INCOME TAX REPORTS (ITR) Volume 345 Part 3 (Issue dated 2-7-2012) SUBJECT INDEX TO CASES REPORTED IN THIS PART

INCOME TAX REPORTS (ITR)

Volume 345 Part 3 (Issue dated 2-7-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Business expenditure --Deduction--Expenditure incurred on education of daughter of one of directors abroad--Finding by Commissioner (Appeals) as well as Tribunal that expenditure not wholly and exclusively incurred for purpose of business--Finding of fact--Income-tax Act, 1961, s. 37-- Natco Exports P. Ltd. v . CIT (Delhi) . . . 188

Income-tax --General principles--Procedure strictly according to law--Satisfaction of one authority cannot be substituted by satisfaction of another authority-- CIT v . SPL’s Siddhartha Ltd . (Delhi) . . . 223

International transactions --Arms length price--Determination--Payment for acquisition of use of technical know-how incurred for genuine business purposes--To be allowed even if assessee suffered continuous losses in business--Income-tax Act, 1961, s. 92CA--Income-tax Rules, 1962, r. 10B(1)(a)-- CIT v . EKL Appliances Ltd .  (Delhi) . . . 241

Penalty --Repayment of loans or deposits otherwise than by account payee cheque or draft--Provision mandatory--Repayment by debit of account through journal entries--Is in contravention of provision--But penalty can be avoided on showing reasonable cause--Assessee becoming liable to repay loan and receive similar sum towards sale price of shares sold to creditor--Account settled by journal entries--No finding that repayment not bona fide or attempt at evasion of tax--Reasonable cause shown--Penalty not leviable--Income-tax Act, 1961, ss. 269T, 271E, 273B-- CIT v . Triumph International Finance (I.) Ltd . (Bom) . . . 270

Perquisite --Salary--Tax on salary paid by employer--Is a perquisite--Tax component of such perquisite value cannot be included in computation of perquisite value of rent free accommodation--Income-tax Rules, 1962, r. 3--Income-tax Act, 1961, s. 17(2)(iv)-- CIT v. Telsuo Mitera (Delhi) . . . 256

----Valuation--Tax on salary paid by employer--Excludible while computing perquisite of rent free accommodation--Income-tax Act, 1961, s. 17(2)(iv)--Income-tax Rules, 1962, r. 3-- CIT v . Hidechito Shiga (Delhi) . . . 269

Reassessment --Notice--Assessing Officer initially holding transfer of equity shares investments but on reassessment as trade--Change of opinion--Notice to be quashed--Income-tax Act, 1961, ss. 147, 148-- Ritu Investments P. Ltd . v . Deputy CIT  (Delhi) . . . 214

----Notice--Jurisdiction--No universal proposition that notice can never be served when time for issue of notice under section 143(2) has not expired--Assessee deliberately keeping matter pending and continuing to appear and neither protesting nor objecting--Assessing Officer not prevented or barred from recording reasons in writing and issuing fresh notice under section 148--Undertaking by Department to withdraw notice with liberty to issue fresh notice--Income-tax Act, 1961, ss. 147, 148-- Acorus Unitech Wireless P. Ltd . v . Deputy CIT (Delhi) . . . 228

----Notice--Sanction of Joint Commissioner required--Sanction obtained from Commissioner--Notice not valid--Income-tax Act, 1961, ss. 148, 151, 292B-- CIT v. SPL’s Siddhartha Ltd. (Delhi) . . . 223

Revision --Avoidance of tax--International transactions--Circular stating that reference must be made to Transfer Pricing Officer where value exceeds Rs. 5 crores--Circular binding on Assessing Officer--Failure to make reference to Transfer Pricing Officer--Order can be revised--Income-tax Act, 1961, ss. 92CA, 263--Circular No. 3, dated 20-5-2003-- Ranbaxy Laboratories Ltd . v. CIT (Delhi) . . . 193

AUTHORITY FOR ADVANCE RULINGS

Non-resident --Taxability in India--Fees for technical services--Indian company rendering technical services to overseas group companies--Shared services company incorporated in the Netherlands to support global finance functions of group--Branch office in Philippines performing the back office finance services--Philippines branch providing business support services to Indian company--Services rendered by Netherlands company though Philippines branch--DTAA between India and Philippines not applicable--Consideration for financial services received by Indian company not fees for technical services--Payment received by Netherlands company not chargeable to tax in India--No obligation on Indian company to withhold tax--Income-tax Act, 1961, s. 195--Double Taxation Avoidance Agreement between India and the Netherlands, arts. 5, 12-- Shell Technology India Private Limited, In re . . . 206

INCOME TAX REPORTS (ITR) Volume 343 : Part 2 (Issue dated 7-5-2012) SUBJECT INDEX TO CASES REPORTED IN THIS PART

INCOME TAX REPORTS (ITR)

Volume 343 : Part 2 (Issue dated 7-5-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Assessment --Reference to Departmental Valuation Officer--Change of law of with retrospective effect--Effect--Construction in factory building relating to assessment year 1984-85--Reference by Assessing Officer to Departmental Valuation Officer--Not justified--Income-tax Act, 1961, s. 142A-- CIT v. Nabha Solvex (P) Ltd .

