Thursday, November 10, 2011

ITR Volume 338 : Part 5 (Issue dated 14-11-2011) SUBJECT INDEX TO CASES REPORTED IN THIS PART


INCOME TAX REPORTS (ITR)
Volume 338 : Part 5 (Issue dated 14-11-2011)
SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Advance tax :- --Interest--Company--Book profits--Interest can be charged where tax calculated on book profits--Income-tax Act, 1961, ss. 115JA, 234B, 234C-- Amtek Auto Ltd . v. CIT (P&H) . . . 550

Book profits :- --Computation--Provision for bad and doubtful debts, whether includible--Change of law--Matter remanded--Income-tax Act, 1961, s. 115JB-- CIT v. Hutchison Max Telecom P. Ltd. (P&H) . . . 614

Computation:- --Provision for diminution in value of investments--Change of law--Law applicable--Amount set aside as provision for diminution in value of assets will not reduce book profits--Income-tax Act, 1961, s. 115JB(2)-- CIT v. Steriplate P. Ltd . (P&H) . . . 547

Company :- --Book profits--Advance tax--Interest payable by assessee--Effect of section 115JB and Circular No. 13 of 2001--Computation of income under section 115JB--Company liable to pay advance tax--Interest leviable under sections 234B and 234C--Income-tax Act, 1961, ss. 115JB, 234B, 234C-- CIT v. Sankala Polymers P. Ltd . (Karn) . . . 617

Dividend:- --Deemed dividend--Loan to shareholder--Scope of section 2(22)(e)--Gratuitous loan deemed to be dividend--Loan in return to advantage conferred by shareholder--Not deemed dividend--Shareholder permitting his immovable property to be mortgaged to bank enabling it to obtain loan--Loan by company to shareholder--Not deemed dividend--Income-tax Act, 1961, s. 2(22)(e)-- Pradip Kumar Malhotra v. CIT (Cal) . . . 538

Deduction of tax at source :- --Salary--Meaning of--Tips collected by hotel and disbursed to employees constitute salary--Tax deductible at source on such tips--Assessee under bona fide belief that tax was not deductible--Cannot be treated as assessee in default under section 201--Interest under section 201(1A) compensatory and to be paid--Income-tax Act, 1961, ss. 15, 16, 17, 192, 201-- CIT (TDS) v. ITC Ltd. (Delhi) . . . 598

Income from undisclosed sources :- --Burden of proof--Gifts--Proof of identity of donors, their creditworthiness and genuineness of gifts--Value of gifts not assessable as income from undisclosed sources--Income-tax Act, 1961-- CIT v. Ms. Mayawati (Delhi) . . . 563

Rectification of mistakes :- --Failure to apply provisions of law--Mistake which can be rectified--Income-tax Act, 1961, s. 154-- CIT v. Sankala Polymers P. Ltd .(Karn) . . . 617

Revision :- --Commissioner--Assessment order allowing set off of business losses of earlier years against dividend income without discussing how dividend income was business income--Order of revision holding order of Assessing Officer erroneous and prejudicial to interests of Revenue--Tribunal to adjudge validity of order of Commissioner and not to go into question of nature of income--Matter remanded--Income-tax Act, 1961, ss. 56, 72-- CIT v. Nalwa Investments Ltd . (Delhi) . . . 552

Search and seizure :- --Block assessment--Undisclosed income--Meaning of--Tax deducted at source from income and advance tax paid by recipient--Income not undisclosed--Income of partners--Firm disclosing remuneration to partners and deducting tax at source on them--No undisclosed income in hands of partners--Income-tax Act, 1961, s. 158BC-- CIT v. H. E. Mynuddin Pasha (Karn) . . . 533

Words and phrases :- --”Salary”-- CIT (TDS) v. ITC Ltd . (Delhi) . . . 598

AUTHORITY FOR ADVANCE RULINGS

Non-resident :- --Agreement with Indian company for development of software--All software developed by Indian company assigned to non-resident--Settlement of dispute arising out of breach of covenant as to inventor’s assignment by Indian company--Sum paid by Indian company thereunder including consideration for licensing of right to use patent and software comprised therein--Balance payment capital receipt but not capital gains taxable in India--Interest on sums placed in escrow account in India--Is income accruing in India to non-resident--Decision of New York court that payment to be subject to tax deduction at source--Parties to be governed by ruling of court and of order on appeal therefrom--Income-tax Act, 1961, ss. 9(1)(vi), 195-- Upaid Systems Limited , In re . . . 517

