ITR VOL 351 PART 4 AND ITR (TRIB) VOL 22 PART 4

 

INCOME TAX REPORTS (ITR)

Volume 351 Part 4 (Issue dated 18-3-2013)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Advance tax --Interest--Company--Book profit--Computation--Interest can be chargeable--Income-tax Act, 1961, ss. 115JB, 234B, 234C-- CIT v . Glenmark Pharmaceutical Ltd . (Bom) . . . 359

Appeal to Commissioner (Appeals) --Reassessment--Notice--Validity of reassessment--Commissioner (Appeals) not deciding validity but setting aside assessment to be made de novo--Reassessment subject in remand proceedings--Commissioner (Appeals) ought to have adjudicated issue--Tribunal not permitting assessee to raise issue of validity of reassessment--Not justified--Matter remanded to Tribunal to decide appeal--Income-tax Act, 1961, ss. 147, 148-- Smt. Prabha Rani Agrawal v. ITO
(All) . . . 275

Assessment --Enquiry--Notice--Co-operative societies--Person--Definition--Includes co-operative society--Notice under section 142(1) to co-operative societies within jurisdiction--Difference between notices issued under sections 133(6) and 142(1)--Income-tax Act, 1961, ss. 2(31), 133(6), 142(1)-- Mangalam Service Co-operative Bank Ltd. v. ITO
(Ker) . . . 312

Business expenditure --Disallowance--Expenditure on lease rent, taxes and repairs and maintenance of guest house--Not allowable--Income-tax Act, 1961, s. 37(4)-- Oriental Insurance Co. Ltd . v . CIT (Delhi) . . . 270

----Disallowance--Payments subject to deduction of tax at source--Assessee an association of public sector oil companies deploying manpower to foreign companies at contracted rate--Finding that seconded personnel not employees of assessee but continuing to be employees of oil companies--Amount paid as foreign allowances to seconded personnel not liable for deduction of tax at source--Payment not to be disallowed--Income-tax Act, 1961, ss. 40(a)(iii), 192-- CIT v . Petroleum India International (Bom) . . . 295

Capital gains --Long-term capital gains--Transfer of shares--Managing director of a company during survey admitting purchase of shares from assessee and his relatives--Assessing Officer computing gains in hands of assessee on basis of statement of managing director--Tribunal deleting addition on ground assessee not given opportunity to cross-examine managing director--Not justified when no such request by assessee--Tribunal failing to consider fact that managing director in revised return showing cash component of purchase of shares from assessee and his relatives--Matter remanded--Income-tax Act, 1961-- CIT v . Vinod Kumar Gupta (Delhi) . . . 253

Capital or revenue expenditure --Non-compete fee--No discussion for finding that expenses not incurred for acquisition of capital assets but for enhanced profitability--Matter remanded--Marketing know-how resulting in higher sales as well as leading to higher profit--Revenue expenditure--Income-tax Act, 1961-- CIT v . Glenmark Pharmaceutical Ltd. (Bom) . . . 359

Capital or revenue receipt --Multiplexes and theatres--Entertainment subsidy--Object of subsidy to promote cinema houses by constructing multiplex theatres--Capital receipt--Income-tax Act, 1961-- CIT v . Chaphalkar Brothers (Bom) . . . 309

----Multiplexes and theatres--Entertainment tax--Exemption--Scheme of Incentive for Tourism Projects 1995 to 2000--Exemption for giving boost to tourism sector--Scheme offering incentive for recouping or covering a capital investment or outlay already made by assessee--Capital receipt--Income-tax Act, 1961-- Dy. CIT v . Inox Leisure Ltd . (Guj) . . . 314

Company --Book profit--Computation--Provision for gratuity on basis of actuarial calculations--Not to be added back under clause (c) of Explanation 1 below section 115JB--Income-tax Act, 1961, s. 115JB-- Dy. CIT v . Inox Leisure Ltd . (Guj) . . . 314

Depreciation --Royalty--Part of consideration paid for acquiring brand--Allowable--Income-tax Act, 1961, s. 32-- CIT v . Glenmark Pharmaceutical Ltd .
(Bom) . . . 359

Donation for charitable purposes --Special deduction--Approval of institution--Application for renewal pending consideration before Commissioner--Cancellation of renewal without notice--Not justified--Income-tax Act, 1961, s. 80G(5)-- CIT v . Rajasthan Jain Charitable Trust (Karn) . . . 354

Double taxation relief --Special deduction--Income earned in foreign country--Relief to extent taxes paid abroad for relevant previous year--Relief not dependent upon payment of taxes being made in foreign country in previous year--Income-tax Act, 1961, s. 91(1)-- CIT v . Petroleum India International (Bom) . . . 295

Exemption --Charitable purposes--Charitable trust--Receipt less than amount specified in second proviso to section 2(15)--Receipts less than expenditure incurred during relevant assessment year--Assessee entitled to exemption--Income-tax Act, 1961, s. 2(15)-- CIT v . Rajasthan Jain Charitable Trust (Karn) . . . 354

Export --Special deduction--Computation--Sale of scrap--Includible in business profits--Income-tax Act, 1961, s. 80HHC-- R. N. Gupta and Co. Ltd . v . CIT (Appeals)
(P&H) . . . 369

----Special deduction--Law prior to amendment in 1991--Assessee not entitled to deduction for exporting granites--Income-tax Act, 1961, s. 80HHC-- CIT v. Vijay Granites Pvt. Ltd. (Mad) . . . 247

Export markets development allowance --Weighted deduction--Insurance business--Assessee not entitled to weighted deduction--Income-tax Act, 1961, s. 35B-- Oriental Insurance Co. Ltd. v . CIT (Delhi) . . . 270

Income --Accrual--Interest--Instrument stipulating interest to be payable at specified dates--Interest does not accrue to holder on any date prior thereto but only on date specified--Securities held by assessee on last day of financial year--Interest for broken period did not accrue to assessee on such date and not taxable in hands of assessee--Consideration received by assessee in respect of sale of securities is capital gains and exempt in terms of DTAA--Double Taxation Avoidance Agreement between India and Cyprus, arts. 11(4), 14(4)-- DIT (International Taxation) v . Credit Suisse First Boston (Cyprus) Ltd. (Bom) . . . 323

----Disallowance of expenditure in earning tax-free income--Whether or not expenses were incurred for earning exempt income--Question of fact--Tribunal finding no expenses incurred for earning dividend income--Investments made from assessee’s own funds and not borrowed funds--Finding of fact--Income-tax Act, 1961, s. 14A-- CIT v. Glenmark Pharmaceutical Ltd . (Bom) . . . 359

Insurance business --Computation--Export markets development reserve--Bad and doubtful debts reserve--Not to be added to balance of profits disclosed in annual accounts--Income-tax Act, 1961, s. 44 ; Sch. I, r. 5-- Oriental Insurance Co. Ltd . v. CIT (Delhi) . . . 270

----Profits and gains--Computation--Special provisions--Tax deducted at source--Provision for income-tax--No additions could be made--Income-tax Act, 1961, s. 44 ; Sch. I, r. 5-- Oriental Insurance Co. Ltd . v . CIT
(Delhi) . . . 270

Investment allowance --Industrial undertaking--Special deduction--Export of granite--Whether assessee doing manufacturing activity--Matter remanded--Income-tax Act, 1961, ss. 32A, 80-I-- CIT v. Vijay Granites Pvt. Ltd . (Mad) . . . 247

Investment deposit account --Provision for excise duty written back--Deductible--Companies Act, 1956, Sch. VI, Parts II, III--Income-tax Act, 1961, s. 32AB-- CIT v. Tata Yodogawa Ltd . (Jharkhand) . . . 379

Non-resident --Income deemed to accrue or arise in India--Non-resident employing Denmark nationals--Employees receiving salaries for services rendered in India for a period not exceeding 183 days--Salaries paid by non-resident employer and not borne by permanent establishment--Salaries not taxable in India--Double Taxation Avoidance Agreement Between India and Denmark--Income-tax Act, 1961, s. 9(1)(ii)-- DIT (International Taxation) v. Maersk Company Ltd . (Uttarakhand) . . . 366

Penalty --Concealment of income--Furnishing inaccurate particulars--Whether income from sale of stock option assessable as short-term capital gains or as long-term capital gains--Debatable issue at time of filing of return by assessee--No penalty leviable--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Jaswinder Singh Ahuja
(Delhi) . . . 262

----Loan in cash exceeding prescribed limit--Amount received in cash by assessee from her father-in-law for purchasing property--Transaction genuine and source disclosed for such transaction--Penalty could not be imposed--Income-tax Act, 1961, ss. 269SS, 271D-- CIT v. Smt. M. Yesodha (Mad) . . . 265

Reassessment --Charitable trust--Exemption--Accumulation of income--Assessee can file Form 10 during reassessment proceedings--Assessee could not file Form 10 only before Tribunal--Income-tax Act, 1961, s. 11--Income-tax Rules, 1962, r. 17, Form 10-- Association of Corporation and Apex Societies of Handlooms v . Asst. DIT
(Delhi) . . . 287

----Notice--Assessment under section 143(3) read with section 147 in which assessee participating--Fresh assessment consequent to notice under section 263--Assessee cannot contend opportunity to hearing not given and assessment invalid--Income-tax Act, 1961, ss. 148, 263-- NTUC Income Insurance Co-operative Ltd . v. Dy. DIT (International Taxation) (Bom) . . . 372

----Notice--Objections--Order dealing with objections not an empty formality--Application of mind to objections essential--Income-tax Act, 1961, s. 148-- Jay Bharat Maruti Ltd. v . Asst. CIT (Delhi) . . . 342

----Notice after four years--Conditions precedent--Failure to disclose all material facts necessary for assessment--No allegation in notice of failure on part of assessee to disclose any material facts--No mention in order rejecting objections what fact assessee had failed to disclose--Notice and order rejecting objections not valid--Income-tax Act, 1961, s. 148-- E. I. Dupont India Pvt. Ltd . v . Dy. CIT (Delhi) . . . 299

Recovery of tax --Notice of demand--Stay--Appeals before Commissioner (Appeals) pending--Withdrawal of huge money in pursuance of notice under section 220(6)--Enforcement of recovery of demand without disposing of application for stay--Not justified--Income-tax Act, 1961, s. 220(6)-- Society of the Franciscan (Hospitaller) Sisters v. Dy. DIT (Exemptions) (Bom) . . . 302

----Stay of demand--Housing project--Special deduction--Assessing Officer disallowing claim and raising demand--Tribunal holding in favour of assessee--Tax Recovery Officer bound to pass appropriate order based on order passed in appeal--Income-tax Act, 1961, s. 225(2)-- Sri Lakshmi Brick Industries v. TRO (Mad) . . . 345

