ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))--PRINT AND ONLINE EDITIONONLINE EDITION SUBJECT INDEX TO CASES REPORTED Exemption --Interest on foreign borrowings--Tax-free bonds--Expenditure in relation to income not includible in total income--Exemption under section 10(15) available on gross amount of interest--No current fresh investment in bonds fetching exempt income--No interest can be disallowed under section 14A--Income-tax Act, 1961, ss. 10(15), 14A--Deputy DIT (International Taxation) v. Development Bank of Singapore (Mumbai) . . . 776 Export --Exemption--Assessing Officer to verify receipts of assessee from associated enterprises--Amount not be added back to cost base if mere recovery of expenses without services--Matter remanded--Income-tax Act, 1961, s. 10A-- Virtusa (India) P. Ltd. v. Deputy CIT (Hyderabad) . . . 754 ----Exemption--Computation of deduction--Communication charges to be reduced from both export turnover and total turnover--Income-tax Act, 1961, s. 10A-- Adaptec (India) P. Ltd. v. Deputy CIT (Hyderabad) . . . 744 ----Exemption--Computation of deduction--Total turnover--Reimbursement of expenses--To be reduced from both export turnover and total turnover--Income-tax Act, 1961, s. 10A--Virtusa (India) P. Ltd. v. Deputy CIT (Hyderabad) . . . 754 ----Exemption--Disallowance of benefit under section 10A to second unit on ground of reconstruction of business already in existence--Benefit granted in earlier assessment years--Assessing Officer to allow benefit under section 10A to second unit--Income-tax Act, 1961, s. 10A-- Virtusa (India) P. Ltd. v. Deputy CIT (Hyderabad) . . . 754 ----Exemption--Reimbursement of expenses--Amount cannot be added to income of assessee if foreign inward remittance certificate towards reimbursement amount was within stipulated time--Matter remanded--Income-tax Act, 1961, s. 10A-- Virtusa (India) P. Ltd. v. Deputy CIT (Hyderabad) . . . 754 International transactions --Arm’s length price--Computation--Selection of comparables--Giant companies having extraordinary turnover to be excluded--Income-tax Act, 1961, s. 92CA-- Adaptec (India) P. Ltd. v. Deputy CIT (Hyderabad) . . . 744 ----Arm’s length price--Determination--Comparable uncontrolled price method--Transactions benchmarked on basis LIBOR rates--LIBOR an arithmetical mean of several rates not a single rate--Benefit of plus or minus 5 per cent. variation available to assessee--Income-tax Act, 1961-- Deputy DIT (International Taxation) v. Development Bank of Singapore (Mumbai) . . . 776 ----Arm’s length price--Determination--Head office expenses--Proof of documentary evidence to substantiate rendering of service--Bills issued on audit fees and head office expenses, details regarding allocation of expenses and a copy of assessee's letter to Transfer Pricing Officer sufficient to prove benefit--Transfer Pricing Officer not entitled to take payment at nil--Income-tax Act, 1961-- Deputy DIT (International Taxation) v. Development Bank of Singapore (Mumbai) . . . 776 ----Arm’s length price--Determination--Selection of comparables--Companies earning revenue from both software development services and products, giant companies having diversified activities and huge turnover, companies failing in employee cost filter and related party transaction filter to be excluded from comparables--Only segmental margin of comparable company in relevant previous year to be considered--Income-tax Act, 1961, s. 92CA-- Virtusa (India) P. Ltd. v. Deputy CIT (Hyderabad) . . . 754 Non-resident --Deduction for head office expenses--Expenses incurred by head office exclusively for Indian branch--Allowable in full--Income-tax Act, 1961, s. 44C-- Deputy DIT (International Taxation) v. Development Bank of Singapore (Mumbai) . . . 776 Refund --Interest on excess refund--Interest to be calculated from date of granting of refund not from date of receipt of refund--Income-tax Act, 1961, ss. 234D, 244A-- Deputy DIT (International Taxation) v. Development Bank of Singapore (Mumbai) . . . 776 PRINT EDITION Volume 32 : Part 4 (Issue dated : 23-6-2014) SUBJECT INDEX TO CASES REPORTED Appeal to Commissioner (Appeals) --Appealable orders--Assessment--Assessing Officer--Jurisdiction--No appeal lies on ground of lack of jurisdiction--Commissioner (Appeals) has no power to entertain additional ground on question of jurisdiction of Assessing Officer--Income-tax Act, 1961, s. 246A-- Assistant CIT v. Punjab Urban Development Authority(Chandigarh) . . . 