Issue No. 242 / August 9^th, 2021

Dear Professionals, 

We are glad to present to you the 242^nd edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!

Status of Journals Updated

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Expert Column

There has been a wave of changes brought in since the adaptation of information technology more and more in day-to-day activities, be it any kind of activity. Even the change is being adapted by the Income tax department not only by implementing electronic filing of return but also bringing technology in disposal of assessments, appeals, etc. It is very noteworthy that even the new income-tax forms notified by the Government have made it mandatory to file audit reports in the electronic mode at the time of filing tax returns.

CA Uttamchand P. Jain, throws light on the two additional Rules added by CBDT vide Notification No. 83/2021/F. No. 370142/30/2021-TPL namely “Rule 130 – Omission of certain rules and Forms and savings” and “Rule 131 – Electronic furnishing of Forms, Returns, Statements, Reports, Orders etc.”; Referring to Rule 131, the author states “It is a settled principle of law that the “Form” cannot go beyond the Rule under which it is notified and the Rule in turn cannot override the relevant Act.”. Gives an illustrative example of how we as taxpayers blindly follow the rule if e-filing when none of the forms prescribes so in particular. Highlights on the fact that there is no facility on the e-filing portal of revising any already uploaded form by adding an addendum or corrigendum to it, states “CDBT has taken a new path by inserting Rule 130 & Rule 131... novel way has been adopted for “Omission of certain rules and Forms and savings” which were hitherto was normally done under direct taxes at least by amending the respective Rule”

Click here to the article titled "Filing of Forms and Audit Reports – Are we on the way to path Correction!"

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Key Takeaways from Handpicked Rulings

1) HC: Upholds Assessee’s right to opt for revision over appeal, remits matter to AO for ascertainment of facts - HC sets aside the order of the revisional authority and remits the matter back to the AO to consider Assessee’s case in accordance with law; Assessee has challenged the legality and correctness of the single judge order in writ in the intra court appeal; In the impugned order, it was observed that Assessee has by-passed the remedy available u/s 246A and availed revisional remedy u/s 246; HC observes in the instant case, Assessee instead of preferring an appeal with the CIT(A), filed a revision petition u/s 264 before the revisional authority, being aggrieved by the AO’s order; HC remarks that Assessee was within its rights to opt for the revision instead of appeal and therefore all observations made by the single judge with regard to it are unsustainable; On perusal of merits involved in the case, HC observes that no application of mind is there as to whether the subject lands are capital assets or not, and unless the same is ascertained no demand under Chapter IV was tenable; HC remands the matter back to the AO to consider the case in the light of the observations made, in accordance with law; ............... Click here to read and download HC Judgment

2) ITAT: Directs Revenue to conduct detailed enquiry on allegation of transaction under Benami Law - ITAT in an appeal filed by the Assessee, remits matter back to the AO to conduct in depth inquiries; One Mr. Shulakhan Ram executed a document in favour of the Assessee-Individual with an intention to avoid long term capital gains tax of the property, and after the sale, entire consideration was transferred to Shulakhan Ram’s bank account except Rs.1 lac which was left to comply with the minimum balance requirement of HSBC Bank; ITAT observes that this was a case where innocent citizen was duped, and no appropriate enquiries were made by the AO / CIT(A) despite the facts being brought to their notice; ITAT remarks that the additions have been made in a cryptic and stereotypical manner, and thus, remands the matter back to the AO for necessary action under the Income tax law, as well as Benami property Act with directions to initiate proceedings u/s 148 or any other proceedings to ascertain the real nature of transactions, Further directs AO to decide the issue within a period of  6 months from receipt of this order.........................Click here to read and download ITAT Order

3) ITAT: Local authority not liable u/s 194LA for DRC issued on surrender of land – ITAT condones Assessee’s inordinate delay in filing appeal, and rules that provisions of section 194LA are not applicable to Assessee-Local Authority; Assessee was overseeing the development and provision of civic amenities, in consideration of acquisition of land for civic amenities and infrastructure, Assessee provided Development Rights Certificate (DRC); Revenue held Assessee was liable to deduct tax at source on the market value of DRC u/s 194LA, and since the same was not complied with, held Assessee as ‘assessee in default’ u/s 201(1); Assessee preferred an appeal before the CIT(A), filing of which was delayed by 598 days, physically and 1077 days for the online appeal; Assessee stated that delay in filing appeal was attributed to the officials of Assessee being busy with statutory duties relating to election, and that the delay was not wilful or malafide; CIT(A) refused to condone the delay and dismissed the appeal; ITAT observes that reasons adduced by the Assessee for..............Click here to read and download ITAT Order

4) HC: ‘Capitalisation’ not pre-condition for claiming deduction u/s 80-IA(4) - HC allows Assessee’s claim of deduction u/s 80-IA, and rules on the applicability of MAT provisions for AY 2005-06; Assessee -public limited company is wholly owned by Govt. of Karnataka and was engaged in activity of distribution of electricity; Assessee claimed deduction of Rs, 141 Cr u/s 80-IA(4), and filed nil return of income, whereas the book profits for the year under consideration were Rs.88.46 lacs; Assessee was assessed u/s 143(3) and claim for deduction u/s 80-IA(4) was disallowed, and tax liability was ascertained as per normal provisions; Revenue held that expenditure reflected as work in progress was not eligible for deduction unless.................. Click here to read and download HC Judgment

5) HC: Directs CBDT to condone delay in furnishing ITR attributable to CLB proceedings - HC upholds order passed by single judge in a writ filed by Assessee challenging CBDT’s rejection of application for refund where there was a delay in furnishing return of income; Assessee-company was undergoing proceedings before the CLB and on account of related delays, there was a delay in furnishing Assessee’s return of income; The Assessee applied for condonation of delay in filing return before the AO; Further since the claim of refund exceeded Rs. 50 lacs, it was required to make an application to CBDT for condonation of delay, which was rejected; Against such rejection Assessee preferred a writ petition,............. Click here to read and download HC Judgment

6) ITAT: Revision of reassessment order for overcoming limitation against revising original order, unsustainable - Mumbai ITAT holds that impugned order of the PCIT revising order u/s 143(3) r.w.s 147 is un-sustainable; Assessee’s case was re-opened u/s 147 for the reason that expenditure to the extent of Rs. 68.62 had escaped assessment, and during the course of reassessment proceedings, AO examine the issue of deduction u/s 80-IA, which was subsequently revised by PCIT’s order u/s 263; Assessee aggrieved by the revision preferred an appeal with ITAT; ITAT observes original assessment order contained an issue related to deduction u/s 80-IA, and any attempt by the assessing officer to deal with such issue in re-assessment proceedings would have amounted to review of the original assessment order, which is impermissible; ITAT further remarks that “the original assessment order could not be revised under section 263 of the Act due............ Click here to read and download ITAT Order

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“Taxsutra Database”, a true Income-tax research tool, is an archive of over 113060+ Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR (Trib) and also includes recent ‘unreported handpicked rulings of SC, HC & ITAT’. It is a completely integrated service with the following features: 

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