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 2(22)(e) :- --Company--Dividend--Deemed dividend--Loan to shareholder--Scope of section 2(22)(e)--Gratuitous loan deemed to be dividend--Loan in return to advantage conferred by shareholder--Not deemed dividend--Shareholder permitting his immovable property to be mortgaged to bank enabling it to obtain loan--Loan by company to shareholder--Not deemed dividend-- Pradip Kumar Malhotra v. CIT (Cal) . . . 538

S. 9(1)(vi) :- --Non-resident--Agreement with Indian company for development of software--All software developed by Indian company assigned to non-resident--Settlement of dispute arising out of breach of covenant as to inventor’s assignment by Indian company--Sum paid by Indian company thereunder including consideration for licensing of right to use patent and software comprised therein--Balance payment capital receipt but not capital gains taxable in India--Interest on sums placed in escrow account in India--Is income accruing in India to non-resident--Decision of New York court that payment to be subject to tax deduction at source--Parties to be governed by ruling of court and of order on appeal therefrom-- Upaid Systems Limited , In re(AAR) . . . 517

S. 15 :- --Deduction of tax at source--Salary--Meaning of--Tips collected by hotel and disbursed to employees constitute salary--Tax deductible at source on such tips--Assessee under bona fide belief that tax was not deductible--Cannot be treated as assessee in default under section 201--Interest under section 201(1A) compensatory and to be paid-- CIT (TDS) v. ITC Ltd. (Delhi) . . . 598

S. 16 :- --Deduction of tax at source--Salary--Meaning of--Tips collected by hotel and disbursed to employees constitute salary--Tax deductible at source on such tips--Assessee under bona fide belief that tax was not deductible--Cannot be treated as assessee in default under section 201--Interest under section 201(1A) compensatory and to be paid-- CIT (TDS) v. ITC Ltd. (Delhi) . . . 598

S. 17 :- --Deduction of tax at source--Salary--Meaning of--Tips collected by hotel and disbursed to employees constitute salary--Tax deductible at source on such tips--Assessee under bona fide belief that tax was not deductible--Cannot be treated as assessee in default under section 201--Interest under section 201(1A) compensatory and to be paid-- CIT (TDS) v. ITC Ltd. (Delhi) . . . 598

S. 56 :- --Revision--Commissioner--Assessment order allowing set off of business losses of earlier years against dividend income without discussing how dividend income was business income--Order of revision holding order of Assessing Officer erroneous and prejudicial to interests of Revenue--Tribunal to adjudge validity of order of Commissioner and not to go into question of nature of income--Matter remanded-- CIT v. Nalwa Investments Ltd . (Delhi) . . . 552

S. 72 :- --Revision--Commissioner--Assessment order allowing set off of business losses of earlier years against dividend income without discussing how dividend income was business income--Order of revision holding order of Assessing Officer erroneous and prejudicial to interests of Revenue--Tribunal to adjudge validity of order of Commissioner and not to go into question of nature of income--Matter remanded-- CIT v. Nalwa Investments Ltd . (Delhi) . . . 552

S. 115JA :- --Advance tax--Interest--Company--Book profits--Interest can be charged where tax calculated on book profits-- Amtek Auto Ltd . v. CIT (P&H) . . . 550

S. 115JB :- --Book profits--Computation--Provision for bad and doubtful debts, whether includible--Change of law--Matter remanded-- CIT v. Hutchison Max Telecom P. Ltd. (P&H) . . . 614

Company--Book profits:- --Advance tax--Interest payable by assessee--Effect of section 115JB and Circular No. 13 of 2001--Computation of income under section 115JB--Company liable to pay advance tax--Interest leviable under sections 234B and 234C-- CIT v. Sankala Polymers P. Ltd . (Karn) . . . 617

S. 115JB(2) :- --Book profits--Computation--Provision for diminution in value of investments--Change of law--Law applicable--Amount set aside as provision for diminution in value of assets will not reduce book profits-- CIT v. Steriplate P. Ltd .(P&H) . . . 547

S. 154 :- --Rectification of mistakes--Failure to apply provisions of law--Mistake which can be rectified-- CIT v. Sankala Polymers P. Ltd . (Karn) . . . 617

