INCOME TAX REPORTS (ITR)
Volume 351 Part 4 (Issue dated 18-3-2013)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Advance tax --Interest--Company--Book profit--Computation--Interest can be chargeable--Income-tax Act, 1961, ss. 115JB, 234B, 234C-- CIT v . Glenmark Pharmaceutical Ltd . (Bom) . . . 359
Appeal to Commissioner (Appeals) --Reassessment--Notice--Validity of reassessment--Commissioner (Appeals) not deciding validity but setting aside assessment to be made de novo--Reassessment subject in remand proceedings--Commissioner (Appeals) ought to have adjudicated issue--Tribunal not permitting assessee to raise issue of validity of reassessment--Not justified--Matter remanded to Tribunal to decide appeal--Income-tax Act, 1961, ss. 147, 148-- Smt. Prabha Rani Agrawal v. ITO
(All) . . . 275
Assessment --Enquiry--Notice--Co-operative societies--Person--Definition--Includes co-operative society--Notice under section 142(1) to co-operative societies within jurisdiction--Difference between notices issued under sections 133(6) and 142(1)--Income-tax Act, 1961, ss. 2(31), 133(6), 142(1)-- Mangalam Service Co-operative Bank Ltd. v. ITO
(Ker) . . . 312
Business expenditure --Disallowance--Expenditure on lease rent, taxes and repairs and maintenance of guest house--Not allowable--Income-tax Act, 1961, s. 37(4)-- Oriental Insurance Co. Ltd . v . CIT (Delhi) . . . 270
----Disallowance--Payments subject to deduction of tax at source--Assessee an association of public sector oil companies deploying manpower to foreign companies at contracted rate--Finding that seconded personnel not employees of assessee but continuing to be employees of oil companies--Amount paid as foreign allowances to seconded personnel not liable for deduction of tax at source--Payment not to be disallowed--Income-tax Act, 1961, ss. 40(a)(iii), 192-- CIT v . Petroleum India International (Bom) . . . 295
Capital gains --Long-term capital gains--Transfer of shares--Managing director of a company during survey admitting purchase of shares from assessee and his relatives--Assessing Officer computing gains in hands of assessee on basis of statement of managing director--Tribunal deleting addition on ground assessee not given opportunity to cross-examine managing director--Not justified when no such request by assessee--Tribunal failing to consider fact that managing director in revised return showing cash component of purchase of shares from assessee and his relatives--Matter remanded--Income-tax Act, 1961-- CIT v . Vinod Kumar Gupta (Delhi) . . . 253
Capital or revenue expenditure --Non-compete fee--No discussion for finding that expenses not incurred for acquisition of capital assets but for enhanced profitability--Matter remanded--Marketing know-how resulting in higher sales as well as leading to higher profit--Revenue expenditure--Income-tax Act, 1961-- CIT v . Glenmark Pharmaceutical Ltd. (Bom) . . . 359
Capital or revenue receipt --Multiplexes and theatres--Entertainment subsidy--Object of subsidy to promote cinema houses by constructing multiplex theatres--Capital receipt--Income-tax Act, 1961-- CIT v . Chaphalkar Brothers (Bom) . . . 309
----Multiplexes and theatres--Entertainment tax--Exemption--Scheme of Incentive for Tourism Projects 1995 to 2000--Exemption for giving boost to tourism sector--Scheme offering incentive for recouping or covering a capital investment or outlay already made by assessee--Capital receipt--Income-tax Act, 1961-- Dy. CIT v . Inox Leisure Ltd . (Guj) . . . 314
Company --Book profit--Computation--Provision for gratuity on basis of actuarial calculations--Not to be added back under clause (c) of Explanation 1 below section 115JB--Income-tax Act, 1961, s. 115JB-- Dy. CIT v . Inox Leisure Ltd . (Guj) . . . 314
Depreciation --Royalty--Part of consideration paid for acquiring brand--Allowable--Income-tax Act, 1961, s. 32-- CIT v . Glenmark Pharmaceutical Ltd .
