{"id":1277,"date":"2009-12-30T19:22:57","date_gmt":"2009-12-30T13:52:57","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?page_id=1277"},"modified":"2009-12-30T19:22:57","modified_gmt":"2009-12-30T13:52:57","slug":"digest-of-important-case-law-december-2009","status":"publish","type":"page","link":"https:\/\/itatonline.org\/archives\/digest-of-important-case-law-december-2009\/","title":{"rendered":"Digest of important case law – December 2009"},"content":{"rendered":"
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\nNo time to read through voluminous case reports?<\/p>\n
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\nFret Not! The KSA Legal team will bring you up-to-speed with the choicest of case-law so you can focus your attention only on the important ones. This section is updated on a monthly basis so make sure you bookmark this page.\n<\/div>\n

Compiled By: Ajay R. Singh, Paras S. Savla, Rahul K. Hakani and Sujeet S. Karkal, Advocates<\/DIV><\/p>\n<\/div>\n

<\/DIV>\n<\/div>\n
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Digest of important case law – December 2009 <\/strong><\/td>\n <\/td>\n<\/tr>\n
Download monthly<\/strong> (December 2009 Part II<\/em><\/strong>) digest in pdf format <\/td>\n Click here to download the judgement (digest_case_laws_december_2009_part_II.pdf) <\/strong> <\/a><\/p> <\/td>\n<\/tr>\n
Download monthly<\/strong> (December 2009) digest in pdf format <\/td>\n Click here to download the judgement (digest_case_laws_december_2009.pdf) <\/strong> <\/a><\/p> <\/td>\n<\/tr>\n
Download consolidated<\/strong> (January 2009 to Dec 2009) digest in pdf format <\/td>\n <\/td>\n<\/tr>\n
Looking for the Previous Month’s digest? Click here.<\/a> <\/td>\n Click here to download the judgement (consolidated_digest_of_case_laws_jan_09_to_dec_09.pdf) <\/strong> <\/a><\/p> <\/td>\n<\/tr>\n<\/table>\n<\/div>\n
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Journals Referred <\/strong>: 30 & 31 DTR, 34 SOT, 121 ITD, 125 & 126 TTJ, 185 Taxman, 227 CTR, 318 ITR, 319 ITR, (part 1), BCAJ & www.itatonline.org\n <\/div>\n

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1. Appeal \u2013 Tribunal- Additional ground- Interest- s 234B, 254 (1)<\/p>\n

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Plea against charging of interest under section 234B, could be allowed to be raised by the assessee in appeal before the tribunal notwithstanding the fact that it was not raised by it before lower authorities.
\nS. Kumars Tyre Manufacturing Company Ltd v CIT ( 2009 ) 227 CTR (MP ) 181.
\n2. Appeal -Tribunal \u2013 Power to dismiss.\u2013 Excise Act \u2013 S.35C
\nEvery court or tribunal has an inherent power to dismiss a proceeding for non prosecution when the petitioner\/appellant before it does not wish to prosecute the proceeding.<\/p>\n

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M\/s Chemipol Vs UOI (Bom.) (itatonline.org
\n3. Appeal- High Court – Monetary limit \u2013 S. 260A, 268A.
\nCircular \/income tax Instruction no 5 of 2008 dt 15-5-2008 , issued by CBDT directing income tax authorities not to file appeals if tax effect is less than 4 lakhs would be applicable to cases pending before High court as on 15-5-2008 either for admission or for final disposal , even though said appeals and \/or petitions were filed before High court prior to 15-5-2008 .
\nCIT v Madhukar K.Inamdar HUF (2009) 185 Taxman 101 (Bom).
\nSee:- CIT Vs. Pithwa Engg. Works 276 ITR 519 (Bom.)
\n4. Assessment- Notice- Block Assessment- s 143 ( 2 ) , 158BC, 260A.
\nNotice under section 143 ( 2 ) not having been issued within one year of filing the return by assessee , block assessment was invalid . No substantial question of law arises.
\nCIT v Ms Mudra G.Nanawati (2009 ) 30 DTR ( Bom ) 108.
\n5. Assessment- Notice- Block Assessment- 143 ( 2 ), 158BC, 292 BB.
\nA.O having, not issued any notice under section 143 (2 ) before completing the assessment under section 158BC (c ) , assessment was bad in law and liable to be quashed . s 292BB does not save the same.
\nAsstt CIT v Supreme Appar & Associates ( 2009 ) 30 DTR (Mumbai ) (Trib ) 229.
\n6. Assessment- notice under section 143 ( 2 )- validity- s 143 ( 2 ).
