INCOME TAX REPORTS (ITR)
Volume 340 : Part 3 (Issue dated 16-1-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Advance tax --Interest payable by assessee--Reassessment--Original order of assessment on 24-6-1991--Order of reassessment on 28-1-1994--Interest under section 234B payable from original order of assessment--Income-tax Act, 1961, ss. 143, 147, 234B-- Vijay Kumar Saboo (HUF) v. Asst. CIT (Karn) . . . 382
Appeal to Appellate Tribunal --Question relating to allocation of direct and common expenses to income from equipment financing and debt refinancing and transition loan--Question raised before Commissioner (Appeals) and before Tribunal but not examined or considered by Commissioner (Appeals)--Failure to decide question--Tribunal directed to decide question--Income-tax Act, 1961, ss. 36(1)(viii), 254(2)-- Power Finance Corporation Ltd. v. Addl. CIT (Delhi) . . . 284
Business expenditure --Capital or revenue expenditure--Severance cost to employees on suspension of one of manufacturing activities--Assessee continuing trading and other activities--Severance cost to employees--Revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v. KJS India P. Ltd. (Delhi) . . . 380
----Deduction only on actual payment--Late payment of provident fund dues--Allowable--Income-tax Act, 1961-- B. D. P. S. Software Limited v. Deputy CIT (Bom) . . . 375
----Disallowance--Failure to deduct tax at source on payment--Tax not deducted at source on transaction charges paid to stock exchange--Position accepted by Revenue for the past ten years--Failure to deduct tax at source on transaction charges in accounting year relevant to assessment year 2005-06--Not a ground for disallowing the payment--Income-tax Act, 1961, s. 40(a)(ia)-- CIT v. Kotak Securities Ltd. (Bom) . . . 333
Deduction of tax at source --Business of share broking--Transaction charges paid to stock exchange--Amount to fees for managerial services--Tax must be deducted at source on transaction charges--Income-tax Act, 1961, s. 194J-- CIT v. Kotak Securities Ltd. (Bom) . . . 333
Depreciation --Computer software and hardware--Finding that claim was not genuine--Disallowance of claim justified--Income-tax Act, 1961, s. 32-- B. D. P. S. Software Limited v. Deputy CIT (Bom) . . . 375
Dispute Resolution Panel --Order--Reasons to be stated in order--Matter remanded--Income-tax Act, 1961-- Vodafone Essar Ltd. v. Dispute Resolution Panel (Delhi) . . . 352
Exemption --Education--Educational society running schools --Amounts received towards admission fees, corpus fund and loans from parents--Amounts utilised for creating additional infrastructure for schools--No diversion of funds to members of society--Assessee entitled to exemption--Income-tax Act, 1961, s. 10(22)-- Deputy Director of Income-tax v. Shanti Devi Progressive Education Society (Delhi) . . . 320
Income --Asset management company receiving less investment advisory fees from mutual funds than permitted--Assessee receiving only part of marketing and recurring expenses from mutual funds--Amounts not received not assessable as income of assessee--Income-tax Act, 1961-- CIT v. Templeton Asset Management (India) P. Ltd. (Bom) . . . 279
Income-tax --General principles--Principle of consistency-- Deputy Director of Income-tax v. Shanti Devi Progressive Education Society (Delhi) . . . 320
Industrial undertaking --Special deduction under section 80-IA--Receipt on account of job work not a result of manufacturing or by producing article or thing--Job work charges to be excluded from eligible profits and gains--Income-tax Act, 1961, s. 80-IA-- Friends Casting P. Ltd. v. CIT (P&H) . . . 305
----Special deduction under section 80-IA(9)--Prohibition on deduction under different sections in respect of same income--Deduction computed under section 80-IB to be reduced from business profits to compute deduction under section 80HHC--Income-tax Act, 1961, ss. 80HHC, 80-IA, 80-IB-- Friends Casting P. Ltd. v. CIT (P&H) . . . 305
Method of accounting --State financial corporation--Cash system of accounting--Interim payments by defaulting borrowers treated under "Current liabilities"--Bifurcation into principal and interest not possible till final settlement--Interim payments cannot be treated as interest and revenue receipt--Income-tax Act, 1961, s. 145-- CIT v. Haryana Financial Corporation (P&H) . . . 288
