INCOME TAX REPORTS (ITR)
Volume 335 : Part 2 (Issue dated 11-7-2011)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal to Appellate Tribunal --Powers of Tribunal--Business expenditure--Commission paid to direct selling agents for services in sourcing hirers--Tribunal remanding matter to Assessing Officer as no sufficient material to give a finding as to allowability of entire brokerage--No infirmity--Income-tax Act, 1961-- Citi Financial Consumer Finance India Ltd . v. CIT (Delhi) . . . 209
Assessee --Person--Sports association is an assessee--Income-tax Act, 1961, s. 2(17), (31)-- PILCOM v. CIT (Cal) . . . 147
Assessment --Special audit--Order under section 142(2A) directing special audit--Condition precedent--Assessing Officer should be satisfied that accounts were complex and special audit was necessary--Reasons for special audit not mentioned--Order under section 142(2A)--Not valid--Income-tax Act, 1961, s. 142(2A)-- Hind Samachar Ltd . v. Asst. CIT (P&H) . . . 277
Business expenditure --Expenditure on advertisement and sales promotion--To be allowed--Income-tax Act, 1961, s. 37-- CIT v. Casio India Ltd . (Delhi) . . . 196
----General principles--Travel expenses--Resolution of company authorising foreign travel of managing director and his wife for business purposes--Travel expenses deductible--No resolution authorising foreign travel of wife of deputy managing director--Travel expenses of wife of deputy managing director--Not deductible--Income-tax Act, 1961, s. 37-- J. K. Industries Ltd . v. CIT (Cal) . . . . 170
----Manufacturer of soft beverages--Loss on bottle breakage--Deductible--Cost of repairs to wooden crates--Deductible--Income-tax Act, 1961, s. 37-- CIT v. Brindavan Beverages P. Ltd . (Karn) . . . 163
Capital gains --Capital asset--Definition--Exception--Personal effects--Sale of household items--Whether falling under section 2(14)--Matter remanded--Income-tax Act, 1961, s. 2(14)-- CIT v. Faiz Murtaza Ali (Delhi) . . . 272
Depreciation --Rate of depreciation--100 per cent. depreciation for machinery and plant used in mineral oil concerns--Wireline logging and perforation equipment used for oil companies--Entitled to 100 per cent. depreciation--Income-tax Act, 1961, s. 32--Income-tax Rules, 1962, r. 5-- CIT v. HLS India Ltd . (Delhi) . . . 292
Income from undisclosed sources --Manufacturer of soft beverages--Security deposit from distributors towards wooden crates and bottles--No evidence that amounts not received--Amount cannot be treated as income of assessee merely because distributors were related to assessee or employees of assessee--Income-tax Act, 1961-- CIT v. Brindavan Beverages P. Ltd. (Karn) . . . 163
Industrial undertaking --Investment allowance--Special deduction under sections 80-IA and 80-IB--Meaning of industrial undertaking--Manufacture or production of article or thing--Assessee providing wireline logging and perforation services to oil companies--Assessee is an industrial undertaking for purposes of section 32A and section 80-IA/80-IB--Income-tax Act, 1961, ss. 32A, 80-IA, 80-IB-- CIT v. HLS India Ltd .(Delhi) . . . 292
Interest on borrowed capital --Exemption--Claim to deduction of interest paid on borrowed capital--Borrowing for purpose of investment in partnership--Claim not established--Interest not allowable--Income-tax Act, 1961, ss. 10(2A), 36(1)(iii)-- CIT v. K. L. Srihari (Karn) . . . 215
Interpretation of taxing statutes --Interpretation should not lead to anomaly-- CIT v. Mridula, Prop. Dhruv Fabrics (P&H) . . . 266
Non-banking financial company --Income--Mercantile system of accounting--Interest on loans given--Loans became non-performing assets--Interest not received and possibility of recovery nil--Interest not to be treated to be accrued in favour of assessee--Income-tax Act, 1961, s. 5-- Director of Income-tax v. Brahamputra Capital Financial Services Ltd. (Delhi) . . . 182
Penalty --Concealment of income--Commissioner (Appeals) setting aside penalty, without going into merits--Matter to be heard with quantum appeal filed by assessee--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Rajesh Rana (P&H) . . . 207
----Concealment of income--Discrepancy in stocks found during search--Voluntary surrender of income by assessee during assessment proceedings to buy peace--Not by itself ground to impose penalty--Assessee placing evidence with corroborating proof explaining discrepancy in stocks--Deletion of penalty in identical circumstances in case of firm of which assessee partner becoming final--Penalty not imposable on assessee--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Harsh Talwar (Delhi) . . . 200
----Concealment of income--Survey--Assessing Officer initiating penalty on ground of discrepancies found during survey--Assessee disclosing particulars of income and surrendering entire amount in return duly filed--Penalty cannot be imposed --Income-tax Act, 1961, s. 271(1)(c)-- CIT v. SAS Pharmaceuticals (Delhi) . . . 259
