Download online / offline utility for e-Filing of ITR 2 for AY 2014-15 | No Penalty-Judgement on Sec 115JB

Download online / offline utility for e-Filing of ITR 2 for AY 2014-15

http://taxguru.in/income-tax/download-online-offline-utility-efiling-itr-2-ay-201415.html

CBDT has released ITR-2 Online and offline Utility for A.Y. 2014-15 on its website https://incometaxindiaefiling.gov.in/. CBDT has already released Online and offline Return Filing Utility for  ITR 1 & ITR 4S for AY 2014-15. So till now  CBDT has launched following Utilities :-

ITR 1 (SAHAJ) –   For Individuals having Income from Salary & Interest.

ITR 2 –   For Individuals & HUFs not having Income from Business or Profession

ITR 4S (SUGAM) -   For Individuals/HUF having income from presumptive business

We are not uploading the ITR Utility on our website as Forms are just been released and considering  previous year experience we expect changes in the  utility for removal of discrepancies in the utility if any.  We request our readers to download the latest ITR Utility whenever they wish to file an ITR through offline Java Utility from e-filing website of Income Tax Department.

Steps to file form offline

1. Download the applicable ITR form from Downloads
2. Fill it offline
3. Generate XML
4. Register on e-Filing website using your PAN
5. LOGIN to the portal.
6. Go to e-File link – Upload Return

Or
Login to e-filing website to Prepare and Submit ITR Online

Other Recent Good Articles 

Penalty not applicable for concealment under normal provisions if book profits U/s. 115JB assessed

http://taxguru.in/income-tax-case-laws/penalty-applicable-concealment-normal-provisions-book-profits-115jb-assessed.html

Section 50B: Bombay High Court Lays Down Imp Law On Taxability Of Slump Sales

 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.

CIT vs. Bharat Bijlee Ltd (Bombay High Court)

S. 50B applies only to a "sale" for a "monetary consideration" and not to a case of "exchange" of the undertaking for shares under a s. 391/394 scheme of arrangement

The assessee transferred its Lift Division to Tiger Elevators Pvt. Ltd under a scheme of arrangement u/s 391 & 394 of the Companies Act, 1956. The transfer of the undertaking took place in exchange of preference shares and bonds issued by Tiger Elevators as per a valuation report. The assessee claimed that the transfer was not liable to tax on capital gains on the basis that there was no "cost of acquisition" of the undertaking. The AO held that the transaction was a "slump sale" as defined in s. 2(42C) and that the gains had to be computed u/s 50B. This was upheld by the CIT (A). On appeal by the assessee to the Tribunal, the Tribunal accepted the claim of the assessee. On appeal by the department to the High Court HELD dismissing the appeal:

The definition of the term "slump sale" in s. 2(42C) means the transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sale. In Motors & General Stores (P) Ltd 66 ITR 692 (SC) it was held that a "sale" meant a transfer for a monetary consideration and that an "exchange" would not amount to a "sale". On facts, scheme of arrangement shows that the transfer of the undertaking took place in exchange for issue of preference shares and bonds. Merely because there was quantification when bonds/preference shares were issued, does not mean that monetary consideration was determined and its discharge was only by way of issue of bonds/preference shares. In other words, this is not a case where the consideration was determined and decided by parties in terms of money but its disbursement was to be in terms of allotment or issue of bonds/preference shares. All the clauses read together and the entire Scheme of Arrangement envisages transfer of the Lift Division not for any monetary consideration. The Scheme does not refer to any monetary consideration for the transfer. The parties were agreed that the assessee was to transfer the undertaking and take bonds/preference shares as consideration. Thus, it was a case of exchange and not a sale. Therefore, s. 2(42C) of the Act was inapplicable. If that was not applicable and was not attracted, then, s. 50B was also inapplicable. The judgement of the Delhi High Court in SRIE Infrastructure Finance Ltd 207 Taxman 74 (Del) is distinguishable on facts. There is no necessity to analyze the circumstances in which s. 50B was inserted in the statute book.

See also S. 50B & Capital Gains On Slump Transactions: A Comprehensive Analysis

Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

Kone Elevator India Pvt. Ltd vs. State of T. N (Supreme Court – 5 Judge Bench)

Important principles on distinction between "contract for sale of goods" and "works contract" explained

__._,_.

Supreme Court Lays Down Imp Law On Taxation Of Specific And Discretionary Trusts

 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.

