ITR Volume 361 : Part 2 (Issue dated : 24-2-2014)

INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

HIGH COURTS

Business --Other sources--Business income or income from other sources--Leasing of building equipped for special purposes--Two agreements of lease, one for building and another for amenities--Not conclusive--Income from lease assessable as business income--Income-tax Act, 1961, ss. 28, 56-- CIT v. Velankani Information Systems P. Ltd. (Karn) . . . 138

Capital gains --Computation--Effect of section 50C--Transfer of property to sister concern in view of financial exigency--Transfer for consideration above that prescribed in guidelines--Capital gains could not be computed taking market value of property--Income-tax Act, 1961, ss. 45, 50C-- CIT v. Velankani Information Systems P. Ltd. (Karn) . . . 138

Industrial undertaking --Special deduction under section 80-IA--Condition precedent--Manufacture of article--Meaning of manufacture--Process of converting semi-finished HDPE bags into laminated HDPE bags--Product after processing different and distinct and semi-finished and laminated bags having different use--Process amounted to manufacture--Assessee entitled to special deduction under section 80-IA--Income-tax Act, 1961, s. 80-IA-- Jhaveri Coaters P. Ltd. v. Assistant CIT (Guj) . . . 129

PRINT EDITION

ITR Volume 361 : Part 2 (Issue dated : 24-2-2014)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Appeal to Appellate Tribunal --Duty of Tribunal--Tribunal to record findings supported by reasons to sustain order--Refund of excise duty not includible in total income--Whether arithmetical mistake can be rectified--Tribunal must consider materials placed on record--Matter remanded--Income-tax Act, 1961, ss. 154, 255(6)-- CIT v. GEC Alsthom India Ltd. (Mad) . . . 304

Appeal to High Court --Substantial question of law--Business expenditure--Amounts paid to sub-contractors--Disallowance on ground of non-production of witnesses--Commissioner (Appeals) relying on remand report and supplementary report and partly confirming disallowance--Tribunal exhaustively noting details furnished by parties deleting entire addition--Order based on facts--No question of law--Income-tax Act, 1961, ss. 37, 260A-- CIT v. B. M. S. Projects P. Ltd. (Guj) . . . 195

Business expenditure --Disallowance--Payments on which tax deductible at source--Payment of transportation charges--No disallowance could be made--Income-tax Act, 1961, s. 40(a)(ia)-- CIT v. B. M. S. Projects P. Ltd. (Guj) . . . 195

----Purchase transaction--Tribunal noticing assessee’s books of account as well as sales tax records of seller and finding purchase genuine transaction--No rejection of books of account by authorities--Deletion of addition on account of purchase transaction justified--Income-tax Act, 1961, s. 37-- CIT v. Sunrise Tooling System P. Ltd. (Delhi) . . . 206

Capital or revenue expenditure --Mobile phones and instant messaging--Software development--Product improvement expenses--Expenses on upgrading, improving or removing problem areas in an existing old product--Software upgradation is required to keep and ensure marketability of product--Revenue expenditure--Income-tax Act, 1961-- CIT v. ACL Wireless Ltd. (Delhi) . . . 210

Cash credits --Private company--Share application money--General principles--Assessee not making public issue or advertisement for issuance of share capital--Cash deposited in bank and then utilised by way of an account payee cheque for purchase of shares at premium of Rs. 100 to Rs. 200 per share by unrelated persons and shares thereafter sold to directors at loss--Assessee unable to produce investors--Clear attempt to camouflage accommodation entries--Failure by assessee to discharge initial onus to establish identity, creditworthiness of share applicants and genuineness of transaction--Addition of cash credits justified--Income-tax Act, 1961, s. 68-- CIT v. MAF Academy P. Ltd. (Delhi) . . . 258

----Unexplained investments--Burden of proof--Share application money--Assessee explaining source of money--Identities of applicants and their creditworthiness established--Burden of proof discharged by assessee--Onus shifted to Department--No evidence to show transactions were not genuine--Sections 68 and 69 not applicable--Income-tax Act, 1961, ss. 68, 69-- CIT v. Kamdhenu Steel and Alloys Ltd. (Delhi) . . . 220

Dividend --Deemed dividend--Share application money retained for some months and shares allotted in following year--Tribunal finding amount received by assessee was share application money--Sum cannot be treated as loan or deposit--Not assessable as deemed dividend--Income-tax Act, 1961, s. 2(22)(e)-- CIT v. Alpex Exports Pvt. Ltd. (Delhi) . . . 297

Income-tax survey --Power to call information--Notice to bank calling for information as regards persons having deposits--Valid--Income-tax Act, 1961, s. 133(6)-- Kulathupuzha Service Co-operative Bank Ltd. v. ITO (Intelligence) (Ker) . . . 200

Industrial undertaking --Special deduction under section 80-IB--Condition precedent--Production of article--Bottling of gas into cylinders amounts to production--Assessee entitled to special deduction under section 80-IB--Income-tax Act, 1961, s. 80-IB-- Puttur Petro Products P. Ltd. v. Assistant CIT (Karn) . . . 290

Refund --Interest on excess refund--Assessment for period prior to date of coming into force of provision for charging interest made after that date--Interest chargeable--Income-tax Act, 1961, s. 234D-- CIT v. Fisher Sanmar Ltd. (Mad) . . . 296

Search and seizure --Block assessment--Validity--Issuance of notice under section 143(2)--Mandatory--No specific information in respect of issuance of notice under section 143(2)--Cancellation of block assessment justified--Income-tax Act, 1961, ss. 143(2), 158BC-- CIT v. Pratapbhai K. Soni (Guj) . . . 201

Settlement of cases --Case--Definition--Change of law--Maintainability of application--Pendency of assessment proceedings--Time to make assessment on return filed by assessee for assessment years 2007-08 to 2009-10 barred by limitation when settlement application filed by assessee--Assessment proceedings not pending before Assessing Officer--Income-tax Act, 1961, s. 245D-- Shriniwas Machine Craft P. Ltd. v. ITSC (Bom) . . . 313

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 2(22)(e) --Dividend--Deemed dividend--Share application money retained for some months and shares allotted in following year--Tribunal finding amount received by assessee was share application money--Sum cannot be treated as loan or deposit--Not assessable as deemed dividend-- CIT v. Alpex Exports Pvt. Ltd. (Delhi) . . . 297

S. 37 --Appeal to High Court--Substantial question of law--Business expenditure--Amounts paid to sub-contractors--Disallowance on ground of non-production of witnesses--Commissioner (Appeals) relying on remand report and supplementary report and partly confirming disallowance--Tribunal exhaustively noting details furnished by parties deleting entire addition--Order based on facts--No question of law-- CIT v. B. M. S. Projects P. Ltd. (Guj) . . . 195

----Business expenditure--Purchase transaction--Tribunal noticing assessee’s books of account as well as sales tax records of seller and finding purchase genuine transaction--No rejection of books of account by authorities--Deletion of addition on account of purchase transaction justified-- CIT v. Sunrise Tooling System P. Ltd. (Delhi) . . . 206

