ITR (Trib) HIGHLIGHTS Volume 12 Part 7 ISSUE DATED 12-12-2011

ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS
ISSUE DATED 12-12-2011
Volume 12 Part 7

APPELLATE TRIBUNAL ORDERS



--> Disclosure of capital gains after search not proof of bona fides of assessee, penalty leviable : Dy. CIT v. Metal Rolling Works Ltd. (Mumbai) p. 628

--> Salary paid to member of society not unreasonable considering qualification, assessee entitled to exemption u/s. 13(2)(c) : Young Scholars Educational Society v. ITO (Chandigarh) p. 640

--> Addition not based on evidence found during course of search, deletion of penalty justified : Asst. CIT v. Shanti Bai Yadav (Jaipur) p. 646

--> Purchaser neither legal representative nor agent of legal heirs of owner of land, reassessment not valid : ITO v.Siddharth S. Patel (Ahmedabad) p. 653

--> Transfer pricing : Interest income, rent receipts, dividend receipts, penalty collected, rent deposits returned, foreign exchange fluctuations and profit on sale of assets not part of operational income, matter remanded : DHL Express (India) P. Ltd. v. Asst. CIT (Mumbai) p. 658

--> Claim for depreciation at appropriate rate treating transaction as lease transaction, not concealment of income, penalty cannot be levied : Comet Leasing and Finance Ltd. v. Asst. CIT (Delhi) p. 667

--> Requirement for claim by unit in software technology park notified by Commerce Ministry under Foreign Trade (Development and Regulation) Act not satisfied, assessee not entitled to exemption u/s. 10A : Dy. CIT v. IBS Software Services P. Ltd. (Cochin) p. 675

--> Expenses incurred in travelling, telecommunication, consultancy charges not includible in total turnover : Dy. CIT v. IBS Software Services P. Ltd. (Cochin) p. 675

--> Royalty : Payment for software cannot be treated as payment for use of copyright in the software : Addl. DIT (International Tax) v. TII Team Telecom International P. Ltd. (Mumbai) p. 688

--> Non-resident : Where all matches played in foreign countries, advertisement revenues not taxable in India : Nimbus Sport International Pte. Ltd. v. Dy. DIT (Delhi) p. 709

ITR Volume 339 : Part 3 Issue dated 12-12-2011

INCOME TAX REPORTS (ITR)

Volume 339 : Part 3 (Issue dated 12-12-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Business expenditure --Disallowance--Payment in cash exceeding prescribed limit--No evidence to indicate that assessee made any payment in excess--Section 40A(3) not applicable merely on basis of estimate-- Income-tax Act, 1961, s. 40A(3)-- CIT v. Ratanlal Vyaparilal Jain (Guj) . . . 351

Capital or revenue expenditure --Expenditure on dismantling of cell room and construction of new cell room--Capital expenditure--Expenditure on transformer, pumping set and motors--Revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v. Modi Industries Ltd. (Delhi) . . . 467

----Expenditure on setting up new sugar units--Expansion of existing business--Is revenue expenditure--Income-tax Act, 1961, ss. 36, 37-- CIT v. Sakthi Sugars Ltd .

(Mad) . . . 400

----Renovation of house property --Assessing Officer not giving credit to investment disclosed by assessee and others-- Tribunal reducing addition considering expenditure disclosed in returns--Findings of fact--Income-tax Act, 1961-- CIT v. Ratanlal Vyaparilal Jain (Guj) . . . 351

Deduction of tax at source --Failure to deduct--Registered office of assessee at New Delhi--Assessee filing returns and assessed at New Delhi--Notice under sections 201 and 201(1A) by Assessing Officer, Mumbai for not deducting tax at source on lease premium paid to MMRDA--Assessing Officer, Mumbai has no jurisdiction--Competent authority at New Delhi has jurisdiction--Income-tax Act, 1961, s. 201(1A)-- Indian Newspaper Society v. ITO (TDS) (Bom) . . . 365

Exemption --Educational institution--Application for exemption--Delay in application--Delay cannot be condoned--Income-tax Act, 1961, s. 10(23C), fourteenth proviso-- R. R. M. Educational Society v. Chief CIT (AP) . . . 323

----Educational institution--Application for exemption--Law applicable--Effect of fourteenth proviso to section 10(23C) inserted w.e.f. 1-6-2006--Limitation laid down for application--Delay in application cannot be condoned--Income-tax Act, 1961, s. 10(23C)(vi)-- Aurora Educational Society v. Chief CIT (AP) . . . 333

----Educational institution--Condition precedent--Institution should exist solely for purposes of education--Institution having other objects--Amendment of objects in August 2009--No certificate from Registrar of Societies regarding such alteration--Institution not entitled to exemption for assessment years 2004-05 to 2008-09--Income-tax Act, 1961, s. 10(23C)(vi)-- Aurora Educational Society v. Chief CIT

(AP) . . . 333

----Educational institution--Condition precedent for exemption under section 10(23C)(vi)--Institution must exist solely for purposes of education--Assessee having eradication of unemployment as one of its objects--Not entitled to exemption--Income-tax Act, 1961, s. 10(23C)(vi)-- R. R. M. Educational Society v. Chief CIT

(AP) . . . 323

----Export--Condition precedent for claiming exemption under section 10B--Law applicable--Effect of amendment of section 10B w.e.f. 1-4-1994--No condition regarding quantum of export prior to 1-4-1994--Income-tax Act, 1961, s. 10B-- CIT v. BAEHAL Software Ltd. (Karn) . . . 368

Export --Special deduction under section 80HHC--"Processing" of goods--Meaning of "processing"--Cleaning and grading of cardamom do not amount to processing--Assessee not entitled to special deduction under section 80HHC--Income-tax Act, 1961, s. 80HHC-- CIT v. Midland Rubber and Produce Co. Ltd . (Ker) . . . 436

Industrial park --Special deduction--Industrial park scheme--Three categories of industrial parks : those engaged in developing ; those engaged in developing and operating ; and those engaged in maintaining and operating--Assessee engaged in development of industrial park--Assessee providing infrastructural facilities and dividing plot into small units and selling all of them within specified period--Approval obtained from Government--Units not starting production--Not a ground for withdrawal of approval--Notice for such withdrawal can be quashed--Income-tax Act, 1961, s. 80-IA--Industrial Park Scheme, 2002, clause 9--Constitution of India, art. 226-- Ganesh Housing Corporation Ltd . v. Padam Singh, Under Secretary (Guj) . . . 441

Interest-tax --Credit institution--Loans and advances--Meaning of--Trade advance for purchase of goods--Advance adjusted against purchase price and never returned to assessee--Interest on such advance for delay in delivery of goods--Not interest on loan or advance liable to interest-tax--Interest-tax Act, 1974, s. 2(5B)-- CIT v. Integrated Finance Co. Ltd . (Mad) . . . 391

Method of accounting --Rule of consistency--Mercantile system of accounting--Prior period expenses debited in following year--Method consistently followed by assessee and accepted by Department--No evidence of distortion of profits--Method could not be rejected--Income-tax Act, 1961, s. 145-- CIT v. Jagatjit Industries Ltd .

