{"id":6436,"date":"2013-03-17T00:58:52","date_gmt":"2013-03-16T19:28:52","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?page_id=6436"},"modified":"2013-08-05T23:00:38","modified_gmt":"2013-08-05T17:30:38","slug":"digest-of-important-case-law-january-2013","status":"publish","type":"page","link":"https:\/\/itatonline.org\/archives\/digest-of-important-case-law-january-2013\/","title":{"rendered":"Digest of important case law &#8211; January 2013"},"content":{"rendered":"<div id=AddressingEnvelope>\n<a href=\"https:\/\/i0.wp.com\/itatonline.org\/archives\/wp-content\/uploads\/2008\/10\/ksalegal.gif\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" src=\"https:\/\/i0.wp.com\/itatonline.org\/archives\/wp-content\/uploads\/2008\/10\/ksalegal.gif?resize=157%2C133\" alt=\"\" title=\"ksalegal\" width=\"157\" height=\"133\" class=\"alignleft size-full wp-image-183\" \/><\/a><\/p>\n<div id=MainEnvelope>\nNo time to read through voluminous case reports?<\/p>\n<div id=RSVP>\nCan\u2019t separate the wheat from the chaff?\n<\/div>\n<div id=Invite>\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<p><DIV class=team>Compiled By: Ajay R. Singh, Paras S. Savla, Rahul K. Hakani and Sujeet S. Karkal, Advocates<\/DIV><\/p>\n<\/div>\n<p><DIV class=clear-simple><\/DIV>\n<\/div>\n<div class=\"clock\">\n<table border=\"0\">\n<tr>\n<td colspan=\"2\"><strong>Digest of important case law &#8211; January 2013 <\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"264\" rowspan=\"2\" valign=\"top\">\n<p><script type=\"text\/javascript\"><!--\ngoogle_ad_client = \"ca-pub-6440093791992877\";\n\/* DLCenter_336x280 *\/\ngoogle_ad_slot = \"7705834990\";\ngoogle_ad_width = 336;\ngoogle_ad_height = 280;\n\/\/-->\n<\/script><br \/>\n<script type=\"text\/javascript\"\nsrc=\"http:\/\/pagead2.googlesyndication.com\/pagead\/show_ads.js\">\n<\/script><\/p>\n<\/td>\n<td width=\"271\" valign=\"top\">\n<p><script type=\"text\/javascript\"><!--\ngoogle_ad_client = \"ca-pub-6440093791992877\";\n\/* DLCenter_336x280 *\/\ngoogle_ad_slot = \"7705834990\";\ngoogle_ad_width = 336;\ngoogle_ad_height = 280;\n\/\/-->\n<\/script><br \/>\n<script type=\"text\/javascript\"\nsrc=\"http:\/\/pagead2.googlesyndication.com\/pagead\/show_ads.js\">\n<\/script><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td valign=\"top\"><\/td>\n<\/tr>\n<tr>\n<td>Download <strong>monthly<\/strong> (January 2013) digest in pdf format<\/td>\n<td align=\"right\">Download <strong>Consolidated Digest<\/strong> (Jan 2012 to Sept 2012) in pdf format<\/td>\n<\/tr>\n<tr>\n<td align=\"left\" valign=\"top\"><a href=\"https:\/\/itatonline.org\/archives\/?dl_id=964\" onclick=\"if (event.button==0) \r\n     setTimeout(function () { window.location = 'http:\/\/itatonline.org\/downloads.php?varname=dl_id=964&varname2=digest_important_case_laws_january_2013.pdf'; }, 100)\" ><strong>Click here to download the judgement (digest_important_case_laws_january_2013.pdf) <\/strong> <\/a><\/p> <\/td>\n<td align=\"right\" valign=\"top\"><a href=\"https:\/\/itatonline.org\/archives\/?dl_id=901\" onclick=\"if (event.button==0) \r\n     setTimeout(function () { window.location = 'http:\/\/itatonline.org\/downloads.php?varname=dl_id=901&varname2=consolidated_digest_of_case_laws_jan_2012_sept_2012.pdf'; }, 100)\" ><strong>Click here to download the judgement (consolidated_digest_of_case_laws_jan_2012_sept_2012.pdf) <\/strong> <\/a><\/p> <\/td>\n<\/tr>\n<tr>\n<td colspan=\"2\"><a href=\"http:\/\/itatonline.org\/archives\/index.php\/digest-of-important-case-law-december-2012\/\">Looking for the Previous Month&#8217;s digest? Click here.<\/a> <\/td>\n<\/tr>\n<\/table>\n<\/div>\n<p>   <script type=\"text\/javascript\"><!--\ngoogle_ad_client = \"ca-pub-6440093791992877\";\n\/* DLCenter_728x90 *\/\ngoogle_ad_slot = \"3275635396\";\ngoogle_ad_width = 728;\ngoogle_ad_height = 90;\n\/\/-->\n<\/script><br \/>\n<script type=\"text\/javascript\"\nsrc=\"http:\/\/pagead2.googlesyndication.com\/pagead\/show_ads.js\">\n<\/script><\/p>\n<div class=\"journal\">\n<p><strong>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<div>\n<div style='float:left; margin-top:5px ; margin-left:5px ; margin-right:10px ; margin-bottom:5px ;'>\n<\/div>\n<p><strong>S.2(22)(e):Dividend-Deemed  dividend-Loans and advances-Legal fiction does not extend to broaden the  concept of shareholder&nbsp; to make tax loans  or advances as deemed dividend in the hands of deemed share holder. (Companies  Act, S.153, 187C)<\/strong><br \/>\n  During&nbsp;&nbsp; search various papers relating&nbsp; share holding pattern of Amod Stampings Pvt  Ltd were seized . It was found that said company had granted loans to various  companies wherein share holdings and voting power exceeded 10 percent .It was  explained that on creation of Trust a part of said company were settled in  favour of Trust and after&nbsp; excluding of  shares the assessee did not have more than 10 percent voting power and the  assessee had no beneficial interest in the said Trust. The Assessing Officer  held that creation of Trust was an afterthought&nbsp;  and taxed the&nbsp; amount as deemed  dividend .Before Commissioner (Appeals) it was contended that as per section  153 of the Companies Act&nbsp; a company is  not permitted to include the name of the trust in the register of members. It  was also contended that the provision of section 187C have been made&nbsp;&nbsp; ineffective w.e.f.13 th December , 2000 and  therefore there is no requirement at present to declare beneficial interest etc  , therefore such&nbsp; beneficial interest was  is not declared in the register of the Company or the Registrar of the Companies.  However Commissioner (Appeals) up held the addition.&nbsp; On appeal the Tribunal held that since the  said Company was not permitted to include name of Trust in its register , name  which was earlier noted as share holders remained&nbsp; same, however&nbsp;  through &nbsp;a Board meeting it was  resolved to acknowledge change in vesting of shares, hence in view of the facts  deemed dividend&nbsp; could not be taxed in  hands of assessee.Legal fiction created  under section 2(22)(e) does not extend further for broadening concept of shareholder  so as to tax loans or advances as &#8216;deemed dividend&#8217; in hands of a &#8216;deeming  shareholder&#8217;.(.AY. 2006-07)<br \/>\n  <strong>Krupeshbhai N. Patel v. Dy. CIT (2013) 140 ITD 176  (Ahd.)(Trib.)<\/strong><br \/>\n  <strong>S.2(22)(e):Dividend- Deemed  dividend &ndash; Credit balance in Capital account &ndash; Non-encashment of cheque the  amount is credited back to company&rsquo;s account cannot be assessed as&nbsp; deemed dividend. <\/strong><br \/>\n  The  assessee is running a proprietorship concern which was converted into private  limited company. There was credit balance in capital account of the assessee in  proprietorship concern against which payment was made by proprietorship concern  to the assessee. However, because of conversion, cheque could not be encashed  and same was returned to company which was credited to the assessee&rsquo;s account by  company. Subsequently money was withdrawn by the assessee. It was held that the  said amount could not be treated as deemed dividend. (A.Y. 2008-09)<br \/>\n  <strong>Dy. CIT v. Radhe Shyam Jain  (2013) 140 ITR 244 (<\/strong><strong>Chandigarh<\/strong><strong>)(Trib.)<\/strong><br \/>\n  <strong>S.2(22)(e):Dividend-Deemed  dividend &ndash; Accumulated profits &ndash; Share premium account does not partake nature  of commercial profit hence not be treated as accumulated profit. <\/strong><br \/>\n  Share  premium account would not partake nature of commercial profits and thus cannot  be treated as accumulated profit. (A.Y. 2008-09)<br \/>\n  <strong>Dy. CIT v. Radhe Shyam Jain  (2013) 140 ITR 244 (<\/strong><strong>Chandigarh<\/strong><strong>)(Trib.)<\/strong><br \/>\n  <strong>S.2(22)(e):Dividend-Deemed  dividend &ndash; Advance given to company in which assessee holds substantial stake  is held to be deemed dividend.<\/strong><br \/>\n  AO  treated advance taken by assessee from a company in which having substantial  stake as deemed dividend. It was case of assessees that since they had  mortgages their properties with bank to enable company to avail finance  facilities from bank, advance by company was not a gratuitous loan or advance  but in return for an advantage which company had already availed on account of  mortgaging of properties done by assessee. However, it was a fact on record  that assessee had not produced any documents to prove fact that personal  properties of assessee were actually mortgaged with the bank for sake of  availing loans by company. Assessee had also not produced any correspondence  made either with bank or with company towards release of properties mortgaged.  Thus, revenue rightly considered advances given by company to assessee as  deemed dividend. (A.Y. 2002-03, 2003-04 &amp; 2006-07)<br \/>\n  <strong>Dy. CIT v. B. DhanunjayaRao  (2013) 140 ITD 443 (Hyd.)(Trib.) <\/strong><br \/>\n  <strong>S.2(22)(e):Dividend-Deemed dividend&mdash;Advance towards <\/strong><strong>Sale<\/strong><strong> of Property -Matter  remanded.<\/strong><br \/>\n  The  assessee is engaged in real estate development. The assessee received advance  towards sale of property . The Assessing Officer treated the said amount as  deemed dividend . Commissioner (Appeals)&nbsp;  deleted the addition . On appeal by department the Tribunal seta-side the order of  Commissioner(Appeals)&nbsp; as he failed to  pass as speaking order. Matter remanded. (A.Y. 2006-07, 2007-08)<br \/>\n  <strong>ITO v. <\/strong><strong>Nam<\/strong><strong> Estates P.Ltd (2013)  21 ITR 109 (Bang.)(Trib.)<\/strong><br \/>\n  <strong>S.4: Chargeability of Income-Tax-  Capital or revenue&ndash; Refund of excise duty is capital receipt hence not  chargeable to tax. [S.28(i)]<\/strong><br \/>\n  The  question before the Special Bench was &ldquo;whether in the facts and circumstances  of the case, the excise duty refund set off is a capital receipt.&rdquo;&nbsp; &ldquo;If the excise duty refund \/set off is held  to be revenue receipt, whether the said amount is to be included in the  business profits for the purpose of deduction under section 80IB of the Income  &ndash;tax Act.&rdquo;&nbsp; The Special Bench held that  refund of excise duty is to be treated as capital receipt in the hands of the  assessee, which is not chargeable to tax.&nbsp;  As the first question is decided in favour of assessee the second  question was not decided.(A.Y. 2006-07)<br \/>\n  <strong>Vinod Kumar Jain v. ITO (2013)  140 ITD 1(SB) (Asr.)(Trib.)<\/strong><br \/>\n  <strong>S.9: Income deemed to accrue to  or arise &ndash;Business connection-DTAA- India &ndash; Germany &#8211; Supply of imported  equipments and materials from Germany and supervision of erection, start-up and  commissioning of power project &ndash; Income be taxed as business Profit. (S. 44D,  115A, Art.7)<\/strong><br \/>\n  The  assessee a company was awarded a contract by State Government for renovation,  modernization and up gradation of a power house. The scope of work included  supply of imported equipments and materials from Germany and supervision of erection,  start-up and commissioning of power project. The assessee offered the amount  for taxation at the rate of 10% of contract value&nbsp; as per section 44BB&nbsp; of the Income-tax Act.