INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
ITR Volume 363 : Part 3 (Issue dated : 12-5-2014)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Accounting --Appeal to Appellate Tribunal--Duty of Tribunal to pass speaking order--Rejection of accounts and estimate of income--Change in estimate by Tribunal without giving reasons--Matter remanded--Income-tax Act, 1961, ss. 145, 254-- CIT v. Ram Singh (Raj) . . . 417
----Rejection of accounts--Flat rate assessment--Wide fluctuations in production compared to consumption of electricity and also no record of work-in-progress--Rejection of accounts justified--Flat rate assessment on the basis of evidence--Justified--Income-tax Act, 1961-- Rajmoti Industries v. Joint CIT (Guj) . . . 467
----Rejection of accounts--Liquor business--Non-maintenance of sales vouchers--Rejection of accounts justified--Income-tax Act, 1961, s. 145-- CIT v. Ram Singh (Raj) . . . 417
Bad debt --Money-lending--Whether transaction was in the ordinary course of business--Factual material to be looked into--Whether assessee has accounted for accrued interest in earlier years and offered it for taxation--Aspect not examined--Matter remanded--Income-tax Act, 1961, s. 36(1)(vii)-- Peninsular Plantations Ltd. v. Asst. CIT (Ker) . . . 441
Business expenditure --Disallowance--Payments subject to deduction of tax at source--Commission or brokerage--Definition--Exclusion--Payments in relation to services relating to securities--Income earned from mutual fund houses--Brokerage for canvassing and marketing various mutual fund schemes to potential investors after collecting details from assessee--Services rendered in relation to securities--Disallowance under section 40(a)(ia) not warranted--Income-tax Act, 1961, ss. 40(a)(ia), 194H-- CIT v. Tandon and Mahendra (All) . . . 454
Capital gains --Long-term capital gains--Transfer--Transfer of immovable property--Time of transfer--Agreement for sale of land to developer--Part of consideration paid and buyer in possession of land in April 2003--Buyer given power of attorney to sell portions of land--Transfer took place in April 2003--Income-tax Act, 1961, s. 45-- CIT v. Cochin Stock Exchanges Ltd. (Ker) . . . 382
Hotel --Special deduction--Earnings in convertible foreign exchange--All units of assessee to be taken together--Eligibility criteria for deductions under sections 80HHD and 80-IB the same--Computation of benefit cannot be given separately to each hotel--Income-tax Act, 1961, ss. 80HHD, 80-IB-- Hotel and Allied Trades P. Ltd. v. Deputy CIT (Ker) . . . 328
Income --Computation of income--Disallowance of expenditure on earning non-taxable income--No evidence of expenditure to earn non-taxable income--Disallowance under section 14A not justified--Income-tax Act, 1961, s. 14A-- CIT v. Torrent Power Ltd. (Guj) . . . 474
Income from undisclosed sources --Estimation of income--Pharmaceutical drugs--Unaccounted consumption of raw materials--No direct evidence of unaccounted sales outside books of account--Estimate of profit element at thirty-five per cent. of such extra consumption--Reasonable--Income-tax Act, 1961-- CIT v. Leo Formulations P. Ltd. (Guj) . . . 322
Industrial undertaking --Special deduction--Condition precedent--Manufacture or production of article--Assessee purchasing transformer oil from market and centrifuging by centrifuging machine to make it usable in transformer--No new substance or articles or things emerged from processing--No manufacturing activity or production of any new articles or things--Assessee not entitled to deduction--Income-tax Act, 1961, s. 80-IA(2)(iv)(c)-- CIT v. S. K. Transformer P. Ltd. (All) . . . 394
----Special deduction--Export turnover--Application of formula for arriving at deduction--Commission to foreign agent--Not to be reduced from export turnover--Income-tax Act, 1961, s. 80HHC-- CIT v. Koncherry Coir Factories (Ker) . . . 463
International transactions --Arm’s length price--Comparable uncontrolled price method--Reliable and authentic price publications--Mere base of organisation not relevant--Appellate authorities accepting reliability and authenticity of organisation and its publication of rate list submitted by assessee--Transfer Pricing Officer’s objection that rates quoted not based in Malaysia and that it was an independent organisation not justified--Income-tax Act, 1961, s. 92C--Income-tax Rules, 1962, r. 10D(3)(c)-- CIT v. Adani Wilmar Ltd. (Guj) . . . 338
Interpretation of taxing statutes --Plain and natural meaning-- CIT v. Tandon and Mahendra (All) . . . 454
