Wednesday, July 7, 2010

INCOME TAX REPORTS (ITR) Volume 325 : Part 1 (Issue dated 12-7-2010)

INCOME TAX REPORTS (ITR)

Volume 325 : Part 1 (Issue dated 12-7-2010)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Accounting --Rejection of accounts--Onus on Revenue to show accounts incorrect or incomplete--Assessing Officer rejecting book results on low net profit--Finding that accounts maintained by assessee neither defective nor incomplete--Findings of fact--Income-tax Act, 1961, s. 145(3)-- CIT v. Paradise Holidays (Delhi) . . . 13

Appeal to High Court --Amount received on dissolution of partnership--Question regarding assessability considered by High Court--Question regarding quantum not raised before Tribunal--High Court could not consider question--Income-tax Act, 1961, s. 260A-- Davangere Maganur Bassappa and Sons v. ITO (Karn) . . . 139

----Power of court to admit new ground--Tribunal holding sum in question not taxable under section 28(i)--Appeal by Department seeking to tax sum under section 28(iv)--Facts before court and not disputed--Pure question of law--Can be raised--Income-tax Act, 1961, ss. 28(i), (iv), 260A-- CIT v. Jindal Equipments Leasing and Consultancy Services Ltd. (Delhi) . . . 87

Assessment --Orders under section 143(1)(a)--Claim for investment allowance beyond period of limitation--Claim for prior period expenses without specifying provision under which claim was made--Assessing Officer justified in disallowing amounts--Income-tax Act, 1961, s. 143(1)(a)-- CIT v. Vanaja Textiles Ltd. (Ker) . . . 132

Association of persons --No provision for assessing member independently--Income-tax Act, 1961, s. 3(1)(b), (f)-- Pradeep Trust v. CIT (Cal) . . . 1

Bad debts --Classification of debts as bad--Change of law--Assessee writing off debts as bad debts in books was in compliance with requirement of section 36(1)(vii)--Income-tax Act, 1961, s. 36(1)(vii)-- CIT v. Omprakas B. Salecha (Bom) . . . 24

Business --Business income--Business expenditure--Steel plant not commencing production--Income from deposits--Tribunal assessing as business income and allowing expenditure thereagainst--Relief granted without considering all points--Matter remanded--Income-tax Act, 1961, s. 2(13)-- CIT v. Jindal Vijaya-nagar Steel Ltd . (Karn) . . . 144

Business income --Benefit or perquisite arising in course of business of nature other than cash or money--Assessee an investment company--Loan taken from another company partially written off by creditor--Sum written off--Not income having regard to nature of assessee's business--Not taxable--Income-tax Act, 1961, ss. 28(i), (iv), 41(1)-- CIT v. Jindal Equipments Leasing and Consultancy Services Ltd . (Delhi) . . . 87

----Deemed income--Remission of liability--Liability still outstanding--Addition under section 41(1) not valid--Income-tax Act, 1961, s. 41(1)-- CIT v. GP International Ltd. (P&H) . . . 25

Capital gains --Computation of capital gains--Deductions--Cost of acquisition of asset--Interest on amount borrowed for purchase of property--Part of cost of acquisition of property--Deductible--Income-tax Act, 1961-- CIT v. Sri Hariram Hotels P. Ltd . (Karn) . . . 136

----Exemption--Investment in specified security within six months of transfer--Date of investment would be date of payment and receipt by National Housing Bank--Income-tax Act, 1961, s. 54EC-- Hindustan Unilever Ltd . v. Deputy CIT (Bom) . . . 102

----Firm--Assets taken over by assessee on dissolution of firm--Sale within three days of dissolution--Short-term capital gains--Income-tax Act, 1961, ss. 2(42A), 45(4), 49(1)(iii)(b)--Partnership Act, 1932, s. 14-- P. P. Menon v. CIT (Ker) . . . 122

----Transfer--Distribution of capital assets on dissolution of firm--Amounts to transfer--Gains assessable--Income-tax Act, 1961, s. 45-- Davangere Maganur Bassappa and Sons v. ITO (Karn) . . . 139

Capital or revenue expenditure --Amount deposited for acquisition of distribution rights of products of a company--Failure of company to produce article--Part of deposit written off--Not deductible as revenue expenditure--Income-tax Act, 1961, s. 37-- Cochin Malabar Estates and Industries Ltd . v. CIT (Ker) . . . 129