S. 158BC :- --Search and seizure--Block assessment--Undisclosed income--Meaning of--Tax deducted at source from income and advance tax paid by recipient--Income not undisclosed--Income of partners--Firm disclosing remuneration to partners and deducting tax at source on them--No undisclosed income in hands of partners-- CIT v. H. E. Mynuddin Pasha (Karn) . . . 533

S. 192 :- --Deduction of tax at source--Salary--Meaning of--Tips collected by hotel and disbursed to employees constitute salary--Tax deductible at source on such tips--Assessee under bona fide belief that tax was not deductible--Cannot be treated as assessee in default under section 201--Interest under section 201(1A) compensatory and to be paid-- CIT (TDS) v. ITC Ltd. (Delhi) . . . 598

S. 195 :- --Non-resident--Agreement with Indian company for development of software--All software developed by Indian company assigned to non-resident--Settlement of dispute arising out of breach of covenant as to inventor’s assignment by Indian company--Sum paid by Indian company thereunder including consideration for licensing of right to use patent and software comprised therein--Balance payment capital receipt but not capital gains taxable in India--Interest on sums placed in escrow account in India--Is income accruing in India to non-resident--Decision of New York court that payment to be subject to tax deduction at source--Parties to be governed by ruling of court and of order on appeal therefrom-- Upaid Systems Limited , In re (AAR) . . . 517

S. 201 :- --Deduction of tax at source--Salary--Meaning of--Tips collected by hotel and disbursed to employees constitute salary--Tax deductible at source on such tips--Assessee under bona fide belief that tax was not deductible--Cannot be treated as assessee in default under section 201--Interest under section 201(1A) compensatory and to be paid-- CIT (TDS) v. ITC Ltd. (Delhi) . . . 598

S. 234B :- --Advance tax--Interest--Company--Book profits--Interest can be charged where tax calculated on book profits-- Amtek Auto Ltd . v. CIT (P&H) . . . 550

Company--Book profits:- --Advance tax--Interest payable by assessee--Effect of section 115JB and Circular No. 13 of 2001--Computation of income under section 115JB--Company liable to pay advance tax--Interest leviable under sections 234B and 234C-- CIT v. Sankala Polymers P. Ltd . (Karn) . . . 617

S. 234C :- --Advance tax--Interest--Company--Book profits--Interest can be charged where tax calculated on book profits-- Amtek Auto Ltd . v. CIT (P&H) . . . 550

Company--Book profits:- --Advance tax--Interest payable by assessee--Effect of section 115JB and Circular No. 13 of 2001--Computation of income under section 115JB--Company liable to pay advance tax--Interest leviable under sections 234B and 234C-- CIT v. Sankala Polymers P. Ltd . (Karn) . . . 617

ITR (TRIB) Volume 12 : Part 2 (Issue dated : 7-11-2011)


ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 12 : Part 2 (Issue dated : 7-11-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Business expenditure :- --Obsolete materials written off--Valuation of cassettes at Re. 1 after some time--Proper--Loss allowable--Income-tax Act, 1961-- Bennett Coleman and Co. Ltd. v. Addl. CIT [SB] (Mumbai) . . . 97

Capital gains :- --Loss--Assessee holding shares in company--Value of shares reduced as result of reduction of share capital of company--No transfer involved--No consideration flowing from company--Provisions of section 45 not applicable--No loss to shareholder--Notional loss not allowable--Income-tax Act, 1961, ss. 2(47), 45, 55(2)(b)(v)-- Bennett Coleman and Co. Ltd. v. Addl. CIT [SB] (Mumbai) . . . 97

Industrial undertaking :- --Special deduction--Publishing of newspaper--Is industrial activity--Special deduction allowable--Income-tax Act, 1961, s. 80-IB-- Bennett Coleman and Co. Ltd. v. Addl. CIT [SB] (Mumbai) . . . 97

