INCOME TAX REPORTS (ITR)
Volume 354 Part 2 (Issue dated 3-6-2013)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Co-operative society --Special deduction--Marketing of agricultural produce of members--Co-operative sugar mill--Purchase of sugarcane grown by members for sugar mill--Final product sugar marketed by assessee whether agricultural produce of its members--Whether manufacture involved--Tests--Matter remanded to Commissioner (Appeals)--Income-tax Act, 1961, s. 80P(2)(a)(iii)-- Morinda Co-operative Sugar Mills Ltd . v .CIT . . . 230
Deduction of tax at source --Failure to deduct tax at source and remit to Central Government--Interim order by High Court in writ petition by employees directing employer not to deduct tax--Writ petition ultimately dismissed and interim order vacated with direction to employer to quantify tax deductible at source and pay it--Failure by employer to do so--Employer not in default for period during which interim order of High Court in operation--Employer in default for period starting from date of vacation of interim order--Liable to pay interest for that period--Income-tax Act, 1961, ss. 192, 201(1A)-- Regional Director, ONGC Ltd . v .Association of Scientific and Technical Officers, ONGC Ltd . . . . 156
Export --Special deduction--Export of goods or merchandise--Leasing rights are goods--Transfer of such rights is sale--Income-tax Act, 1961, s. 80HHC-- CIT v . Romesh Sharma . . . 229
Industrial undertaking --Special deduction--Computation of profits--Duty drawback benefits not part of net profit--Not eligible for deduction--Income-tax Act, 1961, s. 80-IA-- CIT v. Orchev Pharma P. Ltd . . . . 227
Method of accounting --Valuation of closing stock--Excise duty--To be excluded--Income-tax Act, 1961--Asst. CIT v . T orrent Cables Ltd . . . . 163
Perquisite --Deduction of tax at source--Writ petition by employer against order treating it as assessee in default--Contention taken by association of employees that value of accommodation provided by employer not really a concession and not taxable as perquisite--Court will not decide--Employee to take contention in assessment proceedings--Income-tax Act, 1961, s. 17-- Regional Director, ONGC Ltd . v . Association of Scientific and Technical Officers, ONGC Ltd. . . . 156
Reassessment --Notice--Writ--High Court--No reasons stated for dismissal of writ petition by assessee--Order set aside and matter remanded for consideration afresh--Income-tax Act, 1961, s. 148--Constitution of India, art. 226-- Parvez Nazir Hussein Jafri v . CIT . . . 235
Words and phrases --“Manufacture†-- Morinda Co-operative Sugar Mills Ltd . v . CIT . . . 230
Accounting --Rejection of accounts--Sales declared before sales tax authorities--No material to show quantum of sales outside books of account--Estimation of more than one and half times sales declared by assessee--Not justified--Applying gross profit of twenty-five per cent.--Proper--Income-tax Act, 1961, s. 145-- CIT v . Mahan Marbles Pvt. Ltd. (Raj) . . . 238
Advance tax --Interest--Non-resident--Failure by payer to deduct tax at source--Interest not chargeable under section 234B--Income-tax Act, 1961, s. 234B-- Director of Income-tax (International Taxation) v .Krupp Udhe GMBH (Bom) . . . 173
Appeal to Appellate Tribunal --Remand--Denial of deductions under sections 80HH, 80-I and 80-IA--Tribunal remanding matter for fresh adjudication--Assessing Officer dealing only with issue of allowability of deduction--Appeal from order pending before Tribunal--Writ petition after five years contending all grounds of appeal open under order of remand by Tribunal--Assessee failing to adopt remedy under section 254(2)--No valid explanation for delay--Assessee not entitled to relief--Income-tax Act, 1961, s. 254(2)--Bharat Petroleum Corporation Ltd . v . ITAT (Bom) . . . 165
Books of account --Rejection of--Profit ratio low in comparison to that of earlier year--Failure to consider purchase of coal in relevant years--Matter remanded--Income-tax Act, 1961, s. 145(1)-- Mahakoshal Pottaries v . CIT (MP) . . . 149
Business expenditure --Accounting--Expenses under heads “provisions for completed expenses and expenses incurred on completed project†--Allowable--Income-tax Act, 1961, s. 37-- CIT v . Ansal Housing Finance and Leasing Co. Ltd.
