Tax Cases Weekly Round-Up: 28 August To 3 September, 2022

Delhi High Court Re-assessment Order Passed Without Considering Detailed Reply Of The Assessee: Delhi High Court Case Title: Rithala Education Society Versus Union Of India Citation: 2022 LiveLaw (Del) 816 The Delhi High Court held that the significance of issuing a show cause notice prior to issuing a re-assessment notice has been lost because the order under Section 148A(d) of the Income Tax Act was made without taking into account the detailed reply filed by the assessee. The division bench of Justice Manmohan and Justice Manmeet Pritam Singh has observed that the department has not examined the petitioner's plea that the petitioner-society has included all the transactions carried out by the Citizen Model School in its books of accounts. Delhi High Court Allows Deduction To PVR On Difference Between Market Price & Issue Price Of ESOP Case Title: PVR Ltd. Versus Commissioner Of Income Tax Citation: 2022 LiveLaw (Del) 817 The Delhi High Court has allowed the appeal of PVR Ltd. and allowed the deduction on the difference between the price at which stock options were offered to employees of the appellant company under ESOP and ESPS and the prevailing market price of the stock. The division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora has relied on the decision of the Karnataka High Court in the case of Commissioner of Income Tax vs. Biocon Ltd. and has observed that an assessee is entitled to claim a deduction under Section 37(1) if the expenditure has been incurred. The expression "expenditure" will also include a loss, and therefore, the issuance of shares at a discount where the assessee absorbs the difference between the price at which they are issued and the market value of the shares would also be expenditure incurred for the purposes of Section 37(1). The primary object is not to waste capital but to earn profits by securing the consistent services of the employees. Therefore, it cannot be construed as a short receipt of capital. Attempt By CIT To Exclude Genuine Disputes Under The VSV Act Is Extremely Hyper-Technical: Delhi High Court Case Title: Kapri International Pvt. Ltd. Vs CIT The Delhi High Court has held that the attempt by the CIT to exclude genuine disputants of tax liability from the possibility of settlement under the Direct Tax Vivad Se Vishwas Act (VSV) is extremely hyper-technical. The division bench of Justice Mukta Gupta and Justice Anish Dayal has observed that any proceeding challenging a decision by the department in respect of tax, interest, penalty, fee, etc. would come within the purview of a "dispute", which would enable a party to approach the department for a resolution under the VSV Act. Intention To Evade Tax Is Absent, Taxpayer Needs To Be Given Another Chance: Delhi High Court Case Title: Nirmal Kumar Mahaveer Kumar Versus Commissioner of CGST The Delhi High Court has held that the petitioner/taxpayer needs to be given another chance to establish why the subject goods did not reach their designated designation before the expiry of the e-way bill. The division bench of Justice Rajeev Shakdher and Justice Tara Vitasta Ganju has remanded the matter to the respondent to take a fresh decision on the matter, after giving the petitioner due opportunity to produce relevant material and evidence to establish its case. Bombay High Court Bombay High Court Directs CBIC To Issue Clarification Regarding Distribution/ Reporting Of ISD Credit Case Title: Unichem Laboratories Limited versus Union of India and Ors. The Bombay High Court has directed the Central Board of Indirect Taxes and Customs (CBIC) to issue a clarification in relation to the distribution/ reporting of the ISD credit. The Bench of Justices K.R. Shriram and Gauri Godse was dealing with a batch of writ petitions, highlighting the difficulties faced by the petitioners in the distribution/ reporting of the ISD credit. Secured Creditors Shall Take Priority Over Government Dues Under SARFAESI Act: Bombay High Court Case Title: Jalgaon Janta Sahakari Bank Ltd. Versus Joint Commissioner of Sales Tax Nodal 9 The Bombay High Court has held that the rights of secured creditors to realise secured debts shall have priority over government dues, including revenues, taxes, cesses, and rates due to the Central Government, State Government, or local authority under the SARFAESI Act. The three judge bench headed by Chief Justice Dipankar Dutta, Justice M.S.Karnik and Justice N.J. Jamadar has observed that the Sales Tax Commissioners did not claim that they registered the claim with the CERSAI to adhere to the mandate contained in section 26B(4) of the SARFAESI Act. Non-registration of the claim and/or order of attachment entails the consequences envisaged under section 26C (2) of the SARFAESI Act. Thus, dual disability sets in. Firstly, in the absence of material to show that...

Tax Cases Weekly Round-Up: 28 August To 3 September, 2022

Mariya Paliwala

Tags