INCOME TAX REPORTS (ITR)
Volume 341 : Part 3 (Issue dated 27-2-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Agricultural income --Meaning of agriculture--Company supplying seeds to farmers under agreement--Company supervising cultivation of seeds--Seeds after harvesting purchased by company at a fixed price--Seeds subjected to a process of cleaning and grading and converted into certified seeds--Company not actually cultivating land and not having derivative interest in it--Income earned by company not agricultural income--Income-tax Act, 1961, s. 2(1A)-- CIT v. Namdhari Seeds P. Ltd .(Karn) . . . 342
Capital gains --Sale of property and factory building--Sale consideration accepted by assessing authority--Tribunal referring back question of bifurcation and apportionment of sale consideration between land and factory building--Assessing Officer while re-examining enhancing sale consideration already accepted--Not justified--Sale consideration and quantum not to be re-examined--Income-tax Act, 1961-- Gadodia Electronics P. Ltd . v. CIT (Delhi) . . . 380
Deduction of tax at source --Payment for work--Agreement between manufacturer, supplier and assessee providing for supply of raw material to manufacturer and sale by manufacturer of product to assessee for marketing--Assessee and supplier interrelated, assessee supplying technical know-how and products manufactured in brand name of assessee--Contract not merely one of sale of products, but for work--Payments liable to deduction of tax at source--Income-tax Act, 1961, s. 194C-- CIT v. Nova Nordisk Pharma India Ltd . (Karn) . . . 451
Exemption --Medical institution--Application for registration--Order dismissing application not considering explanation of applicant--Authority directed to consider application afresh--Income-tax Act, 1961, s. 10(23C)(iv)-- Synodical Board of Health Services v. Director General of Income-tax (Delhi) . . . 459
----New industrial undertaking in free trade zone--Loss--Depreciation--Carry forward of loss and depreciation of section 10A unit--Effect of sub-section (6) of section 10A--Income-tax Act, 1961, ss. 10A, 32-- CIT v. Yokogawa India Ltd .(Karn) . . . 385
----New industrial undertaking in free trade zone--Scope of section 10A--Income of section 10A unit to be deducted before computing gross total income--Income-tax Act, 1961, s. 10A-- CIT v. Yokogawa India Ltd . (Karn) . . . 385
Fringe benefits tax --Car dealer--Accessories provided free of cost to customers who purchased cars--Not an item of hospitality or sales promotion--Not liable to fringe benefits tax--Income-tax Act, 1961, s. 115WB(2)(B), (D)--CBDT Circular No. 8 of 2005, dated 29-8-2005-- T & T Motors Ltd. v. Asst. CIT (Delhi) . . . 332
Housing project --Special deduction--Ownership of property not a condition precedent for grant of deduction--Agreements with land owners to develop property and build residential units--Developer having full authority and assuming all risks and responsibilities in execution of project--Whether paid only remuneration or entitled to profits--Developer put in possession in part performance of contract--Is owner for purpose of provision--Entitled to deduction--Developer not a works contractor--Amendment providing that deduction not allowable to works contractor--Does not affect entitlement to deduction--Income-tax Act, 1961, ss. 2(47)(v), 80-IB(10)--Transfer of Property Act, 1882, s. 53A-- CIT v. Radhe Developers (Guj) . . . 403
Interpretation of taxing statutes --Nothing to be read in that is not provided-- CIT v. Radhe Developers (Guj) . . . 403
Precedent --Observation in judgment not to be read divorced from context-- CIT v. Jawahar Bhattacharjee [FB] (Gauhati) . . . 434
Reassessment --Notice--Industrial park--Special deduction for development of--Question of entitlement of assessee considered in scrutiny assessment, and appeals therefrom up to stage of Tribunal--Court in writ petition against withdrawal of approval of industrial park holding in favour of assessee and directing CBDT to issue notification--Reopening of assessment to withdraw deduction on ground of lack of CBDT notification--No new material--Not sustainable--Income-tax Act, 1961, ss. 80-IA(4)(iii), 80-IB(10), 115JB, 147, 148--Income-tax Rules, 1962, r. 18C(4)--Industrial Park Scheme, 2002-- Ganesh Housing Corporation Ltd. v. Deputy CIT (Guj) . . . 312
