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Thursday, December 10, 2009

ITR VOL 327 PART 4 AND ITR (TRIB) VOL 5 PART 7


INCOME TAX REPORTS (ITR)
Volume 327 : Part 4 (Issue dated 11-10-2010)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
HIGH COURTS
Appeal to Commissioner (Appeals) --Power to admit additional evidence--Duty to allow Assessing Officer opportunity to examine additional evidence--Tribunal holding violation of rule for failure to allow Assessing Officer to cross-examine witnesses, but directing consideration of evidence dispensing with cross-examination--Not proper--Assessee to produce witnesses--Income-tax Rules, 1962, r. 46A-- CIT v. Subbu Shashank (Mad) . . . 577
Appeal to High Court --Competency of appeal--Monetary limit laid down in CBDT Circular--Binding on Revenue--Tax effect less than monetary limit--Appeal not maintainable--Income-tax Act, 1961, s. 260A--Circular 5 of 2008-- CIT v. Abhinash Gupta (P&H) . . . 619
Business expenditure --Disallowance--Salary and perquisites--Disallowance governed by first proviso to section 40A(5)(a) not section 40A(5)(c)--Income-tax Act, 1961, s. 40A(5)(a), (c)-- CIT v. Modi Industries Limited (Delhi) . . . 570
Cash credits --Share application money--Substantial evidence produced by assessee to prove creditworthiness of creditor and genuineness of share application--Failure to produce creditor not material--Deletion of addition--No interference--Income-tax Act, 1961, s. 68-- CIT v. Orbital Communication (P) Ltd. (Delhi) . . . 560
Commissioner --Revision--Non-consideration of appraisal report by Assessing Officer--Appraisal report essential for making assessment--Revision by Commissioner justified--Income-tax Act, 1961, s. 263-- CIT v. Daga Entrade P. Ltd. (Gauhati) . . . 467
Deduction of tax at source --Double taxation relief--Verification of certificates of tax deducted at source in two different countries--Letter informing assessee verification not practicable--Writ petition not maintainable--Income-tax Act, 1961, ss. 4, 5, 201(1A)--Constitution of India, art. 226-- V. Ganesh v. Asst. CIT (Mad) . . . 564
Depreciation --Initial depreciation--"Building", meaning of--New residential quarters--Initial depreciation allowable--Income-tax Act, 1961, s. 32(1)(iv)-- CIT v. Modi Industries Limited (Delhi) . . . 570
Income --Accrual of income--Sugar manufacturer realizing price in excess of that fixed by Government on condition excess would be refunded if its challenge failed--Excess amount a contingent receipt--Not taxable-- CIT v. Modi Industries Limited (Delhi) . . . 570
----Mutual association--Essence of mutuality--Complete identity between contributors and participators--Firm engaged in property development, commission agency and allied activities--Not a mutual association--Income of firm assessable--Income-tax Act, 1961-- Prabhashankar Plaza v. ITO (Karn) . . . 582
Income from undisclosed sources --Payment made to another assessee--Addition--Assessee failing to produce books of account--Finding that payment made out of undisclosed sources and addition proper--Findings of fact--Income-tax Act, 1961, s. 69-- Manak Chand Agarwal v. CIT (P&H) . . . 486
Income-tax survey --Statement made at time of survey not conclusive--Undisclosed money--Retraction of statement at time of assessment found bona fide by Commissioner (Appeals)--Explanation for failure to write up books for two and a half years accepted by Commissioner (Appeals) and additions deleted--Tribunal affirming on ground no defect found in books and material available with assessee for writing up books primary evidence--Findings of fact--Income-tax Act, 1961, ss. 69, 69A, 133A-- ITO v. Vijay Kumar Kesar (Chhattisgarh) . . . 497
Industrial undertaking --Special deduction under section 80-IA--Condition precedent--Profit must be "derived" from industrial undertaking--Meaning of "derived"--Freight subsidy received from Government--Not derived from industrial undertaking--Not entitled to be taken into account for computing special deduction under section 80-IA--Income-tax Act, 1961, s. 80-IA-- CIT v. Kiran Enterprises (HP) . . . 520
