INCOME TAX REPORTS (ITR)
Volume 331 : Part 3 (Issue dated 28-2-2011)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Amalgamation of companies --Amalgamation of sick industrial company with assessee--Effect of Special Provisions Act--Powers of Board for Industrial and Financial Reconstruction--Special Provisions Act has overriding effect over Income-tax Act--BIFR can specify date from which its scheme becomes effective--Amalgamation in January 1994--Scheme sanctioned by BIFR with retrospective effect from February 1, 1992--Revised return filed by assessee on March 31, 1994, claiming unabsorbed business losses of sick company--Return valid--Income-tax Act, 1961, ss. 72A, 80, 139--Sick Industrial Companies (Special Provisions) Act, 1985, ss. 18, 32-- CIT v. J. K. Corporation Ltd .(Cal) . . . 303
Appeal --General principles--Appellate authority differing from view of subordinate authority--Must assign reasons-- CIT v. Smt. Swapna Roy (All) . . . 367
Appeal to Appellate Tribunal --Duties of Tribunal--Duty to pass speaking order--Even if merely following order for earlier year--Dismissal of appeal as infructuous not proper--Income-tax Act, 1961, s. 254-- CIT v. Deepak M. Kothari (All) . . . 301
Business expenditure --Assessee occupying part of building for business as tenant--Building owned by trust of which assessee trustee and beneficiary--Assessee carrying out repairs to building--Expenditure for entire building not wholly and exclusively for purpose of business--Deduction allowable pro rata for assessee's portion of building--Income-tax Act, 1961, s. 38-- Danesh A. Irani v. CIT (Bom) . . . 291
Business income --Benefit arising out of business--Bank loan taken for purchase of capital assets--Waiver by bank of principal--Not a benefit arising out of business--Nor a remission of a trading liability--Income-tax Act, 1961, ss. 2(24), 28(iv), 41(1)-- Iskraemeco Regent Ltd. v. CIT (Mad) . . . 317
----Income from house property--Difference between business income and income from house property--Assessee constructing commercial complex--Rent received assessed as business income for several years--No change in circumstances--Income cannot be assessed as income from house property--Income-tax Act, 1961, ss. 22, 28-- CIT v. Goel Builders (All) . . . 344
Capital or revenue receipt --Every receipt in connection with business not a trading receipt--Bank loan taken by assessee for purchase of capital assets--Waiver of principal and interest by bank under one-time settlement--Principal waived not a trading receipt-- Iskraemeco Regent Ltd. v. CIT (Mad) . . . 317
Company --Book profits--Special deduction--Export--Set off of carried forward business loss and unabsorbed depreciation resulting in negative income--Assessee entitled to deduction in computation of book profits--Deduction to be computed as prescribed in section 80HHC(3) and (3A)--Income-tax Act, 1961, ss. 80AB, 80B(5) 80HHC, 115JA, 115JB-- CIT v. Packworth Udyog Ltd. [FB] (Ker) . . . 416
Income from other sources --Deduction--Expenditure must be wholly and exclusively incurred to earn income--Intention to earn income must be established--Borrowed funds invested in financially fragile sister concerns--No intention to earn income but merely to assist concerns--Deduction of interest paid on borrowings not allowable--Income-tax Act, 1961, s. 57(iii)-- CIT v. Smt. Swapna Roy (All) . . . 367
----Interest on borrowed capital--Borrowings from sister concern paying higher rate of interest--Investment in shares of another sister concern carrying dividend at lower rate--Taxing authorities and court entitled to determine true legal relation resulting from transaction--Must look at matter from viewpoint of prudent businessman--Not entitled to hold roving enquiry--Income-tax Act, 1961, ss. 36(1)(iii), 37, 57(iii)-- CIT v. Rockman Cycle Industries Private Limited [FB] (P&H) . . . 401
Income-tax --General principles--Res judicata--Principle of consistency-- CIT v. Goel Builders (All) . . . 344
----General principles--Rule of consistency how far applicable-- CIT v. Smt. Swapna Roy (All) . . . 367
Income-tax authorities --Quasi-judicial orders--Duty of authorities to record reasons-- Iskraemeco Regent Ltd. v. CIT (Mad) . . . 317
Precedent --Effect of decision of Supreme Court in Radhasoami Satsang v. CIT [1992] 193 ITR 321 (SC)-- CIT v. Goel Builders (All) . . . 344
----High Court--Decision not to be followed without discussion as to how applicable to facts-- Iskraemeco Regent Ltd . v. CIT (Mad) . . . 317
