INCOME TAX REPORTS (ITR)
Volume 334 : Part 2 (Issue dated 6-6-2011)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Business expenditure --Capital or revenue expenditure--Company--Expenditure on raising convertible debentures--Revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v. ITC Hotels Ltd. (Karn) . . . 109
----Deduction only on actual payment--Contribution to employees' State insurance--Disallowed as deposited beyond due date--Amendment to first proviso to section 43B by Finance Act, 2003 with retrospective effect--Applicable--Assessee entitled to deduction--Income-tax Act, 1961, s. 43B-- CIT v. Rai Agro Industries Ltd. (P&H) . . . 122
----Deduction only on actual payment--Disallowance on ground that expenses related to prior period and not present assessment year--Tribunal finding all expenses settled in current year and covered under section 43B(d)--Justified--Income-tax Act, 1961, s. 43B(d)-- CIT v. Modipon Ltd. (No. 1 ) (Delhi) . . . 102
----Deduction only on actual payment--Excise duty paid in advance--Assessing Officer holding that deduction can be claimed only on removal of goods from factories--Not proper--Assessee entitled to deduction--Income-tax Act, 1961, s. 43B-- CIT v. Modipon Ltd. (No. 2 ) (Delhi) . . . 106
----Disallowance--Travelling expenses--Addition made in subsequent years accepted by assessee--To be followed this year also--Income-tax Act, 1961, s. 37--Income-tax Rules, 1962, r. 6D-- CIT v. Modipon Ltd. (No. 2 ) (Delhi) . . . 106
Capital gains --Company--Sale of property by company--Company not in liquidation--Section 49 not applicable--Capital gains assessable in hands of company--Income-tax Act, 1961, ss. 45, 49-- CIT v. Shashi Charla (Delhi) . . . 129
----Exemption--Long-term capital gains--Investment of net consideration from transfer of depreciable asset under Capital Gains Deposit Account Scheme--Assessee entitled to exemption--Income-tax Act, 1961, s. 54F-- CIT v. Rajiv Shukla (Delhi) . . . 138
----Full value of consideration--Provision for adopting value assessed for stamp duty purposes--Provision not beyond legislative competence and not violative of article 14--Income-tax Act, 1961, s. 50C--Constitution of India, art. 14 ; Sch VII, List I, entry 82-- Bhatia Nagar Premises Co-operative Society Ltd . v. Union of India (Bom) . . . 145
Company --Computation of book profits under section 115JB--Depreciation--Change in method of computation of depreciation from straight line method to written down value method--Change reflected in profit and loss account audited and certified by registering authority under company law--Change valid--Income-tax Act, 1961, s. 115JB-- CIT v. Tidel Park Ltd. (Mad) . . . 126
Exemption --Export oriented industry--Conditions precedent for exemption--Conditions should be satisfied in initial year of manufacture or production--Value of machinery and plant in initial year of manufacture more than 20 per cent. of total value of machinery and plant--Purchase of new machinery and value reduced to less than 20 per cent. in a subsequent year--Assessee not entitled to exemption under section 10B--Income-tax Act, 1961, s. 10B-- Sami Labs Ltd. v. Asst. CIT (Karn) . . . 157
Export --Special deduction--Computation--Income from duty drawback, duty entitlement pass book and duty-free remission scheme--To be treated as business income--Income-tax Act, 1961, s. 80HHC-- CIT v. F. C. Sondhi and Co. P. Ltd .(P&H) . . . 141
Income from undisclosed sources --Purchasers found to be fictitious--Addition to income valid--Purchases by account payee cheques--Inability to produce purchaser after three years--Not material--Addition not justified--Income-tax Act, 1961-- Diagnostics v. CIT (Cal) . . . 111
Interpretation of taxing statutes --Words-- CIT v. Oceanic Shipping Service of M. T. Suhail (Guj) . . . 132
Non-resident --Shipping business--Conditions precedent for application of section 172--Carriage of goods shipped at Indian port--Tug towing ship which could not sail by itself--No carriage of goods--Section 172 not applicable--Income-tax Act, 1961, s. 172-- CIT v. Oceanic Shipping Service of M. T. Suhail (Guj) . . . 132
Revision --Commissioner--Jurisdiction--Amendment to section 263 permitting revision of orders of Inspecting Assistant Commissioner--Not retrospective--Income-tax Act, 1961, s. 263-- CIT v. Smt. Asha M. Primlani (Delhi) . . . 143