CWT vs. Estate of Late HMM Vikramsinghji of Gondal (Supreme Court)

Important principles of law on taxation of discretionary & specific trust explained

A discretionary trust is one which gives a beneficiary no right to any part of the income of the trust property, but vests in the trustees a discretionary power to pay him, or apply for his benefit, such part of the income as they think fit. The trustees must exercise their discretion as and when the income becomes available, but if they fail to distribute in due time, the power is not extinguished so that they can distribute later. They have no power to bind themselves for the future. The beneficiary thus has no more than a hope that the discretion will be exercised in his favour. Having regard to the above legal position about the discretionary trust which is also applied by by this Court in the earlier judgment and the fact that the income has been retained and not disbursed to the beneficiaries, the view taken by the High Court cannot be said to be legally flawed. Merely because the Settlor and after his death, his son did not exercise their power to appoint the discretion exercisers, the character of the subject trusts does not get altered. The two U.K. trusts continued to be 'discretionary trust' for the subject assessment years. The High Court has taken a correct view that the value of the assets cannot be assessed on the estate of the deceased Settlor (Snell's Principles of Equity, 28th Edition, Page 138 followed)

Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

CIT vs. Bharat Bijlee Ltd (Bombay High Court)

S. 50B applies only to a "sale" for a "monetary consideration" and not to a case of "exchange" of the undertaking for shares under a s. 391/394 scheme of arrangement

__._

ITR (TRIB) Volume 31 : Part 5 (Issue dated : 12-5-2014)

 

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

 

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

International transactions --Arm’s length price--Determination--Transactional net margin method--That associated enterprise had suffered losses and there was no intention of shifting of profits outside India not relevant--“Product similarity†to be seen first before “functional similarity†--Comparability analysis can include uncontrolled transactions in different products involving similar functions--Current financial year’s data alone relevant--Arm’s length price can be computed on basis of single comparable--Finding of only one comparable does not mean Transfer Pricing Officer should do more research--Controlled transactions can be taken into account but filter to be applied in respect of related party transactions--Assessing Officer may consider “internal comparables†but after certain adjustments--Whether cost of production of trial batches of new range of glass mosaics not normal cost and to be excluded--Matter remanded--Transfer pricing adjustment only in respect of value of international transactions--Income-tax Act, 1961, ss. 92(3), 92CA(3)--Income-tax Rules, 1962, r. 10D(2)-- Pino Bisazza Glass P. Ltd. v. Assistant Commissioner of Income-tax (Ahmedabad) . . . 537

----Arm’s length price--Transactional net margin method--Selection of comparables--Power of Transfer Pricing Officer to invoke provisions of section 133(6) to collect information--Information so gathered should be shared with assessee so that it may file objections--Income-tax Act, 1961, s. 133(6)-- Pino Bisazza Glass P. Ltd. v. Assistant Commissioner of Income-tax (Ahmedabad) . . . 537

 

PRINT EDITION

Volume 31 : Part 5 (Issue dated : 12-5-2014)

SUBJECT INDEX TO CASES REPORTED

Appeal to Commissioner (Appeals) --General instructions to Assessing Officer--Not binding--Does not amount to setting aside of order of Assessing Officer--Income-tax Act, 1961-- Suresh Nanda v. Assistant CIT (Delhi) . . . 620

Assessment --Addition on protective basis--Finding that assessee separate from other entity--Addition on protective basis not permissible--Income-tax Act, 1961-- Suresh Nanda v. Assistant CIT (Delhi) . . . 620

Business expenditure --Depreciation--Expenditure on renovation of leased premises--Lease for a period of nine years--Retrieval test not applicable--Capital expenditure incurred on civil works and flooring not allowable as deduction but to be capitalised--Income-tax Act, 1961, s. 32, Explanation 1 -- Rohit Bal Designs P. Ltd. v. Deputy CIT (Delhi) . . . 614

----Disallowance--Excessive or unreasonable payments--Foreign travel expenses--Members of family company undertaking foreign tours jointly every year to places of tourist attraction--Absence of details of expenditure incurred by using purchased foreign currency and absence of detailed tour reports with supporting materials--Disallowance warranted--That some business purpose involved in foreign tours not ruled out--Disallowance of 20 per cent. of expenses reasonable--Income-tax Act, 1961, s. 40A(2)-- Assistant CIT v. M. M. Publications Ltd. (Cochin) . . . 569

Business income --Sale of land--Intention of assessee at time of purchase of property, mode of purchase and other factors to be ascertained--Matter remanded--Income-tax Act, 1961-- Deputy CIT v. Smt. Thankamma Simon (Cochin) . . . 595

Capital gains --Business--Business income or capital gains--Purchase and sale of property--Purchase of property in name of individual--Sale of property after eight years--Assessee intending to possess property as owner--Profit arising out of sale of property to be treated as capital gains--Income-tax Act, 1961, ss. 28, 45-- Deputy CIT v. Smt. Thankamma Simon (Cochin) . . . 595

----Sale of land--Land cultivated with plantain, tapioca and pineapple--Land classified as wetland in records of State Government--Usage by purchaser does not determine character of land in hands of assessee--Land cannot be treated as capital asset profits on sale of which taxable--Income-tax Act, 1961-- Deputy CIT v. Smt. Thankamma Simon (Cochin) . . . 595

----Sale of land--Land maintained as agricultural land on which coconut trees grown--Development of land by purchaser into residential plots not ground for treating land as non-agricultural land--No capital gains arise on sale of land--Income-tax Act, 1961-- Deputy CIT v. Smt. Thankamma Simon (Cochin) . . . 595

Capital or revenue expenditure --Non-compete fee paid on termination of service of director--Restricting only one employee for period of one year--No enduring benefit for assessee--Non-compete fee in nature of revenue expenditure--Income-tax Act, 1961-- Hidelberg Cement India Ltd. v. Additional CIT (Mumbai) . . . 582

