ITR VOL 349 PART 1

 

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INCOME TAX REPORTS (ITR)

Volume 349 Part 1 (Issue dated 19-11-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Assessment --Intimation on basis of return--Assessing Officer cannot disallow claim and make addition for lack of evidence--When proof is required notice for production of evidence in support of return to be issued--Intimation to be set aside--Income-tax Act, 1961, s. 143(1)(a)-- Indian Drugs and Pharmaceuticals Ltd . v . Union of India  (Delhi) . . . 32

----Intimation under section 143(1)(a)--Addition related to debatable issues and documents not required to be filed with return--No power to disallow claim on lack of proof of claim--Income-tax Act, 1961, s. 143(1)(a), proviso (i), cl. (iii)-- Abhishek Cement Ltd . v . Union of India (Delhi) . . . 1

Business expenditure --Company--Premia on keyman insurance for directors--Policies subsequently assigned to directors--Premia deductible as business expenditure--Income-tax Act, 1961, s. 37-- CIT v . Rajan Nanda (Delhi) . . . 8

----Deduction only on actual payment--Tax dues--Assessee failing to enclose with return documents to show payment of tax--Section 43B applicable--Income-tax Act, 1961, s. 43B-- Abhishek Cement Ltd . v . Union of India (Delhi) . . . 1

----Provision for warranty--Deductible--Matter remanded for verification of double deduction--Justified--Income-tax Act, 1961, s. 37-- CIT v . Toyota Kirloskar Motors Pvt. Ltd. (Karn) . . . 65

Capital gains --Long-term capital gains--Exemption--Sale of residential property and investment of gains in residential property and bonds--No condition that purchase of property or investment in bonds should be exclusively in name of assessee--Inclusion of husband’s name as joint owner in sale deed as well as in bonds--Assessee entitled to exemption of entire investment--Transfer of Property Act, 1882, s. 45--Income-tax Act 1961, ss. 54, 54EC-- Director of Income-tax (International Taxation) v . Mrs. Jennifer Bhide (Karn) . . . 80

----Long-term capital loss--Exemption--Acquisition of property by firm from partner’s wife and sale to another at loss--Assessee‘s account showing debit of amount--Revenue failing to enquire facts of loss on sale--Order of Tribunal deleting disallowance not perverse--Income-tax Act, 1961, s. 54-- CIT v. Bharti Overseas Trading Co . (Delhi) . . . 52

Capital or revenue expenditure --Fee paid for obtaining software and licence and for renewing licence--Revenue expenditure--Income-tax Act, 1961-- CIT v . Toyota Kirloskar Motors Pvt. Ltd . (Karn) . . . 65

Company --Book profits--Computation of profits under section 115JA--Limited powers of Assessing Officer--Prior period expenses--Deductible--Income-tax Act, 1961, s. 115JA-- Tamil Nadu Cements Corporation Ltd . v. Joint CIT (Mad) . . . 58

----Dividend--Deemed dividend--Partners of assessee shareholders in a company--Firm receiving payment from company--Contention that payment not out of accumulated profits not examined by Commissioner (Appeals) and Tribunal--Matter remanded--Income-tax Act, 1961, s. 2(22)(e)-- CIT v. Bharti Overseas Trading Co . (Delhi) . . . 52

Deduction of tax at source --Works contract--Contract for purchase of natural gas--Payment of charges for transportation of natural gas to seller--Transport of gas part of sale transaction not under works contract or contract for carriage of goods--Transportation charges not liable to tax deduction at source--Income-tax Act, 1961, s. 194C-- CIT (TDS) v . Krishak Bharati Co-operative Ltd . (Guj) . . . 68

Exemption --Export--Method of computing exemption under section 10A--Income-tax Act, 1961, s. 10A-- CIT v . Tata Elxsi Ltd . (Karn) . . . 98

Penalty --Concealment of income--Claim for deduction which was debatable--No concealment of income--Penalty could not be levied--Income-tax Act, 1961, s. 271(1)(c)-- Karan Raghav Exports P. Ltd . v . CIT (Delhi) . . . 112

Precedent --Effect of decision of Supreme Court in Apollo Tyres v. CIT [2002] 255 ITR 273 (SC)-- Tamil Nadu Cements Corporation Ltd . v . Joint CIT (Mad) . . . 58

Reassessment --Notice--Validity--No tangible material for belief that income had escaped assessment--Claim for expenses in original assessment--Assessment after considering claim--Notice on ground expenses wrongly allowed--Not valid--Income-tax Act, 1961, ss. 147, 148-- CIT v . Amitabh Bachchan (Bom) . . . 76

Salary --Profits in lieu of salary--Keyman insurance policies--Assignment to employee/director--Conversion into an ordinary policy--Difference between actual premia paid and surrender value--Not assessable as profits in lieu of salary in hands of employee/director--Maturity value of such policies--Not assessable--Income-tax Act, 1961, ss. 15, 17-- CIT v . Rajan Nanda (Delhi) . . . 8

