Digest of important case law – December 2012

S. 2(14): Definitions– Capital asset –Capital gains- Agricultural land – Land situated beyond prescribed municipal limit and recorded as agricultural land in revenue record is to be considered as agricultural land until proved otherwise. (S.45)
It was held that there is no requirement in Act that only self cultivated land would be treated as agricultural land. For purposes of land being agricultural land, actual agricultural operation or cultivation or tilting of land is always not necessary. Thus, land situated beyond prescribed municipal limit and recorded as agricultural land in revenue record is to be considered as agricultural land until proved otherwise. Tehsildar is most competent revenue officer to certify proof of agricultural operation, distance of land from particular place, rate of land etc. (AY 2008-09)
ITO v. Ashok Shukla (2012) 139 ITD 666 (Indore) (Trib.) 

S.2(22)(e): Definitions- Dividend- Deemed dividend – Loans or advances –Director holding 10 percent voting power addition is held to be justified.
Assessee took an unsecured loan from a company in which he was a director and was holding 10 per cent voting power. He submitted that substantial part of business of said company was of money lending. However, Assessing Officer made addition under section 2(22)(e). It was held that since said company had not obtained requisite permission to carry on money lending business and major part of loan was advanced to assessee, addition under section 2(22)(e) was justified. (AY 2008-09)
Krishna Gopal Maheshwari v. ACIT (2012) 139 ITD 656 (Agra)(Trib.)

S.4: Charge of Income- tax-Addition-Appropriation of profit-Sale of sugar at concessional rate by Co-operative society- Matter remanded  back to the Commissioner (Appeals). (S.37(1)
The assessee is a co-operative society engaged in the business of production of sugar cane and sale thereof . Assessee buys sugarcane from its members. Every month and on Diwali assessee sells certain quantity of sugar (Final product) at concessional rate to farmers /cane growers /members . The difference between the average price of sugar sold in the market and the price of sugar sold by the assessee to its members at concessional rate is sought to be taxed by the department under the head ‘appropriation of profit’. When the matter came before the Supreme Court by revenue the Supreme court set aside the matter the Commissioner (Appeals) to consider on what basis the quantity of sugar is being fixed for sale to farmers /cane growers/members each year on month to-month , apart from Diwali. Whether the aforesaid practice of selling sugar industry and whether any resolution has been passed by the State Government supporting this practice.
CIT v. Krishna Sahakari Sahakar Karkhana Ltd and Ors ( 2012) 80 DTR 298/ 254 CTR 638 (SC).
Editorial: From the judgment  and order dated 30 the June, 2009 of the Bombay High Court ITA NO 225  of 2007 

S.4: Charge of Income- tax- Income-Mutuality- Interest-Interest earned by a mutual association from deposits placed with member banks is not exempt on the ground of “mutuality”.
 The assessee, a mutual association, claimed that the interest earned by it on fixed deposits kept with the bank (which was a corporate member) was not taxable on the basis of mutuality. The AO rejected the claim though the CIT(A) and Tribunal upheld the claim. The High Court reversed the Tribunal and upheld the stand of the AO. On appeal by the assessee to the Supreme Court, held dismissing the appeal:

For a receipt to be exempt on the principles of Mutuality, three conditions have to be satisfied. The first is that there must be a complete identity between the contributors and participators. The second is that the actions of the participators and contributors must be in furtherance of the mandate of the association. The third is that there must be no scope of profiteering by the contributors from a fund made by them which could only be expended or returned to themselves. On facts, though the interest was earned from banks which were corporate members of the club, it was not exempt on the ground of mutuality because (i) the arrangement lacks a complete identity between the contributors and participators. With the funds of the club, member banks engaged in commercial operations with third parties outside of the mutuality, rupturing the ‘privity of mutuality’, and consequently, violating the one to one identity between the contributors and participators, (ii) the surplus funds were not used in furtherance of the object of the club but were taken out of mutuality when the member banks placed the same at the disposal of third parties, thus, initiating an independent contract between the bank and the clients of the bank, a third party, not privy to the mutuality & (iii) The Banks generated revenue by paying a lower rate of interest to the assessee-club and loaning the funds to third parties. The interest accrued on the surplus deposited by the club like in the case of any other deposit made by an account holder with the bank. A façade of a club cannot be constructed over commercial transactions to avoid liability to tax. Such setups cannot be permitted to claim double benefit of mutuality.
Bangalore Club v. CIT (SC) www.itatonline.org.

S.4: Charge of Income-tax-Mutuality–Interest on fixed deposits with member banks is taxable.
As per the club rules, a corporate member like a bank was entitled to nominate their whole time directors, or full time senior executives, as members. It was held that when a company itself becomes a member of a club to the extent of making contribution it is responsible, but when it comes to participation and availment of facilities and privileges it is not the juridical person but it is only the nominated officers of the company who do so.  There is thus a discernible factor which takes away the nexus between contribution and participation. It further held that there is also a dichotomy between the juridical personality who contributes to the club and the nominees (who can be changed) who actually avail of facilities and receive benefits from the club activities.  An important facet of the principle of mutuality is not only the identity of the contributors of and the recipients from, the fund, but also the right to be returned the contribution in the event of the aggregate of members getting dissolved. If the continuance of the original contributors till the end, or till the achievement of the objects for forming the association or society/club is uncertain, the principle of mutuality ceases to apply.  Further, when a person deposits money in a bank, the relationship is that of a creditor and a debtor, and they would be bound by the contract that regulates the deposit and payment of interest thereon.  Principle of mutuality ends the moment the club deposits the amount with the sole aim of earning interest on the deposits. Further, by depositing its funds with its corporate member banks, the club would certainly help increase the business of the bank. In that view of the matter, the corporate member bank is being shown a favour, and is not being provided a facility.  Therefore, it was held that interest on fixed deposits with banks was taxable. (A.Ys. 1996-97, 1998-99 to 2001-2002)  

CIT v. Secunderabad Club (2012) 254 CTR 163 (AP)(High Court)
CIT v. Armed Forces Officer’s Co-Operative Housing Society Ltd. (2012) 254 CTR 163 (AP)(High Court)

S.4: Charge of Income- tax – Principle of mutuality – Nostro and overseas accounts with head office, neither interest income taxable, nor interest expenditure allowable.
Assessee-bank maintained Nostro and overseas accounts with head office and branches outside India. It was held that on principle of mutuality neither interest income was taxable nor interest expenditure was allowable. (AY 1998-99 to 2000-01)
Asst. DIT (IT) v. Credit Lyonnais (2012) 139 ITD 681 (Mum.)(Trib.)

S. 4: Charge of Income- tax – Principle of mutuality –Deduction at source- Mere deduction of tax at source by members making payment, not lead to conclusion that receipt was taxable and section  28(iii) held to be  not applicable.(S.28(iii) )
Assessee-institution which was formed by tenants of a building, was working for common interest of its members. It claimed tax exempt status on ground of mutuality.  The Assessing Officer declined its claim. It was held that as long as services were rendered to members, even for a remuneration, same could be covered by principle of mutuality. Mere deduction of tax at source by members making payment could not lead to conclusion that receipt was taxable in nature. Thus, section 28(iii) had no application as it comes into play only when there is an ‘income’ derived by assessee but no income can be arise in case of mutuality. (A.Y. 2006-07)
Belvedere Estates Tenants Association v. ITO (2012) 139 ITD 675 (Kol.)(Trib.)

S.4: Charge of income-tax- Income-Sales tax subsidy-Capital receipt.
Sale tax subsidy from Government of Maharashtra under Sales Tax Subsidy Scheme of 1993  was held to be capital receipt not liable to tax(A.Y. 2005-06, 2006-07)
DCIT v. Indo Rama Textiles Ltd. (2012) 53 SOT 515 ( Delhi) (Trib.)

S.6: Residence in India-Residential status-Less than 180 days-Date of arrival was to be excluded  as it was not complete day.
 Assessee had received salary in India as employee of T and also he worked on rig outside India . Assessee filed loss return as non-resident – Assessee’s passport revealed that assessee had arrived seven times in India and stayed for 187 days during relevant financial year – Assessing Officer considered assessee as resident and brought his salary to tax – Commissioner (Appeals) found that assessee generally arrived late in night after completing his work abroad and attended to work next day and generally left early in morning so as to attend work again after arriving at destination . He held that such days of arrival was to be excluded and by doing so assessee’s staying was less than 180 days in India .Date of arrival was to be excluded as it was not complete day, thus, assessee would be a non-resident and, hence, his salary could not be brought to tax in India (2007-08) 
ITO v.Fausta C. Cordeiro (2012) 53 SOT 522 ( Mum) (Trib.)

S.9(1)(vii): Income deemed to accrue or arise in India-Fees for technical services- Reimbursement of expenses -DTAA-India-UK  (S.40(a)(ia), 195,  Art. 13)
Abbey UK entered into an outsourcing agreement with an Indian company. As per the agreement   services provided by Abbey UK were outsourced to Indian Company .To facilitate outsourcing agreement, a secondment agreement was entered into by Abbey UK with assessee which was its Indian group company. Under said agreement trained staff of Abbey UK was seconded to assessee. Under terms of secondment agreement, Abbey UK remained as employer of secondees – Abbey UK bore all expenses in relation to secondees and assessee reimbursed all such expenses to Abbey UK .Assessing Officer disallowed deduction of said expenditure by invoking section 40(a)(i) on ground that assessee was liable to deduct tax at source under section 195 on such payment, as said payment was made for receiving ‘managerial service’ from secondees, which constituted ‘fees for technical services’ under section 9(1)(vii). The Tribunal held that  since payment made by assessee to Abbey UK was pure reimbursement of expenses without any profit element, it could not be regarded as income chargeable to tax in hands of Abbey UK. Further since agreement was for secondment of employees only, it could not tantamount to rendering of technical services and, therefore, reimbursement made could not be categorised as fees for technical services. (A. Y 2005-06 & 2006-07)
Abbey Business Services (India) (P.) Ltd. v. DCIT (2012) 53 SOT 401(Bang.)(Trib.)

S.9(1)(vii): Income deemed to accrue or arise in India –Royalty.
Assessee-Government undertaking was engaged in transporting coal from one port to another port. For said purpose, assessee was using its own vessels as well as hiring vessels from foreign companies .Payment made by assessee as hire charges was royalty and hence, on facts, provisions of section 9(1)(vi) were attracted(A.Y.2002-03 to 2004-5 , 2006-07)]
Poompuhar Shipping Corpn. Ltd. v. ADIT (International Taxation) (2012) 53 SOT 451(Chennai)(Trib.)

S. 10(23C): Exempt incomes- Educational institution –Approval cannot be refused for alleged irregularities in the books of accounts when the books were audited every year. 
Assessee society engaged in imparting education and running school sought approval under section 10(23C)(vi). DGIT(E) found that there were serious irregularities in books of account of assessee which related to payment made by assessee in connection with annual day celebration of school and accordingly, denied approval. The Court held that  since books of account of assessee were audited every year and all payments were made through cheques and bank statements were also produced before DGIT(E), such crucial facts were not rightly ignored by DGIT(E).Therefore, impugned order passed by DGIT(E) refusing to grant approval to assessee under section 10(23C)(vi) was to be quashed and set aside. (A.Ys.2008-09 to 2010-11)
Mahavira Foundation v .DCIT (2012) 210 Taxman 548( Delhi)(High Court)

S.10(23C): Exempt income-Educational institution-Matter remanded for fresh consideration to decide the exemption considering the facts of relevant year. 
Petitioner, a Horticulture Board, claimed exemption under section 10(23C) – It filed complete information with audited accounts for Assessment year 2010-11 and submitted that balance sheet for assessment year 2011-12 was under compilation. However, CCIT denied exemption on account of non-filing of relevant accounting documents and denial of exemption in earlier years. It was discerned from records that petitioner stopped charging processing fees from 1-2-2000, which was ground for denial of exemption in earlier years and that impugned order being dated 26-4-2011 for assessment year 2011-12, time for getting accounts audited and file balance sheet was still available. The Court held that since CCIT had failed to consider these factors, his order could not be legally sustained hence the matter remanded. (A.Y. 2011-12 to 2013-14)
National Horticulture Board v Chief CIT (2012) 210 Taxman 555 (Punj. & Har.)(High Court)

S.10A: Newly established undertakings-Free trade zone-Reimbursement of expenses incurred in obtaining ISO certification, relating to rent satellite charges, printing, stationery  corporate charges paid  form  sister concern  is  entitled to exemption.
The assessee was engaged in the business of manufacture and export of computer software. It spent a sum of Rs. 23,52,000 in obtaining ISO quality certification. 50 per cent. of this expenditure was reimbursed by the Exim Bank. The Tribunal found that the total expenses incurred by the assessee were much higher, namely, Rs. 23,52,000, which sum was allowable as expenditure and, therefore, the grant being 50 per cent. of the expenses incurred in obtaining the ISO quality certification would qualify for exemption under section 10A of the Income-tax Act, 1961. The assessee incurred certain expenses on behalf of its sister concern. The expenses were reimbursed in the form of corporate charges. Similarly, the assessee was also reimbursed for the use of work stations belonging to the assessee for and on behalf of its sister concern. The Tribunal held that what was received by the assessee was by way of reimbursement of expenses and that since the expenses were debited to the profit and loss account and while computing the profits of the eligible undertaking, the profits were reduced to the extent of expenses, the amount received by way of reimbursement of expenses could not be reduced from the profits of business of the eligible industrial undertaking. The Tribunal directed the Assessing Officer not to reduce the profits of business by the amount of Rs. 20 lakhs received by way of corporate charges and Rs. 9,00,250 received by way of reimbursement recovered for use of work stations. On appeal by revenue High Court confirmed the order of Tribunal.  (A. Y. 1999-2000)
CIT v.Perot Systems TSI India Ltd. [2012] 349 ITR 563(Delhi) (High Court)

S.10B: Export oriented undertakings-Software development-Registration –Exemption was allowed.
The assessee-company was engaged in software development. The Assessing Officer rejected the assessee’s claim for exemption under section 10B for reasons that the assessee-company had failed to comply with the requirement of filing audit report with form 56G and, moreover, the assessee failed to produce the attested copy of the bills raised from STPI and customs authority, copy of Softex Forms, copy of STPI registration for which software development it was registered and details of software developed by it.  In appeal the Commissioner (Appeals) opined that the assessee-company was given approval as an STPI unit on 3-1-2006 and had carried out the business of development/manufacture and export of computer software/IT enabled services from 1-2-2006.  Therefore, based on the CBDT Circular No. 1/2005, dated 6-1-2005 and the details filed by the assessee which were also filed at the assessment stage, the assessee-company qualified as an eligible unit for exemption under section 10B with effect from 1-2-2006. He, therefore, directed Assessing Officer to carefully verify the computation with regard to their accuracy and authenticity and allow exemption under section 10B on the profits, if any derived for the period 1-2-2006 to 31-3-2006 as per law. On revenue’s appeal The Tribunal held that, where it was found that assessee-company’s EOU was given approval as STPI unit and it had carried out business of development/manufacture and export of computer software/IT enabled services, assessee’s claim for deduction under section 10B was to be allowed. [A. Y. 2006-07] 
ITO v. RSG Media (P.) Ltd. (2012)53 SOT 588 (Delhi) (Trib.)

S.11: Charitable or religious purpose-Donation-Cheque-Handing over date-Payment by post-dated cheque relates back to date of handing over of cheque and there is no violation [S.13 (2)(h)].
In the year ended 31.3.2002, the assessee, a charitable trust eligible for exemption u/s 11, received a post-dated cheque dated 22.4.2002 from Apollo Tyres Ltd for which it issued a receipt. The AO held that the post-dated cheque had been accepted by the assessee to do undue favour to Apollo Tyres, whose directors were trustees of the assessee and that there was a violation of s. 13(2)(d)(h), and that s. 11 exemption had to be denied. This was reversed by the Tribunal and the High Court on the ground that as the post dated cheque was given before 31.3.2002 and was duly honoured in April, 2002 when it was presented before the bank, the date of payment of the cheque should be treated as the date on which the cheque was received by the assessee. On appeal by the department to the Supreme Court, held  dismissing the appeal:

Though the assessee trust issued a receipt in March 2002 when it received the cheque dated 22.4.2002, it was clearly stated in its record that the amount of donation was receivable in future and it was shown as donation receivable in the balance sheet as on 31.3.2002. Also Apollo Tyres Ltd did not avail any advantage of the said donation during the FY 2001-2002. When a post-dated cheque is issued, it will have to be presumed that the amount was paid on the date on which the cheque was given to the assessee and, therefore, it cannot be said that any undue favour was done by the assessee to Apollo Tyres Ltd. A cheque, unless dishonoured, is payment (CIT v Ogale Glass Works Ltd. (1954) 25 ITR 529 (SC) followed)
CIT  v. Raunaq Education Foundation (SC) www.itatonline.org

S.11: Charitable purposes  or religious purpose – Application of income-Depreciation-Adjustment of expenditure of earlier year against income of current year, amounts to application of income for charitable purpose-and Trust entitled to exemption. Entitled  to depreciation.(S. 32) 
As per   section 11(1)(a) of the Act when the income of the trust is used or put to use to meet charitable or religious purposes, it is applied for charitable purposes and the application of the income for charitable or religious purposes takes place in the year in which the income is adjusted to meet the expenses incurred for charitable or religious purposes. Thus, even if the expenses for charitable and religious purposes have been incurred in the earlier year and the expenses are adjusted against the income of a subsequent year, the income of that year can be said to have been applied for charitable and religious purposes in the year in which expenses incurred for charitable and religious purposes had been adjusted. There are no words of limitation in section 11(1)(a) of the Act explaining that the income should have been applied for charitable or religious purposes only in the year in which the income had arisen. Charitable trust is  held to be entitled depreciation.  (A.Ys. 2004-2005 to 2006-2007)
CIT  v.Gujrati Samaj (Regd.) 2012] 349 ITR 559(MP )(High Court)

S.11: Charitable or religious trust –Person- Exemption of income from property (S. 2(15), 2(31), 12, 13)
 Definition of ‘person’ under section 2(31) includes legal authority but not Government itself. Assessing Officer withdrew from assessee society benefit under section 11 on ground that main donor of assessee society was State Government of Andhra Pradesh and application of receipts included expenses towards supply of equipments to Government hospitals. Government could not be said to have been benefited by machines out of its own grant and benefit actually accrued to general public at a large, entitling assessee to benefit of section 11.Exemption under section 11 could not be denied to assessee merely because it was not registered under A.P. Charitable & Hindu Religious Institutions and Endowments Act, 1987 since provisions of sections 2(15), 11 to 13 no where refer that charitable institution to be eligible for exemption under section 11 should also be registered under any other Act for time being(A.Y 2004-05)
DCIT v Andhra Pradesh Right to Sight Society (2012)53 SOT 480 (Hyd.)(Trib.)