Cash credit --Debentures issued to foreign company--Assessee required to prove all ingredients in respect of debenture proceeds--Authorities to examine material furnished by assessee to prove creditworthiness--Matter remanded--Income-tax Act, 1961, s. 68-- Saurashtra Ferrous P. Ltd. v. Deputy CIT (Mumbai) . . . 560

Double taxation relief --Failure by authority to consider claim in respect of foreign taxes paid outside India--Matter remanded--Income-tax Act, 1961, ss. 90, 91-- Shipping Corporation of India Ltd. v. Additional CIT (Mumbai) . . . 545

Income --Assessee managing business of non-resident relative and receiving income from him--Assessee giving interest-free loan to his relatives--Funds transferred through banking channels--Assessee having sufficient funds at his disposal to provide interest free loans--Loans not bogus--Income-tax Act, 1961-- Deputy CIT v. Smt. Thankamma Simon (Cochin) . . . 595

----Indirect taxes not realised--Writing off service tax in profit and loss account allowable where it has already formed part of income--Unrealised service tax written off allowable as deduction--Income-tax Act, 1961, s. 28-- S. M. Kapoor and Co. and Mehra Khanna and Co. v. Assistant CIT (Mumbai) . . . 592

Income from undisclosed sources --Business--Sale of villas--Estimation of profit on basis of material found in search operations--Assessing Officer ought to have found out actual sale consideration received on sale--Matter remanded--Income-tax Act, 1961-- Deputy CIT v. Smt. Thankamma Simon (Cochin) . . . 595

----Seizure of cash from locker of third person--Payment made by purchaser of villa in pursuance of agreement with assessee--Payment not reflected in cash flow statement--Amounts received by third person on behalf of assessee in pursuance of agreement--Amount to be treated as assessee’s income--Income-tax Act, 1961-- Deputy CIT v. Smt. Thankamma Simon (Cochin) . . . 595

Non-resident --Individual--Stay of assessee in India exceeding 180 days due to illegal impounding of passport--Period from impounding of passport till release to be excluded while counting days of stay in India--Assessee to be treated as non-resident--Income-tax Act, 1961, s. 6-- Suresh Nanda v. Assistant CIT (Delhi) . . . 620

Search and seizure --Excess cash found at time of search--Cash flow statement filed by assessee--Opening balance of cash to be considered--Matter remanded--Income-tax Act, 1961-- Suresh Nanda v. Assistant CIT (Delhi) . . . 620

Shipping --Tonnage tax scheme--Assessee earning income from interest on fixed deposits and dividend from investment in shares--Income chargeable to tax in hands of assessee under head “Income from other sources†--Income-tax Act, 1961, ss. 57(iii), 115VJ-- Shipping Corporation of India Ltd. v. Additional CIT (Mumbai) . . . 545

----Tonnage tax scheme--Profit on sale of ships and fixed ships to be reduced from turnover of core shipping--Write back of excess provision and sundry credit balances to be included in turnover of core shipping--Income-tax Act, 1961-- Shipping Corporation of India Ltd. v. Additional CIT (Mumbai) . . . 545

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961

S. 6 --Non-resident--Individual--Stay of assessee in India exceeding 180 days due to illegal impounding of passport--Period from impounding of passport till release to be excluded while counting days of stay in India--Assessee to be treated as non-resident-- Suresh Nanda v. Assistant CIT (Delhi) . . . 620

S. 28 --Capital gains--Business--Business income or capital gains--Purchase and sale of property--Purchase of property in name of individual--Sale of property after eight years--Assessee intending to possess property as owner--Profit arising out of sale of property to be treated as capital gains-- Deputy CIT v. Smt. Thankamma Simon (Cochin) . . . 595

----Income--Indirect taxes not realised--Writing off service tax in profit and loss account allowable where it has already formed part of income--Unrealised service tax written off allowable as deduction-- S. M. Kapoor and Co. and Mehra Khanna and Co. v. Assistant CIT (Mumbai) . . . 592

S. 32, Explanation 1 --Business expenditure--Depreciation--Expenditure on renovation of leased premises--Lease for a period of nine years--Retrieval test not applicable--Capital expenditure incurred on civil works and flooring not allowable as deduction but to be capitalised-- Rohit Bal Designs P. Ltd. v. Deputy CIT (Delhi) . . . 614

S. 40A(2) --Business expenditure--Disallowance--Excessive or unreasonable payments--Foreign travel expenses--Members of family company undertaking foreign tours jointly every year to places of tourist attraction--Absence of details of expenditure incurred by using purchased foreign currency and absence of detailed tour reports with supporting materials--Disallowance warranted--That some business purpose involved in foreign tours not ruled out--Disallowance of 20 per cent. of expenses reasonable-- Assistant CIT v. M. M. Publications Ltd. (Cochin) . . . 569

S. 45 --Capital gains--Business--Business income or capital gains--Purchase and sale of property--Purchase of property in name of individual--Sale of property after eight years--Assessee intending to possess property as owner--Profit arising out of sale of property to be treated as capital gains-- Deputy CIT v. Smt. Thankamma Simon (Cochin) . . . 595

