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Wednesday, August 29, 2012

ITR VOL 346 PART 4 AND ITR (TRIB) VOL 18 PART 2

 

INCOME TAX REPORTS (ITR)

INCOME TAX REPORTS

Volume 346 Part 4 (Issue dated 27-8-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Advance tax --Interest--No material on record that assessee committed default in payment of advance tax--Tribunal justified in remitting matter to Assessing Officer for decision afresh--Income-tax Act, 1961, s. 234B-- CIT v . Kotak Securities Ltd . (No. 2)
(Bom) . . . 352

Business expenditure --Purchase of software--Is revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v . Amway India Enterprises (Delhi) . . . 341

----Repairs--Current repairs--Is revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v . Amway India Enterprises (Delhi) . . . 341

----Software expenses--Expenditure not to create new asset or a new source of income but to upgrade system--Extent of expenditure cannot be a decisive factor in determining its nature--Treatment in books of account not conclusive--Software expenditure is revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v . Asahi India Safety Glass Ltd . (Delhi) . . . 329

Capital or revenue expenditur e--Software expenses--Allowable--Income-tax Act, 1961-- CIT v . Kotak Securites Ltd . (No. 1) (Bom) . . . 349

Depreciation --First stock exchange membership card--Entitled to depreciation--Income-tax Act, 1961-- CIT v . Kotak Securites Ltd . (No. 1) (Bom) . . . 349

----First stock exchange membership card--Entitled to depreciation--Income-tax Act, 1961-- CIT v. Kotak Securities Ltd . (No. 2) (Bom) . . . 352

Reassessment --Reassessment after four years--Failure by assessee to disclose material facts--Income from other sources--Reopening of assessment to disallow interest on borrowings for purchase of shares--No failure by assessee--Reassessment not permissible--Income-tax Act, 1961, ss. 57(iii), 147, 148-- Ashank D. Desai v . Asst. CIT
(Guj) . . . 326

AUTHORITY FOR ADVANCE RULINGS

Non-resident --Royalty--Provision of social media monitoring service for company, brand or product, for subscribing clients--Subscriptions are royalty chargeable to tax in India--Tax deductible at source on payments--Income-tax Act, 1961, ss. 9(1)(vi), Expln. 2(iv), 195--Double Taxation Avoidance Agreement between India and Singapore, art. 12-- ThoughtBuzz Pvt. Ltd., In re . . . 345

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

Volume 18 : Part 2 (Issue dated : 27-08-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Best judgment assessment --Rejection of accounts and assessment under section 144--Disallowance of expenses under section 40(a)(ia) on ground of non-deduction of tax at source--Not justified--Income-tax Act, 1961, ss. 40(a)(ia), 144-- ITO v. Sahadev Pradhan (Cuttack) . . . 180

Business income --Income from other sources--Interest on income-tax refund--Is income from other sources, not business income--Income-tax Act, 1961, ss. 28, 56-- Kotak Mahindra Capital Co. Ltd. v. Assistant CIT [SB] (Mumbai) . . . 213

Capital gains --Computation--Effect of section 50C--Assessee booking flat--Amount paid for booking returned subsequently--Section 50C not applicable--Income-tax Act, 1961, ss. 45, 50C-- ITO v. Yasin Moosa Godil (Ahmedabad) . . . 253

----Loss--Carry forward and set off--Change of law--Amendment with effect from April 1, 2003 restricting set-off of long-term capital loss only against long-term capital gains and not against short-term capital gains--Applicable only to long-term capital loss incurred in assessment year 2003-04 and subsequent years--Set-off of long-term capital loss brought forward from periods prior to assessment year 2003-04 governed by provisions as they stood prior to amendment--Assessee entitled to set off brought forward long-term capital loss relating to assessment year 2001-02 against short-term capital gains of assessment year 2003-04--Income-tax Act, 1961, s. 74 (as amended by Finance Act, 2002)-- Kotak Mahindra Capital Co. Ltd. v. Assistant CIT [SB] (Mumbai) . . . 213

Charitable purpose --Donation for charitable purpose--Approval of institution--If objects charitable no right to deny approval--Registration under section 12A is sufficient proof--Assessee entitled to renewal of exemption certificate--Income-tax Act, 1961, ss. 12A, 80G(5)(vi)-- Bengal Hosiery Manufacturers’ Association v. Director of Income-tax (Exemption) (Kolkata) . . . 205

----Donation for charitable purposes--Registration of trust under section 80G--Clause in trust deed empowering trustees to invest in business--Other clauses making it clear that all powers subject to limitations and restrictions under Income-tax Act--Clause cannot be read in isolation--Trust granted registration under sections 10(23C) and 12A--Trust entitled to registration under section 80G--Income-tax Act, 1961, ss. 10(23C), 12A, 80G-- NSHM Academy v. CIT (Kolkata) . . . 244

Company --Book profits--Minimum alternate tax--Interest--Section 115JB not applicable--Net profit already computed under Companies Act--Addition to book profit not proper--Income-tax Act, 1961, s. 115JB-- Joint CIT v. Shreyans Industries Ltd. (Chandigarh) . . . 169

----Book profits--Provision for gratuity--To be excluded from calculation of book profits--Income-tax Act, 1961, s. 115JB-- Joint CIT v. Shreyans Industries Ltd. (Chandigarh) . . . 169

Depreciation --Goodwill--Amalgamation of wholly owned subsidiary with assessee-company--Subsidiary company earning income by lease of property--Primary asset transferred was land--No proof of transfer of goodwill--Depreciation not allowable on goodwill--Income-tax Act, 1961, s. 32-- Deputy CIT v. Toyo Engineering India Ltd. (Mumbai) . . . 159

