Thursday, July 7, 2011

ITR (TRIB) Volume 10 : Part 2 Issue dated : 11-07-2011

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

Volume 10 : Part 2 (Issue dated : 11-07-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Appeal to Commissioner (Appeals) --Income from house property--Annual letting value--Municipal taxes--Subletting of property--Sub-tenants directly depositing municipal taxes--Assessee admitting annual letting value without explaining facts--Additional ground raising annual letting value--Commissioner (Appeals) dismissing additional ground--Not proper--Matter remanded--Income-tax Act, 1961-- Urmila and Co. Ltd. v . Deputy CIT (Mumbai) . . . 217

Assessment --Limitation--Report of special auditors received on 20-6-2005--Assessing Officer has no power to extend period of limitation--Assessment order passed on 29-8-2005 barred by limitation--Income-tax Act, 1961, s. 142-- Deputy CIT v. Ramachandra Dashrath Hande and Co. (Mumbai) . . . 117

Business expenditure --Disallowance--Excessive and unreasonable payments--Tug charges paid to sister concern--Tug not used for any transportation during relevant period--No case for commercial expediency of payment to sister concern--Disallowance justified--Income-tax Act, 1961, s. 40A(2)(b)-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217

Disallowance--Expenditure on Diwali gift--Claim not substantiated by evidence --Disallowance of fifty per cent.--Proper--Income-tax Act, 1961, s. 37-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217

Disallowance--Expenses relating to civil work--No evidence to show amount not encashed by department--Disallowance justified--Income-tax Act, 1961, s. 37-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217

Disallowance--Motor car expenses and current repairs--Disallowance modified to 10 per cent.--Income-tax Act, 1961, s. 37-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217

Fee for utilisation of club facilities by executive officer of assessee--Allowable--Sum towards receivables--Not allowable--Income-tax Act, 1961, s. 37-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217

Reimbursement of telephone expenses by assessee to its executives--Perquisites in hands of executives--No addition could be made--Income-tax Act, 1961, s. 37-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217

Tug hire charges--Period of contract more than thirteen months--Accrual of hire charges--Hire charges for months and part thereof allowable--Claim of hire charges for tug for thirteen months--Proper--Hire charges for demobilisation period--Assessee not entitled to hire charges--Income-tax Act, 1961-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217

Capital gains --Computation of capital gains--Deductions--Cost of improvement--No evidence that sums had been spent on improvement of property--Expenditure on general maintenance--Amounts not deductible--Income-tax Act, 1961-- Mrs. Kiran Bansal v. Asst. CIT (Delhi) . . . 180

Computation--Understatement of sale consideration--Burden of proof--No proof of understatement of sale consideration--Assessing Officer to adopt sale consideration of shares as disclosed by assessee--Income-tax Act, 1961, s. 48-- Deputy CIT v. Jindal Equipment Leasing and Consultancy Services Ltd. (Delhi) . . . 128

Long-term capital gains--Exemption--Sale of shares--Assessee's primary business, dealing in shares--Assessee holding controlling shares in particular company promoted by assessee and treating shares as investment and not in nature of stock-in-trade--Transfer of shares give rise to long-term capital gains--Assessee entitled to exemption--Income-tax Act, 1961, s. 10(38)-- Asst. CIT v. Stargate Investments P. Ltd. (Chennai) . . . 211

Charitable trust --Exemption--Assessee engaged in imparting education and training in traditional art forms--Assessee entitled to exemption--Income-tax Act, 1961, ss. 10(23C)(iiiad), 11-- Vempati Chinna Satyam Kuchipudi Art Foundation v. Deputy CIT (Chennai) . . . 201

Exemption--Money utilised by trustee to meet his medical emergency--Trustee not beneficiary and trust entitled to exemption--Income-tax Act, 1961, ss. 11, 13(3)-- Vempati Chinna Satyam Kuchipudi Art Foundation v. Deputy CIT (Chennai) . . . 201

Commissioner -Revision-Capital gains-Cost of acquisition--Tiles laying, white washing, electrical rewiring and wood work expenses--Are post-acquisition expenses--To be excluded--Brokerage and legal fees--Part of acquisition cost--To be allowed--Income-tax Act, 1961, ss. 54, 263-- Smt. S. Sudha v. Asst. CIT (Chennai) . . . 206

Revision-Penalty--Commissioner can interfere only in case of failure by assessing authority to levy penalty where it is imperative--Assessee claiming expenses as part of acquisition cost on a bona fide belief--Penalty cannot be imposed--Income-tax Act, 1961, ss. 271(1)(c), 274-- Smt. S. Sudha v. Asst. CIT (Chennai) . . . 206