(Bom) . . . 359
Donation for charitable purposes --Special deduction--Approval of institution--Application for renewal pending consideration before Commissioner--Cancellation of renewal without notice--Not justified--Income-tax Act, 1961, s. 80G(5)-- CIT v . Rajasthan Jain Charitable Trust (Karn) . . . 354
Double taxation relief --Special deduction--Income earned in foreign country--Relief to extent taxes paid abroad for relevant previous year--Relief not dependent upon payment of taxes being made in foreign country in previous year--Income-tax Act, 1961, s. 91(1)-- CIT v . Petroleum India International (Bom) . . . 295
Exemption --Charitable purposes--Charitable trust--Receipt less than amount specified in second proviso to section 2(15)--Receipts less than expenditure incurred during relevant assessment year--Assessee entitled to exemption--Income-tax Act, 1961, s. 2(15)-- CIT v . Rajasthan Jain Charitable Trust (Karn) . . . 354
Export --Special deduction--Computation--Sale of scrap--Includible in business profits--Income-tax Act, 1961, s. 80HHC-- R. N. Gupta and Co. Ltd . v . CIT (Appeals)
(P&H) . . . 369
----Special deduction--Law prior to amendment in 1991--Assessee not entitled to deduction for exporting granites--Income-tax Act, 1961, s. 80HHC-- CIT v. Vijay Granites Pvt. Ltd. (Mad) . . . 247
Export markets development allowance --Weighted deduction--Insurance business--Assessee not entitled to weighted deduction--Income-tax Act, 1961, s. 35B-- Oriental Insurance Co. Ltd. v . CIT (Delhi) . . . 270
Income --Accrual--Interest--Instrument stipulating interest to be payable at specified dates--Interest does not accrue to holder on any date prior thereto but only on date specified--Securities held by assessee on last day of financial year--Interest for broken period did not accrue to assessee on such date and not taxable in hands of assessee--Consideration received by assessee in respect of sale of securities is capital gains and exempt in terms of DTAA--Double Taxation Avoidance Agreement between India and Cyprus, arts. 11(4), 14(4)-- DIT (International Taxation) v . Credit Suisse First Boston (Cyprus) Ltd. (Bom) . . . 323
----Disallowance of expenditure in earning tax-free income--Whether or not expenses were incurred for earning exempt income--Question of fact--Tribunal finding no expenses incurred for earning dividend income--Investments made from assessee’s own funds and not borrowed funds--Finding of fact--Income-tax Act, 1961, s. 14A-- CIT v. Glenmark Pharmaceutical Ltd . (Bom) . . . 359
Insurance business --Computation--Export markets development reserve--Bad and doubtful debts reserve--Not to be added to balance of profits disclosed in annual accounts--Income-tax Act, 1961, s. 44 ; Sch. I, r. 5-- Oriental Insurance Co. Ltd . v. CIT (Delhi) . . . 270
----Profits and gains--Computation--Special provisions--Tax deducted at source--Provision for income-tax--No additions could be made--Income-tax Act, 1961, s. 44 ; Sch. I, r. 5-- Oriental Insurance Co. Ltd . v . CIT
(Delhi) . . . 270
Investment allowance --Industrial undertaking--Special deduction--Export of granite--Whether assessee doing manufacturing activity--Matter remanded--Income-tax Act, 1961, ss. 32A, 80-I-- CIT v. Vijay Granites Pvt. Ltd . (Mad) . . . 247
Investment deposit account --Provision for excise duty written back--Deductible--Companies Act, 1956, Sch. VI, Parts II, III--Income-tax Act, 1961, s. 32AB-- CIT v. Tata Yodogawa Ltd . (Jharkhand) . . . 379
Non-resident --Income deemed to accrue or arise in India--Non-resident employing Denmark nationals--Employees receiving salaries for services rendered in India for a period not exceeding 183 days--Salaries paid by non-resident employer and not borne by permanent establishment--Salaries not taxable in India--Double Taxation Avoidance Agreement Between India and Denmark--Income-tax Act, 1961, s. 9(1)(ii)-- DIT (International Taxation) v. Maersk Company Ltd . (Uttarakhand) . . . 366
Penalty --Concealment of income--Furnishing inaccurate particulars--Whether income from sale of stock option assessable as short-term capital gains or as long-term capital gains--Debatable issue at time of filing of return by assessee--No penalty leviable--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Jaswinder Singh Ahuja
(Delhi) . . . 262
----Loan in cash exceeding prescribed limit--Amount received in cash by assessee from her father-in-law for purchasing property--Transaction genuine and source disclosed for such transaction--Penalty could not be imposed--Income-tax Act, 1961, ss. 269SS, 271D-- CIT v. Smt. M. Yesodha (Mad) . . . 265
Reassessment --Charitable trust--Exemption--Accumulation of income--Assessee can file Form 10 during reassessment proceedings--Assessee could not file Form 10 only before Tribunal--Income-tax Act, 1961, s. 11--Income-tax Rules, 1962, r. 17, Form 10-- Association of Corporation and Apex Societies of Handlooms v . Asst. DIT
(Delhi) . . . 287
----Notice--Assessment under section 143(3) read with section 147 in which assessee participating--Fresh assessment consequent to notice under section 263--Assessee cannot contend opportunity to hearing not given and assessment invalid--Income-tax Act, 1961, ss. 148, 263-- NTUC Income Insurance Co-operative Ltd . v. Dy. DIT (International Taxation) (Bom) . . . 372
----Notice--Objections--Order dealing with objections not an empty formality--Application of mind to objections essential--Income-tax Act, 1961, s. 148-- Jay Bharat Maruti Ltd. v . Asst. CIT (Delhi) . . . 342
