INCOME TAX REPORTS (ITR)
Business expenditure --Deduction only on actual payment--Bank--Loan--Interest--One-time settlement--Either interest amount has to be allowed or sum waived by bank has to be reduced by amount of interest paid--Income-tax Act, 1961, s. 43B-- CIT v. KLN Agrotechs (P.) Ltd. (Karn) . . . 301
----Deduction only on actual payment--Gratuity--Whether claim was merely writing back of the provision or actual payment--Matter remanded--Income-tax Act, 1961, s. 43B-- CIT v. Dhampur Sugar Mills P. Ltd. (All) . . . 296
----Disallowance--Excessive or unreasonable payments--Assessee purchasing windmills--Comparable cases showing payment not inflated--No evidence to establish that price of windmills paid by assessee not actual price--No documentary evidence that money came back to assessee from concern to whom commission paid--No disallowance could be made--Income-tax Act, 1961, s. 40A(2)(b)-- CIT v. Karma Energy Ltd. (Bom) . . . 264
----Disallowance--Expenses for tea, coffee, cold drinks and snacks--Tribunal sustaining disallowance on estimate basis and deleting balance--Question of fact--Income-tax Act, 1961, s. 37(2)-- Sai Computers P. Ltd. v. Joint CIT (All) . . . 285
----Disallowance--Failure to deduct tax at source on payments--Finding that payment made to a group company not in nature of income but expenditure reimbursed and not a revenue receipt--Disallowance not warranted--Income-tax Act, 1961, ss. 40(a)(ia), 194C-- CIT v. Karma Energy Ltd. (Bom) . . . 264
----Fines and penalties--Failure to export sugar in terms of Sugar Export Promotion Act, 1958--Whether amount paid to Government by assessee penal or not--Matter remanded--Income-tax Act, 1961, s. 37-- CIT v. Dhampur Sugar Mills P. Ltd. (All) . . . 296
Business loss --Chit fund--Bid loss--Assessee not producing requisite information before Tribunal--Tribunal’s finding that particulars produced before Commissioner (Appeals) and he had not taken note of them erroneous--One more opportunity to assessee to produce relevant materials--Matter remanded--Income-tax Act, 1961-- CIT v. Shriram Chits (Karnataka) Pvt. Ltd. (Karn) . . . 289
Capital gains or business income --Non-compete fees--Deprivation of business--Taxable under section 28(va)--Income-tax Act, 1961, s. 28(va)-- Arun Toshniwal v. Deputy CIT (Bom) . . . 270
Cash credits
--Gift--Donors relatives of assessee--Gifts made out of love and affection--Details each donor’s return produced before Assessing Officer--Donors income-tax assessees--Gifts reflected in books of account--Transfer of amounts voluntarily and by way of entries--Creditworthiness and genuineness of transactions proved--Gifts valid--Income-tax Act, 1961-- Radhey Shyam Bhatia v. CIT (All) . . . 294
--Gift--Donors relatives of assessee--Gifts made out of love and affection--Details each donor’s return produced before Assessing Officer--Donors income-tax assessees--Gifts reflected in books of account--Transfer of amounts voluntarily and by way of entries--Creditworthiness and genuineness of transactions proved--Gifts valid--Income-tax Act, 1961-- Radhey Shyam Bhatia v. CIT (All) . . . 294 Company --Dividend--Deemed dividend--Loan to shareholder by closely held company--General principles--Assessee managing director of company and also partner of firm--Firm acting as agent of company--Amount advanced by firm to assessee--Firm had independent existence--No evidence that funds of company were used for advance--Amount not assessable as deemed dividend--Income-tax Act, 1961, s. 2(22)(e) -- CIT v. Subrata Roy (Delhi) . . . 207
Depreciation --Tubewell--Is plant and machinery--Assessee entitled to depreciation--Income-tax Act, 1961, s. 32-- CIT v. Dhampur Sugar Mills P. Ltd. (All) . . . 296
Exemption --Hospital--Condition precedent for exemption under section 10(23C)(via)--Institute should exist for philanthropic purposes and secondly it should not exist for profit--Evidence of accumulation of surplus and meagre amount on weaker sections of society--Assessee not entitled to approval under section 10(23C)(via)--Income-tax Act, 1961, s. 10(23C)(via)-- Yash Society v. Chief CIT (Bom) . . . 152
Income --Assessability--General principles--Editor of magazine--Award received from third person for excellence in journalism--Not assessable as income--Income-tax Act, 1961, s. 2(24)-- Aroon Purie v. CIT (Delhi) . . . 188
Income from undisclosed sources --Assessee selling bagasse to its sister concern--Addition on ground sale rate to sister concern lower than average rate in all other cases--Deletion of addition by court in assessee’s own case--No addition to be made--Income-tax Act, 1961, s. 145(1)-- CIT v. Dhampur Sugar Mills P. Ltd. (All) . . . 296
