INCOME TAX REPORTS (ITR)
Volume 348 Part 2 (Issue dated 8-10-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal to Appellate Tribunal --Powers--Rectification of mistakes--Disallowance of short-term and long-term capital loss--Tribunal deciding issue on merits--While allowing appeal by Revenue Tribunal referring to another decision of Tribunal--Not a mistake apparent from record--Income-tax Act, 1961, s. 254(2)-- Geofin Investment (P.) Ltd. v. CIT (Delhi) . . . 118
Appeal to Commissioner (Appeals) --Power of enhancement of assessment--Items considered by Assessing Officer but no additions made--Commissioner (Appeals) has power to consider such items and enhance assessment--Income-tax Act, 1961, s. 251(1)(a)-- Gurinder Mohan Singh Nindrajog v . CIT (Delhi) . . . 170
Business loss --Advance in the course of business--Advance becoming irrecoverable--Claim as bad debt--Not relevant--Amount deductible as business loss--Income-tax Act, 1961, s. 37-- Mohan Meakin Ltd . v. CIT(Delhi) . . . 109
Capital gains --Rate of tax--Transfer of shares--Conversion of private company to public limited company--Transfer of shares to registrar to issue and subsequent sale through stock exchange--Shares not listed on date of transfer by assessee--Assessee not entitled to lower rate of 10 per cent.--Income-tax Act, 1961, s. 45--Uday Punj v . CIT (Delhi) . . . 98
Depreciation --Actual cost--Loans from Government for acquisition of assets--Waiver of loan--Amount waived to be reduced from cost of assets for calculating depreciation--Income-tax Act, 1961, ss. 32, 43(1)--Steel Authority of India Ltd. v. CIT
(Delhi) . . . 150
Exemption --Capital gains--Effect of section 10(38)--Sale of equity shares through recognised stock exchange--Conversion of private company to public limited company--Transfer of shares in private company to registrar to issue on 29-12-2005--Listing approved by stock exchanges on 4-1-2006 and trading in stock exchange commencing on 6-1-2006--Transfer from assessee to registrar to issue not through stock exchange--Assessee not entitled to exemption under section 10(38)--Income-tax Act, 1961, s. 10(38)-- Uday Punj v . CIT(Delhi) . . . 98
Income-tax --General principles--Entries in books of account relevant while considering nature of transaction-- Steel Authority of India Ltd. v . CIT (Delhi) . . . 150
----General principles--Right of assessee not restricted to plea raised-- Mohan Meakin Ltd . v . CIT (Delhi) . . . 109
Rectification of mistakes --Condition precedent--Mistake must be apparent--Section 154 not applicable where issue is debatable--Adjustment of prior period expenses in computation of profits of company under section 115JB--Debatable question--Disallowance of prior period expenses under section 154--Not valid--Income-tax Act, 1961, ss. 115JB, 154-- CIT v. R. T. C. L. Ltd . (Delhi) . . . 120
Settlement of cases --Powers of Settlement Commission--Effect of section 245-I--Application for settlement of case--Order of Settlement Commission substantially accepting undisclosed income and granting applicant immunity from prosecution and penalty--Applicant cannot thereafter plead that application should be rejected--Observation by Settlement Commission that immunity was not available to third persons whose incomes had been discovered--Applicant cannot ask that those observations be expunged--Income-tax Act, 1961, s. 245-I-- Gupta Perfumers P. Ltd . v. Income-tax Settlement Commission (Delhi) . . . 86
Unexplained investment --Valuation of property--Burden of proof on Department to show assessee received higher amount than that declared--Memoranda of understanding admitted by assessee mentioning value of asset--Onus of proof discharged by Department--Finding of Tribunal to contrary--Not sustainable-- CIT v .Karan Khandelwal (Delhi) . . . 126
Advance ruling --Application--Maintainability--Operations of group in India taken over by applicant from another non-resident entity--Transactions between that non-resident entity and Indian subsidiary subject-matter of assessment--Does not preclude application for ruling on transactions of Indian subsidiary with applicant--Order under section 195 not to affect maintainability of application--Income-tax Act, 1961, ss. 195, 245(2)-- Aramex International Logistics Private Limited, In re . . . 159
