INCOME TAX REPORTS (ITR)
Volume 350 Part 2 (Issue dated 14-1-2013)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Export --Special deduction--Telecasting rights of television serial--Entitled to deduction--Income-tax Act, 1961, s. 80HHC-- CIT v. Faquir Chand (HUF) . . . 207
Industrial undertaking --Special deduction--Manufacture--Twisting and texturing partially oriented yarn--Is manufacture--Income-tax Act, 1961, s. 80-IA-- CIT v. Yashasvi Yarn Ltd. . . . 208
Advance tax --Interest--Mandatory nature of charging of interest and actual charging of interest by application of mind and mention of section are two different things--Plea that in demand notice there was charging of interest--No plea raised before Tribunal--Tribunal deleting interest justified--Income-tax Act, 1961, s. 234B-- CIT v. Deep Awadh Hotels (P.) Ltd . (All) . . . 185
Appeal to High Court --Appeal only on substantial question of law--Meaning of substantial question of law--Income-tax Act, 1961, s. 260A-- Deputy CIT v. Sulabh International Social Service Organisation (Patna) . . . 189
Charitable purposes --Registration of trusts--Society granted registration as charitable institution--No evidence of diversion of funds to founder of society--Section 13 not applicable--Society entitled to exemption--Income-tax Act, 1961, ss. 11, 13-- Deputy CIT v . Sulabh International Social Service Organisation
(Patna) . . . 189
----Registration of trusts--Society granted registration under section 12A as charitable institution--Object of society construction of public lavatories--Maintenance of public lavatories--Incidental to object of society--Amounts spent on such maintenance--Entitled to exemption--Income-tax Act, 1961, ss. 11, 12, 13-- Deputy CIT v. Sulabh International Social Service Organisation (Patna) . . . 189
Income-tax --General principles--Principles of consistency in tax matters-- Deputy CIT v . Sulabh International Social Service Organisation (Patna) . . . 189
Investment allowance --Industrial undertaking--Whether investment allowance allowable--Tribunal remanding matter--Appeal against remand order--Assessing Officer to consider all cases cited before him--Income-tax Act, 1961, s. 32A-- CIT v. Deep Awadh Hotels (P.) Ltd. (All) . . . 185
Reassessment --Condition precedent--Tangible material to believe escapement of income from taxation--All details regarding special deduction under section 80-IB(10) furnished--Original assessment granting special deduction--Subsequent reassessment proceedings to withdraw special deduction--Not valid--Income-tax Act, 1961, ss. 80-IB, 147, 148-- Ganesh Housing Corporation Ltd . v . Deputy CIT (Guj) . . . 131
----Notice--Validity--Notice after four years--No allegation that assessee had failed to disclose material facts necessary for assessment--Notice based on subsequent decision of Tribunal--Tribunal not laying down general principle of law--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Shriram Foundry Ltd . v. Deputy CIT
(Bom) . . . 115
----Notice--Validity--Validity to be determined with reference to reasons recorded for belief--Assessee submitting returns electronically as required and subsequently in conventional form--Assessee, a non-resident, earned income from investments in India disclosed in return--Assessment determining nil income--Notice of reassessment on ground section 115AD may be applicable--Not valid--Income-tax Act, 1961, ss. 115AD, 147, 148-- Indivest Pte. Ltd. v . Addl. DIT (Bom) . . . 120
Recovery of tax --Interest under section 220(2A)--Waiver of interest--Provision to be construed liberally--Partial waiver can be given--Application for stay of recovery proceedings cannot be construed as non-co-operation--Entire arrears paid within six months--Partial relief under section 220(2A) granted--Income-tax Act, 1961, s. 220(2A)-- Arun Sunny v. Chief CIT (Ker) . . . 147
Settlement of cases --Order passed by Settlement Commission is final--No income-tax authority can initiate proceedings in respect of period and income covered by such order--Settlement Commission cannot direct income-tax authorities to reopen case in respect of period dealt with in its order--Income-tax Act, 1961, Chap. XIX-A-- CIT v. Smt. Diksha Singh (All) . . . 157
Advance ruling --Rectification of mistake--Ruling given on order for withholding of tax--Modification of withholding order by Assessing Officer to give effect to ruling--Not to affect power of Authority to rectify mistake on the merits--Ruling that income from offshore supplies not taxable in India--Finding that assessable unit in respect of transaction was association of persons--One of members a resident--Ruling not consistent with finding--Mistake apparent from record--To be rectified--Authority for Advance Rulings (Procedure) Rules, 1996, r. 19--Income-tax Act, 1961, ss. 2(31)(v), 195-- CTCI Overseas Corporation Ltd. , In re . . . 174
