INCOME TAX LAWS

Here  are   some   important   direct   tax   case   laws   which   were   passed   recently -  It  may  be  helpful  in  proceeding  of Appeal  before  Supreme  Court,  High  Court,  Income  Tax   Appellate Tribunal (ITAT),  and  CIT (A).  Also  helpfully   for  Assessment   &   Reassessment   cases.

1.      Capital Gain -   Bogus capital gains from penny stocks: If the holding of shares is D-mat account cannot be disputed then the transaction cannot be held as bogus. The AO has also not disputed the sale of shares from the D-mat account of the assessee and the sale consideration was directly credited to the bank account of the assessee. Once the assessee produced all relevant evidence to substantiate the transaction of purchase, dematerialization and sale of shares then, in the absence of any contrary material brought on record the same cannot be held as bogus transaction merely on the basis of statement of one Anil Agrawal recorded by the Investigation Wing, Kolkata wherein there is a general statement of providing bogus long term capital gain transaction to the clients without stating anything about the transaction of allotment of shares by the company to the assessee. ( Favour of Assessee)

Ramprasad Agarwal vs. Income Tax Officer  ( ITAT Mumbai )

2.      Reassessment - A report of the Revenue audit party is merely information and opinion. It is not new or fresh or tangible material. If the reassessment notice is solely based on an audit opinion, it means it is issued on change of opinion which is not permissible (Favour of Assessee)

FIS Global Business Solutions India Pvt. Ltd vs. Principal Commissioner of Income Tax (High Court- Delhi)

3.      Conversion - The conversion of a company into a LLP constitutes a "transfer". If the conditions of s. 47(xiiib) are not satisfied, the transaction is chargeable to 'capital gains‘ u/s 45. If the assets and liabilities of the company are vested in the LLP at 'book value’s(cost), there is in fact no capital gain. The argument that u/s 58(4) of the LLP Act, the LLP is entitled to carry forward the accumulated losses & unabsorbed depreciation of the company, notwithstanding non-compliance with s. 47(xiiib) is not acceptable (Favour of Assessee)

Assistant Commissioner of Income Tax  vs.  Celerity Power LLP (ITAT- Mumbai)

4.      Order of ITAT - The ITAT should give independent reasons showing consideration of the submissions made on behalf of the assessee. An appellate order which affirms the order of the lower authority need not be a very detailed order. Nevertheless, there should be some indication in the order passed by the appellate authority of due application of mind to the contentions raised by the asseseee in the context of findings of the lower authority which were the subject matter of the challenge before it. (Favour of Assessee)

Cheryl J. Patel  vs.  Assistant Commissioner of Income Tax  (High Court - Bombay)

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