ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 7 : Part 7 (Issue dated : 14-2-2011)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Assessment --Estimation of trading income--Application of gross profit rate at 14 per cent. without reason--Direction to Assessing Officer to apply 13 per cent. gross profit rate agreed to by assessee proper--Income-tax Act, 1961-- ITO v . Nitesh Maheshwari (Jaipur) . . . 645
----Reference to Valuation Officer--Investment in construction of house--Investment disclosed in books of account--Expenditure proved by vouchers--Reference to Valuation Officer without rejecting books of account or pointing out defects in books of account--Not proper--Addition on basis of higher value adopted by Valuation Officer not justified--Section 142A not applicable--Direction to allow deduction of 20 per cent. of CPWD rates and 12 per cent. for self supervision proper--Income-tax Act, 1961, s. 143 -- ITO v. Nitesh Maheshwari (Jaipur) . . . 645
Best judgment assessment --Enhancement of turnover--Disallowance of sundry credits--Disallowance of cutting expenses--Disallowance without material--Entire income of assessee subject to deduction--Disallowances deleted-- ITO v. Smt. Asha Mittal (Jaipur) . . . 633
Business income --Deemed profits--Cessation of liability--No deduction in earlier year on account of interest allowed--Addition to be deleted--Income-tax Act, 1961, s. 41(1)-- Asst. CIT v. Rollatainers Ltd. (Delhi) . . . 665
Capital asset --Depreciation--Toll road constructed by assessee on "build, own, operate and transfer" basis--Assessee constructing road in course of carrying out its business activities--Is an asset owned by assessee--Assessee entitled to depreciation--Income-tax Act, 1961, s. 32-- Gujarat Road and Infrastructure Co. Ltd. v. CIT (Ahmedabad) . . . 730
Capital gains --Exemption--Investment of gains in residential house--Assessee purchasing ground floor and first floor in two deeds on two consecutive days--Whole constituting single residential unit--Assessee entitled to deduction--Income-tax Act, 1961, s. 54F-- Asst. CIT v. Sudha Gurtoo (Delhi) . . . 653
----Long-term capital gains--Assessee entering into agreement to purchase property in adverse possession of tenant obtaining possession from tenant after payment under consent terms--Assessee deemed to be holding ownership rights in property from date of agreement not date of obtaining possession--Indexation to be allowed from that date--Income-tax Act, 1961, ss. 2(42A), 45-- Ms. Nita A. Patel v. ITO (Mumbai) . . . 659
Deduction of tax at source --Commission--Assessee, a Government undertaking, engaged in extraction of iron ore--Assessee disentitled to export iron ore with iron content of sixty-four per cent. and above in terms of Exim Policy--Export of iron ore by MMTC not on behalf of assessee but on principal to principal basis--Agreement between assessee and exporter not deciding factor of nature of transaction--Payment to MMTC not commission--Assessee not liable to deduct tax at source--Income-tax Act, 1961, ss. 194H, 201, (1A)-- NMDC Ltd. v. Asst. CIT (TDS) (Visakhapatnam) . . . 690
Exemption --Educational institution--Condition that institution should be "financed by Government"--State legislation providing for compulsory contributions by member societies to education fund set apart as source of finance for educational institution promoting co-operative movement in India--Finance received by co-operative society from members in accordance with State legislation--Constitutes indirect financing by Government--Educational institution entitled to exemption--Maharashtra State Co-operative Societies Act, 1960, s. 68--Income-tax Act, 1961, s. 10(23C)(iiiab)-- Maharashtra Rajya Sahakari Sangh Maryadit v. ITO (Pune) . . . 675
----Local authority--District rural development agency--Notified area created by State Government under Gujarat Industrial Development Act for industrial development --Self-governing institutions--Powers of notified area equivalent to that of other municipal bodies--Notified area governed by Gujarat Municipalities Act--Notified area deemed municipality and local authority--Exemption to be allowed--Constitution of India, art. 243Q--Income-tax Act, 1961, s. 10(20)--Gujarat Industrial Development Act, 1962, s. 16--Gujarat Municipalities Act, 1963, ss. 264A, 264B-- ITO v. Sachin Notified Area (Ahmedabad) . . . 699
Industrial undertaking --Special deduction--Manufacture--Sawing, cutting and sizing of marble blocks--Is manufacture--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-IB-- ITO v. Smt. Asha Mittal (Jaipur) . . . 633
Loss --Set off and carry forward--Amalgamation of companies--To be decided at time of allowance of loss--Income-tax Act, 1961, s. 72A-- Gujarat Road and Infrastructure Co. Ltd. v. CIT (Ahmedabad) . . . 730
Penalty --Furnishing of inaccurate particulars of income--Assessee reporting profit as loss deliberately--Explanation that mistake of reporting profit as loss due to inadvertent error in operating formula--Error not rectified despite notice--Discrepancies in book profit, audited report--Case of furnishing in-accurate particulars of income--Penalty exigible--Income-tax Act, 1961, s. 271(1)(c)-- Deputy CIT v. Terra Energy Ltd. (Chennai) . . . 711
Reassessment --Industrial undertaking--Special deduction--Deduction allowed for two earlier years--Notice for reassessment based on Supreme Court decision--Permissible--Income-tax Act, 1961, ss. 80-IB, 147, 148-- ITO v. Smt. Asha Mittal (Jaipur) . . . 633
----Validity--Commissioner (Appeals) holding re-opening was on change of opinion --Bound to hold reassessment invalid--Income-tax Act, 1961, s. 148-- Asst. CIT v. Rollatainers Ltd. (Delhi) . . . 665
Revision --Commissioner--Direction to Assessing Officer to verify expenses on road overlay and renewal expenses--Not warranted--Income-tax Act, 1961, s. 263-- Gujarat Road and Infrastructure Co. Ltd. v. CIT (Ahmedabad) . . . 730
----Commissioner--Failure by Assessing Officer to make enquiry with regard to deduction claimed--Assessment order prejudicial to interests of Revenue--Matter remanded--Income-tax Act, 1961, ss. 10A, 263-- TCE Consulting Engineers Ltd. v. Addl. CIT (Mumbai) . . . 718
Words and phrases --"Held"-- Ms. Nita A. Patel v. ITO (Mumbai) . . . 659
----"Building"-- Gujarat Road and Infrastructure Co. Ltd. v. CIT (Ahmedabad) . . . 730
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Constitution of India :
Art. 243Q --Exemption--Local authority--District rural development agency--Notified area created by State Government under Gujarat Industrial Development Act for industrial development--Self-governing institutions--Powers of notified area equivalent to that of other municipal bodies--Notified area governed by Gujarat Municipalities Act --Notified area deemed municipality and local authority--Exemption to be allowed-- ITO v. Sachin Notified Area (Ahmedabad) . . . 699
Gujarat Industrial Development Act, 1962 :
S. 16 --Exemption--Local authority--District rural development agency--Notified area created by State Government under Gujarat Industrial Development Act for industrial development--Self-governing institutions--Powers of notified area equivalent to that of other municipal bodies--Notified area governed by Gujarat Municipalities Act--Notified area deemed municipality and local authority--Exemption to be allowed-- ITO v. Sachin Notified Area (Ahmedabad) . . . 699
Gujarat Municipalities Act, 1963 :
Ss. 264A, 264B --Exemption--Local authority--District rural development agency--Notified area created by State Government under Gujarat Industrial Development Act for industrial development --Self-governing institutions--Powers of notified area equivalent to that of other municipal bodies--Notified area governed by Gujarat Municipalities Act --Notified area deemed municipality and local authority--Exemption to be allowed-- ITO v. Sachin Notified Area (Ahmedabad) . . . 699
Income-tax Act, 1961 :
S. 2(42A) --Capital gains--Long-term capital gains--Assessee entering into agreement to purchase property in adverse possession of tenant obtaining possession from tenant after payment under consent terms--Assessee deemed to be holding ownership rights in property from date of agreement not date of obtaining possession--Indexation to be allowed from that date-- Ms. Nita A. Patel v. ITO (Mumbai) . . . 659
S. 10(20) --Exemption--Local authority--District rural development agency--Notified area created by State Government under Gujarat Industrial Development Act for industrial development--Self-governing institutions--Powers of notified area equivalent to that of other municipal bodies--Notified area governed by Gujarat Municipalities Act --Notified area deemed municipality and local authority--Exemption to be allowed-- ITO v. Sachin Notified Area (Ahmedabad) . . . 699
S. 10(23C)(iiiab) --Exemption--Educational institution--Condition that institution should be "financed by Government"--State legislation providing for compulsory contributions by member societies to education fund set apart as source of finance for educational institution promoting co-operative movement in India--Finance received by co-operative society from members in accordance with State legislation--Constitutes indirect financing by Government--Educational institution entitled to exemption-- Maharashtra Rajya Sahakari Sangh Maryadit v. ITO (Pune) . . . 675
S. 10A --Revision--Commissioner--Failure by Assessing Officer to make enquiry with regard to deduction claimed--Assessment order prejudicial to interests of Revenue --Matter remanded-- TCE Consulting Engineers Ltd. v. Addl. CIT (Mumbai) . . . 718
S. 32 --Capital asset--Depreciation--Toll road constructed by assessee on "build, own, operate and transfer" basis--Assessee constructing road in course of carrying out its business activities--Is an asset owned by assessee--Assessee entitled to depreciation -- Gujarat Road and Infrastructure Co. Ltd. v. CIT (Ahmedabad) . . . 730
S. 41(1) --Business income--Deemed profits--Cessation of liability--No deduction in earlier year on account of interest allowed--Addition to be deleted-- Asst. CIT v. Rollatainers Ltd. (Delhi) . . . 665
S. 45 --Capital gains--Long-term capital gains--Assessee entering into agreement to purchase property in adverse possession of tenant obtaining possession from tenant after payment under consent terms--Assessee deemed to be holding ownership rights in property from date of agreement not date of obtaining possession--Indexation to be allowed from that date-- Ms. Nita A. Patel v. ITO (Mumbai) . . . 659
S. 54F --Capital gains--Exemption--Investment of gains in residential house--Assessee purchasing ground floor and first floor in two deeds on two consecutive days--Whole constituting single residential unit--Assessee entitled to deduction-- Asst. CIT v. Sudha Gurtoo (Delhi) . . . 653
S. 72A --Loss--Set off and carry forward--Amalgamation of companies--To be decided at time of allowance of loss-- Gujarat Road and Infrastructure Co. Ltd. v. CIT (Ahmedabad) . . . 730
S. 80-IB --Industrial undertaking--Special deduction--Manufacture--Sawing, cutting and sizing of marble blocks--Is manufacture--Assessee entitled to deduction-- ITO v. Smt. Asha Mittal (Jaipur) . . . 633
----Reassessment--Industrial undertaking--Special deduction--Deduction allowed for two earlier years--Notice for reassessment based on Supreme Court decision--Permissible-- ITO v. Smt. Asha Mittal (Jaipur) . . . 633
S. 143 --Assessment--Reference to Valuation Officer--Investment in construction of house--Investment disclosed in books of account--Expenditure proved by vouchers--Reference to Valuation Officer without rejecting books of account or pointing out defects in books of account--Not proper--Addition on basis of higher value adopted by Valuation Officer not justified--Section 142A not applicable--Direction to allow deduction of 20 per cent. of CPWD rates and 12 per cent. for self supervision proper-- ITO v. Nitesh Maheshwari (Jaipur) . . . 645
S. 147 --Reassessment--Industrial undertaking--Special deduction--Deduction allowed for two earlier years--Notice for reassessment based on Supreme Court decision --Permissible-- ITO v. Smt. Asha Mittal (Jaipur) . . . 633
S. 148 --Reassessment--Industrial undertaking--Special deduction--Deduction allowed for two earlier years--Notice for reassessment based on Supreme Court decision --Permissible-- ITO v. Smt. Asha Mittal (Jaipur) . . . 633
----Reassessment--Validity--Commissioner (Appeals) holding re-opening was on change of opinion --Bound to hold reassessment invalid-- Asst. CIT v. Rollatainers Ltd. (Delhi) . . . 665
S. 194H --Deduction of tax at source--Commission--Assessee, a Government undertaking, engaged in extraction of iron ore--Assessee disentitled to export iron ore with iron content of sixty-four per cent. and above in terms of Exim Policy--Export of iron ore by MMTC not on behalf of assessee but on principal to principal basis--Agreement between assessee and exporter not deciding factor of nature of transaction--Payment to MMTC not commission--Assessee not liable to deduct tax at source-- NMDC Ltd. v. Asst. CIT (TDS) (Visakhapatnam) . . . 690
S. 201(1A) --Deduction of tax at source--Commission--Assessee, a Government undertaking, engaged in extraction of iron ore--Assessee disentitled to export iron ore with iron content of sixty-four per cent. and above in terms of Exim Policy--Export of iron ore by MMTC not on behalf of assessee but on principal to principal basis--Agreement between assessee and exporter not deciding factor of nature of transaction--Payment to MMTC not commission--Assessee not liable to deduct tax at source-- NMDC Ltd. v. Asst. CIT (TDS) (Visakhapatnam) . . . 690
S. 263 --Revision--Commissioner--Direction to Assessing Officer to verify expenses on road overlay and renewal expenses--Not warranted-- Gujarat Road and Infrastructure Co. Ltd. v. CIT (Ahmedabad) . . . 730
