INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Search and seizure --Assessment in search cases--Undisclosed income--Scope of section 153A--Assessee cannot claim fresh deduction of expenditure in an assessment under section 153A--Income-tax Act, 1961, ss. 132, 132A, 153A-- Jai Steel (India) v. Asst. CIT (Raj) . . . 371
ITR Volume 357 : Part 4 (Issue dated : 7-10-2013)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal to Appellate Tribunal --Powers of Tribunal--Power to remand--Power to be used sparingly--All facts considered by Assessing Officer--Tribunal competent to consider effect of retrospective amendment--Order of remand--Not justified--Income-tax Act, 1961, s. 9-- Cholamandalam MS General Insurance Co. v. Assistant/Deputy CIT (Mad) . . . 597
Appeal to Commissioner (Appeals) --Assessment--Appellate authority deciding matter against assessee on preliminary issue--Matter to be remanded--Income-tax Act, 1961-- Milan Poddar v. CIT (Jharkhand) . . . 619
Appeal to High Court --Transfer of case--Territorial jurisdiction of High Court--Assessment order in Jammu--Case transferred to Delhi during pendency of appeal to Tribunal--Delhi High Court had jurisdiction to hear appeal--Income-tax Act, 1961, ss. 127, 260A-- CIT v. Aar Bee Industries (Delhi) . . . 542
Assessment --Notice--Service of notice--Service by “post†--†Post†includes speed post--Notice under section 143(2) sent by speed post--Valid service--Income-tax Act, 1961, s. 282-- Milan Poddar v. CIT (Jharkhand) . . . 619
Business expenditure --Disallowance--Payments exceeding specified limit otherwise than by crossed cheques or crossed bank drafts--Exclusion from disallowance--Exceptional or unavoidable circumstances--No proof of such unavoidable circumstances --Disallowance justified--Income-tax Act, 1961, s. 40A(3)--Income-tax Rules, 1962, r. 6DD(j)-- CIT v. Singamsetty Subba Rao (AP) . . . 529
Charitable purpose --Exemption--Property held under trust--Business held under trust--General principles--Business commenced by trustees with borrowings from banks and sister concerns in which settlors and trustees had substantial interest--Earnings from business utilised to pay off borrowings--Business not “property held under trust†--Mere powers conferred upon trustees to carry on business not sufficient--Business not in existence at time of formation of trust--Could not have been settled upon trust--No nexus between amount originally settled upon trust and setting up and conduct of business--No connection between carrying on of business and attainment of objects of trust--Whole or part of income from business earmarked for application to charitable objects--Business cannot be considered incidental to attainment of objects--Income-tax Act, 1961, s. 11(4), (4A)-- CIT v. Mehta Charitable Prajnalay Trust (Delhi) . . . 560
Depreciation --Computation of depreciation--Assessee exempt from tax till 1-4-2003--Claim for depreciation for the first time in assessment year 2003-04--Notional depreciation of earlier years to be taken into account--Income-tax Act, 1961, s. 32-- CIT v. U. P. State Warehousing Corporation (All) . . . 487
Interest on borrowed capital --Borrowed capital utilised for expansion of business--Interest deductible--Income-tax Act, 1961, s. 36(1)(iii)-- CIT v. U. P. Asbestos Ltd. (All) . . . 509
----Deduction--Condition precedent--Borrowed capital must be used for purposes of business--Borrowed capital utilized for advancing loans to directors--Interest not deductible--Income-tax Act, 1961, s. 36(1)(iii)-- A. Murali and Co. P. Ltd. v. Assistant CIT (Mad) . . . 580
International transaction --Transfer pricing--Arm’s length price--Determination--Transactional net margin method--Selection of comparables--Tribunal finding eight comparables selected by Transfer Pricing Officer not functionally comparable with assessee--These comparables rejected for other years--To be excluded--As result difference between operating margin of assessee as against comparable companies within range of +/- five per cent.--No adjustment for arm’s length price--Income-tax Act, 1961-- CIT v. Carlyle India Advisors (P.) Ltd. (Bom) . . . 584
