ITR Volume 363 : Part 2 (Issue dated : 5-5-2014)

 

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

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

SUPREME COURT

Supreme Court --Inherent powers--Curative petition--When entertained--Search and seizure--Block assessment--Undisclosed income--Statement under section 132(4)--Addition made on basis of statement--No case for entertainment of curative petition--Income-tax Act, 1961, s. 132(4)-- Bhagirath Aggarwal v. CIT . . . 377

HIGH COURTS

Capital or revenue expenditure --Current repairs--Expenses on replacement and renovation of a boat--That boat not put to use in year of purchase before repairs were made to it--Not ground to deny deduction of expenditure on repairs--Revenue expenditure--Income-tax Act, 1961, s. 31-- CIT v. Machado Sons (Mad) . . . 385

Income --Computation--Disallowance of expenditure incurred in earning income not forming part of total income--Income earned out of mutual fund investment--Reasonable allocation of expenditure to taxable income and tax exempt income permissible--Tribunal not justified in holding in absence of rule 8D no disallowance can be made under section 14A by proportionate bifurcation of expenditure--Income-tax Rules, 1962, r. 8D--Income-tax Act, 1961, ss. 10(35), 14A-- CIT v. Sintex Industries Ltd. (Guj) . . . 364

----Disallowance of expenditure incurred for earning exempted income--Investments were from interest-free funds available with assessee--Assessee suo motu disallowing certain sum under section 14A--No further disallowance--No finding as to how much administrative expenditure have been incurred to earn exempt income--No disallowance could be made--Income-tax Act, 1961, s. 14A-- CIT v. UTI Bank Ltd. (Guj) . . . 366

Precedent --Effect of Supreme Court decision in GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19-- SAK Industries Pvt. Ltd. v. Deputy CIT (Delhi) . . . 378

Reassessment --Validity--Order passed without considering objections of assessee--Not valid--Income-tax Act, 1961, s. 147-- SAK Industries Pvt. Ltd. v. Deputy CIT (Delhi) . . . 378

Transfer of case --Co-ordinated investigation--Assessees entities of group and having substantial financial transaction with various group entities--Opportunity of hearing given to assessees and objections raised and considered before passing order of transfer--Agreement between Commissioner at Delhi and Commissioner at Mumbai available--Order indicating due application of mind and transfer of case not mala fide--Order transferring assessee’s case from Mumbai to Delhi valid--Income-tax Act, 1961, s. 127(2)-- Aamby Valley Ltd. v. CIT (Bom) . . . 370

Writ --Existence of alternative remedy--Not an absolute bar for issue of writ--Constitution of India, art. 226--SAK Industries Pvt. Ltd. v. Deputy CIT (Delhi) . . . 378

 

PRINT EDITION

ITR Volume 363 : Part 2 (Issue dated : 5-5-2014)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Appeal to Appellate Tribunal --Duty of Tribunal--Duty to give finding of fact--Finding should take into account relevant facts--Finding by Tribunal not taking into account facts found by Assessing Officer and Commissioner (Appeals)--Order set aside and matter remanded--Income-tax Act, 1961, s. 254-- CIT v. Arun Malhotra (Delhi) . . . 195

Appeal to High Court --Issue not raised before or considered by Tribunal--Issue cannot be considered by High Court--Income-tax Act, 1961, s. 260A-- S. Muthukumar v. ITO (Mad) . . . 161

Assessment --General principles--Appeal to Commissioner (Appeals)--Powers of Commissioner (Appeals)--Exemption--Mistake in claim for exemption--Provision wrongly mentioned in e-return--Exemption allowed in the past--Documents in support of claim for exemption filed--Commissioner (Appeals) justified in granting exemption--Income-tax Act, 1961, ss. 10B, 251-- CIT v. Rajasthan Fasteners P. Ltd. (Raj) . . . 271

Business expenditure --Accounting--Real estate business set up--Development expenses whether allowable under Accounting Standards read with section 145/145A--Matter remanded--Income-tax Act, 1961, ss. 145, 145A-- Rangoli Projects P. Ltd. v. CIT (Delhi) . . . 192

----Capital or revenue expenditure--General principles--Hotel business--Amount paid as licence fee for use of courtyard--Revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v. ITC Hotels (Karn) . . . 254

----Disallowance--Deduction only on actual payment--Dues under general provident fund, contributory provident fund and employees’ State insurance--Amounts paid before due date for furnishing income-tax return--Amounts could not be disallowed--Income-tax Act, 1961, ss. 36(1)(va), 43B-- CIT v. Jaipur Vidyut Vitaran Nigam Ltd. (Raj) . . . 307

----Disallowance--Guest house expenses--Not allowable--Income-tax Act, 1961, s. 37(4)-- CIT v. Baghpat Co-operative Sugar Mills Ltd. (All) . . . 319

Capital gains --Long-term capital gains--Short-term capital gains--Transfer--Time of transfer--Agreement for purchase of property under attachment to bank in June 2001--Consideration for sale paid in February 2004--Sale of property to third person in February 2005--Rights under agreement acquired only in February 2004--Gains on sale of property assessable as short-term capital gains--Income-tax Act, 1961, ss. 2, 45-- Lachmandas and Sons v. Deputy CIT (Ker) . . . 315

Capital or revenue expenditure --Hotel--Extensive repairs on ground floor, walls removed walls in rear room and bar constructed--Commissioner (Appeals) carrying out site inspection and holding expenditure was revenue in nature--Justified--Income-tax Act, 1961-- Comfort Living Hotels P. Ltd. v. CIT (Delhi) . . . 182

Cash credits --Amounts claimed to be payments for services--No evidence of payments--Tribunal correct in upholding assessment of amounts under section 68--Tribunal correct in rejecting application for rectification to contend that amounts should be treated as undisclosed turnover--Income-tax Act, 1961, ss. 68, 254-- S. Muthukumar v. ITO (Mad) . . . 161

Charitable purposes --Charitable trust--Exemption--Loans given in violation of section 13--Amount of loans not entitled to exemption--Entire income of trust cannot be denied exemption--Income-tax Act, 1961, ss. 11, 13-- CIT v. Fr. Mullers Charitable Institutions (Karn) . . . 230

----Registration of trust--Committee constituted under State Act constructing hospital--Committee constituting trust to run and operate hospital--Legality of trust--Civil court holding establishment of trust illegal and contrary to law--Section 24 not authorising committee to utilise its properties or monies through device of trusts and societies to engage in indirect commercial activity--Trust not entitled to registration--Delhi Sikh Gurudwara Act, 1971, s. 24--Income-tax Act, 1961, s. 12A-- Director of Income-tax v. Guru Harkishan Medical Trust (Delhi) . . . 186

