INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Auditing of accounts --Special audit--Scope of section 142(2A)--Assessee should be given reasonable opportunity of being heard--No requirement of personal hearing--Assessing Officer finding accounts complex--Commissioner giving personal hearing to assessee--Direction for special audit--Valid--Income-tax Act, 1961, s. 142(2A)-- Neesa Leisure Ltd. v.Deputy CIT (Guj) . . . 93
ITR Volume 365 : Part 4 (Issue dated : 28-7-2014)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Best judgment assessment --Revision--Commissioner--Assessees uneducated persons not properly represented before Assessing Officer--Commissioner dismissing revision petitions from assessments and refusing to recall his order--High Court affirming--Supreme Court--No interference with assessment but no interest or penalty to be charged--Income-tax Act, 1961, ss. 144, 264-- Tripal Singh v. CIT . . . 511
Wealth-tax --Valuation of asset--Discretion of Assessing Officer to discard valuation determined in accordance with rule 3 and invoke rule 8--Huge difference between value declared by assessee based on valuation for municipal taxes and market value--Assessee itself entering into agreement to sell property for much higher price than declared--Impracticable to apply rule 3--Reference to Valuation Officer and assessment at his valuation proper--Wealth-tax Act, 1957, ss. 7, 16A, Sch. III, rr. 3 to 7, 8(a), 20-- Amrit Banaspati Co. Ltd. v. CWT . . . 515
Words and phrases --“Practicable†-- Amrit Banaspati Co. Ltd. v. CWT . . . 515
Business --Capital gains--Business income or short-term capital gains--Tests--Gains from purchase and sale of shares--Short-term capital gains--Income-tax Act, 1961, ss. 28, 45--CIT v. Devasan Investment P. Ltd. (Delhi) . . . 452
Business expenditure --Accrual of liability--Assessee, joint venture enterprise, receiving advance for equity from Government--Government insisting on return of its contribution of share application for non-allotment of shares--Assessee refunding amount after twelve years to Government--Accrual, crystallisation and finalisation relatable to year in which returned--Entire amount allowable--Professional fee for consultancy services--Allowable--Income-tax Act, 1961, s. 37-- CIT v. Urban Mass Transit Ltd. (Delhi) . . . 442
----Capital or revenue expenditure--Lease for eighty years from State Industrial Development Corporation with option of renewal of lease--Assignment of rights under lease agreement--Lump-sum payment for assignment--Capital expenditure--Income-tax Act, 1961, s. 37-- CITv. Rane Brake Linings Ltd. (Mad) . . . 401
----Deduction only on actual payment--Liability for years prior to introduction of section 43B--Excise duty--Assessee disputing claim made on basis of valuation--Payment made after adjudication in assessment year 1984-85 and not during relevant year--Deductible--Income-tax Act, 1961, s. 43B-- ITC Ltd. v. CIT (Cal) . . . 532
----Education and training expenses--Expenditure incurred on higher education of son of director--Son of director employee of assessee-company--Commitment letter to work for a further five years after finishing MBA--Assessee’s business investments and securities--Nothing to suggest transaction not honest--Expenditure incurred for pursuit for higher studies allowable--Income-tax Act, 1961, s. 37(1)-- Kostub Investment Ltd. v. CIT (Delhi) . . . 436
----Expenditure on higher education abroad--Firm of advocates--Daughter of assessee joining firm and immediately sent for education abroad--No scheme for higher education abroad for employees and associates of firm--Daughter permitted not only to continue and stay abroad but to join any firm after completing higher education--Expenditure on education not in interests of profession of firm but for furthering career prospects of daughter--Not allowable--Income-tax Act, 1961, s. 37-- Divyakant C. Mehta v. ITO (Bom) . . . 423
----Expenditure on remuneration and training of working director--Expenses incurred out of personal considerations and not commercial considerations--Not allowable--Income-tax Act, 1961, s. 37-- Shreenath Motors P. Ltd. v. CIT (Bom) . . . 536
Deduction of tax at source --Failure to deduct--No period of limitation prescribed for passing order under section 201 treating assessee as in default--Revenue not bound by any reasonable period of limitation for taking action under section 201--Time limit prescribed in section 149 for taking action under section 147 has no application for taking action under section 201--Income-tax Act, 1961, s. 201(1), (1A)-- Bhura Exports Ltd. v. ITO (Cal) . . . 548
----Order deeming person assessee in default--Limitation for passing order--No time limit specified in Act--Order must be passed within reasonable time--Passing of order has to be within one year from end of financial year in which proceedings under section 201(1) initiated--Same time limit for passing of order under section 201(1A)--Income-tax Act, 1961, s. 201(1), (1A)-- DIT (International Taxation) v. Mahindra and Mahindra Ltd. (Bom) . . . 560