(Delhi) . . . 180
----Accrued or contigent liability--Revision--Commissioner--Powers--Provision for warranty cost--Method of making provision neither explained by assessee before Tribunal nor examined by Assessing Officer--Commissioner directing Assessing Officer to quantify correct amount of provision for warranty cost--Tribunal finding liability unascertained contingent liability--Justified--Income-tax Act, 1961, s. 263--Renowned Auto Products Mfrs. Ltd . v . ITO (Mad) . . . 127
----Disallowance--Payments liable to tax deduction at source--Law applicable--Change of law--Assessee not complying with requirement when filing return of crediting tax deducted at source to Government within seven days--Provision amended subsequently with retrospective effect permitting payment up to due date for filing return--Appellate authorities extending benefit of amended provision--Justified--Income-tax Act, 1961, s. 40(a)(ia)-- ITO v . Anil Kumar and Co . (Karn) . . . 170
----Disallowance--Transit accommodation for employees--Intention of employer not to provide guest house--Expenses allowable--Income-tax Act, 1961, s. 37(4), (5)-- CIT v . Ansal Housing Finance And Leasing Co. Ltd. (Delhi) . . . 180
Capital gains --Cost of acquisition--Self-generated asset--Sum received on termination of tenancy--No proof of payment of pugree--Entire sum taxable--Income-tax Act, 1961, s. 55-- P. Kunhiraman Nair v . CIT (Ker) . . . 141
Charitable purpose --Exemption--Condition precedent--Trust applying for registration within nine months of its formation--Objects for which trust formed to be examined--Activities of trust not a criterion--Denial of registration on ground no activity of charity commenced--Not justified--Income-tax Act, 1961, s. 12AA(3)--Director of Income-tax (Exemptions) v . Meenakshi Amma Endowment Trust
(Karn) . . . 219
Depreciation --Higher rate of depreciation--Construction business--Scaffolding and shuttering--Value written off within couple of years--Entitled to 100 per cent. depreciation--Income-tax Act, 1961-- CIT v .Ansal Housing Finance and Leasing Co. Ltd .
(Delhi) . . . 180
----Motor cars purchased and used outside India for business activities--Expenses for upkeep of vehicles--Entitled to depreciation--Income-tax Act, 1961, s. 32(1)(ii)-- CIT v. Ansal Housing Finance and Leasing Co. Ltd . (Delhi) . . . 180
Housing project --Special deduction--Specification of area of residential unit--Meaning of “built-up area†--Inner measurement of residential unit at floor level to be taken into consideration--Common areas like balconies even if shared with one other person to be excluded--Income-tax Act, 1961, s. 80-IB--Circular No. 5 of 2010, dated 3-6-2010-- CIT v . Raghavendra Constructions (Karn) . . . 194
Income --Interest--Assessability--Assessee-company promoted by State Government to augment power supply--Amounts received from Government towards share capital--Interest earned on deposit for short-term--Agreement between assessee and Government that interest would belong to State Government--Interest not assessable in hands of assessee--Income-tax Act, 1961-- Gujarat Power Corporation Ltd. v . ITO
(Guj) . . . 201
Income from house property --Construction business--Unsold flats--Intention of developer to hold properties till sold--†Own†occupation for business purposes--Tax payable on annual letting value--Income-tax Act, 1961-- CIT v. Ansal Housing Finance and Leasing Co. Ltd. (Delhi) . . . 180
Income-tax survey --Scope of section 133A--Distinction between statement recorded under section 132(4) and section 133A--Statement in survey operations--Not conclusive piece of evidence--Statement recorded under section 133A not recorded on oath--No evidentiary value--Income-tax Act, 1961, ss. 132(4), 133A, 271(1)(c)-- CIT v. P. Balasubramanian (Mad) . . . 116
----Statement recorded under section 133A--Evidentiary value only if supported by materials and forms basis for assessment--Assessee doing business in gold jewels on job work basis giving remaining gold to goldsmiths--No verification whether gold available with goldsmiths--Statement in respect of remaining gold not substantiated--Addition in respect of remaining gold not justified--Income-tax Act, 1961, s. 133A-- CIT v. P. Balasubramanian (Mad) . . . 116
Interest on borrowed capital --Interest-free loans to sister concerns--Huge funds available with assessee without any interest liability--No evidence that borrowed money utilised for purpose of advance to sister concerns--Interest allowable--Income-tax Act, 1961-- CIT v . Raghuvir Synthetics Ltd . (Guj) . . . 222
Investment deposit account --Eligibility to claim benefit not in issue before authorities--Deduction of interest justified--Income-tax Act, 1961, s. 32AB-- CIT v . Ansal Housing Finance and Leasing Co. Ltd . (Delhi) . . . 180
Non-resident --Technicians deputed to India in connection with supply of machinery--Reimbursement of expenses for air tickets--Not income-- Director of Income-tax (International Taxation) v . Krupp Udhe GMBH(Bom) . . . 173
Reassessment --Notice within four years--Change of opinion--Maintenance contribution--Nature of expenditure examined in original assessment and expenditure treated as business expenditure--Reopening of assessment to disallow such expenditure--Impermissible--Income-tax Act, 1961, ss. 147, 148--Vishwanath Engineers v . Asst. CIT (Guj) . . . 211
Recovery of tax --Stay of recovery during pendency of appeal--Assessee should not be treated as defaulter--Attachment of bank account--Commissioner (Appeals) directed to consider application for stay of recovery--No coercive action till decision of Commissioner (Appeals)--Income-tax Act, 1961, ss. 220(6), 256(6A)--Sanjay Kumar Sahu v. ITO (MP) . . . 177
Search and seizure --Retention of seized articles--Retention only as long as there is outstanding demand of tax and penalty--No outstanding demand for tax or penalty--Retention not valid--Assessee cannot be asked to give bank guarantee to extent of seized articles--Income-tax Act, 1961--Circular dated 21-1-2009-- Smt. Bhawna Lodha v . Director General of Income-tax (Raj) . . . 134
----Undisclosed income--Addition on account of cash deposits admitted by assessee during course of search--No evidence to show that amount belonged to his daughter as she was employed in a bank--Addition justified--Income-tax Act, 1961, s. 131-- P. Kunhiraman Nair v . CIT (Ker) . . . 141
