INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
ITR Volume 356 : Part 3 (Issue dated : 26-8-2013)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Accounting --Rejection of accounts--Construction business--Assessee maintaining audited books of account--No question of disbelieving them in absence of cogent evidence--Income-tax Act, 1961, s. 44AA(2)-- CIT v. Dolphin Builders (P.) Ltd.
(MP) . . . 420
Amortisation of expenses --Deduction under section 35D in prior years--Deduction allowable in assessment year under consideration--Income-tax Act, 1961, s. 35D-- Dy. CIT v . Gujarat Narmada Valley Fertilizers Co. Ltd . (Guj) . . . 460
Business expenditure --Capital or revenue expenditure--Amortisation of expenses--Payments to employees under voluntary retirement scheme--Compliance with rule 2BA is for benefit under section 10(10C)--No such compliance mandatory for deduction in hands of employer under section 35DDA--Allowable deduction--Income-tax Rules, 1962, r. 2BA--Income-tax Act, 1961, s. 35DDA-- CIT v. State Bank of Mysore (Karn) . . . 468
----Commission--Sales through commission agents--Some buyers in accounting year relevant to assessment year 2005-06 stating that sales were direct--Statement not rebutted with evidence--Amounts not deductible--Income-tax Act, 1961-- CIT v. Printer House P. Ltd. (Delhi) . . . . 474
----Premium on redemption of debentures--Deductible--Income-tax Act, 1961-- Dy. CIT v. Gujarat Narmada Valley Fertilizers Co. Ltd. (Guj) . . . 460
Business loss --Loss due to confiscation of goods--Deductible--Income-tax Act, 1961-- CIT v. T. C. Reddy (AP) . . . 516
Capital gains --Capital asset--Paintings--Law applicable--Effect of amendment of section 2(14) w.e.f. 1-4-2008--Paintings excluded from personal effects w.e.f. 1-4-2008--Gains from transfer of paintings not assessable in assessment year 2005-06--Income-tax Act, 1961, ss. 2(14), 45-- CIT v. Kuruvilla Abraham (Mad) . . . 519
----Charge of tax--Condition precedent--Transfer of property--Agreement to purchase immovable property--Agreement making it clear that property would be transferred only after payment of entire amount--Entire amount not paid--Clause in agreement that parts of property could be transferred to third parties--Not relevant--No transfer of property--Tax not leviable--Income-tax Act, 1961, s. 45--Transfer of Property Act, 1882, ss. 5, 19-- Ratna Trayi Reality Service P. Ltd. v. ITO
(Guj) . . . 493
Capital or revenue expenditure --Expenditure on restructuring loan--Revenue expenditure--Income-tax Act, 1961, s. 37-- Dy. CIT v. Gujarat Narmada Valley Fertilizers Co. Ltd. (Guj) . . . 460
Charitable purposes --Donation to charitable institution--Approval of institution--Corpus donations substantially utilized for commercial activities in nature of construction of shopping complex--Assessee not entitled to approval under section 80G--Income-tax Act, 1961, ss. 2(15), 80G-- Vishal Khanna Public Charitable Trust v. Union of India (All) . . . 442
Depreciation --Lease of assets--Depreciation allowed in prior years--Depreciation allowable in assessment year under consideration--Income-tax Act, 1961, s. 32-- Dy. CIT v. Gujarat Narmada Valley Fertilizers Co. Ltd. (Guj) . . . 460
Export --Special deduction--Premium payment received on transferring export licence--Does not involve any earnings of foreign exchange and does not result in profits attributable to an export activity--No deduction under section 80HHC allowable--Income-tax Act, 1961, s. 80HHC-- CIT v. Garniwal Exports (P.) Ltd.
