INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Accounting --Rejection of accounts--Estimate of rate of profit--Addition on ground of unexplained expenditure--Finding that estimated rate of profit was not justified and that there was a reasonable explanation for source of money for expenditure--Deletion of addition to income justified--Income-tax Act, 1961-- CIT v. Babulal Agarwal (Raj) . . . 5
Assessment --Best judgment assessment--Construction business--Search and seizure--Failure to file returns--Estimation of income--Income earned by builder more than income earned by civil contractor--No material to show project not completed up to five per cent.--Estimation of profit at twenty per cent. of gross collection justified--Income-tax Act, 1961, s. 144-- Touch Home Builders and Realtors (P.) Ltd. v. Deputy CIT (Ker) . . .1
Business expenditure --Deduction only on actual payment--Tax or duty not actually paid--Employees contributions under ESI and EPF Acts--Amounts paid after due dates under the Acts but before filing of returns--Amounts could not be disallowed--Income-tax Act, 1961, s. 43B-- Spectrum Consultants India P. Ltd. v. CIT (Karn) . . . 12
Capital gains --Long-term capital gains--Firm--Partner--Amounts received on retirement by a partner--Exempt from capital gains--Income-tax Act, 1961-- CIT v. Riyaz A. Sheikh (Bom) . . . 24
Charitable purposes --Charitable trust--Exemption--Denial of exemption--Effect of section 13--Meaning of “benefit†to per sons in prohibited category--Remuneration for services rendered by such persons--Section 13 not applicable--Donations to other charitable organisations--Assessee entitled to exemption--Income-tax Act, 1961, ss. 11, 13-- CIT v. Bharat Sewa Sansthan (All) . . . 26
Recovery of tax --Priority of debts--Effect of State Financial Corporations Act--Income-tax dues do not have priority over debt due to State Industrial Investment Development Corporation--Income-tax Act, 1961, Sch. II, r. 29--State Financial Corporations Act, 1951-- Karnataka State Industrial Investment Development Corporation Ltd. v. CIT (Karn) . . . 17
ITR Volume 360 : Part 1 (Issue dated : 6-1-2014)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Export --Special deduction--Profits of business--Computation--Sale of DEPB credit--Matter remanded to Assessing Officer for computation in accordance with law laid down in Topman Exports [2012] 342 ITR 49 (SC)--Income-tax Act, 1961, s. 80HHC-- Nissan Export v. CIT . . . 93
----Special deduction--Profits of business--Computation--Sale of DEPB credit--Matter remanded to Assessing Officer for computation in accordance with law laid down in Topman Exports [2012] 342 ITR 49 (SC)--Income-tax Act, 1961, s. 80HHC-- Global Agro Products P. Ltd. v. ITO . . . 117
Appeal to Appellate Tribunal --Rectification of mistakes--Scope of jurisdiction--Failure to apply judgment of jurisdictional High Court--Is a mistake apparent on record--Tribunal has jurisdiction to rectify mistake--Income-tax Act, 1961, s. 254(2)-- South India Corporation Ltd. v. Asst. CIT (Ker) . . . 39
Business expenditure --Capital or revenue expenditure--Expenditure on raising loan to obtain technical know-how--Revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v. Dhampur Sugar Mills Ltd. (All) . . . 82
----Capital or revenue expenditure--Pre-operational trial run expenses--Revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v. Dhampur Sugar Mills Ltd. (All) . . . 82
----Expenditure on issuing convertible premium notes--Expenditure spread over six years--Deduction to be spread over six years--Income-tax Act, 1961-- CIT v. Dhampur Sugar Mills Ltd. (All) . . . 82
----Expenditure on provision of electricity --Salaries and annual maintenance contract charges--Deductible--Income-tax Act, 1961-- CIT v. Hero Management Service Ltd. (Delhi) . . . 68
Business income --Income from other sources--Assessee entering into agreements with two foreign companies--Assessee’s proprietorship concern appointed as investment manager to invest and manage funds entrusted to it by foreign companies--Income from investment management and advisory fees--No evidence to prove that assessee did not carry out activity of investment management--That expenses not identified by assessee--Does not establish that income not derived from business activity--No change in terms of agreement or in the nature of services rendered--No fundamental difference in the nature of business activity between the present year and earlier years--Principle of consistency--Assessable as business income--Income-tax Act, 1961-- CIT v. Ashok Mittal (Delhi) . . . 12