S.11: Charitable or religious trust – Exemption of income from property held-Application of income should be in India.
Requirement of section 11(1)(a) is that income of trust should be applied for charitable purposes, and it should be applied in India. Amounts spent by assessee-trust outside India for participating in a fair held in Germany could not be treated as application of income of trust for purpose of section 11(1)(a) and were rightly disallowed (A.Y 2007-08)
India Brand Equity Foundation v. ACIT (2012) 53 SOT 506 (Delhi) (Trib.)

S.11: Charitable or religious purposes- Income from management development program, hiring premises is eligible for exemption.

1. Income from management development program earned by educational institute considered as eligible for exemption;
2. Income from hiring premises and advertisement rights since applied for educational activities eligible for exemption;
3. Claim for depreciation on fixed assets, the cost of which was allowed as application of income, allowed. The tribunal observed that the assessee was not claiming double deduction on account of depreciation as has been held by the AO. According to it, the income of the assessee being exempt, the assessee was only claiming that depreciation should be recued from the income for determining the percentage of funds which have to be applied for the purpose of Trust. Thus, there was no double deduction claimed by the assessee..(A.Y. 2008 – 2009)

ADIT  v. Shri Vile Parle Kelvani Mandal, Mumbai ITAT, ITA No. 7106/Mum/2011,  Dt. 05-10-2012, BCAJ Pg. 26, Vol. 44-B Part 2, November, 2012(Mum)(Trib.)

S.11: Charitable or religious purposes- Depreciation is treated as application of income-   Receipt of loan  does not  invite denial of exemption- Repayment of loan will amount application of income.

1. Claim for depreciation on fixed assets is treated as application of income;
2. Receipt of loan in violation of the Bombay Public Trust Act does not invite denial of exemption u/s. 11;
3. Repayment of loan originally taken for the objects of the trust will amount to an application of income.

Dy.DIT v. G.K.R. Charities, Mumbai ITAT, ITA No.8210/Mum/2010, Dr. 10-08-2012 A.Y. 2007 – 2008., (2012) BCAJ Pg. 26, Vol. 44-B Part 3, December, 2012(Mum.)(Trib.)

S.12A: Trust or institution- Charitable purpose- Registration CIT/Director is not required to examine whether the trust has actually in fact carried on charitable activities .(S.12AA)
It was held that statute does not prohibit or enjoin the CIT from registering trust solely based on its objects, without any activity, in the case of a newly registered trust. Hence, while examining the application u/s. 12AA(1)(b) r/w/s 12A, the CIT/Director is not required to examine the question whether the trust has actually commenced and has, in fact, carried on charitable activities.
DIT v. Foundation of Opthalmic and Optometry Research Education Centre (2012) 254 CTR 133 (Delhi)(High Court)

S.12A: Trust or institution-Registration-Charitable purposes-Promoting networking facilities is eligible for exemption.
Assessee Company was incorporated u/s 25 of the Companies Act, 1956. The main object of the Assessee was to promote networking facilities to the CEOs for improving the quality and profitability of their enterprises, by providing a platform for CEOs for exchange of ideas and promotion of entrepreneurship through shared experience in India. The prosperity would also be shared by those who engaged in the trade, commerce and industry, but on that account, the purpose is not rendered any less an object of general public utility. The Tribunal held that reasons assigned by the DIT for rejecting the assessee’s application for registration cannot be sustained.
XYZ v. DIT (Exem), Mumbai Tribunal, ITA No. 3503/M/2011, Dt. 13.06.2012,(2012) BCAJ Pg. 27, Vol. 44-B Part 1, October 2012(Mum.)(Trib.)

S.12AA: Charitable or religions trust – Registration (S.11).
Depreciation on assets debited in books of account, will be allowable in computing application of income for purpose of granting registration under section 12AA(1)(A.Ys 2004-05 , 2005-06)
ITO v. Krishi Upaj Mandi Samiti (2012) 53 SOT 500 (Jaipur)( Trib.)

S.12AA: Charitable or religious purpose-Registration-Maintenance and development of park. [S.2(15)]
Assessee-society carried on activity of maintenance and development of park, said activity would y fall within words ‘preservation of environment’ under section 2(15) and, thus, assessee was entitled to registration under section 12AA (A.Y. 2011-12)
New Saibaba Nagar Welfare Association v. DIT (Exemption) (2012) 53 SOT 495 (Mum)(Trib.)
S.14A: Expenditure disallowance- Exempted income- Dividend–Restricting disallowance to Rs. 50,000 was reasonable.
The Assessing Officer disallowed an amount of Rs. 20,53,048 being 5 per cent of the dividend income of Rs. 4,10,60,955. On appeal, the assessee contended that there was no interest expenditure for earning the tax-free dividend/income. Further it was also the submission of the assessee that only 5 dividend cheques totalling to Rs. 4,10,60,759 were received and therefore disallowance of 5 per cent of the total income on estimate basis was unjustified. The Commissioner (Appeals) restricted such disallowance to Rs. 50,000 on the ground that the ad hoc disallowance at the rate of 5 per cent of the dividend income was too high. On revenue’s appeal , the Tribunal held that restricting disallowance to Rs 50000 was held to be reasonable .(A.Y.1999-2000]
Kirloskar Oil Engines Ltd. v. Dy. CIT (2012) 54 SOT 201(Pune)(Trib.)

S.26: Income from house property-Owned by co-owners-  Income from other sources–Rent received from letting out plinths- and not house property is assessable as income from other sources-.[S.2(31). 22, 56]
The court held that the rent received from letting out the plinths was assessable under section 56 of the Income-tax Act, 1961, and, therefore, the provisions of section 26 have no applicability. (A.Y.2004-2005 )
Sudhir Nagpal v.ITO [2012] 349 ITR 636 ( P & H) (High Court)    

S.28(i): Business income-Sale Proceeds of TDR – Project completion method.
In case of assessee following project completion method, sale proceeds of TDR allotted consequent to development of road need to be reduced from WIP.(A.Y. 2006-07)
ITO v. DKP Engineers & Construction P. Ltd., Mumbai ITAT, ITA No. 7796/M/2010, dt. 31-08-(2012) BCAJ Pg. 28, Vol. 44-B Part 2, November, 2012(Mum.)(Trib.)
S.28(i): Business income – Business loss – Confiscation of stock of silver allowable as business loss. 
Amount written off by assessee, a jeweler, on account of confiscation of stock of silver by the customs authorities is allowable as business loss. In view of the CEGAT’s order the issue of loss stood crystallized in the year under consideration.(A.Y.1997098)
Rajmal Lalchichand v. AICT (2012) 150 TTJ 111 (Pune)(Trib.)

S.32: Depreciation-  Charitable purposes  or religious purpose –A charitable trust is entitled to  depreciation. (S.11)
Depreciation is nothing but decrease in the value of property through wear, deterioration or obsolescence and allowance is made for this purpose in book keeping, accountancy, etc. It is the exhaustion of the effective life of a fixed asset owing to "use" or obsolescence. It may be computed as that part of the cost of the asset which will not be recovered when the asset is finally put out of use. The object of providing for depreciation is to spread the expenditure, incurred in acquiring the asset, over its effective lifetime ; the amount of the provision, made in respect of an accounting period, is intended to represent the proportion of such expenditure, which has expired during that period. If depreciation is not allowed as a necessary deduction in computing the income of a charitable trust, then there would be no way to preserve the corpus of the trust. A charitable trust is, therefore, entitled to depreciation in respect of the assets owned by it. (A.Ys. 2004-2005 to 2006-2007)
CIT  v.Gujrati Samaj (Regd.) 2012] 349 ITR 559(MP)(High Court)

S. 32: Deprecation – Toll Bridge –Assessee is entitled to depreciation.
Assessee constructed toll bridge on a land provided by Government for a long lease on BOOT (Build, Own, Operate and Transfer) basis, exercised full ownership right on the road which include charging of tolls, was held to be entitled for deprecation on the toll road.  (A.Y. 2005 – 06)
CIT v. Noida Toll Bridge Co. Ltd. (2012) 80 DTR 387(2013) 255 CTR 88(All)(High Court)

S.32: Depreciation – Owner – Possession- Registration deed.-Depreciation is allowable. (Transfer of Property Act, 1882 S.53A)
The assessee was in possession of the property and had acquired interest in the said property as per section 53 A of the Transfer of Property Act, 1882, depreciation on the said property cannot be denied to the assessee merely because registered sale deed was not executed in favour of assessee. (A.Ys. 1993-94, 1995-96 to 1998-1999 & 2001-02 to 2004-05)
CIT v. Indian Sugar & General Industry Export Import (2012) 80 DTR 300 (Delhi)(High Court)

S.32: Depreciation – Rate of   depreciation-Not required to file revised return.
Assessee showed addition to machinery as an addition to ‘Plant and machinery’ in its books. However, in Form 3CD, it showed same addition as addition to ‘Building’. Assessing Officer allowed depreciation at rate of 10 per cent .The Tribunal held that to claim higher rate of depreciation, i.e., of 25 per cent, claim could be modified in original return and revised return need not be filed (A.Ys. 2005-06 to 2007-08)
Solaris Bio Chemicals Ltd. v DCIT (2012) 53 SOT 195(URO) (Delhi)(Trib.)

S.32: Depreciation –Terminal depreciation-Use of asset-For claiming terminal depreciation under section 32(1)(iii), asset must be used for purpose of business or profession.
Assessee-company, doing business of offset printing and typesetting, stopped its business and converted land and building into stock in trade  It shifted its business into new line of business being real estate development. Assessee also demolished factory building and had used factory land for putting up construction of dwelling units and sold same.  While computing its profits of real estate business assessee had taken WDV of factory building and land as terminal depreciation under section 32(1)(iii). The Tribunal held that  since assessee had converted land and factory building into stock-in-trade of new business of real estate, said assets of assessee no more survived as business assets and assessee could not be allowed terminal depreciation under section 32(1)(iii) on such assets. [A.Ys. 2006-07 & 2007-08]
DCIT v. Rajeswari Foundations Ltd.(2012) 53 SOT 569 (Chennai)(Trib.)

S.32: Depreciation – Capital expenditure on building – Depreciation was held to be allowable.
Assessee is engaged in software development. It claimed depreciation  in respect of capital expenditure incurred on building in which it carried on its business.Assessing Officer rejected assessee’s claim holding that assessee did not hold lease or other rights of occupancy in building in question as required by Explanation to section 32. The Tribunal held that,it was noticed from records that there was oral understanding between landlady and a director of company for lease of building. Moreover, various authorities like customs department and STPI had given licenses with same property as assessee’s address and  business was also started from same premises during relevant year, therefore the   assessee’s claim for deprecation was to be allowed. [A. Y. 2006-07]
ITO v. RSG Media (P.) Ltd. (2012)53 SOT 588 ( Delhi) (Trib.)

S.32(1)(iia).: Depreciation–Additional depreciation–Assets acquired after 30-9-2004-Statutory stipulation that restriction to 50 per cent. of amount allowable under section 32(1)(iia)–Assessing Officer restricting depreciation to 50 per cent held to be proper.
Clause (iia) was inserted by the Finance Act, 2002, with effect from April 1, 2003, in the second proviso to section 32(1) of the Income-tax Act, 1961. Therefore, it was imperative that on and after April 1, 2003, the claim of the assessee made under section 32(1)(iia) had to be necessarily allowable by applying the second proviso to section 32(1).Held accordingly, dismissing the appeal, (i) that when there was statutory stipulation providing for restriction to 50 per cent. of the amount allowable under section 32(1)(iia) no fault could be found with the assessing authority applying the second proviso to section 32(1) to restrict the allowability of the depreciation to 50 per cent. of the amount permissible under section 32(1)(iia) as well as that of the first appellate authority and the Tribunal in having affirmed the action of the assessing authority.( A. Y. 2005-2006 )
M. M. Forgings Ltd. v.Add. CIT  [2012] 349 ITR 673(Mad) (High Court)

S.32A: Investment allowance-Canteen-Refrigerator-Cooking range- Assessee is not entitled to investment allowance in respect of refrigerator, cooking range and fans installed in canteen.
Though the canteen may be part of production unit or factory , it cannot be said to be an “industrial undertaking” for the reason that it does not manufacture or produce any article or thing , as required under sub- clause(iii) of clause (b) of section 32A(2), therefore, assessee is not entitled to investment allowance in respect of refrigerator, cooking range and fans installed in its canteen. (A.Ys. 1978-79, 1979-80, 1985-86)
Escorts Tractors Ltd v. CIT ( 2012) 80 DTR  162/211 Taxman 38/254 CTR 467(SC)   

S.35: Scientific research expenditure – Development centre-Reference to Board is required as the Assessing Officer has not referred the matter the order of Tribunal allowing the claim was  up held. (S.43(4)).  
The assessee-company incurred expenditure of certain sum in setting up a research and development centre (R&D) at Pune for developing sophisticated versatile software products. One such product developed was MAMIS.  On such expenditure, the assessee claimed deduction under section 35. The Assessing officer disallowed the said claim on ground that no new product was developed at said centre and there was only modification in existing product to suit of the requirements of the prospective buyers. On appeal, the Commissioner (Appeals) also confirmed the order of Assessing Officer. On further appeal, the Tribunal was of the opinion that the expression ‘scientific research’ defined under section 43(4) was of wide amplitude. It accepted the assessee’s contention that the product MAMIS would ensure reduction of the process time substantially. This could be treated as a major breakthrough in the field of software processing. It concluded that the assessee had carried out scientific research in the process of developing such software and upheld the assessee’s claim for deduction under section 35. It further held that under section 35(1), the Assessing Officer could not have rejected such a claim without making a reference to the Board. On appeal  by revenue the  Court held that the (i) Tribunal itself ought not to have decided the allowability of claim under section 35 without the opinion of the prescribed authority, particularly without full discussion on the materials on record.(ii) The reference ought to have been sought by the revenue before the Board to the prescribed authority and not having done so, the Tribunal was justified in reversing the orders of the revenue authorities rejecting the assessee’s claim for deduction. Accordingly the appeals of revenue were dismissed.(  (A.Ys. 1992-93, 1993-94, 1994-95)
DCIT .v.  Mastek  Ltd(2012)210 Taxman  432 (Guj.)(High Court)

S.35: Expenditure on scientific research-Not necessary in house expenditure.
In order to allow deduction for expenses incurred on clinical drug trial, it has to be seen that such expenses are incurred in relation to scientific research carried out in in-house research and development facility, however, it is not necessary that expenditure itself on clinical drug trial should be incurred in-house. (A.Ys.2002-03, 2003-04)

Cadila Pharmaceuticals Ltd. v. ACIT (2012) 53 SOT 356 (Ahd.)(Trib.)

S.35D: Amortisation of preliminary expenses-Proposal to expand capacity of production–Expenditure on issue of shares expenditure to be amortised.
The assessee derived income from the manufacture and sale of commercial vehicles, engines and parts thereof.  The assessee claimed a sum of Rs. 14,21,52,904 being Euro issue expenditure as revenue expenditure. The assessee furnished the particulars in respect of its expenses, which amounted to a sum of Rs. 14,21,52,402. The issue document indicated the proposal of the company to invest approxi-mately Rs. 6,493 million for expanding production capacity of vehicles, parti-cularly the cargo range of vehicles. The company was also planning to invest approximately Rs. 722 million in the modernisation of its Ennore plant, in particular, the paint shop. Apart from that, a sum of Rs. 1640 million was proposed to be invested in routine capital replacement, modernisation of other existing facilities and development. The assessee pointed out that the assessee also planned capacity expansion of its units at Hosur. In the context of its proposal for expansion, the assessee claimed that it was entitled to claim deduction under section 35D. The claim was, however, rejected. The Tribunal held that the expenditure was incurred for expansion of the industrial undertaking and, hence, it qualified for deduction. As far as the qualifying amount to be considered under section 35D was concerned, the Tribunal remanded the matter to the Assessing Officer to recompute the deduction in accordance with the provisions of the Act. On appeal to the High Court :
Held, dismissing all the appeals, that the Tribunal was right in equating the proposal to expand the capacity of production with extension of industrial undertaking under section 35D. The Tribunal was right in holding that the expenses related to "Euro issue" by the assessee were entitled to be amortised under section 35D. (A. Y. 1995-1996 )   
Ashok Leyland Ltd. v.CIT [2012] 349 ITR 663( Mad) (High Court)

S.36(1)(vii): Deductions-Bad debts – Irrecoverable advances –Money lending   was part of business activity  irrecoverable debt cannot be allowed as bad debt.
The assessee was not recognised as a moneylender under any law or as a financial institution, it cannot be said that assessee is carrying on money lending activity as part of its business.  Therefore, amount advance by the assessee becoming irrecoverable cannot be allowed as bad debt under section 36 (1) (vii) of the Act.  (A.Y. 2001 – 02)
CIT v. Epsilon Advisers (P) Ltd. (2012) 80 DTR 366 (Karn.)(High Court)

S.36(1)(vii): Deductions-Bad debts–Short deduction allowable as bad debts.
Assesee  with a view to maintain customer relationship and not to loose valuable customers assessee-advertising company accepted short payments against bills raised and short payments were written off by assessee as bad debts .The Tribunal held that  write off  of the amount  was a reversal of income which was booked in excess and was borne out of a commercial consideration and therefore could not be termed as arbitrary or irrational, therefore, assessee’s claim of bad debts was to be allowed. (A.Ys. 2005-06 to 2007-08)

Hindustan Thompson Associates (P.) Ltd. v. ACIT (2012)53  SOT 389(Mum.)(Trib.)

S.37(1): Business expenditure-Research expenses of head office-Apportionment of expenses-Apportionment of expenses held to be not proper.
The assessee carries on business inter alia of manufacturing Ayurvedic medicines and ointments It has head office and four units .The head office  as well as each units have their own R&D departments equipped with a laboratory. The Assessing Officer allocated the head office expenses on the basis of proportionate turnover of various units. On appeal  Commissioner (Appeals) and Tribunal confirmed the  addition .On appeal to the High Court  the Court held that Tribunal was not justified in confirming the allocation of R&D expenses incurred by the head office among the four manufacturing units on the presumption that the expenditure so incurred is for the benefit of these manufacturing units, when in fact such research conducted had no connection with the business of said units , nor any benefit is received by them from the said research. Assessees appeal was allowed. (A.Y. 1993-94)
Zandu Pharmaceuticals Works Ltd v. CIT ( 2012) 80 DTR 322 (Bom.)(High Court). 

