ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 7 : Part 6 (Issue dated : 7-2-2011)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Accounting --Rejection of accounts--Rejection of accounts based on enquiry into transaction of third parties--Evidence of assessee not considered--Increase in gross profit rate in year in question--Rejection of accounts and addition of income--Not justified--Income-tax Act, 1961, s. 145(3)-- Ravi Kumar Rawat v. ITO (Jaipur) . . . 593
Appeal to Appellate Tribunal --Additional ground that payment of non-compete fee to be treated as deferred expenditure--Ground involving question of law can be raised at any stage of appellate proceedings--Additional ground admitted--Income-tax Act, 1961-- Orchid Chemicals and Pharmaceuticals Ltd. v. Asst. CIT (Chennai) . . . 601
Appeal to Commissioner (Appeals) --Appeal from assessment order--Commissioner (Appeals) not entitled to pronounce on penalty matter-- Agrawal Roadlines Pvt. Ltd. v. Deputy CIT (Ahmedabad) . . . 576
Business expenditure --Fines and penalties--Charges for overloading vehicles carrying liquid cargo--State Government permitting overload on payment of charges--Charges not in nature of penalty--Deductible in assessment year 2005-06--Income-tax Act, 1961, s. 37-- Agrawal Roadlines Pvt. Ltd. v. Deputy CIT (Ahmedabad) . . . 576
----Foreign travel expenses of director related to container freight station activity--Allowable--Income-tax Act, 1961, s. 37-- A. S. Shipping Agencies P. Ltd. v. Asst. CIT (Chennai) . . . 532
Business loss --Loss on account of embezzlement--Investigation pending--Loss if recovered would belong to investor--Assessee making provision in books of account of contingent liability and adding it back in computation of income--Unless assessee pays any part of loss to investor no loss arises to assessee--Deduction on account of embezzlement premature--Income-tax Act, 1961-- Birla Sunlife Asset Management Co. v. Deputy CIT (Mumbai) . . . 586
Capital gains --Cost of acquisition--Provision for substituting sale consideration with fair market value of shares--Provision providing for such substitution omitted with effect from April 1, 1988--Sale consideration cannot be substituted with fair market value of shares to compute capital gains--Income-tax Act, 1961, ss. 45, 52-- Moral Trading and Investment Ltd. v. Deputy CIT (Delhi) . . . 548
----Short-term or long-term capital gains--Transfer of shares not on stock exchange --Date of acquisition of shares--Letter from company stating decision taken to allot shares to assessee--No resolution of board of directors to show decision taken--Date on which share certificates issued is date of acquisition--Period of holding to be reckoned from that date--Income-tax Act, 1961, s. 45--Circular No. 704 dated April 28, 1995-- Moral Trading and Investment Ltd. v. Deputy CIT (Delhi) . . . 548
Capital or revenue expenditure --Payment of non-compete fee for establishing new line of manufacturing business--Agreement precluding sellers from competing for four years without any future liability on assessee--No benefit for considerable period--Receipt of non-compete fee considered income does not lead to conclusion that payment of non-compete fee revenue expenditure--Non-compete fee deferred revenue expenditure to be spread over four years--Income-tax Act, 1961, ss. 28(va), 37-- Orchid Chemicals and Pharmaceuticals Ltd. v. Asst. CIT (Chennai) . . . 601
Cash credits --Firm--Burden of proof--Cash credits in name of partner--Firm to prove genuineness of credit--Income-tax Act, 1961, s. 68-- Paras Collins Distilleries v. ITO (Hyderabad) . . . 614
----Firm--Unexplained cash credits in capital accounts of partners--Cash credit entry in books of firm in names of partners--Returned income not sufficient to explain source of cash credits--No substantial evidence in support of explanation of firm that investment out of agricultural income and gifts--Failure to prove creditworthiness and genuineness of transaction--Partners incapable of investing in firm--Cash credits undisclosed income of firm--Addition justified--Income-tax Act, 1961, s. 68-- Paras Collins Distilleries v. ITO (Hyderabad) . . . 614
Income from other sources --Deductions--Amounts borrowed to repay pre-existing liability of interest-free loan--Borrowings not wholly and exclusively for purpose of earning interest income--Not allowable as deduction--Income-tax Act, 1961, s. 57(iii)-- Moral Trading and Investment Ltd. v. Deputy CIT (Delhi) . . . 548
Industrial undertaking --Special deduction--Container freight station--Warehousing income--Withdrawal of special deduction in revision--Assessing Officer giving effect to revision order without following direction of Tribunal--Serious procedural lapse--Warehousing income is part of container freight station--Deduction to be allowed--Income-tax Act, 1961, s. 80-IA-- A. S. Shipping Agencies P. Ltd. v. Asst. CIT (Chennai) . . . 532
