Saturday, August 23, 2014

ITR Volume 366 : Part 3 (Issue dated : 25-8-2014)

 

INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION

ONLINE EDITION

New Return Forms 
ITR-3, ITR-4, ITR-5, ITR-6
 
and ITR-7

(See [2014] 3 ITR-OL (St.) 1)

 

PRINT EDITION

ITR Volume 366 : Part 3 (Issue dated : 25-8-2014)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Appeal to High Court --Substantial question of law--Search and seizure--Block assessment--Undisclosed income--Excess stock of silver--Investment in excess stock of gold jewellery--Tribunal restricting additions based on material--Pure questions of fact--Income-tax Act, 1961, ss. 158BC, 260A-- CIT v. Mangal and Mangal (Mad) . . . 478

Assessment --Special audit--Condition precedent--Ledger account not containing narration--Whether charging of interest revenue neutral ascertainable only after all entries examined by special auditor--Failure to file details of expenditure in projects in special economic zone and other projects--Number of transactions between assessee and related parties--Condition as to nature and complexity of accounts satisfied--Direction for special audit warranted--Income-tax Act, 1961, s. 142(2A)-- DLF Ltd. v. Addl. CIT (Delhi) . . . 390

Business expenditure --Assessee entering into agreement to purchase furnace oil--Import without licence prohibited by law--Assessee transferring contractual liability to sister concern--Purchase of furnace oil and sale from sister concern in contravention of law--Amount paid as commission to sister concern--Not deductible--Income-tax Act, 1961, s. 37--Overseas Trading and Shipping Co. P. Ltd. v. Asst. CIT (Guj) . . . 311

----Capital or revenue expenditure--Company jointly promoted by two companies--New company formed on bifurcation of business of such company--Amount paid for getting domestic customer data base--Amount paid for getting trained personnel--Revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v. IBM Global Services India P. Ltd. (Karn) . . . 293

----Deduction only on actual payment--Disallowance--Contribution towards provident fund--Effect of sections 36 and 43B--Contribution of employer and employee made on or before due date for furnishing returns under section 139(1)--Entitled to deduction--Income-tax Act, 1961, ss. 2(24)(x), 36(1)(va), 43B-- Essae Teraoka P. Ltd. v. Deputy CIT (Karn) . . . 408

----Disallowance--Provision for gratuity--Effect of insertion of section 40A(7) w. e. f. 1-4-1973--Trust deed executed in December 1975 and granted approval in December 1975--Claim based on actuarial valuation--Assessee entitled to deduction of provision in assessment year 1973-74--Income-tax Act, 1961, s. 40A(7)-- CIT v. Maharaja Shree Umaid Mills Ltd. (Raj) . . . 341

----Sales promotion--Amount paid for sending a large consignment of mangoes to a person abroad--Claim that it was for purposes of business promotion--No evidence to support claim--Amount not deductible--Income-tax Act, 1961, s. 37-- Overseas Trading and Shipping Co. P. Ltd. v. Asst. CIT (Guj) . . . 311

Business loss --Loss on fluctuation in rate of foreign exchange--Deductible--Income-tax Act, 1961-- CIT v. IBM Global Services India P. Ltd. (Karn) . . . 293

Capital gains --Computation of capital gains--Capital asset having market value but cost of acquisition of which could not be ascertained--Cost to be taken at fair market value on statutorily specified date or at option of assessee market value on date of acquisition--Income-tax Act, 1961, ss. 45, 55-- Thakur Dwara Shri Krishanji Maharaj Handiyaya, Barnalav. CIT (P&H) . . . 381

----Exemption under sections 54 and 54F--Condition that on date of transfer assessee should not be in possession of residential house--†Residential house†includes shared possession of a residential house--Co-owner not entitled to exemption--Income-tax Act, 1961, ss. 54, 54F-- CIT v. M. J. Siwani (Karn) . . . 356

Cash credit --Unexplained cash credits--Two-thirds of creditors unconfirmed--Books of account audited under section 44AB--Nothing to suggest in audit report that closing stock was on estimate basis and that sales suppressions introduced in names of sundry creditors--Unconfirmed sundry creditors treated as unexplained cash credit--Justified--Income-tax Act, 1961, s. 68-- R. C. Auto Centre (S. I.) v. ITO (Mad) . . . 305

Exemption --Educational institution--Application under section 10(23C)(vi) rejected on ground trust deed did not provide for distribution of funds on dissolution--Future contingency--Defect in trust deed rectified--Rejection of application not justified--Income-tax Act, 1961, s. 10(23C)-- St. Kabir Educational Society v. CBDT (P&H) . . . 378

----Infrastructure facility--Bank--Condition precedent--Pre-condition of notification in Official Gazette--Not applicable to bonds purchased by assessee during financial year 1997-98--Income-tax Act, 1961, s. 10(23G)-- CIT v. Lord Krishna Bank Ltd. (Bom) . . . 416

----Special allowance to meet expenses of office--Life Insurance Corporation of India--Conveyance and additional conveyance allowance for Development Officers fixed by formula--Exempt from tax--Income-tax Act, 1961, s. 10(14)-- CIT v. Madan Gopal Bansal(Raj) . . . 319

Reassessment --Notice--Condition precedent--Reason to believe income had escaped assessment--Reason must be based on relevant material--Notice for verifying evidence--Rejection of objection without speaking order--Notice and reassessment not valid--Income-tax Act, 1961, ss. 147, 148-- Mukesh Modi v. Deputy CIT (Raj) . . . 418

----Notice--Objections--Order passed on objections is part of process of determination--Not an order deciding disputes between parties--New contentions can be raised before Assessing Officer--Writ petition challenging order passed on objections not maintainable--Income-tax Act, 1961, ss. 147, 148-- Joint CIT v. Kalanithi Maran (Mad) . . . 453

Recovery of tax --Stay of recovery proceedings--Claim for exemption not proved--Recovery proceedings could not be stayed--Interim stay of fifty per cent. of tax during pendency of appeal--Income-tax Act, 1961-- Kanav Khanna v. CIT (P&H) . . . 386

Revision --Powers of Commissioner--Conditions precedent for exercise of powers--Order erroneous and prejudicial to Revenue--Satisfaction of Commissioner essential--Assessment order under section 143(3)--Assessing Officer having jurisdiction while issuing notice under section 143(3)--Subsequent loss of jurisdiction due to Departmental circular--Order of assessment not invalid--Revision of such order not justified--Income-tax Act, 1961, ss. 143, 263-- CIT v. Kailash Chand Methi (Raj) . . . 333

Search and seizure --Block assessment--Undisclosed income--Agricultural income--Agricultural income assessed in prior years--Amount of agricultural income not includible in undisclosed income--Income-tax Act, 1961-- CIT v. M. J. Siwani (Karn) . . . 356

