{"id":1997,"date":"2010-08-24T14:19:24","date_gmt":"2010-08-24T08:49:24","guid":{"rendered":"http:\/\/itatonline.org\/archives\/index.php"},"modified":"2010-08-24T14:19:24","modified_gmt":"2010-08-24T08:49:24","slug":"digest-of-important-case-law-july-2010","status":"publish","type":"page","link":"https:\/\/itatonline.org\/archives\/digest-of-important-case-law-july-2010\/","title":{"rendered":"Digest of important case law – July 2010"},"content":{"rendered":"
\n\"\"<\/a><\/p>\n
\nNo time to read through voluminous case reports?<\/p>\n
\nCan\u2019t separate the wheat from the chaff?\n<\/div>\n
\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
\n\n\n\n\n\n
Digest of important case law – July 2010 <\/strong><\/td>\n <\/td>\n<\/tr>\n
Download monthly<\/strong> (July 2010) digest in pdf format <\/td>\n Click here to download the judgement (digest_case_laws_july_2010.pdf) <\/strong> <\/a><\/p> <\/td>\n<\/tr>\n
Download Consolidated Digest<\/strong> (January 2010 to April 2010) 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_2010_to_Apr_2010.pdf) <\/strong> <\/a><\/p> <\/td>\n<\/tr>\n<\/table>\n<\/div>\n
\n

Journals Referred <\/strong>: BCAJ, CTR, DTR, ITD, ITR, ITR (Trib), Income Tax Review, SOT, Taxman, Taxation, TLR, TTJ, BCAJ, ACAJ, www.itatonline.org\n <\/div>\n

<\/p>\n

\n
\n
\n<\/p>\n<\/div>\n

Income Tax<\/u><\/strong><\/p>\n

S. 2(22)(e) : Deemed Dividend – Loan granted to the company<\/strong><\/p>\n

Loan granted by company to assessee company. Common share holders having more than 10% in both companies. Fact that the assessee company was neither a registered shareholder nor a beneficial share holder in both the companies, provisions of section 2(22)(e), of the Act were not applicable.<\/p>\n

Shruti Properties P. Ltd. vs. ITO (2010) 4 ITR 186 (Mum.)(Trib.)<\/em><\/strong><\/p>\n

\n
\n<\/p>\n<\/div>\n

S. 4 : Capital or Revenue Receipt – Entrance Fee<\/strong><\/p>\n

Entrance fees paid to acquire right to avail of services and facilities extended by assessee is capital receipt.<\/p>\n

ACIT vs. Karnavati Club Ltd. (2010) 4 ITR 174 (Ahd.)(Trib.)<\/em><\/strong><\/p>\n

S. 4 : Income – Diversion of at source by overriding title or application of income<\/strong><\/p>\n

Payment made by assessee to its retiring partners were a self–imposed obligations being gratuitous and hence, application of income hence, not allowable as deduction.<\/p>\n

S. B. Billimoria & Co. vs. ACIT (2010) 125 ITD 122 (Mum.)<\/em><\/strong><\/p>\n

S. 4 : Income – Mutuality – Interest on bank fixed deposits<\/strong><\/p>\n

The excess of income over expenditure in respect of the effluent receipts is exempt from income tax on the principle of mutuality. Income from interest on fixed deposits are chargeable to Income tax Act.
\n CIT vs. Common Effluent Treatment Plant (Thane Belapur) Association (2010) Vol. (6) (Bom.) L.R. 2791 (July) <\/em><\/strong><\/p>\n

S. 4 : Income or Capital – Liquidated Damages – Capital Receipt<\/strong><\/p>\n

The damages received by the assessee were directly and intimately linked with the procurement of a capital asset. Viz., the cement plant. The amount received by the assessee towards compensation for sterilization of the profit earning source, not in the ordinary course of business was a capital receipt.<\/p>\n

CIT vs. Saurashtra Cement Ltd. (2010) 325 ITR 422 \/ 42 DTR 49 \/ 233 CTR 209 (SC)<\/em><\/strong><\/p>\n

S. 5 : Income – Accrual – Excise Duty Refund<\/strong><\/p>\n

Claim of Excise Duty refund under duty drawback rules by assessee following mercantile method of accounting being an incentive for deemed exports, is liable to be taxed in the year of claim.<\/p>\n

Nathapa Jhakri Joint Venture vs. ACIT (2010) 41 DTR 233 (Mum.)(Trib.)<\/em><\/strong><\/p>\n

S. 9(1)(i) : Accrual of Income – Business Connection<\/strong><\/p>\n

Cruises operated by SCML did not touch any port in India. It was also noted that services rendered by assessee were general in nature which could not be interpreted as “business connection” within the meaning of section 9(1)(i), therefore no income had accrued to SCML in India in respect of booking of cruise packages by assessee.<\/p>\n

Dy. CIT (International) vs. Star Cruises (<\/em><\/strong>India<\/em><\/strong>) Travel Services (P) Ltd. (2010) 39 SOT 18 (Mum.)<\/em><\/strong>
\n  
\n S. 10 (23C)(vi) : Exemption – Educational Institution <\/strong><\/p>\n

Condition imposed by the CBDT while granting approval under section 10(23C)(vi) to the petitioner, a US based educational institution, that the petitioner must apply seventy five percent of  its total income for educational purposes in India is upheld as valid; prescribed authority ID directed to furnish to the petitioner an opportunity to comply with the monitoring conditions and to allow a reasonable period to do so in the event of the Assessing Officer coming to the conclusion that there is any shortfall in compliance.<\/p>\n

American Hotel & Lodging Educational Institute vs. CBDT & Ors. (2010) 42 DTR 54 (Bom.)<\/em><\/strong><\/p>\n

S. 10A : Exemption – Computation – Export Total Turnover<\/strong><\/p>\n

Freight and insurance charges do not have an element of turnover and are to be excluded from the total turnover for the purpose of computing exemption under section 10A.<\/p>\n

CIT vs. Gem Plus Jewellery India Ltd. (2010) 42 DTR 73 \/ 233 CTR 248 \/(Bom.)<\/em><\/strong><\/p>\n

S. 10A : Exemption – Foreign Exchange Gain Fluctuation<\/strong><\/p>\n

Gain from foreign exchange fluctuation realized within stipulated period forms part of the sale proceeds and is directly related with the export activities and such gain should be considered as income derived from export activities eligible for exemption under section 10A in the year in which export took place.<\/p>\n

CIT vs. Gem Plus Jewellery India Ltd. (2010) 42 DTR 73 (Bom.)<\/em><\/strong><\/p>\n

S. 10A : Exemption – Free trade zone – Onsite development<\/strong><\/p>\n

Payment made by assessee in foreign exchange to engineers employed on site for development of software could not be excluded from its export turnover for computing deduction under section 10A.<\/p>\n

Relq Software (P) Ltd. vs. ITO (2010) 125 ITD 101 (Bang.)<\/em><\/strong><\/p>\n

S. 10A : Exemption – Free trade zone – Business loss or unabsorbed depreciation loss – Non STPI unit<\/strong><\/p>\n

Business loss or unabsorbed depreciation of non STPI unit of assessee could not be set off from its income of STPI unit for computing deduction under section 10A.<\/p>\n

Relq Software (P) Ltd. vs. ITO (2010) 125 ITD 101 (Bang.)<\/em><\/strong> <\/p>\n

S. 12AA : Charitable Trust – Registration<\/strong><\/p>\n

While granting registration to a Charitable Trust or institution, the powers of the CIT are limited to examination as to whether or not the objects of the trust are charitable in nature and examination about the genuineness of the activities, when genuineness of the activities is not in doubt, the CIT was not justified in refusing the registration under section 12AA, on irrelevant grounds.<\/p>\n

Saint Kabir Educational Trust vs. CIT (2010) 41 DTR 267 (Asr.)(Trib.)<\/em><\/strong><\/p>\n

S. 12A : Charitable Trust – Registration – [S. 80G(5)(vi)]<\/strong><\/p>\n

Only because no charitable activity is carried on for the relevant year, registration cannot be refused. The Tribunal directed the CIT to grant approval under section 80G(5)(vi).<\/p>\n

Jasoda Devi Charitable Trust vs. CIT (2010) 4 ITR 457 (Jaipur)(Trib.)<\/em><\/strong><\/p>\n

S. 14A : Expenditure incurred in relation to Income not includible in total Income – Disallowance – Rule 8D – Not Retrospective – Reasonable Basis <\/strong><\/p>\n

Rule 8D r.w.s. 14A(2) is not arbitrary or unreasonable but can be applied only if assessee’s method not satisfactory. Rule 8D is not retrospective and applies from AY 2008-09. For earlier years, disallowance has to be worked out on “reasonable basis” under section 14A(1).<\/strong><\/p>\n