----Theatre--Change of sound system--Change not resulting in increased income--Expenditure incurred thereon revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v. Sagar Talkies (Karn) . . . 133

Deduction of tax at source --Business expenditure--Disallowance--For failure to deposit tax deduction at source--Provision valid--Constitutional validity--Income-tax Act, 1961, ss. 40(a)(ia), 200(1)--Constitution of India, art. 14-- Rakesh Kumar and Co. v. Union of India (P&H) . . . 35

----Commission--Meaning of commission--Assessee providing cellular telephone network--Appointing distributors for selling pre-paid SIM cards--Discount allowed by assessee to distributor constituted commission--Assessee liable to deduct tax at source on such commission--Income-tax Act, 1961, s. 194H-- CIT v. Idea Cellular Ltd. (Delhi) . . . 148

----Salary--Perquisite--Reimbursement of club membership fees and allowance on soft furnishings--Assessee obtaining corporate membership for its benefit--Failure by Assessing Officer to take note of materials produced by assessee and treating sums as perquisites liable to deduction of tax at source--Matter remanded--Income-tax Act, 1961, ss. 17(2), 201(1A)-- Asst. CIT v. Brooke Bond Lipton India Ltd. (Karn) . . . 141

Depreciation --Leasing of trucks and buses--Depreciation allowable at higher rate--Income-tax Act, 1961--Income-tax Rules, 1962, Appendix I, Part A, item III, entries (2), (3)(ii)-- CIT v. Punjab Leasing (P.) Ltd. (P&H) . . . 29

Export --Deduction under section 10B--Law applicable--Effect of amendment by Finance Act, 2000--Provision now for deduction--Loss in eligible unit could be set off against profits of business--Income-tax Act, 1961, s. 10B-- Hindustan Unilever Ltd. v. Deputy CIT (Bom) . . . 102

----Special deduction--Interest--Interest on FDRs--To be included in total turnover--Income-tax Act, 1961, s. 80HHC-- CIT v. Shriram Pistons and Rings Ltd. (Delhi) . . . 46

Gift-tax --Deemed gift--Assessee purchasing non-cumulative preference shares above market value--Assessee acquiring no interest in property at that stage as no transfer is involved--Company cannot issue shares under discount under company law--No evidence that assessee purchased shares as colourable device to reduce tax liability--Gift-tax cannot be imposed--Companies Act, 1956, s. 69--Gift-tax Act, 1958, s. 4(1)(a), proviso-- CGT v. Rockman Cycle Industries P. Ltd. (P&H) . . . 18

Income --Income from tea--Computation of income--Effect of rule 8--Forty per cent. of income liable to tax--Expenditure and losses to be taken into account in calculating that income--Income-tax Act, 1961--Income-tax Rules, 1962, r. 8-- Hindustan Unilever Ltd . v. Deputy CIT (Bom) . . . 102

Income from undisclosed sources --Company--Share application money--Identity of contributors established--Failure by some of them to respond to notice under section 133--Not relevant--Amount not assessable as income of assessee--Income-tax Act, 1961-- CIT v. GP International Ltd. (P&H) . . . 25

Income-tax --General principles--Liability crystallizes on last day of previous year-- Pradeep Trust v. CIT (Cal) . . . 1

Intercorporate dividend --Special deduction--Assessee incurring expenditure for earning dividend income--Tribunal finding no basis for estimating expenditure and reducing it from dividend income--Amount of dividend and disallowance negligible--Not to be interfered with--Income-tax Act, 1961, s. 80M-- CIT v. Federal Bank Ltd. (Ker) . . . 128

International treaties --Government--Writ--Public interest litigation--Requirement to place before Parliament--Matter to be left to Government and Parliament--Court cannot adjudicate upon--Treaty to be in conformity with constitutional provisions--Constitution of India, art. 226--Income-tax Act, 1961, s. 90-- Shiva Kant Jha v. Union of India (Delhi) . . . 51

Offences and prosecution --Wilful attempt to evade tax--Firm--Partner conducting business of firm--Discrepancy in stocks of firm not explained--Conviction of partner--Valid--Income-tax Act, 1961, s. 276C-- Puran Chand v. R. K. Suman, ITO (P&H) . . . 38