\nAssessment order passed either without serving notice under section 143 ( 2 ) or serving the notice improperly upon the assessee can not be said to be void and the assessment order can not be annulled on this ground
\nHaryana Sanitary Ware Industries ( P ) Ltd v ITO ( 2009 ) 31 DTR ( Del ) ( Trib ) 329
\n7. Assessment Records \u2013 demand by the Third Party \u2013 RTI Act \u2013 S. 3,8,9.
\nThe Appellant, as informer, is assisting the Department by bringing instances of tax evasion to its notice, and if he is using information that he has received through RTI Applications for this purpose, it cannot be considered to be misuse of information in any way, nor can it be considered to be an unwarranted invasion of privacy of the assessee. Accordingly PIO was directed to provide inspection of records and the other information sought by the applicant.
\nRakesh Kumar Gupta Vs. PIO (itatonline.org)
\n8. Bad Debt \u2013 burden lies on assessee to prove \u2013 S. 36 (1) (vii).
\nWriting off of the bad debt in the books of accounts is not conclusive and the AO is not precluded from making inquiries as to whether the entries are genuine and not imaginary or fanciful. The AO has the power u\/s 143(2) to see that the entries are not mere paper work or fake and at the same time, the wisdom of the assessee cannot be questioned and no demonstrative or infallible proof of bad debt having become bad should be required. Commercial expediency is to be seen from the point of view of assessee depending on nature of transaction, capacity of debtor etc.
\nCIT vs. Kohli Brothers Color Lab (All.)(itatonline.org)
\n9. Business Expenditure- Payment of demurrage- U\/s. 40 (a)(i)
\nTax having not been deducted at source from payment of demurrage charges to foreign shipping company, s. 40(a)(i) was clearly attracted; assessee being a resident company, there was no question of invoking s.172
\nCIT v. Orient (Goa) (P) Ltd. [2009 30 DTR (Bom) 129]
\n10. Business Expenditure – Reimbursement of expenditure to parent, non-resident company \u2013 s.40 (a) (i)
\nNo income accrued or arose to the payee from the payment made by the assessee to its non-resident parent company in respect of the expenditure incurred by the latter in connection with the business activity carried on by assessee was not required to deduct tax at source and therefore, the payments could not be disallowed by invoking the provision s of s.40 (a) (i); disallowance could not be made also for the reason that the income of the assessee is to be computed as per the special provisions of s.42 which overrides the general provisions of computation of income.
\nCairn Energy India Pvt. Ltd v. Asst CIT. [2009 30 DTR (Chennai) (Trib.) 258]
\n11. Business expenditure – Disallowance – Discounting charges- S. 2 (28A ), 40 (a) (i), 195.
\nDiscounting charges on discounting bills of exchange do not amount to interest and therefore , assessee was not under any obligation to deduct tax at source s 195, and hence the discounting charges cannot be disallowed by invoking s 40(a ) (i).
\nAsst CIT v Cargill Global Trading (I ) (p ) Ltd ( 2009 ) 31 DTR ( Del 0 ( Trib ) 289.
\n12. Business expenditure – Capital or Revenue – Advance lease rent – S. 37 (1).
\nAssessee acquiring land on lease for a period of 99 years, making payment of advance rent in the sum of Rs 48 crores, and paying monthly rent of Rs 40 per month, advance rent paid was allowable revenue expenditure.
\nDy. CIT v Sun Pharmaceutical Ind LTD (2009 ) 227 CTR (Guj ) 206.
\nEditorial- see Joint CIT v Mukund Ltd (2007) 291 ITR (AT) 249 (Mumbai) (SB). Lump sum paid as premium for securing lease hold right held as capital expenditure.
\n13. Business Expenditure – Feasibility report of new project \u2013 S. 37 (1).
\nIf expenditure incurred for preparation of feasibility report of a new project, is in respect of same business which is already carried on by assessee, even if it is foe expansion of business , namely to start a new unit which is same as earlier business , and there is unity of control and a common fund such expenditure is to be treated as revenue expenditure.
\nCIT v Priya Viilage Road shows Ltd (2009) 185 Taxman 44 (Delhi)
\n14. Business expenditure – Puja expenses – s 37 (1).
\nExpenditure incurred on Vishwakarma Puja by a company cannot be treated as expenditure wholly and exclusively for the purposes of business of the company, and it cannot be allowed any deduction under section 37(1) towards such expenditure.
\nHira Ferro Alloys Ltd v DY CIT (2009) 31 DTR (Chhattisgarh) 20.
