Thursday, April 18, 2013

ITR (TRIB) Volume 19 : Part 6 (Issue dated : 05-11-2012)

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 19 : Part 6 (Issue dated : 05-11-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Accounting --Valuation of closing stock--Provision for excise duty on closing stock of finished goods paid before clearance of goods prior to date of tax audit report and difference between opening provision of excise duty on stock and excise duty on closing stock debited in profit and loss account--Amount debited in the profit and loss account paid before due date of filing of return--No disallowance of debit in profit and loss account-- Deputy CIT (LTU) v. Hyundai Motor India Ltd. (Chennai) . . . 778

Assessment --Income computed in hands of another person taxed in hands of assessee on protective basis--Income taxed substantively in hands of that person--Issue pending before Commissioner (Appeals)--Commissioner (Appeals) to decide in whose hands addition to be made-- Mali Florex Ltd. v. Deputy CIT (Hyderabad) . . . 791

Business expenditure --Mercantile system of accounting--Project expenditure incurred prior to commencement of business --Not allowable as business expenditure--Income-tax Act, 1961, s. 37-- Mali Florex Ltd. v. Deputy CIT (Hyderabad) . . . 791

----Payments totalling Rs. 30 lakhs made by account payee cheque--Disallowance of only part of payments on ground deleted in hands of recipients--Payments arising out of same transaction--Expenditure incurred on account of business and commercial exigencies--Deletion in hands of recipients by itself not ground for disallowance in hands of assessee--Income-tax Act, 1961, s. 37-- Mali Florex Ltd. v. Deputy CIT (Hyderabad) . . . 791

----Real estate business--Site-levelling expenses--Architect fee subjected to tax deduction at source--Incurring of expenditure not doubted--Expenditure wholly and exclusively for purpose of business--Not to be disallowed merely because not stipulated in memorandum of understanding--Fees paid to sub-agents on which tax deducted at source on payments and receipts issued by recipients--Payments made by cheque and not doubted--Expenditure wholly and exclusively for purpose of business--Claim to be allowed--Technical expenditure--No proof of expenditure--Expenditure relating to earlier year--Disallowance proper--Video surveillance charges--If expenditure incurred for purpose of business in assessment year under consideration to be allowed though entire property not sold in year under consideration--Income-tax Act, 1961, s. 37-- Mali Florex Ltd. v. Deputy CIT (Hyderabad) . . . 791

Capital gains --Transfer--Definition--
Agreement to sell land --Meagre portion of total consideration received and possession not parted with--Not a case of relinquishment of right over property amounting to transfer--Income-tax Act, 1961, s. 2(47)--Transfer of Property Act, 1882, s. 53A-- Mali Florex Ltd. v. Deputy CIT (Hyderabad) . . . 791

Capital or revenue expenditure --Furniture--Capital asset--Expenses incurred for procuring furniture not allowable--Income-tax Act, 1961-- Mahindra Holidays and Resorts India Ltd. v. Deputy CIT (Chennai) . . . 811

----Market research expenses for launching new holiday concept which was later abandoned--Expenses related to setting up of new business--Capital in nature--Income-tax Act, 1961-- Mahindra Holidays and Resorts India Ltd. v. Deputy CIT (Chennai) . . . 811

----Payment of fee for licence to use software for three years--Software did not become asset of assessee--Payment is revenue expenditure--Income-tax Act, 1961-- Mahindra Holidays and Resorts India Ltd. v. Deputy CIT (Chennai) . . . 811

Charitable purposes --Depreciation--Investment in asset treated as application of income to objects of trust--Depreciation on assets allowable--Income-tax Act, 1961, ss. 11, 32-- Assistant CIT v. Shri Adichunchanagiri Shikshana Trust (Bangalore) . . . 828

Export --Special deduction--Computation of profits--Supporting manufacturer--Service charges relating to exports not supported by disclaimer certificates--Not eligible for deduction--Income-tax Act, 1961, s. 80HHC, Expln. (baa) -- Abad Fisheries v. ITO (Cochin) . . . 753

----Special deduction--Exports made through export houses--Whether or not sale proceeds received in foreign exchange and whether assessee received drawback benefits, etc., not available on record--Matter remanded--Income-tax Act, 1961, s. 80HHC-- Abad Fisheries v. ITO (Cochin) . . . 753

