ITR VOL 332 PART 3 AND ITR (TRIB) VOL 8 PART 5

 

INCOME TAX REPORTS (ITR)

Volume 332 : Part 3 (Issue dated 4-4-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Appeal to Commissioner (Appeals) --Loss on sale of shares--Additional evidence--No objection in remand report to admission of additional evidence--Evidence having direct bearing on quantum of claim--Addition deleted by Commissioner (Appeals) and confirmed by Tribunal--Justified--Work outsourced to sister concern and expenses for undertaking that work allocated on proportionate basis to assessee--Explanation furnished by assessee found to be satisfactory--Income-tax Act, 1961--Income-tax Rules, 1962, r. 46A-- CIT v. Virgin Securities and Credits P. Ltd. (Delhi) . . . 396

Appeal to High Court --Powers of court--Power to consider question of law though not formulated at time of admission of appeal--Income-tax Act, 1961, s. 260A(4)-- Helios and Metheson Information Technology Ltd . v. Asst. CIT (Mad) . . . 403

Business expenditure --Deduction only on actual payment--Law applicable--No disallowance if amount paid before due date for furnishing of return--First proviso to section 43B retrospective in operation--ESI contribution for accounting year relevant to assessment year 1998-99 paid before submission of return--Matter remanded for consideration of applicability of Allied Motors' case and CBDT Circular No. 7 of 2003--Income-tax Act, 1961, s. 43B-- Sudhir Kumar Agarwala v. CIT (Orissa) . . . 452

Business income --Estimation--Gross profit rate--No discrepancies in trading operations and stock--Non-maintenance of day-to-day stock register--Not a reason to reject books--No adverse comment regarding books produced before Assessing Officer--Lower gross profit rate in period subsequent to survey due to huge discounts on merchandise--Gross profit rate disclosed by assessee reasonable--Income-tax Act, 1961-- CIT v. Bindals Apparels (Delhi) . . . 410

Business loss --Depreciation--Carry forward and set off--Hotel business carried on by assessee--Agreement with another company for running hotel--Disputes and suit against other company--Hotel business run by court receiver who was a director of assessee-company--Assessee resuming business--No cessation of business--Losses and depreciation carried forward could be set off against profits--Income-tax Act, 1961, ss. 32, 72-- CIT v. Bencomar Hotels (Goa) P. Ltd. (Bom) . . . 441

Capital gains --Short-term capital gains--Finding that gains were short-term capital gains--Finding of fact--Income-tax Act, 1961-- Sudhir Kumar Agarwala v. CIT (Orissa) . . . 452

Cash credits --Company--Share capital--Deposits in company--Assessee providing identity and creditworthiness of shareholders and depositors--Amounts could not be added under section 68--Income-tax Act, 1961, s. 68-- CIT v. Ambuja Ginning, Pressing and Oil Co. P. Ltd . (Guj) . . . 434

Income from undisclosed sources --Assessing Officer making estimated additions on basis of loose papers found during survey--Commissioner (Appeals) as well as Tribunal partly setting aside addition holding that loose papers not to be accepted, in absence of any other material--No question of law--Income-tax Act, 1961-- CIT v. Atam Valves (P) Ltd . (P&H) . . . 468

Industrial undertaking --Manufacture--Converting raw fish into tinned fish--Processing but not manufacturing--Assessee not entitled to deduction--Income-tax Act, 1961, s. 80-IB-- CIT v. Gitwako Farma (I) P. Ltd. (Delhi) . . . 471

----Special deduction under section 80-IA --Assessee undertaking manufacturing jobs on behalf of others --Entitled to special deduction--Income-tax Act, 1961, s. 80-IA -- CIT v. Ambuja Ginning, Pressing and Oil Co. P. Ltd. (Guj) . . . 434

Interest-tax --Interest--Definition--Bank giving loan at lower rate of interest under Export Credit Subsidy Scheme of RBI--Compensation paid to bank by RBI for loss of interest--Amount received from RBI not "interest" under Interest-tax Act--Interest-tax Act, 1974, s. 2(7)-- Punjab National Bank v. CIT (Delhi) . . . 337

Non-resident --Income deemed to accrue or arise in India--Condition precedent--Business connection--Carrying out operations in India, wholly or partly, essential--Royalty--Meaning of--Transfer of rights in respect of property--Different from transfer of rights in property--Assessee, a non-resident, engaged in satellite communications and having control of satellites--Providing use of transponder facility on satellite to television companies outside India--Signals from customers' facilities received by transponder on assessee's satellite, amplified and relayed--Cable operators in India receiving and passing them on to customers--Assessee having no business operations in India--No lease of equipment but only use of broadband facility--That transponder had footprint on various continents did not imply process took place in India--Payment not royalty--Income-tax Act, 1961, ss. 5(2), 9(1)(i), (vi), Expln. 2, (vii), 90-- Asia Satellite Telecommunications Co. Ltd . v. DIT (Delhi) . . . 340

Reassessment --Notice after four years--Assessee showing receipt of substantial sum in profit and loss account in relation to transfer of division but not making reference thereto in return--Transferor and transferee companies having common directors and operating at same address--Division commenced barely two years before transfer--Copies of agreement not produced--Failure to make full disclosure of material facts--Reassessment valid--Claim that sum received as non-compete fee under restrictive covenant upon transfer of business not established--Income-tax Act, 1961, s. 147-- Helios and Metheson Information Technology Ltd. v. Asst. CIT (Mad) . . . 403

----Notice--Assessee disclosing fully and truly all material facts necessary for assessment--Notice issued beyond period of four years cannot be sustained--Income-tax Act, 1961, ss. 147, 148-- Yash Raj Films P. Ltd. v. Asst. CIT (Bom) . . . 428

----Validity--Rectification proceedings dropped--Subsequent reassessment proceedings within limitation--Valid--Income-tax Act, 1961, ss. 147, 154-- CIT v. India Sea Foods (Ker) . . . 424

Rectification of mistakes --Mistake must be obvious--Assessee carrying on hotel business setting off unabsorbed depreciation and loss carried forward--Finding that there had been no cessation of business--No mistake apparent from record--Rectification proceedings to withdraw benefit of set-off--Not valid--Income-tax Act, 1961, s. 154 -- CIT v. Bencomar Hotels (Goa) P. Ltd. (Bom) . . . 441

Tour operator --Special deduction--Advances received in foreign exchange placed in short-term deposits in banks--Interest earned in Indian currency--Interest not profits derived from services provided to foreign tourists--Not entitled to benefit under section 80HHD--Income-tax Act, 1961, s. 80HHD--Lotus Trans Travels P. Ltd. v. CIT(Delhi) . . . 463

Unexplained investment --Finding by Commissioner (Appeals) and Tribunal that explanation regarding investment was reasonable--Amount not assessable as unexplained investment--Income-tax Act, 1961, s. 69-- CIT v. Byyanna (HUF) (Karn) . . . 448

AUTHORITY FOR ADVANCE RULINGS

Business profits --Special provision--Foreign company--Turnkey power project--Contract for erection of steam turbines etc.--Applicant to deploy expats and work force--Presumptive rate of tax applicable--Income-tax Act, 1961, s. 44BBB-- Toshiba Plant Systems Services Corporation , In re . . . 456

Non-resident --Exploration of mineral oils--Special provision for computing profits--Applicable to seismic data acquisition and processing for exploration companies--Income-tax Act, 1961, s. 44BB-- Global Geophysical Services Ltd. , In re . . . 418