Non-resident --Permanent establishment--Wholly owned Indian subsidiary formed to look after Indian operations of group--Is permanent establishment--Receipts attributable to permanent establishment taxable in India and payments liable to deduction of tax at source--Income-tax Act, 1961, s. 195--Double Taxation Avoidance Agreement between India and Singapore, art. 5(2), (8), (10)-- Aramex International Logistics Private Limited , In re . . . 159
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 19 : Part 2 (Issue dated : 8-10-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Accounting --Rejection of accounts--Assessee failing to give proper explanation for discrepancies--Rejection justified--Income-tax Act, 1961, s. 145(3)-- Pawan Kumar v. ITO (Chandigarh) . . . 185
Accounting--Rejection of accounts--Estimation of profits--Assessee applying low gross profit rate--Direction to make addition justified--Income-tax Act, 1961-- Pawan Kumar v. ITO (Chandigarh) . . . 185
Agricultural income --Land taken on lease--Evidence of purchase of materials for green house, agricultural equipment, seeds, wages and evidence of sale of agricultural produce to various entities--Assessee established for carrying out agricultural activities--Entire income is agricultural--Income-tax Act, 1961--ITO v. Pods Biotech P. Ltd. (Bangalore) . . . 194
Appeal to Appellate Tribunal --Special Bench--Scope of powers--Power to reframe question to bring out point requiring determination more clearly--Within parameters of reference made by President--No mistake requiring rectification--Tribunal after deciding question examining issue from another angle--Exercise not beyond question before Special Bench--Not a case of Special Bench going beyond subject matter of reference--Objections that Tribunal did not consider arguments of Department, or case law cited by Department or that finding contrary to settled position of law--Overruled--Income-tax Act, 1961, ss. 41(1), 43B, 254(2), 255(3)--Circular No. 496 dated 25-9-1987-- Deputy CIT v. Sulzer India Ltd. [SB] (Mumbai) . . . 268
Assessing Officer --Powers of Assessing Officer--Remand by Tribunal--Free food allowances--Assessing Officer not entitled to enhance disallowance beyond that in original assessment--Income-tax Act, 1961--Kellogg India P. Ltd. v. Assistant CIT (Mumbai) . . . 220
Business expenditure --Assessee following mercantile system of accounting--Advertisement expenses relating to prior periods--Assessee not given sufficient opportunity by Assessing Officer and Commissioner (Appeals)--Matter remanded--Income-tax Act, 1961-- Kellogg India P. Ltd. v. Assistant CIT (Mumbai) . . . 220
----Deduction only on actual payment--Assessee making payment before extended time of filing return--Deduction allowable--Income-tax Act, 1961, s. 43B-- Vinod Kumar v. Joint CIT (Chandigarh) . . . 246
----Disallowance--Agents’ commission for sale of space for advertisement in newspapers and time slots for television broadcasting--Assessee not required to deduct tax at source--Payments cannot be disallowed--Income-tax Act, 1961, s. 40(a)(ia)-- Assistant CIT v. Ushodaya Enterprises Ltd. (Hyderabad) . . . 199
----Disallowance--Excessive or unreasonable payments--Can be made only on part of payment which is excessive or unreasonable--Income-tax Act, 1961, s. 40A(2)(b)-- Vinod Kumar v. Joint CIT (Chandigarh) . . . 246
----Disallowance--Payment of data circuit rentals--Assessee not required to deduct tax at source--Payments cannot be disallowed--Income-tax Act, 1961, s. 40(a)(ia)-- Assistant CIT v. Ushodaya Enterprises Ltd.(Hyderabad) . . . 199
----Expenditure on foreign travel of employees to countries where assessee had no transactions--Expenditure genuine and for business purposes--Allowable--Income-tax Act, 1961, s. 37-- Kellogg India P. Ltd. v.Assistant CIT (Mumbai) . . . 220
----Provision for foreign exchange--Assessee to be provided with reasonable opportunity of being heard--Matter remanded-- Vinod Kumar v. Joint CIT (Chandigarh) . . . 246
----Telephone expenses--Direction to disallow one-tenth of expenses--Income-tax Act, 1961-- Vinod Kumar v.Joint CIT (Chandigarh) . . . 246
----Travelling expenses of employees--Travelling by employees undertaken in earlier years and bills submitted in present year--Finding that expenditure genuine and involving petty sums compared to assessee’s turnover--To be allowed--Income-tax Act, 1961, s. 37-- Kellogg India P. Ltd. v. Assistant CIT(Mumbai) . . . 220