Industrial undertaking --Special deduction--Condition precedent--Employment of specified number of employees--Contract workers--Assessee controlling not only work to be done by contract workers but also manner of doing work--Contract workers employees for purposes of section 80-IA(2)(v)--Assessee entitled to deduction--Income-tax Act, 1961, s. 80-IA(2)(v)-- Sai Computers P. Ltd. v. Joint CIT (All) . . . 285
P. Ltd. v. Joint CIT (All) . . . 285 ----Special deduction--Income derived from any business of an industrial undertaking--Meaning of--Import licence for procuring raw material for manufacturing finished products for exports--Sale of import licence has no nexus with business of manufacturing and sale of finished products--Not entitled to deduction--Income-tax Act, 1961, s. 80-IA-- Deccan Industrial Products v. Asst. CIT (T & AP) . . . 256
International transactions --Arm’s length price--Failure by Transfer Pricing Officer to apply turnover filter at initial stage--Inconsistency not noticed by Dispute Resolution Panel--Tribunal correcting position holding Department could not take advantage particularly when turnover filter not a test even in respect of surviving comparable--Finding of fact--Income-tax Act, 1961-- CIT v. Nortel Networks India P. Ltd. (Delhi) . . . 183
Penalty --Acceptance and return of loans exceeding specified limit in cash--No explanation offered for availing of huge cash loan transactions for a number of years--Not a bona fide transaction--Not a case of business exigency--Financier doing money-lending business for long years giving and taking back loan amounts only in cash--Huge revenue loss to Exchequer--Sufficient opportunities given by Assessing Officer--Remand of matter to authorities not warranted--Levy of penalty valid--Income-tax Act, 1961, ss. 269SS, 269T, 271D, 271E, 273B-- P. Muthukaruppan v. Joint CIT (Mad) . . . 243
transactions for a number of years--Not a bona fide transaction--Not a case of business exigency--Financier doing money-lending business for long years giving and taking back loan amounts only in cash--Huge revenue loss to Exchequer--Sufficient opportunities given by Assessing Officer--Remand of matter to authorities not warranted--Levy of penalty valid--Income-tax Act, 1961, ss. 269SS, 269T, 271D, 271E, 273B-- P. Muthukaruppan v. Joint CIT (Mad) . . . 243 Reassessment --Notice on basis of survey report--Survey report and other materials not indicating any income chargeable to tax has escaped assessment--Nothing before Assessing Officer to record belief that escapement has taken place--Reasons recorded prior and subsequent to survey not satisfying requirement of law--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Hemant Traders v. ITO (Bom) . . . 167
report--Survey report and other materials not indicating any income chargeable to tax has escaped assessment--Nothing before Assessing Officer to record belief that escapement has taken place--Reasons recorded prior and subsequent to survey not satisfying requirement of law--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Hemant Traders v. ITO (Bom) . . . 167 ----Scope--Notice--No information received by Assessing Officer during the course of reassessment proceedings regarding escapement of commission income--Assessing Officer could not have formed opinion it has escaped assessment--Reasons to believe did not record the factum of escapement of commission--Reopening not valid--Income-tax Act, 1961, ss. 147, 148-- CIT v. Barnala Steel Industries Ltd. (All) . . . 281
Refund --Interest--Companies--Book profit--Priority first on adjustment of minimum alternate tax credit--Minimum alternate tax credit available should be allowed to be set off--Tax liability to be determined taking note of advance tax paid and tax deduction at source available--Refund not on minimum alternate tax credit received but on adjustment--Assessee eligible for interest on refund--Income-tax Act, 1961, ss. 115JAA(4), 244A--CIT v. Ambattur Clothing Ltd. (Mad) . . . 233
--Minimum alternate tax credit available should be allowed to be set off--Tax liability to be determined taking note of advance tax paid and tax deduction at source available--Refund not on minimum alternate tax credit received but on adjustment--Assessee eligible for interest on refund--Income-tax Act, 1961, ss. 115JAA(4), 244A--CIT v. Ambattur Clothing Ltd. (Mad) . . . 233 Residence --Period of stay in India--Extended stay due to wrongful impounding of passport--Period from impounding of passport till release--Excludible while counting days of stay in India--Assessee to be treated as non-resident--Income-tax Act, 1961, s. 6(1)(a)-- CIT v. Suresh Nanda (Delhi) . . . 172