Export --Special deduction--Profit on transfer of DEPB licence--Duty of Assessing Officer to grant opportunity of hearing to assessee--Matter remanded--Income-tax Act, 1961, s. 80HHC-- Jacob Export House v. Assistant CIT (Chandigarh) . . . 175

Interpretation of taxing statutes --Strict construction--Construction according to rules of grammar-- Kotak Mahindra Capital Co. Ltd. v. Assistant CIT [SB] (Mumbai) . . . 213

Non-resident --Business loss--Set off--No permanent establishment in India--Assessee choosing to be governed by Income-tax Act and not by Double Taxation Avoidance Agreement--Assessing Officer cannot impose Double Taxation Avoidance Agreement--Assessee entitled to set off loss under “Profits and gains of business or profession†against “Income from other sources†--Income-tax Act, 1961, ss. 71, 90(2)-- Prudential Assurance Co. Ltd. v. Assistant Director of Income-tax (Mumbai) . . . 186

Reassessment --Notice issued after four years--No case of failure to disclose material facts--Reassessment on change of opinion--To be quashed--Income-tax Act, 1961, ss. 143(3), 147, 148-- Prudential Assurance Co. Ltd. v. Assistant Director of Income-tax (Mumbai) . . . 186

Refund --Interest--Interest on excess refund--Provision inserted with effect from June 1, 2003--Explanation that interest leviable for assessment years prior to that date if proceedings completed thereafter--Assessee liable to pay interest--Income-tax Act, 1961, s. 234D-- Kotak Mahindra Capital Co. Ltd. v. Assistant CIT [SB] (Mumbai) . . . 213

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 10(23C) --Charitable purposes--Donation for charitable purposes--Registration of trust under section 80G--Clause in trust deed empowering trustees to invest in business--Other clauses making it clear that all powers subject to limitations and restrictions under Income-tax Act--Clause cannot be read in isolation--Trust granted registration under sections 10(23C) and 12A--Trust entitled to registration under section 80G-- NSHM Academy v. CIT (Kolkata) . . . 244

S. 12A --Charitable purpose--Donation for charitable purpose--Approval of institution--If objects charitable no right to deny approval--Registration under section 12A is sufficient proof--Assessee entitled to renewal of exemption certificate-- Bengal Hosiery Manufacturers’ Association v. Director of Income-tax (Exemption) (Kolkata) . . . 205

----Charitable purposes--Donation for charitable purposes--Registration of trust under section 80G--Clause in trust deed empowering trustees to invest in business--Other clauses making it clear that all powers subject to limitations and restrictions under Income-tax Act--Clause cannot be read in isolation--Trust granted registration under sections 10(23C) and 12A--Trust entitled to registration under section 80G-- NSHM Academy v. CIT (Kolkata) . . . 244

S. 28 --Business income--Income from other sources--Interest on income-tax refund--Is income from other sources, not business income-- Kotak Mahindra Capital Co. Ltd. v. Assistant CIT [SB] (Mumbai) . . . 213

S. 32 --Depreciation--Goodwill--Amalgamation of wholly owned subsidiary with assessee-company--Subsidiary company earning income by lease of property--Primary asset transferred was land--No proof of transfer of goodwill--Depreciation not allowable on goodwill-- Deputy CIT v. Toyo Engineering India Ltd. (Mumbai) . . . 159

S. 40(a)(ia) --Best judgment assessment--Rejection of accounts and assessment under section 144--Disallowance of expenses under section 40(a)(ia) on ground of non-deduction of tax at source--Not justified-- ITO v. Sahadev Pradhan (Cuttack) . . . 180

S. 45 --Capital gains--Computation--Effect of section 50C--Assessee booking flat--Amount paid for booking returned subsequently--Section 50C not applicable-- ITO v. Yasin Moosa Godil (Ahmedabad) . . . 253

S. 50C --Capital gains--Computation--Effect of section 50C--Assessee booking flat--Amount paid for booking returned subsequently--Section 50C not applicable-- ITO v. Yasin Moosa Godil (Ahmedabad) . . . 253

S. 56 --Business income--Income from other sources--Interest on income-tax refund--Is income from other sources, not business income-- Kotak Mahindra Capital Co. Ltd. v. Assistant CIT [SB] (Mumbai) . . . 213

S. 71 --Non-resident--Business loss--Set off--No permanent establishment in India--Assessee choosing to be governed by Income-tax Act and not by Double Taxation Avoidance Agreement--Assessing Officer cannot impose Double Taxation Avoidance Agreement--Assessee entitled to set off loss under “Profits and gains of business or profession†against “Income from other sources†-- Prudential Assurance Co. Ltd. v. Assistant Director of Income-tax (Mumbai) . . . 186

S. 74 (as amended by Finance Act, 2002) --Capital gains--Loss--Carry forward and set off--Change of law--Amendment with effect from April 1, 2003 restricting set-off of long-term capital loss only against long-term capital gains and not against short-term capital gains--Applicable only to long-term capital loss incurred in assessment year 2003-04 and subsequent years--Set-off of long-term capital loss brought forward from periods prior to assessment year 2003-04 governed by provisions as they stood prior to amendment--Assessee entitled to set off brought forward long-term capital loss relating to assessment year 2001-02 against short-term capital gains of assessment year 2003-04-- Kotak Mahindra Capital Co. Ltd. v. Assistant CIT [SB] (Mumbai) . . . 213

