Saturday, July 31, 2010

ITR VOL 325 PART 4 / ITR (TRIB) VOL 4 PART 5

INCOME TAX REPORTS (ITR)

Volume 325 : Part 4 (Issue dated 2-8-2010)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Deduction of tax at source --Indian company engaged in sale and export of sea food--Entering into agreement with non-resident for chartering fishing vessels--Indian company bringing catch at high seas to Indian port where value of catch was assessed and local taxes paid--Indian company carrying fish to destination chosen by non-resident--Income of non-resident chargeable in India--Indian company liable to deduct tax at source--Income-tax Act, 1961, ss. 5(2), 195, 201(1)-- Kanchanganga Sea Foods Ltd. v. CIT . . . 540

HIGH COURTS

Advance tax --Interest payable by assessee on shortfall--Scope of section 234B--Interest can be levied for first time in reassessment proceedings--Loss shown and accepted in original return--Reassessment resulting in positive income--Interest not levied under section 234B(3)--Revision of reassessment--Interest could be levied on such revision--Income-tax Act, 1961, s. 234B(3)-- South Indian Bank Ltd. v. CIT (Ker) . . . 517

Appeal to Appellate Tribunal --Income or capital--Non-competing fees--Commissioner (Appeals) directing Assessing Officer to determine year of receipt and confirming assessment--Assessing Officer in meantime passing an order pursuant to direction of Commissioner (Appeals) assessing amount as capital gains--Commissioner (Appeals) deleting addition relying on order of Tribunal--Tribunal dismissing appeal from order of Commissioner (Appeals)--Chargeability of amount not properly analysed and considered--Matter remanded--Income-tax Act, 1961-- CIT v. United Breweries Ltd . (Karn) . . . 485

Assessment --Reference to Valuation Officer--Addition on basis of valuation by District Valuation Officer--Addition deleted on ground report not reliable--Finding of fact not challenged before Tribunal--No interference--Income-tax Act, 1961, s. 142A-- CIT v. N. S. Bakshi (P&H) . . . 607

----Trust--Trust deed providing for operation of trust till beneficiary attains 21 years--Beneficiary on attaining majority revoking trust and carrying on business as proprietor--No assessment on trust permissible thereafter--Department cannot insist trust will operate till beneficiary attains 21 years--Indian Trusts Act, 1882, s. 78(a)-- CIT v. Nelson Trust (Ker) . . . 456

Business expenditure --Deduction only on actual payment--Gratuity--Contribution to gratuity fund--Deductible if made before filing of return--Matter remanded--Income-tax Act, 1961, s. 43B(b)-- CIT v. Popular Vehicles and Services Ltd. (Ker) . . . 523

----Disallowance--Deduction of tax at source--Amount paid to non-resident without deducting tax at source--Demurrage paid by Indian company to foreign company--Section 172 not applicable--Demurrage paid without deducting tax at source--Disallowance under section 40(a)(i) justified--Income-tax Act, 1961, ss. 40(a)(i), 172-- CIT v. Orient (Goa) P. Ltd . (Bom) . . . 554

----Gratuity--Effect of section 40A(7)--Insurance against liability under Payment of Gratuity Act--Conditions laid down in section 40A(7)(a) not fulfilled--Amount not deductible--Income-tax Act, 1961, s. 40A(7)(a)-- CIT v. Pradeshiya Industrial and Investment Corpn. of U. P. Ltd. (All) . . . 583

Business income --Remission or cessation of trading liability--Credits outstanding for six years and acknowledged by creditors--No evidence of deduction in earlier years--Credits not assessable under section 41--Income-tax Act, 1961, s. 41(1)-- CIT v. Smt. Sita Devi Juneja (P&H) . . . 593

Capital gains --Capital asset--Definition--Agricultural land --Report of Tehsildar that land was beyond eight kilometres from municipal limit--Gains arising from transfer not assessable--Income-tax Act, 1961, ss. 45, 54B-- CIT v. Lal Singh (P&H) . . . 588

