Pages

Tuesday, November 24, 2015

Update Pan to ICAI data base

Announcement

In terms of the decision taken by the Council following advice received from the Income Tax Department, the Permanent Account Number (PAN) Card details of the members and firm of chartered accountants are required to be included in the Central Database of the Institute.

The members are therefore requested to provide the following details with self-attested copy of PAN card to their concerned Regional office on or before 15th December, 2015.

Member's PAN details:

S. No.    Particulars of Member    Details
1.    Name of Member    
2.    Membership Number    
3.    PAN Number (Self attested copy to be enclosed)    

Firm's PAN details (if applicable):

S. No.    Particulars of Firms    Details
1.    Name of Firm    
2.    Firm Registration Number    
3.    Name of the Member in-charge with Membership Number    
4.    PAN Number (Self attested copy to be enclosed)    

Alternatively, they can also email the self-attested scanned copy of the above details along with the Pan Card to the following email ids.

1) Members of Western Region : wropan@icai.in
2) Members of Southern Region : sropan@icai.in
3) Members of Eastern Region : eropan@icai.in
4) Members of Central Region : cropan@icai.in
5) Members of Northern Region : nropan@icai.in

(V. Sagar)
Secretary, ICAI
Dated: 20th November 2015

-Regards
CA. C. V. PAWAR

Wednesday, November 18, 2015

Fwd: Link of Rachnatmak Sankalp

---------- Forwarded message ----------
From: Rachnatmak Sankalp <rachsankalp@yahoo.in>
Date: 2015-11-18 11:20 GMT+05:30
Subject: Link of Rachnatmak Sankalp
To:


"इंस्टीट्यूट ऑफ चार्टर्ड एकाउंटेंट्स की सेंट्रल काउंसिल की अपनी उम्मीदवारी के लिए समर्थन जुटाने की पीयूष छाजेड़ की कोशिश प्रफुल्ल छाजेड़ के नाम से समानता के चलते मुश्किल में पड़ी" शीर्षक रिपोर्ट पढ़ने के लिए Please click the Link : http://rachnatmaksankalp.blogspot.in/2015/11/blog-post_17.html

Tuesday, November 17, 2015

Change in MVAT Interest Rate from 1st December,2015

Change in MVAT (VAT Maharashtra) Interest Rate from 1st December,2015 
1. For Delay upto 1 month 1.25%
2. For Delay upto 3 month 1.50%
3. For Delay above 3 months 2.00%




Regards,
-------
CA.C.V.PAWAR
PATIL DAWARE GIRASE PAWAR & ASSOCIATES
CHARTERED ACCOUNTANTS
0253-2319641. M-9423961209

INDIAN CA - NURTURED IN INDIA, GROOMED FOR THE WORLD

Saturday, November 14, 2015

SECTION 147: High Court Warns Dept Of Dire Consequences For Harassing Taxpayers With Frivolous Reopening Of Cases

Dear Subscriber,

 

The following important judgements are available for download at itatonline.org.


Pr CIT vs. Samcor Glass Ltd (Delhi High Court)

S. 147/ 148: Dept warned not to harass taxpayers by reopening assessments in a mechanical and casual manner. Pr CIT directed to issue instructions to AOs to strictly adhere to the law explained in various decisions and make it mandatory for them to ensure that an order for reopening of an assessment clearly records compliance with each of the legal requirements. AOs also directed to strictly comply with the law laid down in GKN Driveshafts 259 ITR 19 (SC) as regards disposal of objections to reopening assessment

The Court is of the view that notwithstanding several decisions of the Supreme Court as well as this Court clearly enunciating the legal position under Section 147/148 of the Act, the reopening of assessment in cases like the one on hand give the impression that reopening of assessment is being done mechanically and casually resulting in unnecessary harassment of the Assessee


ITO vs. Hiranandani Builders (ITAT Mumbai)

S. 80-IA: Interest on TDS refund, interest from lessees, interest on FDRs and Tender fees are all "derived" from the undertaking and are eligible for deduction. If items of income are not eligible, it should be netted off against expenditure and only balance can be disallowed

The TDS deduction from lease rental income was beyond the control of the assessee and also due to the delay in getting no-deduction certificate from the AO. In view of the same, the assessee was deprived of funds to the extent of TDS amount, which would have otherwise used for the purpose of business purposes including repayment of loan taken for construction of IT parks and SEZ. The Income tax department was required to pay interest only due to the delay in granting refund of TDS. In the case of Liberty India Ltd, relied upon by the AO, the assessee therein received DEPB credits as per the scheme framed by the Government of India. Hence the Hon'ble Supreme Court held that the primary source of the DEPB receipt is the scheme framed by the Government. However, in the instant case, TDS deduction is integral part connected with the receipt of lease income and the same cannot be separted from the activity carried on by the assessee


Reliance Gems & Jewels Ltd vs. DCIT (ITAT Mumbai)

S. 37(1): A business is "set up" the moment employees are recruited for the purpose of the business. All expenditure incurred thereafter is allowable as a deduction even if the business has not commenced

Setting up of business is different from commencement of business and the expenditures are allowable on setting up of business. The assessee has recruited employees for the purpose of its business and about 16 employees are for the job of quality assurance. In our considered opinion, upon recruitment of employees, the factum that expenditure under the different heads was incurred is indicative that business was set up


Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

Ved Parkash Contractors vs. CIT (ITAT Chandigarh)

S. 263: CIT's action of stepping into shoes of AO and virtually redoing assessment by issuing specific directions to AO is unlawful. Remand to AO with direction to give opportunity of hearing to assessee is meaningless

__._,_.___

Transfer Of Hon'ble Vice President Of The ITAT + Imp Verdicts On Penalty, Revision And Reopening



 

Dear Subscriber,

Transfer Of Hon'ble Vice President Of The ITAT

Vide Order dated 03.11.2015 passed by Hon'ble President, a Vice-President of the ITAT has been transferred in public interest.