----Revision--Commissioner--Failure by Assessing Officer to make enquiry with regard to deduction claimed--Assessment order prejudicial to interests of Revenue--Matter remanded-- TCE Consulting Engineers Ltd. v. Addl. CIT (Mumbai) . . . 718
S. 271(1)(c) --Penalty--Furnishing of inaccurate particulars of income--Assessee reporting profit as loss deliberately--Explanation that mistake of reporting profit as loss due to inadvertent error in operating formula--Error not rectified despite notice--Discrepancies in book profit, audited report--Case of furnishing inaccurate particulars of income--Penalty exigible-- Deputy CIT v. Terra Energy Ltd. (Chennai) . . . 711
Maharashtra State Co-operative Societies Act, 1960 :
S. 68--Exemption--Educational institution--Condition that institution should be "financed by Government"--State legislation providing for compulsory contributions by member societies to education fund set apart as source of finance for educational institution promoting co-operative movement in India--Finance received by co-operative society from members in accordance with State legislation--Constitutes indirect financing by Government--Educational institution entitled to exemption-- Maharashtra Rajya Sahakari Sangh Maryadit v. ITO (Pune) . . . 675
Monday, February 14, 2011
Friday, February 11, 2011
ITR : Volume 331 Part 1 dated 14-02-2011
INCOME TAX REPORTS (ITR) HIGHLIGHTS
ISSUE DATED 14-2-2011 Volume 331 Part 1
HIGH COURT JUDGMENTS
->> Cash system : Interest on enhanced compensation on acquisition of land taxable in the year of receipt : CIT v. Smt. Burfi (P&H) p. 1
->> Notice indicating intention to treat director as principal officer : Failure to issue such notice : Prosecution against director quashed : ITO v. Delhi Iron Works P. Ltd. (Delhi) p. 5
->> Fees for full course or package received in advance : Income does not accrue : CIT v. Dinesh Kumar Goel (Delhi) p. 10
->> Failure to file return of loss within time allowed in section 139(3) : Loss cannot be carried forward and set off : Joginder Paul (HUF) v. CIT (P&H) p. 31
->> Reassessment to recompute depreciation not valid : Hind Syntex Ltd. v. CIT (MP) p. 36
->> State Electricity Board having loss of Rs. 1,500 crores filing return in delay owing to bifurcation of State : CBDT ought to have considered Board's explanation : M. P. State Electricity Board v. Union of India (MP) p. 50
->> Land shown in revenue records as agricultural and no permission taken by assessee for conversion of land use : Gains from sale exempt : CIT v. Smt. Debbie Alemao (Bom) p. 59
->> Once assessment reopened, assessment to be made of such income and also any other which has escaped assessment : CIT v. Best Wood Industries and Saw Mills (Ker) p. 63
->> Mixing rubber with chemicals, process oil, etc. to make compound rubber for tyre manufacturing companies entitled to deduction u/s 80-IB : Midas Polymer Compounds P. Ltd. v. Asst. CIT (Ker) [FB] p. 68
->> Whether interest on delayed payments for job work eligible for deduction : Matter remanded : Midas Polymer Compounds P. Ltd. v. Asst. CIT (Ker) [FB] p. 68
->> Promoters of company having 51 per cent. of voting power even after change in shareholding resulted in their having less than 50 per cent. of the shares : Entitled to exemption u/s 10A in AY 2001-02 : Zycus Infotech P. Ltd. v. CIT (Bom) p. 72
->> Fees received for developmental work from foreign company intimately connected with manufacture and sale of goods : Fees could not be deducted in computing business profits : CIT v. Motor Industries Co. Ltd. (Karn) p. 79
->> Certified copy of instrument of partnership deed to be furnished if assessment was claimed in status of firm for any assessment year commencing from 1993-94, irrespective of whether assessee was assessed as firm up to 1993-94 : Bhaskar and Co. v. CIT (Ker) p. 90
->> Marble stones : Activities carried on by assessee amounts to manufacturing process : CIT v. Sophisticated Marbles and Granite Industries (Delhi) p. 96
->> Death of assessee : No abatement of appeal : CIT v. Smt. V. Rukmini (Karn) p. 102
->> Non-disclosure of capital gains : Reassessment notice valid : Smt. Maya Rastogi v. CIT (All) p. 116
->> Reassessment to give effect to finding or direction of appellate authority : No time limit applies but sanction of Joint Commissioner must be obtained : Smt. Maya Rastogi v. CIT (All) p. 116
STATUTES AND NOTIFICATIONS
->> Notifications :
Income-tax Act, 1961 : Notification under section 35(1)(iii) : Scientific research associations notified p. 2
Income-tax Act, 1961 : Notifications under section 35AC, Expln., clause (b) : Eligible projects or schemes p. 5
Income-tax Act, 1961 : Notification under section 80-IA(4)(iii) : Industrial parks notified p. 1
Income-tax Act, 1961 : Notification under section 80-IB(10) : Corrigendum p. 2
Income-tax Act, 1961 : Notification under section 90 : Avoidance of double taxation and mutual administrative assistance in tax matters among Governments of SAARC Member States : Gazette reference p. 5
JOURNAL
->> Double deduction for depreciation and capital expenditure in case of charitable trusts-Whether justified ?--Dindayal Dhandaria, Chartered Accountant p. 1
->> Whether the rigours of clubbing of income of spouse as remuneration under section 64(1)(ii) applies to directors of companies and partners of firms--Kanhayalal Sharma, Advocate and Tax Consultant p. 17
NEWS-BRIEF
->> Help centre on income-tax queries inducted at Finance Minister's constituency
The Income-tax Department has, identified Finance Minister's constituency along with the National Capital Region, Jammu, Shillong and Kochi for setting up Aayakar Sampark Kendras to help answer your queries related to PAN card, grievances and filing of tax returns.
The plan is to connect taxpayers with these centres which will have a cumulative seating capacity of 80 persons, with 40 located in the call centre in the NCR, which comprises Delhi, Gurgaon, Noida and Faridabad. The other centres-Jammu, Jangipur, Kochi and Shillong-will have 10 seats each to begin with. The tax Department is trying to rope in BPO or call centre operators to set up these inter-connected facilities where capacities can be scaled up. In addition, these operators will have to hire, train and manage tax relationship agents, who will answer queries of taxpayers.
As part of its plan to offer improved services to taxpayers, the Government had already set up an Aayakar Sampark Kendra in Gurgaon (0124-24380000 ) a few years ago and now the capacity is being expanded by adding more centres.
The call centres would be in addition to the Aayakar Seva Kendra (ASK), which is the single-window front office for filing all applications for services and redressal of grievances, including paper returns.
The Government has earlier shown its intent to offer better services to honest taxpayers to facilitate payment of taxes and filing of returns. The tax return preparers scheme was started under which a trained individual helped people at the Aayakar Sampark Kendra. [Source : www.economictimes.com dated February 4, 2011]
->> DTAAs with SAARC nations to commence operation from April
Taking forward its efforts to track and unearth blackmoney, India has now ratified its Double Taxation Avoidance Agreements with SAARC nations and the revised treaties will come into effect from next fiscal.
The tax information exchange treaties amongst the South Asian Association for Regional Co-operation (SAARC) nations was struck first at Dhaka in 2005. The tax agreement, amongst SAARC countries-Bangladesh, Bhutan, Maldives, Nepal, Pakistan, Sri Lanka and India-was ratified by the SAARC Secretariat last April.
"The Central Government hereby directs that all the provisions of the said agreement shall be given effect to by the Union of India with effect from 1st day of April, 2011," the official Government Gazette notification said. The new agreement will apply to persons who are residents of one or more member States.
"On formalisation, this SAARC limited multilateral agreement on avoidance of double taxation and mutual administrative assistance in tax matters shall be applicable only in the member States where an adequate Direct Tax structure is in place.
"Further, in case of a member State where such a structure is not in place, this agreement shall become effective from the date on which such a member State introduces a proper Direct Tax structure and notifies the SAARC secretariat to this effect," the Gazette notification added.
At present, India is in the process of negotiating Double Taxation Avoidance Agreements (DTAAs) with 65 countries to broaden the scope of article concerning Exchange of Information, specifically regarding banking and taxpayers not covered by the said exchange treaty.
He said DTAA and Exchange of Taxation Information Agreement are two instrumentalities under which information can be obtained and that the Government has already amended pacts with 23 countries to get information from various banks. [Source : www.economictimes.com dated February 4, 2011]
->> I-T Department to start investigations on global acquisition details
The Income-tax Department has served a notice on a FMCG firm and its overseas parent company seeking details of its $19-billion global takeover last year. The notice follows a directive from the Finance Ministry after a public interest petition was filed in the Delhi High Court in 2010 claiming that parent company had "completely and illegally avoided" tax liabilities related to the sale of shares and capital assets in India.
The move is the latest in a series of efforts by the Revenue Department to tax overseas deals, circumventing Indian tax laws.
I-T officials confirmed the development. "An enquiry is on and we are in the process of collecting the details of the transaction," a senior official said.
A spokesperson of the company however, sought to play down the significance of the notice.
"The court has not granted any relief to the petitioner and has instead suggested to the petitioner to file a representation with the Government and the Indian tax authorities to take appropriate steps to respond to the queries raised, and is fully committed to complying with the Indian law and is responding to queries raised by the Indian tax authorities." Senior officials close to the development said the India business is a very small part of the overall global acquisition of FMCG company shares. [Source : www.economictimes.com dated February 1, 2011]
->> I-T slaps Rs. 1,180 crore more tax on the largest Realty Developer
The Income-tax Department has sought Rs. 1,180 crore more tax from the country's largest real estate developer, and its 22 subsidiaries for the assessment year 2009-10.
The group, which has filed an appeal with the appropriate appellate authorities, has not made any provision toward this demand in its third quarter result. The tax demand was raised in the previous quarter.
"The company has made a significant investment in acquiring fresh land that has resulted in exceeding the capital expenditure by Rs. 500 crore for the third quarter," said another company official. "Due to fresh capital investment in land and the delay in new launches, net debt has witnessed a marginal rise in the quarter," he said. At the end of second quarter, the company had a debt of around Rs. 20,000 crore.
The Realty developer reported marginal decline in consolidated net profit at Rs. 465.67 crore for the quarter ended December 31, 2010. The company had posted a net profit of Rs. 467.89 crore in the corresponding period previous fiscal, a company statement said. The consolidated sales during the quarter, however, increased by 22.42 per cent. to Rs. 2,479.93 crore from Rs. 2,025.77 crore in the year-ago period, it added. [Source : www.economictimes.com dated February 1, 2011]
->> I-T Department tip-off helps CBI nail the former telecom minister, aides
The arrest of tainted former telecom minister and his associates by the Central Bureau of Investigation (CBI) was triggered by an Income-tax Department investigation on the money trail from a Mumbai-based realty firm to a Chennai-based company.
They said the seized documents gave critical transaction details that took place after the allotment of 2G licences. Investigations revealed some of the group companies of the Mumbai-based realty firm transferred Rs. 209 crore to the company.
Though the officials refused to share the names of the companies, they said the information compiled by the Department could be one of the reasons that led to former minister's arrest.
I-T Department officials said they had found crucial links to the 2G scam from papers seized during a search in Mumbai 10-11 months earlier.
A close scrutiny of the money trail by the Department revealed that Rs. 206 crore was subsequently given by the realty firm to a renowned event management company, understood to be close to a senior and influential politician-someone seen as a guiding force behind the realty company.
Further investigations in the case revealed the money then changed hands from the event management company to a fruits and vegetables company that subsequently passed on the money to a Chennai-based company.
Officials said the Department was in the process of establishing links to the former minister and his associates with this Chennai-based company but due to pressures from obvious quarters, the department was sitting on this investigation for quite some time. The arrest of the former minister and his associates might be just the first step towards a much wider action on the 2G scam. [Source : www.businessstandard.com dated February 3, 2011]
--
Me on net :
> >>>>>>>>>>>>>>>>>>>>>
http://rajkumaratthenet.blogspot.com/
http://itronline.blogspot.com/
Virus Warning: Although the I have taken reasonable precautions to ensure no viruses are present in his email, sender (I) cannot accept responsibility for any loss or damage arising from the use of this email or attachment."
