INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Appeal to Appellate Tribunal --Investment allowance--Remand for recomputation--Restricted--No jurisdiction in Assessing Officer to consider admissibility of investment allowance--Need for remand orders to be specific in directions--Income-tax Act, 1961, ss. 32A, 254-- CIT v. V. S. Dempo and Co. Ltd. (Bom) . . . 523
Reassessment --Income escaping assessment--Reason to believe--Material forming basis for--Communication received from Governmental agency under exchange of information in terms of Double Taxation Avoidance Agreement that assessee received money not shown in its books--Prima facie ground for reassessment--Notice valid--Income-tax Act, 1961, s. 147-- Mitsui and Company India Pvt. Ltd. v. ITO (Delhi) . . . 534
----Notice after four years--No failure by assessee to disclose material facts--Notice not valid--Income-tax Act, 1961, s. 147-- CIT v. Gujarat Mineral Development Corporation Ltd. (Guj) . . . 532
Revision --Jurisdiction--Erroneous and prejudicial to Revenue --Assessing Officer after detailed enquiry and considering assessee’s disclosures allowing deduction--Not a case of no enquiry--Order of Tribunal holding expenditure revenue--View taken by Assessing Officer plausible--Revision not permissible--Income-tax Act, 1961, s. 263-- CIT v. Vodafone Essar South Ltd. (Delhi) . . . 526
ITR Volume 359 : Part 1 (Issue dated : 2-12-2013)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Assessing Officer --Powers--International transactions--Transfer Pricing Officer determining arm’s length price after taking transactions suo motu for consideration--Assessing Officer cannot deviate from order of Transfer Pricing Officer--Income-tax Act, 1961-- Vodafone India Service Pvt. Ltd. v. Union of India (Bom) . . . 133
Assessment --Auditing of accounts--Special audit--Conditions precedent--Charitable trust--No plea that Assessing Officer had concluded complexity of accounts without having examined accounts--Audit as required under section 12A(1)(b) not found satisfactory--Nature and complexity of accounts of assessee satisfied--No prejudice to trust by special audit--Direction for special audit warranted--Income-tax Act, 1961, ss. 12A(1)(b), 142(2A)-- Hiranandani Foundation v. Joint Director of Income-tax (Exemption) (Bom) . . . 29
Business expenditure --Disallowance--Payments subject to deduction of tax at source--Non-resident--Commission or discount paid to non-resident--Circular clarifying that tax need not be deducted if non-resident did not have permanent establishment in India--Withdrawal of circular in October 2009--Non-deduction of tax in accounting year relevant to assessment year 2009-10--Payment not to be disallowed--Income-tax Act, 1961, s. 40(a)(i)-- CIT v. Angelique International Ltd. (Delhi) . . . 9
----Modvat credit on account of excess of excise duty and additional customs duty paid by assessee on purchase of raw material--Allowable--Income-tax Act, 1961, s. 37(1)-- CIT v. Samtel India Ltd. (Delhi) . . . 62
Business income or capital gains --Income from futures and options transactions and daily trading in shares with business motive--Business income--Income-tax Act, 1961-- CIT v. Om Prakash Suri (No. 1 ) (MP) . . . 39
Capital gains --Business--Business income or capital gains--Purchase and sale of shares--Purchase by investment company to obtain right to manage vendor company--Shares held for more than 30 months before sale--Shares not freely transferable--Profits from sale of shares assessable as capital gains--Income-tax Act, 1961, ss. 28, 45-- Accra Investments P. Ltd. v. ITO (Bom) . . . 116
----Firm--Partners--Retiring partner taking only money towards value of his share--No distribution of capital assets among partners--No transfer of capital asset--No profits or gains payable by firm under section 45(4)--Income-tax Act, 1961, ss. 2(47), 45(4)-- CIT v. Dynamic Enterprises [FB] (Karn) . . . 83
----Income from delivery based transactions with investment motive--Short-term capital gains--Income-tax Act, 1961-- CIT v. Om Prakash Suri (No. 1 ) (MP) . . . 39
Circular --Effect--Circulars binding on income-tax authorities--Circulars withdrawing benefit--Not to have retrospective effect--Income-tax Act, 1961, s. 119-- CIT v. Angelique International Ltd. (Delhi) . . . 9
