The Indian Hume Pipe Co Ltd vs. ACIT (Bombay High Court)

S. 147: “Full & true disclosure of material facts” means “specific” disclosure of “each” fact


The assessee entered into an agreement in July 2001 for sale of development rights for Rs.39 crores. The transfer was in December 2003. The assessee computed LTCG of Rs. 23.19 crores. The assessee invested in eligible bonds between Feb & June 2002 (after the agreement to sell but before the transfer) and claimed exemption u/s 54EC. During the assessment proceedings, the AO asked for a copy of the agreements with the purchaser and other details which the assessee furnished. A copy each of the s. 54EC bonds (which gave the dates of investments) was also furnished. The AO allowed the deduction as claimed. After the expiry of 4 years from the end of the assessment year, the AO issued a notice u/s 148 claiming that as the investments were made prior to the date of transfer (Dec 2003), s. 54EC deduction was not admissible. The assessee filed a Writ Petition to challenge the reopening on the ground that there was no failure on its part to make a full and true disclosure of material facts. HELD dismissing the Petition:

(i) “Full and true disclosure of material facts” means that the disclosure should not be garbled or hidden in the crevices of the documentary material which has been filed by the assessee with the AO. The assessee must act with candor. A full disclosure is a disclosure of all material facts which does not contain any hidden material or suppression of fact. It must be truthful in all respects;

(ii) On facts, though the AO enquired into the matter and the assessee furnished a copy of the s. 54EC bonds (from which the dates of allotment/ investment were evident), there was no (specific) reference by the assessee to the dates on which the amounts were invested in the s. 54EC bonds. Also, it was it was evident that the AO had not applied his mind to the issue of s. 54EC exemption. Accordingly, the AO was justified in reopening the assessment.

Direct Tax Laws Oct 17

Merely because an educational society was charging fees and was getting surplus would not be a reason to deny registration under section 80G(5)(vi) - [2011] 15 taxmann 250 (Punjab and Haryana)

There is no bar in law to sent a notice under section 148 after return is filed by assessee; such a notice can be issued by Assessing Officer if on consideration of return assessee is found to have understated his income or claimed excessive loss or deduction in return - [2011] 15 taxmann 249 (Karnataka)

Notice under section 158BC is not a procedural requirement, but it gives very jurisdiction to Assessing Officer to proceed under section 158BC - [2011] 15 taxmann 264 (Chennai - Trib.)

MAT liability - In view of addition of clause (g) to section 115JA, provision for bad debts is to be added back for computing net profits.Under MAT, profit derived by industrial undertaking from business of generation and distribution of power has to be reduced from net profit whether or not such profit appears in P&L account; however, no addition of loss can be made to net profit. Just for reason that assessee has started making provision for first time, leave encashment cannot be disallowed. Equipment constructed or installed at other's premises does not give enduring benefit.Provision for wealth-tax would come within ambit of clause (a) of Explanation to 115JA - [2011] 15 taxmann 262 (Chennai - Trib.)

Guideline value collected from sub-registrar office is only a guiding factors for valuing a property and such guideline value need not be market value for all time. Market value is determined by so many external factors including prevalent market conditions and, therefore, a detailed enquiry is needed for arriving at a reasonable market value of property - [2011] 15 taxmann 257 (Chennai - Trib.)(TM)

Where assessee could not file appeal against penalty order within prescribed time period due to death of her husband, it constituted a sufficient cause and, thus, Commissioner (Appeals) was to be directed to condone delay in filing appeal and dispose it of on merits - [2011] 15 taxmann 256(Kolkata - Trib.)

Where stay of demand was granted to assessee and therefore balance outstanding demand was to be stayed - [2011] 15 taxmann 255 (Mumbai - Trib.)

Where DRP did not consider assessee's objections and passed a cryptic order a prima facie case for stay of demand arose during pendency of proceedings before Tribunal - [2011] 15 taxmann 254 (Mumbai - Trib.)

Where assessee, a manufacturer of ice cream, failed to prove source of deposits allegedly received from dealers said amount could not be added to assessee's taxable income under section 41(1) - [2011] 15 taxmann 253 (Ahmedabad - Trib.)

Expression 'shareholder being a person who is beneficial owner of shares' referred to in first limb of section 2(22)(e) refers to both a registered shareholder and beneficial shareholder - [2011] 15 taxmann 252 (Kolkata - Trib.)

