INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

HIGH COURTS

Penalty --Concealment of income--Claim for deduction rejected--Tribunal finding that there was no furnishing of inaccurate particulars or concealment of income--Penalty could not be imposed--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Dabwali Transport Co. (P&H) . . . 577

Reassessment --Notice after four years--Reasons based on verification of material already on record during original assessment--No allegation that there was any failure on part of assessee to disclose truly and fully all material facts--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Patel Alloy Steel (P.) Ltd. v. Asst. CIT (OSD) (Guj) . . . 580

 

PRINT EDITION

ITR Volume 359 : Part 4 (Issue dated : 23-12-2013)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Appeal to High Court --Powers of court--Findings of fact--When can be disturbed--Income-tax Act, 1961, s. 260A-- CIT v. Sonal Constructions (Delhi) . . . 532

Assessment --Notice under section 143(2)--Limitation--Service of notice impossible on last day of limitation--Service of notice on the very next day--Not barred by limitation--Income-tax Act, 1961, s. 143-- Gujarat State Plastic Manufacturers Association v. Deputy Director of Income-tax (Exemption) (Guj) . . . 516

----Notice under section 143(2)--Service of notice--Expressions “service” and “issue” are interchangeable--Issue of notice within prescribed period--Notice valid--Income-tax Act, 1961, s. 143(2)-- V. R. A. Cotton Mills P. Ltd. v. Union of India (P&H) . . . 495

Authority for Advance Rulings --Jurisdiction--Authority admitting application for purposes of giving ruling--Cannot at final hearing refuse to give a ruling on ground of suspicion that an illegality had taken place--Income-tax Act, 1961, s. 245R(2)-- Mahindra BT Investment Co. (Mauritius) Ltd. v. Director of Income-tax (International Taxation) (Bom) . . . 485

Business expenditure --Bad debts--Amounts incurred by assessee for wholly owned subsidiary companies--Business nexus between assessee and subsidiary companies--Amount written off as bad debts--Allowable--Income-tax Act, 1961, s. 37-- CIT v. Spencers and Co. Ltd. (No. 1 ) (Mad) . . . 612

----Buyer’s commission--Genuineness of payment made to agent established--Commission deductible--Income-tax Act, 1961, s. 37-- CIT v. E. Ramachandran (Mad) . . . 671

----Disallowance--Assessee by availing of service benefits from group resource company, availing of valuable benefit, for its business operations--Payment of licence fee towards its share of actual expenses incurred by group company--Legal expenses--Retainer fee--Allowable--Income-tax Act, 1961, s. 37-- CIT v. Spencers and Co. Ltd. (No. 2 ) (Mad) . . . 630

----Licence fee--Deductible--Income-tax Act, 1961, s. 37-- CIT v. Spencers and Co. Ltd. (No. 3 ) (Mad) . . . 644

Business income --Development of property--Agreement providing for allotment of specified car parking spaces to assessee and provision of air-conditioning equipment free of cost by developer--Car parking spaces not included in sanctioned built-up area and not included in saleable area--No sale or transfer of car parking spaces to assessee--Assessee allowed to park cars in open space against refundable security deposits--Notional value of benefits towards allotment of car parking spaces--Not income--Developer failing to provide air-conditioning equipment free of cost till transfer of property to assessee--Notional addition on account of provision of air-conditioning does not arise--Income-tax Act, 1961-- CIT v. Spencers and Co. Ltd. (No. 3 ) (Mad) . . . 644

Capital gains --Computation--Cost of improvement--No obligation on assessee to settle claim of tenants for getting vacant possession--Compensation paid to tenants for delivering vacant possession--Not transfer of development rights but cost of improvement--Entitled to indexation benefit--Income-tax Act, 1961, s. 48(ii)-- CIT v. Spencers and Co. Ltd. (No. 3 ) (Mad) . . . 644

Capital or revenue receipt --Non-compete fee--Assessee selling profitable running retail business to a new company--Restrictive covenant prohibiting assessee from carrying on competing business in retail--Amount received as non-compete fee--Capital receipt--Not taxable--Income-tax Act, 1961-- CIT v. Spencers and Co. Ltd. (No. 1 ) (Mad) . . . 612

