Bombay HC - Sec 234E fee constitutionally valid, compensates Dept's additional work due to delayed filing

Levy of mandatory fee for delayed filing of TDS return & Sec 234E is constitutionally valid; Delay in filing TDS returns has cascading effect and IT Department cannot process deductee's tax status until TDS return is filed by deductor; Delay in filing TDS return results in additional burden upon department due to deductor's fault, hence levy of fee u/s 234E is to compensate for additional work burden forced upon the Department ; HC observes that "Section 234E of the Act is not punitive in nature but a fee which is a fixed charge for the extra service which the Department has to provide due to the late filing of the TDS statements"; TDS return is regularised by paying fee u/s 234E, and is a privilege and special service provided to deductor by allowing him to submit TDS return beyond due date; HC rejects petitioner's argument that fee u/s 234E is collected in the guise of tax; Absence of "right to appeal" against Sec 234E fee cannot make levy & section invalid ; HC says " It must be noted that a right of appeal is not a matter of right but is a creature of the statute, and if the Legislature deems it fit not to provide a remedy of appeal, so be it"; Statute relating to economic activities should be viewed with greater latitude than laws touching civil rights  : Bombay HC The ruling was delivered by Chief Justice Mohit Shah and Justice B. P. Colabawalla. Additional Solicitor General Anil Singh alongwith Advocates A.R. Malhotra and N.A. Kazi represented the Revenue.Advocates B.L. Gandhi and K.C. Pandey argued for the Petitioners. A detailed summary of the ruling will be uploaded on portal shortly.  [TS-44-HC-2015(BOM)] Click here to read and download Judgment copy.

CREDAI NUMBER GIVEN FOR COMPLAINT AGAINST BUILDERS NOT WORKING

Recently the Chairman/President of Credai Mr.Papalal Goyal has made announcement that, the general public can contact on 022-22886666 to register complain against the builders.

However, the contact number is not working at all. Even the phone get piced up; you will not get any response from other side. These types of announcement are just made to fool the peoples. All these MAFIA are hand in hand with the builder lobby and make false announcement to disguise  the general public 

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

CHARTERED ACCOUNTANTS

0253-2319641. M-9423961209

Fwd: ITR Volume 370 : Part 5 (Issue dated : 2-2-2015)

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

HIGH COURTS

Income --Accrual of income--Time of accrual--Agreement for supply of technical know-how--Termination of agreement--Provision for continuation of use of technical know-how for a further period of three years--No new technical know-how--Lump sum paid for continued user of technical know-how--Amount entered in accounts for three years--Not conclusive--Amount accrued and assessable in year of receipt--Income-tax Act, 1961-- New Holland Tractors (India) P. Ltd. v. CIT (Delhi) . . . 35

Interest on borrowed capital --Disallowance on ground loan given for non-business purposes out of interest-bearing funds--Books of account neither produced before Assessing Officer nor before Commissioner (Appeals)--No steps taken to bring evidence on record even before Tribunal--Non-co-operative attitude of assessee--Tribunal finding assessee had not made out case for remanding matter to Assessing Officer--Justified--Income-tax Act, 1961-- Poonam Dyeing and Ptg. Mills Pvt. Ltd. v. ITO (Guj) . . . 21

Penalty --Concealment of income--Lump sum received on termination of agreement disclosed--Claim that amount was assessable over a period of three years--Rejection of claim--No concealment of income--Penalty could not be levied--Income-tax Act, 1961, s. 271(1)(c)-- New Holland Tractors (India) P. Ltd. v. CIT (Delhi) . . . 35

Reassessment --Notice--Validity of notice--Reasons for notice must be read as a whole--Notice after four years--Failure to disclose material facts necessary for assessment--Duty to disclose material facts fully and truly--Finding during income-tax survey in subsequent year that expenditure had been allowed in original assessment in respect of bogus transaction--Notice after four years--Valid--Income-tax Act, 1961, ss. 147, 148-- Nickunj Eximp Enterprises P. Ltd. v. Asst. CIT (Bom) . . . 25

 

PRINT EDITION

ITR Volume 370 : Part 5 (Issue dated : 2-2-2015)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Appeal to Appellate Tribunal --Powers of Tribunal--Power to admit additional evidence--Application for admission of additional evidence six years after assessment during penalty proceedings--No credible evidence and no explanation for delay in application--Rejection of application--Justified--Income-tax Act, 1961, s. 254-- Jawahar Lal Jain (HUF) v. CIT (P&H) . . . 712

Business --Business income--Remission or cessation of liability--Cessation of sales tax liability--Not liable to tax--Income-tax Act, 1961, s. 41(1)-- CIT v. Colgate Palmolive (India) Ltd. (Bom) . . . 728

Business expenditure --Deduction only on actual payment--Assessee importing sterline fatty acid--Contractual trading liability incurred in nature of additional cost of material--Contingent liability--Not an allowable deduction--Income-tax Act, 1961, s. 43B-- Oswal Agro Mills Ltd. v.CIT (Delhi) . . . 676

----Disallowance--Failure to deduct tax at source on payments--Contract of assessee to transport gas--Freight charges paid to sub-contractors--Assessee not deducting tax at source on freight payments to sub-contractors--Entire expenditure to be disallowed--Income-tax Act, 1961, ss. 40(a)(ia), 194C-- Palam Gas Service v. CIT (HP) . . . 740

Business loss --Capital or revenue loss--Devaluation of Indian rupee--Loss incurred on account of devaluation of rupee--No disallowance could be made--Income-tax Act, 1961--Oswal Agro Mills Ltd. v. CIT (Delhi) . . . 676

----Manufacture of and trade in oral care products--Investment in 100 per cent. subsidiary--Investment for purposes of business--Loss on sale of investment--Business loss--Income-tax Act, 1961-- CIT v. Colgate Palmolive (India) Ltd. (Bom) . . . 728

Capital or revenue expenditure --One-time lump sum payment for use of technology for a period of six years--Is licence fee for permitting assessee to use technology--Licence neither transferable nor payment recoverable--No accretion to capital asset--No enduring benefit--Revenue expenditure--Income-tax Act, 1961-- Timken India Ltd. v. CIT (Cal) . . . 656

Charitable purpose --Charitable trust--Registration--Commissioner to look into actual activity and main activity of trust--Assessee-trust running posh school for children of non-resident Indians on commercial lines under guise of charitable purpose--Not entitled to registration--Income-tax Act, 1961, s. 12A-- Dawn Educational Charitable Trust v. CIT (Ker) . . . 724

Co-operative society --Special deduction--Effect of sub-section (4) of section 80P--Multi-purpose co-operative credit society registered under Karnataka Act--Sub-section (4) of section 80P not applicable--Society entitled to special deduction--Income-tax Act, 1961, s. 80P-- Venugram Multipurpose Co-operative Credit Society Ltd. v. ITO (Karn) . . . 636

Deduction of tax at source --Works contract--Sale--Distinction--Assessee purchasing chassis and entrusting agency for building bus--Building bus bodies needs lot of expertise, experience and technical know-how--Activity undertaken by assessee not a works contract--No tax deduction at source required--Income-tax Act, 1961, s. 194C-- CIT v. A. P. State Road Transport Corporation (T & AP) . . . 621

Dividend --Deemed dividend--Assessee holding more than 10 per cent. of equity capital of two private limited companies--Lending of money not part of business of companies nor substantial part of business--No organised course of activity involving dealings with any one else except for assessee--Loan to assessee--Exclusionary clause not applicable--Income-tax Act, 1961, s. 2(22)(e)-- Shashi Pal Agarwal v. CIT (All) . . . 720