S. 40(a)(ia) --Business expenditure--Disallowance--Payments on which tax deductible at source--Payment of transportation charges--No disallowance could be made-- CIT v. B. M. S. Projects P. Ltd. (Guj) . . . 195

S. 68 --Cash credits--Private company--Share application money--General principles--Assessee not making public issue or advertisement for issuance of share capital--Cash deposited in bank and then utilised by way of an account payee cheque for purchase of shares at premium of Rs. 100 to Rs. 200 per share by unrelated persons and shares thereafter sold to directors at loss--Assessee unable to produce investors--Clear attempt to camouflage accommodation entries--Failure by assessee to discharge initial onus to establish identity, creditworthiness of share applicants and genuineness of transaction--Addition of cash credits justified-- CIT v. MAF Academy P. Ltd. (Delhi) . . . 258

----Cash credits--Unexplained investments--Burden of proof--Share application money--Assessee explaining source of money--Identities of applicants and their creditworthiness established--Burden of proof discharged by assessee--Onus shifted to Department--No evidence to show transactions were not genuine--Sections 68 and 69 not applicable-- CIT v. Kamdhenu Steel and Alloys Ltd. (Delhi) . . . 220

S. 69 --Cash credits--Unexplained investments--Burden of proof--Share application money--Assessee explaining source of money--Identities of applicants and their creditworthiness established--Burden of proof discharged by assessee--Onus shifted to Department--No evidence to show transactions were not genuine--Sections 68 and 69 not applicable-- CIT v. Kamdhenu Steel and Alloys Ltd. (Delhi) . . . 220

S. 80-IB --Industrial undertaking--Special deduction under section 80-IB--Condition precedent--Production of article--Bottling of gas into cylinders amounts to production--Assessee entitled to special deduction under section 80-IB-- Puttur Petro Products P. Ltd. v. Assistant CIT (Karn) . . . 290

S. 133(6) --Income-tax survey--Power to call information--Notice to bank calling for information as regards persons having deposits--Valid-- Kulathupuzha Service Co-operative Bank Ltd. v. ITO (Intelligence) (Ker) . . . 200

S. 143(2) --Search and seizure--Block assessment--Validity--Issuance of notice under section 143(2)--Mandatory--No specific information in respect of issuance of notice under section 143(2)--Cancellation of block assessment justified-- CIT v. Pratapbhai K. Soni (Guj) . . . 201

S. 154 --Appeal to Appellate Tribunal--Duty of Tribunal--Tribunal to record findings supported by reasons to sustain order--Refund of excise duty not includible in total income--Whether arithmetical mistake can be rectified--Tribunal must consider materials placed on record--Matter remanded-- CIT v. GEC Alsthom India Ltd. (Mad) . . . 304

S. 158BC --Search and seizure--Block assessment--Validity--Issuance of notice under section 143(2)--Mandatory--No specific information in respect of issuance of notice under section 143(2)--Cancellation of block assessment justified-- CIT v. Pratapbhai K. Soni (Guj) . . . 201

S. 234D --Refund--Interest on excess refund--Assessment for period prior to date of coming into force of provision for charging interest made after that date--Interest chargeable-- CIT v. Fisher Sanmar Ltd. (Mad) . . . 296

S. 245D --Settlement of cases--Case--Definition--Change of law--Maintainability of application--Pendency of assessment proceedings--Time to make assessment on return filed by assessee for assessment years 2007-08 to 2009-10 barred by limitation when settlement application filed by assessee--Assessment proceedings not pending before Assessing Officer-- Shriniwas Machine Craft P. Ltd. v. ITSC (Bom) . . . 313

S. 255(6) --Appeal to Appellate Tribunal--Duty of Tribunal--Tribunal to record findings supported by reasons to sustain order--Refund of excise duty not includible in total income--Whether arithmetical mistake can be rectified--Tribunal must consider materials placed on record--Matter remanded-- CIT v. GEC Alsthom India Ltd. (Mad) . . . 304

S. 260A --Appeal to High Court--Substantial question of law--Business expenditure--Amounts paid to sub-contractors--Disallowance on ground of non-production of witnesses--Commissioner (Appeals) relying on remand report and supplementary report and partly confirming disallowance--Tribunal exhaustively noting details furnished by parties deleting entire addition--Order based on facts--No question of law-- CIT v. B. M. S. Projects P. Ltd. (Guj) . . . 195

ITR(TRIB) Volume 26 : Part 2 (Issue dated : 2-9-2013)

ITR’S TRIBUNAL TAX REPORTS (ITR (TRIB)) -- PRINT AND ONLINE EDITION

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Appeal to Commissioner (Appeals) --Recovery of tax--Application for stay of recovery during pendency of appeal--Case on merits--Assessee having already paid substantial portion of total tax liability--Stay of recovery of outstanding demand--Income-tax Act, 1961, s. 40(a)(ia)-- S. S. Warad v. Additional CIT (Bangalore) . . . 290

Business expenditure --Interest on borrowed capital--Proportionate interest paid by assessee worked out based on average cost of funds against interest income to be allowed-- Essar Power Ltd. v. Additional CIT (Mumbai) . . . 264

Business income or income from other sources --Infrastructure undertaking--Special deduction--Eligible profits--Interest on employees loan and advances, interest on margin money and interest income dues towards income-tax refund adjustment from purchaser of power--Not eligible for deduction--But to be assessed as business income for limited purpose of determining head of income--Income-tax Act, 1961, s. 80-IA. -- Essar Power Ltd. v. Additional CIT(Mumbai) . . . 264

Capital or revenue receipt --Supply of power by assessee to State Electricity Board--Under power purchase agreement Board to reimburse income-tax payable by assessee--Provision for tax recoverable--Income-tax calculated and paid by Board part of tariff charged by assessee on sale of electricity and not reimbursement of expenses--Amount is income in assessee’s hands--Income-tax Act, 1961, ss. 2(24), 40(a)(ii), 198-- Essar Power Ltd. v. Additional CIT(Mumbai) . . . 264

Company --Book profits--Computation--Amendment with retrospective effect--Exclusion of provision for income-tax recoverable--Matter remanded for reconsideration in light of amendment--Income-tax Act, 1961, s. 115JB, Expln. --Essar Power Ltd. v. Additional CIT (Mumbai) . . . 264

----Book profits--Computation--Change of law in 2009 with retrospective effect from April 1, 2001--Provision for unascertained liability--Matter remanded for reconsideration in light of amendment--Income-tax Act, 1961, s. 115JB,Expln. -- Essar Power Ltd. v. Additional CIT (Mumbai) . . . 264

PRINT EDITION

Volume 26 : Part 2 (Issue dated : 2-9-2013)

SUBJECT INDEX TO CASES REPORTED

Amalgamation of companies --Loss--Depreciation--Set off of brought forward loss and unabsorbed depreciation of amalgamating company--Certificate of chartered accountant--Not admitted by Dispute Resolution Panel observing that certificate appeared to be back dated--Assessee claiming to have evidence to rebut observation--Direction to Assessing Officer to readjudicate and decide under law--Matter remanded--Income-tax Act, 1961-- Alstom Projects India Ltd. v. Additional CIT (Mumbai) . . . 322