----Vehicle expenses--One tenth of car expenses and depreciation included in computation of income--No addition required--Income-tax Act, 1961-- Vinod Kumar v. Joint CIT (Chandigarh) . . . 246
Capital gains --Purchase and sale of shares--Finding that assessee made investment from year to year--Investment in shares made with own funds--Income to be treated as “income from capital gains†--Income-tax Act, 1961-- Ramesh Gupta v. Assistant CIT (Chandigarh) . . . 228
Charitable trust --Exemption--Rental income from hotel business--Finding that assessee not running hotel itself but only collecting a fixed sum as compensation--Income not to be taxed as business income--Income-tax Act, 1961, s. 11-- Deputy Director of Income-tax v. Habib Ismail Hospital and Medical Trust (Mumbai) . . . 233
----Trifurcation of main trust resulting in creation and establishment of three new trusts--New trust to be treated as part of old trust--Trust not working for benefit of single community in terms of section 13(1)(b)--Income-tax Act, 1961, ss. 11, 13(1)(b)-- Deputy Director of Income-tax v. Habib Ismail Hospital and Medical Trust (Mumbai) . . . 233
Depreciation --Rate of depreciation--Computer accessories--Entitled to rate of sixty per cent. as applicable to computers--Income-tax Act, 1961, s. 32-- Assistant CIT v. Ushodaya Enterprises Ltd. (Hyderabad) . . . 199
Income --Accounting--Application of gross profit ratio--Addition on account of decline in gross profit ratio--Failure to give explanation regarding decline in gross profit ratio--Direction to estimate gross profit ratio at 13 per cent.--Income-tax Act, 1961, s. 145(3)-- Vinod Kumar v. Joint CIT (Chandigarh) . . . 246
Industrial undertaking --Special deduction--Computation--Assessee having three units--Losses suffered in two eligible units not to be reduced from income of eligible unit before granting deduction--Income-tax Act, 1961, s. 80-IA-- Jindal Aluminium Ltd. v. Assistant CIT (Bangalore) . . . 255
Interest on borrowed capital --Funds utilised for purchase of printing machinery--No evidence that assets purchased out of borrowed funds not put to use in concerned financial year--Deduction allowable--Income-tax Act, 1961-- Assistant CIT v. Ushodaya Enterprises Ltd. (Hyderabad) . . . 199
----Interest-free advances--Direction to verify interest paid on unsecured loans and apply same rate for purpose of disallowing of interest--Justified--Income-tax Act, 1961-- Pawan Kumar v. ITO (Chandigarh) . . . 185
Precedent --Appellate Tribunal--Is authority higher than Commissioner (Appeals)--Commissioner (Appeals) bound by orders of Tribunal-- Jindal Aluminium Ltd. v. Assistant CIT (Bangalore) . . . 255
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 11 --Charitable trust--Exemption--Rental income from hotel business--Finding that assessee not running hotel itself but only collecting a fixed sum as compensation--Income not to be taxed as business income--Deputy Director of Income-tax v. Habib Ismail Hospital and Medical Trust (Mumbai) . . . 233
----Charitable trust--Trifurcation of main trust resulting in creation and establishment of three new trusts--New trust to be treated as part of old trust--Trust not working for benefit of single community in terms of section 13(1)(b)-- Deputy Director of Income-tax v. Habib Ismail Hospital and Medical Trust (Mumbai) . . . 233
S. 13(1)(b) --Charitable trust--Trifurcation of main trust resulting in creation and establishment of three new trusts--New trust to be treated as part of old trust--Trust not working for benefit of single community in terms of section 13(1)(b)-- Deputy Director of Income-tax v. Habib Ismail Hospital and Medical Trust(Mumbai) . . . 233
S. 32 --Depreciation--Rate of depreciation--Computer accessories--Entitled to rate of sixty per cent. as applicable to computers-- Assistant CIT v. Ushodaya Enterprises Ltd. (Hyderabad) . . . 199
S. 37 --Business expenditure--Expenditure on foreign travel of employees to countries where assessee had no transactions--Expenditure genuine and for business purposes--Allowable-- Kellogg India P. Ltd. v. Assistant CIT (Mumbai) . . . 220
----Business expenditure--Travelling expenses of employees--Travelling by employees undertaken in earlier years and bills submitted in present year--Finding that expenditure genuine and involving petty sums compared to assessee’s turnover--To be allowed-- Kellogg India P. Ltd. v. Assistant CIT (Mumbai) . . . 220
