INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Appeal to High Court --Power of court to frame questions of law--Decision of Supreme Court in CIT v. Mastek Ltd. [2013] 358 ITR 252 (SC)--High Court refusing to admit questions on allowability of exemption in respect of profits arising out of fluctuation in rate of foreign exchange--Special leave petition--Supreme Court--Direction to High Court to consider matter in light of CIT v. Mastek Ltd. [2013] 358 ITR 252 (SC)--Income-tax Act, 1961, s. 260A-- Convergys India Services P. Ltd. v. CIT . . . 194
----Substantial questions of law--Non-resident--Taxability in India--Business expenditure--Disallowance--Payment to non-resident--Whether procurement fees payable to non-resident not taxable in India, whether procurement services in nature of commercial services, and whether disallowance of payment under section 40(a)(i) proper--Questions of law--Income-tax Act, 1961, ss. 9(1)(i), (vii), 40(a)(i), 260A-- Directorate of Income-tax (International Taxation) v. Black and Veatch (I) P. Ltd. . . . 198
Income --Disallowance of expenditure in earning tax-free income--Computation of disallowance--Tribunal remanding matter to Assessing Officer to compute disallowance in light of decision of jurisdictional High Court--Finding of fact--Income-tax Act, 1961, s. 14A-- CIT v. Ceat Ltd. (Bom) . . . 201
----Housing society permitting developer to construct on its land--Agreement stating developer will pay compensation to society and its members--No change in ownership of land--Grant of consent not transfer of land or any rights--Amounts paid by developer to members under independent contract--Individual members offering receipts to tax and taxed in their hands--Amounts paid to members not income in hands of assessee--Not taxable--Income-tax Act, 1961, s. 2(24), (47)-- CIT v. Raj Ratan Palace Co-operative Housing Society (Bom) . . . 210
Penalty --Concealment of income--Claim for depreciation of a huge sum found to be not genuine--Imposition of penalty--Valid--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Morgan Finvest P. Ltd. (Delhi) . . . 219
Reassessment --Notice--Condition precedent--Tangible material to show escapement of income from assessment--Assessment after enquiry--Reasons for notice must be compelling--Assessment after enquiry relating to exemption under section 10B--Notice on ground that exemption was wrongly computed--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Moser Baer India Ltd. v. Deputy CIT (Delhi) . . . 227
ITR Volume 362 : Part 1 (Issue dated : 24-3-2014)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal to Appellate Tribunal --Rectification of mistakes--Application for rectification--Duty is limited to points raised before Tribunal--Aspects and contentions not raised by parties--Pleadings, evidence or material to which Tribunal’s pointed attention not drawn in course of proceedings--Tribunal not expected to unearth evidence or material to which its attention not drawn by parties--Tribunal justified in not rectifying mistake--Income-tax Act, 1961, s. 254(2)-- Dholadhar Investment P. Ltd. v. CIT (Delhi) . . . 111
Appeal to Commissioner (Appeals) --Assessment on basis of voluntary statement of managing director of assessee--Tax paid without retracting voluntary statement--No case of retraction before Commissioner (Appeals)--Commissioner (Appeals) deleting addition on ground addition cannot be sustained only on basis of admissions and acquiescences--Not permissible--Income-tax Act, 1961-- Kermex Micro Systems (India) Ltd. v. Deputy CIT (AP) . . . 13
Appeal to High Court --Capital gains--Full value of consideration--Memorandum of understanding reflecting higher sale price but agreement to sell and sale deed recording lower figure--No material to suggest excess consideration actually paid--Limited use of land allowed to purchaser--Fifty per cent. of land likely to be reserved--No evidence other than memorandum of understanding to controvert evidence--Cost of acquisition--Without further evidence, Assessing Officer could not substitute valuation of registered valuer--Concurrent factual finding of Commissioner (Appeals) and Tribunal--No question of law--Income-tax Act, 1961, s. 260A-- CIT v. Hiraben Govindbhai Patel (Guj) . . . 59
Assessment --Special audit--Approval of Commissioner--No requirement of recording elaborate reasons for approval--Approval cannot be mechanical--Terms of reference sent by Assessing Officer, views of Assessing Officer and those of assessee available before Commissioner--Approval not without application of mind by Commissioner--Income-tax Act, 1961, s. 142(2A)-- AT & T Communication Services India (P.) Ltd. v. CIT (Delhi) . . . 97
----Special audit--International transactions--That reference made to Transfer Pricing Officer whose order binding on Assessing Officer--Does not make provisions for direction for special audit subject to powers of Transfer Pricing Officer--Income-tax Act, 1961, ss. 92CA, 142(2A)-- AT & T Communication Services India (P.) Ltd. v. CIT (Delhi) . . . 97
----Special audit--Natural justice--Assessee submitting elaborate reply to notice under section 142(1) showing cause against special audit--Requirement of adherence to rules of natural justice satisfied--Income-tax Act, 1961, s. 142(2A)-- AT & T Communication Services India (P.) Ltd. v. CIT (Delhi) . . . 97
