ITR (TRIB)--Vol-37 Part-1 PRINT AND ONLINE EDITION

ITR (TRIB)--Vol-37 Part-1 PRINT AND ONLINE EDITION

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

~International transactions --Arm's length price--Determination--Most appropriate method--Assessee paying commission to associated enterprises and unrelated domestic agents depending upon services rendered--Comparable uncontrolled price method cannot be applied for determining arm's length price--Income-tax Act, 1961 s. 92C-- Amphenol Interconnect India P. Ltd. v. Deputy CIT (Pune) . . . 1

~Arm's length price--Determination--Most appropriate method--Comparable uncontrolled price method--Transactional differences with associated enterprises and third parties pertaining to similar products--Suitable adjustments cannot be made for volume, geographical, timing, risk and functional differences--Comparable uncontrolled price method not appropriate to determine arm's length price--Additions to be deleted--Income-tax Act, 1961, s. 92C-- Amphenol Interconnect India P. Ltd. v. Deputy CIT (Pune) . . . 1

~Special deduction --Donation to charitable institution--Approval of institution--No allegation with regard to charitable object of assessee or genuineness of activities--Assumption that assessee had commercial intentions and utilised its funds outside India--Reasons for denial of registration irrelevant and extraneous--Refusal of registration not valid--Income-tax Act, 1961, ss. 12A, 80G(5)(vi)-- George Institute for Global Health v. DIT (Exemption) (Hyd) . . . 24

PRINT EDITION

Volume 37 : Part 1 (Issue dated : 5-1-2015)

SUBJECT INDEX TO CASES REPORTED

~Advance tax --Interest--Failure by payer to deduct tax at source--Interest cannot be imposed on assessee under section 234B--Income-tax Act, 1961, ss. 234B, 234C-- Fugro Geoteam AS v. Addl. DIT (International Taxation) (Delhi) . . . 46

~Interest--Charging of interest under sections 234A, 234B and 234C mandatory and no discretion with Assessing Officer in that matter--Income-tax Act, 1961, ss. 234A, 234B, 234C-- Nandini Delux v. Asst. CIT (Bangalore) . . . 52

~Appeals --Competency of appeal--Monetary limits for appeal by Department--Instruction No. 5 of 2014--Limits applicable to pending cases--Failure by Department to point out exceptional circumstances for filing appeal despite monetary limit--Appeal to be dismissed in limine--CBDT Instruction No. 5 of 2014, dated 10-7-2014-- Deputy CIT v. Chetan Prakash Mittal (Delhi) . . . 28

~Assessment --Estimate of income--Additions for suppressed sales--Failure by Assessing Officer to bring corroborative material to substantiate unaccounted sales--Additions to be deleted--Income-tax Act, 1961-- Nandini Delux v. Asst. CIT (Bangalore) . . . 52

~Business expenditure --Disallowance--Payments liable to deduction of tax at source--Failure by assessee to deduct tax at source on payment--Expenditure to be disallowed--Scope of section 40(a)(i) and (ia)--Deduction to be allowed in accounting year in which tax has been paid--Income-tax Act, 1961, s. 40(a)(i), (ia)-- Termo Penpol Ltd. v. Asst. CIT (Cochin) . . . 87

~Capital gains --Full value of consideration--Sale agreement subjected to valuation for purpose of stamp duty payment--Section 50C applicable--Income-tax Act, 1961, s. 50C--Prakash Shantilal Parekh v. ITO (Mumbai) . . . 119

~Long-term or Short-term capital gains--Capital asset--Agreement to transfer flat to be constructed in new building--No question of handing over of possession when structure not in physical existence--Right to get new flat alone transferred--Transfer of capital asset under agreement within period of 36 months from date of purchase--Short-term capital gain--Income-tax Act, 1961-- Prakash Shantilal Parekh v. ITO (Mumbai) . . . 119

~Capital or revenue expenditure --Expenditure incurred on renovation of leased premises--Assessee not acquiring new asset or income-earning apparatus--No enduring benefit to assessee--Expenditure revenue in nature--Income-tax Act, 1961-- Nandini Delux v. Asst. CIT (Bangalore) . . . 52

~Charitable purpose --Charitable trust--Registration--Assessee undertaking limited activity--Nature of objects and genuineness of activities of trust to be appreciated--Failure by assessee to file activity report before Tribunal--Matter to be re-examined by Commissioner--Income-tax Act, 1961, s. 12AA-- Christian Women's Association v. CIT (Cochin) . . . 30

~Computation of income--Depreciation--Claim to depreciation on assets owned by it--Not a case of double deduction--Income-tax Act, 1961, s. 11-- ITO v. Ramananda Adigalar Foundation (Chennai) . . . 80

~Registration of trusts--Assessee not having commenced any of charitable activities enumerated in trust deed--Not entitled to registration--Income-tax Act, 1961, s. 12AA--Progressive Educational and Charitable Trust v. CIT (Cochin) . . . 84

~Depreciation --Wind electric generators--Integral part of windmill unit--Entitled to higher rate of depreciation--Income-tax Act, 1961, s. 32-- Deputy CIT v. Lanco Infratech Ltd . (Hyd) . . . 95

~Exemption --New industrial undertaking in free trade zone--Profits of undertaking--Unabsorbed business loss--Depreciation--Deduction to be calculated before reducing unabsorbed loss and depreciation from profits of undertaking--Income-tax Act, 1961, s. 10A-- Canam International P. Ltd. v. Asst. CIT (Delhi) . . . 38

~Export --Exemption--Profits of undertaking--Share application money--Income from variation in rates of foreign exchange--Whether to be excluded from total income--Matter remanded--Income-tax Act, 1961, s. 10A-- Canam International P. Ltd. v. Asst. CIT (Delhi) . . . 38

~Income --Expenditure incurred in earning income not forming part of total income--Disallowance--Investments to incorporate special purpose vehicles for road projects--Investments not for earning dividend income--Expenses and interest not to be disallowed--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D(2)(iii)-- L & T Infrastructure Development Projects Ltd. v. ITO (Chennai) . . . 10

~International transactions --Arm's length price--Determination--Administrative and management support services--Selection of comparables--Companies having related party transactions to extent of 88.23 per cent. cannot be considered as comparable--Functionally dissimilar companies excluded and functionally similar to be included--Foreign exchange gain to be included in operating income--Matter remanded to Transfer Pricing Officer to recompute arm's length price after affording opportunity of being heard--Income-tax Act, 1961--CISCO Systems (India) P. Ltd. v. Deputy CIT (Bangalore) . . . 133

~Arm's length price--Determination--Service of replacement of spares to customers--Matter remanded to Transfer Pricing Officer to determine arm's length price in light of directions of Tribunal for assessment year 2006-07--Income-tax Act, 1961-- CISCO Systems (India) P. Ltd. v. Deputy CIT (Bangalore) . . . 133

~Arm's length price--Determination--Software development services--Transactional net margin method--Selection of comparables--Companies having export turnover less than 75 per cent. of total sales to be excluded--Functionally different companies cannot be treated as comparable--Functionally similar companies to be included--Matter remanded to Transfer Pricing Officer for decision afresh--Income-tax Act, 1961, s. 92CA-- CISCO Systems (India) P. Ltd. v. Deputy CIT (Bangalore) . . . 133

~Arm's length price--Determination--Transactional net margin method--Selection of comparables--Computation of operational profit to total cost--Non-operative items of income and expenses to be excluded--Income-tax Act, 1961-- Deputy CIT v. Exxon Mobil Gas (India) P. Ltd. (Delhi) . . . 22

~Non-resident --Presumptive tax--Income from exploration of mineral oils--Income from service of 3D seismic data processing--Income taxable only under section 44BB and not as fees for technical services--Income-tax Act, 1961, s. 44BB-- Fugro Geoteam AS v. Addl. DIT (International Taxation) (Delhi) . . . 46

~Presumptive tax--Income from exploration of mineral oils--Reimbursement of mobilisation and demobilisation charges outside India--Taxable--Income-tax Act, 1961-- Fugro Geoteam AS v. Addl. DIT (International Taxation) (Delhi) . . . 46