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 5(2) --Non-resident--Income deemed to accrue or arise in India--Condition precedent--Business connection--Carrying out operations in India, wholly or partly, essential--Royalty--Meaning of--Transfer of rights in respect of property--Different from transfer of rights in property--Assessee, a non-resident, engaged in satellite communications and having control of satellites--Providing use of transponder facility on satellite to television companies outside India--Signals from customers' facilities received by transponder on assessee's satellite, amplified and relayed--Cable operators in India receiving and passing them on to customers--Assessee having no business operations in India--No lease of equipment but only use of broadband facility--That transponder had footprint on various continents did not imply process took place in India--Payment not royalty-- Asia Satellite Telecommunications Co. Ltd . v. DIT (Delhi) . . . 340

S. 9(1)(i), (vi), Expln. 2, (vii) --Non-resident--Income deemed to accrue or arise in India--Condition precedent--Business connection--Carrying out operations in India, wholly or partly, essential--Royalty--Meaning of--Transfer of rights in respect of property--Different from transfer of rights in property--Assessee, a non-resident, engaged in satellite communications and having control of satellites--Providing use of transponder facility on satellite to television companies outside India--Signals from customers' facilities received by transponder on assessee's satellite, amplified and relayed--Cable operators in India receiving and passing them on to customers--Assessee having no business operations in India--No lease of equipment but only use of broadband facility--That transponder had footprint on various continents did not imply process took place in India--Payment not royalty-- Asia Satellite Telecommunications Co. Ltd . v. DIT (Delhi) . . . 340

S. 32 --Business loss--Depreciation--Carry forward and set off--Hotel business carried on by assessee--Agreement with another company for running hotel--Disputes and suit against other company--Hotel business run by court receiver who was a director of assessee-company--Assessee resuming business--No cessation of business--Losses and depreciation carried forward could be set off against profits-- CIT v. Bencomar Hotels (Goa) P. Ltd. (Bom) . . . 441

S. 43B --Business expenditure--Deduction only on actual payment--Law applicable--No disallowance if amount paid before due date for furnishing of return--First proviso to section 43B retrospective in operation--ESI contribution for accounting year relevant to assessment year 1998-99 paid before submission of return--Matter remanded for consideration of applicability of Allied Motors' case and CBDT Circular No. 7 of 2003-- Sudhir Kumar Agarwala v. CIT (Orissa) . . . 452

S. 44BB --Non-resident--Exploration of mineral oils--Special provision for computing profits--Applicable to seismic data acquisition and processing for exploration companies-- Global Geophysical Services Ltd. , In re (AAR) . . . 418

S. 44BBB --Business profits--Special provision--Foreign company--Turnkey power project--Contract for erection of steam turbines etc.--Applicant to deploy expats and work force--Presumptive rate of tax applicable-- Toshiba Plant Systems Services Corporation , In re (AAR) . . . 456

S. 68 --Cash credits--Company--Share capital--Deposits in company--Assessee providing identity and creditworthiness of shareholders and depositors--Amounts could not be added under section 68-- CIT v. Ambuja Ginning, Pressing and Oil Co. P. Ltd . (Guj) . . . 434

S. 69 --Unexplained investment--Finding by Commissioner (Appeals) and Tribunal that explanation regarding investment was reasonable--Amount not assessable as unexplained investment-- CIT v. Byyanna (HUF) (Karn) . . . 448

S. 72 --Business loss--Depreciation--Carry forward and set off--Hotel business carried on by assessee--Agreement with another company for running hotel--Disputes and suit against other company--Hotel business run by court receiver who was a director of assessee-company--Assessee resuming business--No cessation of business--Losses and depreciation carried forward could be set off against profits-- CIT v. Bencomar Hotels (Goa) P. Ltd. (Bom) . . . 441

S. 80HHD --Tour operator--Special deduction--Advances received in foreign exchange placed in short-term deposits in banks--Interest earned in Indian currency--Interest not profits derived from services provided to foreign tourists--Not entitled to benefit under section 80HHD-- Lotus Trans Travels P. Ltd. v. CIT (Delhi) . . . 463

S. 80-IA --Industrial undertaking--Special deduction under section 80-IA --Assessee undertaking manufacturing jobs on behalf of others --Entitled to special deduction-- CIT v. Ambuja Ginning, Pressing and Oil Co. P. Ltd. (Guj) . . . 434

S. 80-IB --Industrial undertaking--Manufacture--Converting raw fish into tinned fish--Processing but not manufacturing--Assessee not entitled to deduction-- CIT v. Gitwako Farma (I) P. Ltd. (Delhi) . . . 471

S. 90 --Non-resident--Income deemed to accrue or arise in India--Condition precedent--Business connection--Carrying out operations in India, wholly or partly, essential--Royalty--Meaning of--Transfer of rights in respect of property--Different from transfer of rights in property--Assessee, a non-resident, engaged in satellite communications and having control of satellites--Providing use of transponder facility on satellite to television companies outside India--Signals from customers' facilities received by transponder on assessee's satellite, amplified and relayed--Cable operators in India receiving and passing them on to customers--Assessee having no business operations in India--No lease of equipment but only use of broadband facility--That transponder had footprint on various continents did not imply process took place in India--Payment not royalty-- Asia Satellite Telecommunications Co. Ltd . v. DIT (Delhi) . . . 340

S. 147 --Reassessment--Notice after four years--Assessee showing receipt of substantial sum in profit and loss account in relation to transfer of division but not making reference thereto in return--Transferor and transferee companies having common directors and operating at same address--Division commenced barely two years before transfer--Copies of agreement not produced--Failure to make full disclosure of material facts--Reassessment valid--Claim that sum received as non-compete fee under restrictive covenant upon transfer of business not established-- Helios and Metheson Information Technology Ltd. v. Asst. CIT (Mad) . . . 403

----Reassessment--Notice--Assessee disclosing fully and truly all material facts necessary for assessment--Notice issued beyond period of four years cannot be sustained-- Yash Raj Films P. Ltd. v. Asst. CIT (Bom) . . . 428

----Reassessment--Validity--Rectification proceedings dropped--Subsequent reassessment proceedings within limitation--Valid-- CIT v. India Sea Foods (Ker) . . . 424

S. 148 --Reassessment--Notice--Assessee disclosing fully and truly all material facts necessary for assessment--Notice issued beyond period of four years cannot be sustained-- Yash Raj Films P. Ltd. v. Asst. CIT (Bom) . . . 428

S. 154 --Reassessment--Validity--Rectification proceedings dropped--Subsequent reassessment proceedings within limitation--Valid-- CIT v. India Sea Foods (Ker) . . . 424

----Rectification of mistakes--Mistake must be obvious--Assessee carrying on hotel business setting off unabsorbed depreciation and loss carried forward--Finding that there had been no cessation of business--No mistake apparent from record--Rectification proceedings to withdraw benefit of set-off--Not valid-- CIT v. Bencomar Hotels (Goa) P. Ltd. (Bom) . . . 441

S. 260A(4) --Appeal to High Court--Powers of court--Power to consider question of law though not formulated at time of admission of appeal-- Helios and Metheson Information Technology Ltd . v. Asst. CIT (Mad) . . . 403

Income-tax Rules, 1962 :

