ITR Volume 334 Part 2 issue dated 06-06-2011

INCOME TAX REPORTS (ITR)

Volume 334 : Part 2 (Issue dated 6-6-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Business expenditure --Capital or revenue expenditure--Company--Expenditure on raising convertible debentures--Revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v. ITC Hotels Ltd.(Karn) . . . 109

-->Deduction only on actual payment--Contribution to employees' State insurance--Disallowed as deposited beyond due date--Amendment to first proviso to section 43B by Finance Act, 2003 with retrospective effect--Applicable--Assessee entitled to deduction--Income-tax Act, 1961, s. 43B-- CIT v.Rai Agro Industries Ltd. (P&H) . . . 122

-->Deduction only on actual payment--Disallowance on ground that expenses related to prior period and not present assessment year--Tribunal finding all expenses settled in current year and covered under section 43B(d)--Justified--Income-tax Act, 1961, s. 43B(d)-- CIT v. Modipon Ltd. (No. 1 ) (Delhi) . . . 102

-->Deduction only on actual payment--Excise duty paid in advance--Assessing Officer holding that deduction can be claimed only on removal of goods from factories--Not proper--Assessee entitled to deduction--Income-tax Act, 1961, s. 43B-- CIT v. Modipon Ltd. (No. 2 ) (Delhi) . . . 106

-->Disallowance--Travelling expenses--Addition made in subsequent years accepted by assessee--To be followed this year also--Income-tax Act, 1961, s. 37--Income-tax Rules, 1962, r. 6D-- CIT v. Modipon Ltd. (No. 2 ) (Delhi) . . . 106

-->Capital gains --Company--Sale of property by company--Company not in liquidation--Section 49 not applicable--Capital gains assessable in hands of company--Income-tax Act, 1961, ss. 45, 49-- CIT v.Shashi Charla (Delhi) . . . 129

-->Exemption--Long-term capital gains--Investment of net consideration from transfer of depreciable asset under Capital Gains Deposit Account Scheme--Assessee entitled to exemption--Income-tax Act, 1961, s. 54F-- CIT v. Rajiv Shukla (Delhi) . . . 138

-->Full value of consideration--Provision for adopting value assessed for stamp duty purposes--Provision not beyond legislative competence and not violative of article 14--Income-tax Act, 1961, s. 50C--Constitution of India, art. 14 ; Sch VII, List I, entry 82-- Bhatia Nagar Premises Co-operative Society Ltd . v. Union of India (Bom) . . . 145

-->Company --Computation of book profits under section 115JB--Depreciation--Change in method of computation of depreciation from straight line method to written down value method--Change reflected in profit and loss account audited and certified by registering authority under company law--Change valid--Income-tax Act, 1961, s. 115JB-- CIT v. Tidel Park Ltd. (Mad) . . . 126

-->Exemption --Export oriented industry--Conditions precedent for exemption--Conditions should be satisfied in initial year of manufacture or production--Value of machinery and plant in initial year of manufacture more than 20 per cent. of total value of machinery and plant--Purchase of new machinery and value reduced to less than 20 per cent. in a subsequent year--Assessee not entitled to exemption under section 10B--Income-tax Act, 1961, s. 10B-- Sami Labs Ltd. v. Asst. CIT (Karn) . . . 157

-->Export --Special deduction--Computation--Income from duty drawback, duty entitlement pass book and duty-free remission scheme--To be treated as business income--Income-tax Act, 1961, s. 80HHC--CIT v. F. C. Sondhi and Co. P. Ltd .(P&H) . . . 141

-->Income from undisclosed sources --Purchasers found to be fictitious--Addition to income valid--Purchases by account payee cheques--Inability to produce purchaser after three years--Not material--Addition not justified--Income-tax Act, 1961-- Diagnostics v. CIT (Cal) . . . 111

-->Interpretation of taxing statutes --Words-- CIT v. Oceanic Shipping Service of M. T. Suhail (Guj) . . . 132

