ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB)) -- PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Business expenditure --Expenditure relating to income not includible in taxable income--Assessee engaged in research, production and marketing of hybrid seeds of various field crops--Research and development expenditure connected to entire operation of assessee, both agricultural and commercial--Expenditure to be apportioned between agricultural and commercial operations to determine business income--Income-tax Act, 1961-- Deputy Commissioner of Income-tax v. Vibha Agro Tech Ltd. (Hyderabad) . . . 445
Business income or capital gains --Trading or investment--Sale of shares acquired in reorganisation of group--Not an adventure in nature of trade--Amount not assessable as business income but as capital gains--Income-tax Act, 1961-- Deputy Commissioner of Income-tax v. Primo Enterprises P. Ltd. (Mumbai) . . . 436
Volume 27 : Part 3 (Issue dated : 21-10-2013)
SUBJECT INDEX TO CASES REPORTED
Accounting --Valuation of closing stock--Manufacture of cars--Debit of provision for slow moving and obsolete inventory being net increase--Closing stock of inventories valued at cost or market value, whichever was lower--Practically not possible to determine market value of each and every part and necessity to maintain adequate inventory--No adjustments made in earlier years--Matter remanded--Income-tax Act, 1961, s. 145A-- General Motors India P. Ltd. v. Deputy CIT (Ahmedabad) . . . 373
Business expenditure --Assessee manufacturing passenger cars--Gifts to dealers, business associates, employees, etc., during festivals--Customary--Expenditure incurred for business expediency--Allowable--Income-tax Act, 1961, s. 37(1)-- General Motors India P. Ltd. v. Deputy CIT (Ahmedabad) . . . 373
----Disallowance--Provision for gratuity--Employees promoted in position of manager and ceasing to be employees of assessee and becoming employee of its apex body--Assessee paying amount on account of gratuity to its apex body for promoted employees--Not a provision--Amount allowable--Income-tax Act, 1961, s. 40A(7)-- Fazilka Central Co-op. Bank Ltd. v. Deputy CIT (Amritsar) . . . 326
----Expenditure under head “workmen and staff welfare†--Increase from preceding year owing to increase in employees’ strength--Ad hoc disallowance of 10 per cent.--Not proper--No documentary evidence to suggest that ad hoc disallowance warranted--Disallowance to be deleted--Income-tax Act, 1961, s. 37-- General Motors India P. Ltd. v. Deputy CIT (Ahmedabad ) . . . 373
----Lease-hold land--Expenses amortised over period of lease--Assessee having only right to use lease-hold land for purpose of its business--Sums deductible-- General Motors India P. Ltd. v. Deputy CIT (Ahmedabad) . . . 373
Business loss --Jewellery business--Wastage loss of gold and silver--Wastage of 5 per cent. within permissible limits--Addition to be deleted--Income-tax Act, 1961-- Deputy CIT v. Sanghi Jewellers P. Ltd . (Hyderabad) . . . 317
Capital gains --Cost of acquisition--Tenancy rights inherited by assessee--Cost of acquisition is cost to previous owner, not nil--Option for assessee to adopt fair market value of tenancy right as on April 1, 1981--Income-tax Act, 1961, ss. 48, 49(1)(iii)(a), 55(2)(ii)(a), (b)-- Meher R. Surti v. ITO (Mumbai) . . . 340
----Exemption--Purchase of two residential houses--Deduction allowable for purchase of more than one house--Income-tax Act, 1961, s. 54F-- Meher R. Surti v. ITO (Mumbai) . . . 340
----Exemption--Residential house means proper habitable house not mere structure--Purchase of old house and expenditure incurred on its renovation--Assessee entitled to exemption for expenditure made for making old house habitable--Income-tax Act, 1961, s. 54-- Meher R. Surti v. ITO (Mumbai) . . . 340
----Long-term capital gains--Exemption--Surrender of tenancy rights--Deemed ownership cannot be considered for exemption--Assessee not entitled to exemption for transfer of residential house under section 54--Income-tax Act, 1961, ss. 54, 54F-- Meher R. Surti v. ITO (Mumbai) . . . 340
