ITR Volume 366 : Part 4 (Issue dated : 1-9-2014)

 

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

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

HIGH COURTS

Capital gains --Transfer--Definition--Transfer of shares pledged with bank--Purchaser would not be able to get shares transferred in his name--Transaction amounts to transfer within the meaning of section 2(47)--Gains from transfer of right in shares assessable under section 45--Income-tax Act, 1961, ss. 2(47), 45-- Asst. CIT v. Biraj Investment P. Ltd. (Guj) . . . 157

Income-tax --General principles--Avoidance of tax--Colourable transaction--Transfer of shares at loss to group company--Transfer not prohibited by law--No evidence that price of shares was lower than market value--Transfer not a colourable device--Income-tax Act, 1961-- Asst. CIT v. Biraj Investment P. Ltd. (Guj) . . . 157

Non-resident --Shipping--Double taxation relief--Income from operation of ships in international traffic--Scope of article 9 of DTAA--Income from slot hire facilities--Entitled to benefit under article 9--Income-tax Act, 1961, s. 44B--Double Taxation Avoidance Agreement between India and the U. K., art. 9-- Director of Income-tax (International Taxation) v. Balaji Shipping U. K. Ltd. (Bom) . . . 135

 

New Return Forms 
ITR-3, ITR-4, ITR-5, ITR-6 
and ITR-7

(See [2014] 3 ITR-OL (St.) 1)

 

PRINT EDITION

ITR Volume 366 : Part 4 (Issue dated : 1-9-2014)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Appeal to Appellate Tribunal --Commissioner (Appeals) allowing twelve claims--Independent appeals preferred by parties with reference to various claims--Tribunal bound to deal with them independently--Failure to furnish reasons would render proceedings defective or deficient to that extent--Income-tax Act, 1961-- CIT v. Orient Longman Ltd. (T & AP) . . . 559

----Duty of Tribunal--Duty to consider facts--Question regarding existence of agency--Tribunal deciding case without considering facts and relying solely on its earlier decision in another case--Decision erroneous--Matter remanded--Income-tax Act, 1961-- CIT v.Koottummal Groups (Ker) . . . 546

----Export--Exemption--Export oriented undertaking--Requisite approval from Board constituted under Industries (Development and Regulation) Act, 1951 not possessed by assessee--Tribunal not entitled to rewrite law or accept anything in lieu of what was required by statute--Matter remanded to Assessing Officer with directions--Income-tax Act, 1961, s. 10B-- CIT v. J. E. Enterprises P. Ltd. (Cal) . . . 571

Appeal to High Court --Substantial question of law--Penalty--Concealment of particulars--Disallowance of claim--Does not mean that ingredients of clause (c) satisfied or fulfilled--Finding that penalty not warranted--Finding of fact--Income-tax Act, 1961, ss. 260A, 271(1)(c)-- CIT v. Larsen and Toubro Ltd. (Bom) . . . 502

Business income --Banking business--Broken period interest--Deductible--Income-tax Act, 1961-- CIT v. HDFC Bank Ltd. (Bom) . . . 505

Business loss --Set off against income from house property--Lease of entire factory premises--Rejection of case of assessee that it was still carrying on business activity--Disallowance of set off of business loss against income from house property--No reason to interfere findings--Income-tax Act, 1961, s. 71-- Phelix Appliances Ltd. v. ITO (Guj) . . . 574

Capital or revenue expenditure --Expenditure on development of software--Revenue expenditure-- CIT v. Shri Renuga Textiles Mills Ltd. (Mad) . . . 649

----Manufacture of cast iron ingots using iron scrap--Cast iron moulds not having enduring shelf life--Expenditure on reusable cast iron moulds--Revenue expenditure--Income-tax Act, 1961-- CIT v. Aditya Ferro Alloys P. Ltd. (Mad) . . . 490

Central Board of Direct Taxes --Return--Delay in filing return--Application to CBDT to condone delay--Rejection of application without recording reasons--Not justified--Income-tax Act, 1961, s. 119(2)(b)-- Bal Kishan Dhawan (HUF) v. Union of India (P&H) . . . 639

Company --Dividend--Deemed dividend--Loan to shareholder--Money-lending not business of company--Loan assessable as deemed dividend--Income-tax Act, 1961, s. 2(22)(e)-- Smt. Thankamma Oommen v. Asst. CIT (Ker) . . . 542

Depreciation --Block of assets--Written down value--Certain items of block assets destroyed in fire--Compensation received from insurer--Reduction in written down value only to extent of value reflected in accounts--Income-tax Act, 1961, s. 43(6)-- CIT v. Priyadarshini Spinning Mills Ltd. (T & AP) . . . 563

----Sale and lease back agreement--Purchase of machinery by assessee, a finance company, on payment of sales tax--Lease of machinery back to manufacturer--Lease income disclosed as business income--Assessee owner of machinery--No material to show transaction of sale and lease back not genuine--Assessee entitled to depreciation--Income-tax Act, 1961, s. 32-- CIT v. TVS Finance and Services Ltd. (Mad) . . . 487

Export --Exemption--Export oriented undertaking--Assessee’s sister undertaking fulfilling requirements of section 10B(2)(ii) and (iii) at time of formation--Transfer of entire business to assessee--Assessee entitled to exemption--Income-tax Act, 1961, s. 10B(2)(ii), (iii)-- CIT v.Heartland Delhi Transcription Services P. Ltd. (Delhi) . . . 523

----Exemption--Export oriented unit--Subsidiary of assessee, a 100 per cent. export oriented unit, merging with assessee by order of court--Not a case of business formed by splitting up or reconstruction of a business already in existence--Assessee’s status as 100 per cent. export oriented unit approved by Government of India--Assessee eligible for benefit of exemption--Income-tax Act, 1961, s. 10B-- CIT v. Shri Renuga Textiles Mills Ltd. (Mad) . . . 649

Income-tax --General principles--Necessity of passing a reasoned order-- Bal Kishan Dhawan (HUF) v. Union of India (P&H) . . . 639

Interest on borrowed capital --Banking business--Own funds and other non-interest bearing funds of bank more than investment in tax-free securities--No disallowance of interest under section 14A--Income-tax Act, 1961, s. 14A-- CIT v. HDFC Bank Ltd. (Bom) . . . 505

Loss --Carry forward and set off--Condition precedent--Carrying on same business--Tests for “same business†--Finding that there was unity of control and common management--Finding of fact--Set off of carried forward loss--Valid--Income-tax Act, 1961-- CIT v. Ganga Corporation Asbestos P. Ltd. (All) . . . 582

Penalty --Furnishing inaccurate particulars--Liquidated damages paid in terms of contract with purchaser--Allowance claimed on basis of quantity in excess of that actually agreed--No material to support assessee’s claim that quantity for which deduction claim was agreed quantity--Plea that figure included moisture content found untrue--Explanation not bona fide--Penalty justified--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Global Associates(Delhi) . . . 499

Precedent --Effect of decision of Supreme Court in Kranti Associates P. Ltd. v. Masood Ahmed Khan [2010] 9 SCC 496-- Bal Kishan Dhawan (HUF) v. Union of India (P&H) . . . 639

Rectification of mistakes --Mistake apparent from record--Construction activity--Investment allowance--Unabsorbed investment allowance--Substantial part allowed to be set off in earlier and subsequent years without any reservation as to admissibility of allowance--Subsequent Supreme Court decision that construction activity cannot be treated as manufacturing activity--After expiry of four years from end of financial year as specified in section 154(4)--Assessing Officer cannot without modifying order of earlier years disallow unabsorbed investment allowance already allowed--Income-tax Act, 1961, ss. 32A, 154(4)--Prefab Gratings Ltd. v. Asst. CIT (T & AP) . . . 550

