INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Business expenditure --Disallowance--Payments liable to deduction of tax at source--Transport business--Payments to sub-contractors--Form No. 15-I obtained by assessee from transporters for payment without deduction of tax at source--No liability to deduct tax at source--Payments deductible--Requirement of furnishing particulars in form No. 15J before June 30 next--Not to result in disallowance of expenditure--Income-tax Act, 1961, ss. 40(a)(ia), 194C--Income-tax Rules, 1962, r. 29D-- CIT v. Valibhai Khanbhai Mankad (Guj) . . . 405
Search and seizure --Assessment--Undisclosed income of third person--Condition precedent for assessment under section 153C--Evidence that valuable article or document discovered during search belonged to third person--Admission by person searched that document in question belonged to him--Proceedings under section 153C--Not valid--Income-tax Act, 1961, s. 153C-- CIT v. Amrish R. Patel (Guj) . . . 398
----Assessment--Undisclosed income of third person--Condition precedent for assessment under section 153C--Evidence that valuable article or document discovered during search belonged to third person--Document found during search not written by assessee--Proceedings under section 153C--Not valid--Income-tax Act, 1961, s. 153C-- CIT v. Meghmani Organics Ltd. (Guj) . . . 386
----Assessment--Undisclosed income of third person--Condition precedent for assessment under section 153C--Evidence that valuable article or document discovered during search belonged to third person--Finding by Tribunal that no valuable article or document belonging to assessee had been discovered during search proceedings--Proceedings under section 153C--Not valid--Income-tax Act, 1961, s. 153C-- CIT v. Gambhir Silk Mills (Guj) . . . 392
ITR Volume 357 : Part 5 (Issue dated : 14-10-2013)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal to Supreme Court --Search and seizure--Assessment in search cases--Appellate authority, Tribunal and High Court setting aside assessments--Appeals primarily decided on facts--No substantial question of law--No opinion expressed on interpretation of section 153C by High Court--Income-tax Act, 1961, s. 153C-- CIT v. Vijaybhai N. Chandrani . . . 713
Writ --Search and seizure--Assessment in search cases--Assessment of third party--Notice to show cause against assessment--Writ petition--High Court--Going into facts and setting aside notices--Not proper--Assessee to reply to notice and if aggrieved, to adopt remedy under Act--Income-tax Act, 1961, s. 153C--Constitution of India, art. 226-- CIT v. Vijaybhai N. Chandrani . . . 713
Appeal to Commissioner (Appeals) --Powers of Commissioner (Appeals)--Power to admit additional evidence--Scope of power --Commissioner (Appeals) must record reasons for admitting additional evidence--Commissioner (Appeals) must evaluate evidence--Disallowance of expenditure deleted by Commissioner (Appeals) on the basis of new plea and additional evidence--Deletion of disallowance not justified--Income-tax Act, 1961--Income-tax Rules, 1962, r. 46A-- CIT v. Mitra Logistics P. Ltd. (Cal) . . . 657
Assessment --Valuation of property--Reference to Departmental Valuation Officer for valuation of investment--Addition solely on basis of valuation report--Not permissible--Income-tax Act, 1961-- CIT v. Lahsa Construction Pvt. Ltd. (Delhi) . . . 671
Business expenditure --Deduction only on actual payment--Conversion of sales tax liability into a loan within relevant assessment year--Deductible--Income-tax Act, 1961, s. 43B-- CIT v. Minda Wirelinks Pvt. Ltd. (Delhi) . . . 668
----Deduction only on actual payment--Tax or duty not actually paid--Law applicable--Amendment of section 43B w.e.f. 1-4-1989--Amendment not retrospective--Market fees not tax--Section 43B prior to 1-4-1989 not applicable--Income-tax Act, 1961, s. 43B-- CIT v. Moti Lal Padampat Udyog Ltd. (All) . . . 705
----Disallowance--Payments on which tax deductible at source--Tax deducted at source from salaries of employees paid by another party on behalf of assessee--Assessee not required to deduct tax on reimbursements to that party--Income-tax Act, 1961, s. 40(a)(ia)-- CIT v. Vector Shipping Services (P.) Ltd. (All) . . . 642
----Making up charges--Finding that expenditure genuine--Amount deductible--Income-tax Act, 1961, s. 37-- CIT v. Modern Terry Towels Ltd. (Bom) . . . 750
----Provision for warranty--Confusion in order of Tribunal on computation--Matter remanded to Assessing Officer to examine provision for warranty including actual warranty expenses--Income-tax Act, 1961, s. 37(1)-- Woodward Governor India Ltd. v. CIT (Delhi) . . . 673
