Thursday, March 24, 2011

ITR Vol 8 Part 4 dated 28-03-2011

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

Volume 8 : Part 4 (Issue dated : 28-3-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Appeal to Appellate Tribunal --Powers of Tribunal--Power to rectify mistakes in its order--Mistake must be apparent from record--Addition of undisclosed income in block assessment--Addition after considering document discovered during search--Addition not on basis of presumption under section 132(4)--Subsequent decision of Supreme Court in P. R. Metrani's case [2006] 287 ITR 209 not applicable--No mistake in original order--Addition could not be deleted in proceedings under section 254(2)--Income-tax Act, 1961, ss. 132, 254(2)-- Kailashnath Malhotra v. Joint CIT (Mumbai) . . . 457

----Rectification of mistakes--Application for rectification dismissed--Second application not maintainable--Income-tax Act, 1961, s. 254(2)-- Kailashnath Malhotra v. Joint CIT (Mumbai) . . . 457

Business expenditure --Disallowance--Consultancy charges paid to director--No evidence that payment was excessive or unreasonable--Disallowance of part of payment--Not justified--Income-tax Act, 1961, s. 40A(2)-- Tally Solutions P. Ltd. v. Deputy CIT (Bangalore) . . . 434

Business income --Benefit arising out of business--Assessee managing director of company--Pledge of shares held by company in another group company to assessee as security for loan from assessee--Shares in dematerialised form--Assessee shown as beneficial owner in account of depository participant--Not conclusive that transaction was sale--No material to show sale--Allegation that pledge was camouflage to avoid tax implications of sale and that acquisition of shares intended to acquire control of group company--Not substantiated--Loan repaid and company again shown as beneficial owner--Difference between loan amount and market price of shares not to be taxed as benefit arising out of business in assessee's hands--Income-tax Act, 1961, s. 2(24)(iv)--Companies Act, 1956, ss. 2(46), 82, 83, 187C--Depositories Act, 1996, ss. 10, 12, 25, 28--Sale of Goods Act, 1930, ss. 2(7), 19--Contract Act, 1872, ss. 148, 172--Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

Cash credits --Return of assessee-company processed under section 143(1) accepting return--Balance-sheet showing increase in paid-up share capital and reserves--Enquiry--Directors of assessee attending from time to time and submitting list of shareholders--Letters sent to shareholders returned unserved in majority of cases--Assessee not filing any reply to show-cause notice--Sum added as unexplained cash credit--Appeal--Assessee denying filing of return and repudiating balance-sheet--Not permissible--Additional evidence cannot be admitted--Addition of cash credits proper--Income-tax Act, 1961, s. 68--Income-tax Rules, 1962, r. 46A-- Vishwanath Clorinate and Chemicals P. Ltd. v. ITO (Ahmedabad) . . . 387

Income --Remission of liability--Purchase of deep freezers for storage and supply of ice creams to dealers against deposits for deep freezers--Deposits not transferred to profit and loss account--Section 41 not applicable--Deep freezer deposits not income--Addition deleted--Income-tax Act, 1961, s. 41-- P. I. C. (Gujarat) Ltd. v. Deputy CIT (Ahmedabad) . . . 417

Penalty --Concealment of income and furnishing inaccurate particulars of income--Distinction--Amendment of section 271(1B) with retrospective effect from April 1, 1989--Distinction not maintained--Satisfaction arrived at for filing inaccurate particulars but penalty levied for concealment--Cancellation of penalty justified--Income-tax Act, 1961, ss. 271(1)(c), 271(1B)-- ITO v. Chhail Behari (Agra) . . . 383

Rectification of mistake --Assessing Officer allowing deduction under section 80HHC and later by an order under section 154 reducing deduction--Power under section 154 not to cover each and every decided issue which may result in possible loss of revenue--Order of rectification to be set aside--Income-tax Act, 1961, ss. 80HHC, 154-- Satish Kumar Aggarwal v. Deputy CIT (Delhi) . . . 424

Revision --Commissioner--Jurisdiction--Questionnaire issued by Assessing Officer covering all points raised by Commissioner in notice--Assessee replying to all points with supporting material--No ground for exercise of power of revision--Even if in opinion of Commissioner inquiry by Assessing Officer inadequate--Income-tax Act, 1961, s. 263-- Ramakant Singh v. CIT (Patna) . . . 403

----Commissioner--Set-off of unabsorbed depreciation allowed as accumulated book loss higher than unabsorbed depreciation--Revision to recompute book profit by taking into account adjustment made in earlier year--Concession in previous year not binding on assessee in other years--Order not erroneous--Income-tax Act, 1961, s. 263 -- Aircel Cellular Ltd. v. Asst. CIT (Chennai) . . . 446

Scientific research --Capital expenditure on scientific research--Deductible--Income-tax Act, 1961, s. 35(1)(iv)-- Tally Solutions P. Ltd. v. Deputy CIT (Bangalore) . . . 434