Tax is not liable to be deducted at source under section 195 on payments made to foreign companies which do not have branches, or business place in India, and have rendered services outside India - [2011] 15 taxmann 251 (Chennai - Trib.)

Compilations of case law: STATUS OF ASSESSEE ; PARTITION

PARTITION

Death of coparcenor – No ipso facto partition
CIT Vs Charan Das (HUF) (All) 280 ITR 637

No evidence that after the death of Kartha, partition by metes and bounds took place – No partition as per Expl. 1 to Sec. 6 – Sale deed executed by son of deceased Kartha on behalf of HUF – Entire property treated as that of HUF for capital gains computation – Share of deceased Kartha not to be excluded
CIT Vs Dharam Pal Singh (HUF) (All ) 280 ITR 629

In the absence of more than on coparcenor, a partition is impossible – A sole surviving coparcenor with female members – Grant of share in property to female members – could only be in the nature of settlement of property.
V.V.S. Natarajan Vs CIT (Mad) 111 ITR 539
B.T. Ravindranath Punja Vs CIT (Kar) 179 ITR 243
Sat Pal Bansal Vs CIT (P&H) 162 ITR 582

IT authorities had their own view to take and were not bound by the partition decree – A junior member can act as the karta of a HUF with the consent of all the other members.
Narendrakumar J. Modi Vs CIT (SC) 105 ITR 109

Even after death of a male coparcenor in the joint family and even after the undivided shares of the family members became defined under the Hindu Succession Act, until an order u/s.171 is passed by ITO recognizing the partition in the family on the basis of any claim made in this behalf HUF continue to be assessed to IT & WT.
Narendrakumar Modi Vs CIT (SC) 105 ITR 109
R.B. Tunki Sah Baidyanath Prasad Vs CIT (SC) 212 ITR 632.
Kalloomal Topeswari Prasad (HUF) Vs CIT (SC) 133 ITR 690.

Partition not registered – No physical division – No actual division of assets – No partition in HUF.
CIT Vs Venugopal Inani (SC) 239 ITR 514
Kanhaiyalal Thawarji Vs CIT (HP) 176 ITR 329
Satish Chandra Modi (HUF) Vs CIT & Anr. (AP) 216 ITR 717

Partial partition not valid after insertion of 171(9) w.e.f. 1.4.1980
CIT Vs Tej Cloth Weaving Factory (P&H) 178 ITR 474

Death of karta after Hindu Succession Act came into force – Female members of family entitled to definite share in family property –Female members not becoming divided from members of family.
State of Maharashtra Vs Narayana Rao Sham Rao Deshmuk & others (SC) 163 ITR 31

Proviso to sec. 6 of Hindu Succession Act does not effect a disruption in coparcenory family – No partition effected by operation of law.
Addl. CIT Vs Maharani Raj Laxmi Kumari Devei (SC) 224 ITR 582

HUF consisting of karta, wife, 2 daughters and adopted son – Karta died – Property continued to belong to HUF.
Gowli Buddanna Vs CIT (SC) 60 ITR 293

Widow's share in coparcenary property must be ascertained by adding the share to which she would be entitled at a notional partition immediately before her husband's death and the share which she would get in her husband's interest upon his death.
Gurupad Khandappa Magdum Vs Hirabai Khandappa Magdum & Ors.(SC) 129 ITR 440

Only one coparcenor – No partition possible – Karta cannot gift any HUF property to himself.
T.G.K. Raman (HUF) Vs CIT (Mad) 140 ITR 876
Balchand Malaiya HUF Vs CWT (MP) 227 ITR 651

HUF consisting of 2 brothers – No partition took place by virtue of Sec.6 of Hindu Succession Act on death of one brother – Interest of deceased in HUF cannot be excluded for assessment.
CWT Vs Chandrasinhrao D.Gaekward (Guj) 237 ITR 875

Sec. 20 applies to transactions entered into prior to enactment of WT Act – Order of WTO recording partition, mandatory.
Tatavarthi Rajah & Anr Vs CWT (SC) 225 ITR 561

Partial partition of HUF not recognized under WT Act – HUF would continue to be assessable as if no partial partition had taken place.
Lalchand Kothari Vs CWT (Raj) 225 ITR 142

