INCOME TAX REPORTS (ITR)
Volume 333 : Part 2 (Issue dated 2-5-2011)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal to Appellate Tribunal --Duty of Tribunal--Order passed by Tribunal ex parte due to non-appearance of appellant--Sufficient cause shown for non-appearance--Tribunal must set aside ex parte order--Income-tax (Appellate Tribunal) Rules, 1963 r. 24-- Devendra G. Pasale v. Asst. CIT (Guj) . . . 263
Bad debt --Conditions precedent--Debt must be shown in accounts as income of assessee--Assets and liabilities of L taken over by assessee and another company--Debt of L written off by assessee--No evidence that assessee had taken over debt--Debt not shown as income of assessee--Assessee not entitled to deduction of debt--Income-tax Act, 1961, s. 36(1)(vii), (2)(i)-- CIT v. Lal Woollen and Silk Mills Pvt. Ltd .(P&H) . . . 254
Business expenditure --Disallowance--Excessive and unreasonable payments--Truck hire charges paid on per truck basis to concern of assessee's son at rate lower than to other parties--Disallowance not proper--Income-tax Act, 1961, s. 40A(2)-- CIT v. Brij Pal Sharma (P&H) . . . 229
----Machinery hire charges--That charges excessive and assessee could have purchased an excavator for that cost--Irrelevant--Failure to summon party to determine veracity of claim--Assessee producing books showing payment and confirmation of party--Claim allowable--Income-tax Act, 1961-- CIT v. Brij Pal Sharma (P&H) . . . 229
----Payments by assessee to party partly in cash--Assessee requesting Assessing Officer to summon person to whom cash payment made--Addition without summoning person--Not proper--Income-tax Act, 1961-- CIT v. Brij Pal Sharma (P&H) . . . 229
Cash credits --Burden of proof--Share application money--Identity of subscribers established--Burden on Revenue to prove transaction was not genuine--No such proof--Amount not assessable under section 68--Income-tax Act, 1961, s. 68-- CIT v. STL Extrusion P. Ltd. (MP) . . . 269
Charitable purposes --Charitable trust--Exemption--Denial of exemption--Investment of income of trust in debentures--Meaning of debentures--Debentures are bonds--Charitable trust could not be denied exemption--Income-tax Act, 1961, ss. 11(5), 13(1)(d)-- DIT v. Shree Visheshwar Nath Memorial Public Charitable Trust (Delhi) . . . 248
Export --Special deduction--Mode of computation--Liability of deduction under clause (baa) to Explanation--Net interest alone to be taken into account--Income-tax Act, 1961, s. 80HHC, Expln. (baa)-- CIT v. Gokuldas Exports (Karn) . . . 214
Industrial undertaking --Special deduction under section 80-IB--Condition precedent--Manufacture or production of article --Meaning of manufacture and production--Procurement of parts and assembling windmill amounts to production of article--Assessee entitled to special deduction under section 80-IB--Income-tax Act, 1961, s. 80-IB-- CIT v. Chiranjjeevi Wind Energy Ltd. (Mad) . . . 192
Interpretation of taxing statutes --Term not defined in the Income-tax Act--Definition in a different act and meaning in common parlance to be taken--Companies Act, 1956, s. 2(12)-- DIT v. Shree Visheshwar Nath Memorial Public Charitable Trust (Delhi) . . . 248
Penalty --Concealment of income--Search and seizure--Law applicable--Effect of amendment of section 271--Search in premises of assessee--Statement by assessee disclosing details of concealed income and paying tax thereon--Assessee entitled to immunity from penalty--Income-tax Act, 1961, s. 271(1)(c), Expln. 5(2)-- CIT v. A B Kage and Co . (Karn) . . . 189
Precedent --Effect of Supreme Court decisions in India Cine Agencies v. CIT [2009] 308 ITR 98 and CIT v. Sesa Goa Ltd. [2004] 271 ITR 331-- CIT v. Chiranjjeevi Wind Energy Ltd . (Mad) . . . 192
Reassessment --Notice--Acquisition of property--Enhancement of compensation--Issue sub judice--Disclosure of enhancement of compensation amount in return for relevant assessment year--Amount invested in bonds--Reassessment on ground exemption not available in such year--Not a reason to reopen for that year--Income-tax Act, 1961, ss. 54E, 147(a), 148-- Central India Electric Supply Co. Ltd. v. ITO (Delhi) . . . 237
