INCOME TAX REPORTS (ITR) Volume 337 : Part 4 Issue dated 3-10-2011 :- SUBJECT INDEX

INCOME TAX REPORTS (ITR)

Volume 337 : Part 4 (Issue dated 3-10-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Advance tax :-- Failure to pay advance tax--Deferment of advance tax--Interest under sections 234B and 234C--Condition precedent--Liability to pay advance tax on last day of accounting year--Liability arising due to subsequent amendment of provision with retrospective effect--Interest could not be levied--Income-tax Act, 1961, ss. 234B, 234C-- Emami Ltd. v. CIT (Cal) . . . 470

Appeal to Appellate Tribunal: - Merger of order of Assessing Officer in appellate order--Issue not dealt with by Tribunal--No merger of order--Rectification of mistake with regard to such issue--Valid--Income-tax Act, 1961, ss. 154, 254-- Mitsubishi Corporation v. CIT (Delhi) . . . 498

Appeal to High Court: - Monetary limits for appeals by Department--Instructions of CBDT specifying limit--Exceptions--Substantial question of law likely to arise repeatedly--Assessability of wealth-tax on semi-constructed buildings on urban land--Exception clause (3) of Instruction No. 2 of 2005 applicable--Appeal maintainable--Wealth-tax Act, 1957, s. 27A-- CWT v. John L. Chackola (Ker) . . . 385

Business: - Income from other sources--Income from other sources or business income--Commission--Assessee carrying on business of distribution of computers--Transfer of business--Transferee paying commission to assessee--Commission allowed as business expenditure in hands of transferee--Commission assessable as business income of assessee--Income-tax Act, 1961 s. 28-- CIT v. FX Info Technologies P. Ltd . (Delhi) . . . 526

Business expenditure: - General principles--Resolution by company on account of pension--Liability worked out on actuarial basis--Not deductible--Income-tax Act, 1961, ss. 36, 37-- Brooke Bond India Ltd . v. Joint CIT (Cal) . . . 482

Capital gains: - Slump sale--Meaning of--Sale of undertaking as a going concern for a lump sum--Sale was a slump sale--Income-tax Act, 1961, s. 50B-- CIT v. Accelerated Freeze Drying Co. Ltd . (Ker) . . . 440

Deemed dividend: - Advance on salary and commission received by managing director--Advance on salary not assessable as deemed dividend--Advance on commission assessable as deemed dividend--Income-tax Act, 1961, s. 2(22)(e)-- Shyama Charan Gupta v. CIT (All) . . . 511

Income from other sources: - Business income--Assessee establishing to set up power plant--Delay in remitting security deposit by investing company resulting rejection of bid of assessee--Disputes before arbitration tribunal and High Court--Deposit returned kept as fixed deposits--Interest on fixed deposits--Assessable as income from other sources--Income-tax Act, 1961, ss. 28, 56-- CIT v. Madhya Bharat Energy Corporation Ltd . (Delhi) . . . 389

Industrial undertaking: - Special deduction under sections 80HH and 80-I--Condition precedent--Income should be derived from industrial undertaking--Interest on fixed deposits--Not entitled to special deduction--Income-tax Act, 1961, ss. 80HH, 80-I-- CIT v. Navbharat Explosives Co. P. Ltd. (Chhattisgarh) . . . 515

Interpretation of taxing statutes: - Reasonable interpretation-- Rai Bahadur G. V. Swaika Estates P. Ltd . v. Chief CIT (Cal) . . . 425

Loss: - Speculation--Carry forward and set off--Loss on purchase and sale of shares--Effect of Explanation to section 73--Finding that principal business of assessee was granting of loans--Loss from share dealing could be carried forward and set off against business income--Income-tax Act, 1961, ss. 72, 73-- PCBL Industrial Ltd . v. CIT (Cal) . . . 536

Offences and prosecution: - Fabricating false evidence--Assessee a tax practitioner, submitted return and certificate of tax deduction at source on behalf of client--Refund granted on basis thereof--Certificate found bogus and consequential refund obtained by fraud--Prosecution of assessee--No evidence to show assessee fabricated bogus certificate--No investigation to show client was a fictitious person--Acquittal justified--Code of Criminal Procedure, 1973, ss. 193, 196, 420, 468, 471--Income-tax Act, 1961, s. 277-- ITO v. R. Soundararajan (Mad) . . . 531

Purchase of immovable property by Central Government: - Tendering of apparent consideration--Scope of section 269UG--Amount can be tendered through Appropriate Authority--Income-tax Act, 1961, ss. 269UF, 269UG-- Rai Bahadur G. V. Swaika Estates P. Ltd . v. Chief CIT (Cal) . . . 425

