INCOME TAX REPORTS (ITR)
Volume 348 Part 1 (Issue dated 1-10-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal to Supreme Court --Special leave petition--Government Department--Delay in filing--Condonation of delay--Principles governing-- Office of the Chief Post Master General v . Living Media India Ltd. . . . 7
Appeal --Question of law can be raised at any stage in income-tax proceedings--Income-tax Act, 1961-- CIT v. St. Mary’s Malankara Seminary (Ker) . . . 69
Capital gains --Transfer of self-generated assets--Law applicable--Effect of amendment of section 55(2) w. e. f. 1-4-2002--Amendment not retrospective--Gains from transfer of trade mark and brand name prior to 1-4-2002--Not assessable as capital gains--Income-tax Act, 1961, ss. 45, 48, 55(2)-- CIT v. Fernhill Laboratories and Industrial Establishment (Bom) . . . 1
Exemption --Deduction--Newly established undertaking in free trade zone--Deduction to be given at the stage of computing profits and gains of business--Brought forward unabsorbed depreciation and losses of unit cannot be set off against current profits of unit--Income-tax Act, 1961, s. 10A-- CIT v . Black and Veatch Consulting Pvt. Ltd .
(Bom) . . . 72
----Educational institution--Meaning of--Seminary imparting religious education--Educational institution within the meaning of section 10(23C)(iiiad)--Income-tax Act, 1961, s. 10(23C)(iiiad)-- CIT v. St. Mary’s Malankara Seminary (Ker) . . . 69
Interpretation of taxing statutes --Retrospective effect of provision-- CIT v. Fernhill Laboratories and Industrial Establishment (Bom) . . . 1
Search and seizure --Block assessment--Notice under section 158BC--Notice calling for return within fifteen days--Notice not valid--Assessee requesting further time and submitting return would not make notice valid--Notice void ab initio and consequent block assessment invalid--Section 292B not applicable--Income-tax Act, 1961, Chap. XIV-B-- CIT v . Micro Labs Ltd . (Karn) . . . 75
----Block assessment--Refund amount computed adjusted against amounts paid under VDIS--Taxes not paid voluntarily--Proviso to section 240 not applicable--Assessee entitled to refund--Income-tax Act, 1961, s. 240-- CIT v . Micro Labs Ltd.
(Karn) . . . 75
Non-resident --Provision of inspection, verification, testing and certification services--Is technical services--Payment therefor taxable in India--Tax deductible at source--Non-resident to file return in India--Income-tax Act, 1961, ss. 9(1)(vii), 139, 195-- XYZ Ltd ., In re . . . 20
----Secondment of employees to Indian subsidiary--Seconded employees remaining employees of holding company--Payment to non-resident for their services not a case of reimbursement--Indian company liable to withhold tax at source--Payroll processing charge--Details insufficient to render ruling as to nature of payment--Income-tax Act, 1961, s. 195--Double Taxation Avoidance Agreement between India and U. S. A., art. 12-- Target Corporation India Pvt. Ltd ., In re . . . 61
----Taxability in India--Indian company formed as wholly owned subsidiary of non-resident to provide services to overseas entities--Employees of holding company seconded to Indian company to oversee operations--Employees remaining employees of holding company--Payment by Indian company to holding company compensation for managerial services--Not fees for technical services--Taxable as arising out of service permanent establishment--Tax deductible at source--Income-tax Act, 1961, ss. 9(1)(vii), 195--Double Taxation Avoidance Agreement between India and the United Kingdom, arts. 5(2)(k), 13(4)--Double Taxation Avoidance Agreement between India and Canada, arts. 5(2)(1), 12(4)-- Centrica India Offshore Private Ltd ., In re . . . 45
----Technical services--Definition--Provision of inspection, verification, testing and certification services--Is technical service--Payments in connection with costs incurred and recovery of administrative cost also fees for technical services--No technical knowledge made available--Outside scope of technical service where definition of Double Taxation Avoidance Agreement contains requirement of making available--Protocol to DTAA containing most favoured nation clause--Requirement of making available technical knowledge applicable--Where no specific provision governing taxability of fees for technical services in DTAA--Payments not chargeable--Where definition in DTAA identical with that in Act, payments chargeable--Returns to be filed--Income-tax Act, 1961, ss. 9(1)(vii), 139, 195-- XYZ, In re . . . 31
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 19 : Part 1 (Issue dated : 1-10-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal to Appellate Tribunal --Constitution of Special Bench--Reference of one question by Division Bench--On request by assessee, entire appeal placed for disposal by Special Bench--Permissible--Income-tax Act, 1961, s. 255-- Sardar Sarovar Narmada Nigam Ltd. v. Assistant CIT [SB] (Ahmedabad) . . . 133