Capital or revenue expenditure --Expenditure on replacement of machinery parts--Whether deductible--General principles--List of items, data available on record not available before any of appellate authorities to decide issue--Matter remanded--Income-tax Act, 1961-- Super Spinning Mills Ltd. v. Assistant CIT (Mad) . . . 720
Charitable purposes --Charitable trust--Donation for charitable purposes--Approval of trust for purposes of section 80G--Renewal of approval--Voluntary contributions for specific purpose--Amounts constitute corpus fund--85 per cent. of amounts not utilised for charitable purposes--Not relevant--Trust entitled to renewal of registration--Income-tax Act, 1961, ss. 11(1)(d), 80G-- Director of Income-tax (Exemptions) v. Sri Ramakrishna Seva Ashrama (Karn) . . . 731
Deduction of tax at source --Payment to contractor--Works contract--Meaning of--Tenderer securing material from other source and supplying material to assessee--Contract amounts to sale and not works contract--Tax not deductible at source--Income-tax Act, 1961, s. 194C, Expln. (iv) -- CIT v. Bangalore District Co-operative Milk Producers Societies Union Ltd. (Karn) . . . 676
Income from undisclosed sources --Amounts shown as sundry creditors--No evidence of such creditors--Assessment at flat rate after rejection of accounts--Amounts shown as sundry credits could also be taxed--Matter remanded--Income-tax Act, 1961-- CIT v. G. S. Tiwari and Co. (All) . . . 651
Industrial undertaking --Special deduction--Manufacture--Components such as printed circuit boards, random access devices, high and low transmission wireless adaptors, wireless antennae and other networking components put together to make single product to requirement of customer--New item formed--Is manufacture--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-IC-- CIT v. Gemini Communication Ltd. (Mad) . . . 759
Intercorporate dividend --Special deduction--No evidence of expenditure to earn dividends--Deduction of estimated expenditure--Not justified--Income-tax Act, 1961, s. 80M-- CIT v. Modern Terry Towels Ltd. (Bom) . . . 750
Interest on borrowed capital --Condition precedent for allowance--Borrowed capital should be used for purposes of business--Assessee carrying on business of financing--Borrowed capital utilised for investment in shares in company in which assessee had substantial interest--Interest not deductible--Income-tax Act, 1961, s. 36(1)(iii)--CIT v. Deepak Agarwal (All) . . . 741
Interpretation of taxing statutes --Provision whether mandatory or directory-- Uttam Modern Rice and Oil Mill v. Union of India (All) . . . 692
Penalty --Concealment of income--Disallowance on account of curtailment of deduction under section 80-IB, duty draw back and dividend income from foreign companies--Amounts offered to tax suo motu by assessee and not consequent to detection by Revenue--No concealment of income or furnishing inaccurate particulars of income--No penalty could be levied--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Blue Star Ltd. (Bom) . . . 669
----Concealment of income--Miscellaneous expenses--Payments exceeding Rs. 5,000--Corporate office maintaining consolidated accounts and regional offices maintaining books of account--Failure to file details some claims--Tribunal accepting bona fides of assessee--Penalty could not be imposed--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Electrolux Kelvenatro Ltd. (Delhi) . . . 665
----Concealment of income--Non-compete fee--Whether capital or revenue expenditure--Issue debatable and not free from doubt when assessee filing return--Penalty could not be imposed--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Electrolux Kelvenatro Ltd. (Delhi) . . . 665
----Concealment of income--Search and seizure--Search in premises of partner of assessee-firm--No incriminating material found against firm--Absence of books of account of firm in partner’s residence does not mean that no books of account maintained by firm--Search conducted prior to due date for filing return--Return filed thereafter declaring income--No further proceedings taken till date of filing return--Assessment made accepting return and books of account produced before authority--No ground for levy of penalty for concealment of income--Income-tax Act, 1961, s. 271(1)(c)-- S. M. J. Housing v. CIT (Mad) . . . 698
Reassessment --Notice after four years--Failure to disclose material facts necessary for assessment--No evidence of such failure--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- CIT v. Viniyas Finance and Investment P. Ltd. (Delhi) . . . 646
Rectification of mistakes --Revision of intimation whereby provision for gratuity was disallowed--Revision not objected to by assessee--Levy of additional tax in consequence by order of rectification--Valid--Income-tax Act, 1961-- Tamilnadu Magnesite Ltd. v. Deputy CIT (Mad) . . . 687
