Saturday, June 9, 2012

INCOME TAX REPORTS (ITR)

Volume 341 : Part 2 (Issue dated 20-2-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Business expenditure --Deduction only on actual payment--Assessee taking over sick company--Rehabilitation scheme--Interest payable by sick company to bank--Assessee entitled to benefit under scheme--Income-tax Act, 1961, s. 43B--Sick Industrial Companies (Special Provisions) Act, 1985, s. 32-- CIT v. Tube Investments of India Ltd. (Mad) . . . 199

Capital gains --Agricultural land--Whether land agricultural land or otherwise--Date of permission for conversion treated as the cut-off date--Tribunal finding land retained its agricultural character till date of order permitting non-agricultural use--No capital gains tax leviable--Income-tax Act, 1961, ss. 2(14), 45, 48-- CIT v. Smt. K. Leela-vathy (Karn) . . . 287

Capital or revenue expenditure --Construction works--Amount spent on acquiring unfinished works and inventories of another company--Revenue expenditure--Income-tax Act, 1961, s. 37-- Alacrity Housing Ltd . v. CIT (Mad) . . . 264

Cash credit --Production of demand drafts and confirmation letters--Denial of financial transaction by parties before Tribunal--Credits not satisfactorily explained--Addition justified--Income-tax Act, 1961, s. 68-- CIT v. S. L. N. Traders (No. 1 )

(Karn) . . . 232

Depreciation --Higher rate of depreciation--Assessee leasing truck--Assessee not entitled to higher rate of depreciation because not engaged in business of hire--Income-tax Act, 1961--Income-tax Rules, 1962, Appendix I, entry III, clause (2)(ii)-- Deputy CIT v. Pradip N. Desai (HUF) (Guj) . . . 277

----Ownership of asset--Assessee-company giving vehicles on hire--Vehicles registered in the names of directors--Funds for purchase of vehicles provided by company--Income from vehicles assessed in hands of company--Company entitled to depreciation on vehicles--Income-tax Act, 1961, s. 32-- CIT v. Aravali Finlease Ltd.

(Guj) . . . 282

----Rate of depreciation--Vehicles given on lease--Assessee not entitled to higher rate of depreciation--Income-tax Act, 1961, s. 32--Income-tax Rules, 1962-- CIT v. Aravali Finlease Ltd. (Guj) . . . 282

Dispute Resolution Panel --Assessee referring matter to Panel and submitting objections to draft assessment order--Subsequent application to withdraw reference and file appeal--Panel not right in confirming draft assessment order without considering assessee's objections--Income-tax Act, 1961, s. 144C-- AIA Engineering Ltd. v. Dispute Resolution Panel (Guj) . . . 145

----Constitutional validity of provisions--Panel having Commissioner as member--Possibility of bias of Commissioner--Not a ground for declaring section 144C and rule 3(2) invalid--Income-tax Act, 1961, s. 144C--Income-tax (Dispute Resolution Panel) Rules, 2009, r. 3--Constitution of India-- Hyundai Heavy Industries Ltd . v. Union of India (Uttarakhand) . . . 203

----Draft assessment--Assessee to file objections--Panel to pass speaking order with cogent reasons--Income-tax Act, 1961, ss. 94C, 144C(6), (7)-- Ericsson AB v. Additional Director of Income-tax (International Taxation) (Delhi) . . . 162

Export --Special deduction--Computation of special deduction under section 80HHC--Effect of clause (baa) in Explanation to section 80HHC and Circular No. 772--Special deduction under section 80-IB not to be taken into account--Income-tax Act, 1961, ss. 80HHC, 80-IB--CBDT Circular No. 772, dated 23-12-1998-- CIT v. Millipore India P. Ltd . (Karn) . . . 219

Penalty --Concealment of income--Addition of credits in assessment--Assessee explaining in penalty proceedings that it had agreed to addition because of its inability to prove genuineness of credits--Explanation accepted by Commissioner (Appeals) and Tribunal--Penalty could not be levied--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. S. L. N. Traders (No. 2 ) (Karn) . . . 235