481 Bad debt --Taking over liability during merger--Not bad debt--Amount not considered for calculating income in earlier years--Good debt cannot be written off--Income-tax Act, 1961, s. 36(1)(vii), (2)-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 Business expenditure --Assessee engaged in acquiring land and developing it and after development land, selling plots in auction--Continuing to maintain various sectors even after completion--Staff and infrastructure jointly shared by developed and undeveloped sectors--Cash system of accounting--All cash outgoings in revenue field to be allowed--Administrative expenses allowable--Disallowance on ground partly related to incomplete projects not permissible-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 ----Deduction only on actual payment--Provident fund contributions deposited in bank as fixed deposit after finalisation of balance-sheet--Provident fund established by assessee governed by provisions of Provident Funds Act, 1925--No question of recognition of provident fund--Employer’s contribution allowable under section 37 and employee's contribution allowable under section 36(1)(va)--Assessee falling under exceptions under section 40A(9)--Disallowance not applicable--Benefit of exception that expenditure paid before due date of filing of return allowable not available where assessee following cash system--Assessing Officer to examine whether provident fund independently monitored and whether deposits made for long periods--Income-tax Act, 1961, ss. 36(1)(iv), (va), 37, 40A(9), 43B-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 Capital gains --Business income--Conversion of stock-in-trade into investment--Permissible--Income-tax Act, 1961-- Sukarma Finance Ltd. v. Assistant CIT (Delhi) . . . 465 ----Business income--Purchases of shares and stock of shares recorded in books of account as investment--No evidence to prove trading in shares--Volume of sale consideration not determinative to prove trading in shares--Income from purchase and sale of shares to be treated under head “Capital gains†--Income-tax Act, 1961-- Sukarma Finance Ltd. v. Assistant CIT (Delhi) . . . 465 Capital or revenue expenditure --Sum paid for acquisition of land for international airport at Mohali--Contribution by assessee decided by Government on basis of availability of funds--No benefit to assessee from contribution to airport--No link established to show contribution resulted directly in increase of land prices--Expenditure for acquisition of land for proposed airport not revenue expenditure--Capital expenditure not allowable--Income-tax Act, 1961, s. 37-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 Capital or revenue receipt --Assessee carrying on business of construction and development of houses and sale thereof outright or on instalment basis under hire purchase agreements--Instalments received from allottees are in nature of revenue receipts--Assessee adopting cash system of accounting during year--Not entitled to contend that in respect of instalments it was following continuously project completion method--Expenditure incurred in cash towards construction of houses and flats sold under hire purchase to be allowed--Instalments accumulated in schemes to be considered with opening stock whenever particular scheme completed--Instalments received for pending adjustments for which particulars not available--Instalments pertaining to earlier years remaining unreconciled not to be added to income in later years-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 Depreciation --Building--Assessee explaining that lands on which buildings constructed were under its ownership--Categorically stating no inclusion of any cost of land in cost of building--Depreciation to be allowed-- Assistant CIT v. Punjab Urban Development Authority(Chandigarh) . . . 481 Export --Exemption--Computation of deduction--Total turnover--Communication charges attributable to delivery of computer software outside India reduced from export turnover to be reduced also from total turnover--Income-tax Act, 1961, s. 10A-- Sumtotal Systems India P. Ltd. v. Assistant CIT (Hyderabad) . . . 446 Income --Accrual--Advances received for future consultancy--Chronological events of case to be considered by Assessing Officer before making addition--Matter remanded--Income-tax Act, 1961-- Corporate Law Chambers India v. Deputy CIT (Mumbai) . . . 477 ----Earnest money received from prospective buyers to whom no allotment made--No addition possible under cash system of accounting-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 ----Method of accounting--Right of assessee to adopt cash system of accounting as regards “Income from other sources†--Interest on bank deposits--Right of assessee to offer it on receipt basis--Income-tax Act, 1961, s. 145-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 Income-tax authorities --Assessment--Validity--Assessment made by assessing authority holding territorial jurisdiction over assessee in terms of notification issued under section 120--Valid--Income-tax Act, 1961, ss. 120, 124(5)-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 ----Jurisdiction--Assessing Officer--Transfer of case--Orders to be passed through assessee information system--No opportunity to be provided to assessee if case is transferred within city--Objection to jurisdiction to be raised within one month from issue of notice--Provision applies to cases of revised returns--Challenge to jurisdiction not maintainable at later stage--Income-tax Act, 1961, ss. 120, 124, 127, 129-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 International transactions --Transfer pricing--Computation of arm’s length price--Selection of comparables--Companies having revenue from both products and software services and segment-wise data not available, companies having super normal profit, enormous turnover, companies not qualifying employee cost filter and RPT filter and functionally dissimilar cannot be treated as comparable--Income-tax Act, 1961, s. 92CA--Sumtotal Systems India P. Ltd. v. Assistant CIT (Hyderabad) . . . 