ISSUE DATED 14-2-2011 Volume 331 Part 1
HIGH COURT JUDGMENTS
->> Cash system : Interest on enhanced compensation on acquisition of land taxable in the year of receipt : CIT v. Smt. Burfi (P&H) p. 1
->> Notice indicating intention to treat director as principal officer : Failure to issue such notice : Prosecution against director quashed : ITO v. Delhi Iron Works P. Ltd. (Delhi) p. 5
->> Fees for full course or package received in advance : Income does not accrue : CIT v. Dinesh Kumar Goel (Delhi) p. 10
->> Failure to file return of loss within time allowed in section 139(3) : Loss cannot be carried forward and set off : Joginder Paul (HUF) v. CIT (P&H) p. 31
->> Reassessment to recompute depreciation not valid : Hind Syntex Ltd. v. CIT (MP) p. 36
->> State Electricity Board having loss of Rs. 1,500 crores filing return in delay owing to bifurcation of State : CBDT ought to have considered Board's explanation : M. P. State Electricity Board v. Union of India (MP) p. 50
->> Land shown in revenue records as agricultural and no permission taken by assessee for conversion of land use : Gains from sale exempt : CIT v. Smt. Debbie Alemao (Bom) p. 59
->> Once assessment reopened, assessment to be made of such income and also any other which has escaped assessment : CIT v. Best Wood Industries and Saw Mills (Ker) p. 63
->> Mixing rubber with chemicals, process oil, etc. to make compound rubber for tyre manufacturing companies entitled to deduction u/s 80-IB : Midas Polymer Compounds P. Ltd. v. Asst. CIT (Ker) [FB] p. 68
->> Whether interest on delayed payments for job work eligible for deduction : Matter remanded : Midas Polymer Compounds P. Ltd. v. Asst. CIT (Ker) [FB] p. 68
->> Promoters of company having 51 per cent. of voting power even after change in shareholding resulted in their having less than 50 per cent. of the shares : Entitled to exemption u/s 10A in AY 2001-02 : Zycus Infotech P. Ltd. v. CIT (Bom) p. 72
->> Fees received for developmental work from foreign company intimately connected with manufacture and sale of goods : Fees could not be deducted in computing business profits : CIT v. Motor Industries Co. Ltd. (Karn) p. 79
->> Certified copy of instrument of partnership deed to be furnished if assessment was claimed in status of firm for any assessment year commencing from 1993-94, irrespective of whether assessee was assessed as firm up to 1993-94 : Bhaskar and Co. v. CIT (Ker) p. 90
->> Marble stones : Activities carried on by assessee amounts to manufacturing process : CIT v. Sophisticated Marbles and Granite Industries (Delhi) p. 96
->> Death of assessee : No abatement of appeal : CIT v. Smt. V. Rukmini (Karn) p. 102
->> Non-disclosure of capital gains : Reassessment notice valid : Smt. Maya Rastogi v. CIT (All) p. 116
->> Reassessment to give effect to finding or direction of appellate authority : No time limit applies but sanction of Joint Commissioner must be obtained : Smt. Maya Rastogi v. CIT (All) p. 116
STATUTES AND NOTIFICATIONS
->> Notifications :
Income-tax Act, 1961 : Notification under section 35(1)(iii) : Scientific research associations notified p. 2
Income-tax Act, 1961 : Notifications under section 35AC, Expln., clause (b) : Eligible projects or schemes p. 5
Income-tax Act, 1961 : Notification under section 80-IA(4)(iii) : Industrial parks notified p. 1
Income-tax Act, 1961 : Notification under section 80-IB(10) : Corrigendum p. 2
Income-tax Act, 1961 : Notification under section 90 : Avoidance of double taxation and mutual administrative assistance in tax matters among Governments of SAARC Member States : Gazette reference p. 5
JOURNAL
->> Double deduction for depreciation and capital expenditure in case of charitable trusts-Whether justified ?--Dindayal Dhandaria, Chartered Accountant p. 1
->> Whether the rigours of clubbing of income of spouse as remuneration under section 64(1)(ii) applies to directors of companies and partners of firms--Kanhayalal Sharma, Advocate and Tax Consultant p. 17
NEWS-BRIEF
->> Help centre on income-tax queries inducted at Finance Minister's constituency
The Income-tax Department has, identified Finance Minister's constituency along with the National Capital Region, Jammu, Shillong and Kochi for setting up Aayakar Sampark Kendras to help answer your queries related to PAN card, grievances and filing of tax returns.
The plan is to connect taxpayers with these centres which will have a cumulative seating capacity of 80 persons, with 40 located in the call centre in the NCR, which comprises Delhi, Gurgaon, Noida and Faridabad. The other centres-Jammu, Jangipur, Kochi and Shillong-will have 10 seats each to begin with. The tax Department is trying to rope in BPO or call centre operators to set up these inter-connected facilities where capacities can be scaled up. In addition, these operators will have to hire, train and manage tax relationship agents, who will answer queries of taxpayers.
As part of its plan to offer improved services to taxpayers, the Government had already set up an Aayakar Sampark Kendra in Gurgaon (0124-24380000 ) a few years ago and now the capacity is being expanded by adding more centres.
The call centres would be in addition to the Aayakar Seva Kendra (ASK), which is the single-window front office for filing all applications for services and redressal of grievances, including paper returns.
The Government has earlier shown its intent to offer better services to honest taxpayers to facilitate payment of taxes and filing of returns. The tax return preparers scheme was started under which a trained individual helped people at the Aayakar Sampark Kendra. [Source : www.economictimes.com dated February 4, 2011]
->> DTAAs with SAARC nations to commence operation from April
Taking forward its efforts to track and unearth blackmoney, India has now ratified its Double Taxation Avoidance Agreements with SAARC nations and the revised treaties will come into effect from next fiscal.
The tax information exchange treaties amongst the South Asian Association for Regional Co-operation (SAARC) nations was struck first at Dhaka in 2005. The tax agreement, amongst SAARC countries-Bangladesh, Bhutan, Maldives, Nepal, Pakistan, Sri Lanka and India-was ratified by the SAARC Secretariat last April.
"The Central Government hereby directs that all the provisions of the said agreement shall be given effect to by the Union of India with effect from 1st day of April, 2011," the official Government Gazette notification said. The new agreement will apply to persons who are residents of one or more member States.
"On formalisation, this SAARC limited multilateral agreement on avoidance of double taxation and mutual administrative assistance in tax matters shall be applicable only in the member States where an adequate Direct Tax structure is in place.
"Further, in case of a member State where such a structure is not in place, this agreement shall become effective from the date on which such a member State introduces a proper Direct Tax structure and notifies the SAARC secretariat to this effect," the Gazette notification added.
At present, India is in the process of negotiating Double Taxation Avoidance Agreements (DTAAs) with 65 countries to broaden the scope of article concerning Exchange of Information, specifically regarding banking and taxpayers not covered by the said exchange treaty.
He said DTAA and Exchange of Taxation Information Agreement are two instrumentalities under which information can be obtained and that the Government has already amended pacts with 23 countries to get information from various banks. [Source : www.economictimes.com dated February 4, 2011]
->> I-T Department to start investigations on global acquisition details
The Income-tax Department has served a notice on a FMCG firm and its overseas parent company seeking details of its $19-billion global takeover last year. The notice follows a directive from the Finance Ministry after a public interest petition was filed in the Delhi High Court in 2010 claiming that parent company had "completely and illegally avoided" tax liabilities related to the sale of shares and capital assets in India.
The move is the latest in a series of efforts by the Revenue Department to tax overseas deals, circumventing Indian tax laws.
I-T officials confirmed the development. "An enquiry is on and we are in the process of collecting the details of the transaction," a senior official said.
A spokesperson of the company however, sought to play down the significance of the notice.
"The court has not granted any relief to the petitioner and has instead suggested to the petitioner to file a representation with the Government and the Indian tax authorities to take appropriate steps to respond to the queries raised, and is fully committed to complying with the Indian law and is responding to queries raised by the Indian tax authorities." Senior officials close to the development said the India business is a very small part of the overall global acquisition of FMCG company shares. [Source : www.economictimes.com dated February 1, 2011]
->> I-T slaps Rs. 1,180 crore more tax on the largest Realty Developer
The Income-tax Department has sought Rs. 1,180 crore more tax from the country's largest real estate developer, and its 22 subsidiaries for the assessment year 2009-10.
The group, which has filed an appeal with the appropriate appellate authorities, has not made any provision toward this demand in its third quarter result. The tax demand was raised in the previous quarter.
"The company has made a significant investment in acquiring fresh land that has resulted in exceeding the capital expenditure by Rs. 500 crore for the third quarter," said another company official. "Due to fresh capital investment in land and the delay in new launches, net debt has witnessed a marginal rise in the quarter," he said. At the end of second quarter, the company had a debt of around Rs. 20,000 crore.
The Realty developer reported marginal decline in consolidated net profit at Rs. 465.67 crore for the quarter ended December 31, 2010. The company had posted a net profit of Rs. 467.89 crore in the corresponding period previous fiscal, a company statement said. The consolidated sales during the quarter, however, increased by 22.42 per cent. to Rs. 2,479.93 crore from Rs. 2,025.77 crore in the year-ago period, it added. [Source : www.economictimes.com dated February 1, 2011]
->> I-T Department tip-off helps CBI nail the former telecom minister, aides
The arrest of tainted former telecom minister and his associates by the Central Bureau of Investigation (CBI) was triggered by an Income-tax Department investigation on the money trail from a Mumbai-based realty firm to a Chennai-based company.
They said the seized documents gave critical transaction details that took place after the allotment of 2G licences. Investigations revealed some of the group companies of the Mumbai-based realty firm transferred Rs. 209 crore to the company.
Though the officials refused to share the names of the companies, they said the information compiled by the Department could be one of the reasons that led to former minister's arrest.
I-T Department officials said they had found crucial links to the 2G scam from papers seized during a search in Mumbai 10-11 months earlier.
A close scrutiny of the money trail by the Department revealed that Rs. 206 crore was subsequently given by the realty firm to a renowned event management company, understood to be close to a senior and influential politician-someone seen as a guiding force behind the realty company.
Further investigations in the case revealed the money then changed hands from the event management company to a fruits and vegetables company that subsequently passed on the money to a Chennai-based company.
Officials said the Department was in the process of establishing links to the former minister and his associates with this Chennai-based company but due to pressures from obvious quarters, the department was sitting on this investigation for quite some time. The arrest of the former minister and his associates might be just the first step towards a much wider action on the 2G scam. [Source : www.businessstandard.com dated February 3, 2011]
--
Me on net :
> >>>>>>>>>>>>>>>>>>>>>
http://rajkumaratthenet.blogspot.com/
http://itronline.blogspot.com/
Virus Warning: Although the I have taken reasonable precautions to ensure no viruses are present in his email, sender (I) cannot accept responsibility for any loss or damage arising from the use of this email or attachment."
Thursday, February 10, 2011
ITAT (MUM) : Premium amortised over the period remaining till maturity is allowable
Facts
• The Assessee had a unit at Bhopal which was not functioning since the assessment year 1997-98.
• The Bank of Rajasthan Ltd ('the assessee') was a company engaged in the business of banking.
• The assessee had filed its Return of Income claiming loss on valuation of investments which included an amount towards amortization of premium paid for securities held under 'Held to Maturity' (HTM) category.
• The Assessing Officer ("AO") held that securities held by the assessee under HTM category were in nature of investment and not stock in trade. Therefore, the claim for amortization of premium paid at the time of purchase of the securities was not allowed being in the nature of capital expenditure.
• The assessee contended that all the investments were stock-in-trade and this fact had been accepted by the income-tax authorities in the past, as diminution in the value of stock in trade had always been allowed as deduction. Further, the securities on which premium was paid at the time of purchase and which were held under HTM category were held as stock in trade and not as investments. All income/loss whatever arose on account of such securities has been treated as business income/loss and assessed accordingly in all past years by the income-tax authorities.
• The AO however rejected the claim and disallowed the deduction of premium amortized in respect of HTM securities.
• The CIT (A) upheld the assessee's claim. It held that as per the circular issued by the Central Board of Direct Taxes („the CBDT?), Circular No.17 dated 26/11/2008, investments classified under HTM category need not be marked to market and could be carried at acquisition cost unless it was more than the face value, in such case the premium should be amortized over the period remaining to maturity. Such premium was held allowable as revenue expenditure.
• Aggrieved by the above order, the AO preferred an appeal before the Tribunal.
Issues before the Tribunal
Whether premium paid in excess of the face value of investments classified under HTM category which has been amortised over the maturity period is allowable as business loss.
Observations and Ruling of the Tribunal
• There was no dispute in accepting the assessee's claim that all investments were in the nature of stock in trade. This was already accepted by the income-tax authorities in earlier years in the assessee's own case.
• Amortization of premium in respect of investments held in HTM was in accordance with the method of valuation prescribed the Reserve Bank of India and was consistently followed by the assessee. A consistently and regularly followed method of accounting cannot be disregarded.
• It referred to the Hon'ble Supreme Court decision in the case of UCO bank (240 ITR 355), wherein it was held that under the Banking Regulation Act, banks are required to disclose securities held, as investment, but that does not mean that they are to be treated as investment for all purposes. The HTM securities could be sold before maturity, in fact they had been sold in the subsequent year and income/loss was treated as business income/loss and not capital gain/loss.
• Further, reference was made to the decision of the Jodhpur Tribunal in Bank's own case in the earlier years, wherein it was held that investment was stock in trade and entire loss on account of diminution in value was allowable as a deduction. This judgment was accepted by the AO and not contested before the Rajasthan High Court.
• The Tribunal held that since the claim of assessee was as per RBI guidelines and the circular issued by the CBDT, the AO was directed to allow the assessee's claim.
Comments
The above decision lays down that in the case of banks the premium paid in excess of the face value of investments classified under HTM category, which has been amortised over the period till maturity, is allowable as revenue expenditure since the claim is as per RBI guidelines and the CBDT also has directed to allow such premium.
Source: ACIT v/s The Bank of Rajasthan Ltd (2011-TIOL-35-ITAT-MUM)
Source : ACIT v/s The Bank of Rajasthan Ltd (2011-TIOL-35-ITAT-MUM)
Link : ACIT v/s The Bank of Rajasthan Ltd (2011-TIOL-35-ITAT-MUM)
--
Me on net :
> >>>>>>>>>>>>>>>>>>>>>
http://rajkumaratthenet.blogspot.com/
http://itronline.blogspot.com/
Virus Warning: Although the I have taken reasonable precautions to ensure no viruses are present in his email, sender (I) cannot accept responsibility for any loss or damage arising from the use of this email or attachment."
• The Assessee had a unit at Bhopal which was not functioning since the assessment year 1997-98.
• The Bank of Rajasthan Ltd ('the assessee') was a company engaged in the business of banking.
• The assessee had filed its Return of Income claiming loss on valuation of investments which included an amount towards amortization of premium paid for securities held under 'Held to Maturity' (HTM) category.