Bad debts --Assessee debiting accounts with aggregate of amounts irrecoverable--No infirmity--Income-tax Act, 1961, s. 36(1)(vii)-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

Business expenditure --Conversion of assessee, a co-operative bank to public limited company--Suits by erstwhile shareholders--Expenditure by way of legal and professional fees to protect title--Allowable-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Deduction only on actual payment--Provident fund contribution made before due date of filing return--Allowable--Matter remanded to verify that payments made before due date of filing return--Income-tax Act, 1961, s. 43B--Alstom Projects India Ltd. v. Additional CIT (Mumbai) . . . 322

----Disallowance--Payments in cash exceeding specified limit--Exception where payment made by agent of assessee--Payment of lorry hire charges to lorry drivers--Assessee neither owner of vehicle nor owner of goods carried--Lorry drivers cannot be considered as agents of assessee--Failure to show payments covered by any exception--Disallowance proper--Income-tax Act, 1961, s. 40A(3)--Income-tax Rules, 1962, r. 6DD(k)-- MRS Roadways v. Deputy CIT (Cochin) . . . 317

----Disallowance--Payments in cash exceeding specified limit--Payments made to agents--Never claimed as expenditure--Not liable to tax deduction at source--Payments of reimbursement--Are purely for business expenses--Income-tax Act, 1961, ss. 40A(3), 194C-- Deputy CIT v. Maruti Freight Movers Ltd. (Kolkata) . . . 305

----Stamp duty paid on lease agreement--Added back in computation--Not to be disallowed-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

Capital or revenue expenditure --Corporate membership of club--Meant for benefit of assessee and not for any particular employee--Expenditure wholly and exclusively for purposes of business--Allowable--Income-tax Act, 1961, s. 37-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Payment for re-acquiring premises given on rent--For betterment of title to capital asset--Expenses capital in nature-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Payments to banks association for participating in shared payment network system--Facility of connectivity of automated teller machine of one bank to another bank--Advantage of enduring nature--Expenditure capital--Assessee entitled to depreciation-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

Charitable purposes --Exemption--Income from property--Assessee paying advance for purchase of land from Government grant--To be treated as application of income--No violation of section 11(5)--Grant on capital account not income or corpus of trust--Interest on fixed deposits from unutilised funds on which Government had overriding title--At par with grant and not to be treated as income--Income-tax Act, 1961, ss. 11(5), 13(1)(d)-- Additional Director of Income-tax (Exemption) v. Natrip Implementation Society (Delhi) . . . 333

----Registration of trust--Factors to be considered--Commissioner and not any other authority to dispose of application for registration--Powers cannot be delegated unless permitted by statute--Communication or order signed by Income-tax Officer cannot be treated as disposal of application--Failure by Commissioner to pass such order within time limit specified in section 12A--Application deemed to be allowed--Income-tax Act, 1961, ss. 12A, 12AA-- Pravat v. CIT(Kolkata) . . . 294

----Registration of trusts--Director (Exemptions) entitled to enquire into activities of trust before granting registration--Disqualification even where small portion of income enures to benefit of person mentioned in section 13(3)--Assessee conducting eye operations with funds received under licence from Canadian organisation to whom it was bound to pay licence fee of $1.00 yearly--Assessee not independent entity--Not entitled to registration--Income-tax Act, 1961, ss. 11, 12AA, 13(3)-- Operation Eyesight Universal v. Director of Income-tax (Exemptions) (Hyderabad) . . . 268

Deduction of tax at source --Commission--Mobile telephone service--Discount given by assessee to distributors on sale of SIM cards and recharge coupons--Constitutes commission--Assessee liable to deduct tax at source on such commission--Income-tax Act, 1961, s. 194H-- Bharati Airtel Ltd. v. Deputy CIT (TDS) (Cochin) . . . 263

----Failure to deposit tax deducted at source with Central Government--Interim order of High Court in writ petition challenging validity of rule 3 directing assessee to place tax deducted at source in separate account till further orders--Assessee placing tax deducted at source amount in a separate account--Commissioner (Appeals) justified in directing Assessing Officer to wait till final order of High Court for recovery of tax deducted at source--Income-tax Rules, 1962, r. 3.--Income-tax Act, 1961, s. 201(1), (1A)-- Deputy CIT (TDS) v. Power Grid Corporation of India Ltd. (Nagpur) . . . 203

----Professional services--Third party administrator providing services to holders of health insurance policies--Payments to hospitals or nursing homes--Are payments for professional services--Tax deductible at source--Income-tax Act, 1961, s. 194J-- Health India TPA Services P. Ltd. v. ITO (OSD) (TDS) (Mumbai) . . . 298

Depreciation --Ownership of asset--Sale and lease back--Normal lease--Civil dispute between lessor and lessee--Transaction genuine--Assessee entitled to depreciation--Income-tax Act, 1961, s. 32-- Development Credit Bank Ltd.v. Deputy CIT (Mumbai) . . . 209

----Rate of depreciation--Goodwill and furniture and fittings--To be bifurcated--Depreciation allowable at 25 per cent. on goodwill and 10 per cent. on furniture and fittings--Income-tax Act, 1961, s. 32(1)(ii)-- Tirumala Music Centre P. Ltd. v. Assistant CIT (Hyderabad) . . . 309

----Rate of depreciation--Payment towards leasehold rights--Goodwill--Matter remanded to allow depreciation on intangible asset--Income-tax Act, 1961, s. 32(1)(ii)-- Tirumala Music Centre P. Ltd. v. Assistant CIT (Hyderabad) . . . 309

Export --Exemption--Export oriented unit--Telecommunication and internet charges--Incurred for export business--To be excluded from export turnover as well as total turnover--Belated payment of employees’ provident fund contributions--Payment made before date of filing of returns--Allowable--Income-tax Act, 1961, s. 10B-- Assistant CITv. SCM Microsystems (India) P. Ltd. (Chennai) . . . 178

Income --Expenditure relating to income not includible in total income--Disallowance--Commissioner (Appeals) can disallow in first instance--Disallowance at 10 per cent. of exempt income would suffice--Assessing Officer cannot simply brush aside disallowance calculated suo motu by assessee--Must give cogent reasons for not being satisfied with correctness of claim--No reasoned finding against disallowance computed and shown by assessee--Disallowance to be computed after affording reasonable opportunity to assessee--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

Industrial undertaking --Special deduction--Unit manufacturing perfumery compound--Licence from Directorate of Industries, registration for value added tax purposes, order of Commercial Tax Department establishing that factory was in existence and assessee was engaged in manufacturing of perfumery oils--Certificate from chartered engineers in respect of production of finished goods in short period--Factory closed in 2010--Inspection in 2012 by Income-tax Inspector not sufficient to dislodge evidence--Assessee enjoying benefit of special deduction in immediate preceding year--Rule of consistency--Not to be denied benefit--Income-tax Act, 1961, s. 80-IC-- Shree Veer Aromatics Herbs Products v. ITO (Delhi) . . . 282

Interest-tax --Issue of interest itself deleted--No question of levy of interest-tax--Interest-tax not be leviable on interest collected by the assessee--Interest-tax Act, 1974-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

