Income Tax Dept warns public against cash dealings of Rs 2 lakh or more saying that the receiver of the amount will have to cough up an equal amount as penalty.

Interest received on enhanced compensation on acquisition of agricultural land entitled to exemption

Where assessee's agricultural land was acquired by Government, enhanced compensation including interest received would be eligible for exemption

[2019] 104 taxmann.com 99 (Delhi - Trib.)

IN THE ITAT DELHI BENCH 'G'

Baldev Singh

v.

Income-tax Officer, Ward-2, Karnal*
PRASHANT MAHARISHI, ACCOUNTANT MEMBER
AND K. NARASIMHA CHARY, JUDICIAL MEMBER

IT APPEAL NO. 2970 (DELHI) OF 2015
[ASSESSMENT YEAR 2011-12]

MARCH 8, 2019

Section 10(37), read with section 45, of the Income-tax Act, 1961 and section 28 of the Land Acquisition Act, 1894 - Capital gains on compulsory acquisition of agricultural land (Interest on compensation) - Assessment year 2011-12 - Assessee was an agriculturist and inherited land from his parents - Said land was acquired by Government and assessee received enhanced compensation including interest - Whether section 10(37) exempts capital gains arising from transfer of agricultural land - Held, yes - Whether, therefore, TDS amount that was deducted on account of enhanced compensation was to be refunded - Held, yes [Para 9] [In favour of assessee]


FACTS
■ Agricultural land was acquired by the Government and the assessee received enhanced compensation of Rs. 4.69 crore which included principal amount of Rs. 2.70 crore and interest of Rs. 1.99 crore. TDS was deducted on these payments.
■ In respect of enhanced compensation and interest thereon, the assessee claimed exemption under section 10(37). He accordingly, claimed refund of TDS of Rs. 33.84 lakh in return of income.
■ The Assessing Officer, basing on section 56(2), held that such interest would be subject to deduction of 50 per cent under section 57(iv). He, accordingly, taxed 50 per cent of interest received.
■ On appeal before the Commissioner (Appeals), the assessee contended that the interest received by the assessee under section 28 of Land Acquisition Act was part of compensation and thus, entitled to exemption under section 10(37). However, the Commissioner (Appeals), confirmed the addition made by the Assessing Officer.
■ On the assessee's appeal before the Tribunal:


HELD
■ In the case of CIT v. Ghanshyam Dass [2009] 315 ITR 1/182 Taxman 363, the Supreme Court held in unequivocal terms that the additional amount under section 23(1A), solatium under section 23(2) and interest on excess compensation under section 28 of the Land Acquisition Act forms a part of enhanced compensation under section 45(5)(b) and, therefore, is subject to tax under section 45(5) in the year of receipt. No contrary view is taken by the Supreme Court in the subsequent judgments and as on the date, law is fairly settled that the amount of interest received under section 28 of the Land Acquisition Act is in the nature of capital gain. In the case of Union of India v. Hari Singh [2018] 91 taxmann.com 20/254 Taxman 126 (SC) while dealing with the similar question under identical set of facts, while setting aside the matter to the file of the Assessing Officer to examine the facts of the case and to apply the law as contained in the Income-tax Act, Supreme Court specifically directed that in case the Assessing Officer finds that the compensation was received in respect of the agricultural land, the tax deposited with the Income-tax Department shall be refunded to the assessee.
■ There is no doubt as to the nature of amount by way of interest under section 28 of the Land Acquisition Act in the hands of the assessee or the applicability of the Income-tax Act to such amount. Though the Supreme Court specifically directed in the case of Hari Singh (supra) that the Assessing Officer shall examine the facts of the case and then apply the law as contained in the Income-tax Act, the Commissioner (Appeals) has not stated that such an amount shall be brought to tax under section 45(5) without applying the provisions under 10(37), which exempts such receipts from being taxed. It could be noted that section 45(5) makes no reference to the nature of property that is acquired but it deals with the category of cases which falls in the description of 'capital assets'. However, section 10(37) exempts specifically an income chargeable under the head 'capital gains' arising from the transfer of agricultural land. It is, therefore, clear that the Supreme Court directed the Assessing Officer in the case of Hari Singh (supra) that after examining the facts, the provisions contained in the Income-tax Act are to be applied with a specific reference to the agricultural land; in case if it is found that the compensation was received in respect of the agricultural land, the tax deposited with the Income-tax Department shall be refunded to these depositors. [Para 9]
■ Therefore, the Assessing Officer is to be directed to refund the TDS amount that was deducted on account of the enhanced compensation. [Para 10]


