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Saturday, August 10, 2013

ITR VOL 356 PART 1


 

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

 

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

High Courts

Cash credit --Loans in cash--Concurrent findings by Assessing Officer, Commissioner (Appeals) and Tribunal that loans were not genuine--Amounts assessable under section 68--Income-tax Act, 1961, s. 68-- Blessing Construction v . ITO
(Guj) . . . 213

Company --Dividend--Deemed dividend--Loan by private company to shareholder out of accumulated profits--Meaning of “accumulated profits†--Finding that company had liabilities and no accumulated profits--Loan to shareholders could not be deemed to dividend--Income-tax Act, 1961, s. 2(22)(e)-- CIT v . Vikram M. Kothari
(All) . . . 223

Deduction of tax at source --Payment to contractor--Meaning of “works contract†in section 194C--Government company engaged in power supply entering into contracts for transmission of electricity--Contracts for supply, civil work and erection--Contracts divisible--Tax not deductible at source on contract for supply--Income-tax Act, 1961, ss. 194C, 201-- CIT v . Karnataka Power Transmission Corporation Ltd .
(Karn) . . . 229

Reassessment --Notice after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Claim for special deduction under section 80-IA allowed in original assessment--Notice after four years to re-compute special deduction--Not valid--Income-tax Act, 1961, ss. 147, 148-- Jivraj Tea Ltd. v . Asst. CIT
(Guj) . . . 219

 

PRINT EDITION

ITR Volume 356 : Part 1 (Issue dated : 12-8-2013)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Advance tax --Interest--Notice of demand--Notice issued for a period prior to date of notice--Notice of demand ex facie not valid--Income-tax Act, 1961, ss. 156, 234B-- Vodafone Mobile Service Ltd . v. Union of India (Delhi) . . . 173

----Interest under sections 234A and 234B--Interest mandatory--Income-tax Act, 1961, ss. 234A, 234B-- Gouli Mahadevappa v . ITO (Karn) . . . 90

----Penalty--Untrue estimate of advance tax--Burden of proof--Burden on assessee to prove that estimate not untrue--Finding that estimate untrue--Imposition of penalty--Justified--Income-tax Act, 1961, s. 273(2)(a)-- J. K. Synthetics Ltd . v . CIT
(All) . . . 104

Assessment --Construction of commercial complexes--Suppression of sale price--No evidence of understatement--No addition could be made on suspicions--Income-tax Act, 1961-- CIT v . Discovery Estates Pvt. Ltd. (Delhi) . . . 159

----Draft assessment order--Advance tax--Penalty--Untrue estimate of advance tax--Proceedings for penalty need not be proposed in draft assessment order--Income-tax Act, 1961, ss. 144B, 273(2)-- J. K. Synthetics Ltd . v . CIT (All) . . . 104

----Law applicable--Effect of insertion of section 142A by Finance (No. 2) Act, 2004 with retrospective effect from November 15, 1972--Power to refer to Valuation Officer--Rejection of accounts not a pre-condition--Assessing Officer not accepting valuation of plant in previous assessment year--Notice under section 142A--Valid--Income-tax Act, 1961, s. 142A-- Bharathi Cement Corporation P. Ltd. v . CIT (AP) . . . 74

----Limitation--Writ--Powers of High Court--High Court cannot extend period of limitation for assessment--Income-tax Act, 1961, s. 153--Constitution of India, art. 226-- Satyam Computer Services Ltd . v . Addl. CIT (AP) . . . 17

Bad debt --Condition precedent for deduction--Law applicable--Effect of amendment of section 36(1)(vii) with effect from 1-4-1989--Sufficient if amount is written off in accounts--Not necessary to prove debt was bad--Income-tax Act, 1961, s. 36(1)(vii)-- CIT v . Samara India P. Ltd . (Delhi) . . . 12

Business loss --Capital or revenue loss--Assessee, an ice cream manufacturing concern, advancing money for construction of cold storage at its factory--Irrecoverable advance given in course of business--Not allowable as business loss or trading loss--Income-tax Act, 1961-- Kwality Fun Foods and Restaurants (P.) Ltd . v. Dy. CIT
(Mad) . . . 170

Capital gains --Effect of section 50C--Assessee not contesting deemed value of property--Assessee cannot contest deemed value in assessment proceedings--Income-tax Act, 1961, s. 50C-- Gouli Mahadevappa v . ITO (Karn) . . . 90

----Exemption--Reinvestment of sale consideration in residential property--Computation of exemption--Deemed value of property taken into consideration--Entire amount invested in acquiring property including other funds should be taken into account--Income-tax Act, 1961-- Gouli Mahadevappa v . ITO (Karn) . . . 90