Exemption --Ruler--Annual value of any one palace in occupation of ruler--Scope of section 10(19A)--Section 10(19A) similar to section 5(1)(iii) of Wealth-tax Act--Meaning of “in the occupation†--Part of palace given on rent--Ruler not entitled to exemption in respect of annual value of such part--Income-tax Act, 1961, s. 10(19A)--Wealth-tax Act, 1957, s 5(1)(iii)-- CIT v. Maharao Bhim Singh of Kota [FB] (Raj) . . . 485
Income-tax proceedings --Principles of res judicata and estoppel not applicable-- CIT v.Maharao Bhim Singh of Kota [FB] (Raj) . . . 485
Industrial undertaking --Special deduction--Assessee buying monitor, key board, mouse and assembling them--Activity carrying out by assessee is manufacturing activity--Entitled to special deduction--Income-tax Act, 1961, s. 80-IB-- CIT v. Sai Infosystem India P. Ltd. (Guj) . . . 433
----Special deduction--Manufacture or production of article or thing--Assembling computers and servers out of various components by carrying on quality control through testing equipment--New and distinct product other than components of which made--Entitled to deduction--Income-tax Act, 1961, s. 80-IB-- CIT v. Sunilbhai S. Kakad (Guj) . . . 427
----Special deduction--Return--Delay in filing return--Whether assessee disqualified for deduction for delay in filing return and audit report--CBDT notification extending date for filing returns and audit report--Whether notification applicable to assessee goes root of matter--Tribunal directed to decide afresh--Income-tax Act, 1961, ss. 80-IB, 139-- Bal Kishan Dhawan (HUF) v. Deputy CIT (P&H) . . . 581
Interpretation of taxing statutes --Provision conferring exemption--Strict interpretation-- CITv. Maharao Bhim Singh of Kota [FB] (Raj) . . . 485
Loss --Short-term capital loss--Non-convertible debentures with detachable warrants--Sale of part of debentures at a loss of application money--Application money for debentures payable for acquisition of each detachable warrant--Loss not short-term capital loss--Sale proceeds of detachable warrants constitutes business income--Income-tax Act, 1961--Ganapati Enterprises v. CIT (Cal) . . . 480
Penalty --Cash loans exceeding specified limit--Loans from agriculturists in remote areas--Transactions genuine--Cancellation of penalty under section 271D--Justified--Income-tax Act, 1961, ss. 269SS, 271D, 273B-- CIT v. MAA Khodiyar Construction (Guj) . . . 474
Reassessment --Notice after four years--Conditions precedent--Failure to furnish material facts necessary for assessment--Material facts disclosed in return--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Gujarat Carbon and Industries Ltd. v. Asst. CIT (Guj) . . . 464
----Notice--Reasons to believe based on investigation report--No indication in notice that report was not on record at time of completion of original assessment--Position clarified in additional affidavit and not in counter-affidavit--Evidence to show report available and used at time of original assessment--Notice and further proceedings not valid--Income-tax Act, 1961, ss. 147, 148-- Rasalika Trading and Investment Co. P. Ltd. v. Deputy CIT (Delhi) . . . 447
Search and seizure --Assessment of third person--Condition precedent--Recording of satisfaction by Assessing Officer having jurisdiction over person in respect of whom search conducted that money or assets discovered during search belong to third person--Recording of satisfaction necessary even if Assessing Officer of both persons is the same--Income-tax Act, 1961, s. 153C-- CIT v. Gopi Apartment (All) . . . 411
Unexplained investment --Accounts not rejected--Reference to Valuation Officer and addition based on his report--Not valid--Income-tax Act, 1961, s. 69B-- CIT v. Vijaykumar D. Gupta (Guj) . . . 470
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 10(19A) --Exemption--Ruler--Annual value of any one palace in occupation of ruler--Scope of section 10(19A)--Section 10(19A) similar to section 5(1)(iii) of Wealth-tax Act--Meaning of “in the occupation†--Part of palace given on rent--Ruler not entitled to exemption in respect of annual value of such part-- CIT v. Maharao Bhim Singh of Kota [FB] (Raj) . . . 485
S. 28 --Business--Capital gains--Business income or short-term capital gains--Tests--Gains from purchase and sale of shares--Short-term capital gains-- CIT v. Devasan Investment P. Ltd. (Delhi) . . . 452
S. 37 --Business expenditure--Accrual of liability--Assessee, joint venture enterprise, receiving advance for equity from Government--Government insisting on return of its contribution of share application for non-allotment of shares--Assessee refunding amount after twelve years to Government--Accrual, crystallisation and finalisation relatable to year in which returned--Entire amount allowable--Professional fee for consultancy services--Allowable-- CIT v. Urban Mass Transit Ltd. (Delhi) . . . 442
