INCOME TAX REPORTS (ITR)
Volume 322 : Part 3 (Issue dated 12-4-2010)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Accounting --Rejection of accounts--Estimate of income--Books of account not maintained--Estimate of income can be made on rational basis--Income-tax Act, 1961-- Prakash Automobiles v. CIT (Ker) . . . 435
----Rejection of accounts--Estimate of profits--Estimate based on comparable cases--Valid--Income-tax Act, 1961-- Salem Steel Company v. CIT
----Rejection of accounts--Estimation of profits--Estimation of profits based on facts--Justified--Income-tax Act, 1961, s. 145-- Sri Vaddanahal Rajanna (HUF) v. Asst. CIT (Karn) . . . 356
Advance tax --Interest--Assessee voluntarily offering income for taxation to avoid probe--Interest not chargeable under sections 234A and 234B--Income-tax Act, 1961, ss. 234A, 234B-- T. P. Indrakumar v. ITO (Karn) . . . 454
----Interest--Company--Book profit--Income computed under section 115J--Interest not leviable--Income-tax Act, 1961, ss. 115J, 234B-- Deputy CIT (Asstt.) v. Madhusudan Industries Ltd. (Guj) . . . 438
----Interest--Interest chargeable under sections 234A, 234B and 234C--Law applicable--Effect of changes made by Finance Act, 1997--Charge of interest under sections 234A, 234B and 234C mandatory--Computation in Form ITNS-150 accompanying order of assessment clearly specifying provision of law and amount of interest charged--Order valid--Income-tax Act, 1961, ss. 234A, 234B, 234C-- Hari Narain Soni v. ITO (Raj) . . . 444
Appeal to Appellate Tribunal --Counsel of assessee not available at time of hearing--Managing director of assessee contesting appeal but not presenting case properly as having no expertise in taxation laws--Assessee seeking proper opportunity to make effective submissions before Tribunal--Matter remanded-- Anand Flori Farms India P. Ltd . v. ITO (Delhi) . . . 406
----Powers of Tribunal--Rectification of mistakes--Factual error in order--Tribunal could correct error--Income-tax Act, 1961, s. 254(2)-- CIT v. Income-tax Appellate Tribunal (Bom) . . . 359
Appeal to High Court --Condonation of delay--Limitation Act has no application--High Court has no power to condone delay beyond period prescribed under Income-tax Act--Income-tax Act, 1961, s. 260A--Limitation Act, 1963, s. 5-- Sukhvinder Singh v. CIT (P&H) . . . 339
Assessment --Additions--Failure to consider assessee's statement made subsequent to retracted statement documentary evidence on record--Matter remanded--Income-tax Act, 1961-- CIT v. Omprakash K. Jain
----Assessee's case taken up for scrutiny--Assessee offering income for taxation voluntarily to avoid probe--Assessment of such income--Valid--Income-tax Act, 1961, s. 68-- T. P. Indrakumar v. ITO (Karn) . . . 454
Avoidance of tax --Seed money received for commencement of business--Parting of part of profit by assessee instead of paying interest--Transaction not a colourable device--Income-tax Act, 1961-- CIT v. V. G. Siddartha
Business expenditure --Fines and penalties--Amount paid by builder as regularisation fee for violating building bye-laws--Penalty--Not deductible--Income-tax Act, 1961, s. 37--Karnataka Municipal Corporation Act, 1976, s. 483-- Millennia Developers P. Ltd . v. Deputy CIT (Karn) . . . 401
----Guest house--Expenditure on guest house--Not allowable--Income-tax Act, 1961, s. 37-- CIT v. Hindustan Zinc Ltd. (Raj) . . . 478
----Hire purchase agreement--Finance commission allowed as deduction in prior years--Deduction could not be denied in assessment year 1981-82--Income-tax Act, 1961, s. 37-- CIT v. Heeralal Kataria (Raj) . . . 342
Capital or revenue expenditure --Smelter plant requiring large quantities of water--Expenditure on construction of a dam--Object and effect of expenditure is to facilitate its trade operation and enable assessee to conduct business more efficiently--Is revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v. Hindustan Zinc Ltd. (Raj) . . . 478
Cash credits --Additions--Tribunal deleting additions--Books of account available with Assessing Officer would indicate capacity of party to advance loan--No need to prove on assessee to prove capacity--Income-tax Act, 1961-- CIT v. Tania Investments P. Ltd. (Bom) . . . 394
----Unaccounted cash credit--Tribunal confirming deletion of addition made by Assessing Officer without verifying whether creditor paid tax on amount added as cash credit--Matter remanded--Income-tax Act, 1961, s. 68-- CIT v. Vinod Swarupchandra Mehta (Guj) . . . 399
