ITR VOL 328 PART 3 AND ITR (TRIB) VOL 6 PART 2

INCOME TAX REPORTS (ITR)

Volume 328 : Part 3 (Issue dated 8-11-2010)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Advance tax --Nature of--Does not affect charge of tax or modify liability to pay tax on assessment order--Income-tax Act, 1961, ss. 4(1), 190(1), 207-- Brij Lal v. CIT . . . 477

Settlement of cases --Settlement Commission--Interest under section 234B--Only up to the date of order under section 245D(1) and not up to date of order of settlement under section 245D(4)--Income-tax Act, 1961, ss. 234B, 245D(1), (4)-- Brij Lal v. CIT  . . 477

----Settlement Commission--Proceedings concluded--Thereafter interest under section 234B cannot be levied by way of rectification--Relevant date for determining quantum of interest under section 234B--Income-tax Act, 1961, ss. 2(40), (45), 140A, 143, 154, 207, 209, 210, 215, 234A, 234B, 234C, 245A, 245C, 245D, 245E, 245F, 245-I-- Brij Lal v. CIT . . . 477

Words and phrases --"Assessment", meaning of-- Brij Lal v. CIT . . . 477

HIGH COURTS

Accounting --Change of method of accounting from turnover base to capital investment base--Bona fides of assessee to adopt new method cannot be doubted merely because resulting in more benefits to assessee--Income-tax Act, 1961-- CIT v. Jindal Saw Pipes Ltd . (Delhi) . . . 338

Advance tax --Interest payable by assessee--Waiver of interest--Jurisdiction to grant waiver--Effect of circular-cum-notification dated 23-5-1996--Chief Commissioner and Director General of Income-tax (Exemptions) have jurisdiction only in cases covered by category 2(a) to (e) mentioned in circular--Income-tax Act, 1961, ss. 234B, 234C--Circular-cum-Notification dated 23-5-1996-- Director General of Income-tax (Exemptions) v. Jockeys Association of India (Karn) . . . 405

Appeal to Appellate Tribunal --Additional ground can be entertained--Income-tax Act, 1961, s. 250(5)-- CIT v. Jindal Saw Pipes Ltd. (Delhi) . . . 338

Appeal to High Court --Circular fixing monetary limit in case of appeal by Revenue --Whether monetary limit applicable to pending cases--To be decided by a larger Bench--Income-tax Act, 1961, ss. 260A, 268A-- CIT v. Varindra Construction Co. (P&H) . . . 446

Business expenditure --Deduction only on actual payment--Exclusion from disallowance--Law applicable--Amendment of section 43B with effect from 1-4-2004--Amendment retrospective--Payment of contribution to provident fund after due date but before filing of return--Payment deductible--Income-tax Act, 1961, s. 43B-- H. P. Tourism Development Corporation Ltd. v. CIT (HP) . . . 508

Cash credits --Share application money--Assessee proving identity of parties, genuineness of transaction and creditworthiness of share applicants--Tribunal deleting additions after appreciating evidence on record--Finding of fact--No substantial question of law--Income-tax Act, 1961, s. 68-- CIT v. Ujala Dyeing and Printing Mills P. Ltd. (Guj) . . . 437

Charitable purposes --Exemption--Educational institution--Assessee running schools--Entitled to exemption under section 11--Income-tax Act, 1961, s. 11-- CIT v. Manav Mangal Society (P&H) . . . 421

Deduction of tax at source --Interest--Chit fund--Chit agreement would not fall under "money lending"--No "debt incurred"--Bid amount disbursed is not interest payable on money borrowed--Payments disbursed not subject to deduction of tax at source--Income-tax Act, 1961, ss. 2(28A), 194A, 201-- CIT v. Sahib Chits (Delhi) (Pvt.) Ltd. (Delhi) . . . 342

Export --Special deduction--Computation--Meaning of "profits of business"--Law applicable--Effect of insertion of clause (iiid) in section 28 by Finance Act, 2005--Entire sale consideration on transfer of DEPB credit assessable on business profits--Income-tax Act, 1961, ss. 28(iiid), 80HHC-- CIT v. Kalpataru Colours and Chemicals (Bom) . . . 451

----Special deduction--Computation--Tribunal allowing deduction under section 80HHC on basis of book profits under section 115JA and not on basis of eligible profits under section 80HHC as per normal computation--Justified--Income-tax Act, 1961, ss. 80HHC, 115JA-- CIT v. Bhari Information Technology Systems P. Ltd. (Mad) . . . 380

Income --Association--Principle of mutuality--Interest on surplus funds invested in fixed deposits with banks--Not income received from members of assessee but from third parties--Investing funds of association in bank fixed deposits a prudent commercial decision--Principle of mutuality does not apply--Matter remanded--Income-tax Act, 1961-- CIT v. Common Effluent Treatment Plant, (Thane-Belapur) Association (Bom) . . . 362

----Association--Principle of mutuality--Surplus income over expenditure--Principle of mutuality applies--Not chargeable to tax--Income-tax Act, 1961-- CIT v. Common Effluent Treatment Plant, (Thane-Belapur) Association (Bom) . . . 362

----Principle of mutuality--Club--Surplus funds deposited with institutional members--Interest on such deposits--Does not satisfy principle of mutuality--Chargeable to tax--Income-tax Act, 1961, s. 4-- Madras Gymkhana Club v. Deputy CIT (Mad) . . . 348

----Time-barred unclaimed matured debentures transferred to general reserve account and utilised for business purposes--Amount assessable as trading receipt--Income-tax Act, 1961-- Hindustan Foods Ltd. v. Deputy CIT (Bom) . . . 392

Income from undisclosed sources --Additions to income on basis of statement given by assessee during survey--Assessee later contending that income was from agriculture--Assessee failing to produce books of account or any other authentic contemporaneous evidence of agricultural income--Some entries in a diary not sufficient and conclusive to hold that statement made earlier false--Addition proper--Income-tax Act, 1961, ss 132(4), 133A-- Bachittar Singh v. CIT (P&H) . . . 400

----Amount realised on sale of gold jewellery and diamonds--Claim that gold jewellery and diamonds declared under Voluntary Disclosure of Income Scheme--No specific finding regarding claim--Addition to income not justified--Matter remanded--Finance Act, 1997, s. 68-- Smt. Kailashi Devi G. Agarwal v. ITO (Karn) . . . 425

----Unaccounted sales--Unaccounted sales covered by income declared by assessee--No separate addition required--Income-tax Act, 1961-- CIT v. Sambhav Textiles Ltd. (P&H) . . . 444

Industrial undertaking --Deduction under section 80-IB--Sale of export incentive--Not income derived from industrial undertaking--Not entitled to deduction--Income-tax Act, 1961 s. 80-IB-- CIT v. Jaswand Sons (P&H) . . . 442

----Special deduction under section 80-IA--Computation of gross total income for purposes of section 80-IA--Deduction granted after setting off losses from all other sources--Proper--Income-tax Act, 1961, s. 80-IA-- CIT v. Tridoss Laboratories Ltd .(Bom) . . . 448