Precedent --Effect of decision of Supreme Court in CIT v. Walchand and Co. P. Ltd. [1967] 65 ITR 381--J . K. Industries Ltd . v. CIT (Cal) . . . . 170
Reassessment --Notice after four years--Failure to disclose material facts necessary for assessment--Original assessment allowing deduction for housing project after examining facts--Notice after four years alleging that assessee was a works contractor and not a developer--No failure to disclose material facts necessary for assessment--Notice not valid--Income-tax Act, 1961, ss. 80-IB(10), 147, 148-- Aayojan Developers v. ITO (Guj) . . . 234
----Notice--Condition precedent--Recording of reasons--Effect of affidavit--Affidavit can explain reasons but cannot validate notice--Income-tax Act, 1961, s. 148-- Aayojan Developers v. ITO (Guj) . . . 234
----Notice--Validity--Notice for rectification issued beyond period of limitation--Rectification proceedings not pending--Notice of reassessment can be issued--Income-tax Act, 1961, ss. 148, 154-- CIT v. S. M. Overseas P. Ltd . (P&H) . . . 281
----Notice--Validity--Payment of usance interest on purchase of ship without deducting tax at source for assessment year 1994-95--Amendment of section 10(15) with retrospective effect from 1-4-1962 exempting usance interest--Notice not valid--Income-tax Act, 1961, ss. 10(15)(iv)(c), 40(a)(i), 148-- Trivenu Ship Breakers v. Harsh Prakash (Guj) . . . 284
Rectification of mistakes --Application for rectification--Effect of sub-section (8) of section 154--Order on application to be made within six months of receipt of application--Failure to pass order--Application again made to new incumbent upon restructuring of Department--Application cannot be rejected on the ground of limitation--Income-tax Act, 1961, s. 154(8)-- State Bank of India v. CIT (TDS) (Patna) . . . 287
Return --Delay in filing return--Interest--Assessing Officer holding assessee not eligible for benefit of loss to be carried forward for failure to file return within due date and levying interest--Tribunal following identical issue in the case of a family member allowing assessee's claim--That assessee, a partner of firm in whose case due date for filing return was later--Whether assessee also partner--Matter remanded--Income-tax Act, 1961, ss. 139, 234A-- CIT v. Sashi Prakash Khemka (Delhi) . . . 176
Search and seizure --Block assessment--Assessment of third person--Scope of section 158BD--Action under section 158BD must be taken before completion of assessment of searched person--Block assessment under section 158BC completed on 30-3-2005--Satisfaction under section 158BD recorded on 15-7-2005--Proceedings not valid--Income-tax Act, 1961, ss. 158BC, 158BD-- CIT v. Mridula, Prop. Dhruv Fabrics (P&H) . . . 266
----Block assessment--Delay in filing returns--Interest payable--Income-tax Act, 1961, s. 158BFA-- CIT v. K. L. Srihari (Karn) . . . 215
----Block assessment--Surcharge to be paid--Income-tax Act, 1961, s. 113-- CIT v. K. L. Srihari (Karn) . . . 215
----Requisitioning of assets--Warrant of authorisation under section 132A--Cash and silver seized by Railway police--Report of Director of Income-tax that assets would not be disclosed to Revenue--Warrant of authorisation under section 132A--Valid--Income-tax Act, 1961, s. 132A-- Smt. Suman Singhai v. Director of Income-tax (Investigation) (MP) . . . 188
Sports association --Deduction of tax at source--Effect of sections 115BBA and 194E--Sports association in England granting permission to Indian sports association to conduct matches in India--Amount paid by Indian sports association to non-resident sports association--Tax to be deducted on such payments--Income-tax Act, 1961, ss. 115BBA, 194E-- PILCOM v. CIT (Cal) . . . 147
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 2(14) --Capital gains--Capital asset--Definition--Exception--Personal effects--Sale of household items--Whether falling under section 2(14)--Matter remanded-- CIT v. Faiz Murtaza Ali (Delhi) . . . 272
S. 2(17) --Assessee--Person--Sports association is an assessee-- PILCOM v. CIT (Cal) . . . 147
S. 2(31) --Assessee--Person--Sports association is an assessee-- PILCOM v. CIT (Cal) . . . 147
S. 5 --Non-banking financial company--Income--Mercantile system of accounting--Interest on loans given--Loans became non-performing assets--Interest not received and possibility of recovery nil--Interest not to be treated to be accrued in favour of assessee-- Director of Income-tax v. Brahamputra Capital Financial Services Ltd. (Delhi) . . . 182
S. 10(2A) --Interest on borrowed capital--Exemption--Claim to deduction of interest paid on borrowed capital--Borrowing for purpose of investment in partnership--Claim not established--Interest not allowable-- CIT v. K. L. Srihari (Karn) . . . 215
