Indian Tax Updates- July '19

TAX UPDATES – JULY ‘19 ROUND UP
BY CA. REETIKA G AGARWAL
NEWS
DIRECT TAX
1. Income Tax Department detects foreign assets
in recent search.
[Ref:https://www.incometaxindia.gov.in/Lists
/Press%20Releases/Attachments/777/PressRel
ease_ITD_detects_foreign_assets_in_recent_s
earch_29_7_19.pdf]
2. NR earning income from investment fund set up
in IFSC is exempt from filing of ITR.
[Ref: NOTIFICATION NO. S.O. 2672(E) [NO.
55/2019 (F.NO.225/79/2019-ITA.II], DATED 26-
7-2019]
3. CBDT extends due date for filing of ITR from 31-
07-2019 to 31-08-2019.
[Ref: CIRCULAR [F.NO.225/157/2019/ITA.II],
DATED 23-7-2019]
4. Income earned by NR from off-shore
investments routed through Category I/II AIFs
not taxable in India.
[Ref: CIRCULAR NO. 14/2019 [F.NO.
225/79/2019-ITA.II], DATED 3-7-2019]
5. Amending the Agreement between the
Government of the Republic of India and the
Government of the People’s Republic of China
for the Avoidance of Double Taxation.
[Ref: Notification No.54/2019/F.No.
503/02/2008-FTD-II]
*********
OECD
1. Eswatini joins the Inclusive Framework on BEPS.
[Ref:-https://www.oecd.org]
2. OECD and Brazil share outcomes of project to
align Brazil's transfer pricing rules to OECD
standard.
3. Bosnia and Herzegovina joins the Inclusive
Framework on BEPS.
4. Gibraltar joins the Inclusive Framework on
BEPS.
*******

DOMESTIC TAX CASE LAWS
SUPREME COURT
1. Constitutional validity of any provision and
especially taxing provision cannot be struck
down on a plea based on equity or/and
hardship. [Prashanti Medical Services &
Research Foundation v UOI [2019] 107
taxmann.com 382 (SC)]
2. Where High Court upheld Tribunal's order
deleting addition made under section 68 in
respect of share application money received by
assessee on ground that assessee had brought
on record sufficient documentary evidence to
prove identity and creditworthiness of share
applicants, SLP filed against said order was to be
dismissed. [Pr. CIT v. Adamine Construction (P.)
Ltd. [2019] 107 taxmann.com 85 (SC)]
3. Where High Court without admitting appeal and
framing any question of law issued notice of
appeal to respondent assessee, heard both
parties on questions urged by appellant and
dismissed it, order so passed not being in
conformity with mandatory procedure
prescribed in section 260A, was to be set aside.
[Pr. CIT v. A.A. Estate (P.) Ltd. [2019] 107
4. SLP dismissed against High Court's order
holding that where commercial user permitted
by local authority was within limits prescribed
under Development control Rules/Regulation,
deduction under section 80IB(10) upto 31-3-
2005 would be allowable irrespective of fact
that project was approved as 'housing project'
or 'residential plus commercial'. [CIT v. Indo
Continental Hotels and Resorts Ltd. [2019] 107
5. SLP filed against High Court's order recalling its
earlier judgment on ground that it contained
some factual inadvertent error committed while
disposing of assessee's petition; was to be
dismissed. [Dy. CIT v. Ajay Surendra Patel
[2019] 107 taxmann.com 222 (SC)]
setting aside reassessment proceedings on
ground that addition made in said proceedings
was beyond scope of section 147, read with
section 148, SLP filed against said order was to
be dismissed. [Pr. CIT v. Mahendra Singh
Asoliya [2019] 107 taxmann.com 81 (SC)]
7. Where assessee surrendered its right, title and
interest in plot allotted by MIDC in favour of
third party, in view of fact that assessee did not
carry on any business activity during relevant
year and thus plot transferred became a capital
asset which did not bring into existence any
business income as held by High Court, SLP filed
against said order was to be dismissed. [Pr. CIT
v. Well Wisher Construction (P.) Ltd. [2019]
106 taxmann.com 260 (SC)]
holding that income earned by assessee HUF as
a partner of partnership firm from sale of
goodwill and trademark of firm was taxable as
capital gain, SLP filed against decision of High
Court was to be dismissed. [Pr. CIT v.
Prakashchandra S Soni, HUF [2019] 107
9. SLP dismissed against High Court ruling that
where assessee did not honour its commitment
to take delivery against some purchase orders
placed on foreign sellers consequent upon price
of palm oil declining and accepted foreign
seller's claims for damages, amount so paid
could not be disallowed as speculative loss
under section 43(5). [CIT v. Ambo Agro
Products (P.) Ltd. [2019] 106 taxmann.com 306
(SC)]
10. Assessee-Company has floated various schemes
which require subscribers to deposit certain
amounts by way of subscriptions in its hands,
and, depending upon scheme in question, these
subscribed amounts at end of scheme are
ultimately repaid with interest. Scheme at hand
also contained forfeiture clauses as a result of

