Thursday, March 24, 2011

ITR(Trib) Vol 332 Part 1 dated 28-03-2011


Volume 332 : Part 2 (Issue dated 28-3-2011)



Appeal to Commissioner (Appeals) --Additional evidence--Assessing Officer making addition on basis of valuation of work-in-progress--Commissioner (Appeals) as well as Tribunal upholding valuation of assessee considering affidavit filed before Commissioner (Appeals) reiterating its stand--Findings of fact--Income-tax Rules, 1962, r. 46A-- CIT v. Central Mall (P&H) . . . 320

Business expenditure --Disallowance on estimate basis--Similar expenses allowed in totality in previous year--To be followed in subsequent years--Income-tax Act, 1961, s. 37-- Friends Clearing Agency (P.) Ltd . v. CIT (Delhi) . . . 269

----Disallowance--Payment to non-resident--Assessee purchasing software and selling in Indian market--Payment not royalty--Not liable to deduction of tax at source--Deduction allowable--Income-tax Act, 1961, s. 40(a)(i)-- CIT v. Dynamic Vertical Software India P. Ltd. (Delhi) . . . 222

----Interest--Mercantile system of accounting--Amount not shown in books of account by assessee nor by bank--No finding that assessee did not pay interest for relevant period--Assessee entitled to deduction--Income-tax Act, 1961, s. 37-- Friends Clearing Agency (P.) Ltd. v. CIT (Delhi) . . . 269

Cash credits --Claim that certain amounts were received as gifts--No evidence of gifts--Amount assessable under section 68--Income-tax Act, 1961, s. 68-- Trilok Singh Dhillon v. CIT (Chhattisgarh) . . . 185

----No rule that addition on account of unexplained credit entries cannot be made along with trading addition--Question of fact whether unexplained credit entries have nexus with trading results--Income-tax Act, 1961-- Grover Fabrics (India) P. Ltd. v. CIT (P&H) . . . 312

Deduction of tax at source --Commission or brokerage--Mobile telephone service--Discount given to distributors on sale of SIM cards and recharge coupons--No sale of goods--Tax deductible at source on discount--Income-tax Act, 1961, s. 194H--V odafone Essar Cellular Ltd. v. Asst. CIT (TDS) (Ker) . . . 255

----Commission--Agents of airline companies permitted to sell tickets at any rate between fixed minimum commercial price and published price--Difference between commercial price and published price--Not commission or brokerage--No deduction of tax at source--Income-tax Act, 1961, s. 194H, Expln.-- CIT v. Qatar Airways (Bom) . . . 253

Depreciation --Actual cost--Fluctuation in foreign exchange rates--To be allowed on outstanding liability--Income-tax Act, 1961-- CIT v. National Hydroelectric Power Corpn. Ltd . (P&H) . . . 322

----Plant and machinery--Addition to block of assets and sale of some machinery--Plant and machinery remaining in existence--Entitled to depreciation on written down value after adjustment of addition and sale--Income-tax Act, 1961, ss. 32(1), 41(2)-- CIT v. Rhodoen Silk Mills P. Ltd . (P&H) . . . 330

----Plant--Meaning of--Construction industry--Centering and shuttering material--Each item of shuttering material does not form a plant--Not entitled to 100 per cent. depreciation under first proviso to section 32(1)(ii)--Income-tax Act, 1961, s. 32(1)(ii), first proviso-- CIT v. Vijaya Enterprises (AP) . . . 235

----Rate of depreciation--EPABX and mobile phones are not computers--Not entitled to depreciation at the rate of 60 per cent.--Income-tax Act, 1961-- Federal Bank Ltd . v. Asst. CIT (Ker) . . . 319

Double Taxation Avoidance --Canadian company providing consultancy services to Indian Government organisation--Technical drawings furnished by Canadian company--Fees received were "fees for included services" within the meaning of article 12(4) of DTAA--Fees not assessable under section 9--Income-tax Act, 1961, s. 9--DTAA between Canada and India, art. 12(4)-- DIT v. SNC Lavalin International Inc .(Delhi) . . . 314

Export --Special deduction under section 80HHC--Computation of special deduction--Business income--Assessee carrying on export business utilising surplus funds for discounting bills and making intercorporate deposits--Income earned therefrom--Not business income--Income-tax Act, 1961, s. 80HHC-- CIT v. Swani Spice Mills P. Ltd. (Bom) . . . 288

----Special deduction under section 80HHC--Exclusion mineral oil--Meaning of mineral oil--Calcined petroleum coke derived from crude petroleum is not mineral oil--Income-tax Act, 1961, s. 80HHC-- Goa Carbon Ltd. v. CIT (Bom) . . . 209

Industrial undertaking --Deduction under section 80-IB--Claim not allowed on ground assessee had not filed a revised return--Tribunal allowing deduction on ground that assessee not making any fresh claim and duly furnished documents and Form 10CCB during assessment proceedings--Justified--Income-tax Act, 1961, s. 80-IB-- CIT v. Ramco International (P&H) . . . 306

Interpretation of taxing statutes --Meaning of words--Common parlance meaning-- Goa Carbon Ltd . v. CIT (Bom) . . . 209

