ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Income --Accrual of income--Time of accrual--Agreement for supply of technical know-how--Termination of agreement--Provision for continuation of use of technical know-how for a further period of three years--No new technical know-how--Lump sum paid for continued user of technical know-how--Amount entered in accounts for three years--Not conclusive--Amount accrued and assessable in year of receipt--Income-tax Act, 1961-- New Holland Tractors (India) P. Ltd. v. CIT (Delhi) . . . 35
Interest on borrowed capital --Disallowance on ground loan given for non-business purposes out of interest-bearing funds--Books of account neither produced before Assessing Officer nor before Commissioner (Appeals)--No steps taken to bring evidence on record even before Tribunal--Non-co-operative attitude of assessee--Tribunal finding assessee had not made out case for remanding matter to Assessing Officer--Justified--Income-tax Act, 1961-- Poonam Dyeing and Ptg. Mills Pvt. Ltd. v. ITO (Guj) . . . 21
Penalty --Concealment of income--Lump sum received on termination of agreement disclosed--Claim that amount was assessable over a period of three years--Rejection of claim--No concealment of income--Penalty could not be levied--Income-tax Act, 1961, s. 271(1)(c)-- New Holland Tractors (India) P. Ltd. v. CIT (Delhi) . . . 35
Reassessment --Notice--Validity of notice--Reasons for notice must be read as a whole--Notice after four years--Failure to disclose material facts necessary for assessment--Duty to disclose material facts fully and truly--Finding during income-tax survey in subsequent year that expenditure had been allowed in original assessment in respect of bogus transaction--Notice after four years--Valid--Income-tax Act, 1961, ss. 147, 148-- Nickunj Eximp Enterprises P. Ltd. v. Asst. CIT (Bom) . . . 25
ITR Volume 370 : Part 5 (Issue dated : 2-2-2015)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal to Appellate Tribunal --Powers of Tribunal--Power to admit additional evidence--Application for admission of additional evidence six years after assessment during penalty proceedings--No credible evidence and no explanation for delay in application--Rejection of application--Justified--Income-tax Act, 1961, s. 254-- Jawahar Lal Jain (HUF) v. CIT (P&H) . . . 712
Business --Business income--Remission or cessation of liability--Cessation of sales tax liability--Not liable to tax--Income-tax Act, 1961, s. 41(1)-- CIT v. Colgate Palmolive (India) Ltd. (Bom) . . . 728
Business expenditure --Deduction only on actual payment--Assessee importing sterline fatty acid--Contractual trading liability incurred in nature of additional cost of material--Contingent liability--Not an allowable deduction--Income-tax Act, 1961, s. 43B-- Oswal Agro Mills Ltd. v.CIT (Delhi) . . . 676
----Disallowance--Failure to deduct tax at source on payments--Contract of assessee to transport gas--Freight charges paid to sub-contractors--Assessee not deducting tax at source on freight payments to sub-contractors--Entire expenditure to be disallowed--Income-tax Act, 1961, ss. 40(a)(ia), 194C-- Palam Gas Service v. CIT (HP) . . . 740
Business loss --Capital or revenue loss--Devaluation of Indian rupee--Loss incurred on account of devaluation of rupee--No disallowance could be made--Income-tax Act, 1961--Oswal Agro Mills Ltd. v. CIT (Delhi) . . . 676
----Manufacture of and trade in oral care products--Investment in 100 per cent. subsidiary--Investment for purposes of business--Loss on sale of investment--Business loss--Income-tax Act, 1961-- CIT v. Colgate Palmolive (India) Ltd. (Bom) . . . 728
Capital or revenue expenditure --One-time lump sum payment for use of technology for a period of six years--Is licence fee for permitting assessee to use technology--Licence neither transferable nor payment recoverable--No accretion to capital asset--No enduring benefit--Revenue expenditure--Income-tax Act, 1961-- Timken India Ltd. v. CIT (Cal) . . . 656
Charitable purpose --Charitable trust--Registration--Commissioner to look into actual activity and main activity of trust--Assessee-trust running posh school for children of non-resident Indians on commercial lines under guise of charitable purpose--Not entitled to registration--Income-tax Act, 1961, s. 12A-- Dawn Educational Charitable Trust v. CIT (Ker) . . . 724