Deceased and his brother coparceners in HUF – Deceased dying issueless leaving widow – His entire share in coparcenory property passes – No question of deemed parturition with wife.
Bhartiben S. Jhaveli Vs Controller of estate duty (Guj) 238 ITR 995

Setting up certain assets of HUF in respect of certain coparcener on a condition that no further claim will be allowed – Partial partition – Not recognized in IT Act.
ITO Vs P. Shankaraiah Yadav (ITAT, Hyd) 91 ITD 228

ITR (TRIB) Volume 12 : Part 4 (Issue dated : 21-11-2011)

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

Volume 12 : Part 4 (Issue dated : 21-11-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Bad debts ::-Writing off debit balances of creditors--Deduction allowable--Income-tax Act, 1961, s. 36-- FAG Bearing India Ltd. v. Deputy CIT (Ahmedabad) . . . 395

Business expenditure :-Disallowance:-Excessive payment of royalty--Disallowance on ground that no change in know-how provided and products manufactured--Not reason to enhance payment--Matter remanded--Income-tax Act, 1961, s. 40A(2)(b)-- FAG Bearing India Ltd. v. Deputy CIT (Ahmedabad) . . . 395

--Expenditure on foreign training of director’s so::-No evidence that expenditure for benefit of business of assessee-company--Expenditure not deductible--Income-tax Act, 1961, s. 37-- Vishesh Entertainment Ltd. v. Asst. CIT (Mumbai) . . . 337

Repairs expenses to plant and machinery:-No opportunity to furnish bills--Matter remanded--Income-tax Act, 1961-- FAG Bearing India Ltd. v. Deputy CIT (Ahmedabad) . . . 395

Capital or revenue expenditure :-Expenditure on know-how for manufacture--Know-how not owned by assessee but by collaborator--Is revenue expenditure--Income-tax Act, 1961-- FAG Bearing India Ltd. v. Deputy CIT (Ahmedabad) . . . 395

Expenditure on licence fee:-Revenue expenditure--Income-tax Act, 1961-- FAG Bearing India Ltd. v. Deputy CIT (Ahmedabad) . . . 395

Charitable purpose :-Education institution--Voluntary donations permissible--No proof that assessee collected capitation fee--Not violation of section 13(1)(c)--Assessee eligible for exemption under sections 11 and 12--Income-tax Act, 1961, ss. 11, 13(1)(c), 164(1)-- Saveetha Institute of Medical and Technical Sciences v. Asst. CIT (Chennai) . . . 376

Current repairs :-Scope of section 31--Expenditure on repairs of building--Allowable as revenue expenditure--Income-tax Act, 1961, s. 31-- FAG Bearing India Ltd. v. Deputy CIT (Ahmedabad) . . . 395

Income from undisclosed sources :-Document alleged to evidence sale of land by assessee--Proof of possession remaining with assessee, cancellation of transaction and return of advance--Addition to be deleted--Income-tax Act, 1961-- Mansi Builders Ltd. v. Asst. CIT (Ahmedabad) . . . 358

Industrial undertaking :-Special deduction under section 80-IA--Computation--Electricity generated by assessee collects by Electricity Board and releases to assessee whenever required--Assessee neither selling nor buying as far as captive consumption of power is concerned--Assessee paid consumption of power more than contribution--Market value to be taken for computation--Income-tax Act, 1961, s. 80-IA-- Sri Velayudhaswamy Spinning Mills P. Ltd. v. Deputy CIT (Chennai) . . . 353

Special deduction:-Condition precedent--Assessee a private telephone exchange operating as agent of BSNL--Purely commercial venture not involving development of infrastructure--Not entitled to special deduction--Income-tax Act, 1961, s. 80-IA(4)(ii).-- ITO v. Smt. A. Jayalakshmi (Chennai) . . . 371

International transactions :-Arm’s length price--Transfer pricing--Import of coal made by assessee from its associate enterprise over-invoiced--Assessee not furnishing any comparable data--Addition proper--Income-tax Act, 1961, s. 92CA(3)-- Coastal Energy P. Ltd. v. Asst. CIT (Chennai) . . . 347

Penalty :-Concealment of income--Claim for deduction under section 80-IB--Disallowance of certain expenses--Penalty on account of notional reallocation of expenditure between two units--Reallocation a debatable issue--Addition on account of interest from fixed deposit--Finding by Tribunal that amount incorrectly claimed by assessee --Not concealment of income--Penalty cannot be imposed--Income-tax Act, 1961, ss. 80-IB, 271(1)(c)-- ITO v. Shilpa Filaments P. Ltd. (Ahmedabad) . . . 324