(Delhi) . . . 382

Penalty --Concealment of income--Furnishing of inaccurate particulars--Advance on account of development agreement--Assessee disclosing receipt but not offering to tax in return--Assessee also disclosing amounts received from time to time in relevant years--Assessing Officer not sure as to whether assessee liable to pay capital gains tax and if so in which assessment year and under which head of income--Penalty cannot be imposed--Income-tax Act, 1961, s. 271(1)(c)-- Metal Rolling Works Ltd . v. CIT

(Bom) . . . 373

Salary --Profits in lieu of salary--Meaning of expression before insertion of clause (iii) of section 17(3) w.e.f. 1-4-2002--Ex gratia payment by employer on termination of service in accounting year relevant to assessment year 2001-02--Not assessable as profits in lieu of salary--Income-tax Act, 1961, s. 17(3)(i), (iii)-- CIT v. Deepak Verma

(Delhi) . . . 475

Search and seizure --Block assessment--Undisclosed income--Assessment on estimation--Gross profit--Commissioner (Appeals) working out gross profit at 6 per cent. whereas Tribunal at 5 per cent.--Finding of fact--Income-tax Act, 1961-- CIT v. Ratanlal Vyaparilal Jain (Guj) . . . 351

----Block assessment--Undisclosed income--Cheque discounting and bill discounting--Tribunal finding no separate addition on bill discounting required as it already included in cheque discounting--Findings of fact--Income-tax Act, 1961-- CIT v. Ratanlal Vyaparilal Jain (Guj) . . . 351

----Block assessment--Undisclosed income--Debit interest--Addition on basis of seized paper--Assessee not claiming interest as deduction--Issue not to be adjudicated--Income-tax Act, 1961-- CIT v. Ratanlal Vyaparilal Jain

(Guj) . . . 351

----Block assessment--Undisclosed income--Jewellery--Tribunal finding source of jewellery held by family in consonance with general practice in Hindu families--Justified--CBDT Circular No. 1916 dated 11-5-1994-- CIT v. Ratanlal Vyaparilal Jain

(Guj) . . . 351

----Prohibitory order under section 132(3)--Condition precedent--Prohibitory order on bank accounts--No evidence that deposits in banks constituted undisclosed income of assessee--Prohibitory order--Not valid--Income-tax Act, 1961, s. 132-- Maa Vaishnavi Sponge Ltd. v. Director General of Income-tax (Investigation)

(Orissa) . . . 413

Voluntary disclosure of income --Conditions precedent for benefit under Scheme--Declaration of undisclosed income on or before 31-12-1997--Payment of tax on such income along with declaration or within three months--Declaration to be made before Commissioner--Declaration before Assessing Officer made on 30-12-1997--Declaration forwarded to Commissioner on 31-12-1997--Payment of tax on 31-3-1998--Assessee not entitled to benefit of Scheme--Finance Act, 1997, ss. 66, 67--Voluntary Disclosure of Income Scheme, 1997-- S. Sudarsana Babu v. ITO (Ker) . . . 424

----Conditions precedent for benefit under Scheme--Declaration of undisclosed income on or before 31-12-1997--Payment of tax on such income along with declaration or within three months--Meaning of "month"--Declaration must be made before Commissioner--Declaration before Assessing Officer on 30-12-1997--Declaration forwarded to Commissioner on 31-12-1997 and receipt signed by him--Payment of tax on 31-3-1998--Date of receipt of declaration by Commissioner relevant--Tax paid within time--Assessee entitled to benefit of Scheme--Finance Act, 1997, ss. 62(2), 66, 67, 68(2)--Voluntary Disclosure of Income Scheme, 1997-- S. Sudarsana Babu v. ITO

(Ker) . . . 428

Wealth-tax --Exemption--Charitable trust--Kalyana mandapam belonging to trust let out and income applied for charitable purposes--Income held to be from property and granted exemption under Income-tax Act--Kalyana mandapam entitled to exemption under Wealth-tax Act--Wealth-tax Act, 1957, s. 5(1)(i)-- Director of Income-tax (Exemptions) v. Samyuktha Gowda Saraswatha Sabha (Mad) . . . 456

Words and phrases --Meaning of "processing"-- CIT v. Midland Rubber and Produce Co. Ltd. (Ker) . . . 436

Writ --Jurisdiction of High Court discretionary--Interference only to cure substantial injustice--Constitution of India, art. 226-- Aurora Educational Society v. Chief CIT

(AP) . . . 333

----Powers of High Court--Notice can be quashed in exceptional cases--Constitution of India, art. 226-- Ganesh Housing Corporation Ltd. v. Padam Singh, Under Secretary (Guj) . . . 441

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Constitution of India ;

Art. 226 --Industrial park--Special deduction--Industrial park scheme--Three categories of industrial parks : those engaged in developing ; those engaged in developing and operating ; and those engaged in maintaining and operating--Assessee engaged in development of industrial park--Assessee providing infrastructural facilities and dividing plot into small units and selling all of them within specified period--Approval obtained from Government--Units not starting production--Not a ground for withdrawal of approval--Notice for such withdrawal can be quashed-- Ganesh Housing Corporation Ltd . v. Padam Singh, Under Secretary (Guj) . . . 441

----Writ--Jurisdiction of High Court discretionary--Interference only to cure substantial injustice-- Aurora Educational Society v. Chief CIT (AP) . . . 333

----Writ--Powers of High Court--Notice can be quashed in exceptional cases-- Ganesh Housing Corporation Ltd. v. Padam Singh, Under Secretary

(Guj) . . . 441

Finance Act, 1997 :