Valuation of closing stock --Excise and customs duties--Assessee entitled to exclude excise and customs duties paid from value of closing stock--Income- tax Act, 1961-- CIT v. Modipon Ltd. ( No. 2 ) (Delhi) . . . 106
Wealth-tax --Appeal to Appellate Tribunal--Contradiction in Tribunal's order regarding valuation of land--Recall of order by Tribunal--Tribunal holding no contradiction in its findings--Amounts to review of its earlier order--Not permissible--Tribunal directed to reconsider matter--Wealth-tax Act, 1957, ss. 7(4), 24-- Raja Malwinder Singh v. CWT (P&H) . . . 115
Words and phrases --"Shipping" and "goods"--Meanings of-- CIT v. Oceanic Shipping Service of M. T. Suhail (Guj) . . . 132
Writ --Capital gains--Development agreement to develop property of assessee--Reference by developer--Determination of stamp duty payable--Developer paying--Assessee cannot challenge valuation by stamp valuation authority--Remedy available under Stamp Act--Bombay Stamp Act, 1958, ss. 31, 53 ; Sch. I, art. 5(ga)--Income-tax Act, 1961, s. 50C-- Bhatia Nagar Premises Co-operative Society Ltd. v. Union of India (Bom) . . . 145
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 31, 53 ; Sch. I, art. 5(ga) --Writ--Capital gains--Development agreement to develop property of assessee--Reference by developer--Determination of stamp duty payable--Developer paying--Assessee cannot challenge valuation by stamp valuation authority--Remedy available under Stamp Act-- Bhatia Nagar Premises Co-operative Society Ltd. v. Union of India (Bom) . . . 145
Art. 14 ; Sch VII, List I, entry 82 --Capital gains--Full value of consideration--Provision for adopting value assessed for stamp duty purposes--Provision not beyond legislative competence and not violative of article 14-- Bhatia Nagar Premises Co-operative Society Ltd . v. Union of India (Bom) . . . 145
S. 10B --Exemption--Export oriented industry--Conditions precedent for exemption--Conditions should be satisfied in initial year of manufacture or production--Value of machinery and plant in initial year of manufacture more than 20 per cent. of total value of machinery and plant--Purchase of new machinery and value reduced to less than 20 per cent. in a subsequent year--Assessee not entitled to exemption under section 10B-- Sami Labs Ltd. v. Asst. CIT (Karn) . . . 157
S. 37 --Business expenditure--Capital or revenue expenditure--Company--Expendi-ture on raising convertible debentures--Revenue expenditure-- CIT v. ITC Hotels Ltd. (Karn) . . . 109
----Business expenditure--Disallowance--Travelling expenses--Addition made in subsequent years accepted by assessee--To be followed this year also-- CIT v. Modipon Ltd. (No. 2) (Delhi) . . . 106
S. 43B --Business expenditure--Deduction only on actual payment--Contribution to employees' State insurance--Disallowed as deposited beyond due date--Amendment to first proviso to section 43B by Finance Act, 2003 with retrospective effect--Applicable--Assessee entitled to deduction-- CIT v. Rai Agro Industries Ltd. (P&H) . . . 122
----Business expenditure--Deduction only on actual payment--Excise duty paid in advance--Assessing Officer holding that deduction can be claimed only on removal of goods from factories--Not proper--Assessee entitled to deduction-- CIT v. Modipon Ltd. ( No. 2) (Delhi) . . . 106
S. 43B(d) --Business expenditure--Deduction only on actual payment--Disallowance on ground that expenses related to prior period and not present assessment year--Tribunal finding all expenses settled in current year and covered under section 43B(d)--Justified-- CIT v. Modipon Ltd. (No. 1 ) (Delhi) . . . 102
S. 45 --Capital gains--Company--Sale of property by company--Company not in liquidation--Section 49 not applicable--Capital gains assessable in hands of company-- CIT v. Shashi Charla (Delhi) . . . 129
S. 49 --Capital gains--Company--Sale of property by company--Company not in liquidation--Section 49 not applicable--Capital gains assessable in hands of company-- CIT v. Shashi Charla (Delhi) . . . 129
S. 50C --Capital gains--Full value of consideration--Provision for adopting value assessed for stamp duty purposes--Provision not beyond legislative competence and not violative of article 14-- Bhatia Nagar Premises Co-operative Society Ltd . v. Union of India (Bom) . . . 145
----Writ--Capital gains--Development agreement to develop property of assessee--Reference by developer--Determination of stamp duty payable--Developer paying--Assessee cannot challenge valuation by stamp valuation authority--Remedy available under Stamp Act-- Bhatia Nagar Premises Co-operative Society Ltd. v. Union of India (Bom) . . . 145
