No penalty can be levied on a tax demand that arises purely from the deeming fiction of Section 56(2)(x) of the Income-tax Act, 1961. Issue Can a penalty for “under-reporting of income” under Section 270A be imposed on an addition that is made solely based on the deeming provision of Section 56(2)(x), which taxes the… Read More »
“Purchase” for a 54F exemption means making the investment, not just the final registration of the sale deed within the prescribed time. Issue For the purpose of claiming a capital gains exemption under Section 54F of the Income-tax Act, 1961, does the word “purchase” require the execution of a registered sale deed for the new… Read More »
A search assessment requires incriminating material, not just regular books of account. Issue Can additions be made in a search assessment under Section 153A of the Income-tax Act, 1961, for completed or “unabated” assessment years if those additions are not based on any “incriminating material” found during the search, but are instead derived from a… Read More »
An ad hoc disallowance of a fully vouched and verified business expenditure is arbitrary and legally unsustainable. Issue Can an Assessing Officer make an ad hoc, estimated disallowance of a business expenditure, even when the taxpayer has furnished all the required supporting documents and the recipients of the payment have confirmed the transaction under a… Read More »
A lumpsum payment in lieu of pension is exempt, even if not on retirement. Issue Is an employee entitled to a tax exemption under Section 10(10A) of the Income-tax Act, 1961, for a lumpsum payment received in lieu of a pension, even if the payment is not strictly on account of superannuation, and can the… Read More »
A taxpayer must be given a reasonable time to procure supporting documents from a group entity before an expense claim is disallowed. Issue Should a disallowance of expenses be sustained if the taxpayer was not given sufficient time by the tax authorities to collate the required supporting documents from a third party, particularly from a… Read More »
A 54F exemption is allowed if construction is delayed for reasons beyond control. Issue Is a taxpayer eligible for an exemption under Section 54F of the Income-tax Act, 1961, if they are prevented from completing the construction of a new house within the statutory time limit due to external factors completely beyond their control, and… Read More »
Reassessment notices must be issued under the faceless scheme, not in physical form. Issue Are reassessment notices issued by jurisdictional Assessing Officers in physical form legally valid when the law, under Section 151A of the Income-tax Act, 1961, mandates that such notices must be issued under the faceless assessment scheme? Facts The petitioners filed writ… Read More »
Adeduction for an expense disallowed in a prior year for non-deduction of TDS is allowable in the year the TDS is eventually paid. Issue If an expenditure (like a discount) was disallowed in a prior assessment year under Section 40(a)(ia) due to a failure to deduct TDS, can the assessee claim that deduction in a… Read More »
A rectification application cannot be used to re-argue a case on its merits. Issue Can a rectification application be maintained if it only seeks to correct one of two independent grounds on which a final order was based, especially when correcting that single ground would not change the final outcome of the case? Facts The… Read More »