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Sunday, September 29, 2013

ITR Volume 357 : Part 3


 

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

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

HIGH COURTS

Business income --Remission or cessation of liability--Condition precedent for application of section 41(1)--Deduction in earlier year--Return of earlier year in which claim for deduction was made treated as non est--Remission of liability in relevant accounting year--No deduction in earlier year--Section 41(1) not applicable--Income-tax Act, 1961, s. 41(1)-- CIT v . Rayala Corporation P. Ltd. (Mad) . . . 356

Central Board of Direct Taxes --Powers--Scope of powers under section 119--Power to admit claim for deduction beyond limitation--Finding that claim was genuine and there were reasons for not filing application within time--Genuine hardship to assessee if application were rejected--Application to be considered--Income-tax Act, 1961, s. 119-- Jay Vijay Express Carriers v. CIT (Guj) . . . 363

Interpretation of taxing statutes --Strict interpretation-- CIT v . Rayala Corporation P. Ltd . (Mad) . . . 356

 

PRINT EDITION

ITR Volume 357 : Part 3 (Issue dated : 30-9-2013)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Writ --Existence of alternative remedy--Court will not ordinarily entertain writ petition--Writ petition against notices for reassessment--Assessee relegated to appeal--Constitution of India, art. 226--Income-tax Act, 1961, s. 148-- CIT v . Chhabil Dass Agarwal . . . 357

HIGH COURTS

Bad debt --Bank--Classification of rural branches--Explanation (ia) to section 36(1)(viia)--Branch in rural area where population is less than 10,000--Income-tax Act, 1961, s. 36(1)(viia), Expln. (ia)-- CIT v . Dhanalekshmi Bank Ltd . (Ker) . . . 448

Business expenditure --Disallowance--Deduction only on actual payment--Tax or duty not actually paid--Law applicable--Effect of amendment of section 43B by Finance Act, 1988--Extension of provision to cess and fees--Amendment not retrospective--Amendment effective from 1-4-1989--Cess and cess surcharge payable under Tamil Nadu Panchayat Act--Difference between cess and tax--Cess and cess surcharge deductible in assessment year 1985-86--Income-tax Act, 1961, s. 43B-- Dalmia Cement (Bharat) Ltd . v . CIT (Delhi) . . . 419

Co-operative society --Special deduction--Sale of liquor not falling under categories in section 80P(2)--Not allowable--Agricultural products grown by members for public distribution system--Entitled to deduction--Income-tax Act, 1961, s. 80P(2)(a)(iii)-- Satyamangalam Agricultural Producer’s Co-operative Marketing Society Ltd. v . ITO (Mad) . . . 347

Company --Book profit--Bad debt--Computation--Whether provision for bad debt is to be added while computing book profit--Decision of Supreme Court in favour of assessee--Subsequent amendment with retrospective effect to nullify decision--Assessing Officer directed to redo assessment in the light of amended provisions--Income-tax Act, 1961-- CIT v . Dhanalekshmi Bank Ltd . (Ker) . . . 448

----Book profit--Disallowance of expenditure in relation to exempted income--Proportionate addition of expenditure attributable to exempted income while computing book profit--Authorities not considered provision authorising addition to book profit--Matter remanded--Income-tax Act, 1961, s. 115JA-- CIT v. Dhanalekshmi Bank Ltd .
(Ker) . . . 448

Deduction of tax at source --Credit for tax deducted--Contract work--Firm converted into a company--Joint venture--Whether certificates of tax deduction at source issued in name of joint venture or in name of a director--Not relevant--Contract receipts shown in certificates assessed in hands of assessee--Assessee to be given credit for tax deducted at source as mentioned in certificates--Income-tax Rules, 1962, r. 37BA--Income-tax Act, 1961, s. 199-- CIT v . Bhooratnam and Co. (AP) . . . 396

Exemption --Export oriented unit--Condition precedent for exemption--Profits should be derived from unit--Training fees not entitled to exemption--Income-tax Act, 1961, s. 10B-- Pentamedia Graphics Ltd. v . Asst. CIT (Mad) . . . 403

----Salary--Perquisites--Scope of section 10(10CC)--Tax paid by employer on behalf of employee--Entitled to exemption--Multiple stage grossing up not applicable--Income-tax Act, 1961, ss. 10(10CC), 17, 195A-- Yoshio Kubo v. CIT (Delhi) . . . 452

Income --Amounts collected as deposits towards possible levy of sales tax--Amounts to be returned if sales tax were not levied--Amounts not trading receipt--Income-tax Act, 1961-- Dalmia Cement (Bharat) Ltd . v. CIT (Delhi) . . . 419

Interpretation of taxing statutes --Exemption provision-- Pentamedia Graphics Ltd . v. Asst. CIT (Mad) . . . 403

Penalty --Concealment of income--Bogus claims for deduction--Claim for deduction of penalty and fine under Customs Act, bogus claims to bill discounting charges and depreciation--Levy of penalty--Justified--Income-tax Act, 1961, s. 271(1)(c)-- Sharma Alloys (India) Ltd . v . ITO (OSD) (Mad) . . . 379

Precedent --Effect of Supreme Court decision in Russel’s case [1964] 53 ITR 91 (SC)-- Yoshio Kubo v . CIT (Delhi) . . . 452

Reassessment --Income escaping assessment--Disallowance of expenditure in relation to exempted incomes--Effect of proviso to section 14A--No reassessment for any assessment year prior to 2001-02--Income-tax Act, 1961, ss. 14A, 147-- CIT v . Dhanalekshmi Bank Ltd . (Ker) . . . 448

----Notice--Reasons to believe--Reasons recorded showing only factual position--Notice recording assessee had permanent establishment in India but no indication why and how permanent establishment had impacted tax payable or income assessed in original assessment--Notice incomplete and incomprehensible--Requisite belief that income had escaped assessment not possible on basis of reasons recorded--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- G. S. Engineering and Construction Corporation v . Dy. DIT (International Taxation) (Delhi) . . . 335

----Notice--Validity--Information forming basis for notice vague--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- CIT v. Insecticides (India) Ltd.  (Delhi) . . . 330

----Scope of provisions--Fresh claim by assessee regarding interest on investment--Not to be entertained--Reassessment proceedings for benefit of Revenue--Income-tax Act, 1961, ss. 147, 148-- Satyamangalam Agricultural Producer’s Co-operative Marketing Society Ltd . v. ITO (Mad) . . . 347

Refund --Interest payable by assessee on excess refund--Law applicable--Effect of section 234D with effect from 1-6-2003--Income-tax Act, 1961, s. 234D-- CIT v. Dhanalekshmi Bank Ltd . (Ker) . . . 448

Revision --Scope of section 263--Revising authority feeling inquiry inadequate--Revising authority must make enquiry and show that assessment order was erroneous--Revising authority has no power to remand and direct Assessing Officer to conduct enquiry--Income-tax Act, 1961, s. 263-- DIT v. Jyoti Foundation (Delhi) . . . 388

Salary --Perquisite--Contribution towards social security benefits by foreign employer in foreign country--TDS payments received by employee--Legal and accountancy expenses incurred by employer on behalf of employee--Amount withheld by employer to fulfil commitment to pay particular salary--Not assessable as perquisites--Tax paid by employer to be excluded while computing value of rent-free accommodation--Income-tax Act, 1961, s. 17-- Yoshio Kubo v. CIT (Delhi) . . . 452