----Short-term capital loss--Renunciation of right to subscribe to rights shares--Renunciation in favour of general public--Transaction did not amount to transfer--Loss notional--Not deductible--Income-tax Act, 1961-- CIT v. United Breweries Ltd. (Karn) . . . 485

Capital loss --Dividends--Transactions in securities--Dividend stripping--Loss on sale of units set off against profits on sale of units--Sale beyond statutory period of three months--Section 94(7) not attracted--Income-tax Act, 1961, s. 94(7)-- CIT v. Shambhu Mercantile Ltd . (Delhi) . . . 535

----Sale of units--Sale taking place after expiry of three months from record date--Section 94(7) does not apply--Income-tax Act, 1961, s. 94(7)-- CIT v. Smt. Alka Bhosle (Bom) . . . 550

Company --Book profit--Computation--Depreciation not charged to profit and loss account but disclosed in note to accounts--Deductible--Income-tax Act, 1961, s. 115J--Companies Act, 1956, Sch. VI, Parts II, III-- CIT v. Sain Processing and Weaving Mills P. Ltd. (Delhi) . . . 565

Deduction of tax at source --Salary--Employees of Japanese company working for assessee--Assessee not liable to deduct tax at source on salary received by employees from their Japanese employer--Penalty cannot be levied on assessee for non-deduction of tax on such salary--Income-tax Act, 1961, ss. 192, 271(1)(c)-- CIT v. Indo Nissin Foods Ltd. (Karn) . . . 451

Doctrine of merger --Reassessment--Merger of original order in reassessment order only to extent of issues considered in original order--Income-tax Act, 1961, s. 147-- Ashoka Buildcon Ltd . v. Asst. CIT (Bom) . . . 574

Donation for charitable purposes --Special deduction--Assessee carrying on charitable works--Entitled to benefit under section 80G--Income-tax Act, 1961, s. 80G(5)(vi)-- CIT v. Sewa Bharti Haryana Pradesh (P&H) . . . 599

Gift-tax --Gift--Revocable gift not void for purposes of gift-tax--Bonus shares after revocation continue to be property of donee--Gift-tax Act, 1958, s. 6(2)-- CGT v. Sh. Om Parkash Munjal (P&H) . . . 605

Income --Business income--Bottle deposits received from customers--Finding that deposits not sale proceeds--Amount not assessable--Income-tax Act, 1961-- CIT v. United Breweries Ltd . (Karn) . . . 485

----Sale of beer--Bottle deposit shown as liability--Addition on ground that liability not proved--Addition justified--Income-tax Act, 1961-- CIT v. United Breweries Ltd . (Karn) . . . 485

Intercorporate dividends --Special deduction--Computation--Financial institution--Deduction allowable on gross amount of dividend without deducting proportionate deduction available under section 36(1)(viii)--Income-tax Act, 1961, ss. 36(1)(viii), 80M-- Deputy CIT v. G.I.I.C. Limited (Guj) . . . 597

Interest on borrowed capital --Expenditure in relation to income not forming part of total income--Funds diverted to sister concern of which assessee was a partner--Share income from firm not taxable--Interest not deductible--Income-tax Act, 1961 ss. 10(2A), 14A(1), 36(1)(iii)-- CIT v. Popular Vehicles and Services Ltd. (Ker) . . . 523

Precedent --Effect of decisions in Shree Sajjan Mills Ltd. v. CIT [1985] 156 ITR 585 (SC) and Kumson Motor Owners Union Ltd. v. CIT [1993] 201 ITR 601 (All)-- CIT v. Pradeshiya Industrial and Investment Corpn. of U. P. Ltd . (All) . . . 583

