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Monday, October 14, 2013

ITR (TRIB) VOL 27 PART 2


 

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

 

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Business expenditure --Disallowance--Payments liable to deduction of tax at source--Expenditure incurred on transportation--Assessee filing 15J declarations from payees--Deletion of disallowance justified--Payments claimed to be reimbursements--Nature of payments to be examined--Matter remanded--Income-tax Act, 1961, s. 40(a)(ia)-- Mitra Logistic P. Ltd. v. ITO (Kolkata) . . . 391

----Disallowance--Payments liable to deduction of tax at source--Salaries of employees paid by third party after deduction of tax at source--Reimbursement of third party by assessee--Assessee not bound to deduct tax--Reimbursements not to be disallowed--Income-tax Act, 1961, s. 40(a)(ia)-- Assistant CIT v. Vector Shipping Services P. Ltd. (Delhi) . . . 422

Income from undisclosed sources --Addition on account of deemed income from sale of books--Not permissible without adverse material evidence on record and without rejecting books of account-- Assistant CIT v. Vector Shipping Services P. Ltd. (Delhi) . . . 422

Industrial undertaking --Special deduction--Manufacture--Assembling of components such as printed circuit boards and other components to make radio frequency identification device--Resulting product different from components and having different use--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-IC-- Assistant CIT v. Gemini Communication Ltd. (Chennai) . . . 396

Penalty --Concealment of income--Search and seizure--Assessee firm dissolved but documents found in search of partner’s premises revealing transaction giving rise to profit--No return filed or advance tax paid before date of search--That return filed or tax paid after date of search not relevant--Concealment established--Assessee liable to penalty--Income-tax Act, 1961, s. 271(1)(c)-- Deputy Director of Income-tax v. S. M. J. Housing (Chennai) . . . 429

Short-term capital loss --Depreciable assets--Technical books forming part of block of assets--Short-term capital loss not allowable--As long as block of assets exists, assessee entitled only to depreciation--Matter remanded to Assessing Officer to consider findings for assessment year 2008-09 and arrive at fresh decision-- Assistant CIT v. Vector Shipping Services P. Ltd. (Delhi) . . . 422

 

PRINT EDITION

Volume 27 : Part 2 (Issue dated : 14-10-2013)

SUBJECT INDEX TO CASES REPORTED

Bad and doubtful debts --Contention that specific amounts identified by assessee and relevant entries made in books of account--Deduction allowed subject to verification--Income-tax Act, 1961, s. 36(1)(vii), (2)-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

Business expenditure --Disallowance--Payments in cash exceeding specified limit--Cash payments to villagers for purchase of agricultural land--Payments falling under exceptions specified in rule 6DD(k)--Not to be disallowed--Income-tax Act, 1961, s. 40A(3)--Income-tax Rules, 1962, r. 6DD(k), (h)-- Saraswati Housing and Developers v. Addl. CIT (Delhi) . . . 175

----Expenses for providing street lights on road to assessee’s factory, ambulance for medical emergencies for residents of village and cost of public garden--Allowable--Income-tax Act, 1961, s. 37(1)-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

----Plant forced to close down as tablets manufactured not conforming to prescribed specifications--Expenses incurred after closure--Finding that unit closed as business necessity arising out of statutory compulsion--Business not discontinued but shifted to other places--Expenses allowable-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

----Year in which allowable--Payments made to foreign technicians--Bill for services raised by technicians on April 1, 1997 and received by assessee in year under consideration--Allowable-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

Capital gains --Long-term capital gains--Computation--Indexation to be allowed--Income-tax Act, 1961, s. 50C-- Smt. Sowcar Janaki v. ITO (Chennai) . . . 226

----Slump sale--Definition--Monetary consideration essential--Transfer of unit under scheme of amalgamation against allotment of shares--No monetary consideration--Transfer not slump sale--Assessee not liable for capital gains tax--Income-tax Act, 1961, ss. 2(42C), 50B-- ITO v. Zinger Investments P. Ltd. (Hyderabad) . . . 218

----Transfer--Agreement between assessee and builders for agreement of sale and joint development of land--Agreement requiring transfer of possession within previous year--No evidence to suggest possession given at later point of time--Transfer within meaning of section 2(47)--Income-tax Act, 1961, s. 2(47)-- Smt. Sowcar Janaki v. ITO (Chennai) . . . 226

Capital or revenue expenditure --Payments under voluntary retirement schemes, gratuity payments and other terminal benefits--No creation of any asset or any advantage of enduring nature--Payments allowable--Income-tax Act, 1961, s. 37-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

