INCOME TAX REPORTS (ITR)
Volume 330 : Part 4 (Issue dated 24-1-2011)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
SUPREME COURTAdvance tax --Interest--Company--Minimum alternate tax--Book profits--Interest can be charged on tax calculated on book profits--Income-tax Act, 1961, ss. 115JA, 234B--Circular No. 13 of 2001 dated November 9, 2001-- Joint CIT v. Rolta India Ltd. . . . 470
Business --Business income--Cessation of liability--Condition precedent for application of section 41--Mere change in name in books of account--No actual extinguishment of liability--Amount not taxable under section 41--Income-tax Act, 1961, s. 41-- CIT v. Auto Kashyap India P. Ltd. (Delhi) . . . 435
Charitable purposes --Charitable trust--Registration of trust--Registration does not automatically confer exemption--Assessee trust having imparting education as one of its objects--Assessee running educational institutions--Assessee entitled to registration under section 12A--Income-tax Act, 1961, s. 12A-- Director of Income-tax v. Garden City Educational Trust (Karn) . . . 480
Income --Mercantile system of accounting--Non-banking financial company--Interest on intercorporate deposit not received for more than six months--Assessee bound by Reserve Bank of India directions to treat deposit as non-performing asset--Interest does not accrue--Income-tax Act, 1961, ss. 5, 145(1)--Reserve Bank of India Act, 1934, s. 45Q--Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998-- CIT v. Vasisth Chay Vyapar Ltd. (Delhi) . . . 440
Income from undisclosed sources --Addition on account of deposits--Deposits not huge amounts--Explanation of assessee to be accepted--Income-tax Act, 1961-- Sunil Dua v. CIT (Delhi) . . . 413
----Jewellery--Assessee contending that jewellery inherited under a will--Genuineness of will not proved--Inclusion of jewellery proper--Income-tax Act, 1961-- Sunil Dua v. CIT (Delhi) . . . 413
Industrial undertaking --Special deduction--Brought forward unabsorbed loss and deficiencies of earlier years--To be adjusted first before granting special deduction--Income-tax Act, 1961, ss. 80HH, 80-I-- Modi Nagar Paper Mills Ltd. v. Deputy CIT (All) . . . 405
----Special deduction--Interest on deposits--Not allowable--Miscellaneous income--Matter remanded--Income-tax Act, 1961, s. 80-IB-- CIT v. Dresser Rand India P. Ltd . (Bom) . . . 453
----Special deduction--Receipts from freight and insurance, packing charges, sales tax set off and gross service income--90 per cent. to be excluded from profits of business--Income-tax Act, 1961, s. 80HHC-- CIT v. Dresser Rand India P. Ltd.
(Bom) . . . 453
Interest on borrowed capital --Interest on loans obtained by assessee to settle liability of its sister concern--Interest paid to retain business premises of assessee--To be allowed--Income-tax Act, 1961, s. 36(1)(iii)-- CIT v. Neelkanth Synthetics and Chemicals P. Ltd. (Bom) . . . 463
Penalty --Compulsory audit of accounts--Law applicable--Requirement of filing audit report along with return--Only w.e.f. 1-7-1995--Failure for earlier years--Penalty cannot be imposed--Income-tax Act, 1961, ss. 44AB, 271B-- S. V. Pathak and Company v. N. C. Tewari, CIT (Bom) . . . 410
Precedent --Supreme Court--Decision of Delhi High Court in Ansal Properties and Industries Ltd. v. Appropriate Authority [1999] 236 ITR 793 not completely overruled in DLF Universal Ltd. v. Appropriate Authority [2000] 243 ITR 730 (SC)-- R. N. Soin and Sons P. Ltd. v. Appropriate Authority (Delhi) . . . 455
Purchase of immovable property by Central Government --Allocation of residential plot--Assignee of letter of allocation entering into agreement with builder for development of plot--Form 37-I filed after plot developed--Appropriate Authority--Valuation--Whether as on date of agreement with original allottee or with assignee or as on date of determination--Matter remanded--Income-tax Act, 1961, s. 269UD(1)--Constitution of India, art. 226-- R. N. Soin and Sons P. Ltd. v. Appropriate Authority (Delhi) . . . 455