Sarita Kaur Manjeet Singh Chopra vs. ITO (ITAT Pune)

Scope of Explanation 5A to S. 271(1)(c) on deemed concealment despite income having been offered in the search return explained

The deeming provisions of Explanation 5A under section 271(1)(c) of the Act are applicable to all the searches initiated under section 132 of the Act on or after first day of June, 2007. Reading the said provisions of the Explanation 5A to section 271(1)(c) of the Act, it is noted that the person is deemed to have concealed particulars of his income or furnished inaccurate particulars of such income, which is equivalent to the value of money, bullion, jewellery, valuable articles or things from the possession of the assessee during the course of search conducted on or after first day of June, 2007


Ved Parkash Contractors vs. CIT (ITAT Chandigarh)

S. 263: CIT's action of stepping into shoes of AO and virtually redoing assessment by issuing specific directions to AO is unlawful. Remand to AO with direction to give opportunity of hearing to assessee is meaningless

It is trite law that it is not permissible for the CIT being a revisional authority to step into the shoes of the Assessing officer and to redo the assessment and pass fresh assessment order. In the instant case, the Commissioner has set aside the order of the Assessing officer on the aforesaid issues with a direction to the Assessing officer to pass a fresh assessment order. At the same time, the Commissioner has directed the Assessing officer to make specific additions. Remanding the matter to the Assessing officer is of no consequence, particularly when the CIT himself has reframed the assessment. The CIT has not left any scope for the Assessing officer to redo the assessment or pass a fresh assessment order


M/s Kothari Metals vs. ITO (Karnataka High Court)

S. 147/ 148: Non-furnishing of reasons for reopening to assessee renders reassessment void

The question of non-furnishing the reasons for re-opening an already concluded assessment goes to the very root of the matter. Since such reasons had not been furnished to the appellant, even though a request for the same had been made, we are of the opinion that proceedings for the re-assessment could not have been taken further on this ground alone


Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

How To Improve Process For Selection & Appointment Of Judges To Courts And Tribunals: Suggestions By AIFTP To The Supreme Court


Supreme Court Judges Were Not Appointed On Merit: Ex Supreme Court Judge + Imp CBDT Directives


 

Dear Subscriber,

Supreme Court Judges Were Not Appointed On Merit: Ex Supreme Court Judge

Justice Markandey Katju, the retired judge of the Supreme Court, has made the shocking allegation that some judges of the Supreme Court were not appointed on merit but on extraneous considerations such as caste, nepotism etc. He has given specific instances of such alleged appointments. The learned former judge has also claimed that though he went to Justice S. H. Kapadia (not Chief Justice at that time) to object against the elevation of Justice Dinakaran of the Karnataka High Court to the Supreme Court on the ground that there were serious allegations about him, the concerns were disregarded by the Collegium and Justice Dinakaran's name was cleared (though the appointment was later stalled owing to impeachment proceedings in Parliament).

Justice Katju has suggested that like in the USA, the interview and appointment of Judges should be televised so to prevent any skulduggery. This will ensure transparency and avoid undeserving candidates occupying high judicial positions, he says


CBDT Warns Top-Brass Of Adverse Action If They Don't Pass S. 12AA Orders Within Time Limit

The CBDT has issued Instruction No. 16 of 2015 dated 06.11.2015 in which it has taken a stern view of the fact that the time limit of six months specified in s. 12AA(2) of the Income-tax Act 1961 for passing an order granting or refusing registration under s. 12AA are not being adhered to by the Commissioners of Income Tax (Exemptions). The CBDT has directed the Chief Commissioners to monitor that the Commissioners are adhering to the time limit and to take suitable administrative action in the case of laxity


Imp Notification By Central Government Of 'Tolerance Range' For Transfer Pricing Cases For AY 2015-16

The Ministry of Finance has issued a Notification dated 29.10.2015 in which it is stated that where the variation between the arm's length price determined under section 92C and the price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed one percent of the latter in respect of wholesale trading and three percent of the latter in all other cases, the price at which the international transaction or specified domestic transaction has actually been undertaken shall be deemed to be the arm's length price for Assessment Year 2015-2016


Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

Chief Justice Designate T. S. Thakur Is A Tax Expert & Is Well Aware Of The Functioning Of The ITAT


New Chief Justice Of India Is A Tax Expert And Is Familiar With ITAT Working + Supreme Court Invites Suggestions From The Public


 

Dear Subscriber,

Chief Justice Designate T. S. Thakur Is A Tax Expert & Is Well Aware Of The Functioning Of The ITAT

Hon'ble Justice T. S. Thakur, who has been nominated as the Chief Justice of India, has a very soft-spoken, polite and patient demeanour. He is, however, also firm in his approach. He is much respected by the Bar and the litigants. The ITAT Bar Association had the privilege of interacting with the learned Judge during one of his visits to Mumbai. The learned Judge was very impressed to learn of the facilities available in the ITAT Bar Library for the benefit of the professionals and the taxpayers. In particular, he appreciated the fact that the Library has all the books on taxation and general law, including several treatises on foreign taxation law. The learned judge also indicated that he had great admiration for the legal acumen of the late Shri. Nani Palkhivala and his mastery of income-tax law


Supreme Court Invites Suggestions From Public On Measures To Improve The Collegium System For Appointment Of Judges

The Supreme Court has passed an order dated 05.11.2015 in which it has noted that a number of suggestions relating to the Collegium system have already been received. However, as several parties are yet to offer suggestions, the Court has granted time till 17.00 hours on 13.11.2015 to enable everyone to offer suggestions


Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

Pr CIT vs. Samcor Glass Ltd (Delhi High Court)

S. 147/ 148: Dept warned not to harass taxpayers by reopening assessments in a mechanical and casual manner. Pr CIT directed to issue instructions to AOs to strictly adhere to the law explained in various decisions and make it mandatory for them to ensure that an order for reopening of an assessment clearly records compliance with each of the legal requirements. AOs also directed to strictly comply with the law laid down in GKN Driveshafts 259 ITR 19 (SC) as regards disposal of objections to reopening assessment


CBDT Acts On NAMOs Promise. AOs To Be Punished For Harassing Taxpayers With High-Pitched Assmnt Orders


 

Dear Subscriber,

Diwali Gift! CBDT Acts On NAMO's Promise And Sets Up Committee To Punish AOs For Harassing Taxpayers With High-Pitched Assessment Orders

Pursuant to the solemn promise made by Prime Minister Narendra Modi that a mechanism would be set up to ensure that Assessing Officers are accountable for the unreasonable additions that they make in the assessment order, the CBDT has issued Instruction No. 17/2015 dated 09.11.2015 in which it has admitted that the tendency of the AOs to frame high-pitched and unreasonable assessment orders reflects harassment of taxpayers and leads to generation of unproductive work for the Department.

The CBDT has consequently set up a committee of high-ranking officials which will examine whether there is a prima-facie case of high-pitched assessment, non-observance of principles of natural justice, non-application of mind , gross negligence or lack of involvement of assessing officer. The Committee would ascertain whether the addition made in assessment order are not backed by any sound reason or logic, the provisions of law have grossly been misinterpreted or obvious and well established facts on records have out rightly been ignored. The Committee would also take into consideration whether the principles of natural justice have been followed by the assessing officer. If it is established that unreasonable and high-pitched additions have been made by the assessing officer, a report would be sent to the Pr. CCIT by the Local Committee who will then take suitable administrative action against the Assessing Officer. Further, the departmental position as determined by the Local Committee in such cases would be appropriately presented before the Appellate Authorities so that litigation is curtailed.


Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

No More Tears! NAMO Promises To Make Assessing Officers Accountable For Bogus Additions And Demands

__._,_.___

No More Tears! NAMO Promises To Make Assessing Officers Accountable For Bogus Additions And Demands

 Subscriber,

No More Tears! NAMO Promises To Make Assessing Officers Accountable For Bogus Additions And Demands

It is common experience that Assessing Officers have the tendency to make huge additions and disallowances on frivolous grounds and raise huge tax demands. Coercive measures are adopted to recover the said demands. This causes immense hardship to honest taxpayers.

There are two reasons for the modus operandi of the Assessing Officers. The first is that the CBDT has/ had a policy of rewarding officers with plum postings and promotions based on the tax collected by them (see Collect Taxes; Get Promotion & Choice Posting: CBDT Chief). The second is that some unscrupulous officers get an excuse to demand bribes from the taxpayers (see Chief CIT Used Strong-Arm Techniques To Extort Bribe From Hapless Taxpayers: CBI Report). Read more ›


Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

Supreme Court Judges Were Not Appointed On Merit: Ex Supreme Court Judge

__._,_.___

Increase in Service Tax w.e.f.15.11.2015



INDIRECT TAXES UPDATE – 145

 

SERVICE TAX

 

Regarding Levy of Swachh Bharat Cess 

 

CBEC on 6th November notified that Swachh Bharat Cess would be applicable @ 0.5% on value of all taxable services with effect from 15th November 2015.

 

Now, CBEC vide Notification No. 23/2015-Service Tax Dated 12th November, 2015 has provided that in cases where service tax is payable on abated value as per Notification No. 26/2012 -Service Tax, dated 20th June, 2012, Swachh Bharat Cess would also be levied on the abated value of taxable services determined in accordance with the Service Tax (Determination of Value) Rules, 2006. For example if the abatement is 60% & value of taxable services is Rs. 1000 then service tax payable would be Rs. 56.00 (1000 * 40% * 14%) and SBC payable would be Rs. 2.00 (Rs. 1000* 40% * 0.5%  or Rs. 400* 0.5%).

 

Further, CBEC vide Notification No. 24/2015-Service Tax Dated 12th November, 2015 has provided that in cases where service tax is payable under Reverse Charge Method  as per Notification No. 30/2012 -Service Tax, dated 20th June, 2012, Swachh Bharat Cess would also be payable as per the Reverse Charge provisions.  

 

Swachh Bharat Cess would also be leviable on the persons liable for paying the service tax at alternate rates who provide services as an air travel agent, an insurer carrying on life insurance business, purchase or sale of foreign currency, lottery distributor or selling agent. In this regard, CBEC vide Notification No. 25/2015-Service Tax Dated 12th November, 2015 has provided that  such assessees, during any calendar month or quarter, shall have the option to discharge their liability towards Swachh Bharat Cess which can be determined as follows:

 

Alternate Tax Rate x 0.5

14

 

The option under once exercised, shall apply uniformly in respect of such services and shall not be changed during a financial year under any circumstances. For example, an air travel agent is liable to pay service tax @ 1.4% of the basic fare in the case of international bookings. Here SBC payable would be @ 0.05 % [(1.4 * 0.5)/ 14].  Thus on Basic fare of Rs. 5000, SBC payable would be Rs. 2.5 (5000*0.05).

 

It is important to note that, with regards to point of taxation, no SBC liability would arise where payment has been received and invoice has been raised before 15th November 2015. When payment is received before 15th November 2015 and invoice is raised within 14 days i.e. 29th November 2015, no SBC would be required to be paid. However, SBC would be applicable when services are provided on or after 15th November 2015 and payment for the same is received after that date and invoice is not raised within 14 days i.e. invoice is issued after 29th November 2015.

