IT : Notice sent under section 158BD cannot be declared as invalid for reason th

IT : Notice sent under section 158BD cannot be declared as invalid for reason that Assessing Officer has not separately mentioned in said notice that it was issued under section 158BC also - [2011] 11 taxmann.com 52 (Ker.)

Direct Tax Laws Oct 2011 01

Interest from (i) fixed deposits made for opening letter of credit and (ii) advances given out of surplus funds, which were not done in ordinary course of business, is to be treated as 'income from other sources' - [2011] 13 taxmann.com 227 (Madras)

Revenue cannot justify reopening of assessment on grounds which are not recorded in reasons for reopening assessment - [2011] 13 taxmann.com 224 (Bombay)

Petition for waiver of interest under section 220(2) can be filed even after payment of interest - [2011] 13 taxmann.com 222 (Delhi)

Application of CBDT Circulars dated 23-5-1996 and 30-1-1997 and Circular No. 2/2006 for charge of interest under section 234B - [2011] 13 taxmann.com 221 (Delhi)

Section 115WC(2)(b) will also apply activity of manufacturing of specialized equipments of solid and waste which includes fixation of certain equipments on land for managing waste - [2011] 13 taxmann.com 228 (Delhi - Trib.)

Where assessee, a Russian company, entered into a co-operation agreement with KPTL and scope of activities of assessee clearly showed that assessee was only required to provide technical services and depute expert for site review and implementation by KPTL, it could not be said that assessee was doing construction work and therefore, scope of work of assessee would not fall within exclusion category of Explanation 2 to section 9(1)(vii) - [2011] 13 taxmann.com 223 (Ahmedabad - Trib.)

IT : Department is not precluded from taking a correct view of matter in subsequ

IT : Department is not precluded from taking a correct view of matter in subsequent years during reassessment proceedings

Income-tax : Merely on basis of wrong view taken by Assessing Officer in earlier assessment year it cannot be held that the Department is precluded from taking a correct view of matter in subsequent years [Section 148 of the Income-tax Act, 1961 - Income escaping assessment - Issue of notice for] - [2011] 10 taxmann.com 127 (Delhi - ITAT)

Compilations of case law: General Topics: PROCEDURAL LAPSE – When fatal ?

PROCEDURAL LAPSE – When fatal ?

A wrong reference to the power under which an order is made does not per se vitiate the order if there is some other power under which the order could lawfully be made. The validity of the impugned order has to be tested by reference to the question whether the ITO had any power at all to make an order of this nature. If the power is otherwise established, the fact that the source of power has been incorrectly described would not make the order invalid.
VR.C.RM. Adaikkappa Chettiar Vs CIT (Mad) 78 ITR 285
R.P. Kandaswami & others Vs CIT (Mad) 49 ITR 344
CIT Vs Hargopal Balan & Sons (P &H) 82 ITR 243
L. Hazir Mal Kuthiala Vs ITO & Anr. (SC) 41 ITR 12
CIT Vs Motor Industries Co. (Kar) 229 ITR 126
K.P. Paulose & Co. Vs CIT (Ker) 230 ITR 798

Non-mention of Section under which statement of assessee is recorded will not invalidate statement recorded during course of proceedings u/s.132A.
ACIT Vs M.V. Nagaraja (ITAT, Bang) 70 ITD 318

Failure to mention specific provision under which interest is charged does not make the order bad.
CIT Vs Quality (Pat) 224 ITR 77

Assessment completed without following prescribed procedure – Non-compliance is only a procedural irregularity and will not render the assessment ab initio void – Direction to ITO to redo assessment after following prescribed procedure is valid
G.R. Steel and Alloys P. Ltd,. Vs CIT (Kar) 152 ITR 220
Saraljit Singh Vs CIT (Del) 234 ITR 641
V. Raju Vs CIT (Mad) 147 ITR 212
M.S. Kimtee Vs CIT (MP) 151 ITR 73

Assessee participating in reassessment proceedings – Failure to consider objection to 148 notice and failure to issue notice under section 143(2) – Reassessment order not void but irregular – Matter remitted to assessing Officer
Areva T & D India Ltd. Vs ACIT (Mad) 294 ITR 233

Penalty proceedings validly initiated – No opportunity of being heard given – Order set-aside – Continuation of proceedings from stage of notice – valid
Guduthur Bros Vs ITO (SC) 40 ITR 298
Thakur V. Hari Prasad Vs CIT (AP) 167 ITR 603
Addl. CIT Vs Boina Surana (AP) 124 ITR 328

