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Thursday, February 11, 2016

ITR (TRIB) Volume 45 : Part 6 (Issue dated : 8-2-2016)

 

 

 

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

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Income --Computation of income--Disallowance of expenditure relating to exempt income--Rule 8D applicable from assessment year 2008-09--No power in appellate authorities to estimate expenditure on reasonable basis--No requirement for Assessing Officer to record satisfaction as to correctness of assessee's voluntary disallowance--Whether on certain investments no exempt income arise--Order of Commissioner (Appeals) remanding matter back to Assessing Officer to recompute disallowance--Proper--Assessing Officer to point out why voluntary disallowance made by assessee unreasonable and unsatisfactory--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Munjal Sales Corporation v . Asst. CIT (Chandigarh) . . . 69

 

PRINT EDITION

Volume 45 : Part 6 (Issue dated : 8-2-2016)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Capital gains --Exemption--Purchase or construction of residential house--Property booked with Housing Board by assessee's mother-in-law, payments made and possession of house taken by her--Assessee later applying to Housing Board to add her name--All payments made 17 months prior to date of sale of flat--Purchase of constructed house in a self-financing scheme from authority treated as construction not purchase of residential house--Assessee not entitled to exemption under section 54F--Income-tax Act, 1961, s. 54F--Seema Singh Beniwal v. Deputy CIT
(Jaipur) . . . 664

----Exemption--Purchase or construction of residential house--Purchase of plot out of sum deposited in capital gains account and investment in construction of garage unit--Construction habitable as servant quarters--Construction within three years from date of sale--Assessee entitled to deduction under section 54F--Income-tax Act, 1961, s. 54F--Seema Singh Beniwal v. Deputy CIT (Jaipur) . . . 664

----Immovable property--Fair market value--Reference to Departmental Valuation Officer--Assessee challenging valuation--Primary duty of Assessing Officer to refer matter to Departmental Valuation Officer for valuation--Failure by Assessing Officer to discharge his duty--Assessing Officer to refer matter to Departmental Valuation Officer to decide afresh--Matter remanded--Income-tax Act, 1961, s. 50C-- S. D. Vimalchand Jain v. ITO (Chennai) . . . 628

Cash credits --Burden of proof--Share application money--Share applicants confirming investment in assessee--Burden on assessee discharged--Moneys cannot be brought to tax as unexplained cash credits--Income-tax Act, 1961, s. 68-- A. P. Refinery P. Ltd. v. Addl. CIT(Chandigarh) . . . 724

Charitable purpose --Definition--Change of law--Advancement of object of general public utility--Profits from business activity incidental to attainment of objectives of trust--Exempt--Insertion of provisos in 2008 and 2009--Effect--No disqualification as long as object of general public utility not merely mask to hide true purpose of rendering of service in relation to trade, commerce or business and such services rendered incidental to or subservient to main object of "general public utility"--Amendment in 2015 signifying substantive conceptual change--Prospective in nature--Income-tax Act, 1961, ss. 2(15), provisos, 11-- Hoshiarpur Improvement Trust v. ITO
(Amritsar) . . . 682

----Definition--Profit motive--Profit on sale does not necessarily imply profit motive--Income-tax Act, 1961, s. 2(15)-- Hoshiarpur Improvement Trust v. ITO
(Amritsar) . . . 682

----Object of general public utility--Does not necessarily require activities or beneficiaries must be funded or subsidised by State--Trusts formed by State Government under statute for planned development of cities and towns--Planned development of cities and towns an object of general public utility--Formation of trusts not mask or device to hide true purpose of business--Presence of profit element in conservancy changes and unforeseen charges does not vitiate charitable character of activities--Auction does not make functioning of trusts a commercial venture--Trusts not implementing poverty alleviation programs--Object of general public utility does not necessarily involve direct acts of charity driven by compassion and benevolence--Trusts entitled to exemption--Income-tax Act, 1961, s. 2(15), provisos--Hoshiarpur Improvement Trust v. ITO
(Amritsar) . . . 682

Income --Principle of mutuality--Conditions for application--Beneficiaries of assessee-trust general public--Contributors of assessee have no role in administration--Principle of mutuality not applicable--Income-tax Act, 1961-- Sri Sai Padhuga Trust v. ITO (Exemptions) (Chennai) . . . 633