S. 62(2) --Voluntary disclosure of income--Conditions precedent for benefit under Scheme--Declaration of undisclosed income on or before 31-12-1997--Payment of tax on such income along with declaration or within three months--Meaning of "month"--Declaration must be made before Commissioner--Declaration before Assessing Officer on 30-12-1997--Declaration forwarded to Commissioner on 31-12-1997 and receipt signed by him--Payment of tax on 31-3-1998--Date of receipt of declaration by Commissioner relevant--Tax paid within time--Assessee entitled to benefit of Scheme--Voluntary Disclosure of Income Scheme, 1997-- S. Sudarsana Babu v. ITO

(Ker) . . . 428

S. 66 --Voluntary disclosure of income--Conditions precedent for benefit under Scheme--Declaration of undisclosed income on or before 31-12-1997--Payment of tax on such income along with declaration or within three months--Declaration to be made before Commissioner--Declaration before Assessing Officer made on 30-12-1997--Declaration forwarded to Commissioner on 31-12-1997--Payment of tax on 31-3-1998--Assessee not entitled to benefit of Scheme--Voluntary Disclosure of Income Scheme, 1997-- S. Sudarsana Babu v. ITO (Ker) . . . 424

----Voluntary disclosure of income--Conditions precedent for benefit under Scheme--Declaration of undisclosed income on or before 31-12-1997--Payment of tax on such income along with declaration or within three months--Meaning of "month"--Declaration must be made before Commissioner--Declaration before Assessing Officer on 30-12-1997--Declaration forwarded to Commissioner on 31-12-1997 and receipt signed by him--Payment of tax on 31-3-1998--Date of receipt of declaration by Commissioner relevant--Tax paid within time--Assessee entitled to benefit of Scheme--Voluntary Disclosure of Income Scheme, 1997-- S. Sudarsana Babu v. ITO

(Ker) . . . 428

S. 67 --Voluntary disclosure of income--Conditions precedent for benefit under Scheme--Declaration of undisclosed income on or before 31-12-1997--Payment of tax on such income along with declaration or within three months--Declaration to be made before Commissioner--Declaration before Assessing Officer made on 30-12-1997--Declaration forwarded to Commissioner on 31-12-1997--Payment of tax on 31-3-1998--Assessee not entitled to benefit of Scheme--Voluntary Disclosure of Income Scheme, 1997-- S. Sudarsana Babu v. ITO (Ker) . . . 424

----Voluntary disclosure of income--Conditions precedent for benefit under Scheme--Declaration of undisclosed income on or before 31-12-1997--Payment of tax on such income along with declaration or within three months--Meaning of "month"--Declaration must be made before Commissioner--Declaration before Assessing Officer on 30-12-1997--Declaration forwarded to Commissioner on 31-12-1997 and receipt signed by him--Payment of tax on 31-3-1998--Date of receipt of declaration by Commissioner relevant--Tax paid within time--Assessee entitled to benefit of Scheme--Voluntary Disclosure of Income Scheme, 1997-- S. Sudarsana Babu v. ITO

(Ker) . . . 428

S. 68(2) --Voluntary disclosure of income--Conditions precedent for benefit under Scheme--Declaration of undisclosed income on or before 31-12-1997--Payment of tax on such income along with declaration or within three months--Meaning of "month"--Declaration must be made before Commissioner--Declaration before Assessing Officer on 30-12-1997--Declaration forwarded to Commissioner on 31-12-1997 and receipt signed by him--Payment of tax on 31-3-1998--Date of receipt of declaration by Commissioner relevant--Tax paid within time--Assessee entitled to benefit of Scheme--Voluntary Disclosure of Income Scheme, 1997-- S. Sudarsana Babu v. ITO

(Ker) . . . 428

Income-tax Act, 1961 :

S. 10B --Exemption--Export--Condition precedent for claiming exemption under section 10B--Law applicable--Effect of amendment of section 10B w.e.f. 1-4-1994--No condition regarding quantum of export prior to 1-4-1994-- CIT v. BAEHAL Software Ltd. (Karn) . . . 368

S. 10(23C), fourteenth proviso --Exemption--Educational institution--Application for exemption--Delay in application--Delay cannot be condoned-- R. R. M. Educational Society v. Chief CIT (AP) . . . 323

S. 10(23C)(vi) --Exemption--Educational institution--Application for exemption--Law applicable--Effect of fourteenth proviso to section 10(23C) inserted w.e.f. 1-6-2006 --Limitation laid down for application--Delay in application cannot be condoned-- Aurora Educational Society v. Chief CIT (AP) . . . 333

----Exemption--Educational institution--Condition precedent for exemption under section 10(23C)(vi)--Institution must exist solely for purposes of education--Assessee having eradication of unemployment as one of its objects--Not entitled to exemption-- R. R. M. Educational Society v. Chief CIT (AP) . . . 323

----Exemption--Educational institution--Condition precedent--Institution should exist solely for purposes of education--Institution having other objects--Amendment of objects in August 2009--No certificate from Registrar of Societies regarding such alteration--Institution not entitled to exemption for assessment years 2004-05 to 2008-09-- Aurora Educational Society v. Chief CIT (AP) . . . 333

S. 17(3)(i), (iii) --Salary--Profits in lieu of salary--Meaning of expression before insertion of clause (iii) of section 17(3) w.e.f. 1-4-2002--Ex gratia payment by employer on termination of service in accounting year relevant to assessment year 2001-02--Not assessable as profits in lieu of salary-- CIT v. Deepak Verma (Delhi) . . . 475

S. 36 --Capital or revenue expenditure--Expenditure on setting up new sugar units--Expansion of existing business--Is revenue expenditure-- CIT v. Sakthi Sugars Ltd .

(Mad) . . . 400

S. 37 --Capital or revenue expenditure--Expenditure on dismantling of cell room and construction of new cell room--Capital expenditure--Expenditure on transformer, pumping set and motors--Revenue expenditure-- CIT v. Modi Industries Ltd.

(Delhi) . . . 467

----Capital or revenue expenditure--Expenditure on setting up new sugar units--Expansion of existing business--Is revenue expenditure-- CIT v. Sakthi Sugars Ltd .