which if, mid-way, a certain amount was
forfeited, then said amount would immediately
become income in hands of assessee. [Peerless
General Finance & Investment Co. Ltd. v. CIT
[2019] 107 taxmann.com 228 (SC)]
holding that Commissioner (Appeals) was
justified in not allowing set off of losses of
earlier years before granting deduction under
section 10A, SLP filed against order of High
Court was to be dismissed. [Pr. CIT v. Infosys
BPO Ltd. [2019] 107 taxmann.com 57 (SC)]
12. Where High Court held that assessee's activity
of compression of natural gas into CNG
amounted to 'manufacture' within meaning of
section 2(29BA), SLP filed against order of High
Court was to be allowed. [Dy. CIT v. Central
U.P. Gas Ltd. [2019] 106 taxmann.com 371
(SC)]
holding that in absence of any exempt income
reported by assessee, disallowance could not be
made under section 14A, SLP filed against said
order was to be dismissed. [Pr. CIT v. GVK
Project and Technical Services Ltd. [2019] 106
14. Where High Court rejected revenue's plea to
effect that since assessee's income was eligible
for exemption under section 11, Tribunal should
not have allowed assessee's claim for
depreciation as same would amount to granting
double deduction, SLP filed against order of
High Court was to be dismissed. [DIT v. Society
for Applied Microwave Electronic Engineering
& Research [2019] 106 taxmann.com 204 (SC)]
15. Where High Court upheld addition made by
authorities below relying upon statement made
in course of search proceedings by director of
assessee-company, since assessee failed to
discharge its burden that admission made by
director in his statement was wrong and said
statement was recorded under duress and
coercion, SLP filed against decision of High
Court was to be dismissed. [Bannalal Jat
Constructions (P.) Ltd. v. Asst. CIT [2019] 106
16. Where High Court upheld Tribunal's order that
land sold by assessee did not fall within
meaning of capital asset under section 2(14) as
it was classified as dry land for which Kishtu had
been paid and, moreover, mere fact that
adjacent land was divided into plots for sale
could not a ground to conclude that land sold
by assessee was for purpose of development,
SLP filed against order of High Court was to be
dismissed. [CIT v. Venkateswara Hospital
[2019] 106 taxmann.com 283 (SC)]
17. Where Settlement Commission rejected
application filed by assessee holding that
amount disclosed by assessee never belonged
to him and High Court by impugned order
upheld same, SLP filed against impugned order
was to be granted. [Vishwa Nath Gupta v. Pr.
CIT [2019] 106 taxmann.com 310 (SC)]
*********

HIGH COURT
1. Decision which is quasi-judicial in nature, has to
be taken by Assessing Officer under section
197(1) on objective criteria and be based on
relevant material provided by applicant and
available with department - It must be
supported by reasons available on file which
conform to requirement of section 197 of Act
read with Rule 28AA of Rules - Those reasons
must be communicated to applicant - It cannot
be taken, on dictation of an officer superior to
Assessing Officer. [Bently Nevada LLC v. ITO
[2019] 107 taxmann.com 440 (Delhi)]
2. Where recovery of demand was stayed on
deposit of 20 per cent of outstanding demand,
for purpose of computing demand, advance tax
and TDS paid at time of filing of return should
also be taken into consideration. [Keva
Fragrances (P.) Ltd. v. Asstt. CIT [2019] 106
taxmann.com 345 (Bombay)]
3. Provisions of section 50C could not be applied
for making addition under section 69B. [Pr. CIT
v Dharmaja Infrastructure [2019] 107
taxmann.com 281 (Gujarat)]
4. Expenditure incurred by assessee-Cricket Club
of India for renovation and interior work of
stadium, construction of foundation of camera,
staircase, control room, fabrication and
erection of structural steels, fixing of MS sliding
gates, different pipes for sprinkler system in
main ground, excavation of soil, purchasing of
LED replay screen, electric materials etc., for
upgrading stadium in accordance with ICC
Standards, was revenue in nature. [Pr. CIT v.
Cricket Club of India [2019] 107 taxmann.com
280 (Bombay)]
5. Merely on basis of Shah Commission's Report
opining that there was under-invoicing of
export price by iron-ore miners and exporters,
reassessment could not be initiated when there
was nothing to indicate that any particular
income had accrued to anyone as a result of
price difference. [Sesa Sterlite Ltd. v. Asst. CIT
[2019] 107 taxmann.com 388 (Bombay)]
6. Where assessee-company, running a hotel in
Ahmedabad, at Mount Abu and also serving
flight catering in Indian Airines at Ahmedabad
Airport, is served with notice directing for
conducting special audit under section 142(2A)
on ground that assessee is not in a position to
submit detailed Profit and Loss account as
called for and system of maintenance of
accounts of assessee is so complex that
assessee is not in a position to submit details of
various heads of income and expenditure in a
understandable and satisfactory manner and
further it is found that for last couple of years
assessee failed to get its books of accounts
audited and submit audit report to department
in time, since satisfaction recorded by Assessing
Officer would indicate that same is not just an
eyewash but Assessing Officer had applied his
mind to various aspects like nature of accounts,
method of maintaining accounts, entries
recorded etc. and reached to conclusion that
accounts were complex and it was in interest of
revenue that special audit under section
142(2A) of Act should be directed, order passed
by Assessing Officer in exercise of his powers
under section 142(2A) is justified. [Cama Hotels
Ltd. v. Samir Vakil or His Successor Dy. CIT
[2019] 107 taxmann.com 385 (Gujarat)]
7. Where assessee was engaged in development
of housing projects and it in return of income
filed for assessment year 2008-09 had not
claimed deduction under section 80-IB(10) and
subsequent to assessment framed by Assessing
Officer it filed an application under section 264
before Commissioner and raised claim of
deduction under section 80-IB(10) and
Commissioner rejected revision application
holding that since assessee had not made a
claim under section 80-IB(10) in return of
income, by virtue of section 80A(5), claim could
not be granted, Commissioner was justified in
his view. [EBR Enterprises v. UOI [2019] 107

