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Tuesday, January 28, 2014

ITR Volume 360 : Part 4 (Issue dated : 27-1-2014)

 

INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

HIGH COURTS

Cash --Share application money--Burden of proof--Burden on assessee to prove genuineness of transaction--Mere production of permanent account numbers or incorporation details of companies which applied for shares not sufficient--Finding by Assessing Officer that applicants for shares were entry operators not involved in any business--Tribunal not justified in deleting addition of amounts to income of assessee--Income-tax Act, 1961, s. 68-- CIT v. NR Portfolio P. Ltd. (Delhi) . . . 68

Penalty --Concealment of income or furnishing inaccurate particulars--Dishonest intention of assessee must be shown--Contract between assessee and party for procurement, supply and erection of automobile assembly equipment--Party having right to claim penalty, if assessee failed to meet delivery dates in contract--Assessee as caution providing for penalty in books and claiming deduction at earliest point of time--Not a case of concealment of income for purpose of avoiding tax--Penalty not leviable--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Durr India P. Ltd. (Mad) . . . 87

 

PRINT EDITION

ITR Volume 360 : Part 4 (Issue dated : 27-1-2014)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Agricultural income-tax (Kerala) --Recovery of tax--Provision that assessments shall be completed within five year from end of year for which agricultural income was first assessable--Amended assessment order passed beyond five-year period--Recovery proceedings not valid--Kerala Agricultural Income-tax Act, 1991, ss. 35(2), 57-- Savy L. Purayidam v. Agrl. IT and CTO (Ker) . . . 551

Business expenditure --Disallowance--Guest house--Depreciation on guest house--Not allowable--Income-tax Act, 1961, s. 37(4)-- CIT v. Radico Khaitan Ltd. (All) . . . 462

Business income or income from other sources --Interest income--To be treated as business income--Not income from other sources--Income-tax Act, 1961, ss. 22, 56-- CIT v. Radico Khaitan Ltd. (All) . . . 462

Capital gains --Capital asset--Law applicable--Effect of section 28(va)--Technical know-how acquired on or after 1-4-1998 is a capital asset--Amount received on transfer of such asset assessable as capital gains--Income-tax Act, 1961, ss. 28, 45-- CIT v. Wintac Ltd. (Karn) . . . 614

----Capital loss--Sale of shares to subsidiary company--Sale to avoid stringent action by financial institution--Sale genuine--Losses deductible--Income-tax Act, 1961-- CIT v. Wintac Ltd. (Karn) . . . 614

----Exemption--Sale of long-term capital asset and construction of residential house within three years--Meaning of “construction†--Purchase and demolition of old house and construction of new house within three years--Assessee entitled to exemption--Income-tax Act, 1961, s. 54F-- CIT v. Ashok Kumar Ralhan (Delhi) . . . 575

Charitable purpose --Exemption--Accumulation of income--Information to be furnished to Assessing Officer in prescribed form within prescribed time--Matter of form and not of substance--Information furnished in form of letter with full details as required in Form 10 furnished for setting part and carrying forward unspent amount for spending in next year--Assessee entitled to exemption--Income-tax Act, 1961, s. 11-- CIT v. Moti Ram Gopi Chand Charitable Trust (All) . . . 598

Dividend --Deemed dividend--Loan to shareholder--Deemed dividend not to be assessed in hands of person not a shareholder of company--Income-tax Act, 1961, s. 2(22)(e)-- Asst. CIT v. Britto Amusement Pvt. Ltd. (Bom) . . . 544

Export --Special deduction--Computation--Conversion of raw materials into yarn on job work basis--Net conversion charges--Ninety per cent. of sum to be reduced in total turnover to arrive at business profits--Income-tax Act, 1961, s. 80HHC-- CIT v. Kadri Mills Ltd. (Mad) . . . 595

----Special deduction--Demurrage and dead freight charges liability of assessee and deducted before remittance of export proceeds--Allowable--Income-tax Act, 1961, s. 80HHC-- CIT v. Bannariamman Exports Ltd. (Mad) . . . 591

Income or capital --Agreement for sale of property to lessee--Termination of agreement--Sale agreement providing for forfeiture of thirty lakhs of rupees--Amount received in excess assessable as revenue receipt--Income-tax Act, 1961-- CIT v. Wintac Ltd. (Karn) . . . 614