----Registration of trusts--Delay in application for registration--Agricultural produce marketing committee--Statutory body--Entitled to registration--Income-tax Act, 1961, ss. 12A, 12AA-- CIT v. Krishi Utpadan Mandi Samiti (All) . . . 290

Depreciation --Higher rate of depreciation--Hotel--Roofing--Temporary construction for convenience of workers of assessee--Construction subsequently demolished--Entitled to hundred per cent. depreciation--Income-tax Act, 1961, s. 32-- Comfort Living Hotels P. Ltd. v. CIT (Delhi) . . . 182

Dividend --Deemed dividend--Assessee taking substantial part of loan from a company in which he was a director and having substantial interest--No chance to accumulate profits pertaining to available funds--Failure to establish that substantial part of business of company was money-lending--Amount includible as income of assessee as deemed dividend--Income-tax Act, 1961, s. 2(22)(e)-- Krishna Gopal Maheshwari v. Addl. CIT (All) . . . 280

Hotel --Special deduction under section 80HHD--Computation of special deduction--Special deduction whether to be computed on entire business or in respect of each eligible unit--Income-tax Act, 1961, s. 80HHD-- CIT v. ITC Hotels (Karn) . . . 254

Income from other sources --Business income or income from other sources--Grants and loans received for setting up business--Investment of funds before commencement of business--Investment not connected with business--Interest on investment assessable as income from other sources--Income-tax Act, 1961, ss. 28, 56-- CIT v. Indian Vaccines Corporation Ltd. (Delhi) . . . 295

Income-tax survey --Undisclosed income--Statement recorded on oath admitting undisclosed income--Does not lose its evidentiary value--Statement not sole evidence--No evidence to show statement recorded during middle of night--Explanation in course of assessment that loose paper contained estimate of income prepared by consultant for submission to bank for loan to purchase equipment--Identity of consultant not established--No details of equipment for which loan is required--Explanation an afterthought--No evidence to support claim to cash expenses incurred not recorded in regular books of account--Assessment valid--Income-tax Act, 1961, s. 133A-- Dr. Dinesh Jain v. ITO (Bom) . . . 210

Industrial undertaking --Special deduction--Manufacture or production of article--Article need not be final product--Precured tread rubber--Income from mixing rubber with chemicals on job work basis--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-IB-- CIT v. Midas Polymer Compounds P. Ltd. (Ker) . . . 309

----Special deduction under Chapter VI-A--Special deductions can be granted under more than one provision--Income-tax Act, 1961, Chapter VI-A-- CIT v. Panachayil Industries (Ker) . . . 261

----Special deduction under section 80-IA--Condition precedent--Profits and gains derived from industrial undertaking--Interest on KEB and NSC deposits--Not derived from industrial undertaking--Not entitled to special deduction--Income-tax Act, 1961, s. 80-IA-- CIT v. ITC Hotels (Karn) . . . 254

----Special deduction under section 80-IB--Condition precedent--Assessee should manufacture or produce article not covered by entry 25 in Eleventh Schedule--Assessee manufacturing polyurethane foam which is mentioned in entry 25 of Eleventh Schedule--Assessee not entitled to special deduction under section 80-IB--Income-tax Act, 1961, s. 80-IB-- CIT v. Polyfex (India) P. Ltd. (Karn) . . . 224

----Special deductions under sections 80HH, 80-I and 80-IB--Condition precedent--Production of article--Crushing of granite boulders into small pieces constitutes production--Assessee entitled to special deduction under sections 80HH, 80J and 80-IB--Income-tax Act, 1961, ss. 80HH, 80J, 80-IB-- CIT v. Panachayil Industries (Ker) . . . 261

Precedent --Effect of decision of Supreme Court in Asst. CIT v. Hotel Blue Moon [2010] 321 ITR 362 (SC)-- CIT v. Vasudev Construction (Karn) . . . 247

----Effect of decision of the Supreme Court in Joint CIT v. Mandideep Engg. and Pkg. Ind. P. Ltd. [2007] 292 ITR 1 (SC) and CIT v. N. C. Budharaja and Co. [1993] 204 ITR 412 (SC)-- CIT v. Panachayil Industries (Ker) . . . 261

Reassessment --Notice after four years--Limitation--Extended period of limitation where income escaping assessment exceeds Rs. 1 lakh--Condition precedent for invocation of extended period--Assessing Officer must record in reasons for notice fact that income escaping assessment likely to exceed Rs. 1 lakh--Failure to do so--Sanctioning authority cannot record satisfaction for reassessment in absence thereof--Notice not valid--Income-tax Act, 1961, ss. 148, 149(1)(b), 151(1), prov. -- Mahesh Kumar Gupta v. CIT (All) . . . 300

----Notice--Condition precedent--Reason for reassessment must be recorded before issuing notice--Income-tax Act, 1961, ss. 147, 148-- Gujarat Borosil Ltd. v. Deputy CIT (Guj) . . . 293

----Notice--Return--Not a scrap of paper but sanctity attached to it--Obligation of assessee to file return in terms of notice--Assessee cannot deny obligation on ground in his opinion there is no taxable income--Income-tax Act, 1961, s. 148-- Adobe Systems Software Ireland Ltd. v. Asst. DIT (Delhi) . . . 174

Recovery of tax --Application for stay--Tribunal granting stay and passing interim order for period of one hundred and eighty days in open court in presence of counsel for Revenue--Attachment of amounts in assessee’s bank account on ground concerned Assessing Officer was not intimated--Would amount to overreach of order of Tribunal--Revenue should lift attachment and ensure that amounts recovered are deposited back in assessee’s account--Income-tax Act, 1961, s. 221-- A. T. Kearney India P. Ltd. v. ITO (Delhi) . . . 172

Remuneration from foreign enterprise --Special deduction under section 80-O--Conditions precedent--Services should be rendered outside India--Furnishing of legal opinion to foreign company on matters relating to setting up industry in India--Amount received from foreign enterprise not entitled to special deduction under section 80-O--Income-tax Act, 1961, s. 80-O--Circular No. 700, dated 23-3-1995-- H. Raghavendra Rao v. Deputy CIT (Karn) . . . 238

Revision --Commissioner--Powers--Condition precedent for application of section 263--Order must be erroneous and also prejudicial to Revenue--Prejudice refers to lawful revenue being realised--Income-tax Act, 1961, s. 263-- CIT v. Fr. Mullers Charitable Institutions (Karn) . . . 230

----Commissioner--Powers--Development of infrastructure for shooting locations--Lease rentals earned from land developed for creating film shooting facilities--Assessing Officer capitalising receipt as connected with main activity--Commissioner has no jurisdiction to revise because one of two possible views was taken by Assessing Officer--Income-tax Act, 1961, s. 263-- CIT v. Usha Kiran Movies Ltd. (AP) . . . 165