S.37(1): Business expenditure –Capital or revenue expenditure-Expenditure incurred for purpose of sub-division of shares for purpose of easy trading of shares in market is revenue in nature and, therefore, allowable.
The assessee incurred an expenditure of Rs. 4.12 lakh for the purpose of sub-division of its shares. It claimed same as revenue expenditure. The revenue disallowed the same by holding that it was capital in nature. The Tribunal confirmed the order of Assessing Officer by holding that the expenditure was incurred in connection with the capital structure of the company and gave the company an advantage of enduring nature.  On appeal by assessee the court held that  the expenditure admittedly was made for the purpose of sub-division of the shares. It is not even the case of the Department that by such arrangement, share capital of the assessee company in any manner increased. Such sub-division was made only for the purpose of easy trading of the shares in the market. Such arrangement, therefore, may result into some benefit for the shareholders of the company, nevertheless it is difficult to see as to how the revenue can argue that such division of shares resulted into any enduring benefit for the company.  In case of sub-division of the shares, there is no increase in the share capital of the company .Accordingly the appeal of assesessee was allowed.  (A.Y.1987-88)
G.S.F.C. Ltd. v.DCIT (2012) 210 Taxman  448(Guj.)(High Court)

S.37(1): Business expenditure – Loss on account of foreign exchange difference – Legal and professional charges – Tribunal relying on audited accounts and deleting disallowance held to be justified.
The assessee produced its audited accounts before the Assessing Officer but did not furnish the vouchers called for by the Assessing Officer in support of the audited accounts. The Assessing Officer, disallowed the loss on account of fluctuation in the rates of foreign exchange and legal and professional charges for want of supporting documents. The Commissioner (Appeals) affirmed this, but the Tribunal deleted the disallowances. The assessee having stated that the vouchers for payment of legal and professional charges being not traceable, the Tribunal took note of the fact that the assessee was continuously paying professional charges and allowed the claim to the extent on the basis of the expenditure claimed under the said head. On appeal   by the revenue the Court held that the Tribunal was justified in deleting the disallowance on foreign exchange difference. The Court also held that  merely mentioning that since such amount was paid by the assessee against the head of the legal and professional charges in other years, did not mean that this was treated to be res judicata. It was for the purpose of determination and quantification alone that the amount of previous years had been taken into account by the Tribunal which could not be said to be impermissible. Accordingly the appeal of revenue was dismissed.
CIT v.Timken India Ltd[2012] 349 ITR 546(Jharkhand) (High Court)

S.37(1): Business expenditure – Capital or revenue – Lease rent- Lease rent paid to NOIDA is allowable as revenue expenditure.
The Assessing Officer disallowed the lease rent payment of Rs. 2,04,400 to the Noida authorities treating it as capital expenditure. The Tribunal allowed it as revenue expenditure holding that the amount paid was not for acquiring any leasehold right by way of annual lease rent. Thus, the payment was for continuing to enjoy the leasehold rights. In such situation, the assessee would not acquire any new capital asset but merely maintain capital asset already acquired. Thus, the expenditure assumed the character of revenue in nature and not capital expenditure. On appeal by revenue the order of Tribunal was up held. (A.Y. 1999-2000)
CIT v.Perot Systems TSI India Ltd. [2012] 349 ITR 563(Delhi) (High Court)

S.37(1): Business expenditure-Capital or revenue expenditure-Payment to employees under voluntary retirement scheme for periods prior to introduction of section 35DDA held to be allowable as revenue expenditure. (S.35D)
Court held, that the assessee  is entitled to deduction of the expenditure of Rs. 66,75,665 incurred by way of payments to employees who took retirement under the voluntary retirement scheme during the previous year relevant to the assessment year .Accordingly the order of Tribunal was up held. (A.Y. 1999-2000)
CIT v.O. E. N. India Ltd. [2012] 349 ITR 554(Karn.)(High Court)
Editorial:  Section 35DDA with effect from April 1, 2001-Obiter dicta : Section 35DDA is virtual declaration of the fact that expenditure incurred under the voluntary retirement scheme should not be allowed as a revenue expenditure in one year and it is in the nature of a capital expenditure to be amortized in the course of a few years. Therefore, even for the period prior to the introduction of section 35DDA with effect from April 1, 2001, the assessee would be entitled to claim deduction of expenditure incurred under the voluntary retirement scheme only in a phased manner in the course of a few years which has to be rationally fixed by the assessee by making accounting entries.
 S.37(1): Business expenditure-Current repairs-Capital or revenue expenditure-Tests. (S.30)

Precise rules for distinguishing capital expenditure from revenue expenditure cannot be formulated. The line of demarcation is thin. Certain broad tests have, however, been laid down. Each case turns on its own facts. The aim and object of the expenditure would determine the character of the expenditure whether it is a capital expenditure or a revenue expenditure. When an expenditure is made for acquiring or bringing into existence an asset or an advantage for the enduring benefit of the business, it is properly attributable to capital and is of the nature of capital expenditure.

Amount spent on providing wooden partition, painting of leased premises, carrying out repairs so as to make premises workable, to replace glasses is held to be revenue expenditure. Expenditure on electricity and civil works and interior decoration, matter remanded to find out nature of expenditure. (A.Y.1995-96)

CIT v.H. P. Global Soft Ltd. 2012] 349 ITR 462 (Karn.) (High Court)

S.37(1): Business expenditure – Capital or revenue –Lease premium for 90  years   capital expenditure.
Lease premium paid in addition to the rent paid for acquiring a long lease for a period of 90 year with the permission to construct a office complex could not be allowed as revenue expenditure by amortization over the period of lease. (A.Y. 2004 – 05)
Krishak Bharati Co – operative Ltd. v. Dy. CIT (2012) 80 DTR 264 (Delhi)(High Court)

S.37(1): Business expenditure – Provision –Wages –Based on  past experience is allowable.
Provision for wage revision based on past experience, previous Pay Commission reports of public sector employees, union demands and other relevant factors the same cannot be disallowed as contingent liability.  ( A.Ys. 1988 – 89 & 1998 – 99)
CIT v. Bharat Heavy Electrical Ltd. (2012) 80 DTR 7 (Delhi)(High Court)

S.37(1): Business expenditure – Capital or revenue expenditure – Entertainment expenses – Omission of S. 37(2) –Once Legislature deleted certain artificial disallowances, those cannot be again covered by  the Assessing Officer u/s 37(1). [S.37(2)] 
The Assessing officer disallowed entertainment expenses despite omission of section 37(2) with effect from 1-4-1998. He held that such disallowances hitherto included in section 37(2A) would henceforth be covered under section 37(1). It was held that importing of crux of section 37(2) by Assessing Officer in section 37(1), was obviously not mandate of omission of provision. Hence once Legislature has deleted certain artificial disallowances, those cannot be again covered by Assessing Officer in section 37(1). Therefore, disallowance made by Assessing Officer was not justified. (A.Ys. 1998-99 to 2000-01)
Asst. DIT (IT) v. Credit Lyonnais (2012) 139 ITD 681 (Mum.)(Trib.)

S.37(1):Business expenditure – Prior period expenses-Held to be not allowable.
Assessee claimed deduction in respect of audit fee and purchase of raw material – Assessing Officer rejected assessee’s claim holding that said expenses were prior period expenses. Tribunal held that as regards audit fee, since audit was carried out in earlier years, even if bill was not received in previous year, expenses should have been considered in respective year and hence deduction was not allowable in year under consideration. As regards raw material cost, since assessee failed to bring any material on record to show in support of its case that there was any dispute regarding payment to be made to supplier and said dispute was settled in relevant year, no case was made out for deduction, hence disallowance was held to be justified. (A.Ys. 2002-03, 2003-04)

Cadila Pharmaceuticals Ltd.  v. ACIT(2012) 53 SOT 356 (Ahd.)(Trib.)

S.37(1): Business expenditure – Debentures-Interest-Held to be allowable.
Assessee-company issued optionally convertible debentures to another company – Assessee had debited interest on debentures in profit and loss account and claimed deduction of same. OCDs had been converted to equity shares of assessee-company. The Tribunal held that interest on debentures could not be treated as contingent liability and accordingly, same was to be allowed. Whether debentures , fully or partly or optionally (OCDs) are noting but debt till date of conversion and any interest paid on these debentures  is allowable as normal business expenditure.A.Y.2008-09)

DCIT v. UAG Builders (P.) Ltd. (2012) 53 SOT 370 (Delhi)( Trib.)

S.37(1): Business expenditure –Business activities or rental income-Matter was set aside for verification. [S.24(b)] 
Assessee claimed deduction of expenses of certain amount under head ‘business expenditure’ Tribunal held that since no material was brought on record indicating fact that assessee had carried out business activities and assessee had only shown rental income against which only expenses enumerated in section 24(b) could be allowed, claim of assessee could not be allowed. The Assessee  also claimed financial expenses and alleged that interest bearing funds were used for raising construction. Claim was rejected on ground that assessee failed to establish as to how interest bearing funds were used for raising construction, which enabled assessee to earn rental income. Assessee filed a bank certificate contending that it had raised unsecured loans from individuals for construction and those loans were repaid by taking a term loan from bank. It was held that revenue authorities had failed to look into accounts of assessee for earlier years and, therefore, it was appropriate to set aside these issues to file of Assessing Officer for verification and re-adjudication.(A. Y. 2008-09]

Rare Garments (P.) Ltd. v. ACIT(2012) 53 SOT 374(Delhi)(Trib.)

S.37(1): Business expenditure-New line of business-Development cost of earlier business which was discontinued is not allowable as revenue expenditure.
Assessee-company, doing business of offset printing and typesetting, it developed land and constructed factory in it. Land and building became part of business assets. Later on assessee shifted its business into new line of business being real estate development and converted land and building into stock in trade. Assessee demolished factory building and had used factory land for putting up construction of dwelling units and sold same. Assessee claimed that development cost incurred earlier for land portion was now to be allowed as business expenditures. Since business in respect of which said development cost had been incurred was discontinued, same could not be claimed as revenue expenditure in respect of another business being real estate business. Held in  favour of revenue. [A.Y. 2006-07 & 2007-08]
DCIT v. Rajeswari Foundations Ltd.(2012) 53 SOT 569 (Chennai)(Trib.)

S.37(1): Business expenditure –Travelling expenses –Director-Expenditure to attend board meeting held to be allowable as business expenditure.
Travelling expenses were incurred by assessee-company on travel of its director so as to enable him to attend Board meetings and to file various documents before various authorities, assessee’s claim for deduction was to be allowed. [A.Y. 2006-07]
ITO v. RSG Media (P.) Ltd. (2012)53 SOT 588 ( Delhi) (Trib.)

S.37(1): Business expenditure – Year of deduction- Commission-Held to be allowable in the year of sale.
During assessment proceedings, Assessing Officer rejected assessee’s claim in respect of commission paid to foreign agents. On appeal, it was noted that liability to pay commission had arisen by virtue of sales in relevant financial year. In this regard, realization of sale amount in next financial year would not make much difference as liability to pay commission had crystallised in year of sale itself. The Tribunal held that  in view of above, assessee’s claim for deduction in respect of commission payment was to be allowed . [A.Y.2005-06]
Devendra Exports (P.) Ltd. v.ACIT ( 2012 )54 SOT 220( Chennai) (Trib.)

S.37(1): Business expenditure Common services –Expenditure held to be allowable.
Assessee-company was engaged in business of purchase and sale of software. It had entered into an agreement with SSL for availing common services in areas of finance, accounts, taxation, legal administration, HRD, etc.  Assessing Officer disallowed assessee’s claim of expenditure by holding that assessee did not prove with supporting evidence that services were in fact rendered by SSL.Tribunal held that the  assessee had given detailed statement of various expenditure and how same were allocated,further, service charges recovered from assessee were shown as income in SSL’s account. Accordingly the expenses was held to be  allowable as business expenditure.(A.Y. 2008-09)
Sonata Information Technology Ltd. v. Dy.CIT (2012) 54 SOT 233( Mum)(Trib.)

S.40(a)(ia): Amounts not deductible-Royalty- Deduction at source-Matter remanded. [S.9(1)( vi)]
Assessee made a payment for purchase of software from persons who were resident in India. It did not deduct tax at source while making said payments . According to Assessing Officer, payment in question was in nature of royalty because it was for a right to use software and, therefore, assessee ought to have deducted tax at source and since assessee had not so deducted tax at source, sum in question was disallowed under section 40(a)(ia). Matter  remanded back to decide case afresh to consider whether amounts paid to Indian suppliers could be considered as royalty keeping in mind latest pronouncements of various higher judicial authorities on issue and nature of purchase and rights involved.(A.Y. 2008-09)
Sonata Information Technology Ltd. v. Dy. CIT (2012) 54 SOT 233 (Mum) (Trib.)

S.40(b)(v): Amounts not deductible- Remuneration to partners of firm
First appellate authority as well as the Tribunal recorded a concurrent finding of fact allowing deduction of remuneration paid by the assessee firm to its working partners based on the relevant clause of the partnership deed which authorized such payments according to the standards and norms fixed by the relevant provisions of the Act. No substantial question of law arose.
CIT v. The Asian Marketing (2012) 79 DTR 49(Raj.)(High) (Court) 

S.40(b):Amounts not deductible-Firm-HUF– Commission payment to partners  held  to be not deductible.
It was held that Commission paid to partners of firm who are representing their HUFs, for their personal qualifications, is disallowable u/s. 40(b) unless such partner is a working partner and partnership deed provides remuneration to him for services rendered.  Otherwise in view of non obstante clause contained in s. 40(b) any remuneration paid to a partner in whatever capacity, in whatever manner, is not deductible as an expenditure. (A.Y.2005-06)
Dr. Bidari Ashwini Hospital v. ITO (2012) 254 CTR 290 (Karn.)(High Court)
Srinath Drugs Distributors v. ITO (2012) 254 CTR 290 (Karn.)(High Court)
Shree Gururaj Agencies v. ITO (2012) 254 CTR290(Karn.)(High Court) 

S.40(b): Amounts not deductible-Firm- Book profit – Interest income and profit on sale of assets  should be considered though assessed under the head income from other sources. 
Even if the interest income, profits on sale of assets and other income form part of income from other sources but the same are included in the profit and loss accounts of the firm, these incomes should be considered while computing book profit for the purpose of computation of allowable remuneration to partners under section 40 (b) of the Act. (A.Y. 1995 – 96 to 1998 – 99)
Md. Serajuddin & Brothers v. CIT (2012) 80 DTR 46 (Cal.)(High Court)

S.40A(2): Expenses not deductible – Payment of brokerage to relatives held to be not deductible.
Assessing Officer   found that the assessee has not shown payment of brokerage to anybody other than his son U and daughter in law Smt. S and that this has been done to divert his income to his family members which would have otherwise become taxable in his own hands.  Income was also diverted as U and Smt. S. were having huge brought forward losses.  Assessing Officer,   CIT(A) and the Tribunal disallowed the payment of brokerage by applying s. 40A(2)(b). It was held that in view of concurrent finding which are based upon facts of the case and material on record, there is no infirmity in the order of Tribunal.
Shanti Lal Jain v. CIT(2012) 254 CTR 229 (Raj)(High Court)

S. 40A(3): Expenses not deductible- Cash payments- Depositing in suppliers  account is liable to be disallowed. 
The assessee instate of paying cash to the suppliers deposits the same in their bank accounts.  Provision of section 40 A (3) were held to be attracted and payments are liable to be disallowed. (A.Ys. 1993 – 94 & 1995 – 96) 
CIT v. Venkatadhri Constructions (2012) 80 DTR 363 (Mad)(High Court)  

S.43B: Deduction on actual payment-Contribution to Provident fund, ESI which was paid before due date of filing of return held as allowable.
Deduction of PF, ESI, etc. paid subsequent to close of accounting period but before return was filed are to be allowed. (A.Y. 2000-01, 2001-02)
CIT v. Solar Exports (2012) 210 Taxman 520 (Karn.)(High Court)

S.43B: Business disallowance – Certain deductions to be allowed only on actual payment-Interest- converting  interest due to equity shares of company, interest is not allowable as it is not actual payment.
Assessee-company claimed deduction in respect of interest paid to bank by way of converting interest due into equity shares of assessee-company. The Tribunal held that such payment will not  amount to actual payment, hence,  disallowance of such payment under section 43B was justified. [A.Y. 2005-06]
ITO v. Glittek Granites Ltd. (2012) 53 SOT 575 ( Kol.)(Trib.)

S.44BB: Mineral oils-Computation-Service tax
Service tax collected from customer does not form part of receipts for computing presumptive income u/s. 44BB of IT Act. (Asst. Year 2008-09)
DDIT v. Mitchell Driling International Pty Ltd, ITA No. 698/Del/2012, Dt. 31-08-2012 (2012) BCAJ Pg. 31, Vol. 44-B Part 2, November, 2012 (Delhi)(Trib.)

S.45: Capital gains – Genuineness of transaction-Share transaction with tainted share broker would not lead to bogus transaction capital  gains declared by the assessee was accepted as genuine.
The assessee in is return of income claiming that he purchased certain shares of various companies and those shares were sold after a period of 12 months and, therefore, the share transactions of the assessee resulted into a long term capital gains. Assessing Officer found that there was unusual rise in price of shares of some of companies and, thus, SEBI had ordered enquiry. In said enquiry, it was found that some share brokers carried out share transactions in violation of norms of SEBI regulations. Since assessee also entered into share transactions with one of such brokers, the Assessing Officer held that assessee’s share transactions were bogus . On appeal, the Commissioner (Appeals) held that purchase of shares was shown by assessee in his balance sheet for last five years and genuineness of books of account was never questioned .Further, payment for purchase of shares was made through bank and it was verified from bank statement. Whether in aforesaid circumstances, merely because assessee bonafidely entered into share transactions with one of tainted share brokers would not lead to inference that those transactions were bogus .capital gain declared by assessee in his return was to be accepted. On appeal by revenue, the Tribunal confirmed the order of Commissioner(Appeals). On appeal to High Court  High court also confirmed the order of Tribunal. 
CIT v Arun Kumar Agarwal (HUF) 210 Taxman  405 (Jharkhand)(High Court)

S.45: Capital gains- Business income- Investment in shares- Gains on shares held in investment portfolio not assessable as business profits. [S.28(i)]
The assessee was maintaining separate portfolios for shares in the trading account and for those in the investment account. This was accepted by the department in the earlier years. In AY 2007-08, the assessee sold all the shares in the investment portfolio and offered the gains to tax as long-term and short-term capital gains. The AO held that as the volume (Rs. 52 crores) and frequency of transactions was large, the LTCG & STCG were assessable to tax as business profits. The CIT(A) and Tribunal (order attached) reversed the AO by relying on CBDT Circular No. 4 of 2007 dated 15.06.2007 { (2007)291 ITR (Stat) 35}. On appeal by the department to the High Court, held dismissing the appeal:

The intent and purport of Circular No. 4 of 2007 dated 15.06.2007 is to demonstrate that a tax payer could have two portfolios, namely, an investment portfolio and a trading portfolio. In other words, the assessee could own shares for the purposes of investment and/or for the purposes of trading. In the former case whenever the shares are sold and gains are made the gains would be capital gains and not profits of any business venture. In the latter case any gains would amount to profits in business. This has been made clear by the CBDT circular in the remaining portion of the circular itself. On facts, the finding of the CIT(A) & Tribunal that the short term capital gains and long term capital gains were out of the investment account and were not related to the trading account does not call for any interference. (A.Y. 2007-08)
CIT v. Avinash Jain (Delhi)( High Court) www.itatonline.org.