8. Petitioners, Institute of Chartered Accountants
of India, being an autonomous body which
found their existence on account of a Central
enactment of Parliament, appropriate
Government to refer industrial dispute against
petitioners to Industrial Tribunal would be
Central Government and not State Government.
[The Institute of Chartered Accountants of
India v State of U.P. [2019] 106 taxmann.com
342 (Allahabad)]
9. Attachment of properties of assessee for
recovery of interest payable by assessee was
unjustified if appeal under section 220(2A) filed
by assessee before Commissioner for waiver of
such interest was pending. [Kings Infra
Ventures Ltd. v. TRO [2019] 107 taxmann.com
132 (Madras)]
10. When assessee during pendency of its
application under section 245C, made a
voluntary offer of additional income i.e. income
in excess of what was disclosed in application,
Settlement Commission should not have
proceeded with assessee's application. [CIT v.
Settlement Commission (Income-tax & Wealth-
tax) [2019] 107 taxmann.com 137 (Kerala)]
11. Where Commissioner (Exemptions) had
accepted that main aim of assessee society was
running of college and educational institutions
and made no adverse observation regarding
genuineness of objects or activities carried on
by society, registration under section 12AA
could not have been denied holding that it was
entitled to exemption under section 10(23C)(vi).
[CIT (Exp) v. Khatu Ji Para Medical Technology
Educational & Research Society [2019] 106
taxmann.com 344 (Punjab & Haryana)]
12. Where assessee firm on being asked to explain
certain credits in its books of account, pointed
out three partners (creditors) who had
advanced loans and said creditors had produced
credible material to show their source of
income for specific advances made to firm,
additions made under section 68 had rightly
been deleted by Tribunal. [CIT v. Sree Ganesh
Trading Company [2019] 107 taxmann.com 130
(Kerala)]
13. Introduction of Modified Rules for
Departmental Examination for 1998 Rules
whereby 'Pass Percentage' in Rule VI prescribing
requirement of 60 per cent of marks for passing
each of subjects was modified and reduced to
50 per cent with effect from 26-5-2008, cannot
be given retrospective effect. [C.V. Antony v.
Chairman, Central Board of Direct Taxes [2019]
107 taxmann.com 210 (Kerala)]
14. No approval was required to claim deduction of
exp. related to scientific research u/s 35(1)(i).
[CIT v. Rajapalayam Mills Ltd. [2019] 107
taxmann.com 129 (Madras)]
15. Time limit for purchase of new house to avail
sec. 54F relief to be reckoned from date of
agreement to sell. [Kishorbhai Harjibhai Patel
v. ITO [2019] 107 taxmann.com 295 (Gujarat)]
16. Where assessee, NBFC, engaged in trading in
shares, incurred loss (speculation loss) as a
result of its activities of trading in shares, said
loss could not be set off against income from
others sources which were a refund of income-
tax. [CIT v. Harrisons Malayalam Financial
Services Ltd. v. [2019] 107 taxmann.com 77
(Kerala)]
17. Payment for clerical services such as data
storage, documents scanning, etc., require sec.
194C TDS. [CIT v. Reliance Life Insurance Co.
Ltd. [2019] 106 taxmann.com 400 (Bombay)]
18. Where during search and seizure operation
conducted upon premises of assessee, keys
belonging to assessee's lockers were found and
seized in which certain jewellery was found,
since there was proper authorization for
impugned search and seizure operation, same
could not be set aside. [Sumedha Dutta v. UOI
[2019] 106 taxmann.com 394 (Madhya
Pradesh)]