Refund --Interest on refund--Assessee entitled to refund consequent upon deduction given on minimum alternate tax credit and tax deduction at source--Assessing Officer directed to work out interest on refund--Income-tax Act, 1961, s. 244A-- CIT v. Aban Loyd Chiles Offshore Ltd. (Mad) . . . 483

Revision --Commissioner--Powers--Condition precedent--Order of Assessing Officer must be erroneous and prejudicial to Revenue--Presumption that assessment order passed after due application of mind--Evidence that order was made after enquiry--Finding of Tribunal that assessment order was not erroneous--Order not challenged--Cancellation of order of revision--Valid--Income-tax Act, 1961, s. 263-- CIT v. J. L. Morrison (India) Ltd. (Cal) . . . 593

Transfer pricing --International transactions--Arm’s length price--Transactions of purchase and sale between parties on principal to principal basis--Trading transactions and transactions not commission agent or broker--Appropriate comparables would be chosen--Income-tax Act, 1961-- Mitsubishi Corporation of India P. Ltd. v. Addl. CIT (Delhi) . . . 495

Valuation of stock --Finding that there were discrepancies in valuation--Finding of fact--Additions to income justified--Income-tax Act, 1961-- Smt. Shakuntla Thukral v. CIT (P&H) . . . 644

----Loss due to diminution in value of current investment and amortisation of premium on investments held to maturity--RBI guidelines--Mandatory--Loss deductible--Income-tax Act, 1961-- CIT v. HDFC Bank Ltd. (Bom) . . . 505

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 2(22)(e) --Company--Dividend--Deemed dividend--Loan to shareholder--Money-lending not business of company--Loan assessable as deemed dividend-- Smt. Thankamma Oommenv. Asst. CIT (Ker) . . . 542

S. 10B --Appeal to Appellate Tribunal--Export--Exemption--Export oriented undertaking--Requisite approval from Board constituted under Industries (Development and Regulation) Act, 1951 not possessed by assessee--Tribunal not entitled to rewrite law or accept anything in lieu of what was required by statute--Matter remanded to Assessing Officer with directions-- CIT v. J. E. Enterprises P. Ltd. (Cal) . . . 571

----Export--Exemption--Export oriented unit--Subsidiary of assessee, a 100 per cent. export oriented unit, merging with assessee by order of court--Not a case of business formed by splitting up or reconstruction of a business already in existence--Assessee’s status as 100 per cent. export oriented unit approved by Government of India--Assessee eligible for benefit of exemption-- CIT v. Shri Renuga Textiles Mills Ltd. (Mad) . . . 649

S. 10B(2)(ii), (iii) --Export--Exemption--Export oriented undertaking--Assessee’s sister undertaking fulfilling requirements of section 10B(2)(ii) and (iii) at time of formation--Transfer of entire business to assessee--Assessee entitled to exemption-- CIT v. Heartland Delhi Transcription Services P. Ltd. (Delhi) . . . 523

S. 14A --Interest on borrowed capital--Banking business--Own funds and other non-interest bearing funds of bank more than investment in tax-free securities--No disallowance of interest under section 14A-- CIT v. HDFC Bank Ltd. (Bom) . . . 505

S. 32 --Depreciation--Sale and lease back agreement--Purchase of machinery by assessee, a finance company, on payment of sales tax--Lease of machinery back to manufacturer--Lease income disclosed as business income--Assessee owner of machinery--No material to show transaction of sale and lease back not genuine--Assessee entitled to depreciation--CIT v. TVS Finance and Services Ltd. (Mad) . . . 487

S. 32A --Rectification of mistakes--Mistake apparent from record--Construction activity--Investment allowance--Unabsorbed investment allowance--Substantial part allowed to be set off in earlier and subsequent years without any reservation as to admissibility of allowance--Subsequent Supreme Court decision that construction activity cannot be treated as manufacturing activity--After expiry of four years from end of financial year as specified in section 154(4)--Assessing Officer cannot without modifying order of earlier years disallow unabsorbed investment allowance already allowed-- Prefab Gratings Ltd. v. Asst. CIT (T & AP) . . . 550

S. 43(6) --Depreciation--Block of assets--Written down value--Certain items of block assets destroyed in fire--Compensation received from insurer--Reduction in written down value only to extent of value reflected in accounts-- CIT v. Priyadarshini Spinning Mills Ltd. (T & AP) . . . 563

S. 71 --Business loss--Set off against income from house property--Lease of entire factory premises--Rejection of case of assessee that it was still carrying on business activity--Disallowance of set off of business loss against income from house property--No reason to interfere findings-- Phelix Appliances Ltd. v. ITO (Guj) . . . 574

S. 119(2)(b) --Central Board of Direct Taxes--Return--Delay in filing return--Application to CBDT to condone delay--Rejection of application without recording reasons--Not justified--Bal Kishan Dhawan (HUF) v. Union of India (P&H) . . . 639

S. 154(4) --Rectification of mistakes--Mistake apparent from record--Construction activity--Investment allowance--Unabsorbed investment allowance--Substantial part allowed to be set off in earlier and subsequent years without any reservation as to admissibility of allowance--Subsequent Supreme Court decision that construction activity cannot be treated as manufacturing activity--After expiry of four years from end of financial year as specified in section 154(4)--Assessing Officer cannot without modifying order of earlier years disallow unabsorbed investment allowance already allowed-- Prefab Gratings Ltd. v. Asst. CIT (T & AP) . . . 550

S. 244A --Refund--Interest on refund--Assessee entitled to refund consequent upon deduction given on minimum alternate tax credit and tax deduction at source--Assessing Officer directed to work out interest on refund-- CIT v. Aban Loyd Chiles Offshore Ltd.(Mad) . . . 483

S. 260A --Appeal to High Court--Substantial question of law--Penalty--Concealment of particulars--Disallowance of claim--Does not mean that ingredients of clause (c) satisfied or fulfilled--Finding that penalty not warranted--Finding of fact-- CIT v. Larsen and Toubro Ltd.(Bom) . . . 502

S. 263 --Revision--Commissioner--Powers--Condition precedent--Order of Assessing Officer must be erroneous and prejudicial to Revenue--Presumption that assessment order passed after due application of mind--Evidence that order was made after enquiry--Finding of Tribunal that assessment order was not erroneous--Order not challenged--Cancellation of order of revision--Valid-- CIT v. J. L. Morrison (India) Ltd. (Cal) . . . 593

S. 271(1)(c) --Appeal to High Court--Substantial question of law--Penalty--Concealment of particulars--Disallowance of claim--Does not mean that ingredients of clause (c) satisfied or fulfilled--Finding that penalty not warranted--Finding of fact-- CIT v. Larsen and Toubro Ltd.(Bom) . . . 502

----Penalty--Furnishing inaccurate particulars--Liquidated damages paid in terms of contract with purchaser--Allowance claimed on basis of quantity in excess of that actually agreed--No material to support assessee’s claim that quantity for which deduction claim was agreed quantity--Plea that figure included moisture content found untrue--Explanation not bona fide--Penalty justified-- CIT v. Global Associates (Delhi) . . . 499

 

__._,_.___

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Posted by: CA RAJU SHAH <shahmars@hotmail.com>

CBDT revises monetary limits for filing appeals;

CBDT revises monetary limits for filing appeals; issues measures to reduce litigation

Please note that CBDT has revised monetary limit for filing appeal and measures to prevent litigation:.

 INSTRUCTION NO. 5/2014 [F. NO. 279/MISC. 142/2007-ITJ (PT.)], DATED 10-7-2014

Reference is invited to Board's Instruction No. 3/2011, dated 09/02/2011 wherein monetary limits and other conditions for filing departmental appeals (in Income-tax matters) before Appellate Tribunal, High Courts and Supreme Court were specified.

