ITR (TRIB) VOL 9 PART 4

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

Volume 9 : Part 4 (Issue dated : 23-05-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Accounting --Valuation of stock--Purchase of securities--Stock-in-trade--Valuation --Profit on revaluation of securities--Taxable on substantive basis--Income-tax Act, 1961-- Joint CIT v. Dena Bank (Mumbai) . . . 327

Appeal to Commissioner (Appeals) --Appealable orders--Meaning of "amount of tax determined"--Expression covers sum as finally determined after adjustment of advance tax, TDS and withheld tax--Assessing Officer not considering withheld tax under section 90/91--Appeal from order competent--Income-tax Act, 1961, s. 246A(1)(a)-- Capgemini Business Services (India) Ltd. v. Deputy CIT (Mumbai) . . . 391

Bad debts --Writing off--Deduction on account of provision for non-rural debts allowed only to extent of debts actually written off--Deduction for bad debts allowable provided debited to profit and loss account and then reduced in balance-sheet--Assessee complying with requirements under section 36(1)(viia)--Deduction for bad debts to be allowed--Income-tax Act, 1961, s. 36(1)(viia)-- Joint CIT v. Dena Bank (Mumbai) . . . 327

Business expenditure --Amortisation of expenses for increasing share capital--Matter not considered--Remanded--Income-tax Act, 1961, s. 35D-- Joint CIT v. Dena Bank (Mumbai) . . . 327

----Bank--Purchase of securities--Interest for broken period--Securities current assets of assessee--Broken period interest deductible--Income-tax Act, 1961, s. 37-- Joint CIT v. Dena Bank (Mumbai) . . . 327

----Company--Disallowance of expenditure--Expenditure on vehicles and telephones by directors and officials could not be disallowed--Income-tax Act, 1961, s. 37-- Ramkishin Textiles P. Ltd. v. ITO (Mumbai) . . . 321

----Disallowance--Entertainment expenses-- Tribunal in earlier year holding 40 per cent. of total expenses not in nature of entertainment expenses--To be followed--Income-tax Act, 1961-- Joint CIT v. Dena Bank (Mumbai) . . . 327

Capital gains --Short-term or long-term capital gains--Purchase and sale of shares in dematerialised form--Effect of CBDT Circular No. 768 dated 24-2-1998--Period of holding of shares prior to transfer--Link between sale of shares with corresponding purchase made earlier must be found--Matter remanded--Income-tax Act, 1961, s. 45 --Circular No. 704 dated 20-4-1995 and 768 dated 24-6-1998-- ITO v. Deepchan G. Shah (Mumbai) . . . 360

Cash credits --Deposits in bank account of assessee--Assessee must be given opportunity to produce cash book for verification--Matter remanded--Income-tax Act, 1961, s. 68-- Batra Gulati Hotels v. ITO (Mumbai) . . . 345

Closing stock --Valuation of--Assessee adopting weighted average value method--Commissioner (Appeals) not examining whether such method an accepted method of valuation mandated by AS-2--Matter remanded--Income-tax Act, 1961-- Asst. CIT v. UE Trade Corporation (India) P. Ltd. (Delhi) . . . 400

Deduction --Depreciation in value of securities held as stock- in-trade--Assessee following "cost or market price whichever is less"--To be considered at market value--Income-tax Act, 1961-- Joint CIT v. Dena Bank (Mumbai) . . . 327

Deduction of tax at source --Interest under section 201(1A)--Assessing Officer while framing assessment under section 143(3) cannot charge interest under section 201(1A)--Income-tax Act, 1961, s. 201(1A)-- Joint CIT v. Dena Bank (Mumbai) . . . 327

Expenditure relating to exempted income --Interest received on tax-free securities--Matter remanded--Income-tax Act, 1961, s. 14A-- Joint CIT v. Dena Bank (Mumbai) . . . 327

Income from house property --Business--Income from other sources--Lease of hotel building with furniture and fixtures--Lease for a long period--Assessee not in hotel business--Income from lease of building assessable as income form house property --Income from lease of furniture and fixtures assessable as income from other sources--Income-tax Act, 1961, ss. 23, 28, 56-- Batra Gulati Hotels v. ITO (Mumbai) . . . 345

Intercorporate dividend --Special deduction--Computation of dividends--Reducing direct expenses from gross dividend--Matter remanded--Income-tax Act, 1961, s. 80M -- Joint CIT v. Dena Bank (Mumbai) . . . 327

Interest on borrowed capital --Borrowed capital advanced interest-free to sister concern--Interest not paid when loans were taken from sister concern--Transaction commercially expedient--Interest deductible--Income-tax Act, 1961, s. 36(1)(iii)-- Ramkishin Textiles P. Ltd. v. ITO (Mumbai) . . . 321

International transactions --Transfer pricing--Arm's length price--Exception under provisos to section 92C(2) applicable only when more than one price determined--Where only one price determined, option of five per cent. not available to assessee--Evaluation of each transaction separately--Permissible--Assessing Officer entitled to determine arm's length price without reference to Transfer Pricing Officer--Income-tax Act, 1961, s. 92C(2)--Circular No. 12, dated 23-8-2001-- Asst. CIT v. UE Trade Corporation (India) P. Ltd. (Delhi) . . . 400

Loss --Forward foreign exchange contract--Matter remanded-- Joint CIT v. Dena Bank (Mumbai) . . . 327

Revision --Depreciation--Non-exclusion of value of land for purpose of grant of depreciation against statutory provision--Assessment order erroneous and prejudicial to interests of Revenue--Income-tax Act, 1961, ss. 32, 263-- Vashti Management Services P. Ltd. v. ITO (Delhi) . . . 372

----Rental income--Assessment as business income in earlier years--View taken by Assessing Officer a possible view--No records to prove contrary--Assessment order not erroneous and prejudicial to interests of Revenue--Income-tax Act, 1961, s. 263-- Vashti Management Services P. Ltd. v. ITO (Delhi) . . . 372

----Set-off of profit earned on transfer of depreciable assets--Assessing Officer not examining nature of income--Assessment order erroneous and prejudicial to interests of Revenue--Income-tax Act, 1961, ss. 41(2), 50(2), 263-- Vashti Management Services P. Ltd. v. ITO (Delhi) . . . 372

----Set-off of speculation loss against business income--Losses classified as business losses and not speculative losses in earlier years--Assessment order not erroneous and prejudicial to interests of Revenue--Income-tax Act, 1961, ss. 73(1), 263.-- Vashti Management Services P. Ltd. v. ITO (Delhi) . . . 372

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 14A --Expenditure relating to exempted income--Interest received on tax-free securities--Matter remanded-- Joint CIT v. Dena Bank (Mumbai) . . . 327

S. 23 --Income from house property--Business--Income from other sources--Lease of hotel building with furniture and fixtures--Lease for a long period--Assessee not in hotel business--Income from lease of building assessable as income form house property --Income from lease of furniture and fixtures assessable as income from other sources-- Batra Gulati Hotels v. ITO (Mumbai) . . . 345

S. 28 --Income from house property--Business--Income from other sources--Lease of hotel building with furniture and fixtures--Lease for a long period--Assessee not in hotel business--Income from lease of building assessable as income form house property --Income from lease of furniture and fixtures assessable as income from other sources-- Batra Gulati Hotels v. ITO (Mumbai) . . . 345

S. 32 --Revision--Depreciation--Non-exclusion of value of land for purpose of grant of depreciation against statutory provision--Assessment order erroneous and prejudicial to interests of Revenue-- Vashti Management Services P. Ltd. v. ITO (Delhi) . . . 372

S. 35D --Business expenditure--Amortisation of expenses for increasing share capital--Matter not considered--Remanded-- Joint CIT v. Dena Bank (Mumbai) . . . 327