----Special deduction--Benefit allowed in three preceding years--Assessee entitled to deduction for following year--Income-tax Act, 1961, s. 80J-- CIT v. Modi Industries Limited (Delhi) . . . 570
Interest-tax --Charge of tax--Financial company--Definition--Leasing business--Difference between financial lease and operational lease--Company carrying on financial lease would be chargeable to tax--Matter remanded--Interest-tax Act, 1974, s. 2(5B)-- CIT v. Motor and General Finance Ltd. (Delhi) . . . 530
Offences and prosecution --Wilful attempt to evade tax--Prosecution can continue even where penalty set aside by Tribunal--Where trial has commenced court will not quash prosecution--Prosecution not to be postponed till decision in compounding proceedings--Income-tax Act, 1961, ss. 273A(4), 276C, 277, 278--Indian Penal Code, 1860, ss. 120B, 193, 196, 420, 511-- N. Athimoolam v. ITO (Mad) . . . 603
Penalty --Concealment of income--Appellate Tribunal--Power to remand--Adequate material not available before Assessing Officer for conclusive determination of issue--Tribunal remanding matter for fresh disposal--Cannot be interfered with--Income-tax Act, 1961, s. 271(1)(c)-- Kamakhya Photo Lab P. Ltd. v. CIT (Gauhati) . . . 565
----Concealment of income--Claim for deduction not bona fide--Amounts to concealment of income--Accounts showing deduction of income-tax and equipment written off--Not allowable deductions--Assessee a company with professional assistance in computing income--Assessee had concealed its income--Liable to pay penalty--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Zoom Communication P. Ltd. (Delhi) . . . 510
----Concealment of income--Companies--Book profits--Total income computed under regular provisions less than book profits--Assessment made under section 115JB--Penalty cannot be levied--Income-tax Act, 1961, ss. 115JB, 271(1)(c)-- CIT v. Nalwa Sons Investments Ltd . (Delhi) . . . 543
----Concealment of income--Value of property assessed as unexplained investment--Rejection of explanation regarding source of funds for acquisition of property--No proof of concealment of income--Penalty could not be levied--Income-tax Act, 1961, s. 271(1)(c)-- S. V. Kalyanam v. ITO (Mad) . . . 477
Search and seizure --Block assessment--Return--Delay in filing--Interest--Before expiry of time limit assessee seeking copies of documents seized for purpose of filing return--Department delaying supply of copies by over a year--Assessee filing return within forty-five days thereafter--Not to be exonerated from liability to interest--Time taken by Department to supply documents to be excluded from total period reckoned from date of notice--Interest chargeable for delay exceeding forty five days--Income-tax Act, 1961, s. 158BFA(1)-- CIT v. Mesco Airlines Ltd. (Delhi) . . . 554
Total income --Inclusions--Transfer of assets--Transfer of asset to trust for benefit of daughter-in-law and grandchildren of assessee--No direct or indirect transfer to son's wife or grandchildren--Trust an independent legal entity and trustee legal owner of trust property--Income from trust not includible in income of assessee--Income-tax Act, 1961, s. 64(1)(vi)-- CIT v. Smt. Pushpawati (Delhi) . . . 490
Unexplained investment --Scope of section 69--Section 69 confers discretion on income-tax authorities--Assessee applying for tax clearance certificate--Explanation that property owned jointly with spouse and that his spouse and son contributed to purchase--Tribunal not right in not considering explanation--Value of property not assessable as unexplained investment--Income-tax Act, 1961, ss. 69, 230A-- S. V. Kalyanam v. ITO (Mad) . . . 477
Wealth-tax --Reassessment--Grounds for reassessment--Report of Valuation Officer--Report called for after completion of assessment--Not a ground for reassessment--Report called for during pendency of assessment but received after completion of assessment--Valid ground for reassessment--Wealth-tax Act, 1957, ss. 16, 16A, 17-- CWT v. Sona Properties P. Ltd. (Bom) . . . 592
Words and phrases --Meaning of "derived"-- CIT v. Kiran Enterprises (HP) . . . 520

