Four Articles On Important Issues By Leading Tax Experts

 

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The following articles on important topics are available at itatonline.org. A pdf copy of each article is available for download.

The Law on Taxability of Gifts under The Income-tax Act, 1961

The law under sections 2(24)(xii) r.w.s. 56(2)(vii) of the Income-tax Act, 1961 relating to taxation of gifts has several nuances and complications. The author has conducted a detailed study of the subject and explained all the implications of the law with utmost clarity

The Entire Law Relating To Hindu Undivided Family (HUF) Explained

The law relating to Hindu Undivided Families (HUFs) is a complicated branch of law, requiring specialist knowledge. The authors have mastered the subject, identified all the core issues, and explained them in a succinct manner

The Entire Law On The Making Of Wills Explained

Though the law on the making of Wills is important, there is considerable confusion in the minds of even educated persons and some times even amongst tax practitioners as to the scope of the law. To dispel the confusion, the authors have written this guide in an easy to understand format

The Entire Law Relating To Family Settlements Explained

The legal implications of a family settlement, from the perspective of general law, the Transfer of Property Act, the Registration Act, the Income-tax Act, etc has been explained in a succinct manner. All the important case laws on the issue have been cited

The articles are a must-read for all professionals.


A pdf copy of each article is available for download.

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Editor,

 

itatonline.org

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Latest:

India Trade Promotion Organization vs. DGIT (E) (Delhi High Court)

S. 2(15)/ 10(23C)(iv): If the definition of "charitable purpose" is construed literally, it is violative of the principles of equality & unconstitutional. If the dominant object is not to carry on business or trade or commerce, then an incidental or ancillary activity for which a fee is charged does not destroy the character of a charitable institution

ITR Volume 370 : Part 3 (Issue dated : 19-1-2015)

 

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

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

HIGH COURTS

Infrastructure development --Special deduction--Condition precedent--Development of infrastructure facility and deriving of income from such facility--Meaning of infrastructure--Assessee engaged in advertising--Agreement with local authority to construct bus shelters, erect lamp posts and beautify road medians--Income derived from advertisement hoardings on such structure--No development of infrastructure facility and no income derived therefrom--Assessee not entitled to special deduction--Income-tax Act, 1961, s. 80-IA-- CITv. Skyline Advertising P. Ltd. (Karn) . . . 1

PRINT EDITION

ITR Volume 370 : Part 3 (Issue dated : 19-1-2015)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Appeal to Appellate Tribunal --Duty of Tribunal--Appeal should not be disposed of in a light hearted or casual manner--Issue withdrawing deduction in relation to standard assets--Tribunal merely following previous orders and upholding order of Commissioner--Not justified--Tribunal directed to rehear appeal on merits--Income-tax Act, 1961, s. 254(2)-- State Bank of India v. Deputy CIT (Bom) . . . 438

----Opportunity of hearing--Request by assessee by letter for adjournment--Record not showing whether assessee put on notice about the date of hearing--Tribunal ought not to have heard appeals ex parte--To dispose of appeals afresh--Income-tax (Appellate Tribunal) Rules, 1963, r. 25--Income-tax Act, 1961, s. 24(1)(x)-- Ananda Nilayam v. ITO (T & AP) . . . 370

Appeal to Commissioner (Appeals) --Powers of Commissioner (Appeals)--Power to admit additional evidence--Evidence of third parties summoned under sections 131 and 133--Assessing Officer not given opportunity to rebut evidence--Order of Commissioner (Appeals) relying on such evidence--Not valid--Order of Tribunal upholding order of Commissioner (Appeals)--Not valid--Income-tax Act, 1961--Income-tax Rules, 1962, r. 46A-- CIT v. Trimline Vyapaar P. Ltd. (Cal) . . . 373

Business expenditure --Disallowance--Payments subject to deduction of tax at source--Bank providing swiping machine to assessee--Amount punched in swiping machine credited to account of retailer by bank--Bank providing banking services in form of payment and subsequently collecting payment--Bank does not render any service in the nature of agency--Bank not concerned with buying or selling of goods--Disallowance under section 40(a)(ia) not warranted--Principle of doubtful penalisation is applicable and has to be applied strictly--Income-tax Act, 1961, ss. 40(a)(ia), 194H-- CIT v. JDS Apparels P. Ltd. (Delhi) . . . 454

Capital gains --Long-term capital gains--Cost of acquisition--Acquisition of additional floor space index/transferable development right under Development Control Rules--No cost of acquisition incurred in respect of development right--Not a case of sale of development right already embedded in land acquired and owned by assessee--Transfer of transferable development right under a document in favour purchaser--Does not result in capital gains assessable to tax--Income-tax Act, 1961, s. 55(2)-- CIT v. Sambhaji Nagar Co-op. Hsg. Society Ltd. (Bom) . . . 325

Charitable institution --Exemption--Continuation of grant of exemption--Effect of insertion of fourteenth proviso to section 10(23C)(via)--Application after 1-6-2006, to be made during previous year relevant to assessment year--Proviso not applicable to previous year which had already expired before introduction of proviso--Income-tax Act, 1961, s. 10(23C)(via), fourteenth proviso-- Marthoma Medical Mission v. Chief CIT (Ker) . . . 418

Company --Book profits--Computation--Law applicable--Effect of amendment with effect from 1-4-1998--Provision for bad and doubtful debts not deductible from book profits for assessment year 1998-99--Income-tax Act, 1961, s. 115JA-- CIT v. Tamil Nadu Small Industries Development Corporation Ltd. (Mad) . . . 449

Depreciation --Actual cost--Fixed assets--Acquisition of entire business including assets and liabilities for a lump sum amount--Valuation of buildings, boundary wall and other plant and machinery as on date of sale done by surveyor relied on by assessee and seller--Determination of actual cost of depreciable assets on basis of valuation report justified--Income-tax Act, 1961-- DE NORA India Ltd. v. CIT (Delhi) . . . 391

Exemption --Mutuality--Co-operative housing society--Bye-laws of society in consonance with Government resolution--Building heavy repair fund--Contribution made to fund--Not transfer fees--Principle of mutuality applicable--Not liable to tax--Income-tax Act, 1961-- CITv. Darbhanga Mansion CHS Ltd. (Bom) . . . 443

Export --Computer software--Hundred per cent. export-oriented undertaking--Exemption--Conditions precedent--Certificate of approval by STPI--Approval from STPI after end of previous year relevant to assessment year--Question of granting exemption does not arise--Circular No. 1 of 2005, dated 6-1-2005--Industries (Development and Regulation) Act, 1951, s. 14--Income-tax Act, 1961, s. 10B-- CIT v. Live Connection Software Solutions P. Ltd.(Mad) . . . 356

