ITR (TRIB) VOL 27 PART 4

 

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

 

ONLINE EDITION  Volume 27 : Part 4 (Issue dated : 28-10-2013)

 

SUBJECT INDEX TO CASES REPORTED

Business expenditure --Disallowance--Payments to non-resident--Failure to deduct tax at source--Commission paid to foreign agent for procurement of export orders--No evidence that agents were also designers and technical advisors--Payments not “fees for technical services†--Income of non-resident neither received in India nor accrued on deemed to accrue in India--Not chargeable to tax in India--Assessee not required to deduct tax at source--Expenditure allowable--Income-tax Act, 1961, ss. 9(1)(vii), 40(a)(ia), 195--CBDT Circular Nos. 23 of 1969, 163 of 1975, 786 of 2000, 7 of 2009-- Assistant CIT v. Model Exims (Lucknow) . . . 451

----Year in which allowable--Prior period expenses claimed to have crystallised during year under consideration--Exact nature of liability and how it related to business of assessee not seen--Evidence about crystallisation in year not seen--Matter remanded--Assessee to show why expenditure could not be claimed in year to which it belonged-- Atul Ltd. v. Assistant CIT (Ahmedabad) . . . 461

Capital or revenue expenditure --Advance made for equipment but assessee afterwards deciding not to take equipment--Advance retained by party--Advance related to acquisition of capital asset not to be allowed--Not “debt†but an advance--Not to be allowed as bad debt--Income-tax Act, 1961, ss. 36(1)(vii), 37-- Atul Ltd. v. Assistant CIT (Ahmedabad) . . . 461

Depreciation --Assessee not claiming but Assessing Officer allowing for 2001-02--Assessing Officer reducing depreciation for 2006-07 by depreciation already allowed from 2001-02 to 2005-06--Consequential effect of re-computation of depreciation--Proper--Income-tax Act, 1961, ss. 32, 80-IA-- Atul Ltd. v. Assistant CIT (Ahmedabad) . . . 461

----Carry forward and set off--Special deduction--Industrial undertaking--Allowed for earlier year before setting of unabsorbed depreciation--Balance of unabsorbed depreciation after such set off available carried forward--Disallowance of differential claim--Proper--Income-tax Act, 1961, ss. 32(2), 72, 73, 80-IA-- Atul Ltd. v. Assistant CIT (Ahmedabad) . . . 461

Income --Expenditure relating to income not forming part of total income--Dividend--Disallowance of proportionate expenditure--Only when relevant facts considered by Assessing Officer--Presumption that interest-bearing funds could have been utilised towards earning of non-taxable dividend--Not proper--Assessing Officer to compute correct disallowance, after providing adequate opportunity of hearing to assessee--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Atul Ltd. v. Assistant CIT (Ahmedabad) . . . 461

Industrial undertaking --Special deduction--Installation of new power plant, captive power plant and co-generation plant--Whether new undertaking dependent on existing unit--Whether new undertaking separate and distinct identity--Matter remanded--Income-tax Act, 1961, s. 80-IA-- Atul Ltd. v. Assistant CIT (Ahmedabad) . . . 461

International transactions --Arm’s length price--Determination--Assessing Officer need not demonstrate avoidance of tax before invoking transfer pricing provisions--Assessing Officer not bound to provide opportunity of hearing to assessee before making reference to Transfer Pricing Officer--Comparable uncontrolled price method--Product for sale and circumstances surrounding controlled transaction must be substantially the same as those of uncontrolled transaction--End use of product by buyer has no relevance in fixation of sale price--Common market practice to give bulk purchase discount--Several divisions engaged in manufacturing different product--Aggregation ruled out when arm’s length price can be more accurately determined on separate basis--Income-tax Act, 1961, ss. 92C(3), 92CA(3)--Income-tax Rules, 1962, r. 10A(d)-- Atul Ltd. v. Assistant CIT (Ahmedabad) . . . 461

----Arm’s length price--Transaction not made part of reference to Transfer Pricing Officer--Adjustment by Transfer Pricing Officer without jurisdiction--Non-disclosure by assessee--Assessing Officer empowered to determine international transaction coming to his knowledge on basis of any material or document available with him--Including report of Transfer Pricing Officer--Income-tax Act, 1961, s. 92CA(3)-- Atul Ltd. v. Assistant CIT (Ahmedabad) . . . 461

PRINT EDITION

Volume 27 : Part 4 (Issue dated : 28-10-2013)

SUBJECT INDEX TO CASES REPORTED

Bad and doubtful debts --Amounts mostly in nature of liquidated damages and not bad debts--Details of liquidated damages not furnished by assessee and no finding by Assessing Officer--Matter remanded-- GE India Industrial P. Ltd. v. Deputy CIT (Ahmedabad) . . . 543

Bad debts --Advances written off in profit and loss account--Required details like name of parties, purpose for which advance was granted, were not furnished--No finding as to compliance with conditions under section 36(1)(vii) of Act--Matter remanded--Income-tax Act, 1961, s. 36(1)(vii)-- GE India Industrial P. Ltd. v. Deputy CIT (Ahmedabad) . . . 543

Business expenditure --Claim based on utilisation or reversal of provision--Disallowance on ground appeal against disallowance in earlier year pending--Assessee’s contention that amount disallowed was out of disallowance in earlier year--Assessing Officer to verify whether reversal in year under appeal was out of disallowance--Matter remanded-- GE India Industrial P. Ltd. v. Deputy CIT (Ahmedabad) . . . 543

----Deduction only on actual payment--Provident fund contribution made after due date for filing return--Allowable in year of payment--Income-tax Act, 1961, ss. 36(1)(va), 43B-- Euro Pratik Ispat P. Ltd. v. Assistant CIT (Mumbai) . . . 432

----Disallowance--Payment to non-resident--Management fee paid to non-resident for services--Failure by Assessing Officer to examine taxability of amount paid--Matter remanded--Income-tax Act, 1961, s. 40(a)-- GE India Industrial P. Ltd. v. Deputy CIT (Ahmedabad) . . . 543

----Freight accrual expenses for services received by assessee for which payments made in subsequent years--Contention of assessee that amount reversed in current year represented amount disallowed in earlier year--Matter to be examined afresh on merits-- GE India Industrial P. Ltd. v. Deputy CIT (Ahmedabad) . . . 543

