ITR VOL 340 PART 5 and ITR (TRIB) VOL 13 PART 4

 

INCOME TAX REPORTS (ITR)

Volume 340 : Part 5 (Issue dated 30-1-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Export of computer software --Computation of profits--Special deduction--Has to be worked out on the basis of adjusted book profits--Income-tax Act, 1961, ss. 80HHE, 115JA-- CIT v. Bhari Information Tech. Sys. P. Ltd. . . . 593

HIGH COURTS

Capital gains --Other sources--Capital gains or income from other sources--Sale of property in public auction--Purchaser given possession as lessee--Purchaser allowed to pay part of price and balance in instalments--Interest payable on such balance--Lump sum paid towards interest--Sale certificate issued after entire sale consideration including interest received--No transfer of property till entire sale consideration received--Interest part of sale price--Assessable as capital gains--Income-tax Act, 1961, s. 2(28A) (47)-- Cauvery Spinning and Weaving Mills Ltd. (in liquidation) v. Deputy CIT ( Mad) . . . 550

Company --Book profits--Minimum alternate tax--Computation of profits under section 115JA/115JB--Export--Special deduction under section 80HHC--Special deduction allowable on the basis of book profits--Income-tax Act, 1961, ss. 80HHC, 115JA, 115JB-- CIT v. C. P. S. Textiles P. Ltd . (Mad) . . . 590

Heads of income --Business income or income from house property--Assessee-company formed to carry on business in real estate and develop property--Taking on lease land and building owned by director, constructing commercial complex and receiving rental income--Finding that assessee did no other business since that year--No exploitation of business asset--Income taxable as income from house property--Income-tax Act, 1961, ss. 22, 28-- CIT v. Ideal Garden Complex P. Ltd. (Mad) . . . 609

Industrial undertaking --Special deduction--Allowance of deduction in preceding year--Denial of deduction in year in question without further material on ground unit was reconstruction of another business--Not permissible--Quantum of deduction--Important aspect to be considered and examined--Tribunal not considering aspect in spite of facts stated in assessment order--Matter remanded--Income-tax Act, 1961, s. 80-IC-- CIT v. Visual Technologies India Pvt. Ltd. (Delhi) . . . 565

Penalty --Furnishing inaccurate particulars of income--Bad debt--Disallowance of claim to deduction--Sum deposited with company as share application money converted by assessee into loan by unilateral act upon failure by company to allot shares--No interest charged from company or offered to tax in any earlier year--No explanation for this--No material to show debt taken into account in earlier year--Particulars furnished by assessee not complete, and therefore, inaccurate--Levy of penalty proper--Income-tax Act, 1961, ss. 36(2)(i), 271(1)(c)-- Kanchenjunga Advertising P. Ltd . v. CIT  (Delhi) . . . 595

----Loan exceeding prescribed limit in cash--No reasonable explanation for such loan--Penalty leviable--Income-tax Act, 1961, ss. 269SS, 271D, 273B-- P. Baskar v. CIT  (Mad) . . . 560

Precedent --Effect of Supreme Court decision in Ajanta Pharma Ltd. v. CIT [2010] 327 ITR 305-- CIT v. C. P. S. Textiles P. Ltd. (Mad) . . . 590

Reassessment --Change of law--Amendment with effect from 1-4-1989--Effect--Original assessment under section 143(1)(a)--Reassessment whether justified--Income-tax Act, 1961, ss. 143(1)(a), (3), 147-- CIT v. Ideal Garden Complex P. Ltd .  (Mad) . . . 609

----Notice--Regular assessment allowing deduction under section 80HHC/80-IA after examining answers to questionnaire--Assessee justifying claim furnishing documentary evidence or proof--Reassessment on ground deduction wrongly claimed--Is a change of opinion and not permissible--Income-tax Act, 1961, ss. 80HHC, 80-IA, 147, 148-- CIT v. Raj Kumar Mahajan (Delhi) . . . 570

Recovery of tax --Interest--Principles governing--Notice of demand--Part payment of demand--Appeal against assessment--Partial relief granted pursuant to order in appeal--Tribunal restoring order of assessment--Effect--Revival of demand--Interest payable by assessee for entire period on tax as computed in assessment order--Relief granted in first appeal does not affect liability--Income-tax Act, 1961, s. 220(2A)--Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964, s. 3(b)(iii)-- Girnar Investment Ltd. v. CIT (Delhi) . . . 529

