Friday, November 12, 2010

ITR : Volume 328 : Part 4 Issue dated 15-11-2010

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INCOME TAX REPORTS (ITR)

Volume 328 : Part 4 (Issue dated 15-11-2010)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Assessment --Books of account of assessee not rejected--Assessing Officer cannot refer matter to Departmental Valuation Officer-- Sargam Cinema v. CIT . . . 513

Reassessment --Information--Opinion of District Valuation Officer--Cannot be basis for reopening assessment--Income-tax Act, 1961, s. 147-- Asst. CIT v. Dhariya Construction Co . . . . 515

HIGH COURTS

Advance tax --Interest payable by assessee--Compensation and interest on acquisition of land--Failure to pay advance tax--Interest can be levied under section 234B--Income-tax Act, 1961, s. 234B-- Deputy CIT v. Gopal Ramnarayan Kasat (Bom) . . . 556

Appellate Tribunal --Tribunal holding that assessee produced all relevant documents before Assessing Officer--Finding of fact--Income-tax Act, 1961-- CIT v. Sikka Overseas P. Ltd. (Delhi) . . . 641

Assessment --Reference to Valuation Officer--Opinion of Valuation Officer--Not sufficient basis without anything further to make addition--Income-tax Act, 1961-- CIT v. Naveen Gera (Delhi) . . . 516

----Valuation of property--Reference to Valuation Officer for valuation of investment--Not permissible where assessment made prior to September 30, 2004--Income-tax Act, 1961, s. 142A-- CIT v. Naveen Gera (Delhi) . . . 516

Business --Adventure in the nature of trade--Purchase of plots of land demarcated for acquisition by Government--Subsequent acquisition and receipt of compensation--Transaction adventure in the nature of trade--Gains assessable as business income--Income-tax Act, 1961, ss. 2(13), 28-- Deputy CIT v. Gopal Ramnarayan Kasat (Bom) . . . 556

----Business income--Cessation of liability--Interest on loans deducted in prior years--Credit entries transferred to capital accounts of partners of assessee-firm--Liability to pay interest ceased--Interest credited to accounts of creditors in assessment year assessable under section 41(1)--Income-tax Act, 1961, s. 41(1)-- Sree Hanuman Trading Co . v. ITO (Ker) . . . 662

----Other sources--Interest on compensation--Assessable as business income--Income-tax Act, 1961, s. 28-- Deputy CIT v. Gopal Ramnarayan Kasat (Bom) . . . 556

Business expenditure --Capital or revenue expenditure--Expenditure incurred in setting up new unit--Finding that new unit was separate and independent--Expenditure not deductible--Income-tax Act, 1961, s. 37-- CIT v. Vadilal Dairy International Ltd . (Guj) . . . 544

----Capital or revenue expenditure--Expenditure on foreign travel--Foreign travel for purposes of setting up new unit--Expenditure capitalised by assessee--Expenditure not deductible--Income-tax Act, 1961, s. 37-- CIT v. Vadilal Dairy International Ltd. (Guj) . . . 544

----Disallowance--Payments in cash exceeding specified limit--Distributor of lottery tickets--Explanation that Government insisted on payments in cash or demand drafts--Contention that Government agents were coming for collection of cash--Explanation contrary to contention--Commissioner (Appeals) and Tribunal not justified in setting aside disallowance--Matter remanded--Income-tax Act, 1961, s. 40A(3)-- ITO v. K. N. Pramod (Karn) . . . 669

Capital gains --Capital loss--Assessee in October 1992 acquiring convertible debentures for shares hold--Renunciation of right--Loss incurred--Deductible as short-term capital loss--Income-tax Act, 1961, s. 55-- Asst. CIT v. Acropolish Investments Ltd .(Guj) . . . 664

----Liability to tax--Land and building brought to firm as capital contribution by partners--Depreciation on land and buildings allowed to firm for a number of years--Dissolution of firm and assets distributed among partners--Transaction covered by section 45(4)--Gains assessable--Reference to valuer under section 55A justified--Income-tax Act, 1961, ss. 45(4), 55A--CIT v. Kumbazha Tourist Home (Dissolved) (Ker) . . . 600

Charitable purpose --Exemption--Money advanced for purchase of land--Peaceful and vacant possession of property handed over and irrevocable general power of attorney executed in assessee's favour--Assessee entitled to exemption--Income-tax Act, 1961, s. 11-- Director of Income-tax (Exemptions) v. Maharaja Agarsen Technical Education Society (Delhi) . . . 551