Appeal to Commissioner (Appeals) --Power to admit new claim--Transfer Pricing Officer determining arm’s length price on basis of comparables, including four selected by assessee--Assessee entitled to claim in appeal that four companies were not comparable--Assessee engaged in marketing support services--Companies carrying out turnkey engineering projects--Not comparable--To be excluded--Income-tax Act, 1961, s. 92CA-- Deputy CIT v. MCI Com India P. Ltd. (Delhi) . . . 42
Business --Commencement of business--Company set up to undertake execution of Sardar Sarovar Project and promote schemes for irrigation and water supply in State for utilisation of water from Sardar Sarovar--Project partly completed and water supplied through Narmada main canal--Supply of water contributes setting up of business--That entire stretch of canal up to desired destination not completed--That revenue not generated--Not relevant-- Sardar Sarovar Narmada Nigam Ltd. v. Assistant CIT [SB] (Ahmedabad) . . . 133
----Retail trade--Computation of income--Income on sales effected more than provided under section 44AF--Estimation of income--Justified--Income-tax Act, 1961, s. 44AF--Shanthi Fire Works v. ITO (Hyderabad) . . . 27
Business expenditure --Disallowance--Payments subject to tax deduction at source--Provision applies only to sums “payable†as on date of balance-sheet in question--Not to sums already paid during year without deduction of tax at source--Matter remanded--Income-tax Act, 1961, s. 40(a)(ia)-- S. S. Warad v. Additional CIT (Bangalore) . . . 35
----Expenditure wholly and exclusively incurred for business--Shares in assessee-company held by two family groups--Disputes resolved by family settlement--Expenditure on cancellation and purchase back of shares of minority shareholding group in terms of settlement--Facts showing disputes between shareholders had affected day-to-day business of assessee and settlement helped run business effectively enabling further growth--Expenditure deductible--Income-tax Act, 1961, s. 37-- Chemosyn Limited v.Assistant CIT (Mumbai) . . . 6
----Fines and penalties--Payment for delay in filing various statutory returns with Registrar of Companies--Late filing fees not penal in nature--Allowable--Income-tax Act, 1961-- ITO v. Virtue Financial Service P. Ltd. (Delhi) . . . 57
----Interest on borrowed capital--Assessee, a film actor--Borrowings used to maintain life style--Disallowance on ground advances used for personal purposes--Not justified--Income-tax Act, 1961, s. 36(1)(iii)-- Jackie Shroff v. ITO (Mumbai) . . . 83
----Professional charges--Assessee explaining circumstances of expenditure--Not to be disallowed--Income-tax Act, 1961-- ITO v. Virtue Financial Service P. Ltd. (Delhi) . . . 57
Business income --Method of accounting--Assessee, a film actor, following cash system of accounting--Advances received from producers offered to tax in year in which film released--Not proper--Claim that out of advances certain sums offered to tax in earlier years--Matter remanded for verification of claim--Income-tax Act, 1961, s. 145-- Jackie Shroff v. ITO (Mumbai) . . . 83
Capital or revenue expenditure --General principles--Expenditure incurred on replacing old worn-out mechanical yarn clearers with electronic yarn clearers--No new advantage to assessee--Is revenue expenditure--Income-tax Act, 1961-- Prabhu Spinning Mills P. Ltd. v. Deputy CIT (Chennai) . . . 106
Cash credits --Burden of proof--Sum paid as school fees claimed to have been paid by mother-in-law of assessee--Confirmation letter from mother-in-law not mentioning amount paid, details of bank account or mode of payment--No other corroborative evidence--Copy of bank statements from amount transmitted not filed--Sum rightly treated as income of assessee--Income-tax Act, 1961, s. 68-- Jackie Shroff v. ITO (Mumbai) . . . 83
Charitable purpose --Registration of trusts--Cancellation--Amendment of objects of society without informing Department--Original registration does not hold good--Registering Authority to decide after assessee submits amendments--Appeal not maintainable--Income-tax Act, 1961, ss. 12A, 253-- The Board of Control for Cricket in Indiav. ITO (Mumbai) . . . 91
Double taxation avoidance --Non-resident--Permanent establishment--Exact period of continuous activities in India to be ascertained--Matter remanded--Income-tax Act, 1961--Double Taxation Avoidance Agreement between India and Mauritius, art. 5(2)(i)-- GIL Mauritius Holdings Ltd. v. Assistant Director of Income-tax (International Taxation) (Delhi) . . . 63
Export --Special deduction--Appeal to Appellate Tribunal--Indirect cost computed in original assessment--Tribunal directing Assessing Officer to recompute deduction with respect to income from DEPB in light of amended provisions--Assessing Officer not entitled to recompute indirect cost of trading goods already computed in original assessment--Deduction under section 80HHC allowable in respect of incentives even if there was loss from export business--Deduction under section 80HHE not claimed in return or at time of appeal--Cannot be claimed at time of fresh assessment pursuant to remand by Tribunal--Income-tax Act, 1961, ss. 80HHC, 80HHE-- Computree Infotech P. Ltd. v. ITO (Mumbai) . . . 126
