Saturday, June 9, 2012

INCOME TAX REPORTS (ITR) Volume 341 : Part 4 (Issue dated 5-3-2012)

INCOME TAX REPORTS (ITR)

Volume 341 : Part 4 (Issue dated 5-3-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Accounting --Depreciation--Lease equalization charges--Accounting of leases--Debit of lease equalization charges in profit and loss account following Guidance Note, issued by ICAI--Method in accordance with principles of accountancy--Proper--Income-tax Act, 1961--Companies Act, 1956-- CIT v. Virtual Soft Systems Ltd.

(Delhi) . . . 593

Appeal to Appellate Tribunal --Powers of Tribunal--Additions becoming final in appeal against block assessment--Tribunal not entitled to reopen in appeal from penalty--Deletion of penalty on ground addition made on presumptions and that nothing incriminating found--Not permissible--Income-tax Act, 1961, s. 158BFA(2)-- CIT v. Becharbhai P. Parmar (Guj) . . . 499

Assessment --Rejection of accounts--Estimation on basis of rate of previous year--Findings of fact--Income-tax Act, 1961, s. 145(2)-- Shri Venkteshwar Sugar Mills v. CIT (Appeals) (All) . . . 588

Bad debt --Law after 1989--Assessee need not prove debt had become bad--Sufficient if debt written off in books--Assessing Officer not doubting whether transactions shown in person's name in fact incurred by assessee but only whether incurred by that person in individual capacity or on behalf of employer--Debt written off in assessee's books--Allowable--Income-tax Act, 1961, s. 36(1)(vii)-- CIT v. Prasad and Co.

(Delhi) . . . 480

Business expenditure --Assessee a stock broker--Payments to stock exchange for violation of trading beyond exposure limit, late submission of margin certificate and delay in making deliveries of shares due to deficiencies--Not penalties--Allowable--Income-
tax Act, 1961, s. 37-- CIT v. Prasad and Co. (Delhi) . . . 480

----Commission paid to managing director in addition to salary--Payment towards services rendered--Deductible--Income-tax Act, 1961, s. 36(1)(ii)-- AMD Metplast P. Ltd. v. Deputy CIT (Delhi) . . . 563

Capital or revenue receipt --Acquisition of land--Acquisition based on agreement--Award made subsequently--Interest till date of award--Is capital receipt--Land Acquisition Act, 1894--Income-tax Act, 1961-- CIT v. V. Subbaraju

(AP) . . . 584

Cash credits --Share application money and loans--Finding that transaction was genuine and payments were made by person with sufficient means--Addition to income--Not valid--Income-tax Act, 1961, s. 68-- CIT v. VLS Foods Pvt. Ltd.

(Delhi) . . . 570

Depreciation --Block of assets--Asset forming part of block of assets--To be allowed depreciation even if not used in relevant year--Income-tax Act, 1961, ss. 2(11), 32(1), 43(6)-- CIT v. Oswal Agro Mills Ltd . (Delhi) . . . 467

----User of asset for purpose of business--Passive user--Scope of expression--Unit remaining closed for six years--Cannot be treated as temporary closure--Assessee not entitled to claim passive user of asset--Income-tax Act, 1961, s. 32(1)-- CIT v. Oswal Agro Mills Ltd. (Delhi) . . . 467

Export --Special deduction--Computer software recorded on magnetic tapes, floppies, discs or CDs--Is goods or merchandise--Assessee entitled to deduction for export thereof--Income-tax Act, 1961, s. 80HHC(1)-- CIT v. Ajay Automation (P) Ltd.

(AP) . . . 577

----Special deduction--Law applicable--Introduction of provision specifically for export of computer software--Assessee entitled to deduction under general provision for period prior thereto--Income-tax Act, 1961, ss. 80HHC(1), 80HHE(1)-- CIT v. Ajay Automation (P) Ltd. (AP) . . . 577

----Special deduction under section 80HHC--Assessee having two units--No interdependency or interlacing of funds between units--One unit completely export oriented--Income from such units entitled to special deduction under section 80HHC--Income-tax Act, 1961, s. 80HHC-- Chamundi Textiles (Silk Mills) Ltd . v. CIT

(Mad) . . . 488

Income from house property --Business--Income from house property or business income--Income from letting out property--Assessable as income from house property--Income-tax Act, 1961, ss. 22, 28-- CIT v. Saran Holdings Pvt. Ltd .

