INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Capital gains --Business--Capital gains or business income--Shares held as stock-in-trade by company belonging to group--Resolution to convert shares into investment--Income from sales within few months--Finding that transaction was collusive--Income assessable as business income--Income-tax Act, 1961, ss. 28, 45-- CIT v. Abhinandan Investment Ltd.(Delhi) . . . 139
Income-tax --General principles--Transactions to evade tax--Principle in McDowell and Co.'s case [1985] 154 ITR 148 (SC) explained-- CIT v. Abhinandan Investment Ltd. (Delhi) . . . 139
Loss --Carry forward and set off--Income from transfer of shares and sale of entitlement to acquire partly convertible debentures--Business income--Loss on sale of entitlement to acquire partly convertible debentures--Transactions among related companies--Transaction collusive--Loss not allowable--Income-tax Act, 1961, s. 28, 45-- CIT v. Sun Investments Ltd.(Delhi) . . . 164
----Loss on sale of entitlement to acquire partly convertible debentures--Finding that loss was contrived--Loss not allowable--Income-tax Act, 1961--CIT v. Abhinandan Investment Ltd. (Delhi) . . . 139
Non-resident --Income deemed to accrue or arise in India--Permanent establishment in India--Income from permanent establishment assessable as business income--Receipts in US dollars not taxable--Income-tax Act, 1961, s. 9(1)-- DIT International Taxation v. J Ray McDermott Eastern Hemisphere Ltd. (Bom) . . . 137
ITR Volume 381 : Part 2 (Issue dated : 22-2-2016)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Business --Business income--Computation of income from distribution of feature films--Effect of rule 9B--Distribution rights acquired on basis of minimum guarantee--Amount paid to be taken as cost of acquisition of distribution rights--Cost of acquisition would not include publicity expenses or expenditure incurred for preparation of positive prints of film--Income-tax Act, 1961, s. 28--Income-tax Rules, 1962, r. 9B-- Honey Enterprises v. CIT (Delhi) . . . 258
----Business income--Computation of income from distribution of feature films--Films not released for exhibition at least one hundred eighty days before end of relevant previous year--Cost of acquisition of distribution rights not exceeding amount realised allowable as deduction--Income-tax Act, 1961, s. 28--Income-tax Rules, 1962, r. 9B-- Honey Enterprisesv. CIT (Delhi) . . . 258
Business expenditure --Disallowance of expenditure--Payments exceeding prescribed limit otherwise than by crossed cheque or crossed bank draft--Exclusion from disallowance--Scope of rule 6DD and Circular No. 220 dated 31-5-1977--Rule 6DD allows exclusion where payment made in unavoidable circumstances--Circumstances enumerated in circular not exhaustive--Practicability of payment to be judged from point of view of businessman--Genuineness of payments and identities of payees established--Circumstances indicating unavoidable circumstances--Payments cannot be disallowed--Income-tax Act, 1961, s. 40A(3)--Income-tax Rules, 1962, r. 6DD--Circular No. 220 dated 31-5-1977-- Honey Enterprises v. CIT (Delhi) . . . 258
----Disallowance--Payments liable to deduction of tax at source--Shipping business of non-resident--General principles--Demurrage charges paid by Indian company to foreign company--Whether liable for deduction of tax at source--Income-tax Act, 1961, ss. 40(a)(i), 172, 195-- CIT v. V. S. Dempo and Co. P. Ltd. [FB] (Bom) . . . 303
----Interest on borrowed capital--Assessee having sufficient interest-free advances from its directors, shareholders and members of their families to cover interest-free advances made by company--Interest on borrowings not to be disallowed--Income-tax Act, 1961, s. 36(1)(iii)-- CIT v. Kapsons Associates (P&H) . . . 204
----Interest on borrowed capital--Effect of Explanation 8 to section 43(1)--Borrowed capital used for construction of hotels as part of expansion of business--Interest deductible--Income-tax Act, 1961, ss. 36(1)(iii), 37-- CIT v. Bharat Hotels Ltd. (Delhi) . . . 222
----Investments in shops and penthouses--Merely because some properties were rented it cannot be inferred that investments in other properties not for business purpose--Assessee can give its properties on rent and acquire further properties towards investment--Deduction allowable--Income-tax Act, 1961-- CIT v. Kapsons Associates (P&H) . . . 204
