ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB)) -- PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Business expenditure --Provision for doubtful debts and advances--Details of opening balance on account of doubtful debts and closing balance clearly indicating assessee had reduced provision for doubtful debts which was no longer written back--No material to show reconciliation not correct--Disallowance not justified--Income-tax Act, 1961, s. 36-- Assistant CIT v. Living Media India Ltd. (Delhi) . . . 666
Business income or capital gains --Trading or investment--Adventure in nature of trade--Purchase of minority stake in loss-making company at high price with view to sell shares at profit--Sale during lock-in-period at huge profit to other promoters--Not an investment--Profit on sale of shares assessable as business income--Income-tax Act, 1961, s. 28(ii)-- ITO v. Accra Investments P. Ltd. (Mumbai) . . . 683
Company --Book profits--Computation--Disallowance of expenditure in earning tax-free income--Principle of apportionment cannot be applied in computing book profit--Amount of expenditure to be adjusted--Matter remanded--Income-tax Act, 1961, s. 115JB-- Joint CIT (OSD) v. Reliance Capital Ltd. (Mumbai) . . . 695
Deduction of tax at source --Shortfall in deduction--Salary or professional fees--Hospital employing doctors under two types of agreements--Employee doctors receiving allowances--Consultant doctors receiving lump sum monthly payment--Employee doctors entitled to leave, medical benefit and personal accident benefit--No such benefit to consultant doctors--Consultant doctors required to take professional indemnity insurance on their own--Relationship of consultant doctors with hospital, not an employer-employee relationship--Deduction of tax at source to be made under section 194J--No short deduction of tax by assessee--No question of charging of interest--Income-tax Act, 1961, ss. 192, 194J, 201-- ITO v. Apollo Hospitals International Ltd. (Ahmedabad) . . . 656
Depreciation --Carry forward and set off--Brought forward depreciation cannot be set off against capital gains--Income-tax Act, 1961, ss. 71, 72-- Assistant CIT v. Living Media India Ltd. (Delhi) . . . 666
Income --Disallowance of expenditure in earning tax-free income--Assessee not able to produce evidence with regard to source of investments--Disallowance to be decided after considering available funds from sale of investments and own funds--Matter remanded--Income-tax Act, 1961, s. 14A-- Joint CIT (OSD) v. Reliance Capital Ltd. (Mumbai) . . . 695
Interest on borrowed capital --Interest on money borrowed and lent to subsidiary company without charging interest--Deduction of interest allowable if made as measure of commercial expediency--Income-tax Act, 1961, s. 36(1)(iii)-- Joint CIT (OSD) v. Reliance Capital Ltd. (Mumbai) . . . 695
Penalty --Concealment of income--Claim of loss made during course of assessment proceedings--Disallowance of loss--Not a case for levy of penalty--Income-tax Act, 1961, s. 271(1)(c)-- DCM Ltd. v. Assistant CIT (Delhi) . . . 680
Reassessment --Jurisdiction--Reason to believe--Detailed questionnaire issued by Assessing Officer and replies filed by assessee--Details of bad debt placed before Assessing Officer--Assessment thereafter completed under section 143(3)--Notice of reassessment to bring provision for bad debts to tax--Assessing Officer assuming jurisdiction without any material--Reopening of assessment without jurisdiction--Income-tax Act, 1961, s. 148-- Assistant CIT v. Living Media India Ltd. (Delhi) . . . 666
----Validity--Reasons recorded only on account of provision for bad debt--Additional reasons recorded during reassessment proceedings--Assumption of jurisdiction originally held not valid--Entire assessment quashed--Income-tax Act, 1961, ss. 147, 148-- Assistant CIT v. Living Media India Ltd. (Delhi) . . . 666
Volume 28 : Part 2 (Issue dated : 2-12-2013)
SUBJECT INDEX TO CASES REPORTED
Advance tax --Interest--Interest under sections 234A and 234B--Mandatory and consequential in nature--Income-tax Act, 1961, ss. 234A, 234B-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284
Assessment --Income in whose hands to be taxed--Assessee-society running engineering and medical colleges--Amounts collected from students over and above prescribed fees--Manager stating amounts collected and retained by him without knowledge of management committee--Amounts taxed in his assessments--Manager agreeing to withdraw appeals against assessments and pay tax if amounts added as income of assessee-society deleted--Receipts not to be considered as exclusively relating to assessee-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284
Business expenditure --Clearing expenses--Restriction of disallowance to 50 per cent in earlier year--Deviation in decision not permissible in absence of change in facts--Income-tax Act, 1961-- AFL P. Ltd. v. Assistant CIT (Mumbai) . . . 263
----Payments to sub-contractors--Letters to parties returned--Disallowance of 5 per cent. of payments covered by letters returned--Reasonable--Income-tax Act, 1961, s. 37-- IJM (India) Infrastructure Ltd. v. Assistant CIT (Hyderabad) . . . 176
