ITR Volume 333 Part 4 issue3 dated 16-05-2011

INCOME TAX REPORTS (ITR)

Volume 333 : Part 4 (Issue dated 16-5-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Salaries --Duty to deduct estimated tax and pay to authority--Failure to deduct and pay--Attracts penalty of amount equal to tax--Income-tax Act, 1961, ss. 192, 200, 206, 271C, 276B, 276BB-- Rajeswar Tiwari v. Nanda Kishore Roy . . . 534

High Court --Matter of civil nature--Prosecution wrongly laid--Application by accused for relief--High Court ought to interfere by using inherent powers to prevent abuse of process--Indian Penal Code, 1860, ss. 120B, 406--Code of Criminal Procedure, 1973, ss. 200, 482-- Rajeswar Tiwari v. Nanda Kishore Roy . . . 534

HIGH COURTS

Advance tax --Interest--Condition precedent--Default by assessee in estimating income and paying tax in accordance with law as on date of payment of advance tax--Assessee claiming exemption in respect of capital gains on sale of shares to holding company--Return found defective and assessee filing corrected return--By this time holding company no longer holding company--No default at time of payment of advance tax--Interest for default not chargeable--Income-tax Act, 1961, ss. 47(v), 139(9), 234B, 292B-- Prime Securities Ltd. v. Asst. CIT (Investigation) (Bom) . . . 464

----Interest--Waiver of interest--Interest on bank deposits held to be income from other sources in assessment years 1993-94, 1994-95 and 1995-96--Refusal to waive interest justified--Claim for waiver for assessment year 1996-97 to be considered--Income-tax Act, 1961, s. 234B-- Royal Stitches P. Ltd. v. Chief CIT (Mad) . . . 523

Appeal to Appellate Tribunal --Duty of Tribunal to consider reasons for decision of Commissioner (Appeals)--Assessing Officer granting opportunity to assessee to prove genuineness of alleged gift--No proof that gift was genuine--Addition to income upheld by Commissioner (Appeals)--Tribunal not justified in remanding matter to Assessing Officer--Income-tax Act, 1961, s. 254-- CIT v. Mira S. Khurana (Guj) . . . 488

----Interest-tax--Imposition of penalty on several grounds--One ground held not tenable--Matter remanded to consider other grounds-- CIT v. H. P. State Co-operative Bank (HP) . . . 441

Bad debt --Condition precedent--Law applicable--After 1-4-1989 sufficient if debt is written off in accounts--Income-tax Act, 1961, s. 36-- CIT v. Krone Communication Ltd . (Karn) . . . 497

Capital gains --Depreciable asset--Assessee claiming depreciation on asset for 21 years and thereafter discontinuing claim--Sale of asset after two years--Profit on sale of depreciable asset is short-term capital gains--Income-tax Act, 1961, s. 50-- CIT v. Sakthi Metal Depot (Ker) . . . 492

----Sale of shares--Finding that profits on sale of shares are capital gain as shares not treated as stock-in-trade but shown under investment portfolio--Finding of fact--Income-tax Act, 1961--CBDT Circular No. 4 of 2007 dated 15-6-2007-- CIT v. Jubilant Securities P. Ltd . (Delhi) . . . 445

Export --Special deduction under section 80HHC--Computation of special deduction--Exports and domestic sales--Calculation of turnover--Scrap sales and insurance--Income from scrap sales part of business profits--Insurance receipt on loss of goods part of business profits--Matter remanded--Income-tax Act, 1961, s. 80HHC-- CIT v. Kar Mobiles Ltd . (Ker) . . . 478

----Special deduction--Computation--Excise duty and sales tax not part of turnover--90 per cent. of net commission to be taken into account in determining projects of business--Income-tax Act, 1961, s. 80HHC-- CIT v. Krone Communication Ltd. (Karn) . . . 497

Interest-tax --Penalty--Presumption against assessee in case of non-filing of return within time under Income-tax Act not applicable to income-tax proceedings--Grounds for imposition of penalty laid down in section 13 of Interest-tax Act--Interest-tax Act, 1974, ss. 13, 21--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. H. P. State Co-operative Bank (HP) . . . 441