Loss --Set off of loss--Year in which loss occurred--Destruction of stock stored in State warehousing corporation by fire in 1978--Suit filed for reimbursement of loss dismissed in May 1982--Loss allowable in assessment year 1983-84--Income-tax Act, 1961, s. 71-- New Diwan Oil Mills v. CIT (P&H) . . . 432

Precedent --Effect of decision of Supreme Court in CIT v. Alom Extrusions Ltd. [2009] 319 ITR 306-- H. P. Tourism Development Corporation Ltd . v. CIT (HP) . . . 508

----Effect of decision of Supreme Court in CIT v. Anjum M. H. Ghaswala [2001] 252 ITR 1-- Director General of Income-tax (Exemptions) v. Jockeys Association of India (Karn) . . . 405

Principle of mutuality --Application of-- CIT v. Common Effluent Treatment Plant, (Thane-Belapur) Association (Bom) . . . 362

Reassessment --Limitation--No assessment made under section 143(3)--Time limit of four years not applicable--Income-tax Act, 1961, ss. 143(3), 147-- Madras Gymkhana Club v. Deputy CIT (Mad) . . . 348

Search and seizure --Undisclosed investment--Addition on basis of statement under section 132(4) by assessee recorded at midnight--Assessee later retracting and giving proper explanation for investment--Statement made at odd hours cannot be considered as voluntary statement--Addition not justified--Income-tax Act, 1961-- Kailashben Manharlal Chokshi v. CIT (Guj) . . . 411

Survey --Discrepancy in stock and cash--Addition on basis of statement made during survey--Assessee later contending that statement incorrect and that discrepancy reconciled as it was a mistake--Statement made under section 133A not conclusive proof--Assessee able to explain discrepancy in stock by production of relevant record--Addition to be deleted--Income-tax Act, 1961, s. 133A-- CIT v. Dhingra Metal Works (Delhi) . . . 384

Unexplained investments --Addition on basis of variation between stocks hypothecated with bank and stock shown in books of account--Tribunal finding addition based on bank statement and verification by Regional Officer that stock actually lying with assessee and assessee failed to give satisfactory explanation--Findings of fact--Income-tax Act, 1961 s. 69-- B. T. Steels Ltd. v. CIT (P&H) . . . 471

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Finance Act, 1997 :

S. 68 --Income from undisclosed sources--Amount realised on sale of gold jewellery and diamonds--Claim that gold jewellery and diamonds declared under Voluntary Disclosure of Income Scheme--No specific finding regarding claim--Addition to income not justified--Matter remanded-- Smt. Kailashi Devi G. Agarwal v. ITO (Karn) . . . 425

Income-tax Act, 1961 :

S. 2(28A) --Deduction of tax at source--Interest--Chit fund--Chit agreement would not fall under "money lending"--No "debt incurred"--Bid amount disbursed is not interest payable on money borrowed--Payments disbursed not subject to deduction of tax at source-- CIT v. Sahib Chits (Delhi) (Pvt.) Ltd. (Delhi) . . . 342

S. 2(40) --Settlement of cases--Settlement Commission--Proceedings concluded--Thereafter interest under section 234B cannot be levied by way of rectification--Relevant date for determining quantum of interest under section 234B-- Brij Lal v. CIT (SC) . . . 477

S. 2(45) --Settlement of cases--Settlement Commission--Proceedings concluded--Thereafter interest under section 234B cannot be levied by way of rectification--Relevant date for determining quantum of interest under section 234B-- Brij Lal v. CIT

(SC) . . . 477

S. 4 --Income--Principle of mutuality--Club--Surplus funds deposited with institutional members--Interest on such deposits--Does not satisfy principle of mutuality--Chargeable to tax-- Madras Gymkhana Club v. Deputy CIT (Mad) . . . 348

S. 4(1) --Advance tax--Nature of--Does not affect charge of tax or modify liability to pay tax on assessment order-- Brij Lal v. CIT (SC) . . . 477

S. 11 --Charitable purposes--Exemption--Educational institution--Assessee running schools--Entitled to exemption under section 11-- CIT v. Manav Mangal Society (P&H) . . . 421

S. 28(iiid) --Export--Special deduction--Computation--Meaning of "profits of business"--Law applicable--Effect of insertion of clause (iiid) in section 28 by Finance Act, 2005--Entire sale consideration on transfer of DEPB credit assessable on business profits-- CIT v. Kalpataru Colours and Chemicals (Bom) . . . 451

S. 43B --Business expenditure--Deduction only on actual payment--Exclusion from disallowance--Law applicable--Amendment of section 43B with effect from 1-4-2004--Amendment retrospective--Payment of contribution to provident fund after due date but before filing of return--Payment deductible-- H. P. Tourism Development Corporation Ltd. v. CIT (HP) . . . 508

S. 68 --Cash credits--Share application money--Assessee proving identity of parties, genuineness of transaction and creditworthiness of share applicants--Tribunal deleting additions after appreciating evidence on record--Finding of fact--No substantial question of law-- CIT v. Ujala Dyeing and Printing Mills P. Ltd. (Guj) . . . 437

S. 69 --Unexplained investments--Addition on basis of variation between stocks hypothecated with bank and stock shown in books of account--Tribunal finding addition based on bank statement and verification by Regional Officer that stock actually lying with assessee and assessee failed to give satisfactory explanation--Findings of fact-- B. T. Steels Ltd. v. CIT (P&H) . . . 471

S. 71 --Loss--Set off of loss--Year in which loss occurred--Destruction of stock stored in State warehousing corporation by fire in 1978--Suit filed for reimbursement of loss dismissed in May 1982--Loss allowable in assessment year 1983-84-- New Diwan Oil Mills v. CIT (P&H) . . . 432

S. 80HHC --Export--Special deduction--Computation--Meaning of "profits of business"--Law applicable--Effect of insertion of clause (iiid) in section 28 by Finance Act, 2005--Entire sale consideration on transfer of DEPB credit assessable on business profits-- CIT v. Kalpataru Colours and Chemicals (Bom) . . . 451

----Export--Special deduction--Computation--Tribunal allowing deduction under section 80HHC on basis of book profits under section 115JA and not on basis of eligible profits under section 80HHC as per normal computation--Justified-- CIT v. Bhari Information Technology Systems P. Ltd. (Mad) . . . 380

S. 80-IA --Industrial undertaking--Special deduction under section 80-IA--Computation of gross total income for purposes of section 80-IA--Deduction granted after setting off losses from all other sources--Proper-- CIT v. Tridoss Laboratories Ltd . (Bom) . . . 448

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))

Volume 6 : Part 2 (Issue dated : 8-11-2010)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Advance tax --Interest--Liability--Estimated income nil under law at time of deposit of advance tax--Assessee not liable to pay advance tax--Assessee becoming liable to tax owing to subsequent change of law--Interest not chargeable--Income-tax Act, 1961, ss. 208, 209, 234B, 234C-- Hindson International v. ITO (Chandigarh) . . . 123