Co-operative society --Society carrying on banking activities--Special deduction under section 80P--Interest on refund of income-tax--Entitled to special deduction--Income-tax Act, 1961, s. 80P-- CIT v. Haryana State Co-operative Apex Bank Ltd. (P&H) . . . 404
Depreciation --Rate of depreciation--Effect of Circular No. 652 dated 14-6-1993--Higher rate of depreciation applicable to motor lorries used in transportation business--Income-tax Act, 1961, s. 32--Income-tax Rules, 1962, App I, item III-2(ii)-- CIT v. S. C. Thakur and Bros . (Bom) . . . 463
----Rate of depreciation--Law applicable--Law in force on 1st day of April of financial year--Subsequent amendment enhancing rate of depreciation--Not applicable--Income-tax Rules, 1962, r. 5, Appex I-- KEC International Ltd . v. CIT (Bom) . . . 465
----Rate of depreciation--Trucks--Assessee engaged in purchase and sale of limestone--Hiring trucks to outsiders--Not engaged in transportation business--Not entitled to higher rate of depreciation--Entitled to depreciation at 30 per cent. only--Income-tax Act, 1961, s. 32--Income-tax Rules 1962, Appx. I, Part I, Items Nos. III(ii)-D(9), E(1A)-- CIT v. Bimalchand Jain (Raj) . . . 346
Export --Special deduction under section 80HHC--Computation of special deduction--Interest--Reduction of 90 per cent. from interest--Gross amount of interest to be taken into account--Income-tax Act, 1961, s. 80HHC-- CIT v. Devraj Nensee and Co. (Mad) . . . 430
Export markets development allowance --Weighted deduction--Insurance and freight charges--Export inspection charges--Interest on export packing credit loans--Not entitled to weighted deduction--Income-tax Act, 1961, s. 35B-- KEC International Ltd . v. CIT (Bom) . . . 465
Impounding of documents --Scope of power under section 131(3)--"Document" does not include passport--Passport cannot be impounded under section 131--Income-tax Act, 1961, s. 131-- Avinash Bhosale v. Union of India
Offences and prosecution --Delay in filing return by Hindu undivided family--Complaint not showing karta ill till returns required to be filed and he transferred his liability to son--Son cannot be said to have consented or connived with karta in late filing of returns--Son participating in income-tax proceedings--Not a ground to fasten liability for commission of any offence under Act on him--Income-tax Act, 1961, ss. 276CC, 278C(2)-- Roshan Lal v. Special Chief Judicial Magistrate (All) . . . 353
----Powers of trial court--Trial court has power to decide whether particular Supreme Court case is applicable--Income-tax Act, 1961, ss. 277(ii), 278B-- P. Kuknhappa Nair and Co . v. Deputy CIT (Ker) . . . 437
----Wilful attempt to evade tax--False verification--Conviction of women--Release under Probation of Offenders Act--Justified--Income-tax Act, 1961, ss. 276C, 277--Probation of Offenders Act, 1958-- Union of India v. Smt. Mamta Sethi (MP) . . . 440
Precedent --Effect of decision of Supreme Court in Suresh Nanda v. CBI [2008] 3 SCC 674-- Avinash Bhosale v. Union of India (Bom) . . . 381
Purchase of immovable property by Central Government --Condition precedent for pre-emptive purchase--Finding of undervaluation by 15 per cent. with a view to evade tax--Mere remark that prices were rising--Not sufficient--Order of pre-emptive purchase--Not valid--Income-tax Act, 1961, ss. 269UD(1), 269UE-- Cigeo Construction Co. Pvt. Ltd. v. Appropriate Authority
Reassessment --Grounds for reassessment--Rectification proceedings dropped--No new material--Reassessment proceedings on same grounds--Not valid--Income-tax Act, 1961, s. 147-- Berger Paints India Ltd . v. Asst. CIT
----Income escaping assessment--Company--Book profits--Provision for bad and doubtful debts--Addition--Commissioner (Appeals) deleting--Tribunal upholding order--No substantial question of law arose--Income-tax Act, 1961, ss. 148, 115JB-- CIT v. Mysore Paper Mills Ltd . (Karn) . . . 428
----Notice--Writ--Conditions precedent for notice absent--Writ petition to quash notice--Maintainable--Income-tax Act, 1961, ss. 147, 148--Constitution of India, art. 226-- Berger Paints India Ltd. v. Asst. CIT (Cal) . . . 369