Kar Vivad Samadhan Scheme --Declaration by assessee--Certificate issued and later amended making additions--Amendment order not determination order--No time limit specified for payment in terms of amendment order--Assessee making payment in reasonable time as per amendment orders--Assessee entitled to certificate under section 90(2)--Finance (No. 2) Act, 1998, ss. 88, 89, 90-- Sri Balaji Finance v. ITO (Mad) . . . 512

----Declaration by assessee--Certificate issued--Later designated authority finding mistake and making amendments--Not a reopening of assessment--Amendment can be made at any stage-- Finance (No. 2) Act, 1998, s. 90--Income-tax Act, 1961, s. 140A-- Sri Balaji Finance v. ITO (Mad) . . . 512

Penalty --Failure to deduct tax at source--Limitation--Order of penalty passed after expiry of six months from end of month in which show-cause notice issued--Barred by limitation--Income-tax Act, 1961, ss. 271C, 275(1)(c)-- CIT (TDS) v. Ikea Trading Hong Kong Ltd. (Delhi) . . . 565

Reassessment --Conditions precedent--Notice after four years--Based on subsequent amendment of law with retrospective effect--No dispute that there was no failure on part of assessee to disclose fully and truly all material facts--Notices invalid--Income-tax Act, 1961, ss. 147, 148-- Sadbhav Engineering Ltd . v. Deputy CIT (Guj) . . . 483

----Reassessment after four years based on audit report--Assessee disclosing truly and completely material particulars--Tribunal cancelling reassessment holding proceedings based on change of opinion--Proper--Income-tax Act, 1961, ss. 143(3), 147, 148--Circular dated 28-7-1960-- CIT v. Simbhaoli Sugar Mills Ltd . (Delhi) . . . 470

Return --Revised return--Revised return filed after intimation under section 143(1)(a) but within time limit--Duty of Assessing Officer to process--Income-tax Act, 1961, ss. 139(5), 143(1B)-- CIT v. Himgiri Foods Limited (Guj) . . . 508

Revision --Commissioner--Powers--Scope of section 263--Order of Assessing Officer in consonance with decisions of Tribunal--Revision to recompute special deduction not valid--Income-tax Act, 1961, s. 263-- CIT v. Honda Siel Power Products Ltd. (Delhi) . . . 547

Search and seizure --Assessment in search cases--Assessment of income of third person--Condition precedent for notice under section 153C--Valuable thing or document should belong to such third person--Income-tax Act, 1961, s. 153C-- Vijaybhai N. Chandrani v. Asst. CIT (Guj) . . . 436

----Block assessment--Limitation--Assessment of third person--Notice issued under section 158BC--But later fresh notice issued under correct section, section 158BD--Time for making assessment to be reckoned from first notice--Assessment barred by time--Income-tax Act, 1961, ss. 158BC, 158BD, 158BE(2)(b)-- CIT v. K. M. Gamesman (Mad) . . . 562

----Block assessment--Limitation--Last panchanama is document evidencing conclusion of actual search--Block assessment to be within two years from such date--Prohibitory order under section 132(3) in force for 60 days--Lifting prohibitory order after 60 days does not amount to continuation of search--Not to be taken into account for ascertaining date of execution of last warrant of authorisation--Income-tax Act, 1961, ss. 132, 158BE-- Rakesh Sarin v.Deputy CIT (Mad) . . . 451

Writ --Maintainability--Block assessment--Appeal before Commissioner (Appeals) against assessment on merits--Writ petition--Maintainable--Constitution of India, art. 226-- Rakesh Sarin v. Deputy CIT (Mad) . . . 451

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Code of Criminal Procedure, 1973 :

Ss. 200, 482 --High Court--Matter of civil nature--Prosecution wrongly laid--Application by accused for relief--High Court ought to interfere by using inherent powers to prevent abuse of process-- Rajeswar Tiwari v. Nanda Kishore Roy (SC) . . . 534

Constitution of India :

