INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Reassessment --Reason to believe income has escaped assessment--Assessing Officer must form belief independently--Notice merely based on audit report--Failure by Assessing Officer to undertake independent exercise--Reasons for reopening of assessment not placed on record before Tribunal--Reassessment not proper--Income-tax Act, 1961, ss. 69C, 147, 148, 153-- CIT v. DRM Enterprises (Bom) . . . 412
ITR Volume 382 : Part 4 (Issue dated : 11-4-2016)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Accounting --Method of accounting--Assessee consistently following project completion method--Expenses of construction not debited to profit and loss account of assessee and shown as cost of construction of block of buildings--Assessee offering tax in subsequent financial year--No actual loss to Revenue--Income-tax Act, 1961, s. 145-- Paras Buildtech India P. Ltd. v. CIT (Delhi) . . . 630
----Rejection of accounts--Assessee receiving advances in respect of project that never took off--Part of advance returned in following financial year--Income not to be taxed in hands of assessee--No purpose in remanding matter to Assessing Officer--Income-tax Act, 1961, s. 145-- Paras Buildtech India P. Ltd. v. CIT (Delhi) . . . 630
Advance tax --Interest--Waiver--Power of Chief Commissioner to grant--Directions of Central Board of Direct Taxes --Assessee declaring sale of property but not disclosing capital gains thereon--Failure to disclose not due to unavoidable circumstances--Denial of waiver proper--Income-tax Act, 1961, ss. 119(2)(a), 234B-- Arun Sunny v. Chief CIT (Ker) . . . 533
Appeal to Appellate Tribunal --Application for recall of order--Inordinate delay in filing application--Rejection of application justified--Income-tax Act, 1961-- CIT v. State Bank of Hyderabad (T&AP) . . . 499
Appellate Tribunal --International transactions--Arm’s length price--Determination--Three comparables accepted for subsequent assessment year submitted by assessee before Commissioner (Appeals)--Appellate Tribunal--Refusal to consider--Not proper--Direction to remand matter to Transfer Pricing Officer for consideration of comparables--Income-tax Act, 1961, s. 92C-- Advance Power Display Systems Ltd. v. CIT (Bom) . . . 607
Business expenditure --Commission--Uncontroverted statements of witness--Assessee refusing to cross examine witness despite being granted opportunity--No violation of principles of natural justice--Sufficient adverse inference against assessee that payments of commission were fictitious--Disallowance of commission justified--Income-tax Act, 1961--Roger Enterprises P. Ltd. v. CIT (Delhi) . . . 639
----Travel expenses of director outside India--Assessee doing job work manufacture for one entity in Singapore--Deduction of foreign travel expenses restricted to country where buyer situated--Proper--Income-tax Act, 1961, s. 37-- Advance Power Display Systems Ltd. v. CIT(Bom) . . . 607
Capital or revenue expenditure --Tests--Depreciation--Effect of Explanation 1 to section 32(1)(i)--Expenditure incurred for construction of superstructures and setting up of workshop facilities on leasehold premises--Whether expenditure capital or revenue to be decided on facts of each case by applying relevant tests--Ratio expressed by Division Bench lays down correct law and does not need reconsideration--Income-tax Act, 1961, ss. 32(1), Expln. 1 , 37-- Indus Motors Co. P. Ltd. v. Deputy CIT [FB] (Ker) . . . 503
Charitable purposes --Registration of trust--Objectives of trust to be considered as a whole, and not in isolation--Intention of settler or executor cannot decide nature of trust--Tribunal to consider purpose and objectives of trust in light of trust deed and other documents--Matter remanded--Income-tax Act, 1961, ss. 12A, 80G(5)(vi)-- Bangalore Urban and Rural District Co-operative Milk Producers Societies Members and Employees Welfare Trust Bangalore Milk Union Ltd. v. DIT (Exemptions) (Karn) . . . 528
Exemption --Death-cum-retirement gratuity--Cash equivalent of leave salary--Meaning of salary for purposes of section 10(10) and (10AA)--Definition of salary in rule 2(h) of Part A of Fourth Schedule applies--Income-tax Act, 1961, s. 10(10), (10AA), Fourth Schedule, Part A, r. 2(h)-- Harbans Singh v. CIT (P&H) . . . 600
Income-tax --General principles--Rights of assessee-- CIT v. State Bank of Hyderabad(T&AP) . . . 499
Interpretation of taxing statutes -- Explanation 1 to section 32(1)(i)--Strict interpretation--Indus Motors Co. P. Ltd. v. Deputy CIT [FB] (Ker) . . . 503
