1. CHYTHANYA K.K., B. Com, FCA, LLB
Caselaw Analysis
CHYTHANYA K.K., B. Com, FCA, LLB
Advocate
#1109, 9th Main, Between Metro Pillars 303 and 304, Vijayanagar, Bangalore, Karnataka, India.

2. Cash credits under section 68 – paving way for next demonetization
Applicability of section 68 read with section 115BBE : Tax at 60%
Surcharge as per Sixth proviso to sec 2(3) of Finance Act : 25%
Cess at 3%
Normal penalty at 10% as per section 271AAC(1)
Penalty at 30% or 60% in case of search under section 271AAB(1A)
Penalty under section 271DA at 100%

3. Cash credits NDTV TS-283-ITAT-2017(DEL)]
Rajmandir Estate Pvt. Ltd [TS-287-HC-2016(CAL)]
Subhlakshmi Vanijya (P) Ltd. v. CIT 155 ITD 171 (Kolkata)
Mohanakala 291 ITR 278 SC

4. House property v. Business income
RAJ DADARKAR AND ASSOCIATES Vs ACIT TS-183-SC-2017
Chennai Properties & Investments Ltd. 373 ITR 673 SC
Rayala Corporation (P) Ltd. 386 ITR 500 SC
Sultan Bros 51 ITR 353 SC
East India Housing and Land Development Trust Ltd. v. CIT, (1961) 42 ITR 49 
Karanpura Development Co. Ltd. v. CIT, (1962) 44 ITR 362
See circular no.16 of 2017 dated  

5. House property v. Business income
Tejas Securities 393 ITR 132 Guj : When partnership deed prohibits share trading, the gain cannot be treated as business profits.
Chennai property principle applied for a firm [non corporate] : Sri Bharathi Warehousing Corporation 392 ITR 160 AP
Mere husk of title – income is chargeable under business Shree Nirmal Commercial 193 ITR 694 Bby
Agya Ram 386 ITR 545 see para 21 [where sole income being rent is indicator of business], para 23[where Chennai property used for non corporate], para 25 for distinguishing between lease and license]

6. Family settlement
Kale v. Dy. Director of Consolidation AIR 1976 SC 807
Family settlement involving companies
Permissible : CIT Vs Ashwani Chopra 352 ITR 620 P&H
Not permissible : B.A.Mohota Textiles Traders Pvt. Ltd. TS-234-HC-2017(BOM)

7. Right person to pay tax
Capital gain is liable in the hands of partnership firm though partners already paid taxes in individual capacity
Capital gain on transfer of construction work in Progress [WIP] to the partners by the firm on dissolution to be taxed in the hands of partnership firm [WIP] though partners already paid taxes in the individual capacity;
Follows Hon’ble SC decision in Ch. Atchaiah [218 ITR 239]
Sangam Builders Promoters [TS-6268-ITAT-2015(PUNE)-O]

8. Tax adjustment between two persons
Ashish Plastic Industries 373 ITR 45 (SC)
CIT Vs Relcom 2015-TIOL-2538-HC-DEL-IT
CIT v. Bhooratnam, (2013) 357 ITR 196 (AP)

9. Section 40a(ia) Palam Gas Service 394 ITR 300 SC
No retro default - Vatika Township 367 ITR 466 SC, CIT Vs Kotak Securities 2011-TIOL-693-HC-MUM
Kotak Securities 383 ITR 1 SC
Principle of doubtful penalisation - CIT Vs JDS APPARELS 2014-TIOL-2046-HC-DEL

10. Section 40a(ia) – Extent of disallowance
In Honda Cars 382 ITR 88 Delhi : Para 6 : Dept concedes that in terms of the Circular No.3/2015 dated issued by the CBDT disallowance under Section 40(a)(i) should be made only in the appropriate proportion of the sum chargeable to tax as per Section 195(1) of the Act and as the said Circular of CBDT is binding on the Assessing Officer, the benefit of the Circular would be given to the assessee

11. Section 40a(ia)
Only when AO makes up his mind that a particular payment requiring TDS under a particular section, has been made without such deduction, that he can proceed to invoke section 40(a)(ia) after putting assessee on notice : LDS Engineers 2014-TIOL-790-ITAT-DEL
Sundry creditors cannot be disallowed u/s 40(a)(ia) of the Act without bringing on record that the said amount represents current year expenditure which is payable : GURJANT SINGH Vs ITO 2014-TIOL-510-ITAT-KOL