Reassessment --Jurisdiction--Reassessment not permissible on mere change of opinion--Report of Investigation Wing revealing assessee accepting accommodation entries part of record before Assessing Officer at stage of original assessment--Assessment order stated to have been passed on basis of material relating to investments in assessee--Reassessment to bring to tax share application moneys as undisclosed income of assessee--Not permissible--Income-tax Act, 1961, ss. 68, 69C, 148-- A. P. Refinery P. Ltd. v. Addl. CIT(Chandigarh) . . . 724

Search and seizure --Undisclosed income--Director put under coercion to surrender additional income--Disclosure not voluntary--Assessee contending that surrender in connection with alleged excess stock pointed out by search officials--No incriminating material supporting offer other than diary containing trade transactions--Additional income offered only in connection with alleged excess stock--Income-tax Act, 1961, s. 132, 132(4)--Tribhovandas Bhimji Zaveri (Delhi) P. Ltd. v. Asst. CIT
(Mumbai) . . . 636

----Unexplained investment--Pocket diary seized during search--Presumption that belonged to assessee--Transactions noted down in diary tallying with jewellery items dealt with by assessee--Transactions in diary can only be trade transactions--Gross profit declared by assessee to be assessed in respect of transactions noted down in diary--Addition to be restricted at rate of gross profit--Income-tax Act, 1961, s. 69-- Tribhovandas Bhimji Zaveri (Delhi) P. Ltd. v. Asst. CIT (Mumbai) . . . 636

Unexplained money --Reconciliation statement by assessee that some items to be included in physical stock and some items received on sale or return basis from its suppliers to be excluded from book stock--Commissioner (Appeals) enhancing addition accepting inclusion of physical stock and rejecting exclusion of return from book stock--Pick and choose basis adopted by Commissioner (Appeals) not permissible--Commissioner (Appeals) not providing opportunity to assessee before enhancing addition--Violation of section 251(2)--No merit in decision of Commissioner (Appeals)--Income-tax Act, 1961, s. 69A-- Tribhovandas Bhimji Zaveri (Delhi) P. Ltd. v. Asst. CIT
(Mumbai) . . . 636

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961

S. 2(15) --Charitable purpose--Definition--Profit motive--Profit on sale does not necessarily imply profit motive-- Hoshiarpur Improvement Trust v. ITO
(Amritsar) . . . 682

S. 2(15), provisos --Charitable purpose--Definition--Change of law--Advancement of object of general public utility--Profits from business activity incidental to attainment of objectives of trust--Exempt--Insertion of provisos in 2008 and 2009--Effect--No disqualification as long as object of general public utility not merely mask to hide true purpose of rendering of service in relation to trade, commerce or business and such services rendered incidental to or subservient to main object of "general public utility"--Amendment in 2015 signifying substantive conceptual change--Prospective in nature-- Hoshiarpur Improvement Trust v. ITO (Amritsar) . . . 682

----Charitable purpose--Object of general public utility--Does not necessarily require activities or beneficiaries must be funded or subsidised by State--Trusts formed by State Government under statute for planned development of cities and towns--Planned development of cities and towns an object of general public utility--Formation of trusts not mask or device to hide true purpose of business--Presence of profit element in conservancy changes and unforeseen charges does not vitiate charitable character of activities--Auction does not make functioning of trusts a commercial venture--Trusts not implementing poverty alleviation programs--Object of general public utility does not necessarily involve direct acts of charity driven by compassion and benevolence--Trusts entitled to exemption-- Hoshiarpur Improvement Trust v. ITO
(Amritsar) . . . 682

S. 11 --Charitable purpose--Definition--Change of law--Advancement of object of general public utility--Profits from business activity incidental to attainment of objectives of trust--Exempt--Insertion of provisos in 2008 and 2009--Effect--No disqualification as long as object of general public utility not merely mask to hide true purpose of rendering of service in relation to trade, commerce or business and such services rendered incidental to or subservient to main object of "general public utility"--Amendment in 2015 signifying substantive conceptual change--Prospective in nature-- Hoshiarpur Improvement Trust v. ITO (Amritsar) . . . 682

S. 50C --Capital gains--Immovable property--Fair market value--Reference to Departmental Valuation Officer--Assessee challenging valuation--Primary duty of Assessing Officer to refer matter to Departmental Valuation Officer for valuation--Failure by Assessing Officer to discharge his duty--Assessing Officer to refer matter to Departmental Valuation Officer to decide afresh--Matter remanded-- S. D. Vimalchand Jain v. ITO (Chennai) . . . 628