• The Assessing Officer ("AO") held that securities held by the assessee under HTM category were in nature of investment and not stock in trade. Therefore, the claim for amortization of premium paid at the time of purchase of the securities was not allowed being in the nature of capital expenditure.
• The assessee contended that all the investments were stock-in-trade and this fact had been accepted by the income-tax authorities in the past, as diminution in the value of stock in trade had always been allowed as deduction. Further, the securities on which premium was paid at the time of purchase and which were held under HTM category were held as stock in trade and not as investments. All income/loss whatever arose on account of such securities has been treated as business income/loss and assessed accordingly in all past years by the income-tax authorities.
• The AO however rejected the claim and disallowed the deduction of premium amortized in respect of HTM securities.
• The CIT (A) upheld the assessee's claim. It held that as per the circular issued by the Central Board of Direct Taxes („the CBDT?), Circular No.17 dated 26/11/2008, investments classified under HTM category need not be marked to market and could be carried at acquisition cost unless it was more than the face value, in such case the premium should be amortized over the period remaining to maturity. Such premium was held allowable as revenue expenditure.
• Aggrieved by the above order, the AO preferred an appeal before the Tribunal.
Issues before the Tribunal
Whether premium paid in excess of the face value of investments classified under HTM category which has been amortised over the maturity period is allowable as business loss.
Observations and Ruling of the Tribunal
• There was no dispute in accepting the assessee's claim that all investments were in the nature of stock in trade. This was already accepted by the income-tax authorities in earlier years in the assessee's own case.
• Amortization of premium in respect of investments held in HTM was in accordance with the method of valuation prescribed the Reserve Bank of India and was consistently followed by the assessee. A consistently and regularly followed method of accounting cannot be disregarded.
• It referred to the Hon'ble Supreme Court decision in the case of UCO bank (240 ITR 355), wherein it was held that under the Banking Regulation Act, banks are required to disclose securities held, as investment, but that does not mean that they are to be treated as investment for all purposes. The HTM securities could be sold before maturity, in fact they had been sold in the subsequent year and income/loss was treated as business income/loss and not capital gain/loss.
• Further, reference was made to the decision of the Jodhpur Tribunal in Bank's own case in the earlier years, wherein it was held that investment was stock in trade and entire loss on account of diminution in value was allowable as a deduction. This judgment was accepted by the AO and not contested before the Rajasthan High Court.
• The Tribunal held that since the claim of assessee was as per RBI guidelines and the circular issued by the CBDT, the AO was directed to allow the assessee's claim.
Comments
The above decision lays down that in the case of banks the premium paid in excess of the face value of investments classified under HTM category, which has been amortised over the period till maturity, is allowable as revenue expenditure since the claim is as per RBI guidelines and the CBDT also has directed to allow such premium.
Source: ACIT v/s The Bank of Rajasthan Ltd (2011-TIOL-35-ITAT-MUM)
Source : ACIT v/s The Bank of Rajasthan Ltd (2011-TIOL-35-ITAT-MUM)
Link : ACIT v/s The Bank of Rajasthan Ltd (2011-TIOL-35-ITAT-MUM)
--
Me on net :
> >>>>>>>>>>>>>>>>>>>>>
http://rajkumaratthenet.blogspot.com/
http://itronline.blogspot.com/
Virus Warning: Although the I have taken reasonable precautions to ensure no viruses are present in his email, sender (I) cannot accept responsibility for any loss or damage arising from the use of this email or attachment."
Monday, February 7, 2011
ITAT(MUM):- Filing stay application before the lower authorities is directory and mandatory for filing stay application before ITAT
Filing stay application before the lower authorities is directory and mandatory for filing stay application before ITAT
In brief :- In the case of DHL Express (India) P Ltd. v. ACIT [SA No. 119/Mum/2010], dated 19 November, 2010, the Mumbai Income Tax Appellate Tribunal ("Tribunal") has held that stay application arising out of the assessment order passed by the Assessing Officer ("AO") in pursuance to the direction of the Dispute Resolution Panel ("DRP") under section 144C of the Income-tax Act, 1961 ("the Act"), is maintainable before the Tribunal. Filing of stay application before lower authorities is directory, and not mandatory, for filing stay application before the Tribunal.
Facts
• This is the first year wherein the assessee could have opted for DRP route instead of the conventional route (i.e., filing of an appeal before the Commissioner of Income tax (Appeals) against the assessment order passed by the AO.
• The assessee had adopted the DRP route. Accordingly, against the order of the AO, it had filed an appeal before the Tribunal.
• Thereafter, it filed a stay application before the Tribunal requesting for stay against recovery of outstanding demand raised by the AO. Further, it had not approached the revenue authorities viz., AO, Additional Commissioner and Commissioner of Income-tax requesting for stay against the recovery of outstanding demand.
Issue :*Whether the Tribunal is empowered to grant stay where the assessee had taken DRP route and had not filed any stay application before the revenue authorities.
Assessee's contentions
• In view of the procedure for filing of stay application, prescribed under Rule 35A of the Appellate Tribunal Rules, 1963 ("the Rules"), the assessee had taken a position that only in case a stay application is filed before the revenue authorities, the same is required to be filed alongwith the stay application before the Tribunal and not otherwise.
• In the assessee's case, since no stay application was filed before the revenue authorities, no correspondence was enclosed with the stay application to the Tribunal.
• The assessee had requested for full stay against recovery of outstanding demand and out-of-turn hearing of its appeal.
Revenue's contentions
• Relying on the Mumbai Tribunal decision in the case of RPG Enterprises Ltd. v. DCIT [2001] 74 TTJ 391 (Mum), the revenue insisted that the assessee ought to have approached the Commissioner for grant of stay of the disputed demand, which would give an opportunity to study the case, gather necessary data and protect revenue's interest.
• The assessee should be directed to pay forthwith the entire outstanding demand.
Tribunal
• In the instant case, the assessment order had been framed in conformity with the directions of the DRP under section 144C of the Act and therefore, the assessee had filed an appeal directly before the Tribunal.
• In the view of the Tribunal, it was not mandatory on the part of the assessee to move an application before revenue authorities for granting stay of outstanding demand. Such a requirement is directory and not mandatory.
• As the Tribunal was satisfied that the assessee had a prima facie case, the Tribunal directed the assessee to pay around 20% of the outstanding demand and stayed the recovery of the balance demand till the disposal of the appeal, or for a period of six months from the date of order, whichever is earlier.
• It also granted an out-of-turn hearing of the appeal.
Conclusion:-This decision of the Tribunal is the first decision adopting such an approach against an order passed by the AO in conformity with the directions of the DRP. Such an approach of the Tribunal will expedite the process of obtaining a stay order and also provide an early disposal of the quantum appeal before the Tribunal.
Source : DHL Express (India) P Ltd. v. ACIT [SA No. 119/Mum/2010]
--
Me on net :
> >>>>>>>>>>>>>>>>>>>>>
http://rajkumaratthenet.blogspot.com/
http://itronline.blogspot.com/
Virus Warning: Although the I have taken reasonable precautions to ensure no viruses are present in his email, sender (I) cannot accept responsibility for any loss or damage arising from the use of this email or attachment."
In brief :- In the case of DHL Express (India) P Ltd. v. ACIT [SA No. 119/Mum/2010], dated 19 November, 2010, the Mumbai Income Tax Appellate Tribunal ("Tribunal") has held that stay application arising out of the assessment order passed by the Assessing Officer ("AO") in pursuance to the direction of the Dispute Resolution Panel ("DRP") under section 144C of the Income-tax Act, 1961 ("the Act"), is maintainable before the Tribunal. Filing of stay application before lower authorities is directory, and not mandatory, for filing stay application before the Tribunal.
Facts
• This is the first year wherein the assessee could have opted for DRP route instead of the conventional route (i.e., filing of an appeal before the Commissioner of Income tax (Appeals) against the assessment order passed by the AO.
• The assessee had adopted the DRP route. Accordingly, against the order of the AO, it had filed an appeal before the Tribunal.
• Thereafter, it filed a stay application before the Tribunal requesting for stay against recovery of outstanding demand raised by the AO. Further, it had not approached the revenue authorities viz., AO, Additional Commissioner and Commissioner of Income-tax requesting for stay against the recovery of outstanding demand.
Issue :*Whether the Tribunal is empowered to grant stay where the assessee had taken DRP route and had not filed any stay application before the revenue authorities.
Assessee's contentions
• In view of the procedure for filing of stay application, prescribed under Rule 35A of the Appellate Tribunal Rules, 1963 ("the Rules"), the assessee had taken a position that only in case a stay application is filed before the revenue authorities, the same is required to be filed alongwith the stay application before the Tribunal and not otherwise.
• In the assessee's case, since no stay application was filed before the revenue authorities, no correspondence was enclosed with the stay application to the Tribunal.
• The assessee had requested for full stay against recovery of outstanding demand and out-of-turn hearing of its appeal.
Revenue's contentions
• Relying on the Mumbai Tribunal decision in the case of RPG Enterprises Ltd. v. DCIT [2001] 74 TTJ 391 (Mum), the revenue insisted that the assessee ought to have approached the Commissioner for grant of stay of the disputed demand, which would give an opportunity to study the case, gather necessary data and protect revenue's interest.
• The assessee should be directed to pay forthwith the entire outstanding demand.
Tribunal
• In the instant case, the assessment order had been framed in conformity with the directions of the DRP under section 144C of the Act and therefore, the assessee had filed an appeal directly before the Tribunal.
• In the view of the Tribunal, it was not mandatory on the part of the assessee to move an application before revenue authorities for granting stay of outstanding demand. Such a requirement is directory and not mandatory.
• As the Tribunal was satisfied that the assessee had a prima facie case, the Tribunal directed the assessee to pay around 20% of the outstanding demand and stayed the recovery of the balance demand till the disposal of the appeal, or for a period of six months from the date of order, whichever is earlier.
• It also granted an out-of-turn hearing of the appeal.
Conclusion:-This decision of the Tribunal is the first decision adopting such an approach against an order passed by the AO in conformity with the directions of the DRP. Such an approach of the Tribunal will expedite the process of obtaining a stay order and also provide an early disposal of the quantum appeal before the Tribunal.
Source : DHL Express (India) P Ltd. v. ACIT [SA No. 119/Mum/2010]
--
Me on net :
> >>>>>>>>>>>>>>>>>>>>>
http://rajkumaratthenet.blogspot.com/
http://itronline.blogspot.com/
Virus Warning: Although the I have taken reasonable precautions to ensure no viruses are present in his email, sender (I) cannot accept responsibility for any loss or damage arising from the use of this email or attachment."
Sunday, February 6, 2011
Definition of ‘Charitable purpose’ under section 2(15) of the Income-tax Act, 1961
Definition of 'Charitable purpose' under section 2(15) of the Income-tax Act, 1961
Section 2(15) of the Income Tax Act, 1961 ('Act') defines "charitable purpose" to include the following:-
(i) Relief of the poor
(ii) Education
(iii) Medical relief, and
(iv) the advancement of any other object of general public utility.
An entity with a charitable object of the above nature was eligible for exemption from tax under section 11 or alternatively under section 10(23C) of the Act. However, it was seen that a number of entities who were engaged in commercial activities were also claiming exemption on the ground that such activities were for the advancement of objects of general public utility in terms of the fourth limb of the definition of 'charitable purpose'. Therefore, section 2(15) was amended vide Finance Act, 2008 by adding a proviso which states that the 'advancement of any other object of general public utility' shall not be a charitable purpose if it involves the carrying on of –
(a) any activity in the nature of trade, commerce or business; or
(b) any activity of rendering any service in relation to any trade, commerce or business;
for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention of the income from such activity.
2. The following implications arise from this amendment –
2.1 The newly inserted proviso to section 2(15) will not apply in respect of the first three limbs of section 2(15), i.e., relief of the poor, education or medical relief. Consequently, where the purpose of a trust or institution is relief of the poor, education or medical relief, it will constitute 'charitable purpose' even if it incidentally involves the carrying on of commercial activities.
2.2. 'Relief of the poor' encompasses a wide range of objects for the welfare of the economically and socially disadvantaged or needy. It will, therefore, include within its ambit purposes such as relief to destitute, orphans or the handicapped, disadvantaged women or children, small and marginal farmers, indigent artisans or senior citizens in need of aid. Entities who have these objects will continue to be eligible for exemption even if they incidentally carry on a commercial activity, subject, however, to the conditions stipulated under section 11(4A) or the seventh proviso to section 10(23C) which are that
(i) the business should be incidental to the attainment of the objectives of the entity,and
(ii) separate books of account should be maintained in respect of such business.
Similarly, entities whose object is 'education' or 'medical relief' would also continue to be eligible for exemption as charitable institutions even if they incidentally carry on a commercial activity subject to the conditions mentioned above.
3. The newly inserted proviso to section 2(15) will apply only to entities whose purpose is 'advancement of any other object of general public utility' i.e. the fourth limb of the definition of 'charitable purpose' contained in section 2(15). Hence, such entities will not be eligible for exemption under section 11 or under section 10(23C) of the Act if they carry on commercial activities. Whether such an entity is carrying on an activity in the nature of trade, commerce or business is a question of fact which will be decided based on the nature, scope, extent and frequency of the activity.
