If Form 16A Issued, TDS Credit Cannot Be Denied On Any Excuse: Guj HC

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

Sumit Devendra Rajani vs. ACIT (Gujarat High Court)

Upon issue of Form 16A TDS certificate, TDS credit has to be given to the payee even if there is Form 26AS mismatch or deductor is at fault for non-deposit of TDS with Govt.

U/s 204, the liability to deduct TDS is on the employer / payer. U/s 205, when tax is deductible at source, the assessee shall not be called upon to pay tax himself to the extent to which tax has been deducted from that income. This means that the assessee / deductee is entitled to credit of such amount of TDS. Even if the deductor, after deducting the TDS, does not deposit the sum with the department, the department has to recover the said amount from the deductor and cannot deny credit to the deductee (Om Prakas Gattani 242 ITR 638 (Gau) & Yashpal Sahni 293 ITR 539 (Bom) followed)

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Finance (No. 2) Act 2014 Is Available For Download

Section 14A/ Rule 8D: Special Bench Verdict And CBDT Circular Are Not Good Law

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

ACIT vs. M. Baskaran (ITAT Chennai)

S. 14A/ Rule 8D: No disallowance can be made if there is no exempt income. Cheminvest (SB) &CBDT Circular are not good law

No doubt in Cheminvest Ltd vs. ITO 121 ITD 318 (SB) the Special Bench of the Tribunal has held that disallowance u/s 14A can be made even in the year in which no exempt income has been earned or received by the assessee. This decision of Special Bench of the Tribunal has been impliedly overruled by the decisions of High Courts in Shivam Motors P Ltd (All HC), CIT vs. Corrtech Energy Pvt. Ltd (Guj HC), CIT vs. Delite Enterprises (Bom HC), CIT vs. Lakhani Marketing (P&H HC), CIT vs. Winsome Textiles Industries Ltd 319 ITR 204 (P&H) where it has been held that when there is no exempt income and no claim for exemption, s. 14A and Rule 8D have no application and no disallowance can be made.

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CBDT Order Trandferring And Posting Addl/ Joint CsIT

Volume 33 : Part 3 (Issue dated : 28-7-2014)

 

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

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Business income --Adventure in nature of trade--Development agreement--No sale of undivided share in land to developer in previous year--Assessee remaining owner of property--No business income accrues--Income-tax Act, 1961, s. 28-- Fibars Infratech P. Ltd. v. ITO (Hyd) . . . 47

Capital gains --Capital asset--Agricultural land--Development agreement executed and presented for registration at time when land agricultural land--Registration after approval for conversion received--Land no more agricultural land at time of registration of development agreement--Capital asset--Income-tax Act, 1961, s. 2(14)(iii)-- Fibars Infratech P. Ltd. v. ITO(Hyd) . . . 47

----Transfer--Definition--Contract “of nature referred to in section 53A of Transfer of Property Act†--Condition precedent--Transferee should have performed or be willing to perform his part of contract--Development agreement--No progress in development work in previous year--Transferee neither performed nor willing to perform its obligation under agreement in previous year--Commencement of building construction not initiated as building approval not yet granted--No income accrued in assessment year--Development agreement not a “contract of nature referred to in section 53A--No deemed transfer under section 2(47)(v)--Income-tax Act, 1961, ss. 2(47)(v), 45, 48--Transfer of Property Act, 1882, s. 53A-- Fibars Infratech P. Ltd. v. ITO (Hyd) . . . 47

----Transfer--Definition--Exchange--Both properties which are subject matter of exchange must be in existence at time of transaction--Development agreement--Only land in existence at time of entering into development agreement--No quantification of consideration or other property which assessee was to receive in exchange for handing over property for development--Not a transfer by way of exchange--Income-tax Act, 1961, s. 2(47)(i)-- Fibars Infratech P. Ltd. v. ITO (Hyd) . . . 47

PRINT EDITION

Volume 33 : Part 3 (Issue dated : 28-7-2014)

SUBJECT INDEX TO CASES REPORTED

Appeal to Appellate Tribunal --Condonation of delay--Appeal against order of Commissioner under section 263--Assessee appearing before Assessing Officer and Commissioner (Appeals) in proceedings pursuant to order of Commissioner--Plea that assessee not aware of revision proceedings and misplacement of papers--Not genuine explanation--Petition to be dismissed--Income-tax Act, 1961, s. 263-- Abhishek Transtel Ltd. v. Deputy CIT (Hyd) . . . 356

----Powers of Tribunal--Power to admit additional evidence--Scope of--Assessee not filing return and reassessment made--Assessee failing to file information regarding expatriate employees engaged in services to group companies outside India--Whether assessee had permanent establishment in India to be determined--Department seeking to place additional evidence in form of “Linkedin†profiles of expatriate employees--To be permitted--Linkedin profiles not hearsay--Income-tax Act, 1961, ss. 131, 133A, 254--Income-tax (Appellate Tribunal) Rules, 1963, r. 29-- GE Energy Parts Inc. v. Addl. DIT, International Taxation (Delhi) . . . 411

Business expenditure --Accrued or contingent liability--Provision for unpaid expenses--Not in nature of contingent expenditure--Provision made against actual expenditure and allowable--Income-tax Act, 1961-- ITO (TDS) v. Cognizant Technology Solutions India P. Ltd. (Chennai) . . . 382

----Deduction only on actual payment--Amount debited to profit and loss account and same amount also added to closing stock--Explanation of assessee that amount added to closing stock is not amount claimed in computation of income to be verified--Matter remanded--Income-tax Act, 1961, s. 43B-- Abhishek Transtel Ltd. v. Deputy CIT (Hyd) . . . 356