\n15. Business expenditure – cost of production of TV serial \u2013 Rule 9A of Income Tax Rules.
\nFeature film which was exclusively for telecast on TV Rule 9A will be applicable as the film was released for exhibition for less than 90 days.
\nVieshesh Films (P) Ltd v DY CIT (2009) 126 TTJ ( Mumbai ) 271.
\n16. Business expenditure \u2013 Contribution to provident fund-Deduction on actual payment- S.43B
\nContribution to provident fund, made before due date of filing of return allowable as deduction. The deletion of the second proviso to s. 43B, and the amendment to the first proviso, by the Finance Act, 2003 was to overcome implementation problems. Consequently, the amendments, though made applicable by Parliament only with effect from 1.4.2004, were curative in nature and would apply retrospectively w.e.f. 1.4.1988.
\nCIT vs. Alom Extrusions Ltd (2009) 319 ITR 306 (SC), (2009) 185 Taxman 416 (SC) (itatonline.org)
\nEditorial \u2013 Pamvi Tissues 313 ITR 137 (Bom), impliedly overruled.
\n17. Business expenditure – Interest on Deep Discount Bonds – Mercantile system of accounting \u2013 S. 36 (I) (iii), 43B.
\nInterest accrued on deep Discount Bonds, though payable on maturity on some later date was in view of mercantile system of accounting followed by assessee, there being no loan or advance or borrowing by assessee, section 43B, was not allowable.
\nGujarat Toll Road Investment Co Ltd v Asst CIT (2009) 126 TTJ (Ahd) 262.
\n18. Block assessment- Computation of undisclosed income – s 158BB.
\nLoans which were shown by the assessee in the balance sheet filed with the return for an earlier year cannot be treated as bogus and addition cannot be made merely because interest has not been paid.
\nEstimation by Tehsildar cannot be basis to make addition as income from undisclosed source.
\nAsst. CIT v Subhash Verma (2009) 125 TTJ (Del) (SB) 865.
\n19. Block assessment- Limitation- s 158BE.
\nLast valid panchnama has been drawn on August 7, 1996, the date on which seizure was made and therefore,the assessment proceedings ought to have been completed before August 30, 1997.The Tribunal held that the last Panchanama Dt. October 10, 1996 , drawn after conclusion of search was not valid as no seizure was made on that date.(ITA no 904 of 2007 Dt. 1-7-2008 (Kar)
\nCIT v Children\u2019s Education Society. SLP (Civil) no 17330 of 2009 dt 17-7-2009 ( 2009 ) 319 ITR 2 (st ).
\nEditorial: See: (a) S. K. Katyal (2008) 16 DTR 285 (Del.)
\n(b) CIT vs. Plastika Enterprises (2009) 23 DTR 333 (Bom.)
\n(c) Nandlal M. Gandhi Vs. ACIT (2008) 115 ITD 1 (Mum.) (TM)
\n20. Capital Gains \u2013 Residential house \u2013 Land appurtenant- S. 54, 54 F.
\nCost of vacant land appurtenant to and forming part of a residential unit is to be considered for claim of exemption under section 54 F, even if no construction has been done on appurtenant land.
\nAddl. CIT v Narendra Mohan Uniyal ( 2009 ) 34 SOT 152 (Delhi ).
\n21. Capital Gain \u2013 TDR \u2013 FSI – Consideration \u2013 Not chargeable – S. 45.
\nConsideration received for permission to use TDR \/ FSI not chargeable to tax as the cost of acquisition being nil.
\nOm Shanti Co-op Society vs. ITO (ITAT Mumbai) (itatonline.org)
\n22. Capital gains- Stamp duty valuation \u2013 S. 50C.
\nIf there is objection from assesse\u2019s side regarding sale consideration without challenging stamp duty valuation, then valuation should be referred to valuation officer who is an expert and who can do correct valuation.
\nAjmal Fragrances & Fashions (P) Ltd v Asstt. CIT (2009) 34 SOT 57.( Mum ).
\n23. Capital gains \u2013 Computation\u2013Interest capitalised-S 48.
\nInterest was paid because instalments could not be paid in time and same had became part of cost of acquisition, hence the interest capitalised has to be considered as part of cost of acquisition.
\nAjmal Fragrances & Fashions (P) Ltd (2009) 34 SOT 57 (Mum).
\n24. Capital Gains \u2013 Exemption \u2013 Extension of existing building.-s 54 F
\nMere extension of existing building would not give benefit to assessee under section 54 F.
\nAsstt .CIT v T.N. Gopla (2009) 121 ITD 352 (Chennai) (TM).
