INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
HIGH COURTS
Deduction of tax at source --Non-payment of tax deducted at source--Assessing Officer has power to declare person “assessee in default†--Income-tax Act, 1961, ss. 200, 200A, 201-- CIT v. Kingfisher Airlines Ltd. (Karn) . . . 106
----Principles of natural justice--Non-payment of tax deducted at source--Person admitting liability but claiming inability to pay amount--No evidence of payment submitted to Assessing Officer or Commissioner (Appeals)--No complaint of denial of opportunity to be heard--No violation of principles of natural justice--Order passed under section 201 valid--Income-tax Act, 1961, s. 201-- CIT v. Kingfisher Airlines Ltd. (Karn) . . . 106
Reassessment --Notice--Housing project--Special deduction--Claim of assessee examined at length--Assessing Officer disallowing substantial portion of claim--Reopening on ground yet another element of claim not gone into--Impermissible--Income-tax Act, 1961, ss. 147, 148--Sarla Rajkumar Varma v. Asst. CIT (Guj) . . . 95
Unexplained expenditure --Trading in by-products of rice--Onus on assessee to produce material to establish purchase transactions--No material to substantiate payments made by cheque--Goods said to have been transported by a non-existent entity--Addition on account of purchases justified--Income-tax Act, 1961-- Rajesh Kumar v. CIT (P&H) . . . 87
PRINT EDITION
ITR Volume 371 : Part 2 (Issue dated : 23-2-2015)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
HIGH COURTS
Accounting --Rejection of accounts--Finding that there was no evidence that accounts were not reliable--Rejection of accounts not justified--Income-tax Act, 1961-- CIT v. Nuchem Ltd.(P&H) . . . 164
Amortisation of preliminary expenses --Expenditure on raising share capital--One-tenth of expenditure in assessment years 1994-95 to 1999-2000--Income-tax Act, 1961, s. 35D(2)(c)(iv)-- CIT v. Nuchem Ltd. (P&H) . . . 164
Appeal to Commissioner (Appeals) --Competency of appeal--Appeal maintainable only by aggrieved person--Assessee consenting to assessment--Subsequent penalty cancelled--Assessee was not an aggrieved person--Assessee not competent to appeal--Income-tax Act, 1961, s. 246A-- Deep Kukreti v. CIT (Uttarakhand) . . . 257
Appeal to High Court --Monetary ceiling limits--Exception--Revenue audit objection--No document to support--Tribunal finding appeal not maintainable on ground tax effect much less than prescribed limit--Justified--CBDT Instruction No. 3 of 2011, dated 9-2-2011--Income-tax Act, 1961, s. 268A-- CIT v. Shri Shanthinath Benefit Fund Ltd. (Mad) . . . 271
Business expenditure --Commercial expediency--Royalty payments to foreign principals--Deductible--Income-tax Act, 1961, s. 37(1)-- CIT v. Yum Restaurants India P. Ltd. (Delhi) . . . 139
----Deduction only on actual payment--Contributions to provident fund and employees’ State insurance--Provision that contribution should be paid before due date for filing return applicable to contribution by employees also--Income-tax Act, 1961, s. 43B-- CIT v. Magus Customers Dialog Pvt. Ltd. (Karn) . . . 242
----Delay in deposit of employees’ contribution to PF and ESI--Finding that there was no delay--Disallowance not justified--Income-tax Act, 1961, s. 36(1)(va)-- CIT v. Nuchem Ltd.(P&H) . . . 164
----Firm doing import and export--Foreign travel expenses of persons including a lady--Lady one of the founder partners travelling in that capacity with others--Expenditure incurred wholly and exclusively for the purpose of the business--Allowable deduction--Income-tax Act, 1961, s. 37-- CIT v. Irbaz Shoe Co. (Mad) . . . 215
----Guarantee commission--Deductible--Expenditure on maintenance of accommodation of employees--Deductible--Expenditure on inauguration of new centre--Deductible--Amount paid for market survey--Deductible--Income-tax Act, 1961, s. 37(2A), (3)-- CIT v. Nuchem Ltd.(P&H) . . . 164
----Mercantile system of accounting--Provision made based on past experience--Concurrent finding method not objectionable--Not a contingent liability--Provision allowable--Income-tax Act, 1961, s. 37-- CIT v. Yum Restaurants India P. Ltd. (Delhi) . . . 139
