INCOME TAX REPORTS (ITR)
Volume 350 Part 1 (Issue dated 7-1-2013)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal to Appellate Tribunal --Duty of Tribunal--Duty to examine facts carefully--Income-tax Act, 1961-- Hastalloy India Ltd . v . Deputy CIT (AP) . . . 52
Business expenditure --Capital or revenue expenditure--Assessee engaged in tourism and transportation--Expenses incurred in developing infrastructure facilities like flyovers and pedestrian facilities--Flyovers and pedestrian facilities handed over to Government--Expenditure deductible--Income-tax Act, 1961, s. 37-- CIT v. D. T. T. D. C. Ltd. (Delhi) . . . 1
Capital or revenue expenditure --Premium on acquisition of leasehold rights in land--Lease for ninety years with substantial interests in land--Premium constituted capital expenditure--Income-tax Act, 1961, s. 37-- Krishak Bharati Co-operative Ltd. v. Deputy CIT (Delh) . . . 24
Company --Dividend--Deemed dividend--Advance to shareholder--Scope of section 2(22)(e)--Assessee-company holding less than 10 per cent. voting rights in another company which had advanced money to assessee-company--Shareholder with more than 10 per cent. voting rights in assessee-company and having substantial rights in other company--Advance not assessable as deemed dividend--Income-tax Act, 1961, s. 2(22)(e)-- CIT v . Gopal Clothing Co. P. Ltd. (Delhi) . . . 67
Deduction of tax at source --Failure to deduct tax at source--Assessee deemed to be in default--Assessee introducing voluntary retirement scheme--Payment as per section 10(10C) and rule 2BA--Additional payments as incentives--Amount received by employees treated as exempt--Assessee could not be treated as in default--Income-tax Act, 1961, ss. 10(10C), 201(1A)--Income-tax Rules, 1962, r. 2BA-- CIT v. Maruti Udyog Ltd . (Delhi) . . . 81
Exemption --Amount received under voluntary retirement scheme--Effect of section 10(10C) and rule 2BA--Income-tax Act, 1961, s. 10(10C)--Income-tax Rules, 1962, r. 2BA-- CIT v . Maruti Udyog Ltd . (Delhi) . . . 81
----Export--Expenditure incurred by assessee not forming part of export turnover--Excludible from total turnover--Income-tax Act, 1961, s. 10A-- CIT v. Samsung Electronics Co. Ltd . (Karn) . . . 65
----Profits from export of software--Method of computing profits--Common expenses for exempt and non-exempt income--Apportionment of expenses--No statutory method--Apportionment based on head count of employees--Method followed consistently and accepted by Revenue in prior years--No accounting standard violated by the method--Method of apportionment was justified--Income-tax Act, 1961, s. 10A-- CIT v . EHPT India P. Ltd . (Delhi) . . . 41
Income --Diversion of income by overriding title--General principles--Government company engaged in tourism, transportation and running of liquor shops--Retail trade in country liquor transferred to assessee in consideration of assessee undertaking development of infrastructure like construction of flyovers and pedestrian facilities--Assessee creating “transport infrastructure utilisation fund†and other general economic services--Transport infrastructure utilisation fund not diverted by overriding title--Assessee not having control over other general economic services--Amount credited to other general economic services not income in hands of assessee in assessment years 1990-91 and 1991-92--Income-tax Act, 1961-- CIT v. D. T. T. D. C. Ltd. (Delhi) . . . 1
New industrial undertaking --Special deduction--Tests to determine if industrial undertaking is new--Some dependence on old undertaking would not be a decisive factor--Investment of rupees seven crores for expansion of existing business--New industrial licence and new letter of intent--Capacity for production doubled--Assessee entitled to special deduction under section 80-I--Income-tax Act, 1961, s. 80-I-- Gujarat Alkalies and Chemicals Ltd. v . CIT (Guj) . . . 94
Precedent --Effect of decision of Supreme Court in Sitaldas Tirathdas [1961] 41 ITR 367 and Motilal Chhadami Lal Jain [1991] 190 ITR 1-- CIT v . D. T. T. D. C. Ltd. (Delhi) . . . 1