~Penalty --Concealment of income--Non-inclusion of allowances in return of income--Allowances in form of reimbursement cannot be treated as income in hands of assessee--No concealment of income--Penalty cannot be levied--Income-tax Act, 1961, s. 271(1)(c)--Soumya Prakash Pattnaik v. Asst. CIT (Cuttack) . . . 35

~Furnishing inaccurate particulars of income--Industrial undertaking--Special deduction--Assessee furnishing details regarding deduction--Penalty cannot be levied on estimated addition--Income-tax Act, 1961, ss. 80-IC, 271(1)(c)-- Octave Exports v. Deputy CIT(Chandigarh) . . . 100

~Furnishing inaccurate particulars of income--Industrial undertaking--Special deduction--Small-scale industrial unit--Assessee furnishing details regarding deduction--Assessee not guilty of filing inaccurate particulars of income--Penalty cannot be levied--Income-tax Act, 1961, ss. 80-IB, 271(1)(c)-- Deputy CIT v. Parabolic Drugs Ltd. (Chandigarh) . . . 16

~Reassessment --Income escaping assessment--Reason to believe--Purchase of property and entering into sale agreement--Failure by assessee to file return and disclose fully and truly all material facts necessary for assessment--Valid reason to believe income chargeable to tax escaped assessment--Income-tax Act, 1961, ss. 147, 148-- Prakash Shantilal Parekh v. ITO (Mumbai) . . . 119

~Revision --Commissioner--Condition precedent--Order erroneous and prejudicial to Revenue--Both conditions to be satisfied--Industrial undertaking--Special deduction--Assessing Officer including receipt from sale of carbon credits in eligible profits--Order not prejudicial to Revenue--Income-tax Act, 1961, ss. 80-IA, 263-- Subhash Kabini Power Corporation Ltd. v. CIT (Bangalore) . . . 106

~Search and seizure --Assessment in search cases--Undisclosed income--Business expenditure--Disallowance--Once assessment reopened Assessing Officer can determine total income and pass assessment order--Section 153A does not prohibit Assessing Officer from disallowing expenditure--Income-tax Act, 1961, ss. 132, 153A-- Nandini Delux v. Asst. CIT (Bangalore) . . . 52

~Wealth-tax --Net wealth--Transfer of assets--Wife of assessee purchasing residential house and jewellery out of interest-free cash loan given by assessee--Cash loan not “asset†--No transfer of asset--Amount cannot be added to net wealth of assessee--Wealth-tax Act, 1957, s. 4(1)(a)(i)-- Shah Rukh Khan v. Asst. CWT (Mumbai) . . . 1

~SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

~Income-tax Act, 1961

~S. 10A --Exemption--New industrial undertaking in free trade zone--Profits of undertaking--Unabsorbed business loss--Depreciation--Deduction to be calculated before reducing unabsorbed loss and depreciation from profits of undertaking-- Canam International P. Ltd. v. Asst. CIT (Delhi) . . . 38

~Export--Exemption--Profits of undertaking--Share application money--Income from variation in rates of foreign exchange--Whether to be excluded from total income--Matter remanded-- Canam International P. Ltd. v. Asst. CIT (Delhi) . . . 38

~S. 11 --Charitable purpose--Computation of income--Depreciation--Claim to depreciation on assets owned by it--Not a case of double deduction-- ITO v. Ramananda Adigalar Foundation (Chennai) . . . 80

~S. 12AA --Charitable purpose--Charitable trust--Registration--Assessee undertaking limited activity--Nature of objects and genuineness of activities of trust to be appreciated--Failure by assessee to file activity report before Tribunal--Matter to be re-examined by Commissioner--Christian Women's Association v. CIT (Cochin) . . . 30

~Charitable purpose--Registration of trusts--Assessee not having commenced any of charitable activities enumerated in trust deed--Not entitled to registration-- Progressive Educational and Charitable Trust v. CIT (Cochin) . . . 84

~S. 14A --Income--Expenditure incurred in earning income not forming part of total income--Disallowance--Investments to incorporate special purpose vehicles for road projects--Investments not for earning dividend income--Expenses and interest not to be disallowed-- L & T Infrastructure Development Projects Ltd. v. ITO (Chennai) . . . 10

~S. 32 --Depreciation--Wind electric generators--Integral part of windmill unit--Entitled to higher rate of depreciation-- Deputy CIT v. Lanco Infratech Ltd . (Hyd) . . . 95

~S. 40(a)(i) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Failure by assessee to deduct tax at source on payment--Expenditure to be disallowed--Scope of section 40(a)(i) and (ia)--Deduction to be allowed in accounting year in which tax has been paid-- Termo Penpol Ltd. v. Asst. CIT (Cochin) . . . 87

~S. 40(a)(ia) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Failure by assessee to deduct tax at source on payment--Expenditure to be disallowed--Scope of section 40(a)(i) and (ia)--Deduction to be allowed in accounting year in which tax has been paid-- Termo Penpol Ltd. v. Asst. CIT (Cochin) . . . 87

~S. 44BB --Non-resident--Presumptive tax--Income from exploration of mineral oils--Income from service of 3D seismic data processing--Income taxable only under section 44BB and not as fees for technical services-- Fugro Geoteam AS v. Addl. DIT (International Taxation)(Delhi) . . . 46

~S. 50C --Capital gains--Full value of consideration--Sale agreement subjected to valuation for purpose of stamp duty payment--Section 50C applicable-- Prakash Shantilal Parekh v. ITO(Mumbai) . . . 119

~S. 80-IA --Revision--Commissioner--Condition precedent--Order erroneous and prejudicial to Revenue--Both conditions to be satisfied--Industrial undertaking--Special deduction--Assessing Officer including receipt from sale of carbon credits in eligible profits--Order not prejudicial to Revenue-- Subhash Kabini Power Corporation Ltd. v. CIT (Bangalore) . . . 106

~S. 80-IB --Penalty--Furnishing inaccurate particulars of income--Industrial undertaking--Special deduction--Small-scale industrial unit--Assessee furnishing details regarding deduction--Assessee not guilty of filing inaccurate particulars of income--Penalty cannot be levied-- Deputy CIT v. Parabolic Drugs Ltd. (Chandigarh) . . . 16

~S. 80-IC --Penalty--Furnishing inaccurate particulars of income--Industrial undertaking--Special deduction--Assessee furnishing details regarding deduction--Penalty cannot be levied on estimated addition-- Octave Exports v. Deputy CIT (Chandigarh) . . . 100

~S. 92CA --International transactions--Arm's length price--Determination--Software development services--Transactional net margin method--Selection of comparables--Companies having export turnover less than 75 per cent. of total sales to be excluded--Functionally different companies cannot be treated as comparable--Functionally similar companies to be included--Matter remanded to Transfer Pricing Officer for decision afresh--CISCO Systems (India) P. Ltd. v. Deputy CIT (Bangalore) . . . 133

~S. 132 --Search and seizure--Assessment in search cases--Undisclosed income--Business expenditure--Disallowance--Once assessment reopened Assessing Officer can determine total income and pass assessment order--Section 153A does not prohibit Assessing Officer from disallowing expenditure-- Nandini Delux v. Asst. CIT (Bangalore) . . . 52

~S. 147 --Reassessment--Income escaping assessment--Reason to believe--Purchase of property and entering into sale agreement--Failure by assessee to file return and disclose fully and truly all material facts necessary for assessment--Valid reason to believe income chargeable to tax escaped assessment-- Prakash Shantilal Parekh v. ITO (Mumbai) . . . 119

~S. 148 --Reassessment--Income escaping assessment--Reason to believe--Purchase of property and entering into sale agreement--Failure by assessee to file return and disclose fully and truly all material facts necessary for assessment--Valid reason to believe income chargeable to tax escaped assessment-- Prakash Shantilal Parekh v. ITO (Mumbai) . . . 119

~S. 153A --Search and seizure--Assessment in search cases--Undisclosed income--Business expenditure--Disallowance--Once assessment reopened Assessing Officer can determine total income and pass assessment order--Section 153A does not prohibit Assessing Officer from disallowing expenditure-- Nandini Delux v. Asst. CIT (Bangalore) . . . 52

