ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS
F Where interest-free advances far less than own funds of assessee, no disallowance can be made : Videocon Industries Ltd. v. Addl. CIT (Mumbai) p. 551 (6-2-2015)
F Disallowance on interest not warranted where investment in shares and securities not exceeding own funds of assessee : Videocon Industries Ltd. v. Addl. CIT (Mumbai) p. 551
F Assessing Officer must record his non-satisfaction about correctness of claim of assessee before making disallowance u/s. 14A : Videocon Industries Ltd. v. Addl. CIT (Mumbai) p. 551
F Internationa transaction : Exclusion of export incentive received by assessee for benchmarking not proper : Videocon Industries Ltd. v. Addl. CIT (Mumbai) p. 551
F Advancing loan by assessee to its associated enterprises and charging interest at LIBOR, accepted benchmarking for interest transactions : Videocon Industries Ltd. v. Addl. CIT (Mumbai) p. 551
F Arm's length price : Corporate bank guarantee to associated enterprises, no bearing on profits, income, losses or assets of such enterprises and outside ambit of international transactions : Videocon Industries Ltd. v. Addl. CIT (Mumbai) p. 551
F Where no opportunity provided to rebut evidence in possession of Department, additions not proper : Videocon Industries Ltd. v. Addl. CIT (Mumbai) p. 551
F Income from undisclosed sources : Nothing on record to show amount utilised by assessee on withdrawal, matter remanded : Gurpreet Singh v. ITO (Chandigarh) p. 467
F Where assessee remitting provident fund contribution of employees belatedly but within due date of filing return of income u/s. 139(1), disallowance not proper : Tetra Soft (India) P. Ltd. v. Asst. CIT (Hyderabad) p. 470 (3-6-2015)
F Uninterrupted power supply being part and parcel of computer system, depreciation allowable at 60 per cent. : Tetra Soft (India) P. Ltd. v. Asst. CIT (Hyderabad) p. 470
F Internet charges and onsite expenses reduced from export turnover to be reduced from total turnover also : Tetra Soft (India) P. Ltd. v. Asst. CIT (Hyderabad) p. 470
F Right to appeal against order of revision : Vested right cannot be taken away except by express provision or by necessary implication : Garden Reach Shipbuilders and Engineers Ltd. v. CIT (Kolkata) p. 475 (15-5-2015)
F Disallowance u/s. 43B not permissible where no claim of excise duty for relevant assessment year : Garden Reach Shipbuilders and Engineers Ltd. v. CIT (Kolkata) p. 475
F Where assessment order neither erroneous nor prejudicial to interests of Revenue, order u/s. 263 not sustainable : Garden Reach Shipbuilders and Engineers Ltd. v. CIT (Kolkata) p. 475
F Conversion of capital asset to stock-in-trade : No income accruing to assessee, capital gains not assessable : Fardeen Khan v. Asst. CIT (Mumbai) p. 487
F Special deduction u/s. 80-IB : Condition precedent : ITO v. Paras Builders (Pune) p. 507
F Capital gains : Profits to be used for purchase of residential property or deposited in specified account before due date for furnishing return : Nand Lal Sharma v. ITO (Jaipur) p. 518 (15-5-2015)
F Capital gains : Actual sale consideration to be taken for computation of exemption : Nand Lal Sharma v. ITO (Jaipur) p. 518
F International transactions : Company that underwent merger in previous year cannot be considered comparables : Ciena India P. Ltd. v. Deputy CIT (Delhi) p. 524 (23-4-2015)
F Selection of comparables : Marketing support services cannot be equated with testing services : Ciena India P. Ltd. v. Deputy CIT (Delhi) p. 524
F Expenditure incurred towards recruitment and training, revenue in nature : Ciena India P. Ltd. v. Deputy CIT (Delhi) p. 524
F Failure by Commissioner (Appeals) to give opportunity to Assessing Officer before admitting additional evidence, violative of rule 46A of 1962 Rules : Ciena India P. Ltd. v. Deputy CIT (Delhi) p. 524
F Where assessee furnishing details about encashment of foreign exchange with no doubt regarding foreign tours undertaken by employees of assessee, expenditure allowable : SM Energy Teknik and Electronics Ltd. v. Deputy CIT (Mumbai) p. 540
F Claim of assessee allowable if goods sold at price shown by assessee as on last date of accounting year or lower price : SM Energy Teknik and Electronics Ltd. v. Deputy CIT (Mumbai) p. 540