Where an invalid assessment is annulled, it should be remanded to the ITO so that the assessee is not set at large without payment of tax
CIT Vs Anaimugan Transports (P) Ltd. (Mad) 215 ITR 553

Death of assessee in course of assessment procedure – Legal representative impleaded and heard – Assessment order mentioning name of deceased assessee instead of legal heir – Only a clerical error – Assessment is valid
Swaran Kanta Vs CIT (P & H) 176 ITR 291

Assessment order passed without giving notice to assessee – Assessment only legally vitiated but not warranting annulment.
C.G.G. Panicker Vs CIT (Ker) 237 ITR 443
Notice to only one legal representative of deceased – No objection taken by him and other legal representatives against non-impleadment of other heirs – assessment so made is valid.
ITO Vs Shahid Atiq, L/H of Late Atiquer Rehman (ITAT, Del) 89 ITD 489
CIT Vs Chandra Mohan Verma (All) 244 ITR 430
CIT Vs Pushpa Devi (Raj) 250 ITR 495
A.K.M. Govindaswamy Chettiar & Ors. Vs ITO ( Mad ) 244 ITR 559

Assessment order against deceased passed after his death – His son, with an advocate appeared in the proceedings – Assessment set-aside to ITO for impleading the legal heirs
CIT Vs Roshan Lal & Ors. (Del) 134 ITR 145

Penalty u/s 271(1)( c) quashed by CIT(A) as ITO had not obtained approval of IAC – ITAT directed ITO to pass an order afresh in accordance with law – held ITAT was justified.
Prabhudayal Amichand Vs CIT ( M P ) 180 ITR 84
CIT Vs Vijay Dal Mills (MP) 230 ITR 301
Gayathri Textiles Vs CIT (Kar) 243 ITR 674
Sardar Harinder Singh Vs ITO & Ors. (All) 219 ITR 257
CIT Vs Damodardas Murarilal (AP) 222 ITR 401

Act does not contemplate a hearing being given to the assessee by IAC before approving the penalty.
Lachmandas Mahar Chand Vs ITAT (Lahore) 12 ITR 432.

Office note is part of assessment order
Bimla Gulati Vs Appellate Asst. Commissioner (MP) 165 ITR 296

Computation of Total income made in assessment order and tax computed only on ITNS 50 – valid.
CIT Vs Hotel Highland Park (J&K) 246 ITR 130

Determination of tax not incorporated in assessment order but on a separate sheet of paper accompanying it – forms part of assessment order
Karuna Rani Jain & Ors. Vs CIT (P&H) 178 ITR 321
Kalyankumar Ray Vs CIT (SC) 191 ITR 634
Shashi Mangla Vs ACIT (ITAT, Del ) 60 TTJ 362

Notice issued u/s.148 vague as 'status' not mentioned therein – Assessee consciously and intentionally waived his right to object to defect in notice – Defect stood caused by sec.292 B – notice valid
CIT Vs Rajbir Singh (P & H) 233 ITR 126

Mere mistake in language used in penalty notice and non-striking of the inapplicable portion cannot by itself invalidate the notice.
CIT Vs Kausalya and others (Bom) 216 ITR 660
H.P. State Forest Corpn. Ltd. Vs CIT & Ors. (HP) 267 ITR 285
CIT Vs Maharaj Kishan (Del) 246 ITR 327

Penalty notice served along with an enclosure – Enclosure signed by ITO but notice not signed – Penalty not vitiated – There is nothing to indicate that the assessee was prejudiced by the defective notice served on him.
Kashmir Vastralaya Vs CIT (Pat) 112 ITR 630

Failure to serve Demand Notice – Recovery proceedings – not valid
Mohan Wahi Vs CIT & Ors. (SC) 248 ITR 799
Original assessment allowing development rebate – AAC set-aside whole assessment order – During fresh assessment proceedings, information that machinery was sold within 10 years – Development rebate can be rejected straight away – No need to allow it first and cancel u/s.35(11).
Indian Motors Transport P. Ltd Vs CIT & Ors. (SC) 156 ITR 489

Failure to quantify amount of penalty in the order – will not invalidate order
Assam Frontier Veneer & Saw Mills Vs CIT (Gau) 104 ITR 479
CIT Vs Jayantilal Meghani (Cal) 244 ITR 468

Office copy of notice available in assessment records – show notice validly issued by Assessing Officer – No evidence for proper service of such notice – Illegality occurred at this stage – Assessing Officer can proceed further from this stage
Raju Saigal Vs ITO (ITAT, Del) 106 Taxman (Mag) 12.