Search and seizure --Presumption as to correctness of seized documents--Must be given full effect--Expenditure shown on documents--Must be allowed--Income-tax Act, 1961, ss. 37, 132(4A)-- CIT v. Indeo Airways Pvt. Ltd. (Delhi) . . . 85

Valuation of stock --Sugar--Assessee purchasing and exporting sugar--Net realisable value of stock--No statutory or contractual obligation for reimbursement of export losses from manufacturers--Reimbursement payments not includible in net realisable value--Income-tax Act, 1961-- CIT v . Indian Sugar and Gen. Industry Export Import (Delhi) . . . 38

----Valuation of closing stock--Valuation to be at cost price or market price whichever is lower--Income-tax Act, 1961-- CIT v . Indian Sugar and Gen. Industry Export Import (Delhi) . . . 38

ITR (TRIB) VOL 20 PART 1

 

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

Volume 20 : Part 1 (Issue dated : 19-11-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Assessment --Gross profit rate--Low gross profit rate not ground to make additions--Assessing Officer not making comparative studies with similar business--Assessee furnishing all details required--Details not proved to be defective--Deletion of addition proper--Income-tax Act, 1961, s. 145-- ITO v. Sai International(Delhi) . . .1

Book profits --Computation--Claim for bad debts--Law applicable--Effect of retrospective amendment to section 115JB by Finance (No. 2) Act, 2009--Bad debts to be rejected--Income-tax Act, 1961, s. 115JB--Assistant CIT v. GE Plastics India Ltd. (Ahmedabad) . . . 58

Business expenditure --Current repairs--Manufacture of tread rubber--Chamber assembly integral part of intermix machine and incapable of performing independent function--Expenditure for replacing chamber assembly “current repair†and allowable--Income-tax Act, 1961, s. 31(i)-- Midas Rubber P. Ltd. v.Assistant CIT (Cochin) . . . 6

----Deduction on actual payment--Contribution to provident fund--Only contribution paid before due date for filing of return to be allowed--Matter remanded--Income-tax Act, 1961, s. 43B-- Fenner (India) Ltd. v.Additional CIT (Chennai) . . . 48

Capital gains --Long-term capital gains--Exemption--Investment of gains in residential property--No requirement that property should be in India--Assessee investing gains in house property in the United States of America--Entitled to exemption--Income-tax Act, 1961, s. 54F-- Vinay Mishra v. Assistant CIT(Bangalore) . . . 129

----Revaluation of assets on conversion of firm into company--Not to be taxed as capital gains--Income-tax Act, 1961, ss. 45(4), 47(xiii)-- ITO v. Alta Inter-Chem Industries (Ahmedabad) . . . 103

Capital or revenue expenditure --Non-compete fee--Not revenue expenditure--Income-tax Act, 1961--Assistant CIT v. GE Plastics India Ltd. (Ahmedabad) . . . 58

----Royalty for use of trade mark--25 per cent. of royalty considered capital expenditure and 75 per cent. towards revenue expenditure--Income-tax Act, 1961-- Fenner (India) Ltd. v. Additional CIT (Chennai) . . . 48

Capital gains or business income --Profits from purchase and sale of shares--Voluminous share transactions, repetition and continuity of transactions--Purchase of shares not for earning dividend but with dominant intention of resale in order to earn profits--Profit not mere enhancement of value of shares but profit in business--Profits taxable as business income--Income-tax Act, 1961, ss. 2(14)(i), 28, 45-- Assistant CIT v.Manoj Kumar Samdaria (Delhi) . . . 13

Charitable trust --Registration--Denial of registration on ground that object religious in nature--Finding that amendment in objects clause--Law applicable--Effect of section 13(1)(b)-- Denial of registration not valid--Income-tax Act, 1961, ss. 12AA, 13(1)(b)-- Radhika Seva Sansthan v. CIT (Jaipur) . . . 31

Company --Book profits--Minimum alternate tax--Computation of profits under section 115JB--Export--Special deduction allowable on basis of book profits under section 80HHC--Income-tax Act, 1961, ss. 80HHC, 115JB-- Assistant CIT v. GE Plastics India Ltd. (Ahmedabad) . . . 58

Depreciation --Non-compete fee--Is intangible asset--Eligible for depreciation--Income-tax Act, 1961, s. 32(1)(ii)-- Assistant CIT v. GE Plastics India Ltd. (Ahmedabad) . . . 58

----Whether or not newly acquired extrusion business commenced in present year for allowing depreciation--Matter remanded--Income-tax Act, 1961-- Assistant CIT v. GE Plastics India Ltd. (Ahmedabad) . . . 58

Donation to charitable institution --Special deduction--Denial of approval under section 80G(5)(vi)--Objects clause not indicating that expenditure on religious objects limited to 5 per cent. of total income for particular year--Approval to be denied--Income-tax Act, 1961, s. 80G(5)(vi)-- Radhika Seva Sansthan v. CIT (Jaipur) . . . 31

Export --Deduction--Computation--Communication expenses attributable to delivery of computer software--Adjustments to export turnover also to be made in total turnover--Income-tax Act, 1961, s. 10A-- Centillium India Ltd. v. Deputy CIT (Bangalore) . . . 69