S.45: Capital gains – Computation – Full value of consideration-Actual consideration-On facts it was held that the addition was justified difference between ostensible consideration and real consideration.
Value of land in question, after change of land use so as to enable construction of a commercial building and payment of conversion charges, development charges, etc., was agreed by KSPP Ltd and FFI Ltd at Rs.6.35 crores as per MOU. As against total worth of SPP Ltd. as Rs.6.35 crores, SB and PB had paid Rs.5 crores, including loan liabilities. AO added Rs.60 lakhs on account of brokerage and commission and difference of Rs.75 lakhs added by AO. It was held that action of A.O. was  Justified on the facts of the case.  If the Revenue is able to show from the material available to the AO that actual consideration was more than the ostensible consideration disclosed by the assessee, the presumption of correctness of the consideration stands duly displaced and the AO would be justified in taking a view that the difference between the ostensible consideration and the real consideration reflected the amount which was paid by the purchaser to the seller, but was not reflected in the account books of the parties.(A.Y.2003-04)
CIT v. Karan Khandelwal (2012) 254 CTR143 (Delhi)(High Court)
CIT v. Sunil Bedi (2012) 254 CTR 143 (Delhi)(High Court)

S.45: Capital gains –Investment in shares-Business income-Sale of investment was held to be assessable as capital gain.(S.28(i)
As per main object of assessee company it was an investment company to buy, invest, acquire and hold shares, stocks, etc. To implement objects of said company, two of directors gifted their shares in another company to assessee company and some of these shares were subsequently sold and assessee. Company treated receipt as capital gain but Assessing Officer treated it as business income. The court held that  merely because company earned profits by selling some shares that would not mean that assessee company was engaged in share trading. Accordingly the Court held that the Assessing Officer was unjustified in treating income from solitary sale of shares as business income. (A.Y. 1999-2000)
CIT v. Nadatur Holdings and Investments (P.) Ltd.(2012) 210 Taxman 597 (Karn.)(High Court)

S.45: Capital gains-Market value – Actual consideration-Evasion of tax–Sale of shareholding in wholly owned subsidiary company- Transaction held to be genuine, addition was not justified.
During the financial period March 28, 2006, the assessee sold its equity shareholding in its wholly owned subsidiary  at Rs 48.56 per share . The Assessing Officer recomputed the value of share at Rs 184-25 per share  as there was a distribution of dividends at Rs. 140 per equity share  just before the sale transaction . The Assessing Officer  held that  the  distribution of dividend was nothing but a colourable device to deny legitimate share of revenue in capital gains of the assessee, and should, therefore, be ignored. The Commissioner (Appeals) decided in  favour of assessee . On appeal by revenue the Tribunal held that  there were sufficient reserves and surplus, which were eligible for distribution as dividend, and had sufficient cash balances as well.  Considering the facts the appeal of revenue was dismissed  (A.Y. 2006-07)
Asst.DIT v.Maersk Line UK Ltd. [2012] 20 ITR 643 ( Kol.)(Trib.)

S:45: Capital gains- Capital asset- Income from other sources-Reassessment-Development agreement- Consideration is taxable as capital gains- Reassessment was held to be invalid. (2 (14), 56, 147)
 Assessee-co-owner transferred land under a development agreement – Availability of higher FSI on plot enabled developer to load TDR and construct additional floors. Those floors were sold to outsiders and outsiders did not own any interest over land. The  Assessing Officer concluded that it was an arrangement done to facilitate developer to load TDR on plot of land and, hence, transfer by assessee was not a transfer falling within provisions of section 45 and was a case where assessee was getting a compensation for loading and developing TDR by new structure and therefore, proceeds received by assessee were in nature of income from other sources. It was noted that right to construct building on plot of land by consuming FSI and right as a receiving plot owner to load TDR over and above normal FSI accrued to assessee by virtue of development control regulations for area in which property was located. The Tribunal held that these rights were rights on property, which were capital assets falling under definition of capital assets under section 2(14) therefore the  consideration received by assessee for transfer of rights over such capital asset would  fall within provisions of section 45. In the first part of the reasons recorded the belief entertained by the Assessing Officer is that the income in question is capital gain whereas in the second part of the reason recorded the belief entertained is that the income in question is ‘Income from other sources’. The question that would arise for consideration is whether the Assessing Officer can record two reasons which are mutually contradictory to each other, for initiating reassessment proceeding. The reasons recorded also do not claim that it is an alternate case sought to be made out by the Assessing Officer for initiating reassessment proceedings. It is opined that permitting initiation of reassessment proceedings in such circumstances would not be proper. As already explained in the earlier part of this order, the belief entertained by the Assessing Officer regarding escapement of income chargeable to tax must not be arbitrary or irrational. The expression ‘reason to believe’ does not mean purely subjective satisfaction of the Assessing Officer. The belief must be held in good faith. It cannot be merely pretence. It cannot be said that from the second part of the reason recorded by the Assessing Officer one can form a bona fide belief, a belief held in good faith, regarding escapement of income. Looked at from any angle, the initiation of reassessment proceedings on the basis of the reasons recorded by the Assessing Officer cannot be sustained. Therefore, the grounds raised in the cross-objection regarding validity of initiation of reassessment proceedings were allowed and it was to be held that the initiation of reassessment proceeding is not legal. The order of reassessment is therefore annulled.  [A. Y. 2005-06]
ITO v. Chetana H. Trivedi (Mrs.) (2012) 53 SOT 544 ( Mum)(Trib.)

S.45: Capital gains-Business loss –Investment in shares –Forfeiture of partly allotted shares being  nature of investment assessable as capital loss and not as business loss. [S.28(i)].
Assessee-investment company disclosed investment for allotment of shares of a company being partly paid-up under head of ‘investment in equity shares’ . The Tribunal held that  since partly allotted shares were in nature of investment of assessee, income or loss arising out of purchase and sale of same had to be taxed under head of capital gains, either short-term or long-term  and not as business loss.
Where shares of a company were shown as stock-in-trade in balance sheet of assessee-investment company, loss on purchase and sale of those shares had to be treated as trading loss.(A.Y. 2006-07)
Mask Investment Ltd. v. ACIT(OSD)(2012) 53 SOT 532 ( Ahd.)(Trib.)

S.45: Capital gains- Capital asset- Derivative(future and options)-Business income. [S. 2(14), 28(i)]
Derivative by itself cannot be termed as investment or stock-in-trade. Therefore, entire transactions of purchase/sale of securities/shares through derivatives and later on dealing with those shares/securities will determine whether an investment is made or stock-in-trade is procured. In the present case, the natures of the transactions of derivatives in its entirety on case to case basis are not produced before the Bench and also before the revenue. Therefore, this alternate ground raised by the assessee is dismissed.  (A.Y. 2006-07)
Mask Investment Ltd. v.  ACIT(OSD)(2012) 53 SOT 532 ( Ahd.)(Trib.)

S.48: Capital gains – Computation-Payments to remove slum dwellers held to be allowable against short term capital gains. (S.45) 
Assessee derived short term as well long term capital gain from sale of land – It had paid certain amount to a party for removal of slum dwellers from land and claimed it as expenses against short term capital gains only. Assessee’s claim was supported by letter from payees, Payee’s bills showed that expenses related exclusively to sites which resulted in short term capital gain. The Court held that such expenses could not be apportioned to long term and short term capital gain.(A.Y.2006-07)
CIT v. Mohd. V. Shaffiulla (2012) 210 Taxman 613(Karn.)(High Court)
S.48: Capital gains – Computation – Exchange of property-Development agreement – In the case of  property A as specified in project development agreement represented market value on date of entering into agreement, same was to be taken as basis for computation of capital gain.

The assessee filed his return of income for the assessment year 2001-2002 declaring a total income of Rs. 8,98,127. The Assessing Officer noticed that assessee had shown 1/3rd share of long term capital gain on sale of J.P. Nagar property site. The said site was jointly held by the assessee along with his two brothers. The long term capital gain had been calculated after taking into consideration the fair market value as on 1-4-1981. However, the assessee got the ownership over the property on 11-11-1987. The Assessing Officer found that adopting fair market value as on 1-4-1981 for calculating the capital gain was contrary to law and assessed the said property having arrived at the long term capital gain of the assessee at higher amount.  The property value had been fixed at Rs. 66 lakhs taking into consideration the fair market value as on 1-4-1981 and the long term capital gain had been shown as NIL. The Assessing Officer, worked out the capital gain based on the actual cost of construction reported by the Developer vide letter dated 1-2-2004 as Rs. 2.86 crores and 50 per cent had to be reckoned as the value of site received by the assessee and his brothers. The share of the assessee was 1/3. Taking into consideration the said value, the Assessing Officer assessed the capital gain in respect of the property situated at ‘A’ road at higher amount. The Commissioner (Appeals) as well as Tribunal partly allowed the appeal .  The appellate authority clearly held that the market value of the property had to be taken into consideration as on the date of grant of land in respect of the J. P. Nagar Property and also market value of the property as on the date of development agreement entered into between the parties in respect of ‘A’ Road. On revenue’s appeal, the court held that since property J was allotted to assessee’s father prior to 1-4-1981, fair market value as on 1-4-1981 had to be taken into consideration for arriving at capital gain. The court  also held that  since exchange value of property A as specified in project development agreement represented market value on date of entering into agreement, same was to be taken as basis for computation of capital gain.(A.Y. 2001-02)
CIT v. Ved Prakash Rakhra( 2012) 210 Taxman 605 (Karn.)(High Court)

S.50C: Capital gains- Full value of consideration- Stamp valuation-Assessing Officer is required to value as per stamp valuation if the said value is less than the value determined  by the Valuation Officer. (S.48, 55A )
When the reference was made to the valuation officer and he determined a value higher than the value adopted by the stamp valuation authority, the Assessing Officer was required to adopt the value determined by stamp duty authority as per provisions of section 50C(3).  (A.Y 2008-09) 
ACIT v. Prakash Ratanlal Sheth (2012) 53 SOT 378 (Ahd.)(Trib.)

S.50C: Capital Gains – Full value of consideration- Stamp valuation-Fair market value-Not fair market value assessed by DVO. (S.55A)
Assessee had sold property for a total consideration of Rs. 15.25 lakhs.  Assessing Officer referred assessability of fair market value of property sold by assessee to Departmental valuer (DVO) under section 55A.  DVO computed value at Rs. 25.02 lakhs which was adopted by the Assessing Officer for computing long-term capital gains. Under provisions of section 50C, fair market value estimated by registering authority is deemed to be full value of consideration; and there is no provision under Act under which provides that fair market value assessed by DVO is to be taken as full value of consideration, therefore, impugned order of Assessing Officer was not sustainable. [A.Y. 2006-07]
ITO v. Mohinder Nath Sehgal & Sons (2012) 53 SOT 539 (Chd.)(Trib.)

S.54EC: Capital gains-Investment in bonds- Exemption-Investment within six months eligible exemption.
Under a development agreement, assessee-co-owner of land received, apart from built-up area, monetary consideration .Assessee invested said amount in NABARD Capital Gains Bonds within six months . AO noted that investment was made in assessment year 2006-07 while assessee was claiming exemption under section 54EC for assessment year 2005-06 . AO, thus, rejected assessee’s claim. Provisions of section 54EC do not make any reference to assessment year in which investment is to be made but only lays down a condition of 6 months period of time after date of transfer of capital asset .Since investment in long term specified asset was made by assessee within period of 6 months after date of transfer of capital asset, assessee’s claim for deduction was to be allowed(A.Y.2005-06)
ITO v. Chetana H. Trivedi (Mrs.) (2012) 53 SOT 544 ( Mum)(Trib.)

S.54: Capital gains – Profit on sale of property used for residential house – Property given to a builder for construction and development of residential and commercial Complexes-Residential building was demolished by assessee himself before entering into development agreement, he was not entitled to claim benefit under section 54.(S.54F )
Property  situated at ‘A’ road, the assessee claimed that he was a co-owner of the said property along with his two brothers. The said property was sought to be jointly developed with ‘E’. As per the development agreement, the land was handed over to the Developer in the year 1995 and superstructure was built in the year 2000 consisting of multistoried building. As per the agreement 50 per cent of the flats 50 per cent of the car parking space and 50 per cent of saleable terrace were given to the assessee and two of his brothers. In that, the assessee was entitled for 1/3 share. The property value had been fixed at Rs. 66 lakhs taking into consideration the fair market value as on 1-4-1981 and the long term capital gain had been shown as NIL. The Assessing Officer, worked out the capital gain based on the actual cost of construction reported by the Developer vide letter dated 1-2-2004 as Rs. 2.86 crores and 50 per cent had to be reckoned as the value of site received by the assessee and his brothers. The share of the assessee was 1/3. Taking into consideration the said value, the Assessing Officer assessed the capital gain in respect of the property situated at ‘A’ road at higher amount. The Commissioner (Appeals) as well as Tribunal after partly allowed the appeal and issued directions to the assessing authority to give exemption under section 54.  On revenue’s appeal relating to deduction under section 54 is concerned, as per the development agreement entered into between the parties, the assessee and his brothers have demolished the existing residential building and handed over the vacant spare to an extend of 16,800 sq.ft. to the developer for construction of the apartment. Since the residential building has already been demolished by the assessee and his brothers themselves, they are not entitled to claim benefit under section 54. At the most they are entitled to benefit under section 54F. The order passed by the appellate authority directing the Assessing Officer to allow the deduction under section 54 is contrary to law and the same cannot be sustained. Hence, this issue is held against the assessee. (A.Y. 2001-02)
CIT v. Ved Prakash Rakhra( 2012) 210 Taxman 605 (Karn.)(High Court)

S.54F: Capital gains – Exemption – In case of investment in residential house-House need not be completed within three years.
Assessee sold a commercial plot of land on 14-10-2005 and invested total sale consideration in construction of a residential house within three years after transfer of plot  Said house was completed by end of October, 2008. Assessee claimed exemption under section 54F in respect of capital gain arising from sale of plot. Once assessee had invested total sale consideration into construction of a residential house within three years after transfer of plot, she was entitled to exemption under section 54F even though house was completed after expiry of three years from transfer of plot. [A. Y. 2006-07]
Usha Vaid (Smt.)  v ITO.(2012)53 SOT 385(Asr.)(Trib.)

S:55A: Capital gains – Reference to valuation officer –Full value of consideration under section 48 cannot be construed as fair market value for purpose of section 55A.: (S.48, 50C)

For calculation of capital gain full value of the transaction received or accruing as a result of the transfer of the capital assets following amount is to be deducted (i) expenditure incurred wholly and exclusively in connection with such transfer (ii) the cost of acquisition of the assets and the cost of any improvement thereon. Further, indexation on cost of acquisition and cost of improvement is to be allowed. The full value consideration means the full value of consideration received by the transferee in exchange of the capital assets transferred by him. The Supreme Court also observed that in the case of full value consideration is the full sale price is actually paid. It was further of the view that the expression full value means the whole price without any deduction, whatsoever and it cannot refer to the adequacy or inadequacy of the price bargained for. Nor did it has any necessary reference to the market value of the capital assets which is the subject-matter of the transfer. Held that the Assessing Officer was not justified in substituting the fair market value in place of full value of consideration. The order of the Commissioner (Appeals) is confirmed. (A.Y. 2008-09)

ACIT v. Prakash Ratanlal Sheth (2012) 53 SOT 378 ( Ahd.)(Trib.)

S.68: Cash credits – Gift- No occasion- Gifts could have been given without any occasion and only for the love and affection with the assessee. Deletion was  held to be justified.  
Assessee had filed relevant documents viz. gift deeds, bank accounts of the donors, bank statement of the donors, directorship/partnership, income of the donors and passports of the donors.  CIT(A) as well as Tribunal both were satisfied with regard to identity and creditworthiness of the donors and genuineness of the gifts.  Tribunal was also satisfied that there is no room to doubt about love and affection of the donors with the assessee as donors were brothers of the assessee.  Therefore, gifts could have been given without any occasion and only for the love and affection with the assessee. It was held that Tribunal was therefore justified in deleting addition finding of fact of both the authorities below cannot be interfered with.(A,Y. 2006-07)
CIT v. Arun Kumar Kothari(2012) 254 CTR 648 / 79 DTR 193  (Raj) (High Court)

S.68: Cash credits –Repayment in next year- Matter remanded.
 Assessee filed its return wherein certain amount was shown payable under head ‘sundry creditors’ and ‘hire charges’. Assessing Officer added said amount to assessee’s income under section 68. Commissioner (Appeals) finding that assessee had made payment of said creditors in subsequent year, deleted addition . The Tribunal held that  even though subsequent payment by assessee was a relevant factor, yet in absence of confirmations from concerned creditors, matter remained indeterminate and, thus, same was to be remanded back for disposal afresh (A.Y 2003-04)
DCIT v Verma Roadways(2012)53 SOT 207 (luck)(URO)(Trib.)

S.72A: Losses – Carry forward and set off of accumulated loss, etc-Amalgamation-Order of BIFR is binding on the Assessing Officer and loss was allowed to be carry forward and set off.
During the year under consideration ‘S’ Ltd. got merged with assessee company. As per the BIFR’s order on amalgamation assessee shall be allowed to carry forward and set off losses and unabsorbed depreciation allowance of ‘S’ Ltd. under section 72A and amount advanced by assessee to ‘S’ Ltd till the effective amalgamation takes place, shall be allowed as business loss under section 29 to assessee in the year in which amalgamation takes effect. The Assessing Officer contended that in view of the CBDT instruction dated 16-2-2000, if the department was not given chance of being heard, the assessing authority was constrained not to give effect to the recommendation of the BIFR before the same were considered by CBDT and since there was nothing on record to show that the view of the department were considered before finalization of BIFR’s proceedings, the Assessing Officer did not take into account the BIFR’s order while finalizing the assessment.

On appeal, the assessee submitted that the order of BIFR used the words ‘shall be allowed’ while deciding on the reliefs. It was submitted that when ‘shall’ was used by the statute, the context in which it was used becomes an obligation or a direction. It would be an altogether different case if the words ‘may’ had been used, then the context may have become a discretion or a recommendation. It was, accordingly, submitted that the Assessing Officer had committed a grave error in law by not following the CBDT order, which was binding upon her. Based on the arguments advanced by the assessee, the Commissioner (Appeals) allowed the claim of the assessee. On appeal  the Tribunal held that  it was found from records that after original order was passed by BIFR on 16-12-1999, department had objected for not giving any opportunity and, hence, BIFR issued notice for draft modification but despite such opportunity being given to department, it sought adjournment which was not accepted by BIFR and final order was passed on 19-8-2003 therefore it could not be said that department was not given any opportunity and, therefore, direction given by BIFR was binding on Assessing Officer and assessee would be entitled to relief as per BIFR order. [A.Y.1999-2000]
Kirloskar Oil Engines Ltd. v.Dy. CIT (2012) 54 SOT 201(Pune)(Trib.)