Penalty --Concealment of income--Assessee director and shareholder with substantial interest in company--Assessee also partner in firm--Loan by firm to company and by company to assessee--Loan treated as deemed dividend--Consequent levy of penalty--Tribunal not justified in cancelling penalty without considering facts relied on by Assessing Officer--Matter remanded--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Alkesh K. Patel (Bom) . . . 118

----Interest--Advance tax--Delay in filing returns--Waiver of penalty and interest--Discretion to be used judiciously and fairly--Belated return filed voluntarily and taxes paid--Rejection of application for waiver--Not valid--Matter remanded--Income-tax Act, 1961, s. 273A-- Vasantbhai Jethalal Lathiwala v. CIT (Bom) . . . 41

Precedent --Effect of order of Supreme Court in Malabar Industrial Co. v. CIT [2000] 243 ITR 83-- Jewel of India v. Asst. CIT (Bom) . . . 92

Previous year --Separate previous years for separate sources of income permissible-- Pradeep Trust v. CIT (Cal) . . . 1

Reassessment --Agricultural income--Assessee having possession of certain lands--Entering into agreement to earmark lands in its possession for scheme of growing teak trees--Under agreement shifting responsibility of growing and maintaining trees to another concern--Resultant surplus not income derived from agriculture or agricultural operations--But from not encroaching upon use of land for a specific purpose--Assessee returning income earned is agricultural income--Reassessment valid--Income-tax Act, 1961, ss. 2(1A)(a), (b), 147-- Papaya Farms Pvt. Ltd. v. Deputy CIT (Mad) . . . 60

----Previous year--Joint venture business carried on by assessee with another person as association of persons--Assessee taking over business as sole proprietor on January 1, 1982--Previous year for business ending on December 31, 1981, but that of branch ending on March 31, 1982--Association of persons not including business of branch for period ending March 31, 1982 in return for 1982-83--Assessee including it in return for 1983-84--Commissioner (Appeals) approving of this and order becoming final--No justification for reopening assessment--Income-tax Act, 1961, ss. 3(1)(b), (f), 147, 148-- Pradeep Trust v. CIT (Cal) . . . 1

----Rectification of mistake--Simple computational error by Assessing Officer--Error should be rectified--Reassessment proceedings to correct error--Not valid--Income-tax Act, 1961, ss. 147, 154--H industan Unilever Ltd. v. Deputy CIT (Bom) . . . 102

----Reopening on ground suppression detected during search and seizure operations--Income disclosed in return filed prior to search--Reassessment not justified--Income-tax Act, 1961, s. 147-- Pradeep Trust v. CIT (Cal) . . . 1

Revision --Condition precedent--Order of Assessing Officer should be erroneous and also prejudicial to Revenue--Order found to be erroneous but no finding that it was prejudicial to Revenue--Order could not be revised--Income-tax Act, 1961, s. 263-- Jewel of India v. Asst. CIT (Bom) . . . 92

----Conditions precedent--Order should be erroneous and prejudicial to Revenue--Assessing Officer allowing set off of speculation loss against speculation profits in first instance--Order in accordance with CBDT circular and applying decision of High Court--Order not erroneous--Order could not be revised--CBDT Circular No. 23 (XXXIX-4)D of 1960, dated September 12, 1960--Income-tax Act, 1961, s. 263-- CIT v. Pradeep Kumar Todi (Cal) . . . 96

----Powers of Commissioner--Change in law by Finance Act, 1989, with retrospective effect from 1-6-1988--Commissioner can invoke power under section 263 even if order of assessment subject-matter of appeal--Income-tax Act, 1961, s. 263-- CIT v. Ganesh Steel Indus. (P&H) . . . . 99

Search and seizure --Block assessment--Undisclosed income--Finding that assessee had suppressed sales--Additions justified--Income-tax Act, 1961-- CIT v. Kallada Wines (Ker) . . . 125

----Seizure of jewellery from locker--Explanation given by assessee not considered--Matter remanded--Income-tax Act, 1961-- Smt. Urmila Gambhir v. CIT (Delhi) . . . 171

----Undisclosed income--Addition on account of loose sheet of paper found during search--Assessee failing to discharge onus to prove contents of paper--Concurrent findings that amount mentioned undisclosed income--Proper--Income-tax Act, 1961, ss. 132, 158BC-- Smt. Urmila Gambhir v. CIT (Delhi) . . . 171