\n25. Capital gains – short term or long term – dissolution \u2013 period of holdings – S. 2 (42A), 49 (1) (iii) (b).
\nOn dissolution the property was taken over by the partner. Partner sold the property within three days of acquiring it. Sale has to be treated as short term. The benefit of section 49 (1) (iii) (b) is not available.
\nP.P.Menon v CIT (2009) 31 DTR (Ker) 159 .
\n26. Capital gains – Slump Sale \u2013 S. 48, 50. 50A.
\nSale proceeds received by the from sale of a going concern of one division of assessee, which was slump sale and not a sale of block of assets , section 50 was not applicable .
\nCIT v MaxIndia Ltd (2009) 319 ITR 68 (P&H ).
\n27. Capital gains- reference to valuation officer- s 50C.
\nIn the event of the assessee contending that valuation as done by Stamp valuation Authority is not acceptable to him and asking the assessing officer to make a reference to the valuation officer , it is mandatory on the part of the assessing officer to make such a reference notwithstanding that the assessee has not filed an appeal against such valuation.
\nKalpataru Industries v ITO. 265 (2009) 41 \u2013 B . BCAJ December 32
\n28. Capital or revenue- compensation for termination of agreement- s 4.
\nCompensation received by assessee from the other party for termination of the agreement for transfer of property to be treated as capital receipt and not as revenue receipt.
\nS. Zoraster & Co v CIT (2009) 31 DTR (Raj) 107.
\n29. Capital or revenue expenditure- s 37.
\nPayment of royalty at rate calculated, per piece of production is revenue expenditure.
\nCIT v Sharada Motor Industries Ltd (2009) 319 ITR 109 (Delhi).
\n30. Carry forward and set-off- unabsorbed depreciation – S. 10 A
\nIn view of s. 10 A(6) by the finance Act,2003 , unabsorbed depreciation relating to asst. yr. 1993-94 and 1995-96 of an industrial unit located in free trade zone cannot be set-off against income of the unit for the asst. yr. 2003-04.
\nPhoenix Lamps Ltd v. Add. CIT.[2009 30 DTR (Del) (Trib) 245]
\n31. Cash credits- Gifts- s 68.
\nAssessee had filed, confirmation, of the person from whom the gift was given. Genuineness of the transaction of gift and the capacity of the donor stood established .Addition can not be made under section 68.( ITA NO 1108 of 2008 dt 26-9-2008 )
\nCIT v Asha Hampannavar SLP (Civil no. 16370 of 2009 Dt. 14-7-2009.(2009) 319 ITR ( St.) 5 (sc ).
\n32. Charitable or religious trust \u2013 s 11.
\nA trust established to carry out partly charitable purposes and partly religious purposes would be entitled to exemption under section 11.
\nSociety of Presentation Sisters v ITO ( 2009 ) 121 ITD 422 ( Cochin ) (TM ).
\n 33. Concession of law- admission- Binding effect-143 ( 3 ).
\nAdmission or concession by a counsel made inadvertently or under a mistaken impression of law will not only bind on his client, but also same can not ensure to the benefit of other party. Party can resile from such concession.
\nDY CIT v K.S.Suresh ( 2009 ) 319 ITR 1 ( Mad ).
\n34. Deduction -Computation \u2013 gross total income – Adjustment of Brought forward loss, depreciation etc. \u2013s.80I
\nGross Total income of the assessee has first to be computed in accordance with the Act and thus profit of assessee new unit had first to be adjusted against other unit \u2018s losses and if there was no positive income. Deduction u\/s. 80 I could not be allowed.
\nCommissioner of Income Tax v. Shree Synthetics Ltd. [2009 30 DTR (MP):Indore Bench)
\n35. Deduction of tax at source-Ad-interim \u2013 Stay recovery granted.- S.195.
\nIn a SLP filed against the judgement of the Karnataka High Court in CIT vs. Samsung Electronics co Ltd ( 2009 ) 185 Tax man 313 ( Kar ).the court held that liability can not be avoided on ground of non taxability of receipient, the Supreme Court, by an ad-interim order dated 18.12.2009 directed issue of notice to the Respondents and also directed \u201cStay of recovery till further orders\u201d.
\nG.E. India Technology vs. CIT (SC) (itatonline.org).
\n36. Deduction of tax at source-Fess for professional or technical services. \u2013 s 194 J.
\nThird party Administrator (TPA), who is responsible for making payment to hospitals for rendering medical services to policy holders under various health insurance policies issued by several insurers, is obliged to deduct tax at source under section 194 J from payments made to hospitals.