Charitable purpose --Exemption--Denial of renewal of exemption on ground that object religious in nature--Finding that training, medical care and concession provided to all persons irrespective of their caste, creed or religion--Assessee entitled to registration--Income-tax Act, 1961, s. 80G(5)-- Christian Medical College v. CIT (Chandigarh) . . . 308
----Registration of trusts--Object of society to provide services to medical professionals and to promote sale of nutritional medicines--Not charitable activity--Assessee not entitled to registration--Income-tax Act, 1961, s. 12AA-- Indian Nutritional Medical Association v. CIT (Cochin) . . . 322
Depreciation --Rate of depreciation--Motor car--Used for less than 180 days--Full depreciation not allowable--Depreciation allowable at rate of 50 per cent-- Deputy CIT v. Sanghi Jewellers P. Ltd. (Hyderabad) . . . 317
Exemption --Educational institution--Charitable purpose--Accumulation of income--Delay in filing of form 10--Funds to be accumulated deposited with nationalised bank for purpose of construction of school building--Resolution for such accumulation passed during year--Delay in filing form 10 to be condoned--Exemption to be allowed--Income-tax Act, 1961, ss. 10(23C)(iiid), 11, 12-- Joint CIT v. Sewa Education Trust (Agra) . . . 292
Income --Accrual of income--Consistent practice of assessee of adjusting interest charged at lower sum, in following year--Interest accrues in following year-- Fazilka Central Co-op. Bank Ltd. v. Deputy CIT (Amritsar) . . . 326
International transaction --Transfer pricing--Arm’s length price--Determination--Comparison with uncontrolled transaction between unrelated parties--Transaction of advancing loans to associated enterprise--International transaction subjected to arm’s length price--Interest-free advances to associated enterprise--Adjustment for notional interest--Appropriate rate would be LIBOR plus 2 per cent. on monthly closing balance of advances during financial year--Income-tax Act, 1961, ss. 92B, 92CA(1)--Income-tax Rules, 1962, r. 10B-- Aurionpro Solutions Ltd. v. Additional CIT (Mumbai) . . . 276
----Arm’s length price--Determination--Selection of comparables--Tested party--Foreign associated enterprise can be tested party--Transfer Pricing Officer rejecting comparable companies outside his jurisdiction saying he could not call for additional information or scrutinise books--Not proper--Dispute Resolution Panel not considering in detail why associated enterprise should not be selected as tested party--Matter remanded--Income-tax Act, 1961, s. 92CA-- General Motors India P. Ltd. v. Deputy CIT (Ahmedabad) . . . 373
----Arm’s length price--Determination--Transactional net margin method--Selection of comparables--Transfer Pricing Officer rejecting assessee’s comparables and selecting new comparables--Dispute Resolution Panel holding all companies selected by him comparable with assessee--Bald and cryptic--How Dispute Resolution Panel came to conclusion not stated--Matter remanded to Transfer Pricing Officer for fresh consideration--Royalty--Technology licence agreement--Benchmarked with internal comparable uncontrolled price available on similar agreement--Transfer Pricing Officer rejecting agreement and adopting two other agreements--Dispute Resolution Panel sustaining Transfer Pricing Officer’s stand without analysing or assigning reason--Matter requiring considerable verification, examination and comparison--Matter remanded-- General Motors India P. Ltd. v. Deputy CIT (Ahmedabad) . . . 373
----Arm’s length price--Determination--Transfer Pricing Officer to verify whether variation between arm’s length price determined and price at which transaction undertaken was within range of five per cent.--Income-tax Act, 1961, s. 92C(2)-- General Motors India P. Ltd. v. Deputy CIT (Ahmedabad) . . . 373
Penalty --Concealment of income--Mutual fund investment--Information from assessee’s portfolio manager that capital investment of assessee was worth more--Not a case of concealment of income--Decisions favourable to assessee should be accepted--Levy of penalty not justified--Income-tax Act, 1961, s. 271(1)(c)-- Kalyan Sarkar v. Deputy CIT (Cuttack) . . . 360
----Furnishing inaccurate particulars of income--Dispute as to year of taxability of income--Penalty cannot be levied--Income-tax Act, 1961, s. 271(1)(c)-- Deputy CIT v. Otis Elevator Co. (I) Ltd. (Mumbai) . . . 303
