Section 271 (1) (c) of the Income-tax Act, 1961

Section 271 (1) (c) of the Income-tax Act, 1961

SECTION 271 (1) (c)

PENALTIES

Penalty under clause c of Sub-Section 1 of Section 271 of the Income-tax Act, 1961, if the Assessing Officer or the Commissioner of Income Tax (Appeals) during the course of the Assessment Proceedings under the Act is satisfied that any person has ‘concealed’ or ‘furnished inaccurate particulars of income’. The words ‘concealed’ or ‘furnished inaccurate particulars of income’ has been defined either in this Section nor any where else of the Act. One thing is certain that these two circumstances are not identical in details although they may lead to the same effect, namely, keeping a certain portion of the income. The word ‘conceal’ is derived from the Latin word ‘concelare’ which implies to ‘hide’. It signifies a deliberate act of omission on the part of the assessee. A mere omission or negligence would not constitute a deliberate act suppressio veri or suggestio falsi – T. Ashok Pai Vs. CIT (2007) 161 Taxman 340, 292 ITR 11 (SC).

The words ‘furnishing inaccurate particulars of income’ refer to the particulars which have been furnished by an assessee of his income and the requirements of concealment of income is that income has not been declared at all or is not even recorded in the books of accounts or in a particular case the concealment of the particulars of income may be from the books of accounts as well as from the furnished – CIT vs. Raj Trading Co. (1996) 217 ITR 208, 86 Taxman 282 (Raj).

Above provisions of the Section clarifies that:

a) The penalty could only be levied by the Assessing Officer and/or the Commissioner of Income Tax (Appeals) and not higher authorities to that such as Income Tax Appellant Tribunal, High Court, and Supreme Court.

b)   It would only be levied during the Assessment Proceedings under the Income-tax Act, 1961.

c)   The penalty is in addition to the tax, if any payable by the assessee.

d)  Penalty could not be levied where the Total Income of the Assessee is in negative i.e. loss after the completion of the Assessment Proceedings under the Income-tax Act, 1961. Commissioner of Income Tax vs. Rajasthan Vanaspati Product Limited, (2008) 8 DTR (Raj) 282, were it has been held that, Penalty under section 271(1)(c)—Concealment—Assessment at loss—Penalty under s. 271(1)(c), prior to amendment of Explanation 4 thereof by the Finance Act, 2002, w.e.f. 1st, April, 2003, could not be imposed in cases where, even after adding the concealed income, the assessed income remained a loss. And concluded that, Penalty under s. 271(1)(c), prior to amendment of Explanation 4 thereof by the Finance Act, 2002, w.e.f. 1st April, 2003, could not be imposed in cases where, even after adding the concealed income, the assessed income remained a loss.

HISTORY OF THE SECTION

It all started way back in 01.04.1965 when the word ‘deliberately’ was omitted by the Finance Act 1964. It is obvious that the onus to prove the ‘deliberately’ was on the department. But, the same had been causing difficulties to the assessee as the departments are used to levy penalty almost under all the circumstances of disallowance or additions as the case may be.

The principal object of enacting this section was to provide prevention against recurrence of default on the part of the assessee. The basic sense of this section was to stop the practice of what the legislature considers to be against the public interest. The department was unable to prove one’s deliberateness towards certain act, thus the whole onus was on the laps of the department wholly and solely.

To overcome this difficulties in discharging this ‘onus’ the legislature came with an amendment under the Finance Act, 1964 w.e.f. 01/04/1965 by deleting the word ‘deliberately’ from the section. With this the burden once again fell on the assessee. Thus, the assessee was the one who had to prove that the particular act has not been done deliberately. An explanation was also added at the end of the section in order to cast upon the assessee the ‘onus’ to prove that the omission of income did not arise from any fraud or gross or wilful neglect in case where the difference between the returned income and assessed income was at a certain specified percentage.

DETAILED VIEW ON CASE LAWS

1.   VOLUNTARY SURRENDER OF UNDISCLOSED INCOME

A close study of the recent cases reveals the liberal judicial approach in applying the specific and strict provisions of section 271(1)(c). Voluntary surrender of the alleged undisclosed income just to buy peace of mind has emerged as an exception protecting the assessee against penalty even in an obvious case.

Thus, the Madras High Court in the case of CIT vs. Jayaraj Talkies (1999) 239 ITR 914 (Mad) held that mere agreement to addition of income or surrender of income did not imply concealment of income where the assessee surrendered certain amount to assessment because it was unable to substantiate its claims with necessary vouchers.

Similarly, the Kerala High Court in the case of CIT vs. M. George & Brothers (1987) 59 CTR (Ker) 298 : (1986) 160 ITR 511 (Ker) held that where the assessee for one reason or the other agrees or surrenders certain amounts for assessment, the imposition of penalty solely on the basis of the assessee's surrender will not be well founded.

In CIT vs. Suraj Bhan (2006) 203 CTR (P&H) 230 : (2007) 294 ITR 481 (P&H), the Punjab & Haryana High Court held that penalty cannot be imposed merely on account of higher income having been subsequently declared.

In this case, the assessee filed revised return showing higher income and gave the explanation that the higher income was offered to buy peace of mind, and to avoid litigation.

The Punjab & Haryana High Court, again, seems to have gone a step further in defying the specific provision of Explanation 1. In this case, transportation charges to the tune of Rs. 12,12,880 debited in the profit and loss account, when detected and investigated by the Assessing Officer during the assessment proceedings, the assessee could not satisfactorily explain the same. The assessee, without filing a revised return, surrendered the said uncorroborated amount of expenses merely to buy peace of mind and to avoid further litigation.

Although it was a clear-cut case of concealment penalty but the Punjab & Haryana High Court rather unconvincingly found that since the impugned payments were directly made by the suppliers, therefore, there was neither concealment of income nor furnishing of inaccurate particulars of income within the meaning of section 271(1)(c). "The Department has to prove mens rea before levying penalty under section 271(1)(c) and it cannot be made out that the assessee has concealed income or furnished inaccurate particulars merely because he has surrendered certain amount to avoid litigation and to buy peace of mind."

It appears that in all the aforediscussed cases, the respective Madras, Kerala, Punjab & Haryana High Courts relied on the two rulings of the Supreme Court, viz., Sir Shadi Lal Sugar & General Mills Ltd. vs. CIT (1987) 64 CTR (SC) 199 : (1987) 168 ITR 705 (SC) and CIT vs. Suresh Chandra Mittal (2001) 170 CTR (SC) 182 : (2001) 251 ITR 9 (SC).

In Sir Shadi Lal Sugar & General Mills Ltd. (supra) it was categorically ruled that if the assessee had agreed to the assessment of undisclosed income, it did not absolve the Revenue from proving mens rea in a quasi criminal offence.

In Suresh Chandra Mittal's case (supra) the Court came out with an epoch-making ruling, viz., if an assessee files a revised return showing higher income and gives explanation that he has offered higher income to buy peace of mind and to avoid litigation, penalty cannot be imposed merely on account of higher income having been subsequently declared.

2.   IF EXPLANATION IS NOT PRESSED INTO SERVICE BURDEN IS ON THE DEPARTMENT

It would indeed be a misconception of law to assume that merely by bringing the case under section 271(1)(c), its Explanation 1 would automatically be made applicable. Instead, Explanation 1 has to be specifically referred in the relevant notice; otherwise the case has to be adjudicated in the light of the main provision of section 271(1)(c) which has to be construed in the light of the ruling of Anwar Ali (supra). Consequently, the initial burden which has been cast upon the assessee by reason of Explanation 1 would automatically be on the Department by virtue of the rule of Anwar Ali. This, as a matter of fact and law, is the stand repeatedly taken by the Bombay High Court in the two cases of CIT vs. P.M. Shah (1993) 203 ITR 792 (Bom) : TC 50R.800 and CIT vs. Dharamchand L. Shah (1993) 113 CTR (Bom) 214 : (1993) 204 ITR 462 (Bom).

In both the cases, penalty proceedings were initiated without mentioning in the notice that Explanation 1 to section 271(1)(c) was being resorted to. The assessee objected the application of Explanation 1 at a subsequent stage. When the controversy came up before the Bombay High Court by way of a reference, the Court, concurring with the Tribunal, held that in the absence of any intimation of penalty proceedings under the Explanation 1 to section 271(1)(c), levy of penalty under the Explanation was not sustainable.

To clarify its finding, the Court, stressed that the Explanation cannot in any manner be said to be merely an elucidation of what was already contained in section 271(1)(c); instead, the Explanation makes a considerable difference to what was contained in section 271(1)(c).

3.   UNSATISFACTORY EXPLANATION WOULD NOT ATTRACT PENALTY

In the case of Roshan Lal Madan (supra), the Chandigarh Bench of the Appellate Tribunal came out with a very peculiar construction of clause (A) to Explanation 1, which, in effect, renders the whole statutory exercise in this respect as quite futile.

It was virtually pointed out that "The words used in clause (A) of the Explanation 1 "found to be false" expressly imports the element of deceitful intent. The word "false" in its juristic sense implies something more than a mere untruth. Untruth is simply a statement which is not true and may have been uttered without intention to deceive and through ignorance. However, falsehood necessarily denotes the violation of truth for the purposes of deceit. Merely because the explanation furnished by the assessee is considered not satisfactory or unreasonable would not ipso facto justify the invocation of clause (A) to levy penalty under section 271(1)(c)".

The Tribunal, accordingly, came to the conclusion that an unsatisfactorily explained investment would result into the addition of the impugned amount as income from undisclosed sources under section 69 but would not justify the levy of penalty under section 271(1)(c), Explanation 1(A).