S. 57(iii) --Shipping--Tonnage tax scheme--Assessee earning income from interest on fixed deposits and dividend from investment in shares--Income chargeable to tax in hands of assessee under head “Income from other sources†-- Shipping Corporation of India Ltd. v. Additional CIT (Mumbai) . . . 545

S. 68 --Cash credit--Debentures issued to foreign company--Assessee required to prove all ingredients in respect of debenture proceeds--Authorities to examine material furnished by assessee to prove creditworthiness--Matter remanded-- Saurashtra Ferrous P. Ltd. v. Deputy CIT (Mumbai) . . . 560

S. 90 --Double taxation relief--Failure by authority to consider claim in respect of foreign taxes paid outside India--Matter remanded-- Shipping Corporation of India Ltd. v. Additional CIT (Mumbai) . . . 545

S. 91 --Double taxation relief--Failure by authority to consider claim in respect of foreign taxes paid outside India--Matter remanded-- Shipping Corporation of India Ltd. v. Additional CIT (Mumbai) . . . 545

S. 115VJ --Shipping--Tonnage tax scheme--Assessee earning income from interest on fixed deposits and dividend from investment in shares--Income chargeable to tax in hands of assessee under head “Income from other sources†-- Shipping Corporation of India Ltd. v. Additional CIT (Mumbai) . . . 545

 

ITR Volume 363 : Part 3 (Issue dated : 12-5-2014)

 

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

PRINT EDITION

ITR Volume 363 : Part 3 (Issue dated : 12-5-2014)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Accounting --Appeal to Appellate Tribunal--Duty of Tribunal to pass speaking order--Rejection of accounts and estimate of income--Change in estimate by Tribunal without giving reasons--Matter remanded--Income-tax Act, 1961, ss. 145, 254-- CIT v. Ram Singh (Raj) . . . 417

----Rejection of accounts--Flat rate assessment--Wide fluctuations in production compared to consumption of electricity and also no record of work-in-progress--Rejection of accounts justified--Flat rate assessment on the basis of evidence--Justified--Income-tax Act, 1961-- Rajmoti Industries v. Joint CIT (Guj) . . . 467

----Rejection of accounts--Liquor business--Non-maintenance of sales vouchers--Rejection of accounts justified--Income-tax Act, 1961, s. 145-- CIT v. Ram Singh (Raj) . . . 417

Bad debt --Money-lending--Whether transaction was in the ordinary course of business--Factual material to be looked into--Whether assessee has accounted for accrued interest in earlier years and offered it for taxation--Aspect not examined--Matter remanded--Income-tax Act, 1961, s. 36(1)(vii)-- Peninsular Plantations Ltd. v. Asst. CIT (Ker) . . . 441

Business expenditure --Disallowance--Payments subject to deduction of tax at source--Commission or brokerage--Definition--Exclusion--Payments in relation to services relating to securities--Income earned from mutual fund houses--Brokerage for canvassing and marketing various mutual fund schemes to potential investors after collecting details from assessee--Services rendered in relation to securities--Disallowance under section 40(a)(ia) not warranted--Income-tax Act, 1961, ss. 40(a)(ia), 194H-- CIT v. Tandon and Mahendra (All) . . . 454

Capital gains --Long-term capital gains--Transfer--Transfer of immovable property--Time of transfer--Agreement for sale of land to developer--Part of consideration paid and buyer in possession of land in April 2003--Buyer given power of attorney to sell portions of land--Transfer took place in April 2003--Income-tax Act, 1961, s. 45-- CIT v. Cochin Stock Exchanges Ltd. (Ker) . . . 382

Hotel --Special deduction--Earnings in convertible foreign exchange--All units of assessee to be taken together--Eligibility criteria for deductions under sections 80HHD and 80-IB the same--Computation of benefit cannot be given separately to each hotel--Income-tax Act, 1961, ss. 80HHD, 80-IB-- Hotel and Allied Trades P. Ltd. v. Deputy CIT (Ker) . . . 328

Income --Computation of income--Disallowance of expenditure on earning non-taxable income--No evidence of expenditure to earn non-taxable income--Disallowance under section 14A not justified--Income-tax Act, 1961, s. 14A-- CIT v. Torrent Power Ltd. (Guj) . . . 474

Income from undisclosed sources --Estimation of income--Pharmaceutical drugs--Unaccounted consumption of raw materials--No direct evidence of unaccounted sales outside books of account--Estimate of profit element at thirty-five per cent. of such extra consumption--Reasonable--Income-tax Act, 1961-- CIT v. Leo Formulations P. Ltd. (Guj) . . . 322

Industrial undertaking --Special deduction--Condition precedent--Manufacture or production of article--Assessee purchasing transformer oil from market and centrifuging by centrifuging machine to make it usable in transformer--No new substance or articles or things emerged from processing--No manufacturing activity or production of any new articles or things--Assessee not entitled to deduction--Income-tax Act, 1961, s. 80-IA(2)(iv)(c)-- CIT v. S. K. Transformer P. Ltd. (All) . . . 394