(Karn) . . . 432
Income from other sources or business income --Interest earned by short-term investment of money raised by issue of zero coupon bonds in order to maintain debt equity ratio--Taxable as income from other sources and not income from business--Income-tax Act, 1961-- Bharat Oman Refineries Ltd. v. CIT (MP) . . . 399
Income from undisclosed sources --Assessee trading in steel--Finding that some purchases recorded by it were not bogus but from other parties not recorded in books--Estimation of profit element embedded in purchases--Tribunal justified in estimation on the basis of facts--Income-tax Act, 1961-- CIT v. Simit P. Sheth (Guj) . . . 451
Income-tax --General principles--Genuine transaction not colourable device because of motive to avoid taxation-- CIT v. Special Prints Ltd . (Guj) . . . 404
----General principles--Rule of consistency-- Dy. CIT v. Gujarat Narmada Valley Fertilizers Co. Ltd. (Guj) . . . 460
Interest on borrowed capital --Borrowed capital utilised for purchasing new machinery for expansion of business--Interest deductible--Income-tax Act, 1961, s. 36(1)(iii)-- Dy. CIT v. Gujarat Narmada Valley Fertilizers Co. Ltd.
(Guj) . . . 460
Loss --Firm--Carry forward and set off of loss--Scope of sections 78 and 170 --Dissolution of firm--Business of firm continued by erstwhile partner--Firm and partner are two distinct entities--Loss of firm could not be carried forward and set off by sole proprietor--Income-tax Act, 1961, ss. 78, 170-- Pramod Mittal v. CIT
(Delhi) . . . 456
----Set-off of loss--Capital gains--Set-off of capital loss against capital gains--Finding that transaction whereby capital loss was incurred was genuine--Set-off of capital loss valid--Income-tax Act, 1961-- CIT v. Special Prints Ltd. (Guj) . . . 404
Penalty --Concealment of income--Loss--Law applicable--Effect of Explanation 4 to section 271(1)(c)--Concealment of income resulting in reduction of loss--Penalty can be levied--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Balaramakrishna Engineering Contractors Corporation (AP) . . . 524
Precedent --Effect of decision in CIT v. Gold Coin Health Food P. Ltd. [2008] 304 ITR 308 (SC)-- CIT v. Balaramakrishna Engineering Contractors Corporation
(AP) . . . 524
----Effect of decision of Supreme Court in Ajantha Industries v. CBDT [1976] 102 ITR 281 (SC)-- Global Energy P. Ltd. v . CIT (Bom) . . . 502
----Effect of Supreme Court decision in Azadi Bachao Andolan’s case-- CIT v. Special Prints Ltd. (Guj) . . . 404
----Effect of Supreme Court decision in Madras Industrial Investment Corporation Ltd. v. CIT [1997] 225 ITR 802 (SC)-- Dy. CIT v. Gujarat Narmada Valley Fertilizers Co. Ltd. (Guj) . . . 460
Presumptive taxation --Construction business--Total receipts including those not accounted for in books of account, not exceeding Rs. 40 lakhs--Section 44AD not applicable--Income-tax Act, 1961, s. 44AD-- CIT v. Dolphin Builders (P.) Ltd.
(MP) . . . 420
Reassessment --Notice--Change of opinion--Reasons given in notice not matters considered by assessing authority in original assessment on which opinion formed--Reassessment not by change of opinion--Reassessment valid--Income-tax Act, 1961, ss. 147, 148-- Innovative Foods Ltd. v. Union of India (Ker) . . . 389
----Notice--Condition precedent--Tangible material to show escapement of income from tax--Original assessment without scrutiny--Not relevant--Notice cannot be issued without proper reasons--Income-tax Act, 1961, ss. 147, 148-- Ratna Trayi Reality Service P. Ltd. v . ITO (Guj) . . . 493
----Notice--Validity--Notice not permissible merely for verification of claims--Notice on the ground of miscalculation of special deduction under section 80HHC and excess deduction on account of provision for warranty--Notice valid--Income-tax Act, 1961, ss. 147, 148-- Inductotherm (India) P. Ltd. v. M. Gopalan, Dy. CIT
(Guj) . . . 481
----Notice after four years--Validity--Deduction of excess provision written back--Sufficient disclosure in return to enable Assessing Officer to scrutinise such a claim--Reopening after four years not valid--Income-tax Act, 1961, ss. 147, 148-- National Dairy Development Board v. Dy. CIT (Guj) . . . 413
Refund --Adjustment of refund--Condition precedent--Intimation in writing to assessee prior to adjustment--No intimation in writing to assessee before making adjustment of refund--Order adjusting refund not justified--Income-tax Act, 1961, ss. 240, 244, 244A, 245-- Cognizant Technology Solutions India P. Ltd. v. Dy. CIT
(Mad) . . . 373
Revision --Commissioner--Powers--Industrial undertaking--Transport subsidy--Object is to reduce cost of production--Direct nexus to profits of industrial undertaking--Entitled to deduction--Commissioner revising order on ground transport subsidy could not have been deducted by resorting to section 80-IA--Not valid--Income-tax Act, 1961, s. 263-- Patkai Coal Products Pvt. Ltd. v. CIT (Gauhati) . . . 528
Search and seizure --Block assessment--Limitation--Effect of proviso to Explanation in section 153B--Extension of period of limitation--Proviso can be applied more than once--Stay ordered by High Court and thereafter order passed under section 142(2A) for special audit--Both periods to be excluded for computing limitation--Income-tax Act, 1961, s. 153B-- CIT v. Ulike Promoters P. Ltd. (Delhi) . . . 507
----Warrant of authorisation--No jurisdiction of authority to open camp office in residence of assessee--Allegation that authority trespassed into assessee’s house not countered--Liable to prosecution before competent court--Search and seizure preceded by warrant--Availability of time to pay advance tax and file return--Does not mean that authority had no jurisdiction to issue warrant and effect search and seizure--Income-tax Act, 1961, s. 132-- Prakash V. Sanghvi v. Ramesh G., Major, Dy. DIT (Inv.)
