INCOME TAX REPORTS (ITR)
Volume 346 Part 1 (Issue dated 6-8-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Assessment --Special audit--Condition precedent--Assessee to be given opportunity to be heard--No evidence that submissions of assessee considered--Order not containing finding as to complexity of accounts--Matter remanded--Income-tax Act, 1961, s. 142(2A)-- Nickunj Eximp Enterprises Pvt. Ltd . v . Asst. CIT (Bom) . . . 6
Bad debt --Cheque given by party dishonoured and amount written off in accounts--Amount deductible as bad debt--Income-tax Act, 1961, ss. 36(1)(vii), (2)-- CIT v . Voith Paper Fabrics India Ltd. (P&H) . . . 70
Business expenditure --Legal expenses and settlement charges--Assessee giving licence to conduct business--Disputes between assessee and licensee--Dispute settled and consent decree passed--Settlement charges and legal expenses--Deductible--Income-tax Act, 1961, s. 37-- CIT v . Airlines Hotel P. Ltd . (Bom) . . . 33
----Provision for leave salary--Not a contingent liability but an ascertained liability--Deductible--Income-tax Act, 1961, s. 37-- CIT v. Raj. State Bridge and Construction Corporation Ltd . (Raj) . . . 53
Business loss --Disallowance on ground assessee failing to furnish documentary evidence in support of claim that loss due to market fluctuation--Deletion as transactions at fair market prices--Findings of fact--Income-tax Act, 1961-- CIT v . Kamal Trading Company (Raj) . . . 60
----Sale of shares on principal to principal basis--No evidence to show that any amount over and above sale price received for sale of shares--Tribunal deleting addition on account of sale of shares--Finding of fact--Income-tax Act, 1961-- CIT (Deputy) v. Surya Credits Ltd . (Raj) . . . 3
Capital gains --Sale of tradeable warrants in accounting year relevant to assessment year 1994-95--No cost of acquisition--Law applicable--Effect of addition of clause (aa) of section 55(2) by Finance Act, 1995--Gains not assessable as capital gains--Income-tax Act, 1961, ss. 45, 55(2)-- CIT v . Crown Estates P. Ltd . (Bom) . . . 1
Capital or revenue expenditure --Expenditure on repair of road in factory premises, replacement of floor in factory and on water proofing of roof--Expenditure on customising software--Revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v. Voith Paper Fabrics India Ltd . (P&H) . . . 70
----Software expenses--Revenue expenditure--Income-tax Act, 1961, s. 37-- Chief CIT v. O. K. Play India Ltd. (P&H) . . . 57
Income --Value of closing stock of cement and steel--Assessee executing works contract--Material provided by contractee and assessee to pay for cement and steel--Value of closing stock cannot be included as part of income--Income-tax Act, 1961-- Tarapore and Co. v. Deputy CIT (Mad) . . . 49
Reassessment --Notice--Conditions precedent--Reasons for reopening not communicated--Violation of natural justice--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Agarwal Metals and Alloys v . Asst. CIT (Bom) . . . 64
----Notice--Notice under section 148 to be issued for each year separately--Assessing Officer issuing combined notice for all four years--Reassessment not valid--Income-tax Act, 1961, s. 148-- Mohd. Ayub v. ITO (All) . . . 30
----Notice--Validity--Reassessment based on opinion of Departmental Valuation Officer--No application of mind by Assessing Officer--Notice not valid--Income-tax Act, 1961, s. 148-- Vinayak Builders v. BD Garsar (or) Successor (Guj) . . . 39
Recovery of tax --Priority of income-tax debt--Transfer of property during pendency of income-tax proceedings--Effect of proviso to section 281--Transfer void only if transferee had notice of pendency of income-tax proceedings--Income-tax Act, 1961, s. 281-- TRO v. Industrial Finance Corporation of India (Guj) . . . 11
----Prohibitory order--Assessee showing bona fides by making payment of outstanding tax liability--Prohibitory order stayed conditional upon assessee making certain payments--Income-tax Act, 1961, Sch. II, r. 26-- Nickunj Eximp Enterprises P. Ltd. v. Addl. CIT (Bom) . . . 78
Revision --Powers of Commissioner--Deduction for payment of bonus allowed twice--Fact that reassessment or rectification could be made--Not relevant--Order could be revised--Income-tax Act, 1961, s. 263-- CIT v . B and A Plantation and Industries Ltd. (Gauhati) . . . 43
----Tribunal remanding matter to Assessing Officer to examine question examined by Commissioner--No interference--Income-tax Act, 1961, s. 263-- Mind Tree Ltd. v . CIT (Karn) . . . 76
Search and seizure --Block assessment--Notice under section 143(2) not served--Assessment not valid--Income-tax Act, 1961, s. 143(2)-- CIT v . Bihari Lal Agrawal (All) . . . 67
----Block assessment--Warrant of authorisation--Validity--Common warrant for several assessees functioning as a group and separate warrants where necessary--Returns filed in response to notices after search--Warrants of search valid--Income-tax Act, 1961, s. 132-- CIT v . Khyber Foods (Ker) . . . 36
