INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Business expenditure --Capital or revenue expenditure--General principles--Assessee engaged in manufacture and sale of music cassettes--Payment of lump sum to acquire master plate and copyright in music--Royalty--Expenditure on carpets in recording room--Expenditure on commencing video division--All expenses deductible--Income-tax Act, 1961, s. 37-- CIT v. Krishan Kumar (Delhi) . . . 159
Charitable purposes --Charitable trust--Exemption--Denial of exemption where section 13 applies--Amounts advanced to person with substantial interest in trust--Advance for purchase of land--No evidence of possession of land--Advance for more than a year without interest--Transaction not genuine--Assessee not entitled to exemption--Amount advanced to educational society for setting up university--No violation of provisions of section 13--Exemption could not be denied--Income-tax Act, 1961, ss. 11, 13-- Director of Income-tax (Exemption) v. Charanjiv Charitable Trust (Delhi) . . . 180
Charitable trust --Cash credits--Identity of donors and their creditworthiness established--Addition of donations under section 68 not justified--Income-tax Act, 1961, s. 68-- Director of Income-tax (Exemption) v. Charanjiv Charitable Trust (Delhi) . . . 180
Depreciation --Charitable trust--Cost of assets allowed as application of income of trust--Trust not entitled to depreciation on such assets--Income-tax Act, 1961, s. 32-- Director of Income-tax (Exemption) v. Charanjiv Charitable Trust (Delhi) . . . 180
Housing project --Special deduction--Not available for profits from sale of unutilised floor space index--Full details regarding floor space index given in assessment order--Matter could not be remanded--Income-tax Act, 1961, s. 80-IB(10)-- CIT v. Desai Developers (Guj) . . . 151
----Special deduction--Ownership of property not a condition precedent for grant of deduction--Marginal underutilisation of floor space index--Not to affect allowance --Assessee entitled to deduction--Income-tax Act, 1961, s. 80-IB(10)-- CIT v. Shreenath Infrastructure (Guj) . . . 144
Recovery of tax --Interest--Notice of demand--Where order revised or modified after passing assessment order--Notice of demand relates back to original notice of demand--Default on part of assessee--Interest leviable--Income-tax Act, 1961, ss. 139(8), 215, 220(2)--Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964, s. 3(b)(iii)-- CIT v.Udaipur Mineral Development Syndicate (P.) Ltd. (Raj) . . . 136
Reference --High Court--CBDT circulars--Monetary ceiling limits for filing appeal--Reference admitted--Matter cannot be disposed of without answering questions on merits merely because tax effect is minimal--Income-tax Act, 1961 s. 256(1), (2)-- CIT v. Udaipur Mineral Development Syndicate (P.) Ltd. (Raj) . . . 136
ITR Volume 371 : Part 4 (Issue dated : 9-3-2015)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Non-resident --Income deemed to accrue or arise in India--Source rule of taxation--Fees for technical services--Definition--Expert services of non-resident engaged for preparation of scheme for raising requisite finances and tie up loans for power project--Services including developing comprehensive financial model to tie up rupee and foreign currency loan requirements of project, assisting expert credit agencies world-wide and obtaining commercial bank support on competitive terms, and assisting in loan negotiations and documentation with lenders--Amounts to consultancy service--Falls within definition of technical service--Payments to non-resident taxable--Liable to deduction of tax at source--Income-tax Act, 1961, s. 9(1)(i), (vii)(b)-- GVK Industries Ltd. v. ITO . . . 453
Accounting --Rejection of accounts--Estimate of income--Estimate should be based on past history and comparative cases--No evidence to justify additions--Addition not justified--Income-tax Act, 1961, s. 145-- CIT v. Gupta, K. N. Construction Co. (Raj) . . . 325
Appeal to Appellate Tribunal --Precedent--Order of Special Bench--Binding--That appeal therefrom pending before High Court--Not a ground to direct Assessing Officer to redecide issue after disposal of appeal by High Court--Tribunal either to follow or not to follow Special Bench decision--Tribunal to decide matter afresh--Income-tax Act, 1961-- CIT v. Janapriya Engineers Syndicate (T & AP) . . . 439