19. Where in course of appellate proceedings,
Commissioner (Appeals) directed assessee to
pay 15 per cent of aggregate demand as
reduced by demand already paid, since said
order did not suffer from any infirmity, same
was to be upheld. [Martin Puthumana Thomas
v. Asst. CIT [2019] 106 taxmann.com 269
(Kerala)]
20. Where assessee entered into an agreement
dated 5-3-2010 with a company to pay
liquidated damages to said company for
cancellation of contract in three installments,
and last installment was paid on 20-5-2010,
deduction in respect entire amount of
liquidated damages paid by assessee was to be
allowed in assessment year 2011-12. [Pr. CIT v.
Rajesh Prakash Timblo [2019] 106
21. No sec. 194C TDS where major part of materials
was purchased from third parties for job work.
[Kramski Stamping & Molding India (P.) Ltd. v.
Asst. CIT [2019] 106 taxmann.com 247
(Madras)]
22. HC rejected application for waiver of interest as
there was wilful evasion of payment of tax by
assessee. [Mansukhlal Pitalia v. Pr. CIT [2019]
106 taxmann.com 349 (Madhya Pradesh)]
23. There being a unity of control and management
and common fund apart from other features,
assessee on showing that it has commenced
several of its activities in bunch of activities for
which it was incorporated would definitely
qualify for deduction of expenditure incurred by
it under head operating expenses, financial
expenses and depreciation. [Daimler India
Commercial Vehicles (P.) Ltd. v. Dy. CIT [2019]
107 taxmann.com 243 (Madras)]
24. Where AO after expiry of four years from end of
relevant assessment year, initiated
reassessment proceedings by taking a view that
assessee was in possession of certain cash
amount which was not disclosed in return and
thus escaped assessment, in view of fact that
Assessing Officer was in possession of all
relevant documents at time of assessment,
initiation of reassessment proceedings merely
on basis of change of opinion was not justified.
[Rajbhushan Omprakash Dixit v. Dy. CIT [2019]
106 taxmann.com 307 (Bombay)]
25. Where assessee had allegedly allowed his friend
to use his credit cards, who refused having used
assessee's credit card, and, thus, amount in
question was added to assessee's income as
unexplained expenditure, since assessee failed
to prove nature of expenses incurred through
credit cards despite adequate opportunity given
by Tribunal, impugned addition made by
authorities below was to be confirmed. [Sunil
Balasubramaniam Shankar v. ITO [2019] 107
26. Where assessee, incorporated to promote child
education, claimed exemption under section
10(23C)(iiiad), in view of fact that assessee's
gross annual receipts from fee and interest
along with addition made under section 68
exceeded Rs. one crore, claim so raised
deserved to be rejected. [Satluj Shiksha Samiti
v. CIT [2019] 107 taxmann.com 54 (Punjab &
Haryana)]
27. Revision petition under Sec. 264 is maintainable
against sec. 143(1) intimation. [Epcos Electronic
Components S.A v. UOI [2019] 107
taxmann.com 227 (Delhi)]
28. Where pursuant to search at assessee's
premises, revenue formulated a prima facie
belief that assessee had undisclosed income as
well as undisclosed foreign investment and
povisionally attached assessee's bank accounts
and two immovable properties, in view of fact
that assessee's tax, interest and possible
penalty liabilities were unlikely to exceed
valuation of aforesaid two immovable
properties, provisional attachment of his bank
accounts was to be lifted. [Darius