----Non-compete fees--Capital receipt--Income-tax Act, 1961-- CIT v. Wintac Ltd. (Karn) . . . 614

Industrial undertaking --Special deduction--Deduction under section 80-I allowable on gross total income without reducing deduction under section 80HH--Income-tax Act, 1961, ss. 80HH, 80-I-- CIT v. Radico Khaitan Ltd. (All) . . . 462

----Special deduction--Income surrendered during survey--No presumption that surrendered income eligible for deduction under section 80-IB--Burden on assessee to demonstrate that surrendered income derived from industrial undertaking and eligible for section 80-IB--No evidence to establish direct nexus of income with industrial undertaking--Assessee not entitled to deduction--Income-tax Act, 1961, s. 80-IB-- Tudor Knitting Works Pvt. Ltd. v. CIT (P&H) . . . 453

----Special deduction under sections 80HH and 80-I--Computation of profits--Determination of value of raw material--Raw material not available at place of production--Determination of value of raw material to be made taking into account cost at nearest available place, cost of transportation and local taxes--Income-tax Act, 1961, ss. 80HH, 80-I-- CIT v. Wipro Ltd. (No. 1 ) (Karn) . . . 606

Interest-tax --Chargeable interest--Sticky loans--Interest not credited in profit and loss account as recovery extremely doubtful--Not chargeable interest--Interest-tax Act, 1974, ss. 4, 5, 6-- UCO Bank v. CIT (Cal) . . . 567

----Finding that transaction entered into by assessee with third party is hire purchase agreement and not a loan transaction--No requirement of payment of interest--Interest-tax Act, 1974-- CIT v. M. G. Brothers Finance Ltd. (AP) . . . 603

Interpretation of taxing statutes --Reasonable interpretation-- CIT v. Leroy Somer and Controls (India) P. Ltd. (Delhi) . . . 532

Penalty --Concealment of income--Condition precedent--Evidence of deliberate concealment--Finding in assessment proceedings not conclusive--Addition to income based on estimate--No evidence of deliberate concealment of income--Penalty could not be imposed--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Krishi Tyre Retreading and Rubber Industries (Raj) . . . 580

----International transaction--Failure to furnish documentation or information required under section 92D--Scope of section 271G--Penalty is discretionary--Notice under section 92D should specify information or document to be furnished--Income-tax Act, 1961, ss. 92D, 271G-- CIT v. Leroy Somer and Controls (India) P. Ltd. (Delhi) . . . 532

Reassessment --Company--Book profits--Computation--Notice after four years--Failure to disclose material facts necessary for assessment--Amount considered in scrutiny assessment--Assessing Officer taking different view regarding computation of income--Notice not valid--Income-tax Act, 1961, ss. 115JB, 147, 148-- Gujarat Lease Financing Ltd. v. Deputy CIT (Guj) . . . 496

----Notice after four years--Conditions precedent--No satisfaction recorded by Assessing Officer that income has escaped assessment by reason of failure on part of assessee to disclose fully and truly all material facts necessary for its assessment--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- General Motors India Pvt. Ltd. v. Deputy CIT (Guj) . . . 527

Recovery of tax --Appeal to Appellate Tribunal--Stay of recovery pending appeal--Tribunal holding assessee having arguable case and directing hearing along with Department’s cross-appeal--Subsequently dismissing stay application without granting adjournment--Inconsistent approach of Tribunal--Writ petition--High Court--Tribunal to hear appeal on merits--Income-tax Act, 1961-- Unique Artage v. Union of India (Raj) . . . 467

Refund --Application for refund--Delay in filing return--Claim for refund filed belatedly--Condonation of delay--Refusal to condone delay causing genuine hardship to assessee--Delay condoned matter remitted to Chief Commissioner to consider application afresh--Income-tax Act, 1961-- Vasco Sales and Marketing Corporation v. Deputy CIT (Ker) . . . 578

Revision --Commissioner--Powers--Search and seizure--Block assessment--Law applicable--Effect of amendment of section 158BG--Commissioner has no power to revise block assessments made pursuant to searches conducted prior to 1-1-1997--Income-tax Act, 1961, ss. 158BC, 158BG, 158BH, 263-- R. Srinivasan v. Asst./Deputy CIT (Mad) . . . 471