Assessment --Intimation--Prima facie adjustment--Only where facts are undisputed--Customs duty--Refund of substantial amount--Nature of receipt--Debatable issue--Assessing Officer determining nature of receipt as revenue receipt by prima facie adjustment--Impermissible--Income-tax Act, 1961, s. 143(1)(a)-- CIT v. Nagarjuna Fertilizers and Chemicals Ltd. (T & AP) . . . 318
Capital gains --Charge of tax--Transfer--Firm--Firm selling its assets to a company--Consideration in form of allotment of shares paid to partners--No distribution of assets--Does not mean there is no transfer--No direct transaction between partners and transferee--Manner of payment consideration not material--Money value of assets fixed--Liable to capital gains tax--Income-tax Act, 1961, ss. 45(1), 158BD-- Ana Labs v. Deputy CIT (T & AP) . . . 295
----Long-term capital gains--Income--Accrual of income--Real income theory--First development agreement not acted upon as agreement modified by tripartite agreement--Income earned under subsequent agreement offered as capital gains in subsequent years--Consideration in form of constructed area in terms of first development agreement did not really accrue to assessee--Not liable to capital gains--Income-tax Act, 1961-- CIT v.Chemosyn Ltd. (Bom) . . . 427
Capital or revenue expenditure --Shares in assessee held by two family groups--Dispute between two groups affecting business of assessee--Settlement helping assessee in substantial increase in business--Expenditure incurred by assessee to purchase its shares in terms of settlement--Revenue expenditure--Income-tax Act, 1961-- CIT v. Chemosyn Ltd.(Bom) . . . 427
Cash credit --Genuineness of transactions--Burden on Revenue--No effort made by Revenue to show whether creditors were credit worthy--Loans taken from family members--Creditors genuine and amounts shown in their books of account--No addition could be made--Income-tax Act, 1961-- Radha Raman Agrawal v. ITO (All) . . . 435
----Provision--Assessee liaisoning for supply of medical equipment--Lump sum received and shown in return--Assessee liable to maintain medical equipment--Amounts received adjusted against such expenses--Nil income shown in return for assessment year 2007-08--Amount attributable to assessment year 2007-08 added under section 68--Provision for maintenance found to be on scientific basis by Tribunal--Finding of fact--Amount not assessable under section 68--Income-tax Act, 1961, s. 68-- CIT v. Smt. Paramjeet Luthra (Delhi) . . . 306
Charitable purposes --Charitable institution--Exemption under section 10(23C)(iv)--Definition of “charitable purpose†in section 2(15)--Amendment of section 2(15) by Finance Act, 2008--Validity of amendment--Amendment to be read down--Primary and dominant object of institution to advance general public utility--Income generated by commercial activities incidental--Charitable institution entitled to exemption--Income-tax Act, 1961, ss. 2(15), 10(23C)(iv)-- India Trade Promotion Organization v. Director General of Income-tax (Exemptions) (Delhi) . . . 333
Deduction of tax at source --Failure to deduct tax--Limitation for taking action--Action to be taken within reasonable period in absence of prescription of time limit--Four-year period reasonable--Notice after seven years--Not justified--Income-tax Act, 1961, s. 201(1A)-- CITv. U. B. Electronic Instruments Ltd. (T & AP) . . . 314
Export --Special deduction--Gains on account of fluctuations on account of exchange rates--Eligible for deduction--Import duty entitlement benefit partakes of the character of amounts covered by clause (iii) of section 28--Excludible from total turnover--Income-tax Act, 1961, s. 80HHC-- CIT v. Godavari Drugs Ltd. (T & AP) . . . 379
Firm --Difference between Indian Partnership Act and Income-tax Act--Indian Partnership Act, 1932--Income-tax Act, 1961-- CIT v. Muthoot Financiers (Delhi) . . . 408
Hindu undivided family --Family arrangement--Effect--Disposition in favour of six minor daughters of karta in form of fixed deposits--Interest cannot thereafter be treated as part of wealth of Hindu undivided family--Not taxable in hands of Hindu undivided family--Income-tax Act, 1961, s. 171-- P. Shankaraiah Yadav (HUF) v. ITO (T & AP) . . . 386
Income --Accrual of income--Mercantile system of accounting--Civil construction--Sums retained for payment after expiry of defect-free period--Right to receive amount contingent upon there being no defects--Accrual only on receipt of amount after defect-free period--Income-tax Act, 1961-- CIT v. Shanker Constructions (T & AP) . . . 320