Death of assessee – Notice issued in the name of a person who was dead – widow of such person participating in re-assessment proceedings. Defect in notice stood automatically cured.
Kausalyabai Vs CIT (MP) 238 ITR 1008

Non-service of assessment order before serving of demand notice would not invalidate assessment order.
Surya Proteins Ltd. Vs ACIT ( ITAT, Indore ) 56 ITD 367

After abolition of Sec. 144B, Assessing Officer passed order after getting approval of Deputy Commissioner – Only a procedural lapse - Does not make assessment order invalid.
Amulakhbhai R.Patel Vs ACIT (ITAT, Ahd) 68 ITD 434

Penalty proceedings conducted by IAC – IAC directed ITO to levy penalty and to issue Demand Notice - Penalty valid
A.M. Shah & Co. Vs CIT (Guj) 238 ITR 415

Omissions of Assessing Officer to confront assessee with materials collected by him – Irregularity in exercise of jurisdiction and not lack of jurisdiction – Remand to Assessing Officer
CIT Vs Bharatkumar Modi (Bom) 246 ITR 693

Calling for information u/s.133(6) without approval of CIT – Procedural lapse – curable defect – Still material obtained can be used.
Gyarsri Lal Gupta & Sons Vs ITO (ITAT, JP) 94 ITD 329.

Expl. 3 to sec. 153 – Direction by CIT(A) to initiate re-assessment proceedings against third person – Such person was aware of proceedings and given opportunity of being heard – Formal notice not necessary – Proceedings valid
Atul Traders Vs ITO ( All ) 282 ITR 536

Assessment order in the name of non-existent entity was passed on account of ignorance of fact of amalgamation. Irregularity only – Remit to Assessing Officer to issue notice in the name of successor company
Century Enka Ltd. Vs DCIT ( Mum ) 101 ITD 489
144 Asst – Registration cancelled without affording opportunity – Not justified - Matter restored to Assessing Officer for considering afresh.
Indotia Construction Co. Vs ITO (ITAT, Jp) 61 TTJ 398

Direct Tax Laws Oct 2011 10

Direct Tax  Laws

Aeroplane and Aircraft are same thing; Aircraft cannot be held to be 'plant and machinery' and allowed depreciation less than 40 per cent.Cash payments exceeding prescribed limits made to Airport Authority of India, may be allowable - [2011] 14 taxmann 115 (Delhi - Trib.)

Assessing Officer is not empowered to travel beyond specific issues contained in order of remand passed by Commissioner (Appeals) - [2011] 14 taxmann 118 (Gujarat)

Benefit under section 23(1)(c) cannot be extended to a case where a property is not let out at all during previous year - [2011] 14 taxmann 146 (Andhra Pradesh)

Clause (i) of Explanation 1 to Section 115JB(2) was made effective from 1-4-2001 and would, therefore, apply to assessment year 2001-02 and subsequent assessment years - [2011] 14 taxmann 121 (Punjab and Haryana)

In view of amendment in section 80HHC(3) with effect from 1-4-1991, deduction is required to be computed by aggregating profits, export turnover and total turnover of all businesses carried on by assessee - [2011] 14 taxmann 117 (Calcutta)

It is not proper for Tribunal to remand matter without attempting to settle matter at its stage - [2011] 14 taxmann 143 (Karnataka)

Liberty is to be given to department to move to High Court pointing out that Instruction No. 3, dated 9-2-2011 should not be applied ipso facto - [2011] 14 taxmann 142 (SC)

Provision made towards irrecoverability of debt cannot be said to be provision for liability under clause (c) of Explanation to section 115J(IA) - [2011] 14 taxmann 147 (Calcutta)

Remand can be for rectification of specific points of mistakes - [2011] 14 taxmann 119 (Calcutta)

Sub-letting charges to DDA are not deductible under proviso to section 23(1) - [2011] 14 taxmann 116(Delhi - Trib.)

Supply of foods to international flights leaving India after customs clearance would be export when RBI has treated payment in Indian rupee as convertible foreign exchange - [2011] 14 taxmann 113 (Calcutta)

When in view of business exigency AMC charges from mutual funds expenditure lesser than that actually spent, no addition can be made to income of company - [2011] 14 taxmann 144 (Bombay)

Where a charitable society merges with another society having similar objects, registration granted under section 12AA cannot be withdrawn - [2011] 14 taxmann 114 (Mumbai - Trib.)

