Pages

Monday, August 30, 2010

ITR VOL 326 PART 3 AND ITR (TRIB) VOL 5 PART 1

 
INCOME TAX REPORTS (ITR)
Volume 326 : Part 3 (Issue dated 30-8-2010)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
HIGH COURTS
Appeal to Appellate Tribunal --Duties of Tribunal--Duty to consider facts--Export--Special deduction--Order on revision on ground that certain amounts did not constitute business income--Tribunal mechanically following decision of High Court which was not applicable to the facts--Tribunal's order not valid--Matter remanded to Commissioner--Income-tax Act, 1961, ss. 80HHC, 254, 263-- CIT v. Damodar Mangalji Mining Co . (Bom) . . . 437
----Revised monetary limits for litigation by revenue--Tax liability less than revised monetary limits--Dismissal of appeal by Tribunal justified--Income-tax Act, 1961--Circular F. No. 279/126/98-IT dated 27-3-2000-- CIT v. Hospital Superintendent, Government Head Quarters, Mettur Dam (Mad) . . . 511
Assessment --Notice under section 143(2)--Limitation--Affidavit by assessee that notice not received within limitation--Onus on Revenue to prove that notice served in time--Income-tax Act, 1961, s. 143(2)-- CIT v. Silver Streak Trading P. Ltd. (Delhi) . . . 418
Bad debt --Condition precedent--Amount should have been shown in accounts of earlier year to be written off in later year--Business loss--Amount relating to transactions of earlier years not deductible trading loss--Matter remanded to permit assessee to prove claim of bad debt--Income-tax Act, 1961, ss. 28, 36-- CIT v. Popular Vehicles and Services Ltd. (Ker) . . . 387
Block assessment --Agricultural income--Whether additional income already part of undisclosed income--Matter remanded--Income-tax Act, 1961-- CIT v. Shrimati Ram Devi (Delhi) . . . 421
Business expenditure --Deduction only on actual payment--Bonus--Law applicable--Effect of omission of second proviso to section 43B w. e. f. 1-4-1989--Payment of bonus to irrevocable trust before omission of proviso--Amount could not be disallowed--Income-tax Act, 1961, s. 43B(c)-- CIT v. Sri Venkatesa Mills Ltd. (Mad) . . . 508
----Deduction only on actual payment--Excise duty paid on goods manufactured but not sold and lying in closing stock--Cannot be disallowed--Income-tax Act, 1961, s. 43B-- CIT v. Motor Industries Co. Ltd. (Karn) . . . 358
----Deduction only on actual payment--Payment towards provident fund and employees' State insurance made after due date specified in Explanation appended below section 36(1)(va)--Not entitled to deduction--Income-tax Act, 1961, ss. 36(1)(va) Expln., 43B-- B. S. Patel v. Deputy CIT (MP) . . . 457
----Deduction only on actual payment--Sales tax and provident fund contribution--Paid within permissible time--Entitled to deduction--Income-tax Act, 1961, s. 43B-- CIT v. Vijay Foundary and Engg. Works (MP) . . . 378
----Deduction only on actual payment--Sales tax paid within due time but after close of accounting year--Cannot be disallowed--Income-tax Act, 1961, s. 43B-- CIT v. Paliwal Glass Works (All) . . . 407
----State owned financial corporation--Expenditure at instance of State on "model villages" to promote infrastructural facilities and new markets in villages--Expenditure for business purposes of assessee--Deductible--Income-tax Act, 1961, s. 37-- CIT v. Karnataka Financial Corporation (Karn) . . . 355
Business income --Amalgamation of companies--Assessee acquiring company at price below book value--Subsequent to amalgamation sale by assessee of shares held by that company--Cost of shares to be taken at proportion of total price paid by assessee for takeover of assets--Not book value shown in books--Income-tax Act, 1961, s. 41(2)-- CIT v. Mahindra and Co. Ltd. (Raj) . . . 465
Capital or revenue expenditure --Corporate membership fee to club--Expenditure wholly and exclusively for purposes of business and not towards capital account--Deductible as revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v. Samtel Color Ltd. (Delhi) . . . 425
----Expenditure on load extension and purchase of distribution panels--Finding that expenditure was of recurring nature and no asset of enduring nature obtained--Expenditure deductible--Income-tax Act, 1961, s. 37-- CIT v. Lakhani Rubber Works (P&H) . . . 415
----Interest liability in respect of borrowings in foreign exchange--Increased liability on account of foreign exchange rate fluctuation--On revenue account--Income-tax Act, 1961-- CIT v. Indian Toners and Developers Ltd. (Delhi) . . . 435
----Registration and stamp duty on lease deed for taking plant on lease--Revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v. Gopal Associates (HP) . . . 413
----Take over of business--Amount paid to transfer for deprivation of business--Revenue expenditure--Income-tax Act, 1961-- CIT v. Hindustan Zinc Ltd. (Raj) . . . 474
Charitable purposes --Exemption--Amount advanced to cement trader claimed to be for construction of pilgrim centre--No concrete proposal and immediate requirement of cement--Amount advanced only form of investment or deposit--Not entitled to exemption--Income-tax Act, 1961, ss. 11(1)(a), 12, 13(1)(d)-- CIT v. Shree P. Subramoniam Religious Trust (Ker) . . . 393
Company --Tax on undistributed profits--Failure to declare dividend--Finding that plea of losses by assessee not acceptable--Assessment made at positive income in preceding year--Invocation of section 104--Justified--Income-tax Act, 1961, s. 104-- Thakur Devi Investments (P.) Ltd. v. CIT (P&H) . . . 396
Deduction of tax at source --Interest--Interest on enhanced compensation for agricultural land--Tax deductible at source on interest--Income-tax Act, 1961, ss. 194A, 194LA-- Karnail Singh v. State of Haryana (P&H) . . . 501
Depreciation --Actual cost--Subsidy received from Central Government--Not to be deducted from cost of assets for allowing depreciation--Income-tax Act, 1961, s. 43(1)-- CIT v. Standard Fireworks P. Ltd. (Mad) . . . 498