Revision --Commissioner--Erroneous and prejudicial to Revenue--Scope of expression--Includes error in assessment order arising by ignoring relevant material, or on incorrect assumption of facts or incorrect application of law--Observation that error means defect in jurisdiction--To be read in context--Income-tax Act, 1961, s. 263-- CIT v. Jawahar Bhattacharjee [FB] (Gauhati) . . . 434
----Commissioner--Powers--Deduction granted on payments made to parties in Canada and Thailand stating computation in accordance with relevant articles of Double Taxation Avoidance Agreements--Assessing authority failing to indicate basis for grant of deduction--Order not merely erroneous but also prejudicial to interests of Revenue--Commissioner has power to revise such order--Income-tax Act, 1961, s. 263-- CIT v. Infosys Technologies Ltd. (No. 2 ) (Karn) . . . 293
----Commissioner--Powers--Order beyond two years from date of assessment order--Barred by limitation--Income-tax Act, 1961, s. 263-- CIT v. Infosys Technologies Ltd. (No. 1 ) (Karn) . . . 290
Words and phrases --"Sales promotion"--"Hospitality"-- T & T Motors Ltd . v. Asst. CIT (Delhi) . . . 332
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 2(1A) --Agricultural income--Meaning of agriculture--Company supplying seeds to farmers under agreement--Company supervising cultivation of seeds--Seeds after harvesting purchased by company at a fixed price--Seeds subjected to a process of cleaning and grading and converted into certified seeds--Company not actually cultivating land and not having derivative interest in it--Income earned by company not agricultural income-- CIT v. Namdhari Seeds P. Ltd . (Karn) . . . 342
S. 2(47)(v) --Housing project--Special deduction--Ownership of property not a condition precedent for grant of deduction--Agreements with land owners to develop property and build residential units--Developer having full authority and assuming all risks and responsibilities in execution of project--Whether paid only remuneration or entitled to profits--Developer put in possession in part performance of contract--Is owner for purpose of provision--Entitled to deduction--Developer not a works contractor--Amendment providing that deduction not allowable to works contractor--Does not affect entitlement to deduction-- CIT v. Radhe Developers (Guj) . . . 403
S. 10(23C)(iv) --Exemption--Medical institution--Application for registration--Order dismissing application not considering explanation of applicant--Authority directed to consider application afresh-- Synodical Board of Health Services v. Director General of Income-tax (Delhi) . . . 459
S. 10A --Exemption--New industrial undertaking in free trade zone--Loss--Depreciation--Carry forward of loss and depreciation of section 10A unit--Effect of sub-section (6) of section 10A-- CIT v. Yokogawa India Ltd . (Karn) . . . 385
----Exemption--New industrial undertaking in free trade zone--Scope of section 10A--Income of section 10A unit to be deducted before computing gross total income-- CIT v. Yokogawa India Ltd . (Karn) . . . 385
S. 32 --Exemption--New industrial undertaking in free trade zone--Loss--Depreciation--Carry forward of loss and depreciation of section 10A unit--Effect of sub-section (6) of section 10A-- CIT v. Yokogawa India Ltd . (Karn) . . . 385
S. 80-IA(4)(iii) --Reassessment--Notice--Industrial park--Special deduction for development of--Question of entitlement of assessee considered in scrutiny assessment, and appeals therefrom up to stage of Tribunal--Court in writ petition against withdrawal of approval of industrial park holding in favour of assessee and directing CBDT to issue notification--Reopening of assessment to withdraw deduction on ground of lack of CBDT notification--No new material--Not sustainable--Industrial Park Scheme, 2002-- Ganesh Housing Corporation Ltd. v. Deputy CIT (Guj) . . . 312
