ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 8 : Part 2 (Issue dated : 14-3-2011)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Accounting --Application of gross profit rate--Addition on account of decline in gross profit ratio--No adverse reporting by statutory auditors in audited financial statements--Decline in gross profit ratio accepted in last year scrutiny assessment--Addition to be deleted--Income-tax Act, 1961-- Eagle Synthetics P. Ltd. v. ITO (Ahmedabad) . . . 211
----Rejection of books of account--Assessee failing to produce some details sought by Assessing Officer since records lost in flood--Evidence furnished by assessee regarding loss not contradicted--Rejection not proper--Income-tax Act, 1961-- Eagle Synthetics P. Ltd. v. ITO (Ahmedabad) . . . 211
Appeal to Appellate Tribunal --Rectification of mistake--Only in order on appeal--Application for rectification of order on application for rectification--Not permissible--Income-tax Act, 1961, s. 254(2)-- Padam Prakash (HUF) v. ITO [SB] (Delhi) . . . 135
Bad debts --Stock broker--Sums receivable from clients--Allowable--Income-tax Act, 1961, s. 36(2)-- Bhavik Rajesh Khandra Share and Stock Brokers P. Ltd. v. Deputy CIT (Mumbai) . . . 155
Business expenditure --Brokerage--Details of brokers to whom payments made through banking channel after deducting taxes at source filed--Bills lost in flood--Brokerage paid in last year accepted--Expenditure allowable--Income-tax Act, 1961-- Eagle Synthetics P. Ltd. v. ITO (Ahmedabad) . . . 211
----Litigation expenses--Criminal proceedings against actor in his individual capacity--Expenditure incurred in defence--Not deductible--Income-tax Act, 1961, s. 37-- Deputy CIT v. Salman Khan (Mumbai) . . . 150
Depreciation --Depreciation at higher rate--Pre-weaving machines not covered under block III(6) of Appendix I--Assessee entitled to depreciation at normal rate--Income-tax Rules, 1962, Appendix I-- Eagle Synthetics P. Ltd. v. ITO (Ahmedabad) . . . 211
Income from property or income from other sources --Lease income from lease of land and building for five years--Admission of assessee that no manufacturing activity due to sale of machinery--Lease not on account of lull in business--Lease income from exploitation of property income from house property--Income-tax Act, 1961, s. 22-- Asst. CIT v. T & R Welding Products (India) Ltd. (Chennai) . . . 181
International transactions --Arm's length price--Analysis of all aspects of international transactions--Arm's length price in relation to transactions accepted--Does not preclude Transfer Pricing Officer from looking into financial impact of receivables remaining outstanding from associated enterprise to assessee beyond normal period--Effect of assessee's funds remaining locked in to be assessed--Interest on outstandings to be calculated for overflow period after allowing interest-free period and added--Impact felt by assessee in India--Indian rate of interest applicable not US rate--Adjustments as allowable for loans not applicable--Prime lending rate of State Bank of India not applicable, but rate of interest on deposits--Rate fixed at five per cent.--Income-tax Act, 1961, ss. 92C, 92CA-- Logix Micro Systems Ltd. v. Asst. CIT (Bangalore) . . . 159
----Arm's length price--Dispute Resolution Panel--Must consider submissions of assessee and pass speaking order--Income-tax Act, 1961, s. 144C-- GAP International Sourcing India P. Ltd. v. Deputy CIT (Delhi) . . . 177
----Arm's length price--Factors for determination--Bad debts written off--Not a factor for determination--Income-tax Act, 1961, ss. 92C, 92CA--Income-tax Rules, 1962, r. 10B-- C. A. Computer Associates P. Ltd. v. Deputy CIT (Mumbai) . . . 142
----Arm's length price--Reference to Transfer Pricing Officer--Power of Transfer Pricing Officer --Limited to making adjustments in respect of transactions referred to him--No power to take up other transactions suo motu for verification and suggest adjustments--Income-tax Act, 1961, s. 92CA(1)--CBDT Instruction No. 3, dated 20-5-2003-- Amadeus India P. Ltd. v. Asst. CIT (Delhi) . . . 187