Reassessment --Notice--Notice issued on presumption that bogus payment made by assessee to a loss making company--Finding that company not a loss making company and payment made for services rendered to assessee--Payee showing the amount in its return and paying tax--Proceedings quashed--Income-tax Act, 1961, s. 147-- CIT v. Rainee Singh (Delhi) . . . 417
Search and seizure --Block assessment--Undisclosed income--Concurrent finding by authorities that amount disclosed in audit reports, balance-sheets and regular returns of income--Finding of fact--Cannot be interfered with--Income-tax Act, 1961, s. 132-- CIT v. Modern Engineering Works (Delhi) . . . 416
----Undisclosed income--Investment in hundis--Tribunal finding investments not belonging to assessee but to family members as well--Findings of fact--Income-tax Act, 1961-- CIT v. Chandulal Chhugani (Chhattisgarh) . . . 467
----Warrant--Additional Director competent to issue warrant of authorization--Notification No. S. O. 3862, dated November 6, 1979--Income-tax Act, 1961, s. 132-- Sunil Dua v. CIT (Delhi) . . . 413
Settlement of cases --Order passed by Settlement Commission is conclusive--Settlement of case after search operation--Order of Settlement Commission not challenged--No allegation of fraud or misrepresentation before Settlement Commission--Notice under section 142(1) based on material discovered during search operation--Notice not valid--Income-tax Act, 1961, ss. 245D, 245F, 245-I-- Smt. Neeru Agarwal v. Union of India (All) . . . 422
Art. 226 --Purchase of immovable property by Central Government--Allocation of residential plot--Assignee of letter of allocation entering into agreement with builder for development of plot--Form 37-I filed after plot developed--Appropriate Authority--Valuation--Whether as on date of agreement with original allottee or with assignee or as on date of determination--Matter remanded-- R. N. Soin and Sons P. Ltd. v. Appropriate Authority (Delhi) . . . 455
S. 5 --Income--Mercantile system of accounting--Non-banking financial company--Interest on intercorporate deposit not received for more than six months--Assessee bound by Reserve Bank of India directions to treat deposit as non-performing asset--Interest does not accrue--Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998-- CIT v. Vasisth Chay Vyapar Ltd. (Delhi) . . . 440
S. 12A --Charitable purposes--Charitable trust--Registration of trust--Registration does not automatically confer exemption--Assessee trust having imparting education as one of its objects--Assessee running educational institutions--Assessee entitled to registration under section 12A-- Director of Income-tax v. Garden City Educational Trust (Karn) . . . 480
S. 36(1)(iii) --Interest on borrowed capital--Interest on loans obtained by assessee to settle liability of its sister concern--Interest paid to retain business premises of assessee--To be allowed-- CIT v. Neelkanth Synthetics and Chemicals P. Ltd.
(Bom) . . . 463
S. 41 --Business--Business income--Cessation of liability--Condition precedent for application of section 41--Mere change in name in books of account--No actual extinguishment of liability--Amount not taxable under section 41-- CIT v. Auto Kashyap India P. Ltd. (Delhi) . . . 435
S. 44AB --Penalty--Compulsory audit of accounts--Law applicable--Requirement of filing audit report along with return--Only w.e.f. 1-7-1995--Failure for earlier years--Penalty cannot be imposed-- S. V. Pathak and Company v. N. C. Tewari, CIT
(Bom) . . . 410
S. 80HH --Industrial undertaking--Special deduction--Brought forward unabsorbed loss and deficiencies of earlier years--To be adjusted first before granting special deduction-- Modi Nagar Paper Mills Ltd. v. Deputy CIT (All) . . . 405
S. 80HHC --Industrial undertaking--Special deduction--Receipts from freight and insurance, packing charges, sales tax set off and gross service income--90 per cent. to be excluded from profits of business-- CIT v. Dresser Rand India P. Ltd.