----Commissioner--Search and seizure--Block assessment--Tribunal finding transactions reflected in books of account and genuine transactions--Order of Tribunal on block assessment attaining finality--Notice of revision solely on basis of block assessment not valid--No material for Commissioner to deny assessee deduction and depreciation considered by Assessing Officer--Income-tax Act, 1961, s. 263-- Seshasayee Paper and Boards Ltd. v. Deputy CIT (Mad) . . . 483

Search and seizure --Warrant of authorisation--Four companies used for booking bogus expenses by a coal company through assessees--Assessees acting as authorised representatives of two of four companies in respect of assessment records--Search and seizure operations at residence and office premises of assessees--Valid--Deputy Director possessing information pertaining to four companies connected with coal company and assessees’ nexus therewith--Reason to suspect that income had been concealed or was likely to be concealed by assessees need not be stated in notice under section 131(1A)--Notice valid--Income-tax Act, 1961, ss. 131(1A), 132-- Sumermal Jain v. Deputy CIT (Cal) . . . 553

Settlement of cases --Settlement Commission--Addition based on statement and affidavit received after conclusion of arguments--Failure to confront assessee with statement and affidavit--Violation of natural justice--Order of Settlement Commission set aside--Settlement Commission directed to decide matter afresh--Income-tax Act, 1961-- Dr. Avtar Singh v. ITSC (P&H) . . . 588

----Settlement Commission--Whether enquiry or investigation under section 245D(3) should be ordered--Within exclusive of Settlement Commission--Proceedings pending before Settlement Commission--Writ petition not maintainable--Income-tax Act, 1961, s. 245D-- CIT v. ITSC (Bom) . . . 539

Unexplained investment --Gold biscuits recovered from locker of assessee--Concurrent finding that gold biscuits recovered from locker not owned by brother of assessee at time of recording his statement--Finding of fact--Addition in hands of assessee sustainable--Income-tax Act, 1961, s. 69-- Dharmendra Kumar Varshney v. CIT (All) . . . 563

Valuation of stock --Agreement for sale of drug manufacturing unit--Assessee retaining closing stock--Assessee discontinuing manufacturing articles of unit--Finding that drugs in stock not saleable--Valuation of stock at “nil†--Justified--Income-tax Act, 1961-- CIT v. Wintac Ltd. (Karn) . . . 614

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 2(22)(e) --Dividend--Deemed dividend--Loan to shareholder--Deemed dividend not to be assessed in hands of person not a shareholder of company-- Asst. CIT v. Britto Amusement Pvt. Ltd. (Bom) . . . 544

S. 11 --Charitable purpose--Exemption--Accumulation of income--Information to be furnished to Assessing Officer in prescribed form within prescribed time--Matter of form and not of substance--Information furnished in form of letter with full details as required in Form 10 furnished for setting part and carrying forward unspent amount for spending in next year--Assessee entitled to exemption-- CIT v. Moti Ram Gopi Chand Charitable Trust (All) . . . 598

S. 22 --Business income or income from other sources--Interest income--To be treated as business income--Not income from other sources-- CIT v. Radico Khaitan Ltd. (All) . . . 462

S. 28 --Capital gains--Capital asset--Law applicable--Effect of section 28(va)--Technical know-how acquired on or after 1-4-1998 is a capital asset--Amount received on transfer of such asset assessable as capital gains-- CIT v. Wintac Ltd. (Karn) . . . 614

S. 37(4) --Business expenditure--Disallowance--Guest house--Depreciation on guest house--Not allowable-- CIT v. Radico Khaitan Ltd. (All) . . . 462

S. 45 --Capital gains--Capital asset--Law applicable--Effect of section 28(va)--Technical know-how acquired on or after 1-4-1998 is a capital asset--Amount received on transfer of such asset assessable as capital gains-- CIT v. Wintac Ltd. (Karn) . . . 614

S. 54F --Capital gains--Exemption--Sale of long-term capital asset and construction of residential house within three years--Meaning of “construction†--Purchase and demolition of old house and construction of new house within three years--Assessee entitled to exemption-- CIT v. Ashok Kumar Ralhan (Delhi) . . . 575

S. 56 --Business income or income from other sources--Interest income--To be treated as business income--Not income from other sources-- CIT v. Radico Khaitan Ltd. (All) . . . 462