S.73: Losses-Speculation business-Company-Interest income -Tribunal rightly set off the losses from sale and purchase from the income of the assessee from loans and advances. [S. 28(i)]
Section 73(1) and the explanation to  section73 indicate that the income which is chargeable is the income in the relevant year arising from business or profession carried on by the company.  Words “carried on” mean actual carrying of the activity.  Words “carried on” have to be read in context of what actually was done by the company in the relevant year, rather than what was main object in the memorandum of association of the company.  Entire income of the assessee during the relevant years consisted of interest income from loans and advances and the assessee was clearly covered by exclusionary clause of explanation to S. 73.  Hence, it was held that tribunal rightly set off the losses from sale and purchase from the income of the assessee from loans and advances.(A.Y. 1996-97 , 1998-99)
CIT v. Narain Properties Ltd. (2012) 254 CTR185 (All.)(High Court)

S.74: Losses – Capital gains – Speculation-Derivatives-Loss allowed to be set off against short term capital gains. [S. 43 (5)]
The Assessing Officer the treated the loss on derivative as speculation loss and has not allowed  to be  set off against the short term capital gains . In appeal Commissioner (Appeals)  confirmed the  view of Assesing Officer. On further appeal The Tribunal held that in view of amendment with effect from 1-4-2006  the  loss suffered by assessee during derivative trading amounted to  short term capital loss and same could be set off against short term capital gain during relevant year. Accordingly the appeal of assessee was allowed. [A.Y.2005-06]
Devendra Exports (P.) Ltd. v. ACIT ( 2012 )54 SOT 220( Chennai) (Trib.)

S.79: Losses – Carry forward and set off of, in case of certain   companies –Change in share holdings – Loss was not allowed to   carry forward and set off. [S. 2(18)]
The assessee-company was running a hospital. The Assessing Officer noticed that during relevant assessment year more than 51 per cent of paid up share capital of the assessee-company was transferred to ‘P’ family. The control and management of company was also transferred to ‘P’ family. The company was not one, where public was substantially interested as defined in section 2(18). In such circumstances, the Assessing Officer opined that provisions of section 79 applied to assessee’s case and loss incurred by company in the assessment year 2005-06 could not be allowed to carry forward. The Commissioner (Appeals) upheld the order of the Assessing Officer. On second appeal the Tribunal also up held the order of   Tribunal. [A.Y. 2007-08]
Peoples Heritage Hospital Ltd. v. Dy. CIT (2012) 54 SOT 225 (Agra) (Trib.)

S.80: Return of losses – Carry forward and set off- Return of income – Revised return – Carry forward of loss was not allowed as the loss was claimed in the original return [S.139(1), 139(3), 139(5), 143(3)]
The assessee filed its return of income declaring  positive  income. Thereafter, a revised return was filed declaring loss. During the assessment proceedings under section 143(3), the Assessing Officer observed that the revised return filed by the assessee under section 139(5) was non est. He, accordingly, computed the taxable income of the assessee. The assessee filed an appeal before the Commissioner (Appeals) challenging the non-consideration of the revised return. The Commissioner (Appeals) held that the revised return was return which should have been filed within the time specified under section 139(3) and, therefore, the loss return filed beyond the time-limit prescribed under section 139(3) was null and void. On further appeal the Tribunal held that  when assessee was claiming loss for relevant assessment year and also claiming loss to be carried forward of earlier years, assessee was required to file return under section 139(3), however, in instant case in absence of claim of loss or carried forward loss, return filed under section 139(1) could not be treated as a return under section 139(3) and, therefore, revised return filed under section 139(5) could not be accepted and had to be treated as null and void. Accordingly the appeal of assessee was dismissed. [A.Y. 2004-05]
Karnataka Forest Development Corp. Ltd. v.CIT (2012) 54 SOT 76 (URO)( Bang.)( Trib.)

S.80HH: Deduction-Industrial undertaking–Research expenses of head office-Apportionment of expenses-Apportionment of expenses held to be not proper and deduction was to be allowed without apportionment. (S.37(1), 80I)
The assessee carries on business inter alia of manufacturing Ayurvedic medicines and ointments It has head office and four units .The head office  as well as each units have their own R&D departments equipped with a laboratory. The Assessing Officer allocated the head office expenses on the basis of proportionate turnover of various units. On appeal  Commissioner (Appeals) and Tribunal confirmed the  addition .On appeal to the High Court  the Court held that Tribunal was not justified in confirming the allocation of R&D expenses incurred by the head office among the four manufacturing units on the presumption that the expenditure so incurred is for the benefit of these manufacturing units, when in fact such research conducted had no connection with the business of said units , nor any benefit is received by them from the said research. Appeal of assessee was allowed. (A.Y. 1993-94)
Zandu Pharmaceuticals Works Ltd v. CIT ( 2012) 80 DTR 322 (Bom.)(High Court). 

S.80HHC: Export- Validity – Transfer Petition – Cases pending in various High Courts – Some already transferred to Supreme Court – Consolidated hearing of all cases before one High Court (Constitution of India-Arts. 139-A, 226, 32 and 136 ) 
Since question related to the vires of a statute, it would be more convenient and beneficial if all matters are decided by one High Court in the country. Matters before Supreme Court as well as others High Courts directed to be transferred to High Court of Gujarat within two weeks where maximum numbers of such matters are pending.
UOI and Ors  .v. Vijay Silk House (Bangalore) Ltd. (2012) 10 SCC 289

S.80HHC: Deduction-Export- DTAA-India-Canada –Non-resident-Permanent residence- Deduction denied as the assessee has not filed the required details . (S.6, 90, Art. 5)
The assessee was carrying on the business of export. He filed return of income for relevant years claiming that he was resident of India and entitled to the benefits provided under section 80HHC. Subsequently, the department conducted a survey on the assessee whereby it transpired that the assessee had settled down in Canada and the entire business was managed by his brother on the strength of general power of attorney .The copies of the passport submitted by the power of attorney holder revealed that the assessee was not a resident of India and, hence, was not entitled for benefits under section 80HHC. Accordingly, department reopened assessment for relevant years. The assessee submitted that even if it was presumed that he was a non-resident then as per provisions of article 5 of the India-Canada DTAA there was no PE in India. It was the submission of the assessee that it was merely making purchases in the course of exports and, hence, there was no PE in India. Number of letter had been submitted by the assessee claiming that he was a citizen of Canada but there was no trace of any evidence submitted to show that the assessee was tax resident of Canada. Assessing Officer therefore, held that in absence of any tax residency certificate, the assessee could not claim benefits of the Indo-Canada DTAA. On appeal, the Commissioner (Appeals) allowed claim of the assessee. Before the Tribunal , the brother of the assessee submitted that of late the assessee (who was residing in Canada), had not been co-operating in the matter and his whereabouts were also not known, and he was finding difficulty in representing the matter before the Tribunal. He, also submitted that it seems that the assessee did not want him to represent the matter before the Tribunal. He, accordingly, withdraw his Power of  Attorney and did not pursue appeals of revenue. The Tribunal held that  that no useful purpose would be served by adjourning the matter, as there is no possibility of getting the notices served on the assessee when the duly constituted power of attorney holder acknowledges the receipt of notice but refused to co-operate for the reasons specified in the letter and due to lack of assistance from the assessee in defending revenue’s appeals and as being convinced with the submissions of the Department, the grounds raised in all the appeals preferred by the revenue is to be allowed. Insofar as the cross objections preferred by the assessee are concerned, due to non-prosecution, the same are dismissed. [A. Ys. 1999-2000 to 2006-07]
ITO v. Nasiruddin A. Jesani (2012)53 SOT 526 ( Mum)( Trib.)

S.80IA:Deduction-Industrial undertaking-Computation-Export incentives earned from DEPB scheme is not entitled to deduction.
 Following the judgment of Supreme Court in Liberty India v. CIT (2009) 317 ITR 218(SC)   the court held that  the assessee was not entitled to deduction under section 80-IA on export incentives being profits arising from the DEPB scheme.( A. Y. 2005-2006 )
M. M. Forgings Ltd. v.Add. CIT  [2012] 349 ITR 673(Mad) (High Court)

S.80IA: Deduction-Industrial Undertakings – Manufacture or production-Process of converting limestone into limestone power is a manufacturing activity.
Court  held that, converting limestone into limestone powder was a manufacturing activity and income derived from such activity was eligible for deduction u/s. 80IA and 80IB.
CIT v.  Supriya Gill (Smt.)(2012) 254 CTR 559/79 DTR 265 (HP)(High Court)
CIT v. Vir  Singh Gill(2012) 254 CTR 559 (HP)(High Court) 

S.80IB: Deduction –Industrial undertakings- Number of workers –Casual and contractual workers –Eligible deduction.
Assessee would be eligible for deduction under section 80 IB of the Act if he employ ten or more worker who are working in his direct supervision and control, even though the employees are casual or contractual workers. (A.Y. 2006 – 07)
CIT v. Nanda Mint & Pine Chemicals Ltd. (2012) 80 DTR 329 (Delhi)(High Court)

S.80-IB: Deductions – Profits and gains from industrial undertakings other than infrastructure development undertakings-Development of software – Claim was allowed as sales tax authorities  also granted exemption – genuineness cannot be doubted. (S.80IA)
Assessee engaged in business of software development, established a new unit at Silvassa, on 13-3-1999 and showed an income of Rs. 72.32 lakh there from against investment of Rs. 2.06 lakh, amounting to 94.8 per cent profit in 18 days on which deduction of Rs. 60.43 lakh was claimed under section 80-IA. For next two years also assessee claimed deduction under section 80-IB. Assessing Officer denied deductions on ground that no documents were produced to prove that assessee had manufactured any product at its Silvassa unit. Assessing Officer was of the view that the assessee had only diverted sales and profit from Bangalore unit. From records it was noted that assessee had been granted sales tax exemption by sales tax authorities. Further, software products unlike other commercial products can be developed within a short span of time and once a software is developed, any number of copies can be made within a short span of time. Furthermore, assessee had a strong customer base in India and abroad due to its existent business. In view of above facts it was very difficult to doubt genuineness of business activities of assessee at Silvassa , therefore, assessee’s was claim for deduction under sections 80-IA and 80-IB was to be allowed. Accordingly appeal of revenue dismissed.  (A.Y.1999-2000 to 2001-02)
CIT v Vesesh Infotechnics Ltd (2012) 210 Taxman 522 (Karn.)(High Court)

S.80IC: Deduction- Special category of States-Interest income-Interest received from irrigation department was held to be eligible for deduction.
It was held that Interest received from the irrigation department, government of Assam as per the order of the Court for the delay involved in the payment in connection with delivery of goods to Irrigation Department constituted income derived from the industrial undertaking of the assessee and is eligible for deduction u/s. 80-IC.(A.Y.2004-05)
CIT v. Universal Pipes (P) Ltd. (2012) 254 CTR 311 (Gau.)(High Court)
S.80P: Deduction – Co-operative societies –Rural bank-Income from investment is eligible exemption.
The assessee was a regional rural bank (RRB). It claimed deduction under section 80P on profit arising out of investment. The Assessing Officer disallowed the said claim on ground that deduction could not be allowed in respect of investment income. On appeal, the Commissioner (Appeals) allowed the deduction. On appeal by revenue the Tribunal confirmed the order of   Commissioner (Appeals)   and held that the section 80P is applicable ton regional rural banks. (A.Y. 2004-05)
ACIT v. Bundi Chittorgarh Kshetriya Gramin Bank (2012) 54 SOT 62(URO)(Jaipur)(Trib.)

S.80P: Deduction – Co-operative societies –Banking business- Members and non members-Income from  members is entitled to deduction.
The assessee was a registered agriculture co-operative society carrying out banking activities like borrowing, raising or taking up money and lending or advancing money for the purpose of agriculture, sale and purchase of seeds and fertilizers etc. It was accepting deposits from non-members also. However, credit facilities and supply of seeds, urea etc. for the purpose of agriculture were given only to the members of the assessee-society. The assessee claimed deduction under section 80P(2)(a)(i) and 80P(2)(a)(iv ). The Assessing Officer rejected the assessee’s claim holding that income of the assessee was not attributable to the qualifying activity of carrying on the business of banking or providing credit facilities to its members and the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members as the similar activities were being performed for the non-members also. On appeal, the Commissioner (Appeals) held that merely because the assessee was unable to bifurcate the expenditure for the deposits from the members and non-members, deduction under section 80P(2)(a)( i) and under section 80P(2)(a)(iv) could not be denied. On revenue’s appeal  the Tribunal held that The exemption under section 80P(2)(a ) is available to the income of a cooperative society engaged in the business or activities facilitating to its members as mentioned in clauses (i ) to (vi) of sub-section (a) of section 80P(2). Appeal of revenue was dismissed. [A. Y. 2008-09]
ACIT  v.Palhawas Primary Agriculture Co-op. Society Ltd. 54 SOT 53(URO)(Delhi)(Trib.) 

S.80P: Deduction – Co-operative societies –Co-operative bank-Co-operative credit society is entitled for deduction under section 80P(2)(a)(i).
The assessee was a Co-operative Credit Society engaged in providing credit facilities to its members. The primary object of the society was to receive the deposits and meet all the financial requirements of its members and to provide credit facilities to the members as per the bye laws. The assessee claimed a deduction under section 80P(2)(a)( i). The Assessing Officer concluded that if a Co-operative Society conducted any business which came within the ambit of the definition of the Banking business, as defined in section 5(b) of the Banking Regulation Act or as described in section 6(1), it could be inferred that the said Co-operative Society was engaged in business and was the primary Co-operative Bank. He thus, denied the deduction to the assessee claimed under section 80P(2)(a)(i ) .The Commissioner (Appeals), however, allowed the assessee’s claim.

On revenue’s appeal. The Tribunal held that The Co-operative Credit Society is distinct and separate from the Co-operative Bank nor it can be said as a Primary Co-operative Bank within the meaning of Banking Regulation Act, 1949. The assessee being a Co-operative Credit Society is entitled for deduction under section 80 P(2)(a )(i).In the result, revenue’s appeal is dismissed. [A.Y.2007-08]
ITO  v.Jankalyan Nagri Sahakari Pat Sanstha Ltd.(2012) 54 SOT 60( Pune)(Trib.)

S.80P: Deductions – Co-operative-societies – Credit facilities to its members- Interest from employees, jeep charges and no due certificate charges cannot be assessed as  Income from other sources. (S.56)
The assessee, a co-operative society, was engaged primarily in providing credit facilities to its members. It claimed deduction under section 80P(2)(a)(i).

The Assessing Officer while computing said deduction excluded following three items of income holding those items as ‘income from other sources’ – (i) interest from employees; (ii) Jeep charges which represented recovery of jeep expenses incurred on trips made by the staff to recover the dues from the defaulting borrowers as also for inspection of securities; and (iii) No dues certificates – which represented the fee received from the borrowers to transfer their borrowing or otherwise switch to another bank or co-operative society to issue a ‘no dues certificate. On appeal, the Commissioner (Appeals) allowed the claim of the assessee.  On revenue’s appeal The Tribunal held that It was undisputed that assessee-society was engaged primarily in providing credit facilities to its members, so that same represented its principal or core business activity .Its employees, under circumstances, could only be considered as non-members, to whom monies had been similarly lent, making it a collateral activity, incidental to its business . As regards jeep charges, it was noted that same was not source of income, but represented only recovery of jeep expenses incurred on trips made by staff to recover dues from defaulting borrowers as also for inspection of securities. As regards ‘no due certificates’, when borrower wished to transfer his borrowing or otherwise switch to another bank or co-operative society, he had to be issued a ‘no dues certificate’ from existing lender, i.e., assessee, who charged a nominal fee for same. Thus, said amount could not be assessed as income from other sources, being only integral to assessee’s principal business of lending, therefore on facts the  amounts in question were not assessable as ‘income from other sources’ and, thus, impugned action of Assessing Officer was not sustainable. (A.Y. 2005-06]
ITO  v.Jhalawar Sahkari Bhoomi Vikas Bank Ltd.(2012) 54 SOT 56(URO) (JP) (Trib.)

S.80P: Deductions-Co-operative societies-Primary co-operative agricultural and rural development bank-Matter seta-side for verification.  
The assessee was a co-operative society, formed under the Rajasthan State Co-operative Societies Act, 2001. It filed its return for the year on 29-2-2008, claiming exemption under section 80P(2)(a)(i). In view of the amendment to section 80P vide Finance Act, 2006, with effect from 1.4.2007, excluding benefit under section 80P to co-operative banks other than the defined categories, the said relief was proposed to be disallowed by the Assessing Officer. The assessee, in response, claimed to be a primary co-operative agricultural and rural development bank, which category of co-operative banks stood excepted under section 80P(4). The same did not find favour with the Assessing Officer as the assessee was engaged in financing activities even other than purely agricultural activities. Also, its area of operation was not confined to one Taluk, as stipulated under the defining clause of the provision of section 80P(4) per Explanation (b) thereto. Accordingly, the Assessing Officer rejected the assessee’s claim. On appeal, the Commissioner (Appeals) upheld the order of the Assessing Officer. On appeal to Tribunal the Tribunal held that in order to claim deduction, assessee was required to show that its principal business consisted of providing financial accommodation to its members for agricultural purposes or for purposes connected with agricultural activities (including marketing of crops) aforesaid requirement had to be satisfied by assessee independently for each year, as there could well be a change in profile of its lending activities with time,, there being no finding in matter by authorities below, case was to be remanded back for disposal afresh. For the – Assessment year 2007-08, Income of co-operative societies’ and, further having regard to fact that area of operation of assessee-society exceeded ‘a taluk’, there was no basis to consider assessee as being a primary co-operative agricultural and rural development bank as defined in section 80P, so as to be entitled for tax benefit there under on its income. Accordingly the appeal was decided in fvaour of revenue. [A.Y. 2007-08]
Kekri Sahakari Bhumi Vikas Bank Ltd.v.ITO (2012) 54 SOT 649(URO)( Jaipur) (Trib.)