Godrej & Boyce Mfg. Co. Ltd. vs. Dy. CIT (Bombay High Court)<\/a><\/em>Source: www.itatonline.org<\/em><\/h2>\n

S. 14A : Expenditure not incurred in relation to total income – [S. 10(33)]<\/strong><\/p>\n

Proximity cause between expenditure and exempt income is condition precedent for disallowance of expenditure.<\/p>\n

CIT vs. Walfort Share and Stock Brokers P. Ltd. (2010) 326 ITR 1 \/ 233 CTR 42 \/ 41 DTR 233\/192 Taxman211.   (SC) <\/em><\/strong><\/p>\n

S. 15 : Salaries – Overriding Charges – Japanese Law<\/strong><\/p>\n

The matter was remanded to the Tribunal for fresh consideration in terms of the clause in the letter of employment and Japanese law, particularly when the question as to the nature of the levy as being an overriding charge had to be decided. 
\n CIT vs. NHK Japan Broadcasting Corporation (2010) 322 ITR 628 (SC)<\/em><\/strong>
\n  
\n S. 22 : Income from House Property or Business Income – (S. 28)<\/strong><\/p>\n

The assessee carrying on the business of dealing and investing in properties flats, ware houses, shops, etc., purchased flats for trading purposes but let them out on licence basis for temporary and earned monthly rental income as licence fee, the Court held that rental income assessable as income from House Property.<\/p>\n

Mangalan Homes P. Ltd. vs. ITO (2010) 325 ITR 281 (Bom.)  <\/em><\/strong><\/p>\n

S. 23(1)(a) : Income from House Property – Fair Rental Value – Interest free deposit<\/strong><\/p>\n

Benefit derived by assessee from interest free deposit can be taken into consideration for determination of fair rental value under section 23(1)(a). Since, the property in question was not subject to Rent Control Act, annual letting value was not to be restricted to standard rent as per Rent Control Act.<\/p>\n

ITO vs. Baker Technical Services (P) Ltd. (2010) 125 ITD 1 (Mum.)(TM)<\/em><\/strong><\/p>\n

S. 28(i) : Business Income or Other Sources – Interest Income – Remanded – (S. 56)<\/strong><\/p>\n

In the absence of factual matrix to decide the question whether the interest income received by the assessee on short term fixed deposits constituted business income under section 28 or other income from other sources under section 56 the matter was remanded to the Tribunal for fresh consideration in accordance with law.<\/p>\n

CIT vs. Producing P. Ltd. (2010) 322 ITR 270 (SC)<\/em><\/strong><\/p>\n

S. 28(i) : Business Loss – Non recovery of PF contribution – Prior period Expenditure<\/strong><\/p>\n

Loss suffered by the assessee on account of non-recovery of PF contributions of personnel who were deputed to other State Government concerns \/ departments which was recoverable from the said customers and written off by assessee is allowable as trading loss under section 28(i), even though the said amount has been debited in the Profit & Loss A\/c. as prior period expenditure.<\/p>\n

Hartron Informatics Ltd. vs. ACIT (2010) 41 DTR 489 (Chd.)(Trib.)<\/em><\/strong><\/p>\n

S. 28(iia) : Business Income – Benefit or Perquisite – <\/strong>Sale<\/strong> of duty entitlement pass book (DEPB)<\/strong><\/p>\n

Amount equivalent to the face of DEPB as well as the amount received in excess of the DEPB credit constitute profits of business under section 28(iiid), where the face value of the DEPB credit is offered to tax as business profits under section 28(iiid) in the year in which credit accrued to the assessee, any further profit arising on transfer of DEPB credit is to be taxed as profits of business under section 28(iiid) in the year in which the transfer of DEPB takes place, no part of credit that is available under DEPB scheme can fall for classification under cl. (iiib) of section 28.<\/p>\n

CIT vs. Kalpataru Colours & Chemicals (2010) 233 CTR 313 \/ 42 DTR 193 (Bom.)<\/em><\/strong><\/p>\n

S. 28 : Business Loss – Exchange Fluctuation loss on pending forward contract is an “accrued” loss<\/strong><\/p>\n

The assessee a foreign bank carrying on business in India, entered into forward contracts with its clients to buy or sell foreign exchange at an agreed price on a future date. On the date of maturity, the contract was executed which resulted in either profits or losses to the assessee. There was no dispute that the loss was on revenue account and that loss arising on execution of the contracts in the same year were allowable as deduction. With respect to contracts where the date of maturity fell beyond the accounting period, the assessee valued the forward contracts on the last of the accounting period on the basis of rate of foreign exchange prevailing on that date and accounted for loss or profit as the case may be. The Assessing Officer taxed the profits on such contracts, though he disallowed the losses on the ground that they were “notional” or “contingent” loss or whether it was an “accrued” loss held deciding in favour of the assessee.<\/p>\n

Dy. CIT vs. Bank of <\/em><\/strong>Bahrian<\/em><\/strong><\/strong>&<\/em><\/strong><\/strong>Amp<\/em><\/strong>, <\/em><\/strong>Kuwait<\/em><\/strong> (SB) (Mumbai) Source: www.itatonline.org          <\/em><\/strong><\/p>\n

S. 32(1)(ii) : Depreciation – Lease of Premises – Deposit – Intangible Asset<\/strong><\/p>\n

Assessee was not entitled to depreciation on the amount paid by it as deposit while renewing the agreement of lease of premises since by making such payment the assessee did not acquire any asset at all. The amount paid is not a licence or intangible asset nor a commercial rights of the nature specified in section 32(1)(ii).<\/p>\n

ACIT vs. Malyala Manorama Co. Ltd. (2010) 41 DTR 93 (Coch.)(Trib.)<\/em><\/strong><\/p>\n

S. 32(1)(ii) : Depreciation – Goodwill<\/strong><\/p>\n

Goodwill is not an intangible asset within the meaning of section 32(1)(ii), hence, not entitled to depreciation.<\/p>\n

Madular Infoyech (P) Ltd. vs. Dy. CIT (2010) 131 TTJ 243 (Pune)<\/em><\/strong><\/p>\n

S. 32 : Depreciation – Lease of Machinery<\/strong><\/p>\n

Assessee carrying on business of leasing is entitled to claim the depreciation, as soon as the machinery is leased and the lease rent is received, whether less is installed the  machinery or not is immaterial.<\/p>\n

CIT vs. Kotak Mahindra Finance Ltd. (2010) 191 Taxman 280 (Bom.)<\/em><\/strong><\/p>\n

S. 32 : Depreciation – Goodwill<\/strong><\/p>\n

Goodwill is also an intangible asset of similar nature referred to in cl. (ii) of section 32(1), and therefore, depreciation is allowable on the same.<\/p>\n

Kotak Forex Brokerage Ltd. vs. ACIT (2010) 131 TTJ 404 \/ 41 DTR 387 (Mum.)(Trib.)<\/em><\/strong>
\n Editorial Note:- Refer CIT vs. Techno Shares & Stocks Ltd. (2009) 323 ITR 69 (Bom.)  <\/p>\n

S. 35D : Business Expenditure – Debt Restructuring – [S. 37(1), 145(2)]<\/strong><\/p>\n

Amount paid as premium on debt restructuring, where the benefit results to the assessee in reduction of interest on account of restructuring relates to ten assessment years, cannot be allowed in entirety, but needs to be spread over a period of ensuring years during which the assessee secures the benefit of that expenditure.<\/p>\n

ACIT vs. Bihar Caustic & Chemicals Ltd. (2010) 41 DTR 377 (<\/em><\/strong>Ranchi<\/em><\/strong>) (Trib)<\/em><\/strong><\/p>\n

S. 36(1)(iii) : Interest on Borrowed Capital on Acquisition of Capital Asset<\/strong><\/p>\n

Borrowings invested in acquisition of capital asset for purpose of business. Interest is allowable. Amendment in 2004 is not retrospective.<\/p>\n

Shruti Properties P. Ltd. vs. ITO (2010) 4 ITR 186 (Mum.)(Trib.)<\/em><\/strong><\/p>\n

 <\/h2>\n

S. 36(1)(iii) : Deduction – Shares – Stock-in-Trade – (S. 14A) <\/h2>\n

 <\/strong><\/h2>\n

S. 14A applies where shares are held as investment and the only benefit derived is dividend. Section 36(1)(iii) deduction allowable if shares held as stock-in-trade.<\/strong><\/h2>\n

 <\/h2>\n

CIT vs. Leena Ramachandran (Kerala High Court)<\/a> Source: www.itatonline.org<\/em><\/h2>\n