4.   SPECIFIC INVOCATION OF EXPLANATION NOT REQUIRED

As has already been stated in the beginning, in the recent case of K.P. Madhusudhanan (supra) a three Judges Bench of the Supreme Court has categorically laid down that no express invocation of the Explanation to section 271 in the notice under section 271 is necessary for applying the provisions of said Explanation and after the introduction of Explanation, there is no question of proof of mens rea.

Affirming the decision of the Kerala High Court in CIT vs. K.P. Madhusudhanan (2001) 165 CTR (Ker) 353 : (2000) 246 ITR 218 (Ker) and overruling the aforediscussed (contrary) decision of the Bombay High Court, the apex Court in K.P. Madhusudhanan’s case (supra) clarified that "The Explanation to section 271(1)(c) is a part of section 271". Therefore, when the designated tax-authority issues to an assessee a notice under Section 271, he makes the assessee aware that the provisions thereof are to be used against him. These provisions include the Explanation. The notice under section 271 puts the assessee to notice that he has to rebut the presumption drawn against him by virtue of the Explanation; otherwise he has to bear the penalty, emphatically concluded the Court.

5.   ASSESSEE’S CONSENT FOR ADDITION SHALL NOT ABSOLVE THE ASSESSEE FROM BURDEN OF PROOF

In an earlier case of Sir Shadilal Sugar & General Mills Ltd. vs. CIT (1987) 64 CTR (SC) 199: (1987) 168 ITR 705 (SC) : TC 50R.300, a two Judges Bench of the Supreme Court, in the context of the assessment year 1958-59, firmly stated that if an assessee admitted that there were incomes, it could not amount to an admission that there was deliberate concealment. "From agreeing to additions, it does not follow that the amount agreed to be added was concealed income. There may be a hundred and one reasons for such admission, i.e., when the assessee realises the true position, it does not dispute certain disallowances but that does not absolve the Revenue from proving the mens rea of a quasi criminal offence".

The three Judges Bench of the Supreme Court in the recent case of K.P. Madhusudhanan (supra) expressly stated that the aforequoted observation was made prior to the insertion of Explanation. Therefore, it is no longer good after the insertion of Explanation. No burden lies on the Revenue to prove mens rea even if the assessee has agreed the additions to his income as by virtue of the Explanation the assessee is not absolved from the initial burden laid on him by the Explanation, Emphatically stated the Court.

6.   PRINCIPLES EMERGING FROM DILIP N. SHROFF'S CASE

A careful reading of the judgment of the Supreme Court reveals the following legal positions regarding the provisions of section 271(1)(c) read with Explanation 1 thereto :

(a)     The Explanations to section 271(1)(c) are applicable to both the concealment of income and the furnishing of inaccurate particulars. Clause (c) of sub-section (1) of section 271 categorically states that the penalty would be leviable if the assessee conceals the particulars of his income or furnishes inaccurate particulars thereof. By reason of such concealment or furnishing of inaccurate particulars alone, the assessee does not ipso facto become liable for penalty. Imposition of penalty is not automatic. Levy of penalty not only is discretionary in nature but such discretion is required to be exercised on the part of the Assessing Officer keeping the relevant factors in mind. Penalty proceedings are not to be initiated, only to harass the assessee. The approach of the Assessing Officer in this behalf must be fair and objective.

(b)     Only in the event the factors enumerated in clauses (A) and (B) of Explanation 1 are satisfied and a finding in this behalf is arrived at by the Assessing Officer, the legal fiction created thereunder would be attracted.

(c)      Both the expressions, viz., concealment and the furnishing of inaccurate particulars signify a deliberate act or omission on the part of the assessee. Such deliberate act must be either for the purpose of concealment of income or furnishing of inaccurate particulars.

(d)     In view of clause (A) of Explanation 1, the Assessing Officer is required to arrive at a finding that the explanation offered, if any, by the assessee is false. In view of clause (B), findings have to be given by the Assessing Officer (i) that the assessee has failed to prove that explanation given by him is bona fide and (ii) that all the facts relating to the same and material to the computation of income have not been disclosed by him. Thus, apart from his explanation being not bona fide, it should have been found as of fact that he has not disclosed all the facts which are material to the computation of his income.

(e)     Primary burden of proof, therefore, is on the Revenue. The statute requires satisfaction on the part of the Assessing Officer. He is required to arrive at a satisfaction so as to show that there is primary evidence to establish that the assessee has concealed the amount or furnished inaccurate particulars and this onus is to be discharged by the Department.

(f)       While considering as to whether the assessee has been able to discharge his burden, the Assessing Officer should not begin with the presumption that he is guilty.

(g)     Once the primary burden of proof is discharged, the secondary burden of proof would shift on to the assessee because the proceeding under section 271(1)(c) is of penal nature in the sense that its consequences are intended to be an effective deterrent  which will put a stop to practices which the Parliament considers to be against the public interest and, therefore, it is for the Department to establish that the assessee is guilty of concealment of income or of furnishing inaccurate particulars thereof.

(h)     The order imposing penalty is quasi-criminal in nature and, thus, burden lies on the Department to establish that the assessee has concealed his income. Since burden of proof in penalty proceedings varies from that in the assessment proceedings, a finding in an assessment proceeding that a particular receipt is income cannot automatically be adopted, though a finding in the assessment proceeding constitutes good evidence in the penalty proceeding. In the penalty proceedings, thus, the authorities must consider the matter afresh as the question hasto be considered from a different angle.

(i)       Thus, before a penalty can be imposed, the entirety of the circumstances must reasonably point to the conclusion that the disputed amount represents income and that the assessee has consciously concealed the particulars of his income or has furnished inaccurate particulars thereof.

(j)       Penalty provisions have to be strictly construed. Even when the burden is required to be discharged by an assessee, it would not be as heavy as in the case of prosecution.

(k)     It may be true that the legislature has attempted to shift the burden from Revenue to the assessee. It may further be correct that different views have been expressed as regards construction of statutes in the light of the changing legislative scenario, but the tenor of a penal proceeding remains the same.

(l)       The omission of the word "deliberately" from section 271(1)(c), thus, may or may not be of much significance but what is material is its application.

(m)   "Concealment of income" and "furnishing of inaccurate particulars" are different. Both concealment and furnishing of inaccurate particulars refer to deliberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppression veri or suggestio falsi. Although it may not be very accurate or apt but suppressio veri would amount to concealment, suggestio falsi would amount to furnishing of inaccurate particulars.

(n)     The Assessing Officer is required to arrive at a satisfaction that there is "falsity" in furnishing of explanation by the assessee. Explanation 1, therefore, categorically states that such Explanation must either be false or not otherwise substantiated.

(o)     Concealment and furnishing of inaccurate particulars would not overlap each other as they represent different concepts. Had they not been so, the Parliament would not have used the different terminologies. Where the show-cause notice issued by the Assessing Officer does not clearly say whether it is issued for concealment of income or for furnishing inaccurate particulars of income, it will mean non-application of mind on the part of the Assessing Officer.

(p)     The Assessing Officer is bound to comply with the principles of natural justice while passing the order levying penalty for concealment.

I-T - Whether merely incurring expenditure and paying by account payee cheques a

 

I-T - Whether merely incurring expenditure and paying by account payee cheques apart from deducting tax at source on such payments are not enough to claim an expenditure as revenue expenditure - Yes, rules ITAT

AHMEDABAD, OCT 18, 2011: THE questions before the Tribunal are - Whether merely incurring business expenditure and paying by cheque apart from deducting tax at source on such payments are not enough to claim business expenses; Whether assessee is required to establish that such expenses were incurred wholly and exclusively for the purpose of business; Whether interest paid on capital can be disallowed notionally ignoring that no disallowance was made in earlier year in which such advances were made and the assessee had sufficient interest free funds and whether failure to attend proceedings before AO attracts penalty for non-appearance. And the verdict partly goes against the assessee.

Facts of the case

Assesses is engaged in the manufacturing of yarn. It filed its ROI claiming deduction of certain payments made by it on account of services obtained, AO asked the details, assessee filed details in parts however could not file any document establishing that the services obtained were wholly and exclusively for the purpose of business- CIT(A) affirmed the order of the AO rejecting the contention that the payments are allowable since made by account payee cheques and TDS was also deducted from the same.

Assessee gave certain advances to its near and dears and hence the AO disallowed notional interest attributable to these advances from the payments of interest made by assessee- CIT (A) affirmed the same- Before ITAT AR of the assessee points out that the advances were made in preceding assessment year and no disallowance was made beside this the assessee was having ample funds at the time of advancing of the funds- In respect of third issue the AO levied penalty of 271(1)(b) on account of non-appearance of the assessee-CIT(A) affirmed the same.

