ITR (TRIB) Volume 30 : Part 6 (Issue dated : 31-3-2014)

 

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

 

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Appeal to Appellate Tribunal --Rectification of mistakes--Mistake apparent from record--Tribunal taking considered view that entire income earned by assessee from Indian projects taxable in India under article 7 of the Double Taxation Avoidance Agreement--No mistake apparent from record--Income-tax Act, 1961, s. 254--Double Taxation Avoidance Agreement between India and the United Kingdom, art. 7-- Linklaters and Paines v. ITO (International Taxation) (Mumbai) . . . 287

Double taxation relief --Shipping company--Assessee entering into joint pool agreement with other shipping companies to share space owned by others on vessel bound to India--Scope of article 8(4)--Assessee “otherwise liable to tax†in UAE and entitled to relief under DTAA--Nature of receipts of assessee not known--Matter remanded to determine nature of income and find if covered by article 8--Double Taxation Avoidance Agreement between India and the U. A. E., art. 8-- Additional Director of Income-tax (International Taxation) v. Simatech Shipping Forwarding LLC (Mumbai) . . . 303

 

PRINT EDITION

Volume 30 : Part 6 (Issue dated : 31-3-2014)

SUBJECT INDEX TO CASES REPORTED

Appeal to Appellate Tribunal --Right of respondent to support order appealed against “on any ground†decided against him--Scope of--Distinct from right to file cross appeal or cross-objections in appeal--Ground raised by assessee rejected by Commissioner (Appeals) but issue ultimately held in favour of assessee--Assessee can seek decision on ground as respondent before Tribunal--But other party must be put on notice--Income-tax Act, 1961, s. 253(4)--Income-tax (Appellate Tribunal) Rules, 1963, r. 27-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

Business expenditure --Disallowance--Payments liable to deduction of tax at source--Deposit of tax deducted after due date--Individuals not required to deduct tax prior to June 1, 2007--Expenditure allowable--Income-tax Act, 1961, ss. 40(a)(ia), 194C-- Asst. CIT v. Smt. Pritam Kaur Kahlon (Chandigarh) . . . 710

----Disallowance--Payments liable to deduction of tax at source--Payments to non-residents--View of Special Bench of Tribunal in Merilyn Shipping and Transports v. Addl. CIT [2014] 16 ITR (Trib) 1 (Vishakapatnam) [SB] that disallowance attracted only to amounts remaining payable at year end--High Court in CIT v. Vector Shipping Services P. Ltd. [2013] 357 ITR 642 (All) refusing to consider question of law but observation approving Tribunal’s view--CBDT Circular expounding Department’s view to include amounts paid within year in scope of disallowance but to abide by High Court’s view in territories within court’s jurisdiction--Effect--Income-tax Act, 1961, s. 40(a)(ia)-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Disallowance--Payments to non-residents--Allowance of deduction subject to deduction of tax at source--Effect of failure to withhold tax--Disallowance attracted only when assessee had liability withhold tax, i.e., when income embedded in payment liable to tax in India--Income-tax Act, 1961, s. 40(a)(ia)-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Disallowance--Payments to non-residents--Failure to withhold tax--Payments towards development costs--Reimbursement of costs incurred by non-resident in development of product range of assessee--No income embedded in payment--No obligation on assessee to deduct tax at source--No disallowance--Income-tax Act, 1961, s. 40(a)(ia)-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Disallowance--Payments to non-residents--Fees for technical services--Failure to withhold tax--Payment to non-resident entity for professional services--That entity to which payment made owned by individual would not take payment outside ambit of fees for technical services--Provisions relating to individuals not applicable--Assessee bound to deduct tax from payments--Failure to do so attracts disallowance of payment--Income-tax Act, 1961, s. 40(a)(ia)--Taxation Avoidance Agreement between India and Belgium, arts. 12(3)(b), 14-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Disallowance--Payments to non-residents--Fees for technical services--Failure to withhold tax--Payments for purchase of goods--Vendors not having permanent establishment in India--Business profits not taxable in India--No liability to deduct tax at source--No disallowance under section 40(a)(i)--Income-tax Act, 1961, s. 40(a)(i)--Double Taxation Avoidance Agreement between India and Italy, art. 7-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Disallowance--Payments to non-residents--Fees for technical services--Failure to withhold tax--Payments of “design and development expenses†--Payments for purchase of goods--Recipients not having permanent establishment in India--Transactions not taxable in India--No obligation on assessee not to withhold tax--No disallowance under section 40(a)(i)--Income-tax Act, 1961, s. 40(a)(ia)--Double Taxation Avoidance Agreement between India and Spain, art. 7-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Disallowance--Payments to non-residents--Fees for technical services--Failure to withhold tax--Payments of “design and development expenses†--Whether Spanish recipient an entity or an individual having no permanent establishment in India, in which case, payments would be independent professional services and not taxable--Whether payments were for designs, sketches and photographs for product development by assessee--Matter remanded--Double Taxation Avoidance Agreement between India and Spain, arts. 13, 15-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Disallowance--Payments to non-residents--Fees for technical services--Failure to withhold tax--Payments to residents of Ireland, Denmark and Austria--Provisions of deduction neutrality non-discrimination attracted--Disallowance under section 40(a)(i) not permissible--Taxability of these payments in India not considered--Income-tax Act, 1961, s. 40(a)(ia)--Double Taxation Avoidance Agreement between India and Ireland, art. 24--Double Taxation Avoidance Agreement between India and Denmark, art. 24--Double Taxation Avoidance Agreement between India and Austria, art. 24-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Disallowance--Payments to non-residents--Fees for technical services--Failure to withhold tax--Supply of samples and sketches to assessee to enable it to seek information in respect of fashion trends in Europe--Professional services rendered by individual--No fixed base in India--Payments not taxable as income under “independent personal services†--No disallowance--Income-tax Act, 1961, s. 40(a)(ia)--Double Taxation Avoidance Agreement between India and Italy, arts. 13, 15-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Wastage--Assessee manufacturing wheel nuts--Nut carved out of solid piece and balance usable only as scrap--Wastage to be estimated on reasonable basis--Direction to Assessing Officer to make total addition of on account instead of three additions--Matter remanded--Income-tax Act, 1961, s. 37-- Asst. CIT v. Smt. Pritam Kaur Kahlon (Chandigarh) . . . 710

Charitable purpose --Definition--Main object of assessee including medical research and informal education and communication on health and nutritional issues for urban slums and rural communities--Assessee carrying out techno-medical research support for research and compilation of data on account of “rota virus†project--Activity constituting education within meaning of section 2(15)--Circular clarifying that purpose of trust or institution is relief to poor, education on medical relief to poor, constitute “charitable purpose†even if it incidentally involves carrying on commercial activity--Assessee entitled to exemption--Income-tax Act, 1961, ss. 2(15), 11, 12--CBDT Circular No. 11 of 2008-- ITO (Exemption) v. Society for Essential Health Action and Training (Delhi) . . . 698

----Special deduction--Donation for charitable purposes--Approval of trust for purposes of section 80G--Provision in trust deed authorising trustees to make donations to other institutions--Donations made to established organisations and genuineness not in doubt--Direction to competent authority to consider grant of approval under section 80G(5)(vi) --Entitlement of trust to exemption under section 11 to be considered at time of assessment, not at time of approval for purpose of section 80G--Income-tax Act, 1961, s. 80G(5)(vi)-- Tewari Charitable Trust v. Director of Income-tax (Exemption) (Mumbai) . . . 705