&nbsp; The revenue taxed the consideration in  respect of these activities as Business Profit. It was held that there was  neither any other contrary view nor the assessee brought on record any material  controverting the findings of the AO in this regards. Thus, the consideration  be taxed under article&nbsp; 7 of DTAA r.w.s.  44D and S. 115A. Accordingly the appeal of assessee was dismissed. (A.Y.  2007-08)<br \/>\n  <strong>Voith Seimens Hydro  Kraftwerkstechnik Gmbh &amp; Co. KG (2013) 140 ITD 216 (<\/strong><strong>Delhi<\/strong><strong>.)(Trib.)<\/strong><br \/>\n  <strong>S.9(1)(vi): Income deemed to accrue or arise in  India- Royalty-Royalty earned by non-resident from another non-resident is not  taxable in India even if payer uses the know-how for sale of products to India.<\/strong><strong> <\/strong><br \/>\n  &nbsp;The assessee, a USA based  company, held patents to the CDMA mobile technology which it licensed to  various unrelated wireless Original Equipment Manufacturers (OEMs) located  outside India. The  OEMs used the assessee&rsquo;s technology to manufacture CDMA handsets outside India which  were sold to telecom companies in India (e.g.  Reliance Com). The Indian telecom companies sold the handsets to Indian  consumers. The AO and CIT(A) held that as the OEMs sold the handsets to  customers in India, they were &ldquo;carrying on a business in India&rdquo; or had a  &ldquo;source of income in India&rdquo; and so the royalty paid by them to the assessee was  taxable in India u\/s 9(1)(vii)(c). On appeal by the assessee to the Tribunal, held  by the Tribunal allowing the appeal:<\/p>\n<p>(i) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; U\/s  9(1)(vi)(c) royalty payable by a person who is a non-resident is deemed to  arise in India where the royalty is payable in respect of any right etcutilised  for the purposes of a business carried on by such person in India or for the  purposes of earning any income from any source in India. S. 9(1)(vi)(c) is a  deeming provision and the burden is on the Revenue to prove that the payer has  a business\/ source of income in India. What  is important for s. 9(1)(vi)(c) is not whether the right to property is used  &ldquo;in&rdquo; or &ldquo;for the purpose of&rdquo; a business, but to determine whether such business  is &ldquo;carried on by such person in India&rdquo;;<\/p>\n<p>(ii) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The  first question is whether the OEMs have carried on business in India and  used the assessee&rsquo;s patents for that purpose. The mere fact that the products  manufactured by the OEMs outside India were  sold to parties in India does  not mean that the OEM&rsquo;s carried on business in India. For  a business to be carried out in India there  should be some activity carried out in India. A  mere purchase and sale with an Indian party is not sufficient. The fact that  the OEMs customized the handsets so as lock them to a specific operator and  included Hindi and regional languages, etc was irrelevant as such customization  was not connected with the assessee&rsquo;s patents. There was no customization of  the hand set qua the CDMA technology. Further, even if the OEM customized the  handsets to Indian specifications that did not mean that the OEM was &ldquo;carrying  on business in India&rdquo;. The  assessee&rsquo;s role ended when it licensed its patents to the OEMs and the OEMs  role ended when they sold the handset to the Indian customer. The sale was of a  chattel as a chattel and though the product is a combination of hardware and  technology, the revenue&rsquo;s attempt to break down the sale into various  components is not supported by the terms of the agreement and the facts and it  cannot be said that every item other than software was sold and that the  embedded software has been separately licensed. There is also no evidence on  record to show that title to the handsets passed in India or  that certain further activity was done by the OEMs in India after  the sale. On the other hand, title to the equipment passed to the Indian  customer on high seas and the profits made by the OEMs would not be chargeable  to tax in India. The  taxability of the assessee directly depends on the taxability of the OEMs and  if the OEM is not taxable, the assessee cannot be made taxable (<a href=\"http:\/\/itatonline.org\/archives\/index.php\/dit-vs-ericsson-ab-delhi-high-court-s-9-profits-from-offshore-supply-of-equipment-software-not-taxable-in-india\/\">Ericsson AB<\/a> 246  CTR 433 (Del), Skoda Export, <a href=\"http:\/\/itatonline.org\/archives\/index.php\/dit-vs-nokia-networks-oy-delhi-high-court-offshore-supply-profits-not-taxable-ishikawajima-still-good-law-despite-retrospective-amendments-to-s-91vi-no-tax-on-software-in-view-of-dtaa\/\">Nokia Net  Works<\/a> followed). Even otherwise, the mere passing of  title in imported goods in India does  not mean that the OEM is carrying on business in India. It  is &ldquo;business with India&rdquo; and  not &ldquo;business in India&rdquo;; <\/p>\n<p>(iii) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The  second question is whether the OEMs have used the asssessee&rsquo;s technology to  earn or make income from a &ldquo;source&rdquo; in India. A  &ldquo;source of income&rdquo; is the activity that gives raise to income. The source of  the royalty income for the assessee is the activity of manufacturing by the  OEMs, which is carried out outside India (Rhodesia Metals 9 ITR (Suppl) 45 &amp;<a href=\"http:\/\/itatonline.org\/archives\/index.php\/cit-vs-havells-india-ltd-delhi-high-court-s-91viib-export-sales-is-not-a-source-of-income-outside-india-expenditure-on-fully-convertible-debentures-is-deductible\/\">Havells  India<\/a> followed). The department&rsquo;s argument that the  assessee had made available the CDMA technology (software) to the OEMs in the  form of chip sets and that OEMs have inserted these chip sets into the handsets  manufactured by them and that these in turn have been licensed to Indian  operators for which OEMs have received a consideration and hence they have a  source of income in India is contrary to the facts. It is also not the basis on  which the assessment was made by the AO &amp;CIT(A). What was brought to tax is  the royalty earned from the licensing of patents and not royalty earned on  software embedded in the chip sets.(A. Y. 2000-01 to 2004-05)<br \/>\n    <strong>Qualcomm Incorporated v. ADIT (<\/strong><strong>Delhi<\/strong><strong>) (Trib.)  www.itatonline.org <\/strong><br \/>\n    <strong>S.9(1)(vii): Income deemed to  accrue or arise in India &ndash;<\/strong><strong> Fees  for technical services- <\/strong><strong>Dependent agent-Market supportive  services-DTAA &ndash;India- Switzerland-In the absence of Permanent Establishment ,  article 7 pertaining&nbsp; to business profits  would cease to operate in assessee&rsquo;s case hence not liable to tax.&nbsp;&nbsp; (S. 90,115A, Art. 5, 7 )<\/strong><br \/>\n  Assessee, a Swiss company, operated India  specific websites. For this purpose, it entered into Marketing Support  Agreement with two group companies in India.  Assessee claimed that though it earned revenue from its websites in India, same  was not taxable as business profits as it did not have PE in India. The  Indian group companies at no stage negotiated or entered into contract for or  on behalf of assessee. They simply provided marketing services to assessee or  making collection from customer and forwarding same to assessee. Indian group  companies were not required to manufacture or process goods or merchandise on  behalf of foreign assessee. Further goods or merchandize were delivered by  seller to buyer directly who enter into contract through assessee&#8217;s website. It  was held that though group companies were dependent agents as per article 5(6)  because they exclusively assisted assessee in carrying on business in India,  they could not be considered as &#8216;Dependent agent PE&#8217; because they did not  perform any function specified in clauses (i) to (iii) of article 5(5). Thus,  in absence of PE, article 7 pertaining to taxing business profits would cease  to operate in assessee&#8217;s case.<br \/>\n  <strong>eBay International AG v. ADIT  (2013) 140 ITD 20\/82 DTR 89 (Mum.)(Trib.)<\/strong><br \/>\n  <strong>S.9(1)(vii): Income deemed to  accrue or arise in India &ndash; Fees for technical services-Website-DTAA-India &ndash;  United Kingdom &ndash; Payment for subscription made by garment manufacturer to an  online fashion store&nbsp; is royalty matter  remanded back to Commissioner (Appeals). (S.90, 195, Art.7, 13 )<\/strong><br \/>\n  Assessee, a resident, was  engaged in business of fashionable ready to wear garments. In order to get  international trend analysis and other information relating to fashion design  and style, it subscribed to internet site of a company located in United Kingdom and paid subscription charges of &pound; 17,000. Assessee  sought certificate for payment without deduction of tax at source under section  195. Assessing Officer rejected application and directed deduction of tax at  15.30 per cent holding said payment as royalty. It was held that subscription  made by garment manufacturer to online fashion website is royalty or not, to be  decided in light of judgment of Karnataka High Court in <em>CIT (International  Taxation)<\/em> v. <em>Wipro Ltd.<\/em> [2011] 203 Taxman 621\/16 taxmann.com 275.  Matter remanded to Commissioner (Appeals) for a specific finding on point of  transfer of right to use copy right&nbsp; in  the light of Karnataka High Court&rsquo;s decision.&nbsp;  (AY 2005-06)<br \/>\n  <strong>ADIT v. Globus Stores P. Ltd. (2013) 140 ITD 103\/81  DTR 225 (Mum.)(Trib.)<\/strong><br \/>\n  <strong>S.9(1)(vi): Income deemed to  accrue or arise in India &ndash;Fees for technical services-Permanent  establishment-DTAA- India &ndash; USA &#8211; Creative fees and Database cost is held as  Fees for Included Services&nbsp; and&nbsp; client coordination fees&nbsp; is held as business profit could not be taxed  in India. (Art 7, 12 )&nbsp; <\/strong><br \/>\n  Assessee,  USA based company, acted as a communication interface  between its group concerns and group concerns and multinational clients.&nbsp; The assessee provided services to one of its  group concern and received fees as creative fees, database cost and client  coordination fees. It was held that fees under the head creative fees and  database cost amounted to Fees for included services as per Art. 12 of DTAA and  chargeable at the rate of 15%. However, client coordination fees which was  taxed as business profit,&nbsp; could not be  taxed in India, due to non existence of PE .  (A.Y. 2010 &ndash; 11)<br \/>\n  <strong>DDIT (IT) v. Euro RSCG Worldwide  Inc. (2013) 140 ITD 210 (Mum.)(Trib.)<\/strong><br \/>\n  <strong>S. 10(23C): Exempt incomes&ndash;  Educational institution &ndash; Annual receipts is to be taken into consideration and  not total income of society.<\/strong><br \/>\n  The  assessee society is running a school activities. The Assessing Officer held  that the annual receipts of the assessee including interest&nbsp; exceeded Rs. 1 crore ,but the assessee had  not obtained prior approval of&nbsp; Chief  Commissioner under section 10(23C)(vi). He accordingly the rejected the claim  under section 10(23C)(iiid). Commissioner (Appeals) up held the order of  Assessing Officer. On appeal, the Tribunal held that, in terms of provisions of  section 10(23C)(iiiad), annual receipts of school or university may be taken  into consideration and not total income of society running that school or  university.However, income from interest on FDRs is an additional income of the  society and it cannot be considered to be part of annual receipts of the school.  