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III. Direct Tax Case laws:
1.
Ester Industries Limited Vs. Commissioner of Income Tax, Income Tax
Appeal No. 702/2007, Date of decision: 29th July 2013, Delhi High Court
Whether a
prima facie adjustment can be made u/s 143(1)(a) of the Income Tax Act,
1961 regarding applicability of provisions of Minimum Alternative Tax
u/s 115JA of the Act.
Held No,
The assessee
company filed its return of income declaring “nil” income along with a
note claiming that MAT provisions u/s 115JA of the Act was not
applicable. The AO by intimation u/s 143(1)(a) of the Act computed the
taxable income under MAT .
It was held
that the assessee had specifically claimed that that the provisions of
MAT were not applicable on him. The contention may be wrong or incorrect
but it has to be dealt with and examined. Further computation has to be
made u/s 115JA of the Act, which is not possible without examining and
considering several aspects.
Thus, following the decision in SRF Charitable Trust versus Union of India & Others, (1992) 193 ITR 95 (Del.),
it was held that the adjustment made in the instant case would not be
covered within the four corners and limited scope of Section 143(1)(a)
and the AO should issue notice u/s 143(2) of the Act.
(Please click here for judgment)
2. Mahindra BT Investment Co. (Mauritius) Ltd. Vs. The
Director of Income Tax, Writ Petition No. 2632 of 2013, Date of
Pronouncement: 25 July 2013, Bombay High Court
Whether the
Authority for Advance Ruling, after having admitted the questions can
refuse to give a ruling on the question of law formulated at the final
hearing without there being any change in facts or circumstances.
Held No,
The Authority
for Advance Ruling admitted the petitioner's application for advance
ruling u/s 245R(2) of the Act. However, the Authority during the course
of final hearing of the application, suo motu raised a question whether
it should at all give a ruling on the questions formulated as the
transaction giving rise to the questions was in blatant circumvention of
the SEBI Guidelines which has been issued in the interest of the
general public.
After
considering the matter, the Authority concluded that the entire cause of
action giving rise to the formulated questions is based on an illegal
act committed by the petitioner. In these circumstances, the Authority
held that it would not be proper for the Authority to give a ruling on
the question of law posed before it, as according to the Authority, it
emanates from the circumvention of SEBI Guidelines. In any event the
Authority held that it has discretion to refuse to give a ruling in an
appropriate case and the present case before it, is one such case.
It was held
that the Authority, in an appropriate case, has discretion to refuse to
give a ruling on a question of law even in respect of matters outside
the proviso to Sec. 245R(2), yet this discretion of refusing to rule on a
question cannot be arbitrary. The Authority can exercise its discretion
not to give a ruling only in cases where fraud and/or illegality is ex
facie evident or the fraud or illegality has been established in some
proceedings. Such discretion is not to be exercised on a mere suspicion
of illegality or fraud having taken place.
Thus, the
Authority is not correct in refusing to give a ruling at the time of
final hearing in the absence of any fresh material, merely on the basis
of the suspicion.
(Please click here for judgment)
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