Transfer of case --Co-ordinated and effective investigation--Assessees’ investments with a group companies whose cases being investigated and related to Commonwealth games--Necessity of centralisation of assessment in view of assessees’ nexus with group companies--Order of transfer of cases valid--Income-tax Act, 1961, s. 127-- Arrow Alloys Pvt. Ltd . v. Union of India (Gauhati) . . . 259

----Search and seizure in group cases at Delhi and allegation of tax evasion at Delhi--Head office of group in Dibrugarh and registered office and business activities of group in New Delhi--Not possible for Assessing Officer in regular charge to undertake detailed and co-ordinated investigations--Order of transfer of cases to central charge in New Delhi valid--Income-tax Act, 1961, s. 127(2)-- Continental Milkose (India) Ltd . v . CIT (Gauhati) . . . 292

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Companies Act, 1956 :

Sch. VI, Parts II, III --Investment deposit account--Provision for excise duty written back--Deductible-- CIT v. Tata Yodogawa Ltd . (Jharkhand) . . . 379

Double Taxation Avoidance Agreement between India and Cyprus :

Arts. 11(4), 14(4) --Income--Accrual--Interest--Instrument stipulating interest to be payable at specified dates--Interest does not accrue to holder on any date prior thereto but only on date specified--Securities held by assessee on last day of financial year--Interest for broken period did not accrue to assessee on such date and not taxable in hands of assessee--Consideration received by assessee in respect of sale of securities is capital gains and exempt in terms of DTAA-- DIT (International Taxation) v . Credit Suisse First Boston (Cyprus) Ltd. (Bom) . . . 323

Income-tax Act, 1961 :

S. 2(15) --Exemption--Charitable purposes--Charitable trust--Receipt less than amount specified in second proviso to section 2(15)--Receipts less than expenditure incurred during relevant assessment year--Assessee entitled to exemption-- CIT v . Rajasthan Jain Charitable Trust (Karn) . . . 354

S. 2(31) --Assessment--Enquiry--Notice--Co-operative societies--Person--Definition--Includes co-operative society--Notice under section 142(1) to co-operative societies within jurisdiction--Difference between notices issued under sections 133(6) and 142(1)-- Mangalam Service Co-operative Bank Ltd. v. ITO (Ker) . . . 312

S. 9(1)(ii) --Non-resident--Income deemed to accrue or arise in India--Non-resident employing Denmark nationals--Employees receiving salaries for services rendered in India for a period not exceeding 183 days--Salaries paid by non-resident employer and not borne by permanent establishment--Salaries not taxable in India--Double Taxation Avoidance Agreement Between India and Denmark-- DIT (International Taxation) v. Maersk Company Ltd . (Uttarakhand) . . . 366

S. 11 --Reassessment--Charitable trust--Exemption--Accumulation of income--Assessee can file Form 10 during reassessment proceedings--Assessee could not file Form 10 only before Tribunal-- Association of Corporation and Apex Societies of Handlooms v . Asst. DIT (Delhi) . . . 287

S. 14A --Income--Disallowance of expenditure in earning tax-free income--Whether or not expenses were incurred for earning exempt income--Question of fact--Tribunal finding no expenses incurred for earning dividend income--Investments made from assessee’s own funds and not borrowed funds--Finding of fact-- CIT v. Glenmark Pharmaceutical Ltd . (Bom) . . . 359

S. 32 --Depreciation--Royalty--Part of consideration paid for acquiring brand--Allowable-- CIT v . Glenmark Pharmaceutical Ltd . (Bom) . . . 359

S. 32A --Investment allowance--Industrial undertaking--Special deduction--Export of granite--Whether assessee doing manufacturing activity--Matter remanded-- CIT v. Vijay Granites Pvt. Ltd . (Mad) . . . 247

S. 32AB --Investment deposit account--Provision for excise duty written back--Deductible-- CIT v. Tata Yodogawa Ltd . (Jharkhand) . . . 379

S. 35B --Export markets development allowance--Weighted deduction--Insurance business--Assessee not entitled to weighted deduction-- Oriental Insurance Co. Ltd. v . CIT (Delhi) . . . 270

S. 37(4) --Business expenditure--Disallowance--Expenditure on lease rent, taxes and repairs and maintenance of guest house--Not allowable-- Oriental Insurance Co. Ltd . v . CIT (Delhi) . . . 270

S. 40(a)(iii) --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Assessee an association of public sector oil companies deploying manpower to foreign companies at contracted rate--Finding that seconded personnel not employees of assessee but continuing to be employees of oil companies--Amount paid as foreign allowances to seconded personnel not liable for deduction of tax at source--Payment not to be disallowed-- CIT v . Petroleum India International
(Bom) . . . 295

S. 44 --Insurance business--Computation--Export markets development reserve--Bad and doubtful debts reserve--Not to be added to balance of profits disclosed in annual accounts-- Oriental Insurance Co. Ltd . v. CIT (Delhi) . . . 270

----Insurance business--Profits and gains--Computation--Special provisions--Tax deducted at source--Provision for income-tax--No additions could be made-- Oriental Insurance Co. Ltd . v . CIT (Delhi) . . . 270

S. 80G(5) --Donation for charitable purposes--Special deduction--Approval of institution--Application for renewal pending consideration before Commissioner--Cancellation of renewal without notice--Not justified-- CIT v . Rajasthan Jain Charitable Trust (Karn) . . . 354

S. 80HHC --Export--Special deduction--Computation--Sale of scrap--Includible in business profits-- R. N. Gupta and Co. Ltd . v . CIT (Appeals) (P&H) . . . 369

----Export--Special deduction--Law prior to amendment in 1991--Assessee not entitled to deduction for exporting granites-- CIT v. Vijay Granites Pvt. Ltd.
(Mad) . . . 247

S. 80-I --Investment allowance--Industrial undertaking--Special deduction--Export of granite--Whether assessee doing manufacturing activity--Matter remanded-- CIT v. Vijay Granites Pvt. Ltd . (Mad) . . . 247

S. 91(1) --Double taxation relief--Special deduction--Income earned in foreign country--Relief to extent taxes paid abroad for relevant previous year--Relief not dependent upon payment of taxes being made in foreign country in previous year-- CIT v . Petroleum India International (Bom) . . . 295

S. 115JB --Advance tax--Interest--Company--Book profit--Computation--Interest can be chargeable-- CIT v . Glenmark Pharmaceutical Ltd . (Bom) . . . 359

----Company--Book profit--Computation--Provision for gratuity on basis of actuarial calculations--Not to be added back under clause (c) of Explanation 1 below section 115JB-- Dy. CIT v . Inox Leisure Ltd . (Guj) . . . 314

S. 127 --Transfer of case--Co-ordinated and effective investigation--Assessees’ investments with a group companies whose cases being investigated and related to Commonwealth games--Necessity of centralisation of assessment in view of assessees’ nexus with group companies--Order of transfer of cases valid-- Arrow Alloys Pvt. Ltd . v. Union of India (Gauhati) . . . 259

S. 127(2) --Transfer of case--Search and seizure in group cases at Delhi and allegation of tax evasion at Delhi--Head office of group in Dibrugarh and registered office and business activities of group in New Delhi--Not possible for Assessing Officer in regular charge to undertake detailed and co-ordinated investigations--Order of transfer of cases to central charge in New Delhi valid-- Continental Milkose (India) Ltd . v . CIT
(Gauhati) . . . 292

S. 133(6) --Assessment--Enquiry--Notice--Co-operative societies--Person--Definition--Includes co-operative society--Notice under section 142(1) to co-operative societies within jurisdiction--Difference between notices issued under sections 133(6) and 142(1)-- Mangalam Service Co-operative Bank Ltd. v. ITO (Ker) . . . 312

S. 142(1) --Assessment--Enquiry--Notice--Co-operative societies--Person--Definition--Includes co-operative society--Notice under section 142(1) to co-operative societies within jurisdiction--Difference between notices issued under sections 133(6) and 142(1)-- Mangalam Service Co-operative Bank Ltd. v. ITO (Ker) . . . 312

S. 147 --Appeal to Commissioner (Appeals)--Reassessment--Notice--Validity of reassessment--Commissioner (Appeals) not deciding validity but setting aside assessment to be made de novo--Reassessment subject in remand proceedings--Commissioner (Appeals) ought to have adjudicated issue--Tribunal not permitting assessee to raise issue of validity of reassessment--Not justified--Matter remanded to Tribunal to decide appeal-- Smt. Prabha Rani Agrawal v. ITO (All) . . . 275

S. 148 --Appeal to Commissioner (Appeals)--Reassessment--Notice--Validity of reassessment--Commissioner (Appeals) not deciding validity but setting aside assessment to be made de novo--Reassessment subject in remand proceedings--Commissioner (Appeals) ought to have adjudicated issue--Tribunal not permitting assessee to raise issue of validity of reassessment--Not justified--Matter remanded to Tribunal to decide appeal-- Smt. Prabha Rani Agrawal v. ITO (All) . . . 275

----Reassessment--Notice--Assessment under section 143(3) read with section 147 in which assessee participating--Fresh assessment consequent to notice under section 263--Assessee cannot contend opportunity to hearing not given and assessment invalid-- NTUC Income Insurance Co-operative Ltd . v. Dy. DIT (International Taxation) (Bom) . . . 372

----Reassessment--Notice--Objections--Order dealing with objections not an empty formality--Application of mind to objections essential-- Jay Bharat Maruti Ltd. v . Asst. CIT (Delhi) . . . 342

----Reassessment--Notice after four years--Conditions precedent--Failure to disclose all material facts necessary for assessment--No allegation in notice of failure on part of assessee to disclose any material facts--No mention in order rejecting objections what fact assessee had failed to disclose--Notice and order rejecting objections not valid-- E. I. Dupont India Pvt. Ltd . v . Dy. CIT (Delhi) . . . 299

S. 192 --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Assessee an association of public sector oil companies deploying manpower to foreign companies at contracted rate--Finding that seconded personnel not employees of assessee but continuing to be employees of oil companies--Amount paid as foreign allowances to seconded personnel not liable for deduction of tax at source--Payment not to be disallowed-- CIT v . Petroleum India International (Bom) . . . 295

S. 220(6) --Recovery of tax--Notice of demand--Stay--Appeals before Commissioner (Appeals) pending--Withdrawal of huge money in pursuance of notice under section 220(6)--Enforcement of recovery of demand without disposing of application for stay--Not justified-- Society of the Franciscan (Hospitaller) Sisters v. Dy. DIT (Exemptions) (Bom) . . . 302

S. 225(2) --Recovery of tax--Stay of demand--Housing project--Special deduction--Assessing Officer disallowing claim and raising demand--Tribunal holding in favour of assessee--Tax Recovery Officer bound to pass appropriate order based on order passed in appeal-- Sri Lakshmi Brick Industries v. TRO (Mad) . . . 345

S. 234B --Advance tax--Interest--Company--Book profit--Computation--Interest can be chargeable-- CIT v . Glenmark Pharmaceutical Ltd . (Bom) . . . 359

