INCOME TAX REPORTS (ITR)
Volume 337 : Part 4 (Issue dated 3-10-2011)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
HIGH COURTS
Advance tax :-- Failure to pay advance tax--Deferment of advance tax--Interest under sections 234B and 234C--Condition precedent--Liability to pay advance tax on last day of accounting year--Liability arising due to subsequent amendment of provision with retrospective effect--Interest could not be levied--Income-tax Act, 1961, ss. 234B, 234C-- Emami Ltd. v. CIT (Cal) . . . 470
Appeal to Appellate Tribunal: - Merger of order of Assessing Officer in appellate order--Issue not dealt with by Tribunal--No merger of order--Rectification of mistake with regard to such issue--Valid--Income-tax Act, 1961, ss. 154, 254-- Mitsubishi Corporation v. CIT (Delhi) . . . 498
Appeal to High Court: - Monetary limits for appeals by Department--Instructions of CBDT specifying limit--Exceptions--Substantial question of law likely to arise repeatedly--Assessability of wealth-tax on semi-constructed buildings on urban land--Exception clause (3) of Instruction No. 2 of 2005 applicable--Appeal maintainable--Wealth-tax Act, 1957, s. 27A-- CWT v. John L. Chackola (Ker) . . . 385
Business: - Income from other sources--Income from other sources or business income--Commission--Assessee carrying on business of distribution of computers--Transfer of business--Transferee paying commission to assessee--Commission allowed as business expenditure in hands of transferee--Commission assessable as business income of assessee--Income-tax Act, 1961 s. 28-- CIT v. FX Info Technologies P. Ltd . (Delhi) . . . 526
Business expenditure: - General principles--Resolution by company on account of pension--Liability worked out on actuarial basis--Not deductible--Income-tax Act, 1961, ss. 36, 37-- Brooke Bond India Ltd . v. Joint CIT (Cal) . . . 482
Capital gains: - Slump sale--Meaning of--Sale of undertaking as a going concern for a lump sum--Sale was a slump sale--Income-tax Act, 1961, s. 50B-- CIT v. Accelerated Freeze Drying Co. Ltd . (Ker) . . . 440
Deemed dividend: - Advance on salary and commission received by managing director--Advance on salary not assessable as deemed dividend--Advance on commission assessable as deemed dividend--Income-tax Act, 1961, s. 2(22)(e)-- Shyama Charan Gupta v. CIT (All) . . . 511
Income from other sources: - Business income--Assessee establishing to set up power plant--Delay in remitting security deposit by investing company resulting rejection of bid of assessee--Disputes before arbitration tribunal and High Court--Deposit returned kept as fixed deposits--Interest on fixed deposits--Assessable as income from other sources--Income-tax Act, 1961, ss. 28, 56-- CIT v. Madhya Bharat Energy Corporation Ltd . (Delhi) . . . 389
Industrial undertaking: - Special deduction under sections 80HH and 80-I--Condition precedent--Income should be derived from industrial undertaking--Interest on fixed deposits--Not entitled to special deduction--Income-tax Act, 1961, ss. 80HH, 80-I-- CIT v. Navbharat Explosives Co. P. Ltd. (Chhattisgarh) . . . 515
Interpretation of taxing statutes: - Reasonable interpretation-- Rai Bahadur G. V. Swaika Estates P. Ltd . v. Chief CIT (Cal) . . . 425
Loss: - Speculation--Carry forward and set off--Loss on purchase and sale of shares--Effect of Explanation to section 73--Finding that principal business of assessee was granting of loans--Loss from share dealing could be carried forward and set off against business income--Income-tax Act, 1961, ss. 72, 73-- PCBL Industrial Ltd . v. CIT (Cal) . . . 536
Offences and prosecution: - Fabricating false evidence--Assessee a tax practitioner, submitted return and certificate of tax deduction at source on behalf of client--Refund granted on basis thereof--Certificate found bogus and consequential refund obtained by fraud--Prosecution of assessee--No evidence to show assessee fabricated bogus certificate--No investigation to show client was a fictitious person--Acquittal justified--Code of Criminal Procedure, 1973, ss. 193, 196, 420, 468, 471--Income-tax Act, 1961, s. 277-- ITO v. R. Soundararajan (Mad) . . . 531