\nMedi. Assist India TPA (P) Ltd v Dy CIT (TDS) (2009) 184 Taxman 359 (Kar).
\n37. Deduction of tax at source- franchisee- s 194 I.
\nPayments made by the assessee to its franchisee would not bear the character of rent in the absence of any lessor \u2013 lessee relationship.
\nCIT v NIIT Ltd (2009) 184 Taxman 472 (Delhi), (2009) 30 DTR 49 (Delhi)
\n38. Deduction – infrastructure projects -s 80IA (4 ).
\nDeduction under section 80IA (4) is not available to contractors.
\nB.T.Patil & sons v ACIT. (2009) 32 DTR (Mum.) (TM) (Trib.) ,Itatonline.org. Income tax review December p 166.
\n39. Deduction of Tax at source-Payment by society to its members- s 194 C.
\nPayments made by assessee society to the truck owners who are its members after receiving the payments from the companies for transporting their goods are not subject to TDS under section 194 C (2 ), as there is no sub contracts with the said companies on behalf of its members.
\nCIT v Ambuja Darla Kashlog Mangu Transport co \u2013op Society.( 2009 ) 31 DTR (HP ) 49.
\n40. Deduction of tax at source – payment to non resident-technical documents- s 9, 9(1) (vi ),195,
\nAssessee company had purchased plant in the form of technical documents including designs, drawings etc, and the title in the documents stood transferred to assessee on payment to foreign company and therefore the payment could not be termed as royalty so as to attract TDS.
\nCIT v Maggronic Devices (P) ltd (2009) 31 DTR (HP) 65.
\n41. Deduction \u2013 Cutting & Polishing marbles block \u2013 \u2018Production\u2019 \u2013 S.80IA.
\nThe activity of polishing and conversion of blocks into polished slabs and tiles amounts to \u201cmanufacture\u201d or \u201cproduction\u201d because the conversion of blocks into polished slabs and tiles results in emergence of a new and distinct commodity. There is accordingly \u201cmanufacture or production\u201d for s. 80-IA
\n ITO vs. Arihant Tiles & Marbles (SC) (itatonline.org)
\n 42. Deemed Dividend- Loans for business advantages. S 2 (22 ) (e ).
\nThe amount advanced for business transaction would not fall within the definition of \u201cdeemed dividend\u201d .
\nCIT v Creative Dying & Printing ( P ) Ltd ( 2009 ) 184 Taxman 483 (Delhi )
\n43. Deduction \u2013 Export- Fabrication \/ Processing charges \u2013 s 80 HHC.
\nThe processing\/fabrication charges on the goods which were ultimately exported by other exports for whom processing was undertaken by the assessee , such income would form part of one of the components of business profits, as the said activity would have direct and immediate nexus with the activity of export.
\nSouthern Sea Foods Ltd v JT .CIT (2009) 184 Taxman 86 (SC).
\n44. Deduction \u2013 Industrial Undertakings- s 80 IB -80HHC.
\nThe assessee is not entitled to simultaneous deduction of both sections 80 HHC, and 80 IB, while computing deduction under section 80HHC, in view of specific exclusion under section 80 IB (13) hence deduction granted under section 80 IB has to be excluded.
\nOlam Exports India Ltd v CIT b( 2009 0 184 Taxman 373 ( Ker ).
\n45. Deduction \u2013 housing project- project percentage method- s 80 IB (10).
\nAn assessee developing a housing project and fulfilling all other requirements of section 80 IB ( 10 ), can adopt \u201cproject percentage method\u201d to arrive at the eligible profits for claiming deduction under the said section, deduction can not be postponed to later year ie.on completion of project.
\nB.K.Patel Enterprises v Dy CIT (2009) 125 TTJ (Pune) 974.
\n46. Deduction \u2013 Business Expenditure – Share of partner in partnership firm \u2013 S. 10(2A )14A.Rule 8D,& 28 (V).
\nPartnership firm is a separate assessable entity for the purpose of income tax Act. Income charged in the hands of partnership firm can not be treated as non exempt income in the hands of such firm and therefore, provisions of section 14A, are applicable in computing the total income of such partner in respect of his share in profits of the firm. Assessee partner having received salary from the partnership firm besides share of profit, disallowance under section 14A has to be worked out as per the provisions of rule 8D same being retrospective.
\nDharamsingh M.Popat v Asstt CIT ( 2009) 31 DTR (Mumbai ) (Trib ) 295.
\n47. Depreciation -Block of Assets \u2013 Individual User \u2013 S. 32.