----Provision for “warranty and replacement expenses†--Guidelines of Supreme Court for allowance--No material to show compliance with guidelines by assessee--Matter remanded for decision afresh-- GE India Industrial P. Ltd. v. Deputy CIT (Ahmedabad) . . . 543

Business loss --Claim that loss was on account of difference in general ledger and subsidiary ledgers arising out of posting error--No details of posting error filled--No interference--Income-tax Act, 1961, s. 29-- GE India Industrial P. Ltd. v. Deputy CIT (Ahmedabad) . . . 543

----Loss of stocks due to floods--Assessee’s insurance claim not fully accepted--Claim of assessee not found bogus--Disallowance to extent insurance claim not accepted--Not proper--Income-tax Act, 1961, s. 29-- GE India Industrial P. Ltd. v. Deputy CIT (Ahmedabad) . . . 543

Capital or revenue expenditure --Expenditure on software--Expenditure treated as capital in earlier year and depreciation granted--Claim to depreciation at 60 per cent. on balance in current year--If appeal for earlier year decided in favour of assessee, Assessing Officer to rectify assessment for present year-- GE India Industrial P. Ltd. v. Deputy CIT (Ahmedabad) . . . 543

Company --Book profits--Provision for foreseeable losses, claims and import duty demands--Assessing Officer to recompute book profits after considering issues like provision for bad and doubtful debts and advances, provision for claims--On other aspects, order of Dispute Resolution Panel upheld--Income-tax Act, 1961, s. 115JB-- GE India Industrial P. Ltd. v. Deputy CIT (Ahmedabad) . . . 543

----Dividend--Deemed dividend--Loan to assessee-company by another company--Common shareholders--Scope of section 2(22)(e)--Provision does not contemplate piercing corporate veil--Test of holding substantial interest by common shareholders not satisfied--Assessee not shareholder of company which provided loan--Section 2(22)(e) not attracted--Income-tax Act, 1961, s. 2(22)(e)-- Assistant CIT v. Source Hub India P. Ltd. (Bangalore) . . . 470

Deduction of tax at source --Payment to non-resident--Fees for technical services--Payment made towards part reimbursement of salaries of seconded employees--No transfer of technology--Payment not fees for technical services--Payment already subjected to tax in India--Assessee not liable for non-deduction of tax at source--Income-tax Act 1961, ss. 195, 201--Double Taxation Avoidance Agreement between India and the U.K. art. 13(4)-- Additional DIT (International Taxation) v. Mark and Spencer Reliance India P. Ltd. (Mumbai) . . . 448

Depreciation --Rate of depreciation--Uninterrupted power supply system (UPS) and printer--Higher depreciation at sixty per cent allowable--Income-tax Act, 1961, s. 32-- RayBan Sun Optics India Ltd. v. Deputy CIT (Delhi) . . . 440

Income --Deduction of expenditure--Burden on assessee to show correlation with income-- Hatkesh Co-Operative Housing Society Ltd. v. Assistant CIT (Mumbai) . . . 494

----Principle of mutuality--Essential conditions for application of principle--Mutual arrangement must not lead to scope for generation of income in hands of individual member--Whether commerciality or by profit motive involves question of fact--Co-operative plot owners’ society--Regulations providing for previous written consent for member to let or part with possession of property and for payment to society of half premium received by him from purchaser on every permitted disposition--Assessee-society has stake in transaction--Transfer fees received by assessee taxable to extent in excess of sum allowed by notification to be charged--Premium received on transfer of development rights--Chargeable as income of assessee-society--Income-tax Act, 1961, ss. 2(24)(v), 28(iii)-- Hatkesh Co-Operative Housing Society Ltd. v. Assistant CIT (Mumbai) . . . 494

International transactions --Arm’s length price--Determination--Advertising, marketing and promotional expenses--Guidelines laid down by Tribunal in L. G. Electronics India P. Ltd. v. Asst. CIT [2013] 22 ITR (Trib) 1 (Delhi) [SB]--Matter remanded for consideration in accordance with law in light of guidelines--Income-tax Act, 1961, ss. 92B(2), Expln. , 92C(1)(f), 92CA, 92F(v)-- RayBan Sun Optics India Ltd. v. Deputy CIT (Delhi) . . . 440

----Arm’s length price--Transfer pricing--Profit level indicator--Altering of profit level indicator without assigning reason and opportunity of hearing--Contrary to principles of natural justice--Matter remanded--Income-tax Act, 1961-- Sandvik Asia P. Ltd. v. Assistant CIT (Pune) . . . 477

----Arm’s length price--Transfer pricing--Selection of comparables--Two comparables excluded--Materials on record indicating profits and functionality comparable--No cogent reason to exclude comparables--Direction to Assessing Officer to recompute arm’s length price--Income-tax Act, 1961-- Sandvik Asia P. Ltd. v. Assistant CIT (Pune) . . . 477

----Transfer pricing--Adjustments proposed by Transfer Pricing Officer--Assessee’s submissions and objections not dealt with by Dispute Resolution Panel or cogent reasons given why objections not acceptable--Non-speaking order--Liable to be set aside--Dispute Resolution Panel to pass speaking order after taking into consideration submissions of both parties-- GE India Industrial P. Ltd. v. Deputy CIT (Ahmedabad) . . . 543

----Transfer pricing--Arm’s length price--Transactional net margin method--Profit level indicator--Use of multi-year data--Failure to show influence of multi-year data in determination of transfer prices--Selection of comparables--Rejection of comparable justifies on non-availability of data in public domain--Company in debt cannot be compared to company with sufficient capital base and differ in product--Income-tax Act, 1961, s. 92C--Income-tax Rules, 1962, r. 10B(4)-- Michael Aram Exports P. Ltd. v. ITO (Delhi) . . . 528

----Transfer pricing--Arm’s length price--Transfer pricing adjustment to be limited to international transaction with associated enterprises not to entity level transactions--Income-tax Act, 1961, s. 92(1)-- Sandvik Asia P. Ltd. v. Assistant CIT (Pune) . . . 477

Loss --Unabsorbed loss and depreciation--Carry forward and set off would depend upon finality of order for earlier years--Assessing Officer to determine carried forward losses based on outcome for earlier years--Matter remanded-- GE India Industrial P. Ltd. v. Deputy CIT (Ahmedabad) . . . 543