(Mad) . . . 400

S. 40A(3) --Business expenditure--Disallowance--Payment in cash exceeding prescribed limit--No evidence to indicate that assessee made any payment in excess--Section 40A(3) not applicable merely on basis of estimate-- CIT v. Ratanlal Vyaparilal Jain (Guj) . . . 351

S. 80HHC --Export--Special deduction under section 80HHC--"Processing" of goods--Meaning of "processing"--Cleaning and grading of cardamom do not amount to processing--Assessee not entitled to special deduction under section 80HHC-- CIT v. Midland Rubber and Produce Co. Ltd . (Ker) . . . 436

S. 80-IA --Industrial park--Special deduction--Industrial park scheme--Three categories of industrial parks : those engaged in developing ; those engaged in developing and operating ; and those engaged in maintaining and operating--Assessee engaged in development of industrial park--Assessee providing infrastructural facilities and dividing plot into small units and selling all of them within specified period--Approval obtained from Government--Units not starting production--Not a ground for withdrawal of approval--Notice for such withdrawal can be quashed-- Ganesh Housing Corporation Ltd . v. Padam Singh, Under Secretary (Guj) . . . 441

S. 132 --Search and seizure--Prohibitory order under section 132(3)--Condition precedent--Prohibitory order on bank accounts--No evidence that deposits in banks constituted undisclosed income of assessee--Prohibitory order--Not valid-- Maa Vaishnavi Sponge Ltd. v. Director General of Income-tax (Investigation)

(Orissa) . . . 413

S. 145 --Method of accounting--Rule of consistency--Mercantile system of accounting--Prior period expenses debited in following year--Method consistently followed by assessee and accepted by Department--No evidence of distortion of profits--Method could not be rejected-- CIT v. Jagatjit Industries Ltd . (Delhi) . . . 382

S. 201(1A) --Deduction of tax at source--Failure to deduct--Registered office of assessee at New Delhi--Assessee filing returns and assessed at New Delhi--Notice under sections 201 and 201(1A) by Assessing Officer, Mumbai for not deducting tax at source on lease premium paid to MMRDA--Assessing Officer, Mumbai has no jurisdiction--Competent authority at New Delhi has jurisdiction-- Indian Newspaper Society v. ITO (TDS) (Bom) . . . 365

S. 271(1)(c) --Penalty--Concealment of income--Furnishing of inaccurate particulars--Advance on account of development agreement--Assessee disclosing receipt but not offering to tax in return--Assessee also disclosing amounts received from time to time in relevant years--Assessing Officer not sure as to whether assessee liable to pay capital gains tax and if so in which assessment year and under which head of income--Penalty cannot be imposed-- Metal Rolling Works Ltd . v. CIT (Bom) . . . 373

Interest-tax Act, 1974 :

S. 2(5B) --Interest-tax--Credit institution--Loans and advances--Meaning of--Trade advance for purchase of goods--Advance adjusted against purchase price and never returned to assessee--Interest on such advance for delay in delivery of goods--Not interest on loan or advance liable to interest-tax-- CIT v. Integrated Finance Co. Ltd .

(Mad) . . . 391

Wealth-tax Act, 1957 :

S. 5(1)(i) --Wealth-tax--Exemption--Charitable trust--Kalyana mandapam belonging to trust let out and income applied for charitable purposes--Income held to be from property and granted exemption under Income-tax Act--Kalyana mandapam entitled to exemption under Wealth-tax Act-- Director of Income-tax (Exemptions) v. Samyuktha Gowda Saraswatha Sabha (Mad) . . . 456

Industrial Park Scheme, 2002 :

Clause 9 --Industrial park--Special deduction--Industrial park scheme--Three categories of industrial parks : those engaged in developing ; those engaged in developing and operating ; and those engaged in maintaining and operating--Assessee engaged in development of industrial park--Assessee providing infrastructural facilities and dividing plot into small units and selling all of them within specified period--Approval obtained from Government--Units not starting production--Not a ground for withdrawal of approval--Notice for such withdrawal can be quashed-- Ganesh Housing Corporation Ltd . v. Padam Singh, Under Secretary (Guj) . . . 441

Compilations of case law : HEAD OF INCOME

INCOME – CHARGEABILITY AND COMPUTATION

HEAD OF INCOME

Under which head, the transaction to be assessed ?

RECEIPT OF INTEREST

Interest earned before commencement of business on short term deposit with banks out of term loan secured from financial institutions - Other Sources

Tuticorin Alkali Chemicals and Fertilizers Limited Vs CIT (SC) 227 ITR 172

CIT Vs Petrofils Co-operative Ltd. (Guj) 241 ITR 139

CIT Vs Cochin Ship Yard Ltd. (Ker) 158 CTR 208

CIT Vs Rassi Cement Ltd (AP) 232 ITR 554

South India Shipping Corporation Vs CIT ( Mad ) 240 ITR 24

CIT Vs Kisan Sahakari Chini Mills ( All ) 280 ITR 617

Chandpur Sugar Co. Ltd. Vs CIT ( All ) 280 ITR 612

Bokaro Steel Ltd. Vs CIT (Patna) 170 ITR 545

CIT Vs Coromandel Cements Ltd, (SC) 234 ITR 412

CIT Vs Autokast Ltd. (SC) 248 ITR 110

Consolidated Fibres & Chemicals Ltd. Vs CIT (Cal) 273 ITR 353

Interest earned on short term deposits of share capital – Other sources income – cannot be set off against interest paid on capital borrowed for setting up industry.

Eskayef Ltd. Vs DCIT (ITAT, Bang) 71 ITD 419

Godavari Fertilizers and Chemicals Ltd,. Vs CIT (AP) 198 ITR 388

CIT Vs Hindustan Electro Graphites Ltd. (MP) 177 ITR 465

CIT Vs Tamil Nadu Industrial Development Corpn. Ltd. (Mad0 189 ITR 670

CIT Vs New Central Jute Mills Co. Ltd. (Cal) 118 ITR 1005

CIT Vs V.P. Gopinathan (SC) 248 ITR 449

CIT Vs Manipur Spinning Mills Corpn. Ltd. (Gau) 226 ITR 551

Money lying idle deposited in Bank – Interest – Other Sources.

Collis Line P. Ltd. Vs CIT (Ker) 135 ITR 390

Traco Cable Co. Ltd. Vs CIT (Ker) 72 ITR 503

Madhya Pradesh State Industries Copn. Ltd. Vs CIT (MP) 69 ITR 824

CIT Vs Cochin Refineries Ltd (Ker) 154 ITR 345

CIT Vs L and T McNeil Ltd. (Bom) 202 ITR 662

IAC Vs S.Khushwant Singh (ITAT, Del) 18 ITD 540

CIT Vs Monarch Tools (Mad) 260 ITR 258

CIT Vs Assam Plantation Crops Dev. Corpn. Ltd. (Gau) 221 ITR 392

Interest on debentures issued by co-operative land mortgage bank – Assessable as income from Other Sources.