----Notice after four years--Conditions precedent--Failure to disclose all material facts necessary for assessment--No allegation in notice of failure on part of assessee to disclose any material facts--No mention in order rejecting objections what fact assessee had failed to disclose--Notice and order rejecting objections not valid--Income-tax Act, 1961, s. 148-- E. I. Dupont India Pvt. Ltd . v . Dy. CIT (Delhi) . . . 299
Recovery of tax --Notice of demand--Stay--Appeals before Commissioner (Appeals) pending--Withdrawal of huge money in pursuance of notice under section 220(6)--Enforcement of recovery of demand without disposing of application for stay--Not justified--Income-tax Act, 1961, s. 220(6)-- Society of the Franciscan (Hospitaller) Sisters v. Dy. DIT (Exemptions) (Bom) . . . 302
----Stay of demand--Housing project--Special deduction--Assessing Officer disallowing claim and raising demand--Tribunal holding in favour of assessee--Tax Recovery Officer bound to pass appropriate order based on order passed in appeal--Income-tax Act, 1961, s. 225(2)-- Sri Lakshmi Brick Industries v. TRO (Mad) . . . 345
Transfer of case --Co-ordinated and effective investigation--Assessees’ investments with a group companies whose cases being investigated and related to Commonwealth games--Necessity of centralisation of assessment in view of assessees’ nexus with group companies--Order of transfer of cases valid--Income-tax Act, 1961, s. 127-- Arrow Alloys Pvt. Ltd . v. Union of India (Gauhati) . . . 259
----Search and seizure in group cases at Delhi and allegation of tax evasion at Delhi--Head office of group in Dibrugarh and registered office and business activities of group in New Delhi--Not possible for Assessing Officer in regular charge to undertake detailed and co-ordinated investigations--Order of transfer of cases to central charge in New Delhi valid--Income-tax Act, 1961, s. 127(2)-- Continental Milkose (India) Ltd . v . CIT (Gauhati) . . . 292
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Sch. VI, Parts II, III --Investment deposit account--Provision for excise duty written back--Deductible-- CIT v. Tata Yodogawa Ltd . (Jharkhand) . . . 379
Double Taxation Avoidance Agreement between India and Cyprus :
Arts. 11(4), 14(4) --Income--Accrual--Interest--Instrument stipulating interest to be payable at specified dates--Interest does not accrue to holder on any date prior thereto but only on date specified--Securities held by assessee on last day of financial year--Interest for broken period did not accrue to assessee on such date and not taxable in hands of assessee--Consideration received by assessee in respect of sale of securities is capital gains and exempt in terms of DTAA-- DIT (International Taxation) v . Credit Suisse First Boston (Cyprus) Ltd. (Bom) . . . 323
S. 2(15) --Exemption--Charitable purposes--Charitable trust--Receipt less than amount specified in second proviso to section 2(15)--Receipts less than expenditure incurred during relevant assessment year--Assessee entitled to exemption-- CIT v . Rajasthan Jain Charitable Trust (Karn) . . . 354
S. 2(31) --Assessment--Enquiry--Notice--Co-operative societies--Person--Definition--Includes co-operative society--Notice under section 142(1) to co-operative societies within jurisdiction--Difference between notices issued under sections 133(6) and 142(1)-- Mangalam Service Co-operative Bank Ltd. v. ITO (Ker) . . . 312
S. 9(1)(ii) --Non-resident--Income deemed to accrue or arise in India--Non-resident employing Denmark nationals--Employees receiving salaries for services rendered in India for a period not exceeding 183 days--Salaries paid by non-resident employer and not borne by permanent establishment--Salaries not taxable in India--Double Taxation Avoidance Agreement Between India and Denmark-- DIT (International Taxation) v. Maersk Company Ltd . (Uttarakhand) . . . 366
S. 11 --Reassessment--Charitable trust--Exemption--Accumulation of income--Assessee can file Form 10 during reassessment proceedings--Assessee could not file Form 10 only before Tribunal-- Association of Corporation and Apex Societies of Handlooms v . Asst. DIT (Delhi) . . . 287
S. 14A --Income--Disallowance of expenditure in earning tax-free income--Whether or not expenses were incurred for earning exempt income--Question of fact--Tribunal finding no expenses incurred for earning dividend income--Investments made from assessee’s own funds and not borrowed funds--Finding of fact-- CIT v. Glenmark Pharmaceutical Ltd . (Bom) . . . 359
S. 32 --Depreciation--Royalty--Part of consideration paid for acquiring brand--Allowable-- CIT v . Glenmark Pharmaceutical Ltd . (Bom) . . . 359
S. 32A --Investment allowance--Industrial undertaking--Special deduction--Export of granite--Whether assessee doing manufacturing activity--Matter remanded-- CIT v. Vijay Granites Pvt. Ltd . (Mad) . . . 247
S. 32AB --Investment deposit account--Provision for excise duty written back--Deductible-- CIT v. Tata Yodogawa Ltd . (Jharkhand) . . . 379
S. 35B --Export markets development allowance--Weighted deduction--Insurance business--Assessee not entitled to weighted deduction-- Oriental Insurance Co. Ltd. v . CIT (Delhi) . . . 270
S. 37(4) --Business expenditure--Disallowance--Expenditure on lease rent, taxes and repairs and maintenance of guest house--Not allowable-- Oriental Insurance Co. Ltd . v . CIT (Delhi) . . . 270