Deduction of tax at source --Salary or professional fees--Consultant doctors employed in hospital in addition to full time resident doctors--Consultants rendering services under contract--Fees paid to them not salary--Tax deductible under section 194J and not under section 192--Consultants declaring professional fees in returns and paying tax thereon--No loss to Revenue--Levy of interest not justified--Income-tax Act, 1961, ss. 192, 194J, 201(1A)-- CIT (TDS) v. Apollo Hospitals International Ltd. (Guj) . . . 78
Deemed dividend --Loan to shareholder--Finding of fact of Tribunal that sum received by assessee upon sale of land not as loan or advance--Sum not taxable as deemed dividend--Income-tax Act, 1961, s. 2(22)(e)-- CIT v. Om Prakash Suri (No. 2 ) (MP) . . . 41
Depreciation --Imported motor cars--Amalgamation--Assessee acquiring cars after 1-4-2001 under scheme of amalgamation--Bar on depreciation allowance on imported vehicles in section 32(1) proviso (a) has no application--Assessee entitled to depreciation--Income-tax Act, 1961, ss. 32, 43(1)-- CIT v. Mira Exim Ltd. (Delhi) . . . 70
Exemption --New industrial undertaking in free trade zone--Transfer of entire business--Transferee entitled to exemption--Income-tax Act, 1961, s. 10A-- CIT v. Heartland KG Information Ltd. (Mad) . . . 1
International transaction --Transfer pricing--Arm’s length price--Determination--Writ--Determination of arm’s length price after notice to assessee and hearing it--Principles of natural justice followed--Assessee had alternative remedy--Writ would not issue to quash order of Transfer Pricing Officer--Income-tax Act, 1961, s. 92CA-- Hindalco Industries Ltd. v. Addl. CIT (Bom) . . . 46
----Arm’s length price--Amendment empowering Transfer Pricing Officer to consider transaction coming to his notice “during the course of proceedings before him†--Phrase “during the course of the proceedings†--Does not restrict the source to material already on record--Transfer Pricing Officer has jurisdiction to consider transactions not reported by assessee and transactions not referred to him by Assessing Officer where proceedings pending before him on 1-6-2011--Income-tax Act, 1961, s. 92CA(2A), (2B)-- Vodafone India Service Pvt. Ltd. v. Union of India (Bom) . . . 133
Penalty --Concealment of income--Claim made in course of scrutiny assessment to loss on account of loan to subsidiary company being written off--Bona fide claim--Not a case of concealment--Penalty not leviable--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. DCM Ltd. (Delhi) . . . 101
----Loan or deposit in cash exceeding specified limit--Assessee doing business as “shroff†--Cheque discounting business--Farmers selling their produce to traders against post-dated cheques--Taking cheques to assessee for discounting for cash--Not a case of assessee taking loan or deposit from agriculturists or repaying loan to agriculturists--Provisions of section 269SS or section 269T not attracted--No question of levy of penalty under sections 271D and 271E--Income-tax Act, 1961, ss. 269SS, 269T, 271D, 271E-- CIT v. Dineshchandra Shantilal Shah (HUF) (Guj) . . . 57
Precedent --Effect of decision of Supreme Court in Catholic Syrian Bank Ltd. v. CIT [2012] 343 ITR 270 (SC)-- CIT v. Angelique International Ltd. (Delhi) . . . 9
Purchase of immovable property by Central Government --Conditions precedent--Valuation of cost for resettling tenant--Appropriate Authority ignoring court orders twice and giving same reasons which court found not good enough to sustain acquisition of property--Pre-emptive purchase not warranted--Income-tax Act, 1961, s. 269UD(1)-- Satish Balan v. Union of India (Bom) . . . 15
Reassessment --Notice--Reason to believe income escaping assessment--Grounds must be recorded before issue of notice--Assessing Officer not entitled to record additional reasons thereafter--Income-tax Act, 1961, ss. 147, 148-- CIT v. Living Media India Ltd. (Delhi) . . . 106
----Notice--Validity--Original assessment after scrutiny--No new material showing escapement of income from assessment--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- CIT v. Fujistu Optel Ltd. (MP) . . . 67
----Notice--Validity--To be judged on basis of reasons recorded prior to issue of notice--Additions based on reasons recorded prior to notice deleted and that order becoming final--Reassessment on other grounds recorded after issue of notice not valid--Income-tax Act, 1961, ss. 147, 148-- CIT v. Living Media India Ltd. (Delhi) . . . 106
Unexplained investment --Search and seizure against third person--Reassessment of assessee on basis of statement of such person--Addition relying on statement without opportunity to assessee to cross-examine--Violation of principles of natural justice--Matter remitted to Assessing Officer for fresh consideration--Income-tax Act, 1961, s. 69A-- CIT v. P. C. Chemicals (Delhi) . . . 129