Revision --Application for revision under section 264--Limitation for passing order--Provision of section 264(4) directory--Failure of Commissioner to pass order within time limit--Commissioner not incompetent to pass order--Income-tax Act, 1961, s. 264--Circular No. 772, dated 23-12-1998-- Uttam Modern Rice and Oil Mill v. Union of India (All) . . . 692
----Commissioner--Powers--Condition precedent--Assessment order must be erroneous and prejudicial to Revenue--Both conditions must be satisfied--No specific error in assessment order--Order of revision--Not valid--Income-tax Act, 1961, s. 263-- CIT v. L and T Infrastructure Development Projects Ltd. (Mad) . . . 763
Search and seizure --Block assessment--Undisclosed income--Disclosure of closing balance in balance-sheet submitted before Assessing Officer--Entries in balance-sheet not disputed--Opening balance cannot be treated as undisclosed income--Income-tax Act, 1961, s. 158BC-- CIT v. V. P. Singh (P&H) . . . 681
----Block assessment--Undisclosed income--Non-filing of return on ground that after allowing deduction income remains below taxable limit--Not undisclosed income--Income-tax Act, 1961, s. 158BC-- CIT v. V. P. Singh (P&H) . . . 681
Valuation of stock --Change in method--Change in consequence of mandatory requirement--Change valid--Income-tax Act, 1961-- CIT v. Modern Terry Towels Ltd. (Bom) . . . 750
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Art. 226 --Writ--Search and seizure--Assessment in search cases--Assessment of third party--Notice to show cause against assessment--Writ petition--High Court--Going into facts and setting aside notices--Not proper--Assessee to reply to notice and if aggrieved, to adopt remedy under Act-- CIT v. Vijaybhai N. Chandrani (SC). . . 713
S. 11(1)(d) --Charitable purposes--Charitable trust--Donation for charitable purposes--Approval of trust for purposes of section 80G--Renewal of approval--Voluntary contributions for specific purpose--Amounts constitute corpus fund--85 per cent. of amounts not utilised for charitable purposes--Not relevant--Trust entitled to renewal of registration-- Director of Income-tax (Exemptions) v. Sri Ramakrishna Seva Ashrama (Karn) . . . 731
S. 36(1)(iii) --Interest on borrowed capital--Condition precedent for allowance--Borrowed capital should be used for purposes of business--Assessee carrying on business of financing--Borrowed capital utilised for investment in shares in company in which assessee had substantial interest--Interest not deductible--CIT v. Deepak Agarwal (All) . . . 741
S. 37 --Business expenditure--Making up charges--Finding that expenditure genuine--Amount deductible-- CIT v. Modern Terry Towels Ltd. (Bom) . . . 750
S. 37(1) --Business expenditure--Provision for warranty--Confusion in order of Tribunal on computation--Matter remanded to Assessing Officer to examine provision for warranty including actual warranty expenses-- Woodward Governor India Ltd. v. CIT (Delhi) . . . 673
S. 40(a)(ia) --Business expenditure--Disallowance--Payments on which tax deductible at source--Tax deducted at source from salaries of employees paid by another party on behalf of assessee--Assessee not required to deduct tax on reimbursements to that party-- CIT v. Vector Shipping Services (P.) Ltd. (All) . . . 642
S. 43B --Business expenditure--Deduction only on actual payment--Conversion of sales tax liability into a loan within relevant assessment year--Deductible-- CIT v. Minda Wirelinks Pvt. Ltd. (Delhi) . . . 668
----Business expenditure--Deduction only on actual payment--Tax or duty not actually paid--Law applicable--Amendment of section 43B w.e.f. 1-4-1989--Amendment not retrospective--Market fees not tax--Section 43B prior to 1-4-1989 not applicable-- CIT v. Moti Lal Padampat Udyog Ltd. (All) . . . 705
S. 80G --Charitable purposes--Charitable trust--Donation for charitable purposes--Approval of trust for purposes of section 80G--Renewal of approval--Voluntary contributions for specific purpose--Amounts constitute corpus fund--85 per cent. of amounts not utilised for charitable purposes--Not relevant--Trust entitled to renewal of registration-- Director of Income-tax (Exemptions) v. Sri Ramakrishna Seva Ashrama (Karn) . . . 731
S. 80-IC --Industrial undertaking--Special deduction--Manufacture--Components such as printed circuit boards, random access devices, high and low transmission wireless adaptors, wireless antennae and other networking components put together to make single product to requirement of customer--New item formed--Is manufacture--Assessee entitled to deduction-- CIT v. Gemini Communication Ltd. (Mad) . . . 759
S. 80M --Intercorporate dividend--Special deduction--No evidence of expenditure to earn dividends--Deduction of estimated expenditure--Not justified-- CIT v. Modern Terry Towels Ltd. (Bom) . . . 750