S. 36(1)(iii) --Interest on borrowed capital--Borrowed capital advanced interest-free to sister concern--Interest not paid when loans were taken from sister concern--Transaction commercially expedient--Interest deductible-- Ramkishin Textiles P. Ltd. v. ITO (Mumbai) . . . 321

S. 36(1)(viia) --Bad debts--Writing off--Deduction on account of provision for non-rural debts allowed only to extent of debts actually written off--Deduction for bad debts allowable provided debited to profit and loss account and then reduced in balance-sheet--Assessee complying with requirements under section 36(1)(viia)--Deduction for bad debts to be allowed-- Joint CIT v. Dena Bank (Mumbai) . . . 327

S. 37 --Business expenditure--Bank--Purchase of securities--Interest for broken period--Securities current assets of assessee--Broken period interest deductible-- Joint CIT v. Dena Bank (Mumbai) . . . 327

----Business expenditure--Company--Disallowance of expenditure--Expenditure on vehicles and telephones by directors and officials could not be disallowed-- Ramkishin Textiles P. Ltd. v. ITO (Mumbai) . . . 321

S. 41(2) --Revision--Set-off of profit earned on transfer of depreciable assets--Assessing Officer not examining nature of income--Assessment order erroneous and prejudicial to interests of Revenue-- Vashti Management Services P. Ltd. v. ITO (Delhi) . . . 372

S. 45 --Capital gains--Short-term or long-term capital gains--Purchase and sale of shares in dematerialised form--Effect of CBDT Circular No. 768 dated 24-2-1998--Period of holding of shares prior to transfer--Link between sale of shares with corresponding purchase made earlier must be found--Matter remanded--Circular No. 704 dated 20-4-1995 and 768 dated 24-6-1998-- ITO v. Deepchan G. Shah (Mumbai) . . . 360

S. 50(2) --Revision--Set-off of profit earned on transfer of depreciable assets--Assessing Officer not examining nature of income--Assessment order erroneous and prejudicial to interests of Revenue-- Vashti Management Services P. Ltd. v. ITO (Delhi) . . . 372

S. 56 --Income from house property--Business--Income from other sources--Lease of hotel building with furniture and fixtures--Lease for a long period--Assessee not in hotel business--Income from lease of building assessable as income form house property --Income from lease of furniture and fixtures assessable as income from other sources-- Batra Gulati Hotels v. ITO (Mumbai) . . . 345

S. 68 --Cash credits--Deposits in bank account of assessee--Assessee must be given opportunity to produce cash book for verification--Matter remanded-- Batra Gulati Hotels v. ITO (Mumbai) . . . 345

S. 73(1) --Revision--Set-off of speculation loss against business income--Losses classified as business losses and not speculative losses in earlier years--Assessment order not erroneous and prejudicial to interests of Revenue-- Vashti Management Services P. Ltd. v. ITO (Delhi) . . . 372

S. 80M --Intercorporate dividend--Special deduction--Computation of dividends--Reducing direct expenses from gross dividend--Matter remanded-- Joint CIT v. Dena Bank (Mumbai) . . . 327

S. 92C(2) --International transactions--Transfer pricing--Arm's length price--Exception under provisos to section 92C(2) applicable only when more than one price determined--Where only one price determined, option of five per cent. not available to assessee--Evaluation of each transaction separately--Permissible--Assessing Officer entitled to determine arm's length price without reference to Transfer Pricing Officer--Circular No. 12, dated 23-8-2001-- Asst. CIT v. UE Trade Corporation (India) P. Ltd. (Delhi) . . . 400

S. 201(1A) --Deduction of tax at source--Interest under section 201(1A)--Assessing Officer while framing assessment under section 143(3) cannot charge interest under section 201(1A)-- Joint CIT v. Dena Bank (Mumbai) . . . 327

S. 246A(1)(a) --Appeal to Commissioner (Appeals)--Appealable orders--Meaning of "amount of tax determined"--Expression covers sum as finally determined after adjustment of advance tax, TDS and withheld tax--Assessing Officer not considering withheld tax under section 90/91--Appeal from order competent-- Capgemini Business Services (India) Ltd. v. Deputy CIT (Mumbai) . . . 391

S. 263 --Revision--Depreciation--Non-exclusion of value of land for purpose of grant of depreciation against statutory provision--Assessment order erroneous and prejudicial to interests of Revenue-- Vashti Management Services P. Ltd. v. ITO (Delhi) . . . 372

----Revision--Rental income--Assessment as business income in earlier years--View taken by Assessing Officer a possible view--No records to prove contrary--Assessment order not erroneous and prejudicial to interests of Revenue-- Vashti Management Services P. Ltd. v. ITO (Delhi) . . . 372

----Revision--Set-off of profit earned on transfer of depreciable assets--Assessing Officer not examining nature of income--Assessment order erroneous and prejudicial to interests of Revenue-- Vashti Management Services P. Ltd. v. ITO (Delhi) . . . 372

----Revision--Set-off of speculation loss against business income--Losses classified as business losses and not speculative losses in earlier years--Assessment order not erroneous and prejudicial to interests of Revenue-- Vashti Management Services P. Ltd. v. ITO (Delhi) . . . 372

 

CA.RAJU SHAH

ITR VOL 333 PART 3 AND ITR (TRIB) VOL 9 PART 2

INCOME TAX REPORTS (ITR)

Volume 333 : Part 3 (Issue dated 9-5-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Appeal to Appellate Tribunal --Notice--Service of notice--Assessee intimating change of address--Notice informing date of hearing sent to old address and returned with endorsement addressee not found--Appeal dismissed for absence of assessee--Breach of natural justice--Order dismissing appeal to be set aside--Matter remanded--Income-tax Act, 1961-- Jagjivandas Nandlal and Co. v. ITAT (Bom) . . . 374

----Powers of Tribunal--Question whether sales were genuine considered by Assessing Officer and Commissioner (Appeals)--Tribunal could not reduce sale price--Income-tax Act, 1961, s. 254-- S. A. Rahim v. CIT (AP) . . . 379

Assessment --Best judgment assessment--Notice under section 148--Opportunity given to assessee to file objections and time therefore extended--Failure to produce material particulars--Best judgment assessment not void ab initio--Income-tax Act, 1961, s. 144-- V. Lakshmi Reddy v. ITO (Mad) . . . 359

----Special audit--Scope of section 142(2A)--Assessing Officer has power to specify period for audit report--Assessing Officer can extend period on request by auditor--Income-tax Act, 1961, s. 142(2A)-- CIT v. Popular Automobiles (Ker) . . . 308

Business expenditure --Deduction only an actual payment--Law applicable--Proviso to section 43B applicable with retrospective effect--Sales tax collected in March 1985 and paid in April 1985--Amount was deductible--Income-tax Act, 1961, s. 43B-- CIT v. P. Glass Works (All) . . . 355

Capital gains --Computation--Expenditure incurred for rectifying defects in title to property and removing encumbrance to transfer--Assessee failing to raise issue before Tribunal--Question of law--Assessee to be given an opportunity to substantiate claim--Matter remanded--Income-tax Act, 1961, s. 48-- V. Lakshmi Reddy v. ITO (Mad) . . . 359

Capital or revenue receipt --Incentives scheme formulated by Central Government for Jammu and Kashmir to accelerate industrial development, generate employment and create opportunities for self-employment--Purpose in public interest--Excise duty refund and interest subsidy--Capital receipt--Income-tax Act, 1961, s. 80-IB-- Shree Balaji Alloys v. CIT (J&K) . . . 335

Circulars --Effect of circular-- Prasad Agents (P.) Ltd. v. ITO (Bom) . . . 275

Depreciation --Actual cost--Government subsidy not part of actual cost--Income-tax Act, 1961-- CIT v. P. Glass Works (All) . . . 355

