ITR (TRIB) VOL 5 PART 8

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

Volume 5 : Part 8 (Issue dated : 18-10-2010)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Business expenditure --Deduction--Liability on account of foreign exchange fluctuaztion--To be allowed on accrual basis with reference to rate of foreign exchange at end of year--Income-tax Act, 1961, ss. 37, 43A-- HLS Asia Ltd . v. Deputy CIT (Delhi) . . . 774

Charitable purpose --Charitable trust--Registration--Commissioner to satisfy himself about object of trust and genuineness of activities of trust--Trust deed disclosing establishment of trust for purpose of setting up and running educational institution--Activity charitable in nature and genuineness of activity established--Conditions of registration fulfilled--Direction to Commissioner to grant registration--Income-tax Act, 1961, ss. 2(15), 12A, 12AA-- Shri Krishna Education and Welfare Trust v. CIT (Delhi) . . . 750

Depreciation --Plant and machinery--Higher rate allowed in previous years--Assessee entitled to higher depreciation present year also--Income-tax Act, 1961, s. 32-- HLS Asia Ltd. v. Deputy CIT (Delhi) . . . 774

----Transaction of purchase and lease of cylinders --Purchase and lease of cylinders confirmed by parties--No material produced by Assessing Officer to prove transaction not genuine--Assessee entitled to depreciation--Income-tax Act, 1961, s. 32-- Asst. CIT v. Banaras Beads Ltd. (Delhi) . . . 761

Export --Special deduction--Capital assets not constituting trading items of assessee--Not allowable--Income-tax Act, 1961, s. 80HHC-- HLS Asia Ltd. v. Deputy CIT (Delhi) . . . 774

----Special deduction--Receipt of convertible foreign exchange--Extension of time granted by competent authority--Receipt of export sales in convertible foreign exchange before completion of assessment--Export receipts to be included--Income-tax Act, 1961, ss. 80HHC(2), 155(13)-- Asst. CIT v. Banaras Beads Ltd. (Delhi) . . . 761

Income from house property --Deductions--Repairs and vacancy allowance--Commissioner directing Assessing Officer to verify if municipal tax paid and reduce it from annual value to allow deduction--Direction of Commissioner in consonance with legal provisions--Income-tax Act, 1961-- SICAL Logistics Ltd. v. Addl. CIT (Chennai) . . . 801

----Revision--Annual value--Determination of annual value--Property let out to group concern--Fixation of annual value of property by Corporation at higher rate--Commissioner directing Assessing Officer to examine issue considering sections 23 and 24 of Act--Proper--Income-tax Act, 1961, ss. 23, 24, 263-- SICAL Logistics Ltd. v. Addl. CIT (Chennai) . . . 801

Industrial undertaking --Special deduction--Assessee to be given deduction where allowed in previous years--Income-tax Act, 1961, s. 80-IB-- HLS Asia Ltd. v. Deputy CIT (Delhi) . . . 774

Penalty --Acceptance and repayment of loans or deposits in cash--Change of law--Amendment with effect from June 1, 2003 bringing repayment of loans within purview of provision--Repayment of loans in cash prior to amendment--No penalty imposable--Income-tax Act, 1961, ss. 269T, 271E-- ITO v. Sudesh Kumar Sareen (Delhi) . . . 829

Revision --Notice issued on ground profits low--Failure to show error in assessment order--Revision order set aside--Income-tax Act, 1961, s. 263-- SICAL Logistics Ltd. v. Addl. CIT (Chennai) . . . 801

Wealth-tax --Net wealth--Debt owed--Loans obtained for working capital against security of lands--Not debts incurred in relation to lands--Cannot be deducted while computing net wealth--Wealth-tax Act, 1957, s. 2(m)-- Phoenix International Ltd. v. Deputy CWT (Delhi) . . . 787

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 2(15) --Charitable purpose--Charitable trust--Registration--Commissioner to satisfy himself about object of trust and genuineness of activities of trust--Trust deed disclosing establishment of trust for purpose of setting up and running educational institution--Activity charitable in nature and genuineness of activity established--Conditions of registration fulfilled--Direction to Commissioner to grant registration-- Shri Krishna Education and Welfare Trust v. CIT (Delhi) . . . 750

S. 12A --Charitable purpose--Charitable trust--Registration--Commissioner to satisfy himself about object of trust and genuineness of activities of trust--Trust deed disclosing establishment of trust for purpose of setting up and running educational institution--Activity charitable in nature and genuineness of activity established--Conditions of registration fulfilled--Direction to Commissioner to grant registration-- Shri Krishna Education and Welfare Trust v. CIT (Delhi) . . . 750

S. 12AA --Charitable purpose--Charitable trust--Registration--Commissioner to satisfy himself about object of trust and genuineness of activities of trust--Trust deed disclosing establishment of trust for purpose of setting up and running educational institution--Activity charitable in nature and genuineness of activity established--Conditions of registration fulfilled--Direction to Commissioner to grant registration-- Shri Krishna Education and Welfare Trust v. CIT (Delhi) . . . 750

S. 23 --Income from house property--Revision--Annual value--Determination of annual value--Property let out to group concern--Fixation of annual value of property by Corporation at higher rate--Commissioner directing Assessing Officer to examine issue considering sections 23 and 24 of Act--Proper-- SICAL Logistics Ltd. v. Addl. CIT (Chennai) . . . 801

 

S. 24 --Income from house property--Revision--Annual value--Determination of annual value--Property let out to group concern--Fixation of annual value of property by Corporation at higher rate--Commissioner directing Assessing Officer to examine issue considering sections 23 and 24 of Act--Proper-- SICAL Logistics Ltd. v. Addl. CIT (Chennai) . . . 801

 

S. 32 --Depreciation--Plant and machinery--Higher rate allowed in previous years--Assessee entitled to higher depreciation present year also-- HLS Asia Ltd. v. Deputy CIT (Delhi) . . . 774

 

----Depreciation--Transaction of purchase and lease of cylinders--Purchase and lease of cylinders confirmed by parties--No material produced by Assessing Officer to prove transaction not genuine--Assessee entitled to depreciation-- Asst. CIT v. Banaras Beads Ltd. (Delhi) . . . 761

 

S. 37 --Business expenditure--Deduction--Liability on account of foreign exchange fluctuaztion--To be allowed on accrual basis with reference to rate of foreign exchange at end of year-- HLS Asia Ltd . v. Deputy CIT (Delhi) . . . 774