After hearing the parties the ITAT held that,

++ the assessee failed to submit any test report either before the authorities below or before the Tribunal. In the absence of any evidence of testing of yearn by this Consultancy Services, the assessee failed to prove that they had rendered any services for the purpose of business of the assessee. The AO also specifically asked the assessee to produce the person to whom consultancy service charges have been paid and to establish their identity. The assessee however, did not produce any such persons before the AO and even the identity is not established. The AO also noted in the assessment order that as per information available during the course of assessment proceedings, the assessee was purchasing some cotton bales from other parties for supply to Mafatlal Industries Ltd. Considering the facts of the case noted above and failure of the assessee to prove that expenses were incurred wholly and exclusively for the purpose of its business, the authorities below were justified in rejecting the claim of the assessee;

++ copy of the intimation u/s 143(1) of the IT Act for preceding assessment year 2006-07 is also filed at PB-26 in which no disallowance out of interest have been made. Since the interest has not been disallowed in the earlier year on the same facts, therefore, on mere opening balances in the assessment year under appeal, no disallowance could have been made. We rely upon the decision of the Hon'ble Karnataka High Court in the case of Sridev Enterprises;

++ the assesses filed copy of the balance sheet for the assessment year under appeal to show that interest-free funds from M/s. Travel World was available to the assessee in a sum of Rs.30,00,000/- and sufficient capital was available in the capital account of the partners. The profit of the assessee as per profit & loss account was also shown at Rs.28,95,852/-. Thus, sufficient interest free funds were available with the assessee to give interest-free loans and advances to these 3 parties. The AO has also not made out any case if any borrowed funds have been diverted for non-business purposes;

++ the AO noted in the penalty order that despite show cause notice for levy of penalty was served upon the assesses but the assessee did not give any reasons why penalty should not be imposed. Thus, according to the AO no explanation is filed for failure to comply with statutory notice. The learned Counsel for the assessee however, referred to the show cause notice dated 17-07-2009 and the reply filed by the assessee on 23-07-2009 (PB-19) which according to her also is referred to in the assessment order. We find that though this reply dated 23-07-2009 was filed before the AO but no reasons have been given for failure to comply with the statutory notices. The assessee from Para 1 to 8 submitted the details on merit and in the bottom merely stated that the assessee has no intention to not to comply with the statutory notices and that the notice u/s 143(2) of the IT Act could not be complied with because it was not possible to collect various information. Thus, the assessee has not given any specific or reasonable cause to show why there was failure to comply with the statutory notices.

Section 50C – Whether for the purpose of application of section 50C, the rates prevailing as on the date of agreement are to be adopted instead of rates prevailing on date of registration of property.

Income tax – Section 50C – Whether for the purpose of application of section 50C, the rates prevailing as on the date of agreement are to be adopted instead of rates prevailing on date of registration of property.

The assessee has declared 50% share of taxable short term capital gains on sale of plot and for determining the gains on sale transaction, the assessee adopted the sale value of property at Rs.16,02,000/-. However, on examination of the copy of the sale deed dated 3.2.2006, the market value of the property sold was shown at Rs.27,14,000/-. AO applied section 50C and made addition for the 50% of the difference amount. Assessee submitted that on the date of sale agreement i.e. 5th September 2005 on which the assessee also received the advance payment in cash and which was duly recorded in the books of account, as per the valuation certificate from the sub registrar office, the market value of the said property was Rs. 14,43,750/- which is less than the actual sale consideration. CIT (A) confirmed the order of the assessing officer stating that the value of the property was rightly taken by the AO on the date of registration of sale of property.

In appeal, the ITAT held: -

++ that the rates prevailing as on the date of agreement are to be adopted instead of rates prevailing on date of registration of property. Since the value of the property declared by the assessee as on the date of sale agreement is higher than the value shown in the certificate, the value declared by the assessee is to be adopted for computing the capital gain. Therefore, no addition is called for.

Assessee's appeal allowed

ORDER

Per: S K Yadav:

This appeal is preferred by the assessee against the order of the CIT(A) on following grounds:

1. The Ld. CIT(A) is not correct in confirming the order of the ITO, making the addition of Rs.5,56,000/- (50% of Rs.11,12,000/- being 50% share in Property by the Assessee) u/s 50C of the Act, 1961, being the difference between the Sale Consideration in Sale Deed and Market Value adopted by Registrar for Stamp Duty purpose without considering the circumstances in which the Assessee has entered into such a sale deed.

2. The Assessee contends that the Ld. CIT(A) is not considered the latest amended position of Provision 50C which applies to Sale Agreements also according to which the conditions of Sec 50C fulfilled at the time of Sale Agreement where the Market value of sold property for the purpose of stamp duty is less than the actual sale consideration. Sale deed is nothing but furtherance of sale agreement.

3. The Assessee contends that Cash advance was taken as soon as the deal was finalized through agreement not giving any scope for the Vendee to back trap from the deal if a condition is posed that may cause delay in arranging for a demand draft as the Assessee was in a desperate mood to sell. Since this advance amount was also mentioned in the regular sale deed with date, the transaction went on in a natural course and it did not amount to an afterthought arrangement to rule out the doubts. Since this happens to be a personal property, the law did not restrict for the payment in cash.

4. The assessee has disputed the value so adopted or assessed by the stamp valuation authority under Sub-sec(1) of sec. 50C before the Ld. CIT(A), Visakhapatnam.

5. These and other grounds that may be presented at the time of hearing, the aggrieved assessee filed this appeal.

2. Though the assessee has raised various grounds but they all relate to the calculation of short term capital gains on sale of plot measuring 275 Sq.yds. situated at Ramkrishnanagar, Gopalapatnam, Visakhapatnam. The facts in brief borne out from the record are that the assessee has declared 50% share of taxable short term capital gains on sale of plot and for determining the gains on sale transaction, the assessee adopted the sale value of property at Rs.16,02,000/-. However, on examination of the copy of the sale deed dated 3.2.2006, the market value of the property sold was shown at Rs.27,14,000/- as against the sale value of Rs.16,02,000/-. Accordingly, the market value of Rs.27,14,000/- was adopted as provided in the section 50C of the I.T. Act. The assessee's share of 50% was worked out to Rs.5,74,268/-. An appeal was filed before the CIT(A) with the submission that the assessee has entered into a sale agreement on 5th September, 2005 before the registration of the property. At the time of sale agreement, the assessee has received a sum of Rs.4,50,000/- in cash as advance. However, the sale deed was executed on 3rd February, 2006. He has also furnished the valuation certificate from the sub-registrar office as on 5.9.2005 wherein the market value of the said property was given at Rs.14,43,750/- which is less than the actual sale consideration of Rs.16,02,000/- agreed by the assessees. The CIT(A) was not convinced with the explanations of the assessee and he confirmed the action of the A.O. after holding the value has rightly been taken by the A.O. as on the date of registration of the property i.e. 3rd February, 2006.

3. Aggrieved, the assessee has preferred an appeal before the Tribunal with the submission that the impugned issue is squarely covered by the order of the Tribunal in the case of Koduru Satya Srinivas Vs. ACIT in ITA Nos.556&557 of 2008 in which the Tribunal has taken a view that the rates prevailing as on the date of agreement are to be adopted instead of rates prevailing on date of registration of property. Copy of the order of the Tribunal is placed on record.

4. The Ld. D.R. placed a reliance upon the order of the CIT(A).

5. Having gone through the order of the Tribunal in the light of rival submissions, we are of the view that impugned issue is squarely covered by the aforesaid order of the Tribunal. The Tribunal while adjudicating the issue in the aforesaid case has followed its order in the case of M/s. Lahiri Promoters in ITA No.12/Vizag/2009 dated 22.6.2010. The relevant observation of the Tribunal on this issue is extracted hereunder:

"8. We have heard the rival contentions and carefully perused the record. The issue agitated before us revolves around section 50C of the Act. For the sake of convenience, we extract the section 50C(1) below:

"50C (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer."

This section provides for adoption of value assessed/determined by the Stamp valuation authority for the purpose of payment of stamp duty ( hereinafter "stamp duty value"), if the sale consideration disclosed in the sale deed is less than the stamp duty value. Section 50C was inserted by the Finance act 2002 w.e.f. 1.4.2003.

9. In the instant case, there is no dispute that the assessee herein entered into a separate sale agreement with the two vendees respectively on 27.3.2003. The assessee has cited certain reasons for not executing the sale deed immediately which were not found to be false. Thereafter, the sale deeds were executed on 30.6.2005 by complying with the terms of the sale agreement. Hence the sale deed was executed for the consideration as agreed between the parties as per the sale agreement. If we apply the provisions of section 50C literally, the tax authorities are right in adopting the value assessed by the stamp authority for the purposes of computation of capital gains. However, Ld AR has heavily placed reliance on the decision of Hon'ble Supreme Court in the case of K.P.Verghese Vs. ITO, referred supra, with regard to the proper interpretation of section 50C in the facts and circumstances of the case.

10. The Hon'ble Supreme Court in the case of Shri K.P. Varghese Vs. ITO Supra has observed that while interpreting a provision, strictly literal reading of Section should not be adopted if it leads to manifestly unreasonable and absurd consequences. However attempt should be made to discover the intent of the legislature from the language used by it. The Hon'ble Apex Court rendered the said decision in the context of then existing Sec 52(2) of the Act, which provided that where a capital asset is transferred and if in the opinion of the ITO, the fair market value of that asset exceeds the full value of the consideration declared by the assessee by an amount of not less than 15% of the value so declared, then the full value of the consideration shall be taken to be its fair market value on the date of its transfer. The revenue took the stand that in order to invoke the provisions of section 52(2), it is enough if it is shown that the fair market value exceeded the disclosed value by 15%. However, the Hon'ble Supreme Court held that a fair and reasonable construction of Sec 52(2) would be to read into it a condition that it would apply only where the consideration for the transfer is under- stated and hence it would have no application in the case of a bonafide transaction where the full value of the consideration for the transfer is correctly declared by the assessee. For the sake of convenience, we extract below the relevant observations of the Hon'ble Apex Court on the rule of interpretation and the logical conclusion:

"5. Now, on these provisions the question arises as to what is the true interpretation of s.52, sub-s.(2). The argument of the Revenue was, and this argument found favour with the majority judges of the Full Bench, that on a plain and natural construction of the language of s.52, sub-s.(2), the only condition for attracting the applicability of that provision was that the fair market value of the capital asset transferred by the assessee as on the date of the transfer exceeded the full value of the consideration declared by the assessee in respect of the transfer by an amount of not less than 15% of the value so declared. Once the ITO is satisfied that this condition exists, he can proceed to invoke the provision in s.52, sub-s.(2), and take the fair market value of the capital asset transferred by the assessee as on the date of the transfer as representing the full value of the consideration for the transfer of the capital asset and compute the capital gains on that basis. No more is necessary to be proved, contended the Revenue. To introduce any further condition such as under-statement of consideration in respect of the transfer would be to read into the statutory provision something which is not there; indeed, it would amount to re-writing the section. This argument was based on a strictly literal reading of s.52, sub-s. (2), but we do not think such a construction can be accepted. It ignores several vital considerations which must always be borne in mind when we are interpreting a statutory provision. The task of interpretation of a statutory enactment is not a mechanical task. It is more than a mere reading of mathematical formulae because few words possess the precision of mathematical symbols. It is an attempt to discover the intent of the legislature from the language used by it and it must always be remembered that language is at best an imperfect instrument for the expression of human thought and, as pointed out by Lord Denning, it would be idle to expect every statutory provision to be "drafted with divine prescience and perfect clarity". We can do no better than repeat the famous words of judge Learned Hand when he said:

…it is true that the words used, even in their literal sense, are the primary and ordinarily the most reliable source of interpreting the meaning of any writing: be it a statute, a contract or anything else. But it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary: but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning".

