Accounting --Valuation of stock--Purchase of Government securities--Stock-in-trade--Valuation--Cost or market value whichever is lower followed by assessee--Profit on revaluation of securities--Not taxable--Excess of market price over cost price cannot be added to total income--Income-tax Act, 1961-- Deputy Director (International Taxation) v. Chohung Bank (Mumbai) . . . 627
Advance tax --Interest--Interest under section 234B--Is mandatory--Income-tax Act, 1961, s. 234B-- Aditya Birla Power Co. Ltd. v. ITO (Mumbai) . . . 658
Appeal to Appellate Tribunal --Competency of appeal--Monetary limit of tax effect as fixed by CBDT instruction from time to time--Limit as fixed by instruction prevailing at time of filing appeal to be considered--Income-tax Act, 1961-- ITO v. Sanatan Textrade Ltd. (Mumbai) . . . 593
Business expenditure --Bank--Purchase of securities--Interest for broken period--Deductible--Income-tax Act, 1961, s. 37-- Deputy Director (International Taxation) v. Chohung Bank (Mumbai) . . . 627
----Expenses on developing business of associate concerns disclosed as "advances recoverable"--Expenditure to be incurred till financial closure of business and recovery thereof contingent and uncertain--To be treated as work-in-progress--Income-tax Act, 1961-- Aditya Birla Power Co. Ltd. v. ITO (Mumbai) . . . 658
----Increase in salary and other expenses--No evidence to show genuineness of--Addition proper--Income-tax Act, 1961-- Aditya Birla Power Co. Ltd. v. ITO (Mumbai) . . . 658
----Interest on borrowed capital--Interest on unsecured loans granted to group companies, legal and professional fees related to project, consultancy fees for BPO project--Third party expenditure to be treated as work-in-progress--Income-tax Act, 1961, s. 36(1)(iii)-- Aditya Birla Power Co. Ltd. v. ITO (Mumbai) . . . 658
----Non-resident--Head office expenses--Salaries paid to expatriates--Expenditure incurred for branch office--Section 44C not applicable--Head office expenses allowable--Income-tax Act, 1961, ss. 37(1), 44C-- Deputy Director (International Taxation) v. Chohung Bank (Mumbai) . . . 627
----Revenue expenditure--Deferred revenue expenditure--Expenses on advertisement to create brand image--Partly debited in profit and loss account and balance deferred over a period of three years--Entry or absence of an entry does not determine allowability--Not a case that expenditure incurred not revenue in nature--To be allowed--Income-tax Act, 1961, s. 37-- Deputy CIT v. Godrej Tea Ltd. (Mumbai) . . . 649
Business loss --Bank--Loss incurred on sale of Government securities--Securities in nature of current investments--Loss arising from sale of stock-in-trade allowable as business loss--Income-tax Act, 1961, s. 28-- Deputy Director (International Taxation) v. Chohung Bank (Mumbai) . . . 627
Deduction --Expenses relating to non-taxable income--Assessee earning dividend from long-term investment--Disallowance under section 14A to be made in accordance with rule 8D--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- ITO v. Sanatan Textrade Ltd. (Mumbai) . . . 593
Income --Accounting--Accrual of income--Guarantee commission--No clause in agreement for refund of guarantee commission in case of revocation of guarantee--Entire guarantee commission accrues at time of executing guarantee--Liable to tax--Income-tax Act, 1961-- Deputy Director (International Taxation) v. Chohung Bank (Mumbai) . . . 627
Interest on borrowed capital --Borrowed funds transferred to BPO project--BPO project taken over by another company--Assessee receiving entire amount back from that company in following year without any profit--To be treated as work-in-progress and pro rata disallowances made during year to be made for following year--Income-tax Act, 1961, s. 36(1)(iii)-- Aditya Birla Power Co. Ltd. v. ITO (Mumbai) . . . 658
International transactions --Arm's length price--Transactional net margin method--Comparables--Enterprise treated as comparable on basis of evidence provided by assessee--Assessee not estopped from challenging inclusion of enterprise as comparable--Enterprise running at a loss, rendering different services from assessee and having a negative net worth--Not to be treated as comparable--Whether assessee to be given benefit of five per cent.--Matter remanded--Income-tax Act, 1961, s. 92C(2)--Income-tax Rules, 1962, r. 10B-- Deputy CIT v. Quark Systems Pvt. Ltd. [SB] (Chandigarh) . . . 606
Precedent --High Court--Contrary decisions by benches of equal strength--Later decision binding-- ITO v. Sanatan Textrade Ltd. (Mumbai) . . . 593
Reassessment --Capital gains--Provision permitting valuation for stamp duty purposes as value of property--Applicable only for purposes of capital gains--Not applicable for bringing to tax additional amounts in hands of purchaser of property--Income-tax Act, 1961, ss. 50C, 147-- ITO v. Venu Proteins Industries (Ahmedabad) . . . 602
