INCOME TAX REPORTS (ITR)
Volume 352 Part 5 (Issue dated 6-5-2013)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal to High Court --Substantial question of law--Concession recorded during course of hearing--Not to be disputed in appeal--Income-tax Act, 1961, s. 260A-- Dr. Gurvinder Singh Randhawa v . CIT (P&H) . . . 616
Business expenditure --Accounting--Expenses under heads provision for completed expenses and expenses incurred on completed projects --Allowable--Income-tax Act, 1961-- CIT v . Ansal Properties and Industries Ltd . (Delhi) . . . 637
----Disallowance--Maintenance of accommodation for employees and executives for duration of projects outside India--Intention of employer not to provide for guest house--Expenses allowable--Income-tax Act, 1961, s. 37(4), (5)-- CIT v . Ansal Properties and Industries Ltd . (Delhi) . . . 637
----Warranty--Provision for installation and service charges payable under warranty in respect of office equipment--Provision not made on any scientific data and past experience--Not allowable--Income-tax Act, 1961, s. 37-- CIT v . Forbes Campbell Finance Ltd. (Mad) . . . 602
Capital gains --Long-term capital gains--Principle of owelty--Family settlement--Payment to assessee to compensate inequalities in partition of assets--Amount paid is immovable property--No capital gains arise--Income-tax Act, 1961-- CIT v. Ashwani Chopra (P&H) . . . 620
----Transfer--Disputes among family members--Arbitration and family arrangement--Adjustment of shares among family members does not amount to transfer within the meaning of section 45--No capital gains arises--Income-tax Act, 1961, s. 45-- CIT v. R. Nagaraja Rao (Karn) . . . 565
Depreciation --Motor cars used outside India for business and commercial activities--Expenses for upkeeping vehicles--Entitled to depreciation--Income-tax Act, 1961, s. 32(1)(ii)-- CIT v . Ansal Properties and Industries Ltd . (Delhi) . . . 637
Export --Special deduction--Addition on account of surrendering amount as income on account of excess valuation of closing stock--Concurrent finding that assessee satisfied condition for grant of deduction to the extent of excess closing stock valuation--Assessee entitled to deduction--Income-tax Act, 1961, s. 80HHC-- CIT v . Haswani Arts (Raj) . . . 574
Income --Disallowance of expenditure in earning tax-free income--Assessee using its own funds for investments in shares and using borrowed funds entirely for its business purposes--No finding that any expenditure by way of interest was incurred in respect of investments--Disallowance under section 14A not justified--Income-tax Act, 1961, s. 14A-- CIT v . Gujarat Power Corporation Ltd . (Guj) . . . 583
Infrastructure facility --Special deduction--Explanation that person executing works contract not eligible for deduction--Intrinsic difference between developing infrastructure facility and executing works contract--Explanation clarificatory--Introduction in 2009 with effect from 2000--Not a case of retrospective levy or withdrawal of deduction with retrospective effect--Valid--Income-tax Act, 1961, s. 80-IA(4), (13), Expln.-- Katira Construction Ltd. v . Union of India (Guj) . . . 513
Interpretation of taxing statutes --Explanation--Scope of-- Katira Construction Ltd . v . Union of India (Guj) . . . 513
Legislative powers --Parliament--Taxation--Power to legislate with retrospective effect-- Katira Construction Ltd . v . Union of India (Guj) . . . 513
Penalty --Excess claim to depreciation--Wrong claim to loss as revenue expenditure--Mistakes rectified during assessment proceedings since time to file revised return expired--No dispute that mistake bona fide--No penalty leviable--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Somany Evergree Knits Ltd . (Bom) . . . 592
----Furnishing inaccurate particulars--Property held as stock-in-trade--Conversion of stock-in-trade into investment just before sale of property to pay lower tax--Furnishing inaccurate particulars of income--Levy of penalty justified--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Splender Construction (Delhi) . . . 588
Reassessment --Condition precedent--Tangible material regarding escapement of income--Reason for notice must be given and objections disposed of by speaking order--Special deduction under section 80-IB(10) granted in original assessment--Reassessment withdrawing special deduction--Objections not heard--Order of reassessment--Not valid--Income-tax Act, 1961, ss. 80-IB(10), 147, 148-- Vishwanath Engineers v . Asst. CIT (Guj) . . . 549