Valuation of closing stock --Additions on account of discrepancies in record--No proof of perversity in not appreciating evidence in form of comparative results of other mill owners--Tribunal finding additions made due to absence of proper and complete record--Finding of fact--Income-tax Act, 1961-- Amba Rice Mills v. CIT (P&H) . . . 33

AUTHORITY FOR ADVANCE RULINGS

Deduction of tax at source --Reimbursement of expenses--No deduction of tax at source--Income-tax Act, 1961, s. 195-- HMS Real Estate P. Ltd., In re. . . 71

Non-resident --Not having permanent establishment in India--Agreement for provision of architectural designs--Fees for "included services"--Payment to be treated as for "included services" under article 12 of DTAA--Taxable in India--Rate of tax--Lesser rate of ten per cent.--Income-tax Act, 1961, s. 115A(1)(b)(BB)--Agreement for Avoidance of Double Taxation between India and the USA, art. 12(4)(b)-- HMS Real Estate P. Ltd. , In re . . . 71

Rate of tax --Lesser rate of ten per cent.--Income-tax Act, 1961, s. 115A(1)(b)(BB)-- HMS Real Estate P. Ltd. , In re . . . 71

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Agreement for Avoidance of Double Taxation between India and the USA :

Art. 12(4)(b) --Non-resident--Not having permanent establishment in India--Agreement for provision of architectural designs--Fees for "included services"--Payment to be treated as for "included services" under article 12 of DTAA--Taxable in India--Rate of tax--Lesser rate of ten per cent.-- HMS Real Estate P. Ltd. , In re (AAR) . . . 71

Companies Act, 1956 :

S. 69 --Gift-tax--Deemed gift--Assessee purchasing non-cumulative preference shares above market value--Assessee acquiring no interest in property at that stage as no transfer is involved--Company cannot issue shares under discount under company law--No evidence that assessee purchased shares as colourable device to reduce tax liability--Gift-tax cannot be imposed-- CGT v. Rockman Cycle Industries P. Ltd. (P&H) . . . 18

Constitution of India :

Art. 14 --Deduction of tax at source--Business expenditure--Disallowance--For failure to deposit tax deduction at source--Provision valid--Constitutional validity-- Rakesh Kumar and Co. v. Union of India (P&H) . . . 35

Art. 226 --International treaties--Government--Writ--Public interest litigation--Requirement to place before Parliament--Matter to be left to Government and Parliament--Court cannot adjudicate upon--Treaty to be in conformity with constitutional provisions-- Shiva Kant Jha v. Union of India (Delhi) . . . 51

Gift-tax Act, 1958 :

S. 4(1)(a), proviso --Gift-tax--Deemed gift--Assessee purchasing non-cumulative preference shares above market value--Assessee acquiring no interest in property at that stage as no transfer is involved--Company cannot issue shares under discount under company law--No evidence that assessee purchased shares as colourable device to reduce tax liability--Gift-tax cannot be imposed-- CGT v. Rockman Cycle Industries P. Ltd. (P&H) . . . 18

Income-tax Act, 1961 :

S. 2(1A)(a), (b) --Reassessment--Agricultural income--Assessee having possession of certain lands--Entering into agreement to earmark lands in its possession for scheme of growing teak trees--Under agreement shifting responsibility of growing and maintaining trees to another concern--Resultant surplus not income derived from agriculture or agricultural operations--But from not encroaching upon use of land for a specific purpose--Assessee returning income earned is agricultural income--Reassessment valid-- Papaya Farms Pvt. Ltd. v. Deputy CIT (Mad) . . . 60

S. 2(13) --Business--Business income--Business expenditure--Steel plant not commencing production--Income from deposits--Tribunal assessing as business income and allowing expenditure thereagainst--Relief granted without considering all points--Matter remanded-- CIT v. Jindal Vijayanagar Steel Ltd .(Karn) . . . 144

S. 2(42A) --Capital gains--Firm--Assets taken over by assessee on dissolution of firm--Sale within three days of dissolution--Short-term capital gains-- P. P. Menon v. CIT (Ker) . . . 122

S. 3(1)(b), (f) --Association of persons--No provision for assessing member independently-- Pradeep Trust v. CIT (Cal) . . . 1