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Constitution of India :
Art. 226 --Deduction of tax at source--Double taxation relief--Verification of certificates of tax deducted at source in two different countries--Letter informing assessee verification not practicable--Writ petition not maintainable-- V. Ganesh v. Asst. CIT (Mad) . . . 564
Income-tax Act, 1961 :
S. 4 --Deduction of tax at source--Double taxation relief--Verification of certificates of tax deducted at source in two different countries--Letter informing assessee verification not practicable--Writ petition not maintainable-- V. Ganesh v. Asst. CIT (Mad) . . . 564
S. 5 --Deduction of tax at source--Double taxation relief--Verification of certificates of tax deducted at source in two different countries--Letter informing assessee verification not practicable--Writ petition not maintainable-- V. Ganesh v. Asst. CIT (Mad) . . . 564
S. 32(1)(iv) --Depreciation--Initial depreciation--"Building", meaning of--New residential quarters--Initial depreciation allowable-- CIT v. Modi Industries Limited (Delhi) . . . 570
S. 40A(5)(a), (c) --Business expenditure--Disallowance--Salary and perquisites--Disallowance governed by first proviso to section 40A(5)(a) not section 40A(5)(c)-- CIT v. Modi Industries Limited (Delhi) . . . 570
S. 64(1)(vi) --Total income--Inclusions--Transfer of assets--Transfer of asset to trust for benefit of daughter-in-law and grandchildren of assessee--No direct or indirect transfer to son's wife or grandchildren--Trust an independent legal entity and trustee legal owner of trust property--Income from trust not includible in income of assessee-- CIT v. Smt. Pushpawati (Delhi) . . . 490
S. 68 --Cash credits--Share application money--Substantial evidence produced by assessee to prove creditworthiness of creditor and genuineness of share application--Failure to produce creditor not material--Deletion of addition--No interference-- CIT v. Orbital Communication (P) Ltd. (Delhi) . . . 560
S. 69 --Income from undisclosed sources--Payment made to another assessee--Addition--Assessee failing to produce books of account--Finding that payment made out of undisclosed sources and addition proper--Findings of fact-- Manak Chand Agarwal v. CIT (P&H) . . . 486
----Income-tax survey--Statement made at time of survey not conclusive--Undisclosed money--Retraction of statement at time of assessment found bona fide by Commissioner (Appeals)--Explanation for failure to write up books for two and a half years accepted by Commissioner (Appeals) and additions deleted--Tribunal affirming on ground no defect found in books and material available with assessee for writing up books primary evidence--Findings of fact-- ITO v. Vijay Kumar Kesar (Chhattisgarh) . . . 497
----Unexplained investment--Scope of section 69--Section 69 confers discretion on income-tax authorities--Assessee applying for tax clearance certificate--Explanation that property owned jointly with spouse and that his spouse and son contributed to purchase--Tribunal not right in not considering explanation--Value of property not assessable as unexplained investment-- S. V. Kalyanam v. ITO (Mad) . . . 477
S. 69A --Income-tax survey--Statement made at time of survey not conclusive--Undisclosed money--Retraction of statement at time of assessment found bona fide by Commissioner (Appeals)--Explanation for failure to write up books for two and a half years accepted by Commissioner (Appeals) and additions deleted--Tribunal affirming on ground no defect found in books and material available with assessee for writing up books primary evidence--Findings of fact-- ITO v. Vijay Kumar Kesar (Chhattisgarh) . . . 497
S. 80-IA --Industrial undertaking--Special deduction under section 80-IA --Condition precedent--Profit must be "derived" from industrial undertaking--Meaning of "derived"--Freight subsidy received from Government--Not derived from industrial undertaking--Not entitled to be taken into account for computing special deduction under section 80-IA-- CIT v. Kiran Enterprises (HP) . . . 520