Purchase of immovable property by Central Government: - Tendering of apparent consideration--Scope of section 269UG--Amount can be tendered through Appropriate Authority--Income-tax Act, 1961, ss. 269UF, 269UG-- Rai Bahadur G. V. Swaika Estates P. Ltd . v. Chief CIT (Cal) . . . 425
Reassessment: - Notice--Validity--Effect of Explanation 2(b) to section 147--Return submitted but no assessment made--Discovery of understatement of income--Notice under section 148--Valid--Income-tax Act, 1961, ss. 147, 148-- CIT v. Madhya Bharat Energy Corporation Ltd . (Delhi) . . . 389
Notice after four years--No Failure to disclose material facts necessary for assessment--Notice based on subsequent decision of High Court--Not valid--Income-tax Act, 1961 s. 148-- Gujarat State Co-op. Agri. and Rural Develop. Bank Ltd. v. Deputy CIT (Guj) . . . 447
Rectification of mistake: - Mistake apparent from record--Bad debts--Provision that after 1-4-1989 assessee need not establish that debt had become irrecoverable--Failure to apply correct law--Deduction under section 36(1)(vii) a debatable issue--Rectification not permissible--Income-tax Act, 1961, ss. 36(1)(vii), 154-- CIT v. Jindal Stainless Ltd . (Delhi) . . . 495
Mistake apparent from record: - Failure to treat tax paid by employer on behalf of employees as salary for purposes of rule 3--Mistake which could be corrected --Income-tax Act, 1961, ss. 15, 16, 17, 154--Income-tax Rules, 1962, r. 3-- Mitsubishi Corporation v. CIT (Delhi) . . . 498
Reference: - Appeal to High Court--Competency of appeal or reference--Monetary limits laid down in circulars--Competency to be decided on basis of circular in force on date of appeal or reference--Income-tax Act, 1961, ss. 256, 260A-- CIT v. Navbharat Explosives Co. P. Ltd. (Chhattisgarh) . . . 515
Salary: - Perquisites--Tax paid by employer on behalf of employee--Part of salary--Income-tax Act, 1961, ss. 15, 16, 17--Income-tax Rules, 1962, r. 3-- Mitsubishi Corporation v. CIT (Delhi) . . . 498
Search and seizure: - Assessment in search cases--Notice under section 153A and questionnaires calling for details sent--Whether further notice under section 143(2) should be sent--Not necessary--Income-tax Act, 1961, ss. 143(2), 153A-- Ashok Chaddha v. ITO (Delhi) . . . 399
Block assessment: - Undisclosed income--Additions made not based on material discovered during search--Not valid--Income-tax Act, 1961, s. 158BB-- CIT v. Templeton Asset Management (India) P. Ltd. (Bom) . . . 541
Block assessment: - Undisclosed income--Debentures shown in books of account--Interest on debentures whether includible on accrual--Question to be decided in regular assessment and not in block assessment--Income-tax Act, 1961, s. 158BB-- CIT v. Templeton Asset Management (India) P. Ltd . (Bom) . . . 541
Speculative transaction: - Law applicable--Effect of amendment of proviso to section 43(5) w.e.f. 1-4-2006--Amendment not retrospective--Derivative transaction carried on in accounting year relevant to assessment year 2003-04--Speculative transaction--Loss incurred not a business loss--Income-tax Act, 1961, s. 43(5)-- CIT v. Bharat R. Ruia (HUF) (Bom) . . . 452
AUTHORITY FOR ADVANCE RULINGS
Non-resident: - India liaison office engaged in purchase of goods and also carrying out vendor identification and recommendation, review of costing data, quality control and uploading of material prices into internal product data management system--Activities not confined to purchase of goods for export alone--Liaison office is permanent establishment and income attributable to it assessable in India--Income-tax Act, 1961, ss. 5(2), 9(1)(i), Explns. 1(b), 2--Double Taxation Avoidance Agreement between India and U. S. A., arts. 5, 7(1)-- Columbia Sportswear Company, In re . . . 407
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Code of Criminal Procedure, 1973 :
Ss. 193, 196, 420, 468, 471: - Offences and prosecution--Fabricating false evidence--Assessee a tax practitioner, submitted return and certificate of tax deduction at source on behalf of client--Refund granted on basis thereof--Certificate found bogus and consequential refund obtained by fraud--Prosecution of assessee--No evidence to show assessee fabricated bogus certificate--No investigation to show client was a fictitious person--Acquittal justified-- ITO v. R. Soundararajan (Mad) . . . 531