S. 40(a)(iii) --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Assessee an association of public sector oil companies deploying manpower to foreign companies at contracted rate--Finding that seconded personnel not employees of assessee but continuing to be employees of oil companies--Amount paid as foreign allowances to seconded personnel not liable for deduction of tax at source--Payment not to be disallowed-- CIT v . Petroleum India International
(Bom) . . . 295
S. 44 --Insurance business--Computation--Export markets development reserve--Bad and doubtful debts reserve--Not to be added to balance of profits disclosed in annual accounts-- Oriental Insurance Co. Ltd . v. CIT (Delhi) . . . 270
----Insurance business--Profits and gains--Computation--Special provisions--Tax deducted at source--Provision for income-tax--No additions could be made-- Oriental Insurance Co. Ltd . v . CIT (Delhi) . . . 270
S. 80G(5) --Donation for charitable purposes--Special deduction--Approval of institution--Application for renewal pending consideration before Commissioner--Cancellation of renewal without notice--Not justified-- CIT v . Rajasthan Jain Charitable Trust (Karn) . . . 354
S. 80HHC --Export--Special deduction--Computation--Sale of scrap--Includible in business profits-- R. N. Gupta and Co. Ltd . v . CIT (Appeals) (P&H) . . . 369
----Export--Special deduction--Law prior to amendment in 1991--Assessee not entitled to deduction for exporting granites-- CIT v. Vijay Granites Pvt. Ltd.
(Mad) . . . 247
S. 80-I --Investment allowance--Industrial undertaking--Special deduction--Export of granite--Whether assessee doing manufacturing activity--Matter remanded-- CIT v. Vijay Granites Pvt. Ltd . (Mad) . . . 247
S. 91(1) --Double taxation relief--Special deduction--Income earned in foreign country--Relief to extent taxes paid abroad for relevant previous year--Relief not dependent upon payment of taxes being made in foreign country in previous year-- CIT v . Petroleum India International (Bom) . . . 295
S. 115JB --Advance tax--Interest--Company--Book profit--Computation--Interest can be chargeable-- CIT v . Glenmark Pharmaceutical Ltd . (Bom) . . . 359
----Company--Book profit--Computation--Provision for gratuity on basis of actuarial calculations--Not to be added back under clause (c) of Explanation 1 below section 115JB-- Dy. CIT v . Inox Leisure Ltd . (Guj) . . . 314
S. 127 --Transfer of case--Co-ordinated and effective investigation--Assessees’ investments with a group companies whose cases being investigated and related to Commonwealth games--Necessity of centralisation of assessment in view of assessees’ nexus with group companies--Order of transfer of cases valid-- Arrow Alloys Pvt. Ltd . v. Union of India (Gauhati) . . . 259
S. 127(2) --Transfer of case--Search and seizure in group cases at Delhi and allegation of tax evasion at Delhi--Head office of group in Dibrugarh and registered office and business activities of group in New Delhi--Not possible for Assessing Officer in regular charge to undertake detailed and co-ordinated investigations--Order of transfer of cases to central charge in New Delhi valid-- Continental Milkose (India) Ltd . v . CIT
(Gauhati) . . . 292
S. 133(6) --Assessment--Enquiry--Notice--Co-operative societies--Person--Definition--Includes co-operative society--Notice under section 142(1) to co-operative societies within jurisdiction--Difference between notices issued under sections 133(6) and 142(1)-- Mangalam Service Co-operative Bank Ltd. v. ITO (Ker) . . . 312
S. 142(1) --Assessment--Enquiry--Notice--Co-operative societies--Person--Definition--Includes co-operative society--Notice under section 142(1) to co-operative societies within jurisdiction--Difference between notices issued under sections 133(6) and 142(1)-- Mangalam Service Co-operative Bank Ltd. v. ITO (Ker) . . . 312
S. 147 --Appeal to Commissioner (Appeals)--Reassessment--Notice--Validity of reassessment--Commissioner (Appeals) not deciding validity but setting aside assessment to be made de novo--Reassessment subject in remand proceedings--Commissioner (Appeals) ought to have adjudicated issue--Tribunal not permitting assessee to raise issue of validity of reassessment--Not justified--Matter remanded to Tribunal to decide appeal-- Smt. Prabha Rani Agrawal v. ITO (All) . . . 275
S. 148 --Appeal to Commissioner (Appeals)--Reassessment--Notice--Validity of reassessment--Commissioner (Appeals) not deciding validity but setting aside assessment to be made de novo--Reassessment subject in remand proceedings--Commissioner (Appeals) ought to have adjudicated issue--Tribunal not permitting assessee to raise issue of validity of reassessment--Not justified--Matter remanded to Tribunal to decide appeal-- Smt. Prabha Rani Agrawal v. ITO (All) . . . 275
----Reassessment--Notice--Assessment under section 143(3) read with section 147 in which assessee participating--Fresh assessment consequent to notice under section 263--Assessee cannot contend opportunity to hearing not given and assessment invalid-- NTUC Income Insurance Co-operative Ltd . v. Dy. DIT (International Taxation) (Bom) . . . 372
----Reassessment--Notice--Objections--Order dealing with objections not an empty formality--Application of mind to objections essential-- Jay Bharat Maruti Ltd. v . Asst. CIT (Delhi) . . . 342