S. 36(1)(iii) : Deductions – Interest on borrowed Capital – Interest free advances to sister concern<\/strong><\/p>\n

Assessee failed to make out a case of commercial expediency in advancing interest free advances to its sister concern which where made from its CC account with a bank, proportionate interest paid by assessee on borrowing was rightly disallowed.<\/p>\n

Punjab<\/em><\/strong> Stainless Steel Inds. vs. CIT (2010) 41 DTR 88 (Del.)<\/em><\/strong><\/p>\n

S. 36(1)(vii) : Bad debts – Share broker<\/strong><\/p>\n

Once brokerage income is taken in to account, the principal amount of debt is considered as the full amount of debt for claim of deduction as bad debts.<\/p>\n

Dy. CIT vs. Shreyas S. Morakhia (2010) 42 DTR 320 (SB)(Mum.) Source: www.itatonline.org<\/em><\/strong><\/p>\n

S. 37(1) : Business Expenditure – Retrenchment Compensation – Closure of Business<\/strong><\/p>\n

When there was interdependence and a unity of control between the three units established by the existence of common management, a common business organization, administration and fund; closure of one unit did not involve the closure of the business and retrenchment compensation paid to workmen was therefore an allowable deduction.
\n CIT vs. Pfizer Ltd. (2010) 42 DTR 32 (Bom.)<\/em><\/strong><\/p>\n

S. 37(1) : Capital Expenditure – Non-competence Rights <\/strong><\/p>\n

Amount paid for non-compete rights while acquiring business is capital expenditure.<\/strong><\/p>\n

Tecumseh India vs. ACIT (SB) (Delhi) (Trib.) <\/a>Source: www.itatonline.org<\/em><\/h2>\n

S. 40(a)(i) : Business Expenditure – Disallowance – Deduction of tax at Source – Demurrage – (S. 172)<\/strong><\/p>\n

Demurrage paid by Indian Company to foreign company without deduction of tax at source, disallowance under section 40(a)(i) is justified. <\/p>\n

CIT vs. Orient (<\/em><\/strong>Goa<\/em><\/strong>) P. Ltd. (2010) 325 ITR 554 (Bom.)<\/em><\/strong><\/p>\n

S. 40(a)(i) : Business Expenditure – Disallowance – Royalty – Guaranteed Licence fee – Tax deduction at source – [S. 9(1)(vi)]<\/strong><\/p>\n

Amount paid under licence agreement where non-resident licensees shall exploit the programme for rental and sale through distribution fall outside the purview of royalty within the meaning of section 9(1)(vi), therefore, no TDS is required to be made from such payment and consequently no disallowance under section 40(a)(i).<\/p>\n

Asiavision Home Entertainment (P) Ltd. vs. ACIT (2010) 41 DTR 492 (Mum.)(Trib.)<\/em><\/strong><\/p>\n

S. 40(a)(ia) : Business Expenditure – Disallowance – Contractor – Tax deduction at source – (S. 194C)<\/strong><\/p>\n

Tax deducted at source in the month of March and paid before due date of filing of return of income, disallowance under section 40(a)(ia) is not justified.<\/p>\n

Bapusaheb Nanasaheb Dhumal vs. ACIT (ITA No. 6628\/M\/2009 Bench ‘B’ dt. 26-6-2010 Income Tax Review – August 2010 P. 84) <\/em><\/strong>
\n  
\n S. 43B : Deduction – Actual Payment – Employers and Employees Contribution – [S. 2(24)(x)] <\/strong><\/p>\n

Employer’s and Employees’ contribution to PF and other incidental charges paid by assessee beyond the due dates could not be disallowed.   <\/p>\n

CIT vs. Lakhani Rubber Works (2010) 232 CTR 350 (P & H)<\/em><\/strong><\/p>\n

S. 43B : Business Disallowance – Interest<\/strong><\/p>\n

Interest accrued for year under consideration, even though payable on date of maturity of bonds, was still allowable in view of mercantile system of accounting followed by assessee. Since, interest was payable in respect of certain deposits received by assessee and not in respect of any loans and advances or borrowings made by assessee, clause (e) of section 43B relating to loans and advances from a scheduled bank was not applicable to instant case.<\/p>\n

Gujarat Toll Road Investment Co. Ltd. vs. ACIT (2010) 125 ITD 159 (All)<\/em><\/strong><\/p>\n

S. 44B : Shipping business – Non-residents – Income – Accrual<\/strong><\/p>\n

The passengers who had booked cruise packages were not travelling from or to any port in India, amount received on sale of cruise tickets could not be brought to tax under section 44B.<\/p>\n

Dy. CIT (International Taxation) vs. Star Cruises (<\/em><\/strong>India<\/em><\/strong>) Travel Services (P) Ltd. (2010) 39 SOT 18 (Mum.)<\/em><\/strong>
\n  
\n S. 45 : Capital Gains – Business Income – <\/strong>Sale<\/strong> of Land – (S. 28)<\/strong><\/p>\n

Sale of land not registered in assessee’s name, no material to hold that assessee was indulging in business, the amount is assessable as capital gains.<\/p>\n

CIT vs. <\/em><\/strong>S. Rajamannar<\/em><\/strong> (2010) 40 DTR 282 (Kar.)<\/em><\/strong><\/p>\n

S. 45 : Capital Gains – Computation – Deduction – Interest – Cost<\/strong><\/p>\n

Interest on borrowed capital is includible as part of cost of acquisition.<\/p>\n

CIT vs. Sri Hariram Hotels P. Ltd (2010) 325 ITR 136 (Karn.)<\/em><\/strong><\/p>\n

S. 45 : Capital Gains – Business Income – <\/strong>Sale<\/strong> of land not registered – [S. 28(i)]<\/strong><\/p>\n

Profit on sale of land (though not registered in his name) received by the assessee from the owner of land in pursuance of an agreement to develop his land and for spending certain amount for developing it for the owner was taxable as Capital Gain.<\/p>\n

CIT vs. <\/em><\/strong>S. Rajamannar<\/em><\/strong> (2010) 40 DTR 282 (Kar.)<\/em><\/strong><\/p>\n

S. 45(2) : Capital Gains – Conversion of Capital Asset in to stock-in-trade – Year of Chargeability – [S. 2(47)]<\/strong>
\n Where the assessee converted his land in to stock-in-trade and thereafter a development agreement was entered into by the assessee with the developer where by assessee provided his land measuring 44000 sq. ft. to developer for construction of residential apartments and the assessee was to get constructed area of 25130 sq. ft. the capital gain arising from the conversion of the land and building in to stock-in-trade were assessable proportionately in the previous years in which the constructed property was sold by the assessee and not in the year of development agreement.<\/p>\n

R. Gopinath (HUF) vs. ACIT (2010) 42 DTR 127 (Chennai)(Trib.)<\/em><\/strong><\/p>\n

S. 45(4) : Capital Gains – Firm – Revaluation of assets before conversion<\/strong><\/p>\n

Revaluation of assets before conversion of firm in to company, not a case of dissolution of firm nor transfer of assets of firm hence, section 45(4) not attracted.<\/p>\n

ITO vs. Gulabdas Printers (2010) 4 ITR 264 (Ahd.)(Trib.)<\/em><\/strong><\/p>\n

S. 48 : Capital Gains – Business Income – <\/strong>Sale<\/strong> of Ancestral House – [S. 28(i)]<\/strong><\/p>\n

Where the assessee sold ancestral property which was capital asset and Tribunal has found that the same was not converted in to stock-in-trade, the profit on sale of such property is assessable as capital gains.<\/p>\n

CIT vs. Raja Malwinder Singh (2010) 40 DTR 273 (P & H)<\/em><\/strong><\/p>\n

S. 48 : Capital Gains – Index Cost – Date of Agreement – Possession cost of improvement – Payment to tenant<\/strong><\/p>\n

For the purpose of determining the indexed cost of acquisition of property, indexation has to be allowed from the date on which the assessee purchased the property by way of agreement and not from the date on which the assessee got vacant possession thereof after evicting the tenant. Assessee is entitled to consider the amount paid to the tenant for obtaining vacant possession as cost of improvement of property.<\/p>\n

Nita A. Patel (Mrs.) vs. ITO (2010) 40 DTR 507 (Mum.)(Trib.) <\/em><\/strong><\/p>\n

S. 48 : Capital Gains – Cost of Index – Base Year – Inheritance – [S. 55(2)(b)]<\/strong><\/p>\n

Base year of cost index to be considered while computing the indexed cost of acquisition in relation to an asset which had been acquired through inheritance in the year 1992-93 from the previous year owner who held the property in 1956 was 1981-82.<\/p>\n

