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Monday, January 18, 2016

ITR (TRIB) Volume 45 : Part 2 (Issue dated : 11-1-2016)



 

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))--PRINT AND ONLINE EDITION

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Appeal to Appellate Tribunal --Commissioner (Appeals) in assessee’s appeal deleting addition in hands of assessee and directing addition in hands of shareholder--Failure by Commissioner (Appeals) to grant opportunity of hearing before making addition--Assessee can challenge validity of directions--Directions to be considered as futile--Income-tax Act, 1961-- ITO v. Biotech Ophthalmic P. Ltd. (Ahd) . . . 453

----Rectification of mistake--Observations made by Tribunal about profession of chartered accountants not necessary to adjudicate issues urged before Tribunal--Order rectified--Income-tax Act, 1961, s. 254(2)-- Vijay V. Meghani v. Asst. CIT
(Mumbai) . . . 499

Appeal to Commissioner (Appeals) --Power to admit additional evidence--Adequate and real opportunities lacking during assessment proceedings--Admission of additional evidence proper--Income-tax Act, 1961--Income-tax Rules, 1962, r. 46A-- Asst. CIT v. R. P. G. Credit and Capital Ltd. (Delhi) . . . 440

Business expenditure --Disallowance--Payments in cash exceeding specified limit--Exclusion from disallowance--Reasonable explanation for payments in cash--Payments made under compelling circumstances on account of business expediency--No disallowance--Income-tax Act, 1961, s. 40A(3)-- ITO v. Smt. Asha Agarwal
(Lucknow) . . . 462

----Vehicle expenses and staff welfare expenses--Ad hoc disallowance--Commissioner (Appeals) restricting disallowance--Assessee neither preferring appeal nor cross-objection--Order of Commissioner (Appeals) to be confirmed--Income-tax Act, 1961-- ITO v. Smt. Asha Agarwal (Lucknow) . . . 462

----Wages and site expenses--Commissioner (Appeals) restricting disallowance of total wages on ground of possible leakages and deleting disallowance on site expenses on ground ad hoc--Failure by Department to point out specific defects in order of Commissioner (Appeals)--Order of Commissioner (Appeals) to be confirmed--Income-tax Act, 1961-- ITO v. Smt. Asha Agarwal (Lucknow) . . . 462

Cash credit --Appeal to Commissioner (Appeals)--Submission of additional evidence before Commissioner (Appeals)--Remand report called for--Assessing Officer accepting loans taken by assessee after verification--Commissioner (Appeals) deleting addition based on admission of Assessing Officer--Appeal by Department not maintainable--Income-tax Act, 1961, ss. 68, 133(6), 153C--Income-tax Rules, 1962, r. 46A-- Asst. CIT v. R. P. G. Credit and Capital Ltd.(Delhi) . . . 440

----Commissioner (Appeals) deleting addition on finding that assessee depositing money from its opening balance--Failure by Department to dislodge findings of Commissioner (Appeals)--Order of Commissioner (Appeals) to be confirmed--Income-tax Act, 1961, s. 68-- ITO v. Smt. Asha Agarwal (Lucknow) . . . 462

Depreciation --Ad hoc disallowance on purchase of machinery--Commissioner (Appeals) allowing depreciation after verifying bills--Failure by Department to point out defects in order of Commissioner (Appeals)--Order to be confirmed--Income-tax Act, 1961-- ITO v. Smt. Asha Agarwal (Lucknow) . . . 462

Dividend --Deemed dividend--Loan to shareholder--Condition precedent--Shareholder must be both registered and beneficial--Assessee not registered shareholder--Provisions of section 2(22)(e) not applicable--Income-tax Act, 1961, s. 2(22)(e)-- ITO v. Biotech Ophthalmic P. Ltd. (Ahd) . . . 453

Reassessment --Notice--No notice under section 143(2) issued within six months from end of relevant assessment year--No assessment proceedings pending in relation to relevant assessment year when reference made to Transfer Pricing Officer--Invalid reference--Order determining adjustment to international transaction nullity in law and void ab initio--Notice issued under section 148 by Assessing Officer based on order of Transfer Pricing Officer not valid and subsequent assessment order to be quashed--Income-tax Act, 1961, ss. 92CA, 143, 144C, 147, 148-- Maximize Learning P. Ltd. v. Asst. CIT (Pune) . . . 476