Penalty --Concealment of income--Nothing on record to demonstrate nature of service rendered by companies to whom commission paid--Onus on assessee to prove genuineness of commission payments--Assessee failing to discharge--Essential conditions for levying penalty fulfilled--Income-tax Act, 1961, s. 271(1)(c)-- Roger Enterprises P. Ltd. v. CIT (Delhi) . . . 639
Reassessment --Condition precedent--Opinion that income had escaped assessment must be that of Assessing Officer--Notice based on review of assessment order by Commissioner--Not valid--Notice should give reasons--Notice cannot be improved by affidavits and other reasons--Income-tax Act, 1961, ss. 147, 148-- Munjal Showa Ltd. v.Deputy CIT (Delhi) . . . 555
----Notice--Industrial undertaking--Special deduction--Condition precedent for reassessment--Reason to believe that income chargeable to tax had escaped assessment--Issued on which reasons based considered in original assessment--Reopening of assessment without jurisdiction--Obligation of assessee only to disclose primary facts necessary for assessment--Assessee disclosing truly and fully all material facts--Reopening of assessment not warranted--Income-tax Act, 1961, ss. 80-IA, 148-- CIT (LTU) v. Reliance Industries Ltd. (Bom) . . . 574
----Notice--Service of valid notice within limitation--Condition precedent for reassessment--Burden of proof of service of notice on Department--Participation in reassessment proceedings by representative of assessee does not result in waiver of necessity of service of notice--Objection raised to non-service of notice--Reassessment proceedings ignoring objection--Notice and consequent reassessment not valid--Income-tax Act, 1961, ss. 147, 148-- CIT v. Chetan Gupta (Delhi) . . . 613
----Notice--Validity--Conditions precedent--Reasons recorded for reopening assessment should state failure by assessee to disclose fully and truly all material facts necessary for his assessment and should provide live link to formation of belief that income has escaped assessment--Essential requirement not satisfied--Notice to be quashed--Income-tax Act, 1961, ss. 147, 148-- Sabharwal Properties Industries P. Ltd. v. ITO (Delhi) . . . 547
----Notice after four years--Failure to disclose material facts necessary for assessment--Complete details furnished during original assessment proceedings--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Munjal Showa Ltd. v. Deputy CIT (Delhi) . . . 555
----Validity--Returns not disclosing unabsorbed depreciation and business losses carried forward--Assessment order on 31-12-2010 and order of rectification on 6-9-2011--Assessment order merging in order of rectification--Notice of reassessment on 10-12-2013--Notice not beyond four years--Notice and consequent reassessment--Valid--Income-tax Act, 1961, ss. 147, 148-- PVP Ventures Ltd. v. Asst. CIT (Mad) . . . 582
Tea development allowance --Computation of allowance--Mode of computation--Composite income--Apportionment of agricultural income and non-agricultural income--Deduction to be allowed from total composite income derived from growing and manufacturing tea--Rule 8 shall apply thereafter to apportion resultant income--Income-tax Act, 1961, s. 33AB--Income-tax Rules, 1962, r. 8-- Singlo (India) Tea Ltd. v. CIT (Cal) . . . 537
Writ --Power of Chief Commissioner to waive interest--Court cannot direct waiver--Constitution of India, art. 226-- Arun Sunny v. Chief CIT (Ker) . . . 533
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Art. 226 --Writ--Power of Chief Commissioner to waive interest--Court cannot direct waiver--Arun Sunny v. Chief CIT (Ker) . . . 533
S. 10(10), (10AA), Fourth Schedule, Part A, r. 2(h) --Exemption--Death-cum-retirement gratuity--Cash equivalent of leave salary--Meaning of salary for purposes of section 10(10) and (10AA)--Definition of salary in rule 2(h) of Part A of Fourth Schedule applies-- Harbans Singh v. CIT (P&H) . . . 600
S. 12A --Charitable purposes--Registration of trust--Objectives of trust to be considered as a whole, and not in isolation--Intention of settler or executor cannot decide nature of trust--Tribunal to consider purpose and objectives of trust in light of trust deed and other documents--Matter remanded-- Bangalore Urban and Rural District Co-operative Milk Producers Societies Members and Employees Welfare Trust Bangalore Milk Union Ltd. v.DIT (Exemptions) (Karn) . . . 528