----Registration--Truck operators association--Welfare activities as in business organizations--Assessee not formed for advancement of general public utility--Assessee not entitled to benefit of registration--Income-tax Act, 1961, ss. 2(15), 12AA-- CIT v. Truck Operators Association (P&H) . . . 636

Deduction of tax at source --Writ--Works contract--Supply of eggs to Government in terms of specification contained in contract--Transaction whether works contract or sale is a question of fact--Assessee having alternative remedies under Income-tax Act--Writ would not issue to quash order for deduction of tax at source--Income-tax Act, 1961, s. 194C--Constitution of India, art. 226-- Mani Muthusamy v. Personal Assistant to Collector (Mad) . . . 588

Export --Special deduction under section 80HHC--Computation of turnover--Conversion charges not includible in turnover--Income-tax Act, 1961, s. 80HHC-- CIT v. Coimbatore Twisters Pvt. Ltd. (Mad) . . . 609

Income --Accrual of income--Time of accrual--Interest on compensation--Assessable in year of receipt--Income-tax Act, 1961-- Deputy CIT v. Gopal Ramnarayan Kasat (Bom) . . . 556

Income from undisclosed sources --Investment in property--Burden of proof to prove understatement is on Revenue--No evidence found at search to suggest payment over and above consideration mentioned in registered purchase deed--Addition solely on basis of report of Valuation Officer--Not justified--Income-tax Act, 1961-- CIT v. Smt. Suraj Devi (Delhi) . . . 604

----Long-term capital gains--Assessees belonging to a group purchasing and selling shares of similar companies--Assessing Officer holding transactions sham as sale through same broker and not at market rate--Tribunal finding transactions genuine--Finding of fact--Income-tax Act, 1961, s. 68-- CIT v. Jamnadevi Agrawal (Bom) . . . 656

Interest on borrowed capital --Capital used for setting up new business--Law applicable--Proviso to section 36(1)(iii) effective from 1-4-2004--Interest deductible in assessment year 1993-94--Income-tax Act, 1961, s. 36(1)(iii)-- CIT v. Vadilal Dairy International Ltd. (Guj) . . . 544

Loss --Business loss--Lease transaction found to be bogus--Claim for business loss arising from such transaction--Not allowable--Income-tax Act, 1961-- CIT v. English Indian Clays Ltd. (Ker) . . . 647

Offences and prosecution --Wilful attempt to evade tax--Penalty set aside by competent court--Prosecution based on same facts cannot continue--Income-tax Act, 1961, ss. 276C, 278B-- Harkawat and Company v. Union of India (MP) . . . 624

Penalty --Concealment of income--Additions on account of disallowance of certain expenses--Not a case of concealment of income or furnishing inaccurate particulars--Tribunal deleting penalty on finding disallowance on an estimate basis without pointing out any specific defect in explanation of assessee--Findings of fact--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. SSP Ltd. (P&H) . . . 643

----Concealment of income--Claim for deduction of loss--Details regarding claim furnished--Claim rejected--No furnishing of inaccurate particulars or concealment of income--Cancellation of penalty--Valid--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. IFCI Ltd. (Delhi) . . . 611

----Disallowance--Not a ground for levying penalty--Income-tax Act, 1961, s. 271(1)(c)--CIT v. SSP Ltd. (P&H) . . . 643

Precedent --Effect of decision of Supreme Court in Assistant CIT v. Rajesh Jhaveri Stock Brokers P. Ltd. [2007] 291 ITR 500-- CIT v. Chandrasekhar Balagopal (Ker) . . . 619

----Effect of decision of Supreme Court in State of A. P. v. Kone Elevators [2005] 3 SCC 389-- Mani Muthusamy v. Personal Assistant to Collector (Mad) . . . 588

----Effect of Supreme Court decision in Deputy CIT v. Core Health Care Ltd. [2008] 298 ITR 194-- CIT v. Vadilal Dairy International Ltd. (Guj) . . . 544

Professional income from foreign sources --Special deduction--Dress designer--Is an artist--Design fees received in convertible foreign exchange--Eligible for deduction under section 80RR--Income-tax Act, 1961, s. 80RR-- CIT v. Tarun R. Tahiliani (Bom) . . . 629

Purchase of immovable property by Central Government --Transactions cited by transferor and transferee not considered--No good reason for valuation fixed by Appropriate Authority--Order of pre-emptive purchase--Not valid--Income-tax Act, 1961, s. 268UD(1)-- Dattaram Bhikai Telge v. Appropriate Authority (Bom) . . . 580