Refund --Interest on excess refund--Assessment for period prior to date of coming into force of provision for charging interest made after that date--Interest chargeable--Income-tax Act, 1961, s. 234D-- CIT v. Infrastructure Development Finance Co. Ltd . (Mad) . . . 580

----Interest on refund--Period for which interest is to be given--Period of delay caused by assessee to be excluded--Assessee making belated claim for deduction which was allowed by Commissioner (Appeals)--No delay caused by assessee--Interest payable from beginning of relevant assessment year till date of grant of refund--Income-tax Act, 1961, s. 244A-- CIT v. South Indian Bank Ltd . (Ker) . . . 574

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 2(28A), (47) --Capital gains--Other sources--Capital gains or income from other sources--Sale of property in public auction--Purchaser given possession as lessee--Purchaser allowed to pay part of price and balance in instalments--Interest payable on such balance--Lump sum paid towards interest--Sale certificate issued after entire sale consideration including interest received--No transfer of property till entire sale consideration received--Interest part of sale price--Assessable as capital gains-- Cauvery Spinning and Weaving Mills Ltd. (in liquidation) v. Deputy CIT  (Mad) . . . 550

S. 22 --Heads of income--Business income or income from house property--Assessee-company formed to carry on business in real estate and develop property--Taking on lease land and building owned by director, constructing commercial complex and receiving rental income--Finding that assessee did no other business since that year--No exploitation of business asset--Income taxable as income from house property-- CIT v. Ideal Garden Complex P. Ltd. (Mad) . . . 609

S. 28 --Heads of income--Business income or income from house property--Assessee-company formed to carry on business in real estate and develop property--Taking on lease land and building owned by director, constructing commercial complex and receiving rental income--Finding that assessee did no other business since that year--No exploitation of business asset--Income taxable as income from house property-- CIT v. Ideal Garden Complex P. Ltd. (Mad) . . . 609

S. 36(2)(i) --Penalty--Furnishing inaccurate particulars of income--Bad debt--Disallowance of claim to deduction--Sum deposited with company as share application money converted by assessee into loan by unilateral act upon failure by company to allot shares--No interest charged from company or offered to tax in any earlier year--No explanation for this--No material to show debt taken into account in earlier year--Particulars furnished by assessee not complete, and therefore, inaccurate--Levy of penalty proper-- Kanchenjunga Advertising P. Ltd . v. CIT (Delhi) . . . 595

S. 80HHC --Company--Book profits--Minimum alternate tax--Computation of profits under section 115JA/115JB--Export--Special deduction under section 80HHC--Special deduction allowable on the basis of book profits-- CIT v. C. P. S. Textiles P. Ltd . (Mad) . . . 590

----Reassessment--Notice--Regular assessment allowing deduction under section 80HHC/80-IA after examining answers to questionnaire--Assessee justifying claim furnishing documentary evidence or proof--Reassessment on ground deduction wrongly claimed--Is a change of opinion and not permissible-- CIT v. Raj Kumar Mahajan  (Delhi) . . . 570

S. 80HHE --Export of computer software--Computation of profits--Special deduction--Has to be worked out on the basis of adjusted book profits-- CIT v. Bhari Information Tech. Sys. P. Ltd. (SC) . . . 593

S. 80-IA --Reassessment--Notice--Regular assessment allowing deduction under section 80HHC/80-IA after examining answers to questionnaire--Assessee justifying claim furnishing documentary evidence or proof--Reassessment on ground deduction wrongly claimed--Is a change of opinion and not permissible-- CIT v. Raj Kumar Mahajan (Delhi) . . . 570

S. 80-IC --Industrial undertaking--Special deduction--Allowance of deduction in preceding year--Denial of deduction in year in question without further material on ground unit was reconstruction of another business--Not permissible--Quantum of deduction--Important aspect to be considered and examined--Tribunal not considering aspect in spite of facts stated in assessment order--Matter remanded-- CIT v. Visual Technologies India Pvt. Ltd. (Delhi) . . . 565

S. 115JA --Company--Book profits--Minimum alternate tax--Computation of profits under section 115JA/115JB--Export--Special deduction under section 80HHC--Special deduction allowable on the basis of book profits-- CIT v. C. P. S. Textiles P. Ltd . (Mad) . . . 590

----Export of computer software--Computation of profits--Special deduction--Has to be worked out on the basis of adjusted book profits-- CIT v. Bhari Information Tech. Sys. P. Ltd. (SC) . . . 593

S. 115JB --Company--Book profits--Minimum alternate tax--Computation of profits under section 115JA/115JB--Export--Special deduction under section 80HHC--Special deduction allowable on the basis of book profits-- CIT v. C. P. S. Textiles P. Ltd .  (Mad) . . . 590