Search and seizure --Retention of seized articles--Effect of section 132B--Explanation regarding seized articles furnished--Application for release of seized articles within time limit--No sufficient reason for retention of seized articles--Order rejecting application--Not valid--Income-tax Act, 1961, s. 132B-- Mitaben R. Shah v. Deputy CIT (Guj) . . . 424
Words and phrases --"Wholly and exclusively for the purpose"-- CIT v. Smt. Swapna Roy (All) . . . 367
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 2(24) --Business income--Benefit arising out of business--Bank loan taken for purchase of capital assets--Waiver by bank of principal--Not a benefit arising out of business--Nor a remission of a trading liability-- Iskraemeco Regent Ltd. v. CIT (Mad) . . . 317
S. 22 --Business income--Income from house property--Difference between business income and income from house property--Assessee constructing commercial complex--Rent received assessed as business income for several years--No change in circumstances--Income cannot be assessed as income from house property-- CIT v. Goel Builders (All) . . . 344
S. 28 --Business income--Income from house property--Difference between business income and income from house property--Assessee constructing commercial complex--Rent received assessed as business income for several years--No change in circumstances--Income cannot be assessed as income from house property-- CIT v. Goel Builders (All) . . . 344
S. 28(iv) --Business income--Benefit arising out of business--Bank loan taken for purchase of capital assets--Waiver by bank of principal--Not a benefit arising out of business--Nor a remission of a trading liability-- Iskraemeco Regent Ltd. v. CIT (Mad) . . . 317
S. 36(1)(iii) --Income from other sources--Interest on borrowed capital--Borrowings from sister concern paying higher rate of interest--Investment in shares of another sister concern carrying dividend at lower rate--Taxing authorities and court entitled to determine true legal relation resulting from transaction--Must look at matter from viewpoint of prudent businessman--Not entitled to hold roving enquiry-- CIT v. Rockman Cycle Industries Private Limited [FB] (P&H) . . . 401
S. 37 --Income from other sources--Interest on borrowed capital--Borrowings from sister concern paying higher rate of interest--Investment in shares of another sister concern carrying dividend at lower rate--Taxing authorities and court entitled to determine true legal relation resulting from transaction--Must look at matter from viewpoint of prudent businessman--Not entitled to hold roving enquiry-- CIT v. Rockman Cycle Industries Private Limited [FB] (P&H) . . . 401
S. 38 --Business expenditure--Assessee occupying part of building for business as tenant--Building owned by trust of which assessee trustee and beneficiary--Assessee carrying out repairs to building--Expenditure for entire building not wholly and exclusively for purpose of business--Deduction allowable pro rata for assessee's portion of building-- Danesh A. Irani v. CIT (Bom) . . . 291
S. 41(1) --Business income--Benefit arising out of business--Bank loan taken for purchase of capital assets--Waiver by bank of principal--Not a benefit arising out of business--Nor a remission of a trading liability-- Iskraemeco Regent Ltd. v. CIT (Mad) . . . 317
S. 57(iii) --Income from other sources--Deduction--Expenditure must be wholly and exclusively incurred to earn income--Intention to earn income must be established--Borrowed funds invested in financially fragile sister concerns--No intention to earn income but merely to assist concerns--Deduction of interest paid on borrowings not allowable-- CIT v. Smt. Swapna Roy (All) . . . 367
----Income from other sources--Interest on borrowed capital--Borrowings from sister concern paying higher rate of interest--Investment in shares of another sister concern carrying dividend at lower rate--Taxing authorities and court entitled to determine true legal relation resulting from transaction--Must look at matter from viewpoint of prudent businessman--Not entitled to hold roving enquiry-- CIT v. Rockman Cycle Industries Private Limited [FB] (P&H) . . . 401