 

S. 43A --Business expenditure--Deduction--Liability on account of foreign exchange fluctuaztion--To be allowed on accrual basis with reference to rate of foreign exchange at end of year-- HLS Asia Ltd . v. Deputy CIT (Delhi) . . . 774

 

S. 80HHC --Export--Special deduction--Capital assets not constituting trading items of assessee--Not allowable-- HLS Asia Ltd. v. Deputy CIT (Delhi) . . . 774

 

S. 80HHC(2) --Export--Special deduction--Receipt of convertible foreign exchange --Extension of time granted by competent authority--Receipt of export sales in convertible foreign exchange before completion of assessment--Export receipts to be included-- Asst. CIT v. Banaras Beads Ltd. (Delhi) . . . 761

 

S. 80-IB --Industrial undertaking--Special deduction--Assessee to be given deduction where allowed in previous years-- HLS Asia Ltd. v. Deputy CIT (Delhi) . . . 774

 

S. 155(13) --Export--Special deduction--Receipt of convertible foreign exchange--Extension of time granted by competent authority--Receipt of export sales in convertible foreign exchange before completion of assessment--Export receipts to be included-- Asst. CIT v. Banaras Beads Ltd. (Delhi) . . . 761

 

S. 263 --Income from house property--Revision--Annual value--Determination of annual value--Property let out to group concern--Fixation of annual value of property by Corporation at higher rate--Commissioner directing Assessing Officer to examine issue considering sections 23 and 24 of Act--Proper-- SICAL Logistics Ltd. v. Addl. CIT (Chennai) . . . 801

 

----Revision--Notice issued on ground profits low--Failure to show error in assessment order--Revision order set aside-- SICAL Logistics Ltd. v. Addl. CIT (Chennai) . . . 801

 

S. 269T --Penalty--Acceptance and repayment of loans or deposits in cash--Change of law--Amendment with effect from June 1, 2003 bringing repayment of loans within purview of provision--Repayment of loans in cash prior to amendment--No penalty imposable-- ITO v. Sudesh Kumar Sareen (Delhi) . . . 829

 

S. 271E --Penalty--Acceptance and repayment of loans or deposits in cash--Change of law--Amendment with effect from June 1, 2003 bringing repayment of loans within purview of provision--Repayment of loans in cash prior to amendment--No penalty imposable-- ITO v. Sudesh Kumar Sareen (Delhi) . . . 829

 

Wealth-tax Act, 1957 :

 

S. 2(m) --Wealth-tax--Net wealth--Debt owed--Loans obtained for working capital against security of lands--Not debts incurred in relation to lands--Cannot be deducted while computing net wealth-- Phoenix International Ltd. v. Deputy CWT (Delhi) . . . 787

 

 

ITAT DEL : Member who has taken a view should not be party to a Special Bench

October 10th, 2010
CLC & Sons  vs. ACIT
(ITAT Delhi Special Bench)

In the interest of judicial discipline, a Member who has taken a view should not be party to a Special Bench

A 3 Member Special Bench was constituted to decide whether the assessee was entitled to claim depreciation u/s 32 on intangible assets termed 'Goodwill'. At the hearing, the assessee raised a preliminary objection that as the Judicial Member on the Special Bench has already taken a view about allowability of depreciation on goodwill in the case of Bharatbhai J. Vyas vs. ITO 97 ITD 248 (Ahd.) judicial discipline requires that this Special Bench should consist of persons who have not already taken a view.

Pursuant to this, the Judicial Member expressed the opinion that having already taken a view on the issue of llowability of depreciation on goodwill, it will be in the interest of judicial discipline to recuse himself from the hearing of the appeal before the Special Bench

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SC: Law Of Natural Justice Has Limits

Kanwar Natwar Singh vs. Directorate of Enforcement (Supreme Court)

 

Non-furnishing of "all documents" does not violate principles of natural justice

 

Natwar Singh & Jagat Singh ("Natwar Singh") were alleged to have dealt in and acquired Foreign Exchange totaling US $ 8,98,027 in respect of some Iraq oil contracts in contravention of FEMA. A notice was issued asking Natwar Singh to show-cause why an inquiry should not be held against them. In response, Natwar Singh demanded that the Adjudicating Authority furnish "copies of all documents in … possession in respect of the instant case, including the 83000 documents allegedly procured by one Virender Dayal". The Adjudicating Authority furnished copies of the documents as were relied upon by it but declined to furnish copies of other documents and decided to hold an inquiry in accordance with FEMA. This non-furnishing of "all documents" was challenged by Natwar Singh in the Delhi High Court which dismissed the challenge. Natwar Singh challenged the decision of the High Court in the Supreme Court. HELD, dismissing the appeal:

 

(i) The extent of applicability of principles of natural justice depends upon the nature of inquiry, the consequences that may visit a person after such inquiry from out of the decision pursuant to such inquiry. The right to fair hearing is a guaranteed right. Every person before an Authority exercising the adjudicatory powers has a right to know the evidence to be used against him. Dhakeswari Cotton Mills Ltd. vs. CIT 26 ITR 775 (SC) followed;

 

(ii) However, the principles of natural justice do not require supply of documents upon which no reliance has been placed by the Authority to set the law into motion. Supply of relied on documents based on which the law has been set into motion would meet the requirements of principles of natural justice;

 

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ITAT (MUM): Banks are not liable to pay S. 115JB MAT on “book profits”

Krung Thai Bank PCL vs. JDIT (ITAT Mumbai)

Banks are not liable to pay S. 115JB MAT on "book profits"

The assessee, a foreign bank operating in India through a branch office, filed a return offering Nil income as per the normal provisions of the Act. Though the assessee had a net profit of Rs. 78.32 lakhs in the P&L A/c it did not compute "book profits" u/s 115JB. The AO accepted the return u/s 143(3) though he subsequently made a reassessment u/s 147 in which he assessed the "book profits" u/s 115JB. The assessee challenged the reopening on the ground that s. 115JB did not apply to banking companies. HELD upholding the challenge:

(i) S. 115 JB can only come into play when the assessee is required to prepare its profit and loss account in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act. The starting point of computation of minimum alternate tax u/s 115 JB is the result shown by such a profit and loss account. In the case of banking companies, however, the provisions of Schedule VI are not applicable in view of exemption set out under proviso to S. 211 (2) of the Companies Act. The final accounts of banking companies are required to be prepared in accordance with the provisions of the Banking Regulation Act. Consequently, s. 115 JB cannot be applied to a banking company;

