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II. Direct Tax Case laws:
1. CIT Vs. Bharti Airtel Limited, ITA No. 294/2013, Date of decision: 19.07.2013, Delhi High Court
Section 263 of the Income Tax Act, 1961
What
will be the starting point of limitation under Section 263(2) of the
Income Tax Act, 1961, the first order u/s 143(3) of the Act or the
second order u/s 147 read with Sec. 143(3) of the Act?
The
first order of assessment u/s 143(3) was passed on 31.12.2007 and the
second order of reassessment u/s 147 read with Sec. 143(3) was passed on
10.12.2009. Further, the Commissioner made an order u/s 263 of the Act
on 24.03.2011.
It
was held that once reassessment order was passed, original
underassessment was set aside, to the extent of underassessment but not
in respect of matters covered by the original assessment and not subject
matter of reassessment proceedings or order. In the instant case, the
subject matter of additions made in the order passed u/s 263 of the Act
was not dealt with in the reassessment order. Thus doctrine of merger
would not apply and order u/s 263 passed by the Commissioner was held to
be barred by limitation.
(Please click here for judgment)
2. CIT Vs. Rayala Corporation P. Ltd., Tax Case (Appeal) No. 184 of 2010, Date of decision: 18.06.2013, Madras high Court
Section 41(1) of the Income Tax Act, 1961
Whether
provisions of section 41(1) of the Act can be invoked even when the
Income Tax Return of the year in which claim of deduction of interest
was made, has been considered as non est on account of non rectification
of defects, pursuant to notice under Section 139(9) of the Act.
Held No
For
the applicability of Section 41(1) of the Act, the prerequisite
condition is that an allowance or deduction has been made in the
assessment for any of the years in respect of an expenditure, loss or
trading liability incurred by the assessee and subsequently during any
previous year, the assessee has received remission or obtained refund of
the said amount. Thus Section 41(1) creates a legal fiction and hence,
has to be strictly complied with if any addition to the income is
sought to be made by the Revenue.
In
the context of Section 139(9) of the Act, with the return filed treated
as non est in the eye of law, we hold that the expression "where an
allowance or deduction has been made in the assessment for any year" has
to be read as any allowance or deduction considered in the assessment
for the purpose of invoking Section 41(1) of the Act. Thus, unless the
amount had been allowed as a deduction in the earlier years, the
question of invoking Section 41(1) does not arise.
(Please click here for judgment)
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