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Friday, April 30, 2010

ITR (TRIB) VOL 3 PART 1

 

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

Volume 3 : Part 1 (Issue dated : 3-5-2010)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Appellate Tribunal --Special Bench--Whether bound by decision of court other than jurisdictional High Court-- ITO v . Prasad Production Ltd. [SB] (Chennai ) . . . 58

Bad debts --Assessee establishing debts claimed related to agro-chemical division--No contrary material to prove bad debt related to engineering division which was sold--Deletion of addition justified--Income-tax Act, 1961, s. 36(1)(vii)-- CIT (Joint) v . Rallis India Ltd. (Mumbai) . . . 1

Business expenditure --Sugar industry--Distillery business run as a separate undertaking--Separate set of accounts for distillery business--Closure of distillery business in 1997--Expenditure incurred in distillery business not deductible in assessment year 2003-04--Income-tax Act, 1961, s. 37-- Gurdaspur Co-operative Sugar Mills v. Deputy CIT (Amritsar) . . . 101

Business loss --Loans advanced to subsidiaries--Controlling interest in subsidiaries along with engineering unit sold on April 1, 1991--Entire loan advanced to subsidiary written off and claimed as bad debt--No business loss on account of business relationship--No commercial expediency--Transactions of write off and claim as loss related to sale of shares of subsidiaries and engineering unit--Capital loss not business loss--Income-tax Act, 1961, s. 28-- CIT (Joint) v. Rallis India Ltd. (Mumbai) . . . 1

Capital gains --Long-term capital loss--Carry forward and set off--Allowable --Direction to recalculate loss under "Capital gains" and allow carry forward and set off--Income-tax Act, 1961, s. 74-- CIT (Joint) v. Rallis India Ltd. (Mumbai) . . . 1

Capital loss --Long-term capital loss--Recomputation--Remand for valuation by yield method after verifying method for valuing of share--Proper--Income-tax Act, 1961-- CIT (Joint) v . Rallis India Ltd. (Mumbai) . . . 1

Capital or revenue expenditure --Travelling and incidental expenses incurred in finalisation of project--Expenditure incurred for existing business--Revenue in nature--Income-tax Act, 1961, s. 37-- CIT (Joint) v . Rallis India Ltd. (Mumbai) . . . 1

Co-operative society --Special deduction--Condition precedent--Deduction allowable to society marketing agricultural produce grown by members--Society buying sugarcane from agriculturists, crushing it and selling sugar--Deduction not allowable--Income-tax Act, 1961, s. 80P(2)(a)(iii) -- Gurdaspur Co-operative Sugar Mills v. Deputy CIT (Amritsar) . . . 101

Deduction of tax at source --Payment to non-resident--Liability to make deduction if sum chargeable to tax--"Sum chargeable to tax"--Meaning of--Liability to deduct tax at source if even a part of payment chargeable to tax--No liability if payer bona fide believes no part of payment chargeable to tax--Income-tax Act, 1961, ss. 4, 195, 201(1), (1A)--Circular No. 759, dated 18-11-1997-- ITO v. Prasad Production Ltd. [SB] (Chennai ) . . . 58

Depreciation --Closure of business in 1997--Depreciation not allowable in assessment year 2003-04--Income-tax Act, 1961, s. 32-- Gurdaspur Co-operative Sugar Mills v. Deputy CIT (Amritsar) . . . 101

Income or capital --Sugar industry--Loan given by State Government to compensate assessee for price paid to farmers--Loan converted into grant-in-aid on 31-12-2002--No restriction on use of grant--Grant was revenue receipt--Assessable in assessment year 2003-04--Not in year of receipt of loan--Income-tax Act, 1961, s. 5-- Gurdaspur Co-operative Sugar Mills v. Deputy CIT (Amritsar) . . . 101

Loss --Carry forward and set off--Business loss related to engineering unit of assessee--Business not carried on in previous year--Business loss cannot be carried forward and set off--Income-tax Act, 1961, s. 72(1)(i), proviso-- CIT (Joint) v. Rallis India Ltd. (Mumbai) . . . 1

Penalty --Concealment of income--Furnishing inaccurate particulars--Payment of royalty for using brand name in accordance with agreement--Business centres run on partnership and franchisee basis--Disallowance on ground royalty expenses of franchisees and partnerships assessable to tax separately--Income generated only by use of brand name--Payment of royalty not concealment of income or furnishing of inaccurate particulars--Penalty deleted--Income-tax Act, 1961, s. 271(1)(c)-- VLCC Health Care Ltd. v . Asst. CIT (Delhi) . . . 51

----Limitation--Penalty order passed within prescribed time--Not barred by limitation--Income-tax Act, 1961, s. 275(1)(a)-- VLCC Health Care Ltd. v. Asst. CIT (Delhi) . . . 51

Unexplained investment --Addition on account of addition made to fixed assets based on inspection report--Neither statement of neighbour recorded nor collection of material during inspection--Assets duly recorded in books of account --Section 69 not applicable--Income-tax Act, 1961, s. 69-- Victoria Foods P. Ltd. v. Deputy CIT (Delhi) . . . 35

----Addition on account of discrepancy between declared value of fixed assets in balance-sheet and certificate submitted to bank to avail of loan--Audited accounts submitted along with return--Certificate estimating probable cost of project not sufficient evidence--Department to substantiate proof of unexplained investment by concrete material--Addition to be deleted--Income-tax Act, 1961-- Victoria Foods P. Ltd. v . Deputy CIT (Delhi) . . . 35