Double taxation avoidance --Protocol integral part of Agreement--To be given effect in same manner as other substantive parts of Agreement--Protocol providing for most favoured nation clause--Restricted scope of taxation of fees for technical services--Effect--Non-discrimination clause for harsher pre-conditions for eligibility to deduction not applicable--Payments disallowable for failure to withhold tax--Double Taxation Avoidance Agreement between India and Spain, arts. 13, 15--Protocol dated February 8, 1993--Income-tax Act, 1961, s. 40(a)(ia)-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Provision against discrimination--Specific clauses on discrimination against deductions of payments--Pre-condition of tax withholding for deduction of payments to non-residents not permissible without similar pre-condition for deductibility of payments to residents--Pre-conditions ineffective by virtue of non-discrimination clause in Double Taxation Avoidance Agreements--Not to affect deduction--Provision in Agreement that national of one Contracting State should not be discriminated against “by reason of nationality†--Scope of--Residence not relevant--Comparison between nationals “in same circumstances and similar conditions†--Taxpayer who is resident of Contracting State and one who is not are not in same circumstances--Different pre-conditions for deductibility of payments to residents and non-residents permissible--Double Taxation Avoidance Agreement between India and Spain, art. 26--Double Taxation Avoidance Agreement between India and Italy, art. 25--Double Taxation Avoidance Agreement between India and Ireland, art. 24--Double Taxation Avoidance Agreement between India and United Kingdom, art. 26--Double Taxation Avoidance Agreement between India and Denmark, art. 24--Double Taxation Avoidance Agreement between India and Austria, art. 24--Double Taxation Avoidance Agreement between India and Belgium, art. 24-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

Precedent --Double Taxation Avoidance Agreements--Interpretation--Decision in context of one Agreement not necessarily applicable for other Agreements where differently worded-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

Search and seizure --Block assessment--Penalty--Limitation--Scope of section 158BFA--Failure to complete penalty proceedings within statutory time frame--Order set aside--Income-tax Act, 1961, s. 158BFA(2)-- Smt. G. Akila v. Deputy CIT (Chennai) . . . 732

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance Agreement between India and Austria :

Art. 24 --Business expenditure--Disallowance--Payments to non-residents--Fees for technical services--Failure to withhold tax--Payments to residents of Ireland, Denmark and Austria--Provisions of deduction neutrality non-discrimination attracted--Disallowance under section 40(a)(i) not permissible--Taxability of these payments in India not considered-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Double taxation avoidance--Provision against discrimination--Specific clauses on discrimination against deductions of payments--Pre-condition of tax withholding for deduction of payments to non-residents not permissible without similar pre-condition for deductibility of payments to residents--Pre-conditions ineffective by virtue of non-discrimination clause in Double Taxation Avoidance Agreements--Not to affect deduction--Provision in Agreement that national of one Contracting State should not be discriminated against “by reason of nationality†--Scope of--Residence not relevant--Comparison between nationals “in same circumstances and similar conditions†--Taxpayer who is resident of Contracting State and one who is not are not in same circumstances--Different pre-conditions for deductibility of payments to residents and non-residents permissible-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

Double Taxation Avoidance Agreement between India and Belgium :

Arts. 12(3)(b), 14 --Business expenditure--Disallowance--Payments to non-residents--Fees for technical services--Failure to withhold tax--Payment to non-resident entity for professional services--That entity to which payment made owned by individual would not take payment outside ambit of fees for technical services--Provisions relating to individuals not applicable--Assessee bound to deduct tax from payments--Failure to do so attracts disallowance of payment-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

Art. 24 --Double taxation avoidance--Provision against discrimination--Specific clauses on discrimination against deductions of payments--Pre-condition of tax withholding for deduction of payments to non-residents not permissible without similar pre-condition for deductibility of payments to residents--Pre-conditions ineffective by virtue of non-discrimination clause in Double Taxation Avoidance Agreements--Not to affect deduction--Provision in Agreement that national of one Contracting State should not be discriminated against “by reason of nationality†--Scope of--Residence not relevant--Comparison between nationals “in same circumstances and similar conditions†--Taxpayer who is resident of Contracting State and one who is not are not in same circumstances--Different pre-conditions for deductibility of payments to residents and non-residents permissible-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

Double Taxation Avoidance Agreement between India and Denmark :

Art. 24 --Business expenditure--Disallowance--Payments to non-residents--Fees for technical services--Failure to withhold tax--Payments to residents of Ireland, Denmark and Austria--Provisions of deduction neutrality non-discrimination attracted--Disallowance under section 40(a)(i) not permissible--Taxability of these payments in India not considered-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Double taxation avoidance--Provision against discrimination--Specific clauses on discrimination against deductions of payments--Pre-condition of tax withholding for deduction of payments to non-residents not permissible without similar pre-condition for deductibility of payments to residents--Pre-conditions ineffective by virtue of non-discrimination clause in Double Taxation Avoidance Agreements--Not to affect deduction--Provision in Agreement that national of one Contracting State should not be discriminated against “by reason of nationality†--Scope of--Residence not relevant--Comparison between nationals “in same circumstances and similar conditions†--Taxpayer who is resident of Contracting State and one who is not are not in same circumstances--Different pre-conditions for deductibility of payments to residents and non-residents permissible-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

Double Taxation Avoidance Agreement between India and Ireland :

Art. 24 --Business expenditure--Disallowance--Payments to non-residents--Fees for technical services--Failure to withhold tax--Payments to residents of Ireland, Denmark and Austria--Provisions of deduction neutrality non-discrimination attracted--Disallowance under section 40(a)(i) not permissible--Taxability of these payments in India not considered-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Double taxation avoidance--Provision against discrimination--Specific clauses on discrimination against deductions of payments--Pre-condition of tax withholding for deduction of payments to non-residents not permissible without similar pre-condition for deductibility of payments to residents--Pre-conditions ineffective by virtue of non-discrimination clause in Double Taxation Avoidance Agreements--Not to affect deduction--Provision in Agreement that national of one Contracting State should not be discriminated against “by reason of nationality†--Scope of--Residence not relevant--Comparison between nationals “in same circumstances and similar conditions†--Taxpayer who is resident of Contracting State and one who is not are not in same circumstances--Different pre-conditions for deductibility of payments to residents and non-residents permissible-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

Double Taxation Avoidance Agreement between India and Italy :

Art. 7 --Business expenditure--Disallowance--Payments to non-residents--Fees for technical services--Failure to withhold tax--Payments for purchase of goods--Vendors not having permanent establishment in India--Business profits not taxable in India--No liability to deduct tax at source--No disallowance under section 40(a)(i)-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

Arts. 13, 15 --Business expenditure--Disallowance--Payments to non-residents--Fees for technical services--Failure to withhold tax--Supply of samples and sketches to assessee to enable it to seek information in respect of fashion trends in Europe--Professional services rendered by individual--No fixed base in India--Payments not taxable as income under “independent personal services†--No disallowance-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

Art. 25 --Double taxation avoidance--Provision against discrimination--Specific clauses on discrimination against deductions of payments--Pre-condition of tax withholding for deduction of payments to non-residents not permissible without similar pre-condition for deductibility of payments to residents--Pre-conditions ineffective by virtue of non-discrimination clause in Double Taxation Avoidance Agreements--Not to affect deduction--Provision in Agreement that national of one Contracting State should not be discriminated against “by reason of nationality†--Scope of--Residence not relevant--Comparison between nationals “in same circumstances and similar conditions†--Taxpayer who is resident of Contracting State and one who is not are not in same circumstances--Different pre-conditions for deductibility of payments to residents and non-residents permissible-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

