INCOME TAX REPORTS (ITR)
Volume 343 : Part 4 (Issue dated 21-5-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Business expenditure --Foreign travel expenditure--Expenses for personal use--To be disallowed--Income-tax Act, 1961, s. 37-- Mira Kulkarni v. Asst. CIT (Delhi) . . . 358
----Interest on borrowed capital--Depreciation--Exemption--Expenses allocated between exempt and non- exempt business--Tribunal justified in remanding matter to Assessing Officer to allocate depreciation and interest in the ratio of turnover between section 10A and non-section 10A activities--Income-tax Act, 1961, ss. 32, 36, 37-- CIT v. Sonata Software Ltd. (Bom) . . . 397
----Repair, maintenance, salary and local conveyance expenses--Expenses incurred not for assessee's business--Disallowance proper--Income-tax Act, 1961, s. 37-- Mira Kulkarni v. Asst. CIT (Delhi) . . . 358
Company --Dividend--Deemed dividend--Advance to shareholder--Advance by sister concern to assessee-company--Assessee not a shareholder in sister concern--Director of assessee-company holding majority of shares in both companies--Not relevant--Amount not assessable as deemed dividend--Income-tax Act, 1961, s. 2(22)(e)-- CIT v. MCC Marketing Pvt. Ltd. (Delhi) . . . 350
Deduction of tax at source --Non-resident--Income deemed to accrue or arise in India--Business connection--Mere entry in books of account of Indian payer does not mean that non-resident received payment in India--Failure to establish business connection--No income accrued in India--Tax need not be deducted at source--Income-tax Act, 1961, ss. 9, 40(a)(i)--Central Board of Direct Taxes Circular No. 23, dated 23-7-1969 --Circular No. 786, dated 7-2-2000-- CIT v. EON Technology P. Ltd. (Delhi) . . . 366
Exemption --Export--Condition precedent for exemption under section 10A--Meaning of reconstruction of business--Sale of business not a reconstruction--Finding that there was no splitting up of business--Unit commencing production in October, 1994--Assessee entitled to exemption under section 10A--Income-tax Act, 1961, s. 10A-- CIT v. Sonata Software Ltd . (Bom) . . . 397
Industrial undertaking --Special deduction under section 80-IA--Condition precedent--Commencement of commercial production before 31-3-2000--Assessee commencing commercial production before specified date--Subsequent installation of new plant and machinery--Finding that there was no new industrial undertaking--Assessee entitled to special deduction under section 80-IA --Income-tax Act, 1961, s. 80-IA-- CIT v. Hindustan Pencils Ltd. (Bom) . . . 379
Penalty --Acceptance of deposit in cash exceeding prescribed limit--Share application money--Not "deposit" within meaning of section 269SS--Penalty cannot be imposed under section 271D--Income-tax Act, 1961, ss. 269SS, 271D-- CIT v. I. P. India P. Ltd. (Delhi) . . . 353
Precedent --Effect of decision of Supreme Court in CIT v. Kelvinator of India [2010] 320 ITR 561-- Sanand Properties P. Ltd. v. Joint CIT (Bom) . . . 388
Reassessment --Notice--Condition precedent--Tangible material to show escape of income from assessment--Assessee disclosing income from association of persons--Assessment after enquiry--Assessment of association of persons not reopened--Reassessment on the ground that share of income of assessee from association of persons escaped assessment--Notice not valid--Income-tax Act, 1961, s. 147-- Sanand Properties P. Ltd. v. Joint CIT (Bom) . . . 388
Revision --Commissioner--Amortisation of expenditure on voluntary retirement scheme--Commissioner disallowing on ground note in audit report created doubt whether expenditure actually incurred--Assessee clarifying that note written by auditor as a precautionary measure--Order under section 263 rightly quashed--Income-tax Act, 1961, ss. 35DDA, 263-- CIT v. Hero Auto Ltd . (Delhi) . . . 342
----Commissioner--Business expenditure--Provision for warranty claims--Commissioner failing to observe how and in what manner enquiry lacking and what default committed by Assessing Officer--Similar claim allowed in earlier years upheld by High Court--Order under section 263 rightly set aside--Income-tax Act, 1961, s. 263-- CIT v. Hero Auto Ltd. (Delhi) . . . 342
