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Friday, July 5, 2013

ITR VOL 355 PART 1



 

INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION

 

INCOME TAX REPORTS (ITR)

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

High Courts

Business income --Remission or cessation of liability--Unpaid liability on account of employees’ dues--Confirmation only in respect of three employees, out of one hundred and seventy--Section 41(1) applicable--Income-tax Act, 1961, s. 41(1)-- CIT v . Chipsoft Technology Pvt. Ltd . (Delhi) . . . 106

Housing project --Special deduction under section 80-IB(10)--Meaning of “housing project†--Definition in Explanation to section 80HHBA applicable--Housing project including commercial units entitled to special deduction--Special deduction can be given pro rata to units fulfiling conditions laid down in section 80-IB(10)--Income-tax Act, 1961, s. 80-IB(10)-- CIT v . Arun Excello Foundations P. Ltd . (Mad) . . . 82

Precedent --Effect of Supreme Court decision Tata Engg. and Locomotive Co. Ltd . v. Gram Panchayat, Pimpri Waghere [1976] 4 SCC 177-- CIT v . Arun Excello Foundations P. Ltd. (Mad) . . . 82

 

PRINT EDITION

ITR Volume 355 : Part 1 (Issue dated : 8-7-2013)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Advance tax --Interest--Waiver or reduction--Deduction withdrawn in appeal on basis of decision of High Court--Deduction restored by Tribunal on basis of subsequent decision of High Court entitling assessee to deduction--Default in payment of advance tax due to unavoidable circumstances--High Court--Writ--Decision need not be of jurisdictional High Court--Waiver of 25 per cent. interest ordered--Income-tax Act, 1961, s. 234B-- UB Global Corporation Ltd . v. Chief CIT (Karn) . . . 87

Business expenditure --Disallowance--Payments in cash exceeding prescribed limit--Assessee purchasing raw cotton from society--Finding that no element of sale--Society acting as agent of assessee--No disallowance can be made--Income-tax Act, 1961, s. 40A(3)--Income-tax Rules, 1962, r. 6DD(i)-- CIT v . Sri Shanmuga Ginning Factory (Mad) . . . 96

----Expenditure on advertisement and sales promotion--Scope of section 37(3B)--Office for sales promotion need not be maintained by assessee himself--Reimbursement of expenses incurred on behalf of sales promotion for assessee by third person to whom advertising outsourced--Assessee entitled to deduction--Income-tax Act, 1961, s. 37(3B)-- CIT v. Dey’s Medical Stores Manufacturing P. Ltd. (All) . . . 126

Industrial undertaking --Special deduction--Computation--Assessee printing and publishing magazines in its four units--One unit carrying out job work of printing for publishing unit--Expenses attributable to publishing unit not to be allocated to it--No evidence to show that job work charges charged from publishing unit not at market rates--No defect or manipulation found in books of account--Expenses relating to printing work--Deductible from job charges for purposes of sections 80-IA and 80-IB--Income-tax Act, 1961, ss. 80-IA, 80-IB-- CIT v . Delhi Press Patra Prakashan Ltd. (No. 1 ) (Delhi) . . . 1

----Special deduction--Condition of employing ten or more workers in a manufacturing process--Quantifying number of persons to be deployed in manufacturing process--No condition that workers in industrial undertaking must be on rolls of assessee--More than ten workers permanently involved in carrying on activities in second and third units of assessee--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-I(2)(iv)-- CIT v . Delhi Press Patra Prakashan Ltd. (No. 2 ) (Delhi) . . . 14

----Special deduction--Manufacture or produce any article or thing--†Produce†has wider connotation than “manufacture†--Printed paper produced in units of assessee--Not excludible from ambit of expression “article†or “thing†--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-I(2)(iii)-- CIT v. Delhi Press Patra Prakashan Ltd. (No. 2 ) (Delhi) . . . 14

----Special deduction--No condition that assessee must structure its business in any particular form--Assessee acquiring raw material on job work basis--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-I(2)(iii)-- CIT v. Delhi Press Patra Prakashan Ltd. (No. 2 ) (Delhi) . . . 14

----Special deduction--Principle of consistency--Assessing Officer consistently allowing deduction for preceding three years--Denial of deduction on ground of non-fulfilment of condition in section 80-I(2) without disturbing earlier assessments--Not justified--Income-tax Act, 1961, s. 80-I-- CIT v. Delhi Press Patra Prakashan Ltd. (No. 2 ) (Delhi) . . . 14