Reassessment: - Notice--Validity--Effect of Explanation 2(b) to section 147--Return submitted but no assessment made--Discovery of understatement of income--Notice under section 148--Valid--Income-tax Act, 1961, ss. 147, 148-- CIT v. Madhya Bharat Energy Corporation Ltd . (Delhi) . . . 389

Notice after four years--No Failure to disclose material facts necessary for assessment--Notice based on subsequent decision of High Court--Not valid--Income-tax Act, 1961 s. 148-- Gujarat State Co-op. Agri. and Rural Develop. Bank Ltd. v. Deputy CIT (Guj) . . . 447

Rectification of mistake: - Mistake apparent from record--Bad debts--Provision that after 1-4-1989 assessee need not establish that debt had become irrecoverable--Failure to apply correct law--Deduction under section 36(1)(vii) a debatable issue--Rectification not permissible--Income-tax Act, 1961, ss. 36(1)(vii), 154-- CIT v. Jindal Stainless Ltd . (Delhi) . . . 495

Mistake apparent from record: - Failure to treat tax paid by employer on behalf of employees as salary for purposes of rule 3--Mistake which could be corrected --Income-tax Act, 1961, ss. 15, 16, 17, 154--Income-tax Rules, 1962, r. 3-- Mitsubishi Corporation v. CIT (Delhi) . . . 498

Reference: - Appeal to High Court--Competency of appeal or reference--Monetary limits laid down in circulars--Competency to be decided on basis of circular in force on date of appeal or reference--Income-tax Act, 1961, ss. 256, 260A-- CIT v. Navbharat Explosives Co. P. Ltd. (Chhattisgarh) . . . 515

Salary: - Perquisites--Tax paid by employer on behalf of employee--Part of salary--Income-tax Act, 1961, ss. 15, 16, 17--Income-tax Rules, 1962, r. 3-- Mitsubishi Corporation v. CIT (Delhi) . . . 498

Search and seizure: - Assessment in search cases--Notice under section 153A and questionnaires calling for details sent--Whether further notice under section 143(2) should be sent--Not necessary--Income-tax Act, 1961, ss. 143(2), 153A-- Ashok Chaddha v. ITO (Delhi) . . . 399

Block assessment: - Undisclosed income--Additions made not based on material discovered during search--Not valid--Income-tax Act, 1961, s. 158BB-- CIT v. Templeton Asset Management (India) P. Ltd. (Bom) . . . 541

Block assessment: - Undisclosed income--Debentures shown in books of account--Interest on debentures whether includible on accrual--Question to be decided in regular assessment and not in block assessment--Income-tax Act, 1961, s. 158BB-- CIT v. Templeton Asset Management (India) P. Ltd . (Bom) . . . 541

Speculative transaction: - Law applicable--Effect of amendment of proviso to section 43(5) w.e.f. 1-4-2006--Amendment not retrospective--Derivative transaction carried on in accounting year relevant to assessment year 2003-04--Speculative transaction--Loss incurred not a business loss--Income-tax Act, 1961, s. 43(5)-- CIT v. Bharat R. Ruia (HUF) (Bom) . . . 452

AUTHORITY FOR ADVANCE RULINGS

Non-resident: - India liaison office engaged in purchase of goods and also carrying out vendor identification and recommendation, review of costing data, quality control and uploading of material prices into internal product data management system--Activities not confined to purchase of goods for export alone--Liaison office is permanent establishment and income attributable to it assessable in India--Income-tax Act, 1961, ss. 5(2), 9(1)(i), Explns. 1(b), 2--Double Taxation Avoidance Agreement between India and U. S. A., arts. 5, 7(1)-- Columbia Sportswear Company, In re . . . 407

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Code of Criminal Procedure, 1973 :

Ss. 193, 196, 420, 468, 471: - Offences and prosecution--Fabricating false evidence--Assessee a tax practitioner, submitted return and certificate of tax deduction at source on behalf of client--Refund granted on basis thereof--Certificate found bogus and consequential refund obtained by fraud--Prosecution of assessee--No evidence to show assessee fabricated bogus certificate--No investigation to show client was a fictitious person--Acquittal justified-- ITO v. R. Soundararajan (Mad) . . . 531

Double Taxation Avoidance Agreement between India and U. S. A. :

Arts. 5, 7(1): - Non-resident--India liaison office engaged in purchase of goods and also carrying out vendor identification and recommendation, review of costing data, quality control and uploading of material prices into internal product data management system--Activities not confined to purchase of goods for export alone--Liaison office is permanent establishment and income attributable to it assessable in India-- Columbia Sportswear Company, In re (AAR) . . . 407

Income-tax Act, 1961 :

S. 2(22)(e): - Deemed dividend--Advance on salary and commission received by managing director--Advance on salary not assessable as deemed dividend--Advance on commission assessable as deemed dividend-- Shyama Charan Gupta v. CIT (All) . . . 511