----Commissioner--No finding that order erroneous and prejudicial to interests of Revenue--Revision not permitted --Income-tax Act, 1961, s. 263-- ITO v. DG Housing Projects Ltd. (Delhi) . . . 329
Non-resident --Procurement of cellular telecommunication equipment, software and documentation from company in Sweden--Loans taken from Swedish banks guaranteed by Swedish Export Credits Guarantee Board--Banks transferring rights under agreement to Swedish company--Interest payments to Swedish company not taxable in India--Income-tax Act, 1961, s. 195--Double Taxation Avoidance Convention between India and Sweden, art. 11(3)-- Idea Cellular Limited, In re . . . 381
----Supply of rice par boiling and dryer plants by manufacturer in India to non-resident--Orders brought by non-resident agents--Commission payable to non-resident agents accrues in India--Taxable in India and tax deductible at source on payments to them--Income-tax Act, 1961, ss. 5(2)(b), 9(1)(i), 195-- SKF Boilers and Driers Pvt. Ltd. , In re . . . 385
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Double Taxation Avoidance Convention between India and Sweden :
Art. 11(3) --Non-resident--Procurement of cellular telecommunication equipment, software and documentation from company in Sweden--Loans taken from Swedish banks guaranteed by Swedish Export Credits Guarantee Board--Banks transferring rights under agreement to Swedish company--Interest payments to Swedish company not taxable in India-- Idea Cellular Limited, In re (AAR) . . . 381
S. 2(22)(e) --Company--Dividend--Deemed dividend--Advance to shareholder--Advance by sister concern to assessee-company--Assessee not a shareholder in sister concern--Director of assessee-company holding majority of shares in both companies--Not relevant--Amount not assessable as deemed dividend-- CIT v. MCC Marketing Pvt. Ltd. (Delhi) . . . 350
S. 5(2)(b) --Non-resident--Supply of rice par boiling and dryer plants by manufacturer in India to non-resident--Orders brought by non-resident agents--Commission payable to non-resident agents accrues in India--Taxable in India and tax deductible at source on payments to them-- SKF Boilers and Driers Pvt. Ltd. , In re (AAR) . . . 385
S. 9 --Deduction of tax at source--Non-resident--Income deemed to accrue or arise in India--Business connection--Mere entry in books of account of Indian payer does not mean that non-resident received payment in India--Failure to establish business connection--No income accrued in India--Tax need not be deducted at source--Central Board of Direct Taxes Circular No. 23, dated 23-7-1969--Circular No. 786, dated 7-2-2000 -- CIT v. EON Technology P. Ltd. (Delhi) . . . 366
S. 9(1)(i) --Non-resident--Supply of rice par boiling and dryer plants by manufacturer in India to non-resident--Orders brought by non-resident agents--Commission payable to non-resident agents accrues in India--Taxable in India and tax deductible at source on payments to them-- SKF Boilers and Driers Pvt. Ltd. , In re (AAR) . . . 385
S. 10A --Exemption--Export--Condition precedent for exemption under section 10A--Meaning of reconstruction of business--Sale of business not a reconstruction--Finding that there was no splitting up of business--Unit commencing production in October, 1994--Assessee entitled to exemption under section 10A-- CIT v. Sonata Software Ltd . (Bom) . . . 397
S. 32 --Business expenditure--Interest on borrowed capital--Depreciation--Exemption--Expenses allocated between exempt and non- exempt business--Tribunal justified in remanding matter to Assessing Officer to allocate depreciation and interest in the ratio of turnover between section 10A and non-section 10A activities-- CIT v. Sonata Software Ltd. (Bom) . . . 397
S. 35DDA --Revision--Commissioner--Amortisation of expenditure on voluntary retirement scheme--Commissioner disallowing on ground note in audit report created doubt whether expenditure actually incurred--Assessee clarifying that note written by auditor as a precautionary measure--Order under section 263 rightly quashed-- CIT v. Hero Auto Ltd . (Delhi) . . . 342
S. 36 --Business expenditure--Interest on borrowed capital--Depreciation--Exemption--Expenses allocated between exempt and non- exempt business--Tribunal justified in remanding matter to Assessing Officer to allocate depreciation and interest in the ratio of turnover between section 10A and non-section 10A activities-- CIT v. Sonata Software Ltd. (Bom) . . . 397