----Special deduction--Computation--Sales tax to be excluded from total turnover for computing deduction--Income-tax Act, 1961, s. 80HHC-- Assistant CIT v. GE Plastics India Ltd. (Ahmedabad) . . . 58

----Special deduction--Insurance--Insurance receipts constitute “operational income†--Scrap--Scarp from manufacturing activity and packing activity--Receipts on account of scarps to be segregated and re-determined--Matter remanded--Technology transfer fees--Is “operational income†if comparable to receipts on account of development work--Matter remanded--Income-tax Act, 1961, s. 80HHC-- CIPLA Ltd.v. Deputy CIT (Mumbai) . . . 98

Export business --Special deduction--Set-off of unabsorbed depreciation of earlier years against total income--Justified--Income-tax Act, 1961, s. 80HHC-- Assistant CIT v . GE Plastics India Ltd. (Ahmedabad) . . . 58

Income --Computation of income--Disallowance of expenditure incurred in earning income not forming part of total income--Law applicable--Rule 8D applicable from assessment year 2008-09--Disallowance for earlier periods to be determined on reasonable basis--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D--Fenner (India) Ltd. v. Additional CIT (Chennai) . . . 48

International transactions --Arm’s length price--Determination--Transactions with associated enterprises alone to be considered--Selection of comparables--Standard deduction of 5 per cent. under provisos to section 92C(2) granted--Matter remanded--Income-tax Act, 1961, s. 92C(2)-- Centillium India Ltd. v. Deputy CIT (Bangalore) . . . 69

----Arm’s length price--Transfer pricing study--Transactional net margin method--Profit level indicator--Comparables--Working capital relevant factor for determining profit margin--Mere low profit or loss would not make a functional comparable company uncomparable--Entity can be taken as uncontrolled, if its related party transaction does not exceed 25 per cent. of total revenue--Function, assets and risk analysis--Comparable cannot be rejected just because it is operating in same sector in different line--No prejudice shown in inclusion of comparables which had incurred more than 5 per cent. of sales as expenses towards advertisement and marketing--Company showing fluctuation in profits and losses to be excluded--Large companies having turnover of more than Rs. 260 crores not comparable--Current year’s data to be used--Income-tax Act, 1961, ss. 92C, 92D--Income-tax Rules, 1962, rr. 10B, 10D-- Actis Advisers P. Ltd. v. Deputy CIT (Delhi) . . . 138

Non-resident --Permanent establishment--Liaison office in India--Not a permanent establishment--Non-resident not assessable in India--Income-tax Act, 1961, s. 9-- Deputy Director of Income-tax (International Taxation) v. M. Fabricant and Sons Inc. (Mumbai) . . . 118

Penalty --Compulsory maintenance of accounts--Assessee running poultry farm in remote village--Books of account not maintained--Reasonable cause--Assessee entitled to benefit under section 273B--Penalty not leviable--Income-tax Act, 1961, ss. 44AA, 271A, 273B-- C. T. Chacko v. ITO (Cochin) . . . 125

----Concealment of income--Assessee not filing return in response to notice under section 148--Difference between assessed income and returned income to be considered as concealed income--Penalty to be levied--Income-tax Act, 1961, ss. 148, 271(1)(c)-- C. T. Chacko v. ITO (Cochin) . . . 125

----Deduction of tax at source--Failure to furnish PAN number of one of the deductees--Penalty exigible under section 272B--Income-tax Act, 1961, s. 272B-- Tej Pal Gupta v. ITO (TDS) (Chandigarh) . . . 46

Revision --Condition precedent--Order should be erroneous and prejudicial to Revenue--Assessing Officer following High Court decisions and deducting premium on keyman insurance--Order not erroneous--Withdrawal of deduction in revision proceedings--Not valid--Income-tax Act, 1961, s. 263-- Laj Exports v.Deputy CIT (Chandigarh) . . . 111

Search and seizure --Block assessment--Income disclosed in regular return cannot be treated as undisclosed income in block assessment--Income disclosed prior to search cannot be assessed under sections 158BC and 158BD--Income-tax Act, 1961, ss. 158BC, 158BD-- Assistant CIT v. Smt. Sula Jayakumar (Cochin) . . . 37

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 2(14)(i) --Capital gains or business income--Profits from purchase and sale of shares--Voluminous share transactions, repetition and continuity of transactions--Purchase of shares not for earning dividend but with dominant intention of resale in order to earn profits--Profit not mere enhancement of value of shares but profit in business--Profits taxable as business income-- Assistant CIT v. Manoj Kumar Samdaria (Delhi) . . . 13

S. 9 --Non-resident--Permanent establishment--Liaison office in India--Not a permanent establishment--Non-resident not assessable in India-- Deputy Director of Income-tax (International Taxation) v. M. Fabricant and Sons Inc. (Mumbai) . . . 118

S. 10A --Export--Deduction--Computation--Communication expenses attributable to delivery of computer software--Adjustments to export turnover also to be made in total turnover-- Centillium India Ltd. v. Deputy CIT (Bangalore) . . . 69