S. 54F --Capital gains--Exemption--Purchase or construction of residential house--Property booked with Housing Board by assessee's mother-in-law, payments made and possession of house taken by her--Assessee later applying to Housing Board to add her name--All payments made 17 months prior to date of sale of flat--Purchase of constructed house in a self-financing scheme from authority treated as construction not purchase of residential house--Assessee not entitled to exemption under section 54F-- Seema Singh Beniwal v. Deputy CIT (Jaipur) . . . 664

----Capital gains--Exemption--Purchase or construction of residential house--Purchase of plot out of sum deposited in capital gains account and investment in construction of garage unit--Construction habitable as servant quarters--Construction within three years from date of sale--Assessee entitled to deduction under section 54F-- Seema Singh Beniwal v. Deputy CIT (Jaipur) . . . 664

S. 68 --Cash credits--Burden of proof--Share application money--Share applicants confirming investment in assessee--Burden on assessee discharged--Moneys cannot be brought to tax as unexplained cash credits-- A. P. Refinery P. Ltd. v. Addl. CIT
(Chandigarh) . . . 724

----Reassessment--Jurisdiction--Reassessment not permissible on mere change of opinion--Report of Investigation Wing revealing assessee accepting accommodation entries part of record before Assessing Officer at stage of original assessment--Assessment order stated to have been passed on basis of material relating to investments in assessee--Reassessment to bring to tax share application moneys as undisclosed income of assessee--Not permissible-- A. P. Refinery P. Ltd. v. Addl. CIT
(Chandigarh) . . . 724

S. 69 --Search and seizure--Unexplained investment--Pocket diary seized during search--Presumption that belonged to assessee--Transactions noted down in diary tallying with jewellery items dealt with by assessee--Transactions in diary can only be trade transactions--Gross profit declared by assessee to be assessed in respect of transactions noted down in diary--Addition to be restricted at rate of gross profit-- Tribhovandas Bhimji Zaveri (Delhi) P. Ltd. v. Asst. CIT (Mumbai) . . . 636

S. 69A --Unexplained money--Reconciliation statement by assessee that some items to be included in physical stock and some items received on sale or return basis from its suppliers to be excluded from book stock--Commissioner (Appeals) enhancing addition accepting inclusion of physical stock and rejecting exclusion of return from book stock--Pick and choose basis adopted by Commissioner (Appeals) not permissible--Commissioner (Appeals) not providing opportunity to assessee before enhancing addition--Violation of section 251(2)--No merit in decision of Commissioner (Appeals)-- Tribhovandas Bhimji Zaveri (Delhi) P. Ltd. v. Asst. CIT (Mumbai) . . . 636

S. 69C --Reassessment--Jurisdiction--Reassessment not permissible on mere change of opinion--Report of Investigation Wing revealing assessee accepting accommodation entries part of record before Assessing Officer at stage of original assessment--Assessment order stated to have been passed on basis of material relating to investments in assessee--Reassessment to bring to tax share application moneys as undisclosed income of assessee--Not permissible-- A. P. Refinery P. Ltd. v. Addl. CIT
(Chandigarh) . . . 724

S. 132 --Search and seizure--Undisclosed income--Director put under coercion to surrender additional income--Disclosure not voluntary--Assessee contending that surrender in connection with alleged excess stock pointed out by search officials--No incriminating material supporting offer other than diary containing trade transactions--Additional income offered only in connection with alleged excess stock-- Tribhovandas Bhimji Zaveri (Delhi) P. Ltd. v. Asst. CIT (Mumbai) . . . 636

S. 132(4) --Search and seizure--Undisclosed income--Director put under coercion to surrender additional income--Disclosure not voluntary--Assessee contending that surrender in connection with alleged excess stock pointed out by search officials--No incriminating material supporting offer other than diary containing trade transactions--Additional income offered only in connection with alleged excess stock-- Tribhovandas Bhimji Zaveri (Delhi) P. Ltd. v. Asst. CIT (Mumbai) . . . 636

S. 148 --Reassessment--Jurisdiction--Reassessment not permissible on mere change of opinion--Report of Investigation Wing revealing assessee accepting accommodation entries part of record before Assessing Officer at stage of original assessment--Assessment order stated to have been passed on basis of material relating to investments in assessee--Reassessment to bring to tax share application moneys as undisclosed income of assessee--Not permissible-- A. P. Refinery P. Ltd. v. Addl. CIT
(Chandigarh) . . . 724

 

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