CIT Vs Lakshmi Vilas Bank Ltd.(Mad) 234 ITR 796

Unpaid sale consideration – can be treated as loan – interest accruing thereon – Income from other sources.

Mount Stuart Tea Estate & Amar Coffee Plantation Vs CIT (Mad) 239 ITR 489

Taking FDRs and pledging them as securities for taking loans are two separate transactions – FDRs pledged as securities in bank for taking loans for business – Interest on such FDRs is Income from Other Sources

DCIT Vs Allied Construction (ITAT, Del-SB) 105 ITD 1

ITAT President cannot write ACRs of Members - Who will Judge Judges?

 

ITAT President cannot write ACRs of Members - Who will Judge Judges?

IS the ITAT President the boss of the Members and can he write their annual confidential reports? This was a question answered by the Madras High Court last week. The question is not exactly new. Exactly five years ago, the Madras High Court decided the same issue in respect of the CESTAT. And it was the same judge of the High Court who wrote both the orders.

In Revenue Secretary vs Shri Syed Liaquath Peeran, Member (J) - 2006-TIOL-413-HC-MAD-CESTAT, the High Court observed, "there is no provision of law enabling the President to write ACRs in respect of other Members of the Tribunal ".

In the present case before the High Court, a Member of the ITAT had challenged the selection of a vice president of the ITAT who was junior to the petitioner. His grouse is that he was not selected because of the adverse remarks in his confidential reports by the President who had no power to write the confidential reports.

Following its earlier order in the Peeran case, the High Court held that the President of the ITAT has no power or authority to write the ACRs of the Members.

Please see Tribunal President- not a boss to the members! Who will judge the judges? DDT 514-18.12.2006

My Lords; No Arrogance Please

THE High Court, in the above case, was pained to see that the material would depict a gloomy picture about the petitioner that he is arrogant and would always throw to winds the well-established judicial conventions. Instances of keeping the matters for writing dissenting orders for months together and fighting with the other Members on silly aspects are some of them. The High Court observed,

It is the bounden duty of the Judges to maintain utmost decorum on and off the dais. Deviations in this regard by the Judges would result in loss of confidence about the entire judiciary by the Public and the Bar.

The allegations made against the petitioner by the respondents that he sans such decorum are quite alarming. It is also to be mentioned that there is no allegation made against the petitioner touching his integrity. Therefore, what comes to be known is that the petitioner is rigid even to his colleagues - whether junior or senior - and behaves in a harsh manner with them and he seems to have not maintaining any cordial relation with any of his colleagues or for that matter with the Bar also, further throwing to winds the judicial conventions.

No institution could survive in a democracy unless it earns public esteem; and it can earn the public esteem only by discharging its duties impartially and expeditiously. Judiciary is no exception for this principle.

The impartiality of the Judges has to be not only actual but also manifest and apparent. This is in conformity with the oft-repeated maxim-"Justice must not only be done but also appear to be done.'

The well-established precepts of public trust and public accountability are fully applicable to the functions, which emerge, from the public servants or even the persons holding public office.

People occupying higher positions in the society and enjoying the respect and benefits attached to such exalted positions at the cost of the taxpayer's money, must adorn the positions in a responsive manner and to be role models for others to follow. Nobody has raised his little finger against the petitioner about his honesty and integrity, but all the allegations are pinpointed towards his arrogant behaviour and ignoring the judicial conventions. All these would force us to direct the petitioner to mend his ways, conduct himself in a dignified manner, and follow the established judicial conventions, so as to maintain the decorum on and off the dais.

Can't the Judges be a little less rude?

THE observations of the Madras High Court could not have come a day earlier.

Everybody in the Court bows to the bench and are all always submissive and extremely polite and almost every sentence is followed and preceded by "my Lords". But many of their lordships on the Bench are often rude and arrogant and lose their temper (with no attempt to regain it). It does not mean that all judges are rude and arrogant. Many of them are extremely courteous, smiling and encourage the junior lawyers. Some of the Supreme Court judges are so kind and humble that one would be baffled at the arrogance of some junior judges in some lower courts. Of course, rude and arrogant behaviour is not limited to the lower courts, but can be seen even in the highest courts.

Courtesy and good behaviour can go together, as is being proved by many a judge.

And usually arrogance and outbursts are the highest when ignorance is also highest.

Recently Justice Ruma Pal remarked, arrogance as one of the seven sins - judges often "misconstrue"independence as judicial and administrative indiscipline. "Both of these in fact stem from judicial arrogance as to one's intellectual ability and status. Intellectual arrogance or what some may call intellectual dishonesty is manifest when judges decide without being bound by principles of stare decisis or precedent.

Chief justice Kapadia recently remarked, "Judicial accountability, is a facet of judicial independence. The legislature is accountable to the electorate. The executive is indirectly accountable to the people through the elected legislature. There is no reason why the judiciary should not be accountable to the community for its due performance of the functions vested in it. Power is given on trust and judicial power is no exception. Like other public institutions, the judiciary must be subject to a fair criticism."

business exp

(2010) 34 (II) ITCL 531 (Mum `J'-Trib)

Shabro International v. Addl. CIT

ORDER

These three appeals pertain to the same assessee involve common issues arising out of materially similar set of facts and circumstances and were heard together. As a matter of convenience, therefore, all the three appeals are being disposed off by way of this consolidated order.

2. First we take up assessee's appeal in ITA No.5122/Mum./2005, for assessment year 2002-03.

3. Ground no.1 raised by the assessee, reads as under:

"1. The learned Commissioner (Appeals) erred in allowing only 50% of total expenses as the expenses were incurred to protect the business interest of assessee firm. Hence, they are to be fully allowed."

3. Briefly stated the material facts are like this. The assessee is a partnership firm engaged in the business, inter-alia, of exporting "Precious" brand agarbattis (incense sticks) which are manufactured by it's sister concern M/s. Hem Corporation. During the relevant previous year, the assessee had to incur certain expenses in connection with trade mark "Precious" which is owned by it's sister concern, in respect of a litigation in U.S.A. While agarbattis are manufactured by the sister concern, the entire export of agarbattis is being handled by the assessee. It was in these circumstances and since the expenses related to export market, the expenditure was borne by the assessee firm. In the course of assessment proceedings, however, the assessing officer declined deduction in respect of the same on the ground that the trade mark was owned by the sister concern. Aggrieved, the assessee carried the matter in appeal before the learned Commissioner (Appeals) who allowed only half of the expenditure on the ground that the sister concern ought to bear half of this expenditure as the sister concern also had valuable rights protected by the said litigation. Being aggrieved, the assessee is in further appeal before us.