----Rate of depreciation--Generator--Not entitled to depreciation at 20 per cent.--No dispute regarding depreciation at 15 per cent. allowed by Assessing Officer--Rate could not be reduced by High Court--Income-tax Act, 1961, s. 256-- CIT v. P. Glass Works (All) . . . 355

Exemption --Educational institution--Condition precedent--No investment of funds other than those prescribed in section 11(5) for previous three years--Investment in chit fund in accounting year preceding assessment year for which exemption sought--Denial of exemption for assessment year--Justified--Income-tax Act, 1961, ss. 10(23C)(vi), 11(5)-- Priyadarshini Educational Academy v. Director General of Income-tax (Investigation) (AP) . . . 347

Housing project --Special deduction under section 80-IB(10)--Law applicable--Restriction inserted with effect from 1-4-2005 as to permissible limit of commercial use in project--Not retrospective--Housing project approved by local authority having residential and commercial units--Prior to 1-4-2005 entire profits entitled to special deduction under section 80-IB--Income-tax Act, 1961, s. 80-IB-- CIT v. Brahma Associates (Bom) . . . 289

Income --Business income--Investment company taking loan and investing for long-term in shares--No communication and no claim for many years by lender and unsecured loan written back--Remission of liability--No deduction claimed in respect of loan--Not income--Income-tax Act, 1961, s. 41(1)-- Logitronics P. Ltd. v. CIT (Delhi) . . . 386

----Business income--Waiver of loan taken by assessee for business activity--Assessable as business income--Income-tax Act, 1961, ss. 2(24), 28(iv), 41(1)-- Logitronics P. Ltd . v. CIT (Delhi) . . . 386

Industrial undertaking --Special deduction under section 80-IB--Assessee not claiming deduction for initial years--Does not disentitle assessee to claim benefit for remaining years if conditions are satisfied--Income-tax Act, 1961, s. 80-IB-- Praveen Soni v. CIT (Delhi) . . . 324

----Special deduction under section 80-IB--Registration under Industries (Development and Regulation) Act, 1951 not a condition for treating assessee as small scale industrial undertaking--Assessee fulfilling eligibility conditions stipulated in notification issued under section 11B of 1951 Act--Assessee entitled to benefit under section 80-IB--Income-tax Act, 1961, s. 80-IB--Industries (Development and Regulation) Act, 1951, s. 11B--Notification dated 10-12-1997-- Praveen Soni v. CIT (Delhi) . . . 324

Loss --Speculation business--Law applicable--Effect of amendment of section 73 by Taxation Laws (Amendment) Act 1975--Business of company consisting of purchase and sale of shares--Company deemed to be carrying on speculation business--No transaction of purchase and sale of shares in accounting year--Loss in book value of shares constitutes loss in speculation business--Income-tax Act, 1961, s. 73-- Prasad Agents (P.) Ltd . v. ITO (Bom) . . . 275

Precedent --Effect of decisions of Supreme Court in Allied Motors P. Ltd. v. CIT [1997] 224 ITR 677 and CIT v. P. J. Chemicals Ltd. [1994] 210 ITR 830-- CIT v. P. Glass Works (All) . . . 355

Presumptive tax --Foreign company engaged in turnkey projects--Deemed profit and gains--Section 44BBB applicable--Income-tax Act, 1961, s. 44BBB-- DIT v. DSD Noell GmbH (Delhi) . . . 304

Reassessment --Notice after four years--Conditions precedent--Failure to disclose material facts necessary for assessment--Income allegedly escaping assessment should not be subject-matter of appeal, reference or revision--No failure to disclose material facts necessary for assessment--Income allegedly escaping assessment subject-matter of appeal--Reassessment proceedings--Not valid--Income-tax Act, 1961, s. 147-- Pra-shant Projects Ltd . v. Asst. CIT (Bom) . . . 368

Search and seizure --Block assessment--Assessment of third person--Search in premises of managing partner--Same Assessing Officer having jurisdiction over managing partner and firm--Notice to firm under section 158BD read with 158BC--Assessing Officer need not record reasons--Block assessment of firm valid--Income-tax Act, 1961, ss. 158BC, 158BD-- CIT v. Panchajanyam Management Agencies and Services (Ker) . . . 281

----Block assessment--Block assessment of third person--Conditions precedent--Satisfaction of Assessing Officer that undisclosed income discovered during search belonged to third person--Satisfaction must be recorded--Finding regarding undisclosed income must be based on books or documents recovered in search--No satisfaction recorded--Mere statement of third person--Proceedings under section 158BD--Not valid--Income-tax Act, 1961, s. 158BD-- CIT v. Raj Pal Bhatia (Late) (Delhi) . . . 315

----Conditions precedent--Reasons for search--Assessee, a unit in special economic zone--Prima facie case made out against search--Assessee entitled to know reasons for search--Income-tax Act, 1961, s. 132-- MD Overseas Ltd . v. Director General of Income-tax (All) . . . 407

----Information regarding search--Right to Information Act not applicable--Income-tax Act, 1961, s. 132--Right to Information Act, 2005-- MD Overseas Ltd . v. Director General of Income-tax (All) . . . 407

----Jurisdiction to authorise search--Assessee having several businesses elsewhere and a warehouse in Noida--Director of Income-tax, Kanpur had jurisdiction to authorise search--Income-tax Act, 1961, s. 132-- MD Overseas Ltd. v. Director General of Income-tax (All) . . . 407

----Special Economic Zones Act--Law applicable--Search in SEZ area in September 2009--Section 22 of SEZ Act not applicable--Income-tax Act, 1961, s. 132--Special Economic Zones Act, 2005, s. 22-- MD Overseas Ltd. v. Director General of Income-tax (All) . . . 407

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 2(24) --Income--Business income--Waiver of loan taken by assessee for business activity--Assessable as business income-- Logitronics P. Ltd . v. CIT (Delhi) . . . 386

S. 10(23C)(vi) --Exemption--Educational institution--Condition precedent--No investment of funds other than those prescribed in section 11(5) for previous three years--Investment in chit fund in accounting year preceding assessment year for which exemption sought--Denial of exemption for assessment year--Justified-- Priyadarshini Educational Academy v. Director General of Income-tax (Investigation) (AP) . . . 347

S. 11(5) --Exemption--Educational institution--Condition precedent--No investment of funds other than those prescribed in section 11(5) for previous three years--Investment in chit fund in accounting year preceding assessment year for which exemption sought--Denial of exemption for assessment year--Justified-- Priyadarshini Educational Academy v. Director General of Income-tax (Investigation) (AP) . . . 347

S. 28(iv) --Income--Business income--Waiver of loan taken by assessee for business activity--Assessable as business income-- Logitronics P. Ltd . v. CIT (Delhi) . . . 386

S. 41(1) --Income--Business income--Investment company taking loan and investing for long-term in shares--No communication and no claim for many years by lender and unsecured loan written back--Remission of liability--No deduction claimed in respect of loan--Not income-- Logitronics P. Ltd. v. CIT (Delhi) . . . 386

----Income--Business income--Waiver of loan taken by assessee for business activity--Assessable as business income-- Logitronics P. Ltd . v. CIT (Delhi) . . . 386

S. 43B --Business expenditure--Deduction only an actual payment--Law applicable--Proviso to section 43B applicable with retrospective effect--Sales tax collected in March 1985 and paid in April 1985--Amount was deductible-- CIT v. P. Glass Works (All) . . . 355

S. 44BBB --Presumptive tax--Foreign company engaged in turnkey projects--Deemed profit and gains--Section 44BBB applicable-- DIT v. DSD Noell GmbH (Delhi) . . . 304

