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Thursday, January 28, 2016

ITR Volume 380 : Part 4 (Issue dated : 25-1-2016)

 

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

ONLINE EDITION

STATUTES AND NOTIFICATIONS

Notifications :

Income-tax Act, 1961 :

Notifications under section 35AC(1), Expln. clause (b) :

Eligible projects or schemes . . . 27

 

PRINT EDITION

ITR Volume 380 : Part 4 (Issue dated : 25-1-2016)

SUBJECT INDEX TO CASES REPORTED

SUPREME COURT

Deduction of tax at source --Penalty--Failure to deduct tax at source--Finding by Commissioner (Appeals) and Tribunal that tax and interest under section 201(1) and (1A) paid and no case made out for levy of penalty--No substantial question of law arises--Income-tax Act, 1961, s. 271C-- CIT v. Bank of Nova Scotia . . . 550

Settlement of cases --Change of law--Provision for abatement of proceedings where no order passed by cut-off date--To be read down--Abatement only where failure owing to reasons attributable to applicant--Order of High Court holding proceedings abated--Set aside and matter remanded to High Court for decision afresh on merits--Income-tax Act, 1961, s. 245HA(1)(iv), (3)-- CIT v. Rajendra Kumar Verma . . . 430

 

HIGH COURTS

Appeal to Appellate Tribunal --Power to rectify defects in order--Application under sections 154(1A) and 254(2) for rectification--Rejection of application under section 254(2) justified--Income-tax Act, 1961, s. 254-- Indus Finance Corporation Ltd. v. CIT (Mad) . . . 504

Capital gains --Meaning of "transfer"--Transfer includes extinguishment of rights in capital asset--Surrender of floor area ratio rights in land amounts to transfer--Income-tax Act, 1961, s. 2(47)-- CIT v. Dinesh D. Ranka (Karn) . . . 440

----Slump sale--Net worth of undertaking--Aggregate value of total assets--Definitions--Depreciable assets--Incorporation by reference of section 43(6)(c)(i)(C)--Effect--Clause (C) must be read as an integral part of clause (a) of Explanation 2 to section 50B--Actual cost to be reduced, inter alia, by depreciation as would have been allowable for years commencing on or after 1-4-1988--Depreciation actually allowed for these years not relevant--Aggregate value of total assets not to be taken at written down value of block of assets as existing--Income-tax Act, 1961, ss. 2(11), 32, 43(6)(c)(i)(C), 50B-- CIT v. Dharampal Satyapal (Delhi) . . . 527

Capital or revenue receipt --Money to be used in purchase of plant and machinery temporarily placed in fixed deposits--Inextricably linked with setting up of plant--Interest on fixed deposits--Capital receipt--Income-tax Act, 1961-- Principal CIT v. Facor Power Ltd.(Delhi) . . . 474

Deduction of tax at source --Interest--Insurance company--Death or injury--Compensation--Not a business transaction or a receipt of any charges on account of services rendered by any other party--Insurance company not required to deduct tax at source--Income-tax Act, 1961-- New India Assurance Co. Ltd. v. Sudesh Chawla (P&H) . . . 467

Depreciation --Additional depreciation--One-time benefit to encourage industrialisation--Half of twenty per cent. allowable where plant and machinery put to use after October 31, 2006 and before March 31, 2007--No restriction in claiming balance ten per cent. in next assessment year--Income-tax Act, 1961, s. 32(1)(iia)-- CIT (LTU) v. Rittal India Pvt. Ltd. (No. 2 ) (Karn) . . . 428

----Additional depreciation--One-time benefit to encourage industrialisation--Plant and machinery set up after October 31, 2006 and before March 31, 2007--Half of additional depreciation of twenty per cent. allowable--No restriction in claiming balance ten per cent. in next assessment year--Income-tax Act, 1961, s. 32(1)(iia)-- CIT v. Rittal India Pvt. Ltd. (No.1 ) (Karn) . . . 423