 

[Notification No. 23/2015-Service Tax,  Notification No. 24/2015-Service Tax  &  Notification No. 24/2015-Service Tax all Dated 12th November, 2015]

 

Source: www.cbec.gov.in

 


 





Tuesday, November 10, 2015

INCREASE IN SERVICE TAX @ 14.50% wef 15.11.2015

INDIRECT TAXES UPDATE - 144

SERVICE TAX

Swachh Bharat Cess leviable from 15th November 2015

CBEC vide Notification No. 21/2015-Service Tax Dated 6th November, 2015 has provided that Swachh Bharat Cess (SBC) @ 0.5% would be leviable on value of all taxable services with effect from 15th November 2015. This implies that effective rate of service tax will be 14.5%.

Further, CBEC vide Notification No. 22/2015-Service Tax Dated 6th November, 2015 has exempted all taxable services from payment of Swachh Bharat Cess in excess of 0.5% of the value of services. It has also been provided that SBC would not be applicable on non-taxable services and services which are exempt from service tax.

As there is no amendment proposed in the CENVAT Credit Rules, 2004, hence whether CENVAT credit of SBC would be available or not requires an immediate clarification/amendment from the board.

[Notification No. 21/2015-Service Tax Dated 6th November, 2015 & Notification No. 22/2015-Service Tax Dated 6th November, 2015]

Source: www.cbec.gov.in





Monday, November 2, 2015

ITR Volume 378 : Part 1 (Issue dated : 26-10-2015)

 

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

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Exemption --Sum received under early retirement option scheme of bank--Assessee entitled to exemption under section 10(10C)--Income-tax Act, 1961, s. 10(10C)-- S. Palaniappan v.ITO . . . 275

Income-tax --General principles--Rule of consistency--Head of income--Income from other sources or business income--Interest from fixed deposits before business actually commenced treated as business income for preceding three years--No change in circumstances--Income for year in question to be treated similarly--Income-tax Act, 1961, ss. 28, 56-- CIT v. Dalmia Promoters and Devels. (P) Ltd. . . . 277

HIGH COURTS

Deduction of tax at source --Failure to pay tax deducted at source to Government--Interest--Assessment of payee companies completed holding them not liable to pay tax--No interest leviable against assessee for period after that--Income-tax Act, 1961, s. 201(1A)-- CIT v.Labh Construction and Ind. Ltd. (Guj) . . . 261

----Legislative powers--Constitutional validity of provision--Section 234E levying fee for delay in filing statements of tax deducted at source--Default in filing statement would cause problems for Revenue--No hardships for assessee--Power of CBDT to issue general or specific orders--Principles of natural justice not applicable--Section 234E valid--Income-tax Act, 1961, s. 234E--Constitution of India, art. 226-- Lakshminirman Bangalore P. Ltd. v.Deputy CIT (Karn) . . . 279

Interpretation of taxing statutes --Interpretation upholding constitutional validity of provisions-- Lakshminirman Bangalore P. Ltd. v. Deputy CIT (Karn) . . . 279

Penalty --Concealment of income--Furnishing of inaccurate particulars of income--Hospital--Difference between profit and loss account and account books impounded at time of survey--Differential amount not accounted--Explanation that on account of impounding of books, accounts could not be audited and no intentional omission--Explanation rejected on ground assessee's duty to get its accounts audited and time for audit expired long before survey--Finding upheld by Tribunal attained finality--Levy of penalty justified--Income-tax Act, 1961, s. 271(1)(c)-- Manural Huda Trust v. CIT (Ker) . . . 270

 

PRINT EDITION

ITR Volume 378 : Part 1 (Issue dated : 26-10-2015)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Charitable purpose --Accumulation of income--Exercise of option--No specific mode--Exercise of option at time of filing return--Sufficient compliance--Income-tax Act, 1961, s. 11-- CIT v. G. R. Govindarajulu and Sons . . .1

----Accumulation of income--Only to extent of 25 per cent. of income not actually applied for charitable purpose--No further deduction for accumulation of income--Income-tax Act, 1961, s. 11-- CIT v. G. R. Govindarajulu and Sons . . .1

Wealth-tax --Valuation of asset--"Price that asset would fetch in market"--Factors to be considered--Land coming under purview of Land Ceiling Act--Proceedings for acquisition initiated and maximum compensation therefor declared at Rs. 2 lakhs though notification not issued--Value for wealth-tax purposes--Cannot be arrived at ignoring pending proceedings under Land Ceiling Act--Reasonable buyer knowing acquisition proceedings in progress would not offer more than Rs. 2 lakhs--Value for wealth-tax purposes cannot be at higher figure--Wealth-tax Act, 1957, s. 7--Urban Land (Ceiling and Regulation) Act, 1976-- S. N. Wadiyar (decd. through L. R.) v. CWT . . . 9

HIGH COURTS

Accounting --Rejection of accounts--Consistent method of accounting followed--Stock register maintained--Reasonable explanation for expenses--Accounts could not be rejected--Income-tax Act, 1961-- CIT v. Navbharat Export (Delhi) . . . 89

Appeal to Appellate Tribunal --Compliance with principles of natural justice--Duty to pass reasoned order--Tribunal copying order of Commissioner (Appeals) verbatim at different places--No independent application of mind--Matter remitted to Tribunal for decision afresh--Income-tax Act, 1961-- Kewal Chaudhary v. CIT (P&H) . . . 52

Appeal to High Court --Substantial question of law--Interest on borrowed capital--Assessee having at its disposal its own and borrowed funds--Loans advanced interest free to sister concerns--To be taken to have come from own funds--Tribunal taking plausible view on facts--No question of law arises--Income-tax Act, 1961, ss. 36(1)(iii), 260A-- CIT v. Modi Rubber Ltd. (Delhi) . . . 128