----Reassessment--Previous year--Joint venture business carried on by assessee with another person as association of persons--Assessee taking over business as sole proprietor on January 1, 1982--Previous year for business ending on December 31, 1981, but that of branch ending on March 31, 1982--Association of persons not including business of branch for period ending March 31, 1982 in return for 1982-83--Assessee including it in return for 1983-84--Commissioner (Appeals) approving of this and order becoming final--No justification for reopening assessment-- Pradeep Trust v. CIT (Cal) . . . 1

S. 10B --Export--Deduction under section 10B--Law applicable--Effect of amendment by Finance Act, 2000--Provision now for deduction--Loss in eligible unit could be set off against profits of business-- Hindustan Unilever Ltd. v. Deputy CIT (Bom) . . . 102

S. 17(2) --Deduction of tax at source--Salary--Perquisite--Reimbursement of club membership fees and allowance on soft furnishings--Assessee obtaining corporate membership for its benefit--Failure by Assessing Officer to take note of materials produced by assessee and treating sums as perquisites liable to deduction of tax at source--Matter remanded-- Asst. CIT v. Brooke Bond Lipton India Ltd. (Karn) . . . 141

S. 28(i), (iv) --Appeal to High Court--Power of court to admit new ground--Tribunal holding sum in question not taxable under section 28(i)--Appeal by Department seeking to tax sum under section 28(iv)--Facts before court and not disputed--Pure question of law--Can be raised-- CIT v. Jindal Equipments Leasing and Consultancy Services Ltd. (Delhi) . . . 87

----Business income--Benefit or perquisite arising in course of business of nature other than cash or money--Assessee an investment company--Loan taken from another company partially written off by creditor--Sum written off--Not income having regard to nature of assessee's business--Not taxable-- CIT v. Jindal Equipments Leasing and Consultancy Services Ltd .(Delhi) . . . 87

S. 36(1)(vii) --Bad debts--Classification of debts as bad--Change of law--Assessee writing off debts as bad debts in books was in compliance with requirement of section 36(1)(vii)-- CIT v. Omprakas B. Salecha (Bom) . . . 24

S. 37 --Capital or revenue expenditure--Amount deposited for acquisition of distribution rights of products of a company--Failure of company to produce article--Part of deposit written off--Not deductible as revenue expenditure-- Cochin Malabar Estates and Industries Ltd . v. CIT (Ker) . . . 129

----Capital or revenue expenditure--Theatre--Change of sound system--Change not resulting in increased income--Expenditure incurred thereon revenue expenditure-- CIT v. Sagar Talkies (Karn) . . . 133

S. 40(a)(ia) --Deduction of tax at source--Business expenditure--Disallowance--For failure to deposit tax deduction at source--Provision valid--Constitutional validity-- Rakesh Kumar and Co. v. Union of India (P&H) . . . 35

S. 41(1) --Business income--Benefit or perquisite arising in course of business of nature other than cash or money--Assessee an investment company--Loan taken from another company partially written off by creditor--Sum written off--Not income having regard to nature of assessee's business--Not taxable-- CIT v. Jindal Equipments Leasing and Consultancy Services Ltd . (Delhi) . . . 87

----Business income--Deemed income--Remission of liability--Liability still outstanding--Addition under section 41(1) not valid-- CIT v. GP International Ltd. (P&H) . . . 25

S. 45 --Capital gains--Transfer--Distribution of capital assets on dissolution of firm--Amounts to transfer--Gains assessable-- Davangere Maganur Bassappa and Sons v. ITO (Karn) . . . 139

S. 45(4) --Capital gains--Firm--Assets taken over by assessee on dissolution of firm--Sale within three days of dissolution--Short-term capital gains-- P. P. Menon v. CIT (Ker) . . . 122

S. 49(1)(iii)(b) --Capital gains--Firm--Assets taken over by assessee on dissolution of firm--Sale within three days of dissolution--Short-term capital gains-- P. P. Menon v. CIT (Ker) . . . 122

S. 54EC --Capital gains--Exemption--Investment in specified security within six months of transfer--Date of investment would be date of payment and receipt by National Housing Bank-- Hindustan Unilever Ltd . v. Deputy CIT (Bom) . . . 102

S. 80HHC --Export--Special deduction--Interest--Interest on FDRs--To be included in total turnover-- CIT v. Shriram Pistons and Rings Ltd. (Delhi) . . . 46

S. 80M --Intercorporate dividend--Special deduction--Assessee incurring expenditure for earning dividend income--Tribunal finding no basis for estimating expenditure and reducing it from dividend income--Amount of dividend and disallowance negligible--Not to be interfered with-- CIT v. Federal Bank Ltd. (Ker) . . . 128