Reassessment --Condition precedent--Reason to believe that income had escaped assessment--Assessee carrying on life insurance business--Method of accounting accepted in original assessment--Subsequent reassessment proceedings on ground that method of accounting was incorrect--Not valid--Income-tax Act, 1961, ss. 147, 148-- ICICI Prudential Life Insurance Co. Ltd . v. Asst. CIT (Bom) . . . 471

----Condition precedent--Reason to believe that income has escaped assessment--Information available with Assessing Officer at time of original assessment--Cannot be a ground for reopening assessment--Audit objection--Not a "reason to believe income escaped assessment"--Income-tax Act, 1961, ss. 80-IB, 148-- Purity Techtextile Private Limited v. Asst. CIT (Bom) . . . 459

----Industrial undertaking--Special deduction--Eligibility--Assessee running unit on licence from purchaser of unit from MFSC--Unit not formed by splitting up or reconstruction of existing business--Deed of conveyance executed by MSFC only in respect of land and building--Plant and machinery installed by assessee not used in another business--That factory plan approved twelve years ago not material--Reassessment to withdraw deduction--Not permissible--Income-tax Act, 1961, ss. 80-IB, 148-- Purity Techtextile Private Limited v. Asst. CIT (Bom) . . . 459

----Notice--Notice in the name of dead person--Notice not served on legal representatives--Notice not valid--Income-tax Act, 1961, s. 148-- CIT v. Suresh Chandra Jaiswal (All) . . . 563

----Reassessment after four years--Industrial undertaking--Special deduction--That factory plan approved twelve years ago disclosed at time of assessment in audit report--No failure to disclose material facts--Reassessment after four years not permissible--Income-tax Act, 1961, ss. 80-IB, 148-- Purity Techtextile Private Limited v. Asst. CIT (Bom) . . . 459

----Reassessment beyond four years--Condition precedent--Failure to disclose material facts necessary for assessment--Assessee carrying on life insurance business--Accounts maintained in accordance with statutory provisions--Change in statutory provisions and consequent change in accounting method--Facts disclosed to Assessing Officer--Reassessment proceedings after four years on ground that accounting procedure was incorrect--Not valid--Income-tax Act, 1961, ss. 147, 148-- ICICI Prudential Life Insurance Co. Ltd . v. Asst. CIT (Bom) . . . 471

Reference --Question not raised earlier--Oral prayer for question--Question could not be referred--Gift-tax Act, 1958-- CGT v. Sh. Om Parkash Munjal (P&H) . . . 605

Refund --Self-assessment--Tax paid on self-assessment cannot be refunded--Voluntary returns and tax paid for assessment years 1979-80 to 1984-85--Reassessments annulled--Self-assessments not annulled--Assessee not entitled to any refund--Income-tax Act, 1961, s. 240, prov. (b)-- Varkey Jacob v. Deputy CIT (Asstt.) (Ker) . . . 507

Revision --Assessment order set aside by Commissioner--Tribunal setting aside order of Commissioner--No occasion for Assessing Officer to pass fresh assessment--Order setting aside order of Assessing Officer pursuant to revision--Justified--Income-tax Act, 1961, s. 263-- CIT v. Sir Shadi Lal Enterprises Ltd .(All) . . . 561

----Commissioner--Limitation--Assessment under section 143(3)--Reassessment--Notice issued on issues unrelated to grounds on which original assessment reopened and reassessed--Limitation starts from original assessment--Income-tax Act, 1961, s. 263-- Ashoka Buildcon Ltd . v. Asst. CIT (Bom) . . . 574

Search and seizure --Block assessment--Undisclosed income--Document seized considered in assessment of third person--Notice could not be issued on assessee under section 158BD--Income-tax Act, 1961, s. 158BD-- Superhouse Overseas Ltd. v. Deputy CIT (All) . . . 448

Wealth-tax --Asset--Definition--Law applicable--Effect of amendment w.e.f. 1-4-1995--Exclusion--Urban land on which commercial building constructed within two years of acquisition--Commencement of construction within two years and completion of construction subsequent to two years--Wealth-tax could not be charged on such land--Wealth-tax Act, 1957, s. 2(ea)(vi), Expln. 1(b)-- Apollo Tyres Ltd. v. Asst. CIT (Ker) . . . 528