4. After having heard the rival contentions and on perusal of the material on record and duly considering the applicable legal position as also the factual matrix of the case, we are of the considered view that the assessee's grievance has legally sustainable on merits. We have noted that the learned Commissioner (Appeals) has given a finding to the fact that these expenditure were incurred in furtherance of the legitimate business interest of the assessee and the revenue has not challenged this finding. On the basis of these findings, 50% of this expenditure have been allowed. The learned Commissioner (Appeals) has, however, disallowed remaining 50% expenditure on the ground that the sister concern ought to have borne the amount. This observation, in our considered view is indeed devoid of any substance inasmuch as once the learned Commissioner (Appeals) accepts the business expediency of the expenditure, it is not for him to question as to how much the assessee and the sister concern should have borne. As long as expenses are incurred wholly and exclusively for the purposes of earning the income from business or profession, as is now uncontroverted position on the facts of this case, even if some of these expenses are borne voluntarily, these expenses do not cease to be deductible under section 37(1). It was so held by the Hon'ble Supreme Court in the case of CIT v. Chandulal Keshanlal & Co., (1960) 38 ITR 601, and Sasson J. David & Co. v. CIT, (1979) 118 ITR 261. That apart, on the facts of the present cases, assessee had bonafide business reasons to bear the impugned expenses. We have noted that the assessee has substantial business interest in protecting the valuable trade mark and it was the assessee alone who was doing the entire business in the U.S.A. for the products in respect of which trade mark was being sought to be protected. Under these circumstances, particular in the light of the uncontroverted findings of the learned Commissioner (Appeals), in our considered view, the disallowance sustained by the learned Commissioner (Appeals) is indeed only fit to be deleted. We do so. The assessee gets relief accordingly.

5. Ground no.2 raised by the assessee, reads as under:-

"2. The learned Commissioner (Appeals) erred in allowing only 50% of expenses as all the details were furnished before the assessing officer and all the expenses were relating to the business of assessee firm. Hence, they are to be fully allowed."

5. The assessee firm had incurred foreign tour expenses aggregating to Rs.9,49,094/-. The ticket component aggregating to Rs.4,51,879/- were allowed by the assessing officer as business expenditure. The balance amount of Rs.4,97,215/- has not been allowed on the ground that no details were filed by the assessee firm except credit card bills showing the amount spent.

6. The assessee, being aggrieved by the order so passed by the assessing officer, carried the matter in appeal before the learned Commissioner (Appeals) who allowed 50% of the expenses on the ground that the amount is reasonably spent by the assessee firm for the stay abroad for the purpose of the business. While doing so, the learned Commissioner (Appeals), inter-alia, observed as follows:-

"11. Even before me, the A/R has not produced any evidence that the disallowed amount had indeed been spent for the business. Firstly, the disallowed amounts pertaining to A.Y. 2003-04 have not been exactly clarified and the purposes have not been spelt out. Secondly, for the A.Y. 2004-05, the A/R has mentioned in his submission, inter alia, it is not feasible and practical to retain each and every bill and/or voucher.

12. Considering the arguments, I am of the view that the appellant firm has not established its contention. It is only baffling that when the amounts could be ledgerised to arrive at a figure under a particular head of expenses, how the same could not be justified with any noting or narration? I refuse to believe that the expenditure had indeed been made for the purpose of business. Therefore, I confirm the disallowances made in both the years. The ground taken in this regard is dismissed."

7. Not satisfied by the stand so taken by the learned Commissioner (Appeals), the assessee is in further appeal before us.

8. We have heard the rival contentions, perused the material on record and duly considered the applicable legal position as also the factual matrix of the case.

9. The impugned disallowance is with respect to foreign currency purchases in respect of which actual supporting evidences of expenditure are not filed. An amount of Rs.4,97,215/- is shown to have been spent for purchase of currency but beyond that there are no bills or vouchers. To the extent the details are not furnished, partial disallowance is indeed justified for want of details. As for the break-up filed by the assessee, even this break-up, in round figures, is devoid of any support or basis. It has been contended before us that hotel bills which are paid on credit cards, have also been disallowed on ad-hoc basis @ 50%. We do not think such a disallowance is called for. We, therefore, modify the learned Commissioner (Appeals)'s order to the extent that the extent assessee has borne any direct expenses on the credit card, the same should be allowed fully. As for the expenses for which no supporting evidence is available, except for evidence of purchasing the foreign currency, only 50% of expenses are to be allowed on estimate basis even without bills and vouchers. To that extent, the order of the learned Commissioner (Appeals) is modified.

10. The remaining ground raised by the assessee is not pressed and is accordingly dismissed as such.

11. In the result, assessee's appeal is partly allowed in the terms indicated above.

12. Now we take up assessee's appeal in ITA No.5885/Mum./2007, for assessment year 2004-05.

"1. The learned Commissioner (Appeals) erred in allowing only 50% (and disallowing balance 50%) of expenses, as the expenses were incurred solely to protect the business interest of assessee firm. Hence, they are to be fully allowed.

13. The issue arising out of the above ground is mutatis mutandis identical to the ground no.1 decided by us in the appeal in ITA No.5122/Mum./2005 for assessment year 2002-03, vide Para-4, wherein, we have deleted the disallowance sustained by the learned Commissioner (Appeals). In view of our directions as contained in Para-4 above, similar directions are issued on this ground also. Thus, the assessee gets relief accordingly.

14. Ground No.2, reads as under:-

"2. The learned Commissioner (Appeals) erred in confirming the disallowance of foreign tour expenses of Rs.10,14,157/- without appreciating the fact that the assessee has not furnished to the assessing officer details and bills for currency purchase and credit card statements."

15. The issue arising out of the above ground is mutatis mutandis identical to the ground no.2 decided by us in the appeal in ITA No.5122/Mum./2005 for assessment year 2002-03, vide Para–8, wherein, we have direct the assessing officer to allow the amount recomputed on the basis of our decision Para-9 above. Similar directions are issued on this ground also. Thus, the assessee gets partial relief accordingly.

16. The remaining ground raised by the assessee, reads as under:-

"3. The ld. Commissioner (Appeals) erred in confirming the disallowance of membership and subscription expenses of Rs.2,83,852/- without appreciating the fact that they are for membership of assessee firm only and no asset is acquired by incurring these expenses."