Sammotashaw v. Dy. CIT [2019] 106
29. Assessee, a non-banking institution, engaged in
providing financial assistance to its customers,
was not liable to pay tax in respect of interest
earned on non-performing assets (NPA) on
accrual basis. [Bhind District Cooperative
Central Bank Ltd. v. Income tax Department
[2019] 106 taxmann.com 396 (Madhya
Pradesh)]
30. Where assessee-company claimed deduction of
legal and professional expenses incurred in
relation to buyback of shares of company from
its shareholders, since said expenditure would
not in any manner enhance capital structure of
assessee company, expenditure in question
being revenue in nature was eligible for
deduction under section 37(1). [Pr. CIT v. Bayer
Vapi (P.) Ltd. [2019] 106 taxmann.com 395
(Gujarat)]
31. It is sine qua non for Assessing Officer to
consider claims of deduction/exemption made
by assessee and thereafter to return said claims
if assessee is not entitled to same by assigning
reasons. [Deepak Dhanaraj v. ITO [2019] 107
taxmann.com 76 (Karnataka)]
32. Method of accounting provided for valuation of
inventory u/s 145A doesn't determine
allowability of exp. [Mahindra World City
Developers Ltd. v. Asst. CIT [2019] 107
33. Where assessee, a medical practitioner by
profession, used interest free funds obtained
from her father for purchasing shares and had
shown shares as investment in balance sheet
and, further, in case of fall in value of shares,
same was not claimed as a business loss, profit
arose on sale of such shares was to be treated
as capital gain and not as business income. [Pr.
CIT v. Amrita P. Talwar [2019] 107
34. In case of service sector, even certain kinds of
preliminary steps, such as engaging in
negotiation or employment of personnel, could
be regarded as an activity of commencement of
business and, thus, where assessee being one of
such undertaking took some preliminary steps
such as appointment of key personnel,
preparation of draft model development
agreement and initiation of process to tender
financial and advisory services, its claim for
deduction of depreciation, preliminary
expenses and employee's remuneration was to
be allowed. [Indian Railway Stations
Development Corporation Ltd. v. Pr. CIT [2019]
107 taxmann.com 79 (Delhi)]
35. Proviso to section 80-IA(4) does not require that
there should be a direct agreement between
transferee enterprise and specified authority
for availing benefit under section 80-IA. [CIT v.
Chettinad Lignite Transport Services (P.) Ltd.
[2019] 107 taxmann.com 12 (Madras)]
36. Profit from sale of slag, which was a by-product
in manufacture of pig iron, was to be
considered as profit from business of industrial
undertaking engaged in manufacture and sale
of pig iron for purpose of deduction under
section 80-IB. [Sesa Industries Ltd. v. CIT [2019]
106 taxmann.com 118 (Bombay)]
37. Where Assessing Officer made addition on
account of bogus purchase of raw material by
assessee company, since Commissioner
(Appeals) and Tribunal concurrently found that
assessee had yielded huge profits during year
from sales which would not be possible without
utilising huge raw material, Tribunal was wholly
justified in restricting impugned additions on
account of bogus purchased to 25 per cent. [Pr.
CIT v. Synbiotics Ltd. [2019] 106 taxmann.com
316 (Gujarat)]
38. Where TV broadcaster paid organiser for
organising cricket series, if a cricket match in a
particular series was cancelled while a match of
another series was added and by a fresh

contract, both broadcaster and organiser
agreed neither to refund amount for cancelled
match nor to charge for additional match, no
addition of price difference in broadcasting
rights of matches to be made under section
40A(2). [Pr. CIT v. NEO Sports Broadcast (P.)
Ltd. [2019] 107 taxmann.com 17 (Bombay)]
39. Survey at residential premises of assessee could
not have been converted into search and
seizure without tax authorities recording that
assessee had failed to co-operate or there was a
suspicion that income had been concealed by
assessee warranting resort to process of search
and seizure. [Pawan Kumar Goel v. UOI [2019]
107 taxmann.com 21 (Punjab & Haryana)]
40. Before applying provisions of section 56(2)(viib),
assessing authority is required to undertake
exercise of determining fair Market Value of
shares as provided in provisions of section
56(2)(viib). [CIT v. Vaani Estates (P.) Ltd. [2019]
107 taxmann.com 15 (Madras)]
41. Repetitive applications under section 254(2) are
not permissible and, therefore, an order passed
under section 254(2) cannot be rectified nor
amended by invoking provisions of sub-section
(2) of section 254 once again. [Pr. CIT v. Smt.
Alpana Bhartia [2019] 106 taxmann.com 397
(Karnataka)]
42. Where notice under section 143(2) was issued
to assessee prior to filing of return of income,
said notice being invalid, assessment order
passed in pursuance of same deserved to be set
aside. [Pr. CIT v. Marck Biosciences Ltd. [2019]
106 taxmann.com 399 (Gujarat)]
43. Assessing Officer could not make addition to
assessee's income under section 41(1) in
respect of sundry creditors shown in books of
account merely on ground that assessee failed
to furnish PAN or correct address of those
creditors. [Pr. CIT v. B.T. Nagraj Reddy [2019]
106 taxmann.com 308 (Karnataka)]
44. Where assessee filed an appeal before Tribunal
but did not appear on hearing due to reason
that assessee was out of country, since assessee
failed to make arrangement to represent her
before Tribunal by an authorised representative
and also failed to sought for another date of
hearing, Tribunal was justified in dismissing
impugned appeal filed by assessee. [Smt.
Shobha Lakshman v. CIT [2019] 106
taxmann.com 313 (Karnataka)]
45. Where Assessing Officer sought to reopen
assessment in respect of income involving a
matter which was subject matter of appeal
before Commissioner (Appeals), said reopening
of assessment was hit by third proviso to
section 147 which was not permissible in law.
[Jhankit Chandulal Prajapati v. Dy. CIT [2019]
106 taxmann.com 312 (Gujarat)]
46. In case of service sector, even certain kinds of
preliminary steps, such as engaging in
negotiation or employment of personnel, could
be regarded as an activity of commencement of
business and, thus, where assessee being one of
such undertaking took some preliminary steps
such as appointment of key personnel,
preparation of draft model development
agreement and initiation of process to tender
financial and advisory services, its claim for
deduction of depreciation, preliminary
expenses and employee's remuneration was to
be allowed. [Indian Railway Stations
Development Corporation Ltd. v. Pr. CIT [2019]
107 taxmann.com 79 (Delhi)]
47. Period of 182 days to be considered for
calculating residential status of a person
migrated to Foreign Country. [Pr. CIT v. Binod
Kumar Singh [2019] 107 taxmann.com 27
(Bombay)]
48. When assessee raised a ground before Tribunal,
it was duty of Tribunal to dispose of such
ground and give its opinion thereon. [Rolls-
Royce Marine India (P.) Ltd. v. ITO [2019] 107

