INCOME TAX REPORTS (ITR)
Volume 337 : Part 1 (Issue dated 12-9-2011)
Assessing Officer --Powers--Order giving effect to order of Tribunal--No jurisdiction to go beyond order of Tribunal--Winnings from television game show--Order of Tribunal holding not taxable under section 115BB prior to 1-4-2002--Assessing Officer not entitled to tax as income from other sources while giving effect to order of Tribunal--Income-tax Act, 1961, ss. 2(24)(ix), 115BB-- Miss Lopamudra Misra v. Asst. CIT (Orissa) . . . 92
Assessment --Assessing Officer--Jurisdiction--Objection to jurisdiction cannot be raised after assessment is completed--Assessing Officer having jurisdiction when he commenced assessment proceedings--Subsequent transfer of case from him--Assessment completed by same Assessing Officer--Plea of want of jurisdiction could not be raised in appeal--No evidence of prejudice to assessee--Assessment valid--Income-tax Act, 1961, s. 124(4)-- CIT v. British India Corporation Ltd. (All) . . . 64
Business expenditure --Disallowance--Excessive or unreasonable payments--Remuneration/royalty paid to subsidiaries for technical assistance--Finding that such assistance essential for business--Finding that expenditure not excessive or unreasonable--Deductible--Section 92 does not apply to royalty which is not part of regular business between resident and non-resident--Income-tax Act, 1961, ss. 37, 40A(2), 92--Double Taxation Avoidance Agreement between India and Switzerland, art. 9-- CIT v. Nestle India Ltd . (Delhi) . . . 103
Capital gains --Computation--Deduction--Cost of acquisition--Sale of original shares and bonus shares--Cost of acquisition to be spread over original and bonus shares--Income-tax Act, 1961, ss. 45, 55(2)(b)(i)-- M. B. and Co. Ltd . v. Asst. CIT (Mad) . . . 29
Exemption --Charitable institution--Exemption under section 10(23C)(iv)--Order of court to withdraw utilization/investment and utilize/invest those funds in terms of section 11(5) for entitlement to benefit--Assessee complying with direction--Assessee entitled to exemption--Income-tax Act, 1961, s. 10(23C)(iv)-- Export Promotion Council for Handicrafts v. Director General of Income-tax (Exemptions) (Delhi) . . . 26
Income --Definition--Winnings from television game show--Included within definition with effect from assessment year 2002-03--Winnings in earlier period not taxable--Matter remanded--Income-tax Act, 1961, ss. 2(24)(ix), Expln. (ii), 115BB-- Miss Lopamudra Misra v. Asst. CIT (Orissa) . . . 86
----Income or capital--Company--Share capital raised in foreign country and repatriated when required--Gains due to fluctuation in foreign exchange--Constituted capital receipt --Part of amount used as working capital--Not relevant--Income-tax Act, 1961-- CIT v. Jagatjit Industries Ltd . (Delhi) . . . 21
Income from house property --Deduction--Vacancy--Law applicable--Effect of insertion of clause (c) in section 23(1)--Property not let out at all--Deduction for vacancy not allowable--Income-tax Act, 1961, s. 23-- Vivek Jain v. Asst. CIT (AP) . . . 74
Offences and prosecution --Wealth-tax--Wilful failure to file return on time--Not a continuing offence--Condition precedent for prosecution--Sanction for prosecution--Sanction accorded without application of mind--No evidence that default was wilful--Prosecution not valid--Code of Criminal Procedure, 1973, s. 245--Weatlh-tax Act, 1957, ss. 35B, 35-O-- J. Jayalalitha v. Asst. CWT (Mad) . . . 1
Revision --Commissioner--Industrial undertaking--Special deduction--Allowance of deduction without determination year of commencement of business--Commissioner directing Assessing Officer to decide year of commencement of business--Tribunal on merits holding in favour of assessee--Not proper--Income-tax Act, 1961, ss. 80-IB, 263-- CIT v. Eastern Medikit Ltd . (Delhi) . . . 56
Search and seizure --Block assessment--No undisclosed income discovered in search--Addition on ground assessee controlling a concern in name of another--Whether assessee a real owner of that concern--To be determined and addition made only in regular assessment and not in block assessment--Income-tax Act, 1961-- CIT v. Mukesh Luthra (Delhi) . . . 41
Advance ruling --Authority--Bound by decisions of Supreme Court--Application for ruling not to be kept pending on ground special leave petition against decision of High Court pending on similar point--Income-tax Act, 1961, s. 245R(2)-- LS Cable Ltd. , In re. . . 35
----Precedent--Binding only on parties to ruling--Authority not precluded from looking at issue afresh in another application--Income-tax Act, 1961, s. 245S-- Cairn U. K. Holdings Ltd ., In re . . . 131
Non-resident --Consortium consisting of Indian and non-resident companies awarded turnkey project in India--Non-resident responsible for offshore supplies--Sums payable to non-resident not taxable in India--Income-tax Act, 1961-- Deepak Cables (India) Ltd ., In re . . . 127