Double Taxation Avoidance Agreement between India and Spain :

Art. 7 --Business expenditure--Disallowance--Payments to non-residents--Fees for technical services--Failure to withhold tax--Payments of “design and development expenses†--Payments for purchase of goods--Recipients not having permanent establishment in India--Transactions not taxable in India--No obligation on assessee not to withhold tax--No disallowance under section 40(a)(i)-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

Arts. 13, 15 --Business expenditure--Disallowance--Payments to non-residents--Fees for technical services--Failure to withhold tax--Payments of “design and development expenses†--Whether Spanish recipient an entity or an individual having no permanent establishment in India, in which case, payments would be independent professional services and not taxable--Whether payments were for designs, sketches and photographs for product development by assessee--Matter remanded-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Double taxation avoidance--Protocol integral part of Agreement--To be given effect in same manner as other substantive parts of Agreement--Protocol providing for most favoured nation clause--Restricted scope of taxation of fees for technical services--Effect--Non-discrimination clause for harsher pre-conditions for eligibility to deduction not applicable--Payments disallowable for failure to withhold tax-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

Art. 26 --Double taxation avoidance--Provision against discrimination--Specific clauses on discrimination against deductions of payments--Pre-condition of tax withholding for deduction of payments to non-residents not permissible without similar pre-condition for deductibility of payments to residents--Pre-conditions ineffective by virtue of non-discrimination clause in Double Taxation Avoidance Agreements--Not to affect deduction--Provision in Agreement that national of one Contracting State should not be discriminated against “by reason of nationality†--Scope of--Residence not relevant--Comparison between nationals “in same circumstances and similar conditions†--Taxpayer who is resident of Contracting State and one who is not are not in same circumstances--Different pre-conditions for deductibility of payments to residents and non-residents permissible-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

Double Taxation Avoidance Agreement between India and United Kingdom :

Art. 26 --Double taxation avoidance--Provision against discrimination--Specific clauses on discrimination against deductions of payments--Pre-condition of tax withholding for deduction of payments to non-residents not permissible without similar pre-condition for deductibility of payments to residents--Pre-conditions ineffective by virtue of non-discrimination clause in Double Taxation Avoidance Agreements--Not to affect deduction--Provision in Agreement that national of one Contracting State should not be discriminated against “by reason of nationality†--Scope of--Residence not relevant--Comparison between nationals “in same circumstances and similar conditions†--Taxpayer who is resident of Contracting State and one who is not are not in same circumstances--Different pre-conditions for deductibility of payments to residents and non-residents permissible-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

Income-tax Act, 1961 :

S. 2(15) --Charitable purpose--Definition--Main object of assessee including medical research and informal education and communication on health and nutritional issues for urban slums and rural communities--Assessee carrying out techno-medical research support for research and compilation of data on account of “rota virus†project--Activity constituting education within meaning of section 2(15)--Circular clarifying that purpose of trust or institution is relief to poor, education on medical relief to poor, constitute “charitable purpose†even if it incidentally involves carrying on commercial activity--Assessee entitled to exemption-- ITO (Exemption) v. Society for Essential Health Action and Training (Delhi) . . . 698

S. 11 --Charitable purpose--Definition--Main object of assessee including medical research and informal education and communication on health and nutritional issues for urban slums and rural communities--Assessee carrying out techno-medical research support for research and compilation of data on account of “rota virus†project--Activity constituting education within meaning of section 2(15)--Circular clarifying that purpose of trust or institution is relief to poor, education on medical relief to poor, constitute “charitable purpose†even if it incidentally involves carrying on commercial activity--Assessee entitled to exemption-- ITO (Exemption) v. Society for Essential Health Action and Training (Delhi) . . . 698

S. 12 --Charitable purpose--Definition--Main object of assessee including medical research and informal education and communication on health and nutritional issues for urban slums and rural communities--Assessee carrying out techno-medical research support for research and compilation of data on account of “rota virus†project--Activity constituting education within meaning of section 2(15)--Circular clarifying that purpose of trust or institution is relief to poor, education on medical relief to poor, constitute “charitable purpose†even if it incidentally involves carrying on commercial activity--Assessee entitled to exemption-- ITO (Exemption) v. Society for Essential Health Action and Training (Delhi) . . . 698

S. 37 --Business expenditure--Wastage--Assessee manufacturing wheel nuts--Nut carved out of solid piece and balance usable only as scrap--Wastage to be estimated on reasonable basis--Direction to Assessing Officer to make total addition of on account instead of three additions--Matter remanded-- Asst. CIT v. Smt. Pritam Kaur Kahlon (Chandigarh) . . . 710

S. 40(a)(i) --Business expenditure--Disallowance--Payments to non-residents--Fees for technical services--Failure to withhold tax--Payments for purchase of goods--Vendors not having permanent establishment in India--Business profits not taxable in India--No liability to deduct tax at source--No disallowance under section 40(a)(i)-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

S. 40(a)(ia) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Deposit of tax deducted after due date--Individuals not required to deduct tax prior to June 1, 2007--Expenditure allowable-- Asst. CIT v. Smt. Pritam Kaur Kahlon (Chandigarh) . . . 710

----Business expenditure--Disallowance--Payments liable to deduction of tax at source--Payments to non-residents--View of Special Bench of Tribunal in Merilyn Shipping and Transports v. Addl. CIT [2014] 16 ITR (Trib) 1 (Vishakapatnam) [SB] that disallowance attracted only to amounts remaining payable at year end--High Court in CIT v. Vector Shipping Services P. Ltd. [2013] 357 ITR 642 (All) refusing to consider question of law but observation approving Tribunal’s view--CBDT Circular expounding Department’s view to include amounts paid within year in scope of disallowance but to abide by High Court’s view in territories within court’s jurisdiction--Effect-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Business expenditure--Disallowance--Payments to non-residents--Allowance of deduction subject to deduction of tax at source--Effect of failure to withhold tax--Disallowance attracted only when assessee had liability withhold tax, i.e., when income embedded in payment liable to tax in India-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Business expenditure--Disallowance--Payments to non-residents--Failure to withhold tax--Payments towards development costs--Reimbursement of costs incurred by non-resident in development of product range of assessee--No income embedded in payment--No obligation on assessee to deduct tax at source--No disallowance-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Business expenditure--Disallowance--Payments to non-residents--Fees for technical services--Failure to withhold tax--Payments of “design and development expenses†--Payments for purchase of goods--Recipients not having permanent establishment in India--Transactions not taxable in India--No obligation on assessee not to withhold tax--No disallowance under section 40(a)(i)-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Business expenditure--Disallowance--Payments to non-residents--Fees for technical services--Failure to withhold tax--Payment to non-resident entity for professional services--That entity to which payment made owned by individual would not take payment outside ambit of fees for technical services--Provisions relating to individuals not applicable--Assessee bound to deduct tax from payments--Failure to do so attracts disallowance of payment-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Business expenditure--Disallowance--Payments to non-residents--Fees for technical services--Failure to withhold tax--Payments to residents of Ireland, Denmark and Austria--Provisions of deduction neutrality non-discrimination attracted--Disallowance under section 40(a)(i) not permissible--Taxability of these payments in India not considered-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Business expenditure--Disallowance--Payments to non-residents--Fees for technical services--Failure to withhold tax--Supply of samples and sketches to assessee to enable it to seek information in respect of fashion trends in Europe--Professional services rendered by individual--No fixed base in India--Payments not taxable as income under “independent personal services†--No disallowance-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