S. 40(a)(ia) --Business expenditure--Disallowance--Agents' commission for sale of space for advertisement in newspapers and time slots for television broadcasting--Assessee not required to deduct tax at source--Payments cannot be disallowed-- Assistant CIT v. Ushodaya Enterprises Ltd. (Hyderabad) . . . 199
----Business expenditure--Disallowance--Payment of data circuit rentals--Assessee not required to deduct tax at source--Payments cannot be disallowed-- Assistant CIT v. Ushodaya Enterprises Ltd. (Hyderabad) . . . 199
S. 40A(2)(b) --Business expenditure--Disallowance--Excessive or unreasonable payments--Can be made only on part of payment which is excessive or unreasonable-- Vinod Kumar v. Joint CIT (Chandigarh) . . . 246
S. 41(1) --Appeal to Appellate Tribunal--Special Bench--Scope of powers--Power to reframe question to bring out point requiring determination more clearly--Within parameters of reference made by President--No mistake requiring rectification--Tribunal after deciding question examining issue from another angle--Exercise not beyond question before Special Bench--Not a case of Special Bench going beyond subject matter of reference--Objections that Tribunal did not consider arguments of Department, or case law cited by Department or that finding contrary to settled position of law--Overruled-- Deputy CIT v. Sulzer India Ltd.[SB] (Mumbai) . . . 268
S. 43B --Appeal to Appellate Tribunal--Special Bench--Scope of powers--Power to reframe question to bring out point requiring determination more clearly--Within parameters of reference made by President--No mistake requiring rectification--Tribunal after deciding question examining issue from another angle--Exercise not beyond question before Special Bench--Not a case of Special Bench going beyond subject matter of reference--Objections that Tribunal did not consider arguments of Department, or case law cited by Department or that finding contrary to settled position of law--Overruled-- Deputy CIT v. Sulzer India Ltd.[SB] (Mumbai) . . . 268
----Business expenditure--Deduction only on actual payment--Assessee making payment before extended time of filing return--Deduction allowable-- Vinod Kumar v. Joint CIT (Chandigarh) . . . 246
S. 80-IA --Industrial undertaking--Special deduction--Computation--Assessee having three units--Losses suffered in two eligible units not to be reduced from income of eligible unit before granting deduction--Jindal Aluminium Ltd. v. Assistant CIT (Bangalore) . . . 255
S. 145(3) --Accounting--Rejection of accounts--Assessee failing to give proper explanation for discrepancies--Rejection justified-- Pawan Kumar v. ITO (Chandigarh) . . . 185
S. 145(3) --Income--Accounting--Application of gross profit ratio--Addition on account of decline in gross profit ratio--Failure to give explanation regarding decline in gross profit ratio--Direction to estimate gross profit ratio at 13 per cent.-- Vinod Kumar v. Joint CIT (Chandigarh) . . . 246
S. 254(2) --Appeal to Appellate Tribunal--Special Bench--Scope of powers--Power to reframe question to bring out point requiring determination more clearly--Within parameters of reference made by President--No mistake requiring rectification--Tribunal after deciding question examining issue from another angle--Exercise not beyond question before Special Bench--Not a case of Special Bench going beyond subject matter of reference--Objections that Tribunal did not consider arguments of Department, or case law cited by Department or that finding contrary to settled position of law--Overruled-- Deputy CIT v. Sulzer India Ltd.[SB] (Mumbai) . . . 268
S. 255(3) --Appeal to Appellate Tribunal--Special Bench--Scope of powers--Power to reframe question to bring out point requiring determination more clearly--Within parameters of reference made by President--No mistake requiring rectification--Tribunal after deciding question examining issue from another angle--Exercise not beyond question before Special Bench--Not a case of Special Bench going beyond subject matter of reference--Objections that Tribunal did not consider arguments of Department, or case law cited by Department or that finding contrary to settled position of law--Overruled-- Deputy CIT v. Sulzer India Ltd.[SB] (Mumbai) . . . 268
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