S. 80G --Charitable purposes--Donation for charitable purposes--Registration of trust under section 80G--Clause in trust deed empowering trustees to invest in business--Other clauses making it clear that all powers subject to limitations and restrictions under Income-tax Act--Clause cannot be read in isolation--Trust granted registration under sections 10(23C) and 12A--Trust entitled to registration under section 80G-- NSHM Academy v. CIT (Kolkata) . . . 244

S. 80G(5)(vi) --Charitable purpose--Donation for charitable purpose--Approval of institution--If objects charitable no right to deny approval--Registration under section 12A is sufficient proof--Assessee entitled to renewal of exemption certificate-- Bengal Hosiery Manufacturers’ Association v. Director of Income-tax (Exemption) (Kolkata) . . . 205

S. 80HHC --Export--Special deduction--Profit on transfer of DEPB licence--Duty of Assessing Officer to grant opportunity of hearing to assessee--Matter remanded-- Jacob Export House v. Assistant CIT (Chandigarh) . . . 175

S. 90(2) --Non-resident--Business loss--Set off--No permanent establishment in India--Assessee choosing to be governed by Income-tax Act and not by Double Taxation Avoidance Agreement--Assessing Officer cannot impose Double Taxation Avoidance Agreement--Assessee entitled to set off loss under “Profits and gains of business or profession†against “Income from other sources†-- Prudential Assurance Co. Ltd. v. Assistant Director of Income-tax (Mumbai) . . . 186

S. 115JB --Company--Book profits--Minimum alternate tax--Interest--Section 115JB not applicable--Net profit already computed under Companies Act--Addition to book profit not proper-- Joint CIT v. Shreyans Industries Ltd. (Chandigarh) . . . 169

----Company--Book profits--Provision for gratuity--To be excluded from calculation of book profits-- Joint CIT v. Shreyans Industries Ltd. (Chandigarh) . . . 169

S. 143(3) --Reassessment--Notice issued after four years--No case of failure to disclose material facts--Reassessment on change of opinion--To be quashed-- Prudential Assurance Co. Ltd. v. Assistant Director of Income-tax (Mumbai) . . . 186

S. 144 --Best judgment assessment--Rejection of accounts and assessment under section 144--Disallowance of expenses under section 40(a)(ia) on ground of non-deduction of tax at source--Not justified-- ITO v. Sahadev Pradhan (Cuttack) . . . 180

S. 147 --Reassessment--Notice issued after four years--No case of failure to disclose material facts--Reassessment on change of opinion--To be quashed-- Prudential Assurance Co. Ltd. v. Assistant Director of Income-tax (Mumbai) . . . 186

S. 148 --Reassessment--Notice issued after four years--No case of failure to disclose material facts--Reassessment on change of opinion--To be quashed-- Prudential Assurance Co. Ltd. v. Assistant Director of Income-tax (Mumbai) . . . 186

S. 234D --Refund--Interest--Interest on excess refund--Provision inserted with effect from June 1, 2003--Explanation that interest leviable for assessment years prior to that date if proceedings completed thereafter--Assessee liable to pay interest-- Kotak Mahindra Capital Co. Ltd. v. Assistant CIT [SB] (Mumbai) . . . 213



Saturday, August 18, 2012

Section 54EC: High Court Takes Liberal View On Time Limit For Investment



 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.


CIT vs. Cello Plast (Bombay High Court)

Fact that s. 54EC bonds were available during the 6 months & that there were alternative bonds available irrelevant if the bonds not available on the last date

 

The assessee sold factory building on 22.3.2006 and earned LTCG of Rs.49.36 lakhs. The LTCG was invested in s. 54EC bonds of Rural Electrification Corporation ("REC Bonds") on 31.1.2007, beyond the period of 6 months (21.9.2006) specified in s. 54EC. The assessee claimed that the delay was due to the fact that for the period from 4.8.2006 to 22.1.2007, the bonds were not available and the investment was made when available. The Tribunal allowed the assessee's claim (included in file). Before the High Court, the department argued that (a) even if the bonds were not available for a part of the period, they were available for some time in the period after the transfer (1.7.2006 to 3.8.2006) and the assessee ought to have invested then & (b) the s. 54EC bonds issued by National Highway Authority (NHAI) were available and the assessee could have invested in them. HELD by the High Court dismissing the appeal:


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Regards,


Editor,


itatonline.org

---------------------

Latest:

CIT vs. Virendra & Co (Bombay High Court)

Low Tax Effect Circular is retrospective & applies to pending appeals



ITR VOL 346 PART 3 AND ITR (TRIB) VOL 18 PART 1

 

INCOME TAX REPORTS (ITR)

INCOME TAX REPORTS

Volume 346 Part 3 (Issue dated 20-8-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Reassessment --Notice after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Amount shown as loan from company--Assessee not disclosing that it had substantial interest in a company--Reassessment proceedings after four years to assess amount as deemed dividend--Valid--Income-tax Act, 1961, ss. 147, 148-- Dishman Pharmaceuticals and Chemicals Limited v. Deputy CIT (OSD) (No. 1 ) (Guj) . . . 228

----Notice after four years--Failure to disclose material facts necessary for assessment--Notice need not specify instances of failure--Sufficient if failure can be inferred--Investigation by customs authorities--Penalty for theft of electricity--Reassessment proceedings valid--Income-tax Act, 1961, ss. 147, 148-- I. P. Patel and Co. v. Deputy CIT
(Guj) . . . 207

----Notice--Validity--Reassessment proceedings found not valid--Reassessment cannot be sustained under another ground not mentioned in notice--Income-tax Act, 1961, ss. 147, 148-- Dishman Pharmaceuticals and Chemicals Ltd . v . Deputy CIT (OSD) (No. 2 ) (Guj) . . . 245