----Contracts for offshore supply of equipment, onshore supply and onshore service--Separate contracts--Offshore supply on c. i. f. basis--Transaction of sale and transfer of title outside India--Receipts therefor not taxable in India--Income-tax Act, 1961--Double Taxation Avoidance Agreement between India and Korea-- LS Cable Ltd. , In re . . . 35
----Long-term capital gains--Rate of tax--Transfer of equity shares in Indian company to another non-resident by off-market mode--Lower rate of tax of 10 per cent. not available--Income-tax Act, 1961, ss. 48, 112(1)-- Cairn U. K. Holdings Ltd ., In re. . . 131
----Prospecting for or extraction of mineral oils--Special provisions for computation of income--Time charter vessels hired by non-resident to company carrying out offshore drilling and support services for ONGC--Not technical service--Income to be computed under special provisions--Tax to be withheld at rate of 4.22 per cent.--Income-tax Act, 1961, ss. 9(1)(vii), Expln. 2, 44BB-- Bourbon Offshore Asia Pte. Ltd ., In re . . . 122
----Resident of Sri Lanka--Services involving field data collection, desk study and mathematical model study and technology transfer involving transfer of software--Fees for technical services taxable under DTAA--Income-tax Act, 1961, s. 9(1)(vii)--Double Taxation Avoidance Agreement between India and Sri Lanka, arts. 7, 12, 22-- Lanka Hydraulic Institute Ltd ., In re . . . 47
S. 245 --Offences and prosecution--Wealth-tax--Wilful failure to file return on time--Not a continuing offence--Condition precedent for prosecution--Sanction for prosecution--Sanction accorded without application of mind--No evidence that default was wilful--Prosecution not valid-- J. Jayalalitha v. Asst. CWT (Mad) . . . 1
Arts. 7, 12, 22 --Non-resident--Resident of Sri Lanka--Services involving field data collection, desk study and mathematical model study and technology transfer involving transfer of software--Fees for technical services taxable under DTAA-- Lanka Hydraulic Institute Ltd ., In re (AAR) . . . 47
Art. 9 --Business expenditure--Disallowance--Excessive or unreasonable payments--Remuneration/royalty paid to subsidiaries for technical assistance--Finding that such assistance essential for business--Finding that expenditure not excessive or unreasonable--Deductible--Section 92 does not apply to royalty which is not part of regular business between resident and non-resident-- CIT v. Nestle India Ltd .(Delhi) . . . 103
S. 2(24)(ix) --Assessing Officer--Powers--Order giving effect to order of Tribunal--No jurisdiction to go beyond order of Tribunal--Winnings from television game show--Order of Tribunal holding not taxable under section 115BB prior to 1-4-2002--Assessing Officer not entitled to tax as income from other sources while giving effect to order of Tribunal-- Miss Lopamudra Misra v. Asst. CIT (Orissa) . . . 92
S. 2(24)(ix), Expln. (ii) --Income--Definition--Winnings from television game show--Included within definition with effect from assessment year 2002-03--Winnings in earlier period not taxable--Matter remanded-- Miss Lopamudra Misra v. Asst. CIT (Orissa) . . . 86
S. 9(1)(vii) --Non-resident--Resident of Sri Lanka--Services involving field data collection, desk study and mathematical model study and technology transfer involving transfer of software--Fees for technical services taxable under DTAA-- Lanka Hydraulic Institute Ltd ., In re (AAR) . . . 47
S. 9(1)(vii), Expln. 2 --Non-resident--Prospecting for or extraction of mineral oils--Special provisions for computation of income--Time charter vessels hired by non-resident to company carrying out offshore drilling and support services for ONGC--Not technical service--Income to be computed under special provisions--Tax to be withheld at rate of 4.22 per cent.-- Bourbon Offshore Asia Pte. Ltd ., In re (AAR) . . . 122
S. 10(23C)(iv) --Exemption--Charitable institution--Exemption under section 10(23C)(iv)--Order of court to withdraw utilization/investment and utilize/invest those funds in terms of section 11(5) for entitlement to benefit--Assessee complying with direction--Assessee entitled to exemption-- Export Promotion Council for Handi-crafts v. Director General of Income-tax (Exemptions) (Delhi) . . . 26
S. 23 --Income from house property--Deduction--Vacancy--Law applicable--Effect of insertion of clause (c) in section 23(1)--Property not let out at all--Deduction for vacancy not allowable-- Vivek Jain v. Asst. CIT (AP) . . . 74
S. 37 --Business expenditure--Disallowance--Excessive or unreasonable payments--Remuneration/royalty paid to subsidiaries for technical assistance--Finding that such assistance essential for business--Finding that expenditure not excessive or unreasonable--Deductible--Section 92 does not apply to royalty which is not part of regular business between resident and non-resident-- CIT v. Nestle India Ltd . (Delhi) . . . 103