Loss --Carry forward and set-off--Business loss carried forward cannot be set off against lease income--Land and building not held as stock-in-trade--Assessee not carrying on business--Carried forward business loss cannot be set off against lease income--Income-tax Act, 1961, s. 72-- Asst. CIT v. T & R Welding Products (India) Ltd. (Chennai) . . . 181
New industrial undertaking --Special deduction--Requirement under section 80AC that original return to be filed in time but claim can be made in subsequent return--Original return filed within extended time in terms of circular of Central Board of Direct Taxes--Revised return not filed within one year of end of assessment year--Not valid return--Claim before appellate authorities to be decided on merits--Matter remanded--Income-tax Act, 1961, ss. 80AC, 80-IB--Circular F. No. 220/5/2006-ITA-II, dated 13-10-2006-- Parmeshwar Cold Storage P. Ltd. v. Asst. CIT (Ahmedabad) . . . 172
Penalty --Concealment of income--That addition affirmed does not mean income concealed--No evidence that assessee had concealed any particulars of income--Penalty to be deleted--Income-tax Act, 1961, s. 271(1)(c)-- Eagle Synthetics P. Ltd. v. ITO (Ahmedabad) . . . 211
Refund --Interest on excess refund--Provision not applicable for assessment years prior to 2004-05--Income-tax Act, 1961, s. 234D-- C. A. Computer Associates P. Ltd. v. Deputy CIT (Mumbai) . . . 142
Search and seizure --Block assessment--Assessment of third person--Notice--Notice issued under section 158BC read with section 158BD procedural--Failure to mention section 158BD in notice not fatal--Defect curable under section 292B--Block assessment order within jurisdiction--Income-tax Act, 1961 ss. 132, 158BC, 158BD, 292B-- Asst. CIT v. Dilip Kumar Balar (Bangalore) . . . 229
----Block assessment--Assessment of third person--Satisfaction recorded on basis of statement recorded during search and appraisal report--No material establishing Assessing Officer having no jurisdiction to pass assessment order--Assessing Officer having jurisdiction over person searched and assessee--Income-tax Act, 1961, ss. 158BC, 158BD -- Asst. CIT v. Dilip Kumar Balar (Bangalore) . . . 229
----Block assessment--Notice--Returns filed pursuant to notice--Proceedings transferred to another officer at same station having jurisdiction--Assessee need not be heard --Transfer after issue of notice--Permissible--Income-tax Act, 1961, ss. 132, 158BC, 158BD-- Asst. CIT v. Dilip Kumar Balar (Bangalore) . . . 229
----Block assessment--Penalty--Addition on basis of cash seized from assessee--Tribunal confirming addition finding explanation of assessee that cash seized belonged to company not bona fide--Not a case of technical or venial breach--Fit case for levy of penalty--Income-tax Act, 1961, ss. 158BC, 158BFA(2)-- Harish Dargan v. Deputy CIT (Delhi) . . . 125
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 22 --Income from property or income from other sources--Lease income from lease of land and building for five years--Admission of assessee that no manufacturing activity due to sale of machinery--Lease not on account of lull in business--Lease income from exploitation of property income from house property-- Asst. CIT v. T & R Welding Products (India) Ltd. (Chennai) . . . 181
S. 36(2) --Bad debts--Stock broker--Sums receivable from clients--Allowable-- Bhavik Rajesh Khandra Share and Stock Brokers P. Ltd. v. Deputy CIT (Mumbai) . . . 155
S. 37 --Business expenditure--Litigation expenses--Criminal proceedings against actor in his individual capacity--Expenditure incurred in defence--Not deductible-- Deputy CIT v. Salman Khan (Mumbai) . . . 150
S. 72 --Loss--Carry forward and set-off--Business loss carried forward cannot be set off against lease income--Land and building not held as stock-in-trade--Assessee not carrying on business--Carried forward business loss cannot be set off against lease income-- Asst. CIT v. T & R Welding Products (India) Ltd. (Chennai) . . . 181
