[aaykarbhavan] ITR Volume 350 Part 4 (Issue dated 28-1-2013)

Volume 350 Part 4 (Issue dated 28-1-2013)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Exemption --Charitable purpose--Assessee-trust receiving donation by cheque before end of accounting year--Cheque bearing date falling after end of accounting year and encashed thereafter--Assessee in balance sheet for accounting year showing sum as receivable in future and company not claiming advantage on account of donation in accounting year--No violation of provisions disqualifying assessee for exemption--That trustees and directors of donor-company related not material--Income-tax Act, 1961, ss. 11, 12, 13(2)(b), (d), (h)-- DIT (Exemption) v . Raunaq Education Foundation 
. . . 420

HIGH COURTS

Accounting --Hire-purchase agreement--Indexing system followed by assessee--Mercantile system followed for purposes of assessment--Not justified--Income-tax Act, 1961, s. 145-- Chakra Financial Services Ltd . v . CIT (AP) . . . 396

Appeal to Appellate Tribunal --Duty of Tribunal to give its own reason--Income-tax Act, 1961-- Abhyudaya Pharmaceuticals v . CIT (All) . . . 358

Appeal to Commissioner (Appeals) --Appeal can be made only by assessee--Assessee cannot withdraw appeal--Rejection of application for settlement on ground that appeal had been withdrawn--Not valid--Income-tax Act, 1961, ss. 245C, 251-- M. Loganathan v. ITO (Mad) . . . 373

Appeal to High Court --Competency of appeal--Effect of Instruction No. 3 of 2011 issued by CBDT--No appeal if tax effect is less than ten lakhs of rupees--Instruction applicable to pending proceedings--Appeal not having cascading effect--Appeal not maintainable--CBDT Instruction No. 3 of 2011, dated 9-2-2011--Income-tax Act, 1961, s. 260A-- CIT v . Smt. Varsha Dilip Kolhe (Bom) . . . 384

Auditing of accounts --Direction for special audit--Conditions precedent--Complexity of accounts and safeguarding interests of Revenue--Conditions cumulative--Statutory authority maintaining books of account in accordance with law--Books of account not examined--No evidence that accounts were complex--Notice on basis of notes of accounts--Not valid--Income-tax Act, 1961, s. 142(2A)-- Delhi Development Authority v. Union of India (Delhi) . . . 432

Business expenditure --Capital or revenue expenditure--Repairs and renovation of leased business premises--Revenue expenditure--Income-tax Act, 1961, s. 37--Thiru Arooran Sugars Ltd . v. Deputy CIT (Mad) . . . 324

----Deduction only on actual payment--Provident fund and ESI contributions made before filing return--Allowable--Income-tax Act, 1961, ss. 36(1)(va), 43B-- CITv. Nipso Polyfabriks Ltd. (HP) . . . 327

Cash credits --Firm--Capital introduced by partner after commencement of business--Dispute regarding source of contribution--Unexplained cash credit cannot be added in hands of firm--Income-tax Act, 1961, s. 68-- Abhyudaya Pharmaceuticals v. CIT (All) . . . 358

----Share application money--Assessing Officer--Powers--Power to seek information from assessee as to creditworthiness of share applicants--Power to seek information as to sources of share applicants--Income-tax Act, 1961, s. 68-- CIT v . Nipun Builders and Developers Pvt. Ltd. (Delhi) . . . 407

----Share application money--Creditworthiness of share applicants--Burden of proof--No need of in-depth particulars and details about resources of share applicants--Prima facie satisfaction about creditworthiness of applicants--Mere furnishing of bank statements of share applicants--Not sufficient to prove creditworthiness--Income-tax Act, 1961, s. 68-- CIT v . Nipun Builders and Developers Pvt. Ltd. 
(Delhi) . . . 407

----Share application money--Genuineness of transactions--Reassessment--Report from Intelligence Wing that share capital represented accommodation entries--Failure to furnish report does not affect validity of addition--Income-tax Act, 1961, ss. 68, 147-- CIT v . Nipun Builders and Developers Pvt. Ltd. (Delhi) . . . 407

----Share application money--Genuineness of transactions--Summons to share applicants--Burden of proof--No onus on Assessing Officer to visit website for addresses of share applicants for verification--Onus on assessee to prove genuineness--Income-tax Act, 1961, ss. 68, 131-- CIT v . Nipun Builders and Developers Pvt. Ltd. 
(Delhi) . . . 407

Deduction of tax at source --Lorry booking business--Assessee collecting freight charges from clients who intended to transport their goods through separate transporters--Assessee paying to transporters entire amount collected from clients after deducting his commission--No privity of contract of carriage of goods between assessee and his clients--Assessee not a person responsible but only a facilitator--Tax not deductible at source--Income-tax Act, 1961, s. 194C-- CIT v.Hardarshan Singh 
(Delhi) . . . 427