Appeal to Appellate Tribunal --Competency of appeal--CBDT Instruction No. 5, dated May 15, 2008 prescribing monetary limits of tax effect for filing appeals--Tax effect less than Rs. 2 lakhs--Appeal not maintainable--Income-tax Act, 1961-- Asst. CIT v. Pioneer Fabricators P. Ltd. (Delhi) . . . 121

Assessment --Notice--Notice served on assessee's wife in his absence--Valid--Income-tax Act, 1961, ss. 148, 282(1)--Code of Civil Procedure, 1908, O. 5, r. 15 (amended by Code of Civil Procedure (Amendment) Act, 1976 w.e.f. 1-2-1977)-- ITO v. Gurbax Singh Gill (Amritsar) . . . 129

Business expenditure --Deduction only on actual payment--Contribution made to employees' provident fund and employees' State insurance--Amount deposited within grace period--Entitled to deduction--Amount paid after grace period--To be disallowed --Income-tax Act, 1961, s. 43B-- BASF India Ltd. v. Addl. CIT (Mumbai) . . . 156

Capital gains --Long-term capital gains--Computation--Full value of consideration --No provision for taking fair market value assessed by Valuation Officer as full value of consideration--Only full value of consideration to be taken into account--Income-tax Act, 1961, s. 48-- ITO v. Mohinder Nath Sehgal and Sons (Chandigarh) . . . 138

----Long-term capital gains--Exemption--Sale of plot of land and investment of consideration in residential house--Cost of new asset exceeding full value of consideration of land--Registration of new asset before filing of return not required--Assessee entitled to deduction--Income-tax Act, 1961, s. 54F-- Gyan Chand Batra v. ITO (Jaipur) . . . 147

Capital or revenue receipt --Amount received on account of transfer or assignment of marketing rights--Amount received in exchange of source of income--Capital receipt --Income-tax Act, 1961, s. 54EC-- BASF India Ltd. v. Addl. CIT (Mumbai) . . . 156

----Capital gains--Non-compete fees--Is capital receipt--Capital gains not taxable where cost of acquisition not determined--Income-tax Act, 1961-- BASF India Ltd. v. Addl. CIT (Mumbai) . . . 156

Donation to charitable institution --Special deduction--Approval of institution in perpetuity till specific withdrawal in accordance with law--Direction to Director of Income-tax (Exemption) to modify order accordingly--Income-tax Act, 1961, s. 80G(5)(vi)-- Splash for Children v. Director of Income-tax (Exemption) (Kolkata) . . . 199

Donations to charitable trust --Special deduction--Renewal of exemption--Approvals expiring on or after October 1, 2009 deemed to be extended in perpetuity till specific withdrawal under Board's circular--Circular binding on Department--Direction to Director of Income-tax (Exemption) to grant exemption till withdrawal in accordance with law--Income-tax Act, 1961, s. 80G(5)(vi)--Circular No. 5, dated 3-6-2010-- D. J. Shah Foundation v. Director of Income-tax (Exemption) (Kolkata) . . . 196

Firm --Takeover by company--Valuation of closing stock--Can be at cost price or market price whichever is lower--Firm not in existence on date of survey and stock found at time of survey not belonging to firm--Deletion of addition--Justified--Income-tax Act, 1961-- ITO v. Vishal Jewellers (Delhi) . . . 143

Interpretation of statutes --Deeming provisions--Deeming provisions of section 50C not applicable to section 54F with regard to meaning of full value of consideration-- Gyan Chand Batra v. ITO (Jaipur) . . . 147

----Legal fiction--Scope of fiction to be confined to purpose of fiction-- ITO v. Harley Street Pharmaceuticals Ltd. (Ahmedabad) . . . 182

----Two views possible--View favourable to assessee to be taken-- Deputy CIT v. Avinash Ch. Gupta (Kolkata) . . . 173

Search and seizure --Assessment in search cases--Penalty--Concealment of income --Admission of undisclosed income under section 132(4) by assessee--Return filed under section 153A including undisclosed income--No concealment of income--Penalty cancelled--Income-tax Act, 1961, ss. 132, 153A, 271(1)(c), Expln. 5(2)-- Deputy CIT v. Avinash Ch. Gupta (Kolkata) . . . 173

Shipping business --Deduction of amount credited to reserve account--Condition precedent--Amount carried to reserve not to exceed twice aggregate of paid-up capital and general reserve--Paid-up capital includes preference share capital--Assessing Officer to examine whether capital redemption reserve balance includes redemption of preference share capital--Transfer of sum from reserve to general reserve after purchase of ships permissible--Direction to recompute deduction--Income-tax Act, 1961, s. 33AC -- United Shippers Ltd. v. Asst. CIT (Mumbai) . . . 202

----Deduction of amount credited to reserve--Disqualification where ships sold within specified period--Change of law w.e.f. April 1, 2004 reducing prohibition period from eight years to three years--Law in force in assessment period applicable--Sale of ships after three years--Assessee entitled to deduction--Income-tax Act, 1961, s. 33AC(3)(c)-- United Shippers Ltd. v. Asst. CIT (Mumbai) . . . 202

Transactions in securities --Sale of units beyond three months from date of purchase--Deletion of disallowance--Proper--Income-tax Act, 1961, s. 94(7)-- ITO v. Ashish Navnitlal Shah (Ahmedabad) . . . 170

Unexplained investment --Assessee purchasing land--Assessing Officer making addition on basis of additional stamp duty paid by assessee invoking section 50C--Section 50C not applicable to purchaser--No record that assessee paid over and above recorded as purchase consideration of land in sale deed--Addition to be deleted--Income-tax Act, 1961, ss. 50C, 69B-- ITO v. Harley Street Pharmaceuticals Ltd. (Ahmedabad) . . . 182

----Valuation of property--Property situated in mofussil area--PWD rates applicable --15 per cent. deduction to be given on net value--Income-tax Act, 1961-- Deputy CIT v. Smt. C. K. Sumathy (Chennai) . . . 193

 SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Code of Civil Procedure, 1908 :

O. 5, r. 15 (amended by Code of Civil Procedure (Amendment) Act, 1976 w.e.f. 1-2-1977) --Assessment--Notice--Notice served on assessee's wife in his absence--Valid-- ITO v. Gurbax Singh Gill (Amritsar) . . . 129

Income-tax Act, 1961 :

S. 33AC --Shipping business--Deduction of amount credited to reserve account--Condition precedent--Amount carried to reserve not to exceed twice aggregate of paid-up capital and general reserve--Paid-up capital includes preference share capital--Assessing Officer to examine whether capital redemption reserve balance includes redemption of preference share capital--Transfer of sum from reserve to general reserve after purchase of ships permissible--Direction to recompute deduction-- United Shippers Ltd. v. Asst. CIT (Mumbai) . . . 202