S. 80J --Industrial undertaking--Special deduction--Benefit allowed in three preceding years--Assessee entitled to deduction for following year-- CIT v. Modi Industries Limited (Delhi) . . . 570
S. 115JB --Penalty--Concealment of income--Companies--Book profits--Total income computed under regular provisions less than book profits--Assessment made under section 115JB--Penalty cannot be levied-- CIT v. Nalwa Sons Investments Ltd .(Delhi) . . . 543
S. 133A --Income-tax survey--Statement made at time of survey not conclusive--Undisclosed money--Retraction of statement at time of assessment found bona fide by Commissioner (Appeals)--Explanation for failure to write up books for two and a half years accepted by Commissioner (Appeals) and additions deleted--Tribunal affirming on ground no defect found in books and material available with assessee for writing up books primary evidence--Findings of fact-- ITO v. Vijay Kumar Kesar (Chhattisgarh) . . . 497
S. 158BFA(1) --Search and seizure--Block assessment--Return--Delay in filing--Interest--Before expiry of time limit assessee seeking copies of documents seized for purpose of filing return--Department delaying supply of copies by over a year--Assessee filing return within forty-five days thereafter--Not to be exonerated from liability to interest--Time taken by Department to supply documents to be excluded from total period reckoned from date of notice--Interest chargeable for delay exceeding forty five days-- CIT v. Mesco Airlines Ltd. (Delhi) . . . 554
S. 201(1A) --Deduction of tax at source--Double taxation relief--Verification of certificates of tax deducted at source in two different countries--Letter informing assessee verification not practicable--Writ petition not maintainable-- V. Ganesh v. Asst. CIT (Mad) . . . 564
S. 230A --Unexplained investment--Scope of section 69--Section 69 confers discretion on income-tax authorities--Assessee applying for tax clearance certificate--Explanation that property owned jointly with spouse and that his spouse and son contributed to purchase--Tribunal not right in not considering explanation--Value of property not assessable as unexplained investment-- S. V. Kalyanam v. ITO (Mad) . . . 477
S. 260A --Appeal to High Court--Competency of appeal--Monetary limit laid down in CBDT Circular--Binding on Revenue--Tax effect less than monetary limit--Appeal not maintainable--Circular 5 of 2008-- CIT v. Abhinash Gupta (P&H) . . . 619
S. 263 --Commissioner--Revision--Non-consideration of appraisal report by Assessing Officer--Appraisal report essential for making assessment--Revision by Commissioner justified-- CIT v. Daga Entrade P. Ltd. (Gauhati) . . . 467
S. 271(1)(c) --Penalty--Concealment of income--Appellate Tribunal--Power to remand--Adequate material not available before Assessing Officer for conclusive determination of issue--Tribunal remanding matter for fresh disposal--Cannot be interfered with-- Kamakhya Photo Lab P. Ltd. v. CIT (Gauhati) . . . 565
----Penalty--Concealment of income--Claim for deduction not bona fide--Amounts to concealment of income--Accounts showing deduction of income-tax and equipment written off--Not allowable deductions--Assessee a company with professional assistance in computing income--Assessee had concealed its income--Liable to pay penalty-- CIT v. Zoom Communication P. Ltd. (Delhi) . . . 510
----Penalty--Concealment of income--Companies--Book profits--Total income computed under regular provisions less than book profits--Assessment made under section 115JB--Penalty cannot be levied-- CIT v. Nalwa Sons Investments Ltd . (Delhi) . . . 543
----Penalty--Concealment of income--Value of property assessed as unexplained investment--Rejection of explanation regarding source of funds for acquisition of property--No proof of concealment of income--Penalty could not be levied-- S. V. Kalyanam v. ITO (Mad) . . . 477
S. 273A(4) --Offences and prosecution--Wilful attempt to evade tax--Prosecution can continue even where penalty set aside by Tribunal--Where trial has commenced court will not quash prosecution--Prosecution not to be postponed till decision in compounding proceedings-- N. Athimoolam v. ITO (Mad) . . . 603
