Compilations of case law: IT Act related Topics : VDIS / KVSS

VDIS – "income" in respect of which warrant has been issued – income is material and not person to whom warrant is issued – Amount cannot be disclosed under VDIS
Nandlal Rander Vs CIT (Cal) 245 ITR 810.

Assessee filing petition under VDS – Disclosure not accepted by Department – Amount disclosed assessable as income from undisclosed sources.
Baldeo Prasad Vs CIT (Patna) 166 ITR 205

Immunity conferred under VDIS is of limited character and is not an absolute or universal immunity. The immunity cannot be extended beyond the confines specified by the said provisions.
Tekchand etc. Vs Competent Authority (SC) 112 CTR 458

VDIS declaration filed, but tax not paid – No immunity
CWT Vs Sudha Devi Khaitan (Pat) 223 ITR 740

Issues decided by A.O. and subject matter of dispute only will be covered in KVSS
Bhilwara Spinners Ltd. ( ITAT, Jodhpur ) 101 ITD 237
TVS Motor Company Ltd. Vs ACIT (Mad) 293 ITR 394

Issues not covered by KVSS are subject to revision u/s 263
Siddhartha Tubes Ltd. Vs CIT (ITAT, Ind) 85 ITD 316

KVSS – Pendency of litigation is a must – Artificial creation of such pendency is not permissible.
Gopal Films Vs DCIT (Kar) 237 ITR 655

Compilations of case law: IT Act related Topics : SEARCHES UNDER I.T. ACT

SEARCHES UNDER I.T. ACT

Assessee merely contended that Director of Investigation has no valid information on the basis of which he could issue warrant of search – Assessee not supporting contention with cogent material – Department cannot be asked to produce records to show information having been received – 132(3) order not seizure – No order u/s 132(3) can be passed when Assessing Officer is in doubt whether asset is disclosed or not.
Sriram Jaiswal Vs Union of India & Ors.(All) 176 ITR 261

"Reason to believe" need not be disclosed when a mere allegation made by petitioner – Illegality of search does not vitiate evidence collected during search.
Dr. Pratap Singh & another Vs Director of Enforcement & Ors.(SC) 155 ITR 166

Preliminary statement recorded before start of actual search and in which questions put to assessee were of general nature – was not at all a statement u/s 132(4) – Revenue cannot rely on such an unauthorized statement.
Rishab Kumar Jain Vs ACIT (ITAT,Del) 63 TTJ 236

Evidence collected during an illegal search can be used against the searched party.
State of Punjab Vs Baldev Singh etc (SC) 157 CTR 3
Vimalchand Jain Vs ACIT (ITAT, Jp) 64 ITD 394
Pooran Mal Vs Director of Inspection (Investigation) & Ors. ( SC ) 93 ITR 505

Amount seized and retained u/s 132(5) cannot be adjusted against advance-tax.
Kanhaiya Lal Doshi Vs ACIT (ITAT, Jaipur) 56 ITD 486
ACIT Vs Topsel (P) Ltd.(ITAT, Cal) 56 ITD 186
DCIT Vs Muni Lal & Ors. (ITAT, Chd) 57 TTJ 596

When the search continues over a period, it is not necessary that the same witness should be present on all occasions.
T.S. Chandrasekhar Vs ACIT (ITAT, Bang) 66 TTJ 360

Assessing Officer includes ADIT also
Dr. N.S.D. Raju Vs DGIT(Inv.) & Anr. ( Ker ) 282 ITR 154

Initiation of search – when authorities issue authorization and not when it is executed
Suraj Prakash Soni Vs ACIT (ITAT, Jodh) 106 ITD 321

Compilations of case law: IT Act related Topics : RECEIPT OF NRE GIFTS - TAXABILITY

RECEIPT OF NRE GIFTS - TAXABILITY

Donors not relatives and friends of assessee – No reason for receiving gifts – Unexplained investment of assessee
Lall Chand Kalra Vs CIT (P & H) 22 CTR 135
Harish Kumar Singal Vs ACIT (P & H) 276 ITR 355
ITO Vs Dr. A.K. Sharma (ITAT, Amritsar) 63 TTJ 380
D.C. Rastogi (HUF) Vs ACIT (ITAT, Delhi) 57 ITD 295
Jyotsna Suri Vs DCIT (ITAT, Delhi) 61 ITD 139
Sanjeev Batra Vs ACIT (ITAT, Del) 69 ITD 23
Renu Gupta Vs DCIT (ITAT, Mum) 72 ITD 306
Deepak Kumar Agarwal (ITAT, Jab) 110 Taxman 233 (Mag)
Mahesh Kumar Singal Vs ACIT ( P & H ) 193 CTR 271
CIT Vs P. Mohanakala (SC) 291 ITR 278