S. 10(15)(iv)(c) --Reassessment--Notice--Validity--Payment of usance interest on purchase of ship without deducting tax at source for assessment year 1994-95--Amendment of section 10(15) with retrospective effect from 1-4-1962 exempting usance interest--Notice not valid-- Trivenu Ship Breakers v. Harsh Prakash (Guj) . . . 284
S. 32 --Depreciation--Rate of depreciation--100 per cent. depreciation for machinery and plant used in mineral oil concerns--Wireline logging and perforation equipment used for oil companies--Entitled to 100 per cent. depreciation-- CIT v. HLS India Ltd .(Delhi) . . . 292
S. 32A --Industrial undertaking--Investment allowance--Special deduction under sections 80-IA and 80-IB--Meaning of industrial undertaking--Manufacture or production of article or thing--Assessee providing wireline logging and perforation services to oil companies--Assessee is an industrial undertaking for purposes of section 32A and section 80-IA/80-IB-- CIT v. HLS India Ltd . (Delhi) . . . 292
S. 36(1)(iii) --Interest on borrowed capital--Exemption--Claim to deduction of interest paid on borrowed capital--Borrowing for purpose of investment in partnership--Claim not established--Interest not allowable-- CIT v. K. L. Srihari (Karn) . . . 215
S. 37 --Business expenditure--Expenditure on advertisement and sales promotion--To be allowed-- CIT v. Casio India Ltd . (Delhi) . . . 196
----Business expenditure--General principles--Travel expenses--Resolution of company authorising foreign travel of managing director and his wife for business purposes--Travel expenses deductible--No resolution authorising foreign travel of wife of deputy managing director--Travel expenses of wife of deputy managing director--Not deductible-- J. K. Industries Ltd . v. CIT (Cal) . . . 170
----Business expenditure--Manufacturer of soft beverages--Loss on bottle breakage--Deductible--Cost of repairs to wooden crates--Deductible-- CIT v. Brindavan Beverages P. Ltd . (Karn) . . . 163
S. 40(a)(i) --Reassessment--Notice--Validity--Payment of usance interest on purchase of ship without deducting tax at source for assessment year 1994-95--Amendment of section 10(15) with retrospective effect from 1-4-1962 exempting usance interest--Notice not valid-- Trivenu Ship Breakers v. Harsh Prakash (Guj) . . . 284
S. 80-IA --Industrial undertaking--Investment allowance--Special deduction under sections 80-IA and 80-IB--Meaning of industrial undertaking--Manufacture or production of article or thing--Assessee providing wireline logging and perforation services to oil companies--Assessee is an industrial undertaking for purposes of section 32A and section 80-IA/80-IB-- CIT v. HLS India Ltd . (Delhi) . . . 292
S. 80-IB --Industrial undertaking--Investment allowance--Special deduction under sections 80-IA and 80-IB--Meaning of industrial undertaking--Manufacture or production of article or thing--Assessee providing wireline logging and perforation services to oil companies--Assessee is an industrial undertaking for purposes of section 32A and section 80-IA/80-IB-- CIT v. HLS India Ltd . (Delhi) . . . 292
S. 80-IB(10) --Reassessment--Notice after four years--Failure to disclose material facts necessary for assessment--Original assessment allowing deduction for housing project after examining facts--Notice after four years alleging that assessee was a works contractor and not a developer--No failure to disclose material facts necessary for assessment--Notice not valid-- Aayojan Developers v. ITO (Guj) . . . 234
S. 113 --Search and seizure--Block assessment--Surcharge to be paid-- CIT v. K. L. Srihari (Karn) . . . 215
S. 115BBA --Sports association--Deduction of tax at source--Effect of sections 115BBA and 194E--Sports association in England granting permission to Indian sports association to conduct matches in India--Amount paid by Indian sports association to non-resident sports association--Tax to be deducted on such payments-- PILCOM v. CIT (Cal) . . . 147
S. 132A --Search and seizure--Requisitioning of assets--Warrant of authorisation under section 132A--Cash and silver seized by Railway police--Report of Director of Income-tax that assets would not be disclosed to Revenue--Warrant of authorisation under section 132A--Valid-- Smt. Suman Singhai v. Director of Income-tax (Investigation) (MP) . . . 188
S. 139 --Return--Delay in filing return--Interest--Assessing Officer holding assessee not eligible for benefit of loss to be carried forward for failure to file return within due date and levying interest--Tribunal following identical issue in the case of a family member allowing assessee's claim--That assessee, a partner of firm in whose case due date for filing return was later--Whether assessee also partner--Matter remanded-- CIT v. Sashi Prakash Khemka (Delhi) . . . 176
S. 142(2A) --Assessment--Special audit--Order under section 142(2A) directing special audit--Condition precedent--Assessing Officer should be satisfied that accounts were complex and special audit was necessary--Reasons for special audit not mentioned--Order under section 142(2A)--Not valid-- Hind Samachar Ltd . v. Asst. CIT (P&H) . . . 277