----Special deduction--Business income--Income from other sources--Term deposit placed with bank as condition for availing of credit facility--Deposit for purpose of business--Interest earned from such deposit--Business income--Failure to furnish document for purpose of availing of credit facility before Tribunal--Tribunal directed to consider document afresh--Income-tax Act, 1961, s. 80HHC-- Premier Enterprises v. Deputy CIT (Mad). . . 465

Housing project --Special deduction--Condition precedent--Filing of return on time--Condition mandatory--Income-tax Act, 1961, s. 80-IB(10)-- CIT v. Shelcon Properties P. Ltd. (Cal) . . . 305

Income --Accrual--Meaning of accrual--Property sold by Government undertaking--Consideration to be received in instalments along with interest--Accumulated interest credited to suspense account--No evidence that interest was not realisable--Interest had accrued to assessee--Income-tax Act, 1961-- U. P. Chalchitra Nigam Ltd. v. CIT (All) . . . 379

----Computation of income--Disallowance of expenditure on earning non-taxable income--Mode and method of computing disallowance--Voluntary disallowance--Sufficient funds for making investments in shares and mutual funds--No satisfaction recorded by Assessing Officer before making disallowance as to why voluntary disallowance made by assessee was unreasonable and unsatisfactory--Disallowance not justified--Income-tax Act, 1961, s. 14A-- CIT v. Taikisha Engineering India Ltd. (Delhi) . . . 338

Industrial undertaking --Special deduction--Claim by assessee that Central excise set-off was an export incentive--Assessee not entitled to special deduction in respect of Central excise set-off and sales tax set-off--Income-tax Act, 1961, s. 80-IA-- ADCI Dye Chem P. Ltd. v. Deputy CIT (Guj) . . . 408

----Special deduction--Computation--Manufacture of cold rolled strips--Interest on belated payment--Part of consideration and partakes of the character of price--Interest earned from trade debtors to be treated as profits derived from industrial undertaking--Entitled to deduction--Income-tax Act, 1961, s. 80HH-- CIT v. Surana Strips Ltd. (T & AP) . . . 469

----Special deduction--Manufacture of gold jewellery on job work basis--Job workers undertaking work under supervision and control of assessee and under assessee’s directions--Constitutes manufacturing activity by assessee entitling to deduction--Income-tax Act, 1961, s. 80HHC(3)(a)-- CIT v. Harig India Ltd. (Delhi) . . . 424

Offences and prosecution --False verification in return--Complaint lodged after getting proper sanction--Conviction and sentence confirmed--Liberty to Department to consider application for compounding offence--Income-tax Act, 1961, ss. 276C, 277-- B. Gopi v. G. Thiyagarajan, ITO (Mad) . . . 353

Penalty --Concealment of income--Assessing Officer must record satisfaction during course of assessment proceedings whether or not penalty to be levied--Recording satisfaction in a particular manner or reduce it into writing--Not necessary--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Lotus Constructions (T & AP) . . . 475

----Loans in cash exceeding prescribed limit--Finding that assessee had a reasonable explanation for such loans--Penalty could not be levied under sections 271D and 271E--Income-tax Act, 1961, ss. 269SS, 269T, 271D, 271E-- CIT v. T. Perumal (Indl.) (Mad) . . . 313

----Self-assessment tax--Non-payment of admitted tax--Finding that assessee had no intention to evade tax and paid entire tax--Reduction of quantum of penalty to twenty-five per cent.--Justified--Income-tax Act, 1961, s. 140A(3)-- CIT v. Naresh Kumar Jaggi (Delhi) . . . 401

Precedent --Effect of decision of Supreme Court in Liberty India v. CIT [2009] 317 ITR 218--ADCI Dye Chem P. Ltd. v. Deputy CIT (Guj) . . . 408

----Effect of Supreme Court decision in CIT v. Excel Industries [2013] 358 ITR 295-- U. P. Chalchitra Nigam Ltd. v. CIT (All) . . . 379

Reassessment --Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Interest payments allowed after enquiry in original assessment--Reassessment proceedings after four years on ground that rate of interest on part of borrowings was excessive--No failure to disclose material facts--Reassessment proceedings not valid--Income-tax Act, 1961, ss. 147, 148-- CIT v. Asian Tubes Ltd. (Guj) . . . 414

Revision --Commissioner--Powers--Order prejudicial to Revenue--Recording of satisfaction before issuing notice--Commissioner signing on order-sheet for putting up draft notice under section 263 as well as issuing notice--Sufficient compliance in the matter of calling for, examining records of assessment to consider necessity of issuing notice--Notice valid--Income-tax Act, 1961, s. 263-- Zigma Commodities Pvt. Ltd v. ITO (Cal) . . . 318

Search and seizure --Unexplained investment--Excess gold jewellery--No explanation offered--Instruction relating to seizure of jewellery and ornaments in course of search--Does not state that it should not be treated as unexplained investment in jewellery--Inclusion of excess jewellery other than found in wealth-tax assessment--Justified--Income-tax Act, 1961 s. 153-- V. G. P. Ravidas v. Asst. CIT (Mad) . . . 364

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 10(23C)(via), fourteenth proviso --Charitable institution--Exemption--Continuation of grant of exemption--Effect of insertion of fourteenth proviso to section 10(23C)(via)--Application after 1-6-2006, to be made during previous year relevant to assessment year--Proviso not applicable to previous year which had already expired before introduction of proviso--Marthoma Medical Mission v. Chief CIT (Ker) . . . 418

S. 10B --Export--Computer software--Hundred per cent. export-oriented undertaking--Exemption--Conditions precedent--Certificate of approval by STPI--Approval from STPI after end of previous year relevant to assessment year--Question of granting exemption does not arise--Circular No. 1 of 2005, dated 6-1-2005-- CIT v. Live Connection Software Solutions P. Ltd. (Mad) . . . 356

S. 14A --Income--Computation of income--Disallowance of expenditure on earning non-taxable income--Mode and method of computing disallowance--Voluntary disallowance--Sufficient funds for making investments in shares and mutual funds--No satisfaction recorded by Assessing Officer before making disallowance as to why voluntary disallowance made by assessee was unreasonable and unsatisfactory--Disallowance not justified-- CIT v. Taikisha Engineering India Ltd. (Delhi) . . . 338

S. 24(1)(x) --Appeal to Appellate Tribunal--Opportunity of hearing--Request by assessee by letter for adjournment--Record not showing whether assessee put on notice about the date of hearing--Tribunal ought not to have heard appeals ex parte--To dispose of appeals afresh-- Ananda Nilayam v. ITO (T & AP) . . . 370