Concealment of income:-Failure to deduct tax at source--Assessee disclosing amount in accounts--Not case of concealment of income--Penalty to be deleted--Income-tax Act, 1961, ss. 40(a)(ia), 271(1)(c)-- New Horizon India Ltd. v. Deputy CIT (Delhi) . . . 332

Refund :-Interest on tax refund--To be taxed--Income-tax Act, 1961-- FAG Bearing India Ltd. v. Deputy CIT (Ahmedabad) . . . 395

Search and seizure :-Assessment--Addition based on statement recorded under section 132(4)--Not proper--Addition to be deleted--Income-tax Act, 1961, s. 132(4)--Circular No. 286/2/2003-IT-- Saveetha Institute of Medical and Technical Sciences v. Asst. CIT (Chennai) . . . 376

Seizure of cash:-Cash established to be fees paid by students--Addition to be deleted--Income-tax Act, 1961-- Saveetha Institute of Medical and Technical Sciences v. Asst. CIT (Chennai) . . . 376

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 11 :-Charitable purpose--Education institution--Voluntary donations permissible--No proof that assessee collected capitation fee--Not violation of section 13(1)(c)--Assessee eligible for exemption under sections 11 and 12-- Saveetha Institute of Medical and Technical Sciences v. Asst. CIT (Chennai) . . . 376

S. 13(1)(c) :-Charitable purpose--Education institution--Voluntary donations permissible--No proof that assessee collected capitation fee--Not violation of section 13(1)(c)--Assessee eligible for exemption under sections 11 and 12-- Saveetha Institute of Medical and Technical Sciences v. Asst. CIT (Chennai) . . . 376

S. 31 :-Current repairs--Scope of section 31--Expenditure on repairs of building--Allowable as revenue expenditure-- FAG Bearing India Ltd. v. Deputy CIT (Ahmedabad) . . . 395

S. 36 :-Bad debts--Writing off debit balances of creditors--Deduction allowable-- FAG Bearing India Ltd. v. Deputy CIT (Ahmedabad) . . . 395

S. 37 :-Business expenditure--Expenditure on foreign training of director’s son--No evidence that expenditure for benefit of business of assessee-company--Expenditure not deductible-- Vishesh Entertainment Ltd. v. Asst. CIT (Mumbai) . . . 337

S. 40(a)(ia) :-Penalty--Concealment of income--Failure to deduct tax at source--Assessee disclosing amount in accounts--Not case of concealment of income--Penalty to be deleted-- New Horizon India Ltd. v. Deputy CIT (Delhi) . . . 332

S. 40A(2)(b) :-Business expenditure--Disallowance--Excessive payment of royalty--Disallowance on ground that no change in know-how provided and products manufactured--Not reason to enhance payment--Matter remanded-- FAG Bearing India Ltd. v. Deputy CIT (Ahmedabad) . . . 395

S. 80-IA :-Industrial undertaking--Special deduction under section 80-IA--Computation--Electricity generated by assessee collects by Electricity Board and releases to assessee whenever required--Assessee neither selling nor buying as far as captive consumption of power is concerned--Assessee paid consumption of power more than contribution--Market value to be taken for computation-- Sri Velayudhaswamy Spinning Mills P. Ltd. v. Deputy CIT (Chennai) . . . 353

S. 80-IA(4)(ii) :-Industrial undertaking--Special deduction--Condition precedent--Assessee a private telephone exchange operating as agent of BSNL--Purely commercial venture not involving development of infrastructure--Not entitled to special deduction-- ITO v. Smt. A. Jayalakshmi (Chennai) . . . 371

S. 80-IB :-Penalty--Concealment of income--Claim for deduction under section 80-IB--Disallowance of certain expenses--Penalty on account of notional reallocation of expenditure between two units--Reallocation a debatable issue--Addition on account of interest from fixed deposit--Finding by Tribunal that amount incorrectly claimed by assessee--Not concealment of income--Penalty cannot be imposed-- ITO v. Shilpa Filaments P. Ltd. (Ahmedabad) . . . 324