~S. 234A --Advance-tax--Interest--Charging of interest under sections 234A, 234B and 234C mandatory and no discretion with Assessing Officer in that matter-- Nandini Delux v. Asst. CIT (Bangalore) . . . 52

~S. 234B --Advance tax--Interest--Failure by payer to deduct tax at source--Interest cannot be imposed on assessee under section 234B-- Fugro Geoteam AS v. Addl. DIT (International Taxation) (Delhi) . . . 46

~Advance-tax--Interest--Charging of interest under sections 234A, 234B and 234C mandatory and no discretion with Assessing Officer in that matter-- Nandini Delux v. Asst. CIT (Bangalore) . . . 52

~S. 234C --Advance tax--Interest--Failure by payer to deduct tax at source--Interest cannot be imposed on assessee under section 234B-- Fugro Geoteam AS v. Addl. DIT (International Taxation) (Delhi) . . . 46

~Advance-tax--Interest--Charging of interest under sections 234A, 234B and 234C mandatory and no discretion with Assessing Officer in that matter-- Nandini Delux v. Asst. CIT (Bangalore) . . . 52

~S. 263 --Revision--Commissioner--Condition precedent--Order erroneous and prejudicial to Revenue--Both conditions to be satisfied--Industrial undertaking--Special deduction--Assessing Officer including receipt from sale of carbon credits in eligible profits--Order not prejudicial to Revenue-- Subhash Kabini Power Corporation Ltd. v. CIT (Bangalore) . . . 106

~S. 271(1)(c) --Penalty--Concealment of income--Non-inclusion of allowances in return of income--Allowances in form of reimbursement cannot be treated as income in hands of assessee--No concealment of income--Penalty cannot be levied-- Soumya Prakash Pattnaik v. Asst. CIT (Cuttack) . . . 35

~Penalty--Furnishing inaccurate particulars of income--Industrial undertaking--Special deduction--Assessee furnishing details regarding deduction--Penalty cannot be levied on estimated addition-- Octave Exports v. Deputy CIT (Chandigarh) . . . 100

~Penalty--Furnishing inaccurate particulars of income--Industrial undertaking--Special deduction--Small-scale industrial unit--Assessee furnishing details regarding deduction--Assessee not guilty of filing inaccurate particulars of income--Penalty cannot be levied--Deputy CIT v. Parabolic Drugs Ltd. (Chandigarh) . . . 16

Income-tax Rules, 1962

~R. 8D(2)(iii) --Income--Expenditure incurred in earning income not forming part of total income--Disallowance--Investments to incorporate special purpose vehicles for road projects--Investments not for earning dividend income--Expenses and interest not to be disallowed-- L & T Infrastructure Development Projects Ltd. v. ITO (Chennai) . . . 10

Wealth-tax Act, 1957

~S. 4(1)(a)(i) --Wealth-tax--Net wealth--Transfer of Assets--Wife of assessee purchasing residential house and jewellery out of interest-free cash loan given by assessee--Cash loan not “asset†--No transfer of asset--Amount cannot be added to net wealth of assessee-- Shah Rukh Khan v. Asst. CWT (Mumbai) . . . 1

ITR(TRIB) Volume 26 : Part 2 (Issue dated : 2-9-2013)

ITR’S TRIBUNAL TAX REPORTS (ITR (TRIB)) -- PRINT AND ONLINE EDITION

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Appeal to Commissioner (Appeals) --Recovery of tax--Application for stay of recovery during pendency of appeal--Case on merits--Assessee having already paid substantial portion of total tax liability--Stay of recovery of outstanding demand--Income-tax Act, 1961, s. 40(a)(ia)-- S. S. Warad v. Additional CIT (Bangalore) . . . 290

Business expenditure --Interest on borrowed capital--Proportionate interest paid by assessee worked out based on average cost of funds against interest income to be allowed-- Essar Power Ltd. v. Additional CIT (Mumbai) . . . 264

Business income or income from other sources --Infrastructure undertaking--Special deduction--Eligible profits--Interest on employees loan and advances, interest on margin money and interest income dues towards income-tax refund adjustment from purchaser of power--Not eligible for deduction--But to be assessed as business income for limited purpose of determining head of income--Income-tax Act, 1961, s. 80-IA. -- Essar Power Ltd. v. Additional CIT(Mumbai) . . . 264

Capital or revenue receipt --Supply of power by assessee to State Electricity Board--Under power purchase agreement Board to reimburse income-tax payable by assessee--Provision for tax recoverable--Income-tax calculated and paid by Board part of tariff charged by assessee on sale of electricity and not reimbursement of expenses--Amount is income in assessee’s hands--Income-tax Act, 1961, ss. 2(24), 40(a)(ii), 198-- Essar Power Ltd. v. Additional CIT(Mumbai) . . . 264

Company --Book profits--Computation--Amendment with retrospective effect--Exclusion of provision for income-tax recoverable--Matter remanded for reconsideration in light of amendment--Income-tax Act, 1961, s. 115JB, Expln. --Essar Power Ltd. v. Additional CIT (Mumbai) . . . 264

----Book profits--Computation--Change of law in 2009 with retrospective effect from April 1, 2001--Provision for unascertained liability--Matter remanded for reconsideration in light of amendment--Income-tax Act, 1961, s. 115JB,Expln. -- Essar Power Ltd. v. Additional CIT (Mumbai) . . . 264

PRINT EDITION

Volume 26 : Part 2 (Issue dated : 2-9-2013)

SUBJECT INDEX TO CASES REPORTED

Amalgamation of companies --Loss--Depreciation--Set off of brought forward loss and unabsorbed depreciation of amalgamating company--Certificate of chartered accountant--Not admitted by Dispute Resolution Panel observing that certificate appeared to be back dated--Assessee claiming to have evidence to rebut observation--Direction to Assessing Officer to readjudicate and decide under law--Matter remanded--Income-tax Act, 1961-- Alstom Projects India Ltd. v. Additional CIT (Mumbai) . . . 322

Bad debts --Assessee debiting accounts with aggregate of amounts irrecoverable--No infirmity--Income-tax Act, 1961, s. 36(1)(vii)-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

Business expenditure --Conversion of assessee, a co-operative bank to public limited company--Suits by erstwhile shareholders--Expenditure by way of legal and professional fees to protect title--Allowable-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Deduction only on actual payment--Provident fund contribution made before due date of filing return--Allowable--Matter remanded to verify that payments made before due date of filing return--Income-tax Act, 1961, s. 43B--Alstom Projects India Ltd. v. Additional CIT (Mumbai) . . . 322

----Disallowance--Payments in cash exceeding specified limit--Exception where payment made by agent of assessee--Payment of lorry hire charges to lorry drivers--Assessee neither owner of vehicle nor owner of goods carried--Lorry drivers cannot be considered as agents of assessee--Failure to show payments covered by any exception--Disallowance proper--Income-tax Act, 1961, s. 40A(3)--Income-tax Rules, 1962, r. 6DD(k)-- MRS Roadways v. Deputy CIT (Cochin) . . . 317

----Disallowance--Payments in cash exceeding specified limit--Payments made to agents--Never claimed as expenditure--Not liable to tax deduction at source--Payments of reimbursement--Are purely for business expenses--Income-tax Act, 1961, ss. 40A(3), 194C-- Deputy CIT v. Maruti Freight Movers Ltd. (Kolkata) . . . 305

----Stamp duty paid on lease agreement--Added back in computation--Not to be disallowed-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

Capital or revenue expenditure --Corporate membership of club--Meant for benefit of assessee and not for any particular employee--Expenditure wholly and exclusively for purposes of business--Allowable--Income-tax Act, 1961, s. 37-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Payment for re-acquiring premises given on rent--For betterment of title to capital asset--Expenses capital in nature-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Payments to banks association for participating in shared payment network system--Facility of connectivity of automated teller machine of one bank to another bank--Advantage of enduring nature--Expenditure capital--Assessee entitled to depreciation-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

