Sunday, December 4, 2011
Direct Tax Laws Oct 27
Compilations of case law: STATUS OF ASSESSEE ; CLUBBING OF INCOME
CLUBBING OF INCOME
Inclusion of income of minor child from firm – Parent need not be a partner.
CIT Vs Dhanushkodi (Mad) 252 ITR 794
Clubbing of income of minor with that of father eventhough source of investment is not from father.
Chandrakala Bai Naila Vs CIT (MP) 178 ITR 341
CIT Vs Bajrangal (AP) 176 ITR 334
CIT Vs Chinabai M. Modi (Guj) 69 ITR 76
CIT Vs K.R. Natarajan (Mad) 236 ITR 402
P. Alwarsamy Vs CIT ( Mad ) 98 Taxman 19
CIT Vs S.J.S. Selvalakshmi Ammal (Mad) 240 ITR 934
CIT Vs P. Murugesan (Mad) 245 ITR 301
CIT Vs Pelleti Sridevamma ( SC ) 216 ITR 826
Inclusion of income of minor child from firm – father need not have any income.
CIT Vs Krishna Iyer (Decd) (Mad) 249 ITR 498
Property given by an oral gift by a Mohammedan to his wife out of natural love and affection is not for adequate consideration or under an agreement to live apart. Hence Sec. 64 applicable – Clubbing.
N.P. Syed Sadique JT 1998(8) SC 32 (105 Taxman (Mag) 81)
Assets transferred to wife – Capital Gains derived by wife by selling the assets – to be clubbed in the hands of assessee, husband.
Sevantilal Maneklal Sheth Vs CIT (SC) 68 ITR 503
Transfer of house property by assessee to his wife – 64(1)(iv) attracts – clubbing .
Syed Sadique & Ors Vs CIT (SC) 239 ITR 263
Income of step-child can be clubbed u/s.64(1)(iii).
CIT Vs Abdul Rahim Khan M. Pathan (Guj) 243 ITR 409
Cash transferred to wife – amount invested in firm – income from firm was includible in the Total Income of husband
Kaushalyabai Vs CIT (MP) 238 ITR 1008
H.P. Dandiwala Vs CIT (All) 231 ITR 281
Clubbing of income of spouse / minor child – No separate deduction u/s.80L for clubbed income.
ITO Vs Yogi H. Aggarwal (ITAT, Mum) 96 ITD 288
Assessee routed certain sales through a sister concern to make that concern earn profit – Actual delivery made by assessee directly to ultimate purchaser – Sister concern situated in the same premises, has no godown, incurred no freight and transportation charges – colourable device – Profit shown to have been earned by sister concern assessed in the hands of assessee.
Bansal Ispat (Lucknow)(P) Ltd. Vs ACIT (ITAT, All) 61 ITD 246
Assessee managing affairs of firm – Benami of assessee – Income to be included in the hands of assessee
CIT Vs G.M. Dharia ( Kar ) 243 ITR 104
Assessing giving gifts to wife – wife invested this amount in firm A – Later on, wife withdrew the amount from firm A and invested it in firm B in which assessee is a partner – Clubbed in the hands of 'a' u/s.64(1)
CIT Vs Harkishdas (MP) 228 ITR 289
Assessee purchased lease rights of a firm for 5 years – sold within 5 months to minor grand daughter – Took back on lease – assessee did not work – sham transaction – income of minor grand daughter clubbed with assessee as benami.
G. Krishnammal Vs DCIT (ITAT, Mad) 66 ITD 83
Cross-gifts to be included for clubbing purposes.
CIT Vs C.M. Kothari (SC) 49 ITR 107
Om Dutt Vs CIT (P&H) 277 ITR 63
Finding that firm's business was actually being conducted by another firm – Firm was not genuine
Oswal Trading Co. Vs CIT (MP) 233 ITR 385
Firm carrying on money lending business – Three ladies closely related to partners of the firm forming another firm for carrying on similar business – Finding that business was actually carried on by original firm – Partnership formed by ladies not genuine – Clubbing of income of both firm.
