INCOME TAX REPORTS (ITR)
Volume 334 : Part 4 (Issue dated 20-6-2011)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Annual letting value --Maintenance and other charges--Deductible from rent while calculating annual letting value--Income-tax Act, 1961, s. 23-- CIT v. R. J. Wood P. Ltd. (Delhi) . . . 358
Appeal to Appellate Tribunal --Powers of Tribunal--Controversy regarding amount received on sale of land--High Court holding sum taxable as capital gains--Reassessment proceedings initiated during pendency of proceedings before High Court on the ground that a larger amount than that disclosed had been received--Direction by Tribunal for assessment of additional amount similar to original amount--Direction valid--Income-tax Act, 1961-- Debaprasad Paul v. CIT (Cal) . . . 274
----Tribunal recording admission by counsel for assessee--Assessee filing application denying admission--Application should be considered on merits--Income-tax Act, 1961-- Bagoria Udyog v. CIT (Cal) . . . 280
Business expenditure --Assessee dealer in autorickshaws--Amount paid for parking autorickshaws--Evidence of lease of land and payment of rent through account payee cheques--Amount deductible--Commission--No evidence of payment of part of the amount--Amount not deductible--Income-tax Act, 1961, s. 37-- CIT v. Gautam Motors (Delhi) . . . 326
----Club expenses--Disallowance--Tribunal finding claim of paltry amount and not mala fide--Findings of fact--Income-tax Act, 1961, s. 37-- CIT v. H. B. Leasing and Finance Co. Ltd . (Delhi) . . . 367
----Deduction only on actual payment--Provision for pension--Liability accrues from year to year--Payable on retirement/resignation of eligible employees--Assessee entitled to deduction--Income-tax Act, 1961, s. 43B(b)-- CIT v. Ranbaxy Laboratories Ltd. (Delhi) . . . 341
----Expenditure on share transfer--Assessing Officer making addition holding as capital in nature--Tribunal finding expenditure actually incurred--Findings of fact--Income-tax Act, 1961, s. 37-- CIT v. H. B. Leasing and Finance Co. Ltd. (Delhi) . . . 367
----Interest on borrowed capital--Advance to managing director for purchase of land--Sale not taking place and receipt of entire amount paid--Tribunal finding no nexus between borrowed funds and amount advanced--Interest not disallowed in previous years--Assessee entitled to deduction--Income-tax Act, 1961, s. 36(1)(iii)-- CIT v. Century Flour Mills Ltd. (Mad) . . . 377
Capital gains --Loss--Acquisition of company and subsequent sale--Transactions by account payee cheques--No evidence that transaction was not genuine--Fact that assessee could have waited or invested more not relevant--Loss deductible--Income-tax Act, 1961-- CIT v. Oberoi Hotels P. Ltd . (Cal) . . . 293
Cash credits --Claim that amount was a gift--Finding that assessee could not prove gift--Assessment under section 68--Valid--Income-tax Act, 1961, s. 68-- Balbir Singh v. CIT (P&H) . . . 287
Depreciation --Purchase of assets from franchisee companies--Assessing Officer holding that assessee purchasing running companies and land value suppressed and price of plant and machinery inflated to claim excess depreciation--Tribunal directing Assessing Officer to accept valuation of assets on the basis of valuation report shown in relevant agreements--No defects in valuation reports--Consideration paid represents cost of purchased assets--Depreciation allowable--Income-tax Act, 1961, ss. 32(1), 43(6)-- CIT v. Pepsico India Holdings P. Ltd. (Delhi) . . . 404
Exemption --Educational institution--Condition precedent for exemption under section 10(23C)(vi)--Institution must exist solely for purposes of education--Publication of papers and holding of seminars ancillary objects--Institution cannot be denied exemption because of such objects--Rent paid to secretary of institution--Enquiry to be made to determine if rent paid was at the prevalent market rate--Amount advanced to another educational institution--Institution not entitled to exemption--Interest-free advance given to secretary of institution--Institution not entitled to exemption--Income-tax Act, 1961, s. 10(23C)(vi)-- New Noble Educational Society v. Chief CIT (AP) . . . 303