Accordingly the appeal of assessee was allowed.&nbsp;  (A.Y. 2006-07)<br \/>\n  <strong>Param Hans Swami Uma Bharti  Mission v. ACIT (2013) 140 ITD 429 (<\/strong><strong>Delhi<\/strong><strong>)(Trib.)<\/strong><br \/>\n  <strong>S.10A:<\/strong><strong> Free trade zone- Newly established  undertaking- <\/strong><strong>Export  turnover&mdash;Total turnover-Expenditure incurred by assessee not forming part of  export turnover is excludible from total turnover. <\/strong><br \/>\n  &nbsp;Court held  that when computing the relief under section 10A of the Income-tax Act, 1961,  the expenditure incurred by the assessee should be excluded from the total  turnover if they are reduced from the export turnover. CIT v. Tata Elxsi Ltd.  [2012] 349 ITR 98 (Karn) followed. ( A. Y. 2005-2006 )<br \/>\n  <strong>CIT  v. Samsung Electronics Co. Ltd. (2013) 350 ITR 65 (Karn.)(High Court)<\/strong><br \/>\n  Editorial: The Supreme Court has granted special  leave to the Department to appeal against this judgment : (2013) 350 ITR (St.) 3<br \/>\n  <strong>S.10A:Free trade Zone-&nbsp; Newly established undertaking-Apportionment  of income and Expenditure &ndash; Method consistently Accepted by Department  -Satellite charges not telecommunication charges to be excluded from export  turnover.<\/strong><br \/>\n  Assessee  having two units,&nbsp; one of which  qualifying for exemption. Apportionment of income and expenditure on basis of  head-count of employees in two units. Method consistently used and accepted by  department is not to be disturbed. U. K. company providing training to  employees of assessee in India. Payment  for services rendered by U. K. company. Technical services is&nbsp; not provided outside India. Expenses  relating to technical services not to be deducted. Satellite charges not  telecommunication charges to be excluded from export turnover. (A. Y.2006-2007)<br \/>\n  <strong>Wills Processing Services (<\/strong><strong>India<\/strong><strong>) P. Ltd. v. Dy. CIT [2013] 21 ITR&nbsp; 1\/ 151 TTJ 555(Mum.)(Trib.)<\/strong><br \/>\n  <strong>S.10B:<\/strong><strong> Hundred per cent export-oriented  undertakings- Newly established-&nbsp; <\/strong><strong>&nbsp;Computation of profits-Set off  of loss- Losses of eligible units during tax holiday period is not be allowed  to be set-off against income of non-eligible units. (S.2 (45), 10A)<\/strong><br \/>\n  Assessee  had three units, two were section 10B eligible units and one was non- eligible  unit. There were losses incurred in eligible units during the year which were  sought to be set-off from profits of non-eligible unit. It was held that losses  of eligible units during tax holiday period could not be allowed to be set-off  against income of non-eligible units as per provisions of S. 10B(6) allow such  losses to be kept in suspense to be set-off only after tax holiday period is  over. Therefore the claim of set off made by assessee was disallowed. Appeal of  assessee was dismissed.(A.Y. 2008-09)<br \/>\n  <strong>Karle International (P.) Ltd. v.  ACIT (2013) 140 ITD 261 (Bang.)(Trib.)<\/strong><\/p>\n<p><strong>S.11:<\/strong><strong>Property held for charitable purposes-<\/strong><strong>Registration-Maintenance Public  lavatories is incidental to object which is eligible for exemption (S.2(15), 12,  13)<\/strong><br \/>\n  Object of society is&nbsp;  construction of public lavatories. Maintenance of public lavatories  being incidental to object of society ,amounts spent on such maintenance is  entitled to exemption. As there was no evidence of diversion of funds to  founder of society, section 13 is&nbsp; not  applicable, hence the Society is entitled for registration.(A.Y. 2006-07)<strong><\/strong><br \/>\n  <strong>Dy.  CIT v. Sulabh International Social Service Organisation (2013) 350 ITR 189 (<\/strong><strong>Patna<\/strong><strong>)(High Court)<\/strong><br \/>\n  <strong>S.11: <\/strong><strong>Property held for charitable purposes- Exemption of income from property treated as  Business &#8211; Income is exempt if there is no profit motive. [S.2(15), 28(iii)] <\/strong><br \/>\n  Receipts  derived by a Chamber of Commerce and industry for performing specific services  to its members, though treated as business income, would still be entitled to  exemption under section 11, provided there is no profit motive. Issue&nbsp; is decided in favour&nbsp; of assessee.(A.Y.2006-07, 2007-08)<br \/>\n  <strong>PHD Chamber of Commerce &amp;  Industry v. DIT (2013) 212 Taxman 194 (<\/strong><strong>Delhi<\/strong><strong>)(High  Court)<\/strong><br \/>\n  <strong>S.12A:<\/strong><strong> Registration- Trust or institution- Cancellation of registration is held to be  not justified. (S.10 (23C), 11, 12AA)<\/strong><br \/>\n  Assessee  was granted registration under section 12A being a charitable institution.  Chief Commissioner disallowed assessee&#8217;s claim of exemption under section  10(23C)(vi) on ground that it had not solely been established for educational  purposes .Commissioner relying on said order cancelled registration granted to  assessee under section 12A.Tribunal restored registration. On appeal by  revenue&nbsp; the Court held that since (i)  exemption under section 10(23C)(vi) could be claimed by an assessee without  applying for registration under section 12A, and (ii) in order of Commissioner  there was no whisper that assessee had not fulfilled any of conditions of  section 11, Tribunal had rightly restored registration. Appeal of revenue was  dismissed .<br \/>\n  <strong>CIT <em>v. <\/em>Jeevan Deep  Charitable Trust&nbsp; (2013) 212 Taxman 19  (All.)(High Court)<\/strong><br \/>\n  <strong>S.14A:<\/strong><strong>Disallowance  of expenditure&#8211;Exempt income- <\/strong><strong>No dividend income- NO disallowance  -(Income-tax Rules, 1962, R. 8D)<\/strong><br \/>\n  Tribunal  held that as no dividend income&nbsp;&nbsp; was  declared by assessee during the relevant assessment year hence disallowance  held to be&nbsp; not proper. (A.Y.2008-09)<br \/>\n  <strong>Gurudas&nbsp; Mann&nbsp;&nbsp;  v. Dy.CIT ( 2013 ) 21&nbsp; ITR 57 (<\/strong><strong>Chandigarh<\/strong><strong>)(Trib.) <\/strong><br \/>\n  <strong>S.14A:<\/strong><strong> Disallowance  of expenditure&#8211;Exempt income- <\/strong><strong>Banking business-Interest expenditure. [S.10(15)]<\/strong><br \/>\n  Assessee,  carrying on banking business, maintainingnostro accounts for receipt and  payment of money in foreign currency. Interest earned from overseas branches  chargeable hence no disallowance of interest expenditure paid by assessee.  Interest on foreign currency loans.Allowable on gross interest and not on net  interest.Assessee utilising interest-free funds at its disposal for investment  in interest-free securities. No disallowance qua the investment in tax-free  securities.( A. Y.1997-1998 )<br \/>\n  <strong>Asst. DIT (IT v. Credit Agricole Indosuez (2013)  21 ITR&nbsp; 345(Mum.)Trib.)<\/strong><br \/>\n  <strong>S.24:<\/strong><strong> Deductions-  Income from house property- <\/strong><strong>Interest&#8211;Interest on borrowed capital  utilised for purchase of flats to be allowed in equal proportions in hands of  assessee and her husband.<\/strong><br \/>\n  The assessee claimed deduction against the rental income of Rs.  10,49,604 on account of interest paid to the bank on borrowed capital, under  the head &ldquo;Income from house property&rdquo;. the Assessing Officer disallowed the  claim. The Commissioner (Appeals) upheld this. On appeal&nbsp; the Tribunal held that&nbsp; admittedly, the total interest paid by the  assessee with her husband on the borrowed loans during the year under  consideration was Rs.10,39,604 out of which deduction of Rs. 5,14,802 had been  allowed in the hands of the husband. When the rental income from the individual  flats owned by the assessee and her husband had been included in their  respective hands, deduction on account of the interest paid on borrowed capital  utilised for the purchase of the flat was to be allowed in equal proportions in  the hands of the assessee and her husband.&nbsp;  (A.Y. 2006-07)<br \/>\n  <strong>Gurudas Mann v. Dy.  CIT (2013) 21&nbsp; ITR 57 (<\/strong><strong>Chandigarh<\/strong><strong>)(Trib.)<\/strong><br \/>\n  <strong>Manjit Mann (Smt) v. Dy.CIT (2013) 21 ITR 57(<\/strong><strong>Chandigarh<\/strong><strong>) (Trib.)<\/strong><\/p>\n<p><strong>S.32: Depreciation-Method of  accounting-Duty of tax&nbsp; officials-Claim  of depreciation against interest income held to be allowable. (S.145) <\/strong><br \/>\n  Assessee  claimed set-off of depreciation on assets used for construction of National Highway against interest income. Assessing Officer found  that assessee itself had capitalized all expenditures incurred on construction  of Highway and in audited profit and loss account, no expenditure or  depreciation had been claimed by assessee; he, thus, disallowed assessee&#8217;s  claim under section 145(3).Section 145(3) had no manner of application as  uniform accounting system was followed by assessee, therefore depreciation was  allowable. While making assessment of any returns, if any deduction is sought  for, it is duty of revenue official to examine not only account but also  substantive right of claiming deduction under Act. Matter decided in  favour&nbsp; of assessee.(A.Y.2003-04).<br \/>\n  <strong>Mapex Infrastructure (P.) Ltd. <em>v.CIT<\/em> [2013] 212 Taxman 23\/81 Taxman 202 (<\/strong><strong>Cal.<\/strong><strong>)(High  Court)<\/strong><br \/>\n  <strong>S.32: Depreciation-Ownership of  asset-No requirement of usage of assessee himself-Registration in the name of  lessee-A &ldquo;Financier&rdquo; satisfies the &ldquo;ownership&rdquo;&nbsp;&nbsp;  and &ldquo;user&rdquo; test for depreciation. [Motor Vehicles Act&nbsp; 1988 S. 2(30),&nbsp; 2 (13), 2(24)]<\/strong><strong> <\/strong><br \/>\n  The assessee, a NBFC, bought vehicles  and leased it out to its customers. The vehicles were registered in the names  of the customers. The AO held that as the vehicles were registered in the names  of the customers and were used by them, the assessee was not eligible for  depreciation u\/s 32 as it was not the &ldquo;owner&rdquo; of the vehicles nor had it &ldquo;used&rdquo;  the vehicles for purposes of business. The CIT(A) &amp; Tribunal allowed the  assessee&rsquo;s claim. However, the High Court reversed the Tribunal on the ground  that the assessee was only a &ldquo;financier&rdquo; and not the &ldquo;owner&rdquo; of the vehicles  and so was not eligible to claim depreciation. On appeal by the assessee to the  Supreme Court, held reversing the High Court:<\/p>\n<p>(i) S.32 requires that the asset must  be &ldquo;owned, wholly or partly, by the assessee and used for the purposes of the  business&rdquo;. The Department&rsquo;s argument that the assessee is not the &ldquo;owner&rdquo; of  the vehicles is not acceptable because the lease agreement specifically  provided that the assessee was the exclusive owner of the vehicle at all points  of time and that it was empowered to repossess the vehicle (and not merely  recover money) if the lessee committed a default. At the conclusion of the  lease period, the lessee was obliged to return the vehicle to the assessee.  