----Reassessment--Notice after four years--Conditions precedent--Failure to disclose all material facts necessary for assessment--No allegation in notice of failure on part of assessee to disclose any material facts--No mention in order rejecting objections what fact assessee had failed to disclose--Notice and order rejecting objections not valid-- E. I. Dupont India Pvt. Ltd . v . Dy. CIT (Delhi) . . . 299
S. 192 --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Assessee an association of public sector oil companies deploying manpower to foreign companies at contracted rate--Finding that seconded personnel not employees of assessee but continuing to be employees of oil companies--Amount paid as foreign allowances to seconded personnel not liable for deduction of tax at source--Payment not to be disallowed-- CIT v . Petroleum India International (Bom) . . . 295
S. 220(6) --Recovery of tax--Notice of demand--Stay--Appeals before Commissioner (Appeals) pending--Withdrawal of huge money in pursuance of notice under section 220(6)--Enforcement of recovery of demand without disposing of application for stay--Not justified-- Society of the Franciscan (Hospitaller) Sisters v. Dy. DIT (Exemptions) (Bom) . . . 302
S. 225(2) --Recovery of tax--Stay of demand--Housing project--Special deduction--Assessing Officer disallowing claim and raising demand--Tribunal holding in favour of assessee--Tax Recovery Officer bound to pass appropriate order based on order passed in appeal-- Sri Lakshmi Brick Industries v. TRO (Mad) . . . 345
S. 234B --Advance tax--Interest--Company--Book profit--Computation--Interest can be chargeable-- CIT v . Glenmark Pharmaceutical Ltd . (Bom) . . . 359
S. 234C --Advance tax--Interest--Company--Book profit--Computation--Interest can be chargeable-- CIT v . Glenmark Pharmaceutical Ltd . (Bom) . . . 359
S. 263 --Reassessment--Notice--Assessment under section 143(3) read with section 147 in which assessee participating--Fresh assessment consequent to notice under section 263--Assessee cannot contend opportunity to hearing not given and assessment invalid-- NTUC Income Insurance Co-operative Ltd . v. Dy. DIT (International Taxation) (Bom) . . . 372
S. 269SS --Penalty--Loan in cash exceeding prescribed limit--Amount received in cash by assessee from her father-in-law for purchasing property--Transaction genuine and source disclosed for such transaction--Penalty could not be imposed-- CIT v. Smt. M. Yesodha (Mad) . . . 265
S. 271(1)(c) --Penalty--Concealment of income--Furnishing inaccurate particulars--Whether income from sale of stock option assessable as short-term capital gains or as long-term capital gains--Debatable issue at time of filing of return by assessee--No penalty leviable-- CIT v. Jaswinder Singh Ahuja (Delhi) . . . 262
S. 271D --Penalty--Loan in cash exceeding prescribed limit--Amount received in cash by assessee from her father-in-law for purchasing property--Transaction genuine and source disclosed for such transaction--Penalty could not be imposed-- CIT v. Smt. M. Yesodha (Mad) . . . 265
Sch. I, r. 5 --Insurance business--Computation--Export markets development reserve--Bad and doubtful debts reserve--Not to be added to balance of profits disclosed in annual accounts-- Oriental Insurance Co. Ltd . v. CIT (Delhi) . . . 270
----Insurance business--Profits and gains--Computation--Special provisions--Tax deducted at source--Provision for income-tax--No additions could be made-- Oriental Insurance Co. Ltd . v . CIT (Delhi) . . . 270
R. 17, Form 10 --Reassessment--Charitable trust--Exemption--Accumulation of income--Assessee can file Form 10 during reassessment proceedings--Assessee could not file Form 10 only before Tribunal-- Association of Corporation and Apex Societies of Handlooms v . Asst. DIT (Delhi) . . . 287
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 22 : Part 4 (Issue dated : 18-3-2013)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Business expenditure --Bad debt--Banking company--Interest accrued and shown in books but not due--Deduction allowable--Income-tax Act, 1961, s. 36(1)(vii)-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500
----Banking company--Purchase of securities--Broken-period interest paid by assessee--Allowable-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500
Business loss --Provision for loss on account of revaluation of outstanding foreign exchange contracts--Allowable as a business loss--Income-tax Act, 1961, s. 29-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500
Capital or revenue expenditure --Expenditure on installation of laser upgradation kit for eye surgery--Advanced technology used in line of business of assessee--Is revenue expenditure--Income-tax Act, 1961, s. 37-- Dy. CIT v. Lasik Centre (India) P. Ltd. (Chennai) . . . 462
Company --Book profits--Provision for bad debts--To be added while computing book profits--Income-tax Act, 1961, s. 115JA (as amended by Finance (No. 2) Act, 2009 with retrospective effect from April 1, 1998)-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500
----Minimum alternate tax--Commissioner (Appeals) holding provisions not applicable to assessee--Matter remanded for decision on question of applicability of provisions of section 115JA to assessee by speaking order--Income-tax Act, 1961, s. 115JA-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500