----Special deduction--Second and third units established in addition to existing unit and no transfer of any asset from existing unit--Facility of high speed printing of quality in second and third units not available in existing unit--Second and third units not formed by splitting up or reconstruction of business of existing unit--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-I(2)(i)-- CIT v . Delhi Press Patra Prakashan Ltd. (No. 2 ) (Delhi) . . . 14

Interpretation of taxing statutes --Literal interpretation-- CIT v. Dey’s Medical Stores Manufacturing P. Ltd. (All) . . . 126

Legislative powers --Parliament--Companies--Minimum alternate tax--Book profits--Computation--Amendment in 2009 with retrospective effect from 1-4-2001, that provision for diminution in value of asset debited to profit and loss account to be added--Valid--No new levy--Nor nature of levy changed--Merely case of curing provision of vice--Retrospective effect within competence of Legislature to give--That Statement of Objects and Reasons for Bill did not state justification for provision--Will not render it invalid--Income-tax Act, 1961, s. 115JB, Expln. 1(i)-- Whirlpool of India Limited v . Union of India (Delhi) . . . 51

Reassessment --Notice--Notice within four years--Reopening of assessment for earlier years to deny deduction under section 80-IB held to be unsustainable--Reopening of assessment for relevant years amounts to change of opinion--Assessee entitled to deduction under section 80-IB--Income-tax Act, 1961, ss. 80-IB, 147, 148-- Dynacraft Air Controls v . Smt. Sneha Joshi (Bom) . . . 102

----Notice after four years--Conditions precedent--Reopening of assessment on material produced by assessee--No suppression of facts material to assessment by assessee--Form ITNS 34 not requiring reasons should state that there was a failure of assessee to disclose fully and truly all material facts--Form, an administrative instruction, cannot override statutory provision--Omission to state a jurisdictional fact not a typographical error--Violation of jurisdictional condition--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Dynacraft Air Controls v. Smt. Sneha Joshi (Bom) . . . 102

----Notice after four years--Limitation--Original assessment allowing long-term capital loss accepting explanation of assessee--Not a case of assessee’s failure to disclose fully and truly all material facts necessary for assessment--Conditions in second proviso to section 147 not applicable--Reassessment proceedings after four years barred by limitation--Income-tax Act, 1961, s. 147, second prov-- CIT v. Mysore Cements Ltd .
(Karn) . . . 136

Search and seizure --Seizure of cash--Return of seized cash--Effect of sections 132B and 292CC--Warrant of authorisation in names of assessees and third persons--No business connection between assessees and third persons--Separate orders of assessment--Assessee receiving refund of tax--Assessee entitled to return of seized cash with interest--Income-tax Act, 1961, ss. 132, 132B, 292CC-- Vijay Prakash Agrawal v . CIT (Central) (All) . . . 114

Writ --High Court--Existence of alternative remedy--Expenditure incurred against advance receipt but no revenue recognition--Assessment by changing method of accounting from completed contract method to percentage completion method--No valid reasons given for changing method of accounting--Not a ground to bypass appeal remedies--Bypassing such statutory appeal remedies--Writ will not issue--Constitution of India, art. 226--Income-tax Act, 1961, s. 145-- Kone Elevator India Pvt. Ltd . v. Asst. CIT (Mad) . . . 139

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Constitution of India :

Art. 226 --Writ--High Court--Existence of alternative remedy--Expenditure incurred against advance receipt but no revenue recognition--Assessment by changing method of accounting from completed contract method to percentage completion method--No valid reasons given for changing method of accounting--Not a ground to bypass appeal remedies--Bypassing such statutory appeal remedies--Writ will not issue-- Kone Elevator India Pvt. Ltd . v. Asst. CIT (Mad) . . . 139

Income-tax Act, 1961 :

S. 37(3B) --Business expenditure--Expenditure on advertisement and sales promotion--Scope of section 37(3B)--Office for sales promotion need not be maintained by assessee himself--Reimbursement of expenses incurred on behalf of sales promotion for assessee by third person to whom advertising outsourced--Assessee entitled to deduction-- CIT v. Dey’s Medical Stores Manufacturing P. Ltd. (All) . . . 126