----Actual cost--Subsidy received from State Government for specific purpose of purchase of generator set--Subsidy to be deducted in computing actual cost--Rate of depreciation--Generator--General rate applicable--Income-tax Act, 1961, ss. 32, 43(1)-- CIT v. Paliwal Glass Works (All) . . . 407
Exemption --Educational institution--Surplus funds must be used for objects of institution within five years for claiming exemption--Income-tax Act, 1961, s. 10(23C)(vi)-- Dr. Maharaj Krishana Kapur Educational Charitable Trust and Managment Society v. Union of India (P&H) . . . 385
Export --Special deduction--Computation of total turnover for purposes of section 80HHC--Amount received by sale of scrap in domestic market--Includible--Excise duty on scrap--Not includible--Matter remanded--Income-tax Act, 1961, s. 80HHC-- CIT v. Motor Industries Co. Ltd . (Karn) . . . 358
----Special deduction--Computation of total turnover for purposes of section 80HHC--Receipt on account of exchange fluctuation--Includible--Income-tax Act, 1961, s. 80HHC-- CIT v. Amber Exports (India) (Bom) . . . 455
----Special deduction--Turnover--Computation--Sales tax and excise duty not to be included in total turnover--Income-tax Act, 1961, s. 80HHC-- CIT v. Standard Fireworks P. Ltd . (Mad) . . . 498
Income --Accrual of income--Accounting--Principle of real income--Amount due to assessee in terms of royalty agreement--Dispute between parties and arbitration proceedings pending--No accrual of income--Assessment only on completion of arbitration proceedings--Income-tax Act, 1961-- FGP Ltd. v. CIT (Bom) . . . 444
Income from undisclosed sources --Commissioner (Appeals) and Tribunal finding only suppression of sale consideration--Addition only in respect of profit--Concurrent finding--Income-tax Act, 1961-- CIT v. Samir Synthetics Mill (Guj) . . . 410
Interest-tax --Chargeable interest--Interest earned on refinancing operations--To be excluded from chargeable interest--Interest-tax Act, 1974, s. 2(5)-- CIT v. Punjab State Industrial Development Corporation (P&H) . . . 390
Interpretation of taxing statutes --Rule against retrospectivity-- B. S. Patel v. Deputy CIT (MP) . . . 457
Kar Vivad Samadhan Scheme --Application for settlement under KVSS--Condition precedent--Proceedings for appeals, references or revisions which are pending--Revision application filed beyond time with prayer for condonation of delay--Revision petition not rejected--Revision proceedings were pending--Application for settlement valid--Income-tax Act, 1961, s. 264--Finance (No. 2) Act, 1998 s. 95(i)(c)--Kar Vivad Samadhan Scheme, 1998-- Sheela Ashokkumar Goenka v. Designated Authority under Kar Vivad Samadhan Scheme (Guj) . . . 402
Offences and prosecution --Purchase of immovable property by Central Government--Failure to file Form 37-I--Purchase of immovable properties by individual and his wife and sale thereof by individual deeds--Sale prices could not be aggregated--Individual value less than prescribed limit--Prosecution under section 276AB--Not valid--Income-tax Act, 1961, ss. 269UC, 269UL, 276AB-- Banumathi v. ITO (Mad) . . . 368
Penalty --Concealment of income--Claim for special deduction under section 80-IA--Details regarding special deduction furnished--Claim whether allowable debatable issue--Law later settled by subsequent ruling of High Court and Supreme Court--No concealment of income or furnishing of inaccurate particulars--Penalty could not be levied--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Arisudana Spinning Mills Ltd. (P&H) . . . 429
Reassessment --Original return accepted under section 143(1) --Consideration of material filed in response to notices under sections 143(2) and 142(1) in reassessment proceedings--Not a case of change of opinion--Reassessment proceedings cannot be set aside--Income-tax Act, 1961, ss. 142, 143, 147, 148-- CIT v. Ravindran Prabhakar (Mad) . . . 363
Royalty from foreign enterprise --Special deduction--Assessee a professor developing educational material in form of CDs and in book form and exporting to students abroad--No new invention or design in respect of educational materials--Not entitled to special deduction--Income-tax Act, 1961, s. 80-O-- P. C. Thomas v. Asst. CIT (Ker) . . . 388
Undisclosed income --Assessment based on documents seized--Findings that investment cannot be treated as income and commission alone to be treated as income earned from sale--Findings of fact--Income-tax Act, 1961-- CIT v. Dhani Ram (P&H) . . . 399
Wealth-tax --Asset--Assessee purchasing flat before 1-4-1993 and admitted as member of housing society--Transfer not registered in books of society--Not relevant--Value of flat includible in net wealth of assessee --Wealth-tax Act, 1957, s. 4(7)-- Bennett Coleman and Co. Ltd. v. Asst. CWT (Bom) . . . 447
----Asset--Right to purchase property at a fixed rate--Not an asset for purposes of wealth-tax--Wealth-tax Act, 1957-- Ardeshir Behram Dubash v. WTO (Bom) . . . 451
AUTHORITY FOR ADVANCE RULINGS
Deduction of tax at source --Income-tax Act, 1961, s. 195-- Bharati AXA General Insurance Co. Ltd. , In re . . . 477
Non-resident --Agreement with resident for assistance such as business support, marketing information technology support services and strategy support, etc.--Non-resident having no permanent establishment in India--Payments made to non-resident as a mark up of expenses--Whether taxable in India--"Royalty", scope of--Avoidance of Double Taxation between India and Singapore, art. 12(3), (4)-- Bharati AXA General Insurance Co. Ltd. , In re . . . 477
----Non-profit organization--Providing accreditation to conformity assessment bodies--Fees received by non-profit organization for certification from bodies in India--Whether non-profit organization liable to tax in India--Agreement for Avoidance of Double Taxation between India and Australia, arts. 7(1), 12--Income-tax Act, 1961, s. 9(1)(vii)-- Joint Accreditation System of Australia and New Zealand , In re . . . 487
Words and phrases --"Fees for technical services", "royalty, meanings of-- Bharati AXA General Insurance Co. Ltd. , In re . . . 477

