ITR Volume 382 : Part 1 (Issue dated : 21-3-2016)

INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
>
> ONLINE EDITION
>
> SUBJECT INDEX TO CASES REPORTED
>
> HIGH COURTS
>
> Appeal to High Court --Jurisdiction--Territorial jurisdiction of High Court--Discretion of High Court--Order passed by Assessing Officer of Delhi--Punjab and Haryana High Court had no jurisdiction to hear appeal from order--Income-tax Act, 1961, s. 260A-- Asian Consolidated Industries Ltd. v. Asst. CIT (P&H) . . . 324
>
> Assessment --Return--Assessing Officer accepting second revised return--Commissioner (Appeals) enhancing assessment and bringing first revised income to tax--Finding of Tribunal that acceptance of second revised return in order--No application of mind--Tribunal to examine matter afresh--Matter remanded--Income-tax Act, 1961-- CIT v. DD Industries Ltd.(Delhi) . . . 294
>
> Business expenditure --Increase of interest free security deposit for lease--Assessee needing premises consistent and long standing arrangement with sister concern--Security deposit not increased for long time--No other material to establish dubiousness in transaction--Expenditure allowable as commercially expedient--Income-tax Act, 1961-- CIT v. DD Industries Ltd. (Delhi) . . . 294
>
> ----Interest on borrowed capital--Material to show that amounts not advanced in year in question--Assessee possessing mixed funds which included its own funds in sufficient quantity--Presumption that its own funds utilised for advances--Memorandum of understanding with sister concern not rejected by Assessing Officer or Commissioner (Appeals)--Balance-sheet of sister concern disclosing inventories in form of land--Advances cannot be linked with borrowed capital--Deduction of interest allowable--Income-tax Act, 1961, s. 36(1)(iii)-- CIT v. DD Industries Ltd. (Delhi) . . . 294
>
> Export --Special deduction--Computation of special deduction under section 80HHC--Effect of clause (baa) of Explanation to section 80HHC--Income from services and repairs of vessels--Finding that activities had nexus to exports--Clause (baa) of Explanation to section 80HHC not applicable--Income from hiring barges--Extraction charges of iron ore, income from sales of pig iron, vessels, engineering products, materials and coke breeze--Clause (baa) ofExplanation to section 80HHC applicable--Income-tax Act, 1961, s. 80HHC-- Sesa Goa Ltd. v.CIT (Bom) . . . 306
>
> Precedent --Effect of decision of Supreme Court in K. Ravindranathan Nair's case [2007] 295 ITR 228 (SC), Bombay High Court in Pfizer Ltd.'s case [2011] 330 ITR 62 (Bom) andDresser Rand India (P.) Ltd.'s case [2010] 323 ITR 429 (Bom)-- Sesa Goa Ltd. v. CIT (Bom) . . . 306
>
> Revision --Powers of Commissioner--Failure by Assessing Officer to ascertain facts as directed by Tribunal--Commissioner has power to set aside order--Income-tax Act, 1961, s. 263-- U. P. Forest Corporation v. CIT (All) . . . 330
>
>  
>
> PRINT EDITION
>
> ITR Volume 382 : Part 1 (Issue dated : 21-3-2016)
>
> SUBJECT INDEX TO CASES REPORTED IN THIS PART
>
> SUPREME COURT
>
> Charitable purpose --Registration of trusts--Application for registration--Decision of High Court that if application not responded to within six months assessee to be deemed registered--Supreme Court--Registration to take effect six months after date of application--Income-tax Act, 1961, s. 12AA-- CIT v. Society for the Promotion of Education . . . 6
>
> Deduction of tax at source --Interest for delayed payment of compensation for acquisition of land--Whether subject to deduction of tax at source--Failure by High Court to give reasons--Supreme Court--Matter remanded--Income-tax Act, 1961, s. 194A-- Commissioner, Belgaum Urban Development Authority v. CIT . . . 8
>
> Supreme Court --Petition for special leave to appeal--Income--Assessability--Sums collected towards apprehended sales tax liability--Finding that sums refundable and since refunded and not taxable--Business expenditure--Enhanced rent paid under agreement after machinery revamped--Finding that agreement not sham and enhanced rent deductible--Factual determination by High Court--Supreme Court will not entertain special leave petitions--Income-tax Act, 1961-- CIT v. Khoday Breweries Ltd. . . . 1
>
> HIGH COURTS
>
> Appeal to Appellate Tribunal --Power to rectify mistakes--Assessee treating interest as business income--Assessing Officer and appellate authorities treating it as income from other sources--Tribunal can examine whether order sought to be rectified has apparent error of law not limited to mistakes of fact apparent on face of record--Tribunal dismissing rectification application filed by assessee--Tribunal to examine issue in light of stand of Department in earlier and later assessment years--Rule of consistency to be followed--Matter remanded--Income-tax Act, 1961, s. 254(2)-- Promain Ltd. v. CIT (Delhi) . . . 25
>
> ----Power to remand matter--When exercised--When materials available on record, Tribunal to arrive at own conclusion--High Court remanding matter to Tribunal to decide issue applying decision of Supreme Court--Tribunal remanding matter to Assessing Officer without proper reason for remand--Not proper--Tribunal to decide issue in light of judgment of Supreme Court-- Dell International Services India P. Ltd. v. Asst. CIT (Karn) . . . 37
>
> Assessment --Assessment in case of search--Limitation--Assessment to be completed within sixty days from date on which special auditor's report due--Assessment order dated 27-4-2007 served on assessee on 30-4-2007--No proof to establish that order issued beyond control of authority within period of limitation being 29-4-2007--Assessment barred by limitation--Income-tax Act, 1961, ss. 142(2A), (2C), 153A-- CIT v. B J N Hotels Ltd. (Karn) . . . 110
>
> ----Draft assessment order--Eligible assessee--Assessee not foreign company and Transfer Pricing Officer accepting return filed by assessee--Assessee for purposes of section 144C(15)(b) not "eligible assessee"--Assessing Officer cannot propose draft order of assessment to vary income or loss declared in return--Income-tax Act, 1961, s. 144C(1), (15)(b)-- Honda Cars India Ltd. v. Deputy CIT (Delhi) . . . 88
>
> Business expenditure --Accrued or contingent liability--Provision for warranty claims--Deduction permissible if requirements fulfilled--Matter remanded--Income-tax Act, 1961, s. 37-- Dell International Services India P. Ltd. v. Asst. CIT (Karn) . . . 37
>
> ----Disallowance--Payments subject to deduction of tax at source--Salaries and perquisites paid by head office outside India to employees deputed to Indian branches--Payments not brought into profit and loss account in respect of business in India--Tax deductible in respect of such payments paid in subsequent year pursuant to clarification by CBDT--Assessee entitled to deduction thereof--Condition to deposit tax deducted at source within time cannot be read into section 40(a)(iii)--Absence of entries in books of account not decisive of entitlement of assessee to claim deduction--Income-tax Act, 1961, s. 40(a)(iii)--CBDT Circular No. 685, dated 17/20-6-1994-- ANZ Grindlays Bank v. Deputy CIT (Delhi) . . . 156
>
> ----Expenses incurred on conveyance and telephone charges of directors--Expenditure incurred in providing benefit free of charge under Companies Act cannot be disallowed--Expenses allowable--Income-tax Act, 1961, s. 37-- Principal CIT v. Rimjhim Ispat Ltd. (All) . . . 152
>
> ----Manufacturing expenses--Failure by assessee to produce bills, vouchers and other supporting documents in relation to various expenses--No stock register maintained--Disallowance of 5 per cent. proper--Income-tax Act, 1961, s. 37-- Principal CIT v. Rimjhim Ispat Ltd. (All) . . . 152
>
> Capital gains --Exemption--Investment of consideration in residential house--No provision requiring amount received on transfer of original capital asset must be used for meeting cost of new asset--Investment by assessee within stipulated time and in sum greater than capital gains earned by him--Assessee entitled to get benefit under section 54F--Income-tax Act, 1961, s. 54F-- CIT v. Kapil Kumar Agarwal (P&H) . . . 56
>
> Depreciation --Condition precedent--Manufacture of thing--Meanings of "thing" and "manufacture"--Thing could be intangible--Definition of "manufacture" in section 2(29BA) retrospective--Manufacture would include combination of processes--Claim in respect of intangible asset can be made without claim in respect of tangible asset--Broadcasting amounts to manufacture of thing--Plant and machinery used in broadcasting entitled to additional depreciation--Income-tax Act, 1961, ss. 2(29BA), 32(1)(iia)-- CIT v. Radio Today Broadcasting Ltd. (Delhi) . . . 42
>
> ----Condition precedent--Use of plant or machinery in relevant accounting year--Meaning of word "use"--Plant or machinery kept ready for use would amount to user for purposes of section 32--Income-tax Act, 1961, s. 32-- CIT v. Radio Today Broadcasting Ltd. (Delhi) . . . 42
>
> ----User of asset in business of assessee--Sale and lease back--Finding that transaction genuine--Lessee not claiming any depreciation and assessee taking loan against security of leased assets--Assessee entitled to depreciation--CBDT Circular No. 2 of 2001, dated 9-2-2001--Income-tax Act, 1961-- CIT v. Apollo Finvest (I) Ltd. (Bom) . . . 33
>
> Interpretation of taxing statute --Speech of Finance Minister while inserting provision can be referred to-- U. P. Transformers (India) P. Ltd. v. CIT (All) . . . 66
>
> ----Strict interpretation-- ANZ Grindlays Bank v. Deputy CIT (Delhi) . . . 156
>
> Non-resident --Income deemed to accrue or arise in India--Double Taxation Avoidance Agreements between India and Thailand and between India and Netherlands--General principles relating to international double taxation--Royalty--Royalty having same meaning under Income-tax Act and double taxation avoidance agreements--Subsequent amendment in Income-tax Act widening scope of "royalty"--Meaning under double taxation avoidance agreements cannot be altered--Double taxation avoidance agreement more beneficial than Income-tax Act--Double taxation avoidance agreement applicable--Income-tax Act, 1961, ss. 9, 90--Double Taxation Avoidance Agreements between India and Thailand and between India and Netherlands-- Director of Income-tax v. New Skies Satellite BV (Delhi) . . . 114
>
> ----Taxability in India--Double taxation avoidance--Fees for technical services--Liaison office not involved in supervisory activities and not allowed to do trading, commercial or industrial activity--Not supervisory permanent establishment in India--Income not taxable as business income but as fees for technical services--Double Taxation Avoidance Agreement between India and Japan, arts. 7, 12(2), (5)-- CIT v. Sumitomo Corporation (Delhi) . . . 75
>
> Reassessment --Notice--Validity--Notice issued after death of assessee returned unserved--Notice to be sent prior to limitation period if Department intends to proceed against legal heirs of deceased assessee--Notice sent to legal heir after limitation period--Not valid--Income-tax Act, 1961, ss. 147, 148, 159-- Vipin Walia v. ITO (Delhi) . . . 19
>
> ----Notice after four years--Failure to disclose material facts necessary for assessment--Notice should give reasons--Reasons cannot be supplemented by affidavit or other materials--No allegation in notice regarding non-disclosure of material particulars--Facts showing particulars had been disclosed--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Nirmal Bang Securities Pvt. Ltd. v. Asst. CIT (Bom) . . . 93
>
> Special deduction --New industrial undertaking--Special deduction under section 80-I--Condition precedent--Industrial undertaking should be set up after 1-4-1981--Income-tax Act, 1961, s. 80-I-- U. P. Transformers (India) P. Ltd. v. CIT (All) . . . 66
>
> ----New industrial undertaking in backward area--Special deduction under section 80HH--Conditions precedent--Not necessary that setting up of industry and manufacturing activity should take place simultaneously--Undertaking set up in accounting year relevant to assessment year 1980-81--Manufacturing activity started in accounting year relevant to assessment year 1985-86--Assessee entitled to special deduction under section 80HH for assessment years 1985-86 and 1987-88--Income-tax Act, 1961, s. 80HH-- U. P. Transformers (India) P. Ltd. v. CIT (All) . . . 66