Also, the assessee had the right of inspection of the vehicle at all times. As  the assessee has a right to retain the legal title of the vehicle against the  rest of the world, it would be the owner of the vehicle in the eyes of law. The  fact that at the end of the lease period, the ownership of the vehicle is  transferred to the lessee at a nominal value not exceeding 1% of the original  cost of the vehicle does not make a difference. Also the fact that the Motor  Vehicles Act deems the lessee to be the &ldquo;owner&rdquo; has no relevance; <\/p>\n<p>(ii) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The  Department&rsquo;s argument that the assessee had not &ldquo;used&rdquo; the vehicles is also not  acceptable because the vehicle was &ldquo;used&rdquo; by the assessee in its&rsquo; business of  leasing. Once it is held that leasing out of the vehicles is one mode of doing  business by the assessee and the income derived from leasing out is treated as  business income it would be contradictory, in terms, to say that the vehicles  are not used wholly for the purpose of the assessee&rsquo;s business. The physical  user of the vehicles is not necessary (CIT v Shaan Finance (P) Ltd. (1998) 231 ITR 308 (SC) followed)(A.Y.  1991-92 to 1996-97)<br \/>\n    <strong>I. C. D. S. Ltd v. CIT(2013) 350 ITR  527\/212 Taxman 550\/255 CTR 449\/82 DTR 33(SC)<\/strong><br \/>\n    <strong>S. 32: Depreciation-  Rate &ndash;Leasing business-Higher rate for&nbsp;  Vehicles used in business of hire.<\/strong><br \/>\n  Assessee in&nbsp; business of  leasing vehicles is entitled to depreciation at higher rate.(A.Y. 1991-92&nbsp; to 1996-97)<br \/>\n  <strong>I.C.D.S. Ltd v. CIT (  2013) 350 ITR 527\/212 Taxman 550\/255 CTR 449\/82 DTR 33 (SC)<\/strong><br \/>\n  <strong>S.32: Depreciation-Office&ndash;Depreciation is to be allowed. <\/strong><br \/>\n  The authorities below disallowed depreciation in the hands of the  assessee on the ground that the office was not being utilised for business  purpose, as it was given for re-development. The claim of the assessee was that  the re-development agreement was signed on January   18, 2010 and re-development started in the assessment year 2009-10. The  assessee claimed to have utilised the office during the year under consideration.  On appeal&nbsp; the Tribunal held that&nbsp; the claim of depreciation was to be allowed  to the assessee.(A.Y.2006-07)<br \/>\n  <strong>Manjit Mann (Mrs) v..  Dy. CIT ( 2013) 21&nbsp; ITR 57 ( <\/strong><strong>Chandigarh<\/strong><strong>) (Trib.)<\/strong><br \/>\n  <strong>S.35AB: Expenditure on know-how-  Depreciation-Acquired prior to 1-4-1998-Allowable deduction. [S.32(1)(ii), 43(2)] <\/strong><br \/>\n  The  assessee acquired the technical know-how from a foreign company as per the  terms of Joint Venture Agreement dt. 25\/11\/1994. However, the payment for the  same was made in installments during the period 1998-99 to 2001-02. The  assessee claimed deduction in respect of the know-how fee under S. 35AB. It was  held that in view of harmonious interpretation of the provisions of S.  32(1)(ii) and section 35AB, in respect of technical know-how acquired prior to 1\/4\/1998, deduction u\/s 35AB will be  allowed even if payment is made after 1\/4\/1998.(A.Y. 2002-03 to 2004-05)<strong><\/strong><br \/>\n  <strong>Hindustan Colas Ltd. v. ACIT  (2013) 140 ITD 277\/151 TTJ 421 (Mum.)(Trib.)<\/strong><br \/>\n  <strong>S.35D: Amortisation  of preliminary&nbsp; expenses-Financial  institutions-Not allowable.<\/strong><br \/>\n  A financial institution recognized by the RBI guidelines cannot be  treated as an industrial undertaking . Words &lsquo;industrial undertaking&rsquo; have a  definite meaning in taxation, therefore&nbsp;  a non banking financial company&nbsp;  cannot be treated as an industrial undertaking and&nbsp; it is not entitled to deduction under section  35D.(A.Y. 2005-06)<br \/>\n  <strong>Instant Holdings  Ltd&nbsp; v. Dy.CIT (2013) 81 DTR 1  (Mum.)(Trib.)<\/strong><br \/>\n  <strong>S.36(1)(iii): Deductions-Interest on borrowed capital-Matter  remanded.<\/strong><br \/>\n  The tribunal held that&nbsp; ,if loans relatable to specific purpose and  not part of general pool of funds available to assessee, no disallowance of any  part of interest relatable to such secured loans to be disallowed. Assessee  advancing interest-free loans. Matter remanded for finding on nature of secured  loans raised by assessee.(A.Y.2008-09)<br \/>\n  <strong>Gurudas&nbsp; Mann v. Dy. CIT  (2013) 21 ITR 57 (<\/strong><strong>Chandigarh<\/strong><strong>)(Trib.) <\/strong><br \/>\n  <strong>S.36(1)(va):<\/strong><strong> Deductions-Any sum received from employees-<\/strong><strong>-Deduction only on  actual payment-Employee&rsquo;s Contribution &#8211; Provident fund and ESI contributions  made before filing return held allowable.(S.43B ) <\/strong><br \/>\n  The Court held that the deletion of the second proviso to section  43B which specifically made a reference to section 36(1)(va) was curative in  nature and, hence, would apply with retrospective effect from April 1, 1988. The second proviso to section 43B(b)  specifically referred to the due date under section 36(1)(va) of the Act and as  such, it cannot be urged that the provisions of section 43B and section  36(1)(va) should not be read together. The law was enacted to ensure that the  payment of the contributions towards the provident funds, the ESI funds or  other such welfare schemes must be made before furnishing the return of income  under sub-section (1) of section 139. On a conjoint reading of section  36(1)(va) and section 43B it is obvious that earlier section 43B made reference  to the due date as prescribed under section 36(1)(va). There was a conflict  between the first and the second provisos and the second proviso was deleted.  The benefit of this amendment must be extended to the employees&#8217; contribution  also. Appeal of revenue was dismissed.&nbsp; (  A. Y. 2001-2002 )<br \/>\n  <strong>CIT v. Nipso Polyfabriks Ltd. (2013) 350 ITR 327 (HP)( High Court)<\/strong><\/p>\n<p><strong>S.36(1)(vii): Deductions-Bad debt-  Inter-corporate deposits- -Resolution for writing off interest in May  2002,would relate back to accounting year relevant for assessment year  2002-03.-Interest assessed on basis of accrual in earlier years hence  deductible. Inter-corporate deposits part of business of assessee hence loss on  investment is allowable as business loss. [S.28(i)]<\/strong><br \/>\n  The assessee had debited a sum of Rs.  1,94,49,012, as interest receivable written off during the year under  consideration. The Assessing Officer disallowed the claim and this was  confirmed by the Commissioner (Appeals).The Assessing Officer further  disallowed the claim for loss of inter-corporate deposits along with interest  written off. This was also upheld by the Commissioner (Appeals). On appeal to  the Tribunal&nbsp; The Tribunal held that&nbsp; there is no condition in section 36(1)(vii)  that the decision for treating a debt as bad or irrecoverable should be taken  in the previous year itself. If the books of account are not closed and  completed, it is permissible to make adjustments before they are finally  closed. The board resolution passed in May 2002, with regard to the approval of  writing off the amount as irrecoverable in the accounts, would relate back to  that previous year in which it was treated as irrecoverable. In the earlier  years the assessee&#8217;s interest income shown under the head &quot;Business  income&quot;, had been accepted by the Department. Thus, on these facts, once  the interest income had been offered on accrual basis, which had been credited  in the profit and loss account as business income in the earlier years and the  sum had been written off as irrecoverable in the accounts in this year, the sum  had to be allowed as bad debt.The assessee had shown accrued interest on  inter-corporate deposits in the profit and loss account and had offered it for  tax as business income. This had been accepted by the Department also. The  corollary, therefore, was that interest was earned during the course of  business. The interest which had been written off was deductible . Tribunal  also held that investment in inter-corporate deposits was part of the business  activities as the interest accrued there from had been treated as business  income. The loss arising on such investment was thus consequently allowable as  business loss and therefore, the sum of Rs. 32 lakhs was deductible as business  loss. (A. Y. 2001-2002 )<br \/>\n  <strong>Jindal Iron and Steel Co. Ltd.v. Dy. CIT [2013] 21  ITR 414 (Mum.)(Trib.)<\/strong><br \/>\n  <strong>S.37(1):  Business expenditure- Capital or revenue- Operating license fee-PSTN&nbsp; charges &ndash;Dealers commission- After&ndash;Setting up  of business- before Commencement of business- Allowable as revenue  expenses-Foreign tour Expenses &#8211; revenue expenditure.(S. 35ABB)<\/strong><br \/>\n  The Court held that the operating license fee for  providing cellular mobile service&nbsp; paid  by assessee to J.T.Mobiles Ltd&nbsp; who had  received&nbsp; telecom license from Government  is allowable as business expenditure. The fact that the assessee had in its  books of accounts spread over the&nbsp;  expenditure over a period of 10 years would not change the nature of  expenditure . Provisions of section 35ABB would not apply. Expenses incurred on  account of PSTN charges and dealers commission after setting up of a business  and before the commencement of business is allowable as revenue expenditure.  Expenditure&nbsp; on foreign travel did not  give rise to any enduring benefits but only enabled the assessee to run its  business to achieve higher profits and therefore the said expenditure is  allowable as revenue expenditure.&nbsp; The  appeal of revenue was&nbsp; dismissed . (A.Y.  1998-99)<br \/>\n  <strong>CIT  v. Evergrowth Telecom Ltd ( 2013) 81 DTR 412\/256 CTR 84 (Bom.) (High Court) <\/strong><br \/>\n  <strong>S.37(1): Business expenditure  &#8211; Capital or revenue &ndash; Nature of expenditure based on -Statement of managing  partner- Not correct &#8211; Matter remanded.<\/strong><br \/>\n  Assessee-firm  filed return claiming depreciation on iron rolls of machinery. Later on it  filed revised return contending that during production rolls were used to avoid  friction and such rolls suffer damage necessitating frequent replacement and  hence, be treated as &#8216;current repairs&#8217;. However, only on basis of no objection  of managing partner to treat rolls as depreciable assets, Assessing Officer  held same as capital expenditure .When a specific question was raised before  Tribunal as regards nature of expenditure, Tribunal should have adverted to issues  raised viz., to consider whether expenditure was, in fact, a &#8216;revenue&#8217; or  &#8216;capital expenditure&#8217;; it should not have based its decision on statement of  managing partner ,matter remanded(A.Y.1992-93)<br \/>\n  <strong>Chamundi Steel Rolling Mills v. ACIT[2013] 212 Taxman 30 (<\/strong><strong>Mad.<\/strong><strong>)(High  Court)<\/strong><br \/>\n  <strong>S.37(1): Business expenditure&#8211;Capital or revenue-Repairs and  renovation &#8211; Leased business premises &#8211; revenue expenditure. <\/strong><br \/>\n  The assessee is in occupation of leased premises, carried out  renovation work by providing false ceiling and furniture modification spending  Rs. 1.71 lakhs and Rs. 9.19 lakhs. The assessee claimed that the sums were  eligible for depreciation at 100 per cent. However, this expenditure was  treated as capital expenditure eligible for depreciation at 10 per cent. This  was upheld by the Tribunal. On appeal to the High Court,held, that the  temporary structure by means of false ceiling and office renovation had not  resulted in any capital expenditure.Appeal of assessee allowed.