CASE REVIEW
CIT v. Ghanshyam Dass (HUF) [2009] 315 ITR 1/182 Taxman 363 SC (para 10) and Union of India v. Hari Singh [2018] 91 taxmann.com 20/254 Taxman 126 (SC) (para 10) followed.


CASES REFERRED TO
CIT v. Ghanshyam Dass (HUF) [2009] 315 ITR 1/182 Taxman 363 (SC) (para 4), CIT v. Gobind Bhai Mamaiya [2014] 367 ITR 498/[2015] 229 Taxman 138/[2014] 52 taxmann.com 270 (SC) (para 4), Union of India v. Hari Singh [2018] 91 taxmann.com 20/254 Taxman 126 (SC) (para 6), CIT v. Chet Ram (HUF) [2018] 400 ITR 23/[2017] 251 Taxman 4/86 taxmann.com 103 (SC) (para 7) and Smt. Premlata Purshottam Paldiwal v. CIT [2017] 84 taxmann.com 317 (Bom.) (para 7).

Gurjeet Singh, CA for the Appellant. S.S. Rana, CIT DR for the Respondent.


ORDER

K. Narasimha Chary, Judicial Member. - The present appeal filed by the assessee is directed against the order dated 25.3.2015 in Appeal No.IT/89/KNL/CIT(A)/KNL/2013-14 passed by the Learned Commissioner of Income-tax(Appeals), Rohtak {"CIT(A)"} in relation to Assessment Year 2011-12.

2. Brief facts of the case are that the assessee is an agriculturist and inherited land from his parents as an agricultural property. Such land was acquired by the Government and the assessee had received enhanced compensation of Rs.4,69,20,146/- including interest thereon and claimed exemption u/s 10(37) of the Income-tax Act, 1961 ("the Act") and claimed refund of Rs.33,84,464/- in the return of income. Learned AO found that as per Form D issued by the Land Acquisition Officer, Panchkula, the assessee had received enhanced compensation of Rs.4,69,20,146/- which includes principal amount of Rs.2,70,33,074/- and interest amount of Rs.1,98,85,972/- from the LAO, Panchkula, during the year and on the enhanced compensation received, TDS amounting to Rs.93,84,030/- was deducted out of which amount of Rs.74,45,433/- was refunded to the assessee and credited in his account on 1.7.2011.

3. Learned AO passed order u/s 143(3) of the Act, basing on the amendment of sub section (2) of Section 56 and consequent amendment under clause (b) of Section 145A and simultaneous amendment u/s 57(iv) of the Act by the Finance (No.2) Act, 2009 w.e.f. 1.4.2010 applicable relevant to the AY 2010-11, according to which the interest received by the assessee on compensation or enhanced compensation amount is taken to be an income in which year it has been received, irrespective of the method of accounting followed by the assessee subject to deduction 50% u/s 57(iv) of the Act of such interest income referred to in clause (viii) of sub section (2) of Section 56 of the Act. He accordingly taxed 50% of interest received, which worked out at Rs.99,42,986/- He added such amount back to the income of the assessee.