12. Section 40a(ia)
When no expenditure is claimed, no disallowance Maruti Freight Movers Ltd. [2015] 152 ITD 740 (Kol), PENTHEA BUILDERS & DEVELOPERS PVT LTD Vs ITO 2014-TIOL-753-ITAT-DEL, ACIT Vs M/s Godavari Developers 2012-TIOL-736-ITAT-HYD, ITO vs Ahaar Consumer Products Pvt. Ltd 10 taxmann.com 181 (Delhi - ITAT), 61 Taxmann.com 88 Pune
Held in favour of assessee in CIT Vs Health India Tpa Services Pvt Ltd 2015-TIOL-2746-HC-MUM-IT, CIT Vs M/s Calibre Personnel Services Pvt Ltd 2015-TIOL-358-HC-MUM-IT & G Balraj 390 ITR 50 Kar
Contra - DCIT v. Umang Dairies Ltd. [2010] 3 ITR (Trib) 497 (Delhi)

13. Section 40a(ia)
No expenditure could be disallowed u/s.40(a)(i) of the Act if such expenditure was capitalized and not claimed as a revenue : Gera Developments Pvt Ltd Vs JCIT 2015-TIOL-167-ITAT-PUNE & Reckitt Benckiser Healthcare India Ltd. v. Asst. CIT (OCD) [2014] 360 ITR 427 (Guj. – HC)
See Nector Beverages 314 ITR 314 SC

14. Section 40a(ia)
Second proviso to sec 40a(ia) is retrospective - Rajeev Kumar Agarwal vs. ACIT (ITAT Agra) ITAT Online – and Bharti Auto Products Vs. CIT ((2013) 27 ITR 611 (Trib.)(Rajkot)(SB) [contra : Prudential Logistics & Transports in ITA No. 01 of 2014 Kerala dated 13th January, 2014]
Ansal Landmark Township TS-495-HC 2015, 377 ITR Delhi HC : FA 2012 amendment is retrospective

15. Section 40a(ia)
Where payee has shown income in the return but claiming the same as exempt, payer cannot be regarded as defaulter - RBL Bank Ltd. 65 Taxmann.com 219 Panaji Tri :

16. Section 40a(ia)
No disallowance of depreciation under sec 40a(ia) - Sonic Biochem Extractions P. Ltd. v. ITO [2013] 23 ITR (Trib) 447 (Mumbai), Nector Beverages 314 ITR 314 SC, Cranes Software ITA No. 741 & 742/B/2010 [Bangalore ITAT], SMS Demag Pvt Ltd Vs DCIT 2010-TIOL-135-ITAT-DEL
Similar issue pending before Karnataka High Court in Wifi Networks in ITA 394 of 2013

17. Section 40a(ia)
No disallowance in case of short deduction - CIT Vs M/s S K Tekriwal 2012-TIOL-1057-HC-KOL-IT , CIT Vs Valibhai Khanbhai Mankad 2012-TIOL-892-HC-AHM-IT, Sriram Refregeration Industries 361 ITR 119 AP at 129 and CIT Vs Kishore Rao (HUF) 2016-TIOL-719-HC-KAR-IT , CIT Vs Hewlett-packard India Sales Pvt Ltd 2016-TIOL-356-HC-KAR-IT
Contra : PVS Memorial Hospital ltd. TS-439-HC-2015 Kerala
No set off between excess TDS and short TDS - ITO vs Nisha Saraf 2011-TIOL-06-ITAT-KOL

18. Section 40a(ia)
No section 40a(ia) in case of presumptive taxation - Shri B V Prabhu Vs ITO 2010-TIOL-420-ITAT-BANG

19. Section 40a(ia) - Reimbursement
Aassessee, during the subject assessment year paid a sum of Rs.4.59 crores to its holding company M/s. IDFC Ltd. on account of reimbursement of expenses
Tribunal allowed the appeal of the respondent assessee holding that there is no requirement of deducting TDS in case of reimbursement of expensesfollowing the decision of this Court in Commissioner of Income Tax Vs. Siemens AG, 310 ITR 320 = 2008-TIOL-569-HC-MUM-IT as well as the decision of its coordinate bench in Stratcap Securities (I) Pvt. Ltd. Vs. ACIT, ITR 7048/Mum/2008 = 2011-TIOL-163-ITAT-MUM
Tribunal’s decision upheld in IDFC INVESTMENT ADVISORS LTD 2016-TIOL-2699-HC-MUM-IT