S. 234C --Advance tax--Interest--Company--Book profit--Computation--Interest can be chargeable-- CIT v . Glenmark Pharmaceutical Ltd . (Bom) . . . 359

S. 263 --Reassessment--Notice--Assessment under section 143(3) read with section 147 in which assessee participating--Fresh assessment consequent to notice under section 263--Assessee cannot contend opportunity to hearing not given and assessment invalid-- NTUC Income Insurance Co-operative Ltd . v. Dy. DIT (International Taxation) (Bom) . . . 372

S. 269SS --Penalty--Loan in cash exceeding prescribed limit--Amount received in cash by assessee from her father-in-law for purchasing property--Transaction genuine and source disclosed for such transaction--Penalty could not be imposed-- CIT v. Smt. M. Yesodha (Mad) . . . 265

S. 271(1)(c) --Penalty--Concealment of income--Furnishing inaccurate particulars--Whether income from sale of stock option assessable as short-term capital gains or as long-term capital gains--Debatable issue at time of filing of return by assessee--No penalty leviable-- CIT v. Jaswinder Singh Ahuja (Delhi) . . . 262

S. 271D --Penalty--Loan in cash exceeding prescribed limit--Amount received in cash by assessee from her father-in-law for purchasing property--Transaction genuine and source disclosed for such transaction--Penalty could not be imposed-- CIT v. Smt. M. Yesodha (Mad) . . . 265

Sch. I, r. 5 --Insurance business--Computation--Export markets development reserve--Bad and doubtful debts reserve--Not to be added to balance of profits disclosed in annual accounts-- Oriental Insurance Co. Ltd . v. CIT (Delhi) . . . 270

----Insurance business--Profits and gains--Computation--Special provisions--Tax deducted at source--Provision for income-tax--No additions could be made-- Oriental Insurance Co. Ltd . v . CIT (Delhi) . . . 270

Income-tax Rules, 1962 :

R. 17, Form 10 --Reassessment--Charitable trust--Exemption--Accumulation of income--Assessee can file Form 10 during reassessment proceedings--Assessee could not file Form 10 only before Tribunal-- Association of Corporation and Apex Societies of Handlooms v . Asst. DIT (Delhi) . . . 287

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

Volume 22 : Part 4 (Issue dated : 18-3-2013)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Business expenditure --Bad debt--Banking company--Interest accrued and shown in books but not due--Deduction allowable--Income-tax Act, 1961, s. 36(1)(vii)-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500

----Banking company--Purchase of securities--Broken-period interest paid by assessee--Allowable-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500

Business loss --Provision for loss on account of revaluation of outstanding foreign exchange contracts--Allowable as a business loss--Income-tax Act, 1961, s. 29-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500

Capital or revenue expenditure --Expenditure on installation of laser upgradation kit for eye surgery--Advanced technology used in line of business of assessee--Is revenue expenditure--Income-tax Act, 1961, s. 37-- Dy. CIT v. Lasik Centre (India) P. Ltd. (Chennai) . . . 462

Company --Book profits--Provision for bad debts--To be added while computing book profits--Income-tax Act, 1961, s. 115JA (as amended by Finance (No. 2) Act, 2009 with retrospective effect from April 1, 1998)-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500

----Minimum alternate tax--Commissioner (Appeals) holding provisions not applicable to assessee--Matter remanded for decision on question of applicability of provisions of section 115JA to assessee by speaking order--Income-tax Act, 1961, s. 115JA-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500

Depreciation --Windmills--Higher rate of depreciation--Entitled to higher rate of depreciation--Income-tax Act, 1961, s. 32-- Assistant CIT v. Rajave Textiles P. Ltd. (Chennai) . . . 475

Donations to charitable institutions --Special deduction--Approval of institution--Renewal--Circular clarifying that existing approvals deemed to have been extended in perpetuity unless specifically withdrawn--Circular binding--Approval to continue--Income-tax Act, 1961, s. 80G(5)--Circular No. 5 dated 3-6-2010-- Vishav Namdhari Sangat v. CIT (Chandigarh) . . . 468

Exemption --Export-oriented undertaking--Registered with Software Technology Park of India--Whether ratification of Board of approval required to obtain benefit under section 10B--Matter remanded--Income-tax Act, 1961, s. 10B--Notification No. 33/(RE)/92-97 dated 22-3-1994-- ITO v. Selectsys India P. Ltd. (Hyderabad) . . . 493

----Export-oriented unit--Registered with Software Technology Park of India--Whether ratification of Board of approval required to obtain benefit under section 10B--Matter remanded--Income-tax Act, 1961, s. 10B-- ITO v. Singularity Software (India) P. Ltd. (Hyderabad) . . . 495

----Interest on foreign currency deposits with scheduled banks--Disallowance of expenses--Matter remanded to Assessing Officer to compute disallowance under section 14A--Income-tax Act, 1961, ss. 10(15)(iv)(fa), 14A-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500

Income from house property --Annual letting value--Vacancy allowance--Premises continuously let since 1997--Property lying vacant on expiry of lease in April, 2004--Vacancy allowance not allowable--No evidence to support value based on municipal rateable value on basis that the property subject to rent control legislation--Valuation to be on basis of sum for which property may be let--Assessing Officer fixing annual letting value based on rent fetched up to April, 2004--Reasonable--Income-tax Act, 1961, ss. 23(1)(a), (b), (c)-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527

Income not includible in total income --Disallowance of expenditure in relation to--Effect of rule 8D--Open to assessee to prove it had sufficient funds to finance tax-exempt investments and that no disallowance would arise on basis of general pool of funds hypothesis--Matter remanded to Assessing Officer to allow assessee opportunity to show why disallowance under section 14A(1) should not be worked out following proportionate method--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527

Income --Foreign company--Interest received by assessee from its head office and overseas branches--Not taxable-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500

Industrial undertaking --Special deduction--Deeming fiction that eligible business only source of income for previous year relevant to initial assessment year up to assessment year of determination of deduction under section 80-IA(1)--Scope of--Year of commencement of operations of eligible undertaking or enterprise is initial assessment year not first year of determination of deduction--Overriding effect of section 80-IA(5) limited to where allowance not already set-off against other income--Section 80-IA(5) being applicable for current year, set-off of loss/allowance against other income allowable--Income-tax Act, 1961, ss. 32(2), 70, 71, 72, 80B(5), 80-IA(1), (5)-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527

International transactions --Arm’s length price--Loan of money in foreign currency to foreign subsidiaries--Domestic prime lending rate not applicable--International rate, LIBOR, to be taken as benchmark--Assessee having an arrangement for loan with bank for less than 4 per cent. but for loans to associated enterprises charging 4 per cent. interest--Assessee’s profits exempt under section 10B--No case that assessee would benefit by shifting profits outside India--No adjustment for arm’s length price warranted--Income-tax Act, 1961, ss. 10B, 92CA-- Cotton Naturals (I) P. Ltd. v. Deputy CIT (Delhi) . . . 438

----Determination of arm’s length price--Finding that comparison of transaction was possible--Transactional net margin method cannot be adopted--Matter remanded--Income-tax Act, 1961, s. 92CA-- Delphi TVS Diesel Systems Ltd. v. Assistant CIT (Chennai) . . . 478

Judicial discipline --Appellate Tribunal--Bound by order of co-ordinate Bench--That appeal therefrom pending before court, not ground not to follow-- Assistant CIT v. Rajave Textiles P. Ltd. (Chennai) . . . 475

Penalty --Concealment of income--Claim to depreciation on cost of development of portal and e-commerce site--Not a fixed asset under section 2(11)(b)--Penalty not leviable for wrong claim--Deletion of penalty--Justified--Income-tax Act, 1961, s. 271(1)(c)-- Deputy CIT v. Hifunda Ltd. (Kolkata) . . . 488

Reassessment --Reopening before expiry of four years--Nothing to show consideration of provision of section 80-IA(5) by Assessing Officer while framing original assessments--Reassessment proceedings rightly initiated--Income-tax Act, 1961, ss. 80-IA(5), 147-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 10(15)(iv)(fa) --Exemption--Interest on foreign currency deposits with scheduled banks--Disallowance of expenses--Matter remanded to Assessing Officer to compute disallowance under section 14A-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500

S. 10B --Exemption--Export-oriented undertaking--Registered with Software Technology Park of India--Whether ratification of Board of approval required to obtain benefit under section 10B--Matter remanded-- ITO v. Selectsys India P. Ltd. (Hyderabad) . . . 493

----Exemption--Export-oriented unit--Registered with Software Technology Park of India--Whether ratification of Board of approval required to obtain benefit under section 10B--Matter remanded-- ITO v. Singularity Software (India) P. Ltd. (Hyderabad) . . . 495

----International transactions--Arm’s length price--Loan of money in foreign currency to foreign subsidiaries--Domestic prime lending rate not applicable--International rate, LIBOR, to be taken as benchmark--Assessee having an arrangement for loan with bank for less than 4 per cent. but for loans to associated enterprises charging 4 per cent. interest--Assessee’s profits exempt under section 10B--No case that assessee would benefit by shifting profits outside India--No adjustment for arm’s length price warranted-- Cotton Naturals (I) P. Ltd. v. Deputy CIT (Delhi) . . . 438

S. 14A --Exemption--Interest on foreign currency deposits with scheduled banks--Disallowance of expenses--Matter remanded to Assessing Officer to compute disallowance under section 14A-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500

----Income not includible in total income--Disallowance of expenditure in relation to--Effect of rule 8D--Open to assessee to prove it had sufficient funds to finance tax-exempt investments and that no disallowance would arise on basis of general pool of funds hypothesis--Matter remanded to Assessing Officer to allow assessee opportunity to show why disallowance under section 14A(1) should not be worked out following proportionate method-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527

S. 23(1)(a), (b), (c) --Income from house property--Annual letting value--Vacancy allowance--Premises continuously let since 1997--Property lying vacant on expiry of lease in April, 2004--Vacancy allowance not allowable--No evidence to support value based on municipal rateable value on basis that the property subject to rent control legislation--Valuation to be on basis of sum for which property may be let--Assessing Officer fixing annual letting value based on rent fetched up to April, 2004--Reasonable-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527

S. 29 --Business loss--Provision for loss on account of revaluation of outstanding foreign exchange contracts--Allowable as a business loss-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500

S. 32 --Depreciation--Windmills--Higher rate of depreciation--Entitled to higher rate of depreciation-- Assistant CIT v. Rajave Textiles P. Ltd. (Chennai) . . . 475

S. 32(2) --Industrial undertaking--Special deduction--Deeming fiction that eligible business only source of income for previous year relevant to initial assessment year up to assessment year of determination of deduction under section 80-IA(1)--Scope of--Year of commencement of operations of eligible undertaking or enterprise is initial assessment year not first year of determination of deduction--Overriding effect of section 80-IA(5) limited to where allowance not already set-off against other income--Section 80-IA(5) being applicable for current year, set-off of loss/allowance against other income allowable-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527