Writ --Alternative remedy--Reassessment--Notice--Assessing Officer ignoring Supreme Court directives while disposing of objections before finalising reassessment--Revenue cannot contend that assessee should be relegated to remedy of appeal before appellate authorities--Constitution of India, art. 226--Income-tax Act, 1961, ss. 147, 148-- Vishwanath Engineers v . Asst. CIT (Guj) . . . 211
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Art. 226 --Reassessment--Notice--Writ--High Court--No reasons stated for dismissal of writ petition by assessee--Order set aside and matter remanded for consideration afresh-- Parvez Nazir Hussein Jafri v . CIT(SC) . . . 235
----Writ--Alternative remedy--Reassessment--Notice--Assessing Officer ignoring Supreme Court directives while disposing of objections before finalising reassessment--Revenue cannot contend that assessee should be relegated to remedy of appeal before appellate authorities-- Vishwanath Engineers v . Asst. CIT (Guj) . . . 211
S. 12AA(3) --Charitable purpose--Exemption--Condition precedent--Trust applying for registration within nine months of its formation--Objects for which trust formed to be examined--Activities of trust not a criterion--Denial of registration on ground no activity of charity commenced--Not justified-- Director of Income-tax (Exemptions) v . Meenakshi Amma Endowment Trust (Karn) . . . 219
S. 17 --Perquisite--Deduction of tax at source--Writ petition by employer against order treating it as assessee in default--Contention taken by association of employees that value of accommodation provided by employer not really a concession and not taxable as perquisite--Court will not decide--Employee to take contention in assessment proceedings-- Regional Director, ONGC Ltd . v . Association of Scientific and Technical Officers, ONGC Ltd. (SC) . . . 156
S. 32(1)(ii) --Depreciation--Motor cars purchased and used outside India for business activities--Expenses for upkeep of vehicles--Entitled to depreciation-- CIT v. Ansal Housing Finance and Leasing Co. Ltd . (Delhi) . . . 180
S. 32AB --Investment deposit account--Eligibility to claim benefit not in issue before authorities--Deduction of interest justified-- CIT v . Ansal Housing Finance and Leasing Co. Ltd . (Delhi) . . . 180
S. 37 --Business expenditure--Accounting--Expenses under heads “provisions for completed expenses and expenses incurred on completed project†--Allowable-- CIT v . Ansal Housing Finance and Leasing Co. Ltd. (Delhi) . . . 180
S. 37(4) --Business expenditure--Disallowance--Transit accommodation for employees--Intention of employer not to provide guest house--Expenses allowable-- CIT v . Ansal Housing Finance and Leasing Co. Ltd. (Delhi) . . . 180
S. 37(5) --Business expenditure--Disallowance--Transit accommodation for employees--Intention of employer not to provide guest house--Expenses allowable-- CIT v . Ansal Housing Finance and Leasing Co. Ltd. (Delhi) . . . 180
S. 40(a)(ia) --Business expenditure--Disallowance--Payments liable to tax deduction at source--Law applicable--Change of law--Assessee not complying with requirement when filing return of crediting tax deducted at source to Government within seven days--Provision amended subsequently with retrospective effect permitting payment up to due date for filing return--Appellate authorities extending benefit of amended provision--Justified-- ITO v . Anil Kumar and Co . (Karn) . . . 170
S. 55 --Capital gains--Cost of acquisition--Self-generated asset--Sum received on termination of tenancy--No proof of payment of pugree--Entire sum taxable-- P. Kunhiraman Nair v . CIT (Ker) . . . 141
S. 80HHC --Export--Special deduction--Export of goods or merchandise--Leasing rights are goods--Transfer of such rights is sale-- CIT v . Romesh Sharma
(SC) . . . 229
S. 80-IA --Industrial undertaking--Special deduction--Computation of profits--Duty drawback benefits not part of net profit--Not eligible for deduction-- CIT v . Orchev Pharma P. Ltd. (SC) . . . 227
S. 80-IB --Housing project--Special deduction--Specification of area of residential unit--Meaning of “built-up area†--Inner measurement of residential unit at floor level to be taken into consideration--Common areas like balconies even if shared with one other person to be excluded--Circular No. 5 of 2010, dated 3-6-2010-- CIT v . Raghavendra Constructions (Karn) . . . 194
S. 80P(2)(a)(iii) --Co-operative society--Special deduction--Marketing of agricultural produce of members--Co-operative sugar mill--Purchase of sugarcane grown by members for sugar mill--Final product sugar marketed by assessee whether agricultural produce of its members--Whether manufacture involved--Tests--Matter remanded to Commissioner (Appeals)-- Morinda Co-operative Sugar Mills Ltd . v . CIT
(SC) . . . 230
S. 131 --Search and seizure--Undisclosed income--Addition on account of cash deposits admitted by assessee during course of search--No evidence to show that amount belonged to his daughter as she was employed in a bank--Addition justified-- P. Kunhiraman Nair v . CIT (Ker) . . . 141
S. 132(4) --Income-tax survey--Scope of section 133A--Distinction between statement recorded under section 132(4) and section 133A--Statement in survey operations--Not conclusive piece of evidence--Statement recorded under section 133A not recorded on oath--No evidentiary value-- CIT v. P. Balasubramanian (Mad) . . . 116
S. 133A --Income-tax survey--Scope of section 133A--Distinction between statement recorded under section 132(4) and section 133A--Statement in survey operations--Not conclusive piece of evidence--Statement recorded under section 133A not recorded on oath--No evidentiary value-- CIT v. P. Balasubramanian (Mad) . . . 116
----Income-tax survey--Statement recorded under section 133A--Evidentiary value only if supported by materials and forms basis for assessment--Assessee doing business in gold jewels on job work basis giving remaining gold to goldsmiths--No verification whether gold available with goldsmiths--Statement in respect of remaining gold not substantiated--Addition in respect of remaining gold not justified-- CIT v . P. Balasubramanian (Mad) . . . 116
S. 145 --Accounting--Rejection of accounts--Sales declared before sales tax authorities--No material to show quantum of sales outside books of account--Estimation of more than one and half times sales declared by assessee--Not justified--Applying gross profit of twenty-five per cent.--Proper-- CIT v . Mahan Marbles Pvt. Ltd.