(Bom) . . . 453
S. 80-I --Industrial undertaking--Special deduction--Brought forward unabsorbed loss and deficiencies of earlier years--To be adjusted first before granting special deduction-- Modi Nagar Paper Mills Ltd. v. Deputy CIT (All) . . . 405
S. 80-IB --Industrial undertaking--Special deduction--Interest on deposits--Not allowable--Miscellaneous income--Matter remanded-- CIT v. Dresser Rand India P. Ltd . (Bom) . . . 453
S. 115JA --Advance tax--Interest--Company--Minimum alternate tax--Book profits--Interest can be charged on tax calculated on book profits--Circular No. 13 of 2001 dated November 9, 2001-- Joint CIT v. Rolta India Ltd. (SC) . . . 470
S. 132 --Search and seizure--Block assessment--Undisclosed income--Concurrent finding by authorities that amount disclosed in audit reports, balance-sheets and regular returns of income--Finding of fact--Cannot be interfered with-- CIT v. Modern Engineering Works (Delhi) . . . 416
----Search and seizure--Warrant--Additional Director competent to issue warrant of authorization--Notification No. S. O. 3862, dated November 6, 1979-- Sunil Dua v. CIT (Delhi) . . . 413
S. 145(1) --Income--Mercantile system of accounting--Non-banking financial company--Interest on intercorporate deposit not received for more than six months--Assessee bound by Reserve Bank of India directions to treat deposit as non-performing asset--Interest does not accrue--Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998-- CIT v. Vasisth Chay Vyapar Ltd. (Delhi) . . . 440
S. 147 --Reassessment--Notice--Notice issued on presumption that bogus payment made by assessee to a loss making company--Finding that company not a loss making company and payment made for services rendered to assessee--Payee showing the amount in its return and paying tax--Proceedings quashed-- CIT v. Rainee Singh
(Delhi) . . . 417
S. 234B --Advance tax--Interest--Company--Minimum alternate tax--Book profits--Interest can be charged on tax calculated on book profits--Circular No. 13 of 2001 dated November 9, 2001-- Joint CIT v. Rolta India Ltd. (SC) . . . 470
S. 245D --Settlement of cases--Order passed by Settlement Commission is conclusive--Settlement of case after search operation--Order of Settlement Commission not challenged--No allegation of fraud or misrepresentation before Settlement Commission--Notice under section 142(1) based on material discovered during search operation--Notice not valid-- Smt. Neeru Agarwal v. Union of India (All) . . . 422
S. 245F --Settlement of cases--Order passed by Settlement Commission is conclusive--Settlement of case after search operation--Order of Settlement Commission not challenged--No allegation of fraud or misrepresentation before Settlement Commission--Notice under section 142(1) based on material discovered during search operation--Notice not valid-- Smt. Neeru Agarwal v. Union of India (All) . . . 422
S. 245-I --Settlement of cases--Order passed by Settlement Commission is conclusive--Settlement of case after search operation--Order of Settlement Commission not challenged--No allegation of fraud or misrepresentation before Settlement Commission--Notice under section 142(1) based on material discovered during search operation--Notice not valid-- Smt. Neeru Agarwal v. Union of India (All) . . . 422
S. 269UD(1) --Purchase of immovable property by Central Government--Allocation of residential plot--Assignee of letter of allocation entering into agreement with builder for development of plot--Form 37-I filed after plot developed--Appropriate Authority--Valuation--Whether as on date of agreement with original allottee or with assignee or as on date of determination--Matter remanded-- R. N. Soin and Sons P. Ltd. v. Appropriate Authority (Delhi) . . . 455
S. 271B --Penalty--Compulsory audit of accounts--Law applicable--Requirement of filing audit report along with return--Only w.e.f. 1-7-1995--Failure for earlier years--Penalty cannot be imposed-- S. V. Pathak and Company v. N. C. Tewari, CIT
(Bom) . . . 410
S. 45Q --Income--Mercantile system of accounting--Non-banking financial company--Interest on intercorporate deposit not received for more than six months--Assessee bound by Reserve Bank of India directions to treat deposit as non-performing asset--Interest does not accrue--Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998-- CIT v. Vasisth Chay Vyapar Ltd. (Delhi) . . . 440
