ACIT vs. St. Mary’s Rubbers Private Ltd (ITAT Cochin)

S. 40(a)(ia): Amounts paid by way of reimbursement of expenses do not constitute income in the hands of the recipient. Consequently, the payer is under no obligation to deduct TDS u/s 194C and no disallowance of the expenditure can be made u/s 40(a)(ia). CBDT Circular No.715 dated 08.08.1995 distinguished

The Tribunal, while giving the above decision, had also considered the effect of CBDT Circular No.715 dated 08.08.1995 and also ruled that the said Circular was applicable only where consolidated bills were raised inclusive of contractual payments and re-imbursement of actual expenditure. Same view was taken by the Bangalore Bench of this Tribunal in the case of DCIT vs. Dhanyaa Seeds (P) Ltd. (supra). Hon’ble Gujarat High Court in the case of Pr. CIT vs. Consumer Marketing (India) (P.) Ltd.(supra) held that when separate bills are there for reimbursement of expenditure received by C&F agent, TDS was not required to be made on reimbursement

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CIT vs. Diamond Dye Chem Ltd (Bombay High Court)

S. 145A: Irrespective of the method of accounting followed, the unutilized Cenvat credit does not constitute income and cannot be directly added to the closing stock. The assessee is entitled to follow the exclusive method and value the closing stock by excluding the modvat credit

Merely because the Modvat credit was irreversible credit offered to manufacturers upon purchase of duty paid raw materials, that would not amount to income which was liable to be taxed under the Act. It is also held that whichever method of accounting is adopted, the net result would be the same

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CIT vs. Mettler Toledo India Pvt. Ltd (Bombay High Court)

S. 92C +/- 5%: The contention that there is an error because mere mathematical calculation shows that the arm’s length purchase price as worked out by the TPO falls beyond (+)/(-) 5% range and consequently falls outside the scope of the second proviso to s. 92C(2) cannot be considered if it was not raised before the CIT(A) & ITAT

Whether on the facts and circumstances of the case and in law, the ITAT is correct in directing the Assessing Officer to allow benefit of +/5% to the assessee without considering Explanation (2A) to Section 92C(2) inserted by Finance Act 2012 w.e.f. 1.4.2002, whereby deduction of 5% earlier being allowed by appellate authorities has been explicitly prohibited w.e.f. 1.4.2002 and therefore, the ITATought not to have issued such directions to the A.O. as are in contravention of the provisions of the statute

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B.A.Mohota Textiles Traders Pvt. Ltd vs. DCIT (Bombay High Court)

Capital Gains: While a family arrangement/settlement does not amount to a “transfer” u/s 2(47) as it only recognizes “pre-existing rights” between the parties, the same applies only to members of the families and not to transfers made by corporate entities. The corporate veil can never be lifted at the instance of the company itself because that would amount to its denying its own corporate existence. The fact that the Company is wholly owned by the members of the family is irrelevant

There is no dispute before us that a family arrangement/settlement would not amount to a transfer. So far as the members of Mohota family are concerned, who are parties to the family settlement, any transfer inter se between them on account of family settlement would not result in a transfer so as to attract the provisions of the Capital gain tax under the Act. However, in the present case, we are not concerned with the members of Mohota family who were parties to the family settlement, but with transfer of share done by the Company incorporated under the Companies Act having separate/independent corporate existence, perpetual succession and common seal. This Company is independent and distinct from it’s members

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ACIT vs. Vireet Industries Pvt Ltd (ITAT Delhi) (Special Bench)

S. 14A/ Rule 8D: (i) The computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A read with Rule 8D of the Income tax Rules 1962, (ii) Only those investments are to be considered for computing the average value of investment which yielded exempt income during the year

(i) The computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to the computation as contemplated u/s 14A read with Rule 8D of the Income tax Rules 1962. (ii) Only those investments are to be considered for computing the average value of investment which yielded exempt income during the year.

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ITO vs. Gravity Systems Pvt. Ltd (ITAT Delhi)

S. 143(2) notice: If the Department fails to produce evidence relating to the issue and service of the s. 143(2) notice, an adverse inference has to be drawn as per s. 114 of the Evidence Act. The s. 143(3) assessment order has to be held invalid and void ab initio

Once this Tribunal has directed the Revenue to produce the record with regard to the assessment so that it can be verified whether notice under section 143(2) of the Act has been issued and served on the assessee before completing the assessment under section 147/148 of the Act, the Revenue was bound to produce the record. But the Revenue could not produce the record and just explained in the Bar that the record has been misplaced. Under these circumstances, we are bound to take an adverse inference in view of the provisions of section 114 of the Evidence Act to the effect that had the assessment record been produced, the same would have gone against the interest of the Revenue

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Mehsana District Central Co-op Bank Ltd vs. ACIT (Gujarat High Court)

S. 147/148: Law on validity of reopening of assessment when the AO is acting on the dictates of the audit party and is not applying his own mind explained

Nevertheless, if we see entire sequence, it becomes clear that the Assessing Officer was clearly acting under the dictates of the audit party. Even after issuing the notice, he still maintained an opinion that no income chargeable to tax had escaped assessment. If that be so, he ought to have dropped the assessment proceedings, at least at that stage when the petitioner raised the objections which even without such objections, the Assessing Officer was convinced, were valid

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