Tag Archives: #Gujarathighcourt #incometax

Case Title: Artiben Amishkumar Patel Versus The Income Tax Officer,

Case No.: R/Special Civil Application No. 18957 Of 2019

Appearance

Petitioner: Mr. Tushar Hemani, Senior Counsel With Ms Vaibhavi K Parikh

Respondent : Mr. Karan Sanghani, Mrs Kalpana K Raval

CORAM: HONOURABLE MR. JUSTICE BIREN VAISHNAV and HONOURABLE MR. JUSTICE BHARGAV D. KARIA

Order dated: 12/09/2023

Introduction

The High Court of Gujarat conveyed a crucial ruling asserting that scrutiny on suspicion for making further inquiry is unsustainable under section 148 of the Income Tax Act.

Facts of the Case

The petitioner is a partner in a partnership firm, namely, “M/s. My Home Developers”. The partnership firm is engaged in the business of developing housing projects. The petitioner, along with other partners of the said partnership firm, executed a partnership deed on 27.06.2007 which contained a discretionary clause as to “payment of interest on capital” but “no remuneration” was payable to the partners.

it was mutually agreed upon that with effect from 01.04.2009, “no interest on capital” shall be payable to the partners of the firm. Thus, Financial Year 2009-10 onwards, neither any “interest on capital” nor any “remuneration” was payable to the partners. Accordingly, the “partnership firm” did not pay either any “interest on capital” or any “remuneration” to its partners, including the petitioner, during the year under consideration. The partnership firm filed a return of income for the Assessment Year 2012-13 on 29.09.2012 declaring total income at Rs. Nil after claiming a deduction of Rs.15,78,260/- under section 80IB(10) of the Act

the Income Tax Appellate Tribunal in appeal bearing Income Tax Appeal No. 2966/Ahd/2014, held that income of Rs.76,25,000/- disclosed during the course of the survey was income from developing housing projects and that the partnership firm is eligible for deduction under section 80IB(10) of the Act. The case of the partnership firm for the Assessment Years 2011-12, 2012-13, and 2013-14 was reopened by the issuance of notice under section 148 of the Act in the month of March 2018. The partnership firm challenged the reopening notice for all three years before this Court by filing a Special Civil Application

The respondent issued the impugned notice dated 30.03.2019 under section 148 of the Act seeking to reopen the case of the petitioner for the year under consideration The petitioner filed a return of income for the year under consideration in response to the notice issued under section 148 of the Act.

learned Senior Counsel, further submitted that even on merits, no addition can be made in the hands of the petitioner and accordingly, there is no escapement of income chargeable to tax. Under the circumstances, in the submission of Mr.Hemani, Senior Counsel, reopening is unjustified.

Analysis of the court

the order disposing of the objections is read, certain observations made on the gain made on the sale of property and change in the amount of interest were not reflected in the reasons for reopening of an assessment which also makes the exercise vulnerable.

all the petitions deserve to be allowed. The impugned notices in the respective petitions are quashed and set aside. The rule is made absolute accordingly, with no orders as to costs.

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Kaulav roy chowdhury

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Case Title: The Principal Commissioner Of Income Tax 1, Ahmadabad Versus Jigar Jashwantlal Shah)

Case No.: R/Tax Appeal No. 80 Of 2023

Appearance

Appellant: Mr.Varun K.Patel, Senior Standing Counsel With Mr. Dev D. Patel

Respondent : Mr B S Soparkar

CORAM: HONOURABLE MR. JUSTICE BIREN VAISHNAV and HONOURABLE MR. JUSTICE BHARGAV D. KARIA

Order dated:: 28/08/2023

Introduction

Recently the High Court of Gujrat has contended that the deduction under section 35(2AB) of the Income Tax Act cannot be denied merely due to failure of authority to send intimataion.

The decision came in response to an appeal filed by the Revenue against the order of the Income Tax Appellate Tribunal ‘C’ Bench, Ahmedabad, about the assessment year 2016-17.

Facts of the case

these tax appeals are filed by the revenue arising from the common judgment and order by the Income-tax Appellate Tribunal.