Company --Book profits--Computation--Provision for diminution in value of assets claimed as provision for doubtful advances--Not to be deducted--Income-tax Act, 1961, s. 115JB-- I Dream Productions P. Ltd. v. Asst. CIT (Mumbai) . . . 169

----Book profits--Debenture redemption reserve debited in profit and loss account--Provision for ascertained liability--Deductible--Expenses on voluntary retirement scheme, closure of factory and loss on termination of lease debited to profit and loss account--Assessing Officer not to go behind profits shown in profit and loss account--Income-tax Act, 1961, s. 115JA-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

Depreciation --Expenditure incurred on repairs to building in earlier year held capital in nature--Depreciation allowable-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

----Take over of bulk drug unit of another company--Not a case of transfer of assets by holding company to subsidiary or vice versa or amalgamation--Transferor not losing independent existence--Written down value of assets taken over to be actual cost to assessee--Income-tax Act, 1961, s. 43(6)-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

----Written down value--Assets taken over in scheme of amalgamation--Transferor company not claiming depreciation for earlier assessment years--Written down value to be arrived at after reducing depreciation actually allowed--Omission of section 34(1) and (2) and rule 5AA--Effect--Allowance cannot be thrust upon assessee in absence of claim-- Explanation 5 in section 32 applicable only from assessment year 2002-03 onwards--Income-tax Act, 1961, s. 32, Expln. 5 , 34(1), (2)--Income-tax Rules, 1962, r. 5AA-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

Double taxation avoidance --Non-resident--Transponder fee for usage of satellite of foreign company--Provisions of Double Taxation Avoidance Agreement to be applied--Matter remanded--Income-tax Act, 1961, ss. 40(a)(ia), 195--Double Taxation Avoidance Agreement between India and Malaysia-- Assistant CIT v. Zee News Ltd. (Mumbai) . . . 240

Interest on borrowed capital --Finding of Commissioner (Appeals) that entire investment in tax-free bonds made by assessee out of its own funds--No utilisation of borrowed funds--Interest allowable--Income-tax Act, 1961, s. 36(1)(iii)-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

----Finding that new glass factory nothing but expansion of existing business--Interest on loan taken for setting up new plant--Allowable--Income-tax Act, 1961, s. 36(1)(iii)-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

Penalty --Concealment of income--Block assessment--Undisclosed income--Admission of substantial question of law by High Court--Not sufficient to hold issue debatable so as not to attract penalty--Income-tax Act, 1961, ss. 158BFA(2), 260A-- Vasant Thakoor v. Assistant CIT (Mumbai) . . . 254

Reassessment --Income escaping assessment--Return processed under section 143(1)--New information and tangible material coming into possession of Assessing Officer in course of assessment for later year--Not mere change of opinion--Provisions of section 147 can be invoked--Income-tax Act, 1961, ss. 143(1), 147-- Smt. Sowcar Janaki v. ITO (Chennai) . . . 226

----Limitation--Completion of assessment after expiry of one year from end of financial year in which notice issued--Assessment barred by limitation--Income-tax Act, 1961, s. 153(2)-- Smt. Sowcar Janaki v. ITO (Chennai) . . . 226

----Notice after four years--Conditions precedent--No averment in notice or in reasons recorded of failure by assessee to disclose fully and truly material facts--Notice invalid--Income-tax Act, 1961, s. 148-- Agilsys IT Services India P. Ltd. v. ITO (Mumbai) . . . 244

Search and seizure --Block assessment--Penalty--Admission by assessee in statement under section 132(4)--Retraction after more than two years--Not accepted by Tribunal in quantum proceedings--Penalty justified--Explanation in respect of jewellery substantially accepted in quantum proceedings--Estimations involved in valuation of jewellery at different stages--Marginal difference to income--Not to be treated as concealment to attract penalty--Income-tax Act, 1961, ss. 132(4), 158BC, 158BFA(2)-- Vasant Thakoor v. Assistant CIT (Mumbai) . . . 254

----Block assessment--Undisclosed income--Remand for correct determination of addition on account of unexplained cash, assets and interests--Determination not beyond scope of direction--Quantification of unexplained cash found at time of search linked with main issue--Additional ground admissible-- Vasant Thakoor v. Assistant CIT (Mumbai) . . . 254

Words and phrases --†Set aside†, meaning of-- I Dream Productions P. Ltd. v. Asst. CIT (Mumbai) . . . 169