R. 46A --Appeal to Commissioner (Appeals)--Loss on sale of shares--Additional evidence--No objection in remand report to admission of additional evidence--Evidence having direct bearing on quantum of claim--Addition deleted by Commissioner (Appeals) and confirmed by Tribunal--Justified--Work outsourced to sister concern and expenses for undertaking that work allocated on proportionate basis to assessee--Explanation furnished by assessee found to be satisfactory-- CIT v. Virgin Securities and Credits P. Ltd. (Delhi) . . . 396

Interest-tax Act, 1974 :

S. 2(7) --Interest-tax--Interest--Definition--Bank giving loan at lower rate of interest under Export Credit Subsidy Scheme of RBI--Compensation paid to bank by RBI for loss of interest--Amount received from RBI not "interest" under Interest-tax Act-- Punjab National Bank v. CIT (Delhi) . . . 337

 

 

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))

Volume 8 : Part 5 (Issue dated : 04-04-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Appeal to Appellate Tribunal --Double Taxation Avoidance Agreement--Mutual assessment procedure--Does not preclude Tribunal entertaining appeal-- Gracemac Corporation v. Asst. Director of Income-tax (Delhi) . . . 522

Business expenditure --Disallowance--Payments in cash exceeding specified limit--Payment for labour and materials for construction in area where no banking facility available--Allowable--Income-tax Act, 1961, ss. 40A(3), 263--Income-tax Rules, 1962, r. 6DD(j)-- Ramakant Singh v. CIT (No. 2) (Patna) . . . 505

Deduction of tax at source --Credit for tax deducted--No requirement of confirmation by deductors--Income-tax Act, 1961, s. 199-- Ramakant Singh v. CIT (No. 2) (Patna) . . . 505

International transactions --Arm's length price--Transactional net margin method --Determination only at transaction level not at industry level--Income-tax Act, 1961, ss. 92B, 92C, 92CA(3), 92F(ii)--Income-tax Rules, 1962, r. 10B(1)(e)-- Deputy CIT v. Ankit Diamonds (Mumbai) . . . 487

Interpretation of taxing statutes --Royalty--Definition--Meaning of--To be interpreted in terms of Act and DTAA--U. S. regulations or OECD commentary not proper guides--Income-tax Act, 1961, s. 9(1)(vi)--Double Taxation Avoidance Agreement between India and the U. S. A., art. 12--Copyright Act, 1957, s. 14(a), (b), (d), (e)-- Gracemac Corporation v. Asst. Director of Income-tax (Delhi) . . . 522

----Words to be given plain meaning--Punctuation not to be treated as redundant-- Gracemac Corporation v. Asst. Director of Income-tax (Delhi) . . . 522

Non-resident --Tax residency certificates issued by competent authority of another State--Entities cannot be treated as fictitious-- Gracemac Corporation v. Asst. Director of Income-tax (Delhi) . . . 522

Revision --Commissioner--Erroneous and prejudicial to Revenue--Assessee Officer making enquiry and accepting assessee's case--Commissioner not entitled to revise on ground enquiry not adequate--Income-tax Act, 1961, s. 263-- Ramakant Singh v. CIT (No. 2) (Patna) . . . 505

Royalty --Non-resident--Sale of "off the shelf software product" by U. S. based non-resident companies to independent Indian distributors--Payments by Indian distributors--Are royalty taxable in hands of non-resident companies--Appointment of Indian distributors is business connection--Income-tax Act, 1961, ss. 9(1)(vi), 115A, 234A, 234B --Double Taxation Avoidance Agreement between India and the U. S. A., art. 12-- Gracemac Corporation v. Asst. Director of Income-tax (Delhi) . . . 522

Words and phrases --"Copyright"--"Copyrighted article"-- Gracemac Corporation v. Asst. Director of Income-tax (Delhi) . . . 522

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Copyright Act, 1957 :

S. 14(a), (b), (d), (e) --Interpretation of taxing statutes--Royalty--Definition--Meaning of--To be interpreted in terms of Act and DTAA--U. S. regulations or OECD commentary not proper guides-- Gracemac Corporation v. Asst. Director of Income-tax (Delhi) . . . 522

Double Taxation Avoidance Agreement between India and the U. S. A. :

Art. 12 --Interpretation of taxing statutes--Royalty--Definition--Meaning of--To be interpreted in terms of Act and DTAA--U. S. regulations or OECD commentary not proper guides-- Gracemac Corporation v. Asst. Director of Income-tax (Delhi) . . . 522

----Royalty--Non-resident--Sale of "off the shelf software product" by U. S. based non-resident companies to independent Indian distributors--Payments by Indian distributors--Are royalty taxable in hands of non-resident companies--Appointment of Indian distributors is business connection-- Gracemac Corporation v. Asst. Director of Income-tax (Delhi) . . . 522

Income-tax Act, 1961 :

S. 9(1)(vi) --Interpretation of taxing statutes--Royalty--Definition--Meaning of--To be interpreted in terms of Act and DTAA--U. S. regulations or OECD commentary not proper guides-- Gracemac Corporation v. Asst. Director of Income-tax (Delhi) . . . 522

----Royalty--Non-resident--Sale of "off the shelf software product" by U. S. based non-resident companies to independent Indian distributors--Payments by Indian distributors--Are royalty taxable in hands of non-resident companies--Appointment of Indian distributors is business connection-- Gracemac Corporation v. Asst. Director of Income-tax (Delhi) . . . 522

S. 40A(3) --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Payment for labour and materials for construction in area where no banking facility available--Allowable-- Ramakant Singh v. CIT (No. 2) (Patna) . . . 505

S. 92B --International transactions--Arm's length price--Transactional net margin method--Determination only at transaction level not at industry level-- Deputy CIT v. Ankit Diamonds (Mumbai) . . . 487

S. 92C --International transactions--Arm's length price--Transactional net margin method--Determination only at transaction level not at industry level-- Deputy CIT v. Ankit Diamonds (Mumbai) . . . 487

S. 92CA(3) --International transactions--Arm's length price--Transactional net margin method--Determination only at transaction level not at industry level-- Deputy CIT v. Ankit Diamonds (Mumbai) . . . 487

S. 92F(ii) --International transactions--Arm's length price--Transactional net margin method --Determination only at transaction level not at industry level-- Deputy CIT v. Ankit Diamonds (Mumbai) . . . 487

S. 115A --Royalty--Non-resident--Sale of "off the shelf software product" by U. S. based non-resident companies to independent Indian distributors--Payments by Indian distributors--Are royalty taxable in hands of non-resident companies--Appointment of Indian distributors is business connection-- Gracemac Corporation v. Asst. Director of Income-tax (Delhi) . . . 522

S. 199 --Deduction of tax at source--Credit for tax deducted--No requirement of confirmation by deductors-- Ramakant Singh v. CIT (No. 2) (Patna) . . . 505

S. 234A --Royalty--Non-resident--Sale of "off the shelf software product" by U. S. based non-resident companies to independent Indian distributors--Payments by Indian distributors--Are royalty taxable in hands of non-resident companies--Appointment of Indian distributors is business connection-- Gracemac Corporation v. Asst. Director of Income-tax (Delhi) . . . 522

S. 234B --Royalty--Non-resident--Sale of "off the shelf software product" by U. S. based non-resident companies to independent Indian distributors--Payments by Indian distributors--Are royalty taxable in hands of non-resident companies--Appointment of Indian distributors is business connection-- Gracemac Corporation v. Asst. Director of Income-tax (Delhi) . . . 522