S. 69 --Unexplained investment--Gold biscuits recovered from locker of assessee--Concurrent finding that gold biscuits recovered from locker not owned by brother of assessee at time of recording his statement--Finding of fact--Addition in hands of assessee sustainable-- Dharmendra Kumar Varshney v. CIT (All) . . . 563

S. 80HH --Industrial undertaking--Special deduction under sections 80HH and 80-I--Computation of profits--Determination of value of raw material--Raw material not available at place of production--Determination of value of raw material to be made taking into account cost at nearest available place, cost of transportation and local taxes-- CIT v. Wipro Ltd. (No. 1 ) (Karn) . . . 606

----Industrial undertaking--Special deduction--Deduction under section 80-I allowable on gross total income without reducing deduction under section 80HH-- CIT v. Radico Khaitan Ltd. (All) . . . 462

S. 80HHC --Export--Special deduction--Computation--Conversion of raw materials into yarn on job work basis--Net conversion charges--Ninety per cent. of sum to be reduced in total turnover to arrive at business profits-- CIT v. Kadri Mills Ltd. (Mad) . . . 595

----Export--Special deduction--Demurrage and dead freight charges liability of assessee and deducted before remittance of export proceeds--Allowable-- CIT v. Bannariamman Exports Ltd. (Mad) . . . 591

S. 80-I --Industrial undertaking--Special deduction under sections 80HH and 80-I--Computation of profits--Determination of value of raw material--Raw material not available at place of production--Determination of value of raw material to be made taking into account cost at nearest available place, cost of transportation and local taxes-- CIT v. Wipro Ltd. (No. 1 ) (Karn) . . . 606

----Industrial undertaking--Special deduction--Deduction under section 80-I allowable on gross total income without reducing deduction under section 80HH-- CIT v. Radico Khaitan Ltd. (All) . . . 462

S. 80-IB --Industrial undertaking--Special deduction--Income surrendered during survey--No presumption that surrendered income eligible for deduction under section 80-IB--Burden on assessee to demonstrate that surrendered income derived from industrial undertaking and eligible for section 80-IB--No evidence to establish direct nexus of income with industrial undertaking--Assessee not entitled to deduction-- Tudor Knitting Works Pvt. Ltd. v. CIT (P&H) . . . 453

S. 92D --Penalty--International transaction--Failure to furnish documentation or information required under section 92D--Scope of section 271G--Penalty is discretionary--Notice under section 92D should specify information or document to be furnished-- CIT v. Leroy Somer and Controls (India) P. Ltd. (Delhi) . . . 532

S. 115JB --Reassessment--Company--Book profits--Computation--Notice after four years--Failure to disclose material facts necessary for assessment--Amount considered in scrutiny assessment--Assessing Officer taking different view regarding computation of income--Notice not valid-- Gujarat Lease Financing Ltd. v. Deputy CIT (Guj) . . . 496

S. 131(1A) --Search and seizure--Warrant of authorisation--Four companies used for booking bogus expenses by a coal company through assessees--Assessees acting as authorised representatives of two of four companies in respect of assessment records--Search and seizure operations at residence and office premises of assessees--Valid--Deputy Director possessing information pertaining to four companies connected with coal company and assessees’ nexus therewith--Reason to suspect that income had been concealed or was likely to be concealed by assessees need not be stated in notice under section 131(1A)--Notice valid-- Sumermal Jain v. Deputy CIT (Cal) . . . 553

S. 132 --Search and seizure--Warrant of authorisation--Four companies used for booking bogus expenses by a coal company through assessees--Assessees acting as authorised representatives of two of four companies in respect of assessment records--Search and seizure operations at residence and office premises of assessees--Valid--Deputy Director possessing information pertaining to four companies connected with coal company and assessees’ nexus therewith--Reason to suspect that income had been concealed or was likely to be concealed by assessees need not be stated in notice under section 131(1A)--Notice valid-- Sumermal Jain v. Deputy CIT (Cal) . . . 553

S. 147 --Reassessment--Company--Book profits--Computation--Notice after four years--Failure to disclose material facts necessary for assessment--Amount considered in scrutiny assessment--Assessing Officer taking different view regarding computation of income--Notice not valid-- Gujarat Lease Financing Ltd. v. Deputy CIT (Guj) . . . 496