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 10(23C)(iiid) --Exemption--Educational institution--Charitable purpose--Accumulation of income--Delay in filing of form 10--Funds to be accumulated deposited with nationalised bank for purpose of construction of school building--Resolution for such accumulation passed during year--Delay in filing form 10 to be condoned--Exemption to be allowed--J oint CIT v. Sewa Education Trust (Agra) . . . 292
S. 11 --Exemption--Educational institution--Charitable purpose--Accumulation of income--Delay in filing of form 10--Funds to be accumulated deposited with nationalised bank for purpose of construction of school building--Resolution for such accumulation passed during year--Delay in filing form 10 to be condoned--Exemption to be allowed-- Joint CIT v. Sewa Education Trust (Agra) . . . 292
S. 12 --Exemption--Educational institution--Charitable purpose--Accumulation of income--Delay in filing of form 10--Funds to be accumulated deposited with nationalised bank for purpose of construction of school building--Resolution for such accumulation passed during year--Delay in filing form 10 to be condoned--Exemption to be allowed-- Joint CIT v. Sewa Education Trust (Agra) . . . 292
S. 12AA --Charitable purpose--Registration of trusts--Object of society to provide services to medical professionals and to promote sale of nutritional medicines--Not charitable activity--Assessee not entitled to registration-- Indian Nutritional Medical Association v. CIT (Cochin) . . . 322
S. 37 --Business expenditure--Expenditure under head “workmen and staff welfare†--Increase from preceding year owing to increase in employees’ strength--Ad hoc disallowance of 10 per cent.--Not proper--No documentary evidence to suggest that ad hoc disallowance warranted--Disallowance to be deleted-- General Motors India P. Ltd. v. Deputy CIT (Ahmedabad) . . . 373
S. 37(1) --Business expenditure--Assessee manufacturing passenger cars--Gifts to dealers, business associates, employees, etc., during festivals--Customary--Expenditure incurred for business expediency--Allowable-- General Motors India P. Ltd. v. Deputy CIT (Ahmedabad) . . . 373
S. 40A(7) --Business expenditure--Disallowance--Provision for gratuity--Employees promoted in position of manager and ceasing to be employees of assessee and becoming employee of its apex body--Assessee paying amount on account of gratuity to its apex body for promoted employees--Not a provision--Amount allowable-- Fazilka Central Co-op. Bank Ltd. v. Deputy CIT (Amritsar) . . . 326
S. 48 --Capital gains--Cost of acquisition--Tenancy rights inherited by assessee--Cost of acquisition is cost to previous owner, not nil--Option for assessee to adopt fair market value of tenancy right as on April 1, 1981-- Meher R. Surti v. ITO (Mumbai) . . . 340
S. 49(1)(iii)(a) --Capital gains--Cost of acquisition--Tenancy rights inherited by assessee--Cost of acquisition is cost to previous owner, not nil--Option for assessee to adopt fair market value of tenancy right as on April 1, 1981-- Meher R. Surti v. ITO (Mumbai) . . . 340
S. 54 --Capital gains--Exemption--Residential house means proper habitable house not mere structure--Purchase of old house and expenditure incurred on its renovation--Assessee entitled to exemption for expenditure made for making old house habitable-- Meher R. Surti v. ITO (Mumbai) . . . 340
----Capital gains--Long-term capital gains--Exemption--Surrender of tenancy rights--Deemed ownership cannot be considered for exemption--Assessee not entitled to exemption for transfer of residential house under section 54-- Meher R. Surti v. ITO (Mumbai) . . . 340
S. 54F --Capital gains--Exemption--Purchase of two residential houses--Deduction allowable for purchase of more than one house-- Meher R. Surti v. ITO (Mumbai) . . . 340
----Capital gains--Long-term capital gains--Exemption--Surrender of tenancy rights--Deemed ownership cannot be considered for exemption--Assessee not entitled to exemption for transfer of residential house under section 54-- Meher R. Surti v. ITO (Mumbai) . . . 340