Business expenditure --Capital or revenue expenditure--Assessee running business owning land in different places--Land in excess of ceiling prescribed--Application for exemption of excess land from acquisition--State Government granting exemption subject to payment of specified amount and construction of certain buildings--Amount paid was for obtaining enduring benefit--Not deductible--Income-tax Act, 1961, s. 37-- Sandvik Asia Ltd. v. Deputy CIT (Bom) . . . 114

----Deduction only on actual payment--Payment to superannuation fund--Scheme of company not providing for payment by employee--No question of disallowing delayed payment--Income-tax Act, 1961, s. 43B-- CIT v. Modi Rubber Ltd. (Delhi) . . . 128

----Interest on borrowed capital--Interest on borrowings used to subscribe to rights issue of closely related company--Whether investments made from borrowings on account of strategic compulsions or linked to earning of dividends--Matter remanded to Assessing Officer for full appraisal of fact situations--Income-tax Act, 1961, ss. 36(1)(iii), 80M-- Eicher Goodearth Ltd. v. CIT (Delhi) . . . 28

Capital gains --Long-term capital gains--Capital asset--Definition--Agricultural land--Exception--Land situated within specified distance from municipality--Measurement of distance from municipality--Distance to be measured from agricultural land to outer limit of municipality by road--Not by straight line or aerial route--Income-tax Act, 1961, s. 2(14)(iii)(b)-- CIT v. Vijay Singh Kadan (Delhi) . . . 71

Capital or revenue expenditure --Current repairs--Import of Banbury mixer--Capital expenditure--Expenditure on reduction gear box for 3 coil calendar--Imported item part of 3 roll calendar--Revenue expenditure--Income-tax Act, 1961-- CIT v. Modi Rubber Ltd. (Delhi) . . . 128

Capital or revenue receipt --Business income--Remission or cessation of trading liability--Waiver of sums by creditors including part of principal--Principal waived not debited into profit and loss account in earlier years or claimed as deduction--Not taxable--Income-tax Act, 1961, s. 41(1)-- CIT v. Pasupati Spinning Weaving Mills Ltd. (Delhi) . . . 80

Central Board of Direct Taxes --Power to relax provisions of section 139--Extension of due date for filing income-tax returns--Policy decision--High Court not to interfere such decision--No prejudice would be caused by extending time for filing income-tax returns--Not a ground to interfere to such decision--Income-tax Act, 1961, ss. 119, 139-- Avinash Gupta v. Union of India (Delhi) . . . 137

Charitable purposes --Exemption under section 11--Assessee granted exemption under section 10(20) as local authority up to assessment year 2002-03--Assessee filing application for registration as a charitable trust on 26-3-2007 with effect from 1-4-2003--Application rejected by Assessing Officer but accepted finally by Tribunal--Claim for exemption under section 11 for assessment year 2005-06--Rejection of application on account of delay in filing necessary forms--Not valid--Income-tax Act, 1961, ss. 11, 12A-- CIT v. Mumbai Metropolitan Regional Iron and Steel Market Committee (Bom) . . . 103

Depreciation --Actual cost--Written down value--Imported hospital equipment--Withdrawal of customs duty exemption--Increase in cost of equipment to extent of customs duty paid--Enhanced cost to be taken into consideration from year in which order for payment of customs duty passed--Assessee entitled to depreciation on enhanced cost from that year and written down value to be computed accordingly--Whether assessee entitled to depreciation on enhanced cost from year of import left open--Income-tax Act, 1961-- CIT v.Noida Medicare Centre Ltd. (Delhi) . . . 65

----Building--Cost of construction--Amount paid to State Government to prevent acquisition of land--Not part of cost of construction--Assessee not entitled to depreciation on such amount--Income-tax Act, 1961, s. 32-- Sandvik Asia Ltd. v. Deputy CIT (Bom) . . . 114

Income --Computation of income--Exempted income--Disallowance of expenditure incurred in earning exempted income--Meaning of expression "does not form part of the total income" in section 14A--No income exempt from tax received or receivable in relevant previous year--No disallowance could be made under section 14A--Income-tax Act, 1961, s. 14A--Cheminvest Ltd. v. CIT (Delhi) . . . 33

----Disallowance of expenditure in relation to exempt income--Higher disallowance agreed to before Assessing Officer during course of assessment--Assessee could not be bound by such offer--Restriction of disallowance justified--Income-tax Act, 1961, s. 14A-- CIT v.Everest Kento Cylinders Ltd. (Bom) . . . 57

International transactions --Transfer pricing--Arm's length price--Determination--Assessee issuing corporate guarantee in respect of borrowings by its associated enterprise--Distinction between corporate guarantee and bank guarantee--No transfer pricing adjustment could be made in respect of guarantee commission on basis of bank rate--Income-tax Act, 1961, s. 92B-- CIT v. Everest Kento Cylinders Ltd. (Bom) . . . 57

Offences and prosecution --Failure to produce accounts or documents--Finding that accounts had been submitted when criminal complaint was issued--Sanction for prosecution not valid--Income-tax Act, 1961, s. 276D--Criminal Procedure Code, 1973, s. 482-- Shravan Gupta v. Asst. CIT (Delhi) . . . 95

Reassessment --Notice--Creditor in a settlement agreeing to convert a portion of interest into shares--Original assessment accepting conversion as actual payment of interest within meaning of section 43B--Reassessment on ground that conversion of portion of outstanding interest into shares will not amount to actual payment of interest--Change of opinion--Reassessment impermissible--Income-tax Act, 1961, ss. 43B, 147, 148-- CIT v. Rathi Graphics Technologies Ltd. (Delhi) . . . 107

