INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
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
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
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
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
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