----Erroneous and prejudicial to Revenue--Assessee making claim under section 80P--Requirement of Assessing Officer to enquire factual situation whether assessee bank conducting business as a primary agriculture credit society or a primary co-operative agricultural and rural development bank--Benefit extended on basis of registration as co-operative society--Order erroneous and prejudicial to interests of Revenue--Income-tax Act, 1961, ss. 80P, 263-- Perinthalmanna Service Co-operative Bank Ltd. v. ITO (Ker) . . . 268

----Order of revision under section 263--Condition precedent--Opportunity to assessee to be heard--No proper notice but assessee actually heard--Order of revision was valid--Income-tax Act, 1961, s. 263-- Ashutosh Bandopadhyay v. CIT (Tripura) . . . 168

Search and seizure --Block assessment--Scope of block assessment--No incriminating material found during search--Difference between cost of construction estimated by District Valuation Officer and cost shown in accounts less than 15 per cent.--Addition to income in block assessment--Not justified--Income-tax Act, 1961, Chapter XIV-B-- CIT v. Vasudev Construction (Karn) . . . 247

----Block assessment--Undisclosed income--No issue of notice under section 143(2)--Block assessment invalid--Income-tax Act, 1961, ss. 143(2), 158BC-- R. Romi v. CIT (Ker) . . . 311

----Block assessment--Undisclosed income--Tribunal deleting addition without considering facts found by Assessing Officer--Matter remanded--Income-tax Act, 1961-- CIT v. Arun Malhotra (Delhi) . . . 195

Transfer of case --Co-ordinated investigation--Reason for such co-ordinated investigation must be given--No notice giving a personal hearing and order passed without recording reasons--Order transferring case of assessee from Mumbai to Bangalore not valid--Income-tax Act, 1961, s. 127(2)-- Sunisha Impex P. Ltd. v. CIT (Bom) . . . 220

Writ --Reassessment--Notice--Validity--Depends on whether assessee had a permanent establishment within jurisdiction of Assessing Officer issuing notice--Existence of jurisdictional fact cannot be examined in writ proceedings--Assessee to resolve disputed questions of fact in alternative remedies--Income-tax Act, 1961, ss. 147, 148-- Adobe Systems Software Ireland Ltd. v. Asst. DIT (Delhi) . . . 174

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Delhi Sikh Gurudwara Act, 1971 :

S. 24 --Charitable purposes--Registration of trust--Committee constituted under State Act constructing hospital--Committee constituting trust to run and operate hospital--Legality of trust--Civil court holding establishment of trust illegal and contrary to law--Section 24 not authorising committee to utilise its properties or monies through device of trusts and societies to engage in indirect commercial activity--Trust not entitled to registration-- Director of Income-tax v. Guru Harkishan Medical Trust (Delhi) . . . 186

Income-tax Act, 1961 :

S. 2 --Capital gains--Long-term capital gains--Short-term capital gains--Transfer--Time of transfer--Agreement for purchase of property under attachment to bank in June 2001--Consideration for sale paid in February 2004--Sale of property to third person in February 2005--Rights under agreement acquired only in February 2004--Gains on sale of property assessable as short-term capital gains-- Lachmandas and Sons v. Deputy CIT (Ker) . . . 315

S. 2(22)(e) --Dividend--Deemed dividend--Assessee taking substantial part of loan from a company in which he was a director and having substantial interest--No chance to accumulate profits pertaining to available funds--Failure to establish that substantial part of business of company was money-lending--Amount includible as income of assessee as deemed dividend-- Krishna Gopal Maheshwari v. Addl. CIT (All) . . . 280

S. 10B --Assessment--General principles--Appeal to Commissioner (Appeals)--Powers of Commissioner (Appeals)--Exemption--Mistake in claim for exemption--Provision wrongly mentioned in e-return--Exemption allowed in the past--Documents in support of claim for exemption filed--Commissioner (Appeals) justified in granting exemption-- CIT v. Rajasthan Fasteners P. Ltd. (Raj) . . . 271

S. 11 --Charitable purposes--Charitable trust--Exemption--Loans given in violation of section 13--Amount of loans not entitled to exemption--Entire income of trust cannot be denied exemption-- CIT v. Fr. Mullers Charitable Institutions (Karn) . . . 230

S. 12A --Charitable purposes--Registration of trust--Committee constituted under State Act constructing hospital--Committee constituting trust to run and operate hospital--Legality of trust--Civil court holding establishment of trust illegal and contrary to law--Section 24 not authorising committee to utilise its properties or monies through device of trusts and societies to engage in indirect commercial activity--Trust not entitled to registration-- Director of Income-tax v. Guru Harkishan Medical Trust (Delhi) . . . 186

----Charitable purposes--Registration of trusts--Delay in application for registration--Agricultural produce marketing committee--Statutory body--Entitled to registration-- CIT v. Krishi Utpadan Mandi Samiti (All) . . . 290

S. 12AA --Charitable purposes--Registration of trusts--Delay in application for registration--Agricultural produce marketing committee--Statutory body--Entitled to registration-- CIT v. Krishi Utpadan Mandi Samiti (All) . . . 290

S. 13 --Charitable purposes--Charitable trust--Exemption--Loans given in violation of section 13--Amount of loans not entitled to exemption--Entire income of trust cannot be denied exemption-- CIT v. Fr. Mullers Charitable Institutions (Karn) . . . 230

S. 28 --Income from other sources--Business income or income from other sources--Grants and loans received for setting up business--Investment of funds before commencement of business--Investment not connected with business--Interest on investment assessable as income from other sources-- CIT v. Indian Vaccines Corporation Ltd. (Delhi) . . . 295

S. 32 --Depreciation--Higher rate of depreciation--Hotel--Roofing--Temporary construction for convenience of workers of assessee--Construction subsequently demolished--Entitled to hundred per cent. depreciation-- Comfort Living Hotels P. Ltd. v. CIT (Delhi) . . . 182

S. 36(1)(va) --Business expenditure--Disallowance--Deduction only on actual payment--Dues under general provident fund, contributory provident fund and employees’ State insurance--Amounts paid before due date for furnishing income-tax return--Amounts could not be disallowed-- CIT v. Jaipur Vidyut Vitaran Nigam Ltd. (Raj) . . . 307

S. 37 --Business expenditure--Capital or revenue expenditure--General principles--Hotel business--Amount paid as licence fee for use of courtyard--Revenue expenditure-- CIT v. ITC Hotels (Karn) . . . 254

S. 37(4) --Business expenditure--Disallowance--Guest house expenses--Not allowable-- CIT v. Baghpat Co-operative Sugar Mills Ltd. (All) . . . 319

S. 43B --Business expenditure--Disallowance--Deduction only on actual payment--Dues under general provident fund, contributory provident fund and employees’ State insurance--Amounts paid before due date for furnishing income-tax return--Amounts could not be disallowed-- CIT v. Jaipur Vidyut Vitaran Nigam Ltd. (Raj) . . . 307

