ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB)) Vol 5 Part 3 dt 13 09 2010

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

Volume 5 : Part 3 (Issue dated : 13-9-2010)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Accounting --Income--Accrual of income--Method of accounting--Bank--Forward contract entered into by assessee to sell foreign currency at agreed price at future date falling beyond last date of accounting period--Binding obligation on assessee on that date--Foreign exchange currency is assessee's stock-in-trade--Loss on account of evaluation of contract occurs on last date of accounting period, not on date of maturity of contract--Income-tax Act, 1961, s. 145(3)-- Deputy CIT v. Bank of Bahrain and Kuwait [SB] (Mumbai) . . . 301

Appeal to Appellate Tribunal --Rectification of mistake--Subsequent decision of court--Order of Tribunal contrary--Liable to be rectified--Income-tax Act, 1961, s. 254(2)-- V. R. Chittanandam v. Asst. CIT (Chennai) . . . 258

Appeal to Commissioner (Appeals) --Order must be self explanatory--Non-speaking order not disposing of all grounds--Set aside and matter remitted--Income-tax Act, 1961, s. 250(6)-- ITO v. Charanbir Singh Oberoi (Delhi) . . . 251

Assessment --Exemption--Sportsman--Award money and cricketing income --Assessee entitled to exemption in respect of award money--Claim for cricketing income raised for first time before Tribunal--Matter remanded for verification--Income-tax Act, 1961, s. 147--Circular No. 447, dated January 22, 1986-- Asst. CIT v. Ajay Jadeja (Delhi) . . . 233

Bad debts --Department insisting upon proof of debts becoming bad--Not justified--Deduction allowable--Income-tax Act, 1961, s. 36(1)(vii)-- Deputy CIT v. Spic Gel Engineering Construction Co. Ltd. (Chennai) . . . 293

Banking company --Interest on Government securities--Mercantile system of accounting--Interest accrues on coupon dates and not on day-to-day basis--Income-tax Act, 1961-- Deputy CIT v. Bank of Bahrain and Kuwait [SB] (Mumbai) . . . 301

Business expenditure --Assessee distributing electricity under licence from State Government--Expenditure incurred to help State Government in drought relief in Gujarat State--Expenditure for purposes of commercial expediency--Deductible--Income-tax Act, 1961, ss. 37, 80G-- Surat Electricity Co. Ltd. v. Asst. CIT (Ahmedabad) . . . 280

----Securities purchased during year and lying in closing stock--Finding that securities held as stock-in-trade--Mere classification as investment in balance-sheet not relevant--Broken period interest paid on securities purchased during year--Allowable--Income-tax Act, 1961-- Deputy CIT v. Bank of Bahrain and Kuwait [SB] (Mumbai) . . . 301

Deduction --Income not includible in total income--Dividend--Expenditure in earning, whether to be disallowed--Matter remanded--Income-tax Act, 1961, s. 14A-- Deputy CIT v. Bank of Bahrain and Kuwait [SB] (Mumbai) . . . 301

Depreciation --Assessee claiming deduction on account of depreciation on camera given on rent--Explanation that professional charges declared inclusive of camera hire charges--Assessing Officer disallowing claim for non-production of agreement with company--Substantial amount of professional receipts disclosed by assessee--Direction to allow claim--Income-tax Act, 1961, s. 32-- Asst. CIT v. Ajay Jadeja (Delhi) . . . 233

Dividend --Deemed dividend--Amount received by shareholder from company disclosed as loan in balance-sheet--Amount liable to be treated as deemed dividend--Addition to be restricted to extent of accumulated profits of company at beginning of year--Income-tax Act, 1961, s. 2(22)(e)-- Asst. CIT v. Ajay Jadeja (Delhi) . . . 233

Exemption --Salary--Relief when paid in advance or arrears--Amount received on voluntary retirement--Amounts received by retiring employees of RBI--Subsequent decision binding on Tribunal--Assessee entitled to exemption--Income-tax Act, 1961, s. 10(10C)-- V. R. Chittanandam v. Asst. CIT (Chennai) . . . 258

Foreign projects --Special deduction--Supply of manpower for refinery shut down not qualifying as foreign project--Assessing Officer to verify details of other works undertaken by assessee--Income-tax Act, 1961, s. 80HHB(2)(b)(ii)-- Deputy CIT v. Spic Gel Engineering Construction Co. Ltd. (Chennai) . . . 293

Income --Accrual of income--Guarantee commission--When taxable--If commission refundable on revocation of guarantee, guarantee commission to be spread over period for which guarantee given--If not, to be taxed in year guarantee given irrespective of period-- Deputy CIT v. Bank of Bahrain and Kuwait [SB] (Mumbai) . . . 301

Interpretation of taxing statutes --Word "satisfaction" used in different sections--Has different meanings-- Asst. CIT v. M. N. Rajaraman (Chennai) . . . 261

