Direct Tax Alert

Recent Updates

ITR Form-U for Updated Income Tax Return: CBDT notifies form and manner for filing Updated Return in Notification no. 48/2022 dated 29.04.2022.

Updated return can be filed from the assessment year 2020-21 inwards.

CBDT issues revised norms for constitution of committee to deal taxpayer’s grievance from high pitched assessment. Instruction F. No. 225/101/2021-ITA-II, DATED 23-4-2022

Important Judicial Precedents

OECD and Indian TP guidelines don’t prohibit selecting foreign AE as tested party for TP Study

Indian Transfer Pricing guidelines issued by Institute of Chartered Accountants of India vide guidance note on report under section 92E by ICAI and transfer pricing guidelines issued by OECD do not prohibit foreign AE to be a tested party, therefore, where assessee company was a more complex entity when compared to its foreign AE, said foreign AE could be selected as a tested party

In course of transfer pricing proceedings, where segmental results are available, adjustment can be made only on basis of individual transaction and not on aggregation basis [PCIT V. Almatis Alumina Pvt. Ltd. [2022] 137 taxmann.com 202 (Calcutta-HC)]

The High Court of Kerala disallows to entitle to any interest on refund u/s 244A. Omission or commission in the return filed by the assessee resulting in a delay in assessment is attributable to the assessee; hence, the time taken to cure those omissions and defects is excluded for interest calculation.

Having availed the time for rectifying the defects and claiming interest for the defect rectification time is unavailable. Such an interpretation does not fit into the requirement of filing a return fully compliant with the order of assessment, levy of interest, refund etc.

If period taken by the assessee for curing the defects is not excluded while calculating interest, then, for no fault of the Department, the Department is called upon to compensate by way of interest.

[SBI vs. Chief Commissioner of Income Tax (Kerala HC)]

No interference of High Court for reassessment of Derivative loss incurred in March:

HC declines to interfere in proceedings for reassessment of loss from suspicious derivative trade in March, as notice u/s 148 was based on tangible material.

• Where AO’s reassessment notice was based on tangible material from Department’s insight portal which showed that derivatives of same scripts were bought and sold within seconds in March resulting into huge loss and assessee was unable to satisfy AO that transactions were genuine, AO was justified in dismissing assessee’s objections with an order that he intended to proceed with reassessment proceedings.

• No interference by High Court is called for as the petitioner/assessee will have full opportunity to prove his case before the assessing officer in the proceedings of reopening of the assessment u/s 148 of the IT Act.

• The opinion expressed by the assessing officer u/s 148 of the IT Act is only a prima facie view taken by the assessing officer for the purpose of further enquiry which can be changed after giving an opportunity of being heard and to demonstrate as to how the belief of assessing officer that the income of the petitioner had escaped assessment was incorrect. [Shrikant Phulchand Bhakkad (HUF) vs. The Joint Commissioner of Income Tax. Bombay HC]

• Mumbai ITAT dismisses Assessee’s appeal, upholds addition to book profits of the amount offered under normal tax provisions and reflected in Form 26AS; ITAT Opines that “once the error was committed by the assessee in preparation of Profit and loss statement by not adding the entire amount shown in 26AS as income of the assessee either on account of omission, inadvertent error or by way of fraud which was otherwise required to be included in the statement of the profit and loss account, then it cannot be said that the said amount which was wrongly or deliberately or otherwise left to be included in the book of accounts, cannot be added to the book profit for the purpose of section 115JB”;  [TS-135-ITAT-2022(Mum)]