S. 40A(3) --Business expenditure--Disallowance--Payments in cash exceeding prescribed limit--Assessee purchasing raw cotton from society--Finding that no element of sale--Society acting as agent of assessee--No disallowance can be made-- CIT v . Sri Shanmuga Ginning Factory (Mad) . . . 96

S. 80-I --Industrial undertaking--Special deduction--Principle of consistency--Assessing Officer consistently allowing deduction for preceding three years--Denial of deduction on ground of non-fulfilment of condition in section 80-I(2) without disturbing earlier assessments--Not justified-- CIT v. Delhi Press Patra Prakashan Ltd. (No. 2 ) (Delhi) . . . 14

S. 80-I(2)(i) --Industrial undertaking--Special deduction--Second and third units established in addition to existing unit and no transfer of any asset from existing unit--Facility of high speed printing of quality in second and third units not available in existing unit--Second and third units not formed by splitting up or reconstruction of business of existing unit--Assessee entitled to deduction-- CIT v . Delhi Press Patra Prakashan Ltd. (No. 2 ) (Delhi) . . . 14

S. 80-I(2)(iii) --Industrial undertaking--Special deduction--Manufacture or produce any article or thing--†Produce†has wider connotation than “manufacture†--Printed paper produced in units of assessee--Not excludible from ambit of expression “article†or “thing†--Assessee entitled to deduction-- CIT v. Delhi Press Patra Prakashan Ltd. (No. 2 ) (Delhi) . . . 14

----Industrial undertaking--Special deduction--No condition that assessee must structure its business in any particular form--Assessee acquiring raw material on job work basis--Assessee entitled to deduction-- CIT v. Delhi Press Patra Prakashan Ltd. (No. 2 ) (Delhi) . . . 14

S. 80-I(2)(iv) --Industrial undertaking--Special deduction--Condition of employing ten or more workers in a manufacturing process--Quantifying number of persons to be deployed in manufacturing process--No condition that workers in industrial undertaking must be on rolls of assessee--More than ten workers permanently involved in carrying on activities in second and third units of assessee--Assessee entitled to deduction-- CIT v . Delhi Press Patra Prakashan Ltd. (No. 2 ) (Delhi) . . . 14

S. 80-IA --Industrial undertaking--Special deduction--Computation--Assessee printing and publishing magazines in its four units--One unit carrying out job work of printing for publishing unit--Expenses attributable to publishing unit not to be allocated to it--No evidence to show that job work charges charged from publishing unit not at market rates--No defect or manipulation found in books of account--Expenses relating to printing work--Deductible from job charges for purposes of sections 80-IA and 80-IB-- CIT v . Delhi Press Patra Prakashan Ltd. (No. 1 ) (Delhi) . . . 1

S. 80-IB --Industrial undertaking--Special deduction--Computation--Assessee printing and publishing magazines in its four units--One unit carrying out job work of printing for publishing unit--Expenses attributable to publishing unit not to be allocated to it--No evidence to show that job work charges charged from publishing unit not at market rates--No defect or manipulation found in books of account--Expenses relating to printing work--Deductible from job charges for purposes of sections 80-IA and 80-IB-- CIT v . Delhi Press Patra Prakashan Ltd. (No. 1 ) (Delhi) . . . 1

----Reassessment--Notice--Notice within four years--Reopening of assessment for earlier years to deny deduction under section 80-IB held to be unsustainable--Reopening of assessment for relevant years amounts to change of opinion--Assessee entitled to deduction under section 80-IB-- Dynacraft Air Controls v . Smt. Sneha Joshi
(Bom) . . . 102

S. 115JB, Expln. 1(i) --Legislative powers--Parliament--Companies--Minimum alternate tax--Book profits--Computation--Amendment in 2009 with retrospective effect from 1-4-2001, that provision for diminution in value of asset debited to profit and loss account to be added--Valid--No new levy--Nor nature of levy changed--Merely case of curing provision of vice--Retrospective effect within competence of Legislature to give--That Statement of Objects and Reasons for Bill did not state justification for provision--Will not render it invalid-- Whirlpool of India Limited v . Union of India
(Delhi) . . . 51

