INCOME TAX REPORTS (ITR)
Volume 327 : Part 1 (Issue dated 20-9-2010)
Appeal to Appellate Tribunal --Rectification of mistakes--Debatable issue--Tribunal cannot make rectification--Wealth-tax Act, 1957, s. 35-- Amrit Lai Jindal and Sons (HUF) v. WTO (P&H) . . . 161
Appeal to Commissioner (Appeals) --Delay in filing--Power of Commissioner (Appeals) to condone delay--Explanation of assessee that owing to strike in factory office did not work regularly--Delay to be condoned--Income-tax Act, 1961, s. 249(3)-- Alacrity Housing Limited v. Asst. CIT (Mad) . . . 139
Appeal to High Court --Competency of appeal--Dispute between State owned corporation and Income-tax Department--No clearance obtained from Committee on Disputes--Appeal not maintainable--Income-tax Act, 1961, s. 260A-- CIT v. Tamil Nadu Industrial Investment Corporation Ltd . (Mad) . . . 68
Assessment --General principles--Principle of consistency--Fundamental facts remaining the same through different assessment years--Mode of assessment cannot be changed without reason--Income-tax Act, 1961-- CIT v. Haryana Tourism Corporation Ltd . (P&H) . . . 26
Business expenditure --Amounts paid to franchisees under incentive scheme communicated to them on 4-4-2001--Amounts not deductible in financial year ending 31-3-2001--Contribution to subsidiary company towards advertisement expenses--No obligation to make such contribution--Amount not actually spent by subsidiary company--Not deductible--Income-tax Act, 1961, s. 37-- Yum! Restaurants (India) P. Ltd . v. CIT (Delhi) . . . 150
Business income --Deemed income--Composite agreement for transfer of assets and liabilities of firm to company as a going concern--Actual value of land, building, plant and machinery not reflected in agreement--Difference between consideration and written down value of assets not chargeable to tax--Income-tax Act, 1961, s. 41(2)-- CIT v. Agrosynth Chemicals (Karn) . . . 135
----Income from commission and service charges--That assessee a manufacturer not a ground to treat income as income from other sources--Income from commission and service charges is business income--Income-tax Act, 1961-- CIT v. Arihant Cotsyn Limited (P&H) . . . 142
Business income or income from other sources --Finding that assessee was dealing in mutual funds and money-lending business--Interest earned assessable as business income--Income-tax Act, 1961, ss. 36(1)(vii), (2), 56(2)-- CIT v. Eastman Industries (P&H) . . . 29
Capital gains --Compulsory acquisition of land--Enhanced compensation and interest received--Amount received can be taxed only after final disposal of case--Income-tax Act, 1961, s. 45(5)-- New Friends Co-operative House Building Society Ltd. v. CIT (P&H) . . . 39
Capital or revenue expenditure --Contribution for treating effluent--Contribution made only to protect its business as an ongoing entity--Revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v. Jayendrakumar Hiralal (Guj) . . . 147
Cash credit --Finding that transactions genuine and identity of depositors established--Finding of fact--Amount representing cash credits could not be added to income of assessee--Income-tax Act, 1961, s. 68-- CIT v. Micro Melt (P) Ltd. (Guj) . . . 70
Company --Minimum alternate tax--Credit for MAT brought forward--Credit under section 115JAA should be given effect before charging interest under sections 234B and 234C--Income-tax Act, 1961, ss. 115JAA, 234B, 234C-- CIT v. Roots Multiclean Limited (Mad) . . . 65
Depreciation --Increase of prices due to fluctuation in foreign exchange rate--Assessee entitled to adjust cost of acquisition in accordance with section 43A--Income-tax Act, 1961, s. 43A-- CIT v. Arihant Cotsyn Limited (P&H) . . . 142
Exemption --Educational institution--Change of law with effect from April 1, 1999--Introduction of provisions for monitoring--Effect--Test to be applied not affected--Whether institution exists solely for educational purposes--Generation of surplus over four or five years after meeting expenditure not disqualification--Whether institution applying profits wholly and exclusively to objects for which established to be seen--Expenditure wholly and exclusively on acquisition of capital assets not part of total income--Institution registered as a society eligible to apply for exemption--Income-tax Act, 1961, ss. 2(15), 10(22), (23C)(vi), 11--Income-tax Rules, 1962, r. 2CA, Form 56D-- Pinegrove International Charitable Trust v. Union of India (P&H) . . . 73
----Educational institution--Scope of section 10(23C) --Charitable trust whose sole activity was running educational institutions for eighty years--Primary object of trust to provide education for women--Other objects mentioned in trust--Not relevant--Investment of surplus from activities applied for educational purposes--Rejection of approval under section 10(23C)--Not valid--Income-tax Act, 1961, s. 10(23C)(vi)-- Vanita Vishram Trust v. Chief CIT (Bom) . . . 121
