Wednesday, January 26, 2011

ITR(Trib) Vol 7 Part 5 dated 31-01-2011

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

Volume 7 : Part 5 (Issue dated : 31-1-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Appeal to Appellate Tribunal --Jurisdiction--Restricted to subject-matter of appeal --Not confined to grounds raised in appeal--Decision on any other ground may be given after affording an opportunity to affected party--Income-tax Act, 1961, s. 254--Income-tax (Appellate Tribunal) Rules, 1963, r. 11--J oint CIT v. Reuters Ltd. (Mumbai) . . . 422

----Powers--Ground not set forth in appeal--Ground regarding existence of permanent establishment--No definite finding--Non-resident and Indian company whether associated enterprises--Deputation of employee of non-resident to Indian company to render services whether indication of Indian company service permanent establishment of non-resident--Plea within parameters of grounds of appeal to Tribunal--Matter remanded--Double Taxation Avoidance Agreement between India and the U. K. art. 5(2)(k), (5)-- Joint CIT v. Reuters Ltd. (Mumbai) . . . 422

Assessment --Estimation of income--Gross profit rate--Rejection of books of account--Additions on basis of books of account arbitrary--Assessing Officer estimating income on basis of gross profit rate--Justified--Income-tax Act, 1961-- Asst. CIT v. Lakshmi Industries (Chennai) . . . 495

Capital gains --Computation of capital gains--Assessees acquiring property by inheritance--Indexation to be with reference to year in which previous owner acquired asset--Property acquired by previous owner prior to 1-4-1981--Cost inflation index relating to financial year 1981-82 to be adopted--Income-tax Act, 1961, s. 2(42A), Expln. 1(b)-- M. Siva Parvathi v. ITO (Visakhapatnam) . . . 468

----Computation of capital gains--Deductions--Sale of house property acquired by inheritance--Payment made to persons claiming to be legal heirs--Expenditure incurred in removing encumbrance to transfer--Payments to tenants--Deductible--Income-tax Act, 1961-- M. Siva Parvathi v. ITO (Visakhapatnam) . . . 468

----Computation of capital gains--Property acquired by inheritance--Agreement to sell entered into prior to introduction of section 50C--Delay in registering sale deed due to genuine reasons--Completion of transaction after introduction of section 50C--Section 50C not applicable--Income-tax Act, 1961, s. 50C-- M. Siva Parvathi v. ITO (Visakhapatnam) . . . 468

----Exemption--Investment of net consideration in construction of "a residential house" and purchase of flat--Exemption restricted to investment in construction of residential house--Income-tax Act, 1961, s. 54-- M. Siva Parvathi v. ITO (Visakhapatnam) . . . 468

Deduction of tax at source --Works contract--Film finance--Assessee advancing money for production of film--Amount recoverable from producer of film--Assessee given certain rights--Agreement did not result in works contract--Assessee not liable to deduct tax at source on advances--Income-tax Act, 1961, s. 194C-- Muktha Arts v. Asst. CIT (Mumbai) . . . 517

Export --New industrial undertaking engaged in export--Deduction of 100 per cent. profits under section 10B--Assessee manufacturing and exporting garments--Forward contracts to protect sales from exchange fluctuations--Transaction speculative in character--Profits from forward contracts derived from speculation business--Not entitled to deduction under section 10B--Income-tax Act, 1961, ss. 10B, 28, Expln. 2-- Asst. CIT v. K. Mohan and Co. (Exports) P. Ltd. (Bangalore) . . . 507

Penalty --Concealment of income--Assessee agreeing to addition of unexplained credit on realising creditor will not co-operate--All details regarding identity of creditor and genuineness of transaction furnished by assessee--Failure to produce creditor to prove transaction to satisfaction of Assessing Officer--Imposition of penalty not justified--Income-tax Act, 1961, s. 271(1)(c)-- New Raja Jewellery v. ITO (Chennai) . . . 459

----Concealment of income--Disallowance of deductions on software expenditure and meal expenses accepted by assessee--Penalty cannot be imposed merely because assessee allowed matter to attain finality--Income-tax Act, 1961, s. 271(1)(c)-- Deputy CIT v. Boston Consulting Group (India) P. Ltd. (Mumbai) . . . 417

Revision --Commissioner--Show-cause notice by Income-tax Officer on proposal by Joint Commissioner--Assessment order not examined prior to initiation of revision proceedings--No application of mind by Commissioner--Revision order void ab initio--Income-tax Act, 1961, s. 263-- Jheendu Ram v. CIT (Lucknow) . . . 463

Search and seizure --Block assessment--Scope of section 158BC--Assessing Officer acquires jurisdiction to initiate block assessment only on issue of notice--Notice not mere procedural requirement--Notice to be issued by registered post acknowledgment due--Return to be filed thereafter--Income-tax Act, 1961, s. 158BC-- Asst. CIT v. Lakshmi Industries (Chennai) . . . 495

----Block assessment--Validity--Notice--Service of notice--No material to prove notice served on assessee--Failure on part of Department to issue notice despite information regarding non-receipt of notice by assessee--Expiry of time to issue notice when assessee filed return--Proceedings null and void ab initio--Income-tax Act, 1961, s. 158BC-- Asst. CIT v. Lakshmi Industries (Chennai) . . . 495

----Undisclosed income--Investments in power looms, rental income from hiring of looms and unexplained loans--Investments made prior to 1999--Addition cannot be made in 2002-03--Gross monthly rent of power loom determined based on seized material--Twenty per cent. deduction allowable on expenses incurred--Cash flow statement with regard to loans not properly considered by Assessing Officer--Matter remanded--Income-tax Act, 1961, s. 69-- Masoomkhan Shabbirkhan Pathan v. Deputy CIT (Mumbai) . . . 443