S. 147 --Reassessment--Notice after four years--Failure to disclose material facts necessary for assessment--Original assessment allowing deduction for housing project after examining facts--Notice after four years alleging that assessee was a works contractor and not a developer--No failure to disclose material facts necessary for assessment--Notice not valid-- Aayojan Developers v. ITO (Guj) . . . 234
S. 148 --Reassessment--Notice--Condition precedent--Recording of reasons--Effect of affidavit--Affidavit can explain reasons but cannot validate notice-- Aayojan Developers v. ITO (Guj) . . . 234
----Reassessment--Notice--Validity--Notice for rectification issued beyond period of limitation--Rectification proceedings not pending--Notice of reassessment can be issued-- CIT v. S. M. Overseas P. Ltd . (P&H) . . . 281
----Reassessment--Notice--Validity--Payment of usance interest on purchase of ship without deducting tax at source for assessment year 1994-95--Amendment of section 10(15) with retrospective effect from 1-4-1962 exempting usance interest--Notice not valid-- Trivenu Ship Breakers v. Harsh Prakash (Guj) . . . 284
----Reassessment--Notice after four years--Failure to disclose material facts necessary for assessment--Original assessment allowing deduction for housing project after examining facts--Notice after four years alleging that assessee was a works contractor and not a developer--No failure to disclose material facts necessary for assessment--Notice not valid-- Aayojan Developers v. ITO (Guj) . . . 234
S. 154 --Reassessment--Notice--Validity--Notice for rectification issued beyond period of limitation--Rectification proceedings not pending--Notice of reassessment can be issued-- CIT v. S. M. Overseas P. Ltd . (P&H) . . . 281
S. 154(8) --Rectification of mistakes--Application for rectification--Effect of sub-section (8) of section 154--Order on application to be made within six months of receipt of application--Failure to pass order--Application again made to new incumbent upon restructuring of Department--Application cannot be rejected on the ground of limitation-- State Bank of India v. CIT (TDS) (Patna) . . . 287
S. 158BC --Search and seizure--Block assessment--Assessment of third person--Scope of section 158BD--Action under section 158BD must be taken before completion of assessment of searched person--Block assessment under section 158BC completed on 30-3-2005--Satisfaction under section 158BD recorded on 15-7-2005--Proceedings not valid-- CIT v. Mridula, Prop. Dhruv Fabrics (P&H) . . . 266
S. 158BD --Search and seizure--Block assessment--Assessment of third person--Scope of section 158BD--Action under section 158BD must be taken before completion of assessment of searched person--Block assessment under section 158BC completed on 30-3-2005--Satisfaction under section 158BD recorded on 15-7-2005--Proceedings not valid-- CIT v. Mridula, Prop. Dhruv Fabrics (P&H) . . . 266
S. 158BFA --Search and seizure--Block assessment--Delay in filing returns--Interest payable-- CIT v. K. L. Srihari (Karn) . . . 215
S. 194E --Sports association--Deduction of tax at source--Effect of sections 115BBA and 194E--Sports association in England granting permission to Indian sports association to conduct matches in India--Amount paid by Indian sports association to non-resident sports association--Tax to be deducted on such payments-- PILCOM v. CIT (Cal) . . . 147
S. 234A --Return--Delay in filing return--Interest--Assessing Officer holding assessee not eligible for benefit of loss to be carried forward for failure to file return within due date and levying interest--Tribunal following identical issue in the case of a family member allowing assessee's claim--That assessee, a partner of firm in whose case due date for filing return was later--Whether assessee also partner--Matter remanded-- CIT v. Sashi Prakash Khemka (Delhi) . . . 176
S. 271(1)(c) --Penalty--Concealment of income--Commissioner (Appeals) setting aside penalty, without going into merits--Matter to be heard with quantum appeal filed by assessee-- CIT v. Rajesh Rana (P&H) . . . 207
----Penalty--Concealment of income--Discrepancy in stocks found during search--Voluntary surrender of income by assessee during assessment proceedings to buy peace--Not by itself ground to impose penalty--Assessee placing evidence with corroborating proof explaining discrepancy in stocks--Deletion of penalty in identical circumstances in case of firm of which assessee partner becoming final--Penalty not imposable on assessee-- CIT v. Harsh Talwar (Delhi) . . . 200
----Penalty--Concealment of income--Survey--Assessing Officer initiating penalty on ground of discrepancies found during survey--Assessee disclosing particulars of income and surrendering entire amount in return duly filed--Penalty cannot be imposed -- CIT v. SAS Pharmaceuticals (Delhi) . . . 259
