Friday, November 12, 2010

ITR (Tribunal) Vol 6 Part 3 ISSUE DATED 15-11-2010

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

Volume 6 : Part 3 (Issue dated : 15-11-2010)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

 

Advance tax --Refund--Interest--Assessee entitled to interest from date of regular assessment till date of grant of refund on amount of prepaid tax found in excess of tax assessed under section 251 and further interest from date of payment of regular tax till date of grant of refund--Income-tax Act, 1961, s. 244(1A)-- Deputy CIT v. Simbhaoli Sugar Mills Ltd. (Delhi) . . . 247

 

Refund--Interest--Assessee entitled to receive interest under section 214(1A) on difference between advance tax and tax assessed under section 251 from the first day of assessment year till day of passing regular assessment under section 143(3)--Income-tax Act, 1961, s. 214(1A)-- Deputy CIT v. Simbhaoli Sugar Mills Ltd. (Delhi) . . . 247

 

Appeal to Appellate Tribunal --Decision by Division Bench--Difference of opinion between members of Division Bench regarding admission of additional grounds of appeal--Additional ground considered by only one of members--No decision on merits by Division Bench--Matter remanded--Income-tax Act, 1961-- Everwin Export Corporation v. ITO (Chennai) . . . 287

 

`Procedure--Additional grounds of appeal--No specific procedure to be followed --Additional ground raised in petition--Space provided in petition form to mention additional ground left blank--Mistake in stating appeal number--Not relevant--Additional ground to be considered by Tribunal--Income-tax Act, 1961-- Everwin Export Corporation v. ITO (Chennai) . . . 287

 

Business expenditure --Capital or revenue expenditure--Expenses incurred on site development--Agreement between assessee and VGS for development of site and portal for VGS--Assessee already in software development business and development of portal--No asset acquired--Expenditure incurred in connection with business of assessee--Revenue expenditure--Income-tax Act, 1961, s. 37-- Asst. CIT v. Jupiter Corporate Services Ltd. (Ahmedabad) . . . 264

 

`Disallowance--Payments in cash exceeding specified limit--Payments made to truck drivers for hiring trucks--Payments made against vouchers signed by driver--Section 40A(3) prior to amendment applicable--Single payment not exceeding Rs. 20,000--Not to be disallowed--Income-tax Act, 1961, s. 40A(3)-- Leader Transport Co. v. ITO (Ahmedabad) . . . 229

 

`Interest on borrowed capital--Investment in property for business purposes in earlier year reclassified as "loans and advances"--Explanation that investment in property out of share capital of company prior to its amalgamation with assessee--No evidence as regards interest bearing funds of assessee invested in interest-free advances to director--Amalgamation of company with assessee a business transaction and outstanding amount against director related to business--Interest paid allowable--Income-tax Act, 1961, s. 37-- Asst. CIT v. Jupiter Corporate Services Ltd. (Ahmedabad) . . . 264

 

`Parking fees--Vehicles not owned by assessee--Payment made only in one branch--Claim of expenses on notional basis--To be disallowed--Income-tax Act, 1961 -- Leader Transport Co. v. ITO (Ahmedabad) . . . 229

 

Business income --Income earned from money lending business--Assessed as business income in preceding and subsequent years--No change in facts of present year--To be assessed as business income--Income-tax Act, 1961-- Asst. CIT v. Jitender Kumar Gupta (Delhi) . . . 256

 

`Profits chargeable to tax--Remission or cessation of trading liability--Conversion of sales tax collected into loan liability under deferral scheme--Entire sales tax deferral liability from loan liability discharged on payment of lesser amount--Difference amount is income of assessee for assessment year in which liability is discharged--Income-tax Act, 1961, s. 41(1)-- Schenectady Specialities Asia Pvt. Ltd. v. Asst. CIT (Mumbai) . . . 300

 

Capital gains --Capital asset--Definition--Exclusion--Agricultural land outside specified distance from municipality--Meaning of "municipality" in section 2(14)--Notification that land within two kilometres from local limits of Phagwara Municipality would be considered within its jurisdiction--Agricultural land outside specified limit--Transfer of such land did not give rise to capital gains--Income-tax Act, 1961, ss. 2(14), 45--Notification No. 9447/F. No. 164/3/87-ITA-I, dated 6-1-1992-- Deputy CIT v. Capital Local Area Bank Ltd. (Amritsar) . . . 314