3.1. There are industry and trade associations who claim exemption from tax u/s 11 on the ground that their objects are for charitable purpose as these are covered under 'any other object of general public utility'. Under the principle of mutuality, if trading takes place between persons who are associated together and contribute to a common fund for the financing of some venture or object and in this respect have no dealings or relations with any outside body, then any surplus returned to the persons forming such association is not chargeable to tax. In such cases, there must be complete identity between the contributors and the participants.
Therefore, where industry or trade associations claim both to be charitable institutions as well as mutual organizations and their activities are restricted to contributions from and participation of only their members, these would not fall under the purview of the proviso to section 2(15) owing to the principle of mutuality. However, if such organizations have dealings with non-members, their claim to be charitable organizations would now be governed by the additional conditions stipulated in the proviso to section 2 (15).
3.2. In the final analysis, however, whether the assessee has for its object 'the advancement of any other object of general public utility' is a question of fact. If such assessee is engaged in any activity in the nature of trade, commerce or business or renders any service in relation to trade, commerce or business, it would not be entitled to claim that its object is charitable purpose. In such a case, the object of 'general public utility' will be only a mask or a device to hide the true purpose which is trade, commerce or business or the rendering of any service in relation to trade, commerce or business. Each case would, therefore, be decided on its own facts and no generalization is possible. Assessees, who claim that their object is 'charitable purpose' within the meaning of Section 2(15), would be well advised to eschew any activity which is in the nature of trade, commerce or business or the rendering of any service in relation to any trade, commerce or business.
--
Me on net :
> >>>>>>>>>>>>>>>>>>>>>
http://rajkumaratthenet.blogspot.com/
http://itronline.blogspot.com/
Virus Warning: Although the I have taken reasonable precautions to ensure no viruses are present in his email, sender (I) cannot accept responsibility for any loss or damage arising from the use of this email or attachment."
Thursday, February 3, 2011
ITR(Trib) Vol 7 Part 6 dated 07-02-2011
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
--
Me on net :
> >>>>>>>>>>>>>>>>>>>>>
http://rajkumaratthenet.blogspot.com/
http://itronline.blogspot.com/
Virus Warning: Although the I have taken reasonable precautions to ensure no viruses are present in his email, sender (I) cannot accept responsibility for any loss or damage arising from the use of this email or attachment."
Volume 7 : Part 6 (Issue dated : 7-2-2011)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Accounting --Rejection of accounts--Rejection of accounts based on enquiry into transaction of third parties--Evidence of assessee not considered--Increase in gross profit rate in year in question--Rejection of accounts and addition of income--Not justified--Income-tax Act, 1961, s. 145(3)-- Ravi Kumar Rawat v. ITO (Jaipur) . . . 593
Appeal to Appellate Tribunal --Additional ground that payment of non-compete fee to be treated as deferred expenditure--Ground involving question of law can be raised at any stage of appellate proceedings--Additional ground admitted--Income-tax Act, 1961-- Orchid Chemicals and Pharmaceuticals Ltd. v. Asst. CIT (Chennai) . . . 601
Appeal to Commissioner (Appeals) --Appeal from assessment order--Commissioner (Appeals) not entitled to pronounce on penalty matter-- Agrawal Roadlines Pvt. Ltd. v. Deputy CIT (Ahmedabad) . . . 576
Business expenditure --Fines and penalties--Charges for overloading vehicles carrying liquid cargo--State Government permitting overload on payment of charges--Charges not in nature of penalty--Deductible in assessment year 2005-06--Income-tax Act, 1961, s. 37-- Agrawal Roadlines Pvt. Ltd. v. Deputy CIT (Ahmedabad) . . . 576
----Foreign travel expenses of director related to container freight station activity--Allowable--Income-tax Act, 1961, s. 37-- A. S. Shipping Agencies P. Ltd. v. Asst. CIT (Chennai) . . . 532
Business loss --Loss on account of embezzlement--Investigation pending--Loss if recovered would belong to investor--Assessee making provision in books of account of contingent liability and adding it back in computation of income--Unless assessee pays any part of loss to investor no loss arises to assessee--Deduction on account of embezzlement premature--Income-tax Act, 1961-- Birla Sunlife Asset Management Co. v. Deputy CIT (Mumbai) . . . 586
Capital gains --Cost of acquisition--Provision for substituting sale consideration with fair market value of shares--Provision providing for such substitution omitted with effect from April 1, 1988--Sale consideration cannot be substituted with fair market value of shares to compute capital gains--Income-tax Act, 1961, ss. 45, 52-- Moral Trading and Investment Ltd. v. Deputy CIT (Delhi) . . . 548
----Short-term or long-term capital gains--Transfer of shares not on stock exchange --Date of acquisition of shares--Letter from company stating decision taken to allot shares to assessee--No resolution of board of directors to show decision taken--Date on which share certificates issued is date of acquisition--Period of holding to be reckoned from that date--Income-tax Act, 1961, s. 45--Circular No. 704 dated April 28, 1995-- Moral Trading and Investment Ltd. v. Deputy CIT (Delhi) . . . 548
Capital or revenue expenditure --Payment of non-compete fee for establishing new line of manufacturing business--Agreement precluding sellers from competing for four years without any future liability on assessee--No benefit for considerable period--Receipt of non-compete fee considered income does not lead to conclusion that payment of non-compete fee revenue expenditure--Non-compete fee deferred revenue expenditure to be spread over four years--Income-tax Act, 1961, ss. 28(va), 37-- Orchid Chemicals and Pharmaceuticals Ltd. v. Asst. CIT (Chennai) . . . 601
Cash credits --Firm--Burden of proof--Cash credits in name of partner--Firm to prove genuineness of credit--Income-tax Act, 1961, s. 68-- Paras Collins Distilleries v. ITO (Hyderabad) . . . 614
----Firm--Unexplained cash credits in capital accounts of partners--Cash credit entry in books of firm in names of partners--Returned income not sufficient to explain source of cash credits--No substantial evidence in support of explanation of firm that investment out of agricultural income and gifts--Failure to prove creditworthiness and genuineness of transaction--Partners incapable of investing in firm--Cash credits undisclosed income of firm--Addition justified--Income-tax Act, 1961, s. 68-- Paras Collins Distilleries v. ITO (Hyderabad) . . . 614
Income from other sources --Deductions--Amounts borrowed to repay pre-existing liability of interest-free loan--Borrowings not wholly and exclusively for purpose of earning interest income--Not allowable as deduction--Income-tax Act, 1961, s. 57(iii)-- Moral Trading and Investment Ltd. v. Deputy CIT (Delhi) . . . 548
Industrial undertaking --Special deduction--Container freight station--Warehousing income--Withdrawal of special deduction in revision--Assessing Officer giving effect to revision order without following direction of Tribunal--Serious procedural lapse--Warehousing income is part of container freight station--Deduction to be allowed--Income-tax Act, 1961, s. 80-IA-- A. S. Shipping Agencies P. Ltd. v. Asst. CIT (Chennai) . . . 532
International transactions --Determination of arm's length price--Difference less than 5 per cent.--Section 92C(2) not applicable--Income-tax Act, 1961, s. 92C(2)-- Ravi Kumar Rawat v. ITO (Jaipur) . . . 593
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 28(va) --Capital or revenue expenditure--Payment of non-compete fee for establishing new line of manufacturing business--Agreement precluding sellers from competing for four years without any future liability on assessee--No benefit for considerable period--Receipt of non-compete fee considered income does not lead to conclusion that payment of non-compete fee revenue expenditure--Non-compete fee deferred revenue expenditure to be spread over four years-- Orchid Chemicals and Pharmaceuticals Ltd. v. Asst. CIT (Chennai) . . . 601
S. 37 --Business expenditure--Fines and penalties--Charges for overloading vehicles carrying liquid cargo--State Government permitting overload on payment of charges--Charges not in nature of penalty--Deductible in assessment year 2005-06-- Agrawal Roadlines Pvt. Ltd. v. Deputy CIT (Ahmedabad) . . . 576
----Business expenditure--Foreign travel expenses of director related to container freight station activity--Allowable-- A. S. Shipping Agencies P. Ltd. v. Asst. CIT (Chennai) . . . 532
----Capital or revenue expenditure--Payment of non-compete fee for establishing new line of manufacturing business--Agreement precluding sellers from competing for four years without any future liability on assessee--No benefit for considerable period--Receipt of non-compete fee considered income does not lead to conclusion that payment of non-compete fee revenue expenditure--Non-compete fee deferred revenue expenditure to be spread over four years-- Orchid Chemicals and Pharmaceuticals Ltd. v. Asst. CIT (Chennai) . . . 601
S. 45 --Capital gains--Cost of acquisition--Provision for substituting sale consideration with fair market value of shares--Provision providing for such substitution omitted with effect from April 1, 1988--Sale consideration cannot be substituted with fair market value of shares to compute capital gains-- Moral Trading and Investment Ltd. v. Deputy CIT (Delhi) . . . 548
----Capital gains--Short-term or long-term capital gains--Transfer of shares not on stock exchange --Date of acquisition of shares--Letter from company stating decision taken to allot shares to assessee--No resolution of board of directors to show decision taken--Date on which share certificates issued is date of acquisition--Period of holding to be reckoned from that date --Circular No. 704 dated April 28, 1995-- Moral Trading and Investment Ltd. v. Deputy CIT (Delhi) . . . 548
S. 52 --Capital gains--Cost of acquisition--Provision for substituting sale consideration with fair market value of shares--Provision providing for such substitution omitted with effect from April 1, 1988--Sale consideration cannot be substituted with fair market value of shares to compute capital gains-- Moral Trading and Investment Ltd. v. Deputy CIT (Delhi) . . . 548
S. 57(iii) --Income from other sources--Deductions--Amounts borrowed to repay pre-existing liability of interest-free loan--Borrowings not wholly and exclusively for purpose of earning interest income--Not allowable as deduction-- Moral Trading and Investment Ltd. v. Deputy CIT (Delhi) . . . 548
S. 68 --Cash credits--Firm--Burden of proof--Cash credits in name of partner--Firm to prove genuineness of credit-- Paras Collins Distilleries v. ITO (Hyderabad) . . . 614
----Cash credits--Firm--Unexplained cash credits in capital accounts of partners--Cash credit entry in books of firm in names of partners--Returned income not sufficient to explain source of cash credits--No substantial evidence in support of explanation of firm that investment out of agricultural income and gifts--Failure to prove creditworthiness and genuineness of transaction--Partners incapable of investing in firm--Cash credits undisclosed income of firm--Addition justified-- Paras Collins Distilleries v. ITO (Hyderabad) . . . 614
S. 80-IA --Industrial undertaking--Special deduction--Container freight station--Warehousing income--Withdrawal of special deduction in revision--Assessing Officer giving effect to revision order without following direction of Tribunal--Serious procedural lapse--Warehousing income is part of container freight station--Deduction to be allowed-- A. S. Shipping Agencies P. Ltd. v. Asst. CIT (Chennai) . . . 532
S. 92C(2) --International transactions--Determination of arm's length price--Difference less than 5 per cent.--Section 92C(2) not applicable-- Ravi Kumar Rawat v. ITO (Jaipur) . . . 593
S. 145(3) --Accounting--Rejection of accounts--Rejection of accounts based on enquiry into transaction of third parties--Evidence of assessee not considered--Increase in gross profit rate in year in question--Rejection of accounts and addition of income--Not justified-- Ravi Kumar Rawat v. ITO (Jaipur) . . . 593
--
Me on net :
> >>>>>>>>>>>>>>>>>>>>>
http://rajkumaratthenet.blogspot.com/
http://itronline.blogspot.com/
Virus Warning: Although the I have taken reasonable precautions to ensure no viruses are present in his email, sender (I) cannot accept responsibility for any loss or damage arising from the use of this email or attachment."
Sunday, January 30, 2011
Fwd: SOME USEFUL JUDGEMENTS
---------- Forwarded message ----------
From: pavan singla <singlapavan@gmail.com>
Date: Sun, Jan 30, 2011 at 00:03
Subject: SOME USEFUL JUDGEMENTS
S. 80IB : Deductions – Profits and Gains from Industrial Undertakings
–Manufacturing – Types of Sheets and Pre-engineering Building Material
Assessee had employed high–tech sophisticated machinery, e.g., for
marking roof tops, it bought plain sheets and gave them curved and
desired shape on cold rolled mill and thereafter, different
engineering operations were carried on and thus, ultimately assessee
gave technical inputs in respect of tensile strength, long durable
service life and structural quality keeping factors like heat
resistance operational requirement, energy consumption and
environmental factors in mind. Similarly, for beams columns and
rafters, assessee had used high duty shearing machine as against
simple fabrication tools employed by others. It had auto–welding
machines which gave uniform welding and made all parts uniformly
joining and becoming one static body and ultimately improved its
tensile strength. In view of above process, there was sea change from
raw materials to finished products, hence, the assessee could be said
to be engaged in production or manufacture of an article or thing and
entitled to deduction under section 80IB.
steelFabBuilding Systems vs. ITO (2010) 127 ITD 419 (Mum.)
S. 139(5) : Revised Return – Limitation – Sanction of Merger Scheme by Court
Once the scheme of amalgamation had been sanctioned with effect from a
particular date, it is binding on every one including the statutory
authorities and the only course open to the Revenue would be to act as
per the scheme sanctioned. The tax authorities are bound to take note
of state of affairs of the applicant as on the effective date i.e. 1st
Jan., 2004 and a revised return filed reflecting the same cannot be
ignored on the strength of section 139(5).
Pentamedia Graphics Ltd. vs. ITO (2010) 236 CTR 204 (Mad.)
S. 133A : Survey – Disclosure – Statement
Confession made during survey cannot be the sole basis for making an
addition, without considering the explanation of assessee.
