S. 153A: Assessee can agitate claim which was given up at s. 143(3) stage

 

DCIT vs. Eversmile Construction Co Pvt Ltd (ITAT Mumbai)

S. 153A: Assessee can agitate claim which was given up at s. 143(3) stage

The assessee filed a ROI declaring a loss of Rs. 3.93 crores. The AO passed a s. 143(3) order by which he disallowed interest of Rs. 58 lakhs. The assessee accepted the disallowance and it became final. Subsequently, pursuant to a search u/s 132, the assessee filed a ROI u/s 153A in which it reserved its right to claim deduction for the said interest of Rs. 58 lakhs. The AO rejected the claim though the CIT (A) gave part relief. The department filed an appeal before the Tribunal claiming that in s. 153A proceedings the assessee was not entitled to seek relief on additions which were made in the original assessment as s. 153A did not permit assessment at an income lower than the one assessed in original assessment. HELD dismissing the appeal:

S. 153A requires the AO to make the assessment afresh and compute the "total income" in respect of each of the relevant six assessment years. There is no inhibition on the jurisdiction of the AO on the including of new income and likewise there is no restriction on the assessee to claim any deduction which was not allowed in the original assessment. The determination of total income u/s 153A has to be done afresh without any reference to what was done in the original assessment. The fact that there was an addition in the original assessment does not preclude the assessee from contesting it in the s. 153A proceedings. As it is a fresh exercise of framing assessment of "total income", the assessee is not estopped from arguing about the merits of his case qua the additions made in the original assessment. Debarring the assessee from making a claim about the deductibility of any item, which was earlier disallowed, counters the very concept of fresh assessment of total income (Sun Engineering Works 198 ITR 297 (SC) & Goetze (India) Ltd 284 ITR 323 (SC) distinguished)

Note: Contrast with Anil Kumar Bhatia 1 ITR 484 (Delhi)(Trib) & the cases referred to therein where it was held that s. 153A does not authorize a "de novo" assessment & completed matters could not be revived

Related Judgements
Anil Kumar Bhatia vs. ACIT (ITAT Delhi) S. 153A does not authorize the making of a de novo assessment. While under the 1st Proviso, the AO is empowered to frame assessment for six years, under the 2nd Proviso, only the assessments which are pending on the date of initiation of search abate. The effect is that…
Manori Properties Pvt Ltd vs. ITO (ITAT Mumbai) The claim regarding "business loss" cannot be entertained because, though the CIT (A) has dealt with the issue, there is no specific ground. The claim is also not maintainable under Rule 27 since that applies only to a Respondent in the appeal
DCIT vs. Reclamation Realty India Pvt. Ltd (ITAT Mumbai) In Circular 204 dated 24.7.1976, the CBDT has accepted that u/s 23(1)(a) the "sum for which the property might reasonably be expected to let from year to year" is the municipal valuation of the property. The same view that the Municipal valuation is the annual value u/s 23(1)(a) has…

Be Courteous to Public and Legislators - Government Directs Babus

 

Be Courteous to Public and Legislators - Government Directs Babus

AS per the Conduct Rules, Government servants shall in the discharge of his duties act in a courteous manner and shall not adopt dilatory tactics in his dealings with the public or otherwise.

Government has reiterated and strengthened the instructions and directs:-

(i) Government servants should show courtesy and consideration to Members of Parliament and State Legislatures;

(ii) while the Government servants should consider carefully or listen patiently to what the Members of Parliament and of the State Legislatures may have to say, the Government servant should always act according to his own best judgment and as per the rules;

(iii) Any deviation from an appointment made with a Member of Parliament/State Legislature must be promptly explained to him to avoid any possible inconvenience. Fresh appointment should be fixed in consultation with him;

(iv) An officer should be meticulously correct and courteous and rise to receive and see off a Member of Parliament/State Legislature visiting him.;

(v) Members of Parliament of the area should invariably be invited to public functions organized by a Government office. Proper and comfortable seating arrangements at public functions and proper order of seating on the dais should be made for Members keeping in view the fact that they appear above officers of the rank of Secretaries to Government of India in the Warrant of Precedence;

(vi) Where any meeting convened by the Government is to be attended by Members of Parliament, special care should be taken to see that notice is given to them in good time regarding the date, time, venue etc. of the meeting.

(vii) Letters from Members of Parliament and Members of State Legislatures must be promptly acknowledged, and a reply sent at an appropriate level expeditiously as per the relevant provisions of the Central Secretariat Manual of Office Procedure;

(viii) Information or statistics relating to matters of local importance must be furnished to the MPs and MLAs when asked for.

(ix) If the information sought by a Member of Parliament cannot be given and is to be refused, instructions from a higher authority should be taken and the reasons for not furnishing the information should be given in the reply;

(x) Wherever any letter from a Member of Parliament is in English and the reply is required to be given in Hindi in terms of the Official Languages Act, 1963 and the rules framed there under, an English translation should also be sent along with the reply for the convenience of such Members of Parliament from non Hindi speaking areas;

(xi) References from the Committees of Parliament must be attended to promptly;

(xii) The officers should not ignore telephonic messages left for them by the Members of Parliament/State Legislatures in their absence and should try to contact at the earliest the Member of Parliament/State Legislature concerned.

(xiii) All Ministries/Departments may ensure that the powers of Members of Parliament/State Legislatures as Chairpersons/ Members of committees under various Centrally Sponsored/Central Sector government schemes are clearly and adequately defined; and

(xiv) A Government servant should not approach MPs/MLAs for sponsoring his individual case.

DOPT No. 11013/4/2011-Estt.( A) Dated: December 01, 2011.

Compilations of case law : SALE OF OTHER ASSETS

INCOME – CHARGEABILITY AND COMPUTATION

SALE OF OTHER ASSETS

Purchase of silver bars when prices were going to rise due to war and sales made at rising levels – Adventure in the nature of trade.