Income from undisclosed sources --Accounting--Rejection of accounts--Estimate of income--Estimate cannot be based solely on consumption of electricity--Commissioner (Appeals) and Tribunal taking other factors also into consideration and reducing addition to income--Justified--Income-tax Act, 1961-- CIT v. Ram Steel Industries (P&H) . . . 373
Industrial undertaking --Special deduction--Profits eligible for deduction--Interest earned on deposits--Interest on deposit made in relation to business activity alone eligible for deduction--Income-tax Act, 1961, ss. 80HH, 80-I-- CIT v. Godavari Drugs Ltd. (T & AP) . . . 379
Interpretation of taxing statutes --Interpretation upholding validity--Reading down of provisions-- India Trade Promotion Organization v. Director General of Income-tax (Exemptions) (Delhi) . . . 333
Penalty --Loan or deposit in cash exceeding prescribed limit--Firm--Payments from partners in cash--Firm and partners are not different entities--Penalty cannot be imposed under section 271D--Income-tax Act, 1961, ss. 271D, 271E, 273B-- CIT v. Muthoot Financiers(Delhi) . . . 408
Precedent --Effect of decision of Supreme Court in CIT v. R. M. Chidambaram Pillai [1977] 106 ITR 292 (SC)-- CIT v. Muthoot Financiers (Delhi) . . . 408
----Effect of decision of Supreme Court in Rotork Controls India P. Ltd. v. CIT [2009] 314 ITR 62 (SC)-- CIT v. Smt. Paramjeet Luthra (Delhi) . . . 306
Reassessment --Notice--Reasons recorded by Assessing Officer referring to facts already on file--No sufficient or adequate material available with Assessing Officer--No rational and tangible nexus between reasons and belief--Assessing Officer had no jurisdiction to initiate reassessment proceedings--Income-tax Act, 1961, ss. 147, 148-- Arun Gupta v. Union of India (All) . . . 394
----Notice after four years--Failure to disclose material facts necessary for assessment--Details regarding capital gains disclosed in original assessment--Reassessment proceedings after four years to re-compute capital gains--Not valid--Income-tax Act, 1961, s. 45, 147, 148-- Jagdishbhai Govindlal Patel v. ITO (Guj) . . . 419
----Notice after four years--Nature of business--Assessing Officer in original assessment opining that assessee engaged in shipping and allowing deduction under section 33AC--Application of mind by Assessing Officer in original assessment--Reopening of assessment on basis of letter of Commissioner (Appeals) containing identical facts stated by assessee--Not valid--Income-tax Act, 1961, ss. 33AC, 147, 148-- United Shippers Ltd. v. Asst. CIT(Bom) . . . 441
----Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Additional depreciation allowed in scrutiny assessment--Notice after four years to withdraw additional depreciation--No failure to disclose material facts necessary for assessment--Notice not valid--Income-tax Act, 1961, ss. 32, 147, 148-- Rantnamani Metals and Tubes Ltd. v. Deputy CIT (Guj) . . . 301
Revision --Commissioner--Powers--Erroneous and prejudicial to the interests of the Revenue--Depressed sales and 60 per cent. discount offered on account of ongoing sealing drive conducted by municipal authorities--Insufficient to take a different view--Revision invalid--Income-tax Act, 1961, s. 263-- CIT v. Garg Cheap Cut Piece House (Delhi) . . . 291
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 2(15) --Charitable purposes--Charitable institution--Exemption under section 10(23C)(iv)--Definition of “charitable purpose†in section 2(15)--Amendment of section 2(15) by Finance Act, 2008--Validity of amendment--Amendment to be read down--Primary and dominant object of institution to advance general public utility--Income generated by commercial activities incidental--Charitable institution entitled to exemption-- India Trade Promotion Organization v. Director General of Income-tax (Exemptions) (Delhi) . . . 333
S. 9(1)(i), (vii)(b) --Non-resident--Income deemed to accrue or arise in India--Source rule of taxation--Fees for technical services--Definition--Expert services of non-resident engaged for preparation of scheme for raising requisite finances and tie up loans for power project--Services including developing comprehensive financial model to tie up rupee and foreign currency loan requirements of project, assisting expert credit agencies world-wide and obtaining commercial bank support on competitive terms, and assisting in loan negotiations and documentation with lenders--Amounts to consultancy service--Falls within definition of technical service--Payments to non-resident taxable--Liable to deduction of tax at source--GVK Industries Ltd. v. ITO (SC) . . . 453