----Effect of decision of Supreme Court in Textile Machinery Corporation v. CIT [1977] 107 ITR 195-- Gujarat Alkalies and Chemicals Ltd . v. CIT (Guj) . . . 94
Res judicata --Estoppel--Principles not applicable in income-tax proceedings-- Krishak Bharati Co-operative Ltd . v . Deputy CIT (Delh) . . . 24
Search and seizure --Block assessment--Undisclosed income--Effect of section 132(4)--Voluntary statements later retracted--Voluntary statement has evidentiary value--Burden on assessee to disprove voluntary statement--Evidence of purchase of property--Admission that there was understatement of consideration--Admission regarding expenses--Amount claimed to be loan but no proof of loan--Addition of amounts justified--Income-tax Act, 1961, ss. 132, 158BC-- CIT v . O. Abdul Razak (Ker) . . . 71
----Block assessment--Undisclosed income--FDRs in names of employees found to be bogus--Addition to income justified--Deletion of amounts representing FDRs in names of friends and relatives of managing director--No evidence regarding genuineness of FDRs--Matter remanded--Income-tax Act, 1961, s. 158BC-- Hastalloy India Ltd . v . Deputy CIT (AP) . . . 52
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 21 : Part 1 (Issue dated : 7-1-2013)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Business expenditure --Assessee engaged in development and maintenance of roads--Provision for road renewal--Not deductible--Income-tax Act, 1961, s. 37-- Deputy CIT v. Gujarat Road and Infrastructure Co. Ltd. (Ahmedabad) . . . 88
----Assessee engaged in real estate development--Expenditure on levelling and fencing land--Disallowance of part of expenditure--No evidence that entire expenditure was incurred on levelling and fencing--Disallowance justified--Income-tax Act, 1961-- ITO v. Nam Estates P. Ltd. (Bangalore) . . . 109
----Assessee engaged in real estate development--Payment of brokerage and commission--Disallowance of part of payment--No evidence that entire expenditure was genuine--Disallowance justified--Income-tax Act, 1961-- ITO v. Nam Estates P. Ltd. (Bangalore) . . . 109
----Assessee, a film maker and event manager, following project completion method--Showing receipts and corresponding expenditure in respect of each venture separately--Common expenditure under various heads--Expenses like dress and costumes, publicity expenses, lodging and boarding expenses, society maintenance expenses and telecast expenses and title registration expenses not attributable to common expenditure for running business--Not allowable--Income-tax Act, 1961-- Gurdas Mann v. Deputy CIT (Chandigarh) . . . 57
----Deduction only on actual payment--Contribution made to provident fund and employees’ State insurance--Amount deposited within grace period--Deduction allowable--Income-tax Act, 1961, s. 43B-- Assistant CIT v. UPS Jetair Express P. Ltd. (Mumbai) . . . 82
----Disallowance for bills and vouchers not verifiable made after discussion with assessee--Cannot be challenged--Ad hoc disallowance without pointing out nature of discrepancies and head of to which expenditure related--Disallowance not proper--Income-tax Act, 1961-- Gurdas Mann v. Deputy CIT (Chandigarh) . . . 57
----Disallowance--Cash payments exceeding specified limit--No material to controvert finding of Assessing Officer--No evidence to establish claim that no single payment in cash made above Rs. 20,000--Disallowance proper--Income-tax Act, 1961, s. 40A(3)-- Gurdas Mann v. Deputy CIT (Chandigarh) . . . 57
----Disallowance--Failure to deduct tax at source out of certain payments--If the amounts paid during the year under consideration, no disallowance warranted--Matter remanded--Income-tax Act, 1961, s. 40(a)(ia)-- Gurdas Mann v. Deputy CIT (Chandigarh) . . . 57
----Disallowance--Payments in cash exceeding specified limit--No evidence of exceptional circumstances--Disallowance justified--Income-tax Act, 1961, s. 40A(3)-- ITO v. Nam Estates P. Ltd. (Bangalore) . . . 109