ACIT vs. Sayed Maqbul Hussain (2010) 4 ITR 44 (Chennai)(Trib.)  <\/em><\/strong><\/p>\n

S. 50 : Capital Gains – Depreciable Assets – Double Taxation Reliefs – India-Mauritius – (S. 9(1)(i), 45, 90)<\/strong><\/p>\n

Gains on sale of rig, which was a PE asset on which depreciation was claimed all long, is taxable in India under the IT Act, as also under 13 of the India-Mauritius tax treaty, it is wholly immaterial, in this case whether the assets were sold in India or outside India.<\/p>\n

Cartier Shipping Co. Ltd. vs. Dy. DIT (2010) 40 DTR 459 (Mum.)(Trib.)<\/em><\/strong><\/p>\n

S. 50 : Capital Gains – Slump <\/strong>Sale<\/strong> – [S. 41(2)]<\/strong><\/p>\n

Provisions of section 41(2), r.w.s. 50 are not applicable in the case of a transfer of entire going concern where the agreement does not reflect the actual value of land, building, plant and machinery and also does not reflect the actual liability of the assessee payable to different persons.<\/p>\n

CIT vs. Agrosynth Chemicals (2010) 233 CTR 101 (Ker.)<\/em><\/strong><\/p>\n

S. 50C : Capital Gains – Valuation fixed by Stamp Authorities<\/strong><\/p>\n

Assessee entering into agreement with land developer and appointing assessee’s wife as power of attorney. Land subsequently transferred by eleven sale deeds to purchasers, value fixed by stamp authorities higher than consideration mentioned in sale deeds. Section 50C is applicable.<\/p>\n

Meera Somasekaran vs. ITO (2010) 4 ITR 271 (Chennai)(Trib.)<\/em><\/strong><\/p>\n

S. 50C : Capital Gains – Full Value of Consideration – Valuation by Stamp Authorities – Not-ultra vires – Measure of tax<\/strong><\/p>\n

The assessee was the owner of land & building, it entered into a development agreement for the development & sale of the land. The consideration receivable by the assessee was Rs. 4.85 crores. The stamp authorities valued the same at Rs. 15.50 crores and the duty was paid by the developer. As the stamp valuation adversely affected the assessee for the purpose of section 50C (which provides that the value adopted by the stamp authorities shall be deemed to be full value of the consideration received or accruing as a result of transfer). The assessee challenged the validity of the provision. The Court dismissing the petition held that (1) there is a distinction between the subject matter of a tax and the standard by which the amount of tax and the standard by which the amount of tax is measured. Section 50C is only a standard of measuring for imposition of tax hence valid. The Court followed the principle laid down in A Sanyasi Rao  219 ITR 330 (SC).
\n  
\n Bhatia Nagar Premises co operative Society vs. UOI (<\/em><\/strong>Bombay<\/em><\/strong> High Court) Source: www.itatonline.org<\/em><\/strong><\/p>\n

S. 54F : Capital Gains – Exemption<\/strong><\/p>\n

When residential property is allotted in lieu of transfer of land as per development agreement with developer, assessee is entitled to exemption under section 54F.<\/p>\n

R. Gopinath (HUF) vs. ACIT (2010) 42 DTR 127 (Chennai)(Trib.)<\/em><\/strong><\/p>\n

S. 68 : Cash Credit – Share Application Money – Income from Undisclosed Sources<\/strong><\/p>\n

Merely because some of the persons did not respond to the notice issued by the Assessing Officer under section 133(6), of the Act, it could not be taken that the transaction was not genuine. The amount could not be added as unexplained income in the hands of the assessee.<\/p>\n

CIT vs. GP International Ltd. (2010) 325 ITR 25 (P & H)<\/em><\/strong><\/p>\n

S. 68 : Cash Credit – Share Application Money<\/strong>
\n Genuineness of receipt of application money by assessee company had been duly established by the assessee apart from establishing the identity of the share applicants and therefore, the addition was not called for.<\/p>\n

CIT vs. Winstral Petrochemicals (P) Ltd. (2010) 41 DTR 139 (Del.)<\/em><\/strong><\/p>\n

S. 69A : Income from Undisclosed Source – <\/strong>Opportunity<\/strong> of Cross Examination<\/strong><\/p>\n

Addition under section 69A made by the Assessing Officer on the basis of statements of third parties without providing these statements to the assessee and without affording any opportunity to him to cross–examine the deponents despite repeated requests by the assessee is not sustainable.<\/p>\n

ITO vs. Pawan Kumar Gupta (2010) 42 DTR 148 (<\/em><\/strong>Del.<\/em><\/strong>)(Trib.)          <\/em><\/strong><\/p>\n

S. 80HH : Deduction – Computation – Adjustment of loss of other unit – (S. 80I)<\/strong><\/p>\n

Assessee company had three units, two manufacturing units eligible for deduction under section 80HH and 80I and one service unit, for the purpose of calculating deduction under section 80HH and 80I, the loss sustained in service unit cannot be taken into account and only profit of two eligible units shall be taken into account as if it were the only source of income of that unit.<\/p>\n

CIT vs. Modi Xerox Ltd. (2010) 41 DTR 50 (All)<\/em><\/strong><\/p>\n

S. 80HH : Deduction – New Industrial Undertaking – Reconstruction of Existing Business – (S. 80I)<\/strong><\/p>\n

Assessee was not entitled to deduction under section 80HH and 80I for the current year since the plant and machineries purchased were erected in the earlier year of assessment. No details were furnished as regards machineries installed during the year.<\/p>\n

CIT vs. Wipro Ltd. (2010) 41 DTR 81 (Kar.)<\/em><\/strong><\/p>\n

S. 80HHC : Deduction – Export – Profits of Business – Insurance Claim – Stock-in-trade<\/strong><\/p>\n

The insurance claim for loss of stock-in-trade must stand on the same footing asd the income that would have been realized by the assessee on the sale of the stock-in-trade. Insurance claim on account of the stock-in-trade does not constitute an independent income or a receipt of a nature similar to brokerage, commission, interest, rent or charges; hence, such a receipt would not be subject to a deduction of ninety percent under clause (1) of Expln. (baa)<\/p>\n

CIT vs. Pfizer Ltd. (2010) 42 DTR 32 (Bom.)<\/em><\/strong><\/p>\n

S. 80HHC : Deduction – Profits of Business – Gross or Net Interest<\/strong><\/p>\n

While computing deduction under section 80HHC, 90 percent of gross interest is to be reduced from the profits of the business in term of cl. (baa) of Expln. to section 80HHC.<\/p>\n

CIT vs. Gem Plus Jewellery India Ltd. (2010) 42 DTR 73 (Bom.)<\/em><\/strong><\/p>\n

S. 80HHC : Deduction – Export – Interest on late payment received by customer<\/strong><\/p>\n

Interest on late payment received from the customers qualifies for deduction under section 80HHC.<\/p>\n

ACIT vs. Chokshi Heraeus (P) Ltd. (2010) 41 DTR 44 (Jd.)(Trib.) <\/em><\/strong><\/p>\n

S. 80HHC : Export – Computation – Direct Cost – Freight and Insurance<\/strong><\/p>\n

While computing the deduction under section 80HHC(3)(b), freight and insurance is not be included in the direct cost.<\/p>\n

CIT vs. King Metal Works, ITA No. 801 of 2010 dt. <\/em><\/strong>7-7-2010<\/em><\/strong> (<\/em><\/strong>Bombay<\/em><\/strong> High Court) (2010) BCAJ August P. 29.<\/em><\/strong><\/p>\n

S. 80HHC : Export – DEPB<\/strong><\/p>\n

The assessee had an export turnover exceeding Rs. 10 Crores and did not fulfill the conditions set out in the third proviso to section 80HHC(3) and therefore, the assessee was not entitled to a deduction under section 80HHC, on the amount received on transfer of DEPB. The contention that profits on transfer of DEPB in section 28(iiid) would not include the face value of the DEPB so that the assessee gets the deduction under section 80HHC on the face value of the DEPB has no merit.<\/p>\n

CIT vs. Kalpataru Colours & Chemicals (2010) 233 CTR 313 (Bom.) Source: www.itatonline.org       <\/em><\/strong>
\n S. 80IA(4) : Deduction – Industrial Undertakings – Infrastructure – Work Contract – Retrospective Amendment<\/strong><\/p>\n

Reopening of assessment beyond 4 years due to retrospective amendment made to section 80IA by Finance Act, 2009, w.e.f. 1-4-2000 which provided that that section 80IA would not be made available to an assessee who carries on the work in the nature of works contract. Reassessment after four years held to be not justified.<\/p>\n