Industrial undertaking --Special deduction--Computation of deduction under section 80-I--Sections 80HH and 80-I are independent--Assessee entitled to deduction under section 80-I without suffering deduction under section 80HH--Income-tax Act, 1961, ss. 80HH, 80-I-- CITv. Unipatch Rubber Ltd. (Delhi) . . . 685

----Special deduction--Condition precedent--Manufacture of article--Meaning of manufacture--Processing of plain glazed ceramic tiles--Amounts to manufacture--Assessee entitled to special deduction--Income-tax Act, 1961, s. 80-IA-- CIT v. Murudeshwar Decor Ltd. (Karn) . . . 626

Penalty --Concealment of income--Search and seizure--Discrepancy in accounts noted in search proceedings--Surrender of amount--Assessment completed and accepted--Levy of penalty--Valid--Income-tax Act, 1961, s. 271(1)(c)-- Jawahar Lal Jain (HUF) v. CIT (P&H) . . . 712

Reassessment --Notice--†Escapement of income†, meaning of--All information, documents or records relating to assessee available before Assessing Officer--Reasons for notice showing discovery of new facts from existing records--Mere change of opinion--Not escapement of income--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Debashis Moulik v. Asst. CIT (Cal) . . . 660

----Notice--Subsidy treated as a capital receipt in section 263 proceedings for assessment year 2003-04 and matter within knowledge of Department--Reopening of assessments for subsequent years on ground receipt of subsidy not fulfilling requirement of capital receipt--Not valid--Income-tax Act, 1961, ss. 147, 148-- Man Mohan Kedia v. ITO (Cal) . . . 649

----Notice--Validity--Reason to believe income has escaped assessment--Failure to assess income due to mistake by Assessing Officer--Notice valid--Income-tax Act, 1961, ss. 147, 148--Double Taxation Avoidance Agreement between India and U.K., art. 14-- B. S. Shantharaju v. CIT (Karn) . . . 617

----Notice after four years--Condition precedent--Understatement of closing stock--Balance-sheet and audit report showing closing stock not understated--Assessing Officer believing no income escaped and disagreeing with audit objection yet issuing notice--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- AVTEC Ltd. v. Deputy CIT (Delhi) . . . 611

Rebate --Securities transactions tax--Trading in shares and investment--Assessee’s total income in previous year including income arising from taxable securities transactions--Assessee entitled to deduction from amount of income-tax on such income--Income-tax Act, 1961, s. 88E-- CIT v. Manish D. Innani (Bom) . . . 679

Recovery of tax --Private company--Recovery of tax from directors of private company--Conditions precedent--Tax not recoverable from company and non-recovery attributable to gross negligence, misfeasance or breach of duty by directors--Recovery proceedings on ground of non-filing of returns by company--Order under section 179 not valid--Income-tax Act, 1961, s. 179-- Ram Prakash Singeshwar Rungta v. ITO (Guj) . . . 641

----Stay of recovery proceedings--Power to grant stay--Discretionary power--Factors to be considered--Decision against assessee in prior years on similar issue--No evidence of financial hardship--Conditional stay granted in view of pending appeal--Income-tax Act, 1961, s. 220-- Vodafone Cellular Ltd. v. CIT (Appeals) (Mad) . . . 750

Rectification of mistakes --Debatable point of law--Not a mistake apparent from record--Doctrine of merger--Weighted deduction--Assessing Officer while implementing first appellate order not entitled to review his earlier order--Assessing Officer on basis of new facts cannot pass new order unless order of appellate order challenged or modified--Income-tax Act, 1961, ss. 35C, 154-- Gujarat State Seeds Corporation Ltd. v. ITO (OSD)(Guj) . . . 666

Refund --Interest on excess refund--Refund granted prior to 1-6-2003 but proceedings for assessment completed after 1-6-2003--Interest payable by assessee--Income-tax Act, 1961, s. 234D-- CIT v. Colgate Palmolive (India) Ltd. (Bom) . . . 728

Revision --Commissioner--Powers--Unaccounted purchases and sales--Addition by Commissioner on basis of statement before excise authorities in context of levy of excise duty on unaccounted production--Excise authority deleting addition and deletion affirmed by Tribunal--No material to conclude assessee made unexplained sales or purchases--Revision not valid--Income-tax Act, 1961, s. 263-- CIT v. Arora Alloys Ltd. (P&H) . . . 732

Search and seizure --Block assessment--Assessment of third person--Condition precedent--Assessing Officer of person in respect of whom search conducted must record his satisfaction that undisclosed income belonged to such third person--Failure to record reasons--Notice under section 158BD not valid--Income-tax Act, 1961, ss. 158BC, 158BD--CIT v. Champakbhai Mohanbhai Patel (Guj) . . . 700

----Block assessment--Assessment of third persons--Limitation--Notice to be issued immediately after completion of assessment of persons in respect of whom search conducted--Notice issued to third person more than a year after completion of assessments of persons in respect of whom search conducted--Notice not valid--Income-tax Act, 1961, s. 158BD-- CIT v. Bharat Bhushan Jain (Delhi) . . . 695

----Block assessment--Assessment of third person--Satisfaction of Assessing Officer of person searched that undisclosed income discovered during search belonged to third person--Opinion not formed in terms of section 158BB--Block assessment not valid--Income-tax Act, 1961, s. 158BB-- CIT v. Manoj Bansal (Delhi) . . . 704

Survey --Statements recorded during survey--Evidentiary value of--Understatement of sale consideration--Assessment solely on basis of statements recorded during survey--Statements retracted--Specific plea that statements recorded from partners by applying pressure--Retracted statement cannot constitute the sole basis for fastening liability--Assessments not valid--Income-tax Act, 1961, s. 132-- Gajjam Chinna Yellappa v. ITO (T & AP) . . . 671

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance Agreement between India and U.K. :

Art. 14 --Reassessment--Notice--Validity--Reason to believe income has escaped assessment--Failure to assess income due to mistake by Assessing Officer--Notice valid-- B. S. Shantharaju v. CIT (Karn) . . . 617

Income-tax Act, 1961 :

S. 2(22)(e) --Dividend--Deemed dividend--Assessee holding more than 10 per cent. of equity capital of two private limited companies--Lending of money not part of business of companies nor substantial part of business--No organised course of activity involving dealings with any one else except for assessee--Loan to assessee--Exclusionary clause not applicable-- Shashi Pal Agarwal v. CIT (All) . . . 720

S. 12A --Charitable purpose--Charitable trust--Registration--Commissioner to look into actual activity and main activity of trust--Assessee-trust running posh school for children of non-resident Indians on commercial lines under guise of charitable purpose--Not entitled to registration-- Dawn Educational Charitable Trust v. CIT (Ker) . . . 724

S. 35C --Rectification of mistakes--Debatable point of law--Not a mistake apparent from record--Doctrine of merger--Weighted deduction--Assessing Officer while implementing first appellate order not entitled to review his earlier order--Assessing Officer on basis of new facts cannot pass new order unless order of appellate order challenged or modified--Gujarat State Seeds Corporation Ltd. v. ITO (OSD) (Guj) . . . 666

S. 40(a)(ia) --Business expenditure--Disallowance--Failure to deduct tax at source on payments--Contract of assessee to transport gas--Freight charges paid to sub-contractors--Assessee not deducting tax at source on freight payments to sub-contractors--Entire expenditure to be disallowed-- Palam Gas Service v. CIT (HP) . . . 740

S. 41(1) --Business--Business income--Remission or cessation of liability--Cessation of sales tax liability--Not liable to tax-- CIT v. Colgate Palmolive (India) Ltd. (Bom) . . . 728

S. 43B --Business expenditure--Deduction only on actual payment--Assessee importing sterline fatty acid--Contractual trading liability incurred in nature of additional cost of material--Contingent liability--Not an allowable deduction-- Oswal Agro Mills Ltd. v. CIT (Delhi) . . . 676