Sri Krishna Finance Corporation Vs CIT (AP) 169 ITR 611
Spouse must have technical or professional qualification and income must be solely attributable to the application of his / her technical or professional knowledge and experience – Otherwise, income to be clubbed
J.M. Mokashi Vs CIT (Bom) 207 ITR 252
Saturday, December 3, 2011
ITR (TRIB) Volume 12 : Part 6 (Issue dated : 05-12-2011) SUBJECT INDEX TO CASES REPORTED IN THIS PART
ITR Volume 339 : Part 2 (Issue dated 5-12-2011) SUBJECT INDEX TO CASES REPORTED IN THIS PART
Friday, December 2, 2011
Compilations of case law: STATUS OF ASSESSEE : TRUST: EXEMPTION
EXEMPTION
Registration of a Trust u/s 12A is a condition precedent to claim exemption u/s 11 & 12
U.P. Forest Corporation Vs DCIT (SC) 297 ITR 1
Charitable Trust carrying on educational activities – But not conducting any courses in formal education – Not affiliated to / registered by any authority – No exemption.
Saurashtra Education Foundation Vs CIT (Guj) 273 ITR 139
Bihar Institute of Mining & Mine Surveying Vs CIT (Pat) 208 ITR 608
Assessee conducting examinations for recruitment to various public sector banks – Income earned not exempt u/s 10(22)
Institute of Banking Personnel Selection Vs ADIT (ITAT, Mum) 67 ITD 160
Exemption u/s. 10(22) – Assessee granting scholarships to deserving Parsi students – Not entitled for exemption.
CIT Vs Sorabji Nusserwanji Parekh (Guj) 201 ITR 939
Assessee running hospital, income of which is exempt u/s 10(22) – Interest income from banks, UTI, gift shop income etc. not entitled to exemption.
National Health & Education Society Vs ADIT (Exemption) (ITAT, Mum) 70 ITD 330
Trust advanced money to a company in which trustees were Directors – Advance was for construction of hospital but amount not utilized during relevant accounting year – Amount not entitled to exemption.
CIT Vs V.G.P. Foundation (Mad) 262 ITR 187
Huge sums of money advanced to company having substantial interest in Trust – No interest charged nor adequate security taken – violation u/s 13(3) – Denial of exemption upheld
Kanahya Lal Punj Charitable Trust Vs DIT (Exem) (Del) 297 ITR 66
Property of trust let out at meager rent to a firm in which one of the trustees is partner – No exemption.
Ram Bhawan Dharamshala Vs State of Rajasthan (Raj) 258 ITR 725
Trust – Payments made to interested persons – No exemption.
CIT Vs Nagarathu Vaisiyargal Sangam (Mad) 246 ITR 164
Refrigerator purchased by Trust and placed in residence of managing trustee till trust buildings were ready – No exemption to Trust.
Agappa Child Centre Vs CIT (Ker) 226 ITR 211
Object to conduct stock exchange – No prohibition against declaration of dividends to share holders or dealing with its profits in any manner it liked – No exemption.
Delhi Stock Exchange Association Ltd. Vs CIT (SC) 225 ITR 235
Bihar State Forest Department Corporation Vs CIT (Pat) 224 ITR 757
Donation received from associated companies used for the benefit of children of Trustees – No exemption u/s 11
Concast (India) Educational Trust Vs ITO (ITAT, Bom) 57 ITD 599
A part of Trust income was being used directly or indirectly for benefits of its founder and Managing Director – No exemption u/s 11 or 10(22).
Skin Institute & Public Services Charitable Trust Vs ADIT (Exemption) (ITAT, Del) 65 ITD 125
Chandrika Educational Trust Vs CIT (Ker) 139 CTR 96
Charitable and non-charitable objects – Trustees can apply income to any of these objects – No exemption u/s 11.
Daulat Ram Public Trust Vs CIT (Del) 244 ITR 514
Manner in which trust property was to be utilized, not indicated in trust deed – Not entitled to exemption.
Assembly Rooms Vs CIT (Mad) 241 ITR 76
Proviso to Sec. 13 of IT Act and Sec. 21A of WT Act lays down that exemption will not be denied if part of the income is applied for benefit of a person referred to in Sec. 13(3), if such use or application is in compliance to mandatory terms of Trust which is created before 1.4.62 – Mandatory terms should have existed before 1.4.62 – Subsequent amendment of Trust deed imposing such a term – No exemption.
CIT Vs Rattan Trust (SC) 227 ITR 356
Certain amount set apart as provision was not actually applied for charitable purposes – Not entitled to exemption u/s. 11.
Nachimuthu Industrial Association Vs CIT (SC) 156 CTR 187
Trust must be for public benefit – Only those subscribing to fund continuously or their dependents eligible to benefit in this case – Benefit conferred is not public but private – Not entitled to exemption.
CIT Vs BEL Employees Death Relief Fund and Service Benefit Fund Association (Kar) 225 ITR 270.
