ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 4 : Part 1 (Issue dated : 5-7-2010)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Assessment --Assessing Officer estimating income at 8 per cent. of contract receipts on basis of information during survey--Assessee not maintaining proper vouchers and relatable evidences for purchase of materials--Assessing Officer justified in rejecting accounts of assessee and estimating income on a reasonable basis--Income-tax Act, 1961-- Asst. CIT v. Skyline Builders (Cochin) . . . 48
Best judgment assessment --Addition--No defects pointed out in books of account--Low profit in a particular year by itself cannot be a ground for invoking powers of best judgment assessment--Rejection of books of account not proper--Income-tax Act, 1961, ss. 144, 145(3)-- Deputy CIT v. Paras Dyeing and Printing Mills P. Ltd. (Ahmedabad) . . . 29
Book profit --Computation--Provision made for bad and doubtful debts in assessment year 1998-99--Assessee withdrawing and crediting in profit and loss account--Assessee is correct in excluding amount while computing income under section 115JB--Income-tax Act, 1961, s. 115JB-- Kochi Refineries Ltd. v. Deputy CIT (Mumbai) . . . 95
Business expenditure --Ascertained or contingent liability--Mercantile system of accounting--Interest on loan--Liability not entered in books of account--Interest liability to be allowed since assessee following mercantile system of accounting--Income-tax Act, 1961, s. 37-- Deputy CIT v. Dune Leasing and Finance Ltd. (Delhi) . . . 65
----Disallowance--Payments made to staff club--Expenditure incurred for business purpose--Not to be disallowed under section 40A(9)--Income-tax Act, 1961, s. 37-- Kochi Refineries Ltd. v. Deputy CIT (Mumbai) . . . 95
Capital gains --Capital loss--Capital asset--Transfer--Lease of land--Asset held by assessee need not be his own--Assessee acquiring possession of land under an agreement for consideration and later surrendering with a request to transfer its interest under another agreement to third party--Assessee a party to that agreement--Surrender of rights of assessee amounts to extinguishment of his rights in land/capital asset--Is capital loss allowable in hands of assessee--Income-tax Act, 1961, s. 2(14), (47)-- Asian PPG Industries Ltd . v. Deputy CIT (Mumbai) . . . 17
----Long-term capital gains--Computation--Cost of acquisition--Assessee inheriting property--Previous owner acquiring property prior to 1981-82--Indexation to be with reference to 1981-82--Income-tax Act, 1961, s. 48, Expln. (iii)-- Asst. CIT v. Syed Maqbul Hussain (Chennai) . . . 44
----Long-term capital gains--Computation--Determination of cost of acquisition--Inheritance of property in 1993--Property acquired by previous owner prior to 1981--Direction to adopt cost of acquisition as on April 1, 1981 justified--Income-tax Act, 1961, ss. 48, Expln. (iii), 55(2)(b)-- Asst. CIT v. Syed Maqbul Hussain (Chennai) . . . 44
Capital or revenue expenditure --Expenditure incurred for repairs of plant and machinery--Is revenue expenditure--Income-tax Act, 1961 s. 37-- Kochi Refineries Ltd. v. Deputy CIT (Mumbai) . . . 95
----Expenditure on feasibility studies--Allowed as revenue expenditure in earlier years--To be allowed in present year also--Income-tax Act, 1961-- Kochi Refineries Ltd. v. Deputy CIT (Mumbai) . . . 95
Capital or revenue receipt --Amount received for surrender of marketing rights--Assessee having no exclusive marketing rights over controlled products and composite agreement entered into for supply of fixed quantity--Compensation received for loss of income--Is revenue receipt--Income-tax Act, 1961-- Kochi Refineries Ltd. v. Deputy CIT (Mumbai) . . . 95
Company --Book profits--Computation--Assessing Officer cannot reopen audited and certified account passed in general body meeting filed before Registrar of Companies--Interest income not credited to accounts--Addition of interest income to profit and loss account--Interest income cannot be added to book profit --Income-tax Act, 1961, s. 115JB-- Deputy CIT v. Dune Leasing and Finance Ltd. (Delhi) . . . 65
Co-operative society --Special deduction--Interest income earned on deposits --Not deductible--Income-tax Act, 1961, s. 80P-- Sri Laxminarayana Swamy Co-operative Society Ltd. v. ITO (Bangalore) . . . 27
----Special deduction--Mutual concern--Objective of registered co-operative society to make profits and declare dividends to its members--Society not entitled to exemption on concept of mutuality--Income-tax Act, 1961, s. 80P-- Sri Laxminarayana Swamy Co-operative Society Ltd. v. ITO (Bangalore) . . . 27
----Special deduction--Operational income--Claim on ground society carrying out specified activity for common benefit of members--Assessing authority to verify activities of assessee--Income-tax Act, 1961, s. 80P(2)(a)(iii), (iv)-- Sri Laxminarayana Swamy Co-operative Society Ltd. v. ITO (Bangalore) . . . 27
