INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Search and seizure --Block assessment--Surcharge--Provision for levy of surcharge on income-tax in case of block assessments--Not clarificatory or declaratory--Not to have retrospective effect--Not to apply to block assessments pertaining to period prior to 1-6-2002--Income-tax Act, 1961, s. 113, proviso -- CIT v. K. Raheja Hotels and Estate Pvt. Ltd. . . . 63
Agricultural income-tax (Assam) --Income from tea--Export--Special deduction--To be allowed on net income after apportionment under rule 8(1)--Effect of decision on assessments made under State Act--Assam Agricultural Income-tax Act, 1939--Income-tax Act, 1961, s. 80HHC--Income-tax Rules, 1962, r. 8-- Mcleod Russel India Ltd. v. State of Assam (Gauhati) . . . 73
Bad debts --Banking company--Provision for bad debts of advances by rural branches--Not deductible--Income-tax Act, 1961, s. 36-- CIT v. Federal Bank Ltd. (Ker) . . . 59
Depreciation --Investment in securities--Assessee entitled to depreciation--Income-tax Act, 1961, s. 32-- CIT v. Federal Bank Ltd. (Ker) . . . 59
Export --Special deduction--Calculation of profits--Amount earned on account of difference in rate of foreign exchange--To be taken into consideration--Income-tax Act, 1961, s. 80HHC-- CIT v. Alps Chemicals Pvt. Ltd. (Guj) . . . 61
Industrial undertaking --Special deduction--Amount received on sale of DEPB licence and foreign exchange fluctuation of rate difference--To be taken into consideration--Income-tax Act, 1961, s. 80-IA-- CIT v. Alps Chemicals Pvt. Ltd. (Guj) . . . 61
Interest --Accrual of income--Time of accrual--Interest credited to profit and loss account--Interest had not accrued and not assessable--Income-tax Act, 1961-- CIT v. Federal Bank Ltd. (Ker) . . . 59
ITR Volume 371 : Part 1 (Issue dated : 16-2-2015)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Advance ruling --Evasion of tax--Transaction of sale in Mauritius of shares of Indian company to a foreign company--Consideration to be paid partly in a lump sum and partly as an “earn-out†--Commercial reasons for such transaction--No evasion of tax--Section 245R not applicable--Income-tax Act, 1961, s. 245R-- DIT (International Tax) v. Copal Research Ltd. (Delhi) . . . 114
Appeal to Commissioner (Appeals) --Powers--Construction of house property--Claim by assessee that construction took two to three years--Addition of amount of excess cost of construction under section 69--Commissioner (Appeals) justified in spreading the addition over two years--Income-tax Act, 1961-- CIT v. Shivlal (Mad) . . . 109
Appeal to High Court --Procedure--Cross-objections--No right to file cross-objection--Income-tax Act, 1961, s. 260A--Civil Procedure Code, 1908-- CICB-Chemicon P. Ltd. v. CIT(Karn) . . . 78
Business --Transactions in shares--Whether business transactions or investment--Concurrent finding that transaction in the nature of investment--Finding based on evidence and a possible view--Income-tax Act, 1961-- Joint CIT v. Bajranglal Chowdhury (Cal) . . . 17
Business expenditure --Capital or revenue expenditure--Expenditure on supply of demonstration equipment--Revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v.Allergan India P. Ltd. (Karn) . . . 38
----Capital or revenue expenditure--State Government undertaking engaged in contract farming--Expenditure on development of land--Finding by Tribunal that land was fallow and expenses were incurred for business purposes--Expenditure deductible--Income-tax Act, 1961, s. 37-- CIT v. Punjab Agro Foodgrains Corporation (P&H) . . . 100
----Disallowance--Guest house--Depreciation--Rent and repairs--Expenditure on guest house disallowable--Income-tax Act, 1961, s. 37(4)-- CIT v. Kelvinator of India Ltd. (Delhi) . . . 51
Capital gains --Liability to tax--Sale of business--Finding that it was a slump sale--No liability to tax--Income-tax Act, 1961, s. 50-- CICB-Chemicon P. Ltd. v. CIT (Karn) . . . 78
Charitable purpose --Charitable trust--Registration--Condition precedent--Actual existence of institution for educational purpose--Institution need not comply with requirements in other provisos at the stage of registration--Profit element from activity--Not a ground to conclude that predominant object of activity of trust is to earn profit--Facts not properly analysed--Matter remanded to prescribed authority for consideration de novo--Income-tax Act, 1961, ss. 10(23C)(vi), 12AA-- Allahabad Young Men’s Christian Association v. Chief CIT (All) . . . 23