F Where assessee not showing income under head exempt income under Chapter III against which it claimed expenditure, conditions not fulfilled to invoke provisions of section 14A : SM Energy Teknik and Electronics Ltd. v. Deputy CIT (Mumbai) p. 540
F Remission or cessation of liability : Condition for invoking section 41(1) : SM Energy Teknik and Electronics Ltd. v. Deputy CIT (Mumbai) p. 540
F Approval not to be denied for want of approval of civil court for amendment of trust deed : Heal A Child Foundation v. DIT (Exemptions) (Hyderabad) p. 550 (1-4-2015)
F Charitable purpose : Registration under Societies Act not required for registration u/s. 12AA : Paramount Education Charitable Trust v. CIT (Chandigarh) p. 555 (7-5-2015)
F Receipt of income by institution established for charitable purpose does not affect its charitable nature : Water and Land Management Training and Research Institute v. DIT (Exemption) (Hyderabad) p. 559 (13-5-2015)
F Where transfer of only small percentage of employees and customers and formation of assessee not by reconstruction, exemption allowable : Jeans Knit P. Ltd. v. Asst. CIT (Bangalore) p. 567 (17-4-2015)
F Functionally dissimilar companies, companies engaged in development of software products and services not comparable to be excluded while determining arm's length price : McAfee Software (India) P. Ltd. v. Deputy CIT (Bangalore) p. 574 (24-4-2015)
F Where issue not adjudicated before Commissioner (Appeals), Assessing Officer to examine afresh : McAfee Software (India) P. Ltd. v. Deputy CIT (Bangalore) p. 574
F "Income" to be worked out in accordance with provisions of 1961 Act to compute gross total income : Deepi Arora v. ITO (Mumbai) p. 597
F Where difference of opinion amongst authorities whether sum allowable as bad debt or business loss, penalty cannot be levied : Hungry Jacks Fast Food P. Ltd. v. ITO (Mumbai) p. 607
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INCOME TAX REPORTS (ITR)
Bad debt --Bank--Special allowance--Effect of section 36(1)(viia)--Advances made by rural branches of bank--Meaning of rural--Population of less than ten thousand--No difference between figures given in provisional census and final census--Figures given in provisional census could be taken into account--Income-tax Act, 1961, s. 36(1)(viia)-- State Bank of Mysore v. Asst. CIT (Karn) . . . 490
Capital gains --Difference between short-term and long-term capital gains--Land held on lease for more than three years--Conversion into freehold and transfer thereafter--Gains assessable as long-term capital gains--Income-tax Act, 1961, s. 45-- Neeraj Kanta Verma v. Union of India (All) . . . 466
Charitable purposes --Charitable institution--Exemption--Condition precedent--Application of income for purposes of charitable institution--Trust running educational institution--Development fees collected from students in violation of State law--Finding that amount had been utilised for purposes of trust--Trust entitled to exemption--Income-tax Act, 1961, s. 11-- CIT v. CMR Jnanadhara Trust (Karn) . . . 483
Reassessment --Notice after four years--Failure to disclose material facts necessary for assessment--Gains shown in returns as long-term capital gains and details regarding transfer of capital asset given--Notice after four years to treat gains as short-term capital gains--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Neeraj Kanta Verma v. Union of India (All) . . . 466
----Notice--Limitation--Notice after four years but before six years--Condition precedent--Satisfaction of Assessing Officer that income escaping assessment was likely to exceed one lakh of rupees--No recording of such satisfaction--Notice barred by limitation--Income-tax Act, 1961, ss. 148, 149-- Neeraj Kanta Verma v. Union of India (All) . . . 466
Business expenditure --Deduction only on actual payment--Tax, duty, cess or fee by whatever name called--Manufacturer of liquor and sugar--Levy of vend fee per bulk litre of arrack sold towards fund to be used for repair and replacement of old machinery and equipment in mills--Is a fee--Attracts disallowance where not actually paid in previous year--Income-tax Act, 1961, s. 43B(a) (as amended by Finance Act, 1988 w. e. f. 1-4-1989)-- CIT v. Travancore Sugars and Chemicals Ltd. . . . 585