Tribhuvandas Vallabhdas Vs CIT (Bom) 61 ITR 518

Wisdom Vs Chamberlain (CA) 74 ITR 306

Rosewood trees after felling were dressed and sold - Assessee not a dealer in trees - isolated transaction - capital gains only and not business

C.G. Thimmaiah Vs CIT (Kar ) 148 ITR 741

Import of 4 Cement Plants – Intention of re-sale was there – Adventure in the nature of trade

Dalmia Cement Ltd Vs CIT (SC) 105 ITR 633

Transactions of acquiring leases and granting sub-leases of coal mines, were in the nature of trading - Salami received is revenue receipt.

Karanpura Development Co. Ltd. Vs CIT (SC) 44 ITR 362

Purchased mortgage decree – As a result of execution proceedings, realized excess money-Business profit.

Jaldu Manikyala Rao Vs CIT (Mad) 28 ITR 220, 54 ITR 409.

Assessee took over the liability to pay the shareholders of a company controlled by him knowing that claims will not be made by the share holders – Adventure in the nature of trade – Business income.

R. Dalmia Vs CIT (Del) 137 ITR 665

Assessee advancing money to another to further litigation with a condition that in case of borrower succeeds, the assessee should get a share in the proceeds – Business.

Goyaprasad & Chotey Lal, IN RE (All) 3 ITR 177

Direct Tax Laws Oct 27

Direct Tax Laws

-> Amount paid by assessee-company to Bank for services rendered in connection with issue of shares to increase capital base of company, could not be allowed as revenue expenditure - [2011] 15 taxmann 371 <Bangalore - Trib.)

-> Article 14 : DTAA between India and France - Where transactions of sale of shares by foreign entities involving another foreign company, having controlling interest in an Indian company, are part of scheme for avoidance of tax, gain arising from such transaction is taxable in India, even if it is not an alienation of shares of an Indian company - [2011] 16 taxmann 21 <New Delhi)

-> Assessee himself having treated income as business income and had suddenly changed to heading 'agricultural income' - [2011] 16 taxmann 9 <Karnataka)

-> Assessee was assessable in respect of gross interest received from department on income-tax refund and not merely on not interest remaining after set off of interest paid to department on account of late payment of tax - [2011] 15 taxmann 381 <Pune - Trib.)<TM)

-> Assessee was entitled to receive interest under section 214(1A) on difference between advance tax and tax assessed under section 251 from first day of assessment year till day of passing regular assessment order under section 143(3) - [2011] 15 taxmann 365 <Delhi - Trib.)

-> Assessee was not liable to deduct tax at source from commission payment to non-resident which was not rendering any service or performing any activity in India itself - [2011] 15 taxmann 391 <Delhi)

-> Computation of undisclosed income should be based on material seized during search - [2011] 15 taxmann 394 <Karnataka)

-> Consideration received by assessee from a company on letting his name 'S' to be used in company's name and its product would be taxable under head 'Capital gains' - [2011] 15 taxmann 388 <Chennai - Trib.)

-> Deduction under section 80P(2) cannot be denied to co-operative society engaged in producing and marketing of sugar from sugarcane grown by members - [2011] 16 taxmann 14 <Punjab and Haryana)

-> Enhanced compensation alongwith interest received by assessee on account of acquisition of his land would be taxed in assessment year in which it was received - [2011] 15 taxmann 366 <Delhi - Trib.)

-> Even where assessee deducted gross payment made to sub-contractor from its gross income from contract and had shown commission income separately in profit & loss account, TDS liability under section 194C would arise - [2011] 15 taxmann 380 <Ahmedabad - Trib.)

-> Expenditure incurred by assessee-company for installation of a common effluent treatment plant under infrastructure upgradation scheme was to be allowed as revenue expenditure - [2011] 15 taxmann 370 <Chennai - Trib.)

-> Expenses incurred by assessee on installation of an accounting software to enable management to run its business more effectively and efficiently would be revenue expenditure - [2011] 15 taxmann 382 <Delhi)

-> In case of direct nexus between borrowing and advancing of money, interest spent is to be deducted from interest earned - [2011] 15 taxmann 386 <Delhi - Trib.)

-> Liaison office of non-resident assessee in India performing activities of selection of right goods and negotiation of price as part of purchasing process as per assessee's instructions cannot be considered PE of assessee in India - [2011] 15 taxmann 358 <Mumbai - Trib.)

-> Merely because Assessing Officer had decided to disallow certain expenses on ad hoc basis after making necessary enquiry, that by itself cannot be a ground to invoke powers under section 263 - [2011] 15 taxmann 384 <Delhi - Trib.)

-> Once assessment proceedings are initiated under section 158BD for computing undisclosed income of person other than person searched, based on evidence found in course of search, then it would be open to Assessing Officer to make use of any other information available with him for making block assessment - [2011] 15 taxmann 393 <Kerala)

-> Ownership of toll road under State-private joint-venture on Build, Own, Operate and Transfer <BOOT) basis rests with private party till transfer, entitling it to depreciation on same - [2011] 15 taxmann 387 <Ahmedabad - Trib.)

-> Penalty under section 271(1)(c) was imposable where assessee wrongly claimed set off of loss incurred in capacity of a partner of a firm against his individual income - [2011] 16 taxmann 11 <Delhi - Trib.)

-> Proceedings under section 147 cannot be initiated when time available for issuing notice under section 143(2) has not expired - [2011] 16 taxmann 12 <Lucknow - Trib.)

-> Revision of AO's order where Assessing Officer after examining various details of case had disallowed a part of purchases made under section 40A(3) - [2011] 16 taxmann 13 <Mumbai - Trib.)

-> Rule 8D of Income-tax Rules 1962, which was introduced by virtue of Notification No. 45/2008, dated 24-3-2008, is prospective in operation and cannot be regarded as being retrospective - [2011] 15 taxmann 390 <Delhi)

-> Temporary wooden structure and partition for running Computer Centre is eligible to 100% depreciation.NBFC can claim deduction of irrecoverable loans and advances under section 36(1)(vii) if there is an actual write off in books - [2011] 15 taxmann 392 <Madras)

-> Terms 'exempt income' and 'deduction from income' are two different propositions and, therefore, where assessee's income was not exempt under section 10 rather same was eligible for deduction under section 80P, assessee's case was not hit by provisions of section 14A - [2011] 16 taxmann 10 <Delhi - Trib.)