(P&H) . . . 178

Business expenditure --Expenditure on higher education of two directors of assessee--Disallowance on ground directors are children of managing director--Not proper--Assessing Officer to consider whether assessee entitled to claim deduction under section 37(1)--Income-tax Act, 1961, ss. 37(1), 144(1)(b)-- Krishna Fabrications Ltd . v. Joint CIT (Asstt.) (Karn) . . . 126

Capital gains --Transfer--Slump sale--Agreement for transfer of business as going concern--Not of itemised assets--Capital gains not chargeable--Income-tax Act, 1961, s. 45-- CIT v. Polychem Ltd. (Bom) . . . 115

Reassessment --Notice--Assessing Officer finding that claim of depreciation bogus--Notice valid--Income-tax Act, 1961, s. 148-- Indo European Breweries Ltd. v. ITO (Bom) . . . 195

----Notice--Non-resident company deriving income by maintaining and operating super computer sold to Government of India--Assessment order showing Assessing Officer aware of nature and character of obligation performed for which consideration paid--Reassessment on ground agreement between assessee and Government not produced before Assessing Officer--Not proper--Income-tax Act, 1961, ss. 147, 148-- CIT v. Cray Research India Ltd. (Delhi) . . . 212

----Reassessment after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Meaning of "primary facts"--Claim for special deduction under sections 80HHC and 80-IB--Audited accounts and auditor's report submitted--Special deductions allowed--Reassessment notice after four years on ground that special deductions were excessive--Notice not valid--Income-tax Act, 1961, s. 147-- CIT v. Purolator India Ltd. (Delhi) . . . 155

----Reassessment after four years--Condition precedent--Failure to disclose material facts necessary for assessment--No such failure--Reassessment to correct errors in assessment--Not valid--Income-tax Act, 1961, s. 147-- Titanor Components Ltd . v. Asst. CIT (Bom) . . . 183

----Reassessment after four years--Permissible on basis of disclosures made by assessee in assessment for subsequent year--Disclosures not made in year in question--Amounts to failure to disclose material facts--Income-tax Act, 1961, ss. 10A, 147, 148-- Siemens Information Systems Limited v. Asst. CIT (Bom) . . . 188

----Reassessment after four years--Validity--No failure to disclose material facts necessary for assessment--Deduction of expenditure in original assessment--Reassessment proceedings to disallow expenditure--Not valid--Income-tax Act, 1961, s. 147-- BLB Limited v. Asst. CIT (Delhi) . . . 129

----Validity--Failure to disclose material facts necessary for assessment--Details regarding loan not furnished--Assessment order for assessment year 1999-2000 that loan from sister concern was assessable as deemed dividend--Reassessment proceedings to assess such loans as deemed dividend in assessment year 2000-01--Valid--Income-tax Act, 1961, s. 147-- Atma Ram Properties Private Limited v. Deputy CIT

(Delhi) . . . 141

----Validity--Reassessment after four years--Failure to disclose material facts necessary for assessment--Loans from sister concern--Facts disclosed by assessee--Failure to assess loans as deemed dividends--Reassessment proceedings not valid for assessment year 1999-2000--Income-tax Act, 1961, s. 147-- Atma Ram Properties Private Limited v. Deputy CIT (Delhi) . . . 141

Revision --Erroneous and prejudicial to Revenue--General principles--Special deductions under sections 80-I, 80-IA and 80HHC granted without allocation of expenditure to those units--Revision justified--Revision to allocate expenditure on green tea cess, interest and agency commission--Not justified--Income-tax Act, 1961, s. 263-- CIT v. Hindustan Lever Ltd. (Bom) . . . 161

AUTHORITY FOR ADVANCE RULINGS

Advance ruling --Authority--Jurisdiction--Prohibition where question in issue before authorities under Act--Application by Indian company whether tax deductible at source on payments to non-resident--Is in effect question of taxability of payments in hands of non-resident--Non-resident already assessed and appeal pending before Tribunal--Question already pending before income-tax authority--Application by Indian company not maintainable--Income-tax Act, 1961, ss. 195, 245N(a)(ii), 245R(2), 245S-- Nuclear Power Corporation of India Ltd. , In re . . . 220

----Maintainability--Question on which ruling sought already pending before income-tax authority--Application not maintainable--Date of filing return is date to be reckoned for determination whether question already pending before authority--Income-tax Act, 1961, s. 245R(2)-- WaveField Inseis ASA , In re . . . 136

Non-resident --Purchase of aircraft by Indian company from company incorporated in France--COFACE, body incorporated on behalf of French State, ensuring credit facility--Promissory notes, for principal and interest separately executed by Indian buyer in favour of foreign seller--Promissory notes irrevocably and unconditionally assigned by seller to BNP Paribas--Interest payable by Indian buyer to seller or to BNP not taxable in India--Income-tax Act, 1961, s. 195--Double Taxation Avoidance Agreement between India and France, art. 12(3)(b)-- Poonawalla Aviation Private Limited , In re

. . . 202

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance Agreement between India and France :

Art. 12(3)(b) --Non-resident--Purchase of aircraft by Indian company from company incorporated in France--COFACE, body incorporated on behalf of French State, ensuring credit facility--Promissory notes, for principal and interest separately executed by Indian buyer in favour of foreign seller--Promissory notes irrevocably and unconditionally assigned by seller to BNP Paribas--Interest payable by Indian buyer to seller or to BNP not taxable in India-- Poonawalla Aviation Private Limited , In re

(AAR) . . . 202

Income-tax Act, 1961 :

S. 10A --Reassessment--Reassessment after four years--Permissible on basis of disclosures made by assessee in assessment for subsequent year--Disclosures not made in year in question--Amounts to failure to disclose material facts-- Siemens Information Systems Limited v. Asst. CIT (Bom) . . . 188

S. 37(1) --Business expenditure--Expenditure on higher education of two directors of assessee--Disallowance on ground directors are children of managing director--Not proper--Assessing Officer to consider whether assessee entitled to claim deduction under section 37(1)-- Krishna Fabrications Ltd . v. Joint CIT (Asstt.)