Firm --Legality of firm--Power to enquire into genuineness of firm--Effect of amendment of sections 184 and 185 by Finance Act 1992--Even after amendment Assessing Officer has power to enquire into legality of firm--Liquor licence in individual name of partner--State Excise Act prohibiting transfer of licence--Liquor business carried on by firm--Firm not legal--Income-tax Act, 1961, ss. 184, 185-- CIT v. Swarna Bar Restaurant (AP) . . . 387
Income --Accrual of income--Interest--Waiver of interest before end of accounting year--Interest did not accrue to assessee--Income-tax Act, 1961-- Bagoria Udyog v. CIT (Cal) . . . 280
Income from property --Arrears of rent--Arrears of rent received in subsequent year cannot be spread over previous years--Taxable in year of receipt--Income-tax Act, 1961, ss. 23, 25B-- CIT v. R. J. Wood P. Ltd. (Delhi) . . . 358
Income-tax --General principles--Avoidance of tax--Transaction whether genuine--Supreme Court decision in Azadi Bachao Andolan's case [2003] 263 ITR 706 (SC) to be applied-- CIT v. Oberoi Hotels P. Ltd . (Cal) . . . 293
----General principles--Tax planning permissible--Effect of decision of Supreme Court in Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706-- Eveready Industries India Ltd. v. CIT (Cal) . . . 413
Intercorporate dividend --Special deduction--Disallowance on ground intercorporate dividend not actually distributed--Amount kept in separate account--Tribunal finding issue debatable--No question of law arises--Income-tax Act, 1961, s. 80M-- CIT v. H. B. Leasing and Finance Co. Ltd. (Delhi) . . . 367
Interest on borrowed capital --Loans for business purposes--Fact that assessee had unused amounts--Not relevant--Interest deductible--Income-tax Act, 1961, s. 36(1)(iii) -- CIT v. Gautam Motors (Delhi) . . . 326
----No disallowance in terms of section 14A--No challenge to non-applicability of section 14A--Tribunal not justified in directing consideration of disallowance under section 14A--Income-tax Act, 1961, s. 14A-- Topstar Mercantile P. Ltd . v. Asst. CIT (Bom) . . . 374
Interpretation of taxing statutes --Amendment-- CIT v. Swarna Bar Restaurant (AP) . . . 387
Loss --Purchase and sale of units in 1989--Units purchased-cum-dividend--Sales ex-dividend--Loss allowable--Income-tax Act, 1961-- Eveready Industries India Ltd. v. CIT (Cal) . . . 413
New industrial undertaking --Special deduction--Duty drawback benefits do not form part of net profit--Income-tax Act, 1961, s. 80-IA-- CIT v. Ranbaxy Laboratories Ltd . (Delhi) . . . 341
Precedent --Effect of decision by Supreme Court--Decision of larger Bench explained by smaller Bench to be followed-- CIT v. Oberoi Hotels P. Ltd . (Cal) . . . 293
Reassessment --Reassessment after four years--Conditions precedent--Failure to disclose material facts necessary for assessment--Mere claim for deduction would not amount to such failure--Reassessment on ground computation of deduction under section 80HHC not correct--Reassessment proceedings--Not valid--Income-tax Act, 1961, s. 147-- Cadila Healthcare Ltd. v. Deputy CIT (Guj) . . . 420
Search and seizure --Advance tax--Interest--Assessee requesting to adjust advance tax payable out of cash seized--Request made prior to due date for payment of instalment of advance tax--Assessee entitled to adjustment--No interest can be charged--Income-tax Act, 1961, ss. 234A, 234B-- CIT v. Ashok Kumar (P&H) . . . 355
----Advance tax--Interest--Search taking place after close of financial year--Request for adjustment of advance tax liability against seized cash--Interest under sections 234B and 234C charged--Assessee liable to pay interest under sections 234B and 234C and entitled to benefit of payment out of seized cash from date of making application for adjustment of seized cash towards tax liability--Income-tax Act, 1961, ss. 234B, 234C-- CIT v. Arun Kapoor (P&H) . . . 351
----Warrant of authorisation--Power to issue warrant--Joint Director of Income-tax (Investigation) cannot issue warrant unless authorised specifically by notification of CBDT--Income-tax Act, 1961, s. 132-- CIT v. Capital Power Systems Limited (Delhi) . . . 349