----Writ--Information received from Directorate of Investigation that assessee beneficiary of bogus accommodation entries--Assessing Officer has reason to believe that income escaped assessment--Sufficiency of reason cannot be considered in writ petition--Assessee to participate in reassessment proceedings and to satisfy that no escapement of taxable income--Income-tax Act, 1961 ss. 147, 148--Constitution of India, art. 226-- AGR Investment Ltd. v. Addl. CIT (Delhi) . . . 146
Revision --Commissioner--No cogent and valid reasons for coming to conclusion that assessment order was erroneous and prejudicial to interests of Revenue--Interpretation of clause (baa) of Explanation to section 80HHC--Assessing Officer taking one out of two views--Order not prejudicial to interests of Revenue--Revision not valid--Income-tax Act, 1961, ss. 80HHC, 263-- CIT v. Gokuldas Exports (Karn) . . . 214
Search and seizure --Block assessment--Draft assessment approved by Commissioner and copy of assessment order and notice of demand issued to assessee within limitation--Assessment order not containing signature of Assessing Officer--Order not invalidated--Order not barred by limitation--Income-tax Act, 1961, ss. 158BE, 158BG, 292B-- CIT v. T. O. Abraham and Co. (Ker) . . . 182
----Block assessment--Tribunal holding that condition precedent for initiating proceedings under section 158BD not satisfied and assessments void ab initio--Not proper--Seized cash and documents requisitioned under section 132A and detailed information of accounts furnished--Assessment valid--Matter remanded-- Income-tax Act, 1961, ss. 132A, 158BC, 158BD-- CIT v. Mittal Consul and Co .(Delhi) . . . 163
----Conditions precedent--Reason to believe based on materials--Writ--Record showing formation of opinion, rationality and application of mind by authorities--Writ petition not maintainable--Constitution of India, art. 226--Income-tax Act, 1961, s. 132 -- Gwalior Citizen Sakh Sahakarita Maryadit v. Union of India (MP) . . . 196
Words and phrases --"Debenture"--DIT v. Shree Visheshwar Nath Memorial Public Charitable Trust (Delhi) . . . 248
----"Manufacture" and "production"--Meanings of-- CIT v. Chiranjjeevi Wind Energy Ltd. (Mad) . . . 192
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 2(12) --Interpretation of taxing statutes--Term not defined in the Income-tax Act--Definition in a different act and meaning in common parlance to be taken-- DIT v. Shree Visheshwar Nath Memorial Public Charitable Trust (Delhi) . . . 248
Art. 226 --Reassessment--Writ--Information received from Directorate of Investigation that assessee beneficiary of bogus accommodation entries--Assessing Officer has reason to believe that income escaped assessment--Sufficiency of reason cannot be considered in writ petition--Assessee to participate in reassessment proceedings and to satisfy that no escapement of taxable income-- AGR Investment Ltd. v. Addl. CIT (Delhi) . . . 146
----Search and seizure--Conditions precedent--Reason to believe based on materials--Writ--Record showing formation of opinion, rationality and application of mind by authorities--Writ petition not maintainable-- Gwalior Citizen Sakh Sahakarita Maryadit v. Union of India (MP) . . . 196
Income-tax (Appellate Tribunal) Rules, 1963 :
r. 24 --Appeal to Appellate Tribunal--Duty of Tribunal--Order passed by Tribunal ex parte due to non-appearance of appellant--Sufficient cause shown for non-appearance--Tribunal must set aside ex parte order-- Devendra G. Pasale v. Asst. CIT (Guj) . . . 263
S. 11(5) --Charitable purposes--Charitable trust--Exemption--Denial of exemption --Investment of income of trust in debentures--Meaning of debentures--Debentures are bonds--Charitable trust could not be denied exemption-- DIT v. Shree Visheshwar Nath Memorial Public Charitable Trust (Delhi) . . . 248