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Agreement for Avoidance of Double Taxation between India and Australia :
Arts. 7(1), 12 --Non-resident--Non-profit organization--Providing accreditation to conformity assessment bodies--Fees received by non-profit organization for certification from bodies in India--Whether non-profit organization liable to tax in India-- Joint Accreditation System of Australia and New Zealand , In re(AAR) . . . 487
Avoidance of Double Taxation between India and Singapore :
Art. 12(3), (4) --Non-resident--Agreement with resident for assistance such as business support, marketing information technology support services and strategy support, etc.--Non-resident having no permanent establishment in India--Payments made to non-resident as a mark up of expenses--Whether taxable in India--"Royalty", scope of-- Bharati AXA General Insurance Co. Ltd. , In re(AAR) . . . 477
Finance (No. 2) Act, 1998 :
S. 95(i)(c) --Kar Vivad Samadhan Scheme--Application for settlement under KVSS--Condition precedent--Proceedings for appeals, references or revisions which are pending--Revision application filed beyond time with prayer for condonation of delay--Revision petition not rejected--Revision proceedings were pending--Application for settlement valid----Kar Vivad Samadhan Scheme, 1998-- Sheela Ashokkumar Goenka v. Designated Authority under Kar Vivad Samadhan Scheme (Guj) . . . 402
Income-tax Act, 1961 :
S. 9(1)(vii) --Non-resident--Non-profit organization--Providing accreditation to conformity assessment bodies--Fees received by non-profit organization for certification from bodies in India--Whether non-profit organization liable to tax in India--Agreement for Avoidance of Double Taxation between India and Australia, arts. 7(1), 12-- Joint Accreditation System of Australia and New Zealand , In re (AAR) . . . 487
S. 10(23C)(vi) --Exemption--Educational institution--Surplus funds must be used for objects of institution within five years for claiming exemption-- Dr. Maharaj Krishana Kapur Educational Charitable Trust and Managment Society v. Union of India (P&H) . . . 385
S. 11(1)(a) --Charitable purposes--Exemption--Amount advanced to cement trader claimed to be for construction of pilgrim centre--No concrete proposal and immediate requirement of cement--Amount advanced only form of investment or deposit--Not entitled to exemption-- CIT v. Shree P. Subramoniam Religious Trust (Ker) . . . 393
S. 12 --Charitable purposes--Exemption--Amount advanced to cement trader claimed to be for construction of pilgrim centre--No concrete proposal and immediate requirement of cement--Amount advanced only form of investment or deposit--Not entitled to exemption-- CIT v. Shree P. Subramoniam Religious Trust (Ker) . . . 393
S. 13(1)(d) --Charitable purposes--Exemption--Amount advanced to cement trader claimed to be for construction of pilgrim centre--No concrete proposal and immediate requirement of cement--Amount advanced only form of investment or deposit--Not entitled to exemption-- CIT v. Shree P. Subramoniam Religious Trust (Ker) . . . 393
S. 28 --Bad debt--Condition precedent--Amount should have been shown in accounts of earlier year to be written off in later year--Business loss--Amount relating to transactions of earlier years not deductible trading loss--Matter remanded to permit assessee to prove claim of bad debt-- CIT v. Popular Vehicles and Services Ltd. (Ker) . . . 387
S. 32 --Depreciation--Actual cost--Subsidy received from State Government for specific purpose of purchase of generator set--Subsidy to be deducted in computing actual cost--Rate of depreciation--Generator--General rate applicable-- CIT v. Paliwal Glass Works (All) . . . 407
S. 36 --Bad debt--Condition precedent--Amount should have been shown in accounts of earlier year to be written off in later year--Business loss--Amount relating to transactions of earlier years not deductible trading loss--Matter remanded to permit assessee to prove claim of bad debt-- CIT v. Popular Vehicles and Services Ltd. (Ker) . . . 387
S. 36(1)(va) Expln. --Business expenditure--Deduction only on actual payment--Payment towards provident fund and employees' State insurance made after due date specified in Explanation appended below section 36(1)(va)--Not entitled to deduction-- B. S. Patel v. Deputy CIT (MP) . . . 457
S. 37 --Business expenditure--State owned financial corporation--Expenditure at instance of State on "model villages" to promote infrastructural facilities and new markets in villages--Expendi-ture for business purposes of assessee--Deductible-- CIT v. Karnataka Financial Corporation (Karn) . . . 355
----Capital or revenue expenditure--Corporate membership fee to club--Expenditure wholly and exclusively for purposes of business and not towards capital account--Deductible as revenue expenditure-- CIT v. Samtel Color Ltd. (Delhi) . . . 425
----Capital or revenue expenditure--Expenditure on load extension and purchase of distribution panels--Finding that expenditure was of recurring nature and no asset of enduring nature obtained--Expenditure deductible-- CIT v. Lakhani Rubber Works (P&H) . . . 415
----Capital or revenue expenditure--Registration and stamp duty on lease deed for taking plant on lease--Revenue expenditure-- CIT v. Gopal Associates (HP) . . . 413
S. 41(2) --Business income--Amalgamation of companies--Assessee acquiring company at price below book value--Subsequent to amalgamation sale by assessee of shares held by that company--Cost of shares to be taken at proportion of total price paid by assessee for takeover of assets--Not book value shown in books-- CIT v. Mahindra and Co. Ltd. (Raj) . . . 465
S. 43(1) --Depreciation--Actual cost--Subsidy received from Central Government--Not to be deducted from cost of assets for allowing depreciation-- CIT v. Standard Fireworks P. Ltd. (Mad) . . . 498
Income-tax Act, 1961, S. 043(1)--Depreciation--Actual cost--Subsidy received from State Government for specific purpose of purchase of generator set--Subsidy to be deducted in computing actual cost--Rate of depreciation--Generator--General rate applicable-- CIT v. Paliwal Glass Works (All) . . . 407
S. 43B --Business expenditure--Deduction only on actual payment--Excise duty paid on goods manufactured but not sold and lying in closing stock--Cannot be disallowed-- CIT v. Motor Industries Co. Ltd. (Karn) . . . 358