Babulal Gangwal, Jaipur vs. Addl. CIT (2010) Tax World December, 10
Vol. XLIV, Part-6, P. No. 222
S. 145(3) : Accounts – Rejection – Absence of Discrepancy – Accounts Audited
Where the Assessing Officer has not pointed out any specific defect or
discrepancy in the account books maintained by the assessee which are
duly audited by an independent Chartered Accountant, there was no
justification in rejecting the books of accounts and making the
addition to the declared income.
CIT vs. Pradise Holidays (2010) 48 DTR 349 (Delhi)
S. 147 : Reassessment – Reason to Believe – Report of DVO – (S. 148)
Opinion of DVO per se is not an information for the purpose of
reopening assessment under section 147. Assessing Officer has to apply
his mind to the information if any, collected and must form a belief
thereon.
ACIT vs. Dhariya Construction Company (2010) 328 ITR 515 / 236 CTR 226
/ 47 DTR 288 (SC)
S. 194A : Deduction of Tax at Source – Bank – Interest – Notional
Provision for half yearly interest of Cumulative deposit – (S. 201)
Bank making for notional provision for half yearly interest on account
of cumulative deposit shown in general ledger reversed on next working
day. Interest credited to provisioning account for macro–monitoring.
Interest not due and payable on that day. Deduction of tax not
obligatory.
Bank of Maharashtra vs. ITO (2010) 6 ITR 824 (Trib.)(Ahd.)
S. 194C : Deduction of Tax at Source – Payment to Contractor and
Sub-contractors
Assessee–society having been created by transporters with a view to
enter into contracts with companies for transportation of goods and to
ensure allocation of work among all members on an equitable basis,
there is no sub-contract between the society and the members and
therefore, section 194C(2) is not attracted to the facts of the case
and the assessee society is not liable to deduct tax at source from
the payments made to the truck owners who are its members.
CIT vs. Sirmour Truck Operators Union (2010) 48 DTR 130 (HP)
S. 226 : Recovery – No-coercive recovery if first appeal is ready for Hearing
The assessee filed appeals before the Commissioner of Income-tax
(Appeals) against the assessment orders for Asst. Years 2004-05 to
2008-09. Though the appeals were ripe for hearing and the appellate
authority had already posted for hearing on different dates, the
Assessing Officer without considering the pendency of the appeals
issued demand notice and took steps for attachment of the assessee's
bank account. The assessee filed a Writ petition to challenge the
recovery action which was opposed by the department on the ground that
the assessee had repeatedly sought adjournment of the hearing of
appeals, the Court allowed the petition and directed to dispose the
appeals at the earliest possible after affording an opportunity of
hearing to the assessee, at any date within a period of one month from
the date of receipt of a copy of the Court's judgment and till such
time orders are passed by the appellate authority, recovery steps
shall be kept in abeyance. If there is no co-operation by assessee the
appellate authority is at liberty to finalise the appeals without
according any further opportunity of hearing.
Hotel Leela Venture vs. Ag. ITO (Kerala High Court) Source: www.itatonline.org
S. 226 : Recovery – Ability to pay demand is no bar for grant on recovery
The assessee filed a stay application before the Tribunal. The
department opposed the stay by relying on the Supreme Court in ACCE
vs. Dunlop India (1985) 154 ITR 172 (SC), and contended that as
paucity of funds had not been sufficiently demonstrated, for this
reason alone stay should not be granted. The Tribunal rejected the
contention of Departmental representative following B. N. Co. vs. Jt.
CIT (2001) 71 TTJ 153 (Kol.) and further held that Supreme Court's
observation in Dunlop cannot be interpreted to mean that the Tribunal
is denuded of the powers to grant stay until case for financial
stringency is successfully made out by the applicant. Accordingly stay
was granted till the disposal of appeal.
KEC International Ltd. vs. ACIT (ITAT – Mumbai) Source: www.itatonline.org
S. 2(24) : Income – Non-occupancy Charges – Transfer Fee – Voluntary
Contribution
The receipt of non-occupancy charges, transfer fee and voluntary
contribution from its members by the Co-operative Housing Society is
not taxable.
ITO vs. Grand Pradi CHS Ltd. (2011) BCAJ Jan., 2011. P. 20 (Vol. 42B.
Part 4. 436
S. 5 : Income – Accrual – Interest on RBI Bonds – Cash Basis
Assessees were entitled to recognize the interest income attributable
to 8 % RBI Bonds on cash basis to be reckoned at the time of
redemption of the bonds. Assessing Officer was not justified in making
addition on yearly accrual basis.
K. Nagendrasa & Ors. vs. Dy. CIT (2010) 48 DTR 492 (Bang.)(Trib
S. 10B : Exemption – Export Turnover – Foreign Expenditure for self
purpose – Turnover retained abroad
The assessee was engaged in the business of development of software by
way of on site and off shore development and had a branch in USA for
which separate accounts were maintained. The assessee claimed
deduction under section 10B in respect of the exports of software
made. In computing the export turnover, the Assessing Officer held
that the amount of Rs. 3.33 crores incurred by the USA branch
constituted "expenses incurred in foreign exchange in providing
technical services outside India" and had to be deducted from the
export turnover as provided under section 10B. He also held that the
turnover of the USA branch to the extent of Rs. 15.14 crores had to be
reduced from the export profits as it had not been received in
convertible foreign exchange in India within the period specified in
section 10B(3). On appeal CIT(A) upheld the claim of assessee with
regard to Rs. 15.14 crores while rejected the claim with regard to Rs
3.33 crores. The cross appeals of the parties were referred to Special
Bench. The Special Bench referring the circular No. 621 dated
19-12-1991 and 694 dated 23-11-1994 held that expenditure incurred on
site abroad is eligible for deduction under section 10B. As regards
the turnover of Rs. 15.14 retained abroad, one limb of the Government
cannot be allowed to defeat the operation of other limb. While section
10B requires the foreign exchange to be brought to India within the
prescribed period, the RBI permits the assessee to retain the said
foreign exchange abroad for specific purpose. RBI is the competent
authority for section 10B as well. The result is that reinvestment of
export earning is deemed to have been received in India and thereafter
to have been repatriated abroad. (Principle in J. B. Boda & Co. (1998)
233 ITR 271 (SC) followed).
Zylog Systems Ltd. vs. ITO (2011) 49 DTR 1 (Chennai)(Trib.)(SB)
S. 32 : Depreciation – Trial Run – Plant and Machinery
Assessee is entitled to claim depreciation on plant and machinery even
if it is used during the year for trial production.
CIT vs. Mentha & Allied Products (2010) 47 DTR 284 (All)
S. 32(1)(iv) : Depreciation – Initial Depreciation – Construction of
New Residential Quarters
Considering the dictionary meaning of the term "building" along with
the purpose for which the provision of section 32(1)(iv) was enacted,
namely, to afford incentives to business to construct building for
housing lowly paid employees, the Tribunal was right in holding that
the assessee was entitled to initial depreciation under section
32(1)(iv) in respect of new residential quarters.
CIT vs. Modi Industries Ltd. (2010) 48 DTR 364 (Del.)
S. 32(2) : Depreciation – Unabsorbed – Carry forward and set off –
Export Oriented Unit – [S. 10B(6)]
In view of prohibition in section 10B(6) unabsorbed depreciation
carried over for several years is not allowed to be set off in the
assessment year immediately following end of the period of tax
exemption does not mean that the assessee cannot carry forward
unabsorbed depreciation or business loss until such assessment year;
S. 10B(6) has no application in Asst. Year 2003-04 for the assessee
which is enjoying exemption under section 10B from asst year 1996-97
to asst year 2006-07 and the assessee is entitled to carry forward
unabsorbed depreciation from Asst. Year 2002-03.
Akay Flavours & Aromatics (P) Ltd. vs. Dy. CIT (2010) 48 DTR 382 (Ker.)
. 37(1) : Business Expenditure – Retrenchment Compensation –
Suspension of Manufacturing Activity
Assessee having suspended only its manufacturing activity and not
closed down its trading activity, it is not a case of closure of
business and therefore, expenses incurred by it towards severance cost
of employees is allowable as revenue expenditure.
KJS India (P) Ltd. vs. Dy. CIT (2010) 134 TTJ 697 (Del.)
S. 37(1) : Business Expenditure – Market Research Expenses
Assessee a manufacturer of a soft drink having conducted a market
research by using the services of a professional agency to determine
its brand performance with price, gauge the consumer demand at the
current price or a lower price and to know whether its brand can adopt
a different pricing between the base flavours and the new flavours,
the expenses were incurred for exploring the circumstances as to how
assessee can carry on its business more potentially and not exploring
the market of a new product and therefore, same is allowable as
revenue expenditure
KJS India (P) Ltd. vs. Dy. CIT (2010) 134 TTJ 697 (Del.)
S. 37(1) : Business Expenditure – Capital or Revenue – Purchase of
Anti–virus software
Expenditure incurred on purchase of anti–virus software is of revenue
expenditure.
Chambal Fertilisers & Chemicals Ltd. vs. ACIT (2010) Tax World.
December Vol. XLIV. Part 6. P. 195
S. 37(1) : Business Expenditure – Payment to Trust for Opening and
Running a school in the assessee company premises
Payment made to a trust for opening a school in the assessee company's
premises will be allowable as deduction since the amount was paid with
the object of providing education to the children of employees of
assessee company within the company premises itself and was
necessitated for business purpose.
Chambal Fertilisers & Chemicals Ltd. vs. ACIT (2010) Tax World.
December Vol. XLIV. Part 6. P. 195
S. 37(1) : Business Expenditure – Administrative Charges for obtaining loan
Administrative charges paid for obtaining loan are allowable as
revenue expenditure in the year of payment, notwithstanding the fact
that the assessee has treated this expenditure as deferred revenue
expenditure in its books of account and benefit of loan would accrue
over a long period.
ACIT vs. Tata Housing Development Co. Ltd. (2010) 48 DTR 452 (Trib.)(Mum.)
S. 40(a)(ia) : Disallowance – Amendment by Finance Act, 2010
-Retrospective effect from the Asst. Year 2005-06 – TDS paid before
due date of filing of return
Section 40(a)(ia) by Finance Act, 2010 is retrospective and applies
from the day said section was brought in to the statute book i.e.
w.e.f. 1-4-2005, meaning thereby, that even if the TDS was paid by due
date for filing return of income, no disallowance under section
40(a)(ia) could be made for any of the assessment years starting from
assessment year 2005-06.
Kanubhai Ramjibhai vs. ITO (2010) Chartered Accountants Association
Ahmedabad, December, 2010 P. 411
S. 40A(3) : Business Disallowance – Cash Payments – Distributor for
BSNL in its card division
During the year under consideration assessee made total purchases of
India Telephone cards at Rs. 270.64 lakhs, of which Rs. 187.73 lakhs
were by way of cash purchases. Assessing Officer invoked provisions of
section 40A(3) and disallowed 20% of impugned expenditure. CIT(A)
upheld the disallowance. The Tribunal held that on facts, it was
apparent that relationship between service provider i.e. BSNL and
assessee–distributor was of principal and agent and income arising to
assessee was in nature of commission or remuneration against services
rendered, hence, disallowance under section 40A(3) is not applicable.
S. Rahumathulla vs. ACIT (2010) 127 ITD 440 (Cochin)
S. 54 : Capital Gains – Long Term Capital Gains – Allotment of Flat
under DDA – [S. 2(14), 2(29A), 2(42A)]
Assessee was allotted a flat under scheme of DDA on 27-2-1982.
Delivery of possession of said flat took place on 15-5-1986, when
actual flat number was allotted to assessee. Assessee sold said flat
on 1-1-1989 and claimed set off under section 54 against long term
Capital Gain. Assessing Officer treated the said transaction as short
term capital gain considering the date as 15-5-1986. The High Court
held that under self finance scheme, an allottee gets title to
property on issuance of an allotment letter and payment of
installments is only a consequential action upon which delivery of
possession flows hence claim under section 54 was justified.
Vinod Kumar Jain vs. CIT (2010) 195 Taxman 174 (P&H)
S. 54 : Capital Gains – Exemption – Investment in more than one
residential house – (General Clauses Act 1897 – S. 13)
Expression "a residential house" in section 54 should be understood in
a sense that the building should be residential in nature and "a"
should not be understood to indicate a singular number, assessee was
entitled to claim exemption under section 54 in respect of four
residential flats acquired by her.
CIT vs. K. G. Rukminiamma (Smt.) (2010) 48 DTR 377 (Kar.)
. 80-IA(9) : Deduction – Industrial Undertaking – Interpretation – (S. 80HHC)
S. 80-IA(9) cannot be interpreted to mean that section 80-IA deduction
has to be reduced for computing section 80HHC deduction. The
restriction in section 80IA(9) relates to the allowance of deduction
i.e. seeks to curtail allowance and not computation of deduction.
Section 80IA(9) does not disturb the mechanism of computing the
deduction provided under section 80HHC(3). The reasonable construction
of section 80IA(9) is that where deduction is allowed under section
80IA, then the deduction computed under other provisions under heading
'C' of Chapter VIA has to be restricted to the profits of the business
that remains after excluding the profits allowed as deductions under
section 80IA, so that the total deduction allowed under the heading
'C' of Chapter VIA does not exceed the profits of the business.