----Deduction only on actual payment--Provision for leave encashment--Not allowable--Income-tax Act, 1961, s. 43B(f)-- Popular Vehicles and Services Ltd. v. Deputy CIT (Cochin) . . . 347

----Disallowance--Payments exceeding prescribed limit otherwise than by crossed cheques or crossed bank drafts--Payments towards purchase of telephone cards--Principal and agent relationship--Section 40A(3) not applicable--Income-tax Act, 1961, s. 40A(3)-- Doshi Vijaykumar Motilal v. ITO (Pune) . . . 403

----Disallowance--Payments to non-resident--Failure to deduct tax at source--Payments for use of telecommunication equipment and other services--Use and right to use of process constitute royalty--Assessee liable to deduct tax at source--Income-tax Act, 1961, ss. 9(1)(vi), 40(a)(ia), 195, 201(1), (1A)-- ITO (TDS) v. Cognizant Technology Solutions India P. Ltd. (Chennai) . . . 382

----Expenditure incurred on filling up land purchased by assessee to make it saleable--Similar claim of vendor alone not ground to disallow claim of assessee--Bank statement and ledger account showing genuineness of expenditure--Expenditure allowable in hands of assessee--Income-tax Act, 1961-- Deputy CIT v. Damac Holdings P. Ltd. (Cochin) . . . 331

----Sundry and travelling expenses--Considering details of expenses and turnover of business ad hoc disallowance of 20 per cent. of travelling expenses on higher side--Ad hoc disallowance of 5 per cent. reasonable--Considering nature of business of designer jewellery and maintenance of showroom disallowance of sundry expenses not proper--Varun Exports v. Addl. CIT (Mumbai) . . . 441

Capital or revenue receipt --Subsidy received from Central Government--Subsidy envisaging technology upgradation of industry--Capital in nature--Income-tax Act, 1961-- Deputy CIT v. Gloster Jute Mills Ltd. (Kolkata) . . . 322

Capital gains --Exemption--Investment of gains in residential property--Not necessary that property should be purchased in India itself--Assessee investing gains in residential property in Singapore--Entitled to exemption--Income-tax Act, 1961, s. 54-- N. Ranganathan v. ITO(Chennai) . . . 444

Depreciation --Rate of depreciation--Lorries--Higher rate applicable where used in business of hiring--Assessee not engaged in business of hiring--Not entitled to depreciation at higher rate--Income-tax Act, 1961, s. 32-- Baliapatam Tile Works Ltd. v. Deputy CIT (Cochin) . . . 396

Export --Exemption--Computation of deduction--Eligible unit--Current year’s profit of eligible unit not be reduced by setting off of brought forward losses of earlier years--Deduction to be granted on eligible profits of current assessment year--Income-tax Act, 1961, s. 10A-- ITO (TDS) v. Cognizant Technology Solutions India P. Ltd. (Chennai) . . . 382

----Exemption--Computation of deduction--Foreign currency expenditure and telecommunication expenses to be included in export turnover--Income-tax Act, 1961, s. 10A-- ITO (TDS) v. Cognizant Technology Solutions India P. Ltd. (Chennai) . . . 382

Fringe benefits tax --Telephones installed at business premises--Not to be treated as fringe benefit--Vehicles kept for demo drive by potential customers--Not to be treated as fringe benefit--Matter remanded for verification of details--Income-tax Act, 1961, s. 115WB(2)--Popular Vehicles and Services Ltd. v. Deputy CIT (Cochin) . . . 347

Income --Computation of income--Disallowance of expenditure relating to exempt income--Provisions of rule 8D have effect from assessment year 2008-09 only--Export--Exemption--Computation of eligible profits--Profits to be enhanced to extent of disallowance--Proportionate enhancement in amount of deduction available--Income-tax Act, 1961, ss. 10A, 14A--Income-tax Rules, 1962, r. 8D-- ITO (TDS) v. Cognizant Technology Solutions India P. Ltd. (Chennai) . . . 382

----Disallowance of expenditure in relation to exempt income--Computation of disallowance--Failure by assessee to consider two parts of rule 8D(2)--Computation made by Assessing Officer considering aggregate of all three components of rule 8D(2) proper--Income-tax Act, 1961, s. 14A(2)--Income-tax Rules, 1962, r. 8D(2)-- Joint Investment P. Ltd. v. Asst. CIT(Delhi) . . . 373

----Disallowance of expenditure in relation to exempt income--Contention of assessee that investment made by assessee less than profit of year--Matter remanded--Income-tax Act, 1961, s. 14A-- Popular Vehicles and Services Ltd. v. Deputy CIT (Cochin) . . . 347

----Disallowance of expenditure in relation to exempt income--Rule 8D mandatory--Expenditure in relation to exempt income to be determined according to method prescribed in Rules--Income-tax Act, 1961, s. 14A(2)--Income-tax Rules, 1962, r. 8D-- Joint Investment P. Ltd. v. Asst. CIT (Delhi) . . . 373

Loss --Set off--Export oriented unit--Business loss and depreciation loss of 100 per cent. export oriented unit can be set off against profits of other units--Income-tax Act, 1961--Deputy CIT v. Gloster Jute Mills Ltd. (Kolkata) . . . 322

Reassessment --Notice after four years--Necessary information not placed on record at time of original assessment--Assessing Officer well within jurisdiction to reopen assessment--Income-tax Act, 1961, ss. 143(3), 147, 148-- Abhishek Transtel Ltd. v. Deputy CIT (Hyd) . . . 356

Refund --Interest on excess refund--Assessment completed prior to 1-6-2003--Section 234D has no retrospective applicability--Income-tax Act, 1961, s. 234D-- ITO (TDS) v. Cognizant Technology Solutions India P. Ltd. (Chennai) . . . 382