\nAs per s. 32(1) the asset is to be owned and \u201cused\u201d for the purpose of business or profession, the expression \u201cused for the purpose of business\u201d when applied to block asset would mean use of block asset and not any specific items in the said block as individual assets have lost their identity after becoming inseparable part of the block asset.
\nCIT vs. Bharat Aluminium (Delhi High Court) (itatonline.org)
\n48. Depreciation \u2013 Good will \u2013 Revision – s 32, 263.
\nTrue test of depreciation is character of an asset and not its description , therefore , even if an asset is described as \u201cgoodwill\u201d but it fits in description of section 32 ( 1 ) (ii ) , depreciation is to be granted thereon , hence the revision order is bad in law.
\nHindustan Coca Cola Beverages (P) Ltd Vs Dy. CIT (2009) 34 SOT 171 (Delhi).
\n49. Depreciation-Sale and lease back transaction vis-a-vis tax avoidance \u2013s.32(1)(ii)
\nAssessee having sold the machinery and then acquired the same on lease and lease rental was also paid, it could not be said that transaction was sham or a device, and therefore depreciation was allowable.
\nCIT v. Punjab State Electricity Board. [2009 30 DTR (P&H) 153]
\n50. Depreciation \u2013 Workers quarters- s 32 (1) (iv).
\nWorkers quarters having been leased out as a part of the plant and income derived as assessed as business income, the assessee was entitled to depreciation @ 40 percent under section 32 (1) (iv ) in respect of workers quarters.
\nCIT v Rieta Biscuit Co (P) Ltd ( 2009 ) 31 DTR (P&H) 89.
\n51. Deduction \u2013Business expenditure-exempted income \u2013 S. 14A.
\nIt could not be assumed that assessee did not incur any expenditure in earning dividend and therefore disallowance under section 14A restricted to I percent of tax free dividend received by the assessee.
\nEIH Associated Hotels Ltd v Dy CIT (2009) 126 TTJ (Kol) 246.
\n52. Exemption \u2013splitting up or reconstruction \u2013 s 10A.
\nAssessee having taken over the medical transcription unit from another company along with obligation of exports , etc , it is a case of purchase of business undertaking in view of circular no F. No 15\/S\/63 \u2013ITA -1 ) dt 13 Dec 1963, it can not be said to be a case of formation of undertaking by using assets previously used and, therefore, assessee is entitled to deduction under section 10A,more so as deduction has already been allowed to the assessee for two assessment years.
\nITO v Heartland K.G.Information LTD. (2009) 31 DTR (Chennai) (Trib) 98.
\n53. Exemption \u2013 Manufacture- s10B.
\nActivity of processing of stone, marble, granite, etc , amounts to manufacture and therefore assessee was entitled to exemption under s 10B.
\nCIT v Ramsons Organics Ltd (2009) 31 DTR (Del) 83.
\n54. Export-oriented undertaking- s 10B.
\nLanguage of section 10B, provides for exemption with respect to any \u201cprofits and gains\u201d of business and profession and same is not confined to \u201cprofits and gains\u201d of business provided under section 14 (D ) ,hence interest income received by assessee from its sister concern would fall within expression \u201cprofits and gains\u201d and assessee would be entitled to exemption under section 10 B in respect of such interest income.
\nCIT v Hycron India Ltd (2009) 185 Taxman 70 (Raj).
\n55. Exemption \u2013 Keyman insurance- s 10 (10D).
\nIn view of the conflicting clarification given by the LIC, regarding the status of keyman insurance policy after assignment ,issue regarding taxability of the amounts received on the maturity of such policy remanded to AO for fresh consideration after obtaining clarification from higher authorities of LIC.
\nRajan Nanda v Dy CIT (2009) 31 DTR (Del) (Trib) 249.
\n56. Exemption \u2013 setting of loss- s 10A, 70.
\nSince 10A, was not forming part of sections mentioned in section 29, business losses of the undertaking whose income was not exempt under section 10A, can not be setoff against profits of the undertaking whose income is exempt. Loss of the non STPI is allowed to be carried forward.
\nACIT v Honeywell Technology Solutions Lab Pvt Ltd 263 (2009) 41 – B BCAJ p 34. (December)
\n57. Income from Undisclosed Sources- Loose sheets- s 69.
\nLoose sheets by them self may not be enough to justify addition on estimated basis even though the explanation of the assessee is found unbelievable and circumstances may be pointing other wise.
\nCIT v Atam Valves (P) Ltd (2009) 184 Taxaman 6 ( P& H ).
\n58. Income from undisclosed source – slips- 69A.
