INCOME TAX REPORTS (ITR) HIGHLIGHTS
ISSUE DATED 17-1-2011 Volume 330 Part 3
SUPREME COURT JUDGMENTS
-> Computation of book profit : Reduction of net profit by amount withdrawn from revaluation reserve only if amount added back in year of creation of revaluation reserve : Indo Rama Synthetics (I.) Ltd. v. CIT p. 363
-> Foreign exchange : Adjudication : Noticee not entitled to copies of documents not relied on by adjudicating authority : Kanwar Natwar Singh v. Directorate of Enforcement p. 374
HIGH COURT JUDGMENTS
-> Return of company not signed by managing director but by person authorised by board resolution: Defect curable u/s 292B : Hind Samachar Ltd. v. UOI (P & H) p. 266
-> AO failing to raise any issue with regard to plea u/s 239 at appropriate stage and CIT (A) ordered refund on appeal : Revenue liable to make refund : Hind Samachar Ltd. v. UOI ( P & H) p. 266
-> Rejection of application for continuance of registration without affording opportunity to be heard : Not valid : Bharat Construction Co. v. CIT (All) p. 285
-> Disallowance of claim in reassessment proceedings valid : Ramesh Chander Singla v. CIT (A) ( P & H) p. 288
-> Income from property owned by assessee on property taken on lease assessable as business income : CIT v. D. S. Promoters and Developers P. Ltd. (Delhi) p. 291
-> Findings cannot be set aside unless perverse : CIT v. D. S. Promoters and Developers P. Ltd. (Delhi) p. 291
-> Cash credits : Inability to find a few applicants not sufficient to invoke s 68 : CIT v. Dwarkadhish Investment P. Ltd. (Delhi) p. 298
-> Most of instalments for flat paid prior to sale of agricultural land and flat not in name of assessee-HUF but in joint names of individual and his mother : Benefit of s 54F not available : Vipin Malik (HUF ) v. CIT (Delhi) p. 309
-> Tax effect less than prescribed in CBDT Instruction : Appeal barred : CIT v. Koronmoy Roy Choudhury (Gauhati) p. 316
-> Amount received for relinquishment of life membership and secretaryship of society : Assessable under income from other sources : CIT v. H. S. Ramachandra Rao (Karn) p. 322
-> Unabsorbed expenditure of closure of one branch to be apportioned equally amongst head office and other branches : Victoria Gold Jewellery v. CIT (Ker) p. 330
-> Enhanced compensation received on 28-5-1984 for the land acquired on 4-2-1972 : Not taxable either in year of receipt or in year of acquisition : CIT v. Smt. Parkash Kaur ( P & H) p. 332
-> Advance tax : Waiver of interest : Position of tax liability not clear : Interest liability fixed at Rs. 1 lakh : Chief CIT v. Jimmichan M. Varicatt (Ker) p. 338
-> Refund : Assessee deducting and depositing TDS on time but filing TDS certificates during assessment proceedings : Interest u/s 244A cannot be denied : CIT v. Larsen and Toubro Ltd. (Bom) p. 340
-> Wrong claim treating interest receipt as export incentive : Reassessment proceedings cannot be quashed : Tamil Nadu Petrochemicals Ltd. v. CIT (Mad) p. 342
-> Purchase of redemption of units of mutual fund : CIT (A) and Tribunal finding transaction genuine and deleting addition : Finding of fact : CIT v. Hindustan Tin Works Ltd. (Delhi) p. 350
-> Book profit arrived at to be the basis for taxation : AVT Natural Products Ltd. v. Deputy CIT (Mad) p. 360
-> Sale of entire business, including all assets and liabilities as a going concern : Transfer does not give rise to capital gains : Asst. CIT v. Patel Specific Family Trust (Guj) p. 397
-> Supreme Court to waive Rs. 25 crore fee from Vodafone
A bench comprising Chief Justice S H Kapadia and Justices K S Radha-krishnan and Swatanter Kumar expressed willingness to waive off the one per cent. court fee on the Income-tax Department on the Rs. 2,500 crore deposited by an international telecom company.
The "doctrine of unjust enrichment" has been propounded as an equitable concept created to remedy injustices that occur where one person makes a substantial contribution to the property of another person without compensation.
The Attorney General submitted that 1 per cent. court fee must be waived off, otherwise in the event of losing the case, the Government will pay back Rs. 2,475 crore only to the appellant. In December, the Government had moved an application requesting the Supreme Court to waive the fee for letting it withdraw Rs. 2,500 crore, deposited by the company.