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ITR(Tribunal) Vol 5 Part 7

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

Volume 5 : Part 7 (Issue dated : 11-10-2010)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Appeal to Commissioner (Appeals) --Maintainability--Interest--Denial of liability to pay interest by assessee--Issue appealable--Income-tax Act, 1961, s. 220(2)-- Asst. CIT v. Hemendra M. Kothari (Mumbai) . . . 646

Assessment --Appeal to Appellate Tribunal--Order passed by Assessing Officer consequent to order of Tribunal--Tribunal holding that particular amount arising on transfer of shares not assessable in assessment year 1997-98 but in subsequent year--Tribunal not considering whether amount business income or capital gains--Assessing Officer cannot assess income in subsequent year as business income--Income-tax Act, 1961-- Asst. CIT v. Hemendra M. Kothari (Mumbai) . . . 646

Capital or revenue expenditure --Payment made for obtaining vacant and peaceful possession of premises under sub-lease--Landlord, tenants and sub-tenants and assessee-firm consisting of persons related inter se--No dispute existing--Question of payment for obtaining possession does not arise--Expenditure for renovation of leased premises--Not allowable--Income-tax Act, 1961, s. 32, Expln. 1 -- ITO v. Pritam Juice (Mumbai) . . . 664

Income --Accrual of income--Retention money--Bank guarantee in respect of due performance of contract and deficiencies in goods and equipment--Income from sale accruing to assessee at time of delivery of product and income from installation and commission at time of rendering services--Amount received in respect of delivered goods not installed to be treated as advance--Retention money cannot be excluded from total income--Income-tax Act, 1961-- Emerson Network Power India P. Ltd. v. Asst. CIT (Mumbai) . . . 727

Income from other sources --Interest--Loan obtained for setting up factory--Part of loan and capital contribution deposited in fixed deposit account--Not a condition precedent for disbursement of loan--Interest earned on fixed deposit assessable as income from other sources--Income-tax Act, 1961, s. 56-- Positive Packaging Industries Ltd. v. ITO (Mumbai) . . . 656

Industrial undertaking --Special deduction under section 80-I--Income derived from industrial undertaking alone to be considered as source of income for purpose of section 80-I(6)--Unabsorbed losses, depreciation and investment allowance set off against income of assessee from interest, capital gain and dividend in assessment years 1988-89 to 1991-92--To be reduced in accordance with section 80-I(6) from current year's profit for computation of deduction under section 80-I--Income-tax Act, 1961, s. 80-I-- Gujarat Ambuja Cements Ltd. v. Deputy CIT (Mumbai) . . . 689

----Special deduction--Industrial undertaking not carrying out trading activities--Deduction not allowable on profits and gains derived from any activity incidental to manufacturing activity--Assessee not entitled to deduction on profits of trading activities--Income-tax Act, 1961, s. 80-IA-- Emerson Network Power India P. Ltd. v. Asst. CIT (Mumbai) . . . 727

Search and seizure --Block assessment--Income disclosed prior to search cannot be assessed under sections 158BC and 158BD--Income-tax Act, 1961, ss. 158BC, 158BD-- Deputy CIT v. Suresh Chand Bafna (Chennai) . . . 675

Words and phrases --"Profits and gains derived from industrial undertaking or business of hotel" and "any business of"-- Emerson Network Power India P. Ltd. v. Asst. CIT (Mumbai) . . . 727

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 32, Expln. 1 --Capital or revenue expenditure--Payment made for obtaining vacant and peaceful possession of premises under sub-lease--Landlord, tenants and sub-tenants and assessee-firm consisting of persons related inter se--No dispute existing --Question of payment for obtaining possession does not arise--Expenditure for renovation of leased premises--Not allowable-- ITO v. Pritam Juice (Mumbai) . . . 664

S. 56 --Income from other sources--Interest--Loan obtained for setting up factory--Part of loan and capital contribution deposited in fixed deposit account--Not a condition precedent for disbursement of loan--Interest earned on fixed deposit assessable as income from other sources-- Positive Packaging Industries Ltd. v. ITO (Mumbai) . . . 656

S. 80-I --Industrial undertaking--Special deduction under section 80-I--Income derived from industrial undertaking alone to be considered as source of income for purpose of section 80-I(6)--Unabsorbed losses, depreciation and investment allowance set off against income of assessee from interest, capital gain and dividend in assessment years 1988-89 to 1991-92--To be reduced in accordance with section 80-I(6) from current year's profit for computation of deduction under section 80-I-- Gujarat Ambuja Cements Ltd. v. Deputy CIT (Mumbai) . . . 689

S. 80-IA --Industrial undertaking--Special deduction--Industrial undertaking not carrying out trading activities--Deduction not allowable on profits and gains derived from any activity incidental to manufacturing activity--Assessee not entitled to deduction on profits of trading activities-- Emerson Network Power India P. Ltd. v. Asst. CIT (Mumbai) . . . 727

S. 158BC --Search and seizure--Block assessment--Income disclosed prior to search cannot be assessed under sections 158BC and 158BD-- Deputy CIT v. Suresh Chand Bafna (Chennai) . . . 675

S. 158BD --Search and seizure--Block assessment--Income disclosed prior to search cannot be assessed under sections 158BC and 158BD-- Deputy CIT v. Suresh Chand Bafna (Chennai) . . . 675

S. 220(2) --Appeal to Commissioner (Appeals)--Maintainability--Interest--Denial of liability to pay interest by assessee--Issue appealable-- Asst. CIT v. Hemendra M. Kothari (Mumbai) . . . 646

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ITR VOL 327 PART 4

INCOME TAX REPORTS (ITR)
Volume 327 : Part 4 (Issue dated 11-10-2010)
SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Appeal to Commissioner (Appeals) --Power to admit additional evidence--Duty to allow Assessing Officer opportunity to examine additional evidence--Tribunal holding violation of rule for failure to allow Assessing Officer to cross-examine witnesses, but directing consideration of evidence dispensing with cross-examination--Not proper--Assessee to produce witnesses--Income-tax Rules, 1962, r. 46A-- CIT v. Subbu Shashank (Mad) . . . 577