S. 13(1)(d) --Charitable purposes--Charitable trust--Exemption--Denial of exemption--Investment of income of trust in debentures--Meaning of debentures--Debentures are bonds--Charitable trust could not be denied exemption-- DIT v. Shree Visheshwar Nath Memorial Public Charitable Trust (Delhi) . . . 248
S. 36(1)(vii), (2)(i) --Bad debt--Conditions precedent--Debt must be shown in accounts as income of assessee--Assets and liabilities of L taken over by assessee and another company--Debt of L written off by assessee--No evidence that assessee had taken over debt--Debt not shown as income of assessee--Assessee not entitled to deduction of debt-- CIT v. Lal Woollen and Silk Mills Pvt. Ltd .(P&H) . . . 254
S. 40A(2) --Business expenditure--Disallowance--Excessive and unreasonable payments--Truck hire charges paid on per truck basis to concern of assessee's son at rate lower than to other parties--Disallowance not proper-- CIT v. Brij Pal Sharma (P&H) . . . 229
S. 54E --Reassessment--Notice--Acquisition of property--Enhancement of compensation--Issue sub judice--Disclosure of enhancement of compensation amount in return for relevant assessment year--Amount invested in bonds--Reassessment on ground exemption not available in such year--Not a reason to reopen for that year-- Central India Electric Supply Co. Ltd. v. ITO (Delhi) . . . 237
S. 68 --Cash credits--Burden of proof--Share application money--Identity of subscribers established--Burden on Revenue to prove transaction was not genuine--No such proof--Amount not assessable under section 68-- CIT v. STL Extrusion P. Ltd. (MP) . . . 269
S. 80HHC --Revision--Commissioner--No cogent and valid reasons for coming to conclusion that assessment order was erroneous and prejudicial to interests of Revenue--Interpretation of clause (baa) of Explanation to section 80HHC--Assessing Officer taking one out of two views--Order not prejudicial to interests of Revenue--Revision not valid-- CIT v. Gokuldas Exports (Karn) . . . 214
S. 80HHC, Expln. (baa) --Export--Special deduction--Mode of computation--Liability of deduction under clause (baa) to Explanation--Net interest alone to be taken into account-- CIT v. Gokuldas Exports (Karn) . . . 214
S. 80-IB --Industrial undertaking--Special deduction under section 80-IB --Condition precedent--Manufacture or production of article --Meaning of manufacture and production--Procurement of parts and assembling windmill amounts to production of article--Assessee entitled to special deduction under section 80-IB-- CIT v. Chiranjjeevi Wind Energy Ltd. (Mad) . . . 192
S. 132 --Search and seizure--Conditions precedent--Reason to believe based on materials--Writ--Record showing formation of opinion, rationality and application of mind by authorities--Writ petition not maintainable-- Gwalior Citizen Sakh Sahakarita Maryadit v. Union of India (MP) . . . 196
S. 132A --Search and seizure--Block assessment--Tribunal holding that condition precedent for initiating proceedings under section 158BD not satisfied and assessments void ab initio--Not proper--Seized cash and documents requisitioned under section 132A and detailed information of accounts furnished--Assessment valid--Matter remanded-- CIT v. Mittal Consul and Co . (Delhi) . . . 163
S. 147 --Reassessment--Writ--Information received from Directorate of Investigation that assessee beneficiary of bogus accommodation entries--Assessing Officer has reason to believe that income escaped assessment--Sufficiency of reason cannot be considered in writ petition--Assessee to participate in reassessment proceedings and to satisfy that no escapement of taxable income-- AGR Investment Ltd. v. Addl. CIT (Delhi) . . . 146
S. 147(a) --Reassessment--Notice--Acquisition of property--Enhancement of compensation--Issue sub judice--Disclosure of enhancement of compensation amount in return for relevant assessment year--Amount invested in bonds--Reassessment on ground exemption not available in such year--Not a reason to reopen for that year-- Central India Electric Supply Co. Ltd. v. ITO (Delhi) . . . 237
