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From: CA RAJU SHAH <shahmars@hotmail.com>
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Sent: Friday, 27 September 2013 12:42 PM
Subject: ITR Volume 357 : Part 3
From: CA RAJU SHAH <shahmars@hotmail.com>
To: CANEWS@yahoogroups.com
Cc: 'NEXTGEN GROUP ' <nextgen-ca@yahoogroups.com>
Sent: Friday, 27 September 2013 12:42 PM
Subject: ITR Volume 357 : Part 3
INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
Business income --Remission or cessation of liability--Condition precedent for application of section 41(1)--Deduction in earlier year--Return of earlier year in which claim for deduction was made treated as non est--Remission of liability in relevant accounting year--No deduction in earlier year--Section 41(1) not applicable--Income-tax Act, 1961, s. 41(1)-- CIT v . Rayala Corporation P. Ltd. (Mad) . . . 356
Central Board of Direct Taxes --Powers--Scope of powers under section 119--Power to admit claim for deduction beyond limitation--Finding that claim was genuine and there were reasons for not filing application within time--Genuine hardship to assessee if application were rejected--Application to be considered--Income-tax Act, 1961, s. 119-- Jay Vijay Express Carriers v. CIT (Guj) . . . 363
Interpretation of taxing statutes --Strict interpretation-- CIT v . Rayala Corporation P. Ltd . (Mad) . . . 356
Writ --Existence of alternative remedy--Court will not ordinarily entertain writ petition--Writ petition against notices for reassessment--Assessee relegated to appeal--Constitution of India, art. 226--Income-tax Act, 1961, s. 148-- CIT v . Chhabil Dass Agarwal . . . 357
Bad debt --Bank--Classification of rural branches--Explanation (ia) to section 36(1)(viia)--Branch in rural area where population is less than 10,000--Income-tax Act, 1961, s. 36(1)(viia), Expln. (ia)-- CIT v . Dhanalekshmi Bank Ltd . (Ker) . . . 448
Business expenditure --Disallowance--Deduction only on actual payment--Tax or duty not actually paid--Law applicable--Effect of amendment of section 43B by Finance Act, 1988--Extension of provision to cess and fees--Amendment not retrospective--Amendment effective from 1-4-1989--Cess and cess surcharge payable under Tamil Nadu Panchayat Act--Difference between cess and tax--Cess and cess surcharge deductible in assessment year 1985-86--Income-tax Act, 1961, s. 43B-- Dalmia Cement (Bharat) Ltd . v . CIT (Delhi) . . . 419
Co-operative society --Special deduction--Sale of liquor not falling under categories in section 80P(2)--Not allowable--Agricultural products grown by members for public distribution system--Entitled to deduction--Income-tax Act, 1961, s. 80P(2)(a)(iii)-- Satyamangalam Agricultural Producer’s Co-operative Marketing Society Ltd. v . ITO (Mad) . . . 347
Company --Book profit--Bad debt--Computation--Whether provision for bad debt is to be added while computing book profit--Decision of Supreme Court in favour of assessee--Subsequent amendment with retrospective effect to nullify decision--Assessing Officer directed to redo assessment in the light of amended provisions--Income-tax Act, 1961-- CIT v . Dhanalekshmi Bank Ltd . (Ker) . . . 448
----Book profit--Disallowance of expenditure in relation to exempted income--Proportionate addition of expenditure attributable to exempted income while computing book profit--Authorities not considered provision authorising addition to book profit--Matter remanded--Income-tax Act, 1961, s. 115JA-- CIT v. Dhanalekshmi Bank Ltd .