S. 92CA(3) :-International transactions--Arm’s length price--Transfer pricing--Import of coal made by assessee from its associate enterprise over-invoiced--Assessee not furnishing any comparable data--Addition proper-- Coastal Energy P. Ltd. v. Asst. CIT (Chennai) . . . 347

S. 132(4) :-Search and seizure--Assessment--Addition based on statement recorded under section 132(4)--Not proper--Addition to be deleted--Circular No. 286/2/2003-IT -- Saveetha Institute of Medical and Technical Sciences v. Asst. CIT (Chennai) . . . 376

S. 164(1) :-Charitable purpose--Education institution--Voluntary donations permissible--No proof that assessee collected capitation fee--Not violation of section 13(1)(c) --Assessee eligible for exemption under sections 11 and 12-- Saveetha Institute of Medical and Technical Sciences v. Asst. CIT (Chennai) . . . 376

S. 271(1)(c) :-Penalty--Concealment of income--Claim for deduction under section 80-IB--Disallowance of certain expenses--Penalty on account of notional reallocation of expenditure between two units--Reallocation a debatable issue--Addition on account of interest from fixed deposit--Finding by Tribunal that amount incorrectly claimed by assessee--Not

concealment of income--Penalty cannot be imposed-- ITO v. Shilpa Filaments P. Ltd. (Ahmedabad) . . . 324:

Penalty--Concealment of income:-Failure to deduct tax at source--Assessee disclosing amount in accounts--Not case of concealment of income--Penalty to be deleted--New Horizon India Ltd. v. Deputy CIT (Delhi) . . . 332

Direct Tax Laws Oct 15

Where in opinion of Assessing Officer, assessee had understated its income in return filed for assessment year 1999-2000, it was to be held that assessee's case was covered under Explanation 2 to section 147 and, thus, notice issued under section 148 as on 31-5-2001 was a valid notice - [2011] 15 taxmann 228 (AHD. - ITAT)

Where land belonging to assessee was not located in an area falling within 5 kms. of local municipal limit as notified by Central Government, it was to be regarded as an agricultural land - [2011] 15 taxmann 227 (DELHI - ITAT)

Where assessee-company receives certain amount from shareholders and, in support of said transactions, assessee gives addresses of shareholders whose identity is not in dispute, in such a situation, it is not for assessee to establish but it is for department to enquire with investors about their capacity to invest amount in shares - [2011] 15 taxmann 226 (KAR.)

Where assessee had proved identity and creditworthiness of share applicants, share application money could not be treated as unexplained money under section 68 - [2011] 15 taxmann 225 (DELHI)

Where assessee disclosed full facts pertaining to claim made in respect of expenditure incurred on transfer of capital asset in its return of income, penalty order passed under section 271(1)(c) was to be set aside - [2011] 15 taxmann 224 (MUM. - ITAT)

In absence of an opportunity granted to assessee to establish his claim in respect of advance money received, impugned addition under section 68 was to be set aside and, matter was to be remanded back for disposal afresh - [2011] 15 taxmann 223 (DELHI)

Notice issued under section 158BC is invalid if minimum 15 days time is not provided for filing return - [2011] 15 taxmann 222 (KAR.)

Prior to amendment in section 142(2A) with effect from 1-4-2008 Assessing Officer did not have power to extend time for submission of audit report on his own - [2011] 15 taxmann 221 (DELHI)

An activity of hiring of tractors/trolleys for purposes of using them in business would not amount to a contract for carrying out of 'work' as contemplated under section 194C - [2011] 15 taxmann 218 (PUNE - ITAT)

Even where regular assessment is initiated but not completed, Assessing Officer is entitled to re-open assessment and bring to tax escaped income - [2011] 15 taxmann 217 (KER.)

Payment of sub-brokerage made by assessee, a share broker, to his father and wife for diverting their clients to him, could not be disallowed under section 40A(2) - [2011] 15 taxmann 216 (PUNE - ITAT)

Provisions of section 271B did not apply to assessee-federation that was formed with main object to promote game of hockey and not to carry on any business activity with profit motive - [2011] 15 taxmann 215 (DELHI - ITAT)

Followance of project completion method in case of builders - [2011] 15 taxmann 213 (MUM. - ITAT)

Expenses relating to laying of tiles, white-washing, electrical rewiring and wood work incurred by assessee after purchasing property cannot be treated as part of acquisition cost for purpose of claiming exemption under section 54F - [2011] 15 taxmann 212 (CHENNAI - ITAT)