Associated Capsules Pvt. Ltd. vs. Dy. CIT (Bombay High Court) Source:
www.itatonline.org
From: pavan singla <singlapavan@gmail.com>
Date: Sun, Jan 30, 2011 at 00:03
Subject: SOME USEFUL JUDGEMENTS
S. 80IB : Deductions – Profits and Gains from Industrial Undertakings
–Manufacturing – Types of Sheets and Pre-engineering Building Material
Assessee had employed high–tech sophisticated machinery, e.g., for
marking roof tops, it bought plain sheets and gave them curved and
desired shape on cold rolled mill and thereafter, different
engineering operations were carried on and thus, ultimately assessee
gave technical inputs in respect of tensile strength, long durable
service life and structural quality keeping factors like heat
resistance operational requirement, energy consumption and
environmental factors in mind. Similarly, for beams columns and
rafters, assessee had used high duty shearing machine as against
simple fabrication tools employed by others. It had auto–welding
machines which gave uniform welding and made all parts uniformly
joining and becoming one static body and ultimately improved its
tensile strength. In view of above process, there was sea change from
raw materials to finished products, hence, the assessee could be said
to be engaged in production or manufacture of an article or thing and
entitled to deduction under section 80IB.
steelFabBuilding Systems vs. ITO (2010) 127 ITD 419 (Mum.)
S. 139(5) : Revised Return – Limitation – Sanction of Merger Scheme by Court
Once the scheme of amalgamation had been sanctioned with effect from a
particular date, it is binding on every one including the statutory
authorities and the only course open to the Revenue would be to act as
per the scheme sanctioned. The tax authorities are bound to take note
of state of affairs of the applicant as on the effective date i.e. 1st
Jan., 2004 and a revised return filed reflecting the same cannot be
ignored on the strength of section 139(5).
Pentamedia Graphics Ltd. vs. ITO (2010) 236 CTR 204 (Mad.)
S. 133A : Survey – Disclosure – Statement
Confession made during survey cannot be the sole basis for making an
addition, without considering the explanation of assessee.
Babulal Gangwal, Jaipur vs. Addl. CIT (2010) Tax World December, 10
Vol. XLIV, Part-6, P. No. 222
S. 145(3) : Accounts – Rejection – Absence of Discrepancy – Accounts Audited
Where the Assessing Officer has not pointed out any specific defect or
discrepancy in the account books maintained by the assessee which are
duly audited by an independent Chartered Accountant, there was no
justification in rejecting the books of accounts and making the
addition to the declared income.
CIT vs. Pradise Holidays (2010) 48 DTR 349 (Delhi)
S. 147 : Reassessment – Reason to Believe – Report of DVO – (S. 148)
Opinion of DVO per se is not an information for the purpose of
reopening assessment under section 147. Assessing Officer has to apply
his mind to the information if any, collected and must form a belief
thereon.
ACIT vs. Dhariya Construction Company (2010) 328 ITR 515 / 236 CTR 226
/ 47 DTR 288 (SC)
S. 194A : Deduction of Tax at Source – Bank – Interest – Notional
Provision for half yearly interest of Cumulative deposit – (S. 201)
Bank making for notional provision for half yearly interest on account
of cumulative deposit shown in general ledger reversed on next working
day. Interest credited to provisioning account for macro–monitoring.
Interest not due and payable on that day. Deduction of tax not
obligatory.
Bank of Maharashtra vs. ITO (2010) 6 ITR 824 (Trib.)(Ahd.)
S. 194C : Deduction of Tax at Source – Payment to Contractor and
Sub-contractors
Assessee–society having been created by transporters with a view to
enter into contracts with companies for transportation of goods and to
ensure allocation of work among all members on an equitable basis,
there is no sub-contract between the society and the members and
therefore, section 194C(2) is not attracted to the facts of the case
and the assessee society is not liable to deduct tax at source from
the payments made to the truck owners who are its members.
CIT vs. Sirmour Truck Operators Union (2010) 48 DTR 130 (HP)
S. 226 : Recovery – No-coercive recovery if first appeal is ready for Hearing
The assessee filed appeals before the Commissioner of Income-tax
(Appeals) against the assessment orders for Asst. Years 2004-05 to
2008-09. Though the appeals were ripe for hearing and the appellate
authority had already posted for hearing on different dates, the
Assessing Officer without considering the pendency of the appeals
issued demand notice and took steps for attachment of the assessee's
bank account. The assessee filed a Writ petition to challenge the
recovery action which was opposed by the department on the ground that
the assessee had repeatedly sought adjournment of the hearing of
appeals, the Court allowed the petition and directed to dispose the
appeals at the earliest possible after affording an opportunity of
hearing to the assessee, at any date within a period of one month from
the date of receipt of a copy of the Court's judgment and till such
time orders are passed by the appellate authority, recovery steps
shall be kept in abeyance. If there is no co-operation by assessee the
appellate authority is at liberty to finalise the appeals without
according any further opportunity of hearing.
Hotel Leela Venture vs. Ag. ITO (Kerala High Court) Source: www.itatonline.org
S. 226 : Recovery – Ability to pay demand is no bar for grant on recovery
The assessee filed a stay application before the Tribunal. The
department opposed the stay by relying on the Supreme Court in ACCE
vs. Dunlop India (1985) 154 ITR 172 (SC), and contended that as
paucity of funds had not been sufficiently demonstrated, for this
reason alone stay should not be granted. The Tribunal rejected the
contention of Departmental representative following B. N. Co. vs. Jt.
CIT (2001) 71 TTJ 153 (Kol.) and further held that Supreme Court's
observation in Dunlop cannot be interpreted to mean that the Tribunal
is denuded of the powers to grant stay until case for financial
stringency is successfully made out by the applicant. Accordingly stay
was granted till the disposal of appeal.
KEC International Ltd. vs. ACIT (ITAT – Mumbai) Source: www.itatonline.org
S. 2(24) : Income – Non-occupancy Charges – Transfer Fee – Voluntary
Contribution
The receipt of non-occupancy charges, transfer fee and voluntary
contribution from its members by the Co-operative Housing Society is
not taxable.
ITO vs. Grand Pradi CHS Ltd. (2011) BCAJ Jan., 2011. P. 20 (Vol. 42B.
Part 4. 436
S. 5 : Income – Accrual – Interest on RBI Bonds – Cash Basis
Assessees were entitled to recognize the interest income attributable
to 8 % RBI Bonds on cash basis to be reckoned at the time of
redemption of the bonds. Assessing Officer was not justified in making
addition on yearly accrual basis.
K. Nagendrasa & Ors. vs. Dy. CIT (2010) 48 DTR 492 (Bang.)(Trib
S. 10B : Exemption – Export Turnover – Foreign Expenditure for self
purpose – Turnover retained abroad
The assessee was engaged in the business of development of software by
way of on site and off shore development and had a branch in USA for
which separate accounts were maintained. The assessee claimed
deduction under section 10B in respect of the exports of software
made. In computing the export turnover, the Assessing Officer held
that the amount of Rs. 3.33 crores incurred by the USA branch
constituted "expenses incurred in foreign exchange in providing
technical services outside India" and had to be deducted from the
export turnover as provided under section 10B. He also held that the
turnover of the USA branch to the extent of Rs. 15.14 crores had to be
reduced from the export profits as it had not been received in
convertible foreign exchange in India within the period specified in
section 10B(3). On appeal CIT(A) upheld the claim of assessee with
regard to Rs. 15.14 crores while rejected the claim with regard to Rs
3.33 crores. The cross appeals of the parties were referred to Special
Bench. The Special Bench referring the circular No. 621 dated
19-12-1991 and 694 dated 23-11-1994 held that expenditure incurred on
site abroad is eligible for deduction under section 10B. As regards
the turnover of Rs. 15.14 retained abroad, one limb of the Government
cannot be allowed to defeat the operation of other limb. While section
10B requires the foreign exchange to be brought to India within the
prescribed period, the RBI permits the assessee to retain the said
foreign exchange abroad for specific purpose. RBI is the competent
authority for section 10B as well. The result is that reinvestment of
export earning is deemed to have been received in India and thereafter
to have been repatriated abroad. (Principle in J. B. Boda & Co. (1998)
233 ITR 271 (SC) followed).
Zylog Systems Ltd. vs. ITO (2011) 49 DTR 1 (Chennai)(Trib.)(SB)
S. 32 : Depreciation – Trial Run – Plant and Machinery
Assessee is entitled to claim depreciation on plant and machinery even
if it is used during the year for trial production.
CIT vs. Mentha & Allied Products (2010) 47 DTR 284 (All)
S. 32(1)(iv) : Depreciation – Initial Depreciation – Construction of
New Residential Quarters
Considering the dictionary meaning of the term "building" along with
the purpose for which the provision of section 32(1)(iv) was enacted,
namely, to afford incentives to business to construct building for
housing lowly paid employees, the Tribunal was right in holding that
the assessee was entitled to initial depreciation under section
32(1)(iv) in respect of new residential quarters.
CIT vs. Modi Industries Ltd. (2010) 48 DTR 364 (Del.)
S. 32(2) : Depreciation – Unabsorbed – Carry forward and set off –
Export Oriented Unit – [S. 10B(6)]
In view of prohibition in section 10B(6) unabsorbed depreciation
carried over for several years is not allowed to be set off in the
assessment year immediately following end of the period of tax
exemption does not mean that the assessee cannot carry forward
unabsorbed depreciation or business loss until such assessment year;
S. 10B(6) has no application in Asst. Year 2003-04 for the assessee
which is enjoying exemption under section 10B from asst year 1996-97
to asst year 2006-07 and the assessee is entitled to carry forward
unabsorbed depreciation from Asst. Year 2002-03.
Akay Flavours & Aromatics (P) Ltd. vs. Dy. CIT (2010) 48 DTR 382 (Ker.)
. 37(1) : Business Expenditure – Retrenchment Compensation –
Suspension of Manufacturing Activity
Assessee having suspended only its manufacturing activity and not
closed down its trading activity, it is not a case of closure of
business and therefore, expenses incurred by it towards severance cost
of employees is allowable as revenue expenditure.
KJS India (P) Ltd. vs. Dy. CIT (2010) 134 TTJ 697 (Del.)
S. 37(1) : Business Expenditure – Market Research Expenses
Assessee a manufacturer of a soft drink having conducted a market
research by using the services of a professional agency to determine
its brand performance with price, gauge the consumer demand at the
current price or a lower price and to know whether its brand can adopt
a different pricing between the base flavours and the new flavours,
the expenses were incurred for exploring the circumstances as to how
assessee can carry on its business more potentially and not exploring
the market of a new product and therefore, same is allowable as
revenue expenditure
KJS India (P) Ltd. vs. Dy. CIT (2010) 134 TTJ 697 (Del.)
S. 37(1) : Business Expenditure – Capital or Revenue – Purchase of
Anti–virus software
Expenditure incurred on purchase of anti–virus software is of revenue
expenditure.
Chambal Fertilisers & Chemicals Ltd. vs. ACIT (2010) Tax World.
December Vol. XLIV. Part 6. P. 195
S. 37(1) : Business Expenditure – Payment to Trust for Opening and
Running a school in the assessee company premises
Payment made to a trust for opening a school in the assessee company's
premises will be allowable as deduction since the amount was paid with
the object of providing education to the children of employees of
assessee company within the company premises itself and was
necessitated for business purpose.
Chambal Fertilisers & Chemicals Ltd. vs. ACIT (2010) Tax World.
December Vol. XLIV. Part 6. P. 195
S. 37(1) : Business Expenditure – Administrative Charges for obtaining loan
Administrative charges paid for obtaining loan are allowable as
revenue expenditure in the year of payment, notwithstanding the fact
that the assessee has treated this expenditure as deferred revenue
expenditure in its books of account and benefit of loan would accrue
over a long period.
ACIT vs. Tata Housing Development Co. Ltd. (2010) 48 DTR 452 (Trib.)(Mum.)
S. 40(a)(ia) : Disallowance – Amendment by Finance Act, 2010
-Retrospective effect from the Asst. Year 2005-06 – TDS paid before
due date of filing of return
Section 40(a)(ia) by Finance Act, 2010 is retrospective and applies
from the day said section was brought in to the statute book i.e.
w.e.f. 1-4-2005, meaning thereby, that even if the TDS was paid by due
date for filing return of income, no disallowance under section
40(a)(ia) could be made for any of the assessment years starting from
assessment year 2005-06.
Kanubhai Ramjibhai vs. ITO (2010) Chartered Accountants Association
Ahmedabad, December, 2010 P. 411
S. 40A(3) : Business Disallowance – Cash Payments – Distributor for
BSNL in its card division
During the year under consideration assessee made total purchases of
India Telephone cards at Rs. 270.64 lakhs, of which Rs. 187.73 lakhs
were by way of cash purchases. Assessing Officer invoked provisions of
section 40A(3) and disallowed 20% of impugned expenditure. CIT(A)
upheld the disallowance. The Tribunal held that on facts, it was
apparent that relationship between service provider i.e. BSNL and
assessee–distributor was of principal and agent and income arising to
assessee was in nature of commission or remuneration against services
rendered, hence, disallowance under section 40A(3) is not applicable.
S. Rahumathulla vs. ACIT (2010) 127 ITD 440 (Cochin)
S. 54 : Capital Gains – Long Term Capital Gains – Allotment of Flat
under DDA – [S. 2(14), 2(29A), 2(42A)]
Assessee was allotted a flat under scheme of DDA on 27-2-1982.