(Karn) . . . 126

S. 45 --Capital gains--Transfer--Slump sale--Agreement for transfer of business as going concern--Not of itemised assets--Capital gains not chargeable-- CIT v. Polychem Ltd. (Bom) . . . 115

S. 142A --Assessment--Reference to Departmental Valuation Officer--Change of law of with retrospective effect--Effect--Construction in factory building relating to assessment year 1984-85--Reference by Assessing Officer to Departmental Valuation Officer--Not justified-- CIT v. Nabha Solvex (P) Ltd . (P&H) . . . 178

S. 144(1)(b) --Business expenditure--Expenditure on higher education of two directors of assessee--Disallowance on ground directors are children of managing director--Not proper--Assessing Officer to consider whether assessee entitled to claim deduction under section 37(1)-- Krishna Fabrications Ltd . v. Joint CIT (Asstt.)

(Karn) . . . 126

S. 147 --Reassessment--Notice--Non-resident company deriving income by maintaining and operating super computer sold to Government of India--Assessment order showing Assessing Officer aware of nature and character of obligation performed for which consideration paid--Reassessment on ground agreement between assessee and Government not produced before Assessing Officer--Not proper-- CIT v. Cray Research India Ltd. (Delhi) . . . 212

----Reassessment--Reassessment after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Meaning of "primary facts"--Claim for special deduction under sections 80HHC and 80-IB--Audited accounts and auditor's report submitted--Special deductions allowed--Reassessment notice after four years on ground that special deductions were excessive--Notice not valid-- CIT v. Purolator India Ltd. (Delhi) . . . 155

----Reassessment--Reassessment after four years--Condition precedent--Failure to disclose material facts necessary for assessment--No such failure--Reassessment to correct errors in assessment--Not valid-- Titanor Components Ltd . v. Asst. CIT

(Bom) . . . 183

----Reassessment--Reassessment after four years--Permissible on basis of disclosures made by assessee in assessment for subsequent year--Disclosures not made in year in question--Amounts to failure to disclose material facts-- Siemens Information Systems Limited v. Asst. CIT (Bom) . . . 188

----Reassessment--Reassessment after four years--Validity--No failure to disclose material facts necessary for assessment--Deduction of expenditure in original assessment--Reassessment proceedings to disallow expenditure--Not valid-- BLB Limited v. Asst. CIT (Delhi) . . . 129

----Reassessment--Validity--Failure to disclose material facts necessary for assessment--Details regarding loan not furnished--Assessment order for assessment year 1999-2000 that loan from sister concern was assessable as deemed dividend--Reassessment proceedings to assess such loans as deemed dividend in assessment year 2000-01--Valid-- Atma Ram Properties Private Limited v. Deputy CIT

(Delhi) . . . 141

----Reassessment--Validity--Reassessment after four years--Failure to disclose material facts necessary for assessment--Loans from sister concern--Facts disclosed by assessee--Failure to assess loans as deemed dividends--Reassessment proceedings not valid for assessment year 1999-2000-- Atma Ram Properties Private Limited v. Deputy CIT (Delhi) . . . 141

S. 148 --Reassessment--Notice--Assessing Officer finding that claim of depreciation bogus--Notice valid-- Indo European Breweries Ltd. v. ITO (Bom) . . . 195

----Reassessment--Notice--Non-resident company deriving income by maintaining and operating super computer sold to Government of India--Assessment order showing Assessing Officer aware of nature and character of obligation performed for which consideration paid--Reassessment on ground agreement between assessee and Government not produced before Assessing Officer--Not proper-- CIT v. Cray Research India Ltd.

(Delhi) . . . 212

----Reassessment--Reassessment after four years--Permissible on basis of disclosures made by assessee in assessment for subsequent year--Disclosures not made in year in question--Amounts to failure to disclose material facts-- Siemens Information Systems Limited v. Asst. CIT (Bom) . . . 188

S. 195 --Advance ruling--Authority--Jurisdiction--Prohibition where question in issue before authorities under Act--Application by Indian company whether tax deductible at source on payments to non-resident--Is in effect question of taxability of payments in hands of non-resident--Non-resident already assessed and appeal pending before Tribunal--Question already pending before income-tax authority--Application by Indian company not maintainable-- Nuclear Power Corporation of India Ltd. , In re

(AAR) . . . 220

----Non-resident--Purchase of aircraft by Indian company from company incorporated in France--COFACE, body incorporated on behalf of French State, ensuring credit facility--Promissory notes, for principal and interest separately executed by Indian buyer in favour of foreign seller--Promissory notes irrevocably and unconditionally assigned by seller to BNP Paribas--Interest payable by Indian buyer to seller or to BNP not taxable in India-- Poonawalla Aviation Private Limited , In re (AAR) . . . 202

S. 245N(a)(ii) --Advance ruling--Authority--Jurisdiction--Prohibition where question in issue before authorities under Act--Application by Indian company whether tax deductible at source on payments to non-resident--Is in effect question of taxability of payments in hands of non-resident--Non-resident already assessed and appeal pending before Tribunal--Question already pending before income-tax authority--Application by Indian company not maintainable-- Nuclear Power Corporation of India Ltd. , In re

(AAR) . . . 220

S. 245R(2) --Advance ruling--Authority--Jurisdiction--Prohibition where question in issue before authorities under Act--Application by Indian company whether tax deductible at source on payments to non-resident--Is in effect question of taxability of payments in hands of non-resident--Non-resident already assessed and appeal pending before Tribunal--Question already pending before income-tax authority--Application by Indian company not maintainable-- Nuclear Power Corporation of India Ltd. , In re

(AAR) . . . 220

----Advance ruling--Maintainability--Question on which ruling sought already pending before income-tax authority--Application not maintainable--Date of filing return is date to be reckoned for determination whether question already pending before authority-- WaveField Inseis ASA , In re (AAR) . . . 136