Total income --Inclusions in total income--Inclusion of income of minor in income of parent whose income is greater--Clubbing of income of minors with income of mother on ground mother’s income higher--Proper--Income-tax Act, 1961, s. 64(1A)-- Anju Mehra v . CIT (P&H) . . . 416

Valuation of stock --Bank--Valuation of unquoted equity shares--Yield to maturity method--Valuation according to RBI guidelines--Valid--Income-tax Act, 1961-- CIT v. Dhanalekshmi Bank Ltd. (Ker) . . . 448

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Constitution of India :

Art. 226 --Writ--Existence of alternative remedy--Court will not ordinarily entertain writ petition--Writ petition against notices for reassessment--Assessee relegated to appeal-- CIT v . Chhabil Dass Agarwal (SC) . . . 357

Income-tax Act, 1961 :

S. 10(10CC) --Exemption--Salary--Perquisites--Scope of section 10(10CC)--Tax paid by employer on behalf of employee--Entitled to exemption--Multiple stage grossing up not applicable-- Yoshio Kubo v. CIT (Delhi) . . . 452

S. 10B --Exemption--Export oriented unit--Condition precedent for exemption--Profits should be derived from unit--Training fees not entitled to exemption-- Pentamedia Graphics Ltd. v . Asst. CIT (Mad) . . . 403

S. 14A --Reassessment--Income escaping assessment--Disallowance of expenditure in relation to exempted incomes--Effect of proviso to section 14A--No reassessment for any assessment year prior to 2001-02-- CIT v . Dhanalekshmi Bank Ltd .
(Ker) . . . 448

S. 17 --Exemption--Salary--Perquisites--Scope of section 10(10CC)--Tax paid by employer on behalf of employee--Entitled to exemption--Multiple stage grossing up not applicable-- Yoshio Kubo v. CIT (Delhi) . . . 452

----Salary--Perquisite--Contribution towards social security benefits by foreign employer in foreign country--TDS payments received by employee--Legal and accountancy expenses incurred by employer on behalf of employee--Amount withheld by employer to fulfil commitment to pay particular salary--Not assessable as perquisites--Tax paid by employer to be excluded while computing value of rent-free accommodation-- Yoshio Kubo v. CIT (Delhi) . . . 452

S. 36(1)(viia), Expln. (ia) --Bad debt--Bank--Classification of rural branches--Explanation (ia) to section 36(1)(viia)--Branch in rural area where population is less than 10,000-- CIT v . Dhanalekshmi Bank Ltd . (Ker) . . . 448

S. 43B --Business expenditure--Disallowance--Deduction only on actual payment--Tax or duty not actually paid--Law applicable--Effect of amendment of section 43B by Finance Act, 1988--Extension of provision to cess and fees--Amendment not retrospective--Amendment effective from 1-4-1989--Cess and cess surcharge payable under Tamil Nadu Panchayat Act--Difference between cess and tax--Cess and cess surcharge deductible in assessment year 1985-86-- Dalmia Cement (Bharat) Ltd . v . CIT
(Delhi) . . . 419

S. 64(1A) --Total income--Inclusions in total income--Inclusion of income of minor in income of parent whose income is greater--Clubbing of income of minors with income of mother on ground mother’s income higher--Proper-- Anju Mehra v . CIT
(P&H) . . . 416

S. 80P(2)(a)(iii) --Co-operative society--Special deduction--Sale of liquor not falling under categories in section 80P(2)--Not allowable--Agricultural products grown by members for public distribution system--Entitled to deduction-- Satyamangalam Agricultural Producer’s Co-operative Marketing Society Ltd. v . ITO
(Mad) . . . 347

S. 115JA --Company--Book profit--Disallowance of expenditure in relation to exempted income--Proportionate addition of expenditure attributable to exempted income while computing book profit--Authorities not considered provision authorising addition to book profit--Matter remanded-- CIT v. Dhanalekshmi Bank Ltd .
(Ker) . . . 448

S. 147 --Reassessment--Income escaping assessment--Disallowance of expenditure in relation to exempted incomes--Effect of proviso to section 14A--No reassessment for any assessment year prior to 2001-02-- CIT v . Dhanalekshmi Bank Ltd .
(Ker) . . . 448

----Reassessment--Notice--Reasons to believe--Reasons recorded showing only factual position--Notice recording assessee had permanent establishment in India but no indication why and how permanent establishment had impacted tax payable or income assessed in original assessment--Notice incomplete and incomprehensible--Requisite belief that income had escaped assessment not possible on basis of reasons recorded--Notice not valid-- G. S. Engineering and Construction Corporation v . Dy. DIT (International Taxation) (Delhi) . . . 335

----Reassessment--Notice--Validity--Information forming basis for notice vague--Notice not valid-- CIT v. Insecticides (India) Ltd. (Delhi) . . . 330

----Reassessment--Scope of provisions--Fresh claim by assessee regarding interest on investment--Not to be entertained--Reassessment proceedings for benefit of Revenue-- Satyamangalam Agricultural Producer’s Co-operative Marketing Society Ltd . v. ITO (Mad) . . . 347

S. 148 --Reassessment--Notice--Reasons to believe--Reasons recorded showing only factual position--Notice recording assessee had permanent establishment in India but no indication why and how permanent establishment had impacted tax payable or income assessed in original assessment--Notice incomplete and incomprehensible--Requisite belief that income had escaped assessment not possible on basis of reasons recorded--Notice not valid-- G. S. Engineering and Construction Corporation v . Dy. DIT (International Taxation) (Delhi) . . . 335

----Reassessment--Notice--Validity--Information forming basis for notice vague--Notice not valid-- CIT v. Insecticides (India) Ltd. (Delhi) . . . 330

----Reassessment--Scope of provisions--Fresh claim by assessee regarding interest on investment--Not to be entertained--Reassessment proceedings for benefit of Revenue-- Satyamangalam Agricultural Producer’s Co-operative Marketing Society Ltd . v. ITO (Mad) . . . 347

----Writ--Existence of alternative remedy--Court will not ordinarily entertain writ petition--Writ petition against notices for reassessment--Assessee relegated to appeal-- CIT v . Chhabil Dass Agarwal (SC) . . . 357

S. 195A --Exemption--Salary--Perquisites--Scope of section 10(10CC)--Tax paid by employer on behalf of employee--Entitled to exemption--Multiple stage grossing up not applicable-- Yoshio Kubo v. CIT (Delhi) . . . 452

S. 199 --Deduction of tax at source--Credit for tax deducted--Contract work--Firm converted into a company--Joint venture--Whether certificates of tax deduction at source issued in name of joint venture or in name of a director--Not relevant--Contract receipts shown in certificates assessed in hands of assessee--Assessee to be given credit for tax deducted at source as mentioned in certificates-- CIT v . Bhooratnam and Co. (AP) . . . 396

S. 234D --Refund--Interest payable by assessee on excess refund--Law applicable--Effect of section 234D with effect from 1-6-2003-- CIT v. Dhanalekshmi Bank Ltd . (Ker) . . . 448

S. 263 --Revision--Scope of section 263--Revising authority feeling inquiry inadequate--Revising authority must make enquiry and show that assessment order was erroneous--Revising authority has no power to remand and direct Assessing Officer to conduct enquiry-- DIT v. Jyoti Foundation (Delhi) . . . 388

S. 271(1)(c) --Penalty--Concealment of income--Bogus claims for deduction--Claim for deduction of penalty and fine under Customs Act, bogus claims to bill discounting charges and depreciation--Levy of penalty--Justified-- Sharma Alloys (India) Ltd . v . ITO (OSD) (Mad) . . . 379

Income-tax Rules, 1962 :

R. 37BA --Deduction of tax at source--Credit for tax deducted--Contract work--Firm converted into a company--Joint venture--Whether certificates of tax deduction at source issued in name of joint venture or in name of a director--Not relevant--Contract receipts shown in certificates assessed in hands of assessee--Assessee to be given credit for tax deducted at source as mentioned in certificates-- CIT v . Bhooratnam and Co. (AP) . . . 396

 


Thursday, September 26, 2013

Tax audit report to be filed manually before Sept 30, 1 month extension for e-filing

Tax audit due date extended.