----Special audit--Writ--Whether accounts and related documents and records complex within meaning of section 142(2A) to be decided by Assessing Officer--Power of court limited to examining whether discretion exercised objectively and there was valid material before Assessing Officer to infer complexity--No requirement that “books of account†should be examined by Assessing Officer before directing special audit--On facts, accounts including documents, records and other material before Assessing Officer did make issues complex requiring special audit--Income-tax Act, 1961, s. 142(2A)--Constitution of India, art. 226-- AT & T Communication Services India (P.) Ltd. v. CIT (Delhi) . . . 97
Business expenditure --Disallowance--Payments exceeding prescribed limit otherwise than by crossed cheques or crossed bank drafts--ONGC acquiring lands from farmers and farmers forming a society--Society receiving amounts from ONGC and distributing to farmers--Payments not expended by society and would not come within meaning of expenditure either under section 40(a)(ia) or section 40A(3)--No disallowance could be made--Income-tax Act, 1961, ss. 40(a)(ia), 40A(3)-- CIT v. Ankleshwar Taluka ONGC and Land Loser Travellers Co-operative Society (Guj) . . . 92
----Disallowance--Payments on which tax deductible at source--ONGC formulating a scheme to acquire oil field land area from farmers by compensating them--ONGC forming a society for maintaining individual account of each farmer and co-ordinating all matters with ONGC--No element of works contract--Society receiving amount and distributing to farmers--Society not a sub-contractor--Society need not deduct tax at source on payments made to each of farmers--Income-tax Act, 1961, ss. 40(a)(ia), 40A(3), 194C-- ITO v. Ankleshwar Taluka ONGC Land Loser Travellers Co-operative Society (Guj) . . . 87
----Disallowance--Payments prohibited by law--Effect of insertion of Explanation to section 37(1) with retrospective effect from 1-4-1962--Secret commission and specimen distribution to public servants--Disallowable--Matter remanded to Tribunal for deciding question of allowability of deduction in light of Explanation to section 37(1)--Income-tax Act, 1961, s. 37(1), Expln. -- CIT v. Dhanpat Rai and Sons (P&H) . . . 7
Business income --Remission or cessation of liability--Unexplained purchase--Addition on ground liability for sum not carried over in following year--Fact that credit entry for sum was first entry in ledger of concerned party--Appellate authorities justified in deleting addition--Income-tax Act, 1961, s. 41(1)-- CIT v. Nandadevi Sales Agency (Cal) . . . 5
Charitable purpose --Charitable trust--Exemption--Investment in immovable property--Major portion of income of trust spent towards construction of commercial complex--Objects clause of bye-laws of trust not showing construction of commercial complex is object of trust--Commercial complex not used for any of objects of trust--Donations received considered as normal donation and not as donations towards corpus fund--Assessee not entitled to exemption--Income-tax Act, 1961, s. 11-- Kamma Sangham v. Director of Income-tax (Exemptions) (AP) . . . 30
Export --Exemption--Export oriented undertaking--Appeal to Commissioner (Appeals)--Power to admit additional evidence--Assessee seeking to produce documents in support of claim for exemption as export oriented unit--Remand report called for from Assessing Officer not dealing with merits of claim but only referring to adjournments sought by assessee--No dispute as regards assessee’s status as a 100 per cent. export oriented unit for earlier year--Return filed within due date and copy of green card and certificate from chartered accountant produced--Failure to go into merits of claim and dismissal of appeal on technical ground of lack of vigilant prosecution--Not proper--Appeal to High Court--Orders of Tribunal and Commissioner (Appeals) set aside and matter remanded--Income-tax Act, 1961, s. 10B--Income-tax Rules, 1962, r. 46A-- Venture Metal Products P. Ltd. v. Deputy CIT (Mad) . . . 122
International transactions --Arm’s length price--Determination--Dispute Resolution Panel directing Transfer Pricing Officer to make proportionate adjustment on total sales to associated enterprise only and no adjustment on non-associated enterprise--Tribunal deleting addition on ground unit compared by Transfer Pricing Officer not comparable to assessee--Whether there was any other comparable unit or any other unit to be considered by Transfer Pricing Officer--Matter remanded--Income-tax Act, 1961, s. 92CA-- CIT v. Manaksia Ltd. (Cal) . . . 56
Penalty --Appeal to Appellate Tribunal--Stay of recovery pending appeal--Marketing expenses paid to associated enterprise--Revised return withdrawing deduction--Imposition of penalty on ground revised return filed to get over determination of arm’s length price--Quantum appeal pending before High Court--Assessee paying full amount of tax and twenty-five per cent. of penalty--Tribunal ought not to have directed assessee to deposit further sum for staying outstanding demand of penalty--Income-tax Act, 1961, s. 271(1)(c)-- Deloitte Consulting India P. Ltd. v. Asst. CIT (Bom) . . . 46