International transaction --Determination of arm’s length price--Agreement between parties not to exclude other approved method of determining arm’s length price--Assessee can adopt any method specified in section 92C if able to show it to be most appropriate method--Failure by Transfer Pricing Officer to conduct pricing study and independently determine arm’s length price by taking candid transactions of unrelated parties--Matter remanded--Income-tax Act, 1961, s. 92C-- Assistant CIT v. SCM Microsystems (India) P. Ltd. (Chennai) . . . 178

----Transfer pricing--Determination of arm’s length price--Transfer pricing adjustment can be made only on transactions with associated enterprises--Proportionate adjustment falling within plus or minus 5 per cent.--No transfer pricing adjustment required--Income-tax Act, 1961-- Alstom Projects India Ltd. v. Additional CIT (Mumbai) . . . 322

Loss --Revaluation of outstanding contracts on net basis--Allowable-- Development Credit Bank Ltd. v. Deputy CIT(Mumbai) . . . 209

----Revaluation of securities at market rate--Resulting loss allowable-- Development Credit Bank Ltd. v. Deputy CIT(Mumbai) . . . 209

Return of income --Delay in filing--Interest--Return filed in time but signed by general manager and chief manager and not by managing director--Merely defective not invalid--Interest not leviable--Income-tax Act, 1961, s. 234A--Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

Revision --Commissioner--Bad debts--Provision for--Working out of deduction--Change of opinion--Revision not permissible--Income-tax Act, 1961, ss. 36(1)(vii), 263-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible--Income-tax Act, 1961, ss. 80-IB(10), 139(4), 143(3), 147, 263--Vanshree Builders and Developers P. Ltd. v. CIT (Bangalore) . . . 188

Wealth-tax --Valuation of asset--Motor cars--80 per cent. of insurance value to be taken--Not written down value--Wealth-tax Act, 1957-- Zee Entertainment Enterprises Ltd. v. Assistant CWT (Mumbai) . . . 314

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 10B --Export--Exemption--Export oriented unit--Telecommunication and internet charges--Incurred for export business--To be excluded from export turnover as well as total turnover--Belated payment of employees’ provident fund contributions--Payment made before date of filing of returns--Allowable-- Assistant CIT v. SCM Microsystems (India) P. Ltd. (Chennai) . . . 178

S. 11 --Charitable purpose--Registration of trusts--Director (Exemptions) entitled to enquire into activities of trust before granting registration--Disqualification even where small portion of income enures to benefit of person mentioned in section 13(3)--Assessee conducting eye operations with funds received under licence from Canadian organisation to whom it was bound to pay licence fee of $1.00 yearly--Assessee not independent entity--Not entitled to registration-- Operation Eyesight Universal v. Director of Income-tax (Exemptions) (Hyderabad) . . . 268

S. 11(5) --Charitable purposes--Exemption--Income from property--Assessee paying advance for purchase of land from Government grant--To be treated as application of income--No violation of section 11(5)--Grant on capital account not income or corpus of trust--Interest on fixed deposits from unutilised funds on which Government had overriding title--At par with grant and not to be treated as income-- Additional Director of Income-tax (Exemption) v.Natrip Implementation Society (Delhi) . . . 333

S. 12A --Charitable purpose--Registration of trust--Factors to be considered--Commissioner and not any other authority to dispose of application for registration--Powers cannot be delegated unless permitted by statute--Communication or order signed by Income-tax Officer cannot be treated as disposal of application--Failure by Commissioner to pass such order within time limit specified in section 12A--Application deemed to be allowed-- Pravatv. CIT (Kolkata) . . . 294

S. 12AA --Charitable purpose--Registration of trusts--Director (Exemptions) entitled to enquire into activities of trust before granting registration--Disqualification even where small portion of income enures to benefit of person mentioned in section 13(3)--Assessee conducting eye operations with funds received under licence from Canadian organisation to whom it was bound to pay licence fee of $1.00 yearly--Assessee not independent entity--Not entitled to registration-- Operation Eyesight Universal v. Director of Income-tax (Exemptions) (Hyderabad) . . . 268

----Charitable purpose--Registration of trust--Factors to be considered--Commissioner and not any other authority to dispose of application for registration--Powers cannot be delegated unless permitted by statute--Communication or order signed by Income-tax Officer cannot be treated as disposal of application--Failure by Commissioner to pass such order within time limit specified in section 12A--Application deemed to be allowed-- Pravat v. CIT (Kolkata) . . . 294

S. 13(1)(d) --Charitable purposes--Exemption--Income from property--Assessee paying advance for purchase of land from Government grant--To be treated as application of income--No violation of section 11(5)--Grant on capital account not income or corpus of trust--Interest on fixed deposits from unutilised funds on which Government had overriding title--At par with grant and not to be treated as income-- Additional Director of Income-tax (Exemption) v.Natrip Implementation Society (Delhi) . . . 333

S. 13(3) --Charitable purpose--Registration of trusts--Director (Exemptions) entitled to enquire into activities of trust before granting registration--Disqualification even where small portion of income enures to benefit of person mentioned in section 13(3)--Assessee conducting eye operations with funds received under licence from Canadian organisation to whom it was bound to pay licence fee of $1.00 yearly--Assessee not independent entity--Not entitled to registration-- Operation Eyesight Universal v. Director of Income-tax (Exemptions) (Hyderabad) . . . 268

S. 14A --Income--Expenditure relating to income not includible in total income--Disallowance--Commissioner (Appeals) can disallow in first instance--Disallowance at 10 per cent. of exempt income would suffice--Assessing Officer cannot simply brush aside disallowance calculated suo motu by assessee--Must give cogent reasons for not being satisfied with correctness of claim--No reasoned finding against disallowance computed and shown by assessee--Disallowance to be computed after affording reasonable opportunity to assessee-- Development Credit Bank Ltd. v. Deputy CIT(Mumbai) . . . 209

S. 32 --Depreciation--Ownership of asset--Sale and lease back--Normal lease--Civil dispute between lessor and lessee--Transaction genuine--Assessee entitled to depreciation-- Development Credit Bank Ltd. v. Deputy CIT(Mumbai) . . . 209

S. 32(1)(ii) --Depreciation--Rate of depreciation--Goodwill and furniture and fittings--To be bifurcated--Depreciation allowable at 25 per cent. on goodwill and 10 per cent. on furniture and fittings-- Tirumala Music Centre P. Ltd. v.Assistant CIT (Hyderabad) . . . 309

----Depreciation--Rate of depreciation--Payment towards leasehold rights--Goodwill--Matter remanded to allow depreciation on intangible asset-- Tirumala Music Centre P. Ltd. v. Assistant CIT (Hyderabad) . . . 309

S. 36(1)(vii) --Bad debts--Assessee debiting accounts with aggregate of amounts irrecoverable--No infirmity--Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Revision--Commissioner--Bad debts--Provision for--Working out of deduction--Change of opinion--Revision not permissible-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

S. 37 --Capital or revenue expenditure--Corporate membership of club--Meant for benefit of assessee and not for any particular employee--Expenditure wholly and exclusively for purposes of business--Allowable-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