INCOME TAX APPELLATE TRIBUNAL
1. Where assessee sold one of its business
undertakings with all its assets and liabilities
together with all licences, permits, approvals,
registration, contracts and other contingent
liabilities for a slump price, its case would fall
within meaning of section 50B and, thus, profit
earned by assessee from said transaction would
be taxable as long term capital gain. [Amalgam
Foods Ltd. v. Dy. CIT [2019] 107 taxmann.com
316 (Cochin - Trib.)]
2. Where assessee-society was engaged in
imparting education as a learning centre of a
University i.e. PTU, since object of assessee was
charitable in nature within meaning of section
2(15), a part of semester fee paid by PTU to
assessee could not be regarded as commission
and, assessee's claim for exemption under
section 10(23C)(iiiad) in respect of amount so
received, was to be allowed. [Shaheed Udham
Singh Educational Society v. ITO (Exp) [2019]
107 taxmann.com 282 (Amritsar - Trib.)]
3. Where at time of filing of return of income by
assessee on 30-9-2009, sub-clause (e) to section
49(1)(iii) was not in statute as same was
inserted by Finance Act, 2012, even though said
amendment was retrospectively effective from
1-4-1999, it could not be applied for computing
capital gain in relevant assessment year. [Utsav
Cold Storage (P.) Ltd. v ITO [2019] 107
taxmann.com 184 (Jaipur - Trib.)]
4. Where assessee sold a residential house and
invested sale consideration in a plot for purpose
of construction of residential house, merely
because assessee could not obtain possession
of plot within period of three years due to
developer's failure to offer possession,
assessee's claim for exemption under section 54
could not be denied. [Varun Seth v. Asst. CIT
[2019] 107 taxmann.com 133 (Delhi - Trib.)]
5. Where Assessing Officer computed assessee's
profits derived from 'export of articles or goods'
manufactured at SEZ undertaking on standalone
basis, deduction under section 10AA could not
be denied. [DIC Fine Chemicals (P.) Ltd. v. Dy.
CIT [2019] 107 taxmann.com 213 (Kolkata -
Trib.)]
6. Where business loss was arrived at by Assessing
Officer while giving effect to order of Tribunal,
said loss could be carried forward and benefit of
set off against business income in subsequent
assessment years could be allowed to assessee
even in absence of such claim in return of
income. [Maharashtra State Warehousing
Corporation v. Dy. CIT [2019] 107
taxmann.com 92 (Pune - Trib.)]
7. Annual value of property could be assessed as
income only in hands of 'owner' of property;
therefore, where assessee was an SPV
promoted by State Housing Board for
undertaking construction of apartments and
assessee was not an owner of apartments but
its role was limited only to developer who held
apartments under construction in trust to be
ultimately owned by persons to whom
allotments were approved by Board, annual
value of unfinished flats could not be brought to
tax in hands of assessee. [Bengal DCL Housing
Development Co. Ltd. v. DY. CIT [2019] 106
taxmann.com 346 (Kolkata - Trib.)]
8. Where assessee deposited amount of capital
gain in capital gain account scheme before
expiry of date of filing return under section
139(4), her claim for deduction under section
54F was to be allowed. [ITO v. Nilima Abhijit
Tannu [2019] 106 taxmann.com 256 (Mumbai -
Trib.)]
9. No sec. 194-I TDS on wharfage charges paid to
Maharashtra Maritime Board for
loading/unloading goods at waterfront. [Angre
Port (P.) Ltd. v ITO [2019] 106 taxmann.com
252 (Pune - Trib.)]
10. Where assessee-society was set up with object
of promoting sport of cricket and to bring out
new talent in field of cricket and to organize