S. 143(1)(a), (3) --Reassessment--Change of law--Amendment with effect from 1-4-1989--Effect--Original assessment under section 143(1)(a)--Reassessment whether justified-- CIT v. Ideal Garden Complex P. Ltd . (Mad) . . . 609

S. 147 --Reassessment--Change of law--Amendment with effect from 1-4-1989--Effect--Original assessment under section 143(1)(a)--Reassessment whether justified-- CIT v. Ideal Garden Complex P. Ltd . (Mad) . . . 609

----Reassessment--Notice--Regular assessment allowing deduction under section 80HHC/80-IA after examining answers to questionnaire--Assessee justifying claim furnishing documentary evidence or proof--Reassessment on ground deduction wrongly claimed--Is a change of opinion and not permissible-- CIT v. Raj Kumar Mahajan (Delhi) . . . 570

S. 148 --Reassessment--Notice--Regular assessment allowing deduction under section 80HHC/80-IA after examining answers to questionnaire--Assessee justifying claim furnishing documentary evidence or proof--Reassessment on ground deduction wrongly claimed--Is a change of opinion and not permissible-- CIT v. Raj Kumar Mahajan

(Delhi) . . . 570

S. 220(2A) --Recovery of tax--Interest--Principles governing--Notice of demand--Part payment of demand--Appeal against assessment--Partial relief granted pursuant to order in appeal--Tribunal restoring order of assessment--Effect--Revival of demand--Interest payable by assessee for entire period on tax as computed in assessment order--Relief granted in first appeal does not affect liability-- Girnar Investment Ltd. v. CIT (Delhi) . . . 529

S. 234D --Refund--Interest on excess refund--Assessment for period prior to date of coming into force of provision for charging interest made after that date--Interest chargeable-- CIT v. Infrastructure Development Finance Co. Ltd . (Mad) . . . 580

S. 244A --Refund--Interest on refund--Period for which interest is to be given--Period of delay caused by assessee to be excluded--Assessee making belated claim for deduction which was allowed by Commissioner (Appeals)--No delay caused by assessee--Interest payable from beginning of relevant assessment year till date of grant of refund-- CIT v. South Indian Bank Ltd . (Ker) . . . 574

S. 269SS --Penalty--Loan exceeding prescribed limit in cash--No reasonable explanation for such loan--Penalty leviable-- P. Baskar v. CIT (Mad) . . . 560

S. 271(1)(c) --Penalty--Furnishing inaccurate particulars of income--Bad debt--Disallowance of claim to deduction--Sum deposited with company as share application money converted by assessee into loan by unilateral act upon failure by company to allot shares--No interest charged from company or offered to tax in any earlier year--No explanation for this--No material to show debt taken into account in earlier year--Particulars furnished by assessee not complete, and therefore, inaccurate--Levy of penalty proper-- Kanchenjunga Advertising P. Ltd . v. CIT (Delhi) . . . 595

S. 271D --Penalty--Loan exceeding prescribed limit in cash--No reasonable explanation for such loan--Penalty leviable-- P. Baskar v. CIT (Mad) . . . 560

S. 273B --Penalty--Loan exceeding prescribed limit in cash--No reasonable explanation for such loan--Penalty leviable-- P. Baskar v. CIT (Mad) . . . 560

Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964 :

S. 3(b)(iii) --Recovery of tax--Interest--Principles governing--Notice of demand--Part payment of demand--Appeal against assessment--Partial relief granted pursuant to order in appeal--Tribunal restoring order of assessment--Effect--Revival of demand--Interest payable by assessee for entire period on tax as computed in assessment order--Relief granted in first appeal does not affect liability-- Girnar Investment Ltd. v. CIT (Delhi) . . . 529

 

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))

Volume 13 : Part 4 (Issue dated : 23-1-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Business expenditure --Disallowance--Discount allowed to associated enterprises--No records to prove discount not arm's length discount--Disallowance to be deleted--Income-tax Act, 1961, s. 37-- Dresser-Rand India P. Ltd. v. Addl. CIT (Mumbai) . . . 422

----Disallowance--Payments liable to deduction of tax at source--Payment towards cost contribution agreement--Not established that payee has tax liability in respect of income embedded in payment--Disallowance not proper--Income-tax Act, 1961, s. 40(a)(i)--Double Taxation Avoidance Agreement between India and the U. S. A, art. 5 -- Dresser-Rand India P. Ltd. v. Addl. CIT (Mumbai) . . . 422