Survey --Suppression of sales--Set-off of intangible additions in past on account of suppressed sales against excess stock detected at survey--Payment of tax on undisclosed incomes on reassessment--Assessing Officer to consider set-off of amount which has been legalized by payment of tax--Income-tax Act, 1961-- Balaram Saha v. CIT (Cal) . . . 383
Unexplained investment --Development agreement in respect of property--Letter by developer showing receipt of a sum as advance from assessee--Assessing Officer before discarding evidence ought to have summoned developer to find out fact--Matter remanded--Income-tax Act, 1961, ss. 68, 69A-- Faiz Murtuza Ali v. CIT (Delhi) . . . 370
Unexplained money --No incriminating material found during search proceedings--Statement of third party during survey--Not relevant--Section 69A not applicable--Income-tax Act, 1961, s. 69A-- CIT v. Concorde Capital Management Company Ltd. (Delhi) . . . 346
Voluntary disclosure of income --Offences and prosecution--Effect of section 78(b) of Finance Act, 1997--FIR lodged but later withdrawn--No prosecution initiated or pending when assessee applied for certificate under VDIS--Assessee entitled to benefit under VDIS--Finance Act, 1997, s. 78(b)--Voluntary Disclosure of Income Scheme, 1997-- CIT v. Smt. Meena Goyal (Uttarakhand) . . . 428
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 78(b) --Voluntary disclosure of income--Offences and prosecution--Effect of section 78(b) of Finance Act, 1997--FIR lodged but later withdrawn--No prosecution initiated or pending when assessee applied for certificate under VDIS--Assessee entitled to benefit under VDIS--Voluntary Disclosure of Income Scheme, 1997-- CIT v. Smt. Meena Goyal (Uttarakhand) . . . 428
S. 10(23C)(vi) --Exemption--Educational institution--Condition precedent for exemption under section 10(23C)(vi)--Institution must exist solely for purposes of education--Publication of papers and holding of seminars ancillary objects--Institution cannot be denied exemption because of such objects--Rent paid to secretary of institution--Enquiry to be made to determine if rent paid was at the prevalent market rate--Amount advanced to another educational institution--Institution not entitled to exemption--Interest-free advance given to secretary of institution--Institution not entitled to exemption-- New Noble Educational Society v. Chief CIT (AP) . . . 303
S. 14A --Interest on borrowed capital--No disallowance in terms of section 14A--No challenge to non-applicability of section 14A--Tribunal not justified in directing consideration of disallowance under section 14A-- Topstar Mercantile P. Ltd . v. Asst. CIT (Bom) . . . 374
S. 23 --Annual letting value--Maintenance and other charges--Deductible from rent while calculating annual letting value-- CIT v. R. J. Wood P. Ltd. (Delhi) . . . 358
----Income from property--Arrears of rent--Arrears of rent received in subsequent year cannot be spread over previous years--Taxable in year of receipt-- CIT v. R. J. Wood P. Ltd. (Delhi) . . . 358
S. 25B --Income from property--Arrears of rent--Arrears of rent received in subsequent year cannot be spread over previous years--Taxable in year of receipt-- CIT v. R. J. Wood P. Ltd. (Delhi) . . . 358
S. 32(1) --Depreciation--Purchase of assets from franchisee companies--Assessing Officer holding that assessee purchasing running companies and land value suppressed and price of plant and machinery inflated to claim excess depreciation--Tribunal directing Assessing Officer to accept valuation of assets on the basis of valuation report shown in relevant agreements--No defects in valuation reports--Consideration paid represents cost of purchased assets--Depreciation allowable-- CIT v. Pepsico India Holdings P. Ltd. (Delhi) . . . 404
S. 36(1)(iii) --Business expenditure--Interest on borrowed capital--Advance to managing director for purchase of land--Sale not taking place and receipt of entire amount paid--Tribunal finding no nexus between borrowed funds and amount advanced--Interest not disallowed in previous years--Assessee entitled to deduction-- CIT v. Century Flour Mills Ltd. (Mad) . . . 377