Appeal to High Court --Competency of appeal--Monetary limit laid down in CBDT Circular--Binding on Revenue--Tax effect less than monetary limit--Appeal not maintainable--Income-tax Act, 1961, s. 260A--Circular 5 of 2008-- CIT v. Abhinash Gupta (P&H) . . . 619

Business expenditure --Disallowance--Salary and perquisites--Disallowance governed by first proviso to section 40A(5)(a) not section 40A(5)(c)--Income-tax Act, 1961, s. 40A(5)(a), (c)-- CIT v. Modi Industries Limited (Delhi) . . . 570

Cash credits --Share application money--Substantial evidence produced by assessee to prove creditworthiness of creditor and genuineness of share application--Failure to produce creditor not material--Deletion of addition--No interference--Income-tax Act, 1961, s. 68-- CIT v. Orbital Communication (P) Ltd. (Delhi) . . . 560

Commissioner --Revision--Non-consideration of appraisal report by Assessing Officer--Appraisal report essential for making assessment--Revision by Commissioner justified--Income-tax Act, 1961, s. 263-- CIT v. Daga Entrade P. Ltd. (Gauhati) . . . 467

Deduction of tax at source --Double taxation relief--Verification of certificates of tax deducted at source in two different countries--Letter informing assessee verification not practicable--Writ petition not maintainable--Income-tax Act, 1961, ss. 4, 5, 201(1A)--Constitution of India, art. 226-- V. Ganesh v. Asst. CIT (Mad) . . . 564

Depreciation --Initial depreciation--"Building", meaning of--New residential quarters--Initial depreciation allowable--Income-tax Act, 1961, s. 32(1)(iv)-- CIT v. Modi Industries Limited (Delhi) . . . 570

Income --Accrual of income--Sugar manufacturer realizing price in excess of that fixed by Government on condition excess would be refunded if its challenge failed--Excess amount a contingent receipt--Not taxable-- CIT v. Modi Industries Limited (Delhi) . . . 570

----Mutual association--Essence of mutuality--Complete identity between contributors and participators--Firm engaged in property development, commission agency and allied activities--Not a mutual association--Income of firm assessable--Income-tax Act, 1961-- Prabhashankar Plaza v. ITO (Karn) . . . 582

Income from undisclosed sources --Payment made to another assessee--Addition--Assessee failing to produce books of account--Finding that payment made out of undisclosed sources and addition proper--Findings of fact--Income-tax Act, 1961, s. 69-- Manak Chand Agarwal v. CIT (P&H) . . . 486

Income-tax survey --Statement made at time of survey not conclusive--Undisclosed money--Retraction of statement at time of assessment found bona fide by Commissioner (Appeals)--Explanation for failure to write up books for two and a half years accepted by Commissioner (Appeals) and additions deleted--Tribunal affirming on ground no defect found in books and material available with assessee for writing up books primary evidence--Findings of fact--Income-tax Act, 1961, ss. 69, 69A, 133A-- ITO v. Vijay Kumar Kesar (Chhattisgarh) . . . 497

Industrial undertaking --Special deduction under section 80-IA--Condition precedent--Profit must be "derived" from industrial undertaking--Meaning of "derived"--Freight subsidy received from Government--Not derived from industrial undertaking--Not entitled to be taken into account for computing special deduction under section 80-IA--Income-tax Act, 1961, s. 80-IA-- CIT v. Kiran Enterprises (HP) . . . 520

----Special deduction--Benefit allowed in three preceding years--Assessee entitled to deduction for following year--Income-tax Act, 1961, s. 80J-- CIT v. Modi Industries Limited (Delhi) . . . 570

Interest-tax --Charge of tax--Financial company--Definition--Leasing business--Difference between financial lease and operational lease--Company carrying on financial lease would be chargeable to tax--Matter remanded--Interest-tax Act, 1974, s. 2(5B)-- CIT v. Motor and General Finance Ltd. (Delhi) . . . 530

Offences and prosecution --Wilful attempt to evade tax--Prosecution can continue even where penalty set aside by Tribunal--Where trial has commenced court will not quash prosecution--Prosecution not to be postponed till decision in compounding proceedings--Income-tax Act, 1961, ss. 273A(4), 276C, 277, 278--Indian Penal Code, 1860, ss. 120B, 193, 196, 420, 511-- N. Athimoolam v. ITO (Mad) . . . 603

Penalty --Concealment of income--Appellate Tribunal--Power to remand--Adequate material not available before Assessing Officer for conclusive determination of issue--Tribunal remanding matter for fresh disposal--Cannot be interfered with--Income-tax Act, 1961, s. 271(1)(c)-- Kamakhya Photo Lab P. Ltd. v. CIT (Gauhati) . . . 565

----Concealment of income--Claim for deduction not bona fide--Amounts to concealment of income--Accounts showing deduction of income-tax and equipment written off--Not allowable deductions--Assessee a company with professional assistance in computing income--Assessee had concealed its income--Liable to pay penalty--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Zoom Communication P. Ltd. (Delhi) . . . 510

----Concealment of income--Companies--Book profits--Total income computed under regular provisions less than book profits--Assessment made under section 115JB--Penalty cannot be levied--Income-tax Act, 1961, ss. 115JB, 271(1)(c)-- CIT v. Nalwa Sons Investments Ltd . (Delhi) . . . 543

----Concealment of income--Value of property assessed as unexplained investment--Rejection of explanation regarding source of funds for acquisition of property--No proof of concealment of income--Penalty could not be levied--Income-tax Act, 1961, s. 271(1)(c)-- S. V. Kalyanam v. ITO (Mad) . . . 477

Search and seizure --Block assessment--Return--Delay in filing--Interest--Before expiry of time limit assessee seeking copies of documents seized for purpose of filing return--Department delaying supply of copies by over a year--Assessee filing return within forty-five days thereafter--Not to be exonerated from liability to interest--Time taken by Department to supply documents to be excluded from total period reckoned from date of notice--Interest chargeable for delay exceeding forty five days--Income-tax Act, 1961, s. 158BFA(1)-- CIT v. Mesco Airlines Ltd. (Delhi) . . . 554

Total income --Inclusions--Transfer of assets--Transfer of asset to trust for benefit of daughter-in-law and grandchildren of assessee--No direct or indirect transfer to son's wife or grandchildren--Trust an independent legal entity and trustee legal owner of trust property--Income from trust not includible in income of assessee--Income-tax Act, 1961, s. 64(1)(vi)-- CIT v. Smt. Pushpawati (Delhi) . . . 490