----Net wealth--Asset--Urban land--Exclusion--Land on which construction not permitted--Not urban land--Value of land not includible in net wealth--Wealth-tax Act, 1957, s. 2(ea), Expln. 1(b)-- CWT v. Lt. Genl. (Retd.) R. K. Mehra (P&H) . . . 601

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Companies Act, 1956 :

Sch. VI, Parts II, III --Company--Book profit--Computation--Depreciation not charged to profit and loss account but disclosed in note to accounts--Deductible-- CIT v. Sain Processing and Weaving Mills P. Ltd.

(Delhi) . . . 565

Gift-tax Act, 1958 :

S. 6(2) --Gift-tax--Gift--Revocable gift not void for purposes of gift-tax--Bonus shares after revocation continue to be property of donee-- CGT v. Sh. Om Parkash Munjal (P&H) . . . 605

Income-tax Act, 1961 :

S. 5(2) --Deduction of tax at source--Indian company engaged in sale and export of sea food--Entering into agreement with non-resident for chartering fishing vessels--Indian company bringing catch at high seas to Indian port where value of catch was assessed and local taxes paid--Indian company carrying fish to destination chosen by non-resident--Income of non-resident chargeable in India--Indian company liable to deduct tax at source-- Kanchanganga Sea Foods Ltd. v. CIT (SC) . . . 540

S. 10(2A) --Interest on borrowed capital--Expenditure in relation to income not forming part of total income--Funds diverted to sister concern of which assessee was a partner--Share income from firm not taxable--Interest not deductible-- CIT v. Popular Vehicles and Services Ltd. (Ker) . . . 523

S. 14A(1) --Interest on borrowed capital--Expenditure in relation to income not forming part of total income--Funds diverted to sister concern of which assessee was a partner--Share income from firm not taxable--Interest not deductible-- CIT v. Popular Vehicles and Services Ltd. (Ker) . . . 523

S. 36(1)(iii) --Interest on borrowed capital--Expenditure in relation to income not forming part of total income--Funds diverted to sister concern of which assessee was a partner--Share income from firm not taxable--Interest not deductible-- CIT v. Popular Vehicles and Services Ltd. (Ker) . . . 523

S. 36(1)(viii) --Intercorporate dividends--Special deduction--Computation--Financial institution--Deduction allowable on gross amount of dividend without deducting proportionate deduction available under section 36(1)(viii)-- Deputy CIT v. G.I.I.C. Limited (Guj) . . . 597

S. 40(a)(i) --Business expenditure--Disallowance--Deduction of tax at source--Amount paid to non-resident without deducting tax at source--Demurrage paid by Indian company to foreign company--Section 172 not applicable--Demurrage paid without deducting tax at source--Disallowance under section 40(a)(i) justified-- CIT v. Orient (Goa) P. Ltd . (Bom) . . . 554

S. 40A(7)(a) --Business expenditure--Gratuity--Effect of section 40A(7)--Insurance against liability under Payment of Gratuity Act--Conditions laid down in section 40A(7)(a) not fulfilled--Amount not deductible-- CIT v. Pradeshiya Industrial and Investment Corpn. of U. P. Ltd. (All) . . . 583

S. 41(1) --Business income--Remission or cessation of trading liability--Credits outstanding for six years and acknowledged by creditors--No evidence of deduction in earlier years--Credits not assessable under section 41-- CIT v. Smt. Sita Devi Juneja (P&H) . . . 593

S. 43B(b) --Business expenditure--Deduction only on actual payment--Gratuity--Contribution to gratuity fund--Deductible if made before filing of return--Matter remanded-- CIT v. Popular Vehicles and Services Ltd. (Ker) . . . 523