-> Transfer Pricing - Where assessee-company had entered into international transaction with its AE and in course of assessment assessee had furnished all details and documents in respect of these transactions which was accepted to be one confirming to arm's length price, no penalty could be levied on assessee under section 271AA - [2011] 16 taxmann 5 <Mumbai - Trib.)

-> Tribunal was justified in holding that case of assessee was a fit case for stay of outstanding demand beyond period of 365 days as per provisions of section 254(2A) - [2011] 15 taxmann 369 <Bombay)

-> When an assessee writes off a debt or part thereof as irrecoverable in accounts for previous year, same can be allowed as deduction under section 36(1)(vii) and, no further proof is necessary - [2011] 15 taxmann 373 <Andhra Pradesh)

-> Where after completion of search proceedings, assessee did not file a block return rather, it filed a regular return belatedly which was rejected by Assessing Officer, it did not make assessee liable to penalty under section 158BFA - [2011] 15 taxmann 375 <Chennai - Trib.)

-> Where assessee borrowed certain amount for its business purpose and earned interest on unutilized portion of loan interest income was taxable as business income - [2011] 16 taxmann 8 <Bombay)

-> Where assessee entered into agreements with finance companies to provide access to their customer database, it was not a contract for service and, thus, assessee was not required to deduct tax at source while making payments to finance companies - [2011] 16 taxmann 6 <Chennai - Trib.)

-> Where assessee showed purchase value of shares as debit to profit and loss account and, further, closing stock of shares was valued at cost or market value whichever was less, it was to be held that assessee treated shares as stock-in-trade and, thus, fall in value of same was allowable as business loss - [2011] 15 taxmann 385 <Mumbai - Trib.)

-> Where assessee-authority carried on systematic activity of development and sale of immovable properties which was incidental to its main object of town planning, exemption under section 11 was available to assessee only if it maintained separate books of account for aforesaid activity - [2011] 15 taxmann 389 <Delhi - Trib.)

-> Where Assessing Officer at time of passing assessment order, charged interest under a non-existent provision, it constituted a glaring, patent and obvious mistake which had to be rectified under section 154 - [2011] 16 taxmann 15 <Chennai - Trib.)

-> Where Assessing Officer could not rebut assessee's contention that no expenditure had been incurred to earn exempt income under section 10(33) and, moreover, rule 8D of Income-tax Rules, 1962, was also not applicable for assessment year in question, disallowance made under section 14A on ad hoc basis was to be set aside - [2011] 15 taxmann 376 <Delhi - Trib.)

-> where Assessing Officer had not brought out any specific expenditure which had been incurred by assessee for earning of tax exempt dividend income, disallowance of expenses invoking provisions of section 14A was not justified - [2011] 15 taxmann 383 <Delhi - Trib.)

-> Where interest earned on FDRs had direct nexus with assessee's export business, assessee should be allowed netting of such interest from interest paid by it to bank in terms of Explanation (baa) of section 80HHC - [2011] 15 taxmann 361 <Delhi)

-> Where Tribunal remanded an issue back to Assessing Officer for disposal afresh, subsequent decision of Supreme Court on said issue did not make Tribunal's order erroneous on face of record which could be rectified under section 254 (2) - [2011] 15 taxmann 367 <Lucknow - Trib.)

Compilations of case law: STATUS OF ASSESSEE ; CLUBBING OF INCOME

CLUBBING OF INCOME

Inclusion of income of minor child from firm – Parent need not be a partner.
CIT Vs Dhanushkodi (Mad) 252 ITR 794

Clubbing of income of minor with that of father eventhough source of investment is not from father.
Chandrakala Bai Naila Vs CIT (MP) 178 ITR 341
CIT Vs Bajrangal (AP) 176 ITR 334
CIT Vs Chinabai M. Modi (Guj) 69 ITR 76
CIT Vs K.R. Natarajan (Mad) 236 ITR 402
P. Alwarsamy Vs CIT ( Mad ) 98 Taxman 19
CIT Vs S.J.S. Selvalakshmi Ammal (Mad) 240 ITR 934
CIT Vs P. Murugesan (Mad) 245 ITR 301
CIT Vs Pelleti Sridevamma ( SC ) 216 ITR 826

Inclusion of income of minor child from firm – father need not have any income.
CIT Vs Krishna Iyer (Decd) (Mad) 249 ITR 498

Property given by an oral gift by a Mohammedan to his wife out of natural love and affection is not for adequate consideration or under an agreement to live apart. Hence Sec. 64 applicable – Clubbing.
N.P. Syed Sadique JT 1998(8) SC 32 (105 Taxman (Mag) 81)

Assets transferred to wife – Capital Gains derived by wife by selling the assets – to be clubbed in the hands of assessee, husband.
Sevantilal Maneklal Sheth Vs CIT (SC) 68 ITR 503

Transfer of house property by assessee to his wife – 64(1)(iv) attracts – clubbing .
Syed Sadique & Ors Vs CIT (SC) 239 ITR 263

Income of step-child can be clubbed u/s.64(1)(iii).
CIT Vs Abdul Rahim Khan M. Pathan (Guj) 243 ITR 409

Cash transferred to wife – amount invested in firm – income from firm was includible in the Total Income of husband
Kaushalyabai Vs CIT (MP) 238 ITR 1008
H.P. Dandiwala Vs CIT (All) 231 ITR 281

Clubbing of income of spouse / minor child – No separate deduction u/s.80L for clubbed income.
ITO Vs Yogi H. Aggarwal (ITAT, Mum) 96 ITD 288

Assessee routed certain sales through a sister concern to make that concern earn profit – Actual delivery made by assessee directly to ultimate purchaser – Sister concern situated in the same premises, has no godown, incurred no freight and transportation charges – colourable device – Profit shown to have been earned by sister concern assessed in the hands of assessee.
Bansal Ispat (Lucknow)(P) Ltd. Vs ACIT (ITAT, All) 61 ITD 246

Assessee managing affairs of firm – Benami of assessee – Income to be included in the hands of assessee
CIT Vs G.M. Dharia ( Kar ) 243 ITR 104
Assessing giving gifts to wife – wife invested this amount in firm A – Later on, wife withdrew the amount from firm A and invested it in firm B in which assessee is a partner – Clubbed in the hands of 'a' u/s.64(1)
CIT Vs Harkishdas (MP) 228 ITR 289