S. 40A(3) --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Exception where payment made by agent of assessee--Payment of lorry hire charges to lorry drivers--Assessee neither owner of vehicle nor owner of goods carried--Lorry drivers cannot be considered as agents of assessee--Failure to show payments covered by any exception--Disallowance proper-- MRS Roadways v. Deputy CIT (Cochin) . . . 317

----Business expenditure--Disallowance--Payments in cash exceeding specified limit--Payments made to agents--Never claimed as expenditure--Not liable to tax deduction at source--Payments of reimbursement--Are purely for business expenses-- Deputy CIT v. Maruti Freight Movers Ltd. (Kolkata) . . . 305

S. 43B --Business expenditure--Deduction only on actual payment--Provident fund contribution made before due date of filing return--Allowable--Matter remanded to verify that payments made before due date of filing return-- Alstom Projects India Ltd. v. Additional CIT (Mumbai) . . . 322

S. 80-IB(10) --Revision--Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible-- Vanshree Builders and Developers P. Ltd. v.CIT (Bangalore) . . . 188

S. 80-IC --Industrial undertaking--Special deduction--Unit manufacturing perfumery compound--Licence from Directorate of Industries, registration for value added tax purposes, order of Commercial Tax Department establishing that factory was in existence and assessee was engaged in manufacturing of perfumery oils--Certificate from chartered engineers in respect of production of finished goods in short period--Factory closed in 2010--Inspection in 2012 by Income-tax Inspector not sufficient to dislodge evidence--Assessee enjoying benefit of special deduction in immediate preceding year--Rule of consistency--Not to be denied benefit-- Shree Veer Aromatics Herbs Products v.ITO (Delhi) . . . 282

S. 92C --International transaction--Determination of arm’s length price--Agreement between parties not to exclude other approved method of determining arm’s length price--Assessee can adopt any method specified in section 92C if able to show it to be most appropriate method--Failure by Transfer Pricing Officer to conduct pricing study and independently determine arm’s length price by taking candid transactions of unrelated parties--Matter remanded-- Assistant CIT v. SCM Microsystems (India) P. Ltd. (Chennai) . . . 178

S. 139(4) --Revision--Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible-- Vanshree Builders and Developers P. Ltd. v.CIT (Bangalore) . . . 188

S. 143(3) --Revision--Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible-- Vanshree Builders and Developers P. Ltd. v.CIT (Bangalore) . . . 188

S. 147 --Revision--Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible-- Vanshree Builders and Developers P. Ltd. v.CIT (Bangalore) . . . 188

S. 194C --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Payments made to agents--Never claimed as expenditure--Not liable to tax deduction at source--Payments of reimbursement--Are purely for business expenses-- Deputy CIT v. Maruti Freight Movers Ltd. (Kolkata) . . . 305

S. 194H --Deduction of tax at source--Commission--Mobile telephone service--Discount given by assessee to distributors on sale of SIM cards and recharge coupons--Constitutes commission--Assessee liable to deduct tax at source on such commission-- Bharati Airtel Ltd. v. Deputy CIT (TDS) (Cochin) . . . 263

S. 194J --Deduction of tax at source--Professional services--Third party administrator providing services to holders of health insurance policies--Payments to hospitals or nursing homes--Are payments for professional services--Tax deductible at source-- Health India TPA Services P. Ltd. v. ITO (OSD) (TDS) (Mumbai) . . . 298

S. 201(1), (1A) --Deduction of tax at source--Failure to deposit tax deducted at source with Central Government--Interim order of High Court in writ petition challenging validity of rule 3 directing assessee to place tax deducted at source in separate account till further orders--Assessee placing tax deducted at source amount in a separate account--Commissioner (Appeals) justified in directing Assessing Officer to wait till final order of High Court for recovery of tax deducted at source-- Deputy CIT (TDS) v. Power Grid Corporation of India Ltd. (Nagpur) . . . 203

S. 234A --Return of income--Delay in filing--Interest--Return filed in time but signed by general manager and chief manager and not by managing director--Merely defective not invalid--Interest not leviable-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

S. 263 --Revision--Commissioner--Bad debts--Provision for--Working out of deduction--Change of opinion--Revision not permissible-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Revision--Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible-- Vanshree Builders and Developers P. Ltd. v. CIT(Bangalore) . . . 188

Income-tax Rules, 1962 :

R. 3 --Deduction of tax at source--Failure to deposit tax deducted at source with Central Government--Interim order of High Court in writ petition challenging validity of rule 3 directing assessee to place tax deducted at source in separate account till further orders--Assessee placing tax deducted at source amount in a separate account--Commissioner (Appeals) justified in directing Assessing Officer to wait till final order of High Court for recovery of tax deducted at source-- Deputy CIT (TDS) v. Power Grid Corporation of India Ltd. (Nagpur) . . . 203

R. 6DD(k) --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Exception where payment made by agent of assessee--Payment of lorry hire charges to lorry drivers--Assessee neither owner of vehicle nor owner of goods carried--Lorry drivers cannot be considered as agents of assessee--Failure to show payments covered by any exception--Disallowance proper-- MRS Roadways v. Deputy CIT (Cochin) . . . 317

R. 8D --Income--Expenditure relating to income not includible in total income--Disallowance--Commissioner (Appeals) can disallow in first instance--Disallowance at 10 per cent. of exempt income would suffice--Assessing Officer cannot simply brush aside disallowance calculated suo motu by assessee--Must give cogent reasons for not being satisfied with correctness of claim--No reasoned finding against disallowance computed and shown by assessee--Disallowance to be computed after affording reasonable opportunity to assessee-- Development Credit Bank Ltd. v. Deputy CIT(Mumbai) . . . 209

ITR(TRIB) Volume 26 : Part 2 (Issue dated : 2-9-2013)

ITR’S TRIBUNAL TAX REPORTS (ITR (TRIB)) -- PRINT AND ONLINE EDITION

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Appeal to Commissioner (Appeals) --Recovery of tax--Application for stay of recovery during pendency of appeal--Case on merits--Assessee having already paid substantial portion of total tax liability--Stay of recovery of outstanding demand--Income-tax Act, 1961, s. 40(a)(ia)-- S. S. Warad v. Additional CIT (Bangalore) . . . 290

Business expenditure --Interest on borrowed capital--Proportionate interest paid by assessee worked out based on average cost of funds against interest income to be allowed-- Essar Power Ltd. v. Additional CIT (Mumbai) . . . 264

Business income or income from other sources --Infrastructure undertaking--Special deduction--Eligible profits--Interest on employees loan and advances, interest on margin money and interest income dues towards income-tax refund adjustment from purchaser of power--Not eligible for deduction--But to be assessed as business income for limited purpose of determining head of income--Income-tax Act, 1961, s. 80-IA. -- Essar Power Ltd. v. Additional CIT(Mumbai) . . . 264

Capital or revenue receipt --Supply of power by assessee to State Electricity Board--Under power purchase agreement Board to reimburse income-tax payable by assessee--Provision for tax recoverable--Income-tax calculated and paid by Board part of tariff charged by assessee on sale of electricity and not reimbursement of expenses--Amount is income in assessee’s hands--Income-tax Act, 1961, ss. 2(24), 40(a)(ii), 198-- Essar Power Ltd. v. Additional CIT(Mumbai) . . . 264