Penalty --Concealment of income--Adjustment applying transfer pricing provisions not concealment of income--Cancellation of penalty justified--Income-tax Act, 1961, s. 271(1)(c)-- Michael Aram Exports P. Ltd. v. Income-tax Officer (Delhi) . . . 528

Search and seizure --Assessment--Limitation--Exclusion of period for which assessment stayed by High Court on writ petition--Limitation resumes on date of order vacating stay--Not from date of receipt of order by Department--Assessment barred by limitation--Income-tax Act, 1961, s. 158BC-- Deputy CIT v. Drs. X-Ray and Pathology Institute P. Ltd. (Lucknow) . . . 434

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance Agreement between India and the U.K. :

Art. 13(4) --Deduction of tax at source--Payment to non-resident--Fees for technical services--Payment made towards part reimbursement of salaries of seconded employees--No transfer of technology--Payment not fees for technical services--Payment already subjected to tax in India--Assessee not liable for non-deduction of tax at source-- Additional DIT (International Taxation) v. Mark and Spencer Reliance India P. Ltd. (Mumbai) . . . 448

Income-tax Act, 1961 :

S. 2(22)(e) --Company--Dividend--Deemed dividend--Loan to assessee-company by another company--Common shareholders--Scope of section 2(22)(e)--Provision does not contemplate piercing corporate veil--Test of holding substantial interest by common shareholders not satisfied--Assessee not shareholder of company which provided loan--Section 2(22)(e) not attracted-- Assistant CIT v. Source Hub India P. Ltd. (Bangalore) . . . 470

S. 2(24)(v) --Income--Principle of mutuality--Essential conditions for application of principle--Mutual arrangement must not lead to scope for generation of income in hands of individual member--Whether commerciality or by profit motive involves question of fact--Co-operative plot owners’ society--Regulations providing for previous written consent for member to let or part with possession of property and for payment to society of half premium received by him from purchaser on every permitted disposition--Assessee-society has stake in transaction--Transfer fees received by assessee taxable to extent in excess of sum allowed by notification to be charged--Premium received on transfer of development rights--Chargeable as income of assessee-society-- Hatkesh Co-Operative Housing Society Ltd. v. Assistant CIT (Mumbai) . . . 494

S. 28(iii) --Income--Principle of mutuality--Essential conditions for application of principle--Mutual arrangement must not lead to scope for generation of income in hands of individual member--Whether commerciality or by profit motive involves question of fact--Co-operative plot owners’ society--Regulations providing for previous written consent for member to let or part with possession of property and for payment to society of half premium received by him from purchaser on every permitted disposition--Assessee-society has stake in transaction--Transfer fees received by assessee taxable to extent in excess of sum allowed by notification to be charged--Premium received on transfer of development rights--Chargeable as income of assessee-society-- Hatkesh Co-Operative Housing Society Ltd. v. Assistant CIT (Mumbai) . . . 494

S. 29 --Business loss--Claim that loss was on account of difference in general ledger and subsidiary ledgers arising out of posting error--No details of posting error filled--No interference-- GE India Industrial P. Ltd. v. Deputy CIT (Ahmedabad) . . . 543

----Business loss--Loss of stocks due to floods--Assessee’s insurance claim not fully accepted--Claim of assessee not found bogus--Disallowance to extent insurance claim not accepted--Not proper-- GE India Industrial P. Ltd. v. Deputy CIT (Ahmedabad) . . . 543

S. 32 --Depreciation--Rate of depreciation--Uninterrupted power supply system (UPS) and printer--Higher depreciation at sixty per cent allowable-- RayBan Sun Optics India Ltd. v. Deputy CIT (Delhi) . . . 440

S. 36(1)(va) --Business expenditure--Deduction only on actual payment--Provident fund contribution made after due date for filing return--Allowable in year of payment-- Euro Pratik Ispat P. Ltd. v. Assistant CIT (Mumbai) . . . 432

S. 36(1)(vii) --Bad debts--Advances written off in profit and loss account--Required details like name of parties, purpose for which advance was granted, were not furnished--No finding as to compliance with conditions under section 36(1)(vii) of Act--Matter remanded-- GE India Industrial P. Ltd. v. Deputy CIT (Ahmedabad) . . . 543

S. 40(a) --Business expenditure--Disallowance--Payment to non-resident--Management fee paid to non-resident for services--Failure by Assessing Officer to examine taxability of amount paid--Matter remanded-- GE India Industrial P. Ltd. v. Deputy CIT (Ahmedabad) . . . 543

S. 43B --Business expenditure--Deduction only on actual payment--Provident fund contribution made after due date for filing return--Allowable in year of payment-- Euro Pratik Ispat P. Ltd. v. Assistant CIT (Mumbai) . . . 432

S. 92(1) --International transactions--Transfer pricing--Arm’s length price--Transfer pricing adjustment to be limited to international transaction with associated enterprises not to entity level transactions-- Sandvik Asia P. Ltd. v. Assistant CIT (Pune) . . . 477

S. 92B(2), Expln. --International transactions--Arm’s length price--Determination--Advertising, marketing and promotional expenses--Guidelines laid down by Tribunal in L. G. Electronics India P. Ltd. v. Asst. CIT [2013] 22 ITR (Trib) 1 (Delhi) [SB]--Matter remanded for consideration in accordance with law in light of guidelines-- RayBan Sun Optics India Ltd. v. Deputy CIT (Delhi) . . . 440

S. 92C --International transactions--Transfer pricing--Arm’s length price--Transactional net margin method--Profit level indicator--Use of multi-year data--Failure to show influence of multi-year data in determination of transfer prices--Selection of comparables--Rejection of comparable justifies on non-availability of data in public domain--Company in debt cannot be compared to company with sufficient capital base and differ in product--Income-tax Rules, 1962, r. 10B(4)-- Michael Aram Exports P. Ltd. v. ITO (Delhi) . . . 528

S. 92C(1)(f) --International transactions--Arm’s length price--Determination--Advertising, marketing and promotional expenses--Guidelines laid down by Tribunal in L. G. Electronics India P. Ltd. v. Asst. CIT [2013] 22 ITR (Trib) 1 (Delhi) [SB]--Matter remanded for consideration in accordance with law in light of guidelines-- RayBan Sun Optics India Ltd. v. Deputy CIT (Delhi) . . . 440