S. 45 --Capital gains--Long-term capital gains--Short-term capital gains--Transfer--Time of transfer--Agreement for purchase of property under attachment to bank in June 2001--Consideration for sale paid in February 2004--Sale of property to third person in February 2005--Rights under agreement acquired only in February 2004--Gains on sale of property assessable as short-term capital gains-- Lachmandas and Sons v. Deputy CIT (Ker) . . . 315

S. 56 --Income from other sources--Business income or income from other sources--Grants and loans received for setting up business--Investment of funds before commencement of business--Investment not connected with business--Interest on investment assessable as income from other sources-- CIT v. Indian Vaccines Corporation Ltd. (Delhi) . . . 295

S. 68 --Cash credits--Amounts claimed to be payments for services--No evidence of payments--Tribunal correct in upholding assessment of amounts under section 68--Tribunal correct in rejecting application for rectification to contend that amounts should be treated as undisclosed turnover-- S. Muthukumar v. ITO (Mad) . . . 161

S. 80HH --Industrial undertaking--Special deductions under sections 80HH, 80-I and 80-IB--Condition precedent--Production of article--Crushing of granite boulders into small pieces constitutes production--Assessee entitled to special deduction under sections 80HH, 80J and 80-IB-- CIT v. Panachayil Industries (Ker) . . . 261

S. 80HHD --Hotel--Special deduction under section 80HHD--Computation of special deduction--Special deduction whether to be computed on entire business or in respect of each eligible unit-- CIT v. ITC Hotels (Karn) . . . 254

S. 80-IA --Industrial undertaking--Special deduction under section 80-IA--Condition precedent--Profits and gains derived from industrial undertaking--Interest on KEB and NSC deposits--Not derived from industrial undertaking--Not entitled to special deduction-- CIT v. ITC Hotels (Karn) . . . 254

S. 80-IB --Industrial undertaking--Special deduction--Manufacture or production of article--Article need not be final product--Precured tread rubber--Income from mixing rubber with chemicals on job work basis--Assessee entitled to deduction-- CIT v. Midas Polymer Compounds P. Ltd. (Ker) . . . 309

----Industrial undertaking--Special deductions under sections 80HH, 80-I and 80-IB--Condition precedent--Production of article--Crushing of granite boulders into small pieces constitutes production--Assessee entitled to special deduction under sections 80HH, 80J and 80-IB-- CIT v. Panachayil Industries (Ker) . . . 261

----Industrial undertaking--Special deduction under section 80-IB--Condition precedent--Assessee should manufacture or produce article not covered by entry 25 in Eleventh Schedule--Assessee manufacturing polyurethane foam which is mentioned in entry 25 of Eleventh Schedule--Assessee not entitled to special deduction under section 80-IB-- CIT v. Polyfex (India) P. Ltd. (Karn) . . . 224

S. 80J --Industrial undertaking--Special deductions under sections 80HH, 80-I and 80-IB--Condition precedent--Production of article--Crushing of granite boulders into small pieces constitutes production--Assessee entitled to special deduction under sections 80HH, 80J and 80-IB-- CIT v. Panachayil Industries (Ker) . . . 261

S. 80-O --Remuneration from foreign enterprise--Special deduction under section 80-O--Conditions precedent--Services should be rendered outside India--Furnishing of legal opinion to foreign company on matters relating to setting up industry in India--Amount received from foreign enterprise not entitled to special deduction under section 80-O-- H. Raghavendra Rao v. Deputy CIT (Karn) . . . 238

S. 80P --Revision--Erroneous and prejudicial to Revenue--Assessee making claim under section 80P--Requirement of Assessing Officer to enquire factual situation whether assessee bank conducting business as a primary agriculture credit society or a primary co-operative agricultural and rural development bank--Benefit extended on basis of registration as co-operative society--Order erroneous and prejudicial to interests of Revenue-- Perinthalmanna Service Co-operative Bank Ltd. v. ITO (Ker) . . . 268

Chapter VI-A --Industrial undertaking--Special deduction under Chapter VI-A--Special deductions can be granted under more than one provision-- CIT v. Panachayil Industries (Ker) . . . 261

S. 127(2) --Transfer of case--Co-ordinated investigation--Reason for such co-ordinated investigation must be given--No notice giving a personal hearing and order passed without recording reasons--Order transferring case of assessee from Mumbai to Bangalore not valid-- Sunisha Impex P. Ltd. v. CIT (Bom) . . . 220

S. 133A --Income-tax survey--Undisclosed income--Statement recorded on oath admitting undisclosed income--Does not lose its evidentiary value--Statement not sole evidence--No evidence to show statement recorded during middle of night--Explanation in course of assessment that loose paper contained estimate of income prepared by consultant for submission to bank for loan to purchase equipment--Identity of consultant not established--No details of equipment for which loan is required--Explanation an afterthought--No evidence to support claim to cash expenses incurred not recorded in regular books of account--Assessment valid-- Dr. Dinesh Jain v. ITO (Bom) . . . 210

S. 143(2) --Search and seizure--Block assessment--Undisclosed income--No issue of notice under section 143(2)--Block assessment invalid-- R. Romi v. CIT (Ker) . . . 311

S. 145 --Business expenditure--Accounting--Real estate business set up--Development expenses whether allowable under Accounting Standards read with section 145/145A--Matter remanded-- Rangoli Projects P. Ltd. v. CIT (Delhi) . . . 192

S. 145A --Business expenditure--Accounting--Real estate business set up--Development expenses whether allowable under Accounting Standards read with section 145/145A--Matter remanded-- Rangoli Projects P. Ltd. v. CIT (Delhi) . . . 192

S. 147 --Reassessment--Notice--Condition precedent--Reason for reassessment must be recorded before issuing notice-- Gujarat Borosil Ltd. v. Deputy CIT (Guj) . . . 293

----Writ--Reassessment--Notice--Validity--Depends on whether assessee had a permanent establishment within jurisdiction of Assessing Officer issuing notice--Existence of jurisdictional fact cannot be examined in writ proceedings--Assessee to resolve disputed questions of fact in alternative remedies-- Adobe Systems Software Ireland Ltd. v. Asst. DIT (Delhi) . . . 174

S. 148 --Reassessment--Notice--Condition precedent--Reason for reassessment must be recorded before issuing notice-- Gujarat Borosil Ltd. v. Deputy CIT (Guj) . . . 293

----Reassessment--Notice--Return--Not a scrap of paper but sanctity attached to it--Obligation of assessee to file return in terms of notice--Assessee cannot deny obligation on ground in his opinion there is no taxable income-- Adobe Systems Software Ireland Ltd. v. Asst. DIT (Delhi) . . . 174

