ITR Volume 339 : Part 3 Issue dated 12-12-2011

INCOME TAX REPORTS (ITR)

Volume 339 : Part 3 (Issue dated 12-12-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Business expenditure --Disallowance--Payment in cash exceeding prescribed limit--No evidence to indicate that assessee made any payment in excess--Section 40A(3) not applicable merely on basis of estimate-- Income-tax Act, 1961, s. 40A(3)-- CIT v. Ratanlal Vyaparilal Jain (Guj) . . . 351

Capital or revenue expenditure --Expenditure on dismantling of cell room and construction of new cell room--Capital expenditure--Expenditure on transformer, pumping set and motors--Revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v. Modi Industries Ltd. (Delhi) . . . 467

----Expenditure on setting up new sugar units--Expansion of existing business--Is revenue expenditure--Income-tax Act, 1961, ss. 36, 37-- CIT v. Sakthi Sugars Ltd .

(Mad) . . . 400

----Renovation of house property --Assessing Officer not giving credit to investment disclosed by assessee and others-- Tribunal reducing addition considering expenditure disclosed in returns--Findings of fact--Income-tax Act, 1961-- CIT v. Ratanlal Vyaparilal Jain (Guj) . . . 351

Deduction of tax at source --Failure to deduct--Registered office of assessee at New Delhi--Assessee filing returns and assessed at New Delhi--Notice under sections 201 and 201(1A) by Assessing Officer, Mumbai for not deducting tax at source on lease premium paid to MMRDA--Assessing Officer, Mumbai has no jurisdiction--Competent authority at New Delhi has jurisdiction--Income-tax Act, 1961, s. 201(1A)-- Indian Newspaper Society v. ITO (TDS) (Bom) . . . 365

Exemption --Educational institution--Application for exemption--Delay in application--Delay cannot be condoned--Income-tax Act, 1961, s. 10(23C), fourteenth proviso-- R. R. M. Educational Society v. Chief CIT (AP) . . . 323

----Educational institution--Application for exemption--Law applicable--Effect of fourteenth proviso to section 10(23C) inserted w.e.f. 1-6-2006--Limitation laid down for application--Delay in application cannot be condoned--Income-tax Act, 1961, s. 10(23C)(vi)-- Aurora Educational Society v. Chief CIT (AP) . . . 333

----Educational institution--Condition precedent--Institution should exist solely for purposes of education--Institution having other objects--Amendment of objects in August 2009--No certificate from Registrar of Societies regarding such alteration--Institution not entitled to exemption for assessment years 2004-05 to 2008-09--Income-tax Act, 1961, s. 10(23C)(vi)-- Aurora Educational Society v. Chief CIT

(AP) . . . 333

----Educational institution--Condition precedent for exemption under section 10(23C)(vi)--Institution must exist solely for purposes of education--Assessee having eradication of unemployment as one of its objects--Not entitled to exemption--Income-tax Act, 1961, s. 10(23C)(vi)-- R. R. M. Educational Society v. Chief CIT

(AP) . . . 323

----Export--Condition precedent for claiming exemption under section 10B--Law applicable--Effect of amendment of section 10B w.e.f. 1-4-1994--No condition regarding quantum of export prior to 1-4-1994--Income-tax Act, 1961, s. 10B-- CIT v. BAEHAL Software Ltd. (Karn) . . . 368

Export --Special deduction under section 80HHC--"Processing" of goods--Meaning of "processing"--Cleaning and grading of cardamom do not amount to processing--Assessee not entitled to special deduction under section 80HHC--Income-tax Act, 1961, s. 80HHC-- CIT v. Midland Rubber and Produce Co. Ltd . (Ker) . . . 436

Industrial park --Special deduction--Industrial park scheme--Three categories of industrial parks : those engaged in developing ; those engaged in developing and operating ; and those engaged in maintaining and operating--Assessee engaged in development of industrial park--Assessee providing infrastructural facilities and dividing plot into small units and selling all of them within specified period--Approval obtained from Government--Units not starting production--Not a ground for withdrawal of approval--Notice for such withdrawal can be quashed--Income-tax Act, 1961, s. 80-IA--Industrial Park Scheme, 2002, clause 9--Constitution of India, art. 226-- Ganesh Housing Corporation Ltd . v. Padam Singh, Under Secretary (Guj) . . . 441

