INCOME TAX REPORTS (ITR)
Volume 345 Part 2 (Issue dated 25-6-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
HIGH COURTS
Appeal to Appellate Tribunal --Findings of fact--Finality--Finding not based on evidence--Can be set aside--Income-tax Act, 1961-- S. K. Bahadur v. Union of India (Delhi) . . . 95
----Findings of fact--Whether perverse--Finding that holding company paid for entire share capital of assessee by cheque--Finding that shares held by individuals as nominees of holding company--Finding that violations of Companies Act not to affect benefit under Income-tax Act--Not sustainable--Matter remanded for decision afresh-- CIT v . Sunaero Limited (Delhi) . . . 163
Assessment --Notice--Notice not served on correct address mentioned in return--Assessment not valid--Income-tax Act, 1961, s. 143(2)-- CIT v. Mascomptel India Ltd . (Delhi) . . . 58
Business income --Remission or cessation of trading liability--Brokerage liability outstanding written back into profit and loss account and tax paid--No remission or cessation of liability in relevant assessment year--Income-tax Act, 1961, s. 41(1)-- CIT v. Enam Securities P. Ltd . (Bom) . . . 64
Capital gains --Long-term capital gains--Set off of loss against gains on sale of shares--Genuineness and credibility of transaction not disputed in past years--Non-cumulative redeemable preference shares could not be equated with debentures or bond--Assessee entitled to benefit of indexation--Income-tax Act, 1961, s. 48-- CIT v. Enam Securities P. Ltd . (Bom) . . . 64
----Transactions not regarded as transfers--Transfer by subsidiary to holding company--Subsidiary must be wholly owned--Income-tax Act, 1961, ss. 45, 47(v)--Companies Act, 1956, ss. 49, 187C-- CIT v. Sunaero Limited (Delhi) . . . 163
Central Board of Direct Taxes --Circulars--Binding nature--Scope of-- CIT v. Nagesh Knitwears P. Ltd . (Delhi) . . . 135
Company --Shareholder--Presumption that registered shareholder holds share in own right--Claim that shares held as nominee--Burden of proof on person claiming-- CIT v . Sunaero Limited (Delhi) . . . 163
Export --Special deduction--Business income--Premium on sale of export quota--Not covered by clauses 28(iiia) to 28(iiie)--Not to be considered for deduction--Income-tax Act, 1961, ss. 28(iiia), (iiic), 80HHC(3)-- CIT v . Nagesh Knitwears P. Ltd. (Delhi) . . . 135
Industrial undertaking --Development of infrastructure--Industrial park or special economic zone--Special deduction under section 80-IA--Condition precedent--Industrial undertaking should get notified under a gazetted scheme--No scheme in existence between 1st April, 2006, and 8th January, 2008--Application for notification under section 2002 Scheme in September, 2006--Rejection of application--Justified--Income-tax Act, 1961, s. 80-IA-- Regency Soraj Infrastructures v . Union of India (Delhi) . . . 105
----Special deduction--Activity requiring more than ten workers--Casual or contractual workers are workers--Conditions under section 80-IB fulfilled--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-IB(2)(iv)-- CIT v. Nanda Mint and Pine Chemicals Ltd . (Delhi) . . . 60
Interpretation of taxing statutes --Provisos-- CIT v. Mohair Investment and Trading Co. P. Ltd . (Delhi) . . . 51
Loss --Carry forward and set off--Petition filed beyond time--Finding that return had been filed within extension of time granted by Assessing Officer--Carry forward and set off of loss--Valid--Income-tax Act, 1961-- CIT v . Arunajothi Balasubramanian (Mad) . . . 81
Penalty --Acceptance of loan or deposit in cash exceeding prescribed limit--Whether amount received loan or deposit--Tribunal failing to examine specific findings of Assessing Officer and Commissioner (Appeals)--Matter remanded--Income-tax Act, 1961, s. 271D-- CIT v. Numero Uno Financial Services P. Ltd. (Delhi) . . . 84
----Limitation--Law applicable--Effect of proviso to section 275(1)(a)--Penalty levied within six months of receipt of order from Tribunal--Not barred by limitation--Income-tax Act, 1961, s. 275(1)(a)-- CIT v . Mohair Investment and Trading Co. P. Ltd . (Delhi) . . . 51
Reassessment --Notice after four years on ground assessee acted as a facilitator for its parent company and not a manufacturer or exporter--Failure to disclose all material facts not set out in reasons--Notice not valid--Income-tax Act, 1961, s. 148-- Sitara Diamond Pvt. Ltd. v . Deputy CIT (Bom) . . . 91
----Validity--Capital gains--Reassessment on ground that rate of tax applicable to long-term capital gains wrong--Reasons for notice not recording that proviso to section 112 was not applicable--Reassessment not valid--Income-tax Act, 1961, ss. 112, 147-- Director of Income-tax (International Taxation) v . May and Baker Ltd . (Bom) . . . 87
Recovery of tax --Stay of recovery proceedings--General principles--Recovery proceedings against member of association of persons--Appeal by association of persons against its assessment pending--Rejection of application for stay--Not justified--Income-tax Act, 1961, s. 220-- UTI Mutual Fund v . ITO (Bom) . . . 71