S. 40(a)(ia) --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Bank providing swiping machine to assessee--Amount punched in swiping machine credited to account of retailer by bank--Bank providing banking services in form of payment and subsequently collecting payment--Bank does not render any service in the nature of agency--Bank not concerned with buying or selling of goods--Disallowance under section 40(a)(ia) not warranted--Principle of doubtful penalisation is applicable and has to be applied strictly-- CIT v. JDS Apparels P. Ltd. (Delhi) . . . 454

S. 55(2) --Capital gains--Long-term capital gains--Cost of acquisition--Acquisition of additional floor space index/transferable development right under Development Control Rules--No cost of acquisition incurred in respect of development right--Not a case of sale of development right already embedded in land acquired and owned by assessee--Transfer of transferable development right under a document in favour purchaser--Does not result in capital gains assessable to tax-- CIT v. Sambhaji Nagar Co-op. Hsg. Society Ltd. (Bom) . . . 325

S. 80HH --Industrial undertaking--Special deduction--Computation--Manufacture of cold rolled strips--Interest on belated payment--Part of consideration and partakes of the character of price--Interest earned from trade debtors to be treated as profits derived from industrial undertaking--Entitled to deduction-- CIT v. Surana Strips Ltd. (T & AP) . . . 469

S. 80HHC --Export--Special deduction--Business income--Income from other sources--Term deposit placed with bank as condition for availing of credit facility--Deposit for purpose of business--Interest earned from such deposit--Business income--Failure to furnish document for purpose of availing of credit facility before Tribunal--Tribunal directed to consider document afresh-- Premier Enterprises v. Deputy CIT (Mad). . . 465

S. 80HHC(3)(a) --Industrial undertaking--Special deduction--Manufacture of gold jewellery on job work basis--Job workers undertaking work under supervision and control of assessee and under assessee’s directions--Constitutes manufacturing activity by assessee entitling to deduction-- CIT v. Harig India Ltd. (Delhi) . . . 424

S. 80-IA --Industrial undertaking--Special deduction--Claim by assessee that Central excise set-off was an export incentive--Assessee not entitled to special deduction in respect of Central excise set-off and sales tax set-off-- ADCI Dye Chem P. Ltd. v. Deputy CIT (Guj) . . . 408

S. 80-IB(10) --Housing project--Special deduction--Condition precedent--Filing of return on time--Condition mandatory-- CIT v. Shelcon Properties P. Ltd. (Cal) . . . 305

S. 115JA --Company--Book profits--Computation--Law applicable--Effect of amendment with effect from 1-4-1998--Provision for bad and doubtful debts not deductible from book profits for assessment year 1998-99-- CIT v. Tamil Nadu Small Industries Development Corporation Ltd. (Mad) . . . 449

S. 140A(3) --Penalty--Self-assessment tax--Non-payment of admitted tax--Finding that assessee had no intention to evade tax and paid entire tax--Reduction of quantum of penalty to twenty-five per cent.--Justified-- CIT v. Naresh Kumar Jaggi (Delhi) . . . 401

S. 147 --Reassessment--Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Interest payments allowed after enquiry in original assessment--Reassessment proceedings after four years on ground that rate of interest on part of borrowings was excessive--No failure to disclose material facts--Reassessment proceedings not valid-- CIT v. Asian Tubes Ltd. (Guj) . . . 414

S. 148 --Reassessment--Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Interest payments allowed after enquiry in original assessment--Reassessment proceedings after four years on ground that rate of interest on part of borrowings was excessive--No failure to disclose material facts--Reassessment proceedings not valid-- CIT v. Asian Tubes Ltd. (Guj) . . . 414

S. 153 --Search and seizure--Unexplained investment--Excess gold jewellery--No explanation offered--Instruction relating to seizure of jewellery and ornaments in course of search--Does not state that it should not be treated as unexplained investment in jewellery--Inclusion of excess jewellery other than found in wealth-tax assessment--Justified-- V. G. P. Ravidas v. Asst. CIT (Mad) . . . 364

S. 194H --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Bank providing swiping machine to assessee--Amount punched in swiping machine credited to account of retailer by bank--Bank providing banking services in form of payment and subsequently collecting payment--Bank does not render any service in the nature of agency--Bank not concerned with buying or selling of goods--Disallowance under section 40(a)(ia) not warranted--Principle of doubtful penalisation is applicable and has to be applied strictly-- CIT v. JDS Apparels P. Ltd. (Delhi) . . . 454

S. 254(2) --Appeal to Appellate Tribunal--Duty of Tribunal--Appeal should not be disposed of in a light hearted or casual manner--Issue withdrawing deduction in relation to standard assets--Tribunal merely following previous orders and upholding order of Commissioner--Not justified--Tribunal directed to rehear appeal on merits-- State Bank of India v. Deputy CIT(Bom) . . . 438

S. 263 --Revision--Commissioner--Powers--Order prejudicial to Revenue--Recording of satisfaction before issuing notice--Commissioner signing on order-sheet for putting up draft notice under section 263 as well as issuing notice--Sufficient compliance in the matter of calling for, examining records of assessment to consider necessity of issuing notice--Notice valid-- Zigma Commodities Pvt. Ltd v. ITO (Cal) . . . 318

S. 269SS --Penalty--Loans in cash exceeding prescribed limit--Finding that assessee had a reasonable explanation for such loans--Penalty could not be levied under sections 271D and 271E-- CIT v. T. Perumal (Indl.) (Mad) . . . 313

S. 269T --Penalty--Loans in cash exceeding prescribed limit--Finding that assessee had a reasonable explanation for such loans--Penalty could not be levied under sections 271D and 271E-- CIT v. T. Perumal (Indl.) (Mad) . . . 313

S. 271(1)(c) --Penalty--Concealment of income--Assessing Officer must record satisfaction during course of assessment proceedings whether or not penalty to be levied--Recording satisfaction in a particular manner or reduce it into writing--Not necessary-- CIT v. Lotus Constructions (T & AP) . . . 475

S. 271D --Penalty--Loans in cash exceeding prescribed limit--Finding that assessee had a reasonable explanation for such loans--Penalty could not be levied under sections 271D and 271E-- CIT v. T. Perumal (Indl.) (Mad) . . . 313

S. 271E --Penalty--Loans in cash exceeding prescribed limit--Finding that assessee had a reasonable explanation for such loans--Penalty could not be levied under sections 271D and 271E-- CIT v. T. Perumal (Indl.) (Mad) . . . 313

S. 276C --Offences and prosecution--False verification in return--Complaint lodged after getting proper sanction--Conviction and sentence confirmed--Liberty to Department to consider application for compounding offence-- B. Gopi v. G. Thiyagarajan, ITO (Mad) . . . 353

S. 277 --Offences and prosecution--False verification in return--Complaint lodged after getting proper sanction--Conviction and sentence confirmed--Liberty to Department to consider application for compounding offence-- B. Gopi v. G. Thiyagarajan, ITO (Mad) . . . 353