----Disallowance--Payments on which tax not deducted at source--Payments for satellite link charges for use of standard facility--Not royalty--Not liable to deduction of tax at source--Tribunal holding in favour of assessee in proceedings arising out of section 201 proceedings--Followed in proceedings arising out of assessment--Income-tax Act, 1961, ss. 40(a)(ia), 201-- Wills Processing Services (India) P. Ltd. v. Deputy CIT (Mumbai) . . . 1
----Expenditure booked by assessee on dates at variance with dates of foreign shows--Assessee unable to explain nature of expenditure and date of incurrence--Disallowance confirmed--Income-tax Act, 1961-- Gurdas Mann v. Deputy CIT (Chandigarh) . . . 57
----Expenses shown under “repairs and maintenance†--Expenditure on purchase of new furniture not replacement--Capital expenditure, not allowable--No material to show replacement of electric installation or nature of electric installation replaced--Deduction not allowable--Income-tax Act, 1961-- Gurdas Mann v. Deputy CIT (Chandigarh) . . . 57
----Interest on borrowed capital--Assessee advancing interest-free loans--Matter remanded for finding on nature of secured loans raised by assessee--If loans relatable to specific purpose and not part of general pool of funds available to assessee, no disallowance of any part of interest relatable to such secured loans to be disallowed--Income-tax Act, 1961, s. 36(1)(iii)-- Gurdas Mann v. Deputy CIT (Chandigarh) . . . 57
----Vehicle related expenses and telephone expenses--Disallowance of 20 per cent. for personal use--Proper--Conveyance, lodging and boarding, travelling staff welfare, business promotion and publicity expenses--No disallowance for personal use--Income-tax Act, 1961-- Gurdas Mann v. Deputy CIT (Chandigarh) . . . 57
Capital gains --Capital asset--Assessee licensee of looms having incidental possession of land--Transfer of land--Amount paid to assessee for surrender of rights in land--Assessee deemed tenant by virtue of amendment of Rent Control Act--Right of assessee a capital asset within the meaning of section 2(14)--Amount received assessable as capital gains--Income-tax Act, 1961, ss. 2(14), 45, 55-- Kewal Silk Mills v. Assistant CIT (Mumbai) . . . 121
----Exemption--Sale of residential property and investment of gains in purchase or construction of another residential property--Scope of section 54--Sale of residential property and investment of gains in acquiring tenancy rights in perpetuity in another residential property--Assessee not entitled to exemption under section 54--Income-tax Act, 1961, s. 54-- Yogesh Sunderlal Shah v. Assistant CIT (Mumbai) . . . 97
Computation of income --Incomes not includible in total income--Disallowance of expenditure--No dividend income declared by assessee--Disallowance not proper--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Gurdas Mann v. Deputy CIT (Chandigarh) . . . 57
Deduction of tax at source --Interest--Failure to deduct tax at source--No tax deducted at source on interest paid by partner of firm--Interest not payable if no tax is payable by firm--Matter remanded--Income-tax Act, 1961, s. 201(1A)-- Thomas Muthoot v. Deputy CIT (Cochin) . . . 133
----Interest--Firm--Partner--Interest paid by partner to firm--Tax deductible at source on such interest--Income-tax Act, 1961, s. 194A-- Thomas Muthoot v. Deputy CIT (Cochin) . . . 133
----Penalty--Failure to deduct tax at source--Penalty under section 201(1) compensatory--Failure to deduct tax at source on interest paid by partner to firm--Penalty leviable if no tax is payable by firm--Matter remanded--Income-tax Act, 1961, s. 201-- Thomas Muthoot v. Deputy CIT (Cochin) . . . 133
Depreciation --Office utilised for business purpose--Depreciation to be allowed--Income-tax Act, 1961, s. 32-- Gurdas Mann v. Deputy CIT (Chandigarh) . . . 57
Dividend --Deemed dividend--Advance received towards sale of property--Appeal to Commissioner (Appeals)--Failure to pass speaking order on deemed dividend--Matter remanded--Income-tax 1961, s. 2(22)(e)-- ITO v. Nam Estates P. Ltd. (Bangalore) . . . 109
Exemption --Export of computer software--Assessee having two units, one of which qualifying for exemption--Apportionment of income and expenditure on basis of head-count of employees in two units--Method consistently used and accepted by Department--Not to be disturbed--Income-tax Act, 1961, s. 10A(4)-- Wills Processing Services (India) P. Ltd. v. Deputy CIT (Mumbai) . . . 1