----Double taxation avoidance--Protocol integral part of Agreement--To be given effect in same manner as other substantive parts of Agreement--Protocol providing for most favoured nation clause--Restricted scope of taxation of fees for technical services--Effect--Non-discrimination clause for harsher pre-conditions for eligibility to deduction not applicable--Payments disallowable for failure to withhold tax-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

S. 80G(5)(vi) --Charitable purpose--Special deduction--Donation for charitable purposes--Approval of trust for purposes of section 80G--Provision in trust deed authorising trustees to make donations to other institutions--Donations made to established organisations and genuineness not in doubt--Direction to competent authority to consider grant of approval under section 80G(5)(vi)--Entitlement of trust to exemption under section 11 to be considered at time of assessment, not at time of approval for purpose of section 80G-- Tewari Charitable Trust v. Director of Income-tax (Exemption) (Mumbai) . . . 705

S. 158BFA(2) --Search and seizure--Block assessment--Penalty--Limitation--Scope of section 158BFA--Failure to complete penalty proceedings within statutory time frame--Order set aside-- Smt. G. Akila v. Deputy CIT (Chennai) . . . 732

S. 194C --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Deposit of tax deducted after due date--Individuals not required to deduct tax prior to June 1, 2007--Expenditure allowable-- Asst. CIT v. Smt. Pritam Kaur Kahlon (Chandigarh) . . . 710

S. 253(4) --Appeal to Appellate Tribunal--Right of respondent to support order appealed against “on any ground†decided against him--Scope of--Distinct from right to file cross appeal or cross-objections in appeal--Ground raised by assessee rejected by Commissioner (Appeals) but issue ultimately held in favour of assessee--Assessee can seek decision on ground as respondent before Tribunal--But other party must be put on notice-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

Income-tax (Appellate Tribunal) Rules, 1963 :

R. 27 --Appeal to Appellate Tribunal--Right of respondent to support order appealed against “on any ground†decided against him--Scope of--Distinct from right to file cross appeal or cross-objections in appeal--Ground raised by assessee rejected by Commissioner (Appeals) but issue ultimately held in favour of assessee--Assessee can seek decision on ground as respondent before Tribunal--But other party must be put on notice-- Deputy CIT v. Gupta Overseas (Agra) . . . 738

 

ITR Volume 362 : Part 2 (Issue dated : 31-3-2014)

 

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

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

HIGH COURTS

Capital gains --Business income--Assessee transferring its shares in private limited company to its holding company--Shares not tradeable in market like any other normal trading asset--Profits on sale of shares assessable as capital gains--Income-tax Act, 1961, s. 45-- CIT v. Renato Finance and Investment Ltd. (Bom) . . . 267

Search and seizure --Warrant of authorisation--Validity--Reliable evidence regarding concealment of income by doctors--Search proceedings valid--Notice under section 131(1A) would not invalidate proceedings--Income-tax Act, 1961, ss. 131(1A), 132-- Dr. Roop v. CIT (All) . . . 240

 

ONLINE EDITION

ITR Volume 362 : Part 2 (Issue dated : 31-3-2014)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Appeal to Appellate Tribunal --Powers of Tribunal--Power to grant stay--Limited to total period of 365 days from date of first order of stay--If delay due to lapse on part of Department, Tribunal at liberty to conclude hearing and decide appeal--Department can make a statement that it would not take coercive steps to recover demand and Tribunal can adjourn matter--Assessee can file writ petition for stay and High Court can grant stay and issue directions to Tribunal as required--Income-tax Act, 1961, s. 254(2A)--Constitution of India, art. 226-- CIT v. Maruti Suzuki (India) Ltd. (Delhi) . . . 215

----Powers of Tribunal--Power to grant stay--Period of stay--Law applicable--Effect of introduction of proviso to section 254(2) with effect from 1-10-2008--Stay for a maximum of 365 days from date of initial order--Income-tax Act, 1961, s. 254-- CIT v. Ecom Gill Coffee Trading P. Ltd. (Karn) . . . 204

Appeal to High Court --New ground not raised before Tribunal cannot be raised before High Court--Income-tax Act, 1961, s. 260A-- CIT v. Jayshree Gems and Jewellery (Delhi) . . . 272

Assessment --Unaccounted investment--Assessee constructing a building by borrowing funds--Assessee floating company to carry on business of hotel--Company having no income during period of construction of hotel--Money for carrying out construction arranged by assessee in terms of agreement--Excess investment assessable in hands of assessee--Income-tax Act, 1961-- CIT v. D. P. Kanodia (All) . . . 163

Business expenditure --Disallowance--Deduction of tax at source--Failure to deduct tax or pay it to Revenue--Law applicable--Amendment of section 40(a)(ia) by Finance Act, 2010--Amendment has retrospective effect--Income-tax Act, 1961, s. 40(a)(ia)-- CIT v. Naresh Kumar (Delhi) . . . 256

----Disallowance--Payments liable to deduction of tax at source--Payments made in last month of previous year--Requirement that tax deducted at source should be deposited before “said due date†--Due date referred to is due date for filing return of income--Assessee following cash system of accounting--Memorandum maintained for record purpose showing sums due for payment in February of previous year--Payment actually made and tax deducted therefrom in March and deposited in April--Deduction allowable--Income-tax Act, 1961, s. 40(a)(ia) (as amended by Finance Act, 2008 with retrospective effect from April 1, 2005 and Finance Act, 2010)-- CIT v. Rajinder Kumar (Delhi) . . . 241

----Expenditure on purchase of machinery and equipment--Finding that there was proof of such purchase--Amounts deductible--Expenses on design and fabrication--Finding that expenditure was reasonable--Expenditure deductible--Income-tax Act, 1961-- CIT v. Jayshree Gems and Jewellery (Delhi) . . . 272

Charitable purposes --Charitable trust--Registration--No disqualification for trust having both charitable and religious objects to make an application for registration--Trust not commencing its activities on date of filing application--Not a ground to deny registration--Income-tax Act, 1961, ss. 11(1)(a), 12AA-- Director of Income-tax Exemptions v. Seervi Samaj Tambaram Trust (Mad) . . . 199

----Charitable trust--Registration--Powers of Commissioner--Commissioner cannot refuse to register trust on the ground that trust has not commenced its activities--Income-tax Act, 1961, s. 12AA-- CIT v. Kutchi Dasa Oswal Moto Pariwar Ambama Trust (Guj) . . . 194

Collection of tax at source --Cotton waste--Not scrap within meaning of Explanation (b) to section 206C--Not liable to collection of tax at source--Income-tax Act, 1961, s. 206C, Expln. (b) -- CIT v. Adisankara Spinning Mills (P.) Ltd. (Mad) . . . 233

----Failure to collect tax at source--Form 27 obtained from buyer filed before assessing authority in course of appellate proceedings--Technical breach liable to be condoned--Income-tax Act, 1961, s. 206C-- CIT v. Adisankara Spinning Mills (P.) Ltd. (Mad) . . . 233

Exemption --Export by new industrial undertaking in special economic zone--Condition precedent--Manufacture of article--Process of making jewellery amounts to manufacture--Assessee entitled to exemption under section 10A--Income-tax Act, 1961, s. 10A-- CIT v. Jayshree Gems and Jewellery (Delhi) . . . 272