Writ --High Court--Alternative remedy--International transactions--Arm’s length price--More efficacious remedy by filing objections before Dispute Resolution Panel--Disputed questions of fact--Writ petition not maintainable--Constitution of India, art. 226-- Vodafone India Service Pvt. Ltd. v. Union of India (Bom) . . . 133
----High Court--Alternative remedy--International transactions--High Court permitting assessee to avail of alternative remedy without prejudice its rights and contentions--Not a ground to refuse to entertain petition--Constitution of India, art. 226-- Vodafone India Service Pvt. Ltd. v. Union of India (Bom) . . . 133
----High Court--International transactions--Doctrine of merger--Transfer Pricing Officer’s order and Assessing Officer’s draft order merged in order of Dispute Resolution Panel--Orders passed in proceedings pursued by assessee without prejudice to its rights and pursuant to orders of court--Writ petition maintainable--Constitution of India, art. 226-- Vodafone India Service Pvt. Ltd. v. Union of India (Bom) . . . 133
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Art. 226 --Writ--High Court--Alternative remedy--International transactions--Arm’s length price--More efficacious remedy by filing objections before Dispute Resolution Panel--Disputed questions of fact--Writ petition not maintainable-- Vodafone India Service Pvt. Ltd. v. Union of India (Bom) . . . 133
----Writ--High Court--Alternative remedy--International transactions--High Court permitting assessee to avail of alternative remedy without prejudice its rights and contentions--Not a ground to refuse to entertain petition-- Vodafone India Service Pvt. Ltd. v. Union of India (Bom) . . . 133
----Writ--High Court--International transactions--Doctrine of merger--Transfer Pricing Officer’s order and Assessing Officer’s draft order merged in order of Dispute Resolution Panel--Orders passed in proceedings pursued by assessee without prejudice to its rights and pursuant to orders of court--Writ petition maintainable-- Vodafone India Service Pvt. Ltd. v. Union of India (Bom) . . . 133
S. 2(22)(e) --Deemed dividend--Loan to shareholder--Finding of fact of Tribunal that sum received by assessee upon sale of land not as loan or advance--Sum not taxable as deemed dividend-- CIT v. Om Prakash Suri (No. 2 ) (MP) . . . 41
S. 2(47) --Capital gains--Firm--Partners--Retiring partner taking only money towards value of his share--No distribution of capital assets among partners--No transfer of capital asset--No profits or gains payable by firm under section 45(4)-- CIT v. Dynamic Enterprises [FB] (Karn) . . . 83
S. 10A --Exemption--New industrial undertaking in free trade zone--Transfer of entire business--Transferee entitled to exemption-- CIT v. Heartland KG Information Ltd. (Mad) . . . 1
S. 12A(1)(b) --Assessment--Auditing of accounts--Special audit--Conditions precedent--Charitable trust--No plea that Assessing Officer had concluded complexity of accounts without having examined accounts--Audit as required under section 12A(1)(b) not found satisfactory--Nature and complexity of accounts of assessee satisfied--No prejudice to trust by special audit--Direction for special audit warranted-- Hiranandani Foundation v. Joint Director of Income-tax (Exemption) (Bom) . . . 29
S. 28 --Capital gains--Business--Business income or capital gains--Purchase and sale of shares--Purchase by investment company to obtain right to manage vendor company--Shares held for more than 30 months before sale--Shares not freely transferable--Profits from sale of shares assessable as capital gains-- Accra Investments P. Ltd. v. ITO (Bom) . . . 116
S. 32 --Depreciation--Imported motor cars--Amalgamation--Assessee acquiring cars after 1-4-2001 under scheme of amalgamation--Bar on depreciation allowance on imported vehicles in section 32(1) proviso (a) has no application--Assessee entitled to depreciation-- CIT v. Mira Exim Ltd. (Delhi) . . . 70
S. 37(1) --Business expenditure--Modvat credit on account of excess of excise duty and additional customs duty paid by assessee on purchase of raw material--Allowable-- CIT v. Samtel India Ltd. (Delhi) . . . 62