We must not adopt a strictly literal interpretation of s.52, sub-s. (2), but we must construe its language having regard to the object and purpose which the legislature had in view in enacting that provision and in the context of the setting in which it occurs. We cannot ignore the context and the collocation of the provisions in which s.52, sub-s (2) appears, because, as pointed out by Judge Learned Hand in the most felicitous language:

"… the meaning of a sentence may be more than that of the separate words, as a melody is more than the notes, and no degree of particularity can ever obviate recourse to the setting in which all appear, and which all collectively create."

Keeping these observations in mind we may now approach the construction of s.52, sub-s. (2).

6. The primary objection against the literal construction of s.52, subs,(2), is that it leads to manifestly unreasonable and absurd consequences. It is true that the consequences of a suggested construction cannot alter the meaning of a statutory provision but it can certainly help to fix its meaning. It is a well recognized rule of construction that a statutory provision must be so construed, if possible, that absurdity and mischief may be avoided. There are many situations where the construction suggested on behalf of the Revenue would lead to a wholly unreasonable result which could never have been intended by the legislature. Take, for example, a case where A agrees to sell his property to B for a certain price and before the sale is completed pursuant to the agreement – and it is quite well known that sometimes the completion of the sale may take place even a couple of years after the date of the agreement – the market price shoots up with the result that the market price prevailing on the date of sale exceeds the agreed price, at which the property is sold, by more than 15% of such agreed price. This is not at all an uncommon case in an economy of rising prices and in fact we would find in a large number of cases where the sale is completed more than a year or two after the date of the agreement that the market price prevailing on the date of the sale is very much more than the price at which the property is sold under the agreement. Can it be contended with any degree of fairness and justice that in such cases, where there is clearly no understatement of consideration in respect of the transfer and the transaction is perfectly honest and bonafide and, in fact, in fulfilment of a contractual obligation, the assessee, who has sold the property, should be liable to pay tax on capital gains which have not accrued or arisen to him? It would indeed be most harsh and inequitable to tax the assessee on income, which has neither arisen to him nor is received by him, merely because he has carried out the contractual obligation undertaken by him. It is difficult to conceive of any rational reason why the legislature should have thought it fit to impose liability to tax on an assessee who is bound by law to carry out his contractual obligation to sell the property at the agreed price and honestly carried out such a contractual obligation. It would indeed be strange if obedience to the law should attract the levy of tax on income, which has neither arisen to the assessee nor has been received by him. If we may take another illustration, let us consider a case where A sells his property to B with a stipulation that after some time which may be a couple of years or more, he shall re-sell property to A for the same price. Could it be contended in such a case that when B transfers the property to A for the same price at which he originally purchased it, he should be liable to pay tax on the basis as if he has received the market value of the property as on the date of resale, if, in the meanwhile, the market price has shot up and exceeds the agreed price by more than 15%. Many other similar situations can be contemplated where it would be absurd and unreasonable to apply s.52, sub-s (2), according to its strict literal construction. We must, therefore, eschew literalness in the interpretation of s.52, sub-s (2), and try to arrive at an interpretation which avoids this absurdity and mischief and makes the provision rational and sensible, unless of course, our hands are tied and we cannot find any escape from the tyranny of the literal interpretation. It is now a well-settled rule of construction that where the plain literal interpretation of a statutory provision produces a manifestly absurd and unjust result which could never have been intended by the legislature, the Court may modify the language used by the legislature or even "do some violence" to it, so as to achieve the obvious intention of the legislature and produce a rational construction; Vide Luke vs. IRC (1963) AC 557 : (964) 54 ITR 692(HL). The Court may also in such a case read into the statutory provision a condition which, though not expressed, is implicit as constituting the basic assumption underlying the statutory provision. We think that, having regard to this well recognized rule of interpretation, a fair and reasonable construction of s.52, sub-s (2), would be to read into it a condition that it would apply only where the consideration for the transfer is understated or, in other words, the assessee has actually received a larger consideration for the transfer than what is declared in the instrument of transfer and it would have no application in the case of a bonafide transaction where the full value of the consideration for the transfer is correctly declared by the assessee. There are several important considerations which incline us to accept this construction of s.52, sub-s.(2)."

The Hon'ble Supreme Court also observed that while interpreting a section it would be legitimate to consider what was the mischief and defect, which was sought to be remedied by an enactment. In that connection the speech made by the Finance Minister while moving the amendment is extremely relevant as it throws a considerable light on the objectives and purpose of enactment. However, as pointed out by Ld AR the purpose of introduction of Sec 50C was not mentioned by the Finance Minister at the time of moving amendment. It was also not explained in the Notes on clauses and Explanatory Memorandum attached to the relevant Finance Bill. However, the Hon'ble Madras High Court in the case of K.R. Palani Swamy and others Supra, while upholding the constitutional validity of Sec 50C, had an occasion to spell out the objective of introducing Sec 50C. The relevant observations are extracted below:

"17. Let us consider the legislative competence of the Parliament in inserting the provision s.50C in the IT Act. It is obvious from the reading of the above provision and rather it is not disputed that the same is inserted to prevent large scale under valuation of the real value of the property in the sale deed so as to defraud Revenue the Government legitimately entitled to by pumping in black money. The impugned provision has been incorporated to check such evasion of tax by undervaluing the real properties.

………………….

Tax could be evaded by breaking the law or could be avoided in terms of the law. When there is a factual avoidance of tax in terms of law, the legislature steps into amend the IT law to catch such an income within the net of taxation."

Hence the object of introduction of section 50C is to prevent under valuation of the real value of the property in the sale deed to avoid payment of tax or duty which the Government is entitled to, which, in our opinion, is akin to the objective of introduction of section 52, which was existing earlier.

11. In the case of K.P. Varghese, supra the Hon'ble Apex Court contemplated a situation, by way of an example, where the completion of sale took place after a couple of years after the date of agreement. In this connection it is pertinent to extract the relevant observations of the Hon'ble Supreme Court, at the cost of repetition, as the said example contemplated by the Hon'ble Apex Court is squarely applicable to the facts of the present case.

"There are many situations where the construction suggested on behalf of the Revenue would lead to a wholly unreasonable result which could never have been intended by the legislature. Take, for example, a case where A agrees to sell his property to B for a certain price and before the sale is completed pursuant to the agreement – and it is quite well known that sometimes the completion of the sale may take place even a couple of years after the date of the agreement – the market price shoots up with the result that the market price prevailing on the date of sale exceeds the agreed price, at which the property is sold, by more than 15% of such agreed price. This is not at all an uncommon case in an economy of rising prices and in fact we would fine in a large number of cases where the sale is completed more than a year or two after the date of the agreement that the market price prevailing on the date of the sale is very much more than the price at which the property is sold under the agreement. Can it be contended with any degree of fairness and justice that in such cases, where there is clearly no under-statement of consideration in respect of the transfer and the transaction is perfectly honest and bonafide and, in fact, in fulfilment of a contractual obligation, the assessee, who has sold the property, should be liable to pay tax on capital gains which have not accrued or arisen to him? It would indeed be most harsh and inequitable to tax the assessee on income, which has neither arisen to him nor is received by him, merely because he has carried out the contractual obligation undertaken by him. It is difficult to conceive of any rational reason why the legislature should have thought it fit to impose liability to tax on an assessee who is bound by law to carry out his contractual obligation to sell the property at the agreed price and honestly carried out such a contractual obligation. It would indeed be strange if obedience to the law should attract the levy of tax on income, which has neither arisen to the assessee nor has been received by him."

11.2 The Hon'ble Apex court in the case of K.P.Verghese, supra has held that the provisions of section 52(2) that was existing at the relevant point of time was not applicable to a honest and bona fide transaction where the consideration received by the assessee was correctly declared or disclosed by him and there was no concealment or suppression of the consideration. The Hon'ble Supreme Court, after considering the speech of the Finance Minister, has understood that the object of introduction of section 52(2) was to curtail those transactions of sale of property, where the actual consideration received was understated in the sale deed. However, though the object of introduction of section 50C was not mentioned in the relevant Finance bill or in the speech of the Finance minister, yet, the Hon'ble Madras High Court in the case of K.R. Palani Swamy and others, Supra has stated that the provision of Sec 50C was inserted in the income-tax act to prevent large scale under valuation of real value of property in the sale deed, so as to defraud revenue which the government is legitimately entitled to, by pumping in black money. Thus we can see that the purpose of introduction of section 52(2) earlier and section 50C w.e.f. 1.4.2003 are for the purpose of achieving similar objectives.