20. Section 40a(ia) – Charitable trust
Section 40a(ia) is inapplicable to a trust eligible for exemption under section 11 :
Mother Theresa Educational Society [2016] 158 ITD 473 (Visakhapatnam - Trib.)
Mahatma Gandhi Seva Mandir [2012] 52 SOT 26 (Mum.)

21. Sec 14A Godrej & Boyce Manufacturing Company [2017] 394 ITR 449 (SC)
Dividend is tax free inspite of company paying DDT under section 115O
Therefore, section 14A is applicable with respect to dividend income.
The requirement for attracting the provisions of Section 14A(1) of the Act is proof of the fact that the expenditure sought to be disallowed/deducted had actually been incurred in earning the dividend income

22. Rule 8D – Not a suo motu obligation
CIT Vs Taikisha Engineering India Ltd 2014-TIOL-2239-HC-DEL-IT : If and only if the Assessing Officer is not satisfied on this count after making reference to the accounts, that he is entitled to adopt the method as prescribed i.e. Rule 8D of the Rules. Thus, Rule 8D is not attracted and applicable to all assessee who have exempt income and it is not compulsory and necessary that an assessee must voluntarily compute disallowance as per Rule 8D of the Rules
This would imply that no need to pay advance tax by applying Rule 8D, no need to pay interest and no need to pay penalty

23. Sec 14A and MAAT
Vireet Investment Ltd. TS-272-ITAT-2017(DEL) SB : Section 14A cannot be applied while computing book profits under section 115JB
The matter is pending in appeal in Karnataka High Court in the case of Manyata Promoters in ITA 452/2014
Conflicting Delhi HC decisions
CIT vs. Goetze (India) Ltd ITAT Online – : Adverse
Bhushan Steel : Favourable

24. No Sec 14A in the year of no exempt income
Redington India Ltd Vs ADDL CIT 2017-TIOL-62-HC-MAD-IT
15. The exemption extended to dividend income would relate only to the previous year when the income was earned and none other and consequently the expenditure incurred in connection therewith should also be dealt with in the same previous year. Thus, by application of the matching concept, in a year where there is no exempt income, there cannot be a disallowance of expenditure in relation to such assumed income. (Madras Industrial Investment Corporation Ltd vs. CIT (225 ITR 802) = 2002-TIOL-290-SC-IT-LB). The language of s.14A (1) should be read in that context and such that it advances the scheme of the Act rather than distort it.

25. Section 40b v. Sec 14A
When s. 10(2A) speaks of its exclusion from the total income it means the total income of the person whose case is under consideration i.e. the partner. As the share income is excluded from his total income, s. 14A would apply and any expenditure incurred to earn the share income will have to be disallowed
Shri Vishnu Anant Mahajan Vs ACIT 2012-TIOL-311-ITAT-AHM-SB

26. Section 40b v. Sec 14A Munjal Sales 298 ITR 298 SC
After the enactment of Finance Act, 1992, section 40(b)(iv) was brought to the statute book not only to avoid double taxation but also to bring on par different assessees in the matter of assessment.
Therefore, the assessee-firm, in the present case, was required to prove that it was entitled to claim deduction for payment of interest on capital borrowed under section 36(1)(iii) and that it was not disentitled under section 40(b)(iv).
There is one more way of answering the above contention. Section 36(1)(iii) and section 40(b)(iv) both deal with payment of interest by the firm, for which deduction could be claimed.