17. The assessee claimed Rs.2,65,980/- as charges of Club Mahindra membership. The assessing officer noticed that the main place of business of the assessee is at Mumbai and Club Mahindra does not have any resort in Mumbai. He was of the view that the Club Mahindra are mainly located for enjoying vacation with the family and the resorts are mainly located at various tourist places which are not connected with the assessee's business. The assessing officer also seen that the joining fees is for a period of 25 years and the whole expenditure cannot be allowed in one year. He disallowed the whole expenditure as the same is person in nature. Apart from this, the assessing officer also disallowed Rs.6,372/- on account of New Year Card Membership, Rs.4,000/- on account of Acre Club, Rs.7,500/- on account of J.W. Marriot Membership aggregating to Rs.2,83,852/-.

18. The assessee, being aggrieved by the order so passed by the assessing officer, carried the matter in appeal before the learned Commissioner (Appeals), but without any success. The learned Commissioner (Appeals) affirmed the action of the assessing officer, observing as follows:-

"22. It is seen from the ledger copy presented before me that out of 11 entries made therein between 1-4-2003 and 18-2-2004, the following are worth the consideration for their apparent non-business purposes. They are mentioned in brief as under:-

Date
Expenditure incurred on account of
Amount (Rs.)

30.4.2003
Acre Club Membership
4,000/-

12.6.2003
Hotel Membership
7,000/-

06.2.2004
Club Mahindra Holiday for season
2,65,980/-

18.2.2004
18.2.2004 New Year Card Membership
6,372/-

Total
2,83,852/-


23. It is true that while listing the above at Para-7 of Page-3 of his order, the assessing officer has inadvertently omitted the figure for Club Mahindra Holiday membership, although in the total he has mentioned of Rs.2,83,852/-.

24. The A.R. argued before me that these amounts had all been spent for the purpose of business only without categorically justifying the same. However, after careful consideration of the details, I am of the view that the listed out expenditure had been ostensibly made for personal benefits of one partner Mr. Uday Shah. From no angle, these can be considered as expenses incurred wholly and exclusively for the purpose of business. Therefore, I confirm the disallowance made by the assessing officer The ground taken in this regard is dismissed.

19. We have heard the rival contentions, perused the material on record and duly considered the applicable legal position as also the factual matrix of the case.

20. Learned counsel for the assessee has relied upon a co-ordinate bench's decision in the case of Sterlite Industries India Ltd. v. Addl. CIT, 6 SOT 497 in support of the proposition that the amount paid for corporate membership of Club Mahindra is to be allowed as deduction. However, as is the clear uncontroverted finding of the assessing officer, the club membership is in the name of the partner of the firm and even this is not established that the expenditure was of the assessee firm. The judicial precedents cited by the assessee are of thus no use. In any event, there is no material on record to establish, or even indicate that the expenditure was incurred for the assessee firm or the assessee firm benefited from the same. We, therefore, see no reason to interfere in the order of the learned Commissioner (Appeals) in this regard. We approve and uphold the same.

21. In the result, assessee's appeal is partly allowed in the terms indicated above.

22. Now we take up assessee's appeal in ITA No.5884/MUM./2007, for assessment year 2003-04.

23. Ground no.1 raised by the assessee, reads as under:-

"1. The learned Commissioner (Appeals) erred in allowing only 50% (and disallowing balance 50%) of expenses as the expenses were incurred to protect the business interest of assessee firm. Hence, they are to be fully allowed."

24. The issue arising out of the above ground is mutatis mutandis identical to the ground no.1 decided by us in the appeal in ITA No.5122/Mum./2005 for assessment year 2002-03, vide Para–4, wherein, we have deleted the disallowance sustained by the learned Commissioner (Appeals). Similar directions are issued on this ground also.

25. The remaining ground raised by the assessee, reads as under:-

"2. The learned Commissioner (Appeals) erred in confirming the disallowance of Foreign Tour Expenses of Rs.49,454/- without appreciating the fact that the assessee has furnished to the assessing officer details of bills of Rs.31,950/- and credit card statements for Rs.17,504/- relating to the disallowance made by the assessing officer.

26. The issue arising out of the above ground is mutatis mutandis identical to the ground no.2 decided by us in the appeal in ITA No.5122/Mum./2005 for assessment year 2002-03, vide Para–8, wherein, we have direct the assessing officer to allow full amount incurred on account of local travel, food and hotel expenses and re-compute the income in the light of our aforesaid directions as contained in Para–8 above. Similar directions are issued on this ground also. Thus, the assessee gets relief accordingly.

27. In the result, assessee's appeal stands partly allowed in the terms indicated above.

28. To sum up, all the appeals are allowed. Pronounced in the open court today on 30-4-2010.

__._,_.___

CONVERSION OF WRIT PETITION INTO APPEAL By: Mr. M. GOVINDARAJAN : View Profile

 

CONVERSION OF WRIT PETITION INTO APPEAL

The indirect tax laws provide adjudication process and appeal process. The lowest authority is the Adjudication Authority and appeals lies with the order against to that of Adjudication Authority is Commissioner (Appeals). The next appellate authority is CESTAT. The next appeal lies with High Court. In some cases the assesses directly filed writ petition before the High Court. The Supreme Court as well as High Courts dismissed such writ petitions on the ground that once there is an alternative remedy of appeal the writ petition will not be entertained. In such cases the writ petitions will be dismissed with directions to avail alternate remedy of appeal. In some cases the writ petitions are admitted if there is an action against the law. In `Vijay Plas Fabs (P) Limited V. CESTAT, Chennai' -2011 (24) STR 279 (Mad) the High Court returned the writ petition for being converted into appeal.

In this case the petitioner is engaged in the manufacture of HDPE/PP circular woven socks and articles of plastics falling under Chapter 39 of the Central Excise Tariff Act and is eligible to avail CENVAT credit of duty paid on inputs and capital goods for the period 2000-2001. The petitioner was allowed to pay the duty fortnightly. On default of payment of duty for one time the petitioner was barred from paying the duty fortnightly and asked to pay the duty in account current. He is also allowed to utilize the CENVAT credit for the payment of duty on clearance of the final product. During the relevant period of time the petitioner, in acute financial problem the demand was complied with from and out of CENVAT credit account and not through personal ledger account.

The petitioner was issued with a show cause notice under Rule 8 of Central Excise Rules treating the payment of duty out of CENVAT credit account as in contravention of Central Excise Rules and treating the petitioner as defaulter in payment of duty and the petitioner was demanded to pay duty. A reply was filed to the show cause notice. The Adjudicating authority did not accept the reply passed the confirming the duty liability and penalty.