Export --Special deduction--Receipts on account of foreign exchange fluctuation on EEFC account and interest on EEFC--Exchange fluctuation in EEFC account arises after completion of export activity--No proximate and direct nexus with export transaction--Section 80HHC does not apply--To be considered as income from other sources--Income-tax Act, 1961, s. 80HHC-- CIT v. Shah Originals (Bom) . . . 19
Income --Sale of property--Advance money received--Is income of assessee--Income-tax Act, 1961-- CIT v. Fair Deal Traders (P&H) . . . 34
Income from house property --Income from house property or business income--Rental income assessed in earlier years as income from house property--Income could not be assessed as business income without any reason--Income-tax Act, 1961, ss. 24, 28-- CIT v. Haryana Tourism Corporation Ltd . (P&H) . . . 26
Industrial undertaking --Special deduction under section 80-I--Finding that machinery and plant used by assessee not new--Assessee not entitled to special deduction under section 80-I--Income-tax Act, 1961, s. 80-I-- Himson Fadis Machinery P. Ltd. v. CIT (Guj) . . . 61
Search and seizure --Documents discovered during search--Effect of sections 132(4A) and 292C--Legal presumption that docu-ments belong to assessee--Loose papers found during search--Explanation that papers had been planted by accountants --No police action against accountants--Accountants continuing in service--Additions to income based on papers--Tribunal not justified in deleting addition without considering effect of presumption--Matter remanded--Income-tax Act, 1961, ss. 132(4A), 292C-- CIT v. D. R. Bansal (Chhattisgarh) . . . 44
Voluntary disclosure of income --Delay in payment of tax--Balance payment of tax beyond prescribed period of 3 months from date of declaration--Assessee not entitled to benefit of Scheme--Direction to refund or adjust balance amount deposited by assessee--Voluntary Disclosure of Income Scheme, 1997--Finance Act, 1997, s. 67-- Hakimchand D. Chotai v. CIT (Guj) . . . 133
Wealth-tax --Hindu undivided family--Asset--Exemption--Land on which construction not permitted--Not to be considered urban land--Value of land not includible in net wealth--Wealth-tax Act, 1957, s. 2(ea)-- Amrit Lai Jindal and Sons (HUF ) v. WTO (P&H) . . . 161
----Reassessment--Notice--Limitation--Notice mistakenly issued under Income-tax Act--Writ petition--Notice set aside with liberty to Department to issue fresh notice--Order of court does not save limitation--Notice issued much beyond expiry of time limit--Barred by limitation--Wealth-tax Act, 1957, ss. 16(2), 17-- Tamil Nadu Real Estates Ltd. v. Asst. CIT (Mad) . . . 144
Non-resident --Business of supplying special purpose computer software--Software sent by air--Software not prepared to suit special needs of customer--Consideration received in US $ outside India--Not "royalty"--Not "fees for technical services"--Income not taxable in India--Income-tax Act, 1961, s. 9(1)(vi)--Agreement for Avoidance of Double Taxation between India and the Netherlands, art. 12-- GeoQuest Systems B. V ., In re . . . 1
Words and phrases --"Royalty", "fees for technical services", meanings of-- GeoQuest Systems B. V ., In re . . . 1
Art. 12 --Non-resident--Business of supplying special purpose computer software--Software sent by air--Software not prepared to suit special needs of customer--Consideration received in US $ outside India--Not "royalty"--Not "fees for technical services"--Income not taxable in India—Geo Quest Systems B. V ., In re(AAR) . . . 1
S. 67 --Voluntary disclosure of income--Delay in payment of tax--Balance payment of tax beyond prescribed period of 3 months from date of declaration--Assessee not entitled to benefit of Scheme--Direction to refund or adjust balance amount deposited by assessee--Voluntary Disclosure of Income Scheme, 1997-- Hakimchand D. Chotai v. CIT (Guj) . . . 133
S. 2(15) --Exemption--Educational institution--Change of law with effect from April 1, 1999--Introduction of provisions for monitoring--Effect--Test to be applied not affected--Whether institution exists solely for educational purposes--Generation of surplus over four or five years after meeting expenditure not disqualification--Whether institution applying profits wholly and exclusively to objects for which established to be seen--Expenditure wholly and exclusively on acquisition of capital assets not part of total income--Institution registered as a society eligible to apply for exemption-- Pinegrove International Charitable Trust v. Union of India (P&H) . . . 73
S. 9(1)(vi) --Non-resident--Business of supplying special purpose computer software--Software sent by air--Software not prepared to suit special needs of customer--Consideration received in US $ outside India--Not "royalty"--Not "fees for technical services"--Income not taxable in India—Geo Quest Systems B. V ., In re(AAR) . . . 1