S. 55(2)(ii)(a) --Capital gains--Cost of acquisition--Tenancy rights inherited by assessee--Cost of acquisition is cost to previous owner, not nil--Option for assessee to adopt fair market value of tenancy right as on April 1, 1981-- Meher R. Surti v. ITO (Mumbai) . . . 340
S. 55(2)(ii)(b) --Capital gains--Cost of acquisition--Tenancy rights inherited by assessee--Cost of acquisition is cost to previous owner, not nil--Option for assessee to adopt fair market value of tenancy right as on April 1, 1981-- Meher R. Surti v. ITO (Mumbai) . . . 340
S. 80G(5) --Charitable purpose--Exemption--Denial of renewal of exemption on ground that object religious in nature--Finding that training, medical care and concession provided to all persons irrespective of their caste, creed or religion--Assessee entitled to registration-- Christian Medical College v. CIT (Chandigarh) . . . 308
S. 92B --International transaction--Transfer pricing--Arm’s length price--Determination--Comparison with uncontrolled transaction between unrelated parties--Transaction of advancing loans to associated enterprise--International transaction subjected to arm’s length price--Interest-free advances to associated enterprise--Adjustment for notional interest--Appropriate rate would be LIBOR plus 2 per cent. on monthly closing balance of advances during financial year-- Aurionpro Solutions Ltd. v. Additional CIT (Mumbai) . . . 276
S. 92C(2) --International transactions--Arm’s length price--Determination--Transfer Pricing Officer to verify whether variation between arm’s length price determined and price at which transaction undertaken was within range of five per cent.-- General Motors India P. Ltd. v. Deputy CIT (Ahmedabad) . . . 373
S. 92CA --International transactions--Arm’s length price--Determination--Selection of comparables--Tested party--Foreign associated enterprise can be tested party--Transfer Pricing Officer rejecting comparable companies outside his jurisdiction saying he could not call for additional information or scrutinise books--Not proper--Dispute Resolution Panel not considering in detail why associated enterprise should not be selected as tested party--Matter remanded-- General Motors India P. Ltd. v. Deputy CIT (Ahmedabad) . . . 373
S. 92CA(1)--International transaction--Transfer pricing--Arm’s length price--Determination--Comparison with uncontrolled transaction between unrelated parties--Transaction of advancing loans to associated enterprise--International transaction subjected to arm’s length price--Interest-free advances to associated enterprise--Adjustment for notional interest--Appropriate rate would be LIBOR plus 2 per cent. on monthly closing balance of advances during financial year-- Aurionpro Solutions Ltd. v. Additional CIT (Mumbai) . . . 276
S. 145A --Accounting--Valuation of closing stock--Manufacture of cars--Debit of provision for slow moving and obsolete inventory being net increase--Closing stock of inventories valued at cost or market value, whichever was lower--Practically not possible to determine market value of each and every part and necessity to maintain adequate inventory--No adjustments made in earlier years--Matter remanded-- General Motors India P. Ltd. v. Deputy CIT (Ahmedabad) . . . 373
S. 271(1)(c) --Penalty--Concealment of income--Mutual fund investment--Information from assessee’s portfolio manager that capital investment of assessee was worth more--Not a case of concealment of income--Decisions favourable to assessee should be accepted--Levy of penalty not justified-- Kalyan Sarkar v. Deputy CIT (Cuttack) . . . 360
----Penalty--Furnishing inaccurate particulars of income--Dispute as to year of taxability of income--Penalty cannot be levied-- Deputy CIT v. Otis Elevator Co. (I) Ltd. (Mumbai) . . . 303
R. 10B --International transaction--Transfer pricing--Arm’s length price--Determination--Comparison with uncontrolled transaction between unrelated parties--Transaction of advancing loans to associated enterprise--International transaction subjected to arm’s length price--Interest-free advances to associated enterprise--Adjustment for notional interest--Appropriate rate would be LIBOR plus 2 per cent. on monthly closing balance of advances during financial year-- Aurionpro Solutions Ltd. v. Additional CIT (Mumbai) . . . 276
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