Words and phrases --"Loss"--"Expenditure"-- CIT (Joint) v. Rallis India Ltd. (Mumbai) . . . 1

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 4 --Deduction of tax at source--Payment to non-resident--Liability to make deduction if sum chargeable to tax--"Sum chargeable to tax"--Meaning of--Liability to deduct tax at source if even a part of payment chargeable to tax--No liability if payer bona fide believes no part of payment chargeable to tax--Circular No. 759, dated 18-11-1997-- ITO v. Prasad Production Ltd. (Chennai ) . . . 58

S. 5 --Income or capital--Sugar industry--Loan given by State Government to compensate assessee for price paid to farmers--Loan converted into grant-in-aid on 31-12-2002--No restriction on use of grant--Grant was revenue receipt--Assessable in assessment year 2003-04--Not in year of receipt of loan-- Gurdaspur Co-operative Sugar Mills v. Deputy CIT (Amritsar) . . . 101

S. 28 --Business loss--Loans advanced to subsidiaries--Controlling interest in subsidiaries along with engineering unit sold on April 1, 1991--Entire loan advanced to subsidiary written off and claimed as bad debt--No business loss on account of business relationship--No commercial expediency--Transactions of write off and claim as loss related to sale of shares of subsidiaries and engineering unit--Capital loss not business loss-- CIT (Joint) v. Rallis India Ltd. (Mumbai) . . . 1

S. 32 --Depreciation--Closure of business in 1997--Depreciation not allowable in assessment year 2003-04-- Gurdaspur Co-operative Sugar Mills v. Deputy CIT (Amritsar) . . . 101

S. 36(1)(vii) --Bad debts--Assessee establishing debts claimed related to agro-chemical division--No contrary material to prove bad debt related to engineering division which was sold--Deletion of addition justified-- CIT (Joint) v . Rallis India Ltd. (Mumbai) . . . 1

S. 37 --Business expenditure--Sugar industry--Distillery business run as a separate undertaking--Separate set of accounts for distillery business--Closure of distillery business in 1997--Expenditure incurred in distillery business not deductible in assessment year 2003-04-- Gurdaspur Co-operative Sugar Mills v. Deputy CIT (Amritsar) . . . 101

----Capital or revenue expenditure--Travelling and incidental expenses incurred in finalisation of project--Expenditure incurred for existing business--Revenue in nature-- CIT (Joint) v . Rallis India Ltd. (Mumbai) . . . 1

S. 69 --Unexplained investment--Addition on account of addition made to fixed assets based on inspection report--Neither statement of neighbour recorded nor collection of material during inspection--Assets duly recorded in books of account --Section 69 not applicable-- Victoria Foods P. Ltd. v. Deputy CIT (Delhi) . . . 35

S. 72(1)(i), proviso --Loss--Carry forward and set off--Business loss related to engineering unit of assessee--Business not carried on in previous year--Business loss cannot be carried forward and set off-- CIT (Joint) v. Rallis India Ltd. (Mumbai) . . . 1

S. 74 --Capital gains--Long-term capital loss--Carry forward and set off--Allowable--Direction to recalculate loss under "Capital gains" and allow carry forward and set off-- CIT (Joint) v. Rallis India Ltd. (Mumbai) . . . 1

S. 80P(2)(a)(iii) --Co-operative society--Special deduction--Condition precedent--Deduction allowable to society marketing agricultural produce grown by members--Society buying sugarcane from agriculturists, crushing it and selling sugar--Deduction not allowable-- Gurdaspur Co-operative Sugar Mills v. Deputy CIT (Amritsar) . . . 101

S. 195 --Deduction of tax at source--Payment to non-resident--Liability to make deduction if sum chargeable to tax--"Sum chargeable to tax"--Meaning of--Liability to deduct tax at source if even a part of payment chargeable to tax--No liability if payer bona fide believes no part of payment chargeable to tax--Circular No. 759, dated 18-11-1997-- ITO v. Prasad Production Ltd. (Chennai ) . . . 58

S. 201(1) --Deduction of tax at source--Payment to non-resident--Liability to make deduction if sum chargeable to tax--"Sum chargeable to tax"--Meaning of--Liability to deduct tax at source if even a part of payment chargeable to tax--No liability if payer bona fide believes no part of payment chargeable to tax--Circular No. 759, dated 18-11-1997-- ITO v. Prasad Production Ltd. (Chennai ) . . . 58

S. 201(1A) --Deduction of tax at source--Payment to non-resident--Liability to make deduction if sum chargeable to tax--"Sum chargeable to tax"--Meaning of--Liability to deduct tax at source if even a part of payment chargeable to tax--No liability if payer bona fide believes no part of payment chargeable to tax--Circular No. 759, dated 18-11-1997-- ITO v. Prasad Production Ltd. (Chennai ) . . . 58

S. 271(1)(c) --Penalty--Concealment of income--Furnishing inaccurate particulars--Payment of royalty for using brand name in accordance with agreement--Business centres run on partnership and franchisee basis--Disallowance on ground royalty expenses of franchisees and partnerships assessable to tax separately--Income generated only by use of brand name--Payment of royalty not concealment of income or furnishing of inaccurate particulars--Penalty deleted-- VLCC Health Care Ltd. v . Asst. CIT (Delhi) . . . 51

S. 275(1)(a) --Penalty--Limitation--Penalty order passed within prescribed time--Not barred by limitation-- VLCC Health Care Ltd. v. Asst. CIT (Delhi) . . . 51

-CA.RAJU SHAH 

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