Where assessee had furnished details with respect to deposits which investors acknowledged, assessee was not required to prove genuineness of transactions or creditworthiness of investors - [2011] 14 taxmann 150 (Delhi)

Where issue involved is debatable, an intimation under section 143(1)(a) disallowing claim based on such debatable issue on ground that it is prima facie inadmissible, cannot be sustained - [2011] 14 taxmann 122 (Delhi - Trib.)

Where land owner entered into agreement with developers and, received certain sum and a part of build-up area as consideration, capital gain would be assessable in year in which possession of property was handed over, and not in year in which project was completed - [2011] 14 taxmann 120 (Karnataka)

Without showing valid reasoning, value of excess stock found at time of survey cannot be drastically reduced on ground that some of items valued at market price were merely scrap - [2011] 14 taxmann 124 (Delhi - Trib.)

Compilations of case law: General Topics: ESTOPPEL – Whether applicable

ESTOPPEL – Whether applicable

The doctrine of promissory estoppel cannot be used to compel the Government to carry out any representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government.

Delite Cinema Vs Municipal Corporation of Delhi & Anr. (Del) 172 ITR 208

CIT Vs Bankam Investment Ltd. (Cal) 208 ITR 208

Union of India & Ors. Vs Godfrey Philips India Ltd. (SC) 158 ITR 574

Tribunal upheld reopening u/s 147 and on merits remitted to Assessing Officer – Assessing Officer passed subsequent order – Question of validity of reopening u/s 147 cannot be challenged again in subsequent proceedings.

Gowri Rajes & ors. Vs CIT (Mad) 241 ITR 506

M.S.P. Senthil Kumar Vs CIT (Mad) 241 ITR 502

Court decisions based on concession of parties do not constitute binding precedents for other authorities.

Lakshmi Shankar Srivastava AIR 1979 SC 451

The doctrine of " approbate and reprobate " is a species of estoppels. It applies to the conduct of parties. The assessee having opted for a scheme and having availed the benefit, cannot lateron claim that the benefit was wrongly conferred on it.

CIT Vs V. MR. P. Firm (SC) 56 ITR 67

IT : Forfeiture of convertible warrant would amount to 'transfer' within meaning

IT : Forfeiture of convertible warrant would amount to `transfer' within meaning of section 2(47) - [2011] 10 taxmann.com 129 (Delhi)

IT : Short term capital loss, attributable to a genuine business transaction, ca

IT : Short term capital loss, attributable to a genuine business transaction, can be set-off against long-term capital gains

Income-tax : It is not within the province of Assessing Officer to ignore an otherwise genuine transaction and to brand it as a colourable one on ground that it was duty of the company to invest further amount or it should have waited for a reasonable period [Section 74 of the Income-tax Act, 1961 - Losses under the head `Capital gains'] - [2011] 10 taxmann.com 119 (Cal.)

Compilations of case law: General Topics: AFFIDAVIT – How far reliable ?

AFFIDAVIT – How far reliable ?

Affidavit need not always be accepted as correct
Sri Krishna Vs CIT (All) 142 ITR 618

Affidavit says "notice send by registered post on 31.8.88"- Not denied in rejoinder affidavit –Fact of issuing notice accepted eventhough no evidence was produced.
Arjun Singh & Anr. Vs ADIT & Ors. (MP) 246 ITR 363

Direct Tax Laws Oct 10

Where assessee had not furnished details asked for by Assessing Officer during assessment proceedings, there could not be full and true disclosure to apply proviso to section 147 - [2011] 14 taxmann.com 106 (Delhi)

Exemption under section 54EC is allowable in respect of capital gains arising on transfer of capital asset on which depreciation has been allowed - [2011] 14 taxmann.com 110 (Mumbai - Trib.)

Statement recorded under section 132(4) is an evidence by itself and any retraction contrary to that should be supported by strong evidence for demonstrating that earlier evidence recorded was under coercion - [2011] 14 taxmann.com 108 (Ahmedabad - Trib.)

VSAT equipment installed by assessee-stock exchange at premises of member broker for carrying on online and screen base trading would be eligible for full depreciation - [2011] 14 taxmann.com 107 (Mumbai - Trib.)