The Delhi High Court upheld a deduction on royalty computed based on actual sales value, supporting the decision made by the Appellate Tribunal. The Department had challenged the Tribunal’s decision, but the High Court ruled that for royalty calculation, the actual sales value should be considered, not the list price.
The case involved a dispute over the payment of royalty, where the Assessee had increased the royalty rate from 30% to 56%. The Assessee argued that the change in the rate resulted in a lower payout because it was based on the effective royalty rate over previous years. The Income Tax Appellate Tribunal ruled in favour of the Assessee, and the Revenue appealed to the High Court, questioning the adjustment made by the Transfer Pricing Officer and the royalty payment rate.
The division bench of the High Court upheld the Tribunal’s decision and noted that once the policy no longer required royalty to be computed based on the list price, the Assessee had moved to a system where royalty was based on the actual license and support revenue. The Court concluded that there were no substantial questions of law, and the Tribunal’s decision was justified.
The Delhi High Court ruled that the Assessing Officer (AO) must record reasons as to why a matter should be referred to a Transfer Pricing Officer (TPO) under Section 92CA of the Income Tax Act, 1961. The court also noted that although Section 92CA does not explicitly mention giving the assessee an opportunity to be heard, it implicitly requires the principles of natural justice to be followed before making a reference to the TPO.
The case involved the petitioner, Indorama Synthetics (India) Limited, who had entered into transactions of importing raw materials from a company in Thailand. The AO initiated a reference to the TPO for the determination of the Arm’s Length Price (ALP) for these international transactions, even though the petitioner contended that the transactions did not qualify as international transactions with associated enterprises (AE).
The division bench of the High Court emphasised that certain jurisdictional prerequisites must be met for the AO to refer a matter to the TPO. This includes the AO being satisfied that the assessee has entered into international transactions. If the assessee raises objections regarding the existence of such transactions, the AO must deal with these objections and record reasons, even prima facie, for making the reference to the TPO.
The court further explained that the procedural requirement of providing an opportunity to the taxpayer to be heard before recording satisfaction is implicit in the law. Following the decision of the Bombay High Court in Vodafone India Services (P) Limited v. Union of India, the court held that the references made by the AO to the TPO without affording the petitioner an opportunity to be heard were not sustainable.
The Madras High Court recently ruled that Primary Agricultural Co-operative Credit Societies are entitled to exemption under Section 80P(4) of the Income Tax Act, 1961. The court considered an appeal by the Revenue, which contended that such societies did not qualify for the exemption. The assessee in this case was a Primary Agricultural Co-operative Credit Society engaged in banking and providing credit facilities to its members. The society had invested funds and received interest income. The Revenue argued that all co-operative banks, other than primary agricultural credit societies, were ineligible for exemption under Section 80P(4).
The High Court noted a similar decision by the Kerala High Court in Chirakkal Service Co-operative Bank Ltd., Kannur vs. the Commissioner of Income Tax, which had ruled in favour of primary agricultural credit societies’ entitlement to exemption. Following this precedent, the division bench of the Madras High Court dismissed the Revenue’s appeal, affirming that the exemption under Section 80P(4) applied to the assessee credit society.
The Delhi High Court recently ruled that the income earned by the assessee from licensing parts of his property should be treated as “Business Income” and not as “Income from House Property.” The court considered an appeal filed by the assessee against the Income Tax Appellate Tribunal’s order, which had categorised the income as “Income from House Property.”
In this case, the assessee had given licenses for 91% of his factory premises and received license fees. The assessing officer re-opened proceedings and treated the income as “Income from House Property” instead of “Business Income.” The Commissioner of Income Tax (Appeals) had earlier ruled in favour of the assessee, stating that the income should be taxed as business income.
The High Court analyzed various judicial decisions and noted that using the term “license” instead of “rent” did not change the nature of the income. Citing previous judgments and the rule of consistency, the court held that the income from licensing the property should be assessed under the head “Profit & Gains From Business and Profession.” The Tribunal’s order was set aside.
The Delhi High Court, held that only actual payments of money are covered under Section 43-B of the Income Tax Act, 1961. The court disallowed the deduction claimed by the assessee for interest paid through the issuance of non-convertible debentures. This decision came in response to a review petition filed by the assessee challenging the court’s earlier findings.
The assessee had issued non-convertible debentures to a financial institution for interest payments. The assessing officer disallowed the deduction, citing that the conditions under Section 43-B were not met because the issuance of debentures did not constitute actual payment of interest. The Commissioner of Income Tax (Appeal) accepted the assessee’s plea, but the Appellate Tribunal ruled in favor of the revenue.