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 2(42C) --Capital gains--Slump sale--Definition--Monetary consideration essential--Transfer of unit under scheme of amalgamation against allotment of shares--No monetary consideration--Transfer not slump sale--Assessee not liable for capital gains tax-- ITO v. Zinger Investments P. Ltd. (Hyderabad) . . . 218

S. 2(47) --Capital gains--Transfer--Agreement between assessee and builders for agreement of sale and joint development of land--Agreement requiring transfer of possession within previous year--No evidence to suggest possession given at later point of time--Transfer within meaning of section 2(47)-- Smt. Sowcar Janaki v. ITO (Chennai) . . . 226

S. 32, Expln. 5 --Depreciation--Written down value--Assets taken over in scheme of amalgamation--Transferor company not claiming depreciation for earlier assessment years--Written down value to be arrived at after reducing depreciation actually allowed--Omission of section 34(1) and (2) and rule 5AA--Effect--Allowance cannot be thrust upon assessee in absence of claim--Explanation 5 in section 32 applicable only from assessment year 2002-03 onwards-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

S. 34(1) --Depreciation--Written down value--Assets taken over in scheme of amalgamation--Transferor company not claiming depreciation for earlier assessment years--Written down value to be arrived at after reducing depreciation actually allowed--Omission of section 34(1) and (2) and rule 5AA--Effect--Allowance cannot be thrust upon assessee in absence of claim--Explanation 5 in section 32 applicable only from assessment year 2002-03 onwards-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

S. 34(2) --Depreciation--Written down value--Assets taken over in scheme of amalgamation--Transferor company not claiming depreciation for earlier assessment years--Written down value to be arrived at after reducing depreciation actually allowed--Omission of section 34(1) and (2) and rule 5AA--Effect--Allowance cannot be thrust upon assessee in absence of claim--Explanation 5 in section 32 applicable only from assessment year 2002-03 onwards-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

S. 36(1)(iii) --Interest on borrowed capital--Finding of Commissioner (Appeals) that entire investment in tax-free bonds made by assessee out of its own funds--No utilisation of borrowed funds--Interest allowable-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

----Interest on borrowed capital--Finding that new glass factory nothing but expansion of existing business--Interest on loan taken for setting up new plant--Allowable-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

S. 36(1)(vii) --Bad and doubtful debts--Contention that specific amounts identified by assessee and relevant entries made in books of account--Deduction allowed subject to verification-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

S. 36(2) --Bad and doubtful debts--Contention that specific amounts identified by assessee and relevant entries made in books of account--Deduction allowed subject to verification--Income-tax Act, 1961, s. 36(1)(vii), (2)-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

S. 37 --Capital or revenue expenditure--Payments under voluntary retirement schemes, gratuity payments and other terminal benefits--No creation of any asset or any advantage of enduring nature--Payments allowable-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

S. 37(1) --Business expenditure--Expenses for providing street lights on road to assessee’s factory, ambulance for medical emergencies for residents of village and cost of public garden--Allowable-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

S. 40(a)(ia) --Double taxation avoidance--Non-resident--Transponder fee for usage of satellite of foreign company--Provisions of Double Taxation Avoidance Agreement to be applied--Matter remanded-- Assistant CIT v. Zee News Ltd. (Mumbai) . . . 240

S. 40A(3) --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Cash payments to villagers for purchase of agricultural land--Payments falling under exceptions specified in rule 6DD(k)--Not to be disallowed-- Saraswati Housing and Developers v. Addl. CIT (Delhi) . . . 175

S. 43(6) --Depreciation--Take over of bulk drug unit of another company--Not a case of transfer of assets by holding company to subsidiary or vice versa or amalgamation--Transferor not losing independent existence--Written down value of assets taken over to be actual cost to assessee-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

S. 50B --Capital gains--Slump sale--Definition--Monetary consideration essential--Transfer of unit under scheme of amalgamation against allotment of shares--No monetary consideration--Transfer not slump sale--Assessee not liable for capital gains tax-- ITO v. Zinger Investments P. Ltd. (Hyderabad) . . . 218

S. 50C --Capital gains--Long-term capital gains--Computation--Indexation to be allowed-- Smt. Sowcar Janaki v. ITO (Chennai) . . . 226

S. 115JA --Company--Book profits--Debenture redemption reserve debited in profit and loss account--Provision for ascertained liability--Deductible--Expenses on voluntary retirement scheme, closure of factory and loss on termination of lease debited to profit and loss account--Assessing Officer not to go behind profits shown in profit and loss account-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

S. 115JB --Company--Book profits--Computation--Provision for diminution in value of assets claimed as provision for doubtful advances--Not to be deducted-- I Dream Productions P. Ltd. v. Asst. CIT (Mumbai) . . . 169