Assessee has option to file the tax audit report manually if he is facing problem in uploading electronically and still wish to file before 30th sept 2013.

However, as per notification assessee/CA can upload electronically before 31st Oct. , 2013.

Kindly follow the below mentioned link for notification.

Regards,
-------
CA.C.V.PAWAR
---------- Forwarded message ----------
From: Pune West <puneweststudycircle@googlegroups.com>
Date: Thu, Sep 26, 2013 at 12:22 PM
Subject: Tax audit report to be filed manually before Sept 30, 1 month extension for e-filing
To: cvpawar@gmail.com


Dear Members,
 
Please find link to CBDT Notification pursuant to all our representations. http://www.taxsutra.com/sites/taxsutra.com/files/webform/Notification.PDF
 
Regards

CA Sarosh Irani
Convenor - Pune West CPE Study Circle

Monday, September 23, 2013

CBDT Modifies Norms For Compulsory Scrutiny Of Cases In FY 2013-14

Dear Subscriber,

CBDT Modifies Norms For Compulsory Scrutiny Of Cases In FY 2013-14

The CBDT has issued Instruction No. 13 of 2013 dated 20.09.2013 by which it has modified the norms for compulsory manual selection of cases for scrutiny in FY 2013-14 as specified in Instruction No. 10 of 2013 dated 05.08.2013. The scrutiny norms have been made public pursuant to the directions of the Delhi High Court in Joginder Pal Gulati vs. OSD – CPIO


(Click Here To Read More)

 

Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

Transfer Pricing: Final Safe Harbour Rules Available For Download




ITR (TRIB) VOL 26 PART 5



 

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB)) -- PRINT AND ONLINE EDITION

 

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Dividend --Deemed dividend--Loan to shareholder having voting power exceeding 10 per cent.--Contention that if shares belonging to trust excluded, shareholding would be less than ten per cent.--Notarised trust deed and copy of board resolution of company produced in support of contention--Deeming fiction to be strictly construed--Loan not assessable as deemed dividend--Income-tax Act, 1961 , s. 2(22)(e) -- Krupeshbhai N. Patel v. Deputy CIT (Ahmedabad) . . . 325

Loss --Short-term capital loss--Sale of units of mutual funds--Purchases of units within period of three months prior to record date and sale within period of nine months from record date--Meaning of “within a period of three months prior to record date†--Condition under section 94(7)(b)(ii) fulfilled--Disallowance of short-term capital loss justified--Income-tax Act, 1961 , s. 94(7) -- Krupeshbhai N. Patel v. Deputy CIT (Ahmedabad) . . . 325

Search and seizure --Assessment--Sale consideration of land--Additions on basis of notings on loose papers found during scrutiny--No direct evidence about receiving money--Addition not justified--Income-tax Act, 1961 -- Krupeshbhai N. Patel v. Deputy CIT (Ahmedabad) . . . 325

 

PRINT EDITION

Volume 26 : Part 5 (Issue dated : 23-9-2013)

SUBJECT INDEX TO CASES REPORTED

Business expenditure --Disallowance--Payments liable to deduction of tax at source--Commission or brokerage--Assessee, a distributor of SIM cards carrying out sale of SIM cards through dealers--Payments to dealers for activation--Are in the nature of commission or brokerage liable to tax deduction at source--Assessee failing to deduct tax at source--Expenditure not allowable under section 40(a)(ia)--Income-tax Act, 1961, ss. 40(a)(ia), 194H-- ITO v. Smart Distributors (Chandigarh) . . . 660

----Employees’ and employer’s contributions to employees’ State insurance and provident fund--Payments made before due date for filing return--Allowable--Income-tax Act, 1961, s. 36(1)(va)-- Onward Technologies Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 734

----Expenses incurred on food and beverages--Failure to pay fringe benefit tax--Finding that 20 per cent. disallowance reasonable on provisions of fringe benefit tax--Justified--Income-tax Act, 1961, s. 115WB(2)-- Diamond Carpet v. Additional CIT (Agra) . . . 689

----Expenses necessary for purpose of business--Expenses incurred by manufacturer of carpets on erection of looms--Expenditure cannot be disallowed on whole--Expenditure allowable on basis of proportion of loom expenditure to gross profit in earlier year--Income-tax Act, 1961-- Diamond Carpet v. Additional CIT (Agra) . . . 689

----Interest on borrowed capital--Interest free loan given to partner--No details of own funds--Matter remanded for decision afresh on basis of formula laid down by Tribunal-- Diamond Carpet v. Additional CIT (Agra) . . . 689

Capital gains --Exemption--Sale of property and investment of consideration in purchase or construction of residential house--Provision to be liberally construed--Document not revealing actual date and amount of purchase--Assessee to place supporting evidence regarding date and amount of investment towards purchase--Matter remanded--Income-tax Act, 1961, s. 54F-- Narasimha Raju Rudra Raju v. Assistant CIT (Hyderabad) . . . 681

Capital or revenue expenditure --Expenditure for renovating rented office premises--Finding that it was difficult to bifurcate expenditure into revenue and capital and therefore 50 per cent. treated as capital expenditure and balance as revenue--Proper-- SICOM Ltd. v. Joint CIT (Mumbai) . . . 706

----Expenditure incurred on introducing compact spinning system--Revenue expenditure--Income-tax Act, 1961-- Assistant CIT v. Prabhu Spinning Mills P. Ltd. (Chennai) . . . 795

----Expenditure on installation of light fixtures and fittings, repairs and replacement of small electrical fittings--Expenses in nature of preserving and maintaining existing assets or of repairs--No new asset or any enduring benefit derived by assessee--Expenditure not capital in nature-- SICOM Ltd. v. Joint CIT (Mumbai) . . . 706

Cash credits --Company--Sums shown as share application money--Shareholders filing confirmation letters--Income-tax returns of shareholders accepted--Department cannot thereafter, without showing money emanated from assessee’s hands, tax sums as unexplained credits--Income-tax Act, 1961, s. 68-- Assistant CIT v. AMR Hospitality Services Ltd. (Hyderabad) . . . 758

Company --Book profit--Computation--Provision for bad debt and provision for leave salary--Not be included--Income-tax Act, 1961, s. 115J-- SICOM Ltd. v. Joint CIT (Mumbai) . . . 706

Depreciation --Assets forming part of block of assets and depreciation allowed in earlier years--Depreciation not to be disallowed on opening written down value--Income-tax Act, 1961, s. 32-- SICOM Ltd. v. Joint CIT (Mumbai) . . . 706

----Lease transactions--Finding that assets owned by assessee and under lease agreement assessee having right to repossess assets and assets to revert back to assessee at end of lease period--Disallowance not to be disallowed--Income-tax Act, 1961, s. 32-- SICOM Ltd. v. Joint CIT (Mumbai) . . . 706