S. 40(a)(i) --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Non-resident--Commission or discount paid to non-resident--Circular clarifying that tax need not be deducted if non-resident did not have permanent establishment in India--Withdrawal of circular in October 2009--Non-deduction of tax in accounting year relevant to assessment year 2009-10--Payment not to be disallowed-- CIT v. Angelique International Ltd. (Delhi) . . . 9
S. 43(1) --Depreciation--Imported motor cars--Amalgamation--Assessee acquiring cars after 1-4-2001 under scheme of amalgamation--Bar on depreciation allowance on imported vehicles in section 32(1) proviso (a) has no application--Assessee entitled to depreciation-- CIT v. Mira Exim Ltd. (Delhi) . . . 70
S. 45 --Capital gains--Business--Business income or capital gains--Purchase and sale of shares--Purchase by investment company to obtain right to manage vendor company--Shares held for more than 30 months before sale--Shares not freely transferable--Profits from sale of shares assessable as capital gains-- Accra Investments P. Ltd. v. ITO (Bom) . . . 116
S. 45(4) --Capital gains--Firm--Partners--Retiring partner taking only money towards value of his share--No distribution of capital assets among partners--No transfer of capital asset--No profits or gains payable by firm under section 45(4)-- CIT v. Dynamic Enterprises [FB] (Karn) . . . 83
S. 69A --Unexplained investment--Search and seizure against third person--Reassessment of assessee on basis of statement of such person--Addition relying on statement without opportunity to assessee to cross-examine--Violation of principles of natural justice--Matter remitted to Assessing Officer for fresh consideration-- CIT v. P. C. Chemicals (Delhi) . . . 129
S. 92CA --International transaction--Transfer pricing--Arm’s length price--Determination--Writ--Determination of arm’s length price after notice to assessee and hearing it--Principles of natural justice followed--Assessee had alternative remedy--Writ would not issue to quash order of Transfer Pricing Officer-- Hindalco Industries Ltd. v. Addl. CIT (Bom) . . . 46
S. 92CA(2A), (2B) --International transactions--Arm’s length price--Amendment empowering Transfer Pricing Officer to consider transaction coming to his notice “during the course of proceedings before him†--Phrase “during the course of the proceedings†--Does not restrict the source to material already on record--Transfer Pricing Officer has jurisdiction to consider transactions not reported by assessee and transactions not referred to him by Assessing Officer where proceedings pending before him on 1-6-2011-- Vodafone India Service Pvt. Ltd. v. Union of India (Bom) . . . 133
S. 119 --Circular--Effect--Circulars binding on income-tax authorities--Circulars withdrawing benefit--Not to have retrospective effect-- CIT v. Angelique International Ltd. (Delhi) . . . 9
S. 142(2A) --Assessment--Auditing of accounts--Special audit--Conditions precedent--Charitable trust--No plea that Assessing Officer had concluded complexity of accounts without having examined accounts--Audit as required under section 12A(1)(b) not found satisfactory--Nature and complexity of accounts of assessee satisfied--No prejudice to trust by special audit--Direction for special audit warranted-- Hiranandani Foundation v. Joint Director of Income-tax (Exemption) (Bom) . . . 29
S. 147 --Reassessment--Notice--Reason to believe income escaping assessment--Grounds must be recorded before issue of notice--Assessing Officer not entitled to record additional reasons thereafter-- CIT v. Living Media India Ltd. (Delhi) . . . 106
----Reassessment--Notice--Validity--Original assessment after scrutiny--No new material showing escapement of income from assessment--Notice not valid-- CIT v. Fujistu Optel Ltd. (MP) . . . 67
----Reassessment--Notice--Validity--To be judged on basis of reasons recorded prior to issue of notice--Additions based on reasons recorded prior to notice deleted and that order becoming final--Reassessment on other grounds recorded after issue of notice not valid-- CIT v. Living Media India Ltd. (Delhi) . . . 106
S. 148 --Reassessment--Notice--Reason to believe income escaping assessment--Grounds must be recorded before issue of notice--Assessing Officer not entitled to record additional reasons thereafter-- CIT v. Living Media India Ltd. (Delhi) . . . 106
----Reassessment--Notice--Validity--Original assessment after scrutiny--No new material showing escapement of income from assessment--Notice not valid-- CIT v. Fujistu Optel Ltd. (MP) . . . 67