(Raj) . . . 238
S. 145(1) --Books of account--Rejection of--Profit ratio low in comparison to that of earlier year--Failure to consider purchase of coal in relevant years--Matter remanded-- Mahakoshal Pottaries v . CIT (MP) . . . 149
S. 147 --Reassessment--Notice within four years--Change of opinion--Maintenance contribution--Nature of expenditure examined in original assessment and expenditure treated as business expenditure--Reopening of assessment to disallow such expenditure--Impermissible-- Vishwanath Engineers v . Asst. CIT (Guj) . . . 211
----Writ--Alternative remedy--Reassessment--Notice--Assessing Officer ignoring Supreme Court directives while disposing of objections before finalising reassessment--Revenue cannot contend that assessee should be relegated to remedy of appeal before appellate authorities-- Vishwanath Engineers v . Asst. CIT (Guj) . . . 211
S. 148 --Reassessment--Notice--Writ--High Court--No reasons stated for dismissal of writ petition by assessee--Order set aside and matter remanded for consideration afresh-- Parvez Nazir Hussein Jafri v . CIT(SC) . . . 235
----Reassessment--Notice within four years--Change of opinion--Maintenance contribution--Nature of expenditure examined in original assessment and expenditure treated as business expenditure--Reopening of assessment to disallow such expenditure--Impermissible-- Vishwanath Engineers v . Asst. CIT (Guj) . . . 211
----Writ--Alternative remedy--Reassessment--Notice--Assessing Officer ignoring Supreme Court directives while disposing of objections before finalising reassessment--Revenue cannot contend that assessee should be relegated to remedy of appeal before appellate authorities-- Vishwanath Engineers v . Asst. CIT (Guj) . . . 211
S. 192 --Deduction of tax at source--Failure to deduct tax at source and remit to Central Government--Interim order by High Court in writ petition by employees directing employer not to deduct tax--Writ petition ultimately dismissed and interim order vacated with direction to employer to quantify tax deductible at source and pay it--Failure by employer to do so--Employer not in default for period during which interim order of High Court in operation--Employer in default for period starting from date of vacation of interim order--Liable to pay interest for that period-- Regional Director, ONGC Ltd . v . Association of Scientific and Technical Officers, ONGC Ltd .
(SC) . . . 156
S. 201(1A) --Deduction of tax at source--Failure to deduct tax at source and remit to Central Government--Interim order by High Court in writ petition by employees directing employer not to deduct tax--Writ petition ultimately dismissed and interim order vacated with direction to employer to quantify tax deductible at source and pay it--Failure by employer to do so--Employer not in default for period during which interim order of High Court in operation--Employer in default for period starting from date of vacation of interim order--Liable to pay interest for that period-- Regional Director, ONGC Ltd . v . Association of Scientific and Technical Officers, ONGC Ltd .