----Subsidiary company of assessee--Administrative expenses--Final effect is revenue-neutral--No allocation or apportionment of expenses could be made--Income-tax Act, 1961, s. 37(1)-- CIT v. Yum Restaurants India P. Ltd. (Delhi) . . . 139
Business income --Income from other sources--Assessee entering into franchise agreements with various entities to operate pizza and chicken restaurants--Services provided by assessee constituting a systematic organised activity conducted with a special purpose--Income therefrom is business income--Income-tax Act, 1961-- CIT v. Yum Restaurants India P. Ltd. (Delhi) . . . 139
Capital gains --Difference between short-term and long-term capital gains--Land held on lease for more than three years--Conversion into freehold and transfer thereafter--Gains assessable as long-term capital gains--Income-tax Act, 1961, s. 45-- Amar Nath Agrawal v.CIT (All) . . . 183
Capital or revenue expenditure --Restaurant business--Developing new recipes to develop clientele--Expenses for food tasting and trials--Revenue expenditure--Income-tax Act, 1961--CIT v. Yum Restaurants India P. Ltd. (Delhi) . . . 139
Charitable purposes --Charitable trust--Registration of trust--Cancellation of registration--Finding that trust was running several educational institutions and had not violated any of the conditions for claiming exemption--Assessee entitled to registration--Income-tax Act, 1961, ss. 11, 12, 12A-- CIT v. Karnataka Lingayat Education Society (Karn) . . . 249
Depreciation --Assessee purchasing assets for its employees’ benefit--Assessee as part of its emolument policy reimbursing expenses incurred by employees--Reimbursement only to extent of employees’ entitlement--Individual identity of asset lost in block--Expenses not personal to assessee’s employees--Entitled to depreciation--Income-tax Act, 1961-- CIT v. Yum Restaurants India P. Ltd. (Delhi) . . . 139
----Rate of depreciation--Broadcasting/exhibition rights and satellite rights in feature films amount to distribution rights--Assessee entitled to 100 per cent. depreciation--Income-tax Act, 1961, s. 32--Income-tax Rules, 1962, r. 9B-- CIT v. Smt. Achila Sabharwal (Delhi) . . . 219
Estimation of income --Application of net profit rate--Tribunal upholding exercise undertaken by Assessing Officer and Commissioner (Appeals) and rejecting assessee’s complaint--Tribunal after referring to comparable cases applying net profit at 8 per cent.--Pure finding of fact--Income-tax Act, 1961-- CIT v. Ratansingh M. Rathod (Bom) . . . 135
Industrial undertaking --Special deduction--Computation--Depreciation allowance and development rebate for past assessment years fully set off against total income for those assessment years--Not to be notionally carried forward and set off against income of current year--Income-tax Act, 1961, s. 80-I-- Carborundum Universal Ltd. v. Joint CIT (Mad) . . . 275
Penalty --Concealment of income--No satisfactory explanation as regards failure by assessee to disclose in original return gifts from non-resident Indians--Disclosure in revised return only after survey operation in business premises--Genuineness of gifts not proved--Levy of penalty justified--Income-tax Act, 1961, s. 271(1), Expln. 1(B) -- R. Padmanabhan v.Deputy CIT (Mad) . . . 211
Reassessment --Notice--Limitation--Notice after four years but before six years--Condition precedent--Satisfaction of Assessing Officer that income escaping assessment was likely to exceed one lakh rupees--No recording of such satisfaction--Notice barred by limitation--Income-tax Act, 1961, ss. 148, 149-- Amar Nath Agrawal v. CIT (All) . . . 183
----Notice--Validity--Notice based on audit objection--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Raajratna Metal Industries Ltd. v. Asst. CIT (Guj) . . . 222
----Notice--Validity--Notice for assessment year 2008-09 on ground that deduction under section 10A was found to be excessive in similar circumstances for assessment year 2009-10--Tribunal holding that deduction was not excessive--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- A. T. Kearney India Ltd. v. ITO (Delhi) . . . 179
----Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Gains shown in returns as long-term capital gains and details regarding transfer of capital asset given--Notice after four years to treat gains as short-term capital gains--Not valid--Income-tax Act, 1961, ss. 147, 148-- Amar Nath Agrawal v. CIT (All) . . . 183
----Notice within four years--Power to reassess not a power to review--Industrial undertaking--Special deduction--Allocation of expenditure between assessees’ three manufacturing units--Assessing Officer raising queries and accepting reply--Due application of mind by Assessing Officer to facts involved and opinion formed to allow claim--Reassessment with respect to allocation of expenditure--Change of opinion--No reason to believe that income chargeable to tax has escaped assessment--Reassessment not valid--Income-tax Act, 1961, ss. 80-IA, 80-IB, 147, 148-- GKN Sinter Metals Ltd. v. Ms. Ramapriya Raghavan, Asst. CIT (Bom) . . . 225
Recovery of tax --Stay of recovery proceedings--Prima facie case against order of assessment--Finding that recovery of amount demanded would cause irreparable injury to assessee--Conditional stay granted--Income-tax Act, 1961-- Nerka Chemicals P. Ltd. v.Union of India (Bom) . . . 280
Remuneration from foreign enterprise --Special deduction--Conditions precedent--Assessee conducting services for benefit of foreign companies--Services rendered “from India†and “in India†--Distinction--Report of survey submitted by assessee not utilised within India though received by foreign agency in India--Mere submission of report within India does not take assessee out of purview of benefit--Income-tax Act, 1961, s. 80-O-- CIT v. Peters and Prasad Association (T & AP) . . . 206
Search and seizure --Block assessment--Assessment of third person--Undisclosed income--Assessing Officer satisfied that undisclosed income discovered during search belonged to third person--Notice under section 158BD to such third person--Valid--Income-tax Act, 1961, ss. 158BC, 158BD-- Gyanendra Kumar Jain v. Asst. CIT (All) . . . 244
----Block assessment--Undisclosed income--Deletion of non-genuine gifts on ground amount already included--Benefit given to certain amount as past savings--Allowing certain value of jewellery as stridhan of assessee’s wife--Deletion of addition for unexplained jewellery on ground jewellery belonged to some one else--Pure findings of fact--Income-tax Act, 1961-- CIT v. Naresh Kumar Kohli (P&H) . . . 201
----Block assessment--Undisclosed income--Statement of managing partner of assessee recorded one-and-half months after search--Cannot be brought under purview of section 132(4)--Block assessment solely on basis of discrepancy between two registers referable to Central Excise Act--Registers can be taken into account for income-tax purposes only after ascertaining facts and conclusions from officials of Excise Department--Neither Assessing Officer nor Commissioner (Appeals) recording any finding that assessee suppressed sale of steel referable to discrepancy--Block assessment just on basis of surmises--Block assessment not valid--Income-tax Act, 1961, ss. 132(4), 158BC-- CIT v.Balaji Steel Profiles (T & AP) . . . 265
Shipping business --Tonnage tax company--Tonnage tax scheme--Tonnage income--Non qualifying ships--Computation--Income from slot charter operations--Includible--Income-tax Act, 1961, ss. 115VB, 115VC, 115VD-- Trans Asian Shipping Services P. Ltd. v. CIT (Ker) . . . 194
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Income-tax Act, 1961 :
S. 11 --Charitable purposes--Charitable trust--Registration of trust--Cancellation of registration--Finding that trust was running several educational institutions and had not violated any of the conditions for claiming exemption--Assessee entitled to registration-- CITv. Karnataka Lingayat Education Society (Karn) . . . 249