Gift of cheque from strangers –no occasion to make gifts - Donor less wealthier – income from undisclosed sources eventhough donors confirmed gifts
ITO Vs Dr. Jagdish J. Kansagara (ITAT, Ahd) 66 ITD 381

Burden of proof on assessee to establish that donor had means and gift was genuine, for natural love and affection
Jaspal Singh Vs CIT (P&H) 290 ITR 306

Compilations of case law: IT Act related Topics : LOSS FROM SPECULATION

LOSS FROM SPECULATION

Speculative transaction – if actual delivery of share scrips does not take place both for purchases as well as sales – Sec.43(5) – delivery recalled by brothers – No actual delivery – speculative transaction. – Loss can't be set off against business income.
ACIT Vs Claytone Commercial Co. Ltd. (ITAT, Delhi) 67 ITD 118
Ram Lal & Sons Vs ITO (ITAT, Asr) 71 ITD 256

Purchase of shares and sales back to them at a loss – No evidence about effective delivery of shares and payment of purchase consideration – transaction not genuine
CIT Vs Shekhawati Rajputana Trg. Co. (P) Ltd. ( Cal ) 236 ITR 950

Transaction of purchase and sale of units & Government securities by Banking Company through Banker's Receipt without actual delivery – speculative transaction
ANZ Grindlays Bank Vs DCIT ( ITAT, Del) 88 ITD 53

Shares purchased from broker on principal to principal basis and resold without taking physical delivery of shares – Loss by paying difference between purchase and sale value of shares – Speculation loss
Bhikamchand Betala and Sons Vs ITO (Gau) 294 ITR 10

Applicability of Sec. 73 - Set off of Speculation Loss - No need to prove tax avoidance
DCIT Vs Front Line Capital Services Ltd. ( ITAT, Del ) 96 TTJ 201 overruled SMC
decision in Aman Portfolio (P) Ltd. Vs DCIT

Sec. 73 and 43(5) operate in different fields - Sec. 73 applies even to shares transferred with delivery
Rohini Capital Services Ltd. Vs DCIT ( ITAT, Del ) 92 ITD 317
Paharpur Cooling Towers Ltd. Vs DCIT ( ITAT, Kol ) 85 ITD 745
AMP Spg. & Wvg. Mills (P) Ltd. Vs ITO ( ITAT, Ahd-SB ) 100 ITD 142

Provisions of sec. 73 explained in detail
Melville Finvest Ltd. Vs JCIT ( ITAT, Hyd ) 89 ITD 528
DCIT Vs Aakrosh Investment & Leasing (P) Ltd. ( ITAT, Mum ) 90 ITD 287
Yucca Finvest (P) Ltd Vs DCIT ( ITAT, Mum ) 101 ITD 403

Investment companies are not exempted under sec. 73
JCIT Vs Haldia Investment Co. Ltd. ( ITAT, Kol ) 85 ITD 212
RPG Industries Ltd. Vs ACIT ( ITAT, Kol – TM ) 85 ITD 105

Forward transaction – Raw materials in which transaction made must have a direct connection with goods manufactured or items sold.
Delhi Flour Mills Co. Ltd,. Vs CIT (Del) 95 ITR 151

Explanation to section 73 – Physical delivery of shares not relevant – Gross Total income does not consist mainly of income chargeable under the heads "Interest on securities", "Income from House property", "Capital gains" and "Income from other Sources" OR assessee's principle business is not banking or granting loans and advances – Exemptions will not apply
CIT Vs Intermetal Trade Ltd. (MP) 285 ITR 536

Compilations of case law: IT Act related Topics : LOSS / DEPRECIATION – CARRY FORWARD & SET-OFF

LOSS / DEPRECIATION – CARRY FORWARD & SET-OFF

Since income from a certain activity is not taxable, loss incurred in such activity cannot be set off against income from other heads
CIT Vs S.S. Thiagarajan (Mad) 129 ITR 115

Loss return filed after due date disclosing 115 J income – since RI filed late, no carry forward of loss to subsequent year.
ACIT Vs Dynavision Ltd (ITAT, Chennai) 88 ITD 213