Double Taxation Avoidance Agreement between India and U. S. A. :
Arts. 5, 7(1): - Non-resident--India liaison office engaged in purchase of goods and also carrying out vendor identification and recommendation, review of costing data, quality control and uploading of material prices into internal product data management system--Activities not confined to purchase of goods for export alone--Liaison office is permanent establishment and income attributable to it assessable in India-- Columbia Sportswear Company, In re (AAR) . . . 407
Income-tax Act, 1961 :
S. 2(22)(e): - Deemed dividend--Advance on salary and commission received by managing director--Advance on salary not assessable as deemed dividend--Advance on commission assessable as deemed dividend-- Shyama Charan Gupta v. CIT (All) . . . 511
S. 5(2): - Non-resident--India liaison office engaged in purchase of goods and also carrying out vendor identification and recommendation, review of costing data, quality control and uploading of material prices into internal product data management system--Activities not confined to purchase of goods for export alone--Liaison office is permanent establishment and income attributable to it assessable in India-- Columbia Sportswear Company, In re (AAR) . . . 407
S. 9(1)(i), Explns. 1(b), 2: - Non-resident--India liaison office engaged in purchase of goods and also carrying out vendor identification and recommendation, review of costing data, quality control and uploading of material prices into internal product data management system--Activities not confined to purchase of goods for export alone--Liaison office is permanent establishment and income attributable to it assessable in India-- Columbia Sportswear Company, In re (AAR) . . . 407
S. 15: - Rectification of mistake--Mistake apparent from record--Failure to treat tax paid by employer on behalf of employees as salary for purposes of rule 3--Mistake which could be corrected -- Mitsubishi Corporation v. CIT (Delhi) . . . 498
Salary :-- Perquisites--Tax paid by employer on behalf of employee--Part of salary-- Mitsubishi Corporation v. CIT (Delhi) . . . 498
S. 16: - Rectification of mistake--Mistake apparent from record--Failure to treat tax paid by employer on behalf of employees as salary for purposes of rule 3--Mistake which could be corrected -- Mitsubishi Corporation v. CIT (Delhi) . . . 498
Salary--Perquisites--Tax paid by employer on behalf of employee--Part of salary-- Mitsubishi Corporation v. CIT (Delhi) . . . 498
S. 17: - Rectification of mistake--Mistake apparent from record--Failure to treat tax paid by employer on behalf of employees as salary for purposes of rule 3--Mistake which could be corrected -- Mitsubishi Corporation v. CIT (Delhi) . . . 498
Salary: - Perquisites--Tax paid by employer on behalf of employee--Part of salary-- Mitsubishi Corporation v. CIT (Delhi) . . . 498
S. 28: - Business--Income from other sources--Income from other sources or business income--Commission--Assessee carrying on business of distribution of computers--Transfer of business--Transferee paying commission to assessee--Commission allowed as business expenditure in hands of transferee--Commission assessable as business income of assessee-- CIT v. FX Info Technologies P. Ltd . (Delhi) . . . 526
Income from other sources: - Business income--Assessee establishing to set up power plant--Delay in remitting security deposit by investing company resulting rejection of bid of assessee--Disputes before arbitration tribunal and High Court--Deposit returned kept as fixed deposits--Interest on fixed deposits--Assessable as income from other sources-- CIT v. Madhya Bharat Energy Corporation Ltd . (Delhi) . . . 389
S. 36: - Business expenditure--General principles--Resolution by company on account of pension--Liability worked out on actuarial basis--Not deductible-- Brooke Bond India Ltd . v. Joint CIT (Cal) . . . 482
S. 36(1)(vii): - Rectification of mistake--Mistake apparent from record--Bad debts--Provision that after 1-4-1989 assessee need not establish that debt had become irrecoverable--Failure to apply correct law--Deduction under section 36(1)(vii) a debatable issue--Rectification not permissible-- CIT v. Jindal Stainless Ltd . (Delhi) . . . 495