Assessee purchased lease rights of a firm for 5 years – sold within 5 months to minor grand daughter – Took back on lease – assessee did not work – sham transaction – income of minor grand daughter clubbed with assessee as benami.
G. Krishnammal Vs DCIT (ITAT, Mad) 66 ITD 83

Cross-gifts to be included for clubbing purposes.
CIT Vs C.M. Kothari (SC) 49 ITR 107
Om Dutt Vs CIT (P&H) 277 ITR 63

Finding that firm's business was actually being conducted by another firm – Firm was not genuine
Oswal Trading Co. Vs CIT (MP) 233 ITR 385

Firm carrying on money lending business – Three ladies closely related to partners of the firm forming another firm for carrying on similar business – Finding that business was actually carried on by original firm – Partnership formed by ladies not genuine – Clubbing of income of both firm.
Sri Krishna Finance Corporation Vs CIT (AP) 169 ITR 611

Spouse must have technical or professional qualification and income must be solely attributable to the application of his / her technical or professional knowledge and experience – Otherwise, income to be clubbed
J.M. Mokashi Vs CIT (Bom) 207 ITR 252

ITR (TRIB) Volume 12 : Part 6 (Issue dated : 05-12-2011) SUBJECT INDEX TO CASES REPORTED IN THIS PART

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))

Volume 12 : Part 6 (Issue dated : 05-12-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

-->> Advance tax :- Levy of interest--Direction to allow consequential relief to assessee--Section 234D applicable from assessment year 2004-05--Not applicable to assessment year 2002-03--Income-tax Act, 1961, ss. 234B, 234C, 234D-- Sunit S. Shah v. Asst. CIT (Ahmedabad) . . . 596

-->> Business expenditure :- Disallowance--Expenditure on travelling and conveyance, telephone and mobile, vehicle maintenance, etc.--Disallowance at 25 per cent. for personal element --Assessee not making any effort to show such expenses excessive or not reasonable--Disallowance justified--Income-tax Act, 1961-- K. J. Prabhakar v. Asst. CIT (Chennai) . . . 603

-->> Depreciation :- Office premises--Wholly and exclusively for business purposes--Depreciation allowed in previous year--Direction to verify past records and allow depreciation--Income-tax Act, 1961-- Sunit S. Shah v. Asst. CIT (Ahmedabad) . . . 596

-->> Income :- Exemption--Gift from Hindu undivided family to its member--Hindu undivided family is a group of relatives--Section 56(2) applicable--Amount not assessable--Amount also exempt under section 10(2)--Income-tax Act, 1961, ss. 10(2), 56(2)-- Vineetkumar Raghavjibhai Bhalodia v. ITO (Rajkot) . . . 616

-->> Professional receipt:- Direction to allow enough time to furnish details--Matter remanded--Income-tax Act, 1961-- Sunit S. Shah v. Asst. CIT (Ahmedabad) . . . 596

-->> Penalty :- Assessee offering additional income during survey--No clear finding in penalty order whether addition on account of concealment of income or furnishing inaccurate particulars of income--Not a case for imposition of penalty--Income-tax Act, 1961, s. 271(1)(c)-- Asst. CIT v. RMP Infotech P. Ltd. (Chennai) . . . 581

-->> Concealment of income:- Charitable purpose--Exemption--Equipment of trust being used by private hospital run by its trustees--Assessee not entitled to exemption under section 11--Levy of penalty justified--Income-tax Act, 1961, ss. 11, 13, 271(1)(c)-- Chinnammal ENT Medical Education and Research Foundation v. Asst. CIT (Exemption) (Chennai) . . . 589

-->> Rectification of mistake :- Mistake apparent from record--Reimbursement of excise duty--Amount neither debited in profit and loss account nor in computation of income --Disallowance of reimbursement of excise duty--Amounts to mistake apparent from record--Income-tax Act, 1961, ss. 143(3), 154-- Deputy CIT v. SIEL Ltd . (Delhi) . . . 577

-->> Revision :- Powers of Commissioner--Assessee providing services of storing blood stem cells for period of 21 years--Lump sum collection in nature of advance and not income against services--Assessing Officer following one of possible views--Assessment order just and proper--Revision not sustainable--Income-tax Act, 1961, s. 263-- Lifecell International P. Ltd. v. Asst. CIT (Chennai) . . . 611

-->> Search and seizure :- Block assessment--Undisclosed income--Meaning of--Income that would not have been disclosed--Additions permissible only on basis of evidence found in search--Disclosures made to Department in course of statement recorded under section 131 prior to search--Information as to bank accounts available with Department before search--Moneys in account cannot be treated as undisclosed income for assessment under Chapter XIV-B--Income-tax Act, 1961, ss. 144, 158B(b), 158BB(1), 158BC, 158BD-- Shibu Soren v. Asst. CIT (Delhi) . . . 540

-->> Unexplained investment :- Assessee claiming gift from father--No evidence to establish source of income of father--Addition proper--Income-tax Act, 1961, s. 69-- K. J. Prabhakar v. Asst. CIT (Chennai) . . . 603

-->> Words and phrases :- ”Relatives”-- Vineetkumar Raghavjibhai Bhalodia v. ITO (Rajkot) . . . 616

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

-->> S. 10(2) :- Income--Exemption--Gift from Hindu undivided family to its member--Hindu undivided family is a group of relatives--Section 56(2) applicable--Amount not assessable--Amount also exempt under section 10(2)-- Vineetkumar Raghavjibhai Bhalodia v. ITO (Rajkot) . . . 616

-->> S. 11 :- Penalty--Concealment of income--Charitable purpose--Exemption--Equipment of trust being used by private hospital run by its trustees--Assessee not entitled to exemption under section 11--Levy of penalty justified-- Chinnammal ENT Medical Education and Research Foundation v. Asst. CIT (Exemption) (Chennai) . . . 589

-->> S. 13 :- Penalty--Concealment of income--Charitable purpose--Exemption--Equipment of trust being used by private hospital run by its trustees--Assessee not entitled to exemption under section 11--Levy of penalty justified-- Chinnammal ENT Medical Education and Research Foundation v. Asst. CIT (Exemption) (Chennai) . . . 589