Interpretation of taxing statutes --Meaning of words-- Milan Poddar v. CIT (Jharkhand) . . . 619
----Retrospective operation of provisions-- P. Ram Gopal Varma v. Deputy Commissioner of Income-tax (Assessment) (AP) . . . 493
Penalty --Concealment of income--Burden of proof--Burden on Revenue to prove concealment--Flat rate assessment after rejection of accounts--No evidence of concealment of income--Penalty could not be imposed--Income-tax Act, 1961, s. 271(1)(c)-- Naresh Chand Agarwal v. CIT (All) . . . 514
----Concealment of income--Furnishing inaccurate particulars--Employees’ stock option scheme--Revenue treating gains not as long-term capital gains but as short-term capital gains--Assessee surrendering right to contest issue on condition no penalty would be imposed--Whether gains long-term or short-term, a contentious issue at material time--Not a case of furnishing inaccurate particulars or concealment of income--No penalty leviable--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Smt. Neenu Dutta (Delhi) . . . 525
Reassessment --Notice--Condition precedent--Reason to believe income had escaped assessment--Charitable trust receiving donation which was discovered to be bogus--Dropping of proceedings for cancellation of registration of trust without giving reasons--Not relevant--Notice valid--Income-tax Act, 1961, ss. 11, 12, 12AA(3), 147, 148-- Fateh Chand Charitable Trust v. CIT (All) . . . 604
----Notice--Notice on ground that no return had been filed--Declaration filed under Voluntary Disclosure of Income Scheme--Notice not valid--Income-tax Act, 1961, s. 148-- Northern Exim P. Ltd. v. Deputy CIT (Delhi) . . . 586
----Notice--Validity--Validity to be considered with reference to recorded reasons--Assessing Officer cannot justify notice on other grounds--Income-tax Act, 1961, ss. 147, 148-- Northern Exim P. Ltd. v. Deputy CIT (Delhi) . . . 586
----Notice after four years--Complete particulars relating to memorandum of understanding and its impact on profit and loss of assessee disclosed by assessee in its return--No failure on part of assessee to disclose primary facts--Notice without jurisdiction and not valid--Income-tax Act, 1961, ss. 147, 148-- Rollatainers Ltd. v. Deputy CIT (Delhi) . . . 553
Rectification of mistakes --Part of claim allowed in original assessment--Balance claim found to be genuine--Balance claim could be allowed in rectification proceedings--Income-tax Act, 1961, s. 154-- CIT v. Sahara India Savings and Investment Corporation Ltd. (All) . . . 520
Return --Burden of proof--Burden on assessee to prove correctness of return--Tribunal placing burden on Revenue--Matter remanded--Income-tax Act, 1961-- CIT v. Smt. Jasvinder Kaur (Gauhati) . . . 638
Search and seizure --Block assessment--Undisclosed income--Unexplained expenditure--Proviso to section 69C not applicable to block assessment of assessment years 1986-87 to 1996-97--No proper explanation regarding expenditure--Amounts assessable as undisclosed income--Income-tax Act, 1961-- P. Ram Gopal Varma v. Deputy Commissioner of Income-tax (Assessment) (AP) . . . 493
----Retention of seized assets--Interest on such assets--Effect of section 132B--Value of assets not in excess of liability of assessee--No interest payable--Settlement of case under Kar Vivad Samadhan Scheme--Liability under settlement less than value of seized assets--Interest payable--Income-tax Act, 1961, s. 132B-- Ram Kishan Gupta v. Union of India (Delhi) . . . 534
Unexplained expenditure --Law applicable--Proviso to section 69C inserted with effect from 1-4-1999--Proviso affects substantive rights--Proviso not retrospective--Income-tax Act, 1961, s. 69C-- P. Ram Gopal Varma v. Deputy CIT (Assessment) (AP) . . . 493