Reassessment --Income of third person clubbed with that of assessee--Third person benamidar of assessee--Clubbing of income--Justified--Income-tax Act, 1961-- M. R. Associates v. ITAT (All) . . . 293
----Limitation--Reassessment after four years but before six years--No proper explanation for payment exceeding three lakhs of rupees--Prima facie escapement of income of more than one lakh of rupees--Reassessment not barred by limitation--Income-tax Act, 1961, ss. 147, 149-- M. R. Associates v. ITAT (All) . . . 293
----Reassessment after four years--Failure to disclose material facts necessary for assessment--Waiver of part of loan--Amount waived written back to profit and loss account--Facts disclosed to Assessing Officer--Amount not assessed originally--Reassessment proceedings to assess amount after four years--Not valid--Income-tax Act, 1961, s. 147-- Kimplas Trenton Fittings Ltd. v. Asst. CIT (Bom) . . . 299
----Search and seizure--Block assessment--Section 158BD analogous to section 147--Search of third party disclosing escapement of income in hands of assessee--Assessment proceedings pending limitation of section 158BD becoming operative--Notice of reassessment under section 147--Valid--Income-tax Act, 1961, ss. 132, 147, 158BD-- CIT v. Abhyudaya Builders (P.) Ltd. (All) . . . 310
Revision --Commissioner--Assessing Officer failing to deal with many issues noted by Commissioner--Matter remanded--Income-tax Act, 1961, s. 263-- CIT v. Raja Industries (P&H) . . . 344
Advance ruling --Application for--Pendency of proceedings under section 195 not a bar to entertaining application--Income-tax Act, 1961, ss. 195, 245R(2)-- Groupe Industrial Marcel Dassault, In re . . . 353
Double taxation avoidance --Capital gains--Sale of shares in Indian company by Mauritius company to another non-resident--Mauritius company subsidiary of U. K. company--Shares held for considerable time and proposed sale a commercial transaction at market price--Possible intention to take benefit of Double Taxation Avoidance Agreement with Mauritius--Does not render it a case of treaty shopping--U. K. Agreement not applicable--Capital gains not taxable in India under Mauritius Agreement--But applicant bound to file return in India--Income-tax Act, 1961, s. 245R(2)--Double Taxation Avoidance Agreement between India and Mauritius, art. 13(4)-- Ardex Investments Mauritius Ltd. , In re . . . 272
Non-resident --Double taxation avoidance--Shares in Indian company held by non-resident company--Transfer of shares in non-resident company--Is in effect transfer of controlling interest in Indian company--Transfer is for avoidance of tax in India on capital gains--Application for ruling not maintainable--On merits, gains from transfer of shares taxable in India--Income-tax Act, 1961, s. 245R(2)--Double Taxation Avoidance Agreement between India and France, art. 14(5), (6)-- Groupe Industrial Marcel Dassault, In re . . . 353
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Double Taxation Avoidance Agreement between India and France :
Art. 14(5), (6) --Non-resident--Double taxation avoidance--Shares in Indian company held by non-resident company--Transfer of shares in non-resident company--Is in effect transfer of controlling interest in Indian company--Transfer is for avoidance of tax in India on capital gains--Application for ruling not maintainable --On merits, gains from transfer of shares taxable in India-- Groupe Industrial Marcel Dassault, In re (AAR) . . . 353
Double Taxation Avoidance Agreement between India and Mauritius :
Art. 13(4) --Double taxation avoidance--Capital gains--Sale of shares in Indian company by Mauritius company to another non-resident--Mauritius company subsidiary of U. K. company--Shares held for considerable time and proposed sale a commercial transaction at market price--Possible intention to take benefit of Double Taxation Avoidance Agreement with Mauritius--Does not render it a case of treaty shopping--U. K. Agreement not applicable--Capital gains not taxable in India under Mauritius Agreement--But applicant bound to file return in India-- Ardex Investments Mauritius Ltd. , In re (AAR) . . . 272