4. Assessee challenged the said addition before the learned CIT(A) stating that the interest received by the assessee u/s 28 of the Land Acquisition Act is part of compensation and is exempt u/s 10(37) of the Act in view of the judgment of the Hon'ble Apex Court in the case of CIT v. Ghanshyam Dass (HUF) [2009] 315 ITR 1/182 Taxman 368 (SC) followed by the Hon'ble Apex Court in the case of CIT v. Gobind Bhai Mamaiya [2014] 367 ITR 498/[2015] 229 Taxman 138/[2014] 52 taxmann.com 270 (SC). The assessee, therefore, contended that the ld. AO treated the interest on enhanced compensation as interest income and has taxed it as interest income received u/s 57(iv) of the Act read with Section 145A of the Act whereas the interest on enhanced compensation has been held by the Hon'ble Apex court as part of the compensation and is not interest income as has been treated by the AO. Assessee, therefore, prayed before the learned CIT(A) that the levy of tax on the interest received u/s 28 of the Land Acquisition Act is illegal and has to be deleted.

5. Learned CIT(A) clearly found that this is a case of receipt of interest on enhanced compensation u/s 28 of the Land Acquisition Act. However, learned CIT(A) held that the decision of the Hon'ble Supreme Court in the case of Gobind Bhai Mamaiya (supra) vide para 8 holds that the interest earned u/s 28 of the Land Acquisition Act is on enhanced compensation and be treated as an accretion to the value and part of the compensation making it eligible to tax. On this premise, learned CIT(A) held that inasmuch as the said judgment did not deal with the exemption u/s 10(37) of the Act, and, therefore, is not applicable to the facts of the case. He accordingly dismissed the appeal and confirmed the addition.

6. Assessee is, therefore, before us stating that the judgment of the Hon'ble Apex Court in the case of Ghanshyam Dass(supra) and Gobind Bhai Mamaiya (Supra) and also in the case of Union of India v. Hari Singh [2018] 91 taxmann.com 20/254 Taxman 126 (SC) classify the receipt of interest u/s 28 of the Act as capital receipt to be dealt with under the provisions of Section 45(5) of the Act and the consequences under the Act shall follow thereafter; that merely because the Hon'ble Apex Court had stated that the compensation and the enhancement of the compensation has to be dealt with u/s 45(5) of the Act, does not take away the effect of provisions of Section 10(37) of the Act; and that, therefore, it is just and proper to look into the provisions involved in this matter in a holistic way but the decision of the Hon'ble Apex court shall not be read to have denied the assessee the benefit u/s 10(37) of the Act.

7. Per contra, it is the submission of the learned DR that in CIT v. Chet Ram (HUF) [2018] 400 ITR 23/[2017] 251 Taxman 4/86 taxmann.com 103 (SC), Govindbhai Mamaiya (supra) and Smt. Premlata Purshottam Paldiwal v. CIT [2017] 84 taxmann.com 317 (Bom.), the it was held that interest has to be taxed in the year of receipt and not to be spread over the years on actual basis and the enhanced compensation with interest thereon received under the interim order passed by the High Court in pending appeals relating to the land acquisition has to be assessed for tax not in the year in which the said amount had been received. Learned DR further submitted in the case of Ghanshyam Dass (supra) the Hon'ble Apex Court held that even in cases where appeal is pending, the forum permits claimant to withdraw against security or otherwise, enhanced compensation, which is in dispute, the same is liable to be taxed u/s 45(5) in the year of receipt. Basing on this, he argued that the matter is squarely covered by the above decision in favour of the revenue and in all the matters, the Hon'ble Supreme Court stated that the interest on the enhanced compensation is also liable to be taxed u/s 45(5) of the Act in the year of receipt and nowhere the Hon'ble Supreme Court had dealt with the exemption u/s 37 [sic. 10(37)] of the Act and, therefore, there is no strength in the contention put forth by the assessee and the appeal is liable to be dismissed.