Art. 226 --Writ--Maintainability--Block assessment--Appeal before Commissioner (Appeals) against assessment on merits--Writ petition--Maintainable--Rakesh Sarin v. Deputy CIT (Mad) . . . 451

Finance (No. 2) Act, 1998 :

Ss. 88, 89, 90 --Kar Vivad Samadhan Scheme--Declaration by assessee--Certificate issued and later amended making additions--Amendment order not determination order--No time limit specified for payment in terms of amendment order--Assessee making payment in reasonable time as per amendment orders--Assessee entitled to certificate under section 90(2)-- Sri Balaji Finance v. ITO (Mad) . . . 512

S. 90 --Kar Vivad Samadhan Scheme--Declaration by assessee--Certificate issued--Later designated authority finding mistake and making amendments--Not a reopening of assessment--Amendment can be made at any stage-- Sri Balaji Finance v. ITO (Mad) . . . 512

Income-tax Act, 1961 :

S. 36 --Bad debt--Condition precedent--Law applicable--After 1-4-1989 sufficient if debt is written off in accounts-- CIT v. Krone Communication Ltd .(Karn) . . . 497

S. 47(v) --Advance tax--Interest--Condition precedent--Default by assessee in estimating income and paying tax in accordance with law as on date of payment of advance tax--Assessee claiming exemption in respect of capital gains on sale of shares to holding company--Return found defective and assessee filing corrected return--By this time holding company no longer holding company--No default at time of payment of advance tax--Interest for default not chargeable-- Prime Securities Ltd. v. Asst. CIT (Investigation) (Bom) . . . 464

S. 50 --Capital gains--Depreciable asset--Assessee claiming depreciation on asset for 21 years and thereafter discontinuing claim--Sale of asset after two years--Profit on sale of depreciable asset is short-term capital gains-- CIT v. Sakthi Metal Depot (Ker) . . . 492

S. 80HHC --Export--Special deduction under section 80HHC--Computation of special deduction--Exports and domestic sales--Calculation of turnover--Scrap sales and insurance--Income from scrap sales part of business profits--Insurance receipt on loss of goods part of business profits--Matter remanded-- CIT v. Kar Mobiles Ltd . (Ker) . . . 478

----Export--Special deduction--Computation--Excise duty and sales tax not part of turnover--90 per cent. of net commission to be taken into account in determining projects of business-- CIT v. Krone Communication Ltd. (Karn) . . . 497

S. 132 --Search and seizure--Block assessment--Limitation--Last panchanama is document evidencing conclusion of actual search--Block assessment to be within two years from such date--Prohibitory order under section 132(3) in force for 60 days--Lifting prohibitory order after 60 days does not amount to continuation of search--Not to be taken into account for ascertaining date of execution of last warrant of authorisation-- Rakesh Sarin v. Deputy CIT (Mad) . . . 451

S. 139(5) --Return--Revised return--Revised return filed after intimation under section 143(1)(a) but within time limit--Duty of Assessing Officer to process--CIT v. Himgiri Foods Limited (Guj) . . . 508

S. 139(9) --Advance tax--Interest--Condition precedent--Default by assessee in estimating income and paying tax in accordance with law as on date of payment of advance tax--Assessee claiming exemption in respect of capital gains on sale of shares to holding company--Return found defective and assessee filing corrected return--By this time holding company no longer holding company--No default at time of payment of advance tax--Interest for default not chargeable-- Prime Securities Ltd. v. Asst. CIT (Investigation) (Bom) . . . 464

S. 140A --Kar Vivad Samadhan Scheme--Declaration by assessee--Certificate issued--Later designated authority finding mistake and making amendments--Not a reopening of assessment--Amendment can be made at any stage-- Sri Balaji Finance v. ITO (Mad) . . . 512

S. 143(1B) --Return--Revised return--Revised return filed after intimation under section 143(1)(a) but within time limit--Duty of Assessing Officer to process--CIT v. Himgiri Foods Limited (Guj) . . . 508