----Ownership of asset--No evidence regarding ownership of car and use for business purpose--Depreciation not allowable--Income-tax Act, 1961, s. 32-- Diamond Carpet v. Additional CIT (Agra) . . . 689

----Sale and leaseback--Transaction of sale and leaseback taking place in preceding previous year and depreciation allowed and asset forming part of block of assets--Disallowance not proper--Commissioner (Appeals) judging genuineness of sale transactions without adverse material brought by Assessing Officer--Asset purchased and leased back to party--Assets belonging to assessee and assessee having right of reversion of possession at end of lease period--Matter remanded to Assessing Officer to examine issue of sale and leaseback agreement afresh-- SICOM Ltd. v. Joint CIT (Mumbai) . . . 706

Exemption --Export of computer software--Interest income--To be considered as income from other sources--Not eligible for exemption--Inclusion of finder fees and marketing fees in total turnover--Proper--Inclusion of expenditure incurred in foreign currency in total turnover--Not justified--Income-tax Act, 1961, s. 10A-- Onward Technologies Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 734

----Interest earned by infrastructure capital fund or company--Notification by Government not received at time of assessment--Appeal--Notification received--Matter remanded for grant of exemption after verification of notification--Income-tax Act, 1961, s. 10(23G)-- SICOM Ltd. v. Joint CIT (Mumbai) . . . 706

Income --Computation--Income not includible in total income--Disallowance of expenditure--Shares held as stock in trade--Rule 8D(2)(ii) and (iii) cannot have application--Section 14A applicable--Disallowance of sum estimated at 10 per cent. of dividend earned proper--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962 r. 8D-- Deputy CIT v. Gulshan Investment Co. Ltd. (Kolkata) . . . 674

----Disallowance of expenditure related to exempt income--Disallowance to be worked out on reasonable basis--Dividend--No borrowed funds utilised for making investment in shares--Assessee buying shares in companies by way of financing to promote industrial development--Administrative costs--One per cent. to be disallowed as administrative expenses for purpose of earning exempt income--Income-tax Act, 1961, ss. 14A, 10(33)-- SICOM Ltd. v. Joint CIT (Mumbai) . . . 706

----Undertaking set up by Government for providing finance for industrial development--Port development programme of Government--Survey charges incurred and to be recovered from successful bidders--Expenses incurred in assessment year--Assessee debiting expenses to profit and loss account and claiming them as expenses and as and when recovered offering tax--Permissible--Expenses incurred in pursuance of activities assigned to assessee--Expenses offered for tax in year when recovered--Not to be disallowed in this year-- SICOM Ltd. v. Joint CIT (Mumbai) . . . 706

Income-tax --General principles--Res judicata--No estoppel against provisions of Act--Authorities clearly taking incorrect view in earlier year--Not stopped from taking correct view of statutory provisions in later year--Method employed by assessee for determining arm’s length price of international transactions contrary to statutory provisions--Assessee not entitled to continue calculating arm’s length price in erroneous manner-- Onward Technologies Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 734

----General principles--Res judicata--Principle of consistency-- SICOM Ltd. v. Joint CIT (Mumbai) . . . 706

Intercorporate dividend --Special dividend--Borrowings of assessee not utilised for making investment in shares--Interest on borrowings and other expenditure allowable as deduction while computing business income--Expenditure could not once again be deducted from dividend income for purpose of computing deduction under section 80M--Deduction to be granted with reference to gross dividend--Income-tax Act, 1961, s. 80M-- SICOM Ltd. v. Joint CIT (Mumbai) . . . 706

Interest-tax --Credit institution--Definition--Finance company--Leasing company--Matter remanded for recording finding whether principally granting operating leases or finance leases--Thereafter decision to be arrived at whether assessee is credit institution--Interest-tax Act, 1974, s. 2(5B)-- Gujarat Gas Financial Services Ltd. v. Assistant CIT [SB] (Ahmedabad) . . . 775

International transactions --Arm’s length price--Determination--Impermissible to adopt combination of prescribed methods or altogether unprescribed method--Overall profit of group as whole cannot be considered for determination of arm’s length price--Mixing transactional net margin method and cost plus method in determining its arm’s length price--Not proper--Transactional net margin method--Comparable cases must be those engaged in similar business as assessee--Transfer Pricing Officer accepting as at arm’s length transactions of two segments--Determination of arm’s length price for third segment--Figures of two segments cannot be taken--Figures of relevant segment alone to be considered--Income-tax Act, 1961, ss. 92(1), 92B, 92C(1)--Income-tax Rules, 1962, r. 10B-- Onward Technologies Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 734

----Arm’s length price--International transaction--Definition--Calculation of profit earned by assessee from transaction with associated enterprise--Only from transaction between two or more associated enterprises--Profit realised by foreign associated enterprise from ultimate customers--Not permissible to consider--Selection of foreign associated enterprise as tested party not permissible--Income-tax Act, 1961, ss. 92(1), 92B, 92C(1)--Income-tax Rules, 1962, r. 10B-- Onward Technologies Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 734

Reassessment --Notice--Income escaping assessment--Details given not enough to establish transaction in nature of accommodation entries--Reasons do not satisfy requirement of section 147--Income-tax Act, 1961, ss. 147, 148-- ITO v. On Exim P. Ltd. (Delhi) . . . 697

----Notice--Validity--Incorrect address--Notice to be sent at address given in record of Income-tax Department--Income-tax Act, 1961, s. 148-- ITO v. On Exim P. Ltd. (Delhi) . . . 697

----Notice--Validity--Notice signed on March 31 but handed over to postal authority on April 1--Beyond period of limitation--Income-tax Act, 1961, ss. 148, 149-- ITO v. On Exim P. Ltd. (Delhi) . . . 697

Revision --Commissioner--Condition precedent--Order under revision should be erroneous and prejudicial to interests of Revenue--Income-tax Act, 1961, s. 263-- Mihir J. Doshi v. Assistant CIT (Mumbai) . . . 652

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 10(23G) --Exemption--Interest earned by infrastructure capital fund or company--Notification by Government not received at time of assessment--Appeal--Notification received--Matter remanded for grant of exemption after verification of notification-- SICOM Ltd. v. Joint CIT (Mumbai) . . . 706

S. 10(33) --Income--Disallowance of expenditure related to exempt income--Disallowance to be worked out on reasonable basis--Dividend--No borrowed funds utilised for making investment in shares--Assessee buying shares in companies by way of financing to promote industrial development--Administrative costs--One per cent. to be disallowed as administrative expenses for purpose of earning exempt income-- SICOM Ltd. v. Joint CIT (Mumbai) . . . 706

S. 10A --Exemption--Export of computer software--Interest income--To be considered as income from other sources--Not eligible for exemption--Inclusion of finder fees and marketing fees in total turnover--Proper--Inclusion of expenditure incurred in foreign currency in total turnover--Not justified-- Onward Technologies Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 734

S. 14A --Income--Computation--Income not includible in total income--Disallowance of expenditure--Shares held as stock in trade--Rule 8D(2)(ii) and (iii) cannot have application--Section 14A applicable--Disallowance of sum estimated at 10 per cent. of dividend earned proper-- Deputy CIT v. Gulshan Investment Co. Ltd. (Kolkata) . . . 674

----Income--Disallowance of expenditure related to exempt income--Disallowance to be worked out on reasonable basis--Dividend--No borrowed funds utilised for making investment in shares--Assessee buying shares in companies by way of financing to promote industrial development--Administrative costs--One per cent. to be disallowed as administrative expenses for purpose of earning exempt income-- SICOM Ltd. v. Joint CIT (Mumbai) . . . 706