Sadhav Engineering Ltd. vs. Dy. CIT (SCA 5846 of 2010 (Guj.) (2010) Income Tax Review August P. 81)<\/em><\/strong>
\n  
\n S. 80IB : Deductions – Industrial Undertakings – Manufacture – Herbal Powder – Coconut Shell Powder<\/strong><\/p>\n

Assessee purchased various items of herbal products, medicinal plants flowers, roots, etc., which were cleaned dried and grinded to obtain fine powder. After having undergone various processes, identity of original ingredients had been lost, which could never be brought back to its original form. Since there was a complete transformation of original raw materials so as to produce a commercially different product, assessee is entitled to deduction under section 80IB.<\/p>\n

ACIT vs. Vinayagar Silks (P) Ltd. (2010) 39 SOT 51 (Chennai)<\/em><\/strong><\/p>\n

S. 80IB : Deductions – Manufacture or Production – Making non-ferrous wires<\/strong><\/p>\n

Activity of the assessee making non-ferrous wires from the big gauge rods is covered within the meaning of production under section 80IB.<\/p>\n

ACIT vs. Leebo Metals (P) Ltd. (2010) 131 TTJ 34 (Mum.)<\/em><\/strong><\/p>\n

S. 80-O : Deduction – Royalties – Foreign Enterprises<\/strong><\/p>\n

Supply of architectural designs for use outside India, receipt of fee in foreign exchange is entitled to deduction.<\/p>\n

CIT vs. Charles M .Correa (2010) 232 CTR 61 (Bom.)<\/em><\/strong><\/p>\n

S. 80P(2)(ii)(vi) : Deduction – Co-operative Society – Manufacturing Cloth through weavers – Members of Primary Societies.<\/strong><\/p>\n

The Assessing Officer ought to have called for the bye–laws of the assessee to determine (i) whether a weaver could have became a member of apex society and (ii) whether the assessee was engaged in cottage industry. The department was directed to decide the applicability of section 80P keeping in mind the bye laws of the  assessee and the scheme.<\/p>\n

CIT vs. Rajasthan Raiya Bunkear S. Samiti Ltd. (2010) 323 ITR 365 (SC)         <\/em><\/strong><\/p>\n

S. 80RR : Deduction – Artist – Dress Designer – Professional Income from Foreign Source<\/strong><\/p>\n

Work of a dress designer involves a high degree of imagination, creativity and skill and therefore, a dress designer is an artist for the purpose of section 80RR.<\/p>\n

CIT vs. Tarun R. Tahilini (2010) 232 CTR 289 \/ 41 DTR 74 (Bom.)<\/em><\/strong><\/p>\n

S. 80IB : Deduction – Industrial Undertaking – Interest from trade debtors<\/strong><\/p>\n

Interest income received on delayed realization of sale proceeds becomes  part of sale price as it is the direct result of sale of goods and therefore, such income falls within the expression “derived from such industrial undertaking” and is eligible for deduction under section 80IB.<\/p>\n

CIT vs. Poddar Pigments Ltd. (2010) 41 DTR 390 (Del.) <\/em><\/strong><\/p>\n

S. 80IB(10) : Housing Project – Prorata<\/strong><\/p>\n

The project had been approved as housing project by local authority, if built of area of some of the housing units being more than 1500 sq. ft. assessee is entitled for deduction under section 80IB(10), prorata for the housing units having built up area less than 1500 sq. ft.<\/p>\n

Sreevatsa Real Estates (P) Ltd. vs. ITO (2010) 41 DTR 497 (Chennai)(Trib.)<\/em><\/strong><\/p>\n

S. 90 : Double Taxation Relief – DTAA – India-Switzerland – Art. 12 – Royalty or Technical fees<\/strong><\/p>\n

Assessee was only rendering consultancy services, it did not import any know how to STPL, it retained the experience required to perform the services. Therefore, the receipts in question could not be said to be in the nature of royalty within the meaning of Article 12(3) of IS treaty.<\/p>\n

Dy. CIT vs. Preroy A. G. (2010) 39 SOT 187 (Mum.)<\/em><\/strong><\/p>\n

S. 90 : Double Taxation Relief – International Taxation – Reimbursement -Technical Services – India-French (Art. 13)<\/strong><\/p>\n

Payment towards reimbursement of technical expenses to the head office which is not on account of any specific technical services having been “made available” cannot be brought to tax under Art. 13 of Indo-French tax treaty.<\/p>\n

Asst. DIT vs. Bureau Veritals (2010) 131 TTJ 29 (Mum.) <\/em><\/strong><\/p>\n

S. 92(C) : Transfer Pricing –International taxation- Computation of Arm’s Length Price – Use of brand logo of foreign company and advertisement expenditure.<\/strong><\/p>\n

Before determining the ALP the TPO \/AO needs to give appropriate notice to the assessee conveying the grounds on which the adjustment is proposed to be made, expenditure incurred by domestic entity which is an AE of a foreign entity etc.<\/p>\n

Maruti Suzuki India Ltd. vs. Addl. CIT (2010) 233 CTR 105 \/ 41 DTR 289 (Del.)<\/em><\/strong>
\n      
\n S. 92(C) : Transfer pricing –International taxation- Arm’s Length Price – Comparable Cases<\/strong><\/p>\n

Comparable cases which are in different line of business activity and do not meet the conditions mentioned in Rule 10C , cannot be treated comparable cases for calculating ALP under TNMM. Availability of advance without interest from AE is a material factor determining by taking only one comparable case, proviso to section 92C(2) is not applicable for making adjustment of 5 percent.<\/p>\n

Vedaris Technology (P) Ltd. vs. ACIT (2010) 41 DTR 73 \/ 131 TTJ 309 (<\/em><\/strong>Del.<\/em><\/strong>) (Trib.)<\/em><\/strong><\/p>\n

S. 92(C): Transfer Pricing –International taxation- Arm’s Length Price – <\/strong>Sale<\/strong> to associate entities at 5% discount<\/strong><\/p>\n

The Tribunal has considered the following circumstances for determining the Arm’s length price.<\/p>\n

    \n
  1. Turnover and quantity difference.<\/li>\n
  2. Geographical differences.<\/li>\n
  3. Profile of customer<\/li>\n
  4. Business environment of USA and Europe.<\/li>\n
  5. Simple average – over head expenses identified.<\/li>\n<\/ol>\n

    The Tribunal confirmed the order of CIT(A), who has deleted the additions made by the assessing.<\/p>\n

    ACIT vs. Dufon Laboratories (2010) 39 SOT 59 (Mum.)  <\/em><\/strong><\/p>\n

    S. 94(7) : Tax Avoidance – Transaction in Securities – Purchase of Units<\/strong><\/p>\n

    Units purchased on the record date falls very much within the period of three months as prescribed under section 94(7), record date of the units purchased by the assessee being 8th Aug., 2003, three months period was to expire on 8th Nov 2003, and therefore, sale of units by the assessee on 7th Nov., 2003, was within three months from the date of record, attracting section 94(7).<\/p>\n

    Tube Investments of India Ltd. vs. Jt. CIT (2010) 40 DTR 500 (Chennai) (Trib.)<\/em><\/strong><\/p>\n

    S. 94(7) : Tax Avoidance – Tax Planning – Dividend Stripping – Loss – Set off loss – Sale of Units – Loss cannot be disallowed – (S. 10(33), 14A)<\/strong><\/p>\n

    Even assuming that transaction was pre planned, there is nothing to impeach the genuineness of the transaction, hence, loss arising in the course of a dividend stripping transaction, before the insertion of section 94(7), w.e.f. 1st April 2002, cannot be disallowed, dividend stripping transaction cannot be said to be “abuse of law” even if it was pre planned. Loss not “expenditure”. Purchase of securities “cum dividend” and sale at loss, claim of loss permissible.
    \n Purchase of securities and sale thereof within three months, loss to be ignored.<\/p>\n

    CIT vs. Walfort Share & Stock Brokers (P) Ltd. (2010) 326 ITR 1 \/ 233 CTR 42 \/ 41 DTR 233\/192 Taxman 211. (SC)<\/em><\/strong><\/p>\n

    S. 115JB : Book Profits – Computation – Long Term Capital Gains – 100% Subsidiary<\/strong><\/p>\n

    The assessee had claimed exclusion of long term Capital Gains which were exempt under section 47(iv) of the Act. Capital Gains on sale of shares having been included in computing the profits presented before the share holders, they should also be included in computing book profit, the assessee was not entitled to the exclusion claimed.<\/p>\n

    Rain Commodities Ltd. vs. Dy. CIT (2010) 4 ITR 551 (Hyd.)(Trib.)(SB)<\/strong><\/p>\n

