1.  CIT vs Smt. Sita Devi Juneja: Punjab & Haryana High Court:

After hearing learned counsel for the appellant and going through the impugned order, we do not find any merit in the instant appeal. It is the conceded position that in the assessee's balance sheet, the aforesaid liabilities have been shown, which are payable to the sundry creditors. Such liabilities, shown in the balance sheet, indicate the acknowledgment of the debts payable by the assessee. Merely because such liability is outstanding for the last six years, it cannot be presumed that the said liabilities have ceased to exist. It is also conceded position that there is no bilateral act of the assessee and the creditors, which indicates that the said liabilities have ceased to exist. In absence of any bilateral act, the said liabilities could not have been treated to have ceased. In view of these facts, the CIT (A) as well as the ITAT have rightly come to the conclusion that the Assessing Officer has wrongly invoked the Explanation-I of Section 41 (1) of the Act and made the aforesaid addition on the basis of presumption, conjectures and surmises.

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2.  CIT vs M/s G.P.International Ltd-P & H HC:

In view of these facts, in our opinion, the ITAT has rightly come to the conclusion that the aforesaid liability of the assessee cannot be said to have ceased to exist and the provision of Section 41 (1) and explanation to this provision are not applicable, because the assessee is still showing it as a liability in its books and has not written off the same…In our opinion, the CIT (A) as well as the ITAT have rightly deleted the aforesaid addition, because in the instant case, the Assessing Officer is not doubting the identity of the persons from whom the assessee has shown receipt of application money. Merely because some of the persons did not respond to the notice issued by the Assessing Officer under Section 133 (6) of the Act, it cannot be taken that the said transaction was ingenuine. It has been held by the Hon'ble Supreme Court in Commissioner of Income Tax v. Lovely Exports (P) Ltd. (2008) 216 CTR 195 (SC) that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the Assessing Officer, then the department is free to proceed to re-open their individual assessments in accordance with law. But the said amount cannot be taken as unexplained income in the hands of the assessee.

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3.  Ashima Ispat Pvt. Ltd vs DCIT- Gujarat High Court:

Reopening: Section 148: “The moot question, which is to be decided by the Court is as to whether at the time of framing the assessment, whether the assessing officer has applied his mind to this aspect. Admittedly, the assessment is framed under Section 143(1) of the Act. There is nothing to indicate that he has taken into consideration as to whether any cash purchases were made by the petitioner. In the reasons recorded, it is specifically observed that the purchases were made from the various parties. Even if no purchases have been made from these two parties, it is to be inquired and investigated as to whether purchases are made from other parties and whether those purchases are made in cash or by cheque. Even, so far as these two parties are concerned, it is only when survey was carried out and bogus purchases were detected, the explanation have come forward that they have not made any purchase from these parties and only bogus bills were raised. However, subsequently, the amount was received back. This shows the conduct of the petitioner, and when such conduct is found on the face of the record, the Court is reluctant to exercise its extraordinary equitable writ jurisdiction under Article 226 of the Constitution of India.. The Court is therefore of the view that there is no dispute about the fact that Mr. Katiyar while issuing the notice has indicated his satisfaction and since he was in agreement with the satisfaction recorded by Shri S.K.Suthar, and after obtaining the permission from the Commissioner of Income Tax, he has issued the notice. Hence, there is no infirmity in the issuance of the reopening notice by Mr. Katiyar. Even otherwise, there is no evidence before us which even remotely suggests that Mr. Katiyar, before issuing notice, has not recorded his satisfaction. These petitions are merely based on apprehensions. Notice of reopening of assessment cannot be challenged merely on apprehension..”

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4.  Madras High Court Corporate Tax Issues etc:

CIT vs M/s SPIC Ltd.-  Held expenses related to obtaining fixed deposits from the public is a revenue expenditure liable for deduction; depreciation should be allowed on standby spare parts  even though they were not taken for use during the year etc.

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5.  CIT vs Shri S. Chand & Co. Ltd.-Delhi High Court on Characterization of loss vis a vis CAP GAINS & BUSINESS HEADS: UPHELD ITAT ORDER AS TO:

“The business of the respondent-company concededly is that of   publishing. In the assessment year in question, the Assessing Officer observed that the Assessee had shown a long term capital loss of Rs.7,39,623/- from dealing in shares. This was not allowed to be set off against the long term capital gain on the ground that it was speculative loss. The Tribunal has arrived at a finding that the Assessee was not in the business of shares at all. It was a solitary transaction of sale of shares in which the Assessee suffered loss. The Tribunal also noted that the Assessee had filed a return   of Income of over Rs.12 Crores nd entire income was from publishing business. Another fact established on record is that as on 31.03.2000, the total investment declared by the Assessee is worth Rs.5.52 crores. From this ITAT observed that the Assessee was holding the shares by way of investment…”

(Click here for judgment)  

 

6.  Clarification regarding deduction in respect of contribution to pension scheme under section 80CCD of the Income-tax Act, 1961:

Where the Central Government or any other employer makes any contribution to the account of employee for the pension scheme, the assessee shall also be allowed a deduction in the computation of his total income of the whole of the amount contributed by the Central Govt. or any other employer as does not exceed 10% of his salary in the previous year. Circular F.NO. 275/192/2009-IT (B), dated 9-2-2010

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CA. Sanjay Kumar Agarwal, Founder - Voice of CA

Member - Central  Council  ICAI  (Former Chairman - NIRC)

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