Investment deposit account --Computation of profits for purposes of deduction under section 32AB--Revision--Assessing Officer taking a view prevalent at time that income shown in balance-sheet under head "Other income" not to be excluded--Commissioner (Appeals) granting relief resulting in enhanced deduction--Section 263 cannot be invoked--Income-tax Act, 1961, s. 32AB--Companies Act, 1956, Sch. VI-- CIT v. Kelvinator of India Ltd . (Delhi) . . . 231

Non-resident --Income deemed to accrue or arise in India--Scope of section 9(1)(vii)--Technical know-how--Designs, drawings and data delivered to person outside India--Consideration received by non-resident not assessable in India--Income-tax Act, 1961, s. 9(1)(vii)-- Grasim Industries Ltd. v. S. M. Mishra, CIT (Bom) . . . 276

Penalty --Concealment of income--Disallowance of business loss in quantum proceedings--No finding that transaction was not genuine--Penalty could not be imposed--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Usha Marketing (P.) Ltd .(Delhi) . . . 334

Precedent --Effect of Supreme Court decision in Ishikawajima-Harima Heavy Industries Ltd. v. Director of Income-tax [2007] 288 ITR 408 (SC)-- Grasim Industries Ltd . v. S. M. Mishra, CIT (Bom) . . . 276

Reassessment --Income escaping assessment--Sum received by assessee on retirement from firm of solicitors upon superannuation--Provision in deed of partnership prohibiting retiring partners from soliciting firm's clients for three years--Not applicable to assessee--No income escaping assessment--Income-tax Act, 1961, ss. 28(iv), 147, 148-- Smt. Jyoti Rajnikant v. Asst. CIT (Bom) . . . 229

----Notice--Notice issued after four years from relevant assessment year--Assessing Officer on satisfaction allowing claim regarding entrance fee in original assessment--No failure on part of assessee to disclose fully and truly all material facts--Notice to be quashed--Income-tax Act, 1961, ss. 147, 148-- Bombay Presidency Golf Club Ltd . v. ITO (Bom) . . . 226

----Notice--Scientific research--Exemption for donation to approved institution--Reassessment on ground CBDT had withdrawn approval to institution with retrospective effect--High Court quashing notification of withdrawal--Reassessment not valid--Income-tax Act, 1961, ss. 147, 148-- Ultra Marine Air Aids (P.) Ltd. v. Inspecting Assistant Commissioner (Delhi) . . . 273

----Reassessment after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Assessee claiming deduction under section 36(1)(viii) --Complete details furnished--Deduction granted after consideration by Assessing Officer--Reassessment proceedings after four years on the ground that deduction had been wrongly granted--Reassessment proceedings not valid--Income-tax Act, 1961, s. 147-- CIT v. Pradeshiya Industrial and Investment Corporation of Uttar Pradesh Ltd. (All) . . . 324

Recovery of tax --Stay of recovery proceedings--Factors to be considered--Existence of prima facie case--Order refusing stay without considering existence of prima facie case--Set aside--Income-tax Act, 1961, s. 220(6)-- KLM Royal Dutch Airlines v. Deputy DIT (Delhi) . . . 224

Revision --Commissioner--Assessing Officer taking one of two possible views with which Commissioner not agreeing--Cannot be treated as an erroneous order prejudicial to interest of Revenue--Income-tax Act, 1961, s. 263-- CIT v. Kelvinator of India Ltd. (Delhi) . . . 231

Scientific research --Application for approval under section 35--Rejection of application without affording assessee opportunity to be heard and without giving reasons--Order of rejection--Not valid--Income-tax Act, 1961, s. 35(1)(ii)-- Institution of Engineers (India) v. Union of India (Cal) . . . 309

Search and seizure --Assessment--Assessment not at the dictates of other authorities--Finding that assessee was transacting business through benamidars--Findings of fact--Additions of certain amounts--Remand to Assessing Officer in respect of additions--Justified--Income-tax Act, 1961-- Trilok Singh Dhillon v. CIT (Chhattisgarh) . . . 185

----Assessment--Notice--Notice under section 153C issued in February 2005 and a second notice issued in September 2006--Income of third persons included in total income of assessee--Same Assessing Officer assessing such third persons--First notice issued after application of mind--Second notice would not invalidate proceedings--Income-tax Act, 1961, s. 153C-- Trilok Singh Dhillon v. CIT (Chhattisgarh) . . . 185

----Assessment--Protective assessment permissible under section 153C--Income-tax Act, 1961, s. 153C-- Trilok Singh Dhillon v. CIT (Chhattisgarh) . . . 185

----Assessment--Validity of search cannot be questioned during assessment proceedings or in appellate proceedings therefrom--Income-tax Act, 1961, ss 132, 153A-- Trilok Singh Dhillon v. CIT (Chhattisgarh) . . . 185

Words and phrases --"Plant" meaning of-- CIT v. Vijaya Enterprises (AP) . . . 235

----Meaning of "mineral oil"-- Goa Carbon Ltd . v. CIT (Bom) . . . 209

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