INCOME TAX REPORTS (ITR)
Agricultural income --Seed is a product of agricultural activity--Income from sale of seeds--Deductible--Income-tax Act, 1961, s. 10(1)-- CIT v. Prabhat Agri Biotech Ltd. (AP) . . . 116
Appeal to Appellate Tribunal --Rectification of mistakes--Mistake apparent from record--Search and seizure--Block assessment--Order of Tribunal proceeding on basis no satisfaction of undisclosed income belonging to assessee recorded by Assessing Officer of person searched--Department producing letter showing such satisfaction--Tribunal recalling order and placing appeal before regular Bench for fresh consideration on the merits in a manner status quo ante--Tribunal, while recalling order, ought not to have made observations regarding exact nature, scope, effect and consequences of satisfaction--Impermissible--Income-tax Act, 1961, ss. 158BC, 158BD, 254(2)-- Gyan Construction Co. v. ITAT (Bom) . . . 122
Charitable purposes --Charitable trust--Donation to charitable trust--Application for renewal of recognition of charitable institution for purposes of section 80G--Limitation--Commissioner has no jurisdiction to pass order of rejection or approval after limitation--Income-tax Act, 1961, s. 80G--Income-tax Rules, 1962, r. 11AA-- Maheshwari Foundation v. Director of Income-tax (Exemptions) (Karn) . . . 118
Income from undisclosed sources --Finding that there had been bogus purchases--Finding not rebutted--Addition to income justified--Income-tax Act, 1961-- Anand Silver P. Ltd. v. CIT (Cal) . . . 132
Unexplained investment --Purchase of property--No evidence that excess price paid out of undisclosed income--Addition to income not justified--Income-tax Act, 1961--CIT v. Fantastic Buildcon P. Ltd. (Gauhati) . . . 128
Non-resident --Income deemed to accrue or arise in India--Fees for technical services--Definition--Exclusion of activities relating to mining--Prospecting, extraction or production of mineral oils--Presumptive tax--Pith and substance of each contract to be seen--Contract for operation and management of drilling rigs--Drilling operations for purpose of production of petroleum amounts to mining activity or operation--Contract inextricably connected with prospecting, extraction or production of mineral oils--Dominant purpose was for prospecting, extraction or production of mineral oils though ancillary works contemplated--Payments taxable on presumptive basis under section 44BB and not section 44D--Income-tax Act, 1961, ss. 9(1)(vii), Expln. 2 , 44BB, 44D-- Oil and Natural Gas Corporation Ltd. v. CIT . . . 306
Assessment --Decision arrived at in previous year--Not binding in assessment for subsequent years--Income-tax Act, 1961-- Equity Intelligence India P. Ltd. v. Asst. CIT (Ker) . . . 321
Business expenditure --Bonus paid to employee shareholders--Deductible--Income-tax Act, 1961, s. 36(1)(ii)-- Chryscapital Investment Advisors (India) P. Ltd. v. Deputy CIT (Delhi) . . . 183
----Capital or revenue expenditure--Foreign currency loan for acquisition of plant and machinery--Forward contract to bank to obtain foreign currency on a specific date at a specific rate--Consideration paid to bank in order to protection from fluctuation of foreign exchange rate--Revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v. Britannia Industries Ltd. (Cal) . . . 299
----Capital or revenue expenditure--Machines not put to use on ground technology obsolete--Expenses incurred for development of machines revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v. Britannia Industries Ltd. (Cal) . . . 299
----Expenses incurred for engaging services of concerns to carry out promotional and advertisement activities--Disallowance on ground of bogus claim relying on statements of two concerns--No opportunity to assessee to cross-examine witnesses--Breach of principles of natural justice--Matter remanded--Income-tax Act, 1961, s. 37-- R. W. Promotions P. Ltd. v. Asst. CIT (Bom) . . . 342
Capital gains or business income --Purchase and sale of shares--Trading or investment--Organised and systematic activity--Income earned by assessee by way of dividend of very few scrips compared to value of shares held--Involvement of assessee in trading of shares not occasional--Short period of holding shares--Income to be considered as business income--Income-tax Act, 1961-- Equity Intelligence India P. Ltd. v. Asst. CIT (Ker) . . . 321
Depreciation --Rate of depreciation--Functional test--Centering and shuttering equipment--Not a single unit or component--Can be put to use and made functional only with support of other components--If one single article/unit/component itself is sufficient to fulfil functioning of shuttering--Can be treated as plant--Centering and shuttering material is a homogenous qualitative material--Assessee not entitled to hundred per cent. depreciation--Assessee cannot claim that every single unit/article/component used for shuttering is costing less than Rs. 5,000--Income-tax Act, 1961, s. 32(1)-- CIT v. S. Vijaya Kumar [FB] (T & AP) . . . 226