----Concealment of income--Wrong claim of deduction--No finding that explanation offered by assessee not bona fide--No penalty imposable--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Sandur Manganese and Iron Ores Ltd. (Karn) . . . 160
Reassessment --Notice--Assessing Officer accepting assessee’s objections on ground there was no evidence to connect assessee with properties in tax evasion petition to have been acquired by assessee out of undisclosed income--Assessing Officer admitting contents of tax evasion petition factually incorrect--Assessing Officer instead of terminating proceedings thereafter inviting assessee to cross-examine complainant--Impermissible--Income-tax Act, 1961, s. 148-- Pradyot K. Misra v. Asst. CIT (Delhi) . . . 24
----Notice--Validity--Change of opinion--Issue regarding tax deducted at source considered in original assessment and ad hoc disallowance of payments made--Notice of reassessment to disallow payments on ground tax deduction at source had not been made--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Transwind Infrastructure P. Ltd. v. ITO (Guj) . . . 67
----Notice--Validity--Notice after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Assessee creating provision at a time when its income was exempt from tax--Write back of provision subsequently and fact disclosed in return--Amount not taxed--Notice seeking to tax amount after four years--Not valid--Income-tax Act, 1961, ss. 147, 148-- National Dairy Development Board v. Deputy CIT (Guj) . . . 79
----Notice--Validity--Scrutiny assessment and partial disallowance of a particular amount--Notice on ground there should have been total disallowance of amount--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Siddhi Vinayak Transport v. Asst. CIT (Guj) . . . 72
Recovery of tax --Private company--Liability of directors--Recovery from directors not permissible if director proves non-recovery not attributable to gross neglect, misfeasance or breach of duty on his part--Company having substantial dues towards bank--Debts Recovery Tribunal directing recovery of bank’s dues by sale of properties of company--Balance due to bank supplied by directors from their personal resources--Directors agreeing to forgo their loans to company in order to have its name struck of register of companies--Facts establishing that non-recovery of tax due from company not attributable to gross neglect, misfeasance or breach of duty on part of directors--Recovery of tax dues of company personally from directors not permissible--Income-tax Act, 1961, s. 179(1)-- Jashvantlal Natverlal Kansara v. ITO (Guj) . . . 115
Search and seizure --Block assessment--Undisclosed income--Assessment of third party--Limitation--Information given to Assessing Officer having jurisdiction over assessee after completion of assessment of person against whom search conducted--Not a valid satisfaction--Notice issued to assessee thirty-four months after framing of assessment of person against whom search conducted--Notice beyond reasonable time--Block assessment and additions made thereon not justified--Income-tax Act, 1961, s. 158BE-- CIT v. Umesh Chandra Gupta (Delhi) . . . 1
Non-resident --Advance ruling--Jurisdiction of Authority--Bar where question already pending before income-tax authority--Meaning of “question already pending†--Only after issue of notice under section 143(2) can question be said to be pending before income-tax authority--Mere filing of return not sufficient--Return filed prior to filing application but notice issued after date of application--Application maintainable--Income-tax Act, 1961, ss. 143(2), 245R-- LS Cable & System Ltd., In re . . . 18
----Permanent establishment--Business connection--Definitions--Scope of--General principles--Payments received or receivable by non-resident in connection with provision of services of technical and professional personnel to Indian group company--Terms and conditions governing relationship between non-resident and Indian company, global character and profile of group, interdependence amongst companies of group, nature of services rendered and exchanged and location of Indian company’s office indicating Indian company a permanent establishment of non-resident--Essential features of business connection also satisfied--Incomes received by non-resident from Indian company taxable as business profits--Payments subject to withholding of tax--Income-tax Act, 1961, ss. 9(1), Expln. 2, 195--Double Taxation Avoidance Agreement between India and Germany, art. 7--Double Taxation Avoidance Agreement between India and Japan, art. 7--Double Taxation Avoidance Agreement between India and the U. S. A., art. 7--Double Taxation Avoidance Agreement between India and the Netherlands, art. 7--Double Taxation Avoidance Agreement between India and Italy, art. 7--Double Taxation Avoidance Agreement between India and Australia, art. 7--Double Taxation Avoidance Agreement between India and France, art. 7--Double Taxation Avoidance Agreement between India and China, art. 7--Double Taxation Avoidance Agreement between India and the U. K., art. 7-- Booz and Company (Australia) P. Ltd., In re . . . 134