-->> S. 56(2) :- Income--Exemption--Gift from Hindu undivided family to its member--Hindu undivided family is a group of relatives--Section 56(2) applicable--Amount not assessable--Amount also exempt under section 10(2)-- Vineetkumar Raghavjibhai Bhalodia v. ITO (Rajkot) . . . 616

-->> S. 69 :- Unexplained investment--Assessee claiming gift from father--No evidence to establish source of income of father--Addition proper-- K. J. Prabhakar v. Asst. CIT (Chennai) . . . 603

-->> S. 143(3) :- Rectification of mistake--Mistake apparent from record--Reimbursement of excise duty--Amount neither debited in profit and loss account nor in computation of income--Disallowance of reimbursement of excise duty--Amounts to mistake apparent from record-- Deputy CIT v. SIEL Ltd. (Delhi) . . . 577

-->> S. 144 :- Search and seizure--Block assessment--Undisclosed income--Meaning of--Income that would not have been disclosed--Additions permissible only on basis of evidence found in search--Disclosures made to Department in course of statement recorded under section 131 prior to search--Information as to bank accounts available with Department before search--Moneys in account cannot be treated as undisclosed income for assessment under Chapter XIV-B-- Shibu Soren v. Asst. CIT (Delhi) . . . 540

-->> S. 154 :- Rectification of mistake--Mistake apparent from record--Reimbursement of excise duty--Amount neither debited in profit and loss account nor in computation of income--Disallowance of reimbursement of excise duty--Amounts to mistake apparent from record-- Deputy CIT v. SIEL Ltd. (Delhi) . . . 577

-->> S. 158B(b) :- Search and seizure--Block assessment--Undisclosed income--Meaning of--Income that would not have been disclosed--Additions permissible only on basis of evidence found in search--Disclosures made to Department in course of statement recorded under section 131 prior to search--Information as to bank accounts available with Department before search--Moneys in account cannot be treated as undisclosed income for assessment under Chapter XIV-B-- Shibu Soren v. Asst. CIT (Delhi) . . . 540

-->> S. 158BB(1) :- Search and seizure--Block assessment--Undisclosed income--Meaning of--Income that would not have been disclosed--Additions permissible only on basis of evidence found in search--Disclosures made to Department in course of statement recorded under section 131 prior to search--Information as to bank accounts available with Department before search--Moneys in account cannot be treated as undisclosed income for assessment under Chapter XIV-B-- Shibu Soren v. Asst. CIT (Delhi) . . . 540

-->> S. 158BC :- Search and seizure--Block assessment--Undisclosed income--Meaning of--Income that would not have been disclosed--Additions permissible only on basis of evidence found in search--Disclosures made to Department in course of statement recorded under section 131 prior to search--Information as to bank accounts available with Department before search--Moneys in account cannot be treated as undisclosed income for assessment under Chapter XIV-B-- Shibu Soren v. Asst. CIT (Delhi) . . . 540

-->> S. 158BD :- Search and seizure--Block assessment--Undisclosed income--Meaning of--Income that would not have been disclosed--Additions permissible only on basis of evidence found in search--Disclosures made to Department in course of statement recorded under section 131 prior to search--Information as to bank accounts available with Department before search--Moneys in account cannot be treated as undisclosed income for assessment under Chapter XIV-B-- Shibu Soren v. Asst. CIT (Delhi) . . . 540

-->> S. 234B :- Advance tax--Levy of interest--Direction to allow consequential relief to assessee--Section 234D applicable from assessment year 2004-05--Not applicable to assessment year 2002-03-- Sunit S. Shah v. Asst. CIT (Ahmedabad) . . . 596

-->> S. 234C :- Advance tax--Levy of interest--Direction to allow consequential relief to assessee--Section 234D applicable from assessment year 2004-05--Not applicable to assessment year 2002-03-- Sunit S. Shah v. Asst. CIT (Ahmedabad) . . . 596

-->> S. 234D :- Advance tax--Levy of interest--Direction to allow consequential relief to assessee--Section 234D applicable from assessment year 2004-05--Not applicable to assessment year 2002-03-- Sunit S. Shah v. Asst. CIT (Ahmedabad) . . . 596

-->> S. 263 :- Revision--Powers of Commissioner--Assessee providing services of storing blood stem cells for period of 21 years--Lump sum collection in nature of advance and not income against services--Assessing Officer following one of possible views--Assessment order just and proper--Revision not sustainable-- Lifecell International P. Ltd. v. Asst. CIT (Chennai) . . . 611

-->> S. 271(1)(c) :- Penalty--Assessee offering additional income during survey--No clear finding in penalty order whether addition on account of concealment of income or furnishing inaccurate particulars of income--Not a case for imposition of penalty--Asst. CIT v. RMP Infotech P. Ltd. (Chennai) . . . 581

-->> Penalty:- Concealment of income--Charitable purpose--Exemption--Equipment of trust being used by private hospital run by its trustees--Assessee not entitled to exemption under section 11--Levy of penalty justified-- Chinnammal ENT Medical Education and Research Foundation v. Asst. CIT (Exemption) (Chennai) . . . 589

ITR Volume 339 : Part 2 (Issue dated 5-12-2011) SUBJECT INDEX TO CASES REPORTED IN THIS PART

INCOME TAX REPORTS (ITR)

Volume 339 : Part 2 (Issue dated 5-12-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

-->> Appeal to Appellate Tribunal :- Order under section 263 set aside--Proceedings thereafter infructuous--Tribunal has no jurisdiction to allow appeal from order of Commissioner--Income-tax Act, 1961, s. 263-- Anil Kumar Rastogi v. ITO (All) . . . 279

-->> Business expenditure :- Deferred revenue expenditure--Expenditure on purchases--Finding by Commissioner (Appeals) and Tribunal that amounts were deductible--Finding of fact--Income-tax Act, 1961-- CIT v. P. R. Packaging Ltd. (P&H) . . . 281