     <\/h2>\n

    S. 115JB : Book Profit – Minimum Alternate Tax – Foreign Company<\/h2>\n

     <\/strong><\/h2>\n

    S. 115JB (MAT) not applicable to foreign company without presence in <\/strong>India<\/strong>.<\/strong><\/h2>\n

     <\/h2>\n

    In Re The Timken Company (AAR)<\/a> Source: www.itatonline.org<\/em><\/h2>\n

    S. 139 : Income tax return – Prescription of forms – Non-availability of forms<\/strong><\/p>\n

    It is for the statutory authority and not for the Court to decide whether the income tax return should be filed in a particular form. The Court cannot do so even if there is paucity of time and the requisite form is not available.<\/p>\n

    UOI vs. Income Tax Bar Association, <\/em><\/strong>Lucknow<\/em><\/strong> (2010) 324 ITR 81 (SC)<\/em><\/strong><\/p>\n

    S. 143(2) : Assessment – Notice – Block Assessment – Mandatory<\/strong><\/p>\n

    Service of notice on the assessee under section 143(2), within the prescribed period of time is a prerequisite for framing the block assessment. Non-issuance of notice is not a mere procedural irregularity and the same is not curable.<\/p>\n

    Virendra Dev Dixit vs. ACIT (2010) 41 DTR 43 (All)<\/em><\/strong><\/p>\n

    S. 143(2) : Assessment – Notice – Reassessment – (S. 148)<\/strong><\/p>\n

    Provision contained in section 143(2), is mandatory in nature and it is obligatory for the Assessing Officer to apply his mind to the contents of the return filed in response to notice under section 148 and thereafter issue notice under section 143(2), before proceeding to decide the controversy regarding escaped assessment, non issue of notice under section 143(2), after filing of return by assessee vitiated the reassessment proceedings.<\/p>\n

    CIT vs. Rajeev Sharma (2010) 232 CTR 303 (All)<\/em><\/strong><\/p>\n

    S. 143(2) : Assessment – Notice – Service by Affixture<\/strong><\/p>\n

    In the absence of any evidence that any independent person was associated with the identification of assesse’s place of business at the time of service under section 143(2) by affixture or that the inspectors of IT had personal knowledge of such place of business service of notice by affixture cannot be treated as valid service. Second notice having been served beyond the period of twelve months was otherwise invalid hence, assessment is annulled.<\/p>\n

    Kohli Bros. vs. ITO (2010) 42 DTR 113 (Luck.)(Trib.)    <\/em><\/strong><\/p>\n

    S. 147 : Reassessment – Full and true disclosure – Notice after expiry of four years – Non-disclosure of sale of rig<\/strong><\/p>\n

    Non-disclosure of fact about sale of rig, used in the PE and on which depreciation was claimed by non–resident assessee amounted to failure in disclosing fully and truly all material facts hence, justified in reopening of assessment.<\/p>\n

    Cartier Shipping Co. Ltd. vs. Dy. DIT (2010) 40 DTR 459 (Mum.)(Trib.)<\/em><\/strong><\/p>\n

    S. 147 : Reassessment – Recorded Reasons<\/strong><\/p>\n

    Once the assessee requests for supply of reasons recorded for issuance of notice under section 148, Assessing Officer is bound to furnish the same within reasonable time. The matter restored back to the Assessing Officer with the direction to follow the procedure laid down by the Apex Court.<\/p>\n

    CIT vs. Sangeetha Granites Ltd. (2010) 42 DTR 42 (Kar.)<\/em><\/strong><\/p>\n

    S. 147 : Reassessment – Retrospective Amendment<\/h2>\n

     <\/strong><\/h2>\n

    Reopening beyond 4 years on basis of retrospective amendment not justified if assessee has not failed to disclose material facts.<\/strong><\/h2>\n

     <\/strong><\/h2>\n

    Sadbhav Engineering vs. Dy. CIT (Gujarat High Court)<\/a> Source: www.itatonline.org<\/em><\/h2>\n

    (Editor: Rallies India Ltd. v ACIT (2010) 323 ITR 54 (Bom.)<\/strong><\/p>\n

    S. 147 : Reassessment – Rectification – (S. 154)<\/strong><\/p>\n

    S. 147 reopening for rectifying sections 154 mistakes are invalid.<\/strong><\/p>\n

    Hindustan Unilever vs. Dy. CIT (Bombay High Court)<\/a> Source: www.itatonline.org<\/em><\/h2>\n

    S. 147 : Reassessment – Reason to Believe – Wrong Claim of Deduction – (S. 80I)<\/strong><\/p>\n

    On the facts of the case, the Tribunal was directed to examine the validity of the impugned notice under section 148 in appeal before it.<\/p>\n

    Swaraj Engineers Ltd. vs. ACIT (2010) 38 DTR 1 (SC)<\/em><\/strong><\/p>\n

    S. 147 : Reassessment – Reason to Believe – Direction of Higher Officer <\/strong><\/p>\n

    Mere information received from the Dy. Director of IT (Inv.) and directions of the said officer and Addl. CIT to initiate proceedings under section 147 can not constitute valid reasons for initiating reassessment proceedings in the absence of anything to show that the Assessing Officer has independently applied his mind to arrive at a belief that income has escaped assessment.<\/p>\n

    CIT vs. SFIL Stock Broking Ltd. (2010) 41 DTR 98 (Del.)<\/em><\/strong>
    \n  
    \n S. 147 : Reassessment – Full and true disclosure – Reassessment after four years<\/strong><\/p>\n

    Assessee having fully and truly disclosed all the material facts necessary for its assessment insofar as it had a bearing on dividend income and the Assessing Officer having specifically applied his mind to the question as to whether the dividend income could be claimed as exempt without disallowance under section 14A, impugned notice under section 148 seeking to reopen the assessment after expiry of four years is set aside.<\/p>\n

    Indian Oil Corporation Ltd. vs Dy. CIT (2010) 41 DTR 200 (Bom.)<\/em><\/strong><\/p>\n

    S. 147 : Reassessment – Notice – Objection<\/strong><\/p>\n

    Reassessment order passed without considering the objections lodged by the assessee is not sustainable. Assessing Officer is directed to consider the objections filed by the assessee and pass fresh orders after hearing the assessee.<\/p>\n

    IOT Infrastructure & Energy Services Ltd. vs. ACIT (2010) 233 CTR 175 (Bom.)<\/em><\/strong>
    \n   
    \n S. 147 :  Reassessment – Full and True Disclosure – Notice after four years<\/strong><\/p>\n

    Revenue has failed to establish that there was failure on the part of the assessee to disclose fully and truly all the material facts necessary during the course of relevant assessment, statutory condition precedent to validity exercise the power to reopen an assessment beyond the stipulated four years period was not satisfied, the notice of reassessment was liable to be quashed.<\/p>\n

    3i Infotech Ltd. vs. ACIT (2010) 41 DTR 377\/192 Taxman 137 (Bom.)<\/em><\/strong><\/p>\n

    S. 147 – Reassessment – Validity – Jurisdiction – (S. 292B)<\/strong><\/p>\n

    Where reopening proceedings are initiated by the Assessing Officer not having jurisdiction, the reassessment made in pursuance to such notice by the Assessing Officer is illegal and invalid.<\/p>\n

    K. B. Kumar (Dr.) (Mrs.) vs. ITO (2010) 41 DTR 423 (<\/em><\/strong>Del.<\/em><\/strong>) (Trib.) <\/em><\/strong><\/p>\n

    S. 147 : Reassessment – Block Assessment – (S. 158BC)<\/strong><\/p>\n

    Once assessment has been framed under section 158BC in relation to undisclosed income of the block period as a result of search, Assessing Officer cannot issue notice under section 148 for reopening such assessment.<\/p>\n

    Mangal Singh (HUF) vs. ACIT (2010) 42 DTR 58 (<\/em><\/strong>Del.<\/em><\/strong>)(Trib.)<\/em><\/strong>
    \n   
    \n S. 153A : Search and Seizure – Warrant of Authorization<\/strong><\/p>\n

    Warrant of authorization being issued in the name of trust and assessee being managing trustee of the trust, but no search operation was conducted in the premises of the assessee and in the warrant of authorization, the address of the place to be searched is not the address of the assessee individual, no panchnama is also drawn in pursuance with the warrant of authrization in the case of the assessee, no documents were seized or impounded as such during the course of search from the assessee, the Assessing Officer was not justified in initiating proceedings or assuming valid jurisdiction under section 153A against the assessee.<\/p>\n

    Mansukh Kanjibhai Shah (Dr.) vs. ACIT (2010) 41 DTR 353 (Ahd.)(Trib.)<\/em><\/strong><\/p>\n