Unexplained investment --Scope of section 69--Section 69 confers discretion on income-tax authorities--Assessee applying for tax clearance certificate--Explanation that property owned jointly with spouse and that his spouse and son contributed to purchase--Tribunal not right in not considering explanation--Value of property not assessable as unexplained investment--Income-tax Act, 1961, ss. 69, 230A-- S. V. Kalyanam v. ITO (Mad) . . . 477

Wealth-tax --Reassessment--Grounds for reassessment--Report of Valuation Officer--Report called for after completion of assessment--Not a ground for reassessment--Report called for during pendency of assessment but received after completion of assessment--Valid ground for reassessment--Wealth-tax Act, 1957, ss. 16, 16A, 17-- CWT v. Sona Properties P. Ltd. (Bom) . . . 592

Words and phrases --Meaning of "derived"-- CIT v. Kiran Enterprises (HP) . . . 520

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Constitution of India :

Art. 226 --Deduction of tax at source--Double taxation relief--Verification of certificates of tax deducted at source in two different countries--Letter informing assessee verification not practicable--Writ petition not maintainable-- V. Ganesh v. Asst. CIT (Mad) . . . 564

Income-tax Act, 1961 :

S. 4 --Deduction of tax at source--Double taxation relief--Verification of certificates of tax deducted at source in two different countries--Letter informing assessee verification not practicable--Writ petition not maintainable-- V. Ganesh v. Asst. CIT (Mad) . . . 564

S. 5 --Deduction of tax at source--Double taxation relief--Verification of certificates of tax deducted at source in two different countries--Letter informing assessee verification not practicable--Writ petition not maintainable-- V. Ganesh v. Asst. CIT (Mad) . . . 564

S. 32(1)(iv) --Depreciation--Initial depreciation--"Building", meaning of--New residential quarters--Initial depreciation allowable-- CIT v. Modi Industries Limited (Delhi) . . . 570

S. 40A(5)(a), (c) --Business expenditure--Disallowance--Salary and perquisites--Disallowance governed by first proviso to section 40A(5)(a) not section 40A(5)(c)-- CIT v. Modi Industries Limited (Delhi) . . . 570

S. 64(1)(vi) --Total income--Inclusions--Transfer of assets--Transfer of asset to trust for benefit of daughter-in-law and grandchildren of assessee--No direct or indirect transfer to son's wife or grandchildren--Trust an independent legal entity and trustee legal owner of trust property--Income from trust not includible in income of assessee-- CIT v. Smt. Pushpawati (Delhi) . . . 490

S. 68 --Cash credits--Share application money--Substantial evidence produced by assessee to prove creditworthiness of creditor and genuineness of share application--Failure to produce creditor not material--Deletion of addition--No interference-- CIT v. Orbital Communication (P) Ltd. (Delhi) . . . 560

S. 69 --Income from undisclosed sources--Payment made to another assessee--Addition--Assessee failing to produce books of account--Finding that payment made out of undisclosed sources and addition proper--Findings of fact-- Manak Chand Agarwal v. CIT (P&H) . . . 486

----Income-tax survey--Statement made at time of survey not conclusive--Undisclosed money--Retraction of statement at time of assessment found bona fide by Commissioner (Appeals)--Explanation for failure to write up books for two and a half years accepted by Commissioner (Appeals) and additions deleted--Tribunal affirming on ground no defect found in books and material available with assessee for writing up books primary evidence--Findings of fact-- ITO v. Vijay Kumar Kesar (Chhattisgarh) . . . 497

----Unexplained investment--Scope of section 69--Section 69 confers discretion on income-tax authorities--Assessee applying for tax clearance certificate--Explanation that property owned jointly with spouse and that his spouse and son contributed to purchase--Tribunal not right in not considering explanation--Value of property not assessable as unexplained investment-- S. V. Kalyanam v. ITO (Mad) . . . 477

S. 69A --Income-tax survey--Statement made at time of survey not conclusive--Undisclosed money--Retraction of statement at time of assessment found bona fide by Commissioner (Appeals)--Explanation for failure to write up books for two and a half years accepted by Commissioner (Appeals) and additions deleted--Tribunal affirming on ground no defect found in books and material available with assessee for writing up books primary evidence--Findings of fact-- ITO v. Vijay Kumar Kesar (Chhattisgarh) . . . 497

S. 80-IA --Industrial undertaking--Special deduction under section 80-IA --Condition precedent--Profit must be "derived" from industrial undertaking--Meaning of "derived"--Freight subsidy received from Government--Not derived from industrial undertaking--Not entitled to be taken into account for computing special deduction under section 80-IA-- CIT v. Kiran Enterprises (HP) . . . 520

S. 80J --Industrial undertaking--Special deduction--Benefit allowed in three preceding years--Assessee entitled to deduction for following year-- CIT v. Modi Industries Limited (Delhi) . . . 570

S. 115JB --Penalty--Concealment of income--Companies--Book profits--Total income computed under regular provisions less than book profits--Assessment made under section 115JB--Penalty cannot be levied-- CIT v. Nalwa Sons Investments Ltd .(Delhi) . . . 543

S. 133A --Income-tax survey--Statement made at time of survey not conclusive--Undisclosed money--Retraction of statement at time of assessment found bona fide by Commissioner (Appeals)--Explanation for failure to write up books for two and a half years accepted by Commissioner (Appeals) and additions deleted--Tribunal affirming on ground no defect found in books and material available with assessee for writing up books primary evidence--Findings of fact-- ITO v. Vijay Kumar Kesar (Chhattisgarh) . . . 497

S. 158BFA(1) --Search and seizure--Block assessment--Return--Delay in filing--Interest--Before expiry of time limit assessee seeking copies of documents seized for purpose of filing return--Department delaying supply of copies by over a year--Assessee filing return within forty-five days thereafter--Not to be exonerated from liability to interest--Time taken by Department to supply documents to be excluded from total period reckoned from date of notice--Interest chargeable for delay exceeding forty five days-- CIT v. Mesco Airlines Ltd. (Delhi) . . . 554

S. 201(1A) --Deduction of tax at source--Double taxation relief--Verification of certificates of tax deducted at source in two different countries--Letter informing assessee verification not practicable--Writ petition not maintainable-- V. Ganesh v. Asst. CIT (Mad) . . . 564