Interest-tax --Credit institution--Loans and advances--Meaning of--Trade advance for purchase of goods--Advance adjusted against purchase price and never returned to assessee--Interest on such advance for delay in delivery of goods--Not interest on loan or advance liable to interest-tax--Interest-tax Act, 1974, s. 2(5B)-- CIT v. Integrated Finance Co. Ltd . (Mad) . . . 391

Method of accounting --Rule of consistency--Mercantile system of accounting--Prior period expenses debited in following year--Method consistently followed by assessee and accepted by Department--No evidence of distortion of profits--Method could not be rejected--Income-tax Act, 1961, s. 145-- CIT v. Jagatjit Industries Ltd .

(Delhi) . . . 382

Penalty --Concealment of income--Furnishing of inaccurate particulars--Advance on account of development agreement--Assessee disclosing receipt but not offering to tax in return--Assessee also disclosing amounts received from time to time in relevant years--Assessing Officer not sure as to whether assessee liable to pay capital gains tax and if so in which assessment year and under which head of income--Penalty cannot be imposed--Income-tax Act, 1961, s. 271(1)(c)-- Metal Rolling Works Ltd . v. CIT

(Bom) . . . 373

Salary --Profits in lieu of salary--Meaning of expression before insertion of clause (iii) of section 17(3) w.e.f. 1-4-2002--Ex gratia payment by employer on termination of service in accounting year relevant to assessment year 2001-02--Not assessable as profits in lieu of salary--Income-tax Act, 1961, s. 17(3)(i), (iii)-- CIT v. Deepak Verma

(Delhi) . . . 475

Search and seizure --Block assessment--Undisclosed income--Assessment on estimation--Gross profit--Commissioner (Appeals) working out gross profit at 6 per cent. whereas Tribunal at 5 per cent.--Finding of fact--Income-tax Act, 1961-- CIT v. Ratanlal Vyaparilal Jain (Guj) . . . 351

----Block assessment--Undisclosed income--Cheque discounting and bill discounting--Tribunal finding no separate addition on bill discounting required as it already included in cheque discounting--Findings of fact--Income-tax Act, 1961-- CIT v. Ratanlal Vyaparilal Jain (Guj) . . . 351

----Block assessment--Undisclosed income--Debit interest--Addition on basis of seized paper--Assessee not claiming interest as deduction--Issue not to be adjudicated--Income-tax Act, 1961-- CIT v. Ratanlal Vyaparilal Jain

(Guj) . . . 351

----Block assessment--Undisclosed income--Jewellery--Tribunal finding source of jewellery held by family in consonance with general practice in Hindu families--Justified--CBDT Circular No. 1916 dated 11-5-1994-- CIT v. Ratanlal Vyaparilal Jain

(Guj) . . . 351

----Prohibitory order under section 132(3)--Condition precedent--Prohibitory order on bank accounts--No evidence that deposits in banks constituted undisclosed income of assessee--Prohibitory order--Not valid--Income-tax Act, 1961, s. 132-- Maa Vaishnavi Sponge Ltd. v. Director General of Income-tax (Investigation)

(Orissa) . . . 413

Voluntary disclosure of income --Conditions precedent for benefit under Scheme--Declaration of undisclosed income on or before 31-12-1997--Payment of tax on such income along with declaration or within three months--Declaration to be made before Commissioner--Declaration before Assessing Officer made on 30-12-1997--Declaration forwarded to Commissioner on 31-12-1997--Payment of tax on 31-3-1998--Assessee not entitled to benefit of Scheme--Finance Act, 1997, ss. 66, 67--Voluntary Disclosure of Income Scheme, 1997-- S. Sudarsana Babu v. ITO (Ker) . . . 424

----Conditions precedent for benefit under Scheme--Declaration of undisclosed income on or before 31-12-1997--Payment of tax on such income along with declaration or within three months--Meaning of "month"--Declaration must be made before Commissioner--Declaration before Assessing Officer on 30-12-1997--Declaration forwarded to Commissioner on 31-12-1997 and receipt signed by him--Payment of tax on 31-3-1998--Date of receipt of declaration by Commissioner relevant--Tax paid within time--Assessee entitled to benefit of Scheme--Finance Act, 1997, ss. 62(2), 66, 67, 68(2)--Voluntary Disclosure of Income Scheme, 1997-- S. Sudarsana Babu v. ITO