----Special deduction--Export turnover--Application of formula for arriving at deduction--Commission to foreign agent--Not to be reduced from export turnover--Income-tax Act, 1961, s. 80HHC-- CIT v. Koncherry Coir Factories (Ker) . . . 463

International transactions --Arm’s length price--Comparable uncontrolled price method--Reliable and authentic price publications--Mere base of organisation not relevant--Appellate authorities accepting reliability and authenticity of organisation and its publication of rate list submitted by assessee--Transfer Pricing Officer’s objection that rates quoted not based in Malaysia and that it was an independent organisation not justified--Income-tax Act, 1961, s. 92C--Income-tax Rules, 1962, r. 10D(3)(c)-- CIT v. Adani Wilmar Ltd. (Guj) . . . 338

Interpretation of taxing statutes --Plain and natural meaning-- CIT v. Tandon and Mahendra (All) . . . 454

Precedent --Effect of Supreme Court decision in Asst. CIT v. Hotel Blue Moon [2010] 321 ITR 362 (SC) and CIT v. Suresh N. Gupta [2008] 297 ITR 322 (SC)-- CIT v. B. Nagendra Baliga (Karn) . . . 410

Reassessment --Notice--Validity--Issues gone into during assessment proceedings and first reassessment proceedings--Cannot be revisited a third time--Reassessment impermissible--Income-tax Act, 1961, s. 148-- Vodafone South Ltd. v. Union of India (Delhi) . . . 388

----Notice after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Scrutiny assessment based on material submitted by assessee--Notice after four years to re-compute income--Notice not valid--Income-tax Act, 1961, s. 148-- Ferromatik Milacron India P. Ltd. v. Asst. CIT (Guj) . . . 461

----Notice after four years--Principles governing--Assessment accepting assessee’s investments shown as funded by three companies--Companies found subsequently to be bogus--Disclosure rendered untrue--Reopening after four years permissible--Requirement that Assessing Officer should specify that income escaping assessment exceeds Rs. 1 lakh--Met if such statement recorded while placing reasons for approval of Commissioner prior to issuance of notice--Sanction of Commissioner--Merely stating “yes†--No inference that Commissioner did not apply mind while granting sanction--Income-tax Act, 1961, ss. 147, prov. , 148, 149(1)(b), 151(2)-- Lalita Ashwin Jain v. ITO (Guj) . . . 343

Recovery of tax --Garnishee order--Application for stay of recovery proceedings--Rejection of stay application and passing of garnishee order on the same day--Legal but not in consonance with principles of fair play--Income-tax Act, 1961, s. 220-- Sony India P. Ltd. v. Addl. CIT (Delhi) . . . 330

Revision --Commissioner--Powers--Industrial undertaking--Special deduction--Assessing Officer, while allowing deduction, factually not satisfied with material available and recording that he attempted to collect material but failed--Order prejudicial to interests of Revenue--Commissioner justified in initiating revision--Income-tax Act, 1961, ss. 80-IB, 263-- CIT v. Abad Constructions P. Ltd. (Ker) . . . 372

Search and seizure --Block assessment--Block assessment only on basis of evidence discovered during search--Income-tax Act, 1961-- CIT v. B. Nagendra Baliga (Karn) . . . 410

----Block assessment--Delay in furnishing returns--Interest--Delay due to failure of Income-tax Department to furnish necessary seized documents in time--Interest could not be levied--Income-tax Act, 1961, s. 158BFA(1)-- CIT v. B. Nagendra Baliga (Karn) . . . 410

----Block assessment--Levy of surcharge whether valid--Income-tax Act, 1961, s. 113-- CIT v. B. Nagendra Baliga (Karn) . . . 410

Transfer of cases --Scope of power--Reasons for transfer should be given--Assessee must be given opportunity to be heard--Assessee part of a group of companies--Assessee having substantial transactions with other companies in the group--Transfer of proceedings to another Assessing Officer--Assessee participating in such proceedings--Order of transfer--Valid--Income-tax Act, 1961, s. 127-- Sahara Hospitality Ltd. v. CIT (Bom) . . . 435

Undisclosed investment --Purchase of property--Evidence that there was undervaluation of property--Assessee failing to disprove evidence by giving evidence to show market value of land in the locality--No evidence that witness give false evidence--Addition on account of undisclosed investment justified--Income-tax Act, 1961-- CIT v. P. M. Aboobacker (Ker) . . . 447

Words and phrases --†In relation to†and “relating to†--Meanings of-- CIT v. Tandon and Mahendra (All) . . . 454

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 14A --Income--Computation of income--Disallowance of expenditure on earning non-taxable income--No evidence of expenditure to earn non-taxable income--Disallowance under section 14A not justified-- CIT v. Torrent Power Ltd. (Guj) . . . 474

S. 36(1)(vii) --Bad debt--Money-lending--Whether transaction was in the ordinary course of business--Factual material to be looked into--Whether assessee has accounted for accrued interest in earlier years and offered it for taxation--Aspect not examined--Matter remanded-- Peninsular Plantations Ltd. v. Asst. CIT (Ker) . . . 441