27. Section 40b v. Sec 14A Munjal Sales 298 ITR 298 SC
Therefore, keeping in mind the scheme of Chapter IV-D every assessee who claims deduction under sections 30 to 38 is also requires to establish that it is not disentitled under section 40.
It is in this respect that we have stated that the object of section 40 is to put limitation on the amount of deduction which the assessee is entitled to under sections 30 to 38. In our view, section 40 is a corollary to sections 30 to 38 and, therefore, section 40 is not a stand-alone section

28. Section 40b v. Sec 14A
Interest under section 40b is actually allowable under section 36(1)(iii) and hence would come under section 14A : ACIT v. Pahilajrai Jaikishin 66 Taxmann.com 30 Mumbai
Contra : Interest paid on partner’s capital is not an expenditure and hence sec 14A could not be applied : Quality Industries v. ACIT 73 Taxmann.com 363 Pune ITAT.

29. Section 40b v. Sec 14A
Interest under section 36(1)(iii) is also an expenditure only and same is also hit by provisions of section 14A if it is found that the same has been incurred for earning exempt income.
Proviso to Section 28(v) comes into play only if there is some disallowance in hands of firm under clause (b) of Section 40 and it is not applicable in case of disallowance made under Section 14A.
See Shankar Chemical Works v. DCIT [2011] 47 SOT 121 [Ahm]

30. Related implications Section 44AD/44ADA v. Section 28(v)
No separate provision for allowance under sec 40b
Once section is applied, deductions under sections 30 to 38 shall be deemed to have been allowed
As sec 40b co-exists with section 36(1)(iii), there is no disallowance when sec 36(1)(iii) is deemed to be dealt with
Section 28(v) operates to tax interest and remuneration in the hands of partners

31. Related implications Section 44AD/44ADA v. Section 28(v)
When sections 44AD/AE are applied, it is preferable to amend the deed to provide for no interest and remuneration
Disallowance of interest and remuneration to partners under section 14A does not give relief to partners as per Shankar Vittal case
Section 44AE stands on a different footing

32. Section 40A(3)
Sec 40A(3) applies to cash purchases found as a result of search even when the undisclosed income is offered on peak credit basis : K.R. Ganesh Kumar 383 ITR 165 Mad.
No disallowance if paid to agent who is required to pay in cash as per rule 6DD(k) in The Solution 382 ITR 337 Raj. It applied Attar Singh Gurmuk Singh 191 TR 667 SC even post omission of rule 6DD(j) see para 10 and para 11.
No disallowance if genuineness is proved : Honey Enterprises 65 Taxmann.com 35 Delhi, Gurdas Garg [TS-719-HC-2015(P & H)], Hotel Nagas 2016-TIOL-1012-HC-MAD (Contra : TS-607-ITAT-2016(Mum)

33. Section 40A(3)
Disallowance is only in respect of excess over the threshold : M G Pictures (Madras) Ltd Vs ACIT 2015-TIOL-37-SC and Shankar Koliwad in ITA No of 2009 dated [Kar]
Section 40A(3) of the Act is mandatory and is also applicable in the case of illegal business :S. Venkata Subba Rao vs. CIT (1988) 173 ITR 340 AP & CIT vs. Hynoup Food and Oil Ind. P. Ltd. (2007) 290 ITR 702 (Guj)

34. Section 40A(3)
Section 40A(3) is not applicable in case of fictitious payments [CIT v. DineshKumar Chandmal Jain [2014] 221 Taxman 367 (Guj. – HC)]
There is a difference between “crossed cheque” and “account payee cheque”. Payment by crossed cheque attracts s. 40A(3) disallowance : Rajmoti Industries Vs ACIT 2014-TIOL-586-HC-AHM-IT
When vendors insist on cash payment, sec 40A(3) may not be invoked : Anupam Tele Services 2014-TIOL-161-HC-AHM

35. Depreciation - Building
Building which was constructed by the firm belonged to the firm though reimbursed by the assessee.
The title in the said immovable property cannot pass when its value is more than Rs.100/- unless it is executed on a proper stamp paper and is also duly registered with the sub-Registrar.
In the absence thereof, it could not be said that the assessee had become the owner of the property
Explanation 1 is not available as assessee did not itself carry construction
: Mother Hospital Pvt Ltd Vs CIT 2017-TIOL-120-SC-IT

36. Implications
If no depreciation, cost should have been allowed as per Madras Auto 233 ITR 468 SC

37. Depreciation
Hire purchase:
Circular No.127 (12)-I.T.2 dated
Circular F.No. 160/1/96 dated , under the Interest Tax Act 1974
Recognised in CIT v. Ashok Leyland Finance Ltd. [2012] 210 Taxman 95 (Mad.)
Circular No. 9 dated applied in Sai Industries Ltd. v. Asst. CIT [2013] 353 ITR 213 (Delhi) HC