S. 148 --Reassessment--Notice--Acquisition of property--Enhancement of compensation--Issue sub judice--Disclosure of enhancement of compensation amount in return for relevant assessment year--Amount invested in bonds--Reassessment on ground exemption not available in such year--Not a reason to reopen for that year-- Central India Electric Supply Co. Ltd. v. ITO (Delhi) . . . 237
----Reassessment--Writ--Information received from Directorate of Investigation that assessee beneficiary of bogus accommodation entries--Assessing Officer has reason to believe that income escaped assessment--Sufficiency of reason cannot be considered in writ petition--Assessee to participate in reassessment proceedings and to satisfy that no escapement of taxable income-- AGR Investment Ltd. v. Addl. CIT (Delhi) . . . 146
S. 158BC --Search and seizure--Block assessment--Tribunal holding that condition precedent for initiating proceedings under section 158BD not satisfied and assessments void ab initio--Not proper--Seized cash and documents requisitioned under section 132A and detailed information of accounts furnished--Assessment valid--Matter remanded-- CIT v. Mittal Consul and Co . (Delhi) . . . 163
S. 158BD --Search and seizure--Block assessment--Tribunal holding that condition precedent for initiating proceedings under section 158BD not satisfied and assessments void ab initio--Not proper--Seized cash and documents requisitioned under section 132A and detailed information of accounts furnished--Assessment valid--Matter remanded-- CIT v. Mittal Consul and Co . (Delhi) . . . 163
S. 158BE --Search and seizure--Block assessment--Draft assessment approved by Commissioner and copy of assessment order and notice of demand issued to assessee within limitation--Assessment order not containing signature of Assessing Officer--Order not invalidated--Order not barred by limitation-- CIT v. T. O. Abraham and Co. (Ker) . . . 182
S. 158BG --Search and seizure--Block assessment--Draft assessment approved by Commissioner and copy of assessment order and notice of demand issued to assessee within limitation--Assessment order not containing signature of Assessing Officer--Order not invalidated--Order not barred by limitation-- CIT v. T. O. Abraham and Co. (Ker) . . . 182
S. 263 --Revision--Commissioner--No cogent and valid reasons for coming to conclusion that assessment order was erroneous and prejudicial to interests of Revenue--Interpretation of clause (baa) of Explanation to section 80HHC--Assessing Officer taking one out of two views--Order not prejudicial to interests of Revenue--Revision not valid-- CIT v. Gokuldas Exports (Karn) . . . 214
S. 271(1)(c), Expln. 5(2) --Penalty--Concealment of income--Search and seizure--Law applicable--Effect of amendment of section 271--Search in premises of assessee--Statement by assessee disclosing details of concealed income and paying tax thereon--Assessee entitled to immunity from penalty-- CIT v. A B Kage and Co .(Karn) . . . 189
S. 292B --Search and seizure--Block assessment--Draft assessment approved by Commissioner and copy of assessment order and notice of demand issued to assessee within limitation--Assessment order not containing signature of Assessing Officer--Order not invalidated--Order not barred by limitation-- CIT v. T. O. Abraham and Co. (Ker) . . . 182
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 9 : Part 1 (Issue dated : 02-05-2011)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appellate Tribunal --Special Bench--Bound by decision of jurisdictional High Court -- Tata Communications Ltd. v. Asst. CIT [SB] (Mumbai) . . . 1
Appeal to Appellate Tribunal --Powers of Tribunal--Power to grant stay pending disposal of appeal--Power to extend stay beyond period of 365 days where delay not attributable to assessee--Amendment in 2008 notwithstanding--Income-tax Act, 1961, s. 254(2A), third proviso (as amended by the Finance Act, 2008, w. e. f. 1-10-2008)-- Tata Communications Ltd. v. Asst. CIT [SB] (Mumbai) . . . 1