----Writ--Existence of alternative remedy--Not an absolute bar for issue of writ--Appeal subsequent to filing of writ petition--Petition admitted and affidavit filed--Writ petition could not be dismissed--Income-tax Act, 1961, s. 148--Constitution of India, art. 226-- Vishwanath Engineers v . Asst. CIT (Guj) . . . 549
Residence --Conditions precedent for considering Indian citizen or person of Indian origin a resident--Residence in India for a period exceeding 365 days in the immediately preceding four years and residence during previous year for period of 182 days--Conditions cumulative--Individual residing in India for more than 365 days in immediately preceding four years but residing for less than 182 days in previous year--Not a resident--Income-tax Act, 1961, s. 6-- CIT v . Suresh Nanda (Delhi) . . . 611
Search and seizure --Retention of seized assets--Dispute between assessee and its partners regarding ownership of seized jewellery--Suit pending before civil court--High Court setting aside order of Commissioner entrusting jewellery to one partner and remanding matter for redetermination--Order of Commissioner treating jewellery as belonging to one partner and levying interest under section 220(2)--Power of Commissioner to waive or reduce interest--Matter remanded--Income-tax Act, 1961, ss. 132, 132B, 220(2)--R oxy Industrial Corporation v. CIT (P&H) . . . 569
Settlement of cases --Settlement Commission--Power of review--Rectification of mistakes--Order of Commission charging interest contrary to Circular and decision of Supreme Court--Revision of order by way of rectification--Impermissible--Income-tax Act, 1961, ss. 154, 245D-- Smt. U. Narayanamma v. Government of India
(AP) . . . 598
Undisclosed income --Assessee a surgeon--Addition on account of undisclosed surgeries--Tribunal reducing average rate of surgery than that declared by assessee--Average rate of surgery based upon number of surgeries performed by assessee in one year and income earned therefrom--Assessee not entitled to contend that flat rate applied by Tribunal arbitrary--Income-tax Act, 1961-- Dr. Gurvinder Singh Randhawa v . CIT (P&H) . . . 616
Unexplained investment --Investment in property--No evidence that extra consideration received--Addition to income based solely on report of District Valuation Officer--Not valid--Income-tax Act, 1961, s. 69B-- CIT v . Sadhna Gupta
(Delhi) . . . 595
----Unexplained expenditure--Effect of section 69B--Condition precedent for application of provision--No evidence to establish understatement of purchase price--No addition by treating investment as undisclosed--Wealth-tax Act, 1957, Sch. III, r. 3--Income-tax Act, 1961, s. 69B-- CIT v . Dinesh Jain (HUF) (Delhi) . . . 629
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Art. 226 --Reassessment--Writ--Existence of alternative remedy--Not an absolute bar for issue of writ--Appeal subsequent to filing of writ petition--Petition admitted and affidavit filed--Writ petition could not be dismissed-- Vishwanath Engineers v . Asst. CIT (Guj) . . . 549
S. 6 --Residence--Conditions precedent for considering Indian citizen or person of Indian origin a resident--Residence in India for a period exceeding 365 days in the immediately preceding four years and residence during previous year for period of 182 days--Conditions cumulative--Individual residing in India for more than 365 days in immediately preceding four years but residing for less than 182 days in previous year--Not a resident-- CIT v . Suresh Nanda (Delhi) . . . 611
S. 14A --Income--Disallowance of expenditure in earning tax-free income--Assessee using its own funds for investments in shares and using borrowed funds entirely for its business purposes--No finding that any expenditure by way of interest was incurred in respect of investments--Disallowance under section 14A not justified-- CIT v . Gujarat Power Corporation Ltd . (Guj) . . . 583
S. 32(1)(ii) --Depreciation--Motor cars used outside India for business and commercial activities--Expenses for upkeeping vehicles--Entitled to depreciation-- CIT v . Ansal Properties and Industries Ltd . (Delhi) . . . 637
S. 37 --Business expenditure--Warranty--Provision for installation and service charges payable under warranty in respect of office equipment--Provision not made on any scientific data and past experience--Not allowable-- CIT v . Forbes Campbell Finance Ltd. (Mad) . . . 602
S. 37(4) --Business expenditure--Disallowance--Maintenance of accommodation for employees and executives for duration of projects outside India--Intention of employer not to provide for guest house--Expenses allowable-- CIT v . Ansal Properties and Industries Ltd . (Delhi) . . . 637