Search and seizure --Assessment in search cases--Framing assessment order under section 153C instead of 153C read with 153A--Omission to mention relevant provision of law--Not reason to invalidate assessment order--Income-tax Act, 1961, ss. 132, 153A, 153C-- Deputy CIT v. Damac Holdings P. Ltd. (Cochin) . . . 331

----Assessment in search cases--Wrong description of designation of officer--Not reason to invalidate assessment order--Income-tax Act, 1961-- Deputy CIT v. Damac Holdings P. Ltd.(Cochin) . . . 331

Transfer of case --Transfer made after giving due notice and for effective investigation--Completion of assessment by one Assessing Officer--Recording of satisfaction not necessary--Income-tax Act, 1961, s. 127-- Deputy CIT v. Damac Holdings P. Ltd. (Cochin) . . . 331

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961

S. 9(1)(vi) --Business expenditure--Disallowance--Payments to non-resident--Failure to deduct tax at source--Payments for use of telecommunication equipment and other services--Use and right to use of process constitute royalty--Assessee liable to deduct tax at source-- ITO (TDS) v. Cognizant Technology Solutions India P. Ltd. (Chennai) . . . 382

S. 10A --Export--Exemption--Computation of deduction--Eligible unit--Current year’s profit of eligible unit not be reduced by setting off of brought forward losses of earlier years--Deduction to be granted on eligible profits of current assessment year-- ITO (TDS) v. Cognizant Technology Solutions India P. Ltd. (Chennai) . . . 382

----Export--Exemption--Computation of deduction--Foreign currency expenditure and telecommunication expenses to be included in export turnover-- ITO (TDS) v. Cognizant Technology Solutions India P. Ltd. (Chennai) . . . 382

----Income--Computation of income--Disallowance of expenditure relating to exempt income--Provisions of rule 8D have effect from assessment year 2008-09 only--Export--Exemption--Computation of eligible profits--Profits to be enhanced to extent of disallowance--Proportionate enhancement in amount of deduction available-- ITO (TDS) v. Cognizant Technology Solutions India P. Ltd. (Chennai) . . . 382

S. 14A --Income--Computation of income--Disallowance of expenditure relating to exempt income--Provisions of rule 8D have effect from assessment year 2008-09 only--Export--Exemption--Computation of eligible profits--Profits to be enhanced to extent of disallowance--Proportionate enhancement in amount of deduction available-- ITO (TDS) v. Cognizant Technology Solutions India P. Ltd. (Chennai) . . . 382

----Income--Disallowance of expenditure in relation to exempt income--Contention of assessee that investment made by assessee less than profit of year--Matter remanded--Popular Vehicles and Services Ltd. v. Deputy CIT (Cochin) . . . 347

S. 14A(2) --Income--Disallowance of expenditure in relation to exempt income--Computation of disallowance--Failure by assessee to consider two parts of rule 8D(2)--Computation made by Assessing Officer considering aggregate of all three components of rule 8D(2) proper--Joint Investment P. Ltd. v. Asst. CIT (Delhi) . . . 373

----Income--Disallowance of expenditure in relation to exempt income--Rule 8D mandatory--Expenditure in relation to exempt income to be determined according to method prescribed in Rules-- Joint Investment P. Ltd. v. Asst. CIT (Delhi) . . . 373

S. 32 --Depreciation--Rate of depreciation--Lorries--Higher rate applicable where used in business of hiring--Assessee not engaged in business of hiring--Not entitled to depreciation at higher rate-- Baliapatam Tile Works Ltd. v. Deputy CIT (Cochin) . . . 396

S. 40(a)(ia) --Business expenditure--Disallowance--Payments to non-resident--Failure to deduct tax at source--Payments for use of telecommunication equipment and other services--Use and right to use of process constitute royalty--Assessee liable to deduct tax at source-- ITO (TDS) v. Cognizant Technology Solutions India P. Ltd. (Chennai) . . . 382

S. 40A(3) --Business expenditure--Disallowance--Payments exceeding prescribed limit otherwise than by crossed cheques or crossed bank drafts--Payments towards purchase of telephone cards--Principal and agent relationship--Section 40A(3) not applicable-- Doshi Vijaykumar Motilal v. ITO (Pune) . . . 403

S. 43B --Business expenditure--Deduction only on actual payment--Amount debited to profit and loss account and same amount also added to closing stock--Explanation of assessee that amount added to closing stock is not amount claimed in computation of income to be verified--Matter remanded-- Abhishek Transtel Ltd. v. Deputy CIT (Hyd) . . . 356

S. 43B(f) --Business expenditure--Deduction only on actual payment--Provision for leave encashment--Not allowable-- Popular Vehicles and Services Ltd. v. Deputy CIT (Cochin) . . . 347

S. 54 --Capital gains--Exemption--Investment of gains in residential property--Not necessary that property should be purchased in India itself--Assessee investing gains in residential property in Singapore--Entitled to exemption-- N. Ranganathan v. ITO (Chennai) . . . 444

S. 115WB(2) --Fringe benefits tax--Telephones installed at business premises--Not to be treated as fringe benefit--Vehicles kept for demo drive by potential customers--Not to be treated as fringe benefit--Matter remanded for verification of details-- Popular Vehicles and Services Ltd. v. Deputy CIT (Cochin) . . . 347

S. 127 --Transfer of case--Transfer made after giving due notice and for effective investigation--Completion of assessment by one Assessing Officer--Recording of satisfaction not necessary-- Deputy CIT v. Damac Holdings P. Ltd. (Cochin) . . . 331

S. 131 --Appeal to Appellate Tribunal--Powers of Tribunal--Power to admit additional evidence--Scope of--Assessee not filing return and reassessment made--Assessee failing to file information regarding expatriate employees engaged in services to group companies outside India--Whether assessee had permanent establishment in India to be determined--Department seeking to place additional evidence in form of “Linkedin†profiles of expatriate employees--To be permitted--“Linkedin†profiles not hearsay-- GE Energy Parts Inc. v. Addl. DIT, International Taxation (Delhi) . . . 411