Precedent --Effect of Supreme Court decision in Asst. CIT v. Hotel Blue Moon [2010] 321 ITR 362 (SC) and CIT v. Suresh N. Gupta [2008] 297 ITR 322 (SC)-- CIT v. B. Nagendra Baliga (Karn) . . . 410
Reassessment --Notice--Validity--Issues gone into during assessment proceedings and first reassessment proceedings--Cannot be revisited a third time--Reassessment impermissible--Income-tax Act, 1961, s. 148-- Vodafone South Ltd. v. Union of India (Delhi) . . . 388
----Notice after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Scrutiny assessment based on material submitted by assessee--Notice after four years to re-compute income--Notice not valid--Income-tax Act, 1961, s. 148-- Ferromatik Milacron India P. Ltd. v. Asst. CIT (Guj) . . . 461
----Notice after four years--Principles governing--Assessment accepting assessee’s investments shown as funded by three companies--Companies found subsequently to be bogus--Disclosure rendered untrue--Reopening after four years permissible--Requirement that Assessing Officer should specify that income escaping assessment exceeds Rs. 1 lakh--Met if such statement recorded while placing reasons for approval of Commissioner prior to issuance of notice--Sanction of Commissioner--Merely stating “yes†--No inference that Commissioner did not apply mind while granting sanction--Income-tax Act, 1961, ss. 147, prov. , 148, 149(1)(b), 151(2)-- Lalita Ashwin Jain v. ITO (Guj) . . . 343
Recovery of tax --Garnishee order--Application for stay of recovery proceedings--Rejection of stay application and passing of garnishee order on the same day--Legal but not in consonance with principles of fair play--Income-tax Act, 1961, s. 220-- Sony India P. Ltd. v. Addl. CIT (Delhi) . . . 330
Revision --Commissioner--Powers--Industrial undertaking--Special deduction--Assessing Officer, while allowing deduction, factually not satisfied with material available and recording that he attempted to collect material but failed--Order prejudicial to interests of Revenue--Commissioner justified in initiating revision--Income-tax Act, 1961, ss. 80-IB, 263-- CIT v. Abad Constructions P. Ltd. (Ker) . . . 372
Search and seizure --Block assessment--Block assessment only on basis of evidence discovered during search--Income-tax Act, 1961-- CIT v. B. Nagendra Baliga (Karn) . . . 410
----Block assessment--Delay in furnishing returns--Interest--Delay due to failure of Income-tax Department to furnish necessary seized documents in time--Interest could not be levied--Income-tax Act, 1961, s. 158BFA(1)-- CIT v. B. Nagendra Baliga (Karn) . . . 410
----Block assessment--Levy of surcharge whether valid--Income-tax Act, 1961, s. 113-- CIT v. B. Nagendra Baliga (Karn) . . . 410
Transfer of cases --Scope of power--Reasons for transfer should be given--Assessee must be given opportunity to be heard--Assessee part of a group of companies--Assessee having substantial transactions with other companies in the group--Transfer of proceedings to another Assessing Officer--Assessee participating in such proceedings--Order of transfer--Valid--Income-tax Act, 1961, s. 127-- Sahara Hospitality Ltd. v. CIT (Bom) . . . 435
Undisclosed investment --Purchase of property--Evidence that there was undervaluation of property--Assessee failing to disprove evidence by giving evidence to show market value of land in the locality--No evidence that witness give false evidence--Addition on account of undisclosed investment justified--Income-tax Act, 1961-- CIT v. P. M. Aboobacker (Ker) . . . 447
Words and phrases --†In relation to†and “relating to†--Meanings of-- CIT v. Tandon and Mahendra (All) . . . 454
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 14A --Income--Computation of income--Disallowance of expenditure on earning non-taxable income--No evidence of expenditure to earn non-taxable income--Disallowance under section 14A not justified-- CIT v. Torrent Power Ltd. (Guj) . . . 474
S. 36(1)(vii) --Bad debt--Money-lending--Whether transaction was in the ordinary course of business--Factual material to be looked into--Whether assessee has accounted for accrued interest in earlier years and offered it for taxation--Aspect not examined--Matter remanded-- Peninsular Plantations Ltd. v. Asst. CIT (Ker) . . . 441
