INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Capital gains --Liability to tax--Gains on transfer of trade mark--Effect of amendment of section 55(2) w. e. f. 1-4-2002--Amendment not retrospective--Gains on transfer of trade mark in accounting year relevant to assessment year 1996-97--Not liable to tax under section 45--Income-tax Act, 1961, ss. 45, 55-- CIT v. Associated Electronics and Electrical Industries (Bangalore) Pvt. Ltd. (Karn) . . . 471
----Liability to tax--Transfer of goodwill--Difference between trade mark and goodwill--Transfer of trade mark--Business continued--Agreement showing that transfer of trade mark was not accompanied by transfer of goodwill--Gains in accounting year relevant to assessment year 1996-97--Not liable to tax under section 45--Income-tax Act, 1961, s. 45--CIT v. Associated Electronics and Electrical Industries (Bangalore) Pvt. Ltd. (Karn) . . . 471
Cash credits --Cash deposits in bank--No explanation called for by Assessing Officer--Finding that balance in bank account matches with balance-sheet and cash book--No addition permissible--Income-tax Act, 1961, s. 68-- CIT v. Wellworth Construction Udyog Ltd. (Delhi) . . . 464
----Share application money--Applicants genuine business concerns with good turnovers--Finding of Commissioner (Appeals) that identity and creditworthiness of share applicants proved--No adverse comments in remand report--Reasonable inference drawn by Commissioner (Appeals) and Tribunal that addition unsustainable--No question of law arose--Income-tax Act, 1961, s. 68-- CIT v. Wellworth Construction Udyog Ltd. (Delhi) . . . 464
Income --Assessability--Co-operative society manufacturing and selling salt--Sale proceeds transferred to “distributable pool account†--Amount transferred not deductible--Co-operative society assessable on profits from business--Income-tax Act, 1961-- CIT v.Nagarbail Salt-owners Co-operative Society Limited (Karn) . . . 482
Interpretation of taxing statutes --Strict interpretation-- CIT v. Nagarbail Salt-owners Co-operative Society Limited (Karn) . . . 482
ITR Volume 383 : Part 2 (Issue dated : 2-5-2016)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Export --Special deduction--Computation of profits--Ninety per cent. of net interest included in profits, and not of gross interest to be deducted--Income-tax Act, 1961, s. 80HHC, Expln. (baa) -- Liberty Footwear Co. v. CIT . . . 195
Industrial undertaking --Special deduction--Profits derived from business--Test--Direct nexus between profits and business--Immediate source of profits not relevant--Transport, interest and power subsidies given by Government--Go to reimbursement of cost in production of goods--Form part of profits of business--Do not fall under “Income from other sources†--Income-tax Act, 1961, ss. 28(iii)(b), 56, 80-IB, 80-IC-- CIT v. Meghalaya Steels Ltd. . . . 217
Interest-tax --Charge of tax--Chargeable interest--Definition--Interest payable “on loans and advances made in India†--Interest payable on default in payment of amounts due under discounted bill of exchange--Not interest payable on loan or advance--Not chargeable interest--Interest-tax Act, 1974, s. 2(7)-- State Bank of Patiala v. CIT . . . 244
Interpretation of taxing statutes --Aids to construction--Budget speech of Finance Minister--CIT v. Meghalaya Steels Ltd. . . . 217
Taxation --Only by clear statutory provision-- State Bank of Patiala v. CIT . . . 244
Appeal to High Court --Competency of appeal--Decision of Tribunal following earlier decision--No appeal from earlier decision--No affidavit explaining reasons for appeal--Appeal not competent--Income-tax act, 1961, s. 260A-- CIT v. Gujarat Reclaim and Rubber Products Ltd. (Bom) . . . 236
----Substantial question of law--Question not raised before Tribunal--Cannot be raised before court--Income-tax Act, 1961, s. 260A-- CIT v. Air India Ltd. (Bom) . . . 284
Appellate Tribunal --Procedure--Application to Tribunal for recall of order--Limitation--Assessee, a public sector undertaking--Dismissal of Department’s appeal by Tribunal for failure to obtain approval of Committee on Disputes--Not an order rejecting memorandum of appeal under rule 12 of Income-tax (Appellate Tribunal) Rules, 1963 but an order under section 254(1)--Supreme Court decision later doing away with requirement of approval of Committee on Disputes--Application thereafter by Department for recall of order after five years--Limitation for applications under section 254(2) applicable--Refusal by Tribunal to recall order on ground application beyond limitation proper--Income-tax Act, 1961, s. 254(2)--Income-tax (Appellate Tribunal) Rules, 1963, rr. 7, 12-- CIT v. Air India Ltd. (Bom) . . . 284