----Export of computer software--Computation of exemption--Export turnover--U.K. company providing training to employees of assessee in India--Payment for services rendered by U. K. company--Technical services not provided outside India--Expenses relating to technical services not to be deducted--Satellite charges not telecommunication charges to be excluded from export turnover--Income-tax Act, 1961, s. 10A-- Wills Processing Services (India) P. Ltd. v. Deputy CIT (Mumbai) . . . 1
Income from house property --Deductions--Interest on borrowings--Rental income from two flats owned by assessee and her husband included in their respective hands--Bank certificate showing loan applicant to be husband and co-applicant to be assessee--Interest on borrowed capital utilised for purchase of flats to be allowed in equal proportions in hands of assessee and her husband--Income-tax Act, 1961, s. 24(b)-- Gurdas Mann v. Deputy CIT (Chandigarh) . . . 57
Income-tax Department --Rule of consistency--Issue held in favour of assessee for earlier years and Department accepting--Assessing Officer not to take different view-- Wills Processing Services (India) P. Ltd. v. Deputy CIT (Mumbai) . . . 1
International transactions --Arm’s length price--Determination--Information relied upon by Transfer Pricing Officer not available in public domain--Failure by Transfer Pricing Officer to furnish information to assessee--Secret information not to be used against assessee--No uniformity in rejection of assessee’s comparables and selection of comparables by Transfer Pricing Officer--Proper and appropriate functions, assets and risk analysis required to be done--Transfer Pricing Officer and Dispute Resolution Panel to deal with assessee’s objections and discuss them in order--Income-tax Act, 1961, ss. 92C, 92CA, 133(6)-- Wills Processing Services (India) P. Ltd. v. Deputy CIT (Mumbai) . . . 1
----Transfer pricing--Arm’s length price--Comparables--Reference to Transfer Pricing Officer--Commissioner (Appeals) deleting addition after considering revised Transfer Pricing Officer’s remand proceedings--Justified--Income-tax Act, 1961, s. 92CA(3)-- Assistant CIT v. UPS Jetair Express P. Ltd. (Mumbai) . . . 82
Penalty --Concealment of income--Discrepancies discovered in accounts--Amounts surrendered--Presumption of concealment--No evidence to rebut presumption--Levy of penalty--Valid--Income-tax Act, 1961, s. 271(1)(c)-- Ajay Jain v. Assistant CIT (Delhi) . . . 41
Words and phrases --“Deemed owner†--Meaning of-- Yogesh Sunderlal Shah v. Assistant CIT (Mumbai) . . . 97
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 2(14) --Capital gains--Capital asset--Assessee licensee of looms having incidental possession of land--Transfer of land--Amount paid to assessee for surrender of rights in land--Assessee deemed tenant by virtue of amendment of Rent Control Act--Right of assessee a capital asset within the meaning of section 2(14)--Amount received assessable as capital gains-- Kewal Silk Mills v. Assistant CIT (Mumbai) . . . 121
S. 2(22)(e) --Dividend--Deemed dividend--Advance received towards sale of property--Appeal to Commissioner (Appeals)--Failure to pass speaking order on deemed dividend--Matter remanded-- ITO v. Nam Estates P. Ltd. (Bangalore) . . . 109
S. 10A --Exemption--Export of computer software--Computation of exemption--Export turnover--U. K. company providing training to employees of assessee in India--Payment for services rendered by U. K. company--Technical services not provided outside India--Expenses relating to technical services not to be deducted--Satellite charges not telecommunication charges to be excluded from export turnover-- Wills Processing Services (India) P. Ltd. v. Deputy CIT (Mumbai) . . . 1
S. 10A(4) --Exemption--Export of computer software--Assessee having two units, one of which qualifying for exemption--Apportionment of income and expenditure on basis of head-count of employees in two units--Method consistently used and accepted by Department--Not to be disturbed-- Wills Processing Services (India) P. Ltd. v. Deputy CIT (Mumbai) . . . 1