S. 37(5) --Business expenditure--Disallowance--Maintenance of accommodation for employees and executives for duration of projects outside India--Intention of employer not to provide for guest house--Expenses allowable-- CIT v . Ansal Properties and Industries Ltd . (Delhi) . . . 637
S. 45 --Capital gains--Transfer--Disputes among family members--Arbitration and family arrangement--Adjustment of shares among family members does not amount to transfer within the meaning of section 45--No capital gains arises-- CIT v. R. Nagaraja Rao (Karn) . . . 565
S. 69B --Unexplained investment--Investment in property--No evidence that extra consideration received--Addition to income based solely on report of District Valuation Officer--Not valid-- CIT v . Sadhna Gupta (Delhi) . . . 595
----Unexplained investment--Unexplained expenditure--Effect of section 69B--Condition precedent for application of provision--No evidence to establish understatement of purchase price--No addition by treating investment as undisclosed-- CIT v . Dinesh Jain (HUF) (Delhi) . . . 629
S. 80HHC --Export--Special deduction--Addition on account of surrendering amount as income on account of excess valuation of closing stock--Concurrent finding that assessee satisfied condition for grant of deduction to the extent of excess closing stock valuation--Assessee entitled to deduction-- CIT v . Haswani Arts (Raj) . . . 574
S. 80-IA(4) --Infrastructure facility--Special deduction--Explanation that person executing works contract not eligible for deduction--Intrinsic difference between developing infrastructure facility and executing works contract--Explanation clarificatory--Introduction in 2009 with effect from 2000--Not a case of retrospective levy or withdrawal of deduction with retrospective effect--Valid-- Katira Construction Ltd. v . Union of India (Guj) . . . 513
S. 80-IA(13), Expln. --Infrastructure facility--Special deduction--Explanation that person executing works contract not eligible for deduction--Intrinsic difference between developing infrastructure facility and executing works contract--Explanation clarificatory--Introduction in 2009 with effect from 2000--Not a case of retrospective levy or withdrawal of deduction with retrospective effect--Valid-- Katira Construction Ltd. v . Union of India (Guj) . . . 513
S. 80-IB(10) --Reassessment--Condition precedent--Tangible material regarding escapement of income--Reason for notice must be given and objections disposed of by speaking order--Special deduction under section 80-IB(10) granted in original assessment--Reassessment withdrawing special deduction--Objections not heard--Order of reassessment--Not valid-- Vishwanath Engineers v . Asst. CIT (Guj) . . . 549
S. 132 --Search and seizure--Retention of seized assets--Dispute between assessee and its partners regarding ownership of seized jewellery--Suit pending before civil court--High Court setting aside order of Commissioner entrusting jewellery to one partner and remanding matter for redetermination--Order of Commissioner treating jewellery as belonging to one partner and levying interest under section 220(2)--Power of Commissioner to waive or reduce interest--Matter remanded--R oxy Industrial Corporation v. CIT (P&H) . . . 569
S. 132B --Search and seizure--Retention of seized assets--Dispute between assessee and its partners regarding ownership of seized jewellery--Suit pending before civil court--High Court setting aside order of Commissioner entrusting jewellery to one partner and remanding matter for redetermination--Order of Commissioner treating jewellery as belonging to one partner and levying interest under section 220(2)--Power of Commissioner to waive or reduce interest--Matter remanded--R oxy Industrial Corporation v. CIT (P&H) . . . 569
S. 147 --Reassessment--Condition precedent--Tangible material regarding escapement of income--Reason for notice must be given and objections disposed of by speaking order--Special deduction under section 80-IB(10) granted in original assessment--Reassessment withdrawing special deduction--Objections not heard--Order of reassessment--Not valid-- Vishwanath Engineers v . Asst. CIT (Guj) . . . 549
S. 148 --Reassessment--Condition precedent--Tangible material regarding escapement of income--Reason for notice must be given and objections disposed of by speaking order--Special deduction under section 80-IB(10) granted in original assessment--Reassessment withdrawing special deduction--Objections not heard--Order of reassessment--Not valid-- Vishwanath Engineers v . Asst. CIT (Guj) . . . 549