S. 90 --International treaties--Government--Writ--Public interest litigation--Requirement to place before Parliament--Matter to be left to Government and Parliament--Court cannot adjudicate upon--Treaty to be in conformity with constitutional provisions-- Shiva Kant Jha v. Union of India (Delhi) . . . 51

S. 115A(1)(b)(BB) --Non-resident--Not having permanent establishment in India--Agreement for provision of architectural designs--Fees for "included services"--Payment to be treated as for "included services" under article 12 of DTAA--Taxable in India--Rate of tax--Lesser rate of ten per cent.-- HMS Real Estate P. Ltd. , In re (AAR) . . . 71

----Rate of tax--Lesser rate of ten per cent.-- HMS Real Estate P. Ltd. , In re (AAR) . . . 71

S. 132 --Search and seizure--Undisclosed income--Addition on account of loose sheet of paper found during search--Assessee failing to discharge onus to prove contents of paper--Concurrent findings that amount mentioned undisclosed income--Proper-- Smt. Urmila Gambhir v. CIT (Delhi) . . . 171

S. 143(1)(a) --Assessment--Orders under section 143(1)(a)--Claim for investment allowance beyond period of limitation--Claim for prior period expenses without specifying provision under which claim was made--Assessing Officer justified in disallowing amounts-- CIT v. Vanaja Textiles Ltd. (Ker) . . . 132

S. 145(3) --Accounting--Rejection of accounts--Onus on Revenue to show accounts incorrect or incomplete--Assessing Officer rejecting book results on low net profit--Finding that accounts maintained by assessee neither defective nor incomplete--Findings of fact-- CIT v. Paradise Holidays (Delhi) . . . 13

S. 147 --Reassessment--Agricultural income--Assessee having possession of certain lands--Entering into agreement to earmark lands in its possession for scheme of growing teak trees--Under agreement shifting responsibility of growing and maintaining trees to another concern--Resultant surplus not income derived from agriculture or agricultural operations--But from not encroaching upon use of land for a specific purpose--Assessee returning income earned is agricultural income--Reassessment valid-- Papaya Farms Pvt. Ltd. v. Deputy CIT (Mad) . . . 60

----Reassessment--Previous year--Joint venture business carried on by assessee with another person as association of persons--Assessee taking over business as sole proprietor on January 1, 1982--Previous year for business ending on December 31, 1981, but that of branch ending on March 31, 1982--Association of persons not including business of branch for period ending March 31, 1982 in return for 1982-83--Assessee including it in return for 1983-84--Commissioner (Appeals) approving of this and order becoming final--No justification for reopening assessment-- Pradeep Trust v. CIT (Cal) . . . 1

----Reassessment--Rectification of mistake--Simple computational error by Assessing Officer--Error should be rectified--Reassessment proceedings to correct error--Not valid--H industan Unilever Ltd. v. Deputy CIT (Bom) . . . 102

----Reassessment--Reopening on ground suppression detected during search and seizure operations--Income disclosed in return filed prior to search--Reassessment not justified-- Pradeep Trust v. CIT (Cal) . . . 1

S. 148 --Reassessment--Previous year--Joint venture business carried on by assessee with another person as association of persons--Assessee taking over business as sole proprietor on January 1, 1982--Previous year for business ending on December 31, 1981, but that of branch ending on March 31, 1982--Association of persons not including business of branch for period ending March 31, 1982 in return for 1982-83--Assessee including it in return for 1983-84--Commissioner (Appeals) approving of this and order becoming final--No justification for reopening assessment-- Pradeep Trust v. CIT (Cal) . . . 1

S. 154 --Reassessment--Rectification of mistake--Simple computational error by Assessing Officer--Error should be rectified--Reassessment proceedings to correct error--Not valid--H industan Unilever Ltd. v. Deputy CIT (Bom) . . . 102

S. 158BC --Search and seizure--Undisclosed income--Addition on account of loose sheet of paper found during search--Assessee failing to discharge onus to prove contents of paper--Concurrent findings that amount mentioned undisclosed income--Proper-- Smt. Urmila Gambhir v. CIT (Delhi) . . . 171