S. 276C --Offences and prosecution--Wilful attempt to evade tax--Prosecution can continue even where penalty set aside by Tribunal--Where trial has commenced court will not quash prosecution--Prosecution not to be postponed till decision in compounding proceedings-- N. Athimoolam v. ITO (Mad) . . . 603
S. 277 --Offences and prosecution--Wilful attempt to evade tax--Prosecution can continue even where penalty set aside by Tribunal--Where trial has commenced court will not quash prosecution--Prosecution not to be postponed till decision in compounding proceedings-- N. Athimoolam v. ITO (Mad) . . . 603
S. 278 --Offences and prosecution--Wilful attempt to evade tax--Prosecution can continue even where penalty set aside by Tribunal--Where trial has commenced court will not quash prosecution--Prosecution not to be postponed till decision in compounding proceedings-- N. Athimoolam v. ITO (Mad) . . . 603
Indian Penal Code, 1860 :
Ss. 120B, 193, 196, 420, 511 --Offences and prosecution--Wilful attempt to evade tax--Prosecution can continue even where penalty set aside by Tribunal--Where trial has commenced court will not quash prosecution--Prosecution not to be postponed till decision in compounding proceedings-- N. Athimoolam v. ITO (Mad) . . . 603
Interest-tax Act, 1974 :
S. 2(5B) --Interest-tax--Charge of tax--Financial company--Definition--Leasing business--Difference between financial lease and operational lease--Company carrying on financial lease would be chargeable to tax--Matter remanded-- CIT v. Motor and General Finance Ltd. (Delhi) . . . 530
Wealth-tax Act, 1957 :
Ss. 16, 16A, 17 --Wealth-tax--Reassessment--Grounds for reassessment--Report of Valuation Officer--Report called for after completion of assessment--Not a ground for reassessment--Report called for during pendency of assessment but received after completion of assessment--Valid ground for reassessment-- CWT v. Sona Properties P. Ltd. (Bom) . . . 592
Income-tax Rules, 1962 :
R. 46A --Appeal to Commissioner (Appeals)--Power to admit additional evidence--Duty to allow Assessing Officer opportunity to examine additional evidence--Tribunal holding violation of rule for failure to allow Assessing Officer to cross-examine witnesses, but directing consideration of evidence dispensing with cross-examination--Not proper--Assessee to produce witnesses-- CIT v. Subbu Shashank (Mad) . . . 577



ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 5 : Part 7 (Issue dated : 11-10-2010)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal to Commissioner (Appeals) --Maintainability--Interest--Denial of liability to pay interest by assessee--Issue appealable--Income-tax Act, 1961, s. 220(2)-- Asst. CIT v. Hemendra M. Kothari (Mumbai) . . . 646
Assessment --Appeal to Appellate Tribunal--Order passed by Assessing Officer consequent to order of Tribunal--Tribunal holding that particular amount arising on transfer of shares not assessable in assessment year 1997-98 but in subsequent year--Tribunal not considering whether amount business income or capital gains--Assessing Officer cannot assess income in subsequent year as business income--Income-tax Act, 1961-- Asst. CIT v. Hemendra M. Kothari (Mumbai) . . . 646
Capital or revenue expenditure --Payment made for obtaining vacant and peaceful possession of premises under sub-lease--Landlord, tenants and sub-tenants and assessee-firm consisting of persons related inter se--No dispute existing--Question of payment for obtaining possession does not arise--Expenditure for renovation of leased premises--Not allowable--Income-tax Act, 1961, s. 32, Expln. 1 -- ITO v. Pritam Juice (Mumbai) . . . 664
Income --Accrual of income--Retention money--Bank guarantee in respect of due performance of contract and deficiencies in goods and equipment--Income from sale accruing to assessee at time of delivery of product and income from installation and commission at time of rendering services--Amount received in respect of delivered goods not installed to be treated as advance--Retention money cannot be excluded from total income--Income-tax Act, 1961-- Emerson Network Power India P. Ltd. v. Asst. CIT (Mumbai) . . . 727