Carry forward and set off of unabsorbed depreciation and losses – Specific and clear finding in prior assessment years, is necessary.
Sri Rajarathinam Transports P. Ltd. Vs CIT (Mad) 199 ITR 203
S.K.V. Selvaraj Vs CIT (Mad) 240 ITR 217

No appeal filed in the year in which loss occurred for which return filed late and Assessing Officer did not allow carry forward of loss – Appeal in subsequent year in which profit was earned to get this loss set off – Not maintainable.
CIT Vs Dalmia Cement (Bharat) Ltd. (SC) 216 ITR 79
Poddar Tyres Limited Vs DCIT (ITAT, Mum) 59 ITD 548

Brought forward unabsorbed depreciation of one amalgamating firm cannot be set off against profit of amalgamated firm.
Anand & Co. Vs ACIT (ITAT, Kol) 89 ITD 125

Carry forward of loss – Assessee receiving share of loss from firm – Assessee not filed return – Loss not allowed to carried forward.
K.V.K. Raju (HUF) Vs CIT (AP) 252 ITR 724

A Member of AOP cannot claim in his personal assessment, set off of his share of loss in AOP.
CIT Vs Lalitha M. Bhatt (Bom) 234 ITR 319

Loss of AOP can be set off only against its own profits and not against profits of its members.
CIT Vs Lalita M. Bhat (Bom) 234 ITR 319

Merger of Co-operative Societies and formation of a new co-operative society – carry forward losses of merged co-operative society cannot be set off against profits of new co-operative society.
Rajasthan Rajya Sahakari Spinning & Ginning Mills Fed. Ltd. Vs ITAT & Anr. (Raj) 260 ITR 167

Share of loss from Trust – No need to adjust this against individual income of beneficiaries as done in partner's cases.
M. Manoj Shenoy Vs ITO (ITAT, Bang) 35 TTJ 333

Machinery and Plant sold – No manufacturing activity carried on – Receiving interest income on outstanding dues on sale of plant & machinery – No actual sale of stocks – No continuation of business – Interest income not from business – Brought forward loss cannot be set off against interest income – claim of bad debts cannot be allowed.
Good earth Engines (P) Ltd. Vs ACIT (ITAT, Del) 62 TTJ 740

Loss in jute business – Discontinuance of business – Income from letting out godown used in jute business held assessable as House Property income – Loss in earlier year cannot be set off.
CIT Vs Bengal Jute Mills Co. Ltd (Cal) 165 ITR 631

Carry forward loss and unabsorbed depreciation – set off of – Business should be carried on.
Nakavar Agricultural Co. Ltd. Vs CIT (Ker) 229 ITR 548

Two proprietary business – Separate accounts – Separate premises – separate entities – one business stopped – Loss of that business cannot be set off against income from the other business.
C.L. Mehra Vs ITO (ITAT, Del) 59 ITD 99

Unabsorbed depreciation to be set off before unabsorbed Investment Allowance.
Seshasayee Paper & Boards Ltd. Vs DCIT (Mad) 272 ITR 165

Return of loss filed in response to notice u/s.148 – No carry forward and set off.
Koppino Pvt. Ltd. Vs CIT ( Cal) 207 ITR 228

Cost of prints cannot be included in cost of acquisition of exhibition right in film which can be carried forward – Rule 9B
ITO Vs Honey Enterprises (ITAT, Del) 89 ITD 301

Assessee never admitted the Trust as his benami – ITO rejected set off of loss in the case of Trust against income of assessee – upheld in spite of the fact that income from said Trust was included in the hands of assessee in earlier years.
ITO Vs B.N. Mathur (ITAT, Del) 30 ITD 9

Claim of loss from share transaction – some brokers not identifiable – some brokers could not file details – No details of distinctive number of share scrips purchased / sold, given – Loss not proved
ACIT Vs Rameshchandra R. Patel (ITAT, Ahd-TM) 89 ITD 203

A.Y. 1999-00 - Brought forward depreciation of earlier years cannot be set off against capital gains
Southern Travels Vs ACIT (ITAT, Chennai-SB) 103 ITD 198

Transport business - Not maintaining books - Income computed u/s 44AE - Assessee not entitled to set off unabsorbed depreciation.
DCIT Vs Sunil M. Kankariya (ITAT, Pune) 298 ITR (AT) 205