(A. Y. 1995-1996)<br \/>\n  <strong>Thiru  Arooran Sugars Ltd. v. Dy. CIT (2013) 350 ITR 324(Mad)(High Court)<\/strong><br \/>\n  <strong>S.37(I): Business  expenditure&ndash;Capital or revenue &ndash; Selling of diamonds under the brand name &ndash;Expenditure  not capital in nature as profit derived from selling of premier product,no  right either on mark or in IPR or goodwill of mark. <\/strong><br \/>\n  The assessee company is  engaged in the business of licensing, manufacturing, distribution and selling  of diamonds under the brand &ldquo;Nakshatra&rdquo;. &lsquo;B&rsquo;, a Swiss-diamond manufacturer was  owner of mark &ldquo;Nakshatra&rdquo; B&#8217; licensed said mark to &#8216;D&#8217;, who in turn, had  sub-licensed to assessee. Assessee sold diamonds under brand name &ldquo;Nakshatra&rdquo;.  Assessee made payment to &#8216;D&#8217; for its share on promotion of mark &#8216;N&#8217; and claimed  sales promotion expenses. Assessing Officer disallowed 20 per cent of payment  holding same to be capital in nature.It was held that facts revealed that  entire rights and goodwill through marketing campaign and advertisement would  be owned by &#8216;B&#8217; and &#8216;D&#8217;; assessee had no right either on mark or in  intellectual property right or goodwill of mark; and what assessee was enjoying  was only profit from selling of premium products under said mark. Therefore,  expenditure incurred was revenue in nature and was to be allowed. (A.Y.  2006-07)<br \/>\n  <strong>Brightest Circle Jewellery (P.)Ltd. v. ACIT (2013)  140 ITD 11 (Mum.)(Trib.)<\/strong><br \/>\n  <strong>S.37(I): Business expenditure &ndash;Capital or revenue-  &ndash; Warranty expenditure &ndash; Deduction allowed if provision made on scientific  basis.<\/strong><br \/>\n  Assessee had acquired  personal computer and laptops division of IBM India and continued business of  trading and manufacture of PCs and MCs. It provided either 1 year or 3 years  warranty on sale of PCs and laptops made to its customers in India. Assessee debited actual warranty expenditure  incurred during year and also made additional provision on basis of assessment  of warranty liability on sales made for unexpired period to profit and loss  account and claimed it as deduction. It was held that since IBM was carrying on  business in India in earlier assessment years and it was making  provision for warranty on basis of its global data, assessee could use data  used by IBM for past years for making estimation and if assessee had made  provision on a scientific basis, it had to be allowed as deduction. (A.Y.  2006-07)<br \/>\n  <strong>Lenovo India P. Ltd. v. ACIT (2013) 140 ITD 127  (Bang.)(Trib.)<\/strong><br \/>\n  <strong>S.37(I): Business expenditure &ndash; Capital or revenue  &ndash; Fees for services rendered as per market support agreement &ndash; Payment for  efficient running of business and deriving revenues there from,&nbsp;&nbsp; fees allowable as deduction.<\/strong><br \/>\n  Assessee acquired  personal computer business from IBM. As IBM had well-established enterprise  sales force and established global sales infrastructure, such as client  representation centre, etc., for more than 52 years, assessee wanted to take  support from IBM and for that purpose had entered into market support agreement  with IBM. Assessee paid certain feed to IBM for services rendered under market  support agreement.&nbsp; Assessing Officer  treated same as payment for acquisition of goodwill and considered it to be in  nature of capital expenditure not allowable under section 37. It was held that  since support services were for purpose of sale of products manufactured by  assessee, it was clearly established that it was for efficient running of  business and deriving revenues therefrom and, therefore, fee paid by assessee  for marketing support services rendered by IBM was allowable as deduction under  section 37(1). (AY 2006-07)<br \/>\n  <strong>Lenovo India P. Ltd. v. ACIT (2013) 140 ITD 127  (Bang.)(Trib. )<\/strong><br \/>\n  <strong>S.37(I): Business expenditure &ndash; Capital or  revenue&nbsp; &ndash;Payments made to maintain  dealership&nbsp; \/ business relationship  revenue expenditure.<\/strong><br \/>\n  Assessee acquired  business of PCs and laptops division from IBM during previous year, and  continued to carry on manufacturing and trading operations of PCs using same  facility and same dealership network as used by IBM in its business prior to  acquisition. Future billing adjustment reserve of certain amount was a  liability towards various claims\/special discounts payable to  distributors\/dealers of IBM India, whereas actual pay outs relating to period  up to effective date of takeover was much higher amount and, accordingly,  amount of difference was charged to profit and loss account and claimed as  revenue expenditure. It was held that since assessee was to carry on business  with said dealers in future, it was bound to make payments to maintain business  relations with dealers and such payments had to be considered as business  expenditure of assessee. (A.Y. 2006-07)<br \/>\n  <strong>Lenovo India P. Ltd. v. ACIT (2013) 140 ITD 127  (Bang.)(Trib.)<\/strong><br \/>\n  <strong>S.37(I):Business expenditure &ndash;Capital or revenue  &ndash;Duty free replenishment certificates (DFRC) written off as not utilized &ndash;  Deduction allowable as assessee was in same line of business.<\/strong><br \/>\n  As part of personal  computer business acquired by assessee from IBM, assessee had also taken over  duty free replenishment certificates (DFRC) receivable from IBM India and same  were available for utilization against import of inputs used in manufacture of  goods without payment of customs duty. However, Government of India vide  Notification No. 24\/2005 &#8211; Customs dated 1-3-2005 exempted custom duty on all  imports of computer parts and, therefore, DFRC receivable was no longer  utilizable and was, hence, written off and charged to profit and loss account  as revenue expenditure, since assessee was also in same line of business,  assessee was entitled to deduction of aforesaid expenditure as revenue expenditure.  (A.Y. 2006-07)<br \/>\n  <strong>Lenovo India P. Ltd. v. ACIT (2013) 140 ITD 127  (Bang)(Trib.)<\/strong><br \/>\n  <strong>S.37(1):Business  expenditure-Sharing of expenses- Debit note from parent Company &#8211; In the  absences of vouchers and bills 50% of&nbsp;  disallowance is held to be justified.<\/strong><br \/>\n  The  Assessee claimed the expenditure on the basis of debit note received from its  parent company without producing any evidence to establish that the said  expenditure was incurred for the purpose of business .&nbsp; Considering the facts the&nbsp; Tribunal&nbsp;  held that disallowance of 50% expenses&nbsp;  is held to be justified.(A.Y. 2005-06)<br \/>\n  <strong>Instant Holdings Ltd&nbsp; v. Dy.CIT ( 2013) 81 DTR 1(Mum)(Trib.)<\/strong><br \/>\n  <strong>S.37(1):Business expenditure&mdash;Provision-Assessee engaged in  development and maintenance of roads &#8211; provision for road renewal is&nbsp; held to be not deductible. <\/strong><br \/>\n  The assessee-company is engaged in the business of development,  operation and maintenance of toll roads. For the assessment year 2002-03, it  claimed deduction of Rs. 1,61,37,960 being expenditure on road overlay or  renewal. It was observed by the Assessing Officer that a certain sum was  debited to the profit and loss account. When the details were called for the  assessee explained it to be provision made on a scientific basis. The Assessing  Officer disallowed the claim and this was confirmed by the Commissioner  (Appeals). On appeal to the Tribunal&nbsp;  held that&nbsp; it was evident that the  entire expenses claimed by the assessee were a provision made in the books of  account and did not pertain to actual expenses incurred by the assessee during  the year. The expenses were not deductible.(A. Y. 2002-2003, 2005-2006)<br \/>\n  <strong>Dy.  CIT v. <\/strong><strong>Gujarat Road<\/strong><strong> and Infrastructure Co. Ltd.  (2013) 21 ITR&nbsp; 88 (Ahd.)(Trib.)<\/strong><\/p>\n<p><strong>S.37(1): Business expenditure-Project completion method-Expenses  and title registration expenses not attributable to common expenditure for  running business&nbsp; is held to be not  allowable.<br \/>\n  <\/strong>The  assessee&nbsp; is a film maker and an event  manager. The assessee followed the project completion method, showed loss from  film business and profit from music albums. In addition to this, the assessee  showed receipts from old films, i. e., royalty, telecast rights of films,  satellite rights of movies and corresponding expenditure in respect of each of  her ventures separately. Over and above this the assessee claimed common  expenditure under various heads like Diwali expenditure, printing and  stationery, professional fee, conveyance, credit card charges, depreciation,  dress and costume, interest on loan, miscellaneous expenses and telephone  charges. The Assessing Officer held that the expenditure booked on account of  professional fee, publicity, business promotion, dress and costume, etc. was  not in any way linked to old film income and was not allowable. The  Commissioner (Appeals) upheld the order of the Assessing Officer. On  appeal&nbsp; the Tribunal held that&nbsp; expenses  and title registration expenses not attributable to common expenditure for  running business&nbsp; is held to be not  allowable. (A.Y. 2006-07)<br \/>\n  <strong>Gurudas Mann v. Dy.  CIT ( 2013) 21&nbsp; ITR 57 ( <\/strong><strong>Chandigarh<\/strong><strong>) (Trib.)<\/strong><\/p>\n<p><strong>S.37(1):Business expenditure-Vehicle  &ndash;Telephone-Conveyance-Personal&nbsp; use &#8211;  Disallowance not proper. <\/strong><br \/>\n  Tribunal held that&nbsp; vehicle related expenses and telephone  expenses, disallowance of 20 per cent. for personal use is proper. Conveyance,  lodging and boarding, travelling staff welfare, business promotion and  publicity expenses no disallowance can be made for personal use.(A.Y. 2008-09)<br \/>\n  <strong>Manjit Mann (Mrs.)&nbsp; v. Dy.CIT (2013)  21&nbsp; ITR 57 (Chandigarh)(Trib.) <\/strong><\/p>\n<p><strong>S.37(1): Business expenditure&mdash;Ad hoc disallowance- Not proper.<\/strong><br \/>\n  The tribunal held that disallowance for  bills and vouchers not verifiable made after discussion with assessee is cannot  be challenged. Ad hoc disallowance without pointing out nature of discrepancies  and head of to which expenditure related disallowance is not proper. (A.Y.  2008-09).<br \/>\n  <strong>Manjit Mann (Mrs.)&nbsp; v. Dy.CIT ( 2013 )  21&nbsp; ITR 57 (<\/strong><strong>Chandigarh<\/strong><strong>)(Trib.) <\/strong><\/p>\n<p><strong>S.37(1): Business expenditure-Foreign shows- Disallowance  confirmed.<\/strong><br \/>\n  The Tribunal held that&nbsp; the Assessee unable to explain nature of  expenditure and date of incurrence of foreign&nbsp;  show.- Expenditure booked by assessee on dates at variance with dates of  foreign shows. Disallowance was&nbsp;  confirmed.(A.Y. 2006-07)<br \/>\n  <strong>Gurudas&nbsp; Mannv. Dy.CIT (  2013 ) 21&nbsp; ITR 57 (<\/strong><strong>Chandigarh<\/strong><strong>)(Trib.) <\/strong><\/p>\n<p><strong>S.37(1):Business expenditure- Capital or revenue- Repair and  maintenance- Not in nature of replacement is capital in nature .<\/strong><br \/>\n  &nbsp;The Tribunal held that expenditure on purchase  of new furniture not replacement hence capital expenditure, not allowable. The  Tribunal also held that there was no material to show replacement of electric  installation or nature of electric installation replaced hence deduction  is&nbsp; not allowable.