----Reassessment--Writ--Existence of alternative remedy--Not an absolute bar for issue of writ--Appeal subsequent to filing of writ petition--Petition admitted and affidavit filed--Writ petition could not be dismissed-- Vishwanath Engineers v . Asst. CIT (Guj) . . . 549
S. 154 --Settlement of cases--Settlement Commission--Power of review--Rectification of mistakes--Order of Commission charging interest contrary to Circular and decision of Supreme Court--Revision of order by way of rectification--Impermissible-- Smt. U. Narayanamma v. Government of India (AP) . . . 598
S. 220(2) --Search and seizure--Retention of seized assets--Dispute between assessee and its partners regarding ownership of seized jewellery--Suit pending before civil court--High Court setting aside order of Commissioner entrusting jewellery to one partner and remanding matter for redetermination--Order of Commissioner treating jewellery as belonging to one partner and levying interest under section 220(2)--Power of Commissioner to waive or reduce interest--Matter remanded--R oxy Industrial Corporation v. CIT (P&H) . . . 569
S. 245D --Settlement of cases--Settlement Commission--Power of review--Rectification of mistakes--Order of Commission charging interest contrary to Circular and decision of Supreme Court--Revision of order by way of rectification--Impermissible-- Smt. U. Narayanamma v. Government of India (AP) . . . 598
S. 260A --Appeal to High Court--Substantial question of law--Concession recorded during course of hearing--Not to be disputed in appeal-- Dr. Gurvinder Singh Randhawa v . CIT (P&H) . . . 616
S. 271(1)(c) --Penalty--Excess claim to depreciation--Wrong claim to loss as revenue expenditure--Mistakes rectified during assessment proceedings since time to file revised return expired--No dispute that mistake bona fide--No penalty leviable-- CIT v. Somany Evergree Knits Ltd . (Bom) . . . 592
----Penalty--Furnishing inaccurate particulars--Property held as stock-in-trade--Conversion of stock-in-trade into investment just before sale of property to pay lower tax--Furnishing inaccurate particulars of income--Levy of penalty justified-- CIT v. Splender Construction (Delhi) . . . 588
Sch. III, r. 3 --Unexplained investment--Unexplained expenditure--Effect of section 69B--Condition precedent for application of provision--No evidence to establish understatement of purchase price--No addition by treating investment as undisclosed-- CIT v . Dinesh Jain (HUF) (Delhi) . . . 629
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 23 : Part 4 (Issue dated : 6-5-2013)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Advance tax --Interest--Company--Minimum alternate tax--Book profit--Provision for doubtful debts added back to book profits on basis of law amended retrospectively--No interest chargeable--As advance tax--Income-tax Act, 1961, s. 234B-- Garware Polyester Ltd. v. Assistant CIT (Mumbai) . . . 549
Business expenditure --Deduction only on actual payment--Exemption--Export of computer software--Provident fund contributions made before filing return--Allowable as business expenditure--If disallowed to be treated as business income under section 10A--Income-tax Act, 1961, ss. 10A, 43B-- Patni Telecom Solutions P. Ltd. v. ITO (Hyderabad) . . . 534
----Deduction only on actual payment--Payments to employees'€™ State corporation and provident fund--Payments made within grace period or within year itself or before filing return of income--Allowable--Income-tax Act, 1961, s. 43B-- Sonic Biochem Extractions P. Ltd. v. ITO (Mumbai) . . . 447
----Disallowance of travel expenses for want of details--System of reversing expenses in succeeding assessment years wherever not incurred--Assessing Officer to examine issue afresh and ascertain reasonableness of basis on which provision made--Matter remanded-- Trilogy E-Business Software India P. Ltd. v. Deputy CIT (Bangalore) . . . 464
----Disallowance--Royalty--Tax deduction at source--Purchase of software with hardware of computers--Claim to depreciation--No purchase of copyright--Does not involve commercial exploitation thereof--No intangible asset involved--Purchase of asset and claim to depreciation not covered under section 40(a)(ia) for disallowance--Income-tax Act, 1961, ss. 9(1)(vi), Expln. 2 , 40(a)(ia)-- Sonic Biochem Extractions P. Ltd. v. ITO (Mumbai) . . . 447
----Disallowance--Whether tax deducted at deposited in Government treasury before due date not clear--Direction to Assessing Officer to verify and decide under law--Matter remanded--Income-tax Act, 1961, ss. 40(a)(ia), 80-IB-- Deputy CIT v. Rameshbhai C. Prajapati (Ahmedabad) . . . 516