----Reassessment after four years--Assessee disclosing material facts necessary for assessment--Reassessment proceedings to recalculate special deduction under section 80HHC--Not valid--Income-tax Act, 1961, ss. 80HHC, 147, 148-- Dishman Pharmaceuticals and Chemicals Ltd. v . Deputy CIT (OSD) (No. 2 ) (Guj) . . . 245

----Reassessment after four years--Condition precedent--Failure by assessee to disclose material facts--Income from other sources--Claim to deduction of interest against dividend--Fact of borrowings to purchase shares and details of investments disclosed in return and during course of assessment in reply to queries raised by Assessing Officer--Reassessment to disallow deduction on ground interest was not paid for earning dividend but for acquiring controlling interest in company--Not a case of failure to disclose material facts--Reassessment not permissible--Income-tax Act, 1961, ss. 57(iii), 147, 148-- Ketan B. Mehta v . Asst. CIT (Guj) . . . 254

----Reassessment after four years--Condition precedent--Failure by assessee to disclose material facts--Reasons recorded by Assessing Officer must reflect such failure--Reopening of assessment on ground pre-operative expenses capital in nature had been allowed as revenue--Not a case of default by assessee--Reassessment not permissible--Income-tax Act, 1961, ss. 147, 148-- Ashokjyot Oxygen Pvt. Ltd . v . H. N. Patel, ITO
(Guj) . . . 199

----Reassessment after four years--Condition precedent--Failure by assessee to disclose material facts--Reopening of assessment on ground deduction for bad debts erroneously allowed--Not permissible--Income-tax Act, 1961, ss. 147, 148-- V. B. Investments v . Deputy CIT (Guj) . . . 193

----Reassessment after four years--Failure by assessee to disclose material facts--Notice issued to disallow deduction of usance interest paid to non-residents without deduction of tax--No indication of default by assessee--Reopening not permissible--Income-tax Act, 1961, ss. 147, 148-- Priya Blue Industries Pvt. Ltd. v . Deputy CIT
(Guj) . . . 204

----Writ--Powers of High Court--High Court only required to find out if there was prima facie material justifying notice of reassessment--Income-tax Act, 1961, ss. 147, 148--Constitution of India, art. 226-- I. P. Patel and Co. v . Deputy CIT
(Guj) . . . 207

Search and seizure --Assessment of third person--Scope of section 153C--Provision authorises enquiry on satisfaction that valuable articles or documents discovered during search belonged to third person--Such valuable article or document to be handed over to Assessing Officer having jurisdiction over assessee--Not necessary that satisfaction should be recorded that valuable article or document showed undisclosed income--Income-tax Act, 1961, ss. 132, 152A, 153C, 153BD, 158-- SSP Aviation Ltd . v . Deputy CIT (Delhi) . . . 177

 

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

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

Volume 18 : Part 1 (Issue dated : 20-08-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Assessment --Notice--Service of notice at address other than address shown on return--Notice returned unserved--No proper service of notice--Assessment invalid--That assessee participated in proceedings--Does not preclude right to object on ground of non-service of notice--Provision precluding assessee from taking such objection not applicable to assessment years prior to 2008-09--Income-tax Act, 1961, ss. 143(2), 292BB-- Ashok B. Bafna v. Deputy CIT (Mumbai) . . . 43

Deduction of tax at source --Payment of royalty to non-resident for hire of transponder--Payment from one non-resident to another non-resident made outside India--Deduction of tax at source not required--Income-tax Act, 1961, ss. 40(a)(i), 195-- B4U International Holdings Ltd. v. Deputy CIT (International Taxation) (Mumbai) . . . 62

Exemption --Special economic zone--Manufacture--Definition--Amendment--Clarificatory--Hundred per cent export oriented undertaking in special economic zone engaged in blending and export of tea--Is manufacturer entitled to exemption--Income-tax Act, 1961, ss. 2(29BA), 10A, 10B--Special Economic Zones Act, 2005, s. 2(r)-- Madhu Jayanti International Ltd. v. Deputy CIT [SB] (Kolkata) . . . 1

Industrial undertaking --Infrastructure facility--Special deduction--Inland port--Container freight station is inland port--Income entitled to deduction--Income-tax Act, 1961, s. 80-IA(4)-- All Cargo Global Logistics Ltd. v. Deputy CIT [SB] (Mumbai) . . . 106

Search and seizure --Assessment in search cases--Conditions precedent--Warrant of authorisation must be executed in name of assessee--Warrant in name of trust and assessee as managing trustee--Search executed in branches of bank--No search executed on assessee in individual capacity--No undisclosed income of assessee discovered--Assessment of assessee in individual capacity not permissible--Income-tax Act, 1961, ss. 132, 153A-- Dr. Mansukh Kanjibhai Shah v. Assistant CIT (Ahmedabad) . . . 80

----Assessment in search cases--Scope of proceedings--Abatement of pending assessments--Effect--Only one assessment for each assessment year separately on basis of findings of search and other material brought on record of Assessing Officer--Assessments not abating--Assessment to be made on basis of books or other documents not produced in course of original assessment but found in course of search and undisclosed income or undisclosed property discovered in course of search--Income-tax Act, 1961, ss. 132, 153A-- All Cargo Global Logistics Ltd. v. Deputy CIT [SB] (Mumbai) . . . 106

Words and phrases --†Manufacture†-- Madhu Jayanti International Ltd. v. Deputy CIT [SB] (Kolkata) . . . 1

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

 Special Economic Zones Act, 2005 :