----Block assessment--Undisclosed income--Amount shown as credit in the name of third person--Amount not disclosed in return--Amount assessable--Income-tax Act, 1961-- CIT v.M. J. Siwani (Karn) . . . 356

----Block assessment--Undisclosed income--Income shown in returns filed under section 139(1) or section 139(4) cannot be included--Income-tax Act, 1961, Ch. XIV-B-- CIT v. M. J. Siwani (Karn) . . . 356

----Jewellery discovered during search--Effect of CBDT Instruction--Jewellery within prescribed limits--Addition of value of part of jewellery as undisclosed income--Not justified--Instruction No. 1916 dated 11-5-1994--Income-tax Act, 1961-- CIT v. Satya Narain Patni(Raj) . . . 325

Valuation of stock --Land under litigation--Value to be determined with reference to purchase price and market value--Income-tax Act, 1961-- CIT v. M. J. Siwani (Karn) . . . 356

Writ --Existence of alternate remedy--Not an absolute bar on issue of writ--Constitution of India, art. 226-- Mukesh Modi v. Deputy CIT (Raj) . . . 418

----High Court--Reassessment--Alternative remedy--Challenge to order passed on objections of assessee--Writ petition not maintainable--Constitution of India, art. 226-- Joint CIT v.Kalanithi Maran (Mad) . . . 453

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Constitution of India :

Art. 226 --Writ--Existence of alternate remedy--Not an absolute bar on issue of writ--Mukesh Modi v. Deputy CIT (Raj) . . . 418

----Writ--High Court--Reassessment--Alternative remedy--Challenge to order passed on objections of assessee--Writ petition not maintainable-- Joint CIT v. Kalanithi Maran (Mad) . . . 453

Income-tax Act, 1961 :

S. 2(24)(x) --Business expenditure--Deduction only on actual payment--Disallowance--Contribution towards provident fund--Effect of sections 36 and 43B--Contribution of employer and employee made on or before due date for furnishing returns under section 139(1)--Entitled to deduction-- Essae Teraoka P. Ltd. v. Deputy CIT (Karn) . . . 408

S. 10(14) --Exemption--Special allowance to meet expenses of office--Life Insurance Corporation of India--Conveyance and additional conveyance allowance for Development Officers fixed by formula--Exempt from tax-- CIT v. Madan Gopal Bansal (Raj) . . . 319

S. 10(23C) --Exemption--Educational institution--Application under section 10(23C)(vi) rejected on ground trust deed did not provide for distribution of funds on dissolution--Future contingency--Defect in trust deed rectified--Rejection of application not justified-- St. Kabir Educational Society v. CBDT (P&H) . . . 378

S. 10(23G) --Exemption--Infrastructure facility--Bank--Condition precedent--Pre-condition of notification in Official Gazette--Not applicable to bonds purchased by assessee during financial year 1997-98-- CIT v. Lord Krishna Bank Ltd. (Bom) . . . 416

S. 36(1)(va) --Business expenditure--Deduction only on actual payment--Disallowance--Contribution towards provident fund--Effect of sections 36 and 43B--Contribution of employer and employee made on or before due date for furnishing returns under section 139(1)--Entitled to deduction-- Essae Teraoka P. Ltd. v. Deputy CIT (Karn) . . . 408

S. 37 --Business expenditure--Assessee entering into agreement to purchase furnace oil--Import without licence prohibited by law--Assessee transferring contractual liability to sister concern--Purchase of furnace oil and sale from sister concern in contravention of law--Amount paid as commission to sister concern--Not deductible-- Overseas Trading and Shipping Co. P. Ltd. v. Asst. CIT (Guj) . . . 311

----Business expenditure--Capital or revenue expenditure--Company jointly promoted by two companies--New company formed on bifurcation of business of such company--Amount paid for getting domestic customer data base--Amount paid for getting trained personnel--Revenue expenditure-- CIT v. IBM Global Services India P. Ltd. (Karn) . . . 293

----Business expenditure--Sales promotion--Amount paid for sending a large consignment of mangoes to a person abroad--Claim that it was for purposes of business promotion--No evidence to support claim--Amount not deductible-- Overseas Trading and Shipping Co. P. Ltd. v. Asst. CIT (Guj) . . . 311

S. 40A(7) --Business expenditure--Disallowance--Provision for gratuity--Effect of insertion of section 40A(7) w. e. f. 1-4-1973--Trust deed executed in December 1975 and granted approval in December 1975--Claim based on actuarial valuation--Assessee entitled to deduction of provision in assessment year 1973-74-- CIT v. Maharaja Shree Umaid Mills Ltd. (Raj) . . . 341

S. 43B --Business expenditure--Deduction only on actual payment--Disallowance--Contribution towards provident fund--Effect of sections 36 and 43B--Contribution of employer and employee made on or before due date for furnishing returns under section 139(1)--Entitled to deduction-- Essae Teraoka P. Ltd. v. Deputy CIT (Karn) . . . 408

S. 45 --Capital gains--Computation of capital gains--Capital asset having market value but cost of acquisition of which could not be ascertained--Cost to be taken at fair market value on statutorily specified date or at option of assessee market value on date of acquisition--Thakur Dwara Shri Krishanji Maharaj Handiyaya, Barnala v. CIT (P&H) . . . 381

S. 54 --Capital gains--Exemption under sections 54 and 54F--Condition that on date of transfer assessee should not be in possession of residential house--†Residential house†includes shared possession of a residential house--Co-owner not entitled to exemption-- CITv. M. J. Siwani (Karn) . . . 356

S. 54F --Capital gains--Exemption under sections 54 and 54F--Condition that on date of transfer assessee should not be in possession of residential house--†Residential house†includes shared possession of a residential house--Co-owner not entitled to exemption-- CITv. M. J. Siwani (Karn) . . . 356

S. 55 --Capital gains--Computation of capital gains--Capital asset having market value but cost of acquisition of which could not be ascertained--Cost to be taken at fair market value on statutorily specified date or at option of assessee market value on date of acquisition--Thakur Dwara Shri Krishanji Maharaj Handiyaya, Barnala v. CIT (P&H) . . . 381

S. 68 --Cash credit--Unexplained cash credits--Two-thirds of creditors unconfirmed--Books of account audited under section 44AB--Nothing to suggest in audit report that closing stock was on estimate basis and that sales suppressions introduced in names of sundry creditors--Unconfirmed sundry creditors treated as unexplained cash credit--Justified-- R. C. Auto Centre (S. I.) v. ITO (Mad) . . . 305

S. 142(2A) --Assessment--Special audit--Condition precedent--Ledger account not containing narration--Whether charging of interest revenue neutral ascertainable only after all entries examined by special auditor--Failure to file details of expenditure in projects in special economic zone and other projects--Number of transactions between assessee and related parties--Condition as to nature and complexity of accounts satisfied--Direction for special audit warranted-- DLF Ltd. v. Addl. CIT (Delhi) . . . 390