S. 10(23C)(iv) --Charitable purposes--Charitable institution--Exemption under section 10(23C)(iv)--Definition of “charitable purpose†in section 2(15)--Amendment of section 2(15) by Finance Act, 2008--Validity of amendment--Amendment to be read down--Primary and dominant object of institution to advance general public utility--Income generated by commercial activities incidental--Charitable institution entitled to exemption-- India Trade Promotion Organization v. Director General of Income-tax (Exemptions) (Delhi) . . . 333
S. 32 --Reassessment--Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Additional depreciation allowed in scrutiny assessment--Notice after four years to withdraw additional depreciation--No failure to disclose material facts necessary for assessment--Notice not valid-- Rantnamani Metals and Tubes Ltd. v. Deputy CIT (Guj) . . . 301
S. 33AC --Reassessment--Notice after four years--Nature of business--Assessing Officer in original assessment opining that assessee engaged in shipping and allowing deduction under section 33AC--Application of mind by Assessing Officer in original assessment--Reopening of assessment on basis of letter of Commissioner (Appeals) containing identical facts stated by assessee--Not valid-- United Shippers Ltd. v. Asst. CIT (Bom) . . . 441
S. 45 --Reassessment--Notice after four years--Failure to disclose material facts necessary for assessment--Details regarding capital gains disclosed in original assessment--Reassessment proceedings after four years to re-compute capital gains--Not valid--Jagdishbhai Govindlal Patel v. ITO (Guj) . . . 419
S. 45(1) --Capital gains--Charge of tax--Transfer--Firm--Firm selling its assets to a company--Consideration in form of allotment of shares paid to partners--No distribution of assets--Does not mean there is no transfer--No direct transaction between partners and transferee--Manner of payment consideration not material--Money value of assets fixed--Liable to capital gains tax-- Ana Labs v. Deputy CIT (T & AP) . . . 295
S. 68 --Cash credit--Provision--Assessee liaisoning for supply of medical equipment--Lump sum received and shown in return--Assessee liable to maintain medical equipment--Amounts received adjusted against such expenses--Nil income shown in return for assessment year 2007-08--Amount attributable to assessment year 2007-08 added under section 68--Provision for maintenance found to be on scientific basis by Tribunal--Finding of fact--Amount not assessable under section 68-- CIT v. Smt. Paramjeet Luthra (Delhi) . . . 306
S. 80HH --Industrial undertaking--Special deduction--Profits eligible for deduction--Interest earned on deposits--Interest on deposit made in relation to business activity alone eligible for deduction-- CIT v. Godavari Drugs Ltd. (T & AP) . . . 379
S. 80HHC --Export--Special deduction--Gains on account of fluctuations on account of exchange rates--Eligible for deduction--Import duty entitlement benefit partakes of the character of amounts covered by clause (iii) of section 28--Excludible from total turnover--CIT v. Godavari Drugs Ltd. (T & AP) . . . 379
S. 80-I --Industrial undertaking--Special deduction--Profits eligible for deduction--Interest earned on deposits--Interest on deposit made in relation to business activity alone eligible for deduction-- CIT v. Godavari Drugs Ltd. (T & AP) . . . 379
S. 143(1)(a) --Assessment--Intimation--Prima facie adjustment--Only where facts are undisputed--Customs duty--Refund of substantial amount--Nature of receipt--Debatable issue--Assessing Officer determining nature of receipt as revenue receipt by prima facie adjustment--Impermissible-- CIT v. Nagarjuna Fertilizers and Chemicals Ltd. (T & AP) . . . 318
S. 145 --Accounting--Rejection of accounts--Estimate of income--Estimate should be based on past history and comparative cases--No evidence to justify additions--Addition not justified-- CIT v. Gupta, K. N. Construction Co. (Raj) . . . 325
S. 147 --Reassessment--Notice--Reasons recorded by Assessing Officer referring to facts already on file--No sufficient or adequate material available with Assessing Officer--No rational and tangible nexus between reasons and belief--Assessing Officer had no jurisdiction to initiate reassessment proceedings-- Arun Gupta v. Union of India (All) . . . 394
----Reassessment--Notice after four years--Failure to disclose material facts necessary for assessment--Details regarding capital gains disclosed in original assessment--Reassessment proceedings after four years to re-compute capital gains--Not valid-- Jagdishbhai Govindlal Patel v. ITO (Guj) . . . 419