----University--Condition precedent for exemption under section 10(23C)--University should exist solely for educational purposes and not for profit--Reasonable surplus over income would not disentitle university to exemption--What is reasonable surplus would depend on facts of case--University established by State Government--Land and grants given by State Government--University accumulating an income of about rupees five hundred crores in ten years--University not entitled to exemption under section 10(23C)--University not “State†within meaning of articles 12, 131 and 289--University not entitled to exemption as a “State†--Income-tax Act, 1961, s. 10(23C)--Constitution of India, arts, 12, 131, 289-- Visvesvaraya Technological University v. Asst. CIT (Karn) . . . 279

Housing project --Special deduction--Law applicable--Amendment with effect from 1-4-2005 requiring certificate of completion of project within four years of approval--Not applicable to project approved prior to that date--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-IB(10)(a)(ii)-- CIT v. CHD Developers Ltd. (Delhi) . . . 177

----Special deduction--No disallowance on ground assessee not a developer--Construction completed two years before final date and building use permission applied for--Rejection of building permission on technical grounds--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-IB(10)-- CIT v. Tarnetar Corporation (Guj) . . . 174

Income from other sources --Object of assessee promoting sports--Grants from constituents--Assessee acting as a custodian to constituents for purpose of promoting sports--Expenditure incurred for purpose of promoting sports events and activities--Allowable--Income-tax Act, 1961, ss. 11, 57(iii)-- Deputy Director of Income-tax (Exemptions) v. Petroleum Sports Promotion Board (Delhi) . . . 235

Interpretation of taxing statutes --Ambiguity--Interpretation taking into account object of Legislature-- CIT v. Ecom Gill Coffee Trading P. Ltd. (Karn) . . . 204

----Business expenditure--Disallowance--Payments liable to deduction of tax at source--Provisions not intended to penalise assessee when payment has been made within time specified--To be interpreted in fair, just and equitable manner--Income-tax Act, 1961, s. 40(a)(ia)-- CIT v. Rajinder Kumar (Delhi) . . . 241

----Machinery provisions--Provision whether has retrospective effect-- CIT v. Naresh Kumar (Delhi) . . . 256

----Strict interpretation-- Visvesvaraya Technological University v. Asst. CIT (Karn) . . . 279

Precedent --Decision of Supreme Court interpreting Excise Act not binding in interpreting provisions of Income-tax Act-- CIT v. Ecom Gill Coffee Trading P. Ltd. (Karn) . . . 204

Reassessment --Notice--Not permissible on change of opinion--Valuation of property referred to Valuation Officer during assessment proceedings--Assessment made before receipt of valuation report--Reassessment on basis of valuation report--No application of mind--Reasons recorded for notice contrary to facts on record--Notices based on change of opinion--Not valid--Income-tax Act, 1961, ss. 147, 148-- Mahashay Chunnilal v. Deputy CIT (Delhi) . . . 314

----Notice--Opinion of Valuation Officer not information for reopening assessment--Assessing Officer must apply mind and form belief that income has escaped assessment--Income-tax Act, 1961, ss. 147, 148-- Mahashay Chunnilal v. Deputy CIT (Delhi) . . . 314

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Constitution of India :

Art. 12 --Exemption--University--Condition precedent for exemption under section 10(23C)--University should exist solely for educational purposes and not for profit--Reasonable surplus over income would not disentitle university to exemption--What is reasonable surplus would depend on facts of case--University established by State Government--Land and grants given by State Government--University accumulating an income of about rupees five hundred crores in ten years--University not entitled to exemption under section 10(23C)--University not “State†within meaning of articles 12, 131 and 289--University not entitled to exemption as a “State†-- Visvesvaraya Technological University v. Asst. CIT (Karn) . . . 279

Art. 131 --Exemption--University--Condition precedent for exemption under section 10(23C)--University should exist solely for educational purposes and not for profit--Reasonable surplus over income would not disentitle university to exemption--What is reasonable surplus would depend on facts of case--University established by State Government--Land and grants given by State Government--University accumulating an income of about rupees five hundred crores in ten years--University not entitled to exemption under section 10(23C)--University not “State†within meaning of articles 12, 131 and 289--University not entitled to exemption as a “State†-- Visvesvaraya Technological University v. Asst. CIT (Karn) . . . 279

Art. 226 --Appeal to Appellate Tribunal--Powers of Tribunal--Power to grant stay--Limited to total period of 365 days from date of first order of stay--If delay due to lapse on part of Department, Tribunal at liberty to conclude hearing and decide appeal--Department can make a statement that it would not take coercive steps to recover demand and Tribunal can adjourn matter--Assessee can file writ petition for stay and High Court can grant stay and issue directions to Tribunal as required-- CIT v. Maruti Suzuki (India) Ltd. (Delhi) . . . 215

Art. 289 --Exemption--University--Condition precedent for exemption under section 10(23C)--University should exist solely for educational purposes and not for profit--Reasonable surplus over income would not disentitle university to exemption--What is reasonable surplus would depend on facts of case--University established by State Government--Land and grants given by State Government--University accumulating an income of about rupees five hundred crores in ten years--University not entitled to exemption under section 10(23C)--University not “State†within meaning of articles 12, 131 and 289--University not entitled to exemption as a “State†-- Visvesvaraya Technological University v. Asst. CIT (Karn) . . . 279

Income-tax Act, 1961 :

S. 10(23C) --Exemption--University--Condition precedent for exemption under section 10(23C)--University should exist solely for educational purposes and not for profit--Reasonable surplus over income would not disentitle university to exemption--What is reasonable surplus would depend on facts of case--University established by State Government--Land and grants given by State Government--University accumulating an income of about rupees five hundred crores in ten years--University not entitled to exemption under section 10(23C)--University not “State†within meaning of articles 12, 131 and 289--University not entitled to exemption as a “State†-- Visvesvaraya Technological University v. Asst. CIT (Karn) . . . 279

S. 10A --Exemption--Export by new industrial undertaking in special economic zone--Condition precedent--Manufacture of article --Process of making jewellery amounts to manufacture--Assessee entitled to exemption under section 10A-- CIT v. Jayshree Gems and Jewellery (Delhi) . . . 272

S. 11 --Income from other sources--Object of assessee promoting sports--Grants from constituents--Assessee acting as a custodian to constituents for purpose of promoting sports--Expenditure incurred for purpose of promoting sports events and activities--Allowable-- Deputy Director of Income-tax (Exemptions) v. Petroleum Sports Promotion Board (Delhi) . . . 235

S. 11(1)(a) --Charitable purposes--Charitable trust--Registration--No disqualification for trust having both charitable and religious objects to make an application for registration--Trust not commencing its activities on date of filing application--Not a ground to deny registration-- Director of Income-tax Exemptions v. Seervi Samaj Tambaram Trust (Mad) . . . 199

S. 12AA --Charitable purposes--Charitable trust--Registration--No disqualification for trust having both charitable and religious objects to make an application for registration--Trust not commencing its activities on date of filing application--Not a ground to deny registration-- Director of Income-tax Exemptions v. Seervi Samaj Tambaram Trust (Mad) . . . 199

----Charitable purposes--Charitable trust--Registration--Powers of Commissioner--Commissioner cannot refuse to register trust on the ground that trust has not commenced its activities-- CIT v. Kutchi Dasa Oswal Moto Pariwar Ambama Trust (Guj) . . . 194

S. 40(a)(ia) --Business expenditure--Disallowance--Deduction of tax at source--Failure to deduct tax or pay it to Revenue--Law applicable--Amendment of section 40(a)(ia) by Finance Act, 2010--Amendment has retrospective effect-- CIT v. Naresh Kumar (Delhi) . . . 256