----Residence--Indian citizen employed outside India and returning to India in financial year 2010-11 after resigning employment--Total stay of assessee in India in preceding four years more than 365 days and total stay in India for financial year 2010-11 was 119 days--Assessee resident in 2010-11 and receipts taxable--Income-tax Act, 1961, s. 6(1), Expln. -- Mrs. Smita Anand , In re . . . 38
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Art. 226 --Assessment--Special audit--Writ--Whether accounts and related documents and records complex within meaning of section 142(2A) to be decided by Assessing Officer--Power of court limited to examining whether discretion exercised objectively and there was valid material before Assessing Officer to infer complexity--No requirement that “books of account†should be examined by Assessing Officer before directing special audit--On facts, accounts including documents, records and other material before Assessing Officer did make issues complex requiring special audit-- AT & T Communication Services India (P.) Ltd. v. CIT (Delhi) . . . 97
Double Taxation Avoidance Agreement between India and Australia :
Art. 7 --Non-resident--Permanent establishment--Business connection--Definitions--Scope of--General principles--Payments received or receivable by non-resident in connection with provision of services of technical and professional personnel to Indian group company--Terms and conditions governing relationship between non-resident and Indian company, global character and profile of group, interdependence amongst companies of group, nature of services rendered and exchanged and location of Indian company’s office indicating Indian company a permanent establishment of non-resident--Essential features of business connection also satisfied--Incomes received by non-resident from Indian company taxable as business profits--Payments subject to withholding of tax-- Booz and Company (Australia) P. Ltd., In re (AAR). . . 134
Double Taxation Avoidance Agreement between India and China :
Art. 7 --Non-resident--Permanent establishment--Business connection--Definitions--Scope of--General principles--Payments received or receivable by non-resident in connection with provision of services of technical and professional personnel to Indian group company--Terms and conditions governing relationship between non-resident and Indian company, global character and profile of group, interdependence amongst companies of group, nature of services rendered and exchanged and location of Indian company’s office indicating Indian company a permanent establishment of non-resident--Essential features of business connection also satisfied--Incomes received by non-resident from Indian company taxable as business profits--Payments subject to withholding of tax-- Booz and Company (Australia) P. Ltd., In re (AAR). . . 134
Double Taxation Avoidance Agreement between India and France :
Art. 7 --Non-resident--Permanent establishment--Business connection--Definitions--Scope of--General principles--Payments received or receivable by non-resident in connection with provision of services of technical and professional personnel to Indian group company--Terms and conditions governing relationship between non-resident and Indian company, global character and profile of group, interdependence amongst companies of group, nature of services rendered and exchanged and location of Indian company’s office indicating Indian company a permanent establishment of non-resident--Essential features of business connection also satisfied--Incomes received by non-resident from Indian company taxable as business profits--Payments subject to withholding of tax-- Booz and Company (Australia) P. Ltd., In re (AAR). . . 134
Double Taxation Avoidance Agreement between India and Germany :
Art. 7 --Non-resident--Permanent establishment--Business connection--Definitions--Scope of--General principles--Payments received or receivable by non-resident in connection with provision of services of technical and professional personnel to Indian group company--Terms and conditions governing relationship between non-resident and Indian company, global character and profile of group, interdependence amongst companies of group, nature of services rendered and exchanged and location of Indian company’s office indicating Indian company a permanent establishment of non-resident--Essential features of business connection also satisfied--Incomes received by non-resident from Indian company taxable as business profits--Payments subject to withholding of tax-- Booz and Company (Australia) P. Ltd., In re (AAR). . . 134
Double Taxation Avoidance Agreement between India and Italy :
Art. 7 --Non-resident--Permanent establishment--Business connection--Definitions--Scope of--General principles--Payments received or receivable by non-resident in connection with provision of services of technical and professional personnel to Indian group company--Terms and conditions governing relationship between non-resident and Indian company, global character and profile of group, interdependence amongst companies of group, nature of services rendered and exchanged and location of Indian company’s office indicating Indian company a permanent establishment of non-resident--Essential features of business connection also satisfied--Incomes received by non-resident from Indian company taxable as business profits--Payments subject to withholding of tax-- Booz and Company (Australia) P. Ltd., In re (AAR). . . 134
