194C:TDS provisions:Ist Year:HUF/Individual;Hardship(mass impact; can apply to non residents initial payments in year beginning); TDS by Hospital Doctors payments; DTAA benefit (Netherlands Co.) Doc's required'; Cap. Gains or Bus. income: Shares

*IN THE HIGH COURT OF GUJARAT AT AHMEDABAD*

*SPECIAL CIVIL APPLICATION No. 12243 of 2009 Date : 16/07/2012*

*HARSHADBHAI NARANBHAI BAGADIA **14. In the present case, admittedly such
condition was not satisfied in the preceding financial year. The AO however
interpreted that liability to deduct tax at source would arise even if the
case of the assessee fell under clauses (a) or (b) of Section 44AB in the
current financial year. We do not see how such interpretation is possible.
Firstly, proviso to sub-section (2) of Section 194C clearly refers to
financial year immediately preceding the financial year in which sum is
credited or paid to the sub-contractor. Statutory provisions do not permit
any ambiguity.*

15. Even otherwise the interpretation put forth by the Revenue would lead
to anomalous *situation. The assessee as an individual or HUF may be
required to make the payments to a sub-contractor on the first date of the
financial year or at any rate in the early part of the financial year. At
that stage, the assessee would obviously not be in position to foresee
whether total sales, gross receipts or turnover would exceed statutory
limits and his accounts would be therefore required to be audited under
Section 44 AB of the Act. In such a situation, the assessee could not be
expected to deduct tax at source. If out of abundant caution, he did deduct
the tax at that stage, the recipient of the payment would legitimately
object to any such deduction. Moreover, eventually during the financial
year under consideration, if the assessee's total sales, gross receipts or
turnover did not exceed statutory limits, the entire exercise of deduction
of tax at source would be unauthorized. On the other hand, if the assessee
did not deduct the tax and by the year end, found that his total sale,
gross receipts or turnover had exceed the limit, he would be liable to be
declared a defaulter with grave consequences of such payments though
actually made, being discarded for deduction under Section 40(a)(ia) of the
Act. Surely, the statute never intended to bring about such strange
results. It is precisely for this reason that the liability of an
individual or HUF to deduct tax at source upon the payments being made to
the sub-contractor, is made relatable to his gross receipts, sales or total
turnover of the financial year immediately preceding the year when such
payment is made or credited.*

*16. In the result, we are of the opinion that the Assessing Officer's
reason to believe that the income chargeable to tax in case of the assessee
has escaped assessment is without any foundation and lacks validity. When
the sole reason of reopening of the assessment fails, the notice itself is
rendered in valid and the same is therefore quashed. Rule is made absolute.
No cost.*

* *

*APOLLO HOSPITALS INTERNATIONALLTD *

*IN THE HIGH COURT OF GUJARAT AT AHMEDABAD*

*TAX APPEAL No. 827 of 2011*

6*. Another important aspect was that the consultant doctors had filed
their individual returns of their income showing professional fees received
from the assessee and on that they had paid tax. The assessing officer
directed for payment of interest under section 201(1A) of the Act. On the
issue of charging of interest the fact that those consultant doctors were
independently assessed was of signifying relevance inasmuch as since they
were paying tax, there was no loss to the Revenue. In such facts and
circumstances, the Tribunal correctly concluded that charging interest was
not justified*.



*6.1. As discussed above, the Tribunal took into account all the relevant
aspects from the material on record to arrive at a conclusion that the
consultant doctors were not getting salary, but the payment to them was in
nature of professional fees. The contract with them by the assessee was one
of contract `for service' and `not of service'. Therefore, tax was being
rightly deducted at source under section 194J and section 192 of the Act
had no application. The findings and conclusions of the Tribunal are
proper. There is no error of appreciation. We are in agreement with the
same. No substantial question of law arises for consideration.*



* *

*IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 12 *

*of 2012 MITSUTOR SHIPPING AGENCY PVT LTD**. *

3.2 In the proceedings of appeal, upon an application by the respondent,
the appellate commissioner permitted production of certain documents by the
assessee. He was of the view that due to short time the assessee could not
produce the same before the Assessing Officer. *Copies of certificate of
incorporation in Netherlands, certificate of residence, minute of the
Annual General Meeting etc. were produced by the respondent assessee*.
These evidences were sent to Assessing Officer for his comments and the
Assessing Officer submitted his remand report.

*From the material documents allowed to be produced, the assessee could
satisfy the Commissioner (Appeals) that the place of effective management
of its enterprises was situated at Netherlands and thus, the requirement of
condition in Article 8A of DTA agreement was met with. The Tribunal has
rightly confirmed the decision of the Appellate Commissioner holding the
assessee to be eligible for benefits of DTAA. While confirming the findings
of the Commissioner, the Tribunal also observed that Revenue had failed to
point out any contrary material either from the record or at the time of
hearing before it. *

*6.1 The Commissioner (Appeals) as well as the Tribunal, have concurrently
arrived at the findings that the assessee is eligible for the benefit. The
finding arrived at by the Tribunal is based on material before it and was
based on the reading of the documents submitted by assessee whereby it was
pointed out that necessary requirement about place of effective management
under the relevant clause of agreement was satisfied. No substantial
question arises for consideration of this Court. *

* *

*IN THE HIGH COURT OF GUJARAT AT AHMEDABAD *VAIBHAV J SHAH (HUF) TAX
APPEAL No. 77 of 2010 "Whether the Appellate Tribunal is right in law and
on facts in confirming the order passed by CIT (A) in directing to tax the
income earned from trading in shares under the head 'LTCG/STCG' as shown by
the assessee instead of taxing it under the head 'Income From Business &
Profession' ?" However, the question with regard to assessment Year
2005–2006 and 2006–2007 were left open as according to the Department,
large number of transactions took place which required separate
consideration. Both these Tax Appeal relate to the Assessment Years
2005–2006 and 2006–2007 respectively.

9*. In view of the aforesaid decisions of the Apex Court as well as of this
Court, it is clear that where number of transactions of sale and purchase
of shares takes place, the most important test is the volume, frequency,
continuity and regularity of transactions of purchase and sale of the
shares. However, where there is repetition and continuity, coupled with
magnitude of the transaction, bearing reasonable proportion to the strength
of holding, then an inference can be drawn that activity is in the nature
of business. Learned counsel for the revenue from the records could not
demonstrate that there were large number of transactions which had
frequency, volume, continuity and regularity and fell within the tests laid
down by the Division Bench of this Court*. 10. For the aforesaid reasons,
we are of the considered opinion that the income earned by the assessee
from trading in the shares under the head long term capital gain / short
term capital gain was correctly shown. *We do not find that in the
Assessment Year 2005-2006 and 2006-2007, the transaction of sale of shares
and volume were substantial. We do not find any error or irregularity in
the impugned order passed by the Tribunal*. The substantial question of law
framed by this Court as mentioned above is answered in the affirmative and
against the revenue. Both these Tax Appeals are accordingly dismissed.
Refer *Commissioner of Income-tax v. Rewashanker A. Kothari (2006) 283 ITR
338 (Guj.) Commissioner of Income Tax, Bombay v. H. Holck Larsen, 160 ITR
67 (SC)*, *Commissioner of Income Tax, Bombay v. H. Holck Larsen, 160 ITR
67 (SC)*,