S. 45 --Capital gains--Capital asset--Definition--Agricultural land--Report of Tehsildar that land was beyond eight kilometres from municipal limit--Gains arising from transfer not assessable-- CIT v. Lal Singh (P&H) . . . 588

S. 54B --Capital gains--Capital asset--Definition--Agricultural land --Report of Tehsildar that land was beyond eight kilometres from municipal limit--Gains arising from transfer not assessable-- CIT v. Lal Singh (P&H) . . . 588

S. 80G(5)(vi) --Donation for charitable purposes--Special deduction--Assessee carrying on charitable works--Entitled to benefit under section 80G-- CIT v. Sewa Bharti Haryana Pradesh (P&H) . . . 599

S. 80-IB --Reassessment--Condition precedent--Reason to believe that income has escaped assessment--Information available with Assessing Officer at time of original assessment--Cannot be a ground for reopening assessment--Audit objection--Not a "reason to believe income escaped assessment"-- Purity Techtextile Private Limited v. Asst. CIT (Bom) . . . 459

S. 80-IB --Reassessment--Industrial undertaking--Special deduction--Eligibility--Assessee running unit on licence from purchaser of unit from MFSC--Unit not formed by splitting up or reconstruction of existing business--Deed of conveyance executed by MSFC only in respect of land and building--Plant and machinery installed by assessee not used in another business--That factory plan approved twelve years ago not material--Reassessment to withdraw deduction--Not permissible-- Purity Techtextile Private Limited v. Asst. CIT (Bom) . . . 459

----Reassessment--Reassessment after four years--Industrial undertaking--Special deduction--That factory plan approved twelve years ago disclosed at time of assessment in audit report--No failure to disclose material facts--Reassessment after four years not permissible-- Purity Techtextile Private Limited v. Asst. CIT (Bom) . . . 459

S. 80M --Intercorporate dividends--Special deduction--Computation--Financial institution--Deduction allowable on gross amount of dividend without deducting proportionate deduction available under section 36(1)(viii)-- Deputy CIT v. G.I.I.C. Limited (Guj) . . . 597

S. 94(7) --Capital loss--Dividends--Transactions in securities--Dividend stripping--Loss on sale of units set off against profits on sale of units--Sale beyond statutory period of three months--Section 94(7) not attracted-- CIT v. Shambhu Mercantile Ltd . (Delhi) . . . 535

----Capital loss--Sale of units--Sale taking place after expiry of three months from record date--Section 94(7) does not apply-- CIT v. Smt. Alka Bhosle (Bom) . . . 550

S. 115J --Company--Book profit--Computation--Depreciation not charged to profit and loss account but disclosed in note to accounts--Deductible-- CIT v. Sain Processing and Weaving Mills P. Ltd. (Delhi) . . . 565

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))

Volume 4 : Part 5 (Issue dated : 2-8-2010)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Appeal to Appellate Tribunal --Admission of additional grounds--Ground relating to validity of assessment order of non-existent company--Legal ground not requiring further investigation of facts--Considered--Confirmation of rectification order without providing opportunity of hearing to assessee--Violation of principles of natural justice--Matter remanded--Income-tax Act, 1961-- Asst. CIT v. Precot Meridian Ltd. (Chennai) . . . 495

Business expenditure --Disallowance--Conveyance expenses, telephone and postage expenses--Expenses recorded in books of account on day-to-day basis and assessee furnished complete details--Partial ad hoc disallowance not proper--Income-tax Act, 1961, s. 37-- Ayushakti Ayurved P. Ltd. v. Asst. CIT (Mumbai) . . . 537

----Disallowance--Foreign travel expenses incurred for business purposes--Not unreasonable--Brokerage expenses--Practice in business to pay 2 per cent. brokerage--No reasons specified for disallowance--Remuneration of director--Supported by resolution of board--Increase in turnover of company due to effort of director--Allowable--Income-tax Act, 1961, s. 37-- G. L. Gems Ltd. v. Asst. CIT (Jaipur) . . . 525