Double Taxation Avoidance Agreement between India and Japan :
Art. 7 --Non-resident--Permanent establishment--Business connection--Definitions--Scope of--General principles--Payments received or receivable by non-resident in connection with provision of services of technical and professional personnel to Indian group company--Terms and conditions governing relationship between non-resident and Indian company, global character and profile of group, interdependence amongst companies of group, nature of services rendered and exchanged and location of Indian company’s office indicating Indian company a permanent establishment of non-resident--Essential features of business connection also satisfied--Incomes received by non-resident from Indian company taxable as business profits--Payments subject to withholding of tax-- Booz and Company (Australia) P. Ltd., In re (AAR). . . 134
Double Taxation Avoidance Agreement between India and the Netherlands :
Art. 7 --Non-resident--Permanent establishment--Business connection--Definitions--Scope of--General principles--Payments received or receivable by non-resident in connection with provision of services of technical and professional personnel to Indian group company--Terms and conditions governing relationship between non-resident and Indian company, global character and profile of group, interdependence amongst companies of group, nature of services rendered and exchanged and location of Indian company’s office indicating Indian company a permanent establishment of non-resident--Essential features of business connection also satisfied--Incomes received by non-resident from Indian company taxable as business profits--Payments subject to withholding of tax-- Booz and Company (Australia) P. Ltd., In re (AAR). . . 134
Double Taxation Avoidance Agreement between India and the U. K. :
Art. 7 --Non-resident--Permanent establishment--Business connection--Definitions--Scope of--General principles--Payments received or receivable by non-resident in connection with provision of services of technical and professional personnel to Indian group company--Terms and conditions governing relationship between non-resident and Indian company, global character and profile of group, interdependence amongst companies of group, nature of services rendered and exchanged and location of Indian company’s office indicating Indian company a permanent establishment of non-resident--Essential features of business connection also satisfied--Incomes received by non-resident from Indian company taxable as business profits--Payments subject to withholding of tax-- Booz and Company (Australia) P. Ltd., In re (AAR). . . 134
Double Taxation Avoidance Agreement between India and the U. S. A. :
Art. 7 --Non-resident--Permanent establishment--Business connection--Definitions--Scope of--General principles--Payments received or receivable by non-resident in connection with provision of services of technical and professional personnel to Indian group company--Terms and conditions governing relationship between non-resident and Indian company, global character and profile of group, interdependence amongst companies of group, nature of services rendered and exchanged and location of Indian company’s office indicating Indian company a permanent establishment of non-resident--Essential features of business connection also satisfied--Incomes received by non-resident from Indian company taxable as business profits--Payments subject to withholding of tax-- Booz and Company (Australia) P. Ltd., In re (AAR). . . 134
S. 6(1), Expln. --Non-resident--Residence--Indian citizen employed outside India and returning to India in financial year 2010-11 after resigning employment--Total stay of assessee in India in preceding four years more than 365 days and total stay in India for financial year 2010-11 was 119 days--Assessee resident in 2010-11 and receipts taxable-- Mrs. Smita Anand , In re (AAR). . . 38
S. 9(1), Expln. 2 --Non-resident--Permanent establishment--Business connection--Definitions--Scope of--General principles--Payments received or receivable by non-resident in connection with provision of services of technical and professional personnel to Indian group company--Terms and conditions governing relationship between non-resident and Indian company, global character and profile of group, interdependence amongst companies of group, nature of services rendered and exchanged and location of Indian company’s office indicating Indian company a permanent establishment of non-resident--Essential features of business connection also satisfied--Incomes received by non-resident from Indian company taxable as business profits--Payments subject to withholding of tax-- Booz and Company (Australia) P. Ltd., In re (AAR). . . 134