Industries (Development and Regulation) Act, 1951 :

S. 14 --Export--Computer software--Hundred per cent. export-oriented undertaking--Exemption--Conditions precedent--Certificate of approval by STPI--Approval from STPI after end of previous year relevant to assessment year--Question of granting exemption does not arise--Circular No. 1 of 2005, dated 6-1-2005-- CIT v. Live Connection Software Solutions P. Ltd. (Mad) . . . 356

Income-tax (Appellate Tribunal) Rules, 1963 :

R. 25 --Appeal to Appellate Tribunal--Opportunity of hearing--Request by assessee by letter for adjournment--Record not showing whether assessee put on notice about the date of hearing--Tribunal ought not to have heard appeals ex parte--To dispose of appeals afresh--Ananda Nilayam v. ITO (T & AP) . . . 370

Income-tax Rules, 1962 :

R. 46A --Appeal to Commissioner (Appeals)--Powers of Commissioner (Appeals)--Power to admit additional evidence--Evidence of third parties summoned under sections 131 and 133--Assessing Officer not given opportunity to rebut evidence--Order of Commissioner (Appeals) relying on such evidence--Not valid--Order of Tribunal upholding order of Commissioner (Appeals)--Not valid-- CIT v. Trimline Vyapaar P. Ltd. (Cal) . . . 373

 

ITR Volume 370 : Part 4 (Issue dated : 26-1-2015)

 

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

PRINT EDITION

ITR Volume 370 : Part 4 (Issue dated : 26-1-2015)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Appeal to Appellate Tribunal --Tribunal’s decision based on documents and evidence not presented to Assessing Officer or Commissioner (Appeals)--Matter remanded to Assessing Officer--Income-tax Act, 1961--CIT v. Muthoot General Finance (Ker) . . . 543

Best judgment assessment --Best judgment assessment based on documents seized by CBI--Documents not returned to assessee--Principles of natural justice violated--Best judgment assessment was not valid--Income-tax Act, 1961 s. 147-- Mridul Kumar Laskar v.Union of India (Gauhati) . . . 593

Business expenditure --Disallowance--Payments subject to deduction of tax at source--Transportation of coal--Agreement between assessee and non-resident--Sums must be chargeable under Income-tax Act--Payments to non-resident--Director of Income-tax holding amount not assessable in India--Payments to non-resident not liable to deduction of tax at source--Disallowance not justified--Income-tax Act, 1961, ss. 40, 44B, 195-- Anand Transport P. Ltd. v. Asst. CIT (Mad) . . . 524

Capital gains --Long-term capital gains--Exemption--Investment falling under two financial years--Exemption could not be restricted--Income-tax Act, 1961, s. 54EC-- CIT v.Coromandel Industries Ltd. (Mad) . . . 586

----Long-term capital gains--Exemption--Sale of residential property and investment of gains in residential property and bonds--Time of six months from date of transfer for investment--Assessee entitled to exemption in respect of investment Rs. 50 lakhs each in two different financial years within time limit--Income-tax Act, 1961, s. 54EC-- CIT v. C. Jaichander (Mad) . . . 579

Charitable purpose --Charitable trust--Registration--Trust yet to obtain registration--Provision requiring furnishing of report of audited accounts has no application--No subjective satisfaction recorded--Registration denied on ground trust spent low quantum towards charitable activities--Reasons for declining registration unsustainable--Income-tax Rules, 1962 r. 17A, 17B--Income-tax Act, 1961, s. 12AA-- DIT (Exemptions) v. R. J. B. V. Vasudevan Educational and Charitable Trust (Mad) . . . 517

----Exemption--Accumulation of income--Condition precedent--Specification of purpose of accumulation--Whether and in which cases purpose of accumulation declared by assessee to be treated as sufficient--Pure finding of fact--Scheme floated by assessee to work for welfare of its members--Accumulation for further utilisation for objectives of assessee--Finding that purpose was neither vague nor unspecified--No disallowance on account of accumulation of income--Income-tax Act, 1961, s. 11(2)-- DIT (Exemption) v. NBIE Welfare Society (Delhi) . . . 490

Educational institution --Exemption--Capital expenditure incurred for attainment of object of institution--Entitled to exemption--Income-tax Act, 1961, s. 11-- CIT v. Silicon Institute of Technology (Orissa) . . . 567

Exemption --Bank employee--Exit option scheme--Employee serving for more than ten years and at time of retirement more than forty years of age--Second exit option scheme for overall reduction of employees--Employee declaring he had not accepted any commercial employment in any company belonging to same management--Scheme fulfilling conditions in rule 2BA--Ex gratia amount entitled to exemption--Income-tax Rules, 1962, r. 2BA--Income-tax Act, 1961, s. 10(10C)-- CIT v. Appasaheb Baburao Kamble (Karn) . . . 499

----Educational institution--Consideration received on account relinquishment of right in firm--Appellate authorities finding not a transfer and no capital gains tax leviable--Whether it is independent of exemption--Matter remanded--Income-tax Act, 1961, s. 10(23C)(via)-- CIT v.Medical Relief Society of South Kanara (Karn) . . . 497

Industrial undertaking --Special deduction--Condition for entitlement--Assessee should be an industrial undertaking in notified backward area--Whether it is manufacturing or producing or processing--Immaterial--Assessee granted deductions for prior years--Denial of deduction on ground no process of manufacturing involved in relevant assessment year--Not justified--Income-tax Act, 1961, ss. 80HH, 80-I-- CIT v. Shree Processors P. Ltd. (T & AP) . . . 511

Intercorporate dividend --Special deduction--Contract to sell shares not specifically performed--Assessee obtaining dividends and selling shares at reduced price--Alteration of contract permissible--Deduction in respect of dividend allowable--Income-tax Act, 1961, s. 80M-- Maud Tea and Seed Co. Ltd. v. CIT (Cal) . . . 603

Precedent --Effect of Supreme Court decision in GE India Technology Centre P. Ltd. v. CIT[2010] 327 ITR 456 (SC)-- Anand Transport P. Ltd. v. Asst. CIT (Mad) . . . 524

Reassessment --Notice after four years--Conditions precedent--Failure on part of assessee to disclose fully and truly all material facts necessary for assessment, for that assessment year--Reasons for reopening based on assessment records--Reopening of assessment contrary to law--Income-tax Act, 1961, ss. 147, 148-- ACI Oils P. Ltd. v. Deputy CIT (All) . . . 561

Refund --Self-assessment--Interest on refund--Refund of tax paid on self-assessment--Interest payable on such refund--Income-tax Act, 1961, ss. 140A, 244A-- CIT v. Punjab Chemical and Crop Protection Limited (P & H) . . . 481