Charitable purposes --Exemption--Income from property--Assessee paying advance for purchase of land from Government grant--To be treated as application of income--No violation of section 11(5)--Grant on capital account not income or corpus of trust--Interest on fixed deposits from unutilised funds on which Government had overriding title--At par with grant and not to be treated as income--Income-tax Act, 1961, ss. 11(5), 13(1)(d)-- Additional Director of Income-tax (Exemption) v. Natrip Implementation Society (Delhi) . . . 333

----Registration of trust--Factors to be considered--Commissioner and not any other authority to dispose of application for registration--Powers cannot be delegated unless permitted by statute--Communication or order signed by Income-tax Officer cannot be treated as disposal of application--Failure by Commissioner to pass such order within time limit specified in section 12A--Application deemed to be allowed--Income-tax Act, 1961, ss. 12A, 12AA-- Pravat v. CIT(Kolkata) . . . 294

----Registration of trusts--Director (Exemptions) entitled to enquire into activities of trust before granting registration--Disqualification even where small portion of income enures to benefit of person mentioned in section 13(3)--Assessee conducting eye operations with funds received under licence from Canadian organisation to whom it was bound to pay licence fee of $1.00 yearly--Assessee not independent entity--Not entitled to registration--Income-tax Act, 1961, ss. 11, 12AA, 13(3)-- Operation Eyesight Universal v. Director of Income-tax (Exemptions) (Hyderabad) . . . 268

Deduction of tax at source --Commission--Mobile telephone service--Discount given by assessee to distributors on sale of SIM cards and recharge coupons--Constitutes commission--Assessee liable to deduct tax at source on such commission--Income-tax Act, 1961, s. 194H-- Bharati Airtel Ltd. v. Deputy CIT (TDS) (Cochin) . . . 263

----Failure to deposit tax deducted at source with Central Government--Interim order of High Court in writ petition challenging validity of rule 3 directing assessee to place tax deducted at source in separate account till further orders--Assessee placing tax deducted at source amount in a separate account--Commissioner (Appeals) justified in directing Assessing Officer to wait till final order of High Court for recovery of tax deducted at source--Income-tax Rules, 1962, r. 3.--Income-tax Act, 1961, s. 201(1), (1A)-- Deputy CIT (TDS) v. Power Grid Corporation of India Ltd. (Nagpur) . . . 203

----Professional services--Third party administrator providing services to holders of health insurance policies--Payments to hospitals or nursing homes--Are payments for professional services--Tax deductible at source--Income-tax Act, 1961, s. 194J-- Health India TPA Services P. Ltd. v. ITO (OSD) (TDS) (Mumbai) . . . 298

Depreciation --Ownership of asset--Sale and lease back--Normal lease--Civil dispute between lessor and lessee--Transaction genuine--Assessee entitled to depreciation--Income-tax Act, 1961, s. 32-- Development Credit Bank Ltd.v. Deputy CIT (Mumbai) . . . 209

----Rate of depreciation--Goodwill and furniture and fittings--To be bifurcated--Depreciation allowable at 25 per cent. on goodwill and 10 per cent. on furniture and fittings--Income-tax Act, 1961, s. 32(1)(ii)-- Tirumala Music Centre P. Ltd. v. Assistant CIT (Hyderabad) . . . 309

----Rate of depreciation--Payment towards leasehold rights--Goodwill--Matter remanded to allow depreciation on intangible asset--Income-tax Act, 1961, s. 32(1)(ii)-- Tirumala Music Centre P. Ltd. v. Assistant CIT (Hyderabad) . . . 309

Export --Exemption--Export oriented unit--Telecommunication and internet charges--Incurred for export business--To be excluded from export turnover as well as total turnover--Belated payment of employees’ provident fund contributions--Payment made before date of filing of returns--Allowable--Income-tax Act, 1961, s. 10B-- Assistant CITv. SCM Microsystems (India) P. Ltd. (Chennai) . . . 178

Income --Expenditure relating to income not includible in total income--Disallowance--Commissioner (Appeals) can disallow in first instance--Disallowance at 10 per cent. of exempt income would suffice--Assessing Officer cannot simply brush aside disallowance calculated suo motu by assessee--Must give cogent reasons for not being satisfied with correctness of claim--No reasoned finding against disallowance computed and shown by assessee--Disallowance to be computed after affording reasonable opportunity to assessee--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

Industrial undertaking --Special deduction--Unit manufacturing perfumery compound--Licence from Directorate of Industries, registration for value added tax purposes, order of Commercial Tax Department establishing that factory was in existence and assessee was engaged in manufacturing of perfumery oils--Certificate from chartered engineers in respect of production of finished goods in short period--Factory closed in 2010--Inspection in 2012 by Income-tax Inspector not sufficient to dislodge evidence--Assessee enjoying benefit of special deduction in immediate preceding year--Rule of consistency--Not to be denied benefit--Income-tax Act, 1961, s. 80-IC-- Shree Veer Aromatics Herbs Products v. ITO (Delhi) . . . 282

Interest-tax --Issue of interest itself deleted--No question of levy of interest-tax--Interest-tax not be leviable on interest collected by the assessee--Interest-tax Act, 1974-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

International transaction --Determination of arm’s length price--Agreement between parties not to exclude other approved method of determining arm’s length price--Assessee can adopt any method specified in section 92C if able to show it to be most appropriate method--Failure by Transfer Pricing Officer to conduct pricing study and independently determine arm’s length price by taking candid transactions of unrelated parties--Matter remanded--Income-tax Act, 1961, s. 92C-- Assistant CIT v. SCM Microsystems (India) P. Ltd. (Chennai) . . . 178

----Transfer pricing--Determination of arm’s length price--Transfer pricing adjustment can be made only on transactions with associated enterprises--Proportionate adjustment falling within plus or minus 5 per cent.--No transfer pricing adjustment required--Income-tax Act, 1961-- Alstom Projects India Ltd. v. Additional CIT (Mumbai) . . . 322

Loss --Revaluation of outstanding contracts on net basis--Allowable-- Development Credit Bank Ltd. v. Deputy CIT(Mumbai) . . . 209

----Revaluation of securities at market rate--Resulting loss allowable-- Development Credit Bank Ltd. v. Deputy CIT(Mumbai) . . . 209

Return of income --Delay in filing--Interest--Return filed in time but signed by general manager and chief manager and not by managing director--Merely defective not invalid--Interest not leviable--Income-tax Act, 1961, s. 234A--Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

Revision --Commissioner--Bad debts--Provision for--Working out of deduction--Change of opinion--Revision not permissible--Income-tax Act, 1961, ss. 36(1)(vii), 263-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible--Income-tax Act, 1961, ss. 80-IB(10), 139(4), 143(3), 147, 263--Vanshree Builders and Developers P. Ltd. v. CIT (Bangalore) . . . 188

Wealth-tax --Valuation of asset--Motor cars--80 per cent. of insurance value to be taken--Not written down value--Wealth-tax Act, 1957-- Zee Entertainment Enterprises Ltd. v. Assistant CWT (Mumbai) . . . 314

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 10B --Export--Exemption--Export oriented unit--Telecommunication and internet charges--Incurred for export business--To be excluded from export turnover as well as total turnover--Belated payment of employees’ provident fund contributions--Payment made before date of filing of returns--Allowable-- Assistant CIT v. SCM Microsystems (India) P. Ltd. (Chennai) . . . 178

S. 11 --Charitable purpose--Registration of trusts--Director (Exemptions) entitled to enquire into activities of trust before granting registration--Disqualification even where small portion of income enures to benefit of person mentioned in section 13(3)--Assessee conducting eye operations with funds received under licence from Canadian organisation to whom it was bound to pay licence fee of $1.00 yearly--Assessee not independent entity--Not entitled to registration-- Operation Eyesight Universal v. Director of Income-tax (Exemptions) (Hyderabad) . . . 268

S. 11(5) --Charitable purposes--Exemption--Income from property--Assessee paying advance for purchase of land from Government grant--To be treated as application of income--No violation of section 11(5)--Grant on capital account not income or corpus of trust--Interest on fixed deposits from unutilised funds on which Government had overriding title--At par with grant and not to be treated as income-- Additional Director of Income-tax (Exemption) v.Natrip Implementation Society (Delhi) . . . 333