446 Method of accounting --Assessee earlier enjoying exemption--Upon ceasure of exemption revising accounting systems--Revision having effect of increasing profits of earlier year for which assessment completed--Not permissible--Income-tax Act, 1961, ss. 10(20A), 145--Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 SECTIONWISE INDEX TO CASES REPORTED IN THIS PART Income-tax Act, 1961 S. 10(20A) --Method of accounting--Assessee earlier enjoying exemption--Upon ceasure of exemption revising accounting systems--Revision having effect of increasing profits of earlier year for which assessment completed--Not permissible-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 S. 10A --Export--Exemption--Computation of deduction--Total turnover--Communication charges attributable to delivery of computer software outside India reduced from export turnover to be reduced also from total turnover-- Sumtotal Systems India P. Ltd. v. Assistant CIT (Hyderabad) . . . 446 S. 36(1)(iv) --Business expenditure--Deduction only on actual payment--Provident fund contributions deposited in bank as fixed deposit after finalisation of balance-sheet--Provident fund established by assessee governed by provisions of Provident Funds Act, 1925--No question of recognition of provident fund--Employer’s contribution allowable under section 37 and employee's contribution allowable under section 36(1)(va)--Assessee falling under exceptions under section 40A(9)--Disallowance not applicable--Benefit of exception that expenditure paid before due date of filing of return allowable not available where assessee following cash system--Assessing Officer to examine whether provident fund independently monitored and whether deposits made for long periods-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 S. 36(1)(va) --Business expenditure--Deduction only on actual payment--Provident fund contributions deposited in bank as fixed deposit after finalisation of balance-sheet--Provident fund established by assessee governed by provisions of Provident Funds Act, 1925--No question of recognition of provident fund--Employer’s contribution allowable under section 37 and employee's contribution allowable under section 36(1)(va)--Assessee falling under exceptions under section 40A(9)--Disallowance not applicable--Benefit of exception that expenditure paid before due date of filing of return allowable not available where assessee following cash system--Assessing Officer to examine whether provident fund independently monitored and whether deposits made for long periods-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 S. 36(1)(vii) --Bad debt--Taking over liability during merger--Not bad debt--Amount not considered for calculating income in earlier years--Good debt cannot be written off--Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 S. 36(2) --Bad debt--Taking over liability during merger--Not bad debt--Amount not considered for calculating income in earlier years--Good debt cannot be written off-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 S. 37 --Business expenditure--Deduction only on actual payment--Provident fund contributions deposited in bank as fixed deposit after finalisation of balance-sheet--Provident fund established by assessee governed by provisions of Provident Funds Act, 1925--No question of recognition of provident fund--Employer’s contribution allowable under section 37 and employee's contribution allowable under section 36(1)(va)--Assessee falling under exceptions under section 40A(9)--Disallowance not applicable--Benefit of exception that expenditure paid before due date of filing of return allowable not available where assessee following cash system--Assessing Officer to examine whether provident fund independently monitored and whether deposits made for long periods-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 ----Capital or revenue expenditure--Sum paid for acquisition of land for international airport at Mohali--Contribution by assessee decided by Government on basis of availability of funds--No benefit to assessee from contribution to airport--No link established to show contribution resulted directly in increase of land prices--Expenditure for acquisition of land for proposed airport not revenue expenditure--Capital expenditure not allowable-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 S. 40A(9) --Business expenditure--Deduction only on actual payment--Provident fund contributions deposited in bank as fixed deposit after finalisation of balance-sheet--Provident fund established by assessee governed by provisions of Provident Funds Act, 1925--No question