Some Recent Imp Case Laws on Direct Tax

CCIT vs. Pampapathi



Tax deductible at source has to be excluded from tax payable while computing advance tax as

provided in section 209(1)(d), even if tax had not actually been deducted.





Dy. CIT vs. Pride Former SAS



Proceedings under section 158BD, have to be initiated within reasonable time after completion

of proceedings under section 158BC. Proceedings under section 158BD initiated beyond six

years of conclusion of proceedings under section 158BC are barred by time even though there is

satisfactory explanation for the delay.





Saroj Nursing Home vs. ACIT



Recording of satisfaction is mandatory and imperative before assumption of jurisdiction under

section 158 BD.



Manoj Aggrwal vs. Dy. CIT



It could not be said that passing of prohibitory order under sub section (3) of section 132 is in all

cases only to extend period of limitation for making assessments, without any facts and

circumstances or evidence justifying said conclusion and in bonafide case, where there is no such

attempt and prohibitory order is passed in normal course and bonafide reasons, search cannot be

deemed to have been concluded on day on which said order was passed.



Smt. Krishna Verma vs. ACIT



Business Expenditure - Education Expenses of son of Director –S. 37

Expenditure incurred on foreign education of a director who is son of director is not allowable as

deduction as the process of his admission to the foreign university had started even before he was

made a director and his appointment as a director was simply to ruse to claim deduction of said

expenditure which is personal obligation of his father and there is no nexus between the

expenditure and the business of the company.





UPS Freight Services vs. ACIT Source: www.itatonline.org



Income – Perquisite - Voluntary Gifts – S. 28(iv)

Assessee never charging any fee from his followers for attending his lectures gift of Rs

122,70,795, received by the assessee on his 80th birth day from his followers out of regard and

respect to the qualities of the assessee could not be charged to tax as "benefit" or "perquisite"

under section 28 (iv) of the Act.





Nirmala P. Athavale vs. ITO

Interest – S. 234D



Section 234 D, inserted by taxation laws (amendment) Act, 2003, w.e.f. 1st June 2003, being

substantive in nature, has no retrospective effect, hence applicable from asst year 2004-05, only.

Automated Securities vs. ITO (itatonline.org)

Profits and Gains from New Industrial Undertakings - Duty Draw Back and DEPB – S. 80 IB

Assessee, manufacturer and exporter, was entitled to deduction under section 80 IB, in respect of

duty draw back and DEPB received by it as same had a direct nexus with business of its

industrial undertaking.





Rajkumar Dugar (HUF) vs. ITO



Search and Seizure – Apportionment of Seized Assets - Cash Seized – S. 132B, 158BC (d) ,234

B & 234C

Assessee having requested the department to adjust the cash seized during the search against his

tax liability. The department has to adjust the seized amount towards the advance tax etc from

the date it was seized.



Sudhakar M. Shetty vs. ACIT



Unexplained Investment – S. 68,69, 69B

Where the assessee is not maintaining any books of account, section 68 will not be applicable,

yet cash deposit in bank should be explained by assessee under section 69 or section 69B.

Unless assessee by any clinching evidence, shows nature and source of money deposited in to

bank account, same should be added as assesses's unexplained income.





Manoj Aggrwal vs. Dy. CIT



Even when entry has been made in books of account of assessee as required by Voluntary

Disclosure of Income Scheme (VDIS) 1997, section 68 of Income Tax Act, can be invoked when

declared asset is sold later and sale proceeds are credited in books of account.