----Meaning of "owner"--Lease of land for ninety- nine years--Lessee constructing buildings on land and in full control of such buildings--Entitled to depreciation on buildings and on sanitary fittings installed in them--Income-tax Act, 1961, s. 32-- CIT v. Bharat Hotels Ltd.(Delhi) . . . 552

Income --Computation of income--Disallowance under section 14A--Appellate authorities finding ten per cent. of income earned could be apportioned towards expenses for earning dividend--Finding not perverse--Income-tax Rules, 1962, r. 8D--Income-tax Act, 1961, s. 14A-- CIT v. India Advantage Securities Ltd. (Bom) . . . 471

----Lease of land for ninety-nine years--Lessee constructing buildings on land--Spaces in buildings allotted to sub-lessees and interest-free deposits collected--Amount reflected in business income--No further addition could be made--Income-tax Act, 1961-- CIT v. Bharat Hotels Ltd. (Delhi) . . . 552

Income-tax --General principles--Estoppel against pursuing parallel proceedings before two different authorities for same relief-- Indus Finance Corporation Ltd. v. CIT (Mad) . . . 504

Industrial undertaking --Special deduction under section 80-IB --Year in which special deduction is available--Year of manufacture--Three machines manufactured by assessee shown in exhibition in January, 1995--All three machines sold to allied concerns--Not relevant--Manufacture started in accounting year 1994-95 relevant to assessment year 1995-96 not 1996-97--Income-tax Act, 1961, s. 80-IB-- ACE Manufacturing Systems Ltd. v.Addl. CIT (LTU) (Karn) . . . 432

International transactions --Arm’s length price--Effect of section 92CA--Amount in dispute exceeding five crores of rupees--Matter has to be referred to Transfer Pricing Officer--Income-tax Act, 1961, ss. 92CA, 144C-- Carrier Race Technologies Pvt. Ltd. v. ITO(Mad) . . . 483

Interpretation of statutes --Beneficial provision--Additional depreciation--To be construed reasonably and purposively-- CIT (LTU) v. Rittal India Pvt. Ltd. (No. 2 ) (Karn) . . . 428

Interpretation of taxing statutes --Additional depreciation--Beneficial legislation--Liberal construction-- CIT v. Rittal India Pvt. Ltd. (No. 1 ) (Karn) . . . 423

----Definition-- CIT v. Dinesh D. Ranka (Karn) . . . 440

----Incorporation of provision by reference-- CIT v. Dharampal Satyapal (Delhi) . . . 527

Penalty --Concealment of income--Furnishing inaccurate particulars of income--Discretionary power of Tribunal to set aside penalty--Foreign gifts--Factum of gifts mentioned in note in return--When explanation called for further particulars not furnished on account of sour relationship--Tribunal cancelling penalty--No substantial question of law--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Sunila Sharma (P&H) . . . 462

Precedent --Effect of decisions of Supreme Court in Podar Cement case and Mysore Minerals case-- CIT v. Bharat Hotels Ltd. (Delhi) . . . 552

Reassessment --Notice after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Deductions granted in original assessment after enquiry--Reassessment proceedings after four years to withdraw deduction--No failure to disclose material facts necessary for assessment--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- E-Infochips Ltd. v. Deputy CIT (Guj) . . . 449

----Notice after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Treatment of unutilised Cenvat credit for valuing stock examined by Assessing Officer in original scrutiny assessment--Notice after four years to recompute value of stock--No failure to disclose material facts necessary for assessment--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Tirupati Foam Ltd. v. Deputy CIT (Guj) . . . 493

Rectification of mistakes --Effect of section 154(1A)--Power to rectify matter not considered in original order of rectification--Lease deed found to be bogus in search proceedings--Disallowance of depreciation in block assessment--Lease income assessed as income from financing transaction--No appeal against such assessment or disallowance of depreciation--Earlier application for rectification given up--Application under section 154(1A) to delete income from lease--Not valid--Income-tax Act, 1961, s. 154-- Indus Finance Corporation Ltd.v. CIT (Mad) . . . 504