Income --Computation--Disallowance of expenditure incurred in earning income not forming part of total income--Borrowed funds--Investment in tax-free bonds--Common pool of funds--No presumption that investment in tax-free bonds only out of assessee’s own funds--No disallowance could be made--Income-tax Act, 1961, s. 14A-- CIT v. SBI DHFL Ltd. (Bom) . . . 296
International transaction --Arm’s length price--Determination of arm’s length price--Effect of rule 10B--Relevance of data relating to prior years--Matter remanded--Income-tax Act, 1961--Income-tax Rules, 1962, r. 10B-- Chryscapital Investment Advisors (India) P. Ltd. v. Deputy CIT (Delhi) . . . 183
Reassessment --Notice--Income escaping assessment--Reason to believe--Does not mean that Assessing Officer must be satisfied that there exist grounds for reopening assessment or he should have formed an opinion about nature of final order likely to be passed after reopening assessment--Income-tax Act, 1961, ss. 147, 148-- Equity Intelligence India P. Ltd. v. Asst. CIT (Ker) . . . 321
----Notice--Notice after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Payment to non-resident who had a permanent establishment in India--Fact not disclosed to income-tax authorities--Notice valid--Income-tax Act, 1961, ss. 147, 148-- Principal Officer, L. G. Electronics P. Ltd. v. Asst. CIT (All) . . . 281
----Notice--Purchase and sale of shares--Assessment for 2006-07 completed treating income as capital gains--Assessment for 2008-09 completed treating income as business income--Assessing Officer had sufficient materials to believe that income chargeable to tax as business income for assessment year 2006-07 had escaped assessment--Not change of opinion--Income-tax Act, 1961, ss. 147, 148-- Equity Intelligence India P. Ltd. v. Asst. CIT (Ker) . . . 321
Search and seizure --Block assessment--Undisclosed income--Individual--Hindu undivided family income--Association of persons--Assessee carrying on lottery business as karta of Hindu undivided family and finance business as an association of persons--Undisclosed income relatable to lottery business to be assessed in hands of Hindu undivided family--Return filed in status of association of persons--Notice issued under section 158BC in name of association of persons--Undisclosed income relatable to finance business--Assessable in hands of association of persons--Income-tax Act, 1961, s. 158BC-- CIT v. Manish Kumar Pajwani (Karn) . . . 292
Unexplained investment --Deemed income--Search and seizure--Locker key of M seized on 20-3-1986--Jewellery found and seized belonging to assessee only on opening of locker on 28-7-1986--Assessee found to be owner of jewellery in financial year 1986-87--Year of assessment in respect of such deemed income--Would be assessment year 1987-88--Income-tax Act, 1961, s. 69A-- Ajay R. Dhoot v. Deputy CIT (Bom) . . . 347
S. 9(1)(vii), Expln. 2 --Non-resident--Income deemed to accrue or arise in India--Fees for technical services--Definition--Exclusion of activities relating to mining--Prospecting, extraction or production of mineral oils--Presumptive tax--Pith and substance of each contract to be seen--Contract for operation and management of drilling rigs--Drilling operations for purpose of production of petroleum amounts to mining activity or operation--Contract inextricably connected with prospecting, extraction or production of mineral oils--Dominant purpose was for prospecting, extraction or production of mineral oils though ancillary works contemplated--Payments taxable on presumptive basis under section 44BB and not section 44D-- Oil and Natural Gas Corporation Ltd. v. CIT (SC) . . . 306
S. 14A --Income--Computation--Disallowance of expenditure incurred in earning income not forming part of total income--Borrowed funds--Investment in tax-free bonds--Common pool of funds--No presumption that investment in tax-free bonds only out of assessee’s own funds--No disallowance could be made-- CIT v. SBI DHFL Ltd. (Bom) . . . 296
S. 32(1) --Depreciation--Rate of depreciation--Functional test--Centering and shuttering equipment--Not a single unit or component--Can be put to use and made functional only with support of other components--If one single article/unit/component itself is sufficient to fulfil functioning of shuttering--Can be treated as plant--Centering and shuttering material is a homogenous qualitative material--Assessee not entitled to hundred per cent. depreciation--Assessee cannot claim that every single unit/article/component used for shuttering is costing less than Rs. 5,000-- CIT v. S. Vijaya Kumar [FB] (T & AP) . . . 226
S. 36(1)(ii) --Business expenditure--Bonus paid to employee shareholders--Deductible-- Chryscapital Investment Advisors (India) P. Ltd. v. Deputy CIT (Delhi) . . . 183
S. 37 --Business expenditure--Capital or revenue expenditure--Foreign currency loan for acquisition of plant and machinery--Forward contract to bank to obtain foreign currency on a specific date at a specific rate--Consideration paid to bank in order to protection from fluctuation of foreign exchange rate--Revenue expenditure-- CIT v. Britannia Industries Ltd. (Cal) . . . 299