S. 10B --Export--Exemption--Export oriented undertaking--Appeal to Commissioner (Appeals)--Power to admit additional evidence--Assessee seeking to produce documents in support of claim for exemption as export oriented unit--Remand report called for from Assessing Officer not dealing with merits of claim but only referring to adjournments sought by assessee--No dispute as regards assessee’s status as a 100 per cent. export oriented unit for earlier year--Return filed within due date and copy of green card and certificate from chartered accountant produced--Failure to go into merits of claim and dismissal of appeal on technical ground of lack of vigilant prosecution--Not proper--Appeal to High Court--Orders of Tribunal and Commissioner (Appeals) set aside and matter remanded-- Venture Metal Products P. Ltd. v. Deputy CIT (Mad) . . . 122
S. 11 --Charitable purpose--Charitable trust--Exemption--Investment in immovable property--Major portion of income of trust spent towards construction of commercial complex--Objects clause of bye-laws of trust not showing construction of commercial complex is object of trust--Commercial complex not used for any of objects of trust--Donations received considered as normal donation and not as donations towards corpus fund--Assessee not entitled to exemption-- Kamma Sangham v. Director of Income-tax (Exemptions) (AP) . . . 30
S. 37(1), Expln. --Business expenditure--Disallowance--Payments prohibited by law--Effect of insertion of Explanation to section 37(1) with retrospective effect from 1-4-1962--Secret commission and specimen distribution to public servants--Disallowable--Matter remanded to Tribunal for deciding question of allowability of deduction in light of Explanation to section 37(1)-- CIT v. Dhanpat Rai and Sons (P&H) . . . 7
S. 40(a)(ia) --Business expenditure--Disallowance--Payments exceeding prescribed limit otherwise than by crossed cheques or crossed bank drafts--ONGC acquiring lands from farmers and farmers forming a society--Society receiving amounts from ONGC and distributing to farmers--Payments not expended by society and would not come within meaning of expenditure either under section 40(a)(ia) or section 40A(3)--No disallowance could be made-- CIT v. Ankleshwar Taluka ONGC and Land Loser Travellers Co-operative Society (Guj) . . . 92
----Business expenditure--Disallowance--Payments on which tax deductible at source--ONGC formulating a scheme to acquire oil field land area from farmers by compensating them--ONGC forming a society for maintaining individual account of each farmer and co-ordinating all matters with ONGC--No element of works contract--Society receiving amount and distributing to farmers--Society not a sub-contractor--Society need not deduct tax at source on payments made to each of farmers-- ITO v. Ankleshwar Taluka ONGC Land Loser Travellers Co-operative Society (Guj) . . . 87
S. 40A(3) --Business expenditure--Disallowance--Payments exceeding prescribed limit otherwise than by crossed cheques or crossed bank drafts--ONGC acquiring lands from farmers and farmers forming a society--Society receiving amounts from ONGC and distributing to farmers--Payments not expended by society and would not come within meaning of expenditure either under section 40(a)(ia) or section 40A(3)--No disallowance could be made-- CIT v. Ankleshwar Taluka ONGC and Land Loser Travellers Co-operative Society (Guj) . . . 92
----Business expenditure--Disallowance--Payments on which tax deductible at source--ONGC formulating a scheme to acquire oil field land area from farmers by compensating them--ONGC forming a society for maintaining individual account of each farmer and co-ordinating all matters with ONGC--No element of works contract--Society receiving amount and distributing to farmers--Society not a sub-contractor--Society need not deduct tax at source on payments made to each of farmers-- ITO v. Ankleshwar Taluka ONGC Land Loser Travellers Co-operative Society (Guj) . . . 87
S. 41(1) --Business income--Remission or cessation of liability--Unexplained purchase--Addition on ground liability for sum not carried over in following year--Fact that credit entry for sum was first entry in ledger of concerned party--Appellate authorities justified in deleting addition-- CIT v. Nandadevi Sales Agency (Cal) . . . 5
S. 92CA --Assessment--Special audit--International transactions--That reference made to Transfer Pricing Officer whose order binding on Assessing Officer--Does not make provisions for direction for special audit subject to powers of Transfer Pricing Officer-- AT & T Communication Services India (P.) Ltd. v. CIT (Delhi) . . . 97
----International transactions--Arm’s length price--Determination--Dispute Resolution Panel directing Transfer Pricing Officer to make proportionate adjustment on total sales to associated enterprise only and no adjustment on non-associated enterprise--Tribunal deleting addition on ground unit compared by Transfer Pricing Officer not comparable to assessee--Whether there was any other comparable unit or any other unit to be considered by Transfer Pricing Officer--Matter remanded -- CIT v. Manaksia Ltd. (Cal) . . . 56