S. 132 --Search and seizure--Assessment in search cases--Framing assessment order under section 153C instead of 153C read with 153A--Omission to mention relevant provision of law--Not reason to invalidate assessment order-- Deputy CIT v. Damac Holdings P. Ltd.(Cochin) . . . 331

S. 133A --Appeal to Appellate Tribunal--Powers of Tribunal--Power to admit additional evidence--Scope of--Assessee not filing return and reassessment made--Assessee failing to file information regarding expatriate employees engaged in services to group companies outside India--Whether assessee had permanent establishment in India to be determined--Department seeking to place additional evidence in form of “Linkedin†profiles of expatriate employees--To be permitted--“Linkedin†profiles not hearsay-- GE Energy Parts Inc. v. Addl. DIT, International Taxation (Delhi) . . . 411

S. 143(3) --Reassessment--Notice after four years--Necessary information not placed on record at time of original assessment--Assessing Officer well within jurisdiction to reopen assessment-- Abhishek Transtel Ltd. v. Deputy CIT (Hyd) . . . 356

S. 147 --Reassessment--Notice after four years--Necessary information not placed on record at time of original assessment--Assessing Officer well within jurisdiction to reopen assessment-- Abhishek Transtel Ltd. v. Deputy CIT (Hyd) . . . 356

S. 148 --Reassessment--Notice after four years--Necessary information not placed on record at time of original assessment--Assessing Officer well within jurisdiction to reopen assessment-- Abhishek Transtel Ltd. v. Deputy CIT (Hyd) . . . 356

S. 153A --Search and seizure--Assessment in search cases--Framing assessment order under section 153C instead of 153C read with 153A--Omission to mention relevant provision of law--Not reason to invalidate assessment order-- Deputy CIT v. Damac Holdings P. Ltd.(Cochin) . . . 331

S. 153C --Search and seizure--Assessment in search cases--Framing assessment order under section 153C instead of 153C read with 153A--Omission to mention relevant provision of law--Not reason to invalidate assessment order-- Deputy CIT v. Damac Holdings P. Ltd.(Cochin) . . . 331

S. 195 --Business expenditure--Disallowance--Payments to non-resident--Failure to deduct tax at source--Payments for use of telecommunication equipment and other services--Use and right to use of process constitute royalty--Assessee liable to deduct tax at source-- ITO (TDS) v. Cognizant Technology Solutions India P. Ltd. (Chennai) . . . 382

S. 201(1) --Business expenditure--Disallowance--Payments to non-resident--Failure to deduct tax at source--Payments for use of telecommunication equipment and other services--Use and right to use of process constitute royalty--Assessee liable to deduct tax at source-- ITO (TDS) v. Cognizant Technology Solutions India P. Ltd. (Chennai) . . . 382

S. 201(1A) --Business expenditure--Disallowance--Payments to non-resident--Failure to deduct tax at source--Payments for use of telecommunication equipment and other services--Use and right to use of process constitute royalty--Assessee liable to deduct tax at source-- ITO (TDS) v. Cognizant Technology Solutions India P. Ltd. (Chennai) . . . 382

S. 234D --Refund--Interest on excess refund--Assessment completed prior to 1-6-2003--Section 234D has no retrospective applicability-- ITO (TDS) v. Cognizant Technology Solutions India P. Ltd. (Chennai) . . . 382

S. 254 --Appeal to Appellate Tribunal--Powers of Tribunal--Power to admit additional evidence--Scope of--Assessee not filing return and reassessment made--Assessee failing to file information regarding expatriate employees engaged in services to group companies outside India--Whether assessee had permanent establishment in India to be determined--Department seeking to place additional evidence in form of “Linkedin†profiles of expatriate employees--To be permitted--“Linkedin†profiles not hearsay-- GE Energy Parts Inc. v. Addl. DIT, International Taxation (Delhi) . . . 411

S. 263 --Appeal to Appellate Tribunal--Condonation of delay--Appeal against order of Commissioner under section 263--Assessee appearing before Assessing Officer and Commissioner (Appeals) in proceedings pursuant to order of Commissioner--Plea that assessee not aware of revision proceedings and misplacement of papers--Not genuine explanation--Petition to be dismissed-- Abhishek Transtel Ltd. v. Deputy CIT (Hyd) . . . 356

Income-tax Rules, 1962

R. 8D --Income--Computation of income--Disallowance of expenditure relating to exempt income--Provisions of rule 8D have effect from assessment year 2008-09 only--Export--Exemption--Computation of eligible profits--Profits to be enhanced to extent of disallowance--Proportionate enhancement in amount of deduction available-- ITO (TDS) v. Cognizant Technology Solutions India P. Ltd. (Chennai) . . . 382

----Income--Disallowance of expenditure in relation to exempt income--Rule 8D mandatory--Expenditure in relation to exempt income to be determined according to method prescribed in Rules-- Joint Investment P. Ltd. v. Asst. CIT (Delhi) . . . 373

R. 8D(2) --Income--Disallowance of expenditure in relation to exempt income--Computation of disallowance--Failure by assessee to consider two parts of rule 8D(2)--Computation made by Assessing Officer considering aggregate of all three components of rule 8D(2) proper--Joint Investment P. Ltd. v. Asst. CIT (Delhi) . . . 373

