INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
Depreciation --Additional depreciation--Plant and machinery--Condition precedent--Report of accountant to be filed in Form 3AA--Not filed with return but during assessment proceedings before order passed--Sufficient compliance--Assessee entitled to additional depreciation--Income-tax Act, 1961, s. 32(1)(iia)-- CIT v. G. M. Knitting Industries (P.) Ltd. . . . 456
Industrial undertaking --Special deduction--Condition precedent--Filing of audit report in form 10CCB--Sufficient compliance if report filed before assessment completed--Income-tax Act, 1961, s. 80-IB-- CIT v. G. M. Knitting Industries (P.) Ltd. . . . 456
Total income --Inclusions--Income of minor child of assessee from admission to benefits of partnership--Trusts in favour of minor children of assessee--Stipulation that income from trusts not to be given to or used for benefit of beneficiaries until they attain majority--Income of trusts from firm not to be included in assessee’s income--Income-tax Act, 1961, s. 64(1)(iii), Expln. 2A -- Kapoor Chand (Dead) v. Asst. CIT . . . 450
Wealth-tax --Appeal to High Court--Substantial question of law--Question of law to be formulated by High Court--Question of law not formulated by court--Matter remanded for framing question of law and hearing of appeal again--Wealth-tax Act, 1957, s. 27A(3), (4)-- P. A. Jose v. CWT . . . 448
Business expenditure --Capital or revenue expenditure--Difference between sections 37 and 35AB--Agreement for utilisation of technical know-how--No lump sum payment and no absolute acquisition of technical know-how--Amount paid constituted revenue expenditure--Income-tax Act, 1961, ss. 35AB, 37-- Diffusion Engineers Ltd. v. Deputy CIT (Karn) . . . 487
----Deduction only on actual payment--Amendment of section 43B with retrospective effect--Interest converted into principal/term loan --Not deemed payment--Not deductible--Income-tax Act, 1961, s. 43B-- CIT v. Pennar Profiles Ltd. (T & AP) . . . 355
----Deduction only on actual payment--Amounts not actually paid--Law applicable--Effect of amendment of section 43B by Finance Act, 2006--Interest on loan from public financial institution--Interest converted to debentures in assessment year 1996-97--No actual payment of interest--Interest not deductible--Income-tax Act, 1961, s. 43B-- CIT v. M. M. Aqua Technologies Ltd. (Delhi) . . . 498
Central Board of Direct Taxes --Circular--Circulars binding on income-tax authorities-- Mku (Armours) P. Ltd. v. CIT (All) . . . 514
Charitable purposes --Charitable trust--Exemption--Accumulation of income--Condition precedent--Specific purpose of accumulation must be given--Such information must be given before completion of assessment--Income-tax Act, 1961, s. 11-- Samaj Seva Nidhi v. Asst. CIT (Inv.) (T & AP) . . . 507
Deduction of tax at source --Failure to deduct--Notice--Order deeming person assessee in default--Notice declared barred by limitation by court--Amendment extending period of limitation--Assessing Officer--Powers--No power to issue notice thereafter on basis of same information in earlier notice--Income-tax Act, 1961, s. 201(1), (1A), (3)-- Oracle India P. Ltd. v. Deputy CIT (Delhi) . . . 411
Export --Exemption--100 per cent. export-oriented undertaking--Part of manufacture outsourced but under control and supervision of assessee--Assessee entitled to exemption under section 10B--Income-tax Act, 1961, s. 10B-- MKU (Armours) P. Ltd. v. CIT (All) . . . 514
----Exemption--Succession--Exemption under section 10B--Law applicable--Effect of insertion of sub-section (7A) in section 10B--Successor entitled to exemption for unexpired period--Income-tax Act, 1961, s. 10B-- Mku (Armours) P. Ltd. v. CIT (All) . . . 514
Gift-tax --Gift--Share and membership in stock exchange--Not assets--Transfer thereof--Not liable to gift-tax--Tribunal adopting composite value of share as well as ticket for purpose of gift-tax--Not justified--Gift-tax Act, 1958-- Jagan Nath Syal (Deceased) v. CGT (Delhi) . . . 395
Income --Disallowance of expenditure in relation to exempt income--No nexus between expenditure incurred and income not forming part of total income--No disallowance could be made--Income-tax Act, 1961, s. 14A-- CIT v. Om Prakash Khaitan (Delhi) . . . 390
----Professional advances--Principle of consistency--Firm of solicitors accepting monies from clients on account to defray expenses and appropriating fees only upon completion of case--Revenue accepting advances not income of firm in past years--No new facts existing to take different view--Advances not income of firm--Income-tax Act, 1961-- CIT v. Om Prakash Khaitan (Delhi) . . . 390
Income or capital --Excise duty paid in respect of materials prior to date of commencement--Refund of excise duty--Would go to ultimately reduce cost of project--Capital receipt--Income-tax Act, 1961, s. 28(iiic)-- CIT v. Maithon Power Ltd. (Delhi) . . . 414
Interpretation of taxing statutes --Ambiguity--Construction beneficial to assessee--No room for equity-- K. Nagesh v. Asst. CIT (Karn) . . . 473