S. 230A --Unexplained investment--Scope of section 69--Section 69 confers discretion on income-tax authorities--Assessee applying for tax clearance certificate--Explanation that property owned jointly with spouse and that his spouse and son contributed to purchase--Tribunal not right in not considering explanation--Value of property not assessable as unexplained investment-- S. V. Kalyanam v. ITO (Mad) . . . 477

S. 260A --Appeal to High Court--Competency of appeal--Monetary limit laid down in CBDT Circular--Binding on Revenue--Tax effect less than monetary limit--Appeal not maintainable--Circular 5 of 2008-- CIT v. Abhinash Gupta (P&H) . . . 619

S. 263 --Commissioner--Revision--Non-consideration of appraisal report by Assessing Officer--Appraisal report essential for making assessment--Revision by Commissioner justified-- CIT v. Daga Entrade P. Ltd. (Gauhati) . . . 467

S. 271(1)(c) --Penalty--Concealment of income--Appellate Tribunal--Power to remand--Adequate material not available before Assessing Officer for conclusive determination of issue--Tribunal remanding matter for fresh disposal--Cannot be interfered with-- Kamakhya Photo Lab P. Ltd. v. CIT (Gauhati) . . . 565

----Penalty--Concealment of income--Claim for deduction not bona fide--Amounts to concealment of income--Accounts showing deduction of income-tax and equipment written off--Not allowable deductions--Assessee a company with professional assistance in computing income--Assessee had concealed its income--Liable to pay penalty-- CIT v. Zoom Communication P. Ltd. (Delhi) . . . 510

----Penalty--Concealment of income--Companies--Book profits--Total income computed under regular provisions less than book profits--Assessment made under section 115JB--Penalty cannot be levied-- CIT v. Nalwa Sons Investments Ltd . (Delhi) . . . 543

----Penalty--Concealment of income--Value of property assessed as unexplained investment--Rejection of explanation regarding source of funds for acquisition of property--No proof of concealment of income--Penalty could not be levied-- S. V. Kalyanam v. ITO (Mad) . . . 477

S. 273A(4) --Offences and prosecution--Wilful attempt to evade tax--Prosecution can continue even where penalty set aside by Tribunal--Where trial has commenced court will not quash prosecution--Prosecution not to be postponed till decision in compounding proceedings-- N. Athimoolam v. ITO (Mad) . . . 603

S. 276C --Offences and prosecution--Wilful attempt to evade tax--Prosecution can continue even where penalty set aside by Tribunal--Where trial has commenced court will not quash prosecution--Prosecution not to be postponed till decision in compounding proceedings-- N. Athimoolam v. ITO (Mad) . . . 603

S. 277 --Offences and prosecution--Wilful attempt to evade tax--Prosecution can continue even where penalty set aside by Tribunal--Where trial has commenced court will not quash prosecution--Prosecution not to be postponed till decision in compounding proceedings-- N. Athimoolam v. ITO (Mad) . . . 603

S. 278 --Offences and prosecution--Wilful attempt to evade tax--Prosecution can continue even where penalty set aside by Tribunal--Where trial has commenced court will not quash prosecution--Prosecution not to be postponed till decision in compounding proceedings-- N. Athimoolam v. ITO (Mad) . . . 603

Indian Penal Code, 1860 :

Ss. 120B, 193, 196, 420, 511 --Offences and prosecution--Wilful attempt to evade tax--Prosecution can continue even where penalty set aside by Tribunal--Where trial has commenced court will not quash prosecution--Prosecution not to be postponed till decision in compounding proceedings-- N. Athimoolam v. ITO (Mad) . . . 603

Interest-tax Act, 1974 :

S. 2(5B) --Interest-tax--Charge of tax--Financial company--Definition--Leasing business--Difference between financial lease and operational lease--Company carrying on financial lease would be chargeable to tax--Matter remanded-- CIT v. Motor and General Finance Ltd. (Delhi) . . . 530

Wealth-tax Act, 1957 :

Ss. 16, 16A, 17 --Wealth-tax--Reassessment--Grounds for reassessment--Report of Valuation Officer--Report called for after completion of assessment--Not a ground for reassessment--Report called for during pendency of assessment but received after completion of assessment--Valid ground for reassessment-- CWT v. Sona Properties P. Ltd. (Bom) . . . 592

Income-tax Rules, 1962 :

R. 46A --Appeal to Commissioner (Appeals)--Power to admit additional evidence--Duty to allow Assessing Officer opportunity to examine additional evidence--Tribunal holding violation of rule for failure to allow Assessing Officer to cross-examine witnesses, but directing consideration of evidence dispensing with cross-examination--Not proper--Assessee to produce witnesses-- CIT v. Subbu Shashank (Mad) . . . 577

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HC (DEL) : Confession made during survey is not conclusive & can be retracted

Friends , when ever there is survey and you are recording the statement, please keep in a mind about the following judgment..
Take concrete evidence to support the statement.


CIT vs. Dhingra Metal Works (Delhi High Court)

A survey u/s 133A was conducted in the premises of the assessee during which certain discrepancies were found in stock & cash-in-hand. The assessee surrendered an amount of Rs. 99 lakhs and offered the same to tax. The offer included a sum of Rs. 45 lakhs on account of excess stock found during the survey. Subsequently, the assessee retracted the offer of Rs. 45 lakhs in respect of the stock on the ground that the discrepancy noticed during the survey had been reconciled. The AO rejected the retraction on the ground that it was an after-thought though the CIT (A) and Tribunal upheld the assessee's claim on the basis that the AO had not made any independent investigation and had made the addition on the addition solely on the basis of the survey statement. On appeal by the department, HELD dismissing the appeal:

(i) S. 133A does not mandate that any statement recorded under that section would have evidentiary value. It merely enables the authority to record the statement of any person which may be useful for, or relevant to, any proceeding under the Act. For a statement to have evidentiary value, the survey officer should have been authorised to administer oath and to record sworn statement as under s.132 (4). While s. 132(4) specifically authorizes an officer to examine a person on oath, s. 133A does not permit the same. Paul Mathews 263 ITR 101 (Ker) & Kader Khan 300 ITR 157 (Mad) followed;

 

(ii) In any event though an admission is extremely important piece of evidence, it is not conclusive and it is open to the person who has made the admission to show that it is incorrect.