S. 12 --Charitable purposes--Charitable trust--Registration of trust--Cancellation of registration--Finding that trust was running several educational institutions and had not violated any of the conditions for claiming exemption--Assessee entitled to registration-- CITv. Karnataka Lingayat Education Society (Karn) . . . 249
S. 12A --Charitable purposes--Charitable trust--Registration of trust--Cancellation of registration--Finding that trust was running several educational institutions and had not violated any of the conditions for claiming exemption--Assessee entitled to registration-- CITv. Karnataka Lingayat Education Society (Karn) . . . 249
S. 32 --Depreciation--Rate of depreciation--Broadcasting/exhibition rights and satellite rights in feature films amount to distribution rights--Assessee entitled to 100 per cent. depreciation--CIT v. Smt. Achila Sabharwal (Delhi) . . . 219
S. 35D(2)(c)(iv) --Amortisation of preliminary expenses--Expenditure on raising share capital--One-tenth of expenditure in assessment years 1994-95 to 1999-2000-- CIT v.Nuchem Ltd. (P&H) . . . 164
S. 36(1)(va) --Business expenditure--Delay in deposit of employees’ contribution to PF and ESI--Finding that there was no delay--Disallowance not justified-- CIT v. Nuchem Ltd.(P&H) . . . 164
S. 37 --Business expenditure--Firm doing import and export--Foreign travel expenses of persons including a lady--Lady one of the founder partners travelling in that capacity with others--Expenditure incurred wholly and exclusively for the purpose of the business--Allowable deduction-- CIT v. Irbaz Shoe Co. (Mad) . . . 215
----Business expenditure--Mercantile system of accounting--Provision made based on past experience--Concurrent finding method not objectionable--Not a contingent liability--Provision allowable-- CIT v. Yum Restaurants India P. Ltd. (Delhi) . . . 139
S. 37(1) --Business expenditure--Commercial expediency--Royalty payments to foreign principals--Deductible-- CIT v. Yum Restaurants India P. Ltd. (Delhi) . . . 139
----Business expenditure--Subsidiary company of assessee--Administrative expenses--Final effect is revenue-neutral--No allocation or apportionment of expenses could be made-- CITv. Yum Restaurants India P. Ltd. (Delhi) . . . 139
S. 37(2A), (3) --Business expenditure--Guarantee commission--Deductible--Expenditure on maintenance of accommodation of employees--Deductible--Expenditure on inauguration of new centre--Deductible--Amount paid for market survey--Deductible-- CIT v. Nuchem Ltd.(P&H) . . . 164
S. 43B --Business expenditure--Deduction only on actual payment--Contributions to provident fund and employees’ State insurance--Provision that contribution should be paid before due date for filing return applicable to contribution by employees also-- CIT v. Magus Customers Dialog Pvt. Ltd. (Karn) . . . 242
S. 45 --Capital gains--Difference between short-term and long-term capital gains--Land held on lease for more than three years--Conversion into freehold and transfer thereafter--Gains assessable as long-term capital gains-- Amar Nath Agrawal v. CIT (All) . . . 183
S. 80-I --Industrial undertaking--Special deduction--Computation--Depreciation allowance and development rebate for past assessment years fully set off against total income for those assessment years--Not to be notionally carried forward and set off against income of current year-- Carborundum Universal Ltd. v. Joint CIT (Mad) . . . 275
S. 80-IA --Reassessment--Notice within four years--Power to reassess not a power to review--Industrial undertaking--Special deduction--Allocation of expenditure between assessees’ three manufacturing units--Assessing Officer raising queries and accepting reply--Due application of mind by Assessing Officer to facts involved and opinion formed to allow claim--Reassessment with respect to allocation of expenditure--Change of opinion--No reason to believe that income chargeable to tax has escaped assessment--Reassessment not valid-- GKN Sinter Metals Ltd. v. Ms. Ramapriya Raghavan, Asst. CIT (Bom) . . . 225