Rectification of mistakes --Mistake apparent from record--Legal position at time of adjudication to be seen--Delayed payment of contribution of provident fund and employees State insurance--Deduction only on actual payment--Quantam of disallowance in original assessment enhanced by rectification--Prevailing legal position not in support of disallowance under section 43B--Payments cannot be disallowed by rectification--Income-tax Act, 1961, ss. 43B, 154-- Fouress Engineering (I) Ltd. v. ITO (Mumbai) . . . 643
Search and seizure --Block assessment--Undisclosed income--Amount not recorded in regular books of account--Addition justified--Income-tax Act, 1961, ss. 132, 158BC-- Deputy CIT v. Tulsibhai Mavjibhai Shankar (Ahmedabad) . . . 670
----Block assessment--Undisclosed income--Entries in seized documents considered for taxation in hands of company of which assessee partner--Deletion of sum in hands of assessee justified--Income-tax Act, 1961, ss. 132, 158BC-- Deputy CIT v. Tulsibhai Mavjibhai Shankar (Ahmedabad) . . . 670
----Block assessment--Undisclosed income--Seized documents decoded by interpreting and applying thousand to figures mentioned--Wrong interpretation of seized documents without any basis--Seized documents found in possession of assessee to be read as true--Income-tax Act, 1961, ss. 132, 132(4A), 158BC-- Deputy CIT v. Tulsibhai Mavjibhai Shankar (Ahmedabad) . . . 670
Unexplained money --Burden on Department to prove un-explained money belongs to assessee-- Asst. CIT v. Smt. Kusum Ramniklal Sanghani (Mumbai) . . . 582
----Deemed income--Search and seizure--Search at premises of assessee's son-in-law--Keys to locker belonging to assessee found and cash found in locker--Assessee explaining that cash represents donations received on behalf of trust and she has no source of income--Explanation and proof of details of donors to trust satisfactory--Addition to be deleted--Income-tax Act, 1961, ss. 69A, 132-- Asst. CIT v. Smt. Kusum Ramniklal Sanghani (Mumbai) . . . 582
S. 14A --Deduction--Expenses relating to non-taxable income--Assessee earning dividend from long-term investment--Disallowance under section 14A to be made in accordance with rule 8D-- ITO v. Sanatan Textrade Ltd. (Mumbai) . . . 593
S. 28 --Business loss--Bank--Loss incurred on sale of Government securities--Securities in nature of current investments--Loss arising from sale of stock-in-trade allowable as business loss-- Deputy Director (International Taxation) v. Chohung Bank (Mumbai) . . . 627
S. 36(1)(iii) --Business expenditure--Interest on borrowed capital--Interest on unsecured loans granted to group companies, legal and professional fees related to project, consultancy fees for BPO project--Third party expenditure to be treated as work-in-progress-- Aditya Birla Power Co. Ltd. v. ITO (Mumbai) . . . 658
----Interest on borrowed capital--Borrowed funds transferred to BPO project --BPO project taken over by another company--Assessee receiving entire amount back from that company in following year without any profit--To be treated as work-in-progress and pro rata disallowances made during year to be made for following year-- Aditya Birla Power Co. Ltd. v. ITO (Mumbai) . . . 658
S. 37 --Business expenditure--Bank--Purchase of securities--Interest for broken period--Deductible-- Deputy Director (International Taxation) v. Chohung Bank (Mumbai) . . . 627
----Business expenditure--Revenue expenditure--Deferred revenue expenditure--Expenses on advertisement to create brand image--Partly debited in profit and loss account and balance deferred over a period of three years--Entry or absence of an entry does not determine allowability--Not a case that expenditure incurred not revenue in nature--To be allowed-- Deputy CIT v. Godrej Tea Ltd. (Mumbai) . . . 649
S. 37(1) --Business expenditure--Non-resident--Head office expenses--Salaries paid to expatriates--Expenditure incurred for branch office--Section 44C not applicable--Head office expenses allowable-- Deputy Director (International Taxation) v. Chohung Bank (Mumbai) . . . 627
S. 43B --Rectification of mistakes--Mistake apparent from record--Legal position at time of adjudication to be seen--Delayed payment of contribution of provident fund and employees State insurance--Deduction only on actual payment--Quantam of disallowance in original assessment enhanced by rectification--Prevailing legal position not in support of disallowance under section 43B--Payments cannot be disallowed by rectification-- Fouress Engineering (I) Ltd. v. ITO (Mumbai) . . . 643
S. 44C --Business expenditure--Non-resident--Head office expenses--Salaries paid to expatriates--Expenditure incurred for branch office--Section 44C not applicable--Head office expenses allowable-- Deputy Director (International Taxation) v. Chohung Bank (Mumbai) . . . 627
S. 50C --Reassessment--Capital gains--Provision permitting valuation for stamp duty purposes as value of property--Applicable only for purposes of capital gains--Not applicable for bringing to tax additional amounts in hands of purchaser of property-- ITO v. Venu Proteins Industries (Ahmedabad) . . . 602