International transactions --Determination of arm's length price--Difference less than 5 per cent.--Section 92C(2) not applicable--Income-tax Act, 1961, s. 92C(2)-- Ravi Kumar Rawat v. ITO (Jaipur) . . . 593
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 28(va) --Capital or revenue expenditure--Payment of non-compete fee for establishing new line of manufacturing business--Agreement precluding sellers from competing for four years without any future liability on assessee--No benefit for considerable period--Receipt of non-compete fee considered income does not lead to conclusion that payment of non-compete fee revenue expenditure--Non-compete fee deferred revenue expenditure to be spread over four years-- Orchid Chemicals and Pharmaceuticals Ltd. v. Asst. CIT (Chennai) . . . 601
S. 37 --Business expenditure--Fines and penalties--Charges for overloading vehicles carrying liquid cargo--State Government permitting overload on payment of charges--Charges not in nature of penalty--Deductible in assessment year 2005-06-- Agrawal Roadlines Pvt. Ltd. v. Deputy CIT (Ahmedabad) . . . 576
----Business expenditure--Foreign travel expenses of director related to container freight station activity--Allowable-- A. S. Shipping Agencies P. Ltd. v. Asst. CIT (Chennai) . . . 532
----Capital or revenue expenditure--Payment of non-compete fee for establishing new line of manufacturing business--Agreement precluding sellers from competing for four years without any future liability on assessee--No benefit for considerable period--Receipt of non-compete fee considered income does not lead to conclusion that payment of non-compete fee revenue expenditure--Non-compete fee deferred revenue expenditure to be spread over four years-- Orchid Chemicals and Pharmaceuticals Ltd. v. Asst. CIT (Chennai) . . . 601
S. 45 --Capital gains--Cost of acquisition--Provision for substituting sale consideration with fair market value of shares--Provision providing for such substitution omitted with effect from April 1, 1988--Sale consideration cannot be substituted with fair market value of shares to compute capital gains-- Moral Trading and Investment Ltd. v. Deputy CIT (Delhi) . . . 548
----Capital gains--Short-term or long-term capital gains--Transfer of shares not on stock exchange --Date of acquisition of shares--Letter from company stating decision taken to allot shares to assessee--No resolution of board of directors to show decision taken--Date on which share certificates issued is date of acquisition--Period of holding to be reckoned from that date --Circular No. 704 dated April 28, 1995-- Moral Trading and Investment Ltd. v. Deputy CIT (Delhi) . . . 548
S. 52 --Capital gains--Cost of acquisition--Provision for substituting sale consideration with fair market value of shares--Provision providing for such substitution omitted with effect from April 1, 1988--Sale consideration cannot be substituted with fair market value of shares to compute capital gains-- Moral Trading and Investment Ltd. v. Deputy CIT (Delhi) . . . 548
S. 57(iii) --Income from other sources--Deductions--Amounts borrowed to repay pre-existing liability of interest-free loan--Borrowings not wholly and exclusively for purpose of earning interest income--Not allowable as deduction-- Moral Trading and Investment Ltd. v. Deputy CIT (Delhi) . . . 548
S. 68 --Cash credits--Firm--Burden of proof--Cash credits in name of partner--Firm to prove genuineness of credit-- Paras Collins Distilleries v. ITO (Hyderabad) . . . 614
----Cash credits--Firm--Unexplained cash credits in capital accounts of partners--Cash credit entry in books of firm in names of partners--Returned income not sufficient to explain source of cash credits--No substantial evidence in support of explanation of firm that investment out of agricultural income and gifts--Failure to prove creditworthiness and genuineness of transaction--Partners incapable of investing in firm--Cash credits undisclosed income of firm--Addition justified-- Paras Collins Distilleries v. ITO (Hyderabad) . . . 614
S. 80-IA --Industrial undertaking--Special deduction--Container freight station--Warehousing income--Withdrawal of special deduction in revision--Assessing Officer giving effect to revision order without following direction of Tribunal--Serious procedural lapse--Warehousing income is part of container freight station--Deduction to be allowed-- A. S. Shipping Agencies P. Ltd. v. Asst. CIT (Chennai) . . . 532
S. 92C(2) --International transactions--Determination of arm's length price--Difference less than 5 per cent.--Section 92C(2) not applicable-- Ravi Kumar Rawat v. ITO (Jaipur) . . . 593
S. 145(3) --Accounting--Rejection of accounts--Rejection of accounts based on enquiry into transaction of third parties--Evidence of assessee not considered--Increase in gross profit rate in year in question--Rejection of accounts and addition of income--Not justified-- Ravi Kumar Rawat v. ITO (Jaipur) . . . 593
-RAJU SHAH
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