Revision --Commissioner--Powers--Capital or revenue receipt--Capital gains--Business income--Agency business--Termination of agency business--Assessing Officer wrongly treating receipt as capital gains and applying section 54EC to grant exemption--Consideration for transfer of goodwill received in nature of compensation--Taxable under head “Profits and gains of business or profession†--Revision applying section 28(ii)(c) valid--Income-tax Act, 1961, ss. 28(ii)(c), 45, 263-- Chakiat Agencies Pvt. Ltd. v. Asst. CIT (Mad) . . . 502

----Commissioner--Powers--Nature of transaction in immovable property in Mumbai--Acquisition of three flats--Agreement for sale conferring enforceable right and such right statutorily recognised--Commissioner exercising revisional power on ground agreement for sale confers no title in immovable property--Not valid--Commissioner finding separate indexation needed for two separate sets of agreement, original agreement to sale and deed of rectification--Mere change of opinion--Revision not valid--Income-tax Act, 1961, s. 263--CIT v. Ms. Bina Indrakumar (Bom) . . . 552

Search and seizure --Block assessment--Undisclosed income--Retraction of statement--Relevant documents shown to assessee and assessee not only admitting genuineness of documents but also admitting unaccounted income mentioned therein--Assessee cannot disown statement--Block assessment not based on exclusively upon statement but supported by other documents seized during search--Block assessment valid--Income-tax Act, 1961, s. 158BC-- Y. Ramachandra Reddy v. Addl. CIT (Assessment) (T & AP) . . . 557

Speculative transaction --Stock and share broker--Hedging transactions--Loss due to price of shares continuing to rise--Not speculative loss--Transaction within ambit of exception--Not disallowable--Income-tax Act, 1961, s. 43(5), proviso -- Maud Tea and Seed Co. Ltd. v. CIT(Cal) . . . 603

Transfer of case --Transfer based on document found during search--Assessee denying any dealings with group subjected to search--Assessee not furnished copy of document--Assessee not given opportunity to be heard--Order of transfer not valid--Income-tax Act, 1961, s. 127-- Sachin Joshi v. CIT (Bom) . . . 598

Writ --High Court--Existence of alternative remedy--Not an absolute bar to issue of writ--Constitution of India, art. 226-- Anand Transport P. Ltd. v. Asst. CIT (Mad) . . . 524

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Constitution of India :

Art. 226 --Writ--High Court--Existence of alternative remedy--Not an absolute bar to issue of writ-- Anand Transport P. Ltd. v. Asst. CIT (Mad) . . . 524

Income-tax Act, 1961 :

S. 10(10C) --Exemption--Bank employee--Exit option scheme--Employee serving for more than ten years and at time of retirement more than forty years of age--Second exit option scheme for overall reduction of employees--Employee declaring he had not accepted any commercial employment in any company belonging to same management--Scheme fulfilling conditions in rule 2BA--Ex gratia amount entitled to exemption-- CIT v. Appasaheb Baburao Kamble (Karn) . . . 499

S. 10(23C)(via) --Exemption--Educational institution--Consideration received on account relinquishment of right in firm--Appellate authorities finding not a transfer and no capital gains tax leviable--Whether it is independent of exemption--Matter remanded-- CIT v. Medical Relief Society of South Kanara (Karn) . . . 497

S. 11 --Educational institution--Exemption--Capital expenditure incurred for attainment of object of institution--Entitled to exemption-- CIT v. Silicon Institute of Technology (Orissa) . . . 567

S. 11(2) --Charitable purpose--Exemption--Accumulation of income--Condition precedent--Specification of purpose of accumulation--Whether and in which cases purpose of accumulation declared by assessee to be treated as sufficient--Pure finding of fact--Scheme floated by assessee to work for welfare of its members--Accumulation for further utilisation for objectives of assessee--Finding that purpose was neither vague nor unspecified--No disallowance on account of accumulation of income-- DIT (Exemption) v. NBIE Welfare Society (Delhi) . . . 490

S. 12AA --Charitable purpose--Charitable trust--Registration--Trust yet to obtain registration--Provision requiring furnishing of report of audited accounts has no application--No subjective satisfaction recorded--Registration denied on ground trust spent low quantum towards charitable activities--Reasons for declining registration unsustainable-- DIT (Exemptions) v.R. J. B. V. Vasudevan Educational and Charitable Trust (Mad) . . . 517

S. 28(ii)(c) --Revision--Commissioner--Powers--Capital or revenue receipt --Capital gains--Business income--Agency business--Termination of agency business--Assessing Officer wrongly treating receipt as capital gains and applying section 54EC to grant exemption--Consideration for transfer of goodwill received in nature of compensation--Taxable under head “Profits and gains of business or profession†--Revision applying section 28(ii)(c) valid-- Chakiat Agencies Pvt. Ltd. v. Asst. CIT (Mad) . . . 502

S. 40 --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Transportation of coal--Agreement between assessee and non-resident--Sums must be chargeable under Income-tax Act--Payments to non-resident--Director of Income-tax holding amount not assessable in India--Payments to non-resident not liable to deduction of tax at source--Disallowance not justified-- Anand Transport P. Ltd. v. Asst. CIT (Mad) . . . 524

S. 43(5), proviso --Speculative transaction--Stock and share broker--Hedging transactions--Loss due to price of shares continuing to rise--Not speculative loss--Transaction within ambit of exception--Not disallowable-- Maud Tea and Seed Co. Ltd. v. CIT (Cal) . . . 603

S. 44B --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Transportation of coal--Agreement between assessee and non-resident--Sums must be chargeable under Income-tax Act--Payments to non-resident--Director of Income-tax holding amount not assessable in India--Payments to non-resident not liable to deduction of tax at source--Disallowance not justified-- Anand Transport P. Ltd. v. Asst. CIT (Mad) . . . 524

S. 45 --Revision--Commissioner--Powers--Capital or revenue receipt --Capital gains--Business income--Agency business--Termination of agency business--Assessing Officer wrongly treating receipt as capital gains and applying section 54EC to grant exemption--Consideration for transfer of goodwill received in nature of compensation--Taxable under head “Profits and gains of business or profession†--Revision applying section 28(ii)(c) valid-- Chakiat Agencies Pvt. Ltd. v. Asst. CIT (Mad) . . . 502

S. 54EC --Capital gains--Long-term capital gains--Exemption--Investment falling under two financial years--Exemption could not be restricted-- CIT v. Coromandel Industries Ltd. (Mad) . . . 586

----Capital gains--Long-term capital gains--Exemption--Sale of residential property and investment of gains in residential property and bonds--Time of six months from date of transfer for investment--Assessee entitled to exemption in respect of investment Rs. 50 lakhs each in two different financial years within time limit-- CIT v. C. Jaichander (Mad) . . . 579