Co-operative society --Special deduction--Effect of sub-section (4) of section 80P--Multi-purpose co-operative credit society registered under Karnataka Act--Sub-section (4) of section 80P not applicable--Society entitled to special deduction--Income-tax Act, 1961, s. 80P-- Venugram Multipurpose Co-operative Credit Society Ltd. v. ITO (Karn) . . . 636
Deduction of tax at source --Works contract--Sale--Distinction--Assessee purchasing chassis and entrusting agency for building bus--Building bus bodies needs lot of expertise, experience and technical know-how--Activity undertaken by assessee not a works contract--No tax deduction at source required--Income-tax Act, 1961, s. 194C-- CIT v. A. P. State Road Transport Corporation (T & AP) . . . 621
Dividend --Deemed dividend--Assessee holding more than 10 per cent. of equity capital of two private limited companies--Lending of money not part of business of companies nor substantial part of business--No organised course of activity involving dealings with any one else except for assessee--Loan to assessee--Exclusionary clause not applicable--Income-tax Act, 1961, s. 2(22)(e)-- Shashi Pal Agarwal v. CIT (All) . . . 720
Industrial undertaking --Special deduction--Computation of deduction under section 80-I--Sections 80HH and 80-I are independent--Assessee entitled to deduction under section 80-I without suffering deduction under section 80HH--Income-tax Act, 1961, ss. 80HH, 80-I-- CITv. Unipatch Rubber Ltd. (Delhi) . . . 685
----Special deduction--Condition precedent--Manufacture of article--Meaning of manufacture--Processing of plain glazed ceramic tiles--Amounts to manufacture--Assessee entitled to special deduction--Income-tax Act, 1961, s. 80-IA-- CIT v. Murudeshwar Decor Ltd. (Karn) . . . 626
Penalty --Concealment of income--Search and seizure--Discrepancy in accounts noted in search proceedings--Surrender of amount--Assessment completed and accepted--Levy of penalty--Valid--Income-tax Act, 1961, s. 271(1)(c)-- Jawahar Lal Jain (HUF) v. CIT (P&H) . . . 712
Reassessment --Notice--†Escapement of income†, meaning of--All information, documents or records relating to assessee available before Assessing Officer--Reasons for notice showing discovery of new facts from existing records--Mere change of opinion--Not escapement of income--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Debashis Moulik v. Asst. CIT (Cal) . . . 660
----Notice--Subsidy treated as a capital receipt in section 263 proceedings for assessment year 2003-04 and matter within knowledge of Department--Reopening of assessments for subsequent years on ground receipt of subsidy not fulfilling requirement of capital receipt--Not valid--Income-tax Act, 1961, ss. 147, 148-- Man Mohan Kedia v. ITO (Cal) . . . 649
----Notice--Validity--Reason to believe income has escaped assessment--Failure to assess income due to mistake by Assessing Officer--Notice valid--Income-tax Act, 1961, ss. 147, 148--Double Taxation Avoidance Agreement between India and U.K., art. 14-- B. S. Shantharaju v. CIT (Karn) . . . 617
----Notice after four years--Condition precedent--Understatement of closing stock--Balance-sheet and audit report showing closing stock not understated--Assessing Officer believing no income escaped and disagreeing with audit objection yet issuing notice--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- AVTEC Ltd. v. Deputy CIT (Delhi) . . . 611
Rebate --Securities transactions tax--Trading in shares and investment--Assessee’s total income in previous year including income arising from taxable securities transactions--Assessee entitled to deduction from amount of income-tax on such income--Income-tax Act, 1961, s. 88E-- CIT v. Manish D. Innani (Bom) . . . 679
Recovery of tax --Private company--Recovery of tax from directors of private company--Conditions precedent--Tax not recoverable from company and non-recovery attributable to gross negligence, misfeasance or breach of duty by directors--Recovery proceedings on ground of non-filing of returns by company--Order under section 179 not valid--Income-tax Act, 1961, s. 179-- Ram Prakash Singeshwar Rungta v. ITO (Guj) . . . 641
----Stay of recovery proceedings--Power to grant stay--Discretionary power--Factors to be considered--Decision against assessee in prior years on similar issue--No evidence of financial hardship--Conditional stay granted in view of pending appeal--Income-tax Act, 1961, s. 220-- Vodafone Cellular Ltd. v. CIT (Appeals) (Mad) . . . 750