(A.Y.2007-08)<br \/>\n  <strong>Gurudas&nbsp; Mann&nbsp; v. Dy.CIT ( 2013 ) 21&nbsp; ITR 57 (Chandigarh)(Trib.)<\/strong><br \/>\n  <strong>S.37(1):Business expenditure-Expenditure on levelling and fencing  land- Expenses not verifiable &#8211; Disallowance of part of expenditure is&nbsp; held to be justified.<\/strong><br \/>\n  Assessee engaged in real estate  development. The  Assessing Officer made an ad hoc disallowance of 25 per cent. of the expenditure  claimed on levelling and fencing charges. After examining details the  Commissioner (Appeals) held that such expenses appeared to be genuine and were  generally incurred in the course of the assessee&rsquo;s line of business. He also  found that some of such expenses were supported only by self vouchers and cash  receipts which were not verifiable, and therefore restricted the disallowance.  On appeal to the Tribunal held that&nbsp;&nbsp; the  assessee had not furnished any cogent evidence to establish that the expenses,  which stood disallowed, were verifiable. The disallowance was justified.(A.  Y.2006-2007, 2007-2008 )<br \/>\n  <strong>ITO  v. Nam Estates P. Ltd [2013] 21 ITR&nbsp;  109(Bang.)(Trib.)<\/strong><\/p>\n<p><strong>S.37(1):Business expenditure&mdash;Brokerage-Commission- TDS deducted  allowable balance disallowance was confirmed.<\/strong><br \/>\n  Assessee  is&nbsp; engaged in real estate development. Out of the total expenses claimed under the head  &ldquo;Brokerage and commission&rdquo;, the Assessing Officer holding that in this line of  business of land transactions the average percentage of commission and  brokerage was one per cent., disallowed the balance. The Commissioner (Appeals)  examined the matter in detail and came to the view that expenses on commission  and brokerage charges, on which tax had been deducted at source and remitted to  the treasury, were genuine according to the facts placed before him and  accordingly allowed the assessee relief and Confirmed the disallowance of Rs  4,44, 342. Tribunal confirmed the order of Commissioner (Appeals) and dismissed  the cross appeal of assessee. (A. Y.2006-2007, 2007-2008 )<br \/>\n  <strong>ITO  v. Nam Estates P. Ltd [2013] 21 ITR&nbsp;  109(Bang.)(Trib.)<\/strong><\/p>\n<p><strong>S.37(1):Business expenditure-Foreign  tour expenses of accompanying spouse- Disallowance held to be proper.<\/strong><br \/>\n  The assessee  claimed the foreign tour expenses of accompanying spouse of directors of  assessee-company. As the assessee failed&nbsp;  to provide any evidence disallowance of such expense,&nbsp; was held to be proper.( A. Y.2005-2006 )<br \/>\n  <strong>Harinagar Sugar Mills Ltd. vACIT[2013] 21 ITR&nbsp; 383(Mum.)(Trib.)<\/strong><\/p>\n<p><strong>S.37(1): Business expenditure&#8211;Club  expenses&mdash;Allowable.<\/strong><br \/>\n  Tribunal held that&nbsp; the disallowance under the head &quot;club  expenditure&quot; was not justified. ( A. Y. 2001-2002 )<br \/>\n  <strong>Jindal Iron and Steel Co. Ltd.v. Dy. CIT [2013] 21  ITR 414 (Mum.)(Trib.)<\/strong><\/p>\n<p><strong>S.40(a)(i): Amounts not  deductible- Deduction at source-<\/strong><strong> Outside  India-Non-resident- Interest- Discount  charges is not interest. [S. 2(28A)]<\/strong><br \/>\n  Discount  charges earned by assessee-financial service provider by way of discounting  bill of exchange and promissory notes in favour of Indian companies is to be  treated as business income, and not as interest income, hence provisions of  section 40(a)(i) cannot be applied .(A.Ys. 2005-06 to 2007-08)<br \/>\n  <strong>DIT ( IT) v.Cargil TSF PTE Ltd. (2013)  212 Taxman 16 (<\/strong><strong>Delhi<\/strong><strong>)(High  Court)<\/strong><br \/>\n  <strong>S.40(a)(ia): Amounts not deductible &ndash;Deduction at source-Matter  remanded.<\/strong><br \/>\n  &nbsp;The tribunal&nbsp;  following the judgment of Special Bench in&nbsp; Merilyn Shipping and Transports v. Addl CIT (  2012) 16 ITR 1(Trib.) (SB) held that&nbsp; if  the amounts paid during the year under consideration,<br \/>\n  &nbsp;No disallowance warranted. Matter remanded.(A.Y.2007-08)<br \/>\n  <strong>Gurudas&nbsp; Mann&nbsp; v. Dy.CIT ( 2013 ) 21&nbsp; ITR 57 (<\/strong><strong>Chandigarh<\/strong><strong>)(Trib.) <\/strong><\/p>\n<p><strong>S.40(a)(ia): Amounts not  deductible-Royalty-Satellite link charges- Not liable to deduction of tax at  source. (S.201)<\/strong><br \/>\n  Payments for  satellite link charges for use of standard facility-is not royalty hence not  liable to deduction of tax at source. Tribunal holding in favour of assessee in  proceedings arising out of section 201 proceedings same&nbsp; is followed in proceedings arising out of  assessment.(A.  Y.2006-2007)<br \/>\n  <strong>Wills Processing Services (<\/strong><strong>India<\/strong><strong>) P. Ltd. v. Dy. CIT [2013] 21 ITR&nbsp; 1\/151 TTJ 555 (Mum.)(Trib.)<\/strong><\/p>\n<p><strong>S.40(b): Amounts not deductible-Firm-Book profit-  Income from Other Source included in P&amp;L a\/c &#8211; Cannot be discarded &nbsp;qua book profit for computation of  remuneration payable to partners.<\/strong><br \/>\n  The assessee-firm derived its income from  profession as an advocate. In the profit and loss account, the assessee-firm  credited certain amount received as licence fee and compensation for use of  shared facilities. In the course of assessment, the Assessing Officer opined  that since the aforesaid income was not a professional income, the same could  not form part of &#8216;book profit&#8217; for computation of allowable remuneration to  partners under section 40(<em>b<\/em>). It was held that Income from other sources included in profit and loss account to  ascertain net profit cannot be discarded <em>qua <\/em>book profit for computation  of remuneration payable to partners. The Tribunal allowed the appeal of  assessee.s (A.Y. 2005-06)<br \/>\n  <strong>Suresh A. Shroff&amp; Co. v. JCIT (2013) 140 ITD 1  (Mum.)(Trib.)<\/strong><br \/>\n  <strong>S.40A(3):<\/strong><strong> Expenses or payments not deductible- Cash payments exceeding prescribed limits-<\/strong><strong>Assessee purchasing goods and  depositing amount in bank account of seller&#8211;No disallowance in hands of  assessee.(Income-tax Rules, 1962, R. 6DD.) <\/strong><br \/>\n  The  Assessing Officer made an addition of Rs. 60,19,000 ,on the ground that the  assessee had violated the provisions of section 40A(3) of the Income-tax Act,  1961. The Tribunal partly allowed the appeal by the assessee. On appeal&nbsp; by revenue high Court, dismissing the appeal,  held&nbsp; that the Tribunal categorically  held that the amount in question was directly deposited in the bank account of  the seller. The Tribunal had considered the factor that the assessee was only  an agent of the seller and held that no disallowance could be made in the hands  of the assessee. The findings had not been shown to be perverse. Therefore, the  addition was not justified.(A. Y. 2008-2009 )<br \/>\n  <strong>CIT  v.&nbsp; Shelly Passi (Smt)[2013] 350 ITR 227(  P &amp; H)(High Court)<\/strong><br \/>\n  <strong>S.40A(3):<\/strong><strong>Expenses  or payments not deductible- Cash payments exceeding prescribed limits- <\/strong><strong>Cash payments-Held  proper.<\/strong><br \/>\n  The tribunal held that the assessee has  not produced any&nbsp; material to controvert  finding of Assessing Officer that no cash payment was made above over and above  Rs 20000&nbsp; by way of a single payment&nbsp; or aggregate of payments in a single day .As  no evidence to establish claim that no single payment in cash made&nbsp; was blow&nbsp;  of&nbsp; Rs. 20,000 disallowance was  held to be&nbsp; proper.(A.Y. 2008-09)<br \/>\n  <strong>Manjit Mann (Mrs.) v. Dy.CIT (2013) 21  ITR 57 (<\/strong><strong>Chandigarh<\/strong><strong>)(Trib.) <\/strong><br \/>\n  <strong>S.40A(3):<\/strong><strong> Expenses or payments not deductible- Cash payments  exceeding prescribed limits- <\/strong><strong>Cash payment-Disallowance justified.<\/strong><br \/>\n  Tribunal  held that there&nbsp; is no evidence of  exceptional circumstances, hence disallowance is held to be&nbsp; justified.(A. Y.2006-2007, 2007-2008 )<br \/>\n  <strong>ITO  v. Nam Estates P. Ltd [2013] 21 ITR&nbsp;  109(Bang.)(Trib.)<\/strong><\/p>\n<p><strong>S.43B: Deduction on actual payment- Interest-  Schedule bank-Co-operative bank- Interest payable to SMM Co-operative Bank Ltd  could not be disallowed under section 43B.<\/strong><br \/>\n  The assessee claimed in  respect of interest payable to Shree Mahalaxmi Mercantile Co-operative Bank  ltd. The Assessing Officer disallowed the interest under section 43B&nbsp; on the ground that the interest was not paid  up to the date of filing of the return. On appeal the Commissioner (Appeals)  confirmed the order of Assessing Officer. On appeal to the Tribunal the  Tribunal held that section 43B&nbsp; would not  apply in case of payment of interest to a co-operative bank for the reasons  that section is applicable only in respect of interest payable to on a loan  taken from&nbsp; a schedule bank . Under terms  of Explanation 4(aa) to section 43B&nbsp; of  the Act ,&nbsp; a schedule Bank would have a  meaning assigned to it in the Explanation to cl.(iii) of sub.s.(5) of section  11 of the Act . The Tribunal held that ShreeMahalaxmi Mercantile Co-operative  bank is not covered&nbsp; with in the  definition of scheduled bank&nbsp; under  section 43B,therefore the appeal of assessee was allowed. On appeal to High  Court the High Court confirmed the view of&nbsp;  Tribunal&nbsp; and the appeal of  revenue was dismissed.(A.Y. 200-05)<br \/>\n  <strong>CIT v. UpendraT.Kapadia ( 2013) 81 DTR 279\/ 256 CTR  201 (Bom.)(High Court)<\/strong><br \/>\n  <strong>S.43B: Deduction on actual payment- <\/strong><strong>Employees<\/strong><strong> <\/strong><strong>State<\/strong><strong> Insurance-Contribution made to provident fund and Employees&rsquo; State insurance,  the amount deposited within grace period is allowable.<\/strong><br \/>\n  The Tribunal held that&nbsp; the  disallowance under section 43B is not required when the amounts are paid within  the grace period allowed ; this is so not only on legal principles but also on  the fact that the entire amount was paid before the closure of the financial  year or within the due date for filing the return as provided. (A. Y. 2004-2005 )<br \/>\n  <strong>ACIT  v. UPS Jetair Express P. Ltd.(2013) 21 ITR 82 (Mum.)(Trib.)<\/strong><br \/>\n  <strong>S.44: Insurance business &ndash; Actuarial Valuation &ndash;Income  to be assessed as work out as per provisions of Insurance Act and not IRDA Act  .<\/strong><br \/>\n  Assessee declared surplus  deficit from life insurance business&nbsp;  under Form &ndash;I&nbsp; as prescribed under  the Insurance Act after adjusting share holder and policy holder account  thereby neutralizing transfer of funds from shareholder&rsquo;s account to policy  holders account .Assessing Officer gave credence to new Form-I, prescribed  under IRDA Regulation&nbsp; and took &lsquo;total  surplus&rsquo; as surplus of Life Insurance business ignoring transfer from share  holder&rsquo;s account&nbsp; and accordingly brought  to tax the surplus or deficit under the said Regulation. On appeal Commissioner  (Appeals) confirmed the order of Assessing Officer. On appeal to Tribunal it  was held that , the Assessee engaged in insurance business should workout  actuarial surplus\/deficit in accordance with provisions of Insurance Act, and  not as per IRDA Act or it&#8217;s regulations. Accordingly the appeal of assessee was  allowed. (A.Y. 2005-06 to 2008-09)<br \/>\n  <strong>ICICI Prudential Insurance Co. Ltd. v. ACIT (2013)  140 ITD 41 (Mum.)