S. 263 --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Payment for labour and materials for construction in area where no banking facility available--Allowable-- Ramakant Singh v. CIT (No. 2) (Patna) . . . 505

----Revision--Commissioner--Erroneous and prejudicial to Revenue--Assessee Officer making enquiry and accepting assessee's case--Commissioner not entitled to revise on ground enquiry not adequate-- Ramakant Singh v. CIT (No. 2) (Patna) . . . 505

Income-tax Rules, 1962 :

R. 6DD(j) --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Payment for labour and materials for construction in area where no banking facility available--Allowable-- Ramakant Singh v. CIT (No. 2) (Patna) . . . 505

R. 10B(1)(e)--International transactions--Arm's length price--Transactional net margin method --Determination only at transaction level not at industry level--Deputy CIT v. Ankit Diamonds (Mumbai) . . . 487

 

CA.CVPAWAR

MCA NOTIFICATIONS

--------- Forwarded message ----------
From: Anchal Mittal <mittal_anchal@yahoo.com>
Date: Mon, Mar 28, 2011 at 2:20 PM
Subject: {jalgaoncas} MCA NOTIFICATIONS
To: MAYANK ARORA <csmayankarora@gmail.com>

Dear All, Enclosed is the Latest MCA notifications.. 1. MCA_-_Notification_FORM_61-26mar2011[1].pdf https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=1GUJI2Mi3uliF8Hu220mnS05reEitLi80a5i6C58TnUgio-mhv57ISC_v0pF0&hl=en&authkey=CPX9lJMH 2.MCA_Notification_DIN_26mar2011[1]-1.pdf https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=1_5yN-tvFGBtfavYXh5YqUjYSQS6rsMm4p_ItWsGzIcglau5SFtONSu3A4POE&hl=en&authkey=CJCduJEE ------------- Thanks & Regards For A M & Associates Company Secretaries Anchal Mittal Call at: +91-9818585707

Maharashtra State Budget Speech 2011

---------- Forwarded message ----------
From: ram daware <ramdaware@yahoo.com>
Date: Thu, Mar 24, 2011 at 10:51 AM
Subject: NashiCAs Maharashtra State Budget Speech 2011
To: nashik CAs <nashicas@googlegroups.com>

Dear Members

Please Find attached herewith State Budget annouced on 23/3/2011 by State Finance Minister.

CLICK HERE: (1)
https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=1Xc9CqWtH2Y2NVxheyWUyg-a12_GhjkiQe1yWz2-0awsW5bUIULWzTLvJn-ix&hl=en&authkey=CMvmstcD

CLICK HERE: (2)

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=1f30ayO8UGiwg0w4O_z_y2Pdu2AY_mutuXlqQfxHyzKIdiDhUI4DlOibkWiRM&hl=en&authkey=CMnxu0Q

CA R.P.DAWARE

PARTNER

M/S PATIL DAWARE GIRASE PAWAR & ASSO.

ITR VOL 332 PART 2 AND ITR (TRIB) VOL 8 PART 4

INCOME TAX REPORTS (ITR)

Volume 332 : Part 2 (Issue dated 28-3-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Appeal to Commissioner (Appeals) --Additional evidence--Assessing Officer making addition on basis of valuation of work-in-progress--Commissioner (Appeals) as well as Tribunal upholding valuation of assessee considering affidavit filed before Commissioner (Appeals) reiterating its stand--Findings of fact--Income-tax Rules, 1962, r. 46A-- CIT v. Central Mall (P&H) . . . 320

Business expenditure --Disallowance on estimate basis--Similar expenses allowed in totality in previous year--To be followed in subsequent years--Income-tax Act, 1961, s. 37-- Friends Clearing Agency (P.) Ltd . v. CIT (Delhi) . . . 269

----Disallowance--Payment to non-resident--Assessee purchasing software and selling in Indian market--Payment not royalty--Not liable to deduction of tax at source--Deduction allowable--Income-tax Act, 1961, s. 40(a)(i)-- CIT v. Dynamic Vertical Software India P. Ltd. (Delhi) . . . 222

----Interest--Mercantile system of accounting--Amount not shown in books of account by assessee nor by bank--No finding that assessee did not pay interest for relevant period--Assessee entitled to deduction--Income-tax Act, 1961, s. 37-- Friends Clearing Agency (P.) Ltd. v. CIT (Delhi) . . . 269

Cash credits --Claim that certain amounts were received as gifts--No evidence of gifts--Amount assessable under section 68--Income-tax Act, 1961, s. 68-- Trilok Singh Dhillon v. CIT (Chhattisgarh) . . . 185

----No rule that addition on account of unexplained credit entries cannot be made along with trading addition--Question of fact whether unexplained credit entries have nexus with trading results--Income-tax Act, 1961-- Grover Fabrics (India) P. Ltd. v. CIT (P&H) . . . 312

Deduction of tax at source --Commission or brokerage--Mobile telephone service--Discount given to distributors on sale of SIM cards and recharge coupons--No sale of goods--Tax deductible at source on discount--Income-tax Act, 1961, s. 194H--V odafone Essar Cellular Ltd. v. Asst. CIT (TDS) (Ker) . . . 255

----Commission--Agents of airline companies permitted to sell tickets at any rate between fixed minimum commercial price and published price--Difference between commercial price and published price--Not commission or brokerage--No deduction of tax at source--Income-tax Act, 1961, s. 194H, Expln.-- CIT v. Qatar Airways (Bom) . . . 253

Depreciation --Actual cost--Fluctuation in foreign exchange rates--To be allowed on outstanding liability--Income-tax Act, 1961-- CIT v. National Hydroelectric Power Corpn. Ltd . (P&H) . . . 322

----Plant and machinery--Addition to block of assets and sale of some machinery--Plant and machinery remaining in existence--Entitled to depreciation on written down value after adjustment of addition and sale--Income-tax Act, 1961, ss. 32(1), 41(2)-- CIT v. Rhodoen Silk Mills P. Ltd . (P&H) . . . 330

----Plant--Meaning of--Construction industry--Centering and shuttering material--Each item of shuttering material does not form a plant--Not entitled to 100 per cent. depreciation under first proviso to section 32(1)(ii)--Income-tax Act, 1961, s. 32(1)(ii), first proviso-- CIT v. Vijaya Enterprises (AP) . . . 235

----Rate of depreciation--EPABX and mobile phones are not computers--Not entitled to depreciation at the rate of 60 per cent.--Income-tax Act, 1961-- Federal Bank Ltd . v. Asst. CIT (Ker) . . . 319

Double Taxation Avoidance --Canadian company providing consultancy services to Indian Government organisation--Technical drawings furnished by Canadian company--Fees received were "fees for included services" within the meaning of article 12(4) of DTAA--Fees not assessable under section 9--Income-tax Act, 1961, s. 9--DTAA between Canada and India, art. 12(4)-- DIT v. SNC Lavalin International Inc .(Delhi) . . . 314

Export --Special deduction under section 80HHC--Computation of special deduction--Business income--Assessee carrying on export business utilising surplus funds for discounting bills and making intercorporate deposits--Income earned therefrom--Not business income--Income-tax Act, 1961, s. 80HHC-- CIT v. Swani Spice Mills P. Ltd. (Bom) . . . 288