S. 10(22) --Exemption--Education--Educational society running schools --Amounts received towards admission fees, corpus fund and loans from parents--Amounts utilised for creating additional infrastructure for schools--No diversion of funds to members of society--Assessee entitled to exemption-- Deputy Director of Income-tax v. Shanti Devi Progressive Education Society (Delhi) . . . 320
S. 32 --Depreciation--Computer software and hardware--Finding that claim was not genuine--Disallowance of claim justified-- B. D. P. S. Software Limited v. Deputy CIT (Bom) . . . 375
S. 36(1)(viii) --Appeal to Appellate Tribunal--Question relating to allocation of direct and common expenses to income from equipment financing and debt refinancing and transition loan--Question raised before Commissioner (Appeals) and before Tribunal but not examined or considered by Commissioner (Appeals)--Failure to decide question--Tribunal directed to decide question-- Power Finance Corporation Ltd. v. Addl. CIT (Delhi) . . . 284
S. 37 --Business expenditure--Capital or revenue expenditure--Severance cost to employees on suspension of one of manufacturing activities--Assessee continuing trading and other activities--Severance cost to employees--Revenue expenditure-- CIT v. KJS India P. Ltd. (Delhi) . . . 380
S. 40(a)(ia) --Business expenditure--Disallowance--Failure to deduct tax at source on payment--Tax not deducted at source on transaction charges paid to stock exchange--Position accepted by Revenue for the past ten years--Failure to deduct tax at source on transaction charges in accounting year relevant to assessment year 2005-06--Not a ground for disallowing the payment-- CIT v. Kotak Securities Ltd. (Bom) . . . 333
S. 80HHC --Industrial undertaking--Special deduction under section 80-IA(9)--Prohibition on deduction under different sections in respect of same income--Deduction computed under section 80-IB to be reduced from business profits to compute deduction under section 80HHC-- Friends Casting P. Ltd. v. CIT (P&H) . . . 305
S. 80-IA --Industrial undertaking--Special deduction under section 80-IA--Receipt on account of job work not a result of manufacturing or by producing article or thing--Job work charges to be excluded from eligible profits and gains-- Friends Casting P. Ltd. v. CIT (P&H) . . . 305
----Industrial undertaking--Special deduction under section 80-IA(9)--Prohibition on deduction under different sections in respect of same income--Deduction computed under section 80-IB to be reduced from business profits to compute deduction under section 80HHC-- Friends Casting P. Ltd. v. CIT (P&H) . . . 305
S. 80-IB --Industrial undertaking--Special deduction under section 80-IA(9)--Prohibition on deduction under different sections in respect of same income--Deduction computed under section 80-IB to be reduced from business profits to compute deduction under section 80HHC-- Friends Casting P. Ltd. v. CIT (P&H) . . . 305
S. 132 --Reassessment--Search and seizure--Block assessment--Section 158BD analogous to section 147--Search of third party disclosing escapement of income in hands of assessee--Assessment proceedings pending limitation of section 158BD becoming operative--Notice of reassessment under section 147--Valid-- CIT v. Abhyudaya Builders (P.) Ltd. (All) . . . 310
S. 143 --Advance tax--Interest payable by assessee--Reassessment--Original order of assessment on 24-6-1991--Order of reassessment on 28-1-1994--Interest under section 234B payable from original order of assessment-- Vijay Kumar Saboo (HUF) v. Asst. CIT (Karn) . . . 382
S. 145 --Method of accounting--State financial corporation--Cash system of accounting--Interim payments by defaulting borrowers treated under "Current liabilities"--Bifurcation into principal and interest not possible till final settlement--Interim payments cannot be treated as interest and revenue receipt-- CIT v. Haryana Financial Corporation (P&H) . . . 288
S. 147 --Advance tax--Interest payable by assessee--Reassessment--Original order of assessment on 24-6-1991--Order of reassessment on 28-1-1994--Interest under section 234B payable from original order of assessment-- Vijay Kumar Saboo (HUF) v. Asst. CIT (Karn) . . . 382