2. In supersession of the above instruction, it has been decided by the Board that departmental appeals may be filed on merits before Appellate Tribunal, High Courts and Supreme Court keeping in view the monetary limits and conditions specified below.

3. Henceforth appeals shall not be filed in cases where the tax effect does not exceed the monetary limits given hereunder:—

S. No.	Appeals in Income-tax matters	Monetary Limit (in Rs.)
1.	Before Appellate Tribunal	4,00,000/-
2.	U/s 260A before High Court	10,00,000/-
3.	Before Supreme Court	25,00,000/-

It is clarified that an appeal should not be filed merely because the tax effect in a case exceeds the monetary limits prescribed above. Filing of appeal in such cases is to be decided on merits of the case.

4. For this purpose, "tax effect" means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issues against which appeal is intended to be filed (hereinafter referred to as "disputed issues"). However the tax will not include any interest thereon, except where chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In cases where returned loss is reduced or assessed as income, the tax effect would include notional tax on disputed additions. In case of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against.

5. The Assessing Officer shall calculate the tax effect separately for every assessment year in respect of the disputed issues in the case of every assessee. If, in the case of an assessee, the disputed issues arise in more than one assessment year, appeal, can be filed in respect of such assessment year or years in which the tax effect in respect of the disputed issues exceeds the monetary limit specified in para 3. No appeal shall be filed in respect of an assessment year or years in which the tax effect is less than the monetary limit specified in para 3. In other words, henceforth, appeals can be filed only with reference to the tax effect in the relevant assessment year. However, in case of a composite order of any High Court or appellate authority, which involves more than one assessment year and common issues in more than one assessment year, appeal shall be filed in respect of all such assessment years even if the 'tax effect' is less than the prescribed monetary limits in any of the year(s), if it is decided to file appeal in respect of the year(s) in which 'tax effect' exceeds the monetary limit prescribed. In case where a composite order/judgment involves more than one assessee, each assessee shall be dealt with separately.

6. In a case where appeal before a Tribunal or a Court is not filed only on account of the tax effect being less than the monetary limit specified above, the Commissioner of Income-tax shall specifically record that "even though the decision is not acceptable, appeal is not being filed only on the consideration that the tax effect is less than the monetary limit specified in this instruction". Further, in such cases, there will be no presumption that the Income-tax Department has acquiesced in the decision on the disputed issues. The Income-tax Department shall not be precluded from filing an appeal against the disputed issues in the case of the same assessee for any other assessment year, or in the case of any other assessee for the same or any other assessment year, if the tax effect exceeds the specified monetary limits.

The detailed order is enclosed. 

https://drive.google.com/file/d/0B8GyRsbVIg8gX3JuZ3gzZWZrQkVvOFFvTEdHTVlMdkNqY05N/edit?usp=sharing

Vector Shipping - Has Sec 40(a)(ia) controversy been put to rest?

Article by.

S. Venkatraman Partner, V

Sankar Aiyar & Co

Click here for Link: https://drive.google.com/file/d/0B8GyRsbVIg8gR0lSb2dRN3pIa3JKRG1yQTFBbzlHV3F6NURr/edit?usp=sharing

Regards,
-------
CA.C.V.PAWAR

Can A Litigant Be Allowed To Have A Say In The Appointment Of A Judge?

 

 Dear Subscriber,

Can A Litigant Be Allowed To Have A Say In The Appointment Of A Judge?

The author, an eminent Sr. Advocate and a champion of judicial integrity and independence, expresses grave apprehension that the National Judicial Appointments Commission Bill, 2014, which seeks to replace the present Collegium system of appointment of Judges by a Committee, comprised partly of politicians, will severely hamper the independence of the Judiciary. He reminds us that the Government is the biggest litigant in the Country and warns that Judges may feel apprehensive of taking bold decisions against the Government in the fear that their chances of promotion to the higher Court would be jeopardized. The author also argues that the present Collegium system is working well and the few defects in it can be rectified. He offers practical suggestions on how this can be done.

Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:  

Analysis Of An Important Judgement On International Taxation

Section 80-IB: Dada Kondke Gets J. P. Dutta’s ‘Border’ Tax Break

 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.

CIT vs. Jyoti Prakash Dutta (Bombay High Court)

S. 80-IB: An "industrial undertaking" can be formed by taking P&M on hire. Not necessary for the assessee to "own" the P&M. Dept's tendency to try to unsettle matters strongly disapproved

The assessee, a film producer, claimed deduction u/s 80-IB in respect of the profits from his film called 'Border'. The AO, relying on Textile Machinery Corp 107 ITR 195, denied the claim for deduction on the ground that as the assessee did not own any plant & machinery, he was not an "industrial undertaking" u/s 80-IB(2)(ii). However, the CIT(A) & Tribunal allowed the assessee's claim. On appeal by the department, HELD dismissing the appeal:

(i) The argument of the department that if an assessee does not own plant and machinery, it cannot be an industrial undertaking is extreme and misconceived. S. 80-IB permits an undertaking to be formed by 'hire' of plant and machinery and does not require the assessee to own the same. A film production unit formed by engaging cameraman, editor, sound technicians and using their equipments for filming, processing, sound recording and mixing machines on contract basis is an "industrial undertaking" eligible for s. 80-IB deduction (D.K. Kondke 192 ITR 128 (Bom) followed, Textile Machinery Corp 107 ITR (SC) distinguished);

(ii) It is unfortunate that the department does not maintain the rule of consistency and instead disobeys it. As the Tribunal had for the earlier years decided the issue in favour of the assessee and the High Court had dismissed the department's appeals, the Revenue ought not to have filed an appeal for the present year. We strongly disapprove of the attempt to canvass extreme arguments so as to take a chance and try to unsettle the settled matters and things. This tendency has to be curbed and we must come down heavily on parties to curb it, may it be the Revenue.

Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

Can A Litigant Be Allowed To Have A Say In The Appointment Of A Judge?

ITR Volume 366 : Part 3 (Issue dated : 25-8-2014)

 

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

ONLINE EDITION

New Return Forms 
ITR-3, ITR-4, ITR-5, ITR-6 
and ITR-7

(See [2014] 3 ITR-OL (St.) 1)

 

PRINT EDITION

ITR Volume 366 : Part 3 (Issue dated : 25-8-2014)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Appeal to High Court --Substantial question of law--Search and seizure--Block assessment--Undisclosed income--Excess stock of silver--Investment in excess stock of gold jewellery--Tribunal restricting additions based on material--Pure questions of fact--Income-tax Act, 1961, ss. 158BC, 260A-- CIT v. Mangal and Mangal (Mad) . . . 478

Assessment --Special audit--Condition precedent--Ledger account not containing narration--Whether charging of interest revenue neutral ascertainable only after all entries examined by special auditor--Failure to file details of expenditure in projects in special economic zone and other projects--Number of transactions between assessee and related parties--Condition as to nature and complexity of accounts satisfied--Direction for special audit warranted--Income-tax Act, 1961, s. 142(2A)-- DLF Ltd. v. Addl. CIT (Delhi) . . . 390

Business expenditure --Assessee entering into agreement to purchase furnace oil--Import without licence prohibited by law--Assessee transferring contractual liability to sister concern--Purchase of furnace oil and sale from sister concern in contravention of law--Amount paid as commission to sister concern--Not deductible--Income-tax Act, 1961, s. 37--Overseas Trading and Shipping Co. P. Ltd. v. Asst. CIT (Guj) . . . 311