----Reassessment--Notice after four years--Limitation--Extended period of limitation where income escaping assessment exceeds Rs. 1 lakh--Condition precedent for invocation of extended period--Assessing Officer must record in reasons for notice fact that income escaping assessment likely to exceed Rs. 1 lakh--Failure to do so--Sanctioning authority cannot record satisfaction for reassessment in absence thereof--Notice not valid-- Mahesh Kumar Gupta v. CIT (All) . . . 300

----Writ--Reassessment--Notice--Validity--Depends on whether assessee had a permanent establishment within jurisdiction of Assessing Officer issuing notice--Existence of jurisdictional fact cannot be examined in writ proceedings--Assessee to resolve disputed questions of fact in alternative remedies-- Adobe Systems Software Ireland Ltd. v. Asst. DIT (Delhi) . . . 174

S. 149(1)(b) --Reassessment--Notice after four years--Limitation--Extended period of limitation where income escaping assessment exceeds Rs. 1 lakh--Condition precedent for invocation of extended period--Assessing Officer must record in reasons for notice fact that income escaping assessment likely to exceed Rs. 1 lakh--Failure to do so--Sanctioning authority cannot record satisfaction for reassessment in absence thereof--Notice not valid-- Mahesh Kumar Gupta v. CIT (All) . . . 300

S. 151(1), prov. --Reassessment--Notice after four years--Limitation--Extended period of limitation where income escaping assessment exceeds Rs. 1 lakh--Condition precedent for invocation of extended period--Assessing Officer must record in reasons for notice fact that income escaping assessment likely to exceed Rs. 1 lakh--Failure to do so--Sanctioning authority cannot record satisfaction for reassessment in absence thereof--Notice not valid-- Mahesh Kumar Gupta v. CIT (All) . . . 300

S. 158BC --Search and seizure--Block assessment--Undisclosed income--No issue of notice under section 143(2)--Block assessment invalid-- R. Romi v. CIT (Ker) . . . 311

Chapter XIV-B --Search and seizure--Block assessment--Scope of block assessment--No incriminating material found during search--Difference between cost of construction estimated by District Valuation Officer and cost shown in accounts less than 15 per cent.--Addition to income in block assessment--Not justified-- CIT v. Vasudev Construction (Karn) . . . 247

S. 221 --Recovery of tax--Application for stay--Tribunal granting stay and passing interim order for period of one hundred and eighty days in open court in presence of counsel for Revenue--Attachment of amounts in assessee’s bank account on ground concerned Assessing Officer was not intimated--Would amount to overreach of order of Tribunal--Revenue should lift attachment and ensure that amounts recovered are deposited back in assessee’s account-- A. T. Kearney India P. Ltd. v. ITO (Delhi) . . . 172

S. 251 --Assessment--General principles--Appeal to Commissioner (Appeals)--Powers of Commissioner (Appeals)--Exemption--Mistake in claim for exemption--Provision wrongly mentioned in e-return--Exemption allowed in the past--Documents in support of claim for exemption filed--Commissioner (Appeals) justified in granting exemption-- CIT v. Rajasthan Fasteners P. Ltd. (Raj) . . . 271

S. 254 --Appeal to Appellate Tribunal--Duty of Tribunal--Duty to give finding of fact--Finding should take into account relevant facts--Finding by Tribunal not taking into account facts found by Assessing Officer and Commissioner (Appeals)--Order set aside and matter remanded-- CIT v. Arun Malhotra (Delhi) . . . 195

----Cash credits--Amounts claimed to be payments for services--No evidence of payments--Tribunal correct in upholding assessment of amounts under section 68--Tribunal correct in rejecting application for rectification to contend that amounts should be treated as undisclosed turnover-- S. Muthukumar v. ITO (Mad) . . . 161

S. 260A --Appeal to High Court--Issue not raised before or considered by Tribunal--Issue cannot be considered by High Court-- S. Muthukumar v. ITO (Mad) . . . 161

S. 263 --Revision--Commissioner--Powers--Condition precedent for application of section 263--Order must be erroneous and also prejudicial to Revenue--Prejudice refers to lawful revenue being realised-- CIT v. Fr. Mullers Charitable Institutions (Karn) . . . 230

----Revision--Commissioner--Powers--Development of infrastructure for shooting locations--Lease rentals earned from land developed for creating film shooting facilities--Assessing Officer capitalising receipt as connected with main activity--Commissioner has no jurisdiction to revise because one of two possible views was taken by Assessing Officer-- CIT v. Usha Kiran Movies Ltd. (AP) . . . 165

----Revision--Erroneous and prejudicial to Revenue--Assessee making claim under section 80P--Requirement of Assessing Officer to enquire factual situation whether assessee bank conducting business as a primary agriculture credit society or a primary co-operative agricultural and rural development bank--Benefit extended on basis of registration as co-operative society--Order erroneous and prejudicial to interests of Revenue-- Perinthalmanna Service Co-operative Bank Ltd. v. ITO (Ker) . . . 268

----Revision--Order of revision under section 263--Condition precedent--Opportunity to assessee to be heard--No proper notice but assessee actually heard--Order of revision was valid-- Ashutosh Bandopadhyay v. CIT (Tripura) . . . 168

ITR (TRIB) Volume 31 : Part 4 (Issue dated : 5-5-2014)

 

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

 

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Appeal to Appellate Tribunal --Additional ground of appeal--Business expenditure--Whether or not liability for tax deduction at source not recovered from recipients of payments deductible in computation of assessee’s income--Purely legal issue but involving factual verification--Matter remanded--Income-tax Act, 1961, ss. 37, 201-- Bharti Airtel Ltd. v. Additional Commissioner of Income-tax (Delhi) . . . 475

Business expenditure --Disallowance--Payments liable to deduction at source--Interest paid to bank outside India--Whether chargeable to tax in hands of recipient--Matter remanded for adjudication de novo--Free airtime given as discount/trade margin to distributors on retail price of prepaid coupons--Whether commission on which tax required to be deducted at source under section 194H--Roaming charges paid to other telecommunications operators under a revenue-sharing arrangement whether liable to tax deduction at source under section 194J--Matter remanded--Income-tax Act, 1961, ss. 40(a)(ia), 194H, 194J-- Bharti Airtel Ltd. v. Additional Commissioner of Income-tax (Delhi) . . . 475

----Licence fee on revenue-sharing basis pertaining to periods post August 1, 1999--Allowable as revenue deduction--Employee compensation expenses on actual issuance of shares to employees under employee stock option plan--Allowable--Whether lease charges paid to IBM and Nortel fell in category of disguised purchase to be disallowed--Matter remanded for adjudication de novo--Income-tax Act, 1961, s. 37(1)-- Bharti Airtel Ltd. v. Additional Commissioner of Income-tax (Delhi) . . . 475