S. 143 --Revision--Powers of Commissioner--Conditions precedent for exercise of powers--Order erroneous and prejudicial to Revenue--Satisfaction of Commissioner essential--Assessment order under section 143(3)--Assessing Officer having jurisdiction while issuing notice under section 143(3)--Subsequent loss of jurisdiction due to Departmental circular--Order of assessment not invalid--Revision of such order not justified-- CIT v. Kailash Chand Methi (Raj) . . . 333

S. 147 --Reassessment--Notice--Condition precedent--Reason to believe income had escaped assessment--Reason must be based on relevant material--Notice for verifying evidence--Rejection of objection without speaking order--Notice and reassessment not valid-- Mukesh Modi v. Deputy CIT (Raj) . . . 418

----Reassessment--Notice--Objections--Order passed on objections is part of process of determination--Not an order deciding disputes between parties--New contentions can be raised before Assessing Officer--Writ petition challenging order passed on objections not maintainable-- Joint CIT v. Kalanithi Maran (Mad) . . . 453

S. 148 --Reassessment--Notice--Condition precedent--Reason to believe income had escaped assessment--Reason must be based on relevant material--Notice for verifying evidence--Rejection of objection without speaking order--Notice and reassessment not valid-- Mukesh Modi v. Deputy CIT (Raj) . . . 418

----Reassessment--Notice--Objections--Order passed on objections is part of process of determination--Not an order deciding disputes between parties--New contentions can be raised before Assessing Officer--Writ petition challenging order passed on objections not maintainable-- Joint CIT v. Kalanithi Maran (Mad) . . . 453

Ch. XIV-B --Search and seizure--Block assessment--Undisclosed income--Income shown in returns filed under section 139(1) or section 139(4) cannot be included-- CIT v. M. J. Siwani(Karn) . . . 356

S. 158BC --Appeal to High Court--Substantial question of law--Search and seizure--Block assessment--Undisclosed income--Excess stock of silver--Investment in excess stock of gold jewellery--Tribunal restricting additions based on material--Pure questions of fact-- CITv. Mangal and Mangal (Mad) . . . 478

S. 260A --Appeal to High Court--Substantial question of law--Search and seizure--Block assessment--Undisclosed income--Excess stock of silver--Investment in excess stock of gold jewellery--Tribunal restricting additions based on material--Pure questions of fact-- CITv. Mangal and Mangal (Mad) . . . 478

S. 263 --Revision--Powers of Commissioner--Conditions precedent for exercise of powers--Order erroneous and prejudicial to Revenue--Satisfaction of Commissioner essential--Assessment order under section 143(3)--Assessing Officer having jurisdiction while issuing notice under section 143(3)--Subsequent loss of jurisdiction due to Departmental circular--Order of assessment not invalid--Revision of such order not justified-- CIT v. Kailash Chand Methi (Raj) . . . 333

 

__._,_.___

ITR (TRIB) Volume 34 : Part 1 (Issue dated : 25-8-2014)

 

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))--PRINT AND ONLINE EDITION

 

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Business expenditure --Deduction on actual payment--Scientific research expenditure--Weighted deduction--Provision for leave encashment claimed as weighted deduction cannot be disallowed invoking provisions of section 43B(f)--Income-tax Act, 1961, ss. 35(2AB), 43B(f)-- Wheels India Ltd. v. Deputy CIT (Chennai) . . . 166

----Disallowance--Payments to non-residents--Failure to deduct tax at source--Entire services rendered outside India--No permanent establishment in India--Not managerial services--Amount not deductible--Income-tax Act, 1961, ss. 40(a)(i), 195-- Wheels India Ltd.v. Deputy CIT (Chennai) . . . 166

----Loss on account of exchange fluctuation on forward contracts allowable--Income-tax Act, 1961-- Wheels India Ltd. v. Deputy CIT (Chennai) . . . 166

Depreciation --Additional depreciation--Carry forward of unabsorbed additional depreciation--Not permissible--Income-tax Act, 1961-- Wheels India Ltd. v. Deputy CIT (Chennai) . . . 166

Fringe benefits tax --Expenditure on foreign representative office--Assessee within parameters of section 115WB(1) and (2)--Indian company carrying on business outside India and not having employees in India not liable to fringe benefits tax in India--Income-tax Act, 1961, s. 115WB(1), (2)--CBDT Circular No. 8 of 2005, dated 29-08-2005-- M. P. Fashions P. Ltd. v. ITO (Mumbai) . . . 160

Income --Disallowance of expenditure in relation to exempt income--Interest-free funds with assessee in excess of investments earning tax-free income--Provisions of rule 8D(2)(ii) have no application--Substantial transactions in shares involving administrative expenses--Rule 8D(2)(iii) can be invoked where exact quantum of expenditure not known--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D(2)(ii), (iii)-- Wheels India Ltd. v. Deputy CIT(Chennai) . . . 166

PRINT EDITION

Volume 34 : Part 1 (Issue dated : 25-8-2014)

SUBJECT INDEX TO CASES REPORTED

Accounting --Method of accounting--Rejection of accounts--Assessee following method of accounting from year to year--No defects pointed out by Department in method of accounting--No reason to reject method--Income-tax Act, 1961-- Hill View Infrastructure P. Ltd. v. Deputy CIT (Chandigarh) . . . 128

----Rejection of accounts--Estimation of profits--Contract for onshore supply and services--Estimation of income at 10 per cent. reasonable--Income-tax Act, 1961, s. 145(3)-- Pirelli Cavi E Sistemi Telecom S. P. A. (India Project Office) v. Asst. CIT (Hyd) . . . 41

Advance tax --Interest--No liability to interest where tax deductible at source on income--Income-tax Act, 1961, ss. 234B, 234C-- GFA Anlagenbau Gmbh v. Deputy/Asst. DIT (International Taxation) (Hyd) . . . 73

----Interest--Interest cannot be levied if entire income liable to deduction of tax at source--Matter remanded--Income-tax Act, 1961, s. 234B-- Pirelli Cavi E Sistemi Telecom S. P. A. (India Project Office) v. Asst. CIT (Hyd) . . . 41

Assessment --Limitation--Commissioner passing revision order on March 8, 2010--Assessment to be made within nine months from end of relevant assessment year--Assessing Officer passing consequential order on March 28, 2011--Assessment after expiry of limitation and to be annulled--Income-tax Act, 1961, ss. 153(2A), 263-- ITO v. Jheendu Ram (Lucknow) . . . 97

Business expenditure --Brothers carrying on similar business as proprietors from same premises--Executing mutual power of attorney documents and each taking out insurance on life of other--Insurance premium consideration for one another--Arrangement collusive--Expenditure not allowable--Income-tax Act, 1961, s. 37(1)-- Habibur Raheman F. Ansari v. Deputy CIT (Mumbai) . . . 16