S. 5(2): - Non-resident--India liaison office engaged in purchase of goods and also carrying out vendor identification and recommendation, review of costing data, quality control and uploading of material prices into internal product data management system--Activities not confined to purchase of goods for export alone--Liaison office is permanent establishment and income attributable to it assessable in India-- Columbia Sportswear Company, In re (AAR) . . . 407

S. 9(1)(i), Explns. 1(b), 2: - Non-resident--India liaison office engaged in purchase of goods and also carrying out vendor identification and recommendation, review of costing data, quality control and uploading of material prices into internal product data management system--Activities not confined to purchase of goods for export alone--Liaison office is permanent establishment and income attributable to it assessable in India-- Columbia Sportswear Company, In re (AAR) . . . 407

S. 15: - Rectification of mistake--Mistake apparent from record--Failure to treat tax paid by employer on behalf of employees as salary for purposes of rule 3--Mistake which could be corrected -- Mitsubishi Corporation v. CIT (Delhi) . . . 498

Salary :-- Perquisites--Tax paid by employer on behalf of employee--Part of salary-- Mitsubishi Corporation v. CIT (Delhi) . . . 498

S. 16: - Rectification of mistake--Mistake apparent from record--Failure to treat tax paid by employer on behalf of employees as salary for purposes of rule 3--Mistake which could be corrected -- Mitsubishi Corporation v. CIT (Delhi) . . . 498

Salary--Perquisites--Tax paid by employer on behalf of employee--Part of salary-- Mitsubishi Corporation v. CIT (Delhi) . . . 498

S. 17: - Rectification of mistake--Mistake apparent from record--Failure to treat tax paid by employer on behalf of employees as salary for purposes of rule 3--Mistake which could be corrected -- Mitsubishi Corporation v. CIT (Delhi) . . . 498

Salary: - Perquisites--Tax paid by employer on behalf of employee--Part of salary-- Mitsubishi Corporation v. CIT (Delhi) . . . 498

S. 28: - Business--Income from other sources--Income from other sources or business income--Commission--Assessee carrying on business of distribution of computers--Transfer of business--Transferee paying commission to assessee--Commission allowed as business expenditure in hands of transferee--Commission assessable as business income of assessee-- CIT v. FX Info Technologies P. Ltd . (Delhi) . . . 526

Income from other sources: - Business income--Assessee establishing to set up power plant--Delay in remitting security deposit by investing company resulting rejection of bid of assessee--Disputes before arbitration tribunal and High Court--Deposit returned kept as fixed deposits--Interest on fixed deposits--Assessable as income from other sources-- CIT v. Madhya Bharat Energy Corporation Ltd . (Delhi) . . . 389

S. 36: - Business expenditure--General principles--Resolution by company on account of pension--Liability worked out on actuarial basis--Not deductible-- Brooke Bond India Ltd . v. Joint CIT (Cal) . . . 482

S. 36(1)(vii): - Rectification of mistake--Mistake apparent from record--Bad debts--Provision that after 1-4-1989 assessee need not establish that debt had become irrecoverable--Failure to apply correct law--Deduction under section 36(1)(vii) a debatable issue--Rectification not permissible-- CIT v. Jindal Stainless Ltd . (Delhi) . . . 495

S. 37: - Business expenditure--General principles--Resolution by company on account of pension--Liability worked out on actuarial basis--Not deductible-- Brooke Bond India Ltd . v. Joint CIT (Cal) . . . 482

S. 43(5): - Speculative transaction--Law applicable--Effect of amendment of proviso to section 43(5) w.e.f. 1-4-2006--Amendment not retrospective--Derivative transaction carried on in accounting year relevant to assessment year 2003-04--Speculative transaction--Loss incurred not a business loss-- CIT v. Bharat R. Ruia (HUF) (Bom) . . . 452

S. 50B: - Capital gains--Slump sale--Meaning of--Sale of undertaking as a going concern for a lump sum--Sale was a slump sale-- CIT v. Accelerated Freeze Drying Co. Ltd . (Ker) . . . 440

S. 56: - Income from other sources--Business income--Assessee establishing to set up power plant--Delay in remitting security deposit by investing company resulting rejection of bid of assessee--Disputes before arbitration tribunal and High Court--Deposit returned kept as fixed deposits--Interest on fixed deposits--Assessable as income from other sources-- CIT v. Madhya Bharat Energy Corporation Ltd . (Delhi) . . . 389

S. 72: - Loss--Speculation--Carry forward and set off--Loss on purchase and sale of shares--Effect of Explanation to section 73--Finding that principal business of assessee was granting of loans--Loss from share dealing could be carried forward and set off against business income-- PCBL Industrial Ltd . v. CIT (Cal) . . . 536

S. 73: - Loss--Speculation--Carry forward and set off--Loss on purchase and sale of shares--Effect of Explanation to section 73--Finding that principal business of assessee was granting of loans--Loss from share dealing could be carried forward and set off against business income-- PCBL Industrial Ltd . v. CIT (Cal) . . . 536