S. 48 --Capital gains--Computation--Expenditure incurred for rectifying defects in title to property and removing encumbrance to transfer--Assessee failing to raise issue before Tribunal--Question of law--Assessee to be given an opportunity to substantiate claim--Matter remanded-- V. Lakshmi Reddy v. ITO (Mad) . . . 359

S. 73 --Loss--Speculation business--Law applicable--Effect of amendment of section 73 by Taxation Laws (Amendment) Act 1975--Business of company consisting of purchase and sale of shares--Company deemed to be carrying on speculation business--No transaction of purchase and sale of shares in accounting year--Loss in book value of shares constitutes loss in speculation business-- Prasad Agents (P.) Ltd . v. ITO (Bom) . . . 275

S. 80-IB --Capital or revenue receipt--Incentives scheme formulated by Central Government for Jammu and Kashmir to accelerate industrial development, generate employment and create opportunities for self-employment--Purpose in public interest--Excise duty refund and interest subsidy--Capital receipt-- Shree Balaji Alloys v. CIT (J&K) . . . 335

----Housing project--Special deduction under section 80-IB(10)--Law applicable--Restriction inserted with effect from 1-4-2005 as to permissible limit of commercial use in project--Not retrospective--Housing project approved by local authority having residential and commercial units--Prior to 1-4-2005 entire profits entitled to special deduction under section 80-IB-- CIT v. Brahma Associates (Bom) . . . 289

----Industrial undertaking--Special deduction under section 80-IB--Assessee not claiming deduction for initial years--Does not disentitle assessee to claim benefit for remaining years if conditions are satisfied-- Praveen Soni v. CIT (Delhi) . . . 324

----Industrial undertaking--Special deduction under section 80-IB--Registration under Industries (Development and Regulation) Act, 1951 not a condition for treating assessee as small scale industrial undertaking--Assessee fulfilling eligibility conditions stipulated in notification issued under section 11B of 1951 Act--Assessee entitled to benefit under section 80-IB--Notification dated 10-12-1997-- Praveen Soni v. CIT (Delhi) . . . 324

S. 132 --Search and seizure--Conditions precedent--Reasons for search--Assessee, a unit in special economic zone--Prima facie case made out against search--Assessee entitled to know reasons for search-- MD Overseas Ltd . v. Director General of Income-tax (All) . . . 407

----Search and seizure--Information regarding search--Right to Information Act not applicable-- MD Overseas Ltd . v. Director General of Income-tax (All) . . . 407

----Search and seizure--Jurisdiction to authorise search--Assessee having several businesses elsewhere and a warehouse in Noida--Director of Income-tax, Kanpur had jurisdiction to authorise search-- MD Overseas Ltd. v. Director General of Income-tax (All) . . . 407

----Search and seizure--Special Economic Zones Act--Law applicable--Search in SEZ area in September 2009--Section 22 of SEZ Act not applicable-- MD Overseas Ltd. v. Director General of Income-tax (All) . . . 407

S. 142(2A) --Assessment--Special audit--Scope of section 142(2A)--Assessing Officer has power to specify period for audit report--Assessing Officer can extend period on request by auditor-- CIT v. Popular Automobiles (Ker) . . . 308

S. 144 --Assessment--Best judgment assessment--Notice under section 148--Opportunity given to assessee to file objections and time therefore extended--Failure to produce material particulars--Best judgment assessment not void ab initio-- V. Lakshmi Reddy v. ITO (Mad) . . . 359

S. 147 --Reassessment--Notice after four years--Conditions precedent--Failure to disclose material facts necessary for assessment--Income allegedly escaping assessment should not be subject-matter of appeal, reference or revision--No failure to disclose material facts necessary for assessment--Income allegedly escaping assessment subject-matter of appeal--Reassessment proceedings--Not valid-- Prashant Projects Ltd . v. Asst. CIT (Bom) . . . 368

S. 158BC --Search and seizure--Block assessment--Assessment of third person--Search in premises of managing partner--Same Assessing Officer having jurisdiction over managing partner and firm--Notice to firm under section 158BD read with 158BC--Assessing Officer need not record reasons--Block assessment of firm valid-- CIT v. Panchajanyam Management Agencies and Services (Ker) . . . 281

S. 158BD --Search and seizure--Block assessment--Assessment of third person--Search in premises of managing partner--Same Assessing Officer having jurisdiction over managing partner and firm--Notice to firm under section 158BD read with 158BC--Assessing Officer need not record reasons--Block assessment of firm valid-- CIT v. Panchajanyam Management Agencies and Services (Ker) . . . 281

----Search and seizure--Block assessment--Block assessment of third person--Conditions precedent--Satisfaction of Assessing Officer that undisclosed income discovered during search belonged to third person--Satisfaction must be recorded--Finding regarding undisclosed income must be based on books or documents recovered in search--No satisfaction recorded--Mere statement of third person--Proceedings under section 158BD--Not valid-- CIT v. Raj Pal Bhatia (Late) (Delhi) . . . 315

S. 254 --Appeal to Appellate Tribunal--Powers of Tribunal--Question whether sales were genuine considered by Assessing Officer and Commissioner (Appeals)--Tribunal could not reduce sale price-- S. A. Rahim v. CIT (AP) . . . 379

S. 256 --Depreciation--Rate of depreciation--Generator--Not entitled to depreciation at 20 per cent.--No dispute regarding depreciation at 15 per cent. allowed by Assessing Officer--Rate could not be reduced by High Court-- CIT v. P. Glass Works (All) . . . 355

Industries (Development and Regulation) Act, 1951 :

S. 11B --Industrial undertaking--Special deduction under section 80-IB--Registration under Industries (Development and Regulation) Act, 1951 not a condition for treating assessee as small scale industrial undertaking--Assessee fulfilling eligibility conditions stipulated in notification issued under section 11B of 1951 Act--Assessee entitled to benefit under section 80-IB--Notification dated 10-12-1997-- Praveen Soni v. CIT (Delhi) . . . 324

Special Economic Zones Act, 2005 :

S. 22 --Search and seizure--Special Economic Zones Act--Law applicable--Search in SEZ area in September 2009--Section 22 of SEZ Act not applicable-- MD Overseas Ltd. v. Director General of Income-tax (All) . . . 407

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

Volume 9 : Part 2 (Issue dated : 09-05-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Business expenditure --Administrative expenses--Matter remanded-- Deputy CIT v. Tata Sons Ltd. (Mumbai) . . . 154

----Overseas taxes paid by assessee--Income-tax paid abroad entitled to relief under section 90/91--Cannot be allowed as deduction under section 37--Income-tax Act, 1961, ss. 37, 40(a)(ii), 90, 91-- Deputy CIT v. Tata Sons Ltd. (Mumbai) . . . 154

Capital gains --Computation of capital gains--Exemption--Effect of section 50C and exemption provision--Gains to be computed under section 48 and fiction under section 50C to be taken into account--Exemption to be calculated without taking into consideration fiction under section 50C--Income-tax Act, 1961, ss. 45, 48, 50C, 54F--Circular No. 8, dated 27-8-2002-- Gouli Mahadevappa v. ITO (Bangalore) . . . 129

Deduction of tax at source --"Rent"--Definition--Not to be construed ejusdem generis--Emphasis on use of asset--No requirement of transfer of asset--Income-tax Act, 1961, s. 194-I, Expln. (i) -- Vodafone Essar Ltd. v. Deputy CIT (TDS) (Mumbai) . . . 182

----Assessee not in default where payees have brought income in question in computation of their income--Burden of proof--Assessee providing permanent account numbers of payees and confirmation letters from some of them--Treatment of assessee as in default placing burden of proof wholly on it--Not reasonable--Assessing Officer to verify payment of tax by payees--Income-tax Act, 1961, s. 201-- Vodafone Essar Ltd. v. Deputy CIT (TDS) (Mumbai) . . . 182