>
> Words and phrases --"Thing" --"Manufacture"--"Use"--Meanings of-- CIT v. Radio Today Broadcasting Ltd. (Delhi) . . . 42
>
> Writ --Appeal to Commissioner (Appeals)--Powers of Commissioner (Appeals)--Power of enhancement of assessment-- Commissioner (Appeals) calling upon assessee to show cause why amount should not be disallowed--Issue can be contested on merits in accordance with law before Commissioner (Appeals)--No merit in writ petition--Income-tax Act, 1961, s. 251(1)(a)-- Megatrends Inc. v. CIT (Mad) . . . 13
>
>  
>
> SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
>
> Double Taxation Avoidance Agreement between India and Japan :
>
> Arts. 7, 12(2), (5) --Non-resident--Taxability in India--Double taxation avoidance--Fees for technical services--Liaison office not involved in supervisory activities and not allowed to do trading, commercial or industrial activity--Not supervisory permanent establishment in India--Income not taxable as business income but as fees for technical services-- CIT v. Sumitomo Corporation (Delhi) . . . 75
>
> Income-tax Act, 1961 :
>
> S. 2(29BA) --Depreciation--Condition precedent--Manufacture of thing--Meanings of "thing" and "manufacture"--Thing could be intangible--Definition of "manufacture" in section 2(29BA) retrospective--Manufacture would include combination of processes--Claim in respect of intangible asset can be made without claim in respect of tangible asset--Broadcasting amounts to manufacture of thing--Plant and machinery used in broadcasting entitled to additional depreciation-- CIT v. Radio Today Broadcasting Ltd. (Delhi) . . . 42
>
> S. 9 --Non-resident--Income deemed to accrue or arise in India--Double Taxation Avoidance Agreements between India and Thailand and between India and Netherlands--General principles relating to international double taxation--Royalty--Royalty having same meaning under Income-tax Act and double taxation avoidance agreements--Subsequent amendment in Income-tax Act widening scope of "royalty"--Meaning under double taxation avoidance agreements cannot be altered--Double taxation avoidance agreement more beneficial than Income-tax Act--Double taxation avoidance agreement applicable-- Director of Income-tax v.New Skies Satellite BV (Delhi) . . . 114
>
> S. 12AA --Charitable purpose--Registration of trusts--Application for registration--Decision of High Court that if application not responded to within six months assessee to be deemed registered--Supreme Court--Registration to take effect six months after date of application--CIT v. Society for the Promotion of Education (SC). . . 6
>
> S. 32 --Depreciation--Condition precedent--Use of plant or machinery in relevant accounting year--Meaning of word "use"--Plant or machinery kept ready for use would amount to user for purposes of section 32-- CIT v. Radio Today Broadcasting Ltd. (Delhi) . . . 42
>
> S. 32(1)(iia) --Depreciation--Condition precedent--Manufacture of thing--Meanings of "thing" and "manufacture"--Thing could be intangible--Definition of "manufacture" in section 2(29BA) retrospective--Manufacture would include combination of processes--Claim in respect of intangible asset can be made without claim in respect of tangible asset--Broadcasting amounts to manufacture of thing--Plant and machinery used in broadcasting entitled to additional depreciation-- CIT v. Radio Today Broadcasting Ltd. (Delhi) . . . 42
>
> S. 37 --Business expenditure--Accrued or contingent liability--Provision for warranty claims--Deduction permissible if requirements fulfilled--Matter remanded-- Dell International Services India P. Ltd. v. Asst. CIT (Karn) . . . 37
>
> ----Business expenditure--Expenses incurred on conveyance and telephone charges of directors--Expenditure incurred in providing benefit free of charge under Companies Act cannot be disallowed--Expenses allowable-- Principal CIT v. Rimjhim Ispat Ltd. (All) . . . 152
>
> ----Business expenditure--Manufacturing expenses--Failure by assessee to produce bills, vouchers and other supporting documents in relation to various expenses--No stock register maintained--Disallowance of 5 per cent. proper-- Principal CIT v. Rimjhim Ispat Ltd. (All) . . . 152
>
> S. 40(a)(iii) --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Salaries and perquisites paid by head office outside India to employees deputed to Indian branches--Payments not brought into profit and loss account in respect of business in India--Tax deductible in respect of such payments paid in subsequent year pursuant to clarification by CBDT--Assessee entitled to deduction thereof--Condition to deposit tax deducted at source within time cannot be read into section 40(a)(iii)--Absence of entries in books of account not decisive of entitlement of assessee to claim deduction-- ANZ Grindlays Bank v. Deputy CIT (Delhi) . . . 156
>
> S. 54F --Capital gains--Exemption--Investment of consideration in residential house--No provision requiring amount received on transfer of original capital asset must be used for meeting cost of new asset--Investment by assessee within stipulated time and in sum greater than capital gains earned by him--Assessee entitled to get benefit under section 54F-- CIT v. Kapil Kumar Agarwal (P&H) . . . 56
>
> S. 80HH --Special deduction--New industrial undertaking in backward area--Special deduction under section 80HH--Conditions precedent--Not necessary that setting up of industry and manufacturing activity should take place simultaneously--Undertaking set up in accounting year relevant to assessment year 1980-81--Manufacturing activity started in accounting year relevant to assessment year 1985-86--Assessee entitled to special deduction under section 80HH for assessment years 1985-86 and 1987-88-- U. P. Transformers (India) P. Ltd. v. CIT (All) . . . 66
>
> S. 80-I --Special deduction--New industrial undertaking--Special deduction under section 80-I--Condition precedent--Industrial undertaking should be set up after 1-4-1981-- U. P. Transformers (India) P. Ltd. v. CIT (All) . . . 66
>
> S. 90 --Non-resident--Income deemed to accrue or arise in India--Double Taxation Avoidance Agreements between India and Thailand and between India and Netherlands--General principles relating to international double taxation--Royalty--Royalty having same meaning under Income-tax Act and double taxation avoidance agreements--Subsequent amendment in Income-tax Act widening scope of "royalty"--Meaning under double taxation avoidance agreements cannot be altered--Double taxation avoidance agreement more beneficial than Income-tax Act--Double taxation avoidance agreement applicable-- Director of Income-tax v.New Skies Satellite BV (Delhi) . . . 114
>
> S. 142(2A) --Assessment--Assessment in case of search--Limitation--Assessment to be completed within sixty days from date on which special auditor's report due--Assessment order dated 27-4-2007 served on assessee on 30-4-2007--No proof to establish that order issued beyond control of authority within period of limitation being 29-4-2007--Assessment barred by limitation-- CIT v. B J N Hotels Ltd. (Karn) . . . 110
>
> S. 142(2C) --Assessment--Assessment in case of search--Limitation--Assessment to be completed within sixty days from date on which special auditor's report due--Assessment order dated 27-4-2007 served on assessee on 30-4-2007--No proof to establish that order issued beyond control of authority within period of limitation being 29-4-2007--Assessment barred by limitation-- CIT v. B J N Hotels Ltd. (Karn) . . . 110
>
> S. 144C(1) --Assessment--Draft assessment order--Eligible assessee--Assessee not foreign company and Transfer Pricing Officer accepting return filed by assessee--Assessee for purposes of section 144C(15)(b) not "eligible assessee"--Assessing Officer cannot propose draft order of assessment to vary income or loss declared in return-- Honda Cars India Ltd. v. Deputy CIT (Delhi) . . . 88
>
> S. 144C(15)(b) --Assessment--Draft assessment order--Eligible assessee--Assessee not foreign company and Transfer Pricing Officer accepting return filed by assessee--Assessee for purposes of section 144C(15)(b) not "eligible assessee"--Assessing Officer cannot propose draft order of assessment to vary income or loss declared in return-- Honda Cars India Ltd. v. Deputy CIT (Delhi) . . . 88
>
> S. 147 --Reassessment--Notice--Validity--Notice issued after death of assessee returned unserved--Notice to be sent prior to limitation period if Department intends to proceed against legal heirs of deceased assessee--Notice sent to legal heir after limitation period--Not valid--Vipin Walia v. ITO (Delhi) . . . 19
>
> ----Reassessment--Notice after four years--Failure to disclose material facts necessary for assessment--Notice should give reasons--Reasons cannot be supplemented by affidavit or other materials--No allegation in notice regarding non-disclosure of material particulars--Facts showing particulars had been disclosed--Notice not valid-- Nirmal Bang Securities Pvt. Ltd.v. Asst. CIT (Bom) . . . 93
>
> S. 148 --Reassessment--Notice--Validity--Notice issued after death of assessee returned unserved--Notice to be sent prior to limitation period if Department intends to proceed against legal heirs of deceased assessee--Notice sent to legal heir after limitation period--Not valid--Vipin Walia v. ITO (Delhi) . . . 19
>
> ----Reassessment--Notice after four years--Failure to disclose material facts necessary for assessment--Notice should give reasons--Reasons cannot be supplemented by affidavit or other materials--No allegation in notice regarding non-disclosure of material particulars--Facts showing particulars had been disclosed--Notice not valid-- Nirmal Bang Securities Pvt. Ltd.v. Asst. CIT (Bom) . . . 93
>
> S. 153A --Assessment--Assessment in case of search--Limitation--Assessment to be completed within sixty days from date on which special auditor's report due--Assessment order dated 27-4-2007 served on assessee on 30-4-2007--No proof to establish that order issued beyond control of authority within period of limitation being 29-4-2007--Assessment barred by limitation-- CIT v. B J N Hotels Ltd. (Karn) . . . 110
>
> S. 159 --Reassessment--Notice--Validity--Notice issued after death of assessee returned unserved--Notice to be sent prior to limitation period if Department intends to proceed against legal heirs of deceased assessee--Notice sent to legal heir after limitation period--Not valid--Vipin Walia v. ITO (Delhi) . . . 19
>
> S. 194A --Deduction of tax at source--Interest for delayed payment of compensation for acquisition of land--Whether subject to deduction of tax at source--Failure by High Court to give reasons--Supreme Court--Matter remanded-- Commissioner, Belgaum Urban Development Authority v. CIT (SC) . . . 8
>
> S. 251(1)(a) --Writ--Appeal to Commissioner (Appeals)--Powers of Commissioner (Appeals)--Power of enhancement of assessment-- Commissioner (Appeals) calling upon assessee to show cause why amount should not be disallowed--Issue can be contested on merits in accordance with law before Commissioner (Appeals)--No merit in writ petition-- Megatrends Inc. v. CIT (Mad) . . . 13
>
> S. 254(2) --Appeal to Appellate Tribunal--Power to rectify mistakes--Assessee treating interest as business income--Assessing Officer and appellate authorities treating it as income from other sources--Tribunal can examine whether order sought to be rectified has apparent error of law not limited to mistakes of fact apparent on face of record--Tribunal dismissing rectification application filed by assessee--Tribunal to examine issue in light of stand of Department in earlier and later assessment years--Rule of consistency to be followed--Matter remanded-- Promain Ltd. v. CIT (Delhi) . . . 25
>
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ITR (TRIB) Volume 46 : Part 5 (Issue dated : 21-3-2016)