S. 33AC(3)(c) --Shipping business--Deduction of amount credited to reserve--Disqualification where ships sold within specified period--Change of law w.e.f. April 1, 2004 reducing prohibition period from eight years to three years--Law in force in assessment period applicable--Sale of ships after three years--Assessee entitled to deduction-- United Shippers Ltd. v. Asst. CIT (Mumbai) . . . 202

S. 43B --Business expenditure--Deduction only on actual payment--Contribution made to employees' provident fund and employees' State insurance--Amount deposited within grace period--Entitled to deduction--Amount paid after grace period--To be disallowed -- BASF India Ltd. v. Addl. CIT (Mumbai) . . . 156

S. 48 --Capital gains--Long-term capital gains--Computation--Full value of consideration--No provision for taking fair market value assessed by Valuation Officer as full value of consideration--Only full value of consideration to be taken into account-- ITO v. Mohinder Nath Sehgal and Sons (Chandigarh) . . . 138

S. 50C --Unexplained investment--Assessee purchasing land--Assessing Officer making addition on basis of additional stamp duty paid by assessee invoking section 50C--Section 50C not applicable to purchaser--No record that assessee paid over and above recorded as purchase consideration of land in sale deed--Addition to be deleted-- ITO v. Harley Street Pharmaceuticals Ltd. (Ahmedabad) . . . 182

S. 54EC --Capital or revenue receipt--Amount received on account of transfer or assignment of marketing rights--Amount received in exchange of source of income--Capital receipt -- BASF India Ltd. v. Addl. CIT (Mumbai) . . . 156

S. 54F --Capital gains--Long-term capital gains--Exemption--Sale of plot of land and investment of consideration in residential house--Cost of new asset exceeding full value of consideration of land--Registration of new asset before filing of return not required--Assessee entitled to deduction-- Gyan Chand Batra v. ITO (Jaipur) . . . 147

S. 69B --Unexplained investment--Assessee purchasing land--Assessing Officer making addition on basis of additional stamp duty paid by assessee invoking section 50C--Section 50C not applicable to purchaser--No record that assessee paid over and above recorded as purchase consideration of land in sale deed--Addition to be deleted-- ITO v. Harley Street Pharmaceuticals Ltd. (Ahmedabad) . . . 182

S. 80G(5)(vi) --Donation to charitable institution--Special deduction--Approval of institution in perpetuity till specific withdrawal in accordance with law--Direction to Director of Income-tax (Exemption) to modify order accordingly-- Splash for Children v. Director of Income-tax (Exemption) (Kolkata) . . . 199

----Donations to charitable trust--Special deduction--Renewal of exemption--Approvals expiring on or after October 1, 2009 deemed to be extended in perpetuity till specific withdrawal under Board's circular--Circular binding on Department--Direction to Director of Income-tax (Exemption) to grant exemption till withdrawal in accordance with law--Circular No. 5, dated 3-6-2010-- D. J. Shah Foundation v. Director of Income-tax (Exemption) (Kolkata) . . . 196

S. 94(7) --Transactions in securities--Sale of units beyond three months from date of purchase--Deletion of disallowance--Proper-- ITO v. Ashish Navnitlal Shah (Ahmedabad) . . . 170

S. 132 --Search and seizure--Assessment in search cases--Penalty--Concealment of income --Admission of undisclosed income under section 132(4) by assessee--Return filed under section 153A including undisclosed income--No concealment of income --Penalty cancelled-- Deputy CIT v. Avinash Ch. Gupta (Kolkata) . . . 173

S. 148 --Assessment--Notice--Notice served on assessee's wife in his absence--Valid-- ITO v. Gurbax Singh Gill (Amritsar) . . . 129

S. 153A --Search and seizure--Assessment in search cases--Penalty--Concealment of income--Admission of undisclosed income under section 132(4) by assessee--Return filed under section 153A including undisclosed income--No concealment of income --Penalty cancelled-- Deputy CIT v. Avinash Ch. Gupta (Kolkata) . . . 173

S. 208 --Advance tax--Interest--Liability--Estimated income nil under law at time of deposit of advance tax--Assessee not liable to pay advance tax--Assessee becoming liable to tax owing to subsequent change of law--Interest not chargeable-- Hindson International v. ITO (Chandigarh) . . . 123

S. 209 --Advance tax--Interest--Liability--Estimated income nil under law at time of deposit of advance tax--Assessee not liable to pay advance tax--Assessee becoming liable to tax owing to subsequent change of law--Interest not chargeable-- Hindson International v. ITO (Chandigarh) . . . 123

S. 234B --Advance tax--Interest--Liability--Estimated income nil under law at time of deposit of advance tax--Assessee not liable to pay advance tax--Assessee becoming liable to tax owing to subsequent change of law--Interest not chargeable-- Hindson International v. ITO (Chandigarh) . . . 123

S. 234C --Advance tax--Interest--Liability--Estimated income nil under law at time of deposit of advance tax--Assessee not liable to pay advance tax--Assessee becoming liable to tax owing to subsequent change of law--Interest not chargeable-- Hindson International v. ITO (Chandigarh) . . . 123

S. 271(1)(c), Expln. 5(2) --Search and seizure--Assessment in search cases--Penalty--Concealment of income--Admission of undisclosed income under section 132(4) by assessee--Return filed under section 153A including undisclosed income--No concealment of income --Penalty cancelled-- Deputy CIT v. Avinash Ch. Gupta (Kolkata) . . . 173

S. 282(1) --Assessment--Notice--Notice served on assessee's wife in his absence--Valid-- ITO v. Gurbax Singh Gill (Amritsar) . . . 129

ITR (TRIB) VOL 5 PART 8

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))

Volume 5 : Part 8 (Issue dated : 18-10-2010)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Business expenditure --Deduction--Liability on account of foreign exchange fluctuaztion--To be allowed on accrual basis with reference to rate of foreign exchange at end of year--Income-tax Act, 1961, ss. 37, 43A-- HLS Asia Ltd . v. Deputy CIT (Delhi) . . . 774

Charitable purpose --Charitable trust--Registration--Commissioner to satisfy himself about object of trust and genuineness of activities of trust--Trust deed disclosing establishment of trust for purpose of setting up and running educational institution--Activity charitable in nature and genuineness of activity established--Conditions of registration fulfilled--Direction to Commissioner to grant registration--Income-tax Act, 1961, ss. 2(15), 12A, 12AA-- Shri Krishna Education and Welfare Trust v. CIT (Delhi) . . . 750

Depreciation --Plant and machinery--Higher rate allowed in previous years--Assessee entitled to higher depreciation present year also--Income-tax Act, 1961, s. 32-- HLS Asia Ltd. v. Deputy CIT (Delhi) . . . 774

----Transaction of purchase and lease of cylinders --Purchase and lease of cylinders confirmed by parties--No material produced by Assessing Officer to prove transaction not genuine--Assessee entitled to depreciation--Income-tax Act, 1961, s. 32-- Asst. CIT v. Banaras Beads Ltd. (Delhi) . . . 761