S. 92CA --International transactions--Arm’s length price--Determination--Advertising, marketing and promotional expenses--Guidelines laid down by Tribunal in L. G. Electronics India P. Ltd. v. Asst. CIT [2013] 22 ITR (Trib) 1 (Delhi) [SB]--Matter remanded for consideration in accordance with law in light of guidelines-- RayBan Sun Optics India Ltd. v. Deputy CIT (Delhi) . . . 440

S. 92F(v) --International transactions--Arm’s length price--Determination--Advertising, marketing and promotional expenses--Guidelines laid down by Tribunal in L. G. Electronics India P. Ltd. v. Asst. CIT [2013] 22 ITR (Trib) 1 (Delhi) [SB]--Matter remanded for consideration in accordance with law in light of guidelines-- RayBan Sun Optics India Ltd. v. Deputy CIT (Delhi) . . . 440

S. 115JB --Company--Book profits--Provision for foreseeable losses, claims and import duty demands--Assessing Officer to recompute book profits after considering issues like provision for bad and doubtful debts and advances, provision for claims--On other aspects, order of Dispute Resolution Panel upheld-- GE India Industrial P. Ltd. v. Deputy CIT (Ahmedabad) . . . 543

S. 158BC --Search and seizure--Assessment--Limitation--Exclusion of period for which assessment stayed by High Court on writ petition--Limitation resumes on date of order vacating stay--Not from date of receipt of order by Department--Assessment barred by limitation-- Deputy CIT v. Drs. X-Ray and Pathology Institute P. Ltd. (Lucknow) . . . 434

S. 195 --Deduction of tax at source--Payment to non-resident--Fees for technical services--Payment made towards part reimbursement of salaries of seconded employees--No transfer of technology--Payment not fees for technical services--Payment already subjected to tax in India--Assessee not liable for non-deduction of tax at source-- Additional DIT (International Taxation) v. Mark and Spencer Reliance India P. Ltd. (Mumbai) . . . 448

S. 201 --Deduction of tax at source--Payment to non-resident--Fees for technical services--Payment made towards part reimbursement of salaries of seconded employees--No transfer of technology--Payment not fees for technical services--Payment already subjected to tax in India--Assessee not liable for non-deduction of tax at source-- Additional DIT (International Taxation) v. Mark and Spencer Reliance India P. Ltd. (Mumbai) . . . 448

S. 271(1)(c) --Penalty--Concealment of income--Adjustment applying transfer pricing provisions not concealment of income--Cancellation of penalty justified--Income-tax Act, 1961, Michael Aram Exports P. Ltd. v. ITO (Delhi) . . . 528

Income-tax Rules, 1962 :

R. 10B(4) --International transactions--Transfer pricing--Arm’s length price--Transactional net margin method--Profit level indicator--Use of multi-year data--Failure to show influence of multi-year data in determination of transfer prices--Selection of comparables--Rejection of comparable justifies on non-availability of data in public domain--Company in debt cannot be compared to company with sufficient capital base and differ in product-- Michael Aram Exports P. Ltd. v. ITO (Delhi) . . . 528

 

ITR VOL 358 PART 1

 

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

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

HIGH COURTS

Appeal to High Court --Powers of High Court--Question not raised before or considered by Tribunal--Cannot be considered by High Court--Question whether commission receipts were covered by seized cash not raised before or considered by Tribunal--Question could not be considered by High Court--Income-tax Act, 1961, s. 260A-- Smt. Rajrani Gupta v. Deputy CIT (Bom) . . . 416

Capital gains --Exemption--Transfer of capital asset and investment of proceeds in residential property--Investment within extended period of limitation for filing return--Assessee entitled to exemption under section 54F--Income-tax Act, 1961, s. 54F-- CIT v. Jagtar Singh Chawla (P&H) . . . 411

Search and seizure --Block assessment--Undisclosed income--Burden of proof--Burden of proving income was disclosed is on assessee--Amounts disclosed as gifts and shown as capital receipts in returns--Not a disclosure of income--Effect of amendment of section 158BB with retrospective effect from 1995--Evidence relatable to search can be taken into consideration--Gifts from non-resident external accounts--Evidence that gifts were not genuine--Confession and retraction before Enforcement Directorate could be taken into consideration--Amounts shown as gifts assessable as income from undisclosed sources--Income-tax Act, 1961, s. 158BB-- Smt. Rajrani Gupta v. Deputy CIT (Bom) . . . 416

 

PRINT EDITION

ITR Volume 358 : Part 1 (Issue dated : 28-10-2013)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Reassessment --Limitation--Notice after four years--Special deduction--Industrial undertaking--Assessment completed on basis of decision of High Court allowing deduction for civil construction--Cannot be reopened after four years solely on basis of subsequent reversal of High Court by Supreme Court--Income-tax Act, 1961, ss. 80HH, 147, 149(1)(a)-- Deputy CIT v. Simplex Concrete Piles (India) Ltd. . . . 129

HIGH COURTS

Appeal to Appellate Tribunal --Powers of Tribunal--Power to remand--Individuals working in various inter-connected organizations--Commission paid by one organization--No return filed by any of the individuals--Order of remand to determine assessability of commission--Justified--Income-tax Act, 1961, s. 2(24)(iv)-- CIT v. C. S. Srivatsan (Mad) . . . 10

Business expenditure --Deduction only on actual payment--Contributions of employees’ State insurance and provident fund deposited prior to filing return under section 139(1)--Allowable--Income-tax Act, 1961, ss. 2(24)(x), 36(1)(va), 43B, 139(1)-- CIT v. Mark Auto Industries Ltd. (P&H) . . . 43

----Disallowance--Expenditure on technical know-how--Expenditure capitalised and not claimed as revenue expenditure--Provision for disallowance for failure to deduct tax at source not applicable--Income-tax Act, 1961, ss. 32, 35AB, 40(a)(i)-- CIT v. Mark Auto Industries Ltd. (P&H) . . . 43

----Disallowance--Payments to non-resident--Failure to deduct tax at source--Circulars in force during relevant year not obliging assessee to deduct tax at source--Circular withdrawing earlier circulars operative only from date of issue and not applicable for earlier years--Circulars binding upon Department--No obligation to deduct tax at source on commission paid to non-resident who was not liable to pay tax in India--Expenditure allowable--Income-tax Act, 1961, ss. 9(1)(vii), 40(a)(ia), 195-- CIT v. Model Exims (All) . . . 72