-
>  
>
> ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))--PRINT AND ONLINE EDITION
>
> ONLINE EDITION
>
> SUBJECT INDEX TO CASES REPORTED
>
> Capital gains --Transfer--Loss--Cancellation of shares under capital reduction scheme--No transfer--Provisions of section 45 not applicable--Notional loss not allowable--Income-tax Act, 1961, ss. 2(47), 45-- Deputy CIT v. Daikin Industries Ltd.
> (Delhi) . . . 248
>
> Charitable purpose --Exemption--Trust providing micro finance to self help groups by raising loans from commercial banks--Micro finance in a commercial manner to earn profit--Not a charitable activity but a business activity--Not entitled to exemption--Income-tax Act, 1961, s. 2(15)-- ITO v. Kalanjiam Development Financial Services
> (Chennai) . . . 226
>
> Deduction of tax at source --Fee for defaults in furnishing statements--Not permissible in course of processing of statement under section 200A--Income-tax Act, 1961, ss. 200A, 234E-- Dhanlaxmi Developers v. Deputy CIT (Ahd) . . . 253
>
> Reassessment --Validity of reassessment--Assessee wrongly claiming capital loss on account of cancellation of shares--Reason to believe income had escaped assessment--Assessing Officer rightly invoking powers under section 147--Reassessment valid--Income-tax Act, 1961, s. 147-- Deputy CIT v. Daikin Industries Ltd. (Delhi) . . . 248
>
>  
>
> PRINT EDITION
>
> Volume 46 : Part 5 (Issue dated : 21-3-2016)
>
> SUBJECT INDEX TO CASES REPORTED IN THIS PART
>
> Bad debt --Bank--Advances written off by urban branches--Difference between amount written off and credit balance in provisions for bad and doubtful debt account--Deductible--Income-tax Act, 1961, s. 36(1)(vii)-- Allahabad Bank v. Asst. CIT
> (Kolkata) . . . 678
>
> Business expenditure --Co-operative bank--Expenditure on various welfare funds--Statutory obligation--Allowable--Income-tax Act, 1961, s. 37-- Karnataka State Co-operative Apex Bank Ltd. v. Deputy CIT (Bang) . . . 728
>
> ----Financial corporation--Inclusive definition--Banking company is a financial corporation--Special reserve created by institution providing long-term finance--Deduction restricted to amount transferred to special reserve subject to limit of prescribed percentage of profits derived from providing long-term finance--Income-tax Act, 1961, s. 36(1)(viia), (viii)--Allahabad Bank v. Asst. CIT (Kolkata) . . . 678
>
> Charitable purpose --Application of income to charitable objects--Depreciation--Depreciation not allowable on same asset where cost of fixed asset allowed as application of income--Income-tax Act, 1961-- Information Systems Audit and Control Association v. Deputy DIT (Exemptions) (Chennai) . . . 665
>
> ----Exemption--Coaching of students for particular examinations not amounting to imparting education--Assessee not entitled to exemption--Income-tax Act, 1961, ss. 2(15), 11--Information Systems Audit and Control Association v. Deputy DIT (Exemptions) (Chennai) . . . 665
>
> Company --Book profits--Computation--Disallowance of amount under section 14A--Includible while computing book profit--Income-tax Act, 1961, ss. 14A, 115JB(2)-- Deputy CIT v. Viraj Profiles Ltd. (Mumbai) . . . 626
>
> Dividend --Deemed dividend--Loan or advance by non-banking financial companies--Excluded from deeming provision--Not taxable--Income-tax Act, 1961, s. 2(22)(e)-- Deputy CIT v. Sindhu Holdings Ltd. (Delhi) . . . 771
>
> Interpretation of taxing statutes --Deeming provision--Literal interpretation-- Deputy CIT v. Sindhu Holdings Ltd. (Delhi) . . . 771
>
> Non-resident --Permanent establishment--Liaison office in India--Liaison office performing auxiliary services--No core business activity carried on and no authority to sign and execute contracts--Not a permanent establishment--No jurisdiction in Assessing Officer to adjudicate whether assessee violated conditions stipulated by Reserve Bank of India--No violation of conditions laid down by Reserve Bank of India--Non-resident not assessable in India--Income-tax Act, 1961-- Kawasaki Heavy Industries Ltd. v. Asst. CIT (Delhi) . . . 739
>
> Reassessment --Scope of--Issue concluded in original assessment proceedings cannot be reagitated during course of reassessment proceedings--Income-tax Act, 1961, s. 148--Karnataka State Co-operative Apex Bank Ltd. v. Deputy CIT
> (Bang) . . . 728
>
> Royalty --Non-resident--No permanent establishment--Supply of embedded software on hardware supplied to assessee's customers--Software not having any independent existence--Software merely facilitating functioning of equipment and integral part of equipment--Consideration for supply of software--Not royalty--Income-tax Act, 1961, s. 9(1)(vi)-- Galatea Ltd. v. Deputy CIT (International Taxation)
> (Mumbai) . . . 690
>
> Search and seizure --Assessment in search cases--Assessment pursuant to first search concluded prior to second search--Claim to deduction of interest paid on borrowings against interest earned on advances examined and allowed--No incriminating material found during course of second search--No addition could be made with respect to claim of deduction of interest payable on borrowings against interest earned on advances on same facts--Income-tax Act, 1961, s. 153A-- Deputy CIT v. Himanshu B. Kanakia (Mumbai) . . . 756
>
>  
>
> SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
>
> Income-tax Act, 1961
>
> S. 2(15) --Charitable purposes--Exemption--Coaching of students for particular examinations not amounting to imparting education--Assessee not entitled to exemption-- Information Systems Audit and Control Association v. Deputy DIT (Exemptions) (Chennai) . . . 665
>
> S. 2(22)(e) --Dividend--Deemed dividend--Loan or advance by non-banking financial companies--Excluded from deeming provision--Not taxable-- Deputy CIT v. Sindhu Holdings Ltd. (Delhi) . . . 771
>
> S. 9(1)(vi) --Royalty--Non-resident--No permanent establishment--Supply of embedded software on hardware supplied to assessee's customers--Software not having any independent existence--Software merely facilitating functioning of equipment and integral part of equipment--Consideration for supply of software--Not royalty-- Galatea Ltd. v. Deputy CIT (International Taxation) (Mumbai) . . . 690
>
> S. 11 --Charitable purposes--Exemption--Coaching of students for particular examinations not amounting to imparting education--Assessee not entitled to exemption-- Information Systems Audit and Control Association v. Deputy DIT (Exemptions) (Chennai) . . . 665
>
> S. 14A --Company--Book profits--Computation--Disallowance of amount under section 14A--Includible while computing book profit-- Deputy CIT v. Viraj Profiles Ltd. (Mumbai) . . . 626
>
> S. 36(1)(vii) --Bad debt--Bank--Advances written off by urban branches--Difference between amount written off and credit balance in provisions for bad and doubtful debt account--Deductible-- Allahabad Bank v. Asst. CIT (Kolkata) . . . 678
>
> S. 36(1)(viia) --Business expenditure--Financial corporation--Inclusive definition--Banking company is a financial corporation--Special reserve created by institution providing long-term finance--Deduction restricted to amount transferred to special reserve subject to limit of prescribed percentage of profits derived from providing long-term finance-- Allahabad Bank v. Asst. CIT (Kolkata) . . . 678
>
> S. 36(1)(viii) --Business expenditure--Financial corporation--Inclusive definition--Banking company is a financial corporation--Special reserve created by institution providing long-term finance--Deduction restricted to amount transferred to special reserve subject to limit of prescribed percentage of profits derived from providing long-term finance-- Allahabad Bank v. Asst. CIT (Kolkata) . . . 678
>
> S. 37 --Business expenditure--Co-operative bank--Expenditure on various welfare funds--Statutory obligation--Allowable-- Karnataka State Co-operative Apex Bank Ltd. v. Deputy CIT(Bang) . . . 728
>
> S. 115JB(2) --Company--Book profits--Computation--Disallowance of amount under section 14A--Includible while computing book profit-- Deputy CIT v. Viraj Profiles Ltd. (Mumbai) . . . 626
>
> S. 148 --Reassessment--Scope of--Issue concluded in original assessment proceedings cannot be reagitated during course of reassessment proceedings-- Karnataka State Co-operative Apex Bank Ltd. v. Deputy CIT (Bang) . . . 728
>
> S. 153A --Search and seizure--Assessment in search cases--Assessment pursuant to first search concluded prior to second search--Claim to deduction of interest paid on borrowings against interest earned on advances examined and allowed--No incriminating material found during course of second search--No addition could be made with respect to claim of deduction of interest payable on borrowings against interest earned on advances on same facts-- Deputy CIT v. Himanshu B. Kanakia
> (Mumbai) . . . 756
>
>  
>
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ITR (TRIB) Volume 46 : Part 4 (Issue dated : 14-3-2016)

