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II. Direct Taxes Case Laws:
1. Smt. Roma Sengupta Vs. CIT, I.T.A. No. 214 of 2004, Date of Order: 11.03.2016, High Court of Calcutta
Issue:
Whether 50% of the sale consideration received by the assessee
with respect to the matrimonial house was taxable in the hands of the
assessee despite the fact that the Tribunal arrived at a finding that
the said amount was paid on account of alimony?
Held: No
Brief Facts:
The assessee is a divorcee and filed her return of income disclosing
an income and LTCG consequent to sale of 50% of her share in the
matrimonial house sold and sought to deduct 50% of the cost of
acquisition. Also, she claimed exemption u/s 54 of the Act with respect
to the aforesaid LTCG and further claimed deduction of brokerage from
the amount of capital gain. The assessee contended that the matrimonial
house was acquired using the sale proceeds of a flat and that she was a
co-owner of the said matrimonial house, having 50% share therein. The AO
relying upon a report filed by the inspector held that the ex-husband
of the assessee was the exclusive owner of the flat and the assessee was
just his nominee. The AO also observed that since the flat was owned
exclusively by the former husband and the sale proceeds from the said
property were utilized to purchase the matrimonial house, therefore the
former husband of the assessee was the full owner of the newly purchased
matrimonial house and thus held that the assessee could not get the
benefit of cost of acquisition u/s 48 of the Act, as she did not
contribute any investment to purchase the matrimonial house, further
held as per section 49(2) that the self generated acquired property’s
cost of acquisition is taken to be nil and also disallowed the claim for
brokerage.
The
assessee appealed before the CIT(A) and the order was passed in favor of
the assessee, aggrieved the Revenue appealed before the Tribunal and it
rejected the contention of the assessee as regards capital gains on the
basis that 50% of the sale proceeds were received by the assessee on
account of alimony from her former husband. In the Hon’ble High Court
the Ld. AR contended that the lump sum alimony is a capital receipt and
therefore not taxable whereas Ld. DR contended that the Tribunal did not
hold that the 50% of the sale consideration given to the wife was on
account of alimony and also that the assessee could not make a new case.
Held:
The Hon’ble Court held the revenue cannot be heard to contend that it
has been taken by surprise because it did not prefer any appeal against
the finding of the Ld. Tribunal that the payment was “on account of
alimony” and thus must be deemed to have been satisfied by such finding
and that it was open to the assessee to contend that the receipt was
capital in nature and therefore not taxable.
(Please click here for judgment)
2. Soma Rani Ghosh Vs. DCIT, I.T.A. No. 1420/KOL/2015, Date of Order: 09.09.2016, ITAT - Kolkata
Issue:
Whether a disallowance is to be made in respect of transportation
expenses on which TDS u/s 194C has not been deducted but PAN is obtained
from all the individual transporters?
Held: No
Brief Facts
Assessee is carrying on proprietary export business in export of
Chemical, Surgical and Clinical Goods and incurred Transport Charges by
way of Lorry Hire Charges, both in relation to Purchases, referred to as
Carriage Inward, and Exports to Bangladesh referred to as Carriage
Outward. On the premise that the assessee was required to deduct TDS on
the expenses incurred under the head Transport Charges u/s 194C of the
Act and since the assessee failed to deduct the same, Ld. AO disallowed
the expenses claimed as expense towards Carriage Inward and Carriage
Outward, treating such expense disallowable u/s 40(a)(ia) of the Act.
The assessee contended before the Ld CIT that because of the provision
of Section 194C(6), she was not liable to deduct TDS on payments to
transporters who had submitted their PAN, and those details of PAN and
addressees of the transporters were filed during the course of scrutiny
assessment before the AO.
The Ld
CIT had dismissed the appeal on the premise that section 194C(6) will
not apply to payments made by a person who himself is not a transporter.
Also, he stated that provisions of section 194C(6) and 194C(7) have to
be read together and the benefit u/s 194C (6) is available only when the
assessee fulfils the conditions laid down in sub-section 194C(7) of the
Act.
Held:
It was held that Ld. CIT’s interpretation of a contractor is wrong
and as per section 194C(1), person undertaking to do the work is the
Contractor and the person so engaging the contractor is the contractee
and the distinction between a contractor and a sub-contractor has been
done away with and Explanation under 194C(7) clarifies that "contract"
shall include sub-contract. Further, subject to compliance with the
provisions of Section 194C(6), immunity from TDS u/s 194C(1) in relation
to payments to transporters, applies to transporter and non-transporter
contractees alike and that Sections 194C(6) and Section 194C(7) are
independent of each other, and cannot be read together to attract
disallowance u/s 40(a)(ia). Thus, it was held if the assessee complies
with the provisions of Section 194C(6), no disallowance u/s 40(a)(ia) of
the Act is permissible, even if there is violation of the provisions of
Section 194C(7) of the Act and subsequently the additions made were
deleted.
(Please click here for judgment)
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