Cash credits --Amount shown as loan--No satisfactory explanation regarding loan--Addition of amount to income of assessee--Justified--Income-tax Act, 1961, s. 68-- Dr. D. Siva Sankara Rao (HUF) v . ITO (AP) . . . 117

----Company--Share application money--Burden of proof--Assessee establishing identity of investor and genuineness of transaction--Duty of Assessing Officer to investigate creditworthiness of investor--Finding that assessee proved genuineness of transaction--No addition could be made--Income-tax Act, 1961, s. 68-- CIT v. Peoples General Hospital Ltd . (MP) . . . 65

Depreciation --Owner--Lease of vehicles--Dual ownership by owner and lessee--Evidence that assessee was owner of vehicles--Assessee entitled to depreciation--Income-tax Act, 1961, s. 32-- Prakash Leasing Ltd . v . Dy. CIT (Karn) . . . 179

----Sale and lease back transaction--Assessee purchasing certain assets from State electricity board and leasing them back to it--Genuine transaction--Parties to sale-cum-lease back agreement an existing leasing company and a State-owned electricity board--Depreciation based on agreement not to be rejected--Income-tax Act, 1961, s. 32-- First Leasing Co. of India Ltd . v. Asst. CIT (Mad) . . . 128

Exemption --Long-term capital gains on sale of equity shares through recognised stock exchange--Conditions precedent for exemption--Company’s only asset immovable property--Immovable property acquired shortly before sale of shares--Transfer of shares in company would not amount to sale of immovable property--Sale of shares not a colourable transaction--Assessee entitled to exemption under section 10(38)--Income-tax Act, 1961, s. 10(38)-- Bhoruka Engineering Inds. Ltd . v. Dy. CIT
(Karn) . . . 25

Financial corporation --Reserve--Deduction under section 36(1)(viii)--Meaning of “long-term finance†--Dividend from non-redeemable preference shares of company--Not profit from long-term finance--Interest on short-term deposits--Service charges on loans given by Government and routed through assessee--Not entitled to deduction under section 36(1)(viii)--Income-tax Act, 1961, s. 36(1)(viii)-- National Co-operative Development Corporation v . Asst. CIT (Delhi) . . . 184

Housing project --Special deduction under section 80-IB(10)--Conditions to be satisfied--Law applicable--Amendment to sub-section (10) not retrospective--Conditions regarding completion of project and limitation on commercial use imposed by amended provision--Not applicable prior to 1-4-2005--Income-tax Act, 1961, s. 80-IB(10)-- Manan Corporation v . Asst. CIT (Guj) . . . 44

Income from house property --Income from business--Rental income--Assessable under income from house property--Income-tax Act, 1961-- CIT v . Discovery Estates Pvt. Ltd. (Delhi) . . . 159

Income-tax --General principles--Tax planning--Not colourable if legal-- Bhoruka Engineering Inds. Ltd . v . Dy. CIT (Karn) . . . 25

Industrial undertaking --Special deduction--Rental income from towers constructed in industrial park--Commissioner (Appeals) holding receipt was business income and eligible for special deduction under section 80-IA--Revenue not challenging finding of Commissioner (Appeals) on section 80-IA deduction before Tribunal--Tribunal cannot pass remand order for further enquiry on issue of character of receipt--Income-tax Act, 1961, s. 80-IA-- R. R. Industries Ltd . v. ITO (OSD) (Mad) . . . 97

Interpretation of taxing statutes --Rule against retrospectivity--Interpretation beneficial to assessee-- Manan Corporation v. Asst. CIT (Guj) . . . 44

Notice --Validity--Effect of section 292B--Mistake in mention of provision--Notice in accordance with law--Notice not invalid--Income-tax Act, 1961, s. 292B-- Bharathi Cement Corporation P. Ltd . v . CIT (AP) . . . 74

Precedent --Effect of decision of Supreme Court in Kumar Jagdish Chandra Sinha v. CIT [1996] 220 ITR 67 (SC)-- Menezes Fernandes Enterprises v . ITO
(Bom) . . . 82

----Effect of Supreme Court decision in T.R.F. Ltd . v. CIT [2010] 323 ITR 397 (SC)-- CIT v . Samara India P. Ltd. (Delhi) . . . 12

Recovery of tax --Attachment and sale of property--Provisional attachment--Effect of section 281B--Provisional attachment to be commensurate with claim of Revenue--Income-tax Act, 1961, s. 281B-- KDH Properties P. Ltd . v. Asst. CIT
(Mad) . . . 1

----Notice of demand--Stay of demand--Rectification of mistakes--Notice for assessment year 2004-05 issued after four years from end of financial year in which original assessment framed--Barred by limitation--Income-tax Act, 1961, ss. 154, 220(2)-- Vodafone Mobile Service Ltd . v. Union of India (Delhi) . . . 173

