Recent important income tax caselaws / judgements

SECTION 14A

EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME

Dividend : Provisions of section 14A would apply to a case even where tax free dividend income is earned on shares held as stock-in-trade - Deputy Commissioner of Income-tax, Circle -3(1) v. Damani Estates & Finance (P.) Ltd. (2014) 41 taxmann.com 462 (Mumbai - Trib.)     SECTION 28(i) BUSINESS LOSS/DEDUCTION - ALLOWABLE AS Bad debts : Deposits/advances given in connection with business could not be allowed as bad debt but had to be considered as business loss - Smita Conductors Ltd. v. Deputy Commissioner of Income-tax, Range -3(3), Mumbai (2014) 41 taxmann.com 514 (Mumbai - Trib.)       SECTION 68 CASH CREDIT Creditworthiness and genuineness of transaction : Identity, creditworthiness and genuineness of transaction is not established merely by filing bank account details - Gayathri Associates v. Income-tax Officer, Hyderabad (2014) 41 taxmann.com 526 (Andhra Pradesh) Shares : Where Tribunal recorded a finding that Assessing Officer had treated short-term capital gain declared by assessee from sale of shares as unexplained cash credit merely on basis of doubts and suspicion, said finding being a finding of fact, no substantial question of law arose there from - Commissioner of Income-tax v. Jitendra Dalpatbhai Shah (2014) 41 taxmann.com 523 (Gujarat) Gift : Where Assessing Officer allowed assessee's claim of gift without examining creditworthiness of donor and without considering fact that there was no relationship between assessee and donor and, therefore, there did not exist any occasion for giving a gift, impugned order passed by Assessing Officer was erroneous and same was rightly set aside by Commissioner in exercise of his revisional power - Govind Prasad Agarwal v. Commissioner of Income-tax, Aligarh (2014) 41 taxmann.com 521 (Allahabad)       SECTION 254 APPELLATE TRIBUNAL - POWERS OF Power to grant stay : Where high tax demand was raised on assessee but assessee appeared to have a good prima facie case, demand be stayed - Vodafone India Services (P.) Ltd. v. Assistant Commissioner of Income-tax, Circle -3(3) (2014) 41 taxmann.com 554 (Mumbai - Trib.)   Source : Taxmann

Recent important tax caselaws / judgements

SECTION 36(1)(vii)

BAD DEBTS

Conditions precedent : Deduction on account of bad debts was allowable to assessee since debts were outstanding since long and assessee wrote off same as irrecoverable in its books - Radhu Palace v. Additional Commissioner of Income-tax (2014) 41 taxmann.com 281 (Delhi - Trib.)     SECTION 37(1) BUSINESS EXPENDITURE - ALLOWABILITY OF Bad debt : Where trade advances becoming unrealizable, provision was made and profit was loss account was debited in earlier year, same was to be allowed when written of in subsequent year - Commissioner of Income-tax v. Indian Explosives Ltd. (2014) 41 taxmann.com 264 (Calcutta) SECTION 41(1) REMISSION OR CESSATION OF TRADING LIABILITY Time-barred liabilities : Where assessee had outstanding creditors for goods and Assessing Officer made addition in income of assessee under section 41(1) on basis that with respect to 14 creditors liability was outstanding for more than three years, Assessing Officer was not justified in his view - Commissioner of Income-tax v. Puridevi Mahendrakumar Chaudhary (2014) 41 taxmann.com 329 (Gujarat)       SECTION 54F CAPITAL GAINS - EXEMPTION OF, IN CASE OF INVESTMENT IN RESIDENTIAL HOUSE Construction : Where consideration received on transfer of property had been invested by assessee in construction of residential house, merely because construction was not complete in all respects within stipulated period, benefit of section 54F, should not be rejected - Income-tax Officer v. Smt. B.S. Shanthakumari (2014) 41 taxmann.com 325 (Bangalore - Trib.)       SECTION 251 COMMISSIONER (APPEALS) - POWERS OF Power to admit additional evidence : Where assessee was prevented by sufficient cause in not appearing before Assessing Officer while framing assessment due to confusion relating to jurisdiction of Assessing Officer, in such circumstances, Commissioner (Appeals) as well as Tribunal relying upon additional evidence produced by assessee were justified in deleting a part of addition made by Assessing Officer - Commissioner of Income-tax v. Safari Bikes Ltd. (East) (2014) 41 taxmann.com 282 (Punjab & Haryana)       SECTION 271(1)(c) PENALTY - FOR CONCEALMENT OF INCOME Surrender of income : Where Assessing Officer had conducted enquiries into matter of sale of shares prior to surrender made by assessee and duly established on record that said share transactions were sham and bogus, he was justified in levying penalty under section 271(1)(c) in respect of addition made for those transactions - Deputy Commissioner of Income-tax v. Mukesh Kumar Agarwal, (HUF) (2014) 41 taxmann.com 269 (Agra - Trib.)    Source : Taxmann