Saturday, May 4, 2013

ITR Volume 352 Part 5 (Issue dated 6-5-2013)

INCOME TAX REPORTS (ITR)
Volume 352 Part 5 (Issue dated 6-5-2013)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
HIGH COURTS
Appeal to High Court --Substantial question of law--Concession recorded during course of hearing--Not to be disputed in appeal--Income-tax Act, 1961, s. 260A-- Dr. Gurvinder Singh Randhawa v . CIT (P&H) . . . 616
Business expenditure --Accounting--Expenses under heads provision for completed expenses and expenses incurred on completed projects --Allowable--Income-tax Act, 1961-- CIT v . Ansal Properties and Industries Ltd . (Delhi) . . . 637
----Disallowance--Maintenance of accommodation for employees and executives for duration of projects outside India--Intention of employer not to provide for guest house--Expenses allowable--Income-tax Act, 1961, s. 37(4), (5)-- CIT v . Ansal Properties and Industries Ltd . (Delhi) . . . 637
----Warranty--Provision for installation and service charges payable under warranty in respect of office equipment--Provision not made on any scientific data and past experience--Not allowable--Income-tax Act, 1961, s. 37-- CIT v . Forbes Campbell Finance Ltd. (Mad) . . . 602
Capital gains --Long-term capital gains--Principle of owelty--Family settlement--Payment to assessee to compensate inequalities in partition of assets--Amount paid is immovable property--No capital gains arise--Income-tax Act, 1961-- CIT v. Ashwani Chopra (P&H) . . . 620
----Transfer--Disputes among family members--Arbitration and family arrangement--Adjustment of shares among family members does not amount to transfer within the meaning of section 45--No capital gains arises--Income-tax Act, 1961, s. 45-- CIT v. R. Nagaraja Rao (Karn) . . . 565
Depreciation --Motor cars used outside India for business and commercial activities--Expenses for upkeeping vehicles--Entitled to depreciation--Income-tax Act, 1961, s. 32(1)(ii)-- CIT v . Ansal Properties and Industries Ltd . (Delhi) . . . 637
Export --Special deduction--Addition on account of surrendering amount as income on account of excess valuation of closing stock--Concurrent finding that assessee satisfied condition for grant of deduction to the extent of excess closing stock valuation--Assessee entitled to deduction--Income-tax Act, 1961, s. 80HHC-- CIT v . Haswani Arts (Raj) . . . 574
Income --Disallowance of expenditure in earning tax-free income--Assessee using its own funds for investments in shares and using borrowed funds entirely for its business purposes--No finding that any expenditure by way of interest was incurred in respect of investments--Disallowance under section 14A not justified--Income-tax Act, 1961, s. 14A-- CIT v . Gujarat Power Corporation Ltd . (Guj) . . . 583
Infrastructure facility --Special deduction--Explanation that person executing works contract not eligible for deduction--Intrinsic difference between developing infrastructure facility and executing works contract--Explanation clarificatory--Introduction in 2009 with effect from 2000--Not a case of retrospective levy or withdrawal of deduction with retrospective effect--Valid--Income-tax Act, 1961, s. 80-IA(4), (13), Expln.-- Katira Construction Ltd. v . Union of India (Guj) . . . 513
Interpretation of taxing statutes --Explanation--Scope of-- Katira Construction Ltd . v . Union of India (Guj) . . . 513
Legislative powers --Parliament--Taxation--Power to legislate with retrospective effect-- Katira Construction Ltd . v . Union of India (Guj) . . . 513
Penalty --Excess claim to depreciation--Wrong claim to loss as revenue expenditure--Mistakes rectified during assessment proceedings since time to file revised return expired--No dispute that mistake bona fide--No penalty leviable--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Somany Evergree Knits Ltd . (Bom) . . . 592
----Furnishing inaccurate particulars--Property held as stock-in-trade--Conversion of stock-in-trade into investment just before sale of property to pay lower tax--Furnishing inaccurate particulars of income--Levy of penalty justified--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Splender Construction (Delhi) . . . 588