38. Depreciation - Lease
Distinction between Operating lease v. Financial lease is recognised
ABB vs. IFCI (2004) 12 SCC 570,
Sundaram Finance Ltd vs. State of Kerala AIR 1966 SC 1178 = (2002-TIOL-145-SC-CT)
CIT v. INSTALMENT SUPPLY LTD. [2012] 20 taxmann.com 779 (Delhi)
AS 19 [Ind AS 17]

39. Depreciation - Lease
Distinction between Operating lease v. Financial lease is not recognised
Circular No.2 of 2001, dated February 9, 2001
ICDS 350 ITR 527 SC

40. When assessment is made at GP
No 40A(3) if assessed on GP : Amman Steel 377 ITR 568 Mad. Approved in Pradeep Singh Wazir 2017-TIOL-135-SC-IT
Sec 40a(ia) is sustainable even when the assessment is made on GP : Prabhat Construction Co. v. CIT 155 ITD 813 Patna – No more good law now.
Depreciation and interest, which are otherwise deductable in the ordinary course of assessment, remain the same legal character, even where the profit of assessee is determined on percentage basis : CIT Vs Y Ramachandra Reddy 2014-TIOL-1507-HC-AP-IT

41. When assessment is made at GP
Circular no. 29-D dated
When assessed at GP, there is no scope for separate additions and disallowances : CIT vs. Banwari Lal Banshidhar 229 ITR 229 (All) & Hindustan Equipment (P.) Ltd. [2013] 213 Taxman 61 (MP)

42. Firm and partners – section 10(2A)
Share in profits v. share in total income
Vidya Investment & Trading Co. (P.) Ltd. v. UOI [2014] 43 taxmann.com 1 (Karn), 367 ITR 33 Kar
Scheme of taxation of firm and partners

43. Conversion of firm into company
Techspin 263 ITR 345 Bby
R L Kalathia And Co 2016-TIOL-572-HC-AHM-IT
Unity Care (2006) 286 ITR 121 (Bang ITAT) confirmed by 383 ITR 258 (Mad) in Cadd Centre
Conversion of company into LLP – sec 47(xiiib)
Umicore Finance 189 Taxman 250 AAR : Even if section 47(xiii) fails, in the absence of charge, it has no effect

44. Conversion of firm into LLP
[2009] 182 Taxman (St.) 1 : Taxation of Limited Liability Partnerships Press Note No. 1/16/2007-CLV, dt
The Bill further provides that as an LLP and a general partnership is being treated as equivalent (except for recovery purposes) in the Income-tax Act, the conversion from a general partnership firm to an LLP will have no tax implications
If rights and obligations of partners remain same after conversion and
if there is no transfer of any asset or liability after conversion.
The Finance Bill, 2009 also provides that if there is a violation of these conditions, the provisions of section 45 of Income-tax Act shall apply

45. Conversion of proprietorship into company
Assessee-proprietor was allotted shares only to the tune of Rs cr out of the net assets worth Rs cr taken over by the company and the balance amount was lying in assessee’s current account,
HC observes that there was clear deficit, which was never paid or satisfied in the form of shares as envisaged under Section 47(xiv)(c) of the Act
Therefore exemption is not available : KV Mohammed Zakir TS-235-HC-2017(KER)]

46. Compulsory Acquisition
Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 – see section 96 : Circular 36/2016 dated
Mary Kutti [TS-723-HC-2015(KER)]
Suman Dhamija [TS-697-HC-2015(DEL)] 382 ITR 343
CIT v. Ghanshyam (HUF) [2009] 315 ITR 1 (SC)

47. Section 48 – Deferred consideration
Whether deferred contingent payments form part of full value consideration?
Hemal Raju Shete 2016-TIOL-836-HC-MUM-IT
Anurag Jain In Re (2005) 145 Taxman 413 (AAR) upheld in Anurag Jain v. AAR (2009) 183 Taxman 383 (Mad.)
Ajay Guliya 209 Taxman 295 (Delhi)
Ms. Indira R. Shete 138 ITD 264 (Mum.-ITAT)