Revision --Erroneous and prejudicial to Revenue--Order holding assessee entitled to deduction in respect of premium of sale of export quota--Is erroneous and prejudicial to Revenue--Revision justified--Income-tax Act, 1961, ss. 28(iiia), (iiic), 80HHC(3), 263-- CIT v. Nagesh Knitwears P. Ltd. (Delhi) . . . 135
Search and seizure --Block assessment--Undisclosed income--Assets in name of wife of assessee--Wealth-tax return submitted by wife of assessee before search proceedings--Explanation regarding assets not considered--Addition of income from assets belonging to wife of assessee in his total income--Not justified--Income-tax Act, 1961-- S. K. Bahadur v . Union of India (Delhi) . . . 95
AUTHORITY FOR ADVANCE RULINGS
Non-resident --Composite turnkey contract--Contract carried out in India and risk continuing with non-resident till commissioning and acceptance--Offshore services or supplies not to be separately considered--Profits taxable in India--Consortium bidding for contract--Assessable as association of persons--Double Taxation Avoidance Agreement between India and Germany--Income-tax Act, 1961, ss. 2(31), 9(2), Expln ., 44C, 44DA-- ABC , In re . . . 119
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 16 : Part 5 (Issue dated : 25-06-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Business expenditure --Depreciation--Exemption--Disallowance of expenditure incurred in earning income not includible in total income--Share of profit from firm exempt in hands of partner--Disallowance of expenses in proportion to that income --Proper--Depreciation not an expense but an allowance--Provision for disallowance not applicable to depreciation--Income-tax Act, 1961, ss. 10(2A), 14A, 28(v)-- Vishnu Anant Mahajan v. Assistant CIT [SB] (Ahmedabad) . . . 621
Double Taxation Avoidance Agreement --Set-off of losses--Assessee entitled to set off of losses of foreign branch against other business income--Double Taxation Avoidance Agreement Between India and Sweden, art. 7-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533
Exemption --Disallowance of expenditure incurred for earning income not includible in total income--Share income from firm--Depreciation not an expenditure but an allowance--Does not come within scope of disallowance--Special deduction allowed from profits for premium on health insurance--Not to be included within scope of insurance--Other expenses allocated in proportion which share income bears to remuneration--Income-tax Act, 1961, ss. 14A, 37(1), 80D-- Hoshang D. Nanavati v. Assistant CIT (Mumbai) . . . 614
----Export--Change of law--Amendment extending period of exemption from five to ten years--Undertaking existing prior to date of amendment--Entitled to exemption for extended period of years--New independent unit--Factors to be considered--Income-tax Act, 1961, s. 10B-- Maral Overseas Ltd. v. Additional CIT [SB] (Indore) . . . 565
----Export--Computation of exemption--Formula--Based on entire profits of undertaking--Export entitlements and special import licence--Income to be included for exemption --Income-tax Act, 1961, s. 10B-- Maral Overseas Ltd. v. Additional CIT [SB] (Indore) . . . 565
----New industrial undertaking in free trade zone--Loss can be set off against normal business income of assessee--Income-tax Act, 1961, s. 10A-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533
----New industrial undertaking--Computation--If turnover of foreign branches reduced from "export turnover", also excludible from "total turnover"--Income-tax Act, 1961, ss. 10A, 80HHE---- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533
----New industrial undertaking--Finding that three units separate and distinct from existing units and fulfil conditions prescribed under section 10A(2)--Assessee entitled to deduction--Income-tax Act, 1961, s. 10A-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533
Export --Computer software--Special deduction under section 80HHE--Assessee taking benefit of sections 10A and 80HHE in relation to same unit--To consider 10 per cent. of profit of undertaking covered under section 10A--Assessee entitled to special deduction under section 80HHE--Income-tax Act, 1961, s. 80HHE-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533
Interest --Computation of interest under section 234B--Credit available under Double Taxation Avoidance Agreement--To be taken into account--Amendment of section 234B--Matter remanded--Income-tax Act, 1961, s. 234B-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533
International transaction --Determination of arm's length price--Extension of credit to associated enterprises beyond stipulated credit period--Cannot be construed as "international transaction"--No adjustment required for ascertaining arm's length price --Income-tax Act, 1961, s. 92B(1)-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533
Transfer pricing --Arm's length price--Cost incurred on consultancy charges to be apportioned between assessee and associated enterprises--No justification on apportionment of cost incurred on conduct of studies--Income-tax Act, 1961-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Double Taxation Avoidance Agreement Between India and Sweden :
Art. 7 --Double Taxation Avoidance Agreement--Set-off of losses--Assessee entitled to set off of losses of foreign branch against other business income-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533