11.3 In the instant case also, the assessee herein has fulfilled a contractual obligation on 30-6- 2005, which the assessee is bound by law to carry out as per the sale agreement entered in March, 2003. Now the next question that requires to be addressed is whether there was any under statement of actual consideration at the time when the sale agreements were entered into. The assessee has placed a copy of the certificate dated 16.4.2010 issued by the Jt. Sub Registrar, Visakhapatnam by way of additional evidence. According to the said certificate, the market value of the impugned property located at Allipuram Ward was Rs.5000/- as on 26.3.2003. According to Ld AR, the sale value agreed to by the parties, as per the sale agreement entered into on 27-03- 2003 was more than the market value fixed by the Jt. Sub Registrar at the time the sale agreement was entered into. Thus according to Ld AR, there is no understatement or suppression of actual consideration. It is also not the case of revenue that there was any understatement of actual consideration.

12. Thus, by executing the sale deed in June, 2005, the assessee has only completed the contractual obligation imposed upon it by virtue of the sale agreement. Since the process of sale has been initiated from the date of sale agreements, in our opinion, the character of the transaction vis-à-vis Income tax Act should be determined on the basis of the conditions that prevailed on the date the transaction was initially entered into. Accordingly, the applicability of the provisions of section 50C should be looked at only on the date of sale agreement. The assessee has filed a certificate obtained from the Joint Sub Registrar, Visakhapatnam, regarding market value of the impugned property as on the date of the sale agreements. The said certificate was not produced before the tax authorities. We have already held that the provisions of section 50C should be applied to the impugned sale transactions as on the date on which sale agreements were entered into. Since the applicability of section 50C as on the date of sale agreements is required to be examined by the AO, we set aside the issue to the file of the AO with a direction to compute the capital gains on sale of impugned properties after applying the provisions of section 50C as on the date of sale agreements. Accordingly, the order of Ld CIT(A) is reversed."

6. Since the impugned issue is squarely covered by the aforesaid order of the Tribunal, we decide this issue in favour of the assessees. We therefore hold that since the value of the property declared by the assessee as on the date of sale agreement is higher than the value shown in the certificate, the value declared by the assessee is to be adopted for computing the capital gain. Therefore, no addition is called for. Accordingly, the order of the CIT(A) is set aside and we direct the A.O. to delete the addition made in this regard. Accordingly, the appeal stand disposed off.

7. In the result, the appeal of the assessee is allowed.

(Pronounced in the open Court on 10.12.2010)

IT : Extension of due/specified date of filing of returns/tax audit report for A

 

IT : Extension of due/specified date of filing of returns/tax audit report for A.Y. 2011-12 in respect of assessees assessed at Sikkim - ORDER [F.NO.225/72/2010/ITA-II], DATED 30-09-2011

Provisions of section 11(2) of SEBI Act would take within its sweep a Chartered

 

Provisions of section 11(2) of SEBI Act would take within its sweep a Chartered Accountant if his activities are detrimental to interest of investors or securities market

Looking to the provisions of the SEBI Act and the Regulations framed thereunder, it cannot be said that in a given case if there is material against any Chartered Accountant to the effect that he was instrumental in preparing false and fabricated accounts, the SEBI has absolutely no power to take any remedial or preventive measures in such a case; it cannot be said that the SEBI cannot give appropriate directions in safeguarding the interest of the investors of a listed company


It is true, that the SEBI cannot regulate the profession of Chartered Accountants; it is required to be noted that by taking remedial and preventive measures in the interest of investors and for regulating the securities market, if any steps are taken by the SEBI, it can never be said that it is regulating the profession of the Chartered Accountants


[2010] 6 taxmann.com 129 (Mum.)

HIGH COURT OF BOMBAY

Price Waterhouse & Co.

v.

SEBI

W.P.No.5249 of 2010

WITH

W.P.No.5256 of 2010

August 13, 2010

Can the valuation done by any authority of the State Government for the purpose

 

Can the valuation done by any authority of the State Government for the purpose of payment of stamp duty in respect of land or building be taken as actual sale consideration received by the purchaser?

CIT v. Chandni Buchar (2010) 323 ITR 0510 (Pun.& Har.)

The Assessing Officer added the difference between purchase price disclosed in the sale deed and purchase price of the property adopted for the purpose of paying the stamp duty to the total income of the assessee as income from unexplained sources. The Commissioner of Income-tax (Appeals) deleted this addition by holding that section 50C is a deeming provision for the purpose of bringing to tax the difference as capital gain. Further, he also held that in the absence of any legally acceptable evidence, valuation done for the purpose of section 50C would not represent actual consideration passed on to the seller. The Tribunal also held that valuation done by any State agency for the purpose of stamp duty would not ipso facto substitute the actual sale consideration as being passed on to the seller by the purchaser in the absence of any admissible evidence. The Assessing Officer is obliged to bring on record positive evidence indicating the fact that the assessee has paid anything more than the sum disclosed in the purchase deed. In this case, the assessee has discharged the burden of proving the sale consideration as projected in the sale deed by producing original bank statement.

The High Court, therefore, held that the view taken by the Tribunal while accepting the order of the Commissioner of Income-tax (Appeals) does not suffer from any legal infirmity.

__._,_.___

__

Partial completion of housing project Eligibility for deduction under section

 

Partial completion of housing project Eligibility for deduction under section 80-IB(10)

Assessee can claim deduction under section 80-IB on year to year basis, in view of the Circular of the CBDT dated 30-6-2009, even though the assessee proposes to construct on the entire extent of land and paid the development charges in this regard. Therefore, where the assessee completed the project in respect of one block, the assessee was eligible for deduction under section 80-IB( 10) of the Act in respect of the same. – Vide Nagarjuna Homes v.Income Tax Officer (2011) 42(II) ITCL 199 (Hyd-Trib)

IT : Donation by a charitable trust to other charitable institution cannot resul

IT : Donation by a charitable trust to other charitable institution cannot result in same becoming income of donor-trust

Income-tax : If the assessee-trust either itself uses any part of its income for charitable purposes or donates the same to any other charitable trust, such income is exempt from inclusion in the total income of the assessee trust for the relevant year [Section 11 of the Income-tax Act, 1961 - Charitable or religious trust - Exemption of income from property held under] - [2011] 10 taxmann.com 128 (Delhi - ITAT)

I-T SET TO TAP FOREIGN WHISTLEBLOWERSAmid mounting pressure from the Supreme Cou

 

I-T SET TO TAP FOREIGN WHISTLEBLOWERSAmid mounting pressure from the Supreme Court, the government is set to accept tip-offs from foreign informers and whistleblowers for fishing out information on tax evaders who have parked money in Swiss banks and tax havens. We have clear guidelines to pay informants and the same can be extended to cover foreign informers, a top tax official told ET. While rules allow tapping such sources, its an option that has never been explored by Indian authorities. India has been pushing for co-operation among countries in sharing information on tax evaders. At the G20 session in Paris over the weekend, Finance Minister Pranab Mukherjee renewed the pitch for securing old banking information, without explicitly naming Switzerland. Over the past few years, some governments in Europe have used stolen data accessed from whistleblowers to investigate and pass on information to other countries. A few months ago, France shared with New Delhi a list of more than 600 bank accounts of Indians in HSBC, Geneva. The list was stolen by a former HSBC employee. Germany, too, bought stolen data on scores of bank account holders of LGT, a bank in Liechtenstein. The decision to use foreign unofficial sources comes at a time the income-tax department is carrying out raids at residences of individuals whose names figure on the list of HSBC account holders. According to sources, there are indications that the department has also received details of several bank accounts of Indians with two other Swiss banks Julius Baer and Credit Suisse. In recent weeks residents with accounts in these banks have been approached, said a person familiar with the raids.However, we dont know how the I-T department got hold of the names, said the person familiar with the raids and ongoing investigation. Tax officials, however, refused to confirm this. Residents who parked undisclosed wealth abroad either operated direct numbered accounts or used a discretionary trust to hold the money. In such structures, an NRI member of the family functions as settlor of the trust and a tax professional in most cases a chartered accountant is appointed as the protector who looks after the interest of the settler, while other members of the family, most of whom may be resident Indians, are the beneficiaries of the trust. During recent raids, tax officials have landed up at residences of some of the trust beneficiaries. There is a panic. There are many who are willing to give self-declaration of their wealth and pay penalty despite the fact that in many cases there have been no transactions in these accounts for past 6-7 years. . . They want to avoid prosecution, said a senior chartered accountant. According to him, members of certain trades such as diamond exports have come under the glare of the tax department, which has also used passport numbers of residents to make enquiries on bank accounts with authorities in tax havens. Banks worldwide use passport numbers for customer verification. We are hoping to secure information on Indian tax evaders through various channels, including whistleblowers and other informants, especially since foreign banks, most often, do not disclose client details, said the tax official. However, taxmen will check the veracity of the information provided by informants before acting on it. In many cases, Indians hold legitimate money in foreign bank accounts and surely they cannot be subjected to any harassment, the official said. As per rules, the government is to pay informers only after tax evaders settle their dues. The term informer in the tax rule is generic. It does not say that the informer has to be a person of Indian nationality. So, we do not see any problem in covering foreigners or paying them, said the official. Usually, an informer is paid 10% of the amount collected as tax from the evader. Investigation on account holders of HSBC, Geneva, is on and the department is set to launch prosecution proceedings in cases where criminality is proven, said the official. In some cases, he said, the tax department had also found corroborative evidence to nail the evader. Global Financial Integrity, a Washington-based thinktank, has estimated the size of Indias underground economy at 50% of the countrys GDP, or around $640 billion, at end-2008. Of this, about 72% of the illicit assets are held abroad. – www.economictimes.indiatimes.com

EC ropes in I-T dept to check poll funding October, 17th 2011 In a bid to ch

 

EC ropes in I-T dept to check poll funding

October, 17th 2011
In a bid to check suspicious transactions, the Election Commission has rolled out fresh guidelines for monitoring of poll funding during the forthcoming elections in five states, including Uttar Pradesh, and has roped in the income tax department and the financial intelligence unit for this purpose.