----Special deduction under section 80HHC--Exclusion mineral oil--Meaning of mineral oil--Calcined petroleum coke derived from crude petroleum is not mineral oil--Income-tax Act, 1961, s. 80HHC-- Goa Carbon Ltd. v. CIT (Bom) . . . 209

Industrial undertaking --Deduction under section 80-IB--Claim not allowed on ground assessee had not filed a revised return--Tribunal allowing deduction on ground that assessee not making any fresh claim and duly furnished documents and Form 10CCB during assessment proceedings--Justified--Income-tax Act, 1961, s. 80-IB-- CIT v. Ramco International (P&H) . . . 306

Interpretation of taxing statutes --Meaning of words--Common parlance meaning-- Goa Carbon Ltd . v. CIT (Bom) . . . 209

Investment deposit account --Computation of profits for purposes of deduction under section 32AB--Revision--Assessing Officer taking a view prevalent at time that income shown in balance-sheet under head "Other income" not to be excluded--Commissioner (Appeals) granting relief resulting in enhanced deduction--Section 263 cannot be invoked--Income-tax Act, 1961, s. 32AB--Companies Act, 1956, Sch. VI-- CIT v. Kelvinator of India Ltd . (Delhi) . . . 231

Non-resident --Income deemed to accrue or arise in India--Scope of section 9(1)(vii)--Technical know-how--Designs, drawings and data delivered to person outside India--Consideration received by non-resident not assessable in India--Income-tax Act, 1961, s. 9(1)(vii)-- Grasim Industries Ltd. v. S. M. Mishra, CIT (Bom) . . . 276

Penalty --Concealment of income--Disallowance of business loss in quantum proceedings--No finding that transaction was not genuine--Penalty could not be imposed--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Usha Marketing (P.) Ltd .(Delhi) . . . 334

Precedent --Effect of Supreme Court decision in Ishikawajima-Harima Heavy Industries Ltd. v. Director of Income-tax [2007] 288 ITR 408 (SC)-- Grasim Industries Ltd . v. S. M. Mishra, CIT (Bom) . . . 276

Reassessment --Income escaping assessment--Sum received by assessee on retirement from firm of solicitors upon superannuation--Provision in deed of partnership prohibiting retiring partners from soliciting firm's clients for three years--Not applicable to assessee--No income escaping assessment--Income-tax Act, 1961, ss. 28(iv), 147, 148-- Smt. Jyoti Rajnikant v. Asst. CIT (Bom) . . . 229

----Notice--Notice issued after four years from relevant assessment year--Assessing Officer on satisfaction allowing claim regarding entrance fee in original assessment--No failure on part of assessee to disclose fully and truly all material facts--Notice to be quashed--Income-tax Act, 1961, ss. 147, 148-- Bombay Presidency Golf Club Ltd . v. ITO (Bom) . . . 226

----Notice--Scientific research--Exemption for donation to approved institution--Reassessment on ground CBDT had withdrawn approval to institution with retrospective effect--High Court quashing notification of withdrawal--Reassessment not valid--Income-tax Act, 1961, ss. 147, 148-- Ultra Marine Air Aids (P.) Ltd. v. Inspecting Assistant Commissioner (Delhi) . . . 273

----Reassessment after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Assessee claiming deduction under section 36(1)(viii) --Complete details furnished--Deduction granted after consideration by Assessing Officer--Reassessment proceedings after four years on the ground that deduction had been wrongly granted--Reassessment proceedings not valid--Income-tax Act, 1961, s. 147-- CIT v. Pradeshiya Industrial and Investment Corporation of Uttar Pradesh Ltd. (All) . . . 324

Recovery of tax --Stay of recovery proceedings--Factors to be considered--Existence of prima facie case--Order refusing stay without considering existence of prima facie case--Set aside--Income-tax Act, 1961, s. 220(6)-- KLM Royal Dutch Airlines v. Deputy DIT (Delhi) . . . 224

Revision --Commissioner--Assessing Officer taking one of two possible views with which Commissioner not agreeing--Cannot be treated as an erroneous order prejudicial to interest of Revenue--Income-tax Act, 1961, s. 263-- CIT v. Kelvinator of India Ltd. (Delhi) . . . 231

Scientific research --Application for approval under section 35--Rejection of application without affording assessee opportunity to be heard and without giving reasons--Order of rejection--Not valid--Income-tax Act, 1961, s. 35(1)(ii)-- Institution of Engineers (India) v. Union of India (Cal) . . . 309

Search and seizure --Assessment--Assessment not at the dictates of other authorities--Finding that assessee was transacting business through benamidars--Findings of fact--Additions of certain amounts--Remand to Assessing Officer in respect of additions--Justified--Income-tax Act, 1961-- Trilok Singh Dhillon v. CIT (Chhattisgarh) . . . 185

----Assessment--Notice--Notice under section 153C issued in February 2005 and a second notice issued in September 2006--Income of third persons included in total income of assessee--Same Assessing Officer assessing such third persons--First notice issued after application of mind--Second notice would not invalidate proceedings--Income-tax Act, 1961, s. 153C-- Trilok Singh Dhillon v. CIT (Chhattisgarh) . . . 185

----Assessment--Protective assessment permissible under section 153C--Income-tax Act, 1961, s. 153C-- Trilok Singh Dhillon v. CIT (Chhattisgarh) . . . 185

----Assessment--Validity of search cannot be questioned during assessment proceedings or in appellate proceedings therefrom--Income-tax Act, 1961, ss 132, 153A-- Trilok Singh Dhillon v. CIT (Chhattisgarh) . . . 185

Words and phrases --"Plant" meaning of-- CIT v. Vijaya Enterprises (AP) . . . 235

----Meaning of "mineral oil"-- Goa Carbon Ltd . v. CIT (Bom) . . . 209

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

DTAA between Canada and India :

Art. 12(4) --Double Taxation Avoidance--Canadian company providing consultancy services to Indian Government organisation--Technical drawings furnished by Canadian company--Fees received were "fees for included services" within the meaning of article 12(4) of DTAA--Fees not assessable under section 9-- DIT v. SNC Lavalin International Inc . (Delhi) . . . 314

Income-tax Act, 1961 :

S. 9 --Double Taxation Avoidance--Canadian company providing consultancy services to Indian Government organisation--Technical drawings furnished by Canadian company--Fees received were "fees for included services" within the meaning of article 12(4) of DTAA--Fees not assessable under section 9-- DIT v. SNC Lavalin International Inc . (Delhi) . . . 314

S. 9(1)(vii) --Non-resident--Income deemed to accrue or arise in India--Scope of section 9(1)(vii)--Technical know-how--Designs, drawings and data delivered to person outside India--Consideration received by non-resident not assessable in India-- Grasim Industries Ltd. v. S. M. Mishra, CIT (Bom) . . . 276

S. 28(iv) --Reassessment--Income escaping assessment--Sum received by assessee on retirement from firm of solicitors upon superannuation--Provision in deed of partnership prohibiting retiring partners from soliciting firm's clients for three years--Not applicable to assessee--No income escaping assessment-- Smt. Jyoti Rajnikant v. Asst. CIT (Bom) . . . 229

S. 32(1) --Depreciation--Plant and machinery--Addition to block of assets and sale of some machinery--Plant and machinery remaining in existence--Entitled to depreciation on written down value after adjustment of addition and sale-- CIT v. Rhodoen Silk Mills P. Ltd . (P&H) . . . 330