----Interest on borrowed capital--Loans for business purposes--Fact that assessee had unused amounts--Not relevant--Interest deductible-- CIT v. Gautam Motors (Delhi) . . . 326
S. 37 --Business expenditure--Assessee dealer in autorickshaws--Amount paid for parking autorickshaws--Evidence of lease of land and payment of rent through account payee cheques--Amount deductible--Commission--No evidence of payment of part of the amount--Amount not deductible-- CIT v. Gautam Motors (Delhi) . . . 326
----Business expenditure--Club expenses--Disallowance--Tribunal finding claim of paltry amount and not mala fide--Findings of fact-- CIT v. H. B. Leasing and Finance Co. Ltd . (Delhi) . . . 367
----Business expenditure--Expenditure on share transfer--Assessing Officer making addition holding as capital in nature--Tribunal finding expenditure actually incurred--Findings of fact-- CIT v. H. B. Leasing and Finance Co. Ltd. (Delhi) . . . 367
S. 43(6) --Depreciation--Purchase of assets from franchisee companies--Assessing Officer holding that assessee purchasing running companies and land value suppressed and price of plant and machinery inflated to claim excess depreciation--Tribunal directing Assessing Officer to accept valuation of assets on the basis of valuation report shown in relevant agreements--No defects in valuation reports--Consideration paid represents cost of purchased assets--Depreciation allowable-- CIT v. Pepsico India Holdings P. Ltd. (Delhi) . . . 404
S. 43B(b) --Business expenditure--Deduction only on actual payment--Provision for pension--Liability accrues from year to year--Payable on retirement/resignation of eligible employees--Assessee entitled to deduction-- CIT v. Ranbaxy Laboratories Ltd. (Delhi) . . . 341
S. 68 --Cash credits--Claim that amount was a gift--Finding that assessee could not prove gift--Assessment under section 68--Valid-- Balbir Singh v. CIT (P&H) . . . 287
----Unexplained investment--Development agreement in respect of property--Letter by developer showing receipt of a sum as advance from assessee--Assessing Officer before discarding evidence ought to have summoned developer to find out fact--Matter remanded-- Faiz Murtuza Ali v. CIT (Delhi) . . . 370
S. 69A --Unexplained investment--Development agreement in respect of property--Letter by developer showing receipt of a sum as advance from assessee--Assessing Officer before discarding evidence ought to have summoned developer to find out fact--Matter remanded-- Faiz Murtuza Ali v. CIT (Delhi) . . . 370
----Unexplained money--No incriminating material found during search proceedings--Statement of third party during survey--Not relevant--Section 69A not applicable-- CIT v. Concorde Capital Management Company Ltd. (Delhi) . . . 346
S. 80-IA --New industrial undertaking--Special deduction--Duty drawback benefits do not form part of net profit-- CIT v. Ranbaxy Laboratories Ltd .(Delhi) . . . 341
S. 80M --Intercorporate dividend--Special deduction--Disallowance on ground intercorporate dividend not actually distributed--Amount kept in separate account--Tribunal finding issue debatable--No question of law arises-- CIT v. H. B. Leasing and Finance Co. Ltd. (Delhi) . . . 367
S. 132 --Search and seizure--Warrant of authorisation--Power to issue warrant--Joint Director of Income-tax (Investigation) cannot issue warrant unless authorised specifically by notification of CBDT-- CIT v. Capital Power Systems Limited (Delhi) . . . 349
S. 147 --Reassessment--Reassessment after four years--Conditions precedent--Failure to disclose material facts necessary for assessment--Mere claim for deduction would not amount to such failure--Reassessment on ground computation of deduction under section 80HHC not correct--Reassessment proceedings--Not valid-- Cadila Healthcare Ltd. v. Deputy CIT (Guj) . . . 420
S. 184 --Firm--Legality of firm--Power to enquire into genuineness of firm--Effect of amendment of sections 184 and 185 by Finance Act, 1992--Even after amendment Assessing Officer has power to enquire into legality of firm--Liquor licence in individual name of partner--State Excise Act prohibiting transfer of licence--Liquor business carried on by firm--Firm not legal-- CIT v. Swarna Bar Restaurant (AP) . . . 387