S. 143(3) --Reassessment--Reassessment after four years based on audit report--Assessee disclosing truly and completely material particulars--Tribunal cancelling reassessment holding proceedings based on change of opinion--Proper--Circular dated 28-7-1960-- CIT v. Simbhaoli Sugar Mills Ltd . (Delhi) . . . 470

S. 147 --Reassessment--Conditions precedent--Notice after four years--Based on subsequent amendment of law with retrospective effect--No dispute that there was no failure on part of assessee to disclose fully and truly all material facts--Notices invalid-- Sadbhav Engineering Ltd . v. Deputy CIT (Guj) . . . 483

----Reassessment--Reassessment after four years based on audit report--Assessee disclosing truly and completely material particulars--Tribunal cancelling reassessment holding proceedings based on change of opinion--Proper--Circular dated 28-7-1960-- CIT v. Simbhaoli Sugar Mills Ltd . (Delhi) . . . 470

S. 148 --Reassessment--Conditions precedent--Notice after four years--Based on subsequent amendment of law with retrospective effect--No dispute that there was no failure on part of assessee to disclose fully and truly all material facts--Notices invalid-- Sadbhav Engineering Ltd . v. Deputy CIT (Guj) . . . 483

----Reassessment--Reassessment after four years based on audit report--Assessee disclosing truly and completely material particulars--Tribunal cancelling reassessment holding proceedings based on change of opinion--Proper--Circular dated 28-7-1960-- CIT v. Simbhaoli Sugar Mills Ltd . (Delhi) . . . 470

S. 153C --Search and seizure--Assessment in search cases--Assessment of income of third person--Condition precedent for notice under section 153C--Valuable thing or document should belong to such third person-- Vijaybhai N. Chandrani v. Asst. CIT (Guj) . . . 436

S. 158BC --Search and seizure--Block assessment--Limitation--Assessment of third person--Notice issued under section 158BC--But later fresh notice issued under correct section, section 158BD--Time for making assessment to be reckoned from first notice--Assessment barred by time-- CIT v. K. M. Gamesman (Mad) . . . 562

S. 158BD --Search and seizure--Block assessment--Limitation--Assessment of third person--Notice issued under section 158BC--But later fresh notice issued under correct section, section 158BD--Time for making assessment to be reckoned from first notice--Assessment barred by time-- CIT v. K. M. Gamesman (Mad) . . . 562

S. 158BE --Search and seizure--Block assessment--Limitation--Last panchanama is document evidencing conclusion of actual search--Block assessment to be within two years from such date--Prohibitory order under section 132(3) in force for 60 days--Lifting prohibitory order after 60 days does not amount to continuation of search--Not to be taken into account for ascertaining date of execution of last warrant of authorisation-- Rakesh Sarin v. Deputy CIT(Mad) . . . 451

S. 158BE(2)(b) --Search and seizure--Block assessment--Limitation--Assessment of third person--Notice issued under section 158BC--But later fresh notice issued under correct section, section 158BD--Time for making assessment to be reckoned from first notice--Assessment barred by time-- CIT v. K. M. Gamesman (Mad) . . . 562

S. 192 --Salaries--Duty to deduct estimated tax and pay to authority--Failure to deduct and pay--Attracts penalty of amount equal to tax-- Rajeswar Tiwariv. Nanda Kishore Roy (SC) . . . 534

S. 200 --Salaries--Duty to deduct estimated tax and pay to authority--Failure to deduct and pay--Attracts penalty of amount equal to tax-- Rajeswar Tiwariv. Nanda Kishore Roy (SC) . . . 534

S. 206 --Salaries--Duty to deduct estimated tax and pay to authority--Failure to deduct and pay--Attracts penalty of amount equal to tax-- Rajeswar Tiwariv. Nanda Kishore Roy (SC) . . . 534

S. 234B --Advance tax--Interest--Condition precedent--Default by assessee in estimating income and paying tax in accordance with law as on date of payment of advance tax--Assessee claiming exemption in respect of capital gains on sale of shares to holding company--Return found defective and assessee filing corrected return--By this time holding company no longer holding company--No default at time of payment of advance tax--Interest for default not chargeable-- Prime Securities Ltd. v. Asst. CIT (Investigation) (Bom) . . . 464