----Reassessment--Notice after four years--Nature of business--Assessing Officer in original assessment opining that assessee engaged in shipping and allowing deduction under section 33AC--Application of mind by Assessing Officer in original assessment--Reopening of assessment on basis of letter of Commissioner (Appeals) containing identical facts stated by assessee--Not valid-- United Shippers Ltd. v. Asst. CIT (Bom) . . . 441
----Reassessment--Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Additional depreciation allowed in scrutiny assessment-- Notice after four years to withdraw additional depreciation--No failure to disclose material facts necessary for assessment--Notice not valid-- Rantnamani Metals and Tubes Ltd. v. Deputy CIT (Guj) . . . 301
S. 148 --Reassessment--Notice--Reasons recorded by Assessing Officer referring to facts already on file--No sufficient or adequate material available with Assessing Officer--No rational and tangible nexus between reasons and belief--Assessing Officer had no jurisdiction to initiate reassessment proceedings-- Arun Gupta v. Union of India (All) . . . 394
----Reassessment--Notice after four years--Failure to disclose material facts necessary for assessment--Details regarding capital gains disclosed in original assessment--Reassessment proceedings after four years to re-compute capital gains--Not valid-- Jagdishbhai Govindlal Patel v. ITO (Guj) . . . 419
----Reassessment--Notice after four years--Nature of business--Assessing Officer in original assessment opining that assessee engaged in shipping and allowing deduction under section 33AC--Application of mind by Assessing Officer in original assessment--Reopening of assessment on basis of letter of Commissioner (Appeals) containing identical facts stated by assessee--Not valid-- United Shippers Ltd. v. Asst. CIT (Bom) . . . 441
----Reassessment--Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Additional depreciation allowed in scrutiny assessment--Notice after four years to withdraw additional depreciation--No failure to disclose material facts necessary for assessment--Notice not valid-- Rantnamani Metals and Tubes Ltd. v. Deputy CIT (Guj) . . . 301
S. 158BD --Capital gains--Charge of tax--Transfer--Firm--Firm selling its assets to a company--Consideration in form of allotment of shares paid to partners--No distribution of assets--Does not mean there is no transfer--No direct transaction between partners and transferee--Manner of payment consideration not material--Money value of assets fixed--Liable to capital gains tax-- Ana Labs v. Deputy CIT (T & AP) . . . 295
S. 171 --Hindu undivided family--Family arrangement--Effect--Disposition in favour of six minor daughters of karta in form of fixed deposits--Interest cannot thereafter be treated as part of wealth of Hindu undivided family--Not taxable in hands of Hindu undivided family-- P. Shankaraiah Yadav (HUF) v. ITO (T & AP) . . . 386
S. 201(1A) --Deduction of tax at source--Failure to deduct tax--Limitation for taking action--Action to be taken within reasonable period in absence of prescription of time limit--Four-year period reasonable--Notice after seven years--Not justified-- CIT v. U.B. Electronic Instruments Ltd. (T & AP) . . . 314
S. 263 --Revision--Commissioner--Powers--Erroneous and prejudicial to the interests of the Revenue--Depressed sales and 60 per cent. discount offered on account of ongoing sealing drive conducted by municipal authorities--Insufficient to take a different view--Revision invalid-- CIT v. Garg Cheap Cut Piece House (Delhi) . . . 291
S. 271D --Penalty--Loan or deposit in cash exceeding prescribed limit--Firm--Payments from partners in cash--Firm and partners are not different entities--Penalty cannot be imposed under section 271D-- CIT v. Muthoot Financiers (Delhi) . . . 408
S. 271E --Penalty--Loan or deposit in cash exceeding prescribed limit--Firm--Payments from partners in cash--Firm and partners are not different entities--Penalty cannot be imposed under section 271D-- CIT v. Muthoot Financiers (Delhi) . . . 408
S. 273B --Penalty--Loan or deposit in cash exceeding prescribed limit--Firm--Payments from partners in cash--Firm and partners are not different entities--Penalty cannot be imposed under section 271D-- CIT v. Muthoot Financiers (Delhi) . . . 408
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