S. 147 --Reassessment--Notice after four years--Failure to disclose material facts necessary for assessment--No evidence of such failure--Notice not valid-- CIT v. Viniyas Finance and Investment P. Ltd. (Delhi) . . . 646
S. 148 --Reassessment--Notice after four years--Failure to disclose material facts necessary for assessment--No evidence of such failure--Notice not valid-- CIT v. Viniyas Finance and Investment P. Ltd. (Delhi) . . . 646
S. 153C --Appeal to Supreme Court--Search and seizure--Assessment in search cases--Appellate authority, Tribunal and High Court setting aside assessments--Appeals primarily decided on facts--No substantial question of law--No opinion expressed on interpretation of section 153C by High Court-- CIT v. Vijaybhai N. Chandrani (SC). . . 713
----Writ--Search and seizure--Assessment in search cases--Assessment of third party--Notice to show cause against assessment--Writ petition--High Court--Going into facts and setting aside notices--Not proper--Assessee to reply to notice and if aggrieved, to adopt remedy under Act-- CIT v. Vijaybhai N. Chandrani (SC). . . 713
S. 158BC --Search and seizure--Block assessment--Undisclosed income--Disclosure of closing balance in balance-sheet submitted before Assessing Officer--Entries in balance-sheet not disputed--Opening balance cannot be treated as undisclosed income-- CIT v. V. P. Singh (P&H) . . . 681
----Search and seizure--Block assessment--Undisclosed income--Non-filing of return on ground that after allowing deduction income remains below taxable limit--Not undisclosed income-- CIT v. V. P. Singh (P&H) . . . 681
S. 194C, Expln. (iv) --Deduction of tax at source--Payment to contractor--Works contract--Meaning of--Tenderer securing material from other source and supplying material to assessee--Contract amounts to sale and not works contract--Tax not deductible at source-- CIT v. Bangalore District Co-operative Milk Producers Societies Union Ltd. (Karn) . . . 676
S. 263 --Revision--Commissioner--Powers--Condition precedent--Assessment order must be erroneous and prejudicial to Revenue--Both conditions must be satisfied--No specific error in assessment order--Order of revision--Not valid-- CIT v. L and T Infrastructure Development Projects Ltd. (Mad) . . . 763
S. 264 --Revision--Application for revision under section 264--Limitation for passing order--Provision of section 264(4) directory--Failure of Commissioner to pass order within time limit--Commissioner not incompetent to pass order-- Uttam Modern Rice and Oil Mill v. Union of India (All) . . . 692
S. 271(1)(c) --Penalty--Concealment of income--Disallowance on account of curtailment of deduction under section 80-IB, duty draw back and dividend income from foreign companies--Amounts offered to tax suo motu by assessee and not consequent to detection by Revenue--No concealment of income or furnishing inaccurate particulars of income--No penalty could be levied-- CIT v. Blue Star Ltd. (Bom) . . . 669
----Penalty--Concealment of income--Miscellaneous expenses--Payments exceeding Rs. 5,000--Corporate office maintaining consolidated accounts and regional offices maintaining books of account--Failure to file details some claims--Tribunal accepting bona fides of assessee--Penalty could not be imposed-- CIT v. Electrolux Kelvenatro Ltd. (Delhi) . . . 665
----Penalty--Concealment of income--Non-compete fee--Whether capital or revenue expenditure--Issue debatable and not free from doubt when assessee filing return--Penalty could not be imposed-- CIT v. Electrolux Kelvenatro Ltd. (Delhi) . . . 665
----Penalty--Concealment of income--Search and seizure--Search in premises of partner of assessee-firm--No incriminating material found against firm--Absence of books of account of firm in partner’s residence does not mean that no books of account maintained by firm--Search conducted prior to due date for filing return--Return filed thereafter declaring income--No further proceedings taken till date of filing return--Assessment made accepting return and books of account produced before authority--No ground for levy of penalty for concealment of income-- S. M. J. Housing v. CIT (Mad) . . . 698
R. 46A --Appeal to Commissioner (Appeals)--Powers of Commissioner (Appeals)--Power to admit additional evidence--Scope of power--Commissioner (Appeals) must record reasons for admitting additional evidence--Commissioner (Appeals) must evaluate evidence--Disallowance of expenditure deleted by Commissioner (Appeals) on the basis of new plea and additional evidence--Deletion of disallowance not justified-- CIT v. Mitra Logistics P. Ltd. (Cal) . . . 657
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