----Mobile telephone service provider--Payment to other mobile telephone service providers for national roaming facility--Whether payment for technical services--Matter remanded--Income-tax Act, 1961, s. 194J-- Vodafone Essar Ltd. v. Deputy CIT (TDS) (Mumbai) . . . 182

----Rent--Mobile telephone service provider--Payment to other mobile telephone service providers for national roaming facility--Not a payment for use of equipment--Income-tax Act, 1961, s. 194-I-- Vodafone Essar Ltd. v. Deputy CIT (TDS) (Mumbai) . . . 182

Depreciation --Actual cost--Cement units acquired by assessee in open tender--Cost of fixed assets adopted by assessee on basis of registered valuer's report--No evidence transaction a collusive one or to reduce tax liability--No clause in agreement for payment of goodwill--Difference between amount adopted by assessee and amount shown in books of seller treated as payment of goodwill--Not justified--Assessee entitled to depreciation--Income-tax Act, 1961, ss. 32, 43(1), Expln. 3 -- Lafarge India Ltd. v. Deputy CIT (Mumbai) . . . 118

Interpretation of taxing statutes --Rule of ejusdem generis-- Vodafone Essar Ltd. v. Deputy CIT (TDS) (Mumbai) . . . 182

----Rule of strict construction-- Gouli Mahadevappa v. ITO (Bangalore) . . . 129

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 32 --Depreciation--Actual cost--Cement units acquired by assessee in open tender --Cost of fixed assets adopted by assessee on basis of registered valuer's report--No evidence transaction a collusive one or to reduce tax liability--No clause in agreement for payment of goodwill--Difference between amount adopted by assessee and amount shown in books of seller treated as payment of goodwill--Not justified--Assessee entitled to depreciation-- Lafarge India Ltd. v. Deputy CIT (Mumbai) . . . 118

S. 37 --Business expenditure--Overseas taxes paid by assessee--Income-tax paid abroad entitled to relief under section 90/91--Cannot be allowed as deduction under section 37-- Deputy CIT v. Tata Sons Ltd. (Mumbai) . . . 154

S. 40(a)(ii) --Business expenditure--Overseas taxes paid by assessee--Income-tax paid abroad entitled to relief under section 90/91--Cannot be allowed as deduction under section 37-- Deputy CIT v. Tata Sons Ltd. (Mumbai) . . . 154

S. 43(1), Expln. 3 --Depreciation--Actual cost--Cement units acquired by assessee in open tender--Cost of fixed assets adopted by assessee on basis of registered valuer's report--No evidence transaction a collusive one or to reduce tax liability--No clause in agreement for payment of goodwill--Difference between amount adopted by assessee and amount shown in books of seller treated as payment of goodwill--Not justified--Assessee entitled to depreciation-- Lafarge India Ltd. v. Deputy CIT (Mumbai) . . . 118

S. 45 --Capital gains--Computation of capital gains--Exemption--Effect of section 50C and exemption provision--Gains to be computed under section 48 and fiction under section 50C to be taken into account--Exemption to be calculated without taking into consideration fiction under section 50C--Circular No. 8, dated 27-8-2002-- Gouli Mahadevappa v. ITO (Bangalore) . . . 129

S. 48 --Capital gains--Computation of capital gains--Exemption--Effect of section 50C and exemption provision--Gains to be computed under section 48 and fiction under section 50C to be taken into account--Exemption to be calculated without taking into consideration fiction under section 50C--Circular No. 8, dated 27-8-2002-- Gouli Mahadevappa v. ITO (Bangalore) . . . 129

S. 50C --Capital gains--Computation of capital gains--Exemption--Effect of section 50C and exemption provision--Gains to be computed under section 48 and fiction under section 50C to be taken into account--Exemption to be calculated without taking into consideration fiction under section 50C--Circular No. 8, dated 27-8-2002-- Gouli Mahadevappa v. ITO (Bangalore) . . . 129

S. 54F --Capital gains--Computation of capital gains--Exemption--Effect of section 50C and exemption provision--Gains to be computed under section 48 and fiction under section 50C to be taken into account--Exemption to be calculated without taking into consideration fiction under section 50C--Circular No. 8, dated 27-8-2002-- Gouli Mahadevappa v. ITO (Bangalore) . . . 129

S. 90 --Business expenditure--Overseas taxes paid by assessee--Income-tax paid abroad entitled to relief under section 90/91--Cannot be allowed as deduction under section 37-- Deputy CIT v. Tata Sons Ltd. (Mumbai) . . . 154

S. 91 --Business expenditure--Overseas taxes paid by assessee--Income-tax paid abroad entitled to relief under section 90/91--Cannot be allowed as deduction under section 37-- Deputy CIT v. Tata Sons Ltd. (Mumbai) . . . 154

S. 194-I --Deduction of tax at source--Rent--Mobile telephone service provider--Payment to other mobile telephone service providers for national roaming facility--Not a payment for use of equipment-- Vodafone Essar Ltd. v. Deputy CIT (TDS) (Mumbai) . . . 182

S. 194-I, Expln. (i) --Deduction of tax at source--"Rent"--Definition--Not to be construed ejusdem generis--Emphasis on use of asset--No requirement of transfer of asset-- Vodafone Essar Ltd. v. Deputy CIT (TDS) (Mumbai) . . . 182

S. 194J --Deduction of tax at source--Mobile telephone service provider--Payment to other mobile telephone service providers for national roaming facility--Whether payment for technical services--Matter remanded-- Vodafone Essar Ltd. v. Deputy CIT (TDS) (Mumbai) . . . 182

S. 201 --Deduction of tax at source--Assessee not in default where payees have brought income in question in computation of their income--Burden of proof--Assessee providing permanent account numbers of payees and confirmation letters from some of them--Treatment of assessee as in default placing burden of proof wholly on it--Not reasonable--Assessing Officer to verify payment of tax by payees-- Vodafone Essar Ltd. v. Deputy CIT (TDS) (Mumbai) . . . 182

CA.RAJU SHAH

ITR VOL 333 PART 4 AND ITR (TRIB) VOL 9 PART 3

INCOME TAX REPORTS (ITR)

Volume 333 : Part 4 (Issue dated 16-5-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Salaries --Duty to deduct estimated tax and pay to authority--Failure to deduct and pay--Attracts penalty of amount equal to tax--Income-tax Act, 1961, ss. 192, 200, 206, 271C, 276B, 276BB-- Rajeswar Tiwari v. Nanda Kishore Roy . . . 534

High Court --Matter of civil nature--Prosecution wrongly laid--Application by accused for relief--High Court ought to interfere by using inherent powers to prevent abuse of process--Indian Penal Code, 1860, ss. 120B, 406--Code of Criminal Procedure, 1973, ss. 200, 482-- Rajeswar Tiwari v. Nanda Kishore Roy . . . 534

HIGH COURTS

Advance tax --Interest--Condition precedent--Default by assessee in estimating income and paying tax in accordance with law as on date of payment of advance tax--Assessee claiming exemption in respect of capital gains on sale of shares to holding company--Return found defective and assessee filing corrected return--By this time holding company no longer holding company--No default at time of payment of advance tax--Interest for default not chargeable--Income-tax Act, 1961, ss. 47(v), 139(9), 234B, 292B-- Prime Securities Ltd. v. Asst. CIT (Investigation) (Bom) . . . 464

----Interest--Waiver of interest--Interest on bank deposits held to be income from other sources in assessment years 1993-94, 1994-95 and 1995-96--Refusal to waive interest justified--Claim for waiver for assessment year 1996-97 to be considered--Income-tax Act, 1961, s. 234B-- Royal Stitches P. Ltd. v. Chief CIT (Mad) . . . 523