S. 14A --Computation of income--Incomes not includible in total income--Disallowance of expenditure--No dividend income declared by assessee--Disallowance not proper-- Gurdas Mann v. Deputy CIT (Chandigarh) . . . 57
S. 24(b) --Income from house property--Deductions--Interest on borrowings--Rental income from two flats owned by assessee and her husband included in their respective hands--Bank certificate showing loan applicant to be husband and co-applicant to be assessee--Interest on borrowed capital utilised for purchase of flats to be allowed in equal proportions in hands of assessee and her husband-- Gurdas Mann v. Deputy CIT (Chandigarh) . . . 57
S. 32 --Depreciation--Office utilised for business purpose--Depreciation to be allowed-- Gurdas Mann v. Deputy CIT (Chandigarh) . . . 57
S. 36(1)(iii) --Business expenditure--Interest on borrowed capital--Assessee advancing interest-free loans--Matter remanded for finding on nature of secured loans raised by assessee--If loans relatable to specific purpose and not part of general pool of funds available to assessee, no disallowance of any part of interest relatable to such secured loans to be disallowed-- Gurdas Mann v. Deputy CIT (Chandigarh) . . . 57
S. 37 --Business expenditure--Assessee engaged in development and maintenance of roads--Provision for road renewal--Not deductible-- Deputy CIT v. Gujarat Road and Infrastructure Co. Ltd. (Ahmedabad) . . . 88
S. 40(a)(ia) --Business expenditure--Disallowance--Failure to deduct tax at source out of certain payments--If the amounts paid during the year under consideration, no disallowance warranted--Matter remanded-- Gurdas Mann v. Deputy CIT (Chandigarh) . . . 57
----Business expenditure--Disallowance--Payments on which tax not deducted at source--Payments for satellite link charges for use of standard facility--Not royalty--Not liable to deduction of tax at source--Tribunal holding in favour of assessee in proceedings arising out of section 201 proceedings--Followed in proceedings arising out of assessment-- Wills Processing Services (India) P. Ltd. v. Deputy CIT (Mumbai) . . . 1
S. 40A(3) --Business expenditure--Disallowance--Cash payments exceeding specified limit--No material to controvert finding of Assessing Officer--No evidence to establish claim that no single payment in cash made above Rs. 20,000--Disallowance proper-- Gurdas Mann v. Deputy CIT (Chandigarh) . . . 57
----Business expenditure--Disallowance--Payments in cash exceeding specified limit--No evidence of exceptional circumstances--Disallowance justified-- ITO v. Nam Estates P. Ltd. (Bangalore) . . . 109
S. 43B --Business expenditure--Deduction only on actual payment--Contribution made to provident fund and employees’ State insurance--Amount deposited within grace period--Deduction allowable-- Assistant CIT v. UPS Jetair Express P. Ltd. (Mumbai) . . . 82
S. 45 --Capital gains--Capital asset--Assessee licensee of looms having incidental possession of land--Transfer of land--Amount paid to assessee for surrender of rights in land--Assessee deemed tenant by virtue of amendment of Rent Control Act--Right of assessee a capital asset within the meaning of section 2(14)--Amount received assessable as capital gains-- Kewal Silk Mills v. Assistant CIT (Mumbai) . . . 121
S. 55 --Capital gains--Capital asset--Assessee licensee of looms having incidental possession of land--Transfer of land--Amount paid to assessee for surrender of rights in land--Assessee deemed tenant by virtue of amendment of Rent Control Act--Right of assessee a capital asset within the meaning of section 2(14)--Amount received assessable as capital gains-- Kewal Silk Mills v. Assistant CIT (Mumbai) . . . 121
S. 54 --Capital gains--Exemption--Sale of residential property and investment of gains in purchase or construction of another residential property--Scope of section 54--Sale of residential property and investment of gains in acquiring tenancy rights in perpetuity in another residential property--Assessee not entitled to exemption under section 54-- Yogesh Sunderlal Shah v. Assistant CIT (Mumbai) . . . 97
