Recent important tax caselaws / judgements

SECTION 2(15)

CHARITABLE OR RELIGIOUS PURPOSE

Land dealings : Where assessee-trust was carrying out following activities: purchase of land at nominal cost, then level and clear it, cut into plots and sell of plots at much higher prices, and charging of fees and fines, activities of assessee were not charitable in nature within meaning of proviso to section 2(15) - Improvement Trust v. Commissioner of Income-tax (2014) 41 taxmann.com 403 (Amritsar - Trib.)     SECTION 10(23C) CHARITABLE/RELIGIOUS INSTITUTIONS University not tax-exempt under Art 289(1) of the Constitution as 'State' in Art 289 doesn't include University - Visvesvaraya Technological University v. Assistant Commissioner of Income-tax (2014) 42 taxmann.com 237 (Karnataka)       SECTION 45 CAPITAL GAINS - CHARGEABLE AS Business income v. Capital gains - Share dealings : Where assessee-corporation along with private entrepreneurs made investment in shares of companies which were formed with object of promoting agro/horticulture based industry in State, income arising from subsequent sale of those shares was to be taxed as 'capital gain' and not as a 'business income' - Commissioner of Income-tax v. Punjab Agro Industries Corporation Ltd. (2014) 41 taxmann.com 328 (Punjab & Haryana)       SECTION 268A FILING AN APPEAL BY INCOME-TAX AUTHORITY Monetary limit : Appeal cannot be dismissed without considering merits of case, solely on ground of low tax effect, where notional tax effect exceeds monetary limit prescribed by Board - Commissioner of Income-tax v. Anjani Fabrics Ltd (2014) 41 taxmann.com 361 (Gujarat)    Source : Taxmann

Important Latest tax caselaws / judgements

SECTION 2(15)

CHARITABLE PURPOSE

Income from running hostel/guest house : Where assessee, a charitable trust, running orphanages, old age homes, centres for rehabilitation of mentally ill women etc., earned business income from running a women's hostel and guest house, said activity being in nature of 'carrying on an object of general public utility' was hit by proviso to section 2(15) - Young Women's Christian Association of Madras v. Joint Director of Income-tax (OSD)(Exemption) - II, Chennai (2014) 41 taxmann.com 142 (Chennai - Trib.)      SECTION 10(38) CAPITAL GAINS - EXEMPTION OF, ON TRANSFER OF SECURITIES Genuineness of transactions : Where assessee having purchased shares in physical form, converted them in D-Mat form and thereupon sale of those shares was carried out through recognized stock exchange after paying securities transaction tax, said transactions were to be regarded as genuine in nature and, therefore, assessee's claim for exemption under section 10(38) was to be allowed - Income-tax Officer v. Smt. Aarti Mittal (2014) 41 taxmann.com 118 (Hyderabad - Trib.)       SECTION 37(1) BUSINESS EXPENDITURE - ALLOWABILITY OF Sample distribution expenses : Free sample distribution expenses were allowable under section 37(1) even though there was no effective sale during year - Commissioner of Income-tax-II, Chandigarh v. Bazaar Decor (India) (P.) Ltd. (2014) 41 taxmann.com 236 (Punjab & Haryana) Commission : Disallowance upheld where expenditure on account of commission was found to be much higher as compared to earlier years and assessee could not justify its claim with relevant material - Krishna R. Bhat v. Assistant Commissioner of Income-tax (2014) 41 taxmann.com 74 (Mumbai - Trib.)       SECTION 68 CASH CREDITS Advance received for sale of property : Where due to cancellation of sale agreement of property, assessee returned amount of advance and in support of same he furnished copy of sale agreement, copy of cancellation of agreement, copy of PAN of intending purchaser and copy of acknowledgement of return of income of proposed purchaser, amount so returned could not be added to assessee's taxable income under section 68 - Commissioner of Income-tax v. Hitesh Somani (2014) 41 taxmann.com 152 (Gujarat)       SECTION 149 INCOME ESCAPING ASSESSMENT - TIME-LIMIT FOR ISSUANCE OF NOTICE Escaped income in excess of Rs. one lakh : Where it was apparent from records that escaped assessment was more than Rs. One lakh and notice under section 148 had been issued within a period of six years from end of relevant assessment years, in view of provisions of clause (b) of section 149(1), notice so issued could not be quashed on ground of limitation - Manglik Enterprises v. Income-tax Officer (2014) 41 taxmann.com 145 (Allahabad)       SECTION 271AAA PENALTY - WHERE SEARCH HAS BEEN INITIATED Conditions precedent : No penalty under section 271AAA where taxes and applicable interest were paid on undisclosed income and details of nature of undisclosed income and manner of earning was recorded - Commissioner of Income-tax v. Sudhir jain (2014) 41 taxmann.com 234 (Delhi)       SERVICE TAX SECTION 65(92) SCIENTIFIC OR TECHNICAL CONSULTANCY SERVICES Transfer of invention, design, idea, process, patent and other technical know-how in terms of sale and purchase agreement as a going concern is not liable to service tax under Scientific or Technical Consultancy Services or Intellectual Property Services - Gharda Chemicals Ltd. v. Commissioner of Central Excise & Service Tax, Surat (2014) 41 taxmann.com 347 (Ahmedabad - CESTAT)

Source : Taxmann