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The assessee entered into an agreement for sale and made substantial payment for a property in the assessment year (AY) 2013-14. The Assessing Officer (AO) was not convinced with the different versions of sources provided by the assessee for the purchase and made an addition u/s 69 in AY 2014-15. The Commissioner of Income Tax (Appeals) [CIT(A)] rightly decided that the transaction pertained to AY 2013-14 and advised the AO to reopen the assessment for AY 2013-14. However, the advice given by the CIT(A) has only advisory value and cannot be treated as a direction. The CIT(A) erroneously invoked Section 56(2)(vii)(b)(ii), which was amended effective from AY 2014-15, for the transaction pertaining to AY 2013-14. As per the ruling in M. Syamala Rao's case, the CIT(A) cannot invoke provisions amended with effect from a subsequent assessment year on transactions pertaining to a previous assessment year. Consequently, the additions made by the CIT(A) by invoking Section 56(2)(vii)(b)(ii) were deleted by the Income Tax Appellate Tribunal (ITAT).
The assessee entered into an agreement for sale and made substantial payment for a property in the assessment year (AY) 2013-14. The Assessing Officer (AO) was not convinced with the different versions of sources provided by the assessee for the purchase and made an addition u/s 69 in AY 2014-15. The Commissioner of Income Tax (Appeals) [CIT(A)] rightly decided that the transaction pertained to AY 2013-14 and advised the AO to reopen the assessment for AY 2013-14. However, the advice given by the CIT(A) has only advisory value and cannot be treated as a direction. The CIT(A) erroneously invoked Section 56(2)(vii)(b)(ii), which was amended effective from AY 2014-15, for the transaction pertaining to AY 2013-14. As per the ruling in M. Syamala Rao's case, the CIT(A) cannot invoke provisions amended with effect from a subsequent assessment year on transactions pertaining to a previous assessment year. Consequently, the additions made by the CIT(A) by invoking Section 56(2)(vii)(b)(ii) were deleted by the Income Tax Appellate Tribunal (ITAT).
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