    S. 154 – Rectification of Mistake – Subsequent decision of High Court or Supreme Court<\/strong><\/p>\n

    If the assessee does not challenge the order of assessment in which Assessing Officer has refused the relief by filing an appeal, the assessment order becomes final and the rectification application under section 154 cannot be entertained in such case, to grant relief on the basis of a subsequent decision of the High Court or the Supreme Court.<\/p>\n

    CIT vs. Krone Communication Ltd. (2010) 41 DTR 206 (Kar.) <\/em><\/strong><\/p>\n

    S. 154 – Rectification of Mistake – Retrospective Amendment of Law – Levy of Interest – (S. 234B)<\/strong><\/p>\n

    Assessment based on the Supreme Court decision cannot be rectified on subsequent retrospective amendment of law. Order of rectification under section 154, for the Asst. Year 1998-99, levying interest for the first time under section 234B in view of retrospective amendment of section 234B was not valid.<\/p>\n

    Shriram Chits (<\/em><\/strong>Bangalore<\/em><\/strong>) Ltd. vs. Jt. CIT (2010) 233 CTR 199 (Kar.)     <\/em><\/strong><\/p>\n

    S. 158BB : Block Assessment – Undisclosed Income – Computation – Books of Account – Evidence – (S. 69)<\/strong><\/p>\n

    It is not sufficient that assessee had disclosed the asset, transaction or entry but it is essential that income attributable to transaction has also been disclosed to get the deduction under section 158BB(1).
    \n The books of account maintained in regular course of business, found during course of search constitute “evidence” as contemplate under section 158BB.
    \n In the case of share broker client ID mismatch found during the search would constitute “material” as contemplated under section 158BB(1).
    \n Since all the provisions of section 142 are applicable to assessment under chapter X1V-B. It is always open to Assessing Officer to resort to provisions of section 142(2A), which deal with compulsory audit and findings of compulsory audit have to be taken in to consideration while determining undisclosed income.
    \n Provision of section 69 would be applicable to extent of income not disclosed in transaction recorded in books of account.<\/p>\n

    Triumph Securities Ltd. vs. Dy. CIT (2010) 39 SOT 139 (Mum.)(SB)<\/em><\/strong>
    \n  
    \n S. 158BD : Block Assessment – Agent of Non-resident – (S. 163)<\/strong><\/p>\n

    Assessment under section 158BD framed on non-resident assessee after issuing a notice on his power of attorney holder without passing an order under section 163 treating the latter as an agent of the assessee and granting him an opportunity of hearing is a nullity, more so the said power of attorney holder does not answer the description of agent as envisaged under section 163(1).<\/p>\n

    CIT vs. Mukesh B. Shah (2010) 40 DTR 297 (Guj.) <\/em><\/strong><\/p>\n

    S. 158BE : Block Assessment – Search and Seizure – Limitation – Last Past Panchnama<\/strong><\/p>\n

    Where the search was concluded on 29th \/ 30th Aug., 1996 by drawing a panchnama, the time limit of one year for framing the block assessment start, when revenue has not done anything tangible after passing the restraint order which was revoked on 18th Nov., 1996. Panchnama drawn at the time of vacating the order cannot extend the period of limitation and therefore assessment order passed on 28th Nov., 1997, was barred by limitation.<\/p>\n

    CIT vs. <\/em><\/strong>D.<\/em><\/strong><\/strong>D.<\/em><\/strong> Axles (P) Ltd. (2010) 40 DTR 293 (Del.) <\/em><\/strong><\/p>\n

    S. 158BE : Block Assessment – Search and Seizure – Limitation – Power of Tribunal<\/strong><\/p>\n

    The Appellate Tribunal has no power to extend the period of limitation by treating the assessment made beyond limitation as bonafide mistake on the part of Assessing Officer and liable to be condoned.<\/p>\n

    K. M. Tiwari and Sons (HUF) vs. ACIT (2010) 325 ITR 389 (Chhatitsgarh)<\/em><\/strong><\/p>\n

    S. 163 : Agent – Representative Assessee – Power of Attorney Holder – NRI <\/strong><\/p>\n

    Power of attorney does not answer the description of agent in relation to a non resident, as envisaged under section 163(3)(1), hence, the assessment order framed in the case of NRI in the name of power of attorney treating as an agent held to be illegal and void.<\/p>\n

    CIT vs. Mukesh B. Shah (2010) 40 DTR 297 (Guj.)<\/em><\/strong><\/p>\n

    S. 171 : HUF – Partition<\/strong><\/p>\n

    Order under section 171 passed by the Assessing Officer after issuing a call memo only to Karta of the HUF and not other members of the family did not comply with the mandatory requirement of section 171(2), and therefore, illegal and not valid. Matter remanded back to the Assessing Officer with the direction to pass an order under section 171 after notifying all the members of HUF and hearing them.<\/p>\n

    P. G. Srinivasetty & Sons (HUF) vs. ITO (2010) 41 DTR 283 (Kar.) <\/em><\/strong><\/p>\n

    S. 179 : Liability of Director’s of Private Company – Penalty – Tax – Reasonable <\/strong>Opportunity<\/strong> <\/strong><\/p>\n

    “Tax” for the purposes of section 179 does not include penalty, therefore, directors of the company cannot be called upon to pay penalty of the company under section 179.
    \n Order passed by the Assessing Officer under section 179 without examining the question as to whether the non recovery of tax from the assessee company was or not a result of gross neglect, misfeasance or breach of duty on the part of the assessee in relation to affairs of the company, Assessing Officer was directed to pass fresh order after giving a reasonable opportunity to the assessee.<\/p>\n

    Dinesh T. Tailor vs. Tax Recovery Officer (2010) 326 ITR 85\/41 DTR 6\/192 Taxman 152 (Bom.)<\/em><\/strong><\/p>\n

    S. 194A : Deduction of tax at source – Interest other than “interest on securities” – Dividend or discount paid to subscribers of chit.<\/strong><\/p>\n

    Transaction between the subscribers and the chit companies (foreman) under a chit scheme cannot be treated as a loan transaction and hence, dividend payments cannot be treated as interest payments made by foreman and they are not liable to deduct tax under section 194A, on such payments.<\/p>\n

    ITO vs. Daspalla Chiys & Investments Ltd. & Ors. (2010) 41 DTR 141 (Visakha)(Trib.)<\/em><\/strong><\/p>\n

     <\/h2>\n

    S. 194C : Deduction of Tax at Source – Due Date – Return of Income<\/h2>\n

    Default under section 194C does not result in section 40(a)(ia) disallowance if TDS paid before due date of filing ROI.<\/strong><\/h2>\n

     <\/h2>\n

    Bapushaeb Nanasaheb Dhumal vs. ACIT (ITAT Mumbai)<\/a><\/em>Source: www.itatonline.org<\/em><\/h2>\n

    S. 194H : Deduction of tax at source – Commission or Brokerage<\/strong>
    \n Expression “commission or brokerage” as contained in clause (i) of explanation to section 194H, is not so wide that it would include any payment receivable directly or indirectly for services in course of buying or selling of goods, hence, discount allowed on transactions relating in outright purchases cannot be treated as brokerage or commission. For application of provisions of section 194H there should be relationship of principal and agent in order to bring discount in ambit of commission or brokerage.<\/p>\n

    ACIT vs. Idea Cellular Ltd. (2010) 125 ITD 222 (Hyd.)<\/em><\/strong><\/p>\n

     <\/h2>\n

    S. 195 :Deduction  of  Tax  at Source – Software – Royalty<\/h2>\n

     <\/strong><\/h2>\n

    Fee for software is NOT royalty & TDS under section 195 not required.<\/strong><\/h2>\n

     <\/h2>\n

    Kansai Nerolac Paints vs. ADIT (ITAT Mumbai)<\/a> Source: www.itatonline.org<\/em><\/h2>\n

     
    \n S. 195 : Deduction of Tax  at source – Non-resident – Reimbursement of Expenses – [S. 40(a)(i)]  <\/strong><\/p>\n

    As the reimbursement of expenses is not taxable in the hands of non-resident payee, there is no need for assessee to deduct TDS and he cannot be held to be assessee in default, consequently no disallowance under section 40(a)(i) is called for.<\/p>\n

    Nathpa Jhakri Joint Venture vs. ACIT (2010) 41 DTR 233 (Mum.)(Trib.)<\/em><\/strong><\/p>\n