Income-tax (Appellate Tribunal) Rules, 1963

R. 29 --Appeal to Appellate Tribunal--Powers of Tribunal--Power to admit additional evidence--Scope of--Assessee not filing return and reassessment made--Assessee failing to file information regarding expatriate employees engaged in services to group companies outside India--Whether assessee had permanent establishment in India to be determined--Department seeking to place additional evidence in form of “Linkedin†profiles of expatriate employees--To be permitted--“Linkedin†profiles not hearsay-- GE Energy Parts Inc. v. Addl. DIT, International Taxation (Delhi) . . . 411

 

ITR Volume 365 : Part 4 (Issue dated : 28-7-2014)

 

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

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

HIGH COURTS

Auditing of accounts --Special audit--Scope of section 142(2A)--Assessee should be given reasonable opportunity of being heard--No requirement of personal hearing--Assessing Officer finding accounts complex--Commissioner giving personal hearing to assessee--Direction for special audit--Valid--Income-tax Act, 1961, s. 142(2A)-- Neesa Leisure Ltd. v.Deputy CIT (Guj) . . . 93

 

PRINT EDITION

ITR Volume 365 : Part 4 (Issue dated : 28-7-2014)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Best judgment assessment --Revision--Commissioner--Assessees uneducated persons not properly represented before Assessing Officer--Commissioner dismissing revision petitions from assessments and refusing to recall his order--High Court affirming--Supreme Court--No interference with assessment but no interest or penalty to be charged--Income-tax Act, 1961, ss. 144, 264-- Tripal Singh v. CIT . . . 511

Wealth-tax --Valuation of asset--Discretion of Assessing Officer to discard valuation determined in accordance with rule 3 and invoke rule 8--Huge difference between value declared by assessee based on valuation for municipal taxes and market value--Assessee itself entering into agreement to sell property for much higher price than declared--Impracticable to apply rule 3--Reference to Valuation Officer and assessment at his valuation proper--Wealth-tax Act, 1957, ss. 7, 16A, Sch. III, rr. 3 to 7, 8(a), 20-- Amrit Banaspati Co. Ltd. v. CWT . . . 515

Words and phrases --“Practicable†-- Amrit Banaspati Co. Ltd. v. CWT . . . 515

HIGH COURTS

Business --Capital gains--Business income or short-term capital gains--Tests--Gains from purchase and sale of shares--Short-term capital gains--Income-tax Act, 1961, ss. 28, 45--CIT v. Devasan Investment P. Ltd. (Delhi) . . . 452

Business expenditure --Accrual of liability--Assessee, joint venture enterprise, receiving advance for equity from Government--Government insisting on return of its contribution of share application for non-allotment of shares--Assessee refunding amount after twelve years to Government--Accrual, crystallisation and finalisation relatable to year in which returned--Entire amount allowable--Professional fee for consultancy services--Allowable--Income-tax Act, 1961, s. 37-- CIT v. Urban Mass Transit Ltd. (Delhi) . . . 442

----Capital or revenue expenditure--Lease for eighty years from State Industrial Development Corporation with option of renewal of lease--Assignment of rights under lease agreement--Lump-sum payment for assignment--Capital expenditure--Income-tax Act, 1961, s. 37-- CITv. Rane Brake Linings Ltd. (Mad) . . . 401

----Deduction only on actual payment--Liability for years prior to introduction of section 43B--Excise duty--Assessee disputing claim made on basis of valuation--Payment made after adjudication in assessment year 1984-85 and not during relevant year--Deductible--Income-tax Act, 1961, s. 43B-- ITC Ltd. v. CIT (Cal) . . . 532

----Education and training expenses--Expenditure incurred on higher education of son of director--Son of director employee of assessee-company--Commitment letter to work for a further five years after finishing MBA--Assessee’s business investments and securities--Nothing to suggest transaction not honest--Expenditure incurred for pursuit for higher studies allowable--Income-tax Act, 1961, s. 37(1)-- Kostub Investment Ltd. v. CIT (Delhi) . . . 436

----Expenditure on higher education abroad--Firm of advocates--Daughter of assessee joining firm and immediately sent for education abroad--No scheme for higher education abroad for employees and associates of firm--Daughter permitted not only to continue and stay abroad but to join any firm after completing higher education--Expenditure on education not in interests of profession of firm but for furthering career prospects of daughter--Not allowable--Income-tax Act, 1961, s. 37-- Divyakant C. Mehta v. ITO (Bom) . . . 423

----Expenditure on remuneration and training of working director--Expenses incurred out of personal considerations and not commercial considerations--Not allowable--Income-tax Act, 1961, s. 37-- Shreenath Motors P. Ltd. v. CIT (Bom) . . . 536

Deduction of tax at source --Failure to deduct--No period of limitation prescribed for passing order under section 201 treating assessee as in default--Revenue not bound by any reasonable period of limitation for taking action under section 201--Time limit prescribed in section 149 for taking action under section 147 has no application for taking action under section 201--Income-tax Act, 1961, s. 201(1), (1A)-- Bhura Exports Ltd. v. ITO (Cal) . . . 548

----Order deeming person assessee in default--Limitation for passing order--No time limit specified in Act--Order must be passed within reasonable time--Passing of order has to be within one year from end of financial year in which proceedings under section 201(1) initiated--Same time limit for passing of order under section 201(1A)--Income-tax Act, 1961, s. 201(1), (1A)-- DIT (International Taxation) v. Mahindra and Mahindra Ltd. (Bom) . . . 560

Exemption --Ruler--Annual value of any one palace in occupation of ruler--Scope of section 10(19A)--Section 10(19A) similar to section 5(1)(iii) of Wealth-tax Act--Meaning of “in the occupation†--Part of palace given on rent--Ruler not entitled to exemption in respect of annual value of such part--Income-tax Act, 1961, s. 10(19A)--Wealth-tax Act, 1957, s 5(1)(iii)-- CIT v. Maharao Bhim Singh of Kota [FB] (Raj) . . . 485