Income --Interest--Interest-free advances given by assessee--Finding that no expenditure claimed on this account--Notional interest cannot be added--Income-tax Act, 1961--ITO v. Virtue Financial Service P. Ltd. (Delhi) . . . 57
----Real income--Capital gains--Assessee owning two plots of land--Transfer of development rights in respect of one plot against consideration in form of money and construction on other plot free of cost--Both plots transferred to third party before construction under tripartite agreement--Consideration received in form of money alone to be taken into account for computing capital gains--Consideration in form of constructed area in terms of development agreement did not actually accrue to assessee--Market value of constructed area not to be taken into account for computing capital gains--Consideration from transfer of plots under tripartite agreement offered to tax in full in later assessment year--No loss to Revenue--Income-tax Act, 1961, s. 45-- Chemosyn Limited v. Assistant CIT (Mumbai) . . . 6
Income from undisclosed sources --Addition on account of unexplained purchases--Assessee giving plausible explanation--Addition to be deleted--Income-tax Act, 1961--Shanthi Fire Works v. ITO (Hyderabad) . . . 27
Industrial undertaking --Special deduction under section 80-IA--Computation--Profit on captive consumption of electricity--To be taken into account for computation of profits--Income-tax Act, 1961, s. 80-IA-- Prabhu Spinning Mills P. Ltd. v. Deputy CIT (Chennai) . . . 106
Penalty --Concealment of income--Additional income shown in revised return--No concealment detected--Penalty cannot be imposed--Income-tax Act, 1961, ss. 143(2), 271(1)(c)-- Assistant CIT v. Ashok Raj Nath (Delhi) . . . 70
Res judicata --Question whether business commenced in year in question--To be considered on facts for year in question--Will not amount to review of order of Tribunal for earlier years-- Sardar Sarovar Narmada Nigam Ltd. v. Assistant CIT [SB] (Ahmedabad) . . . 133
Return of income --Validity--No provision in Act or Rules making electronic filing of return mandatory--Direction by CBDT--Effect--Return filed manually before due date cannot be ignored--Denial of deduction under section 80-IC on ground electronic return filed only after due date--Not permissible--Income-tax Act, 1961, ss. 80AC, 80-IC, 139(1)-- Gemini Communication Ltd. v. Assistant CIT (Chennai) . . . 1
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Double Taxation Avoidance Agreement between India and Mauritius :
Art. 5(2)(i) --Double taxation avoidance--Non-resident--Permanent establishment--Exact period of continuous activities in India to be ascertained--Matter remanded-- GIL Mauritius Holdings Ltd. v. Assistant Director of Income-tax (International Taxation) (Delhi) . . . 63
S. 12A --Charitable purpose--Registration of trusts--Cancellation--Amendment of objects of society without informing Department--Original registration does not hold good--Registering Authority to decide after assessee submits amendments--Appeal not maintainable-- The Board of Control for Cricket in India v. ITO (Mumbai) . . . 91
S. 36(1)(iii) --Business expenditure--Interest on borrowed capital--Assessee, a film actor--Borrowings used to maintain life style--Disallowance on ground advances used for personal purposes--Not justified-- Jackie Shroff v. ITO (Mumbai) . . . 83
S. 37 --Business expenditure--Expenditure wholly and exclusively incurred for business--Shares in assessee-company held by two family groups--Disputes resolved by family settlement--Expenditure on cancellation and purchase back of shares of minority shareholding group in terms of settlement--Facts showing disputes between shareholders had affected day-to-day business of assessee and settlement helped run business effectively enabling further growth--Expenditure deductible-- Chemosyn Limited v. Assistant CIT(Mumbai) . . . 6
S. 40(a)(ia) --Business expenditure--Disallowance--Payments subject to tax deduction at source--Provision applies only to sums “payable†as on date of balance-sheet in question--Not to sums already paid during year without deduction of tax at source--Matter remanded-- S. S. Warad v. Additional CIT (Bangalore) . . . 35
S. 44AF --Business--Retail trade--Computation of income--Income on sales effected more than provided under section 44AF--Estimation of income--Justified-- Shanthi Fire Works v. ITO (Hyderabad). . .27
S. 45 --Income--Real income--Capital gains--Assessee owning two plots of land--Transfer of development rights in respect of one plot against consideration in form of money and construction on other plot free of cost--Both plots transferred to third party before construction under tripartite agreement--Consideration received in form of money alone to be taken into account for computing capital gains--Consideration in form of constructed area in terms of development agreement did not actually accrue to assessee--Market value of constructed area not to be taken into account for computing capital gains--Consideration from transfer of plots under tripartite agreement offered to tax in full in later assessment year--No loss to Revenue-- Chemosyn Limited v. Assistant CIT (Mumbai) . . . 6