S. 40(a)(ia) --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Commission or brokerage--Definition--Exclusion--Payments in relation to services relating to securities--Income earned from mutual fund houses--Brokerage for canvassing and marketing various mutual fund schemes to potential investors after collecting details from assessee--Services rendered in relation to securities--Disallowance under section 40(a)(ia) not warranted-- CIT v. Tandon and Mahendra (All) . . . 454

S. 45 --Capital gains--Long-term capital gains--Transfer--Transfer of immovable property--Time of transfer--Agreement for sale of land to developer--Part of consideration paid and buyer in possession of land in April 2003--Buyer given power of attorney to sell portions of land--Transfer took place in April 2003-- CIT v. Cochin Stock Exchanges Ltd. (Ker) . . . 382

S. 80HHC --Industrial undertaking--Special deduction--Export turnover--Application of formula for arriving at deduction--Commission to foreign agent--Not to be reduced from export turnover-- CIT v. Koncherry Coir Factories (Ker) . . . 463

S. 80HHD --Hotel--Special deduction--Earnings in convertible foreign exchange--All units of assessee to be taken together--Eligibility criteria for deductions under sections 80HHD and 80-IB the same--Computation of benefit cannot be given separately to each hotel-- Hotel and Allied Trades P. Ltd. v. Deputy CIT (Ker) . . . 328

S. 80-IA(2)(iv)(c) --Industrial undertaking--Special deduction--Condition precedent--Manufacture or production of article--Assessee purchasing transformer oil from market and centrifuging by centrifuging machine to make it usable in transformer--No new substance or articles or things emerged from processing--No manufacturing activity or production of any new articles or things--Assessee not entitled to deduction-- CIT v. S. K. Transformer P. Ltd. (All) . . . 394

S. 80-IB --Hotel--Special deduction--Earnings in convertible foreign exchange--All units of assessee to be taken together--Eligibility criteria for deductions under sections 80HHD and 80-IB the same--Computation of benefit cannot be given separately to each hotel-- Hotel and Allied Trades P. Ltd. v. Deputy CIT (Ker) . . . 328

----Revision--Commissioner--Powers--Industrial undertaking--Special deduction--Assessing Officer, while allowing deduction, factually not satisfied with material available and recording that he attempted to collect material but failed--Order prejudicial to interests of Revenue--Commissioner justified in initiating revision-- CIT v. Abad Constructions P. Ltd. (Ker) . . . 372

S. 92C --International transactions--Arm’s length price--Comparable uncontrolled price method--Reliable and authentic price publications--Mere base of organisation not relevant--Appellate authorities accepting reliability and authenticity of organisation and its publication of rate list submitted by assessee--Transfer Pricing Officer’s objection that rates quoted not based in Malaysia and that it was an independent organisation not justified-- CIT v. Adani Wilmar Ltd. (Guj) . . . 338

S. 113 --Search and seizure--Block assessment--Levy of surcharge whether valid-- CIT v. B. Nagendra Baliga (Karn) . . . 410

S. 127 --Transfer of cases--Scope of power--Reasons for transfer should be given--Assessee must be given opportunity to be heard--Assessee part of a group of companies--Assessee having substantial transactions with other companies in the group--Transfer of proceedings to another Assessing Officer--Assessee participating in such proceedings--Order of transfer--Valid-- Sahara Hospitality Ltd. v. CIT (Bom) . . . 435

S. 145 --Accounting--Appeal to Appellate Tribunal--Duty of Tribunal to pass speaking order--Rejection of accounts and estimate of income--Change in estimate by Tribunal without giving reasons--Matter remanded-- CIT v. Ram Singh (Raj) . . . 417

----Accounting--Rejection of accounts--Liquor business--Non-maintenance of sales vouchers--Rejection of accounts justified-- CIT v. Ram Singh (Raj) . . . 417

S. 147, prov. --Reassessment--Notice after four years--Principles governing--Assessment accepting assessee’s investments shown as funded by three companies--Companies found subsequently to be bogus--Disclosure rendered untrue--Reopening after four years permissible--Requirement that Assessing Officer should specify that income escaping assessment exceeds Rs. 1 lakh--Met if such statement recorded while placing reasons for approval of Commissioner prior to issuance of notice--Sanction of Commissioner--Merely stating “yes†--No inference that Commissioner did not apply mind while granting sanction-- Lalita Ashwin Jain v. ITO (Guj) . . . 343

S. 148 --Reassessment--Notice--Validity--Issues gone into during assessment proceedings and first reassessment proceedings--Cannot be revisited a third time--Reassessment impermissible-- Vodafone South Ltd. v. Union of India (Delhi) . . . 388

----Reassessment--Notice after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Scrutiny assessment based on material submitted by assessee--Notice after four years to re-compute income--Notice not valid-- Ferromatik Milacron India P. Ltd. v. Asst. CIT (Guj) . . . 461