S. 245S --Advance ruling--Authority--Jurisdiction--Prohibition where question in issue before authorities under Act--Application by Indian company whether tax deductible at source on payments to non-resident--Is in effect question of taxability of payments in hands of non-resident--Non-resident already assessed and appeal pending before Tribunal--Question already pending before income-tax authority--Application by Indian company not maintainable-- Nuclear Power Corporation of India Ltd. , In re

(AAR) . . . 220

S. 263 --Revision--Erroneous and prejudicial to Revenue--General principles--Special deductions under sections 80-I, 80-IA and 80HHC granted without allocation of expenditure to those units--Revision justified--Revision to allocate expenditure on green tea cess, interest and agency commission--Not justified-- CIT v. Hindustan Lever Ltd. (Bom) . . . 161

INCOME TAX REPORTS (ITR) Volume 343 : Part 1 (Issue dated 30-4-2012) SUBJECT INDEX TO CASES REPORTED IN THIS PART

INCOME TAX REPORTS (ITR)

Volume 343 : Part 1 (Issue dated 30-4-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Export --Special deduction--Computation of profits--Sale of DEPB credit--Sale value less value of DEPB--Ninety per cent. of receipt of nature mentioned in Explanation (baa)(1) included in profits alone to be deducted--Ninety per cent. of net interest or net rent, included in profits, and not of gross interest or gross rent, to be deducted--Income-tax Act, 1961, s. 80HHC, Expln. (baa)-- ACG Associated Capsules Pvt. Ltd. v. CIT

. . . 89

HIGH COURTS

Business expenditure --Royalty--Tribunal allowing expenses in earlier years--No question of law--Income-tax Act, 1961-- CIT v. Galaxy Surfactants Ltd .

(Bom) . . . 108

Charitable purpose --Registration of trusts--Commissioner--Power to cancel registration--Amendment of provision empowering Commissioner to cancel registration granted to trust under section 12A--Valid--Income-tax Act, 1961, s. 12AA(3)-- Sinhagad Technical Education Society v. CIT (Bom) . . . 23

Deduction of tax at source --Non-resident--Permanent establishment--Convention between India and Netherlands treating branch office in India as a separate entity--No obligation on part of branch office in India to deduct tax while making interest remittance to its head office or any other foreign branch--Double Taxation Avoidance Agreement between India and the Netherlands, arts. 5(2), 7(2)--Income-tax Act, 1961, ss. 40(a)(i), 195(1)-- ABN Amro Bank, N. V . v. CIT (Cal) . . . 81

Export --Deduction under section 10B--Loss in eligible unit could be set off against profits of business--Income-tax Act, 1961, s. 10B-- CIT v. Galaxy Surfactants Ltd.

(Bom) . . . 108

----Special deduction under section 80HHC--Conditions precedent--Export and receipt of sale proceeds in convertible foreign exchange--No condition that exports must be from India--Assessee purchasing goods from one foreign country and transporting it to another foreign country--Entitled to special deduction under section 80HHC--Income-tax Act, 1961, ss. 80HHC, 80HHE-- Anil Kumar v. ITO

(Karn) . . . 30

Interpretation of taxing statutes --Interpretation beneficial to assessee-- Anil Kumar v. ITO (Karn) . . . 30

Recovery of tax --Stay of recovery proceedings--Assessee appointed agent of State Government--Position accepted for assessment years 2003-04, 2004-05, 2005-06--Assessment and demand for tax for assessment year 2006-07--Appeal to Commissioner (Appeals) and application for stay of recovery proceedings--Direction for expeditious disposal of appeal and stay of demand till disposal of appeal--Income-tax Act, 1961-- City and Industrial Development Corporation of Maharashtra Ltd. v. Asst. CIT (Bom) . . . 102

Refund --Refund of income-tax and wealth-tax--General principles--Scope of article 265 of Constitution--Difference between tax collected or paid under statutes declared unconstitutional and tax collected or paid under valid statute but wrong interpretation of statute or wrong determination of facts--Constitution of India, art. 265--Income-tax Act, 1961--Wealth-tax Act, 1957-- Indglonal Investment and Finance Ltd . v. ITO

(Delhi) . . . 44

Revision --Jurisdiction--Limitation--Doctrine of merger--Order of assessment does not merge in orders of reassessment as regards issues not forming subject-matter of reassessment--Limitation for revision of assessment order in respect of those issues--Runs from date of assessment order not from date of reassessment orders--Income-tax Act, 1961, ss. 143(3), 148, 263(2)-- CIT v. ICICI Bank Ltd. (Bom) . . . 74

AUTHORITY FOR ADVANCE RULINGS

Advance ruling --Value as precedent--Income-tax Act, 1961, s. 245R(4)-- Citrix Systems Asia Pacific Pty. Limited, In re . . . 1

Royalty --Sale or licensing for use of copyrighted software is grant of right to use copyright--Payment therefor is royalty--Non-resident--Appointment of non-exclusive distributor of software products in India--Payment from distributor for sale of software product--Subscription for updates--Payment for subscription advantage programme--Royalty--Indian distributor to withhold taxes in India on payments--Income-tax Act, 1961, ss. 9(1)(vi), 195--Double Taxation Avoidance Agreement between India and Australia, art. 12-- Citrix Systems Asia Pacific Pty. Limited , In re . . . 1

Words and phrases --"Royalty"--"Licence"-- Citrix Systems Asia Pacific Pty. Limited , In re . . . 1

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Constitution of India :

Art. 265 --Refund--Refund of income-tax and wealth-tax--General principles--Scope of article 265 of Constitution--Difference between tax collected or paid under statutes declared unconstitutional and tax collected or paid under valid statute but wrong interpretation of statute or wrong determination of facts-- Indglonal Investment and Finance Ltd . v. ITO (Delhi) . . . 44