The main issue before the High Court was whether funding the interest amount through debentures qualified as actual payment under Section 43-B. The court, following the Supreme Court’s decision in J.B. Boda Co. (P.) Ltd v Central Board of Direct Taxes, emphasised that only actual payment of money is covered under Section 43-B. The court upheld its previous judgment and found no error that warranted reviewing its decision.
The Bombay High Court, in response to a petition by General Electoral Trust, ruled that the mere non-filing of a return of income does not provide jurisdiction for the Assessing Officer to reopen an assessment. The case involved a notice issued under Section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for the assessment year 2008-09 because the petitioner had not filed a return of income and had not obtained a Permanent Account Number (PAN).
The court explained that non-filing of a return of income or not obtaining a PAN does not automatically grant the jurisdiction to reopen an assessment unless the total income exceeds the maximum amount not chargeable to income tax. This requirement is specified in Explanation 2 to Section 147 of the Act. Therefore, a reasonable belief that income chargeable to tax has escaped assessment is still necessary for issuing a notice of reopening, even when no return of income has been filed.
The court emphasised that the re-opening notice must be based on the recorded reasons for issuing the notice, and the order disposing of the objection cannot be the basis for sustaining the notice. The absence of prejudice to the Assessee cannot be used as a basis for acquiring jurisdiction to issue a reopening notice. Consequently, the court set aside the impugned notice, stating that it was without jurisdiction.
The Madras High Court, in a recent decision, emphasised that the mere sale of immovable property by a trust cannot be the sole determining factor for its tax liability under the Income Tax Act, 1961. The Court further clarified that the income generated from such sales cannot automatically be categorised as “business income.”
In this case, the trust, which operated educational institutions, filed a tax return declaring its income as “NIL.” However, the assessing officer discovered that the trust had earned income from selling land, which raised questions about whether it constituted business income.
The assessing officer argued that the trust’s activities were purely commercial in nature, as the land was systematically developed and sold as plots to make a profit. Consequently, they categorised the income as business income.
The Madras High Court, in its decision, referred to a Supreme Court case (Additional CIT v. Surat Art Silk Cloth Manufactures Association) that stated, “Where the predominant object of the activity is to carry out a charitable purpose and not to earn profit, it would not lose its character of a charitable purpose merely because some profit arises from the activity.”
The Court ruled that the mere sale of land at a higher value, after a substantial period, does not automatically classify the trust’s activities as a business. As long as the trust’s primary objective is charitable, and the incidental sale of land is done to further these charitable purposes, the income derived from it should not be categorised as business income.
The Court also emphasised that the absence of specific restrictions in the Income Tax Act regarding the sale of unused lands in smaller portions supports the trust’s right to engage in such activities. In conclusion, the Court held that the income earned by the trust was not business income but rather incidental to its charitable objectives, entitling it to tax exemption under the relevant provisions of the Income Tax Act.
The Madras High Court, in a recent appeal filed by the Revenue against the Tamil Nadu Tourism Development Company, determined that the expenses incurred by the company for maintaining the Thiruvalluvar statue, a public property, should be considered as “revenue expenditure.” Additionally, the Court concluded that the grants received from the government for infrastructure development were “capital receipts” for the purposes of the Income Tax Act, 1961.
The case revolved around the disallowance of the respondent company’s claims for deductions related to income from hotel leases/franchises, expenses for the Thiruvalluvar statue, and government grants by the Assessing Officer. The Tribunal partially upheld the disallowance, leading to the matter being brought before the High Court.
The division bench of the High Court examined the concepts of “capital expenditure” and “revenue expenditure” and clarified that capital expenditure enhances productivity or earning capacity and provides benefits beyond the current accounting period. On the other hand, revenue expenditure does not enhance the value or earning capacity of the business and is incurred on a regular basis for maintaining assets.
The Court found that the Thiruvalluvar statue was not an asset owned by the company and that the expenses incurred in maintaining it were part of the day-to-day activities of the business and not for bringing a new advantage on the capital side. Therefore, these expenses were categorized as revenue expenditure.
Regarding the government grants, the Court concurred with the Appellate Authority and Tribunal that the expenditures made from the grants were capital in nature because they were meant for capital assets, even if some projects were abandoned. The reasoning provided by the Tribunal in treating the expenditure as capital receipts was deemed convincing.