S. 36(1)(vii) --Business expenditure--Bad debt--Banking company--Interest accrued and shown in books but not due--Deduction allowable-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500

S. 37 --Capital or revenue expenditure--Expenditure on installation of laser upgradation kit for eye surgery--Advanced technology used in line of business of assessee--Is revenue expenditure-- Dy. CIT v. Lasik Centre (India) P. Ltd. (Chennai) . . . 462

S. 70 --Industrial undertaking--Special deduction--Deeming fiction that eligible business only source of income for previous year relevant to initial assessment year up to assessment year of determination of deduction under section 80-IA(1)--Scope of--Year of commencement of operations of eligible undertaking or enterprise is initial assessment year not first year of determination of deduction--Overriding effect of section 80-IA(5) limited to where allowance not already set-off against other income--Section 80-IA(5) being applicable for current year, set-off of loss/allowance against other income allowable-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527

S. 71 --Industrial undertaking--Special deduction--Deeming fiction that eligible business only source of income for previous year relevant to initial assessment year up to assessment year of determination of deduction under section 80-IA(1)--Scope of--Year of commencement of operations of eligible undertaking or enterprise is initial assessment year not first year of determination of deduction--Overriding effect of section 80-IA(5) limited to where allowance not already set-off against other income--Section 80-IA(5) being applicable for current year, set-off of loss/allowance against other income allowable-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527

S. 72 --Industrial undertaking--Special deduction--Deeming fiction that eligible business only source of income for previous year relevant to initial assessment year up to assessment year of determination of deduction under section 80-IA(1)--Scope of--Year of commencement of operations of eligible undertaking or enterprise is initial assessment year not first year of determination of deduction--Overriding effect of section 80-IA(5) limited to where allowance not already set-off against other income--Section 80-IA(5) being applicable for current year, set-off of loss/allowance against other income allowable-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527

S. 80B(5) --Industrial undertaking--Special deduction--Deeming fiction that eligible business only source of income for previous year relevant to initial assessment year up to assessment year of determination of deduction under section 80-IA(1)--Scope of--Year of commencement of operations of eligible undertaking or enterprise is initial assessment year not first year of determination of deduction--Overriding effect of section 80-IA(5) limited to where allowance not already set-off against other income--Section 80-IA(5) being applicable for current year, set-off of loss/allowance against other income allowable-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527

S. 80G(5) --Donations to charitable institutions--Special deduction--Approval of institution--Renewal--Circular clarifying that existing approvals deemed to have been extended in perpetuity unless specifically withdrawn--Circular binding--Approval to continue-- Vishav Namdhari Sangat v. CIT (Chandigarh) . . . 468

S. 80-IA(1) --Industrial undertaking--Special deduction--Deeming fiction that eligible business only source of income for previous year relevant to initial assessment year up to assessment year of determination of deduction under section 80-IA(1)--Scope of--Year of commencement of operations of eligible undertaking or enterprise is initial assessment year not first year of determination of deduction--Overriding effect of section 80-IA(5) limited to where allowance not already set-off against other income--Section 80-IA(5) being applicable for current year, set-off of loss/allowance against other income allowable-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527

S. 80-IA(5) --Industrial undertaking--Special deduction--Deeming fiction that eligible business only source of income for previous year relevant to initial assessment year up to assessment year of determination of deduction under section 80-IA(1)--Scope of--Year of commencement of operations of eligible undertaking or enterprise is initial assessment year not first year of determination of deduction--Overriding effect of section 80-IA(5) limited to where allowance not already set-off against other income--Section 80-IA(5) being applicable for current year, set-off of loss/allowance against other income allowable-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527

----Reassessment--Reopening before expiry of four years--Nothing to show consideration of provision of section 80-IA(5) by Assessing Officer while framing original assessments--Reassessment proceedings rightly initiated-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527

S. 92CA --International transactions--Arm’s length price--Loan of money in foreign currency to foreign subsidiaries--Domestic prime lending rate not applicable--International rate, LIBOR, to be taken as benchmark--Assessee having an arrangement for loan with bank for less than 4 per cent. but for loans to associated enterprises charging 4 per cent. interest--Assessee’s profits exempt under section 10B--No case that assessee would benefit by shifting profits outside India--No adjustment for arm’s length price warranted-- Cotton Naturals (I) P. Ltd. v. Deputy CIT (Delhi) . . . 438

----International transactions--Determination of arm’s length price--Finding that comparison of transaction was possible--Transactional net margin method cannot be adopted--Matter remanded-- Delphi TVS Diesel Systems Ltd. v. Assistant CIT (Chennai) . . . 478

S. 115JA (as amended by Finance (No. 2) Act, 2009 with retrospective effect from April 1, 1998) --Company--Book profits--Provision for bad debts--To be added while computing book profits-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500

----Company--Minimum alternate tax--Commissioner (Appeals) holding provisions not applicable to assessee--Matter remanded for decision on question of applicability of provisions of section 115JA to assessee by speaking order-- Dresdner Bank AG v. Assistant Director of Income-tax (Mumbai) . . . 500

S. 147 --Reassessment--Reopening before expiry of four years--Nothing to show consideration of provision of section 80-IA(5) by Assessing Officer while framing original assessments--Reassessment proceedings rightly initiated-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527

S. 271(1)(c) --Penalty--Concealment of income--Claim to depreciation on cost of development of portal and e-commerce site--Not a fixed asset under section 2(11)(b)--Penalty not leviable for wrong claim--Deletion of penalty--Justified-- Deputy CIT v. Hifunda Ltd. (Kolkata) . . . 488

Income-tax Rules, 1962 :

R. 8D --Income not includible in total income--Disallowance of expenditure in relation to--Effect of rule 8D--Open to assessee to prove it had sufficient funds to finance tax-exempt investments and that no disallowance would arise on basis of general pool of funds hypothesis--Matter remanded to Assessing Officer to allow assessee opportunity to show why disallowance under section 14A(1) should not be worked out following proportionate method-- Hercules Hoists Ltd. v. Assistant CIT (Mumbai) . . . 527

 

Income Tax offices open on 30th and 31st March

SECTION 119 - CENTRAL BOARD OF DIRECT TAXES-INSTRUCTIONS TO SUBORDINATE AUTHORITIES - INCOME-TAX OFFICES THROUGHOUT INDIA TO REMAIN ON 30TH AND 31ST OF MARCH 2013 FOR ACCEPTING RETURNS

ORDER [F. NO. 225/45/2013/ITA.II], DATED 13-3-2013

The Financial Year 2012-13 closes on 31-3-2013. In view of holidays on 27th and 29th of March and thereafter, on 30th and 31st March, being Saturday and Sunday it is directed that all the Income-tax Offices through out India shall remain open and the receipts counters shall also work during normal office hours on 30th and 31st of March 2013. The direction is issued for administrative convenience by the Central Board of Direct Taxes in exercise of powers conferred under section 119 of the Income-tax Act, 1961.

Special arrangements may also be made by way of opening additional receipt counters, wherever required on 30th and 31st March 2013 to facilitate filing of return of income and other related work of tax payers. These instructions may be given wide publicity.

--
warm regards,
CA. Rahul Bajaj

2013 Guidance Note on Audit of Banks

2013 Guidance Note on Audit of Banks (complete text & Appendices) available on ICAI website at URL: http://220.227.161.86/29410aasb19021.pdf. Free downloading.
-Regards
CA.C.V.PAWAR
M-9423961209
Sent from my Nokia E6

Today, CAnews blog will cross the mark of 2 lakhs views

Dear Members,

I'm delighted to share with you that, the CAnews blog ( http://canews1.blogspot.in )  will cross the mark of 2 lakhs visit.

Thank you. 

Regards,
-------
CA.C.V.PAWAR

0253-2319641. M-9423961209

ITR VOL 351 PART 3, ITR (TRIB) VOL 22 PART 3 AND VAT-ST VOL 58 PART 4

 

INCOME TAX REPORTS (ITR)

