IMPORTANT TAX JUDGEMENTS

Direct Taxation

• Cash Availability with Different Companies Sufficient to Explain Cash Found during Search
  The ITAT concluded that the availability of cash with different companies within the group sufficiently explained the cash found during the search. [DCIT Vs Creamy Foods Ltd (ITAT Delhi),06/12/2023; ITA No. 2179/DEL/2022, ITA No. 1911/DEL/2022]
• Land on Leasehold basis INCOME TAX : Where assessee was allotted land on leasehold basis, since recognition of right to use lease hold land as intangible asset as per statement of account was not disputed by revenue, claim of depreciation was correctly made by assessee. Where assessee was allotted land on leasehold basis, since recognition of right to use lease hold land as intangible asset as per statement of account was not disputed by revenue, claim of depreciation was correctly made by the assessee.
  TRANSFER PRICING : Where assessee provided corporate guarantee to its AE, since assessee borrowed loan from bank at an effective rate of interest at 4.06 per cent per annum whereas AE had borrowed loan at rate of 4.92 per cent per annum despite corporate guarantee furnished by assessee, applying interest saving approach as assessee had not obtained any saving of interest/bank charges it would not be justifiable to make any addition on account of furnishing corporate guarantee to AE . [Adani Ports & Special Economic Zone Ltd.vs. Joint Commissioner of Income-tax (OSD); IT APPEAL NO. 319 (AHD.) OF 2020]

GST

• Demand stayed where petitioner wants to avail alternative remedy under section 112
  Held where petitioner wants to avail alternative remedy under provisions of law by approaching second appellate Tribunal which had not been constituted, therefore, as an interim measure subject petitioner depositing entire tax demand within 15 days, rest of the demand should be stayed. [Niranjan Parmanik vs.Commissioner of CT & GST, Odisha; W.P (C) NO.34924 OF 2023, I.A. NO. 16916 OF 2023] 
• If seller existed at the time of the supply but subsequently it was found non- existent- Buyers not to suffer Held where at time of supply, seller existed but subsequently it was found non-existent, since Authorities could have very well verified as to whether after filing of GSTR-1 and GSTR-3B how much tax had been deposited by selling dealer but authorities had failed to do so, impugned order raising demand for entire amount of tax could not be sustained. [Rama Brick Field vs. Additional Commissioner, Grade-2; WRIT TAX NO. 909 OF 2022] 
• GST Registration cannot be retrospectively Cancelled Arbitrarily: Delhi HC
  The Delhi High Court delivered a significant judgment on the retrospective cancellation of GST registration. The court addressed the arbitrary nature of such cancellations and emphasized the importance of providing valid reasons. [Sanchit Jain Vs. Avato Ward-46 Stae Goods & Service Tax; P.(C) No. 16211 Of 2023, C.M. Appl. No. 65181 Of 2023] 
• Refund of Tax paid on export is not barred by period of Limitation: Delhi HC
  Delhi high court held that the petitioner would be entitled to refund of tax paid (IGST paid either under the RCM on inputs or the IGST on exports). The revenue’s contention that any claim for refund of ITC would be barred is also not persuasive. [Grapes Digital pvt. Ltd. Vs Principal Commissioner & Anr (Delhi High Court); P.(C) No. 2918/2021. 
• ITC claimed by the Recipient cannot be denied without conducting due diligence of Supplier
  The Hon’ble Supreme Court reaffirmed on Dec.14,2023 the order wherein the Court set aside the order of reversing excess credit availed in Form GSTR-3B as compared to Form GSTR-2A and held that the demand notice issued to the assessee for reversing the ITC could not be sustained without proper inquiry into the supplier’s actions[ Assistant Commissioner Of State Tax Vs Suncraft Energy Private Limited & Ors. (Supreme Court of India); Special Leave to Appeal (C) No(s).27827-27828/2023]
  Editor’s comment: The GST law has undergone a shift now and GST credit is now legally restricted to what is reflected in GSTR 2 A. The judgement is very important and relevant for earlier tax periods.
• SEBI directs Raju brothers, SRSR, Srinivas & Ramakrishna to disgorge gains of 624 crores from insider trading in Satyam shares
• Directors and employees of Satyam CSL since January 2001, connived and collaborated in overstatement, fabrication, falsification and misrepresentation of books of account and financial statements of SCSL. They presented a rosy picture about the financials of SCSL before its investors in order to mislead them and ultimately to defraud them. Further, B Suryanarayana Raju, the brother of Ramalinga Raju had sold shares during the period January 2001 to December 2008 when in possession of unpublished price sensitive information about the adverse financial position of the company. SEBI ordered B. Ramalinga Raju and B. Rama Raju to restrain from accessing the securities market and further prohibit them from buying, selling or otherwise dealing in securities, directly or  indirectly, or being associated with the securities market in any manner, till July 14.2028. Also, SEBI directed that the Noticees shall disgorge the unlawful gain made by them along with simple interest at the rate of 12% per annum from January 7, 2009 till the date of payment. As directed by the Hon’ble SAT vide its order dated February 02, 2023, the unlawful gain shall be borne individually. [Satyam Computers Services Ltd., In re ANANTH NARAYAN G., MEMBER WTM/AN/SRO/29840 OF 2023-24] 
• Order passed by SEBI cannot travel beyond the measures proposed in the Show Cause Notice
  Where Show Cause Notice issued under section 11B of SEBI Act asked the noticee Venture Capital Fund in winding up as to why suitable directions under section 11B and Regulations 29(c) and 29(d) of Venture Capital Fund should not be issued, SEBI (Whole Time Member) cannot pass directions u/s 11(4)(b) of SEBI Act barring directors of the VCF from accessing securities market or imposing penalty u/s 11B as these measures were not proposed in show cause notice and notice was not put on notice. [Urban Infrastructure Trustees Ltd. v. Securities and Exchange Board of India; APPEAL NOS. 93 TO 99 OF 2023]