The High Court of Gujarat, in a recent decision, clarified that if the Assessing Officer (AO) has sufficient reasons to believe that an assessee’s income has escaped assessment, then the AO can initiate reassessment proceedings under Section 147 of the Income Tax Act, 1961, even after the 4-year period has elapsed. Such an action is valid and can occur during the proceedings of scrutiny assessment.
In this case, the assessee, a limited company, underwent scrutiny assessment by the Assessing Officer. However, during the appeal process against the assessment order, the AO initiated re-assessment proceedings under Section 148, alleging that the income chargeable to tax had escaped assessment. The assessee challenged this notice in court.
The division bench of the High Court examined the case and found that the Assessing Officer had a valid “reason to believe” that the assessee’s income had escaped assessment, which provided sufficient grounds to initiate proceedings under Section 147.
The Court referred to previous decisions by the Supreme Court and noted that the crucial factor at the notice-issuing stage was the existence of reasons to make the Assessing Officer believe that there had been under-assessment of the assessee’s income.
The Court emphasized that the assessing authority’s role at this stage is to administer the statute and determine if there is a reason to believe, rather than establishing the fact of income escapement.
The division bench concluded that as long as the assessing authority has tangible material in the form of specific information, it has the power to issue a notice for reassessment. Even if a scrutiny assessment has already taken place, if substantial new material is discovered based on which the authority can reasonably believe that income has escaped assessment, the authority can reopen the assessment.
The High Court of Rajasthan, in a recent ruling, clarified that a writ petition filed against a show cause notice issued under the provisions of the Income Tax Act, 1961, is maintainable. Such a petition is not barred on the grounds that alternative remedies are available to the assessee under the statute.
In this case, the assessee had filed a writ petition under Article 226 to challenge a notice for re-assessment issued by the Income Tax Authorities under Section 148 of the Income Tax Act. The respondents argued that the petition was not maintainable because alternative remedies were available to the assessee. They cited previous decisions from the same court to support their argument.
However, the court rejected the respondents’ contention and noted that while it’s generally true that a writ petition should not lie against a show cause notice, especially when alternative statutory remedies like appeals are available, there is no fixed rule that a writ petition can never be filed against a show cause notice. If the show cause notice is inherently illegal or suffers from apparent illegality, a writ petition may be maintainable.
The court referred to a decision by the Supreme Court in G.K.N. Drive shafts (India) Ltd v. Income-tax Officer & others, which overturned the High Court’s order and held that a writ petition could not be barred merely on the grounds of the availability of alternative remedies. Following this Supreme Court decision, the division bench of the Rajasthan High Court unanimously held that a writ petition against a show cause notice should not be barred solely based on the availability of alternative remedies.
The Gujarat High Court recently ruled that mere voluntary disclosure of income by the assessee under section 132(4) of the Income Tax Act, 1961 cannot be the sole basis for making an addition to the income. The court emphasised that such a statement must be accompanied by material evidence to support the addition.
In this case, the Assessing Officer had passed an order under section 142(3) of the Income Tax Act, making an addition to the unexplained income from speculation business in shares. This addition was based on a qualified and tentative disclosure made by the assessee under section 132(4). The officer contended that the assessee had concealed income based on this statement.
The Commissioner of Income Tax (Appeals) set aside the order of the Assessing Officer, noting that no material evidence was produced to support the addition. However, the Revenue appealed to the Tribunal, which confirmed the addition. The assessee then filed an appeal before the High Court.
The High Court noted that there is a normal presumption that statements made under section 132(4) are given voluntarily, unless proven otherwise. However, the court cited a previous decision in which it was observed that confessions during search and seizure operations do not serve a useful purpose. The court emphasised the need for material substance, such as documents or other evidence, to justify additions to income.
Based on these considerations, the High Court upheld the order of the Commissioner of Income Tax (Appeals) and ruled that mere speculation could not be the sole basis for adding income. The issue was decided in favour of the assessee and against the Department.
The Madras High Court recently ruled that cooperative societies lending money for non-agricultural purposes are eligible for deduction under Section 80P of the Income Tax Act, 1961. The court quashed the impugned order passed by the Assessing Officer (AO) and further noted that the deduction under this section cannot be denied simply because the assessee charged a higher rate of interest.
The assessee claimed a deduction under Section 80P of the Income Tax Act for the interest they received from non-farming loans. However, the Assessing Officer disallowed the deduction, arguing that it was not available to the assessee because they received interest on non-farm sector loans, which was considered a commercial banking activity and did not qualify for the deduction under Section 80P(2)(a)(i) of the Act.