H.P. Marketing Board is not a local authority within meaning of section 10(20) - [2011] 15 taxmann 211 (HP)

Compilations of case law: STATUS OF ASSESSEE ; HUF

HUF
General

Wife of Karta has taxable income – HUF to be assessed as specified as HUF.
Kushal Chand Sharma Vs CWT (Raj) 216 ITR 56
Prakash Chand Surana Vs CWT (Raj) 228 ITR 604

Specified HUF – Income of a member including income of spouse and minor child to be considered.
CIT Vs P.A. Venkatraman (Mad) 246 ITR 773

An HUF cannot exist with one member alone.
Krishna Prasad Vs CIT (SC) 97 ITR 493

Though a Hindu widow cannot be a coparcenor, she has coparcenary interest and she is also a member of the coparcenory by virtue of the rights conferred on her under Hindu Women's Right to Property Act, 1937.
Controller of Estate Duty Vs Alladi Kuppuswamy (SC) 108 ITR 439

Difference between value of corpus and aggregate shares of beneficiaries is assessable under Wealth Tax Act – Sec. 21(1A) – Trust
H.E.H. The Nizam's Jewellery Trust Vs ACWT & Ors. (AP) 227 ITR 52

Wife of Karta cannot relinquish her status as member of HUF by a unilateral declaration while retaining her marital tie.
CWT Vs M.A.R. Rajkumar (AP) 226 ITR 804

Jat Sikh is a Hindu – Ancestral property is HUF property.
Controller of estate duty Vs Homojit Singh (P&H) 223 ITR 139

The Kerala Joint Hindu Family System (Abolition) Act, 1975 has no application to assessee who is domicile in Tamil Nadu having properties in Kerala.
Dayalan Rajes Vs State of Kerala & Anr. (Ker) 231 ITR 707

Amount received by individual under accident insurance policy covering risk to life of his father – includible in his hands as Individual and not in HUF.
L. Bansi Dhar & Sons Vs CIT (Del) 157 CTR 340.

Compilations of case law: STATUS OF ASSESSEE ; AOP / BOI

AOP / BOI
Distinction between AOP & BOI
CIT Vs Deghamwala Estates (Mad) 121 ITR 684

Business carried on by individual – Death – Business continued by wife on her behalf and on behalf of minor children – BOI.
Meera & Company etc. Vs CIT (SC) 224 ITR 635
CIT Vs Renuka Ganguly & Ors. (Cal) 240 ITR 889
Sakinabai Ibrahim & Sons Vs CIT (Mad) 101 Taxman 473

AOP consisting of an adult and a minor – No evidence that guardian of minor had given his consent to minor's membership in AOP – AOP was not valid.
Bhupindra Food and Malt Industries Vs CIT (HP) 229 ITR 496

Business conducted by Mohammedan – Heirs desiring to continue business – suit for partition – Receivers appointed – Status AOP
Mohamed Noorullah Vs CIT (SC) 42 ITR 115

Agreement to share the prize money was entered into between A & O after A had already purchased the prize winning lottery ticket – There was no AOP as there was no consensus ad idem.
CIT Vs O.K. Arumugham Chettiar & Anr.(Mad) 224 ITR 391

By deed of indenture R gifted her 50% of 1/3 share of a trust to her sons M & J on principle of joint and survivorship as a BOI – Status is BOI – Tax at normal rates – Sec.167B applicable to AY 89-90
M.J. Associates Vs ACIT (ITAT, Ahd) 91 Taxman (Mag) 225

Mutual concerns – Automobile association – Publishing magazine – Advertisement charges received from member & non-members – Profit of association chargeable to IT.
Automobile Association of Bengal Vs CIT (Cal) 69 ITR 878

Principle of mutuality is confined to transactions with members – Interest on FD with banks is assessable income.
Sports Club of Gujarat Ltd. Vs CIT (Guj) 171 ITR 504
Rajpath Club Ltd.Vs CIT (Guj) 211 ITR 379
CIT Vs Bangalore Club (Kar) 287 ITR 263

Floor charges collected from non-members on the basis of transaction in purchase and sale of shares by them – No mutuality – Taxable.
Investors Club Vs ITO (ITAT, Coch) 84 ITD 273