Export --Special deduction--Capital assets not constituting trading items of assessee--Not allowable--Income-tax Act, 1961, s. 80HHC-- HLS Asia Ltd. v. Deputy CIT (Delhi) . . . 774

----Special deduction--Receipt of convertible foreign exchange--Extension of time granted by competent authority--Receipt of export sales in convertible foreign exchange before completion of assessment--Export receipts to be included--Income-tax Act, 1961, ss. 80HHC(2), 155(13)-- Asst. CIT v. Banaras Beads Ltd. (Delhi) . . . 761

Income from house property --Deductions--Repairs and vacancy allowance--Commissioner directing Assessing Officer to verify if municipal tax paid and reduce it from annual value to allow deduction--Direction of Commissioner in consonance with legal provisions--Income-tax Act, 1961-- SICAL Logistics Ltd. v. Addl. CIT (Chennai) . . . 801

----Revision--Annual value--Determination of annual value--Property let out to group concern--Fixation of annual value of property by Corporation at higher rate--Commissioner directing Assessing Officer to examine issue considering sections 23 and 24 of Act--Proper--Income-tax Act, 1961, ss. 23, 24, 263-- SICAL Logistics Ltd. v. Addl. CIT (Chennai) . . . 801

Industrial undertaking --Special deduction--Assessee to be given deduction where allowed in previous years--Income-tax Act, 1961, s. 80-IB-- HLS Asia Ltd. v. Deputy CIT (Delhi) . . . 774

Penalty --Acceptance and repayment of loans or deposits in cash--Change of law--Amendment with effect from June 1, 2003 bringing repayment of loans within purview of provision--Repayment of loans in cash prior to amendment--No penalty imposable--Income-tax Act, 1961, ss. 269T, 271E-- ITO v. Sudesh Kumar Sareen (Delhi) . . . 829

Revision --Notice issued on ground profits low--Failure to show error in assessment order--Revision order set aside--Income-tax Act, 1961, s. 263-- SICAL Logistics Ltd. v. Addl. CIT (Chennai) . . . 801

Wealth-tax --Net wealth--Debt owed--Loans obtained for working capital against security of lands--Not debts incurred in relation to lands--Cannot be deducted while computing net wealth--Wealth-tax Act, 1957, s. 2(m)-- Phoenix International Ltd. v. Deputy CWT (Delhi) . . . 787

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 2(15) --Charitable purpose--Charitable trust--Registration--Commissioner to satisfy himself about object of trust and genuineness of activities of trust--Trust deed disclosing establishment of trust for purpose of setting up and running educational institution--Activity charitable in nature and genuineness of activity established--Conditions of registration fulfilled--Direction to Commissioner to grant registration-- Shri Krishna Education and Welfare Trust v. CIT (Delhi) . . . 750

S. 12A --Charitable purpose--Charitable trust--Registration--Commissioner to satisfy himself about object of trust and genuineness of activities of trust--Trust deed disclosing establishment of trust for purpose of setting up and running educational institution--Activity charitable in nature and genuineness of activity established--Conditions of registration fulfilled--Direction to Commissioner to grant registration-- Shri Krishna Education and Welfare Trust v. CIT (Delhi) . . . 750

S. 12AA --Charitable purpose--Charitable trust--Registration--Commissioner to satisfy himself about object of trust and genuineness of activities of trust--Trust deed disclosing establishment of trust for purpose of setting up and running educational institution--Activity charitable in nature and genuineness of activity established--Conditions of registration fulfilled--Direction to Commissioner to grant registration-- Shri Krishna Education and Welfare Trust v. CIT (Delhi) . . . 750

S. 23 --Income from house property--Revision--Annual value--Determination of annual value--Property let out to group concern--Fixation of annual value of property by Corporation at higher rate--Commissioner directing Assessing Officer to examine issue considering sections 23 and 24 of Act--Proper-- SICAL Logistics Ltd. v. Addl. CIT (Chennai) . . . 801

S. 24 --Income from house property--Revision--Annual value--Determination of annual value--Property let out to group concern--Fixation of annual value of property by Corporation at higher rate--Commissioner directing Assessing Officer to examine issue considering sections 23 and 24 of Act--Proper-- SICAL Logistics Ltd. v. Addl. CIT (Chennai) . . . 801

S. 32 --Depreciation--Plant and machinery--Higher rate allowed in previous years--Assessee entitled to higher depreciation present year also-- HLS Asia Ltd. v. Deputy CIT (Delhi) . . . 774

----Depreciation--Transaction of purchase and lease of cylinders--Purchase and lease of cylinders confirmed by parties--No material produced by Assessing Officer to prove transaction not genuine--Assessee entitled to depreciation-- Asst. CIT v. Banaras Beads Ltd. (Delhi) . . . 761

S. 37 --Business expenditure--Deduction--Liability on account of foreign exchange fluctuaztion--To be allowed on accrual basis with reference to rate of foreign exchange at end of year-- HLS Asia Ltd . v. Deputy CIT (Delhi) . . . 774

S. 43A --Business expenditure--Deduction--Liability on account of foreign exchange fluctuaztion--To be allowed on accrual basis with reference to rate of foreign exchange at end of year-- HLS Asia Ltd . v. Deputy CIT (Delhi) . . . 774

S. 80HHC --Export--Special deduction--Capital assets not constituting trading items of assessee--Not allowable-- HLS Asia Ltd. v. Deputy CIT (Delhi) . . . 774

S. 80HHC(2) --Export--Special deduction--Receipt of convertible foreign exchange --Extension of time granted by competent authority--Receipt of export sales in convertible foreign exchange before completion of assessment--Export receipts to be included-- Asst. CIT v. Banaras Beads Ltd. (Delhi) . . . 761

S. 80-IB --Industrial undertaking--Special deduction--Assessee to be given deduction where allowed in previous years-- HLS Asia Ltd. v. Deputy CIT (Delhi) . . . 774

S. 155(13) --Export--Special deduction--Receipt of convertible foreign exchange--Extension of time granted by competent authority--Receipt of export sales in convertible foreign exchange before completion of assessment--Export receipts to be included-- Asst. CIT v. Banaras Beads Ltd. (Delhi) . . . 761

S. 263 --Income from house property--Revision--Annual value--Determination of annual value--Property let out to group concern--Fixation of annual value of property by Corporation at higher rate--Commissioner directing Assessing Officer to examine issue considering sections 23 and 24 of Act--Proper-- SICAL Logistics Ltd. v. Addl. CIT (Chennai) . . . 801

----Revision--Notice issued on ground profits low--Failure to show error in assessment order--Revision order set aside-- SICAL Logistics Ltd. v. Addl. CIT (Chennai) . . . 801

S. 269T --Penalty--Acceptance and repayment of loans or deposits in cash--Change of law--Amendment with effect from June 1, 2003 bringing repayment of loans within purview of provision--Repayment of loans in cash prior to amendment--No penalty imposable-- ITO v. Sudesh Kumar Sareen (Delhi) . . . 829