Return --E-filing of income-tax returns for assessment year 2015-16--Due date for filing returns--Forms not available on first day of assessment year--No satisfactory explanation or justification for not prescribing relevant forms--Plea that only minor changes in forms--Not justified--Period required for e-filing of returns not reasonable--Extension of date up to 31-10-2015--Income-tax Act, 1961, ss. 119, 139, 139C, 139D-- Vishal Garg v. Union of India (P & H) . . . 145

----Prescription of due date for e-filing returns--Duty of Central Board of Direct Taxes to provide necessary utility and forms at beginning of assessment year--Delay in providing utility and forms--Curtailment of substantial period--Difficulty in collecting necessary datas in notified forms--Direction to extend from 30-9-2015 to 31-10-2015--Income-tax Act, 1961, ss. 119, 139-- All Gujarat Federation of Tax Consultants v. CBDT (Guj) . . . 160

----Prescription of due date for filing e-filing returns--Period of 183 days available to collect necessary information if forms notified on first of April of assessment year--Delay in notifying forms restricting time to 55 to 61 days--Difficulty facing by chartered accountants and tax practitioners to comply with all requirements in notified forms--Extension of due date to two States--Discrimination to assessees in other States--Effect of non-filing of returns--Central Board of Direct Taxes directed to extend due date as extended in two States--Income-tax Act, 1961, ss. 119, 139-- Chamber of Tax Consultants v. Union of India (Bom) . . . 188

----Time for filing--No provision mandating time of one hundred eighty days--Completion of audit not dependent on prescription of forms for filing returns--No cause of action or infringement of fundamental rights--Forms prescribed on 29-7-2015/7-8-2015--Time to 30-9-2015 sufficient for filing income-tax returns and audit report--Central Board of Direct Taxes directed to make available forms for audit report and filing returns on April 1 of assessment year--Income-tax Act, 1961, s. 139-- Avinash Gupta v. Union of India (Delhi) . . . 137

Revision --Commissioner--Condition precedent--Most appropriate method of accounting to correctly reflect the true financial statement is debatable issue--Assessee consistently following project completion method--That method cannot be rejected because another method is preferable--Revision not valid--Income-tax Act, 1961, s. 263-- CIT v. Aditya Builders (Bom) . . . 75

Search and seizure --Assessment of third person--Condition precedent--Satisfaction of Assessing Officer that seized articles belonged to third person--No connection between seized documents and third person--Assessment of third person not valid--Income-tax Act, 1961, s. 153C-- CIT v. Sinhgad Technical Education Society (Bom) . . . 84

----Block assessment--Undisclosed income--Document found during search disclosing loan agreement--Agreement providing for interest on loan--No evidence that interest was not received--No regular books of account maintained--No scope for assessee to claim that it was following cash system of accounting--Interest assessable as undisclosed income--Income-tax Act, 1961, ss. 132, 153BC-- Paras Shantilal Shah v. Deputy CIT (Bom) . . . 41

----Block assessment--Undisclosed income--Jewellery found during search--Statement on oath accepting ownership of jewellery--Subsequent explanation regarding jewellery--Statement not retracted--Value of jewellery assessable as undisclosed income--Income-tax Act, 1961, ss. 132, 153BC-- Paras Shantilal Shah v. Deputy CIT (Bom) . . . 41

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Criminal Procedure Code, 1973 :

S. 482 --Offences and prosecution--Failure to produce accounts or documents--Finding that accounts had been submitted when criminal complaint was issued--Sanction for prosecution not valid-- Shravan Gupta v. Asst. CIT (Delhi) . . . 95

Income-tax Act, 1961 :

S. 2(14)(iii)(b) --Capital gains--Long-term capital gains--Capital asset--Definition--Agricultural land--Exception--Land situated within specified distance from municipality--Measurement of distance from municipality--Distance to be measured from agricultural land to outer limit of municipality by road--Not by straight line or aerial route-- CIT v. Vijay Singh Kadan (Delhi) . . . 71

S. 11 --Charitable purpose--Accumulation of income--Exercise of option--No specific mode--Exercise of option at time of filing return--Sufficient compliance-- CIT v. G. R. Govindarajulu and Sons (SC). . .1

----Charitable purpose--Accumulation of income--Only to extent of 25 per cent. of income not actually applied for charitable purpose--No further deduction for accumulation of income--CIT v. G. R. Govindarajulu and Sons (SC) . . . 1

----Charitable purposes--Exemption under section 11--Assessee granted exemption under section 10(20) as local authority up to assessment year 2002-03--Assessee filing application for registration as a charitable trust on 26-3-2007 with effect from 1-4-2003--Application rejected by Assessing Officer but accepted finally by Tribunal--Claim for exemption under section 11 for assessment year 2005-06--Rejection of application on account of delay in filing necessary forms--Not valid-- CIT v. Mumbai Metropolitan Regional Iron and Steel Market Committee (Bom) . . . 103

S. 12A --Charitable purposes--Exemption under section 11--Assessee granted exemption under section 10(20) as local authority up to assessment year 2002-03--Assessee filing application for registration as a charitable trust on 26-3-2007 with effect from 1-4-2003--Application rejected by Assessing Officer but accepted finally by Tribunal--Claim for exemption under section 11 for assessment year 2005-06--Rejection of application on account of delay in filing necessary forms--Not valid-- CIT v. Mumbai Metropolitan Regional Iron and Steel Market Committee (Bom) . . . 103

S. 14A --Income--Computation of income--Exempted income--Disallowance of expenditure incurred in earning exempted income--Meaning of expression "does not form part of the total income" in section 14A--No income exempt from tax received or receivable in relevant previous year--No disallowance could be made under section 14A-- Cheminvest Ltd. v. CIT(Delhi) . . . 33