S. 80HH --Industrial undertaking--Special deduction--Condition for entitlement--Assessee should be an industrial undertaking in notified backward area--Whether it is manufacturing or producing or processing--Immaterial--Assessee granted deductions for prior years--Denial of deduction on ground no process of manufacturing involved in relevant assessment year--Not justified-- CIT v. Shree Processors P. Ltd. (T & AP) . . . 511

S. 80-I --Industrial undertaking--Special deduction--Condition for entitlement--Assessee should be an industrial undertaking in notified backward area--Whether it is manufacturing or producing or processing--Immaterial--Assessee granted deductions for prior years--Denial of deduction on ground no process of manufacturing involved in relevant assessment year--Not justified-- CIT v. Shree Processors P. Ltd. (T & AP) . . . 511

S. 80M --Intercorporate dividend--Special deduction--Contract to sell shares not specifically performed--Assessee obtaining dividends and selling shares at reduced price--Alteration of contract permissible--Deduction in respect of dividend allowable-- Maud Tea and Seed Co. Ltd. v. CIT (Cal) . . . 603

S. 127 --Transfer of case--Transfer based on document found during search--Assessee denying any dealings with group subjected to search--Assessee not furnished copy of document--Assessee not given opportunity to be heard--Order of transfer not valid-- Sachin Joshi v. CIT (Bom) . . . 598

S. 140A --Refund--Self-assessment--Interest on refund--Refund of tax paid on self-assessment--Interest payable on such refund-- CIT v. Punjab Chemical and Crop Protection Limited (P & H) . . . 481

S. 147 --Best judgment assessment--Best judgment assessment based on documents seized by CBI--Documents not returned to assessee--Principles of natural justice violated--Best judgment assessment was not valid-- Mridul Kumar Laskar v. Union of India (Gauhati) . . . 593

----Reassessment--Notice after four years--Conditions precedent--Failure on part of assessee to disclose fully and truly all material facts necessary for assessment, for that assessment year--Reasons for reopening based on assessment records--Reopening of assessment contrary to law-- ACI Oils P. Ltd. v. Deputy CIT (All) . . . 561

S. 148 --Reassessment--Notice after four years--Conditions precedent--Failure on part of assessee to disclose fully and truly all material facts necessary for assessment, for that assessment year--Reasons for reopening based on assessment records--Reopening of assessment contrary to law-- ACI Oils P. Ltd. v. Deputy CIT (All) . . . 561

S. 158BC --Search and seizure--Block assessment--Undisclosed income--Retraction of statement--Relevant documents shown to assessee and assessee not only admitting genuineness of documents but also admitting unaccounted income mentioned therein--Assessee cannot disown statement--Block assessment not based on exclusively upon statement but supported by other documents seized during search--Block assessment valid--Y. Ramachandra Reddy v. Addl. CIT (Assessment) (T & AP) . . . 557

S. 195 --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Transportation of coal--Agreement between assessee and non-resident--Sums must be chargeable under Income-tax Act--Payments to non-resident--Director of Income-tax holding amount not assessable in India--Payments to non-resident not liable to deduction of tax at source--Disallowance not justified-- Anand Transport P. Ltd. v. Asst. CIT (Mad) . . . 524

S. 244A --Refund--Self-assessment--Interest on refund--Refund of tax paid on self-assessment--Interest payable on such refund-- CIT v. Punjab Chemical and Crop Protection Limited (P & H) . . . 481

S. 263 --Revision--Commissioner--Powers--Capital or revenue receipt--Capital gains--Business income--Agency business--Termination of agency business--Assessing Officer wrongly treating receipt as capital gains and applying section 54EC to grant exemption--Consideration for transfer of goodwill received in nature of compensation--Taxable under head “Profits and gains of business or profession†--Revision applying section 28(ii)(c) valid-- Chakiat Agencies Pvt. Ltd. v. Asst. CIT (Mad) . . . 502

----Revision--Commissioner--Powers--Nature of transaction in immovable property in Mumbai--Acquisition of three flats--Agreement for sale conferring enforceable right and such right statutorily recognised--Commissioner exercising revisional power on ground agreement for sale confers no title in immovable property--Not valid--Commissioner finding separate indexation needed for two separate sets of agreement, original agreement to sale and deed of rectification--Mere change of opinion--Revision not valid-- CIT v. Ms. Bina Indrakumar(Bom) . . . 552

 

Income-tax Rules, 1962 :

R. 2BA --Exemption--Bank employee--Exit option scheme--Employee serving for more than ten years and at time of retirement more than forty years of age--Second exit option scheme for overall reduction of employees--Employee declaring he had not accepted any commercial employment in any company belonging to same management--Scheme fulfilling conditions in rule 2BA--Ex gratia amount entitled to exemption-- CIT v. Appasaheb Baburao Kamble(Karn) . . . 499

R. 17A --Charitable purpose--Charitable trust--Registration--Trust yet to obtain registration--Provision requiring furnishing of report of audited accounts has no application--No subjective satisfaction recorded--Registration denied on ground trust spent low quantum towards charitable activities--Reasons for declining registration unsustainable-- DIT (Exemptions) v.R. J. B. V. Vasudevan Educational and Charitable Trust (Mad) . . . 517

R. 17B --Charitable purpose--Charitable trust--Registration--Trust yet to obtain registration--Provision requiring furnishing of report of audited accounts has no application--No subjective satisfaction recorded--Registration denied on ground trust spent low quantum towards charitable activities--Reasons for declining registration unsustainable-- DIT (Exemptions) v.R. J. B. V. Vasudevan Educational and Charitable Trust (Mad) . . . 517

 

ITR (TRIB) Volume 37 : Part 3 (Issue dated : 19-1-2015)

 

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

 

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Income --Disallowance of expenditure relating to exempt income--Rule 8D not applicable to years prior to 2008-09--Assessee working out disallowance under section 14A--No material to show disallowance computed by assessee unreasonable--Income-tax Act, 1961, s. 14A--Consolidated Finvest and Holdings Ltd. v. Asst. CIT (Delhi) . . . 67

International transactions --Arm’s length price--Determination--Software development and export--Cost plus method--Gross margin for related and unrelated party transactions--Discounting factors to be adopted--Transfer Pricing Officer rejecting discounting factors on project management cost and credit risk--Proper--Direction to Assessing Officer to arrive at arm’s length price based on acceptable discount factors--Income-tax Act, 1961, s. 92CA-- Deputy CIT v. American Megatrends India P. Ltd. (Chennai) . . . 56