----Advance tax--Interest--Waiver of interest--Interest on bank deposits held to be income from other sources in assessment years 1993-94, 1994-95 and 1995-96--Refusal to waive interest justified--Claim for waiver for assessment year 1996-97 to be considered-- Royal Stitches P. Ltd. v. Chief CIT (Mad) . . . 523

S. 254 --Appeal to Appellate Tribunal--Duty of Tribunal to consider reasons for decision of Commissioner (Appeals)--Assessing Officer granting opportunity to assessee to prove genuineness of alleged gift--No proof that gift was genuine--Addition to income upheld by Commissioner (Appeals)--Tribunal not justified in remanding matter to Assessing Officer-- CIT v. Mira S. Khurana (Guj) . . . 488

S. 263 --Revision--Commissioner--Powers--Scope of section 263--Order of Assessing Officer in consonance with decisions of Tribunal--Revision to recompute special deduction not valid-- CIT v. Honda Siel Power Products Ltd. (Delhi) . . . 547

S. 271(1)(c) --Interest-tax--Penalty--Presumption against assessee in case of non-filing of return within time under Income-tax Act not applicable to income-tax proceedings--Grounds for imposition of penalty laid down in section 13 of Interest-tax Act-- CIT v. H. P. State Co-operative Bank (HP) . . . 441

S. 271C --Penalty--Failure to deduct tax at source--Limitation--Order of penalty passed after expiry of six months from end of month in which show-cause notice issued--Barred by limitation-- CIT (TDS) v. Ikea Trading Hong Kong Ltd. (Delhi) . . . 565

----Salaries--Duty to deduct estimated tax and pay to authority--Failure to deduct and pay--Attracts penalty of amount equal to tax-- Rajeswar Tiwari v.Nanda Kishore Roy (SC) . . . 534

S. 275(1)(c) --Penalty--Failure to deduct tax at source--Limitation--Order of penalty passed after expiry of six months from end of month in which show-cause notice issued--Barred by limitation-- CIT (TDS) v. Ikea Trading Hong Kong Ltd. (Delhi) . . . 565

S. 276B --Salaries--Duty to deduct estimated tax and pay to authority--Failure to deduct and pay--Attracts penalty of amount equal to tax-- Rajeswar Tiwariv. Nanda Kishore Roy (SC) . . . 534

S. 276BB --Salaries--Duty to deduct estimated tax and pay to authority--Failure to deduct and pay--Attracts penalty of amount equal to tax-- Rajeswar Tiwari v. Nanda Kishore Roy (SC) . . . 534

S. 292B --Advance tax--Interest--Condition precedent--Default by assessee in estimating income and paying tax in accordance with law as on date of payment of advance tax--Assessee claiming exemption in respect of capital gains on sale of shares to holding company--Return found defective and assessee filing corrected return--By this time holding company no longer holding company--No default at time of payment of advance tax--Interest for default not chargeable-- Prime Securities Ltd. v. Asst. CIT (Investigation) (Bom) . . . 464

Indian Penal Code, 1860 :

S. 120B --High Court--Matter of civil nature--Prosecution wrongly laid--Application by accused for relief--High Court ought to interfere by using inherent powers to prevent abuse of process-- Rajeswar Tiwari v. Nanda Kishore Roy (SC) . . . 534

S. 406 --High Court--Matter of civil nature--Prosecution wrongly laid--Application by accused for relief--High Court ought to interfere by using inherent powers to prevent abuse of process-- Rajeswar Tiwari v. Nanda Kishore Roy (SC) . . . 534

Interest-tax Act, 1974 :

Ss. 13, 21 --Interest-tax--Penalty--Presumption against assessee in case of non-filing of return within time under Income-tax Act not applicable to income-tax proceedings--Grounds for imposition of penalty laid down in section 13 of Interest-tax Act-- CIT v. H. P. State Co-operative Bank (HP) . . . 441