Company – Dividend- Deemed dividend --Company in which public was not substantially interested--Loan to shareholder holding more than 10 per cent. voting rights--Loan out of accumulated profits--No evidence that loan was for purposes of business of company--Loan assessable as deemed dividend--Income-tax Act, 1961, s. 2(22)(e)-- Mrs. Kiran Bansal v. Asst. CIT (Delhi) . . . 180

Deduction of tax at source - Payments to non-residents--Commission paid outside India for services rendered outside India--Tax not deductible at source--Fees for technical services--Insulator testing, advertising, etc.--Not technical services--Tax not deductible at source--Income-tax Act, 1961, ss. 9(1)(i), (vii), 40(a)(ia), 195--Double Taxation Avoidance Agreement between India and the U. K., arts. 7, 13--Double Taxation Avoidance Agreement between India and the U. A. E., art. 7--Double Taxation Avoidance Agreement between India and Russia, arts. 7, 12--Double Taxation Avoidance Agreement with South Africa, art. 7--Circular No. 786, dated February 7, 2000--Circular No. 7, dated 22-10-2009-- Asst. CIT v. Modern Insulator Ltd. (Jaipur) . . . 147

Depreciation - Higher rate of depreciation--Tractors and trailers--Assessee in business of transportation of goods on hire basis--Entitled to higher rate of depreciation--Circular No. 652 dated June 14, 1993--Income-tax Act, 1961, s. 32-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217

Exemption - Venture capital fund--Interest on temporary investments and profit on sale of units of mutual fund--Assessee entitled to exemption--Amendment with effect from April 1, 2008 restricting exemption to income from investment in venture capital undertaking--Not applicable to earlier years--Income-tax Act, 1961, s. 10(23FB)-- ITO v. Kshitij Venture Capital Fund (Mumbai) . . . 136

Export - Special deduction- Computation--Interest received treated as business income by Assessing Officer--Only 90 per cent. of net interest received to be excluded from business profit --Net interest computation--Gross interest less expenditure incurred for earning interest income--Matter remanded to examine nexus between interest received and interest payment--Income-tax Act, 1961, s. 80HHC-- Nancy Krafts P. Ltd. v. Asst. CIT (Delhi) . . . 193

Property - Annual letting value- Rent Control Act--Prohibition on charging more than standard rent permissible under Act--Assessing Officer directed to compute annual letting value in terms of standard rent payable under Act--Bombay Rent Control Act--Income-tax Act, 1961, s. 23-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217

Reassessment - Cost of construction- Reference to Valuation Officer--No proceedings pending before Assessing Officer--Assessing Officer has no jurisdiction to refer property for valuation to Valuation Officer--Reassessment notice issued on basis of valuation--Not permissible--Income-tax Act, 1961, s. 148-- ITO v. Nisarg Co-op. Housing Society Ltd. (Ahmedabad) . . . 174

Validity of notice - Notice issued after four years--No inquiry in original assessment by Assessing Officer nor disclosure by assessee as to nexus between interest received and interest payment--Non-application of mind by Assessing Officer during original assessment--Reassessment valid--Income-tax Act, 1961, ss. 147, 148-- Nancy Krafts P. Ltd. v. Asst. CIT (Delhi) . . . 193

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

for services rendered outside India - Tax not deductible at source--Fees for technical services--Insulator testing, advertising, etc.--Not technical services--Tax not deductible at source--Circular No. 786, dated February 7, 2000--Circular No. 7, dated 22-10-2009-- Asst. CIT v. Modern Insulator Ltd. (Jaipur) . . . 147

services rendered outside India - Tax not deductible at source--Fees for technical services--Insulator testing, advertising, etc.--Not technical services--Tax not deductible at source--Circular No. 786, dated February 7, 2000--Circular No. 7, dated 22-10-2009-- Asst. CIT v. Modern Insulator Ltd. (Jaipur) . . . 147

services rendered outside India - Tax not deductible at source - Fees for technical services--Insulator testing, advertising, etc.--Not technical services--Tax not deductible at source--Circular No. 786, dated February 7, 2000--Circular No. 7, dated 22-10-2009-- Asst. CIT v. Modern Insulator Ltd. (Jaipur) . . . 147

for services rendered outside India - Tax not deductible at source - Fees for technical services--Insulator testing, advertising, etc.--Not technical services--Tax not deductible at source--Circular No. 786, dated February 7, 2000--Circular No. 7, dated 22-10-2009-- Asst. CIT v. Modern Insulator Ltd. (Jaipur) . . . 147

interested- Loan to shareholder holding more than 10 per cent. voting rights--Loan out of accumulated profits--No evidence that loan was for purposes of business of company--Loan assessable as deemed dividend-- Mrs. Kiran Bansal v. Asst. CIT (Delhi) . . . 180