Appeal to Appellate Tribunal --Duty of Tribunal to consider reasons for decision of Commissioner (Appeals)--Assessing Officer granting opportunity to assessee to prove genuineness of alleged gift--No proof that gift was genuine--Addition to income upheld by Commissioner (Appeals)--Tribunal not justified in remanding matter to Assessing Officer--Income-tax Act, 1961, s. 254-- CIT v. Mira S. Khurana (Guj) . . . 488

----Interest-tax--Imposition of penalty on several grounds--One ground held not tenable--Matter remanded to consider other grounds-- CIT v. H. P. State Co-operative Bank (HP) . . . 441

Bad debt --Condition precedent--Law applicable--After 1-4-1989 sufficient if debt is written off in accounts--Income-tax Act, 1961, s. 36-- CIT v. Krone Communication Ltd . (Karn) . . . 497

Capital gains --Depreciable asset--Assessee claiming depreciation on asset for 21 years and thereafter discontinuing claim--Sale of asset after two years--Profit on sale of depreciable asset is short-term capital gains--Income-tax Act, 1961, s. 50-- CIT v. Sakthi Metal Depot (Ker) . . . 492

----Sale of shares--Finding that profits on sale of shares are capital gain as shares not treated as stock-in-trade but shown under investment portfolio--Finding of fact--Income-tax Act, 1961--CBDT Circular No. 4 of 2007 dated 15-6-2007-- CIT v. Jubilant Securities P. Ltd . (Delhi) . . . 445

Export --Special deduction under section 80HHC--Computation of special deduction--Exports and domestic sales--Calculation of turnover--Scrap sales and insurance--Income from scrap sales part of business profits--Insurance receipt on loss of goods part of business profits--Matter remanded--Income-tax Act, 1961, s. 80HHC-- CIT v. Kar Mobiles Ltd . (Ker) . . . 478

----Special deduction--Computation--Excise duty and sales tax not part of turnover--90 per cent. of net commission to be taken into account in determining projects of business--Income-tax Act, 1961, s. 80HHC-- CIT v. Krone Communication Ltd. (Karn) . . . 497

Interest-tax --Penalty--Presumption against assessee in case of non-filing of return within time under Income-tax Act not applicable to income-tax proceedings--Grounds for imposition of penalty laid down in section 13 of Interest-tax Act--Interest-tax Act, 1974, ss. 13, 21--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. H. P. State Co-operative Bank (HP) . . . 441

Kar Vivad Samadhan Scheme --Declaration by assessee--Certificate issued and later amended making additions--Amendment order not determination order--No time limit specified for payment in terms of amendment order--Assessee making payment in reasonable time as per amendment orders--Assessee entitled to certificate under section 90(2)--Finance (No. 2) Act, 1998, ss. 88, 89, 90-- Sri Balaji Finance v. ITO (Mad) . . . 512

----Declaration by assessee--Certificate issued--Later designated authority finding mistake and making amendments--Not a reopening of assessment--Amendment can be made at any stage-- Finance (No. 2) Act, 1998, s. 90--Income-tax Act, 1961, s. 140A-- Sri Balaji Finance v. ITO (Mad) . . . 512

Penalty --Failure to deduct tax at source--Limitation--Order of penalty passed after expiry of six months from end of month in which show-cause notice issued--Barred by limitation--Income-tax Act, 1961, ss. 271C, 275(1)(c)-- CIT (TDS) v. Ikea Trading Hong Kong Ltd. (Delhi) . . . 565

Reassessment --Conditions precedent--Notice after four years--Based on subsequent amendment of law with retrospective effect--No dispute that there was no failure on part of assessee to disclose fully and truly all material facts--Notices invalid--Income-tax Act, 1961, ss. 147, 148-- Sadbhav Engineering Ltd . v. Deputy CIT (Guj) . . . 483

----Reassessment after four years based on audit report--Assessee disclosing truly and completely material particulars--Tribunal cancelling reassessment holding proceedings based on change of opinion--Proper--Income-tax Act, 1961, ss. 143(3), 147, 148--Circular dated 28-7-1960-- CIT v. Simbhaoli Sugar Mills Ltd . (Delhi) . . . 470

Return --Revised return--Revised return filed after intimation under section 143(1)(a) but within time limit--Duty of Assessing Officer to process--Income-tax Act, 1961, ss. 139(5), 143(1B)-- CIT v. Himgiri Foods Limited (Guj) . . . 508

Revision --Commissioner--Powers--Scope of section 263--Order of Assessing Officer in consonance with decisions of Tribunal--Revision to recompute special deduction not valid--Income-tax Act, 1961, s. 263-- CIT v. Honda Siel Power Products Ltd. (Delhi) . . . 547

Search and seizure --Assessment in search cases--Assessment of income of third person--Condition precedent for notice under section 153C--Valuable thing or document should belong to such third person--Income-tax Act, 1961, s. 153C-- Vijaybhai N. Chandrani v. Asst. CIT (Guj) . . . 436

----Block assessment--Limitation--Assessment of third person--Notice issued under section 158BC--But later fresh notice issued under correct section, section 158BD--Time for making assessment to be reckoned from first notice--Assessment barred by time--Income-tax Act, 1961, ss. 158BC, 158BD, 158BE(2)(b)-- CIT v. K. M. Gamesman (Mad) . . . 562

----Block assessment--Limitation--Last panchanama is document evidencing conclusion of actual search--Block assessment to be within two years from such date--Prohibitory order under section 132(3) in force for 60 days--Lifting prohibitory order after 60 days does not amount to continuation of search--Not to be taken into account for ascertaining date of execution of last warrant of authorisation--Income-tax Act, 1961, ss. 132, 158BE-- Rakesh Sarin v. Deputy CIT (Mad) . . . 451

Writ --Maintainability--Block assessment--Appeal before Commissioner (Appeals) against assessment on merits--Writ petition--Maintainable--Constitution of India, art. 226-- Rakesh Sarin v. Deputy CIT (Mad) . . . 451

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Code of Criminal Procedure, 1973 :

Ss. 200, 482 --High Court--Matter of civil nature--Prosecution wrongly laid--Application by accused for relief--High Court ought to interfere by using inherent powers to prevent abuse of process-- Rajeswar Tiwari v. Nanda Kishore Roy (SC) . . . 534

Constitution of India :

Art. 226 --Writ--Maintainability--Block assessment--Appeal before Commissioner (Appeals) against assessment on merits--Writ petition--Maintainable-- Rakesh Sarin v. Deputy CIT (Mad) . . . 451

Finance (No. 2) Act, 1998 :

Ss. 88, 89, 90 --Kar Vivad Samadhan Scheme--Declaration by assessee--Certificate issued and later amended making additions--Amendment order not determination order--No time limit specified for payment in terms of amendment order--Assessee making payment in reasonable time as per amendment orders--Assessee entitled to certificate under section 90(2)-- Sri Balaji Finance v. ITO (Mad) . . . 512

S. 90 --Kar Vivad Samadhan Scheme--Declaration by assessee--Certificate issued--Later designated authority finding mistake and making amendments--Not a reopening of assessment--Amendment can be made at any stage-- Sri Balaji Finance v. ITO (Mad) . . . 512

Income-tax Act, 1961 :

S. 36 --Bad debt--Condition precedent--Law applicable--After 1-4-1989 sufficient if debt is written off in accounts-- CIT v. Krone Communication Ltd .(Karn) . . . 497