S. 40(a)(ia) --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Commission or brokerage--Definition--Exclusion--Payments in relation to services relating to securities--Income earned from mutual fund houses--Brokerage for canvassing and marketing various mutual fund schemes to potential investors after collecting details from assessee--Services rendered in relation to securities--Disallowance under section 40(a)(ia) not warranted-- CIT v. Tandon and Mahendra (All) . . . 454
S. 45 --Capital gains--Long-term capital gains--Transfer--Transfer of immovable property--Time of transfer--Agreement for sale of land to developer--Part of consideration paid and buyer in possession of land in April 2003--Buyer given power of attorney to sell portions of land--Transfer took place in April 2003-- CIT v. Cochin Stock Exchanges Ltd. (Ker) . . . 382
S. 80HHC --Industrial undertaking--Special deduction--Export turnover--Application of formula for arriving at deduction--Commission to foreign agent--Not to be reduced from export turnover-- CIT v. Koncherry Coir Factories (Ker) . . . 463
S. 80HHD --Hotel--Special deduction--Earnings in convertible foreign exchange--All units of assessee to be taken together--Eligibility criteria for deductions under sections 80HHD and 80-IB the same--Computation of benefit cannot be given separately to each hotel-- Hotel and Allied Trades P. Ltd. v. Deputy CIT (Ker) . . . 328
S. 80-IA(2)(iv)(c) --Industrial undertaking--Special deduction--Condition precedent--Manufacture or production of article--Assessee purchasing transformer oil from market and centrifuging by centrifuging machine to make it usable in transformer--No new substance or articles or things emerged from processing--No manufacturing activity or production of any new articles or things--Assessee not entitled to deduction-- CIT v. S. K. Transformer P. Ltd. (All) . . . 394
S. 80-IB --Hotel--Special deduction--Earnings in convertible foreign exchange--All units of assessee to be taken together--Eligibility criteria for deductions under sections 80HHD and 80-IB the same--Computation of benefit cannot be given separately to each hotel-- Hotel and Allied Trades P. Ltd. v. Deputy CIT (Ker) . . . 328
----Revision--Commissioner--Powers--Industrial undertaking--Special deduction--Assessing Officer, while allowing deduction, factually not satisfied with material available and recording that he attempted to collect material but failed--Order prejudicial to interests of Revenue--Commissioner justified in initiating revision-- CIT v. Abad Constructions P. Ltd. (Ker) . . . 372
S. 92C --International transactions--Arm’s length price--Comparable uncontrolled price method--Reliable and authentic price publications--Mere base of organisation not relevant--Appellate authorities accepting reliability and authenticity of organisation and its publication of rate list submitted by assessee--Transfer Pricing Officer’s objection that rates quoted not based in Malaysia and that it was an independent organisation not justified-- CIT v. Adani Wilmar Ltd. (Guj) . . . 338
S. 113 --Search and seizure--Block assessment--Levy of surcharge whether valid-- CIT v. B. Nagendra Baliga (Karn) . . . 410
S. 127 --Transfer of cases--Scope of power--Reasons for transfer should be given--Assessee must be given opportunity to be heard--Assessee part of a group of companies--Assessee having substantial transactions with other companies in the group--Transfer of proceedings to another Assessing Officer--Assessee participating in such proceedings--Order of transfer--Valid-- Sahara Hospitality Ltd. v. CIT (Bom) . . . 435
S. 145 --Accounting--Appeal to Appellate Tribunal--Duty of Tribunal to pass speaking order--Rejection of accounts and estimate of income--Change in estimate by Tribunal without giving reasons--Matter remanded-- CIT v. Ram Singh (Raj) . . . 417
----Accounting--Rejection of accounts--Liquor business--Non-maintenance of sales vouchers--Rejection of accounts justified-- CIT v. Ram Singh (Raj) . . . 417
S. 147, prov. --Reassessment--Notice after four years--Principles governing--Assessment accepting assessee’s investments shown as funded by three companies--Companies found subsequently to be bogus--Disclosure rendered untrue--Reopening after four years permissible--Requirement that Assessing Officer should specify that income escaping assessment exceeds Rs. 1 lakh--Met if such statement recorded while placing reasons for approval of Commissioner prior to issuance of notice--Sanction of Commissioner--Merely stating “yes†--No inference that Commissioner did not apply mind while granting sanction-- Lalita Ashwin Jain v. ITO (Guj) . . . 343