S. 80-I: - Industrial undertaking--Special deduction under sections 80HH and 80-I--Condition precedent--Income should be derived from industrial undertaking--Interest on fixed deposits--Not entitled to special deduction-- CIT v. Navbharat Explosives Co. P. Ltd. (Chhattisgarh) . . . 515

S. 80HH: - Industrial undertaking--Special deduction under sections 80HH and 80-I --Condition precedent--Income should be derived from industrial undertaking--Interest on fixed deposits--Not entitled to special deduction-- CIT v. Navbharat Explosives Co. P. Ltd. (Chhattisgarh) . . . 515

S. 143(2): - Search and seizure--Assessment in search cases--Notice under section 153A and questionnaires calling for details sent--Whether further notice under section 143(2) should be sent--Not necessary-- Ashok Chaddha v. ITO (Delhi) . . . 399

S. 147: - Reassessment--Notice--Validity--Effect of Explanation 2(b) to section 147--Return submitted but no assessment made--Discovery of understatement of income--Notice under section 148--Valid-- CIT v. Madhya Bharat Energy Corporation Ltd . (Delhi) . . . 389

S. 148: - Reassessment--Notice after four years--No Failure to disclose material facts necessary for assessment--Notice based on subsequent decision of High Court--Not valid-- Gujarat State Co-op. Agri. and Rural Develop. Bank Ltd. v. Deputy CIT (Guj) . . . 447

Reassessment: - Notice--Validity--Effect of Explanation 2(b) to section 147--Return submitted but no assessment made--Discovery of understatement of income--Notice under section 148--Valid-- CIT v. Madhya Bharat Energy Corporation Ltd . (Delhi) . . . 389

S. 153A: - Search and seizure--Assessment in search cases--Notice under section 153A and questionnaires calling for details sent--Whether further notice under section 143(2) should be sent--Not necessary-- Ashok Chaddha v. ITO (Delhi) . . . 399

S. 154: - Appeal to Appellate Tribunal--Merger of order of Assessing Officer in appellate order--Issue not dealt with by Tribunal--No merger of order--Rectification of mistake with regard to such issue--Valid-- Mitsubishi Corporation v. CIT (Delhi) . . . 498

Rectification of mistake: - Mistake apparent from record--Bad debts--Provision that after 1-4-1989 assessee need not establish that debt had become irrecoverable--Failure to apply correct law--Deduction under section 36(1)(vii) a debatable issue--Rectification not permissible-- CIT v. Jindal Stainless Ltd . (Delhi) . . . 495

Rectification of mistake: - Mistake apparent from record--Failure to treat tax paid by employer on behalf of employees as salary for purposes of rule 3--Mistake which could be corrected -- Mitsubishi Corporation v. CIT (Delhi) . . . 498

S. 158BB: - Search and seizure--Block assessment--Undisclosed income--Additions made not based on material discovered during search--Not valid-- CIT v. Templeton Asset Management (India) P. Ltd. (Bom) . . . 541

Search and seizure--Block assessment--Undisclosed income--Debentures shown in books of account--Interest on debentures whether includible on accrual--Question to be decided in regular assessment and not in block assessment-- CIT v. Templeton Asset Management (India) P. Ltd . (Bom) . . . 541

S. 234B: - Advance tax--Failure to pay advance tax--Deferment of advance tax--Interest under sections 234B and 234C--Condition precedent--Liability to pay advance tax on last day of accounting year--Liability arising due to subsequent amendment of provision with retrospective effect--Interest could not be levied-- Emami Ltd. v. CIT (Cal) . . . 470

S. 234C: - Advance tax--Failure to pay advance tax--Deferment of advance tax--Interest under sections 234B and 234C--Condition precedent--Liability to pay advance tax on last day of accounting year--Liability arising due to subsequent amendment of provision with retrospective effect--Interest could not be levied-- Emami Ltd. v. CIT (Cal) . . . 470

S. 254: - Appeal to Appellate Tribunal--Merger of order of Assessing Officer in appellate order--Issue not dealt with by Tribunal--No merger of order--Rectification of mistake with regard to such issue--Valid-- Mitsubishi Corporation v. CIT (Delhi) . . . 498

S. 256: - Reference--Appeal to High Court--Competency of appeal or reference--Monetary limits laid down in circulars--Competency to be decided on basis of circular in force on date of appeal or reference-- CIT v. Navbharat Explosives Co. P. Ltd. (Chhattisgarh) . . . 515

S. 260A: - Reference--Appeal to High Court--Competency of appeal or reference--Monetary limits laid down in circulars--Competency to be decided on basis of circular in force on date of appeal or reference-- CIT v. Navbharat Explosives Co. P. Ltd. (Chhattisgarh) . . . 515