 

Capital loss --Purchase and sale of shares--No record to justify purchase price and sale price--Matter remanded-- Asst. CIT v. Jitender Kumar Gupta (Delhi) . . . 256

 

Capital or revenue receipt --Foreign institutional investor--Compensation on non-pari passu shares--Is capital receipt--Not liable to tax--Income-tax Act, 1961-- Advantage Advisors Inc. v. Deputy Director of Income-tax (International Taxation) (Mumbai) . . . 235

 

Deduction --Disallowance of expenditure in relation to income which does not form part of total income--Investment in shares yielding dividend income--Dividend income declared in earlier years and no disallowance made--Investment in shares by company which merged with assessee later on--Investments taken over by assessee--Disallowance not justified--Section 14A not applicable--Income-tax Act, 1961, s. 14A-- Asst. CIT v. Jupiter Corporate Services Ltd. (Ahmedabad) . . . 264

 

Depreciation --User of asset in business of assessee--Earning of income not sole criterion--Lease of hotel by assessee--Disputes between assessee and lessee referred to arbitration--Assessee not receiving licence fee for a particular year by virtue of arbitration award--Depreciation cannot be denied--Income-tax Act, 1961, s. 32-- ELEL Hotels and Investments Ltd. v. Deputy CIT (Delhi) . . . 272

 

Foreign institutional investor --Special provision for computation of capital gains from investment in securities--Capital loss on sale of securities--Eligibility to avail of benefit of indexation not sine qua non to apply for concessional rate of tax--Benefit of indexation not available--General provisions not applicable for computation of capital loss by foreign institutional investor--Income-tax Act, 1961, ss. 48, prov. 2, 112, prov., 115AD--Circular No. 657, dated 30-8-1993-- Advantage Advisors Inc. v. Deputy Director of Income-tax (International Taxation) (Mumbai) . . . 235

 

Income --Accrual of income--Lease--Disputes with respect to responsibility for repair and maintenance of assets referred to arbitration--Award holding assessee not entitled to lease amounts for certain years--Income does not accrue-- ELEL Hotels and Investments Ltd. v. Deputy CIT (Delhi) . . . 272

 

Other sources --Deductions--Cost incurred by assessee to purchase bonds--Finding that assessee being intermediate purchaser expenses to be allowed from sale proceeds--Proper--Income-tax Act, 1961-- Asst. CIT v. Jitender Kumar Gupta (Delhi) . . . 256

 

`Deductions--Expenditure for earning income--Similar expenditure allowed in subsequent year--To be allowed--Income-tax Act, 1961, s. 57(iii)-- Asst. CIT v. Jitender Kumar Gupta (Delhi) . . . 256

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

 

S. 2(14) --Capital gains--Capital asset--Definition--Exclusion--Agricultural land outside specified distance from municipality--Meaning of "municipality" in section 2(14)--Notification that land within two kilometres from local limits of Phagwara Municipality would be considered within its jurisdiction--Agricultural land outside specified limit--Transfer of such land did not give rise to capital gains--Notification No. 9447/F. No. 164/3/87-ITA-I, dated 6-1-1992-- Deputy CIT v. Capital Local Area Bank Ltd. (Amritsar) . . . 314

 

S. 14A --Deduction--Disallowance of expenditure in relation to income which does not form part of total income--Investment in shares yielding dividend income--Dividend income declared in earlier years and no disallowance made--Investment in shares by company which merged with assessee later on--Investments taken over by assessee --Disallowance not justified--Section 14A not applicable-- Asst. CIT v. Jupiter Corporate Services Ltd. (Ahmedabad) . . . 264

 

S. 32 --Depreciation--User of asset in business of assessee--Earning of income not sole criterion--Lease of hotel by assessee--Disputes between assessee and lessee referred to arbitration--Assessee not receiving licence fee for a particular year by virtue of arbitration award--Depreciation cannot be denied-- ELEL Hotels and Investments Ltd. v. Deputy CIT (Delhi) . . . 272

 