(SC) . . . 156
S. 220(6) --Recovery of tax--Stay of recovery during pendency of appeal--Assessee should not be treated as defaulter--Attachment of bank account--Commissioner (Appeals) directed to consider application for stay of recovery--No coercive action till decision of Commissioner (Appeals)-- Sanjay Kumar Sahu v. ITO (MP) . . . 177
S. 234B --Advance tax--Interest--Non-resident--Failure by payer to deduct tax at source--Interest not chargeable under section 234B-- Director of Income-tax (International Taxation) v . Krupp Udhe GMBH(Bom) . . . 173
S. 254(2) --Appeal to Appellate Tribunal--Remand--Denial of deductions under sections 80HH, 80-I and 80-IA--Tribunal remanding matter for fresh adjudication--Assessing Officer dealing only with issue of allowability of deduction--Appeal from order pending before Tribunal--Writ petition after five years contending all grounds of appeal open under order of remand by Tribunal--Assessee failing to adopt remedy under section 254(2)--No valid explanation for delay--Assessee not entitled to relief-- Bharat Petroleum Corporation Ltd . v . ITAT (Bom) . . . 165
S. 256(6A) --Recovery of tax--Stay of recovery during pendency of appeal--Assessee should not be treated as defaulter--Attachment of bank account--Commissioner (Appeals) directed to consider application for stay of recovery--No coercive action till decision of Commissioner (Appeals)-- Sanjay Kumar Sahu v. ITO (MP) . . . 177
S. 263 --Business expenditure--Accrued or contigent liability--Revision--Commissioner--Powers--Provision for warranty cost--Method of making provision neither explained by assessee before Tribunal nor examined by Assessing Officer--Commissioner directing Assessing Officer to quantify correct amount of provision for warranty cost--Tribunal finding liability unascertained contingent liability--Justified-- Renowned Auto Products Mfrs. Ltd . v . ITO (Mad) . . . 127
S. 271(1)(c) --Income-tax survey--Scope of section 133A--Distinction between statement recorded under section 132(4) and section 133A--Statement in survey operations--Not conclusive piece of evidence--Statement recorded under section 133A not recorded on oath--No evidentiary value-- CIT v. P. Balasubramanian
(Mad) . . . 116
Volume 24 : Part 1 (Issue dated : 3-6-2013)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal to Appellate Tribunal --Appeal from revision--Assessee not challenging issue before Commissioner--Not entitled to reargue issue before Tribunal-- Leo Meridian Infrastructure Projects and Hotels Ltd. v.Deputy CIT (Hyderabad) . . . 123
Bad debts --Amount written off in books of account as irrecoverable--To be allowed--Income-tax Act, 1961, s. 36(1)(vii)-- Indian Research Manifestation Labs P. Ltd. v. Assistant CIT (Ahmedabad) . . . 30
Business expenditure --Disallowance--Payments to labour contractors--Failure to establish liability to disallowance under section 40(a)(ia)--Direction to Assessing Officer and Commissioner (Appeals) to delete disallowance--Income-tax Act, 1961, s. 40(a)(ia)-- Aristocon Engineers Co-operative Society Ltd. v. Deputy CIT (Kolkata) . . . 42
----Expenses incurred on maintenance of building and machinery--Finding that expenditure incurred and did not enhance existing capacity--No material to controvert finding of Commissioner (Appeals)--Expenditure allowable--Income-tax Act, 1961-- Indian Research Manifestation Labs P. Ltd. v. Assistant CIT(Ahmedabad) . . . 30
----Expenses incurred on petrol and diesel--Assessee to be given fresh opportunity of producing vouchers and other details--Matter remanded--Business promotion expenses--Disallowance of 10 per cent.--Proper--Income-tax Act, 1961-- Indian Research Manifestation Labs P. Ltd. v. Assistant CIT (Ahmedabad) . . . 30
----Multiplexes and other commercial construction projects--Expenditure of head office allocated on basis of capital cost of each project--Allocation at 67.16 per cent. to revenue and 32.84 per cent. to capital--Justified--Assessing Officer not examining any other method to allocate expenditure but estimating it at two-thirds capital and one-third revenue--No basis for such allocation--Not sustainable-- E-City Entertainment (India) Pvt. Ltd. v. Additional CIT (Mumbai) . . . 73
----Prior period expenditure debited to profit and loss account--Claim that expenditure on account of short provision of depreciation computed under Companies Act in earlier years and depreciation written back--Professional fees and travelling expenses transferred by party with whom assessee had joint development agreement on termination of agreement--Assessing Officer to examine whether expenditure crystallised during year--Matter remanded.-- E-City Entertainment (India) Pvt. Ltd. v. Additional CIT (Mumbai) . . . 73
Capital gains --Computation of capital gains--Deductions--Cost of improvement of property--Assessee purchasing semi-finished building and making alterations--Paying contractors deducting tax at source--Cost of improvement to be considered in computing capital gains--Direction to recompute capital gains--Income-tax Act, 1961-- S. P. Balasubramaniyam v. ITO (Chennai) . . . 47
----Long-term capital gains--Agreement for development of property--Assessee entitled to 42.5 per cent. of built-up area--Income from sale of land to extent of 57.5 per cent. share arises in financial year in which agreement executed--Gains from sale of land to be assessed as long-term capital gains and profits from sale of superstructure to be assessed as short-term capital gains--Investment in capital gains bonds and capital gains account scheme in excess of sum received--Deduction under sections 54 and 54F allowable--Income-tax Act, 1961, ss. 54, 54F-- Assistant CIT v. V. Ram Mohan (Chennai) . . . 50