Reassessment --Condition precedent--Tangible material regarding escapement of income--Reason for notice must be given and objections disposed of by speaking order--Special deduction under section 80-IB(10) granted in original assessment--Reassessment withdrawing special deduction--Objections not heard--Order of reassessment--Not valid--Income-tax Act, 1961, ss. 80-IB(10), 147, 148-- Vishwanath Engineers v . Asst. CIT (Guj) . . . 549
----Writ--Existence of alternative remedy--Not an absolute bar for issue of writ--Appeal subsequent to filing of writ petition--Petition admitted and affidavit filed--Writ petition could not be dismissed--Income-tax Act, 1961, s. 148--Constitution of India, art. 226-- Vishwanath Engineers v . Asst. CIT (Guj) . . . 549
Residence --Conditions precedent for considering Indian citizen or person of Indian origin a resident--Residence in India for a period exceeding 365 days in the immediately preceding four years and residence during previous year for period of 182 days--Conditions cumulative--Individual residing in India for more than 365 days in immediately preceding four years but residing for less than 182 days in previous year--Not a resident--Income-tax Act, 1961, s. 6-- CIT v . Suresh Nanda (Delhi) . . . 611
Search and seizure --Retention of seized assets--Dispute between assessee and its partners regarding ownership of seized jewellery--Suit pending before civil court--High Court setting aside order of Commissioner entrusting jewellery to one partner and remanding matter for redetermination--Order of Commissioner treating jewellery as belonging to one partner and levying interest under section 220(2)--Power of Commissioner to waive or reduce interest--Matter remanded--Income-tax Act, 1961, ss. 132, 132B, 220(2)--R oxy Industrial Corporation v. CIT (P&H) . . . 569
Settlement of cases --Settlement Commission--Power of review--Rectification of mistakes--Order of Commission charging interest contrary to Circular and decision of Supreme Court--Revision of order by way of rectification--Impermissible--Income-tax Act, 1961, ss. 154, 245D-- Smt. U. Narayanamma v. Government of India
(AP) . . . 598

Undisclosed income --Assessee a surgeon--Addition on account of undisclosed surgeries--Tribunal reducing average rate of surgery than that declared by assessee--Average rate of surgery based upon number of surgeries performed by assessee in one year and income earned therefrom--Assessee not entitled to contend that flat rate applied by Tribunal arbitrary--Income-tax Act, 1961-- Dr. Gurvinder Singh Randhawa v . CIT (P&H) . . . 616
Unexplained investment --Investment in property--No evidence that extra consideration received--Addition to income based solely on report of District Valuation Officer--Not valid--Income-tax Act, 1961, s. 69B-- CIT v . Sadhna Gupta
(Delhi) . . . 595

----Unexplained expenditure--Effect of section 69B--Condition precedent for application of provision--No evidence to establish understatement of purchase price--No addition by treating investment as undisclosed--Wealth-tax Act, 1957, Sch. III, r. 3--Income-tax Act, 1961, s. 69B-- CIT v . Dinesh Jain (HUF) (Delhi) . . . 629

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Constitution of India :
Art. 226 --Reassessment--Writ--Existence of alternative remedy--Not an absolute bar for issue of writ--Appeal subsequent to filing of writ petition--Petition admitted and affidavit filed--Writ petition could not be dismissed-- Vishwanath Engineers v . Asst. CIT (Guj) . . . 549
Income-tax Act, 1961 :
S. 6 --Residence--Conditions precedent for considering Indian citizen or person of Indian origin a resident--Residence in India for a period exceeding 365 days in the immediately preceding four years and residence during previous year for period of 182 days--Conditions cumulative--Individual residing in India for more than 365 days in immediately preceding four years but residing for less than 182 days in previous year--Not a resident-- CIT v . Suresh Nanda (Delhi) . . . 611