(Karn) . . . 426
Transfer of case --Transfer for purposes of co-ordinated investigation--Reason for such co-ordination must be given--Income-tax Act, 1961, s. 127-- Global Energy P. Ltd. v . CIT (Bom) . . . 502
Writ --High Court--Competency of writ petition--Notice to withdraw registration of trust--Writ petition not maintainable against notice--Income-tax Act, 1961, ss. 12A, 12AA--Constitution of India, art. 226-- Vishal Khanna Public Charitable Trust v. Union of India (All) . . . 442
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Art. 226 --Writ--High Court--Competency of writ petition--Notice to withdraw registration of trust--Writ petition not maintainable against notice-- Vishal Khanna Public Charitable Trust v. Union of India (All) . . . 442
S. 2(14) --Capital gains--Capital asset--Paintings--Law applicable--Effect of amendment of section 2(14) w.e.f. 1-4-2008--Paintings excluded from personal effects w.e.f. 1-4-2008--Gains from transfer of paintings not assessable in assessment year 2005-06-- CIT v. Kuruvilla Abraham (Mad) . . . 519
S. 2(15) --Charitable purposes--Donation to charitable institution--Approval of institution--Corpus donations substantially utilized for commercial activities in nature of construction of shopping complex--Assessee not entitled to approval under section 80G-- Vishal Khanna Public Charitable Trust v. Union of India
(All) . . . 442
S. 12A --Writ--High Court--Competency of writ petition--Notice to withdraw registration of trust--Writ petition not maintainable against notice-- Vishal Khanna Public Charitable Trust v. Union of India (All) . . . 442
S. 12AA --Writ--High Court--Competency of writ petition--Notice to withdraw registration of trust--Writ petition not maintainable against notice-- Vishal Khanna Public Charitable Trust v. Union of India (All) . . . 442
S. 32 --Depreciation--Lease of assets--Depreciation allowed in prior years--Depreciation allowable in assessment year under consideration-- Dy. CIT v. Gujarat Narmada Valley Fertilizers Co. Ltd. (Guj) . . . 460
S. 35D --Amortisation of expenses--Deduction under section 35D in prior years--Deduction allowable in assessment year under consideration-- Dy. CIT v . Gujarat Narmada Valley Fertilizers Co. Ltd . (Guj) . . . 460
S. 35DDA --Business expenditure--Capital or revenue expenditure--Amortisation of expenses--Payments to employees under voluntary retirement scheme--Compliance with rule 2BA is for benefit under section 10(10C)--No such compliance mandatory for deduction in hands of employer under section 35DDA--Allowable deduction-- CIT v. State Bank of Mysore (Karn) . . . 468
S. 36(1)(iii) --Interest on borrowed capital--Borrowed capital utilised for purchasing new machinery for expansion of business--Interest deductible-- Dy. CIT v. Gujarat Narmada Valley Fertilizers Co. Ltd. (Guj) . . . 460
S. 37 --Capital or revenue expenditure--Expenditure on restructuring loan--Revenue expenditure-- Dy. CIT v. Gujarat Narmada Valley Fertilizers Co. Ltd.