 

PRINT EDITION

Volume 45 : Part 2 (Issue dated : 11-1-2016)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Appeal to Appellate Tribunal --Maintainability of appeal--Assessing Officer initiating reassessment proceedings based on order of Transfer Pricing Officer--No findings given by Dispute Resolution Panel on validity of Assessing Officer to adopt order passed by Transfer Pricing Officer based on an illegal reference--Appeal maintainable against order passed by Assessing Officer under section 143(3) read with sections 147 and 144C pursuant to direction of Dispute Resolution Panel--Income-tax Act, 1961-- Bucyrus India P. Ltd. v . Deputy CIT (Kolkata) . . . 216

Business expenditure --Deduction only on actual payment--Contribution towards employees’ State insurance fund--Contributions paid before due date for filing return--To be allowed--Income-tax Act, 1961, ss. 2(24)(x), 36(1)(x)-- Brothers Pharma P. Ltd. v. ITO (Jaipur) . . . 154

----Disallowance--Payments in cash exceeding prescribed limit--Employees insisting upon cash payments and in order to maintain good relation assessee paying salary in cash for various months--Exceptions provided in rule 6DD not exhaustive--Business expediencies and payments not covering under section 40A(3)--Disallowance not proper--Income-tax Act, 1961, s. 40A(3)--Income-tax Rules, 1962, r. 6DD-- Brothers Pharma P. Ltd. v. ITO (Jaipur) . . . 154

----Disallowance--Payments to non-resident--Failure to deduct tax at source--Reimbursement of expenses not income in hands of non-resident--Not in nature of fees for technical services--Provision requiring deduction of tax at source not applicable--Income-tax Act, 1961, ss. 40(a)(ia), 195-- ITO v. Cerner Health Care Solutions P. Ltd. (Bang) . . . 207

Business income --Remission or cessation of liability--Assessee not writing off any liability on account of loan creditor, trade creditor or security creditor during year under consideration--Failure by Department to establish that liability not in existence or not paid in subsequent year--Sum cannot be brought to tax--Income-tax Act, 1961, s. 41(1)-- Brothers Pharma P. Ltd. v. ITO (Jaipur) . . . 154

Capital gains --Full value of consideration--Value adopted by stamp valuation authority--Section 50C cannot be invoked on account of long-term capital gains on sale of leasehold property--Income-tax Act, 1961, s. 50C-- ITO v. Hari Om Gupta
(Lucknow) . . . 137

Capital or revenue expenditure --Expenditure on repairs and maintenance--Genuineness of expenses not proved by assessee--Disallowance of expenditure justified--Income-tax Act, 1961-- Brothers Pharma P. Ltd. v. ITO (Jaipur) . . . 154

Company --Dividend--Deemed dividend--Loan to shareholder--Transactions between assessee and company in current account--Loan account different from current account with shareholder--Provisions of section 2(22)(e) not applicable to transactions in current account--Income-tax Act, 1961, s. 2(22)(e)-- ITO v. Smt. Gayatri Chakraborty (Kolkata) . . . 197

Exemption --Export--Computation of deduction--Any item reduced from export turnover to be reduced from total turnover also--Income-tax Act, 1961, s. 10A-- ITO v. Cerner Health Care Solutions P. Ltd. (Bang) . . . 207

Fringe benefit tax --Provisions within ambit of Income-tax Act, 1961 and do not operate independently--Manufacture of tea--Business expenditure of assessee determined to extent of 40 per cent.--Business expenditure for purpose of fringe benefit tax to be considered at 40 per cent.--Income-tax Act, 1961, s. 115WA--Income-tax Rules, 1962, r. 8-- McLeod Russel India Ltd. v. Asst. CIT (Kolkata) . . . 182