S.92(C): Avoidance of tax-Transfer Pricing-Discounted value- Law on valuation of shares of a closely held company explained.
The assessee held 50% of the shares in L&T Infocity Asendas Ltd (“LTIAL”) while the rest were held by L&T Infocity Ltd. The assessee and L&T Infocity agreed to sell their entire holding in LTIAL to Ascendas Property Fund India (“APFI”), an AE of the assessee for a consolidated price of Rs. 79 crores. The assessee also held shares in Ascendas (India) IT Park Ltd (“AITPL”) which was also separately sold to APFI. The assessee claimed that the shares were sold at arms’ length price on the basis that (a) with regard to LTIAL, a third party (L&T Infocity) had sold its holding at the same price as that of the assessee and so the price was supported by “internal CUP” and (b) with regard to AITPL, the valuation was determined by a CA in accordance with the Controller of Capital Issues (CCI) Valuation guidelines. The TPO/AO & DRP held that the transfer of shares in LTIAL by L&T Infocity to APFI was not an “uncontrolled comparable transaction” and so the argument of “internal CUP” was not available. With regard to the transfer of shares in AITPL, it was held that the valuation based on CCI guidelines was not acceptable. Instead, the valuation of both sets of shareholdings was determined on the basis of the “Discounted Cash Flow (DCF)” method for valuation of an enterprise and an addition of Rs. 239 crores was made. On appeal by the assessee to the Tribunal, held:

(i) Though s. 92C(1) provides that the arm’s length price in relation to an international transaction “shall” be determined by any of the methods set out therein, the selection of the method cannot be done with a water-tight attitude as such an interpretation will defeat the very purpose of enactment of transfer pricing rules and regulations and also detrimentally affect the effective and fair administration of an international tax regime. There may be difficulties in ascertaining the fair market value, but such difficulties should not be a reason for not adapting the prescribed methods. Some subtle adjustments in the methodology prescribed for evaluation of an international transaction are required to be done;

(ii) To a transaction of sale of shares in a closely held company, none of the six methods prescribed in s. 92C & Rule 10B apply. Accordingly, while determining the most appropriate method, the modern valuation methods fitting the type of underlying service or commodities cannot be ignored. Fixing enterprise value based on discounted value of future profits or cash flow is a method used worldwide. The endeavor is only to arrive at a value which would give a comparable uncontrolled price for the shares sold. Viewed from this angle, the discounted cash flow method adopted by the TPO is in accordance with s. 92C(1);

(iii) The assessee’s argument, with regard to the sale of shares in LTIAL, that the price is at ALP as per the CUP method as a third party (L&T Infocity) sold the same shares at the same price to the same buyer is not acceptable because the sale of shares by L&T Infocity to APFI cannot be said to be uncontrolled. The fact that a common agreement for sale of the shares for a consolidated sum was entered into by the assessee with L&T Infocity shows that the transaction was not independent but was a joint effort;

(iv) The assessee’s argument, with regard to the sale of shares in AITPL, that the TPO was bound by the CCI guidelines on valuation of shares is also not acceptable because the CCI guidelines were issued for a totally different purpose and cannot be transported into a pricing methodology prescribed for fixing ALP. Instead, the Discounted Cash Flow method for valuation is an accepted international methodology for valuing enterprises and for determining the value of the holding of an investor. Investors are interested in ascertaining the present value of their investments, considering the future earning potential of the underlying asset. Ascertaining the net present value of future earnings is more appropriate where market value of an investment is not readily ascertainable by conventional methods;

(v)        The value of equity can be obtained in two methods under the Discounted Cash Flow method. The first method is to discount the cash flow expected from the equity investment and the second method is to ascertain the value of the enterprise by applying DCF on its future earnings and then dividing it with the number of shares. The most important aspect in the application of DCF is the discounting factor used for working out the net present value (NPV). The factor generally used is the Weighted Average Cost of capital. The difficult parts are (i) determining the future cash flows, (ii) determining the cost of equity, (iii) determining the cost of debt and (iv) determining the period of discounting. For a valuation to have some amount of objectivity the variables must be considered within a reasonable limit so that acceptable values can be arrived at. Even a slight change in the discounting ratio will result in substantial change in the valuation of the company. If the ALP of the shares are worked out without considering a reasonable value for the enterprise, it will result in injustice. (Matter remanded to the TPO for a reworking). (A. Y. 2007-08)
Ascendas (India) Pvt. Ltd v. DCIT (Chennai)(Trib.) www.itatonline.org

S.115JAA: Company-Book profits- Deemed income-Surcharge-Amount of surcharge and education cess cannot be included in     amount of MAT credit under section 115JAA.
 In allowing credit of MAT of previous year under section 115JAA against the claim of Rs.63,51,128, the claim was allowed only for an amount of Rs. 56,05,585. There was a short fall in the allowance of credit of MAT by Rs. 7,45,543 being the amount of surcharge and education cess. The assessee filed an appeal before Commissioner (Appeals) and prayed that due credit of MAT including surcharge & education cess should be considered under section 115JAA and in support relied upon Explanation 2 of section 115JB which was inserted by Finance Act, 2008 with retrospective effect from 1-4-2001.Tribunal held  that amount of surcharge and education cess cannot be included in amount of MAT credit under section 115JAA.[A.Y. 2010-11]
Richa Global Exports (P.) Ltd. v. ACIT (2012) 54 SOT 185 ( Delhi) (Trib.)

S.115JB: Company –Book profits-Assessment was made under normal provisions of the Act- Matter remanded to the Assessing Officer to consider the applicability of book profit and decide . (S.143(3)
The Assessee submitted its return of income showing nil income and book profit under section 115JB. Assessing Officer did not proceed to consider the case under section 115JB. Assessing Officer completed the assessment of the assessee company u/s. 143(3) after issuing statutory notices u/s. 142(1) and 143(2) by making certain additions/disallowances, though making a reference to s. 115JB in one line in the operative part of the order. The CIT(A) also proceeded to decide the matter as though it was a regular assessment u/s. 143(3) and deleted the additions after examining the relevant material facts. Tribunal erred in holding that the AO has not made the impugned additions under the regular provisions i.e. s. 143(3) and in upholding the deletion of the additions merely because of the aforesaid one line in the operative part of the AO’s order. On appeal by revenue  the  orders of the Tribunal and the CIT(A) and the assessment order are set aside and the matter was remanded to the AO to decide whether the assessment was required to be made u/s. 115JB or under s. 143(3).
CIT. v. International Auto Ltd. (2012) 254 CTR 298 (Jharkhand) (High Court)

S. 115JB: Company-Book profits-Provision for site restoration expenses debited to profit and loss account held to be allowable.
The assessee created a provision for site restoration expenses and debited same to profit and loss account. The Assessing Officer added the same  for the purpose of computing the profit under section 115JB as unascertained liability. On appeal, the Commissioner (Appeals) after analyzing the various clauses of the production sharing agreement, held that the said provision was for ascertained liability. On appeal to the Tribunal  the Tribunal also confirmed the  view of Commissioner (Appeals). [A. Y.2002-03, 2004-05]
ACIT  v. Tata Petrodyne Ltd. (2012) 54 SOT 191 (Mum.) (Trib.)

S.115WB: Fringe benefits–Deeming fixation-Sales promotion-Where benefit was fully attributable to employees or where expenditure did not result in any benefit at all to employees, deeming fiction under section 115WB(2) was not attracted.
Assessee-company, filed return of Fringe benefits without considering expenses on sales promotion, conveyance, tour and travel and employee referral scheme gifts on ground that said expenditure was neither incurred for benefit of employees nor was it paid to them and there was no employer-employee relationship with person on whom said expenses were incurred. Assessing Officer, however, held that as per section 115WB(2) and Circular No. 8 of 2005, FBT was leviable even though there was no employer-employee relationship. Expenditure on employee referral scheme gift even though satisfied employer-employee relationship, could not be subject to FBT since employees had paid tax on such amount. Legitimate business expenditure in nature of sales promotion, conveyance, tour and travel and gifts, which did not result in any benefit to employees, was not liable for FBT. [A.Y. 2008-09]
Toyota Kirloskar Motor (P.) Ltd. v. Add. CIT (2012) 54 SOT 70(URO) (2012) (Ban) (Trib)

S.115WB : Fringe benefits – ‘Employees’ Welfare’ – Distribution of souvenirs is employees welfare expenditure.
Assessee treated expenditure incurred on distribution of souvenirs to employees as resulting in "employees welfare" and computed value of FBT at 20 per cent. Assessing Officer applied 50 per cent rate, treating same as ‘Gifts’. The Tribunal held that  revenue could not dictate as to how and in what manner assessee was to incur expenditure on employees’ welfare and expenditure, in instant case, been had correctly been treated as "employees’ welfare expenditure" .
[A.Y. 2008-09]
Toyota Kirloskar Motor (P.) Ltd. v. Add. CIT (2012) 54 SOT 70(URO) (2012) (Ban) (Trib.)

S.119: Income-tax authorities – Instructions – CBDT – Fringe benefits – Instructions to subordinate authorities  is not binding on assessee , appellate authorities and  Courts.
Circulars can bind ITO but they are not binding on assessee, appellate authorities and Courts  therefore  in view of facts stated under heading ‘Fringe benifits’, Circular No.8 of 2005 could not be relied upon to disadvantage of assessee in support of conclusion that expenditure in instant case was liable for FBT. [A.Y. 2008-09]
Toyota Kirloskar Motor (P.) Ltd. v. Add. CIT (2012) 54 SOT 70(URO) (2012) (Ban) (Trib.)

S.132: Income-tax authorities-Powers-Search and seizure-Authorization-Warrant in joint names/group name-Held to be not invalid-Orders of Tribunal set aside.
All the concerns are housed in one and the same building and the department proceeded to search the premises as it a group concerns with common store rooms and common facilities. All  the concerns are owned and managed by same party though under separate group names and concerns for the purpose of income tax. When the notice was  issued the  assessee  has not taken objection. It was before the Tribunal the assessee raised the objection stating that the warrant was not issued separately. The Tribunal without reading the entries in the prescribed form, up held the claim of assessee .   On appeal the court held that,  It was held that Search warrant issued in the name of group of concerns, names of each and every assessee separately and specifically mentioning the premises to be searched where all the concerns are housed could not be said to be invalid. Order of Tribunal set aside  and the appeals are restored back to Tribunal for decision on merits.
CIT v. Khyber Foods & Anr. (2012) 254 CTR 629 (Ker.)(High Court)

S.139(5): Assessment-Return-Revised return –Intimation does not constitute assessment – Revised return held to be valid. [S. 143 (1)(a)]
A revised return filed within the time limited allowed under section 139 (5) of the Act cannot be treated as invalid as the original return was proceed and an intimation under section 143 (1) (a) was issued to the assessee before filing the revised return, as the intimation under section 143 (1)(a) does not constitute assessment. (A.Y. 2005 – 06)
Tarsem Kumar v. ITO & Ors. (2012) 80 DTR 164 (P&H)(High Court)

S.145: Assessment-Method of accounting-– Deductions of interest paid to third parties – Estimation of income by applying net profit rate.
In view of the earlier year Tribunal order which has not been reversed by any higher forum, the Tribunal directed Assessing Officer to allow deduction of interest paid to the parties from the income determined after applying net profit rate. (A.Y  2004-05 , 2005-06).
ACIT v. G. R. Contractor (2012) 150 TTJ 65 (Jodh.) (UO)(Trib.)

S.147: Reassessment- Intimation-Fresh material-Even section  143(1) Intimation cannot be reopened u/s 147 without “fresh material”. [S.143 (1)].
The assessee filed a ROI in which it claimed s. 80HHC deduction of Rs. 13.35 crores. The AO accepted the ROI u/s 143(1). He thereafter reopened the assessment u/s 147 on the ground that the sale proceeds of the quota was wrongly considered as export turnover and that it was business profits and 90% thereof had to be reduced u/s 80HHC. The assessee challenged the reopening on the ground that as there was no “fresh material“, the AO had no jurisdiction to reopen the s. 143(1) Intimation. This was upheld by the Tribunal (order attached) by relying on CIT v Kelvinator of India Ltd.(2010) 320 ITR 561 (SC). On appeal by the department to the High Court,  held dismissing the appeal:

S.147 permits an assessment to be reopened if there is “reason to believe”. It makes no distinction between an order u/s 143(3) or an Intimation u/s 143(1). Accordingly, it is not permissible to adopt different standards while interpreting the words “reason to believe” vis-à-vis S.143(1) and S.143(3). The department’s argument that the same rigorous standards which are applicable in the interpretation of the expression when it is applied to the reopening of a s. 143(3) assessment cannot apply to a s. 143(1) Intimation is not acceptable because it would place an assessee whose return is processed u/s 143(1) in a more vulnerable position than an assessee in whose case there is a full-fledged s. scrutiny assessment u/s 143(3). Whether the return is put to scrutiny or is accepted without demur is not a matter which is within the control of assessee. An interpretation which makes a distinction between the meaning and content of the expression “reason to believe” between a case where a s. 143(3) assessment is made and one where an Intimation u/s 143(1) is made may lead to unintended mischief, be discriminatory & lead to absurd results. In Kelvinator 320 ITR 561 (SC) it was held that the term “reason to believe” means that there is “tangible material” and not merely a “change of opinion” and this principle will apply even to s. 143(1) Intimations. On facts, the AO reached the belief that there was escapement of income “on going through the ROI” filed by the assessee. This is nothing but a review of the earlier proceedings and an abuse of power by the AO. There is no whisper in the reasons recorded of any tangible material which came to the possession of the AO subsequent to the issue of the Intimation. It reflects an arbitrary exercise of the power conferred u/s 147 (ACIT v Rajesh Jhaveri Stock Brokers(2007) 291 ITR 500 (SC) distinguished)
CIT v. Orient Craft Ltd (Delhi) ( High Court) www.itatonline.org.

S.147: Reassessment–Transferable development rights premium – Reassessment proceedings  – the  income cannot be less than the income originally assessed-Matter remanded to Tribunal to consider only expenses claimed to have been incurred by assessee. (S.148)
The assessee, a plot owners’ society, received a sum of Rs.12,98,742 as premium for transferable development rights from its members. In the assessment year 1999-2000, it offered the amount to tax and after deducting the expenditure incurred by it, computed the income chargeable to tax at Rs.7,27,660. This was accepted without any addition or disallowance. However, during the course of reassessment proceedings, the assessee contended that the amount was not taxable on the principle of mutuality. The Assessing Officer rejected the contention and held that the expenses claimed were not related to the transfer fees and, hence, not allowable. Accordingly, he computed the income chargeable to tax at Rs. 13,00,740. The Commissioner (Appeals) held that once the assessee voluntarily offered the amount to tax, it was not open to the assessee to contend in the reassessment proceedings that the amount was not taxable on the principle of mutuality. He further held that the assessee had not been able to prove that the expenditure was incurred for earning the taxable income and, therefore, the expenditure claimed by the assessee was not allowable. The Tribunal held that the amount was not taxable on account of the principle of mutuality. However, it upheld the order of the Commissioner (Appeals) in disallowing the expenditure of Rs.5,73,087/-. On appeal contending that the income assessed on reassessment cannot be less than the income originally assessed . The Court held that, the object and purpose of the reassessment is for the benefit of the Revenue and not for the benefit of the assessee and, therefore, in the reassessment proceedings, the assessee could not be permitted to convert the reassessment proceedings as his appeal or revision in disguise. Since the decision of the Tribunal was contrary to the decision of the Supreme Court, the decision of the Tribunal was set aside and the matter was restored to the file of the Tribunal for fresh decision in accordance with law. Since the amount received by the assessee had been voluntarily offered to tax, the question of considering the taxability of that amount by applying the principle of mutuality in the reassessment proceedings did not arise. It was only the expenditure claimed to have been incurred by the assessee which was disallowed in the reassessment that had to be considered by the Tribunal. (A. Y. 1999-2000 )
CIT v.Jaihind Co-operative Housing Society Ltd. [2012] 349 ITR 537(Bom.)( High Court)

S.147: Reassessment–Specific information received that income escaped assessment-Tribunal finding Assessing Officer recorded reasons for reopening assessment–Finding of fact- Reassessment was held to be justified. (S. 68, 148 )
A specific information was received by the Assessing Officer through the office of the Commissioner that the assessee had received the amount of Rs. 1,60,000 from three persons through bank accounts and, on the basis thereof he reopened the assessment under section 147 of the Income-tax Act, 1961. The Assessing Officer held that the provisions of section 68 were applicable. The Commissioner (Appeals) held that there was no nexus between the information received and the reasons recorded by the Assessing Officer and held the assessment void. The Tribunal upheld the reopening of assessment holding that the Assessing Officer had recorded detailed reasons to apply section 68 of the Act. On appeal :
Held, dismissing the appeal, that the officer did take into consideration the relevant materials while forming his prima facie opinion that reassessment proceedings were warranted. There was no substantial question of law.. Appeal of assessee was dismissed. .(A. Y. 2001-2002)
Contel Medicare Systems P. Ltd. v. CIT [2012] 349 ITR 649 ( Delhi) ( High Court)
Edirorial: Order of the Appellate Tribunal in ITO v. Contel Medicare Systems P. Ltd. [2012] 20 ITR  701(Trib.)(Delhi) affirmed.

S.147:Reassessment- Change of opinion- Notice- Objection not raised before the Assessing Officer hence objection was held to be not valid.(S.148)
The Tribunal held that on the facts the assessee has failed to demonstrate that during original assessment proceedings under section 143(3), a considered view was taken by Assessing Officer, question of forming an opinion will not arise and hence, question of change of opinion also will not arise and, thus, re-opening is to be upheld. As regards objections to the notice, where assessee had appeared during reassessment proceedings in response to notice/letter and cooperated in assessment proceedings, it would be deemed that notice had been duly served upon assessee in time in accordance with provisions of Act, and therefore, assessee could not take any objection in any proceedings or enquiry that no notice was given as assessee had not raised such objection before completion of said reassessment proceedings, hence cannot object now accordingly the reassessment was held to be justified.  .(A.Y.2005-06)

Hindustan Thompson Associates (P.) Ltd. v. ACIT(2012)53  SOT 389 (Mum)(Trib.)

S.147: Reassessment- Roving enquiry-Assessing Officer cannot reopen assessment merely on basis of roving enquiry.
Assessing Officer  reopened  the assessment on ground that assessee-society utilized Rs. 13.69 crores on acquisition of certain overseas equipment etc. as per report of Comptroller and Auditor General (Civil) for Govt. of Andhra Pradesh while a cross verification of return shows that total assets amounted to Rs. 4.14 lakhs only, However, no addition was made with respect to purchase of equipments. When  initial reason given for reopening did not survive anymore and Assessing Officer could not go beyond reasons given by him for reopening .[A .Y. 2004-05]
DCIT v Andhra Pradesh Right to Sight Society(2012)53 SOT 480 (Hyd.)(Trib.)

S.147: Reassessment- Non-disclosure of primary facts –Notice-(S.148 )
Assessing Officer reopened assessment on ground that hire charges paid by assessee to foreign shipping companies had been made without deducting TDS and same had to be disallowed. Since Assessing Officer had valid reasons to believe that income chargeable to tax had escaped reassessment was valid. Notice issued within time but served after expiry of time limitation, is a valid notice (2002-03 to 2004-05 and 2006-07)
Poompuhar Shipping Corpn. Ltd. v. ADIT (International Taxation)(2012) 53 SOT 451(Chennai)(Trib.)