Reassessment --International transactions--Arm's length price--Requirement of notice under section 143(2)--Time limit for service of notice--Draft assessment order--Not a final order--Notice issued beyond time limit under section 143(2)(ii)--Assessment invalid--Income-tax Act, 1961, ss. 143(2)(ii), 144C, 292BB-- Alpine Electronics Asia Pte. Ltd . v. Director General of Income-tax (Delhi) . . . 247

Rectification of mistakes --Condition precedent--Mistake must be obvious--Debatable issue--Rectification proceedings not justified--Subsequent decision of Supreme Court would not obliterate conflict of opinion existing on date of order--Income-tax Act, 1961, s. 154-- CIT v. Thambi Modern Spinning Mills Ltd .

(Mad) . . . 229

Revision --Business expenditure--Year in which allowable--Mercantile system of accounting--Interest on belated payment--No evidence that liability accrued during relevant assessment year--Order revising to that extent justified--Income-tax Act, 1961, s. 263-- CIT v. Madras Electrical Conductors Pvt. Ltd. (Mad) . . . 155

----Commissioner--Business loss--Carry forward and set of--Continuance of business--Manufacture and sale of aluminium conductors--Temporary break--Purchase and sale of aluminium foils and other materials thereafter as distributor of group concern--Both activities not separate or independent--Revision on premise that activity not revival of old business--Not justified--Income-tax Act, 1961, s. 263-- CIT v. Madras Electrical Conductors Pvt. Ltd . (Mad) . . . 155

----Commissioner--Reassessment--No addition made on grounds mentioned in reasons recorded--Assessment order not erroneous--Order under section 263 to be set aside-- Income-tax Act, 1961, s. 263-- CIT v. Software Consultants

(Delhi) . . . 240

----Condition precedent--Commissioner not doubting statement of finished goods but directing deeper probe--Insurance claim--No accrual of income without enforceable right--Rejection of claim under section 80HHC--No necessity of further inquiries--Variation in exchange rate--Order not indicating whether there was no such income or income shown was lower--Order not mentioning how order of Assessing Officer was erroneous and prejudicial to interests of Revenue--Revision not valid--Income-tax Act, 1961, s. 263-- CIT v. Leisure Wear Exports Ltd . (Delhi) . . . 166

----Powers of Commissioner--Assessment after enquiry --No error in order--Order cannot be revised on ground enquiry should have been more detailed--Income-tax Act, 1961, s. 263-- CIT v. Hindustan Marketing and Advertising Co. Ltd.

(Delhi) . . . 180

Search and seizure --Block assessment--Penalty--Tribunal confirming addition over and above income declared by assessee--Imposition of penalty proper--Income-tax Act, 1961, s. 158BFA(2)-- Kandoi Bhogilal Mulchand v. Deputy CIT

(Guj) . . . 271

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 2(14) --Capital gains--Agricultural land--Whether land agricultural land or otherwise--Date of permission for conversion treated as the cut-off date--Tribunal finding land retained its agricultural character till date of order permitting non-agricultural use--No capital gains tax leviable-- CIT v. Smt. K. Leelavathy (Karn) . . . 287

S. 32 --Depreciation--Ownership of asset--Assessee-company giving vehicles on hire--Vehicles registered in the names of directors--Funds for purchase of vehicles provided by company--Income from vehicles assessed in hands of company--Company entitled to depreciation on vehicles-- CIT v. Aravali Finlease Ltd.

(Guj) . . . 282

----Depreciation--Rate of depreciation--Vehicles given on lease--Assessee not entitled to higher rate of depreciation-- CIT v. Aravali Finlease Ltd.