----Interpretation of taxing statutes--Business expenditure--Disallowance--Payments liable to deduction of tax at source--Provisions not intended to penalise assessee when payment has been made within time specified--To be interpreted in fair, just and equitable manner-- CIT v. Rajinder Kumar (Delhi) . . . 241

S. 40(a)(ia) (as amended by Finance Act, 2008 with retrospective effect from April 1, 2005 and Finance Act, 2010) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Payments made in last month of previous year--Requirement that tax deducted at source should be deposited before “said due date†--Due date referred to is due date for filing return of income--Assessee following cash system of accounting--Memorandum maintained for record purpose showing sums due for payment in February of previous year--Payment actually made and tax deducted therefrom in March and deposited in April--Deduction allowable-- CIT v. Rajinder Kumar (Delhi) . . . 241

S. 57(iii) --Income from other sources--Object of assessee promoting sports--Grants from constituents--Assessee acting as a custodian to constituents for purpose of promoting sports--Expenditure incurred for purpose of promoting sports events and activities--Allowable-- Deputy Director of Income-tax (Exemptions) v. Petroleum Sports Promotion Board (Delhi) . . . 235

S. 80-IB(10) --Housing project--Special deduction--No disallowance on ground assessee not a developer--Construction completed two years before final date and building use permission applied for--Rejection of building permission on technical grounds--Assessee entitled to deduction-- CIT v. Tarnetar Corporation (Guj) . . . 174

S. 80-IB(10)(a)(ii) --Housing project--Special deduction--Law applicable--Amendment with effect from 1-4-2005 requiring certificate of completion of project within four years of approval--Not applicable to project approved prior to that date--Assessee entitled to deduction-- CIT v. CHD Developers Ltd. (Delhi) . . . 177

S. 147 --Reassessment--Notice--Not permissible on change of opinion--Valuation of property referred to Valuation Officer during assessment proceedings--Assessment made before receipt of valuation report--Reassessment on basis of valuation report--No application of mind--Reasons recorded for notice contrary to facts on record--Notices based on change of opinion--Not valid-- Mahashay Chunnilal v. Deputy CIT (Delhi) . . . 314

----Reassessment--Notice--Opinion of Valuation Officer not information for reopening assessment--Assessing Officer must apply mind and form belief that income has escaped assessment-- Mahashay Chunnilal v. Deputy CIT (Delhi) . . . 314

S. 148 --Reassessment--Notice--Not permissible on change of opinion--Valuation of property referred to Valuation Officer during assessment proceedings--Assessment made before receipt of valuation report--Reassessment on basis of valuation report--No application of mind--Reasons recorded for notice contrary to facts on record--Notices based on change of opinion--Not valid-- Mahashay Chunnilal v. Deputy CIT (Delhi) . . . 314

----Reassessment--Notice--Opinion of Valuation Officer not information for reopening assessment--Assessing Officer must apply mind and form belief that income has escaped assessment-- Mahashay Chunnilal v. Deputy CIT (Delhi) . . . 314

S. 206C --Collection of tax at source--Failure to collect tax at source--Form 27 obtained from buyer filed before assessing authority in course of appellate proceedings--Technical breach liable to be condoned-- CIT v. Adisankara Spinning Mills (P.) Ltd. (Mad) . . . 233

S. 206C, Expln. (b) --Collection of tax at source--Cotton waste--Not scrap within meaning of Explanation (b) to section 206C--Not liable to collection of tax at source-- CIT v. Adisankara Spinning Mills (P.) Ltd. (Mad) . . . 233

S. 254 --Appeal to Appellate Tribunal--Powers of Tribunal--Power to grant stay--Period of stay--Law applicable--Effect of introduction of proviso to section 254(2) with effect from 1-10-2008--Stay for a maximum of 365 days from date of initial order-- CIT v. Ecom Gill Coffee Trading P. Ltd. (Karn) . . . 204

S. 254(2A) --Appeal to Appellate Tribunal--Powers of Tribunal--Power to grant stay--Limited to total period of 365 days from date of first order of stay--If delay due to lapse on part of Department, Tribunal at liberty to conclude hearing and decide appeal--Department can make a statement that it would not take coercive steps to recover demand and Tribunal can adjourn matter--Assessee can file writ petition for stay and High Court can grant stay and issue directions to Tribunal as required-- CIT v. Maruti Suzuki (India) Ltd. (Delhi) . . . 215

S. 260A --Appeal to High Court--New ground not raised before Tribunal cannot be raised before High Court-- CIT v. Jayshree Gems and Jewellery (Delhi) . . . 272

 

ITR (TRIB) Volume 31 : Part 1 (Issue dated : 14-4-2014)

 

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

 

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Business expenditure --Financial corporation--Earnings from lease, hire charges, interest on deposits and interest on long-term finance--Whether income under purview of Explanation (e) to section 36(1)(viii)--Matter remanded for re-examination in terms of agreement between assessee and State--Income-tax Act, 1961, s. 36(1)(viii)-- Tamilnadu Power Finance and Infrastructure Development Corporation Ltd. v. Asst. CIT (Chennai) . . . 390

----Financial corporation--Interest on short term deposits not eligible for deduction--Income-tax Act, 1961, s. 36(1)(viii)-- Tamilnadu Power Finance and Infrastructure Development Corporation Ltd. v. Asst. CIT (Chennai) . . . 390

Company --Book profits--Computation--Provision for diminution in value of stock-in-trade--Law applicable--Direct loss in valuation of stock-in-trade cannot be considered as “provision†--No need for adjustment of loss incurred by assessee in its trading activity--Income-tax Act, 1961, s. 115JB-- Esquire P. Ltd. v. Deputy CIT (Mumbai) . . . 411

Income --Accrual--Interest--Non-banking financial companies--Obligatory under norms issued by Reserve Bank to classify loans on which interest not received for a period exceeding six months, as non-performing assets--Interest cannot be charged--Income-tax Act, 1961--Reserve Bank of India Act, 1934-- Tamilnadu Power Finance and Infrastructure Development Corporation Ltd. v. Asst. CIT (Chennai) . . . 390

----Computation--Expenditure related to income not forming part of total income--Scope of section 14A--Assessing Officer not examining accounts under section 14A(2)--Assessing Officer to examine nature of interest expenditure for earning dividend--Matter remanded--Income-tax Act, 1961, s. 14A-- Esquire P. Ltd. v. Deputy CIT (Mumbai) . . . 411

----Disallowance of expenditure in earning tax free dividend income--Assessing Officer not considering various factors--Alternate plea by assessee that disallowance to be restricted to figure lower than that made by Assessing Officer--Assessing Officer to calculate afresh--Matter remanded--Income-tax Act, 1961, s. 14A-- Manish D. Innani v. Asst. CIT (Mumbai) . . . 404

Refund --Interest on excess refund--Leviable only for assessments completed after 1-6-2003--Matter remanded--Income-tax Act, 1961, s. 234D-- Tamilnadu Power Finance and Infrastructure Development Corporation Ltd. v. Asst. CIT (Chennai) . . . 390

Securities transaction tax --No restriction under section 88E for allowing rebate till positive income filed--Assessing Officer to decide applicability of section 87(2)--Matter remanded--Income-tax Act, 1961, ss. 87(2), 88E-- Manish D. Innani v. Asst. CIT (Mumbai) . . . 404

PRINT EDITION

Volume 31 : Part 1 (Issue dated : 14-4-2014)

SUBJECT INDEX TO CASES REPORTED

Appeal to Appellate Tribunal --Tax effect below prescribed limit--Appeal not maintainable-- ITO v. Raj Kumar Kukreja (Lucknow) . . . 98