Reassessment --Limitation--Exclusion from limitation--Reassessment consequent on finding in appellate order--Effect of sections 150(1) and 153(1)--Order of Commissioner (Appeals) in 1996 that capital gains was assessable in assessment year 1983-84 --Notice under section 148 based on order--Not barred by limitation--Income-tax Act, 1961, ss. 148, 150, 153-- Kalyan Ala Barot v. M. H. Rathod (Guj) . . . . 521

----Notice--Notice after four years on ground assessee not entitled to deduction claimed--Assessee disclosing fully and truly all material facts necessary for assessment and Assessing Officer applying mind thereto--No case for reopening assessment beyond four years--Income-tax Act, 1961, s. 148-- Hindustan Petroleum Corporation Ltd. v. Deputy CIT (Bom) . . . 534

----Notice--Returns filed between 1-10-1991 and 30-9-2005--Notice issued under section 143 after twelve months--Reassessment proceedings valid--Income-tax Act, 1961, ss. 143(2), 147, 148-- Deputy CIT v. Gopal Ramnarayan Kasat (Bom) . . . 556

----Notice--Validity of notice--Law applicable--Effect of amendment of sections 143 and 147 with effect from 1-4-1989--Failure to make assessment based on return--Notice of reassessment not barred--Notice valid--Income-tax Act, 1961, ss. 143, 147, 148-- CIT v. Chandrasekhar Balagopal (Ker) . . . 619

Reference --Finality of findings of fact--Income-tax Act, 1961, s. 256-- Deputy CIT v. Gopal Ramnarayan Kasat (Bom) . . . 556

Rejection of books of account --Assessing Officer rejecting books of account, making assessment by applying gross profit at a higher rate--Finding by appellate authorities that no justification for rejecting books of account since assessee given explanation for decrease in sale and no defect in valuation of stock and assessee following same method of valuation consistently for many years--Findings of fact--Income-tax Act, 1961-- CIT v. Patiala Distt. Co-op. Milk Producers' Union Ltd . (P&H) . . . 615

Undisclosed investment --Purchase of property disclosed in declaration under Voluntary Disclosure Scheme--No evidence found in course of search to show payment of any sum over that declared--No addition permissible--Voluntary Disclosure of Income Scheme, 1997-- CIT v. Naveen Gera (Delhi) . . . 516

Words and phrases --"Artist"--Meaning of-- CIT v. Tarun R. Tahiliani (Bom) . . . 629

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Constitution of India :

Art. 226 --Deduction of tax at source--Writ--Works contract--Supply of eggs to Government in terms of specification contained in contract--Transaction whether works contract or sale is a question of fact--Assessee having alternative remedies under Income-tax Act--Writ would not issue to quash order for deduction of tax at source-- Mani Muthusamy v. Personal Assistant to Collector (Mad) . . . 588

Income-tax Act, 1961 :

S. 2(13) --Business--Adventure in the nature of trade--Purchase of plots of land demarcated for acquisition by Government--Subsequent acquisition and receipt of compensation--Transaction adventure in the nature of trade--Gains assessable as business income-- Deputy CIT v. Gopal Ramnarayan Kasat (Bom) . . . 556

S. 2(15) --Charitable purpose--Registration--Truck operators association--Welfare activities as in business organizations--Assessee not formed for advancement of general public utility--Assessee not entitled to benefit of registration-- CIT v. Truck Operators Association (P&H) . . . 636

S. 11 --Charitable purpose--Exemption--Money advanced for purchase of land--Peaceful and vacant possession of property handed over and irrevocable general power of attorney executed in assessee's favour--Assessee entitled to exemption-- Director of Income-tax (Exemptions) v. Maharaja Agarsen Technical Education Society (Delhi) . . . 551

S. 12AA --Charitable purpose--Registration--Truck operators association--Welfare activities as in business organizations--Assessee not formed for advancement of general public utility--Assessee not entitled to benefit of registration-- CIT v. Truck Operators Association (P&H) . . . 636

S. 28 --Business--Adventure in the nature of trade--Purchase of plots of land demarcated for acquisition by Government--Subsequent acquisition and receipt of compensation--Transaction adventure in the nature of trade--Gains assessable as business income-- Deputy CIT v. Gopal Ramnarayan Kasat (Bom) . . . 556

----Business--Other sources--Interest on compensation--Assessable as business income-- Deputy CIT v. Gopal Ramnarayan Kasat (Bom) . . . 556

S. 36(1)(iii) --Interest on borrowed capital--Capital used for setting up new business--Law applicable--Proviso to section 36(1)(iii) effective from 1-4-2004--Interest deductible in assessment year 1993-94-- CIT v. Vadilal Dairy International Ltd. (Guj) . . . 544