Business loss --Transfer of telecommunications infrastructure at nil value pursuant to scheme of arrangement--Loss on transfer debited to profit and loss account--Pursuant to scheme reserve of business restructuring created and equivalent amount transferred from Reserve to credit of profit and loss account--No effective debit to profit and loss account--Entries profit neutral and no adjustments to business income required--Addition for loss not permissible-- Bharti Airtel Ltd. v. Additional Commissioner of Income-tax (Delhi) . . . 475

International transactions --Arm’s length price--Determination--Adjustments to interest rate for loans to subsidiaries not warranted--Share application moneys--Not to be treated as interest-free loan to associate enterprise--No adjustment permissible for notional interest for period prior to allotment of shares--Income-tax Act, 1961, ss. 92(1), 92B, 133(6)-- Bharti Airtel Ltd. v. Additional Commissioner of Income-tax (Delhi) . . . 475

----Arm’s length price--Determination--Powers of Transfer Pricing Officer--Power to re-characterise transaction found to be substantially at variance with stated form-- Bharti Airtel Ltd. v. Additional Commissioner of Income-tax (Delhi) . . . 475

----Definition-- Explanation inserted by Finance Act, 2012 with retrospective effect from April 1, 2002--Effect--Residual clause covering “any other transaction having a bearing on profits, incomes, losses, or assets of such enterprises†--Effect--Transaction having no bearing on profits, incomes, losses or assets of such enterprise not an “international transaction†--Onus on Department to demonstrate that transaction has “bearing on profits, income, losses or assets†of enterprise--Corporate guarantee issued for benefit of associated enterprise which does not involve any cost to assessee--Not “international transaction†amenable to arm’s length price adjustment--Income-tax Act, 1961, s. 92B-- Bharti Airtel Ltd. v. Additional Commissioner of Income-tax (Delhi) . . . 475

Precedent --Not an authority for question which did not come up for consideration--Authority only for what it actually decides-- Bharti Airtel Ltd. v. Additional Commissioner of Income-tax (Delhi) . . . 475

 

PRINT EDITION

Volume 31 : Part 4 (Issue dated : 5-5-2014)

SUBJECT INDEX TO CASES REPORTED

Appeal to Appellate Tribunal --Powers of Tribunal--Depreciation--Intangible assets--Tenancy rights--Disallowance by Assessing Officer for failure to claim in return--Tribunal can admit--Income-tax Act, 1961, s. 254-- Amit P. Pandya v. Assistant CIT (Mumbai) . . . 414

Bad and doubtful debts --Public financial institution--Special provisions--State Industrial Investment Corporation--Definition--Government company providing long-term finance for industrial projects--Falls within purview of section 617 of Companies Act--Assessee fulfils both conditions to fall within meaning of “State Industrial Investment Corporation†under section 43D--Income-tax Act, 1961, s. 43D--Companies Act, 1956, s. 617-- Assistant CIT v. Tamil Nadu Power Finance and Infrastructure Development Corporation Ltd. (Chennai) . . . 447

Business expenditure --Disallowance of telephone expenses as personal in nature--Matter remanded--Income-tax Act, 1961-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513

----Disallowance--Payments liable to deduction of tax at source--Assessee having declaration in Forms 15G and 15H with it at time when interest paid to respective customer--Not liable to deduct tax at source--Delay in filing declaration with Department--Section 40(a)(ia) not attracted--Income-tax Act, 1961, ss. 40(a)(ia), 194A, 201-- Vijaya Bank v. ITO (Delhi) . . . 427

----Disallowance--Payments liable to deduction of tax at source--Non-resident--Commission to non-resident agents for services rendered outside India--No income accrued in India--Tax need not be deducted at source--Expenditure allowable under section 40(a)(i)--Income-tax Act, 1961, ss. 40(a)(i), 195-- Deputy CIT v. Farida Prime Tannery P. Ltd. (Chennai) . . . 461

----Disallowance--Payments liable to deduction of tax at source--Third party administrator for insurance company--Providing cashless services of paper work and guarantee of making payment to hospitals in which insured persons availed of medical services--Assessee not claiming any such expenditure in its profit and loss account--No disallowance under section 40(a)(ia)--Income-tax Act, 1961, s. 40(a)(ia)-- Assistant CIT v. Health India TPA Services P. Ltd. (Mumbai) . . . 407

----Expenditure incurred towards gifts allowable-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513

----Expenditure on account of training expenses for daughter of chairman-cum-managing director--Order set aside for earlier years to be continued for current year--Matter remanded--Income-tax Act, 1961, s. 37-- Dufon Laboratories P. Ltd. v. Deputy CIT (Mumbai) . . . 410

Business income or capital gains --Trading or investment--Assessee dealing in futures and options and doing share trading--Income assessable as business income--Income-tax Act, 1961, ss. 28, 45-- Amit P. Pandya v. Assistant CIT (Mumbai) . . . 414

Capital or revenue expenditure --Assessee a trader of opthalmic instruments--Expenditure incurred in conducting market research for betterment and expansion of its trading business--Revenue expenditure--Income-tax Act, 1961, s. 37-- Mehra Eyetech P. Ltd. v. CIT (Mumbai) . . . 420

----Claim that expenditure incurred for issue of shares to qualified institutional buyers and on fees paid to Registrar of Companies--Matter remanded for considering whether expenditure incurred to expand business globally by acquiring company doing similar business-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477

----Pre-operative expenses--Expenditure for setting up new manufacturing plant--Claim that there was no purchase of plant and machinery or construction during year--Assessing Officer to verify whether expenditure incurred for purchase and erection of plant and machinery or only administrative expenses--Matter remanded-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477

Capital or revenue receipt --Carbon credit--Receipt on account of carbon credit capital in nature--Not chargeable to tax under head business income or head capital gains--Income-tax Act, 1961-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513

----Sales tax subsidy received under State investment promotion scheme--Capital in nature and not chargeable to tax--Income-tax Act, 1961-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513

Company --Book profits--Computation--Telephone expenses--Disallowance of telephone expenses not permissible in computing book profit under section 115JB--Income-tax Act, 1961, s. 115JB-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513

Depreciation --Additional depreciation--Assessee entitled to additional depreciation at 20 per cent. and allowed 10 per cent. in earlier assessment year--Remaining 10 per cent. to be allowed in subsequent assessment year--Income-tax Act, 1961, s. 32(1)(iia)-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477

----Portion at corporate office let out to sister concern--Assessee not entitled to depreciation thereon--Income-tax Act, 1961, s. 32-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477

Exemption --Disallowance of expenditure incurred for earning income not includible in total income--Share income from firm--Commissioner (Appeals) restricting disallowance to ten per cent. of share income--No interference--Income-tax Act, 1961, s. 14A-- Deputy CIT v. Farida Prime Tannery P. Ltd. (Chennai) . . . 461