House Property owned by member's club – No rent received – Not occupied by Club for business or vocation – Principle of mutuality does not arise – Annual value liable to tax.
Chemford Club Ltd. CIT Vs (Del) 200 ITR 493

Mutual concern - complete identity between contributors and participators in fund mandatory - Right to contribute not enough
Wankaner Jain Social Welfare Society Vs CIT (Mad) 260 ITR 241

COMPANIES – EFFECT OF AMALGAMATION

Amalgamation of subsidiary companies with assessee-company – Property, rights and powers of subsidiary companies transferred and vested in assessee-company – All liabilities and debts of subsidiary companies to become liabilities and debts of assessee Company as from take of amalgamation – Net assets of amalgamating companies taken over by assessee much less / more in value than value of shares held by assessee in subsidiary companies – Diff. is not capital loss or capital gains
Shaw Wallace & Co. Ltd. Vs CIT (Cal) 119 ITR 399
Forbes Campbell & Co. Ltd. Vs CIT (Cal) 150 ITR 529
Alembic Chemical Works Co. Ltd. Vs ACIT (ITAT, Ahd) 72 ITD 251

AY 84-85 – PY ended on 1.1.84 – Entire business of assessee taken over by holding company under an agreement dated 10.12.83 and registered deed executed on 29.12.83 – Business carried on by assessee and not holding company during the year – income assessable in the hands of assessee company.
Ponds Exports Ltd. Vs ITO (ITAT, Mad) 58 ITD 417

Closure of business of amalgamating company – No rehabilitation of workers of amalgamating company – carry forward and set off of loss of amalgamating company not allowed against profits of amalgamated company.
Indian Metals & Ferro Alloys Ltd,. Vs union of India & ors. (Ori) 262 ITR 553

Unabsorbed depreciation of amalgamating company added to the opening Written Down value of it for the year of depreciation and the claim of depreciation for the year was worked out on this basis – This was claimed as set off against profits of amalgamated company – Not correct – Expl. 2 to Sec. 43(6)© will apply
ACIT Vs McDowell & Co. Ltd. (ITAT, Bang) 83 ITD 221

During the period of effective date as provided in the scheme of amalgamation to the date of the order of High Court approving such scheme, amalgamating company is deemed to have conducted business on behalf of the amalgamated company
Marshall Sons & Co. (India) Ltd. Vs ITO (SC) 223 ITR 809

When two companies are merged and are so joined as to form a third company or one is absorbed into one or blended with another, the amalgamating company loses its identity and the amalgamated company acquires a new status
Saraswati Industrial Syndicate Ltd. Vs CIT (SC) 186 ITR 278

Direct Tax Laws Oct 14

Where assessee had made provision for sales tax liability and paid it before due date of filing return, assessee would get deduction in view of proviso of section 43B - [2011] 15 taxmann 207 (Madhya Pradesh)

Where in spite of service of notice neither any return was submitted nor was any cause shown pursuant to notice, Assessing Officer was justified in making best judgment assessment - [2011] 15 taxmann 206 (Calcutta)

Where assessee had satisfactorily explained source of cash deposits in bank, said deposits could not be treated as unexplained - [2011] 15 taxmann 203 (Karnataka)

Where amount of rent which property in question could reasonably fetch, was much higher than annual rent shown by assessee on basis of lease deed, penalty was leviable under section 271(1)(c) - [2011] 15 taxmann 201 (Delhi)

Where promissory note found during search was in name of director of assessee-company, amount of said promissory note could not be treated as undisclosed income of assessee in block assessment - [2011] 15 taxmann 199 (Calcutta)

Where assessee was running a mall, maintenance charges recovered by it from tenants towards promotion and upkeep of mall& were assessable as business income - [2011] 15 taxmann 196 (Bombay)

Where persons, in whose names credits were shown had themselves denied to have any transaction with assessee, mere production of demand drafts could not be considered as sufficient explanation - [2011] 15 taxmann 195 (Karnataka)

Arrangement for transportation of petroleum products is essentially a contract for transportation of goods and not an arrangement of hiring of vehicles; in view thereof, tax is required to be deducted at source from the payments to the carrier in terms of provisions of section 194C and not section 194-I - [2011] 15 taxmann 210 (Delhi - Trib.)

Non-compliance simpliciter with provisions of section of Act would not automatically lead to levy of penalty, if there is a reasonable cause for such a default - [2011] 15 taxmann 208 (Chennai - Trib.)