S. 54F --Capital gains--Exemption--Long-term capital gains--Investment of net consideration from transfer of depreciable asset under Capital Gains Deposit Account Scheme--Assessee entitled to exemption-- CIT v. Rajiv Shukla (Delhi) . . . 138
S. 80HHC --Export--Special deduction--Computation--Income from duty drawback, duty entitlement pass book and duty-free remission scheme--To be treated as business income-- CIT v. F. C. Sondhi and Co. P. Ltd . (P&H) . . . 141
S. 115JB --Company--Computation of book profits under section 115JB--Depreciation--Change in method of computation of depreciation from straight line method to written down value method--Change reflected in profit and loss account audited and certified by registering authority under company law--Change valid-- CIT v. Tidel Park Ltd. (Mad) . . . 126
S. 172 --Non-resident--Shipping business--Conditions precedent for application of section 172--Carriage of goods shipped at Indian port--Tug towing ship which could not sail by itself--No carriage of goods--Section 172 not applicable-- CIT v. Oceanic Shipping Service of M. T. Suhail (Guj) . . . 132
S. 263 --Revision--Commissioner--Jurisdiction--Amendment to section 263 permitting revision of orders of Inspecting Assistant Commissioner--Not retrospective-- CIT v. Smt. Asha M. Primlani (Delhi) . . . 143
R. 6D --Business expenditure--Disallowance--Travelling expenses--Addition made in subsequent years accepted by assessee--To be followed this year also-- CIT v. Modipon Ltd. (No. 2) (Delhi) . . . 106
S. 7(4) --Wealth-tax--Appeal to Appellate Tribunal--Contradiction in Tribunal's order regarding valuation of land--Recall of order by Tribunal--Tribunal holding no contradiction in its findings--Amounts to review of its earlier order--Not permissible--Tribunal directed to reconsider matter-- Raja Malwinder Singh v. CWT (P&H) . . . 115
S. 24 --Wealth-tax--Appeal to Appellate Tribunal--Contradiction in Tribunal's order regarding valuation of land--Recall of order by Tribunal--Tribunal holding no contradiction in its findings--Amounts to review of its earlier order--Not permissible--Tribunal directed to reconsider matter-- Raja Malwinder Singh v. CWT (P&H) . . . 115
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 9 : Part 6 (Issue dated : 06-06-2011)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal to Appellate Tribunal --Issue raised by assessee answered in its favour by Commissioner (Appeals)--Assessee cannot challenge decision in appeal to Tribunal--Income-tax Act, 1961-- ITO v. United Marine Academy [SB] (Mumbai) . . . 639
----Order of Tribunal--Where facts not disputed, no additional arguments advanced and Tribunal fully agreeing with reasons given by Commissioner (Appeals), Tribunal need not repeat reasons given by him--Order of Tribunal not illegal on that ground--Income-tax Act, 1961-- Asst. CIT v. Safe Enterprises (Mumbai) . . . 533
Bad debts --Change of law--Assessee only to write it off as bad debt--Not required to prove that debts had become bad-- Income-tax Act, 1961, s. 36(1)(vii)-- Asst. CIT v. Safe Enterprises (Mumbai) . . . 533
----Disallowance--Entire bad debts written off in books of account maintained under Income-tax Act--Separate books maintained under Companies Act not relevant--Assessee claiming only that sum which has been written off--To be allowed--Income-tax Act, 1961, s. 36(1)(vii)-- Asst. CIT v. Shriram Transport Finance Co. Ltd. (Chennai) . . . 543
Business expenditure --Disallowance--Payments subject to tax deduction at source --Amendment of section 40(a)(ia) by Finance Act, 2010--Amendment retrospective--Tax deducted at source from freight charges during period 1-4-2005 to 28-2-2006 and paid in July and August 2006 i.e. before due date for filing return--Freight charges could not be disallowed in assessment for 2006-07--Income-tax Act, 1961, s. 40(a)(ia) -- Bansal Parivahan (India) P. Ltd. v. ITO (Mumbai) . . . 565
----Disallowance--Payments to non-resident subject to deduction of tax at source--Interest--Difference between definition of interest in Interest-tax Act and that in Income-tax Act--Discounting charges not interest for purposes of Income-tax Act--Tax not deductible at source on discounting charges--Income-tax Act, 1961, ss. 2(28A), 40(a)(i)--Circular No. 647, dated 22-3-1993-- Asst. CIT v. Cargill Global Trading (I) P. Ltd. (Delhi) . . . 558