Capital gains --Exemption--Sale of long-term capital asset and purchase of residential house within prescribed time--Finding that shares had been held for prescribed period before being sold and that assessee did not own another residential house--Assessee entitled to exemption under section 54F--Income-tax Act, 1961, s. 54F-- CIT v. Kapil Nagpal (Delhi) . . . 351
----Transfer--Conversion of firm into company--Shareholders of company consisting of erstwhile partners of firm--Allotment of shares to partners--No accrual of full value of consideration to transferor and no distribution of capital assets--Section 45(1) or (4) not applicable--No accrual of capital gains--Income-tax Act, 1961, s. 45(1), (4)-- Deputy CIT v.R. L. Kalathia and Co. (Guj) . . . 180
Cash credit --Amounts claimed to be gifts--Tribunal finding that creditworthiness of donors and genuineness of gifts not proved--Amounts assessable under section 68--Income-tax Act, 1961, s. 68-- Laxmandas Sujandas Dalpat v. ITO (Guj) . . . 283
Collection of tax at source --Scrap--Definition--Ship breaking--Items are finished products and constitute sizeable part of production by ship breakers--Items usable as such and not "scrap"--Assessee not liable to collect tax at source on sale thereof--Income-tax Act, 1961, ss. 201(1), (1A), 206C(1)--Income-tax Rules, 1962, r. 37C-- CIT (TDS) v. Priya Blue Industries P. Ltd. (Guj) . . . 210
Income --Computation of income--Disallowance of expenditure relating to exempt income--Investments in mutual funds and equity funds--Assessee claiming investments to be old made out of capital and outstanding reserves of company and no separate amount borrowed for making such investments--Disallowance only after recording satisfaction that claim not correct--Assessing Officer not recording any reasons for rejecting claim of assessee--Finding of fact recorded by Commissioner (Appeals) and Appellate Tribunal not perverse--No substantial question of law arose for consideration--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- CIT v. Kapsons Associates (P&H) . . . 204
Income-tax --General principles--Res judicata not applicable-- Honey Enterprises v. CIT(Delhi) . . . 258
International transactions --Arm's length price--Selection of comparables--Companies large and distinct with different area of development of services--Cannot be benchmarked or equated with assessee--Exclusion of three companies based on appreciation of evidence on record--Concurrent findings of fact by authorities below cannot be re-appreciated in appeal--Income-tax Act, 1961, s. 92CA-- CIT v. Pentair Water India Pvt. Ltd. (Bom) . . . 216
Precedent --Effect of decision of Supreme Court in Deputy CIT v. Core Health Care Ltd.[2008] 298 ITR 194 (SC)-- CIT v. Bharat Hotels Ltd. (Delhi) . . . 222
Transfer pricing --International transactions--Arm's length price--Determination--Advertising, marketing and promotion expenses--No evidence to show existence of international transaction between assessee and its foreign associated enterprise as regards such expenses--Question of determination of arm's length price does not arise--Incidental benefit to foreign associated enterprise--Not to be concluded as brand building exercise--Income-tax Act, 1961, s. 92B-- Bausch and Lomb Eyecare (India) Pvt. Ltd. v. Addl. CIT (Delhi) . . . 227
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 14A --Income--Computation of income--Disallowance of expenditure relating to exempt income--Investments in mutual funds and equity funds--Assessee claiming investments to be old made out of capital and outstanding reserves of company and no separate amount borrowed for making such investments--Disallowance only after recording satisfaction that claim not correct--Assessing Officer not recording any reasons for rejecting claim of assessee--Finding of fact recorded by Commissioner (Appeals) and Appellate Tribunal not perverse--No substantial question of law arose for consideration-- CIT v. Kapsons Associates (P&H) . . . 204