S. 12A --Charitable purpose--Registration of trust--Factors to be considered--Commissioner and not any other authority to dispose of application for registration--Powers cannot be delegated unless permitted by statute--Communication or order signed by Income-tax Officer cannot be treated as disposal of application--Failure by Commissioner to pass such order within time limit specified in section 12A--Application deemed to be allowed-- Pravatv. CIT (Kolkata) . . . 294

S. 12AA --Charitable purpose--Registration of trusts--Director (Exemptions) entitled to enquire into activities of trust before granting registration--Disqualification even where small portion of income enures to benefit of person mentioned in section 13(3)--Assessee conducting eye operations with funds received under licence from Canadian organisation to whom it was bound to pay licence fee of $1.00 yearly--Assessee not independent entity--Not entitled to registration-- Operation Eyesight Universal v. Director of Income-tax (Exemptions) (Hyderabad) . . . 268

----Charitable purpose--Registration of trust--Factors to be considered--Commissioner and not any other authority to dispose of application for registration--Powers cannot be delegated unless permitted by statute--Communication or order signed by Income-tax Officer cannot be treated as disposal of application--Failure by Commissioner to pass such order within time limit specified in section 12A--Application deemed to be allowed-- Pravat v. CIT (Kolkata) . . . 294

S. 13(1)(d) --Charitable purposes--Exemption--Income from property--Assessee paying advance for purchase of land from Government grant--To be treated as application of income--No violation of section 11(5)--Grant on capital account not income or corpus of trust--Interest on fixed deposits from unutilised funds on which Government had overriding title--At par with grant and not to be treated as income-- Additional Director of Income-tax (Exemption) v.Natrip Implementation Society (Delhi) . . . 333

S. 13(3) --Charitable purpose--Registration of trusts--Director (Exemptions) entitled to enquire into activities of trust before granting registration--Disqualification even where small portion of income enures to benefit of person mentioned in section 13(3)--Assessee conducting eye operations with funds received under licence from Canadian organisation to whom it was bound to pay licence fee of $1.00 yearly--Assessee not independent entity--Not entitled to registration-- Operation Eyesight Universal v. Director of Income-tax (Exemptions) (Hyderabad) . . . 268

S. 14A --Income--Expenditure relating to income not includible in total income--Disallowance--Commissioner (Appeals) can disallow in first instance--Disallowance at 10 per cent. of exempt income would suffice--Assessing Officer cannot simply brush aside disallowance calculated suo motu by assessee--Must give cogent reasons for not being satisfied with correctness of claim--No reasoned finding against disallowance computed and shown by assessee--Disallowance to be computed after affording reasonable opportunity to assessee-- Development Credit Bank Ltd. v. Deputy CIT(Mumbai) . . . 209

S. 32 --Depreciation--Ownership of asset--Sale and lease back--Normal lease--Civil dispute between lessor and lessee--Transaction genuine--Assessee entitled to depreciation-- Development Credit Bank Ltd. v. Deputy CIT(Mumbai) . . . 209

S. 32(1)(ii) --Depreciation--Rate of depreciation--Goodwill and furniture and fittings--To be bifurcated--Depreciation allowable at 25 per cent. on goodwill and 10 per cent. on furniture and fittings-- Tirumala Music Centre P. Ltd. v.Assistant CIT (Hyderabad) . . . 309

----Depreciation--Rate of depreciation--Payment towards leasehold rights--Goodwill--Matter remanded to allow depreciation on intangible asset-- Tirumala Music Centre P. Ltd. v. Assistant CIT (Hyderabad) . . . 309

S. 36(1)(vii) --Bad debts--Assessee debiting accounts with aggregate of amounts irrecoverable--No infirmity--Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Revision--Commissioner--Bad debts--Provision for--Working out of deduction--Change of opinion--Revision not permissible-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

S. 37 --Capital or revenue expenditure--Corporate membership of club--Meant for benefit of assessee and not for any particular employee--Expenditure wholly and exclusively for purposes of business--Allowable-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

S. 40A(3) --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Exception where payment made by agent of assessee--Payment of lorry hire charges to lorry drivers--Assessee neither owner of vehicle nor owner of goods carried--Lorry drivers cannot be considered as agents of assessee--Failure to show payments covered by any exception--Disallowance proper-- MRS Roadways v. Deputy CIT (Cochin) . . . 317

----Business expenditure--Disallowance--Payments in cash exceeding specified limit--Payments made to agents--Never claimed as expenditure--Not liable to tax deduction at source--Payments of reimbursement--Are purely for business expenses-- Deputy CIT v. Maruti Freight Movers Ltd. (Kolkata) . . . 305

S. 43B --Business expenditure--Deduction only on actual payment--Provident fund contribution made before due date of filing return--Allowable--Matter remanded to verify that payments made before due date of filing return-- Alstom Projects India Ltd. v. Additional CIT (Mumbai) . . . 322

S. 80-IB(10) --Revision--Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible-- Vanshree Builders and Developers P. Ltd. v.CIT (Bangalore) . . . 188

S. 80-IC --Industrial undertaking--Special deduction--Unit manufacturing perfumery compound--Licence from Directorate of Industries, registration for value added tax purposes, order of Commercial Tax Department establishing that factory was in existence and assessee was engaged in manufacturing of perfumery oils--Certificate from chartered engineers in respect of production of finished goods in short period--Factory closed in 2010--Inspection in 2012 by Income-tax Inspector not sufficient to dislodge evidence--Assessee enjoying benefit of special deduction in immediate preceding year--Rule of consistency--Not to be denied benefit-- Shree Veer Aromatics Herbs Products v.ITO (Delhi) . . . 282

S. 92C --International transaction--Determination of arm’s length price--Agreement between parties not to exclude other approved method of determining arm’s length price--Assessee can adopt any method specified in section 92C if able to show it to be most appropriate method--Failure by Transfer Pricing Officer to conduct pricing study and independently determine arm’s length price by taking candid transactions of unrelated parties--Matter remanded-- Assistant CIT v. SCM Microsystems (India) P. Ltd. (Chennai) . . . 178

S. 139(4) --Revision--Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible-- Vanshree Builders and Developers P. Ltd. v.CIT (Bangalore) . . . 188

S. 143(3) --Revision--Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible-- Vanshree Builders and Developers P. Ltd. v.CIT (Bangalore) . . . 188

S. 147 --Revision--Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible-- Vanshree Builders and Developers P. Ltd. v.CIT (Bangalore) . . . 188

S. 194C --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Payments made to agents--Never claimed as expenditure--Not liable to tax deduction at source--Payments of reimbursement--Are purely for business expenses-- Deputy CIT v. Maruti Freight Movers Ltd. (Kolkata) . . . 305

S. 194H --Deduction of tax at source--Commission--Mobile telephone service--Discount given by assessee to distributors on sale of SIM cards and recharge coupons--Constitutes commission--Assessee liable to deduct tax at source on such commission-- Bharati Airtel Ltd. v. Deputy CIT (TDS) (Cochin) . . . 263

S. 194J --Deduction of tax at source--Professional services--Third party administrator providing services to holders of health insurance policies--Payments to hospitals or nursing homes--Are payments for professional services--Tax deductible at source-- Health India TPA Services P. Ltd. v. ITO (OSD) (TDS) (Mumbai) . . . 298

S. 201(1), (1A) --Deduction of tax at source--Failure to deposit tax deducted at source with Central Government--Interim order of High Court in writ petition challenging validity of rule 3 directing assessee to place tax deducted at source in separate account till further orders--Assessee placing tax deducted at source amount in a separate account--Commissioner (Appeals) justified in directing Assessing Officer to wait till final order of High Court for recovery of tax deducted at source-- Deputy CIT (TDS) v. Power Grid Corporation of India Ltd. (Nagpur) . . . 203

S. 234A --Return of income--Delay in filing--Interest--Return filed in time but signed by general manager and chief manager and not by managing director--Merely defective not invalid--Interest not leviable-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

S. 263 --Revision--Commissioner--Bad debts--Provision for--Working out of deduction--Change of opinion--Revision not permissible-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Revision--Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible-- Vanshree Builders and Developers P. Ltd. v. CIT(Bangalore) . . . 188