S.147: Reassessment- Recorded reasons- Non-supply of recorded reasons before passing reassessment order renders the reopening void. Subsequent supply does not validate reassessment order
 The AO issued a notice u/s 147 to reopen the assessment. Though the assessee filed a ROI and requested for a copy of the recorded reasons, the same were not furnished to it. The AO passed a reassessment order and thereafter supplied the assessee with a copy of the recorded reasons. In appeal before the Tribunal, the assessee claimed that as the recorded reasons had not been furnished to it before passing the reassessment order, the reassessment order was void. Held by the Tribunal allowing the appeal:
In GKN Driveshafts(India) Ltd. v ITO (2003)  259 ITR 19 (SC) it was held that the AO is bound to furnish the reasons recorded for reopening the assessment within a reasonable time so that the assessee can file its objections thereto. Even as per the rules of natural justice, the assessee is entitled to know the basis on which the AO has formed an opinion that income has escaped assessment. There is no justifiable reason for the AO to deprive the assessee of the recorded reasons. If the reasons are not furnished to the assessee during the assessment proceedings, then the subsequent furnishing of the reasons after completion of assessment proceedings serves no purpose and amounts to the assessee being denied its right to raise objections to the validity of the reopening proceedings. A reassessment order passed without furnishing the recorded reasons is not sustainable in law. The furnishing of reasons after completion of assessment does not make good the defect/invalidity with which the initiation of proceedings u/s 147/148 is tainted (K V Venkataswamy Reddy (Bang) (attached), Tata International Ltd (ITAT Bom) & CIT v Videsh Sanchar Nigam Ltd. (2012) 340 ITR 66 (Bom.) (SLP dismissed) followed) (A.Y. 2005-06)
Synopsys International Limited v. DDIT (Bang.)(Trib.) www.itatonline.org

S.153(2A): Assessment-Limitation-Assessment on remand by Tribunal- Order of remand on 5-7-1994-Order of assessment not passed within two years from end of financial year in which order of remand passed assessment  held to be barred by limitation.
The return filed by the assessee for the assessment year 1988-89 upon being taken in scrutiny, the Assessing Officer made disallowances of commission paid to two agencies. The Assessing Officer computed the total income of Rs. 13,22,030 and demanded tax and interest on such basis and ordered initiation of penalty proceedings under sections 271(1)(c) and 273(2)(aa) of the Act. The assessment order was confirmed by the Commissioner (Appeals). The Tribunal accepted the contention of the assessee that the additions were made without offering an opportunity to the assessee to cross-examine the representatives of the two agencies whose statements were recorded and relied upon, behind the assessee’s back. The Tribunal by its order dated July 5, 1994, remitted the matter to the file of the Assessing Officer with a direction to summon those two parties again and allow the assessee to cross-examine them. For a long time thereafter, the Assessing Officer did not take any steps pursuant to the order of the Tribunal. Since despite repeated representations, the authorities did not take any steps, the assessee filed a writ petition and prayed for refund. During the pendency of the petition, the authorities were in the process of activating the assessment proceedings which had remained dormant for a number of years. The assessee contended that the assessment proceedings were barred by limitation. The Court allowing the Writ petition held that the Assessing Officer was required to pass a fresh order of assessment which was necessary on account of the order passed by the Tribunal under section 254 of the Act cancelling the assessment framed by the Assessing Officer. The period of limitation prescribed in section 153(2A) would apply. While the order was served on the Commissioner on August 3, 1994, a fresh order of assessment had to be passed by the Assessing Officer, within a period of two years of the end of the such financial year. This not having been done, the proceedings had become time-barred. Accordingly the petition of assessee was allowed. ( A. Y. 1988-1989 )
Instruments and Control Co. v.Chief CIT [2012] 349 ITR 571(Guj.) (High Court)

S.154: Rectification of mistakes-Debatable-Business expenditure-Delay in filing return- Interest.[S. 37(3A) 139(8)]
Question whether newspapers were small and whether expenses were spent on sales promotion is debatable, rectification proceedings to disallow expenditure held to be not valid. Computation of interest payable, mistake in calculating period of interest, reduction of advance tax paid after due date of filing return and delay in filing return being obvious mistakes which could be rectified. (A.Y. 1979-1980 )
Kesharwani Zarda Bhandar v.CIT [2012] 349 ITR 519 (All.) (High Court)

S.158B: Block assessment- Definitions- Undisclosed income-Deduction at source-Advance tax- If return of income is not filed  on due date ,though tax is deducted and advance tax is paid income will be assessed as undisclosed income.(S.132,158BD )
 A search u/s 132 was conducted on 23.2.1996 when it was detected that though the assessee had taxable income for AY 1995-96 it had not filed a ROI and the due date (31.10.1995) had lapsed. The AO issued a s. 158BD notice directing the assessee to file a return for the block period. The assessee claimed that as it had paid advance tax on the income for AY 1995-96, the income could not be said to be “undisclosed“. The AO rejected the claim though the Tribunal and High Court accepted the assessee’s claim on the basis that payment of Advance Tax itself necessarily implies disclosure of the income on which the advance is paid. On appeal by the department to the Supreme Court, held reversing the Tribunal and High Court:
S.158B(b) defines the expression “undisclosed income” to mean that income “which has not been or would not have been disclosed for the purposes of this Act”. The only way of disclosing income on the part of an assessee is through filing of a return and therefore an “undisclosed income” signifies income not stated in the return filed. It cannot be said that payment of Advance Tax by an assessee per se is tantamount to disclosure of total income. There can be no generic rule as to the significance of payment of Advance Tax in construing intention of disclosure of income. This depends on the time at which the search is conducted in relation to the due date for filing return. If the search is conducted after the expiry of the due date for filing return, payment of Advance Tax is irrelevant in construing the intention of the assessee to disclose income because it is a case where income has clearly not been disclosed. The possibility of the intention to disclose does not arise since the opportunity of disclosure has lapsed. If search is conducted prior to the due date for filing return, the opportunity to disclose income by filing a return still persists. In such a case, payment of Advance Tax may be a material fact for construing whether an assessee intended to disclose. An assessee is entitled to make the legitimate claim that even though the search or the documents recovered show income earned by him, he has paid Advance Tax for the relevant assessment year and has an opportunity to declare the total income, in the return of income, which he would file by the due date. Hence, the fulcrum of such a decision is the due date for filing of return of income vis-à-vis date of search. Also, because Advance Tax is based on estimated income, it cannot result in the disclosure of the total income assessable and chargeable to tax. The proposition that payment of Advance Tax is tantamount to disclosure of income would be contrary to the very purpose of filing of return. On facts, as the assessee had not filed the ROI by the date of search and the due date had lapsed, the income found was “undisclosed” even though advance-tax thereon had been paid. Similarly, as TDS is also computed on the estimated income of an assessee for the relevant FY, it does not amount to disclosure of income, nor does it indicate the intention to disclose income if the ROI is not filed.(A.Y.1995-96)
ACIT v. A. R. Enterprises (SC) www.itatonline.org

S.158BE: Block assessment –Time limit- Prohibitory order cannot extend the limitation period for passing order. 
Search was conducted on 12.12.2001 and concluded on 13.12.2001 and Panchanama was also drawn.  Thereafter, subsequent Panchanamas drawn on 08.02.2002 and 15.02.2002 merely issuing prohibitory orders could not extend the limitation period for passing the assessment order. (Block Period – 01.04.1995 to 12.12.2001)
A. Rakesh Kumar Jain v. Jt. CIT (2012) 80 DTR 257 (Mad.)(High Court)

S.167B: Charge of tax-Shares of members unknown-Association of persons or individuals-Co-owners inheriting property from their ancestors-No evidence to show that they acted as an association of persons–Assessable in status of individual.[S. 2(31)]
In order to assess individuals as an association of persons, the individual co-owners should have joined their resources and thereafter acquired property in the name of the association of persons and the property should have been commonly managed. Only then could the income be assessed in the hands of the association of persons. Conversely, the mere accruing of income jointly to more persons than one would not constitute them an association of persons in respect of such income. In other words, unless the associates have done some acts or performed some operations together, which have helped to produce the income in question and that had resulted in that income, they cannot be termed as an association of persons. Unless the members combine or join in a common purpose, it cannot be held that they have formed themselves into an association of persons. Held accordingly, that the assessees, co-owners, had inherited the property from their ancestors and there was nothing to show that they had acted as an association of persons. Thus, the rental income from the plinths was to be assessed in the status of individual. Once it was held that the income was to be assessed as individual and not an association of persons section 167B was not applicable. The income in the hands of the assessees could not be assessed in the status of an association of persons. Accordingly the appeal of assessee was allowed.( A. Y. 2004-2005 )
Sudhir Nagpal v.ITO [2012] 349 ITR 636 ( P & H) (High Court )

S.195: Deduction  at source -Non-resident –Foreign shipping companies.
Assessee-Government undertaking was engaged in transporting coal from one port to another port. For said purpose, assessee was using its own vessels as well as hiring vessels from foreign companies. Assessing Officer disallowed hire charges paid by assessee to foreign companies on ground that assessee had not deducted tax at source. Since said hire charges was income in hands of foreign shipping companies for service rendered in India and it was not shown by assessee that foreign shipping companies were exempted by DTAA from payment of tax, assessee was liable to deduct to tax at source.[A.Y.2002-03 to 2004-5 , 2006-07)]
Poompuhar Shipping Corpn. Ltd. v. ADIT (International Taxation) (2012) 53 SOT 451(Chennai)(Trib.)

S.197: Deduction at source – Certificate for lower rate – Certificate cannot be denied on the ground that financial year is over directed to issue certificate.  
Assessee was a non-profit making organization involved in general public utility services. In past certificate of no-deduction was issued under section 197, for financial year 2009-10. Assessee filed its application on 22-6-2009 for issuance of certificate under section 197.Said application was rejected by impugned order dated 13-8-2010 on ground that there was letter of Assessing Officer dated 25-3-2010 reporting ITO (TDS) that an amount of Rs. 27,36,625 for assessment year 2004-05 and Rs. 4,62,13,909 for year 2005-06 was outstanding against assessee. However, it was found that such reason was not at all correct because as on 25-3-2010, no dues was outstanding against assessee as demand raised for assessment years 2004-05 and 2005-06 was nullified by Tribunal much before. The court held that  necessary certificate should be issued by ITO (TDS) making it effective for financial year in question and same could not be denied on ground that relevant financial year was over. (A.Y.2010-11)  
Management Committee (CFH Scheme) v ITO (2012) 210 Taxman 491(Orissa))(High Court)

S.206C: Collection at source– Licence fee-Purchase price – Licence fee for liquor business did not form purchase price hence not required to collect tax at source.
Licence fee is the auction money which is offered by a buyer in an auction at the fall of hammer in an auction. It is a fee charged by the Govt. for granting exclusive privilege of selling by retail any country liquor or foreign liquor in the shop.  Said privilege is a permission to carry on the liquor business.  There is no sale or purchase of that right as it does not relate to a merchandise goods.  It is merely a sort of leave and licence to carry on the business in liquor.  Element of `sale’ as conceptually understood is not involved while charging licence fees. Therefore, it was held  that the licence fee did not form part of purchase price of the liquor and assessee was not required to collect tax at source on the licence fee. (A.Y. 1989 -90 to 1997-98)
CIT v. District Excise Officer, Muzaffar Nagar & Anr.(2012) 254 CTR  442(All.)(High Court)        

S.220: Collection and recovery-Interest – Quantification – Date from which chargeable- Interest is chargeable from the appellate order as  the notice  of demand was served after the appellate order.(S. 140A(3), 156 )
Assessee submitted his self assessed returns of income, quantifying at  Rs.1,44,74,480/-. Assessees income was assessed at Rs.1,45,40,721 u/s. 143(3) of the IT Act 1961. On 29th Sept. 1976, this return was subjected to proceeding u/s. 148 and ex parte order was passed on 29th March, 1982 which was vacated on 8th July, 1982 and the case was reopened u/s. 146. Then the assessee submitted another return of income of Rs.1,96,91,399 on 12th Jan., 1984. After several rounds of appeals, etc., ultimately the tax liability of the assessee was determined by the appellate order dated 24th March. 1992. The issue involved in this tax appeal was only whether the assessee. Who himself submitted revised returns of self-assessment of his income  u/s. 140A of the Act of 1961, was liable to pay interest from the date of his filing revised returns, i.e. from 12th Jan. 1984, or was liable to pay interest when his tax liability was finally determined by the appellate order dated 24th March, 1992.It was held that Demand notice u/s. 156 having been issued to the assessee after determination of tax liability as per appellate order dated 24th March, 1992, assessee was liable to pay interest under s. 220(2) from that date and not from 12th Jan, 1984 when the assessee had field return.
CIT v. Late Misrilal Jain Through Executor Gyanchand Jain (2012) 254 CTR 554 (Jharkhand)(High Court)

S.234B:  Interest-Advance tax-Book profit- Retrospective amendment-Interest not leviable.
Where advance tax paid by assessee fell short on account of retrospective amendment made by Finance Act, 2008 inserting section 115JB(2), Explanation 1(h) which provided that book profit be increased by amount of deferred tax with effect from 1-4-2001, interest under section 234B could not be charged (A.Ys. 2005-06, 2006-07) 
DCIT v. Indo Rama Textiles Ltd. (2012) 53 SOT 515 (Delhi) (Trib.)

S.234B: Interest- Advance tax-Book profit-While calculating interest under sections 234B and 234C no credit of MAT including surcharge and education cess could be given. (S.234C)
The Tribunal held that while calculating, interest under sections 234B and 234C no credit of MAT including Surcharge and education cess could be given.[A.Y. 2010-11]
Richa Global Exports (P.) Ltd. v. ACIT (2012) 54 SOT 185 ( Delhi) (Trib.)

S.245C: Settlement Commission – Application- Maintainability-Case- Merely  because return was accepted under section 143(1), case of assessee cannot be deemed to be pending for assessment only because final order of assessment under section 143(3) was not passed. Assessments had become time-barred without any notice under section 143(2) and even final time-limit for passing orders, even if such notices were issued, had expired. Assessee’s application was not maintainable.(S. 143(1)(143(2), 245A(b), Article 226 of Constitution of India ) 

The assessee filed an application before the Settlement Commission for settlement of his case for assessment years 2005-06 to 2011-12. He also voluntarily paid tax as per his computation of the settlement. The revenue raised preliminary objection to the maintainability of the application for settlement. The Settlement Commission turned down such preliminary objection ground that the applicant had satisfied the conditions laid down under section 245C.Against the order of admission the Commissioner filed the writ petition . The court held that, From the statutory provisions, one can immediately gather that with effect from 1-6-2007, significant changes were made in the definition of the term ‘case’ defined under section 245(b). Previously, the definition of such term was much wider and included vast number of situations where not only the original assessment would be pending before the Assessing Officer, but would also cover the cases of assessment or re-assessment under section 147 and included the proceedings which would be pending by way of appeal or revision in connection with such assessment or re-assessment which may be pending before an income-tax authority on the date on which the application under section 245(C)(1) was made. After 1-6-2007, such definition was made more restrictive. After such amendments, the term ‘case’ would cover any proceedings for assessment under the Act in respect of an assessment year or years which may be pending before an Assessing Officer on the date on which the application under section 245C(1) is made. Thus, large number of other proceedings, such as, arising out of assessment or re-assessment under section 147 or appeal or revision pending before the income-tax authorities would no longer be governed by the newly introduced definition of the term ‘case’. Therefore, the newly introduced definition of the term ‘case’ would cover only those situations where an assessment is pending before the Assessing Officer or it is still possible for him to pass any order of assessment. Undoubtedly, acceptance of the return filed under section 143(1) cannot be categorized as an order of assessment. Under such a situation, obviously mere acceptance of the return under section 143(1) would not exclude an assessee’s case from the definition contained in section 245(b ). However, to contend that till the final order of assessment is passed, whether the revenue takes a particular case in scrutiny or not, the assessment should be deemed to be pending, would be stretching the language used in the definition, as also providing something which is not stated in the language. Accepting such a contention would lead to strange results. In a given case, if the assessment of an assessee is not taken in scrutiny and the revenue never desired to take the same in scrutiny, for long number of years, the assessee could contend that since no final order of assessment has been passed, his case for assessment can be stated to be pending before the Assessing Officer within the meaning of clause (b ) of section 245A. Surely, the legislature never desired to bring about such anomalous situation. Accepting the proposition that even where by efflux of time, it is not open for the Assessing Officer to pass an order of assessment, merely because the return was accepted under section 143(1), the case of the assessee should be deemed to be pending for assessment only because the final order of assessment under section 143(3) was not passed, would run counter to the statutory amendments made in section 245A(b).  In the present case, the facts are not in dispute at all. For the assessment years 2005-06 to 2008-09, assessments had become time barred without any notice under section 143(2) and even final time limit for passing the orders even if such notices were issued had expired by the time the assessee filed his application for settlement before the Commission. The assessee’s application qua these years, therefore, was not maintainable. Thus the Settlement Commission erred in holding to the contrary in the impugned order.(A.Y. 2005-06 to 2008-09)
CIT v Income-tax Settlement Commission & ors(2012) 210 Taxman 529 / 80 DTR 354 (Guj.)(High Court)

S.254(2A): Appellate Tribunal- Power –Stay – Third Proviso- Tribunal has the power to grant unlimited stay of demand.
 The assessee’s appeal was not disposed of by the Tribunal as a similar issue was pending in the case of another assessee before the Supreme Court. The Tribunal had granted a stay on recovery of the demand. On the expiry of 365 days, the assessee filed an application seeking extension of the stay for a further period. The assessee relied on CIT v Ronuk Industries (2011) 333 ITR 99 (Bom), Tata Communications Ltd v ACIT (2011) 138 TTJ 257 (Mum)(SB) and Qualcomm Incorporated (ITAT Del) where it had been held that despite the Third Proviso to s. 254(2A), the Tribunal had the power to grant stay of demand beyond 365 days if the assessee was not at fault. The Department opposed the application by relying on Ecom Gill Coffee Trading (K’Taka HC) where a contrary view was taken and on ACIT v Dunlop India Ltd (1985) 154 ITR 172 (SC). Held by the Tribunal allowing the stay application:

The assessee is seeking extension of stay beyond 365 days. The assessee argued that on similar facts the matter is pending before the Supreme Court in case of Idea Cellular Ltd and Bharti Cellular Ltd wherein ad interim order had been passed. In CIT vs. Ronuk Industries Ltd (2011) 333 ITR 99 (Bom) & Tata Communications Ltd v ACIT (2011) 138 TTJ 257 (Mum) (SB) it has been held that the Tribunal has power to extend the period of stay beyond 365 days under the Third Proviso to s. 254(2A) even if the delay in disposing off the appeal is not attributable to the assessee as there may be several other reasons for not disposing of the appeal by the ITAT. In Qualcomm Incorporated (ITAT Del) it was held that as there was a cleavage of opinion between the Bombay High Court and the Karnataka High Court and there was no decision of the jurisdictional High Court on the issue, the view favourable to the assessee has to be adopted. Consequently, the stay has to be extended subject to certain conditions. (A.Y. 2009-2010)
Vodafone West Ltd v. ACIT (Ahd.)(Trib.) www.itatonline.org

S.254(2A): Appellate Tribunal- Power –Stay of penalty proceedings before Commissioner (Appeals)-Concealment penalty proceedings can be stayed to await decision on quantum appeal so to avoid multiplicity of proceedings & harassment to assessee.
 In dealing with the assessee’s appeal, the CIT(A) enhanced the assessment by making a disallowance of Rs. 7.53 crores towards bad debts and an upward transfer pricing adjustment of Rs. 5.50 crores. The CIT(A) also initiated s. 271(1)(c) proceedings for concealment of income. The assessee filed an appeal to challenge the CIT(A)’s order and also filed a stay application seeking to restrain him from proceeding with the s. 271(1)(c) penalty proceedings. Held by the Tribunal in dealing with the stay application:

U/s 275(1)(a), the AO cannot pass an order imposing penalty u/s 271(1)(c) if the relevant assessment is subject matter of appeal before the CIT(A). The same analogy will apply where the CIT(A) initiates penalty and the first appeal is pending before the Tribunal. Accordingly, the assessee’s request that the penalty proceedings should be stayed till the disposal of appeal by the Tribunal is not unreasonable. If the CIT(A) is allowed to proceed with the penalty proceedings, prejudice will be caused to the assessee as it will have to face multiplicity of proceedings. In case the assessee succeeds in the quantum appeal, the penalty order passed by the CIT(A) will have no legs to stand while if the assessee fails in the quantum appeal, the CIT(A) will get ample time of six months to dispose of the penalty proceedings. Therefore, to prevent multiplicity of proceedings and harassment to the assessee, the CIT(A) is directed to keep the penalty proceedings in abeyance till the disposal of quantum appeal by the Tribunal (CIT vs. Wander Pvt .Ltd  (Bom.)(High Court) (ITA no 2753 of 2010) referred.www.itatonline.org)(A.Y. 2004-05)
GE India Industrial Pvt. Ltd v. CIT(A)(Ahd.) (Trib.).www.itatonline.org.)