Shares --Pledge--General principles--Depositories Act--Effect of, on share transactions--Companies Act, 1956, ss. 2(46), 82, 83, 187C--Depositories Act, 1996, ss. 10, 12, 25, 28--Sale of Goods Act, 1930, ss. 2(7), 19--Contract Act, 1872, ss. 148, 172-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Companies Act, 1956 :

Ss. 2(46), 82, 83, 187C --Business income--Benefit arising out of business--Assessee managing director of company--Pledge of shares held by company in another group company to assessee as security for loan from assessee--Shares in dematerialised form--Assessee shown as beneficial owner in account of depository participant--Not conclusive that transaction was sale--No material to show sale--Allegation that pledge was camouflage to avoid tax implications of sale and that acquisition of shares intended to acquire control of group company--Not substantiated--Loan repaid and company again shown as beneficial owner--Difference between loan amount and market price of shares not to be taxed as benefit arising out of business in assessee's hands-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

----Shares--Pledge--General principles--Depositories Act--Effect of, on share transactions-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

Contract Act, 1872 :

Ss. 148, 172 --Business income--Benefit arising out of business--Assessee managing director of company--Pledge of shares held by company in another group company to assessee as security for loan from assessee--Shares in dematerialised form--Assessee shown as beneficial owner in account of depository participant--Not conclusive that transaction was sale--No material to show sale--Allegation that pledge was camouflage to avoid tax implications of sale and that acquisition of shares intended to acquire control of group company--Not substantiated--Loan repaid and company again shown as beneficial owner--Difference between loan amount and market price of shares not to be taxed as benefit arising out of business in assessee's hands-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

----Shares--Pledge--General principles--Depositories Act--Effect of, on share transactions-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

Depositories Act, 1996 :

Ss. 10, 12, 25, 28 --Business income--Benefit arising out of business--Assessee managing director of company--Pledge of shares held by company in another group company to assessee as security for loan from assessee--Shares in dematerialised form--Assessee shown as beneficial owner in account of depository participant--Not conclusive that transaction was sale--No material to show sale--Allegation that pledge was camouflage to avoid tax implications of sale and that acquisition of shares intended to acquire control of group company--Not substantiated--Loan repaid and company again shown as beneficial owner--Difference between loan amount and market price of shares not to be taxed as benefit arising out of business in assessee's hands-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

----Shares--Pledge--General principles--Depositories Act--Effect of, on share transactions-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

Income-tax Act, 1961 :

S. 2(24)(iv) --Business income--Benefit arising out of business--Assessee managing director of company--Pledge of shares held by company in another group company to assessee as security for loan from assessee--Shares in dematerialised form--Assessee shown as beneficial owner in account of depository participant--Not conclusive that transaction was sale--No material to show sale--Allegation that pledge was camouflage to avoid tax implications of sale and that acquisition of shares intended to acquire control of group company--Not substantiated--Loan repaid and company again shown as beneficial owner--Difference between loan amount and market price of shares not to be taxed as benefit arising out of business in assessee's hands-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

S. 35(1)(iv) --Scientific research--Capital expenditure on scientific research--Deductible-- Tally Solutions P. Ltd. v. Deputy CIT (Bangalore) . . . 434

S. 40A(2) --Business expenditure--Disallowance--Consultancy charges paid to director--No evidence that payment was excessive or unreasonable--Disallowance of part of payment--Not justified-- Tally Solutions P. Ltd. v. Deputy CIT (Bangalore) . . . 434

S. 41 --Income--Remission of liability--Purchase of deep freezers for storage and supply of ice creams to dealers against deposits for deep freezers--Deposits not transferred to profit and loss account--Section 41 not applicable--Deep freezer deposits not income--Addition deleted-- P. I. C. (Gujarat) Ltd. v. Deputy CIT (Ahmedabad) . . . 417

S. 68 --Cash credits--Return of assessee-company processed under section 143(1) accepting return--Balance-sheet showing increase in paid-up share capital and reserves--Enquiry--Directors of assessee attending from time to time and submitting list of shareholders--Letters sent to shareholders returned unserved in majority of cases--Assessee not filing any reply to show-cause notice--Sum added as unexplained cash credit--Appeal--Assessee denying filing of return and repudiating balance-sheet--Not permissible--Additional evidence cannot be admitted--Addition of cash credits proper -- Vishwanath Clorinate and Chemicals P. Ltd. v. ITO (Ahmedabad) . . . 387

S. 80HHC --Rectification of mistake--Assessing Officer allowing deduction under section 80HHC and later by an order under section 154 reducing deduction--Power under section 154 not to cover each and every decided issue which may result in possible loss of revenue--Order of rectification to be set aside-- Satish Kumar Aggarwal v. Deputy CIT (Delhi) . . . 424