8. We have gone through the orders of the authorities below in the light of the arguments on either side and the decisions of the Hon'ble Apex Court cited above. In the case of Ghanshyam Dass (supra), the Hon'ble Supreme Court held in unequivocal terms that the additional amount u/s 23(1A), solatium under section 23(2) and interest on excess compensation u/s 28 of the Land Acquisition Act form part of enhanced compensation u/s 45(5)(b) and, therefore, is subject to tax u/s 45(5) in the year of receipt. No contrary view is taken by the Supreme Court in the subsequent judgments and as on the date, law is fairly settled that the amount of interest received u/s 28 of the land Acquisition Act is in the nature of capital gain. In the case of Hari Singh (supra) while dealing with the similar question under identical set of facts while setting aside the matter to the file of the AO to examine the facts of the case and to apply the law as contained in the Income-tax Act, Hon'ble Supreme Court specifically directs that in case the learned AO finds that the compensation was received in respect of the agricultural land, the tax deposited with the Income-tax Department shall be refunded to the assessee. Hon'bleSupreme Court gave the above direction after noticing the decision in the case of Ghanshyam Dass (supra).

9. In this set of circumstances, it does not admit of any doubt as to the nature of amount by way of interest u/s 28 of the Land Acquisition Act in the hands of the assessee or the applicability of the Income-tax Act to sch amount. When the Hon'ble Supreme Court specifically directs in the case of Hari Singh (supra), the learned AO shall examine the facts of the case and then apply the law as contained, CIT(A) has not stated that such an amount shall be brought to tax u/s 45(5) without applying the provisions under 10(37) of the Act, which exempts such receipts from being taxed. It could be noted that Section 45(5) makes no reference to the nature of property that is acquired but it deals with the category of cases which falls in the description of "capital assets". However, Section 10(37) exempts specifically an income chargeable under the head "capital gains" arising from the transfer of agricultural land. It is, therefore, clear that once the Hon'ble Supreme court directed the AO in the case of Hari Singh (supra) that after examining the facts to apply the provisions contained in the Income-tax Act with a specific reference to the agricultural land stating that in case if it is found that the compensation was received in respect of the agricultural land, the tax deposited with the Income-tax Department shall be refunded to these depositors.

10. We, therefore, do not have any doubt in our mind as to the law in this aspect and while respectfully following the ratio laid down by the Hon'ble Supreme Court in the case of Ghanshyam Dass (supra) and Hari Singh (supra) above, direct the ld. AO to refund the TDS amount that was deducted on account of the enhanced compensation. With these directions, we allow the appeal of the assessee.

11. In the result, the appeal of the assessee is allowed.

Refer:[2019] 104 taxmann.com 99 (Delhi - Trib.)

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Bombay High Court imposes Fine on Tax Official for Unnecessary Harassment of Assessee

The Bombay High Court has recently imposed a fine of Rs. 50,000 on an officer of the Income Tax Department for passing an order to harass the assessee.

The Assessing Officer issued a provisional attachment order ordering to attach the Petitioner’s Bank Account. It was explained that this is to protect the interest of the Revenue for the likely demand to be raised for the Assessment Year 2016- 17.

The Assessing Officer issued notices to the Petitioner’s Bankers requesting to make payment of the amounts available with it to the Income Tax Department to meet the Petitioner’s dues.

The petitioner said that the attachment order should be withdrawn as the impugned notices under Section 226(3) of the Act make reference to an attachment under Section 281B of the Act by an order dated 18th December 2018, but the same had not been received by it.

The bench comprising Justice Akil Kureshi and Justice M S Sanklecha noted the fact that the letter/intimation given by the Assessing Officer is dated 11th February 2019 and was received by the petitioner only on 13th February 2019 at 6.00 p.m. i.e. after the hearing was concluded before the Pr. CIT.