-->Non-resident --Shipping business--Conditions precedent for application of section 172--Carriage of goods shipped at Indian port--Tug towing ship which could not sail by itself--No carriage of goods--Section 172 not applicable--Income-tax Act, 1961, s. 172-- CIT v. Oceanic Shipping Service of M. T. Suhail (Guj) . . . 132

-->Revision --Commissioner--Jurisdiction--Amendment to section 263 permitting revision of orders of Inspecting Assistant Commissioner--Not retrospective--Income-tax Act, 1961, s. 263-- CIT v. Smt. Asha M. Primlani (Delhi) . . . 143

-->Valuation of closing stock --Excise and customs duties--Assessee entitled to exclude excise and customs duties paid from value of closing stock--Income- tax Act, 1961-- CIT v. Modipon Ltd. ( No. 2 )(Delhi) . . . 106

-->Wealth-tax --Appeal to Appellate Tribunal--Contradiction in Tribunal's order regarding valuation of land--Recall of order by Tribunal--Tribunal holding no contradiction in its findings--Amounts to review of its earlier order--Not permissible--Tribunal directed to reconsider matter--Wealth-tax Act, 1957, ss. 7(4), 24-- Raja Malwinder Singh v. CWT (P&H) . . . 115

-->Words and phrases --"Shipping" and "goods"--Meanings of-- CIT v. Oceanic Shipping Service of M. T. Suhail (Guj) . . . 132

-->Writ --Capital gains--Development agreement to develop property of assessee--Reference by developer--Determination of stamp duty payable--Developer paying--Assessee cannot challenge valuation by stamp valuation authority--Remedy available under Stamp Act--Bombay Stamp Act, 1958, ss. 31, 53 ; Sch. I, art. 5(ga)--Income-tax Act, 1961, s. 50C-- Bhatia Nagar Premises Co-operative Society Ltd. v. Union of India (Bom) . . . 145

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Bombay Stamp Act, 1958 :

S. 31, 53 ; Sch. I, art. 5(ga) --Writ--Capital gains--Development agreement to develop property of assessee--Reference by developer--Determination of stamp duty payable--Developer paying--Assessee cannot challenge valuation by stamp valuation authority--Remedy available under Stamp Act-- Bhatia Nagar Premises Co-operative Society Ltd. v. Union of India (Bom) . . . 145

Constitution of India :

Art. 14 ; Sch VII, List I, entry 82 --Capital gains--Full value of consideration--Provision for adopting value assessed for stamp duty purposes--Provision not beyond legislative competence and not violative of article 14-- Bhatia Nagar Premises Co-operative Society Ltd . v. Union of India (Bom) . . . 145

Income-tax Act, 1961 :

-->S. 10B --Exemption--Export oriented industry--Conditions precedent for exemption--Conditions should be satisfied in initial year of manufacture or production--Value of machinery and plant in initial year of manufacture more than 20 per cent. of total value of machinery and plant--Purchase of new machinery and value reduced to less than 20 per cent. in a subsequent year--Assessee not entitled to exemption under section 10B-- Sami Labs Ltd. v. Asst. CIT (Karn) . . . 157

S. 37 --Business expenditure--Capital or revenue expenditure--Company--Expendi-ture on raising convertible debentures--Revenue expenditure-- CIT v. ITC Hotels Ltd. (Karn) . . . 109

-->Business expenditure--Disallowance--Travelling expenses--Addition made in subsequent years accepted by assessee--To be followed this year also-- CIT v. Modipon Ltd. (No. 2) (Delhi) . . . 106

-->S. 43B --Business expenditure--Deduction only on actual payment--Contribution to employees' State insurance--Disallowed as deposited beyond due date--Amendment to first proviso to section 43B by Finance Act, 2003 with retrospective effect--Applicable--Assessee entitled to deduction-- CIT v. Rai Agro Industries Ltd. (P&H) . . . 122