Return --Assessee selling property to developer--Developer deducting tax at source but failing to deposit amount into Government treasury--Assessee unable to upload return for failure by developer to deposit tax deducted at source--Developer depositing tax deduction at source with interest after assessee filing writ--Revenue stating that it would not charge any interest--Income-tax Act, 1961, ss. 234A, 234B, 234C-- Zulfikar Jeewanjee Moriswala v. Deputy CIT (TDS) (Bom) . . . 148
amount into Government treasury--Assessee unable to upload return for failure by developer to deposit tax deducted at source--Developer depositing tax deduction at source with interest after assessee filing writ--Revenue stating that it would not charge any interest--Income-tax Act, 1961, ss. 234A, 234B, 234C-- Zulfikar Jeewanjee Moriswala v. Deputy CIT (TDS) (Bom) . . . 148 Transfer of case --Power to transfer without assigning reason--Machinery provision to be construed in a manner to make it workable--Chairman of assessee-trust running institutions in Kerala in his individual capacity--Undisclosed income detected in hands of chairman--Transfer of assessee’s case from Tamil Nadu to Kerala for making effective assessment and co-ordinated investigation--Transfer valid--Income-tax Act, 1961, s. 127(2)(a)-- CIT v. Noorul Islam Educational Trust (Mad) . . . 226
Valuation of stock --Change in method of accounting--Scientific and no evasion of tax--Deletion of addition made on account of closing stock justified--Income-tax Act, 1961, s. 145(1)-- CIT v. Dhampur Sugar Mills P. Ltd. (All) . . . 296
of closing stock justified--Income-tax Act, 1961, s. 145(1)-- CIT v. Dhampur Sugar Mills P. Ltd. (All) . . . 296 ----Closing stock--Accounting--Change in method of accounting--Government company--Non-moving stores and spares--Write off on basis of deterioration of slow moving items of machinery--Justified--Income-tax Act, 1961, s. 145A-- CIT v. Indian Rare Earths Ltd. (Bom) . . . 276
moving items of machinery--Justified--Income-tax Act, 1961, s. 145A-- CIT v. Indian Rare Earths Ltd. (Bom) . . . 276 Writ --High Court--Alternative remedy--Notice of reassessment on basis of survey report not containing requisite satisfaction or reasons for belief--Duty of court to interfere--Constitution of India, art. 226-- Hemant Traders v. ITO (Bom) . . . 167
report not containing requisite satisfaction or reasons for belief--Duty of court to interfere--Constitution of India, art. 226-- Hemant Traders v. ITO (Bom) . . . 167 Art. 226 --Writ--High Court--Alternative remedy--Notice of reassessment on basis of survey report not containing requisite satisfaction or reasons for belief--Duty of court to interfere-- Hemant Traders v. ITO (Bom) . . . 167
report not containing requisite satisfaction or reasons for belief--Duty of court to interfere-- Hemant Traders v. ITO (Bom) . . . 167 S. 2(22)(e) --Company--Dividend--Deemed dividend--Loan to shareholder by closely held company--General principles--Assessee managing director of company and also partner of firm--Firm acting as agent of company--Amount advanced by firm to assessee--Firm had independent existence--No evidence that funds of company were used for advance--Amount not assessable as deemed dividend-- CIT v. Subrata Roy (Delhi) . . . 207
S. 2(24) --Income--Assessability--General principles--Editor of magazine--Award received from third person for excellence in journalism--Not assessable as income-- Aroon Purie v. CIT (Delhi) . . . 188
S. 6(1)(a) --Residence--Period of stay in India--Extended stay due to wrongful impounding of passport--Period from impounding of passport till release--Excludible while counting days of stay in India--Assessee to be treated as non-resident-- CIT v. Suresh Nanda (Delhi) . . . 172
S. 10(23C)(via) --Exemption--Hospital--Condition precedent for exemption under section 10(23C)(via)--Institute should exist for philanthropic purposes and secondly it should not exist for profit--Evidence of accumulation of surplus and meagre amount on weaker sections of society--Assessee not entitled to approval under section 10(23C)(via)-- Yash Society v. Chief CIT (Bom) . . . 152
S. 28(va) --Capital gains or business income--Non-compete fees--Deprivation of business--Taxable under section 28(va)-- Arun Toshniwal v. Deputy CIT (Bom) . . . 270
S. 32 --Depreciation--Tubewell--Is plant and machinery--Assessee entitled to depreciation-- CIT v. Dhampur Sugar Mills P. Ltd. (All) . . . 296