----Reassessment--Limitation--Reassessment after four years but before six years--No proper explanation for payment exceeding three lakhs of rupees--Prima facie escapement of income of more than one lakh of rupees--Reassessment not barred by limitation-- M. R. Associates v. ITAT (All) . . . 293
----Reassessment--Reassessment after four years--Failure to disclose material facts necessary for assessment--Waiver of part of loan--Amount waived written back to profit and loss account--Facts disclosed to Assessing Officer--Amount not assessed originally--Reassessment proceedings to assess amount after four years--Not valid-- Kimplas Trenton Fittings Ltd. v. Asst. CIT (Bom) . . . 299
----Reassessment--Search and seizure--Block assessment--Section 158BD analogous to section 147--Search of third party disclosing escapement of income in hands of assessee--Assessment proceedings pending limitation of section 158BD becoming operative--Notice of reassessment under section 147--Valid-- CIT v. Abhyudaya Builders (P.) Ltd. (All) . . . 310
S. 149 --Reassessment--Limitation--Reassessment after four years but before six years--No proper explanation for payment exceeding three lakhs of rupees--Prima facie escapement of income of more than one lakh of rupees--Reassessment not barred by limitation-- M. R. Associates v. ITAT (All) . . . 293
S. 158BD --Reassessment--Search and seizure--Block assessment--Section 158BD analogous to section 147--Search of third party disclosing escapement of income in hands of assessee--Assessment proceedings pending limitation of section 158BD becoming operative--Notice of reassessment under section 147--Valid-- CIT v. Abhyudaya Builders (P.) Ltd. (All) . . . 310
S. 194J --Deduction of tax at source--Business of share broking--Transaction charges paid to stock exchange--Amount to fees for managerial services--Tax must be deducted at source on transaction charges-- CIT v. Kotak Securities Ltd. (Bom) . . . 333
S. 195 --Advance ruling--Application for--Pendency of proceedings under section 195 not a bar to entertaining application-- Groupe Industrial Marcel Dassault, In re (AAR) . . . 353
S. 234B --Advance tax--Interest payable by assessee--Reassessment--Original order of assessment on 24-6-1991--Order of reassessment on 28-1-1994--Interest under section 234B payable from original order of assessment-- Vijay Kumar Saboo (HUF) v. Asst. CIT (Karn) . . . 382
S. 245R(2) --Advance ruling--Application for--Pendency of proceedings under section 195 not a bar to entertaining application-- Groupe Industrial Marcel Dassault, In re (AAR) . . . 353
----Double taxation avoidance--Capital gains--Sale of shares in Indian company by Mauritius company to another non-resident--Mauritius company subsidiary of U. K. company--Shares held for considerable time and proposed sale a commercial transaction at market price--Possible intention to take benefit of Double Taxation Avoidance Agreement with Mauritius--Does not render it a case of treaty shopping--U. K. Agreement not applicable--Capital gains not taxable in India under Mauritius Agreement--But applicant bound to file return in India-- Ardex Investments Mauritius Ltd. , In re (AAR) . . . 272
----Non-resident--Double taxation avoidance--Shares in Indian company held by non-resident company--Transfer of shares in non-resident company--Is in effect transfer of controlling interest in Indian company--Transfer is for avoidance of tax in India on capital gains--Application for ruling not maintainable --On merits, gains from transfer of shares taxable in India-- Groupe Industrial Marcel Dassault, In re (AAR) . . . 353
S. 254(2) --Appeal to Appellate Tribunal--Question relating to allocation of direct and common expenses to income from equipment financing and debt refinancing and transition loan--Question raised before Commissioner (Appeals) and before Tribunal but not examined or considered by Commissioner (Appeals)--Failure to decide question--Tribunal directed to decide question-- Power Finance Corporation Ltd. v. Addl. CIT (Delhi) . . . 284
S. 263 --Revision--Commissioner--Assessing Officer failing to deal with many issues noted by Commissioner--Matter remanded-- CIT v. Raja Industries (P&H) . . . 344
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