Instead, it had requested the court to direct the telecom company to submit Rs. 25 crore extra, so that the Government gets the full amount of Rs. 2,500 crore.
The tax authorities claim that the deal attracts a tax of over Rs. 11,000 crore, even though the deal was done by two MNCs outside the country.
On November 15, the Supreme Court had directed the company which is contesting the tax demand to deposit Rs. 2,500 crore, along with a bank guarantee of Rs. 8,500 crore, before it within 8 weeks for adjudication of its suit.
As the Government approached the apex court to withdraw the funds deposited by the appellant, it . . . was asked to deposit one per cent. of Rs. 2,500 crore, totalling Rs. 25 crore, as per legislative commission. [Source : www.financialexpress.com dated January 5, 2011]
-> Income-tax offices in 8 nations including US, UK soon
Government will operationalise eight overseas Income-tax offices in countries like the US, the UK and the UAE soon to obtain classified financial data and the officers who will man these units will be chosen by this month-end.
The I-T overseas units will begin functioning in less than two months in United States of America (USA), United Kingdom (UK), Netherlands, Cyprus, Germany, France, Japan and United Arab Emirates (UAE) as the Finance Minister has approved the posting policy of the officials who will be appointed by January-end, sources familiar with the development said.
The overseas units are aimed at obtaining seamless flow of information on tax and financial data of investments made by individuals and institutions in these countries and facilitate any data on investment or routing of money in the country and vice-versa.
This information is needed during investigations in cases of tax evasion and ensuring tax compliance under the provisions of the Double Taxation Avoidance Agreement (DTAA) and other tax treaties to facilitate exchange of financial information with these countries, they said.
The Finance Ministry has made it an essential criteria that any senior I-T officer who will be posted in these units should have had a stint in the foreign taxation wing of the CBDT, international taxation and transfer pricing unit of the I-T Department and also at the investigation wing.
"The experience of actual work (by an aspiring officer to be posted at these units) of exchange of information, Mutual Agreement Procedure, tax treaty negotiation would be given more preference," a Finance Ministry notification said in this regard. [Source : www.economictimes.com dated January 6, 2011]
-> Finance Ministry cracks whip on IRS officers overstaying abroad
The Finance Ministry has cracked a whip on Indian Revenue Service (IRS) officers, who are "overstaying" in foreign countries even after the courses they went to undertake had come to an end.
The Ministry has asked all the Chief Commissioners of Income Tax (CCsIT) across the country to report as to how many such officers have gone on trainings and study programmes at universities and institutions abroad and what action has been taken against those who have not returned without furnishing proper reasons.
The action has been taken after the Minister of State for Revenue wrote a letter to the Central Board of Direct Taxes (CBDT)-the administrative authority of the IRS (Income Tax) cadre in the country-stating "some officers who have proceeded on training courses overseas are neither returning on the conclusion of the courses or intimating reasons for their overstay. This may please be verified and a status note in each case reporting action taken against those officers may please be given . . . urgently."
The Department is already facing a shortage of officers and is faced with increasing work pressure and deputation of officers to other law enforcement agencies, they said.
The CCsIT have been asked to furnish the information to the CBDT at the earliest so that proper action can be taken. [Source : www.businessstandard.com dated January 7, 2011]
-> I-T Department devise innovative methods to reduce evasion of tax
The Income-tax Department plans to "immediately capture" on receipt the data of returns filed by taxpayers to enhance their investigation and enforcement action to curb tax evasion and reduce tax gap over the next few years.
The Department is also mooting developing a "criminal investigation" system within its establishment to combat terror financing, money laundering, offshore tax evasion and other illegal trades which impact national security.
The 30-page "Vision 2020" document, which charts out the course of action for the I-T Department over next few years, was unveiled recently by the Finance Minister.
To achieve this objective, the I-T Department will "make internal data available almost on real time basis by capturing data from paper returns immediately after receipt," the document said. The Department also aims at making internal data (of I-T) "robust and current" by including information gathered during enforcement action by the investigation wing and the Assessing Officers.
The Department, which is currently probing a host of high-profile financial irregularities from and to overseas destinations, considers that the "next decade" will see an increased fund flow.
"This will require the Income-tax Department to deploy considerable resource and energy on criminal investigation. Effective criminal investigation will necessarily include a comprehensive international strategy to combat offshore tax evasion, that threaten the security of the country."
The document, which will undergo a mid-term review in 2013, aims at taking forward the strategic planning of the Department and its policies from 2011-2015 along with the new Direct Taxes Code (DTC) which is proposed to replace the current Income-tax Act from next fiscal. [Source : www.economictimes.com dated January 7, 2011]