48. Some related principles
Income accrues when there "arises a corresponding liability of the other party from whom the income becomes due to pay that amount CIT v. Excel Industries and others [2013] 358 ITR 295 (SC)
No reassessment in respect of increase in rent with a retro effect as the right to receive did not exist in the relevant previous year : M/S P.G.& W.SAWOO Pvt. Ltd. [TS-251-SC-2016]
The share application money as also interest earned thereon will remain within a trust in favour of the general body of applicants until the process outlined above is completed in all respects : CIT Vs M/s Henkel Spic India Ltd 379 ITR 322
The mere terming of the money received as 'advance' will not per se render the payment as such when in fact it admittedly was paid upfront as a lump sum amount on which TDS was been deducted as such for the period 1st January to 31st March 2006CIT Vs AMAN KHERA 2016-TIOL-1673-HC-DEL-IT SLP dismissed 77 Taxmann.com 287 SC

49. Section 2(42A) What is the date of acquisition of capital asset?
CIT v. Suresh Rao 223 Taxman 228 [Kar] [SLP of 2014]
Circular No. 471 dated [reported in 162 ITR (St.) 41]
CIT vs. Anilaben Upendra Shah [2003] 262 ITR 657 (Guj.)

50. Section 2(47)(v) Potla Nageswara Rao vs. DCIT 365 ITR 249 AP
Dr K Ramachandra Vs DCIT 2014-TIOL-782-ITAT-HYD distinguishing the above
Sanjeev Lal’s case 365 ITR 389 SC
Unitech Ltd. [TS-639-SC-2015]

51. Distinguishing Chaturbhuj Dwarakadas Kapadia 260 ITR 491 Bby
CIT v. Geetadevi Pasari [2009] 17 DTR 280 Bby
Dr.Arvind S.Phadke vs. ACIT 46 taxmann.com 335 (Pune)
The Metal Rolling Works Ltd. V. CIT 339 ITR 373 Bby
Ramnord Research Laboratory P. Ltd. v. WTO [2008] 305 ITR 299 (Bom) HC
CIT v. . K. Jeelani Basha (2002) 256 ITR 282 (Mad.)

52. Section 54/54F
Construction could commence prior to the date of transfer – All expenses within one year before the date of transfer would qualify
If assessee completes the construction within section139 [including section 139(4)], the question of deposit in capital gains scheme does not arise
K. Ramachandra Rao Kar HC in ITA No. 494/2013, 495/2013, 46/2014 and 47/2014 [see also CIT v. J.R. Subramanya Bhat, (1987) 165 ITR 571 (Kar)]

53. What creates an AOP?
Faqir Chand Gulati vs Uppal Agencies Pvt. Ltd. & Anr (2014) TaxCorp(LJ) 2618 (SC) : Development agreements are NOT joint ventures
Linde A. G. vs. DDIT (Delhi) (2014) TaxCorp (INTL) 7223 (HC)
Mere collaborative effort and the overall responsibility assumed by the applicant for the successful performance of the project is not sufficient to constitute an AOP : Hyosung Corporation, In re [2009] 314 ITR 343 (AAR)
Where the association is not with the object of earning income but for co-ordination in executing the contract, no AOP is created :VAN OORD ACZ. BV, IN RE (2001) 248 ITR 399 (AAR)
Indira Balkrishna [1960] 39 ITR 546 (SC) & Murugesan and Bros as held in the case of [1973] 88 ITR 432 (SC)

54. What creates an AOP?
Meeting of minds of members, common design and common purpose creates an AOP.
Where a joint venture was created to provide project consultancy services and work was allotted to members, mere separate billing and members having separate bank accounts and each member to bear its own costs and expenses, do not derogate from existence of an AOP
Geocuonslt ZT GmbH, In re [2008] 304 ITR 283 (AAR)
Way out if both are taxed – section 177(3)
Circular 7 of

55. Tek Ram (Dead Through LRS.) v. CIT [2013] 357 ITR 133 (SC)
Additional Evidence
Tek Ram (Dead Through LRS.) v. CIT [2013] 357 ITR 133 (SC)
Karimjee P. Ltd. 271 ITR 564 SC