S. 80-IB --Reassessment--Notice within four years--Power to reassess not a power to review--Industrial undertaking--Special deduction--Allocation of expenditure between assessees’ three manufacturing units--Assessing Officer raising queries and accepting reply--Due application of mind by Assessing Officer to facts involved and opinion formed to allow claim--Reassessment with respect to allocation of expenditure--Change of opinion--No reason to believe that income chargeable to tax has escaped assessment--Reassessment not valid-- GKN Sinter Metals Ltd. v. Ms. Ramapriya Raghavan, Asst. CIT (Bom) . . . 225
S. 80-O --Remuneration from foreign enterprise--Special deduction--Conditions precedent--Assessee conducting services for benefit of foreign companies--Services rendered “from India†and “in India†--Distinction--Report of survey submitted by assessee not utilised within India though received by foreign agency in India--Mere submission of report within India does not take assessee out of purview of benefit-- CIT v. Peters and Prasad Association (T & AP) . . . 206
S. 115VB --Shipping business--Tonnage tax company--Tonnage tax scheme--Tonnage income--Non qualifying ships--Computation--Income from slot charter operations--Includible--Trans Asian Shipping Services P. Ltd. v. CIT (Ker) . . . 194
S. 115VC --Shipping business--Tonnage tax company--Tonnage tax scheme--Tonnage income--Non qualifying ships--Computation--Income from slot charter operations--Includible--Trans Asian Shipping Services P. Ltd. v. CIT (Ker) . . . 194
S. 115VD --Shipping business--Tonnage tax company--Tonnage tax scheme--Tonnage income--Non qualifying ships--Computation--Income from slot charter operations--Includible--Trans Asian Shipping Services P. Ltd. v. CIT (Ker) . . . 194
S. 132(4) --Search and seizure--Block assessment--Undisclosed income--Statement of managing partner of assessee recorded one-and-half months after search--Cannot be brought under purview of section 132(4)--Block assessment solely on basis of discrepancy between two registers referable to Central Excise Act--Registers can be taken into account for income-tax purposes only after ascertaining facts and conclusions from officials of Excise Department--Neither Assessing Officer nor Commissioner (Appeals) recording any finding that assessee suppressed sale of steel referable to discrepancy--Block assessment just on basis of surmises--Block assessment not valid-- CIT v. Balaji Steel Profiles (T & AP) . . . 265
S. 147 --Reassessment--Notice--Validity--Notice based on audit objection--Notice not valid--Raajratna Metal Industries Ltd. v. Asst. CIT (Guj) . . . 222
----Reassessment--Notice--Validity--Notice for assessment year 2008-09 on ground that deduction under section 10A was found to be excessive in similar circumstances for assessment year 2009-10--Tribunal holding that deduction was not excessive--Notice not valid-- A. T. Kearney India Ltd. v. ITO (Delhi) . . . 179
----Reassessment--Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Gains shown in returns as long-term capital gains and details regarding transfer of capital asset given--Notice after four years to treat gains as short-term capital gains--Not valid-- Amar Nath Agrawal v. CIT (All) . . . 183
----Reassessment--Notice within four years--Power to reassess not a power to review--Industrial undertaking--Special deduction--Allocation of expenditure between assessees’ three manufacturing units--Assessing Officer raising queries and accepting reply--Due application of mind by Assessing Officer to facts involved and opinion formed to allow claim--Reassessment with respect to allocation of expenditure--Change of opinion--No reason to believe that income chargeable to tax has escaped assessment--Reassessment not valid--GKN Sinter Metals Ltd. v. Ms. Ramapriya Raghavan, Asst. CIT (Bom) . . . 225
S. 148 --Reassessment--Notice--Limitation--Notice after four years but before six years--Condition precedent--Satisfaction of Assessing Officer that income escaping assessment was likely to exceed one lakh rupees--No recording of such satisfaction--Notice barred by limitation-- Amar Nath Agrawal v. CIT (All) . . . 183
----Reassessment--Notice--Validity--Notice based on audit objection--Notice not valid--Raajratna Metal Industries Ltd. v. Asst. CIT (Guj) . . . 222