----Provision towards building registration charges--Disallowance--Provision reversed and offered to tax during assessment year 2009-10--Assessing Officer not to tax sum in 2009-10 as taxed by disallowance in present year-- Trilogy E-Business Software India P. Ltd. v. Deputy CIT (Bangalore) . . . 464
----Repairs, telephone expenses, vehicle expenses and expenses on repairs and maintenance of machines and building--Ad hoc disallowances for personal use by employees and directors--Assessee a public limited company and maintaining books of account and these audited--Question of any element of personal nature does not arise--Expenditure to be allowed--Income-tax Act, 1961, s. 37-- Sonic Biochem Extractions P. Ltd. v. ITO (Mumbai) . . . 447
----Sums written off of as unrecoverable--All details furnished--Deduction allowable.--Income-tax Act, 1961-- Sonic Biochem Extractions P. Ltd. v. ITO (Mumbai) . . . 447
Business loss --Goods damaged in fire in plant--Assessee making assessment of damages and debiting to profit and loss account--Insurance company paying reduced amount--Difference between sum debited and received claim--Revenue expenditure--Assessing Officer to examine actual amounts incurred by assessee and determine actual loss--Income-tax Act, 1961, ss. 30, 31-- Sonic Biochem Extractions P. Ltd. v. ITO (Mumbai) . . . 447
Cash credit --Burden of proof--Initial burden on assessee to prove genuineness of credit--Details of creditorsbank accounts not enough to fulfil ingredients of section 68--Addition justified--Income-tax Act, 1961, s. 68-- ITO v. Gayatri Associates (Hyderabad) . . . 528
Closing stock --Packing material on which batch numbers and price printed and having no value to assessee after lapse of time--Assessee devaluing inventory at Re. 1--To be allowed deduction--Income-tax Act, 1961, s. 145A-- Sonic Biochem Extractions P. Ltd. v. ITO (Mumbai) . . . 447
Depreciation --Refinery discontinued during year--Assets forming part of block of assets--Even if some assets in block functioning, entire block to be allowed depreciation--Income-tax Act, 1961, s. 32-- Sonic Biochem Extractions P. Ltd. v. ITO (Mumbai) . . . 447
----Technical know-how--Chart submitted by assessee--If depreciation claimed on technical know-how different from one-sixth deduction claimed under section 35AB, depreciation to be allowed--Income-tax Act, 1961, ss. 32, 35AB-- Garware Polyester Ltd. v. Assistant CIT (Mumbai) . . . 549
Exemption --Export of computer software--Export turnover--Expenses in foreign exchange on travelling expenses and internet charges for providing technical services--Internet charges on development of software--To be included--Allowable--Income-tax Act, 1961, s. 10A, Expln. 2(iv) -- Patni Telecom Solutions P. Ltd. v. ITO (Hyderabad) . . . 534
Export --Special deduction under section 80HHC--Sale of music rights--Assessee producing evidence regarding delivery of master tapes and receipt of foreign exchange within time and certificates of foreign inward remittance--Entitled to deduction--Income-tax Act, 1961, s. 80HHC-- Deputy CIT v. K. J. Yesudoss (Chennai) . . . 540
----Special deduction--Book profit--Deduction under section 80HHC to be computed in accordance with ruling of Supreme Court in Ajanta Pharma --Income-tax Act, 1961, ss. 80HHC, 115JB-- Garware Polyester Ltd. v. Assistant CIT (Mumbai) . . . 549
Housing projects --Special deduction--Profits of business--Expenditure disallowed under section 40(a)(ia)--Not to be included in profits eligible for special deduction--Income-tax Act, 1961, ss. 40(a)(ia), 80-IB-- Deputy CIT v. Rameshbhai C. Prajapati (Ahmedabad) . . . 516
Income-tax survey --Statement made by assessee during survey operations--Failure by Department to collect material during survey--Statement no evidentiary value--Addition to be deleted --Income-tax Act, 1961, s. 133A-- Mahesh Ohri v. Assistant CIT (Delhi) . . . 522
Industrial undertaking --Special deduction under section 80-IB --Findings of Commissioner (Appeals) that shops located on ground floor covered 2 per cent. of built-up area--Deduction allowable--Income-tax Act, 1961, s. 80-IB-- Deputy CIT v. Rameshbhai C. Prajapati (Ahmedabad) . . . 516
Interest on borrowed capital --Interest relating to capital work-in-progress--Not allowable--Matter remanded to give opportunity to assessee to give date-wise details of expenditure--Income-tax Act, 1961, s. 36(1)(iii)-- Garware Polyester Ltd. v. Assistant CIT (Mumbai) . . . 549
International transactions --Arm's length price--Research and development expenses for developing new products in domestic markets--Not considered as part of cost--Assesses€™s submission that expenses incurred for website development--Contrary--Matter remanded for consideration afresh-- Trilogy E-Business Software India P. Ltd. v. Deputy CIT (Bangalore) . . . 464