S. 12AA --Charitable trust--Registration--Denial of registration on ground that object religious in nature--Finding that amendment in objects clause--Law applicable--Effect of section 13(1)(b)-- Denial of registration not valid-- Radhika Seva Sansthan v. CIT (Jaipur) . . . 31

S. 13(1)(b) --Charitable trust--Registration--Denial of registration on ground that object religious in nature--Finding that amendment in objects clause--Law applicable--Effect of section 13(1)(b)-- Denial of registration not valid-- Radhika Seva Sansthan v. CIT (Jaipur) . . . 31

S. 14A --Income--Computation of income--Disallowance of expenditure incurred in earning income not forming part of total income--Law applicable--Rule 8D applicable from assessment year 2008-09--Disallowance for earlier periods to be determined on reasonable basis-- Fenner (India) Ltd. v. Additional CIT(Chennai) . . . 48

S. 28 --Capital gains or business income--Profits from purchase and sale of shares--Voluminous share transactions, repetition and continuity of transactions--Purchase of shares not for earning dividend but with dominant intention of resale in order to earn profits--Profit not mere enhancement of value of shares but profit in business--Profits taxable as business income-- Assistant CIT v. Manoj Kumar Samdaria (Delhi) . . . 13

S. 31(i) --Business expenditure--Current repairs--Manufacture of tread rubber--Chamber assembly integral part of intermix machine and incapable of performing independent function--Expenditure for replacing chamber assembly “current repair†and allowable-- Midas Rubber P. Ltd. v. Assistant CIT (Cochin) . . . 6

S. 32(1)(ii) --Depreciation--Non-compete fee--Is intangible asset--Eligible for depreciation-- Assistant CIT v.GE Plastics India Ltd. (Ahmedabad) . . . 58

S. 43B --Business expenditure--Deduction on actual payment--Contribution to provident fund--Only contribution paid before due date for filing of return to be allowed--Matter remanded-- Fenner (India) Ltd. v.Additional CIT (Chennai) . . . 48

S. 44AA --Penalty--Compulsory maintenance of accounts--Assessee running poultry farm in remote village--Books of account not maintained--Reasonable cause--Assessee entitled to benefit under section 273B--Penalty not leviable-- C. T. Chacko v. ITO (Cochin) . . . 125

S. 45 --Capital gains or business income--Profits from purchase and sale of shares--Voluminous share transactions, repetition and continuity of transactions--Purchase of shares not for earning dividend but with dominant intention of resale in order to earn profits--Profit not mere enhancement of value of shares but profit in business--Profits taxable as business income-- Assistant CIT v. Manoj Kumar Samdaria (Delhi) . . . 13

S. 45(4) --Capital gains--Revaluation of assets on conversion of firm into company--Not to be taxed as capital gains-- ITO v. Alta Inter-Chem Industries (Ahmedabad) . . . 103

S. 47(xiii) --Capital gains--Revaluation of assets on conversion of firm into company--Not to be taxed as capital gains-- ITO v. Alta Inter-Chem Industries (Ahmedabad) . . . 103

S. 54F --Capital gains--Long-term capital gains--Exemption--Investment of gains in residential property--No requirement that property should be in India--Assessee investing gains in house property in the United States of America--Entitled to exemption--Income-tax Act, 1961, Vinay Mishra v. Assistant CIT (Bangalore) . . . 129

S. 80G(5)(vi) --Donation to charitable institution--Special deduction--Denial of approval under section 80G(5)(vi)--Objects clause not indicating that expenditure on religious objects limited to 5 per cent. of total income for particular year--Approval to be denied-- Radhika Seva Sansthan v. CIT (Jaipur) . . . 31

S. 80HHC --Company--Book profits--Minimum alternate tax--Computation of profits under section 115JB--Export--Special deduction allowable on basis of book profits under section 80HHC-- Assistant CIT v. GE Plastics India Ltd. (Ahmedabad) . . . 58

----Export--Special deduction--Computation--Sales tax to be excluded from total turnover for computing deduction-- Assistant CIT v. GE Plastics India Ltd. (Ahmedabad) . . . 58

----Export--Special deduction--Insurance--Insurance receipts constitute “operational income†--Scrap--Scarp from manufacturing activity and packing activity--Receipts on account of scarps to be segregated and re-determined--Matter remanded--Technology transfer fees--Is “operational income†if comparable to receipts on account of development work--Matter remanded-- CIPLA Ltd. v. Deputy CIT (Mumbai) . . . 98

----Export business--Special deduction--Set-off of unabsorbed depreciation of earlier years against total income--Justified-- Assistant CIT v . GE Plastics India Ltd. (Ahmedabad) . . . 58