S. 32 --Depreciation--Assets forming part of block of assets and depreciation allowed in earlier years--Depreciation not to be disallowed on opening written down value-- SICOM Ltd. v. Joint CIT (Mumbai) . . . 706

----Depreciation--Lease transactions--Finding that assets owned by assessee and under lease agreement assessee having right to repossess assets and assets to revert back to assessee at end of lease period--Disallowance not to be disallowed-- SICOM Ltd. v. Joint CIT (Mumbai) . . . 706

----Depreciation--Ownership of asset--No evidence regarding ownership of car and use for business purpose--Depreciation not allowable-- Diamond Carpet v. Additional CIT (Agra) . . . 689

S. 36(1)(va) --Business expenditure--Employees’ and employer’s contributions to employees’ State insurance and provident fund--Payments made before due date for filing return--Allowable-- Onward Technologies Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 734

S. 40(a)(ia) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Commission or brokerage--Assessee, a distributor of SIM cards carrying out sale of SIM cards through dealers--Payments to dealers for activation--Are in the nature of commission or brokerage liable to tax deduction at source--Assessee failing to deduct tax at source--Expenditure not allowable under section 40(a)(ia)-- ITO v. Smart Distributors (Chandigarh) . . . 660

S. 54F --Capital gains--Exemption--Sale of property and investment of consideration in purchase or construction of residential house--Provision to be liberally construed--Document not revealing actual date and amount of purchase--Assessee to place supporting evidence regarding date and amount of investment towards purchase--Matter remanded-- Narasimha Raju Rudra Raju v. Assistant CIT (Hyderabad) . . . 681

S. 68 --Cash credits--Company--Sums shown as share application money--Shareholders filing confirmation letters--Income-tax returns of shareholders accepted--Department cannot thereafter, without showing money emanated from assessee’s hands, tax sums as unexplained credits-- Assistant CIT v. AMR Hospitality Services Ltd. (Hyderabad) . . . 758

S. 80M --Intercorporate dividend--Special dividend--Borrowings of assessee not utilised for making investment in shares--Interest on borrowings and other expenditure allowable as deduction while computing business income--Expenditure could not once again be deducted from dividend income for purpose of computing deduction under section 80M--Deduction to be granted with reference to gross dividend-- SICOM Ltd. v. Joint CIT (Mumbai) . . . 706

S. 92(1) --International transactions--Arm’s length price--Determination--Impermissible to adopt combination of prescribed methods or altogether unprescribed method--Overall profit of group as whole cannot be considered for determination of arm’s length price--Mixing transactional net margin method and cost plus method in determining its arm’s length price--Not proper--Transactional net margin method--Comparable cases must be those engaged in similar business as assessee--Transfer Pricing Officer accepting as at arm’s length transactions of two segments--Determination of arm’s length price for third segment--Figures of two segments cannot be taken--Figures of relevant segment alone to be considered-- Onward Technologies Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 734

----International transactions--Arm’s length price--International transaction--Definition--Calculation of profit earned by assessee from transaction with associated enterprise--Only from transaction between two or more associated enterprises--Profit realised by foreign associated enterprise from ultimate customers--Not permissible to consider--Selection of foreign associated enterprise as tested party not permissible-- Onward Technologies Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 734

S. 92B --International transactions--Arm’s length price--Determination--Impermissible to adopt combination of prescribed methods or altogether unprescribed method--Overall profit of group as whole cannot be considered for determination of arm’s length price--Mixing transactional net margin method and cost plus method in determining its arm’s length price--Not proper--Transactional net margin method--Comparable cases must be those engaged in similar business as assessee--Transfer Pricing Officer accepting as at arm’s length transactions of two segments--Determination of arm’s length price for third segment--Figures of two segments cannot be taken--Figures of relevant segment alone to be considered-- Onward Technologies Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 734

----International transactions--Arm’s length price--International transaction--Definition--Calculation of profit earned by assessee from transaction with associated enterprise--Only from transaction between two or more associated enterprises--Profit realised by foreign associated enterprise from ultimate customers--Not permissible to consider--Selection of foreign associated enterprise as tested party not permissible-- Onward Technologies Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 734

S. 92C(1) --International transactions--Arm’s length price--Determination--Impermissible to adopt combination of prescribed methods or altogether unprescribed method--Overall profit of group as whole cannot be considered for determination of arm’s length price--Mixing transactional net margin method and cost plus method in determining its arm’s length price--Not proper--Transactional net margin method--Comparable cases must be those engaged in similar business as assessee--Transfer Pricing Officer accepting as at arm’s length transactions of two segments--Determination of arm’s length price for third segment--Figures of two segments cannot be taken--Figures of relevant segment alone to be considered-- Onward Technologies Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 734

----International transactions--Arm’s length price--International transaction--Definition--Calculation of profit earned by assessee from transaction with associated enterprise--Only from transaction between two or more associated enterprises--Profit realised by foreign associated enterprise from ultimate customers--Not permissible to consider--Selection of foreign associated enterprise as tested party not permissible-- Onward Technologies Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 734

S. 115J --Company--Book profit--Computation--Provision for bad debt and provision for leave salary--Not be included-- SICOM Ltd. v. Joint CIT (Mumbai) . . . 706

S. 115WB(2) --Business expenditure--Expenses incurred on food and beverages--Failure to pay fringe benefit tax--Finding that 20 per cent. disallowance reasonable on provisions of fringe benefit tax--Justified-- Diamond Carpet v. Additional CIT (Agra) . . . 689

S. 147 --Reassessment--Notice--Income escaping assessment--Details given not enough to establish transaction in nature of accommodation entries--Reasons do not satisfy requirement of section 147-- ITO v. On Exim P. Ltd. (Delhi) . . . 697

S. 148 --Reassessment--Notice--Income escaping assessment--Details given not enough to establish transaction in nature of accommodation entries--Reasons do not satisfy requirement of section 147-- ITO v. On Exim P. Ltd. (Delhi) . . . 697

----Reassessment--Notice--Validity--Incorrect address--Notice to be sent at address given in record of Income-tax Department-- ITO v. On Exim P. Ltd. (Delhi) . . . 697

----Reassessment--Notice--Validity--Notice signed on March 31 but handed over to postal authority on April 1--Beyond period of limitation-- ITO v. On Exim P. Ltd. (Delhi) . . . 697

S. 149 --Reassessment--Notice--Validity--Notice signed on March 31 but handed over to postal authority on April 1--Beyond period of limitation-- ITO v. On Exim P. Ltd. (Delhi) . . . 697

S. 194H --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Commission or brokerage--Assessee, a distributor of SIM cards carrying out sale of SIM cards through dealers--Payments to dealers for activation--Are in the nature of commission or brokerage liable to tax deduction at source--Assessee failing to deduct tax at source--Expenditure not allowable under section 40(a)(ia)-- ITO v. Smart Distributors (Chandigarh) . . . 660

S. 263 --Revision--Commissioner--Condition precedent--Order under revision should be erroneous and prejudicial to interests of Revenue-- Mihir J. Doshi v. Assistant CIT (Mumbai) . . . 652

Income-tax Rules, 1962 :

R. 8D --Income--Computation--Income not includible in total income--Disallowance of expenditure--Shares held as stock in trade--Rule 8D(2)(ii) and (iii) cannot have application--Section 14A applicable--Disallowance of sum estimated at 10 per cent. of dividend earned proper-- Deputy CIT v. Gulshan Investment Co. Ltd. (Kolkata) . . . 674