(Patna) . . . 573

Industrial undertaking --Special deduction--Advances received from customers forfeited on account of breach of contract--Sum not derived from any goods or services produced by assessee--Assessee not entitled to deduction--Income-tax Act, 1961, s. 80-IA-- CIT v. Jackson Engineers Ltd. (Delhi) . . . 518

----Special deduction--Assembling diesel generating sets--Activity amounts to manufacture--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-IA-- CIT v. Jackson Engineers Ltd . (Delhi) . . . 518

----Special deduction--Interest from fixed deposits and interest charged from customers--Whether interest charged on delayed payment--Whether fixed deposit given as collateral security--Matter remanded--Income-tax Act, 1961, s. 80-IA-- CIT v. Jackson Engineers Ltd. (Delhi) . . . 518

----Special deduction--Manufacture--Assembly of television sets out of items such cabinets, chassis, integrated circuit picture tubes purchased by assessee--Is manufacture--Income-tax Act, 1961, s. 80-IC-- CIT v. I. Tech Electronics

(Gauhati) . . . 533

----Special deduction under section 80-IA--Condition precedent--Manufacture or production of article--Meaning of "production"--Conversion of boulders into grits and chips amounts to production--Assessee entitled to special deduction under sections 80-IA and 80-IB--Income-tax Act, 1961, s. 80-IA-- CIT v. Mallikarjun Georesources Associates (Uttarakhand) . . . 581

Interpretation of taxing statutes --"May"--Not to be read as "shall"-- CIT v. Becharbhai P. Parmar (Guj) . . . 499

----Words cannot be given meaning which makes them superfluous-- CIT v. Oswal Agro Mills Ltd. (Delhi) . . . 467

Loss --Carry forward and set off--Speculation business--Deeming fiction that company shall be deemed to carry on speculation business to extent business consists of purchase and sale of shares--Exception--Company having income "mainly" from other sources, etc.--Gross total income to be computed under provisions of Act first to determine whether company comes within deeming fiction--Income-tax Act, 1961, ss. 28, Expln. (2), 43(5), 70(1), 72, 73, Expln.-- CIT v. Darshan Securities P. Ltd .

(Bom) . . . 556

Precedent --Effect of decision of Supreme Court in ITO v. Arihant Tiles and Marbles P. Ltd. [2010] 320 ITR 79-- CIT v. Mallikarjun Georesources Associates

(Uttarakhand) . . . 581

----Effect of decision of Supreme Court in L. M. Chhabda and Sons v. CIT [1967] 65 ITR 638 and Waterfall Estates Ltd. v. CIT [1996] 219 ITR 563-- Chamundi Textiles (Silk Mills) Ltd . v. CIT (Mad) . . . 488

Refund --Interest on refund--Income-tax Act, 1961, s. 244A-- Sitaram v. CIT

(Bom) . . . 549

Revision --Powers of Commissioner--Commissioner must give reasons--Assessee must be given opportunity to be heard--No material to show order of Assessing Officer was prejudicial to Revenue--Explanation of assessee not considered by Commissioner--Order of revision--Not valid--Income-tax Act, 1961, s. 263-- CIT v. Vikas Polymers

(Delhi) . . . 537

Search and seizure --Block assessment--Penalty--Discretionary--Distinction between section 271(1)(c) and section 158BFA(2) --In latter case no burden on Department to prove concealment--That additions made in block assessment on basis of estimate--Not ground to delete penalty--Income-tax Act, 1961, ss. 158BFA(2), 271(1)(c)-- CIT v. Becharbhai P. Parmar (Guj) . . . 499

----Seizure of cash--Interest on sum retained in excess of liability--Income-tax Act, 1961, s. 132B(4)-- Sitaram v. CIT (Bom) . . . 549

Wealth-tax --Company--Exemption--Assessee doing business of leasing out properties--Property leased out as part of business--Entitled to exemption--Finance Act, 1983, s. 40(3)(vib)-- CWT v. Kumudum Printers P. Ltd. (Mad) . . . 514

----Company--Net wealth--Exemption--Part of property used by managing director as residential accommodation--Entitled to exemption--Finance Act, 1983, s. 40(3)(vib)-- CWT v. Kumudum Printers P. Ltd. (Mad) . . . 514

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Finance Act, 1983 :

S. 40(3)(vib) --Wealth-tax--Company--Exemption--Assessee doing business of leasing out properties--Property leased out as part of business--Entitled to exemption-- CWT v. Kumudum Printers P. Ltd. (Mad) . . . 514