(Trib.)<\/strong><br \/>\n  <strong>S.44C:<\/strong><strong> Non-residents- Head office expenditure-<\/strong><strong>-Direction to  deduction of independent of provisions of section 44C is justified-Rate of  tax&#8211;Foreign bank&#8211;Rate applicable to non-resident companies is justified.<br \/>\n  <\/strong>Commissioner  (Appeals) directed the Assessing Officer to allow the assessee deduction of Rs.  48,60,008 independent of the provisions of section 44C of the Act&nbsp; Tribunal held that the order of the  Commissioner (Appeals) was justified. Where the assessee&#8217;s income was taxed at  the higher rate of 55 per cent.as applicable to non-resident companies ,held,  that the order was justified. (A.Y.1997-1998)<br \/>\n  <strong>Asst. DIT (Int.) v. Credit Agricole Indosuez  (2013) 21 ITR&nbsp; 345 (Mum.)(Trib.)<\/strong><br \/>\n  <strong>S.44C:<\/strong><strong>Non-residents-  Head office expenditure-<\/strong><strong>&#8211; Permanent establishment-Interest and commission received from  head office and other overseas branches and paid to other overseas branches and  head office-Mutuality between overseas head office and branch in India-Interest  received from overseas head office or branches not chargeable-Interest paid by  Indian permanent establishment to overseas head office or branches not  allowable as deduction. (S.143)<\/strong><br \/>\n  The assessee received interest and  commission from its head office and other overseas branches and at the same  time also paid interest and commission to other overseas branches and head  office. The assessee, in its computation of total income, reduced the interest  or commission received and added back the interest or commission paid. The  Assessing Officer held that the interest or commission earned by the assessee  from its head office or overseas branches should be charged to tax. The  Commissioner (Appeals) upheld in principle the assessment order on this issue.  On appeal&nbsp; the Tribunal held that&nbsp; (i) that once mutuality is found between  overseas head office and branch in India, there can be no interest income by  the Indian branch from its overseas head office or branches under the  provisions of the Act. No interest or commission received by the Indian branch  from the head office can be charged to tax.Sumitomo Mitsui Banking Corporation  v. Deputy DIT [2012] 16 ITR (Trib) 116 (Mumbai) [SB] followed.<\/p>\n<p>(ii) That the interest paid by the  Indian permanent establishment to its overseas head office or branches should  also not be allowed as deduction.( (A. Y.1997-1998  )<br \/>\n    <strong>Asst.DIT (Int.) v. Credit Agricole Indosuez (2013)  21 ITR&nbsp; 345(Mum.)(Trib.)<\/strong><\/p>\n<p><strong>S.45: Capital gains-Computation- MOU-Sale  consideration-Amount actual received.<\/strong><br \/>\n  The inherited property  was sold for Rs 14 crores but&nbsp; as per MOU  reached between the assessee and his brother , the assessee received only&nbsp; Rs 6 Crores as his share , the Court held&nbsp; that Assessing Officer was not justified in  taking the sale value at Rs 7 Crores in the hands of assessee. Appeal of  revenue was dismissed. (A.Y.2006-07)<br \/>\n  <strong>CIT v. Raman Kumar Suri (2013) 81 DTR 33  (Bom.)(High Court)<\/strong><\/p>\n<p><strong>S.45: Capital gains- Adverse  possession-No cost of acquisition &ndash;Not liable to capital gain tax.<\/strong><br \/>\n  The  Income tax Appellate Tribunal held that when an assessee get the property by  adverse possession there is no cost of acquisition. The consideration is not  liable&nbsp; to capital gain&nbsp; tax. Revenue challenged the said order before  High Court. High court dismissed the appeal stating that no question of law  arises.<br \/>\n  ITANO  1110 OF 2009 and 1153 of 2009 dt 11-8-2009<br \/>\n  <strong>CIT v. Star Chemicals(Bom.) Pvt.  Ltd. (Bom)(High Court) (Un reported)<\/strong><br \/>\n  Editorial:  Order of Mumbai Tribunal in DCIT vs. Star Chemicals (Bom)(P) Ltd. (2007) 110  TTJ 753 (Mum.)&nbsp; is confirmed.<br \/>\n  <strong>S.45: Capital gains &ndash; Transfer &ndash;  Development Agreement &ndash; Irrespective of when physical possession was given,  capital gain was assessable in year in which development was entered into. [S.  2(47)(v), Transfer of Property Act. 1882, S. 53A]<\/strong><br \/>\n  Assessee  entered into development agreement on 14\/2\/2002 for construction of  multi-storeyed building by developer on assessee&rsquo;s land. Possession was given  only on 21\/4\/2004.&nbsp;  The&nbsp; assessee&nbsp; contended&nbsp;  that capital gain was assessable in the year 2005-06 and not in the  Assessment year 2003-04.It was held that irrespective of when physical  possession was given, capital gain was assessable in year in which development  was entered into. (A.Y. 2003-04)<br \/>\n  <strong>G. Sreenivasan v. Dy. CIT (2013)  140 ITD 235 (<\/strong><strong>Cochin<\/strong><strong>)(Trib.) <\/strong><br \/>\n  <strong>S.45: Capital gains-Capital  asset-licensee of looms-Transfer of land-Amount paid to assessee for surrender  of rights in land. Assessee deemed tenant by virtue of amendment of Rent  Control Act. Right of assessee a capital asset within the meaning of section  2(14).Amount received assessable as capital gains and not as income from other  sources. (S.2(14), 54EC, 55, 56 )<\/strong><br \/>\n  The assessee in the return for the  assessment year 2009-10, it declared long-term capital gains on surrender of  sub-tenancy rights and claimed exemption under section 54EC, by making  investment in NHAI bonds. The Assessing Officer found that possession of a  portion of the shed was incidental to the licence granted to it for the use of machinery.  Therefore, the Assessing Officer came to the conclusion that the amount  received by the assessee were merely gratuitous. He held that the assessee  could not be said to have had sub-tenancy rights particularly with regard to  land for which the compensation had been received by the assessee and,  therefore, the amount received by the assessee was not assessable under the  head &ldquo;Capital gains&rdquo;. He taxed it under &ldquo;Other sources&rdquo;. This order was  confirmed by the Commissioner (Appeals). On appeal to the Tribunal&nbsp; The Tribunal held that the assessee had  entered into an agreement for licence to use looms and machinery. It was  entitled to use the shed in which the looms were situated by way of permissible  use on licence basis only as incidental to the use of the looms and machinery.  Incidental right to use the premises was provided by the agreement itself. The  fact also remained that the assessee had been referred to as a licensee in the  agreement. The Bombay Rent Hotel and Lodging and House Rates Control Act, 1947  (Rent Control Act), which was amended by the Amendment Act of 1973, had  converted the status of the assessee from &ldquo;licensee&rdquo; to &ldquo;deemed tenant&rdquo; under  section 5(11)(bb). Under section 15A, which was inserted by the Maharashtra Act  17 of 1973, certain licensees in occupation on February 1,   1973 would  become tenants. By the provisions of section 55(2) of the Income-tax Act,  tenancy rights have been considered to be a capital asset. Moreover, the  definition of capital asset under section 2(14) of the Act is wide enough to  cover &ldquo;property of any kind&rdquo; and the type of right acquired by the assessee in  the property used by it could not in any manner be said to be less than &ldquo;any  kind of property&rdquo; held by the assessee. The assessee in fact was enjoying  possession of the property and for peaceful vacation thereof it had received  the amount which was described by the parties as amount paid for surrender of  tenancy rights. The right of the assessee was undisputed and the nature thereof  was &ldquo;property of any kind&rdquo; which was held by the assessee and was a capital  asset within the meaning of section 2(14). The amount received by the assessee  was assessable under the head &ldquo;Capital gains&rdquo; and eligible for exemption under  section 543EC.( A. Y. 2009-2010 )<strong> <\/strong><br \/>\n  <strong>Kewal Silk Mills v. ACIT [2013] 21 ITR 121 (Mum.)(Trib.)<\/strong><br \/>\n  <strong>S.48: Capital gains- Computation- Cost of  acquisition &ndash; Will-Relevant year.<\/strong><br \/>\n  The property was acquired  by mother in the year 1974,&nbsp; assessee  acquired the property&nbsp; in accordance with  mother&rsquo;s will dated 11th October , 1987 and sold in 2005 , benefit  of indexation is to be given from 1 st April, 1981 and not from  1987.(A.Y.2006-07)<br \/>\n  <strong>CIT v. Raman Kumar Suri (2013) 81 DTR 33 (Bom.)  (High Court) <\/strong><br \/>\n  <strong>S.50C: Capital gains-Full value  of consideration- Stamp valuation-Sale of shares- Section 50C does not apply to  transfer of immovable property held through company. (S.45)<\/strong><br \/>\n  The assessee held shares in a company  called Kamala Mansion Pvt. Ltd. The company owned flats in a building known as  Om Vikas Apartments, Walkeshwar    Road, Mumbai. The  shares were sold by the assessee for Rs. 37.51 lakhs and capital gains were  offered on that basis. The AO &amp; CIT(A) held that by the sale of shares in  the company, the assessee had effectively transferred the immovable property  belonging to the assessee and that it was an indirect way of transferring the  immovable properties being the flats in the building. He accordingly &lsquo;pierced  the corporate veil&lsquo;, invoked s. 50C and computed the capital gains by adopting  the stamp duty value of the flats. On appeal by the assessee to the Tribunal, held  allowing the appeal:<br \/>\n  &nbsp;S.50C applies only to the  transfer of a &ldquo;capital asset, being land or building or both&rdquo;, &ldquo;assessed&rdquo; by  any authority of a State Government for stamp duty purposes. The expression  &ldquo;transfer&rdquo; has to be a direct transfer as defined u\/s 2(47) which does not  include the tax planning adopted by the assessee. S. 50C is a deeming  provisions and has to be interpreted strictly in accordance with the spirit of  the provision. On facts, the subject matter of transfer is shares in a company  and not land or building or both. The assessee did not have full ownership on  the flats which are owned by the company. The transfer of shares was never a  part of the assessment of the Stamp duty Authorities of the State Government.  Also, the company was deriving income which was taxable under the head &lsquo;income  from property&rsquo; for more than a decade. Consequently, the action of the AO  &amp;CIT(A) to invoke s. 50C to the tax planning adopted by the assessee is not  proper and does not have the sanction of the provisions of the Act.(A. Y.  2007-08, 2008-09)<br \/>\n  <strong>Irfan Abdul Kader Fazlani v. ACIT (Mum)(Trib.)  www.itatonline.org <\/strong><br \/>\n  <strong>S.50C: Capital gains-Full value of  consideration- Stamp valuation- FSI-TDR- Section 50C&nbsp; does not apply to transfer of FSI &amp; TDR. (S.45).<\/strong><strong> <\/strong><br \/>\n  The assessee owned a plot of land  admeasuring 2244.18 sq. mts of which 2110 sq. mts was acquired by the  Municipality for development purposes. The assessee was entitled to receive  TDR\/ FSI in lieu of the land acquired. The assessee sold the development rights  to the said property for Rs. 20 lakhs and computed capital gains on that basis.  