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 2(11) --Capital gains--Slump sale--Net worth of undertaking--Aggregate value of total assets--Definitions--Depreciable assets--Incorporation by reference of section 43(6)(c)(i)(C)--Effect--Clause (C) must be read as an integral part of clause (a) of Explanation 2 to section 50B--Actual cost to be reduced, inter alia, by depreciation as would have been allowable for years commencing on or after 1-4-1988--Depreciation actually allowed for these years not relevant--Aggregate value of total assets not to be taken at written down value of block of assets as existing-- CIT v. Dharampal Satyapal (Delhi) . . . 527

S. 2(47) --Capital gains--Meaning of "transfer"--Transfer includes extinguishment of rights in capital asset--Surrender of floor area ratio rights in land amounts to transfer-- CIT v. Dinesh D. Ranka (Karn) . . . 440

S. 14A --Income--Computation of income--Disallowance under section 14A--Appellate authorities finding ten per cent. of income earned could be apportioned towards expenses for earning dividend--Finding not perverse-- CIT v. India Advantage Securities Ltd. (Bom) . . . 471

S. 32 --Capital gains--Slump sale--Net worth of undertaking--Aggregate value of total assets--Definitions--Depreciable assets--Incorporation by reference of section 43(6)(c)(i)(C)--Effect--Clause (C) must be read as an integral part of clause (a) of Explanation 2 to section 50B--Actual cost to be reduced, inter alia, by depreciation as would have been allowable for years commencing on or after 1-4-1988--Depreciation actually allowed for these years not relevant--Aggregate value of total assets not to be taken at written down value of block of assets as existing-- CIT v. Dharampal Satyapal (Delhi) . . . 527

----Depreciation--Meaning of "owner"--Lease of land for ninety- nine years--Lessee constructing buildings on land and in full control of such buildings--Entitled to depreciation on buildings and on sanitary fittings installed in them-- CIT v. Bharat Hotels Ltd. (Delhi) . . . 552

S. 32(1)(iia) --Depreciation--Additional depreciation--One-time benefit to encourage industrialisation--Half of twenty per cent. allowable where plant and machinery put to use after October 31, 2006 and before March 31, 2007--No restriction in claiming balance ten per cent. in next assessment year-- CIT (LTU) v. Rittal India Pvt. Ltd. (No. 2 ) (Karn) . . . 428

----Depreciation--Additional depreciation--One-time benefit to encourage industrialisation--Plant and machinery set up after October 31, 2006 and before March 31, 2007--Half of additional depreciation of twenty per cent. allowable--No restriction in claiming balance ten per cent. in next assessment year-- CIT v. Rittal India Pvt. Ltd. (No. 1 ) (Karn) . . . 423

S. 43(6)(c)(i)(C) --Capital gains--Slump sale--Net worth of undertaking--Aggregate value of total assets--Definitions--Depreciable assets--Incorporation by reference of section 43(6)(c)(i)(C)--Effect--Clause (C) must be read as an integral part of clause (a) of Explanation 2 to section 50B--Actual cost to be reduced, inter alia, by depreciation as would have been allowable for years commencing on or after 1-4-1988--Depreciation actually allowed for these years not relevant--Aggregate value of total assets not to be taken at written down value of block of assets as existing-- CIT v. Dharampal Satyapal (Delhi) . . . 527

S. 50B --Capital gains--Slump sale--Net worth of undertaking--Aggregate value of total assets--Definitions--Depreciable assets--Incorporation by reference of section 43(6)(c)(i)(C)--Effect--Clause (C) must be read as an integral part of clause (a) of Explanation 2 to section 50B--Actual cost to be reduced, inter alia, by depreciation as would have been allowable for years commencing on or after 1-4-1988--Depreciation actually allowed for these years not relevant--Aggregate value of total assets not to be taken at written down value of block of assets as existing-- CIT v. Dharampal Satyapal (Delhi) . . . 527

S. 80-IB --Industrial undertaking--Special deduction under section 80-IB --Year in which special deduction is available--Year of manufacture--Three machines manufactured by assessee shown in exhibition in January, 1995--All three machines sold to allied concerns--Not relevant--Manufacture started in accounting year 1994-95 relevant to assessment year 1995-96 not 1996-97-- ACE Manufacturing Systems Ltd. v. Addl. CIT (LTU) (Karn) . . . 432