Double Taxation Avoidance Agreement between India and Australia :

Art. 12 --Royalty--Sale or licensing for use of copyrighted software is grant of right to use copyright--Payment therefor is royalty--Non-resident--Appointment of non-exclusive distributor of software products in India--Payment from distributor for sale of software product--Subscription for updates--Payment for subscription advantage programme--Royalty--Indian distributor to withhold taxes in India on payments-- Citrix Systems Asia Pacific Pty. Limited , In re (AAR) . . . 1

Double Taxation Avoidance Agreement between India and the Netherlands :

Arts. 5(2), 7(2) --Deduction of tax at source--Non-resident--Permanent establishment--Convention between India and Netherlands treating branch office in India as a separate entity--No obligation on part of branch office in India to deduct tax while making interest remittance to its head office or any other foreign branch-- ABN Amro Bank, N. V . v. CIT (Cal) . . . 81

Income-tax Act, 1961 :

S. 9(1)(vi) --Royalty--Sale or licensing for use of copyrighted software is grant of right to use copyright--Payment therefor is royalty--Non-resident--Appointment of non-exclusive distributor of software products in India--Payment from distributor for sale of software product--Subscription for updates--Payment for subscription advantage programme--Royalty--Indian distributor to withhold taxes in India on payments-- Citrix Systems Asia Pacific Pty. Limited , In re (AAR) . . . 1

S. 10B --Export--Deduction under section 10B--Loss in eligible unit could be set off against profits of business-- CIT v. Galaxy Surfactants Ltd. (Bom) . . . 108

S. 12AA(3) --Charitable purpose--Registration of trusts--Commissioner--Power to cancel registration--Amendment of provision empowering Commissioner to cancel registration granted to trust under section 12A--Valid-- Sinhagad Technical Education Society v. CIT (Bom) . . . 23

S. 40(a)(i) --Deduction of tax at source--Non-resident--Permanent establishment--Convention between India and Netherlands treating branch office in India as a separate entity--No obligation on part of branch office in India to deduct tax while making interest remittance to its head office or any other foreign branch-- ABN Amro Bank, N. V . v. CIT (Cal) . . . 81

S. 80HHC --Export--Special deduction under section 80HHC--Conditions precedent--Export and receipt of sale proceeds in convertible foreign exchange--No condition that exports must be from India--Assessee purchasing goods from one foreign country and transporting it to another foreign country--Entitled to special deduction under section 80HHC-- Anil Kumar v. ITO (Karn) . . . 30

S. 80HHC, Expln. (baa) --Export--Special deduction--Computation of profits--Sale of DEPB credit--Sale value less value of DEPB--Ninety per cent. of receipt of nature mentioned in Explanation (baa)(1) included in profits alone to be deducted--Ninety per cent. of net interest or net rent, included in profits, and not of gross interest or gross rent, to be deducted-- ACG Associated Capsules Pvt. Ltd. v. CIT (SC) . . . 89

S. 80HHE --Export--Special deduction under section 80HHC--Conditions precedent--Export and receipt of sale proceeds in convertible foreign exchange--No condition that exports must be from India--Assessee purchasing goods from one foreign country and transporting it to another foreign country--Entitled to special deduction under section 80HHC-- Anil Kumar v. ITO (Karn) . . . 30

S. 143(3) --Revision--Jurisdiction--Limitation--Doctrine of merger--Order of assessment does not merge in orders of reassessment as regards issues not forming subject-matter of reassessment--Limitation for revision of assessment order in respect of those issues--Runs from date of assessment order not from date of reassessment orders-- CIT v. ICICI Bank Ltd. (Bom) . . . 74

S. 148 --Revision--Jurisdiction--Limitation--Doctrine of merger--Order of assessment does not merge in orders of reassessment as regards issues not forming subject-matter of reassessment--Limitation for revision of assessment order in respect of those issues--Runs from date of assessment order not from date of reassessment orders-- CIT v. ICICI Bank Ltd. (Bom) . . . 74

S. 195 --Royalty--Sale or licensing for use of copyrighted software is grant of right to use copyright--Payment therefor is royalty--Non-resident--Appointment of non-exclusive distributor of software products in India--Payment from distributor for sale of software product--Subscription for updates--Payment for subscription advantage programme--Royalty--Indian distributor to withhold taxes in India on payments-- Citrix Systems Asia Pacific Pty. Limited , In re (AAR) . . . 1

S. 195(1) --Deduction of tax at source--Non-resident--Permanent establishment--Convention between India and Netherlands treating branch office in India as a separate entity--No obligation on part of branch office in India to deduct tax while making interest remittance to its head office or any other foreign branch-- ABN Amro Bank, N. V . v. CIT (Cal) . . . 81

S. 245R(4) --Advance ruling--Value as precedent-- Citrix Systems Asia Pacific Pty. Limited, In re (AAR) . . . 1

S. 263(2) --Revision--Jurisdiction--Limitation--Doctrine of merger--Order of assessment does not merge in orders of reassessment as regards issues not forming subject-matter of reassessment--Limitation for revision of assessment order in respect of those issues--Runs from date of assessment order not from date of reassessment orders-- CIT v. ICICI Bank Ltd. (Bom) . . . 74

INCOME TAX REPORTS (ITR) Volume 341 : Part 4 (Issue dated 5-3-2012)

INCOME TAX REPORTS (ITR)

Volume 341 : Part 4 (Issue dated 5-3-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Accounting --Depreciation--Lease equalization charges--Accounting of leases--Debit of lease equalization charges in profit and loss account following Guidance Note, issued by ICAI--Method in accordance with principles of accountancy--Proper--Income-tax Act, 1961--Companies Act, 1956-- CIT v. Virtual Soft Systems Ltd.