Precedent --Effect of decision of Supreme Court in Nagpur Hotel Owners’ Association’s case [2001] 247 ITR 201-- Samaj Seva Nidhi v. Asst. CIT (Inv.) (T & AP) . . . 507
Reassessment --Notice after four years--Notice within four years--Statutory minimum price for sugarcane declared under Sugar Control Order, 1966--No restriction on payment of higher price--Amount paid in excess of statutory minimum price declared by Government not distribution of profits--No tangible material with Assessing Officer--No failure by assessee to disclose fully and truly all material facts necessary for assessment--Reassessments merely to tax excess payment--Not valid--Income-tax Act, 1961, s. 148-- Shree Chalthan Vibhag Khand v. Deputy CIT (Guj) . . . 419
----Notice after four years--Reasons not suggesting assessee failed to make full and true disclosure of all necessary facts--Reasons showing all necessary and relevant facts furnished by assessee--Notice not valid--Income-tax Act, 1961, s. 148-- Panchratna Co-operative Housing Society Ltd. v. Assessing Officer (Bom) . . . 404
Refund --Return--Meaning of “return†in proviso to section 240--â€Return†means valid return--Revised return declared invalid--Assessment based on such return is void--Amount paid on void assessment has to be refunded--Interest on amount has to be refunded--Income-tax Act, 1961, ss. 139, 240, 244A-- K. Nagesh v. Asst. CIT (Karn) . . . 473
Search and seizure --Block assessment--Assessment of third person--Undisclosed income--Condition precedent for treating income as undisclosed--Nexus with material unearthed in search--No information or material gathered during enquiry “relatable†to solitary accommodation entry--Credit entries found in assessee’s declared bank account--Not to be made subject matter of block assessment--Income-tax Act, 1961, s. 158BB(1)-- CIT v. DPA Finvest Services Ltd. (Delhi) . . . 399
Settlement of cases --Condition precedent--Payment of tax on additional income disclosed--Payment of tax by adjustment of refund due to assessee--Commissioner objecting to settlement on ground no refund due to assessee in relevant assessment year--Rectification of intimation thereafter by Assessing Officer resulting in assessee being entitled to refund in relevant assessment year--Dismissal of application for settlement merely on ground of Commissioner’s report--Not justified--Assertion of Commissioner required investigation--Application restored to Commission for fresh disposal--Income-tax Act, 1961, s. 245D-- Vascon Engineers Ltd. v. ITSC (Bom) . . . 360
Non-resident --Double taxation avoidance--Royalty--Provision of specially designed software through which course content delivered to end-customer--Transfer of rights of which non-resident the owner--Consideration paid for use or right to use confidential information in form of computer software--Constitutes royalty--No permanent establishment of non-resident created--Payment received by non-resident subject to withholding tax--Income-tax Act, 1961, s. 195--Double Taxation Avoidance Agreement between India and Ireland, arts. 5, 12(3)(a), (b)-- SkillSoft Ireland Ltd. , In re . . . 371
----Double taxation avoidance--Fees for technical services--Definition--Agreement for provision of products and services in respect of strategy and direction of business development--Services to be provided through employee of non-resident designated as group operations director by means of telephone calls, e-mails and occasional visits to India for review of operations of Indian company not exceeding in aggregate 30 days in a year--Agreement for providing procurement services to reduce cost and avoid duplication of procurement efforts within group--Procurement team travelling to different countries to visit suppliers and distributors to determine best price to consolidate purchase requirements and effect cost savings on material purchases to individual entities in group--Services provided by both agreements managerial in nature--Non-resident not making available any technical knowledge of enduring benefit in nature--Services not of technical or consultancy nature but general and routine--No intellectual property created--Payments neither fees for technical services nor royalty--Payments received under agreements not chargeable to tax in India--Double Taxation Avoidance Agreement between India and the United Kingdom, arts. 5(2)(k), 13-- Measurement Technology Ltd. , In re . . . 461
Art. 5 --Non-resident--Double taxation avoidance--Royalty--Provision of specially designed software through which course content delivered to end-customer--Transfer of rights of which non-resident the owner--Consideration paid for use or right to use confidential information in form of computer software--Constitutes royalty--No permanent establishment of non-resident created--Payment received by non-resident subject to withholding tax-- SkillSoft Ireland Ltd. , In re (AAR). . . 371
Art. 12(3)(a), (b) --Non-resident--Double taxation avoidance--Royalty--Provision of specially designed software through which course content delivered to end-customer--Transfer of rights of which non-resident the owner--Consideration paid for use or right to use confidential information in form of computer software--Constitutes royalty--No permanent establishment of non-resident created--Payment received by non-resident subject to withholding tax-- SkillSoft Ireland Ltd. , In re (AAR). . . 371