----Disallowance--Excessive and unreasonable payments--Increase in salary of employees in earlier assessment years on basis of sixth pay commission--Expenditure incurred in remuneration of employees allowable--Income-tax Act, 1961, s. 40A(2)(b)-- Asst. CIT v. Idicula Trust Society (Delhi) . . . 1

----Disallowance--Payments liable to deduction of tax at source--Non-resident--Payment to non-resident translators--Would not fall within ambit of Explanation 2 to section 9(1)(vii) so as to attract provisions of section 194J--Expenditure allowable under section 40(a)(i)--Income-tax Act, 1961, ss. 40(a)(i), 194J-- Cosmic Global Ltd. v. Asst. CIT (Chennai) . . . 114

Charitable purpose --Exemption--Status of assessee that of charitable society eligible for claim of exemption--Exemption allowable--Income-tax Act, 1961, s. 11(1)(a)-- Asst. CIT v. Idicula Trust Society (Delhi) . . . 1

----Registration of trust--Cancellation--Trustees deciding to sell property to recover funds already invested--Mere intention to sell land not violation of objects of trust--Purchase of luxury car out of funds of trust in name of trustee--Debatable matter--Not ground to infer activities of trust not genuine--Scholarships to students routed through another trust--No violation of objects of trust--Not sufficient ground for cancellation of registration--Income-tax Act, 1961, ss. 12A, 12AA, 12AA(3)-- Cancer Aid and Research Foundation v. DIT(Exemption) (Mumbai) . . . 56

Company --Book profits--Computation--Lease equalisation charges--Insertion of Explanation 1(g) to section 115JA from 1-4-1998 with retrospective effect--Lease equalisation charges to be added to book profits--Income-tax Act, 1961, s. 115JA-- Deputy CIT v. Citi Financial Retail Services India Ltd. (Chennai) . . . 92

Deduction of tax at source --Commission or brokerage--Assessee charging constructive payment to subscriber--Section 194H applicable for constructive payment--Assessee in default--Income-tax Act, 1961, ss. 194H, 201-- Idea Cellular Ltd. v. Asst. CIT (Hyd) . . . 101

----Commission--Assessee providing cellular mobile telephone services through network of distributors--Discount offered to distributors in nature of commission--Assessee liable to deduct tax at source--Income-tax Act, 1961, s. 194H-- Idea Cellular Ltd. v. Asst. CIT (Hyd) . . . 101

----Commission--Different from discount--Commission passed on to person who solicits business, whereas discount is reduction on sale price--Assessee offering discount to its customers--Tax deduction at source not attracted--Income-tax Act, 1961, s. 194H-- ITO (TDS) v. Kesar Travels Ltd. (Mumbai) . . . 124

----Failure to deduct tax at source--Levy of interest--Assessing Officer to work out interest from date of tax deductible to date of payment by recipient on amounts determined after verification--Income-tax Act, 1961, s. 201(1A)-- Idea Cellular Ltd. v. Asst. CIT (Hyd) . . . 101

----Interest--Failure to deduct tax at source--Order holding assessee in default--Limitation--Order passed beyond four years but within six years--Not barred by limitation--Income-tax Act, 1961, s. 201-- Idea Cellular Ltd. v. Asst. CIT (Hyd) . . . 101

----Non-resident--Taxability in India--Assessee paying software development charges, salary and benefits and expenses abroad--Companies receiving amounts having no permanent establishment in India or business connection in India--Payments cannot be brought to tax in India--Income-tax Act, 1961, ss. 194C, 194J-- Prithvi Information Solutions Ltd. v. ITO (Hyd) . . . 28

----Payment to contractors--Professional fees--Assessee entering into agreements with certain companies for undertaking certain works in information systems--Vendee-vendor relationship--Payments made to vendor companies were for work falling under section 194C not professional fees under section 194J--Income-tax Act, 1961, ss. 194C, 194J, 201(1), (1A)-- Prithvi Information Solutions Ltd. v. ITO (Hyd) . . . 28

Double Taxation Avoidance --Provision against discrimination--Non-discrimination clause on applicability of tax rate--Rate of tax applicable to foreign company to be same as that applicable to domestic company in similar circumstances--Income-tax Act, 1961--Double Taxation Avoidance Agreement between India and Italy-- Pirelli Cavi E Sistemi Telecom S. P. A. (India Project Office) v. Asst. CIT (Hyd) . . . 41

Exemption --Export--Receivables from foreign clients--Payment in convertible foreign exchange--Assessee making payment to foreign client setting off expenditure incurred abroad with approval of Reserve Bank of India--Assessee entitled to exemption--Income-tax Act, 1961, s. 10A-- Asst. CIT v. DQ Entertainment (International) Ltd. (Hyd) . . . 22

Housing project --Special deduction--No discussion by Assessing Officer in assessment order on allowability of deduction--Application of mind should be reflected in order itself--Matter remanded to Assessing Officer to record reason for conclusion either allowing or disallowing claim--Income-tax Act, 1961, s. 80-IB(10)-- Hemalatha (P. V) v. Asst. CIT(Cochin) . . . 8

Income from undisclosed sources --Assessee contending payment made for dishonour of cheque--No evidence to prove--Seized document not mentioning dishonour of cheques--Income to be assessed as income from undisclosed sources in hands of assessee--Income-tax Act, 1961-- Hill View Infrastructure P. Ltd. v. Deputy CIT (Chandigarh) . . . 128

----Entries in seized documents in duplicate and in triplicate--Another entity and director of assessee offering income before Settlement Commission and Commission deciding income was theirs--Income cannot be assessed in hands of assessee--Income-tax Act, 1961, s. 69-- Hill View Infrastructure P. Ltd. v. Deputy CIT (Chandigarh) . . . 128

Industrial undertaking --Special deduction--Income surrendered as result of search--Assessee not entitled to deduction for surrendered income--Income-tax Act, 1961, s. 80-IB--Hill View Infrastructure P. Ltd. v. Deputy CIT (Chandigarh) . . . 128

Non-resident --Permanent establishment--Foreign technicians staying in India for more than 183 days--Assessee not having building site of its own and no fixed place of business--Articles 5 and 7 not applicable--Assessee’s activities technical in nature and payments fees for technical service--Taxable under article 12--Double Taxation Avoidance Agreement between India and Germany, arts. 5, 7, 12-- GFA Anlagenbau Gmbh v. Deputy/Asst. DIT (International Taxation) (Hyd) . . . 73

----Taxability in India--Offshore contract--Training in India incidental to offshore contract--No profit on training--Equipment transferred outside India--Income not taxable in India--Income-tax Act, 1961-- Pirelli Cavi E Sistemi Telecom S. P. A. (India Project Office) v. Asst. CIT(Hyd) . . . 41