S. 92C --International transactions--Arm’s length price--Transfer pricing study--Transactional net margin method--Profit level indicator--Comparables--Working capital relevant factor for determining profit margin--Mere low profit or loss would not make a functional comparable company uncomparable--Entity can be taken as uncontrolled, if its related party transaction does not exceed 25 per cent. of total revenue--Function, assets and risk analysis--Comparable cannot be rejected just because it is operating in same sector in different line--No prejudice shown in inclusion of comparables which had incurred more than 5 per cent. of sales as expenses towards advertisement and marketing--Company showing fluctuation in profits and losses to be excluded--Large companies having turnover of more than Rs. 260 crores not comparable--Current year’s data to be used-- Actis Advisers P. Ltd. v. Deputy CIT (Delhi) . . . 138

S. 92C(2) --International transactions--Arm’s length price--Determination--Transactions with associated enterprises alone to be considered--Selection of comparables--Standard deduction of 5 per cent. under provisos to section 92C(2) granted--Matter remanded-- Centillium India Ltd. v. Deputy CIT (Bangalore) . . . 69

S. 92D --International transactions--Arm’s length price--Transfer pricing study--Transactional net margin method--Profit level indicator--Comparables--Working capital relevant factor for determining profit margin--Mere low profit or loss would not make a functional comparable company uncomparable--Entity can be taken as uncontrolled, if its related party transaction does not exceed 25 per cent. of total revenue--Function, assets and risk analysis--Comparable cannot be rejected just because it is operating in same sector in different line--No prejudice shown in inclusion of comparables which had incurred more than 5 per cent. of sales as expenses towards advertisement and marketing--Company showing fluctuation in profits and losses to be excluded--Large companies having turnover of more than Rs. 260 crores not comparable--Current year’s data to be used-- Actis Advisers P. Ltd. v. Deputy CIT (Delhi) . . . 138

S. 115JB --Book profits--Computation--Claim for bad debts--Law applicable--Effect of retrospective amendment to section 115JB by Finance (No. 2) Act, 2009--Bad debts to be rejected-- Assistant CIT v. GE Plastics India Ltd. (Ahmedabad) . . . 58

----Company--Book profits--Minimum alternate tax--Computation of profits under section 115JB--Export--Special deduction allowable on basis of book profits under section 80HHC-- Assistant CIT v. GE Plastics India Ltd. (Ahmedabad) . . . 58

S. 145 --Assessment--Gross profit rate--Low gross profit rate not ground to make additions--Assessing Officer not making comparative studies with similar business--Assessee furnishing all details required--Details not proved to be defective--Deletion of addition proper-- ITO v. Sai International (Delhi) . . .1

S. 148 --Penalty--Concealment of income--Assessee not filing return in response to notice under section 148--Difference between assessed income and returned income to be considered as concealed income--Penalty to be levied-- C. T. Chacko v. ITO (Cochin) . . . 125

S. 158BC --Search and seizure--Block assessment--Income disclosed in regular return cannot be treated as undisclosed income in block assessment--Income disclosed prior to search cannot be assessed under sections 158BC and 158BD-- Assistant CIT v. Smt. Sula Jayakumar (Cochin) . . . 37

S. 158BD --Search and seizure--Block assessment--Income disclosed in regular return cannot be treated as undisclosed income in block assessment--Income disclosed prior to search cannot be assessed under sections 158BC and 158BD-- Assistant CIT v. Smt. Sula Jayakumar (Cochin) . . . 37

S. 263 --Revision--Condition precedent--Order should be erroneous and prejudicial to Revenue--Assessing Officer following High Court decisions and deducting premium on keyman insurance--Order not erroneous--Withdrawal of deduction in revision proceedings--Not valid-- Laj Exports v. Deputy CIT (Chandigarh) . . . 111

S. 271(1)(c) --Penalty--Concealment of income--Assessee not filing return in response to notice under section 148--Difference between assessed income and returned income to be considered as concealed income--Penalty to be levied-- C. T. Chacko v. ITO (Cochin) . . . 125

S. 271A --Penalty--Compulsory maintenance of accounts--Assessee running poultry farm in remote village--Books of account not maintained--Reasonable cause--Assessee entitled to benefit under section 273B--Penalty not leviable-- C. T. Chacko v. ITO (Cochin) . . . 125

S. 272B --Penalty--Deduction of tax at source--Failure to furnish PAN number of one of the deductees--Penalty exigible under section 272B-- Tej Pal Gupta v. ITO (TDS) (Chandigarh) . . . 46

S. 273B --Penalty--Compulsory maintenance of accounts--Assessee running poultry farm in remote village--Books of account not maintained--Reasonable cause--Assessee entitled to benefit under section 273B--Penalty not leviable-- C. T. Chacko v. ITO (Cochin) . . . 125

Income-tax Rules, 1962 :

R. 8D --Income--Computation of income--Disallowance of expenditure incurred in earning income not forming part of total income--Law applicable--Rule 8D applicable from assessment year 2008-09--Disallowance for earlier periods to be determined on reasonable basis-- Fenner (India) Ltd. v. Additional CIT(Chennai) . . . 48