Revision :- --Conditions precedent--General principles--Non-resident--Opting to be taxed in terms of DTAA--Deduction of expenses to be allowed--Assessing Officer after verification of TDS returns allowing deductions for payments to contractors outside India and applying 10 per cent. tax rate to balance--Assessee taxed similarly for preceding years--Revision proposed without showing how facts different in current year--Not a case where Assessing Officer did not apply mind or made no enquiry--Order not erroneous or prejudicial to Revenue--No material to show nexus of permanent establishment with income from operations outside India--Revision not permissible--Income-tax Act, 1961, ss. 44BB, 90, 263--Double Taxation Avoidance Agreement between India and Korea, art. 7-- Hyundai Heavy Industries Co. Ltd. v. Director of Income-tax (International Taxation) (Delhi) . . . 168

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance Agreement between India and Korea :

Art. 7 :- -- Revision--Conditions precedent--General principles--Non-resident--Opting to be taxed in terms of DTAA--Deduction of expenses to be allowed--Assessing Officer after verification of TDS returns allowing deductions for payments to contractors outside India and applying 10 per cent. tax rate to balance--Assessee taxed similarly for preceding years--Revision proposed without showing how facts different in current year--Not a case where Assessing Officer did not apply mind or made no enquiry--Order not erroneous or prejudicial to Revenue--No material to show nexus of permanent establishment with income from operations outside India--Revision not permissible-- Hyundai Heavy Industries Co. Ltd. v. Director of Income-tax (International Taxation) (Delhi) . . . 168

Income-tax Act, 1961 :

S. 2(47) :- -- Capital gains--Loss--Assessee holding shares in company--Value of shares reduced as result of reduction of share capital of company--No transfer involved--No consideration flowing from company--Provisions of section 45 not applicable--No loss to shareholder--Notional loss not allowable-- Bennett Coleman and Co. Ltd. v. Addl. CIT [SB] (Mumbai) . . . 97

S. 44BB :- -- Revision--Conditions precedent--General principles--Non-resident--Opting to be taxed in terms of DTAA--Deduction of expenses to be allowed--Assessing Officer after verification of TDS returns allowing deductions for payments to contractors outside India and applying 10 per cent. tax rate to balance--Assessee taxed similarly for preceding years--Revision proposed without showing how facts different in current year--Not a case where Assessing Officer did not apply mind or made no enquiry--Order not erroneous or prejudicial to Revenue--No material to show nexus of permanent establishment with income from operations outside India--Revision not permissible -- Hyundai Heavy Industries Co. Ltd. v. Director of Income-tax (International Taxation) (Delhi) . . . 168

S. 45 :- -- Capital gains--Loss--Assessee holding shares in company--Value of shares reduced as result of reduction of share capital of company--No transfer involved--No consideration flowing from company--Provisions of section 45 not applicable--No loss to shareholder--Notional loss not allowable-- Bennett Coleman and Co. Ltd. v. Addl. CIT [SB] (Mumbai) . . . 97

S. 55(2)(b)(v) :- -- Capital gains--Loss--Assessee holding shares in company--Value of shares reduced as result of reduction of share capital of company--No transfer involved--No consideration flowing from company--Provisions of section 45 not applicable--No loss to shareholder--Notional loss not allowable-- Bennett Coleman and Co. Ltd. v. Addl. CIT [SB] (Mumbai) . . . 97

S. 80-IB :- -- Industrial undertaking--Special deduction--Publishing of newspaper--Is industrial activity--Special deduction allowable-- Bennett Coleman and Co. Ltd. v. Addl. CIT [SB] (Mumbai) . . . 97

S. 90 :- -- Revision--Conditions precedent--General principles--Non-resident--Opting to be taxed in terms of DTAA--Deduction of expenses to be allowed--Assessing Officer after verification of TDS returns allowing deductions for payments to contractors outside India and applying 10 per cent. tax rate to balance--Assessee taxed similarly for preceding years--Revision proposed without showing how facts different in current year--Not a case where Assessing Officer did not apply mind or made no enquiry--Order not erroneous or prejudicial to Revenue--No material to show nexus of permanent establishment with income from operations outside India--Revision not permissible -- Hyundai Heavy Industries Co. Ltd. v. Director of Income-tax (International Taxation) (Delhi) . . . 168

S. 263 :- -- Revision--Conditions precedent--General principles--Non-resident--Opting to be taxed in terms of DTAA--Deduction of expenses to be allowed--Assessing Officer after verification of TDS returns allowing deductions for payments to contractors outside India and applying 10 per cent. tax rate to balance--Assessee taxed similarly for preceding years--Revision proposed without showing how facts different in current year--Not a case where Assessing Officer did not apply mind or made no enquiry--Order not erroneous or prejudicial to Revenue--No material to show nexus of permanent establishment with income from operations outside India--Revision not permissible -- Hyundai Heavy Industries Co. Ltd. v. Director of Income-tax (International Taxation) (Delhi) . . . 168