Income --Accrual of income--Assessee running holiday homes on time share basis--Membership fees collected from members in year of admission--60 per cent. offered as income of year in which collected and balance treated as deferred income spread pro rata over remaining period of holiday share--Proper--Income-tax Act, 1961-- Mahindra Holidays and Resorts India Ltd. v. Deputy CIT (Chennai) . . . 811

----Computation--Disallowance of expenditure in earning exempt income--To be restricted at one per cent.--Income-tax Act, 1961, s. 14A-- Estee Exports P. Ltd. v. ITO
(Kolkata) . . . 724

----Computation--Suppression of stock--Failure to explain discrepancy--Addition justified--Income-tax Act, 1961-- Estee Exports P. Ltd. v. ITO (Kolkata) . . . 724

Method of accounting --Power of Assessing Officer to reject books of account--Condition precedent--Satisfaction of Assessing Officer books not complete and correct--Surmise that profits sought to be reduced by sale of products to sister-concern at lower price--Not sufficient ground to conclude that books not complete and correct--No instance of falsity or incompleteness of books of account--Rejection of books not justified--Income-tax Act, 1961, s. 145-- Deputy CIT v. Sphoorti Machine Tools P. Ltd. (Bangalore) . . . 736

Penalty --Concealment of income--Furnishing of inaccurate particulars--Disclosure of sum in year of receipt--Commissioner (Appeals) holding sum taxable in following year--Revised return filed thereafter for following year with profit and loss account--Not a case of concealment--Every addition not concealment of income--Penalty not leviable--Income-tax Act, 1961, s. 271(1)(c)-- ITO v. Jain Associates (Mumbai) . . . 824

Reassessment --Income escaping assessment--Failure by Assessing Officer to consider information called for during assessment--Not a case of income escaping assessment--Income-tax Act, 1961, s. 147-- Deputy CIT (LTU) v. Hyundai Motor India Ltd. (Chennai) . . . 778

----Notice--Validity--Assessing Officer rejecting assesseeĆ¢€™s working of section 10B exemption and section 80HHC deduction in earlier years--Notice issued on presumption that workings for this year would result in escapement of income--Valid--Income-tax Act, 1961, s. 148-- Abad Fisheries v. ITO (Cochin) . . . 753

Revision --Commissioner--Expenditure on creation of new brand--Finding that expenditure not creating any enduring benefit of asset--Order of Assessing Officer not erroneous or prejudicial to interests of Revenue--Revision to treat expenditure as capital expenditure not sustainable--Income-tax Act, 1961, s. 263-- Fine Jewellery (India) Ltd. v. Assistant CIT (Mumbai) . . . 746

----Jurisdiction--Doctrine of merger--Erroneous and prejudicial to Revenue--Housing projects--Special deduction--Assessing Officer analysing issue and allowing deduction excluding profits derived from undivided share of lands--Revision to disallow deduction in toto on ground assessee only developer and not eligible--Matter decided by Commissioner (Appeals) in first appeal--Assessing Officer taking one of two possible views--Revision not permissible--Income-tax Act, 1961, ss. 80-IB, 263-- Sobha Developers Ltd. v. CIT (LTU) (Bangalore) . . . 764

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 2(47) --Capital gains--Transfer--Definition--Agreement to sell land --Meagre portion of total consideration received and possession not parted with--Not a case of relinquishment of right over property amounting to transfer-- Mali Florex Ltd. v. Deputy CIT (Hyderabad) . . . 791

S. 11 --Charitable purposes--Depreciation--Investment in asset treated as application of income to objects of trust--Depreciation on assets allowable-- Assistant CIT v. Shri Adichunchanagiri Shikshana Trust (Bangalore) . . . 828

S. 14A --Income--Computation--Disallowance of expenditure in earning exempt income--To be restricted at one per cent.-- Estee Exports P. Ltd. v. ITO (Kolkata) . . . 724

S. 32 --Charitable purposes--Depreciation--Investment in asset treated as application of income to objects of trust--Depreciation on assets allowable-- Assistant CIT v. Shri Adichunchanagiri Shikshana Trust (Bangalore) . . . 828

S. 37 --Business expenditure--Mercantile system of accounting--Project expenditure incurred prior to commencement of business --Not allowable as business expenditure-- Mali Florex Ltd. v. Deputy CIT (Hyderabad) . . . 791

----Business expenditure--Payments totalling Rs. 30 lakhs made by account payee cheque--Disallowance of only part of payments on ground deleted in hands of recipients--Payments arising out of same transaction--Expenditure incurred on account of business and commercial exigencies--Deletion in hands of recipients by itself not ground for disallowance in hands of assessee-- Mali Florex Ltd. v. Deputy CIT (Hyderabad) . . . 791