R. 10B --International transactions--Arm’s length price--Transfer pricing study--Transactional net margin method--Profit level indicator--Comparables--Working capital relevant factor for determining profit margin--Mere low profit or loss would not make a functional comparable company uncomparable--Entity can be taken as uncontrolled, if its related party transaction does not exceed 25 per cent. of total revenue--Function, assets and risk analysis--Comparable cannot be rejected just because it is operating in same sector in different line--No prejudice shown in inclusion of comparables which had incurred more than 5 per cent. of sales as expenses towards advertisement and marketing--Company showing fluctuation in profits and losses to be excluded--Large companies having turnover of more than Rs. 260 crores not comparable--Current year’s data to be used-- Actis Advisers P. Ltd. v. Deputy CIT (Delhi) . . . 138

R. 10D --International transactions--Arm’s length price--Transfer pricing study--Transactional net margin method--Profit level indicator--Comparables--Working capital relevant factor for determining profit margin--Mere low profit or loss would not make a functional comparable company uncomparable--Entity can be taken as uncontrolled, if its related party transaction does not exceed 25 per cent. of total revenue--Function, assets and risk analysis--Comparable cannot be rejected just because it is operating in same sector in different line--No prejudice shown in inclusion of comparables which had incurred more than 5 per cent. of sales as expenses towards advertisement and marketing--Company showing fluctuation in profits and losses to be excluded--Large companies having turnover of more than Rs. 260 crores not comparable--Current year’s data to be used-- Actis Advisers P. Ltd. v. Deputy CIT (Delhi) . . . 138

 

 

Fwd: Maharashtra State Co-op Bank Tender

---------- Forwarded message ----------
From: DAYARAM PALIWAL <dayaramca@gmail.com>
Date: Fri, Nov 16, 2012 at 12:33 PM
Subject: Maharashtra State Co-op Bank Tender
To:


Dear Sir/ Madam,

Please find attached file of Maharashtra State Co-op Bank Tender.

Click here:

https://docs.google.com/open?id=1RpLu2W5d0X5x3ICy6QM5ffwHR1C72UbZUP8DtpvNahV-0DUeH8dwOxmfEmRV

Thanking You.

Your's Faithfully,

ITR (TRIB) VIK 19 PART 6

 

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

Volume 19 : Part 6 (Issue dated : 05-11-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Accounting --Valuation of closing stock--Provision for excise duty on closing stock of finished goods paid before clearance of goods prior to date of tax audit report and difference between opening provision of excise duty on stock and excise duty on closing stock debited in profit and loss account--Amount debited in the profit and loss account paid before due date of filing of return--No disallowance of debit in profit and loss account-- Deputy CIT (LTU) v. Hyundai Motor India Ltd. (Chennai) . . . 778

Assessment --Income computed in hands of another person taxed in hands of assessee on protective basis--Income taxed substantively in hands of that person--Issue pending before Commissioner (Appeals)--Commissioner (Appeals) to decide in whose hands addition to be made-- Mali Florex Ltd. v. Deputy CIT (Hyderabad) . . . 791

Business expenditure --Mercantile system of accounting--Project expenditure incurred prior to commencement of business --Not allowable as business expenditure--Income-tax Act, 1961, s. 37-- Mali Florex Ltd. v. Deputy CIT (Hyderabad) . . . 791

----Payments totalling Rs. 30 lakhs made by account payee cheque--Disallowance of only part of payments on ground deleted in hands of recipients--Payments arising out of same transaction--Expenditure incurred on account of business and commercial exigencies--Deletion in hands of recipients by itself not ground for disallowance in hands of assessee--Income-tax Act, 1961, s. 37-- Mali Florex Ltd. v. Deputy CIT (Hyderabad) . . . 791

----Real estate business--Site-levelling expenses--Architect fee subjected to tax deduction at source--Incurring of expenditure not doubted--Expenditure wholly and exclusively for purpose of business--Not to be disallowed merely because not stipulated in memorandum of understanding--Fees paid to sub-agents on which tax deducted at source on payments and receipts issued by recipients--Payments made by cheque and not doubted--Expenditure wholly and exclusively for purpose of business--Claim to be allowed--Technical expenditure--No proof of expenditure--Expenditure relating to earlier year--Disallowance proper--Video surveillance charges--If expenditure incurred for purpose of business in assessment year under consideration to be allowed though entire property not sold in year under consideration--Income-tax Act, 1961, s. 37-- Mali Florex Ltd. v. Deputy CIT (Hyderabad) . . . 791

Capital gains --Transfer--Definition--Agreement to sell land --Meagre portion of total consideration received and possession not parted with--Not a case of relinquishment of right over property amounting to transfer--Income-tax Act, 1961, s. 2(47)--Transfer of Property Act, 1882, s. 53A-- Mali Florex Ltd. v. Deputy CIT (Hyderabad) . . . 791

Capital or revenue expenditure --Furniture--Capital asset--Expenses incurred for procuring furniture not allowable--Income-tax Act, 1961-- Mahindra Holidays and Resorts India Ltd. v. Deputy CIT (Chennai) . . . 811

----Market research expenses for launching new holiday concept which was later abandoned--Expenses related to setting up of new business--Capital in nature--Income-tax Act, 1961-- Mahindra Holidays and Resorts India Ltd. v. Deputy CIT (Chennai) . . . 811