----Arm's length price--Determination--Comparable uncontrolled price--To examine whether there were any internal or external comparables--High degree of comparability necessary--Many variables for applying comparable uncontrolled price--Rejection of one method--Authority bound to adopt another from most appropriate methods'€ --Matter remanded to Transfer Pricing Officer to examine Arm's length price adopting transactional net margin method and carry out fresh comparability analysis--Commissioner--Functional analysis of agency agreements assessee with associated enterprises and with non-associated enterprises--Cost to be incurred by associated enterprises and risk assumed far more--Rate of 10 per cent. reasonable--Benefit of 5 per cent. in terms of proviso to section 92C not a standard deduction--Income-tax Act, 1961, s. 92C(2)--Income-tax Rules, 1962, r. 10B-- Garware Polyester Ltd. v. Assistant CIT (Mumbai) . . . 549
----Arm's length price--Determination--Transactional net margin method--Selection of comparables--Turnover filter important--No bar to considering companies with either abnormal profits or abnormal losses--Assessee to demonstrate abnormal factors if it seeks to exclude comparable--Onsite and offshore services--Assets and risk profile, pricing, prevailing market conditions different--Onsite revenue filter to be applied--Functional comparability--Foreign exchange gain/loss to be added to operating revenue--Fringe benefit tax not considered part of operating cost of comparables--Not to be considered part of operating cost of assessee--Information collected under section 133(6)--Assessee cannot ask for right to cross examine company--Comparability of company neither considered by Transfer Pricing Officer nor Dispute Resolution Panel--Tribunal would not consider--Income-tax Act, 1961, s. 92CA--Income-tax Rules, 1962, r. 10B-- Trilogy E-Business Software India P. Ltd. v. Deputy CIT (Bangalore) . . . 464
Penalty --Concealment of income--Assessee furnishing income-tax particulars as well as declarations for receiving gifts from donors along with their balance-sheets--Explanation bona fide--Penalty not exigible--Income-tax Act, 1961, s. 271(1)(c)-- Sushil Kumar Modi v. Assistant CIT (Jaipur) . . . 513
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 9(1)(vi), Expln. 2 --Business expenditure--Disallowance--Royalty--Tax deduction at source--Purchase of software with hardware of computers--Claim to depreciation--No purchase of copyright--Does not involve commercial exploitation thereof--No intangible asset involved--Purchase of asset and claim to depreciation not covered under section 40(a)(ia) for disallowance-- Sonic Biochem Extractions P. Ltd. v. ITO (Mumbai) . . . 447
S. 10A --Business expenditure--Deduction only on actual payment--Exemption--Export of computer software--Provident fund contributions made before filing return--Allowable as business expenditure--If disallowed to be treated as business income under section 10A-- Patni Telecom Solutions P. Ltd. v. ITO (Hyderabad) . . . 534
S. 10A, Expln. 2(iv) --Exemption--Export of computer software--Export turnover--Expenses in foreign exchange on travelling expenses and internet charges for providing technical services--Internet charges on development of software--To be included--Allowable--Income-tax Act, 1961, Patni Telecom Solutions P. Ltd. v. ITO (Hyderabad) . . . 534
S. 30 --Business loss--Goods damaged in fire in plant--Assessee making assessment of damages and debiting to profit and loss account--Insurance company paying reduced amount--Difference between sum debited and received claim--Revenue expenditure--Assessing Officer to examine actual amounts incurred by assessee and determine actual loss-- Sonic Biochem Extractions P. Ltd. v. ITO (Mumbai) . . . 447
S. 31 --Business loss--Goods damaged in fire in plant--Assessee making assessment of damages and debiting to profit and loss account--Insurance company paying reduced amount--Difference between sum debited and received claim--Revenue expenditure--Assessing Officer to examine actual amounts incurred by assessee and determine actual loss-- Sonic Biochem Extractions P. Ltd. v. ITO (Mumbai) . . . 447
S. 32 --Depreciation--Refinery discontinued during year--Assets forming part of block of assets--Even if some assets in block functioning, entire block to be allowed depreciation-- Sonic Biochem Extractions P. Ltd. v. ITO (Mumbai) . . . 447