Unexplained credit --Tribunal deleting addition on ground Assessing Officer not brought any evidence to disprove any transactions and addition on surmises and conjectures--Findings of fact--Income-tax Act, 1961-- CIT v . Kamal Trading Company (Raj) . . . 60
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 17 : Part 5 (Issue dated : 06-08-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Advance tax --Interest--Default and deferment of advance tax --Liability due to amendment of section 90--Interest chargeable only from date of amendment--Income-tax Act, 1961, ss. 90, 234B-- Siam Commercial Bank PCL v. Deputy Director of Income-tax (International Taxation) (Mumbai) . . . 599
Bad debt --Change of law--After 1-4-1989 sufficient if assessee writes off debt in books--Sums shown as income of year and then written off--Claim allowable--Income-tax Act, 1961, s. 36(1)(vii), (2) (as amended w. e. f. 1-4-1989)-- KPMG India P. Ltd. v. Dy. CIT (Mumbai) . . . 569
----Provision for bad debt at beginning of year-- Deductible--Income-tax Act, 1961, s. 36(1)(vii)-- Siam Commercial Bank PCL v. Deputy Director of Income-tax (International Taxation) (Mumbai) . . . 599
Business --Loss--Foreign currency received as deposit--Sale of foreign currency and forward contract for purchase of foreign currency--Loss in transaction--Not deductible--Income-tax Act, 1961-- Siam Commercial Bank PCL v. Deputy Director of Income-tax (International Taxation) (Mumbai) . . . 599
Business expenditure --Disallowance--Excessive or unreasonable payments--Burden of proof--Is on assessee in first instance--No enquiry by Assessing Officer--Ad hoc disallowance of ten per cent.--Not sustainable--Matter remanded--Income-tax Act, 1961, s. 40A(2)(b)-- KPMG India P. Ltd. v. Dy. CIT (Mumbai) . . . 569
----Disallowance--Payments subject to deduction of tax at source--Payments to non-resident for purely professional services and reimbursement of expenses--Not payment of royalty--Non-resident not having permanent establishment--No tax deductible at source and payment allowable as deduction--Income-tax Act, 1961, s. 40(a)(ia)--Double Taxation Avoidance Agreement between India and the U. S. A., art. 12-- KPMG India P. Ltd. v. Dy. CIT (Mumbai) . . . 569
----Disallowance--Shipping company--Assessment under tonnage tax scheme--Disallowance of expenditure under section 14A cannot be made--Income-tax Act, 1961, ss. 14A, 115VP-- Varun Shipping Co. Ltd. v. Addl. CIT (Mumbai) . . . 587
----Unit exempted under section 10A rendering services to unit not so exempted--Service charges allocated on basis of turnover--Service charges allowable--Expenses under heads “deputation expenses†and “other expenses†--Finding that incurred wholly and exclusively for business--Allowable--Purchase of software--Payment not royalty--Allowable--Income-tax Act, 1961, ss. 9(1)(vi), 10A, 40(a)(ia)-- Asst. CIT v. Sonata Information Tech. Ltd. (Mumbai) . . . 533
Capital gains --Exemption--Time of transfer of capital asset--Agreement for sale of land in June 1996--Changes in agreement and final agreement in November 1999--Possession handed over and 98 per cent. of sale consideration received--No-objection certificate from appropriate authority received in February 2000--Transfer took place in November 1999--Investment of sale proceeds in December 1998--Assessee entitled to benefit under section 54/54F--Income-tax Act, 1961, ss. 54, 54F-- Asst. CIT v. PR. Chockalingam (Chennai) . . . 617
Deduction only on actual payment --Amendments brought in 2003--Curative--Applicable for earlier years--Employer’s contribution to employees provident fund paid before due date for filing return--Allowable--Income-tax Act, 1961, s. 43B-- KPMG India P. Ltd. v. Dy. CIT (Mumbai) . . . 569
Income --Accrual of income--Time of accrual--Discounting of bills--Future discounts--Amounts had not accrued and were not assessable--Income-tax Act, 1961-- Siam Commercial Bank PCL v. Deputy Director of Income-tax (International Taxation) (Mumbai) . . . 599
Shipping company --Computation of book profits--Assessment under tonnage tax scheme--Deduction related to shipping--Admissible--Income-tax Act, 1961, ss. 115JB, 115VI, 115V-O-- Varun Shipping Co. Ltd. v. Addl. CIT (Mumbai) . . . 587
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Double Taxation Avoidance Agreement between India and the U. S. A. :
Art. 12 --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Payments to non-resident for purely professional services and reimbursement of expenses--Not payment of royalty--Non-resident not having permanent establishment--No tax deductible at source and payment allowable as deduction-- KPMG India P. Ltd. v. Dy. CIT (Mumbai) . . . 569
S. 9(1)(vi) --Business expenditure--Unit exempted under section 10A rendering services to unit not so exempted--Service charges allocated on basis of turnover--Service charges allowable--Expenses under heads “deputation expenses†and “other expenses†--Finding that incurred wholly and exclusively for business--Allowable--Purchase of software--Payment not royalty--Allowable-- Asst. CIT v. Sonata Information Tech. Ltd. (Mumbai) . . . 533