----Firm--Insurance premium on keyman insurance policy to insure life of partner--Allowable--Income-tax Act, 1961, ss. 10(10D), 37-- Asst. CIT v. Paramount Impex (Chandigarh) . . . 374

----Prior period expenses--Failure to establish that expenses actually crystallised during year--Expenses not allowable--Income-tax Act, 1961-- Deputy CIT v. Cosmo Films Ltd. (Delhi) . . . 340

Business income --Deemed profit--Remission or cessation of trading liability--Refund of value added tax--Claim of assessee to refund not yet adjudicated by commercial tax authority--Refund shown as "receivable" not taxable--Income-tax Act, 1961, s. 41(1)-- ITO v. Binayak Hi-Tech Engineering Ltd. (Kolkata) . . . 369

Business loss --Foreign exchange--Assessee converting foreign currency assets and liabilities into rupee terms at exchange rate prevalent on date of balance sheet and reflecting loss or gain in profit and loss account from year to year--Loss allowable--Income-tax Act, 1961-- Deputy CIT v. Cosmo Films Ltd. (Delhi) . . . 340

Capital gains or business income --Sale of shares--Income from sale of shares held as investment--Assessable as capital gains--Income-tax Act, 1961, s. 45--CBDT Circular No. 4 of 2007, dated 15-6-2007-- Asst. CIT v. Smt. Gargi Shitalkumar Patel (Ahmedabad) . . . 386

Capital or revenue receipt --Sales tax subsidy--Subsidy given under Dispersal of Industries Scheme as incentive to set up industries in areas other than Bombay, Pune and Thane--Is capital receipt--Income-tax Act, 1961-- Deputy CIT v. Cosmo Films Ltd. (Delhi) . . . 340

Depreciation --Additional depreciation--Penalty--Assets installed and put to use in second half of year--Depreciation claimed at 50 per cent. of rate allowable in that year--Balance of depreciation allowable in next year--Penalty not leviable for wrong claim--Income-tax Act, 1961, ss. 32(1)(ii), (iia), 271(1)(c)-- Deputy CIT v. Cosmo Films Ltd. (Delhi) . . . 340

----Rate of depreciation--Computer accessories--Entitled to rate of sixty per cent. applicable to computers--Income-tax Act, 1961-- Deputy CIT v. Cosmo Films Ltd. (Delhi) . . . 340

Exemption --Export oriented unit--Deductions--Charity and miscellaneous expenses to be excluded from allocation of expenses--Management salary--To be allocated in proportion to sales turnover--Income-tax Act, 1961, s. 10B-- Deputy CIT v. Cosmo Films Ltd. (Delhi) . . . 340

Export --Special deduction--DEPB credit--Credit not sold in assessment year 2007-08--Not assessable as income--Income-tax Act, 1961-- ITO v. Binayak Hi-Tech Engineering Ltd. (Kolkata) . . . 369

International transactions --Arm's length price--Computation--Payment towards cost contribution agreement to parent company--Finding that transaction not genuine, no services rendered by assessee and arm's length price of services nil--Documents not scrutinised by Dispute Resolution Panel--Matter remanded--Income-tax Act, 1961, s. 92C-- Dresser-Rand India P. Ltd. v. Addl. CIT (Mumbai) . . . 422

Loss --Set off--Speculation loss--Can be set off against profits from speculation transactions--Income-tax Act, 1961, s. 73, Expln-- Synergy Entrepreneur Solutions P. Ltd. v. Deputy CIT (Mumbai) . . . 377

Revision --Commissioner--Assessee, member of association of persons--Claim to set off share of loss suffered by association of persons against other income of assessee--Assessing Officer allowing claim in view of proviso to section 86--Assessing Officer taking a possible view--Order of revision to disallow set off not valid--Income-tax Act, 1961, ss. 67, 86, 263-- Hindustan Times Ltd. v. Deputy CIT (Delhi) . . . 406

----Powers of Commissioner--Revision on ground different from that stated in show cause--Not permissible--Income-tax Act, 1961, s. 263-- Synergy Entrepreneur Solutions P. Ltd. v. Deputy CIT (Mumbai) . . . 377

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance Agreement between India and the U. S. A. :

Art. 5 --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Payment towards cost contribution agreement--Not established that payee has tax liability in respect of income embedded in payment--Disallowance not proper-- Dresser-Rand India P. Ltd. v. Addl. CIT (Mumbai) . . . 422

Income-tax Act, 1961 :