S. 37 --Business expenditure--Capital or revenue expenditure--Expenses incurred on site development--Agreement between assessee and VGS for development of site and portal for VGS--Assessee already in software development business and development of portal--No asset acquired--Expenditure incurred in connection with business of assessee--Revenue expenditure-- Asst. CIT v. Jupiter Corporate Services Ltd. (Ahmedabad) . . . 264

 

`Business expenditure--Interest on borrowed capital--Investment in property for business purposes in earlier year reclassified as "loans and advances"--Explanation that investment in property out of share capital of company prior to its amalgamation with assessee--No evidence as regards interest bearing funds of assessee invested in interest-free advances to director --Amalgamation of company with assessee a business transaction and outstanding amount against director related to business--Interest paid allowable-- Asst. CIT v. Jupiter Corporate Services Ltd. (Ahmedabad) . . . 264

 

S. 40A(3) --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Payments made to truck drivers for hiring trucks--Payments made against vouchers signed by driver--Section 40A(3) prior to amendment applicable--Single payment not exceeding Rs. 20,000--Not to be disallowed-- Leader Transport Co. v. ITO (Ahmedabad) . . . 229

 

S. 41(1) --Business expenditure--Profits chargeable to tax--Remission or cessation of trading liability--Conversion of sales tax collected into loan liability under deferral scheme--Entire sales tax deferral liability from loan liability discharged on payment of lesser amount--Difference amount is income of assessee for assessment year in which liability is discharged-- Schenectady Specialities Asia Pvt. Ltd. v. Asst. CIT (Mumbai) . . . 300

 

S. 45 --Capital gains--Capital asset--Definition--Exclusion--Agricultural land outside specified distance from municipality--Meaning of "municipality" in section 2(14)--Notification that land within two kilometres from local limits of Phagwara Municipality would be considered within its jurisdiction--Agricultural land outside specified limit--Transfer of such land did not give rise to capital gains--Notification No. 9447/F. No. 164/3/87-ITA-I, dated 6-1-1992-- Deputy CIT v. Capital Local Area Bank Ltd. (Amritsar) . . . 314

 

S. 48, prov. 2 --Foreign institutional investor--Special provision for computation of capital gains from investment in securities--Capital loss on sale of securities--Eligibility to avail of benefit of indexation not sine qua non to apply for concessional rate of tax--Benefit of indexation not available--General provisions not applicable for computation of capital loss by foreign institutional investor--Circular No. 657, dated 30-8-1993-- Advantage Advisors Inc. v. Deputy Director of Income-tax (International Taxation) (Mumbai) . . . 235

 

S. 57(iii) --Other sources--Deductions--Expenditure for earning income--Similar expenditure allowed in subsequent year--To be allowed-- Asst. CIT v. Jitender Kumar Gupta (Delhi) . . . 256

 

S. 112, prov. --Foreign institutional investor--Special provision for computation of capital gains from investment in securities--Capital loss on sale of securities--Eligibility to avail of benefit of indexation not sine qua non to apply for concessional rate of tax--Benefit of indexation not available--General provisions not applicable for computation of capital loss by foreign institutional investor--Circular No. 657, dated 30-8-1993-- Advantage Advisors Inc. v. Deputy Director of Income-tax (International Taxation) (Mumbai) . . . 235

 

S. 115AD --Foreign institutional investor--Special provision for computation of capital gains from investment in securities--Capital loss on sale of securities--Eligibility to avail of benefit of indexation not sine qua non to apply for concessional rate of tax--Benefit of indexation not available--General provisions not applicable for computation of capital loss by foreign institutional investor--Circular No. 657, dated 30-8-1993-- Advantage Advisors Inc. v. Deputy Director of Income-tax (International Taxation) (Mumbai) . . . 235

 

S. 214(1A) --Advance tax--Refund--Interest--Assessee entitled to receive interest under section 214(1A) on difference between advance tax and tax assessed under section 251 from the first day of assessment year till day of passing regular assessment under section 143(3)-- Deputy CIT v. Simbhaoli Sugar Mills Ltd. (Delhi) . . . 247

 

S. 244(1A) --Advance tax--Refund--Interest--Assessee entitled to interest from date of regular assessment till date of grant of refund on amount of prepaid tax found in excess of tax assessed under section 251 and further interest from date of payment of regular tax till date of grant of refund-- Deputy CIT v. Simbhaoli Sugar Mills Ltd. (Delhi) . . . 247

 

 



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