(Ker) . . . 448
(Ker) . . . 448
Deduction of tax at source --Credit for tax deducted--Contract work--Firm converted into a company--Joint venture--Whether certificates of tax deduction at source issued in name of joint venture or in name of a director--Not relevant--Contract receipts shown in certificates assessed in hands of assessee--Assessee to be given credit for tax deducted at source as mentioned in certificates--Income-tax Rules, 1962, r. 37BA--Income-tax Act, 1961, s. 199-- CIT v . Bhooratnam and Co. (AP) . . . 396
Exemption --Export oriented unit--Condition precedent for exemption--Profits should be derived from unit--Training fees not entitled to exemption--Income-tax Act, 1961, s. 10B-- Pentamedia Graphics Ltd. v . Asst. CIT (Mad) . . . 403
----Salary--Perquisites--Scope of section 10(10CC)--Tax paid by employer on behalf of employee--Entitled to exemption--Multiple stage grossing up not applicable--Income-tax Act, 1961, ss. 10(10CC), 17, 195A-- Yoshio Kubo v. CIT (Delhi) . . . 452
Income --Amounts collected as deposits towards possible levy of sales tax--Amounts to be returned if sales tax were not levied--Amounts not trading receipt--Income-tax Act, 1961-- Dalmia Cement (Bharat) Ltd . v. CIT (Delhi) . . . 419
Interpretation of taxing statutes --Exemption provision-- Pentamedia Graphics Ltd . v. Asst. CIT (Mad) . . . 403
Penalty --Concealment of income--Bogus claims for deduction--Claim for deduction of penalty and fine under Customs Act, bogus claims to bill discounting charges and depreciation--Levy of penalty--Justified--Income-tax Act, 1961, s. 271(1)(c)-- Sharma Alloys (India) Ltd . v . ITO (OSD) (Mad) . . . 379
Precedent --Effect of Supreme Court decision in Russel’s case [1964] 53 ITR 91 (SC)-- Yoshio Kubo v . CIT (Delhi) . . . 452
Reassessment --Income escaping assessment--Disallowance of expenditure in relation to exempted incomes--Effect of proviso to section 14A--No reassessment for any assessment year prior to 2001-02--Income-tax Act, 1961, ss. 14A, 147-- CIT v . Dhanalekshmi Bank Ltd . (Ker) . . . 448
----Notice--Reasons to believe--Reasons recorded showing only factual position--Notice recording assessee had permanent establishment in India but no indication why and how permanent establishment had impacted tax payable or income assessed in original assessment--Notice incomplete and incomprehensible--Requisite belief that income had escaped assessment not possible on basis of reasons recorded--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- G. S. Engineering and Construction Corporation v . Dy. DIT (International Taxation) (Delhi) . . . 335
----Notice--Validity--Information forming basis for notice vague--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- CIT v. Insecticides (India) Ltd. (Delhi) . . . 330
----Scope of provisions--Fresh claim by assessee regarding interest on investment--Not to be entertained--Reassessment proceedings for benefit of Revenue--Income-tax Act, 1961, ss. 147, 148-- Satyamangalam Agricultural Producer’s Co-operative Marketing Society Ltd . v. ITO (Mad) . . . 347
Refund --Interest payable by assessee on excess refund--Law applicable--Effect of section 234D with effect from 1-6-2003--Income-tax Act, 1961, s. 234D-- CIT v. Dhanalekshmi Bank Ltd . (Ker) . . . 448
Revision --Scope of section 263--Revising authority feeling inquiry inadequate--Revising authority must make enquiry and show that assessment order was erroneous--Revising authority has no power to remand and direct Assessing Officer to conduct enquiry--Income-tax Act, 1961, s. 263-- DIT v. Jyoti Foundation (Delhi) . . . 388
Salary --Perquisite--Contribution towards social security benefits by foreign employer in foreign country--TDS payments received by employee--Legal and accountancy expenses incurred by employer on behalf of employee--Amount withheld by employer to fulfil commitment to pay particular salary--Not assessable as perquisites--Tax paid by employer to be excluded while computing value of rent-free accommodation--Income-tax Act, 1961, s. 17-- Yoshio Kubo v. CIT (Delhi) . . . 452