S. 269UF: - Purchase of immovable property by Central Government--Tendering of apparent consideration--Scope of section 269UG--Amount can be tendered through Appropriate Authority-- Rai Bahadur G. V. Swaika Estates P. Ltd . v. Chief CIT (Cal) . . . 425

S. 269UG: - Purchase of immovable property by Central Government--Tendering of apparent consideration--Scope of section 269UG--Amount can be tendered through Appropriate Authority-- Rai Bahadur G. V. Swaika Estates P. Ltd . v. Chief CIT (Cal) . . . 425

S. 277: - Offences and prosecution--Fabricating false evidence--Assessee a tax practitioner, submitted return and certificate of tax deduction at source on behalf of client--Refund granted on basis thereof--Certificate found bogus and consequential refund obtained by fraud--Prosecution of assessee--No evidence to show assessee fabricated bogus certificate--No investigation to show client was a fictitious person--Acquittal justified-- ITO v. R. Soundararajan (Mad) . . . 531

Income-tax Rules, 1962 :

r. 3: - Rectification of mistake--Mistake apparent from record--Failure to treat tax paid by employer on behalf of employees as salary for purposes of rule 3--Mistake which could be corrected -- Mitsubishi Corporation v. CIT (Delhi) . . . 498

Salary: - Perquisites--Tax paid by employer on behalf of employee--Part of salary -- Mitsubishi Corporation v. CIT (Delhi) . . . 498

Wealth-tax Act, 1957 :

S. 27A: - Appeal to High Court--Monetary limits for appeals by Department--Instructions of CBDT specifying limit--Exceptions--Substantial question of law likely to arise repeatedly--Assessability of wealth-tax on semi-constructed buildings on urban land--Exception clause (3) of Instruction No. 2 of 2005 applicable--Appeal maintainable-- CWT v. John L. Chackola (Ker) . . . 385

ITR (TRIB) Volume 11 : Part 7 Issue dated : 10-10-2011 :- SUBJECT INDEX

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

Volume 11 : Part 7 (Issue dated : 10-10-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Deemed dividend :- Circuitous transaction where money initially belonged to assessee returned to company on very same day--No net outflow, no intention to give money as loan or advance, no diversion of dividend or funds--Section 2(22)(e) not attracted--Income-tax Act, 1961, s. 2(22)(e)-- Pravin Bhimshi Chheda Shivsadan v. Deputy CIT (Mumbai)      . . . 705

Housing project: - Special deduction under section 80-IB(10)--Residential as well as commercial project approved by local authority--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-IB(10)-- Bhumiraj Homes Ltd. v. Deputy CIT (Mumbai)            . . . 699

Income: - Keyman insurance policy--Assignment of policy to employee--Consequential treatment for taxation--Order not in accordance with ratio laid in assessee's own case--Matter remanded--Income-tax Act, 1961, s. 10(10D)-- Rajan Nanda v. Asst. CIT (Delhi)                . . . 689

Interpretation of taxing statutes: - Construction that negates intention of Legislature to be avoided-- Gajendra Kumar T. Agarwal v. ITO (Mumbai)         . . . 640

Loss: - Carry forward and set off--Speculation business--Definition--Change of law taking trading in derivatives out of definition--Effect--Loss from trading in derivatives treated as speculation loss in earlier years carried forward--Allowable against profits from trading in derivatives after amendment--Loss can be set off against profit from same business--Income-tax Act, 1961, ss. 43(5), 72, 73-- Gajendra Kumar T. Agarwal v. ITO (Mumbai)       . . . 640

Non-resident: - Income deemed to accrue or arise in India--Royalty--Company having data centre in Singapore providing data processing support to bank in India under agreement--Raw input bank transaction data sent by bank through telecommunication lines to Singapore for processing--Processing done at Singapore according to bank's requirement and processing output generated as reports according to bank's specifications transmitted to India through telecommunication lines--No use or right to use process involved--No right to use any equipment--Payment not royalty--Income-tax Act, 1961, ss. 9(1)(vi), Expln., 195--Double Taxation Avoidance Agreement between India and Singapore, arts. 5, 7, 12(3)(a)-- Standard Chartered Bank v. Deputy Director of Income-tax (Mumbai)       . . . 721

Reassessment: - Notice--No new materials found after completion of original assessment--Reassessment on change of opinion--Not valid--Notice to be quashed--Income-tax Act, 1961, ss. 143(3), 147, 148-- Deputy CIT v. Manak Shoes Co. P. Ltd. (Delhi)          . . . 673

Revision: - Erroneous and prejudicial to Revenue--To be judged on basis of law obtaining at time of assessment--Assessing Officer allowing set off in accordance with judicial pronouncements--Order not erroneous calling for revision--Income-tax Act, 1961, s. 263-- Gajendra Kumar T. Agarwal v. ITO (Mumbai)          . . . 640