Depreciation --Investment allowance--Unabsorbed depreciation and unabsorbed investment allowance--Priority in matter of set off--Legal fiction that carried forward depreciation assumes character of current depreciation--Effect--No bifurcation at choice of assessee to claim current depreciation alone--Situation distinguished from case where no depreciation claimed at all--Income-tax Act, 1961, ss. 32, 34, 72, 73-- Seshasayee Paper and Board Ltd. v. Deputy CIT . . . 619
Search and seizure --General principles--Warrant of authorisation--Conditions precedent for issue--Grounds for satisfaction that search necessary when can be communicated to assessee--Steps in decision-making process indicated in Search and Seizure Manual of Department scrupulously followed--Director General recording view that satisfaction of Director (Investigation) on material available was reasonable and according administrative approval--Proper--Income-tax Act, 1961, s. 132-- Director General of Income-tax (Investigation) v. Spacewood Furnishers Pvt. Ltd. . . . 595
----Writ--Scope of interference by court--Findings with regard to satisfaction touching upon sufficiency and adequacy of reasons and authenticity and acceptability of information on which satisfaction reached--Not permissible in writ jurisdiction--Reproduction by court of contents of satisfaction notes containing reasons for satisfaction premature and not advisable--Income-tax Act, 1961, s. 132--Constitution of India, art. 226-- Director General of Income-tax (Investigation) v. Spacewood Furnishers Pvt. Ltd. . . . 595
Business expenditure --Accounting--Accounting Standards issued by Institute of Chartered Accountants of India--Not to be disregarded--That at relevant time accounting standard employed by assessee not notified by Central Government--Not a ground to discard--Lease equalisation charges--Deductible from lease rental income--Income-tax Act, 1961, ss. 37, 145-- CIT v. Pact Securities and Financial Services Ltd. (T & AP) . . . 681
----Disallowance--Provision relating to tax deduction at source--Mandatory--Application of provision not merely to assessees following mercantile system but also to assessees following cash system--â€Payableâ€, meaning of--Payable is descriptive of payments which attract liability to deduct tax at source--Income-tax Act, 1961, s. 40(a)(ia)-- P. M. S Diesels v. CIT (P&H) . . . 562
Income or capital --Share purchase agreement--Sale of shares--Negative covenant--Independent and distinct assets--Apportionment of consideration as between price of shares and consideration for negative covenant--Agreement not containing provision for apportioning consideration--Does not disentitle assessee for apportionment of consideration in respect of each of them--Tax leviable on basis of true value of asset of transaction and not merely on basis of value adopted by assessee--Assessee entitled to apportionment towards price of shares and price of restrictive covenants--Income-tax Act, 1961-- CIT v. Smt. Usha Saboo (P&H) . . . 695
Industrial park --Infrastructure facility--Special deduction--Competent authority certifying work completion and fitness for occupation--Central Board of Direct Taxes not an appellate authority to sit in judgment over certificates or their contents--Plot developed for composite use--Authority to see location of units and its industrial activity and whether that could qualify as industrial park and for which requisite certificate whether issued--Assessee entitled to deduction--Industrial Park Scheme, 2008, paras. 2(b), (h), 4(1)--Income-tax Act, 1961, s. 80-IA(4)(iii)-- Techniplex v. CBDT (Bom) . . . 722
Infrastructure facility --Special deduction--Container freight station--Entitled to deduction--Income-tax Act, 1961, s. 80-IA(4)-- CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. (Bom) . . . 645
----Special deduction--Container freight station--Part of inland port--No specific exclusion in clause (d) of Explanation to section 80-IA(4)(i)--Approval given by Government of India--Tribunal finding assessee complied with requirement--Finding of fact--Income-tax Act, 1961, s. 80-IA(4)-- CIT v. A. L. Logistics Pvt. Ltd. (Mad) . . . 609
Interpretation of taxing statutes --Word “may†used in sub-section (2) of section 145 cannot be read as “shallâ€--Income-tax Act, 1961, s. 145(2)-- CIT v. Pact Securities and Financial Services Ltd. (T & AP) . . . 681