 

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

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Accounting --Rejection of books of account--Books of account produced before Assessing Officer--Duty of Assessing Officer to check them--Rejection of books without analysing details and explanation filed by assessee--Not justified--Income-tax Act, 1961, s. 145-- ITO v. Krishna Cotton and Ginning Mills (Chandigarh) . . . 209

Appeal to Commissioner (Appeals) --Condonation of delay--Delay of seventeen months in filing appeal--Assessee pursuing rectification bona fide unsuccessfully--Reasonable cause for delay--No mala fide intention or ulterior motive--Delay condoned--Income-tax Act, 1961--Asst. CIT v. Carmelite Charitable Society 
(Amritsar) . . . 193

Charitable purposes --Charitable trust--Exemption--Assessee incurring expenses out of income of current year--No case of accumulation or setting apart of income--Erroneous invocation of section 11(3)(d)--Expenses towards education of fathers serving in schools of assessee--Payment not for a religious purpose but charitable--Assessee entitled to exemption--Income-tax Act, 1961, ss. 11, 11(3)(d), 12A-- Asst. CIT v. Carmelite Charitable Society (Amritsar) . . . 193

Deduction of tax at source --Fee for defaults in furnishing statements--Cannot be levied in course of processing of statement under section 200A--Income-tax Act, 1961, ss. 200A, 234E-- Tanish Industries P. Ltd. v. Deputy CIT (Ahd) . . . 217

 

PRINT EDITION

Volume 46 : Part 4 (Issue dated : 14-3-2016)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Appeal to Appellate Tribunal --Appealable orders--Appeal against order of assessment read with revisional order--Not maintainable--Commissioner (Appeals) is competent to adjudicate--Income-tax Act, 1961, ss. 246A, 253(1)-- Crompton Greaves Ltd. v. CIT (Mumbai) . . . 465

Business expenditure --Disallowance--Payments for unlawful purpose--Bribe for awarding of contract--Sum deleted in case of recipient and deletion affirmed by High Court--No disallowance--Income-tax Act, 1961, s. 37-- Today Homes and Infrastructure Pvt. Ltd. v. Deputy CIT (Delhi) . . . 586

----Expenditure on purchase of software--Not used by assessee but sold to customers--Expenditure on purchase allowable--Income-tax Act, 1961, s. 37-- Deputy CIT v. E-enable Technologies P. Ltd. (Delhi) . . . 546

----Prior period expenses--Assessing Officer directed to re-examine issue and adjudicate after granting proper opportunity to assessee--Income-tax Act, 1961, s. 37-- J. P. Morgan Services P. Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 561

----Provision for sale and maintenance of software--Annual maintenance contract--Mercantile system of accounting--Part of receipt pertaining to current financial year--Accounting standard consistently followed by assessee--No disallowance--Income-tax Act, 1961, s. 37-- Deputy CIT v. E-enable Technologies P. Ltd. (Delhi) . . . 546

----Real estate development--Commission and brokerage--Properties held as business assets--Factum of incurring of expenditure as well as rendering of services by agents not disputed--Quantum of expenses cannot be examined by Assessing Officer--Allowable--Income-tax Act, 1961, s. 37-- Today Homes and Infrastructure Pvt. Ltd. v. Deputy CIT (Delhi) . . . 586

