I. Headlines Today:   

1. Govt. appoints/establishes Adjudicating Authority/Appellate Tribunal at New Delhi under Benami Act  (Click for detail)
   

2. Government unveils National Financial Reporting Authority Rules, 2018  (Click for detail)
   

3. MCA amends companies registered valuers and valuation rules 2017  (Click for detail)
   

4. Government orders telcos’ audit, suspects under-reporting of revenues  (Click for detail)
   

5. Banks lose Rs.4,000-cr income over insolvency delay  (Click for detail)
   

6. Union Bank to raise up to Rs 600 cr by issuing shares under ESPS  (Click for detail)
   

7. RBI needs to align capital adequacy norms with Basel III norms  (Click for detail)
   

8. SEBI issues norms for enhanced disclosures by rating agencies  (Click for detail)

II. A Useful Presentation:

1.  Assessment & Re-assessment Proceedings u/s 147 of the Income Tax Act, 1961

     (Please click here)

1.  Mukand Sumi Metal Processing Limited Vs. Principal Commissioner of Income Tax,  I.T.A. No. 3505/Mum/2018 Date of Pronouncement: 22.10.2018, ITAT - Mumbai

Issue:
Whether direction given to conduct further enquiries and order passed u/s 263 stands valid on the subject matter, the addition on which itself is not permissible as per provisions of law?

Held: No

Brief facts:
The brief facts of the case are that a joint venture was formed for the manufacture of bright bars and wires in India between M/s. Mukand Limited & M/s. Sumitomo Corporation, Japan in the name of Mukand Sumi Metal Processing Limited. Some of the shares were also allotted to M/s.Mukand Ltd. The Ld.CIT after referring to provisions of Sec 56(2)(viib)  set aside the assessment order passed u/s 143(3) for year under consideration observing that shares were issued at high valuation and valuation report was not based on dependable facts. Accordingly, order u/s 263 was passed stating that there is an under assessment of Rs.17,89,200 being premium on  shares issued to Mukand Ltd& others.

Being aggrieved, the assessee has filed an appeal before the Hon’ble ITAT.

Held:
The Hon’ble ITAT held that provisions of Sec 56(2)(viib) applies to company in which public is not substantially interested. In the present case, Mukand Ltd. holds more than 50% voting power in Assessee company. Further, as per notes to accounts of Annual report for FY 2012-13, Assessee Company is a subsidiary of Mukand Ltd. (Listed Co.). Therefore, Assessee Co qualifies as a company in which public is substantially interested as per criteria laid down in Sec 2(18) of Income Tax Act. Accordingly, Sec 56(2)(viib) is not applicable.

Further, on the issue of improper enquiry conducted by Ld.AO as contended by Ld.CIT, Hon’ble ITAT held that once the basis of addition is not sustainable, any further enquiry to be conducted is a futile exercise and would lead to a contradictory order being passed by CIT(A). Also, provisions of Sec 68 are not applicable to Company in which public is substantially interested. Therefore, order passed u/s 263 is quashed.  
Therefore, the appeal was held in favour of assessee and against the revenue.

(Please click here for judgment)

Golden Rules:

  "Success is like your own shadow..
If u try to catch it, u will never succeed.
Ignore it and walk in your own way
and It will follow u" 
                                        

Thanks & Regards

  Team

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