----Capital or revenue expenditure--Company jointly promoted by two companies--New company formed on bifurcation of business of such company--Amount paid for getting domestic customer data base--Amount paid for getting trained personnel--Revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v. IBM Global Services India P. Ltd. (Karn) . . . 293

----Deduction only on actual payment--Disallowance--Contribution towards provident fund--Effect of sections 36 and 43B--Contribution of employer and employee made on or before due date for furnishing returns under section 139(1)--Entitled to deduction--Income-tax Act, 1961, ss. 2(24)(x), 36(1)(va), 43B-- Essae Teraoka P. Ltd. v. Deputy CIT (Karn) . . . 408

----Disallowance--Provision for gratuity--Effect of insertion of section 40A(7) w. e. f. 1-4-1973--Trust deed executed in December 1975 and granted approval in December 1975--Claim based on actuarial valuation--Assessee entitled to deduction of provision in assessment year 1973-74--Income-tax Act, 1961, s. 40A(7)-- CIT v. Maharaja Shree Umaid Mills Ltd. (Raj) . . . 341

----Sales promotion--Amount paid for sending a large consignment of mangoes to a person abroad--Claim that it was for purposes of business promotion--No evidence to support claim--Amount not deductible--Income-tax Act, 1961, s. 37-- Overseas Trading and Shipping Co. P. Ltd. v. Asst. CIT (Guj) . . . 311

Business loss --Loss on fluctuation in rate of foreign exchange--Deductible--Income-tax Act, 1961-- CIT v. IBM Global Services India P. Ltd. (Karn) . . . 293

Capital gains --Computation of capital gains--Capital asset having market value but cost of acquisition of which could not be ascertained--Cost to be taken at fair market value on statutorily specified date or at option of assessee market value on date of acquisition--Income-tax Act, 1961, ss. 45, 55-- Thakur Dwara Shri Krishanji Maharaj Handiyaya, Barnalav. CIT (P&H) . . . 381

----Exemption under sections 54 and 54F--Condition that on date of transfer assessee should not be in possession of residential house--†Residential house†includes shared possession of a residential house--Co-owner not entitled to exemption--Income-tax Act, 1961, ss. 54, 54F-- CIT v. M. J. Siwani (Karn) . . . 356

Cash credit --Unexplained cash credits--Two-thirds of creditors unconfirmed--Books of account audited under section 44AB--Nothing to suggest in audit report that closing stock was on estimate basis and that sales suppressions introduced in names of sundry creditors--Unconfirmed sundry creditors treated as unexplained cash credit--Justified--Income-tax Act, 1961, s. 68-- R. C. Auto Centre (S. I.) v. ITO (Mad) . . . 305

Exemption --Educational institution--Application under section 10(23C)(vi) rejected on ground trust deed did not provide for distribution of funds on dissolution--Future contingency--Defect in trust deed rectified--Rejection of application not justified--Income-tax Act, 1961, s. 10(23C)-- St. Kabir Educational Society v. CBDT (P&H) . . . 378

----Infrastructure facility--Bank--Condition precedent--Pre-condition of notification in Official Gazette--Not applicable to bonds purchased by assessee during financial year 1997-98--Income-tax Act, 1961, s. 10(23G)-- CIT v. Lord Krishna Bank Ltd. (Bom) . . . 416

----Special allowance to meet expenses of office--Life Insurance Corporation of India--Conveyance and additional conveyance allowance for Development Officers fixed by formula--Exempt from tax--Income-tax Act, 1961, s. 10(14)-- CIT v. Madan Gopal Bansal(Raj) . . . 319

Reassessment --Notice--Condition precedent--Reason to believe income had escaped assessment--Reason must be based on relevant material--Notice for verifying evidence--Rejection of objection without speaking order--Notice and reassessment not valid--Income-tax Act, 1961, ss. 147, 148-- Mukesh Modi v. Deputy CIT (Raj) . . . 418

----Notice--Objections--Order passed on objections is part of process of determination--Not an order deciding disputes between parties--New contentions can be raised before Assessing Officer--Writ petition challenging order passed on objections not maintainable--Income-tax Act, 1961, ss. 147, 148-- Joint CIT v. Kalanithi Maran (Mad) . . . 453

Recovery of tax --Stay of recovery proceedings--Claim for exemption not proved--Recovery proceedings could not be stayed--Interim stay of fifty per cent. of tax during pendency of appeal--Income-tax Act, 1961-- Kanav Khanna v. CIT (P&H) . . . 386

Revision --Powers of Commissioner--Conditions precedent for exercise of powers--Order erroneous and prejudicial to Revenue--Satisfaction of Commissioner essential--Assessment order under section 143(3)--Assessing Officer having jurisdiction while issuing notice under section 143(3)--Subsequent loss of jurisdiction due to Departmental circular--Order of assessment not invalid--Revision of such order not justified--Income-tax Act, 1961, ss. 143, 263-- CIT v. Kailash Chand Methi (Raj) . . . 333

Search and seizure --Block assessment--Undisclosed income--Agricultural income--Agricultural income assessed in prior years--Amount of agricultural income not includible in undisclosed income--Income-tax Act, 1961-- CIT v. M. J. Siwani (Karn) . . . 356

----Block assessment--Undisclosed income--Amount shown as credit in the name of third person--Amount not disclosed in return--Amount assessable--Income-tax Act, 1961-- CIT v.M. J. Siwani (Karn) . . . 356

----Block assessment--Undisclosed income--Income shown in returns filed under section 139(1) or section 139(4) cannot be included--Income-tax Act, 1961, Ch. XIV-B-- CIT v. M. J. Siwani (Karn) . . . 356

----Jewellery discovered during search--Effect of CBDT Instruction--Jewellery within prescribed limits--Addition of value of part of jewellery as undisclosed income--Not justified--Instruction No. 1916 dated 11-5-1994--Income-tax Act, 1961-- CIT v. Satya Narain Patni(Raj) . . . 325

Valuation of stock --Land under litigation--Value to be determined with reference to purchase price and market value--Income-tax Act, 1961-- CIT v. M. J. Siwani (Karn) . . . 356

Writ --Existence of alternate remedy--Not an absolute bar on issue of writ--Constitution of India, art. 226-- Mukesh Modi v. Deputy CIT (Raj) . . . 418

----High Court--Reassessment--Alternative remedy--Challenge to order passed on objections of assessee--Writ petition not maintainable--Constitution of India, art. 226-- Joint CIT v.Kalanithi Maran (Mad) . . . 453

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Constitution of India :

Art. 226 --Writ--Existence of alternate remedy--Not an absolute bar on issue of writ--Mukesh Modi v. Deputy CIT (Raj) . . . 418

----Writ--High Court--Reassessment--Alternative remedy--Challenge to order passed on objections of assessee--Writ petition not maintainable-- Joint CIT v. Kalanithi Maran (Mad) . . . 453

Income-tax Act, 1961 :

S. 2(24)(x) --Business expenditure--Deduction only on actual payment--Disallowance--Contribution towards provident fund--Effect of sections 36 and 43B--Contribution of employer and employee made on or before due date for furnishing returns under section 139(1)--Entitled to deduction-- Essae Teraoka P. Ltd. v. Deputy CIT (Karn) . . . 408

S. 10(14) --Exemption--Special allowance to meet expenses of office--Life Insurance Corporation of India--Conveyance and additional conveyance allowance for Development Officers fixed by formula--Exempt from tax-- CIT v. Madan Gopal Bansal (Raj) . . . 319

S. 10(23C) --Exemption--Educational institution--Application under section 10(23C)(vi) rejected on ground trust deed did not provide for distribution of funds on dissolution--Future contingency--Defect in trust deed rectified--Rejection of application not justified-- St. Kabir Educational Society v. CBDT (P&H) . . . 378