Reassessment --Notice--Must be on tangible material--Reopening of assessment to disallow expenditure incurred on software development as capital expenditure--Reopening of assessment not justified--Income-tax Act, 1961, ss. 147, 148-- Deputy CIT v. India Infoline Insurance Services P. Ltd. (Mumbai) . . . 119

Refund --Interest on excess refund--Section 234D not applicable, if assessment completed before June 1, 2003--Matter remanded--Income-tax Act, 1961, s. 234D-- Pirelli Cavi E Sistemi Telecom S. P. A. (India Project Office) v. Asst. CIT (Hyd) . . . 41

Unexplained expenditure --Document found in possession of assessee during search--Assessee claiming document belonging to contractor operating from site of assessee--Failure by Assessing Officer to summon contractor to establish nature of transaction--Addition cannot be made in hands of assessee on basis of document--Income-tax Act, 1961, s. 69C-- Hill View Infrastructure P. Ltd. v. Deputy CIT (Chandigarh) . . . 128

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance Agreement between India and Germany

Art. 5 --Non-resident--Permanent establishment--Foreign technicians staying in India for more than 183 days--Assessee not having building site of its own and no fixed place of business--Articles 5 and 7 not applicable--Assessee’s activities technical in nature and payments fees for technical service--Taxable under article 12-- GFA Anlagenbau Gmbh v. Deputy/Asst. DIT (International Taxation) (Hyd) . . . 73

Art. 7 --Non-resident--Permanent establishment--Foreign technicians staying in India for more than 183 days--Assessee not having building site of its own and no fixed place of business--Articles 5 and 7 not applicable--Assessee’s activities technical in nature and payments fees for technical service--Taxable under article 12-- GFA Anlagenbau Gmbh v. Deputy/Asst. DIT (International Taxation) (Hyd) . . . 73

Art. 12 --Non-resident--Permanent establishment--Foreign technicians staying in India for more than 183 days--Assessee not having building site of its own and no fixed place of business--Articles 5 and 7 not applicable--Assessee’s activities technical in nature and payments fees for technical service--Taxable under article 12-- GFA Anlagenbau Gmbh v. Deputy/Asst. DIT (International Taxation) (Hyd) . . . 73

Income-tax Act, 1961

S. 10A --Exemption--Export--Receivables from foreign clients--Payment in convertible foreign exchange--Assessee making payment to foreign client setting off expenditure incurred abroad with approval of Reserve Bank of India--Assessee entitled to exemption-- Asst. CIT v. DQ Entertainment (International) Ltd. (Hyd) . . . 22

S. 11(1)(a) --Charitable purpose--Exemption--Status of assessee that of charitable society eligible for claim of exemption--Exemption allowable-- Asst. CIT v. Idicula Trust Society(Delhi) . . . 1

S. 12A --Charitable purpose--Registration of trust--Cancellation--Trustees deciding to sell property to recover funds already invested--Mere intention to sell land not violation of objects of trust--Purchase of luxury car out of funds of trust in name of trustee--Debatable matter--Not ground to infer activities of trust not genuine--Scholarships to students routed through another trust--No violation of objects of trust--Not sufficient ground for cancellation of registration-- Cancer Aid and Research Foundation v. DIT (Exemption) (Mumbai) . . . 56

S. 12AA --Charitable purpose--Registration of trust--Cancellation--Trustees deciding to sell property to recover funds already invested--Mere intention to sell land not violation of objects of trust--Purchase of luxury car out of funds of trust in name of trustee--Debatable matter--Not ground to infer activities of trust not genuine--Scholarships to students routed through another trust--No violation of objects of trust--Not sufficient ground for cancellation of registration-- Cancer Aid and Research Foundation v. DIT (Exemption) (Mumbai) . . . 56

S. 12AA(3) --Charitable purpose--Registration of trust--Cancellation--Trustees deciding to sell property to recover funds already invested--Mere intention to sell land not violation of objects of trust--Purchase of luxury car out of funds of trust in name of trustee--Debatable matter--Not ground to infer activities of trust not genuine--Scholarships to students routed through another trust--No violation of objects of trust--Not sufficient ground for cancellation of registration-- Cancer Aid and Research Foundation v. DIT (Exemption) (Mumbai) . . . 56

S. 37(1) --Business expenditure--Brothers carrying on similar business as proprietors from same premises--Executing mutual power of attorney documents and each taking out insurance on life of other--Insurance premium consideration for one another--Arrangement collusive--Expenditure not allowable-- Habibur Raheman F. Ansari v. Deputy CIT (Mumbai) . . . 16

S. 40(a)(i) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Non-resident--Payment to non-resident translators--Would not fall within ambit ofExplanation 2 to section 9(1)(vii) so as to attract provisions of section 194J--Expenditure allowable under section 40(a)(i)-- Cosmic Global Ltd. v. Asst. CIT (Chennai) . . . 114

S. 40A(2)(b) --Business expenditure--Disallowance--Excessive and unreasonable payments--Increase in salary of employees in earlier assessment years on basis of sixth pay commission--Expenditure incurred in remuneration of employees allowable-- Asst. CIT v. Idicula Trust Society (Delhi) . . . 1

S. 69 --Income from undisclosed sources--Entries in seized documents in duplicate and in triplicate--Another entity and director of assessee offering income before Settlement Commission and Commission deciding income was theirs--Income cannot be assessed in hands of assessee-- Hill View Infrastructure P. Ltd. v. Deputy CIT (Chandigarh) . . . 128

S. 69C --Unexplained expenditure--Document found in possession of assessee during search--Assessee claiming document belonging to contractor operating from site of assessee--Failure by Assessing Officer to summon contractor to establish nature of transaction--Addition cannot be made in hands of assessee on basis of document-- Hill View Infrastructure P. Ltd. v. Deputy CIT (Chandigarh) . . . 128

S. 80-IB --Industrial undertaking--Special deduction--Income surrendered as result of search--Assessee not entitled to deduction for surrendered income-- Hill View Infrastructure P. Ltd. v. Deputy CIT (Chandigarh) . . . 128

S. 80-IB(10) --Housing project--Special deduction--No discussion by Assessing Officer in assessment order on allowability of deduction--Application of mind should be reflected in order itself--Matter remanded to Assessing Officer to record reason for conclusion either allowing or disallowing claim-- Hemalatha (P. V) v. Asst. CIT (Cochin) . . . 8

S. 115JA --Company--Book profits--Computation--Lease equalisation charges--Insertion ofExplanation 1(g) to section 115JA from 1-4-1998 with retrospective effect--Lease equalisation charges to be added to book profits-- Deputy CIT v. Citi Financial Retail Services India Ltd. (Chennai) . . . 92

S. 145(3) --Accounting--Rejection of accounts--Estimation of profits--Contract for onshore supply and services--Estimation of income at 10 per cent. reasonable-- Pirelli Cavi E Sistemi Telecom S. P. A. (India Project Office) v. Asst. CIT (Hyd) . . . 41