The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the Assessing Officer’s order, stating that the assessee had not provided credit facilities to its members for agricultural activity. The Income Tax Appellate Tribunal, however, decided the case in favor of the assessee by holding that Class B members could not be treated as non-members.
The High Court upheld the findings of the CIT(A) and the Income Tax Appellate Tribunal, emphasizing that the assessee was eligible for the deduction under Section 80P(2)(a)(i) of the Income Tax Act. The court further noted that the fact that the members charged a higher interest rate or had limited voting and participation rights did not disqualify them from the exemption granted under Section 80P(2)(a)(i).
The Kerala High Court recently held that under Section 153(1)(a) of the Income Tax Act, 1961, it is a mandatory requirement that the assessee shall file a return in consequence of a search conducted under Section 132, even if such search has not resulted in finding any incriminatory documents, materials, or statements.
In this case, the assessee, an ophthalmic surgeon, had assessments for six assessment years completed under Section 153A following a search. The Assessing Officer made some additions to the total income, which were later modified by the Commissioner of Income Tax (Appeals). Both the assessee and the Revenue filed appeals before the Appellate Tribunal. The Tribunal partly allowed the assessee’s appeal and dismissed the Revenue’s appeal.
One of the key questions before the Court was the scope of assessments under Section 153A. The Tribunal had held that only assessments or reassessments relating to any of the six assessment years that were pending on the date of the initiation of the search would abate. Completed assessments would not abate unless incriminating materials were found during the search.
However, the Court referred to its own previous decision and emphasized that the assessee is required to file a return for all the assessment years specified in Section 153A(1)(a), even if no incriminating materials are found during the search. The Court found that the Tribunal’s order was unsustainable as it did not consider the issue with specific reference to the facts of the case. As a result, the Court accepted the plea of the Revenue.
The division bench of the Kerala High Court ruled that an assessment made under section 153C of the Income Tax Act, 1961 cannot be justified solely on the ground that no incriminating material was recovered from a search conducted against the assessee for the relevant previous assessment year. The Court was examining the validity of the order passed by the Tribunal, which stated that such an order is not sustainable.
In this case, the assessee, an individual engaged in the hotel and jewellery business, had an assessment made under section 153A read with section 153C for the assessment years 2001-02 to 2007-08 following a search at their business premises. The Commissioner of Income Tax (Appeals) partly allowed the assessee’s contentions.
Both the Revenue and the assessee filed appeals before the Appellate Tribunal, which allowed the appeals for some years but partly allowed the appeals for others. The Tribunal’s decision was based on the argument that an assessment under section 153C cannot be made in the absence of search material for that particular year.
The High Court, after analyzing the provisions of sections 153C and 153A of the Income Tax Act, found that the fundamental jurisdictional requirement for invoking the powers under section 153C is the seizure or requisitioning of books of account, documents, or assets that belong to a person other than the one referred to in section 153A.
In the absence of such seized materials, the Assessing Officer has no jurisdiction to proceed under section 153C. Therefore, the Tribunal’s conclusion that proceedings under section 153C cannot be initiated by the Assessing Officer in the absence of search material aligns with legal precedent and does not indicate any illegality.
The division bench of the Bombay High Court held that a loss on the sale of an actionable claim should be treated as a business loss, making it eligible for deduction under the provisions of the Income Tax Act, 1961.
The assessee-company had a right to recover a sum of Rs. 103 lakhs from Mr. Varun. They sold the right to recover Rs. 45 lakhs to M/s. Pearl Thread Mills Ltd., and the remaining amount was written off as a bad debt. When filing their return, the assessee claimed a deduction for this loss as a business loss. However, the Commissioner of Income Tax (Appeals) disallowed the claim, arguing that it couldn’t be treated as a business loss because the assessee was not in the business of advancing loans, and the loans were advanced to Mr. Varun as part of an investment program.
On appeal, the Tribunal found that the amount was advanced not as an investment but to prevent the State Bank from proceeding against the assessee as a guarantor, as it was part of their business activity. The Tribunal allowed the appeal, stating that the guarantee given by the assessee for the loan to Varun was part of their business.
The Revenue then appealed to the High Court. The division bench of the High Court found that the mere fact that the assessee did not typically grant loans did not change the nature of this transaction. The Court cited precedent cases and reiterated that even a single transaction can be classified as a business transaction. In this case, the grant of the advance to Mr. Varun was considered to be in the course of carrying on the business.