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance Agreement between India and Singapore :

Art. 5: - Non-resident--Income deemed to accrue or arise in India--Royalty--Company having data centre in Singapore providing data processing support to bank in India under agreement--Raw input bank transaction data sent by bank through telecommunication lines to Singapore for processing--Processing done at Singapore according to bank's requirement and processing output generated as reports according to bank's specifications transmitted to India through telecommunication lines--No use or right to use process involved--No right to use any equipment--Payment not royalty-- Standard Chartered Bank v. Deputy Director of Income-tax (Mumbai)    . . . 721

Art. 7: - Non-resident--Income deemed to accrue or arise in India--Royalty--Company having data centre in Singapore providing data processing support to bank in India under agreement--Raw input bank transaction data sent by bank through telecommunication lines to Singapore for processing--Processing done at Singapore according to bank's requirement and processing output generated as reports according to bank's specifications transmitted to India through telecommunication lines--No use or right to use process involved--No right to use any equipment--Payment not royalty-- Standard Chartered Bank v. Deputy Director of Income-tax (Mumbai)    . . . 721

Art. 12(3)(a): - Non-resident--Income deemed to accrue or arise in India--Royalty--Company having data centre in Singapore providing data processing support to bank in India under agreement--Raw input bank transaction data sent by bank through telecommunication lines to Singapore for processing--Processing done at Singapore according to bank's requirement and processing output generated as reports according to bank's specifications transmitted to India through telecommunication lines--No use or right to use process involved--No right to use any equipment--Payment not royalty-- Standard Chartered Bank v. Deputy Director of Income-tax (Mumbai)    . . . 721

Income-tax Act, 1961 :

S. 2(22)(e): - Deemed dividend--Circuitous transaction where money initially belonged to assessee returned to company on very same day--No net outflow, no intention to give money as loan or advance, no diversion of dividend or funds--Section 2(22)(e) not attracted-- Pravin Bhimshi Chheda Shivsadan v. Deputy CIT (Mumbai)           . . . 705

S. 9(1)(vi), Expln.: - Non-resident--Income deemed to accrue or arise in India--Royalty--Company having data centre in Singapore providing data processing support to bank in India under agreement--Raw input bank transaction data sent by bank through telecommunication lines to Singapore for processing--Processing done at Singapore according to bank's requirement and processing output generated as reports according to bank's specifications transmitted to India through telecommunication lines--No use or right to use process involved--No right to use any equipment--Payment not royalty-- Standard Chartered Bank v. Deputy Director of Income-tax (Mumbai)    . . . 721

S. 10(10D): - Income--Keyman insurance policy--Assignment of policy to employee--Consequential treatment for taxation--Order not in accordance with ratio laid in assessee's own case--Matter remanded-- Rajan Nanda v. Asst. CIT (Delhi)  . . . 689

S. 43(5): - Loss--Carry forward and set off--Speculation business--Definition--Change of law taking trading in derivatives out of definition--Effect--Loss from trading in derivatives treated as speculation loss in earlier years carried forward--Allowable against profits from trading in derivatives after amendment--Loss can be set off against profit from same business-- Gajendra Kumar T. Agarwal v. ITO (Mumbai) . . . 640

S. 72: - Loss--Carry forward and set off--Speculation business--Definition--Change of law taking trading in derivatives out of definition--Effect--Loss from trading in derivatives treated as speculation loss in earlier years carried forward--Allowable against profits from trading in derivatives after amendment--Loss can be set off against profit from same business-- Gajendra Kumar T. Agarwal v. ITO (Mumbai)       . . . 640

S. 73: - Loss--Carry forward and set off--Speculation business--Definition--Change of law taking trading in derivatives out of definition--Effect--Loss from trading in derivatives treated as speculation loss in earlier years carried forward--Allowable against profits from trading in derivatives after amendment--Loss can be set off against profit from same business-- Gajendra Kumar T. Agarwal v. ITO (Mumbai)       . . . 640

S. 80-IB(10): - Housing project--Special deduction under section 80-IB(10)--Residential as well as commercial project approved by local authority--Assessee entitled to deduction-- Bhumiraj Homes Ltd. v. Deputy CIT (Mumbai)      . . . 699

S. 143(3): - Reassessment--Notice--No new materials found after completion of original assessment--Reassessment on change of opinion--Not valid--Notice to be quashed-- Deputy CIT v. Manak Shoes Co. P. Ltd. (Delhi)        . . . 673

S. 147: - Reassessment--Notice--No new materials found after completion of original assessment--Reassessment on change of opinion--Not valid--Notice to be quashed-- Deputy CIT v. Manak Shoes Co. P. Ltd. (Delhi)        . . . 673

S. 148: - Reassessment--Notice--No new materials found after completion of original assessment--Reassessment on change of opinion--Not valid--Notice to be quashed: -- Deputy CIT v. Manak Shoes Co. P. Ltd. (Delhi)     . . . 673