    S. 195 :Deduction of Tax at source – Non-resident – Income – Accrual – Hire Charges – [S. 5(2)]<\/strong><\/p>\n

    Non-resident company having received the charter fee of fishing vessels from the assessee in the shape of 85 percent of the fish catch in India as per the terms and conditions of the agreement between them, income earned by the non-resident company was chargeable to tax under section 5(2) and therefore, assessee was liable to deduct tax under section 195 on the payment made to that company.<\/p>\n

    Kanchanaganga Sea Foods Ltd. vs. CIT (2010) 325 ITR 540 \/ 233 CTR 1 \/ 41 DTR 209\/ 192 Taxman 187 (SC)<\/em><\/strong><\/p>\n

    S. 197 : Deduction of tax at source – Grant of Certificate<\/strong><\/p>\n

    Rejection of application under section 197 without assigning cogent reasons was not justified, especially when it had been accepted for earlier year.<\/p>\n

    Infrastructure Development Authority vs. CIT (2010) 232 CTR 353 (<\/em><\/strong>Patna<\/em><\/strong>)<\/em><\/strong><\/p>\n

    S. 244A : Refunds – Interest<\/strong><\/p>\n

    Assessee company erroneously deducted tax out of interest payment made to IDBI under section 194A(3)(iii)(b), though no tax was required to be deducted from such payments. On assessee’s request department granted refund of amount so deducted. Assessee claimed interest on refund. The Court held that as the assessee has paid the tax on its own on an erroneous impression, it did not become deemed assessee and therefore section 244A did not get attracted.<\/p>\n

    Universal Cables Ltd. vs. CIT (2010) 191 Taxman 370 (MP)<\/em><\/strong><\/p>\n

    S. 254(1) : Appellate Tribunal – Precedent – Order of co-ordinate Bench<\/strong><\/p>\n

    It is the duty of co-ordinate bench to examine earlier decision of Tribunal and if a view has been expressed after taking in to consideration all facts and circumstances of case, to follow same unless its correctness is doubtful in opinion of subsequent Bench of Tribunal.<\/p>\n

    ITO vs. Baker Technical Services (P) Ltd. (2010) 125 ITD 1 (Mum.)(TM) <\/em><\/strong><\/p>\n

    S. 260A : Appeal – High Court – New Ground<\/strong><\/p>\n

    Pure question of law can be raised before the High Court though not raised before the Tribunal.<\/p>\n

    CIT vs. Jundal Equipments Leasing and Consultancy Services Ltd. (2010) 325 ITR 87 (<\/em><\/strong>Delhi<\/em><\/strong>)<\/em><\/strong><\/p>\n

    S. 271(1)(c) – Penalty – Concealment – Deemed Dividend<\/strong><\/p>\n

    Loan treated as deemed dividend and consequently penalty was levied. The Tribunal cancelled the penalty. The Court held that the Tribunal was not justified in cancelling the penalty, without considering facts relied on by Assessing Officer. The matter remanded to Tribunal to fresh decision.<\/p>\n

    CIT vs. Alkesh K. Patel (2010) 325 ITR 118 (Bom.)<\/em><\/strong><\/p>\n

    S. 271(1)(c) : Penalty – Concealment – Satisfaction<\/strong><\/p>\n

    High Court held that on a perusal of the assessment order, the Assessing Officer had not recorded the satisfaction that proceedings under section 271(1)(c), required to be initiated against the assessee. S.L.P of Department rejected.<\/p>\n

    CIT vs. Fibro Tech Chemicals, S.L.P No. 6703 of 2010 dt. <\/em><\/strong>22-2-2010<\/em><\/strong> (2010) 325 ITR 12 (St.)<\/em><\/strong><\/p>\n

    CIT vs. Frontline Solutions (<\/em><\/strong>Baroda<\/em><\/strong>) Ltd. S.L.P. No. 8187 of 2009 dt. <\/em><\/strong>22-2-2010<\/em><\/strong> (2010) 325 ITR 12 (St.)<\/em><\/strong><\/p>\n

    S. 271(1)(c) : Penalty – Concealment – Genuine payment proved in penalty proceedings<\/strong><\/p>\n

    Addition to income on ground that payment for transport services had not been proved. The assessee produced evidence in penalty payment was genuine. Penalty cannot be imposed.<\/p>\n

    Dhirajlal Mangal Shah vs. ITO (2010) 4 ITR 313 (Ahd.)(Trib.)(TM) <\/em><\/strong><\/p>\n

    S. 271(1)(c) : Penalty – Concealment – Estimation of Profit<\/strong><\/p>\n

    Assessee estimating the profit at 6.36% of gross profit. Assessing Officer estimating at 10% of gross profit. Penalty for concealment cannot be levied.<\/p>\n

    CIT vs. Vijay Kumar Jain (2010) 325 ITR 378 (Chhattishgarh)<\/em><\/strong><\/p>\n

    Editorial Note:- Ratio of Apex Court in CIT vs. Reliance Petroproducts P. Ltd (2010) 322 ITR 158 (SC), explained.<\/p>\n

    Wealth tax<\/u><\/strong> <\/p>\n

    S. 2(ea) : Wealth Tax – Exemption – Urban land – Building Constructed<\/strong>
    \n The building in the process of construction could not be understood as a building which had been constructed. The wording being that the urban land would mean land on which complete land on which complete building stands, such lands alone would qualify for exemption.<\/p>\n

    CWT vs. Giridhar G. Yadalam (2010) 325 ITR 223 (Karn.)  <\/em><\/strong><\/p>\n

    S. 2(ea) : Wealth Tax – Assets – Exemption<\/strong><\/p>\n

    Two years tax emption period qua industrial plots held by assessee would be reckoned from date of acquisition of plots by it and not from date when permission to change land in use for industrial purpose was granted.<\/p>\n

    Rockman Cycle Industries Ltd. vs. CWT (2010) 191 Taxman 399 (P & H)<\/em><\/strong><\/p>\n

    General  <\/u><\/strong><\/p>\n

    Service of Notice – E-mail – Commercial Matters<\/strong><\/p>\n

    The Hon’ble Supreme Court directed the advocates to provide the e-mail address, and respondents for sending the notices by e-mail. The above facility is being extended in addition to the modes of service mentioned in the existing Supreme Court Rules.<\/p>\n

    CERC vs. National Hydroelectric Power Corporation, Source: www.itatonline.org   <\/em><\/strong><\/p>\n

    Precedent – Contempt – Failure to follow High Court Order – Sales Tax Officer<\/strong><\/p>\n

    The Sales Tax Officer passed an order refusing to follow the judgment of Bombay High Court in CST vs. Pee Textiles 26 VST 281 on the ground that the said judgment “is not accepted by the sales tax department and the department has appealed against the same”. On a writ petition filed by the assessee, the High Court has taken the view that as the said judgment in Pee Vee Textiles is not stayed “the refusal to follow and implement the judgment of this Court by Mr. Dubey in our considered view prima facie amounts to contempt of this Court”<\/p>\n

    Garware Polyester vs. State of <\/em><\/strong>Maharashtra<\/em><\/strong> and Ors. Source: www.itatonline.org <\/em><\/strong><\/p>\n

    Land Acquisition Act, 1894 – Agricultural Activity<\/strong>
    \n Manufacture of silk thread held not to be an agricultural activity.<\/p>\n

    Special<\/em><\/strong><\/strong>Land<\/em><\/strong> Acquisition Officer vs. Karigowda & Others (2010) 5 SCC 708<\/em><\/strong><\/p>\n

    Judicial Institution – Voice of Citizens – Weapon of Contempt<\/strong><\/p>\n

    Voice of citizen who believes that judicial institution is not functioning well cannot be muffled by using the weapon of contempt.<\/strong> <\/p>\n

    Indirect Tax Practitioners Association vs. R. K. Jain (Supreme Court)<\/a> <\/em><\/strong>Source: www.itatonline.org<\/em><\/strong><\/p>\n

    Condonation of Delay<\/h2>\n

     <\/strong><\/h2>\n

    Unless mala fides are writ large, delay should be condoned. Matters should be disposed of on merits and not technicalities.<\/strong><\/h2>\n

     <\/h2>\n

    Improvement Trust vs. Ujagar Singh (Supreme Court)<\/a> Source: www.itatonline.org<\/em><\/h2>\n

     <\/em><\/h2>\n

     <\/h2>\n\n\n
    \n

    Disclaimer: <\/strong>The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. Neither the author nor itatonline.org and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon. No part of this document should be distributed or copied (except for personal, non-commercial use) without express written permission of itatonline.org.<\/p>\n<\/td>\n<\/tr>\n<\/table>\n<\/div>\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 – July 2010<\/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-1997","page","type-page","status-publish","hentry"],"acf":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/pages\/1997","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=1997"}],"version-history":[{"count":0,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/pages\/1997\/revisions"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/media?parent=1997"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}