Income-tax proceedings --Principles of res judicata and estoppel not applicable-- CIT v.Maharao Bhim Singh of Kota [FB] (Raj) . . . 485

Industrial undertaking --Special deduction--Assessee buying monitor, key board, mouse and assembling them--Activity carrying out by assessee is manufacturing activity--Entitled to special deduction--Income-tax Act, 1961, s. 80-IB-- CIT v. Sai Infosystem India P. Ltd. (Guj) . . . 433

----Special deduction--Manufacture or production of article or thing--Assembling computers and servers out of various components by carrying on quality control through testing equipment--New and distinct product other than components of which made--Entitled to deduction--Income-tax Act, 1961, s. 80-IB-- CIT v. Sunilbhai S. Kakad (Guj) . . . 427

----Special deduction--Return--Delay in filing return--Whether assessee disqualified for deduction for delay in filing return and audit report--CBDT notification extending date for filing returns and audit report--Whether notification applicable to assessee goes root of matter--Tribunal directed to decide afresh--Income-tax Act, 1961, ss. 80-IB, 139-- Bal Kishan Dhawan (HUF) v. Deputy CIT (P&H) . . . 581

Interpretation of taxing statutes --Provision conferring exemption--Strict interpretation-- CITv. Maharao Bhim Singh of Kota [FB] (Raj) . . . 485

Loss --Short-term capital loss--Non-convertible debentures with detachable warrants--Sale of part of debentures at a loss of application money--Application money for debentures payable for acquisition of each detachable warrant--Loss not short-term capital loss--Sale proceeds of detachable warrants constitutes business income--Income-tax Act, 1961--Ganapati Enterprises v. CIT (Cal) . . . 480

Penalty --Cash loans exceeding specified limit--Loans from agriculturists in remote areas--Transactions genuine--Cancellation of penalty under section 271D--Justified--Income-tax Act, 1961, ss. 269SS, 271D, 273B-- CIT v. MAA Khodiyar Construction (Guj) . . . 474

Reassessment --Notice after four years--Conditions precedent--Failure to furnish material facts necessary for assessment--Material facts disclosed in return--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Gujarat Carbon and Industries Ltd. v. Asst. CIT (Guj) . . . 464

----Notice--Reasons to believe based on investigation report--No indication in notice that report was not on record at time of completion of original assessment--Position clarified in additional affidavit and not in counter-affidavit--Evidence to show report available and used at time of original assessment--Notice and further proceedings not valid--Income-tax Act, 1961, ss. 147, 148-- Rasalika Trading and Investment Co. P. Ltd. v. Deputy CIT (Delhi) . . . 447

Search and seizure --Assessment of third person--Condition precedent--Recording of satisfaction by Assessing Officer having jurisdiction over person in respect of whom search conducted that money or assets discovered during search belong to third person--Recording of satisfaction necessary even if Assessing Officer of both persons is the same--Income-tax Act, 1961, s. 153C-- CIT v. Gopi Apartment (All) . . . 411

Unexplained investment --Accounts not rejected--Reference to Valuation Officer and addition based on his report--Not valid--Income-tax Act, 1961, s. 69B-- CIT v. Vijaykumar D. Gupta (Guj) . . . 470

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

 

Income-tax Act, 1961 :

S. 10(19A) --Exemption--Ruler--Annual value of any one palace in occupation of ruler--Scope of section 10(19A)--Section 10(19A) similar to section 5(1)(iii) of Wealth-tax Act--Meaning of “in the occupation†--Part of palace given on rent--Ruler not entitled to exemption in respect of annual value of such part-- CIT v. Maharao Bhim Singh of Kota [FB] (Raj) . . . 485

S. 28 --Business--Capital gains--Business income or short-term capital gains--Tests--Gains from purchase and sale of shares--Short-term capital gains-- CIT v. Devasan Investment P. Ltd. (Delhi) . . . 452

S. 37 --Business expenditure--Accrual of liability--Assessee, joint venture enterprise, receiving advance for equity from Government--Government insisting on return of its contribution of share application for non-allotment of shares--Assessee refunding amount after twelve years to Government--Accrual, crystallisation and finalisation relatable to year in which returned--Entire amount allowable--Professional fee for consultancy services--Allowable-- CIT v. Urban Mass Transit Ltd. (Delhi) . . . 442

----Business expenditure--Capital or revenue expenditure--Lease for eighty years from State Industrial Development Corporation with option of renewal of lease--Assignment of rights under lease agreement--Lump-sum payment for assignment--Capital expenditure-- CIT v.Rane Brake Linings Ltd. (Mad) . . . 401

----Business expenditure--Expenditure on higher education abroad--Firm of advocates--Daughter of assessee joining firm and immediately sent for education abroad--No scheme for higher education abroad for employees and associates of firm--Daughter permitted not only to continue and stay abroad but to join any firm after completing higher education--Expenditure on education not in interests of profession of firm but for furthering career prospects of daughter--Not allowable-- Divyakant C. Mehta v. ITO (Bom) . . . 423

----Business expenditure--Expenditure on remuneration and training of working director--Expenses incurred out of personal considerations and not commercial considerations--Not allowable-- Shreenath Motors P. Ltd. v. CIT (Bom) . . . 536

S. 37(1) --Business expenditure--Education and training expenses--Expenditure incurred on higher education of son of director--Son of director employee of assessee-company--Commitment letter to work for a further five years after finishing MBA--Assessee’s business investments and securities--Nothing to suggest transaction not honest--Expenditure incurred for pursuit for higher studies allowable-- Kostub Investment Ltd. v. CIT (Delhi) . . . 436

S. 43B --Business expenditure--Deduction only on actual payment--Liability for years prior to introduction of section 43B--Excise duty--Assessee disputing claim made on basis of valuation--Payment made after adjudication in assessment year 1984-85 and not during relevant year--Deductible-- ITC Ltd. v. CIT (Cal) . . . 532