Industrial undertaking --Special deduction under sections 80HH and 80-IA--Computation of special deduction--Determination of business profits--Expenditure directly related to industrial units deductible--Research and development expenses of head office--No evidence to show nexus with business of branches--Allocation of such expenses among branch units by Assessing Officer not justified--Income-tax Act, 1961, ss. 80HH, 80-I-- Zandu Pharmaceuticals Works Ltd. v .CIT (Bom) . . . 366

Precedent --Effect of decision of Supreme Court in CIT v. Rai Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443 (SC)-- M. Loganathan v. ITO (Mad) . . . 373

----Effect of decision of Supreme Court in Sanjeev Woolen Mills v. CIT [2005] 279 ITR 434--C hakra Financial Services Ltd. v. CIT (AP) . . . 396

Recovery of tax --Stay of proceedings--Assessee enjoying exemption as a charitable institution for fifty years till assessment year 2009-10--Assessment denying exemption--Recovery proceedings initiated--Rejection of application for stay of proceedings--Not justified--Income-tax Act, 1961, s. 220(6)-- Rajasthani Sammelan Sarvoday Balika Vidyalaya v . Asst. DIT (Exemption) (Bom) . . . 349

Search and seizure --Requisition--Conditions precedent for application of section 132A--Material to show assets or cash seized would not have been disclosed to income-tax authorities--Cash seized by police authorities--Reasonable explanation regarding cash--No evidence that amount would not be disclosed to income-tax authorities--Order of requisition--Not valid--Income-tax Act, 1961, s. 132A-- Prakash Jaichand Shah v . DIT (Investigations) (Guj) . . . 336

Trading or investment --Purchase of units of mutual funds and sale thereof after realisation of dividend at a loss--Whether in course of business--General principles--Intention of parties relevant--Matter remanded-- CIT v. Allu Arvind Babu 
(Mad) . . . 387

Wealth-tax --Surplus of income--Presumption--Exception--No presumption could be drawn after lapse of long period--Addition of income from undisclosed sources in assessment years 1963-64 to 1970-71--Not to be treated as surplus available in assessee’s hands to be treated as wealth for purpose of wealth-tax for years 1985-86 to 1988-89--Wealth-tax Act, 1957-- Gyan Chand Jain v . CWT (Jharkhand) . . . 353

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 11 --Exemption--Charitable purpose--Assessee-trust receiving donation by cheque before end of accounting year--Cheque bearing date falling after end of accounting year and encashed thereafter--Assessee in balance sheet for accounting year showing sum as receivable in future and company not claiming advantage on account of donation in accounting year--No violation of provisions disqualifying assessee for exemption--That trustees and directors of donor-company related not material-- DIT (Exemption) v. Raunaq Education Foundation (SC) . . . 420

S. 12 --Exemption--Charitable purpose--Assessee-trust receiving donation by cheque before end of accounting year--Cheque bearing date falling after end of accounting year and encashed thereafter--Assessee in balance sheet for accounting year showing sum as receivable in future and company not claiming advantage on account of donation in accounting year--No violation of provisions disqualifying assessee for exemption--That trustees and directors of donor-company related not material-- DIT (Exemption) v. Raunaq Education Foundation (SC) . . . 420

S. 13(2)(b), (d), (h) --Exemption--Charitable purpose--Assessee-trust receiving donation by cheque before end of accounting year--Cheque bearing date falling after end of accounting year and encashed thereafter--Assessee in balance sheet for accounting year showing sum as receivable in future and company not claiming advantage on account of donation in accounting year--No violation of provisions disqualifying assessee for exemption--That trustees and directors of donor-company related not material-- DIT (Exemption) v. Raunaq Education Foundation (SC) . . . 420

S. 36(1)(va) --Business expenditure--Deduction only on actual payment--Provident fund and ESI contributions made before filing return--Allowable-- CIT v. Nipso Polyfabriks Ltd. (HP) . . . 327

S. 37 --Business expenditure--Capital or revenue expenditure--Repairs and renovation of leased business premises--Revenue expenditure-- Thiru Arooran Sugars Ltd . v. Deputy CIT (Mad) . . . 324

S. 43B --Business expenditure--Deduction only on actual payment--Provident fund and ESI contributions made before filing return--Allowable-- CIT v. Nipso Polyfabriks Ltd. (HP) . . . 327

S. 68 --Cash credits--Firm--Capital introduced by partner after commencement of business--Dispute regarding source of contribution--Unexplained cash credit cannot be added in hands of firm-- Abhyudaya Pharmaceuticals v. CIT (All) . . . 358

----Cash credits--Share application money--Assessing Officer--Powers--Power to seek information from assessee as to creditworthiness of share applicants--Power to seek information as to sources of share applicants-- CIT v . Nipun Builders and Developers Pvt. Ltd. (Delhi) . . . 407