S. 37 --Business expenditure--Fines and penalties--Failure to export sugar in terms of Sugar Export Promotion Act, 1958--Whether amount paid to Government by assessee penal or not--Matter remanded-- CIT v. Dhampur Sugar Mills P. Ltd. (All) . . . 296
by assessee penal or not--Matter remanded-- CIT v. Dhampur Sugar Mills P. Ltd. (All) . . . 296 S. 37(2) --Business expenditure--Disallowance--Expenses for tea, coffee, cold drinks and snacks--Tribunal sustaining disallowance on estimate basis and deleting balance--Question of fact-- Sai Computers P. Ltd. v. Joint CIT (All) . . . 285
P. Ltd. v. Joint CIT (All) . . . 285 S. 40(a)(ia) --Business expenditure--Disallowance--Failure to deduct tax at source on payments--Finding that payment made to a group company not in nature of income but expenditure reimbursed and not a revenue receipt--Disallowance not warranted-- CIT v. Karma Energy Ltd. (Bom) . . . 264
made to a group company not in nature of income but expenditure reimbursed and not a revenue receipt--Disallowance not warranted-- CIT v. Karma Energy Ltd. (Bom) . . . 264 S. 40A(2)(b) --Business expenditure--Disallowance--Excessive or unreasonable payments--Assessee purchasing windmills--Comparable cases showing payment not inflated--No evidence to establish that price of windmills paid by assessee not actual price--No documentary evidence that money came back to assessee from concern to whom commission paid--No disallowance could be made-- CIT v. Karma Energy Ltd. (Bom) . . . 264
S. 43B --Business expenditure--Deduction only on actual payment- Bank--Loan--Interest--One-time settlement--Either interest amount has to be allowed or sum waived by bank has to be reduced by amount of interest paid-- CIT v. KLN Agrotechs (P.) Ltd. (Karn) . . . 301
--Loan--Interest--One-time settlement--Either interest amount has to be allowed or sum waived by bank has to be reduced by amount of interest paid-- CIT v. KLN Agrotechs (P.) Ltd. (Karn) . . . 301 ----Business expenditure--Deduction only on actual payment--Gratuity--Whether claim was merely writing back of the provision or actual payment--Matter remanded-- CIT v. Dhampur Sugar Mills P. Ltd. (All) . . . 296
S. 80-IA --Industrial undertaking--Special deduction--Income derived from any business of an industrial undertaking--Meaning of--Import licence for procuring raw material for manufacturing finished products for exports--Sale of import licence has no nexus with business of manufacturing and sale of finished products--Not entitled to deduction-- Deccan Industrial Products v. Asst. CIT (T & AP) . . . 256
S. 80-IA(2)(v) --Industrial undertaking--Special deduction--Condition precedent--Employment of specified number of employees--Contract workers--Assessee controlling not only work to be done by contract workers but also manner of doing work--Contract workers employees for purposes of section 80-IA(2)(v)--Assessee entitled to deduction-- Sai Computers P. Ltd. v. Joint CIT (All) . . . 285
P. Ltd. v. Joint CIT (All) . . . 285 S. 115JAA(4) --Refund--Interest--Companies--Book profit--Priority first on adjustment of minimum alternate tax credit--Minimum alternate tax credit available should be allowed to be set off--Tax liability to be determined taking note of advance tax paid and tax deduction at source available--Refund not on minimum alternate tax credit received but on adjustment--Assessee eligible for interest on refund--CIT v. Ambattur Clothing Ltd. (Mad) . . . 233
--Minimum alternate tax credit available should be allowed to be set off--Tax liability to be determined taking note of advance tax paid and tax deduction at source available--Refund not on minimum alternate tax credit received but on adjustment--Assessee eligible for interest on refund--CIT v. Ambattur Clothing Ltd. (Mad) . . . 233 S. 127(2)(a) --Transfer of case--Power to transfer without assigning reason--Machinery provision to be construed in a manner to make it workable--Chairman of assessee-trust running institutions in Kerala in his individual capacity--Undisclosed income detected in hands of chairman--Transfer of assessee’s case from Tamil Nadu to Kerala for making effective assessment and co-ordinated investigation--Transfer valid-- CIT v. Noorul Islam Educational Trust (Mad) . . . 226
S. 145(1) --Income from undisclosed sources--Assessee selling bagasse to its sister concern--Addition on ground sale rate to sister concern lower than average rate in all other cases--Deletion of addition by court in assessee’s own case--No addition to be made-- CIT v. Dhampur Sugar Mills P. Ltd. (All) . . . 296