Housing projects --Special deduction under section 80-IB(10)--Law applicable--Amendment to section 80-IB(10) with effect from April 1, 2005 restricting built up area of shops and commercial establishments included in housing project--Prospective--Not applicable to projects approved prior to April 1, 2005--Income-tax Act, 1961, s. 80-IB(10)(d)-- ITO v. Velentine Developers (Mumbai) . . . 452

Income --Disallowance of expenditure incurred in relation to exempt income--Onus on assessee to show no expenses incurred--Matter remanded--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Amit P. Pandya v. Assistant CIT (Mumbai) . . . 414

----Expenditure in relation to income not includible in taxable income--Dividend--Assessing Officer working out disallowance applying rule 8D(2)(iii)--Onus of proving not discharged by assessee--Disallowance confirmed--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Dufon Laboratories P. Ltd. v. Deputy CIT (Mumbai) . . . 410

----Interest--Interest under section 244A allowable on refund of prepaid taxes after giving credit of brought forward minimum alternate tax--Income-tax Act, 1961, ss. 244, 115JAA-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513

Industrial undertaking --Special deduction--Computation of profits--Generation of power for captive use--Discretion on assessee to adopt market value for power used captively--Assessing Officer can adopt different value only when value adopted by assessee does not correspond to market value--Income-tax Act, 1961, ss. 80-IA, 80-IA(8)-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513

----Special deduction--Sale of carbon credits in respect of emissions generated in assessee’s gas turbine unit under emission reduction certificate issued in terms of Kyoto Protocol--Carbon credit a privilege generated in course of business activity--Not a capital asset or receipt--Income on sale of carbon credit a revenue receipt--But not profit “derived from†industrial undertaking--Assessee not entitled to deduction in respect of carbon credits--Income-tax Act, 1961, ss. 2(14), (24)(vd), 28(iv), 80-IA-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477

International transactions --Arm’s length price--Assessee engaged in manufacture and marketing of tyres--Deputing employees to associated enterprise in South Africa--Deputed employees remaining on payroll of assessee but working for associated enterprise--Salaries paid by assessee but subsequently recovered from associated enterprise without a mark up--Not a simple case of deputing employees for learning techniques but of rendering services to associate enterprises--Adjustment by making a 5 per cent. mark-up not proper--Before making adjustment, services rendered by similarly placed industries to be determined on basis of appropriate method--Matter remanded--Income-tax Act, 1961, s. 92C(2)-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477

Penalty --Furnishing inaccurate particulars of income--Carry forward and set off of business loss against capital gains on advice of consultant--Assessee not be punished for mistakes committed by counsel or advisors--Penalty to be deleted--Income-tax Act, 1961, s. 271(1)(c)-- Sigma Steel Industries v. ITO (Chandigarh) . . . 424

Rebate --Securities transaction tax--Dealer in shares--Assessment order stating rebate granted but in actual fact not granted--Matter remanded for appropriate action consistent with law--Income-tax Act, 1961, s. 88E-- Amit P. Pandya v. Assistant CIT (Mumbai) . . . 414

Scientific research expenditure --Weighted deduction--Matter remanded--Income-tax Act, 1961, s. 35(2AB)-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477

Unexplained income --Search and seizure--Assessee surrendering additional income at time of search but only partly shown in return--No justification for crediting entire sum in books of account--Income unexplained in absence of availability of source--Matter remanded--Income-tax Act, 1961, s. 132-- Assistant CIT v. VMR Promoters P. Ltd . (Delhi) . . . 435

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Companies Act, 1956

S. 617 --Bad and doubtful debts--Public financial institution--Special provisions--State Industrial Investment Corporation--Definition--Government company providing long-term finance for industrial projects--Falls within purview of section 617 of Companies Act--Assessee fulfils both conditions to fall within meaning of “State Industrial Investment Corporation†under section 43D-- Assistant CIT v. Tamil Nadu Power Finance and Infrastructure Development Corporation Ltd. (Chennai) . . . 447

Income-tax Act, 1961

S. 2(14) --Industrial undertaking--Special deduction--Sale of carbon credits in respect of emissions generated in assessee’s gas turbine unit under emission reduction certificate issued in terms of Kyoto Protocol--Carbon credit a privilege generated in course of business activity--Not a capital asset or receipt--Income on sale of carbon credit a revenue receipt--But not profit “derived from†industrial undertaking--Assessee not entitled to deduction in respect of carbon credits-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477

S. 2(24)(vd) --Industrial undertaking--Special deduction--Sale of carbon credits in respect of emissions generated in assessee’s gas turbine unit under emission reduction certificate issued in terms of Kyoto Protocol--Carbon credit a privilege generated in course of business activity--Not a capital asset or receipt--Income on sale of carbon credit a revenue receipt--But not profit “derived from†industrial undertaking--Assessee not entitled to deduction in respect of carbon credits-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477

S. 14A --Exemption--Disallowance of expenditure incurred for earning income not includible in total income--Share income from firm--Commissioner (Appeals) restricting disallowance to ten per cent. of share income--No interference-- Deputy CIT v. Farida Prime Tannery P. Ltd. (Chennai) . . . 461

----Income--Disallowance of expenditure incurred in relation to exempt income--Onus on assessee to show no expenses incurred--Matter remanded-- Amit P. Pandya v. Assistant CIT (Mumbai) . . . 414

----Income--Expenditure in relation to income not includible in taxable income--Dividend--Assessing Officer working out disallowance applying rule 8D(2)(iii)--Onus of proving not discharged by assessee--Disallowance confirmed-- Dufon Laboratories P. Ltd. v. Deputy CIT (Mumbai) . . . 410

S. 28 --Business income or capital gains--Trading or investment--Assessee dealing in futures and options and doing share trading--Income assessable as business income-- Amit P. Pandya v. Assistant CIT (Mumbai) . . . 414

S. 28(iv) --Industrial undertaking--Special deduction--Sale of carbon credits in respect of emissions generated in assessee’s gas turbine unit under emission reduction certificate issued in terms of Kyoto Protocol--Carbon credit a privilege generated in course of business activity--Not a capital asset or receipt--Income on sale of carbon credit a revenue receipt--But not profit “derived from†industrial undertaking--Assessee not entitled to deduction in respect of carbon credits-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477

S. 32 -- Depreciation--Portion at corporate office let out to sister concern--Assessee not entitled to depreciation thereon-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477

S. 32(1)(iia) --Depreciation--Additional depreciation--Assessee entitled to additional depreciation at 20 per cent. and allowed 10 per cent. in earlier assessment year--Remaining 10 per cent. to be allowed in subsequent assessment year-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477

S. 35(2AB) --Scientific research expenditure--Weighted deduction--Matter remanded-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477