The assessee filed the return of income for the Assessment Year 2013-14 declaring income of Rs.86,94,247/- which was processed under Sec.143(1) of the Act. Thereafter, during the assessment proceedings of M/s. Kintech Synergy Limited, it was noticed that the assessee was receiving salary in the capacity of Director of the said Company and the assessee was issued two lakhs right shares at face value of Rs.10 in M/s. Kintech Synergy Limited.

The Assessing Officer, while framing the reassessment order under Sec.143(3) r/w. Sec. 147 of the Act, held that under the provisions of Sec.56(2)(vii)(c) of the Act, Rs.4,90,00,000/- was taxable under the head of income for other sources. The assessee also pointed it out that the Assessing Officer erroneously held that shares allotment was disproportionate and the valuation of shares at Rs.255 per share was also excessive.

Both, the assessee and the revenue, therefore, filed appeals challenging the order of the CIT(A) before the Tribunal.

The Tribunal, dismissed the appeal filed by the revenue on both counts i.e. firstly, Sec.56(2)(vii)(c) not applying to the right shares proportionate to not existing holdings, and secondly Fair Market Value of shares was Rs.205.55 per share

The Tribunal, further held that the provisions of Sec.56(2)(vii)(c) would be applicable in respect of 14,800 shares which were allotted to the assessee as a result of the third party declining to apply for the same.

Analysis of the court

certain observations made on the gain made on the sale of property and change in amount of interest were not reflected in the reasons for reopening of assessment which also makes the exercise vulnerable.

Consequently, the court invalidated and annulled the notices issued by the Assessing Officer under Section 148 of the Income Tax Act.

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Written By

Kaulav roy chowdhury

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Title: Principal Commissioner Of Income Tax 1 Versus KGY Glass Industries (P) Ltd

Citation: R/TAX APPEAL NO. 722 of 2023

Decided on: 18/10/2023

Coram: Justice Biren Vaishnav and Justice Mauna M. Bhatt

Introduction

The division bench of Gujrat High Court consisting of Justice Biren Vaishnav and Justice Mauna M. Bhatt, held that there was no fault of the assessee as it could not upload Form No.10-IC, on ITBA portal on account of technical error. Therefore, it could not be deprived of benefit particularly when this being the first year for availing such benefits.

Facts of the case

The present appeal has been filed by the Revenue under section 260A of the Income Tax Act, 1961 challenging the order passed by the Income Tax Appellate Tribunal. The assessee is in the business of textile, filed its return of income for the A.Y.2020-21declaring income as NIL. The assessee while filing return of income opted to be taxed as per provisions of Section 115BAA of the Income Tax Act,1961 and the income of assessee was taxed as per Section 115JB of the Act. The assessee was taxed as per section 115JB of the act for the reason that it had not filed Form No.10-IC, on or before the due date of filing of return of income.

Issues before the court

1. Whether on facts and in the circumstances of the case and in law, the Ld. Tribunal was justified in allowing the appeal of the Assessee without appreciating the meaning and applicability of section 115BAA of the I.T. Act.?
2. Whether on facts and in the circumstances of the case and in law, the Ld. Tribunal was justified in allowing the relief claimed by the Assessee by totally ignoring the provisions of section 115BAA of the Act as well as the Circular No. 06/22 dated 17/03/2022 issued by the CBDT which is mandatory?
3. Whether on facts and in the circumstances of the case and in law, the Ld. Tribunal was justified in not appreciating that relief claimed under section 115BAA of the I.T. Act cannot be allowed when the Assessee failed to submit Form 10-IC electronically on or before 30.06.2022 or 3 months from the end of the month in which the Circular is issued?

Court’s observation and analysis

The Gujarat High while giving its judgement made the observation that the assessee  could not upload Form No.10-IC on account of technical problem on ITBA portal at the relevant time. Also this was the first year, in which, the assessee was to avail such benefits. Hence, the court opined that there was no fault of the assessee as it could not upload Form No.10-IC, on ITBA portal on account of technical error. Therefore, it could not be deprived of benefit particularly when this being the first year for availing such benefits.

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Written by- Amrita Rout

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