----Firm--Expenditure on education of partner in foreign country--No evidence of commercial expediency in incurring expenditure--Expenditure not deductible--Income-tax Act, 1961, s. 37-- Kohinoor Cloth Stores v. Asst. CIT (Pune) . . . 585
Business loss --Corporate guarantee given to subsidiary company--Granting of guarantee part of business of assessee--Guarantee given for commercial purposes--Loss due to such guarantee--Deductible as business loss--Income-tax Act, 1961-- Asst. CIT v. W. S. Industries (India) Ltd. (Chennai) . . . 596
Capital gains --Computation of capital gains--Two fictions in sections 50 and 50C--Section 50 modifies expression "cost of acquisition"--Section 50C modifies expression "full value of consideration"--Both operate in different fields--Both can be applied simultaneously--Sale of block of assets including land--Stamp duty valuation of land can be taken into consideration for computing capital gains--Income-tax Act, 1961, ss. 45, 50, 50C-- ITO v. United Marine Academy [SB] (Mumbai) . . . 639
Capital or revenue expenditure --Royalty paid for using logo--Payment for non-exclusive user of logo based on turnover and not lump sum payment--Revenue expenditure--Income-tax Act, 1961-- Asst. CIT v. Shriram Transport Finance Co. Ltd. (Chennai) . . . 543
Charitable purposes --Definition--Change of law--"Object of general public utility" not to include activity of rendering service in relation to trade, commerce or business--Board constituted under law as regulatory board for environment protection and pollution control--Not rendering service in relation to trade, commerce or business--Registration not to be cancelled--Income-tax Act, 1961, ss. 2(15), 12AA-- Himachal Pradesh Environment Protection and Pollution Control Board v. CIT (Chandigarh) . . . 604
Non-banking financial company --Long-term capital loss--Carry forward--Assessee compelled to divest shares in accordance with RBI directions--Assessing Officer not doubting genuineness of transactions--Similar issue decided in favour of assessee in previous years--To be allowed--Income-tax Act, 1961-- Asst. CIT v. Shriram Transport Finance Co. Ltd. (Chennai) . . . 543
----Securities--Diminution in value--Classified as investment and income earned in nature of dividends--Investments in securities a statutory direction which has to be necessarily complied with assessee--Classification under "investments" immaterial--Assessee entitled to claim of diminution in value of securities which held for purpose of its business--Income-tax Act, 1961-- Asst. CIT v. Shriram Transport Finance Co. Ltd. (Chennai) . . . 543
Non-resident --Double taxation avoidance--Interest on refund of tax deducted at source from receipts of permanent establishment--Provisions of Double Taxation Avoidance Agreement more beneficial and applicable--Payment of tax responsibility of foreign company--Collection of tax at source not effective connection of indebtedness with permanent establishment in India--Amount taxable under article 11(2) of Double Taxation Avoidance Agreement--Income-tax Act, 1961, s. 90--Double Taxation Avoidance Agreement between Australia and India, art. 11(2)-- Asst. CIT v. Clough Engineering Ltd. [SB] (Delhi) . . . 618
Words and phrases --"Interest"-- Asst. CIT v. Cargill Global Trading (I) P. Ltd. (Delhi) . . . 558
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Double Taxation Avoidance Agreement between Australia and India :
Art. 11(2) --Non-resident--Double taxation avoidance--Interest on refund of tax deducted at source from receipts of permanent establishment--Provisions of Double Taxation Avoidance Agreement more beneficial and applicable--Payment of tax responsibility of foreign company--Collection of tax at source not effective connection of indebtedness with permanent establishment in India--Amount taxable under article 11(2) of Double Taxation Avoidance Agreement-- Asst. CIT v. Clough Engineering Ltd. [SB] (Delhi) . . . 618
S. 2(15) --Charitable purposes--Definition--Change of law--"Object of general public utility" not to include activity of rendering service in relation to trade, commerce or business--Board constituted under law as regulatory board for environment protection and pollution control--Not rendering service in relation to trade, commerce or business--Registration not to be cancelled-- Himachal Pradesh Environment Protection and Pollution Control Board v. CIT (Chandigarh) . . . 604