Search and seizure --Assessment in search cases--Assessment in pursuance of notice in relation to six years--Scope of enquiry--Finalised assessment/reassessment shall not abate--Only undisclosed income and undisclosed assets detected during search could be brought to tax in respect of those years--Income-tax Act, 1961, s. 153A-- CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. (Bom) . . . 645
Settlement of case --Assessee depositing tax on admitting additional income--Required amount deposited within time when application admitted--Further tax liability determined after final order satisfied--Interest for period during pendency of application before Settlement Commission--Unwarranted--Income-tax Act, 1961, s. 245D(2C)-- CIT v. Vishan Das (Delhi) . . . 591
Art. 226 --Search and seizure--Writ--Scope of interference by court--Findings with regard to satisfaction touching upon sufficiency and adequacy of reasons and authenticity and acceptability of information on which satisfaction reached--Not permissible in writ jurisdiction--Reproduction by court of contents of satisfaction notes containing reasons for satisfaction premature and not advisable-- Director General of Income-tax (Investigation) v. Spacewood Furnishers Pvt. Ltd. (SC). . . 595
S. 32 --Depreciation--Investment allowance--Unabsorbed depreciation and unabsorbed investment allowance--Priority in matter of set off--Legal fiction that carried forward depreciation assumes character of current depreciation--Effect--No bifurcation at choice of assessee to claim current depreciation alone--Situation distinguished from case where no depreciation claimed at all-- Seshasayee Paper and Board Ltd. v. Deputy CIT (SC). . . 619
S. 34 --Depreciation--Investment allowance--Unabsorbed depreciation and unabsorbed investment allowance--Priority in matter of set off--Legal fiction that carried forward depreciation assumes character of current depreciation--Effect--No bifurcation at choice of assessee to claim current depreciation alone--Situation distinguished from case where no depreciation claimed at all-- Seshasayee Paper and Board Ltd. v. Deputy CIT (SC). . . 619
S. 37 --Business expenditure--Accounting--Accounting Standards issued by Institute of Chartered Accountants of India--Not to be disregarded--That at relevant time accounting standard employed by assessee not notified by Central Government--Not a ground to discard--Lease equalisation charges--Deductible from lease rental income-- CIT v. Pact Securities and Financial Services Ltd. (T & AP) . . . 681
S. 40(a)(ia) --Business expenditure--Disallowance--Provision relating to tax deduction at source--Mandatory--Application of provision not merely to assessees following mercantile system but also to assessees following cash system--â€Payableâ€, meaning of--Payable is descriptive of payments which attract liability to deduct tax at source-- P. M. S Diesels v. CIT (P&H) . . . 562
S. 43B(a) (as amended by Finance Act, 1988 w. e. f. 1-4-1989) --Business expenditure--Deduction only on actual payment--Tax, duty, cess or fee by whatever name called--Manufacturer of liquor and sugar--Levy of vend fee per bulk litre of arrack sold towards fund to be used for repair and replacement of old machinery and equipment in mills--Is a fee--Attracts disallowance where not actually paid in previous year-- CIT v. Travancore Sugars and Chemicals Ltd. (SC). . . 585
S. 72 --Depreciation--Investment allowance--Unabsorbed depreciation and unabsorbed investment allowance--Priority in matter of set off--Legal fiction that carried forward depreciation assumes character of current depreciation--Effect--No bifurcation at choice of assessee to claim current depreciation alone--Situation distinguished from case where no depreciation claimed at all-- Seshasayee Paper and Board Ltd. v. Deputy CIT (SC). . . 619
S. 73 --Depreciation--Investment allowance--Unabsorbed depreciation and unabsorbed investment allowance--Priority in matter of set off--Legal fiction that carried forward depreciation assumes character of current depreciation--Effect--No bifurcation at choice of assessee to claim current depreciation alone--Situation distinguished from case where no depreciation claimed at all-- Seshasayee Paper and Board Ltd. v. Deputy CIT (SC). . . 619
S. 80-IA(4) --Infrastructure facility--Special deduction--Container freight station--Entitled to deduction-- CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. (Bom) . . . 645