(Guj) . . . 282

S. 37 --Capital or revenue expenditure--Construction works--Amount spent on acquiring unfinished works and inventories of another company--Revenue expenditure-- Alacrity Housing Ltd . v. CIT (Mad) . . . 264

S. 43B --Business expenditure--Deduction only on actual payment--Assessee taking over sick company--Rehabilitation scheme--Interest payable by sick company to bank--Assessee entitled to benefit under scheme-- CIT v. Tube Investments of India Ltd.

(Mad) . . . 199

S. 45 --Capital gains--Agricultural land--Whether land agricultural land or otherwise--Date of permission for conversion treated as the cut-off date--Tribunal finding land retained its agricultural character till date of order permitting non-agricultural use--No capital gains tax leviable-- CIT v. Smt. K. Leelavathy (Karn) . . . 287

S. 48 --Capital gains--Agricultural land--Whether land agricultural land or otherwise--Date of permission for conversion treated as the cut-off date--Tribunal finding land retained its agricultural character till date of order permitting non-agricultural use--No capital gains tax leviable-- CIT v. Smt. K. Leelavathy (Karn) . . . 287

S. 68 --Cash credit--Production of demand drafts and confirmation letters--Denial of financial transaction by parties before Tribunal--Credits not satisfactorily explained--Addition justified-- CIT v. S. L. N. Traders (No. 1 ) (Karn) . . . 232

S. 80HHC --Export--Special deduction--Computation of special deduction under section 80HHC--Effect of clause (baa) in Explanation to section 80HHC and Circular No. 772--Special deduction under section 80-IB not to be taken into account--CBDT Circular No. 772, dated 23-12-1998-- CIT v. Millipore India P. Ltd .

(Karn) . . . 219

S. 80-IB --Export--Special deduction--Computation of special deduction under section 80HHC--Effect of clause (baa) in Explanation to section 80HHC and Circular No. 772--Special deduction under section 80-IB not to be taken into account--CBDT Circular No. 772, dated 23-12-1998-- CIT v. Millipore India P. Ltd . (Karn) . . . 219

S. 94C --Dispute Resolution Panel--Draft assessment--Assessee to file objections--Panel to pass speaking order with cogent reasons-- Ericsson AB v. Additional Director of Income-tax (International Taxation) (Delhi) . . . 162

S. 143(2)(ii) --Reassessment--International transactions--Arm's length price--Requirement of notice under section 143(2)--Time limit for service of notice--Draft assessment order--Not a final order--Notice issued beyond time limit under section 143(2)(ii)--Assessment invalid-- Alpine Electronics Asia Pte. Ltd . v. Director General of Income-tax (Delhi) . . . 247

S. 144C --Dispute Resolution Panel--Assessee referring matter to Panel and submitting objections to draft assessment order--Subsequent application to withdraw reference and file appeal--Panel not right in confirming draft assessment order without considering assessee's objections-- AIA Engineering Ltd. v. Dispute Resolution Panel

(Guj) . . . 145

----Dispute Resolution Panel--Constitutional validity of provisions--Panel having Commissioner as member--Possibility of bias of Commissioner--Not a ground for declaring section 144C and rule 3(2) invalid-- Hyundai Heavy Industries Ltd . v. Union of India (Uttarakhand) . . . 203

----Reassessment--
International transactions--Arm's length price--Requirement of notice under section 143(2)--Time limit for service of notice--Draft assessment order--Not a final order--Notice issued beyond time limit under section 143(2)(ii)--Assessment invalid-- Alpine Electronics Asia Pte. Ltd . v. Director General of Income-tax

(Delhi) . . . 247

S. 144C(6) --Dispute Resolution Panel--Draft assessment--Assessee to file objections--Panel to pass speaking order with cogent reasons-- Ericsson AB v. Additional Director of Income-tax (International Taxation) (Delhi) . . . 162

S. 144C(7) --Dispute Resolution Panel--Draft assessment--Assessee to file objections--Panel to pass speaking order with cogent reasons-- Ericsson AB v. Additional Director of Income-tax (International Taxation) (Delhi) . . . 162