Capital or revenue expenditure --Expenditure on glow-sign boards displayed at dealer outlets--Revenue--Income-tax Act, 1961, s. 37-- CIT v. Orient Ceramics and Industries Ltd. (Delhi) . . . 49

Charitable purposes --Charitable trust--Business carried on by charitable trust--Meaning of “business†in section 2(15)--Institute of Chartered Accountants of India established to regulate profession of chartered accountants in India--Institute imparting education--Coaching classes conducted by Institute not like private coaching classes--Activity ancillary to educational purposes--Fees charged for coaching classes--Not conclusive--Institute entitled to exemption under section 11--Income-tax Act, 1961, ss. 2(15), 11-- Institute of Chartered Accountants of India v. Director-General of Income-tax (Exemptions) (Delhi) . . . 91

----Charitable trust--Investment of funds of charitable trust--Institute established for regulating profession of chartered accountants in India--Funds of Institute provided to ICAI Accounting Research Foundation--No violation of provisions of section 13--Institute entitled to exemption under section 11--Income-tax Act, 1961, ss. 11, 13-- Institute of Chartered Accountants of India v. Director-General of Income-tax (Exemptions) (Delhi) . . . 91

Deduction of tax at source --Payment received under holiday home scheme--Exempt in employee’s hands only if, in fact, used towards hotel boarding and lodging facilities for holidays--Amounts not spent towards holiday home scheme would constitute employee’s taxable income--Assessee making payment of fringe benefits tax on payments--No default for failure to deduct tax at source--Conveyance maintenance reimbursement expenditure--Assessee paying fringe benefits tax--Failure to deduct tax at source not default--Income-tax Act, 1961, ss. 10(14), 17(1)(iv), 115WB, 201(1), (1A)--Income-tax Rules, 1962, r. 3(7)(ii)-- CIT (TDS) v. Oil and Natural Gas Corporation (India) Ltd. (Guj) . . . 131

Depreciation --Actual cost--Goods imported without customs duty on basis of exemption certificate--Demand for duty in later year--Duty paid and capitalised in that year--Depreciation allowable on additional cost--Income-tax Act, 1961-- CIT v. Orient Ceramics and Industries Ltd. (Delhi) . . . 49

----Rate of depreciation--Computer accessories and peripherals--Are an integral part of computer system--Entitled to higher rate of depreciation of 60 per cent.--Income-tax Act, 1961, s. 32-- CIT v. BSES Yamuna Powers Ltd. (Delhi) . . . 47

----Rate of depreciation--Uninterrupted power supply system (UPS)--Entitled to higher rate of depreciation of 60 per cent.--Income-tax Act, 1961, s. 32-- CIT v. Orient Ceramics and Industries Ltd. (Delhi) . . . 49

Exemption --Charitable institution notified by Central Government--Meaning of charitable institution--Statutory authority set up as regulatory body--Charitable institution--Fees charged by such authority--Entitled to exemption--Income-tax Act, 1961, ss. 2(15), 10(23C)(iv)-- Bureau of Indian Standards v. Director General of Income-tax (Exemptions) (Delhi) . . . 78

Export --Special deduction--Export of computer software--Effect of introduction of section 80HHE with effect from 1-4-1991--Income from export of computer software in accounting year relevant to assessment years 1993-94 and 1994-95--Special deduction could be claimed only under section 80HHE--Alternate claim could not be made under section 80-O--Income-tax Act, 1961, ss. 80HHE, 80-O-- CIT v. B. T. System and Service Ltd. (Mad) . . . 30

Industrial undertaking --Special deduction under section 80-IA --Condition precedent--Manufacture or production of article--Meaning of manufacture--Processing resulting in commercially distinct product amounts to production--Coating of titanium substrates with chemicals amounts to manufacture--Assessee entitled to special deduction under section 80-IA--Income-tax Act, 1961, s. 80-IA-- Titanor Components Ltd. v. CIT (Delhi) . . . 55

Interpretation of taxing statutes --Special provision excludes general provision-- CIT v. B. T. System and Service Ltd. (Mad) . . . 30

Reassessment --Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Duty of assessee to disclose facts fully and truly--Failure to disclose facts regarding particular transactions--Notice valid--Income-tax Act, 1961, ss. 147, 148-- OPG Metals and Finsec Ltd. v. CIT (Delhi) . . . 144

Rebate --Company--Book profit--Computation of income under section 115JB--Section 88E applies to income computed under section 115JB--Assessee entitled to rebate of securities transaction tax which has been paid--Income-tax Act, 1961, ss. 88E, 115JB-- CIT v. MBL and Co. Ltd. (Delhi) . . . 1

Return --Delay in filing return--Condonation of delay--Assessee required to obtain statutory audit report--Statutory auditor submitting two reports--Delay in filing revised return after final audit report to be condoned--Income-tax Act, 1961, s. 119-- Mahalakshmi Co-operative Bank Ltd. v. CBDT (Karn) . . . 23

Search and seizure --Assessment--Limitation--Exclusion of period during which assessment stayed by court--Limitation resumes on date of vacation of stay--Not from date of receipt of order by Department--Assessment barred by limitation--Income-tax Act, 1961, s. 158BC-- CIT v. Drs. X-Ray and Pathology Institute Pvt. Ltd. (All) . . . 27

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 2(15) --Charitable purposes--Charitable trust--Business carried on by charitable trust--Meaning of “business†in section 2(15)--Institute of Chartered Accountants of India established to regulate profession of chartered accountants in India--Institute imparting education--Coaching classes conducted by Institute not like private coaching classes--Activity ancillary to educational purposes--Fees charged for coaching classes--Not conclusive--Institute entitled to exemption under section 11-- Institute of Chartered Accountants of India v. Director-General of Income-tax (Exemptions) (Delhi) . . . 91

----Exemption--Charitable institution notified by Central Government--Meaning of charitable institution--Statutory authority set up as regulatory body--Charitable institution--Fees charged by such authority--Entitled to exemption-- Bureau of Indian Standards v. Director General of Income-tax (Exemptions) (Delhi) . . . 78

S. 2(24)(iv) --Appeal to Appellate Tribunal--Powers of Tribunal--Power to remand--Individuals working in various inter-connected organizations--Commission paid by one organization--No return filed by any of the individuals--Order of remand to determine assessability of commission--Justified-- CIT v. C. S. Srivatsan (Mad) . . . 10