----Business expenditure--Capital or revenue expenditure--Machines not put to use on ground technology obsolete--Expenses incurred for development of machines revenue expenditure-- CIT v. Britannia Industries Ltd. (Cal) . . . 299
----Business expenditure--Expenses incurred for engaging services of concerns to carry out promotional and advertisement activities--Disallowance on ground of bogus claim relying on statements of two concerns--No opportunity to assessee to cross-examine witnesses--Breach of principles of natural justice --Matter remanded-- R. W. Promotions P. Ltd. v. Asst. CIT (Bom) . . . 342
S. 44BB --Non-resident--Income deemed to accrue or arise in India--Fees for technical services--Definition--Exclusion of activities relating to mining--Prospecting, extraction or production of mineral oils--Presumptive tax--Pith and substance of each contract to be seen--Contract for operation and management of drilling rigs--Drilling operations for purpose of production of petroleum amounts to mining activity or operation--Contract inextricably connected with prospecting, extraction or production of mineral oils--Dominant purpose was for prospecting, extraction or production of mineral oils though ancillary works contemplated--Payments taxable on presumptive basis under section 44BB and not section 44D-- Oil and Natural Gas Corporation Ltd. v. CIT (SC) . . . 306
S. 44D --Non-resident--Income deemed to accrue or arise in India--Fees for technical services--Definition--Exclusion of activities relating to mining--Prospecting, extraction or production of mineral oils--Presumptive tax--Pith and substance of each contract to be seen--Contract for operation and management of drilling rigs--Drilling operations for purpose of production of petroleum amounts to mining activity or operation--Contract inextricably connected with prospecting, extraction or production of mineral oils--Dominant purpose was for prospecting, extraction or production of mineral oils though ancillary works contemplated--Payments taxable on presumptive basis under section 44BB and not section 44D-- Oil and Natural Gas Corporation Ltd. v. CIT (SC) . . . 306
S. 69A --Unexplained investment--Deemed income--Search and seizure--Locker key of M seized on 20-3-1986--Jewellery found and seized belonging to assessee only on opening of locker on 28-7-1986--Assessee found to be owner of jewellery in financial year 1986-87--Year of assessment in respect of such deemed income--Would be assessment year 1987-88-- Ajay R. Dhoot v. Deputy CIT (Bom) . . . 347
S. 147 --Reassessment--Notice--Income escaping assessment--Reason to believe--Does not mean that Assessing Officer must be satisfied that there exist grounds for reopening assessment or he should have formed an opinion about nature of final order likely to be passed after reopening assessment-- Equity Intelligence India P. Ltd. v. Asst. CIT (Ker) . . . 321
----Reassessment--Notice--Notice after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Payment to non-resident who had a permanent establishment in India--Fact not disclosed to income-tax authorities--Notice valid-- Principal Officer, L. G. Electronics P. Ltd. v. Asst. CIT (All) . . . 281
----Reassessment--Notice--Purchase and sale of shares--Assessment for 2006-07 completed treating income as capital gains--Assessment for 2008-09 completed treating income as business income--Assessing Officer had sufficient materials to believe that income chargeable to tax as business income for assessment year 2006-07 had escaped assessment--Not change of opinion-- Equity Intelligence India P. Ltd. v. Asst. CIT (Ker) . . . 321
S. 148 --Reassessment--Notice--Income escaping assessment--Reason to believe--Does not mean that Assessing Officer must be satisfied that there exist grounds for reopening assessment or he should have formed an opinion about nature of final order likely to be passed after reopening assessment-- Equity Intelligence India P. Ltd. v. Asst. CIT (Ker) . . . 321
----Reassessment--Notice--Notice after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Payment to non-resident who had a permanent establishment in India--Fact not disclosed to income-tax authorities--Notice valid-- Principal Officer, L. G. Electronics P. Ltd. v. Asst. CIT (All) . . . 281
----Reassessment--Notice--Purchase and sale of shares--Assessment for 2006-07 completed treating income as capital gains--Assessment for 2008-09 completed treating income as business income--Assessing Officer had sufficient materials to believe that income chargeable to tax as business income for assessment year 2006-07 had escaped assessment--Not change of opinion-- Equity Intelligence India P. Ltd. v. Asst. CIT (Ker) . . . 321
S. 158BC --Search and seizure--Block assessment--Undisclosed income--Individual--Hindu undivided family income--Association of persons--Assessee carrying on lottery business as karta of Hindu undivided family and finance business as an association of persons--Undisclosed income relatable to lottery business to be assessed in hands of Hindu undivided family--Return filed in status of association of persons--Notice issued under section 158BC in name of association of persons--Undisclosed income relatable to finance business--Assessable in hands of association of persons-- CIT v. Manish Kumar Pajwani (Karn) . . . 292