Penalty --Concealment of income--Loss on trading in shares treated as speculation loss--All material facts disclosed--No inaccurate particulars furnished--No material evidencing concealment or explanation of assessee not substantiated--Mere addition to income not sufficient to levy penalty--Penalty to be deleted--Income-tax Act, 1961, s. 271(1)(c), Expln. 1-- Asst. CIT v. Varun Finstock Pvt. Ltd. (Ahmedabad) . . . 271

Reassessment --Reassessment after four years--Condition precedent--No finding of failure by assessee to disclose material facts--Reopening of assessment based on outcome of case for another year--Change of opinion--Reassessment invalid--Income-tax Act, 1961, s. 147, proviso-- Asst. CIT v. Ajay Jadeja (Delhi) . . . 233

----Summary assessment accepting claims for exemption--No expression of opinion--Reopening to disallow exemption--Not a case of change of opinion--Permissible--Income-tax Act, 1961, ss. 143(1)(a), 147-- Asst. CIT v. Ajay Jadeja

(Delhi) . . . 233

Royalties received from foreign enterprises --Special deduction--Consideration in convertible foreign exchange for supply of drawings to foreign company for specific project--Assessee entitled to special deduction--Income-tax Act, 1961, s. 80-O-- Deputy CIT v. Spic Gel Engineering Construction Co. Ltd. (Chennai) . . . 293

Royalty --Special deduction--Technical fees received from foreign enterprises --Assessee receiving remuneration for rendering technical service by deputing personnel--Agreement for providing technical service approved by CBDT/Commissioner--Even promise to render services at future date entitles assessee for deduction under section 80-O--Assessee entitled to deduction--Income-tax Act, 1961, ss. 9(1)(vii), Expln. 2, 80-O-- Voltas International Ltd. v. Asst. CIT (Mumbai) . . . 255

Search and seizure --Requisition--Assessment--Assessment of income of any other person--Deposits made in other concerns cannot be equated with bullion, jewellery etc. seized--No mention in order sheet that seized items belonged to assessee--Revised returns disclosing deposits as income and taxes paid thereon prior to date of recording order sheet entry--Satisfaction of Assessing Officer not recorded in notice--Assessment quashed--Assessee entitled to refund of excess tax paid--Income-tax Act, 1961, ss. 153A, 153C, 158BD-- Asst. CIT v. M. N. Rajaraman (Chennai) . . . 261

Words and phrases --"Inaccurate particulars"-- Asst. CIT v. Varun Finstock Pvt. Ltd. (Ahmedabad) . . . 271

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Income-tax Act, 1961 :

S. 2(22)(e) --Dividend--Deemed dividend--Amount received by shareholder from company disclosed as loan in balance-sheet--Amount liable to be treated as deemed dividend--Addition to be restricted to extent of accumulated profits of company at beginning of year-- Asst. CIT v. Ajay Jadeja (Delhi) . . . 233

S. 9(1)(vii), Expln. 2 --Royalty--Special deduction--Technical fees received from foreign enterprises --Assessee receiving remuneration for rendering technical service by deputing personnel--Agreement for providing technical service approved by CBDT/Commissioner--Even promise to render services at future date entitles assessee for deduction under section 80-O--Assessee entitled to deduction-- Voltas International Ltd. v. Asst. CIT (Mumbai) . . . 255

S. 10(10C) --Exemption--Salary--Relief when paid in advance or arrears--Amount received on voluntary retirement--Amounts received by retiring employees of RBI--Subsequent decision binding on Tribunal--Assessee entitled to exemption-- V. R. Chittanandam v. Asst. CIT (Chennai) . . . 258

S. 14A --Deduction--Income not includible in total income--Dividend--Expenditure in earning, whether to be disallowed--Matter remanded-- Deputy CIT v. Bank of Bahrain and Kuwait [SB] (Mumbai) . . . 301

S. 32 --Depreciation--Assessee claiming deduction on account of depreciation on camera given on rent--Explanation that professional charges declared inclusive of camera hire charges--Assessing Officer disallowing claim for non-production of agreement with company--Substantial amount of professional receipts disclosed by assessee--Direction to allow claim-- Asst. CIT v. Ajay Jadeja (Delhi) . . . 233

S. 36(1)(vii) --Bad debts--Department insisting upon proof of debts becoming bad--Not justified--Deduction allowable-- Deputy CIT v. Spic Gel Engineering Construction Co. Ltd. (Chennai) . . . 293

S. 37 --Business expenditure--Assessee distributing electricity under licence from State Government--Expenditure incurred to help State Government in drought relief in Gujarat State--Expenditure for purposes of commercial expediency--Deductible-- Surat Electricity Co. Ltd. v. Asst. CIT (Ahmedabad) . . . 280

S. 80G --Business expenditure--Assessee distributing electricity under licence from State Government--Expenditure incurred to help State Government in drought relief in Gujarat State--Expenditure for purposes of commercial expediency--Deductible-- Surat Electricity Co. Ltd. v. Asst. CIT (Ahmedabad) . . . 280