S. 32(1), Expln. 1 --Capital or revenue expenditure--Tests--Depreciation--Effect ofExplanation 1 to section 32(1)(i)--Expenditure incurred for construction of superstructures and setting up of workshop facilities on leasehold premises--Whether expenditure capital or revenue to be decided on facts of each case by applying relevant tests--Ratio expressed by Division Bench lays down correct law and does not need reconsideration-- Indus Motors Co. P. Ltd. v. Deputy CIT [FB] (Ker) . . . 503
S. 33AB --Tea development allowance--Computation of allowance--Mode of computation--Composite income--Apportionment of agricultural income and non-agricultural income--Deduction to be allowed from total composite income derived from growing and manufacturing tea--Rule 8 shall apply thereafter to apportion resultant income-- Singlo (India) Tea Ltd. v. CIT (Cal) . . . 537
S. 37 --Capital or revenue expenditure--Tests--Depreciation--Effect of Explanation 1 to section 32(1)(i)--Expenditure incurred for construction of superstructures and setting up of workshop facilities on leasehold premises--Whether expenditure capital or revenue to be decided on facts of each case by applying relevant tests--Ratio expressed by Division Bench lays down correct law and does not need reconsideration-- Indus Motors Co. P. Ltd.v. Deputy CIT [FB] (Ker) . . . 503
----Business expenditure--Travel expenses of director outside India--Assessee doing job work manufacture for one entity in Singapore--Deduction of foreign travel expenses restricted to country where buyer situated--Proper-- Advance Power Display Systems Ltd. v.CIT (Bom) . . . 607
S. 80G(5)(vi) --Charitable purposes--Registration of trust--Objectives of trust to be considered as a whole, and not in isolation--Intention of settler or executor cannot decide nature of trust--Tribunal to consider purpose and objectives of trust in light of trust deed and other documents--Matter remanded-- Bangalore Urban and Rural District Co-operative Milk Producers Societies Members and Employees Welfare Trust Bangalore Milk Union Ltd. v.DIT (Exemptions) (Karn) . . . 528
S. 80-IA --Reassessment--Notice--Industrial undertaking--Special deduction--Condition precedent for reassessment--Reason to believe that income chargeable to tax had escaped assessment--Issued on which reasons based considered in original assessment--Reopening of assessment without jurisdiction--Obligation of assessee only to disclose primary facts necessary for assessment--Assessee disclosing truly and fully all material facts--Reopening of assessment not warranted-- CIT (LTU) v. Reliance Industries Ltd. (Bom) . . . 574
S. 92C --Appellate Tribunal--International transactions--Arm’s length price--Determination--Three comparables accepted for subsequent assessment year submitted by assessee before Commissioner (Appeals)--Appellate Tribunal--Refusal to consider--Not proper--Direction to remand matter to Transfer Pricing Officer for consideration of comparables-- Advance Power Display Systems Ltd. v. CIT (Bom) . . . 607
S. 119(2)(a) --Advance tax--Interest--Waiver--Power of Chief Commissioner to grant--Directions of Central Board of Direct Taxes --Assessee declaring sale of property but not disclosing capital gains thereon--Failure to disclose not due to unavoidable circumstances--Denial of waiver proper-- Arun Sunny v. Chief CIT (Ker) . . . 533
S. 145 --Accounting--Method of accounting--Assessee consistently following project completion method--Expenses of construction not debited to profit and loss account of assessee and shown as cost of construction of block of buildings--Assessee offering tax in subsequent financial year--No actual loss to Revenue-- Paras Buildtech India P. Ltd. v. CIT(Delhi) . . . 630
----Accounting--Rejection of accounts--Assessee receiving advances in respect of project that never took off--Part of advance returned in following financial year--Income not to be taxed in hands of assessee--No purpose in remanding matter to Assessing Officer-- Paras Buildtech India P. Ltd. v. CIT (Delhi) . . . 630
S. 147 --Reassessment--Condition precedent--Opinion that income had escaped assessment must be that of Assessing Officer--Notice based on review of assessment order by Commissioner--Not valid--Notice should give reasons--Notice cannot be improved by affidavits and other reasons-- Munjal Showa Ltd. v. Deputy CIT (Delhi) . . . 555
----Reassessment--Notice--Service of valid notice within limitation--Condition precedent for reassessment--Burden of proof of service of notice on Department--Participation in reassessment proceedings by representative of assessee does not result in waiver of necessity of service of notice--Objection raised to non-service of notice--Reassessment proceedings ignoring objection--Notice and consequent reassessment not valid-- CIT v.Chetan Gupta (Delhi) . . . 613