S. 10(22) --Exemption--Educational institution--Change of law with effect from April 1, 1999--Introduction of provisions for monitoring--Effect--Test to be applied not affected--Whether institution exists solely for educational purposes--Generation of surplus over four or five years after meeting expenditure not disqualification--Whether institution applying profits wholly and exclusively to objects for which established to be seen--Expenditure wholly and exclusively on acquisition of capital assets not part of total income--Institution registered as a society eligible to apply for exemption-- Pinegrove International Charitable Trust v. Union of India (P&H) . . . 73
S. 10(23C)(vi) --Exemption--Educational institution--Change of law with effect from April 1, 1999--Introduction of provisions for monitoring--Effect--Test to be applied not affected--Whether institution exists solely for educational purposes--Generation of surplus over four or five years after meeting expenditure not disqualification--Whether institution applying profits wholly and exclusively to objects for which established to be seen--Expenditure wholly and exclusively on acquisition of capital assets not part of total income--Institution registered as a society eligible to apply for exemption-- Pinegrove International Charitable Trust v. Union of India (P&H) . . . 73
----Exemption--Educational institution--Scope of section 10(23C)--Charitable trust whose sole activity was running educational institutions for eighty years--Primary object of trust to provide education for women--Other objects mentioned in trust--Not relevant--Investment of surplus from activities applied for educational purposes--Rejection of approval under section 10(23C)--Not valid-- Vanita Vishram Trust v. Chief CIT (Bom) . . . 121
S. 11 --Exemption--Educational institution--Change of law with effect from April 1, 1999--Introduction of provisions for monitoring--Effect--Test to be applied not affected--Whether institution exists solely for educational purposes--Generation of surplus over four or five years after meeting expenditure not disqualification--Whether institution applying profits wholly and exclusively to objects for which established to be seen--Expenditure wholly and exclusively on acquisition of capital assets not part of total income--Institution registered as a society eligible to apply for exemption-- Pinegrove International Charitable Trust v. Union of India (P&H) . . . 73
S. 24 --Income from house property--Income from house property or business income--Rental income assessed in earlier years as income from house property--Income could not be assessed as business income without any reason-- CIT v. Haryana Tourism Corporation Ltd . (P&H) . . . 26
S. 28 --Income from house property--Income from house property or business income--Rental income assessed in earlier years as income from house property--Income could not be assessed as business income without any reason-- CIT v. Haryana Tourism Corporation Ltd . (P&H) . . . 26
S. 36(1)(vii) --Business income or income from other sources--Finding that assessee was dealing in mutual funds and money-lending business--Interest earned assessable as business income-- CIT v. Eastman Industries (P&H) . . . 29
S. 36(2) --Business income or income from other sources--Finding that assessee was dealing in mutual funds and money-lending business--Interest earned assessable as business income-- CIT v. Eastman Industries (P&H) . . . 29
S. 37 --Business expenditure--Amounts paid to franchisees under incentive scheme communicated to them on 4-4-2001--Amounts not deductible in financial year ending 31-3-2001--Contribution to subsidiary company towards advertisement expenses--No obligation to make such contribution--Amount not actually spent by subsidiary company--Not deductible-- Yum! Restaurants (India) P. Ltd . v. CIT (Delhi) . . . 150
----Capital or revenue expenditure--Contribution for treating effluent--Contribution made only to protect its business as an ongoing entity--Revenue expenditure-- CIT v. Jayendrakumar Hiralal (Guj) . . . 147
S. 41(2) --Business income--Deemed income--Composite agreement for transfer of assets and liabilities of firm to company as a going concern--Actual value of land, building, plant and machinery not reflected in agreement--Difference between consideration and written down value of assets not chargeable to tax-- CIT v. Agrosynth Chemicals (Karn) . . . 135
S. 43A --Depreciation--Increase of prices due to fluctuation in foreign exchange rate--Assessee entitled to adjust cost of acquisition in accordance with section 43A-- CIT v. Arihant Cotsyn Limited (P&H) . . . 142
S. 45(5) --Capital gains--Compulsory acquisition of land--Enhanced compensation and interest received--Amount received can be taxed only after final disposal of case-- New Friends Co-operative House Building Society Ltd. v. CIT (P&H) . . . 39
S. 56(2) --Business income or income from other sources--Finding that assessee was dealing in mutual funds and money-lending business--Interest earned assessable as business income-- CIT v. Eastman Industries (P&H) . . . 29