Words and phrases --"Thereon", "Pass such orders as Tribunal thinks fit"-- Joint CIT v. Reuters Ltd. (Mumbai) . . . 422

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance Agreement between India and the U. K. :

Art. 5(2)(k), (5) --Appeal to Appellate Tribunal--Powers--Ground not set forth in appeal--Ground regarding existence of permanent establishment--No definite finding--Non-resident and Indian company whether associated enterprises--Deputation of employee of non-resident to Indian company to render services whether indication of Indian company service permanent establishment of non-resident--Plea within parameters of grounds of appeal to Tribunal--Matter remanded-- Joint CIT v. Reuters Ltd. (Mumbai) . . . 422

Income-tax (Appellate Tribunal) Rules, 1963 :

R. 11 --Appeal to Appellate Tribunal--Jurisdiction--Restricted to subject-matter of appeal--Not confined to grounds raised in appeal--Decision on any other ground may be given after affording an opportunity to affected party--J oint CIT v. Reuters Ltd. (Mumbai) . . . 422

Income-tax Act, 1961 :

S. 2(42A), Expln. 1(b) --Capital gains--Computation of capital gains--Assessees acquiring property by inheritance--Indexation to be with reference to year in which previous owner acquired asset--Property acquired by previous owner prior to 1-4-1981--Cost inflation index relating to financial year 1981-82 to be adopted-- M. Siva Parvathi v. ITO (Visakhapatnam) . . . 468

S. 10B --Export--New industrial undertaking engaged in export--Deduction of 100 per cent. profits under section 10B--Assessee manufacturing and exporting garments--Forward contracts to protect sales from exchange fluctuations--Transaction speculative in character--Profits from forward contracts derived from speculation business--Not entitled to deduction under section 10B-- Asst. CIT v. K. Mohan and Co. (Exports) P. Ltd. (Bangalore) . . . 507

S. 28, Expln. 2 --Export--New industrial undertaking engaged in export--Deduction of 100 per cent. profits under section 10B--Assessee manufacturing and exporting garments--Forward contracts to protect sales from exchange fluctuations--Transaction speculative in character--Profits from forward contracts derived from speculation business--Not entitled to deduction under section 10B-- Asst. CIT v. K. Mohan and Co. (Exports) P. Ltd. (Bangalore) . . . 507

S. 50C --Capital gains--Computation of capital gains--Property acquired by inheritance--Agreement to sell entered into prior to introduction of section 50C--Delay in registering sale deed due to genuine reasons--Completion of transaction after introduction of section 50C--Section 50C not applicable-- M. Siva Parvathi v. ITO (Visakhapatnam) . . . 468

S. 54 --Capital gains--Exemption--Investment of net consideration in construction of "a residential house" and purchase of flat--Exemption restricted to investment in construction of residential house-- M. Siva Parvathi v. ITO (Visakhapatnam) . . . 468

S. 69 --Search and seizure--Undisclosed income--Investments in power looms, rental income from hiring of looms and un-explained loans--Investments made prior to 1999--Addition cannot be made in 2002-03--Gross monthly rent of power loom determined based on seized material--Twenty per cent. deduction allowable on expenses incurred--Cash flow statement with regard to loans not properly considered by Assessing Officer--Matter remanded-- Masoomkhan Shabbirkhan Pathan v. Deputy CIT (Mumbai) . . . 443

S. 158BC --Search and seizure--Block assessment--Scope of section 158BC--Assessing Officer acquires jurisdiction to initiate block assessment only on issue of notice--Notice not mere procedural requirement--Notice to be issued by registered post acknowledgment due--Return to be filed thereafter-- Asst. CIT v. Lakshmi Industries (Chennai) . . . 495

----Search and seizure--Block assessment--Validity--Notice--Service of notice--No material to prove notice served on assessee--Failure on part of Department to issue notice despite information regarding non-receipt of notice by assessee--Expiry of time to issue notice when assessee filed return--Proceedings null and void ab initio-- Asst. CIT v. Lakshmi Industries (Chennai) . . . 495

S. 194C --Deduction of tax at source--Works contract--Film finance--Assessee advancing money for production of film--Amount recoverable from producer of film--Assessee given certain rights--Agreement did not result in works contract--Assessee not liable to deduct tax at source on advances-- Muktha Arts v. Asst. CIT (Mumbai) . . . 517

S. 254 --Appeal to Appellate Tribunal--Jurisdiction--Restricted to subject-matter of appeal --Not confined to grounds raised in appeal--Decision on any other ground may be given after affording an opportunity to affected party--J oint CIT v. Reuters Ltd. (Mumbai) . . . 422

S. 263 --Revision--Commissioner--Show-cause notice by Income-tax Officer on proposal by Joint Commissioner--Assessment order not examined prior to initiation of revision proceedings--No application of mind by Commissioner--Revision order void ab initio-- Jheendu Ram v. CIT (Lucknow) . . . 463

S. 271(1)(c) --Penalty--Concealment of income--Assessee agreeing to addition of unexplained credit on realising creditor will not co-operate--All details regarding identity of creditor and genuineness of transaction furnished by assessee--Failure to produce creditor to prove transaction to satisfaction of Assessing Officer--Imposition of penalty not justified-- New Raja Jewellery v. ITO (Chennai) . . . 459

----Penalty--Concealment of income--Disallowance of deductions on software expenditure and meal expenses accepted by assessee--Penalty cannot be imposed merely because assessee allowed matter to attain finality--Deputy CIT v. Boston Consulting Group (India) P. Ltd. (Mumbai) . . . 417



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