----Transfer--Year in which transfer takes place--Law applicable--Insertion of clauses (v) and (vi) in section 2(47) w.e.f. 1-4-1988--Part performance--Agreement with developer and handing over of possession for construction--Transfer complete--Capital gains assessable--Completion of transfer of property under general law not required to attract section 2(47)(v)--Income-tax Act, 1961, ss. 2(47)(v), 45-- Mrs. Durdana Khatoon v. Assistant CIT (Hyderabad) . . . 55
Depreciation --Goodwill--No records to prove amount of goodwill claimed--Matter remanded--Income-tax Act, 1961, s. 32(1)(ii)-- Indian Research Manifestation Labs P. Ltd. v. Assistant CIT (Ahmedabad) . . . 30
----Repairs and maintenance on building and house keeping charges--Disallowance of portion relating to unutilised space--No basis for working out utilised and unutilised areas--Entire project commencing business operations--That part of it not leased out or commercially exploited--Not basis for disallowing depreciation and expenditure-- E-City Entertainment (India) Pvt. Ltd. v. Additional CIT (Mumbai) . . . 73
Double taxation avoidance --Business profits--“Directly or indirectly attributable to permanent establishment†--Consideration attributable to services rendered in State of residence--Not taxable in source State--Double Taxation Avoidance Agreement between India and the United Kingdom, art. 7(1)--Assistant Director of Income-tax (International Taxation) v. Clifford Chance [SB] (Mumbai) . . . 1
Export --Exemption--Export of computer software--Claim to deduction under section 80HHE made in second year of production--For subsequent years exemption allowable under section 10A--Income-tax Act, 1961, ss. 10A, 80HHE-- Interra Information Technologies (India) P. Ltd. v. Deputy CIT (Delhi) . . . 140
Income --Entertainment tax--Subsidy--Entire entertainment tax collected included in profit and loss account--Claim that subsidy wrongly offered to tax--Matter remanded--Nature of subsidy to be seen in light of policies of respective State Governments-- E-City Entertainment (India) Pvt. Ltd. v. Additional CIT(Mumbai) . . . 73
Income from other sources --Projects under completion--Interest given by head office--Not to be capitalised--Taxable as income from other sources-- E-City Entertainment (India) Pvt. Ltd. v. Additional CIT (Mumbai) . . . 73
Income-tax --General principles--Res judicata--How far applicable--Officer in subsequent year on further material deciding in different way from decision in earlier year--Permissible-- Interra Information Technologies (India) P. Ltd. v. Deputy CIT (Delhi) . . . 140
Industrial undertaking --Manufacture or production--Special deduction under section 80-IB--Manufacturing and selling of masala power--Amounts to manufacturing activity--Eligible for deduction--Income-tax Act, 1961, s. 80-IB-- Assistant CIT v. Navas M. Meeran (Cochin) . . . 111
International transactions --Arm’s length price--Determination--That income of assessee exempt and no motive to divert profit--Not ground to claim that transfer pricing adjustment should not be made--Nature of business and type of transactions of prime importance--No provision calling for limiting transfer pricing adjustment so that it does not exceed total profits earned by group--Claim for adjustment on basis of risk or other factors to be based on proper data and sound calculation--Burden of proof on assessee--Uncontrolled transactions significant part of total turnover of assessee--Sufficient sample for benchmarking--Domestic uncontrolled transactions of significant volume--Rejection of internal comparables on ground of less volumes--Not proper--Matter remanded to Transfer Pricing Officer to consider internal comparables given by assessee and arrive at fresh decision--Income-tax Act, 1961, s. 92C--Income-tax Rules, 1962, r. 10B--Interra Information Technologies (India) P. Ltd. v. Deputy CIT (Delhi) . . . 140
Non-resident --Taxability in India--Change of law-- Explanation to section 9(1) introduced in 2010 with retrospective effect from June 1, 1976--Income directly or indirectly through or from any business connection in India--Decision of High Court that if test of 90 days satisfied, taxability to be determined under section 9(1)(i)--Holds good even after amendment--Income attributable to service rendered outside India not taxable in India--Income-tax Act, 1961, s. 9(1)(i), Expln. --Double Taxation Avoidance Agreement between India and the United Kingdom, arts. 5, 7(1), 15-- Assistant Director of Income-tax (International Taxation) v.Clifford Chance [SB] (Mumbai) . . . 1
Penalty --Concealment of income--No contrary material to prove that claiming not bona fide or bogus--No concealment of income--Penalty cannot be levied--Income-tax Act, 1961, s. 271(1)(c)-- Bennett Coleman and Co. Ltd. v. Assistant CIT (Mumbai) . . . 102
Precedent --International transactions--Arm’s length price--Determination--On facts of each case--Case law--How far relevant-- Interra Information Technologies (India) P. Ltd. v. Deputy CIT (Delhi) . . . 140
Presumptive tax --Non-resident--Exploration of mineral oils--Mobilisation, demobilisation and reimbursement charges--Includible as part of gross receipts--Income-tax Act, 1961, s. 44BB-- Transocean Offshore International Venture Ltd. v. Assistant Director of Income-tax (International Taxation) (Delhi) . . . 97
Reassessment --Notice--Notice after four years--No failure to disclose material facts necessary for assessment--Reassessment after four years invalid--Failure to record reasons--Notice void ab initio--Income-tax Act, 1961, ss. 147, 148-- Calyon Bank v. Deputy Commissioner of Income-tax (International Taxation)(Mumbai) . . . 114