S. 80AC --New industrial undertaking--Special deduction--Requirement under section 80AC that original return to be filed in time but claim can be made in subsequent return--Original return filed within extended time in terms of circular of Central Board of Direct Taxes--Revised return not filed within one year of end of assessment year--Not valid return--Claim before appellate authorities to be decided on merits--Matter remanded--Circular F. No. 220/5/2006-ITA-II, dated 13-10-2006-- Parmeshwar Cold Storage P. Ltd. v. Asst. CIT Ahmedabad) . . . 172
S. 80-IB --New industrial undertaking--Special deduction--Requirement under section 80AC that original return to be filed in time but claim can be made in subsequent return--Original return filed within extended time in terms of circular of Central Board of Direct Taxes--Revised return not filed within one year of end of assessment year--Not valid return--Claim before appellate authorities to be decided on merits--Matter remanded--Circular F. No. 220/5/2006-ITA-II, dated 13-10-2006-- Parmeshwar Cold Storage P. Ltd. v. Asst. CIT (Ahmedabad) . . . 172
S. 92C --International transactions--Arm's length price--Analysis of all aspects of international transactions--Arm's length price in relation to transactions accepted--Does not preclude Transfer Pricing Officer from looking into financial impact of receivables remaining outstanding from associated enterprise to assessee beyond normal period--Effect of assessee's funds remaining locked in to be assessed--Interest on outstandings to be calculated for overflow period after allowing interest-free period and added--Impact felt by assessee in India--Indian rate of interest applicable not US rate--Adjustments as allowable for loans not applicable--Prime lending rate of State Bank of India not applicable, but rate of interest on deposits--Rate fixed at five per cent.-- Logix Micro Systems Ltd. v. Asst. CIT (Bangalore) . . . 159
----International transactions--Arm's length price--Factors for determination--Bad debts written off--Not a factor for determination-- C. A. Computer Associates P. Ltd. v. Deputy CIT (Mumbai) . . . 142
S. 92CA --International transactions--Arm's length price--Analysis of all aspects of international transactions--Arm's length price in relation to transactions accepted--Does not preclude Transfer Pricing Officer from looking into financial impact of receivables remaining outstanding from associated enterprise to assessee beyond normal period--Effect of assessee's funds remaining locked in to be assessed--Interest on outstandings to be calculated for overflow period after allowing interest-free period and added--Impact felt by assessee in India--Indian rate of interest applicable not US rate--Adjustments as allowable for loans not applicable--Prime lending rate of State Bank of India not applicable, but rate of interest on deposits--Rate fixed at five per cent.-- Logix Micro Systems Ltd. v. Asst. CIT (Bangalore) . . . 159
----International transactions--Arm's length price--Factors for determination--Bad debts written off--Not a factor for determination-- C. A. Computer Associates P. Ltd. v. Deputy CIT (Mumbai) . . . 142
S. 92CA(1) --International transactions--Arm's length price--Reference to Transfer Pricing Officer--Power of Transfer Pricing Officer --Limited to making adjustments in respect of transactions referred to him--No power to take up other transactions suo motu for verification and suggest adjustments--CBDT Instruction No. 3, dated 20-5-2003-- Amadeus India P. Ltd. v. Asst. CIT (Delhi) . . . 187
S. 132 --Search and seizure--Block assessment--Assessment of third person--Notice --Notice issued under section 158BC read with section 158BD procedural--Failure to mention section 158BD in notice not fatal--Defect curable under section 292B--Block assessment order within jurisdiction-- Asst. CIT v. Dilip Kumar Balar (Bangalore) . . . 229
----Search and seizure--Block assessment--Notice--Returns filed pursuant to notice--Proceedings transferred to another officer at same station having jurisdiction--Assessee need not be heard --Transfer after issue of notice--Permissible-- Asst. CIT v. Dilip Kumar Balar (Bangalore) . . . 229
S. 144C --International transactions--Arm's length price--Dispute Resolution Panel --Must consider submissions of assessee and pass speaking order-- GAP International Sourcing India P. Ltd. v. Deputy CIT (Delhi) . . . 177