----Non-compete fee--Restrictive covenant--Tribunal finding amount received for intangible assets under a separate agreement constituted non-compete fee not containing any element of goodwill--Capital receipt--Income-tax Act, 1961-- CIT v. Real Image Pvt. Ltd. (Mad) . . . 606

Cash credits --Scope of section 68--Meaning of “any sum”--No explanation regarding particular amount--Addition of sum in excess of such particular amount--Not permissible under section 68--Income-tax Act, 1961, s. 68-- D. C. Rastogi v. CIT (Delhi) . . . 513

Dividend --Deemed dividend--Loan to shareholder having voting power exceeding 10 per cent.--Assessee claiming that shares settled upon trust--Trust deed created on a stamp paper four years before date of search and duly notarised--No inquiry with notary public to establish non-genuineness of trust deed--Finding of Tribunal that trust was genuine and assessee did not hold beneficial interest in company exceeding 10 per cent.--Finding of fact not perverse--No question of law--Income-tax Act, 1961, s. 2(22)(e)-- CIT v. Krupeshbhai N. Patel (Guj) . . . 504

Interest on borrowed capital --Investment in shares utilising borrowed capital for strategic business purposes--Companies promoted as special purpose companies to strengthen and promote assessee’s existing business by combining different business segments--Interest allowable--Income-tax Act, 1961, s. 36(1)(iii)-- CIT v. Spencers and Co. Ltd. (No. 3 ) (Mad) . . . 644

Loss --Loss on account of sale of shares--Assessee producing copies of bills, contract notes, receipts for sale consideration and share particulars--Tribunal finding transaction genuine and loss occurred in course of business--Loss allowable--Income-tax Act, 1961-- CIT v. Spencers and Co. Ltd. (No. 3 ) (Mad) . . . 644

Penalty --Concealment of income--General principles--Addition to income agreed to by assessee--Not a proof of concealment of income--Concealment discovered in appellate proceedings--Penalty proceedings should be initiated by appellate authority--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Manjunatha Cotton and Ginning Factory (Karn) . . . 565

----Concealment of income--Search and seizure--Expenses on renovation of residence--Assessee admitting expenses out of business income but expenses not reflected in books of account--Immunity from penalty--Scope of clause (2) of Explanation 5 to section 271(1)(c)--Sufficient if disclosure is made and tax is paid before completion of assessment--Assessee need not specify manner in which income was earned--Tribunal deleting penalty justified--Income-tax Act, 1961, s. 271(1)(c), Expln. 5(2) -- CIT v. Sidh Nath Goel (All) . . . 481

----Concealment of income--Search and seizure--Immunity from penalty under Explanation 5 to section 271(1)(c)--Scope of clause (2) of Explanation 5 to section 271(1)(c)--No return filed under section 153A--Amount surrendered in revised return-- Explanation 5 to section 271(1)(c) not applicable--Imposition of penalty--Valid--Income-tax Act, 1961, ss. 132, 153A, 271(1)(c)-- Shourya Towers P. Ltd. v. Deputy CIT (Delhi) . . . 523

Precedent --Effect of decision of Supreme Court in Mohd. Ayub v. State of U. P. [2009] 17 SCC 70-- Gujarat State Plastic Manufacturers Association v. Deputy Director of Income-tax (Exemption) (Guj) . . . 516

Recovery of tax --Garnishee proceedings--Assessee must be given opportunity to be heard--Income-tax Act, 1961-- Amul Research and Development Association v. ITO (Guj) . . . 549

----Reduction of period for payment of tax--Condition precedent--Reason to believe grant of full period would be detrimental to Revenue and prior permission of Joint Commissioner--Budget deficit of Income-tax Department--Not a ground for reduction of period--Prior permission of Joint Commissioner not obtained--Order of reduction of period--Not valid--Income-tax Act, 1961, s. 220-- Amul Research and Development Association v. ITO (Guj) . . . 549

Search and seizure --Block assessment--Generally--No requirement that every seized document should be corroborated--Seized documents can be in any form including loose papers on which notings made--Income-tax Act, 1961, ss. 132, 158BC-- CIT v. Sonal Constructions (Delhi) . . . 532

----Block assessment--Validity--Appellate Tribunal--Procedural lapses on part of Assessing Officer while making assessment--Proper course not to invalidate assessment or delete additions but to remand assessment to Assessing Officer--Document pertaining to firm recovered from possession of partner--Merely because partners not examined at time of assessment, reliance on documents for making additions not precluded--Income-tax Act, 1961, ss. 132, 158BC-- CIT v. Sonal Constructions (Delhi) . . . 532