S. 2(24)(x) --Business expenditure--Deduction only on actual payment--Contributions of employees’ State insurance and provident fund deposited prior to filing return under section 139(1)--Allowable-- CIT v. Mark Auto Industries Ltd. (P&H) . . . 43

S. 9(1)(vii) --Business expenditure--Disallowance--Payments to non-resident--Failure to deduct tax at source--Circulars in force during relevant year not obliging assessee to deduct tax at source--Circular withdrawing earlier circulars operative only from date of issue and not applicable for earlier years--Circulars binding upon Department--No obligation to deduct tax at source on commission paid to non-resident who was not liable to pay tax in India--Expenditure allowable-- CIT v. Model Exims (All) . . . 72

S. 10(14) --Deduction of tax at source--Payment received under holiday home scheme--Exempt in employee’s hands only if, in fact, used towards hotel boarding and lodging facilities for holidays--Amounts not spent towards holiday home scheme would constitute employee’s taxable income--Assessee making payment of fringe benefits tax on payments--No default for failure to deduct tax at source--Conveyance maintenance reimbursement expenditure--Assessee paying fringe benefits tax--Failure to deduct tax at source not default-- CIT (TDS) v. Oil and Natural Gas Corporation (India) Ltd. (Guj) . . . 131

S. 10(23C)(iv) --Exemption--Charitable institution notified by Central Government--Meaning of charitable institution--Statutory authority set up as regulatory body--Charitable institution--Fees charged by such authority--Entitled to exemption-- Bureau of Indian Standards v. Director General of Income-tax (Exemptions) (Delhi) . . . 78

S. 11 --Charitable purposes--Charitable trust--Business carried on by charitable trust--Meaning of “business†in section 2(15)--Institute of Chartered Accountants of India established to regulate profession of chartered accountants in India--Institute imparting education--Coaching classes conducted by Institute not like private coaching classes--Activity ancillary to educational purposes--Fees charged for coaching classes--Not conclusive--Institute entitled to exemption under section 11-- Institute of Chartered Accountants of India v. Director-General of Income-tax (Exemptions) (Delhi) . . . 91

----Charitable purposes--Charitable trust--Investment of funds of charitable trust--Institute established for regulating profession of chartered accountants in India--Funds of Institute provided to ICAI Accounting Research Foundation--No violation of provisions of section 13--Institute entitled to exemption under section 11-- Institute of Chartered Accountants of India v. Director-General of Income-tax (Exemptions) (Delhi) . . . 91

S. 13 --Charitable purposes--Charitable trust--Investment of funds of charitable trust--Institute established for regulating profession of chartered accountants in India--Funds of Institute provided to ICAI Accounting Research Foundation--No violation of provisions of section 13--Institute entitled to exemption under section 11-- Institute of Chartered Accountants of India v. Director-General of Income-tax (Exemptions) (Delhi) . . . 91

S. 17(1)(iv) --Deduction of tax at source--Payment received under holiday home scheme--Exempt in employee’s hands only if, in fact, used towards hotel boarding and lodging facilities for holidays--Amounts not spent towards holiday home scheme would constitute employee’s taxable income--Assessee making payment of fringe benefits tax on payments--No default for failure to deduct tax at source--Conveyance maintenance reimbursement expenditure--Assessee paying fringe benefits tax--Failure to deduct tax at source not default-- CIT (TDS) v. Oil and Natural Gas Corporation (India) Ltd. (Guj) . . . 131

S. 32 --Business expenditure--Disallowance--Expenditure on technical know-how--Expenditure capitalised and not claimed as revenue expenditure--Provision for disallowance for failure to deduct tax at source not applicable-- CIT v. Mark Auto Industries Ltd. (P&H) . . . 43

----Depreciation--Rate of depreciation--Computer accessories and peripherals--Are an integral part of computer system--Entitled to higher rate of depreciation of 60 per cent.-- CIT v. BSES Yamuna Powers Ltd. (Delhi) . . . 47

----Depreciation--Rate of depreciation--Uninterrupted power supply system (UPS)--Entitled to higher rate of depreciation of 60 per cent.-- CIT v. Orient Ceramics and Industries Ltd. (Delhi) . . . 49

S. 35AB --Business expenditure--Disallowance--Expenditure on technical know-how--Expenditure capitalised and not claimed as revenue expenditure--Provision for disallowance for failure to deduct tax at source not applicable-- CIT v. Mark Auto Industries Ltd. (P&H) . . . 43

S. 36(1)(va) --Business expenditure--Deduction only on actual payment--Contributions of employees’ State insurance and provident fund deposited prior to filing return under section 139(1)--Allowable-- CIT v. Mark Auto Industries Ltd. (P&H) . . . 43

S. 37 --Capital or revenue expenditure--Expenditure on glow-sign boards displayed at dealer outlets--Revenue-- CIT v. Orient Ceramics and Industries Ltd. (Delhi) . . . 49

S. 40(a)(i) --Business expenditure--Disallowance--Expenditure on technical know-how--Expenditure capitalised and not claimed as revenue expenditure--Provision for disallowance for failure to deduct tax at source not applicable-- CIT v. Mark Auto Industries Ltd. (P&H) . . . 43

S. 40(a)(ia) --Business expenditure--Disallowance--Payments to non-resident--Failure to deduct tax at source--Circulars in force during relevant year not obliging assessee to deduct tax at source--Circular withdrawing earlier circulars operative only from date of issue and not applicable for earlier years--Circulars binding upon Department--No obligation to deduct tax at source on commission paid to non-resident who was not liable to pay tax in India--Expenditure allowable-- CIT v. Model Exims (All) . . . 72

S. 43B --Business expenditure--Deduction only on actual payment--Contributions of employees’ State insurance and provident fund deposited prior to filing return under section 139(1)--Allowable-- CIT v. Mark Auto Industries Ltd. (P&H) . . . 43

S. 80HH --Reassessment--Limitation--Notice after four years--Special deduction--Industrial undertaking--Assessment completed on basis of decision of High Court allowing deduction for civil construction--Cannot be reopened after four years solely on basis of subsequent reversal of High Court by Supreme Court-- Deputy CIT v. Simplex Concrete Piles (India) Ltd. (SC) . . . 129