Exemption --Capital gains--Listed shares--USA company holding seventy-four per cent. of shares of Indian company--Transfer of seventy-four per cent. shareholding by USA company to its subsidiary in Singapore without consideration--Neither USA company nor Singapore company liable to tax in India--Income-tax Act, 1961, s. 10(38)-- Director of Income-tax (International Taxation) v. Goodyear Tire and Rubber Co. (Delhi) . . . 159
----Charitable purposes--Meaning of †charitable purposes†--Effect of amendments with effect from 1-4-2009--Society promoted and founded by Government of India from promoting awareness about global coding identification system--Society granted exemption under section 12A--Society charging nominal fee for use of coding system--No business activity--Society entitled to registration under section 10(23C)(iv)--Income-tax Act, 1961, ss. 2(15), 10(23C)(iv)-- GS 1 India v. Director General of Income-tax (Exemption) (Delhi) . . . 138
----Educational institution--Trust with main object of imparting education--Refusal to grant approval under section 10(23C)(vi) on grounds that sole object of trust was not imparting of education and educational activities confined to particular area--Refusal not valid--Income-tax Act, 1961, s. 10-- Sree Kanya Pathsala Trust v. Union of India (Gauhati) . . . 60
----Export--Manufacture by new export oriented undertaking--Meaning of manufacture--Export of dry flowers--Processing of flowers amounted to manufacture--Three directors of private limited company partners of assessee-firm--Company and firm manufacturing different products--No evidence of splitting up of company to form firm--Assessee firm entitled to exemption under section 10B--Income-tax Act, 1961, s. 10B-- CIT v. Deco De Trend (Mad) . . . 1
Goodwill --Firm--Partner--Money paid to a retiring partner--No transfer of any interest--Money paid is only towards share of capital invested by partner--No question of some money being paid towards goodwill--Firm cannot claim goodwill in that assessment year--Income-tax Act, 1961-- Oberon Trading Corporation v. ITO (Ker) . . . 19
Income --Accrual of income--Export--Mercantile system of accounting--When assessee received amount irrelevant--Fluctuations in foreign exchange rates--Profit and loss account credited with a sum representing estimated amount of difference on outstanding bills--Amount not excludible--Income-tax Act, 1961-- CIT v. Mahavir Plantations Pvt. Ltd. (Ker) . . . 22
----Capital or revenue receipt--Amount received under sugar incentive scheme for setting up new unit or expanding existing unit--Capital receipt--Income-tax Act, 1961-- CIT v. Dhampur Sugar Mills Ltd. (All) . . . 82
----Computation of income--Disallowance of expenditure relating to exempt income--Disallowance can be made only after recording satisfaction that claim for deduction was not correct--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- CIT v. Hero Management Service Ltd. (Delhi) . . . 68
----Income or capital--Subsidy--Subsidiary of Government company receiving subsidy from its holding company--Subsidy to protect capital investment of parent company--Subsidy constituted capital receipt--Income-tax Act, 1961-- CIT v. Handicrafts and Handlooms Export Corporation of India Ltd. (Delhi) . . . 130
Interest on borrowed capital --Capital used for setting up new unit--Interest not deductible--Income-tax Act, 1961, s. 36(1)(iii)-- CIT v. Dhampur Sugar Mills Ltd. (All) . . . 82
Penalty --Concealment of income or furnishing of inaccurate particulars thereof--Meaning of “inaccurate particulars†--Details shown in return not inaccurate or incorrect--Bona fide claim for exemption from capital gains tax--No furnishing of inaccurate particulars of income--Penalty could not be levied--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Rajiv Bhatara (P&H) . . . 121
Precedent --Effect of decision of Supreme Court in Aditanar Educational Institution v. Asst. CIT [1997] 224 ITR 310-- Sree Kanya Pathsala Trust v. Union of India (Gauhati) . . . 60
----Effect of decision of Supreme Court in Sahney’s case [1997] 228 ITR 253 (SC)-- CIT v. Handicrafts and Handlooms Export Corporation of India Ltd. (Delhi) . . . 130
Revision --Commissioner--Powers--Condition precedent--Order should be erroneous and also prejudicial to Revenue--Mere observation that order erroneous and prejudicial to Revenue--Not sufficient--Assessing Officer adopting one of two possible courses--Order not erroneous--Special deduction under section 80HHF granted after detailed inquiry--No evidence that order erroneous--Revision of order--Not valid--Income-tax Act, 1961, ss. 80HHF, 263-- CIT v. New Delhi Television Ltd. (Delhi) . . . 44