----Block assessment--Validity--No warrant in name of assessee--Block assessment not valid--Income-tax Act, 1961, ss. 132, 158BC-- CIT v. Sonal Constructions (Delhi) . . . 532

----Presumption as to seized documents--Available for purpose of block assessment--Income-tax Act, 1961, s. 292C-- CIT v. Sonal Constructions (Delhi) . . . 532

Writ --Existence of alternative remedy--Appeal preferred by assessee--Not a bar for issue of writ--Constitution of India, art. 226-- Amul Research and Development Association v. ITO (Guj) . . . 549

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Constitution of India :

Art. 226 --Writ--Existence of alternative remedy--Appeal preferred by assessee--Not a bar for issue of writ-- Amul Research and Development Association v. ITO (Guj) . . . 549

Income-tax Act, 1961 :

S. 2(22)(e) --Dividend--Deemed dividend--Loan to shareholder having voting power exceeding 10 per cent.--Assessee claiming that shares settled upon trust--Trust deed created on a stamp paper four years before date of search and duly notarised--No inquiry with notary public to establish non-genuineness of trust deed--Finding of Tribunal that trust was genuine and assessee did not hold beneficial interest in company exceeding 10 per cent.--Finding of fact not perverse--No question of law-- CIT v. Krupeshbhai N. Patel (Guj) . . . 504

S. 36(1)(iii) --Interest on borrowed capital--Investment in shares utilising borrowed capital for strategic business purposes--Companies promoted as special purpose companies to strengthen and promote assessee’s existing business by combining different business segments--Interest allowable-- CIT v. Spencers and Co. Ltd. (No. 3 ) (Mad) . . . 644

S. 37 --Business expenditure--Bad debts--Amounts incurred by assessee for wholly owned subsidiary companies--Business nexus between assessee and subsidiary companies--Amount written off as bad debts--Allowable-- CIT v. Spencers and Co. Ltd. (No. 1 ) (Mad) . . . 612

----Business expenditure--Buyer’s commission--Genuineness of payment made to agent established--Commission deductible-- CIT v. E. Ramachandran (Mad) . . . 671

----Business expenditure--Disallowance--Assessee by availing of service benefits from group resource company, availing of valuable benefit, for its business operations--Payment of licence fee towards its share of actual expenses incurred by group company--Legal expenses--Retainer fee--Allowable-- CIT v. Spencers and Co. Ltd. (No. 2 ) (Mad) . . . 630

----Business expenditure--Licence fee--Deductible-- CIT v. Spencers and Co. Ltd. (No. 3 ) (Mad) . . . 644

S. 48(ii) --Capital gains--Computation--Cost of improvement--No obligation on assessee to settle claim of tenants for getting vacant possession--Compensation paid to tenants for delivering vacant possession--Not transfer of development rights but cost of improvement--Entitled to indexation benefit-- CIT v. Spencers and Co. Ltd. (No. 3 ) (Mad) . . . 644

S. 68 --Cash credits--Scope of section 68--Meaning of “any sum”--No explanation regarding particular amount--Addition of sum in excess of such particular amount--Not permissible under section 68-- D. C. Rastogi v. CIT (Delhi) . . . 513

S. 132 --Penalty--Concealment of income--Search and seizure--Immunity from penalty under Explanation 5 to section 271(1)(c)--Scope of clause (2) of Explanation 5 to section 271(1)(c)--No return filed under section 153A--Amount surrendered in revised return-- Explanation 5 to section 271(1)(c) not applicable--Imposition of penalty--Valid-- Shourya Towers P. Ltd. v. Deputy CIT (Delhi) . . . 523

----Search and seizure--Block assessment--Generally--No requirement that every seized document should be corroborated--Seized documents can be in any form including loose papers on which notings made-- CIT v. Sonal Constructions (Delhi) . . . 532

----Search and seizure--Block assessment--Validity--Appellate Tribunal--Procedural lapses on part of Assessing Officer while making assessment--Proper course not to invalidate assessment or delete additions but to remand assessment to Assessing Officer--Document pertaining to firm recovered from possession of partner--Merely because partners not examined at time of assessment, reliance on documents for making additions not precluded-- CIT v. Sonal Constructions (Delhi) . . . 532