S. 2(r) --Exemption--Special economic zone--Manufacture--Definition--Amendment--Clarificatory--Hundred per cent export oriented undertaking in special economic zone engaged in blending and export of tea--Is manufacturer entitled to exemption-- Madhu Jayanti International Ltd. v. Deputy CIT [SB] (Kolkata) . . . 1

Income-tax Act, 1961 :

S. 2(29BA) --Exemption--Special economic zone--Manufacture--Definition--Amendment--Clarificatory--Hundred per cent export oriented undertaking in special economic zone engaged in blending and export of tea--Is manufacturer entitled to exemption-- Madhu Jayanti International Ltd. v. Deputy CIT [SB] (Kolkata) . . . 1

S. 10A --Exemption--Special economic zone--Manufacture--Definition--Amendment--Clarificatory--Hundred per cent export oriented undertaking in special economic zone engaged in blending and export of tea--Is manufacturer entitled to exemption-- Madhu Jayanti International Ltd. v. Deputy CIT [SB] (Kolkata) . . . 1

S. 10B --Exemption--Special economic zone--Manufacture--Definition--Amendment--Clarificatory--Hundred per cent export oriented undertaking in special economic zone engaged in blending and export of tea--Is manufacturer entitled to exemption--Special Economic Zones Act, 2005, s. 2(r)-- Madhu Jayanti International Ltd. v. Deputy CIT [SB] (Kolkata) . . . 1

S. 40(a)(i) --Deduction of tax at source--Payment of royalty to non-resident for hire of transponder--Payment from one non-resident to another non-resident made outside India--Deduction of tax at source not required-- B4U International Holdings Ltd. v. Deputy CIT (International Taxation) (Mumbai) . . . 62

S. 80-IA(4) --Industrial undertaking--Infrastructure facility--Special deduction--Inland port--Container freight station is inland port--Income entitled to deduction-- All Cargo Global Logistics Ltd. v. Deputy CIT [SB] (Mumbai) . . . 106

S. 132 --Search and seizure--Assessment in search cases--Conditions precedent--Warrant of authorisation must be executed in name of assessee--Warrant in name of trust and assessee as managing trustee--Search executed in branches of bank--No search executed on assessee in individual capacity--No undisclosed income of assessee discovered--Assessment of assessee in individual capacity not permissible-- Dr. Mansukh Kanjibhai Shah v. Assistant CIT (Ahmedabad) . . . 80

----Search and seizure--Assessment in search cases--Scope of proceedings--Abatement of pending assessments--Effect--Only one assessment for each assessment year separately on basis of findings of search and other material brought on record of Assessing Officer--Assessments not abating--Assessment to be made on basis of books or other documents not produced in course of original assessment but found in course of search and undisclosed income or undisclosed property discovered in course of search-- All Cargo Global Logistics Ltd. v. Deputy CIT [SB] (Mumbai) . . . 106

S. 143(2) --Assessment--Notice--Service of notice at address other than address shown on return--Notice returned unserved--No proper service of notice--Assessment invalid--That assessee participated in proceedings--Does not preclude right to object on ground of non-service of notice--Provision precluding assessee from taking such objection not applicable to assessment years prior to 2008-09-- Ashok B. Bafna v. Deputy CIT (Mumbai) . . . 43

S. 153A --Search and seizure--Assessment in search cases--Conditions precedent--Warrant of authorisation must be executed in name of assessee--Warrant in name of trust and assessee as managing trustee--Search executed in branches of bank--No search executed on assessee in individual capacity--No undisclosed income of assessee discovered--Assessment of assessee in individual capacity not permissible-- Dr. Mansukh Kanjibhai Shah v. Assistant CIT (Ahmedabad) . . . 80

----Search and seizure--Assessment in search cases--Scope of proceedings--Abatement of pending assessments--Effect--Only one assessment for each assessment year separately on basis of findings of search and other material brought on record of Assessing Officer--Assessments not abating--Assessment to be made on basis of books or other documents not produced in course of original assessment but found in course of search and undisclosed income or undisclosed property discovered in course of search-- All Cargo Global Logistics Ltd. v. Deputy CIT [SB] (Mumbai) . . . 106

S. 195 --Deduction of tax at source--Payment of royalty to non-resident for hire of transponder--Payment from one non-resident to another non-resident made outside India--Deduction of tax at source not required-- B4U International Holdings Ltd. v. Deputy CIT (International Taxation) (Mumbai) . . . 62

S. 292BB --Assessment--Notice--Service of notice at address other than address shown on return--Notice returned unserved--No proper service of notice--Assessment invalid--That assessee participated in proceedings--Does not preclude right to object on ground of non-service of notice--Provision precluding assessee from taking such objection not applicable to assessment years prior to 2008-09-- Ashok B. Bafna v. Deputy CIT (Mumbai) . . . 43

 




Friday, August 17, 2012

Direct Entry to Chartered Accountancy Course

DEAR STUDENTS,


Direct admission to the Chartered Accountancy Course - Exemption from

passing Common Proficiency Test (CPT) to certain categories of students.


FOR ANNOUNCEMENT CLICK HERE:\

https://docs.google.com/open?id=1YIIybKK7-pL7BvUkp8Att3_6wJAznCnwI6YQWeBAIO75sqxzYJWQnpZsA-LK




Regards,
-------
CA.C.V.PAWAR
0253-2319641. M-9423961209

Thursday, August 16, 2012

AAR Dissents From Its Own Rulings On Transfer Pricing & 115JB

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Wed, Aug 15, 2012 at 12:26 PM
Subject: Message from EGroup of SolapurCAs AAR Dissents From Its Own Rulings On Transfer Pricing & 115JB
To: editor@itatonline.org


 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.