S. 80HHB(2)(b)(ii) --Foreign projects--Special deduction--Supply of manpower for refinery shut down not qualifying as foreign project--Assessing Officer to verify details of other works undertaken by assessee-- Deputy CIT v. Spic Gel Engineering Construction Co. Ltd. (Chennai) . . . 293

S. 80-O --Royalty--Special deduction--Technical fees received from foreign enterprises --Assessee receiving remuneration for rendering technical service by deputing personnel--Agreement for providing technical service approved by CBDT/Commissioner--Even promise to render services at future date entitles assessee for deduction under section 80-O--Assessee entitled to deduction-- Voltas International Ltd. v. Asst. CIT (Mumbai) . . . 255

----Royalties received from foreign enterprises--Special deduction--Consideration in convertible foreign exchange for supply of drawings to foreign company for specific project--Assessee entitled to special deduction-- Deputy CIT v. Spic Gel Engineering Construction Co. Ltd. (Chennai) . . . 293

S. 143(1)(a) --Reassessment--Summary assessment accepting claims for exemption--No expression of opinion--Reopening to disallow exemption--Not a case of change of opinion--Permissible-- Asst. CIT v. Ajay Jadeja (Delhi) . . . 233

S. 145(3) --Accounting--Income--Accrual of income--Method of accounting --Bank--Forward contract entered into by assessee to sell foreign currency at agreed price at future date falling beyond last date of accounting period--Binding obligation on assessee on that date--Foreign exchange currency is assessee's stock-in-trade--Loss on account of evaluation of contract occurs on last date of accounting period, not on date of maturity of contract-- Deputy CIT v. Bank of Bahrain and Kuwait [SB] (Mumbai) . . . 301

S. 147 --Assessment--Exemption--Sportsman--Award money and cricketing income --Assessee entitled to exemption in respect of award money--Claim for cricketing income raised for first time before Tribunal--Matter remanded for verification--Circular No. 447, dated January 22, 1986-- Asst. CIT v. Ajay Jadeja (Delhi) . . . 233

----Reassessment--Summary assessment accepting claims for exemption--No expression of opinion--Reopening to disallow exemption--Not a case of change of opinion--Permissible-- Asst. CIT v. Ajay Jadeja (Delhi) . . . 233

S. 147, proviso --Reassessment--Reassessment after four years--Condition precedent--No finding of failure by assessee to disclose material facts--Reopening of assessment based on outcome of case for another year--Change of opinion--Reassessment invalid-- Asst. CIT v. Ajay Jadeja (Delhi) . . . 233

S. 153A --Search and seizure--Requisition--Assessment--Assessment of income of any other person--Deposits made in other concerns cannot be equated with bullion, jewellery etc. seized--No mention in order sheet that seized items belonged to assessee--Revised returns disclosing deposits as income and taxes paid thereon prior to date of recording order sheet entry--Satisfaction of Assessing Officer not recorded in notice--Assessment quashed--Assessee entitled to refund of excess tax paid-- Asst. CIT v. M. N. Rajaraman (Chennai) . . . 261

S. 153C --Search and seizure--Requisition--Assessment--Assessment of income of any other person--Deposits made in other concerns cannot be equated with bullion, jewellery etc. seized--No mention in order sheet that seized items belonged to assessee--Revised returns disclosing deposits as income and taxes paid thereon prior to date of recording order sheet entry--Satisfaction of Assessing Officer not recorded in notice--Assessment quashed--Assessee entitled to refund of excess tax paid-- Asst. CIT v. M. N. Rajaraman (Chennai) . . . 261

S. 158BD --Search and seizure--Requisition--Assessment--Assessment of income of any other person--Deposits made in other concerns cannot be equated with bullion, jewellery etc. seized--No mention in order sheet that seized items belonged to assessee--Revised returns disclosing deposits as income and taxes paid thereon prior to date of recording order sheet entry--Satisfaction of Assessing Officer not recorded in notice--Assessment quashed--Assessee entitled to refund of excess tax paid-- Asst. CIT v. M. N. Rajaraman (Chennai) . . . 261

S. 250(6) --Appeal to Commissioner (Appeals)--Order must be self explanatory--Non-speaking order not disposing of all grounds--Set aside and matter remitted-- ITO v. Charanbir Singh Oberoi (Delhi) . . . 251

S. 254(2) --Appeal to Appellate Tribunal--Rectification of mistake--Subsequent decision of court--Order of Tribunal contrary--Liable to be rectified-- V. R. Chittanandam v. Asst. CIT (Chennai) . . . 258

S. 271(1)(c), Expln. 1 --Penalty--Concealment of income--Loss on trading in shares treated as speculation loss--All material facts disclosed--No inaccurate particulars furnished--No material evidencing concealment or explanation of assessee not substantiated--Mere addition to income not sufficient to levy penalty--Penalty to be deleted-- Asst. CIT v. Varun Finstock Pvt. Ltd. (Ahmedabad) . . . 271


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