----Reassessment--Notice--Validity--Notice for assessment year 2008-09 on ground that deduction under section 10A was found to be excessive in similar circumstances for assessment year 2009-10--Tribunal holding that deduction was not excessive--Notice not valid-- A. T. Kearney India Ltd. v. ITO (Delhi) . . . 179
----Reassessment--Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Gains shown in returns as long-term capital gains and details regarding transfer of capital asset given--Notice after four years to treat gains as short-term capital gains--Not valid-- Amar Nath Agrawal v. CIT (All) . . . 183
----Reassessment--Notice within four years--Power to reassess not a power to review--Industrial undertaking--Special deduction--Allocation of expenditure between assessees’ three manufacturing units--Assessing Officer raising queries and accepting reply--Due application of mind by Assessing Officer to facts involved and opinion formed to allow claim--Reassessment with respect to allocation of expenditure--Change of opinion--No reason to believe that income chargeable to tax has escaped assessment--Reassessment not valid--GKN Sinter Metals Ltd. v. Ms. Ramapriya Raghavan, Asst. CIT (Bom) . . . 225
S. 149 --Reassessment--Notice--Limitation--Notice after four years but before six years--Condition precedent--Satisfaction of Assessing Officer that income escaping assessment was likely to exceed one lakh rupees--No recording of such satisfaction--Notice barred by limitation-- Amar Nath Agrawal v. CIT (All) . . . 183
S. 158BC --Search and seizure--Block assessment--Assessment of third person--Undisclosed income--Assessing Officer satisfied that undisclosed income discovered during search belonged to third person--Notice under section 158BD to such third person--Valid--Gyanendra Kumar Jain v. Asst. CIT (All) . . . 244
----Search and seizure--Block assessment--Undisclosed income--Statement of managing partner of assessee recorded one-and-half months after search--Cannot be brought under purview of section 132(4)--Block assessment solely on basis of discrepancy between two registers referable to Central Excise Act--Registers can be taken into account for income-tax purposes only after ascertaining facts and conclusions from officials of Excise Department--Neither Assessing Officer nor Commissioner (Appeals) recording any finding that assessee suppressed sale of steel referable to discrepancy--Block assessment just on basis of surmises--Block assessment not valid-- CIT v. Balaji Steel Profiles (T & AP) . . . 265
S. 158BD --Search and seizure--Block assessment--Assessment of third person--Undisclosed income--Assessing Officer satisfied that undisclosed income discovered during search belonged to third person--Notice under section 158BD to such third person--Valid--Gyanendra Kumar Jain v. Asst. CIT (All) . . . 244
S. 246A --Appeal to Commissioner (Appeals)--Competency of appeal--Appeal maintainable only by aggrieved person--Assessee consenting to assessment--Subsequent penalty cancelled--Assessee was not an aggrieved person--Assessee not competent to appeal--Deep Kukreti v. CIT (Uttarakhand) . . . 257
S. 268A --Appeal to High Court--Monetary ceiling limits--Exception--Revenue audit objection--No document to support--Tribunal finding appeal not maintainable on ground tax effect much less than prescribed limit--Justified--CBDT Instruction No. 3 of 2011, dated 9-2-2011-- CIT v.Shri Shanthinath Benefit Fund Ltd. (Mad) . . . 271
S. 271(1), Expln. 1(B) --Penalty--Concealment of income--No satisfactory explanation as regards failure by assessee to disclose in original return gifts from non-resident Indians--Disclosure in revised return only after survey operation in business premises--Genuineness of gifts not proved--Levy of penalty justified-- R. Padmanabhan v. Deputy CIT (Mad) . . . 211
Income-tax Rules, 1962 :
R. 9B --Depreciation--Rate of depreciation--Broadcasting/exhibition rights and satellite rights in feature films amount to distribution rights--Assessee entitled to 100 per cent. depreciation--CIT v. Smt. Achila Sabharwal (Delhi) . . . 219