Depreciation --Windmills--Higher rate of depreciation--Entitled to higher rate of depreciation--Income-tax Act, 1961, s. 32-- Assistant CIT v. Rajave Textiles P. Ltd. (Chennai) . . . 475
Donations to charitable institutions --Special deduction--Approval of institution--Renewal--Circular clarifying that existing approvals deemed to have been extended in perpetuity unless specifically withdrawn--Circular binding--Approval to continue--Income-tax Act, 1961, s. 80G(5)--Circular No. 5 dated 3-6-2010-- Vishav Namdhari Sangat v. CIT (Chandigarh) . . . 468
Exemption --Export-oriented undertaking--Registered with Software Technology Park of India--Whether ratification of Board of approval required to obtain benefit under section 10B--Matter remanded--Income-tax Act, 1961, s. 10B--Notification No. 33/(RE)/92-97 dated 22-3-1994-- ITO v. Selectsys India P. Ltd. (Hyderabad) . . . 493
----Export-oriented unit--Registered with Software Technology Park of India--Whether ratification of Board of approval required to obtain benefit under section 10B--Matter remanded--Income-tax Act, 1961, s. 10B-- ITO v. Singularity Software (India) P. Ltd. (Hyderabad) . . . 495
----Interest on foreign currency deposits with scheduled banks--Disallowance of expenses--Matter remanded to Assessing Officer to compute disallowance under section 14A--Income-tax Act, 1961, ss. 10(15)(iv)(fa), 14A-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500
Income from house property --Annual letting value--Vacancy allowance--Premises continuously let since 1997--Property lying vacant on expiry of lease in April, 2004--Vacancy allowance not allowable--No evidence to support value based on municipal rateable value on basis that the property subject to rent control legislation--Valuation to be on basis of sum for which property may be let--Assessing Officer fixing annual letting value based on rent fetched up to April, 2004--Reasonable--Income-tax Act, 1961, ss. 23(1)(a), (b), (c)-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527
Income not includible in total income --Disallowance of expenditure in relation to--Effect of rule 8D--Open to assessee to prove it had sufficient funds to finance tax-exempt investments and that no disallowance would arise on basis of general pool of funds hypothesis--Matter remanded to Assessing Officer to allow assessee opportunity to show why disallowance under section 14A(1) should not be worked out following proportionate method--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527
Income --Foreign company--Interest received by assessee from its head office and overseas branches--Not taxable-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500
Industrial undertaking --Special deduction--Deeming fiction that eligible business only source of income for previous year relevant to initial assessment year up to assessment year of determination of deduction under section 80-IA(1)--Scope of--Year of commencement of operations of eligible undertaking or enterprise is initial assessment year not first year of determination of deduction--Overriding effect of section 80-IA(5) limited to where allowance not already set-off against other income--Section 80-IA(5) being applicable for current year, set-off of loss/allowance against other income allowable--Income-tax Act, 1961, ss. 32(2), 70, 71, 72, 80B(5), 80-IA(1), (5)-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527
International transactions --Arm’s length price--Loan of money in foreign currency to foreign subsidiaries--Domestic prime lending rate not applicable--International rate, LIBOR, to be taken as benchmark--Assessee having an arrangement for loan with bank for less than 4 per cent. but for loans to associated enterprises charging 4 per cent. interest--Assessee’s profits exempt under section 10B--No case that assessee would benefit by shifting profits outside India--No adjustment for arm’s length price warranted--Income-tax Act, 1961, ss. 10B, 92CA-- Cotton Naturals (I) P. Ltd. v. Deputy CIT (Delhi) . . . 438
----Determination of arm’s length price--Finding that comparison of transaction was possible--Transactional net margin method cannot be adopted--Matter remanded--Income-tax Act, 1961, s. 92CA-- Delphi TVS Diesel Systems Ltd. v. Assistant CIT (Chennai) . . . 478
Judicial discipline --Appellate Tribunal--Bound by order of co-ordinate Bench--That appeal therefrom pending before court, not ground not to follow-- Assistant CIT v. Rajave Textiles P. Ltd. (Chennai) . . . 475
Penalty --Concealment of income--Claim to depreciation on cost of development of portal and e-commerce site--Not a fixed asset under section 2(11)(b)--Penalty not leviable for wrong claim--Deletion of penalty--Justified--Income-tax Act, 1961, s. 271(1)(c)-- Deputy CIT v. Hifunda Ltd. (Kolkata) . . . 488
Reassessment --Reopening before expiry of four years--Nothing to show consideration of provision of section 80-IA(5) by Assessing Officer while framing original assessments--Reassessment proceedings rightly initiated--Income-tax Act, 1961, ss. 80-IA(5), 147-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 10(15)(iv)(fa) --Exemption--Interest on foreign currency deposits with scheduled banks--Disallowance of expenses--Matter remanded to Assessing Officer to compute disallowance under section 14A-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500
S. 10B --Exemption--Export-oriented undertaking--Registered with Software Technology Park of India--Whether ratification of Board of approval required to obtain benefit under section 10B--Matter remanded-- ITO v. Selectsys India P. Ltd. (Hyderabad) . . . 493
