Showing posts with label income tax. Show all posts
Showing posts with label income tax. Show all posts

04 November 2020

Mesne profits and interest thereon received under the direction of the Civil Court is revenue receipt and is liable to tax u/s. 23(1) of the Income Tax Act

The real issue that needs consideration in the present appeal is whether the mesne profits, and interest on mesne profits, received by the appellant constituted revenue receipt, or capital receipt, in the hands of the appellant/assessee, in the facts and circumstances of the case.[Para No.40]

    Having heard the submissions of learned counsels for the parties and having given our due consideration to them in the light of the decisions relied upon by the learned counsels,
Mesne profits and interest thereon received under the direction of the Civil Court is revenue receipt and is liable to tax u/s. 23(1) of the Income Ta
we are of the view that the mesne profits, and interest on mesne profits, received by the appellant in pursuance of the court decree, in the facts of the present case, constitute revenue receipt.[Para No.41]

    When we apply the said test to the facts of the present case, the only conclusion that we can draw is that the receipt of mesne profits and interest thereon by the appellant/assessee, was a revenue receipt. The capital asset of the appellant i.e. the property in question was earning revenue for the appellant by way of rent till so long as the lease subsisted. After the termination of the lease, the erstwhile tenant continued to occupy the premises unauthorisedly. It is in lieu of the rent which the appellant would have otherwise derived from the tenant, that the mesne profits and interest thereon have been awarded. So far as the capital asset of the assesse is concerned, the same has remained intact. It is not the appellants case that there was any damage to the property/ capital asset inasmuch, as, the building structure was damaged by the bank, and that damages have been awarded by the Court on account of such physical damage. Even the title of the appellant in respect of the capital asset remained intact. Had it been a case where the capital asset would have been subjected to physical damage, or of diminution of the title to the capital asset, and damages would have been awarded under the head, there would have been merit in the appellant's claim that damages received for harm and injury to the capital asset, or on account of its diminution, would be a capital receipt.[Para No.46]

05 August 2020

Debt in cash above ₹20,000 in contravention of Sec.269ss of Income Tax Act does not render the transaction unenforceable under N.I.Act

Next, he submitted that the payment of more than ₹20,000/- in cash violates the provisions of Section 269 SS of the Income Tax Act, 1961 which prohibits grant of any loan or advance over a sum of ₹20,000/- in cash. He submitted that since the said loan was in violation to the provisions of the Income Tax Act, 1961 the same was not an enforceable debt. He relied upon by the decision of the Bombay High Court in Sanjay Mishra v. Kanishka Kapoor @ Nikkin and Anr.: 2009 (4) Mah.L.J.155 in support of his contention.[Para No.11]

    The contention that the debt owed by the petitioner was rendered unenforceable by virtue of the provisions of the Income Tax Act, 1961 is also unmerited.[Para No.13]

Debt in cash above ₹20,000 in contravention of Sec.269ss of Income Tax Act does not render the transaction unenforceable under N.I.Act
    Section 269SS of the Income Tax Act, 1961 prohibits making of any payment in cash above a sum of ₹20,000/-. Thus, any person violating the same would attract imposition of penalties under the said Act. However, the same does not render the said debt un-enforceable or precludes the lender from recovering the same.[Para No.14]

17 July 2020

No obligation on legal heirs to intimate the death of the assessee to the revenue/income tax department

Notice u/s. 148 of Income Tax Act issued to the deceased assessee requiting details of finantial transactions made by him in the past - Income tax department contacted the daughter of deceased on phone - they transferred the proceeding on her PAN - order passed against her - order challenged in writ petition

It is well settled law that an alternative statutory remedy does not operate as a bar to maintainability of a writ petition in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principles of natural justice or where the order or notice or proceedings are wholly without jurisdiction or the vires of an Act is challenged. [See Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai and Others, (1998)8 SCC 1].[Para No.23]

No obligation on legal heirs to intimate the death of the assessee to the revenue/income tax department

Further, the fact that an assessment order has been passed and it is open to challenge by way of an appeal, does not denude the petitioner of its right to challenge the notice for assessment if it is without jurisdiction. If the assumption of jurisdiction is wrong, the assessment order passed subsequently would have no legs to stand. If the notice goes, so does the order of assessment. It is trite law that if the Assessing Officer had no jurisdiction to initiate assessment proceeding, the mere fact that subsequent orders have been passed would not render the challenge to jurisdiction infructuous. In Calcutta Discount Co. Ltd. Vs. Income Tax Officer, Companies District I Calcutta and Another, AIR 1961 SC 372 the Supreme Court has held as under:-
"27. .....It is well settled however that though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Courts, it is well settled, will issue appropriate orders or directions to prevent such consequences.
28. Mr Sastri mentioned more than once the fact that the Company would have sufficient opportunity to raise this question viz. whether the Income Tax Officer had reason to believe that underassessment had resulted from non-disclosure of material facts, before the Income Tax Officer himself in the assessment proceedings and if unsuccessful there before the appellate officer or the Appellate Tribunal or in the High Court under Section 66(2) of the Indian Income Tax Act. The existence of such alternative remedy is not however always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting without jurisdiction from continuing such action.
29. In the present case the Company contends that the conditions precedent for the assumption of jurisdiction under Section 34 were not satisfied and come to the court at the earliest opportunity. There is nothing in its conduct which would justify the refusal of proper relief under Article 226. When the Constitution confers on the High Courts the power to give relief it becomes the duty of the courts to give such relief in fit cases and the courts would be failing to perform their duty if relief is refused without adequate reasons....."[Para No.24]
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