Practical Knowledge With CAAJ

  M/s. TVS Finance & Services Ltd. Vs ACIT The ITAT's Chennai bench ruled that land received by the assessee in the normal course of its finance business in lieu of a foregone business loan would take on the character of a business asset rather than a capital asset, regardless of its treatment in the assessee's books of accounts. (M/s. TVS Finance & Services Ltd. Vs ACIT)

It will be not possible to file belated and revised returns without incurring additional liability The deadline for filing belated and revised income tax returns for the Financial Year ended 31 March 2022 is 31 December 2022. (assessment year 2022-23). After December 31, it will be not possible to file belated and revised returns without incurring additional liability.The only option is to file an updated return under section 139(8A) of the Income Tax Act [subject to certain conditions and restrictions] with an additional liability of 25% of the total amount of tax and interest. Failure to file the returns may result in prosecution under the Act's Section 276CC.

  The Supreme Court has quashed and set aside the High Court order  The Supreme Court has quashed and set aside the High Court order and condoned the delay of 86 days and held that the High Court ought to have condoned the delay of 86 days in preferring the appeal and ought not to have been too technical in dismissing the appeal on the ground of delay. (PCIT Vs Suncity Project Pvt. Ltd.)

The Delhi High Court has set aside the order passed u/s 148A(d)  The Delhi High Court has set aside the order passed u/s 148A(d) on the ground that the information furnished to the assessee and the impugned order do not specify in which bank account or account number, the alleged amount have been received by the assessee. Though the impugned order states that the asset is represented by bogus accommodation entries in the form of bank deposits, yet no details of any such deposit have been mentioned in the impugned order. (Boutique International(P.) Ltd. v. DCIT)

Capital gain exemption under section 54 of the Income Tax Act  The Delhi bench of the ITAT has allowed the capital gain exemption under section 54 of the Income Tax Act on the grounds that the amount equivalent to the capital gains has been used for the acquisition of a new house. In this case, the agreement for sale was signed on 08.08.2014 and the payments have been completed by 08.10.2014. Since, the amount equivalent to the capital gains has been utilized for acquisition of new house, the assessee be permitted to avail the benefit allowable u/s 54 of the Act. (ITA No.6933/Del/2019)

Unaccounted funds  or bogus share capital or share premium The Delhi High Court has upheld the order of ITAT when The appellate authorities have recorded that the entire amount had been received by the assessee company by account payee cheques or demand and the identity, creditworthiness and genuineness of the transaction could not be doubted and that it cannot be said that the Assessee company had brought in its own unaccounted funds through these investor companies as bogus share capital or share premium. (PCIT vs Satkar Infrastructure (P.) Ltd., ITA 386/2022)

Calcutta High Court in case of PCIT vs Britannia Industries Ltd The  PCIT cannot exercise jurisdiction under section 263 when an invoice from one assessment year is accounted for in another year when there is no revenue implication and no prejudice to revenue because the assessee's tax rate in both assessment years is the same.  (Calcutta High Court in case of PCI T vs Britannia Industries Ltd )

Section 68 of the Income Tax Act,1961 The Kolkata bench of the ITAT has held that trading liabilities incurred with corresponding purchases cannot be the subject matter of addition under section 68 of the Income Tax Act,1961 as the provisions of section 68 of the Act are applicable to the credits in the books of accounts of the assesse which could not be explained with respect to identity, creditworthiness and genuineness. (ITA No. 226/Kol/2019).

As per section 36(1)(ib) of the Income Tax Act, any premium paid by the employer, by any mode of payment other than cash, to effect or to keep in force an insurance on the health of his employees is allowed as deduction. As a result, any amount paid in cash is not deductible. 

  Provision for warranty expenses   Provision for warranty expenses provided by the assessee in the books of accounts is on the basis of past history and further, such provision has been made on scientific basis is allowable expenditure as per the decision of the Hon’ble Supreme Court in the case of Rotork Controls India (P) Ltd., wherein, it was held that provision for warranty expenses is ascertained liability and hence, allowable as business expenditure. (ITAT Chennai, ITA No.1340/Chny/2019.

Valuation Report of the Chartered Accountant(Section 56(2) (viib) of the Act read with Rule 11UA (2))   Delhi bench of the ITAT remanded the case to AO on the ground that the Lower Authorities ought to have considered the valuation report of the Chartered Accountant submitted by the assessee and should have verified as to whether the said valuation report is inconformity with Section 56(2) (viib) of the Act read with Rule 11UA (2) of the Income Tax Rules or not and accordingly shoud have decided the matter by following the principal of consistency. (ITA No. 9721/Del/2019)

  Income Tax compliance due date for the month of December,2022 7 December 2022 - Due date for deposit of Tax deducted/collected for the month of November, 2022. However, all sum deducted/collected by an office of the government shall be paid to the credit of the Central Government on the same day where tax is paid without production of an Income-tax Challan 15 December 2022 - Due date for furnishing of Form 24G by an office of the Government where TDS/TCS for the month of November, 2021 has been paid without the production of a challan 15 December 2022 - Third instalment of advance tax for the assessment year 2023-24 15 December 2022 - Due date for issue of TDS Certificate for tax deducted under section 194-IA in the month of October, 2022 15 December 2022 - Due date for issue of TDS Certificate for tax deducted under section 194-IB in the month of October, 2022 15 December 2022 - Due date for issue of TDS Certificate for tax deducted under section 194M in the month of October, 20...

       Last Date to investment For claiming exemption u/s 54  The assessee can make investment to claim exemption u/s 54 of the Income Tax Act till the date of filing belated return u/s139(4) because section 54(2) provides for an interesting proposition that the amount of capital gains which is not appropriated by the assessee for prescribed purposes within one year before; or on or before the due date of filing of return of income under section 139, shall be deposited in the capital gains account scheme. It needs to be emphasized that the literal reading of section 54(2) provides for the two dates i.e. the due date under section 139 and the due date under section 139(1). Pertinently, section 139 cannot be said to mean only section 139(1), but it means all sub-sections of section 139. –ITAT Mumbai, ITA No. 1885/Mum/2017.

                                           Sale of agriculture land Sale of agriculture land is taxable when the assessee has not induced any evidence to establish that the land was used for agricultural purposes during the time the land was held by the assessee or during the period prior to or after its sale has been brought to the attention of the taxing authority. (ITAT Mumbai, ITA No. 1516/Mum/2021)