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II. Direct Taxes Case Laws:
1. LS
Cable & System Ltd., Korea Vs. CIT & ANR, W.P.(C) 8799/2015
& CM 19522/2015, Date of Judgement: 13.05.2016, High Court of Delhi
Issue:
Whether the AAR can reject the application for determination of
tax liability, where the application was filed before filing of return,
for the reason that the issue was identical with application for
preceding year and notice was issued u/s 143(2) in that year.
Held - No
The Petitioner, a company incorporated under the laws of South Korea,
is engaged in the manufacture of electric wires and cables for power
distribution. It executes its onshore works through Project Offices in
India. For A.Y 2012-13, it filled its ROI on 29.11.2012 and on
13.08.2013, notice u/s 143(2) was issued to the assessee. On 29.09.2013,
the Assessee filed 4 applications before the AAR seeking determination
of its tax liability in respect of amounts received towards the offshore
supplies contract, of which 3 applications were pertaining to AY
2013-14. Thereafter, on 29.11.2013, the Petitioner filed its returns for
AY 2013-14 but did not offer the revenues earned from offshore supplies
as the Petitioner took the stand that no portion of the profits arising
therefrom is taxable in India. In respect of AY 2013-14, notice u/s
143(2) was issued on 15.09.2014.
The AAR
rejected the applications since notice u/s 143(2) had already been
issued by the Department earlier to the filing of the applications.
Regarding filing of applications pertaining to AY 2013-14 even before
the filing of the returns, the AAR observed that since the issues are
identical in all the four applications and if even in one of the
applications, the notice is issued u/s 143(2), it will be a case of
pending question before the Income Tax authorities.
The
Hon’ble Court held that order of the AAR is unsustainable in law. The
mere issuance of a notice u/s 143(2) in relation to AY 2012-13 does not
tantamount to the issues raised in the application filed by the
Petitioner before the AAR on 20.09.2013 being already pending before the
AAR. Further, in respect of AY 2013-14, there was no statutory bar to
the AAR considering the said application. The order of the AAR is, thus,
set aside.
(Please click here for judgment)
2. M/s Tegh International Vs. Asst. CIT, I.T.A. No. 1462 & 1463/DEL/ 2014, Date of Judgement: 27.05.2016, ITAT - New Delhi
Issue:-
Whether the proceeding u/s 153A r.w.s. 143(3) of the Income Tax
Act, 1961 can be completed on the basis of documents submitted in
response to notice u/s 142(1) & 143(2) of the Act in absence of any
incriminating material found during the search operation.
Held - No
Assessee firm was engaged in business of export of artificial
jewellery. A search was conducted on the assessee companies group on
26.04.2010. Notice u/s 153A was issued and served on the assessee on
13.04.2011. In response to the same assessee filed its return on
02.05.2011. Subsequently, notices u/s 142(1) of the Act along with a
detailed questionnaire and u/s 143(2) of the Act were issued. On the
basis of submitted detail/ documents, the assessment was completed in
terms of an order u/s 153A r.w.s. 143(3) of the Act wherein the AO made
addition on account of bogus purchases made through accommodation
entries. Assessee contended that the additions not based on any
incriminating material found during search operation are not sustainable
in the eyes of law.
The
Hon’ble Tribunal placing reliance on decision of Hon’ble Delhi High
Court in case of CIT vs. Kabul Chawla [2016] 380 ITR 573 held that the
additions made by the AO are beyond the scope of section 153A of the Act
because no incriminating material or evidence had been found during the
course of search so as to doubt the purchases. Hence, the addition in
the case is deleted and the ground raised by the assessee in the appeal
is allowed.
(Please click here for judgment)
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