The Court concluded that the loss on the actionable claim was a business loss and should be allowed as a deduction to compute the profits and gains from business. Therefore, any loss arising from the non-recovery of Rs. 103 lakhs or any part thereof should be considered a business loss when calculating the profits and gains from the business.
In a case where the Principal Commissioner of Income Tax appealed against the Income Tax Appellate Tribunal’s order, the Gujarat High Court ruled that interest on non-performing assets (NPS) is not taxable on an accrual basis according to the guidelines of the Reserve Bank of India (RBI).
The assessee, Mahila Sewa Sahakari Bank, filed its income tax return for the assessment year 2010-11 and did not report interest income on non-performing assets. During a scrutiny of the return, the Income Tax Department requested details of the accrued interest on these non-performing assets. The assessee argued that it had not charged interest on NPA as mandated by the Income Recognition and Asset Classification Norms of the RBI.
The Gujarat High Court, comprising Justice Harsha Devani and Justice A.G. Uraizee, emphasized that the RBI’s guidelines prevail for income recognition due to provisions in the RBI Act, and when determining tax liability, the Income Tax Act comes into play.
The court made it clear that while accounting principles guide income recognition, they do not determine taxable income. Therefore, the Assessing Officer must follow the RBI Directions regarding income recognition, as per Section 45Q of the RBI Act, and Section 145 of the Income Tax Act has no role in income recognition.
The Gujarat High Court refused to interfere with transfer pricing proceedings initiated against a company, M/s D.B. Corporation Ltd, finding that there was prima facie evidence indicating that the directors of the petitioner company held more than 20% of the shares in voting power in the Associate Enterprise, and the aggregate expenditure incurred by the petitioner exceeded Rs. 5 crores.
The court concluded that there was nothing wrong in initiating transfer pricing proceedings against the assessee-company. The court allowed the transfer pricing procedure to continue, and the legal contention raised by the petitioner regarding Section 40A(2)(b) was not considered at that stage.
The Bombay High Court ruled that foreign exchange losses are not “notional” or “speculation” losses and are eligible for deduction under Section 37 of the Income Tax Act. The court upheld the order of the ITAT and stated that the CBDT’s instruction related to foreign exchange derivative transactions does not apply to losses in dealings with foreign exchange.
In this case, M/s Vinergy International Pvt. Ltd claimed deductions for foreign exchange-related losses and gains on purchase and sales transactions. The Assessing Officer initially disallowed the claim, but the Appellate Tribunal allowed it based on previous case law. The High Court agreed with the Tribunal’s decision and held that the CBDT’s instruction did not apply to the specific losses and gains in this case, as they were not related to derivatives.
The Madras High Court ruled that the profit received by the assessee for the sale of agricultural land, situated more than 8 kilometers from the nearest Municipality, is exempt from tax under the relevant provisions of the Income Tax Act. The court upheld the orders of the Commissioner of Income Tax (Appeals) and the ITAT, which had granted the assessee the exemption.
The court also emphasised that the distance between agricultural land and the nearest municipality should be measured through the access road, considering practical accessibility, and not solely in a straight line or horizontal plane. The case was fully covered by previous court decisions, and the Court upheld the exemption for the sale of the agricultural land.
The Calcutta High Court ruled that confiscation of smuggled goods cannot be considered a “business loss” for tax deduction. An acquittal in a criminal case related to smuggling doesn’t affect the tax assessment. The court rejected the claim that the goods’ confiscation was a business loss, as there was no connection between smuggling and the assessee’s business activities.
The court emphasized that the findings of the criminal court do not apply to tax matters. The appeal centered on whether the confiscated goods could be considered a business loss, and the court upheld that they couldn’t. The court also clarified that the different standards of proof in criminal and tax matters meant that the findings of the criminal court couldn’t be imported into the tax decision. The court upheld this decision, stating that the confiscation was not part of the assessee’s business activities and couldn’t be claimed as a business loss.
The Bombay High Court recently ruled that income earned from service tax billed on services rendered is not subject to income tax because it doesn’t qualify as “trading receipts” under the Income Tax Act. The Income Tax Appellate Tribunal had previously reached the same conclusion.
In this case, the taxpayer was involved in real estate consultancy and property management services. The Assessing Officer initially included service tax billed by the taxpayer in their assessment, treating it as trading receipts under Section 145A(a)(ii) of the Act. The officer also invoked Section 43B of the Income Tax Act, arguing that the billed service tax had not been paid to the government by the due date of the return.