(Guj) . . . 460
S. 44AA(2) --Accounting--Rejection of accounts--Construction business--Assessee maintaining audited books of account--No question of disbelieving them in absence of cogent evidence-- CIT v. Dolphin Builders (P.) Ltd. (MP) . . . 420
S. 44AD --Presumptive taxation--Construction business--Total receipts including those not accounted for in books of account, not exceeding Rs. 40 lakhs--Section 44AD not applicable-- CIT v. Dolphin Builders (P.) Ltd. (MP) . . . 420
S. 45 --Capital gains--Capital asset--Paintings--Law applicable--Effect of amendment of section 2(14) w.e.f. 1-4-2008--Paintings excluded from personal effects w.e.f. 1-4-2008--Gains from transfer of paintings not assessable in assessment year 2005-06-- CIT v. Kuruvilla Abraham (Mad) . . . 519
----Capital gains--Charge of tax--Condition precedent--Transfer of property--Agreement to purchase immovable property--Agreement making it clear that property would be transferred only after payment of entire amount--Entire amount not paid--Clause in agreement that parts of property could be transferred to third parties--Not relevant--No transfer of property--Tax not leviable-- Ratna Trayi Reality Service P. Ltd. v. ITO (Guj) . . . 493
S. 78 --Loss--Firm--Carry forward and set off of loss--Scope of sections 78 and 170 --Dissolution of firm--Business of firm continued by erstwhile partner--Firm and partner are two distinct entities--Loss of firm could not be carried forward and set off by sole proprietor-- Pramod Mittal v. CIT (Delhi) . . . 456
S. 80G --Charitable purposes--Donation to charitable institution--Approval of institution--Corpus donations substantially utilized for commercial activities in nature of construction of shopping complex--Assessee not entitled to approval under section 80G-- Vishal Khanna Public Charitable Trust v. Union of India
(All) . . . 442
S. 80HHC --Export--Special deduction--Premium payment received on transferring export licence--Does not involve any earnings of foreign exchange and does not result in profits attributable to an export activity--No deduction under section 80HHC allowable-- CIT v. Garniwal Exports (P.) Ltd. (Karn) . . . 432
S. 127 --Transfer of case--Transfer for purposes of co-ordinated investigation--Reason for such co-ordination must be given-- Global Energy P. Ltd. v . CIT
(Bom) . . . 502
S. 132 --Search and seizure--Warrant of authorisation--No jurisdiction of authority to open camp office in residence of assessee--Allegation that authority trespassed into assessee’s house not countered--Liable to prosecution before competent court--Search and seizure preceded by warrant--Availability of time to pay advance tax and file return--Does not mean that authority had no jurisdiction to issue warrant and effect search and seizure-- Prakash V. Sanghvi v. Ramesh G., Major, Dy. DIT (Inv.)
(Karn) . . . 426
S. 147 --Reassessment--Notice--Change of opinion--Reasons given in notice not matters considered by assessing authority in original assessment on which opinion formed--Reassessment not by change of opinion--Reassessment valid-- Innovative Foods Ltd. v. Union of India (Ker) . . . 389
----Reassessment--Notice--Condition precedent--Tangible material to show escapement of income from tax--Original assessment without scrutiny--Not relevant--Notice cannot be issued without proper reasons-- Ratna Trayi Reality Service P. Ltd. v . ITO
(Guj) . . . 493
----Reassessment--Notice--Validity--Notice not permissible merely for verification of claims--Notice on the ground of miscalculation of special deduction under section 80HHC and excess deduction on account of provision for warranty--Notice valid-- Inductotherm (India) P. Ltd. v. M. Gopalan, Dy. CIT (Guj) . . . 481
----Reassessment--Notice after four years--Validity--Deduction of excess provision written back--Sufficient disclosure in return to enable Assessing Officer to scrutinise such a claim--Reopening after four years not valid-- National Dairy Development Board v. Dy. CIT (Guj) . . . 413
S. 148 --Reassessment--Notice after four years--Validity--Deduction of excess provision written back--Sufficient disclosure in return to enable Assessing Officer to scrutinise such a claim--Reopening after four years not valid-- National Dairy Development Board v. Dy. CIT (Guj) . . . 413