\nAmount shown and recorded on slips found during survey having been advanced to one person for purchase of land and that person having confirmed the same , no addition was called for simply on the basis of presumption.
\nPrakash Motwani v ITO (2009) 125 TTJ (Agra) (TM).941.
\n59. Income do not form part of total income- Voluntary retirement- s 10 ( 10 C ).
\nAn employee, who takes voluntary retirement, is entitled to exemption under section 10 (10C ).
\nDy CIT v Krishana Gopla Saha (2009) 121 ITD 368 (Kol ) (TM ).
\n60. Income \u2013 remission or cessation of trading liability- one time settlement of loan by bank. s 41 ( 1 ).
\nAssessee had not got any deduction on account of acquisition of capital assets as it had been reflected in the balance sheet and not in the profit and loss account and the remission of the principal amount of loan obtained from the bank and financial institution had not been claimed as expenditure or trading liability in any earlier year ,section 41 (1) was not applicable.(followed Mahindra &Mahindra Ltd v CIT ( 2003 \/261 ITR 501(Bom ).
\nCIT v Tosha International .SLP. (civil ) no 18699 of 2009 dt 24-7-2009 ( 2009 ) 319 ITR (st ) 7. (sc )
\n61. Income- Notional gain on foreign currency swap- s 5.
\nNotional gain arising on revaluation of foreign currency loan at the end of relevant previous year is not a real income and therefore, it is not taxable even though assessee is following mercantile system of accounting.
\nEIH Associated Hotels Ltd v DY CIT ( 2009 ) 126 TTJ (Kol ) 246.
\n62. Interest-Book profit- s 115JA, 234B, 234C.
\nInterest under sections 234B, and 234C, is chargeable on income computed under section 115JA.
\nKanel Oil & Export Inds Ltd v JCIT (2009) 126 TTJ 158 (Ahd) ( TM ). (itatonline.org).
\nEditorial:\u2013 See: Bombay High court – Snowcem India Ltd v DY CIT ( 2009 ) 221 CTR 594 ( Bom ).
\n63. Interest- waiver or reduction- s 234A, 234B, 234C.
\nAssessee filing returns voluntarily and paying taxes due to his over busy schedule during the relevant assessment years constituted as \u2018unavoidable circumstances\u2019 within the meaning of cl. 2(e) of CBDT Notification No.400\/234\/1995-IT (B) and entitle him for waiver of interest under s. 234A, 234B, 234C levied upon by him for failure to file returns within the time allowed u\/s. 139(1)\/(4).
\nS. Nagoor Babu @ Mano Vs. CCIT & ANR (2009) 227 CTR 287(Mad.)
\n64. MAT- Book profits- Company- s 115JB.
\nFor the purpose of adjustment under section 115JB, ordinary business loss and statutory depreciation have been differentiated and either the amount of brought forward loss or unabsorbed depreciation, which ever is less is to be deducted and not both.
\nDy. CIT v Costal Resorts ( I ) Ltd ( 2009 ) 31 DTR ( Coch ) ( Trib ) 283.
\n65. Notice by affixture- Reassessment- s 148, 292BB.
\nIn the absence of anything to show that there was any urgency to serve the notice under section 148 on the very next day after it was issued or any material on record to show or suggest that any effort was made by the AO to serve the notice in the normal course before issuing the directions to serve the same by affixture was not valid service. S 292BB inserted w.e.f Ist April 2008, has not retrospective operation , and therefore ,it was no application for asst year 2001-02.
\nArun Lal v Assst CIT (2009) 30 DTR (Agra) (TM) 178.
\n66. Penalty \u2013 concealment- disclosure of additional income by a letter-s 271 (1) (c), Expln 5.
\nAuthorised officer having not recorded assessee\u2019s, statement under section 132 (4) , during the course of search, the disclosure of additional income made by the assessee through a letter addressed to the Asstt Director of IT (Inv) immediately after conclusion of the search which has shown in the return of income , which has been accepted without any variation , has to be construed as a bona fide voluntary disclosure and therefore , penalty under section 271 (1) (C) is not leviable in view of expln 5 .
\nHissaria Brothers v DY CIT (2009) 31 DTR (Jd) (Trib) 223.
\n67. Penalty \u2013 Concealment – Search and Seizure – s 153A,271 (1)(c).
\nAdditional income declared in returns filed in response to notice under section 153A, did not fall under category of return mentioned in Explanation 5 ( 2 ) to section 271 ( 1 ) (c ), assesses were not entitled to immunity from penalty.