----Special Bench--Power to consider and dispose of appeals finally--Income-tax Act, 1961, s. 255(4)-- Tata Communications Ltd. v. Asst. CIT [SB] (Mumbai) . . . 1
Bad debt --Irrecoverable interest on intercorporate deposits--Finding that assessee made best efforts to retrieve balance interest from parties but irrecoverable--Finding of fact--Income-tax Act, 1961, s. 36(1)(vii), (2)-- JSW Steel Ltd. v. Asst. CIT (Bangalore) . . . 39
Business expenditure --Deduction only on actual payment--Insertion of Explanation 3C to section 43B with retrospective effect from April 1, 1989--Application only to loans and advances and not to preference shares--Conversion of liability of interest into cumulative redeemable preference shares--Actual payment for purposes of section 43B --Income-tax Act, 1961, s. 43B, Expln. 3C -- JSW Steel Ltd. v. Asst. CIT (Bangalore) . . . 39
----Environment monitoring expenses and community development expenses--Expenditure on replacement of electricity meters--Head office expenses--Allowable--Income-tax Act, 1961, s. 37-- Reliance Infrastructure Ltd. v. Addl. CIT (Mumbai) . . . 84
Business income --Income from sale of units of mutual fund and securities--Considered as business income in previous years--To be considered as business income in present year--Income-tax Act, 1961, s. 28-- Reliance Infrastructure Ltd. v. Addl. CIT (Mumbai) . . . 84
Business loss --Advance for acquisition of capital asset--Non-recoverability of partial advance--Genuineness of claim of write off--No sufficient opportunity to put forth assessee's view either before Assessing Officer or Commissioner (Appeals)--Matter remanded--Income-tax Act, 1961-- JSW Steel Ltd. v. Asst. CIT (Bangalore) . . . 39
Capital gains --Sale of majority shares in group company--That company holding landed property purchased in same year--Sale of shares in effect sale of property--Colourable device to evade payment of taxation on short-term capital gains--Surplus arising on sale of shares as short-term capital gains liable for taxation--Income-tax Act, 1961, s. 10(38)-- Bhoruka Engineering Industries Ltd. v. Deputy CIT (Bangalore) . . . 75
Capital gains or business income --Sale of shares--Surplus fund invested in shares--Assessee disclosing profit from investment in shares as long-term capital gains in previous years as well as subsequent years--Profit from sale of shares assessable as capital gains--Income-tax Act, 1961, s. 45-- Nidhi Dyeing and Printing Mills P. Ltd. v. ITO (Ahmedabad) . . . 65
Depreciation --Goodwill--Amalgamation of companies--No specific sum paid for goodwill of transferor company--No cost incurred by assessee--Mere entry in books of account--Depreciation not allowable--Income-tax Act, 1961, s. 32-- Chowgule and Co. P. Ltd. v. Asst. CIT (Panaji) . . . 21
Income from other sources --Interest income--Surplus business funds deployed to earn interest income--Is income from other sources--Income-tax Act, 1961, s. 56-- Reliance Infrastructure Ltd. v. Addl. CIT (Mumbai) . . . 84
Industrial undertaking --Special deduction--Income from generation of electricity--Mode of computation for deduction--Tariff fixed by Regulatory Commission--Not reflecting true rates with regard to activity of generation of power--Not necessary of deviate from regular mode of computation having regard to consumer selling price--Income-tax Act, 1961, s. 80-IA-- Reliance Infrastructure Ltd. v. Addl. CIT (Mumbai) . . . 84
Rectification of mistakes --Condition precedent--Mistake must be obvious--Lease of property found to be sham--Addition made to annual value of property--Application for rectification granting credit for tax paid by lessee--Question debatable--Credit could not be given in rectification proceedings--Income-tax Act, 1961, s. 154-- Sahney Kirkwood P. Ltd. v. Deputy CIT (Mumbai) . . . 57