----Disallowance--Professional fees and contract payments--Deduction of tax at source made in last month of accounting year, paid before filing of return under section 139(1)--Not to be disallowed--Income-tax Act, 1961, s. 40(a)(ia)-- Ayushakti Ayurved P. Ltd. v. Asst. CIT (Mumbai) . . . 537

Business income --Engineering, procuring and commissioning contract between assessee and Dutch entity for development of wind farm and erection work to be done by joint venture--Project qualifying for grant of Dutch Government--Grant inalienable--Assessee surrendering rights under contract but continuing to be shown as owner of turbines--Disclosure of profit from surrender of rights--No cogent material to substantiate that assessee received extra consideration--No document on record indicating receipt of offset credits--Electricity charges paid for consumption of electricity for business purposes--Income-tax Act, 1961, s. 28(iv)-- Asst. CIT v. Tube Investments of India Ltd . (Chennai) . . . 477

----Sale of power to sister concern at concessional rate--Instant payment by sister concern without credit period--Sale at concessional rate not disputed and in business interest--Assessing Officer cannot adopt rate contrary to actual rate agreed between parties--Income-tax Act, 1961, s. 143(3)-- Asst. CIT v. Precot Meridian Ltd. (Chennai) . . . 495

Business Loss --Bad debts--Share broking business--Sums owed to assessee by clients on whose behalf transactions undertaken--Amount written off not shown as income in earlier year--Can be allowed as business loss--Income-tax Act, 1961, ss. 28, 36(1)(vii)-- Jalpradeep Securities Ltd . v. Deputy CIT (Delhi) . . . 491

Capital gains --Capital loss--Long-term capital loss--Loss on sale of shares of unlisted company--No primary evidence as regards genuineness of transaction, identity of purchasers, basis of valuation of shares and fixation of sale price--No capital loss--Income-tax Act, 1961-- Asst. CIT v. Precot Meridian Ltd. (Chennai) . . . 495

Charitable purposes --Registration of trust--Donation to charitable institution--Special deduction--No charitable activity carried out in first year of creation of trust--No doubt regarding charitable nature of trust--No opportunity granted to trust--Direction to grant registration and verify application for approval on fulfilment of conditions--Income-tax Act, 1961, ss. 12AA, 80G(5)(vi)-- Jasoda Devi Charitable Trust v. CIT (Jaipur) . . . 547

Co-operative society --Special deduction--Co-operative society providing credit facilities to members for housing projects--Interest on fixed deposits and savings accounts with commercial banks--Proximate connection between interest earned and business--Interest on funds attributable to business of society--Co-operative society entitled to deduction thereon--Income-tax Act, 1961, s. 80P(2)(a)(i)-- Punjab State Co-operative Federation of Housing Building Societies Ltd. v. Asst. CIT (Chandigarh) . . . 507

Depreciation --Intangible assets--Renewal of leave and licence agreement--Payment for continuous use of premises for official purposes--Is deposit for acquiring use of leasehold property--Payments not for acquiring intangible asset--Premises having no nexus with know-how, patents, copyrights, trade marks, etc.--Payments refundable on termination of leave and licence agreement--Assessee not entitled to depreciation--Income-tax Act, 1961, s. 32(1)(ii), Expln. 3-- Asst. CIT v. Malayala Manorama Co. Ltd. (Cochin) . . . 513

Interpretation of taxing statutes --Principle of ejusdem generis-- Asst. CIT v. Malayala Manorama Co. Ltd. (Cochin) . . . 513

Minimum alternate tax --Book profits--Computation--Exclusions--Only items enumerated in section--Long-term capital gains on sale of shares to hundred per cent. subsidiary--Included in computing profits presented before shareholders--To be included in computing book profits under section 115JB--Exemption under normal provisions not applicable--Income-tax Act, 1961, ss. 47(iv), 115JB--Companies Act, 1956, Sch. VI, Parts II, III-- Rain Commodities Ltd. v. Deputy CIT [SB] (Hyderabad) . . . 551