S. 72A --Amalgamation of companies--Amalgamation of sick industrial company with assessee--Effect of Special Provisions Act--Powers of Board for Industrial and Financial Reconstruction--Special Provisions Act has overriding effect over Income-tax Act--BIFR can specify date from which its scheme becomes effective--Amalgamation in January 1994--Scheme sanctioned by BIFR with retrospective effect from February 1, 1992--Revised return filed by assessee on March 31, 1994, claiming unabsorbed business losses of sick company--Return valid-- CIT v. J. K. Corporation Ltd . (Cal) . . . 303
S. 80 --Amalgamation of companies--Amalgamation of sick industrial company with assessee--Effect of Special Provisions Act--Powers of Board for Industrial and Financial Reconstruction--Special Provisions Act has overriding effect over Income-tax Act--BIFR can specify date from which its scheme becomes effective--Amalgamation in January 1994--Scheme sanctioned by BIFR with retrospective effect from February 1, 1992--Revised return filed by assessee on March 31, 1994, claiming unabsorbed business losses of sick company--Return valid-- CIT v. J. K. Corporation Ltd . (Cal) . . . 303
S. 80AB --Company--Book profits--Special deduction--Export--Set off of carried forward business loss and unabsorbed depreciation resulting in negative income--Assessee entitled to deduction in computation of book profits--Deduction to be computed as prescribed in section 80HHC(3) and (3A)-- CIT v. Packworth Udyog Ltd. [FB] (Ker) . . . 416
S. 80B(5) --Company--Book profits--Special deduction--Export--Set off of carried forward business loss and unabsorbed depreciation resulting in negative income--Assessee entitled to deduction in computation of book profits--Deduction to be computed as prescribed in section 80HHC(3) and (3A)-- CIT v. Packworth Udyog Ltd. [FB] (Ker) . . . 416
S. 80HHC --Company--Book profits--Special deduction--Export--Set off of carried forward business loss and unabsorbed depreciation resulting in negative income--Assessee entitled to deduction in computation of book profits--Deduction to be computed as prescribed in section 80HHC(3) and (3A)-- CIT v. Packworth Udyog Ltd. [FB] (Ker) . . . 416
S. 115JA --Company--Book profits--Special deduction--Export--Set off of carried forward business loss and unabsorbed depreciation resulting in negative income--Assessee entitled to deduction in computation of book profits--Deduction to be computed as prescribed in section 80HHC(3) and (3A)-- CIT v. Packworth Udyog Ltd. [FB] (Ker) . . . 416
S. 115JB --Company--Book profits--Special deduction--Export--Set off of carried forward business loss and unabsorbed depreciation resulting in negative income--Assessee entitled to deduction in computation of book profits--Deduction to be computed as prescribed in section 80HHC(3) and (3A)-- CIT v. Packworth Udyog Ltd. [FB] (Ker) . . . 416
S. 132B --Search and seizure--Retention of seized articles--Effect of section 132B--Explanation regarding seized articles furnished--Application for release of seized articles within time limit--No sufficient reason for retention of seized articles--Order rejecting application--Not valid-- Mitaben R. Shah v. Deputy CIT (Guj) . . . 424
S. 139 --Amalgamation of companies--Amalgamation of sick industrial company with assessee--Effect of Special Provisions Act--Powers of Board for Industrial and Financial Reconstruction--Special Provisions Act has overriding effect over Income-tax Act--BIFR can specify date from which its scheme becomes effective--Amalgamation in January 1994--Scheme sanctioned by BIFR with retrospective effect from February 1, 1992--Revised return filed by assessee on March 31, 1994, claiming unabsorbed business losses of sick company--Return valid-- CIT v. J. K. Corporation Ltd . (Cal) . . . 303
S. 254 --Appeal to Appellate Tribunal--Duties of Tribunal--Duty to pass speaking order--Even if merely following order for earlier year--Dismissal of appeal as infructuous not proper-- CIT v. Deepak M. Kothari (All) . . . 301
Sick Industrial Companies (Special Provisions) Act, 1985 :
Ss. 18, 32 --Amalgamation of companies--Amalgamation of sick industrial company with assessee--Effect of Special Provisions Act--Powers of Board for Industrial and Financial Reconstruction--Special Provisions Act has overriding effect over Income-tax Act--BIFR can specify date from which its scheme becomes effective--Amalgamation in January 1994--Scheme sanctioned by BIFR with retrospective effect from February 1, 1992--Revised return filed by assessee on March 31, 1994, claiming unabsorbed business losses of sick company--Return valid-- CIT v. J. K. Corporation Ltd . (Cal) . . . 303
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