Volume 351 Part 3 (Issue dated 11-3-2013)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS
Advance tax --Interest--Failure by payer to deduct tax at source--Interest cannot be levied on assessee--Income-tax Act, 1961, s. 234B-- DIT (International Taxation) v. Chiron Bearing GmbH and Co. (Bom) . . . 115
Block assessment --Undisclosed income--Finding as to ownership of a particular business is a finding of fact--Revenue accepting Commissioner (Appeals) finding in case of assessee’s wife from assessment year 1997-98 that she was owner of business and on that basis filed her return--No addition as undisclosed income in hands of assessee on ground business belonged to him--Income-tax Act, 1961, s. 158BC-- CIT v . Kuldeep Sood (Delhi) . . . 166
Business expenditure --Disallowance--Expenditure on maintenance of transit house--Not deductible--Income-tax Act, 1961, s. 37-- CIT v. Rassi Cements Ltd .
(AP) . . . 169
----Firm--Disallowance--Remuneration to partners--Excessive and unreasonable payments--Partnership deed specifically providing for payment of remuneration to working partners--Remuneration paid to partners within statutory fixed limit--No disallowance on ground expenditure excessive--Income-tax Act, 1961, ss. 40(b)(v), 40A(2)(a)-- CIT v. Great City Manufacturing Co . (All) . . . 156
----Loss on account of change in rates of foreign exchange--Notional loss--Tests--Matter remanded to Assessing Officer to decide whether claim allowable--Income-tax Act, 1961, s. 37-- CIT v . Wipro Finance Ltd . (Karn) . . . 153
----Purchase of raw materials from undisclosed sources--Estimation of profit element--Tribunal applying twelve and half per cent.--Justified--Income-tax Act, 1961, s. 37-- CIT v. Sathyanarayan P. Rathi (Guj) . . . 150
Capital gains --Exemption--Transfer--Assessee contending that transfer of property was of agricultural land but failing to produce photographs showing coconut trees and water tank before Assessing Officer--Purchaser converting property into apartment complex--Assessee not establishing land was being used for agricultural purpose for a period of two years prior to date of transfer--Exemption not available--Income-tax Act, 1961, ss. 54B, 54F-- Smt. Asha George v . ITO (Ker) . . . 123
Capital or revenue expenditure --Corporate membership to golf club--Expenditure should bring into existence an asset or an advantage for enduring benefit of a trade--Membership fee paid to club--No capital asset is created or comes into existence--Membership obtained for running business with a view to produce profit--Revenue expenditure--Income-tax Act, 1961-- CIT v . Groz Beckert Asia Ltd .
[FB] (P&H) . . . 196
----Royalty--Technical assistance agreement--Assessee allowed to use know-how and information--Royalty deductible--Income-tax Act, 1961, s. 37-- CIT v . Artos Breweries Ltd . (AP) . . . 133
Charitable trust --Exemption--Denial of exemption--Department disputing genuineness of transaction--Contributor to assessee denying transaction--Opportunity should be given to assessee to cross-examine disputant--Income-tax Act, 1961, s. 10(22)-- Sri Krishna Educational and Social Trust v . ITO (Mad) . . . 178
Deduction of tax at source --Short deduction of tax--Payment to contractors--Two separate tax deduction account numbers for deductor’s M and B units--Certificate for deduction at lower rate issued to principal officer of M unit--Assessee not in default merely on ground certificate not issued in name of B unit--Income-tax Act, 1961, ss. 194C, 197-- CIT (TDS) v. Parle Biscuits Pvt. Ltd. (P&H) . . . 138
Double taxation avoidance --Non-resident--Royalty--Fees for technical services--Assessee, a person liable to pay tax in Germany--Assessee considered a taxable entity under taxation laws of Germany--Assessee entitled to benefit under article 12(2)--Double Taxation Avoidance Agreement between India and Germany, art. 12(2)-- DIT (International Taxation) v. Chiron Bearing GmbH and Co. (Bom) . . . 115
Exemption --Educational institution--Conditions precedent--Institution should exist wholly for education--Incidental surplus--Upgrading facilities of college including for purchase of library books and improvement of infrastructure--Not a ground for denial of exemption--Income-tax Act, 1961, s. 10(23C)(vi)-- Tolani Education Society v . Dy. DIT (Exemptions) (Bom) . . . 184
Export of computer software --Special deduction--Assessee transmitting customized electronic data to its clients--Work carried out by assessee not a news agency--Job of data entry notified as computer software service--Assessee entitled to special deduction--Income-tax Act, 1961, s. 80HHE-- CIT v . Malhar Information Services
(Bom) . . . 119
Income or capital --Power subsidy received from State Government--Subsidy given year after year on actual power consumption--Revenue receipt--Income-tax Act, 1961-- CIT v . Rassi Cements Ltd. (AP) . . . 169
Penalty --Recovery of tax--Notice of demand--Stay--Appeal before Commissioner (Appeals) pending--Demand stayed pending disposal of appeal--Income-tax Act, 1961, ss. 220(6), 271(1)(c)-- Deloitte Consulting India Pvt. Ltd. v. Asst. CIT
(Bom) . . . 160
Search and seizure --Block assessment--Undisclosed income--Statement under section 132(4)--No evidence to establish that admission was incorrect in any way--Addition made on basis of statement justified--Income-tax Act, 1961, s. 132(4)-- Bhagirath Aggarwal v . CIT (Delhi) . . . 143
----Warrant of authorisation--Authority should take utmost care and exercise sufficient caution while making decision to issue warrant--Income-tax Act, 1961, s. 132-- Dr. P. G. Viswanathan v . DIT (Investigation) (Mad) . . . 217
----Warrant of authorisation--Reason to believe--Scope of judicial review--Only to see whether materials available before authority adequate--Court cannot examine sufficiency of materials--Court can see whether satisfaction is due to mala fide reasons or based on extraneous factors or mere rumours--Income-tax Act, 1961, s. 132--Constitution of India, art. 226-- Dr. P. G. Viswanathan v . DIT (Investigation)
(Mad) . . . 217
----Warrant of authorisation--Validity--Dissolution of firm composed of assessee and his wife--Business continued by assessee as sole proprietor--Discovery that firm had submitted false accounts and amounts had been accumulated in fixed deposits--Warrant of authorisation in names of firm, assessee and his wife--Firm deemed to continue--Warrant of authorisation--Valid--Income-tax Act, 1961, ss. 132, 189-- Hemendra Ranchhoddas Merchant v. DIT (Investigation) (Bom) . . . 206
Writ --High Court--Search and seizure--Warrant of authorisation--Authority entertaining belief that assessee secreted certain documents relevant for purpose of investigation of matter relating to evasion of tax--Assessee cannot stall proceedings on ground of lack of jurisdiction to issue warrant--Assessee to raise all grounds available in his defence during enquiry and subsequent proceedings--Income-tax Act, 1961, s. 132--Constitution of India, art. 226-- Dr. P. G. Viswanathan v . DIT (Investigation)
(Mad) . . . 217

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Constitution of India :
Art. 226 --Search and seizure--Warrant of authorisation--Reason to believe--Scope of judicial review--Only to see whether materials available before authority adequate--Court cannot examine sufficiency of materials--Court can see whether satisfaction is due to mala fide reasons or based on extraneous factors or mere rumours-- Dr. P. G. Viswanathan v . DIT (Investigation) (Mad) . . . 217
----Writ--High Court--Search and seizure--Warrant of authorisation--Authority entertaining belief that assessee secreted certain documents relevant for purpose of investigation of matter relating to evasion of tax--Assessee cannot stall proceedings on ground of lack of jurisdiction to issue warrant--Assessee to raise all grounds available in his defence during enquiry and subsequent proceedings-- Dr. P. G. Viswanathan v . DIT (Investigation) (Mad) . . . 217
Double Taxation Avoidance Agreement between India and Germany :
Art. 12(2) --Double taxation avoidance--Non-resident--Royalty--Fees for technical services--Assessee, a person liable to pay tax in Germany--Assessee considered a taxable entity under taxation laws of Germany--Assessee entitled to benefit under article 12(2)-- DIT (International Taxation) v. Chiron Bearing GmbH and Co.
(Bom) . . . 115
Income-tax Act, 1961 :
S. 10(22) --Charitable trust--Exemption--Denial of exemption--Department disputing genuineness of transaction--Contributor to assessee denying transaction--Opportunity should be given to assessee to cross-examine disputant-- Sri Krishna Educational and Social Trust v . ITO (Mad) . . . 178
S. 10(23C)(vi) --Exemption--Educational institution--Conditions precedent--Institution should exist wholly for education--Incidental surplus--Upgrading facilities of college including for purchase of library books and improvement of infrastructure--Not a ground for denial of exemption-- Tolani Education Society v . Dy. DIT (Exemptions)
(Bom) . . . 184
S. 37 --Business expenditure--Disallowance--Expenditure on maintenance of transit house--Not deductible-- CIT v. Rassi Cements Ltd . (AP) . . . 169
----Business expenditure--Loss on account of change in rates of foreign exchange--Notional loss--Tests--Matter remanded to Assessing Officer to decide whether claim allowable-- CIT v . Wipro Finance Ltd . (Karn) . . . 153
----Business expenditure--Purchase of raw materials from undisclosed sources--Estimation of profit element--Tribunal applying twelve and half per cent.--Justified-- CIT v. Sathyanarayan P. Rathi (Guj) . . . 150
----Capital or revenue expenditure--Royalty--Technical assistance agreement--Assessee allowed to use know-how and information--Royalty deductible-- CIT v . Artos Breweries Ltd . (AP) . . . 133
S. 40(b)(v) --Business expenditure--Firm--Disallowance--Remuneration to partners--Excessive and unreasonable payments--Partnership deed specifically providing for payment of remuneration to working partners--Remuneration paid to partners within statutory fixed limit--No disallowance on ground expenditure excessive-- CIT v. Great City Manufacturing Co . (All) . . . 156
S. 40A(2)(a) --Business expenditure--Firm--Disallowance--Remuneration to partners--Excessive and unreasonable payments--Partnership deed specifically providing for payment of remuneration to working partners--Remuneration paid to partners within statutory fixed limit--No disallowance on ground expenditure excessive-- CIT v. Great City Manufacturing Co . (All) . . . 156
S. 54B --Capital gains--Exemption--Transfer--Assessee contending that transfer of property was of agricultural land but failing to produce photographs showing coconut trees and water tank before Assessing Officer--Purchaser converting property into apartment complex--Assessee not establishing land was being used for agricultural purpose for a period of two years prior to date of transfer--Exemption not available-- Smt. Asha George v . ITO (Ker) . . . 123
S. 54F --Capital gains--Exemption--Transfer--Assessee contending that transfer of property was of agricultural land but failing to produce photographs showing coconut trees and water tank before Assessing Officer--Purchaser converting property into apartment complex--Assessee not establishing land was being used for agricultural purpose for a period of two years prior to date of transfer--Exemption not available-- Smt. Asha George v . ITO (Ker) . . . 123
S. 80HHE --Export of computer software--Special deduction--Assessee transmitting customized electronic data to its clients--Work carried out by assessee not a news agency--Job of data entry notified as computer software service--Assessee entitled to special deduction-- CIT v . Malhar Information Services (Bom) . . . 119
S. 132 --Search and seizure--Warrant of authorisation--Authority should take utmost care and exercise sufficient caution while making decision to issue warrant-- Dr. P. G. Viswanathan v . DIT (Investigation) (Mad) . . . 217
----Search and seizure--Warrant of authorisation--Reason to believe--Scope of judicial review--Only to see whether materials available before authority adequate--Court cannot examine sufficiency of materials--Court can see whether satisfaction is due to mala fide reasons or based on extraneous factors or mere rumours-- Dr. P. G. Viswanathan v. DIT (Investigation) (Mad) . . . 217
----Search and seizure--Warrant of authorisation--Validity--Dissolution of firm composed of assessee and his wife--Business continued by assessee as sole proprietor--Discovery that firm had submitted false accounts and amounts had been accumulated in fixed deposits--Warrant of authorisation in names of firm, assessee and his wife--Firm deemed to continue--Warrant of authorisation--Valid-- Hemendra Ranchhoddas Merchant v. DIT (Investigation) (Bom) . . . 206
----Writ--High Court--Search and seizure--Warrant of authorisation--Authority entertaining belief that assessee secreted certain documents relevant for purpose of investigation of matter relating to evasion of tax--Assessee cannot stall proceedings on ground of lack of jurisdiction to issue warrant--Assessee to raise all grounds available in his defence during enquiry and subsequent proceedings-- Dr. P. G. Viswanathan v. DIT (Investigation) (Mad) . . . 217
S. 132(4) --Search and seizure--Block assessment--Undisclosed income--Statement under section 132(4)--No evidence to establish that admission was incorrect in any way--Addition made on basis of statement justified-- Bhagirath Aggarwal v . CIT
(Delhi) . . . 143
S. 158BC --Block assessment--Undisclosed income--Finding as to ownership of a particular business is a finding of fact--Revenue accepting Commissioner (Appeals) finding in case of assessee’s wife from assessment year 1997-98 that she was owner of business and on that basis filed her return--No addition as undisclosed income in hands of assessee on ground business belonged to him-- CIT v . Kuldeep Sood
(Delhi) . . . 166
S. 189 --Search and seizure--Warrant of authorisation--Validity--Dissolution of firm composed of assessee and his wife--Business continued by assessee as sole proprietor--Discovery that firm had submitted false accounts and amounts had been accumulated in fixed deposits--Warrant of authorisation in names of firm, assessee and his wife--Firm deemed to continue--Warrant of authorisation--Valid-- Hemendra Ranchhoddas Merchant v . DIT (Investigation) (Bom) . . . 206
S. 194C --Deduction of tax at source--Short deduction of tax--Payment to contractors--Two separate tax deduction account numbers for deductor’s M and B units--Certificate for deduction at lower rate issued to principal officer of M unit--Assessee not in default merely on ground certificate not issued in name of B unit-- CIT (TDS) v. Parle Biscuits Pvt. Ltd. (P&H) . . . 138
S. 197 --Deduction of tax at source--Short deduction of tax--Payment to contractors--Two separate tax deduction account numbers for deductor’s M and B units--Certificate for deduction at lower rate issued to principal officer of M unit--Assessee not in default merely on ground certificate not issued in name of B unit-- CIT (TDS) v. Parle Biscuits Pvt. Ltd. (P&H) . . . 138
S. 220(6) --Penalty--Recovery of tax--Notice of demand--Stay--Appeal before Commissioner (Appeals) pending--Demand stayed pending disposal of appeal-- Deloitte Consulting India Pvt. Ltd. v. Asst. CIT (Bom) . . . 160
S. 234B --Advance tax--Interest--Failure by payer to deduct tax at source--Interest cannot be levied on assessee-- DIT (International Taxation) v. Chiron Bearing GmbH and Co. (Bom) . . . 115
S. 271(1)(c) --Penalty--Recovery of tax--Notice of demand--Stay--Appeal before Commissioner (Appeals) pending--Demand stayed pending disposal of appeal-- Deloitte Consulting India Pvt. Ltd. v. Asst. CIT (Bom) . . . 160

