Here is Direct Tax Quick Weekly Flashback:
Supreme Court
Case Name: Ayodhya Rami Reddy Alla v/s Principal Commissioner Of Income Tax (Central) & Ors.
Citation: Special Leave to Appeal (C) No.14159/2024
The Supreme Court has admitted the Special Leave Petition (SLP) filed by Ayodhya Rami Reddy Alla against the judgement passed by the Telangana High Court.
The court has granted leave in the matter and issued the notice which is returnable on 23rd September, 2024, on the application for interim relief.
The Telangana High Court dismissed the writ petitions filed by the taxpayer, Ayodhya Rami Reddy Alla against the invocation of General Anti-Avoidance Rules (GAAR) provisions.
The taxpayer contended that the transaction is covered under the ambit of Specific Anti-Avoidance Rules(SAAR), and hence, GAAR should not apply.
The Telangana High Court held that the arrangement was an impermissible avoidance arrangement, as it lacked commercial substance. Both GAAR and SAAR provisions could be applied, depending on the facts of each case.
Delhi High Court
AO Obliged To Refund Amount Which Becomes Payable By An Order Passed In Appeal AO: Delhi High Court
Case Name: ESS Singapore Branch V/S Deputy Commissioner Of Income Tax & Ors.
Citation: W.P.(C) 6589/2024
The Delhi High Court ruled that the AO is obliged to refund the amount which becomes payable by an order passed in appeal AO.
The bench said that in cases where a refund becomes due and payable consequent to an order passed in an appeal or other proceedings, the AO is obliged to refund the amount to the assessee without it having to make any claim in that behalf. The reference to Section 239 is thus clearly misconceived. The claim of the petitioner for being accorded credit of the entire TDS as reflected in Form 26AS was thus liable to be accorded recognition along with interest to be computed in accordance with Section 244A of the Act.
The bench viewed that it would be wholly illegal and inequitable for the respondents to give short credit to the tax duly deducted and deposited based on the claim that may be made in a Return of Income.
The bench noted that insofar as the question of rights to live feed being treated as royalty is concerned and other allied issues pertaining to the merits of the dispute stand settled right up to the Court.
Circulars & Notifications
The Central Board of Direct Taxes notified that only persons who are involved in serious financial irregularities to obtain income-tax clearance certificate.
the CBDT, vide its Instruction No. 1/2004, dated 05.02.2004, has specified that the tax clearance certificate under Section 230(1A) of the Act, may be required to be obtained by persons domiciled in India only in the following circumstances:
i. where the person is involved in serious financial irregularities and his presence is necessary in investigation of cases under the Income-tax Act or the Wealth-tax Act and it is likely that a tax demand will be raised against him, or
ii. where the person has direct tax arrears exceeding Rs. 10 lakh outstanding against him which have not been stayed by any authority. Further, a person can be asked to obtain a tax clearance certificate only after recording the reasons for the same and after taking approval from the Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax.
The ITCC under Section 230(1A) of the Act, is needed by residents domiciled in India, only in rare cases, such as (a) where a person is involved in serious financial irregularities or (b) where a tax demand of more than Rs. 10 lakh is pending which is not stayed by any authority.