Delivery of possession of said flat took place on 15-5-1986, when
actual flat number was allotted to assessee. Assessee sold said flat
on 1-1-1989 and claimed set off under section 54 against long term
Capital Gain. Assessing Officer treated the said transaction as short
term capital gain considering the date as 15-5-1986. The High Court
held that under self finance scheme, an allottee gets title to
property on issuance of an allotment letter and payment of
installments is only a consequential action upon which delivery of
possession flows hence claim under section 54 was justified.
Vinod Kumar Jain vs. CIT (2010) 195 Taxman 174 (P&H)
S. 54 : Capital Gains – Exemption – Investment in more than one
residential house – (General Clauses Act 1897 – S. 13)
Expression "a residential house" in section 54 should be understood in
a sense that the building should be residential in nature and "a"
should not be understood to indicate a singular number, assessee was
entitled to claim exemption under section 54 in respect of four
residential flats acquired by her.
CIT vs. K. G. Rukminiamma (Smt.) (2010) 48 DTR 377 (Kar.)
. 80-IA(9) : Deduction – Industrial Undertaking – Interpretation – (S. 80HHC)
S. 80-IA(9) cannot be interpreted to mean that section 80-IA deduction
has to be reduced for computing section 80HHC deduction. The
restriction in section 80IA(9) relates to the allowance of deduction
i.e. seeks to curtail allowance and not computation of deduction.
Section 80IA(9) does not disturb the mechanism of computing the
deduction provided under section 80HHC(3). The reasonable construction
of section 80IA(9) is that where deduction is allowed under section
80IA, then the deduction computed under other provisions under heading
'C' of Chapter VIA has to be restricted to the profits of the business
that remains after excluding the profits allowed as deductions under
section 80IA, so that the total deduction allowed under the heading
'C' of Chapter VIA does not exceed the profits of the business.
Associated Capsules Pvt. Ltd. vs. Dy. CIT (Bombay High Court) Source:
www.itatonline.org
--
Me on net :
> >>>>>>>>>>>>>>>>>>>>>
http://rajkumaratthenet.blogspot.com/
http://itronline.blogspot.com/
Virus Warning: Although the I have taken reasonable precautions to ensure no viruses are present in his email, sender (I) cannot accept responsibility for any loss or damage arising from the use of this email or attachment."
Wednesday, January 26, 2011
ITR(Trib) Vol 7 Part 5 dated 31-01-2011
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 7 : Part 5 (Issue dated : 31-1-2011)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal to Appellate Tribunal --Jurisdiction--Restricted to subject-matter of appeal --Not confined to grounds raised in appeal--Decision on any other ground may be given after affording an opportunity to affected party--Income-tax Act, 1961, s. 254--Income-tax (Appellate Tribunal) Rules, 1963, r. 11--J oint CIT v. Reuters Ltd. (Mumbai) . . . 422
----Powers--Ground not set forth in appeal--Ground regarding existence of permanent establishment--No definite finding--Non-resident and Indian company whether associated enterprises--Deputation of employee of non-resident to Indian company to render services whether indication of Indian company service permanent establishment of non-resident--Plea within parameters of grounds of appeal to Tribunal--Matter remanded--Double Taxation Avoidance Agreement between India and the U. K. art. 5(2)(k), (5)-- Joint CIT v. Reuters Ltd. (Mumbai) . . . 422
Assessment --Estimation of income--Gross profit rate--Rejection of books of account--Additions on basis of books of account arbitrary--Assessing Officer estimating income on basis of gross profit rate--Justified--Income-tax Act, 1961-- Asst. CIT v. Lakshmi Industries (Chennai) . . . 495
Capital gains --Computation of capital gains--Assessees acquiring property by inheritance--Indexation to be with reference to year in which previous owner acquired asset--Property acquired by previous owner prior to 1-4-1981--Cost inflation index relating to financial year 1981-82 to be adopted--Income-tax Act, 1961, s. 2(42A), Expln. 1(b)-- M. Siva Parvathi v. ITO (Visakhapatnam) . . . 468
----Computation of capital gains--Deductions--Sale of house property acquired by inheritance--Payment made to persons claiming to be legal heirs--Expenditure incurred in removing encumbrance to transfer--Payments to tenants--Deductible--Income-tax Act, 1961-- M. Siva Parvathi v. ITO (Visakhapatnam) . . . 468
----Computation of capital gains--Property acquired by inheritance--Agreement to sell entered into prior to introduction of section 50C--Delay in registering sale deed due to genuine reasons--Completion of transaction after introduction of section 50C--Section 50C not applicable--Income-tax Act, 1961, s. 50C-- M. Siva Parvathi v. ITO (Visakhapatnam) . . . 468
----Exemption--Investment of net consideration in construction of "a residential house" and purchase of flat--Exemption restricted to investment in construction of residential house--Income-tax Act, 1961, s. 54-- M. Siva Parvathi v. ITO (Visakhapatnam) . . . 468
Deduction of tax at source --Works contract--Film finance--Assessee advancing money for production of film--Amount recoverable from producer of film--Assessee given certain rights--Agreement did not result in works contract--Assessee not liable to deduct tax at source on advances--Income-tax Act, 1961, s. 194C-- Muktha Arts v. Asst. CIT (Mumbai) . . . 517
Export --New industrial undertaking engaged in export--Deduction of 100 per cent. profits under section 10B--Assessee manufacturing and exporting garments--Forward contracts to protect sales from exchange fluctuations--Transaction speculative in character--Profits from forward contracts derived from speculation business--Not entitled to deduction under section 10B--Income-tax Act, 1961, ss. 10B, 28, Expln. 2-- Asst. CIT v. K. Mohan and Co. (Exports) P. Ltd. (Bangalore) . . . 507
Penalty --Concealment of income--Assessee agreeing to addition of unexplained credit on realising creditor will not co-operate--All details regarding identity of creditor and genuineness of transaction furnished by assessee--Failure to produce creditor to prove transaction to satisfaction of Assessing Officer--Imposition of penalty not justified--Income-tax Act, 1961, s. 271(1)(c)-- New Raja Jewellery v. ITO (Chennai) . . . 459
----Concealment of income--Disallowance of deductions on software expenditure and meal expenses accepted by assessee--Penalty cannot be imposed merely because assessee allowed matter to attain finality--Income-tax Act, 1961, s. 271(1)(c)-- Deputy CIT v. Boston Consulting Group (India) P. Ltd. (Mumbai) . . . 417
Revision --Commissioner--Show-cause notice by Income-tax Officer on proposal by Joint Commissioner--Assessment order not examined prior to initiation of revision proceedings--No application of mind by Commissioner--Revision order void ab initio--Income-tax Act, 1961, s. 263-- Jheendu Ram v. CIT (Lucknow) . . . 463
Search and seizure --Block assessment--Scope of section 158BC--Assessing Officer acquires jurisdiction to initiate block assessment only on issue of notice--Notice not mere procedural requirement--Notice to be issued by registered post acknowledgment due--Return to be filed thereafter--Income-tax Act, 1961, s. 158BC-- Asst. CIT v. Lakshmi Industries (Chennai) . . . 495
----Block assessment--Validity--Notice--Service of notice--No material to prove notice served on assessee--Failure on part of Department to issue notice despite information regarding non-receipt of notice by assessee--Expiry of time to issue notice when assessee filed return--Proceedings null and void ab initio--Income-tax Act, 1961, s. 158BC-- Asst. CIT v. Lakshmi Industries (Chennai) . . . 495
----Undisclosed income--Investments in power looms, rental income from hiring of looms and unexplained loans--Investments made prior to 1999--Addition cannot be made in 2002-03--Gross monthly rent of power loom determined based on seized material--Twenty per cent. deduction allowable on expenses incurred--Cash flow statement with regard to loans not properly considered by Assessing Officer--Matter remanded--Income-tax Act, 1961, s. 69-- Masoomkhan Shabbirkhan Pathan v. Deputy CIT (Mumbai) . . . 443
Words and phrases --"Thereon", "Pass such orders as Tribunal thinks fit"-- Joint CIT v. Reuters Ltd. (Mumbai) . . . 422
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Double Taxation Avoidance Agreement between India and the U. K. :
Art. 5(2)(k), (5) --Appeal to Appellate Tribunal--Powers--Ground not set forth in appeal--Ground regarding existence of permanent establishment--No definite finding--Non-resident and Indian company whether associated enterprises--Deputation of employee of non-resident to Indian company to render services whether indication of Indian company service permanent establishment of non-resident--Plea within parameters of grounds of appeal to Tribunal--Matter remanded-- Joint CIT v. Reuters Ltd. (Mumbai) . . . 422
Income-tax (Appellate Tribunal) Rules, 1963 :
R. 11 --Appeal to Appellate Tribunal--Jurisdiction--Restricted to subject-matter of appeal--Not confined to grounds raised in appeal--Decision on any other ground may be given after affording an opportunity to affected party--J oint CIT v. Reuters Ltd. (Mumbai) . . . 422
S. 2(42A), Expln. 1(b) --Capital gains--Computation of capital gains--Assessees acquiring property by inheritance--Indexation to be with reference to year in which previous owner acquired asset--Property acquired by previous owner prior to 1-4-1981--Cost inflation index relating to financial year 1981-82 to be adopted-- M. Siva Parvathi v. ITO (Visakhapatnam) . . . 468
S. 10B --Export--New industrial undertaking engaged in export--Deduction of 100 per cent. profits under section 10B--Assessee manufacturing and exporting garments--Forward contracts to protect sales from exchange fluctuations--Transaction speculative in character--Profits from forward contracts derived from speculation business--Not entitled to deduction under section 10B-- Asst. CIT v. K. Mohan and Co. (Exports) P. Ltd. (Bangalore) . . . 507
S. 28, Expln. 2 --Export--New industrial undertaking engaged in export--Deduction of 100 per cent. profits under section 10B--Assessee manufacturing and exporting garments--Forward contracts to protect sales from exchange fluctuations--Transaction speculative in character--Profits from forward contracts derived from speculation business--Not entitled to deduction under section 10B-- Asst. CIT v. K. Mohan and Co. (Exports) P. Ltd. (Bangalore) . . . 507
S. 50C --Capital gains--Computation of capital gains--Property acquired by inheritance--Agreement to sell entered into prior to introduction of section 50C--Delay in registering sale deed due to genuine reasons--Completion of transaction after introduction of section 50C--Section 50C not applicable-- M. Siva Parvathi v. ITO (Visakhapatnam) . . . 468
S. 54 --Capital gains--Exemption--Investment of net consideration in construction of "a residential house" and purchase of flat--Exemption restricted to investment in construction of residential house-- M. Siva Parvathi v. ITO (Visakhapatnam) . . . 468
S. 69 --Search and seizure--Undisclosed income--Investments in power looms, rental income from hiring of looms and un-explained loans--Investments made prior to 1999--Addition cannot be made in 2002-03--Gross monthly rent of power loom determined based on seized material--Twenty per cent. deduction allowable on expenses incurred--Cash flow statement with regard to loans not properly considered by Assessing Officer--Matter remanded-- Masoomkhan Shabbirkhan Pathan v. Deputy CIT (Mumbai) . . . 443
S. 158BC --Search and seizure--Block assessment--Scope of section 158BC--Assessing Officer acquires jurisdiction to initiate block assessment only on issue of notice--Notice not mere procedural requirement--Notice to be issued by registered post acknowledgment due--Return to be filed thereafter-- Asst. CIT v. Lakshmi Industries (Chennai) . . . 495
----Search and seizure--Block assessment--Validity--Notice--Service of notice--No material to prove notice served on assessee--Failure on part of Department to issue notice despite information regarding non-receipt of notice by assessee--Expiry of time to issue notice when assessee filed return--Proceedings null and void ab initio-- Asst. CIT v. Lakshmi Industries (Chennai) . . . 495
S. 194C --Deduction of tax at source--Works contract--Film finance--Assessee advancing money for production of film--Amount recoverable from producer of film--Assessee given certain rights--Agreement did not result in works contract--Assessee not liable to deduct tax at source on advances-- Muktha Arts v. Asst. CIT (Mumbai) . . . 517
S. 254 --Appeal to Appellate Tribunal--Jurisdiction--Restricted to subject-matter of appeal --Not confined to grounds raised in appeal--Decision on any other ground may be given after affording an opportunity to affected party--J oint CIT v. Reuters Ltd. (Mumbai) . . . 422
S. 263 --Revision--Commissioner--Show-cause notice by Income-tax Officer on proposal by Joint Commissioner--Assessment order not examined prior to initiation of revision proceedings--No application of mind by Commissioner--Revision order void ab initio-- Jheendu Ram v. CIT (Lucknow) . . . 463
S. 271(1)(c) --Penalty--Concealment of income--Assessee agreeing to addition of unexplained credit on realising creditor will not co-operate--All details regarding identity of creditor and genuineness of transaction furnished by assessee--Failure to produce creditor to prove transaction to satisfaction of Assessing Officer--Imposition of penalty not justified-- New Raja Jewellery v. ITO (Chennai) . . . 459
----Penalty--Concealment of income--Disallowance of deductions on software expenditure and meal expenses accepted by assessee--Penalty cannot be imposed merely because assessee allowed matter to attain finality--Deputy CIT v. Boston Consulting Group (India) P. Ltd. (Mumbai) . . . 417
--
Me on net :
> >>>>>>>>>>>>>>>>>>>>>
http://rajkumaratthenet.blogspot.com/
http://itronline.blogspot.com/
Virus Warning: Although the I have taken reasonable precautions to ensure no viruses are present in his email, sender (I) cannot accept responsibility for any loss or damage arising from the use of this email or attachment."
Subscribe to:
Posts (Atom)