Volume 7 : Part 4 (Issue dated : 24-1-2011)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal to Appellate Tribunal --Additional ground regarding block assessment barred by limitation not raised before Assessing Officer or Commissioner (Appeals)--No specific plea in appeal filed before Tribunal also--Ground raised after conclusion of hearing on issue cannot be entertained--Income-tax Act, 1961-- Kanjibhai Naranbhai Waghela v. Asst. CIT (Ahmedabad) . . . 331
Assessment --Best judgment assessment--Income-tax Officer (HQ) calling for return of income under section 142(1)--Assessee having already filed return with its Assessing Officer--Completion of assessment by Income-tax Officer (HQ) without serving notice under section 143(2)--Income-tax Officer (HQ) has no jurisdiction to issue notice--Assessment null and void--Income-tax Act, 1961, ss. 142(1), 143(2), 144-- Pravin Balubhai Zala v. ITO (Mumbai) . . . 375
Business expenditure --Accounting--Return of loss--Opening work-in-progress--Percentage completion method--Closing work-in-progress offered to tax--Expenditure incurred in preceding year relating to project--Accumulation of income on year to year basis till completion of project--No requirement of return for benefit of carry forward of loss--Completion of small percentage of total work in preceding year--Income need not be offered to tax--Opening work-in-progress allowable--Income-tax Act, 1961, ss. 37, 139(3)-- Deputy Director of Income-tax v. Stork Engineers and Contractors B. V. (Mumbai) . . . 365
----Disallowance--Expenses on film production by way of advertisement--Allowable on basis of outcome of assessee's earlier case--Income-tax Act, 1961, s. 37-- Deputy CIT v. Bayer (India) Ltd. (Mumbai) . . . 381
----Expenditure on repair of plant and machinery--No new asset brought into existence--Replacement of parts of machinery for maintenance--Allowable--Income-tax Act, 1961, s. 37-- Deputy CIT v. Bayer (India) Ltd. (Mumbai) . . . 381
----Non-resident company engaged in business of engineering, procurement and construction activities--Expenditure incurred during period intervening between grant of approval to set up project office in India and commencement of actual work--Not prior period expenditure--Deduction allowable--Man-hour cost allowed in subsequent year --Allowable--Income-tax Act, 1961, s. 37-- Deputy Director of Income-tax v. Stork Engineers and Contractors B. V. (Mumbai) . . . 365
----Provision for leave encashment of employees--Change in method of accounting from cash to mercantile--Liability for earlier year cannot be allowed in current year--Incremental liability pertaining to assessment year alone allowable--Income-tax Act, 1961, ss. 37, 145-- Deputy CIT v. Bayer (India) Ltd. (Mumbai) . . . 381
Capital or revenue receipt --Consideration received for transfer of marketing network of pharmaceutical products to subsidiary of proprietor/licensor of trade marks subsequent to termination of trade mark licence agreement--Profit making structure of assessee not impaired by termination--Assessee deemed to carry on manufacture of pharma products and related activities--Amount received incidental to assessee's business--Revenue receipt--Income-tax Act, 1961, s. 28-- Deputy CIT v. Bayer (India) Ltd. (Mumbai) . . . 381
Export --Exemption--Income received in foreign exchange--Assessee engaged in software development and having branch outside India--Export proceeds retained outside India in accordance with Reserve Bank guidelines and utilised on computer software development on-site at client's place outside India and on expenses of branch--Not to be excluded from export turnover--Income-tax Act, 1961, ss. 9(1)(vii), Expln. 2, 10B--Circular No. 621 dated December 19, 1991--Circular No. 694 dated November 23, 1994-- Zylog Systems Limited v. ITO [SB] (Chennai) . . . 348
----Special deduction under section 80HHC--Manufacture of viscose staple fibre from wood pulp--Amount received on export--Assessee complying with all conditions prescribed under section 80HHC--Assessee entitled to deduction--Income-tax Act, 1961, s. 80HHC-- Grasim Industries Ltd. v. Asst. CIT (Mumbai) . . . 407
Reassessment --Return processed under section 143(1)--Assessee showing long-term capital gain instead of short-term capital gain--Reopening not a result of change of opinion--Initiation and dropping of proceedings under section 154 cannot be equated with passing of an assessment order--Reassessment valid--Income-tax Act, 1961, ss. 143, 147-- Raj Woolen Industries v. Asst. CIT (Delhi) . . . 339
