Southern India Regional Council of
The Institute of Chartered Accountants Of India
(Setup by an Act of Parliament)


Income Tax Updates- March 2018


Gist of Appeal Orders of Income Tax Appellate Tribunal
Sr. No. Name of the Appellant / Respondent Appeal No and date of decision Gist of Judgments / Orders passed
1 Tractors & Farm Equipment Ltd. v. ACIT ITA 1264/ Mds /16 dt 27.9.17 (89 445) Where assessee, engaged in manufacture and sale of tractors and farm equipments, made payments to its subsidiary in USA towards service rendered to provide input for new product development including market survey expenses in USA, payment in question being falling within meaning of 'Fees for included services' under clause 4 of article 12 of DTAA, was taxable in India ……..Amount paid by assessee to its overseas office to meet regular expenses and maintenance of those offices was not taxable in India
2 Adani Retail Ltd Vs ACIT ITA 2177/Ahd /11 dt 13.12.2017 (89 409) These explanations cannot be brushed aside on the ground that separate books of accounts are not maintained, which is not a condition precedent for invoking section 72A(4)(a) anyway, or that these explanations were not furnished at the time of demerger. Nor, for that purpose, rejection of the explanation on the basis of sweeping generalizations or vague reasons can meet our approval either. The approach adopted by the authorities below, thus, does not meet our approval.
3 DCIT Vs Cowtown Land Development ITA No.428/Mum/2016 dt 27.12.17 90 17 It is evidently clear that the payment of Rs.6.50 crores was made to these shareholders of Seth Industries Pvt. Ltd. for withdrawal of litigations and suits filed before Hon'ble High Court of Delhi and Bombay, so that the development of the said property could be smoothly undertaken without any hindrance, consequently, the expenditure was incurred to protect the business interest of the assessee and further to safeguard the assessee itself for further losses, resultantly, we find no infirmity in the order of the First Appellate Authority
4 ITO Vs Keshav Sunderam Rajam ITA 1758/Mds /17 dt 28.12.17(89 411) To establish the cultivation, the only document available is the Adangal extract. Therefore, the Adangal extract cannot be brushed aside so lightly when the assessee produced the same to establish his case that the land in question was used for agricultural activities.
5 Subodh Gupta Vrs Pr CIT ITA 3571/ Del/17 dt 5.1.18) It does not provide that if gift is made to an HUF by any of the „relatives‟ of those individuals comprising the HUF, who is not the member of the HUF, then such gift is not chargeable to tax
6 Pankaj Kumar Gupta Vs ITO ITA 486/LKW /16 dt 16.1.18 In the instant case, nothing is on record to show that there was any malafide intention on the part of the assessee to conceal the income or furnish inaccurate particulars of income and there was an omission while filing the return of income which was rectified through challan on the very date of passing the assessment order
7 Priyanka Chopra Vs DCIT ITA 2769/M/15 dt 16.1.18 S. 68: If an admission of undisclosed income is made by the assessee after reference to the material found during search and seizure, it cannot be said that the admission is not based on incriminating material. The retraction of such admission of undisclosed income is not permissible especially when the retraction is by the mother
8 Sandvik Asia Vs DCIT ITA 467/PUN / 2015 dt 25.1.18 we hold that the draft assessment order passed by the Assessing Officer was complete assessment order which is not envisaged under section 143(3) r.w.s. 144C of the Act. Accordingly, we hold that the draft assessment order passed in the case is invalid in law
9 ITO Vs Zoom Vallabh Steel ITA NO. 4786.Del.2014 dt 25.1.18 Authorities below have not brought out any material on record to establish that assessee has utilised the working capital loan for any other activity other than the business activity. In our considered opinion ad hoc disallowance in such manner cannot be made.
10 DCIT Vs Jubilant Food Works ITA Nos.483 & 615/Del/2016 dt 25.1.18 If such term loan is found to be relating to construction activity which has been capitalized as CWIP, then, the interest actually paid on such term loan should not be allowed as deduction in terms of proviso to section 36(1)(iii) and vice versa
11 ITO Vs Serum Institute of India ITA 621/ PUN/2016 dt 29.01.18 Corpus-specific-voluntary contributions are outside the taxations in case of an unregistered Trust u/s. 12 /12A / 12AAA of the Act too.
12 Emcure Pharmaceuticals Ltd., ITA No.1532/PUN/2015 dt 29.01.18 The pharmaceutical company like the assessee is outside the scope of the circulars by the Medical Council of India or the CBDT.
13 Hitech Plast Ltd Vs DCIT ITA 4358/Mum /16 dt 30.1.18 interest paid on late payment of TDS, Service tax, income tax and income tax penalty cannot be considered as expenditure wholly and exclusively for the purpose of business.
14 ITO vs.Shreenathji Builders ITA No. 47/Rjt/2013 dt 30.1.18 Unless the Assessing Officer establishes that the payment made by the assessee to the specified persons is excessive or unreasonable, there is no question of disallowance under section 40A(2).