S. 10(23G) --Exemption--Infrastructure facility--Bank--Condition precedent--Pre-condition of notification in Official Gazette--Not applicable to bonds purchased by assessee during financial year 1997-98-- CIT v. Lord Krishna Bank Ltd. (Bom) . . . 416

S. 36(1)(va) --Business expenditure--Deduction only on actual payment--Disallowance--Contribution towards provident fund--Effect of sections 36 and 43B--Contribution of employer and employee made on or before due date for furnishing returns under section 139(1)--Entitled to deduction-- Essae Teraoka P. Ltd. v. Deputy CIT (Karn) . . . 408

S. 37 --Business expenditure--Assessee entering into agreement to purchase furnace oil--Import without licence prohibited by law--Assessee transferring contractual liability to sister concern--Purchase of furnace oil and sale from sister concern in contravention of law--Amount paid as commission to sister concern--Not deductible-- Overseas Trading and Shipping Co. P. Ltd. v. Asst. CIT (Guj) . . . 311

----Business expenditure--Capital or revenue expenditure--Company jointly promoted by two companies--New company formed on bifurcation of business of such company--Amount paid for getting domestic customer data base--Amount paid for getting trained personnel--Revenue expenditure-- CIT v. IBM Global Services India P. Ltd. (Karn) . . . 293

----Business expenditure--Sales promotion--Amount paid for sending a large consignment of mangoes to a person abroad--Claim that it was for purposes of business promotion--No evidence to support claim--Amount not deductible-- Overseas Trading and Shipping Co. P. Ltd. v. Asst. CIT (Guj) . . . 311

S. 40A(7) --Business expenditure--Disallowance--Provision for gratuity--Effect of insertion of section 40A(7) w. e. f. 1-4-1973--Trust deed executed in December 1975 and granted approval in December 1975--Claim based on actuarial valuation--Assessee entitled to deduction of provision in assessment year 1973-74-- CIT v. Maharaja Shree Umaid Mills Ltd. (Raj) . . . 341

S. 43B --Business expenditure--Deduction only on actual payment--Disallowance--Contribution towards provident fund--Effect of sections 36 and 43B--Contribution of employer and employee made on or before due date for furnishing returns under section 139(1)--Entitled to deduction-- Essae Teraoka P. Ltd. v. Deputy CIT (Karn) . . . 408

S. 45 --Capital gains--Computation of capital gains--Capital asset having market value but cost of acquisition of which could not be ascertained--Cost to be taken at fair market value on statutorily specified date or at option of assessee market value on date of acquisition--Thakur Dwara Shri Krishanji Maharaj Handiyaya, Barnala v. CIT (P&H) . . . 381

S. 54 --Capital gains--Exemption under sections 54 and 54F--Condition that on date of transfer assessee should not be in possession of residential house--†Residential house†includes shared possession of a residential house--Co-owner not entitled to exemption-- CITv. M. J. Siwani (Karn) . . . 356

S. 54F --Capital gains--Exemption under sections 54 and 54F--Condition that on date of transfer assessee should not be in possession of residential house--†Residential house†includes shared possession of a residential house--Co-owner not entitled to exemption-- CITv. M. J. Siwani (Karn) . . . 356

S. 55 --Capital gains--Computation of capital gains--Capital asset having market value but cost of acquisition of which could not be ascertained--Cost to be taken at fair market value on statutorily specified date or at option of assessee market value on date of acquisition--Thakur Dwara Shri Krishanji Maharaj Handiyaya, Barnala v. CIT (P&H) . . . 381

S. 68 --Cash credit--Unexplained cash credits--Two-thirds of creditors unconfirmed--Books of account audited under section 44AB--Nothing to suggest in audit report that closing stock was on estimate basis and that sales suppressions introduced in names of sundry creditors--Unconfirmed sundry creditors treated as unexplained cash credit--Justified-- R. C. Auto Centre (S. I.) v. ITO (Mad) . . . 305

S. 142(2A) --Assessment--Special audit--Condition precedent--Ledger account not containing narration--Whether charging of interest revenue neutral ascertainable only after all entries examined by special auditor--Failure to file details of expenditure in projects in special economic zone and other projects--Number of transactions between assessee and related parties--Condition as to nature and complexity of accounts satisfied--Direction for special audit warranted-- DLF Ltd. v. Addl. CIT (Delhi) . . . 390

S. 143 --Revision--Powers of Commissioner--Conditions precedent for exercise of powers--Order erroneous and prejudicial to Revenue--Satisfaction of Commissioner essential--Assessment order under section 143(3)--Assessing Officer having jurisdiction while issuing notice under section 143(3)--Subsequent loss of jurisdiction due to Departmental circular--Order of assessment not invalid--Revision of such order not justified-- CIT v. Kailash Chand Methi (Raj) . . . 333

S. 147 --Reassessment--Notice--Condition precedent--Reason to believe income had escaped assessment--Reason must be based on relevant material--Notice for verifying evidence--Rejection of objection without speaking order--Notice and reassessment not valid-- Mukesh Modi v. Deputy CIT (Raj) . . . 418

----Reassessment--Notice--Objections--Order passed on objections is part of process of determination--Not an order deciding disputes between parties--New contentions can be raised before Assessing Officer--Writ petition challenging order passed on objections not maintainable-- Joint CIT v. Kalanithi Maran (Mad) . . . 453

S. 148 --Reassessment--Notice--Condition precedent--Reason to believe income had escaped assessment--Reason must be based on relevant material--Notice for verifying evidence--Rejection of objection without speaking order--Notice and reassessment not valid-- Mukesh Modi v. Deputy CIT (Raj) . . . 418

----Reassessment--Notice--Objections--Order passed on objections is part of process of determination--Not an order deciding disputes between parties--New contentions can be raised before Assessing Officer--Writ petition challenging order passed on objections not maintainable-- Joint CIT v. Kalanithi Maran (Mad) . . . 453

Ch. XIV-B --Search and seizure--Block assessment--Undisclosed income--Income shown in returns filed under section 139(1) or section 139(4) cannot be included-- CIT v. M. J. Siwani(Karn) . . . 356

S. 158BC --Appeal to High Court--Substantial question of law--Search and seizure--Block assessment--Undisclosed income--Excess stock of silver--Investment in excess stock of gold jewellery--Tribunal restricting additions based on material--Pure questions of fact-- CITv. Mangal and Mangal (Mad) . . . 478

S. 260A --Appeal to High Court--Substantial question of law--Search and seizure--Block assessment--Undisclosed income--Excess stock of silver--Investment in excess stock of gold jewellery--Tribunal restricting additions based on material--Pure questions of fact-- CITv. Mangal and Mangal (Mad) . . . 478

S. 263 --Revision--Powers of Commissioner--Conditions precedent for exercise of powers--Order erroneous and prejudicial to Revenue--Satisfaction of Commissioner essential--Assessment order under section 143(3)--Assessing Officer having jurisdiction while issuing notice under section 143(3)--Subsequent loss of jurisdiction due to Departmental circular--Order of assessment not invalid--Revision of such order not justified-- CIT v. Kailash Chand Methi (Raj) . . . 333

 

__._,_.___

ITR (TRIB) Volume 34 : Part 1 (Issue dated : 25-8-2014)

 

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))--PRINT AND ONLINE EDITION

 

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Business expenditure --Deduction on actual payment--Scientific research expenditure--Weighted deduction--Provision for leave encashment claimed as weighted deduction cannot be disallowed invoking provisions of section 43B(f)--Income-tax Act, 1961, ss. 35(2AB), 43B(f)-- Wheels India Ltd. v. Deputy CIT (Chennai) . . . 166