----Business expenditure--Deduction only on actual payment--Payment towards provident fund and employees' State insurance made after due date specified in Explanation appended below section 36(1)(va)--Not entitled to deduction-- B. S. Patel v. Deputy CIT (MP) . . . 457
----Business expenditure--Deduction only on actual payment--Sales tax and provident fund contribution--Paid within permissible time--Entitled to deduction-- CIT v. Vijay Foundary and Engg. Works (MP) . . . 378
----Business expenditure--Deduction only on actual payment--Sales tax paid within due time but after close of accounting year--Cannot be disallowed-- CIT v. Paliwal Glass Works (All) . . . 407
S. 43B(c) --Business expenditure--Deduction only on actual payment--Bonus--Law applicable--Effect of omission of second proviso to section 43B w.e.f. 1-4-1989--Payment of bonus to irrevocable trust before omission of proviso--Amount could not be disallowed-- CIT v. Sri Venkatesa Mills Ltd. (Mad) . . . 508
S. 80HHC --Appeal to Appellate Tribunal--Duties of Tribunal--Duty to consider facts--Export--Special deduction--Order on revision on ground that certain amounts did not constitute business income--Tribunal mechanically following decision of High Court which was not applicable to the facts--Tribunal's order not valid--Matter remanded to Commissioner-- CIT v. Damodar Mangalji Mining Co . (Bom) . . . 437
----Export--Special deduction--Computation of total turnover for purposes of section 80HHC--Amount received by sale of scrap in domestic market--Includible--Excise duty on scrap--Not includible--Matter remanded-- CIT v. Motor Industries Co. Ltd . (Karn) . . . 358
----Export--Special deduction--Computation of total turnover for purposes of section 80HHC--Receipt on account of exchange fluctuation--Includible-- CIT v. Amber Exports (India) (Bom) . . . 455
----Export--Special deduction--Turnover--Computation--Sales tax and excise duty not to be included in total turnover-- CIT v. Standard Fireworks P. Ltd . (Mad) . . . 498
S. 80-O --Royalty from foreign enterprise--Special deduction--Assessee a professor developing educational material in form of CDs and in book form and exporting to students abroad--No new invention or design in respect of educational materials--Not entitled to special deduction-- P. C. Thomas v. Asst. CIT (Ker) . . . 388
S. 104 --Company--Tax on undistributed profits--Failure to declare dividend--Finding that plea of losses by assessee not acceptable--Assessment made at positive income in preceding year--Invocation of section 104--Justified-- Thakur Devi Investments (P.) Ltd. v. CIT (P&H) . . . 396
S. 142 --Reassessment--Original return accepted under section 143(1)--Consideration of material filed in response to notices under sections 143(2) and 142(1) in reassessment proceedings--Not a case of change of opinion--Reassessment proceedings cannot be set aside-- CIT v. Ravindran Prabhakar (Mad) . . . 363
S. 143 --Reassessment--Original return accepted under section 143(1)--Consideration of material filed in response to notices under sections 143(2) and 142(1) in reassessment proceedings--Not a case of change of opinion--Reassessment proceedings cannot be set aside-- CIT v. Ravindran Prabhakar (Mad) . . . 36
S. 143(2) --Assessment--Notice under section 143(2)--Limitation--Affidavit by assessee that notice not received within limitation--Onus on Revenue to prove that notice served in time-- CIT v. Silver Streak Trading P. Ltd. (Delhi) . . . 418
S. 147 --Reassessment--Original return accepted under section 143(1)--Consideration of material filed in response to notices under sections 143(2) and 142(1) in reassessment proceedings--Not a case of change of opinion--Reassessment proceedings cannot be set aside-- CIT v. Ravindran Prabhakar (Mad) . . . 363
S. 148 --Reassessment--Original return accepted under section 143(1)--Consideration of material filed in response to notices under sections 143(2) and 142(1) in reassessment proceedings--Not a case of change of opinion--Reassessment proceedings cannot be set aside-- CIT v. Ravindran Prabhakar (Mad) . . . 363
S. 194A --Deduction of tax at source--Interest--Interest on enhanced compensation for agricultural land--Tax deductible at source on interest-- Karnail Singh v. State of Haryana (P&H) . . . 501
S. 194LA --Deduction of tax at source--Interest--Interest on enhanced compensation for agricultural land--Tax deductible at source on interest-- Karnail Singh v. State of Haryana (P&H) . . . 501
S. 195 --Deduction of tax at source-- Bharati AXA General Insurance Co. Ltd. , In re (AAR) . . . 477
S. 254 --Appeal to Appellate Tribunal--Duties of Tribunal--Duty to consider facts--Export--Special deduction--Order on revision on ground that certain amounts did not constitute business income--Tribunal mechanically following decision of High Court which was not applicable to the facts--Tribunal's order not valid--Matter remanded to Commissioner-- CIT v. Damodar Mangalji Mining Co . (Bom) . . . 437
S. 263 --Appeal to Appellate Tribunal--Duties of Tribunal--Duty to consider facts--Export--Special deduction--Order on revision on ground that certain amounts did not constitute business income--Tribunal mechanically following decision of High Court which was not applicable to the facts--Tribunal's order not valid--Matter remanded to Commissioner-- CIT v. Damodar Mangalji Mining Co . (Bom) . . . 437
S. 264 --Kar Vivad Samadhan Scheme--Application for settlement under KVSS--Condition precedent--Proceedings for appeals, references or revisions which are pending--Revision application filed beyond time with prayer for condonation of delay--Revision petition not rejected--Revision proceedings were pending--Application for settlement valid----Kar Vivad Samadhan Scheme, 1998-- Sheela Ashokkumar Goenka v. Designated Authority under Kar Vivad Samadhan Scheme (Guj) . . . 402
S. 269UC --Offences and prosecution--Purchase of immovable property by Central Government--Failure to file Form 37-I--Purchase of immovable properties by individual and his wife and sale thereof by individual deeds--Sale prices could not be aggregated--Individual value less than prescribed limit--Prosecution under section 276AB--Not valid-- Banumathi v. ITO (Mad) . . . 368