15 Varshney Bhandu FoodsVs DCIT ITA No. 2973/Del/2014dt 30.01.18 assessee has failed to discharge the initial onus cast upon it by cogent or reliable evidence and has simply mentioned that the amount was being surrendered as a voluntary disclosure to buy peace and avoid litigation. We are of the considered opinion that the assessee, in the present case, cannot escape the rigours of penalty as it has failed to offer any explanation and has also failed to lead any cogent or reliable evidence
16 DCITVs Impact Marketing Services ITA No. 4984/Del/2014 dt 30.1.18 There was no rejection of books of accounts by the Assessing Officer and thus the addition on estimated basis by estimating net profit at 3.34% is not just and proper
17 Eastern Track Udyog vs JCIT ITA 1690& 1691 / Kol /16 dt 31.1.18 transaction between two sister concerns are in the nature of current account and hence does not fall in the ambit of sections 269SS and 269T of the Act
18 ACIT Vs V.Rajan, ITA 1234/Mds /2017 dt 31.1.18 Coming to the issue of the creditworthiness of the creditors, the fact that they have accepted the transaction goes to prove that the creditors did have the capacity. This being so, if the AO is still doubted the creditworthiness of the creditors, then, it was opened to him to make the assessment in the hands of such creditors.
19 Sheetal Restaurant & Bar Vs ITO ITA 7511/Mum./ 2012 dt 31.1.18 Therefore, when the addition of interest income was made on notional basis without establishing the fact that the assessee has actually received any interest income on the interest free loan advanced, it cannot be said that the assessee has concealed the interest income.
20 DCIT Vs Zydus Wellness Ltd ITA 80/Ahd/16 dt 1-2-18 we are of the view that the assessee is entitled for depreciation on goodwill.
21 DCIT Vs Brightways Housing ITA No. 5313/DEL/15 dt 1.2.18 an admitted fact that quantum addition does not survive. Therefore, there is no justification to levy the penalty against the assessee.
22 Vidyanidhi Education TrustVs ACIT ITA 1380/ Bang /17 dt 2.2.18 we direct the AO to allow accumulation u/s.11(1)(a) of the IT Act to the extent of 15% of gross receipts in place of 15% of net income
23 Akay Flavours & AromaticsVs ACIT ) ITA No.491/Coch/2016 dt 5.2.18 In view of the judgments of the Hon’ble Apex Court in the case of CIT vs. Yokogawa India Ltd. (supra) and Patspin India Ltd. vs. CIT (supra), we hold that deduction under section 10B of the Act is to be calculated before setting off unabsorbed depreciation and carry forward business losses.
24 Bijaynagar Kraya .. Vs ITO (Exemptions) ITA 330/JP/2016 dt 5.2.18 allowability under section 40A(9), section 37(1) and diversion by overriding title, we believe that the same can be examined by the AO
25 ACIT Vs Shyamsundar Das ITA No.820/Kol/2015 dt 7.2.18 Ld. CIT(A) had rightly placed reliance on the remand report with regard to the issue. We hold that the ld. AO having accepted the stand of the assessee in the remand report ought not to have preferred any appeal
26 Allahabad Bank Vs DCIT ITA 127/Kol /11 dt 7.2.18 90 328 The scheme of taxation is primarily governed by the principles laid down in the Constitution of India and as per Article 265 of the Constitution of India, no tax shall be levied or collected unless by an authority of law …….In case of assessee-bank, amortisation of premium paid for purchase of securities was to be allowed as deduction
27 ACIT Vs Deloitte Haskins & Sells ITA 1517/ CHNY/17 dt 8.2.18 The assessee had merely made compensatory payment of interest on delayed remittance of TDS which is squarely an allowable deduction in the computation of income of the assessee firm
28 Leo Fasteners vs DCIT ITA 2164 & 2165/Mds/17 dt 8.2.18 loss suffered by the assessee on foreign exchange fluctuation has to be allowed under Section 37(1)
29 J. Muthukumar Vs ITO ITA 2203 /CHNY /2017 dt 13.2.18. What the assessee received during the impugned assessment year was income which already accrued to him in an earlier year, when he was a Non Resident. An amount can be income either at the time of accrual or at the time of receipt, under the circumstances mentioned in Section 5 of the Act
30 ACIT Vs POSCO India ITA 155 & 122/CTK/2017 dt 15.2.18 A.R. demonstrated before us by referring to the audited accounts and income tax returns at page 6 of the paper book explaining that the assessee has capitalised the expenditure under pre-operative expenses. Therefore, there is no claim and the Assessing Officer by applying the provisions of section 14A r.w.Rule 8D has made the addition……….we are of the substantive view that the provisions of section 14A are not applicable…
31 ITO Vs R S T Holdings ITA 162 & 163/Kol/2016 dt 15.2.18 It has to be remembered that as per Article 141 of the Constitution, the law laid by the Hon’ble Supreme Court is binding on all courts. The AO while framing the assessment is acting as a quasi judicial authority and is bound to follow the decision of the Hon’ble Supreme Court. Violation of the same makes the order of assessment fragile in the eyes of law
32 Urvi M. Kothari vs. ITO ITA 1331/Ahd /14 dt 19.2.18 benefit of doubt should be given to the assessee and discretion for non imposing the penalty should be exercised in favour of the assessee.

CBDT Circulars / Notifications / Instructions
1 Instruction No.1/2018 12.2.2018 Conduct of Assessment Proceedings in scrutiny cases electronically………."hearing" includes communication of data and documents through electronic mode….. Some of the important procedural aspects while conducting assessment proceedings through 'E-Proceeding'