CIT Vs ITI Employees Death and Superannuation Relief Fund) (Kar) 234 ITR 308
Interest on investments received by Trust would not be covered by principle of mutuality – not entitled to exemption.
CIT Vs ITI Employees Death and Superannuation Relief Fund (Kar) 234 ITR 308
Surplus earned by organizing exhibition, is business income – No separate books for this business, but can be deciphered from common books of the institution →not amount to 11(4A)
Indian Machine Tools Mfrs. Association Vs ADIT (Exemption) (ITAT, Mum) 70 ITD 304.
Rent received from exhibition hall hiring, meeting hall hiring, parking fee – Income from business.
Visveswaraya Ind. Res. Dev. Centre Vs DCIT (ITAT, Mum) 59 ITD 156
Since assessee could not prove that donors were able to give direction before / at time of donation to corpus funds nor assessee was maintaining separate accounts for this purpose, Assessing Officer was right in denying exemption.
Shri Digambar Jain Naya Mandir Vs ADIT (ITAT, Cal) 70 ITD 121
Donation sent to assessee Trust with specific directions to be spent on organizing 'kisan rally' - To be treated as income of assessee.
Khemraj Nemichand Shrishrimal Charitable Trust Vs CIT (MP) 231 ITR 43
Trust founded by members of family – Income earned by Trust from family concern in AY 80-81 but given to trust only in 1984 – Sums remained with firm – Not used for charitable purposes – No exemption.
CIT Vs Muthoottu Charitable Trust (Ker) 227 ITR 203
Chit business carried on by Trust was not in the course of actual carrying out the primary purpose of the trust – No exemption u/s 11.
Dasa Balinjika Seva Sangam Vs CIT (Mad) 240 ITR 863
Deemed income u/s 11(3) – not eligible for accumulation for further period
The Trustees, The B.N. Gamadia Parsi Hunnarshala Vs ADIT (Exemption) (ITAT, Mum) 77 TTJ 274
If the surplus is a regular feature and is a result of intentional charging of abnormal high fee not commensurate with the expenditure, exemption u/s 10(22) cannot be allowed
ACIT Vs Bal Bharti Nursery School (ITAT, All) 82 ITD 71
All India Personality Enhancement & Cultural Centre for Scholars, AIPECS Society Vs DCIT (ITAT, Del) 91 ITD 240
Objective of Trust is carrying on business of race club and scientific breeding of horses – Registration refused
Hyderabad race Club Vs CIT (AP) 153 ITR 521
When the assessee collects money over and above the fees prescribed by the Government, it amounts to selling the education and the element of charity no longer remain in the activities of the assessee – Not eligible for exemption
Vodithala Education Society Vs ADIT (Exem) 2008-TIOL-139-ITAT-HYD
Wednesday, November 30, 2011
Compilations of case law: STATUS OF ASSESSEE ; TRUST
TRUST
Amendment to Trust deed has no retrospective effect.
Bhriguraj Charitable Trust Vs CIT (Del) 228 ITR 50
For 80G registration, Trust should qualify for exemption u/s 11.
Mundakapadam Mandirams Society (Ker) 258 ITR 395
Assessee Trust not carrying out any charitable activity but using funds for construction of shopping complex – Renewal of 80G approval rejected by CIT.
Madani Musafir Khamar Welfare Society Vs CIT & Anr. (Patna) 264 ITR 481
Donation to charitable trust – Trust for religious purposes also – Trustees could spend the entire income of trust for religious purpose – Donation to such trust not entitled to 80G deduction.
Upper Ganges Sugar Mills Ltd Vs CIT (SC) 227 ITR 578
Arsha Vijnana Trust Vs D.P. Sharma, DIT(Exemptions ) (AP) 295 ITR 437
Charitable Trust – Income used for religious purpose, temple construction – CIT denies renewal of recognition.
KirtichandTarawati Charitable Trust Vs DIT (Exemption) & Ors. (Del) 232 ITR 11
Trust for propagation of a particular religion – Not a public charitable Trust.
M.P. Santhivarma Jain Vs State of Kerala & Anr. (Ker) 265 ITR 385
Trust created by members of family for upkeep of temples - Not public trust.
Kizhakke Kovilakam Trust Vs ACIT (Ker) 256 ITR 238
Sole beneficiary is minor – As per Trust deed, he is not entitled to any income when he is a minor – Assessment on Trust u/s 164(1) upheld.