S. 271E --Penalty--Acceptance and repayment of loans or deposits in cash--Change of law--Amendment with effect from June 1, 2003 bringing repayment of loans within purview of provision--Repayment of loans in cash prior to amendment--No penalty imposable-- ITO v. Sudesh Kumar Sareen (Delhi) . . . 829

Wealth-tax Act, 1957 :

S. 2(m) --Wealth-tax--Net wealth--Debt owed--Loans obtained for working capital against security of lands--Not debts incurred in relation to lands--Cannot be deducted while computing net wealth-- Phoenix International Ltd. v. Deputy CWT (Delhi) . . . 787

ITR VOL 328 PART 1

INCOME TAX REPORTS (ITR)

Volume 328 : Part 1 (Issue dated 25-10-2010)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Accounting --Accounting Standard--Method of accounting cost of inventory--Work-in-progress--Indirect travel cost not to be added--Assessee to be permitted to exclude, subject to verification--Income-tax Act, 1961-- CIT v. Indomag Steel Technology Ltd . (Delhi) . . . 37

Business expenditure --Agreement in August 2002 with retrospective effect from January 1, 2002--Addition on ground expenses incurred during January to March 2002 crystallised in relevant previous year--Liability under agreement arising and accruing when agreement executed--Addition cannot be sustained--Income-tax Act, 1961, s. 37-- CIT v. Exxon Mobil Lubricants P. Ltd . (Delhi) . . . 17

----Disallowance--Excessive and unreasonable payments--International transaction--Import of goods at price higher than for local goods--Assessing Officer comparing figures for subsequent year--Not proper--Disallowance not justified--Income-tax Act, 1961, ss. 40A(2), 92-- CIT v. Denso Haryana Pvt. Ltd. (Delhi) . . . 14

Capital gains --Computation of capital gains--Depreciable assets--Scope of section 50--Land is not a depreciable asset--Section 50 not applicable where land forms part of whole undertaking which is transferred--Income-tax Act, 1961, s. 50-- CIT v. Coimbatore Lodge (Mad) . . . 69

----Computation of capital gains--Perpetual lease of land--Lessee constructing flats and selling them--Lessor having residuary rights and right of pre-emptive purchase--Capital gains to be determined by taking into account discounted value of flats and interest-free advance received from lessee--Income-tax Act, 1961, s. 45-- CIT v. N. Srirama Reddy (Karn) . . . 71

----Penalty--Concealment of income--Assessee making correction and filing revised return and offering it during assessment proceedings--Finding of inadvertent error--No penalty leviable--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Escorts Finance Ltd .(Delhi) . . . 44

----Sale of shares to members of family--No finding that any sum in excess of that declared realized--Sale consideration cannot be estimated invoking section 52--Income-tax Act, 1961, s. 52(1)-- CIT v. I. P. Chaudhari (Delhi) . . . 7

----Transfer--Law applicable--Effect of reintroduction of sub-sections (3) and (4) of section 45 with effect from 1-4-1988--Reconstitution of firm twice in 1994 resulting in entire assets held by original partners vesting in new partners and amounts invested by new partners paid to retiring partners--Transaction covered by section 45(4)--Gains taxable--Income-tax Act, 1961, ss. 2(47), 45(4)-- CIT v. Gurunath Talkies (Karn) . . . 59

Capital or revenue expenditure --Payment under agreements for "technical service" and "personnel despatching and receiving"--Whether entire payment to be treated as capital--Income-tax Act, 1961, s. 37-- CIT v. Denso Haryana Pvt. Ltd .(Delhi) . . . 14

Cash credits --Customer advances--Assessee failing to prove identity or existence of persons who had advanced money--Advances to be treated as income from unexplained sources--Income-tax Act, 1961, s. 68-- Hacienda Farms P. Ltd. v. CIT (Delhi) . . . 1

Co-operative society --Special deduction--Co-operative bank--Compulsory investment in Government securities--Interest entitled to special deduction--Rental income from property--Entitled to special deduction--Income-tax Act, 1961, s. 80P--Bihar Co-operative Societies Act, 1935, s. 19--Banking Regulation Act, 1949, ss. 3, 5, 6.-- Bihar State Co-operative Bank Ltd . v. CIT (Patna) . . . 139

Exemption --Income from letting out godowns or warehouses--Condition precedent for exemption--Letting out should be for storage, processing or facilitating marketing of commodities--Income derived from procurement of grains for FCI--Not entitled to exemption--Income-tax Act, 1961, s. 10(29)-- Haryana Warehousing Corporation v. Asst. CIT (P&H) . . . 23

Export markets development allowance --Weighted deduction--No requirement for assessee to maintain agency of foreign party outside India--Only required to pay commission as per agreement--Assessee not entitled to weighted deduction under section 35B(1)(b)(iv)-- Income tax Act, 1961, s. 35B(1)(b)(iv)-- CIT v. Rajjab Carpets (All) . . . 42

Finance company --Amortisation of preliminary expenses--Expenses incurred for issue of public shares--Not entitled to such benefit--Assessee raising a false claim--Penalty can be imposed--Matter remitted--Income-tax Act, 1961, ss. 35D, 271(1)(c)-- CIT v. Escorts Finance Ltd . (Delhi) . . . 44

Income --Accrual of income--Time of accrual--Refund of tax consequent to appellate order--Interest on refund accrues only when refund is granted--Income-tax Act, 1961, s. 244(1A)-- Smt. K. Devayani Amma v. Deputy CIT (Ker) . . . 10

----Computation of income--Constitutional validity of provisions--Disallowance of expenditure under section 14A--Sub-sections (2) and (3) of section 14A are valid--Income-tax Act, 1961, s. 14A--Constitution of India, art. 14-- Godrej and Boyce Mfg. Co. Ltd. v. Deputy CIT (Bom) . . . 81

----Computation of income--Disallowance of expenditure incurred in earning income not forming part of total income--Scope of section 14A--Section 14A applicable to dividend income and income from mutual funds exempt under section 10(33)--Income-tax Act, 1961, ss. 10(33), 14A-- Godrej and Boyce Mfg. Co. Ltd. v. Deputy CIT (Bom) . . . 81

----Computation of income--Disallowance under section 14A--Law applicable--Rule 8D not retrospective--Rule 8D applicable from assessment year 2008-09--Disallowance for earlier periods to be determined on reasonable basis--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Godrej and Boyce Mfg. Co. Ltd . v. Deputy CIT (Bom) . . . 81

----Income or capital--Amount received under incentive scheme for repayment of loans to set up new units--Capital receipt--Income-tax Act, 1961-- CIT v. Kisan Sahkari Chini Mills Ltd. (All) . . . 27

----Land acquisition--Enhanced compensation--Interest--Tax can be deducted at source--Income-tax Act, 1961, s. 194A-- Sant Ram v. Union of India