----Payment of fee for licence to use software for three years--Software did not become asset of assessee--Payment is revenue expenditure--Income-tax Act, 1961-- Mahindra Holidays and Resorts India Ltd. v. Deputy CIT (Chennai) . . . 811

Charitable purposes --Depreciation--Investment in asset treated as application of income to objects of trust--Depreciation on assets allowable--Income-tax Act, 1961, ss. 11, 32-- Assistant CIT v. Shri Adichunchanagiri Shikshana Trust (Bangalore) . . . 828

Export --Special deduction--Computation of profits--Supporting manufacturer--Service charges relating to exports not supported by disclaimer certificates--Not eligible for deduction--Income-tax Act, 1961, s. 80HHC, Expln. (baa) -- Abad Fisheries v. ITO (Cochin) . . . 753

----Special deduction--Exports made through export houses--Whether or not sale proceeds received in foreign exchange and whether assessee received drawback benefits, etc., not available on record--Matter remanded--Income-tax Act, 1961, s. 80HHC-- Abad Fisheries v. ITO (Cochin) . . . 753

Income --Accrual of income--Assessee running holiday homes on time share basis--Membership fees collected from members in year of admission--60 per cent. offered as income of year in which collected and balance treated as deferred income spread pro rata over remaining period of holiday share--Proper--Income-tax Act, 1961-- Mahindra Holidays and Resorts India Ltd. v. Deputy CIT (Chennai) . . . 811

----Computation--Disallowance of expenditure in earning exempt income--To be restricted at one per cent.--Income-tax Act, 1961, s. 14A-- Estee Exports P. Ltd. v. ITO
(Kolkata) . . . 724

----Computation--Suppression of stock--Failure to explain discrepancy--Addition justified--Income-tax Act, 1961-- Estee Exports P. Ltd. v. ITO (Kolkata) . . . 724

Method of accounting --Power of Assessing Officer to reject books of account--Condition precedent--Satisfaction of Assessing Officer books not complete and correct--Surmise that profits sought to be reduced by sale of products to sister-concern at lower price--Not sufficient ground to conclude that books not complete and correct--No instance of falsity or incompleteness of books of account--Rejection of books not justified--Income-tax Act, 1961, s. 145-- Deputy CIT v. Sphoorti Machine Tools P. Ltd. (Bangalore) . . . 736

Penalty --Concealment of income--Furnishing of inaccurate particulars--Disclosure of sum in year of receipt--Commissioner (Appeals) holding sum taxable in following year--Revised return filed thereafter for following year with profit and loss account--Not a case of concealment--Every addition not concealment of income--Penalty not leviable--Income-tax Act, 1961, s. 271(1)(c)-- ITO v. Jain Associates (Mumbai) . . . 824

Reassessment --Income escaping assessment--Failure by Assessing Officer to consider information called for during assessment--Not a case of income escaping assessment--Income-tax Act, 1961, s. 147-- Deputy CIT (LTU) v. Hyundai Motor India Ltd. (Chennai) . . . 778

----Notice--Validity--Assessing Officer rejecting assessee’s working of section 10B exemption and section 80HHC deduction in earlier years--Notice issued on presumption that workings for this year would result in escapement of income--Valid--Income-tax Act, 1961, s. 148-- Abad Fisheries v. ITO (Cochin) . . . 753

Revision --Commissioner--Expenditure on creation of new brand--Finding that expenditure not creating any enduring benefit of asset--Order of Assessing Officer not erroneous or prejudicial to interests of Revenue--Revision to treat expenditure as capital expenditure not sustainable--Income-tax Act, 1961, s. 263-- Fine Jewellery (India) Ltd. v. Assistant CIT (Mumbai) . . . 746

----Jurisdiction--Doctrine of merger--Erroneous and prejudicial to Revenue--Housing projects--Special deduction--Assessing Officer analysing issue and allowing deduction excluding profits derived from undivided share of lands--Revision to disallow deduction in toto on ground assessee only developer and not eligible--Matter decided by Commissioner (Appeals) in first appeal--Assessing Officer taking one of two possible views--Revision not permissible--Income-tax Act, 1961, ss. 80-IB, 263-- Sobha Developers Ltd. v. CIT (LTU) (Bangalore) . . . 764

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 2(47) --Capital gains--Transfer--Definition--Agreement to sell land --Meagre portion of total consideration received and possession not parted with--Not a case of relinquishment of right over property amounting to transfer-- Mali Florex Ltd. v. Deputy CIT (Hyderabad) . . . 791

S. 11 --Charitable purposes--Depreciation--Investment in asset treated as application of income to objects of trust--Depreciation on assets allowable-- Assistant CIT v. Shri Adichunchanagiri Shikshana Trust (Bangalore) . . . 828

S. 14A --Income--Computation--Disallowance of expenditure in earning exempt income--To be restricted at one per cent.-- Estee Exports P. Ltd. v. ITO (Kolkata) . . . 724

