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Supreme Court in Madhur Housing and Development Co. on 05-10-2017 has held that loan/advance by closely held company to another company in which shareholder of closely held company having more than 10% voting power also had substantial interest in the borrowing company, although is taxable as deemed dividend income but the income is taxable in the hands of shareholder and not the borrowing company

Presumption underlying the deeming provision is that that the loans or advances would ultimately be made available to the shareholders of the company giving the loan or advance. The legal fiction in s. 2(22)(e) enlarges the definition of dividend but does not extend to, or broaden the concept of, a “shareholder”.

Continue reading “Supreme Court in Madhur Housing and Development Co. on 05-10-2017 has held that loan/advance by closely held company to another company in which shareholder of closely held company having more than 10% voting power also had substantial interest in the borrowing company, although is taxable as deemed dividend income but the income is taxable in the hands of shareholder and not the borrowing company”

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ITAT Ahmedabad’s applaudable initiatives for paper less Court mandated with effect from 31-12-2017

1.    Copies of ITAT orders to be sent to DRs, CIT A and DRP to be sent through e mail

2.    Registery of ITAT not to accept paper-books containing copies of any of the documents, copies of which are statutorily required to be filed anyway along-with the appeal itself, e.g. assessment order, CIT(A)’s order, DRP order, form 35, form 35A, form 36, grounds of appeal etc. The inclusion of these documents in paper-books is a common practice but it results in wholly avoidable wastage of paper, and is, therefore, discouraged.

 

3.    The registry will also not accept any paper book containing copies of judicial precedents reported in recognized journals and databases. The parties, however, may file copies of such reported judicial precedents when bench concerned, at the time of hearing, may specifically permit or require so.

4.    Paper to be used on both sides. o the extent possible and practicable to do so. Any document or paper-book, wherein paper is used only on one side and wilfully left unused on the other side, will not ordinarily be accepted by the Registry.

5.    Any document specifically prepared for the use of the Tribunal, including any applications and any written submissions, to be filed in our office, shall use the paper on both the sides, will use the font size of no more than 12.5 and will have an internal spacing of no more than 1.5 lines. Any documents or paper books, in violation of these guidelines, will not ordinarily be accepted by the Registry

 

6.    In all the internal functioning of this office, including in the judicial orders, the use of paper will be minimized to the extent possible by, inter alia, ensuring (i) that paper will henceforth be used on both the sides, ordinarily with a maximum font size of 12.5 and internal spacing of no more than 1.5 line.; (ii) that internal guard files for the judicial orders will henceforth be maintained only in digital mode; and that (iii) that use of email is required to be made, through secure official email accounts, as much as possible in all official communications. These requirements, however, do not restrict any officer of the Tribunal from making such exceptions to these general rules, as, in his considered opinion, may be justified or warranted on a case to case basis

7.    The hard copies of constitution of benches and the cause lists shall only be used for limited internal communications. However, a soft copy of the constitution of benches and the cause lists, in addition to being placed on the official website https://www.itat.gov.in and, with effect from today, in the twitter handle at https://twitter.com/itat_amd

 

8.    A guidance note on paperless operation of Court to be issued on or before 15-12-2017

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A proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation so that a reasonable interpretation can be given to the section as a whole

R.B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570 (SC) The Division Bench of Delhi High Court followed the aforesaid decision in the case of CIT v. Rajinder Kumar [2014] 362 ITR 241/220 Taxman 3/[2013] 39 taxmann.com 126 (Delhi) and held that the amendment in the proviso to Section 40(a)(ia) of the Act is retrospective in nature.

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Supreme Court Decisions on Income diverted at source before it accures to the assessee cannot be regarded as an income

1.    CIT v. Sitaldas Tirathdas [1961] 41 ITR 367 (SC),

2.       Provat Kumar Mitter v. CIT [1961] 41 ITR 624 (SC),

3.        Moti Lal Chhadami Lal Jain v. CIT [1991] 190 ITR 1/56 Taxman 49 (SC),

4.       CIT v. Sahara Investment India Ltd. [2004] 266 ITR 641/136 Taxman 61 (SC),

5.       CIT v. Chamanlal Mangaldas & Co. [1960] 39 ITR 8 (SC),

6.       Dalmia Cement Ltd. v. CIT [1999] 237 ITR 617/104 Taxman 97 (SC),

CIT v. Sunil J. Kinariwala [2003] 259 ITR 10/126 Taxman 161 (SC)

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Renting out of counters to counter holders executing the sale and purchase of goods and provision of cash collection counters, staff facility is business Income

Renting out of counters to counter holders executing the sale and purchase of goods and provided facility of collection counter of sales proceeds manned by its own staff, packaging and delivery facility using its own staff, further counters were furnished by assesse, is  not a case of exploiting the property simpliciter, but a case where the objective of earning profits by conducting of the department store was merely facilitated by the use of the property. Hence assessable as business income and not income from house property.

Asiatic Stores & Soda Fountain[2017] 86 taxmann.com 211 (Mumbai – Trib.) SEPTEMBER  27, 2017

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Mere fact that one donation received by it may be bogus would not establish that activities of trust were not genuine or that activities were not being carried out in accordance with objects of trust, just as one swallow does not make the summer

However, if there were multiple bogus transactions of similar kind, it would lead to conclusion that activities of trust were not genuine and, in such a case, registration granted to it could be cancelled under section 12AA(3)

 

Jagannath Gupta Family Trust[2017] 86 taxmann.com 104 (Calcutta) SEPTEMBER  18, 2017