“This conduct is not expected of the Officers of the State. It is unbecoming of the State. It appears the manner in which the Assessing Officer is communicating with the assessee, it is planned attempt to make it impossible for the petitioner to challenge the communication as by the time the petitioner comes to know of the proposed action on receipt of the communication, the action has already taken place making it a fait accompli,” the bench said.

before concluding, the bench added that “We pride ourselves as a State which believes in rule of law. Therefore, the least that is expected of the Officers of the State is to apply the law equally to all and not be overzealous in seeking to collect the revenue ignoring the statutory provisions as well as the binding decisions of this Court. The action of respondent nos.1 and 2 as adverted to in para 14 hereinabove clearly indicates that a separate set of rules was being applied by them in the case of the petitioner. Equal protection of the law which means the equal application of the law has been sacrificed in this case by the Revenue. It appears that the petitioner is being singled out for this unfair treatment. The desire to collect more revenue cannot be at the expense of the Rule of law. In the above view, we direct the Respondent-Revenue to pay the cost of Rs.50,000/- to the Petitioner for the unnecessary harassment, it had to undergo at the hands of the Revenue. This amount is to be paid by the Respondent-Revenue to the Petitioner within four weeks from today.”

Read more at: https://www.taxscan.in/bombay-high-court-imposes-fine-on-tax-official-for-unnecessary-harassment-of-assessee/35272/
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Companies get time till June 15 to submit ACTIVE form - MCA

The government has extended the deadline for uploading photos of business premises to June 15, giving corporates more time to comply with a provision aimed at spotting shell companies.

“It has been decided to extend the date to June 15,” confirmed a corporate affairs ministry official.

The disclosure norms, which came into effect from February, make it mandatory for registered companies to upload pictures of their business premises and at least one director. The last date for compliance was Thursday, April 25. ET had reported on Wednesday that the MCA was looking to extend the deadline.

The move came after the ministry received representations from industry associations with many companies yet to comply.

Startups have, in particular, pointed out that many of them operate out of homes or shared premises or office suites.

The government had launched a crackdown on shell companies as part of the anti-black money drive and these norms were follow-up measures to establish existence of registered entities. Names of thousands of shell companies were struck off as part of this drive.

The new norm requires companies to upload a photograph of the external facade of their registered office with a board displaying the company name, corporate identity number, address of the entity, email and phone number. The entity also has to upload a photo of the office interior showing at least one director who will also sign the form.

This new electronic form INC 22A, which is also known as e-Form ACTIVE (Active Company Tagging Identities and Verification), was notified as part of the Companies (Incorporation) Amendment Rules, 2019 in February. If the form is filed within the due date, there is no fee, while late filing will attract a fine of Rs 10,000.

A non-compliant company would not be able to amend its capital structure or carry out any merger or amalgamation. #casansaar (Source - PTI, Economic times)
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ICAI enumerates Changes in CA Exam from May 2019

The Institute of Chartered Accountants of India ( ICAI ) has enumerated the changes in the exam pattern applicable from coming May 2019 exams.

The question papers in respect of the respective papers for old and new syllabus will have two parts, Part I comprising MCQs to the tune of 30 marks ( each carrying 1 to 2 marks) and Part II comprising descriptive type questions to the tune of 70 marks.

The Candidates will be required to write their answers in respect of Part I of the paper (i.e. MCQs) in OMR answer sheet by darkening the appropriate circles with HB pencil and Part II of the paper ( i.e. the descriptive type questions) in the descriptive type answer book in the normal course.

It emphasized that late entry in the exam hall will be permitted upto 2.15 PM (IST), i.e. upto half an hour from the time question papers are distributed. This will be applicable to all the papers including the composite papers mentioned above.

Exam will conclude at 5.00 PM(IST). No student will be allowed to leave the exam hall before 5.00 PM(IST) even if he has completed the paper. Candidates are required to remain in their seat even if they had completed the paper. This will be applicable to all the papers including the composite papers.