Rectification of mistakes --Debatable point of law--Not a mistake apparent from record--Doctrine of merger--Weighted deduction--Assessing Officer while implementing first appellate order not entitled to review his earlier order--Assessing Officer on basis of new facts cannot pass new order unless order of appellate order challenged or modified--Income-tax Act, 1961, ss. 35C, 154-- Gujarat State Seeds Corporation Ltd. v. ITO (OSD)(Guj) . . . 666
Refund --Interest on excess refund--Refund granted prior to 1-6-2003 but proceedings for assessment completed after 1-6-2003--Interest payable by assessee--Income-tax Act, 1961, s. 234D-- CIT v. Colgate Palmolive (India) Ltd. (Bom) . . . 728
Revision --Commissioner--Powers--Unaccounted purchases and sales--Addition by Commissioner on basis of statement before excise authorities in context of levy of excise duty on unaccounted production--Excise authority deleting addition and deletion affirmed by Tribunal--No material to conclude assessee made unexplained sales or purchases--Revision not valid--Income-tax Act, 1961, s. 263-- CIT v. Arora Alloys Ltd. (P&H) . . . 732
Search and seizure --Block assessment--Assessment of third person--Condition precedent--Assessing Officer of person in respect of whom search conducted must record his satisfaction that undisclosed income belonged to such third person--Failure to record reasons--Notice under section 158BD not valid--Income-tax Act, 1961, ss. 158BC, 158BD--CIT v. Champakbhai Mohanbhai Patel (Guj) . . . 700
----Block assessment--Assessment of third persons--Limitation--Notice to be issued immediately after completion of assessment of persons in respect of whom search conducted--Notice issued to third person more than a year after completion of assessments of persons in respect of whom search conducted--Notice not valid--Income-tax Act, 1961, s. 158BD-- CIT v. Bharat Bhushan Jain (Delhi) . . . 695
----Block assessment--Assessment of third person--Satisfaction of Assessing Officer of person searched that undisclosed income discovered during search belonged to third person--Opinion not formed in terms of section 158BB--Block assessment not valid--Income-tax Act, 1961, s. 158BB-- CIT v. Manoj Bansal (Delhi) . . . 704
Survey --Statements recorded during survey--Evidentiary value of--Understatement of sale consideration--Assessment solely on basis of statements recorded during survey--Statements retracted--Specific plea that statements recorded from partners by applying pressure--Retracted statement cannot constitute the sole basis for fastening liability--Assessments not valid--Income-tax Act, 1961, s. 132-- Gajjam Chinna Yellappa v. ITO (T & AP) . . . 671
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Double Taxation Avoidance Agreement between India and U.K. :
Art. 14 --Reassessment--Notice--Validity--Reason to believe income has escaped assessment--Failure to assess income due to mistake by Assessing Officer--Notice valid-- B. S. Shantharaju v. CIT (Karn) . . . 617
S. 2(22)(e) --Dividend--Deemed dividend--Assessee holding more than 10 per cent. of equity capital of two private limited companies--Lending of money not part of business of companies nor substantial part of business--No organised course of activity involving dealings with any one else except for assessee--Loan to assessee--Exclusionary clause not applicable-- Shashi Pal Agarwal v. CIT (All) . . . 720
S. 12A --Charitable purpose--Charitable trust--Registration--Commissioner to look into actual activity and main activity of trust--Assessee-trust running posh school for children of non-resident Indians on commercial lines under guise of charitable purpose--Not entitled to registration-- Dawn Educational Charitable Trust v. CIT (Ker) . . . 724
S. 35C --Rectification of mistakes--Debatable point of law--Not a mistake apparent from record--Doctrine of merger--Weighted deduction--Assessing Officer while implementing first appellate order not entitled to review his earlier order--Assessing Officer on basis of new facts cannot pass new order unless order of appellate order challenged or modified--Gujarat State Seeds Corporation Ltd. v. ITO (OSD) (Guj) . . . 666
S. 40(a)(ia) --Business expenditure--Disallowance--Failure to deduct tax at source on payments--Contract of assessee to transport gas--Freight charges paid to sub-contractors--Assessee not deducting tax at source on freight payments to sub-contractors--Entire expenditure to be disallowed-- Palam Gas Service v. CIT (HP) . . . 740
S. 41(1) --Business--Business income--Remission or cessation of liability--Cessation of sales tax liability--Not liable to tax-- CIT v. Colgate Palmolive (India) Ltd. (Bom) . . . 728