S. 14A --Income--Disallowance of expenditure in earning tax-free income--Assessee using its own funds for investments in shares and using borrowed funds entirely for its business purposes--No finding that any expenditure by way of interest was incurred in respect of investments--Disallowance under section 14A not justified-- CIT v . Gujarat Power Corporation Ltd . (Guj) . . . 583
S. 32(1)(ii) --Depreciation--Motor cars used outside India for business and commercial activities--Expenses for upkeeping vehicles--Entitled to depreciation-- CIT v . Ansal Properties and Industries Ltd . (Delhi) . . . 637
S. 37 --Business expenditure--Warranty--Provision for installation and service charges payable under warranty in respect of office equipment--Provision not made on any scientific data and past experience--Not allowable-- CIT v . Forbes Campbell Finance Ltd. (Mad) . . . 602
S. 37(4) --Business expenditure--Disallowance--Maintenance of accommodation for employees and executives for duration of projects outside India--Intention of employer not to provide for guest house--Expenses allowable-- CIT v . Ansal Properties and Industries Ltd . (Delhi) . . . 637
S. 37(5) --Business expenditure--Disallowance--Maintenance of accommodation for employees and executives for duration of projects outside India--Intention of employer not to provide for guest house--Expenses allowable-- CIT v . Ansal Properties and Industries Ltd . (Delhi) . . . 637
S. 45 --Capital gains--Transfer--Disputes among family members--Arbitration and family arrangement--Adjustment of shares among family members does not amount to transfer within the meaning of section 45--No capital gains arises-- CIT v. R. Nagaraja Rao (Karn) . . . 565
S. 69B --Unexplained investment--Investment in property--No evidence that extra consideration received--Addition to income based solely on report of District Valuation Officer--Not valid-- CIT v . Sadhna Gupta (Delhi) . . . 595
----Unexplained investment--Unexplained expenditure--Effect of section 69B--Condition precedent for application of provision--No evidence to establish understatement of purchase price--No addition by treating investment as undisclosed-- CIT v . Dinesh Jain (HUF) (Delhi) . . . 629
S. 80HHC --Export--Special deduction--Addition on account of surrendering amount as income on account of excess valuation of closing stock--Concurrent finding that assessee satisfied condition for grant of deduction to the extent of excess closing stock valuation--Assessee entitled to deduction-- CIT v . Haswani Arts (Raj) . . . 574
S. 80-IA(4) --Infrastructure facility--Special deduction--Explanation that person executing works contract not eligible for deduction--Intrinsic difference between developing infrastructure facility and executing works contract--Explanation clarificatory--Introduction in 2009 with effect from 2000--Not a case of retrospective levy or withdrawal of deduction with retrospective effect--Valid-- Katira Construction Ltd. v . Union of India (Guj) . . . 513
S. 80-IA(13), Expln. --Infrastructure facility--Special deduction--Explanation that person executing works contract not eligible for deduction--Intrinsic difference between developing infrastructure facility and executing works contract--Explanation clarificatory--Introduction in 2009 with effect from 2000--Not a case of retrospective levy or withdrawal of deduction with retrospective effect--Valid-- Katira Construction Ltd. v . Union of India (Guj) . . . 513
S. 80-IB(10) --Reassessment--Condition precedent--Tangible material regarding escapement of income--Reason for notice must be given and objections disposed of by speaking order--Special deduction under section 80-IB(10) granted in original assessment--Reassessment withdrawing special deduction--Objections not heard--Order of reassessment--Not valid-- Vishwanath Engineers v . Asst. CIT (Guj) . . . 549
S. 132 --Search and seizure--Retention of seized assets--Dispute between assessee and its partners regarding ownership of seized jewellery--Suit pending before civil court--High Court setting aside order of Commissioner entrusting jewellery to one partner and remanding matter for redetermination--Order of Commissioner treating jewellery as belonging to one partner and levying interest under section 220(2)--Power of Commissioner to waive or reduce interest--Matter remanded--R oxy Industrial Corporation v. CIT (P&H) . . . 569
