Friday, July 15, 2011

ITR (TRIB) Volume 10 : Part 3 Issue dated : 18-07-2011

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

Volume 10 : Part 3 (Issue dated : 18-07-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Accounting --Rejection of accounts--Book profits--Accrual basis followed under Companies Act and cash basis under Income-tax Act--Rejection of accounts and additions to income--Not justified--Income-tax Act, 1961, s. 115JB-- Asst. CIT v. Shriram Transport Finance Co. Ltd. (Chennai) . . . 277

Bad debt --Non-banking financial company--Bona fide writing off of debt in conformity with Reserve Bank directions--To be allowed--Income-tax Act, 1961, s. 36(1)(vii) -- Asst. CIT v. Shriram Transport Finance Co. Ltd. (Chennai) . . . 277

Business expenditure --Provision for warranty made on scientific basis--Allowable --Income-tax Act, 1961, s. 37-- Asst. CIT v. Simpson and Co. Ltd. (Chennai) . . . 283

Business income --Assessee carrying on business of distribution of computer products--Taking business decision to transfer distribution to another company and earn commission--Memorandum of association of assessee permitting assessee to make arrangement with any company to achieve its objects--Income from commission is business income, not income from other sources--Income-tax Act, 1961, ss. 28, 56-- Deputy CIT v. FX Info Technologies P. Ltd. (Delhi) . . . 250

Capital gains --Capital loss--Loss on divestment of shares in sister concern--Commercial transaction between two separate legal entities though belonging to same group--Disallowance not based on valid grounds--To be allowed--Income-tax Act, 1961-- Asst. CIT v. Shriram Transport Finance Co. Ltd. (Chennai) . . . 277

Capital or revenue expenditure --Assessee running tannery business--Assessee to make necessary provisions for disposal of effluents to prevent pollution under Government regulations--Compliance with Pollution Control Board to run unit--Amount paid to agent and other boards for treating effluents--Expenditure on account of business exigency--Revenue expenditure--Income-tax Act, 1961, s. 37-- Asst. CIT v. T. M. Abdul Rahman and Sons (Chennai) . . . 272

----Expenditure on designing charges of telecom equipment--Technical improvement a recurring necessity in the line of manufacturing of telecom equipment--Is revenue expenditure--Income-tax Act, 1961-- Matrix Telecom P. Ltd. v. Asst. CIT (Ahmedabad) . . . 258

Charitable trust --Charitable purpose--Definition--Donation for charitable purposes--Special deduction under section 80G--Approval of institution--Trust for construction and maintenance of Brij Chaurasi Kos Parikrama way and construction and maintenance of dharamshala, tents, etc. for tourists coming to have parikrama--Object of general public utility--No evidence that object was religious--Trust entitled to approval for purposes of section 80G--Income-tax Act, 1961, ss. 2(15), 80G(5)-- Brij Vikas Trust v. CIT (Agra) . . . 310

Income from house property --Deduction--Assessee's father mortgaging property for business purposes--Assessee inheriting property with subsisting mortgage--Assessee offering same property as collateral security and taking loan for investment in shares and in firms--Assessee taking second loan to pay off all previous loans--Original loans taken by father and assessee not for purpose of construction or acquisition of house property--Interest paid on loan--Not deductible--Income-tax Act, 1961, s. 24(1)(vi)-- K. S. Kamalakannan v. Asst. CIT (Chennai) . . . 321

Income-tax --General principles--Rule of consistency-- ITO v. Anjani Synthetics Ltd. (Ahmedabad) . . . 291

Interest on borrowed capital --No nexus between borrowed funds and investments made for non-business purpose--Interest allowed in earlier years--Rule of consistency--Interest to be allowed--Income-tax Act, 1961, s. 36(1)(iii)-- ITO v. Anjani Synthetics Ltd. (Ahmedabad) . . . 291

Non-resident --Agent--French company entering into agreement with Indian company--French company obtaining services of associate company--Employees of associate company working in India--French company cannot be treated as agent of such employees--Income-tax Act, 1961, s. 163-- Pride Foramer S. A. S. v. Asst. CIT (Delhi) . . . 340