Dispute Resolution Panel (DRP) cannot issue direction which is beyond proposed draft order Provision for foreseeable losses made in accordance with guidelines of AS-7 and duly debited in audited accounts of company is an allowable expenditure - [2011] 15 taxmann 198 (Mumbai - Trib.)

Where assessee a Netherland based company and subsidiary of Star Ltd. was granted exclusive rights for sale of advertising time in India on channels, it could not be treated as conduit of STAR Ltd. and income from sales of revenue of advertisement was to be taxed in its hand - [2011] 15 taxmann 197 (Mumbai - Trib.)

Direct Tax Laws Oct 13

In block assessment proceedings no addition can be made on basis of material collected during investigation after search - [2011] 15 taxmann 192 (Karnataka)

If assessee is not served with summons in revenue's appeal before Tribunal, order passed by Tribunal in said appeal would be nullity in law - [2011] 15 taxmann 188 (Delhi)

Levy of interest under section 220(2) where expenses disallowed by Assessing Officer was allowed by Commissioner (Appeals) but same was upheld by Tribunal - [2011] 15 taxmann 186 (Delhi)

Assessee cooperating in assessment or reassessment proceedings, shall be presumed to have been validly served - [2011] 15 taxmann 184 (Punjab and Haryana)

Where assessee-company had given names and addresses of shareholders from whom share application money had been received, Assessing Officer instead of making addition under section 68, should have reached those shareholders in order to find out genuineness of transactions in question - [2011] 15 taxmann 183 (Bombay)

Assessee-firm engaged in manufacturing activity of ginning and pressing of cotton, could not claim deduction under section 80-IB with regard to 'excess cash', 'interest credited' and 'income earned from weigh bridges' - [2011] 15 taxmann 189 (Indore - Trib.)

Payments made to approved hospitals on behalf of employees and reimbursement given to employees against payments made by them to said hospitals directly, do not fall within sphere of fringe benefits as defined in section 115WB - [2011] 15 taxmann 187 (Bangalore - Trib.)

Assessee-trust formed for benefit of religious minorities is not entitled to registration under section 12A - [2011] 15 taxmann 185 (Cochin - Trib.)

If a non-compete receipt is considered as payment of compensation with source remaining intact, it would be revenue receipt falling under section 28(va)(a) - [2011] 15 taxmann 181 (Mumbai - Trib.)

Where assessee sold shares of a company 'PLL' in which he was a director, since shares of 'PLL' were not listed on any recognized stock exchange on date of sale and transaction undertaken by assessee was not chargeable to STT, assessee would not be entitled to exclude gains from his total income - [2011] 15 taxmann 179 (Delhi - Trib.)

In terms of Circular No. 5 of 2010, dated 3-6-2010, issued by CBDT, Director (Exemption) should grant continuance of exemption under section 80G to assessee from assessment year 2010-11 onwards till same is withdrawn as per law - [2011] 15 taxmann 178 (Kolkata - Trib.)

Loss on account of valuation of interest rate swap contract is allowable as deduction and it cannot be disallowed on ground that it is a notional or imaginary loss - [2011] 15 taxmann 177 (Mumbai - Trib.)

Direct Tax Laws Oct 12

Assessment cannot be reopened merely on basis of objections of revenue audit party - [2011] 15 taxmann 170 (Gujarat)

Claim of exemption u/s 10(38) from capital gains tax in respect of capital assets, which were converted into stock-in-trade, could not be allowed merely because on the date of sale of such stock-in-trade, assessee was required to pay STT on them - [2011] 15 taxmann 176 (New Delhi - Trib.)

Any consideration for live broadcasting cannot be considered as royalty for transfer of copyright so as to fall within domain of Explanation 2 to section 9(1)(vi).Mere sale of goods by a non-resident in India on principal to principal basis does not establish any business connection of non-resident with India - [2011] 15 taxmann 175 (Mumbai - Trib.)

Additional depreciation : When assessee had claimed depreciation with reference to only one unit, one should not examine additional enhanced capacity with reference to whole of business; one should consider increase in capacity of an undertaking in which additional machinery was installed - [2011] 15 taxmann 172 (Mumbai - Trib.)

Services provided by security personnel under a contract with agency would fall within ambit of section 194C and not under section 194J - [2011] 15 taxmann 163 (Pune - Trib.)