The petitioner filed appeal before the first appellate authority. He also filed a petition along with the appeal to dispense with the pre deposit of duty and penalty. Without giving notice to the petitioner the appellate authority passed order to pre deposit 50% of the duty confirmed by the adjudicating authority within four weeks as precondition to waive pre deposit and to stay recovery of penalty. The appeal was also dismissed for non compliance of pre deposit order.

The final order of CESTAT, the first appellate authority is challenged before High Court by way of writ petition.The petitioner put forward the following arguments:

The orders dismissing his appeals for failure to make pre-deposit of 50% of the duty amount which is passed ex-parte without giving notice to the petitioner company and without considering the prima facie case and balance of convenience in favor of the petitioner company amounts to failure to properly exercise the discretion vested in the first appellate authority;
When the original order of assessment itself is under serious challenge before the first appellate authority on the ground that the duty amount is already paid through CENVAT credit account, the condition imposed to pay 50% of the duty amount is onerous and is amounting to double payment;
When there are conflicting decisions on the same issue the claim made by the petitioner requires thorough examination and any condition to pay 50% of the amount to entertain the appeal filed against the same will render the petitioner's right to avail the statutory remedy is not meaningful and ineffective;
The conditional order in the absence of strong prima facie case in favor of the Revenue and in spite of the payment of duty by the petitioner through CENVAT account cannot be allowed to stand;
The petitioner relied on various judgments that the writ jurisdiction can be invoked notwithstanding the availability of alternative remedy.

The Revenue put forth the following arguments:

The writ petitions are not maintainable without exhausting the statutory remedy provided under Section 35G of the Central Excise Act, to High Court;
The department filed a detailed counted indicating the order passed by the lower authority is correct;
The notice to the petitioner was properly sent which was returned undelivered as the addressee is not available;
The lower authority has observed that it is for the petitioner to intimate the change of address proceeded to pass the order in the absence of the petitioner;
It is submitted by the petitioner that as the Appellate Tribunal to which further remedy lies itself is High Court the petition need not be dismissed in toto and in order to enable the petitioner to file fresh appeal along with application to condone delay etc., the present writ petition can be returned for being converted into CMA and the same may be after suitably converted so posted before the appropriate bench constituted for disposal of tax matters and if such course is adopted no serious prejudice is likely to be caused to the department/revenue. The High Court considered the same. The writ petition is filed within the period of limitation i.e., 180 days as specified under Sec. 35G of the Act to prefer further appeal. In order to safeguard the interest of both parties and to give a quietus to the litigation the writ petition is ordered by the High Court to be returned for being converted as CMA for disposal as per law.

Dated: - December 6, 2011
By: Mr. M. GOVINDARAJAN :

Compilations of case law : SALE OF SHARES

INCOME – CHARGEABILITY AND COMPUTATION

SALE OF SHARES

Cumulative effect of all factors to be seen – It is Business income if in earlier years, sale of shares treated as business of assessee - Nothing on record to show that purchase of shares was for non-commercial purposes Purchase of shares not for getting controlling interest of company - Shares sold within a short period - Manner in which shares are shown in the Balance sheet is not conclusive

CIT Vs Karam Chand Thapar & Bros P. Ltd. (SC) 176 ITR 535

New Era Agencies Pvt. Ltd. Vs CIT (SC) 68 ITR 585

CIT Vs Amalgamations P. Ltd. (Mad) 108 ITR 895

Magnitude of purchase and sale of shares shows that it is business income

Raja Bahadur Visheshwara Singh & Ors. Vs CIT (SC) 41 ITR 685

Dealing in shares authorized by Article of Association of Company – Business income

Dalmia Cement ltd. Vs CIT (Pat) 12 ITR 50

Memorandum of Association of Company did not authorize purchase and sale of shares – Purchased shares to get controlling interest of company – Capital Gains arises on transfer

Kishan Prasad & Co. Ltd. Vs CIT (SC) 27 ITR 49

Purchase and sale of shares a solitary transaction – No dividend received – Capital gains arises on transfer

CIT Vs Jagarnath Prasad Chhawchharia (Pat) 176 ITR 217

Annual report of company shows investment in shares is for capital appreciation – Capital gains arises on transfer

India Nut Co. Ltd. Vs CIT (Ker) 39 ITR 234

Shares were never treated as stock-in-trade – held for earning dividend only – Transfer results in Capital Gains only

CIT Vs N.S.S. Investments (P.) Ltd. (Mad) 277 ITR 149

Vr. Kr. S. Firm Vs CIT (Mad) 61 ITR 661

It is not established that assessee was holding shares as stock-in-trade – Therefore shares held as investment – Dividend income is income from Other Sources. Holding of investments by itself is not business.

CIT Vs West Coast Electric Supplies Corporation Ltd. (Mad) 243 ITR 565.

Purchase & sale of shares in a Private Company within a short period – Adventure in the nature of trade.

V. Amirtham Ammal Vs CIT (Mad) 74 ITR 739

Burnside Investment & Holdings Ltd Vs CIT (ITAT, Mad) 61 ITD 501

Sale of shares of subsidiary company – Capital gains arises

CIT Vs Calcutta Discount Co. (P.) Ltd. ( Cal) 162 ITR 680

Shares purchased with borrowed funds – sale made not to liquidate debts and proceeds were kept in bank – Adventure in the nature of trade.

CIT Vs Sutlej Cotton Mills Supply Agency Ltd (SC) 100 ITR 706

Atlas Corporation Vs ITO (ITAT, Bom) 57 ITD 139

Neerja Birla Vs ACIT (ITAT, Mum) 66 ITD 148

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

 

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

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

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

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

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

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

Be Courteous to Public and Legislators - Government Directs Babus

 

Be Courteous to Public and Legislators - Government Directs Babus

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

Government has reiterated and strengthened the instructions and directs:-

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Compilations of case law : SALE OF OTHER ASSETS

INCOME – CHARGEABILITY AND COMPUTATION

SALE OF OTHER ASSETS

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

Tribhuvandas Vallabhdas Vs CIT (Bom) 61 ITR 518

Wisdom Vs Chamberlain (CA) 74 ITR 306

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

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

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

Dalmia Cement Ltd Vs CIT (SC) 105 ITR 633

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

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

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

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

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

R. Dalmia Vs CIT (Del) 137 ITR 665

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

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