----Income--Disallowance of expenditure in relation to exempt income--Higher disallowance agreed to before Assessing Officer during course of assessment--Assessee could not be bound by such offer--Restriction of disallowance justified-- CIT v. Everest Kento Cylinders Ltd. (Bom) . . . 57

S. 32 --Depreciation--Building--Cost of construction--Amount paid to State Government to prevent acquisition of land--Not part of cost of construction--Assessee not entitled to depreciation on such amount-- Sandvik Asia Ltd. v. Deputy CIT (Bom) . . . 114

S. 36(1)(iii) --Appeal to High Court--Substantial question of law--Interest on borrowed capital--Assessee having at its disposal its own and borrowed funds--Loans advanced interest free to sister concerns--To be taken to have come from own funds--Tribunal taking plausible view on facts--No question of law arises-- CIT v. Modi Rubber Ltd. (Delhi) . . . 128

----Business expenditure--Interest on borrowed capital--Interest on borrowings used to subscribe to rights issue of closely related company--Whether investments made from borrowings on account of strategic compulsions or linked to earning of dividends--Matter remanded to Assessing Officer for full appraisal of fact situations-- Eicher Goodearth Ltd. v.CIT (Delhi) . . . 28

S. 37 --Business expenditure--Capital or revenue expenditure--Assessee running business owning land in different places--Land in excess of ceiling prescribed--Application for exemption of excess land from acquisition--State Government granting exemption subject to payment of specified amount and construction of certain buildings--Amount paid was for obtaining enduring benefit--Not deductible-- Sandvik Asia Ltd. v. Deputy CIT (Bom) . . . 114

S. 41(1) --Capital or revenue receipt--Business income--Remission or cessation of trading liability--Waiver of sums by creditors including part of principal--Principal waived not debited into profit and loss account in earlier years or claimed as deduction--Not taxable-- CIT v.Pasupati Spinning Weaving Mills Ltd. (Delhi) . . . 80

S. 43B --Business expenditure--Deduction only on actual payment--Payment to superannuation fund--Scheme of company not providing for payment by employee--No question of disallowing delayed payment-- CIT v. Modi Rubber Ltd. (Delhi) . . . 128

----Reassessment--Notice--Creditor in a settlement agreeing to convert a portion of interest into shares--Original assessment accepting conversion as actual payment of interest within meaning of section 43B--Reassessment on ground that conversion of portion of outstanding interest into shares will not amount to actual payment of interest--Change of opinion--Reassessment impermissible-- CIT v. Rathi Graphics Technologies Ltd. (Delhi) . . . 107

S. 80M --Business expenditure--Interest on borrowed capital--Interest on borrowings used to subscribe to rights issue of closely related company--Whether investments made from borrowings on account of strategic compulsions or linked to earning of dividends--Matter remanded to Assessing Officer for full appraisal of fact situations-- Eicher Goodearth Ltd. v.CIT (Delhi) . . . 28

S. 92B --International transactions--Transfer pricing--Arm's length price--Determination--Assessee issuing corporate guarantee in respect of borrowings by its associated enterprise--Distinction between corporate guarantee and bank guarantee--No transfer pricing adjustment could be made in respect of guarantee commission on basis of bank rate--CIT v. Everest Kento Cylinders Ltd. (Bom) . . . 57

S. 119 --Central Board of Direct Taxes--Power to relax provisions of section 139--Extension of due date for filing income-tax returns--Policy decision--High Court not to interfere such decision--No prejudice would be caused by extending time for filing income-tax returns--Not a ground to interfere to such decision-- Avinash Gupta v. Union of India (Delhi) . . . 137

----Return--E-filing of income-tax returns for assessment year 2015-16--Due date for filing returns--Forms not available on first day of assessment year--No satisfactory explanation or justification for not prescribing relevant forms--Plea that only minor changes in forms--Not justified--Period required for e-filing of returns not reasonable--Extension of date up to 31-10-2015-- Vishal Garg v. Union of India (P & H) . . . 145

----Return--Prescription of due date for e-filing returns--Duty of Central Board of Direct Taxes to provide necessary utility and forms at beginning of assessment year--Delay in providing utility and forms--Curtailment of substantial period--Difficulty in collecting necessary datas in notified forms--Direction to extend from 30-9-2015 to 31-10-2015-- All Gujarat Federation of Tax Consultants v. CBDT (Guj) . . . 160

----Return--Prescription of due date for filing e-filing returns--Period of 183 days available to collect necessary information if forms notified on first of April of assessment year--Delay in notifying forms restricting time to 55 to 61 days--Difficulty facing by chartered accountants and tax practitioners to comply with all requirements in notified forms--Extension of due date to two States--Discrimination to assessees in other States--Effect of non-filing of returns--Central Board of Direct Taxes directed to extend due date as extended in two States--Chamber of Tax Consultants v. Union of India (Bom) . . . 188

S. 132 --Search and seizure--Block assessment--Undisclosed income--Document found during search disclosing loan agreement--Agreement providing for interest on loan--No evidence that interest was not received--No regular books of account maintained--No scope for assessee to claim that it was following cash system of accounting--Interest assessable as undisclosed income-- Paras Shantilal Shah v. Deputy CIT (Bom) . . . 41

----Search and seizure--Block assessment--Undisclosed income--Jewellery found during search--Statement on oath accepting ownership of jewellery--Subsequent explanation regarding jewellery--Statement not retracted--Value of jewellery assessable as undisclosed income-- Paras Shantilal Shah v. Deputy CIT (Bom) . . . 41

S. 139 --Central Board of Direct Taxes--Power to relax provisions of section 139--Extension of due date for filing income-tax returns--Policy decision--High Court not to interfere such decision--No prejudice would be caused by extending time for filing income-tax returns--Not a ground to interfere to such decision-- Avinash Gupta v. Union of India (Delhi) . . . 137