(Delhi) . . . 593

Appeal to Appellate Tribunal --Powers of Tribunal--Additions becoming final in appeal against block assessment--Tribunal not entitled to reopen in appeal from penalty--Deletion of penalty on ground addition made on presumptions and that nothing incriminating found--Not permissible--Income-tax Act, 1961, s. 158BFA(2)-- CIT v. Becharbhai P. Parmar (Guj) . . . 499

Assessment --Rejection of accounts--Estimation on basis of rate of previous year--Findings of fact--Income-tax Act, 1961, s. 145(2)-- Shri Venkteshwar Sugar Mills v. CIT (Appeals) (All) . . . 588

Bad debt --Law after 1989--Assessee need not prove debt had become bad--Sufficient if debt written off in books--Assessing Officer not doubting whether transactions shown in person's name in fact incurred by assessee but only whether incurred by that person in individual capacity or on behalf of employer--Debt written off in assessee's books--Allowable--Income-tax Act, 1961, s. 36(1)(vii)-- CIT v. Prasad and Co.

(Delhi) . . . 480

Business expenditure --Assessee a stock broker--Payments to stock exchange for violation of trading beyond exposure limit, late submission of margin certificate and delay in making deliveries of shares due to deficiencies--Not penalties--Allowable--Income-
tax Act, 1961, s. 37-- CIT v. Prasad and Co. (Delhi) . . . 480

----Commission paid to managing director in addition to salary--Payment towards services rendered--Deductible--Income-tax Act, 1961, s. 36(1)(ii)-- AMD Metplast P. Ltd. v. Deputy CIT (Delhi) . . . 563

Capital or revenue receipt --Acquisition of land--Acquisition based on agreement--Award made subsequently--Interest till date of award--Is capital receipt--Land Acquisition Act, 1894--Income-tax Act, 1961-- CIT v. V. Subbaraju

(AP) . . . 584

Cash credits --Share application money and loans--Finding that transaction was genuine and payments were made by person with sufficient means--Addition to income--Not valid--Income-tax Act, 1961, s. 68-- CIT v. VLS Foods Pvt. Ltd.

(Delhi) . . . 570

Depreciation --Block of assets--Asset forming part of block of assets--To be allowed depreciation even if not used in relevant year--Income-tax Act, 1961, ss. 2(11), 32(1), 43(6)-- CIT v. Oswal Agro Mills Ltd . (Delhi) . . . 467

----User of asset for purpose of business--Passive user--Scope of expression--Unit remaining closed for six years--Cannot be treated as temporary closure--Assessee not entitled to claim passive user of asset--Income-tax Act, 1961, s. 32(1)-- CIT v. Oswal Agro Mills Ltd. (Delhi) . . . 467

Export --Special deduction--Computer software recorded on magnetic tapes, floppies, discs or CDs--Is goods or merchandise--Assessee entitled to deduction for export thereof--Income-tax Act, 1961, s. 80HHC(1)-- CIT v. Ajay Automation (P) Ltd.

(AP) . . . 577

----Special deduction--Law applicable--Introduction of provision specifically for export of computer software--Assessee entitled to deduction under general provision for period prior thereto--Income-tax Act, 1961, ss. 80HHC(1), 80HHE(1)-- CIT v. Ajay Automation (P) Ltd. (AP) . . . 577

----Special deduction under section 80HHC--Assessee having two units--No interdependency or interlacing of funds between units--One unit completely export oriented--Income from such units entitled to special deduction under section 80HHC--Income-tax Act, 1961, s. 80HHC-- Chamundi Textiles (Silk Mills) Ltd . v. CIT

(Mad) . . . 488

Income from house property --Business--Income from house property or business income--Income from letting out property--Assessable as income from house property--Income-tax Act, 1961, ss. 22, 28-- CIT v. Saran Holdings Pvt. Ltd .

(Patna) . . . 573

Industrial undertaking --Special deduction--Advances received from customers forfeited on account of breach of contract--Sum not derived from any goods or services produced by assessee--Assessee not entitled to deduction--Income-tax Act, 1961, s. 80-IA-- CIT v. Jackson Engineers Ltd. (Delhi) . . . 518

----Special deduction--Assembling diesel generating sets--Activity amounts to manufacture--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-IA-- CIT v. Jackson Engineers Ltd . (Delhi) . . . 518

----Special deduction--Interest from fixed deposits and interest charged from customers--Whether interest charged on delayed payment--Whether fixed deposit given as collateral security--Matter remanded--Income-tax Act, 1961, s. 80-IA-- CIT v. Jackson Engineers Ltd. (Delhi) . . . 518

----Special deduction--Manufacture--Assembly of television sets out of items such cabinets, chassis, integrated circuit picture tubes purchased by assessee--Is manufacture--Income-tax Act, 1961, s. 80-IC-- CIT v. I. Tech Electronics

(Gauhati) . . . 533

----Special deduction under section 80-IA--Condition precedent--Manufacture or production of article--Meaning of "production"--Conversion of boulders into grits and chips amounts to production--Assessee entitled to special deduction under sections 80-IA and 80-IB--Income-tax Act, 1961, s. 80-IA-- CIT v. Mallikarjun Georesources Associates (Uttarakhand) . . . 581

Interpretation of taxing statutes --"May"--Not to be read as "shall"-- CIT v. Becharbhai P. Parmar (Guj) . . . 499

----Words cannot be given meaning which makes them superfluous-- CIT v. Oswal Agro Mills Ltd. (Delhi) . . . 467

Loss --Carry forward and set off--Speculation business--Deeming fiction that company shall be deemed to carry on speculation business to extent business consists of purchase and sale of shares--Exception--Company having income "mainly" from other sources, etc.--Gross total income to be computed under provisions of Act first to determine whether company comes within deeming fiction--Income-tax Act, 1961, ss. 28, Expln. (2), 43(5), 70(1), 72, 73, Expln.-- CIT v. Darshan Securities P. Ltd .