Non-resident --Wholly owned foreign subsidiary of Indian company--Contracts procured by Indian company and subsidiary carrying out work for Indian company--Payment by Indian company to subsidiary is fees for technical services--No technical knowledge made available to Indian company--Payment not taxable in India--Income-tax Act, 1961, ss. 9(1)(i), (vii), 195--Double Taxation Avoidance Agreement between India and Australia, art. 12(3)(g)-- Infosys Technologies Ltd ., In re . . . 178
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 21 : Part 2 (Issue dated : 14-1-2013)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Accounting --Rejection of accounts--High consumption of electricity--No evidence that high consumption of raw materials led to higher production--Rejection of accounts not justified--Income-tax Act, 1961, s. 145-- Vishal Paper Industries v. Joint CIT (Chandigarh) . . . 220
Appeal to Appellate Tribunal --Date mentioned in acknowledgment slip for hearing of appeal ten months later--Assessee under bona fide belief that fresh notice of hearing will be issued--Failure to appear on date--Reasonable cause--Order of dismissal of appeal for want of representation recalled and appeal restored for hearing-- Dharmesh Pandit v. Assistant CIT (Mumbai) . . . 250
----Procedure--Reference to Third Member--Jurisdiction of Third Member confined to question raised by other two members--Income-tax Act, 1961, s. 255-- Tecnimont ICB P. Ltd. v. Additional CIT (Mumbai) . . . 267
Assessment --Individual or Hindu undivided family income--Capital gains from sale of ancestral property and interest on mutual funds shown as family income and return accepted--Same income cannot be taxed again in hands of individual-- Jyotindra Natwarlal Naik v. ITO (Mumbai) . . . 252
Business expenditure --Interest on borrowed capital--Loans advanced to relatives without interest--Loan taken from bank partly used to fund margin deposit with stock brokers--Funds available with assessee on which no interest paid--Disallowance restricted to extent of funds used to deposit with stock brokers--Income-tax Act, 1961, s. 36(1)(iii)-- Prakash Narottam Das Gupta v. ITO (Mumbai) . . . 255
----Sales promotion expenditure--No reasonable explanation for justifying substantial increase in relevant accounting year--Disallowance of part of expenditure--Justified--Income-tax Act, 1961-- Mysore Minerals Ltd. v. Assistant CIT (Bangalore) . . . 167
Business loss --Mining company--Shortage in closing stock--No reasonable explanation for shortage--Value of shortage--Not deductible--Income-tax Act, 1961-- Mysore Minerals Ltd. v. Assistant CIT (Bangalore) . . . 167
Capital gains --Computation of capital gains--Sale of land--Determination of fair market value as on 1-4-1981--Section 55A applicable--Determination on basis of sale in open market--Income-tax Act, 1961, ss. 2(22B), 45, 55A-- Manjit Singh v. Deputy CIT (Chandigarh) . . . 149
Capital or revenue expenditure --Expenditure on roof work, plumbing work, civil work, carpentry work, ceiling work and sanitary and drainage work in premises used for business--Assessee not owner of premises--Expenditure allowable as revenue expenditure-- Cymroza Art Gallery v. Assistant CIT (Mumbai) . . . 262
----Mining company--Amount paid for diversion of forest land--Revenue expenditure--Income-tax Act, 1961-- Mysore Minerals Ltd. v. Assistant CIT (Bangalore) . . . 167
Cash credits --Firm--Fresh capital brought in by partner and confirmed by him--Not assessable under section 68--Disallowance of interest expenses--Fresh opportunity of hearing to assessee--Matter remanded--Income-tax Act, 1961, s. 68-- Patel Vishnubhai Kantilal and Co. v. ITO (Ahmedabad) . . . 204
Deduction of tax at source --Commission or brokerage--Definition--Does not include transactions in securities--Units of mutual funds--Are securities--Sub-brokerage paid in connection with services rendered in course of transactions pertaining to mutual funds--Not liable to deduction of tax at source--Income-tax Act, 1961, ss. 40(a)(ia), 194H, Expln. (i) -- CIT (Dy.) v. S. J. Investment Agencies P. Ltd. (Mumbai) . . . 258
Income from undisclosed sources --Addition on ground of unaccounted production and consequent unaccounted capital--No evidence of unaccounted production--Addition not justified--Income-tax Act, 1961-- Vishal Paper Industries v. Joint CIT (Chandigarh) . . . 220
----Mining company--Sale of ore--No evidence that assessee had realised price in excess of agreed price--No addition can be made on the ground that price was too low--Income-tax Act, 1961-- Mysore Minerals Ltd. v. Assistant CIT (Bangalore) . . . 167
Income --Amount realised on transfer of carbon credit--Carbon credit not a by-product of business--No cost of acquisition--Amount not assessable--Income-tax Act, 1961-- My Home Power Ltd. v. Deputy CIT (Hyderabad) . . . 186