ITR Volume 338 : Part 4 (Issue dated 7-11-2011)


INCOME TAX REPORTS (ITR)
Volume 338 : Part 4 (Issue dated 7-11-2011)
SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Advance tax :- --Interest--Company--Book profits--Interest under sections 234B and 234C to be paid on failure to pay advance tax in respect of tax payable under section 115JA/115JB--Income-tax Act, 1961, ss. 115JA, 115JB, 234B, 234C-- CIT v. Steel Steips Leasing Ltd. (P&H) . . . 455

Bad debts :- --Non-banking financial company--Amount advanced in ordinary course of business--To be allowed--Income-tax Act, 1961, s. 36(1)(vii), (2)-- All Grow Finance and Investment P. Ltd. v. CIT (Delhi) . . . 496

Business expenditure :- --Interest on borrowed capital--Assessee investing borrowed funds in equity capital of subsidiary company--Expenditure incurred for business purposes--To be allowed--Income-tax Act, 1961, s. 36(1)(iii)-- CIT v. Tulip Star Hotels Ltd . (Delhi) . . . 482

Export :- --Special deduction--Export--Meaning of--Supply of food and beverages to foreign airlines leaving India--Articles escorted by Customs Officer--RBI certifying that amount received deemed to be convertible foreign exchange--Assessee entitled to special deduction under section 80HHC--Income-tax Act, 1961, s. 80HHC-- EIH Ltd . v. CIT (Cal) . . . 503

Income from other sources :- --Business income--Income from letting out factory--No proof that assessee only let it out temporarily and intended to resume its business--Income to be treated as income from other sources--Income-tax Act, 1961-- CIT v. Venkateswara Agro Chemicals and Minerals P. Ltd. (Mad) . . . 428

Income-tax :- --General principles--Decision regarding fundamental nature of transactions continuing for a number of years--Change in view for a particular year without adequate reason--Not justified-- CIT v. Escorts Ltd . (Delhi) . . . 435

Refund :- --Interest on refund--Date from which interest becomes due--Effect of section 244A and Circular No. 549, dated 31-10-1989--Excess amount paid on self-assessment--Excess to be refunded with interest from date of payment of such tax till date of refund--Income-tax Act, 1961, s. 244A--Circular No. 549, dated 31-10-1989-- CIT v. Vijaya Bank (Karn) . . . 489

Revision :- --Transactions of purchase and sale of units for many years--Transactions considered to be genuine in prior and subsequent assessment years--Revision proceedings on ground that transactions pertaining to relevant assessment year were speculative--Not permissible--Income-tax Act, 1961, s. 263-- CIT v. Escorts Ltd .(Delhi) . . . 435

Search and seizure :- --Block assessment--Undisclosed income--Effect of Remittances of Foreign Exchange and Investment in Foreign Exchange Bonds (Immunities and Exemptions) Act, 1991--Bonds entitled to immunity from enquiry--Receipt of bonds as gifts--Value of bonds not assessable as undisclosed income--Income-tax Act, 1961, s. 158BC--Remittances of Foreign Exchange and Investment in Foreign Exchange Bonds (Immunities and Exemptions) Act, 1991-- CIT v. Smt. Usha Omer (All) . . . 448

:- ----Validity--Condition precedent for search--Information giving rise to belief that income would not be disclosed--Inquiries and material showing documents would not be produced--Search valid--Notice under sections 131(1A) and 133(6) subsequent to search would not invalidate search--Allegation that search proceedings were mala fide--Burden of proof on assessee to prove allegation--Income-tax Act, 1961, ss. 131, 132, 133-- Neesa Leisure Ltd . v. Union of India through Secretary (Guj) . . . 460

Unexplained investment :- --Investment in properties--No evidence of understatement of consideration--Addition to income based solely on report of District Valuation Officer--Not valid--Income-tax Act, 1961, s. 69B-- CIT v. Puneet Sabharwal (Delhi) . . . 485