S. 269UL --Offences and prosecution--Purchase of immovable property by Central Government--Failure to file Form 37-I--Purchase of immovable properties by individual and his wife and sale thereof by individual deeds--Sale prices could not be aggregated--Individual value less than prescribed limit--Prosecution under section 276AB--Not valid-- Banumathi v. ITO (Mad) . . . 368
S. 271(1)(c) --Penalty--Concealment of income--Claim for special deduction under section 80-IA--Details regarding special deduction furnished--Claim whether allowable debatable issue--Law later settled by subsequent ruling of High Court and Supreme Court--No concealment of income or furnishing of inaccurate particulars--Penalty could not be levied-- CIT v. Arisudana Spinning Mills Ltd. (P&H) . . . 429
S. 276AB --Offences and prosecution--Purchase of immovable property by Central Government--Failure to file Form 37-I--Purchase of immovable properties by individual and his wife and sale thereof by individual deeds--Sale prices could not be aggregated--Individual value less than prescribed limit--Prosecution under section 276AB--Not valid-- Banumathi v. ITO (Mad) . . . 368
Interest-tax Act, 1974 :
S. 2(5) --Interest-tax--Chargeable interest--Interest earned on refinancing operations--To be excluded from chargeable interest-- CIT v. Punjab State Industrial Development Corporation (P&H) . . . 390
Wealth-tax Act, 1957 :
S. 4(7) --Wealth-tax--Asset--Assessee purchasing flat before 1-4-1993 and admitted as member of housing society--Transfer not registered in books of society--Not relevant--Value of flat includible in net wealth of assessee-- Bennett Coleman and Co. Ltd. v. Asst. CWT (Bom) . . . 447
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 5 : Part 1 (Issue dated : 30-8-2010)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Advance tax --Interest--Book profits--Provision brought subsequently with retrospective effect covering assessment year that deferred tax to be added back--Impossible to pay differential advance tax in relevant previous year--Assessee not liable to interest on differential tax--Income-tax Act, 1961, ss. 115JB, Expln. 1(h), 234B-- JSW Steel Ltd. v. Asst. CIT (Bangalore) . . . 31
Agricultural income --Exemption--Assessee engaged in research, production and sale of hybrid seeds--Method of contract farming and basic seeds sown in leasehold land--Basic as well as secondary agricultural operations carried on by assessee--Entire income is agricultural income--Assessee entitled to exemption--Income-tax Act, 1961, s. 2(1A)-- Advanta India Ltd. v. Deputy CIT (Bangalore) . . . 57
Bad debt --Condition precedent for deduction--Condition that debt should have been taken into account in computing income of previous year or earlier year --Share broker--Sums receivable from clients for transactions undertaken on their behalf--Is trading debt of assessee--Commission taken to profit and loss account --Deduction allowable--Income-tax Act, 1961, s. 36(1)(vii), (2)(i)-- Deputy CIT v. Shreyas S. Morakhia [SB] (Mumbai) . . . 1
Book profits --Computation of--Debenture redemption reserve--Debenture redemption reserve capital in nature--Proceeds not treated as income but loans--Amount set apart to meet ascertained liability--Not deductible--Income-tax Act, 1961, s. 115JB, Expln. 1(b)-- JSW Steel Ltd. v. Asst. CIT (Bangalore) . . . 31
Business expenditure --Capital or revenue expenditure--Work-in-progress expenses in relation to development of designs and drawings used for manufacture of transformers--Amount disclosed in profit and loss account on yearly basis as percentage of revenue expenditure--Amount written off--Allowable--Income-tax Act, 1961, s. 37-- Deputy CIT v. Current Electricals Ltd. (Chennai) . . . 25
----Expenditure incurred on temporary structures on site--Disallowance owing to incompletion of project in 2002-03--Commissioner (Appeals)'s direction to allow deduction in subsequent years on completion of project attaining finality--Order not to be disturbed--Income-tax Act, 1961, s. 37-- Nathpa Jhakri Joint Venture v. Asst. CIT (Mumbai) . . . 75
----Foreign travel expenses--Expenses incurred on foreign trip of doctor's wife who is not a doctor--No proof that business purpose not served--Deduction allowable--Income-tax Act, 1961, s. 37-- Lincoln Pharmaceuticals Ltd. v. ITO (Ahmedabad) . . . 64
----Inter-corporate deposits--Written off--Tribunal's order allowing deduction in earlier year--To be followed--Income-tax Act, 1961-- JSW Steel Ltd. v. Asst. CIT (Bangalore) . . . 31
Business income --Computation--Change in rate of foreign currency--Loss arising from foreign exchange forward contracts--Foreign exchange borrowings for purchase of plant and machinery--Settlement of foreign exchange forward contracts in previous year--Adjustment of loss to be made in previous year--Amount of loss to be added to cost of asset--Income-tax Act, 1961, s. 43A (amended with effect from 1-4-2003)-- JSW Steel Ltd. v. Asst. CIT (Bangalore) . . . 31
Deduction of tax at source --Reimbursement of expenses to non-resident--Liability to deduct tax at source only when payment to non-resident chargeable to tax--Reimbursement of expenses not income--Not taxable in hands of non-resident--Assessee not liable to deduct tax at source--Income-tax Act, 1961, ss. 40(a)(i), 195-- Nathpa Jhakri Joint Venture v. Asst. CIT (Mumbai) . . . 75
Depreciation --Actual cost--Fluctuation in foreign exchange rate--Depreciation on enhanced value of capital assets allowable--Income-tax Act, 1961, ss. 32, 43A-- JSW Steel Ltd. v. Asst. CIT (Bangalore) . . . 31
Exemption --Export oriented unit--Computation of export turnover--Brought forward loss and unabsorbed depreciation of earlier years to be set off before allowing deduction--Income-tax Act, 1961, s. 10A-- Intellinet Technologies India P. Ltd. v. ITO (Bangalore) . . . 96
Export --Special deduction--Computation of--Total turnover--Exclusion of excise duty and sales tax from total turnover--Justified--Income-tax Act, 1961, s. 80HHC-- Lincoln Pharmaceuticals Ltd. v. ITO (Ahmedabad) . . . 64
Income --Accrual--Accounting--Mercantile system of accounting--Application for refund of terminal excise duty on construction material utilised in project--Right accrues when application for refund filed--Amount liable to tax in instant year--Income-tax Act, 1961-- Nathpa Jhakri Joint Venture v. Asst. CIT (Mumbai) . . . 75