----Valuation of stock--Change in method of accounting--Scientific and no evasion of tax--Deletion of addition made on account of closing stock justified-- CIT v. Dhampur Sugar Mills P. Ltd. (All) . . . 296
of closing stock justified-- CIT v. Dhampur Sugar Mills P. Ltd. (All) . . . 296 S. 145A --Valuation of stock--Closing stock--Accounting--Change in method of accounting--Government company--Non-moving stores and spares--Write off on basis of deterioration of slow moving items of machinery--Justified-- CIT v. Indian Rare Earths Ltd. (Bom) . . . 276
S. 147 --Reassessment--Notice on basis of survey report- Survey report and other materials not indicating any income chargeable to tax has escaped assessment--Nothing before Assessing Officer to record belief that escapement has taken place--Reasons recorded prior and subsequent to survey not satisfying requirement of law--Notice not valid-- Hemant Traders v. ITO (Bom) . . . 167
report- Survey report and other materials not indicating any income chargeable to tax has escaped assessment--Nothing before Assessing Officer to record belief that escapement has taken place--Reasons recorded prior and subsequent to survey not satisfying requirement of law--Notice not valid-- Hemant Traders v. ITO (Bom) . . . 167 ----Reassessment--Scope--Notice--No information received by Assessing Officer during the course of reassessment proceedings regarding escapement of commission income--Assessing Officer could not have formed opinion it has escaped assessment--Reasons to believe did not record the factum of escapement of commission--Reopening not valid-- CIT v. Barnala Steel Industries Ltd. (All) . . . 281
S. 148 --Reassessment--Notice on basis of survey report--Survey report and other materials not indicating any income chargeable to tax has escaped assessment--Nothing before Assessing Officer to record belief that escapement has taken place--Reasons recorded prior and subsequent to survey not satisfying requirement of law--Notice not valid-- Hemant Traders v. ITO (Bom) . . . 167
----Reassessment--Scope--Notice--No information received by Assessing Officer during the course of reassessment proceedings regarding escapement of commission income--Assessing Officer could not have formed opinion it has escaped assessment--Reasons to believe did not record the factum of escapement of commission--Reopening not valid-- CIT v. Barnala Steel Industries Ltd. (All) . . . 281
S. 194C --Business expenditure--Disallowance--Failure to deduct tax at source on payments--Finding that payment made to a group company not in nature of income but expenditure reimbursed and not a revenue receipt--Disallowance not warranted-- CIT v. Karma Energy Ltd. (Bom) . . . 264
made to a group company not in nature of income but expenditure reimbursed and not a revenue receipt--Disallowance not warranted-- CIT v. Karma Energy Ltd. (Bom) . . . 264 S. 234A --Return--Assessee selling property to developer--Developer deducting tax at source but failing to deposit amount into Government treasury--Assessee unable to upload return for failure by developer to deposit tax deducted at source--Developer depositing tax deduction at source with interest after assessee filing writ--Revenue stating that it would not charge any interest-- Zulfikar Jeewanjee Moriswala v. Deputy CIT (TDS) (Bom) . . . 148
amount into Government treasury--Assessee unable to upload return for failure by developer to deposit tax deducted at source--Developer depositing tax deduction at source with interest after assessee filing writ--Revenue stating that it would not charge any interest-- Zulfikar Jeewanjee Moriswala v. Deputy CIT (TDS) (Bom) . . . 148 S. 234B --Return--Assessee selling property to developer--Developer deducting tax at source but failing to deposit amount into Government treasury--Assessee unable to upload return for failure by developer to deposit tax deducted at source--Developer depositing tax deduction at source with interest after assessee filing writ--Revenue stating that it would not charge any interest-- Zulfikar Jeewanjee Moriswala v. Deputy CIT (TDS) (Bom) . . . 148
S. 234C --Return--Assessee selling property to developer--Developer deducting tax at source but failing to deposit amount into Government treasury--Assessee unable to upload return for failure by developer to deposit tax deducted at source--Developer depositing tax deduction at source with interest after assessee filing writ--Revenue stating that it would not charge any interest-- Zulfikar Jeewanjee Moriswala v. Deputy CIT (TDS) (Bom) . . . 148