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

Volume 22 : Part 3 (Issue dated : 11-3-2013)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Agricultural income --Assessee filing letter explaining ownership of agricultural land purchased in 1986-87 and disclosing capital gains on sale thereof in subsequent year--Seized material not suggesting inflation of agricultural income--Income not to be treated as income from other sources-- Assistant CIT v. Mir Mazharuddin (Hyderabad) . . . 314

Amortisation of preliminary expenses --Expenses incurred in relation to issue of rights shares--Deduction of one-tenth of expenditure allowable--Income-tax Act, 1961, s. 35D-- Kansai Nerolac Paints Ltd. v. Deputy CIT (Mumbai) . . . 424

Business expenditure --Assessee failing to produce proper bills and vouchers for direct and indirect expenses--Assessing Officer was to restrict disallowance to 5 per cent. of cash payments-- Assistant CIT v. Mir Mazharuddin (Hyderabad) . . . 314

----Capital or revenue expenditure--Software licence fees--Software to enable business to be run more efficiently--Fees deductible--Income-tax Act, 1961, s. 37-- Eimco Elecon (India) Ltd. v. Additional CIT (Ahmedabad) . . . 380

----Catering business--Disallowance on ground of duplication of expenditure--No material to suggest same expenditure claimed in case of company--Assessee disclosing profit on catering services after claiming various expenses--Expenses claimed incurred for purpose of catering business and no duplication--Expenditure to be allowed-- Assistant CIT v. Mir Mazharuddin (Hyderabad) . . . 314

----Deduction only on actual payment--Provision for leave encashment--Disallowance under section 43B(f)--Section 43B(f) held invalid by High Court--Disallowance not valid--Income-tax Act, 1961, s. 43B(f)-- Eimco Elecon (India) Ltd. v. Additional CIT (Ahmedabad) . . . 380

----Depreciation--Operations of manufacture discontinued at one factory--Expenses incurred to protect business assets to be allowed--Assets of unit having already entered block of assets of assessee, depreciation not to be disallowed on ground of non-user--Income-tax Act, 1961, ss. 32, 37-- Kansai Nerolac Paints Ltd. v. Deputy CIT (Mumbai) . . . 424

Capital gains --Computation of capital gains--Assessee owning flat in co-operative housing society--Co-operative society allotted additional floor space--Transfer of development rights to builder by all flat owners--Transfer of capital asset--Gains not taxable as there was no cost of acquisition--Income-tax Act, 1961, ss. 45, 48-- Assistant CIT v. IGE India Ltd. (Mumbai) . . . 365

Cash credits --Dealer deposits received in assessment years 2003-04 and 2004-05--Addition cannot be made for subsequent year--Unsecured loans--Assessee producing creditors and creditors filing bank accounts--Assessing Officer satisfied as to genuineness of transaction and creditworthiness of creditors--Credits to be accepted--Onus on assessee to prove identity, creditworthiness of creditor, genuineness of transaction--Not to prove source of creditor--Where creditor neither attending office of Assessing Officer nor assessee producing creditor--Transaction not established--Loan obtained during financial year 1995-96 and still outstanding--Credit could have been added in year of receipt but not during this year--Creditor not produced before Assessing Officer and remand report of Assessing Officer silent on this issue--Matter remanded--Income-tax Act, 1961, s. 68-- Harish Kawadmal Bajaj v. ITO (Pune) . . . 411

----Income estimated by Assessing Officer--Addition under section 68 permissible--Income-tax Act, 1961, s. 68-- Assistant CIT v. Mir Mazharuddin (Hyderabad) . . . 314

Company --Dividend--Income--Mutual concern--Assessee owning flat in co-operative housing society--Co-operative society allotted additional floor space--Portion of floor space index allotted to assessee--Value not assessable as dividend--Principle of mutuality applicable--Value not assessable in hands of assessee--Income-tax Act, 1961-- Assistant CIT v. IGE India Ltd. (Mumbai) . . . 365

Deduction of tax at source --Hire charges for machinery--Not contract for carrying out any work--Section 194C not applicable--Meaning of rent in section 194-I-- Explanation (i) to section 194-I including hire for machinery inserted w.e.f. 13-7-2006--Not applicable to assessment year under consideration--Income-tax Act, 1961, ss. 194C, 194-I, Expln (i) -- Assistant CIT v. Kiran Constructions (Hyderabad) . . . 356

Dispute Resolution Panel --Order of Dispute Resolution Panel should give reasons--Non-speaking order--Not valid--Income-tax Act, 1961, s. 144C-- Panasonic Consumer India P. Ltd. v. Assistant CIT (Delhi) . . . 390

Export --Exemption--Hundred per cent. export-oriented undertaking--Determination of quantum of profits derived by undertaking from exports--General principles--Interest on monies in fixed deposit with bank for availing of credit facilities--Allowable if part of a normal business arrangement by bank for extending non-fund based credit facilities to its constituents and not mere collateral security--Interest on fixed deposits and bank accounts on surplus funds not derived from assessee’s business and to be excluded--Sales tax refund and excise duty drawback not “derived“ from business, as flows from Government policy--Profit from sale of scrap--Assessee’s business direct source of profit--“Canteen recovery“--Assessing Officer to verify and allow relief to extent amount went to reduce expenditure already claimed and allowed--“Fine from the workers“ not integral part of assessee’s business--Discount--If not an independent receipt but only reduces purchase cost to that extent part of profits derived from eligible business--Income-tax Act, 1961, s. 10B-- Tessitura Monti India P. Ltd. v. ITO (Mumbai) . . . 329

----Special deduction--90 per cent. of income such as, insurance claim, interest, rent to be excluded from profits of business--Amount of sale of raw material to be included in total turnover for purpose of computation of deduction--Income-tax Act, 1961, s. 80HHC-- Kansai Nerolac Paints Ltd. v. Deputy CIT (Mumbai) . . . 424

Income not included in total income --Disallowance of expenditure--Dividend and interest on tax-free bonds claimed exempt--Year prior to introduction of rule 8D--Expenses to be disallowed to be quantified by adopting reasonable method--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Kansai Nerolac Paints Ltd. v. Deputy CIT (Mumbai) . . . 424

Income --Computation of income--Disallowance of expenditure on earning non-taxable income--Interest on borrowed capital--Investment in shares--Investment out of own funds--Borrowed capital used for purposes of business--Disallowance cannot be made under section 14A--Income-tax Act, 1961, s. 14A-- Eimco Elecon (India) Ltd. v. Additional CIT (Ahmedabad) . . . 380

----Computation of income--Interest on borrowed capital--Business expenditure--Assessee dealing in shares and investment consultancy--Investment in shares and share application money placed with same company--Shares not purchased with intention of earning dividends--Interest on money borrowed cannot be disallowed under section 14A--Not disallowable under section 36(1)(iii)--No capital expenditure--Interest deductible--Income-tax Act, 1961, ss. 14A, 36, 37-- MSA Securities Services P. Ltd. v. Assistant CIT (Chennai) . . . 400

Interest on borrowed capital --Investment in shares for acquiring controlling interest in subsidiary companies--In case involving common funds, presumption that investments made from non-interest bearing funds-Interest paid to banks and on fixed deposits to be allowed--Income-tax Act, 1961, s. 36(1)(iii)-- Kansai Nerolac Paints Ltd. v. Deputy CIT (Mumbai) . . . 424

International transactions --Payment of royalty to Japanese company for use of technical know-how by assessee--Comparable uncontrolled price method followed by assessee to determine arm’s length price of royalty on ground that of similar payment of royalty made to two unrelated parties--Transfer Pricing Officer adopting arithmetic mean of royalty paid to two unrelated parties on domestic sales--Assessee not entitled to contend that one of parties not comparable--Domestic sales generated by assessee using technology of one of parties comparable with domestic sales generated from use of technology of associated enterprise--Whether any product actually manufactured by assessee with trade mark irrelevant--Income-tax Act, 1961, s. 92CA-- Kansai Nerolac Paints Ltd. v. Deputy CIT (Mumbai) . . . 424

Penalty --No valid return filed within time allowed under section 139 or notices issued under section 142--Entire assessed income to be considered as concealed income--Income-tax Act, 1961, s. 271(1)(c), Expln. 3 -- T. V. Magaadevan v. Deputy CIT (Chennai) . . . 343

Valuation of closing stock --Land purchased by assessee in dispute before civil court--Dispute having adverse impact on market value--No change in method of valuation--Department accepting value as value of opening stock in subsequent year--Additions made to value not proper--Income-tax Act, 1961-- Assistant CIT v. Satish Estate P. Ltd. (Chandigarh) . . . 349

Words and phrases --“Profits of business of undertaking†-- Tessitura Monti India P. Ltd. v. ITO (Mumbai) . . . 329

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 10B --Export--Exemption--Hundred per cent. export-oriented undertaking--Determination of quantum of profits derived by undertaking from exports--General principles--Interest on monies in fixed deposit with bank for availing of credit facilities--Allowable if part of a normal business arrangement by bank for extending non-fund based credit facilities to its constituents and not mere collateral security--Interest on fixed deposits and bank accounts on surplus funds not derived from assessee’s business and to be excluded--Sales tax refund and excise duty drawback not “derived“ from business, as flows from Government policy--Profit from sale of scrap--Assessee’s business direct source of profit--“Canteen recovery“--Assessing Officer to verify and allow relief to extent amount went to reduce expenditure already claimed and allowed--“Fine from the workers“ not integral part of assessee’s business--Discount--If not an independent receipt but only reduces purchase cost to that extent part of profits derived from eligible business-- Tessitura Monti India P. Ltd. v. ITO (Mumbai) . . . 329