The directives to create a database of doubtful transactions and dubious movement of cash were recently issued by the EC to chief electoral officers of the five states that go to the polls.

"The EC guidelines on poll expenditure monitoring have been operationalized," a senior official privy to the development said. This is for the first time that the EC has asked the elite financial intelligence unit, functioning under the finance ministry, to sift through their records for any instance of information about the assets and liabilities of candidates participating in the polls.

"Besides, the I-T (investigation) and FIU will download from EC website the copies of affidavits declaring assets and liabilities by the candidates. The FIU will also verify the information available with them pertaining to the candidates and send the report to the director general of income tax (investigation) of the state through the Central Board of Direct Taxes," the EC said.

IT : Closing stock of an erstwhile firm converted into stock-in-trade by a propr

IT : Closing stock of an erstwhile firm converted into stock-in-trade by a proprietorship concern will have to be valued at the market value

Income-tax : On dissolution of a firm closing stock has to be valued on the basis of real value i.e., market value, which is independent of the fact whether or not the erstwhile partners of a dissolved firm continue to do business with assets received on dissolution [Section 145 of the Income-tax Act, 1961 - Method of accounting - Valuation of stock] - [2011] 10 taxmann.com 126 (Delhi)

Direct Tax Laws Oct 2011 08

On expiry of tax holiday period under section 10B, block of assets, viz., plant and machineries of industry are available for working out relief under section 50(2) - [2011] 14 taxmann.com 82 (Madras)

Transfer pricing - Rule 10B nowhere provides that comparable uncontrolled transaction shall be only an international transaction - [2011] 14 taxmann.com 91 (New Delhi - Trib.)

Losses on sale and purchase of shares would not be treated as speculation losses of assessee engaged in bills rediscounting activities - [2011] 14 taxmann.com 81 (Mumbai - Trib.)

Where assessee which was an association related to trade had incurred revenue expenses solely for purpose of protection of common interest of its members it would be allowable as deduction under section 44A - [2011] 14 taxmann.com 80 (Delhi - Trib.)

A partner of a firm is an individual only even if he is partner as a representative of HUF and, thus, where salary is paid to such a partner for conducting affairs of business of firm, it has to be allowed as deduction in view of Explanation 4 to section 40(b) - [2011] 14 taxmann.com 79 (Ahmedabad - Trib.)

Assessee not entitled to deduction under section 80-IB(10) where it sold plots to respective customers by registering a sale deed and thereafter it constructed building at an agreed price - [2011] 14 taxmann.com 78 (Indore - Trib.)

Where assessee, a non-resident company, carried out work of offshore transportation and installation of pipelines in territorial waters of India through its vassels, it could be said to have a fixed place of business in India in terms of paragraph (1) of article 5 of Indo-Mauritius DTAA - [2011] 14 taxmann.com 77 (Delhi - Trib.)

If stock-in-trade is converted into investment and sold later on, difference between sale price of shares and their indexed cost of acquisition should be computed as capital gain - [2011] 14 taxmann.com 76 (Chennai - Trib.)

S. 153A: Assessments pending in appeal do not abate

S. 153A: Assessments pending in appeal do not abate


For AY 2002-03, an addition of Rs. 99 lakhs was made by the AO & confirmed by the CIT (A). During the pendency of the appeal before the Tribunal, a search under s. 132 was conducted and s. 153A proceedings were initiated. The Tribunal held that in view of the s. 153A notice, the assessments of the six preceding assessment years prior to the date of search abated and that assessments pending in appeal would stand merged in the fresh assessment to be made by the AO u/s 153A pursuant of the search. The AO was directed to reconsider the additions in the s. 153A assessment. On appeal by the department, HELD reversing the Tribunal:

The second proviso to s. 153A provides that “assessments relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search u/s 132 shall abate“. The words “pending on the date of initiation of search” has to be assigned simple and plain meaning. If the assessment is finalized, there are no “pending proceedings” to be abated. The pendency of an appeal does not mean that the assessment proceedings are pending. The word ‘abatement‘ refers to something, which is pending or alive and its suspension or termination. Proceedings which are complete are not liable for abatement (Circular No.7 of 2003 dated 5.9.2003 referred)

Commodity, bullion trade to come under the I-T radar

 

Commodity, bullion trade to come under the I-T radar

October, 14th 2011

A tardy progress in tax collection has triggered this reform. The government has decided to bring mining along with bullion and commodity trade on the income tax radar in the current financial year so as to promptly detect tax evasion and garner additional revenue.

The Income Tax department has chalked out a multi-pronged strategy to counter the impact of slowdown in growth across sectors, noticing that 2011-12 has failed to paint a rosy picture on direct tax collection so far this year.

A senior official with the Central Board of Direct Taxes (CBDT) said on Thursday that the authorities, as part of the plan, were taking steps to identify potential areas for detecting major tax evasion, act speedily and effectively on the arrear recovery front and verify high-value transaction to identify tax avoidance.

So discouraging has been the direct tax collection performance in the first half of this fiscal that it has made tough the achievement of even the budget estimate of 5.33 lakh crore for 2011-12. We (CBDT) now expect that these steps will help us meeting the target envisaging a 19.5 per cent growth over previous years collection of Rs 4.46 lakh crore, the official told Business Standard.

Net direct tax collection for the first half of 2011-12 was up by only seven per cent to Rs 194,812 crore after a refund of over Rs 62,000 crore.

The scams associated with mining in Karnataka and Goa clearly indicate that the potential of detecting tax evasion in the mining cases is huge, the official noted. Commodity and bullion have also emerged as potential areas in this regard. Realty has always been an area under continued scrutiny.

Along with the news steps, the I-T department has initiated a comprehensive exercise of detecting possible tax avoidance and underpayments from the high-value transaction data uploaded in its system. The idea is to make full use of the available data and compare it with the returns filed by the assessees to identify gaps and collect additional revenue this year, he pointed out.

The CBDT official said the Central Information Branch (CIB) across the country has been given the powers of verification and intelligence gathering on the high-value transaction information available with the department.

We now have a robust database of information on transaction of every assessee. The department is equipped with improved 360 degree profiling for anti-evasion action, he informed.

The I-T department has received 6,462 annual information returns on high-value transactions in 2010-11. These contain 43.83 lakh transactions with a total value of Rs 15,328,045 crore. Further, the CIB uploaded 14.57 crore pieces of information about high-value transactions in 2010-11, as compared to 4.45 crore in 2009-10.

As for arrear recovery, the work has gained pace with the CBDT setting up a committee to strengthen steps to swiftly collect demand due in various cases.

The department is also dwelling on the use of third parties for recovery of tax arrears. This is considering that the recovery of older demands has got hampered due to lack of information on assets of the assessee.

As on March 31, 2010, the total income tax arrear demand outstanding stood at Rs 229,032 crore. Out of this, demand worth Rs 9,476 has become difficult to recover because the assesses have turned out to be untraceable. Besides, Rs 92,360 crore stand as arrear demands held up in no assets cases.

ITR Volume 339 : Part 4 (Issue dated 19-12-2011)

INCOME TAX REPORTS (ITR)

Volume 339 : Part 4 (Issue dated 19-12-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Advance tax --Interest--Company--Book profits--Assessment under section 143/147 and later recomputation under section 143(3) pursuant to revision by Commissioner--Interest under section 234B chargeable on tax calculated on book profits--Income-tax Act, 1961, ss. 115J, 143, 147, 234B-- CIT v. Nahar Spinning Mills Ltd .

(P&H) . . . 557

Appeal to Appellate Tribunal --Powers of Tribunal--Commissioner (Appeals) directing Assessing Officer to decide question on merits--Consequent order of Assessing Officer reversed by Tribunal--Order of Tribunal--Valid--Income-tax Act, 1961, ss. 43(6), Expln. 2, 254-- CIT v. Arvind Products Ltd . (Guj) . . . 643

Assessment --Valuation of property--Reference to valuer--Reference to valuer only after rejection of books of account--Income-tax Act, 1961, s. 142A(1)-- CIT v. Lucknow Public Educational Society (All) . . . 588

Bad debt --Bank--Rural branch--Meaning of "place" in Explanation (ia) to section 36(1)(viia)--Branch in a rural area where population is less than 10,000--Income-tax Act, 1961, s. 36(1)(viia)-- CIT v. Lord Krishna Bank Ltd . (Ker) . . . 606

----Money-lending business--Finding that money-lending business had been carried on and interest had been assessed as business income--Amount written off--Deductible--Income-tax Act 1961, s. 36(1)(vii)-- CIT v. Southern Polymers P. Ltd.