S. 28 --Business--Business income--Computation of income from distribution of feature films--Effect of rule 9B--Distribution rights acquired on basis of minimum guarantee--Amount paid to be taken as cost of acquisition of distribution rights--Cost of acquisition would not include publicity expenses or expenditure incurred for preparation of positive prints of film-- Honey Enterprises v. CIT (Delhi) . . . 258
----Business--Business income--Computation of income from distribution of feature films--Films not released for exhibition at least one hundred eighty days before end of relevant previous year--Cost of acquisition of distribution rights not exceeding amount realised allowable as deduction-- Honey Enterprises v. CIT (Delhi) . . . 258
S. 36(1)(iii) --Business expenditure--Interest on borrowed capital--Assessee having sufficient interest-free advances from its directors, shareholders and members of their families to cover interest-free advances made by company--Interest on borrowings not to be disallowed-- CIT v. Kapsons Associates (P&H) . . . 204
----Business expenditure--Interest on borrowed capital--Effect of Explanation 8 to section 43(1)--Borrowed capital used for construction of hotels as part of expansion of business--Interest deductible-- CIT v. Bharat Hotels Ltd. (Delhi) . . . 222
S. 37 --Business expenditure--Interest on borrowed capital--Effect of Explanation 8 to section 43(1)--Borrowed capital used for construction of hotels as part of expansion of business--Interest deductible-- CIT v. Bharat Hotels Ltd. (Delhi) . . . 222
S. 40(a)(i) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Shipping business of non-resident--General principles--Demurrage charges paid by Indian company to foreign company--Whether liable for deduction of tax at source-- CIT v. V. S. Dempo and Co. P. Ltd. [FB] (Bom) . . . 303
S. 40A(3) --Business expenditure--Disallowance of expenditure--Payments exceeding prescribed limit otherwise than by crossed cheque or crossed bank draft--Exclusion from disallowance--Scope of rule 6DD and Circular No. 220 dated 31-5-1977--Rule 6DD allows exclusion where payment made in unavoidable circumstances--Circumstances enumerated in circular not exhaustive--Practicability of payment to be judged from point of view of businessman--Genuineness of payments and identities of payees established--Circumstances indicating unavoidable circumstances--Payments cannot be disallowed--Honey Enterprises v. CIT (Delhi) . . . 258
S. 45(1) --Capital gains--Transfer--Conversion of firm into company--Shareholders of company consisting of erstwhile partners of firm--Allotment of shares to partners--No accrual of full value of consideration to transferor and no distribution of capital assets--Section 45(1) or (4) not applicable--No accrual of capital gains-- Deputy CIT v. R. L. Kalathia and Co. (Guj) . . . 180
S. 45(4) --Capital gains--Transfer--Conversion of firm into company--Shareholders of company consisting of erstwhile partners of firm--Allotment of shares to partners--No accrual of full value of consideration to transferor and no distribution of capital assets--Section 45(1) or (4) not applicable--No accrual of capital gains-- Deputy CIT v. R. L. Kalathia and Co. (Guj) . . . 180
S. 54F --Capital gains--Exemption--Sale of long-term capital asset and purchase of residential house within prescribed time--Finding that shares had been held for prescribed period before being sold and that assessee did not own another residential house--Assessee entitled to exemption under section 54F-- CIT v. Kapil Nagpal (Delhi) . . . 351
S. 68 --Cash credit--Amounts claimed to be gifts--Tribunal finding that creditworthiness of donors and genuineness of gifts not proved--Amounts assessable under section 68--Laxmandas Sujandas Dalpat v. ITO (Guj) . . . 283
S. 92B --Transfer pricing--International transactions--Arm's length price--Determination--Advertising, marketing and promotion expenses--No evidence to show existence of international transaction between assessee and its foreign associated enterprise as regards such expenses--Question of determination of arm's length price does not arise--Incidental benefit to foreign associated enterprise--Not to be concluded as brand building exercise--Bausch and Lomb Eyecare (India) Pvt. Ltd. v. Addl. CIT (Delhi) . . . 227