----Disallowance--Payments to non-residents--Failure to deduct tax at source--Entire services rendered outside India--No permanent establishment in India--Not managerial services--Amount not deductible--Income-tax Act, 1961, ss. 40(a)(i), 195-- Wheels India Ltd.v. Deputy CIT (Chennai) . . . 166

----Loss on account of exchange fluctuation on forward contracts allowable--Income-tax Act, 1961-- Wheels India Ltd. v. Deputy CIT (Chennai) . . . 166

Depreciation --Additional depreciation--Carry forward of unabsorbed additional depreciation--Not permissible--Income-tax Act, 1961-- Wheels India Ltd. v. Deputy CIT (Chennai) . . . 166

Fringe benefits tax --Expenditure on foreign representative office--Assessee within parameters of section 115WB(1) and (2)--Indian company carrying on business outside India and not having employees in India not liable to fringe benefits tax in India--Income-tax Act, 1961, s. 115WB(1), (2)--CBDT Circular No. 8 of 2005, dated 29-08-2005-- M. P. Fashions P. Ltd. v. ITO (Mumbai) . . . 160

Income --Disallowance of expenditure in relation to exempt income--Interest-free funds with assessee in excess of investments earning tax-free income--Provisions of rule 8D(2)(ii) have no application--Substantial transactions in shares involving administrative expenses--Rule 8D(2)(iii) can be invoked where exact quantum of expenditure not known--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D(2)(ii), (iii)-- Wheels India Ltd. v. Deputy CIT(Chennai) . . . 166

PRINT EDITION

Volume 34 : Part 1 (Issue dated : 25-8-2014)

SUBJECT INDEX TO CASES REPORTED

Accounting --Method of accounting--Rejection of accounts--Assessee following method of accounting from year to year--No defects pointed out by Department in method of accounting--No reason to reject method--Income-tax Act, 1961-- Hill View Infrastructure P. Ltd. v. Deputy CIT (Chandigarh) . . . 128

----Rejection of accounts--Estimation of profits--Contract for onshore supply and services--Estimation of income at 10 per cent. reasonable--Income-tax Act, 1961, s. 145(3)-- Pirelli Cavi E Sistemi Telecom S. P. A. (India Project Office) v. Asst. CIT (Hyd) . . . 41

Advance tax --Interest--No liability to interest where tax deductible at source on income--Income-tax Act, 1961, ss. 234B, 234C-- GFA Anlagenbau Gmbh v. Deputy/Asst. DIT (International Taxation) (Hyd) . . . 73

----Interest--Interest cannot be levied if entire income liable to deduction of tax at source--Matter remanded--Income-tax Act, 1961, s. 234B-- Pirelli Cavi E Sistemi Telecom S. P. A. (India Project Office) v. Asst. CIT (Hyd) . . . 41

Assessment --Limitation--Commissioner passing revision order on March 8, 2010--Assessment to be made within nine months from end of relevant assessment year--Assessing Officer passing consequential order on March 28, 2011--Assessment after expiry of limitation and to be annulled--Income-tax Act, 1961, ss. 153(2A), 263-- ITO v. Jheendu Ram (Lucknow) . . . 97

Business expenditure --Brothers carrying on similar business as proprietors from same premises--Executing mutual power of attorney documents and each taking out insurance on life of other--Insurance premium consideration for one another--Arrangement collusive--Expenditure not allowable--Income-tax Act, 1961, s. 37(1)-- Habibur Raheman F. Ansari v. Deputy CIT (Mumbai) . . . 16

----Disallowance--Excessive and unreasonable payments--Increase in salary of employees in earlier assessment years on basis of sixth pay commission--Expenditure incurred in remuneration of employees allowable--Income-tax Act, 1961, s. 40A(2)(b)-- Asst. CIT v. Idicula Trust Society (Delhi) . . . 1

----Disallowance--Payments liable to deduction of tax at source--Non-resident--Payment to non-resident translators--Would not fall within ambit of Explanation 2 to section 9(1)(vii) so as to attract provisions of section 194J--Expenditure allowable under section 40(a)(i)--Income-tax Act, 1961, ss. 40(a)(i), 194J-- Cosmic Global Ltd. v. Asst. CIT (Chennai) . . . 114

Charitable purpose --Exemption--Status of assessee that of charitable society eligible for claim of exemption--Exemption allowable--Income-tax Act, 1961, s. 11(1)(a)-- Asst. CIT v. Idicula Trust Society (Delhi) . . . 1

----Registration of trust--Cancellation--Trustees deciding to sell property to recover funds already invested--Mere intention to sell land not violation of objects of trust--Purchase of luxury car out of funds of trust in name of trustee--Debatable matter--Not ground to infer activities of trust not genuine--Scholarships to students routed through another trust--No violation of objects of trust--Not sufficient ground for cancellation of registration--Income-tax Act, 1961, ss. 12A, 12AA, 12AA(3)-- Cancer Aid and Research Foundation v. DIT(Exemption) (Mumbai) . . . 56

Company --Book profits--Computation--Lease equalisation charges--Insertion of Explanation 1(g) to section 115JA from 1-4-1998 with retrospective effect--Lease equalisation charges to be added to book profits--Income-tax Act, 1961, s. 115JA-- Deputy CIT v. Citi Financial Retail Services India Ltd. (Chennai) . . . 92

Deduction of tax at source --Commission or brokerage--Assessee charging constructive payment to subscriber--Section 194H applicable for constructive payment--Assessee in default--Income-tax Act, 1961, ss. 194H, 201-- Idea Cellular Ltd. v. Asst. CIT (Hyd) . . . 101

----Commission--Assessee providing cellular mobile telephone services through network of distributors--Discount offered to distributors in nature of commission--Assessee liable to deduct tax at source--Income-tax Act, 1961, s. 194H-- Idea Cellular Ltd. v. Asst. CIT (Hyd) . . . 101

----Commission--Different from discount--Commission passed on to person who solicits business, whereas discount is reduction on sale price--Assessee offering discount to its customers--Tax deduction at source not attracted--Income-tax Act, 1961, s. 194H-- ITO (TDS) v. Kesar Travels Ltd. (Mumbai) . . . 124

----Failure to deduct tax at source--Levy of interest--Assessing Officer to work out interest from date of tax deductible to date of payment by recipient on amounts determined after verification--Income-tax Act, 1961, s. 201(1A)-- Idea Cellular Ltd. v. Asst. CIT (Hyd) . . . 101

----Interest--Failure to deduct tax at source--Order holding assessee in default--Limitation--Order passed beyond four years but within six years--Not barred by limitation--Income-tax Act, 1961, s. 201-- Idea Cellular Ltd. v. Asst. CIT (Hyd) . . . 101

----Non-resident--Taxability in India--Assessee paying software development charges, salary and benefits and expenses abroad--Companies receiving amounts having no permanent establishment in India or business connection in India--Payments cannot be brought to tax in India--Income-tax Act, 1961, ss. 194C, 194J-- Prithvi Information Solutions Ltd. v. ITO (Hyd) . . . 28

----Payment to contractors--Professional fees--Assessee entering into agreements with certain companies for undertaking certain works in information systems--Vendee-vendor relationship--Payments made to vendor companies were for work falling under section 194C not professional fees under section 194J--Income-tax Act, 1961, ss. 194C, 194J, 201(1), (1A)-- Prithvi Information Solutions Ltd. v. ITO (Hyd) . . . 28

Double Taxation Avoidance --Provision against discrimination--Non-discrimination clause on applicability of tax rate--Rate of tax applicable to foreign company to be same as that applicable to domestic company in similar circumstances--Income-tax Act, 1961--Double Taxation Avoidance Agreement between India and Italy-- Pirelli Cavi E Sistemi Telecom S. P. A. (India Project Office) v. Asst. CIT (Hyd) . . . 41