(Bom) . . . 556

Precedent --Effect of decision of Supreme Court in ITO v. Arihant Tiles and Marbles P. Ltd. [2010] 320 ITR 79-- CIT v. Mallikarjun Georesources Associates

(Uttarakhand) . . . 581

----Effect of decision of Supreme Court in L. M. Chhabda and Sons v. CIT [1967] 65 ITR 638 and Waterfall Estates Ltd. v. CIT [1996] 219 ITR 563-- Chamundi Textiles (Silk Mills) Ltd . v. CIT (Mad) . . . 488

Refund --Interest on refund--Income-tax Act, 1961, s. 244A-- Sitaram v. CIT

(Bom) . . . 549

Revision --Powers of Commissioner--Commissioner must give reasons--Assessee must be given opportunity to be heard--No material to show order of Assessing Officer was prejudicial to Revenue--Explanation of assessee not considered by Commissioner--Order of revision--Not valid--Income-tax Act, 1961, s. 263-- CIT v. Vikas Polymers

(Delhi) . . . 537

Search and seizure --Block assessment--Penalty--Discretionary--Distinction between section 271(1)(c) and section 158BFA(2) --In latter case no burden on Department to prove concealment--That additions made in block assessment on basis of estimate--Not ground to delete penalty--Income-tax Act, 1961, ss. 158BFA(2), 271(1)(c)-- CIT v. Becharbhai P. Parmar (Guj) . . . 499

----Seizure of cash--Interest on sum retained in excess of liability--Income-tax Act, 1961, s. 132B(4)-- Sitaram v. CIT (Bom) . . . 549

Wealth-tax --Company--Exemption--Assessee doing business of leasing out properties--Property leased out as part of business--Entitled to exemption--Finance Act, 1983, s. 40(3)(vib)-- CWT v. Kumudum Printers P. Ltd. (Mad) . . . 514

----Company--Net wealth--Exemption--Part of property used by managing director as residential accommodation--Entitled to exemption--Finance Act, 1983, s. 40(3)(vib)-- CWT v. Kumudum Printers P. Ltd. (Mad) . . . 514

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Finance Act, 1983 :

S. 40(3)(vib) --Wealth-tax--Company--Exemption--Assessee doing business of leasing out properties--Property leased out as part of business--Entitled to exemption-- CWT v. Kumudum Printers P. Ltd. (Mad) . . . 514

----Wealth-tax--Company--Net wealth--Exemption--Part of property used by managing director as residential accommodation--Entitled to exemption-- CWT v. Kumudum Printers P. Ltd. (Mad) . . . 514

Income-tax Act, 1961 :

S. 2(11) --Depreciation--Block of assets--Asset forming part of block of assets--To be allowed depreciation even if not used in relevant year-- CIT v. Oswal Agro Mills Ltd . (Delhi) . . . 467

S. 22 --Income from house property--Business--Income from house property or business income--Income from letting out property--Assessable as income from house property-- CIT v. Saran Holdings Pvt. Ltd . (Patna) . . . 573

S. 28 --Income from house property--Business--Income from house property or business income--Income from letting out property--Assessable as income from house property-- CIT v. Saran Holdings Pvt. Ltd . (Patna) . . . 573

S. 28, Expln. (2) --Loss--Carry forward and set off--Speculation business--Deeming fiction that company shall be deemed to carry on speculation business to extent business consists of purchase and sale of shares--Exception--Company having income "mainly" from other sources, etc.--Gross total income to be computed under provisions of Act first to determine whether company comes within deeming fiction-- CIT v. Darshan Securities P. Ltd . (Bom) . . . 556

S. 32(1) --Depreciation--Block of assets--Asset forming part of block of assets--To be allowed depreciation even if not used in relevant year-- CIT v. Oswal Agro Mills Ltd . (Delhi) . . . 467

----Depreciation--User of asset for purpose of business--Passive user--Scope of expression--Unit remaining closed for six years--Cannot be treated as temporary closure--Assessee not entitled to claim passive user of asset-- CIT v. Oswal Agro Mills Ltd. (Delhi) . . . 467

S. 36(1)(ii) --Business expenditure--Commission paid to managing director in addition to salary--Payment towards services rendered--Deductible-- AMD Metplast P. Ltd. v. Deputy CIT (Delhi) . . . 563

S. 36(1)(vii) --Bad debt--Law after 1989--Assessee need not prove debt had become bad--Sufficient if debt written off in books--Assessing Officer not doubting whether transactions shown in person's name in fact incurred by assessee but only whether incurred by that person in individual capacity or on behalf of employer--Debt written off in assessee's books--Allowable-- CIT v. Prasad and Co. (Delhi) . . . 480

S. 37 --Business expenditure--Assessee a stock broker--Payments to stock exchange for violation of trading beyond exposure limit, late submission of margin certificate and delay in making deliveries of shares due to deficiencies--Not penalties--Allowable-- CIT v. Prasad and Co. (Delhi) . . . 480

S. 43(5) --Loss--Carry forward and set off--Speculation business--Deeming fiction that company shall be deemed to carry on speculation business to extent business consists of purchase and sale of shares--Exception--Company having income "mainly" from other sources, etc.--Gross total income to be computed under provisions of Act first to determine whether company comes within deeming fiction-- CIT v. Darshan Securities P. Ltd . (Bom) . . . 556