S. 32(1)(ii), first proviso --Depreciation--Plant--Meaning of--Construction industry--Centering and shuttering material--Each item of shuttering material does not form a plant--Not entitled to 100 per cent. depreciation under first proviso to section 32(1)(ii)-- CIT v. Vijaya Enterprises (AP) . . . 235

S. 32AB --Investment deposit account--Computation of profits for purposes of deduction under section 32AB--Revision--Assessing Officer taking a view prevalent at time that income shown in balance-sheet under head "Other income" not to be excluded--Commissioner (Appeals) granting relief resulting in enhanced deduction--Section 263 cannot be invoked--Companies Act, 1956, Sch. VI-- CIT v. Kelvinator of India Ltd . (Delhi) . . . 231

S. 35(1)(ii) --Scientific research--Application for approval under section 35--Rejection of application without affording assessee opportunity to be heard and without giving reasons--Order of rejection--Not valid-- Institution of Engineers (India) v. Union of India (Cal) . . . 309

S. 37 --Business expenditure--Disallowance on estimate basis--Similar expenses allowed in totality in previous year--To be followed in subsequent years-- Friends Clearing Agency (P.) Ltd . v. CIT (Delhi) . . . 269

----Business expenditure--Interest--Mercantile system of accounting--Amount not shown in books of account by assessee nor by bank--No finding that assessee did not pay interest for relevant period--Assessee entitled to deduction-- Friends Clearing Agency (P.) Ltd. v. CIT (Delhi) . . . 269

S. 40(a)(i) --Business expenditure--Disallowance--Payment to non-resident--Assessee purchasing software and selling in Indian market--Payment not royalty--Not liable to deduction of tax at source--Deduction allowable-- CIT v. Dynamic Vertical Software India P. Ltd. (Delhi) . . . 222

S. 41(2) --Depreciation--Plant and machinery--Addition to block of assets and sale of some machinery--Plant and machinery remaining in existence--Entitled to depreciation on written down value after adjustment of addition and sale-- CIT v. Rhodoen Silk Mills P. Ltd . (P&H) . . . 330

S. 68 --Cash credits--Claim that certain amounts were received as gifts--No evidence of gifts--Amount assessable under section 68-- Trilok Singh Dhillon v. CIT (Chhattisgarh) . . . 185

S. 80HHC --Export--Special deduction under section 80HHC--Computation of special deduction--Business income--Assessee carrying on export business utilising surplus funds for discounting bills and making intercorporate deposits--Income earned therefrom--Not business income-- CIT v. Swani Spice Mills P. Ltd. (Bom) . . . 288

----Export--Special deduction under section 80HHC--Exclusion mineral oil--Meaning of mineral oil--Calcined petroleum coke derived from crude petroleum is not mineral oil-- Goa Carbon Ltd. v. CIT (Bom) . . . 209

S. 80-IB --Industrial undertaking--Deduction under section 80-IB--Claim not allowed on ground assessee had not filed a revised return--Tribunal allowing deduction on ground that assessee not making any fresh claim and duly furnished documents and Form 10CCB during assessment proceedings--Justified-- CIT v. Ramco International (P&H) . . . 306

S. 132 --Search and seizure--Assessment--Validity of search cannot be questioned during assessment proceedings or in appellate proceedings therefrom-- Trilok Singh Dhillon v. CIT (Chhattisgarh) . . . 185

S. 147 --Reassessment--Income escaping assessment--Sum received by assessee on retirement from firm of solicitors upon superannuation--Provision in deed of partnership prohibiting retiring partners from soliciting firm's clients for three years--Not applicable to assessee--No income escaping assessment-- Smt. Jyoti Rajnikant v. Asst. CIT (Bom) . . . 229

----Reassessment--Notice--Notice issued after four years from relevant assessment year--Assessing Officer on satisfaction allowing claim regarding entrance fee in original assessment--No failure on part of assessee to disclose fully and truly all material facts--Notice to be quashed-- Bombay Presidency Golf Club Ltd . v. ITO (Bom) . . . 226

----Reassessment--Notice--Scientific research--Exemption for donation to approved institution--Reassessment on ground CBDT had withdrawn approval to institution with retrospective effect--High Court quashing notification of withdrawal--Reassessment not valid-- Ultra Marine Air Aids (P.) Ltd. v. Inspecting Assistant Commissioner (Delhi) . . . 273

----Reassessment--Reassessment after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Assessee claiming deduction under section 36(1)(viii) --Complete details furnished--Deduction granted after consideration by Assessing Officer--Reassessment proceedings after four years on the ground that deduction had been wrongly granted--Reassessment proceedings not valid-- CIT v. Pradeshiya Industrial and Investment Corporation of Uttar Pradesh Ltd. (All) . . . 324

S. 148 --Reassessment--Income escaping assessment--Sum received by assessee on retirement from firm of solicitors upon superannuation--Provision in deed of partnership prohibiting retiring partners from soliciting firm's clients for three years--Not applicable to assessee--No income escaping assessment-- Smt. Jyoti Rajnikant v. Asst. CIT (Bom) . . . 229

----Reassessment--Notice--Notice issued after four years from relevant assessment year--Assessing Officer on satisfaction allowing claim regarding entrance fee in original assessment--No failure on part of assessee to disclose fully and truly all material facts--Notice to be quashed-- Bombay Presidency Golf Club Ltd . v. ITO (Bom) . . . 226

----Reassessment--Notice--Scientific research--Exemption for donation to approved institution--Reassessment on ground CBDT had withdrawn approval to institution with retrospective effect--High Court quashing notification of withdrawal--Reassessment not valid-- Ultra Marine Air Aids (P.) Ltd. v. Inspecting Assistant Commissioner (Delhi) . . . 273

S. 153A --Search and seizure--Assessment--Validity of search cannot be questioned during assessment proceedings or in appellate proceedings therefrom-- Trilok Singh Dhillon v. CIT (Chhattisgarh) . . . 185

S. 153C --Search and seizure--Assessment--Notice--Notice under section 153C issued in February 2005 and a second notice issued in September 2006--Income of third persons included in total income of assessee--Same Assessing Officer assessing such third persons--First notice issued after application of mind--Second notice would not invalidate proceedings-- Trilok Singh Dhillon v. CIT (Chhattisgarh) . . . 185

----Search and seizure--Assessment--Protective assessment permissible under section 153C-- Trilok Singh Dhillon v. CIT (Chhattisgarh) . . . 185

S. 194H --Deduction of tax at source--Commission or brokerage--Mobile telephone service--Discount given to distributors on sale of SIM cards and recharge coupons--No sale of goods--Tax deductible at source on discount--V odafone Essar Cellular Ltd. v. Asst. CIT (TDS) (Ker) . . . 255

S. 194H, Expln. --Deduction of tax at source--Commission--Agents of airline companies permitted to sell tickets at any rate between fixed minimum commercial price and published price--Difference between commercial price and published price--Not commission or brokerage--No deduction of tax at source-- CIT v. Qatar Airways (Bom) . . . 253

S. 220(6) --Recovery of tax--Stay of recovery proceedings--Factors to be considered--Existence of prima facie case--Order refusing stay without considering existence of prima facie case--Set aside-- KLM Royal Dutch Airlines v. Deputy DIT (Delhi) . . . 224