-->Business expenditure--Deduction only on actual payment--Excise duty paid in advance--Assessing Officer holding that deduction can be claimed only on removal of goods from factories--Not proper--Assessee entitled to deduction-- CIT v. Modipon Ltd. ( No. 2) (Delhi) . . . 106

-->S. 43B(d) --Business expenditure--Deduction only on actual payment--Disallowance on ground that expenses related to prior period and not present assessment year--Tribunal finding all expenses settled in current year and covered under section 43B(d)--Justified-- CIT v. Modipon Ltd. (No. 1 )(Delhi) . . . 102

-->S. 45 --Capital gains--Company--Sale of property by company--Company not in liquidation--Section 49 not applicable--Capital gains assessable in hands of company-- CIT v. Shashi Charla (Delhi) . . . 129

-->S. 49 --Capital gains--Company--Sale of property by company--Company not in liquidation--Section 49 not applicable--Capital gains assessable in hands of company-- CIT v. Shashi Charla (Delhi) . . . 129

-->S. 50C --Capital gains--Full value of consideration--Provision for adopting value assessed for stamp duty purposes--Provision not beyond legislative competence and not violative of article 14-- Bhatia Nagar Premises Co-operative Society Ltd . v. Union of India (Bom) . . . 145

-->Writ--Capital gains--Development agreement to develop property of assessee--Reference by developer--Determination of stamp duty payable--Developer paying--Assessee cannot challenge valuation by stamp valuation authority--Remedy available under Stamp Act-- Bhatia Nagar Premises Co-operative Society Ltd. v. Union of India (Bom) . . . 145

-->S. 54F --Capital gains--Exemption--Long-term capital gains--Investment of net consideration from transfer of depreciable asset under Capital Gains Deposit Account Scheme--Assessee entitled to exemption-- CIT v. Rajiv Shukla (Delhi) . . . 138

-->S. 80HHC --Export--Special deduction--Computation--Income from duty drawback, duty entitlement pass book and duty-free remission scheme--To be treated as business income-- CIT v. F. C. Sondhi and Co. P. Ltd . (P&H) . . . 141

-->S. 115JB --Company--Computation of book profits under section 115JB--Depreciation--Change in method of computation of depreciation from straight line method to written down value method--Change reflected in profit and loss account audited and certified by registering authority under company law--Change valid-- CIT v. Tidel Park Ltd. (Mad) . . . 126

-->S. 172 --Non-resident--Shipping business--Conditions precedent for application of section 172--Carriage of goods shipped at Indian port--Tug towing ship which could not sail by itself--No carriage of goods--Section 172 not applicable-- CIT v. Oceanic Shipping Service of M. T. Suhail (Guj) . . . 132

-->S. 263 --Revision--Commissioner--Jurisdiction--Amendment to section 263 permitting revision of orders of Inspecting Assistant Commissioner--Not retrospective-- CIT v. Smt. Asha M. Primlani(Delhi) . . . 143

Income-tax Rules, 1962 :

-->R. 6D --Business expenditure--Disallowance--Travelling expenses--Addition made in subsequent years accepted by assessee--To be followed this year also-- CIT v. Modipon Ltd. (No. 2) (Delhi) . . . 106

Wealth-tax Act, 1957 :

-->S. 7(4) --Wealth-tax--Appeal to Appellate Tribunal--Contradiction in Tribunal's order regarding valuation of land--Recall of order by Tribunal--Tribunal holding no contradiction in its findings--Amounts to review of its earlier order--Not permissible--Tribunal directed to reconsider matter-- Raja Malwinder Singh v. CWT (P&H) . . . 115

-->S. 24 --Wealth-tax--Appeal to Appellate Tribunal--Contradiction in Tribunal's order regarding valuation of land--Recall of order by Tribunal--Tribunal holding no contradiction in its findings--Amounts to review of its earlier order--Not permissible--Tribunal directed to reconsider matter-- Raja Malwinder Singh v. CWT (P&H) . . . 115