Business expenditure --Disallowance--Failure to deduct tax at source--Non-resident--Payment of commission to non-resident agent--Commission not income deemed to accrue or arise in India--Tax need not be deducted at source from such commission--Income-tax Act, 1961, s. 40(a)(i)-- CIT v. Gujarat Reclaim and Rubber Products Ltd. (Bom) . . . 236
Capital gains --Transfer--Conversion of firm to private limited company with same partners having same shareholding in company as in firm--Revaluation and transfer of capital assets from firm to company--No dissolution of partnership--No consideration accrued or received on transfer of assets--Transaction not transfer giving rise to capital gains--Income-tax Act, 1961, ss. 45(1), (4), 47-- CADD Centre v. Asst. CIT (Mad) . . . 258
Capital or revenue expenditure --Expenditure incurred on renovation of leased office premises--Tribunal bifurcating expenditure as renovation of building and renovation which brought into existence new item of enduring nature-- Failure by Department to show change in rate of taxation after lapse of thirteen years--Even if substantial amount capitalised, entire amount would have been allowed as deduction on account of depreciation and case would be revenue neutral--Bifurcation of renovation expenses by 70 per cent. as revenue and 30 per cent as capital justified--Income-tax Act, 1961, s. 32(1), Expln. 1 -- CIT v. Glaxo Smithkline Consumer Health Care Ltd. (P&H) . . . 290
Charitable purpose --Test--Premises let for running educational institutions--Auditorium let out to outsiders for commercial purpose--Incidental to principal object of promotion of educational activities--Will not fall in category of “advancement of any other object of general public utility†in section 2(15)--Cancellation of registration not justified--Income-tax Act, 1961, ss. 2(15), 12A-- DIT (Exemptions) v. Lala Lajpatrai Memorial Trust (Bom) . . . 345
Depreciation --Charitable purpose--Amount spent on purchase of capital assets claimed exempt as application of income to objects--Depreciation allowable on such capital assets--Income-tax Act, 1961, ss. 11, 32-- CIT v. Jawaharlal Nehru Port Trust (Bom) . . . 339
Exemption --Medical institution--Meaning of “institution†--Private limited company--Can come within purview of “institution†--Eligible for exemption--Income-tax Act, 1961, s. 10(22A)--Companies Act, 1956, s. 25-- CIT v. Apeejay Medical Ltd. (Cal) . . . 297
Interest on borrowed capital --Amount advanced to sister concerns without interest--Finding that assessee had other funds for making advance--Interest deductible--Income-tax Act, 1961, s. 36(1)(iii)-- CIT v. Gujarat Reclaim and Rubber Products Ltd. (Bom) . . . 236
Precedent --Effect of decision of Supreme Court in CIT v.  Toshoku Ltd. [1980] 125 ITR 525 (SC)-- CIT v. Gujarat Reclaim and Rubber Products Ltd. (Bom) . . . 236
Reassessment --Notice after four years--Change of opinion--Assessment order indicating Assessing Officer conducted detailed examination--No reason to believe income escaped assessment--Assessing Officer examining statement of computation of loss and recording satisfactory finding--No material indicating accounts, vouchers or details provided by assessee inaccurate or false--Notice for reopening assessment on account of change of opinion liable to be quashed--Income-tax Act, 1961, ss. 147, 148-- BBC Worldwide Ltd. v.Asst. DIT (International Taxation) (Delhi) . . . 197
Refund --Deduction of tax at source--Exemption--Interest on foreign loan--Loan agreement providing for payment of penal interest as condition for condoning breach of terms--Deduction of tax at source on payments of penal interest--Payment of penal interest not for breach of terms of conditions--Penal interest not paid as result of violation of agreement--Payment of penal interest approved by Government and exempt--Assessee entitled to refund of tax erroneously deducted thereon--Income-tax Act, 1961, ss. 2(28A), 10(15)(iv)(c), 195--CEAT Ltd. v. CBDT (Delhi) . . . 300
Search and seizure --Block assessment--Undisclosed income--Sale of flats--No material on basis of which Assessing Officer applied standard rate of Rs. 4,800 per square feet for all floors--Mere fact that print out stated that flats on second and third floors had been sold did not necessarily mean that they were sold at rates indicated therein--Assessee offering plausible explanation for document--Not open to Assessing Officer to draw inference on basis of projection of sale of flats in document--Burden of proof on Department to show how rate at which flats on second and third floors sold higher than that indicated in sales register or sale deeds--Income-tax Act, 1961, ss. 142(1), 158BC--CIT v. Vatika Landbase P. Ltd.(Delhi) . . . 320