R. 10B --International transactions--Arm’s length price--Determination--Impermissible to adopt combination of prescribed methods or altogether unprescribed method--Overall profit of group as whole cannot be considered for determination of arm’s length price--Mixing transactional net margin method and cost plus method in determining its arm’s length price--Not proper--Transactional net margin method--Comparable cases must be those engaged in similar business as assessee--Transfer Pricing Officer accepting as at arm’s length transactions of two segments--Determination of arm’s length price for third segment--Figures of two segments cannot be taken--Figures of relevant segment alone to be considered-- Onward Technologies Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 734

----International transactions--Arm’s length price--International transaction--Definition--Calculation of profit earned by assessee from transaction with associated enterprise--Only from transaction between two or more associated enterprises--Profit realised by foreign associated enterprise from ultimate customers--Not permissible to consider--Selection of foreign associated enterprise as tested party not permissible-- Onward Technologies Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 734

Interest-tax Act, 1974 :

S. 2(5B) --Interest-tax--Credit institution--Definition--Finance company--Leasing company--Matter remanded for recording finding whether principally granting operating leases or finance leases--Thereafter decision to be arrived at whether assessee is credit institution-- Gujarat Gas Financial Services Ltd. v. Assistant CIT [SB] (Ahmedabad) . . . 775

 


ITR VOL 357 PART 2


 

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

 

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

HIGH COURTS

Assessment --Order passed without giving assessee opportunity to be heard--Not valid--Income-tax Act, 1961-- Green Power Realtors P. Ltd. v. Deputy CIT
(Mad) . . . 332

Income-tax --General principles--Principles of natural justice-- Green Power Realtors P. Ltd. v. Deputy CIT (Mad) . . . 332

Penalty --Concealment of income--Claim for deductions--Finding that claims were bona fide--Rejection of claims and additions to income--No concealment of income--Penalty could not be levied--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Balaji Distilleries Ltd. (Mad) . . . 339

Precedent --Effect of decision in Harshad Mehta’s case-- Kantilal Sakarlal Gandhi v. ITO (Guj) . . . 347

----Effect of decision of Supreme Court in Price Waterhouse Coopers P. Ltd. v. CIT [2012] 348 ITR 306-- CIT v. Balaji Distilleries Ltd. (Mad) . . . 339

Rebate --Company--Book profit--Computation of income under section 115JB--Company paying securities transaction tax--Company entitled to rebate under section 88E--Income-tax Act, 1961, ss. 87, 88E, 115JB-- CIT v. Horizon Capital Ltd.
(Karn) . . . 326

Recovery of tax --Company--Private company--Directors--Liability of directors--Scope of section 179--Section 179 does not cover penalty--Penalty imposed on private company cannot be recovered from director--Income-tax Act, 1961, s. 179-- Kantilal Sakarlal Gandhi v. ITO (Guj) . . . 347

Transfer of case --Assessee’s name appearing in search of third party at Hyderabad--Notice for transfer of assessee’s case from Bangalore to Hyderabad--Authority to make available all and every relevant material, as also particulars, while calling upon assessee to submit objection for transfer of his case to another State--In the absence of such particulars, notice and order of transfer of case not valid--Income-tax Act, 1961, s. 127-- Span Design and Development (P.) Ltd. v. CIT (Karn) . . . 322

Words and phrases --†Rebate†--Meaning of-- CIT v. Horizon Capital Ltd.
(Karn) . . . 326

 

PRINT EDITION

ITR Volume 357 : Part 2 (Issue dated : 23-9-2013)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Accounting --Method of accounting--Valuation of inventory--Accounting Standard--Cost or net realisable value--Discounted value of raw material--Write off factor not proved by assessee--Assessing Officer directed to verify figure--Income-tax Act, 1961, s. 145-- Suzuki Motorcycle India P. Ltd . v . CIT (Delhi) . . . 250

Appeal to Appellate Tribunal --Cash credits--Company--Share application money--Assessing Officer making detailed investigation and finding credits not satisfactorily explained--Tribunal not justified in setting aside finding without examining matter--Matter remanded--Income-tax Act, 1961, ss. 68, 254-- CIT v . Titan Securities Ltd . (Delhi) . . . 184

Appeal to Commissioner (Appeals) --Power of Commissioner (Appeals) to admit additional evidence--Assessing Officer’s objection to admission of additional evidence overruled on ground additional evidence only clarificatory and assessee’s case not exclusively based on it--Admission of additional evidence proper--But Assessing Officer to be given opportunity to examine it and process claim of assessee--Matter remanded--Income-tax Rules, 1962, r. 46A-- CIT v . Arts Beauty Exports (Delhi) . . . 276

Assessment --Special audit--Direction for--Principles governing--Report submitted by Assessing Officer to Commissioner intimating that assessee asked to file necessary details which were being verified and examined in course of assessment proceedings--Opinion that complexities noticed and confronted to assessee have been answered by assessee--Report sent on next day to Commissioner submitting proposal for special audit--Material or compelling circumstances for change of opinion overnight not shown--Reasons vague and unconvincing--Opportunity not afforded to assessee to show cause against proposal--Circumstances to indicate opinion formed by Assessing Officer not his own--Chief Commissioner giving approval to special audit on same day--Failure to apply mind--Nothing on record to show fresh development--Approval granted by Chief Commissioner a nullity and direction for special audit quashed--Income-tax Act, 1961, s. 142(2A)-- DLF Commercial Projects Corporation v . Asst. CIT (Delhi) . . . 211

Business expenditure --Disallowance--Amounts on which tax has not been deducted at source--Scope of section 40(a)(ia)--Meaning of “payable†--Provision would cover amounts payable at any time during the accounting year--Income-tax Act, 1961, s. 40(a)(ia)-- CIT v. Sikandarkhan N. Tunvar (Guj) . . . 312

Capital gains --Exemption--Investment of consideration received on transfer of long-term capital assets in residential house--Meaning of residential house in section 54 and section 54F--House consisting of several units would constitute a residential house--Income-tax Act, 1961, ss. 54, 54F-- CIT v . Gita Duggal (Delhi) . . . 153

----Writ--Computation of capital gains--Reference to Valuation Officer--Effect of section 55A--Writ petition against reference to District Valuation Officer--Not valid--Income-tax Act, 1961, s. 55A--Constitution of India art. 226-- ACC Ltd . v. District Valuation Officer (Delhi) . . . 160

Cash credit --Share application money--Investigation report stating assessee engaged in accommodation entry transactions--Assessee filing certified copies issued by Registrar of Companies in relation to share application, affidavits of directors, Form 2 filed with Registrar of Companies by applicants, confirmations by share applicants, certificates by auditors--Assessing Officer not enquiring into matter or summoning share applicants or directors--No finding that material disclosed untrustworthy or lacked credibility--Addition solely based on investigation report not justified--Income-tax Act, 1961, s. 68-- CIT v . Fair Finvest Ltd. (Delhi) . . . 146

----Share application money--Section 68 applicable--Onus on assessee to prove identity of share applicants, their creditworthiness and genuineness of transaction--Creditworthiness of share applicants and genuineness of transactions not proved--Tribunal not justified in deleting addition under section 68--Matter remanded--Income-tax Act, 1961, s. 68-- CIT v. Youth Construction P. Ltd . (Delhi) . . . 197