----Reassessment--Notice after four years--Conditions precedent--No satisfaction recorded by Assessing Officer that income has escaped assessment by reason of failure on part of assessee to disclose fully and truly all material facts necessary for its assessment--Notice not valid-- General Motors India Pvt. Ltd. v. Deputy CIT (Guj) . . . 527

S. 148 --Reassessment--Company--Book profits--Computation--Notice after four years--Failure to disclose material facts necessary for assessment--Amount considered in scrutiny assessment--Assessing Officer taking different view regarding computation of income--Notice not valid-- Gujarat Lease Financing Ltd. v. Deputy CIT (Guj) . . . 496

----Reassessment--Notice after four years--Conditions precedent--No satisfaction recorded by Assessing Officer that income has escaped assessment by reason of failure on part of assessee to disclose fully and truly all material facts necessary for its assessment--Notice not valid-- General Motors India Pvt. Ltd. v. Deputy CIT (Guj) . . . 527

S. 158BC --Revision--Commissioner--Powers--Search and seizure--Block assessment--Law applicable--Effect of amendment of section 158BG--Commissioner has no power to revise block assessments made pursuant to searches conducted prior to 1-1-1997-- R. Srinivasan v. Asst./Deputy CIT (Mad) . . . 471

S. 158BG --Revision--Commissioner--Powers--Search and seizure--Block assessment--Law applicable--Effect of amendment of section 158BG--Commissioner has no power to revise block assessments made pursuant to searches conducted prior to 1-1-1997-- R. Srinivasan v. Asst./Deputy CIT (Mad) . . . 471

S. 158BH --Revision--Commissioner--Powers--Search and seizure--Block assessment--Law applicable--Effect of amendment of section 158BG--Commissioner has no power to revise block assessments made pursuant to searches conducted prior to 1-1-1997-- R. Srinivasan v. Asst./Deputy CIT (Mad) . . . 471

S. 245D --Settlement of cases--Settlement Commission--Whether enquiry or investigation under section 245D(3) should be ordered--Within exclusive of Settlement Commission--Proceedings pending before Settlement Commission--Writ petition not maintainable-- CIT v. ITSC (Bom) . . . 539

S. 263 --Revision--Commissioner--Powers--Search and seizure--Block assessment--Law applicable--Effect of amendment of section 158BG--Commissioner has no power to revise block assessments made pursuant to searches conducted prior to 1-1-1997-- R. Srinivasan v. Asst./Deputy CIT (Mad) . . . 471

----Revision--Commissioner--Search and seizure--Block assessment--Tribunal finding transactions reflected in books of account and genuine transactions--Order of Tribunal on block assessment attaining finality--Notice of revision solely on basis of block assessment not valid--No material for Commissioner to deny assessee deduction and depreciation considered by Assessing Officer-- Seshasayee Paper and Boards Ltd. v. Deputy CIT (Mad) . . . 483

S. 271(1)(c) --Penalty--Concealment of income--Condition precedent--Evidence of deliberate concealment--Finding in assessment proceedings not conclusive--Addition to income based on estimate--No evidence of deliberate concealment of income--Penalty could not be imposed-- CIT v. Krishi Tyre Retreading and Rubber Industries (Raj) . . . 580

S. 271G --Penalty--International transaction--Failure to furnish documentation or information required under section 92D--Scope of section 271G--Penalty is discretionary--Notice under section 92D should specify information or document to be furnished-- CIT v. Leroy Somer and Controls (India) P. Ltd. (Delhi) . . . 532

Interest-tax Act, 1974 :

Ss. 4, 5, 6 --Interest-tax--Chargeable interest--Sticky loans--Interest not credited in profit and loss account as recovery extremely doubtful--Not chargeable interest-- UCO Bank v. CIT (Cal) . . . 567

Kerala Agricultural Income-tax Act, 1991 :

S. 35(2) --Agricultural income-tax (Kerala)--Recovery of tax--Provision that assessments shall be completed within five year from end of year for which agricultural income was first assessable--Amended assessment order passed beyond five-year period--Recovery proceedings not valid-- Savy L. Purayidam v. Agrl. IT and CTO (Ker) . . . 551

S. 57 --Agricultural income-tax (Kerala)--Recovery of tax--Provision that assessments shall be completed within five year from end of year for which agricultural income was first assessable--Amended assessment order passed beyond five-year period--Recovery proceedings not valid-- Savy L. Purayidam v. Agrl. IT and CTO (Ker) . . . 551

 

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