-->> Capital gains :- Short-term capital gains--Exemption--Depreciable assets--Export--Computation of capital gains--Income from plant and machinery exempt under section 10B--Expiry of period of exemption--Sale of assets as a block to sister concern--Asset transferred and purchased carrying same rate of depreciation--Assessee entitled to bene-fit of section 50(2)--Income-tax Act, 1961, ss. 10B, 50(2)-- S. Muthurajan v. Deputy CIT (Mad) . . . 301

-->> Deduction of tax at source :- Non-resident purchasing shares of Indian company--Notice under section 201--Notice making it clear that non-resident could urge jurisdictional and other facts--Matter had not been pre-judged--Notice could not be quashed--Income-tax Act, 1961, s. 201(1), (1A)-- Richter Holding Ltd . v. Assistant Director of Income-tax (International Taxation) (Karn) . . . 199

-->> Exemption :- Export--Application to Reserve Bank of India for extension of time for realisation of export proceeds--No reply from Reserve Bank--Extension of time for realisation of export proceeds by Reserve Bank under Foreign Exchange Management Act--Deemed approval for purposes of section 10A(3)--Assessee entitled to exemption--Income-tax Act, 1961, s. 10A-- CIT v. Morgan Stanley Advantage Services P. Ltd . (Bom) . . . 291

-->> Income :- Computation--Disallowance of expenditure related to exempt income--Interest attributable to investment in shares--No evidence that loans not utilized for acquisition of shares--No new shares purchased in immediately preceding years--Not relevant--Disallowance of proportionate part of interest attributable to investment in shares dividends from which exempt--Justified--Income-tax Act, 1961, ss. 10(34), 14A-- Dhanuka and Sons v. CIT (Cal) . . . 319

-->> Income-tax :- General principles--Assessment only according to law-- Chandrakant J. Patel v. V. N. Srivastava (Guj) . . . 310

-->> Interest on borrowed capital :- Expenditure in relation to income not forming part of total income--Borrowed funds utilised for acquisition of shares in company of which assessee acquired controlling interest--Acquisition of shares in form of investment and only benefit is dividend income--Assessee not entitled to deduction of interest--Income-tax Act, 1961, ss. 14A, 36(1)(iii)-- CIT v. Smt. Leena Ramachandran (Ker) . . . 296

-->> Reassessment :- Notice--Receipt of advisory fees from charitable institutions subject of assessment--Notice on ground charitable institutions benami of assessee--Income-tax authorities finding charitable institutions were genuine--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Dr. Bindeshwar Pathak v. CIT (Patna) . . . 272

-->> :- --Notice after four years--Conditions precedent--Subsequent retrospective amendment--Proviso to section 147 not attracted--Income-tax Act, 1961, s. 147, proviso-- CIT v. SIL Investments Ltd . (Delhi) . . . 166

-->> :- --Reassessment after four years--Non-resident company assessed under section 44BB after considering material on record--Notice based on subsequent decision of High Court and Explanatory Notes to Finance Bill, 2010--Not valid--Income-tax Act, 1961, ss. 44BB, 44D, 147, 148-- B. J. Services Co. Middle East Ltd . v. Deputy Director of Income-tax, International Taxation (Uttarakhand) . . . 169

-->> Revision :- Application for revision--Powers of Commissioner--Income offered for taxation by mistake--Commissioner cannot reject application on that ground--Income exempt under section 10(15)(iv)(fa) included in assessable income--On merits, assessee not ordinarily resident in India--Commissioner not justified in rejecting application for revision--Income-tax Act, 1961, s. 264-- Chandrakant J. Patel v. V. N. Srivastava (Guj) . . . 310

-->> Search and seizure :- Block assessment--Appeal--Competency of appeal--Appeal only against order of assessment--Validity of search can be challenged in appeal--Income-tax Act, 1961, ss. 158B, 235-- C. Ramaiah Reddy v. Asst. CIT (IMV) (Karn) . . . 210

-->> Block assessment:- Limitation--Limitation starts on date of final conclusion of search--Prohibitory order does not extend limitation--Income-tax Act, 1961, s. 158BE-- C. Ramaiah Reddy v. Asst. CIT (IMV) (Karn) . . . 210

-->> :- Undisclosed income--Addition on basis of two statements recorded in two days--Assessee withdrawing second statement--Assessee explaining that second statement not correct in the context of materials produced--Addition based on second statement to be set aside--Income-tax Act, 1961--CBDT Circular dated 10-3-2003-- M. Narayanan and Bros. v. Asst. CIT (Mad) . . . 192

-->> Valuation of stock :- Law applicable--Effect of insertion of section 145A w.e.f. 1-4-1999 --Excise duty on unsold stock not to be taken into account--Income-tax Act, 1961, s. 145A-- CIT v. Loknete Balasaheb Desai S. S. K. Ltd. (Bom) . . . 288

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

-->> S. 10(34) :- Income--Computation--Disallowance of expenditure related to exempt income--Interest attributable to investment in shares--No evidence that loans not utilized for acquisition of shares--No new shares purchased in immediately preceding years--Not relevant--Disallowance of proportionate part of interest attributable to investment in shares dividends from which exempt--Justified-- Dhanuka and Sons v. CIT (Cal) . . . 319

-->> S. 10A :- Exemption--Export--Application to Reserve Bank of India for extension of time for realisation of export proceeds--No reply from Reserve Bank--Extension of time for realisation of export proceeds by Reserve Bank under Foreign Exchange Management Act--Deemed approval for purposes of section 10A(3)--Assessee entitled to exemption-- CIT v. Morgan Stanley Advantage Services P. Ltd . (Bom) . . . 291

-->> S. 10B :- Capital gains--Short-term capital gains--Exemption--Depreciable assets--Export--Computation of capital gains--Income from plant and machinery exempt under section 10B--Expiry of period of exemption--Sale of assets as a block to sister concern--Asset transferred and purchased carrying same rate of depreciation--Assessee entitled to benefit of section 50(2)-- S. Muthurajan v. Deputy CIT (Mad) . . . 301

-->> S. 14A :- Income--Computation--Disallowance of expenditure related to exempt income--Interest attributable to investment in shares--No evidence that loans not utilized for acquisition of shares--No new shares purchased in immediately preceding years--Not relevant--Disallowance of proportionate part of interest attributable to investment in shares dividends from which exempt--Justified-- Dhanuka and Sons v. CIT (Cal) . . . 319