coaching and camps for players, conduct
matches at district and State level, it could not
be said that assessee was providing any service
in nature of trade, commerce or industry and
assessee was entitled to registration under
section 12AA. [Chhattisgarh State Cricket
Sangh v. Dy. CIT [2019] 106 taxmann.com 347
(Raipur - Trib.)]
11. Sec. 80P relief couldn't be denied to co-
operative credit society providing credit
facilities to its members. [Asst. CIT v. People's
Co.Op. Credit Society Ltd. [2019] 107
taxmann.com 53 (Ahmedabad - Trib.) (SB)]
12. Discount received by assessee on buyback of
Foreign Currency Convertible Bonds (FCCB)
could not be taxed under section 28(iv) as said
receipt in hands of assessee was in form of
cash/money and, further, such proceeds were
utilised partly for ongoing capitalization
programs and, thus, same was capital receipt.
[Dy. CIT v. Pidilite Industries Ltd. [2019] 107
taxmann.com 91 (Mumbai - Trib.)]
13. Where assessee, having sold residential
property, utilised sale consideration for booking
a semi-finished flat with a builder in which
assessee had to carry out internal fit-outs to
make it liveable on its own, same was to be
treated as case of construction of property and
not purchase of property for claiming
exemption under section 54. [Asst. CIT v.
Seema Sobti [2019] 106 taxmann.com 350
(Delhi - Trib.)]
14. Where assessee firm failed to comply with
notices issued under section 142(1), Assessing
Officer was right in framing assessment order
under section 144 denying allowance of interest
and salary paid to partners by taking support of
provisions of section 184(5). [Eastern
Engineering Venture v. ITO [2019] 107
taxmann.com 78 (Cuttack - Trib.)]
15. Delhi Metro Rail Corporation (DMRC) is not
entitled to benefit of exemption under section
10(20A) - DMRC is a company which has been
merely registered or incorporated under
Companies Act, 1956 and failed to satisfy
condition of 'authority constituted by under any
Central, State of Provincial Act'. [Delhi Metro
Rail Corporation Ltd. v. Jt. CIT [2019] 107
taxmann.com 51 (Delhi - Trib.)]
16. Provisions of section 56(2)(vii) have application
to 'property' which is in nature of a capital asset
of recipient and, thus, where assessee
purchased a piece of land as stock-in-trade,
impugned addition made by AO in respect of
said transaction by invoking provisions of
section 56(2)(vii)(b)(ii), was to be set aside.
[Satendra Koushik v. ITO [2019] 106
taxmann.com 244 (Jaipur - Trib.)]
17. ITAT restricts disallowance u/s 14A to 1% of
exempt income considering identical ruling of
earlier year. [Tata Motors Ltd. v. Dy. CIT [2019]
106 taxmann.com 273 (Mumbai - Trib.)]
18. No deemed dividend if interest was duly paid
on loan taken from group company. [Mantri
Tea Company (P.) Ltd. v. Pr. CIT [2019] 106
taxmann.com 272 (Kolkata - Trib.)]
19. Sec. 68 couldn't apply to income credited in
income & exp. a/c by Trust. [Asst. CIT v. Shree
Shiv Vankeshawar Educational & Social
Welfare Trust [2019] 106 taxmann.com 249
(Delhi - Trib.)]
20. A Court can recall order and change its mind in
extreme case even if draft copy is signed and
order is dictated in open Court. [Kamaljit Singh
v. ITO [2019] 106 taxmann.com 251 (Amritsar -
Trib.)]
21. Where approval granted under section 35(1)(ii)
to scientific research society was cancelled
subsequently with retrospective effect,
weighted deduction claimed by assessee donor
under section 35(1)(ii) could not be denied, if
there was valid and subsisting approval when
donation was given. [Urnish Jewellers v. Asst.

CIT [2019] 107 taxmann.com 19 (Mumbai -
Trib.)]
22. Trust eligible for benefit of sec. 11, though ITR
was filed in response to reassessment notice.
[United Educational Society v. Jt. CIT [2019]
107 taxmann.com 127 (Delhi - Trib.)]
23. Expenditure incurred by assessee, a signals
distribution and cable networking company, for
acquisition of Set Top Boxes (STB) generated
permanent source of income for assessee by
way of annual service maintenance charges and
was therefore a capital expenditure. [Asst. CIT
v. Kerala Communicators Cable Ltd. [2019] 106
taxmann.com 355 (Cochin - Trib.)]
24. On retirement, excess sum paid over and above
sum standing to credit of capital account of
assessee partner was to be taxed as capital
gain. [Savitri Kadur v. Dy. CIT [2019] 106
taxmann.com 314 (Bangalore - Trib.)]
25. Assessee a pharmaceutical company engaged in
manufacturing and sales of pharmaceuticals
and allied products would be duly entitled to
claim sales promotion expenses incurred on
distribution of articles to stockists, distributors,
dealers, customers and doctors. Circular No.
5/2012 dated 1-8-2012 issued by Central Board
of Direct Taxes (CBDT) which cites such
expenses as inadmissible as per section 37(1)
would not be applicable to assessee. It was
observed that as per circular it is the medical
practitioners who are prohibited from accepting
freebies. There is no restriction whatsoever on
the pharmaceutical companies. [Aristo
Pharmaceuticals (P.) Ltd. v. Asst. CIT [2019]
107 taxmann.com 119 (Mumbai - Trib.)]
26. Foreign remittances on export sales that were
realized within specified time limit of six (6)
months and those export sales proceeds for
which extension of time limit was applied for by
assessee to authorized bankers and applications
had not been rejected, would be eligible for
deduction under section 10A. [Dy. CIT v.
Tecnotree Convergence Ltd. [2019] 107
taxmann.com 90 (Bangalore - Trib.)]
**********