(Ker) . . . 428

Wealth-tax --Exemption--Charitable trust--Kalyana mandapam belonging to trust let out and income applied for charitable purposes--Income held to be from property and granted exemption under Income-tax Act--Kalyana mandapam entitled to exemption under Wealth-tax Act--Wealth-tax Act, 1957, s. 5(1)(i)-- Director of Income-tax (Exemptions) v. Samyuktha Gowda Saraswatha Sabha (Mad) . . . 456

Words and phrases --Meaning of "processing"-- CIT v. Midland Rubber and Produce Co. Ltd. (Ker) . . . 436

Writ --Jurisdiction of High Court discretionary--Interference only to cure substantial injustice--Constitution of India, art. 226-- Aurora Educational Society v. Chief CIT

(AP) . . . 333

----Powers of High Court--Notice can be quashed in exceptional cases--Constitution of India, art. 226-- Ganesh Housing Corporation Ltd. v. Padam Singh, Under Secretary (Guj) . . . 441

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Constitution of India ;

Art. 226 --Industrial park--Special deduction--Industrial park scheme--Three categories of industrial parks : those engaged in developing ; those engaged in developing and operating ; and those engaged in maintaining and operating--Assessee engaged in development of industrial park--Assessee providing infrastructural facilities and dividing plot into small units and selling all of them within specified period--Approval obtained from Government--Units not starting production--Not a ground for withdrawal of approval--Notice for such withdrawal can be quashed-- Ganesh Housing Corporation Ltd . v. Padam Singh, Under Secretary (Guj) . . . 441

----Writ--Jurisdiction of High Court discretionary--Interference only to cure substantial injustice-- Aurora Educational Society v. Chief CIT (AP) . . . 333

----Writ--Powers of High Court--Notice can be quashed in exceptional cases-- Ganesh Housing Corporation Ltd. v. Padam Singh, Under Secretary

(Guj) . . . 441

Finance Act, 1997 :

S. 62(2) --Voluntary disclosure of income--Conditions precedent for benefit under Scheme--Declaration of undisclosed income on or before 31-12-1997--Payment of tax on such income along with declaration or within three months--Meaning of "month"--Declaration must be made before Commissioner--Declaration before Assessing Officer on 30-12-1997--Declaration forwarded to Commissioner on 31-12-1997 and receipt signed by him--Payment of tax on 31-3-1998--Date of receipt of declaration by Commissioner relevant--Tax paid within time--Assessee entitled to benefit of Scheme--Voluntary Disclosure of Income Scheme, 1997-- S. Sudarsana Babu v. ITO

(Ker) . . . 428

S. 66 --Voluntary disclosure of income--Conditions precedent for benefit under Scheme--Declaration of undisclosed income on or before 31-12-1997--Payment of tax on such income along with declaration or within three months--Declaration to be made before Commissioner--Declaration before Assessing Officer made on 30-12-1997--Declaration forwarded to Commissioner on 31-12-1997--Payment of tax on 31-3-1998--Assessee not entitled to benefit of Scheme--Voluntary Disclosure of Income Scheme, 1997-- S. Sudarsana Babu v. ITO (Ker) . . . 424

----Voluntary disclosure of income--Conditions precedent for benefit under Scheme--Declaration of undisclosed income on or before 31-12-1997--Payment of tax on such income along with declaration or within three months--Meaning of "month"--Declaration must be made before Commissioner--Declaration before Assessing Officer on 30-12-1997--Declaration forwarded to Commissioner on 31-12-1997 and receipt signed by him--Payment of tax on 31-3-1998--Date of receipt of declaration by Commissioner relevant--Tax paid within time--Assessee entitled to benefit of Scheme--Voluntary Disclosure of Income Scheme, 1997-- S. Sudarsana Babu v. ITO