Business loss --Dealing in land--Advance in course of business--Non-refund of advance business loss incidental to business--Allowable--Income-tax Act, 1961, s. 28-- Today Homes and Infrastructure Pvt. Ltd. v. Deputy CIT (Delhi) . . . 586

Capital gains --Business income--Short-term capital gains--Long-term capital gains--Assessee consistently dealing in shares for several years--Classification of transactions--Gains arising from sale of shares up to one month--Business income--Gains arising from sale of shares held for more than one month and up to twelve months--Short-term capital gains--Income-tax Act, 1961-- Asha Ashar v. ITO
(Mumbai) . . . 492

----Computation--Hindu undivided family--Partition--Family settlement--Assessee acquiring land on distribution of assets in family settlement pursuant to partition--Not transfer--Assessee holding property as beneficial owner since 1963--Period of holding of assets in hands of assessee to be reckoned from 1963--Market value to be adopted on 1-4-1981--Indexation benefit also from that date--Income-tax Act, 1961, ss. 2(42A), 45-- ITO v. P. M. Rungta (HUF) (Mumbai) . . . 579

Cash credit --Accommodation entries--Assessee one of conduit companies of entry provider--Settlement Commission in the case entry provider holding cash deposited in bank account of various companies cannot be treated as unexplained cash credit in the hands of conduit companies--Order of Commission attaining finality--Order binding on Department--Refusal to follow order of Commission on ground all facts might not have been produced before Commission--Incorrect--No evidence that specific facts not placed before Commission--No addition could be made in hands of assessee on account of unexplained cash credit--Income-tax Act, 1961, s. 68-- Omni Farms Pvt. Ltd. v. Deputy CIT (Delhi) . . . 505

----Ongoing negotiation regarding acquisition of property--Memorandum of understanding--Cash returned to assessee and entry in books and surrendered as part of total surrender--No dispute in facts--Credit cannot be treated as unexplained--Income-tax Act, 1961, s. 68--Today Homes and Infrastructure Pvt. Ltd. v. Deputy CIT
(Delhi) . . . 586

Collection of tax at source --Scrap--Definition--Sale of cotton waste, maize husk and de-oiled cake--By-products not scrap or waste--No liability on seller to collect tax at source on sale thereof--Income-tax Act, 1961, s. 206C-- Deputy CIT v. Gujarat Ambuja Exports Ltd.(Ahd) . . . 519

Company --Book profits--Computation--Income of unit in special economic zone--Excludible--Income-tax Act, 1961, s. 115JB-- Deputy CIT v. Gebbs Healthcare Solutions P. Ltd.(Mumbai) . . . 551

----Book profits--Computation according to Schedule VII to Companies Act and not under provisions of Income-tax Act--Companies Act, 1956, Sch. VII--Income-tax Act, 1961, s. 115JB-- J. P. Morgan Services P. Ltd. v. Deputy CIT (OSD)
(Mumbai) . . . 561

Deduction of tax at source --Payments to contractors--Port charges to clearing and forwarding agents--Independent contractors--Port charges not professional charges--Tax deductible at source under section 194C and not under section 194J--Income-tax Act, 1961, ss. 194C, 194J-- Deputy CIT v. Gujarat Ambuja Exports Ltd.
(Ahd) . . . 519

Dividend --Deemed dividend--Common shareholders in both companies not ground to treat amount as deemed dividend--No evidence to show assessee a beneficial shareholder or even a shareholder of company from which assessee received advance--Amount not deemed dividend--Income-tax Act, 1961, s. 2(22)(e)-- Deputy CIT v. Gebbs Healthcare Solutions P. Ltd. (Mumbai) . . . 551

Exemption --Export of computer software--Computation of profits--Interest on deposits--Part of business income--Includible for determining amount of total turnover--Income-tax Act, 1961, s. 10A-- J. P. Morgan Services P. Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 561

----Export of computer software--Information technology enabled services--Computation of profits--Deduction allowable before setting of brought forward unabsorbed depreciation--Income-tax Act, 1961, s. 10A-- J. P. Morgan Services P. Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 561

Export oriented undertaking --Exemption--Business process outsourcing--Assessee allowed deduction in earlier years--Facts materially identical in assessment year in question--Assessee entitled to exemption--Income-tax Act, 1961, s. 10B-- Deputy CIT v. Gebbs Healthcare Solutions P. Ltd. (Mumbai) . . . 551

Income from house property --Society maintenance charges--Assessee stating it is obligation of lessee and including charges in rent received--Entitled to deduction apart from standard deduction--Matter remanded to verify claim of deduction--Income-tax Act, 1961, ss. 23, 24(a)-- Asha Ashar v. ITO (Mumbai) . . . 492

Revision --Commissioner--Amalgamation of companies--Effect--Amalgamating company ceases to exist--Order of revision on amalgamating company--Not valid--Provision curing defect not applicable to revision proceedings--Income-tax Act, 1961, ss. 263, 292BB--Emerald Co. Ltd. v. ITO (Kolkata) . . . 619

----Commissioner--Powers-- Explanation 2 that order passed by Assessing Officer without enquiry or verification shall be considered erroneous and prejudicial to interests of Revenue--Declaratory in nature--Provision for warranty, sales tax, excise and liquidated damages--Assessing Officer failing to make relevant and meaningful enquiry whether liability had crystallised to extent deduction claimed in return--Audited account showing amount reflected under head "provisions and contingent liabilities"--Revision valid--Income-tax Act, 1961, s. 263-- Crompton Greaves Ltd. v. CIT
(Mumbai) . . . 465

Transfer pricing --International transactions--Arm's length price--Mutual agreement procedure--Transactions with associated enterprise--Margin determined for ninety-six per cent. of transactions under mutual agreement procedure--No distinction in facts or nature of transactions between these transactions and remaining transactions--Same margin should be adopted for remaining four per cent. of transactions--Double Taxation Avoidance Agreement between India and the U. S. A., art. 27--Income-tax Act, 1961, s. 92C-- J. P. Morgan Services P. Ltd. v. Deputy CIT (OSD)
(Mumbai) . . . 561

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Companies Act, 1956

Sch. VII --Company--Book profits--Computation according to Schedule VII to Companies Act and not under provisions of Income-tax Act-- J. P. Morgan Services P. Ltd. v . Deputy CIT (OSD) (Mumbai) . . . 561

Double Taxation Avoidance Agreement between India and the U. S. A.

Art. 27 --Transfer pricing--International transactions--Arm's length price--Mutual agreement procedure--Transactions with associated enterprise--Margin determined for ninety-six per cent. of transactions under mutual agreement procedure--No distinction in facts or nature of transactions between these transactions and remaining transactions--Same margin should be adopted for remaining four per cent. of transactions-- J. P. Morgan Services P. Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 561

Income-tax Act, 1961

S. 2(22)(e) --Dividend--Deemed dividend--Common shareholders in both companies not ground to treat amount as deemed dividend--No evidence to show assessee a beneficial shareholder or even a shareholder of company from which assessee received advance--Amount not deemed dividend-- Deputy CIT v. Gebbs Healthcare Solutions P. Ltd. (Mumbai) . . . 551

S. 2(42A) --Capital gains--Computation--Hindu undivided family--Partition--Family settlement--Assessee acquiring land on distribution of assets in family settlement pursuant to partition--Not transfer--Assessee holding property as beneficial owner since 1963--Period of holding of assets in hands of assessee to be reckoned from 1963--Market value to be adopted on 1-4-1981--Indexation benefit also from that date-- ITO v. P. M. Rungta (HUF) (Mumbai) . . . 579

S. 10A --Exemption--Export of computer software--Computation of profits--Interest on deposits--Part of business income--Includible for determining amount of total turnover-- J. P. Morgan Services P. Ltd. v. Deputy CIT (OSD)
(Mumbai) . . . 561

----Exemption--Export of computer software--Information technology enabled services--Computation of profits--Deduction allowable before setting of brought forward unabsorbed depreciation-- J. P. Morgan Services P. Ltd. v. Deputy CIT (OSD)
(Mumbai) . . . 561

S. 10B --Export oriented undertaking--Exemption--Business process outsourcing--Assessee allowed deduction in earlier years--Facts materially identical in assessment year in question--Assessee entitled to exemption-- Deputy CIT v. Gebbs Healthcare Solutions P. Ltd.(Mumbai) . . . 551

S. 23 --Income from house property--Society maintenance charges--Assessee stating it is obligation of lessee and including charges in rent received--Entitled to deduction apart from standard deduction--Matter remanded to verify claim of deduction-- Asha Ashar v. ITO(Mumbai) . . . 492

S. 24(a) --Income from house property--Society maintenance charges--Assessee stating it is obligation of lessee and including charges in rent received--Entitled to deduction apart from standard deduction--Matter remanded to verify claim of deduction-- Asha Ashar v. ITO(Mumbai) . . . 492