S. 132B --Search and seizure--Retention of seized assets--Dispute between assessee and its partners regarding ownership of seized jewellery--Suit pending before civil court--High Court setting aside order of Commissioner entrusting jewellery to one partner and remanding matter for redetermination--Order of Commissioner treating jewellery as belonging to one partner and levying interest under section 220(2)--Power of Commissioner to waive or reduce interest--Matter remanded--R oxy Industrial Corporation v. CIT (P&H) . . . 569
S. 147 --Reassessment--Condition precedent--Tangible material regarding escapement of income--Reason for notice must be given and objections disposed of by speaking order--Special deduction under section 80-IB(10) granted in original assessment--Reassessment withdrawing special deduction--Objections not heard--Order of reassessment--Not valid-- Vishwanath Engineers v . Asst. CIT (Guj) . . . 549
S. 148 --Reassessment--Condition precedent--Tangible material regarding escapement of income--Reason for notice must be given and objections disposed of by speaking order--Special deduction under section 80-IB(10) granted in original assessment--Reassessment withdrawing special deduction--Objections not heard--Order of reassessment--Not valid-- Vishwanath Engineers v . Asst. CIT (Guj) . . . 549
----Reassessment--Writ--Existence of alternative remedy--Not an absolute bar for issue of writ--Appeal subsequent to filing of writ petition--Petition admitted and affidavit filed--Writ petition could not be dismissed-- Vishwanath Engineers v . Asst. CIT (Guj) . . . 549
S. 154 --Settlement of cases--Settlement Commission--Power of review--Rectification of mistakes--Order of Commission charging interest contrary to Circular and decision of Supreme Court--Revision of order by way of rectification--Impermissible-- Smt. U. Narayanamma v. Government of India (AP) . . . 598
S. 220(2) --Search and seizure--Retention of seized assets--Dispute between assessee and its partners regarding ownership of seized jewellery--Suit pending before civil court--High Court setting aside order of Commissioner entrusting jewellery to one partner and remanding matter for redetermination--Order of Commissioner treating jewellery as belonging to one partner and levying interest under section 220(2)--Power of Commissioner to waive or reduce interest--Matter remanded--R oxy Industrial Corporation v. CIT (P&H) . . . 569
S. 245D --Settlement of cases--Settlement Commission--Power of review--Rectification of mistakes--Order of Commission charging interest contrary to Circular and decision of Supreme Court--Revision of order by way of rectification--Impermissible-- Smt. U. Narayanamma v. Government of India (AP) . . . 598
S. 260A --Appeal to High Court--Substantial question of law--Concession recorded during course of hearing--Not to be disputed in appeal-- Dr. Gurvinder Singh Randhawa v . CIT (P&H) . . . 616
S. 271(1)(c) --Penalty--Excess claim to depreciation--Wrong claim to loss as revenue expenditure--Mistakes rectified during assessment proceedings since time to file revised return expired--No dispute that mistake bona fide--No penalty leviable-- CIT v. Somany Evergree Knits Ltd . (Bom) . . . 592
----Penalty--Furnishing inaccurate particulars--Property held as stock-in-trade--Conversion of stock-in-trade into investment just before sale of property to pay lower tax--Furnishing inaccurate particulars of income--Levy of penalty justified-- CIT v. Splender Construction (Delhi) . . . 588
Wealth-tax Act, 1957 :
Sch. III, r. 3 --Unexplained investment--Unexplained expenditure--Effect of section 69B--Condition precedent for application of provision--No evidence to establish understatement of purchase price--No addition by treating investment as undisclosed-- CIT v . Dinesh Jain (HUF) (Delhi) . . . 629
ITR’S TRIBUNAL TAX REPORTS (ITR (TRIB))

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