Industrial undertaking --Special deduction--DEPB credit--Not part of net profit--Income-tax Act, 1961, s. 80-IA-- Lincoln Pharmaceuticals Ltd. v. ITO (Ahmedabad) . . . 64
----Special deduction--Interest on fixed deposits--Deposits for obtaining letter of credit--No direct relation with business--Interest not derived from business--Not deductible--Income-tax Act, 1961, s. 80-IA-- Lincoln Pharmaceuticals Ltd. v. ITO (Ahmedabad) . . . 64
----Special deduction--Interest received on late payment of sale proceeds--Income derived from business--Deductible--Income-tax Act, 1961, s. 80-IA-- Lincoln Pharmaceuticals Ltd. v. ITO (Ahmedabad) . . . 64
----Special deduction--No material evidencing purchase rates lower than market rates--Intention of parties to transfer profits from supplier company to assessee to claim higher deduction not proved--Reduction of deduction not justified--Income-tax Act, 1961, s. 80-IA-- Lincoln Pharmaceuticals Ltd. v. ITO (Ahmedabad) . . . 64
International transactions --Arm's length price--Computation of--More than one price not used for each transaction--Specific one year LIBOR rate held as arm's length price for transaction--Cannot be equated with more than one price for each transaction--Benefit of 5 per cent. not allowable--Income-tax Act, 1961, s. 92C(2), prov.-- Perot Systems TSI (India) Ltd. v. Deputy CIT . (Delhi) . . . 106
----Arm's length price--Special provision--Interest free loans advanced to foreign associated enterprises--Transaction debt and not quasi-equity--Lending or borrowing money between two associated enterprises covered within ambit of international transaction--Reserve Bank's approval not a seal on true character of transaction from perspective of transfer pricing regulation--Profits shifted to tax havens or low tax regimes to bring down aggregate tax incidence of multinational group--Case of violation of transfer pricing norms--Transaction not at arm's length--Income-tax Act, 1961, s. 92B-- Perot Systems TSI (India) Ltd. v. Deputy CIT (Delhi) . . . 106
Loss --Speculation business--Loss arising out of valuation of shares--Loss in nature of speculation loss--Cannot be excluded from purview of Explanation to section 73--Direction by Commissioner (Appeals) to allow loss as business loss while computing total income--Not proper--Income-tax Act, 1961, s. 73, Expln-- ITO v. Big Apple Clothing P. Ltd. (Delhi) . . . 44
Penalty --Concealment of income--Depreciation claimed on building without reducing value of land--Bifurcation of land and building--Excess depreciation claimed and allowed since past three years due to inadvertent mistake--Assessee offering depreciation attributable to land portion to tax--Not a case of concealment of income--Penalty to be deleted--Income-tax Act, 1961, s. 271(1)(c)-- Namaste Voyages P. Ltd. v. ITO (Delhi) . . . 90
----Concealment of income--Special deduction--Tour operator--Profits transferred to reserve for use in business--Assessee under bona fide belief that purchase of new motor cycles amounts to utilisation for purpose specified under section 80HHD--Assessee not guilty of concealment or furnishing of inaccurate particulars --Penalty to be deleted--Income-tax Act, 1961, ss. 80HHD, 271(1)(c)-- Namaste Voyages P. Ltd. v. ITO (Delhi) . . . 90
Revision --Commissioner--Effect of declaration of law by High Court--Judgment dates back to date of enactment--Assessment order rendered erroneous and prejudicial to interests of Revenue--Revision order valid--Income-tax Act, 1961, ss. 10A, 263-- Intellinet Technologies India P. Ltd. v. ITO (Bangalore) . . . 96
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Income-tax Act, 1961 :
S. 2(1A) --Agricultural income--Exemption--Assessee engaged in research, production and sale of hybrid seeds--Method of contract farming and basic seeds sown in leasehold land--Basic as well as secondary agricultural operations carried on by assessee--Entire income is agricultural income--Assessee entitled to exemption-- Advanta India Ltd. v. Deputy CIT (Bangalore) . . . 57
S. 10A --Exemption--Export oriented unit--Computation of export turnover--Brought forward loss and unabsorbed depreciation of earlier years to be set off before allowing deduction-- Intellinet Technologies India P. Ltd. v. ITO (Bangalore) . . . 96
----Revision--Commissioner--Effect of declaration of law by High Court--Judgment dates back to date of enactment--Assessment order rendered erroneous and prejudicial to interests of Revenue--Revision order valid-- Intellinet Technologies India P. Ltd. v. ITO (Bangalore) . . . 96
S. 32 --Depreciation--Actual cost--Fluctuation in foreign exchange rate--Depreciation on enhanced value of capital assets allowable-- JSW Steel Ltd. v. Asst. CIT (Bangalore) . . . 31
S. 36(1)(vii), (2)(i) --Bad debt--Condition precedent for deduction--Condition that debt should have been taken into account in computing income of previous year or earlier year --Share broker--Sums receivable from clients for transactions undertaken on their behalf--Is trading debt of assessee--Commission taken to profit and loss account --Deduction allowable-- Deputy CIT v. Shreyas S. Morakhia [SB] (Mumbai) . . . 1
S. 37 --Business expenditure--Capital or revenue expenditure--Work-in-progress expenses in relation to development of designs and drawings used for manufacture of transformers--Amount disclosed in profit and loss account on yearly basis as percentage of revenue expenditure--Amount written off--Allowable-- Deputy CIT v. Current Electricals Ltd. (Chennai) . . . 25
----Business expenditure--Expenditure incurred on temporary structures on site--Disallowance owing to incompletion of project in 2002-03--Commissioner (Appeals)'s direction to allow deduction in subsequent years on completion of project attaining finality--Order not to be disturbed-- Nathpa Jhakri Joint Venture v. Asst. CIT (Mumbai) . . . 75
----Business expenditure--Foreign travel expenses--Expenses incurred on foreign trip of doctor's wife who is not a doctor--No proof that business purpose not served--Deduction allowable-- Lincoln Pharmaceuticals Ltd. v. ITO (Ahmedabad) . . . 64