S. 185 --Firm--Legality of firm--Power to enquire into genuineness of firm--Effect of amendment of sections 184 and 185 by Finance Act, 1992--Even after amendment Assessing Officer has power to enquire into legality of firm--Liquor licence in individual name of partner--State Excise Act prohibiting transfer of licence--Liquor business carried on by firm--Firm not legal-- CIT v. Swarna Bar Restaurant (AP) . . . 387
S. 234A --Search and seizure--Advance tax--Interest--Assessee requesting to adjust advance tax payable out of cash seized--Request made prior to due date for payment of instalment of advance tax--Assessee entitled to adjustment--No interest can be charged-- CIT v. Ashok Kumar (P&H) . . . 355
S. 234B --Search and seizure--Advance tax--Interest--Assessee requesting to adjust advance tax payable out of cash seized--Request made prior to due date for payment of instalment of advance tax--Assessee entitled to adjustment--No interest can be charged-- CIT v. Ashok Kumar (P&H) . . . 355
----Search and seizure--Advance tax--Interest--Search taking place after close of financial year--Request for adjustment of advance tax liability against seized cash--Interest under sections 234B and 234C charged--Assessee liable to pay interest under sections 234B and 234C and entitled to benefit of payment out of seized cash from date of making application for adjustment of seized cash towards tax liability-- CIT v. Arun Kapoor (P&H) . . . 351
S. 234C --Search and seizure--Advance tax--Interest--Search taking place after close of financial year--Request for adjustment of advance tax liability against seized cash--Interest under sections 234B and 234C charged--Assessee liable to pay interest under sections 234B and 234C and entitled to benefit of payment out of seized cash from date of making application for adjustment of seized cash towards tax liability-- CIT v. Arun Kapoor (P&H) . . . 351
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 9 : Part 8 (Issue dated : 20-06-2011)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal to Appellate Tribunal --Competency of appeal--Locus standi to file appeal --Person claiming that assessment order on third person was served on him--Penalty on basis of assessment order--Person alleging mistaken identity cannot appeal against order of penalty--Income-tax Act, 1961, s. 253-- Hirachand Ebha Wadhel v. ITO (Mumbai) . . . 773
Depreciation --Higher rate of depreciation--Failure to exercise option regarding allowance of depreciation in accordance with Appendix I not a bar to allowing higher rate of depreciation--Option exercised by assessee before due date for filing return by claiming higher rate of depreciation in return with audit report--Requirement under second proviso to rule 5(1A) fulfilled--Assessees entitled to depreciation in accordance with Appendix I--Income-tax Act, 1961, s. 32--Income-tax Rules, 1962, r. 5, Appx. I-- K. K. S. K. Leather Processors P. Ltd. v. ITO (Chennai) . . . 758
Industrial undertaking --Special deduction--Housing project--Approval by local authority--Village Administrative Officer or Deputy Director of Town Planning--Are "local authority"--Some units in project exceeding 1500 sq. ft. area--Deduction to be allowed pro rata--Income-tax Act, 1961 s. 80-IB(10)-- Sreevatsa Real Estates P. Ltd. v. ITO (Chennai) . . . 808
Penalty --Concealment of income--Amounts shown as gifts--No proof of gifts or that amount was received on surrender of tenancy rights--Penalty leviable under main provision of section 271(1)(c)--Income-tax Act, 1961, s. 271(1)(c)-- Harish P. Mashruwala v. Asst. CIT [SB] (Mumbai) . . . 752
Reassessment --Validity--Original return processed under section 143--Case not covered under proviso to section 147--Reassessment valid--Income-tax Act, 1961, ss. 143, 147-- K. K. S. K. Leather Processors P. Ltd. v. ITO (Chennai) . . . 758