----Reassessment--Notice after four years--Principles governing--Assessment accepting assessee’s investments shown as funded by three companies--Companies found subsequently to be bogus--Disclosure rendered untrue--Reopening after four years permissible--Requirement that Assessing Officer should specify that income escaping assessment exceeds Rs. 1 lakh--Met if such statement recorded while placing reasons for approval of Commissioner prior to issuance of notice--Sanction of Commissioner--Merely stating “yes†--No inference that Commissioner did not apply mind while granting sanction-- Lalita Ashwin Jain v. ITO (Guj) . . . 343

S. 149(1)(b) --Reassessment--Notice after four years--Principles governing--Assessment accepting assessee’s investments shown as funded by three companies--Companies found subsequently to be bogus--Disclosure rendered untrue--Reopening after four years permissible--Requirement that Assessing Officer should specify that income escaping assessment exceeds Rs. 1 lakh--Met if such statement recorded while placing reasons for approval of Commissioner prior to issuance of notice--Sanction of Commissioner--Merely stating “yes†--No inference that Commissioner did not apply mind while granting sanction-- Lalita Ashwin Jain v. ITO (Guj) . . . 343

S. 151(2) --Reassessment--Notice after four years--Principles governing--Assessment accepting assessee’s investments shown as funded by three companies--Companies found subsequently to be bogus--Disclosure rendered untrue--Reopening after four years permissible--Requirement that Assessing Officer should specify that income escaping assessment exceeds Rs. 1 lakh--Met if such statement recorded while placing reasons for approval of Commissioner prior to issuance of notice--Sanction of Commissioner--Merely stating “yes†--No inference that Commissioner did not apply mind while granting sanction-- Lalita Ashwin Jain v. ITO (Guj) . . . 343

S. 158BFA(1) --Search and seizure--Block assessment--Delay in furnishing returns--Interest--Delay due to failure of Income-tax Department to furnish necessary seized documents in time--Interest could not be levied-- CIT v. B. Nagendra Baliga (Karn) . . . 410

S. 194H --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Commission or brokerage--Definition--Exclusion--Payments in relation to services relating to securities--Income earned from mutual fund houses--Brokerage for canvassing and marketing various mutual fund schemes to potential investors after collecting details from assessee--Services rendered in relation to securities--Disallowance under section 40(a)(ia) not warranted-- CIT v. Tandon and Mahendra (All) . . . 454

S. 220 --Recovery of tax--Garnishee order--Application for stay of recovery proceedings--Rejection of stay application and passing of garnishee order on the same day--Legal but not in consonance with principles of fair play-- Sony India P. Ltd. v. Addl. CIT (Delhi) . . . 330

S. 254 --Accounting--Appeal to Appellate Tribunal--Duty of Tribunal to pass speaking order--Rejection of accounts and estimate of income--Change in estimate by Tribunal without giving reasons--Matter remanded-- CIT v. Ram Singh (Raj) . . . 417

S. 263 --Revision--Commissioner--Powers--Industrial undertaking--Special deduction--Assessing Officer, while allowing deduction, factually not satisfied with material available and recording that he attempted to collect material but failed--Order prejudicial to interests of Revenue--Commissioner justified in initiating revision-- CIT v. Abad Constructions P. Ltd. (Ker) . . . 372

Income-tax Rules, 1962 :

R. 10D(3)(c) --International transactions--Arm’s length price--Comparable uncontrolled price method--Reliable and authentic price publications--Mere base of organisation not relevant--Appellate authorities accepting reliability and authenticity of organisation and its publication of rate list submitted by assessee--Transfer Pricing Officer’s objection that rates quoted not based in Malaysia and that it was an independent organisation not justified-- CIT v. Adani Wilmar Ltd. (Guj) . . . 338

 

Two Imp Verdicts On S. 271(1)(c) On S. 115JB Book Profits + STCG vs. Biz Profits Of PMS Gains

 

Dear Subscriber,

 

The following important judgements are available for download at itatonline.org.

Radials International vs. ACIT (Delhi High Court)

Gains arising from PMS transactions are capital gains & not business profits

The assessee offered LTCG & STCG on sale of shares which had arisen through a Portfolio Management Scheme of Kotak and Reliance. The investments were shown under the head "investments" in the accounts and were made out of surplus funds. Delivery of the shares was taken. The AO, CIT (A) & Tribunal held that as the transactions by the PMS manager were frequent and the holding period was short, the LTCG & STCG were assessable as business profits. On appeal by the assessee, HELD allowing the appeal:

(i) The PMS Agreement in this case was a mere agreement of agency and cannot be used to infer any intention to make profit;

(ii) The intention of an assessee must be inferred holistically, from the conduct of the assessee, the circumstances of the transactions, and not just from the seeming motive at the time of depositing the money;

(iii) Along with the intention of the assessee, other crucial factors like the substantial nature of the transactions, frequency, volume etc. must be taken into account to evaluate whether the transactions are adventure in the nature of trade.