----Business expenditure--Capital or revenue expenditure--Lease for eighty years from State Industrial Development Corporation with option of renewal of lease--Assignment of rights under lease agreement--Lump-sum payment for assignment--Capital expenditure-- CIT v.Rane Brake Linings Ltd. (Mad) . . . 401
----Business expenditure--Expenditure on higher education abroad--Firm of advocates--Daughter of assessee joining firm and immediately sent for education abroad--No scheme for higher education abroad for employees and associates of firm--Daughter permitted not only to continue and stay abroad but to join any firm after completing higher education--Expenditure on education not in interests of profession of firm but for furthering career prospects of daughter--Not allowable-- Divyakant C. Mehta v. ITO (Bom) . . . 423
----Business expenditure--Expenditure on remuneration and training of working director--Expenses incurred out of personal considerations and not commercial considerations--Not allowable-- Shreenath Motors P. Ltd. v. CIT (Bom) . . . 536
S. 37(1) --Business expenditure--Education and training expenses--Expenditure incurred on higher education of son of director--Son of director employee of assessee-company--Commitment letter to work for a further five years after finishing MBA--Assessee’s business investments and securities--Nothing to suggest transaction not honest--Expenditure incurred for pursuit for higher studies allowable-- Kostub Investment Ltd. v. CIT (Delhi) . . . 436
S. 43B --Business expenditure--Deduction only on actual payment--Liability for years prior to introduction of section 43B--Excise duty--Assessee disputing claim made on basis of valuation--Payment made after adjudication in assessment year 1984-85 and not during relevant year--Deductible-- ITC Ltd. v. CIT (Cal) . . . 532
S. 45 --Business--Capital gains--Business income or short-term capital gains--Tests--Gains from purchase and sale of shares--Short-term capital gains-- CIT v. Devasan Investment P. Ltd. (Delhi) . . . 452
S. 69B --Unexplained investment--Accounts not rejected--Reference to Valuation Officer and addition based on his report--Not valid-- CIT v. Vijaykumar D. Gupta (Guj) . . . 470
S. 80-IB --Industrial undertaking--Special deduction--Assessee buying monitor, key board, mouse and assembling them--Activity carrying out by assessee is manufacturing activity--Entitled to special deduction-- CIT v. Sai Infosystem India P. Ltd. (Guj) . . . 433
----Industrial undertaking--Special deduction--Manufacture or production of article or thing--Assembling computers and servers out of various components by carrying on quality control through testing equipment--New and distinct product other than components of which made--Entitled to deduction-- CIT v. Sunilbhai S. Kakad (Guj) . . . 427
----Industrial undertaking--Special deduction--Return--Delay in filing return--Whether assessee disqualified for deduction for delay in filing return and audit report--CBDT notification extending date for filing returns and audit report--Whether notification applicable to assessee goes root of matter--Tribunal directed to decide afresh-- Bal Kishan Dhawan (HUF) v. Deputy CIT (P&H) . . . 581
S. 139 --Industrial undertaking--Special deduction--Return--Delay in filing return--Whether assessee disqualified for deduction for delay in filing return and audit report--CBDT notification extending date for filing returns and audit report--Whether notification applicable to assessee goes root of matter--Tribunal directed to decide afresh-- Bal Kishan Dhawan (HUF) v. Deputy CIT (P&H) . . . 581
S. 144 --Best judgment assessment--Revision--Commissioner--Assessees uneducated persons not properly represented before Assessing Officer--Commissioner dismissing revision petitions from assessments and refusing to recall his order--High Court affirming--Supreme Court--No interference with assessment but no interest or penalty to be charged--Tripal Singh v. CIT (SC). . . 511
S. 147 --Reassessment--Notice after four years--Conditions precedent--Failure to furnish material facts necessary for assessment--Material facts disclosed in return--Notice not valid-- Gujarat Carbon and Industries Ltd. v. Asst. CIT (Guj) . . . 464
----Reassessment--Notice--Reasons to believe based on investigation report--No indication in notice that report was not on record at time of completion of original assessment--Position clarified in additional affidavit and not in counter-affidavit--Evidence to show report available and used at time of original assessment--Notice and further proceedings not valid-- Rasalika Trading and Investment Co. P. Ltd. v. Deputy CIT (Delhi) . . . 447