S. 142(2A) --Assessment--Special audit--Approval of Commissioner--No requirement of recording elaborate reasons for approval--Approval cannot be mechanical--Terms of reference sent by Assessing Officer, views of Assessing Officer and those of assessee available before Commissioner--Approval not without application of mind by Commissioner-- AT & T Communication Services India (P.) Ltd. v. CIT (Delhi) . . . 97
----Assessment--Special audit--International transactions--That reference made to Transfer Pricing Officer whose order binding on Assessing Officer--Does not make provisions for direction for special audit subject to powers of Transfer Pricing Officer-- AT & T Communication Services India (P.) Ltd. v. CIT (Delhi) . . . 97
----Assessment--Special audit--Natural justice--Assessee submitting elaborate reply to notice under section 142(1) showing cause against special audit--Requirement of adherence to rules of natural justice satisfied-- AT & T Communication Services India (P.) Ltd. v. CIT (Delhi) . . . 97
----Assessment--Special audit--Writ--Whether accounts and related documents and records complex within meaning of section 142(2A) to be decided by Assessing Officer--Power of court limited to examining whether discretion exercised objectively and there was valid material before Assessing Officer to infer complexity--No requirement that “books of account†should be examined by Assessing Officer before directing special audit--On facts, accounts including documents, records and other material before Assessing Officer did make issues complex requiring special audit-- AT & T Communication Services India (P.) Ltd. v. CIT (Delhi) . . . 97
S. 143(2) --Non-resident--Advance ruling--Jurisdiction of Authority--Bar where question already pending before income-tax authority--Meaning of “question already pending†--Only after issue of notice under section 143(2) can question be said to be pending before income-tax authority--Mere filing of return not sufficient--Return filed prior to filing application but notice issued after date of application--Application maintainable-- LS Cable & System Ltd., In re (AAR). . . 18
S. 147 --Reassessment--Notice--Validity--Change of opinion--Issue regarding tax deducted at source considered in original assessment and ad hoc disallowance of payments made--Notice of reassessment to disallow payments on ground tax deduction at source had not been made--Notice not valid-- Transwind Infrastructure P. Ltd. v. ITO (Guj) . . . 67
----Reassessment--Notice--Validity--Notice after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Assessee creating provision at a time when its income was exempt from tax--Write back of provision subsequently and fact disclosed in return--Amount not taxed--Notice seeking to tax amount after four years--Not valid-- National Dairy Development Board v. Deputy CIT (Guj) . . . 79
----Reassessment--Notice--Validity--Scrutiny assessment and partial disallowance of a particular amount--Notice on ground there should have been total disallowance of amount--Notice not valid-- Siddhi Vinayak Transport v. Asst. CIT (Guj) . . . 72
S. 148 --Reassessment--Notice--Assessing Officer accepting assessee’s objections on ground there was no evidence to connect assessee with properties in tax evasion petition to have been acquired by assessee out of undisclosed income--Assessing Officer admitting contents of tax evasion petition factually incorrect--Assessing Officer instead of terminating proceedings thereafter inviting assessee to cross-examine complainant--Impermissible-- Pradyot K. Misra v. Asst. CIT (Delhi) . . . 24
----Reassessment--Notice--Validity--Change of opinion--Issue regarding tax deducted at source considered in original assessment and ad hoc disallowance of payments made--Notice of reassessment to disallow payments on ground tax deduction at source had not been made--Notice not valid-- Transwind Infrastructure P. Ltd. v. ITO (Guj) . . . 67
----Reassessment--Notice--Validity--Notice after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Assessee creating provision at a time when its income was exempt from tax--Write back of provision subsequently and fact disclosed in return--Amount not taxed--Notice seeking to tax amount after four years--Not valid-- National Dairy Development Board v. Deputy CIT (Guj) . . . 79
----Reassessment--Notice--Validity--Scrutiny assessment and partial disallowance of a particular amount--Notice on ground there should have been total disallowance of amount--Notice not valid-- Siddhi Vinayak Transport v. Asst. CIT (Guj) . . . 72
S. 158BE --Search and seizure--Block assessment--Undisclosed income--Assessment of third party--Limitation--Information given to Assessing Officer having jurisdiction over assessee after completion of assessment of person against whom search conducted--Not a valid satisfaction--Notice issued to assessee thirty-four months after framing of assessment of person against whom search conducted--Notice beyond reasonable time--Block assessment and additions made thereon not justified-- CIT v. Umesh Chandra Gupta (Delhi) . . . 1