Double Taxation Avoidance --American company deputing personnel to Indian company on hire basis--No permanent establishment of American company in India--Deputed personnel under control and supervision of Indian company--No technical services rendered by American company--Indian company reimbursing salary advanced by American company to deputed personnel--No business income from deputation of personnel to Indian company--Double Taxation Avoidance Agreement between USA and India, art. 5(2)(l)-- Deputy Director of Income-tax (International Taxation) v. Tekmark Global Solutions LLC (Mumbai) . . . 1
Income from undisclosed sources --Cash credits--Genuineness of transaction--Amount shown as receipt of share application money--Share applicants not found at given addresses--No further proof of existence of share applicants--Failure to conduct necessary enquiries by authorities--Matter remanded to examine nature of credit--Income-tax Act, 1961, s. 68-- ITO v. Omega Biotech Ltd. (Delhi) . . . 72
Industrial undertaking --Special deduction--Manufacture--Assembling activity amounts to manufacturing activity--Activity requiring more than ten workers --Conditions under section 80-IB fulfilled--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-IB(iii), (iv)-- Chiranjjeevi Wind Energy Ltd. v. Asst. CIT (Chennai) . . . 9
Inter-corporate dividend --Special deduction under section 80M--State Government undertaking investing in companies promoted by it and those encouraged by it--Activities constituted single indivisible business--Special deduction available on gross dividend--Income-tax Act, 1961, s. 80M-- Deputy CIT v. Tamilnadu Industrial Development Corporation Ltd. (Chennai) . . . 79
Interest on borrowed funds --Funds utilised in investment to earn dividend income--Disallowance of 10 per cent. of dividend as expenses incurred for earning dividend under section 14A--No separate disallowance under section 36(1)(iii) required--Income-tax Act, 1961, ss. 14A, 36(1)(iii)-- Asian PPG Industries Ltd. v. Deputy CIT (Mumbai) . . . 17
Refund --Interest on excess refund--Levy of interest applicable from 1-6-2003 --Refund pertaining to assessment year 2001-02--Not applicable--Income-tax Act, 1961, s. 234D-- Kochi Refineries Ltd. v. Deputy CIT (Mumbai) . . . 95
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Double Taxation Avoidance Agreement between USA and India :
Art. 5(2)(l) --Double Taxation Avoidance--American company deputing personnel to Indian company on hire basis--No permanent establishment of American company in India--Deputed personnel under control and supervision of Indian company--No technical services rendered by American company--Indian company reimbursing salary advanced by American company to deputed personnel--No business income from deputation of personnel to Indian company-- Deputy Director of Income-tax (International Taxation) v. Tekmark Global Solutions LLC (Mumbai) . . . 1
S. 2(14) --Capital gains--Capital loss--Capital asset--Transfer--Lease of land --Asset held by assessee need not be his own--Assessee acquiring possession of land under an agreement for consideration and later surrendering with a request to transfer its interest under another agreement to third party--Assessee a party to that agreement--Surrender of rights of assessee amounts to extinguishment of his rights in land/capital asset--Is capital loss allowable in hands of assessee-- Asian PPG Industries Ltd . v. Deputy CIT (Mumbai) . . . 17
S. 2(47) --Capital gains--Capital loss--Capital asset--Transfer--Lease of land --Asset held by assessee need not be his own--Assessee acquiring possession of land under an agreement for consideration and later surrendering with a request to transfer its interest under another agreement to third party--Assessee a party to that agreement--Surrender of rights of assessee amounts to extinguishment of his rights in land/capital asset--Is capital loss allowable in hands of assessee-- Asian PPG Industries Ltd . v. Deputy CIT (Mumbai) . . . 17
S. 14A --Interest on borrowed funds--Funds utilised in investment to earn dividend income--Disallowance of 10 per cent. of dividend as expenses incurred for earning dividend under section 14A--No separate disallowance under section 36(1)(iii) required-- Asian PPG Industries Ltd. v. Deputy CIT (Mumbai) . . . 17
S. 36(1)(iii) --Interest on borrowed funds--Funds utilised in investment to earn dividend income--Disallowance of 10 per cent. of dividend as expenses incurred for earning dividend under section 14A--No separate disallowance under section 36(1)(iii) required-- Asian PPG Industries Ltd. v. Deputy CIT (Mumbai) . . . 17