Central Board of Direct Taxes --Beneficial circulars or circulars relaxing rigour of provisions of Act--Binding on Assessing Officer and others executing Act-- CIT v . Ashok Mittal (Delhi) . . . 245

Change of law --Circular issued under 1922 Act--Circular not withdrawn--Provisions of old and new Acts similar--Circular to be applied--Indian Income-tax Act, 1922, s. 24--Income-tax Act, 1961, s. 73--Board Circular No. 23D of 1960 dated 12-9-1960-- CIT v. Ashok Mittal (Delhi) . . . 245

Charitable purpose --Charitable trust--Exemption--No evidence to show that activities carried out by assessee were propelled by any profit motive--Section 11(4A) not applicable--Income-tax Act, 1961, ss. 2(15), 11(4A)-- PHD Chamber of Commerce and Industry v . DIT (Exemptions) (Delhi) . . . 296

Depreciation --Power plants--Machinery and equipment used in construction of projects--Machinery and equipment kept ready for use but not used--No material to indicate it related to power generation equipment and was to be installed only after project completed--Entitled to depreciation--Income-tax Act, 1961, ss. 32, 56(2)(ii)-- National Thermal Power Corporation Ltd . v . CIT (Delhi) . . . 253

Exemption --Educational institution--Meaning of educational institution in section 10(23C)(vi)--Assessee teaching Western classical music and Indian and Western dancing--Students prepared for examination conducted by Trinity College, London--Regular classes conducted in a systematic manner--Assessee was an educational institution--Rejection of application under section 10(23C)--Not valid--Income-tax Act, 1961, s. 10(23C)(vi)-- Delhi Music Society v. Director General of Income-tax
(Delhi) . . . 265

----Salary--Perquisite--Tax paid by employer on behalf of employee--Assessee receiving Rs. 77 lakhs in India on which tax payable of Rs. 35 lakhs--Assessee including Rs. 35 lakhs in his salary income and offering Rs. 1.13 crores to tax--Tax amounting to Rs. 15 lakhs paid by assessee not reimbursed by employer--Not includible in income of assessee--Interest-free deposit for accommodation not part of perquisite--No notional interest leviable--Income-tax Act, 1961-- CIT v . Jaydev H. Raja (Bom) . . . 293

Export --Exemption--Firm--Mere reconstitution of firm by taking on new partner does not amount to splitting up or reconstruction of partnership business--Custom-bonding required only where imports contemplated for manufacture for purposes of export--Assessee not importing any materials for use in manufacture or export of handicrafts--Custom-bonding of unit not to be insisted upon--Whether assessee carried on manufacture--Matter remanded--Income-tax Act, 1961, s. 10B-- CIT v . Arts Beauty Exports (Delhi) . . . 276

----Special deduction--Computation--DEPB credit utilised by assessee in its business--Section 28(iiid) not applicable--Second, third and fourth provisos to section 80HHC(3) not applicable--Whether 90 per cent. of DEPB credit can be excluded from assessed profits of the business--Assessing Officer directed to compute DEPB credit afresh--Sale of special import licence--No reduction from profits of business to the extent of ninety per cent.--Income-tax Act, 1961, ss. 28, 80HHC-- CIT v . K. R. B. L. Ltd.
(Delhi) . . . 258

Income --Interest--Interest on loan--Mercantile system of accounting--Resolution not to charge interest in view of financial difficulties of borrowing companies--Borrowing companies in sound financial position in relevant accounting year--Interest assessable--Income-tax Act, 1961-- CIT v . Brahmaputra Capital and Financial Services Ltd .
(Delhi) . . . 241

Income-tax authorities --Powers of income-tax authorities--Scope of section 119(2)(b)--No satisfactory explanation regarding delay in applying for refund or grounds for refund--Income-tax authorities could not be authorised to admit application--Income-tax Act, 1961, s. 119(2)(b)-- Kiwanis Club of New Delhi v . DIT (Exemptions)
(Delhi) . . . 205

Interpretation of taxing statutes --Strict construction-- CIT v. Sikandarkhan N. Tunvar (Guj) . . . 312

Precedent --Effect of decision of Supreme Court in the case of Sole Trustee, Loka Shikshana Trust [1975] 101 ITR 234 (SC)-- Delhi Music Society v . Director General of Income-tax (Delhi) . . . 265

Reassessment --Notice--Condition precedent--Prima facie view that income had escaped assessment--Foreign company having subsidiary in India--Payments made by subsidiary to assessee and interest-free loans by assessee to subsidiary--Notice on ground assessee had business connection in India--Notice valid--Income-tax Act, 1961, ss. 147, 148-- Convergys Customer Management v . Asst. DIT (Delhi) . . . 177

----Notice after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Primary facts relating to claim for depreciation furnished--Depreciation allowed after considering facts--Notice after four years to withdraw depreciation--Not valid--Income-tax Act, 1961, s. 148-- Vatika Ltd . v . ITO
(Delhi) . . . 170

Refund --Application for refund--Delay in filing return and in making application for refund--Return not processed under section 143(1) or section 143(3)--No evidence of deduction of tax at source on payments to assessee--No satisfactory explanation regarding delay in filing return and in applying for refund--Rejection of application for refund--Justified--Income-tax Act, 1961-- Kiwanis Club of New Delhi v . DIT (Exemptions) (Delhi) . . . 205

Speculation loss --Carry forward and set off--Carried forward speculation loss to be first set off against speculative profits of current year before adjusting any other loss against those profits and other incomes--Income-tax Act, 1961, s. 73-- CIT v. Ashok Mittal (Delhi) . . . 245

Words and phrases --†Education†-- Delhi Music Society v. Director General of Income-tax (Delhi) . . . 265

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Constitution of India :

Art. 226 --Capital gains--Writ--Computation of capital gains--Reference to Valuation Officer--Effect of section 55A--Writ petition against reference to District Valuation Officer--Not valid-- ACC Ltd . v. District Valuation Officer (Delhi) . . . 160

Indian Income-tax Act, 1922 :

S. 24 --Change of law--Circular issued under 1922 Act--Circular not withdrawn--Provisions of old and new Acts similar--Circular to be applied-- CIT v. Ashok Mittal
(Delhi) . . . 245

Income-tax Act, 1961 :

S. 2(15) --Charitable purpose--Charitable trust--Exemption--No evidence to show that activities carried out by assessee were propelled by any profit motive--Section 11(4A) not applicable-- PHD Chamber of Commerce and Industry v . DIT (Exemptions) (Delhi) . . . 296

S. 10(23C)(vi) --Exemption--Educational institution--Meaning of educational institution in section 10(23C)(vi)--Assessee teaching Western classical music and Indian and Western dancing--Students prepared for examination conducted by Trinity College, London--Regular classes conducted in a systematic manner--Assessee was an educational institution--Rejection of application under section 10(23C)--Not valid-- Delhi Music Society v. Director General of Income-tax (Delhi) . . . 265

S. 10B --Export--Exemption--Firm--Mere reconstitution of firm by taking on new partner does not amount to splitting up or reconstruction of partnership business--Custom-bonding required only where imports contemplated for manufacture for purposes of export--Assessee not importing any materials for use in manufacture or export of handicrafts--Custom-bonding of unit not to be insisted upon--Whether assessee carried on manufacture--Matter remanded-- CIT v . Arts Beauty Exports (Delhi) . . . 276

S. 11(4A) --Charitable purpose--Charitable trust--Exemption--No evidence to show that activities carried out by assessee were propelled by any profit motive--Section 11(4A) not applicable-- PHD Chamber of Commerce and Industry v . DIT (Exemptions) (Delhi) . . . 296