Revision --Commissioner--Erroneous and prejudicial to Revenue--Both conditions must be satisfied--Assessing Officer not applying correct provisions of Act--Not discussing allowability or disallowance of deductions--Commissioner’s exercise of jurisdiction justified--Income-tax Act, 1961, s. 263-- Leo Meridian Infrastructure Projects and Hotels Ltd. v. Deputy CIT (Hyderabad) . . . 123
Special deduction --Convention centre--Assessee maintaining books of account in regular course of business--Books accepted by Department and no defect pointed out--Failure to maintain separate books of account for convention centre--Not ground to deny deduction--Deduction can be granted for convention hall in proportion of turnover to profit--Income-tax Act, 1961, s. 80-IB(7B)-- Leo Meridian Infrastructure Projects and Hotels Ltd. v. Deputy CIT (Hyderabad) . . . 123
Unexplained investment --Assessee maintaining stock account and stocks recorded in books of account--Assessing Officer accepting profit declared on basis of books of account--Valuation submitted to back for availing of loans showing higher value--Common practice in business circles of inflating stock for availing of loans from banks--Unexplained investment cannot be presumed solely relying upon valuation report submitted to bank-- Leo Meridian Infrastructure Projects and Hotels Ltd. v. Deputy CIT (Hyderabad) . . . 123
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Double Taxation Avoidance Agreement between India and the United Kingdom :
Art. 5 --Non-resident--Taxability in India--Change of law-- Explanation to section 9(1) introduced in 2010 with retrospective effect from June 1, 1976--Income directly or indirectly through or from any business connection in India--Decision of High Court that if test of 90 days satisfied, taxability to be determined under section 9(1)(i)--Holds good even after amendment--Income attributable to service rendered outside India not taxable in India-- Assistant Director of Income-tax (International Taxation) v. Clifford Chance [SB] (Mumbai) . . . 1
Art. 7(1) --Double taxation avoidance--Business profits--“Directly or indirectly attributable to permanent establishment†--Consideration attributable to services rendered in State of residence--Not taxable in source State-- Assistant Director of Income-tax (International Taxation) v. Clifford Chance [SB] (Mumbai) . . . 1
----Non-resident--Taxability in India--Change of law-- Explanation to section 9(1) introduced in 2010 with retrospective effect from June 1, 1976--Income directly or indirectly through or from any business connection in India--Decision of High Court that if test of 90 days satisfied, taxability to be determined under section 9(1)(i)--Holds good even after amendment--Income attributable to service rendered outside India not taxable in India-- Assistant Director of Income-tax (International Taxation) v. Clifford Chance [SB] (Mumbai) . . . 1
Art. 15 --Non-resident--Taxability in India--Change of law-- Explanation to section 9(1) introduced in 2010 with retrospective effect from June 1, 1976--Income directly or indirectly through or from any business connection in India--Decision of High Court that if test of 90 days satisfied, taxability to be determined under section 9(1)(i)--Holds good even after amendment--Income attributable to service rendered outside India not taxable in India-- Assistant Director of Income-tax (International Taxation) v. Clifford Chance [SB] (Mumbai) . . . 1
S. 2(47)(v) --Capital gains--Transfer--Year in which transfer takes place--Law applicable--Insertion of clauses (v) and (vi) in section 2(47) w.e.f. 1-4-1988--Part performance--Agreement with developer and handing over of possession for construction--Transfer complete--Capital gains assessable--Completion of transfer of property under general law not required to attract section 2(47)(v)-- Mrs. Durdana Khatoon v.Assistant CIT (Hyderabad) . . . 55
S. 9(1)(i), Expln. --Non-resident--Taxability in India--Change of law-- Explanation to section 9(1) introduced in 2010 with retrospective effect from June 1, 1976--Income directly or indirectly through or from any business connection in India--Decision of High Court that if test of 90 days satisfied, taxability to be determined under section 9(1)(i)--Holds good even after amendment--Income attributable to service rendered outside India not taxable in India-- Assistant Director of Income-tax (International Taxation) v.Clifford Chance [SB] (Mumbai) . . . 1
S. 10A --Export--Exemption--Export of computer software--Claim to deduction under section 80HHE made in second year of production--For subsequent years exemption allowable under section 10A-- Interra Information Technologies (India) P. Ltd. v. Deputy CIT (Delhi) . . . 140
S. 32(1)(ii) --Depreciation--Goodwill--No records to prove amount of goodwill claimed--Matter remanded--Indian Research Manifestation Labs P. Ltd. v. Assistant CIT (Ahmedabad) . . . 30
S. 36(1)(vii) --Bad debts--Amount written off in books of account as irrecoverable--To be allowed-- Indian Research Manifestation Labs P. Ltd. v. Assistant CIT (Ahmedabad) . . . 30
S. 40(a)(ia) --Business expenditure--Disallowance--Payments to labour contractors--Failure to establish liability to disallowance under section 40(a)(ia)--Direction to Assessing Officer and Commissioner (Appeals) to delete disallowance-- Aristocon Engineers Co-operative Society Ltd. v. Deputy CIT (Kolkata) . . . 42
S. 44BB --Presumptive tax--Non-resident--Exploration of mineral oils--Mobilisation, demobilisation and reimbursement charges--Includible as part of gross receipts-- Transocean Offshore International Venture Ltd. v. Assistant Director of Income-tax (International Taxation) (Delhi) . . . 97
