Thursday, June 2, 2011

ITR (TRIB)) Vol 9 Part 6 dated 06.06.2011

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 9 : Part 6 (Issue dated : 06-06-2011)
SUBJECT INDEX TO CASES REPORTED IN THIS PART

--> Appeal to Appellate Tribunal --Issue raised by assessee answered in its favour by Commissioner (Appeals)--Assessee cannot challenge decision in appeal to Tribunal--Income-tax Act, 1961-- ITO v. United Marine Academy [SB] (Mumbai) . . . 639

--> Order of Tribunal--Where facts not disputed, no additional arguments advanced and Tribunal fully agreeing with reasons given by Commissioner (Appeals), Tribunal need not repeat reasons given by him--Order of Tribunal not illegal on that ground--Income-tax Act, 1961-- Asst. CIT v. Safe Enterprises (Mumbai) . . . 533

--> Bad debts --Change of law--Assessee only to write it off as bad debt--Not required to prove that debts had become bad-- Income-tax Act, 1961, s. 36(1)(vii)-- Asst. CIT v. Safe Enterprises (Mumbai) . . . 533

--> Disallowance--Entire bad debts written off in books of account maintained under Income-tax Act--Separate books maintained under Companies Act not relevant--Assessee claiming only that sum which has been written off--To be allowed--Income-tax Act, 1961, s. 36(1)(vii)-- Asst. CIT v. Shriram Transport Finance Co. Ltd. (Chennai) . . . 543

--> Business expenditure --Disallowance--Payments subject to tax deduction at source --Amendment of section 40(a)(ia) by Finance Act, 2010--Amendment retrospective--Tax deducted at source from freight charges during period 1-4-2005 to 28-2-2006 and paid in July and August 2006 i.e. before due date for filing return--Freight charges could not be disallowed in assessment for 2006-07--Income-tax Act, 1961, s. 40(a)(ia) -- Bansal Parivahan (India) P. Ltd. v. ITO (Mumbai) . . . 565

--> Disallowance--Payments to non-resident subject to deduction of tax at source--Interest--Difference between definition of interest in Interest-tax Act and that in Income-tax Act--Discounting charges not interest for purposes of Income-tax Act--Tax not deductible at source on discounting charges--Income-tax Act, 1961, ss. 2(28A), 40(a)(i)--Circular No. 647, dated 22-3-1993-- Asst. CIT v. Cargill Global Trading (I) P. Ltd.(Delhi) . . . 558

-->----Firm--Expenditure on education of partner in foreign country--No evidence of commercial expediency in incurring expenditure--Expenditure not deductible--Income-tax Act, 1961, s. 37-- Kohinoor Cloth Stores v. Asst. CIT (Pune) . . . 585

-->Business loss --Corporate guarantee given to subsidiary company--Granting of guarantee part of business of assessee--Guarantee given for commercial purposes--Loss due to such guarantee--Deductible as business loss--Income-tax Act, 1961-- Asst. CIT v. W. S. Industries (India) Ltd. (Chennai) . . . 596

-->Capital gains --Computation of capital gains--Two fictions in sections 50 and 50C--Section 50 modifies expression "cost of acquisition"--Section 50C modifies expression "full value of consideration"--Both operate in different fields--Both can be applied simultaneously--Sale of block of assets including land--Stamp duty valuation of land can be taken into consideration for computing capital gains--Income-tax Act, 1961, ss. 45, 50, 50C-- ITO v. United Marine Academy [SB] (Mumbai) . . . 639

-->Capital or revenue expenditure --Royalty paid for using logo--Payment for non-exclusive user of logo based on turnover and not lump sum payment--Revenue expenditure--Income-tax Act, 1961-- Asst. CIT v. Shriram Transport Finance Co. Ltd. (Chennai) . . . 543

-->Charitable purposes --Definition--Change of law--"Object of general public utility" not to include activity of rendering service in relation to trade, commerce or business--Board constituted under law as regulatory board for environment protection and pollution control--Not rendering service in relation to trade, commerce or business--Registration not to be cancelled--Income-tax Act, 1961, ss. 2(15), 12AA-- Himachal Pradesh Environment Protection and Pollution Control Board v. CIT (Chandigarh) . . . 604

-->Non-banking financial company --Long-term capital loss--Carry forward--Assessee compelled to divest shares in accordance with RBI directions--Assessing Officer not doubting genuineness of transactions--Similar issue decided in favour of assessee in previous years--To be allowed--Income-tax Act, 1961-- Asst. CIT v. Shriram Transport Finance Co. Ltd. (Chennai) . . . 543

-->----Securities--Diminution in value--Classified as investment and income earned in nature of dividends--Investments in securities a statutory direction which has to be necessarily complied with assessee--Classification under "investments" immaterial--Assessee entitled to claim of diminution in value of securities which held for purpose of its business--Income-tax Act, 1961-- Asst. CIT v. Shriram Transport Finance Co. Ltd.(Chennai) . . . 543

-->Non-resident --Double taxation avoidance--Interest on refund of tax deducted at source from receipts of permanent establishment--Provisions of Double Taxation Avoidance Agreement more beneficial and applicable--Payment of tax responsibility of foreign company--Collection of tax at source not effective connection of indebtedness with permanent establishment in India--Amount taxable under article 11(2) of Double Taxation Avoidance Agreement--Income-tax Act, 1961, s. 90--Double Taxation Avoidance Agreement between Australia and India, art. 11(2)-- Asst. CIT v. Clough Engineering Ltd. [SB] (Delhi) . . . 618