Total income --Inclusions in total income--Inclusion of income of minor in income of parent whose income is greater--Clubbing of income of minors with income of mother on ground mother’s income higher--Proper--Income-tax Act, 1961, s. 64(1A)-- Anju Mehra v . CIT (P&H) . . . 416
Valuation of stock --Bank--Valuation of unquoted equity shares--Yield to maturity method--Valuation according to RBI guidelines--Valid--Income-tax Act, 1961-- CIT v. Dhanalekshmi Bank Ltd. (Ker) . . . 448
Art. 226 --Writ--Existence of alternative remedy--Court will not ordinarily entertain writ petition--Writ petition against notices for reassessment--Assessee relegated to appeal-- CIT v . Chhabil Dass Agarwal (SC) . . . 357
S. 10(10CC) --Exemption--Salary--Perquisites--Scope of section 10(10CC)--Tax paid by employer on behalf of employee--Entitled to exemption--Multiple stage grossing up not applicable-- Yoshio Kubo v. CIT (Delhi) . . . 452
S. 10B --Exemption--Export oriented unit--Condition precedent for exemption--Profits should be derived from unit--Training fees not entitled to exemption-- Pentamedia Graphics Ltd. v . Asst. CIT (Mad) . . . 403
S. 14A --Reassessment--Income escaping assessment--Disallowance of expenditure in relation to exempted incomes--Effect of proviso to section 14A--No reassessment for any assessment year prior to 2001-02-- CIT v . Dhanalekshmi Bank Ltd .
(Ker) . . . 448
(Ker) . . . 448
S. 17 --Exemption--Salary--Perquisites--Scope of section 10(10CC)--Tax paid by employer on behalf of employee--Entitled to exemption--Multiple stage grossing up not applicable-- Yoshio Kubo v. CIT (Delhi) . . . 452
----Salary--Perquisite--Contribution towards social security benefits by foreign employer in foreign country--TDS payments received by employee--Legal and accountancy expenses incurred by employer on behalf of employee--Amount withheld by employer to fulfil commitment to pay particular salary--Not assessable as perquisites--Tax paid by employer to be excluded while computing value of rent-free accommodation-- Yoshio Kubo v. CIT (Delhi) . . . 452
S. 36(1)(viia), Expln. (ia) --Bad debt--Bank--Classification of rural branches--Explanation (ia) to section 36(1)(viia)--Branch in rural area where population is less than 10,000-- CIT v . Dhanalekshmi Bank Ltd . (Ker) . . . 448
S. 43B --Business expenditure--Disallowance--Deduction only on actual payment--Tax or duty not actually paid--Law applicable--Effect of amendment of section 43B by Finance Act, 1988--Extension of provision to cess and fees--Amendment not retrospective--Amendment effective from 1-4-1989--Cess and cess surcharge payable under Tamil Nadu Panchayat Act--Difference between cess and tax--Cess and cess surcharge deductible in assessment year 1985-86-- Dalmia Cement (Bharat) Ltd . v . CIT
(Delhi) . . . 419
(Delhi) . . . 419
S. 64(1A) --Total income--Inclusions in total income--Inclusion of income of minor in income of parent whose income is greater--Clubbing of income of minors with income of mother on ground mother’s income higher--Proper-- Anju Mehra v . CIT
(P&H) . . . 416
(P&H) . . . 416
S. 80P(2)(a)(iii) --Co-operative society--Special deduction--Sale of liquor not falling under categories in section 80P(2)--Not allowable--Agricultural products grown by members for public distribution system--Entitled to deduction-- Satyamangalam Agricultural Producer’s Co-operative Marketing Society Ltd. v . ITO
(Mad) . . . 347
(Mad) . . . 347
S. 115JA --Company--Book profit--Disallowance of expenditure in relation to exempted income--Proportionate addition of expenditure attributable to exempted income while computing book profit--Authorities not considered provision authorising addition to book profit--Matter remanded-- CIT v. Dhanalekshmi Bank Ltd .
(Ker) . . . 448
(Ker) . . . 448
S. 147 --Reassessment--Income escaping assessment--Disallowance of expenditure in relation to exempted incomes--Effect of proviso to section 14A--No reassessment for any assessment year prior to 2001-02-- CIT v . Dhanalekshmi Bank Ltd .