S. 43(6) --Depreciation--Block of assets--Asset forming part of block of assets--To be allowed depreciation even if not used in relevant year-- CIT v. Oswal Agro Mills Ltd . (Delhi) . . . 467

S. 68 --Cash credits--Share application money and loans--Finding that transaction was genuine and payments were made by person with sufficient means--Addition to income--Not valid-- CIT v. VLS Foods Pvt. Ltd. (Delhi) . . . 570

S. 70(1) --Loss--Carry forward and set off--Speculation business--Deeming fiction that company shall be deemed to carry on speculation business to extent business consists of purchase and sale of shares--Exception--Company having income "mainly" from other sources, etc.--Gross total income to be computed under provisions of Act first to determine whether company comes within deeming fiction-- CIT v. Darshan Securities P. Ltd . (Bom) . . . 556

S. 72 --Loss--Carry forward and set off--Speculation business--Deeming fiction that company shall be deemed to carry on speculation business to extent business consists of purchase and sale of shares--Exception--Company having income "mainly" from other sources, etc.--Gross total income to be computed under provisions of Act first to determine whether company comes within deeming fiction-- CIT v. Darshan Securities P. Ltd . (Bom) . . . 556

S. 73, Expln. --Loss--Carry forward and set off--Speculation business--Deeming fiction that company shall be deemed to carry on speculation business to extent business consists of purchase and sale of shares--Exception--Company having income "mainly" from other sources, etc.--Gross total income to be computed under provisions of Act first to determine whether company comes within deeming fiction-- CIT v. Darshan Securities P. Ltd . (Bom) . . . 556

S. 80HHC --Export--Special deduction under section 80HHC--Assessee having two units--No interdependency or interlacing of funds between units--One unit completely export oriented--Income from such units entitled to special deduction under section 80HHC-- Chamundi Textiles (Silk Mills) Ltd . v. CIT (Mad) . . . 488

S. 80HHC(1) --Export--Special deduction--Computer software recorded on magnetic tapes, floppies, discs or CDs--Is goods or merchandise--Assessee entitled to deduction for export thereof-- CIT v. Ajay Automation (P) Ltd.

(AP) . . . 577

----Export--Special deduction--Law applicable--Introduction of provision specifically for export of computer software--Assessee entitled to deduction under general provision for period prior thereto-- CIT v. Ajay Automation (P) Ltd.

(AP) . . . 577

S. 80HHE(1) --Export--Special deduction--Law applicable--Introduction of provision specifically for export of computer software--Assessee entitled to deduction under general provision for period prior thereto-- CIT v. Ajay Automation (P) Ltd.

(AP) . . . 577

S. 80-IA --Industrial undertaking--Special deduction--Advances received from customers forfeited on account of breach of contract--Sum not derived from any goods or services produced by assessee--Assessee not entitled to deduction-- CIT v. Jackson Engineers Ltd. (Delhi) . . . 518

----Industrial undertaking--Special deduction--Assembling diesel generating sets--Activity amounts to manufacture--Assessee entitled to deduction-- CIT v. Jackson Engineers Ltd . (Delhi) . . . 518

----Industrial undertaking--Special deduction--Interest from fixed deposits and interest charged from customers--Whether interest charged on delayed payment--Whether fixed deposit given as collateral security--Matter remanded-- CIT v. Jackson Engineers Ltd. (Delhi) . . . 518

----Industrial undertaking--Special deduction under section 80-IA--Condition precedent--Manufacture or production of article--Meaning of "production"--Conversion of boulders into grits and chips amounts to production--Assessee entitled to special deduction under sections 80-IA and 80-IB-- CIT v. Mallikarjun Georesources Associates

(Uttarakhand) . . . 581

S. 80-IC --Industrial undertaking--Special deduction--Manufacture--Assembly of television sets out of items such cabinets, chassis, integrated circuit picture tubes purchased by assessee--Is manufacture-- CIT v. I. Tech Electronics

(Gauhati) . . . 533

S. 132B(4) --Search and seizure--Seizure of cash--Interest on sum retained in excess of liability-- Sitaram v. CIT (Bom) . . . 549

S. 145(2) --Assessment--Rejection of accounts--Estimation on basis of rate of previous year--Findings of fact-- Shri Venkteshwar Sugar Mills v. CIT (Appeals)

(All) . . . 588

S. 158BFA(2) --Appeal to Appellate Tribunal--Powers of Tribunal--Additions becoming final in appeal against block assessment--Tribunal not entitled to reopen in appeal from penalty--Deletion of penalty on ground addition made on presumptions and that nothing incriminating found--Not permissible-- CIT v. Becharbhai P. Parmar (Guj) . . . 499

----Search and seizure--Block assessment--Penalty--Discretionary--Distinction between section 271(1)(c) and section 158BFA(2) --In latter case no burden on Department to prove concealment--That additions made in block assessment on basis of estimate--Not ground to delete penalty-- CIT v. Becharbhai P. Parmar

(Guj) . . . 499

S. 244A --Refund--Interest on refund-- Sitaram v. CIT (Bom) . . . 549

S. 263 --Revision--Powers of Commissioner--Commissioner must give reasons--Assessee must be given opportunity to be heard--No material to show order of Assessing Officer was prejudicial to Revenue--Explanation of assessee not considered by Commissioner--Order of revision--Not valid-- CIT v. Vikas Polymers

(Delhi) . . . 537

S. 271(1)(c) --Search and seizure--Block assessment--Penalty--Discretionary--Distinction between section 271(1)(c) and section 158BFA(2) --In latter case no burden on Department to prove concealment--That additions made in block assessment on basis of estimate--Not ground to delete penalty-- CIT v. Becharbhai P. Parmar

(Guj) . . . 499