(Ker) . . . 428

S. 67 --Voluntary disclosure of income--Conditions precedent for benefit under Scheme--Declaration of undisclosed income on or before 31-12-1997--Payment of tax on such income along with declaration or within three months--Declaration to be made before Commissioner--Declaration before Assessing Officer made on 30-12-1997--Declaration forwarded to Commissioner on 31-12-1997--Payment of tax on 31-3-1998--Assessee not entitled to benefit of Scheme--Voluntary Disclosure of Income Scheme, 1997-- S. Sudarsana Babu v. ITO (Ker) . . . 424

----Voluntary disclosure of income--Conditions precedent for benefit under Scheme--Declaration of undisclosed income on or before 31-12-1997--Payment of tax on such income along with declaration or within three months--Meaning of "month"--Declaration must be made before Commissioner--Declaration before Assessing Officer on 30-12-1997--Declaration forwarded to Commissioner on 31-12-1997 and receipt signed by him--Payment of tax on 31-3-1998--Date of receipt of declaration by Commissioner relevant--Tax paid within time--Assessee entitled to benefit of Scheme--Voluntary Disclosure of Income Scheme, 1997-- S. Sudarsana Babu v. ITO

(Ker) . . . 428

S. 68(2) --Voluntary disclosure of income--Conditions precedent for benefit under Scheme--Declaration of undisclosed income on or before 31-12-1997--Payment of tax on such income along with declaration or within three months--Meaning of "month"--Declaration must be made before Commissioner--Declaration before Assessing Officer on 30-12-1997--Declaration forwarded to Commissioner on 31-12-1997 and receipt signed by him--Payment of tax on 31-3-1998--Date of receipt of declaration by Commissioner relevant--Tax paid within time--Assessee entitled to benefit of Scheme--Voluntary Disclosure of Income Scheme, 1997-- S. Sudarsana Babu v. ITO

(Ker) . . . 428

Income-tax Act, 1961 :

S. 10B --Exemption--Export--Condition precedent for claiming exemption under section 10B--Law applicable--Effect of amendment of section 10B w.e.f. 1-4-1994--No condition regarding quantum of export prior to 1-4-1994-- CIT v. BAEHAL Software Ltd. (Karn) . . . 368

S. 10(23C), fourteenth proviso --Exemption--Educational institution--Application for exemption--Delay in application--Delay cannot be condoned-- R. R. M. Educational Society v. Chief CIT (AP) . . . 323

S. 10(23C)(vi) --Exemption--Educational institution--Application for exemption--Law applicable--Effect of fourteenth proviso to section 10(23C) inserted w.e.f. 1-6-2006 --Limitation laid down for application--Delay in application cannot be condoned-- Aurora Educational Society v. Chief CIT (AP) . . . 333

----Exemption--Educational institution--Condition precedent for exemption under section 10(23C)(vi)--Institution must exist solely for purposes of education--Assessee having eradication of unemployment as one of its objects--Not entitled to exemption-- R. R. M. Educational Society v. Chief CIT (AP) . . . 323

----Exemption--Educational institution--Condition precedent--Institution should exist solely for purposes of education--Institution having other objects--Amendment of objects in August 2009--No certificate from Registrar of Societies regarding such alteration--Institution not entitled to exemption for assessment years 2004-05 to 2008-09-- Aurora Educational Society v. Chief CIT (AP) . . . 333

S. 17(3)(i), (iii) --Salary--Profits in lieu of salary--Meaning of expression before insertion of clause (iii) of section 17(3) w.e.f. 1-4-2002--Ex gratia payment by employer on termination of service in accounting year relevant to assessment year 2001-02--Not assessable as profits in lieu of salary-- CIT v. Deepak Verma (Delhi) . . . 475

S. 36 --Capital or revenue expenditure--Expenditure on setting up new sugar units--Expansion of existing business--Is revenue expenditure-- CIT v. Sakthi Sugars Ltd .

(Mad) . . . 400

S. 37 --Capital or revenue expenditure--Expenditure on dismantling of cell room and construction of new cell room--Capital expenditure--Expenditure on transformer, pumping set and motors--Revenue expenditure-- CIT v. Modi Industries Ltd.

(Delhi) . . . 467

----Capital or revenue expenditure--Expenditure on setting up new sugar units--Expansion of existing business--Is revenue expenditure-- CIT v. Sakthi Sugars Ltd .