S. 148 --Reassessment--Notice--Validity--Issues gone into during assessment proceedings and first reassessment proceedings--Cannot be revisited a third time--Reassessment impermissible-- Vodafone South Ltd. v. Union of India (Delhi) . . . 388
----Reassessment--Notice after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Scrutiny assessment based on material submitted by assessee--Notice after four years to re-compute income--Notice not valid-- Ferromatik Milacron India P. Ltd. v. Asst. CIT (Guj) . . . 461
----Reassessment--Notice after four years--Principles governing--Assessment accepting assessee’s investments shown as funded by three companies--Companies found subsequently to be bogus--Disclosure rendered untrue--Reopening after four years permissible--Requirement that Assessing Officer should specify that income escaping assessment exceeds Rs. 1 lakh--Met if such statement recorded while placing reasons for approval of Commissioner prior to issuance of notice--Sanction of Commissioner--Merely stating “yes†--No inference that Commissioner did not apply mind while granting sanction-- Lalita Ashwin Jain v. ITO (Guj) . . . 343
S. 149(1)(b) --Reassessment--Notice after four years--Principles governing--Assessment accepting assessee’s investments shown as funded by three companies--Companies found subsequently to be bogus--Disclosure rendered untrue--Reopening after four years permissible--Requirement that Assessing Officer should specify that income escaping assessment exceeds Rs. 1 lakh--Met if such statement recorded while placing reasons for approval of Commissioner prior to issuance of notice--Sanction of Commissioner--Merely stating “yes†--No inference that Commissioner did not apply mind while granting sanction-- Lalita Ashwin Jain v. ITO (Guj) . . . 343
S. 151(2) --Reassessment--Notice after four years--Principles governing--Assessment accepting assessee’s investments shown as funded by three companies--Companies found subsequently to be bogus--Disclosure rendered untrue--Reopening after four years permissible--Requirement that Assessing Officer should specify that income escaping assessment exceeds Rs. 1 lakh--Met if such statement recorded while placing reasons for approval of Commissioner prior to issuance of notice--Sanction of Commissioner--Merely stating “yes†--No inference that Commissioner did not apply mind while granting sanction-- Lalita Ashwin Jain v. ITO (Guj) . . . 343
S. 158BFA(1) --Search and seizure--Block assessment--Delay in furnishing returns--Interest--Delay due to failure of Income-tax Department to furnish necessary seized documents in time--Interest could not be levied-- CIT v. B. Nagendra Baliga (Karn) . . . 410
S. 194H --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Commission or brokerage--Definition--Exclusion--Payments in relation to services relating to securities--Income earned from mutual fund houses--Brokerage for canvassing and marketing various mutual fund schemes to potential investors after collecting details from assessee--Services rendered in relation to securities--Disallowance under section 40(a)(ia) not warranted-- CIT v. Tandon and Mahendra (All) . . . 454
S. 220 --Recovery of tax--Garnishee order--Application for stay of recovery proceedings--Rejection of stay application and passing of garnishee order on the same day--Legal but not in consonance with principles of fair play-- Sony India P. Ltd. v. Addl. CIT (Delhi) . . . 330
S. 254 --Accounting--Appeal to Appellate Tribunal--Duty of Tribunal to pass speaking order--Rejection of accounts and estimate of income--Change in estimate by Tribunal without giving reasons--Matter remanded-- CIT v. Ram Singh (Raj) . . . 417
S. 263 --Revision--Commissioner--Powers--Industrial undertaking--Special deduction--Assessing Officer, while allowing deduction, factually not satisfied with material available and recording that he attempted to collect material but failed--Order prejudicial to interests of Revenue--Commissioner justified in initiating revision-- CIT v. Abad Constructions P. Ltd. (Ker) . . . 372
R. 10D(3)(c) --International transactions--Arm’s length price--Comparable uncontrolled price method--Reliable and authentic price publications--Mere base of organisation not relevant--Appellate authorities accepting reliability and authenticity of organisation and its publication of rate list submitted by assessee--Transfer Pricing Officer’s objection that rates quoted not based in Malaysia and that it was an independent organisation not justified-- CIT v. Adani Wilmar Ltd. (Guj) . . . 338
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