S. 158BC --Search and seizure--Block assessment--Assessment of third person--Notice--Notice issued under section 158BC read with section 158BD procedural--Failure to mention section 158BD in notice not fatal--Defect curable under section 292B--Block assessment order within jurisdiction-- Asst. CIT v. Dilip Kumar Balar (Bangalore) . . . 229
----Search and seizure--Block assessment--Assessment of third person--Satisfaction recorded on basis of statement recorded during search and appraisal report--No material establishing Assessing Officer having no jurisdiction to pass assessment order--Assessing Officer having jurisdiction over person searched and assessee-- Asst. CIT v. Dilip Kumar Balar (Bangalore) . . . 229
----Search and seizure--Block assessment--Notice--Returns filed pursuant to notice--Proceedings transferred to another officer at same station having jurisdiction--Assessee need not be heard --Transfer after issue of notice--Permissible-- Asst. CIT v. Dilip Kumar Balar (Bangalore) . . . 229
----Search and seizure--Block assessment--Penalty--Addition on basis of cash seized from assessee--Tribunal confirming addition finding explanation of assessee that cash seized belonged to company not bona fide--Not a case of technical or venial breach --Fit case for levy of penalty-- Harish Dargan v. Deputy CIT (Delhi) . . . 125
S. 158BD --Search and seizure--Block assessment--Assessment of third person--Notice--Notice issued under section 158BC read with section 158BD procedural--Failure to mention section 158BD in notice not fatal--Defect curable under section 292B--Block assessment order within jurisdiction-- Asst. CIT v. Dilip Kumar Balar (Bangalore) . . . 229
----Search and seizure--Block assessment--Assessment of third person--Satisfaction recorded on basis of statement recorded during search and appraisal report--No material establishing Assessing Officer having no jurisdiction to pass assessment order--Assessing Officer having jurisdiction over person searched and assessee-- Asst. CIT v. Dilip Kumar Balar (Bangalore) . . . 229
----Search and seizure--Block assessment--Notice--Returns filed pursuant to notice--Proceedings transferred to another officer at same station having jurisdiction--Assessee need not be heard--Transfer after issue of notice--Permissible-- Asst. CIT v. Dilip Kumar Balar (Bangalore) . . . 229
S. 158BFA(2) --Search and seizure--Block assessment--Penalty--Addition on basis of cash seized from assessee--Tribunal confirming addition finding explanation of assessee that cash seized belonged to company not bona fide--Not a case of technical or venial breach--Fit case for levy of penalty-- Harish Dargan v. Deputy CIT (Delhi) . . . 125
S. 234D --Refund--Interest on excess refund--Provision not applicable for assessment years prior to 2004-05-- C. A. Computer Associates P. Ltd. v. Deputy CIT (Mumbai) . . . 142
S. 254(2) --Appeal to Appellate Tribunal--Rectification of mistake--Only in order on appeal--Application for rectification of order on application for rectification--Not permissible-- Padam Prakash (HUF) v. ITO [SB] (Delhi) . . . 135
S. 271(1)(c) --Penalty--Concealment of income--That addition affirmed does not mean income concealed--No evidence that assessee had concealed any particulars of income--Penalty to be deleted-- Eagle Synthetics P. Ltd. v. ITO (Ahmedabad) . . . 211
S. 292B --Search and seizure--Block assessment--Assessment of third person--Notice--Notice issued under section 158BC read with section 158BD procedural--Failure to mention section 158BD in notice not fatal--Defect curable under section 292B--Block assessment order within jurisdiction-- Asst. CIT v. Dilip Kumar Balar (Bangalore) . . . 229
R. 10B --International transactions--Arm's length price--Factors for determination--Bad debts written off--Not a factor for determination-- C. A. Computer Associates P. Ltd. v. Deputy CIT (Mumbai) . . . 142
Appendix I --Depreciation--Depreciation at higher rate--Pre-weaving machines not covered under block III(6) of Appendix I--Assessee entitled to depreciation at normal rate-- Eagle Synthetics P. Ltd. v. ITO (Ahmedabad) . . . 211
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