of recognition of provident fund--Employer’s contribution allowable under section 37 and employee's contribution allowable under section 36(1)(va)--Assessee falling under exceptions under section 40A(9)--Disallowance not applicable--Benefit of exception that expenditure paid before due date of filing of return allowable not available where assessee following cash system--Assessing Officer to examine whether provident fund independently monitored and whether deposits made for long periods-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 S. 43B --Business expenditure--Deduction only on actual payment--Provident fund contributions deposited in bank as fixed deposit after finalisation of balance-sheet--Provident fund established by assessee governed by provisions of Provident Funds Act, 1925--No question of recognition of provident fund--Employer’s contribution allowable under section 37 and employee's contribution allowable under section 36(1)(va)--Assessee falling under exceptions under section 40A(9)--Disallowance not applicable--Benefit of exception that expenditure paid before due date of filing of return allowable not available where assessee following cash system--Assessing Officer to examine whether provident fund independently monitored and whether deposits made for long periods-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 S. 92CA --International transactions--Transfer pricing--Computation of arm’s length price--Selection of comparables--Companies having revenue from both products and software services and segment-wise data not available, companies having super normal profit, enormous turnover, companies not qualifying employee cost filter and RPT filter and functionally dissimilar cannot be treated as comparable-- Sumtotal Systems India P. Ltd. v. Assistant CIT (Hyderabad) . . . 446 S. 120 --Income-tax authorities--Assessment--Validity--Assessment made by assessing authority holding territorial jurisdiction over assessee in terms of notification issued under section 120--Valid-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 ----Income-tax authorities--Jurisdiction--Assessing Officer--Transfer of case--Orders to be passed through assessee information system--No opportunity to be provided to assessee if case is transferred within city--Objection to jurisdiction to be raised within one month from issue of notice--Provision applies to cases of revised returns--Challenge to jurisdiction not maintainable at later stage-- Assistant CIT v. Punjab Urban Development Authority(Chandigarh) . . . 481 S. 124 --Income-tax authorities--Jurisdiction--Assessing Officer--Transfer of case--Orders to be passed through assessee information system--No opportunity to be provided to assessee if case is transferred within city--Objection to jurisdiction to be raised within one month from issue of notice--Provision applies to cases of revised returns--Challenge to jurisdiction not maintainable at later stage-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 S. 124(5) --Income-tax authorities--Assessment--Validity--Assessment made by assessing authority holding territorial jurisdiction over assessee in terms of notification issued under section 120--Valid-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 S. 127 --Income-tax authorities--Jurisdiction--Assessing Officer--Transfer of case--Orders to be passed through assessee information system--No opportunity to be provided to assessee if case is transferred within city--Objection to jurisdiction to be raised within one month from issue of notice--Provision applies to cases of revised returns--Challenge to jurisdiction not maintainable at later stage-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 S. 129 --Income-tax authorities--Jurisdiction--Assessing Officer--Transfer of case--Orders to be passed through assessee information system--No opportunity to be provided to assessee if case is transferred within city--Objection to jurisdiction to be raised within one month from issue of notice--Provision applies to cases of revised returns--Challenge to jurisdiction not maintainable at later stage-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 S. 145 --Income--Method of accounting--Right of assessee to adopt cash system of accounting as regards “Income from other sources†--Interest on bank deposits--Right of assessee to offer it on receipt basis-- Assistant CIT v. Punjab Urban Development Authority(Chandigarh) . . . 481 ----Method of accounting--Assessee earlier enjoying exemption--Upon ceasure of exemption revising accounting systems--Revision having effect of increasing profits of earlier year for which assessment completed--Not permissible-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 S. 246A --Appeal to Commissioner (Appeals)--Appealable orders--Assessment--Assessing Officer--Jurisdiction--No appeal lies on ground of lack of jurisdiction--Commissioner (Appeals) has no power to entertain additional ground on question of jurisdiction of Assessing Officer-- Assistant CIT v. Punjab Urban Development Authority (Chandigarh) . . . 481 | 