R. 10B --International transaction--Arm’s length price--Determination of arm’s length price--Effect of rule 10B--Relevance of data relating to prior years--Matter remanded-- Chryscapital Investment Advisors (India) P. Ltd. v. Deputy CIT (Delhi) . . . 183
GOODS AND SERVICE TAX REPORTS (GSTR) HIGHLIGHTS
F Rebate of wharfage charges allowed by Maritime Board to private party for adjusting against cost of construction incurred by it in construction of jetty for its own use under agreement with Board not chargeable to tax : CCE v. Gujarat Maritime Board p. 608
F Lease rent charged for use of waterfront does not include any service in relation to vessel or goods and cannot be described as "port service" : CCE v. Gujarat Maritime Board p. 608
F Failure to make effective supervision of its employee alone not a ground for revocation of customs house agent's licence : Peak Agencies v. Commissioner of Customs (Trib.-Mum) p. 552
F Wharfage charges charged by Maritime Board amounts to sum received for renting of immovable property in terms of section 65(90a) of 1994 Act, and expressly kept out of tax net till 2010 : Port Officer, Gujarat Maritime Board v. CCE and Service Tax (Trib.-Ahd) p. 566
F Whether letter written by assessee can be treated as a refund claim, matter remanded : Asian Paints Ltd. v. CCE and Service Tax (Trib.-Mum) p. 625
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RBI cancels 7 NBFCs' registration certificate; Coffee Day gets SEBI nod for IPO
RBI cancels 7 NBFCs' registration certificate; Coffee Day gets SEBI nod for IPO
Dear Patrons,
The chase for Geographical Indication (GI) tag for Basmati rice was not yet over and we are already hearing of another similar debate - this time over Rasgullas. As per the media reports, states of Bengal and Odisha are fighting over the claim of origin & ownership of Rasgulla, and there is a possibility that Rasgulla is going to be a new entrant in the register of GIs.
Kartik Chawla of Spicy IP alongwith Latha R Nair (Partner, K&S Partners - IP boutique) cover this recent debate about registration of GI on 'Rasgulla' in their post - Has the Rasgulla GI debate missed the wood for the trees?. Talking about Rasgulla's qualification as a GI, the authors mention that while Rasgulla's origins may have been Odisha or Bengal, currently, Rasgulla is a common sweet dish that is made and consumed across the country. They state, "It is too farfetched to say that consumers or even traders of Rasgulla associate it with Odisha (or Bengal)."
Further, they talk specifically about 'Pahala Ragulla' (Pahala is a small village in Odisha which is a favourite stopover for its brown Rasgulla named Pahal Rasgulla) getting registered as a GI. They state, "If Rasgullas from Pahala indeed have this reputation of being different from the usual white, spongy and very sweet Rasgullas and are known to be available only in Pahala, then they seem to fit the bill for a GI application."
Click here to read this IP Corner article – "Has the Rasgulla GI debate missed the wood for the trees?"
Best Regards,
LSI Team
Refuses to absolve lender Future Capital, Deccan Holdings' independent director in mismanagement petition
CLB dismisses company application filed by Future Capital Holdings Ltd. ('Applicant Co.') and independent director of Deccan Chronicle Holdings Ltd. ('respondent co.') for deleting their name from the array of parties in oppression & mismanagement petition filed by Serious Fraud Investigation Office (SFIO); Rejects applicant co.'s contention that it is not 'necessary' / 'proper party', observes that applicant co. had extended loan facility to the related party of Deccan Chronicle Holdings Ltd. in conspiracy, and such loans were advanced against corporate guarantee that was not in force; Rejects application filed by independent director of Deccan Chronicle Holdings Ltd., who claimed that he was not involved in the co. affairs; CLB peruses averments in petition, which states that internal auditors, independent directors and statutory auditors have arbitrarily diverted funds for their personal enrichment by making false / fraudulent disclosures, also refers minutes of board meeting that directly links independent director to said allegations, notes that such director has played some role in such activity; Holds that "merely because a person is an independent director does not necessarily mean that he has acted fairly and conducted himself according to the law"; CLB directs Future Capital Holdings Ltd. and independent director of Deccan Chronicle Holdings Ltd. to file reply to Section 397/398 petition:New Delhi CLB
The order was passed by Chief Justice M M Kumar, Chairman, Company Law Board, Principal Bench, New Delhi
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