56. CIT v. S. Khader Khan Son 352 ITR 480 SC
Survey statement
CIT v. S. Khader Khan Son 352 ITR 480 SC
Distinguished in Dr Dinesh Jain Vs ITO 2014-TIOL-398-HC-MUM-IT

57. TDS - Salary
Assessee is not liable to deduct TDS u/s. 192 on reasonable per diem allowances paid to employees for overseas trips; Merely because the actual expenses were not verified, the character or nature of the payment would not be changed so as to be taxable u/s. 17(2) of the Act; Payments made were in the nature of reimbursement of expenses incurred by employees travelling for business trips / official trips, not taxable u/s. 10(14), not in nature of perquisites u/s. 17(2) : [TS-5207-HC-2016(KARNATAKA)-O]

58. TDS - Salary
As income from tips would be chargeable in the hands of the employees as income from other sources, such tips being received from customers and not from the employer, Section 192 would not get attracted at all : ITC LTD 2016-TIOL-48-SC-IT, 384 ITR 14 SC

59. TDS Section 194IA v. sec 40a(ia) Is TDS required for payment in kind?
Kanchanjunga 325 ITR 540 SC
Biocon 36 taxmann.com 291 (Bang. – Trib.)
CIT Vs M/s Hindustan Lever Ltd 361 ITR 1 Kar
Chief Accounts Officer BBMP [TS-596-HC-2015(KAR)]

60. No TDS on provision entries if payee is not identified
KPTCL 383 ITR 59 Kar
Botsch [TS-116-ITAT-2016(Bang)]
Rayon Corporation 65 Taxmann.com 157 Mumbai Tri
Ericsson Communications Ltd. 378 ITR 395 Delhi
UCO Bank vs. UOI (Delhi HC) 51 Taxman.com 253 [cir 8/2011 quashed]
Sahara India Mutual Benefit 2014-TIOL-625-HC-ALL-IT

61. No TDS on provision entries if payee is not identified
IDBI vs. ITO 107 ITD 45(Mum)
Pfizer Ltd, Pfizer Centre, Parel Vs ITO 2012-TIOL-631-ITAT-MUM
Kirloskar Oil Engines Ltd Vs Dy.CIT 2015-TIOL-622-ITAT-PUNE
Mahindra &Mahindra[2014] 29 ITR(Trib.)95 (Mum.)
Bank of Maharashtra [2010] 6 ITR (Trib) 824 (Ahm)

62. No TDS on provision entries if payee is not identified
ACIT Vs TECUMSEH PRODUCTS INDIA PVT LTD TIOL-747-ITAT-HYD
DCIT vs. Telco Construction Equipment Co. Ltd. [2014] 46-A BCAJ 153 (Bang. – Trib.)
CBDT’s letter dated addressed to the Tata Iron & Steel Co. Ltd. [Letter No. 275/126/96 IT (B)]

63. No TDS on provision entries if payee is not identified - Adverse
Provision for site restoration as per AS but not a payment to a particular person – No TDS is required. In respect of year end provision, where particulars of payees are available, TDS is required : Dishnet Wireless 45 ITR Tri 430 Chennai
IBM India Pvt Ltd Vs ITO 2015-TIOL-692-ITAT-BANG

64. Interest
SC dismisses Revenue’s SLP appeal against Allahabad HC  order; Sunil Chandra Gupta [TS-244-SC-2016]
HC had deleted interest levied u/s 234A/B/C for AY , as Revenue had failed to adjust seized cash (available before return filing due-date, in its public deposit a/c consequent to search/seizure) against assessee's tax liability;
HC had observed that "assessee made a number of request from time to time for the adjustment of the cash seized against the liability of the advance tax, but the department neither replied nor adjusted the said amount";

65. Interest
HC had thus ruled that assessee was entitled to adjustment of seized cash against advance tax liability and therefore, no interest could be charged u/s 234A/B/C; Upholding HC order, SC rules that “We find no reason to entertain this Special Leave Petition, which is, accordingly, dismissed” 2015-TIOL-673-HC-ALL-IT
Circular 20/2017 dated clarifies that Explanation 2 to section 132B inserted by FA 2013 is prospective.

