CORPORATE TAX UPDATE FOR 3rd NOVEMBER 2015
CORPORATE UPDATION
- Cash loans to firm couldn’t held as Inter-firm transactions due to common partner in both firms; penalty upheld [2015] (Karnataka)HIGH COURT OF KARNATAKA
Commissioner of Income-tax, Mysore
Canara Housing Development Co.*
Section 269T, read with section 271E, of the Income-tax Act, 1961 – Loans deposits mode of taking or accepting – Assessment year 2005-06 – During assessment proceedings, Assessing Officer noted that assessee-firm had repaid certain advances/loans to ‘AI’ in cash – He thus issued a notice to assessee as to why penalty under section 271E should not be imposed – In response to said notice, assessee submitted that since one of partners of assessee and AI firms was common, and both firms were carrying on business in real estate, these were inter-firm transactions which could not be described as loan or deposits within meaning of section 269T – Assessing Officer rejected assessee’s explanation and passed a penalty order under section 271E for violating provisions of section 269T – Whether merely because one partner was common, would not justify parking of such huge funds by one firm in another firm except by way of a loan or deposit – Held, yes – Whether even otherwise, since it was not a case of one stray payment of some amount in cash having been made by assessee but there was a series of payments made in cash spread over nearly five months during relevant period, impugned penalty order did not require any interference – Held, yes [Para 21] [In favour of revenue]
- CBDT issues new instructions to streamline process of departmental representation before AAR
- The Institute of Chartered Accountants of India.
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