----Commissioner--Prejudice to interests of Revenue--Tribunal analysing issue and confirming that there was no application of mind while considering assessment under section 143--Procedure adopted would have implication on tax computation--Order not only erroneous but also prejudicial to interests of Revenue--Income-tax Act, 1961, s. 263-- Appollo Tyres Ltd. v. Deputy CIT (Ker) . . . 36
Search and seizure --Block assessment--Warrant of authorisation--Satisfaction note--Disclosure of documents--Privilege--Privilege can be claimed not only for information but also method and manner of collecting information--Privilege claimed for satisfaction note for issuing warrant of authorisation for search--Satisfaction note based on report of Finance Intelligence Unit of Government of India--Claim valid--Income-tax Act, 1961--Evidence Act, 1872, ss. 123, 124-- M. D. Overseas Ltd. v. Director General of Income-tax (Investigation) (All) . . . 72
Valuation of stock --Change in method--Finding by Tribunal that changed method was more scientific--No addition in prior years on account of undervaluation of stock--No addition could be made on account of undervaluation of stock in assessment year 1998-99--Income-tax Act, 1961-- CIT v. Dhampur Sugar Mills Ltd. (All) . . . 82
Wealth-tax --Charge of tax--Co-owner of property--Agreement with promoter for development of property--Promoter given possession of property--No transfer of rights in property--Assessee liable to pay wealth-tax on value of share in property for assessment years 1987-88 to 1992-93--Wealth-tax Act, 1957-- Siddharth Pratap Chand v. CWT (Delhi) . . . 30
----Valuation of assets--Scope of section 7(4)--Residential property must have been in exclusive possession of assessee for twelve months preceding valuation date--Admission that possession of property was given to purchaser of property--Assessee not entitled to benefit of section 7(4)--Wealth-tax Act, 1957, s. 7-- Siddharth Pratap Chand v. CWT (Delhi) . . . 30
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 123 --Search and seizure--Block assessment--Warrant of authorisation--Satisfaction note--Disclosure of documents--Privilege--Privilege can be claimed not only for information but also method and manner of collecting information--Privilege claimed for satisfaction note for issuing warrant of authorisation for search--Satisfaction note based on report of Finance Intelligence Unit of Government of India--Claim valid-- M. D. Overseas Ltd. v. Director General of Income-tax (Investigation) (All) . . . 72
S. 124 --Search and seizure--Block assessment--Warrant of authorisation--Satisfaction note--Disclosure of documents--Privilege--Privilege can be claimed not only for information but also method and manner of collecting information--Privilege claimed for satisfaction note for issuing warrant of authorisation for search--Satisfaction note based on report of Finance Intelligence Unit of Government of India--Claim valid-- M. D. Overseas Ltd. v. Director General of Income-tax (Investigation) (All) . . . 72
S. 2(15) --Exemption--Charitable purposes--Meaning of †charitable purposes†--Effect of amendments with effect from 1-4-2009--Society promoted and founded by Government of India from promoting awareness about global coding identification system--Society granted exemption under section 12A--Society charging nominal fee for use of coding system--No business activity--Society entitled to registration under section 10(23C)(iv)-- GS 1 India v. Director General of Income-tax (Exemption) (Delhi) . . . 138
S. 10 --Exemption--Educational institution--Trust with main object of imparting education--Refusal to grant approval under section 10(23C)(vi) on grounds that sole object of trust was not imparting of education and educational activities confined to particular area--Refusal not valid-- Sree Kanya Pathsala Trust v. Union of India (Gauhati) . . . 60
S. 10(23C)(iv) --Exemption--Charitable purposes--Meaning of †charitable purposes†--Effect of amendments with effect from 1-4-2009--Society promoted and founded by Government of India from promoting awareness about global coding identification system--Society granted exemption under section 12A--Society charging nominal fee for use of coding system--No business activity--Society entitled to registration under section 10(23C)(iv)-- GS 1 India v. Director General of Income-tax (Exemption) (Delhi) . . . 138