Penalty --Concealment of income--Assessee offering additional income during survey and in return--Penalty proceedings drop on ground co-operation extended by assessee--Co-operation extended by assessee apparent--Revision of order dropping penalty proceedings--Not justified--Income-tax Act, 1961, ss. 263, 271(1)(c)-- C. N. Narasimha Reddy v. CIT (Bangalore) . . . 530

----Concealment of income--Penalty where loss merely reduced--Treatment of business loss as speculative loss--Not concealment of income--Penalty cancelled--Income-tax Act, 1961, s. 271(1)(c), Expln. 4-- Asst. CIT v. Sudarshan Fiscal Services P. Ltd. (Mumbai) . . . 532

Scientific research expenditure --Expenditure related to research and development--To be allowed--Income-tax Act, 1961-- Ayushakti Ayurved P. Ltd. v. Asst. CIT (Mumbai) . . . 537

Words and phrases --"Attributable to"--"Derived from"-- Punjab State Co-operative Federation of Housing Building Societies Ltd. v. Asst. CIT (Chandigarh) . . . 507

----"Licences, business or commercial rights"-- Asst. CIT v. Malayala Manorama Co. Ltd. (Cochin) . . . 513

----"Subsidy"-- Asst. CIT v. Tube Investments of India Ltd. (Chennai) . . . 477

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Companies Act, 1956 :

Sch. VI, Parts II, III --Minimum alternate tax--Book profits--Computation--Exclusions--Only items enumerated in section--Long-term capital gains on sale of shares to hundred per cent. subsidiary--Included in computing profits presented before shareholders--To be included in computing book profits under section 115JB--Exemption under normal provisions not applicable-- Rain Commodities Ltd. v. Deputy CIT [SB] (Hyderabad) . . . 551

Income-tax Act, 1961 :

S. 12AA --Charitable purposes--Registration of trust--Donation to charitable institution--Special deduction--No charitable activity carried out in first year of creation of trust--No doubt regarding charitable nature of trust--No opportunity granted to trust--Direction to grant registration and verify application for approval on fulfilment of conditions-- Jasoda Devi Charitable Trust v. CIT (Jaipur) . . . 547

S. 28 --Business Loss--Bad debts--Share broking business--Sums owed to assessee by clients on whose behalf transactions undertaken--Amount written off not shown as income in earlier year--Can be allowed as business loss-- Jalpradeep Securities Ltd . v. Deputy CIT (Delhi) . . . 491

S. 28(iv) --Business income--Engineering, procuring and commissioning contract between assessee and Dutch entity for development of wind farm and erection work to be done by joint venture--Project qualifying for grant of Dutch Government--Grant inalienable--Assessee surrendering rights under contract but continuing to be shown as owner of turbines--Disclosure of profit from surrender of rights--No cogent material to substantiate that assessee received extra consideration--No document on record indicating receipt of offset credits--Electricity charges paid for consumption of electricity for business purposes-- Asst. CIT v. Tube Investments of India Ltd . (Chennai) . . . 477

S. 32(1)(ii), Expln. 3 --Depreciation--Intangible assets--Renewal of leave and licence agreement--Payment for continuous use of premises for official purposes--Is deposit for acquiring use of leasehold property--Payments not for acquiring intangible asset--Premises having no nexus with know-how, patents, copyrights, trade marks, etc.--Payments refundable on termination of leave and licence agreement--Assessee not entitled to depreciation-- Asst. CIT v. Malayala Manorama Co. Ltd. (Cochin) . . . 513

S. 36(1)(vii) --Business Loss--Bad debts--Share broking business--Sums owed to assessee by clients on whose behalf transactions undertaken--Amount written off not shown as income in earlier year--Can be allowed as business loss-- Jalpradeep Securities Ltd . v. Deputy CIT (Delhi) . . . 491