A candidate will be required to submit a) OMR answer sheet b) Answer book used for answering the descriptive answers ( relating to Part II) and c) MCQ booklet to the invigilator before leaving the exam hall, after the conclusion of the exam. Non submission of the MCQ booklet to the invigilator after the conclusion of the exam, will be deemed to be an act of unfair means and will be dealt with accordingly.

Further, the candidates should not staple or tag the OMR answer sheet with the descriptive type answer book. Further, they are advised not to keep the OMR answer sheet inside the MCQ booklet while submitting the same. MCQ booklet, OMR answer sheet and the descriptive type answer book are to be submitted to the invigilator separately.

Read more at: https://www.taxscan.in/icai-changes-ca-exam-may-2019/35278/
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Non-Filers of GST returns cannot generate E-Way Bill from 21st June: CBIC

The Central Board of Indirect Taxes and Customs (CBIC) has notified that the persons who failed to file the GST returns properly will not be able to generate the E-way Bills from 21st June 2019.

The notification issued by the Board last day clarified that the restrictions imposed by Rule 138E i.e. restriction on furnishing of information in PART A of FORM GST EWB-01 as inserted vide notification 74/2018-CTR have been made effective w.e.f. 21.06.2019.

As per the said Rule, no E-way bills facility shall be available for a registered person who has not furnished his GST returns for the last two tax periods. The Jurisdictional Commissioner may allow or reject the E-way bill filing facility upon request of such registered person. However, in case any contradictory decision is provided by the Commissioner of State tax / Union territory tax, then such decision shall supersede the decision of Jurisdictional Commissioner.

Under the GST regime, persons having a turnover of Rupees Forty lakhs should be registered with the tax department and file returns regularly under the statute.

The new tax regime also introduced a mechanism where the consignment of goods valuing more than rupees fifty thousand would not be possible without a valid E-Way Bill.

Read more at: https://www.taxscan.in/gst-returns-e-way-bill-june-cbic/35253/
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HC set-aside CBDT’s Central Action Plan encouraging CIT(A) to pass revenue favoring orders

Any directives by CBDT which gives additional incentive for an order that Commissioner (Appeals) may pass having regard to its implication, necessarily transgresses in Commissioner's exercise of discretionary quasijudicial powers. Interference or controlling of discretion of a statutory authority in exercise of powers from an outside agency or source, may even be superior authority, is wholly impermissible
• In terms of the provisions contained in sub-section (1) of section 119 , the Board may from time to time issue such orders, instructions and directions to other income tax authorities as it may deem fit, for proper administration of the Act and such authorities shall observe and follow the orders, instructions and directions of the board. While granting such wide powers to the CBDT under sub-section (1) of section 119 , the proviso thereto provides that no such orders, instructions or directions shall be issued, so as to require any income tax authority to make a particular assessment or to dispose of a particular case in a particular manner.

• When the CBDT guidelines provide greater weightage for disposal of an Appeal by the Appellate Commissioner in a particular manner, this proviso of subsection (1) of section 119, would surely be breached.

• Thus, portion of Central Action Plan prepared by CBDT which gives higher weightage for disposal of appeals by quality orders i.e where order passed by Commissioner(Appeals) is in favour of revenue was to be set aside.
Refer:[2019] 104 taxmann.com 397 (Bombay)
HIGH COURT OF BOMBAY
Chamber of Tax Consultants
v.
Central Board of Direct Taxes
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IT department planning a Surgical Strike on cash transactions

Failing to meet direct tax collections target, the Income Tax (I-T) Department has started surgical strikes against cash transactions.

The assessing officers have been directed to penalise those using cash while buying properties, luxury items like jewellery and cars or while paying bills at hospitals.

According to a senior official, the I-T Dept missed the tax collection target of Rs 12 lakh crore.

"We have been directed to focus on new areas from the beginning of the new financial year," said the official.

"We have found about 27,000 cases of cash transactions in the purchase of properties where I-T laws were violated. We need to recover about Rs 5,500 crore soon," he said.