(P&H) . . . 77

Interpretation of taxing statutes --Literal interpretation--Retrospective effect of provisions-- Godrej and Boyce Mfg. Co. Ltd. v. Deputy CIT (Bom) . . . 81

Investment allowance --Disqualification--Manufacture of items in Eleventh Schedule--"Beer, wine and other alcoholic spirits"--Scope of disqualification--Manufacture of industrial spirits not disqualification--Manufacture of both industrial spirits and IMFL--Plant and machinery "mainly" used in manufacture of industrial spirits--Assessee entitled to allowance--Circular No. 229, dated August 9, 1977--Income-tax Act, 1961, s. 32A(2)(b)(iii), (2A), Sch. XI, item 1-- CIT v. Sraya Industries P. Ltd. (Delhi) . . . 29

Penalty --Concealment of income--Assessee claiming entertainment expenses at 50 per cent.--Assessing Officer reducing it to 35 per cent. and imposing penalty--Appellate authority finding no concealment of income--Penalty cannot be imposed--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Escorts Finance Ltd. (Delhi) . . . 44

----Concealment of income--Findings in assessment proceedings relevant--Bogus claim to deduction on account of commission paid to director--Person to whom commission paid not director of company at relevant time and finding by Tribunal in quantum appeal that no services rendered by her--Penalty justified--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Harparshad and Company Ltd. (Delhi) . . . 53

Precedent --Effect of Supreme Court decision in CIT v. Karnataka State Co-op. Apex Bank-- Bihar State Co-operative Bank Ltd. v. CIT (Patna) . . . 139

----Effect of Supreme Court decision in CIT v. Walfort Share and Stock Brokers P. Ltd. [2010] 326 ITR 1-- Godrej and Boyce Mfg. Co. Ltd . v. Deputy CIT (Bom) . . . 81

Rectification of mistakes --Decision contrary to law can be rectified--Income-tax Act, 1961, s. 154-- CIT v. Bindal Industries Ltd. (All) . . . 160

Reference --Reference returned unanswered for earlier year because of insubstantial tax effect--Same reasons apply for year in question--Income-tax Act, 1961, s. 256-- CIT v. J. K. Synthetics Ltd . (Delhi) . . . 6

Revision --Assessing Officer taking possible view on application of provision--Order of Assessing Officer not erroneous--Commissioner taking a different view--Commissioner cannot set aside order of Assessing Officer under section 263--Income-tax Act, 1961, s. 263-- Ranka Jewellers v. Addl. CIT (Bom) . . . 148

----Powers of Commissioner--Subject-matter considered and decided in appeal--Revision of order not valid in respect of same subject-matter--Income-tax Act, 1961, s. 263-- Ranka Jewellers v. Addl. CIT (Bom) . . . 148

Warehousing corporation --Exemption--Business income--Income derived from providing storage facility--Assessee's main business is providing storage facility--Income covered under business income--Income-tax Act, 1961, ss. 22, 28-- Haryana Warehousing Corporation v. Asst. CIT (P&H) . . . 23

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Banking Regulation Act, 1949 :

Ss. 3, 5, 6 --Co-operative society--Special deduction--Co-operative bank--Compulsory investment in Government securities--Interest entitled to special deduction--Rental income from property--Entitled to special deduction-- Bihar State Co-operative Bank Ltd . v. CIT (Patna) . . . 139

Bihar Co-operative Societies Act, 1935 :

S. 19 --Co-operative society--Special deduction--Co-operative bank--Compulsory investment in Government securities--Interest entitled to special deduction--Rental income from property--Entitled to special deduction-- Bihar State Co-operative Bank Ltd . v. CIT (Patna) . . . 139

Constitution of India :

Art. 14 --Income--Computation of income--Constitutional validity of provisions--Disallowance of expenditure under section 14A--Sub-sections (2) and (3) of section 14A are valid-- Godrej and Boyce Mfg. Co. Ltd. v. Deputy CIT (Bom) . . . 81

Income tax Act, 1961 :

S. 2(47) --Capital gains--Transfer--Law applicable--Effect of reintroduction of sub-sections (3) and (4) of section 45 with effect from 1-4-1988--Reconstitution of firm twice in 1994 resulting in entire assets held by original partners vesting in new partners and amounts invested by new partners paid to retiring partners--Transaction covered by section 45(4)--Gains taxable-- CIT v. Gurunath Talkies (Karn) . . . 59

S. 10(29) --Exemption--Income from letting out godowns or warehouses--Condition precedent for exemption--Letting out should be for storage, processing or facilitating marketing of commodities--Income derived from procurement of grains for FCI--Not entitled to exemption-- Haryana Warehousing Corporation v. Asst. CIT (P&H) . . . 23

S. 10(33) --Income--Computation of income--Disallowance of expenditure incurred in earning income not forming part of total income--Scope of section 14A--Section 14A applicable to dividend income and income from mutual funds exempt under section 10(33)-- Godrej and Boyce Mfg. Co. Ltd. v. Deputy CIT (Bom) . . . 81

S. 14A --Income--Computation of income--Constitutional validity of provisions--Disallowance of expenditure under section 14A--Sub-sections (2) and (3) of section 14A are valid-- Godrej and Boyce Mfg. Co. Ltd. v. Deputy CIT (Bom) . . . 81

----Income--Computation of income--Disallowance of expenditure incurred in earning income not forming part of total income--Scope of section 14A--Section 14A applicable to dividend income and income from mutual funds exempt under section 10(33)-- Godrej and Boyce Mfg. Co. Ltd. v. Deputy CIT (Bom) . . . 81

----Income--Computation of income--Disallowance under section 14A--Law applicable--Rule 8D not retrospective--Rule 8D applicable from assessment year 2008-09--Disallowance for earlier periods to be determined on reasonable basis-- Godrej and Boyce Mfg. Co. Ltd . v. Deputy CIT (Bom) . . . 81

S. 22 --Warehousing corporation--Exemption--Business income--Income derived from providing storage facility--Assessee's main business is providing storage facility--Income covered under business income-- Haryana Warehousing Corporation v. Asst. CIT (P&H) . . . 23

S. 28 --Warehousing corporation--Exemption--Business income--Income derived from providing storage facility--Assessee's main business is providing storage facility--Income covered under business income-- Haryana Warehousing Corporation v. Asst. CIT (P&H) . . . 23

S. 32A(2)(b)(iii) --Investment allowance--Disqualification--Manufacture of items in Eleventh Schedule--"Beer, wine and other alcoholic spirits"--Scope of disqualification--Manufacture of industrial spirits not disqualification--Manufacture of both industrial spirits and IMFL--Plant and machinery "mainly" used in manufacture of industrial spirits--Assessee entitled to allowance--Circular No. 229, dated August 9, 1977-- CIT v. Sraya Industries P. Ltd. (Delhi) . . . 29