----Exemption--Export-oriented unit--Registered with Software Technology Park of India--Whether ratification of Board of approval required to obtain benefit under section 10B--Matter remanded-- ITO v. Singularity Software (India) P. Ltd. (Hyderabad) . . . 495
----International transactions--Arm’s length price--Loan of money in foreign currency to foreign subsidiaries--Domestic prime lending rate not applicable--International rate, LIBOR, to be taken as benchmark--Assessee having an arrangement for loan with bank for less than 4 per cent. but for loans to associated enterprises charging 4 per cent. interest--Assessee’s profits exempt under section 10B--No case that assessee would benefit by shifting profits outside India--No adjustment for arm’s length price warranted-- Cotton Naturals (I) P. Ltd. v. Deputy CIT (Delhi) . . . 438
S. 14A --Exemption--Interest on foreign currency deposits with scheduled banks--Disallowance of expenses--Matter remanded to Assessing Officer to compute disallowance under section 14A-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500
----Income not includible in total income--Disallowance of expenditure in relation to--Effect of rule 8D--Open to assessee to prove it had sufficient funds to finance tax-exempt investments and that no disallowance would arise on basis of general pool of funds hypothesis--Matter remanded to Assessing Officer to allow assessee opportunity to show why disallowance under section 14A(1) should not be worked out following proportionate method-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527
S. 23(1)(a), (b), (c) --Income from house property--Annual letting value--Vacancy allowance--Premises continuously let since 1997--Property lying vacant on expiry of lease in April, 2004--Vacancy allowance not allowable--No evidence to support value based on municipal rateable value on basis that the property subject to rent control legislation--Valuation to be on basis of sum for which property may be let--Assessing Officer fixing annual letting value based on rent fetched up to April, 2004--Reasonable-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527
S. 29 --Business loss--Provision for loss on account of revaluation of outstanding foreign exchange contracts--Allowable as a business loss-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500
S. 32 --Depreciation--Windmills--Higher rate of depreciation--Entitled to higher rate of depreciation-- Assistant CIT v. Rajave Textiles P. Ltd. (Chennai) . . . 475
S. 32(2) --Industrial undertaking--Special deduction--Deeming fiction that eligible business only source of income for previous year relevant to initial assessment year up to assessment year of determination of deduction under section 80-IA(1)--Scope of--Year of commencement of operations of eligible undertaking or enterprise is initial assessment year not first year of determination of deduction--Overriding effect of section 80-IA(5) limited to where allowance not already set-off against other income--Section 80-IA(5) being applicable for current year, set-off of loss/allowance against other income allowable-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527
S. 36(1)(vii) --Business expenditure--Bad debt--Banking company--Interest accrued and shown in books but not due--Deduction allowable-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500
S. 37 --Capital or revenue expenditure--Expenditure on installation of laser upgradation kit for eye surgery--Advanced technology used in line of business of assessee--Is revenue expenditure-- Dy. CIT v. Lasik Centre (India) P. Ltd. (Chennai) . . . 462
S. 70 --Industrial undertaking--Special deduction--Deeming fiction that eligible business only source of income for previous year relevant to initial assessment year up to assessment year of determination of deduction under section 80-IA(1)--Scope of--Year of commencement of operations of eligible undertaking or enterprise is initial assessment year not first year of determination of deduction--Overriding effect of section 80-IA(5) limited to where allowance not already set-off against other income--Section 80-IA(5) being applicable for current year, set-off of loss/allowance against other income allowable-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527
S. 71 --Industrial undertaking--Special deduction--Deeming fiction that eligible business only source of income for previous year relevant to initial assessment year up to assessment year of determination of deduction under section 80-IA(1)--Scope of--Year of commencement of operations of eligible undertaking or enterprise is initial assessment year not first year of determination of deduction--Overriding effect of section 80-IA(5) limited to where allowance not already set-off against other income--Section 80-IA(5) being applicable for current year, set-off of loss/allowance against other income allowable-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527
S. 72 --Industrial undertaking--Special deduction--Deeming fiction that eligible business only source of income for previous year relevant to initial assessment year up to assessment year of determination of deduction under section 80-IA(1)--Scope of--Year of commencement of operations of eligible undertaking or enterprise is initial assessment year not first year of determination of deduction--Overriding effect of section 80-IA(5) limited to where allowance not already set-off against other income--Section 80-IA(5) being applicable for current year, set-off of loss/allowance against other income allowable-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527