----Requisition--Cash and silver seized from car by police--Neither police nor Income-tax Department having any information regarding ownership of cash and silver--Order of requisition of cash and silver not justified--Lower court justified in imposing conditions for requisition--Income-tax Act, 1961, s. 132A-- Deputy DIT (Investigation) v. Nayan Kothari(MP) . . . 276
Words and phrases --“Institution†--Meaning of-- CIT v. Apeejay Medical Ltd. (Cal) . . . 297
Writ --Jurisdiction--Territorial jurisdiction--Communication of order by Deputy Commissioner Mumbai--Central Board of Direct Taxes passing order at Delhi--Part of cause of action arising within jurisdiction of court at Delhi--Objection raised for first time at stage of argument--Objection not sustainable--Constitution of India, art. 226--Income-tax Act, 1961-- CEAT Ltd. v.CBDT (Delhi) . . . 300
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 25 --Exemption--Medical institution--Meaning of “institution†--Private limited company--Can come within purview of “institution†--Eligible for exemption-- CIT v. Apeejay Medical Ltd. (Cal) . . . 297
Art. 226 --Writ--Jurisdiction--Territorial jurisdiction--Communication of order by Deputy Commissioner Mumbai--Central Board of Direct Taxes passing order at Delhi--Part of cause of action arising within jurisdiction of court at Delhi--Objection raised for first time at stage of argument--Objection not sustainable-- CEAT Ltd. v. CBDT (Delhi) . . . 300
S. 2(15) --Charitable purpose--Test--Premises let for running educational institutions--Auditorium let out to outsiders for commercial purpose--Incidental to principal object of promotion of educational activities--Will not fall in category of “advancement of any other object of general public utility†in section 2(15)--Cancellation of registration not justified--DIT (Exemptions) v. Lala Lajpatrai Memorial Trust (Bom) . . . 345
S. 2(28A) --Refund--Deduction of tax at source--Exemption--Interest on foreign loan--Loan agreement providing for payment of penal interest as condition for condoning breach of terms--Deduction of tax at source on payments of penal interest--Payment of penal interest not for breach of terms of conditions--Penal interest not paid as result of violation of agreement--Payment of penal interest approved by Government and exempt--Assessee entitled to refund of tax erroneously deducted thereon-- CEAT Ltd. v. CBDT (Delhi) . . . 300
S. 10(15)(iv)(c) --Refund--Deduction of tax at source--Exemption--Interest on foreign loan--Loan agreement providing for payment of penal interest as condition for condoning breach of terms--Deduction of tax at source on payments of penal interest--Payment of penal interest not for breach of terms of conditions--Penal interest not paid as result of violation of agreement--Payment of penal interest approved by Government and exempt--Assessee entitled to refund of tax erroneously deducted thereon-- CEAT Ltd. v. CBDT (Delhi) . . . 300
S. 10(22A) --Exemption--Medical institution--Meaning of “institution†--Private limited company--Can come within purview of “institution†--Eligible for exemption-- CIT v.Apeejay Medical Ltd. (Cal) . . . 297
S. 11 --Depreciation--Charitable purpose--Amount spent on purchase of capital assets claimed exempt as application of income to objects--Depreciation allowable on such capital assets-- CIT v. Jawaharlal Nehru Port Trust (Bom) . . . 339
S. 12A --Charitable purpose--Test--Premises let for running educational institutions--Auditorium let out to outsiders for commercial purpose--Incidental to principal object of promotion of educational activities--Will not fall in category of “advancement of any other object of general public utility†in section 2(15)--Cancellation of registration not justified--DIT (Exemptions) v. Lala Lajpatrai Memorial Trust (Bom) . . . 345
S. 28(iii)(b) --Industrial undertaking--Special deduction--Profits derived from business--Test--Direct nexus between profits and business--Immediate source of profits not relevant--Transport, interest and power subsidies given by Government--Go to reimbursement of cost in production of goods--Form part of profits of business--Do not fall under “Income from other sources†-- CIT v. Meghalaya Steels Ltd. (SC) . . . 217
S. 32 --Depreciation--Charitable purpose--Amount spent on purchase of capital assets claimed exempt as application of income to objects--Depreciation allowable on such capital assets-- CIT v. Jawaharlal Nehru Port Trust (Bom) . . . 339