S. 147 --Reassessment--Notice--Must be on tangible material--Reopening of assessment to disallow expenditure incurred on software development as capital expenditure--Reopening of assessment not justified-- Deputy CIT v. India Infoline Insurance Services P. Ltd.(Mumbai) . . . 119

S. 148 --Reassessment--Notice--Must be on tangible material--Reopening of assessment to disallow expenditure incurred on software development as capital expenditure--Reopening of assessment not justified-- Deputy CIT v. India Infoline Insurance Services P. Ltd.(Mumbai) . . . 119

S. 153(2A) --Assessment--Limitation--Commissioner passing revision order on March 8, 2010--Assessment to be made within nine months from end of relevant assessment year--Assessing Officer passing consequential order on March 28, 2011--Assessment after expiry of limitation and to be annulled-- ITO v. Jheendu Ram (Lucknow) . . . 97

S. 194C --Deduction of tax at source--Non-resident--Taxability in India--Assessee paying software development charges, salary and benefits and expenses abroad--Companies receiving amounts having no permanent establishment in India or business connection in India--Payments cannot be brought to tax in India-- Prithvi Information Solutions Ltd. v. ITO(Hyd) . . . 28

----Deduction of tax at source--Payment to contractors--Professional fees--Assessee entering into agreements with certain companies for undertaking certain works in information systems--Vendee-vendor relationship--Payments made to vendor companies were for work falling under section 194C not professional fees under section 194J-- Prithvi Information Solutions Ltd. v. ITO (Hyd) . . . 28

S. 194H --Deduction of tax at source--Commission--Assessee providing cellular mobile telephone services through network of distributors--Discount offered to distributors in nature of commission--Assessee liable to deduct tax at source-- Idea Cellular Ltd. v. Asst. CIT(Hyd) . . . 101

----Deduction of tax at source--Commission--Different from discount--Commission passed on to person who solicits business, whereas discount is reduction on sale price--Assessee offering discount to its customers--Tax deduction at source not attracted-- ITO (TDS) v. Kesar Travels Ltd. (Mumbai) . . . 124

----Deduction of tax at source--Commission or brokerage--Assessee charging constructive payment to subscriber--Section 194H applicable for constructive payment--Assessee in default-- Idea Cellular Ltd. v. Asst. CIT (Hyd) . . . 101

S. 194J --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Non-resident--Payment to non-resident translators--Would not fall within ambit ofExplanation 2 to section 9(1)(vii) so as to attract provisions of section 194J--Expenditure allowable under section 40(a)(i)-- Cosmic Global Ltd. v. Asst. CIT (Chennai) . . . 114

----Deduction of tax at source--Non-resident--Taxability in India--Assessee paying software development charges, salary and benefits and expenses abroad--Companies receiving amounts having no permanent establishment in India or business connection in India--Payments cannot be brought to tax in India-- Prithvi Information Solutions Ltd. v. ITO (Hyd) . . . 28

----Deduction of tax at source--Payment to contractors--Professional fees--Assessee entering into agreements with certain companies for undertaking certain works in information systems--Vendee-vendor relationship--Payments made to vendor companies were for work falling under section 194C not professional fees under section 194J-- Prithvi Information Solutions Ltd. v. ITO (Hyd) . . . 28

S. 201 --Deduction of tax at source--Commission or brokerage--Assessee charging constructive payment to subscriber--Section 194H applicable for constructive payment--Assessee in default-- Idea Cellular Ltd. v. Asst. CIT (Hyd) . . . 101

----Deduction of tax at source--Interest--Failure to deduct tax at source--Order holding assessee in default--Limitation--Order passed beyond four years but within six years--Not barred by limitation-- Idea Cellular Ltd. v. Asst. CIT (Hyd) . . . 101

S. 201(1) --Deduction of tax at source--Payment to contractors--Professional fees--Assessee entering into agreements with certain companies for undertaking certain works in information systems--Vendee-vendor relationship--Payments made to vendor companies were for work falling under section 194C not professional fees under section 194J-- Prithvi Information Solutions Ltd. v. ITO (Hyd) . . . 28

S. 201(1A) --Deduction of tax at source--Failure to deduct tax at source--Levy of interest--Assessing Officer to work out interest from date of tax deductible to date of payment by recipient on amounts determined after verification-- Idea Cellular Ltd. v. Asst. CIT (Hyd) . . . 101

----Deduction of tax at source--Payment to contractors--Professional fees--Assessee entering into agreements with certain companies for undertaking certain works in information systems--Vendee-vendor relationship--Payments made to vendor companies were for work falling under section 194C not professional fees under section 194J-- Prithvi Information Solutions Ltd. v. ITO (Hyd) . . . 28

S. 234B --Advance-tax--Interest--Interest cannot be levied if entire income liable to deduction of tax at source--Matter remanded-- Pirelli Cavi E Sistemi Telecom S. P. A. (India Project Office) v. Asst. CIT (Hyd) . . . 41

----Advance tax--Interest--No liability to interest where tax deductible at source on income--GFA Anlagenbau Gmbh v. Deputy/Asst. DIT (International Taxation) (Hyd) . . . 73

S. 234C --Advance tax--Interest--No liability to interest where tax deductible at source on income-- GFA Anlagenbau Gmbh v. Deputy/Asst. DIT (International Taxation) (Hyd) . . . 73

S. 234D --Refund--Interest on excess refund--Section 234D not applicable, if assessment completed before June 1, 2003--Matter remanded-- Pirelli Cavi E Sistemi Telecom S. P. A. (India Project Office) v. Asst. CIT (Hyd) . . . 41

S. 263 --Assessment--Limitation--Commissioner passing revision order on March 8, 2010--Assessment to be made within nine months from end of relevant assessment year--Assessing Officer passing consequential order on March 28, 2011--Assessment after expiry of limitation and to be annulled-- ITO v. Jheendu Ram (Lucknow) . . . 97

 


Friday, August 22, 2014

Analysis Of An Important Judgement On International Taxation

 

Dear Subscriber,

Analysis Of An Important Judgement On International Taxation

A recent verdict of the Authority of Advance Rulings (AAR) has created a controversy over the role of a Protocol in interpreting Tax Treaties, in the context of the "Most Favoured Nation" (MFN) clause. The author has conducted a careful analysis of the judgement, explained its implications and provided valuable guidance on the way forward


Regards,

 

Editor,

 

itatonline.org

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Latest

Transfer / Posting Of Additional / Joint Commissioners of Income-tax

Vide Order No. 136 of 2014 dated 20.08.2014, the CBDT has ordered the transfer and posting of several officers in the grade of Additional/ Joint Commissioners of Income-tax with immediate effect and until further orders


CBDT Order u/s 119 Extending Due Date For Filing Tax Audit Report For AY 2014-15

Dear Sir/ Madam,

 

Please find attached CBDT Order u/s 119 Extending Due Date For Filing TAR For AY 2014-15 :