Exemption --Export--Receivables from foreign clients--Payment in convertible foreign exchange--Assessee making payment to foreign client setting off expenditure incurred abroad with approval of Reserve Bank of India--Assessee entitled to exemption--Income-tax Act, 1961, s. 10A-- Asst. CIT v. DQ Entertainment (International) Ltd. (Hyd) . . . 22

Housing project --Special deduction--No discussion by Assessing Officer in assessment order on allowability of deduction--Application of mind should be reflected in order itself--Matter remanded to Assessing Officer to record reason for conclusion either allowing or disallowing claim--Income-tax Act, 1961, s. 80-IB(10)-- Hemalatha (P. V) v. Asst. CIT(Cochin) . . . 8

Income from undisclosed sources --Assessee contending payment made for dishonour of cheque--No evidence to prove--Seized document not mentioning dishonour of cheques--Income to be assessed as income from undisclosed sources in hands of assessee--Income-tax Act, 1961-- Hill View Infrastructure P. Ltd. v. Deputy CIT (Chandigarh) . . . 128

----Entries in seized documents in duplicate and in triplicate--Another entity and director of assessee offering income before Settlement Commission and Commission deciding income was theirs--Income cannot be assessed in hands of assessee--Income-tax Act, 1961, s. 69-- Hill View Infrastructure P. Ltd. v. Deputy CIT (Chandigarh) . . . 128

Industrial undertaking --Special deduction--Income surrendered as result of search--Assessee not entitled to deduction for surrendered income--Income-tax Act, 1961, s. 80-IB--Hill View Infrastructure P. Ltd. v. Deputy CIT (Chandigarh) . . . 128

Non-resident --Permanent establishment--Foreign technicians staying in India for more than 183 days--Assessee not having building site of its own and no fixed place of business--Articles 5 and 7 not applicable--Assessee’s activities technical in nature and payments fees for technical service--Taxable under article 12--Double Taxation Avoidance Agreement between India and Germany, arts. 5, 7, 12-- GFA Anlagenbau Gmbh v. Deputy/Asst. DIT (International Taxation) (Hyd) . . . 73

----Taxability in India--Offshore contract--Training in India incidental to offshore contract--No profit on training--Equipment transferred outside India--Income not taxable in India--Income-tax Act, 1961-- Pirelli Cavi E Sistemi Telecom S. P. A. (India Project Office) v. Asst. CIT(Hyd) . . . 41

Reassessment --Notice--Must be on tangible material--Reopening of assessment to disallow expenditure incurred on software development as capital expenditure--Reopening of assessment not justified--Income-tax Act, 1961, ss. 147, 148-- Deputy CIT v. India Infoline Insurance Services P. Ltd. (Mumbai) . . . 119

Refund --Interest on excess refund--Section 234D not applicable, if assessment completed before June 1, 2003--Matter remanded--Income-tax Act, 1961, s. 234D-- Pirelli Cavi E Sistemi Telecom S. P. A. (India Project Office) v. Asst. CIT (Hyd) . . . 41

Unexplained expenditure --Document found in possession of assessee during search--Assessee claiming document belonging to contractor operating from site of assessee--Failure by Assessing Officer to summon contractor to establish nature of transaction--Addition cannot be made in hands of assessee on basis of document--Income-tax Act, 1961, s. 69C-- Hill View Infrastructure P. Ltd. v. Deputy CIT (Chandigarh) . . . 128

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance Agreement between India and Germany

Art. 5 --Non-resident--Permanent establishment--Foreign technicians staying in India for more than 183 days--Assessee not having building site of its own and no fixed place of business--Articles 5 and 7 not applicable--Assessee’s activities technical in nature and payments fees for technical service--Taxable under article 12-- GFA Anlagenbau Gmbh v. Deputy/Asst. DIT (International Taxation) (Hyd) . . . 73

Art. 7 --Non-resident--Permanent establishment--Foreign technicians staying in India for more than 183 days--Assessee not having building site of its own and no fixed place of business--Articles 5 and 7 not applicable--Assessee’s activities technical in nature and payments fees for technical service--Taxable under article 12-- GFA Anlagenbau Gmbh v. Deputy/Asst. DIT (International Taxation) (Hyd) . . . 73

Art. 12 --Non-resident--Permanent establishment--Foreign technicians staying in India for more than 183 days--Assessee not having building site of its own and no fixed place of business--Articles 5 and 7 not applicable--Assessee’s activities technical in nature and payments fees for technical service--Taxable under article 12-- GFA Anlagenbau Gmbh v. Deputy/Asst. DIT (International Taxation) (Hyd) . . . 73

Income-tax Act, 1961

S. 10A --Exemption--Export--Receivables from foreign clients--Payment in convertible foreign exchange--Assessee making payment to foreign client setting off expenditure incurred abroad with approval of Reserve Bank of India--Assessee entitled to exemption-- Asst. CIT v. DQ Entertainment (International) Ltd. (Hyd) . . . 22

S. 11(1)(a) --Charitable purpose--Exemption--Status of assessee that of charitable society eligible for claim of exemption--Exemption allowable-- Asst. CIT v. Idicula Trust Society(Delhi) . . . 1

S. 12A --Charitable purpose--Registration of trust--Cancellation--Trustees deciding to sell property to recover funds already invested--Mere intention to sell land not violation of objects of trust--Purchase of luxury car out of funds of trust in name of trustee--Debatable matter--Not ground to infer activities of trust not genuine--Scholarships to students routed through another trust--No violation of objects of trust--Not sufficient ground for cancellation of registration-- Cancer Aid and Research Foundation v. DIT (Exemption) (Mumbai) . . . 56

S. 12AA --Charitable purpose--Registration of trust--Cancellation--Trustees deciding to sell property to recover funds already invested--Mere intention to sell land not violation of objects of trust--Purchase of luxury car out of funds of trust in name of trustee--Debatable matter--Not ground to infer activities of trust not genuine--Scholarships to students routed through another trust--No violation of objects of trust--Not sufficient ground for cancellation of registration-- Cancer Aid and Research Foundation v. DIT (Exemption) (Mumbai) . . . 56

S. 12AA(3) --Charitable purpose--Registration of trust--Cancellation--Trustees deciding to sell property to recover funds already invested--Mere intention to sell land not violation of objects of trust--Purchase of luxury car out of funds of trust in name of trustee--Debatable matter--Not ground to infer activities of trust not genuine--Scholarships to students routed through another trust--No violation of objects of trust--Not sufficient ground for cancellation of registration-- Cancer Aid and Research Foundation v. DIT (Exemption) (Mumbai) . . . 56

S. 37(1) --Business expenditure--Brothers carrying on similar business as proprietors from same premises--Executing mutual power of attorney documents and each taking out insurance on life of other--Insurance premium consideration for one another--Arrangement collusive--Expenditure not allowable-- Habibur Raheman F. Ansari v. Deputy CIT (Mumbai) . . . 16

S. 40(a)(i) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Non-resident--Payment to non-resident translators--Would not fall within ambit ofExplanation 2 to section 9(1)(vii) so as to attract provisions of section 194J--Expenditure allowable under section 40(a)(i)-- Cosmic Global Ltd. v. Asst. CIT (Chennai) . . . 114

S. 40A(2)(b) --Business expenditure--Disallowance--Excessive and unreasonable payments--Increase in salary of employees in earlier assessment years on basis of sixth pay commission--Expenditure incurred in remuneration of employees allowable-- Asst. CIT v. Idicula Trust Society (Delhi) . . . 1