(Mad) . . . 540

Capital gains --Exemption--Sale of residential property--Condition precedent for exemption--Profits to be used for purchase of residential property or deposited in specified account before due date for furnishing return--Date for furnishing return--Can be date under section 139(4)--Profits utilised for specified purpose before that date--Entire profits entitled to exemption--Income-tax Act, 1961, ss. 54, 139(4)-- CIT v. Ms. Jagriti Aggarwal (P&H) . . . 610

Charitable purposes --Charitable trust--Exemption--Condition precedent--Application of income for charitable purposes--Mandis established by State Government to help marketing of agricultural produce--Mandi samitis required to give part of collections and development cess to Agricultural Produce Market Board constituted under Mandi Act--Amounts given to Board constituted application of income for charitable purposes--Mandis entitled to exemption--Income-tax Act, 1961-- CIT v. Krishi Utpadan Mandi Samiti (All) . . . 488

----Charitable trust--Registration--Cancellation--Law applicable--Power to cancel registration under section 12A granted with effect from 1-6-2010--Registration under section 12A in December, 1974--Cancellation of registration under section 12AA by order dated 30-6-2009--Not valid--Income-tax Act, 1961, ss. 12A, 12AA-- Director of Income-tax (Exemptions) v. Mool Chand Khairati Ram Trust

(Delhi) . . . 622

Company --Book profits--Unabsorbed depreciation lower than loss carried forward from earlier year--Depreciation to be set off under clause (iv) of Explanation to section 115J(1A)--Income-tax Act, 1961, s. 115J-- Peico Electronics and Electricals Ltd . v. CIT (Cal) . . . 506

Deduction of tax at source --Assessee engaged in transportation of building material--Hiring dumpers--Payment made to contractors for hiring dumpers--Is not rent for machinery or equipment but payment for works contract of shifting of goods from one place to another--Section 194C applicable and not section 194-I--Income-tax Act, 1961, ss. 194C, 194-I-- CIT (TDS) v. Shree Mahalaxmi Transport Co.

(Guj) . . . 484

----Assessee entering into works contracts for transport of goods belonging to assessee to clients through their vehicles--Payment not rent for machinery or equipment but payment for works contract--Tax to be deducted under section 194C--Income-tax Act, 1961, ss. 194C, 194-I-- CIT (TDS) v. Swayam Shipping Services P. Ltd .

(Guj) . . . 647

----Payment to sub-contractors--Union of truck operators procuring contracts for its members--No sub-contracts--Tax not deductible at source--Income-tax Act, 1961, s. 194C-- CIT v. Truck Operators' Union (P&H) . . . 532

Exemption --Dividend--No expenditure in fact incurred in earning dividend income--No disallowance permissible--Income-tax Act, 1961, s. 14A-- CIT v. Reliance Industries Ltd. (Bom) . . . 632

Gift --Transfer of immovable property by assessee to her husband stated to be out of love and affection--Marriage subsisting at time of gift--No evidence that husband bought property with his funds--Gift-tax rightly imposed--Gift-tax Act, 1958, s. 16-- K. Meenakumari v. ITO (Mad) . . . 580

Gift-tax --Deemed gift--Firm--Property brought in as capital contribution by partners--Subsequent retirement of partners and withdrawal of property from firm--Difference in value not as deemed gift--Gift-tax Act, 1958, s. 4(1)(a)-- CIT v. Smt. Jayalakshmamma (Karn) . . . 546

Income --Exemption--Club--Principle of mutuality--Interest on fixed deposits, dividend, income from Government securities and profit on sale of investments--Principle of mutuality applies--Not chargeable to tax--Income-tax Act, 1961-- CIT v. Delhi Gymkhana Club Ltd. (Delhi) . . . 525

----Income or capital--Sales tax incentive--Purpose test--Capital receipt--Income-tax Act, 1961-- CIT v. Reliance Industries Ltd . (Bom) . . . 632

----Mutual concern--Co-operative society--Finding that there was complete identity between contributors and participators--Income of society not taxable--Income-tax Act, 1961-- CIT v. Talangang Co-op. Group Housing Society Ltd.

(Delhi) . . . 518

Industrial undertaking --Special deduction under section 80-IA--Manufacture of identity cards--Finding that activity involved making of a new final product from data with which it started and amount to manufacture or production of an article or thing--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-IA-- CIT v. Haryana State Electronics Development Corporation Ltd. (P&H) . . . 615

----Special deduction under section 80-IB--Condition precedent--Manufacture of goods employing more than ten workers--Meaning of "worker"--Worker would include persons employed indirectly by contractor--Assessee entitled to special deduction under section 80-IB--Income-tax Act, 1961, s. 80-IB(2)(iv)-- CIT v. Jyoti Plastic Works Private Limited (Bom) . . . 491

Interest-tax --Charge of tax--Effect of sections 5 and 6--Interest on loans and advances under bills rediscounting scheme from banks to which Banking Regulation Act applies--Not chargeable to tax--Interest-tax Act, 1974, ss. 5, 6-- National Insurance Co. Ltd. v. CIT (Cal) . . . 573

Precedent --Effect of decision of Supreme court in Sargam Cinema v. CIT [2010] 328 ITR 513 (SC)-- CIT v. Lucknow Public Educational Society (All) . . . 588

Reassessment --Limitation--Effect of section 149(1)(b)--Period extended where alleged escaped income exceeds prescribed limit--Section 149 does not override provisions of section 147--Notice after four years--Failure to disclose material facts necessary for assessment must exist--Income-tax Act, 1961, ss. 147, 149-- Sayaji Hotels Ltd . v. ITO (Guj) . . . 498

----Notice--Change of opinion by succeeding Assessing Officer--Not a ground for reassessment--Income-tax Act, 1961, ss. 144, 147, 148-- H. K. Buildcon Ltd . v. ITO

(Guj) . . . 535

----Validity--Tax payable on reassessment less than tax paid under regular assessment--Reassessment proceedings--Not valid--Income-tax Act, 1961, ss. 147, 148-- PKM Advisory Services P. Ltd. v. ITO (Guj) . . . 585

----Writ--Reassessment after four years--Failure to disclose material facts necessary for assessment--Duty of assessee to disclose material facts fully and truly--Assessee claiming exemption under section 10B in respect of alleged new unit--Facts that exemption under section 10B had been granted earlier not disclosed--Whether facts had been disclosed fully and truly--Question could not be decided in writ proceedings--Income-tax Act, 1961, ss. 147, 148--Constitution of India, art. 226-- Sociedade De Formento Industrial P. Ltd. v. Asst. CIT (Bom) . . . 595

Search and seizure --Warrant of authorisation--Validity--Warrant based on material--Satisfaction note scrutinised by higher authorities--Warrant of authorisation valid--Income-tax Act, 1961, s. 132-- Dipin G. Patel v. Director General of Income-tax (Investigation) (Guj) . . . 636

Unexplained investment --Finding by Tribunal after considering material that investment had been explained--Finding of fact--Deletion of addition--Justified--Income-tax Act, 1961-- CIT v. R. Hanumaiah Associates (Karn) . . . 603

----Value of investment assessable under section 69--Income-tax Act, 1961, ss. 69, 69B-- Dhanush General Stores v. CIT (Chhattisgarh) . . . 651

Valuation of stock --Bank--Valuation of unquoted Government securities--Valuation according to RBI guidelines--Valid--Income-tax Act, 1961-- CIT v. Lord Krishna Bank Ltd . (Ker) . . . 606

Wealth-tax --Asset--Land taken on lease--Assessee in possession after expiry of lease--Litigation with regard to right of assessee--Order of court with regard to previous years that interest in land not assessable to wealth-tax as assessee does not have vested interest in land for a period exceeding six years--To be followed in present year also--Wealth-tax Act, 1957, s. 2(e)(2)(iii)-- George Oakes Ltd . v. Deputy CWT

(Mad) . . . 630

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Constitution of India ;

Art. 226 --Reassessment--Writ--Reassessment after four years--Failure to disclose material facts necessary for assessment--Duty of assessee to disclose material facts fully and truly--Assessee claiming exemption under section 10B in respect of alleged new unit--Facts that exemption under section 10B had been granted earlier not disclosed--Whether facts had been disclosed fully and truly--Question could not be decided in writ proceedings-- Sociedade De Formento Industrial P. Ltd. v. Assistant Commissioner of Income-tax (Bom) . . . 595

Gift-tax Act, 1958 :

S. 4(1)(a) --Gift-tax--Deemed gift--Firm--Property brought in as capital contribution by partners--Subsequent retirement of partners and withdrawal of property from firm--Difference in value not as deemed gift-- CIT v. Smt. Jayalakshmamma

(Karn) . . . 546

S. 16 --Gift--Transfer of immovable property by assessee to her husband stated to be out of love and affection--Marriage subsisting at time of gift--No evidence that husband bought property with his funds--Gift-tax rightly imposed-- K. Meenakumari v. ITO

(Mad) . . . 580

Income-tax Act, 1961 :

S. 12A --Charitable purposes--Charitable trust--Registration--Cancellation--Law applicable--Power to cancel registration under section 12A granted with effect from 1-6-2010--Registration under section 12A in December, 1974--Cancellation of registration under section 12AA by order dated 30-6-2009--Not valid-- Director of Income-tax (Exemptions) v. Mool Chand Khairati Ram Trust

(Delhi) . . . 622

S. 12AA --Charitable purposes--Charitable trust--Registration--Cancellation--Law applicable--Power to cancel registration under section 12A granted with effect from 1-6-2010--Registration under section 12A in December, 1974--Cancellation of registration under section 12AA by order dated 30-6-2009--Not valid-- Director of Income-tax (Exemptions) v. Mool Chand Khairati Ram Trust

(Delhi) . . . 622

S. 14A --Exemption--Dividend--No expenditure in fact incurred in earning dividend income--No disallowance permissible-- CIT v. Reliance Industries Ltd.