As per the law of the Central Board of Direct Taxes (CBDT) effective from June 1, 2015, any transaction in real estate, including agricultural land is required to be made through account payee cheque or the real time gross settlement (RTGS) or electronic funds transfer if the amount is Rs 20,000 or above.

If a transaction is done in cash, then the penalty of an amount equal under Section 271 D of the Income Tax Act is imposed on the seller.

More than 1,100 such cases of cash transaction of more than Rs 2 lakh were recorded last financial year.

According to Section 269ST of the Income Tax Act, no person can receive Rs 2 lakh or more from another person in one day.

Income tax authorities imposed penalties of about Rs 45 crore in such transactions along with another Rs 45 crore on top hospitals and luxury brand showrooms for violations.

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The Supreme Court held that the High Court failed to notice proviso (a) to section 560(5) of the Companies Act and further failed to notice Chapter XV of the Income-tax Act which dealt with 'liability in special cases' and its clause (L) which dealt with 'discontinuance of business or dissolution'.

These provisions provide as to how and in what manner the liability against such Company arising under the Companies Act and under the Income-tax Act is required to be dealt with. Since the High Court did not decide the appeal keeping in view the aforementioned two relevant provisions, the impugned order who not legally sustainable and had to be set aside.

Therefore, impugned order was set aside and case was remanded to the High Court for deciding the appeal afresh on merits in accordance with law keeping in view the relevant provisions of the Companies Act and the Income-tax Act uninfluenced by any observations made by instant Court on merits.
Refer:CIT v. Gopal Shri Scrips (P.) Ltd. - [2019] 104 taxmann.com 192 (SC)
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S. 148 Reopening: As per settled law, notice for reopening of assessment against a dead person is invalid. The fact that the AO was not informed of the death before issue of notice is irrelevant. Consequently, the s. 148 notice is set aside and order of assessment stands annulled (Alamelu Veerappan 257 TM 72 (Mad) followed)

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION

WRIT PETITION NO.404 OF 2019

Rupa Shyamsundar Dhumatkar …. Petitioner
versus
Asst. Commissioner of Income Tax & Ors. … Respondents
Refer:http://itatonline.org/archives/rupa-shyamsundar-dhumatkar-vs-acit-bombay-high-court-s-148-reopening-as-per-settled-law-notice-for-reopening-of-assessment-against-a-dead-person-is-invalid-the-fact-that-the-ao-was-not-informed-of/
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Sec. 43B won't apply if service tax claimed as an expense wasn't paid by assessee due to non-receipt from customer

Section 43B of the Income-tax Act, 1961 - Business disallowance - Certain deduction to be allowed only on actual payment (Service tax) - Assessment year 2006-07 - Assessee provided detection and security services to its clients - Assessee did not receive any amount from its clients, on which service tax was payable - Assessee claimed unpaid service tax as its liability - Assessing Officer was of a view that by virtue of section 43B, service tax could be allowed only when paid, thus, amount was not liable for deduction - High Court by impugned order held that since services were rendered, liability to pay service tax in respect of consideration would arise only upon assessee receiving funds and not otherwise, thus, liability claimed by assessee could not be disallowed under section 43B - Whether Special Leave petition filed against impugned order was to be dismissed - Held, yes [Para 10] [In favour of assessee]

CASE REVIEW
Pr. CIT v. Tops Security Ltd. [2018] 97 taxmann.com 525/258 Taxman 161 (Bom.) [SLP dismissed].
A.N.S. Nadkarni, ASG, Devashish Bharuka, Adv. and Mrs. Anil Katiyar, AOR for the Petitioner.

ORDER

1. Delay condoned.

2. The Special Leave Petition is dismissed.

Refer:[2019] 104 taxmann.com 168 (SC)

SUPREME COURT OF INDIA
Principal Commissioner of Income-tax 11
v.
Tops Security Ltd.
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