U.S. (Judicial Member) and B. R. R. Kumar (Accountant Member), held that a Certificate of Incorporation issued to a Company cannot be treated as cancelled for the purpose of realizing the amount due to the Company and for the payment or discharge of its liabilities.

CESTAT

No Limitation Applicable For Refund Amount Lying With Dept. Having The Nature Of Revenue Deposit: CESTAT

Case Title: M/s. Aadhar Stumbh Township Pvt.Ltd. Versus Commissioner of Central Excise & Central Goods & Service Tax Commissionerate

The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) consisting of Anil Choudhary (Judicial Member) has ruled that the limitation applicable for refund amount lies with the department having the nature of revenue deposit.

Service Tax Not Payable On Liquidated Damages Collected From Contractor: CESTAT

Case Title: M.P. Audyogik Kendra Vikas Nigam (Indore) Limited Versus Commissioner, Central Goods, Service Tax and Central Excise

The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) consisting of Anil Choudhary (Judicial Member) ruled that service tax is not payable on liquidated damages collected from the contractor.

CENVAT Credit Cannot Be Claimed On Expenses Incurred On CSR: Delhi CESTAT

Case Title: M/s. Power Finance Corporation Ltd. versus Commissioner (Appeal), Central Excise & Service Tax, LTU, New Delhi

The Delhi Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that expenses incurred by a person on activities related to its Corporate Social Responsibility (CSR) cannot be termed as input services and thus, CENVAT Credit cannot be claimed on it.

The Bench, consisting of members Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member), ruled that the fact that the CSR is a legal responsibility does not make it an output service.

Availment Of Credit On The Strength Of Photocopies Of Invoices Is Just A Procedural Lapse: CESTAT Allows Cenvat credit

Case Title: DKNV Engineering Pvt Ltd Versus Commissioner of Central Excise & ST, Daman

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) consisting of Ramesh Nair (Judicial Member) has held that the availment of credit on the strength of photocopies of the invoices is just a procedural lapse and cannot be made the basis to disallow the cenvat credit.

AAR

18% GST payable On PV DC Cables: Maharashtra AAR

Applicant's Name: Leoni Cable Solutions (India) Pvt. Ltd.

The Maharashtra Authority of Advance Ruling (AAR), consisting of Rajiv Magoo and T.R. Ramnani, has ruled that 18% GST is payable on PV DC cables.

No GST Payable On Reimbursement Of Stipend Paid To Trainees: AAR

Applicant's Name: Patle Eduskills Foundation

The Maharashtra Authority of Advance ruling (AAR) has ruled that GST is not payable on the reimbursement of stipend paid to trainees by industry partners.

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