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

S. 36(1)(iii) :- --Business expenditure--Interest on borrowed capital--Assessee investing borrowed funds in equity capital of subsidiary company--Expenditure incurred for business purposes--To be allowed-- CIT v. Tulip Star Hotels Ltd .(Delhi) . . . 482

S. 36(1)(vii) :- --Bad debts--Non-banking financial company--Amount advanced in ordinary course of business--To be allowed-- All Grow Finance and Investment P. Ltd. v. CIT (Delhi) . . . 496

S. 36(2) :- --Bad debts--Non-banking financial company--Amount advanced in ordinary course of business--To be allowed-- All Grow Finance and Investment P. Ltd. v. CIT (Delhi) . . . 496

S. 69B :- --Unexplained investment--Investment in properties--No evidence of understatement of consideration--Addition to income based solely on report of District Valuation Officer--Not valid-- CIT v. Puneet Sabharwal (Delhi) . . . 485

S. 80HHC :- --Export--Special deduction--Export--Meaning of--Supply of food and beverages to foreign airlines leaving India--Articles escorted by Customs Officer--RBI certifying that amount received deemed to be convertible foreign exchange--Assessee entitled to special deduction under section 80HHC-- EIH Ltd . v. CIT (Cal) . . . 503

S. 115JA :- --Advance tax--Interest--Company--Book profits--Interest under sections 234B and 234C to be paid on failure to pay advance tax in respect of tax payable under section 115JA/115JB-- CIT v. Steel Steips Leasing Ltd. (P&H) . . . 455

S. 115JB :- --Advance tax--Interest--Company--Book profits--Interest under sections 234B and 234C to be paid on failure to pay advance tax in respect of tax payable under section 115JA/115JB-- CIT v. Steel Steips Leasing Ltd. (P&H) . . . 455

S. 131 :- --Search and seizure--Validity--Condition precedent for search--Information giving rise to belief that income would not be disclosed--Inquiries and material showing documents would not be produced--Search valid--Notice under sections 131(1A) and 133(6) subsequent to search would not invalidate search--Allegation that search proceedings were mala fide--Burden of proof on assessee to prove allegation-- Neesa Leisure Ltd . v. Union of India through Secretary (Guj) . . . 460

S. 132 :- --Search and seizure--Validity--Condition precedent for search--Information giving rise to belief that income would not be disclosed--Inquiries and material showing documents would not be produced--Search valid--Notice under sections 131(1A) and 133(6) subsequent to search would not invalidate search--Allegation that search proceedings were mala fide--Burden of proof on assessee to prove allegation-- Neesa Leisure Ltd . v. Union of India through Secretary (Guj) . . . 460

S. 133 :- --Search and seizure--Validity--Condition precedent for search--Information giving rise to belief that income would not be disclosed--Inquiries and material showing documents would not be produced--Search valid--Notice under sections 131(1A) and 133(6) subsequent to search would not invalidate search--Allegation that search proceedings were mala fide--Burden of proof on assessee to prove allegation-- Neesa Leisure Ltd . v. Union of India through Secretary (Guj) . . . 460

S. 158BC :- --Search and seizure--Block assessment--Undisclosed income--Effect of Remittances of Foreign Exchange and Investment in Foreign Exchange Bonds (Immunities and Exemptions) Act, 1991--Bonds entitled to immunity from enquiry--Receipt of bonds as gifts--Value of bonds not assessable as undisclosed income--Remittances of Foreign Exchange and Investment in Foreign Exchange Bonds (Immunities and Exemptions) Act, 1991-- CIT v. Smt. Usha Omer (All) . . . 448

S. 234B :- --Advance tax--Interest--Company--Book profits--Interest under sections 234B and 234C to be paid on failure to pay advance tax in respect of tax payable under section 115JA/115JB-- CIT v. Steel Steips Leasing Ltd. (P&H) . . . 455

S. 234C :- --Advance tax--Interest--Company--Book profits--Interest under sections 234B and 234C to be paid on failure to pay advance tax in respect of tax payable under section 115JA/115JB-- CIT v. Steel Steips Leasing Ltd. (P&H) . . . 455

S. 244A :- --Refund--Interest on refund--Date from which interest becomes due--Effect of section 244A and Circular No. 549, dated 31-10-1989--Excess amount paid on self-assessment--Excess to be refunded with interest from date of payment of such tax till date of refund--Circular No. 549, dated 31-10-1989-- CIT v. Vijaya Bank (Karn) . . . 489