-->> Interest on borrowed capital:- Expenditure in relation to income not forming part of total income--Borrowed funds utilised for acquisition of shares in company of which assessee acquired controlling interest--Acquisition of shares in form of investment and only benefit is dividend income--Assessee not entitled to deduction of interest-- CIT v. Smt. Leena Ramachandran (Ker) . . . 296

-->> S. 36(1)(iii) :- Interest on borrowed capital--Expenditure in relation to income not forming part of total income--Borrowed funds utilised for acquisition of shares in company of which assessee acquired controlling interest--Acquisition of shares in form of investment and only benefit is dividend income--Assessee not entitled to deduction of interest-- CIT v. Smt. Leena Ramachandran (Ker) . . . 296

-->> S. 44BB :- Reassessment--Reassessment after four years--Non-resident company assessed under section 44BB after considering material on record--Notice based on subsequent decision of High Court and Explanatory Notes to Finance Bill, 2010--Not valid-- B. J. Services Co. Middle East Ltd . v. Deputy Director of Income-tax, International Taxation (Uttarakhand) . . . 169

-->> S. 44D :- Reassessment--Reassessment after four years--Non-resident company assessed under section 44BB after considering material on record--Notice based on subsequent decision of High Court and Explanatory Notes to Finance Bill, 2010--Not valid-- B. J. Services Co. Middle East Ltd . v. Deputy Director of Income-tax, International Taxation (Uttarakhand) . . . 169

-->> S. 50(2) :- Capital gains--Short-term capital gains--Exemption--Depreciable assets--Export--Computation of capital gains--Income from plant and machinery exempt under section 10B--Expiry of period of exemption--Sale of assets as a block to sister concern--Asset transferred and purchased carrying same rate of depreciation--Assessee entitled to benefit of section 50(2)-- S. Muthurajan v. Deputy CIT (Mad) . . . 301

-->> S. 145A :- Valuation of stock--Law applicable--Effect of insertion of section 145A w.e.f. 1-4-1999--Excise duty on unsold stock not to be taken into account-- CIT v. Loknete Balasaheb Desai S. S. K. Ltd. (Bom) . . . 288

-->> S. 147 :- Reassessment--Notice--Receipt of advisory fees from charitable institutions subject of assessment--Notice on ground charitable institutions benami of assessee--Income-tax authorities finding charitable institutions were genuine--Notice not valid-- Dr. Bindeshwar Pathak v. CIT (Patna) . . . 272

-->> Reassessment:- Reassessment after four years--Non-resident company assessed under section 44BB after considering material on record--Notice based on subsequent decision of High Court and Explanatory Notes to Finance Bill, 2010--Not valid-- B. J. Services Co. Middle East Ltd . v. Deputy Director of Income-tax, International Taxation (Uttarakhand) . . . 169

-->> S. 147, proviso :- Reassessment--Notice after four years--Conditions precedent--Subsequent retrospective amendment--Proviso to section 147 not attracted-- CIT v. SIL Investments Ltd . (Delhi) . . . 166

-->> S. 148 :- Reassessment--Notice--Receipt of advisory fees from charitable institutions subject of assessment--Notice on ground charitable institutions benami of assessee--Income-tax authorities finding charitable institutions were genuine--Notice not valid-- Dr. Bindeshwar Pathak v. CIT (Patna) . . . 272

-->> :R eassessment--Reassessment after four years--Non-resident company assessed under section 44BB after considering material on record--Notice based on subsequent decision of High Court and Explanatory Notes to Finance Bill, 2010--Not valid-- B. J. Services Co. Middle East Ltd . v. Deputy Director of Income-tax, International Taxation (Uttarakhand) . . . 169

-->> S. 158B :- Search and seizure--Block assessment--Appeal--Competency of appeal--Appeal only against order of assessment--Validity of search can be challenged in appeal-- C. Ramaiah Reddy v. Asst. CIT (IMV) (Karn) . . . 210

-->> S. 158BE :- Search and seizure--Block assessment--Limitation--Limitation starts on date of final conclusion of search--Prohibitory order does not extend limitation-- C. Ramaiah Reddy v. Asst. CIT (IMV) (Karn) . . . 210

-->> S. 201(1), (1A) :- Deduction of tax at source--Non-resident purchasing shares of Indian company--Notice under section 201--Notice making it clear that non-resident could urge jurisdictional and other facts--Matter had not been pre-judged--Notice could not be quashed-- Richter Holding Ltd . v. Assistant Director of Income-tax (International Taxation) (Karn) . . . 199

-->> S. 235 :- Search and seizure--Block assessment--Appeal--Competency of appeal--Appeal only against order of assessment--Validity of search can be challenged in appeal-- C. Ramaiah Reddy v. Asst. CIT (IMV) (Karn) . . . 210

-->> S. 263 :- Appeal to Appellate Tribunal--Order under section 263 set aside--Proceedings thereafter infructuous--Tribunal has no jurisdiction to allow appeal from order of Commissioner-- Anil Kumar Rastogi v. ITO (All) . . . 279

-->> S. 264 :- Revision--Application for revision--Powers of Commissioner--Income offered for taxation by mistake--Commissioner cannot reject application on that ground--Income exempt under section 10(15)(iv)(fa) included in assessable income--On merits, assessee not ordinarily resident in India--Commissioner not justified in rejecting application for revision-- Chandrakant J. Patel v. V. N. Srivastava (Guj) . . . 310

Compilations of case law: STATUS OF ASSESSEE : TRUST: EXEMPTION

EXEMPTION

Registration of a Trust u/s 12A is a condition precedent to claim exemption u/s 11 & 12
U.P. Forest Corporation Vs DCIT (SC) 297 ITR 1

Charitable Trust carrying on educational activities – But not conducting any courses in formal education – Not affiliated to / registered by any authority – No exemption.
Saurashtra Education Foundation Vs CIT (Guj) 273 ITR 139
Bihar Institute of Mining & Mine Surveying Vs CIT (Pat) 208 ITR 608

Assessee conducting examinations for recruitment to various public sector banks – Income earned not exempt u/s 10(22)
Institute of Banking Personnel Selection Vs ADIT (ITAT, Mum) 67 ITD 160