S. 194H --Deduction of tax at source--Commission--Meaning of commission--Assessee providing cellular telephone network--Appointing distributors for selling pre-paid SIM cards--Discount allowed by assessee to distributor constituted commission--Assessee liable to deduct tax at source on such commission-- CIT v. Idea Cellular Ltd. (Delhi) . . . 148

S. 195 --Deduction of tax at source--Reimbursement of expenses--No deduction of tax at source-- HMS Real Estate P. Ltd., In re (AAR) . . . 71

S. 200(1) --Deduction of tax at source--Business expenditure--Disallowance--For failure to deposit tax deduction at source--Provision valid--Constitutional validity-- Rakesh Kumar and Co. v. Union of India (P&H) . . . 35

S. 201(1A) --Deduction of tax at source--Salary--Perquisite--Reimbursement of club membership fees and allowance on soft furnishings--Assessee obtaining corporate membership for its benefit--Failure by Assessing Officer to take note of materials produced by assessee and treating sums as perquisites liable to deduction of tax at source--Matter remanded-- Asst. CIT v. Brooke Bond Lipton India Ltd. (Karn) . . . 141

S. 260A --Appeal to High Court--Amount received on dissolution of partnership--Question regarding assessability considered by High Court--Question regarding quantum not raised before Tribunal--High Court could not consider question-- Davangere Maganur Bassappa and Sons v. ITO (Karn) . . . 139

----Appeal to High Court--Power of court to admit new ground--Tribunal holding sum in question not taxable under section 28(i)--Appeal by Department seeking to tax sum under section 28(iv)--Facts before court and not disputed--Pure question of law--Can be raised-- CIT v. Jindal Equipments Leasing and Consultancy Services Ltd. (Delhi) . . . 87

S. 263 --Revision--Condition precedent--Order of Assessing Officer should be erroneous and also prejudicial to Revenue--Order found to be erroneous but no finding that it was prejudicial to Revenue--Order could not be revised-- Jewel of India v. Asst. CIT (Bom) . . . 92

----Revision--Conditions precedent--Order should be erroneous and prejudicial to Revenue--Assessing Officer allowing set off of speculation loss against speculation profits in first instance--Order in accordance with CBDT circular and applying decision of High Court--Order not erroneous--Order could not be revised--CBDT Circular No. 23 (XXXIX-4)D of 1960, dated September 12, 1960-- CIT v. Pradeep Kumar Todi (Cal) . . . 96

----Revision--Powers of Commissioner--Change in law by Finance Act, 1989, with retrospective effect from 1-6-1988--Commissioner can invoke power under section 263 even if order of assessment subject-matter of appeal-- CIT v. Ganesh Steel Indus. (P&H) . . . 99

S. 271(1)(c) --Penalty--Concealment of income--Assessee director and shareholder with substantial interest in company--Assessee also partner in firm--Loan by firm to company and by company to assessee--Loan treated as deemed dividend--Consequent levy of penalty--Tribunal not justified in cancelling penalty without considering facts relied on by Assessing Officer--Matter remanded-- CIT v. Alkesh K. Patel (Bom) . . . 118

S. 273A --Penalty--Interest--Advance tax--Delay in filing returns--Waiver of penalty and interest--Discretion to be used judiciously and fairly--Belated return filed voluntarily and taxes paid--Rejection of application for waiver--Not valid--Matter remanded-- Vasantbhai Jethalal Lathiwala v. CIT (Bom) . . . 41

S. 276C --Offences and prosecution--Wilful attempt to evade tax--Firm--Partner conducting business of firm--Discrepancy in stocks of firm not explained--Conviction of partner--Valid-- Puran Chand v. R. K. Suman, ITO (P&H) . . . 38

Income-tax Rules, 1962 :

R. 8 --Income--Income from tea--Computation of income--Effect of rule 8--Forty per cent. of income liable to tax--Expenditure and losses to be taken into account in calculating that income-- Hindustan Unilever Ltd . v. Deputy CIT (Bom) . . . 102

Appendix I, Part A, item III, entries (2), (3)(ii) --Depreciation--Leasing of trucks and buses--Depreciation allowable at higher rate-- CIT v. Punjab Leasing (P.) Ltd. (P&H) . . . 29

Partnership Act, 1932 :

S. 14 --Capital gains--Firm--Assets taken over by assessee on dissolution of firm--Sale within three days of dissolution--Short-term capital gains-- P. P. Menon v. CIT (Ker) . . . 122

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