----Search and seizure--Block assessment--Validity--No warrant in name of assessee--Block assessment not valid-- CIT v. Sonal Constructions (Delhi) . . . 532

S. 143 --Assessment--Notice under section 143(2)--Limitation--Service of notice impossible on last day of limitation--Service of notice on the very next day--Not barred by limitation-- Gujarat State Plastic Manufacturers Association v. Deputy Director of Income-tax (Exemption) (Guj) . . . 516

S. 143(2) --Assessment--Notice under section 143(2)--Service of notice--Expressions “service” and “issue” are interchangeable--Issue of notice within prescribed period--Notice valid-- V. R. A. Cotton Mills P. Ltd. v. Union of India (P&H) . . . 495

S. 153A --Penalty--Concealment of income--Search and seizure--Immunity from penalty under Explanation 5 to section 271(1)(c)--Scope of clause (2) of Explanation 5 to section 271(1)(c)--No return filed under section 153A--Amount surrendered in revised return-- Explanation 5 to section 271(1)(c) not applicable--Imposition of penalty--Valid-- Shourya Towers P. Ltd. v. Deputy CIT (Delhi) . . . 523

S. 158BC --Search and seizure--Block assessment--Generally--No requirement that every seized document should be corroborated--Seized documents can be in any form including loose papers on which notings made-- CIT v. Sonal Constructions (Delhi) . . . 532

----Search and seizure--Block assessment--Validity--Appellate Tribunal--Procedural lapses on part of Assessing Officer while making assessment--Proper course not to invalidate assessment or delete additions but to remand assessment to Assessing Officer--Document pertaining to firm recovered from possession of partner--Merely because partners not examined at time of assessment, reliance on documents for making additions not precluded-- CIT v. Sonal Constructions (Delhi) . . . 532

----Search and seizure--Block assessment--Validity--No warrant in name of assessee--Block assessment not valid-- CIT v. Sonal Constructions (Delhi) . . . 532

S. 220 --Recovery of tax--Reduction of period for payment of tax--Condition precedent--Reason to believe grant of full period would be detrimental to Revenue and prior permission of Joint Commissioner--Budget deficit of Income-tax Department--Not a ground for reduction of period--Prior permission of Joint Commissioner not obtained--Order of reduction of period--Not valid-- Amul Research and Development Association v. ITO (Guj) . . . 549

S. 245R(2) --Authority for Advance Rulings--Jurisdiction--Authority admitting application for purposes of giving ruling--Cannot at final hearing refuse to give a ruling on ground of suspicion that an illegality had taken place-- Mahindra BT Investment Co. (Mauritius) Ltd. v. Director of Income-tax (International Taxation) (Bom) . . . 485

S. 260A --Appeal to High Court--Powers of court--Findings of fact--When can be disturbed-- CIT v. Sonal Constructions (Delhi) . . . 532

S. 271(1)(c) --Penalty--Concealment of income--General principles--Addition to income agreed to by assessee--Not a proof of concealment of income--Concealment discovered in appellate proceedings--Penalty proceedings should be initiated by appellate authority-- CIT v. Manjunatha Cotton and Ginning Factory (Karn) . . . 565

----Penalty--Concealment of income--Search and seizure--Immunity from penalty under Explanation 5 to section 271(1)(c)--Scope of clause (2) of Explanation 5 to section 271(1)(c)--No return filed under section 153A--Amount surrendered in revised return-- Explanation 5 to section 271(1)(c) not applicable--Imposition of penalty--Valid-- Shourya Towers P. Ltd. v. Deputy CIT (Delhi) . . . 523

S. 271(1)(c), Expln. 5(2) --Penalty--Concealment of income--Search and seizure--Expenses on renovation of residence--Assessee admitting expenses out of business income but expenses not reflected in books of account--Immunity from penalty--Scope of clause (2) of Explanation 5 to section 271(1)(c)--Sufficient if disclosure is made and tax is paid before completion of assessment--Assessee need not specify manner in which income was earned--Tribunal deleting penalty justified-- CIT v. Sidh Nath Goel (All) . . . 481

S. 292C --Search and seizure--Presumption as to seized documents--Available for purpose of block assessment-- CIT v. Sonal Constructions (Delhi) . . . 532