S. 37: - Business expenditure--General principles--Resolution by company on account of pension--Liability worked out on actuarial basis--Not deductible-- Brooke Bond India Ltd . v. Joint CIT (Cal) . . . 482
S. 43(5): - Speculative transaction--Law applicable--Effect of amendment of proviso to section 43(5) w.e.f. 1-4-2006--Amendment not retrospective--Derivative transaction carried on in accounting year relevant to assessment year 2003-04--Speculative transaction--Loss incurred not a business loss-- CIT v. Bharat R. Ruia (HUF) (Bom) . . . 452
S. 50B: - Capital gains--Slump sale--Meaning of--Sale of undertaking as a going concern for a lump sum--Sale was a slump sale-- CIT v. Accelerated Freeze Drying Co. Ltd . (Ker) . . . 440
S. 56: - Income from other sources--Business income--Assessee establishing to set up power plant--Delay in remitting security deposit by investing company resulting rejection of bid of assessee--Disputes before arbitration tribunal and High Court--Deposit returned kept as fixed deposits--Interest on fixed deposits--Assessable as income from other sources-- CIT v. Madhya Bharat Energy Corporation Ltd . (Delhi) . . . 389
S. 72: - Loss--Speculation--Carry forward and set off--Loss on purchase and sale of shares--Effect of Explanation to section 73--Finding that principal business of assessee was granting of loans--Loss from share dealing could be carried forward and set off against business income-- PCBL Industrial Ltd . v. CIT (Cal) . . . 536
S. 73: - Loss--Speculation--Carry forward and set off--Loss on purchase and sale of shares--Effect of Explanation to section 73--Finding that principal business of assessee was granting of loans--Loss from share dealing could be carried forward and set off against business income-- PCBL Industrial Ltd . v. CIT (Cal) . . . 536
S. 80-I: - Industrial undertaking--Special deduction under sections 80HH and 80-I--Condition precedent--Income should be derived from industrial undertaking--Interest on fixed deposits--Not entitled to special deduction-- CIT v. Navbharat Explosives Co. P. Ltd. (Chhattisgarh) . . . 515
S. 80HH: - Industrial undertaking--Special deduction under sections 80HH and 80-I --Condition precedent--Income should be derived from industrial undertaking--Interest on fixed deposits--Not entitled to special deduction-- CIT v. Navbharat Explosives Co. P. Ltd. (Chhattisgarh) . . . 515
S. 143(2): - Search and seizure--Assessment in search cases--Notice under section 153A and questionnaires calling for details sent--Whether further notice under section 143(2) should be sent--Not necessary-- Ashok Chaddha v. ITO (Delhi) . . . 399
S. 147: - Reassessment--Notice--Validity--Effect of Explanation 2(b) to section 147--Return submitted but no assessment made--Discovery of understatement of income--Notice under section 148--Valid-- CIT v. Madhya Bharat Energy Corporation Ltd . (Delhi) . . . 389
S. 148: - Reassessment--Notice after four years--No Failure to disclose material facts necessary for assessment--Notice based on subsequent decision of High Court--Not valid-- Gujarat State Co-op. Agri. and Rural Develop. Bank Ltd. v. Deputy CIT (Guj) . . . 447
Reassessment: - Notice--Validity--Effect of Explanation 2(b) to section 147--Return submitted but no assessment made--Discovery of understatement of income--Notice under section 148--Valid-- CIT v. Madhya Bharat Energy Corporation Ltd . (Delhi) . . . 389
S. 153A: - Search and seizure--Assessment in search cases--Notice under section 153A and questionnaires calling for details sent--Whether further notice under section 143(2) should be sent--Not necessary-- Ashok Chaddha v. ITO (Delhi) . . . 399
S. 154: - Appeal to Appellate Tribunal--Merger of order of Assessing Officer in appellate order--Issue not dealt with by Tribunal--No merger of order--Rectification of mistake with regard to such issue--Valid-- Mitsubishi Corporation v. CIT (Delhi) . . . 498