S. 263 --Revision--Commissioner--Assessing Officer taking one of two possible views with which Commissioner not agreeing--Cannot be treated as an erroneous order prejudicial to interest of Revenue-- CIT v. Kelvinator of India Ltd. (Delhi) . . . 231

S. 271(1)(c) --Penalty--Concealment of income--Disallowance of business loss in quantum proceedings--No finding that transaction was not genuine--Penalty could not be imposed-- CIT v. Usha Marketing (P.) Ltd . (Delhi) . . . 334

Income-tax Rules, 1962 :

R. 46A --Appeal to Commissioner (Appeals)--Additional evidence--Assessing Officer making addition on basis of valuation of work-in-progress--Commissioner (Appeals) as well as Tribunal upholding valuation of assessee considering affidavit filed before Commissioner (Appeals) reiterating its stand--Findings of fact-- CIT v. Central Mall (P&H) . . . 320

 

 

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))

Volume 8 : Part 4 (Issue dated : 28-3-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Appeal to Appellate Tribunal --Powers of Tribunal--Power to rectify mistakes in its order--Mistake must be apparent from record--Addition of undisclosed income in block assessment--Addition after considering document discovered during search--Addition not on basis of presumption under section 132(4)--Subsequent decision of Supreme Court in P. R. Metrani's case [2006] 287 ITR 209 not applicable--No mistake in original order--Addition could not be deleted in proceedings under section 254(2)--Income-tax Act, 1961, ss. 132, 254(2)-- Kailashnath Malhotra v. Joint CIT (Mumbai) . . . 457

----Rectification of mistakes--Application for rectification dismissed--Second application not maintainable--Income-tax Act, 1961, s. 254(2)-- Kailashnath Malhotra v. Joint CIT (Mumbai) . . . 457

Business expenditure --Disallowance--Consultancy charges paid to director--No evidence that payment was excessive or unreasonable--Disallowance of part of payment--Not justified--Income-tax Act, 1961, s. 40A(2)-- Tally Solutions P. Ltd. v. Deputy CIT (Bangalore) . . . 434

Business income --Benefit arising out of business--Assessee managing director of company--Pledge of shares held by company in another group company to assessee as security for loan from assessee--Shares in dematerialised form--Assessee shown as beneficial owner in account of depository participant--Not conclusive that transaction was sale--No material to show sale--Allegation that pledge was camouflage to avoid tax implications of sale and that acquisition of shares intended to acquire control of group company--Not substantiated--Loan repaid and company again shown as beneficial owner--Difference between loan amount and market price of shares not to be taxed as benefit arising out of business in assessee's hands--Income-tax Act, 1961, s. 2(24)(iv)--Companies Act, 1956, ss. 2(46), 82, 83, 187C--Depositories Act, 1996, ss. 10, 12, 25, 28--Sale of Goods Act, 1930, ss. 2(7), 19--Contract Act, 1872, ss. 148, 172--Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

Cash credits --Return of assessee-company processed under section 143(1) accepting return--Balance-sheet showing increase in paid-up share capital and reserves--Enquiry--Directors of assessee attending from time to time and submitting list of shareholders--Letters sent to shareholders returned unserved in majority of cases--Assessee not filing any reply to show-cause notice--Sum added as unexplained cash credit--Appeal--Assessee denying filing of return and repudiating balance-sheet--Not permissible--Additional evidence cannot be admitted--Addition of cash credits proper--Income-tax Act, 1961, s. 68--Income-tax Rules, 1962, r. 46A-- Vishwanath Clorinate and Chemicals P. Ltd. v. ITO (Ahmedabad) . . . 387

Income --Remission of liability--Purchase of deep freezers for storage and supply of ice creams to dealers against deposits for deep freezers--Deposits not transferred to profit and loss account--Section 41 not applicable--Deep freezer deposits not income--Addition deleted--Income-tax Act, 1961, s. 41-- P. I. C. (Gujarat) Ltd. v. Deputy CIT (Ahmedabad) . . . 417

Penalty --Concealment of income and furnishing inaccurate particulars of income--Distinction--Amendment of section 271(1B) with retrospective effect from April 1, 1989--Distinction not maintained--Satisfaction arrived at for filing inaccurate particulars but penalty levied for concealment--Cancellation of penalty justified--Income-tax Act, 1961, ss. 271(1)(c), 271(1B)-- ITO v. Chhail Behari (Agra) . . . 383

Rectification of mistake --Assessing Officer allowing deduction under section 80HHC and later by an order under section 154 reducing deduction--Power under section 154 not to cover each and every decided issue which may result in possible loss of revenue--Order of rectification to be set aside--Income-tax Act, 1961, ss. 80HHC, 154-- Satish Kumar Aggarwal v. Deputy CIT (Delhi) . . . 424

Revision --Commissioner--Jurisdiction--Questionnaire issued by Assessing Officer covering all points raised by Commissioner in notice--Assessee replying to all points with supporting material--No ground for exercise of power of revision--Even if in opinion of Commissioner inquiry by Assessing Officer inadequate--Income-tax Act, 1961, s. 263-- Ramakant Singh v. CIT (Patna) . . . 403

----Commissioner--Set-off of unabsorbed depreciation allowed as accumulated book loss higher than unabsorbed depreciation--Revision to recompute book profit by taking into account adjustment made in earlier year--Concession in previous year not binding on assessee in other years--Order not erroneous--Income-tax Act, 1961, s. 263 -- Aircel Cellular Ltd. v. Asst. CIT (Chennai) . . . 446

Scientific research --Capital expenditure on scientific research--Deductible--Income-tax Act, 1961, s. 35(1)(iv)-- Tally Solutions P. Ltd. v. Deputy CIT (Bangalore) . . . 434

Shares --Pledge--General principles--Depositories Act--Effect of, on share transactions--Companies Act, 1956, ss. 2(46), 82, 83, 187C--Depositories Act, 1996, ss. 10, 12, 25, 28--Sale of Goods Act, 1930, ss. 2(7), 19--Contract Act, 1872, ss. 148, 172-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Companies Act, 1956 :

Ss. 2(46), 82, 83, 187C --Business income--Benefit arising out of business--Assessee managing director of company--Pledge of shares held by company in another group company to assessee as security for loan from assessee--Shares in dematerialised form--Assessee shown as beneficial owner in account of depository participant--Not conclusive that transaction was sale--No material to show sale--Allegation that pledge was camouflage to avoid tax implications of sale and that acquisition of shares intended to acquire control of group company--Not substantiated--Loan repaid and company again shown as beneficial owner--Difference between loan amount and market price of shares not to be taxed as benefit arising out of business in assessee's hands-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

----Shares--Pledge--General principles--Depositories Act--Effect of, on share transactions-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

Contract Act, 1872 :

Ss. 148, 172 --Business income--Benefit arising out of business--Assessee managing director of company--Pledge of shares held by company in another group company to assessee as security for loan from assessee--Shares in dematerialised form--Assessee shown as beneficial owner in account of depository participant--Not conclusive that transaction was sale--No material to show sale--Allegation that pledge was camouflage to avoid tax implications of sale and that acquisition of shares intended to acquire control of group company--Not substantiated--Loan repaid and company again shown as beneficial owner--Difference between loan amount and market price of shares not to be taxed as benefit arising out of business in assessee's hands-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

----Shares--Pledge--General principles--Depositories Act--Effect of, on share transactions-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

Depositories Act, 1996 :

