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
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
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
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