----Payments to sub-contractors--That letters addressed to party three or four years after contract executed returned undelivered not ground to disallow expenditure--Payment vouchers produced by assessee giving details including names of payees and bearing signatures of payees as recipients--Genuineness of payments established--However, 15 per cent. of payment to be disallowed to allow for inflation of expenditure by assessee--Income-tax Act, 1961, s. 37-- IJM (India) Infrastructure Ltd. v. Assistant CIT (Hyderabad) . . . 176
----Power and fuel expenses not supported by proper vouchers and bills--Disallowance of 15 per cent. proper--Income-tax Act, 1961, s. 37-- IJM (India) Infrastructure Ltd. v. Assistant CIT (Hyderabad) . . . 176
Business income --Engineering college--Receipt of fees over and above those prescribed--No evidence of collection of excess fees in academic years 2003-04 to 2007-08--No admission by assessee of such collection--Estimation of income on materials seized relating to academic years 2008-09 and 2009-10 assuming unaccounted receipts of fees for earlier assessment years--Not proper--Direction for quantification of receipt of fees for management quota seats, if any, on basis of seized material and other material, if any, relating to academic years 2003-04 to 2007-08-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284
Capital gains --Exemption--Rectification of mistake--Assessment--Intimation--Claim to exemption for capital gains on basis of investment of consideration in residential property in foreign country--Intimation under section 143(1)(a) denying exemption--Not permissible--Question of law to be considered in light of section 54F(4) and beyond jurisdiction under sections 143(1)(a) and 154--Direction to Assessing Officer to pass fresh orders on petition under section 154--Income-tax Act, 1961, ss. 54F(4), 143(1)(a), 154-- Ms. Sushiela Natarajan v. ITO (Chennai) . . . 237
----When transfer took place--Sale deed executed on 3-9-2005 and possession handed over in financial year relevant to assessment year 2006-07 itself--Capital gains assessable in 2006-07--Income-tax Act, 1961, s. 54-- Satishkumar Agarwal v. Deputy CIT (Hyderabad) . . . 167
Charitable purpose --Charitable trust--Donations given for specific purpose as tied-up grant--Not taxable as income if used for specific purpose for which given--Donations used for benefit of trustees to be brought to tax as business income after allowing usual deductions-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284
----Charitable trust--Exemption--Corpus donation is in nature of capital receipt and not taxable irrespective of registration--Income-tax Act, 1961, ss. 12A, 12AA-- ITO v. Gaudiya Granth Anuved Trust (Agra) . . . 161
----Registration of trusts--Assessment denying exemption under sections 11 and 10(23C)(vi)--Order of Tribunal upholding cancellation of registration under section 12A--Denial of exemption cannot be challenged--Income-tax Act, 1961, ss. 10(23C)(vi), 11, 12A-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284
----Registration of trust--Cancellation--Conditions precedent for cancellation--Objects of society to preserve, protect and maintain traditional customs, culture, heritage and language of kodavas--Law applicable-- Amendment of section 2(15) w. e. f. 1-4-2009 disqualifying entity carrying on commercial activities--Cannot be invoked to revoke registration if conditions for cancellation not satisfied--Income-tax Act, 1961, s. 12AA-- Kodava Samaja v. Director of Income-tax (Exemption) (Bangalore) . . . 224
Income --Accrual of income--Receipt of fees from students joining institution for entire course--To be appropriated proportionately for each year under consideration during course period-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284
----Computation--Disallowance of expenditure relating to exempt income--Bank loans dedicated towards financing working capital to be excluded--Matter remanded--Income-tax Act, 1961, s. 14A-- Kunal Corporation v. Assistant CIT (Mumbai) . . . 277
----Expenditure in relation to income not includible in taxable income--Dividend--Assessee suo motu disallowing sum at 10 per cent.--Assessing Officer working out disallowance applying rule 8D--Onus of proving assessee’s claim is with assessee--Expenditure allowable depends upon facts--Records and accounts to be examined--Matter remanded--Income-tax Act, 1961, ss. 10(34), 14A--Income-tax Rules, 1962, r. 8D-- AFL P. Ltd. v. Assistant CIT (Mumbai) . . . 263
International transactions --Condition precedent--Transaction between associated enterprises--“International transaction†and “associated enterprise†--Definitions--General principles--Transactions with permanent establishment of non-residents--Permanent establishments treated as resident and taxed in India--Transactions not international and not subject to transfer pricing regulations--Income-tax Act, 1961, ss. 92A, 92B, 92CA(3)-- IJM (India) Infrastructure Ltd. v. Assistant CIT (Hyderabad) . . . 176
----Transfer pricing--Arm’s length price--Expenditure on advertisement and business promotion expenses--Transactional net margin method--Comparable uncontrolled price method--Matter remanded for fresh adjudication in light of Special Bench decision--Income-tax Act, 1961-- Diageo India P. Ltd. v. Deputy CIT (Mumbai) . . . 242