(Bom) . . . 632

S. 36(1)(vii) --Bad debt--Money-lending business--Finding that money-lending business had been carried on and interest had been assessed as business income--Amount written off--Deductible-- CIT v. Southern Polymers P. Ltd.

(Mad) . . . 540

S. 36(1)(viia) --Bad debt--Bank--Rural branch--Meaning of "place" in Explanation (ia) to section 36(1)(viia)--Branch in a rural area where population is less than 10,000-- CIT v. Lord Krishna Bank Ltd . (Ker) . . . 606

S. 43(6), Expln. 2 --Appeal to Appellate Tribunal--Powers of Tribunal--Commissioner (Appeals) directing Assessing Officer to decide question on merits--Consequent order of Assessing Officer reversed by Tribunal--Order of Tribunal--Valid-- CIT v. Arvind Products Ltd . (Guj) . . . 643

S. 54 --Capital gains--Exemption--Sale of residential property--Condition precedent for exemption--Profits to be used for purchase of residential property or deposited in specified account before due date for furnishing return--Date for furnishing return--Can be date under section 139(4)--Profits utilised for specified purpose before that date--Entire profits entitled to exemption-- CIT v. Ms. Jagriti Aggarwal

(P&H) . . . 610

S. 69 --Unexplained investment--Value of investment assessable under section 69-- Dhanush General Stores v. CIT (Chhattisgarh) . . . 651

S. 69B --Unexplained investment--Value of investment assessable under section 69-- Dhanush General Stores v. CIT (Chhattisgarh) . . . 651

S. 80-IA --Industrial undertaking--Special deduction under section 80-IA--Manufacture of identity cards--Finding that activity involved making of a new final product from data with which it started and amount to manufacture or production of an article or thing--Assessee entitled to deduction-- CIT v. Haryana State Electronics Development Corporation Ltd. (P&H) . . . 615

S. 80-IB(2)(iv) --Industrial undertaking--Special deduction under section 80-IB--Condition precedent--Manufacture of goods employing more than ten workers--Meaning of "worker"--Worker would include persons employed indirectly by contractor--Assessee entitled to special deduction under section 80-IB-- CIT v. Jyoti Plastic Works Private Limited (Bom) . . . 491

S. 115J --Advance tax--Interest--Company--Book profits--Assessment under section 143/147 and later recomputation under section 143(3) pursuant to revision by Commissioner--Interest under section 234B chargeable on tax calculated on book profits-- CIT v. Nahar Spinning Mills Ltd . (P&H) . . . 557

----Company--Book profits--Unabsorbed depreciation lower than loss carried forward from earlier year--Depreciation to be set off under clause (iv) of Explanation to section 115J(1A)-- Peico Electronics and Electricals Ltd . v. CIT

(Cal) . . . 506

S. 132 --Search and seizure--Warrant of authorisation--Validity--Warrant based on material--Satisfaction note scrutinised by higher authorities--Warrant of authorisation valid-- Dipin G. Patel v. Director General of Income-tax (Investigation)

(Guj) . . . 636

S. 139(4) --Capital gains--Exemption--Sale of residential property--Condition precedent for exemption--Profits to be used for purchase of residential property or deposited in specified account before due date for furnishing return--Date for furnishing return--Can be date under section 139(4)--Profits utilised for specified purpose before that date--Entire profits entitled to exemption-- CIT v. Ms. Jagriti Aggarwal

(P&H) . . . 610

S. 142A(1) --Assessment--Valuation of property--Reference to valuer--Reference to valuer only after rejection of books of account-- CIT v. Lucknow Public Educational Society (All) . . . 588

S. 143 --Advance tax--Interest--Company--Book profits--Assessment under section 143/147 and later recomputation under section 143(3) pursuant to revision by Commissioner--Interest under section 234B chargeable on tax calculated on book profits-- CIT v. Nahar Spinning Mills Ltd . (P&H) . . . 557

S. 144 --Reassessment--Notice--Change of opinion by succeeding Assessing Officer--Not a ground for reassessment-- H. K. Buildcon Ltd . v. ITO

(Guj) . . . 535

S. 147 --Advance tax--Interest--Company--Book profits--Assessment under section 143/147 and later recomputation under section 143(3) pursuant to revision by Commissioner--Interest under section 234B chargeable on tax calculated on book profits-- CIT v. Nahar Spinning Mills Ltd . (P&H) . . . 557

----Reassessment--Limitation--Effect of section 149(1)(b)--Period extended where alleged escaped income exceeds prescribed limit--Section 149 does not override provisions of section 147--Notice after four years--Failure to disclose material facts necessary for assessment must exist-- Sayaji Hotels Ltd . v. ITO (Guj) . . . 498

----Reassessment--Notice--Change of opinion by succeeding Assessing Officer--Not a ground for reassessment-- H. K. Buildcon Ltd . v. ITO (Guj) . . . 535

----Reassessment--Validity--Tax payable on reassessment less than tax paid under regular assessment--Reassessment proceedings--Not valid-- PKM Advisory Services P. Ltd. v. ITO (Guj) . . . 585

----Reassessment--Writ--Reassessment after four years--Failure to disclose material facts necessary for assessment--Duty of assessee to disclose material facts fully and truly--Assessee claiming exemption under section 10B in respect of alleged new unit--Facts that exemption under section 10B had been granted earlier not disclosed--Whether facts had been disclosed fully and truly--Question could not be decided in writ proceedings-- Sociedade De Formento Industrial P. Ltd. v. Asst. CIT

(Bom) . . . 595

S. 148 --Reassessment--Notice--Change of opinion by succeeding Assessing Officer--Not a ground for reassessment-- H. K. Buildcon Ltd . v. ITO (Guj) . . . 535

----Reassessment--Validity--Tax payable on reassessment less than tax paid under regular assessment--Reassessment proceedings--Not valid-- PKM Advisory Services P. Ltd. v. ITO (Guj) . . . 585

----Reassessment--Writ--Reassessment after four years--Failure to disclose material facts necessary for assessment--Duty of assessee to disclose material facts fully and truly--Assessee claiming exemption under section 10B in respect of alleged new unit--Facts that exemption under section 10B had been granted earlier not disclosed--Whether facts had been disclosed fully and truly--Question could not be decided in writ proceedings-- Sociedade De Formento Industrial P. Ltd. v. Asst. CIT

(Bom) . . . 595

S. 149 --Reassessment--Limitation--Effect of section 149(1)(b)--Period extended where alleged escaped income exceeds prescribed limit--Section 149 does not override provisions of section 147--Notice after four years--Failure to disclose material facts necessary for assessment must exist-- Sayaji Hotels Ltd . v. ITO (Guj) . . . 498

S. 194C --Deduction of tax at source--Assessee engaged in transportation of building material--Hiring dumpers--Payment made to contractors for hiring dumpers--Is not rent for machinery or equipment but payment for works contract of shifting of goods from one place to another--Section 194C applicable and not section 194-I-- CIT (TDS) v. Shree Mahalaxmi Transport Co. (Guj) . . . 484

----Deduction of tax at source--Assessee entering into works contracts for transport of goods belonging to assessee to clients through their vehicles--Payment not rent for machinery or equipment but payment for works contract--Tax to be deducted under section 194C-- CIT (TDS) v. Swayam Shipping Services P. Ltd . (Guj) . . . 647

----Deduction of tax at source--Payment to sub-contractors--Union of truck operators procuring contracts for its members--No sub-contracts--Tax not deductible at source-- CIT v. Truck Operators' Union (P&H) . . . 532

S. 194-I --Deduction of tax at source--Assessee engaged in transportation of building material--Hiring dumpers--Payment made to contractors for hiring dumpers--Is not rent for machinery or equipment but payment for works contract of shifting of goods from one place to another--Section 194C applicable and not section 194-I-- CIT (TDS) v. Shree Mahalaxmi Transport Co. (Guj) . . . 484

----Deduction of tax at source--Assessee entering into works contracts for transport of goods belonging to assessee to clients through their vehicles--Payment not rent for machinery or equipment but payment for works contract--Tax to be deducted under section 194C-- CIT (TDS) v. Swayam Shipping Services P. Ltd . (Guj) . . . 647

S. 234B --Advance tax--Interest--Company--Book profits--Assessment under section 143/147 and later recomputation under section 143(3) pursuant to revision by Commissioner--Interest under section 234B chargeable on tax calculated on book profits-- CIT v. Nahar Spinning Mills Ltd . (P&H) . . . 557

S. 254 --Appeal to Appellate Tribunal--Powers of Tribunal--Commissioner (Appeals) directing Assessing Officer to decide question on merits--Consequent order of Assessing Officer reversed by Tribunal--Order of Tribunal--Valid-- CIT v. Arvind Products Ltd .

(Guj) . . . 643

Interest-tax Act, 1974 :

Ss. 5, 6 --Interest-tax--Charge of tax--Effect of sections 5 and 6--Interest on loans and advances under bills rediscounting scheme from banks to which Banking Regulation Act applies--Not chargeable to tax-- National Insurance Co. Ltd. v. CIT

(Cal) . . . 573

Wealth-tax Act, 1957 :

S. 2(e)(2)(iii) --Wealth-tax--Asset--Land taken on lease--Assessee in possession after expiry of lease--Litigation with regard to right of assessee--Order of court with regard to previous years that interest in land not assessable to wealth-tax as assessee does not have vested interest in land for a period exceeding six years--To be followed in present year also-- George Oakes Ltd . v. Deputy CWT (Mad) . . . 630