TRANSFER PRICING CASE LAWS
1. Where High Court held consequent upon an
order of TPO under section 92CA(3), it is
incumbent upon Assessing Officer to pass a
draft assessment order under section 144C SLP
filed against said decision was to be dismissed.
[Dy. CIT v. Control Risks India (P.) Ltd. [2019]
107 taxmann.com 83 (SC)]
2. Where TPO was of opinion that purchase of
know-how made by assessee from its AE was
not at Arm's Length, he could have applied any
specified methods for determining Arm's Length
Price of transaction, however, could not have
replaced business decision of assessee and
recorded justification for purchase made in
context of incremental benefit earned by
assessee out of such know-how. [CIT v. SI
Group-India Ltd. [2019] 107 taxmann.com 314
(Bombay-HC)]
3. Where in course of appellate proceedings,
Tribunal directed TPO to exclude depreciation;
interest etc. to calculate operating profit, no
substantial question of law arose from
Tribunal's order. [Pr. CIT v. Kirloskar Toyota
Textile Machinery (P.) Ltd. [2019] 106
taxmann.com 309 (Karnataka-HC)]
4. Where assessee had resold goods imported
from AE without any value addition, most
appropriate method which could be applied for
determining arm's length price would be RPM
and TNMM could not be most appropriate
method in such type of transaction. [Randox
Laboratories (India) (P.) Ltd. v. ITO [2019] 107
5. Where pursuant to order of TPO proposing
transfer pricing adjustment, Assessing Officer
passed assessment order under section 143,
read with section 92CA, issuance of a draft
order of assessment would be a sine-qua-non
before Assessing Officer could pass regular/final
order of assessment under section 143(3), read
with section 144C. [Inatech India (P.) Ltd. v. ITO
[2019] 106 taxmann.com 318 (Bangalore -
Trib.)]
6. Where TPO made addition to assessee's ALP in
respect of excessive price paid to AE for
purchase of Machinery, in view of fact that
custom authorities had not disputed declared
import price of machine and it was an
acceptable method of valuation, impugned
addition was to be deleted. [Dy. CIT v.
Fresenius Kabi Oncology Ltd. [2019] 106
taxmann.com 403 (Delhi - Trib.)]
7. Where AO came to a finding that control and
management of business of assessee was
wholly situated in India, then he had to proceed
further; AO having failed to do so, action of TPO
in applying Profit Split Method for bench-
marking transactions without picking
comparable was beyond his jurisdiction;
further, where TPO has not exercised his
jurisdiction, DRP in exercise of its powers
cannot benchmark new transaction though
reported by assessee, in hands of assessee.
[Sava Healthcare Ltd. v. Asst. CIT [2019] 107
taxmann.com 226 (Pune - Trib.)]
8. Where foreign group company provided
technical know-how for manufacturing printing
ink, if royalty paid was within range approved
by Department of Industrial Policy and
Promotion as well as by SIA and FIPB, said rate
were at arm's length. [Dy. CIT v. DIC India Ltd.
[2019] 106 taxmann.com 404 (Kolkata - Trib.)]
*********

INTERNATIONAL TAXATION CASE LAWS
1. Amount paid by assessee to a foreign bank for
rendering financial services in order to raise
capital abroad through issuance of Global
Depository Receipts ('GDRs'), was not liable to
tax in India as fee for technical services. [CIT v.
Indusind Bank Ltd. [2019] 106 taxmann.com
343 (Bombay-HC)]
2. Where subscription charges were received by
assessee-TV channel operator from customers
enabling them to view channels, since said
receipt was not for transfer of any copyright in
literary, artistic or scientific work, it could not
be categorized as 'royalty income'. [CIT v. MSM
Satellite (Singapore) Pte. Ltd. [2019] 106
taxmann.com 353 (Bombay-HC)]
3. Where assessee, a US company, had entered
into Network Participation Agreement with Citi
Bank and granted non-exclusive right to Citi
Bank for using know-how, technical process,
etc., and received participation fee thereon
which was offered as royalty in its regular
return of income, but after termination of said
agreement, assessee received compensation,
which was claimed as business receipt,
compensation received by assessee was to be
treated only as business receipt in hands of
assessee and not as royalty. [Diners Club
International Ltd. v. Dy. CIT [2019] 106
********
Disclaimer: Above said information are taken
from publically available resources and believed
to be accurate.

Indian Tax Updates- July '19

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Indian Tax Updates- July '19