Tax Cases Weekly Round-Up: 29 January To 4 February 2023

Supreme Court S.153A Income Tax Act| Can Assessments Be Reopened If No Incriminating Material Is Found During Search? Supreme Court Reserves Judgment Case Title : PR. COMMISSIONER OF INCOME TAX CENTRAL v. ABHISAR BUILDWELL P. LTD The Supreme Court on Thursday reserved its judgment on whether in an assessment under section 153A of the Income Tax Act, besides the incriminating material found during search, such materials which the Assessing Officer has on hand and the third party records available can be relied on to assess total income, or whether the assessment has to confined only to the incriminating material seized during the search. The Court also discussed the issue whether there is no incriminating material seized during the search, then those assessments be reopened and reassessed under Section 153A. Supreme Court Stays Madras High Court’s Order Directing Payment of Tax On Manufacture Of Water Borehole Drilling Rigs Case Title: M/s. Paranthaman Hydraulics and Equipments Versus State Of Tamil Nadu The Supreme Court has stayed the order passed by the Madras High Court directing the payment of a minimum 4% tax on the manufacturing of the water borehole drilling rigs. The division bench of Justice Krishna Murari and Justice C.T. Ravi Kumar has observed that tax at the rate of 4% has already been deposited by the petitioner. The direction in the order to pay another 4% shall remain in abeyance until the next date of listing. Delhi High Court Claim That Investment In Shares Was A Capital Account Transaction, Non-Application Of Mind By AO: Delhi High Court Quashes Reassessment Notice Case Title: Blackstone Capital Partner Versus ACIT Citation: 2023 LiveLaw (Del) 92 The Delhi High Court has quashed the reassessment notice as the AO failed to apply his mind as to whether an investment in shares was a capital account transaction. Explanation 2 To S. 37(1) of Income Tax Act, Which Bars Deduction of CSR Expenses, Is Prospective In Nature: Delhi High Court Case Title: Pr. Commissioner of Income Tax versus M/s Steel Authority of India Ltd. Citation: 2023 LiveLaw (Del) 95 The Delhi High Court has reiterated that Explanation 2 to Section 37(1) of Income Tax Act, 1961, inserted by the Finance Act, 2014, which bars deduction of CSR expenses while computing income from business or profession, is prospective in nature. The bench of Justices Rajiv Shakdher and Tara Vitasta Ganju remarked that deductibility of CSR expenses under Section 37(1), prior to its amendment by the Finance Act, cannot depend upon how the funds are spent by the recipient. Information Triggering Reassessment Proceedings Needs To Be Furnished To The Assessee: Delhi High Court Case Title: Charu Chains & Jewels (P) Ltd. Versus ACIT The Delhi High Court has held that the underlying information or material that formed the basis for triggering the assessment or reassessment proceedings was required to be furnished to the assessee. The division bench of Justice Rajiv Shakdher and Justice Tara Vitasta Ganju has noted that the petitioner has indicated that it will file a further response once the information or material is provided, and even if the information or material is not provided, it will reserve its right to file a further response. Aircraft Imported For Private Purposes, No Customs Duty Exemption Allowed: Delhi High Court Case Title: East India Hotels Ltd. Versus Commissioners of Customs, General Excise and Central GST The Delhi High Court has held that the aircraft was imported for private purposes and not for providing non-scheduled passenger or charter services. Therefore, the condition for customs duty exemption was not available to the assessee. Budgetary Support Under GST Regime Can’t Be Denied To Eligible Unit: Delhi High Court Case Title: M/s Special Cables Pvt Ltd versus Central Board of Indirect Taxes and Customs & Ors. Citation: 2023 LiveLaw (Del) 120 The Delhi High Court has directed the revenue authorities to grant budgetary support to a manufacturing unit under the “Scheme of Budgetary Support under Goods and Services Tax (GST) Regime”, available to ‘eligible units’ located in specified States. The Court took note that the petitioner was eligible for exemption from Central Excise Duty prior to 01.07.2017, i.e., before the introduction of the GST regime in India, and thus, in terms of the Scheme, it was entitled to avail budgetary support. Madras High Court Madras High Court Dismisses Plea By AR Rahman, GV Prakash and Santhosh Narayan Challenging GST Department’s Order Claiming Service Tax Case Title: M/s. Amirta International Institute of Hotel Management v. The Principal Commissioner of CGST & Central Excise Citation: 2023 LiveLaw (Mad) 41 The Madras High Court has recently dismissed the pleas filed by music composers AR Rahman, GV Prakash and Santhosh Narayan...

Tax Cases Weekly Round-Up: 29 January To 4 February 2023

Mariya Paliwala

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