S. 37 --Business expenditure--Capital or revenue expenditure--Expenditure incurred in setting up new unit--Finding that new unit was separate and independent--Expendi-ture not deductible-- CIT v. Vadilal Dairy International Ltd . (Guj) . . . 544

----Business expenditure--Capital or revenue expenditure--Expenditure on foreign travel--Foreign travel for purposes of setting up new unit--Expenditure capitalised by assessee--Expenditure not deductible-- CIT v. Vadilal Dairy International Ltd. (Guj) . . . 544

S. 40A(3) --Business expenditure--Disallowance--Payments in cash exceeding speci-fied limit--Distributor of lottery tickets--Explanation that Government insisted on payments in cash or demand drafts--Contention that Government agents were coming for collection of cash--Explanation contrary to contention--Commissioner (Appeals) and Tribunal not justified in setting aside disallowance--Matter remanded-- ITO v. K. N. Pramod (Karn) . . . 669

S. 41(1) --Business--Business income--Cessation of liability--Interest on loans deducted in prior years--Credit entries transferred to capital accounts of partners of assessee-firm--Liability to pay interest ceased--Interest credited to accounts of creditors in assessment year assessable under section 41(1)-- Sree Hanuman Trading Co . v. ITO (Ker) . . . 662

S. 45(4) --Capital gains--Liability to tax--Land and building brought to firm as capital contribution by partners--Depreciation on land and buildings allowed to firm for a number of years--Dissolution of firm and assets distributed among partners--Transaction covered by section 45(4)--Gains assessable--Reference to valuer under section 55A justified--CIT v. Kumbazha Tourist Home (Dissolved) (Ker) . . . 600

S. 55 --Capital gains--Capital loss--Assessee in October 1992 acquiring convertible debentures for shares hold--Renunciation of right--Loss incurred--Deductible as short-term capital loss-- Asst. CIT v. Acropolish Investments Ltd . (Guj) . . . 664

S. 55A --Capital gains--Liability to tax--Land and building brought to firm as capital contribution by partners--Depreciation on land and buildings allowed to firm for a number of years--Dissolution of firm and assets distributed among partners--Transaction covered by section 45(4)--Gains assessable--Reference to valuer under section 55A justified--CIT v. Kumbazha Tourist Home (Dissolved) (Ker) . . . 600

S. 68 --Income from undisclosed sources--Long-term capital gains--Assessees belonging to a group purchasing and selling shares of similar companies--Assessing Officer holding transactions sham as sale through same broker and not at market rate--Tribunal finding transactions genuine--Finding of fact-- CIT v. Jamnadevi Agrawal (Bom) . . . 656

S. 80HHC --Export--Special deduction under section 80HHC--Computation of turnover--Conversion charges not includible in turnover-- CIT v. Coimbatore Twisters Pvt. Ltd. (Mad) . . . 609

S. 80RR --Professional income from foreign sources--Special deduction--Dress designer--Is an artist--Design fees received in convertible foreign exchange--Eligible for deduction under section 80RR-- CIT v. Tarun R. Tahiliani (Bom) . . . 629

S. 142A --Assessment--Valuation of property--Reference to Valuation Officer for valuation of investment--Not permissible where assessment made prior to September 30, 2004-- CIT v. Naveen Gera (Delhi) . . . 516

S. 143 --Reassessment--Notice--Validity of notice--Law applicable--Effect of amendment of sections 143 and 147 with effect from 1-4-1989--Failure to make assessment based on return--Notice of reassessment not barred--Notice valid-- CIT v. Chandrasekhar Balagopal (Ker) . . . 619

S. 143(2) --Reassessment--Notice--Returns filed between 1-10-1991 and 30-9-2005 --Notice issued under section 143 after twelve months--Reassessment proceedings valid-- Deputy CIT v. Gopal Ramnarayan Kasat (Bom) . . . 556

S. 147 --Reassessment--Information--Opinion of District Valuation Officer--Cannot be basis for reopening assessment-- Asst. CIT v. Dhariya Construction Co .(SC) . . . 515

----Reassessment--Notice--Returns filed between 1-10-1991 and 30-9-2005--Notice issued under section 143 after twelve months--Reassessment proceedings valid-- Deputy CIT v. Gopal Ramnarayan Kasat (Bom) . . . 556

----Reassessment--Notice--Validity of notice--Law applicable--Effect of amendment of sections 143 and 147 with effect from 1-4-1989--Failure to make assessment based on return--Notice of reassessment not barred--Notice valid-- CIT v. Chandrasekhar Balagopal (Ker) . . . 619