66. Charitable Trust
Deemed registration : SOCIETY FOR THE PROMN.OF EDN., ALLAHABAD [TS-85-SC-2016]
Instruction 16 of 2015 dt instructs CIT to dispose the application within 6 months.
It is mandatory that if application for approval u/s 80G is not disposed off within six months from date on which application is made, Commissioner has no jurisdiction to pass an order either granting approval or rejecting it : Maheshwari Foundation 56 Taxmann.com 393 Kar

67. Charitable Trust
Shrikar Hotel 394 ITR 657 All : para 13 – if application is made but not yet approved, assessee cannot be denied the benefit.
Rajasthan State Seed Corporation 386 ITR 267 Raj : CIT ought not to have slept over the application for approval for more than 25 years.

68. Education as charity Lala Lajpatrai Memorial Trust 383 ITR 339 Bby
Visvesvaraya Technological University[2016] 68 taxmann.com 287 (SC)

69. Provisos to section 2(15)
A statutory corporation constituted for the purposes of establishing commercial centers in connection with establishment & organization of industrial estates, is entitled to exemption u/s 11 of I-T Act :
Gujarat Industrial Development Corporation 2017-TIOL-1337-HC-AHM-IT
Ahmedabad Urban Development Authority 2017-TIOL-1372-HC-AHM-IT, 2017-TIOL-1036-HC-AHM-IT,
The Tribune 390 ITR 547 TS-684-HC-2016(P & H)]
Industrial area development is not trade following Shri Ramtanu Co-Operative Society (1970) 3 SCC 323 [Constitution Bench] : Yamuna Expressway 395 ITR 18 All

70. Provisos to section 2(15)
As long as service is subservient to charitable cause and is not in the nature of business itself, sec 2(15) proviso is not attracted : Jeevan Vidya Mission 155 ITD 1150 Mum
Sale of articles made by women beneficiaries is not trade and hence not hit by sec 2(15) proviso : DIT v. Women' India Trust 579 ITR 506 Bby
Hoshiarpur Improvement Trust 155 ITD 570 Amritsar
Charitable institution earning profit from its activities carried on sound principles of management would not lose its character of charitable entity under proviso to Section 2(15) Karnataka Industrial Areas Devt Board 2016-TIOL-831-ITAT-BANG

71. Provisos to section 2(15)
Assessee’s income generating activities were inherent part of its main object which was not profit making : Karnataka Water Supply and Drainage Board [TS-544-ITAT-2015(Bang)]
India Trade Promotion Organization 371 ITR 333 Delhi
Development of the area/ maintence within the object of general public utility, cannot be  concluded that it involves the carrying on of any activity in the nature of  trade, commerce or business exemption u/s 12A cannot be denied : Haridwar Development Authority vs CIT 155 ITD 318 Delhi

72. Provisos to section 2(15) - Adverse
Ownership of State cannot be considered or taken into account to determine the character or nature of the activities carried on by the MIDC. Sec 11 charity exemption not available to MIDC as hit by Sec 2(15) proviso : Maharashtra Industrial Development Corporation vs. DDIT

73. Refund and interest on refund
Tata Teleservices [2016] 69 taxmann.com 226 (Delhi) – Instruction 1 of 2015 struck down
UOI vs. Tata Chemicals Ltd 2014-TIOL-27-SC-IT
Gujarat Fluorochemicals Ltd 2013-TIOL-47-SC-IT-LB
GUJARAT FLOUROCHEMICALS LTD 377 ITR 307 Guj
Pfizer Products India Pvt. Ltd. 83 KLJ 206 Kar HC - Interest on interest awarded as cost

74. Interest CIT v. Bhagat Construction Co. Ltd. 235 Taxman 135 SC
Jyotsna Holding [TS-277-SC-2016]

75. Limitation
Explanation 1 to section 158BE(2) excludes period during which assessment proceedings were stayed, from the period of limitation to complete block assessment.
Where stay of some other nature is granted other than the stay of the assessment proceedings but the effect of such stay is to prevent the Assessing Officer from effectively passing assessment order, even that kind of stay order may be treated as stay of the assessment proceedings

76. Limitation
Because of the reason that such stay order becomes an obstacle for the Assessing Officer to pass an assessment order thereby preventing the Assessing Officer to proceed with the assessment proceedings and carry out appropriate assessment
VLS Finance [2016] 68 taxmann.com 368 (SC), 384 ITR 1

77. Thank You