-->Words and phrases --"Interest"-- Asst. CIT v. Cargill Global Trading (I) P. Ltd. (Delhi) . . . 558

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance Agreement between Australia and India :

-->Art. 11(2) --Non-resident--Double taxation avoidance--Interest on refund of tax deducted at source from receipts of permanent establishment--Provisions of Double Taxation Avoidance Agreement more beneficial and applicable--Payment of tax responsibility of foreign company--Collection of tax at source not effective connection of indebtedness with permanent establishment in India--Amount taxable under article 11(2) of Double Taxation Avoidance Agreement-- Asst. CIT v. Clough Engineering Ltd. [SB] (Delhi) . . . 618

Income-tax Act, 1961 :

-->S. 2(15) --Charitable purposes--Definition--Change of law--"Object of general public utility" not to include activity of rendering service in relation to trade, commerce or business--Board constituted under law as regulatory board for environment protection and pollution control--Not rendering service in relation to trade, commerce or business--Registration not to be cancelled-- Himachal Pradesh Environment Protection and Pollution Control Board v. CIT (Chandigarh) . . . 604

-->S. 2(28A) --Business expenditure--Disallowance--Payments to non-resident subject to deduction of tax at source--Interest--Difference between definition of interest in Interest-tax Act and that in Income-tax Act--Discounting charges not interest for purposes of Income-tax Act--Tax not deductible at source on discounting charges--Circular No. 647, dated 22-3-1993-- Asst. CIT v. Cargill Global Trading (I) P. Ltd.(Delhi) . . . 558

-->S. 12AA --Charitable purposes--Definition--Change of law--"Object of general public utility" not to include activity of rendering service in relation to trade, commerce or business--Board constituted under law as regulatory board for environment protection and pollution control--Not rendering service in relation to trade, commerce or business--Registration not to be cancelled-- Himachal Pradesh Environment Protection and Pollution Control Board v. CIT (Chandigarh) . . . 604

-->S. 36(1)(vii) --Bad debts--Change of law--Assessee only to write it off as bad debt--Not required to prove that debts had become bad-- Asst. CIT v. Safe Enterprises (Mumbai) . . . 533

-->----Bad debts--Disallowance--Entire bad debts written off in books of account maintained under Income-tax Act--Separate books maintained under Companies Act not relevant--Assessee claiming only that sum which has been written off--To be allowed-- Asst. CIT v. Shriram Transport Finance Co. Ltd. (Chennai) . . . 543

-->S. 37 --Business expenditure--Firm--Expenditure on education of partner in foreign country--No evidence of commercial expediency in incurring expenditure--Expenditure not deductible-- Kohinoor Cloth Stores v. Asst. CIT (Pune) . . . 585

-->S. 40(a)(i) --Business expenditure--Disallowance--Payments to non-resident subject to deduction of tax at source--Interest--Difference between definition of interest in Interest-tax Act and that in Income-tax Act--Discounting charges not interest for purposes of Income-tax Act--Tax not deductible at source on discounting charges--Circular No. 647, dated 22-3-1993-- Asst. CIT v. Cargill Global Trading (I) P. Ltd.(Delhi) . . . 558

-->S. 40(a)(ia) -- Business expenditure--Disallowance--Payments subject to tax deduction at source--Amendment of section 40(a)(ia) by Finance Act, 2010--Amendment retrospective--Tax deducted at source from freight charges during period 1-4-2005 to 28-2-2006 and paid in July and August 2006 i.e. before due date for filing return--Freight charges could not be disallowed in assessment for 2006-07-- Bansal Parivahan (India) P. Ltd. v. ITO (Mumbai) . . . 565

-->S. 45 --Capital gains--Computation of capital gains--Two fictions in sections 50 and 50C--Section 50 modifies expression "cost of acquisition"--Section 50C modifies expression "full value of consideration"--Both operate in different fields--Both can be applied simultaneously--Sale of block of assets including land--Stamp duty valuation of land can be taken into consideration for computing capital gains-- ITO v. United Marine Academy [SB] (Mumbai) . . . 639

-->S. 50 --Capital gains--Computation of capital gains--Two fictions in sections 50 and 50C--Section 50 modifies expression "cost of acquisition"--Section 50C modifies expression "full value of consideration"--Both operate in different fields--Both can be applied simultaneously--Sale of block of assets including land--Stamp duty valuation of land can be taken into consideration for computing capital gains-- ITO v. United Marine Academy [SB] (Mumbai) . . . 639

-->S. 50C --Capital gains--Computation of capital gains--Two fictions in sections 50 and 50C--Section 50 modifies expression "cost of acquisition"--Section 50C modifies expression "full value of consideration"--Both operate in different fields--Both can be applied simultaneously--Sale of block of assets including land--Stamp duty valuation of land can be taken into consideration for computing capital gains-- ITO v. United Marine Academy [SB] (Mumbai) . . . 639

-->S. 90 --Non-resident--Double taxation avoidance--Interest on refund of tax deducted at source from receipts of permanent establishment--Provisions of Double Taxation Avoidance Agreement more beneficial and applicable--Payment of tax responsibility of foreign company--Collection of tax at source not effective connection of indebtedness with permanent establishment in India--Amount taxable under article 11(2) of Double Taxation Avoidance Agreement-- Asst. CIT v. Clough Engineering Ltd. [SB] (Delhi) . . . 618

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