r. 5 --Depreciation--Rate of depreciation--100 per cent. depreciation for machinery and plant used in mineral oil concerns--Wireline logging and perforation equipment used for oil companies--Entitled to 100 per cent. depreciation-- CIT v. HLS India Ltd . (Delhi) . . . 292
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 10 : Part 2 (Issue dated : 11-07-2011)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal to Commissioner (Appeals) --Income from house property--Annual letting value--Municipal taxes--Subletting of property--Sub-tenants directly depositing municipal taxes--Assessee admitting annual letting value without explaining facts--Additional ground raising annual letting value--Commissioner (Appeals) dismissing additional ground--Not proper--Matter remanded--Income-tax Act, 1961-- Urmila and Co. Ltd. v . Deputy CIT (Mumbai) . . . 217
Assessment --Limitation--Report of special auditors received on 20-6-2005--Assessing Officer has no power to extend period of limitation--Assessment order passed on 29-8-2005 barred by limitation--Income-tax Act, 1961, s. 142-- Deputy CIT v. Ramachandra Dashrath Hande and Co. (Mumbai) . . . 117
Business expenditure --Disallowance--Excessive and unreasonable payments--Tug charges paid to sister concern--Tug not used for any transportation during relevant period--No case for commercial expediency of payment to sister concern--Disallowance justified--Income-tax Act, 1961, s. 40A(2)(b)-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217
----Disallowance--Expenditure on Diwali gift--Claim not substantiated by evidence --Disallowance of fifty per cent.--Proper--Income-tax Act, 1961, s. 37-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217
----Disallowance--Expenses relating to civil work--No evidence to show amount not encashed by department--Disallowance justified--Income-tax Act, 1961, s. 37-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217
----Disallowance--Motor car expenses and current repairs--Disallowance modified to 10 per cent.--Income-tax Act, 1961, s. 37-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217
----Fee for utilisation of club facilities by executive officer of assessee--Allowable--Sum towards receivables--Not allowable--Income-tax Act, 1961, s. 37-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217
----Reimbursement of telephone expenses by assessee to its executives--Perquisites in hands of executives--No addition could be made--Income-tax Act, 1961, s. 37-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217
----Tug hire charges--Period of contract more than thirteen months--Accrual of hire charges--Hire charges for months and part thereof allowable--Claim of hire charges for tug for thirteen months--Proper--Hire charges for demobilisation period--Assessee not entitled to hire charges--Income-tax Act, 1961-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217
Capital gains --Computation of capital gains--Deductions--Cost of improvement--No evidence that sums had been spent on improvement of property--Expenditure on general maintenance--Amounts not deductible--Income-tax Act, 1961-- Mrs. Kiran Bansal v. Asst. CIT (Delhi) . . . 180
----Computation--Understatement of sale consideration--Burden of proof--No proof of understatement of sale consideration--Assessing Officer to adopt sale consideration of shares as disclosed by assessee--Income-tax Act, 1961, s. 48-- Deputy CIT v. Jindal Equipment Leasing and Consultancy Services Ltd. (Delhi) . . . 128
----Long-term capital gains--Exemption--Sale of shares--Assessee's primary business, dealing in shares--Assessee holding controlling shares in particular company promoted by assessee and treating shares as investment and not in nature of stock-in-trade--Transfer of shares give rise to long-term capital gains--Assessee entitled to exemption--Income-tax Act, 1961, s. 10(38)-- Asst. CIT v. Stargate Investments P. Ltd. (Chennai) . . . 211
Charitable trust --Exemption--Assessee engaged in imparting education and training in traditional art forms--Assessee entitled to exemption--Income-tax Act, 1961, ss. 10(23C)(iiiad), 11-- Vempati Chinna Satyam Kuchipudi Art Foundation v. Deputy CIT (Chennai) . . . 201
----Exemption--Money utilised by trustee to meet his medical emergency--Trustee not beneficiary and trust entitled to exemption--Income-tax Act, 1961, ss. 11, 13(3)-- Vempati Chinna Satyam Kuchipudi Art Foundation v. Deputy CIT (Chennai) . . . 201
Commissioner --Revision--Capital gains--Cost of acquisition--Tiles laying, white washing, electrical rewiring and wood work expenses--Are post-acquisition expenses--To be excluded--Brokerage and legal fees--Part of acquisition cost--To be allowed--Income-tax Act, 1961, ss. 54, 263-- Smt. S. Sudha v. Asst. CIT (Chennai) . . . 206