services rendered outside India- Tax not deductible at source - Fees for technical services--Insulator testing, advertising, etc.--Not technical services--Tax not deductible at source--Circular No. 786, dated February 7, 2000--Circular No. 7, dated 22-10-2009-- Asst. CIT v. Modern Insulator Ltd. (Jaipur) . . . 147

in traditional art forms- Assessee entitled to exemption-- Vempati Chinna Satyam Kuchipudi Art Foundation v. Deputy CIT (Chennai) . . . 201

of units of mutual fund--Assessee entitled to exemption--Amendment with effect from April 1, 2008 restricting exemption to income from investment in venture capital undertaking--Not applicable to earlier years-- ITO v. Kshitij Venture Capital Fund (Mumbai) . . . 136

business, dealing in shares--Assessee holding controlling shares in particular company promoted by assessee and treating shares as investment and not in nature of stock-in-trade--Transfer of shares give rise to long-term capital gains--Assessee entitled to exemption-- Asst. CIT v. Stargate Investments P. Ltd. (Chennai) . . . 211

beneficiary and trust entitled to exemption-- Vempati Chinna Satyam Kuchipudi Art Foundation v. Deputy CIT (Chennai) . . . 201

Trustee not beneficiary and trust entitled to exemption-- Vempati Chinna Satyam Kuchipudi Art Foundation v. Deputy CIT (Chennai) . . . 201

rent permissible under Act--Assessing Officer directed to compute annual letting value in terms of standard rent payable under Act--Bombay Rent Control Act-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217

transportation of goods on hire basis- Entitled to higher rate of depreciation--Circular No. 652 dated June 14, 1993-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217

evidence- Disallowance of fifty per cent. -Proper-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217

not encashed by department--Disallowance justified-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217

Allowable--Sum towards receivables--Not allowable-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217

Perquisites in hands of executives--No addition could be made-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217

for services rendered outside India--Tax not deductible at source--Fees for technical services--Insulator testing, advertising, etc.--Not technical services--Tax not deductible at source--Circular No. 786, dated February 7, 2000--Circular No. 7, dated 22-10-2009-- Asst. CIT v. Modern Insulator Ltd. (Jaipur) . . . 147

charges paid to sister concern--Tug not used for any transportation during relevant period--No case for commercial expediency of payment to sister concern--Disallowance justified-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217

of understatement of sale consideration--Assessing Officer to adopt sale consideration of shares as disclosed by assessee-- Deputy CIT v. Jindal Equipment Leasing and Consultancy Services Ltd. (Delhi) . . . 128

electrical rewiring and wood work expenses--Are post-acquisition expenses--To be excluded--Brokerage and legal fees--Part of acquisition cost--To be allowed-- Smt. S. Sudha v. Asst. CIT (Chennai) . . . 206

Assessing Officer--Only 90 per cent. of net interest received to be excluded from business profit--Net interest computation--Gross interest less expenditure incurred for earning interest income--Matter remanded to examine nexus between interest received and interest payment-- Nancy Krafts P. Ltd. v. Asst. CIT (Delhi) . . . 193

Officer has no power to extend period of limitation--Assessment order passed on 29-8-2005 barred by limitation-- Deputy CIT v. Ramachandra Dashrath Hande and Co. (Mumbai) . . . 117

assessment by AO nor disclosure by assessee as to nexus between interest received and interest payment--Non-application of mind by Assessing Officer during original assessment--Reassessment valid-- Nancy Krafts P. Ltd. v. Asst. CIT (Delhi) . . . 193

pending before Assessing Officer--Assessing Officer has no jurisdiction to refer property for valuation to Valuation Officer--Reassessment notice issued on basis of valuation--Not permissible-- ITO v. Nisarg Co-op. Housing Society Ltd. (Ahmedabad) . . . 174

by Assessing Officer nor disclosure by assessee as to nexus between interest received and interest payment--Non-application of mind by Assessing Officer during original assessment--Reassessment valid-- Nancy Krafts P. Ltd. v. Asst. CIT (Delhi) . . . 193

services rendered outside India--Tax not deductible at source--Fees for technical services--Insulator testing, advertising, etc.--Not technical services--Tax not deductible at source--Circular No. 786, dated February 7, 2000--Circular No. 7, dated 22-10-2009-- Asst. CIT v. Modern Insulator Ltd. (Jaipur) . . . 147

electrical rewiring and wood work expenses--Are post-acquisition expenses--To be excluded--Brokerage and legal fees--Part of acquisition cost--To be allowed-- Smt. S. Sudha v. Asst. CIT (Chennai) . . . 206

assessing authority to levy penalty where it is imperative--Assessee claiming expenses as part of acquisition cost on a bona fide belief--Penalty cannot be imposed-- Smt. S. Sudha v. Asst. CIT (Chennai) . . . 206

acquisition cost on a bona fide belief--Penalty cannot be imposed--Smt. S. Sudha v. Asst. CIT (Chennai) . . . 206

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