In exercise of power conferred by section 119 of the Income-tax Act ('the Act'), the Central Board of Direct Taxes (CBDT) hereby extends the due date for obtaining and furnishing of the report of audit under section 44AB of the Act for Assessment Year 2014-15 in case of assessees who are not required to furnish report under section 92E of the Act from 30th day of September, 2014 to 30th November, 2014

 

 


Wednesday, August 20, 2014

ITR Volume 366 : Part 2 (Issue dated : 18-8-2014)

 

INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

New Return Forms 
ITR-3, ITR-4, ITR-5, ITR-6 and ITR-7

(See [2014] 3 ITR-OL (St.) 1)

 

PRINT EDITION

ITR Volume 366 : Part 2 (Issue dated : 18-8-2014)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Business expenditure --Appeal to High Court--Concurrent findings by Assessing Officer, Commissioner (Appeals) and Tribunal that certain expenses were not deductible--Finding based on evidence--High Court could not set aside findings--Expenses not deductible--Income-tax Act, 1961, s. 260A-- Liberty Footwear Co. v. CIT (P&H) . . . 250

----Burden of proof--Assessee failing to avail of opportunity in assessment proceedings to cross-examine persons whose statements relied upon by Inspector--Assessment completed after obtaining assessee’s response to contents of Inspector’s report--No prejudice caused to assessee--Claim at appellate stage that assessee not allowed to cross-examine persons not tenable--No record of individual shops where assessee distributed sampling display--Remand of case in facts not necessary--Income-tax Act, 1961, s. 37(1)--Hindusthan Tobacco Co. v. CIT (Cal) . . . 282

----Deduction only on actual payment--Employees’ contribution to provident fund and employees’ State insurance not credited to accounts of employees relevant funds within due dates as specified in section 36(1)(va)--Amounts not deductible--Amendment of section 43B by Finance Act, 2003, has not changed the law--Income-tax Act, 1961, ss. 36(1)(va), 43B-- CIT v. Gujarat State Road Transport Corporation (Guj) . . . 170

----Deduction only on actual payment--Employer’s and employees’ contributions to employees’ State insurance and provident fund deposited prior to filing of return--Allowable--Income-tax Act, 1961, ss. 2(24)(x), 36(1)(va), 43B-- CIT v. Hemla Embroidery Mills (P.) Ltd. (P&H) . . . 167

----Deduction only on actual payment--Provident fund and employees’ State insurance contributions made before filing return--Allowable--Income-tax Act, 1961, ss. 2(24)(x), 36(1)(va), 43B-- CIT v. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. (Raj) . . . 163

Cash credits --Burden of proof--Burden on assessee to prove genuineness of transaction and creditworthiness of depositor--Burden discharged by assessee--No enquiry by Assessing Officer under section 131--Credits not assessable as income of assessee--Income-tax Act, 1961, s. 68-- CIT v. Varinder Rawlley (P&H) . . . 232

----Identity of creditors, their creditworthiness and genuineness of transactions proved--No addition could be made under section 68--Income-tax Act, 1961, s. 68-- CIT v. Jai Kumar Bakliwal (Raj) . . . 217

Income --Capital or revenue receipt--Termination of lease of business asset--Compensation towards loss of revenue and non-compete fee under agreement in March 1993--Capital receipt--Income-tax Act, 1961-- CIT v. Sapthagiri Distilleries Ltd. (Karn) . . . 270

Income from undisclosed sources --Amounts claimed to be gifts--Facts showing gifts not genuine--Additions of such amounts to income--Justified--Income-tax Act, 1961-- CIT v.Narinder Kumar Sekhri (P&H) . . . 225

----Gift--Burden of proof is on assessee--Identity of donor--Capacity of donor to gift--Genuineness of transaction--Gift by cheque or draft through banking channels--Not sufficient--Unaccounted cash of assessee deposited in different accounts in an organized manner, from where transfer entries given to donors, who at the same time made entries in favour of assessee by way of bank drafts--Amounts claimed as gift--Gifts without any occasion or out of love and affection--Addition of gift amounts justified--Addition of ten per cent. for notional premium paid to middlemen not proper--Income-tax Act, 1961, s. 68-- CIT v.Y. M. Singla (P&H) . . . 242

Penalty --Concealment of income--Furnishing of inaccurate particulars--No false claim by assessee--Claim found to be incorrect--No mens rea on part of assessee to claim deduction--Divergent judicial opinions on claim made by assessee--Debatable issue--Penalty cannot be imposed--Income-tax Act, 1961, ss. 80-IB, 271(1)(c)-- CIT v. Tudor Knitting Works P. Ltd.(P&H) . . . 236

Reassessment --Appeal to Appellate Tribunal--Validity of reassessment--Assessment of capital gains in assessment year 1999-2000--Reassessment based on guidance value of residential land in Government circular dated 10-11-1982--Tribunal not right in setting aside reassessment on the sole ground that Assessing Officer wrong in relying on circular--Matter remanded--Income-tax Act, 1961, ss. 147, 148-- CIT v. M. L. Sridhar (Karn) . . . 267

----Notice after four years--Condition precedent--Approval by Chief Commissioner or Commissioner--No evidence of such approval--Notice not valid--Income-tax Act, 1961, ss. 147, 148, 151-- CIT v. H. M. Constructions (Karn) . . . 277

----Notice after four years--Failure to disclose material facts necessary for assessment--Information from CBI that loans accepted as genuine in original assessment were bogus--Notice valid--Income-tax Act, 1961, ss. 147, 148-- Yogendrakumar Gupta v. ITO (Guj) . . . 186

Rectification of mistakes --Mistake apparent from record--Loss--Carry forward and set off--Assessing Officer allowing set off of long-term capital loss of earlier year against long-term capital gains of subsequent year --Loss of earlier year not determined in pursuance of return filed under section 139(3) within time allowed under section 139(1) for that year--Permitting set off of such losses in subsequent years is mistake apparent from record--Rectification valid--Income-tax Act, 1961, ss. 139(1), (3), 154-- Rajiv Gupta v. CIT (P&H) . . . 257

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 2(24)(x) --Business expenditure--Deduction only on actual payment--Employer’s and employees’ contributions to employees’ State insurance and provident fund deposited prior to filing of return--Allowable-- CIT v. Hemla Embroidery Mills (P.) Ltd. (P&H) . . . 167

----Business expenditure--Deduction only on actual payment--Provident fund and employees’ State insurance contributions made before filing return--Allowable-- CIT v.Udaipur Dugdh Utpadak Sahakari Sangh Ltd. (Raj) . . . 163

S. 36(1)(va) --Business expenditure--Deduction only on actual payment--Employees’ contribution to provident fund and employees’ State insurance not credited to accounts of employees relevant funds within due dates as specified in section 36(1)(va)--Amounts not deductible--Amendment of section 43B by Finance Act, 2003, has not changed the law-- CITv. Gujarat State Road Transport Corporation (Guj) . . . 170