S. 244A --Refund--Interest--Companies--Book profit--Priority first on adjustment of minimum alternate tax credit--Minimum alternate tax credit available should be allowed to be set off--Tax liability to be determined taking note of advance tax paid and tax deduction at source available--Refund not on minimum alternate tax credit received but on adjustment--Assessee eligible for interest on refund--CIT v. Ambattur Clothing Ltd. (Mad) . . . 233
--Minimum alternate tax credit available should be allowed to be set off--Tax liability to be determined taking note of advance tax paid and tax deduction at source available--Refund not on minimum alternate tax credit received but on adjustment--Assessee eligible for interest on refund--CIT v. Ambattur Clothing Ltd. (Mad) . . . 233 S. 269SS --Penalty--Acceptance and return of loans exceeding specified limit in cash--No explanation offered for availing of huge cash loan transactions for a number of years--Not a bona fide transaction--Not a case of business exigency--Financier doing money-lending business for long years giving and taking back loan amounts only in cash--Huge revenue loss to Exchequer--Sufficient opportunities given by Assessing Officer--Remand of matter to authorities not warranted--Levy of penalty valid-- P. Muthukaruppan v. Joint CIT (Mad) . . . 243
transactions for a number of years--Not a bona fide transaction--Not a case of business exigency--Financier doing money-lending business for long years giving and taking back loan amounts only in cash--Huge revenue loss to Exchequer--Sufficient opportunities given by Assessing Officer--Remand of matter to authorities not warranted--Levy of penalty valid-- P. Muthukaruppan v. Joint CIT (Mad) . . . 243 S. 269T --Penalty--Acceptance and return of loans exceeding specified limit in cash--No explanation offered for availing of huge cash loan transactions for a number of years--Not a bona fide transaction--Not a case of business exigency--Financier doing money-lending business for long years giving and taking back loan amounts only in cash--Huge revenue loss to Exchequer--Sufficient opportunities given by Assessing Officer--Remand of matter to authorities not warranted--Levy of penalty valid-- P. Muthukaruppan v. Joint CIT (Mad) . . . 243
transactions for a number of years--Not a bona fide transaction--Not a case of business exigency--Financier doing money-lending business for long years giving and taking back loan amounts only in cash--Huge revenue loss to Exchequer--Sufficient opportunities given by Assessing Officer--Remand of matter to authorities not warranted--Levy of penalty valid-- P. Muthukaruppan v. Joint CIT (Mad) . . . 243 S. 271D --Penalty--Acceptance and return of loans exceeding specified limit in cash--No explanation offered for availing of huge cash loan transactions for a number of years--Not a bona fide transaction--Not a case of business exigency--Financier doing money-lending business for long years giving and taking back loan amounts only in cash--Huge revenue loss to Exchequer--Sufficient opportunities given by Assessing Officer--Remand of matter to authorities not warranted--Levy of penalty valid-- P. Muthukaruppan v. Joint CIT (Mad) . . . 243
transactions for a number of years--Not a bona fide transaction--Not a case of business exigency--Financier doing money-lending business for long years giving and taking back loan amounts only in cash--Huge revenue loss to Exchequer--Sufficient opportunities given by Assessing Officer--Remand of matter to authorities not warranted--Levy of penalty valid-- P. Muthukaruppan v. Joint CIT (Mad) . . . 243 S. 271E --Penalty--Acceptance and return of loans exceeding specified limit in cash--No explanation offered for availing of huge cash loan transactions for a number of years--Not a bona fide transaction--Not a case of business exigency--Financier doing money-lending business for long years giving and taking back loan amounts only in cash--Huge revenue loss to Exchequer--Sufficient opportunities given by Assessing Officer--Remand of matter to authorities not warranted--Levy of penalty valid-- P. Muthukaruppan v. Joint CIT (Mad) . . . 243
