Some of the case laws on Income Tax decided in the month of Nov’ 2012:

1. Where assessee continued his employment with the firm, and was also given commission under Non-Compete Agreement ('NCA') for doing what he was normally expected to do (i.e. work for the said firm in his area of expertise), the commission amount clearly was part of salary - Commissioner of Income-tax – XIII v. Kanwaljit Singh [2012] 28 28 (Delhi)

2. It cannot be contended that even after the passing of the assessment order, provisional attachment order under section 281B shall still remain in force for six months - Motorola Solutions India (P.) Ltd. v. CIT, Faridabad [2012] 27 327 (Punjab & Haryana)

3. Settlement Commission is barred from entertaining a settlement application in cases where the time limit prescribed for making an assessment order under section 143/144 has expired because after expiry of time limit nothing is actually pending which needs consideration before the AO - Commissioner of Income-tax v. Income-tax Settlement Commission [2012] 27 239 (Delhi)

4. Where business was started with funds not belonging to assessee trust but with aid of borrowings etc. and profits of business were also utilised to pay off the borrowings, such business could not be said to constitute "property held under trust" - Commissioner of Income-tax v. Mehta Charitable Prajnalay Trust [2012] 28 73 (Delhi)

5. Non-filing of returns by assessee-trust for last several years cannot be a ground for declining to grant registration under section 12AA to it - Commissioner of Income-tax-1 v. Shri Advait Ashram Society [2012] 28 18 (Allahabad)

6. Where assessee, a co-operative bank, earned interest on deposits of its non statutory liquidity ratio funds, said interest would qualify for deduction under section 80P(2)(a)(i) - Commissioner of Income-tax, Muzaffarnagar v. Muzaffarnagar District Co-Operative Bank Ltd. - [2012] 28 132 (Allahabad)

7. Since validity of rule 3, which was under challenge, was upheld by Supreme Court in a case, assessee-employee would be revert back to original position in so far as TDS obligation under section 192 read with rule 3 was  concerned - Regional Dir. ONGC Ltd. v. Assn. of SC & Tech. Offr. ONGC Ltd. - [2012] 27 222 (SC)

8. Ordinarily, provisions of section 179(1) cannot be applied to a public company. However, if glaring facts establish that the public company was only a conduit for creation of unaccounted money and mis-appropriating it by directors., corporate veil can be lifted and directors made liable for company's dues. There is no reason why such double application of lifting the corporate veil one statutorily provided (in case of private companies) and other due to emergent need of the situation (in case of public companies), cannot be applied - Pravinbhai M. Kheni v. Assistant Commissioner of Income-tax, Central Circle-2&2 [2012] 28 111 (Gujarat)

9. Delhi HC upholds penalty under section 271(1)(c) on assessee involved in bogus donations racket to claim deduction under section 35CCA. Penalty under section 271(1)(c) justified where assessee involved in bogus donations racket to claim deduction under section 35CCA notwithstanding the fact that assessee filed a revised return of income withdrawing the deduction claim after survey took place in assessee's premises and assessee's cash book impounded - Commissioner of Income-tax, Delhi-VI v. Usha International Ltd. [2012] 27 227 (Delhi)

10. Without considering real market price, addition cannot be made merely on basis of higher consideration declared for purpose of stamp duty. Where assessee purchased properties and claimed that sale consideration on its behalf was paid by a person and also filed all necessary documents in this regard, Assessing Officer was wrong in adding back amount of sale consideration to income of assessee as unexplained cash credit - Commissioner of Income-tax, Delhi-II v. Khoobsurat Resorts (P.) Ltd. [2012] 28 93 (Delhi)

11. Amount paid as non-compete fee does not qualify for depreciation under section 32(1)(ii). Non-compete fee paid by assessee to its erstwhile partner as consideration for not setting up any business of similar nature for a period of seven years amounted to capital expenditure and, thus, same was not allowable under section 37(1) - Sharp Business System v. Commissioner of Income-tax-III [2012] 27 50 (Delhi)

12. Amortization of premium paid for long lease of land on nominal lease rent, is not allowable - GAIL India Ltd. v. Joint Commissioner of Income-tax [2012] 27 97 (Delhi)

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