Rectification of mistakes --Assessment granting special deduction under section 80-IA--Rectification to withdraw deduction on export incentive, duty drawback--Matter debatable--Rectification proceedings not permissible--Income-tax Act, 1961, ss. 80-IA, 154-- CIT v. TTK Prestige Ltd . (Karn) . . . 390
Search and seizure --Block assessment--Copies of seized material not provided to assessee nor assessee given opportunity to cross-examination of person on whose statement Assessing Officer relied upon--Violation of natural justice--Fatal to proceedings--Income-tax Act, 1961-- CIT v. Ashwani Gupta
Words and phrases --Meaning of "document"-- Avinash Bhosale v. Union of India (Bom) . . . 381
Non-resident --Russian company--Business of construction and commissioning of power projects--Off-shore contract for design, engineering, manufacture, etc., testing of supplier's works, and dispatching to port of disembarkation in India--Russian company to transport at its own risk and expense, to handle them at point of import and all formalities for customs clearance--Ownership to be transferred to NTPC upon loading on mode of transport to be used to convey them from country of origin to India--Amount received by Russian company not taxable in India--Agreement for Avoidance of Double Taxation between India and Russia-- Joint Stock Company Foreign Economic Association "Technopromexport", In re . . . 409
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Art. 226 --Reassessment--Notice--Writ--Conditions precedent for notice absent--Writ petition to quash notice--Maintainable-- Berger Paints India Ltd. v. Asst. CIT (Cal) . . . 369
S. 32 --Depreciation--Rate of depreciation--Effect of Circular No. 652 dated 14-6-1993--Higher rate of depreciation applicable to motor lorries used in transportation business-- CIT v. S. C. Thakur and Bros . (Bom) . . . 463
----Depreciation--Rate of depreciation--Trucks--Assessee engaged in purchase and sale of limestone--Hiring trucks to outsiders--Not engaged in transportation business--Not entitled to higher rate of depreciation--Entitled to depreciation at 30 per cent. only-- CIT v. Bimalchand Jain (Raj) . . . 346
S. 35B --Export markets development allowance--Weighted deduction--Insurance and freight charges--Export inspection charges--Interest on export packing credit loans--Not entitled to weighted deduction-- KEC International Ltd . v. CIT (Bom) . . . 465
S. 37 --Business expenditure--Fines and penalties--Amount paid by builder as regularisation fee for violating building bye-laws--Penalty--Not deductible-- Millennia Developers P. Ltd . v. Deputy CIT (Karn) . . . 401
----Business expenditure--Guest house--Expenditure on guest house--Not allowable-- CIT v. Hindustan Zinc Ltd. (Raj) . . . 478
----Business expenditure--Hire purchase agreement--Finance commission allowed as deduction in prior years--Deduction could not be denied in assessment year 1981-82-- CIT v. Heeralal Kataria (Raj) . . . 342
----Capital or revenue expenditure--Smelter plant requiring large quantities of water--Expenditure on construction of a dam--Object and effect of expenditure is to facilitate its trade operation and enable assessee to conduct business more efficiently--Is revenue expenditure-- CIT v. Hindustan Zinc Ltd.
S. 68 --Assessment--Assessee's case taken up for scrutiny--Assessee offering income for taxation voluntarily to avoid probe--Assessment of such income--Valid-- T. P. Indrakumar v. ITO (Karn) . . . 454
----Cash credits--Unaccounted cash credit--Tribunal confirming deletion of addition made by Assessing Officer without verifying whether creditor paid tax on amount added as cash credit--Matter remanded-- CIT v. Vinod Swarupchandra Mehta (Guj) . . . 399
S. 80HHC --Export--Special deduction under section 80HHC--Computation of special deduction--Interest--Reduction of 90 per cent. from interest--Gross amount of interest to be taken into account-- CIT v. Devraj Nensee and Co. (Mad) . . . 430
S. 80-IA --Rectification of mistakes--Assessment granting special deduction under section 80-IA--Rectification to withdraw deduction on export incentive, duty drawback--Matter debatable--Rectification proceedings not permissible-- CIT v. TTK Prestige Ltd . (Karn) . . . 390
S. 80P --Co-operative society--Society carrying on banking activities--Special deduction under section 80P--Interest on refund of income-tax--Entitled to special deduction-- CIT v. Haryana State Co-operative Apex Bank Ltd.