Income from undisclosed sources --Unexplained money--Cash book showing shortage of cash--Failure by assessee to produce evidence regarding shortage of cash before authorities--Addition confirmed--Income-tax Act, 1961-- Brothers Pharma P. Ltd. v. ITO(Jaipur) . . . 154

Income-tax survey --Export--Exemption--Excess gold found at survey--Assessee disclosing in books of account sale of excess gold obtained on recouping wastage--Books accepted by Department--Surrender of Rs. 11 lakhs to cover various discrepancies--Disclosure relating to regular business--Addition justified but assessee entitled to exemption because income directly related to export business of assessee--Income-tax Act, 1961, s. 10A-- Bridal Jewellery Mfg. Co. v. ITO (Delhi) . . . 119

Penalty --Concealment of income or furnishing of inaccurate particulars of income--Effect of Circular No. 21 of 2015 dated 10-12-2015--Department’s appeals against orders of Commissioner (Appeals) granting relief pending before Tribunal--Tax effect excluding interest not more than Rs. 10,00,000--Appeals not maintainable--Income-tax Act, 1961, s. 271(1)(c)--CBDT Circular No. 21 of 2015, dated 10-12-2015-- Deputy CIT v. Soma Textiles and Industries Ltd. (Ahd) . . . 147

----Concealment of income--Assessee claiming losses with regard to incomplete work--Assessing Officer disallowing--Not a case of concealment of particulars because information given by assessee in its return not found to be incorrect--Claim of assessee supported by Accounting Standard-7 issued by ICAI--Penalty not leviable--Income-tax Act, 1961, s. 271(1)(c)-- Uhde India P. Ltd. v. Asst. CIT (Mumbai) . . . 177

Reassessment --Limitation--Contention that reassessment proceedings barred by limitation--Failure by assessee to produce specific ground on limitation and file additional ground of appeal--Issue not entertained--Income-tax Act, 1961-- Bucyrus India P. Ltd. v . Deputy CIT(Kolkata) . . . 216

----Notice--Validity--No notice for assessment issued--Reference to Transfer Pricing Officer for determination of arm’s length price without pendency of assessment proceedings--Order of adjustment to arm’s length price on illegal reference by Transfer Pricing Officer--Cannot be basis for reassessment proceedings--Income-tax Act, 1961, ss. 92CA, 143(1), (2), (3), 144C, 147, 148-- Bucyrus India P. Ltd. v . Deputy CIT
(Kolkata) . . . 216

Search and seizure --Application of seized assets--Provision prohibiting adjustment of seized cash against advance tax liability--Prospective--Assessing Officer adjusting seized cash towards tax liability determined in section 153A assessment and in accordance with provisions of section 132B--Subsequent revocation of adjustment under section 154 illegal--Interest under sections 234B and 234C cannot be charged for assessment year 2006-07--Income-tax Act, 1961, ss. 132B, 153A, 154, 234B, 234C-- Asst. CIT v. Narendra N. Thacker(Kolkata) . . . 188

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961

S. 2(22)(e) --Company--Dividend--Deemed dividend--Loan to shareholder--Transactions between assessee and company in current account--Loan account different from current account with shareholder--Provisions of section 2(22)(e) not applicable to transactions in current account-- ITO v. Smt. Gayatri Chakraborty (Kolkata) . . . 197

S. 2(24)(x) --Business expenditure--Deduction only on actual payment--Contribution towards employees’ State insurance fund--Contributions paid before due date for filing return--To be allowed-- Brothers Pharma P. Ltd. v. ITO (Jaipur) . . . 154

S. 10A --Exemption--Export--Computation of deduction--Any item reduced from export turnover to be reduced from total turnover also-- ITO v. Cerner Health Care Solutions P. Ltd.(Bang) . . . 207

----Income-tax survey--Export--Exemption--Excess gold found at survey--Assessee disclosing in books of account sale of excess gold obtained on recouping wastage--Books accepted by Department--Surrender of Rs. 11 lakhs to cover various discrepancies--Disclosure relating to regular business--Addition justified but assessee entitled to exemption because income directly related to export business of assessee-- Bridal Jewellery Mfg. Co. v. ITO (Delhi) . . . 119