Search and seizure --Block assessment--Undisclosed income--Jurisdiction--All cases under control of Assessing Officer after search--Assessing Officer has jurisdiction --Income-tax Act, 1961, ss. 132, 158BD-- Kanjibhai Naranbhai Waghela v. Asst. CIT (Ahmedabad) . . . 331
Short-term capital gains --Sale of depreciable assets--Assessee showing land and building figure in a composite manner and claiming depreciation for previous years--Amount realised to be adjusted against written down value of concerned block of assets --Income-tax Act, 1961, ss. 50, 54EC-- Raj Woolen Industries v. Asst. CIT (Delhi) . . . 339
Unexplained investment --Assessee failing to prove source of investment in flat--Addition of amount as unexplained investment--Proper--Income-tax Act, 1961, ss. 69, 158BD-- Kanjibhai Naranbhai Waghela v. Asst. CIT (Ahmedabad) . . . 331
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 9(1)(vii), Expln. 2 --Export--Exemption--Income received in foreign exchange--Assessee engaged in software development and having branch outside India--Export proceeds retained outside India in accordance with Reserve Bank guidelines and utilised on computer software development on-site at client's place outside India and on expenses of branch--Not to be excluded from export turnover--Circular No. 621 dated December 19, 1991--Circular No. 694 dated November 23, 1994-- Zylog Systems Limited v. ITO [SB] (Chennai) . . . 348
S. 10B --Export--Exemption--Income received in foreign exchange--Assessee engaged in software development and having branch outside India--Export proceeds retained outside India in accordance with Reserve Bank guidelines and utilised on computer software development on-site at client's place outside India and on expenses of branch--Not to be excluded from export turnover--Circular No. 621 dated December 19, 1991--Circular No. 694 dated November 23, 1994-- Zylog Systems Limited v. ITO [SB] (Chennai) . . . 348
S. 28 --Capital or revenue receipt--Consideration received for transfer of marketing network of pharmaceutical products to subsidiary of proprietor/licensor of trade marks subsequent to termination of trade mark licence agreement--Profit making structure of assessee not impaired by termination--Assessee deemed to carry on manufacture of pharma products and related activities--Amount received incidental to assessee's business--Revenue receipt-- Deputy CIT v. Bayer (India) Ltd. (Mumbai) . . . 381
S. 37 --Business expenditure--Accounting--Return of loss--Opening work-in-progress--Percentage completion method--Closing work-in-progress offered to tax--Expenditure incurred in preceding year relating to project--Accumulation of income on year to year basis till completion of project--No requirement of return for benefit of carry forward of loss--Completion of small percentage of total work in preceding year--Income need not be offered to tax--Opening work-in-progress allowable-- Deputy Director of Income-tax v. Stork Engineers and Contractors B. V. (Mumbai) . . . 365
----Business expenditure--Disallowance--Expenses on film production by way of advertisement--Allowable on basis of outcome of assessee's earlier case-- Deputy CIT v. Bayer (India) Ltd. (Mumbai) . . . 381
----Business expenditure--Expenditure on repair of plant and machinery--No new asset brought into existence--Replacement of parts of machinery for maintenance--Allowable-- Deputy CIT v. Bayer (India) Ltd. (Mumbai) . . . 381
----Business expenditure--Non-resident company engaged in business of engineering, procurement and construction activities--Expenditure incurred during period intervening between grant of approval to set up project office in India and commencement of actual work--Not prior period expenditure--Deduction allowable--Man-hour cost allowed in subsequent year--Allowable-- Deputy Director of Income-tax v. Stork Engineers and Contractors B. V. (Mumbai) . . . 365
----Business expenditure--Provision for leave encashment of employees--Change in method of accounting from cash to mercantile--Liability for earlier year cannot be allowed in current year--Incremental liability pertaining to assessment year alone allowable-- Deputy CIT v. Bayer (India) Ltd. (Mumbai) . . . 381
S. 50 --Short-term capital gains--Sale of depreciable assets--Assessee showing land and building figure in a composite manner and claiming depreciation for previous years--Amount realised to be adjusted against written down value of concerned block of assets-- Raj Woolen Industries v. Asst. CIT (Delhi) . . . 339