Rectification of mistake: - Mistake apparent from record--Bad debts--Provision that after 1-4-1989 assessee need not establish that debt had become irrecoverable--Failure to apply correct law--Deduction under section 36(1)(vii) a debatable issue--Rectification not permissible-- CIT v. Jindal Stainless Ltd . (Delhi) . . . 495
Rectification of mistake: - Mistake apparent from record--Failure to treat tax paid by employer on behalf of employees as salary for purposes of rule 3--Mistake which could be corrected -- Mitsubishi Corporation v. CIT (Delhi) . . . 498
S. 158BB: - Search and seizure--Block assessment--Undisclosed income--Additions made not based on material discovered during search--Not valid-- CIT v. Templeton Asset Management (India) P. Ltd. (Bom) . . . 541
Search and seizure--Block assessment--Undisclosed income--Debentures shown in books of account--Interest on debentures whether includible on accrual--Question to be decided in regular assessment and not in block assessment-- CIT v. Templeton Asset Management (India) P. Ltd . (Bom) . . . 541
S. 234B: - Advance tax--Failure to pay advance tax--Deferment of advance tax--Interest under sections 234B and 234C--Condition precedent--Liability to pay advance tax on last day of accounting year--Liability arising due to subsequent amendment of provision with retrospective effect--Interest could not be levied-- Emami Ltd. v. CIT (Cal) . . . 470
S. 234C: - Advance tax--Failure to pay advance tax--Deferment of advance tax--Interest under sections 234B and 234C--Condition precedent--Liability to pay advance tax on last day of accounting year--Liability arising due to subsequent amendment of provision with retrospective effect--Interest could not be levied-- Emami Ltd. v. CIT (Cal) . . . 470
S. 254: - Appeal to Appellate Tribunal--Merger of order of Assessing Officer in appellate order--Issue not dealt with by Tribunal--No merger of order--Rectification of mistake with regard to such issue--Valid-- Mitsubishi Corporation v. CIT (Delhi) . . . 498
S. 256: - Reference--Appeal to High Court--Competency of appeal or reference--Monetary limits laid down in circulars--Competency to be decided on basis of circular in force on date of appeal or reference-- CIT v. Navbharat Explosives Co. P. Ltd. (Chhattisgarh) . . . 515
S. 260A: - Reference--Appeal to High Court--Competency of appeal or reference--Monetary limits laid down in circulars--Competency to be decided on basis of circular in force on date of appeal or reference-- CIT v. Navbharat Explosives Co. P. Ltd. (Chhattisgarh) . . . 515
S. 269UF: - Purchase of immovable property by Central Government--Tendering of apparent consideration--Scope of section 269UG--Amount can be tendered through Appropriate Authority-- Rai Bahadur G. V. Swaika Estates P. Ltd . v. Chief CIT (Cal) . . . 425
S. 269UG: - Purchase of immovable property by Central Government--Tendering of apparent consideration--Scope of section 269UG--Amount can be tendered through Appropriate Authority-- Rai Bahadur G. V. Swaika Estates P. Ltd . v. Chief CIT (Cal) . . . 425
S. 277: - Offences and prosecution--Fabricating false evidence--Assessee a tax practitioner, submitted return and certificate of tax deduction at source on behalf of client--Refund granted on basis thereof--Certificate found bogus and consequential refund obtained by fraud--Prosecution of assessee--No evidence to show assessee fabricated bogus certificate--No investigation to show client was a fictitious person--Acquittal justified-- ITO v. R. Soundararajan (Mad) . . . 531
Income-tax Rules, 1962 :
r. 3: - Rectification of mistake--Mistake apparent from record--Failure to treat tax paid by employer on behalf of employees as salary for purposes of rule 3--Mistake which could be corrected -- Mitsubishi Corporation v. CIT (Delhi) . . . 498
Salary: - Perquisites--Tax paid by employer on behalf of employee--Part of salary -- Mitsubishi Corporation v. CIT (Delhi) . . . 498
Wealth-tax Act, 1957 :
S. 27A: - Appeal to High Court--Monetary limits for appeals by Department--Instructions of CBDT specifying limit--Exceptions--Substantial question of law likely to arise repeatedly--Assessability of wealth-tax on semi-constructed buildings on urban land--Exception clause (3) of Instruction No. 2 of 2005 applicable--Appeal maintainable-- CWT v. John L. Chackola (Ker) . . . 385