S. 47(v) --Advance tax--Interest--Condition precedent--Default by assessee in estimating income and paying tax in accordance with law as on date of payment of advance tax--Assessee claiming exemption in respect of capital gains on sale of shares to holding company--Return found defective and assessee filing corrected return--By this time holding company no longer holding company--No default at time of payment of advance tax--Interest for default not chargeable-- Prime Securities Ltd. v. Asst. CIT (Investigation) (Bom) . . . 464

S. 50 --Capital gains--Depreciable asset--Assessee claiming depreciation on asset for 21 years and thereafter discontinuing claim--Sale of asset after two years--Profit on sale of depreciable asset is short-term capital gains-- CIT v. Sakthi Metal Depot (Ker) . . . 492

S. 80HHC --Export--Special deduction under section 80HHC--Computation of special deduction--Exports and domestic sales--Calculation of turnover--Scrap sales and insurance--Income from scrap sales part of business profits--Insurance receipt on loss of goods part of business profits--Matter remanded-- CIT v. Kar Mobiles Ltd . (Ker) . . . 478

----Export--Special deduction--Computation--Excise duty and sales tax not part of turnover--90 per cent. of net commission to be taken into account in determining projects of business-- CIT v. Krone Communication Ltd. (Karn) . . . 497

S. 132 --Search and seizure--Block assessment--Limitation--Last panchanama is document evidencing conclusion of actual search--Block assessment to be within two years from such date--Prohibitory order under section 132(3) in force for 60 days--Lifting prohibitory order after 60 days does not amount to continuation of search--Not to be taken into account for ascertaining date of execution of last warrant of authorisation-- Rakesh Sarin v. Deputy CIT (Mad) . . . 451

S. 139(5) --Return--Revised return--Revised return filed after intimation under section 143(1)(a) but within time limit--Duty of Assessing Officer to process-- CIT v. Himgiri Foods Limited (Guj) . . . 508

S. 139(9) --Advance tax--Interest--Condition precedent--Default by assessee in estimating income and paying tax in accordance with law as on date of payment of advance tax--Assessee claiming exemption in respect of capital gains on sale of shares to holding company--Return found defective and assessee filing corrected return--By this time holding company no longer holding company--No default at time of payment of advance tax--Interest for default not chargeable-- Prime Securities Ltd. v. Asst. CIT (Investigation) (Bom) . . . 464

S. 140A --Kar Vivad Samadhan Scheme--Declaration by assessee--Certificate issued--Later designated authority finding mistake and making amendments--Not a reopening of assessment--Amendment can be made at any stage-- Sri Balaji Finance v. ITO (Mad) . . . 512

S. 143(1B) --Return--Revised return--Revised return filed after intimation under section 143(1)(a) but within time limit--Duty of Assessing Officer to process-- CIT v. Himgiri Foods Limited (Guj) . . . 508

S. 143(3) --Reassessment--Reassessment after four years based on audit report--Assessee disclosing truly and completely material particulars--Tribunal cancelling reassessment holding proceedings based on change of opinion--Proper--Circular dated 28-7-1960-- CIT v. Simbhaoli Sugar Mills Ltd . (Delhi) . . . 470

S. 147 --Reassessment--Conditions precedent--Notice after four years--Based on subsequent amendment of law with retrospective effect--No dispute that there was no failure on part of assessee to disclose fully and truly all material facts--Notices invalid-- Sadbhav Engineering Ltd . v. Deputy CIT (Guj) . . . 483

----Reassessment--Reassessment after four years based on audit report--Assessee disclosing truly and completely material particulars--Tribunal cancelling reassessment holding proceedings based on change of opinion--Proper--Circular dated 28-7-1960-- CIT v. Simbhaoli Sugar Mills Ltd . (Delhi) . . . 470

S. 148 --Reassessment--Conditions precedent--Notice after four years--Based on subsequent amendment of law with retrospective effect--No dispute that there was no failure on part of assessee to disclose fully and truly all material facts--Notices invalid-- Sadbhav Engineering Ltd . v. Deputy CIT (Guj) . . . 483

----Reassessment--Reassessment after four years based on audit report--Assessee disclosing truly and completely material particulars--Tribunal cancelling reassessment holding proceedings based on change of opinion--Proper--Circular dated 28-7-1960-- CIT v. Simbhaoli Sugar Mills Ltd . (Delhi) . . . 470

S. 153C --Search and seizure--Assessment in search cases--Assessment of income of third person--Condition precedent for notice under section 153C--Valuable thing or document should belong to such third person-- Vijaybhai N. Chandrani v. Asst. CIT (Guj) . . . 436

S. 158BC --Search and seizure--Block assessment--Limitation--Assessment of third person--Notice issued under section 158BC--But later fresh notice issued under correct section, section 158BD--Time for making assessment to be reckoned from first notice--Assessment barred by time-- CIT v. K. M. Gamesman (Mad) . . . 562

S. 158BD --Search and seizure--Block assessment--Limitation--Assessment of third person--Notice issued under section 158BC--But later fresh notice issued under correct section, section 158BD--Time for making assessment to be reckoned from first notice--Assessment barred by time-- CIT v. K. M. Gamesman (Mad) . . . 562

S. 158BE --Search and seizure--Block assessment--Limitation--Last panchanama is document evidencing conclusion of actual search--Block assessment to be within two years from such date--Prohibitory order under section 132(3) in force for 60 days--Lifting prohibitory order after 60 days does not amount to continuation of search--Not to be taken into account for ascertaining date of execution of last warrant of authorisation-- Rakesh Sarin v. Deputy CIT (Mad) . . . 451

S. 158BE(2)(b) --Search and seizure--Block assessment--Limitation--Assessment of third person--Notice issued under section 158BC--But later fresh notice issued under correct section, section 158BD--Time for making assessment to be reckoned from first notice--Assessment barred by time-- CIT v. K. M. Gamesman (Mad) . . . 562

S. 192 --Salaries--Duty to deduct estimated tax and pay to authority--Failure to deduct and pay--Attracts penalty of amount equal to tax-- Rajeswar Tiwari v. Nanda Kishore Roy (SC) . . . 534

S. 200 --Salaries--Duty to deduct estimated tax and pay to authority--Failure to deduct and pay--Attracts penalty of amount equal to tax-- Rajeswar Tiwari v. Nanda Kishore Roy (SC) . . . 534

S. 206 --Salaries--Duty to deduct estimated tax and pay to authority--Failure to deduct and pay--Attracts penalty of amount equal to tax-- Rajeswar Tiwari v. Nanda Kishore Roy (SC) . . . 534

S. 234B --Advance tax--Interest--Condition precedent--Default by assessee in estimating income and paying tax in accordance with law as on date of payment of advance tax--Assessee claiming exemption in respect of capital gains on sale of shares to holding company--Return found defective and assessee filing corrected return--By this time holding company no longer holding company--No default at time of payment of advance tax--Interest for default not chargeable-- Prime Securities Ltd. v. Asst. CIT (Investigation) (Bom) . . . 464

----Advance tax--Interest--Waiver of interest--Interest on bank deposits held to be income from other sources in assessment years 1993-94, 1994-95 and 1995-96--Refusal to waive interest justified--Claim for waiver for assessment year 1996-97 to be considered-- Royal Stitches P. Ltd. v. Chief CIT (Mad) . . . 523

S. 254 --Appeal to Appellate Tribunal--Duty of Tribunal to consider reasons for decision of Commissioner (Appeals)--Assessing Officer granting opportunity to assessee to prove genuineness of alleged gift--No proof that gift was genuine--Addition to income upheld by Commissioner (Appeals)--Tribunal not justified in remanding matter to Assessing Officer-- CIT v. Mira S. Khurana (Guj) . . . 488

S. 263 --Revision--Commissioner--Powers--Scope of section 263--Order of Assessing Officer in consonance with decisions of Tribunal--Revision to recompute special deduction not valid-- CIT v. Honda Siel Power Products Ltd. (Delhi) . . . 547