S. 80HH --Industrial undertaking--Special deduction--Computation of deduction under section 80-I--Sections 80HH and 80-I are independent--Assessee entitled to deduction under section 80-I without suffering deduction under section 80HH-- CIT v. Unipatch Rubber Ltd. (Delhi) . . . 685

S. 80-I --Industrial undertaking--Special deduction--Computation of deduction under section 80-I--Sections 80HH and 80-I are independent--Assessee entitled to deduction under section 80-I without suffering deduction under section 80HH-- CIT v. Unipatch Rubber Ltd. (Delhi) . . . 685

S. 80-IA --Industrial undertaking--Special deduction--Condition precedent--Manufacture of article--Meaning of manufacture--Processing of plain glazed ceramic tiles--Amounts to manufacture--Assessee entitled to special deduction-- CIT v. Murudeshwar Decor Ltd.(Karn) . . . 626

S. 80P --Co-operative society--Special deduction--Effect of sub-section (4) of section 80P--Multi-purpose co-operative credit society registered under Karnataka Act--Sub-section (4) of section 80P not applicable--Society entitled to special deduction-- Venugram Multipurpose Co-operative Credit Society Ltd. v. ITO (Karn) . . . 636

S. 88E --Rebate--Securities transactions tax--Trading in shares and investment--Assessee’s total income in previous year including income arising from taxable securities transactions--Assessee entitled to deduction from amount of income-tax on such income--CIT v. Manish D. Innani (Bom) . . . 679

S. 132 --Survey--Statements recorded during survey--Evidentiary value of--Understatement of sale consideration--Assessment solely on basis of statements recorded during survey--Statements retracted--Specific plea that statements recorded from partners by applying pressure--Retracted statement cannot constitute the sole basis for fastening liability--Assessments not valid-- Gajjam Chinna Yellappa v. ITO (T & AP) . . . 671

S. 147 --Reassessment--Notice--†Escapement of income†, meaning of--All information, documents or records relating to assessee available before Assessing Officer--Reasons for notice showing discovery of new facts from existing records--Mere change of opinion--Not escapement of income--Notice not valid-- Debashis Moulik v. Asst. CIT (Cal) . . . 660

----Reassessment--Notice--Subsidy treated as a capital receipt in section 263 proceedings for assessment year 2003-04 and matter within knowledge of Department--Reopening of assessments for subsequent years on ground receipt of subsidy not fulfilling requirement of capital receipt--Not valid-- Man Mohan Kedia v. ITO (Cal) . . . 649

----Reassessment--Notice--Validity--Reason to believe income has escaped assessment--Failure to assess income due to mistake by Assessing Officer--Notice valid-- B. S. Shantharaju v. CIT (Karn) . . . 617

----Reassessment--Notice after four years--Condition precedent--Understatement of closing stock--Balance-sheet and audit report showing closing stock not understated--Assessing Officer believing no income escaped and disagreeing with audit objection yet issuing notice--Notice not valid-- AVTEC Ltd. v. Deputy CIT (Delhi) . . . 611

S. 148 --Reassessment--Notice--†Escapement of income†, meaning of--All information, documents or records relating to assessee available before Assessing Officer--Reasons for notice showing discovery of new facts from existing records--Mere change of opinion--Not escapement of income--Notice not valid-- Debashis Moulik v. Asst. CIT (Cal) . . . 660

----Reassessment--Notice--Subsidy treated as a capital receipt in section 263 proceedings for assessment year 2003-04 and matter within knowledge of Department--Reopening of assessments for subsequent years on ground receipt of subsidy not fulfilling requirement of capital receipt--Not valid-- Man Mohan Kedia v. ITO (Cal) . . . 649

----Reassessment--Notice--Validity--Reason to believe income has escaped assessment--Failure to assess income due to mistake by Assessing Officer--Notice valid-- B. S. Shantharaju v. CIT (Karn) . . . 617

----Reassessment--Notice after four years--Condition precedent--Understatement of closing stock--Balance-sheet and audit report showing closing stock not understated--Assessing Officer believing no income escaped and disagreeing with audit objection yet issuing notice--Notice not valid-- AVTEC Ltd. v. Deputy CIT (Delhi) . . . 611

S. 154 --Rectification of mistakes--Debatable point of law--Not a mistake apparent from record--Doctrine of merger--Weighted deduction--Assessing Officer while implementing first appellate order not entitled to review his earlier order--Assessing Officer on basis of new facts cannot pass new order unless order of appellate order challenged or modified--Gujarat State Seeds Corporation Ltd. v. ITO (OSD) (Guj) . . . 666

S. 158BB --Search and seizure--Block assessment--Assessment of third person--Satisfaction of Assessing Officer of person searched that undisclosed income discovered during search belonged to third person--Opinion not formed in terms of section 158BB--Block assessment not valid-- CIT v. Manoj Bansal (Delhi) . . . 704

S. 158BC --Search and seizure--Block assessment--Assessment of third person--Condition precedent--Assessing Officer of person in respect of whom search conducted must record his satisfaction that undisclosed income belonged to such third person--Failure to record reasons--Notice under section 158BD not valid-- CIT v. Champakbhai Mohanbhai Patel(Guj) . . . 700

S. 158BD --Search and seizure--Block assessment--Assessment of third person--Condition precedent--Assessing Officer of person in respect of whom search conducted must record his satisfaction that undisclosed income belonged to such third person--Failure to record reasons--Notice under section 158BD not valid-- CIT v. Champakbhai Mohanbhai Patel(Guj) . . . 700

----Search and seizure--Block assessment--Assessment of third persons--Limitation--Notice to be issued immediately after completion of assessment of persons in respect of whom search conducted--Notice issued to third person more than a year after completion of assessments of persons in respect of whom search conducted--Notice not valid-- CIT v.Bharat Bhushan Jain (Delhi) . . . 695

S. 179 --Recovery of tax--Private company--Recovery of tax from directors of private company--Conditions precedent--Tax not recoverable from company and non-recovery attributable to gross negligence, misfeasance or breach of duty by directors--Recovery proceedings on ground of non-filing of returns by company--Order under section 179 not valid-- Ram Prakash Singeshwar Rungta v. ITO (Guj) . . . 641

S. 194C --Business expenditure--Disallowance--Failure to deduct tax at source on payments--Contract of assessee to transport gas--Freight charges paid to sub-contractors--Assessee not deducting tax at source on freight payments to sub-contractors--Entire expenditure to be disallowed-- Palam Gas Service v. CIT (HP) . . . 740

----Deduction of tax at source--Works contract--Sale--Distinction--Assessee purchasing chassis and entrusting agency for building bus--Building bus bodies needs lot of expertise, experience and technical know-how--Activity undertaken by assessee not a works contract--No tax deduction at source required-- CIT v. A. P. State Road Transport Corporation (T & AP) . . . 621

S. 220 --Recovery of tax--Stay of recovery proceedings--Power to grant stay--Discretionary power--Factors to be considered--Decision against assessee in prior years on similar issue--No evidence of financial hardship--Conditional stay granted in view of pending appeal--Vodafone Cellular Ltd. v. CIT (Appeals) (Mad) . . . 750

S. 234D --Refund--Interest on excess refund--Refund granted prior to 1-6-2003 but proceedings for assessment completed after 1-6-2003--Interest payable by assessee-- CITv. Colgate Palmolive (India) Ltd. (Bom) . . . 728

S. 254 --Appeal to Appellate Tribunal--Powers of Tribunal--Power to admit additional evidence--Application for admission of additional evidence six years after assessment during penalty proceedings--No credible evidence and no explanation for delay in application--Rejection of application--Justified-- Jawahar Lal Jain (HUF) v. CIT (P&H) . . . 712

