Section 155 — the law in short
What the courts have decided on section 155, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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G R Infraprojects Limited v ACIT
High CourtHelps taxpayerValidity unconfirmed
I withdrew my education cess claim after the Finance Act 2022 inserted section 155(18). Can the officer still treat it as under-reported income and levy penalty?
The Rajasthan High Court set the penalty aside and directed that immunity under s.270AA be granted. Where the company withdrew its cess claim by letter dated 19 March 2022, before s.155(18) came into force on 1 April 2022, and accepted the proposed variation, it was entitled to immunity from penalty under s.270A, and the initiation was in any event non est because the officer never specified which limb of s.270A(9) was attracted.
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GRK Agencies v ITO — a deed saying salary 'as may be mutually agreed' will not carry a section 40(b)(v) claim
ITATHelps departmentValidity unconfirmed
Our partnership deed says partners' salary will be as mutually agreed from time to time, and we passed a resolution fixing the amounts. The officer has disallowed the whole remuneration. Can he?
Yes, on those facts. The Tribunal held that a clause providing that salary 'be paid every month/year as may be mutually agreed between the partners from time to time' neither fixes a sum, fixed or variable by reference to profits, nor identifies which partners are working partners, and is therefore at best an authorisation to pay salary and nothing more. Because s.40(b)(ii) requires the payment to be both 'authorised by' AND 'in accordance with' the terms of the deed, identification of the partner and quantification of the remuneration are prerequisites to the deduction, and a later resolution on the firm's letterhead — unstamped, unregistered, undated by the signatories and produced only when the officer asked — could not be treated as a valid amendment of the deed.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.