Income from other sources --Interest--Loan obtained for setting up factory--Part of loan and capital contribution deposited in fixed deposit account--Not a condition precedent for disbursement of loan--Interest earned on fixed deposit assessable as income from other sources--Income-tax Act, 1961, s. 56-- Positive Packaging Industries Ltd. v. ITO (Mumbai) . . . 656
Industrial undertaking --Special deduction under section 80-I--Income derived from industrial undertaking alone to be considered as source of income for purpose of section 80-I(6)--Unabsorbed losses, depreciation and investment allowance set off against income of assessee from interest, capital gain and dividend in assessment years 1988-89 to 1991-92--To be reduced in accordance with section 80-I(6) from current year's profit for computation of deduction under section 80-I--Income-tax Act, 1961, s. 80-I-- Gujarat Ambuja Cements Ltd. v. Deputy CIT (Mumbai) . . . 689
----Special deduction--Industrial undertaking not carrying out trading activities--Deduction not allowable on profits and gains derived from any activity incidental to manufacturing activity--Assessee not entitled to deduction on profits of trading activities--Income-tax Act, 1961, s. 80-IA-- Emerson Network Power India P. Ltd. v. Asst. CIT (Mumbai) . . . 727
Search and seizure --Block assessment--Income disclosed prior to search cannot be assessed under sections 158BC and 158BD--Income-tax Act, 1961, ss. 158BC, 158BD-- Deputy CIT v. Suresh Chand Bafna (Chennai) . . . 675
Words and phrases --"Profits and gains derived from industrial undertaking or business of hotel" and "any business of"-- Emerson Network Power India P. Ltd. v. Asst. CIT (Mumbai) . . . 727

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Income-tax Act, 1961 :
S. 32, Expln. 1 --Capital or revenue expenditure--Payment made for obtaining vacant and peaceful possession of premises under sub-lease--Landlord, tenants and sub-tenants and assessee-firm consisting of persons related inter se--No dispute existing --Question of payment for obtaining possession does not arise--Expenditure for renovation of leased premises--Not allowable-- ITO v. Pritam Juice (Mumbai) . . . 664
S. 56 --Income from other sources--Interest--Loan obtained for setting up factory--Part of loan and capital contribution deposited in fixed deposit account--Not a condition precedent for disbursement of loan--Interest earned on fixed deposit assessable as income from other sources-- Positive Packaging Industries Ltd. v. ITO (Mumbai) . . . 656
S. 80-I --Industrial undertaking--Special deduction under section 80-I--Income derived from industrial undertaking alone to be considered as source of income for purpose of section 80-I(6)--Unabsorbed losses, depreciation and investment allowance set off against income of assessee from interest, capital gain and dividend in assessment years 1988-89 to 1991-92--To be reduced in accordance with section 80-I(6) from current year's profit for computation of deduction under section 80-I-- Gujarat Ambuja Cements Ltd. v. Deputy CIT (Mumbai) . . . 689
S. 80-IA --Industrial undertaking--Special deduction--Industrial undertaking not carrying out trading activities--Deduction not allowable on profits and gains derived from any activity incidental to manufacturing activity--Assessee not entitled to deduction on profits of trading activities-- Emerson Network Power India P. Ltd. v. Asst. CIT (Mumbai) . . . 727
S. 158BC --Search and seizure--Block assessment--Income disclosed prior to search cannot be assessed under sections 158BC and 158BD-- Deputy CIT v. Suresh Chand Bafna (Chennai) . . . 675
S. 158BD --Search and seizure--Block assessment--Income disclosed prior to search cannot be assessed under sections 158BC and 158BD-- Deputy CIT v. Suresh Chand Bafna (Chennai) . . . 675
S. 220(2) --Appeal to Commissioner (Appeals)--Maintainability--Interest--Denial of liability to pay interest by assessee--Issue appealable-- Asst. CIT v. Hemendra M. Kothari (Mumbai) . . . 646

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