In Re Castleton Investment Ltd (AAR)

AAR not bound by own rulings. Transfer pricing & ROI filing provisions apply despite no income. Foreign company is liable for MAT u/s 115JB

 

The applicant, a Mauritius company, sold shares of Burroughs Wellcome (India) Ltd. The resultant capital gains were not chargeable to tax under the India-Mauritius DTAA. The AAR had to consider whether, as the Applicant had no income chargeable to tax in India, (a) the transfer pricing provisions were applicable to its, (b) section 115JB (MAT) was applicable to it and (c) it was liable to file a return of income. The AAR had to also consider whether it was bound by its own earlier rulings. HELD by the AAR:


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Regards,


Editor,


itatonline.org

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Latest:

In Re Orient Green Power Pte. Ltd (AAR)

"Gift" by company to subsidiary appears to be "Dubious tax avoidance scheme"



Gift By Company to Subsidiary Is A "Dubious Tax Avoidance Scheme": AAR




---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Wed, Aug 15, 2012 at 12:26 PM
Subject: Message from EGroup of SolapurCAs Gift By Company to Subsidiary Is A "Dubious Tax Avoidance Scheme": AAR
To: editor@itatonline.org


 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.

In Re Orient Green Power Pte. Ltd (AAR)

"Gift" by company to subsidiary appears to be "Dubious tax avoidance scheme"

 

The Applicant, a Singapore company, "gifted" the shares of Bharath Wind Farm Ltd, an Indian company, to its 99.61% subsidiary Orient Green Power Ltd, another Indian company. As the gift was made prior to the enactment of s. 56(2)(viia) and there was no consideration received, it was claimed that there was no taxable income and that the transfer pricing provisions did not apply. The department opposed the applicant on the ground that it did not appear to be genuine. HELD by the AAR:


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Regards,


Editor,


itatonline.org

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Latest:

Appointment Of IRS Officers As Joint Commissioners Of Income-tax



Appointment Of IRS Officers As Joint Commissioners Of Income-tax

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Wed, Aug 15, 2012 at 12:25 PM
Subject: Message from EGroup of SolapurCAs Appointment Of IRS Officers As Joint Commissioners Of Income-tax
To: editor@itatonline.org


 

Dear Subscriber,

Appointment Of IRS Officers As Joint Commissioners Of Income-tax

Vide Order No. 163 of 2012 dated 14.08.2012 the CBDT has stated that the President has appointed several officers of the Indian Revenue Service to the grade of Joint Commissioner of Income-tax on an ad hoc basis


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Latest:

Telco Dadajee Dhackjee Ltd vs. DCIT (ITAT Mumbai Third Member)

S. 143(1) assessment cannot be reopened u/s 147 in absence of "new material"



Section. 143(1) Intimation Cannot Be Reopened u/s 147 In Absence Of "New Material": Third Member

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Tue, Aug 14, 2012 at 5:07 PM
Subject: Message from EGroup of SolapurCAs Even s. 143(1) Intimation Cannot Be Reopened u/s 147 In Absence Of "New Material": Third Member
To: editor@itatonline.org


 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.


Telco Dadajee Dhackjee Ltd vs. DCIT (ITAT Mumbai Third Member)

S. 143(1) assessment cannot be reopened u/s 147 in absence of "new material"

 

The assessee filed a ROI in which it claimed deduction for non-compete fees and depreciation on leased premises which was accepted by the AO vide Intimation u/s 143(1). Thereafter, he issued a notice u/s 148 seeking to reopen the assessment on the ground that the expenses were not allowable. The assessee challenged the reopening on the ground that (a) the AO had not given a copy of the recorded reasons and (b) there was no fresh material to justify the reopening. Before the Tribunal, though the division bench agreed that there was no new material, the AM held that in the case of a s. 143(1) intimation, new material was not required while the JM took the contrary view. On a reference to the Third Member HELD by the Third Member:


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Latest:

WNS Global Services Pvt. Ltd vs. ITO (ITAT Mumbai)

S. 10A(9) applied prospectively but its omission has retrospective effect



Monday, August 13, 2012

Though Section. 10A(9) Omitted w.e.f. AY 2004-05, It Is To Be Treated As Never Existing: ITAT Mumbai


---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Mon, Aug 13, 2012 at 11:48 AM
Subject: Message from EGroup of SolapurCAs Though s. 10A(9) Omitted w.e.f. AY 2004-05, It Is To Be Treated As Never Existing: ITAT Mumbai
To: editor@itatonline.org


 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.

WNS Global Services Pvt. Ltd vs. ITO (ITAT Mumbai)

S. 10A(9) applied prospectively but its omission has retrospective effect

 

Till AY 2003-04, the assessee's shares were held by British Airways and Warburg Pincus. In AY 2003-04, there was a change in the beneficial interest in the shareholding. For AY 2004-05, the assessee claimed s. 10A deduction of Rs. 19 crores in respect of its STPs which were set up pre-2000. The CIT took the view that the s. 10A deduction was not allowable for AY 2003-04 & 2004-05 in view of s. 10A(9) which was introduced in AY 2001-02 to provide that if the "beneficial interest" in the undertaking was transferred, s. 10A deduction would not be allowed. For AY 2003-04, the CIT's stand was upheld by the Tribunal. However, for AY 2004-04, HELD by the Tribunal, reversing the CIT:


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Editor,


itatonline.org

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Latest:

ITAT Members' Training Programme On Intl Tax & Transfer Pricing Inaugurated



High Court Reverses Law On S. 153A Search Assessment

 
----- Forwarded Message -----
From: "editor@itatonline.org" <itatonline.org@gmail.com>
To: editor@itatonline.org
Sent: Friday, August 10, 2012 4:10 PM
Subject: [TaxFinSoft] High Court Reverses Law On S. 153A Search Assessment

 
Dear Subscriber,
 
The following important judgement is available for download at itatonline.org.