The Commissioner of Income Tax (Appeals) upheld this decision, arguing that Section 145A(a)(ii) applies to all companies, not just manufacturing and trading companies. The Tribunal, however, disagreed, stating that this section doesn’t apply to service tax on services but only to taxes related to goods. The Tribunal also rejected the application of Section 43B, as the liability to pay the service tax did not arise before the last date for filing returns, and the taxpayer had not claimed a deduction for the amount while filing their returns.
The High Court upheld the Tribunal’s decision, noting that Section 145A(a)(ii) pertains to goods and not services. The Court also ruled that Section 43B does not apply in this case because the taxpayer did not claim a deduction for the service tax payable when determining taxable income.
The Bombay High Court recently declined to consider a Reference, as the applicant failed to serve it upon the respondent as required by Rule 658 of the Bombay High Court Rules. Rule 658 mandates that the party initiating a Reference must serve notice on the opposing party within two months of receiving the notice of the Reference from the High Court.
In this case, the Reference was made under Section 256(1) of the Income Tax Act by the Income Tax Appellate Tribunal, seeking the High Court’s opinion on legal questions. The applicant claimed they had no evidence of serving the Reference on the Revenue. The Court rejected this claim, stating that the long delay in compliance (over sixteen years) indicated a lack of seriousness in pursuing the Reference. Therefore, the Court declined to extend the time, and the Reference was returned unanswered.
The Gujarat High Court ruled that the deduction under section 80HHC of the Income Tax Act, 1961 cannot be allowed when there is a loss or negative profit. The Court based its decision on a Supreme Court case, IPCA Laboratory Ltd. In this case, the Revenue raised substantial questions regarding the allowance of this deduction when there was negative profit.
The Court upheld the decision of the Appellate Tribunal, stating that the deduction under section 80HHC cannot be permitted in the case of a loss or negative profit. The Court also confirmed the Tribunal’s stance that net interest, rather than gross interest, should be considered when calculating the deduction under Section 80HHC.
Regarding the inclusion of interest income in eligible profits for deductions under Section 80HH and 80IA, the Court referred to previous decisions in Pandian Chemicals Ltd. v. Commissioner of Income Tax and Commissioner of Income Tax v. Gaskets and Radiators Distributors. The Court held that the Tribunal’s order was justifiable, as interest income did not have an immediate and direct nexus with the industrial activities of the assessee.
The Delhi High Court, in an appeal against the ITAT order, stated that the question of attributing any expenditure cannot arise when tax-exempt income is earned without the involvement of any employee but through bank solicitation and advertisement.
The assessee had reported exempt dividend income in their tax return without claiming expenditure deductions. The assessing officer applied Section 14A read with Rule 8D of the Income Tax Rules and added a specific amount to taxable income for statutory disallowance.
The Court referred to the decision in Taikisha Engineering Private Limited’s case, which stated that the computation or disallowance must be examined in conjunction with the accounts. If the explanation or claim of the assessee is unsatisfactory, a computation under Rule 8D(2) should be made.
The Court found that the assessing officer had not objectively analysed the accounts, as required by the decision in Shah. It was crucial to examine whether any expenditure could be attributed to the tax-exempt dividend/interest earned. However, in this case, the income was earned without any employee involvement but through the bank’s solicitation and advertisement. Therefore, the question of attributing any expenditure did not apply.
The Court remanded the matter to the Assessing Officer for a fresh evaluation, instructing them to consider the case in accordance with the Taikisha Engineering Private Limited decision.
The Kerala High Court, in a recent decision, emphasised that an application under section 220(2A) of the Income Tax Act should be considered judiciously, and the mere allegation of a threat by the assessee is not a valid justification for denying the benefit of interest waiver or reduction.
The petitioner had applied for a waiver or reduction of interest under section 220(2A) and claimed to have fulfilled all the specified conditions. The Commissioner, however, rejected the petition, alleging that the conditions were not met.
The single bench, accepting the petitioner’s arguments, stated that when an application is considered under Section 220(2A), it should be evaluated judiciously. The Commissioner’s reasoning that there was a threat by the assessee is not a sufficient basis for denying the waiver or reduction of interest. The denial of interest reduction or waiver should be in line with the statutory provisions outlined in Section 220(2A). The Court, in light of these findings, remanded the matter to the Commissioner with instructions to reconsider it in accordance with the provisions of the said section.
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