S. 10(10D) --Business expenditure--Firm--Insurance premium on keyman insurance policy to insure life of partner--Allowable-- Asst. CIT v. Paramount Impex (Chandigarh) . . . 374

S. 10B --Exemption--Export oriented unit--Deductions--Charity and miscellaneous expenses to be excluded from allocation of expenses--Management salary--To be allocated in proportion to sales turnover-- Deputy CIT v. Cosmo Films Ltd. (Delhi) . . . 340

S. 32(1)(ii) --Depreciation--Additional depreciation--Penalty--Assets installed and put to use in second half of year--Depreciation claimed at 50 per cent. of rate allowable in that year--Balance of depreciation allowable in next year--Penalty not leviable for wrong claim-- Deputy CIT v. Cosmo Films Ltd. (Delhi) . . . 340

S. 32(1)(iia) --Depreciation--Additional depreciation--Penalty--Assets installed and put to use in second half of year--Depreciation claimed at 50 per cent. of rate allowable in that year--Balance of depreciation allowable in next year--Penalty not leviable for wrong claim-- Deputy CIT v. Cosmo Films Ltd. (Delhi) . . . 340

S. 37 --Business expenditure--Disallowance--Discount allowed to associated enterprises--No records to prove discount not arm's length discount--Disallowance to be deleted-- Dresser-Rand India P. Ltd. v. Addl. CIT (Mumbai) . . . 422

----Business expenditure--Firm--Insurance premium on keyman insurance policy to insure life of partner--Allowable-- Asst. CIT v. Paramount Impex (Chandigarh) . . . 374

S. 40(a)(i) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Payment towards cost contribution agreement--Not established that payee has tax liability in respect of income embedded in payment--Disallowance not proper-- Dresser-Rand India P. Ltd. v. Addl. CIT (Mumbai) . . . 422

S. 41(1) --Business income--Deemed profit--Remission or cessation of trading liability--Refund of value added tax--Claim of assessee to refund not yet adjudicated by commercial tax authority--Refund shown as "receivable" not taxable-- ITO v. Binayak Hi-Tech Engineering Ltd. (Kolkata) . . . 369

S. 45 --Capital gains or business income--Sale of shares--Income from sale of shares held as investment--Assessable as capital gains--CBDT Circular No. 4 of 2007, dated 15-6-2007-- Asst. CIT v. Smt. Gargi Shitalkumar Patel (Ahmedabad) . . . 386

S. 67 --Revision--Commissioner--Assessee, member of association of persons--Claim to set off share of loss suffered by association of persons against other income of assessee--Assessing Officer allowing claim in view of proviso to section 86--Assessing Officer taking a possible view--Order of revision to disallow set off not valid-- Hindustan Times Ltd. v. Deputy CIT (Delhi) . . . 406

S. 73, Expln --Loss--Set off--Speculation loss--Can be set off against profits from speculation transactions-- Synergy Entrepreneur Solutions P. Ltd. v. Deputy CIT (Mumbai) . . . 377

S. 86 --Revision--Commissioner--Assessee, member of association of persons--Claim to set off share of loss suffered by association of persons against other income of assessee--Assessing Officer allowing claim in view of proviso to section 86--Assessing Officer taking a possible view--Order of revision to disallow set off not valid-- Hindustan Times Ltd. v. Deputy CIT (Delhi) . . . 406

S. 92C --International transactions--Arm's length price--Computation--Payment towards cost contribution agreement to parent company--Finding that transaction not genuine, no services rendered by assessee and arm's length price of services nil--Documents not scrutinised by Dispute Resolution Panel--Matter remanded-- Dresser-Rand India P. Ltd. v. Addl. CIT (Mumbai) . . . 422

S. 263 --Revision--Commissioner--Assessee, member of association of persons--Claim to set off share of loss suffered by association of persons against other income of assessee--Assessing Officer allowing claim in view of proviso to section 86--Assessing Officer taking a possible view--Order of revision to disallow set off not valid-- Hindustan Times Ltd. v. Deputy CIT (Delhi) . . . 406

----Revision--Powers of Commissioner--Revision on ground different from that stated in show cause--Not permissible-- Synergy Entrepreneur Solutions P. Ltd. v. Deputy CIT (Mumbai) . . . 377

S. 271(1)(c) --Depreciation--Additional depreciation--Penalty--Assets installed and put to use in second half of year--Depreciation claimed at 50 per cent. of rate allowable in that year--Balance of depreciation allowable in next year--Penalty not leviable for wrong claim-- Deputy CIT v. Cosmo Films Ltd. (Delhi) . . . 340