S.260A: Appeal- High Court- Power to condone delay in filing – Retrospective      amendment.
On the date when the appeal was dismissed on the ground of limitation, there was no discretion with the Court to condone the delay. A discretion has come to the court by virtue of the amendment by inserting sec. 260A(2A). The appeal was rightly dismissed as per the then law and the subsequent amendment is not applicable as the matter has already attained finality.
Jay Batra Roy (J.B.Roy) v. Dy.CIT . Review Petition No.10 of 2011 in ITA No. 127 of 2006 dated 7/9/2012, BCAJ Pg. 34, Vol. 44-B Part 2, November 2012(All) (High Court)

S.263:Commissioner-Revision of orders prejudicial to  revenue- Non performing assets- Deduction of securitization- Two views possible revision  was held to be not valid.(S. 143(3)
The assessee company was assessed under section 143 (3) for the relevant assessment year. The commissioner thereafter revised the assessment order under section 263 of the Income-tax act, 1961,  on the ground that verification was required to be made regarding (i) extent of income arising to assessee on non-performing assets and (ii) deduction on account of securitizations . It was held that in so far interest on NPA was concerned, since it had to be considered only after recognizing income from such assets and further verification had been made by the A.O, the order could not be revised. As regards deduction of securitization income, since two views were possible and the A.O. had adopted one view after deliberating on facts, The C.I.T. could not impose his view and direct action u/s. 263. Therefore the revisional order was quashed and the assessment order restored. (A.Y. 2005-2006)
Shriram Investments Limited v .Addl. CIT (2012) 51 SOT 5(URO) (Chennai ) (Trib.)

S.263: Commissioner- Revision of orders prejudicial to revenue- Allowability of interest to partners- Revision of orders held to be not justified. [S. 40(b)]
Interest amount to partners was calculated as per daily product method by the assessee. The CIT is not justified in holding the view that the interest should be calculated on the average amount of opening and closing balances. The Tribunal further noted that the assessee has followed the product method for the purpose of calculating interest payable to the partner, since the partner was having frequent transaction of both receipts and payments. According to it, the said product method is scientific and also followed by the banks and financial institutions. The method takes into account all transactions of payments and receipts carried out throughout the year. On the other hand, the method suggested by the CIT was unscientific which does not taken into account the transactions that have taken place during the year. Therefore, the order of the CIT u/s 263 was set aside.
Muthoot Bankers vs. DCIT, Cochin ITAT, ITA No. 223/Coch/2010, decided on 27.7.2012,(2012) BCAJ Pg. 28, Vol. 44-B Part 1, October 2012(Cochin) (Trib.)

S.264: Commissioner-Revision of other order-On admission the income was assessed for the assessment year 2008-09, hence the revision application was rejected. (Constitution of India. Art 226)
In the course of assessment proceedings the assessee admitted the cash payment to builder and offered to tax for the Assessment year 2008-09.The assessee thereafter moved an application  under  section 264 before the Commissioner stating that the addition was not justified as the amount was not paid to the builder in the assessment year 2008-09 but was paid to the builder during the period from 22nd May , 1994 to 4th May 2008, since the documentary evidence to that effect could not be traced out at the relevant time and same is now traced out . The assessee requested the Commissioner to reduce addition. Commissioner rejected the application. The assessee filed writ petition. The Court held that there was categorical admission on the part of the assessee that an amount of Rs 9,74,775 were paid in cash , the entire case sought to be made out by the assessee is only afterthought and no fault can be find in the order of Commissioner rejecting the application under section 264. Accordingly the writ petition was dismissed.(A.Y.2008-09)
Laxmichand Jagshi  Vora v.CIT ( 2012) 80 DTR 193 (Bom.)(High Court)    

S.271(1)(c ): Penalty-Concealment of income-Suit by bank settled by consent terms for sum less than sum shown as outstanding to bank in assessee’s books-Not a case of concealment of income or furnishing inaccurate particulars of income hence penalty is  not attracted.
The assessee took a loan from a bank to buy a hotel but defaulted in repayment. The suit filed by the bank was settled by a consent decree on April 30, 1982, to the effect that the assessee acknowledged its liability to the bank in the sum of Rs. 42,45,477, the sum outstanding in the loan account of the bank as on April 30, 1982. However, in the books of account of the assessee, the outstanding repayable to the bank was Rs.52,07,873 as on April 30, 1982. On the ground that there had been waiver by the bank to the extent of approximately rupees ten lakhs the Department initiated proceedings under section 271(1)(c) of the Income-tax Act, 1961, against the assessee. The penalty was upheld by the High Court. On appeal  allowing the appeal,  the court held  that although in the books of account of the assessee, the outstanding amount, as on April 30, 1982, was Rs. 52,07,873 including interest, the decree in favour of the bank was for Rs. 42,45,477 because that was the amount indicated as the outstanding amount due and payable by the assessee to the bank in its books of account. The bank had not calculated the interest over the years possibly for the reason that, in its accounts, this amount was classified as a non-performing asset. In the peculiar facts, section 271(1)(c) of the Act was not applicable. (A.Y.1983-1984, 1984-1985, 1985-1986)
Northland Development and Hotel Corporation   v.CIT [2012] 349 ITR 363/80 DTR 321/254 CTR 646( SC)
Editorial: Decision of the Allahabad High Court in Northland Development and Hotel Corporation v. CIT [2006] 285 ITR 265 (All)  and ITR no 127 of 1995  is reversed.

S. 271(1)(c): Penalty- Concealment-Assessment at loss- Penalty is leviable.
Penalty  for concealment under section 271(1)(c ) is leviable even where the assessed income is loss. (Followed CIT v. Gold Coin Health Food (P) Ltd. ( 2008) 304 ITR 308 (SC)
CIT v. Unipol Chemicals Intermediates Ltd ( 2012) 80 DTR 145/211 Taxman 45 / 254 CTR 466 (SC) 

S.271(1)(c): Penalty-Concealment- Bonafide mistake-Levy of concealment penalty  under section 271(1)(c ) is not justified if income not offered to tax due to “bona fide mistake”.
 The assessee, a renowned professional international tennis player, received an award of Rs. 30 lakhs. This was disclosed in the statement of affairs filed with the ROI though not offered to tax. The AO accepted the ROI u/s 143(1). He later reopened the assessment u/s 147 at which stage the assessee offered the said amount to tax. The AO & CIT levied penalty u/s 271(1)(c) on the ground that the assessee had furnished inaccurate particulars of her income and concealed her income. However, the Tribunal cancelled the penalty on the ground that a “bona fide mistake” had been made on her behalf by her Advocate/Chartered Accountant and there was no concealment of income nor a furnishing of inaccurate particulars. On appeal by the department to the High Court, held , dismissing the appeal:

There is nothing to suggest that the assessee acted in a manner such as to lead to the conclusion that she had concealed the particulars of her income or had furnished inaccurate particulars of income. As the amount of Rs.30,63,310 was shown by her in the return, it cannot be said that there was any concealment. As the amount was correctly mentioned, there is also nothing inaccurate in the particulars furnished by her. The only error that seems to have been committed was that it was not shown as a capital (sic) receipt. But as soon as this was pointed out, the error was accepted and the amount was surrendered to tax. This is not a fit case for imposition of penalty.
CIT v.  Sania Mirza (AP.) (High Court) www.itatonline.org.

S.271(1)(c). Penalty – Concealment – Two views – Matter referred to special Bench -Association of persons or individual – Quantum addition was confirmed by tribunal –  Levy of penalty  was held to be not justified. [S.167B(2)]
The assessee, an association of persons, filed returns at nil and claimed refund of the tax deducted at source. The Assessing Officer held  that  the share of each of the embers of the joint venture agreement having exceeded the maximum amount not chargeable to tax, the maximum marginal rate was applied to the association of persons in terms of section 167B(2) and the entire income was assessed in the hands of the association of persons. This order was confirmed by the Commissioner (Appeals). The Special Bench of the Tribunal decided the issue against the assessee. This was confirmed by the High Court.  The Assessing Officer  imposed penalties under section 271(1)(c). The Tribunal deleted the penalty on the ground that two views were possible when the assessee filed the nil return. On appeal by revenue  :

Held, dismissing the appeals, that there were two views possible inasmuch as the Tribunal itself was in doubt as to which of the two views was to be preferred. Therefore, the Tribunal had passed the referral order requiring the matter to be considered by a Special Bench. The fact that the referral order came into being much after the returns were filed would be of no help to the Revenue inasmuch as all that the referral order indicated was that a doubt existed with regard to which of the views was possible. It could not be said that prior to that date, the assessee could not have had such a doubt in its mind when it had filed its return. Therefore, there was no reason to disagree with the Tribunal in its conclusion on deleting the penalty imposed on the assessee.  Accordingly the appeal of revenue was dismissed. (A. Y. 2003-2004, 2004-2005 )
CIT  v.Pradeep Agencies Joint Venture [2012] 349 ITR 477 (Delhi) (High Court)

S.271B: Penalty – Failure to get accounts audited – Exempt income – Levy of penalty is held to be not justified. (S.10(20), 44AB)
Where the income of the assessee is exempt under section 10 (20) of the Act,  the Assessee is not liable to audit under section 44 AB of the Act consequently, no penalty under section 271 B was leviable. (A.Y. 1996 – 97)
CIT v. Market Committee, Sirsa  (2012) 80 DTR 213 (P&H)(High Court)

S.271FA: Penalty – Failure to file annual information return regarding financial transactions–No satisfactory explanation for late filing of annual return it was held that  order levying penalty justified. (Art 227 Constitution of India)
The petitioner filed the annual information return with a delay of 202 days. In the absence of any satisfactory explanation for late filing of the annual information return, the authority imposed a penalty of Rs. 20,200 at the rate of Rs. 100 per day during which the default continued. On a writ petition :

Held, dismissing the petition, that there was no illegality or perversity in the order and it was just and in accordance with the provisions of section 271FA of the Income-tax Act, 1961. No fundamental right or personal right of the petitioner was infringed. Otherwise too, the petitioner had an efficacious alternative legal remedy to challenge the order, but the petitioner did not challenge the order. The petitioner could not be permitted to invoke the extraordinary jurisdiction of the court under article 227 of the Constitution.
State of Rajasthan v.Dy. CIT (CIB) [2012] 349 ITR 536(Raj) (High Court)

S.272B: Penalty-Permanent account number–Obligation to quote permanent account number is on  deductee and not on deductor hence penalty imposed   was cancelled.(S.139A, 273B)
The assessee quoted invalid permanent account numbers for 196 deductees. The error was due to wrong quoting of permanent account numbers by the deductees to the assessee. The assessee rectified the mistake by furnishing the correct permanent account numbers as soon as it came to its notice. The revised permanent account numbers and the revised statement were filed. The Income-tax Officer levied the penalty of Rs. 19,60,000 at Rs. 10,000 per default under section 272B of the Income-tax Act, 1961. The Commissioner (Appeals) deleted the penalty on the ground that there was sufficient compliance with the provisions of section 139A. The Tribunal came to the conclusion that there was sufficient cause on the part of the assessee and as such no penalty was leviable.   On appeal by  revenue , dismissing the appeal,  the court held that  there was nothing to show that the findings recorded by the Commissioner (Appeals) and the Tribunal were erroneous in any manner.(A. Y.  2009-2010 )
CIT(TDS) v.Superintendent of Police [2012] 349 ITR 550 (P & H) (High Court)

S.281B: Provisional Attachment – Recovery – Remain in operation till assessment order is passed and demand is raised. [S.220(1)]
Provisional assessment order passed under section 281 B of the Act would remain in operation only up till  the assessment order is passed and demand is actually raised.  (A.Y. 2008 – 09)
Motorola Solutions India (P) Ltd. v. CIT (2012) 80 DTR 129/254 CTR 569 (P&H)(High Court)
 Interpretation.

Delegated Legislation – Delegation of power to fix rate of tax – Fee – Element of quid pro quo – License fee under the Mysore Race Courses Licensing Act, 1952
Delegation of power to fix rate of tax is permissible so long as legislative policy is clearly laid down. There is no requirement of such guidance unless impost is tax.
In case of license fees imposed for regulatory purpose quid pro quo is not necessary for the services rendered. However, such license fee must be reasonable and not excessive. The license fee under the Mysore Race Courses Licensing Act, 1952 was held to be regulatory in nature; therefore, the government need not render some defined or specific services in return as long as the fee satisfied the limitation of being reasonable.
Delhi Race Club Ltd v. Union of India [2012] 347 ITR 593 (SC)
Power  of taxation-Tax of essential characteristics-Power of Eminent Domain distinguished from Police Power and Taxation Power – (Constitution of India – Arts. 300A, 30(1-A), 31(A-1) second proviso & Art. 31(2) since omitted)
Power of taxation does not necessarily involve a taking of specific property for public purposes, though analogous to eminent domain as regards the purposes to which the contribution of the taxpayer is to be applied. Tax is imposed under statutory power without taxpayer’s consent and payment is enforced by law.
K.T. Plantation (P.) Ltd v. State of Kerala (2011) 9 SCC 1
Interpretation of Statue – Explanation-Purpose.
If the language of the Explanation appended to the section depicts a purpose and a construction consistent with the purpose can reasonably be place upon it, that construction should be preferred against any other construction. (A.Y. 1992 – 93 to 1994 – 95)
Prayag Udyog (P) Ltd. v. UOI & Ors. (2012) 80 DTR 25 (All)(High Court)
Circulars
9 of 2012 dt 17-10-2012- Deduction at source on payment of gas transportation charges by the purchaser of natural gas to the seller gas . ( 2012) 349 ITR (ST) 1.

Practice note.
Income –tax Appellate Tribunal- Regulations regarding hearing of appeals by video conference” 9 the  November , 2012. ( 2012) 349 ITR (ST) 161
S.90: Double taxation agreements- Notification no  S.O. 2689 (E) .  dated 7 the November , 2012- Protocol amending the agreement between the Government of the Republic of India and the Government of the Republic of Uzbekistan for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital ( 2012) 349 ITR (ST) 171

Articles.

S. 12AA: Commencement of Activity-Whether Pre-requisite for registration –Controversies –by Pradip  Kapashi, Gautam Nayak ( 2012) December –BCAJ  P. 45.
S.90: Global Income of a resident –Right  to tax and DTAA- Controversies by Pradip Kapasi,Gautam Nayak ( 2012) Nov BCAJ P. 45
S.90: International taxation- Indi’s DTAAs-Recent developments, by Tarun G. Singal , Anil D.Doshi  (2012) December BCAJ  P. 49
92C(2): Avoidance of tax –Transfer pricing-Constitutional validity of section 92C(2A)  of the Act- by Chythyana  K.K ( 2012)  349 ITR (Journal) 59
S. 147: Reassessment : An Over view by Ajay Singh (2012) AIFTPJ-July –P. 8

206AA:Permanent Account number (PAN)- Constitutional validity- Is section 206AA unconstitutional? Why the Karnayaka High Court , in Kawasalya Bai , wrong? By Tarun Jain ( 2012) 349 ITR (Journal)74.
A.
Accounting standard- Is  separate accounting standards for the Income-tax Department necessary?   By T.N.Pandey ( 2012) 349 ITR (Journal) 89
Concept of Accrued v. Contingent Liability : Legal provisions and Principles as per important decisions by V.P.Gupta ( 2012) AIFTJ –October- P. 9  
C.
Contempt of court  by Vinayak Y.Thakur  2012( 286)E.L.T (Article) 122.
D.
Developer’ s Plight after Bombay High Court Judgments by Vinayk Patkar (2012) AIFTP- December  P.39S
G.
General Anti Avoidance Rules- An Indian and International Perspective  by  Arnab Naskar & Shubhuangi Gupta ( 2012) AIFTJ-October- P. 21  
General Anti Avoidance Rules –GAAR –A Penicillin for all ailments by Harpreet Kaur & Pulkit Jain ( 2012) AIFTPJ-December- P. 21
I.
Interpretation  by N. Prabhakaran .2012 (285 )E.L.T.(Article ) 70.
N.
Natural Justice by Ramesh Chandra Jena 2012 (285)E.L.T (Article) 32
O.
Opinion- Allotment of multiple flats  in a housing project by Pradip Kapasi (2012) AIFTPJ-June –P. 46
Opinion- Applicability of VAT –Sale of flat  by Vinayak Patkar (2012) AIFTPJ –July –P. 36
Opinion- Liability of Developers- Effect of MCHI 51 VST 168 (Bom.)  by Nikita R.Baddheka (2012) AIFTPJ-October- P. 50
R.
Retrospective legislation by T.C.A.Ranamujam and T.C.A.Sangeetha ( 2012) 349  ITR (Journal) 108
S.
Service tax-Exemption under Service tax by Rjakamal Shah ( 2012) AIFTPJ-December- P. 8
Service tax-Negative list based taxation of Services –The Chamber’s Journal –December 2012
Supreme Court Decisions-2011-2012) The Chamber’s Journal-October -2012
W.
Writ Jurisdiction in relation to Taxation matters by Anil Kumar  Bezawada  2012 (285)E.L.T (Article) 35
March of the professional.
Role of Tax Practioners by Mr Justice F.I.Rebello (Retd)( 2012) AIFTPJ-June –P. 8
Time management –Key to success by Nayayan Jain  (2012) AIFTP-September-P.  125
Tax world.
Separate  Benches for “International Taxation & Transfer Pricing” cases in ITAT (2012)AIFTP –October- P. 62
Pendency of tax appeals before ITAT as on 1-10-2012( 2012) AIFTPJ-December-P. 52