S. 28 --Business loss--Dealing in land--Advance in course of business--Non-refund of advance business loss incidental to business--Allowable-- Today Homes and Infrastructure Pvt. Ltd. v. Deputy CIT (Delhi) . . . 586

S. 37 --Business expenditure--Disallowance--Payments for unlawful purpose--Bribe for awarding of contract--Sum deleted in case of recipient and deletion affirmed by High Court--No disallowance-- Today Homes and Infrastructure Pvt. Ltd. v. Deputy CIT (Delhi) . . . 586

----Business expenditure--Expenditure on purchase of software--Not used by assessee but sold to customers--Expenditure on purchase allowable-- Deputy CIT v. E-enable Technologies P. Ltd. (Delhi) . . . 546

----Business expenditure--Prior period expenses--Assessing Officer directed to re-examine issue and adjudicate after granting proper opportunity to assessee-- J. P. Morgan Services P. Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 561

----Business expenditure--Provision for sale and maintenance of software--Annual maintenance contract--Mercantile system of accounting--Part of receipt pertaining to current financial year--Accounting standard consistently followed by assessee--No disallowance--Deputy CIT v. E-enable Technologies P. Ltd. (Delhi) . . . 546

----Business expenditure--Real estate development--Commission and brokerage--Properties held as business assets--Factum of incurring of expenditure as well as rendering of services by agents not disputed--Quantum of expenses cannot be examined by Assessing Officer--Allowable-- Today Homes and Infrastructure Pvt. Ltd. v. Deputy CIT (Delhi) . . . 586

S. 45 --Capital gains--Computation--Hindu undivided family--Partition--Family settlement--Assessee acquiring land on distribution of assets in family settlement pursuant to partition--Not transfer--Assessee holding property as beneficial owner since 1963--Period of holding of assets in hands of assessee to be reckoned from 1963--Market value to be adopted on 1-4-1981--Indexation benefit also from that date-- ITO v. P. M. Rungta (HUF) (Mumbai) . . . 579

S. 68 --Cash credit--Accommodation entries--Assessee one of conduit companies of entry provider--Settlement Commission in the case entry provider holding cash deposited in bank account of various companies cannot be treated as unexplained cash credit in the hands of conduit companies--Order of Commission attaining finality--Order binding on Department--Refusal to follow order of Commission on ground all facts might not have been produced before Commission--Incorrect--No evidence that specific facts not placed before Commission--No addition could be made in hands of assessee on account of unexplained cash credit-- Omni Farms Pvt. Ltd. v. Deputy CIT
(Delhi) . . . 505

----Cash credit--Ongoing negotiation regarding acquisition of property--Memorandum of understanding--Cash returned to assessee and entry in books and surrendered as part of total surrender--No dispute in facts--Credit cannot be treated as unexplained-- Today Homes and Infrastructure Pvt. Ltd. v. Deputy CIT
(Delhi) . . . 586

S. 92C --Transfer pricing--International transactions--Arm's length price--Mutual agreement procedure--Transactions with associated enterprise--Margin determined for ninety-six per cent. of transactions under mutual agreement procedure--No distinction in facts or nature of transactions between these transactions and remaining transactions--Same margin should be adopted for remaining four per cent. of transactions-- J. P. Morgan Services P. Ltd. v. Deputy CIT (OSD) (Mumbai) . . . 561

S. 115JB --Company--Book profits--Computation--Income of unit in special economic zone--Excludible-- Deputy CIT v. Gebbs Healthcare Solutions P. Ltd.
(Mumbai) . . . 551

----Company--Book profits--Computation according to Schedule VII to Companies Act and not under provisions of Income-tax Act-- J. P. Morgan Services P. Ltd. v. Deputy CIT (OSD)(Mumbai) . . . 561

S. 194C --Deduction of tax at source--Payments to contractors--Port charges to clearing and forwarding agents--Independent contractors--Port charges not professional charges--Tax deductible at source under section 194C and not under section 194J-- Deputy CIT v. Gujarat Ambuja Exports Ltd. (Ahd) . . . 519

S. 194J --Deduction of tax at source--Payments to contractors--Port charges to clearing and forwarding agents--Independent contractors--Port charges not professional charges--Tax deductible at source under section 194C and not under section 194J-- Deputy CIT v. Gujarat Ambuja Exports Ltd. (Ahd) . . . 519

S. 206C --Collection of tax at source--Scrap--Definition--Sale of cotton waste, maize husk and de-oiled cake--By-products not scrap or waste--No liability on seller to collect tax at source on sale thereof-- Deputy CIT v. Gujarat Ambuja Exports Ltd.
(Ahd) . . . 519

S. 246A --Appeal to Appellate Tribunal--Appealable orders--Appeal against order of assessment read with revisional order--Not maintainable--Commissioner (Appeals) is competent to adjudicate-- Crompton Greaves Ltd. v. CIT (Mumbai) . . . 465

S. 253(1) --Appeal to Appellate Tribunal--Appealable orders--Appeal against order of assessment read with revisional order--Not maintainable--Commissioner (Appeals) is competent to adjudicate-- Crompton Greaves Ltd. v. CIT (Mumbai) . . . 465

S. 263 --Revision--Commissioner--Amalgamation of companies--Effect--Amalgamating company ceases to exist--Order of revision on amalgamating company--Not valid--Provision curing defect not applicable to revision proceedings-- Emerald Co. Ltd. v. ITO (Kolkata) . . . 619

----Revision--Commissioner--Powers-- Explanation 2 that order passed by Assessing Officer without enquiry or verification shall be considered erroneous and prejudicial to interests of Revenue--Declaratory in nature--Provision for warranty, sales tax, excise and liquidated damages--Assessing Officer failing to make relevant and meaningful enquiry whether liability had crystallised to extent deduction claimed in return--Audited account showing amount reflected under head "provisions and contingent liabilities"--Revision valid--Crompton Greaves Ltd. v. CIT (Mumbai) . . . 465

S. 292BB --Revision--Commissioner--Amalgamation of companies--Effect--Amalgamating company ceases to exist--Order of revision on amalgamating company--Not valid--Provision curing defect not applicable to revision proceedings-- Emerald Co. Ltd. v. ITO (Kolkata) . . . 619

 

__._,_.___

ICAI Online Facility to rectify mistakes in Exam Form:

Shared From FinApp:

ICAI Online Facility to rectify mistakes in Exam Form:

It is found that some candidates while filling the examination application form do not exercise reasonable care and commit errors and seek change of Centre, Group, Medium, on account of errors committed by them in their examination application forms, after submission.

With a view to provide an opportunity to the candidates to correct such errors made by them while submitting their examination application forms, it has been decided to put in place an online facility to view and correct errors if any, committed by them while submitting the examination application form, in the fields of Centre, Group or Medium.

 

The on-line window for seeking change of Centre/Group/Medium will made available from today, at icaiexam.icai.org.

This online facility will be available to the candidates, in two separate sessions. The first opportunity (called "Correction Window") will be free of cost and the second opportunity ( called "Corrections with fee-Window") will be for a fee of Rs 1000/- .

The last date to avail this facility is 16th March.

Check out 'FinApp for CA - CPT IPCC Final' - https://play.google.com/store/apps/details?id=com.sraoss.caapp

-Regards
CA. C. V. PAWAR

ITR Volume 381 : Part 3 (Issue dated : 29-2-2016)

 

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

PRINT EDITION

ITR Volume 381 : Part 3 (Issue dated : 29-2-2016)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Business expenditure --Disallowance--Excessive and unreasonable payments--Service charges paid to firm having common partners with assessee--Failure by assessee to produce proof of service rendered during year in question--Findings recorded in assessment proceedings for preceding year not relevant--Disallowance proper--Income-tax Act, 1961, s. 40A(2)-- Ganapathy and Co. v. CIT . . . 363

Business loss --Finding that entire transaction of investment and showing loss was sham and calculated to avoid tax liability--Disallowance proper-- Ganapathy and Co. v. CIT . . . 363

Documents --Interpretation of documents--Question of law-- Unitech Ltd. v. Union of India . . . 456

Interest-tax --Reassessment--Not permissible where no assessment made in first instance--Interest-tax Act, 1974, s. 10-- Standard Chartered Finance Ltd. v. CIT . . . 453

Purchase of immovable property by Central Government --General principles--No onus on Department to establish undervaluation with view to evade tax--Undervaluation greater than 15 per cent. below fair market value raises rebuttable presumption of attempt to evade taxes--Income-tax Act, 1961, s. 269UD-- Unitech Ltd. v. Union of India . . . 456

----Transfer--Definition--Land held under lease from Municipality--Collaboration agreement under which land holder agreeing to allow developer to construct commercial project on land at its cost--Developer to retain 78 per cent. of total constructed area and transfer 22 per cent. to land holder--Not a case of sale, lease or exchange--Agreement enabling developer to enjoy property of land holder for purpose of construction--Falls within definition--Consideration stated in agreement for land cannot be taken as consideration for available floor space index--Comparable instance of sale taken of property in adjoining locality and not commercial property--Order for pre-emptive purchase vitiated--Income-tax Act, 1961, ss. 269UA, 269UD-- Unitech Ltd. v. Union of India . . . 456