\nAsst CIT v Kirti Dahyabhai Patel ( 2009 ) 121 ITD 159 (Ahd ) (TM ).
\n68. Right to Practise law -Eligibility \u2013 Foreign Law Firms \u2013 RBI Act, FERA Act \u2013 S. 29.
\nForeign Law Firms are not eligible to open liaison offices or to practice law in India. Even giving an opinion on a legal matter amounts to \u201cpractise of law\u201d. Non-Advocates cannot practise law.
\nLawyers Collective vs. Bar Council (Bom.) (itatonline.org)
\n69. Reassessment-Change of opinion- 148,
\nWhere the assessment order does not contain any discussion on a particular issue, the same may be rendered without application of mind, and in that case, there is no question of change of opinion, in such cases mere production of books of account is also no sufficient as per s 147, Explanation 1 and therefore reopening would be valid.
\nEma India Ltd v Asst CIT (2009) 30 DTR (All) 82.
\n70. Rectification of Mistakes \u2013 Apparent from records- s 143 (2), 154.
\nWhen an assessment is subject \u2013 matter of proceedings under section 143 (2), during pendency of such proceedings rectification proceedings under section 154 can not be initiated.
\nWhere there can conceivably be two opinions on a particular issue, provisions of section 154 will not be attracted.
\nM.P.Telelinks Ltd v Asst CIT (2009 ) 121 ITD 241 ( Agra ) (TM ).
\n71. Rectification of mistake- Appellate Tribunal- merger- s 254 ( 2 ).
\nOrder under section 254 (2) merges with original order. Second application for rectification not maintainable.
\nDr. S. Panneerselvam v Asst CIT (2009) 319 ITR 135 (Mad).
\n72. Rectification of mistakes \u2013 s 154, 143 (2).
\nWhen an assessment, is subject \u2013matter of proceedings under section 143 (2), during pendency of such proceedings rectification proceedings under section 154 can not be initiated.
\nM.P.Telelinks Ltd v Asst CIT. ( 2009 ) 121 ITD 241 (Agra ) (TM ).
\n73. Rectification of mistakes – Appellate Tribunal- Powers- S. 254 (2)
\nTribunal can set a side a matter or remand it to file of Assessing officer for further enquiry to make proper assessment by allowing parties including revenue authorities to raise a contention for first time before it.
\nAsstt CIT v Amar Mining Co (2009) 121 ITD 273 ( Ahd ) (TM ).
\n74. Revision \u2013 further enquiry – 263.
\nCommissioner can regard order as erroneous on the ground that in circumstances of case Assessing officer should have made further enquiries before accepting statement made by the assessee.
\nRajalakshmi Mills Ltd v ITO. (2009) 121 ITD 343 (Chennai) (SB).
\n75. Revision \u2013 Lack of enquiry- s 263.
\nAO having made enquiries, elicited replies and thereafter allowed the expenditure on tools and dyes as revenue expenditure, it can not said that it was \u201clack of enquiry\u201d and therefore, the assessment order passed by the AO can not be revised under section 263.
\nCIT v Sunbeam Auto Ltd (2009) 31 DTR (Del) 1 (2009) 227 CTR (Del) 133.
\n76. Search and Seizure- Assessment- limitation- service of order-s 153A.
\nAssessment order passed on 28th Dec ,2007, but served on 2nd Jan , 2008, beyond the period of limitation of 31st Dec, 2007, was barred by limitation and thus non est in law.
\nShantilal Godawat & Ors v Asst CIT (2009) 126 TTJ (Jd ) 135.
\n77. Search and seizure- powers of seizure \u2013 S. 132 (1) (ii) (b).
\nIt is open to the department to copy the data relating to the specified three entities of the assesse group from the two laptops which were seized from the procession of auditor of firm.
\nDI (Inv) v Batliboi & Co. (2009) 31 DTR (SC) 187.
\nEditorial Note: Delhi High Court Order: S. R. Batliboi & Co. vs. Department of Income Tax (2009) 181 Taxman 9 (Del.)<\/p>\n","protected":false},"excerpt":{"rendered":"

No time to read through voluminous case reports? Can\u2019t separate the wheat from the chaff? Fret Not! The KSA Legal team will bring you up-to-speed with the choicest of case-law so you can focus your attention only on the important …<\/p>\n

Digest of important case law – December 2009<\/span> Read More »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"footnotes":""},"class_list":["post-1277","page","type-page","status-publish","hentry"],"acf":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/pages\/1277","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/comments?post=1277"}],"version-history":[{"count":0,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/pages\/1277\/revisions"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/media?parent=1277"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}