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II. Direct Taxes Case Laws:
1. M/s
G. S. Homes and Hotels P. Ltd. Vs. DCIT, Civil Appeal Nos. 7379-7380 of
2016, Date of Judgment: 09.08.2016, Supreme Court of India
Issue:
Whether the amount received by the assessee company from its
shareholders on account of share capital and maintenance deposit will be
taxed as business income under the Income Tax Act, 1961?
Held_No
Brief Facts:
The assessee company is engaged in the business of real estate. The
return of income for the Assessment Year 1996-97 was filed with Nil
income. It was notice that the assessee has shown land as stock in trade
in the balance sheet and the same has not taken to profit and loss
account. Therefore there is reduction in total income to that extent.
Also, it was bought under notice that the assessee company had developed
a huge commercial complex for the benefits of its shareholders for
which shareholders to deposited funds. Also, the maintenance deposit had
to be made with the company for the maintenance and upkeep of the
building. The said deposits were used to construct the building. The
Assessing Officer treated all the refundable deposits under the scheme
as income and the same was confirmed by CIT (A) which was held that the
income derived from deposits which was used for construction is to be
treated as business income.
Held:
It was held that the certain amount of Rs. 45,84,000/- on account of
share capital received from the various shareholders shall not be
treated as business income. However, the order of the High court in
respect of the short term capital gains for the properties T1 and T2 and
maintenance deposits is upheld.
The appeal of the assessee is partly allowed.
(Please click here for judgment)
2. Genus
Electrotech Limited Vs. Union of India, Special Civil Application No.
9010 of 2016, Date of Judgment: 18.07.2016, High Court of Gujarat
Issue:
Whether the mere issuance of notice without providing the reasons
for the transfer of the jurisdiction of the assessee company will be
enough for passing the order under Section 127(2) of the Income Tax Act,
1961?
Held_No
Brief Facts:
The assessee is a company. Due to its shifting of Registered Office
from New Delhi to Ahmedabad in year 2011, its pending appeals for
Assessment years 2006-07 to 2008-09 were also transferred from ACIT,
Circle – 12(1), New Delhi to Ahmedabad. On 30th July, 2015, search and
seizure operations were carried out at the residential premises of the
director of the company and also at the factory and corporate office of
the company at Gandhidham, Moradabad (U.P.). Following which, the order
u/s 127(2) of the Income Tax Act, 1961 was passed by the Principal
Commissioner of Income Tax at Ahmedabad shifting the jurisdiction of the
company from Ahmedabad to Moradabad w.e.f. 31.12.2015. Assessee filed
the petition on the grounds that the order passed by the PCIT is against
the Natural justice of law.
Held:
It was held that no assessment cases can be transferred from one
place to another only as long as at least one of the cases of the group
is pending at such place. The search and survey operations at the
premises would not in any manner will reduce the requirement of the
prescribed authority to convey the assessee the reasons for the transfer
of jurisdiction. Moreover, the fact that the assessee awareness of the
search and survey actions would not change the requirements of the law.
An empty formality of issuing the notice cannot override the principal
of natural injustice which is essentially inbuilt in any administrative
order.
(Please click here for judgment)
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