S. 195: - Non-resident--Income deemed to accrue or arise in India--Royalty--Company having data centre in Singapore providing data processing support to bank in India under agreement--Raw input bank transaction data sent by bank through telecommunication lines to Singapore for processing--Processing done at Singapore according to bank's requirement and processing output generated as reports according to bank's specifications transmitted to India through telecommunication lines--No use or right to use process involved--No right to use any equipment--Payment not royalty-- Standard Chartered Bank v. Deputy Director of Income-tax (Mumbai)    . . . 721

S. 263: - Revision--Erroneous and prejudicial to Revenue--To be judged on basis of law obtaining at time of assessment--Assessing Officer allowing set off in accordance with judicial pronouncements--Order not erroneous calling for revision-- Gajendra Kumar T. Agarwal v. ITO (M

CASE LAWS....

HIGH COURTS
• Capital gains or business income --Consideration received on transfer of rights of trade mark, brands, copyrights in journals and publications--Business given up distinct from business continued-- Consideration not arising out of business but is long-term capital gains--Section 28(va) does not apply-- Income-tax Act, 1961, s. 28(va)-- CIT v. Mediworld Publications Pvt. Ltd. (Delhi) . . . 178

• Income from other sources --Compulsory acquisition of agricultural land--Enhanced compensation-- Interest on delayed payment--Claim to spread over on accrual basis but interest for two years alone disclosed--Inference of cash system of accounting--Interest taxable in year of receipt--Land Acquisition Act, 1894, s. 34--Income-tax Act, 1961, s. 145-- CIT v. Karambir Singh (P&H) . . . 159

• Income from undisclosed sources --Assessee failing to prove capacity of creditor and genuineness of transaction--Finding that transaction bogus and sustaining addition--Disallowance of excess claim on account of loss of bardana--Findings of fact--Income-tax Act, 1961-- Papneja Traders v. CIT (P&H) 172

• Penalty --Concealment of income--Search and seizure--Assessee making disclosure statement under section 132(4)--Time for filing return not expired--Income included in return and tax paid--Not a case of concealment of particulars of income--Penalty cannot be imposed--Income-tax Act, 1961, s. 271(1) (c), Expln. 5-- CIT v. Bhandari Silk Store (P&H) . . . 153

• Reassessment --Notice after four years--No failure to disclose material facts necessary for assessment-- Deduction allowed in original assessment after considering facts--Reassessment proceedings after four years to disallow deduction on ground it was capital expenditure--Not valid--Income-tax Act, 1961, ss. 147, 148-- Parle Sales and Services P. Ltd. v. ITO (Guj) . . . 203

• Search and seizure --Block assessment--Assessment of third person--Condition precedent-- Satisfaction of Assessing Officer of person searched that undisclosed income discovered during search belonged to third person--Meaning of satisfaction--Letter by Assessing Officer of person searched that assessee acted as mediator in bogus accommodation transactions--No evidence that assessee had given cash to person searched or had received commission--Condition not fulfilled-- Block assessment of assessee--Not valid--Income-tax Act, 1961, ss. 158B, 158BD-- CIT v. Radhey Shyam Bansal (Delhi) . . . 217

• -Block assessment--Undisclosed income--Addition permissible only in respect of material discovered during search--Estimate of expenditure on house by Valuation Officer--No material recovered in search showing expenditure beyond that recorded in books--Addition solely on basis of estimate-- Not valid--Income-tax Act, 1961, s. 158BD-- CIT v. Kantilal B. Kansara (HUF) (Guj) . . . 187

• -Block assessment--Undisclosed income--Statement under section 132(4)--Admissibility--Addition based on confessional statement made by assessee and counter-signature by his sons--Failure by assessee to prove that confession was as a result of intimidation, duress and coercion--No evidence that confession made as a result of mistaken belief of law or facts--Addition justified--Income-tax Act, 1961, s. 132(4)-- Asst. CIT v. Hukum Chand Jain (Chhattisgarh) . . . 238

• Non-resident --Prospecting for or extraction of mineral oils--Services in connection therewith--Special provisions for computation of income--Tax resident of Norway providing sea logistics services for ONGC--Not technical services but transportation--Fall within purview of special provisions--But under DTAA notional income restricted to 7.5 per cent. of receipts and tax limited to 50 per cent. of tax imposed by India--No deduction for service tax--Income-tax Act, 1961, ss. 9(1)(vii), 44BB--Finance Act, 1994, s. 68--Double Taxation Avoidance Agreement between India and Norway, art. 23(4)-- Siem Offshore Inc ., In re . . . 207

• -Taxability in India--Deduction of tax at source--Employees of non-resident company deputed to Indian subsidiary for performing managerial functions--Salary and benefits paid to expatriate employees by non-resident employer and reimbursed by Indian company--Are fees for included services accruing to non-resident company--Requirement of "making available" technical know-how not applicable-- Tax deductible at source--Income-tax Act, 1961, ss. 9(1)(vii), Expln. 2, 195--Double Taxation Avoidance Agreement between India and the U.S.A., art. 12(4)(b)-- Verizon Data Services India Private Ltd ., In re .