S. 263 :- --Revision--Transactions of purchase and sale of units for many years--Transactions considered to be genuine in prior and subsequent assessment years--Revision proceedings on ground that transactions pertaining to relevant assessment year were speculative--Not permissible-- CIT v. Escorts Ltd . (Delhi) . . . 435

Direct Tax Laws Nov 07



Transaction charges paid by assessee-broker to stock exchange for entering into transactions in securities/derivatives through BOLT system provided by BSE constitute 'fees for technical services' covered under Section 194J and, therefore, assessee is liable to deduct tax at source while crediting transaction charges to account of stock exchange - [2011] 15 taxmann 77 (Bombay)

Remuneration paid to partners cannot be allowed as a deduction u/s 40(b)(v) when same is not specified or stipulated in the partnership deed but has been left to be decided by a mutual agreement in future - [2011] 15 taxmann 76 (Delhi)

Where assessee challenged disallowance of commission paid to 'L' on ground that same had been shown as taxable income in return filed by 'L' - [2011] 15 taxmann 73 (Delhi)

Where assessee, a manufacturer of commutators, also received service charges on goods manufactured on sub-contract basis, and amounts on sale of copper scrap, section 80HHC deduction would also be available on latter two receipts also - [2011] 15 taxmann 72 (Karnataka)

Commission earned by assessee for supplying certain goods cannot be considered as a 'profit or gain from any business of an industrial undertaking' within meaning of section 80-IA - [2011] 15 taxmann 71 (Karnataka)

Where amount in question was received by assessee by way of account payee cheque and was repaid within a period of less than 15 days through banking channel, no addition could be made under section 68 - [2011] 15 taxmann 70 (Punjab and Haryana)

Only Competent Civil Authority, and not Commissioner of Income-tax is empowered to give findings on title/ownership over property sought to he sold for recovery of tax arrears - [2011] 15 taxmann 69 (Karnataka)

Reopening was unjustified where material relied upon therefor was available on record during original assessment proceedings - [2011] 15 taxmann 68 (Bombay)

Loan or advance given by company to shareholder in return of an advantage conferred upon company by such shareholder cannot be treated as deemed dividend under section 2(22)(e) - [2011] 15 taxmann 66 (Calcutta)

Before ordering special audit under section 142(2A) satisfaction of complexity of accounts is not required to be arrived at by discussing accounts in meticulous details - [2011] 15 taxmann 65 (Allahabad)

Reopening of assessment cannot be permitted merely because Assessing Officer subsequently believes that earlier view was incorrect - [2011] 15 taxmann 63 (Bombay)

Taxability of transponder hire charges by TV Broadcasting Company - [2011] 15 taxmann 64 (Chennai - Trib.)


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

LOSS FROM SPECULATION


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


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


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


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


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

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


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


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


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


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




Can the notional interest on interest free deposit received by the assessee in r


Can the notional interest on interest free deposit received by the assessee in respect of a shop let out on rent be brought to tax as "Business income" or "Income from house property"?

CIT v. Asian Hotels Ltd. (2010) 323 ITR 0490 (Del.)

The assessee had received interest free deposit in respect of shops given on rent. The Assessing Officer added to the assessee's income notional interest on the interest free deposit at the rate of 18 per cent simple interest per annum on the ground that by accepting the interest free deposit, a benefit had accrued to the assessee which was chargeable to tax under section 28(iv).
The High Court held that Section 28(iv) is concerned with business income and brings to tax the value of any benefit on perquisite, whether convertible into money or not arising from the business or exercise of the profession. Section 28(iv) can be invoked only where the benefit or amenity or perquisite is other than cash. In the instant case, the Assessing Officer has determined the monetary value of the benefit stated to have accrued to the assessee by adding a sum that constituted 18 per cent simple interest on the deposit. Hence, section 28(iv) is not applicable.

Section 23(1 )(a) deals with the determination of the annual letting value of such property for computing the income from house property. It provides that the annual letting value is deemed to be the sum for which the property might reasonably be expected to be let from year to year. This contemplates the possible rent that the property might fetch and not certainly the interest in fixed deposit that may be placed by the tenant with the landlord in connection with the letting out of such property.

Thus, the notional interest is not assessable as business income or as income from house property.