S. 2(28A) --Business expenditure--Disallowance--Payments to non-resident subject to deduction of tax at source--Interest--Difference between definition of interest in Interest-tax Act and that in Income-tax Act--Discounting charges not interest for purposes of Income-tax Act--Tax not deductible at source on discounting charges--Circular No. 647, dated 22-3-1993-- Asst. CIT v. Cargill Global Trading (I) P. Ltd. (Delhi) . . . 558
S. 12AA --Charitable purposes--Definition--Change of law--"Object of general public utility" not to include activity of rendering service in relation to trade, commerce or business--Board constituted under law as regulatory board for environment protection and pollution control--Not rendering service in relation to trade, commerce or business--Registration not to be cancelled-- Himachal Pradesh Environment Protection and Pollution Control Board v. CIT (Chandigarh) . . . 604
S. 36(1)(vii) --Bad debts--Change of law--Assessee only to write it off as bad debt--Not required to prove that debts had become bad-- Asst. CIT v. Safe Enterprises (Mumbai) . . . 533
----Bad debts--Disallowance--Entire bad debts written off in books of account maintained under Income-tax Act--Separate books maintained under Companies Act not relevant--Assessee claiming only that sum which has been written off--To be allowed-- Asst. CIT v. Shriram Transport Finance Co. Ltd. (Chennai) . . . 543
S. 37 --Business expenditure--Firm--Expenditure on education of partner in foreign country--No evidence of commercial expediency in incurring expenditure--Expenditure not deductible-- Kohinoor Cloth Stores v. Asst. CIT (Pune) . . . 585
S. 40(a)(i) --Business expenditure--Disallowance--Payments to non-resident subject to deduction of tax at source--Interest--Difference between definition of interest in Interest-tax Act and that in Income-tax Act--Discounting charges not interest for purposes of Income-tax Act--Tax not deductible at source on discounting charges--Circular No. 647, dated 22-3-1993-- Asst. CIT v. Cargill Global Trading (I) P. Ltd. (Delhi) . . . 558
S. 40(a)(ia) -- Business expenditure--Disallowance--Payments subject to tax deduction at source--Amendment of section 40(a)(ia) by Finance Act, 2010--Amendment retrospective--Tax deducted at source from freight charges during period 1-4-2005 to 28-2-2006 and paid in July and August 2006 i.e. before due date for filing return--Freight charges could not be disallowed in assessment for 2006-07-- Bansal Parivahan (India) P. Ltd. v. ITO (Mumbai) . . . 565
S. 45 --Capital gains--Computation of capital gains--Two fictions in sections 50 and 50C--Section 50 modifies expression "cost of acquisition"--Section 50C modifies expression "full value of consideration"--Both operate in different fields--Both can be applied simultaneously--Sale of block of assets including land--Stamp duty valuation of land can be taken into consideration for computing capital gains-- ITO v. United Marine Academy [SB] (Mumbai) . . . 639
S. 50 --Capital gains--Computation of capital gains--Two fictions in sections 50 and 50C--Section 50 modifies expression "cost of acquisition"--Section 50C modifies expression "full value of consideration"--Both operate in different fields--Both can be applied simultaneously--Sale of block of assets including land--Stamp duty valuation of land can be taken into consideration for computing capital gains-- ITO v. United Marine Academy [SB] (Mumbai) . . . 639
S. 50C --Capital gains--Computation of capital gains--Two fictions in sections 50 and 50C--Section 50 modifies expression "cost of acquisition"--Section 50C modifies expression "full value of consideration"--Both operate in different fields--Both can be applied simultaneously--Sale of block of assets including land--Stamp duty valuation of land can be taken into consideration for computing capital gains-- ITO v. United Marine Academy [SB] (Mumbai) . . . 639
S. 90 --Non-resident--Double taxation avoidance--Interest on refund of tax deducted at source from receipts of permanent establishment--Provisions of Double Taxation Avoidance Agreement more beneficial and applicable--Payment of tax responsibility of foreign company--Collection of tax at source not effective connection of indebtedness with permanent establishment in India--Amount taxable under article 11(2) of Double Taxation Avoidance Agreement-- Asst. CIT v. Clough Engineering Ltd. [SB] (Delhi) . . . 618
CA.RAJU SHAH
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