S. 45 --Business--Capital gains--Business income or short-term capital gains--Tests--Gains from purchase and sale of shares--Short-term capital gains-- CIT v. Devasan Investment P. Ltd. (Delhi) . . . 452

S. 69B --Unexplained investment--Accounts not rejected--Reference to Valuation Officer and addition based on his report--Not valid-- CIT v. Vijaykumar D. Gupta (Guj) . . . 470

S. 80-IB --Industrial undertaking--Special deduction--Assessee buying monitor, key board, mouse and assembling them--Activity carrying out by assessee is manufacturing activity--Entitled to special deduction-- CIT v. Sai Infosystem India P. Ltd. (Guj) . . . 433

----Industrial undertaking--Special deduction--Manufacture or production of article or thing--Assembling computers and servers out of various components by carrying on quality control through testing equipment--New and distinct product other than components of which made--Entitled to deduction-- CIT v. Sunilbhai S. Kakad (Guj) . . . 427

----Industrial undertaking--Special deduction--Return--Delay in filing return--Whether assessee disqualified for deduction for delay in filing return and audit report--CBDT notification extending date for filing returns and audit report--Whether notification applicable to assessee goes root of matter--Tribunal directed to decide afresh-- Bal Kishan Dhawan (HUF) v. Deputy CIT (P&H) . . . 581

S. 139 --Industrial undertaking--Special deduction--Return--Delay in filing return--Whether assessee disqualified for deduction for delay in filing return and audit report--CBDT notification extending date for filing returns and audit report--Whether notification applicable to assessee goes root of matter--Tribunal directed to decide afresh-- Bal Kishan Dhawan (HUF) v. Deputy CIT (P&H) . . . 581

S. 144 --Best judgment assessment--Revision--Commissioner--Assessees uneducated persons not properly represented before Assessing Officer--Commissioner dismissing revision petitions from assessments and refusing to recall his order--High Court affirming--Supreme Court--No interference with assessment but no interest or penalty to be charged--Tripal Singh v. CIT (SC). . . 511

S. 147 --Reassessment--Notice after four years--Conditions precedent--Failure to furnish material facts necessary for assessment--Material facts disclosed in return--Notice not valid-- Gujarat Carbon and Industries Ltd. v. Asst. CIT (Guj) . . . 464

----Reassessment--Notice--Reasons to believe based on investigation report--No indication in notice that report was not on record at time of completion of original assessment--Position clarified in additional affidavit and not in counter-affidavit--Evidence to show report available and used at time of original assessment--Notice and further proceedings not valid-- Rasalika Trading and Investment Co. P. Ltd. v. Deputy CIT (Delhi) . . . 447

S. 148 --Reassessment--Notice after four years--Conditions precedent--Failure to furnish material facts necessary for assessment--Material facts disclosed in return--Notice not valid-- Gujarat Carbon and Industries Ltd. v. Asst. CIT (Guj) . . . 464

----Reassessment--Notice--Reasons to believe based on investigation report--No indication in notice that report was not on record at time of completion of original assessment--Position clarified in additional affidavit and not in counter-affidavit--Evidence to show report available and used at time of original assessment--Notice and further proceedings not valid-- Rasalika Trading and Investment Co. P. Ltd. v. Deputy CIT (Delhi) . . . 447

S. 153C --Search and seizure--Assessment of third person--Condition precedent--Recording of satisfaction by Assessing Officer having jurisdiction over person in respect of whom search conducted that money or assets discovered during search belong to third person--Recording of satisfaction necessary even if Assessing Officer of both persons is the same--CIT v. Gopi Apartment (All) . . . 411

S. 201(1), (1A) --Deduction of tax at source--Failure to deduct--No period of limitation prescribed for passing order under section 201 treating assessee as in default--Revenue not bound by any reasonable period of limitation for taking action under section 201--Time limit prescribed in section 149 for taking action under section 147 has no application for taking action under section 201-- Bhura Exports Ltd. v. ITO (Cal) . . . 548

----Deduction of tax at source--Order deeming person assessee in default--Limitation for passing order--No time limit specified in Act--Order must be passed within reasonable time--Passing of order has to be within one year from end of financial year in which proceedings under section 201(1) initiated--Same time limit for passing of order under section 201(1A)--DIT (International Taxation) v. Mahindra and Mahindra Ltd. (Bom) . . . 560

S. 264 --Best judgment assessment--Revision--Commissioner--Assessees uneducated persons not properly represented before Assessing Officer--Commissioner dismissing revision petitions from assessments and refusing to recall his order--High Court affirming--Supreme Court--No interference with assessment but no interest or penalty to be charged--Tripal Singh v. CIT (SC). . . 511

S. 269SS --Penalty--Cash loans exceeding specified limit--Loans from agriculturists in remote areas--Transactions genuine--Cancellation of penalty under section 271D--Justified-- CIT v.MAA Khodiyar Construction (Guj) . . . 474

S. 271D --Penalty--Cash loans exceeding specified limit--Loans from agriculturists in remote areas--Transactions genuine--Cancellation of penalty under section 271D--Justified-- CIT v.MAA Khodiyar Construction (Guj) . . . 474

S. 273B --Penalty--Cash loans exceeding specified limit--Loans from agriculturists in remote areas--Transactions genuine--Cancellation of penalty under section 271D--Justified-- CIT v.MAA Khodiyar Construction (Guj) . . . 474

 

Wealth-tax Act, 1957 :

S. 5(1)(iii) --Exemption--Ruler--Annual value of any one palace in occupation of ruler--Scope of section 10(19A)--Section 10(19A) similar to section 5(1)(iii) of Wealth-tax Act--Meaning of “in the occupation†--Part of palace given on rent--Ruler not entitled to exemption in respect of annual value of such part-- CIT v. Maharao Bhim Singh of Kota [FB] (Raj) . . . 485