S. 115J --Advance tax--Interest--Company--Book profit--Income computed under section 115J--Interest not leviable-- Deputy CIT (Asstt.) v. Madhusudan Industries Ltd. (Guj) . . . 438
S. 115JB --Reassessment--Income escaping assessment--Company--Book profits--Provision for bad and doubtful debts--Addition--Commissioner (Appeals) deleting--Tribunal upholding order--No substantial question of law arose-- CIT v. Mysore Paper Mills Ltd . (Karn) . . . 428
S. 131 --Impounding of documents--Scope of power under section 131(3)--"Document" does not include passport--Passport cannot be impounded under section 131-- Avinash Bhosale v. Union of India (Bom) . . . 381
S. 145 --Accounting--Rejection of accounts--Estimation of profits--Estimation of profits based on facts--Justified-- Sri Vaddanahal Rajanna (HUF) v. Asst. CIT (Karn) . . . 356
S. 147 --Reassessment--Grounds for reassessment--Rectification proceedings dropped--No new material--Reassessment proceedings on same grounds--Not valid-- Berger Paints India Ltd . v. Asst. CIT (Cal) . . . 369
----Reassessment--Notice--Writ--Conditions precedent for notice absent--Writ petition to quash notice--Maintainable-- Berger Paints India Ltd. v. Asst. CIT (Cal) . . . 369
S. 148 --Reassessment--Income escaping assessment--Company--Book profits--Provision for bad and doubtful debts--Addition--Commissioner (Appeals) deleting--Tribunal upholding order--No substantial question of law arose-- CIT v. Mysore Paper Mills Ltd . (Karn) . . . 428
----Reassessment--Notice--Writ--Conditions precedent for notice absent--Writ petition to quash notice--Maintainable-- Berger Paints India Ltd. v. Asst. CIT (Cal) . . . 369
S. 154 --Rectification of mistakes--Assessment granting special deduction under section 80-IA--Rectification to withdraw deduction on export incentive, duty drawback--Matter debatable--Rectification proceedings not permissible-- CIT v. TTK Prestige Ltd . (Karn) . . . 390
S. 234A --Advance tax--Interest--Assessee voluntarily offering income for taxation to avoid probe--Interest not chargeable under sections 234A and 234B-- T. P. Indrakumar v. ITO (Karn) . . . 454
----Advance tax--Interest--Interest chargeable under sections 234A, 234B and 234C--Law applicable--Effect of changes made by Finance Act, 1997--Charge of interest under sections 234A, 234B and 234C mandatory--Computation in Form ITNS-150 accompanying order of assessment clearly specifying provision of law and amount of interest charged--Order valid-- Hari Narain Soni v. ITO
S. 234B --Advance tax--Interest--Assessee voluntarily offering income for taxation to avoid probe--Interest not chargeable under sections 234A and 234B-- T. P. Indrakumar v. ITO (Karn) . . . 454
----Advance tax--Interest--Company--Book profit--Income computed under section 115J--Interest not leviable-- Deputy CIT (Asstt.) v. Madhusudan Industries Ltd. (Guj) . . . 438
----Advance tax--Interest--Interest chargeable under sections 234A, 234B and 234C--Law applicable--Effect of changes made by Finance Act, 1997--Charge of interest under sections 234A, 234B and 234C mandatory--Computation in Form ITNS-150 accompanying order of assessment clearly specifying provision of law and amount of interest charged--Order valid-- Hari Narain Soni v. ITO
S. 234C --Advance tax--Interest--Interest chargeable under sections 234A, 234B and 234C--Law applicable--Effect of changes made by Finance Act, 1997--Charge of interest under sections 234A, 234B and 234C mandatory--Computation in Form ITNS-150 accompanying order of assessment clearly specifying provision of law and amount of interest charged--Order valid-- Hari Narain Soni v. ITO
S. 254(2) --Appeal to Appellate Tribunal--Powers of Tribunal--Rectification of mistakes--Factual error in order--Tribunal could correct error-- CIT v. Income-tax Appellate Tribunal (Bom) . . . 359