----Business expenditure--Real estate business--Site-levelling expenses--Architect fee subjected to tax deduction at source--Incurring of expenditure not doubted--Expenditure wholly and exclusively for purpose of business--Not to be disallowed merely because not stipulated in memorandum of understanding--Fees paid to sub-agents on which tax deducted at source on payments and receipts issued by recipients--Payments made by cheque and not doubted--Expenditure wholly and exclusively for purpose of business--Claim to be allowed--Technical expenditure--No proof of expenditure--Expenditure relating to earlier year--Disallowance proper--Video surveillance charges--If expenditure incurred for purpose of business in assessment year under consideration to be allowed though entire property not sold in year under consideration-- Mali Florex Ltd. v. Deputy CIT (Hyderabad) . . . 791

S. 80HHC --Export--Special deduction--Exports made through export houses--Whether or not sale proceeds received in foreign exchange and whether assessee received drawback benefits, etc., not available on record--Matter remanded-- Abad Fisheries v. ITO (Cochin) . . . 753

S. 80HHC, Expln. (baa) --Export--Special deduction--Computation of profits--Supporting manufacturer--Service charges relating to exports not supported by disclaimer certificates--Not eligible for deduction-- Abad Fisheries v. ITO (Cochin) . . . 753

S. 80-IB --Revision--Jurisdiction--Doctrine of merger--Erroneous and prejudicial to Revenue--Housing projects--Special deduction--Assessing Officer analysing issue and allowing deduction excluding profits derived from undivided share of lands--Revision to disallow deduction in toto on ground assessee only developer and not eligible--Matter decided by Commissioner (Appeals) in first appeal--Assessing Officer taking one of two possible views--Revision not permissible-- Sobha Developers Ltd. v. CIT (LTU) (Bangalore) . . . 764

S. 145 --Method of accounting--Power of Assessing Officer to reject books of account--Condition precedent--Satisfaction of Assessing Officer books not complete and correct--Surmise that profits sought to be reduced by sale of products to sister-concern at lower price--Not sufficient ground to conclude that books not complete and correct--No instance of falsity or incompleteness of books of account--Rejection of books not justified-- Deputy CIT v. Sphoorti Machine Tools P. Ltd. (Bangalore) . . . 736

S. 147 --Reassessment--Income escaping assessment--Failure by Assessing Officer to consider information called for during assessment--Not a case of income escaping assessment-- Deputy CIT (LTU) v. Hyundai Motor India Ltd. (Chennai) . . . 778

S. 148 --Reassessment--Notice--Validity--Assessing Officer rejecting assesseeĆ¢€™s working of section 10B exemption and section 80HHC deduction in earlier years--Notice issued on presumption that workings for this year would result in escapement of income--Valid-- Abad Fisheries v. ITO (Cochin) . . . 753

S. 263 --Revision--Commissioner--Expenditure on creation of new brand--Finding that expenditure not creating any enduring benefit of asset--Order of Assessing Officer not erroneous or prejudicial to interests of Revenue--Revision to treat expenditure as capital expenditure not sustainable-- Fine Jewellery (India) Ltd. v. Assistant CIT (Mumbai) . . . 746

----Revision--Jurisdiction--Doctrine of merger--Erroneous and prejudicial to Revenue--Housing projects--Special deduction--Assessing Officer analysing issue and allowing deduction excluding profits derived from undivided share of lands--Revision to disallow deduction in toto on ground assessee only developer and not eligible--Matter decided by Commissioner (Appeals) in first appeal--Assessing Officer taking one of two possible views--Revision not permissible-- Sobha Developers Ltd. v. CIT (LTU) (Bangalore) . . . 764

S. 271(1)(c) --Penalty--Concealment of income--Furnishing of inaccurate particulars--Disclosure of sum in year of receipt--Commissioner (Appeals) holding sum taxable in following year--Revised return filed thereafter for following year with profit and loss account--Not a case of concealment--Every addition not concealment of income--Penalty not leviable-- ITO v. Jain Associates (Mumbai) . . . 824

Transfer of Property Act, 1882 :

S. 53A --Capital gains--Transfer--Definition--Agreement to sell land--Meagre portion of total consideration received and possession not parted with--Not a case of relinquishment of right over property amounting to transfer-- Mali Florex Ltd. v. Deputy CIT (Hyderabad) . . . 791

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