S. 32(1), Expln. 1 --Capital or revenue expenditure--Expenditure incurred on renovation of leased office premises--Tribunal bifurcating expenditure as renovation of building and renovation which brought into existence new item of enduring nature-- Failure by Department to show change in rate of taxation after lapse of thirteen years--Even if substantial amount capitalised, entire amount would have been allowed as deduction on account of depreciation and case would be revenue neutral--Bifurcation of renovation expenses by 70 per cent. as revenue and 30 per cent as capital justified-- CIT v. Glaxo Smithkline Consumer Health Care Ltd. (P&H) . . . 290
S. 36(1)(iii) --Interest on borrowed capital--Amount advanced to sister concerns without interest--Finding that assessee had other funds for making advance--Interest deductible--CIT v. Gujarat Reclaim and Rubber Products Ltd. (Bom) . . . 236
S. 40(a)(i) --Business expenditure--Disallowance--Failure to deduct tax at source--Non-resident--Payment of commission to non-resident agent--Commission not income deemed to accrue or arise in India--Tax need not be deducted at source from such commission-- CIT v.Gujarat Reclaim and Rubber Products Ltd. (Bom) . . . 236
S. 45(1), (4) --Capital gains--Transfer--Conversion of firm to private limited company with same partners having same shareholding in company as in firm--Revaluation and transfer of capital assets from firm to company--No dissolution of partnership--No consideration accrued or received on transfer of assets--Transaction not transfer giving rise to capital gains--CADD Centre v. Asst. CIT (Mad) . . . 258
S. 47 --Capital gains--Transfer--Conversion of firm to private limited company with same partners having same shareholding in company as in firm--Revaluation and transfer of capital assets from firm to company--No dissolution of partnership--No consideration accrued or received on transfer of assets--Transaction not transfer giving rise to capital gains-- CADD Centre v. Asst. CIT (Mad) . . . 258
S. 56 --Industrial undertaking--Special deduction--Profits derived from business--Test--Direct nexus between profits and business--Immediate source of profits not relevant--Transport, interest and power subsidies given by Government--Go to reimbursement of cost in production of goods--Form part of profits of business--Do not fall under “Income from other sources†-- CIT v. Meghalaya Steels Ltd. (SC) . . . 217
S. 80HHC, Expln. (baa) --Export--Special deduction--Computation of profits--Ninety per cent. of net interest included in profits, and not of gross interest to be deducted-- Liberty Footwear Co. v. CIT (SC) . . . 195
S. 80-IB --Industrial undertaking--Special deduction--Profits derived from business--Test--Direct nexus between profits and business--Immediate source of profits not relevant--Transport, interest and power subsidies given by Government--Go to reimbursement of cost in production of goods--Form part of profits of business--Do not fall under “Income from other sources†-- CIT v. Meghalaya Steels Ltd. (SC) . . . 217
S. 80-IC --Industrial undertaking--Special deduction--Profits derived from business--Test--Direct nexus between profits and business--Immediate source of profits not relevant--Transport, interest and power subsidies given by Government--Go to reimbursement of cost in production of goods--Form part of profits of business--Do not fall under “Income from other sources†-- CIT v. Meghalaya Steels Ltd. (SC) . . . 217
S. 132A --Search and seizure--Requisition--Cash and silver seized from car by police--Neither police nor Income-tax Department having any information regarding ownership of cash and silver--Order of requisition of cash and silver not justified--Lower court justified in imposing conditions for requisition-- Deputy DIT (Investigation) v. Nayan Kothari (MP) . . . 276
S. 142(1) --Search and seizure--Block assessment--Undisclosed income--Sale of flats--No material on basis of which Assessing Officer applied standard rate of Rs. 4,800 per square feet for all floors--Mere fact that print out stated that flats on second and third floors had been sold did not necessarily mean that they were sold at rates indicated therein--Assessee offering plausible explanation for document--Not open to Assessing Officer to draw inference on basis of projection of sale of flats in document--Burden of proof on Department to show how rate at which flats on second and third floors sold higher than that indicated in sales register or sale deeds--CIT v. Vatika Landbase P. Ltd. (Delhi) . . . 320