S. 92CA --International transactions--Arm's length price--Selection of comparables--Companies large and distinct with different area of development of services--Cannot be benchmarked or equated with assessee--Exclusion of three companies based on appreciation of evidence on record--Concurrent findings of fact by authorities below cannot be re-appreciated in appeal-- CIT v. Pentair Water India Pvt. Ltd. (Bom) . . . 216
S. 172 --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Shipping business of non-resident--General principles--Demurrage charges paid by Indian company to foreign company--Whether liable for deduction of tax at source-- CIT v. V. S. Dempo and Co. P. Ltd. [FB] (Bom) . . . 303
S. 195 --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Shipping business of non-resident--General principles--Demurrage charges paid by Indian company to foreign company--Whether liable for deduction of tax at source-- CIT v. V. S. Dempo and Co. P. Ltd. [FB] (Bom) . . . 303
S. 201(1) --Collection of tax at source--Scrap--Definition--Ship breaking--Items are finished products and constitute sizeable part of production by ship breakers--Items usable as such and not "scrap"--Assessee not liable to collect tax at source on sale thereof-- CIT (TDS) v.Priya Blue Industries P. Ltd. (Guj) . . . 210
S. 201(1A) --Collection of tax at source--Scrap--Definition--Ship breaking--Items are finished products and constitute sizeable part of production by ship breakers--Items usable as such and not "scrap"--Assessee not liable to collect tax at source on sale thereof-- CIT (TDS) v.Priya Blue Industries P. Ltd. (Guj) . . . 210
S. 206C(1) --Collection of tax at source--Scrap--Definition--Ship breaking--Items are finished products and constitute sizeable part of production by ship breakers--Items usable as such and not "scrap"--Assessee not liable to collect tax at source on sale thereof-- CIT (TDS) v.Priya Blue Industries P. Ltd. (Guj) . . . 210
R. 6DD --Business expenditure--Disallowance of expenditure--Payments exceeding prescribed limit otherwise than by crossed cheque or crossed bank draft--Exclusion from disallowance--Scope of rule 6DD and Circular No. 220 dated 31-5-1977--Rule 6DD allows exclusion where payment made in unavoidable circumstances--Circumstances enumerated in circular not exhaustive--Practicability of payment to be judged from point of view of businessman--Genuineness of payments and identities of payees established--Circumstances indicating unavoidable circumstances--Payments cannot be disallowed--Honey Enterprises v. CIT (Delhi) . . . 258
R. 8D --Income--Computation of income--Disallowance of expenditure relating to exempt income--Investments in mutual funds and equity funds--Assessee claiming investments to be old made out of capital and outstanding reserves of company and no separate amount borrowed for making such investments--Disallowance only after recording satisfaction that claim not correct--Assessing Officer not recording any reasons for rejecting claim of assessee--Finding of fact recorded by Commissioner (Appeals) and Appellate Tribunal not perverse--No substantial question of law arose for consideration-- CIT v. Kapsons Associates (P&H) . . . 204
R. 9B --Business--Business income--Computation of income from distribution of feature films--Effect of rule 9B--Distribution rights acquired on basis of minimum guarantee--Amount paid to be taken as cost of acquisition of distribution rights--Cost of acquisition would not include publicity expenses or expenditure incurred for preparation of positive prints of film-- Honey Enterprises v. CIT (Delhi) . . . 258
----Business--Business income--Computation of income from distribution of feature films--Films not released for exhibition at least one hundred eighty days before end of relevant previous year--Cost of acquisition of distribution rights not exceeding amount realised allowable as deduction-- Honey Enterprises v. CIT (Delhi) . . . 258
R. 37C --Collection of tax at source--Scrap--Definition--Ship breaking--Items are finished products and constitute sizeable part of production by ship breakers--Items usable as such and not "scrap"--Assessee not liable to collect tax at source on sale thereof-- CIT (TDS) v.Priya Blue Industries P. Ltd. (Guj) . . . 210
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