S. 45 --Capital gains--Transfer--Year in which transfer takes place--Law applicable--Insertion of clauses (v) and (vi) in section 2(47) w.e.f. 1-4-1988--Part performance--Agreement with developer and handing over of possession for construction--Transfer complete--Capital gains assessable--Completion of transfer of property under general law not required to attract section 2(47)(v)-- Mrs. Durdana Khatoon v. Assistant CIT(Hyderabad) . . . 55
S. 54 --Capital gains--Long-term capital gains--Agreement for development of property--Assessee entitled to 42.5 per cent. of built-up area--Income from sale of land to extent of 57.5 per cent. share arises in financial year in which agreement executed--Gains from sale of land to be assessed as long-term capital gains and profits from sale of superstructure to be assessed as short-term capital gains--Investment in capital gains bonds and capital gains account scheme in excess of sum received--Deduction under sections 54 and 54F allowable-- Assistant CIT v. V. Ram Mohan (Chennai) . . . 50
S. 54F --Capital gains--Long-term capital gains--Agreement for development of property--Assessee entitled to 42.5 per cent. of built-up area--Income from sale of land to extent of 57.5 per cent. share arises in financial year in which agreement executed--Gains from sale of land to be assessed as long-term capital gains and profits from sale of superstructure to be assessed as short-term capital gains--Investment in capital gains bonds and capital gains account scheme in excess of sum received--Deduction under sections 54 and 54F allowable-- Assistant CIT v. V. Ram Mohan (Chennai) . . . 50
S. 80HHE --Export--Exemption--Export of computer software--Claim to deduction under section 80HHE made in second year of production--For subsequent years exemption allowable under section 10A-- Interra Information Technologies (India) P. Ltd. v. Deputy CIT (Delhi) . . . 140
S. 80-IB --Industrial undertaking--Manufacture or production--Special deduction under section 80-IB--Manufacturing and selling of masala power--Amounts to manufacturing activity--Eligible for deduction--Assistant CIT v. Navas M. Meeran (Cochin) . . . 111
S. 80-IB(7B) --Special deduction--Convention centre--Assessee maintaining books of account in regular course of business--Books accepted by Department and no defect pointed out--Failure to maintain separate books of account for convention centre--Not ground to deny deduction--Deduction can be granted for convention hall in proportion of turnover to profit-- Leo Meridian Infrastructure Projects and Hotels Ltd. v.Deputy CIT (Hyderabad) . . . 123
S. 92C --International transactions--Arm’s length price--Determination--That income of assessee exempt and no motive to divert profit--Not ground to claim that transfer pricing adjustment should not be made--Nature of business and type of transactions of prime importance--No provision calling for limiting transfer pricing adjustment so that it does not exceed total profits earned by group--Claim for adjustment on basis of risk or other factors to be based on proper data and sound calculation--Burden of proof on assessee--Uncontrolled transactions significant part of total turnover of assessee--Sufficient sample for benchmarking--Domestic uncontrolled transactions of significant volume--Rejection of internal comparables on ground of less volumes--Not proper--Matter remanded to Transfer Pricing Officer to consider internal comparables given by assessee and arrive at fresh decision-- Interra Information Technologies (India) P. Ltd. v. Deputy CIT (Delhi) . . . 140
S. 147 --Reassessment--Notice--Notice after four years--No failure to disclose material facts necessary for assessment--Reassessment after four years invalid--Failure to record reasons--Notice void ab initio-- Calyon Bank v. Deputy Commissioner of Income-tax (International Taxation) (Mumbai) . . . 114
S. 148 --Reassessment--Notice--Notice after four years--No failure to disclose material facts necessary for assessment--Reassessment after four years invalid--Failure to record reasons--Notice void ab initio-- Calyon Bank v. Deputy Commissioner of Income-tax (International Taxation) (Mumbai) . . . 114
S. 263 --Revision--Commissioner--Erroneous and prejudicial to Revenue--Both conditions must be satisfied--Assessing Officer not applying correct provisions of Act--Not discussing allowability or disallowance of deductions--Commissioner’s exercise of jurisdiction justified-- Leo Meridian Infrastructure Projects and Hotels Ltd. v. Deputy CIT (Hyderabad) . . . 123
S. 271(1)(c) --Penalty--Concealment of income--No contrary material to prove that claiming not bona fide or bogus--No concealment of income--Penalty cannot be levied-- Bennett Coleman And Co. Ltd. v. Assistant CIT(Mumbai) . . . 102
R. 10B --International transactions--Arm’s length price--Determination--That income of assessee exempt and no motive to divert profit--Not ground to claim that transfer pricing adjustment should not be made--Nature of business and type of transactions of prime importance--No provision calling for limiting transfer pricing adjustment so that it does not exceed total profits earned by group--Claim for adjustment on basis of risk or other factors to be based on proper data and sound calculation--Burden of proof on assessee--Uncontrolled transactions significant part of total turnover of assessee--Sufficient sample for benchmarking--Domestic uncontrolled transactions of significant volume--Rejection of internal comparables on ground of less volumes--Not proper--Matter remanded to Transfer Pricing Officer to consider internal comparables given by assessee and arrive at fresh decision-- Interra Information Technologies (India) P. Ltd. v. Deputy CIT (Delhi) . . . 140
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