Search and seizure --Block assessment--Assessment of third person--Conditions precedent for making block assessment--Are mandatory and should be satisfied--No recording of "satisfaction" by Assessing Officer of searched persons--Assessment on other person not valid--Income-tax Act, 1961, ss. 132, 158BC, 158BD-- Smt. P. A. Rani v. Asst. CIT (Chennai) . . . 798
----Block assessment--Fixed deposits--Interest on deposits as well as copies of returns disclosed prior to date of search--Proof of source of deposits--Addition to be deleted--Income-tax Act, 1961-- Yudhvir Ramlal Meni v. Deputy CIT (Ahmedabad) . . . 781
----Block assessment--Undisclosed income--Sale of shops and unaccounted cost of construction--Deposits in bank accounts part of regular transaction, disclosing sale proceeds of shops--Seized material not disclosing sale proceeds of shops--Addition to be deleted--Income-tax Act, 1961-- Yudhvir Ramlal Meni v. Deputy CIT (Ahmedabad) . . . 781
----Jewellery--No proof that jewellery acquired by assessee--Jewellery belong to several members of family--Addition to be deleted--Income-tax Act, 1961-- Yudhvir Ramlal Meni v. Deputy CIT (Ahmedabad) . . . 781
Words and phrases --"Assessee"-- Hirachand Ebha Wadhel v. ITO (Mumbai) . . . 773
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 80-IB(10) --Industrial undertaking--Special deduction--Housing project--Approval by local authority--Village Administrative Officer or Deputy Director of Town Planning--Are "local authority"--Some units in project exceeding 1500 sq. ft. area--Deduction to be allowed pro rata-- Sreevatsa Real Estates P. Ltd. v. ITO (Chennai) . . . 808
S. 132 --Search and seizure--Block assessment--Assessment of third person--Conditions precedent for making block assessment--Are mandatory and should be satisfied--No recording of "satisfaction" by Assessing Officer of searched persons--Assessment on other person not valid-- Smt. P. A. Rani v. Asst. CIT (Chennai) . . . 798
S. 143 --Reassessment--Validity--Original return processed under section 143--Case not covered under proviso to section 147--Reassessment valid-- K. K. S. K. Leather Processors P. Ltd. v. ITO (Chennai) . . . 758
S. 147 --Reassessment--Validity--Original return processed under section 143--Case not covered under proviso to section 147--Reassessment valid-- K. K. S. K. Leather Processors P. Ltd. v. ITO (Chennai) . . . 758
S. 158BC --Search and seizure--Block assessment--Assessment of third person--Conditions precedent for making block assessment--Are mandatory and should be satisfied--No recording of "satisfaction" by Assessing Officer of searched persons--Assessment on other person not valid-- Smt. P. A. Rani v. Asst. CIT (Chennai) . . . 798
S. 158BD --Search and seizure--Block assessment--Assessment of third person--Conditions precedent for making block assessment--Are mandatory and should be satisfied--No recording of "satisfaction" by Assessing Officer of searched persons--Assessment on other person not valid-- Smt. P. A. Rani v. Asst. CIT (Chennai) . . . 798
S. 253 --Appeal to Appellate Tribunal--Competency of appeal--Locus standi to file appeal--Person claiming that assessment order on third person was served on him--Penalty on basis of assessment order--Person alleging mistaken identity cannot appeal against order of penalty-- Hirachand Ebha Wadhel v. ITO (Mumbai) . . . 773
S. 271(1)(c) --Penalty--Concealment of income--Amounts shown as gifts--No proof of gifts or that amount was received on surrender of tenancy rights--Penalty leviable under main provision of section 271(1)(c)-- Harish P. Mashruwala v. Asst. CIT [SB] (Mumbai) . . . 752
R. 5, Appx. I --Depreciation--Higher rate of depreciation--Failure to exercise option regarding allowance of depreciation in accordance with Appendix I not a bar to allowing higher rate of depreciation--Option exercised by assessee before due date for filing return by claiming higher rate of depreciation in return with audit report--Requirement under second proviso to rule 5(1A) fulfilled--Assessees entitled to depreciation in accordance with Appendix I-- K. K. S. K. Leather Processors P. Ltd. v. ITO (Chennai) . . . 758
-CA.RAJU SHAH
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