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S. 80HHC vs. 115JB Ajanta Pharma Reversed By Supreme Court

Dear Subscriber,

S. 80HHC vs. 115JB Ajanta Pharma Reversed By Supreme Court

In CIT vs. Ajanta Pharma 318 ITR 252 the Bombay High Court held (reversing the Special Bench judgement in DCIT vs. Syncome Formulations 292 ITR (AT) 144)) that the "sunset clause" of s. 80HHC (1B) applies to s. 115JB as well.

 

This judgement has been reversed by the Supreme Court today (9.9.2010). It has been held that MAT companies are not subject to the limitations of s. 80HHC (1B).

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ITR (Tribunal) ISSUE DATED 4-10-2010 Volume 5 : Part 6

ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS

REPORTS

> Business expenditure : Where purchase of raw material from far-off places from the premises of assessee, identity of payee and genuineness of transaction established disallowance u/s. 40A(3) not justified : Habib Agro Industries v. Addl. CIT (Bangalore) p. 531

> Unabsorbed depreciation cannot be set off against salary income : Chandrakumar v. Asst. CIT (Chennai) p. 540

> Department not entitled to raise additional grounds contrary to finding of AO : ITO v. M.M. Textiles (Mumbai) p. 547

> Rental income derived by assessee from sub-letting premises is "income from other sources" : ITO v. M. M. Textiles (Mumbai) p. 547

> AO co-relating funds contributed by partners with rate of interest on which money lent by assessee for disallowance u/s. 40A(2), not proper : ITO v. M.M. Textiles (Mumbai) p. 547

> Export : Entire direct and indirect costs deductible from sale proceeds realised in convertible foreign exchange u/s. 80HHC(3)(b) : Mectech International v. Asst. CIT (Delhi) p. 564

> Capital gains : Assessee utilising sale proceeds of shares for other purpose and purchasing property from loans taken from bank not entitled to exemption u/s. 54F : Milan Sharad Ruparel v. Asst. CIT (Mumbai) p. 570

> Income earned by exercise of profession as CA not entitled to relief u/s.80RR : Dilip K. Sheth v. ITO (Mumbai) p. 581

> Rectification : Telephone expenses allowed : Order of CIT(Appeals) confirming disallowance deleted : Dilip K. Sheth v. ITO (Mumbai) p. 581

> Sums paid voluntarily by inmates of Ashram to be treated as donations, trust entitled to approval u/s. 80G(5) : Vaidik Bhakti Sadan Asram v. CIT (Delhi) p. 590

> Right to occupy house taken on licence under agreement for period of two terms of eleven months against interest-free deposits cannot be termed to be purchase of residential house : Prafulchandra R. Shah (Late) v. Asst. CIT (Mumbai) p. 598

> Capital gains : Cost of acquisition of tenancy rights to be taken at nil u/s. 55(2) : Prafulchandra R. Shah (Late) v. Asst. CIT (Mumbai) p. 598

> Refund due to excess TDS and advance tax, assessee to be paid interest on refund u/s. 244A : Hyundai Motor India Ltd. v. Dy. CIT (Chennai) p. 611

> Reassessment : AO forming belief interest income assessable as income from other sources has jurisdiction to reassess u/s. 147 : Jagan Lamps Ltd. v. ITO (Delhi) p. 617

ITR HIGHLIGHTS ISSUE DATED 4-10-2010 Volume 326 : Part 3

INCOME TAX REPORTS (ITR) HIGHLIGHTS

ISSUE DATED 4-10-2010 Volume 326 : Part 3

SUPREME COURT JUDGMENTS

> Membership card of Bombay stock exchange is an intangible asset entitled to depreciation : Techno Shares and Stocks Ltd. v. CIT p. 323

> Duty to deduct tax at source does not arise unless remittance contains wholly or partly taxable income : GE India Technology Centre P. Ltd. v. CIT p. 456

HIGH COURT JUDGMENTS

> Withdrawal of approval u/s 10(23C)(vi) for AY 2009-10 and show-cause notices for AY 2007-08 and 2008-09 justified : Valliammai Society v. Director General of Income-tax (Investigation) (Mad) p. 337

> Valuation of stock could not be changed where no evidence that valuation not correct : Voltamp Transformers Ltd. v. CIT (Guj) p. 360

> Excise duty liability only at time of removal of goods not includible in valuation of closing stock of finished goods at end of accounting period : Asst. CIT v. Narmada Chematur Petrochemicals Ltd. (Guj) p. 369

> Activity of import of machine and indigenizing and improving it to suit Indian market entitled to deduction u/s 35(4) : CIT v. Engineering Innovation Ltd. (HP) p. 392

> Deletion of addition justified where assessee reconciling entire material recovered during survey with return filed : CIT v. Diplast Plastics Ltd. (P&H) p. 399

> Additions to income in hands of assessee valid, where husband of assessee admitting that he carried on business and that he had suppressed sales and assessee not rebutting presumption raised : T. Radha v. Asst. CIT (Mad) p. 401

> Lump sum received after retirement from service as non-compete fee not assessable as profits in lieu of salary in AY 2001-02 : CIT v. A. Khosla (Mad) p. 406

> Tribunal confirming additions proper where donors disowning making gifts and denying acquaintance with assessee : Smt. Kusum Lata Thakral v. CIT (P&H) p. 424

> Transport subsidies shown in reserve and surplus account and not in profit and loss account in original return : Reassessment proceedings valid : CIT v. Shiv Shakti Flour Mills P. Ltd. (Gauhati) p. 430

> AO passing order of rectification on ground that assessee wrongly debited warranty claims which was an uncertain liability : Debatable issue : Rectification cannot be made : CIT v. Gemi Motors India P. Ltd. (P&H) p. 443

> Tribunal finding transaction giving rise to capital gains not business income : Finding of fact : CIT v. Rohit Anand (Delhi) p. 445

> High Court has no power to review under I. T. Act : Deepak Kumar Garg v. CIT (MP) p. 448

> Order rejecting application for waiver of penalty without proper reason not valid : Shrinath Ceramics v. CIT (MP) p. 452

JOURNAL

> Education cess is allowable as business expenditure ? (Narayan Jain and Deepak Jain , Advocates) p. 1

> Is excise duty payable on manufactured goods includible in value of closing stock ? (M. S. Prasad, Retd. Director (A & PAC) CBDT) p. 11

NEWS-BRIEF

> Income-tax returns filing date extended to November 30 in Jammu and Kashmir

The Central Board of Direct Taxes (CBDT) has extended the due date of filing of returns of income for the assessment year 2010-11 for all categories of cases in the State of Jammu and Kashmir to November 30, 2010. The decision was taken by the CBDT in exercise of powers conferred under section 119 of the Income-tax Act, 1961, considering the reports of disturbance of general life, caused due to the law and order problem in the State.