transactions for a number of years--Not a bona fide transaction--Not a case of business exigency--Financier doing money-lending business for long years giving and taking back loan amounts only in cash--Huge revenue loss to Exchequer--Sufficient opportunities given by Assessing Officer--Remand of matter to authorities not warranted--Levy of penalty valid-- P. Muthukaruppan v. Joint CIT (Mad) . . . 243 S. 273B --Penalty--Acceptance and return of loans exceeding specified limit in cash--No explanation offered for availing of huge cash loan transactions for a number of years--Not a bona fide transaction--Not a case of business exigency--Financier doing money-lending business for long years giving and taking back loan amounts only in cash--Huge revenue loss to Exchequer--Sufficient opportunities given by Assessing Officer--Remand of matter to authorities not warranted--Levy of penalty valid-- P. Muthukaruppan v. Joint CIT (Mad) . . . 243
transactions for a number of years--Not a bona fide transaction--Not a case of business exigency--Financier doing money-lending business for long years giving and taking back loan amounts only in cash--Huge revenue loss to Exchequer--Sufficient opportunities given by Assessing Officer--Remand of matter to authorities not warranted--Levy of penalty valid-- P. Muthukaruppan v. Joint CIT (Mad) . . . 243Case Law: U. P. Electronics Corporation Ltd vs. DCIT (ITAT Lucknow)
S. 14A & Rule 8D: (i) Investments in subsidiaries & joint ventures are for strategic purposes and not for earning dividend and so the expenditure cannot be disallowed, (ii) If the AO does not deal with the assessee's submissions and merely says "not acceptable" it means he has not recorded proper satisfaction
Investment in subsidiary companies and joint venture companies are long term investment and no decision is required in making the investment or disinvestment on regular basis because these investments are strategic in nature and no direct or indirect expenditure is incurred for maintaining the portfolio on these investments or for holding the same. The department has not disputed that the purpose of investment is not for earning the dividend income but having control and business purpose and consideration
Case Law: U. P. Electronics Corporation Ltd vs. DCIT (ITAT Lucknow)
by Santosh Kumar AgarwalS. 14A & Rule 8D: (i) Investments in subsidiaries & joint ventures are for strategic purposes and not for earning dividend and so the expenditure cannot be disallowed, (ii) If the AO does not deal with the assessee's submissions and merely says "not acceptable" it means he has not recorded proper satisfaction
Investment in subsidiary companies and joint venture companies are long term investment and no decision is required in making the investment or disinvestment on regular basis because these investments are strategic in nature and no direct or indirect expenditure is incurred for maintaining the portfolio on these investments or for holding the same. The department has not disputed that the purpose of investment is not for earning the dividend income but having control and business purpose and consideration Read more of this post
Case Law: ACIT vs. Upper India Paper Mills Co Pvt. Ltd (ITAT Lucknow)
S. 2(47)(v): Even if possession is handed over to the developer, there is no "transfer" if the developer has only paid an interest-free advance to the assessee to meet expenses
The provisions of section 2(47)(v) of the Act can only be invoked where absolute possession of capital asset was given to the buyer against certain consideration, but in the instant case no consideration was ever fixed for handing over the possession to the developer and whatever amount was received it was received as interest free advance to meet the expenses to be incurred in discharging certain responsibilities agreed upon in this agreement. Therefore, from any angle there is no transfer of asset as per provisions of section 2(47) of the Act and capital gain would only be chargeable in the years in which stock-in-trade would be sold
Case Law: ACIT vs. Upper India Paper Mills Co Pvt. Ltd (ITAT Lucknow)
by Santosh Kumar AgarwalS. 2(47)(v): Even if possession is handed over to the developer, there is no "transfer" if the developer has only paid an interest-free advance to the assessee to meet expenses
The provisions of section 2(47)(v) of the Act can only be invoked where absolute possession of capital asset was given to the buyer against certain consideration, but in the instant case no consideration was ever fixed for handing over the possession to the developer and whatever amount was received it was received as interest free advance to meet the expenses to be incurred in discharging certain responsibilities agreed upon in this agreement. Therefore, from any angle there is no transfer of asset as per provisions of section 2(47) of the Act and capital gain would only be chargeable in the years in which stock-in-trade would be sold Read more of this post
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