Company --Book profits--Computation--Amendment with retrospective effect--Exclusion of provision for income-tax recoverable--Matter remanded for reconsideration in light of amendment--Income-tax Act, 1961, s. 115JB, Expln. --Essar Power Ltd. v. Additional CIT (Mumbai) . . . 264

----Book profits--Computation--Change of law in 2009 with retrospective effect from April 1, 2001--Provision for unascertained liability--Matter remanded for reconsideration in light of amendment--Income-tax Act, 1961, s. 115JB,Expln. -- Essar Power Ltd. v. Additional CIT (Mumbai) . . . 264

PRINT EDITION

Volume 26 : Part 2 (Issue dated : 2-9-2013)

SUBJECT INDEX TO CASES REPORTED

Amalgamation of companies --Loss--Depreciation--Set off of brought forward loss and unabsorbed depreciation of amalgamating company--Certificate of chartered accountant--Not admitted by Dispute Resolution Panel observing that certificate appeared to be back dated--Assessee claiming to have evidence to rebut observation--Direction to Assessing Officer to readjudicate and decide under law--Matter remanded--Income-tax Act, 1961-- Alstom Projects India Ltd. v. Additional CIT (Mumbai) . . . 322

Bad debts --Assessee debiting accounts with aggregate of amounts irrecoverable--No infirmity--Income-tax Act, 1961, s. 36(1)(vii)-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

Business expenditure --Conversion of assessee, a co-operative bank to public limited company--Suits by erstwhile shareholders--Expenditure by way of legal and professional fees to protect title--Allowable-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Deduction only on actual payment--Provident fund contribution made before due date of filing return--Allowable--Matter remanded to verify that payments made before due date of filing return--Income-tax Act, 1961, s. 43B--Alstom Projects India Ltd. v. Additional CIT (Mumbai) . . . 322

----Disallowance--Payments in cash exceeding specified limit--Exception where payment made by agent of assessee--Payment of lorry hire charges to lorry drivers--Assessee neither owner of vehicle nor owner of goods carried--Lorry drivers cannot be considered as agents of assessee--Failure to show payments covered by any exception--Disallowance proper--Income-tax Act, 1961, s. 40A(3)--Income-tax Rules, 1962, r. 6DD(k)-- MRS Roadways v. Deputy CIT (Cochin) . . . 317

----Disallowance--Payments in cash exceeding specified limit--Payments made to agents--Never claimed as expenditure--Not liable to tax deduction at source--Payments of reimbursement--Are purely for business expenses--Income-tax Act, 1961, ss. 40A(3), 194C-- Deputy CIT v. Maruti Freight Movers Ltd. (Kolkata) . . . 305

----Stamp duty paid on lease agreement--Added back in computation--Not to be disallowed-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

Capital or revenue expenditure --Corporate membership of club--Meant for benefit of assessee and not for any particular employee--Expenditure wholly and exclusively for purposes of business--Allowable--Income-tax Act, 1961, s. 37-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Payment for re-acquiring premises given on rent--For betterment of title to capital asset--Expenses capital in nature-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Payments to banks association for participating in shared payment network system--Facility of connectivity of automated teller machine of one bank to another bank--Advantage of enduring nature--Expenditure capital--Assessee entitled to depreciation-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

Charitable purposes --Exemption--Income from property--Assessee paying advance for purchase of land from Government grant--To be treated as application of income--No violation of section 11(5)--Grant on capital account not income or corpus of trust--Interest on fixed deposits from unutilised funds on which Government had overriding title--At par with grant and not to be treated as income--Income-tax Act, 1961, ss. 11(5), 13(1)(d)-- Additional Director of Income-tax (Exemption) v. Natrip Implementation Society (Delhi) . . . 333

----Registration of trust--Factors to be considered--Commissioner and not any other authority to dispose of application for registration--Powers cannot be delegated unless permitted by statute--Communication or order signed by Income-tax Officer cannot be treated as disposal of application--Failure by Commissioner to pass such order within time limit specified in section 12A--Application deemed to be allowed--Income-tax Act, 1961, ss. 12A, 12AA-- Pravat v. CIT(Kolkata) . . . 294

----Registration of trusts--Director (Exemptions) entitled to enquire into activities of trust before granting registration--Disqualification even where small portion of income enures to benefit of person mentioned in section 13(3)--Assessee conducting eye operations with funds received under licence from Canadian organisation to whom it was bound to pay licence fee of $1.00 yearly--Assessee not independent entity--Not entitled to registration--Income-tax Act, 1961, ss. 11, 12AA, 13(3)-- Operation Eyesight Universal v. Director of Income-tax (Exemptions) (Hyderabad) . . . 268

Deduction of tax at source --Commission--Mobile telephone service--Discount given by assessee to distributors on sale of SIM cards and recharge coupons--Constitutes commission--Assessee liable to deduct tax at source on such commission--Income-tax Act, 1961, s. 194H-- Bharati Airtel Ltd. v. Deputy CIT (TDS) (Cochin) . . . 263

----Failure to deposit tax deducted at source with Central Government--Interim order of High Court in writ petition challenging validity of rule 3 directing assessee to place tax deducted at source in separate account till further orders--Assessee placing tax deducted at source amount in a separate account--Commissioner (Appeals) justified in directing Assessing Officer to wait till final order of High Court for recovery of tax deducted at source--Income-tax Rules, 1962, r. 3.--Income-tax Act, 1961, s. 201(1), (1A)-- Deputy CIT (TDS) v. Power Grid Corporation of India Ltd. (Nagpur) . . . 203

----Professional services--Third party administrator providing services to holders of health insurance policies--Payments to hospitals or nursing homes--Are payments for professional services--Tax deductible at source--Income-tax Act, 1961, s. 194J-- Health India TPA Services P. Ltd. v. ITO (OSD) (TDS) (Mumbai) . . . 298

Depreciation --Ownership of asset--Sale and lease back--Normal lease--Civil dispute between lessor and lessee--Transaction genuine--Assessee entitled to depreciation--Income-tax Act, 1961, s. 32-- Development Credit Bank Ltd.v. Deputy CIT (Mumbai) . . . 209

----Rate of depreciation--Goodwill and furniture and fittings--To be bifurcated--Depreciation allowable at 25 per cent. on goodwill and 10 per cent. on furniture and fittings--Income-tax Act, 1961, s. 32(1)(ii)-- Tirumala Music Centre P. Ltd. v. Assistant CIT (Hyderabad) . . . 309

----Rate of depreciation--Payment towards leasehold rights--Goodwill--Matter remanded to allow depreciation on intangible asset--Income-tax Act, 1961, s. 32(1)(ii)-- Tirumala Music Centre P. Ltd. v. Assistant CIT (Hyderabad) . . . 309