Art. 5(2)(k) --Non-resident--Double taxation avoidance--Fees for technical services--Definition--Agreement for provision of products and services in respect of strategy and direction of business development--Services to be provided through employee of non-resident designated as group operations director by means of telephone calls, e-mails and occasional visits to India for review of operations of Indian company not exceeding in aggregate 30 days in a year--Agreement for providing procurement services to reduce cost and avoid duplication of procurement efforts within group--Procurement team travelling to different countries to visit suppliers and distributors to determine best price to consolidate purchase requirements and effect cost savings on material purchases to individual entities in group--Services provided by both agreements managerial in nature--Non-resident not making available any technical knowledge of enduring benefit in nature--Services not of technical or consultancy nature but general and routine--No intellectual property created--Payments neither fees for technical services nor royalty--Payments received under agreements not chargeable to tax in India-- Measurement Technology Ltd. , In re (AAR). . . 461
Art. 13 --Non-resident--Double taxation avoidance--Fees for technical services--Definition--Agreement for provision of products and services in respect of strategy and direction of business development--Services to be provided through employee of non-resident designated as group operations director by means of telephone calls, e-mails and occasional visits to India for review of operations of Indian company not exceeding in aggregate 30 days in a year--Agreement for providing procurement services to reduce cost and avoid duplication of procurement efforts within group--Procurement team travelling to different countries to visit suppliers and distributors to determine best price to consolidate purchase requirements and effect cost savings on material purchases to individual entities in group--Services provided by both agreements managerial in nature--Non-resident not making available any technical knowledge of enduring benefit in nature--Services not of technical or consultancy nature but general and routine--No intellectual property created--Payments neither fees for technical services nor royalty--Payments received under agreements not chargeable to tax in India-- Measurement Technology Ltd. , In re (AAR). . . 461
S. 10B --Export--Exemption--100 per cent. export-oriented undertaking--Part of manufacture outsourced but under control and supervision of assessee--Assessee entitled to exemption under section 10B-- Mku (Armours) P. Ltd. v. CIT (All) . . . 514
----Export--Exemption--Succession--Exemption under section 10B--Law applicable--Effect of insertion of sub-section (7A) in section 10B--Successor entitled to exemption for unexpired period-- Mku (Armours) P. Ltd. v. CIT (All) . . . 514
S. 11 --Charitable purposes--Charitable trust--Exemption--Accumulation of income --Condition precedent--Specific purpose of accumulation must be given--Such information must be given before completion of assessment-- Samaj Seva Nidhi v. Asst. CIT (Inv.) (T & AP) . . . 507
S. 14A --Income--Disallowance of expenditure in relation to exempt income--No nexus between expenditure incurred and income not forming part of total income--No disallowance could be made-- CIT v. Om Prakash Khaitan (Delhi) . . . 390
S. 28(iiic) --Income or capital--Excise duty paid in respect of materials prior to date of commencement--Refund of excise duty--Would go to ultimately reduce cost of project--Capital receipt-- CIT v. Maithon Power Ltd. (Delhi) . . . 414
S. 32(1)(iia) --Depreciation--Additional depreciation--Plant and machinery--Condition precedent--Report of accountant to be filed in Form 3AA--Not filed with return but during assessment proceedings before order passed--Sufficient compliance--Assessee entitled to additional depreciation-- CIT v. G. M. Knitting Industries (P.) Ltd. (SC). . . 456
S. 35AB --Business expenditure--Capital or revenue expenditure--Difference between sections 37 and 35AB--Agreement for utilisation of technical know-how--No lump sum payment and no absolute acquisition of technical know-how--Amount paid constituted revenue expenditure-- Diffusion Engineers Ltd. v. Deputy CIT (Karn) . . . 487
S. 37 --Business expenditure--Capital or revenue expenditure--Difference between sections 37 and 35AB--Agreement for utilisation of technical know-how--No lump sum payment and no absolute acquisition of technical know-how--Amount paid constituted revenue expenditure-- Diffusion Engineers Ltd. v. Deputy CIT (Karn) . . . 487
S. 43B --Business expenditure--Deduction only on actual payment--Amendment of section 43B with retrospective effect--Interest converted into principal/term loan --Not deemed payment--Not deductible-- CIT v. Pennar Profiles Ltd. (T & AP) . . . 355