S. 132 --Search and seizure--Seizure of cash--Return of seized cash--Effect of sections 132B and 292CC--Warrant of authorisation in names of assessees and third persons--No business connection between assessees and third persons--Separate orders of assessment--Assessee receiving refund of tax--Assessee entitled to return of seized cash with interest-- Vijay Prakash Agrawal v . CIT (Central) (All) . . . 114

S. 132B --Search and seizure--Seizure of cash--Return of seized cash--Effect of sections 132B and 292CC--Warrant of authorisation in names of assessees and third persons--No business connection between assessees and third persons--Separate orders of assessment--Assessee receiving refund of tax--Assessee entitled to return of seized cash with interest-- Vijay Prakash Agrawal v . CIT (Central) (All) . . . 114

S. 145 --Writ--High Court--Existence of alternative remedy--Expenditure incurred against advance receipt but no revenue recognition--Assessment by changing method of accounting from completed contract method to percentage completion method--No valid reasons given for changing method of accounting--Not a ground to bypass appeal remedies--Bypassing such statutory appeal remedies--Writ will not issue-- Kone Elevator India Pvt. Ltd . v. Asst. CIT (Mad) . . . 139

S. 147 --Reassessment--Notice--Notice within four years--Reopening of assessment for earlier years to deny deduction under section 80-IB held to be unsustainable--Reopening of assessment for relevant years amounts to change of opinion--Assessee entitled to deduction under section 80-IB-- Dynacraft Air Controls v . Smt. Sneha Joshi (Bom) . . . 102

----Reassessment--Notice after four years--Conditions precedent--Reopening of assessment on material produced by assessee--No suppression of facts material to assessment by assessee--Form ITNS 34 not requiring reasons should state that there was a failure of assessee to disclose fully and truly all material facts--Form, an administrative instruction, cannot override statutory provision--Omission to state a jurisdictional fact not a typographical error--Violation of jurisdictional condition--Notice not valid-- Dynacraft Air Controls v. Smt. Sneha Joshi (Bom) . . . 102

S. 147, second prov --Reassessment--Notice after four years--Limitation--Original assessment allowing long-term capital loss accepting explanation of assessee--Not a case of assessee’s failure to disclose fully and truly all material facts necessary for assessment--Conditions in second proviso to section 147 not applicable--Reassessment proceedings after four years barred by limitation-- CIT v. Mysore Cements Ltd .
(Karn) . . . 136

S. 148 --Reassessment--Notice--Notice within four years--Reopening of assessment for earlier years to deny deduction under section 80-IB held to be unsustainable--Reopening of assessment for relevant years amounts to change of opinion--Assessee entitled to deduction under section 80-IB-- Dynacraft Air Controls v . Smt. Sneha Joshi (Bom) . . . 102

----Reassessment--Notice after four years--Conditions precedent--Reopening of assessment on material produced by assessee--No suppression of facts material to assessment by assessee--Form ITNS 34 not requiring reasons should state that there was a failure of assessee to disclose fully and truly all material facts--Form, an administrative instruction, cannot override statutory provision--Omission to state a jurisdictional fact not a typographical error--Violation of jurisdictional condition--Notice not valid-- Dynacraft Air Controls v. Smt. Sneha Joshi (Bom) . . . 102

S. 234B --Advance tax--Interest--Waiver or reduction--Deduction withdrawn in appeal on basis of decision of High Court--Deduction restored by Tribunal on basis of subsequent decision of High Court entitling assessee to deduction--Default in payment of advance tax due to unavoidable circumstances--High Court--Writ--Decision need not be of jurisdictional High Court--Waiver of 25 per cent. interest ordered-- UB Global Corporation Ltd . v. Chief CIT (Karn) . . . 87

S. 292CC --Search and seizure--Seizure of cash--Return of seized cash--Effect of sections 132B and 292CC--Warrant of authorisation in names of assessees and third persons--No business connection between assessees and third persons--Separate orders of assessment--Assessee receiving refund of tax--Assessee entitled to return of seized cash with interest-- Vijay Prakash Agrawal v . CIT (Central) (All) . . . 114

Income-tax Rules, 1962 :

R. 6DD(i) --Business expenditure--Disallowance--Payments in cash exceeding prescribed limit--Assessee purchasing raw cotton from society--Finding that no element of sale--Society acting as agent of assessee--No disallowance can be made-- CIT v . Sri Shanmuga Ginning Factory (Mad) . . . 96

 


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