----Wealth-tax--Company--Net wealth--Exemption--Part of property used by managing director as residential accommodation--Entitled to exemption-- CWT v. Kumudum Printers P. Ltd. (Mad) . . . 514

Income-tax Act, 1961 :

S. 2(11) --Depreciation--Block of assets--Asset forming part of block of assets--To be allowed depreciation even if not used in relevant year-- CIT v. Oswal Agro Mills Ltd . (Delhi) . . . 467

S. 22 --Income from house property--Business--Income from house property or business income--Income from letting out property--Assessable as income from house property-- CIT v. Saran Holdings Pvt. Ltd . (Patna) . . . 573

S. 28 --Income from house property--Business--Income from house property or business income--Income from letting out property--Assessable as income from house property-- CIT v. Saran Holdings Pvt. Ltd . (Patna) . . . 573

S. 28, Expln. (2) --Loss--Carry forward and set off--Speculation business--Deeming fiction that company shall be deemed to carry on speculation business to extent business consists of purchase and sale of shares--Exception--Company having income "mainly" from other sources, etc.--Gross total income to be computed under provisions of Act first to determine whether company comes within deeming fiction-- CIT v. Darshan Securities P. Ltd . (Bom) . . . 556

S. 32(1) --Depreciation--Block of assets--Asset forming part of block of assets--To be allowed depreciation even if not used in relevant year-- CIT v. Oswal Agro Mills Ltd . (Delhi) . . . 467

----Depreciation--User of asset for purpose of business--Passive user--Scope of expression--Unit remaining closed for six years--Cannot be treated as temporary closure--Assessee not entitled to claim passive user of asset-- CIT v. Oswal Agro Mills Ltd. (Delhi) . . . 467

S. 36(1)(ii) --Business expenditure--Commission paid to managing director in addition to salary--Payment towards services rendered--Deductible-- AMD Metplast P. Ltd. v. Deputy CIT (Delhi) . . . 563

S. 36(1)(vii) --Bad debt--Law after 1989--Assessee need not prove debt had become bad--Sufficient if debt written off in books--Assessing Officer not doubting whether transactions shown in person's name in fact incurred by assessee but only whether incurred by that person in individual capacity or on behalf of employer--Debt written off in assessee's books--Allowable-- CIT v. Prasad and Co. (Delhi) . . . 480

S. 37 --Business expenditure--Assessee a stock broker--Payments to stock exchange for violation of trading beyond exposure limit, late submission of margin certificate and delay in making deliveries of shares due to deficiencies--Not penalties--Allowable-- CIT v. Prasad and Co. (Delhi) . . . 480

S. 43(5) --Loss--Carry forward and set off--Speculation business--Deeming fiction that company shall be deemed to carry on speculation business to extent business consists of purchase and sale of shares--Exception--Company having income "mainly" from other sources, etc.--Gross total income to be computed under provisions of Act first to determine whether company comes within deeming fiction-- CIT v. Darshan Securities P. Ltd . (Bom) . . . 556

S. 43(6) --Depreciation--Block of assets--Asset forming part of block of assets--To be allowed depreciation even if not used in relevant year-- CIT v. Oswal Agro Mills Ltd . (Delhi) . . . 467

S. 68 --Cash credits--Share application money and loans--Finding that transaction was genuine and payments were made by person with sufficient means--Addition to income--Not valid-- CIT v. VLS Foods Pvt. Ltd. (Delhi) . . . 570

S. 70(1) --Loss--Carry forward and set off--Speculation business--Deeming fiction that company shall be deemed to carry on speculation business to extent business consists of purchase and sale of shares--Exception--Company having income "mainly" from other sources, etc.--Gross total income to be computed under provisions of Act first to determine whether company comes within deeming fiction-- CIT v. Darshan Securities P. Ltd . (Bom) . . . 556

S. 72 --Loss--Carry forward and set off--Speculation business--Deeming fiction that company shall be deemed to carry on speculation business to extent business consists of purchase and sale of shares--Exception--Company having income "mainly" from other sources, etc.--Gross total income to be computed under provisions of Act first to determine whether company comes within deeming fiction-- CIT v. Darshan Securities P. Ltd . (Bom) . . . 556