Penalty --Concealment of income--Cash credits--Amounts shown as loans assessed as income--Assessee not able to prove genuineness of loans--Imposition of penalty--Valid--Income-tax Act, 1961, s. 271(1)(c)-- STS Chemicals Ltd. v. Asst. CIT (Mumbai) . . . 303

----Concealment of income--Claim to set off carried forward business loss of earlier years of firm in which assessee a partner--Claim untenable and not bona fide--Penalty leviable--Income-tax Act, 1961, s. 271(1)(c)-- Asst. CIT v. Dinesh Goel (Delhi) . . . 330

----Concealment of income--Order of Supreme Court holding interest on price realised from levy sugar payable--Claim to deduction of provision made for interest--No mala fide intention to evade payment of tax--Assessee establishing claim bona fide--Penalty not leviable--Income-tax Act, 1961, s. 271(1)(c)-- Mawana Sugars Ltd. v. Deputy CIT (Delhi) . . . 266

Reassessment --Notice--Reassessment after four years--Assessee disclosing facts truly and fully--Reassessment proceedings after four years on change of opinion--Not valid--Income-tax Act, 1961, ss. 147, 148-- Asst. CIT v. Simpson and Co. Ltd. (Chennai) . . . 283

Revision --Condition precedent--Order of Assessing Officer should be erroneous and prejudicial to Revenue--Assessing Officer allowing deduction after considering facts--Order not erroneous--Order cannot be revised because Commissioner has different opinion--Income-tax Act, 1961, s. 263-- Aditi Developers v. Asst. CIT (Mumbai) . . . 241

Search and seizure --Block assessment--Undisclosed income--Penalty--Assessee filing belated voluntary return after search and offering capital gains--Assessing Officer charging tax at 60 per cent. and imposing penalty--Penalty cannot be imposed--Income-tax Act, 1961, s. 158BFA(2)-- K. Ramakrishnan (HUF) v. Deputy CIT (Chennai) . . . 269

Words and phrases --"Religion","Religious community"-- Brij Vikas Trust v. CIT (Agra) . . . 310

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Income-tax Act, 1961 :

S. 2(15) --Charitable trust--Charitable purpose--Definition--Donation for charitable purposes--Special deduction under section 80G--Approval of institution--Trust for construction and maintenance of Brij Chaurasi Kos Parikrama way and construction and maintenance of dharamshala, tents, etc. for tourists coming to have parikrama--Object of general public utility--No evidence that object was religious--Trust entitled to approval for purposes of section 80G-- Brij Vikas Trust v. CIT (Agra) . . . 310

S. 24(1)(vi) --Income from house property--Deduction--Assessee's father mortgaging property for business purposes--Assessee inheriting property with subsisting mortgage--Assessee offering same property as collateral security and taking loan for investment in shares and in firms--Assessee taking second loan to pay off all previous loans--Original loans taken by father and assessee not for purpose of construction or acquisition of house property--Interest paid on loan--Not deductible-- K. S. Kamalakannan v. Asst. CIT (Chennai) . . . 321

S. 28 --Business income--Assessee carrying on business of distribution of computer products--Taking business decision to transfer distribution to another company and earn commission--Memorandum of association of assessee permitting assessee to make arrangement with any company to achieve its objects--Income from commission is business income, not income from other sources-- Deputy CIT v. FX Info Technologies P. Ltd. (Delhi) . . . 250

S. 36(1)(iii) --Interest on borrowed capital--No nexus between borrowed funds and investments made for non-business purpose--Interest allowed in earlier years--Rule of consistency--Interest to be allowed-- ITO v. Anjani Synthetics Ltd. (Ahmedabad) . . . 291

S. 36(1)(vii) --Bad debt--Non-banking financial company--Bona fide writing off of debt in conformity with Reserve Bank directions--To be allowed-- Asst. CIT v. Shriram Transport Finance Co. Ltd. (Chennai) . . . 277