CIT vs. Anil Kumar Bhatia (Delhi High Court)

S. 153A applies if incriminating material is found even if assessments are completed
 
Pursuant to a search u/s 153A, the AO passed an assessment order in which he assessed various amounts. The Tribunal (1 ITR (Trib) 484) upheld the assessee's appeal on the ground that (a) no "incriminating material" was found in the course of search and (b) as ROIs for the said 6 years disclosed the particulars of the subject additions and these had been accepted by the AO u/s 143(1), no assessment was pending so as to have abated. It was held that s. 153A was not a de novo assessment or a normal/ regular assessment and the additions made therein have to be necessarily restricted to the undisclosed income unearthed during the search. On appeal by the department to the High Court, HELD reversing the Tribunal:

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Latest:

JCIT vs. American Express Bank Ltd (ITAT Mumbai)

S. 14A applies even if the securities are held as stock-in-trade. Article 7(3) limitation applies to all expenditure & not only to s. 44C H.O. expenditure


An Insight about My Social Initiatives

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From: Kumargoelguruji Socialactivistpune <onemanarmyindia@ymail.com>
Date: Mon, Aug 13, 2012 at 11:20 AM


My Dear Well Wisher
and
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Friday, August 10, 2012

ITAT Takes Contra View On Applicability Of S. 14A To Stock-in-trade

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Fri, Aug 10, 2012 at 4:09 PM
Subject: Message from EGroup of SolapurCAs ITAT Takes Contra View On Applicability Of S. 14A To Stock-in-trade
To: editor@itatonline.org


 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.

JCIT vs. American Express Bank Ltd (ITAT Mumbai)

S. 14A applies even if the securities are held as stock-in-trade. Article 7(3) limitation applies to all expenditure & not only to s. 44C H.O. expenditure

 

The Tribunal had to consider two issues (i) Whether the provision in Article 7(3) of the India-USA DTAA that a deduction for expenses, including a reasonable allocation of executive and general administrative expenses, would be allowed "in accordance with, and subject to the limitations of, the taxation laws of India" would apply to all expenses or only to executive & general admin expenses and (ii) whether s. 14A applied to tax-free income on securities held as stock-in-trade. HELD by the Tribunal:


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Editor,


itatonline.org

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Latest:

List Of CITs Selected For "Advanced Mid Career Training Programme" In USA




Tax On Employees' Salary Is Exempt U/s 10(10CC): Uttarakhand High Court


---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Fri, Aug 10, 2012 at 4:10 PM
Subject: Message from EGroup of SolapurCAs Tax On Employees' Salary Is Exempt U/s 10(10CC): Uttarakhand High Court
To: editor@itatonline.org


 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.

DIT vs. Sedco Forex International Drilling Inc (Uttarakhand High Court)

Tax on employees' salary is a "non-monetary" perquisite exempt u/s 10(10CC)

 

The assessee-employer entered into agreements with the employees pursuant to which it agreed to bear the income tax payable by the employees on their salary. The question was whether such tax payment was "income in the nature of a perquisite, not provided for by way of monetary payment, within the meaning of clause (2) of section 17" so as to be exempt in the hands of the employee. HELD by the High Court:


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Editor,


itatonline.org

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Latest:

CIT vs. Anil Kumar Bhatia (Delhi High Court)

S. 153A applies if incriminating material is found even if assessments are completed



Volume 346 Part 2 (Issue dated 13-8-2012)


 

INCOME TAX REPORTS (ITR)

Volume 346 Part 2 (Issue dated 13-8-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Authority for Advance Rulings --Power to determine issues of fact or law--Is a tribunal--Rulings amenable to special leave jurisdiction of Supreme Court and writ jurisdiction of High Court--Supreme Court--Direct appeal from ruling not ordinarily entertained--Division Bench of High Court to hear petitions against rulings--On facts, assessee relegated to High Court--Income-tax Act, 1961, ss. 245N(a), 245S--Constitution of India, arts. 136, 226, 227-- Columbia Sportswear Company v . Director of Income-tax . . . 161

Tribunal --Tests-- Columbia Sportswear Company v . Director of Income-tax
. . . 161

HIGH COURTS

Abatement of proceedings --Search and seizure--Effect of section 153A--Assessment or reassessment proceedings pending at the time of search abate--Appeal from assessment pending before Tribunal would not abate--Income-tax Act, 1961, s. 153A-- CIT v. Smt . Shaila Agarwal (All) . . . 130

Capital gains or business income --Long-term capital gains--Income from sale of shares--Shares whether held as investment or stock-in-trade--Principles--Shares treated as investment in preceding and subsequent assessment years--Profits assessable as capital gains--Income-tax Act, 1961, s. 54E-- Felspar Credit and Investment (P.) Ltd . v. CIT (Mad) . . . 121

Capital or revenue expenditure --Software expenditure--Assessee manufacturing telecommunication and power cable--Software not part of profit-making apparatus of assessee--Expenditure is revenue expenditure--Income-tax Act, 1961-- CIT v . Raychem RPG Ltd . (Bom) . . . 138

Charitable purpose --Assessee providing sports amenities to its members--Assessee does not exist only for an individual or a group of individuals--Membership drawn from a diverse cross-section of society--Assessee a charitable organization--Whether requirements of section 11 fulfilled--Matter remanded--Income-tax Act, 1961, ss. 2(15), 11-- Director of Income-tax (Exemption) v. Chembur Gymkhana (Bom) . . . 86