S. 80HHE --Export--Special deduction--Export of computer software--Effect of introduction of section 80HHE with effect from 1-4-1991--Income from export of computer software in accounting year relevant to assessment years 1993-94 and 1994-95--Special deduction could be claimed only under section 80HHE--Alternate claim could not be made under section 80-O-- CIT v. B. T. System and Service Ltd. (Mad) . . . 30

S. 80-IA --Industrial undertaking--Special deduction under section 80-IA--Condition precedent--Manufacture or production of article--Meaning of manufacture--Processing resulting in commercially distinct product amounts to production--Coating of titanium substrates with chemicals amounts to manufacture--Assessee entitled to special deduction under section 80-IA-- Titanor Components Ltd. v. CIT (Delhi) . . . 55

S. 80-O --Export--Special deduction--Export of computer software--Effect of introduction of section 80HHE with effect from 1-4-1991--Income from export of computer software in accounting year relevant to assessment years 1993-94 and 1994-95--Special deduction could be claimed only under section 80HHE--Alternate claim could not be made under section 80-O-- CIT v. B. T. System and Service Ltd. (Mad) . . . 30

S. 88E --Rebate--Company--Book profit--Computation of income under section 115JB--Section 88E applies to income computed under section 115JB--Assessee entitled to rebate of securities transaction tax which has been paid-- CIT v. MBL and Co. Ltd. (Delhi) . . . 1

S. 115JB --Rebate--Company--Book profit--Computation of income under section 115JB--Section 88E applies to income computed under section 115JB--Assessee entitled to rebate of securities transaction tax which has been paid-- CIT v. MBL and Co. Ltd. (Delhi) . . . 1

S. 115WB --Deduction of tax at source--Payment received under holiday home scheme--Exempt in employee’s hands only if, in fact, used towards hotel boarding and lodging facilities for holidays--Amounts not spent towards holiday home scheme would constitute employee’s taxable income--Assessee making payment of fringe benefits tax on payments--No default for failure to deduct tax at source--Conveyance maintenance reimbursement expenditure--Assessee paying fringe benefits tax--Failure to deduct tax at source not default-- CIT (TDS) v. Oil and Natural Gas Corporation (India) Ltd. (Guj) . . . 131

S. 119 --Return--Delay in filing return--Condonation of delay--Assessee required to obtain statutory audit report--Statutory auditor submitting two reports--Delay in filing revised return after final audit report to be condoned-- Mahalakshmi Co-operative Bank Ltd. v. CBDT (Karn) . . . 23

S. 139(1) --Business expenditure--Deduction only on actual payment--Contributions of employees’ State insurance and provident fund deposited prior to filing return under section 139(1)--Allowable-- CIT v. Mark Auto Industries Ltd. (P&H) . . . 43

S. 147 --Reassessment--Limitation--Notice after four years--Special deduction--Industrial undertaking--Assessment completed on basis of decision of High Court allowing deduction for civil construction--Cannot be reopened after four years solely on basis of subsequent reversal of High Court by Supreme Court-- Deputy CIT v. Simplex Concrete Piles (India) Ltd. (SC) . . . 129

----Reassessment--Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Duty of assessee to disclose facts fully and truly--Failure to disclose facts regarding particular transactions--Notice valid-- OPG Metals and Finsec Ltd. v. CIT (Delhi) . . . 144

S. 148 --Reassessment--Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Duty of assessee to disclose facts fully and truly--Failure to disclose facts regarding particular transactions--Notice valid-- OPG Metals and Finsec Ltd. v. CIT (Delhi) . . . 144

S. 149(1)(a) --Reassessment--Limitation--Notice after four years--Special deduction--Industrial undertaking--Assessment completed on basis of decision of High Court allowing deduction for civil construction--Cannot be reopened after four years solely on basis of subsequent reversal of High Court by Supreme Court-- Deputy CIT v. Simplex Concrete Piles (India) Ltd. (SC) . . . 129

S. 158BC --Search and seizure--Assessment--Limitation--Exclusion of period during which assessment stayed by court--Limitation resumes on date of vacation of stay--Not from date of receipt of order by Department--Assessment barred by limitation-- CIT v. Drs. X-Ray and Pathology Institute Pvt. Ltd. (All) . . . 27

S. 195 --Business expenditure--Disallowance--Payments to non-resident--Failure to deduct tax at source--Circulars in force during relevant year not obliging assessee to deduct tax at source--Circular withdrawing earlier circulars operative only from date of issue and not applicable for earlier years--Circulars binding upon Department--No obligation to deduct tax at source on commission paid to non-resident who was not liable to pay tax in India--Expenditure allowable-- CIT v. Model Exims (All) . . . 72

S. 201(1), (1A) --Deduction of tax at source--Payment received under holiday home scheme--Exempt in employee’s hands only if, in fact, used towards hotel boarding and lodging facilities for holidays--Amounts not spent towards holiday home scheme would constitute employee’s taxable income--Assessee making payment of fringe benefits tax on payments--No default for failure to deduct tax at source--Conveyance maintenance reimbursement expenditure--Assessee paying fringe benefits tax--Failure to deduct tax at source not default-- CIT (TDS) v. Oil and Natural Gas Corporation (India) Ltd. (Guj) . . . 131

Income-tax Rules, 1962 :

R. 3(7)(ii) --Deduction of tax at source--Payment received under holiday home scheme--Exempt in employee’s hands only if, in fact, used towards hotel boarding and lodging facilities for holidays--Amounts not spent towards holiday home scheme would constitute employee’s taxable income--Assessee making payment of fringe benefits tax on payments--No default for failure to deduct tax at source--Conveyance maintenance reimbursement expenditure--Assessee paying fringe benefits tax--Failure to deduct tax at source not default-- CIT (TDS) v. Oil and Natural Gas Corporation (India) Ltd. (Guj) . . . 131

 

ITAT Reverses Law On Tax Treatment Of Co-op Hsg Societies

 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.