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 9 --Appeal to Appellate Tribunal--Powers of Tribunal--Power to remand--Power to be used sparingly--All facts considered by Assessing Officer--Tribunal competent to consider effect of retrospective amendment--Order of remand--Not justified-- Cholamandalam MS General Insurance Co. v. Assistant/Deputy CIT (Mad) . . . 597
S. 11 --Reassessment--Notice--Condition precedent--Reason to believe income had escaped assessment--Charitable trust receiving donation which was discovered to be bogus--Dropping of proceedings for cancellation of registration of trust without giving reasons--Not relevant--Notice valid-- Fateh Chand Charitable Trust v. CIT (All) . . . 604
S. 11(4), (4A) --Charitable purpose--Exemption--Property held under trust--Business held under trust--General principles--Business commenced by trustees with borrowings from banks and sister concerns in which settlors and trustees had substantial interest--Earnings from business utilised to pay off borrowings--Business not “property held under trust†--Mere powers conferred upon trustees to carry on business not sufficient--Business not in existence at time of formation of trust--Could not have been settled upon trust--No nexus between amount originally settled upon trust and setting up and conduct of business--No connection between carrying on of business and attainment of objects of trust--Whole or part of income from business earmarked for application to charitable objects--Business cannot be considered incidental to attainment of objects-- CIT v. Mehta Charitable Prajnalay Trust (Delhi) . . . 560
S. 12 --Reassessment--Notice--Condition precedent--Reason to believe income had escaped assessment--Charitable trust receiving donation which was discovered to be bogus--Dropping of proceedings for cancellation of registration of trust without giving reasons--Not relevant--Notice valid-- Fateh Chand Charitable Trust v. CIT (All) . . . 604
S. 12AA(3) --Reassessment--Notice--Condition precedent--Reason to believe income had escaped assessment--Charitable trust receiving donation which was discovered to be bogus--Dropping of proceedings for cancellation of registration of trust without giving reasons--Not relevant--Notice valid-- Fateh Chand Charitable Trust v. CIT (All) . . . 604
S. 32 --Depreciation--Computation of depreciation--Assessee exempt from tax till 1-4-2003--Claim for depreciation for the first time in assessment year 2003-04--Notional depreciation of earlier years to be taken into account-- CIT v. U. P. State Warehousing Corporation (All) . . . 487
S. 36(1)(iii) --Interest on borrowed capital--Borrowed capital utilised for expansion of business--Interest deductible-- CIT v. U. P. Asbestos Ltd. (All) . . . 509
----Interest on borrowed capital--Deduction--Condition precedent--Borrowed capital must be used for purposes of business--Borrowed capital utilized for advancing loans to directors--Interest not deductible-- A. Murali and Co. P. Ltd. v. Assistant CIT (Mad) . . . 580
S. 40A(3) --Business expenditure--Disallowance--Payments exceeding specified limit otherwise than by crossed cheques or crossed bank drafts--Exclusion from disallowance--Exceptional or unavoidable circumstances--No proof of such unavoidable circumstances --Disallowance justified-- CIT v. Singamsetty Subba Rao (AP) . . . 529
S. 69C --Unexplained expenditure--Law applicable--Proviso to section 69C inserted with effect from 1-4-1999--Proviso affects substantive rights--Proviso not retrospective-- P. Ram Gopal Varma v. Deputy CIT (Assessment) (AP) . . . 493
S. 127 --Appeal to High Court--Transfer of case--Territorial jurisdiction of High Court--Assessment order in Jammu--Case transferred to Delhi during pendency of appeal to Tribunal--Delhi High Court had jurisdiction to hear appeal-- CIT v. Aar Bee Industries (Delhi) . . . 542
S. 132B --Search and seizure--Retention of seized assets--Interest on such assets--Effect of section 132B--Value of assets not in excess of liability of assessee--No interest payable--Settlement of case under Kar Vivad Samadhan Scheme--Liability under settlement less than value of seized assets--Interest payable-- Ram Kishan Gupta v. Union of India (Delhi) . . . 534