Depreciation --Condition precedent for allowance--Machinery should be owned by assessee and used for his business--Contract with firm for manufacture of articles--Machinery purchased and utilised in premises of firm--Finding by Tribunal that assessee owned machinery and used it for its business--Assessee entitled to depreciation--Income-tax Act, 1961, s. 32-- CIT v. Allergan India P. Ltd. (Karn) . . . 38
Exemption --Export--Export oriented undertaking--Condition precedent for exemption--Manufacture of article for export--Export of spare parts--No manufacturing activity--Profit from export of spare parts not entitled to exemption--Profits from sale of scrap--Scrap resulting from manufacturing activity--Profits from sale of scrap entitled to exemption--Income-tax Act, 1961, s. 10B-- GE BE P. Ltd. v. Asst. CIT (Karn) . . . 32
Income --Computation--Disallowance of expenditure on earning non-taxable income--Whether assessee furnished proper explanation as regards expenditure incurred for earning exempt income--Essentially question of fact--Concurrent finding that expenditure properly established--No disallowance could be made--Income-tax Act, 1961, s. 14A-- CIT v. Crish Park Vincom Ltd. (Cal) . . . 15
Industrial undertaking --Special deduction--Deeming provision--Power generation--Loss in year earlier to initial assessment year already absorbed against profit of other business--Not to be notionally brought forward and set off against profits in current year--Income-tax Act, 1961, s. 80-IA-- CIT v. Eastman Exports Global Clothing P. Ltd. (Mad) . . . 1
----Special deduction--Interest on fixed deposits, bank guarantees, deposits and miscellaneous receipts--Not entitled to deduction--Income-tax Act, 1961, s. 80-I-- CIT v.Kelvinator of India Ltd. (Delhi) . . . 51
----Special deduction--Interest received from customers due to late payment beyond credit period--Business income--Entitled to deduction--Income-tax Act, 1961, s. 80-I-- CIT v.Kelvinator of India Ltd. (Delhi) . . . 51
----Special deduction--LCD monitors--Description of information and communication technology devices--Assessing Officer without rejecting the accuracy of books of account or inspecting wages paid, electricity bills generated, nature of plant and machinery rejecting assessee’s claim to deduction--Rejection of claim merely on doubts and surmises--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-IC-- CIT v. Tej Pal Singh Kohli(Delhi) . . . 11
Investment deposit account --Eligible business--Computation--Interest on debentures, loans and intercorporate deposits and dividend--To be taken into consideration--Income-tax Act, 1961, s. 32AB-- CIT v. Kelvinator of India Ltd. (Delhi) . . . 51
----Industrial undertaking--Eligible profits--Computation--Assessee having several units some eligible for deduction and others not--Deduction is on profits and not on aggregate of profits of all units--Income-tax Act, 1961, s. 32AB-- CIT v. Kelvinator of India Ltd. (Delhi) . . . 51
Non-resident --Income deemed to accrue or arise in India--Capital gains--Effect ofExplanation 5 to section 9(1)(i)--Sale in Mauritius of shares in Indian company to a foreign company--Value of shares derived only fractionally from assets in India--Capital gains not assessable in India--Income-tax Act, 1961, s. 9-- DIT (International Tax) v. Copal Research Ltd. (Delhi) . . . 114
Penalty --Concealment of income--Search and seizure--Voluntary disclosure--Assessee filing return but not disclosing amount surrendered voluntarily--Penalty leviable--Income-tax Act, 1961, s. 271(1)(c), Expln. 5A(a), (b) -- CIT v. Prasanna Dugar (Cal) . . . 19
Reassessment --Notice after four years--Conditions precedent--Satisfaction note not disclosing foundation of reasons to believe--Material not showing default by assessee to fully or truly disclose--Reopening on ground of excess claim of deduction--Mere change of opinion--Impermissible--Reassessment and consequential proceedings--Not valid--Income-tax Act, 1961, ss. 147, 148-- Donaldson India Filters Systems P. Ltd. v. Deputy CIT (Delhi) . . . 87
----Notice--Reason to believe--Tangible material--Original scrutiny assessment disallowing certain amounts including exemption under section 10(29) as well as certain categories of income and purchase--First reassessment set aside in appeal and order attaining finality--Second reassessment--Concurrent finding that material or explanation in respect of issues in second reassessment were part of original record--Second reassessment not valid--Income-tax Act, 1961, ss. 147, 148-- CIT v. Central Warehousing Corporation (Delhi) . . . 81