S. 263 --Revision--Commissioner--Powers--Unaccounted purchases and sales--Addition by Commissioner on basis of statement before excise authorities in context of levy of excise duty on unaccounted production--Excise authority deleting addition and deletion affirmed by Tribunal--No material to conclude assessee made unexplained sales or purchases--Revision not valid-- CIT v. Arora Alloys Ltd. (P&H) . . . 732

S. 271(1)(c) --Penalty--Concealment of income--Search and seizure--Discrepancy in accounts noted in search proceedings--Surrender of amount--Assessment completed and accepted--Levy of penalty--Valid-- Jawahar Lal Jain (HUF) v. CIT (P&H) . . . 712

 

ITR (TRIB) Volume 37 : Part 5 (Issue dated : 2-2-2015)

 

 

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

 

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Capital gains --Sale of shares--Shares allotted by Bombay Stock Exchange in lieu of its membership card in scheme of demutualisation--Capital gain on sale of shares to be computed by taking original cost of acquisition of membership card and allowing indexation in accordance with law--Income-tax Act, 1961, s. 55(2)(ab)-- Deputy CIT v. G. Das Capital Markets P. Ltd. (Mumbai) . . . 94

Capital loss --Sale of shares--Sale of shares to relatives of directors of assessee--Actual price of shares on date of sale required for determining profit or loss--Value of share to be determined in accordance with net asset value--Assessing Officer to determine value of share--Matter remanded--Income-tax Act, 1961-- Deputy CIT v. G. Das Capital Markets P. Ltd. (Mumbai) . . . 94

Cash credits --Assessee purchasing teleserials selling portion during current year and disclosing balance as its closing stock--Reasoning given by Assessing Officer for rejecting books of accounts of assessee that supplier company’s accounts not reliable not proper--Rejection of accounts not justified--Sales amount cannot be treated as unexplained cash credit--Assessing Officer to examine books of accounts of assessee and to determine business income--Income-tax Act, 1961, s. 68-- Wellness Communication P. Ltd. v. ITO(Mumbai) . . . 86

Scientific research expenditure --Capital or revenue expenditure--Expenditure incurred for developing prototypes of products for specific customers according to their specifications--No orders can be expected if prototype developed not conform to samples supplied by customer and would constitute loss--Assessee in same business for more than two decades--Expenditure revenue in nature and eligible for deduction--Income-tax Act, 1961, s. 35-- Asst. CIT v. Besson Musical Instrument P. Ltd. (Delhi) . . . 90

 

PRINT EDITION

Volume 37 : Part 5 (Issue dated : 2-2-2015)

SUBJECT INDEX TO CASES REPORTED

Appeal to Appellate Tribunal --Monetary limits for appeals by Department--Instruction No. 5 of 2014, dated July 10, 2014 revising monetary limits--Applicable to pending appeals--Failure by Department to point out exceptions provided in Circular--Appeal not maintainable--CBDT Instruction No. 5 of 2014, dated July 10, 2014--Income-tax Act, 1961-- ITO v. Santo Stores(Kolkata) . . . 665

Appeal to Commissioner (Appeals) --Charitable purpose--Exemption--Commissioner (Appeals) directing Assessing Officer to consider agricultural income for rate purpose--Not entitled to remit issue for further investigation-- Deputy CIT v. R. N. Shetty Trust (Bangalore) . . . 584

Best judgment assessment --Rejection of accounts and assessment under section 144--Estimation of profit--Transport business--Estimation of income at 5 per cent. reasonable--Income-tax Act, 1961, s. 144-- Sahani Transport Corporation v. Deputy CIT (Cuttack) . . . 564

Business expenditure --Deduction only on actual payment--Employer’s contribution to employees provident fund paid before due date for filing return--Allowable--Income-tax Act, 1961, s. 43B-- Deputy CIT v. Selvel Advertising P. Ltd. (Kolkata) . . . 611

----Depreciation--LED video display boards--Are temporary structures--Assessee entitled to 100 per cent. depreciation--Income-tax Act, 1961-- Deputy CIT v. Selvel Advertising P. Ltd.(Kolkata) . . . 611

----Prior period expenses--Expenses relating to earlier years--Assessee producing details of expenses debited in profit and loss account and receipt of bills in respective assessment years--Disallowance to be deleted--Income-tax Act, 1961-- Deputy CIT v. Selvel Advertising P. Ltd. (Kolkata) . . . 611

----Provision for bad and doubtful debts--Amount not to exceed 10 per cent. of aggregate average advances for deduction--Allowable to extent of provision actually created in books of account or amount calculated in terms of section 36(1)(viia) whichever is lower--Income-tax Act, 1961, s. 36(1)(viia)-- Nanded District Central Co-operative Bank Ltd. v. Deputy CIT(Pune) . . . 532

Cash credit --Estimation of income at figure higher than cash credit--No details of sundry creditors--No finding of other source of income earned by assessee--No separate addition for sundry creditors warranted--Income-tax Act, 1961, s. 68-- Sahani Transport Corporation v. Deputy CIT (Cuttack) . . . 564

Charitable purpose --Exemption--Investment in non-specified assets constituting only 1.68 per cent. of total assets--Miniscule investment--Not sufficient to deny exemption--Assessee not maintaining separate books of account for agricultural activities--Failure by Assessing Officer to call for record of Revenue authorities or bring material to show income not from agricultural activities--Exemption cannot be denied--Cash credit--Corpus donations--Assessee giving list of donors for substantial amount--Failure by Assessing Officer to collect confirmation regarding donations--Exemption cannot be denied--Payment of money to sister concerns--No material to demonstrate payment not commensurate with market value of services availed of--No violation of section 13(1)(c) and (3)--Exemption cannot be denied--Trust running educational institutions--Income incidental to main activity--Exemption cannot be denied--Income-tax Act, 1961, ss. 11, 11(5), 12, 13, 68-- Deputy CIT v. R. N. Shetty Trust(Bangalore) . . . 584

Depreciation --Additional depreciation--Assessing Officer allowing additional depreciation in immediately preceding assessment year--Denial of remaining fifty per cent. of additional depreciation for next assessment year holding that business of generation and distribution of power not eligible for additional depreciation--Once conditions regarding claim of depreciation examined in first year cannot be denied in next assessment year--Assessee entitled for balance unutilised fifty per cent. of additional depreciation--Income-tax Act, 1961, s. 32(1)(iia)-- Century Enka Ltd. v. Deputy CIT (Kolkata) . . . 644

----Assessee acquiring commercial rights to display on bridges for business purposes--Entitled to depreciation--Income-tax Act, 1961-- Deputy CIT v. Selvel Advertising P. Ltd.(Kolkata) . . . 611

Income --Accrual--Co-operative bank--Mercantile system of accounting--Interest relating to non-performing assets advances--Interest does not accrue to assessee--Not taxable--Income-tax Act, 1961, s. 43D-- Nanded District Central Co-operative Bank Ltd. v. Deputy CIT (Pune) . . . 532

----Disallowance of expenditure in relation to exempt income--Object of assessee in making investment to gain holding controlling stake in group concerns and not for earning income--Provisions of section 14A cannot be invoked--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Deputy CIT v. Selvel Advertising P. Ltd. (Kolkata) . . . 611

Income from undisclosed sources --Addition on account of bogus purchases--Assessee furnishing proof to substantiate purchases--Addition to be deleted--Income-tax Act, 1961--Deputy CIT v. Selvel Advertising P. Ltd. (Kolkata) . . . 611

Income or capital --Co-operative bank--Negative networth--Financial assistance rendered by State Government with object of safeguarding interest of farmers and depositors and regularising normal banking activity--Transaction between Government and assessee cannot be regarded as business activity--Financial assistance capital in nature not chargeable to tax--Income-tax Act, 1961-- Nanded District Central Co-operative Bank Ltd. v. Deputy CIT(Pune) . . . 532