Exemption u/s. 10(22) – Assessee granting scholarships to deserving Parsi students – Not entitled for exemption.
CIT Vs Sorabji Nusserwanji Parekh (Guj) 201 ITR 939

Assessee running hospital, income of which is exempt u/s 10(22) – Interest income from banks, UTI, gift shop income etc. not entitled to exemption.
National Health & Education Society Vs ADIT (Exemption) (ITAT, Mum) 70 ITD 330

Trust advanced money to a company in which trustees were Directors – Advance was for construction of hospital but amount not utilized during relevant accounting year – Amount not entitled to exemption.
CIT Vs V.G.P. Foundation (Mad) 262 ITR 187

Huge sums of money advanced to company having substantial interest in Trust – No interest charged nor adequate security taken – violation u/s 13(3) – Denial of exemption upheld
Kanahya Lal Punj Charitable Trust Vs DIT (Exem) (Del) 297 ITR 66

Property of trust let out at meager rent to a firm in which one of the trustees is partner – No exemption.
Ram Bhawan Dharamshala Vs State of Rajasthan (Raj) 258 ITR 725

Trust – Payments made to interested persons – No exemption.
CIT Vs Nagarathu Vaisiyargal Sangam (Mad) 246 ITR 164

Refrigerator purchased by Trust and placed in residence of managing trustee till trust buildings were ready – No exemption to Trust.
Agappa Child Centre Vs CIT (Ker) 226 ITR 211

Object to conduct stock exchange – No prohibition against declaration of dividends to share holders or dealing with its profits in any manner it liked – No exemption.
Delhi Stock Exchange Association Ltd. Vs CIT (SC) 225 ITR 235
Bihar State Forest Department Corporation Vs CIT (Pat) 224 ITR 757

Donation received from associated companies used for the benefit of children of Trustees – No exemption u/s 11
Concast (India) Educational Trust Vs ITO (ITAT, Bom) 57 ITD 599

A part of Trust income was being used directly or indirectly for benefits of its founder and Managing Director – No exemption u/s 11 or 10(22).
Skin Institute & Public Services Charitable Trust Vs ADIT (Exemption) (ITAT, Del) 65 ITD 125
Chandrika Educational Trust Vs CIT (Ker) 139 CTR 96

Charitable and non-charitable objects – Trustees can apply income to any of these objects – No exemption u/s 11.
Daulat Ram Public Trust Vs CIT (Del) 244 ITR 514

Manner in which trust property was to be utilized, not indicated in trust deed – Not entitled to exemption.
Assembly Rooms Vs CIT (Mad) 241 ITR 76

Proviso to Sec. 13 of IT Act and Sec. 21A of WT Act lays down that exemption will not be denied if part of the income is applied for benefit of a person referred to in Sec. 13(3), if such use or application is in compliance to mandatory terms of Trust which is created before 1.4.62 – Mandatory terms should have existed before 1.4.62 – Subsequent amendment of Trust deed imposing such a term – No exemption.
CIT Vs Rattan Trust (SC) 227 ITR 356

Certain amount set apart as provision was not actually applied for charitable purposes – Not entitled to exemption u/s. 11.
Nachimuthu Industrial Association Vs CIT (SC) 156 CTR 187

Trust must be for public benefit – Only those subscribing to fund continuously or their dependents eligible to benefit in this case – Benefit conferred is not public but private – Not entitled to exemption.
CIT Vs BEL Employees Death Relief Fund and Service Benefit Fund Association (Kar) 225 ITR 270.
CIT Vs ITI Employees Death and Superannuation Relief Fund) (Kar) 234 ITR 308

Interest on investments received by Trust would not be covered by principle of mutuality – not entitled to exemption.
CIT Vs ITI Employees Death and Superannuation Relief Fund (Kar) 234 ITR 308

Surplus earned by organizing exhibition, is business income – No separate books for this business, but can be deciphered from common books of the institution →not amount to 11(4A)
Indian Machine Tools Mfrs. Association Vs ADIT (Exemption) (ITAT, Mum) 70 ITD 304.

Rent received from exhibition hall hiring, meeting hall hiring, parking fee – Income from business.
Visveswaraya Ind. Res. Dev. Centre Vs DCIT (ITAT, Mum) 59 ITD 156

Since assessee could not prove that donors were able to give direction before / at time of donation to corpus funds nor assessee was maintaining separate accounts for this purpose, Assessing Officer was right in denying exemption.
Shri Digambar Jain Naya Mandir Vs ADIT (ITAT, Cal) 70 ITD 121

Donation sent to assessee Trust with specific directions to be spent on organizing 'kisan rally' - To be treated as income of assessee.
Khemraj Nemichand Shrishrimal Charitable Trust Vs CIT (MP) 231 ITR 43
Trust founded by members of family – Income earned by Trust from family concern in AY 80-81 but given to trust only in 1984 – Sums remained with firm – Not used for charitable purposes – No exemption.
CIT Vs Muthoottu Charitable Trust (Ker) 227 ITR 203

Chit business carried on by Trust was not in the course of actual carrying out the primary purpose of the trust – No exemption u/s 11.
Dasa Balinjika Seva Sangam Vs CIT (Mad) 240 ITR 863

Deemed income u/s 11(3) – not eligible for accumulation for further period
The Trustees, The B.N. Gamadia Parsi Hunnarshala Vs ADIT (Exemption) (ITAT, Mum) 77 TTJ 274

If the surplus is a regular feature and is a result of intentional charging of abnormal high fee not commensurate with the expenditure, exemption u/s 10(22) cannot be allowed
ACIT Vs Bal Bharti Nursery School (ITAT, All) 82 ITD 71
All India Personality Enhancement & Cultural Centre for Scholars, AIPECS Society Vs DCIT (ITAT, Del) 91 ITD 240

Objective of Trust is carrying on business of race club and scientific breeding of horses – Registration refused
Hyderabad race Club Vs CIT (AP) 153 ITR 521

When the assessee collects money over and above the fees prescribed by the Government, it amounts to selling the education and the element of charity no longer remain in the activities of the assessee – Not eligible for exemption
Vodithala Education Society Vs ADIT (Exem) 2008-TIOL-139-ITAT-HYD