----Depreciation--Technical know-how--Chart submitted by assessee--If depreciation claimed on technical know-how different from one-sixth deduction claimed under section 35AB, depreciation to be allowed-- Garware Polyester Ltd. v. Assistant CIT (Mumbai) . . . 549
S. 35AB --Depreciation--Technical know-how--Chart submitted by assessee--If depreciation claimed on technical know-how different from one-sixth deduction claimed under section 35AB, depreciation to be allowed-- Garware Polyester Ltd. v. Assistant CIT (Mumbai) . . . 549
S. 36(1)(iii) --Interest on borrowed capital--Interest relating to capital work-in-progress--Not allowable--Matter remanded to give opportunity to assessee to give date-wise details of expenditure-- Garware Polyester Ltd. v. Assistant CIT (Mumbai) . . . 549
S. 37 --Business expenditure--Repairs, telephone expenses, vehicle expenses and expenses on repairs and maintenance of machines and building--Ad hoc disallowances for personal use by employees and directors--Assessee a public limited company and maintaining books of account and these audited--Question of any element of personal nature does not arise--Expenditure to be allowed-- Sonic Biochem Extractions P. Ltd. v. ITO (Mumbai) . . . 447
S. 40(a)(ia) --Business expenditure--Disallowance--Royalty--Tax deduction at source--Purchase of software with hardware of computers--Claim to depreciation--No purchase of copyright--Does not involve commercial exploitation thereof--No intangible asset involved--Purchase of asset and claim to depreciation not covered under section 40(a)(ia) for disallowance-- Sonic Biochem Extractions P. Ltd. v. ITO (Mumbai) . . . 447
----Business expenditure--Disallowance--Whether tax deducted at deposited in Government treasury before due date not clear --Direction to Assessing Officer to verify and decide under law--Matter remanded-- Deputy CIT v. Rameshbhai C. Prajapati (Ahmedabad) . . . 516
----Housing projects--Special deduction--Profits of business--Expenditure disallowed under section 40(a)(ia)--Not to be included in profits eligible for special deduction-- Deputy CIT v. Rameshbhai C. Prajapati (Ahmedabad) . . . 516
S. 43B --Business expenditure--Deduction only on actual payment--Exemption--Export of computer software--Provident fund contributions made before filing return--Allowable as business expenditure--If disallowed to be treated as business income under section 10A-- Patni Telecom Solutions P. Ltd. v. ITO (Hyderabad) . . . 534
----Business expenditure--Deduction only on actual payment--Payments to employees'€™ State corporation and provident fund--Payments made within grace period or within year itself or before filing return of income--Allowable-- Sonic Biochem Extractions P. Ltd. v. ITO (Mumbai) . . . 447
S. 68 --Cash credit--Burden of proof--Initial burden on assessee to prove genuineness of credit--Details of creditorsbank accounts not enough to fulfil ingredients of section 68--Addition justified-- ITO v. Gayatri Associates (Hyderabad) . . . 528
S. 80HHC --Export--Special deduction--Book profit--Deduction under section 80HHC to be computed in accordance with ruling of Supreme Court in Ajanta Pharma -- Garware Polyester Ltd. v. Assistant CIT (Mumbai) . . . 549
----Export--Special deduction under section 80HHC--Sale of music rights--Assessee producing evidence regarding delivery of master tapes and receipt of foreign exchange within time and certificates of foreign inward remittance--Entitled to deduction-- Deputy CIT v. K. J. Yesudoss (Chennai) . . . 540
S. 80-IB --Business expenditure--Disallowance--Whether tax deducted at deposited in Government treasury before due date not clear --Direction to Assessing Officer to verify and decide under law--Matter remanded-- Deputy CIT v. Rameshbhai C. Prajapati (Ahmedabad) . . . 516
----Housing projects--Special deduction--Profits of business--Expenditure disallowed under section 40(a)(ia)--Not to be included in profits eligible for special deduction-- Deputy CIT v. Rameshbhai C. Prajapati (Ahmedabad) . . . 516
----Industrial undertaking--Special deduction under section 80-IB--Findings of Commissioner (Appeals) that shops located on ground floor covered 2 per cent. of built-up area--Deduction allowable-- Deputy CIT v. Rameshbhai C. Prajapati (Ahmedabad) . . . 516