S. 148 --Reassessment--Limitation--Exclusion from limitation--Reassessment consequent on finding in appellate order--Effect of sections 150(1) and 153(1)--Order of Commissioner (Appeals) in 1996 that capital gains was assessable in assessment year 1983-84 --Notice under section 148 based on order--Not barred by limitation-- Kalyan Ala Barot v. M. H. Rathod (Guj) . . . 521

----Reassessment--Notice--Notice after four years on ground assessee not entitled to deduction claimed--Assessee disclosing fully and truly all material facts necessary for assessment and Assessing Officer applying mind thereto--No case for reopening assessment beyond four years-- Hindustan Petroleum Corporation Ltd. v. Deputy CIT (Bom) . . . 534

----Reassessment--Notice--Returns filed between 1-10-1991 and 30-9-2005--Notice issued under section 143 after twelve months--Reassessment proceedings valid-- Deputy CIT v. Gopal Ramnarayan Kasat (Bom) . . . 556

----Reassessment--Notice--Validity of notice--Law applicable--Effect of amendment of sections 143 and 147 with effect from 1-4-1989--Failure to make assessment based on return--Notice of reassessment not barred--Notice valid-- CIT v. Chandrasekhar Balagopal (Ker) . . . 619

S. 150 --Reassessment--Limitation--Exclusion from limitation--Reassessment consequent on finding in appellate order--Effect of sections 150(1) and 153(1)--Order of Commissioner (Appeals) in 1996 that capital gains was assessable in assessment year 1983-84 --Notice under section 148 based on order--Not barred by limitation-- Kalyan Ala Barot v. M. H. Rathod (Guj) . . . 521

S. 153 --Reassessment--Limitation--Exclusion from limitation--Reassessment consequent on finding in appellate order--Effect of sections 150(1) and 153(1)--Order of Commissioner (Appeals) in 1996 that capital gains was assessable in assessment year 1983-84 --Notice under section 148 based on order--Not barred by limitation-- Kalyan Ala Barot v. M. H. Rathod (Guj) . . . 521

S. 194C --Deduction of tax at source--Writ--Works contract--Supply of eggs to Government in terms of specification contained in contract--Transaction whether works contract or sale is a question of fact--Assessee having alternative remedies under Income-tax Act--Writ would not issue to quash order for deduction of tax at source-- Mani Muthusamy v. Personal Assistant to Collector (Mad) . . . 588

S. 234B --Advance tax--Interest payable by assessee--Compensation and interest on acquisition of land--Failure to pay advance tax--Interest can be levied under section 234B-- Deputy CIT v. Gopal Ramnarayan Kasat (Bom) . . . 556

S. 256 --Reference--Finality of findings of fact-- Deputy CIT v. Gopal Ramnarayan Kasat (Bom) . . . 556

S. 268UD(1) --Purchase of immovable property by Central Government--Transactions cited by transferor and transferee not considered--No good reason for valuation fixed by Appropriate Authority--Order of pre-emptive purchase--Not valid-- Dattaram Bhikai Telge v. Appropriate Authority (Bom) . . . 580

S. 271(1)(c) --Penalty--Concealment of income--Additions on account of disallowance of certain expenses--Not a case of concealment of income or furnishing inaccurate particulars--Tribunal deleting penalty on finding disallowance on an estimate basis without pointing out any specific defect in explanation of assessee--Findings of fact-- CIT v. SSP Ltd. (P&H) . . . 643

----Penalty--Concealment of income--Claim for deduction of loss--Details regarding claim furnished--Claim rejected--No furnishing of inaccurate particulars or concealment of income--Cancellation of penalty--Valid-- CIT v. IFCI Ltd. (Delhi) . . . 611

----Penalty--Disallowance--Not a ground for levying penalty--CIT v. SSP Ltd. (P&H) . . . 643

S. 276C --Offences and prosecution--Wilful attempt to evade tax--Penalty set aside by competent court--Prosecution based on same facts cannot continue-- Harkawat and Company v. Union of India (MP) . . . 624

S. 278B --Offences and prosecution--Wilful attempt to evade tax--Penalty set aside by competent court--Prosecution based on same facts cannot continue-- Harkawat and Company v. Union of India (MP) . . . 624

 



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1 comment:

  1. In CIT Vs. EmpteePoly-yarn Ltd's case Supreme court made some interesting observations " repeatedly this court has recommended to the Department, under excise act, customs act, or I T Act to examine the process applicable to the product in question and not to go only by Dictionary meaning.
    In Para 10, it also cautioned " We once again repeat the caution---- Our Judgment in the present case is to be confined to the facts of present case.

    The other courts should follow this type of explicit observations in their judgments.

    ReplyDelete