Income-tax Rules, 1962 :

R. 3 --Deduction of tax at source--Failure to deposit tax deducted at source with Central Government--Interim order of High Court in writ petition challenging validity of rule 3 directing assessee to place tax deducted at source in separate account till further orders--Assessee placing tax deducted at source amount in a separate account--Commissioner (Appeals) justified in directing Assessing Officer to wait till final order of High Court for recovery of tax deducted at source-- Deputy CIT (TDS) v. Power Grid Corporation of India Ltd. (Nagpur) . . . 203

R. 6DD(k) --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Exception where payment made by agent of assessee--Payment of lorry hire charges to lorry drivers--Assessee neither owner of vehicle nor owner of goods carried--Lorry drivers cannot be considered as agents of assessee--Failure to show payments covered by any exception--Disallowance proper-- MRS Roadways v. Deputy CIT (Cochin) . . . 317

R. 8D --Income--Expenditure relating to income not includible in total income--Disallowance--Commissioner (Appeals) can disallow in first instance--Disallowance at 10 per cent. of exempt income would suffice--Assessing Officer cannot simply brush aside disallowance calculated suo motu by assessee--Must give cogent reasons for not being satisfied with correctness of claim--No reasoned finding against disallowance computed and shown by assessee--Disallowance to be computed after affording reasonable opportunity to assessee-- Development Credit Bank Ltd. v. Deputy CIT(Mumbai) . . . 209

ITR(TRIB) Volume 26 : Part 2 (Issue dated : 2-9-2013)

ITR’S TRIBUNAL TAX REPORTS (ITR (TRIB)) -- PRINT AND ONLINE EDITION

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Appeal to Commissioner (Appeals) --Recovery of tax--Application for stay of recovery during pendency of appeal--Case on merits--Assessee having already paid substantial portion of total tax liability--Stay of recovery of outstanding demand--Income-tax Act, 1961, s. 40(a)(ia)-- S. S. Warad v. Additional CIT (Bangalore) . . . 290

Business expenditure --Interest on borrowed capital--Proportionate interest paid by assessee worked out based on average cost of funds against interest income to be allowed-- Essar Power Ltd. v. Additional CIT (Mumbai) . . . 264

Business income or income from other sources --Infrastructure undertaking--Special deduction--Eligible profits--Interest on employees loan and advances, interest on margin money and interest income dues towards income-tax refund adjustment from purchaser of power--Not eligible for deduction--But to be assessed as business income for limited purpose of determining head of income--Income-tax Act, 1961, s. 80-IA. -- Essar Power Ltd. v. Additional CIT(Mumbai) . . . 264

Capital or revenue receipt --Supply of power by assessee to State Electricity Board--Under power purchase agreement Board to reimburse income-tax payable by assessee--Provision for tax recoverable--Income-tax calculated and paid by Board part of tariff charged by assessee on sale of electricity and not reimbursement of expenses--Amount is income in assessee’s hands--Income-tax Act, 1961, ss. 2(24), 40(a)(ii), 198-- Essar Power Ltd. v. Additional CIT(Mumbai) . . . 264

Company --Book profits--Computation--Amendment with retrospective effect--Exclusion of provision for income-tax recoverable--Matter remanded for reconsideration in light of amendment--Income-tax Act, 1961, s. 115JB, Expln. --Essar Power Ltd. v. Additional CIT (Mumbai) . . . 264

----Book profits--Computation--Change of law in 2009 with retrospective effect from April 1, 2001--Provision for unascertained liability--Matter remanded for reconsideration in light of amendment--Income-tax Act, 1961, s. 115JB,Expln. -- Essar Power Ltd. v. Additional CIT (Mumbai) . . . 264

PRINT EDITION

Volume 26 : Part 2 (Issue dated : 2-9-2013)

SUBJECT INDEX TO CASES REPORTED

Amalgamation of companies --Loss--Depreciation--Set off of brought forward loss and unabsorbed depreciation of amalgamating company--Certificate of chartered accountant--Not admitted by Dispute Resolution Panel observing that certificate appeared to be back dated--Assessee claiming to have evidence to rebut observation--Direction to Assessing Officer to readjudicate and decide under law--Matter remanded--Income-tax Act, 1961-- Alstom Projects India Ltd. v. Additional CIT (Mumbai) . . . 322

Bad debts --Assessee debiting accounts with aggregate of amounts irrecoverable--No infirmity--Income-tax Act, 1961, s. 36(1)(vii)-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

Business expenditure --Conversion of assessee, a co-operative bank to public limited company--Suits by erstwhile shareholders--Expenditure by way of legal and professional fees to protect title--Allowable-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Deduction only on actual payment--Provident fund contribution made before due date of filing return--Allowable--Matter remanded to verify that payments made before due date of filing return--Income-tax Act, 1961, s. 43B--Alstom Projects India Ltd. v. Additional CIT (Mumbai) . . . 322

----Disallowance--Payments in cash exceeding specified limit--Exception where payment made by agent of assessee--Payment of lorry hire charges to lorry drivers--Assessee neither owner of vehicle nor owner of goods carried--Lorry drivers cannot be considered as agents of assessee--Failure to show payments covered by any exception--Disallowance proper--Income-tax Act, 1961, s. 40A(3)--Income-tax Rules, 1962, r. 6DD(k)-- MRS Roadways v. Deputy CIT (Cochin) . . . 317

----Disallowance--Payments in cash exceeding specified limit--Payments made to agents--Never claimed as expenditure--Not liable to tax deduction at source--Payments of reimbursement--Are purely for business expenses--Income-tax Act, 1961, ss. 40A(3), 194C-- Deputy CIT v. Maruti Freight Movers Ltd. (Kolkata) . . . 305

----Stamp duty paid on lease agreement--Added back in computation--Not to be disallowed-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

Capital or revenue expenditure --Corporate membership of club--Meant for benefit of assessee and not for any particular employee--Expenditure wholly and exclusively for purposes of business--Allowable--Income-tax Act, 1961, s. 37-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Payment for re-acquiring premises given on rent--For betterment of title to capital asset--Expenses capital in nature-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Payments to banks association for participating in shared payment network system--Facility of connectivity of automated teller machine of one bank to another bank--Advantage of enduring nature--Expenditure capital--Assessee entitled to depreciation-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

Charitable purposes --Exemption--Income from property--Assessee paying advance for purchase of land from Government grant--To be treated as application of income--No violation of section 11(5)--Grant on capital account not income or corpus of trust--Interest on fixed deposits from unutilised funds on which Government had overriding title--At par with grant and not to be treated as income--Income-tax Act, 1961, ss. 11(5), 13(1)(d)-- Additional Director of Income-tax (Exemption) v. Natrip Implementation Society (Delhi) . . . 333

----Registration of trust--Factors to be considered--Commissioner and not any other authority to dispose of application for registration--Powers cannot be delegated unless permitted by statute--Communication or order signed by Income-tax Officer cannot be treated as disposal of application--Failure by Commissioner to pass such order within time limit specified in section 12A--Application deemed to be allowed--Income-tax Act, 1961, ss. 12A, 12AA-- Pravat v. CIT(Kolkata) . . . 294

----Registration of trusts--Director (Exemptions) entitled to enquire into activities of trust before granting registration--Disqualification even where small portion of income enures to benefit of person mentioned in section 13(3)--Assessee conducting eye operations with funds received under licence from Canadian organisation to whom it was bound to pay licence fee of $1.00 yearly--Assessee not independent entity--Not entitled to registration--Income-tax Act, 1961, ss. 11, 12AA, 13(3)-- Operation Eyesight Universal v. Director of Income-tax (Exemptions) (Hyderabad) . . . 268

Deduction of tax at source --Commission--Mobile telephone service--Discount given by assessee to distributors on sale of SIM cards and recharge coupons--Constitutes commission--Assessee liable to deduct tax at source on such commission--Income-tax Act, 1961, s. 194H-- Bharati Airtel Ltd. v. Deputy CIT (TDS) (Cochin) . . . 263