S. 10(38) --Exemption--Capital gains--Listed shares--USA company holding seventy-four per cent. of shares of Indian company--Transfer of seventy-four per cent. shareholding by USA company to its subsidiary in Singapore without consideration--Neither USA company nor Singapore company liable to tax in India-- Director of Income-tax (International Taxation) v. Goodyear Tire and Rubber Co. (Delhi) . . . 159
S. 10B --Exemption--Export--Manufacture by new export oriented undertaking--Meaning of manufacture--Export of dry flowers--Processing of flowers amounted to manufacture--Three directors of private limited company partners of assessee-firm--Company and firm manufacturing different products--No evidence of splitting up of company to form firm--Assessee firm entitled to exemption under section 10B-- CIT v. Deco De Trend (Mad) . . . 1
S. 14A --Income--Computation of income--Disallowance of expenditure relating to exempt income--Disallowance can be made only after recording satisfaction that claim for deduction was not correct-- CIT v. Hero Management Service Ltd. (Delhi) . . . 68
S. 36(1)(iii) --Interest on borrowed capital--Capital used for setting up new unit--Interest not deductible-- CIT v. Dhampur Sugar Mills Ltd. (All) . . . 82
S. 37 --Business expenditure--Capital or revenue expenditure--Expenditure on raising loan to obtain technical know-how--Revenue expenditure-- CIT v. Dhampur Sugar Mills Ltd. (All) . . . 82
----Business expenditure--Capital or revenue expenditure--Pre-operational trial run expenses--Revenue expenditure-- CIT v. Dhampur Sugar Mills Ltd. (All) . . . 82
S. 80HHC --Export--Special deduction--Profits of business--Computation--Sale of DEPB credit--Matter remanded to Assessing Officer for computation in accordance with law laid down in Topman Exports [2012] 342 ITR 49 (SC)-- Nissan Export v. CIT (SC). . . 93
----Export--Special deduction--Profits of business--Computation--Sale of DEPB credit--Matter remanded to Assessing Officer for computation in accordance with law laid down in Topman Exports [2012] 342 ITR 49 (SC)-- Global Agro Products P. Ltd. v. ITO (SC). . . 117
S. 80HHF --Revision--Commissioner--Powers--Condition precedent--Order should be erroneous and also prejudicial to Revenue--Mere observation that order erroneous and prejudicial to Revenue--Not sufficient--Assessing Officer adopting one of two possible courses--Order not erroneous--Special deduction under section 80HHF granted after detailed inquiry--No evidence that order erroneous--Revision of order--Not valid-- CIT v. New Delhi Television Ltd. (Delhi) . . . 44
S. 254(2) --Appeal to Appellate Tribunal--Rectification of mistakes--Scope of jurisdiction--Failure to apply judgment of jurisdictional High Court--Is a mistake apparent on record--Tribunal has jurisdiction to rectify mistake-- South India Corporation Ltd. v. Asst. CIT (Ker) . . . 39
S. 263 --Revision--Commissioner--Powers--Condition precedent--Order should be erroneous and also prejudicial to Revenue--Mere observation that order erroneous and prejudicial to Revenue--Not sufficient--Assessing Officer adopting one of two possible courses--Order not erroneous--Special deduction under section 80HHF granted after detailed inquiry--No evidence that order erroneous--Revision of order--Not valid-- CIT v. New Delhi Television Ltd. (Delhi) . . . 44
----Revision--Commissioner--Prejudice to interests of Revenue--Tribunal analysing issue and confirming that there was no application of mind while considering assessment under section 143--Procedure adopted would have implication on tax computation--Order not only erroneous but also prejudicial to interests of Revenue-- Appollo Tyres Ltd. v. Deputy CIT (Ker) . . . 36
S. 271(1)(c) --Penalty--Concealment of income or furnishing of inaccurate particulars thereof--Meaning of “inaccurate particulars†--Details shown in return not inaccurate or incorrect--Bona fide claim for exemption from capital gains tax--No furnishing of inaccurate particulars of income--Penalty could not be levied-- CIT v. Rajiv Bhatara (P&H) . . . 121
S. 7 --Wealth-tax--Valuation of assets--Scope of section 7(4)--Residential property must have been in exclusive possession of assessee for twelve months preceding valuation date--Admission that possession of property was given to purchaser of property--Assessee not entitled to benefit of section 7(4)-- Siddharth Pratap Chand v. CWT (Delhi) . . . 30
R. 8D --Income--Computation of income--Disallowance of expenditure relating to exempt income--Disallowance can be made only after recording satisfaction that claim for deduction was not correct-- CIT v. Hero Management Service Ltd. (Delhi) . . . 68
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