S. 92C --International transactions--Arm’s length price--Determination--Information relied upon by Transfer Pricing Officer not available in public domain--Failure by Transfer Pricing Officer to furnish information to assessee--Secret information not to be used against assessee--No uniformity in rejection of assessee’s comparables and selection of comparables by Transfer Pricing Officer--Proper and appropriate functions, assets and risk analysis required to be done--Transfer Pricing Officer and Dispute Resolution Panel to deal with assessee’s objections and discuss them in order-- Wills Processing Services (India) P. Ltd. v. Deputy CIT (Mumbai) . . . 1
S. 92CA --International transactions--Arm’s length price--Determination--Information relied upon by Transfer Pricing Officer not available in public domain--Failure by Transfer Pricing Officer to furnish information to assessee--Secret information not to be used against assessee--No uniformity in rejection of assessee’s comparables and selection of comparables by Transfer Pricing Officer--Proper and appropriate functions, assets and risk analysis required to be done--Transfer Pricing Officer and Dispute Resolution Panel to deal with assessee’s objections and discuss them in order-- Wills Processing Services (India) P. Ltd. v. Deputy CIT (Mumbai) . . . 1
S. 92CA(3) --International transactions--Transfer pricing--Arm’s length price--Comparables--Reference to Transfer Pricing Officer--Commissioner (Appeals) deleting addition after considering revised Transfer Pricing Officer’s remand proceedings--Justified-- Assistant CIT v. UPS Jetair Express P. Ltd. (Mumbai) . . . 82
S. 133(6) --International transactions--Arm’s length price--Determination--Information relied upon by Transfer Pricing Officer not available in public domain--Failure by Transfer Pricing Officer to furnish information to assessee--Secret information not to be used against assessee--No uniformity in rejection of assessee’s comparables and selection of comparables by Transfer Pricing Officer--Proper and appropriate functions, assets and risk analysis required to be done--Transfer Pricing Officer and Dispute Resolution Panel to deal with assessee’s objections and discuss them in order-- Wills Processing Services (India) P. Ltd. v. Deputy CIT (Mumbai) . . . 1
S. 194A --Deduction of tax at source--Interest--Firm--Partner--Interest paid by partner to firm--Tax deductible at source on such interest-- Thomas Muthoot v. Deputy CIT (Cochin) . . . 133
S. 201 --Business expenditure--Disallowance--Payments on which tax not deducted at source--Payments for satellite link charges for use of standard facility--Not royalty--Not liable to deduction of tax at source--Tribunal holding in favour of assessee in proceedings arising out of section 201 proceedings--Followed in proceedings arising out of assessment-- Wills Processing Services (India) P. Ltd. v. Deputy CIT (Mumbai) . . . 1
----Deduction of tax at source--Penalty--Failure to deduct tax at source--Penalty under section 201(1) compensatory--Failure to deduct tax at source on interest paid by partner to firm--Penalty leviable if no tax is payable by firm--Matter remanded-- Thomas Muthoot v. Deputy CIT (Cochin) . . . 133
S. 201(1A) --Deduction of tax at source--Interest--Failure to deduct tax at source--No tax deducted at source on interest paid by partner of firm--Interest not payable if no tax is payable by firm--Matter remanded-- Thomas Muthoot v. Deputy CIT (Cochin) . . . 133
S. 271(1)(c) --Penalty--Concealment of income--Discrepancies discovered in accounts--Amounts surrendered--Presumption of concealment--No evidence to rebut presumption--Levy of penalty--Valid-- Ajay Jain v. Assistant CIT (Delhi) . . . 41
R. 8D --Computation of income--Incomes not includible in total income--Disallowance of expenditure--No dividend income declared by assessee--Disallowance not proper-- Gurdas Mann v. Deputy CIT (Chandigarh) . . . 57
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