----Cash credits--Share application money--Creditworthiness of share applicants--Burden of proof--No need of in-depth particulars and details about resources of share applicants--Prima facie satisfaction about creditworthiness of applicants--Mere furnishing of bank statements of share applicants--Not sufficient to prove creditworthiness-- CIT v . Nipun Builders and Developers Pvt. Ltd. (Delhi) . . . 407

----Cash credits--Share application money--Genuineness of transactions--Reassessment--Report from Intelligence Wing that share capital represented accommodation entries--Failure to furnish report does not affect validity of addition-- CIT v . Nipun Builders and Developers Pvt. Ltd. (Delhi) . . . 407

----Cash credits--Share application money--Genuineness of transactions--Summons to share applicants--Burden of proof--No onus on Assessing Officer to visit website for addresses of share applicants for verification--Onus on assessee to prove genuineness-- CIT v . Nipun Builders and Developers Pvt. Ltd. (Delhi) . . . 407

S. 80HH --Industrial undertaking--Special deduction under sections 80HH and 80-IA--Computation of special deduction--Determination of business profits--Expenditure directly related to industrial units deductible--Research and development expenses of head office--No evidence to show nexus with business of branches--Allocation of such expenses among branch units by Assessing Officer not justified-- Zandu Pharmaceuticals Works Ltd. v . CIT (Bom) . . . 366

S. 80-I --Industrial undertaking--Special deduction under sections 80HH and 80-IA--Computation of special deduction--Determination of business profits--Expenditure directly related to industrial units deductible--Research and development expenses of head office--No evidence to show nexus with business of branches--Allocation of such expenses among branch units by Assessing Officer not justified-- Zandu Pharmaceuticals Works Ltd. v . CIT (Bom) . . . 366

S. 131 --Cash credits--Share application money--Genuineness of transactions--Summons to share applicants--Burden of proof--No onus on Assessing Officer to visit website for addresses of share applicants for verification--Onus on assessee to prove genuineness-- CIT v . Nipun Builders and Developers Pvt. Ltd. (Delhi) . . . 407

S. 132A --Search and seizure--Requisition--Conditions precedent for application of section 132A--Material to show assets or cash seized would not have been disclosed to income-tax authorities--Cash seized by police authorities--Reasonable explanation regarding cash--No evidence that amount would not be disclosed to income-tax authorities--Order of requisition--Not valid-- Prakash Jaichand Shah v . DIT (Investigations) (Guj) . . . 336

S. 142(2A) --Auditing of accounts--Direction for special audit--Conditions precedent--Complexity of accounts and safeguarding interests of Revenue--Conditions cumulative--Statutory authority maintaining books of account in accordance with law--Books of account not examined--No evidence that accounts were complex--Notice on basis of notes of accounts--Not valid-- Delhi Development Authority v . Union of India (Delhi) . . . 432

S. 145 --Accounting--Hire-purchase agreement--Indexing system followed by assessee--Mercantile system followed for purposes of assessment--Not justified--Chakra Financial Services Ltd . v . CIT (AP) . . . 396

S. 147 --Cash credits--Share application money--Genuineness of transactions--Reassessment--Report from Intelligence Wing that share capital represented accommodation entries--Failure to furnish report does not affect validity of addition-- CIT v . Nipun Builders and Developers Pvt. Ltd. (Delhi) . . . 407

S. 194C --Deduction of tax at source--Lorry booking business--Assessee collecting freight charges from clients who intended to transport their goods through separate transporters--Assessee paying to transporters entire amount collected from clients after deducting his commission--No privity of contract of carriage between assessee and his clients--Assessee not a person responsible but only a facilitator--Tax not deductible at source-- CIT v. Hardarshan Singh (Delhi) . . . 427

S. 220(6) --Recovery of tax--Stay of proceedings--Assessee enjoying exemption as a charitable institution for fifty years till assessment year 2009-10--Assessment denying exemption--Recovery proceedings initiated--Rejection of application for stay of proceedings--Not justified-- Rajasthani Sammelan Sarvoday Balika Vidyalaya v . Asst. DIT (Exemption) (Bom) . . . 349

S. 245C --Appeal to Commissioner (Appeals)--Appeal can be made only by assessee--Assessee cannot withdraw appeal--Rejection of application for settlement on ground that appeal had been withdrawn--Not valid-- M. Loganathan v. ITO 
(Mad) . . . 373

S. 251 --Appeal to Commissioner (Appeals)--Appeal can be made only by assessee--Assessee cannot withdraw appeal--Rejection of application for settlement on ground that appeal had been withdrawn--Not valid-- M. Loganathan v. ITO 
(Mad) . . . 373

S. 260A --Appeal to High Court--Competency of appeal--Effect of Instruction No. 3 of 2011 issued by CBDT--No appeal if tax effect is less than ten lakhs of rupees--Instruction applicable to pending proceedings--Appeal not having cascading effect--Appeal not maintainable--CBDT Instruction No. 3 of 2011, dated 9-2-2011-- CIT v . Smt. Varsha Dilip Kolhe (Bom) . . . 384

 

Regards

Prarthana Jalan

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