Assessment --Assessment in name of deceased person non est and void ab initio--Income-tax Act, 1961, s. 143(2)-- ITO v. Raj Kumar Kukreja (Lucknow) . . . 98

Business expenditure --Commission and brokerage on renewal of leave and licence agreement--Brokerage paid in current year and to be allowed in current year only--Expenses not to be apportioned over period of lease--Income-tax Act, 1961-- Asst. CIT v. Nagase India P. Ltd. (Mumbai) . . . 133

----Disallowance--Payments liable to deduction of tax at source--Employees deputed to assessee by non-resident holding company--Gross salary of two directors in deputation inclusive of salary paid by parent company reimbursed by assessee--Assessee deducting tax on entire salary including salary reimbursed--No tax deductible on reimbursement and hence no disallowance warranted--Income-tax Act, 1961, ss. 40(a)(i), (iii), 192-- Asst. CIT v. Nagase India P. Ltd. (Mumbai) . . . 133

----Disallowance--Sums liable to deduction of tax at source--Nature of expenses sample charges, meeting and hotel expenses not covered under provisions of sections 192 to 194LA--No requirement of withholding tax--Income-tax Act, 1961-- Asst. CIT v. Nagase India P. Ltd. (Mumbai) . . . 133

----Disallowance--Sums liable to deduction of tax at source--Professional fees for providing recruitment services for parent company--Assessee deducting tax at source and depositing prior to date of filing of return--Disallowance not proper--Income-tax Act, 1961-- Asst. CIT v. Nagase India P. Ltd. (Mumbai) . . . 133

----Expenditure on technical know-how--Payment for assisting assessee in manufacture of specialised machinery--Section 35AB not applicable--Expenditure allowable--Income-tax Act, 1961, s. 35AB-- Asst. CIT v. Chemfab Welders Ltd. (Chennai) . . . 114

----Foreign travel expenses--Foreign travel for indenting for business purpose--Allowable--Income-tax Act, 1961-- Asst. CIT v. Nagase India P. Ltd. (Mumbai) . . . 133

Charitable purpose --Charitable trust--Exemption--Registration--Establishment of trust for purpose of providing medical relief--Proviso to section 2(15) not applicable--No doubt as to genuineness of activities--Withdrawal of registration under section 12AA(3) and recognition granted under section 80G not proper--Income-tax Act, 1961, ss. 2(15), 12AA, 12AA(3), 80G-- Vivekanand General Hospital v. CIT (Bangalore) . . . 125

Company --Book profits--Minimum alternate tax--Advance tax--Interest--Period prior to decision of Supreme Court in Rolta India Ltd. --Law governed by decision of Supreme Court in Kwality Biscuits Ltd .--Interest not leviable--Income-tax Act, 1961, ss. 115JB, 234B, 234C-- Rockline Developers P. Ltd. v. ITO (Mumbai) . . . 123

----Book profits--Minimum alternate tax--Advance tax--Interest--Period prior to decision of Supreme Court in Rolta India Ltd .--Settled law--No advance tax payable by companies assessed on basis of book profits computed under section 115JB--Interest cannot be levied under sections 234B and 234C--Income-tax Act, 1961, ss. 115JB, 234B, 234C-- Charbhuja Industries P. Ltd. v. Addl. CIT (Mumbai) . . . 89

Depreciation --Rate of depreciation--Medical diagnostic imaging equipment using positron emission tomography useful in detecting and treating cancer, heart disease and neurological diseases--Is life saving medical equipment entitled to higher rate of depreciation at forty per cent.--Income-tax Act, 1961, s. 32-- Asst. CIT v. Bharat Scans P. Ltd. (Chennai) . . . 103

Exemption --Non-resident (external) account--Amount in non-resident (external) account exempted from tax--Income-tax Act, 1961, s. 10(4)(ii)-- Arvind Singh Chauhan v. ITO (Agra) . . . 105

Industrial undertaking --Special deduction--Apportionment of labour charges--Unit merely supplying manufactured products and no role in fabrication work undertaken in site--Not necessary to allocate expenses incurred by assessee in making payment to unit--Income-tax Act, 1961-- Asst. CIT v. Chemfab Welders Ltd. (Chennai) . . . 114

----Special deduction--Assessee establishing new industrial unit in addition to old industrial units--Finding that technical know-how fee was income of new unit and no portion could be apportioned to old units--Assessee entitled to special deduction under section 80-IA without any reduction--Income-tax Act, 1961, s. 80-IA-- Asst. CIT v. Chemfab Welders Ltd. (Chennai) . . . 114

International transactions --Arm’s length price--Selection of comparables--Companies having abnormally high profit--Whether to be excluded solely on that ground--Factors to be considered-- Maersk Global Centres (India) P. Ltd. v. Asst. CIT (Mumbai) [SB] . . . 1

----Arm’s length price--Selection of comparables--Transactional net margin method--Comparability analysis--General principles--Information technology enabled services--Scope of functionality--Whether can further be bifurcated into business process outsourcing services and knowledge process outsourcing services--Low-end services and high-end services--Assessee providing low-end services and comparable companies providing high-end services--Comparison not proper--Income-tax Act, 1961, s. 92C(2)--Income-tax Rules, 1962, r. 10B(3)-- Maersk Global Centres (India) P. Ltd. v. Asst. CIT (Mumbai) [SB] . . . 1

Non-resident --Individual--Taxability in India--Receiving pension from erstwhile employer in India and interest on bank accounts in India--Taxability of such income not by virtue of “resident†status--Salary received from present employment outside India--Not taxable in India--Accrual of salary outside India and remission of amount to India will not constitute receipt of salary in India to trigger taxability--Income-tax Act, 1961, ss. 5(2)(a), 6(5)-- Arvind Singh Chauhan v. ITO (Agra) . . . 105

Penalty --Failure to comply with notice--Notice calling for information in accordance with annexures--No annexure sent along with notice--No specification in notice regarding compliance expected from assessee--Notice vague--Assessee not liable for penalty--Income-tax Act, 1961, s. 271(1)(b)-- Harvinder Singh Jaggi v. Asst. CIT (Delhi) . . . 101

Reassessment --Condition precedent--Notice under section 143(2)--Assessment completed without issue of notice under section 143(2) invalid--Income-tax Act, 1961, ss. 143(2), 147, 148-- Mohinder Kumar Chhabra v. ITO (Delhi) . . . 93

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961

S. 2(15) --Charitable purpose--Charitable trust--Exemption--Registration--Establishment of trust for purpose of providing medical relief--Proviso to section 2(15) not applicable--No doubt as to genuineness of activities--Withdrawal of registration under section 12AA(3) and recognition granted under section 80G not proper-- Vivekanand General Hospital v. CIT (Bangalore) . . . 125

S. 5(2)(a) --Non-resident--Individual--Taxability in India--Receiving pension from erstwhile employer in India and interest on bank accounts in India--Taxability of such income not by virtue of “resident†status--Salary received from present employment outside India--Not taxable in India--Accrual of salary outside India and remission of amount to India will not constitute receipt of salary in India to trigger taxability-- Arvind Singh Chauhan v. ITO (Agra) . . . 105

S. 6(5) --Non-resident--Individual--Taxability in India--Receiving pension from erstwhile employer in India and interest on bank accounts in India--Taxability of such income not by virtue of “resident†status--Salary received from present employment outside India--Not taxable in India--Accrual of salary outside India and remission of amount to India will not constitute receipt of salary in India to trigger taxability-- Arvind Singh Chauhan v. ITO (Agra) . . . 105