----Reassessment--Notice--Validity--Conditions precedent--Reasons recorded for reopening assessment should state failure by assessee to disclose fully and truly all material facts necessary for his assessment and should provide live link to formation of belief that income has escaped assessment--Essential requirement not satisfied--Notice to be quashed--Sabharwal Properties Industries P. Ltd. v. ITO (Delhi) . . . 547
----Reassessment--Notice after four years--Failure to disclose material facts necessary for assessment--Complete details furnished during original assessment proceedings--Notice not valid-- Munjal Showa Ltd. v. Deputy CIT (Delhi) . . . 555
----Reassessment--Validity--Returns not disclosing unabsorbed depreciation and business losses carried forward--Assessment order on 31-12-2010 and order of rectification on 6-9-2011--Assessment order merging in order of rectification--Notice of reassessment on 10-12-2013--Notice not beyond four years--Notice and consequent reassessment--Valid-- PVP Ventures Ltd. v. Asst. CIT (Mad) . . . 582
S. 148 --Reassessment--Condition precedent--Opinion that income had escaped assessment must be that of Assessing Officer--Notice based on review of assessment order by Commissioner--Not valid--Notice should give reasons--Notice cannot be improved by affidavits and other reasons-- Munjal Showa Ltd. v. Deputy CIT (Delhi) . . . 555
----Reassessment--Notice--Industrial undertaking--Special deduction--Condition precedent for reassessment--Reason to believe that income chargeable to tax had escaped assessment--Issued on which reasons based considered in original assessment--Reopening of assessment without jurisdiction--Obligation of assessee only to disclose primary facts necessary for assessment--Assessee disclosing truly and fully all material facts--Reopening of assessment not warranted-- CIT (LTU) v. Reliance Industries Ltd. (Bom) . . . 574
----Reassessment--Notice--Service of valid notice within limitation--Condition precedent for reassessment--Burden of proof of service of notice on Department--Participation in reassessment proceedings by representative of assessee does not result in waiver of necessity of service of notice--Objection raised to non-service of notice--Reassessment proceedings ignoring objection--Notice and consequent reassessment not valid-- CIT v.Chetan Gupta (Delhi) . . . 613
----Reassessment--Notice--Validity--Conditions precedent--Reasons recorded for reopening assessment should state failure by assessee to disclose fully and truly all material facts necessary for his assessment and should provide live link to formation of belief that income has escaped assessment--Essential requirement not satisfied--Notice to be quashed--Sabharwal Properties Industries P. Ltd. v. ITO (Delhi) . . . 547
----Reassessment--Notice after four years--Failure to disclose material facts necessary for assessment--Complete details furnished during original assessment proceedings--Notice not valid-- Munjal Showa Ltd. v. Deputy CIT (Delhi) . . . 555
----Reassessment--Validity--Returns not disclosing unabsorbed depreciation and business losses carried forward--Assessment order on 31-12-2010 and order of rectification on 6-9-2011--Assessment order merging in order of rectification--Notice of reassessment on 10-12-2013--Notice not beyond four years--Notice and consequent reassessment--Valid-- PVP Ventures Ltd. v. Asst. CIT (Mad) . . . 582
S. 234B --Advance tax--Interest--Waiver--Power of Chief Commissioner to grant--Directions of Central Board of Direct Taxes --Assessee declaring sale of property but not disclosing capital gains thereon--Failure to disclose not due to unavoidable circumstances--Denial of waiver proper-- Arun Sunny v. Chief CIT (Ker) . . . 533
S. 271(1)(c) --Penalty--Concealment of income--Nothing on record to demonstrate nature of service rendered by companies to whom commission paid--Onus on assessee to prove genuineness of commission payments--Assessee failing to discharge--Essential conditions for levying penalty fulfilled-- Roger Enterprises P. Ltd. v. CIT (Delhi) . . . 639
R. 8 --Tea development allowance--Computation of allowance--Mode of computation--Composite income--Apportionment of agricultural income and non-agricultural income--Deduction to be allowed from total composite income derived from growing and manufacturing tea--Rule 8 shall apply thereafter to apportion resultant income-- Singlo (India) Tea Ltd. v. CIT (Cal) . . . 537
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