----Return--E-filing of income-tax returns for assessment year 2015-16--Due date for filing returns--Forms not available on first day of assessment year--No satisfactory explanation or justification for not prescribing relevant forms--Plea that only minor changes in forms--Not justified--Period required for e-filing of returns not reasonable--Extension of date up to 31-10-2015-- Vishal Garg v. Union of India (P & H) . . . 145

----Return--Prescription of due date for e-filing returns--Duty of Central Board of Direct Taxes to provide necessary utility and forms at beginning of assessment year--Delay in providing utility and forms--Curtailment of substantial period--Difficulty in collecting necessary datas in notified forms--Direction to extend from 30-9-2015 to 31-10-2015-- All Gujarat Federation of Tax Consultants v. CBDT (Guj) . . . 160

----Return--Prescription of due date for filing e-filing returns--Period of 183 days available to collect necessary information if forms notified on first of April of assessment year--Delay in notifying forms restricting time to 55 to 61 days--Difficulty facing by chartered accountants and tax practitioners to comply with all requirements in notified forms--Extension of due date to two States--Discrimination to assessees in other States--Effect of non-filing of returns--Central Board of Direct Taxes directed to extend due date as extended in two States--Chamber of Tax Consultants v. Union of India (Bom) . . . 188

----Return--Time for filing--No provision mandating time of one hundred eighty days--Completion of audit not dependent on prescription of forms for filing returns--No cause of action or infringement of fundamental rights--Forms prescribed on 29-7-2015/7-8-2015--Time to 30-9-2015 sufficient for filing income-tax returns and audit report--Central Board of Direct Taxes directed to make available forms for audit report and filing returns on April 1 of assessment year-- Avinash Gupta v. Union of India (Delhi) . . . 137

S. 139C --Return--E-filing of income-tax returns for assessment year 2015-16--Due date for filing returns--Forms not available on first day of assessment year--No satisfactory explanation or justification for not prescribing relevant forms--Plea that only minor changes in forms--Not justified--Period required for e-filing of returns not reasonable--Extension of date up to 31-10-2015-- Vishal Garg v. Union of India (P & H) . . . 145

S. 139D --Return--E-filing of income-tax returns for assessment year 2015-16--Due date for filing returns--Forms not available on first day of assessment year--No satisfactory explanation or justification for not prescribing relevant forms--Plea that only minor changes in forms--Not justified--Period required for e-filing of returns not reasonable--Extension of date up to 31-10-2015-- Vishal Garg v. Union of India (P & H) . . . 145

S. 147 --Reassessment--Notice--Creditor in a settlement agreeing to convert a portion of interest into shares--Original assessment accepting conversion as actual payment of interest within meaning of section 43B--Reassessment on ground that conversion of portion of outstanding interest into shares will not amount to actual payment of interest--Change of opinion--Reassessment impermissible-- CIT v. Rathi Graphics Technologies Ltd. (Delhi) . . . 107

S. 148 --Reassessment--Notice--Creditor in a settlement agreeing to convert a portion of interest into shares--Original assessment accepting conversion as actual payment of interest within meaning of section 43B--Reassessment on ground that conversion of portion of outstanding interest into shares will not amount to actual payment of interest--Change of opinion--Reassessment impermissible-- CIT v. Rathi Graphics Technologies Ltd. (Delhi) . . . 107

S. 153BC --Search and seizure--Block assessment--Undisclosed income--Document found during search disclosing loan agreement--Agreement providing for interest on loan--No evidence that interest was not received--No regular books of account maintained--No scope for assessee to claim that it was following cash system of accounting--Interest assessable as undisclosed income-- Paras Shantilal Shah v. Deputy CIT (Bom) . . . 41

----Search and seizure--Block assessment--Undisclosed income--Jewellery found during search--Statement on oath accepting ownership of jewellery--Subsequent explanation regarding jewellery--Statement not retracted--Value of jewellery assessable as undisclosed income-- Paras Shantilal Shah v. Deputy CIT (Bom) . . . 41

S. 153C --Search and seizure--Assessment of third person--Condition precedent--Satisfaction of Assessing Officer that seized articles belonged to third person--No connection between seized documents and third person--Assessment of third person not valid-- CIT v. Sinhgad Technical Education Society (Bom) . . . 84

S. 260A --Appeal to High Court--Substantial question of law--Interest on borrowed capital--Assessee having at its disposal its own and borrowed funds--Loans advanced interest free to sister concerns--To be taken to have come from own funds--Tribunal taking plausible view on facts--No question of law arises-- CIT v. Modi Rubber Ltd. (Delhi) . . . 128

S. 263 --Revision--Commissioner--Condition precedent--Most appropriate method of accounting to correctly reflect the true financial statement is debatable issue--Assessee consistently following project completion method--That method cannot be rejected because another method is preferable--Revision not valid-- CIT v. Aditya Builders (Bom) . . . 75

S. 276D --Offences and prosecution--Failure to produce accounts or documents--Finding that accounts had been submitted when criminal complaint was issued--Sanction for prosecution not valid-- Shravan Gupta v. Asst. CIT (Delhi) . . . 95

 

Wealth-tax Act, 1957 :

S. 7 --Wealth-tax--Valuation of asset--"Price that asset would fetch in market"--Factors to be considered--Land coming under purview of Land Ceiling Act--Proceedings for acquisition initiated and maximum compensation therefor declared at Rs. 2 lakhs though notification not issued--Value for wealth-tax purposes--Cannot be arrived at ignoring pending proceedings under Land Ceiling Act--Reasonable buyer knowing acquisition proceedings in progress would not offer more than Rs. 2 lakhs--Value for wealth-tax purposes cannot be at higher figure-- S. N. Wadiyar (decd. through L. R.) v. CWT (SC) . . . 9