S. 148 --Reassessment--Notice after four years--Conditions precedent--Failure to furnish material facts necessary for assessment--Material facts disclosed in return--Notice not valid-- Gujarat Carbon and Industries Ltd. v. Asst. CIT (Guj) . . . 464
----Reassessment--Notice--Reasons to believe based on investigation report--No indication in notice that report was not on record at time of completion of original assessment--Position clarified in additional affidavit and not in counter-affidavit--Evidence to show report available and used at time of original assessment--Notice and further proceedings not valid-- Rasalika Trading and Investment Co. P. Ltd. v. Deputy CIT (Delhi) . . . 447
S. 153C --Search and seizure--Assessment of third person--Condition precedent--Recording of satisfaction by Assessing Officer having jurisdiction over person in respect of whom search conducted that money or assets discovered during search belong to third person--Recording of satisfaction necessary even if Assessing Officer of both persons is the same--CIT v. Gopi Apartment (All) . . . 411
S. 201(1), (1A) --Deduction of tax at source--Failure to deduct--No period of limitation prescribed for passing order under section 201 treating assessee as in default--Revenue not bound by any reasonable period of limitation for taking action under section 201--Time limit prescribed in section 149 for taking action under section 147 has no application for taking action under section 201-- Bhura Exports Ltd. v. ITO (Cal) . . . 548
----Deduction of tax at source--Order deeming person assessee in default--Limitation for passing order--No time limit specified in Act--Order must be passed within reasonable time--Passing of order has to be within one year from end of financial year in which proceedings under section 201(1) initiated--Same time limit for passing of order under section 201(1A)--DIT (International Taxation) v. Mahindra and Mahindra Ltd. (Bom) . . . 560
S. 264 --Best judgment assessment--Revision--Commissioner--Assessees uneducated persons not properly represented before Assessing Officer--Commissioner dismissing revision petitions from assessments and refusing to recall his order--High Court affirming--Supreme Court--No interference with assessment but no interest or penalty to be charged--Tripal Singh v. CIT (SC). . . 511
S. 269SS --Penalty--Cash loans exceeding specified limit--Loans from agriculturists in remote areas--Transactions genuine--Cancellation of penalty under section 271D--Justified-- CIT v.MAA Khodiyar Construction (Guj) . . . 474
S. 271D --Penalty--Cash loans exceeding specified limit--Loans from agriculturists in remote areas--Transactions genuine--Cancellation of penalty under section 271D--Justified-- CIT v.MAA Khodiyar Construction (Guj) . . . 474
S. 273B --Penalty--Cash loans exceeding specified limit--Loans from agriculturists in remote areas--Transactions genuine--Cancellation of penalty under section 271D--Justified-- CIT v.MAA Khodiyar Construction (Guj) . . . 474
S. 5(1)(iii) --Exemption--Ruler--Annual value of any one palace in occupation of ruler--Scope of section 10(19A)--Section 10(19A) similar to section 5(1)(iii) of Wealth-tax Act--Meaning of “in the occupation†--Part of palace given on rent--Ruler not entitled to exemption in respect of annual value of such part-- CIT v. Maharao Bhim Singh of Kota [FB] (Raj) . . . 485
S. 7 --Wealth-tax--Valuation of asset--Discretion of Assessing Officer to discard valuation determined in accordance with rule 3 and invoke rule 8--Huge difference between value declared by assessee based on valuation for municipal taxes and market value--Assessee itself entering into agreement to sell property for much higher price than declared--Impracticable to apply rule 3--Reference to Valuation Officer and assessment at his valuation proper-- Amrit Banaspati Co. Ltd. v. CWT (SC). . . 515
S. 16A --Wealth-tax--Valuation of asset--Discretion of Assessing Officer to discard valuation determined in accordance with rule 3 and invoke rule 8--Huge difference between value declared by assessee based on valuation for municipal taxes and market value--Assessee itself entering into agreement to sell property for much higher price than declared--Impracticable to apply rule 3--Reference to Valuation Officer and assessment at his valuation proper-- Amrit Banaspati Co. Ltd. v. CWT (SC). . . 515
Sch. III, rr. 3 to 7, 8(a), 20 --Wealth-tax--Valuation of asset--Discretion of Assessing Officer to discard valuation determined in accordance with rule 3 and invoke rule 8--Huge difference between value declared by assessee based on valuation for municipal taxes and market value--Assessee itself entering into agreement to sell property for much higher price than declared--Impracticable to apply rule 3--Reference to Valuation Officer and assessment at his valuation proper-- Amrit Banaspati Co. Ltd. v. CWT (SC). . . 515
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