----Expenditure in relation to income not includible in total income--Disallowance of five per cent. of total expenses in accordance with rule 8D--Proper--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Prakash Narottam Das Gupta v. ITO (Mumbai) . . . 255
Industrial undertaking --Special deduction under section 80-IB--Additions to income--Additions to be taken into account in computing special deduction--Income-tax Act, 1961, s. 80-IB-- Vishal Paper Industries v. Joint CIT (Chandigarh) . . . 220
Interest on borrowed capital --Law applicable--Effect of amendment of section 36(1)(iii) with effect from 1-4-2004--Loan used for purchasing capital asset--Interest not allowable unless capital assets are used--Income-tax Act, 1961, s. 36(1)(iii)-- Vishal Paper Industries v. Joint CIT (Chandigarh) . . . 220
International transaction --Determination of arm’s length price--Net profit margin realised from transaction with associated enterprises cannot be taken as comparable--Income-tax act, 1961, s. 92C-- Tecnimont ICB P. Ltd. v. Additional CIT (Mumbai) . . . 267
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 2(22B) --Capital gains--Computation of capital gains--Sale of land--Determination of fair market value as on 1-4-1981--Section 55A applicable--Determination on basis of sale in open market-- Manjit Singh v. Deputy CIT (Chandigarh) . . . 149
S. 14A --Income--Expenditure in relation to income not includible in total income--Disallowance of five per cent. of total expenses in accordance with rule 8D--Proper-- Prakash Narottam Das Gupta v. ITO (Mumbai) . . . 255
S. 36(1)(iii) --Business expenditure--Interest on borrowed capital--Loans advanced to relatives without interest--Loan taken from bank partly used to fund margin deposit with stock brokers--Funds available with assessee on which no interest paid--Disallowance restricted to extent of funds used to deposit with stock brokers-- Prakash Narottam Das Gupta v. ITO (Mumbai) . . . 255
----Interest on borrowed capital--Law applicable--Effect of amendment of section 36(1)(iii) with effect from 1-4-2004--Loan used for purchasing capital asset--Interest not allowable unless capital assets are used-- Vishal Paper Industries v. Joint CIT (Chandigarh) . . . 220
S. 40(a)(ia) --Deduction of tax at source--Commission or brokerage--Definition--Does not include transactions in securities--Units of mutual funds--Are securities--Sub-brokerage paid in connection with services rendered in course of transactions pertaining to mutual funds--Not liable to deduction of tax at source-- CIT (Dy.) v. S. J. Investment Agencies P. Ltd. (Mumbai) . . . 258
S. 45 --Capital gains--Computation of capital gains--Sale of land--Determination of fair market value as on 1-4-1981--Section 55A applicable--Determination on basis of sale in open market-- Manjit Singh v. Deputy CIT (Chandigarh) . . . 149
S. 55A --Capital gains--Computation of capital gains--Sale of land--Determination of fair market value as on 1-4-1981--Section 55A applicable--Determination on basis of sale in open market-- Manjit Singh v. Deputy CIT (Chandigarh) . . . 149
S. 68 --Cash credits--Firm--Fresh capital brought in by partner and confirmed by him--Not assessable under section 68--Disallowance of interest expenses--Fresh opportunity of hearing to assessee--Matter remanded-- Patel Vishnubhai Kantilal and Co. v. ITO (Ahmedabad) . . . 204
S. 80-IB --Industrial undertaking--Special deduction under section 80-IB--Additions to income--Additions to be taken into account in computing special deduction-- Vishal Paper Industries v. Joint CIT (Chandigarh) . . . 220
S. 92C --International transaction--Determination of arm’s length price--Net profit margin realised from transaction with associated enterprises cannot be taken as comparable-- Tecnimont ICB P. Ltd. v. Additional CIT (Mumbai) . . . 267
S. 145 --Accounting--Rejection of accounts--High consumption of electricity--No evidence that high consumption of raw materials led to higher production--Rejection of accounts not justified-- Vishal Paper Industries v. Joint CIT (Chandigarh) . . . 220
S. 194H, Expln. (i) --Deduction of tax at source--Commission or brokerage--Definition--Does not include transactions in securities--Units of mutual funds--Are securities--Sub-brokerage paid in connection with services rendered in course of transactions pertaining to mutual funds--Not liable to deduction of tax at source-- CIT (Dy.) v. S. J. Investment Agencies P. Ltd. (Mumbai) . . . 258
S. 255 --Appeal to Appellate Tribunal--Procedure--Reference to Third Member--Jurisdiction of Third Member confined to question raised by other two members-- Tecnimont ICB P. Ltd. v. Additional CIT (Mumbai) . . . 267
R. 8D --Income--Expenditure in relation to income not includible in total income--Disallowance of five per cent. of total expenses in accordance with rule 8D--Proper-- Prakash Narottam Das Gupta v. ITO (Mumbai) . . . 255
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