S. 271(1)(c) --Interest-tax--Penalty--Presumption against assessee in case of non-filing of return within time under Income-tax Act not applicable to income-tax proceedings--Grounds for imposition of penalty laid down in section 13 of Interest-tax Act-- CIT v. H. P. State Co-operative Bank (HP) . . . 441

S. 271C --Penalty--Failure to deduct tax at source--Limitation--Order of penalty passed after expiry of six months from end of month in which show-cause notice issued--Barred by limitation-- CIT (TDS) v. Ikea Trading Hong Kong Ltd. (Delhi) . . . 565

----Salaries--Duty to deduct estimated tax and pay to authority--Failure to deduct and pay--Attracts penalty of amount equal to tax-- Rajeswar Tiwari v. Nanda Kishore Roy (SC) . . . 534

S. 275(1)(c) --Penalty--Failure to deduct tax at source--Limitation--Order of penalty passed after expiry of six months from end of month in which show-cause notice issued--Barred by limitation-- CIT (TDS) v. Ikea Trading Hong Kong Ltd. (Delhi) . . . 565

S. 276B --Salaries--Duty to deduct estimated tax and pay to authority--Failure to deduct and pay--Attracts penalty of amount equal to tax-- Rajeswar Tiwari v. Nanda Kishore Roy (SC) . . . 534

S. 276BB --Salaries--Duty to deduct estimated tax and pay to authority--Failure to deduct and pay--Attracts penalty of amount equal to tax-- Rajeswar Tiwari v. Nanda Kishore Roy (SC) . . . 534

S. 292B --Advance tax--Interest--Condition precedent--Default by assessee in estimating income and paying tax in accordance with law as on date of payment of advance tax--Assessee claiming exemption in respect of capital gains on sale of shares to holding company--Return found defective and assessee filing corrected return--By this time holding company no longer holding company--No default at time of payment of advance tax--Interest for default not chargeable-- Prime Securities Ltd. v. Asst. CIT (Investigation) (Bom) . . . 464

Indian Penal Code, 1860 :

S. 120B --High Court--Matter of civil nature--Prosecution wrongly laid--Application by accused for relief--High Court ought to interfere by using inherent powers to prevent abuse of process-- Rajeswar Tiwari v. Nanda Kishore Roy (SC) . . . 534

S. 406 --High Court--Matter of civil nature--Prosecution wrongly laid--Application by accused for relief--High Court ought to interfere by using inherent powers to prevent abuse of process-- Rajeswar Tiwari v. Nanda Kishore Roy (SC) . . . 534

Interest-tax Act, 1974 :

Ss. 13, 21 --Interest-tax--Penalty--Presumption against assessee in case of non-filing of return within time under Income-tax Act not applicable to income-tax proceedings--Grounds for imposition of penalty laid down in section 13 of Interest-tax Act-- CIT v. H. P. State Co-operative Bank (HP) . . . 441

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

Volume 9 : Part 3 (Issue dated : 16-05-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Assessment --Law applicable--Law in force at beginning of assessment year--Income-tax Act, 1961-- Ashok Kumar Damani v. Addl. CIT (Mumbai) . . . 304

Business expenditure --Disallowance--Fines and penalties--Penalty paid to stock exchange--Compensatory payment--Cannot be disallowed--Income-tax Act, 1961-- Ashok Kumar Damani v. Addl. CIT (Mumbai) . . . 304

Charitable purposes --Charitable trust--Registration of trust--Clause in trust deed empowering trustees to conduct business--Removal of clause w.e.f 17-9-2009--Trust entitled to registration from 17-9-2009--Income-tax Act, 1961, s. 12AA-- Dev Siksha Samiti v. Asst. CIT (Delhi) . . . 319

Deduction of tax at source --Amount paid for services--Fees paid to stock exchange as transaction charges and V-sat charges--Not for services--Section 194J not applicable--Income-tax Act, 1961, s. 194J-- Ashok Kumar Damani v. Addl. CIT (Mumbai) . . . 304

Double taxation relief --Income deemed to accrue or arise in India--U. K. law firm rendering services to clients in connection with projects in India--Firm entitled to benefit of DTAA--Assessee had permanent establishment in India--Profits attributable to projects in India taxable in India--Actual profits taxable--Reimbursement of expenses--Evidence that expenses had been incurred--No part of reimbursement could be treated as income--Income-tax Act, 1961, ss. 9, 90--Double Taxation Avoidance Agreement between India and the U. K. arts. 5, 7-- Linklaters LLP v. ITO (International Taxation) (Mumbai) . . . 217

Income --Computation--Disallowance under section 14A--Computation--Law applicable--Rule 8D not retrospective--Disallowance to be made on reasonable basis--Income-tax Act, 1961, s. 14A-- Ashok Kumar Damani v. Addl. CIT (Mumbai) . . . 304

Shares and securities --Loss on purchase and sale of securities--Effect of insertion of section 94(7) and its amendment w. e. f. 1-4-2005--Amendment applicable for assessment year 2005-06--Decrease in value of investment not covered--Income-tax Act, 1961, s. 94-- Ashok Kumar Damani v. Addl. CIT (Mumbai) . . . 304

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance Agreement between India and the U. K. :

Arts. 5, 7 --Double taxation relief--Income deemed to accrue or arise in India--U. K. law firm rendering services to clients in connection with projects in India--Firm entitled to benefit of DTAA--Assessee had permanent establishment in India--Profits attributable to projects in India taxable in India--Actual profits taxable--Reimbursement of expenses--Evidence that expenses had been incurred--No part of reimbursement could be treated as income-- Linklaters LLP v. ITO (International Taxation) (Mumbai) . . . 217

Income-tax Act, 1961 :

S. 9 --Double taxation relief--Income deemed to accrue or arise in India--U. K. law firm rendering services to clients in connection with projects in India--Firm entitled to benefit of DTAA--Assessee had permanent establishment in India--Profits attributable to projects in India taxable in India--Actual profits taxable--Reimbursement of expenses--Evidence that expenses had been incurred--No part of reimbursement could be treated as income-- Linklaters LLP v. ITO (International Taxation) (Mumbai) . . . 217

S. 12AA --Charitable purposes--Charitable trust--Registration of trust--Clause in trust deed empowering trustees to conduct business--Removal of clause w.e.f 17-9-2009--Trust entitled to registration from 17-9-2009-- Dev Siksha Samiti v. Asst. CIT (Delhi) . . . 319

S. 14A --Income--Computation--Disallowance under section 14A--Computation--Law applicable--Rule 8D not retrospective--Disallowance to be made on reasonable basis-- Ashok Kumar Damani v. Addl. CIT (Mumbai) . . . 304

S. 90 --Double taxation relief--Income deemed to accrue or arise in India--U. K. law firm rendering services to clients in connection with projects in India--Firm entitled to benefit of DTAA--Assessee had permanent establishment in India--Profits attributable to projects in India taxable in India--Actual profits taxable--Reimbursement of expenses--Evidence that expenses had been incurred--No part of reimbursement could be treated as income-- Linklaters LLP v. ITO (International Taxation) (Mumbai) . . . 217

S. 94 --Shares and securities--Loss on purchase and sale of securities--Effect of insertion of section 94(7) and its amendment w. e. f. 1-4-2005--Amendment applicable for assessment year 2005-06--Decrease in value of investment not covered-- Ashok Kumar Damani v. Addl. CIT (Mumbai) . . . 304

S. 194J --Deduction of tax at source--Amount paid for services--Fees paid to stock exchange as transaction charges and V-sat charges--Not for services--Section 194J not applicable-- Ashok Kumar Damani v. Addl. CIT (Mumbai) . . . 304

CA.CVPAWAR