S. 69 --Income from undisclosed sources--Entries in seized documents in duplicate and in triplicate--Another entity and director of assessee offering income before Settlement Commission and Commission deciding income was theirs--Income cannot be assessed in hands of assessee-- Hill View Infrastructure P. Ltd. v. Deputy CIT (Chandigarh) . . . 128

S. 69C --Unexplained expenditure--Document found in possession of assessee during search--Assessee claiming document belonging to contractor operating from site of assessee--Failure by Assessing Officer to summon contractor to establish nature of transaction--Addition cannot be made in hands of assessee on basis of document-- Hill View Infrastructure P. Ltd. v. Deputy CIT (Chandigarh) . . . 128

S. 80-IB --Industrial undertaking--Special deduction--Income surrendered as result of search--Assessee not entitled to deduction for surrendered income-- Hill View Infrastructure P. Ltd. v. Deputy CIT (Chandigarh) . . . 128

S. 80-IB(10) --Housing project--Special deduction--No discussion by Assessing Officer in assessment order on allowability of deduction--Application of mind should be reflected in order itself--Matter remanded to Assessing Officer to record reason for conclusion either allowing or disallowing claim-- Hemalatha (P. V) v. Asst. CIT (Cochin) . . . 8

S. 115JA --Company--Book profits--Computation--Lease equalisation charges--Insertion ofExplanation 1(g) to section 115JA from 1-4-1998 with retrospective effect--Lease equalisation charges to be added to book profits-- Deputy CIT v. Citi Financial Retail Services India Ltd. (Chennai) . . . 92

S. 145(3) --Accounting--Rejection of accounts--Estimation of profits--Contract for onshore supply and services--Estimation of income at 10 per cent. reasonable-- Pirelli Cavi E Sistemi Telecom S. P. A. (India Project Office) v. Asst. CIT (Hyd) . . . 41

S. 147 --Reassessment--Notice--Must be on tangible material--Reopening of assessment to disallow expenditure incurred on software development as capital expenditure--Reopening of assessment not justified-- Deputy CIT v. India Infoline Insurance Services P. Ltd.(Mumbai) . . . 119

S. 148 --Reassessment--Notice--Must be on tangible material--Reopening of assessment to disallow expenditure incurred on software development as capital expenditure--Reopening of assessment not justified-- Deputy CIT v. India Infoline Insurance Services P. Ltd.(Mumbai) . . . 119

S. 153(2A) --Assessment--Limitation--Commissioner passing revision order on March 8, 2010--Assessment to be made within nine months from end of relevant assessment year--Assessing Officer passing consequential order on March 28, 2011--Assessment after expiry of limitation and to be annulled-- ITO v. Jheendu Ram (Lucknow) . . . 97

S. 194C --Deduction of tax at source--Non-resident--Taxability in India--Assessee paying software development charges, salary and benefits and expenses abroad--Companies receiving amounts having no permanent establishment in India or business connection in India--Payments cannot be brought to tax in India-- Prithvi Information Solutions Ltd. v. ITO(Hyd) . . . 28

----Deduction of tax at source--Payment to contractors--Professional fees--Assessee entering into agreements with certain companies for undertaking certain works in information systems--Vendee-vendor relationship--Payments made to vendor companies were for work falling under section 194C not professional fees under section 194J-- Prithvi Information Solutions Ltd. v. ITO (Hyd) . . . 28

S. 194H --Deduction of tax at source--Commission--Assessee providing cellular mobile telephone services through network of distributors--Discount offered to distributors in nature of commission--Assessee liable to deduct tax at source-- Idea Cellular Ltd. v. Asst. CIT(Hyd) . . . 101

----Deduction of tax at source--Commission--Different from discount--Commission passed on to person who solicits business, whereas discount is reduction on sale price--Assessee offering discount to its customers--Tax deduction at source not attracted-- ITO (TDS) v. Kesar Travels Ltd. (Mumbai) . . . 124

----Deduction of tax at source--Commission or brokerage--Assessee charging constructive payment to subscriber--Section 194H applicable for constructive payment--Assessee in default-- Idea Cellular Ltd. v. Asst. CIT (Hyd) . . . 101

S. 194J --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Non-resident--Payment to non-resident translators--Would not fall within ambit ofExplanation 2 to section 9(1)(vii) so as to attract provisions of section 194J--Expenditure allowable under section 40(a)(i)-- Cosmic Global Ltd. v. Asst. CIT (Chennai) . . . 114

----Deduction of tax at source--Non-resident--Taxability in India--Assessee paying software development charges, salary and benefits and expenses abroad--Companies receiving amounts having no permanent establishment in India or business connection in India--Payments cannot be brought to tax in India-- Prithvi Information Solutions Ltd. v. ITO (Hyd) . . . 28

----Deduction of tax at source--Payment to contractors--Professional fees--Assessee entering into agreements with certain companies for undertaking certain works in information systems--Vendee-vendor relationship--Payments made to vendor companies were for work falling under section 194C not professional fees under section 194J-- Prithvi Information Solutions Ltd. v. ITO (Hyd) . . . 28

S. 201 --Deduction of tax at source--Commission or brokerage--Assessee charging constructive payment to subscriber--Section 194H applicable for constructive payment--Assessee in default-- Idea Cellular Ltd. v. Asst. CIT (Hyd) . . . 101

----Deduction of tax at source--Interest--Failure to deduct tax at source--Order holding assessee in default--Limitation--Order passed beyond four years but within six years--Not barred by limitation-- Idea Cellular Ltd. v. Asst. CIT (Hyd) . . . 101

S. 201(1) --Deduction of tax at source--Payment to contractors--Professional fees--Assessee entering into agreements with certain companies for undertaking certain works in information systems--Vendee-vendor relationship--Payments made to vendor companies were for work falling under section 194C not professional fees under section 194J-- Prithvi Information Solutions Ltd. v. ITO (Hyd) . . . 28

S. 201(1A) --Deduction of tax at source--Failure to deduct tax at source--Levy of interest--Assessing Officer to work out interest from date of tax deductible to date of payment by recipient on amounts determined after verification-- Idea Cellular Ltd. v. Asst. CIT (Hyd) . . . 101

----Deduction of tax at source--Payment to contractors--Professional fees--Assessee entering into agreements with certain companies for undertaking certain works in information systems--Vendee-vendor relationship--Payments made to vendor companies were for work falling under section 194C not professional fees under section 194J-- Prithvi Information Solutions Ltd. v. ITO (Hyd) . . . 28

S. 234B --Advance-tax--Interest--Interest cannot be levied if entire income liable to deduction of tax at source--Matter remanded-- Pirelli Cavi E Sistemi Telecom S. P. A. (India Project Office) v. Asst. CIT (Hyd) . . . 41

----Advance tax--Interest--No liability to interest where tax deductible at source on income--GFA Anlagenbau Gmbh v. Deputy/Asst. DIT (International Taxation) (Hyd) . . . 73

S. 234C --Advance tax--Interest--No liability to interest where tax deductible at source on income-- GFA Anlagenbau Gmbh v. Deputy/Asst. DIT (International Taxation) (Hyd) . . . 73

S. 234D --Refund--Interest on excess refund--Section 234D not applicable, if assessment completed before June 1, 2003--Matter remanded-- Pirelli Cavi E Sistemi Telecom S. P. A. (India Project Office) v. Asst. CIT (Hyd) . . . 41

S. 263 --Assessment--Limitation--Commissioner passing revision order on March 8, 2010--Assessment to be made within nine months from end of relevant assessment year--Assessing Officer passing consequential order on March 28, 2011--Assessment after expiry of limitation and to be annulled-- ITO v. Jheendu Ram (Lucknow) . . . 97