S. 73, Expln. --Loss--Carry forward and set off--Speculation business--Deeming fiction that company shall be deemed to carry on speculation business to extent business consists of purchase and sale of shares--Exception--Company having income "mainly" from other sources, etc.--Gross total income to be computed under provisions of Act first to determine whether company comes within deeming fiction-- CIT v. Darshan Securities P. Ltd . (Bom) . . . 556

S. 80HHC --Export--Special deduction under section 80HHC--Assessee having two units--No interdependency or interlacing of funds between units--One unit completely export oriented--Income from such units entitled to special deduction under section 80HHC-- Chamundi Textiles (Silk Mills) Ltd . v. CIT (Mad) . . . 488

S. 80HHC(1) --Export--Special deduction--Computer software recorded on magnetic tapes, floppies, discs or CDs--Is goods or merchandise--Assessee entitled to deduction for export thereof-- CIT v. Ajay Automation (P) Ltd.

(AP) . . . 577

----Export--Special deduction--Law applicable--Introduction of provision specifically for export of computer software--Assessee entitled to deduction under general provision for period prior thereto-- CIT v. Ajay Automation (P) Ltd.

(AP) . . . 577

S. 80HHE(1) --Export--Special deduction--Law applicable--Introduction of provision specifically for export of computer software--Assessee entitled to deduction under general provision for period prior thereto-- CIT v. Ajay Automation (P) Ltd.

(AP) . . . 577

S. 80-IA --Industrial undertaking--Special deduction--Advances received from customers forfeited on account of breach of contract--Sum not derived from any goods or services produced by assessee--Assessee not entitled to deduction-- CIT v. Jackson Engineers Ltd. (Delhi) . . . 518

----Industrial undertaking--Special deduction--Assembling diesel generating sets--Activity amounts to manufacture--Assessee entitled to deduction-- CIT v. Jackson Engineers Ltd . (Delhi) . . . 518

----Industrial undertaking--Special deduction--Interest from fixed deposits and interest charged from customers--Whether interest charged on delayed payment--Whether fixed deposit given as collateral security--Matter remanded-- CIT v. Jackson Engineers Ltd. (Delhi) . . . 518

----Industrial undertaking--Special deduction under section 80-IA--Condition precedent--Manufacture or production of article--Meaning of "production"--Conversion of boulders into grits and chips amounts to production--Assessee entitled to special deduction under sections 80-IA and 80-IB-- CIT v. Mallikarjun Georesources Associates

(Uttarakhand) . . . 581

S. 80-IC --Industrial undertaking--Special deduction--Manufacture--Assembly of television sets out of items such cabinets, chassis, integrated circuit picture tubes purchased by assessee--Is manufacture-- CIT v. I. Tech Electronics

(Gauhati) . . . 533

S. 132B(4) --Search and seizure--Seizure of cash--Interest on sum retained in excess of liability-- Sitaram v. CIT (Bom) . . . 549

S. 145(2) --Assessment--Rejection of accounts--Estimation on basis of rate of previous year--Findings of fact-- Shri Venkteshwar Sugar Mills v. CIT (Appeals)

(All) . . . 588

S. 158BFA(2) --Appeal to Appellate Tribunal--Powers of Tribunal--Additions becoming final in appeal against block assessment--Tribunal not entitled to reopen in appeal from penalty--Deletion of penalty on ground addition made on presumptions and that nothing incriminating found--Not permissible-- CIT v. Becharbhai P. Parmar (Guj) . . . 499

----Search and seizure--Block assessment--Penalty--Discretionary--Distinction between section 271(1)(c) and section 158BFA(2) --In latter case no burden on Department to prove concealment--That additions made in block assessment on basis of estimate--Not ground to delete penalty-- CIT v. Becharbhai P. Parmar

(Guj) . . . 499

S. 244A --Refund--Interest on refund-- Sitaram v. CIT (Bom) . . . 549

S. 263 --Revision--Powers of Commissioner--Commissioner must give reasons--Assessee must be given opportunity to be heard--No material to show order of Assessing Officer was prejudicial to Revenue--Explanation of assessee not considered by Commissioner--Order of revision--Not valid-- CIT v. Vikas Polymers

(Delhi) . . . 537

S. 271(1)(c) --Search and seizure--Block assessment--Penalty--Discretionary--Distinction between section 271(1)(c) and section 158BFA(2) --In latter case no burden on Department to prove concealment--That additions made in block assessment on basis of estimate--Not ground to delete penalty-- CIT v. Becharbhai P. Parmar

(Guj) . . . 499

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