S 179(1) --Recovery of tax--Private company--Liability of directors--Recovery from directors not permissible if director proves non-recovery not attributable to gross neglect, misfeasance or breach of duty on his part--Company having substantial dues towards bank--Debts Recovery Tribunal directing recovery of bank’s dues by sale of properties of company--Balance due to bank supplied by directors from their personal resources--Directors agreeing to forgo their loans to company in order to have its name struck of register of companies--Facts establishing that non-recovery of tax due from company not attributable to gross neglect, misfeasance or breach of duty on part of directors--Recovery of tax dues of company personally from directors not permissible-- Jashvantlal Natverlal Kansara v. ITO (Guj) . . . 115
S. 194C --Business expenditure--Disallowance--Payments on which tax deductible at source--ONGC formulating a scheme to acquire oil field land area from farmers by compensating them--ONGC forming a society for maintaining individual account of each farmer and co-ordinating all matters with ONGC--No element of works contract--Society receiving amount and distributing to farmers--Society not a sub-contractor--Society need not deduct tax at source on payments made to each of farmers-- ITO v. Ankleshwar Taluka ONGC Land Loser Travellers Co-operative Society (Guj) . . . 87
S. 195 --Non-resident--Permanent establishment--Business connection--Definitions--Scope of--General principles--Payments received or receivable by non-resident in connection with provision of services of technical and professional personnel to Indian group company--Terms and conditions governing relationship between non-resident and Indian company, global character and profile of group, interdependence amongst companies of group, nature of services rendered and exchanged and location of Indian company’s office indicating Indian company a permanent establishment of non-resident--Essential features of business connection also satisfied--Incomes received by non-resident from Indian company taxable as business profits--Payments subject to withholding of tax-- Booz and Company (Australia) P. Ltd., In re (AAR). . . 134
S. 245R --Non-resident--Advance ruling--Jurisdiction of Authority--Bar where question already pending before income-tax authority--Meaning of “question already pending†--Only after issue of notice under section 143(2) can question be said to be pending before income-tax authority--Mere filing of return not sufficient--Return filed prior to filing application but notice issued after date of application--Application maintainable-- LS Cable & System Ltd., In re (AAR). . . 18
S. 254(2) --Appeal to Appellate Tribunal--Rectification of mistakes--Application for rectification--Duty is limited to points raised before Tribunal--Aspects and contentions not raised by parties--Pleadings, evidence or material to which Tribunal’s pointed attention not drawn in course of proceedings--Tribunal not expected to unearth evidence or material to which its attention not drawn by parties--Tribunal justified in not rectifying mistake-- Dholadhar Investment P. Ltd. v. CIT (Delhi) . . . 111
S. 260A --Appeal to High Court--Capital gains--Full value of consideration--Memorandum of understanding reflecting higher sale price but agreement to sell and sale deed recording lower figure--No material to suggest excess consideration actually paid--Limited use of land allowed to purchaser--Fifty per cent. of land likely to be reserved--No evidence other than memorandum of understanding to controvert evidence--Cost of acquisition--Without further evidence, Assessing Officer could not substitute valuation of registered valuer--Concurrent factual finding of Commissioner (Appeals) and Tribunal--No question of law-- CIT v. Hiraben Govindbhai Patel (Guj) . . . 59
S. 271(1)(c) --Penalty--Appeal to Appellate Tribunal--Stay of recovery pending appeal--Marketing expenses paid to associated enterprise--Revised return withdrawing deduction--Imposition of penalty on ground revised return filed to get over determination of arm’s length price--Quantum appeal pending before High Court--Assessee paying full amount of tax and twenty-five per cent. of penalty--Tribunal ought not to have directed assessee to deposit further sum for staying outstanding demand of penalty-- Deloitte Consulting India P. Ltd. v. Asst. CIT (Bom) . . . 46
----Penalty--Concealment of income--Wrong claim of deduction--No finding that explanation offered by assessee not bona fide--No penalty imposable-- CIT v. Sandur Manganese and Iron Ores Ltd. (Karn) . . . 160
R. 46A --Export--Exemption--Export oriented undertaking--Appeal to Commissioner (Appeals)--Power to admit additional evidence--Assessee seeking to produce documents in support of claim for exemption as export oriented unit--Remand report called for from Assessing Officer not dealing with merits of claim but only referring to adjournments sought by assessee--No dispute as regards assessee’s status as a 100 per cent. export oriented unit for earlier year--Return filed within due date and copy of green card and certificate from chartered accountant produced--Failure to go into merits of claim and dismissal of appeal on technical ground of lack of vigilant prosecution--Not proper--Appeal to High Court--Orders of Tribunal and Commissioner (Appeals) set aside and matter remanded-- Venture Metal Products P. Ltd. v. Deputy CIT (Mad) . . . 122
No comments:
Post a Comment