Export --Special deduction--Scrap sales--Matter remanded-- Income-tax Act, 1961, s. 80HHC-- CIT v . Raychem RPG Ltd . (Bom) . . . 138

Income --Accrual of income--Interest on IDBI bonds--Entire discounted interest on bonds assessable--Income-tax Act, 1961-- Felspar Credit and Investment (P.) Ltd . v. CIT (Mad) . . . 121

----Advance payment mistakenly credited in capital account--Concurrent finding that receipts not revenue but advance payment--Findings of fact--Income-tax Act, 1961-- CIT v. Vinay Pratap Singh (Raj) . . . 83

Infrastructure facility --Special deduction--Meaning of inland port--Inland container depots are inland ports within the meaning of section 80-IA(4)--Entitled to deduction--Income-tax Act, 1961, s. 80-IA(4)-- Container Corporation of India Ltd. v . Asst. CIT (Delhi) . . . 140

Permanent account number --Investors whose total income below taxable limit--Need not furnish permanent account number--Need not file income-tax declarations or returns--Banking and financial institutions need not insist upon permanent account number from such small investors--Income-tax Act, 1961, ss. 139A, 206AA-- Smt. A. Kowsalya Bai v . Union of India (Karn) . . . 156

Reassessment --Order passed without considering objections of assessee--Not valid--Income-tax Act, 1961, s. 147-- Rabo India Finance Ltd . v . Deputy CIT
(Bom) . . . 81

Search and seizure --Block assessment--Notice under section 158BC giving less than fifteen days for filing return--Effect of section 292B--Block assessment not void ab initio--Matter remanded--Income-tax Act, 1961, ss. 158BC, 292B-- CIT v . Naveen Verma (P&H) . . . 100

----Block assessment--Penalty--Concealment of income--Commissioner (Appeals) as well as Tribunal deleting penalty on finding that addition made on estimate basis--Finding of fact--Penalty not leviable--Income-tax Act, 1961, s. 158BFA(2)-- CIT v . Dr. Giriraj Agarwal Giri (Raj) . . . 152

----Block assessment--Undisclosed income--Assessment based on admission by assessee--Valid--Income-tax Act, 1961, s. 158BC-- C. K. K. Catering Services v. Asst. CIT (Karn) . . . 92

----Undisclosed income--Law applicable--Effect of insertion of section 158BI--Assessing Officer can take into consideration material other than that discovered during search--Receipt of on-money on property sale discovered during search--Evidence of purchasers can be considered--Additions made--Justified--Income-tax Act, 1961, s. 158BI-- Gopal Lal Bhadruka v . Deputy CIT (AP) . . . 106

Wealth-tax --Exemption--Company--Assets used in business--Property given on lease--Assessee in leasing business--Property falls within specified assets under section 40(3)(vi)--Exemption available--Wealth-tax Act, 1957--Finance Act, 1983, s. 40(3)(vi)-- CWT v . Donatus Victoria Estates and Hotels P. Ltd . (Mad) . . . 114

Words and phrases --Meaning of “abate†and “pending†-- CIT v. Smt. Shaila Agarwal (All) . . . 130



Tuesday, August 7, 2012

IPCC RESULTS DECLARED!

DEAR STUDENTS,

IPCC MAY -2012 ! RESULTS DECLARED!


Regards,
-------
CA.C.V.PAWAR
0253-2319641. M-9423961209


Change in the time of declaration of results PCC & IPCC (Today @ 9pm)

DEAR STUDENTS,

Announcement on http://icai.org

IMPORTANT ANNOUNCEMENT

August 7, 2012

Sub: Change in the time of declaration of results – May, 2012
In supersession of our earlier announcement dated 31st July,
2012, the results of the Professional Competence, Integrated
Professional Competence Examinations, and the Post
Qualification Examination in Insurance and Risk Management held in
May, 2012 are likely to be declared latest by 9.00 PM today, unless
extended otherwise.

(G. Somasekhar)
Additional Secretary (Exams)



Regards,
-------
CA.C.V.PAWAR
0253-2319641. M-9423961209

PLAN -- PERSEVERE and PROGRESS

INDIAN CA - NURTURED IN INDIA, GROOMED FOR THE WORLD

For latest Updates visit Blogspot : http://canews1.blogspot.com

Monday, August 6, 2012

High Court Takes Liberal View On Limits Of Partners' Remuneration u/s 40(b)(v)

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Sat, Aug 4, 2012 at 9:35 AM
Subject: Message from EGroup of SolapurCAs High Court Takes Liberal View On Limits Of Partners' Remuneration u/s 40(b)(v)
To: editor@itatonline.org


 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.

Md. Serajuddin & Brothers vs. CIT (Calcutta High Court)

For s. 40(b)(v) limits, P&L A/c profits (including non-business income) have to be taken & not only "profits & gains of business" as computed u/s 28 to 43D

 

S. 40(b)(v) permits a firm to claim deduction of remuneration paid to a working partner upto certain limits of the "book profit". The term "book profit" is defined in Explanation 3 to mean "the net profit, as shown in the profit and loss account for the relevant previous year, computed in the manner laid down in Chapter IV-D … ". The High Court had to consider whether the term "book profit" meant the profit as per the P&L A/c (which included non-business income) or the "Profits & gains of business as computed under Chapter IV-D". HELD by the High Court:


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Editor,


itatonline.org

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Latest:

Medical Samples To Doctors Violates Law & Not Allowable As Deduction