Search and seizure --Block assessment--Assessment of third person--Undisclosed income--Sale of gift articles to assessee by group companies reflected in their books of account--Not fictitious sales--Purchase of gift articles shown in assessee’s books and return and accepted by Assessing Officer for relevant assessment--Block assessment treating cost of gift articles as undisclosed income of assessee--Not valid--Income-tax Act, 1961, ss. 158BB, 158BD-- CIT v. Sunny Liquors P. Ltd. (T & AP) . . . 45
----Income-tax survey--Block assessment--No incriminating material found during search--Incriminating material found during income-tax survey but no evidence that it related to assessee--Amounts based on income-tax survey not includible in block assessment--Income-tax Act, 1961-- CIT v. Smt. Yashoda Shetty (Karn) . . . 75
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 9 --Non-resident--Income deemed to accrue or arise in India--Capital gains--Effect ofExplanation 5 to section 9(1)(i)--Sale in Mauritius of shares in Indian company to a foreign company--Value of shares derived only fractionally from assets in India--Capital gains not assessable in India-- DIT (International Tax) v. Copal Research Ltd. (Delhi) . . . 114
S. 10(23C)(vi) --Charitable purpose--Charitable trust--Registration--Condition precedent--Actual existence of institution for educational purpose--Institution need not comply with requirements in other provisos at the stage of registration--Profit element from activity--Not a ground to conclude that predominant object of activity of trust is to earn profit--Facts not properly analysed--Matter remanded to prescribed authority for consideration de novo--Allahabad Young Men’s Christian Association v. Chief CIT (All) . . . 23
S. 10B --Exemption--Export--Export oriented undertaking--Condition precedent for exemption--Manufacture of article for export--Export of spare parts--No manufacturing activity--Profit from export of spare parts not entitled to exemption--Profits from sale of scrap--Scrap resulting from manufacturing activity--Profits from sale of scrap entitled to exemption-- GE BE P. Ltd. v. Asst. CIT (Karn) . . . 32
S. 12AA --Charitable purpose--Charitable trust--Registration--Condition precedent--Actual existence of institution for educational purpose--Institution need not comply with requirements in other provisos at the stage of registration--Profit element from activity--Not a ground to conclude that predominant object of activity of trust is to earn profit--Facts not properly analysed--Matter remanded to prescribed authority for consideration de novo--Allahabad Young Men’s Christian Association v. Chief CIT (All) . . . 23
S. 14A --Income--Computation--Disallowance of expenditure on earning non-taxable income--Whether assessee furnished proper explanation as regards expenditure incurred for earning exempt income--Essentially question of fact--Concurrent finding that expenditure properly established--No disallowance could be made-- CIT v. Crish Park Vincom Ltd. (Cal) . . . 15
S. 32 --Depreciation--Condition precedent for allowance--Machinery should be owned by assessee and used for his business--Contract with firm for manufacture of articles--Machinery purchased and utilised in premises of firm--Finding by Tribunal that assessee owned machinery and used it for its business--Assessee entitled to depreciation-- CIT v.Allergan India P. Ltd. (Karn) . . . 38
S. 32AB --Investment deposit account--Eligible business--Computation--Interest on debentures, loans and intercorporate deposits and dividend--To be taken into consideration--CIT v. Kelvinator of India Ltd. (Delhi) . . . 51
----Investment deposit account--Industrial undertaking--Eligible profits--Computation--Assessee having several units some eligible for deduction and others not--Deduction is on profits and not on aggregate of profits of all units-- CIT v. Kelvinator of India Ltd. (Delhi) . . . 51
S. 37 --Business expenditure--Capital or revenue expenditure--Expenditure on supply of demonstration equipment--Revenue expenditure-- CIT v. Allergan India P. Ltd. (Karn) . . . 38
----Business expenditure--Capital or revenue expenditure--State Government undertaking engaged in contract farming--Expenditure on development of land--Finding by Tribunal that land was fallow and expenses were incurred for business purposes--Expenditure deductible-- CIT v. Punjab Agro Foodgrains Corporation (P&H) . . . 100
S. 37(4) --Business expenditure--Disallowance--Guest house--Depreciation--Rent and repairs--Expenditure on guest house disallowable-- CIT v. Kelvinator of India Ltd. (Delhi) . . . 51
S. 50 --Capital gains--Liability to tax--Sale of business--Finding that it was a slump sale--No liability to tax-- CICB-Chemicon P. Ltd. v. CIT (Karn) . . . 78
S. 80-I --Industrial undertaking--Special deduction--Interest on fixed deposits, bank guarantees, deposits and miscellaneous receipts--Not entitled to deduction-- CIT v.Kelvinator of India Ltd. (Delhi) . . . 51