S. 260A --Appeal to High Court--Condonation of delay--Limitation Act has no application--High Court has no power to condone delay beyond period pres-cribed under Income-tax Act-- Sukhvinder Singh v. CIT (P&H) . . . 339
S. 269UD(1) --Purchase of immovable property by Central Government--Condition precedent for pre-emptive purchase--Finding of undervaluation by 15 per cent. with a view to evade tax--Mere remark that prices were rising--Not sufficient--Order of pre-emptive purchase--Not valid-- Cigeo Construction Co. Pvt. Ltd. v. Appropriate Authority (Bom) . . . 474
S. 269UE --Purchase of immovable property by Central Government--Condition precedent for pre-emptive purchase--Finding of undervaluation by 15 per cent. with a view to evade tax--Mere remark that prices were rising--Not sufficient--Order of pre-emptive purchase--Not valid-- Cigeo Construction Co. Pvt. Ltd. v. Appropriate Authority (Bom) . . . 474
S. 276C --Offences and prosecution--Wilful attempt to evade tax--False verification--Conviction of women--Release under Probation of Offenders Act--Justified-- Union of India v. Smt. Mamta Sethi (MP) . . . 440
S. 276CC --Offences and prosecution--Delay in filing return by Hindu undivided family--Complaint not showing karta ill till returns required to be filed and he transferred his liability to son--Son cannot be said to have consented or connived with karta in late filing of returns--Son participating in income-tax proceedings--Not a ground to fasten liability for commission of any offence under Act on him-- Roshan Lal v. Special Chief Judicial Magistrate
S. 277 --Offences and prosecution--Wilful attempt to evade tax--False verification--Conviction of women--Release under Probation of Offenders Act--Justified-- Union of India v. Smt. Mamta Sethi (MP) . . . 440
S. 277(ii) --Offences and prosecution--Powers of trial court--Trial court has power to decide whether particular Supreme Court case is applicable-- P. Kuknhappa Nair and Co . v. Deputy CIT (Ker) . . . 437
S. 278B --Offences and prosecution--Powers of trial court--Trial court has power to decide whether particular Supreme Court case is applicable-- P. Kuknhappa Nair and Co . v. Deputy CIT (Ker) . . . 437
S. 278C(2) --Offences and prosecution--Delay in filing return by Hindu undivided family--Complaint not showing karta ill till returns required to be filed and he transferred his liability to son--Son cannot be said to have consented or connived with karta in late filing of returns--Son participating in income-tax proceedings--Not a ground to fasten liability for commission of any offence under Act on him-- Roshan Lal v. Special Chief Judicial Magistrate
Appx. I, Part I, Items Nos. III(ii)-D(9), E(1A) --Depreciation--Rate of depreciation--Trucks--Assessee engaged in purchase and sale of limestone--Hiring trucks to outsiders--Not engaged in transportation business--Not entitled to higher rate of depreciation--Entitled to depreciation at 30 per cent. only-- CIT v. Bimalchand Jain (Raj) . . . 346
App I, item III-2(ii) --Depreciation--Rate of depreciation--Effect of Circular No. 652 dated 14-6-1993--Higher rate of depreciation applicable to motor lorries used in transportation business-- CIT v. S. C. Thakur and Bros .
R. 5, Appex I --Depreciation--Rate of depreciation--Law applicable--Law in force on 1st day of April of financial year--Subsequent amendment enhancing rate of depreciation--Not applicable-- KEC International Ltd . v. CIT
Karnataka Municipal Corporation Act, 1976 :
S. 483 --Business expenditure--Fines and penalties--Amount paid by builder as regularisation fee for violating building bye-laws--Penalty--Not deductible-- Millennia Developers P. Ltd . v. Deputy CIT (Karn) . . . 401
S. 5 --Appeal to High Court--Condonation of delay--Limitation Act has no application--High Court has no power to condone delay beyond period prescribed under Income-tax Act-- Sukhvinder Singh v. CIT (P&H) . . . 339
CA.RAJU SHAH, AHMEDABAD
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