(Mad) . . . 400

S. 40A(3) --Business expenditure--Disallowance--Payment in cash exceeding prescribed limit--No evidence to indicate that assessee made any payment in excess--Section 40A(3) not applicable merely on basis of estimate-- CIT v. Ratanlal Vyaparilal Jain (Guj) . . . 351

S. 80HHC --Export--Special deduction under section 80HHC--"Processing" of goods--Meaning of "processing"--Cleaning and grading of cardamom do not amount to processing--Assessee not entitled to special deduction under section 80HHC-- CIT v. Midland Rubber and Produce Co. Ltd . (Ker) . . . 436

S. 80-IA --Industrial park--Special deduction--Industrial park scheme--Three categories of industrial parks : those engaged in developing ; those engaged in developing and operating ; and those engaged in maintaining and operating--Assessee engaged in development of industrial park--Assessee providing infrastructural facilities and dividing plot into small units and selling all of them within specified period--Approval obtained from Government--Units not starting production--Not a ground for withdrawal of approval--Notice for such withdrawal can be quashed-- Ganesh Housing Corporation Ltd . v. Padam Singh, Under Secretary (Guj) . . . 441

S. 132 --Search and seizure--Prohibitory order under section 132(3)--Condition precedent--Prohibitory order on bank accounts--No evidence that deposits in banks constituted undisclosed income of assessee--Prohibitory order--Not valid-- Maa Vaishnavi Sponge Ltd. v. Director General of Income-tax (Investigation)

(Orissa) . . . 413

S. 145 --Method of accounting--Rule of consistency--Mercantile system of accounting--Prior period expenses debited in following year--Method consistently followed by assessee and accepted by Department--No evidence of distortion of profits--Method could not be rejected-- CIT v. Jagatjit Industries Ltd . (Delhi) . . . 382

S. 201(1A) --Deduction of tax at source--Failure to deduct--Registered office of assessee at New Delhi--Assessee filing returns and assessed at New Delhi--Notice under sections 201 and 201(1A) by Assessing Officer, Mumbai for not deducting tax at source on lease premium paid to MMRDA--Assessing Officer, Mumbai has no jurisdiction--Competent authority at New Delhi has jurisdiction-- Indian Newspaper Society v. ITO (TDS) (Bom) . . . 365

S. 271(1)(c) --Penalty--Concealment of income--Furnishing of inaccurate particulars--Advance on account of development agreement--Assessee disclosing receipt but not offering to tax in return--Assessee also disclosing amounts received from time to time in relevant years--Assessing Officer not sure as to whether assessee liable to pay capital gains tax and if so in which assessment year and under which head of income--Penalty cannot be imposed-- Metal Rolling Works Ltd . v. CIT (Bom) . . . 373

Interest-tax Act, 1974 :

S. 2(5B) --Interest-tax--Credit institution--Loans and advances--Meaning of--Trade advance for purchase of goods--Advance adjusted against purchase price and never returned to assessee--Interest on such advance for delay in delivery of goods--Not interest on loan or advance liable to interest-tax-- CIT v. Integrated Finance Co. Ltd .

(Mad) . . . 391

Wealth-tax Act, 1957 :

S. 5(1)(i) --Wealth-tax--Exemption--Charitable trust--Kalyana mandapam belonging to trust let out and income applied for charitable purposes--Income held to be from property and granted exemption under Income-tax Act--Kalyana mandapam entitled to exemption under Wealth-tax Act-- Director of Income-tax (Exemptions) v. Samyuktha Gowda Saraswatha Sabha (Mad) . . . 456

Industrial Park Scheme, 2002 :

Clause 9 --Industrial park--Special deduction--Industrial park scheme--Three categories of industrial parks : those engaged in developing ; those engaged in developing and operating ; and those engaged in maintaining and operating--Assessee engaged in development of industrial park--Assessee providing infrastructural facilities and dividing plot into small units and selling all of them within specified period--Approval obtained from Government--Units not starting production--Not a ground for withdrawal of approval--Notice for such withdrawal can be quashed-- Ganesh Housing Corporation Ltd . v. Padam Singh, Under Secretary (Guj) . . . 441