(Ker) . . . 448
(Ker) . . . 448
----Reassessment--Notice--Reasons to believe--Reasons recorded showing only factual position--Notice recording assessee had permanent establishment in India but no indication why and how permanent establishment had impacted tax payable or income assessed in original assessment--Notice incomplete and incomprehensible--Requisite belief that income had escaped assessment not possible on basis of reasons recorded--Notice not valid-- G. S. Engineering and Construction Corporation v . Dy. DIT (International Taxation) (Delhi) . . . 335
----Reassessment--Notice--Validity--Information forming basis for notice vague--Notice not valid-- CIT v. Insecticides (India) Ltd. (Delhi) . . . 330
----Reassessment--Scope of provisions--Fresh claim by assessee regarding interest on investment--Not to be entertained--Reassessment proceedings for benefit of Revenue-- Satyamangalam Agricultural Producer’s Co-operative Marketing Society Ltd . v. ITO (Mad) . . . 347
S. 148 --Reassessment--Notice--Reasons to believe--Reasons recorded showing only factual position--Notice recording assessee had permanent establishment in India but no indication why and how permanent establishment had impacted tax payable or income assessed in original assessment--Notice incomplete and incomprehensible--Requisite belief that income had escaped assessment not possible on basis of reasons recorded--Notice not valid-- G. S. Engineering and Construction Corporation v . Dy. DIT (International Taxation) (Delhi) . . . 335
----Reassessment--Notice--Validity--Information forming basis for notice vague--Notice not valid-- CIT v. Insecticides (India) Ltd. (Delhi) . . . 330
----Reassessment--Scope of provisions--Fresh claim by assessee regarding interest on investment--Not to be entertained--Reassessment proceedings for benefit of Revenue-- Satyamangalam Agricultural Producer’s Co-operative Marketing Society Ltd . v. ITO (Mad) . . . 347
----Writ--Existence of alternative remedy--Court will not ordinarily entertain writ petition--Writ petition against notices for reassessment--Assessee relegated to appeal-- CIT v . Chhabil Dass Agarwal (SC) . . . 357
S. 195A --Exemption--Salary--Perquisites--Scope of section 10(10CC)--Tax paid by employer on behalf of employee--Entitled to exemption--Multiple stage grossing up not applicable-- Yoshio Kubo v. CIT (Delhi) . . . 452
S. 199 --Deduction of tax at source--Credit for tax deducted--Contract work--Firm converted into a company--Joint venture--Whether certificates of tax deduction at source issued in name of joint venture or in name of a director--Not relevant--Contract receipts shown in certificates assessed in hands of assessee--Assessee to be given credit for tax deducted at source as mentioned in certificates-- CIT v . Bhooratnam and Co. (AP) . . . 396
S. 234D --Refund--Interest payable by assessee on excess refund--Law applicable--Effect of section 234D with effect from 1-6-2003-- CIT v. Dhanalekshmi Bank Ltd . (Ker) . . . 448
S. 263 --Revision--Scope of section 263--Revising authority feeling inquiry inadequate--Revising authority must make enquiry and show that assessment order was erroneous--Revising authority has no power to remand and direct Assessing Officer to conduct enquiry-- DIT v. Jyoti Foundation (Delhi) . . . 388
S. 271(1)(c) --Penalty--Concealment of income--Bogus claims for deduction--Claim for deduction of penalty and fine under Customs Act, bogus claims to bill discounting charges and depreciation--Levy of penalty--Justified-- Sharma Alloys (India) Ltd . v . ITO (OSD) (Mad) . . . 379
R. 37BA --Deduction of tax at source--Credit for tax deducted--Contract work--Firm converted into a company--Joint venture--Whether certificates of tax deduction at source issued in name of joint venture or in name of a director--Not relevant--Contract receipts shown in certificates assessed in hands of assessee--Assessee to be given credit for tax deducted at source as mentioned in certificates-- CIT v . Bhooratnam and Co. (AP) . . . 396
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