Accordingly, the date for obtaining and furnishing Tax Audit report under section 44AB of the Income-tax Act is also extended to November 30, 2010. [Source : www.pib.nic.in dated September 23, 2010]

> Short-lived gift of extra 1% EPF interest under tax-net

The Labour Ministry has hiked the employees' provident fund, or EPF, rate to 9.5 per cent., but a Finance Ministry notification says that anything in excess of 8.5 per cent. will be taxed.

The Labour Ministry is, however, confident that the tax department will renotify the higher rate, as otherwise a lot of contentious issues will come up. The Labour Minister had declared a 9.5 per cent. bonanza on provident fund deposits on September 15-marking a one percentage point increase in the rate from the 8.5 per cent. paid in the last five years.

But even before the EPF board met under the Labour Minister, the Central Board of Direct Taxes had notified a tax-free PF rate of 8.5 per cent. for 2010-11-effective from September 1. This means that the 1 per cent. extra income (or Rs. 1,700 crore) that the Labour Ministry has projected as a gift to the workforce, would be fully taxable. This is the first time ever that income from provident fund would be taxable, if the tax department does not notify the higher rate.

Historically, the tax-free PF rate notified by the Income-tax Department has never been lower than the EPF rate declared for the year.

But levying the tax would be far from easy. The PF interest would be credited to workers' accounts at the end of the year. The trust in charge of the PF would be responsible for deducting the applicable tax at that time.

Usually, the Income-tax Department notifies a tax-free PF rate for the whole year. But this year, it is only applicable from September 1. So the 9.5 per cent. provident fund return would be tax-free from April to August, but taxable thereafter. "For company-run trusts, this would be a headache - calculating the tax liability on 1 per cent. PF income for seven months," said a senior vice president at a private consultancy firm.

But the most acute problem will be faced by the Employees' Provident Fund Organisation-which manages 5 crore PF accounts.

Firstly, EPFO simply does not have the systems in place to deduct tax at source. All PF account withdrawals before completing five years of service, are fully taxable, as per existing income-tax rules. But the rule has never been implemented because of EPFO's unreliable manual record-keeping systems.

Even if EPFO could deduct tax at source before crediting interest to members, the applicable income-tax bracket would vary for its members. For every deduction made, it would also have to give workers a Form 16 statement. [Source : www.economictimes.com dated September 25, 2010]

> Companies will soon be asked to unearth investments held abroad

The provision to tax productive assets will be implemented once the Direct Tax Code regime, which seeks to replace the Income-tax Act, 1961, is implemented from April 2012.

In short, investment by Indians in controlled foreign corporations (CFCs) will be liable to wealth tax, once DTC becomes law. Under the 20th Schedule of DTC, an entity is considered a CFC when one or more persons residing in India exercise control over a foreign company.

Wealth-tax Act in its current form charges tax only on non-productive assets such as urban car, motor vehicles, jewellery, yachts, boats, aircraft etc., at the rate of 1 per cent. on wealth exceeding 15 lakh. The productive assets such as investment with financial institutions, bank balances, land and machinery etc. are not liable for wealth tax.

DTC is proposing to cover productive assets such as investments in equity and preference shares of a CFC. Many Indian companies have investments in CFCs and DTC is proposing to tax these investments. [Source : www.economictimes.com dated September 25, 2010]

> SEZ developers to look at legitimate ways to beat DTC deadline

The deadline of March, 2014, under the proposed Direct Taxes Code (DTC) for making new special economic zone units operational if they are to get tax benefits is likely to speed up development of these SEZs by entrepreneurs, a report said.

The DTC Bill, which was tabled in Parliament in August, proposed that units in SEZs that commence commercial operations by March, 2014, shall be allowed profit-linked deductions permitted under the Income-tax Act, 1961.

It also proposed that SEZs notified on or before March 31, 2012, will get income-tax benefits.

With SEZs attracting investments of over Rs. 1.66 lakh crore, industry sources said the income-tax benefit provided in the SEZ Act, 2005, is the major attraction for investors.

ASSOCHAM further said that demand for offices in the SEZs is expected to be low in the next 3-6 months, as occupiers are likely to rework their real estate strategies in the wake of the new time lines proposed in the DTC.

"The real estate market in India is likely to adjust to the changing circumstances once DTC comes into force and then see a sustained demand momentum until 2014 from developers as well as occupiers," the report said.

The Government has given formal approval for setting up about 580 SEZs, of which 122 have become operational. [Source : www.economictimes.com dated September 23, 2010]

> Supreme Court launches tax evasion plea

The special leave petition of a telecom major has been listed for hearing before a three-judge bench headed by Chief Justice SH Kapadia. The apex court will decide whether the Income-tax Department has the jurisdiction to tax the company's $11.2-billion purchase of 67% controlling interest in the Indian company in February 2007.

The Income-tax Department slapped a show-cause notice on the company's Netherlands-based subsidiary, seeking $1.7 billion as capital gains tax. It also sought to impose penalty for the company's failure to deduct tax at source for the transaction. This was contested by the telecom company in the Bombay High Court, but its petition was dismissed.

The dissident approached the Supreme Court, but the apex court refused to entertain the special leave petition of the telecom giant. The court expressed its displeasure over major's refusal to divulge the details of the agreement of such transaction. "Why the details were not disclosed to the High Court (Bombay High Court). It is not even shown to us (apex court)", a bench comprising Justice SB Sinha (now retired) and Justice MK Sharma had said.
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The apex court, however, asked the assessing authority to decide on the issue of whether the Revenue Department has the jurisdiction to demand capital gain tax on the deal which was carried outside the country. The Department, after hearing it afresh, served an order on the telecom company, saying it had the jurisdiction to tax the deal and once again approached the High Court, which ruled in favour of the Department. [Source : www.economictimes.com dated September 27, 2010]


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