• Bad debt --Deduction--Condition precedent--Writing off in accounting year--Resolution for writing off in subsequent year not relevant--Amount deductible as bad debt--Income-tax Act, 1961, s. 36-- Sashak Noble Metals Ltd. v. ITO (Mumbai) . . . 335

• Business income --Remission or cessation of trading liability--Transfer of loan from sister-concern--No trading transaction--Creditor not acknowledging debt--Amount not assessable under section 41-- Outstanding liability due to trading transaction becoming subsequently non-payable--Section 41 applicable-- Amount to be added to business income of assessee--Income-tax Act, 1961, s. 41-- Sashak Noble Metals Ltd. v. ITO (Mumbai) . . . 335

• Capital gains --Computation--Full value of consideration--Reference to Valuation Officer under section 142A for valuation of market value--Not permissible--No material to show assessee had received any sum in excess of that shown in sale deed--No material to show whether value shown in sale deed was higher or lower than stamp value--Direction to adopt value in accordance with section 50C--Incometax Act, 1961, ss. 48, 50C, 142A-- Sumit Khurana v. Asst. CIT (Delhi) . . 377

• Charitable purpose --Charitable trust--Exemption--Registration of trust--Authorities to satisfy themselves about genuineness of activities of trust but not nature of activity by which income derived by trust-- Trust formed to run hospital earnings from which to be used for charitable purpose--Assessee entitled to registration--Income-tax Act, 1961, ss. 12A, 12AA-- Guru Harkishan Medical Trust v. Director of Income- tax (Exemptions) (Delhi) . . . 361

• Co-operative society --Special deduction--Interest received from credit facilities to members--Assessee not a credit society-- Not entitled to deduction--Income-tax Act, 1961, s. 80P(2)(a)(i)-- ITO v. Modern Engineers Construction Co-op. Society (Chennai) . . . 393

• Penalty --Concealment of income--Additions made by Assessing Officer on account of disallowance of expenditure--No material to show concealment by assessee--Penalty not imposable--Income-tax Act, 1961, s. 271(1)(c)-- Deputy CIT v. Eagle Iron and Metal Industries Ltd. (Mumbai) . . . 384

• -Production of cinematograph films--Statement to be filed in Form 52A--Failure to file by due dates-- Explanation that assessee under bona fide belief that form to be filed with return--Commissioner (Appeals) finding reasonable cause for delay and reducing penalty--Order attaining finality--Order of Commissioner (Appeals) confirmed--Income-tax Act, 1961, s. 272A(2)(c)-- Deputy CIT v. Dasari Narayana Rao (Chennai) . . . 403

• Search and seizure --Block assessment--Assessment set aside by Tribunal with direction to decide afresh on basis of evidence found during course of search--Commissioner (Appeals) to follow directions issued by Tribunal--Income-tax Act, 1961, ss. 132(4), 158BC-- Krishna Terine P. Ltd. v. Asst. CIT (Ahmedabad) . . . 405

• -Block assessment--Undisclosed income--Addition on unaccounted investment --No evidence found during search indicating assessee made investments--Addition to be deleted--Income-tax Act, 1961, s. 158BC-- Krishna Terine P. Ltd. v. Asst. CIT (Ahmedabad) . . . 405

• S. 12AA --Charitable purpose--Charitable trust--Exemption--Registration of trust--Authorities to satisfy themselves about genuineness of activities of trust but not nature of activity by which income derived by trust--Trust formed to run hospital earnings from which to be used for charitable purpose-- Assessee entitled to registration-- Guru Harkishan Medical Trust v. Director of Income-tax (Exemptions) (Delhi) . . . 361

• S. 41 --Business income--Remission or cessation of trading liability--Transfer of loan from sister concern-- No trading transaction--Creditor not acknowledging debt--Amount not assessable under section 41--Outstanding liability due to trading transaction becoming subsequently non-payable-- Section 41 applicable--Amount to be added to business income of assessee-- Sashak Noble Metals Ltd. v. ITO (Mumbai) . . . 335 HIGH COURTS

• Company Law Board --Jurisdiction--Rectification of register--Transfer of shares--Only Company Law Board has jurisdiction to decide issues involving title to shares--Board can direct parties to approach civil court if dispute regarding civil rights or title involved--Civil court does not have jurisdiction otherwise-- Companies Act, 1956, ss. 10, 155-- Vishnu Manglani v. Reliance Industries (Delhi) . . . 524