Year: 2010

Archive for 2010


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DATE: (Date of pronouncement)
DATE: December 20, 2010 (Date of publication)
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CITATION:

Department’s Appeals Should Not be Dismissed For Delay

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DATE: (Date of pronouncement)
DATE: December 19, 2010 (Date of publication)
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CITATION:

Before invoking s. 158 BD, the AO must record his satisfaction in writing on the basis of material found in the search that the undisclosed income belongs to a person other than the person searched. This is a safeguard to prevent abuse of power. In the absence of written satisfaction the AO has no jurisdiction to assess the other person u/s 158BD. On facts, as the “satisfaction” note was not produced, the s. 158BD proceedings were liable to be quashed

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DATE: (Date of pronouncement)
DATE: December 19, 2010 (Date of publication)
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CITATION:

The AO had not correctly calculated the number of transactions because sometimes a single transaction is split by the computers trading of the stock exchanges into many smaller transactions but that does not mean that assessee has carried so many transactions. If someone places an order for purchase of 1000 shares and the same is executed by the electronic trading system of stock exchange into 100 smaller transactions, it does not mean that 100 transactions have been entered into. The assessee had carried out only 31 purchase and 25 sale transactions which cannot be said to be a great volume of transactions

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DATE: (Date of pronouncement)
DATE: December 17, 2010 (Date of publication)
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CITATION:

The scheme of s. 115JA (1) and 115JAA shows that right to set-off the tax credit follows as a matter of course once the conditions of s. 115JAA are fulfilled. The grant of credit is not dependent upon determination by the AO except that the ultimate amount of tax credit to be allowed depends upon the determination of total income for the first assessment year. Accordingly, the assessee is entitled to take into account the set off while estimating its liability to pay advance tax. If this interpretation is not given, there will be absurdity

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DATE: (Date of pronouncement)
DATE: December 14, 2010 (Date of publication)
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CITATION:

There is no presumption that every acquisition by a dealer in a particular commodity is acquisition for the purpose of his business. A dealer may acquire a commodity as a capital asset. In each case the question is one of intention to be gathered from the evidence of conduct and dealings by the acquirer with the commodity (Madan Gopal Radhey Lal 73 ITR 652 (SC) & Vijaya Bank 187 ITR 541 (SC) followed)

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DATE: (Date of pronouncement)
DATE: December 12, 2010 (Date of publication)
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CITATION:

Primarily, the intention with which an assessee starts his activity is the most important factor. If shares are purchased from own funds, with a view to keep the funds in equity shares to earn considerable return on account of enhancement in the value of share over a period then merely because the assessee liquidates its investment within six months or eight months would not lead to the conclusion that the assessee had no intention to keep the funds as invested in equity shares but was actually intended to trade in shares. Mere intention to liquidate the investment at higher value does not imply that the intention was only to trade in security. However, it cannot be held that in all circumstances if assessee has used its own funds for share activity then it would only lead to inference of investment being the sole intention. In such circumstances, frequency of transactions will have to be considered to arrive at proper conclusion regarding the true intention of the assessee. However, if the assessee, on the other hand, borrows funds for making investment in shares then definitely it is a very important indicator of its intention to trade in shares

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DATE: (Date of pronouncement)
DATE: December 11, 2010 (Date of publication)
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CITATION:

S. 2(22)(ii) excludes loans and advances where (a) the loan or advance was made by the lending-company in the ordinary course of its business and (ii) lending of money is a “substantial part” of the business of the lending-company. The first condition was satisfied as the business of the assessee was complimentary to the business of AMPL. As regards the second condition, the expression “substantial part” does not connote an idea of being the “major part” or the part that constitutes majority of the whole. Any business which the company does not regard as small, trivial, or inconsequential as compared to the whole of the business is substantial business. Various factors and circumstances such as turnover, profit, employees, capital employed etc are required to be looked into while considering whether a part of the business of a company is a “substantial part of its business”

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DATE: (Date of pronouncement)
DATE: December 9, 2010 (Date of publication)
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CITATION:

There are differences in the approach of the Tribunal on whether the tribunal can be directly approached for stay of demand without approaching the lower authorities. In view of the decision in Broswel Pharmaceutical Inc vs ITO 83 TTJ 126 (All) it is not mandatory on the part of the assessee to move application before the Revenue Authorities for granting of stay of outstanding demand. Accordingly, there is no merit in the argument of the department that the stay application should be rejected outright since the assessee has not moved any petition before the Revenue Authorities seeking stay of the demand since seeking stay before the lower authorities is directory and not mandatory

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DATE: (Date of pronouncement)
DATE: December 7, 2010 (Date of publication)
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CITATION:

The assessee has urged that no expenditure has been identified to have been incurred to exempt income. Neither the AO nor the CIT (A) has rebutted this submission. The AO has made an adhoc estimate which is not sustainable in the light of Hero Cycles. Accordingly, in view of Vegetable Products 88 ITR 192 where it was held that if two constructions are possible, one favouring the assessee should be adopted, the precedent laid down in Hero Cycles should be followed

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DATE: (Date of pronouncement)
DATE: December 4, 2010 (Date of publication)
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CITATION:

Applying the test of literal construction, s. 80-IA (9) provides for two things (a) once an assessee is allowed deduction u/s 80 IA, “to the extent of such profits and gains” he is not to be allowed further deductions under Chapter-C and (b) in no case the deduction shall exceed the profits and gains of such eligible business of Undertaking. The expression “deduction to the extent of such profits” signifies that if an assessee is claiming benefit of deduction of a particular amount of profits and gains u/s 80 IA, to that extent profits and gains are to be reduced while calculating the deduction under Chapter VI A (C). The word “and” is disjunctive and means that the other provision is independent. The provision aims at achieving two independent objectives and cannot be limited to second objective alone thereby annihilating the first altogether and making it otiose. Even under the purposive interpretation, the purpose behind introducing s. 80IA (9) is to ensure that an assessee does not get deduction on the amount of profits and gains accorded in one provision. Hindustan Mint & Agro Products 315 ITR 401 & Rogini Garments 294 ITR (AT) 15 (Che) approved