Export --Exemption--Export oriented unit--Telecommunication and internet charges--Incurred for export business--To be excluded from export turnover as well as total turnover--Belated payment of employees’ provident fund contributions--Payment made before date of filing of returns--Allowable--Income-tax Act, 1961, s. 10B-- Assistant CITv. SCM Microsystems (India) P. Ltd. (Chennai) . . . 178

Income --Expenditure relating to income not includible in total income--Disallowance--Commissioner (Appeals) can disallow in first instance--Disallowance at 10 per cent. of exempt income would suffice--Assessing Officer cannot simply brush aside disallowance calculated suo motu by assessee--Must give cogent reasons for not being satisfied with correctness of claim--No reasoned finding against disallowance computed and shown by assessee--Disallowance to be computed after affording reasonable opportunity to assessee--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

Industrial undertaking --Special deduction--Unit manufacturing perfumery compound--Licence from Directorate of Industries, registration for value added tax purposes, order of Commercial Tax Department establishing that factory was in existence and assessee was engaged in manufacturing of perfumery oils--Certificate from chartered engineers in respect of production of finished goods in short period--Factory closed in 2010--Inspection in 2012 by Income-tax Inspector not sufficient to dislodge evidence--Assessee enjoying benefit of special deduction in immediate preceding year--Rule of consistency--Not to be denied benefit--Income-tax Act, 1961, s. 80-IC-- Shree Veer Aromatics Herbs Products v. ITO (Delhi) . . . 282

Interest-tax --Issue of interest itself deleted--No question of levy of interest-tax--Interest-tax not be leviable on interest collected by the assessee--Interest-tax Act, 1974-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

International transaction --Determination of arm’s length price--Agreement between parties not to exclude other approved method of determining arm’s length price--Assessee can adopt any method specified in section 92C if able to show it to be most appropriate method--Failure by Transfer Pricing Officer to conduct pricing study and independently determine arm’s length price by taking candid transactions of unrelated parties--Matter remanded--Income-tax Act, 1961, s. 92C-- Assistant CIT v. SCM Microsystems (India) P. Ltd. (Chennai) . . . 178

----Transfer pricing--Determination of arm’s length price--Transfer pricing adjustment can be made only on transactions with associated enterprises--Proportionate adjustment falling within plus or minus 5 per cent.--No transfer pricing adjustment required--Income-tax Act, 1961-- Alstom Projects India Ltd. v. Additional CIT (Mumbai) . . . 322

Loss --Revaluation of outstanding contracts on net basis--Allowable-- Development Credit Bank Ltd. v. Deputy CIT(Mumbai) . . . 209

----Revaluation of securities at market rate--Resulting loss allowable-- Development Credit Bank Ltd. v. Deputy CIT(Mumbai) . . . 209

Return of income --Delay in filing--Interest--Return filed in time but signed by general manager and chief manager and not by managing director--Merely defective not invalid--Interest not leviable--Income-tax Act, 1961, s. 234A--Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

Revision --Commissioner--Bad debts--Provision for--Working out of deduction--Change of opinion--Revision not permissible--Income-tax Act, 1961, ss. 36(1)(vii), 263-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible--Income-tax Act, 1961, ss. 80-IB(10), 139(4), 143(3), 147, 263--Vanshree Builders and Developers P. Ltd. v. CIT (Bangalore) . . . 188

Wealth-tax --Valuation of asset--Motor cars--80 per cent. of insurance value to be taken--Not written down value--Wealth-tax Act, 1957-- Zee Entertainment Enterprises Ltd. v. Assistant CWT (Mumbai) . . . 314

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 10B --Export--Exemption--Export oriented unit--Telecommunication and internet charges--Incurred for export business--To be excluded from export turnover as well as total turnover--Belated payment of employees’ provident fund contributions--Payment made before date of filing of returns--Allowable-- Assistant CIT v. SCM Microsystems (India) P. Ltd. (Chennai) . . . 178

S. 11 --Charitable purpose--Registration of trusts--Director (Exemptions) entitled to enquire into activities of trust before granting registration--Disqualification even where small portion of income enures to benefit of person mentioned in section 13(3)--Assessee conducting eye operations with funds received under licence from Canadian organisation to whom it was bound to pay licence fee of $1.00 yearly--Assessee not independent entity--Not entitled to registration-- Operation Eyesight Universal v. Director of Income-tax (Exemptions) (Hyderabad) . . . 268

S. 11(5) --Charitable purposes--Exemption--Income from property--Assessee paying advance for purchase of land from Government grant--To be treated as application of income--No violation of section 11(5)--Grant on capital account not income or corpus of trust--Interest on fixed deposits from unutilised funds on which Government had overriding title--At par with grant and not to be treated as income-- Additional Director of Income-tax (Exemption) v.Natrip Implementation Society (Delhi) . . . 333

S. 12A --Charitable purpose--Registration of trust--Factors to be considered--Commissioner and not any other authority to dispose of application for registration--Powers cannot be delegated unless permitted by statute--Communication or order signed by Income-tax Officer cannot be treated as disposal of application--Failure by Commissioner to pass such order within time limit specified in section 12A--Application deemed to be allowed-- Pravatv. CIT (Kolkata) . . . 294

S. 12AA --Charitable purpose--Registration of trusts--Director (Exemptions) entitled to enquire into activities of trust before granting registration--Disqualification even where small portion of income enures to benefit of person mentioned in section 13(3)--Assessee conducting eye operations with funds received under licence from Canadian organisation to whom it was bound to pay licence fee of $1.00 yearly--Assessee not independent entity--Not entitled to registration-- Operation Eyesight Universal v. Director of Income-tax (Exemptions) (Hyderabad) . . . 268

----Charitable purpose--Registration of trust--Factors to be considered--Commissioner and not any other authority to dispose of application for registration--Powers cannot be delegated unless permitted by statute--Communication or order signed by Income-tax Officer cannot be treated as disposal of application--Failure by Commissioner to pass such order within time limit specified in section 12A--Application deemed to be allowed-- Pravat v. CIT (Kolkata) . . . 294

S. 13(1)(d) --Charitable purposes--Exemption--Income from property--Assessee paying advance for purchase of land from Government grant--To be treated as application of income--No violation of section 11(5)--Grant on capital account not income or corpus of trust--Interest on fixed deposits from unutilised funds on which Government had overriding title--At par with grant and not to be treated as income-- Additional Director of Income-tax (Exemption) v.Natrip Implementation Society (Delhi) . . . 333

S. 13(3) --Charitable purpose--Registration of trusts--Director (Exemptions) entitled to enquire into activities of trust before granting registration--Disqualification even where small portion of income enures to benefit of person mentioned in section 13(3)--Assessee conducting eye operations with funds received under licence from Canadian organisation to whom it was bound to pay licence fee of $1.00 yearly--Assessee not independent entity--Not entitled to registration-- Operation Eyesight Universal v. Director of Income-tax (Exemptions) (Hyderabad) . . . 268

S. 14A --Income--Expenditure relating to income not includible in total income--Disallowance--Commissioner (Appeals) can disallow in first instance--Disallowance at 10 per cent. of exempt income would suffice--Assessing Officer cannot simply brush aside disallowance calculated suo motu by assessee--Must give cogent reasons for not being satisfied with correctness of claim--No reasoned finding against disallowance computed and shown by assessee--Disallowance to be computed after affording reasonable opportunity to assessee-- Development Credit Bank Ltd. v. Deputy CIT(Mumbai) . . . 209