----Infrastructure facility--Special deduction--Container freight station--Part of inland port--No specific exclusion in clause (d) of Explanation to section 80-IA(4)(i)--Approval given by Government of India--Tribunal finding assessee complied with requirement--Finding of fact-- CIT v. A. L. Logistics Pvt. Ltd. (Mad) . . . 609
S. 80-IA(4)(iii) --Industrial park--Infrastructure facility--Special deduction--Competent authority certifying work completion and fitness for occupation--Central Board of Direct Taxes not an appellate authority to sit in judgment over certificates or their contents--Plot developed for composite use--Authority to see location of units and its industrial activity and whether that could qualify as industrial park and for which requisite certificate whether issued--Assessee entitled to deduction-- Techniplex v. CBDT (Bom) . . . 722
S. 132 --Search and seizure--General principles--Warrant of authorisation--Conditions precedent for issue--Grounds for satisfaction that search necessary when can be communicated to assessee--Steps in decision-making process indicated in Search and Seizure Manual of Department scrupulously followed--Director General recording view that satisfaction of Director (Investigation) on material available was reasonable and according administrative approval--Proper-- Director General of Income-tax (Investigation) v. Spacewood Furnishers Pvt. Ltd. (SC) . . . 595
----Search and seizure--Writ--Scope of interference by court--Findings with regard to satisfaction touching upon sufficiency and adequacy of reasons and authenticity and acceptability of information on which satisfaction reached--Not permissible in writ jurisdiction--Reproduction by court of contents of satisfaction notes containing reasons for satisfaction premature and not advisable-- Director General of Income-tax (Investigation) v. Spacewood Furnishers Pvt. Ltd. (SC). . . 595
S. 145 --Business expenditure--Accounting--Accounting Standards issued by Institute of Chartered Accountants of India--Not to be disregarded--That at relevant time accounting standard employed by assessee not notified by Central Government--Not a ground to discard--Lease equalisation charges--Deductible from lease rental income-- CIT v. Pact Securities and Financial Services Ltd. (T & AP) . . . 681
S. 145(2) --Interpretation of taxing statutes--Word “may†used in sub-section (2) of section 145 cannot be read as “shallâ€-- CIT v. Pact Securities and Financial Services Ltd. (T & AP) . . . 681
S. 153A --Search and seizure--Assessment in search cases--Assessment in pursuance of notice in relation to six years--Scope of enquiry--Finalised assessment/reassessment shall not abate--Only undisclosed income and undisclosed assets detected during search could be brought to tax in respect of those years-- CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. (Bom) . . . 645
S. 245D(2C) --Settlement of case--Assessee depositing tax on admitting additional income--Required amount deposited within time when application admitted--Further tax liability determined after final order satisfied--Interest for period during pendency of application before Settlement Commission--Unwarranted-- CIT v. Vishan Das (Delhi) . . . 591
Para. 2(b), (h) --Industrial park--Infrastructure facility--Special deduction--Competent authority certifying work completion and fitness for occupation--Central Board of Direct Taxes not an appellate authority to sit in judgment over certificates or their contents--Plot developed for composite use--Authority to see location of units and its industrial activity and whether that could qualify as industrial park and for which requisite certificate whether issued--Assessee entitled to deduction-- Techniplex v. CBDT (Bom) . . . 722
Para. 4(1) --Industrial park--Infrastructure facility--Special deduction--Competent authority certifying work completion and fitness for occupation--Central Board of Direct Taxes not an appellate authority to sit in judgment over certificates or their contents--Plot developed for composite use--Authority to see location of units and its industrial activity and whether that could qualify as industrial park and for which requisite certificate whether issued--Assessee entitled to deduction-- Techniplex v. CBDT (Bom) . . . 722
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