Infrastructure facility --Special deduction under section 80-IA(5)--Condition precedent--Deduction cannot be denied in succeeding years without disturbing relief granted for initial year--Income-tax Act, 1961, s. 80-IA(5)-- Deputy CIT v. Selvel Advertising P. Ltd. (Kolkata) . . . 611

Penalty --Concealment of income or furnishing of inaccurate particulars--Long-term capital gains--Rate of tax--Assessee claiming 10 per cent rate of tax in first revised return and 20 per cent. in second for sale of paintings--Assessing Officer rejecting second revised return on ground of lapse of time--No attempt by assessee to show long-term capital gains in a different category--Assessee cannot be held guilty of concealment of income merely for seeking to be taxed at concessional rate by mistake--Deletion of penalty justified--Income-tax Act, 1961, s. 271(1)(c)-- Asst. CIT v. Smt. Cecilia Haresh Chaganlal (Mumbai) . . . 567

----Search and seizure--Assessee cannot be expected to further substantiate manner of earning of income if no questioning done under section 132(4)--Penalty cannot be levied--Income-tax Act, 1961, ss. 132(4), 271AAA-- Sunil Kumar Bansal v. Deputy CIT (Chandigarh) . . . 576

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961

S. 11 --Charitable purpose--Exemption--Investment in non-specified assets constituting only 1.68 per cent. of total assets--Miniscule investment--Not sufficient to deny exemption--Assessee not maintaining separate books of account for agricultural activities--Failure by Assessing Officer to call for record of Revenue authorities or bring material to show income not from agricultural activities--Exemption cannot be denied--Cash credit--Corpus donations--Assessee giving list of donors for substantial amount--Failure by Assessing Officer to collect confirmation regarding donations--Exemption cannot be denied--Payment of money to sister concerns--No material to demonstrate payment not commensurate with market value of services availed of--No violation of section 13(1)(c) and (3)--Exemption cannot be denied--Trust running educational institutions--Income incidental to main activity--Exemption cannot be denied-- Deputy CIT v. R. N. Shetty Trust (Bangalore) . . . 584

S. 11(5) --Charitable purpose--Exemption--Investment in non-specified assets constituting only 1.68 per cent. of total assets--Miniscule investment--Not sufficient to deny exemption--Assessee not maintaining separate books of account for agricultural activities--Failure by Assessing Officer to call for record of Revenue authorities or bring material to show income not from agricultural activities--Exemption cannot be denied--Cash credit--Corpus donations--Assessee giving list of donors for substantial amount--Failure by Assessing Officer to collect confirmation regarding donations--Exemption cannot be denied--Payment of money to sister concerns--No material to demonstrate payment not commensurate with market value of services availed of--No violation of section 13(1)(c) and (3)--Exemption cannot be denied--Trust running educational institutions--Income incidental to main activity--Exemption cannot be denied-- Deputy CIT v. R. N. Shetty Trust (Bangalore) . . . 584

S. 12 --Charitable purpose--Exemption--Investment in non-specified assets constituting only 1.68 per cent. of total assets--Miniscule investment--Not sufficient to deny exemption--Assessee not maintaining separate books of account for agricultural activities--Failure by Assessing Officer to call for record of Revenue authorities or bring material to show income not from agricultural activities--Exemption cannot be denied--Cash credit--Corpus donations--Assessee giving list of donors for substantial amount--Failure by Assessing Officer to collect confirmation regarding donations--Exemption cannot be denied--Payment of money to sister concerns--No material to demonstrate payment not commensurate with market value of services availed of--No violation of section 13(1)(c) and (3)--Exemption cannot be denied--Trust running educational institutions--Income incidental to main activity--Exemption cannot be denied-- Deputy CIT v. R. N. Shetty Trust (Bangalore) . . . 584

S. 13 --Charitable purpose--Exemption--Investment in non-specified assets constituting only 1.68 per cent. of total assets--Miniscule investment--Not sufficient to deny exemption--Assessee not maintaining separate books of account for agricultural activities--Failure by Assessing Officer to call for record of Revenue authorities or bring material to show income not from agricultural activities--Exemption cannot be denied--Cash credit--Corpus donations--Assessee giving list of donors for substantial amount--Failure by Assessing Officer to collect confirmation regarding donations--Exemption cannot be denied--Payment of money to sister concerns--No material to demonstrate payment not commensurate with market value of services availed of--No violation of section 13(1)(c) and (3)--Exemption cannot be denied--Trust running educational institutions--Income incidental to main activity--Exemption cannot be denied-- Deputy CIT v. R. N. Shetty Trust (Bangalore) . . . 584

S. 14A --Income--Disallowance of expenditure in relation to exempt income--Object of assessee in making investment to gain holding controlling stake in group concerns and not for earning income--Provisions of section 14A cannot be invoked-- Deputy CIT v. Selvel Advertising P. Ltd. (Kolkata) . . . 611

S. 32(1)(iia) --Depreciation--Additional depreciation--Assessing Officer allowing additional depreciation in immediately preceding assessment year--Denial of remaining fifty per cent. of additional depreciation for next assessment year holding that business of generation and distribution of power not eligible for additional depreciation--Once conditions regarding claim of depreciation examined in first year cannot be denied in next assessment year--Assessee entitled for balance unutilised fifty per cent. of additional depreciation-- Century Enka Ltd. v. Deputy CIT (Kolkata) . . . 644

S. 36(1)(viia) --Business expenditure--Provision for bad and doubtful debts--Amount not to exceed 10 per cent. of aggregate average advances for deduction--Allowable to extent of provision actually created in books of account or amount calculated in terms of section 36(1)(viia) whichever is lower-- Nanded District Central Co-operative Bank Ltd. v. Deputy CIT(Pune) . . . 532

S. 43B --Business expenditure--Deduction only on actual payment--Employer’s contribution to employees provident fund paid before due date for filing return--Allowable--Deputy CIT v. Selvel Advertising P. Ltd. (Kolkata) . . . 611

S. 43D --Income--Accrual--Co-operative bank--Mercantile system of accounting--Interest relating to non-performing assets advances--Interest does not accrue to assessee--Not taxable-- Nanded District Central Co-operative Bank Ltd. v. Deputy CIT (Pune) . . . 532

S. 68 --Cash credit--Estimation of income at figure higher than cash credit--No details of sundry creditors--No finding of other source of income earned by assessee--No separate addition for sundry creditors warranted-- Sahani Transport Corporation v. Deputy CIT(Cuttack) . . . 564

----Charitable purpose--Exemption--Investment in non-specified assets constituting only 1.68 per cent. of total assets--Miniscule investment--Not sufficient to deny exemption--Assessee not maintaining separate books of account for agricultural activities--Failure by Assessing Officer to call for record of Revenue authorities or bring material to show income not from agricultural activities--Exemption cannot be denied--Cash credit--Corpus donations--Assessee giving list of donors for substantial amount--Failure by Assessing Officer to collect confirmation regarding donations--Exemption cannot be denied--Payment of money to sister concerns--No material to demonstrate payment not commensurate with market value of services availed of--No violation of section 13(1)(c) and (3)--Exemption cannot be denied--Trust running educational institutions--Income incidental to main activity--Exemption cannot be denied-- Deputy CIT v. R. N. Shetty Trust (Bangalore) . . . 584

S. 80-IA(5) --Infrastructure facility--Special deduction under section 80-IA(5)--Condition precedent--Deduction cannot be denied in succeeding years without disturbing relief granted for initial year-- Deputy CIT v. Selvel Advertising P. Ltd. (Kolkata) . . . 611