S. 147 --Reassessment--Notice after four years--Change of opinion--Assessment order indicating Assessing Officer conducted detailed examination--No reason to believe income escaped assessment--Assessing Officer examining statement of computation of loss and recording satisfactory finding--No material indicating accounts, vouchers or details provided by assessee inaccurate or false--Notice for reopening assessment on account of change of opinion liable to be quashed-- BBC Worldwide Ltd. v. Asst. DIT (International Taxation)(Delhi) . . . 197
S. 148 --Reassessment--Notice after four years--Change of opinion--Assessment order indicating Assessing Officer conducted detailed examination--No reason to believe income escaped assessment--Assessing Officer examining statement of computation of loss and recording satisfactory finding--No material indicating accounts, vouchers or details provided by assessee inaccurate or false--Notice for reopening assessment on account of change of opinion liable to be quashed-- BBC Worldwide Ltd. v. Asst. DIT (International Taxation)(Delhi) . . . 197
S. 158BC --Search and seizure--Block assessment--Undisclosed income--Sale of flats--No material on basis of which Assessing Officer applied standard rate of Rs. 4,800 per square feet for all floors--Mere fact that print out stated that flats on second and third floors had been sold did not necessarily mean that they were sold at rates indicated therein--Assessee offering plausible explanation for document--Not open to Assessing Officer to draw inference on basis of projection of sale of flats in document--Burden of proof on Department to show how rate at which flats on second and third floors sold higher than that indicated in sales register or sale deeds--CIT v. Vatika Landbase P. Ltd. (Delhi) . . . 320
S. 195 --Refund--Deduction of tax at source--Exemption--Interest on foreign loan--Loan agreement providing for payment of penal interest as condition for condoning breach of terms--Deduction of tax at source on payments of penal interest--Payment of penal interest not for breach of terms of conditions--Penal interest not paid as result of violation of agreement--Payment of penal interest approved by Government and exempt--Assessee entitled to refund of tax erroneously deducted thereon-- CEAT Ltd. v. CBDT (Delhi) . . . 300
S. 254(2) --Appellate Tribunal--Procedure--Application to Tribunal for recall of order--Limitation--Assessee, a public sector undertaking--Dismissal of Department’s appeal by Tribunal for failure to obtain approval of Committee on Disputes--Not an order rejecting memorandum of appeal under rule 12 of Income-tax (Appellate Tribunal) Rules, 1963 but an order under section 254(1)--Supreme Court decision later doing away with requirement of approval of Committee on Disputes--Application thereafter by Department for recall of order after five years--Limitation for applications under section 254(2) applicable--Refusal by Tribunal to recall order on ground application beyond limitation proper-- CIT v. Air India Ltd.(Bom) . . . 284
S. 260A --Appeal to High Court--Competency of appeal--Decision of Tribunal following earlier decision--No appeal from earlier decision--No affidavit explaining reasons for appeal--Appeal not competent-- CIT v. Gujarat Reclaim and Rubber Products Ltd. (Bom) . . . 236
----Appeal to High Court--Substantial question of law--Question not raised before Tribunal--Cannot be raised before court-- CIT v. Air India Ltd. (Bom) . . . 284
S. 2(7) --Interest-tax--Charge of tax--Chargeable interest--Definition--Interest payable “on loans and advances made in India†--Interest payable on default in payment of amounts due under discounted bill of exchange--Not interest payable on loan or advance--Not chargeable interest-- State Bank of Patiala v. CIT (SC) . . . 244
Income-tax (Appellate Tribunal) Rules, 1963 :
Rr. 7, 12 --Appellate Tribunal--Procedure--Application to Tribunal for recall of order--Limitation--Assessee, a public sector undertaking--Dismissal of Department’s appeal by Tribunal for failure to obtain approval of Committee on Disputes--Not an order rejecting memorandum of appeal under rule 12 of Income-tax (Appellate Tribunal) Rules, 1963 but an order under section 254(1)--Supreme Court decision later doing away with requirement of approval of Committee on Disputes--Application thereafter by Department for recall of order after five years--Limitation for applications under section 254(2) applicable--Refusal by Tribunal to recall order on ground application beyond limitation proper-- CIT v. Air India Ltd.(Bom) . . . 284
Posted by: CA RAJU SHAH
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