----Revision--Penalty--Commissioner can interfere only in case of failure by assessing authority to levy penalty where it is imperative--Assessee claiming expenses as part of acquisition cost on a bona fide belief--Penalty cannot be imposed--Income-tax Act, 1961, ss. 271(1)(c), 274-- Smt. S. Sudha v. Asst. CIT (Chennai) . . . 206
Company --Dividend--Deemed dividend--Company in which public was not substantially interested--Loan to shareholder holding more than 10 per cent. voting rights--Loan out of accumulated profits--No evidence that loan was for purposes of business of company--Loan assessable as deemed dividend--Income-tax Act, 1961, s. 2(22)(e)-- Mrs. Kiran Bansal v. Asst. CIT (Delhi) . . . 180
Deduction of tax at source --Payments to non-residents--Commission paid outside India for services rendered outside India--Tax not deductible at source--Fees for technical services--Insulator testing, advertising, etc.--Not technical services--Tax not deductible at source--Income-tax Act, 1961, ss. 9(1)(i), (vii), 40(a)(ia), 195--Double Taxation Avoidance Agreement between India and the U. K., arts. 7, 13--Double Taxation Avoidance Agreement between India and the U. A. E., art. 7--Double Taxation Avoidance Agreement between India and Russia, arts. 7, 12--Double Taxation Avoidance Agreement with South Africa, art. 7--Circular No. 786, dated February 7, 2000--Circular No. 7, dated 22-10-2009-- Asst. CIT v. Modern Insulator Ltd. (Jaipur) . . . 147
Depreciation --Higher rate of depreciation--Tractors and trailers--Assessee in business of transportation of goods on hire basis--Entitled to higher rate of depreciation--Circular No. 652 dated June 14, 1993--Income-tax Act, 1961, s. 32-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217
Exemption --Venture capital fund--Interest on temporary investments and profit on sale of units of mutual fund--Assessee entitled to exemption--Amendment with effect from April 1, 2008 restricting exemption to income from investment in venture capital undertaking--Not applicable to earlier years--Income-tax Act, 1961, s. 10(23FB)-- ITO v. Kshitij Venture Capital Fund (Mumbai) . . . 136
Export --Special deduction--Computation--Interest received treated as business income by Assessing Officer--Only 90 per cent. of net interest received to be excluded from business profit --Net interest computation--Gross interest less expenditure incurred for earning interest income--Matter remanded to examine nexus between interest received and interest payment--Income-tax Act, 1961, s. 80HHC-- Nancy Krafts P. Ltd. v. Asst. CIT (Delhi) . . . 193
Property --Annual letting value--Rent Control Act--Prohibition on charging more than standard rent permissible under Act--Assessing Officer directed to compute annual letting value in terms of standard rent payable under Act--Bombay Rent Control Act--Income-tax Act, 1961, s. 23-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217
Reassessment --Cost of construction--Reference to Valuation Officer--No proceedings pending before Assessing Officer--Assessing Officer has no jurisdiction to refer property for valuation to Valuation Officer--Reassessment notice issued on basis of valuation--Not permissible--Income-tax Act, 1961, s. 148-- ITO v. Nisarg Co-op. Housing Society Ltd. (Ahmedabad) . . . 174
----Validity of notice--Notice issued after four years--No inquiry in original assessment by Assessing Officer nor disclosure by assessee as to nexus between interest received and interest payment--Non-application of mind by Assessing Officer during original assessment--Reassessment valid--Income-tax Act, 1961, ss. 147, 148-- Nancy Krafts P. Ltd. v. Asst. CIT (Delhi) . . . 193
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Double Taxation Avoidance Agreement between India and Russia :
Arts. 7, 12 --Deduction of tax at source--Payments to non-residents--Commission paid outside India for services rendered outside India--Tax not deductible at source--Fees for technical services--Insulator testing, advertising, etc.--Not technical services--Tax not deductible at source--Circular No. 786, dated February 7, 2000--Circular No. 7, dated 22-10-2009-- Asst. CIT v. Modern Insulator Ltd. (Jaipur) . . . 147
Double Taxation Avoidance Agreement with South Africa :
Art. 7 --Deduction of tax at source--Payments to non-residents--Commission paid outside India for services rendered outside India--Tax not deductible at source--Fees for technical services--Insulator testing, advertising, etc.--Not technical services--Tax not deductible at source--Circular No. 786, dated February 7, 2000--Circular No. 7, dated 22-10-2009-- Asst. CIT v. Modern Insulator Ltd. (Jaipur) . . . 147
Double Taxation Avoidance Agreement between India and the U. A. E. :