S. 32A(2A) --Investment allowance--Disqualification--Manufacture of items in Eleventh Schedule--"Beer, wine and other alcoholic spirits"--Scope of disqualification--Manufacture of industrial spirits not disqualification--Manufacture of both industrial spirits and IMFL--Plant and machinery "mainly" used in manufacture of industrial spirits--Assessee entitled to allowance--Circular No. 229, dated August 9, 1977-- CIT v. Sraya Industries P. Ltd. (Delhi) . . . 29

S. 35B(1)(b)(iv) --Export markets development allowance--Weighted deduction--No requirement for assessee to maintain agency of foreign party outside India--Only required to pay commission as per agreement--Assessee not entitled to weighted deduction under section 35B(1)(b)(iv)-- CIT v. Rajjab Carpets (All) . . . 42

S. 35D --Finance company--Amortisation of preliminary expenses--Expenses incurred for issue of public shares--Not entitled to such benefit--Assessee raising a false claim--Penalty can be imposed--Matter remitted-- CIT v. Escorts Finance Ltd .(Delhi) . . . 44

S. 37 --Business expenditure--Agreement in August 2002 with retrospective effect from January 1, 2002--Addition on ground expenses incurred during January to March 2002 crystallised in relevant previous year--Liability under agreement arising and accruing when agreement executed--Addition cannot be sustained-- CIT v. Exxon Mobil Lubricants P. Ltd . (Delhi) . . . 17

----Capital or revenue expenditure--Payment under agreements for "technical service" and "personnel despatching and receiving"--Whether entire payment to be treated as capital-- CIT v. Denso Haryana Pvt. Ltd . (Delhi) . . . 14

S. 40A(2) --Business expenditure--Disallowance--Excessive and unreasonable payments--International transaction--Import of goods at price higher than for local goods--Assessing Officer comparing figures for subsequent year--Not proper--Disallowance not justified-- CIT v. Denso Haryana Pvt. Ltd. (Delhi) . . . 14

S. 45 --Capital gains--Computation of capital gains--Perpetual lease of land--Lessee constructing flats and selling them--Lessor having residuary rights and right of pre-emptive purchase--Capital gains to be determined by taking into account discounted value of flats and interest-free advance received from lessee-- CIT v. N. Srirama Reddy (Karn) . . . 71

S. 45(4) --Capital gains--Transfer--Law applicable--Effect of reintroduction of sub-sections (3) and (4) of section 45 with effect from 1-4-1988--Reconstitution of firm twice in 1994 resulting in entire assets held by original partners vesting in new partners and amounts invested by new partners paid to retiring partners--Transaction covered by section 45(4)--Gains taxable-- CIT v. Gurunath Talkies (Karn) . . . 59

S. 50 --Capital gains--Computation of capital gains--Depreciable assets--Scope of section 50--Land is not a depreciable asset--Section 50 not applicable where land forms part of whole undertaking which is transferred-- CIT v. Coimbatore Lodge (Mad) . . . 69

S. 52(1) --Capital gains--Sale of shares to members of family--No finding that any sum in excess of that declared realized--Sale consideration cannot be estimated invoking section 52-- CIT v. I. P. Chaudhari (Delhi) . . . 7

S. 68 --Cash credits--Customer advances--Assessee failing to prove identity or existence of persons who had advanced money--Advances to be treated as income from unexplained sources-- Hacienda Farms P. Ltd. v. CIT (Delhi) . . . 1

S. 80P --Co-operative society--Special deduction--Co-operative bank--Compulsory investment in Government securities--Interest entitled to special deduction--Rental income from property--Entitled to special deduction-- Bihar State Co-operative Bank Ltd . v. CIT (Patna) . . . 139

S. 92 --Business expenditure--Disallowance--Excessive and unreasonable payments--International transaction--Import of goods at price higher than for local goods--Assessing Officer comparing figures for subsequent year--Not proper--Disallowance not justified-- CIT v. Denso Haryana Pvt. Ltd. (Delhi) . . . 14

S. 154 --Rectification of mistakes--Decision contrary to law can be rectified-- CIT v. Bindal Industries Ltd. (All) . . . 160

S. 194A --Income--Land acquisition--Enhanced compensation--Interest--Tax can be deducted at source-- Sant Ram v. Union of India (P&H) . . . 77

S. 244(1A) --Income--Accrual of income--Time of accrual--Refund of tax consequent to appellate order--Interest on refund accrues only when refund is granted-- Smt. K. Devayani Amma v. Deputy CIT (Ker) . . . 10

S. 256 --Reference--Reference returned unanswered for earlier year because of insubstantial tax effect--Same reasons apply for year in question-- CIT v. J. K. Synthetics Ltd . (Delhi) . . . 6

S. 263 --Revision--Assessing Officer taking possible view on application of provision--Order of Assessing Officer not erroneous--Commissioner taking a different view--Commissioner cannot set aside order of Assessing Officer under section 263-- Ranka Jewellers v. Addl. CIT (Bom) . . . 148

----Revision--Powers of Commissioner--Subject-matter considered and decided in appeal--Revision of order not valid in respect of same subject-matter-- Ranka Jewellers v. Addl. CIT (Bom) . . . 148

S. 271(1)(c) --Capital gains--Penalty--Concealment of income--Assessee making correction and filing revised return and offering it during assessment proceedings--Finding of inadvertent error--No penalty leviable-- CIT v. Escorts Finance Ltd . (Delhi) . . . 44

----Finance company--Amortisation of preliminary expenses--Expenses incurred for issue of public shares--Not entitled to such benefit--Assessee raising a false claim--Penalty can be imposed--Matter remitted-- CIT v. Escorts Finance Ltd . (Delhi) . . . 44

----Penalty--Concealment of income--Assessee claiming entertainment expenses at 50 per cent.--Assessing Officer reducing it to 35 per cent. and imposing penalty--Appellate authority finding no concealment of income--Penalty cannot be imposed-- CIT v. Escorts Finance Ltd. (Delhi) . . . 44

----Penalty--Concealment of income--Findings in assessment proceedings relevant--Bogus claim to deduction on account of commission paid to director--Person to whom commission paid not director of company at relevant time and finding by Tribunal in quantum appeal that no services rendered by her--Penalty justified-- CIT v. Harparshad and Company Ltd. (Delhi) . . . 53

Sch. XI, item 1 --Investment allowance--Disqualification--Manufacture of items in Eleventh Schedule--"Beer, wine and other alcoholic spirits"--Scope of disqualification--Manufacture of industrial spirits not disqualification--Manufacture of both industrial spirits and IMFL--Plant and machinery "mainly" used in manufacture of industrial spirits--Assessee entitled to allowance--Circular No. 229, dated August 9, 1977-- CIT v. Sraya Industries P. Ltd. (Delhi) . . . 29

Income-tax Rules, 1962 :

R. 8D --Income--Computation of income--Disallowance under section 14A--Law applicable--Rule 8D not retrospective--Rule 8D applicable from assessment year 2008-09--Disallowance for earlier periods to be determined on reasonable basis-- Godrej and Boyce Mfg. Co. Ltd . v. Deputy CIT (Bom) . . . 81