Direct Tax Annual Digest 2024: Part I

ITAT Deletes Additions Against Unsuspecting Investor In A 'Penny Stock' To Make Quick ProfitThe Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the assessee was an unsuspecting investor who transacted in a 'penny stock' with a view to earning a quick profit, and since his involvement in any dubious transaction relating to price rigging or connection with exit providers could not be shown, the transaction could not be treated as a 'pre-arranged' one even if there were no underlying fundamentals in or financial performance by the company whose shares were sold. The bench of Narendra Kumar Choudhry (Judicial Member) and S. Rifaur Rahman (Accountant Member) has observed that even though all the characteristics of penny stock exist in the present case, the department has not brought on record any materials linking the assessee to any dubious transactions relating to entry, price rigging, or exit providers.There Cannot Be Sale Without Purchase: ITAT Deletes Addition The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition made by the AO as there cannot be a sale without a purchase. The bench of Saktijit Dey (Vice President) and Pradip Kumar Kedia (Accountant Member) has observed that the exclusion of purchases from the trading results is not permissible without corresponding exclusion of the sales in such trading activity for arriving at a fair and balanced view. The action of the AO patently offends the rudimentary principle of accounting.Information Found In Pen Drive/Laptop Of Employees Can't Be Considered As Credible Evidence Without Corroborative Evidence: ITAT The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the information found in the pen drive or laptop of employees cannot be considered credible evidence unless it has been corroborated with any other evidence. The bench of Pavan Kumar Gadale (Judicial Member) and B.R. Baskaran (Accountant Member) has rejected the capitation fee addition against the appellant/assessee made on the basis of cash, documents seized from its employees, and statements recorded during the search operation.Indian Chamber Of Commerce Entitled To Claim Exemption In Respect Of Receipts From Seminars And Conferences: ITAT The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) has held that the Indian Chamber of Commerce (ICC) is entitled to claim exemption in respect of its entire receipts. The bench of Rajesh Kumar (Accountant Member) has observed that the ICC is not carrying on any activity of holding meetings, seminars, and conferences for business purposes but only to support its main object, and it charges its participants, members, and non-members the amount of the fee, which does not even cover the cost of holding such events.ITAT Deletes Addition Of Unexplained Investment In Stock Valuation Difference The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition of unexplained investment in stock as a difference in the valuation of stock. The bench of Mahavir Singh (Vice President) and Manjunatha. G. (Accountant Member) has observed that the assessee has declared additional income towards excess stock found during the course of the survey, and the assessee has explained the source for excess stock found during the course of the survey, i.e., that it was out of income earned from current year business or earlier years business, and surrendered the amount. The AO has not done anything to dispute the claim of the assessee that the source was not from business income.Assessment Order Passed Beyond Sec 144C(4) Is Time Barred If Objections To Draft Order Were Filed After Expiry Of Limitation As Per Sec 144C(2): Delhi ITAT Noticing that the draft assessment order was passed on Mar 4, 2022 and the assessee filed objection before the DRP on Apr 6, 2022 which was beyond the due date provided for filing objection, the Delhi ITAT held the assessment order to be time-barred being passed beyond Section 144C(4) of Income tax Act, 1961 time-limit. The ITAT Coram comprising of Challa Nagendra Prasad (Judicial Member) and Dr. B.R.R. Kumar (Accountant Member), observed that “The draft of the Assessment Order, in this case, has been passed on 04 .03.202. The assessee file d objections before DRP on 06.04 .2022, i.e., after the due date of the time allowed for filing of the objections before the ld. DRP. The due date for passing of the final Assessment Order was 31.0 5.2022. Since the final Assessment Order has been passed on 27.12.2022 in divergence to due date prescribed u/s144C of the Income Tax Act, we hold that, the order passed by the Assessing Officer is barre d by limitation, and hence, treated as void”.Right To Broadcast Live Events Is Not 'Copyright', Hence Payment Made In Relation Thereto Cannot Be Taxed As 'Royalty' U/S 9(1)(VI), Clarifies Delhi ITAT Emphasizing that the right to broadcast live events i.e., “Live Rights”, is not “copyright” and therefore any payment made thereto can't be said...

Direct Tax Annual Digest 2024: Part I

Pankaj Bajpai

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