----Failure to deposit tax deducted at source with Central Government--Interim order of High Court in writ petition challenging validity of rule 3 directing assessee to place tax deducted at source in separate account till further orders--Assessee placing tax deducted at source amount in a separate account--Commissioner (Appeals) justified in directing Assessing Officer to wait till final order of High Court for recovery of tax deducted at source--Income-tax Rules, 1962, r. 3.--Income-tax Act, 1961, s. 201(1), (1A)-- Deputy CIT (TDS) v. Power Grid Corporation of India Ltd. (Nagpur) . . . 203

----Professional services--Third party administrator providing services to holders of health insurance policies--Payments to hospitals or nursing homes--Are payments for professional services--Tax deductible at source--Income-tax Act, 1961, s. 194J-- Health India TPA Services P. Ltd. v. ITO (OSD) (TDS) (Mumbai) . . . 298

Depreciation --Ownership of asset--Sale and lease back--Normal lease--Civil dispute between lessor and lessee--Transaction genuine--Assessee entitled to depreciation--Income-tax Act, 1961, s. 32-- Development Credit Bank Ltd.v. Deputy CIT (Mumbai) . . . 209

----Rate of depreciation--Goodwill and furniture and fittings--To be bifurcated--Depreciation allowable at 25 per cent. on goodwill and 10 per cent. on furniture and fittings--Income-tax Act, 1961, s. 32(1)(ii)-- Tirumala Music Centre P. Ltd. v. Assistant CIT (Hyderabad) . . . 309

----Rate of depreciation--Payment towards leasehold rights--Goodwill--Matter remanded to allow depreciation on intangible asset--Income-tax Act, 1961, s. 32(1)(ii)-- Tirumala Music Centre P. Ltd. v. Assistant CIT (Hyderabad) . . . 309

Export --Exemption--Export oriented unit--Telecommunication and internet charges--Incurred for export business--To be excluded from export turnover as well as total turnover--Belated payment of employees’ provident fund contributions--Payment made before date of filing of returns--Allowable--Income-tax Act, 1961, s. 10B-- Assistant CITv. SCM Microsystems (India) P. Ltd. (Chennai) . . . 178

Income --Expenditure relating to income not includible in total income--Disallowance--Commissioner (Appeals) can disallow in first instance--Disallowance at 10 per cent. of exempt income would suffice--Assessing Officer cannot simply brush aside disallowance calculated suo motu by assessee--Must give cogent reasons for not being satisfied with correctness of claim--No reasoned finding against disallowance computed and shown by assessee--Disallowance to be computed after affording reasonable opportunity to assessee--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

Industrial undertaking --Special deduction--Unit manufacturing perfumery compound--Licence from Directorate of Industries, registration for value added tax purposes, order of Commercial Tax Department establishing that factory was in existence and assessee was engaged in manufacturing of perfumery oils--Certificate from chartered engineers in respect of production of finished goods in short period--Factory closed in 2010--Inspection in 2012 by Income-tax Inspector not sufficient to dislodge evidence--Assessee enjoying benefit of special deduction in immediate preceding year--Rule of consistency--Not to be denied benefit--Income-tax Act, 1961, s. 80-IC-- Shree Veer Aromatics Herbs Products v. ITO (Delhi) . . . 282

Interest-tax --Issue of interest itself deleted--No question of levy of interest-tax--Interest-tax not be leviable on interest collected by the assessee--Interest-tax Act, 1974-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

International transaction --Determination of arm’s length price--Agreement between parties not to exclude other approved method of determining arm’s length price--Assessee can adopt any method specified in section 92C if able to show it to be most appropriate method--Failure by Transfer Pricing Officer to conduct pricing study and independently determine arm’s length price by taking candid transactions of unrelated parties--Matter remanded--Income-tax Act, 1961, s. 92C-- Assistant CIT v. SCM Microsystems (India) P. Ltd. (Chennai) . . . 178

----Transfer pricing--Determination of arm’s length price--Transfer pricing adjustment can be made only on transactions with associated enterprises--Proportionate adjustment falling within plus or minus 5 per cent.--No transfer pricing adjustment required--Income-tax Act, 1961-- Alstom Projects India Ltd. v. Additional CIT (Mumbai) . . . 322

Loss --Revaluation of outstanding contracts on net basis--Allowable-- Development Credit Bank Ltd. v. Deputy CIT(Mumbai) . . . 209

----Revaluation of securities at market rate--Resulting loss allowable-- Development Credit Bank Ltd. v. Deputy CIT(Mumbai) . . . 209

Return of income --Delay in filing--Interest--Return filed in time but signed by general manager and chief manager and not by managing director--Merely defective not invalid--Interest not leviable--Income-tax Act, 1961, s. 234A--Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

Revision --Commissioner--Bad debts--Provision for--Working out of deduction--Change of opinion--Revision not permissible--Income-tax Act, 1961, ss. 36(1)(vii), 263-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible--Income-tax Act, 1961, ss. 80-IB(10), 139(4), 143(3), 147, 263--Vanshree Builders and Developers P. Ltd. v. CIT (Bangalore) . . . 188

Wealth-tax --Valuation of asset--Motor cars--80 per cent. of insurance value to be taken--Not written down value--Wealth-tax Act, 1957-- Zee Entertainment Enterprises Ltd. v. Assistant CWT (Mumbai) . . . 314

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 10B --Export--Exemption--Export oriented unit--Telecommunication and internet charges--Incurred for export business--To be excluded from export turnover as well as total turnover--Belated payment of employees’ provident fund contributions--Payment made before date of filing of returns--Allowable-- Assistant CIT v. SCM Microsystems (India) P. Ltd. (Chennai) . . . 178

S. 11 --Charitable purpose--Registration of trusts--Director (Exemptions) entitled to enquire into activities of trust before granting registration--Disqualification even where small portion of income enures to benefit of person mentioned in section 13(3)--Assessee conducting eye operations with funds received under licence from Canadian organisation to whom it was bound to pay licence fee of $1.00 yearly--Assessee not independent entity--Not entitled to registration-- Operation Eyesight Universal v. Director of Income-tax (Exemptions) (Hyderabad) . . . 268

S. 11(5) --Charitable purposes--Exemption--Income from property--Assessee paying advance for purchase of land from Government grant--To be treated as application of income--No violation of section 11(5)--Grant on capital account not income or corpus of trust--Interest on fixed deposits from unutilised funds on which Government had overriding title--At par with grant and not to be treated as income-- Additional Director of Income-tax (Exemption) v.Natrip Implementation Society (Delhi) . . . 333

S. 12A --Charitable purpose--Registration of trust--Factors to be considered--Commissioner and not any other authority to dispose of application for registration--Powers cannot be delegated unless permitted by statute--Communication or order signed by Income-tax Officer cannot be treated as disposal of application--Failure by Commissioner to pass such order within time limit specified in section 12A--Application deemed to be allowed-- Pravatv. CIT (Kolkata) . . . 294

S. 12AA --Charitable purpose--Registration of trusts--Director (Exemptions) entitled to enquire into activities of trust before granting registration--Disqualification even where small portion of income enures to benefit of person mentioned in section 13(3)--Assessee conducting eye operations with funds received under licence from Canadian organisation to whom it was bound to pay licence fee of $1.00 yearly--Assessee not independent entity--Not entitled to registration-- Operation Eyesight Universal v. Director of Income-tax (Exemptions) (Hyderabad) . . . 268

----Charitable purpose--Registration of trust--Factors to be considered--Commissioner and not any other authority to dispose of application for registration--Powers cannot be delegated unless permitted by statute--Communication or order signed by Income-tax Officer cannot be treated as disposal of application--Failure by Commissioner to pass such order within time limit specified in section 12A--Application deemed to be allowed-- Pravat v. CIT (Kolkata) . . . 294

S. 13(1)(d) --Charitable purposes--Exemption--Income from property--Assessee paying advance for purchase of land from Government grant--To be treated as application of income--No violation of section 11(5)--Grant on capital account not income or corpus of trust--Interest on fixed deposits from unutilised funds on which Government had overriding title--At par with grant and not to be treated as income-- Additional Director of Income-tax (Exemption) v.Natrip Implementation Society (Delhi) . . . 333