S. 36(1)(x) --Business expenditure--Deduction only on actual payment--Contribution towards employees’ State insurance fund--Contributions paid before due date for filing return--To be allowed-- Brothers Pharma P. Ltd. v. ITO (Jaipur) . . . 154

S. 40(a)(ia) --Business expenditure--Disallowance--Payments to non-resident--Failure to deduct tax at source--Reimbursement of expenses not income in hands of non-resident--Not in nature of fees for technical services--Provision requiring deduction of tax at source not applicable-- ITO v. Cerner Health Care Solutions P. Ltd.
(Bang) . . . 207

S. 40A(3) --Business expenditure--Disallowance--Payments in cash exceeding prescribed limit--Employees insisting upon cash payments and in order to maintain good relation assessee paying salary in cash for various months--Exceptions provided in rule 6DD not exhaustive--Business expediencies and payments not covering under section 40A(3)--Disallowance not proper-- Brothers Pharma P. Ltd. v. ITO (Jaipur) . . . 154

S. 41(1) --Business income--Remission or cessation of liability--Assessee not writing off any liability on account of loan creditor, trade creditor or security creditor during year under consideration--Failure by Department to establish that liability not in existence or not paid in subsequent year--Sum cannot be brought to tax-- Brothers Pharma P. Ltd. v. ITO (Jaipur) . . . 154

S. 50C --Capital gains--Full value of consideration--Value adopted by stamp valuation authority--Section 50C cannot be invoked on account of long-term capital gains on sale of leasehold property-- ITO v. Hari Om Gupta (Lucknow) . . . 137

S. 92CA --Reassessment--Notice--Validity--No notice for assessment issued--Reference to Transfer Pricing Officer for determination of arm’s length price without pendency of assessment proceedings--Order of adjustment to arm’s length price on illegal reference by Transfer Pricing Officer--Cannot be basis for reassessment proceedings-- Bucyrus India P. Ltd. v . Deputy CIT (Kolkata) . . . 216

S. 115WA --Fringe benefit tax--Provisions within ambit of Income-tax Act, 1961 and do not operate independently--Manufacture of tea--Business expenditure of assessee determined to extent of 40 per cent.--Business expenditure for purpose of fringe benefit tax to be considered at 40 per cent.-- McLeod Russel India Ltd. v. Asst. CIT
(Kolkata) . . . 182

S. 132B --Search and seizure--Application of seized assets--Provision prohibiting adjustment of seized cash against advance tax liability--Prospective--Assessing Officer adjusting seized cash towards tax liability determined in section 153A assessment and in accordance with provisions of section 132B--Subsequent revocation of adjustment under section 154 illegal--Interest under sections 234B and 234C cannot be charged for assessment year 2006-07--Asst. CIT v. Narendra N. Thacker (Kolkata) . . . 188

S. 143(1), (2), (3) --Reassessment--Notice--Validity--No notice for assessment issued--Reference to Transfer Pricing Officer for determination of arm’s length price without pendency of assessment proceedings--Order of adjustment to arm’s length price on illegal reference by Transfer Pricing Officer--Cannot be basis for reassessment proceedings-- Bucyrus India P. Ltd. v . Deputy CIT (Kolkata) . . . 216

S. 144C --Reassessment--Notice--Validity--No notice for assessment issued--Reference to Transfer Pricing Officer for determination of arm’s length price without pendency of assessment proceedings--Order of adjustment to arm’s length price on illegal reference by Transfer Pricing Officer--Cannot be basis for reassessment proceedings-- Bucyrus India P. Ltd. v . Deputy CIT (Kolkata) . . . 216

S.147 --Reassessment--Notice--Validity--No notice for assessment issued--Reference to Transfer Pricing Officer for determination of arm’s length price without pendency of assessment proceedings--Order of adjustment to arm’s length price on illegal reference by Transfer Pricing Officer--Cannot be basis for reassessment proceedings-- Bucyrus India P. Ltd. v . Deputy CIT (Kolkata) . . . 216