S. 10A --Business expenditure--Unit exempted under section 10A rendering services to unit not so exempted--Service charges allocated on basis of turnover--Service charges allowable--Expenses under heads “deputation expenses†and “other expenses†--Finding that incurred wholly and exclusively for business--Allowable--Purchase of software--Payment not royalty--Allowable-- Asst. CIT v. Sonata Information Tech. Ltd. (Mumbai) . . . 533
S. 14A --Business expenditure--Disallowance--Shipping company--Assessment under tonnage tax scheme--Disallowance of expenditure under section 14A cannot be made-- Varun Shipping Co. Ltd. v. Addl. CIT (Mumbai) . . . 587
S. 36(1)(vii), (2) (as amended w. e. f. 1-4-1989) --Bad debt--Change of law--After 1-4-1989 sufficient if assessee writes off debt in books--Sums shown as income of year and then written off--Claim allowable-- KPMG India P. Ltd. v. Dy. CIT (Mumbai) . . . 569
S. 36(1)(vii) --Bad debt--Provision for bad debt at beginning of year--Deductible-- Siam Commercial Bank PCL v. Deputy Director of Income-tax (International Taxation) (Mumbai) . . . 599
S. 40(a)(ia) --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Payments to non-resident for purely professional services and reimbursement of expenses--Not payment of royalty--Non-resident not having permanent establishment--No tax deductible at source and payment allowable as deduction-- KPMG India P. Ltd. v. Dy. CIT (Mumbai) . . . 569
----Business expenditure--Unit exempted under section 10A rendering services to unit not so exempted--Service charges allocated on basis of turnover--Service charges allowable--Expenses under heads “deputation expenses†and “other expenses†--Finding that incurred wholly and exclusively for business--Allowable--Purchase of software--Payment not royalty--Allowable-- Asst. CIT v. Sonata Information Tech. Ltd. (Mumbai) . . . 533
S. 40A(2)(b) --Business expenditure--Disallowance--Excessive or unreasonable payments--Burden of proof--Is on assessee in first instance--No enquiry by Assessing Officer--Ad hoc disallowance of ten per cent.--Not sustainable--Matter remanded-- KPMG India P. Ltd. v. Dy. CIT (Mumbai) . . . 569
S. 43B --Deduction only on actual payment--Amendments brought in 2003--Curative--Applicable for earlier years--Employer’s contribution to employees provident fund paid before due date for filing return--Allowable-- KPMG India P. Ltd. v. Dy. CIT (Mumbai) . . . 569
S. 54 --Capital gains--Exemption--Time of transfer of capital asset--Agreement for sale of land in June 1996--Changes in agreement and final agreement in November 1999--Possession handed over and 98 per cent. of sale consideration received--No-objection certificate from appropriate authority received in February 2000--Transfer took place in November 1999--Investment of sale proceeds in December 1998--Assessee entitled to benefit under section 54/54F-- Asst. CIT v. PR. Chockalingam (Chennai) . . . 617
S. 54F --Capital gains--Exemption--Time of transfer of capital asset--Agreement for sale of land in June 1996--Changes in agreement and final agreement in November 1999--Possession handed over and 98 per cent. of sale consideration received--No-objection certificate from appropriate authority received in February 2000--Transfer took place in November 1999--Investment of sale proceeds in December 1998--Assessee entitled to benefit under section 54/54F-- Asst. CIT v. PR. Chockalingam (Chennai) . . . 617
S. 90 --Advance tax--Interest--Default and deferment of advance tax --Liability due to amendment of section 90--Interest chargeable only from date of amendment-- Siam Commercial Bank PCL v. Deputy Director of Income-tax (International Taxation) (Mumbai) . . . 599
S. 115JB --Shipping company--Computation of book profits--Assessment under tonnage tax scheme--Deduction related to shipping--Admissible-- Varun Shipping Co. Ltd. v. Addl. CIT (Mumbai) . . . 587
S. 115VI --Shipping company--Computation of book profits--Assessment under tonnage tax scheme--Deduction related to shipping--Admissible-- Varun Shipping Co. Ltd. v. Addl. CIT (Mumbai) . . . 587
S. 115V-O --Shipping company--Computation of book profits--Assessment under tonnage tax scheme--Deduction related to shipping--Admissible-- Varun Shipping Co. Ltd. v. Addl. CIT (Mumbai) . . . 587
S. 115VP --Business expenditure--Disallowance--Shipping company--Assessment under tonnage tax scheme--Disallowance of expenditure under section 14A cannot be made-- Varun Shipping Co. Ltd. v. Addl. CIT (Mumbai) . . . 587
S. 234B --Advance tax--Interest--Default and deferment of advance tax --Liability due to amendment of section 90--Interest chargeable only from date of amendment-- Siam Commercial Bank PCL v. Deputy Director of Income-tax (International Taxation) (Mumbai) . . . 599
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