ITO Vs Sheetal Sunder Trust (ITAT, Bang) 96 ITD 128
Trust not specifying shares of beneficiaries – Subsequent rectification deed specifying shares – Does not relate back – Prior to rectification, trust assessable as discretionary Trust
Ranga rao Lottery Agencies Vs CIT (MP) 287 ITR 542
Option to assess trust or beneficiary directly.
CIT Vs Bharti Devi Sarabhai (SC) 231 ITR 526
CIT Vs Dr. Anand Sarabhai Trust (SC) 231 ITR 524
When Assessing Officer assessed Trust, in fact, it was made on Trustees who were representing beneficiaries as representative assessees u/s 160(1)(iv) – Sec. 161(1A) overrides provisions of Sec. 166—It was the duty of Assessing Officer to tax the right person – Hence eventhough assessments were made on beneficiaries on the basis of return filed by Trustees on behalf of beneficiaries, Assessing Officer can assess the right person i.e., Trustees as representative assessee on whole of income consisting of profits & gains of business at maximum marginal rate.
DCIT Vs Manilal Bapalal Family Benefit Trust (ITAT, Mad) 66 ITD 179
Business carried on in terms of Trust deed – Tribunal correct in holding that trustees were not assessable as AOP.
CIT Vs K. Shyamaraju (Trustees) & Ors. (Kar) 189 ITR 392
As per Trust deed, Trustees had no discretion with regard to choice of beneficiary – all assets held by them were meant to be held solely for benefit of one solitary beneficiary – Maximum marginal rate applicable.
CIT Vs Saroja Raman & T.G. Ranjini Trust (Mad) 104 Taxman 163.
Trust deed named grand daughter of author of Trust as beneficiary entitled to Trust income on attaining majority – Not attained majority – Hence payment was left to absolute discretion of trustees, beneficiary is unknown and share indeterminate – Tax at maximum rate.
Anasuya Muthanna Vs CIT (Mad) 232 ITR 561
Since rights of beneficiaries to get corpus of trust fund come into existence only on a future date, interest of beneficiaries is indeterminate or unknown – contingent – Sec. 21(4) of WT Act attracted –Interest of beneficiaries to be assessed.
A.V. Reddy Trust & Ors. Vs CWT (SC) 240 ITR 409
Will comes into operation on the death of testator and not "in presenti" - Since the deed came into effect on the date of execution, it is not Will – Since only 10% income went to the benefit of relatives and balance went to charitable purposes, it cannot be said to be solely for the benefit of relatives.
Not covered by provisions (ii) & (iii) to 164(1)- To be taxed at 65%.
Chintamani Ghosh Trust Vs CIT (All) 222 ITR 578
Trust deriving income from business – assessment to be made in the hands of trustee.
CIT Vs Manoranjitham Thanga Maligai Trust (Mad) 260 ITR 143
Trust created by or on behalf of minor without prior sanction of Civil Court – Not a valid Trust.
T.A.V. Trust Vs CIT (SC) 236 ITR 788
Distribution received by beneficiary from various discretionary trust can be assessed in the hands of beneficiary.
CIT Vs Anand Sarabhai Trust (SC) 231 ITR 524
Amount collected in the name of God / deities, but utilized for benefit of family concerns – Trust to be assessed as AOP at maximum marginal rate.
ITO Vs Shri Radha Dharmarth Trust (ITAT, Del) 66 ITD 253
Not only objects of trust, but application of its income for charitable purposes, is also important.
Al Madeena Charitable Trust Vs ACIT (ITAT, Coch) 76 ITD 214
Even prior to amendment in 1972, under Sec. 12(1) voluntary contribution themselves were taxable if they were not applied solely for charitable or religious purposes.
R.B. Shreeram Religious & Charitable Trust Vs CIT (SC) 233 ITR 53
Local authority constituted for planned development of State – For carrying out its objects, assessee is acquiring lands at nominal rates and selling the same after developing it to general public at higher rates – Assessee is not allotting houses to poor masses free of cost – Objects not of charitable nature but more of commercialised nature involving profit motive
Punjab Urban Planning & Development Authority Vs CIT ( ITAT, Chd ) 103 TTJ 988
Income to be arrived at in a commercial manner without classification under various heads.
CIT Vs Rao Bahadur Calavala Cunnan Chetty Charities (Mad) 135 ITR 485
Amount credited to the account of beneficiaries cannot be treated as loan – Interest paid to such beneficiaries cannot be allowed as deduction.
Arun Family Trust Vs CIT (Guj) 165 Taxman 15