S. 80-IB(10) --Housing project--Special deduction--Ownership of property not a condition precedent for grant of deduction--Agreements with land owners to develop property and build residential units--Developer having full authority and assuming all risks and responsibilities in execution of project--Whether paid only remuneration or entitled to profits--Developer put in possession in part performance of contract--Is owner for purpose of provision--Entitled to deduction--Developer not a works contractor--Amendment providing that deduction not allowable to works contractor--Does not affect entitlement to deduction-- CIT v. Radhe Developers (Guj) . . . 403
----Reassessment--Notice--Industrial park--Special deduction for development of--Question of entitlement of assessee considered in scrutiny assessment, and appeals therefrom up to stage of Tribunal--Court in writ petition against withdrawal of approval of industrial park holding in favour of assessee and directing CBDT to issue notification--Reopening of assessment to withdraw deduction on ground of lack of CBDT notification--No new material--Not sustainable--Industrial Park Scheme, 2002-- Ganesh Housing Corporation Ltd. v. Deputy CIT (Guj) . . . 312
S. 115JB --Reassessment--Notice--Industrial park--Special deduction for development of--Question of entitlement of assessee considered in scrutiny assessment, and appeals therefrom up to stage of Tribunal--Court in writ petition against withdrawal of approval of industrial park holding in favour of assessee and directing CBDT to issue notification--Reopening of assessment to withdraw deduction on ground of lack of CBDT notification--No new material--Not sustainable--Industrial Park Scheme, 2002-- Ganesh Housing Corporation Ltd. v. Deputy CIT (Guj) . . . 312
S. 115WB(2)(B), (D) --Fringe benefits tax--Car dealer--Accessories provided free of cost to customers who purchased cars--Not an item of hospitality or sales promotion--Not liable to fringe benefits tax--CBDT Circular No. 8 of 2005, dated 29-8-2005-- T & T Motors Ltd. v. Asst. CIT (Delhi) . . . 332
S. 147 --Reassessment--Notice--Industrial park--Special deduction for development of--Question of entitlement of assessee considered in scrutiny assessment, and appeals therefrom up to stage of Tribunal--Court in writ petition against withdrawal of approval of industrial park holding in favour of assessee and directing CBDT to issue notification--Reopening of assessment to withdraw deduction on ground of lack of CBDT notification--No new material--Not sustainable--Industrial Park Scheme, 2002-- Ganesh Housing Corporation Ltd. v. Deputy CIT (Guj) . . . 312
S. 148 --Reassessment--Notice--Industrial park--Special deduction for development of--Question of entitlement of assessee considered in scrutiny assessment, and appeals therefrom up to stage of Tribunal--Court in writ petition against withdrawal of approval of industrial park holding in favour of assessee and directing CBDT to issue notification--Reopening of assessment to withdraw deduction on ground of lack of CBDT notification--No new material--Not sustainable--Industrial Park Scheme, 2002-- Ganesh Housing Corporation Ltd. v. Deputy CIT (Guj) . . . 312
S. 194C --Deduction of tax at source--Payment for work--Agreement between manufacturer, supplier and assessee providing for supply of raw material to manufacturer and sale by manufacturer of product to assessee for marketing--Assessee and supplier interrelated, assessee supplying technical know-how and products manufactured in brand name of assessee--Contract not merely one of sale of products, but for work--Payments liable to deduction of tax at source-- CIT v. Nova Nordisk Pharma India Ltd . (Karn) . . . 451
S. 263 --Revision--Commissioner--Erroneous and prejudicial to Revenue--Scope of expression--Includes error in assessment order arising by ignoring relevant material, or on incorrect assumption of facts or incorrect application of law--Observation that error means defect in jurisdiction--To be read in context-- CIT v. Jawahar Bhattacharjee [FB] (Gauhati) . . . 434
