Tax Weekly Round-Up: February 03 - February 09, 2025

SUPREME COURTIncome Tax Act | Offence Committed Before Show-Cause Notice Compoundable As Covered By 'First Offence' In Compounding Guidelines: Supreme CourtCase title: VINUBHAI MOHANLAL DOBARIA Vs CHIEF COMMISSIONER OF INCOME TAXCase no.: SPECIAL LEAVE PETITION (C) NO. 20519 OF 2024The Supreme Court on January 7 set aside the Gujarat High Court's judgment dated March 21, 2017, through which the rejection to the compounding application of the Appellant for the assessment year 2013-2014, for having filed the belated income tax return, was upheld on the ground that only for the "first offence" compounding of offence is possible. Since the Appellant had filed delayed income tax for 2011-2012 and his compounding application was accepted, it now cannot be accepted. However, the Supreme Court observed that the "first offence" is the offence committed prior to the showcause notice, which was the case here for both years.HIGH COURTSBombay HCNotice Issued To Non-Existing Entity Post-Merger Is Substantive Illegality, Dept Cannot Cite Technical Glitch: Bombay High CourtCase Title: City Corporation Limited v. Assistant Commissioner of Income Tax CircleCase Number: WRIT PETITION NO. 6076 OF 2023The Bombay High Court stated that notice issued to a non-existing entity post-merger is a substantive illegality and not some procedural violation.“we cannot condone the fundamental error in issuing the impugned notices against a non-existing company despite full knowledge of the merger. The impugned notices, which are non-est cannot be treated as “good” as urged on behalf of the department” stated the Division Bench of Justices M.S. Sonak and Jitendra Jain.Delhi HCFees Paid By Law Firm Remfry & Sagar To Use Name & Goodwill Of Founder Is Business Expense, Deductible U/S 37 Of Income Tax Act: Delhi HCCase title: Pr. Commissioner Of Income Tax -21 v. M/S.Remfry & SagarCase no.: ITA 199/2017The Delhi High Court has held that the fees paid by IPR law firm Remfry & Sagar to acquire the goodwill vested in a company run by the family members of its deceased founder, is a business expense deductible under Section 37 of the Income Tax Act. A division bench of Justices Yashwant Varma and Ravinder Dudeja observed, “the primary, nay, sole purpose for incurring expenditure towards license fee was to use the words “Remfry & Sagar” and derive benefit of the goodwill attached to it. The appellant do not dispute that Dr. Sagar had validly acquired the goodwill and that the same constituted a valuable asset which was transferable.”Ensure Counsel Appearing On Advance Service Are Instructed Properly: Delhi HC Asks Customs, GST Department, DRI And DGGI To Frame SOPCase title: M/S Vishal Video And Appliances Pvt Ltd v. Commissioner Of Customs Acc(Import)Case no.: CUSAA 9/2025The Delhi High Court has asked the Customs Department, the Central GST Department, the Directorate of Revenue Intelligence (DRI), Directorate of General GST Intelligence (DGGI) to make sure that counsel representing them on advance service are instructed properly.A bench of Justices Prathiba M. Singh and Dharmesh Sharma ordered the Commissioner of Customs to prepare an SOP as to the manner in which the Department shall ensure that instructions are given to the nominated Counsels in the matter when advance copies are served.Date Of Assessment Order Recommending Penalty For Accepting Cash Above ₹2 Lakh Not Relevant For Determining Limitation U/S 275 Of Income Tax Act: Delhi HCCase title: Property Plus Realtors v. Union Of India & OrsCase no.: W.P.(C) 17371/2024The Delhi High Court has held that the date of the assessment order, wherein an Assessing Officer recommended separate penalty proceedings against the assessee under Section 271DA of the Income Tax Act, 1961 for accepting more than ₹2 lakh in cash, is not relevant for determining the limitation period under Section 275(1)(c). A division bench of Acting Chief Justice Vibhu Bakhru and Justice Tushar Rao Gedela said a plain reading of Section 275(1)(c) indicates that the time limit for completion of the action for imposition of penalty is to be reckoned from: (a) the end of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated are completed; or (b) six months from the end of the month in which action for imposition of penalty is initiated, whichever expires later.Suo Moto Disallowance Made By Assessee Under Bonafide Belief Of Tax Liability Can Be Rectified U/S 264 Of Income Tax Act Without Amending ITR: Delhi HCCase title: M/S SMEC India (P.) Ltd. v. Principal Commissioner Of Income Tax – 8Case no.: W.P.(C) 9969/2019The Delhi High Court has held that an application for revision under Section 264 of the Income Tax Act, 1961 can be preferred by an assessee who makes suo motu disallowance in its Return of Income (RoI/ ITR), under a bonafide yet mistaken belief that the same was liable to be offered for taxation. A division bench of Justices Yashwant Varma and...

Tax Weekly Round-Up: February 03 - February 09, 2025

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Tax Weekly Round-Up: February 03 - February 09, 2025

Kapil Dhyani

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