Art. 7 --Deduction of tax at source--Payments to non-residents--Commission paid outside India for services rendered outside India--Tax not deductible at source--Fees for technical services--Insulator testing, advertising, etc.--Not technical services--Tax not deductible at source--Circular No. 786, dated February 7, 2000--Circular No. 7, dated 22-10-2009-- Asst. CIT v. Modern Insulator Ltd. (Jaipur) . . . 147
Double Taxation Avoidance Agreement between India and the U. K. :
Arts. 7, 13 --Deduction of tax at source--Payments to non-residents--Commission paid outside India for services rendered outside India--Tax not deductible at source--Fees for technical services--Insulator testing, advertising, etc.--Not technical services--Tax not deductible at source--Circular No. 786, dated February 7, 2000--Circular No. 7, dated 22-10-2009-- Asst. CIT v. Modern Insulator Ltd. (Jaipur) . . . 147
S. 2(22)(e) --Company--Dividend--Deemed dividend--Company in which public was not substantially interested--Loan to shareholder holding more than 10 per cent. voting rights--Loan out of accumulated profits--No evidence that loan was for purposes of business of company--Loan assessable as deemed dividend-- Mrs. Kiran Bansal v. Asst. CIT (Delhi) . . . 180
S. 9(1)(i) --Deduction of tax at source--Payments to non-residents--Commission paid outside India for services rendered outside India--Tax not deductible at source--Fees for technical services--Insulator testing, advertising, etc.--Not technical services--Tax not deductible at source--Circular No. 786, dated February 7, 2000--Circular No. 7, dated 22-10-2009-- Asst. CIT v. Modern Insulator Ltd. (Jaipur) . . . 147
S. 9(1)(vii) --Deduction of tax at source--Payments to non-residents--Commission paid outside India for services rendered outside India--Tax not deductible at source--Fees for technical services--Insulator testing, advertising, etc.--Not technical services--Tax not deductible at source--Circular No. 786, dated February 7, 2000--Circular No. 7, dated 22-10-2009-- Asst. CIT v. Modern Insulator Ltd. (Jaipur) . . . 147
S. 10(23C)(iiiad) --Charitable trust--Exemption--Assessee engaged in imparting education and training in traditional art forms--Assessee entitled to exemption-- Vempati Chinna Satyam Kuchipudi Art Foundation v. Deputy CIT (Chennai) . . . 201
S. 10(23FB) --Exemption--Venture capital fund--Interest on temporary investments and profit on sale of units of mutual fund--Assessee entitled to exemption--Amendment with effect from April 1, 2008 restricting exemption to income from investment in venture capital undertaking--Not applicable to earlier years-- ITO v. Kshitij Venture Capital Fund (Mumbai) . . . 136
S. 10(38) --Capital gains--Long-term capital gains--Exemption--Sale of shares--Assessee's primary business, dealing in shares--Assessee holding controlling shares in particular company promoted by assessee and treating shares as investment and not in nature of stock-in-trade--Transfer of shares give rise to long-term capital gains--Assessee entitled to exemption-- Asst. CIT v. Stargate Investments P. Ltd. (Chennai) . . . 211
S. 11 --Charitable trust--Exemption--Assessee engaged in imparting education and training in traditional art forms--Assessee entitled to exemption-- Vempati Chinna Satyam Kuchipudi Art Foundation v. Deputy CIT (Chennai) . . . 201
----Charitable trust--Exemption--Money utilised by trustee to meet his medical emergency--Trustee not beneficiary and trust entitled to exemption-- Vempati Chinna Satyam Kuchipudi Art Foundation v. Deputy CIT (Chennai) . . . 201
S. 13(3) --Charitable trust--Exemption--Money utilised by trustee to meet his medical emergency--Trustee not beneficiary and trust entitled to exemption-- Vempati Chinna Satyam Kuchipudi Art Foundation v. Deputy CIT (Chennai) . . . 201
S. 23 --Property--Annual letting value--Rent Control Act--Prohibition on charging more than standard rent permissible under Act--Assessing Officer directed to compute annual letting value in terms of standard rent payable under Act--Bombay Rent Control Act-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217
S. 32 --Depreciation--Higher rate of depreciation--Tractors and trailers--Assessee in business of transportation of goods on hire basis--Entitled to higher rate of depreciation--Circular No. 652 dated June 14, 1993-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217
S. 37 --Business expenditure--Disallowance--Expenditure on Diwali gift--Claim not substantiated by evidence--Disallowance of fifty per cent.--Proper-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217
----Business expenditure--Disallowance--Expenses relating to civil work--No evidence to show amount not encashed by department--Disallowance justified-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217
----Business expenditure--Disallowance--Motor car expenses and current repairs--Disallowance modified to 10 per cent.-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217