----Revision--Commissioner--Powers--Deduction granted on payments made to parties in Canada and Thailand stating computation in accordance with relevant articles of Double Taxation Avoidance Agreements--Assessing authority failing to indicate basis for grant of deduction--Order not merely erroneous but also prejudicial to interests of Revenue--Commissioner has power to revise such order-- CIT v. Infosys Technologies Ltd. (No. 2 ) (Karn) . . . 293
----Revision--Commissioner--Powers--Order beyond two years from date of assessment order--Barred by limitation-- CIT v. Infosys Technologies Ltd. (No. 1 ) (Karn) . . . 290
Transfer of Property Act, 1882 :
S. 53A --Housing project--Special deduction--Ownership of property not a condition precedent for grant of deduction--Agreements with land owners to develop property and build residential units--Developer having full authority and assuming all risks and responsibilities in execution of project--Whether paid only remuneration or entitled to profits--Developer put in possession in part performance of contract--Is owner for purpose of provision--Entitled to deduction--Developer not a works contractor--Amendment providing that deduction not allowable to works contractor--Does not affect entitlement to deduction-- CIT v. Radhe Developers (Guj) . . . 403
R. 18C(4) --Reassessment--Notice--Industrial park--Special deduction for development of--Question of entitlement of assessee considered in scrutiny assessment, and appeals therefrom up to stage of Tribunal--Court in writ petition against withdrawal of approval of industrial park holding in favour of assessee and directing CBDT to issue notification--Reopening of assessment to withdraw deduction on ground of lack of CBDT notification--No new material--Not sustainable--Industrial Park Scheme, 2002-- Ganesh Housing Corporation Ltd. v. Deputy CIT (Guj) . . . 312
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 14 : Part 2 (Issue dated : 27-2-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Business expenditure --Disallowance--Payment subject to tax deduction at source--Amendment of section 40(a)(ia) by Finance Act, 2010--Amendment retrospective in operation--Tax deducted at source from sub-contractors during period April 2007 to February 2008 and paid in 27-3-2008 and 12-5-2008--Disallowance not justified for assessment year 2008-09--Income-tax Act, 1961, s. 40(a)(ia)-- Sanjay Kumar Pradhan v. Asst. CIT (Cuttack) . . . 150
----Disallowance--Payments on which tax deductible--Failure to deduct tax--Expenditure can be disallowed even if payee pays tax--Income-tax Act, 1961, s. 40(a)(ia) -- Asst./Deputy CIT (LTU) v. DICGC Ltd. (Mumbai) . . . 194
----Disallowance--Provision for gratuity--Staff of Reserve Bank deputed to assessee--Assessee reimbursing gratuity in respect of such staff to Reserve Bank--Provision made in income and expenditure fund owing to time lag between liability accruing to assessee and payment to Reserve Bank--Provision allowable--Income-tax Act, 1961, s. 40A(7)-- Asst./Deputy CIT (LTU) v. DICGC Ltd. (Mumbai) . . . 194
----Payments subject to tax deduction at source--Assessee, a co-operative bank, availing of MICR clearing services from clearing agent of clearing house bank--Tax deducted at source on payment of MICR charges by clearing agent to clearing house bank--Reimbursement of charges by assessee to clearing agent inclusive of tax--Deduction to be allowed--Building maintenance and furniture and fixture charges paid without deduction of tax at source--Payments in nature of rent--Expenditure not allowable--Income-tax Act, 1961, ss. 36(1)(vii), 40(a)(ia), 194-I, 194J-- The Karnavati Co-op. Bank Ltd. v. Deputy CIT (Ahmedabad) . . . 175
Cash credits --Genuineness--Addition--Capital introduced by partners--Assessing Officer to proceed against partners--Addition cannot be made in hands of assessee--Income-tax Act, 1961, s. 68-- Sarjan Corporation v. Asst. CIT (Ahmedabad) . . . 140
----Share application money--No proof of receiving money for share allotment--Failure to prove identity and capacity of creditor and genuineness of transaction--Unclaimed money written in books of account added to profit and loss account--To be added income of assessee--Income-tax Act, 1961, s. 68-- Hotel Queen Road P. Ltd. v. ITO (Delhi) . . . 124