S. 92CA --International transactions--Arm’s length price--Effect of section 92CA--Amount in dispute exceeding five crores of rupees--Matter has to be referred to Transfer Pricing Officer-- Carrier Race Technologies Pvt. Ltd. v. ITO (Mad) . . . 483

S. 144C --International transactions--Arm’s length price--Effect of section 92CA--Amount in dispute exceeding five crores of rupees--Matter has to be referred to Transfer Pricing Officer-- Carrier Race Technologies Pvt. Ltd. v. ITO (Mad) . . . 483

S. 147 --Reassessment--Notice after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Deductions granted in original assessment after enquiry--Reassessment proceedings after four years to withdraw deduction--No failure to disclose material facts necessary for assessment--Notice not valid-- E-Infochips Ltd. v.Deputy CIT (Guj) . . . 449

----Reassessment--Notice after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Treatment of unutilised Cenvat credit for valuing stock examined by Assessing Officer in original scrutiny assessment--Notice after four years to recompute value of stock--No failure to disclose material facts necessary for assessment--Notice not valid-- Tirupati Foam Ltd. v. Deputy CIT (Guj) . . . 493

S. 148 --Reassessment--Notice after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Deductions granted in original assessment after enquiry--Reassessment proceedings after four years to withdraw deduction--No failure to disclose material facts necessary for assessment--Notice not valid-- E-Infochips Ltd. v.Deputy CIT (Guj) . . . 449

----Reassessment--Notice after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Treatment of unutilised Cenvat credit for valuing stock examined by Assessing Officer in original scrutiny assessment--Notice after four years to recompute value of stock--No failure to disclose material facts necessary for assessment--Notice not valid-- Tirupati Foam Ltd. v. Deputy CIT (Guj) . . . 493

S. 154 --Rectification of mistakes--Effect of section 154(1A)--Power to rectify matter not considered in original order of rectification--Lease deed found to be bogus in search proceedings--Disallowance of depreciation in block assessment--Lease income assessed as income from financing transaction--No appeal against such assessment or disallowance of depreciation--Earlier application for rectification given up--Application under section 154(1A) to delete income from lease--Not valid-- Indus Finance Corporation Ltd. v. CIT (Mad) . . . 504

S. 245HA(1)(iv), (3) --Settlement of cases--Change of law--Provision for abatement of proceedings where no order passed by cut-off date--To be read down--Abatement only where failure owing to reasons attributable to applicant--Order of High Court holding proceedings abated--Set aside and matter remanded to High Court for decision afresh on merits-- CIT v. Rajendra Kumar Verma(SC) . . . 430

S. 254 --Appeal to Appellate Tribunal--Power to rectify defects in order--Application under sections 154(1A) and 254(2) for rectification--Rejection of application under section 254(2) justified-- Indus Finance Corporation Ltd. v. CIT (Mad) . . . 504

S. 271(1)(c) --Penalty--Concealment of income--Furnishing inaccurate particulars of income--Discretionary power of Tribunal to set aside penalty--Foreign gifts--Factum of gifts mentioned in note in return--When explanation called for further particulars not furnished on account of sour relationship--Tribunal cancelling penalty--No substantial question of law-- CIT v. Sunila Sharma (P&H) . . . 462

S. 271C --Deduction of tax at source--Penalty--Failure to deduct tax at source--Finding by Commissioner (Appeals) and Tribunal that tax and interest under section 201(1) and (1A) paid and no case made out for levy of penalty--No substantial question of law arises-- CIT v.Bank of Nova Scotia (SC). . . 550

 

Income-tax Rules, 1962 :

R. 8D --Income--Computation of income--Disallowance under section 14A--Appellate authorities finding ten per cent. of income earned could be apportioned towards expenses for earning dividend--Finding not perverse-- CIT v. India Advantage Securities Ltd. (Bom) . . . 471

 

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Posted by: CA RAJU SHAH <shahmars@hotmail.com>