S. 10(4)(ii) --Exemption--Non-resident (external) account--Amount in non-resident (external) account exempted from tax-- Arvind Singh Chauhan v. ITO (Agra) . . . 105

S. 12AA --Charitable purpose--Charitable trust--Exemption--Registration--Establishment of trust for purpose of providing medical relief--Proviso to section 2(15) not applicable--No doubt as to genuineness of activities--Withdrawal of registration under section 12AA(3) and recognition granted under section 80G not proper-- Vivekanand General Hospital v. CIT (Bangalore) . . . 125

S. 12AA(3) --Charitable purpose--Charitable trust--Exemption--Registration--Establishment of trust for purpose of providing medical relief--Proviso to section 2(15) not applicable--No doubt as to genuineness of activities--Withdrawal of registration under section 12AA(3) and recognition granted under section 80G not proper-- Vivekanand General Hospital v. CIT (Bangalore) . . . 125

S. 32 --Depreciation--Rate of depreciation--Medical diagnostic imaging equipment using positron emission tomography useful in detecting and treating cancer, heart disease and neurological diseases--Is life saving medical equipment entitled to higher rate of depreciation at forty per cent.-- Asst. CIT v. Bharat Scans P. Ltd. (Chennai) . . . 103

S. 35AB --Business expenditure--Expenditure on technical know-how--Payment for assisting assessee in manufacture of specialised machinery--Section 35AB not applicable--Expenditure allowable-- Asst. CIT v. Chemfab Welders Ltd. (Chennai) . . . 114

S. 40(a)(i) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Employees deputed to assessee by non-resident holding company--Gross salary of two directors in deputation inclusive of salary paid by parent company reimbursed by assessee--Assessee deducting tax on entire salary including salary reimbursed--No tax deductible on reimbursement and hence no disallowance warranted-- Asst. CIT v. Nagase India P. Ltd. (Mumbai) . . . 133

S. 40(a)(iii) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Employees deputed to assessee by non-resident holding company--Gross salary of two directors in deputation inclusive of salary paid by parent company reimbursed by assessee--Assessee deducting tax on entire salary including salary reimbursed--No tax deductible on reimbursement and hence no disallowance warranted-- Asst. CIT v. Nagase India P. Ltd. (Mumbai) . . . 133

S. 80G --Charitable purpose--Charitable trust--Exemption--Registration--Establishment of trust for purpose of providing medical relief--Proviso to section 2(15) not applicable--No doubt as to genuineness of activities--Withdrawal of registration under section 12AA(3) and recognition granted under section 80G not proper-- Vivekanand General Hospital v. CIT (Bangalore) . . . 125

S. 80-IA --Industrial undertaking--Special deduction--Assessee establishing new industrial unit in addition to old industrial units--Finding that technical know-how fee was income of new unit and no portion could be apportioned to old units--Assessee entitled to special deduction under section 80-IA without any reduction-- Asst. CIT v. Chemfab Welders Ltd. (Chennai) . . . 114

S. 92C(2) --International transactions--Arm’s length price--Selection of comparables--Transactional net margin method--Comparability analysis--General principles--Information technology enabled services--Scope of functionality--Whether can further be bifurcated into business process outsourcing services and knowledge process outsourcing services--Low-end services and high-end services--Assessee providing low-end services and comparable companies providing high-end services--Comparison not proper-- Maersk Global Centres (India) P. Ltd. v. Asst. CIT (Mumbai) [SB] . . . 1

S. 115JB --Company--Book profits--Minimum alternate tax--Advance tax--Interest--Period prior to decision of Supreme Court in Rolta India Ltd .--Law governed by decision of Supreme Court in Kwality Biscuits Ltd. --Interest not leviable-- Rockline Developers P. Ltd. v. ITO (Mumbai) . . . 123

----Company--Book profits--Minimum alternate tax--Advance tax--Interest--Period prior to decision of Supreme Court in Rolta India Ltd. --Settled law--No advance tax payable by companies assessed on basis of book profits computed under section 115JB--Interest cannot be levied under sections 234B and 234C-- Charbhuja Industries P. Ltd. v. Addl. CIT (Mumbai) . . . 89

S. 143(2) --Assessment--Assessment in name of deceased person non est and void ab initio-- ITO v. Raj Kumar Kukreja (Lucknow) . . . 98

----Reassessment--Condition precedent--Notice under section 143(2)--Assessment completed without issue of notice under section 143(2) invalid-- Mohinder Kumar Chhabra v. ITO (Delhi) . . . 93

S. 147 --Reassessment--Condition precedent--Notice under section 143(2)--Assessment completed without issue of notice under section 143(2) invalid-- Mohinder Kumar Chhabra v. ITO (Delhi) . . . 93

S. 148 --Reassessment--Condition precedent--Notice under section 143(2)--Assessment completed without issue of notice under section 143(2) invalid-- Mohinder Kumar Chhabra v. ITO (Delhi) . . . 93

S. 192 --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Employees deputed to assessee by non-resident holding company--Gross salary of two directors in deputation inclusive of salary paid by parent company reimbursed by assessee--Assessee deducting tax on entire salary including salary reimbursed--No tax deductible on reimbursement and hence no disallowance warranted-- Asst. CIT v. Nagase India P. Ltd. (Mumbai) . . . 133

S. 234B --Company--Book profits--Minimum alternate tax--Advance tax--Interest--Period prior to decision of Supreme Court in Rolta India Ltd. --Law governed by decision of Supreme Court in Kwality Biscuits Ltd. --Interest not leviable-- Rockline Developers P. Ltd. v. ITO (Mumbai) . . . 123

----Company--Book profits--Minimum alternate tax--Advance tax--Interest--Period prior to decision of Supreme Court in Rolta India Ltd. --Settled law--No advance tax payable by companies assessed on basis of book profits computed under section 115JB--Interest cannot be levied under sections 234B and 234C-- Charbhuja Industries P. Ltd. v. Addl. CIT (Mumbai) . . . 89

S. 234C --Company--Book profits--Minimum alternate tax--Advance tax--Interest--Period prior to decision of Supreme Court in Rolta India Ltd. --Law governed by decision of Supreme Court in Kwality Biscuits Ltd. --Interest not leviable-- Rockline Developers P. Ltd. v. ITO (Mumbai) . . . 123

----Company--Book profits--Minimum alternate tax--Advance tax--Interest--Period prior to decision of Supreme Court in Rolta India Ltd. --Settled law--No advance tax payable by companies assessed on basis of book profits computed under section 115JB--Interest cannot be levied under sections 234B and 234C-- Charbhuja Industries P. Ltd. v. Addl. CIT (Mumbai) . . . 89

S. 271(1)(b) --Penalty--Failure to comply with notice--Notice calling for information in accordance with annexures--No annexure sent along with notice--No specification in notice regarding compliance expected from assessee--Notice vague--Assessee not liable for penalty-- Harvinder Singh Jaggi v. Asst. CIT (Delhi) . . . 101

Income-tax Rules, 1962

R. 10B(3) --International transactions--Arm’s length price--Selection of comparables--Transactional net margin method--Comparability analysis--General principles--Information technology enabled services--Scope of functionality--Whether can further be bifurcated into business process outsourcing services and knowledge process outsourcing services--Low-end services and high-end services--Assessee providing low-end services and comparable companies providing high-end services--Comparison not proper-- Maersk Global Centres (India) P. Ltd. v. Asst. CIT (Mumbai) [SB] . . . 1