Reference --High Court--Scope of powers--Finality of findings of fact of Tribunal--High Court taking into account certain additional facts already on record but not taken note of by Tribunal--Permissible--High Court construing facts without departure therefrom--Differing emphasis on undisputed facts--Within jurisdiction of High Court--Income-tax Act, 1961, s. 256-- Ganapathy and Co. v. CIT . . . 363

Scientific research expenditure --Condition precedent for grant of deduction--Certificate showing that donee had complied with conditions subject to which registration granted to it--Donation by assessee to ashram--Failure by assessee to produce certificate--Denial of deduction proper--Income-tax Act, 1961, s. 35(2A)-- Ganapathy and Co. v. CIT . . . 363

 

HIGH COURTS

Business expenditure --Difference between ascertained and contingent liability--Premises taken under licence agreement--Agreement for ten years with provision for renewal subject to enhancement of fees to be settled in future--Dispute regarding enhancement of fees and protracted litigation--Assessee continuing to use premises--Liability to pay licence fees was ascertained liability--Deduction of licence fees and interest on arrears of licence fees allowed in some assessment years and partly disallowed in some assessment years not justified--Entire licence fees and interest on arrears of licence fees deductible in assessment years 1987-88 to 1992-93, 1995-96, 1997-98 to 2001-02 and 2003-04--Income-tax Act, 1961, s. 37-- Aggarwal and Modi Enterprises (Cinema Project) Co. Pvt. Ltd. v. CIT (Delhi) . . . 469

----Royalty--Assessee acting like original equipment manufacturer--Cannot be treated as job worker or contractor--Payment of royalty allowable--Income-tax Act, 1961-- CIT v. Keihin Panalfa Ltd. (Delhi) . . . 407

Capital or revenue receipt --Amount received by way of compensation against employment contract as goodwill and one time settlement for non-commencement of proposed employment--Capital receipt not "profits in lieu of salary"--Assessee entitled to refund of tax deducted at source--Income-tax Act, 1961, s. 17(3)(iii)-- CIT v. Pritam Das Narang (Delhi) . . . 416

Exemption --Export--Computation of deduction--Exchange fluctuation loss to be reduced from total turnover--Income-tax Act, 1961, s. 10A-- CIT v. Kshema Technologies Ltd. (Karn) . . . 435

----Export--Computation of deduction--Services relating to development of computer software--Deemed to be part of export turnover of computer software outside India--Expenses incurred in foreign currency for providing software development services outside India cannot be excluded from export turnover--Income-tax Act, 1961, s. 10A-- CIT v.Kshema Technologies Ltd. (Karn) . . . 435

Income-tax --General principles--Principle of consistency in income-tax proceedings--Aggarwal and Modi Enterprises (Cinema Project) Co. Pvt. Ltd. v. CIT (Delhi) . . . 469

International transactions --Transfer pricing--Arm's length price--Adjustment only in respect of transactions with its associated enterprises--Income-tax Act, 1961, ss. 92A, 92B-- CIT v.Tara Jewels Exports P. Ltd. (Bom) . . . 404

----Transfer pricing--Arm's length price--Determination only with respect to assessee's international transactions with associated enterprises--Not in respect of transactions entered into by assessee with independent unrelated third parties--Income-tax Act, 1961, Chap. X--CIT v. Thyssen Krupp Industries India P. Ltd. (Bom) . . . 413

----Transfer pricing--Arm's length price--Determination--Transfer pricing adjustment to be made only for transactions attributed to international transactions and not to entire expenses--Income-tax Act, 1961, s. 92CA-- CIT v. Keihin Panalfa Ltd. (Delhi) . . . 407

Kar Vivad Samadhan Scheme --Instructions issued by Ministry of Finance cannot modify Scheme having statutory character--Instructions regarding applicability of marginal rate to unpaid tax for determining disputed income--Not applicable to taxable income arising from capital gains for which uniform rate applies--Assessing Officer to determine disputed income in relation to unpaid tax by applying rate of 33.6 per cent. and to calculate tax at 35 per cent. of disputed income--Income-tax Act, 1961--Kar Vivad Samadhan Scheme, 1998--Finance (No. 2) Act, 1998, ss. 88, 89-- B. P. Jain and Associates v. CIT (Delhi) . . . 423

Reassessment --Condition precedent--Belief that income had escaped assessment--Belief must be that of Assessing Officer--CBDT instruction directing remedial acti0n in case of audit objections--Instructions of CBDT cannot override provisions of section 147--Notice based solely on such instruction--Not valid--Income-tax Act, 1961, ss. 147, 148--CBDT Instruction No. 9 of 2006-- Sun Pharmaceutical Industries Ltd. v. Deputy CIT (Delhi) . . . 387

----Notice--Jurisdiction--Officer who has passed assessment order alone entitled to reopen assessment--Notice and reasons recorded for reopening by officer not Assessing Officer of assessee--Reopening of assessment vitiated--Subsequent notice issued for reopening of assessment by Assessing Officer beyond limitation period--Notice not valid--Income-tax Act, 1961, ss. 147, 148, 149(1)(b)-- Dushyant Kumar Jain v. Deputy CIT (Delhi) . . . 428

----Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Assessment after scrutiny under section 143(3)--Presumption that Assessing Officer had passed order after application of mind--Claim rendered inadmissible due to subsequent change in law--No failure to disclose fact--No allegation that material facts had not been disclosed--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Sun Pharmaceutical Industries Ltd. v. Deputy CIT (Delhi) . . . 387

Reference --Monetary limits for applications by Revenue--Effect of CBDT Circular No. 21 of 2015 dated 10-12-2015 laying down threshold limit of tax effect Rs. 20 lakhs--Applicable even to pending references--Reference by Tribunal where tax effect less than Rs. 20 lakhs returned unanswered--Income-tax Act, 1961, s. 256--CBDT Circular No. 21 of 2015 dated 10-12-2015-- CIT v. Sunny Sounds P. Ltd. (Bom) . . . 443

----Monetary limits prescribed for litigation by Revenue--Effect of CBDT Instruction No. 5 of 2014--Instruction applicable to pending references--Tax effect less than monetary limit prescribed by instruction--Nothing to indicate that issue falls within exclusion clause of instruction nor that issue has cascading effect--Reference returned unanswered--Income-tax Act, 1961, s. 256(1)--CBDT Instruction No. 5 of 2014, dated 10-7-2014-- CIT v. Computer Point (I) Ltd. (Bom) . . . 441

 

AUTHORITY FOR ADVANCE RULINGS

Non-resident --Taxability in India--Exploration of mineral oils--Special provisions for computation of income--Contract for provision of floating production storage and offloading facility used in offshore oil exploration--Change order executed providing for amendments in original contract--Entire consideration received under original contract offered to tax by assessee without distinction based on where work was done or distance travelled outside India or in India as business profits taxable in India under section 44BB--Receipts under change order cannot have different character--Cannot be split--Contentions that receipts were capital or that work not done in India--Not tenable--Compensation for loss of lease rentals received as result of insurance policy obtained and signed outside India--Received outside India and not taxable in India--Income-tax Act, 1961, s. 44BB-- Aker Contracting FP ASA , In re . . . 489

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Finance (No. 2) Act, 1998 :

S. 88 --Kar Vivad Samadhan Scheme--Instructions issued by Ministry of Finance cannot modify Scheme having statutory character--Instructions regarding applicability of marginal rate to unpaid tax for determining disputed income--Not applicable to taxable income arising from capital gains for which uniform rate applies--Assessing Officer to determine disputed income in relation to unpaid tax by applying rate of 33.6 per cent. and to calculate tax at 35 per cent. of disputed income-- B. P. Jain and Associates v. CIT (Delhi) . . . 423

S. 89 --Kar Vivad Samadhan Scheme--Instructions issued by Ministry of Finance cannot modify Scheme having statutory character--Instructions regarding applicability of marginal rate to unpaid tax for determining disputed income--Not applicable to taxable income arising from capital gains for which uniform rate applies--Assessing Officer to determine disputed income in relation to unpaid tax by applying rate of 33.6 per cent. and to calculate tax at 35 per cent. of disputed income-- B. P. Jain and Associates v. CIT (Delhi) . . . 423

 

Income-tax Act, 1961 :

S. 10A --Exemption--Export--Computation of deduction--Exchange fluctuation loss to be reduced from total turnover-- CIT v. Kshema Technologies Ltd. (Karn) . . . 435

----Exemption--Export--Computation of deduction--Services relating to development of computer software--Deemed to be part of export turnover of computer software outside India--Expenses incurred in foreign currency for providing software development services outside India cannot be excluded from export turnover-- CIT v. Kshema Technologies Ltd.(Karn) . . . 435