----Industrial undertaking--Special deduction--Interest received from customers due to late payment beyond credit period--Business income--Entitled to deduction-- CIT v. Kelvinator of India Ltd. (Delhi) . . . 51
S. 80-IA --Industrial undertaking--Special deduction--Deeming provision--Power generation--Loss in year earlier to initial assessment year already absorbed against profit of other business--Not to be notionally brought forward and set off against profits in current year--CIT v. Eastman Exports Global Clothing P. Ltd. (Mad) . . . 1
S. 80-IC --Industrial undertaking--Special deduction--LCD monitors--Description of information and communication technology devices--Assessing Officer without rejecting the accuracy of books of account or inspecting wages paid, electricity bills generated, nature of plant and machinery rejecting assessee’s claim to deduction--Rejection of claim merely on doubts and surmises--Assessee entitled to deduction-- CIT v. Tej Pal Singh Kohli (Delhi) . . . 11
S. 147 --Reassessment--Notice after four years--Conditions precedent--Satisfaction note not disclosing foundation of reasons to believe--Material not showing default by assessee to fully or truly disclose--Reopening on ground of excess claim of deduction--Mere change of opinion--Impermissible--Reassessment and consequential proceedings--Not valid--Donaldson India Filters Systems P. Ltd. v. Deputy CIT (Delhi) . . . 87
----Reassessment--Notice--Reason to believe--Tangible material--Original scrutiny assessment disallowing certain amounts including exemption under section 10(29) as well as certain categories of income and purchase--First reassessment set aside in appeal and order attaining finality--Second reassessment--Concurrent finding that material or explanation in respect of issues in second reassessment were part of original record--Second reassessment not valid-- CIT v. Central Warehousing Corporation (Delhi) . . . 81
S. 148 --Reassessment--Notice after four years--Conditions precedent--Satisfaction note not disclosing foundation of reasons to believe--Material not showing default by assessee to fully or truly disclose--Reopening on ground of excess claim of deduction--Mere change of opinion--Impermissible--Reassessment and consequential proceedings--Not valid--Donaldson India Filters Systems P. Ltd. v. Deputy CIT (Delhi) . . . 87
----Reassessment--Notice--Reason to believe--Tangible material--Original scrutiny assessment disallowing certain amounts including exemption under section 10(29) as well as certain categories of income and purchase--First reassessment set aside in appeal and order attaining finality--Second reassessment--Concurrent finding that material or explanation in respect of issues in second reassessment were part of original record--Second reassessment not valid-- CIT v. Central Warehousing Corporation (Delhi) . . . 81
S. 158BB --Search and seizure--Block assessment--Assessment of third person--Undisclosed income--Sale of gift articles to assessee by group companies reflected in their books of account--Not fictitious sales--Purchase of gift articles shown in assessee’s books and return and accepted by Assessing Officer for relevant assessment--Block assessment treating cost of gift articles as undisclosed income of assessee--Not valid-- CITv. Sunny Liquors P. Ltd. (T & AP) . . . 45
S. 158BD --Search and seizure--Block assessment--Assessment of third person--Undisclosed income--Sale of gift articles to assessee by group companies reflected in their books of account--Not fictitious sales--Purchase of gift articles shown in assessee’s books and return and accepted by Assessing Officer for relevant assessment--Block assessment treating cost of gift articles as undisclosed income of assessee--Not valid-- CITv. Sunny Liquors P. Ltd. (T & AP) . . . 45
S. 245R --Advance ruling--Evasion of tax--Transaction of sale in Mauritius of shares of Indian company to a foreign company--Consideration to be paid partly in a lump sum and partly as an “earn-out†--Commercial reasons for such transaction--No evasion of tax--Section 245R not applicable-- DIT (International Tax) v. Copal Research Ltd. (Delhi) . . . 114
S. 260A --Appeal to High Court--Procedure--Cross-objections--No right to file cross-objection-- CICB-Chemicon P. Ltd. v. CIT (Karn) . . . 78
S. 271(1)(c), Expln. 5A(a), (b) --Penalty--Concealment of income--Search and seizure--Voluntary disclosure--Assessee filing return but not disclosing amount surrendered voluntarily--Penalty leviable-- CIT v. Prasanna Dugar (Cal) . . . 19
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