S. 37 --Business expenditure--Expenditure on account of training expenses for daughter of chairman-cum-managing director--Order set aside for earlier years to be continued for current year--Matter remanded-- Dufon Laboratories P. Ltd. v. Deputy CIT (Mumbai) . . . 410

----Capital or revenue expenditure--Assessee a trader of opthalmic instruments--Expenditure incurred in conducting market research for betterment and expansion of its trading business--Revenue expenditure-- Mehra Eyetech P. Ltd. v. CIT (Mumbai) . . . 420

S. 40(a)(i) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Non-resident--Commission to non-resident agents for services rendered outside India--No income accrued in India--Tax need not be deducted at source--Expenditure allowable under section 40(a)(i)-- Deputy CIT v. Farida Prime Tannery P. Ltd. (Chennai) . . . 461

S. 40(a)(ia) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Assessee having declaration in Forms 15G and 15H with it at time when interest paid to respective customer--Not liable to deduct tax at source--Delay in filing declaration with Department--Section 40(a)(ia) not attracted-- Vijaya Bank v. ITO (Delhi) . . . 427

----Business expenditure--Disallowance--Payments liable to deduction of tax at source--Third party administrator for insurance company--Providing cashless services of paper work and guarantee of making payment to hospitals in which insured persons availed of medical services--Assessee not claiming any such expenditure in its profit and loss account--No disallowance under section 40(a)(ia)-- Assistant CIT v. Health India Tpa Services P. Ltd. (Mumbai) . . . 407

S. 43D --Bad and doubtful debts--Public financial institution--Special provisions--State Industrial Investment Corporation--Definition--Government company providing long-term finance for industrial projects--Falls within purview of section 617 of Companies Act--Assessee fulfils both conditions to fall within meaning of “State Industrial Investment Corporation†under section 43D-- Assistant CIT v. Tamil Nadu Power Finance and Infrastructure Development Corporation Ltd. (Chennai) . . . 447

S. 45 --Business income or capital gains--Trading or investment--Assessee dealing in futures and options and doing share trading--Income assessable as business income-- Amit P. Pandya v. Assistant CIT (Mumbai) . . . 414

S. 80-IA --Industrial undertaking--Special deduction--Computation of profits--Generation of power for captive use--Discretion on assessee to adopt market value for power used captively--Assessing Officer can adopt different value only when value adopted by assessee does not correspond to market value-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513

----Industrial undertaking--Special deduction--Sale of carbon credits in respect of emissions generated in assessee’s gas turbine unit under emission reduction certificate issued in terms of Kyoto Protocol--Carbon credit a privilege generated in course of business activity--Not a capital asset or receipt--Income on sale of carbon credit a revenue receipt--But not profit “derived from†industrial undertaking--Assessee not entitled to deduction in respect of carbon credits-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477

S. 80-IA(8) --Industrial undertaking--Special deduction--Computation of profits--Generation of power for captive use--Discretion on assessee to adopt market value for power used captively--Assessing Officer can adopt different value only when value adopted by assessee does not correspond to market value-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513

S. 80-IB(10)(d) --Housing projects--Special deduction under section 80-IB(10)--Law applicable--Amendment to section 80-IB(10) with effect from April 1, 2005 restricting built up area of shops and commercial establishments included in housing project--Prospective--Not applicable to projects approved prior to April 1, 2005-- ITO v. Velentine Developers (Mumbai) . . . 452

S. 88E --Rebate--Securities transaction tax--Dealer in shares--Assessment order stating rebate granted but in actual fact not granted--Matter remanded for appropriate action consistent with law-- Amit P. Pandya v. Assistant CIT (Mumbai) . . . 414

S. 92C(2) --International transactions--Arm’s length price--Assessee engaged in manufacture and marketing of tyres--Deputing employees to associated enterprise in South Africa--Deputed employees remaining on payroll of assessee but working for associated enterprise--Salaries paid by assessee but subsequently recovered from associated enterprise without a mark up--Not a simple case of deputing employees for learning techniques but of rendering services to associate enterprises--Adjustment by making a 5 per cent. mark-up not proper--Before making adjustment, services rendered by similarly placed industries to be determined on basis of appropriate method--Matter remanded-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477

S. 115JAA --Income--Interest--Interest under section 244A allowable on refund of prepaid taxes after giving credit of brought forward minimum alternate tax-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513

S. 115JB --Company--Book profits--Computation--Telephone expenses--Disallowance of telephone expenses not permissible in computing book profit under section 115JB -- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513

S. 132 --Unexplained income--Search and seizure--Assessee surrendering additional income at time of search but only partly shown in return--No justification for crediting entire sum in books of account--Income unexplained in absence of availability of source--Matter remanded-- Assistant CIT v. VMR Promoters P. Ltd . (Delhi) . . . 435

S. 194A --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Assessee having declaration in Forms 15G and 15H with it at time when interest paid to respective customer--Not liable to deduct tax at source--Delay in filing declaration with Department--Section 40(a)(ia) not attracted-- Vijaya Bank v. ITO (Delhi) . . . 427

S. 195 --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Non-resident--Commission to non-resident agents for services rendered outside India--No income accrued in India--Tax need not be deducted at source--Expenditure allowable under section 40(a)(i)-- Deputy CIT v. Farida Prime Tannery P. Ltd. (Chennai) . . . 461

S. 201 --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Assessee having declaration in Forms 15G and 15H with it at time when interest paid to respective customer--Not liable to deduct tax at source--Delay in filing declaration with Department--Section 40(a)(ia) not attracted-- Vijaya Bank v. ITO (Delhi) . . . 427

S. 244 --Income--Interest--Interest under section 244A allowable on refund of prepaid taxes after giving credit of brought forward minimum alternate tax-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513

S. 254 --Appeal to Appellate Tribunal--Powers of Tribunal--Depreciation--Intangible assets--Tenancy rights--Disallowance by Assessing Officer for failure to claim in return--Tribunal can admit-- Amit P. Pandya v. Assistant CIT (Mumbai) . . . 414

S. 271(1)(c) --Penalty--Furnishing inaccurate particulars of income--Carry forward and set off of business loss against capital gains on advice of consultant--Assessee not be punished for mistakes committed by counsel or advisors--Penalty to be deleted-- Sigma Steel Industries v. ITO (Chandigarh) . . . 424

Income-tax Rules, 1962

R. 8D --Income--Disallowance of expenditure incurred in relation to exempt income--Onus on assessee to show no expenses incurred--Matter remanded-- Amit P. Pandya v. Assistant CIT (Mumbai) . . . 414

----Income--Expenditure in relation to income not includible in taxable income--Dividend--Assessing Officer working out disallowance applying rule 8D(2)(iii)--Onus of proving not discharged by assessee--Disallowance confirmed-- Dufon Laboratories P. Ltd. v. Deputy CIT (Mumbai) . . . 410

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