----Business expenditure--Deduction only on actual payment--Employer’s and employees’ contributions to employees’ State insurance and provident fund deposited prior to filing of return--Allowable-- CIT v. Hemla Embroidery Mills (P.) Ltd. (P&H) . . . 167

----Business expenditure--Deduction only on actual payment--Provident fund and employees’ State insurance contributions made before filing return--Allowable-- CIT v.Udaipur Dugdh Utpadak Sahakari Sangh Ltd. (Raj) . . . 163

S. 37(1) --Business expenditure--Burden of proof--Assessee failing to avail of opportunity in assessment proceedings to cross-examine persons whose statements relied upon by Inspector--Assessment completed after obtaining assessee’s response to contents of Inspector’s report--No prejudice caused to assessee--Claim at appellate stage that assessee not allowed to cross-examine persons not tenable--No record of individual shops where assessee distributed sampling display--Remand of case in facts not necessary--Hindusthan Tobacco Co. v. CIT (Cal) . . . 282

S. 43B --Business expenditure--Deduction only on actual payment--Employees’ contribution to provident fund and employees’ State insurance not credited to accounts of employees relevant funds within due dates as specified in section 36(1)(va)--Amounts not deductible--Amendment of section 43B by Finance Act, 2003, has not changed the law-- CITv. Gujarat State Road Transport Corporation (Guj) . . . 170

----Business expenditure--Deduction only on actual payment--Employer’s and employees’ contributions to employees’ State insurance and provident fund deposited prior to filing of return--Allowable-- CIT v. Hemla Embroidery Mills (P.) Ltd. (P&H) . . . 167

----Business expenditure--Deduction only on actual payment--Provident fund and employees’ State insurance contributions made before filing return--Allowable-- CIT v.Udaipur Dugdh Utpadak Sahakari Sangh Ltd. (Raj) . . . 163

S. 68 --Cash credits--Burden of proof--Burden on assessee to prove genuineness of transaction and creditworthiness of depositor--Burden discharged by assessee--No enquiry by Assessing Officer under section 131--Credits not assessable as income of assessee--CIT v. Varinder Rawlley (P&H) . . . 232

----Cash credits--Identity of creditors, their creditworthiness and genuineness of transactions proved--No addition could be made under section 68-- CIT v. Jai Kumar Bakliwal (Raj) . . . 217

----Income from undisclosed sources--Gift--Burden of proof is on assessee--Identity of donor--Capacity of donor to gift--Genuineness of transaction--Gift by cheque or draft through banking channels--Not sufficient--Unaccounted cash of assessee deposited in different accounts in an organized manner, from where transfer entries given to donors, who at the same time made entries in favour of assessee by way of bank drafts--Amounts claimed as gift--Gifts without any occasion or out of love and affection--Addition of gift amounts justified--Addition of ten per cent. for notional premium paid to middlemen not proper-- CIT v. Y. M. Singla (P&H) . . . 242

S. 80-IB --Penalty--Concealment of income--Furnishing of inaccurate particulars--No false claim by assessee--Claim found to be incorrect--No mens rea on part of assessee to claim deduction--Divergent judicial opinions on claim made by assessee--Debatable issue--Penalty cannot be imposed-- CIT v. Tudor Knitting Works P. Ltd. (P&H) . . . 236

S. 139(1), (3) --Rectification of mistakes--Mistake apparent from record--Loss--Carry forward and set off--Assessing Officer allowing set off of long-term capital loss of earlier year against long-term capital gains of subsequent year--Loss of earlier year not determined in pursuance of return filed under section 139(3) within time allowed under section 139(1) for that year--Permitting set off of such losses in subsequent years is mistake apparent from record--Rectification valid-- Rajiv Gupta v. CIT (P&H) . . . 257

S. 147 --Reassessment--Appeal to Appellate Tribunal--Validity of reassessment--Assessment of capital gains in assessment year 1999-2000--Reassessment based on guidance value of residential land in Government circular dated 10-11-1982--Tribunal not right in setting aside reassessment on the sole ground that Assessing Officer wrong in relying on circular--Matter remanded-- CIT v. M. L. Sridhar (Karn) . . . 267

----Reassessment--Notice after four years--Condition precedent--Approval by Chief Commissioner or Commissioner--No evidence of such approval--Notice not valid-- CIT v. H. M. Constructions (Karn) . . . 277

----Reassessment--Notice after four years--Failure to disclose material facts necessary for assessment--Information from CBI that loans accepted as genuine in original assessment were bogus--Notice valid-- Yogendrakumar Gupta v. ITO (Guj) . . . 186

S. 148 --Reassessment--Appeal to Appellate Tribunal--Validity of reassessment--Assessment of capital gains in assessment year 1999-2000--Reassessment based on guidance value of residential land in Government circular dated 10-11-1982--Tribunal not right in setting aside reassessment on the sole ground that Assessing Officer wrong in relying on circular--Matter remanded-- CIT v. M. L. Sridhar (Karn) . . . 267

----Reassessment--Notice after four years--Condition precedent--Approval by Chief Commissioner or Commissioner--No evidence of such approval--Notice not valid-- CIT v. H. M. Constructions (Karn) . . . 277

----Reassessment--Notice after four years--Failure to disclose material facts necessary for assessment--Information from CBI that loans accepted as genuine in original assessment were bogus--Notice valid-- Yogendrakumar Gupta v. ITO (Guj) . . . 186

S. 151 --Reassessment--Notice after four years--Condition precedent--Approval by Chief Commissioner or Commissioner--No evidence of such approval--Notice not valid-- CIT v. H. M. Constructions (Karn) . . . 277

S. 154 --Rectification of mistakes--Mistake apparent from record--Loss--Carry forward and set off--Assessing Officer allowing set off of long-term capital loss of earlier year against long-term capital gains of subsequent year --Loss of earlier year not determined in pursuance of return filed under section 139(3) within time allowed under section 139(1) for that year--Permitting set off of such losses in subsequent years is mistake apparent from record--Rectification valid-- Rajiv Gupta v. CIT (P&H) . . . 257

S. 260A --Business expenditure--Appeal to High Court--Concurrent findings by Assessing Officer, Commissioner (Appeals) and Tribunal that certain expenses were not deductible--Finding based on evidence--High Court could not set aside findings--Expenses not deductible-- Liberty Footwear Co. v. CIT (P&H) . . . 250

S. 271(1)(c) --Penalty--Concealment of income--Furnishing of inaccurate particulars--No false claim by assessee--Claim found to be incorrect--No mens rea on part of assessee to claim deduction--Divergent judicial opinions on claim made by assessee--Debatable issue--Penalty cannot be imposed-- CIT v. Tudor Knitting Works P. Ltd. (P&H) . . . 236

 

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