S. 132(4) --Search and seizure--Block assessment--Penalty--Admission by assessee in statement under section 132(4)--Retraction after more than two years--Not accepted by Tribunal in quantum proceedings--Penalty justified--Explanation in respect of jewellery substantially accepted in quantum proceedings--Estimations involved in valuation of jewellery at different stages--Marginal difference to income--Not to be treated as concealment to attract penalty-- Vasant Thakoor v. Assistant CIT (Mumbai) . . . 254

S. 143(1) --Reassessment--Income escaping assessment--Return processed under section 143(1)--New information and tangible material coming into possession of Assessing Officer in course of assessment for later year--Not mere change of opinion--Provisions of section 147 can be invoked-- Smt. Sowcar Janaki v. ITO (Chennai) . . . 226

S. 147 --Reassessment--Income escaping assessment--Return processed under section 143(1)--New information and tangible material coming into possession of Assessing Officer in course of assessment for later year--Not mere change of opinion--Provisions of section 147 can be invoked-- Smt. Sowcar Janaki v. ITO (Chennai) . . . 226

S. 148 --Reassessment--Notice after four years--Conditions precedent--No averment in notice or in reasons recorded of failure by assessee to disclose fully and truly material facts--Notice invalid--Agilsys IT Services India P. Ltd. v. ITO (Mumbai) . . . 244

S. 153(2) --Reassessment--Limitation--Completion of assessment after expiry of one year from end of financial year in which notice issued--Assessment barred by limitation-- Smt. Sowcar Janaki v. ITO (Chennai) . . . 226

S. 158BC --Search and seizure--Block assessment--Penalty--Admission by assessee in statement under section 132(4)--Retraction after more than two years--Not accepted by Tribunal in quantum proceedings--Penalty justified--Explanation in respect of jewellery substantially accepted in quantum proceedings--Estimations involved in valuation of jewellery at different stages--Marginal difference to income--Not to be treated as concealment to attract penalty-- Vasant Thakoor v. Assistant CIT (Mumbai) . . . 254

S. 158BFA(2) --Penalty--Concealment of income--Block assessment--Undisclosed income--Admission of substantial question of law by High Court--Not sufficient to hold issue debatable so as not to attract penalty--Income-tax Act, 1961, ss. 158BFA(2), 260A-- Vasant Thakoor v. Assistant CIT (Mumbai) . . . 254

----Search and seizure--Block assessment--Penalty--Admission by assessee in statement under section 132(4)--Retraction after more than two years--Not accepted by Tribunal in quantum proceedings--Penalty justified--Explanation in respect of jewellery substantially accepted in quantum proceedings--Estimations involved in valuation of jewellery at different stages--Marginal difference to income--Not to be treated as concealment to attract penalty-- Vasant Thakoor v. Assistant CIT (Mumbai) . . . 254

S. 195 --Double taxation avoidance--Non-resident--Transponder fee for usage of satellite of foreign company--Provisions of Double Taxation Avoidance Agreement to be applied--Matter remanded-- Assistant CIT v. Zee News Ltd. (Mumbai) . . . 240

S. 260A --Penalty--Concealment of income--Block assessment--Undisclosed income--Admission of substantial question of law by High Court--Not sufficient to hold issue debatable so as not to attract penalty--Income-tax Act, 1961, ss. 158BFA(2), 260A-- Vasant Thakoor v. Assistant CIT (Mumbai) . . . 254

Income-tax Rules, 1962 :

R. 5AA --Depreciation--Written down value--Assets taken over in scheme of amalgamation--Transferor company not claiming depreciation for earlier assessment years--Written down value to be arrived at after reducing depreciation actually allowed--Omission of section 34(1) and (2) and rule 5AA--Effect--Allowance cannot be thrust upon assessee in absence of claim--Explanation 5 in section 32 applicable only from assessment year 2002-03 onwards-- Addl. CIT v. Nicholas Piramal India Ltd. (Mumbai) . . . 182

R. 6DD(h) --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Cash payments to villagers for purchase of agricultural land--Payments falling under exceptions specified in rule 6DD(k)--Not to be disallowed-- Saraswati Housing and Developers v. Addl. CIT (Delhi) . . . 175

R. 6DD(k) --Business expenditure--Disallowance--Payments in cash exceeding specified limit--Cash payments to villagers for purchase of agricultural land--Payments falling under exceptions specified in rule 6DD(k)--Not to be disallowed-- Saraswati Housing and Developers v. Addl. CIT (Delhi) . . . 175

 


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