S. 37 --Business expenditure--Disallowance--Conveyance expenses, telephone and postage expenses--Expenses recorded in books of account on day-to-day basis and assessee furnished complete details--Partial ad hoc disallowance not proper-- Ayushakti Ayurved P. Ltd. v. Asst. CIT (Mumbai) . . . 537

----Business expenditure--Disallowance--Foreign travel expenses incurred for business purposes--Not unreasonable--Brokerage expenses--Practice in business to pay 2 per cent. brokerage--No reasons specified for disallowance--Remuneration of director--Supported by resolution of board--Increase in turnover of company due to effort of director--Allowable-- G. L. Gems Ltd. v. Asst. CIT (Jaipur) . . . 525

S. 40(a)(ia) --Business expenditure--Disallowance--Professional fees and contract payments--Deduction of tax at source made in last month of accounting year, paid before filing of return under section 139(1)--Not to be disallowed-- Ayushakti Ayurved P. Ltd. v. Asst. CIT (Mumbai) . . . 537

S. 47(iv) --Minimum alternate tax--Book profits--Computation--Exclusions--Only items enumerated in section--Long-term capital gains on sale of shares to hundred per cent. subsidiary--Included in computing profits presented before shareholders--To be included in computing book profits under section 115JB--Exemption under normal provisions not applicable-- Rain Commodities Ltd. v. Deputy CIT [SB] (Hyderabad) . . . 551

S. 80G(5)(vi) --Charitable purposes--Registration of trust--Donation to charitable institution--Special deduction--No charitable activity carried out in first year of creation of trust--No doubt regarding charitable nature of trust--No opportunity granted to trust--Direction to grant registration and verify application for approval on fulfilment of conditions-- Jasoda Devi Charitable Trust v. CIT (Jaipur) . . . 547

S. 80P(2)(a)(i) --Co-operative society--Special deduction--Co-operative society providing credit facilities to members for housing projects--Interest on fixed deposits and savings accounts with commercial banks--Proximate connection between interest earned and business--Interest on funds attributable to business of society--Co-operative society entitled to deduction thereon-- Punjab State Co-operative Federation of Housing Building Societies Ltd. v. Asst. CIT (Chandigarh) . . . 507

S. 115JB --Minimum alternate tax--Book profits--Computation--Exclusions--Only items enumerated in section--Long-term capital gains on sale of shares to hundred per cent. subsidiary--Included in computing profits presented before shareholders--To be included in computing book profits under section 115JB--Exemption under normal provisions not applicable-- Rain Commodities Ltd. v. Deputy CIT [SB] (Hyderabad) . . . 551

S. 143(3) --Business income--Sale of power to sister concern at concessional rate--Instant payment by sister concern without credit period--Sale at concessional rate not disputed and in business interest--Assessing Officer cannot adopt rate contrary to actual rate agreed between parties-- Asst. CIT v. Precot Meridian Ltd. (Chennai) . . . 495

S. 263 --Penalty--Concealment of income--Assessee offering additional income during survey and in return--Penalty proceedings drop on ground co-operation extended by assessee--Co-operation extended by assessee apparent--Revision of order dropping penalty proceedings--Not justified-- C. N. Narasimha Reddy v. CIT (Bangalore) . . . 530

S. 271(1)(c) --Penalty--Concealment of income--Assessee offering additional income during survey and in return--Penalty proceedings drop on ground co-operation extended by assessee--Co-operation extended by assessee apparent--Revision of order dropping penalty proceedings--Not justified-- C. N. Narasimha Reddy v. CIT (Bangalore) . . . 530

S. 271(1)(c), Expln. 4 --Penalty--Concealment of income--Penalty where loss merely reduced--Treatment of business loss as speculative loss--Not concealment of income--Penalty cancelled-- Asst. CIT v. Sudarshan Fiscal Services P. Ltd. (Mumbai) . . . 532






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