S. 54EC --Short-term capital gains--Sale of depreciable assets--Assessee showing land and building figure in a composite manner and claiming depreciation for previous years--Amount realised to be adjusted against written down value of concerned block of assets-- Raj Woolen Industries v. Asst. CIT (Delhi) . . . 339
S. 69 --Unexplained investment--Assessee failing to prove source of investment in flat--Addition of amount as unexplained investment--Proper-- Kanjibhai Naranbhai Waghela v. Asst. CIT (Ahmedabad) . . . 331
S. 80HHC --Export--Special deduction under section 80HHC--Manufacture of viscose staple fibre from wood pulp--Amount received on export--Assessee complying with all conditions prescribed under section 80HHC--Assessee entitled to deduction-- Grasim Industries Ltd. v. Asst. CIT (Mumbai) . . . 407
S. 132 --Search and seizure--Block assessment--Undisclosed income--Jurisdiction--All cases under control of Assessing Officer after search--Assessing Officer has jurisdiction-- Kanjibhai Naranbhai Waghela v. Asst. CIT (Ahmedabad) . . . 331
S. 139(3) --Business expenditure--Accounting--Return of loss--Opening work-in-progress--Percentage completion method--Closing work-in-progress offered to tax--Expenditure incurred in preceding year relating to project--Accumulation of income on year to year basis till completion of project--No requirement of return for benefit of carry forward of loss--Completion of small percentage of total work in preceding year--Income need not be offered to tax--Opening work-in-progress allowable-- Deputy Director of Income-tax v. Stork Engineers and Contractors B. V. (Mumbai) . . . 365
S. 142(1) --Assessment--Best judgment assessment--Income-tax Officer (HQ) calling for return of income under section 142(1)--Assessee having already filed return with its Assessing Officer--Completion of assessment by Income-tax Officer (HQ) without serving notice under section 143(2)--Income-tax Officer (HQ) has no jurisdiction to issue notice--Assessment null and void-- Pravin Balubhai Zala v. ITO (Mumbai) . . . 375
S. 143 --Reassessment--Return processed under section 143(1)--Assessee showing long-term capital gain instead of short-term capital gain--Reopening not a result of change of opinion--Initiation and dropping of proceedings under section 154 cannot be equated with passing of an assessment order--Reassessment valid-- Raj Woolen Industries v. Asst. CIT (Delhi) . . . 339
S. 143(2) --Assessment--Best judgment assessment--Income-tax Officer (HQ) calling for return of income under section 142(1)--Assessee having already filed return with its Assessing Officer--Completion of assessment by Income-tax Officer (HQ) without serving notice under section 143(2)--Income-tax Officer (HQ) has no jurisdiction to issue notice--Assessment null and void-- Pravin Balubhai Zala v. ITO (Mumbai) . . . 375
S. 144 --Assessment--Best judgment assessment--Income-tax Officer (HQ) calling for return of income under section 142(1)--Assessee having already filed return with its Assessing Officer--Completion of assessment by Income-tax Officer (HQ) without serving notice under section 143(2)--Income-tax Officer (HQ) has no jurisdiction to issue notice--Assessment null and void-- Pravin Balubhai Zala v. ITO (Mumbai) . . . 375
S. 145 --Business expenditure--Provision for leave encashment of employees--Change in method of accounting from cash to mercantile--Liability for earlier year cannot be allowed in current year--Incremental liability pertaining to assessment year alone allowable-- Deputy CIT v. Bayer (India) Ltd. (Mumbai) . . . 381
S. 147 --Reassessment--Return processed under section 143(1)--Assessee showing long-term capital gain instead of short-term capital gain--Reopening not a result of change of opinion--Initiation and dropping of proceedings under section 154 cannot be equated with passing of an assessment order--Reassessment valid-- Raj Woolen Industries v. Asst. CIT (Delhi) . . . 339
S. 158BD --Search and seizure--Block assessment--Undisclosed income--Jurisdiction--All cases under control of Assessing Officer after search--Assessing Officer has jurisdiction-- Kanjibhai Naranbhai Waghela v. Asst. CIT (Ahmedabad) . . . 331
----Unexplained investment--Assessee failing to prove source of investment in flat--Addition of amount as unexplained investment--Proper-- Kanjibhai Naranbhai Waghela v. Asst. CIT (Ahmedabad) . . . 331
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