----Business expenditure--Deduction only on actual payment--Amounts not actually paid--Law applicable--Effect of amendment of section 43B by Finance Act, 2006--Interest on loan from public financial institution--Interest converted to debentures in assessment year 1996-97--No actual payment of interest--Interest not deductible-- CIT v. M. M. Aqua Technologies Ltd. (Delhi) . . . 498
S. 64(1)(iii), Expln. 2A --Total income--Inclusions--Income of minor child of assessee from admission to benefits of partnership--Trusts in favour of minor children of assessee--Stipulation that income from trusts not to be given to or used for benefit of beneficiaries until they attain majority--Income of trusts from firm not to be included in assessee’s income-- Kapoor Chand (Dead) v. Asst. CIT (SC). . . 450
S 80-IB --Industrial undertaking--Special deduction--Condition precedent--Filing of audit report in form 10CCB--Sufficient compliance if report filed before assessment completed-- CIT v. G. M. Knitting Industries (P.) Ltd. (SC). . . 456
S. 139 --Refund--Return--Meaning of “return†in proviso to section 240--â€Return†means valid return--Revised return declared invalid--Assessment based on such return is void--Amount paid on void assessment has to be refunded--Interest on amount has to be refunded-- K. Nagesh v. Asst. CIT (Karn) . . . 473
S. 148 --Reassessment--Notice after four years--Notice within four years--Statutory minimum price for sugarcane declared under Sugar Control Order, 1966--No restriction on payment of higher price--Amount paid in excess of statutory minimum price declared by Government not distribution of profits--No tangible material with Assessing Officer--No failure by assessee to disclose fully and truly all material facts necessary for assessment--Reassessments merely to tax excess payment--Not valid-- Shree Chalthan Vibhag Khand v. Deputy CIT (Guj) . . . 419
----Reassessment--Notice after four years--Reasons not suggesting assessee failed to make full and true disclosure of all necessary facts--Reasons showing all necessary and relevant facts furnished by assessee--Notice not valid-- Panchratna Co-operative Housing Society Ltd. v. Assessing Officer (Bom) . . . 404
S. 158BB(1) --Search and seizure--Block assessment--Assessment of third person--Undisclosed income--Condition precedent for treating income as undisclosed--Nexus with material unearthed in search--No information or material gathered during enquiry “relatable†to solitary accommodation entry--Credit entries found in assessee’s declared bank account--Not to be made subject matter of block assessment-- CIT v. DPA Finvest Services Ltd. (Delhi) . . . 399
S. 195 --Non-resident--Double taxation avoidance--Royalty--Provision of specially designed software through which course content delivered to end-customer--Transfer of rights of which non-resident the owner--Consideration paid for use or right to use confidential information in form of computer software--Constitutes royalty--No permanent establishment of non-resident created--Payment received by non-resident subject to withholding tax-- SkillSoft Ireland Ltd. , In re (AAR). . . 371
S. 201(1), (1A), (3) --Deduction of tax at source--Failure to deduct--Notice--Order deeming person assessee in default--Notice declared barred by limitation by court--Amendment extending period of limitation--Assessing Officer--Powers--No power to issue notice thereafter on basis of same information in earlier notice-- Oracle India P. Ltd. v. Deputy CIT (Delhi) . . . 411
S. 240 --Refund--Return--Meaning of “return†in proviso to section 240--â€Return†means valid return--Revised return declared invalid--Assessment based on such return is void--Amount paid on void assessment has to be refunded--Interest on amount has to be refunded-- K. Nagesh v. Asst. CIT (Karn) . . . 473
S. 244A --Refund--Return--Meaning of “return†in proviso to section 240--â€Return†means valid return--Revised return declared invalid--Assessment based on such return is void--Amount paid on void assessment has to be refunded--Interest on amount has to be refunded-- K. Nagesh v. Asst. CIT (Karn) . . . 473
S. 245D --Settlement of cases--Condition precedent--Payment of tax on additional income disclosed--Payment of tax by adjustment of refund due to assessee--Commissioner objecting to settlement on ground no refund due to assessee in relevant assessment year--Rectification of intimation thereafter by Assessing Officer resulting in assessee being entitled to refund in relevant assessment year--Dismissal of application for settlement merely on ground of Commissioner’s report--Not justified--Assertion of Commissioner required investigation--Application restored to Commission for fresh disposal-- Vascon Engineers Ltd. v. ITSC (Bom) . . . 360
S. 27A(3), (4) --Wealth-tax--Appeal to High Court--Substantial question of law--Question of law to be formulated by High Court--Question of law not formulated by court--Matter remanded for framing question of law and hearing of appeal again-- P. A. Jose v. CWT (SC) . . . 448
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