S. 28 --Export--Special deduction--Computation--DEPB credit utilised by assessee in its business--Section 28(iiid) not applicable--Second, third and fourth provisos to section 80HHC(3) not applicable--Whether 90 per cent. of DEPB credit can be excluded from assessed profits of the business--Assessing Officer directed to compute DEPB credit afresh--Sale of special import licence--No reduction from profits of business to the extent of ninety per cent.-- CIT v . K. R. B. L. Ltd. (Delhi) . . . 258

S. 32 --Depreciation--Power plants--Machinery and equipment used in construction of projects--Machinery and equipment kept ready for use but not used--No material to indicate it related to power generation equipment and was to be installed only after project completed--Entitled to depreciation-- National Thermal Power Corporation Ltd . v . CIT (Delhi) . . . 253

S. 40(a)(ia) --Business expenditure--Disallowance--Amounts on which tax has not been deducted at source--Scope of section 40(a)(ia)--Meaning of “payable†--Provision would cover amounts payable at any time during the accounting year-- CIT v. Sikandarkhan N. Tunvar (Guj) . . . 312

S. 54 --Capital gains--Exemption--Investment of consideration received on transfer of long-term capital assets in residential house--Meaning of residential house in section 54 and section 54F--House consisting of several units would constitute a residential house-- CIT v . Gita Duggal (Delhi) . . . 153

S. 54F --Capital gains--Exemption--Investment of consideration received on transfer of long-term capital assets in residential house--Meaning of residential house in section 54 and section 54F--House consisting of several units would constitute a residential house-- CIT v . Gita Duggal (Delhi) . . . 153

S. 55A --Capital gains--Writ--Computation of capital gains--Reference to Valuation Officer--Effect of section 55A--Writ petition against reference to District Valuation Officer--Not valid-- ACC Ltd . v. District Valuation Officer (Delhi) . . . 160

S. 56(2)(ii) --Depreciation--Power plants--Machinery and equipment used in construction of projects--Machinery and equipment kept ready for use but not used--No material to indicate it related to power generation equipment and was to be installed only after project completed--Entitled to depreciation-- National Thermal Power Corporation Ltd . v . CIT (Delhi) . . . 253

S. 68 --Appeal to Appellate Tribunal--Cash credits--Company--Share application money--Assessing Officer making detailed investigation and finding credits not satisfactorily explained--Tribunal not justified in setting aside finding without examining matter--Matter remanded-- CIT v . Titan Securities Ltd . (Delhi) . . . 184

----Cash credit--Share application money--Investigation report stating assessee engaged in accommodation entry transactions--Assessee filing certified copies issued by Registrar of Companies in relation to share application, affidavits of directors, Form 2 filed with Registrar of Companies by applicants, confirmations by share applicants, certificates by auditors--Assessing Officer not enquiring into matter or summoning share applicants or directors--No finding that material disclosed untrustworthy or lacked credibility--Addition solely based on investigation report not justified-- CIT v . Fair Finvest Ltd. (Delhi) . . . 146

----Cash credits--Share application money--Section 68 applicable--Onus on assessee to prove identity of share applicants, their creditworthiness and genuineness of transaction--Creditworthiness of share applicants and genuineness of transactions not proved--Tribunal not justified in deleting addition under section 68--Matter remanded-- CIT v. Youth Construction P. Ltd . (Delhi) . . . 197

S. 73 --Change of law--Circular issued under 1922 Act--Circular not withdrawn--Provisions of old and new Acts similar--Circular to be applied-- CIT v. Ashok Mittal
(Delhi) . . . 245

----Speculation loss--Carry forward and set off--Carried forward speculation loss to be first set off against speculative profits of current year before adjusting any other loss against those profits and other incomes-- CIT v. Ashok Mittal (Delhi) . . . 245

S. 80HHC --Export--Special deduction--Computation--DEPB credit utilised by assessee in its business--Section 28(iiid) not applicable--Second, third and fourth provisos to section 80HHC(3) not applicable--Whether 90 per cent. of DEPB credit can be excluded from assessed profits of the business--Assessing Officer directed to compute DEPB credit afresh--Sale of special import licence--No reduction from profits of business to the extent of ninety per cent.-- CIT v . K. R. B. L. Ltd. (Delhi) . . . 258

S. 119(2)(b) --Income-tax authorities--Powers of income-tax authorities--Scope of section 119(2)(b)--No satisfactory explanation regarding delay in applying for refund or grounds for refund--Income-tax authorities could not be authorised to admit application-- Kiwanis Club of New Delhi v . DIT (Exemptions) (Delhi) . . . 205

S. 142(2A) --Assessment--Special audit--Direction for--Principles governing--Report submitted by Assessing Officer to Commissioner intimating that assessee asked to file necessary details which were being verified and examined in course of assessment proceedings--Opinion that complexities noticed and confronted to assessee have been answered by assessee--Report sent on next day to Commissioner submitting proposal for special audit--Material or compelling circumstances for change of opinion overnight not shown--Reasons vague and unconvincing--Opportunity not afforded to assessee to show cause against proposal--Circumstances to indicate opinion formed by Assessing Officer not his own--Chief Commissioner giving approval to special audit on same day--Failure to apply mind--Nothing on record to show fresh development--Approval granted by Chief Commissioner a nullity and direction for special audit quashed-- DLF Commercial Projects Corporation v . Asst. CIT (Delhi) . . . 211

S. 145 --Accounting--Method of accounting--Valuation of inventory--Accounting Standard--Cost or net realisable value--Discounted value of raw material--Write off factor not proved by assessee--Assessing Officer directed to verify figure-- Suzuki Motorcycle India P. Ltd . v . CIT (Delhi) . . . 250

S. 147 --Reassessment--Notice--Condition precedent--Prima facie view that income had escaped assessment--Foreign company having subsidiary in India--Payments made by subsidiary to assessee and interest-free loans by assessee to subsidiary--Notice on ground assessee had business connection in India--Notice valid-- Convergys Customer Management v . Asst. DIT (Delhi) . . . 177

S. 148 --Reassessment--Notice after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Primary facts relating to claim for depreciation furnished--Depreciation allowed after considering facts--Notice after four years to withdraw depreciation--Not valid-- Vatika Ltd . v . ITO (Delhi) . . . 170

----Reassessment--Notice--Condition precedent--Prima facie view that income had escaped assessment--Foreign company having subsidiary in India--Payments made by subsidiary to assessee and interest-free loans by assessee to subsidiary--Notice on ground assessee had business connection in India--Notice valid-- Convergys Customer Management v . Asst. DIT (Delhi) . . . 177

S. 254 --Appeal to Appellate Tribunal--Cash credits--Company--Share application money--Assessing Officer making detailed investigation and finding credits not satisfactorily explained--Tribunal not justified in setting aside finding without examining matter--Matter remanded-- CIT v . Titan Securities Ltd . (Delhi) . . . 184

Income-tax Rules, 1962 :

R. 46A --Appeal to Commissioner (Appeals)--Power of Commissioner (Appeals) to admit additional evidence--Assessing Officer’s objection to admission of additional evidence overruled on ground additional evidence only clarificatory and assessee’s case not exclusively based on it--Admission of additional evidence proper--But Assessing Officer to be given opportunity to examine it and process claim of assessee--Matter remanded-- CIT v . Arts Beauty Exports (Delhi) . . . 276