S. 92C(2) --International transaction--Arm's length price--Determination--Comparable uncontrolled price--To examine whether there were any internal or external comparables--High degree of comparability necessary--Many variables for applying comparable uncontrolled price--Rejection of one method--Authority bound to adopt another from most appropriate methods'€ --Matter remanded to Transfer Pricing Officer to examine Arm's length price adopting transactional net margin method and carry out fresh comparability analysis--Commissioner--Functional analysis of agency agreements assessee with associated enterprises and with non-associated enterprises--Cost to be incurred by associated enterprises and risk assumed far more--Rate of 10 per cent. reasonable--Benefit of 5 per cent. in terms of proviso to section 92C not a standard deduction-- Garware Polyester Ltd. v. Assistant CIT (Mumbai) . . . 549
S. 92CA --International transactions--Arm's length price--Determination--Transactional net margin method--Selection of comparables--Turnover filter important--No bar to considering companies with either abnormal profits or abnormal losses--Assessee to demonstrate abnormal factors if it seeks to exclude comparable--Onsite and offshore services--Assets and risk profile, pricing, prevailing market conditions different--Onsite revenue filter to be applied--Functional comparability--Foreign exchange gain/loss to be added to operating revenue--Fringe benefit tax not considered part of operating cost of comparables--Not to be considered part of operating cost of assessee--Information collected under section 133(6)--Assessee cannot ask for right to cross examine company--Comparability of company neither considered by Transfer Pricing Officer nor Dispute Resolution Panel--Tribunal would not consider-- Trilogy E-Business Software India P. Ltd. v. Deputy CIT (Bangalore) . . . 464
S. 115JB --Export--Special deduction--Book profit--Deduction under section 80HHC to be computed in accordance with ruling of Supreme Court in Ajanta Pharma -- Garware Polyester Ltd. v. Assistant CIT (Mumbai) . . . 549
S. 133A --Income-tax survey--Statement made by assessee during survey operations--Failure by Department to collect material during survey--Statement no evidentiary value--Addition to be deleted-- Mahesh Ohri v. Assistant CIT (Delhi) . . . 522
S. 145A --Closing stock--Packing material on which batch numbers and price printed and having no value to assessee after lapse of time--Assessee devaluing inventory at Re. 1--To be allowed deduction-- Sonic Biochem Extractions P. Ltd. v. ITO (Mumbai) . . . 447
S. 234B --Advance tax--Interest--Company--Minimum alternate tax--Book profit--Provision for doubtful debts added back to book profits on basis of law amended retrospectively--No interest chargeable--As advance tax-- Garware Polyester Ltd. v. Assistant CIT (Mumbai) . . . 549
S. 271(1)(c) --Penalty--Concealment of income--Assessee furnishing income-tax particulars as well as declarations for receiving gifts from donors along with their balance-sheets--Explanation bona fide--Penalty not exigible-- Sushil Kumar Modi v. Assistant CIT (Jaipur) . . . 513
R. 10B --International transaction--Arm's length price--Determination--Comparable uncontrolled price--To examine whether there were any internal or external comparables--High degree of comparability necessary--Many variables for applying comparable uncontrolled price--Rejection of one method--Authority bound to adopt another from most appropriate methods'€ --Matter remanded to Transfer Pricing Officer to examine Arm's length price adopting transactional net margin method and carry out fresh comparability analysis--Commissioner--Functional analysis of agency agreements assessee with associated enterprises and with non-associated enterprises--Cost to be incurred by associated enterprises and risk assumed far more--Rate of 10 per cent. reasonable--Benefit of 5 per cent. in terms of proviso to section 92C not a standard deduction-- Garware Polyester Ltd. v. Assistant CIT (Mumbai) . . . 549
----International transactions--Arm's length price--Determination--Transactional net margin method--Selection of comparables--Turnover filter important--No bar to considering companies with either abnormal profits or abnormal losses--Assessee to demonstrate abnormal factors if it seeks to exclude comparable--Onsite and offshore services--Assets and risk profile, pricing, prevailing market conditions different--Onsite revenue filter to be applied--Functional comparability--Foreign exchange gain/loss to be added to operating revenue--Fringe benefit tax not considered part of operating cost of comparables--Not to be considered part of operating cost of assessee--Information collected under section 133(6)--Assessee cannot ask for right to cross examine company--Comparability of company neither considered by Transfer Pricing Officer nor Dispute Resolution Panel--Tribunal would not consider-- Trilogy E-Business Software India P. Ltd. v. Deputy CIT (Bangalore) . . . 464
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