Ss. 10, 12, 25, 28 --Business income--Benefit arising out of business--Assessee managing director of company--Pledge of shares held by company in another group company to assessee as security for loan from assessee--Shares in dematerialised form--Assessee shown as beneficial owner in account of depository participant--Not conclusive that transaction was sale--No material to show sale--Allegation that pledge was camouflage to avoid tax implications of sale and that acquisition of shares intended to acquire control of group company--Not substantiated--Loan repaid and company again shown as beneficial owner--Difference between loan amount and market price of shares not to be taxed as benefit arising out of business in assessee's hands-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

----Shares--Pledge--General principles--Depositories Act--Effect of, on share transactions-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

Income-tax Act, 1961 :

S. 2(24)(iv) --Business income--Benefit arising out of business--Assessee managing director of company--Pledge of shares held by company in another group company to assessee as security for loan from assessee--Shares in dematerialised form--Assessee shown as beneficial owner in account of depository participant--Not conclusive that transaction was sale--No material to show sale--Allegation that pledge was camouflage to avoid tax implications of sale and that acquisition of shares intended to acquire control of group company--Not substantiated--Loan repaid and company again shown as beneficial owner--Difference between loan amount and market price of shares not to be taxed as benefit arising out of business in assessee's hands-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

S. 35(1)(iv) --Scientific research--Capital expenditure on scientific research--Deductible-- Tally Solutions P. Ltd. v. Deputy CIT (Bangalore) . . . 434

S. 40A(2) --Business expenditure--Disallowance--Consultancy charges paid to director--No evidence that payment was excessive or unreasonable--Disallowance of part of payment--Not justified-- Tally Solutions P. Ltd. v. Deputy CIT (Bangalore) . . . 434

S. 41 --Income--Remission of liability--Purchase of deep freezers for storage and supply of ice creams to dealers against deposits for deep freezers--Deposits not transferred to profit and loss account--Section 41 not applicable--Deep freezer deposits not income--Addition deleted-- P. I. C. (Gujarat) Ltd. v. Deputy CIT (Ahmedabad) . . . 417

S. 68 --Cash credits--Return of assessee-company processed under section 143(1) accepting return--Balance-sheet showing increase in paid-up share capital and reserves--Enquiry--Directors of assessee attending from time to time and submitting list of shareholders--Letters sent to shareholders returned unserved in majority of cases--Assessee not filing any reply to show-cause notice--Sum added as unexplained cash credit--Appeal--Assessee denying filing of return and repudiating balance-sheet--Not permissible--Additional evidence cannot be admitted--Addition of cash credits proper -- Vishwanath Clorinate and Chemicals P. Ltd. v. ITO (Ahmedabad) . . . 387

S. 80HHC --Rectification of mistake--Assessing Officer allowing deduction under section 80HHC and later by an order under section 154 reducing deduction--Power under section 154 not to cover each and every decided issue which may result in possible loss of revenue--Order of rectification to be set aside-- Satish Kumar Aggarwal v. Deputy CIT (Delhi) . . . 424

S. 132 --Appeal to Appellate Tribunal--Powers of Tribunal--Power to rectify mistakes in its order--Mistake must be apparent from record--Addition of undisclosed income in block assessment--Addition after considering document discovered during search--Addition not on basis of presumption under section 132(4)--Subsequent decision of Supreme Court in P. R. Metrani's case [2006] 287 ITR 209 not applicable--No mistake in original order--Addition could not be deleted in proceedings under section 254(2)-- Kailashnath Malhotra v. Joint CIT (Mumbai) . . . 457

S. 154 --Rectification of mistake--Assessing Officer allowing deduction under section 80HHC and later by an order under section 154 reducing deduction--Power under section 154 not to cover each and every decided issue which may result in possible loss of revenue--Order of rectification to be set aside-- Satish Kumar Aggarwal v. Deputy CIT (Delhi) . . . 424

S. 254(2) --Appeal to Appellate Tribunal--Powers of Tribunal--Power to rectify mistakes in its order--Mistake must be apparent from record--Addition of undisclosed income in block assessment--Addition after considering document discovered during search--Addition not on basis of presumption under section 132(4)--Subsequent decision of Supreme Court in P. R. Metrani's case [2006] 287 ITR 209 not applicable--No mistake in original order--Addition could not be deleted in proceedings under section 254(2)-- Kailashnath Malhotra v. Joint CIT (Mumbai) . . . 457

----Appeal to Appellate Tribunal--Rectification of mistakes--Application for rectification dismissed--Second application not maintainable-- Kailashnath Malhotra v. Joint CIT (Mumbai) . . . 457

S. 263 --Revision--Commissioner--Set-off of unabsorbed depreciation allowed as accumulated book loss higher than unabsorbed depreciation--Revision to recompute book profit by taking into account adjustment made in earlier year--Concession in previous year not binding on assessee in other years--Order not erroneous-- Aircel Cellular Ltd. v. Asst. CIT (Chennai) . . . 446

----Revision--Commissioner--Jurisdiction--Questionnaire issued by Assessing Officer covering all points raised by Commissioner in notice--Assessee replying to all points with supporting material--No ground for exercise of power of revision--Even if in opinion of Commissioner inquiry by Assessing Officer inadequate-- Ramakant Singh v. CIT (Patna) . . . 403

S. 271(1)(c) --Penalty--Concealment of income and furnishing inaccurate particulars of income--Distinction--Amendment of section 271(1B) with retrospective effect from April 1, 1989--Distinction not maintained--Satisfaction arrived at for filing inaccurate particulars but penalty levied for concealment--Cancellation of penalty justified-- ITO v. Chhail Behari (Agra) . . . 383

S. 271(1B) --Penalty--Concealment of income and furnishing inaccurate particulars of income--Distinction--Amendment of section 271(1B) with retrospective effect from April 1, 1989--Distinction not maintained--Satisfaction arrived at for filing inaccurate particulars but penalty levied for concealment--Cancellation of penalty justified-- ITO v. Chhail Behari (Agra) . . . 383

Income-tax Rules, 1962 :

R. 46A --Cash credits--Return of assessee-company processed under section 143(1) accepting return--Balance-sheet showing increase in paid-up share capital and reserves --Enquiry--Directors of assessee attending from time to time and submitting list of shareholders--Letters sent to shareholders returned unserved in majority of cases--Assessee not filing any reply to show-cause notice--Sum added as unexplained cash credit--Appeal--Assessee denying filing of return and repudiating balance-sheet--Not permissible--Additional evidence cannot be admitted--Addition of cash credits proper -- Vishwanath Clorinate and Chemicals P. Ltd. v. ITO (Ahmedabad) . . . 387

Sale of Goods Act, 1930 :

Ss. 2(7), 19 --Business income--Benefit arising out of business--Assessee managing director of company--Pledge of shares held by company in another group company to assessee as security for loan from assessee--Shares in dematerialised form--Assessee shown as beneficial owner in account of depository participant--Not conclusive that transaction was sale--No material to show sale--Allegation that pledge was camouflage to avoid tax implications of sale and that acquisition of shares intended to acquire control of group company--Not substantiated--Loan repaid and company again shown as beneficial owner--Difference between loan amount and market price of shares not to be taxed as benefit arising out of business in assessee's hands-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

----Shares--Pledge--General principles--Depositories Act--Effect of, on share transactions-- Joint CIT v. Mukesh D. Ambani (Mumbai) . . . 353

CA.RAJU SHAH