S. 69A --Unexplained money--Deemed income--Search and seizure--Search at premises of assessee's son-in-law--Keys to locker belonging to assessee found and cash found in locker--Assessee explaining that cash represents donations received on behalf of trust and she has no source of income--Explanation and proof of details of donors to trust satisfactory--Addition to be deleted-- Asst. CIT v. Smt. Kusum Ramniklal Sanghani (Mumbai) . . . 582
S. 92C(2) --International transactions--Arm's length price--Transactional net margin method--Comparables--Enterprise treated as comparable on basis of evidence provided by assessee--Assessee not estopped from challenging inclusion of enterprise as comparable--Enterprise running at a loss, rendering different services from assessee and having a negative net worth--Not to be treated as comparable --Whether assessee to be given benefit of five per cent.--Matter remanded-- Deputy CIT v. Quark Systems Pvt. Ltd. [SB] (Chandigarh) . . . 606
S. 132 --Search and seizure--Block assessment--Undisclosed income--Amount not recorded in regular books of account--Addition justified-- Deputy CIT v. Tulsibhai Mavjibhai Shankar (Ahmedabad) . . . 670
----Search and seizure--Block assessment--Undisclosed income--Entries in seized documents considered for taxation in hands of company of which assessee partner--Deletion of sum in hands of assessee justified-- Deputy CIT v. Tulsibhai Mavjibhai Shankar (Ahmedabad) . . . 670
----Search and seizure--Block assessment--Undisclosed income--Seized documents decoded by interpreting and applying thousand to figures mentioned--Wrong interpretation of seized documents without any basis--Seized documents found in possession of assessee to be read as true-- Deputy CIT v. Tulsibhai Mavjibhai Shankar (Ahmedabad) . . . 670
----Unexplained money--Deemed income--Search and seizure--Search at premises of assessee's son-in-law--Keys to locker belonging to assessee found and cash found in locker--Assessee explaining that cash represents donations received on behalf of trust and she has no source of income--Explanation and proof of details of donors to trust satisfactory--Addition to be deleted-- Asst. CIT v. Smt. Kusum Ramniklal Sanghani (Mumbai) . . . 582
S. 132(4A) --Search and seizure--Block assessment--Undisclosed income--Seized documents decoded by interpreting and applying thousand to figures mentioned--Wrong interpretation of seized documents without any basis--Seized documents found in possession of assessee to be read as true-- Deputy CIT v. Tulsibhai Mavjibhai Shankar (Ahmedabad) . . . 670
S. 147 --Reassessment--Capital gains--Provision permitting valuation for stamp duty purposes as value of property--Applicable only for purposes of capital gains--Not applicable for bringing to tax additional amounts in hands of purchaser of property-- ITO v. Venu Proteins Industries (Ahmedabad) . . . 602
S. 154 --Rectification of mistakes--Mistake apparent from record--Legal position at time of adjudication to be seen--Delayed payment of contribution of provident fund and employees State insurance--Deduction only on actual payment--Quantam of disallowance in original assessment enhanced by rectification--Prevailing legal position not in support of disallowance under section 43B--Payments cannot be disallowed by rectification-- Fouress Engineering (I) Ltd. v. ITO (Mumbai) . . . 643
S. 158BC --Search and seizure--Block assessment--Undisclosed income--Amount not recorded in regular books of account--Addition justified-- Deputy CIT v. Tulsibhai Mavjibhai Shankar (Ahmedabad) . . . 670
----Search and seizure--Block assessment--Undisclosed income--Entries in seized documents considered for taxation in hands of company of which assessee partner--Deletion of sum in hands of assessee justified-- Deputy CIT v. Tulsibhai Mavjibhai Shankar (Ahmedabad) . . . 670
----Search and seizure--Block assessment--Undisclosed income--Seized documents decoded by interpreting and applying thousand to figures mentioned--Wrong interpretation of seized documents without any basis--Seized documents found in possession of assessee to be read as true-- Deputy CIT v. Tulsibhai Mavjibhai Shankar (Ahmedabad) . . . 670
S. 234B --Advance tax--Interest--Interest under section 234B--Is mandatory-- Aditya Birla Power Co. Ltd. v. ITO (Mumbai) . . . 658
R. 8D --Deduction--Expenses relating to non-taxable income--Assessee earning dividend from long-term investment--Disallowance under section 14A to be made in accordance with rule 8D-- ITO v. Sanatan Textrade Ltd. (Mumbai) . . . 593
R. 10B --International transactions--Arm's length price--Transactional net margin method--Comparables--Enterprise treated as comparable on basis of evidence provided by assessee--Assessee not estopped from challenging inclusion of enterprise as comparable--Enterprise running at a loss, rendering different services from assessee and having a negative net worth--Not to be treated as comparable --Whether assessee to be given benefit of five per cent.--Matter remanded-- Deputy CIT v. Quark Systems Pvt. Ltd. [SB] (Chandigarh) . . . 606
-CA.RAJU SHAH
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