S. 132(4) --Penalty--Search and seizure--Assessee cannot be expected to further substantiate manner of earning of income if no questioning done under section 132(4)--Penalty cannot be levied-- Sunil Kumar Bansal v. Deputy CIT (Chandigarh) . . . 576

S. 144 --Best judgment assessment--Rejection of accounts and assessment under section 144--Estimation of profit--Transport business--Estimation of income at 5 per cent. reasonable-- Sahani Transport Corporation v. Deputy CIT (Cuttack) . . . 564

S. 271(1)(c) --Penalty--Concealment of income or furnishing of inaccurate particulars--Long-term capital gains--Rate of tax--Assessee claiming 10 per cent rate of tax in first revised return and 20 per cent. in second for sale of paintings--Assessing Officer rejecting second revised return on ground of lapse of time--No attempt by assessee to show long-term capital gains in a different category--Assessee cannot be held guilty of concealment of income merely for seeking to be taxed at concessional rate by mistake--Deletion of penalty justified--Asst. CIT v. Smt. Cecilia Haresh Chaganlal (Mumbai) . . . 567

S. 271AAA --Penalty--Search and seizure--Assessee cannot be expected to further substantiate manner of earning of income if no questioning done under section 132(4)--Penalty cannot be levied-- Sunil Kumar Bansal v. Deputy CIT (Chandigarh) . . . 576

Income-tax Rules, 1962

R. 8D --Income--Disallowance of expenditure in relation to exempt income--Object of assessee in making investment to gain holding controlling stake in group concerns and not for earning income--Provisions of section 14A cannot be invoked-- Deputy CIT v. Selvel Advertising P. Ltd. (Kolkata) . . . 611

 

Four Articles On Important Issues By Leading Tax Experts

 

Dear Subscriber,

The following articles on important topics are available at itatonline.org. A pdf copy of each article is available for download.

The Law on Taxability of Gifts under The Income-tax Act, 1961

The law under sections 2(24)(xii) r.w.s. 56(2)(vii) of the Income-tax Act, 1961 relating to taxation of gifts has several nuances and complications. The author has conducted a detailed study of the subject and explained all the implications of the law with utmost clarity

The Entire Law Relating To Hindu Undivided Family (HUF) Explained

The law relating to Hindu Undivided Families (HUFs) is a complicated branch of law, requiring specialist knowledge. The authors have mastered the subject, identified all the core issues, and explained them in a succinct manner

The Entire Law On The Making Of Wills Explained

Though the law on the making of Wills is important, there is considerable confusion in the minds of even educated persons and some times even amongst tax practitioners as to the scope of the law. To dispel the confusion, the authors have written this guide in an easy to understand format

The Entire Law Relating To Family Settlements Explained

The legal implications of a family settlement, from the perspective of general law, the Transfer of Property Act, the Registration Act, the Income-tax Act, etc has been explained in a succinct manner. All the important case laws on the issue have been cited

The articles are a must-read for all professionals.


A pdf copy of each article is available for download.

Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

India Trade Promotion Organization vs. DGIT (E) (Delhi High Court)

S. 2(15)/ 10(23C)(iv): If the definition of "charitable purpose" is construed literally, it is violative of the principles of equality & unconstitutional. If the dominant object is not to carry on business or trade or commerce, then an incidental or ancillary activity for which a fee is charged does not destroy the character of a charitable institution

ITR Volume 370 : Part 3 (Issue dated : 19-1-2015)

 

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

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

HIGH COURTS

Infrastructure development --Special deduction--Condition precedent--Development of infrastructure facility and deriving of income from such facility--Meaning of infrastructure--Assessee engaged in advertising--Agreement with local authority to construct bus shelters, erect lamp posts and beautify road medians--Income derived from advertisement hoardings on such structure--No development of infrastructure facility and no income derived therefrom--Assessee not entitled to special deduction--Income-tax Act, 1961, s. 80-IA-- CITv. Skyline Advertising P. Ltd. (Karn) . . . 1

PRINT EDITION

ITR Volume 370 : Part 3 (Issue dated : 19-1-2015)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Appeal to Appellate Tribunal --Duty of Tribunal--Appeal should not be disposed of in a light hearted or casual manner--Issue withdrawing deduction in relation to standard assets--Tribunal merely following previous orders and upholding order of Commissioner--Not justified--Tribunal directed to rehear appeal on merits--Income-tax Act, 1961, s. 254(2)-- State Bank of India v. Deputy CIT (Bom) . . . 438

----Opportunity of hearing--Request by assessee by letter for adjournment--Record not showing whether assessee put on notice about the date of hearing--Tribunal ought not to have heard appeals ex parte--To dispose of appeals afresh--Income-tax (Appellate Tribunal) Rules, 1963, r. 25--Income-tax Act, 1961, s. 24(1)(x)-- Ananda Nilayam v. ITO (T & AP) . . . 370

Appeal to Commissioner (Appeals) --Powers of Commissioner (Appeals)--Power to admit additional evidence--Evidence of third parties summoned under sections 131 and 133--Assessing Officer not given opportunity to rebut evidence--Order of Commissioner (Appeals) relying on such evidence--Not valid--Order of Tribunal upholding order of Commissioner (Appeals)--Not valid--Income-tax Act, 1961--Income-tax Rules, 1962, r. 46A-- CIT v. Trimline Vyapaar P. Ltd. (Cal) . . . 373

Business expenditure --Disallowance--Payments subject to deduction of tax at source--Bank providing swiping machine to assessee--Amount punched in swiping machine credited to account of retailer by bank--Bank providing banking services in form of payment and subsequently collecting payment--Bank does not render any service in the nature of agency--Bank not concerned with buying or selling of goods--Disallowance under section 40(a)(ia) not warranted--Principle of doubtful penalisation is applicable and has to be applied strictly--Income-tax Act, 1961, ss. 40(a)(ia), 194H-- CIT v. JDS Apparels P. Ltd. (Delhi) . . . 454

Capital gains --Long-term capital gains--Cost of acquisition--Acquisition of additional floor space index/transferable development right under Development Control Rules--No cost of acquisition incurred in respect of development right--Not a case of sale of development right already embedded in land acquired and owned by assessee--Transfer of transferable development right under a document in favour purchaser--Does not result in capital gains assessable to tax--Income-tax Act, 1961, s. 55(2)-- CIT v. Sambhaji Nagar Co-op. Hsg. Society Ltd. (Bom) . . . 325

Charitable institution --Exemption--Continuation of grant of exemption--Effect of insertion of fourteenth proviso to section 10(23C)(via)--Application after 1-6-2006, to be made during previous year relevant to assessment year--Proviso not applicable to previous year which had already expired before introduction of proviso--Income-tax Act, 1961, s. 10(23C)(via), fourteenth proviso-- Marthoma Medical Mission v. Chief CIT (Ker) . . . 418

Company --Book profits--Computation--Law applicable--Effect of amendment with effect from 1-4-1998--Provision for bad and doubtful debts not deductible from book profits for assessment year 1998-99--Income-tax Act, 1961, s. 115JA-- CIT v. Tamil Nadu Small Industries Development Corporation Ltd. (Mad) . . . 449

Depreciation --Actual cost--Fixed assets--Acquisition of entire business including assets and liabilities for a lump sum amount--Valuation of buildings, boundary wall and other plant and machinery as on date of sale done by surveyor relied on by assessee and seller--Determination of actual cost of depreciable assets on basis of valuation report justified--Income-tax Act, 1961-- DE NORA India Ltd. v. CIT (Delhi) . . . 391