S. 68 --Cash credits--Burden of proof--Sum paid as school fees claimed to have been paid by mother-in-law of assessee--Confirmation letter from mother-in-law not mentioning amount paid, details of bank account or mode of payment--No other corroborative evidence--Copy of bank statements from amount transmitted not filed--Sum rightly treated as income of assessee-- Jackie Shroff v. ITO (Mumbai) . . . 83
S. 80AC --Return of income--Validity--No provision in Act or Rules making electronic filing of return mandatory--Direction by CBDT--Effect--Return filed manually before due date cannot be ignored--Denial of deduction under section 80-IC on ground electronic return filed only after due date--Not permissible-- Gemini Communication Ltd. v.Assistant CIT (Chennai) . . . 1
S. 80HHC --Export--Special deduction--Appeal to Appellate Tribunal--Indirect cost computed in original assessment--Tribunal directing Assessing Officer to recompute deduction with respect to income from DEPB in light of amended provisions--Assessing Officer not entitled to recompute indirect cost of trading goods already computed in original assessment--Deduction under section 80HHC allowable in respect of incentives even if there was loss from export business--Deduction under section 80HHE not claimed in return or at time of appeal--Cannot be claimed at time of fresh assessment pursuant to remand by Tribunal-- Computree Infotech P. Ltd. v. ITO (Mumbai) . . . 126
S. 80HHE --Export--Special deduction--Appeal to Appellate Tribunal--Indirect cost computed in original assessment--Tribunal directing Assessing Officer to recompute deduction with respect to income from DEPB in light of amended provisions--Assessing Officer not entitled to recompute indirect cost of trading goods already computed in original assessment--Deduction under section 80HHC allowable in respect of incentives even if there was loss from export business--Deduction under section 80HHE not claimed in return or at time of appeal--Cannot be claimed at time of fresh assessment pursuant to remand by Tribunal-- Computree Infotech P. Ltd. v. ITO (Mumbai) . . . 126
S. 80-IA --Industrial undertaking--Special deduction under section 80-IA--Computation--Profit on captive consumption of electricity--To be taken into account for computation of profits-- Prabhu Spinning Mills P. Ltd. v. Deputy CIT (Chennai) . . . 106
S. 80-IC --Return of income--Validity--No provision in Act or Rules making electronic filing of return mandatory--Direction by CBDT--Effect--Return filed manually before due date cannot be ignored--Denial of deduction under section 80-IC on ground electronic return filed only after due date--Not permissible-- Gemini Communication Ltd. v.Assistant CIT (Chennai) . . . 1
S. 92CA --Appeal to Commissioner (Appeals)--Power to admit new claim--Transfer Pricing Officer determining arm’s length price on basis of comparables, including four selected by assessee--Assessee entitled to claim in appeal that four companies were not comparable--Assessee engaged in marketing support services--Companies carrying out turnkey engineering projects--Not comparable--To be excluded-- Deputy CIT v. MCI Com India P. Ltd. (Delhi) . . . 42
S. 139(1) --Return of income--Validity--No provision in Act or Rules making electronic filing of return mandatory--Direction by CBDT--Effect--Return filed manually before due date cannot be ignored--Denial of deduction under section 80-IC on ground electronic return filed only after due date--Not permissible-- Gemini Communication Ltd. v.Assistant CIT (Chennai) . . . 1
S. 143(2) --Penalty--Concealment of income--Additional income shown in revised return--No concealment detected--Penalty cannot be imposed-- Assistant CIT v. Ashok Raj Nath (Delhi) . . . 70
S. 145 --Business income--Method of accounting--Assessee, a film actor, following cash system of accounting--Advances received from producers offered to tax in year in which film released--Not proper--Claim that out of advances certain sums offered to tax in earlier years--Matter remanded for verification of claim-- Jackie Shroff v. ITO(Mumbai) . . . 83
S. 253 --Charitable purpose--Registration of trusts--Cancellation--Amendment of objects of society without informing Department--Original registration does not hold good--Registering Authority to decide after assessee submits amendments--Appeal not maintainable-- The Board of Control for Cricket in India v. ITO (Mumbai) . . . 91
S. 255 --Appeal to Appellate Tribunal--Constitution of Special Bench--Reference of one question by Division Bench--On request by assessee, entire appeal placed for disposal by Special Bench--Permissible Sardar Sarovar Narmada Nigam Ltd. v. Assistant CIT [SB] (Ahmedabad) . . . 133
S. 271(1)(c) --Penalty--Concealment of income--Additional income shown in revised return--No concealment detected--Penalty cannot be imposed-- Assistant CIT v. Ashok Raj Nath (Delhi) . . . 70
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