S. 37 --Business expenditure--Ascertained or contingent liability--Mercantile system of accounting--Interest on loan--Liability not entered in books of account--Interest liability to be allowed since assessee following mercantile system of accounting-- Deputy CIT v. Dune Leasing and Finance Ltd. (Delhi) . . . 65
----Business expenditure--Disallowance--Payments made to staff club--Expenditure incurred for business purpose--Not to be disallowed under section 40A(9)-- Kochi Refineries Ltd. v. Deputy CIT (Mumbai) . . . 95
----Capital or revenue expenditure--Expenditure incurred for repairs of plant and machinery--Is revenue expenditure-- Kochi Refineries Ltd. v. Deputy CIT (Mumbai) . . . 95
S. 48, Expln. (iii) --Capital gains--Long-term capital gains--Computation--Cost of acquisition--Assessee inheriting property--Previous owner acquiring property prior to 1981-82--Indexation to be with reference to 1981-82-- Asst. CIT v. Syed Maqbul Hussain (Chennai) . . . 44
----Capital gains--Long-term capital gains--Computation--Determination of cost of acquisition--Inheritance of property in 1993--Property acquired by previous owner prior to 1981--Direction to adopt cost of acquisition as on April 1, 1981 justified-- Asst. CIT v. Syed Maqbul Hussain (Chennai) . . . 44
S. 55(2)(b) --Capital gains--Long-term capital gains--Computation--Determination of cost of acquisition--Inheritance of property in 1993--Property acquired by previous owner prior to 1981--Direction to adopt cost of acquisition as on April 1, 1981 justified-- Asst. CIT v. Syed Maqbul Hussain (Chennai) . . . 44
S. 68 --Income from undisclosed sources--Cash credits--Genuineness of transaction--Amount shown as receipt of share application money--Share applicants not found at given addresses--No further proof of existence of share applicants--Failure to conduct necessary enquiries by authorities--Matter remanded to examine nature of credit-- ITO v. Omega Biotech Ltd. (Delhi) . . . 72
S. 80-IB(iii), (iv) --Industrial undertaking--Special deduction--Manufacture--Assembling activity amounts to manufacturing activity--Activity requiring more than ten workers--Conditions under section 80-IB fulfilled--Assessee entitled to deduction-- Chiranjjeevi Wind Energy Ltd. v. Asst. CIT (Chennai) . . . 9
S. 80M --Inter-corporate dividend--Special deduction under section 80M--State Government undertaking investing in companies promoted by it and those encouraged by it--Activities constituted single indivisible business--Special deduction available on gross dividend-- Deputy CIT v. Tamilnadu Industrial Development Corporation Ltd. (Chennai) . . . 79
S. 80P --Co-operative society--Special deduction--Interest income earned on deposits--Not deductible-- Sri Laxminarayana Swamy Co-operative Society Ltd. v. ITO (Bangalore) . . . 27
----Co-operative society--Special deduction--Mutual concern--Objective of registered co-operative society to make profits and declare dividends to its members--Society not entitled to exemption on concept of mutuality-- Sri Laxminarayana Swamy Co-operative Society Ltd. v. ITO (Bangalore) . . . 27
S. 80P(2)(a)(iii), (iv) --Co-operative society--Special deduction--Operational income--Claim on ground society carrying out specified activity for common benefit of members--Assessing authority to verify activities of assessee-- Sri Laxminarayana Swamy Co-operative Society Ltd. v. ITO (Bangalore) . . . 27
S. 115JB --Book profit--Computation--Provision made for bad and doubtful debts in assessment year 1998-99--Assessee withdrawing and crediting in profit and loss account--Assessee is correct in excluding amount while computing income under section 115JB-- Kochi Refineries Ltd. v. Deputy CIT (Mumbai) . . . 95
----Company--Book profits--Computation--Assessing Officer cannot reopen audited and certified account passed in general body meeting filed before Registrar of Companies--Interest income not credited to accounts--Addition of interest income to profit and loss account--Interest income cannot be added to book profit -- Deputy CIT v. Dune Leasing and Finance Ltd. (Delhi) . . . 65
S. 144 --Best judgment assessment--Addition--No defects pointed out in books of account--Low profit in a particular year by itself cannot be a ground for invoking powers of best judgment assessment--Rejection of books of account not proper-- Deputy CIT v. Paras Dyeing and Printing Mills P. Ltd. (Ahmedabad) . . . 29
S. 145(3) --Best judgment assessment--Addition--No defects pointed out in books of account--Low profit in a particular year by itself cannot be a ground for invoking powers of best judgment assessment--Rejection of books of account not proper-- Deputy CIT v. Paras Dyeing and Printing Mills P. Ltd. (Ahmedabad) . . . 29
S. 234D --Refund--Interest on excess refund--Levy of interest applicable from 1-6-2003--Refundng to assessment year 2001-02--Not applicable-- Kochi Refineries Ltd. v. Deputy CIT (Mumbai) . . . 95
-CA.RAJU SHAH
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