S. 32 --Depreciation--Ownership of asset--Sale and lease back--Normal lease--Civil dispute between lessor and lessee--Transaction genuine--Assessee entitled to depreciation-- Development Credit Bank Ltd. v. Deputy CIT(Mumbai) . . . 209

S. 32(1)(ii) --Depreciation--Rate of depreciation--Goodwill and furniture and fittings--To be bifurcated--Depreciation allowable at 25 per cent. on goodwill and 10 per cent. on furniture and fittings-- Tirumala Music Centre P. Ltd. v.Assistant CIT (Hyderabad) . . . 309

----Depreciation--Rate of depreciation--Payment towards leasehold rights--Goodwill--Matter remanded to allow depreciation on intangible asset-- Tirumala Music Centre P. Ltd. v. Assistant CIT (Hyderabad) . . . 309

S. 36(1)(vii) --Bad debts--Assessee debiting accounts with aggregate of amounts irrecoverable--No infirmity--Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Revision--Commissioner--Bad debts--Provision for--Working out of deduction--Change of opinion--Revision not permissible-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

S. 37 --Capital or revenue expenditure--Corporate membership of club--Meant for benefit of assessee and not for any particular employee--Expenditure wholly and exclusively for purposes of business--Allowable-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

S. 40A(3) --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Exception where payment made by agent of assessee--Payment of lorry hire charges to lorry drivers--Assessee neither owner of vehicle nor owner of goods carried--Lorry drivers cannot be considered as agents of assessee--Failure to show payments covered by any exception--Disallowance proper-- MRS Roadways v. Deputy CIT (Cochin) . . . 317

----Business expenditure--Disallowance--Payments in cash exceeding specified limit--Payments made to agents--Never claimed as expenditure--Not liable to tax deduction at source--Payments of reimbursement--Are purely for business expenses-- Deputy CIT v. Maruti Freight Movers Ltd. (Kolkata) . . . 305

S. 43B --Business expenditure--Deduction only on actual payment--Provident fund contribution made before due date of filing return--Allowable--Matter remanded to verify that payments made before due date of filing return-- Alstom Projects India Ltd. v. Additional CIT (Mumbai) . . . 322

S. 80-IB(10) --Revision--Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible-- Vanshree Builders and Developers P. Ltd. v.CIT (Bangalore) . . . 188

S. 80-IC --Industrial undertaking--Special deduction--Unit manufacturing perfumery compound--Licence from Directorate of Industries, registration for value added tax purposes, order of Commercial Tax Department establishing that factory was in existence and assessee was engaged in manufacturing of perfumery oils--Certificate from chartered engineers in respect of production of finished goods in short period--Factory closed in 2010--Inspection in 2012 by Income-tax Inspector not sufficient to dislodge evidence--Assessee enjoying benefit of special deduction in immediate preceding year--Rule of consistency--Not to be denied benefit-- Shree Veer Aromatics Herbs Products v.ITO (Delhi) . . . 282

S. 92C --International transaction--Determination of arm’s length price--Agreement between parties not to exclude other approved method of determining arm’s length price--Assessee can adopt any method specified in section 92C if able to show it to be most appropriate method--Failure by Transfer Pricing Officer to conduct pricing study and independently determine arm’s length price by taking candid transactions of unrelated parties--Matter remanded-- Assistant CIT v. SCM Microsystems (India) P. Ltd. (Chennai) . . . 178

S. 139(4) --Revision--Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible-- Vanshree Builders and Developers P. Ltd. v.CIT (Bangalore) . . . 188

S. 143(3) --Revision--Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible-- Vanshree Builders and Developers P. Ltd. v.CIT (Bangalore) . . . 188

S. 147 --Revision--Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible-- Vanshree Builders and Developers P. Ltd. v.CIT (Bangalore) . . . 188

S. 194C --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Payments made to agents--Never claimed as expenditure--Not liable to tax deduction at source--Payments of reimbursement--Are purely for business expenses-- Deputy CIT v. Maruti Freight Movers Ltd. (Kolkata) . . . 305

S. 194H --Deduction of tax at source--Commission--Mobile telephone service--Discount given by assessee to distributors on sale of SIM cards and recharge coupons--Constitutes commission--Assessee liable to deduct tax at source on such commission-- Bharati Airtel Ltd. v. Deputy CIT (TDS) (Cochin) . . . 263

S. 194J --Deduction of tax at source--Professional services--Third party administrator providing services to holders of health insurance policies--Payments to hospitals or nursing homes--Are payments for professional services--Tax deductible at source-- Health India TPA Services P. Ltd. v. ITO (OSD) (TDS) (Mumbai) . . . 298

S. 201(1), (1A) --Deduction of tax at source--Failure to deposit tax deducted at source with Central Government--Interim order of High Court in writ petition challenging validity of rule 3 directing assessee to place tax deducted at source in separate account till further orders--Assessee placing tax deducted at source amount in a separate account--Commissioner (Appeals) justified in directing Assessing Officer to wait till final order of High Court for recovery of tax deducted at source-- Deputy CIT (TDS) v. Power Grid Corporation of India Ltd. (Nagpur) . . . 203

S. 234A --Return of income--Delay in filing--Interest--Return filed in time but signed by general manager and chief manager and not by managing director--Merely defective not invalid--Interest not leviable-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

S. 263 --Revision--Commissioner--Bad debts--Provision for--Working out of deduction--Change of opinion--Revision not permissible-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Revision--Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible-- Vanshree Builders and Developers P. Ltd. v. CIT(Bangalore) . . . 188

Income-tax Rules, 1962 :

R. 3 --Deduction of tax at source--Failure to deposit tax deducted at source with Central Government--Interim order of High Court in writ petition challenging validity of rule 3 directing assessee to place tax deducted at source in separate account till further orders--Assessee placing tax deducted at source amount in a separate account--Commissioner (Appeals) justified in directing Assessing Officer to wait till final order of High Court for recovery of tax deducted at source-- Deputy CIT (TDS) v. Power Grid Corporation of India Ltd. (Nagpur) . . . 203

R. 6DD(k) --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Exception where payment made by agent of assessee--Payment of lorry hire charges to lorry drivers--Assessee neither owner of vehicle nor owner of goods carried--Lorry drivers cannot be considered as agents of assessee--Failure to show payments covered by any exception--Disallowance proper-- MRS Roadways v. Deputy CIT (Cochin) . . . 317

R. 8D --Income--Expenditure relating to income not includible in total income--Disallowance--Commissioner (Appeals) can disallow in first instance--Disallowance at 10 per cent. of exempt income would suffice--Assessing Officer cannot simply brush aside disallowance calculated suo motu by assessee--Must give cogent reasons for not being satisfied with correctness of claim--No reasoned finding against disallowance computed and shown by assessee--Disallowance to be computed after affording reasonable opportunity to assessee-- Development Credit Bank Ltd. v. Deputy CIT(Mumbai) . . . 209