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 10(38) --Capital gains--Sale of majority shares in group company--That company holding landed property purchased in same year--Sale of shares in effect sale of property--Colourable device to evade payment of taxation on short-term capital gains--Surplus arising on sale of shares as short-term capital gains liable for taxation-- Bhoruka Engineering Industries Ltd. v. Deputy CIT (Bangalore) . . . 75
S. 28 --Business income--Income from sale of units of mutual fund and securities--Considered as business income in previous years--To be considered as business income in present year-- Reliance Infrastructure Ltd. v. Addl. CIT (Mumbai) . . . 84
S. 32 --Depreciation--Goodwill--Amalgamation of companies--No specific sum paid for goodwill of transferor company--No cost incurred by assessee--Mere entry in books of account--Depreciation not allowable-- Chowgule and Co. P. Ltd. v. Asst. CIT (Panaji) . . . 21
S. 36(1)(vii) --Bad debt--Irrecoverable interest on intercorporate deposits--Finding that assessee made best efforts to retrieve balance interest from parties but irrecoverable--Finding of fact-- JSW Steel Ltd. v. Asst. CIT (Bangalore) . . . 39
S. 36(1)(2) --Bad debt--Irrecoverable interest on intercorporate deposits--Finding that assessee made best efforts to retrieve balance interest from parties but irrecoverable--Finding of fact-- JSW Steel Ltd. v. Asst. CIT (Bangalore) . . . 39
S. 37 --Business expenditure--Environment monitoring expenses and community development expenses--Expenditure on replacement of electricity meters--Head office expenses--Allowable-- Reliance Infrastructure Ltd. v. Addl. CIT (Mumbai) . . . 84
S. 43B, Expln. 3C --Business expenditure--Deduction only on actual payment--Insertion of Explanation 3C to section 43B with retrospective effect from April 1, 1989--Application only to loans and advances and not to preference shares--Conversion of liability of interest into cumulative redeemable preference shares--Actual payment for purposes of section 43B-- JSW Steel Ltd. v. Asst. CIT (Bangalore) . . . 39
S. 45 --Capital gains or business income--Sale of shares--Surplus fund invested in shares--Assessee disclosing profit from investment in shares as long-term capital gains in previous years as well as subsequent years--Profit from sale of shares assessable as capital gains-- Nidhi Dyeing and Printing Mills P. Ltd. v. ITO (Ahmedabad) . . . 65
S. 56 --Income from other sources--Interest income--Surplus business funds deployed to earn interest income--Is income from other sources-- Reliance Infrastructure Ltd. v. Addl. CIT (Mumbai) . . . 84
S. 80-IA --Industrial undertaking--Special deduction--Income from generation of electricity--Mode of computation for deduction--Tariff fixed by Regulatory Commission--Not reflecting true rates with regard to activity of generation of power--Not necessary of deviate from regular mode of computation having regard to consumer selling price-- Reliance Infrastructure Ltd. v. Addl. CIT (Mumbai) . . . 84
S. 154 --Rectification of mistakes--Condition precedent--Mistake must be obvious--Lease of property found to be sham--Addition made to annual value of property--Application for rectification granting credit for tax paid by lessee--Question debatable--Credit could not be given in rectification proceedings-- Sahney Kirkwood P. Ltd. v. Deputy CIT (Mumbai) . . . 57
S. 254(2A) , third proviso (as amended by the Finance Act, 2008, w. e. f. 1-10-2008)--Appeal to Appellate Tribunal--Powers of Tribunal--Power to grant stay pending disposal of appeal--Power to extend stay beyond period of 365 days where delay not attributable to assessee--Amendment in 2008 notwithstanding-- Tata Communications Ltd. v. Asst. CIT [SB] (Mumbai) . . . 1
S. 255(4) --Appeal to Appellate Tribunal--Special Bench--Power to consider and dispose of appeals finally-- Tata Communications Ltd. v. Asst. CIT [SB] (Mumbai) . . . 1
CA. RAJU SHAH
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