Return --Revised return--Effect of section 139(5)--Delay in filing return--Revised return cannot be filed--Income-tax Act, 1961, s. 139(5)-- Menezes Fernandes Enterprises v . ITO (Bom) . . . 82

Total income --Inclusions in total income--Constitutional validity of provisions--Provision for inclusion of income of minor child in total income of parent--Provision is intended to prevent evasion of tax and not discriminatory--Provision is valid--Income-tax Act, 1961, s. 64(1)--Constitution of India, art. 14-- Anju Mehra v . Union of India
(P&H) . . . 149

----Inclusions in total income--Constitutional validity of provisions--Section 64(1A)--Inclusion of income of minor in income of parent whose income is greater--Both mother and father are natural guardians under Hindu law--Provision not arbitrary or violative--Hindu Minority and Guardianship Act, 1956, s. 6--Constitution of India, art. 14.--Income-tax Act, 1961, s. 64(1A)-- Anju Mehra v . Union of India
(P&H) . . . 149

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Constitution of India :

Art. 14 --Total income--Inclusions in total income--Constitutional validity of provisions--Provision for inclusion of income of minor child in total income of parent--Provision is intended to prevent evasion of tax and not discriminatory--Provision is valid-- Anju Mehra v . Union of India (P&H) . . . 149

----Total income--Inclusions in total income--Constitutional validity of provisions--Section 64(1A)--Inclusion of income of minor in income of parent whose income is greater--Both mother and father are natural guardians under Hindu law--Provision not arbitrary or violative-- Anju Mehra v . Union of India (P&H) . . . 149

Art. 226 --Assessment--Limitation--Writ--Powers of High Court--High Court cannot extend period of limitation for assessment-- Satyam Computer Services Ltd . v . Addl. CIT (AP) . . . 17

Hindu Minority and Guardianship Act, 1956 :

S. 6 --Total income--Inclusions in total income--Constitutional validity of provisions---Section 64(1A)--Inclusion of income of minor in income of parent whose income is greater--Both mother and father are natural guardians under Hindu law--Provision not arbitrary or violative-- Anju Mehra v . Union of India (P&H) . . . 149

Income-tax Act, 1961 :

S. 10(38) --Exemption--Long-term capital gains on sale of equity shares through recognised stock exchange--Conditions precedent for exemption--Company’s only asset immovable property--Immovable property acquired shortly before sale of shares--Transfer of shares in company would not amount to sale of immovable property--Sale of shares not a colourable transaction--Assessee entitled to exemption under section 10(38)-- Bhoruka Engineering Inds. Ltd . v. Dy. CIT (Karn) . . . 25

S. 32 --Depreciation--Owner--Lease of vehicles--Dual ownership by owner and lessee--Evidence that assessee was owner of vehicles--Assessee entitled to depreciation-- Prakash Leasing Ltd . v . Dy. CIT (Karn) . . . 179

----Depreciation--Sale and lease back transaction--Assessee purchasing certain assets from State electricity board and leasing them back to it--Genuine transaction--Parties to sale-cum-lease back agreement an existing leasing company and a State-owned electricity board--Depreciation based on agreement not to be rejected-- First Leasing Co. of India Ltd . v. Asst. CIT (Mad) . . . 128

S. 36(1)(vii) --Bad debt--Condition precedent for deduction--Law applicable--Effect of amendment of section 36(1)(vii) with effect from 1-4-1989--Sufficient if amount is written off in accounts--Not necessary to prove debt was bad-- CIT v . Samara India P. Ltd . (Delhi) . . . 12

S. 36(1)(viii) --Financial corporation--Reserve--Deduction under section 36(1)(viii)--Meaning of “long-term finance†--Dividend from non-redeemable preference shares of company--Not profit from long-term finance--Interest on short-term deposits--Service charges on loans given by Government and routed through assessee--Not entitled to deduction under section 36(1)(viii)-- National Co-operative Development Corporation v . Asst. CIT (Delhi) . . . 184

S. 50C --Capital gains--Effect of section 50C--Assessee not contesting deemed value of property--Assessee cannot contest deemed value in assessment proceedings-- Gouli Mahadevappa v . ITO (Karn) . . . 90

S. 64(1) --Total income--Inclusions in total income--Constitutional validity of provisions--Provision for inclusion of income of minor child in total income of parent--Provision is intended to prevent evasion of tax and not discriminatory--Provision is valid-- Anju Mehra v . Union of India (P&H) . . . 149

S. 64(1A) --Total income--Inclusions in total income--Constitutional validity of provisions---Section 64(1A)--Inclusion of income of minor in income of parent whose income is greater--Both mother and father are natural guardians under Hindu law--Provision not arbitrary or violative-- Anju Mehra v . Union of India (P&H) . . . 149