Exemption --Mutuality--Co-operative housing society--Bye-laws of society in consonance with Government resolution--Building heavy repair fund--Contribution made to fund--Not transfer fees--Principle of mutuality applicable--Not liable to tax--Income-tax Act, 1961-- CITv. Darbhanga Mansion CHS Ltd. (Bom) . . . 443

Export --Computer software--Hundred per cent. export-oriented undertaking--Exemption--Conditions precedent--Certificate of approval by STPI--Approval from STPI after end of previous year relevant to assessment year--Question of granting exemption does not arise--Circular No. 1 of 2005, dated 6-1-2005--Industries (Development and Regulation) Act, 1951, s. 14--Income-tax Act, 1961, s. 10B-- CIT v. Live Connection Software Solutions P. Ltd.(Mad) . . . 356

----Special deduction--Business income--Income from other sources--Term deposit placed with bank as condition for availing of credit facility--Deposit for purpose of business--Interest earned from such deposit--Business income--Failure to furnish document for purpose of availing of credit facility before Tribunal--Tribunal directed to consider document afresh--Income-tax Act, 1961, s. 80HHC-- Premier Enterprises v. Deputy CIT (Mad). . . 465

Housing project --Special deduction--Condition precedent--Filing of return on time--Condition mandatory--Income-tax Act, 1961, s. 80-IB(10)-- CIT v. Shelcon Properties P. Ltd. (Cal) . . . 305

Income --Accrual--Meaning of accrual--Property sold by Government undertaking--Consideration to be received in instalments along with interest--Accumulated interest credited to suspense account--No evidence that interest was not realisable--Interest had accrued to assessee--Income-tax Act, 1961-- U. P. Chalchitra Nigam Ltd. v. CIT (All) . . . 379

----Computation of income--Disallowance of expenditure on earning non-taxable income--Mode and method of computing disallowance--Voluntary disallowance--Sufficient funds for making investments in shares and mutual funds--No satisfaction recorded by Assessing Officer before making disallowance as to why voluntary disallowance made by assessee was unreasonable and unsatisfactory--Disallowance not justified--Income-tax Act, 1961, s. 14A-- CIT v. Taikisha Engineering India Ltd. (Delhi) . . . 338

Industrial undertaking --Special deduction--Claim by assessee that Central excise set-off was an export incentive--Assessee not entitled to special deduction in respect of Central excise set-off and sales tax set-off--Income-tax Act, 1961, s. 80-IA-- ADCI Dye Chem P. Ltd. v. Deputy CIT (Guj) . . . 408

----Special deduction--Computation--Manufacture of cold rolled strips--Interest on belated payment--Part of consideration and partakes of the character of price--Interest earned from trade debtors to be treated as profits derived from industrial undertaking--Entitled to deduction--Income-tax Act, 1961, s. 80HH-- CIT v. Surana Strips Ltd. (T & AP) . . . 469

----Special deduction--Manufacture of gold jewellery on job work basis--Job workers undertaking work under supervision and control of assessee and under assessee’s directions--Constitutes manufacturing activity by assessee entitling to deduction--Income-tax Act, 1961, s. 80HHC(3)(a)-- CIT v. Harig India Ltd. (Delhi) . . . 424

Offences and prosecution --False verification in return--Complaint lodged after getting proper sanction--Conviction and sentence confirmed--Liberty to Department to consider application for compounding offence--Income-tax Act, 1961, ss. 276C, 277-- B. Gopi v. G. Thiyagarajan, ITO (Mad) . . . 353

Penalty --Concealment of income--Assessing Officer must record satisfaction during course of assessment proceedings whether or not penalty to be levied--Recording satisfaction in a particular manner or reduce it into writing--Not necessary--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Lotus Constructions (T & AP) . . . 475

----Loans in cash exceeding prescribed limit--Finding that assessee had a reasonable explanation for such loans--Penalty could not be levied under sections 271D and 271E--Income-tax Act, 1961, ss. 269SS, 269T, 271D, 271E-- CIT v. T. Perumal (Indl.) (Mad) . . . 313

----Self-assessment tax--Non-payment of admitted tax--Finding that assessee had no intention to evade tax and paid entire tax--Reduction of quantum of penalty to twenty-five per cent.--Justified--Income-tax Act, 1961, s. 140A(3)-- CIT v. Naresh Kumar Jaggi (Delhi) . . . 401

Precedent --Effect of decision of Supreme Court in Liberty India v. CIT [2009] 317 ITR 218--ADCI Dye Chem P. Ltd. v. Deputy CIT (Guj) . . . 408

----Effect of Supreme Court decision in CIT v. Excel Industries [2013] 358 ITR 295-- U. P. Chalchitra Nigam Ltd. v. CIT (All) . . . 379

Reassessment --Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Interest payments allowed after enquiry in original assessment--Reassessment proceedings after four years on ground that rate of interest on part of borrowings was excessive--No failure to disclose material facts--Reassessment proceedings not valid--Income-tax Act, 1961, ss. 147, 148-- CIT v. Asian Tubes Ltd. (Guj) . . . 414

Revision --Commissioner--Powers--Order prejudicial to Revenue--Recording of satisfaction before issuing notice--Commissioner signing on order-sheet for putting up draft notice under section 263 as well as issuing notice--Sufficient compliance in the matter of calling for, examining records of assessment to consider necessity of issuing notice--Notice valid--Income-tax Act, 1961, s. 263-- Zigma Commodities Pvt. Ltd v. ITO (Cal) . . . 318

Search and seizure --Unexplained investment--Excess gold jewellery--No explanation offered--Instruction relating to seizure of jewellery and ornaments in course of search--Does not state that it should not be treated as unexplained investment in jewellery--Inclusion of excess jewellery other than found in wealth-tax assessment--Justified--Income-tax Act, 1961 s. 153-- V. G. P. Ravidas v. Asst. CIT (Mad) . . . 364

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 10(23C)(via), fourteenth proviso --Charitable institution--Exemption--Continuation of grant of exemption--Effect of insertion of fourteenth proviso to section 10(23C)(via)--Application after 1-6-2006, to be made during previous year relevant to assessment year--Proviso not applicable to previous year which had already expired before introduction of proviso--Marthoma Medical Mission v. Chief CIT (Ker) . . . 418

S. 10B --Export--Computer software--Hundred per cent. export-oriented undertaking--Exemption--Conditions precedent--Certificate of approval by STPI--Approval from STPI after end of previous year relevant to assessment year--Question of granting exemption does not arise--Circular No. 1 of 2005, dated 6-1-2005-- CIT v. Live Connection Software Solutions P. Ltd. (Mad) . . . 356

S. 14A --Income--Computation of income--Disallowance of expenditure on earning non-taxable income--Mode and method of computing disallowance--Voluntary disallowance--Sufficient funds for making investments in shares and mutual funds--No satisfaction recorded by Assessing Officer before making disallowance as to why voluntary disallowance made by assessee was unreasonable and unsatisfactory--Disallowance not justified-- CIT v. Taikisha Engineering India Ltd. (Delhi) . . . 338

S. 24(1)(x) --Appeal to Appellate Tribunal--Opportunity of hearing--Request by assessee by letter for adjournment--Record not showing whether assessee put on notice about the date of hearing--Tribunal ought not to have heard appeals ex parte--To dispose of appeals afresh-- Ananda Nilayam v. ITO (T & AP) . . . 370

S. 40(a)(ia) --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Bank providing swiping machine to assessee--Amount punched in swiping machine credited to account of retailer by bank--Bank providing banking services in form of payment and subsequently collecting payment--Bank does not render any service in the nature of agency--Bank not concerned with buying or selling of goods--Disallowance under section 40(a)(ia) not warranted--Principle of doubtful penalisation is applicable and has to be applied strictly-- CIT v. JDS Apparels P. Ltd. (Delhi) . . . 454