S. 40(a)(i) --Deduction of tax at source--Reimbursement of expenses to non-resident--Liability to deduct tax at source only when payment to non-resident chargeable to tax--Reimbursement of expenses not income--Not taxable in hands of non-resident--Assessee not liable to deduct tax at source-- Nathpa Jhakri Joint Venture v. Asst. CIT (Mumbai) . . . 75
S. 43A --Depreciation--Actual cost--Fluctuation in foreign exchange rate--Depreciation on enhanced value of capital assets allowable-- JSW Steel Ltd. v. Asst. CIT (Bangalore) . . . 31
S. 43A (amended with effect from 1-4-2003)--Business income--Computation--Change in rate of foreign currency--Loss arising from foreign exchange forward contracts--Foreign exchange borrowings for purchase of plant and machinery--Settlement of foreign exchange forward contracts in previous year--Adjustment of loss to be made in previous year--Amount of loss to be added to cost of asset-- JSW Steel Ltd. v. Asst. CIT (Bangalore) . . . 31
S. 73, Expln. --Loss--Speculation business--Loss arising out of valuation of shares--Loss in nature of speculation loss--Cannot be excluded from purview of Explanation to section 73--Direction by Commissioner (Appeals) to allow loss as business loss while computing total income--Not proper-- ITO v. Big Apple Clothing P. Ltd. (Delhi) . . . 44
S. 80HHC --Export--Special deduction--Computation of--Total turnover--Exclusion of excise duty and sales tax from total turnover--Justified-- Lincoln Pharmaceuticals Ltd. v. ITO (Ahmedabad) . . . 64
S. 80HHD --Penalty--Concealment of income--Special deduction--Tour operator--Profits transferred to reserve for use in business--Assessee under bona fide belief that purchase of new motor cycles amounts to utilisation for purpose specified under section 80HHD--Assessee not guilty of concealment or furnishing of inaccurate particulars--Penalty to be deleted-- Namaste Voyages P. Ltd. v. ITO (Delhi) . . . 90
S. 80-IA --Industrial undertaking--Special deduction--DEPB credit--Not part of net profit-- Lincoln Pharmaceuticals Ltd. v. ITO (Ahmedabad) . . . 64
----Industrial undertaking--Special deduction--Interest on fixed deposits--Deposits for obtaining letter of credit--No direct relation with business--Interest not derived from business--Not deductible-- Lincoln Pharmaceuticals Ltd. v. ITO (Ahmedabad) . . . 64
----Industrial undertaking--Special deduction--Interest received on late payment of sale proceeds--Income derived from business--Deductible-- Lincoln Pharmaceuticals Ltd. v. ITO (Ahmedabad) . . . 64
----Industrial undertaking--Special deduction--No material evidencing purchase rates lower than market rates--Intention of parties to transfer profits from supplier company to assessee to claim higher deduction not proved--Reduction of deduction not justified-- Lincoln Pharmaceuticals Ltd. v. ITO (Ahmedabad) . . . 64
S. 92B --International transactions--Arm's length price--Special provision--Interest free loans advanced to foreign associated enterprises--Transaction debt and not quasi-equity--Lending or borrowing money between two associated enterprises covered within ambit of international transaction--Reserve Bank's approval not a seal on true character of transaction from perspective of transfer pricing regulation--Profits shifted to tax havens or low tax regimes to bring down aggregate tax incidence of multinational group--Case of violation of transfer pricing norms--Transaction not at arm's length-- Perot Systems TSI (India) Ltd. v. Deputy CIT (Delhi) . . . 106
S. 92C(2), prov. --International transactions--Arm's length price--Computation of--More than one price not used for each transaction--Specific one year LIBOR rate held as arm's length price for transaction--Cannot be equated with more than one price for each transaction--Benefit of 5 per cent. not allowable-- Perot Systems TSI (India) Ltd. v. Deputy CIT (Delhi) . . . 106
S. 115JB, Expln. 1(b) --Book profits--Computation of--Debenture redemption reserve--Debenture redemption reserve capital in nature--Proceeds not treated as income but loans--Amount set apart to meet ascertained liability--Not deductible-- JSW Steel Ltd. v. Asst. CIT (Bangalore) . . . 31
S. 115JB, Expln. 1(h) --Advance tax--Interest--Book profits--Provision brought subsequently with retrospective effect covering assessment year that deferred tax to be added back--Impossible to pay differential advance tax in relevant previous year--Assessee not liable to interest on differential tax-- JSW Steel Ltd. v. Asst. CIT (Bangalore) . . . 31
S. 195 --Deduction of tax at source--Reimbursement of expenses to non-resident--Liability to deduct tax at source only when payment to non-resident chargeable to tax--Reimbursement of expenses not income--Not taxable in hands of non-resident--Assessee not liable to deduct tax at source-- Nathpa Jhakri Joint Venture v. Asst. CIT (Mumbai) . . . 75
S. 234B --Advance tax--Interest--Book profits--Provision brought subsequently with retrospective effect covering assessment year that deferred tax to be added back--Impossible to pay differential advance tax in relevant previous year--Assessee not liable to interest on differential tax-- JSW Steel Ltd. v. Asst. CIT (Bangalore) . . . 31
S. 263 --Revision--Commissioner--Effect of declaration of law by High Court--Judgment dates back to date of enactment--Assessment order rendered erroneous and prejudicial to interests of Revenue--Revision order valid-- Intellinet Technologies India P. Ltd. v. ITO (Bangalore) . . . 96
S. 271(1)(c) --Penalty--Concealment of income--Depreciation claimed on building without reducing value of land--Bifurcation of land and building--Excess depreciation claimed and allowed since past three years due to inadvertent mistake--Assessee offering depreciation attributable to land portion to tax--Not a case of concealment of income--Penalty to be deleted-- Namaste Voyages P. Ltd. v. ITO (Delhi) . . . 90
----Penalty--Concealment of income--Special deduction--Tour operator--Profits transferred to reserve for use in business--Assessee under bona fide belief that purchase of new motor cycles amounts to utilisation for purpose specified under section 80HHD--Assessee not guilty of concealment or furnishing of inaccurate particulars--Penalty to be deleted-- Namaste Voyages P. Ltd. v. ITO (Delhi) . . . 90