S. 43B --Business expenditure--Deduction only on actual payment--Assessee importing sterline fatty acid--Contractual trading liability incurred in nature of additional cost of material--Contingent liability--Not an allowable deduction-- Oswal Agro Mills Ltd. v. CIT (Delhi) . . . 676
S. 80HH --Industrial undertaking--Special deduction--Computation of deduction under section 80-I--Sections 80HH and 80-I are independent--Assessee entitled to deduction under section 80-I without suffering deduction under section 80HH-- CIT v. Unipatch Rubber Ltd. (Delhi) . . . 685
S. 80-I --Industrial undertaking--Special deduction--Computation of deduction under section 80-I--Sections 80HH and 80-I are independent--Assessee entitled to deduction under section 80-I without suffering deduction under section 80HH-- CIT v. Unipatch Rubber Ltd. (Delhi) . . . 685
S. 80-IA --Industrial undertaking--Special deduction--Condition precedent--Manufacture of article--Meaning of manufacture--Processing of plain glazed ceramic tiles--Amounts to manufacture--Assessee entitled to special deduction-- CIT v. Murudeshwar Decor Ltd.(Karn) . . . 626
S. 80P --Co-operative society--Special deduction--Effect of sub-section (4) of section 80P--Multi-purpose co-operative credit society registered under Karnataka Act--Sub-section (4) of section 80P not applicable--Society entitled to special deduction-- Venugram Multipurpose Co-operative Credit Society Ltd. v. ITO (Karn) . . . 636
S. 88E --Rebate--Securities transactions tax--Trading in shares and investment--Assessee’s total income in previous year including income arising from taxable securities transactions--Assessee entitled to deduction from amount of income-tax on such income--CIT v. Manish D. Innani (Bom) . . . 679
S. 132 --Survey--Statements recorded during survey--Evidentiary value of--Understatement of sale consideration--Assessment solely on basis of statements recorded during survey--Statements retracted--Specific plea that statements recorded from partners by applying pressure--Retracted statement cannot constitute the sole basis for fastening liability--Assessments not valid-- Gajjam Chinna Yellappa v. ITO (T & AP) . . . 671
S. 147 --Reassessment--Notice--†Escapement of income†, meaning of--All information, documents or records relating to assessee available before Assessing Officer--Reasons for notice showing discovery of new facts from existing records--Mere change of opinion--Not escapement of income--Notice not valid-- Debashis Moulik v. Asst. CIT (Cal) . . . 660
----Reassessment--Notice--Subsidy treated as a capital receipt in section 263 proceedings for assessment year 2003-04 and matter within knowledge of Department--Reopening of assessments for subsequent years on ground receipt of subsidy not fulfilling requirement of capital receipt--Not valid-- Man Mohan Kedia v. ITO (Cal) . . . 649
----Reassessment--Notice--Validity--Reason to believe income has escaped assessment--Failure to assess income due to mistake by Assessing Officer--Notice valid-- B. S. Shantharaju v. CIT (Karn) . . . 617
----Reassessment--Notice after four years--Condition precedent--Understatement of closing stock--Balance-sheet and audit report showing closing stock not understated--Assessing Officer believing no income escaped and disagreeing with audit objection yet issuing notice--Notice not valid-- AVTEC Ltd. v. Deputy CIT (Delhi) . . . 611
S. 148 --Reassessment--Notice--†Escapement of income†, meaning of--All information, documents or records relating to assessee available before Assessing Officer--Reasons for notice showing discovery of new facts from existing records--Mere change of opinion--Not escapement of income--Notice not valid-- Debashis Moulik v. Asst. CIT (Cal) . . . 660
----Reassessment--Notice--Subsidy treated as a capital receipt in section 263 proceedings for assessment year 2003-04 and matter within knowledge of Department--Reopening of assessments for subsequent years on ground receipt of subsidy not fulfilling requirement of capital receipt--Not valid-- Man Mohan Kedia v. ITO (Cal) . . . 649
----Reassessment--Notice--Validity--Reason to believe income has escaped assessment--Failure to assess income due to mistake by Assessing Officer--Notice valid-- B. S. Shantharaju v. CIT (Karn) . . . 617
----Reassessment--Notice after four years--Condition precedent--Understatement of closing stock--Balance-sheet and audit report showing closing stock not understated--Assessing Officer believing no income escaped and disagreeing with audit objection yet issuing notice--Notice not valid-- AVTEC Ltd. v. Deputy CIT (Delhi) . . . 611