S. 55(2) --Capital gains--Long-term capital gains--Cost of acquisition--Acquisition of additional floor space index/transferable development right under Development Control Rules--No cost of acquisition incurred in respect of development right--Not a case of sale of development right already embedded in land acquired and owned by assessee--Transfer of transferable development right under a document in favour purchaser--Does not result in capital gains assessable to tax-- CIT v. Sambhaji Nagar Co-op. Hsg. Society Ltd. (Bom) . . . 325

S. 80HH --Industrial undertaking--Special deduction--Computation--Manufacture of cold rolled strips--Interest on belated payment--Part of consideration and partakes of the character of price--Interest earned from trade debtors to be treated as profits derived from industrial undertaking--Entitled to deduction-- CIT v. Surana Strips Ltd. (T & AP) . . . 469

S. 80HHC --Export--Special deduction--Business income--Income from other sources--Term deposit placed with bank as condition for availing of credit facility--Deposit for purpose of business--Interest earned from such deposit--Business income--Failure to furnish document for purpose of availing of credit facility before Tribunal--Tribunal directed to consider document afresh-- Premier Enterprises v. Deputy CIT (Mad). . . 465

S. 80HHC(3)(a) --Industrial undertaking--Special deduction--Manufacture of gold jewellery on job work basis--Job workers undertaking work under supervision and control of assessee and under assessee’s directions--Constitutes manufacturing activity by assessee entitling to deduction-- CIT v. Harig India Ltd. (Delhi) . . . 424

S. 80-IA --Industrial undertaking--Special deduction--Claim by assessee that Central excise set-off was an export incentive--Assessee not entitled to special deduction in respect of Central excise set-off and sales tax set-off-- ADCI Dye Chem P. Ltd. v. Deputy CIT (Guj) . . . 408

S. 80-IB(10) --Housing project--Special deduction--Condition precedent--Filing of return on time--Condition mandatory-- CIT v. Shelcon Properties P. Ltd. (Cal) . . . 305

S. 115JA --Company--Book profits--Computation--Law applicable--Effect of amendment with effect from 1-4-1998--Provision for bad and doubtful debts not deductible from book profits for assessment year 1998-99-- CIT v. Tamil Nadu Small Industries Development Corporation Ltd. (Mad) . . . 449

S. 140A(3) --Penalty--Self-assessment tax--Non-payment of admitted tax--Finding that assessee had no intention to evade tax and paid entire tax--Reduction of quantum of penalty to twenty-five per cent.--Justified-- CIT v. Naresh Kumar Jaggi (Delhi) . . . 401

S. 147 --Reassessment--Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Interest payments allowed after enquiry in original assessment--Reassessment proceedings after four years on ground that rate of interest on part of borrowings was excessive--No failure to disclose material facts--Reassessment proceedings not valid-- CIT v. Asian Tubes Ltd. (Guj) . . . 414

S. 148 --Reassessment--Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Interest payments allowed after enquiry in original assessment--Reassessment proceedings after four years on ground that rate of interest on part of borrowings was excessive--No failure to disclose material facts--Reassessment proceedings not valid-- CIT v. Asian Tubes Ltd. (Guj) . . . 414

S. 153 --Search and seizure--Unexplained investment--Excess gold jewellery--No explanation offered--Instruction relating to seizure of jewellery and ornaments in course of search--Does not state that it should not be treated as unexplained investment in jewellery--Inclusion of excess jewellery other than found in wealth-tax assessment--Justified-- V. G. P. Ravidas v. Asst. CIT (Mad) . . . 364

S. 194H --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Bank providing swiping machine to assessee--Amount punched in swiping machine credited to account of retailer by bank--Bank providing banking services in form of payment and subsequently collecting payment--Bank does not render any service in the nature of agency--Bank not concerned with buying or selling of goods--Disallowance under section 40(a)(ia) not warranted--Principle of doubtful penalisation is applicable and has to be applied strictly-- CIT v. JDS Apparels P. Ltd. (Delhi) . . . 454

S. 254(2) --Appeal to Appellate Tribunal--Duty of Tribunal--Appeal should not be disposed of in a light hearted or casual manner--Issue withdrawing deduction in relation to standard assets--Tribunal merely following previous orders and upholding order of Commissioner--Not justified--Tribunal directed to rehear appeal on merits-- State Bank of India v. Deputy CIT(Bom) . . . 438

S. 263 --Revision--Commissioner--Powers--Order prejudicial to Revenue--Recording of satisfaction before issuing notice--Commissioner signing on order-sheet for putting up draft notice under section 263 as well as issuing notice--Sufficient compliance in the matter of calling for, examining records of assessment to consider necessity of issuing notice--Notice valid-- Zigma Commodities Pvt. Ltd v. ITO (Cal) . . . 318

S. 269SS --Penalty--Loans in cash exceeding prescribed limit--Finding that assessee had a reasonable explanation for such loans--Penalty could not be levied under sections 271D and 271E-- CIT v. T. Perumal (Indl.) (Mad) . . . 313

S. 269T --Penalty--Loans in cash exceeding prescribed limit--Finding that assessee had a reasonable explanation for such loans--Penalty could not be levied under sections 271D and 271E-- CIT v. T. Perumal (Indl.) (Mad) . . . 313

S. 271(1)(c) --Penalty--Concealment of income--Assessing Officer must record satisfaction during course of assessment proceedings whether or not penalty to be levied--Recording satisfaction in a particular manner or reduce it into writing--Not necessary-- CIT v. Lotus Constructions (T & AP) . . . 475

S. 271D --Penalty--Loans in cash exceeding prescribed limit--Finding that assessee had a reasonable explanation for such loans--Penalty could not be levied under sections 271D and 271E-- CIT v. T. Perumal (Indl.) (Mad) . . . 313

S. 271E --Penalty--Loans in cash exceeding prescribed limit--Finding that assessee had a reasonable explanation for such loans--Penalty could not be levied under sections 271D and 271E-- CIT v. T. Perumal (Indl.) (Mad) . . . 313

S. 276C --Offences and prosecution--False verification in return--Complaint lodged after getting proper sanction--Conviction and sentence confirmed--Liberty to Department to consider application for compounding offence-- B. Gopi v. G. Thiyagarajan, ITO (Mad) . . . 353

S. 277 --Offences and prosecution--False verification in return--Complaint lodged after getting proper sanction--Conviction and sentence confirmed--Liberty to Department to consider application for compounding offence-- B. Gopi v. G. Thiyagarajan, ITO (Mad) . . . 353

Industries (Development and Regulation) Act, 1951 :

S. 14 --Export--Computer software--Hundred per cent. export-oriented undertaking--Exemption--Conditions precedent--Certificate of approval by STPI--Approval from STPI after end of previous year relevant to assessment year--Question of granting exemption does not arise--Circular No. 1 of 2005, dated 6-1-2005-- CIT v. Live Connection Software Solutions P. Ltd. (Mad) . . . 356

Income-tax (Appellate Tribunal) Rules, 1963 :

R. 25 --Appeal to Appellate Tribunal--Opportunity of hearing--Request by assessee by letter for adjournment--Record not showing whether assessee put on notice about the date of hearing--Tribunal ought not to have heard appeals ex parte--To dispose of appeals afresh--Ananda Nilayam v. ITO (T & AP) . . . 370

Income-tax Rules, 1962 :

R. 46A --Appeal to Commissioner (Appeals)--Powers of Commissioner (Appeals)--Power to admit additional evidence--Evidence of third parties summoned under sections 131 and 133--Assessing Officer not given opportunity to rebut evidence--Order of Commissioner (Appeals) relying on such evidence--Not valid--Order of Tribunal upholding order of Commissioner (Appeals)--Not valid-- CIT v. Trimline Vyapaar P. Ltd. (Cal) . . . 373