S. 68 --Cash credits--Amount shown as loan--No satisfactory explanation regarding loan--Addition of amount to income of assessee--Justified-- Dr. D. Siva Sankara Rao (HUF) v . ITO (AP) . . . 117

----Cash credit--Company--Share application money--Burden of proof--Assessee establishing identity of investor and genuineness of transaction--Duty of Assessing Officer to investigate creditworthiness of investor--Finding that assessee proved genuineness of transaction--No addition could be made-- CIT v. Peoples General Hospital Ltd . (MP) . . . 65

S. 80-IA --Industrial undertaking--Special deduction--Rental income from towers constructed in industrial park--Commissioner (Appeals) holding receipt was business income and eligible for special deduction under section 80-IA--Revenue not challenging finding of Commissioner (Appeals) on section 80-IA deduction before Tribunal--Tribunal cannot pass remand order for further enquiry on issue of character of receipt-- R. R. Industries Ltd . v. ITO (OSD) (Mad) . . . 97

S. 80-IB(10) --Housing project--Special deduction under section 80-IB(10)--Conditions to be satisfied--Law applicable--Amendment to sub-section (10) not retrospective--Conditions regarding completion of project and limitation on commercial use imposed by amended provision--Not applicable prior to 1-4-2005-- Manan Corporation v . Asst. CIT (Guj) . . . 44

S. 139(5) --Return--Revised return--Effect of section 139(5)--Delay in filing return--Revised return cannot be filed-- Menezes Fernandes Enterprises v . ITO
(Bom) . . . 82

S. 142A --Assessment--Law applicable--Effect of insertion of section 142A by Finance (No. 2) Act, 2004 with retrospective effect from November 15, 1972--Power to refer to Valuation Officer--Rejection of accounts not a pre-condition--Assessing Officer not accepting valuation of plant in previous assessment year--Notice under section 142A--Valid-- Bharathi Cement Corporation P. Ltd. v . CIT (AP) . . . 74

S. 144B --Assessment--Draft assessment order--Advance tax--Penalty--Untrue estimate of advance tax--Proceedings for penalty need not be proposed in draft assessment order-- J. K. Synthetics Ltd . v . CIT (All) . . . 104

S. 153 --Assessment--Limitation--Writ--Powers of High Court--High Court cannot extend period of limitation for assessment-- Satyam Computer Services Ltd . v . Addl. CIT (AP) . . . 17

S. 154 --Recovery of tax--Notice of demand--Stay of demand--Rectification of mistakes--Notice for assessment year 2004-05 issued after four years from end of financial year in which original assessment framed--Barred by limitation-- Vodafone Mobile Service Ltd . v. Union of India (Delhi) . . . 173

S. 156 --Advance tax--Interest--Notice of demand--Notice issued for a period prior to date of notice--Notice of demand ex facie not valid-- Vodafone Mobile Service Ltd . v. Union of India (Delhi) . . . 173

S. 220(2) --Recovery of tax--Notice of demand--Stay of demand--Rectification of mistakes--Notice for assessment year 2004-05 issued after four years from end of financial year in which original assessment framed--Barred by limitation-- Vodafone Mobile Service Ltd . v. Union of India (Delhi) . . . 173

S. 234A --Advance tax--Interest under sections 234A and 234B--Interest mandatory-- Gouli Mahadevappa v . ITO (Karn) . . . 90

S. 234B --Advance tax--Interest--Notice of demand--Notice issued for a period prior to date of notice--Notice of demand ex facie not valid-- Vodafone Mobile Service Ltd . v. Union of India (Delhi) . . . 173

----Advance tax--Interest under sections 234A and 234B--Interest mandatory-- Gouli Mahadevappa v . ITO (Karn) . . . 90

S. 273(2) --Assessment--Draft assessment order--Advance tax--Penalty--Untrue estimate of advance tax--Proceedings for penalty need not be proposed in draft assessment order-- J. K. Synthetics Ltd . v . CIT (All) . . . 104

S. 273(2)(a) --Advance tax--Penalty--Untrue estimate of advance tax--Burden of proof--Burden on assessee to prove that estimate not untrue--Finding that estimate untrue--Imposition of penalty--Justified-- J. K. Synthetics Ltd . v . CIT
(All) . . . 104

S. 281B --Recovery of tax--Attachment and sale of property--Provisional attachment--Effect of section 281B--Provisional attachment to be commensurate with claim of Revenue-- KDH Properties P. Ltd . v. Asst. CIT (Mad) . . . 1

S. 292B --Notice--Validity--Effect of section 292B--Mistake in mention of provision--Notice in accordance with law--Notice not invalid-- Bharathi Cement Corporation P. Ltd . v . CIT (AP) . . . 74



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