S. 154 --Rectification of mistakes--Debatable point of law--Not a mistake apparent from record--Doctrine of merger--Weighted deduction--Assessing Officer while implementing first appellate order not entitled to review his earlier order--Assessing Officer on basis of new facts cannot pass new order unless order of appellate order challenged or modified--Gujarat State Seeds Corporation Ltd. v. ITO (OSD) (Guj) . . . 666
S. 158BB --Search and seizure--Block assessment--Assessment of third person--Satisfaction of Assessing Officer of person searched that undisclosed income discovered during search belonged to third person--Opinion not formed in terms of section 158BB--Block assessment not valid-- CIT v. Manoj Bansal (Delhi) . . . 704
S. 158BC --Search and seizure--Block assessment--Assessment of third person--Condition precedent--Assessing Officer of person in respect of whom search conducted must record his satisfaction that undisclosed income belonged to such third person--Failure to record reasons--Notice under section 158BD not valid-- CIT v. Champakbhai Mohanbhai Patel(Guj) . . . 700
S. 158BD --Search and seizure--Block assessment--Assessment of third person--Condition precedent--Assessing Officer of person in respect of whom search conducted must record his satisfaction that undisclosed income belonged to such third person--Failure to record reasons--Notice under section 158BD not valid-- CIT v. Champakbhai Mohanbhai Patel(Guj) . . . 700
----Search and seizure--Block assessment--Assessment of third persons--Limitation--Notice to be issued immediately after completion of assessment of persons in respect of whom search conducted--Notice issued to third person more than a year after completion of assessments of persons in respect of whom search conducted--Notice not valid-- CIT v.Bharat Bhushan Jain (Delhi) . . . 695
S. 179 --Recovery of tax--Private company--Recovery of tax from directors of private company--Conditions precedent--Tax not recoverable from company and non-recovery attributable to gross negligence, misfeasance or breach of duty by directors--Recovery proceedings on ground of non-filing of returns by company--Order under section 179 not valid-- Ram Prakash Singeshwar Rungta v. ITO (Guj) . . . 641
S. 194C --Business expenditure--Disallowance--Failure to deduct tax at source on payments--Contract of assessee to transport gas--Freight charges paid to sub-contractors--Assessee not deducting tax at source on freight payments to sub-contractors--Entire expenditure to be disallowed-- Palam Gas Service v. CIT (HP) . . . 740
----Deduction of tax at source--Works contract--Sale--Distinction--Assessee purchasing chassis and entrusting agency for building bus--Building bus bodies needs lot of expertise, experience and technical know-how--Activity undertaken by assessee not a works contract--No tax deduction at source required-- CIT v. A. P. State Road Transport Corporation (T & AP) . . . 621
S. 220 --Recovery of tax--Stay of recovery proceedings--Power to grant stay--Discretionary power--Factors to be considered--Decision against assessee in prior years on similar issue--No evidence of financial hardship--Conditional stay granted in view of pending appeal--Vodafone Cellular Ltd. v. CIT (Appeals) (Mad) . . . 750
S. 234D --Refund--Interest on excess refund--Refund granted prior to 1-6-2003 but proceedings for assessment completed after 1-6-2003--Interest payable by assessee-- CITv. Colgate Palmolive (India) Ltd. (Bom) . . . 728
S. 254 --Appeal to Appellate Tribunal--Powers of Tribunal--Power to admit additional evidence--Application for admission of additional evidence six years after assessment during penalty proceedings--No credible evidence and no explanation for delay in application--Rejection of application--Justified-- Jawahar Lal Jain (HUF) v. CIT (P&H) . . . 712
S. 263 --Revision--Commissioner--Powers--Unaccounted purchases and sales--Addition by Commissioner on basis of statement before excise authorities in context of levy of excise duty on unaccounted production--Excise authority deleting addition and deletion affirmed by Tribunal--No material to conclude assessee made unexplained sales or purchases--Revision not valid-- CIT v. Arora Alloys Ltd. (P&H) . . . 732
S. 271(1)(c) --Penalty--Concealment of income--Search and seizure--Discrepancy in accounts noted in search proceedings--Surrender of amount--Assessment completed and accepted--Levy of penalty--Valid-- Jawahar Lal Jain (HUF) v. CIT (P&H) . . . 712
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