----Unsecured loan--Assessee furnishing confirmation of parties, PAN and acknowledgment of income-tax returns--No enquiry made by Assessing Officer--Assessee discharging onus--Addition to be deleted--Income-tax Act, 1961, s. 68-- Sarjan Corporation v. Asst. CIT (Ahmedabad) . . . 140
Income --Accrual--Mercantile system of accounting--Co-operative bank--Interest on non-performing assets--Not taxable--Income-tax Act, 1961, ss. 5, 43D-- The Karnavati Co-op. Bank Ltd. v. Deputy CIT (Ahmedabad) . . . 175
Income from other sources --Interest on deposits--That deposit credited to capital expenditure incurred for substantial renovation of hotel--Failure to prove money invested in deposit for acquiring capital asset--To be treated as income from other sources--Income-tax Act, 1961-- Hotel Queen Road P. Ltd. v. ITO (Delhi) . . . 124
Income from undisclosed sources --Survey--Addition on basis of statement of partner--Additional income duly considered in profit and loss account--Addition to be deleted--Income-tax Act, 1961, s. 133A-- Sarjan Corporation v. Asst. CIT (Ahmedabad) . . . 140
----Unexplained investments--Estimation on presumptions--Not permissible--Admission by assessee of unrecorded commission sales--Estimated addition without further evidence for unexplained investment of capital in such business--Not justified--Determination of peak credit on presumption that payments made on same day--Seized paper showing trade practice of payment after grace period--Estimation of peak credit not proper--No rebuttal of assessee's assertion that sufficient funds available with it prior to search--Additions not justified--Income-tax Act, 1961-- Asst. CIT v. Saileshkumar Nathalal Patel (Ahmedabad) . . . 201
Interpretation of taxing statutes --Where language of statute clear, exact meaning to be given effect-- The Karnavati Co-op. Bank Ltd. v. Deputy CIT (Ahmedabad) . . . 175
Penalty --Concealment of income--Particulars disclosed in return--Stand taken by assessee at time of filing of return possible and plausible view--Penalty not justified--Income-tax Act, 1961, s. 271(1)(c)-- Hero Honda Motors Ltd. v. Deputy CIT (Delhi) . . . 161
Search and seizure --Block assessment--Undisclosed income--Definition--Income must be such as has not been or would not be disclosed--Income disclosed in block return--Further additions without evidence found during search--Not permissible--Income-tax Act, 1961, ss. 158B(b), 158BB(1)-- Asst. CIT v. Saileshkumar Nathalal Patel (Ahmedabad) . . . 201
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 5 --Income--Accrual--Mercantile system of accounting--Co-operative bank--Interest on non-performing assets--Not taxable-- The Karnavati Co-op. Bank Ltd. v. Deputy CIT (Ahmedabad) . . . 175
S. 36(1)(vii) --Business expenditure--Payments subject to tax deduction at source--Assessee, a co-operative bank, availing of MICR clearing services from clearing agent of clearing house bank--Tax deducted at source on payment of MICR charges by clearing agent to clearing house bank--Reimbursement of charges by assessee to clearing agent inclusive of tax--Deduction to be allowed--Building maintenance and furniture and fixture charges paid without deduction of tax at source--Payments in nature of rent--Expenditure not allowable-- The Karnavati Co-op. Bank Ltd. v. Deputy CIT (Ahmedabad) . . . 175
S. 40(a)(ia) --Business expenditure--Payments subject to tax deduction at source--Assessee, a co-operative bank, availing of MICR clearing services from clearing agent of clearing house bank--Tax deducted at source on payment of MICR charges by clearing agent to clearing house bank--Reimbursement of charges by assessee to clearing agent inclusive of tax--Deduction to be allowed--Building maintenance and furniture and fixture charges paid without deduction of tax at source--Payments in nature of rent--Expenditure not allowable-- The Karnavati Co-op. Bank Ltd. v. Deputy CIT (Ahmedabad) . . . 175
----Business expenditure--Disallowance--Payment subject to tax deduction at source--Amendment of section 40(a)(ia) by Finance Act, 2010--Amendment retrospective in operation--Tax deducted at source from sub-contractors during period April 2007 to February 2008 and paid in 27-3-2008 and 12-5-2008--Disallowance not justified for assessment year 2008-09-- Sanjay Kumar Pradhan v. Asst. CIT (Cuttack) . . . 150