----Reassessment--Notice--Change of opinion--Reasons given in notice not matters considered by assessing authority in original assessment on which opinion formed--Reassessment not by change of opinion--Reassessment valid-- Innovative Foods Ltd. v. Union of India (Ker) . . . 389
----Reassessment--Notice--Condition precedent--Tangible material to show escapement of income from tax--Original assessment without scrutiny--Not relevant--Notice cannot be issued without proper reasons-- Ratna Trayi Reality Service P. Ltd. v . ITO (Guj) . . . 493
----Reassessment--Notice--Validity--Notice not permissible merely for verification of claims--Notice on the ground of miscalculation of special deduction under section 80HHC and excess deduction on account of provision for warranty--Notice valid-- Inductotherm (India) P. Ltd. v. M. Gopalan, Dy. CIT (Guj) . . . 481
S. 153B --Search and seizure--Block assessment--Limitation--Effect of proviso to Explanation in section 153B--Extension of period of limitation--Proviso can be applied more than once--Stay ordered by High Court and thereafter order passed under section 142(2A) for special audit--Both periods to be excluded for computing limitation-- CIT v. Ulike Promoters P. Ltd. (Delhi) . . . 507
S. 170 --Loss--Firm--Carry forward and set off of loss--Scope of sections 78 and 170 --Dissolution of firm--Business of firm continued by erstwhile partner--Firm and partner are two distinct entities--Loss of firm could not be carried forward and set off by sole proprietor-- Pramod Mittal v. CIT (Delhi) . . . 456
S. 240 --Refund--Adjustment of refund--Condition precedent--Intimation in writing to assessee prior to adjustment--No intimation in writing to assessee before making adjustment of refund--Order adjusting refund not justified-- Cognizant Technology Solutions India P. Ltd. v. Dy. CIT (Mad) . . . 373
S. 244 --Refund--Adjustment of refund--Condition precedent--Intimation in writing to assessee prior to adjustment--No intimation in writing to assessee before making adjustment of refund--Order adjusting refund not justified-- Cognizant Technology Solutions India P. Ltd. v. Dy. CIT (Mad) . . . 373
S. 244A --Refund--Adjustment of refund--Condition precedent--Intimation in writing to assessee prior to adjustment--No intimation in writing to assessee before making adjustment of refund--Order adjusting refund not justified-- Cognizant Technology Solutions India P. Ltd. v. Dy. CIT (Mad) . . . 373
S. 245 --Refund--Adjustment of refund--Condition precedent--Intimation in writing to assessee prior to adjustment--No intimation in writing to assessee before making adjustment of refund--Order adjusting refund not justified-- Cognizant Technology Solutions India P. Ltd. v. Dy. CIT (Mad) . . . 373
S. 263 --Revision--Commissioner--Powers--Industrial undertaking--Transport subsidy--Object is to reduce cost of production--Direct nexus to profits of industrial undertaking--Entitled to deduction--Commissioner revising order on ground transport subsidy could not have been deducted by resorting to section 80-IA--Not valid-- Patkai Coal Products Pvt. Ltd. v. CIT (Gauhati) . . . 528
S. 271(1)(c) --Penalty--Concealment of income--Loss--Law applicable--Effect of Explanation 4 to section 271(1)(c)--Concealment of income resulting in reduction of loss--Penalty can be levied-- CIT v. Balaramakrishna Engineering Contractors Corporation (AP) . . . 524
Transfer of Property Act, 1882 :
Ss. 5, 19 --Capital gains--Charge of tax--Condition precedent--Transfer of property--Agreement to purchase immovable property--Agreement making it clear that property would be transferred only after payment of entire amount--Entire amount not paid--Clause in agreement that parts of property could be transferred to third parties--Not relevant--No transfer of property--Tax not leviable-- Ratna Trayi Reality Service P. Ltd. v. ITO (Guj) . . . 493
R. 2BA --Business expenditure--Capital or revenue expenditure--Amortisation of expenses--Payments to employees under voluntary retirement scheme--Compliance with rule 2BA is for benefit under section 10(10C)--No such compliance mandatory for deduction in hands of employer under section 35DDA--Allowable deduction-- CIT v. State Bank of Mysore (Karn) . . . 468
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