Income-tax Act, 1961 :
S. 10(2A) --Business expenditure--Depreciation--Exemption--Disallowance of expenditure incurred in earning income not includible in total income--Share of profit from firm exempt in hands of partner--Disallowance of expenses in proportion to that income --Proper--Depreciation not an expense but an allowance--Provision for disallowance not applicable to depreciation-- Vishnu Anant Mahajan v. Assistant CIT [SB] (Ahmedabad) . . . 621
S. 10A --Exemption--New industrial undertaking in free trade zone--Loss can be set off against normal business income of assessee-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533
----Exemption--New industrial undertaking--Computation--If turnover of foreign branches reduced from "export turnover", also excludible from "total turnover"-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533
----Exemption--New industrial undertaking--Finding that three units separate and distinct from existing units and fulfil conditions prescribed under section 10A(2)--Assessee entitled to deduction-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533
S. 10B --Exemption--Export--Change of law--Amendment extending period of exemption from five to ten years--Undertaking existing prior to date of amendment--Entitled to exemption for extended period of years--New independent unit--Factors to be considered-- Maral Overseas Ltd. v. Additional CIT [SB] (Indore) . . . 565
----Exemption--Export--Computation of exemption--Formula--Based on entire profits of undertaking--Export entitlements and special import licence--Income to be included for exemption-- Maral Overseas Ltd. v. Additional CIT [SB] (Indore) . . . 565
S. 14A --Business expenditure--Depreciation--Exemption--Disallowance of expenditure incurred in earning income not includible in total income--Share of profit from firm exempt in hands of partner--Disallowance of expenses in proportion to that income --Proper--Depreciation not an expense but an allowance--Provision for disallowance not applicable to depreciation-- Vishnu Anant Mahajan v. Assistant CIT [SB] (Ahmedabad) . . . 621
----Exemption--Disallowance of expenditure incurred for earning income not includible in total income--Share income from firm--Depreciation not an expenditure but an allowance--Does not come within scope of disallowance--Special deduction allowed from profits for premium on health insurance--Not to be included within scope of insurance--Other expenses allocated in proportion which share income bears to remuneration-- Hoshang D. Nanavati v. Assistant CIT (Mumbai) . . . 614
S. 28(v) --Business expenditure--Depreciation--Exemption--Disallowance of expenditure incurred in earning income not includible in total income--Share of profit from firm exempt in hands of partner--Disallowance of expenses in proportion to that income--Proper--Depreciation not an expense but an allowance--Provision for disallowance not applicable to depreciation-- Vishnu Anant Mahajan v. Assistant CIT [SB] (Ahmedabad) . . . 621
S. 37(1) --Exemption--Disallowance of expenditure incurred for earning income not includible in total income--Share income from firm --Depreciation not an expenditure but an allowance--Does not come within scope of disallowance--Special deduction allowed from profits for premium on health insurance--Not to be included within scope of insurance--Other expenses allocated in proportion which share income bears to remuneration-- Hoshang D. Nanavati v. Assistant CIT (Mumbai) . . . 614
S. 80D --Exemption--Disallowance of expenditure incurred for earning income not includible in total income--Share income from firm --Depreciation not an expenditure but an allowance--Does not come within scope of disallowance--Special deduction allowed from profits for premium on health insurance--Not to be included within scope of insurance--Other expenses allocated in proportion which share income bears to remuneration-- Hoshang D. Nanavati v. Assistant CIT (Mumbai) . . . 614
S. 80HHE --Exemption--New industrial undertaking--Computation--If turnover of foreign branches reduced from "export turnover", also excludible from "total turnover"-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533
----Export--Computer software--Special deduction under section 80HHE--Assessee taking benefit of sections 10A and 80HHE in relation to same unit--To consider 10 per cent. of profit of undertaking covered under section 10A--Assessee entitled to special deduction under section 80HHE-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533
S. 92B(1) --International transaction--Determination of arm's length price--Extension of credit to associated enterprises beyond stipulated credit period--Cannot be construed as "international transaction"--No adjustment required for ascertaining arm's length price-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533
S. 234B --Interest--Computation of interest under section 234B--Credit available under Double Taxation Avoidance Agreement--To be taken into account--Amendment of section 234B--Matter remanded-- Patni Computer Systems Ltd. v. Deputy CIT (Pune) . . . 533