S. 7 --Wealth-tax--Valuation of asset--Discretion of Assessing Officer to discard valuation determined in accordance with rule 3 and invoke rule 8--Huge difference between value declared by assessee based on valuation for municipal taxes and market value--Assessee itself entering into agreement to sell property for much higher price than declared--Impracticable to apply rule 3--Reference to Valuation Officer and assessment at his valuation proper-- Amrit Banaspati Co. Ltd. v. CWT (SC). . . 515

S. 16A --Wealth-tax--Valuation of asset--Discretion of Assessing Officer to discard valuation determined in accordance with rule 3 and invoke rule 8--Huge difference between value declared by assessee based on valuation for municipal taxes and market value--Assessee itself entering into agreement to sell property for much higher price than declared--Impracticable to apply rule 3--Reference to Valuation Officer and assessment at his valuation proper-- Amrit Banaspati Co. Ltd. v. CWT (SC). . . 515

Sch. III, rr. 3 to 7, 8(a), 20 --Wealth-tax--Valuation of asset--Discretion of Assessing Officer to discard valuation determined in accordance with rule 3 and invoke rule 8--Huge difference between value declared by assessee based on valuation for municipal taxes and market value--Assessee itself entering into agreement to sell property for much higher price than declared--Impracticable to apply rule 3--Reference to Valuation Officer and assessment at his valuation proper-- Amrit Banaspati Co. Ltd. v. CWT (SC). . . 515

 

__._,_.___

Class Not Found Exception error while signing return by Digital Signature

Dear Friends,

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Regards,
-------
CA.C.V.PAWAR
PATIL DAWARE GIRASE PAWAR & ASSOCIATES

CHARTERED ACCOUNTANTS

0253-2319641. M-9423961209

Orientatio​n Course on Deemed Conveyance of Housing Co-operati​ves dated 2 Aug, 2014

Dear Co-operative Members, 

The Committee for Deemed Conveyance of MAHARASHTRA SOCIETIES WELFARE ASSOCIATION (MSWA) Jointly With VIDARBHA VAIBHAV MANDIR TRUST MUMBAI & Co- organizer – BLACK ARROW Conference organizing a One day Orientation Course on Deemed Conveyance of Housing Co-operatives on the 2nd August 2014, on 9.30 am to 6.30 pm at Conference Hall, Second floor, Local Self Government, Juhu Gally, Near BMW, Navneet Show room , C.D. Barfiwala Marg, Andheri (W),  Mumbai - 58 

There nearly 90000 Housing Co-operatives registered in Maharashtra. Nearly 70% of Housing Co-operatives have not received the conveyance. The Government of Maharashtra introduced in the year 2012 special drive initially for six months and the same is continued till 31st December, 2014. Only 5% of the societies have taken the benefit so far and there is need to understand the provision of law, process and procedure. There is need to get more professionals,  Housing Co-operative Activists and various Federations, Local Associations and office bearers of the society to come forward and make it a success.  Knowledge is power and this orientation program intended to orient the participants with all the issues and its remedies.  

 

We are keen that you register your name through Co-operative Housing society, so that against one registration fees of Rs.6000/- (Rs. Six Thousand only) Special offer: Book 2 seats and get the 3rd seat complimentary. We also request you to circulate the attached program to all your know circles, members so, that they will be able to participate and interact with the experts in the field and enrich your knowledge, professional opportunities and clarity in the area of their interest.  

We also request you to send us the your valuable inputs on the topics or any other issues related to Housing co-operatives you want to cover in this conference by  eminent speaker/ faculty / panel members. We request you to consider our request and do the needful at the earliest to get registration for this conference by your friends and other co-operative leaders, stakeholders to this conference at the earliest. 

Some of the guest and speakers are subject to confirmation and the organizers reserves the right to reschedule the program as may be deem fit in the interest of making the program an interesting to all the participants. One day schedule of program is attached herewith for your Reference.  

We look forward to receiving your positive and enthusiastic response. 

With Best Regards 

CA. Ramesh S. Prabhu, Chairman, MSWA

A2-302, Laram Center, S.V. Road, Opp: Railway Station 

Andheri (W), Mumbai- 400 058. Tel: 9820106766/ 022- 42551414

DIN to be mentioned with Director’s Signature compulsorily wef 01.04.2014

FOR INFORMATION

DIN to be mentioned with Director's Signature (Section 158)

Now, Director's name & DIN (Director Identification Number) has to be mentioned with their signature on all the documents to be signed in the capacity of director.

PENALTY: – Company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to Rs. 10,000/- and where the contravention is continuing one, with a further fine which may extend to Rs. 1,000/- for every day after the first during which the contravention continues.

IMMEDIATE ACTIONS TO BE TAKEN:-

One should ensure that DIN is written, wherever he is signing as Director of the Company.

During our practice we observed that Directors are not mentioning DIN even on Papers, Returns, Balance Sheet, Annual Return etc. they are filing with ROC, CLB  or Regional Director while One should ensure that DIN is written, wherever he is signing as Director of the Company.

EXTRACT OF SECTION 158 OF THE COMPANIES ACT, 2013

Section 158 – Obligation to indicate Director Identification Number

Every person or company, while furnishing any return, information or particulars as are required to be furnished under this Act, shall mention the Director Identification Number in such return, information or particulars in case such return, information or particulars relate to the director or contain any reference of any director.

Regards,
-------
CA.C.V.PAWAR
PATIL DAWARE GIRASE PAWAR & ASSOCIATES

CHARTERED ACCOUNTANTS

0253-2319641. M-9423961209

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