S. 132 --Appeal to Appellate Tribunal--Powers of Tribunal--Power to rectify mistakes in its order--Mistake must be apparent from record--Addition of undisclosed income in block assessment--Addition after considering document discovered during search--Addition not on basis of presumption under section 132(4)--Subsequent decision of Supreme Court in P. R. Metrani's case [2006] 287 ITR 209 not applicable--No mistake in original order--Addition could not be deleted in proceedings under section 254(2)-- Kailashnath Malhotra v. Joint CIT (Mumbai) . . . 457

S. 154 --Rectification of mistake--Assessing Officer allowing deduction under section 80HHC and later by an order under section 154 reducing deduction--Power under section 154 not to cover each and every decided issue which may result in possible loss of revenue--Order of rectification to be set aside-- Satish Kumar Aggarwal v. Deputy CIT (Delhi) . . . 424

S. 254(2) --Appeal to Appellate Tribunal--Powers of Tribunal--Power to rectify mistakes in its order--Mistake must be apparent from record--Addition of undisclosed income in block assessment--Addition after considering document discovered during search--Addition not on basis of presumption under section 132(4)--Subsequent decision of Supreme Court in P. R. Metrani's case [2006] 287 ITR 209 not applicable--No mistake in original order--Addition could not be deleted in proceedings under section 254(2)-- Kailashnath Malhotra v. Joint CIT (Mumbai) . . . 457

----Appeal to Appellate Tribunal--Rectification of mistakes--Application for rectification dismissed--Second application not maintainable-- Kailashnath Malhotra v. Joint CIT (Mumbai) . . . 457

S. 263 --Revision--Commissioner--Set-off of unabsorbed depreciation allowed as accumulated book loss higher than unabsorbed depreciation--Revision to recompute book profit by taking into account adjustment made in earlier year--Concession in previous year not binding on assessee in other years--Order not erroneous-- Aircel Cellular Ltd. v. Asst. CIT (Chennai) . . . 446

----Revision--Commissioner--Jurisdiction--Questionnaire issued by Assessing Officer covering all points raised by Commissioner in notice--Assessee replying to all points with supporting material--No ground for exercise of power of revision--Even if in opinion of Commissioner inquiry by Assessing Officer inadequate-- Ramakant Singh v. CIT (Patna) . . . 403

S. 271(1)(c) --Penalty--Concealment of income and furnishing inaccurate particulars of income--Distinction--Amendment of section 271(1B) with retrospective effect from April 1, 1989--Distinction not maintained--Satisfaction arrived at for filing inaccurate particulars but penalty levied for concealment--Cancellation of penalty justified-- ITO v. Chhail Behari (Agra) . . . 383

S. 271(1B) --Penalty--Concealment of income and furnishing inaccurate particulars of income--Distinction--Amendment of section 271(1B) with retrospective effect from April 1, 1989--Distinction not maintained--Satisfaction arrived at for filing inaccurate particulars but penalty levied for concealment--Cancellation of penalty justified-- ITO v. Chhail Behari (Agra) . . . 383

Income-tax Rules, 1962 :

R. 46A --Cash credits--Return of assessee-company processed under section 143(1) accepting return--Balance-sheet showing increase in paid-up share capital and reserves --Enquiry--Directors of assessee attending from time to time and submitting list of shareholders--Letters sent to shareholders returned unserved in majority of cases--Assessee not filing any reply to show-cause notice--Sum added as unexplained cash credit--Appeal--Assessee denying filing of return and repudiating balance-sheet--Not permissible--Additional evidence cannot be admitted--Addition of cash credits proper -- Vishwanath Clorinate and Chemicals P. Ltd. v. ITO (Ahmedabad) . . . 387

Sale of Goods Act, 1930 :

Ss. 2(7), 19 --Business income--Benefit arising out of business--Assessee managing director of company--Pledge of shares held by company in another group company to assessee as security for loan from assessee--Shares in dematerialised form--Assessee shown as beneficial owner in account of depository participant--Not conclusive that transaction was sale--No material to show sale--Allegation that pledge was camouflage to avoid tax implications of sale and that acquisition of shares intended to acquire control of group company--Not substantiated--Loan repaid and company again shown as beneficial owner--Difference between loan amount and market price of shares not to be taxed as benefit arising out of business in assessee's hands-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

----Shares--Pledge--General principles--Depositories Act--Effect of, on share transactions-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353



--
>>>>>>>>>>>>>>>>>>>>>>
Dear Friend
Please and immedietly remove my email id from your contact list. As I do not want to receive any invitation from the various friend sites you subscribe.
Thanks and regards.

Me on net :  http://rajkumaratthenet.blogspot.com/
http://itronline.blogspot.com/
http://finance.groups.yahoo.com/group/It_law_reported

http://labs.google.co.in/smschannels/channel/rajkumarsms
--
Virus Warning: Although the I have taken reasonable precautions to ensure no viruses are present in his email, sender (I) cannot accept responsibility for any loss or damage arising from the use of this email or attachment."

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.