----Business expenditure--Fee for utilisation of club facilities by executive officer of assessee--Allowable--Sum towards receivables--Not allowable-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217
----Business expenditure--Reimbursement of telephone expenses by assessee to its executives--Perquisites in hands of executives--No addition could be made-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217
S. 40(a)(ia) --Deduction of tax at source--Payments to non-residents--Commission paid outside India for services rendered outside India--Tax not deductible at source--Fees for technical services--Insulator testing, advertising, etc.--Not technical services--Tax not deductible at source--Circular No. 786, dated February 7, 2000--Circular No. 7, dated 22-10-2009-- Asst. CIT v. Modern Insulator Ltd. (Jaipur) . . . 147
S. 40A(2)(b) --Business expenditure--Disallowance--Excessive and unreasonable payments--Tug charges paid to sister concern--Tug not used for any transportation during relevant period--No case for commercial expediency of payment to sister concern--Disallowance justified-- Urmila and Co. Ltd. v. Deputy CIT (Mumbai) . . . 217
S. 48 --Capital gains--Computation--Understatement of sale consideration--Burden of proof--No proof of understatement of sale consideration--Assessing Officer to adopt sale consideration of shares as disclosed by assessee-- Deputy CIT v. Jindal Equipment Leasing and Consultancy Services Ltd. (Delhi) . . . 128
S. 54 --Commissioner--Revision--Capital gains--Cost of acquisition--Tiles laying, white washing, electrical rewiring and wood work expenses--Are post-acquisition expenses--To be excluded--Brokerage and legal fees--Part of acquisition cost--To be allowed-- Smt. S. Sudha v. Asst. CIT (Chennai) . . . 206
S. 80HHC --Export--Special deduction--Computation--Interest received treated as business income by Assessing Officer--Only 90 per cent. of net interest received to be excluded from business profit--Net interest computation--Gross interest less expenditure incurred for earning interest income--Matter remanded to examine nexus between interest received and interest payment-- Nancy Krafts P. Ltd. v. Asst. CIT (Delhi) . . . 193
S. 142 --Assessment--Limitation--Report of special auditors received on 20-6-2005 --Assessing Officer has no power to extend period of limitation--Assessment order passed on 29-8-2005 barred by limitation-- Deputy CIT v. Ramachandra Dashrath Hande and Co. (Mumbai) . . . 117
S. 147 --Reassessment--Validity of notice--Notice issued after four years--No inquiry in original assessment by Assessing Officer nor disclosure by assessee as to nexus between interest received and interest payment--Non-application of mind by Assessing Officer during original assessment--Reassessment valid-- Nancy Krafts P. Ltd. v. Asst. CIT (Delhi) . . . 193
S. 148 --Reassessment--Cost of construction--Reference to Valuation Officer--No proceedings pending before Assessing Officer--Assessing Officer has no jurisdiction to refer property for valuation to Valuation Officer--Reassessment notice issued on basis of valuation--Not permissible-- ITO v. Nisarg Co-op. Housing Society Ltd. (Ahmedabad) . . . 174
-- --Reassessment--Validity of notice--Notice issued after four years--No inquiry in original assessment by Assessing Officer nor disclosure by assessee as to nexus between interest received and interest payment--Non-application of mind by Assessing Officer during original assessment--Reassessment valid-- Nancy Krafts P. Ltd. v. Asst. CIT (Delhi) . . . 193
S. 195 --Deduction of tax at source--Payments to non-residents--Commission paid outside India for services rendered outside India--Tax not deductible at source--Fees for technical services--Insulator testing, advertising, etc.--Not technical services--Tax not deductible at source--Circular No. 786, dated February 7, 2000--Circular No. 7, dated 22-10-2009-- Asst. CIT v. Modern Insulator Ltd. (Jaipur) . . . 147
S. 263 --Commissioner--Revision--Capital gains--Cost of acquisition--Tiles laying, white washing, electrical rewiring and wood work expenses--Are post-acquisition expenses--To be excluded--Brokerage and legal fees--Part of acquisition cost--To be allowed-- Smt. S. Sudha v. Asst. CIT (Chennai) . . . 206
S. 271(1)(c) --Commissioner--Revision--Penalty--Commissioner can interfere only in case of failure by assessing authority to levy penalty where it is imperative--Assessee claiming expenses as part of acquisition cost on a bona fide belief--Penalty cannot be imposed-- Smt. S. Sudha v. Asst. CIT (Chennai) . . . 206
S. 274--Commissioner--Revision--Penalty--Commissioner can interfere only in case of failure by assessing authority to levy penalty where it is imperative--Assessee claiming expenses as part of acquisition cost on a bona fide belief--Penalty cannot be imposed--Smt. S. Sudha v. Asst. CIT (Chennai) . . . 206
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