Loss --Long term capital loss--Loans granted by assessee to company--Loan converted into redeemable cumulative preference shares--Redemption of 2 per cent redeemable cumulative preference shares resulting in long term capital loss--Department accepting genuineness of transactions in all earlier years--Department cannot treat whole transaction a bogus as last of series of transactions completed--No evidence to show that transaction a sham or bogus--Long term capital loss to be accepted and assessee to be permitted to carry it forward--Income-tax Act, 1961-- Consolidated Finvest and Holdings Ltd. v. Asst. CIT (Delhi) . . . 67

PRINT EDITION

Volume 37 : Part 3 (Issue dated : 19-1-2015)

SUBJECT INDEX TO CASES REPORTED

Appeal to Appellate Tribunal --Competency of appeal by Department--Monetary limit--Instruction No. 5 of 2014 revising monetary limits--Applicable to pending cases--Tax effect less than prescribed limit--Appeal not maintainable--Instruction No. 5 of 2014 dated 10-7-2014--Income-tax Act, 1961, s. 268A-- Deputy CIT v. Piyush Apartment P. Ltd. (Delhi) . . . 340

Business expenditure --Administrative support services fee--Failure by assessee to establish its claim of receiving services--Matter remanded to Transfer Pricing Officer for readjudication--Income-tax Act, 1961-- Cisco Systems Capital (India) P. Ltd. v. Addl. CIT(Bangalore) . . . 343

----Depreciation--Vehicles used by employees for personal purpose--Depreciation allowable--Expenditure in maintenance of vehicles used by employees--Allowable--Income-tax Act, 1961-- Microsoft Corporation India P. Ltd. v. Addl. CIT (Delhi) . . . 290

----Disallowance--Excessive and unreasonable payments--Administrative support services fee--Company rendering services to assessee not in category of persons enumerated under section 40A(2)(b)--Failure to point out any particular expenditure excessive or unreasonable--Assessing Officer cannot make an ad hoc disallowance--Income-tax Act, 1961, s. 40A(2)(b)-- Cisco Systems Capital (India) P. Ltd. v. Addl. CIT (Bangalore) . . . 343

----Disallowance--Payments exceeding prescribed limit otherwise than by crossed cheques or crossed bank drafts--Assessee having no bank account at place of purchase--No doubt as to genuineness of purchases--Disallowance not justified--Income-tax Act, 1961, s. 40A(3)-- Radha Shyam Panda v. ITO (Cuttack) . . . 386

----Travelling and conveyance expenses--Commissioner receiving no remand report from Assessing Officer--No evidence for additions--Matter remanded for fresh adjudication--Income-tax Act, 1961-- Deputy CIT v. Yuvanshankar Raja (Chennai) . . . 355

Company --Book profits--Computation--Provision for doubtful debts part of operating expenses--Direction to Transfer Pricing Officer to recompute margins of comparable companies by including provision for bad and doubtful debts as operating expenses for computing profit and loss of comparable companies--Income-tax Act, 1961-- Kenexa Technologies P. Ltd. v. Deputy CIT (Hyd) . . . 306

Depreciation --Rate of depreciation--Higher rate--Routers and switches--Routers and switches integrated with computers to be treated as computer system--Entitled to higher rate of depreciation--Income-tax Act, 1961, s. 32-- Cisco Systems Capital (India) P. Ltd. v. Addl. CIT (Bangalore) . . . 343

----Rate of depreciation--ITG networking equipment--Included in block of computers--Entitled to higher rate of depreciation--Income-tax Act, 1961, s. 32-- Microsoft Corporation India P. Ltd. v. Addl. CIT (Delhi) . . . 290

Donation for charitable purpose --Special deduction--Conditions precedent for approval of institution--Assessee must fulfil conditions of clauses (i) to (v) of section 80G(5)--If objects charitable no right to deny approval--Registration under section 12AA is sufficient proof--Director of Income-tax rejecting application for grant of approval under section 80G(5)--Not proper--Income-tax Act, 1961, s. 80G(5)-- Sri Ramanuja Sahasrabdi v. DIT (Exemptions)(Hyd) . . . 303

Exemption --Export--Exemption under section 10B--Assessee having export-oriented unit and other units--Assessing Officer allocating part of expenses of other units to export oriented units on basis of percentage turnover--Expenses incurred at other units having no connection with export oriented units--Expenses of other units cannot be allocated to export oriented units--Assessee eligible for full claim under section 10B--Income-tax Act, 1961, s. 10B-- GTL Ltd. v. Asst. CIT (Mumbai) . . . 376

Income --Accrual--Grants--Income from internal resources--Assessee to meet all expenses from amounts given by Government grant--Amount of other income adjusted by Government against grant to be considered as part of grant and not chargeable to tax--Amount not adjusted by Government is not grant and chargeable to tax--Matter remanded--Income-tax Act, 1961-- Inland Waterways Authority of India v. Addl. CIT (Delhi) . . . 332

----Addition on basis of discrepancy in remuneration received for two films--Basis for making addition “receipt†contradictory to findings of Assessing Officer--Each fact requiring detailed verification--Matter remanded--Income-tax Act, 1961-- Deputy CIT v. Yuvanshankar Raja (Chennai) . . . 355

Income from undisclosed sources --Cash deposits in bank--Assessee recording remuneration received in cash in books of account and depositing it in bank--Cannot be considered as unaccounted money--Income-tax Act, 1961-- Deputy CIT v. Yuvanshankar Raja (Chennai) . . . 355

Interest on borrowed capital --Assessee advancing interest-free funds to sister concern from cash credit account--Whether advance given out of assessee’s own funds to be determined--No addition required if assessee substantiate its claim--Matter remanded--Income-tax Act, 1961, s. 36(1)(iii)--Radha Shyam Panda v. ITO (Cuttack) . . . 386

International transactions --Arm’s length price--Computation--Operational costs--Foreign exchange loss to be considered as operative in nature--Included in profit level indicator of assessee--Direction to Transfer Pricing Officer to consider only foreign exchange loss attributable to associated enterprises transactions--Matter remanded--Income-tax Act, 1961--Kenexa Technologies P. Ltd. v. Deputy CIT (Hyd) . . . 306

----Arm’s length price--Determination--Comparable uncontrolled price method--Price to be treated as at arm’s length price if price paid for controlled transactions same as price paid for uncontrolled transactions under similar circumstances--Comparable price can be in terms of formulae, including interest rate, for computing amount--Price to be treated as arm’s length price when pricing mechanism for associated enterprise and independent enterprise is same--Income-tax Rules, 1962, r. 10BA-- Toll Global Forwarding India P. Ltd. v. Deputy CIT (Delhi) . . . 391

----Arm’s length price--Determination--Marketing support services--Selection of comparables--Engineering services rendered by five comparables--Functionally different and not comparable--Matter remanded to Transfer Pricing Officer for decision afresh--Income-tax Act, 1961, s. 92CA-- Microsoft Corporation India P. Ltd. v. Addl. CIT (Delhi) . . . 290