S. 17(3)(iii) --Capital or revenue receipt--Amount received by way of compensation against employment contract as goodwill and one time settlement for non-commencement of proposed employment--Capital receipt not "profits in lieu of salary"--Assessee entitled to refund of tax deducted at source-- CIT v. Pritam Das Narang (Delhi) . . . 416

S. 35(2A) --Scientific research expenditure--Condition precedent for grant of deduction--Certificate showing that donee had complied with conditions subject to which registration granted to it--Donation by assessee to ashram--Failure by assessee to produce certificate--Denial of deduction proper-- Ganapathy and Co. v. CIT (SC) . . . 363

S. 37 --Business expenditure--Difference between ascertained and contingent liability--Premises taken under licence agreement--Agreement for ten years with provision for renewal subject to enhancement of fees to be settled in future--Dispute regarding enhancement of fees and protracted litigation--Assessee continuing to use premises--Liability to pay licence fees was ascertained liability--Deduction of licence fees and interest on arrears of licence fees allowed in some assessment years and partly disallowed in some assessment years not justified--Entire licence fees and interest on arrears of licence fees deductible in assessment years 1987-88 to 1992-93, 1995-96, 1997-98 to 2001-02 and 2003-04-- Aggarwal and Modi Enterprises (Cinema Project) Co. Pvt. Ltd. v. CIT (Delhi) . . . 469

S. 40A(2) --Business expenditure--Disallowance--Excessive and unreasonable payments--Service charges paid to firm having common partners with assessee--Failure by assessee to produce proof of service rendered during year in question--Findings recorded in assessment proceedings for preceding year not relevant--Disallowance proper-- Ganapathy and Co. v. CIT (SC) . . . 363

S. 44BB --Non-resident--Taxability in India--Exploration of mineral oils--Special provisions for computation of income--Contract for provision of floating production storage and offloading facility used in offshore oil exploration--Change order executed providing for amendments in original contract--Entire consideration received under original contract offered to tax by assessee without distinction based on where work was done or distance travelled outside India or in India as business profits taxable in India under section 44BB--Receipts under change order cannot have different character--Cannot be split--Contentions that receipts were capital or that work not done in India--Not tenable--Compensation for loss of lease rentals received as result of insurance policy obtained and signed outside India--Received outside India and not taxable in India-- Aker Contracting FP ASA , In re (AAR) . . . 489

S. 92A --International transactions--Transfer pricing--Arm's length price--Adjustment only in respect of transactions with its associated enterprises-- CIT v. Tara Jewels Exports P. Ltd.(Bom) . . . 404

S. 92B --International transactions--Transfer pricing--Arm's length price--Adjustment only in respect of transactions with its associated enterprises-- CIT v. Tara Jewels Exports P. Ltd.(Bom) . . . 404

S. 92CA --International transactions--Transfer pricing--Arm's length price--Determination--Transfer pricing adjustment to be made only for transactions attributed to international transactions and not to entire expenses-- CIT v. Keihin Panalfa Ltd. (Delhi) . . . 407

Chap. X --International transactions--Transfer pricing--Arm's length price--Determination only with respect to assessee's international transactions with associated enterprises--Not in respect of transactions entered into by assessee with independent unrelated third parties--CIT v. Thyssen Krupp Industries India P. Ltd. (Bom) . . . 413

S. 147 --Reassessment--Condition precedent--Belief that income had escaped assessment--Belief must be that of Assessing Officer--CBDT instruction directing remedial acti0n in case of audit objections--Instructions of CBDT cannot override provisions of section 147--Notice based solely on such instruction--Not valid-- Sun Pharmaceutical Industries Ltd. v. Deputy CIT (Delhi) . . . 387

----Reassessment--Notice--Jurisdiction--Officer who has passed assessment order alone entitled to reopen assessment--Notice and reasons recorded for reopening by officer not Assessing Officer of assessee--Reopening of assessment vitiated--Subsequent notice issued for reopening of assessment by Assessing Officer beyond limitation period--Notice not valid-- Dushyant Kumar Jain v. Deputy CIT (Delhi) . . . 428

----Reassessment--Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Assessment after scrutiny under section 143(3)--Presumption that Assessing Officer had passed order after application of mind--Claim rendered inadmissible due to subsequent change in law--No failure to disclose fact--No allegation that material facts had not been disclosed--Notice not valid-- Sun Pharmaceutical Industries Ltd.v. Deputy CIT (Delhi) . . . 387

S. 148 --Reassessment--Condition precedent--Belief that income had escaped assessment--Belief must be that of Assessing Officer--CBDT instruction directing remedial acti0n in case of audit objections--Instructions of CBDT cannot override provisions of section 147--Notice based solely on such instruction--Not valid-- Sun Pharmaceutical Industries Ltd. v. Deputy CIT (Delhi) . . . 387

----Reassessment--Notice--Jurisdiction--Officer who has passed assessment order alone entitled to reopen assessment--Notice and reasons recorded for reopening by officer not Assessing Officer of assessee--Reopening of assessment vitiated--Subsequent notice issued for reopening of assessment by Assessing Officer beyond limitation period--Notice not valid-- Dushyant Kumar Jain v. Deputy CIT (Delhi) . . . 428

----Reassessment--Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Assessment after scrutiny under section 143(3)--Presumption that Assessing Officer had passed order after application of mind--Claim rendered inadmissible due to subsequent change in law--No failure to disclose fact--No allegation that material facts had not been disclosed--Notice not valid-- Sun Pharmaceutical Industries Ltd.v. Deputy CIT (Delhi) . . . 387

S. 149(1)(b) --Reassessment--Notice--Jurisdiction--Officer who has passed assessment order alone entitled to reopen assessment--Notice and reasons recorded for reopening by officer not Assessing Officer of assessee--Reopening of assessment vitiated--Subsequent notice issued for reopening of assessment by Assessing Officer beyond limitation period--Notice not valid-- Dushyant Kumar Jain v. Deputy CIT (Delhi) . . . 428

S. 256 --Reference--High Court--Scope of powers--Finality of findings of fact of Tribunal--High Court taking into account certain additional facts already on record but not taken note of by Tribunal--Permissible--High Court construing facts without departure therefrom--Differing emphasis on undisputed facts--Within jurisdiction of High Court-- Ganapathy and Co. v. CIT(SC) . . . 363

----Reference--Monetary limits for applications by Revenue--Effect of CBDT Circular No. 21 of 2015 dated 10-12-2015 laying down threshold limit of tax effect Rs. 20 lakhs--Applicable even to pending references--Reference by Tribunal where tax effect less than Rs. 20 lakhs returned unanswered-- CIT v. Sunny Sounds P. Ltd. (Bom) . . . 443

S. 256(1) --Reference--Monetary limits prescribed for litigation by Revenue--Effect of CBDT Instruction No. 5 of 2014--Instruction applicable to pending references--Tax effect less than monetary limit prescribed by instruction--Nothing to indicate that issue falls within exclusion clause of instruction nor that issue has cascading effect--Reference returned unanswered--CIT v. Computer Point (I) Ltd. (Bom) . . . 441

S. 269UA --Purchase of immovable property by Central Government--Transfer--Definition--Land held under lease from Municipality--Collaboration agreement under which land holder agreeing to allow developer to construct commercial project on land at its cost--Developer to retain 78 per cent. of total constructed area and transfer 22 per cent. to land holder--Not a case of sale, lease or exchange--Agreement enabling developer to enjoy property of land holder for purpose of construction--Falls within definition--Consideration stated in agreement for land cannot be taken as consideration for available floor space index--Comparable instance of sale taken of property in adjoining locality and not commercial property--Order for pre-emptive purchase vitiated-- Unitech Ltd. v. Union of India (SC) . . . 456

S. 269UD --Purchase of immovable property by Central Government--General principles--No onus on Department to establish undervaluation with view to evade tax--Undervaluation greater than 15 per cent. below fair market value raises rebuttable presumption of attempt to evade taxes-- Unitech Ltd. v. Union of India (SC) . . . 456

----Purchase of immovable property by Central Government--Transfer--Definition--Land held under lease from Municipality--Collaboration agreement under which land holder agreeing to allow developer to construct commercial project on land at its cost--Developer to retain 78 per cent. of total constructed area and transfer 22 per cent. to land holder--Not a case of sale, lease or exchange--Agreement enabling developer to enjoy property of land holder for purpose of construction--Falls within definition--Consideration stated in agreement for land cannot be taken as consideration for available floor space index--Comparable instance of sale taken of property in adjoining locality and not commercial property--Order for pre-emptive purchase vitiated-- Unitech Ltd. v. Union of India (SC) . . . 456

Interest-tax Act, 1974 :

S. 10 --Interest-tax--Reassessment--Not permissible where no assessment made in first instance-- Standard Chartered Finance Ltd. v. CIT (SC) . . . 453

 

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

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