S. 37 --Business expenditure--Foreign travel expenditure--Expenses for personal use--To be disallowed-- Mira Kulkarni v. Asst. CIT (Delhi) . . . 358
----Business expenditure--Interest on borrowed capital--Depreciation--Exemption--Expenses allocated between exempt and non- exempt business--Tribunal justified in remanding matter to Assessing Officer to allocate depreciation and interest in the ratio of turnover between section 10A and non-section 10A activities-- CIT v. Sonata Software Ltd. (Bom) . . . 397
----Business expenditure--Repair, maintenance, salary and local conveyance expenses--Expenses incurred not for assessee's business--Disallowance proper-- Mira Kulkarni v. Asst. CIT (Delhi) . . . 358
S. 40(a)(i) --Deduction of tax at source--Non-resident--Income deemed to accrue or arise in India--Business connection--Mere entry in books of account of Indian payer does not mean that non-resident received payment in India--Failure to establish business connection--No income accrued in India--Tax need not be deducted at source--Central Board of Direct Taxes Circular No. 23, dated 23-7-1969--Circular No. 786, dated 7-2-2000-- CIT v. EON Technology P. Ltd. (Delhi) . . . 366
S. 80-IA --Industrial undertaking--Special deduction under section 80-IA--Condition precedent--Commencement of commercial production before 31-3-2000--Assessee commencing commercial production before specified date--Subsequent installation of new plant and machinery--Finding that there was no new industrial undertaking--Assessee entitled to special deduction under section 80-IA-- CIT v. Hindustan Pencils Ltd. (Bom) . . . 379
S. 147 --Reassessment--Notice--Condition precedent--Tangible material to show escape of income from assessment--Assessee disclosing income from association of persons--Assessment after enquiry--Assessment of association of persons not reopened--Reassessment on the ground that share of income of assessee from association of persons escaped assessment--Notice not valid-- Sanand Properties P. Ltd. v. Joint CIT (Bom) . . . 388
S. 195 --Non-resident--Procurement of cellular telecommunication equipment, software and documentation from company in Sweden--Loans taken from Swedish banks guaranteed by Swedish Export Credits Guarantee Board--Banks transferring rights under agreement to Swedish company--Interest payments to Swedish company not taxable in India-- Idea Cellular Limited, In re (AAR) . . . 381
----Non-resident--Supply of rice par boiling and dryer plants by manufacturer in India to non-resident--Orders brought by non-resident agents--Commission payable to non-resident agents accrues in India--Taxable in India and tax deductible at source on payments to them-- SKF Boilers and Driers Pvt. Ltd. , In re (AAR) . . . 385
S. 263 --Revision--Commissioner--Amortisation of expenditure on voluntary retirement scheme--Commissioner disallowing on ground note in audit report created doubt whether expenditure actually incurred--Assessee clarifying that note written by auditor as a precautionary measure--Order under section 263 rightly quashed-- CIT v. Hero Auto Ltd . (Delhi) . . . 342
----Revision--Commissioner--Business expenditure--Provision for warranty claims --Commissioner failing to observe how and in what manner enquiry lacking and what default committed by Assessing Officer--Similar claim allowed in earlier years upheld by High Court--Order under section 263 rightly set aside-- CIT v. Hero Auto Ltd. (Delhi) . . . 342
----Revision--Commissioner--No finding that order erroneous and prejudicial to interests of Revenue--Revision not permitted-- ITO v. DG Housing Projects Ltd. (Delhi) . . . 329
S. 269SS --Penalty--Acceptance of deposit in cash exceeding prescribed limit--Share application money--Not "deposit" within meaning of section 269SS--Penalty cannot be imposed under section 271D-- CIT v. I. P. India P. Ltd. (Delhi) . . . 353
S. 271D --Penalty--Acceptance of deposit in cash exceeding prescribed limit--Share application money--Not "deposit" within meaning of section 269SS--Penalty cannot be imposed under section 271D-- CIT v. I. P. India P. Ltd. (Delhi) . . . 353
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