---- Business expenditure--Disallowance--Payments on which tax deductible--Failure to deduct tax--Expenditure can be disallowed even if payee pays tax-- Asst./Deputy CIT (LTU) v. DICGC Ltd. (Mumbai) . . . 194
S. 40A(7) --Business expenditure--Disallowance--Provision for gratuity--Staff of Reserve Bank deputed to assessee--Assessee reimbursing gratuity in respect of such staff to Reserve Bank--Provision made in income and expenditure fund owing to time lag between liability accruing to assessee and payment to Reserve Bank--Provision allowable-- Asst./Deputy CIT (LTU) v. DICGC Ltd. (Mumbai) . . . 194
S. 43D --Income--Accrual--Mercantile system of accounting--Co-operative bank--Interest on non-performing assets--Not taxable-- The Karnavati Co-op. Bank Ltd. v. Deputy CIT (Ahmedabad) . . . 175
S. 68 --Cash credits--Genuineness--Addition--Capital introduced by partners--Assessing Officer to proceed against partners--Addition cannot be made in hands of assessee-- Sarjan Corporation v. Asst. CIT (Ahmedabad) . . . 140
----Cash credits--Share application money--No proof of receiving money for share allotment--Failure to prove identity and capacity of creditor and genuineness of transaction--Unclaimed money written in books of account added to profit and loss account--To be added income of assessee-- Hotel Queen Road P. Ltd. v. ITO (Delhi) . . . 124
----Cash credits--Unsecured loan--Assessee furnishing confirmation of parties, PAN and acknowledgment of income-tax returns--No enquiry made by Assessing Officer--Assessee discharging onus--Addition to be deleted-- Sarjan Corporation v. Asst. CIT (Ahmedabad) . . . 140
S. 133A --Income from undisclosed sources--Survey--Addition on basis of statement of partner--Additional income duly considered in profit and loss account--Addition to be deleted-- Sarjan Corporation v. Asst. CIT (Ahmedabad) . . . 140
S. 158B(b) --Search and seizure--Block assessment--Undisclosed income--Definition--Income must be such as has not been or would not be disclosed--Income disclosed in block return--Further additions without evidence found during search--Not permissible--Asst. CIT v. Saileshkumar Nathalal Patel (Ahmedabad) . . . 201
S. 158BB(1) --Search and seizure--Block assessment--Undisclosed income--Definition--Income must be such as has not been or would not be disclosed--Income disclosed in block return--Further additions without evidence found during search--Not permissible--Asst. CIT v. Saileshkumar Nathalal Patel (Ahmedabad) . . . 201
S. 194-I --Business expenditure--Payments subject to tax deduction at source--Assessee, a co-operative bank, availing of MICR clearing services from clearing agent of clearing house bank--Tax deducted at source on payment of MICR charges by clearing agent to clearing house bank--Reimbursement of charges by assessee to clearing agent inclusive of tax--Deduction to be allowed--Building maintenance and furniture and fixture charges paid without deduction of tax at source--Payments in nature of rent--Expenditure not allowable-- The Karnavati Co-op. Bank Ltd. v. Deputy CIT (Ahmedabad) . . . 175
S. 194J --Business expenditure--Payments subject to tax deduction at source--Assessee, a co-operative bank, availing of MICR clearing services from clearing agent of clearing house bank--Tax deducted at source on payment of MICR charges by clearing agent to clearing house bank--Reimbursement of charges by assessee to clearing agent inclusive of tax--Deduction to be allowed--Building maintenance and furniture and fixture charges paid without deduction of tax at source--Payments in nature of rent--Expenditure not allowable-- The Karnavati Co-op. Bank Ltd. v. Deputy CIT (Ahmedabad) . . . 175
S. 271(1)(c)--Penalty--Concealment of income--Particulars disclosed in return--Stand taken by assessee at time of filing of return possible and plausible view--Penalty not justified-- Hero Honda Motors Ltd. v. Deputy CIT (Delhi) . . . 161
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