S. 14A --Income--Computation of income--Disallowance of expenditure on earning non-taxable income--Interest on borrowed capital--Investment in shares--Investment out of own funds--Borrowed capital used for purposes of business--Disallowance cannot be made under section 14A-- Eimco Elecon (India) Ltd. v. Additional CIT (Ahmedabad) . . . 380

----Income--Computation of income--Interest on borrowed capital--Business expenditure--Assessee dealing in shares and investment consultancy--Investment in shares and share application money placed with same company--Shares not purchased with intention of earning dividends--Interest on money borrowed cannot be disallowed under section 14A--Not disallowable under section 36(1)(iii)--No capital expenditure--Interest deductible-- MSA Securities Services P. Ltd. v. Assistant CIT (Chennai) . . . 400

----Income not included in total income--Disallowance of expenditure--Dividend and interest on tax-free bonds claimed exempt--Year prior to introduction of rule 8D--Expenses to be disallowed to be quantified by adopting reasonable method-- Kansai Nerolac Paints Ltd. v. Deputy CIT (Mumbai) . . . 424

S. 32 --Business expenditure--Depreciation--Operations of manufacture discontinued at one factory--Expenses incurred to protect business assets to be allowed--Assets of unit having already entered block of assets of assessee, depreciation not to be disallowed on ground of non-user-- Kansai Nerolac Paints Ltd. v. Deputy CIT (Mumbai) . . . 424

S. 35D --Amortisation of preliminary expenses--Expenses incurred in relation to issue of rights shares--Deduction of one-tenth of expenditure allowable-- Kansai Nerolac Paints Ltd. v. Deputy CIT (Mumbai) . . . 424

S. 36 --Income--Computation of income--Interest on borrowed capital--Business expenditure--Assessee dealing in shares and investment consultancy--Investment in shares and share application money placed with same company--Shares not purchased with intention of earning dividends--Interest on money borrowed cannot be disallowed under section 14A--Not disallowable under section 36(1)(iii)--No capital expenditure--Interest deductible-- MSA Securities Services P. Ltd. v. Assistant CIT (Chennai) . . . 400

S. 36(1)(iii) --Interest on borrowed capital--Investment in shares for acquiring controlling interest in subsidiary companies--In case involving common funds, presumption that investments made from non-interest bearing funds-Interest paid to banks and on fixed deposits to be allowed-- Kansai Nerolac Paints Ltd. v. Deputy CIT (Mumbai) . . . 424

S. 37 --Business expenditure--Capital or revenue expenditure--Software licence fees--Software to enable business to be run more efficiently--Fees deductible-- Eimco Elecon (India) Ltd. v. Additional CIT (Ahmedabad) . . . 380

----Business expenditure--Depreciation--Operations of manufacture discontinued at one factory--Expenses incurred to protect business assets to be allowed--Assets of unit having already entered block of assets of assessee, depreciation not to be disallowed on ground of non-user-- Kansai Nerolac Paints Ltd. v. Deputy CIT (Mumbai) . . . 424

----Income--Computation of income--Interest on borrowed capital--Business expenditure--Assessee dealing in shares and investment consultancy--Investment in shares and share application money placed with same company--Shares not purchased with intention of earning dividends--Interest on money borrowed cannot be disallowed under section 14A--Not disallowable under section 36(1)(iii)--No capital expenditure--Interest deductible-- MSA Securities Services P. Ltd. v. Assistant CIT (Chennai) . . . 400

S. 43B(f) --Business expenditure--Deduction only on actual payment--Provision for leave encashment--Disallowance under section 43B(f)--Section 43B(f) held invalid by High Court--Disallowance not valid-- Eimco Elecon (India) Ltd. v. Additional CIT (Ahmedabad) . . . 380

S. 45 --Capital gains--Computation of capital gains--Assessee owning flat in co-operative housing society--Co-operative society allotted additional floor space--Transfer of development rights to builder by all flat owners--Transfer of capital asset--Gains not taxable as there was no cost of acquisition-- Assistant CIT v. IGE India Ltd. (Mumbai) . . . 365

S. 48 --Capital gains--Computation of capital gains--Assessee owning flat in co-operative housing society--Co-operative society allotted additional floor space--Transfer of development rights to builder by all flat owners--Transfer of capital asset--Gains not taxable as there was no cost of acquisition-- Assistant CIT v. IGE India Ltd. (Mumbai) . . . 365

S. 68 --Cash credits--Dealer deposits received in assessment years 2003-04 and 2004-05--Addition cannot be made for subsequent year--Unsecured loans--Assessee producing creditors and creditors filing bank accounts--Assessing Officer satisfied as to genuineness of transaction and creditworthiness of creditors--Credits to be accepted--Onus on assessee to prove identity, creditworthiness of creditor, genuineness of transaction--Not to prove source of creditor--Where creditor neither attending office of Assessing Officer nor assessee producing creditor--Transaction not established--Loan obtained during financial year 1995-96 and still outstanding--Credit could have been added in year of receipt but not during this year--Creditor not produced before Assessing Officer and remand report of Assessing Officer silent on this issue--Matter remanded-- Harish Kawadmal Bajaj v. ITO (Pune) . . . 411

----Cash credits--Income estimated by Assessing Officer--Addition under section 68 permissible-- Assistant CIT v. Mir Mazharuddin (Hyderabad) . . . 314

S. 80HHC --Export--Special deduction--90 per cent. of income such as, insurance claim, interest, rent to be excluded from profits of business--Amount of sale of raw material to be included in total turnover for purpose of computation of deduction-- Kansai Nerolac Paints Ltd. v. Deputy CIT (Mumbai) . . . 424

S. 92CA --International transactions--Payment of royalty to Japanese company for use of technical know-how by assessee--Comparable uncontrolled price method followed by assessee to determine arm’s length price of royalty on ground that of similar payment of royalty made to two unrelated parties--Transfer Pricing Officer adopting arithmetic mean of royalty paid to two unrelated parties on domestic sales--Assessee not entitled to contend that one of parties not comparable--Domestic sales generated by assessee using technology of one of parties comparable with domestic sales generated from use of technology of associated enterprise--Whether any product actually manufactured by assessee with trade mark irrelevant-- Kansai Nerolac Paints Ltd. v. Deputy CIT (Mumbai) . . . 424

S. 144C --Dispute Resolution Panel--Order of Dispute Resolution Panel should give reasons--Non-speaking order--Not valid-- Panasonic Consumer India P. Ltd. v. Assistant CIT (Delhi) . . . 390

S. 194C --Deduction of tax at source--Hire charges for machinery--Not contract for carrying out any work--Section 194C not applicable--Meaning of rent in section 194-I-- Explanation (i) to section 194-I including hire for machinery inserted w.e.f. 13-7-2006--Not applicable to assessment year under consideration-- Assistant CIT v. Kiran Constructions (Hyderabad) . . . 356

S. 194-I, Expln (i) --Deduction of tax at source--Hire charges for machinery--Not contract for carrying out any work--Section 194C not applicable--Meaning of rent in section 194-I-- Explanation (i) to section 194-I including hire for machinery inserted w.e.f. 13-7-2006--Not applicable to assessment year under consideration-- Assistant CIT v. Kiran Constructions (Hyderabad) . . . 356

S. 271(1)(c), Expln. 3 --Penalty--No valid return filed within time allowed under section 139 or notices issued under section 142--Entire assessed income to be considered as concealed income-- T. V. Magaadevan v. Deputy CIT (Chennai) . . . 343

Income-tax Rules, 1962 :

R. 8D --Income not included in total income--Disallowance of expenditure--Dividend and interest on tax-free bonds claimed exempt--Year prior to introduction of rule 8D--Expenses to be disallowed to be quantified by adopting reasonable method-- Kansai Nerolac Paints Ltd. v. Deputy CIT (Mumbai) . . . 424

VAT AND SERVICE TAX CASES (VST)

VOLUME 58 : PART 4 : ISSUE DATED 8-3-2013

_____________

SUBJECT INDEX TO CASES REPORTED

HIGH COURTS

Additional sales tax--Sales tax--Rate of tax--Change of law with effect from August 1, 1997--Rate for period prior to that date to be under old law--Tamil Nadu Additional Sales Tax Act (14 of 1970), s. 3.--State of Tamil Nadu v. Sabarigiri Industries (Mad) P. 454

--See also Appeal (Mad) P. 454

Appeal--Appealable orders--Order of rectification to apply correct rate of additional tax--Is appealable--Tamil Nadu General Sales Tax Act (1 of 1959), ss. 31, 55.--State of Tamil Nadu v. Sabarigiri Industries (Mad) P. 454

--Sales tax--Condonation of delay--Principles stated--Dismissal by Tribunal of appeal filed along with application for condonation of delay of 85 days--On facts not sustainable--Limitation Act (36 of 1963), s. 5--Haryana General Sales Tax Act (20 of 1973).--S. R. Traders v. State of Haryana (P&H) P. 437

--See also Penalty (P&H) P. 427, Service tax (Guj) P. 431

Assessment--Sales tax--Natural justice--Objection by assessee to notice by assessing authority containing details of purchase of materials used in work order--Notice dated October 7, 2010, issued by subsequent assessing authority and assessee requesting time to produce further details--Assessment order passed without giving time stating assessee not replied to notice dated October 30, 2008--No such notice found to have been sent--Objections by assessee not considered--Order passed in violation of principles of natural justice--Quashed.--D. P. Mahesh v. Assistant Commissioner (CT) (Addl.) (Mad) P. 434

--Value added tax--Commissioner--Power to extend period of limitation--No power to Commissioner to extend period for framing assessment for 2005-06 beyond November 20, 2009--Punjab Value Added Tax Act (8 of 2005), s. 29(4), (4A).--State of Punjab v. Des Raj Bhim Sain (P&H) P. 395

Best judgment assessment--Sales tax--Estimation--High Court--Revision--Assessee found not maintaining register of finished goods as required under circular--Order making addition on estimation basis--No question of law involved--No interference warranted--U. P. Trade Tax Act (15 of 1948).--Steel Fabricators v. Commissioner of Trade Tax (All) P. 421

Central sales tax--See Declared goods (Gauhati) P. 412

Change of law--See Additional sales tax (Mad) P. 454

Check-post--See Penalty (P&H) P. 427

Commissioner--See Assessment (P&H) P. 395

Construction of taxing statutes--Plain reading in absence of doubt or difficulty.--State of Punjab v. Des Raj Bhim Sain (P&H) P. 395