Provisions of section 71(2) and 72(1) to be read in harmony – Word 'may' used in section 71(2) is only to give flexibility to the assessee which may choose to adjust the losses against other income including capital gains.
Ashok Leyland Ltd. Vs ACIT 2008-TIOL-15-ITAT-MAD

Compilations of case law: IT Act related Topics : GENERAL ISSUES

Additional Commissioner is also Joint Commissioner
Arun Kumar Maheshwari Vs ITO (All) 285 ITR 179

Instruction that cases where international transactions exceed Rs. 5 crore to be taken up for scrutiny – No discrimination – Instruction valid
Sony India P. Ltd. Vs CBDT (Del) 288 ITR 52

Reduction of loss – Not a case of NIL tax effect – Instruction of CBDT fixing monetary limit for filing of appeal does not affect maintainability of appeal in such cases
CIT Vs Abhishek Industries Ltd. (P&H) 286 ITR 1

FD in Bank attached by Dept – Can foreclose such FD
Vysya Bank Ltd. Vs JCIT & Anr. (Kar) 241 ITR 178

Bank statement is not books of accounts maintained by assessee.
ITO Vs Samyeshi Majhi (ITAT, Calcutta) 13 ITD 61.

IT proceedings – strict rules of evidence do not apply – conclusive proof is not necessary to arrive at a conclusion / to establish a fact.
Mriganka Mohan Sur Vs CIT (Cal) 120 ITR 529

Claim that substantial amounts have been won in horse racing in two consecutive accounting years – claim is not justified considering the test of human probabilities.
Sumati Dayal Vs CIT (SC) 214 ITR 801

Protective assessment permissible but appellate authorities cannot make protective order
CIT Vs Durgawati Singh (All) 234 ITR 249
Jagannath Bawri & Ors. Vs CIT & Ors. (Gau) 234 ITR 464

Units of UTI are not shares
CIT Vs Apollo Tyres Ltd. (Ker) 237 ITR 706
Shree Synthetics Ltd. Vs DCIT (ITAT, Indore) 61 ITD 253

Manufacturing beedis –no patent / copyright / know-how involved
CIT Vs Mangalore Ganesh Beedi Works (Kar) 264 ITR 142

Assessing Officer cannot entertain claim for deduction otherwise than by filing a revised return
Goetze (India) Ltd. Vs CIT (SC) 284 ITR 323

Controlling interest in the company is an incidence of shareholding and has no independent existence – It is by reason of control over the shares that the shareholder is able to exercise control over the management
Venkatesh & Ors. Vs CIT (Mad) 243 ITR 367

The word "business" is one of wide import and it means an activity carried on continuously and systematically by a person by the application of his labour and skill with a view to earning an income
Barendra Prasad Ray Vs ITO (SC) 129 ITR 295 pp. 296
Works Contract – defined
State of Gujarat ( Commissioner of Sales Tax), Ahmedabad Vs Variety Body Builders (1976) CTR (SC) 228
Venguard Rolling Shutters & Steel Works Vs Commissioner of Sales Tax (1977) CTR (SC) 190
The Assistant Sales Tax Officer Vs B.C. Kame (1977) CTR (SC) 67
Crompton Engineering Co. Ltd. Vs The State of Tamil Nadu (1976) CTR (Mad) 428
CIT Vs Kumudam Publications P. Ltd. (Mad) 188 ITR 84

Diaries are not books of accounts
Sheraton Apparels Vs ACIT (Bom) 256 ITR 20

Composite business – Tests – Single books of accounts, carried on business in the same premises, no bifurcation in the bank accounts, common administration, common funds, common management, unity of control etc.
CIT Vs Kothari & Sons ( Agencies ) P. Ltd. ( Mad ) 211 ITR 928
Veecumsees Vs CIT ( SC ) 220 ITR 185
B.R. Ltd. Vs V.P. Gupta ( SC ) 113 ITR 647
Produce Exchange Corpn. Ltd. Vs CIT ( SC ) 77 ITR 739
CIT Vs Late T.S. Srinivasa Iyer ( Mad ) 192 ITR 50

Firm of Chartered Accountants – Carries on "Profession" and not "Business"
G.K. Choksi and Co. Vs CIT (SC) 295 ITR 376

Limitation – Assessment of income to be completed within the time period provided in the statute – However the order of assessment need not be communicated within that period.
RM. P.R. Viswanathan Chettiar Vs CIT (Mad) 25 ITR 79