S. 148 --Reassessment--Notice--Validity--No notice for assessment issued--Reference to Transfer Pricing Officer for determination of arm’s length price without pendency of assessment proceedings--Order of adjustment to arm’s length price on illegal reference by Transfer Pricing Officer--Cannot be basis for reassessment proceedings-- Bucyrus India P. Ltd. v . Deputy CIT (Kolkata) . . . 216

S. 153A --Search and seizure--Application of seized assets--Provision prohibiting adjustment of seized cash against advance tax liability--Prospective--Assessing Officer adjusting seized cash towards tax liability determined in section 153A assessment and in accordance with provisions of section 132B--Subsequent revocation of adjustment under section 154 illegal--Interest under sections 234B and 234C cannot be charged for assessment year 2006-07--Asst. CIT v. Narendra N. Thacker (Kolkata) . . . 188

S. 154 --Search and seizure--Application of seized assets--Provision prohibiting adjustment of seized cash against advance tax liability--Prospective--Assessing Officer adjusting seized cash towards tax liability determined in section 153A assessment and in accordance with provisions of section 132B--Subsequent revocation of adjustment under section 154 illegal--Interest under sections 234B and 234C cannot be charged for assessment year 2006-07--Asst. CIT v. Narendra N. Thacker (Kolkata) . . . 188

S. 195 --Business expenditure--Disallowance--Payments to non-resident--Failure to deduct tax at source--Reimbursement of expenses not income in hands of non-resident--Not in nature of fees for technical services--Provision requiring deduction of tax at source not applicable-- ITO v. Cerner Health Care Solutions P. Ltd.
(Bang) . . . 207

S. 234B --Search and seizure--Application of seized assets--Provision prohibiting adjustment of seized cash against advance tax liability--Prospective--Assessing Officer adjusting seized cash towards tax liability determined in section 153A assessment and in accordance with provisions of section 132B--Subsequent revocation of adjustment under section 154 illegal--Interest under sections 234B and 234C cannot be charged for assessment year 2006-07--Asst. CIT v. Narendra N. Thacker (Kolkata) . . . 188

S. 234C --Search and seizure--Application of seized assets--Provision prohibiting adjustment of seized cash against advance tax liability--Prospective--Assessing Officer adjusting seized cash towards tax liability determined in section 153A assessment and in accordance with provisions of section 132B--Subsequent revocation of adjustment under section 154 illegal--Interest under sections 234B and 234C cannot be charged for assessment year 2006-07--Asst. CIT v. Narendra N. Thacker (Kolkata) . . . 188

S. 271(1)(c) --Penalty--Concealment of income--Assessee claiming losses with regard to incomplete work--Assessing Officer disallowing--Not a case of concealment of particulars because information given by assessee in its return not found to be incorrect--Claim of assessee supported by Accounting Standard-7 issued by ICAI--Penalty not leviable-- Uhde India P. Ltd. v. Asst. CIT (Mumbai) . . . 177

----Penalty--Concealment of income or furnishing of inaccurate particulars of income--Effect of Circular No. 21 of 2015 dated 10-12-2015--Department’s appeals against orders of Commissioner (Appeals) granting relief pending before Tribunal--Tax effect excluding interest not more than Rs. 10,00,000--Appeals not maintainable-- Deputy CIT v. Soma Textiles and Industries Ltd. (Ahd) . . . 147

Income-tax Rules, 1962

R. 6DD --Business expenditure--Disallowance--Payments in cash exceeding prescribed limit--Employees insisting upon cash payments and in order to maintain good relation assessee paying salary in cash for various months--Exceptions provided in rule 6DD not exhaustive--Business expediencies and payments not covering under section 40A(3)--Disallowance not proper-- Brothers Pharma P. Ltd. v. ITO
(Jaipur) . . . 154

R. 8 --Fringe benefit tax--Provisions within ambit of Income-tax Act, 1961 and do not operate independently--Manufacture of tea--Business expenditure of assessee determined to extent of 40 per cent.--Business expenditure for purpose of fringe benefit tax to be considered at 40 per cent.-- McLeod Russel India Ltd. v. Asst. CIT
(Kolkata) . . . 182