----Arm’s length price--Determination--Software development services--Selection of comparables--Functionally dissimilar companies to be excluded--Software product companies not comparable with companies rendering software services--Segmental information for associated and non-associated enterprises--Transfer Pricing Officer to verify whether assessee maintained separate books of account which were audited by auditors--Matter remanded--Income-tax Act, 1961, s. 92CA-- Kenexa Technologies P. Ltd. v. Deputy CIT (Hyd) . . . 306

----Transfer pricing--Arm’s length price--Working capital adjustment--Requiring verification by Transfer Pricing Officer--Matter remanded--Income-tax Rules, 1962, r. 10B--Kenexa Technologies P. Ltd. v. Deputy CIT (Hyd) . . . 306

Reassessment --Notice--Condition precedent--Reason to believe income had escaped assessment--Details filed by assessee examined by Assessing Officer and Commissioner in assessment proceedings--In current assessment year Department examining details and coming to different conclusion--No reason to believe income had escaped assessment to reopen proceedings--Initiation of reassessment proceedings invalid--Income-tax Act, 1961, ss. 10B, 148-- GTL Ltd. v. Asst. CIT (Mumbai) . . . 376

Search and seizure --Income on suspense account--Regular transactions duly recorded in books of account--No infirmity deletion of addition--Income-tax Act, 1961-- Deputy CIT v. Yuvanshankar Raja (Chennai) . . . 355

----Undisclosed income--Date of search falling with financial year 2005-06 relevant to assessment year 2006-07--Source of income can be examined only for assessment year 2006-07--Income-tax Act, 1961-- Deputy CIT v. Yuvanshankar Raja (Chennai) . . . 355

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961

S. 10B --Exemption--Export--Exemption under section 10B--Assessee having export-oriented unit and other units--Assessing Officer allocating part of expenses of other units to export oriented units on basis of percentage turnover--Expenses incurred at other units having no connection with export oriented units--Expenses of other units cannot be allocated to export oriented units--Assessee eligible for full claim under section 10B-- GTL Ltd. v. Asst. CIT(Mumbai) . . . 376

----Reassessment--Notice--Condition precedent--Reason to believe income had escaped assessment--Details filed by assessee examined by Assessing Officer and Commissioner in assessment proceedings--In current assessment year Department examining details and coming to different conclusion--No reason to believe income had escaped assessment to reopen proceedings--Initiation of reassessment proceedings invalid-- GTL Ltd. v. Asst. CIT(Mumbai) . . . 376

S. 32 --Depreciation--Rate of depreciation--Higher rate--Routers and switches--Routers and switches integrated with computers to be treated as computer system--Entitled to higher rate of depreciation-- Cisco Systems Capital (India) P. Ltd. v. Addl. CIT (Bangalore) . . . 343

----Depreciation--Rate of depreciation--ITG networking equipment--Included in block of computers--Entitled to higher rate of depreciation-- Microsoft Corporation India P. Ltd. v. Addl. CIT (Delhi) . . . 290

S. 36(1)(iii) --Interest on borrowed capital--Assessee advancing interest- free funds to sister concern from cash credit account--Whether advance given out of assessee’s own funds to be determined--No addition required if assessee substantiate its claim--Matter remanded-- Radha Shyam Panda v. ITO (Cuttack) . . . 386

S. 40A(2)(b) --Business expenditure--Disallowance--Excessive and unreasonable payments--Administrative support services fee--Company rendering services to assessee not in category of persons enumerated under section 40A(2)(b)--Failure to point out any particular expenditure excessive or unreasonable--Assessing Officer cannot make an ad hoc disallowance-- Cisco Systems Capital (India) P. Ltd. v. Addl. CIT (Bangalore) . . . 343

S. 40A(3) --Business expenditure--Disallowance--Payments exceeding prescribed limit otherwise than by crossed cheques or crossed bank drafts--Assessee having no bank account at place of purchase--No doubt as to genuineness of purchases--Disallowance not justified-- Radha Shyam Panda v. ITO (Cuttack) . . . 386

S. 80G(5) --Donation for charitable purpose--Special deduction--Conditions precedent for approval of institution--Assessee must fulfil conditions of clauses (i) to (v) of section 80G(5)--If objects charitable no right to deny approval--Registration under section 12AA is sufficient proof--Director of Income-tax rejecting application for grant of approval under section 80G(5)--Not proper-- Sri Ramanuja Sahasrabdi v. DIT (Exemptions) (Hyd) . . . 303

S. 92CA --International transactions--Arm’s length price--Determination--Marketing support services--Selection of comparables--Engineering services rendered by five comparables--Functionally different and not comparable--Matter remanded to Transfer Pricing Officer for decision afresh-- Microsoft Corporation India P. Ltd. v. Addl. CIT (Delhi) . . . 290

----International transactions--Arm’s length price--Determination--Software development services--Selection of comparables--Functionally dissimilar companies to be excluded--Software product companies not comparable with companies rendering software services--Segmental information for associated and non-associated enterprises--Transfer Pricing Officer to verify whether assessee maintained separate books of account which were audited by auditors--Matter remanded-- Kenexa Technologies P. Ltd. v. Deputy CIT (Hyd) . . . 306

S. 148 --Reassessment--Notice--Condition precedent--Reason to believe income had escaped assessment--Details filed by assessee examined by Assessing Officer and Commissioner in assessment proceedings--In current assessment year Department examining details and coming to different conclusion--No reason to believe income had escaped assessment to reopen proceedings--Initiation of reassessment proceedings invalid-- GTL Ltd. v. Asst. CIT (Mumbai) . . . 376

S. 268A --Appeal to Appellate Tribunal--Competency of appeal by Department--Monetary limit--Instruction No. 5 of 2014 revising monetary limits--Applicable to pending cases--Tax effect less than prescribed limit--Appeal not maintainable--Instruction No. 5 of 2014 dated 10-7-2014-- Deputy CIT v. Piyush Apartment P. Ltd. (Delhi) . . . 340

Income-tax Rules, 1962

R. 10B --International transactions--Transfer pricing--Arm’s length price--Working capital adjustment--Requiring verification by Transfer Pricing Officer--Matter remanded-- Kenexa Technologies P. Ltd. v. Deputy CIT (Hyd) . . . 306

R. 10BA --International transactions--Arm’s length price--Determination--Comparable uncontrolled price method--Price to be treated as at arm’s length price if price paid for controlled transactions same as price paid for uncontrolled transactions under similar circumstances--Comparable price can be in terms of formulae, including interest rate, for computing amount--Price to be treated as arm’s length price when pricing mechanism for associated enterprise and independent enterprise is same-- Toll Global Forwarding India P. Ltd. v. Deputy CIT (Delhi) . . . 391