Digest of important case law

Search and Seizure – S. 158BB(1)(c)

Once the assessee has paid advance tax, income shown in belated return filed after due date of search is not undisclosed income.

CIT vs. Smt. Shoba Ramalingam (2008) 10 DTR 533 (Mad.).

Search and Seizure – Statement – S. 132 (4) – Revised Return – S. 139(5)

A letter written by partner of assessee firm to department admitting undisclosed income higher that disclosed in statement under section 132 (4) ,with certain conditions and further stating that a revised return shall be filed accordingly is not a statement under section 132 (4) nor a revised return and can not be used as a basis for making assessment.

CCIT vs. Pampapathi (2008) 11 DTR 82 (Kar.).

TRIBUNAL

Advance Tax – S. 209(1)(d)

Tax deductible at source has to be excluded from tax payable while computing advance tax as provided in section 209(1)(d), even if tax had not actually been deducted.

Dy. CIT vs. Pride Former SAS (2008) 24 SOT 59 (Delhi).

Block Assessment – S. 158 BD

Proceedings under section 158BD, have to be initiated within reasonable time after completion of proceedings under section 158BC. Proceedings under section 158BD initiated beyond six years of conclusion of proceedings under section 158BC are barred by time even though there is satisfactory explanation for the delay.

Saroj Nursing Home vs. ACIT (2008) 11 DTR 385 (Lucknow) (Trib).

Block Assessment – Recording of Satisfaction – S. 158 BD

Recording of satisfaction is mandatory and imperative before assumption of jurisdiction under section 158 BD.

Manoj Aggrwal vs. Dy. CIT (2008) 113 ITD 377 (Delhi) (SB).

Block Assessment – Limitation – S. 158 BE

It could not be said that passing of prohibitory order under sub section (3) of section 132 is in all cases only to extend period of limitation for making assessments, without any facts and circumstances or evidence justifying said conclusion and in bona fide case, where there is no such attempt and prohibitory order is passed in normal course and bonafide reasons, search can not be deemed to have been concluded on day on which said order was passed.

Smt. Krishna Verma vs. ACIT (2008) 113 ITD 655 (Delhi)(SB).

Business Expenditure – Education Expenses of son of Director –S. 37

Expenditure incurred on foreign education of a director who is son of director is not allowable as deduction as the process of his admission to the foreign university had started even before he was made a director and his appointment as a director was simply to ruse to claim deduction of said expenditure which is personal obligation of his father and there is no nexus between the expenditure and the business of the company.

Mustang Mouldings (P.) Ltd. vs. ITO (2008) 11 DTR 577 (Mum.) (Trib.).

Deduction – Deduction u/s. 80IB has to be reduced – S. 80HHC, 80IB

Nodi Exports vs. ACIT (2008) 12 DTR 1 (Del.)

Exchange rate gain difference – Allowable in the year in which exports are made.

ACIT vs. Prakash I. Shah (Special Bench Mumbai) Source: www.itatonline.org

Grant of stay beyond 365 days by ITAT- Permissible before 1.10.2008

UPS Freight Services vs. ACIT Source: www.itatonline.org

Income – Perquisite – Voluntary Gifts – S. 28(iv)

Assessee never charging any fee from his followers for attending his lectures gift of Rs 122,70,795, received by the assessee on his 80th birth day from his followers out of regard and respect to the qualities of the assessee could not be charged to tax as “benefit” or “perquisite” under section 28 (iv) of the Act.

Nirmala P. Athavale vs. ITO (2008) 10 DTR 367 (Mum.)

Interest – S. 234D

Section 234 D, inserted by taxation laws (amendment) Act, 2003, w.e.f. 1st June 2003, being substantive in nature, has no retrospective effect, hence applicable from asst year 2004-05, only.

ITO vs. Ekta Promoters (P.) Ltd. (2008) 10 DTR 563 (Delhi) (SB) / (2008) 113 ITD 719 (Delhi).

No deduction to non resident – Not Discriminatory – S. 80HHE

Automated Securities vs. ITO (itatonline.org)

Profits and Gains from New Industrial Undertakings – Duty Draw Back and DEPB – S. 80 IB

Assessee, manufacturer and exporter, was entitled to deduction under section 80 IB, in respect of duty draw back and DEPB received by it as same had a direct nexus with business of its industrial undertaking.

Modi Exports vs. ACIT (2008) 24 SOT 526 (Delhi).

Reassessment – change of status

Rajkumar Dugar (HUF) vs. ITO (2008) 12 DTR 16 (Del.)

Search and Seizure – Apportionment of Seized Assets – Cash Seized – S. 132B, 158BC(d) ,234 B & 234C

Assessee having requested the department to adjust the cash seized during the search against his tax liability. The department has to adjust the seized amount towards the advance tax etc from the date it was seized.

Sudhakar M. Shetty vs. ACIT (2008) 10 DTR 173 (Mum.).

Unexplained Investment – S. 68,69, 69B

Where the assessee is not maintaining any books of account, section 68 will not be applicable, yet cash deposit in bank should be explained by assessee under section 69 or section 69B.
Unless assessee by any clinching evidence, shows nature and source of money deposited in to bank account, same should be added as assesses’s unexplained income.

Manoj Aggrwal vs. Dy. CIT (2008) 113 ITD 377 (Delhi).

VDIS 1997

Even when entry has been made in books of account of assessee as required by Voluntary Disclosure of Income Scheme (VDIS) 1997, section 68 of Income Tax Act, can be invoked when declared asset is sold later and sale proceeds are credited in books of account.

Aggarwal vs. Dy. CIT (2008) 113 ITD 377 (Delhi) (SB).