S. 147 --Reassessment--Notice after four years--Complete particulars relating to memorandum of understanding and its impact on profit and loss of assessee disclosed by assessee in its return--No failure on part of assessee to disclose primary facts--Notice without jurisdiction and not valid-- Rollatainers Ltd. v. Deputy CIT (Delhi) . . . 553
----Reassessment--Notice--Condition precedent--Reason to believe income had escaped assessment--Charitable trust receiving donation which was discovered to be bogus--Dropping of proceedings for cancellation of registration of trust without giving reasons--Not relevant--Notice valid-- Fateh Chand Charitable Trust v. CIT (All) . . . 604
----Reassessment--Notice--Validity--Validity to be considered with reference to recorded reasons--Assessing Officer cannot justify notice on other grounds-- Northern Exim P. Ltd. v. Deputy CIT (Delhi) . . . 586
S. 148 --Reassessment--Notice after four years--Complete particulars relating to memorandum of understanding and its impact on profit and loss of assessee disclosed by assessee in its return--No failure on part of assessee to disclose primary facts--Notice without jurisdiction and not valid-- Rollatainers Ltd. v. Deputy CIT (Delhi) . . . 553
----Reassessment--Notice--Condition precedent--Reason to believe income had escaped assessment--Charitable trust receiving donation which was discovered to be bogus--Dropping of proceedings for cancellation of registration of trust without giving reasons--Not relevant--Notice valid-- Fateh Chand Charitable Trust v. CIT (All) . . . 604
----Reassessment--Notice--Notice on ground that no return had been filed--Declaration filed under Voluntary Disclosure of Income Scheme--Notice not valid-- Northern Exim P. Ltd. v. Deputy CIT (Delhi) . . . 586
----Reassessment--Notice--Validity--Validity to be considered with reference to recorded reasons--Assessing Officer cannot justify notice on other grounds-- Northern Exim P. Ltd. v. Deputy CIT (Delhi) . . . 586
S. 154 --Rectification of mistakes--Part of claim allowed in original assessment--Balance claim found to be genuine--Balance claim could be allowed in rectification proceedings-- CIT v. Sahara India Savings and Investment Corporation Ltd. (All) . . . 520
S. 260A --Appeal to High Court--Transfer of case--Territorial jurisdiction of High Court--Assessment order in Jammu--Case transferred to Delhi during pendency of appeal to Tribunal--Delhi High Court had jurisdiction to hear appeal-- CIT v. Aar Bee Industries (Delhi) . . . 542
S. 271(1)(c) --Penalty--Concealment of income--Burden of proof--Burden on Revenue to prove concealment--Flat rate assessment after rejection of accounts--No evidence of concealment of income--Penalty could not be imposed-- Naresh Chand Agarwal v. CIT (All) . . . 514
----Penalty--Concealment of income--Furnishing inaccurate particulars--Employees’ stock option scheme--Revenue treating gains not as long-term capital gains but as short-term capital gains--Assessee surrendering right to contest issue on condition no penalty would be imposed--Whether gains long-term or short-term, a contentious issue at material time--Not a case of furnishing inaccurate particulars or concealment of income--No penalty leviable-- CIT v. Smt. Neenu Dutta (Delhi) . . . 525
S. 282 --Assessment--Notice--Service of notice--Service by “post†--†Post†includes speed post--Notice under section 143(2) sent by speed post--Valid service-- Milan Poddar v. CIT (Jharkhand) . . . 619
R. 6DD(j) --Business expenditure--Disallowance--Payments exceeding specified limit otherwise than by crossed cheques or crossed bank drafts--Exclusion from disallowance--Exceptional or unavoidable circumstances--No proof of such unavoidable circumstances --Disallowance justified-- CIT v. Singamsetty Subba Rao (AP) . . . 529
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