----Reassessment--Notice--Validity--To be judged on basis of reasons recorded prior to issue of notice--Additions based on reasons recorded prior to notice deleted and that order becoming final--Reassessment on other grounds recorded after issue of notice not valid-- CIT v. Living Media India Ltd. (Delhi) . . . 106
S. 192 --Deduction of tax at source--Salary or professional fees--Consultant doctors employed in hospital in addition to full time resident doctors--Consultants rendering services under contract--Fees paid to them not salary--Tax deductible under section 194J and not under section 192--Consultants declaring professional fees in returns and paying tax thereon--No loss to Revenue--Levy of interest not justified-- CIT (TDS) v. Apollo Hospitals International Ltd. (Guj) . . . 78
S. 194J --Deduction of tax at source--Salary or professional fees--Consultant doctors employed in hospital in addition to full time resident doctors--Consultants rendering services under contract--Fees paid to them not salary--Tax deductible under section 194J and not under section 192--Consultants declaring professional fees in returns and paying tax thereon--No loss to Revenue--Levy of interest not justified-- CIT (TDS) v. Apollo Hospitals International Ltd. (Guj) . . . 78
S. 201(1A) --Deduction of tax at source--Salary or professional fees--Consultant doctors employed in hospital in addition to full time resident doctors--Consultants rendering services under contract--Fees paid to them not salary--Tax deductible under section 194J and not under section 192--Consultants declaring professional fees in returns and paying tax thereon--No loss to Revenue--Levy of interest not justified-- CIT (TDS) v. Apollo Hospitals International Ltd. (Guj) . . . 78
S. 269SS --Penalty--Loan or deposit in cash exceeding specified limit--Assessee doing business as “shroff†--Cheque discounting business--Farmers selling their produce to traders against post-dated cheques--Taking cheques to assessee for discounting for cash--Not a case of assessee taking loan or deposit from agriculturists or repaying loan to agriculturists--Provisions of section 269SS or section 269T not attracted--No question of levy of penalty under sections 271D and 271E-- CIT v. Dineshchandra Shantilal Shah (HUF) (Guj) . . . 57
S. 269T --Penalty--Loan or deposit in cash exceeding specified limit--Assessee doing business as “shroff†--Cheque discounting business--Farmers selling their produce to traders against post-dated cheques--Taking cheques to assessee for discounting for cash--Not a case of assessee taking loan or deposit from agriculturists or repaying loan to agriculturists--Provisions of section 269SS or section 269T not attracted--No question of levy of penalty under sections 271D and 271E-- CIT v. Dineshchandra Shantilal Shah (HUF) (Guj) . . . 57
S. 269UD(1) --Purchase of immovable property by Central Government--Conditions precedent--Valuation of cost for resettling tenant--Appropriate Authority ignoring court orders twice and giving same reasons which court found not good enough to sustain acquisition of property--Pre-emptive purchase not warranted-- Satish Balan v. Union of India (Bom) . . . 15
S. 271(1)(c) --Penalty--Concealment of income--Claim made in course of scrutiny assessment to loss on account of loan to subsidiary company being written off--Bona fide claim--Not a case of concealment--Penalty not leviable-- CIT v. DCM Ltd. (Delhi) . . . 101
S. 271D --Penalty--Loan or deposit in cash exceeding specified limit--Assessee doing business as “shroff†--Cheque discounting business--Farmers selling their produce to traders against post-dated cheques--Taking cheques to assessee for discounting for cash--Not a case of assessee taking loan or deposit from agriculturists or repaying loan to agriculturists--Provisions of section 269SS or section 269T not attracted--No question of levy of penalty under sections 271D and 271E-- CIT v. Dineshchandra Shantilal Shah (HUF) (Guj) . . . 57
S. 271E --Penalty--Loan or deposit in cash exceeding specified limit--Assessee doing business as “shroff†--Cheque discounting business--Farmers selling their produce to traders against post-dated cheques--Taking cheques to assessee for discounting for cash--Not a case of assessee taking loan or deposit from agriculturists or repaying loan to agriculturists--Provisions of section 269SS or section 269T not attracted--No question of levy of penalty under sections 271D and 271E-- CIT v. Dineshchandra Shantilal Shah (HUF) (Guj) . . . 57
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