S. 37 --Business expenditure--Provision for warranty made on scientific basis--Allowable-- Asst. CIT v. Simpson and Co. Ltd. (Chennai) . . . 283

----Capital or revenue expenditure--Assessee running tannery business--Assessee to make necessary provisions for disposal of effluents to prevent pollution under Government regulations--Compliance with Pollution Control Board to run unit--Amount paid to agent and other boards for treating effluents--Expenditure on account of business exigency--Revenue expenditure-- Asst. CIT v. T. M. Abdul Rahman and Sons (Chennai) . . . 272

S. 56 --Business income--Assessee carrying on business of distribution of computer products--Taking business decision to transfer distribution to another company and earn commission--Memorandum of association of assessee permitting assessee to make arrangement with any company to achieve its objects--Income from commission is business income, not income from other sources-- Deputy CIT v. FX Info Technologies P. Ltd. (Delhi) . . . 250

S. 80G(5) --Charitable trust--Charitable purpose--Definition--Donation for charitable purposes--Special deduction under section 80G--Approval of institution--Trust for construction and maintenance of Brij Chaurasi Kos Parikrama way and construction and maintenance of dharamshala, tents, etc. for tourists coming to have parikrama--Object of general public utility--No evidence that object was religious--Trust entitled to approval for purposes of section 80G-- Brij Vikas Trust v. CIT (Agra) . . . 310

S. 115JB --Accounting--Rejection of accounts--Book profits--Accrual basis followed under Companies Act and cash basis under Income-tax Act--Rejection of accounts and additions to income--Not justified-- Asst. CIT v. Shriram Transport Finance Co. Ltd. (Chennai) . . . 277

S. 147 --Reassessment--Notice--Reassessment after four years--Assessee disclosing facts truly and fully--Reassessment proceedings after four years on change of opinion--Not valid-- Asst. CIT v. Simpson and Co. Ltd. (Chennai) . . . 283

S. 148 --Reassessment--Notice--Reassessment after four years--Assessee disclosing facts truly and fully--Reassessment proceedings after four years on change of opinion--Not valid-- Asst. CIT v. Simpson and Co. Ltd. (Chennai) . . . 283

S. 158BFA(2) --Search and seizure--Block assessment--Undisclosed income--Penalty--Assessee filing belated voluntary return after search and offering capital gains --Assessing Officer charging tax at 60 per cent. and imposing penalty--Penalty cannot be imposed-- K. Ramakrishnan (HUF) v. Deputy CIT (Chennai) . . . 269

S. 163 --Non-resident--Agent--French company entering into agreement with Indian company--French company obtaining services of associate company--Employees of associate company working in India--French company cannot be treated as agent of such employees-- Pride Foramer S. A. S. v. Asst. CIT (Delhi) . . . 340

S. 263 --Revision--Condition precedent--Order of Assessing Officer should be erroneous and prejudicial to Revenue--Assessing Officer allowing deduction after considering facts--Order not erroneous--Order cannot be revised because Commissioner has different opinion-- Aditi Developers v. Asst. CIT (Mumbai) . . . 241

S. 271(1)(c) --Penalty--Concealment of income--Cash credits--Amounts shown as loans assessed as income--Assessee not able to prove genuineness of loans--Imposition of penalty--Valid-- STS Chemicals Ltd. v. Asst. CIT (Mumbai) . . . 303

----Penalty--Concealment of income--Claim to set off carried forward business loss of earlier years of firm in which assessee a partner--Claim untenable and not bona fide--Penalty leviable-- Asst. CIT v. Dinesh Goel (Delhi) . . . 330

----Penalty--Concealment of income--Order of Supreme Court holding interest on price realised from levy sugar payable--Claim to deduction of provision made for interest--No mala fide intention to evade payment of tax--Assessee establishing claim bona fide--Penalty not leviable-- Mawana Sugars Ltd. v. Deputy CIT (Delhi) . . . 266
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