S. 80B(5) --Industrial undertaking--Special deduction--Deeming fiction that eligible business only source of income for previous year relevant to initial assessment year up to assessment year of determination of deduction under section 80-IA(1)--Scope of--Year of commencement of operations of eligible undertaking or enterprise is initial assessment year not first year of determination of deduction--Overriding effect of section 80-IA(5) limited to where allowance not already set-off against other income--Section 80-IA(5) being applicable for current year, set-off of loss/allowance against other income allowable-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527
S. 80G(5) --Donations to charitable institutions--Special deduction--Approval of institution--Renewal--Circular clarifying that existing approvals deemed to have been extended in perpetuity unless specifically withdrawn--Circular binding--Approval to continue-- Vishav Namdhari Sangat v. CIT (Chandigarh) . . . 468
S. 80-IA(1) --Industrial undertaking--Special deduction--Deeming fiction that eligible business only source of income for previous year relevant to initial assessment year up to assessment year of determination of deduction under section 80-IA(1)--Scope of--Year of commencement of operations of eligible undertaking or enterprise is initial assessment year not first year of determination of deduction--Overriding effect of section 80-IA(5) limited to where allowance not already set-off against other income--Section 80-IA(5) being applicable for current year, set-off of loss/allowance against other income allowable-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527
S. 80-IA(5) --Industrial undertaking--Special deduction--Deeming fiction that eligible business only source of income for previous year relevant to initial assessment year up to assessment year of determination of deduction under section 80-IA(1)--Scope of--Year of commencement of operations of eligible undertaking or enterprise is initial assessment year not first year of determination of deduction--Overriding effect of section 80-IA(5) limited to where allowance not already set-off against other income--Section 80-IA(5) being applicable for current year, set-off of loss/allowance against other income allowable-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527
----Reassessment--Reopening before expiry of four years--Nothing to show consideration of provision of section 80-IA(5) by Assessing Officer while framing original assessments--Reassessment proceedings rightly initiated-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527
S. 92CA --International transactions--Arm’s length price--Loan of money in foreign currency to foreign subsidiaries--Domestic prime lending rate not applicable--International rate, LIBOR, to be taken as benchmark--Assessee having an arrangement for loan with bank for less than 4 per cent. but for loans to associated enterprises charging 4 per cent. interest--Assessee’s profits exempt under section 10B--No case that assessee would benefit by shifting profits outside India--No adjustment for arm’s length price warranted-- Cotton Naturals (I) P. Ltd. v. Deputy CIT (Delhi) . . . 438
----International transactions--Determination of arm’s length price--Finding that comparison of transaction was possible--Transactional net margin method cannot be adopted--Matter remanded-- Delphi TVS Diesel Systems Ltd. v. Assistant CIT (Chennai) . . . 478
S. 115JA (as amended by Finance (No. 2) Act, 2009 with retrospective effect from April 1, 1998) --Company--Book profits--Provision for bad debts--To be added while computing book profits-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500
----Company--Minimum alternate tax--Commissioner (Appeals) holding provisions not applicable to assessee--Matter remanded for decision on question of applicability of provisions of section 115JA to assessee by speaking order-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500
S. 147 --Reassessment--Reopening before expiry of four years--Nothing to show consideration of provision of section 80-IA(5) by Assessing Officer while framing original assessments--Reassessment proceedings rightly initiated-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527
S. 271(1)(c) --Penalty--Concealment of income--Claim to depreciation on cost of development of portal and e-commerce site--Not a fixed asset under section 2(11)(b)--Penalty not leviable for wrong claim--Deletion of penalty--Justified-- Deputy CIT v. Hifunda Ltd. (Kolkata) . . . 488
R. 8D --Income not includible in total income--Disallowance of expenditure in relation to--Effect of rule 8D--Open to assessee to prove it had sufficient funds to finance tax-exempt investments and that no disallowance would arise on basis of general pool of funds hypothesis--Matter remanded to Assessing Officer to allow assessee opportunity to show why disallowance under section 14A(1) should not be worked out following proportionate method-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527
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