S. 68 --Cash credit--Finding that transactions genuine and identity of depositors established--Finding of fact--Amount representing cash credits could not be added to income of assessee-- CIT v. Micro Melt (P) Ltd. (Guj) . . . 70
S. 80HHC --Export--Special deduction--Receipts on account of foreign exchange fluctuation on EEFC account and interest on EEFC--Exchange fluctuation in EEFC account arises after completion of export activity--No proximate and direct nexus with export transaction--Section 80HHC does not apply--To be considered as income from other sources-- CIT v. Shah Originals (Bom) . . . 19
S. 80-I --Industrial undertaking--Special deduction under section 80-I --Finding that machinery and plant used by assessee not new--Assessee not entitled to special deduction under section 80-I-- Himson Fadis Machinery P. Ltd. v. CIT (Guj) . . . 61
S. 115JAA --Company--Minimum alternate tax--Credit for MAT brought forward--Credit under section 115JAA should be given effect before charging interest under sections 234B and 234C-- CIT v. Roots Multiclean Limited (Mad) . . . 65
S. 132(4A) --Search and seizure--Documents discovered during search--Effect of sections 132(4A) and 292C--Legal presumption that documents belong to assessee--Loose papers found during search--Explanation that papers had been planted by accountants--No police action against accountants--Accountants continuing in service--Additions to income based on papers--Tribunal not justified in deleting addition without considering effect of presumption--Matter remanded-- CIT v. D. R. Bansal (Chhattisgarh) . . . 44
S. 234B --Company--Minimum alternate tax--Credit for MAT brought forward--Credit under section 115JAA should be given effect before charging interest under sections 234B and 234C-- CIT v. Roots Multiclean Limited (Mad) . . . 65
S. 234C --Company--Minimum alternate tax--Credit for MAT brought forward--Credit under section 115JAA should be given effect before charging interest under sections 234B and 234C-- CIT v. Roots Multiclean Limited (Mad) . . . 65
S. 249(3) --Appeal to Commissioner (Appeals)--Delay in filing--Power of Commissioner (Appeals) to condone delay--Explanation of assessee that owing to strike in factory office did not work regularly--Delay to be condoned-- Alacrity Housing Limited v. Asst. CIT (Mad) . . . 139
S. 260A --Appeal to High Court--Competency of appeal--Dispute between State owned corporation and Income-tax Department--No clearance obtained from Committee on Disputes--Appeal not maintainable-- CIT v. Tamil Nadu Industrial Investment Corporation Ltd . (Mad) . . . 68
S. 292C --Search and seizure--Documents discovered during search--Effect of sections 132(4A) and 292C--Legal presumption that documents belong to assessee--Loose papers found during search--Explanation that papers had been planted by accountants--No police action against accountants--Accountants continuing in service--Additions to income based on papers--Tribunal not justified in deleting addition without considering effect of presumption--Matter remanded-- CIT v. D. R. Bansal (Chhattisgarh) . . . 44
S. 2(ea) --Wealth-tax--Hindu undivided family--Asset--Exemption--Land on which construction not permitted--Not to be considered urban land--Value of land not includible in net wealth-- Amrit Lai Jindal and Sons (HUF ) v. WTO (P&H) . . . 161
S. 16(2) --Wealth-tax--Reassessment--Notice--Limitation--Notice mistakenly issued under Income-tax Act--Writ petition--Notice set aside with liberty to Department to issue fresh notice--Order of court does not save limitation--Notice issued much beyond expiry of time limit--Barred by limitation-- Tamil Nadu Real Estates Ltd. v. Asst. CIT (Mad) . . . 144
S. 17 --Wealth-tax--Reassessment--Notice--Limitation--Notice mistakenly issued under Income-tax Act--Writ petition--Notice set aside with liberty to Department to issue fresh notice--Order of court does not save limitation--Notice issued much beyond expiry of time limit--Barred by limitation-- Tamil Nadu Real Estates Ltd. v. Asst. CIT (Mad) . . . 144
S. 35 --Appeal to Appellate Tribunal--Rectification of mistakes--Debatable issue--Tribunal cannot make rectification-- Amrit Lai Jindal and Sons (HUF) v. WTO (P&H) . . . 161
R. 2CA, Form 56D --Exemption--Educational institution--Change of law with effect from April 1, 1999--Introduction of provisions for monitoring--Effect--Test to be applied not affected--Whether institution exists solely for educational purposes--Generation of surplus over four or five years after meeting expenditure not disqualification--Whether institution applying profits wholly and exclusively to objects for which established to be seen--Expenditure wholly and exclusively on acquisition of capital assets not part of total income--Institution registered as a society eligible to apply for exemption-- Pinegrove International Charitable Trust v. Union of India (P&H) . . . 73
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