----Transfer pricing--Arm’s length price--Payment towards market promotion expenses made to associated enterprises--Transfer Pricing Officer not entitled to consider whether it was necessary or prudent for assessee to incur expenditure or disallow it on ground assessee has not justified benefit--Direction to Assessing Officer to examine nature of expenditure and to allow expenditure in nature of reimbursement--Income-tax Act, 1961-- Social Media India Ltd. v. Assistant CIT (Hyderabad) . . . 212
----Transfer pricing--Arm’s length price--Transactional net margin method--Comparables--Functional similarity in transactions with associated enterprise and unrelated enterprise--Profitability from uncontrolled party in similar business and circumstances is measure of arm’s length result--Income-tax Act, 1961-- Diageo India P. Ltd. v. Deputy CIT (Mumbai) . . . 242
----Transfer pricing--Determination of arm’s length price--Purchase of web portal, an intangible asset--Valuation report furnished as external comparable uncontrolled price--Nothing on record against value shown by assessee--Intangible asset purchased to be considered at arm’s length price--Depreciation allowable since intangible asset used for business--Assessing Officer not entitled to consider whether purchase was necessary--Income-tax Act, 1961-- Social Media India Ltd. v. Assistant CIT (Hyderabad) . . . 212
Penalty --Concealment of income--Expenditure in relation to income not includible in taxable income accepted at ten per cent. in earlier years--Not a case of concealment--Penalty cannot be levied--Income-tax Act, 1961, s. 271(1)(c)-- AFL P. Ltd. v. Assistant CIT (Mumbai) . . . 263
Search and seizure --Assessment--Cash balance in books of assessee on date of search--Addition cannot be made--Assessee to prove availability of cash balance on date of search--Income-tax Act, 1961, s. 153A-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 10(23C)(vi) --Charitable purpose--Registration of trusts--Assessment denying exemption under sections 11 and 10(23C)(vi)--Order of Tribunal upholding cancellation of registration under section 12A--Denial of exemption cannot be challenged-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284
S. 10(34) --Income--Expenditure in relation to income not includible in taxable income--Dividend--Assessee suo motu disallowing sum at 10 per cent.--Assessing Officer working out disallowance applying rule 8D--Onus of proving assessee’s claim is with assessee--Expenditure allowable depends upon facts--Records and accounts to be examined--Matter remanded-- AFL P. Ltd. v. Assistant CIT (Mumbai) . . . 263
S. 11 --Charitable purpose--Registration of trusts--Assessment denying exemption under sections 11 and 10(23C)(vi)--Order of Tribunal upholding cancellation of registration under section 12A--Denial of exemption cannot be challenged-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284
S. 12A --Charitable purpose--Charitable trust--Exemption--Corpus donation is in nature of capital receipt and not taxable irrespective of registration-- ITO v. Gaudiya Granth Anuved Trust (Agra) . . . 161
----Charitable purpose--Registration of trusts--Assessment denying exemption under sections 11 and 10(23C)(vi)--Order of Tribunal upholding cancellation of registration under section 12A--Denial of exemption cannot be challenged-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284
S. 12AA --Charitable purpose--Charitable trust--Exemption--Corpus donation is in nature of capital receipt and not taxable irrespective of registration-- ITO v. Gaudiya Granth Anuved Trust (Agra) . . . 161
----Charitable purpose--Registration of trust--Cancellation--Conditions precedent for cancellation--Objects of society to preserve, protect and maintain traditional customs, culture, heritage and language of kodavas--Law applicable-- Amendment of section 2(15) w. e. f. 1-4-2009 disqualifying entity carrying on commercial activities--Cannot be invoked to revoke registration if conditions for cancellation not satisfied-- Kodava Samaja v. Director of Income-tax (Exemption) (Bangalore) . . . 224
S. 14A --Income--Computation--Disallowance of expenditure relating to exempt income--Bank loans dedicated towards financing working capital to be excluded--Matter remanded-- Kunal Corporation v. Assistant CIT (Mumbai) . . . 277
----Income--Expenditure in relation to income not includible in taxable income--Dividend--Assessee suo motu disallowing sum at 10 per cent.--Assessing Officer working out disallowance applying rule 8D--Onus of proving assessee’s claim is with assessee--Expenditure allowable depends upon facts--Records and accounts to be examined--Matter remanded-- AFL P. Ltd. v. Assistant CIT (Mumbai) . . . 263
S. 37 --Business expenditure--Payments to sub-contractors--Letters to parties returned--Disallowance of 5 per cent. of payments covered by letters returned--Reasonable-- IJM (India) Infrastructure Ltd. v. Assistant CIT (Hyderabad) . . . 176