S. 40A(2) --Business expenditure--Disallowance--Excessive or unreasonable payments--Remuneration/royalty paid to subsidiaries for technical assistance--Finding that such assistance essential for business--Finding that expenditure not excessive or unreasonable--Deductible--Section 92 does not apply to royalty which is not part of regular business between resident and non-resident-- CIT v. Nestle India Ltd .(Delhi) . . . 103
S. 44BB --Non-resident--Prospecting for or extraction of mineral oils--Special provisions for computation of income--Time charter vessels hired by non-resident to company carrying out offshore drilling and support services for ONGC--Not technical service--Income to be computed under special provisions--Tax to be withheld at rate of 4.22 per cent.-- Bourbon Offshore Asia Pte. Ltd ., In re (AAR) . . . 122
S. 45 --Capital gains--Computation--Deduction--Cost of acquisition--Sale of original shares and bonus shares--Cost of acquisition to be spread over original and bonus shares-- M. B. and Co. Ltd . v. Asst. CIT (Mad) . . . 29
S. 48 --Non-resident--Long-term capital gains--Rate of tax--Transfer of equity shares in Indian company to another non-resident by off-market mode--Lower rate of tax of 10 per cent. not available-- Cairn U. K. Holdings Ltd ., In re(AAR) . . . 131
S. 55(2)(b)(i) --Capital gains--Computation--Deduction--Cost of acquisition--Sale of original shares and bonus shares--Cost of acquisition to be spread over original and bonus shares-- M. B. and Co. Ltd . v. Asst. CIT (Mad) . . . 29
S. 80-IB --Revision--Commissioner--Industrial undertaking--Special deduction--Allowance of deduction without determination year of commencement of business--Commissioner directing Assessing Officer to decide year of commencement of business--Tribunal on merits holding in favour of assessee--Not proper-- CIT v. Eastern Medikit Ltd . (Delhi) . . . 56
S. 92 --Business expenditure--Disallowance--Excessive or unreasonable payments--Remuneration/royalty paid to subsidiaries for technical assistance--Finding that such assistance essential for business--Finding that expenditure not excessive or unreasonable--Deductible--Section 92 does not apply to royalty which is not part of regular business between resident and non-resident-- CIT v. Nestle India Ltd . (Delhi) . . . 103
S. 112(1) --Non-resident--Long-term capital gains--Rate of tax--Transfer of equity shares in Indian company to another non-resident by off-market mode--Lower rate of tax of 10 per cent. not available-- Cairn U. K. Holdings Ltd ., In re (AAR) . . . 131
S. 115BB --Assessing Officer--Powers--Order giving effect to order of Tribunal--No jurisdiction to go beyond order of Tribunal--Winnings from television game show--Order of Tribunal holding not taxable under section 115BB prior to 1-4-2002--Assessing Officer not entitled to tax as income from other sources while giving effect to order of Tribunal-- Miss Lopamudra Misra v. Asst. CIT (Orissa) . . . 92
----Income--Definition--Winnings from television game show--Included within definition with effect from assessment year 2002-03--Winnings in earlier period not taxable--Matter remanded-- Miss Lopamudra Misra v. Asst. CIT (Orissa) . . . 86
S. 124(4) --Assessment--Assessing Officer--Jurisdiction--Objection to jurisdiction cannot be raised after assessment is completed--Assessing Officer having jurisdiction when he commenced assessment proceedings--Subsequent transfer of case from him--Assessment completed by same Assessing Officer--Plea of want of jurisdiction could not be raised in appeal--No evidence of prejudice to assessee--Assessment valid-- CIT v. British India Corporation Ltd. (All) . . . 64
S. 245R(2) --Advance ruling--Authority--Bound by decisions of Supreme Court--Application for ruling not to be kept pending on ground special leave petition against decision of High Court pending on similar point-- LS Cable Ltd. , In re (AAR) . . . 35
S. 245S --Advance ruling--Precedent--Binding only on parties to ruling--Authority not precluded from looking at issue afresh in another application-- Cairn U. K. Holdings Ltd ., In re (AAR) . . . 131
S. 263 --Revision--Commissioner--Industrial undertaking--Special deduction--Allowance of deduction without determination year of commencement of business--Commissioner directing Assessing Officer to decide year of commencement of business--Tribunal on merits holding in favour of assessee--Not proper-- CIT v. Eastern Medikit Ltd . (Delhi) . . . 56
Ss. 35B, 35-O --Offences and prosecution--Wealth-tax--Wilful failure to file return on time--Not a continuing offence--Condition precedent for prosecution--Sanction for prosecution--Sanction accorded without application of mind--No evidence that default was wilful--Prosecution not valid-- J. Jayalalitha v. Asst. CWT (Mad) . . . 1
CA.RAJU SHAH
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