Declared goods--Central sales tax--Refund--"Coke in all its forms"--Assessee engaged in conversion of raw petroleum coke, purchased on payment of tax, into calcined petroleum coke and sale in course of inter-State trade--Entitled to refund of tax paid--Central Sales Tax Act (74 of 1956) s. 14(ia)--Assam General Sales Tax Act (12 of 1993), s. 30.--Guwahati Carbon Ltd. v. State of Assam (Gauhati) P. 412

Deferment of tax--Sales tax--Interest-free sales tax deferral scheme--Diversification--Deferral to be with reference to increased volume of sales and production--Eligibility certificate from SIPCOT stating base production value and base sales value--Branch transfers, consignment sales and export sales not included in turnover for calculating concession--Dealer issued notice for recovery of tax on unauthorised availment of benefit by inclusion of such turnover in calculation of benefit--Writ petition challenging eligibility certificate after ten years--Delay not explained--Dealer bound by eligibility certificate--Tamil Nadu General Sales Tax Act (1 of 1959), s. 17A--Notification G. O. Ms. No. 119, Commercial Taxes and Religious Endowments Department, dated April 13, 1994--Notification G. O. Ms. No. 500, Industries (MIG.II) Department, dated May 14, 1990.--Tamilnadu Petroproducts Limited v. Deputy Commissioner (CT) (Mad) P. 381

Eligibility certificate--See Deferment of tax (Mad) P. 381, Exemption (All) P. 389

Estoppel--See Hotels and restaurants (AP) P. 458

Evasion of tax--See Penalty (P&H) P. 427

Exemption--Trade tax--New industrial unit--Retrospective amendment--Eligibility certificate granted for period from 2nd of June, 1988 to 1st of June, 1993, mentioning date of first sale as June 2, 1988--Benefit effective only from October 15, 1988, date of registration of petitioner's unit under Factories Act--Valid in view of retrospective amendment of definition of "new unit" by U. P. Act No. 28 of 1991--U. P. Trade Tax Act (15 of 1948), s. 4A--U. P. Sales Tax (Amendment and Validation) Act (28 of 1991)--Factories Act (63 of 1948).--Vaishma Plastic Industries v. State of U. P. (All) P. 389

--See also Deferment of tax (Mad) P. 381, Hotels and restaurants (AP) P. 458

Goods transport agency service--See Service tax (Ker) P. 399, (Jharkhand) P. 441

High Court--See Best judgment assessment (All) P. 421, Penalty (P&H) P. 427

Hotels and restaurants--Sales tax--Exemption--Interest--Refund--Amendment granting exemption on sale of soft drinks and food until September 13, 1985 pursuant to 46th amendment to Constitution--Supreme Court setting aside assessments, holding petitioner-dealers entitled to exemption on satisfying tax not levied or collected and directing refund of excess amount with interest--Memorandum dated March 18, 1992 directing that other dealers also be given benefit provided matter alive--Tribunal erred in holding interest payable in all cases--Grant of interest on refund by Appellate Deputy Commissioners pursuant to order by Tribunal valid but only for period from expiry of six months from date of order of Appellate Deputy Commissioners to date when refund granted--Claim for refund not necessary--Principles of res judicata or estoppel not applicable--Orders by authorities granting interest in revision where orders of assessing authorities denying interest challenged--Without jurisdiction--Dealers not entitled to interest--Andhra Pradesh General Sales Tax Act (6 of 1957), ss. 33, 33A, 33B, 33BB, 33E, 33F.--State of Andhra Pradesh v. Hotel Swapna Bar and Restaurant (AP) P. 458

Input-tax credit--Value added tax--Reduction of tax credit by four per cent on goods purchased under circumstances specified in three sub-clauses of clause (b) of sub-section (3) of section 11--Assessee purchasing furnace oil, natural gas and light diesel oil for manufacturing activity and transferring manufactured goods to branches outside State--Taxable goods purchased by assessee satisfied description of two sub-clauses--Denial of tax credit by four per cent as provided in clause (b) to be only once--Gujarat Value Added Tax Act, 2003 (1 of 2005), s. 11(3)(b)(i), (ii), (iii).--State of Gujarat v. Reliance Industries Ltd. (Guj) P. 376

Inter-State sales--See Declared goods (Gauhati) P. 412

Interest--See Hotels and restaurants (AP) P. 458, Revision (AP) P. 458, Service tax (Jharkhand) P. 441

Jurisdiction--See Hotels and restaurants (AP) P. 458, Revision (AP) P. 458

Legislative powers--State Legislature--Has power to make law with retrospective effect.--Vaishma Plastic Industries v. State of U. P. (All) P. 389

Limitation--See Appeal (P&H) P. 437, Assessment (P&H) P. 395

Natural justice--See Assessment (Mad) P. 434, Registration certificate (Mad) P. 417

New industrial unit--See Exemption (All) P. 389

Penalty--Sales tax--Failure to disclose turnover in return--Failure under bona fide belief that turnover not taxable--Penalty not leviable--Tamil Nadu General Sales Tax Act (1 of 1959), s. 12(5)(iii).--State of Tamil Nadu v. Majestic Exports (Mad) P. 423

--Value added tax--Evasion of tax--Appeal to High Court--Findings of Tribunal that goods receipt in question contained particulars of goods, entries made in form ELTA-12 and declaration in form 85--That driver left invoice covering part of goods in vehicle due to oversight and went back and picked them up and produced them before officer--Human mistake--Transaction voluntarily reported at check-post and not violative of provisions--No error in findings--No substantial question of law--Punjab Value Added Tax Act (8 of 2005), s. 51(7)(b).--State of Punjab v. Desai Brothers Limited (P&H) P. 427

--See also Reassessment (Mad) P. 370

Pre-deposit--See Service tax (Guj) P. 431

Rate of tax--See Additional sales tax (Mad) P. 454, Appeal (Mad) P. 454

Reassessment--Sales tax--Penalty--Condition precedent for levy of penalty--Finding of wilful non-disclosure--Dealer engaged in leasing--Dealer financing purchase of equipment--Dealer at no point of time interacting with supplier and acting only under instructions of lessee--Supplier found to be fictitious--No finding as regards wilful non-disclosure--Penalty not leviable--Tamil Nadu General Sales Tax Act (1 of 1959), ss. 3A(2)(b), 16(2).--Lakshmi Trade Credits Limited v. State of Tamil Nadu (Mad) P. 370

Rectification of mistake--See Appeal (Mad) P. 454

Refund--See Declared goods (Gauhati) P. 412, Hotels and restaurants (AP) P. 458, Service tax (Jharkhand) P. 441

Registered dealers--See Registration certificate (Mad) P. 417

Registration certificate--Value added tax--Registration of dealers--Cancellation of registration with retrospective effect on ground registration obtained on false information as to lease of business premises--No opportunity granted to dealer to substantiate claim--Dispute as to tenancy pending before civil court--Order set aside--Dealer given opportunity to place material substantiating claim and direction to authority to consider and pass orders in accordance with law--Tamil Nadu Value Added Tax Act (32 of 2006), s. 39.--S. Peermohamed v. Assistant Commissioner of Commercial Taxes (Mad) P. 417

Res judicata--See Hotels and restaurants (AP) P. 458

Retrospective legislation--See Exemption (All) P. 389, Legislative powers (All) P. 389, Service tax (Jharkhand) P. 441

Return--See Penalty (Mad) P. 423

Revision--Sales tax--Jurisdiction--Orders by authorities in revision filed after July 1, 1985 challenging orders of assessing authorities denying interest--Without jurisdiction--Andhra Pradesh General Sales Tax Act (6 of 1957), s. 20.--State of Andhra Pradesh v. Hotel Swapna Bar and Restaurant (AP) P. 458

--See also Best judgment assessment (All) P. 421

Sales Tax Tribunal--See Appeal (P&H) P. 437

Service tax--Appeal--Pre-deposit--Application for waiver--Dismissal of application for waiver for failure to appear on date of hearing despite notice and appeal for failure to deposit as directed by Tribunal--Applications for modification of order on pre-deposit and restoration of appeal also dismissed--Registrar of Tribunal conveying that orders dispatched returned with postal stamp of "non-delivery" pursuant to application under Right to Information Act--Assessee to be given opportunity to argue--Application for waiver of pre-deposit revived.--Protection & Security Services v. Union of India (Guj) P. 431

--Goods transport agency service--Liability--Recipients of service liable to tax only from May 13, 2005 when sub-section (2) of section 70 introduced and not prior to it--Finance Act (32 of 1994), ss. 65, 66, 68(2), 69(2), 70(2)--Service Tax Rules, 1994, r. 2(1)(d)(v). --Union of India v. Highland Produce Co. Ltd. (Ker) P. 399

--Goods transport service--Refund--Interest--Retrospective legislation--Tax paid by service recipient from November 16, 1997 to June 1, 1998 (prior to decision in Laghu Udyog Bharati v. Union of India [2005] 1 VST 24 (SC))--Refunded to service provider by Department pursuant to application for refund by provider with consent of recipient--Recovery of tax refunded in view of retrospective validation--Liability to tax continued to be on recipient of service without break--Benefit received due to order of court to be restored if order set aside--Refund of amount service provider received from account of recipient--To be recovered from service provider--Liability to pay interest not dependent on any further fact--Interest also recoverable from service provider--Finance Act (10 of 2000), s. 117--Finance Act (32 of 1994).--OTS Ltd. v. Commissioner of Central Excise (Jharkhand) P. 441

State Legislature--See Legislative powers (All) P. 389

Value added tax--See Assessment (P&H) P. 395, Input-tax credit (Guj) P. 376, Registration certificate (Mad) P. 417

Writs under Constitution--See Deferment of tax (Mad) P. 381

CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL

Change of law--See Service tax (CESTAT--Bang) P. 406

Construction of taxing statutes--Exemption--Notification to be construed on plain meaning of words used.--Gokaldas Images Pvt. Ltd. v. Commissioner of Service Tax (CESTAT--Bang) P. 406

Exemption--See Construction of taxing statutes (CESTAT--Bang) P. 406

Export of goods--See Service tax (CESTAT--Bang) P. 406

Limitation--See Service tax (CESTAT--Bang) P. 406

Refund--See Service tax (CESTAT--Bang) P. 406

Service tax--Refund--Limitation--Tax paid on services used for export of goods--Amending notification dated November 18, 2008 extending period of limitation from 60 days to "six months" from end of quarter during which goods exported--Not clarificatory or retrospective--Board's circular to that effect pertained to quarter April-June 2008--Not applicable to refund claim of tax paid on services used for export of goods during January to March 2008--Refund claim filed on June 10, 2008--Barred by limitation--Finance Act (32 of 1994), s. 93(1)--Notification No. 41/2007-S.T. dated October 6, 2007--Notification No. 32/2008-ST dated November 18, 2008.--Gokaldas Images Pvt. Ltd. v. Commissioner of Service Tax (CESTAT--Bang) P. 406