Hatkesh Co-op Housing Society Ltd vs. ACIT (ITAT Mumbai)

A Co-op Hsg Society is not a mutual association because its members can earn income from its property. The transfer fee and TDR premium charged by the Society from its members is a commercial transaction and not eligible for exemption on grounds of mutuality

The assessee, a co-operative housing society, received transfer fee and TDR premium from its members which it claimed was exempt on the ground of mutuality. This stand was upheld by the Tribunal for the earlier years relying on the judgements in Sind Co-op Housing Society 317 ITR 47 (Bom), Mittal Court Premises Co-op Society 320 ITR 414 (Bom) & Jai Hind CHS Ltd 349 ITR 541 (Bom). In the present year, the Department argued that this view was not correct and that the transfer fee and TDR premium were not exempt on the ground of mutuality. HELD by the Tribunal upholding the Department's plea:

(i) The three perquisites which form the essential conditions for mutuality are (a) complete identity between contributors and participants, (b) the actions of the participants must be in furtherance of the mandate of the society as determined from the memorandum and articles of association & rules & (c) there must be no scope of profiteering by the contributors from the fund made by them, which could only be expended on or returned to them. The principle or the notion of mutuality cannot be extended to a cooperative housing society, be it a flat owner's society or a plot owner's society;

(ii) There are three objections to treating a co-op housing society as a mutual concern. The first objection is that while a mutual concern cannot lead to any profit for the members, a member of a co-op housing society can earn income from the property such as by letting. The contributors, by virtue of their membership, obtain a valuable capital asset in their own hands, i.e., the leasehold right in the plots allotted to them, as well as the interest in the super structure. They may encash or capitalize on or even trade on the property. Such valuable rights that inure to the members are separate and distinct from the rights that vest in them as a part of the class of contributors and militates against the very notion of mutuality, which in its concept and operation cannot yield any income to them in their individual capacity. The second objection is that the assessee's activities of charging premium at one half the amount of the premium received by the transferor-member from the transferee-member is a commercial transaction. As such, not only does the arrangement lead to creation and holding of wealth/property by the individual-members, it allows them to encash or otherwise exploit it, paying the society its share. That is, the society also partakes of the profit arising on the subsequent transfer by a member, to the extent of 50% thereof. The third objection is that the policy of allowing the individual members to purchase TDRs from outside and load them on to their existing structures and of allowing non-members residing in the flats built by the members on their plots to have access to and enjoy the common facilities means that there is a break-down in the identity between the contributors and participants and violates another basic condition of mutuality that there must be no dealings with the non-members;

(iii) Apart from that, transfer fees cannot be considered as tax-exempt because the income arises from the exercise of commercial rights, which is akin to a sale. The judgement in Sind CHS cannot be followed because the decision in Presidency CHS Ltd 216 ITR 321 (Bom) would prevail. Sind CHS was based on the fact that the amount there was reasonable and based on the bye-laws. The decision in Mittal Court PCS Ltd does not apply as it is in respect of non-occupancy charges. The TDR Premium is also not governed by the principle of mutuality. The judgement in Jai Hind CHS Ltd holding TDR premium to be exempt does not apply because the question whether commerciality is involved, or the transaction is guided by profit motive, is a matter of fact. The assessee's charter as well as its' operations have been found to be imbued with commerciality and common facilities are being enjoyed by the non-members (Bangalore Club 350 ITR 509 (SC) & Presidency Co-op Housing Society 216 ITR 321 (Bom) followed).

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Regards,

 

Editor,

 

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ITAT Has No Power To Dismiss Appeal For Non-Appearance: Bombay High Court

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.

Bharat Petroleum Corporation Ltd vs. ITAT (Bombay High Court)

Tribunal has no power to dismiss appeal for non-appearance of appellant. It has to deal with the merits. An application for recall of an ex-parte dismissal order is under s. 254(2) & must be filed within 4 years from the date of the order. The Tribunal must permit "mentioning" of matters

The assessee's appeal was fixed for hearing before the Tribunal on 4.12.2007. As nobody appeared for the assessee, the Tribunal dismissed the appeal for want of prosecution. The assessee filed a Miscellaneous Application before the Tribunal on 6.8.2012 seeking to recall the exparte order. The Tribunal dismissed the MA on the ground that the application for recall had been filed beyond a period of 4 years from the date of the ex-parte order. The assessee filed a Writ Petition contending that (a) the Tribunal had no power under Rule 24 to dismiss an appeal for want of prosecution, (ii) an application for recall of an ex-parte order does not fall u/s 254(2) and the time limit of 4 years does not apply to it. It was also contended that the Tribunal ought to allow the system of "mentioning" matters as is done in the High Court. HELD by the High Court dismissing the Petition.

(i) It is a little strange that the Tribunal does not permit the practice of mentioning matters at any time of the day. If it had done so, the exercise of filing an application for recall may not have been necessary. The ultimate object of the Tribunal is to decide a dispute between the revenue and assessee in accordance with law to ensure that justice is done. In the aid of ensuring that justice is done, the Tribunal cannot as a matter of practice bar any Advocates/representative from mentioning their matters before the Tribunal. If indeed this is so, the Tribunal must do away with such a practice. The mentioning of matters should be allowed by the Tribunal. It is of course in the Tribunal's discretion to allow the request made by the parties while mentioning but prohibiting mentioning of matters before a Court/Tribunal is a likely recipe for injustice. We request the Tribunal to henceforth do away with such a practice and allow mentioning of matters;

(ii) Under Rule 24, the Tribunal has no power to dismiss an appeal for non-appearance of the assessee. It has to decide the appeal on merits. The dismissal order is consequently erroneous and the assessee is entitled to have the order set aside (S. Chenniappa Mudaliar 74 ITR 41 (SC) followed; Chemipol (244) ELT 497 (Bom) distinguished);

(iii) However, because dismissing an appeal for non-prosecution in the face of Rule 24 is an error apparent on the face of the record, an application to set right the error of dismissal for non-prosecution is an application u/s 254(2) and not under s. 254(1). Where Parliament has provided a specific provision to deal with a particular situation, it is not open to ignore the same and apply some other provision. Such an application has to be filed within a period of 4 years from the date of the order;

(iv) Though the Proviso to Rule 24 empowers the Tribunal to recall an ex-parte order without specifying any period of limitation, this applies only where the appeal is decided ex-parte on merits. Where the appeal is dismissed ex-parte for non-prosecution, it is a case of an erroneous order which only be rectified u/s 254(2). Also an order passed in breach of Rule 24 is an irregular order but not a void order. Assuming the said order is a void order, yet it continues to be binding till it is set aside by a competent authority (Sultan Sadik v/s. Sanjay Raj Subba 2004 (2) SCC 277 followed)

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Regards,

 

Editor,

 

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