S. 32 --Charitable purposes--Depreciation--Investment in asset treated as application of income to objects of trust--Depreciation on assets allowable-- Assistant CIT v. Shri Adichunchanagiri Shikshana Trust (Bangalore) . . . 828

S. 37 --Business expenditure--Mercantile system of accounting--Project expenditure incurred prior to commencement of business --Not allowable as business expenditure-- Mali Florex Ltd. v. Deputy CIT (Hyderabad) . . . 791

----Business expenditure--Payments totalling Rs. 30 lakhs made by account payee cheque--Disallowance of only part of payments on ground deleted in hands of recipients--Payments arising out of same transaction--Expenditure incurred on account of business and commercial exigencies--Deletion in hands of recipients by itself not ground for disallowance in hands of assessee-- Mali Florex Ltd. v. Deputy CIT (Hyderabad) . . . 791

----Business expenditure--Real estate business--Site-levelling expenses--Architect fee subjected to tax deduction at source--Incurring of expenditure not doubted--Expenditure wholly and exclusively for purpose of business--Not to be disallowed merely because not stipulated in memorandum of understanding--Fees paid to sub-agents on which tax deducted at source on payments and receipts issued by recipients--Payments made by cheque and not doubted--Expenditure wholly and exclusively for purpose of business--Claim to be allowed--Technical expenditure--No proof of expenditure--Expenditure relating to earlier year--Disallowance proper--Video surveillance charges--If expenditure incurred for purpose of business in assessment year under consideration to be allowed though entire property not sold in year under consideration-- Mali Florex Ltd. v. Deputy CIT (Hyderabad) . . . 791

S. 80HHC --Export--Special deduction--Exports made through export houses--Whether or not sale proceeds received in foreign exchange and whether assessee received drawback benefits, etc., not available on record--Matter remanded-- Abad Fisheries v. ITO (Cochin) . . . 753

S. 80HHC, Expln. (baa) --Export--Special deduction--Computation of profits--Supporting manufacturer--Service charges relating to exports not supported by disclaimer certificates--Not eligible for deduction-- Abad Fisheries v. ITO (Cochin) . . . 753

S. 80-IB --Revision--Jurisdiction--Doctrine of merger--Erroneous and prejudicial to Revenue--Housing projects--Special deduction--Assessing Officer analysing issue and allowing deduction excluding profits derived from undivided share of lands--Revision to disallow deduction in toto on ground assessee only developer and not eligible--Matter decided by Commissioner (Appeals) in first appeal--Assessing Officer taking one of two possible views--Revision not permissible-- Sobha Developers Ltd. v. CIT (LTU) (Bangalore) . . . 764

S. 145 --Method of accounting--Power of Assessing Officer to reject books of account--Condition precedent--Satisfaction of Assessing Officer books not complete and correct--Surmise that profits sought to be reduced by sale of products to sister-concern at lower price--Not sufficient ground to conclude that books not complete and correct--No instance of falsity or incompleteness of books of account--Rejection of books not justified-- Deputy CIT v. Sphoorti Machine Tools P. Ltd. (Bangalore) . . . 736

S. 147 --Reassessment--Income escaping assessment--Failure by Assessing Officer to consider information called for during assessment--Not a case of income escaping assessment-- Deputy CIT (LTU) v. Hyundai Motor India Ltd. (Chennai) . . . 778

S. 148 --Reassessment--Notice--Validity--Assessing Officer rejecting assessee’s working of section 10B exemption and section 80HHC deduction in earlier years--Notice issued on presumption that workings for this year would result in escapement of income--Valid-- Abad Fisheries v. ITO (Cochin) . . . 753

S. 263 --Revision--Commissioner--Expenditure on creation of new brand--Finding that expenditure not creating any enduring benefit of asset--Order of Assessing Officer not erroneous or prejudicial to interests of Revenue--Revision to treat expenditure as capital expenditure not sustainable-- Fine Jewellery (India) Ltd. v. Assistant CIT (Mumbai) . . . 746

----Revision--Jurisdiction--Doctrine of merger--Erroneous and prejudicial to Revenue--Housing projects--Special deduction--Assessing Officer analysing issue and allowing deduction excluding profits derived from undivided share of lands--Revision to disallow deduction in toto on ground assessee only developer and not eligible--Matter decided by Commissioner (Appeals) in first appeal--Assessing Officer taking one of two possible views--Revision not permissible-- Sobha Developers Ltd. v. CIT (LTU) (Bangalore) . . . 764

S. 271(1)(c) --Penalty--Concealment of income--Furnishing of inaccurate particulars--Disclosure of sum in year of receipt--Commissioner (Appeals) holding sum taxable in following year--Revised return filed thereafter for following year with profit and loss account--Not a case of concealment--Every addition not concealment of income--Penalty not leviable-- ITO v. Jain Associates (Mumbai) . . . 824

Transfer of Property Act, 1882 :

S. 53A --Capital gains--Transfer--Definition--Agreement to sell land--Meagre portion of total consideration received and possession not parted with--Not a case of relinquishment of right over property amounting to transfer-- Mali Florex Ltd. v. Deputy CIT (Hyderabad) . . . 791