S. 154 --Rectification of mistakes--Condition precedent--Mistake must be obvious--Debatable issue--Rectification proceedings not justified--Subsequent decision of Supreme Court would not obliterate conflict of opinion existing on date of order-- CIT v. Thambi Modern Spinning Mills Ltd . (Mad) . . . 229

S. 158BFA(2) --Search and seizure--Block assessment--Penalty--Tribunal confirming addition over and above income declared by assessee--Imposition of penalty proper-- Kandoi Bhogilal Mulchand v. Deputy CIT (Guj) . . . 271

S. 263 --Revision--Business expenditure--Year in which allowable--Mercantile system of accounting--Interest on belated payment--No evidence that liability accrued during relevant assessment year--Order revising to that extent justified-- CIT v. Madras Electrical Conductors Pvt. Ltd. (Mad) . . . 155

----Revision--Commissioner--Business loss--Carry forward and set of--Continuance of business--Manufacture and sale of aluminium conductors--Temporary break--Purchase and sale of aluminium foils and other materials thereafter as distributor of group concern--Both activities not separate or independent--Revision on premise that activity not revival of old business--Not justified-- CIT v. Madras Electrical Conductors Pvt. Ltd . (Mad) . . . 155

----Revision--Commissioner--Reassessment--No addition made on grounds mentioned in reasons recorded--Assessment order not erroneous--Order under section 263 to be set aside-- CIT v. Software Consultants (Delhi) . . . 240

----Revision--Condition precedent--Commissioner not doubting statement of finished goods but directing deeper probe--Insurance claim--No accrual of income without enforceable right--Rejection of claim under section 80HHC--No necessity of further inquiries--Variation in exchange rate--Order not indicating whether there was no such income or income shown was lower--Order not mentioning how order of Assessing Officer was erroneous and prejudicial to interests of Revenue--Revision not valid-- CIT v. Leisure Wear Exports Ltd . (Delhi) . . . 166

----Revision--Powers of Commissioner--Assessment after enquiry--No error in order--Order cannot be revised on ground enquiry should have been more detailed-- CIT v. Hindustan Marketing and Advertising Co. Ltd. (Delhi) . . . 180

S. 271(1)(c) --Penalty--Concealment of income--Addition of credits in assessment--Assessee explaining in penalty proceedings that it had agreed to addition because of its inability to prove genuineness of credits--Explanation accepted by Commissioner (Appeals) and Tribunal--Penalty could not be levied-- CIT v. S. L. N. Traders (No. 2 )

(Karn) . . . 235

S. 292BB --Reassessment--International transactions--Arm's length price--Requirement of notice under section 143(2)--Time limit for service of notice--Draft assessment order--Not a final order--Notice issued beyond time limit under section 143(2)(ii)--Assessment invalid-- Alpine Electronics Asia Pte. Ltd . v. Director General of Income-tax (Delhi) . . . 247

Income-tax (Dispute Resolution Panel) Rules, 2009 :

R. 3 --Dispute Resolution Panel--Constitutional validity of provisions--Panel having Commissioner as member--Possibility of bias of Commissioner--Not a ground for declaring section 144C and rule 3(2) invalid-- Hyundai Heavy Industries Ltd . v. Union of India (Uttarakhand) . . . 203

Income-tax Rules, 1962 :

Appendix I, entry III, clause (2)(ii) --Depreciation--Higher rate of depreciation--Assessee leasing truck--Assessee not entitled to higher rate of depreciation because not engaged in business of hire-- Dy. CIT v. Pradip N. Desai (HUF) (Guj) . . . 277

Sick Industrial Companies (Special Provisions) Act, 1985 :

S. 32 --Business expenditure--Deduction only on actual payment--Assessee taking over sick company--Rehabilitation scheme--Interest payable by sick company to bank--Assessee entitled to benefit under scheme-- CIT v. Tube Investments of India Ltd.

(Mad) . . . 199

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