----Business expenditure--Payments to sub-contractors--That letters addressed to party three or four years after contract executed returned undelivered not ground to disallow expenditure--Payment vouchers produced by assessee giving details including names of payees and bearing signatures of payees as recipients--Genuineness of payments established--However, 15 per cent. of payment to be disallowed to allow for inflation of expenditure by assessee-- IJM (India) Infrastructure Ltd. v. Assistant CIT (Hyderabad) . . . 176
----Business expenditure--Power and fuel expenses not supported by proper vouchers and bills--Disallowance of 15 per cent. proper-- IJM (India) Infrastructure Ltd. v. Assistant CIT (Hyderabad) . . . 176
S. 54 --Capital gains--When transfer took place--Sale deed executed on 3-9-2005 and possession handed over in financial year relevant to assessment year 2006-07 itself--Capital gains assessable in 2006-07-- Satishkumar Agarwal v. Deputy CIT (Hyderabad) . . . 167
S. 54F(4) --Capital gains--Exemption--Rectification of mistake--Assessment--Intimation--Claim to exemption for capital gains on basis of investment of consideration in residential property in foreign country--Intimation under section 143(1)(a) denying exemption--Not permissible--Question of law to be considered in light of section 54F(4) and beyond jurisdiction under sections 143(1)(a) and 154--Direction to Assessing Officer to pass fresh orders on petition under section 154-- Ms. Sushiela Natarajan v. ITO (Chennai) . . . 237
S. 92A --International transactions--Condition precedent--Transaction between associated enterprises--“International transaction†and “associated enterprise†--Definitions--General principles--Transactions with permanent establishment of non-residents--Permanent establishments treated as resident and taxed in India--Transactions not international and not subject to transfer pricing regulations-- IJM (India) Infrastructure Ltd. v. Assistant CIT (Hyderabad) . . . 176
S. 92B --International transactions--Condition precedent--Transaction between associated enterprises--“International transaction†and “associated enterprise†--Definitions--General principles--Transactions with permanent establishment of non-residents--Permanent establishments treated as resident and taxed in India--Transactions not international and not subject to transfer pricing regulations-- IJM (India) Infrastructure Ltd. v. Assistant CIT (Hyderabad) . . . 176
S. 92CA(3) --International transactions--Condition precedent--Transaction between associated enterprises--“International transaction†and “associated enterprise†--Definitions--General principles--Transactions with permanent establishment of non-residents--Permanent establishments treated as resident and taxed in India--Transactions not international and not subject to transfer pricing regulations-- IJM (India) Infrastructure Ltd. v. Assistant CIT (Hyderabad) . . . 176
S. 143(1)(a) --Capital gains--Exemption--Rectification of mistake--Assessment--Intimation--Claim to exemption for capital gains on basis of investment of consideration in residential property in foreign country--Intimation under section 143(1)(a) denying exemption--Not permissible--Question of law to be considered in light of section 54F(4) and beyond jurisdiction under sections 143(1)(a) and 154--Direction to Assessing Officer to pass fresh orders on petition under section 154-- Ms. Sushiela Natarajan v. ITO (Chennai) . . . 237
S. 153A --Search and seizure--Assessment--Cash balance in books of assessee on date of search--Addition cannot be made--Assessee to prove availability of cash balance on date of search-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284
S. 154 --Capital gains--Exemption--Rectification of mistake--Assessment--Intimation--Claim to exemption for capital gains on basis of investment of consideration in residential property in foreign country--Intimation under section 143(1)(a) denying exemption--Not permissible--Question of law to be considered in light of section 54F(4) and beyond jurisdiction under sections 143(1)(a) and 154--Direction to Assessing Officer to pass fresh orders on petition under section 154-- Ms. Sushiela Natarajan v. ITO (Chennai) . . . 237
S. 234A --Advance tax--Interest--Interest under sections 234A and 234B--Mandatory and consequential in nature-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284
S. 234B --Advance tax--Interest--Interest under sections 234A and 234B--Mandatory and consequential in nature-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284
S. 271(1)(c) --Penalty--Concealment of income--Expenditure in relation to income not includible in taxable income accepted at ten per cent. in earlier years--Not a case of concealment--Penalty cannot be levied-- AFL P. Ltd. v. Assistant CIT (Mumbai) . . . 263
R. 8D --Income--Expenditure in relation to income not includible in taxable income--Dividend--Assessee suo motu disallowing sum at 10 per cent.--Assessing Officer working out disallowance applying rule 8D--Onus of proving assessee’s claim is with assessee--Expenditure allowable depends upon facts--Records and accounts to be examined--Matter remanded-- AFL P. Ltd. v. Assistant CIT (Mumbai) . . . 263
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