The block of transactions entered into by the portfolio manager must be tested against the principles laid down, in order to evaluate whether they are investments or adventures in the nature of trade. On facts, the source of funds of the assessee were its own surplus funds and not borrowed funds. About 71% of the total shares have been held for a period longer than 6 months, and have resulted in an accrual of about 81% of the total gains to the assessee. Only 18% of the total shares are held for a period less than 90 days, resulting in the accrual of only 4% of the total profits. This shows that a large volume of the shares purchased were, as reflected from the holding period, intended towards the end of investment. The fact that an average of 4-5 transactions were made daily, and that only eight transactions resulted in a holding period longer than one year is not relevant because the number of transactions per day, as determined by an average, cannot be an accurate reflection of the holding period/frequency of transactions. Moreover, even if only a small number of transactions resulted in a holding for a period longer than a year, the number becomes irrelevant when it is clear that a significant volume of shares was sold/ purchased in those transactions.

See also ARA Trading, KRA Holding & Radha Birju Patel for a detailed discussion of the law

CIT vs. Jindal Polyester & Steel Ltd (Allahabad High Court)

No s. 271(1)(c) penalty for concealment under normal provisions if s. 115JB book profits assessed

No doubt, there was concealment but that had its repercussions only when the assessment was done under the normal procedure. The assessment as per the normal procedure was, however, not acted upon. On the contrary, it is the deemed income assessed u/s 115JB which has become the basis of assessment as it was higher of the two. Tax is thus paid on the income assessed u/s 115JB. Hence, when the computation was made u/s 115JB, the concealment had no role to play and was totally irrelevant. Therefore, the concealment did not lead to tax evasion at all and no penalty u/s 271(1)(c) is leviable (CIT vs. Aleo Manali Hydro Power (attached) & Nalwa Sons Investment 327 ITR 543 (Del) (SLP dismissed) followed)

Regards,

 

Editor,

 

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Latest:

Change In Constitution Of Tax Bench Of Bombay High Court w.e.f 09.06.2014

Two Important Judgements On S. 147 Reopening + Depreciation On Leased Assets

Dear Subscriber,

 

The following important judgements are available for download at itatonline.org.

ICICI Bank Ltd vs. JCIT (ITAT Mumbai)

S. 32: Assessee (Bank) is entitled to depreciation on assets given on lease

In so far as the issue relating to the claim of depreciation on leased transactions is concerned, the Supreme Court in ICDS vs. CIT 350 ITR 527 had the occasion to consider the question "whether the Assessee is entitled to depreciation on vehicles financed by it which is neither owned by the Assessee nor used by the Assessee?" The Supreme Court after perusing the lease agreement and other related factors held that the lessor is the owner of the vehicles. As an owner, it used the assets in the course of its business satisfying both the requirements of S. 32 of the Act and hence is entitled to claim depreciation. A similar view was taken by the Delhi High Court in Cosmos Films 338 ITR 266 wherein the Delhi High Court considered the implications of S. 19 of Sale of Goods Act, 1930. The Tribunal, Mumbai Bench in the case of Development Credit Bank Ltd has followed the decision of the Supreme Court in the case of ICDS and the decision of Delhi High Court in the case of Cosmos Films and allowed the claim of depreciation. The Tribunal, Mumbai bench, in the case of L&T has considered a similar issue and followed the findings of the Supreme Court in the case of ICDS and also of the co-ordinate bench in the case of Development Credit Bank Ltd and allowed the claim of depreciation on sale of lease back assets. Considering all these judicial decisions in the light of the facts, we direct the AO to allow depreciation

Adobe Systems Software Ireland Ltd vs. ADIT (Delhi High Court)

Assessee is bound to furnish a return in response to a s. 148 notice. The reasons for reopening can be given only thereafter. A writ involving disputed factual issues cannot be entertained

(i) The petitioner did not file any returns of income in response to the notices issued u/s 148. Even under the judgment of the Supreme Court in G.K.N. Driveshafts 259 ITR 19, the petitioner would get the reasons recorded for reopening the assessment only upon filing the return of income pursuant to the notice issued u/s 148. The conduct of the petitioner has been one of defiance; it did not file returns in response to the notices issued u/s 148. The mere filing of the return can never amount to submitting to the jurisdiction. The filing of the return in response to the notice u/s 148 defines the stand taken by the assessee. S. 148 says that the return called for by the notice issued under that section shall be treated as if such a return were a return required to be furnished u/s 139 of the Act. Under the scheme of the Act, a return of income conveys the position taken by the assessee to the assessing authority – whether he has taxable income or not. It is not a mere scrap of paper. There is a sanctity attached to the return. If the assessing authority calls upon the assessee to file a return of income, the same shall be complied with by the assessee and it is no answer to the notice to say that since in his (assessee's) opinion there is no taxable income, he is under no obligation to file the return. The petitioner, not having made the Noida officer aware that no income chargeable to tax had escaped assessment and having merely told him that he has no jurisdiction to issue reassessment notices, was not acting strictly in accordance with law. The writ remedy being a discretionary remedy, the discretion can be exercised in favour of the writ petitioner only if his conduct has been in conformity with law. If it is not, the Court may refuse to exercise the discretion in favour of the writ petitioner;

Regards,

 

Editor,

 

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Latest:

Centrica India Offshore Pvt. Ltd vs. CIT (Delhi High Court)

Tax implications of employee secondment contracts explained