 -CA.RAJU SHAH

Sunday, August 29, 2010

Name availability guidelines for Companies

Superseding all previous Circulars and Instructions (Circular Letter No. 10(1)–RS/60, dated 01-04-1960 and Circular Letter No. 10 / (19)-RS/61, dated 15-03-1962) the Department of Company Affairs has laid down the new principles for deciding cases for availability of names.

 

Click here for the text of the new guidelines.

 

Regards

Mihir Hindocha

Blog: mihiral.blogspot.com

 

 

 

Corporate Alert - The Industrial Disputes (Amendment) Bill, 2010


 

Greetings!!!

We are pleased to send you a copy of our Corporate Alert on The Industrial Disputes (Amendment) Bill, 2010 which has been passed by the Rajya Sabha and which proposes amendment to The Industrial Disputes Act, 1947. We trust that you will find the same useful. We look forward to receiving your valuable feedback.

You may send your comments at newsletter@vaishlaw.com

 

Best Regards,

Vaish Associates, Advocates

Flat No.5-7, 10 Hailey Road,

New Delhi-110001

Phone: +91-11-42492525

Fax: +91-11-23320484

 

Thursday, August 26, 2010

Annual Return Filing MCA



Dear All,

 

MCA has come up with interesting circular, where they have specified the date of filing of annual return with MCA. They have requested all companies to plan date of meeting accordingly.

 

Please see enclosed the circular which is downloaded from www.mca.gov.in

 

Regards,

 

CA Shailesh Rathi

Wednesday, August 25, 2010

Securities Contracts (Regulation) (Second Amendment) Rules, 2010 - Amendment in rules 2, 19 and 19A



The central Government has made the Securities Contracts (Regulation) (Second Amendment) Rules, 2010 to amend the Securities Contracts (Regulation) Rules, 1957 vide Notification No. G.S.R. 662(E), dated 9-8-2010.

 

Click here for the text of the notification.

 

Regards

Mihir Hindocha

Blog: mihiral.blogspot.com

 


ECB liberalisation



At present, entities in the services sectors viz., Hotels, Hospitals and Software are allowed to avail of ECB up to USD 100 million per financial year under the Automatic Route, for foreign currency and/or Rupee capital expenditure for permissible end-uses. On a review, it has now been decided by RBI to consider applications from the corporates in the Hotel, Hospital and Software sectors to avail of ECB beyond USD 100 million under the Approval Route, for foreign currency and / or Rupee capital expenditure for permissible end-uses. The proceeds of the ECB should not be used for acquisition of land.

 

Click here for the text of the A.P. (DIR Series) Circular No. 8, dated 12-8-2010.

 

Regards

Mihir Hindocha

Blog: mihiral.blogspot.com

 

Tuesday, August 24, 2010

Highlights of the annual supplement for the financial year 2010 - 11 to Foreign Trade Policy, 2009 - 14


---------- Forwarded message ----------
From: Excise Jain capjain68@gmail.com


Respected Professionals,
 
Annual supplement for the financial year 2010 - 11 to Foreign Trade Policy, 2009 - 14 has been announced. And following are the highlights of the annual supplement.
 
 

·          DEPB to end on 30.06.2011

 

·          Zero duty EPCG extended till 31.03.2012

 

·          Zero duty EPCG scheme extended to many more areas

 

·          SHIS scheme extended upto 31.03.2012

 

·          New products also added SHIS as done for zero duty EPCG scheme

 

·          New annual EPCG scheme for exporters

 

·          Bonus incentive scheme to handicrafts, handloom, silk carpets, leather products, toys and bicycle parts

 

·          More products added for incentive scheme

 

·          Market linked focus market scheme to garments extended till 31.03.2011

 

·          Additional flexibility for transfer of scrip is being allowed under Agri-infrastructure scheme for units in Food parks

 

·          Advance authorization for annual requirement will be exempted from anti dumping and safeguard duties

 

·          4% SAD refund extended to manufacturers who trades the imported goods

 

·          Advance authorization for physical exports and deemed exports will be brought under a single customs notification in order to facilitate clubbing and closure of authorizations.

 

·          Requirement of chartered engineer certificate for advance authorization under ad hoc norms is being dispensed with

 

·          Additional benefit of 2% bonus under FPS allowed for specified products

 

·          256 new products added under FPS for entitlement of 2% benefits

 

·          VKGUY benefits now available for Instant Tea and CSNL Cardinal

 

·          Additional Towns of Export Excellence (TEEs) announced viz. Barmer (Rajasthan) for Handicrafts; Bhiwandi (Maharashtra) for Textiles; and Agra (Uttar Pradesh) for Leather Products