S. 13(3) --Charitable purpose--Registration of trusts--Director (Exemptions) entitled to enquire into activities of trust before granting registration--Disqualification even where small portion of income enures to benefit of person mentioned in section 13(3)--Assessee conducting eye operations with funds received under licence from Canadian organisation to whom it was bound to pay licence fee of $1.00 yearly--Assessee not independent entity--Not entitled to registration-- Operation Eyesight Universal v. Director of Income-tax (Exemptions) (Hyderabad) . . . 268

S. 14A --Income--Expenditure relating to income not includible in total income--Disallowance--Commissioner (Appeals) can disallow in first instance--Disallowance at 10 per cent. of exempt income would suffice--Assessing Officer cannot simply brush aside disallowance calculated suo motu by assessee--Must give cogent reasons for not being satisfied with correctness of claim--No reasoned finding against disallowance computed and shown by assessee--Disallowance to be computed after affording reasonable opportunity to assessee-- Development Credit Bank Ltd. v. Deputy CIT(Mumbai) . . . 209

S. 32 --Depreciation--Ownership of asset--Sale and lease back--Normal lease--Civil dispute between lessor and lessee--Transaction genuine--Assessee entitled to depreciation-- Development Credit Bank Ltd. v. Deputy CIT(Mumbai) . . . 209

S. 32(1)(ii) --Depreciation--Rate of depreciation--Goodwill and furniture and fittings--To be bifurcated--Depreciation allowable at 25 per cent. on goodwill and 10 per cent. on furniture and fittings-- Tirumala Music Centre P. Ltd. v.Assistant CIT (Hyderabad) . . . 309

----Depreciation--Rate of depreciation--Payment towards leasehold rights--Goodwill--Matter remanded to allow depreciation on intangible asset-- Tirumala Music Centre P. Ltd. v. Assistant CIT (Hyderabad) . . . 309

S. 36(1)(vii) --Bad debts--Assessee debiting accounts with aggregate of amounts irrecoverable--No infirmity--Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Revision--Commissioner--Bad debts--Provision for--Working out of deduction--Change of opinion--Revision not permissible-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

S. 37 --Capital or revenue expenditure--Corporate membership of club--Meant for benefit of assessee and not for any particular employee--Expenditure wholly and exclusively for purposes of business--Allowable-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

S. 40A(3) --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Exception where payment made by agent of assessee--Payment of lorry hire charges to lorry drivers--Assessee neither owner of vehicle nor owner of goods carried--Lorry drivers cannot be considered as agents of assessee--Failure to show payments covered by any exception--Disallowance proper-- MRS Roadways v. Deputy CIT (Cochin) . . . 317

----Business expenditure--Disallowance--Payments in cash exceeding specified limit--Payments made to agents--Never claimed as expenditure--Not liable to tax deduction at source--Payments of reimbursement--Are purely for business expenses-- Deputy CIT v. Maruti Freight Movers Ltd. (Kolkata) . . . 305

S. 43B --Business expenditure--Deduction only on actual payment--Provident fund contribution made before due date of filing return--Allowable--Matter remanded to verify that payments made before due date of filing return-- Alstom Projects India Ltd. v. Additional CIT (Mumbai) . . . 322

S. 80-IB(10) --Revision--Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible-- Vanshree Builders and Developers P. Ltd. v.CIT (Bangalore) . . . 188

S. 80-IC --Industrial undertaking--Special deduction--Unit manufacturing perfumery compound--Licence from Directorate of Industries, registration for value added tax purposes, order of Commercial Tax Department establishing that factory was in existence and assessee was engaged in manufacturing of perfumery oils--Certificate from chartered engineers in respect of production of finished goods in short period--Factory closed in 2010--Inspection in 2012 by Income-tax Inspector not sufficient to dislodge evidence--Assessee enjoying benefit of special deduction in immediate preceding year--Rule of consistency--Not to be denied benefit-- Shree Veer Aromatics Herbs Products v.ITO (Delhi) . . . 282

S. 92C --International transaction--Determination of arm’s length price--Agreement between parties not to exclude other approved method of determining arm’s length price--Assessee can adopt any method specified in section 92C if able to show it to be most appropriate method--Failure by Transfer Pricing Officer to conduct pricing study and independently determine arm’s length price by taking candid transactions of unrelated parties--Matter remanded-- Assistant CIT v. SCM Microsystems (India) P. Ltd. (Chennai) . . . 178

S. 139(4) --Revision--Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible-- Vanshree Builders and Developers P. Ltd. v.CIT (Bangalore) . . . 188

S. 143(3) --Revision--Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible-- Vanshree Builders and Developers P. Ltd. v.CIT (Bangalore) . . . 188

S. 147 --Revision--Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible-- Vanshree Builders and Developers P. Ltd. v.CIT (Bangalore) . . . 188

S. 194C --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Payments made to agents--Never claimed as expenditure--Not liable to tax deduction at source--Payments of reimbursement--Are purely for business expenses-- Deputy CIT v. Maruti Freight Movers Ltd. (Kolkata) . . . 305

S. 194H --Deduction of tax at source--Commission--Mobile telephone service--Discount given by assessee to distributors on sale of SIM cards and recharge coupons--Constitutes commission--Assessee liable to deduct tax at source on such commission-- Bharati Airtel Ltd. v. Deputy CIT (TDS) (Cochin) . . . 263

S. 194J --Deduction of tax at source--Professional services--Third party administrator providing services to holders of health insurance policies--Payments to hospitals or nursing homes--Are payments for professional services--Tax deductible at source-- Health India TPA Services P. Ltd. v. ITO (OSD) (TDS) (Mumbai) . . . 298

S. 201(1), (1A) --Deduction of tax at source--Failure to deposit tax deducted at source with Central Government--Interim order of High Court in writ petition challenging validity of rule 3 directing assessee to place tax deducted at source in separate account till further orders--Assessee placing tax deducted at source amount in a separate account--Commissioner (Appeals) justified in directing Assessing Officer to wait till final order of High Court for recovery of tax deducted at source-- Deputy CIT (TDS) v. Power Grid Corporation of India Ltd. (Nagpur) . . . 203

S. 234A --Return of income--Delay in filing--Interest--Return filed in time but signed by general manager and chief manager and not by managing director--Merely defective not invalid--Interest not leviable-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

S. 263 --Revision--Commissioner--Bad debts--Provision for--Working out of deduction--Change of opinion--Revision not permissible-- Development Credit Bank Ltd. v. Deputy CIT (Mumbai) . . . 209

----Revision--Commissioner--Housing project--Special deduction--Return filed after expiry of time specified in section 139(4)--Deduction allowed in assessment made under section 143(3)--Not erroneous and prejudicial to interests of Revenue--Revision to withdraw deduction not permissible-- Vanshree Builders and Developers P. Ltd. v. CIT(Bangalore) . . . 188

Income-tax Rules, 1962 :

R. 3 --Deduction of tax at source--Failure to deposit tax deducted at source with Central Government--Interim order of High Court in writ petition challenging validity of rule 3 directing assessee to place tax deducted at source in separate account till further orders--Assessee placing tax deducted at source amount in a separate account--Commissioner (Appeals) justified in directing Assessing Officer to wait till final order of High Court for recovery of tax deducted at source-- Deputy CIT (TDS) v. Power Grid Corporation of India Ltd. (Nagpur) . . . 203

R. 6DD(k) --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Exception where payment made by agent of assessee--Payment of lorry hire charges to lorry drivers--Assessee neither owner of vehicle nor owner of goods carried--Lorry drivers cannot be considered as agents of assessee--Failure to show payments covered by any exception--Disallowance proper-- MRS Roadways v. Deputy CIT (Cochin) . . . 317

R. 8D --Income--Expenditure relating to income not includible in total income--Disallowance--Commissioner (Appeals) can disallow in first instance--Disallowance at 10 per cent. of exempt income would suffice--Assessing Officer cannot simply brush aside disallowance calculated suo motu by assessee--Must give cogent reasons for not being satisfied with correctness of claim--No reasoned finding against disallowance computed and shown by assessee--Disallowance to be computed after affording reasonable opportunity to assessee-- Development Credit Bank Ltd. v. Deputy CIT(Mumbai) . . . 209