However, for purposes of stamp duty, the property was valued at Rs. 1.19  crores. The AO held that the value of the property as adopted by the stamp duty  authorities had to be taken as the consideration u\/s 50C for purposes of  capital gains. This was reversed by the CIT(A). On appeal by the department to  the Tribunal,&nbsp;&nbsp; held:<\/p>\n<p>S.50C applies only to the transfer of  &ldquo;land or building&rdquo; and not to the transfer of all &ldquo;immovable property&ldquo;.  Accordingly, though FSI and TDR is &ldquo;immovable property&rdquo; as held in Chedda Housing Development vs. Babijan Shekh Farid  2007 (3) MLJ 402 (Bom), it is not &ldquo;land or building&rdquo; and so cannot be the  subject matter of s. 50C. The property acquired for development (in lieu of  which the FSI\/TDR was granted) also cannot be considered even though the  property continues to stand in the assessee&rsquo;s name in the property records. The  property should be valued by the DVO net of the land transferred to the  Developer by the assessee after considering the acquisition made by the  Govt&amp; the Municipal Corporation and also excluding the value of TDR or  additional FSI included in the consideration shown in the Development Agreement  (A. Y. 2006-2007)<br \/>\n    <strong>ITO v. Prem Rattan Gupta (Mum.)(Trib.)<\/strong><a href=\"http:\/\/www.itatonline.org\/\"><strong>www.itatonline.org<\/strong><\/a><strong> <\/strong><br \/>\n    <strong>S.54: Capital gains- Exemption-  Investment in two flats&nbsp;&nbsp; which is used  as one house.<\/strong><br \/>\n  Assessee purchased two flats which were joined together before the  purchase , exemption under section 54 was rightly allowed in respect of both  the flats treating them as one residential house .The Tribunal decided the  issue in favour of assessee following the ratio of&nbsp; ITO v.SushilM.Jhaveri (2007) 292 ITR  1(SB)(Trib.). On appeal by revenue the High Court affirmed the view of  Tribunal. (A.Y. 2006-07)<br \/>\n  <strong>CIT v. Raman Kumar Suri (2013)  81 DTR 33 (Bom.)(High Court)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <\/strong><br \/>\n  <strong>S.54: Capital gains-Property used for  residence&#8211;Exemption-Deemed owner-Tenancy rights-Sale of residential property  and investment of gains in acquiring tenancy rights in perpetuity in another  residential property, Assessee is not entitled to exemption under section 54. (Bombay  Stamp Act 1958 )&nbsp; <\/strong><br \/>\n  The assessee sold his bungalow and  purchased tenancy rights in two flats in the third floor. The assessee computed  the long-term capital gains from sale of residential bungalow which he claimed  as exempt because of the investments made in acquisition of the tenancy rights  in the new two flats. The Assessing Officer rejected the claim of the assessee  of exemption under section 54 of the Income-tax Act, 1961, in respect of  tenancy rights acquired in the new flat. Accordingly, the claim under section  54 was disallowed. This was confirmed by the Commissioner (Appeals). On appeal  to the Tribunal&nbsp;&nbsp; held that&nbsp; the exemption under section 54 from capital  gains is available to an assessee, who invests the capital gains in a similar  asset being a residential house which would obviously mean that acquisition of  the house should be as an owner, as the capital gains covered under section 54  are the capital gains arising from transfer of a residential house owned by the  assessee. The principle that in case of ambiguity a taxing statute should be  construed in favour of the assessee would not apply to the construction of an  exception or an exempting provision ; these have to be construed strictly. That  the person invoking an exception or an exemption provision to relieve him of  the tax liability must establish clearly that he is covered by the provision.  In case of doubt or ambiguity, benefit must go to the State. In section 54  there is no ambiguity. The provision refers to purchase or construction of a  new residential house and it is quite obvious that the same should be as an  owner and not as perpetual tenant. The argument of deemed ownership was  relevant only in connection with computation of income from house property and  not in relation to exemption under section 54. Similarly, treating the tenancy  as conveyance under the Bombay Stamp Act, 1958, was only for the purpose of  payment of stamp duty and cannot be considered as conveyance of the title of  the property to the assessee as an owner. Taking possession could not be  considered as ownership as possession had been taken as a tenant and not as an  owner of the flat. The assessee was permitted to sub-let the flat, to bequeath  it and to raise loan but such powers were only in relation to tenancy rights of  the assessee and not as an owner of the flat. All these facilities to which the  assessee was entitled were only against right of the assessee as tenant in the  flat and not as owner. Further the agreement provided that the tenant was not  entitled to make any structural changes in the flat which showed that the  assessee was not the owner because an owner had full right in relation to his  property. The assessee was not entitled to exemption under section 54.( A, Y. 2008-2009 )<br \/>\n  <strong>Yogesh Sunderlal Shah v. ACIT [2013] 21 ITR&nbsp; 97 (Mum.)(Trib.)<\/strong><br \/>\n  <strong>S.55(2)(b):Capital gains-Cost  of acquisition-Fair market value as on&nbsp; <\/strong><strong>1st April, 1981-Valuation<\/strong><strong> as  per valuation report is accepted.<\/strong><br \/>\n  The  assessee valued the property for computing the capital gains at fair market  value as on 1-4-1981 and filed the approved&nbsp; valuation  report of registered valuer. Assessing Officer valued the value of property as  per Nabhi&rsquo;s Guide to House Tax in new Delhi . On appeal the Commissioner (Appeals) held that  registered&nbsp; valuer&rsquo;s valuation&nbsp; take precedence over Nabhi&rsquo;s guide&nbsp; to House tax .Tribunal accepted the&nbsp; finding of Commissioner (Appeals). On appeal  by revenue , High Court&nbsp; up held the  order of Tribunal.(A.Y. 2006-07)<br \/>\n  <strong>CIT v. Raman Kumar Suri (2013)  81 DTR 33 (Bom.)(High Court)<\/strong><br \/>\n  <strong>S.56: Income from other  sources &#8211;&nbsp; Composite or inseparable  letting &ndash;Income from house property (S.22, 24 ) <\/strong><br \/>\n  The assessee claimed deduction in respect of its rental  income under the head &#8216;Income from house property. The Assessing Officer  perused rent agreements and found that premises were let out on condition that  the assessee would provide certain facilities like furniture and fixtures,  plant and machinery, etc. He held that the letting out of the machinery, plant  and furniture and the letting out of buildings being inseparable, the rental  income be taxed under the head &#8216;Income from other sources&#8217;, which resulted in  disallowance under section 24..Commissioner (Appeals) confirmed said order The  Tribunal held that the letting out of the plant, machinery or furniture and the  premises constituted a single, composite and inseparable letting rental income  be assessable as &#8216;income from other sources&#8217;. On appeal High Court also held  that letting of building and letting of fixture,  furniture, etc., was inseparable and, therefore, rental income was assessable  as income from other sources. Appeal of assessee was dismissed.. (A.Y. 2007-08)<br \/>\n  <strong>Garg Dyeing &amp; Processing  Industries v.<em> ACIT<\/em> [2013] 212 Taxman 160 (<\/strong><strong>Delhi<\/strong><strong>)(High  Court)<\/strong><br \/>\n  <strong>S.68: Cash credits-Firm-Capital-Partner-First year of business-  Contribution of capital by partner cannot be added in hands of firm. <\/strong><br \/>\n  One of the partners who was a minor introduced Rs. 2,62,000 as his  capital. The Assessing Officer disputed the capital contribution made by the minor.  The explanation offered was not found satisfactory and the Assessing Officer  added the sum in the hands of the assessee. This was confirmed by the Tribunal.  On appeal the Court held that (1)&nbsp; the  authorities below had failed to take into account that this was the first year  of business of the assessee. The Tribunal was not justified in holding that the  unexplained cash credit recorded in the assessee&#8217;s books be added in the hands  of the assessee. There was no material before the Tribunal to hold that the  capital introduced by the minor partner at the time of starting of the  business, was income of the assessee-firm. The Tribunal erroneously came to the  conclusion that the deposits represented undisclosed income of the  assessee-firm. Accordingly the appeal of assessee was allowed. (A. Y.1991-1992 )<br \/>\n  <strong>Abhyudaya  Pharmaceuticals v. CIT( 2013) 350 ITR 358 (All) (High Court)<\/strong><br \/>\n  <strong>S.68: Cash credits &ndash;Identity  proved-Creditworthiness not proved hence addition was held to be justified.<\/strong><br \/>\n  Assessee  HUF claimed to have received a loan of Rs. 2.15 lakhs in cash from karta&#8217;s  wife, who was a State Government employee. She claimed to have received gifts  of Rs. 2 lakh from her parents who had supposedly earned amount by leasing  agricultural land .However, no evidence about such source was submitted.  Further, no evidence was filed taking State Government&#8217;s permission as required  before accepting gifts of such an amount by a government servant.  Creditworthiness of creditor and genuineness of transaction was not proved in  instant case, even though identity of creditor was established. therefore,  addition of impugned amount was appropriate. Appeal of assessee was  dismissed.(A.Y.2002-03)<br \/>\n  <strong>D. Siva Sankara Rao (Dr.) v.ITO (2013) 212 Taxman  151(AP)(High Court)<\/strong><br \/>\n  <strong>S.68:  Cash credits-Share application money-Assessee producing tax returns and also  producing confirmation of shareholders &#8211; Burden of proving source of share  application money discharged addition was&nbsp;&nbsp;  deleted. <\/strong><br \/>\n  Assessee  produced the names, addresses and permanent account numbers of the shareholders  the onus on the assessee to prove the source of share application money stands  discharged. If the assessing authority is not satisfied with the  creditworthiness of the shareholders, it is open to the assessing authority to  verify the same in the hands of the shareholders concerned. The Tribunal  recorded the findings that the assessee had produced the returns filed by the  shareholders who had paid share application money. The assessee had also  produced confirmations from the shareholders indicating the details of their  addresses, permanent account numbers and particulars of cheques through which  the amounts were paid towards the share application money. The Tribunal treated  the deposits of share application money as genuine. On appeal&nbsp; high Court also confirmed the order of  Tribunal.<br \/>\n  <strong>CIT  v. Jay Dee Securities and Finance Ltd. (2013) 350 ITR 220( All.)(High Court)<\/strong><br \/>\n  <strong>S.69:  Unexplained investments-Share application money &#8211; Assessee producing relevant  evidence and establishing that all share applicants not fictitious persons&nbsp;&nbsp; deletion&nbsp;  of addition held to be justified.<\/strong><br \/>\n  The  assessee is engaged in the business of running a cold storage. For the  assessment year 1988-89, the Assessing Officer made&nbsp; &nbsp;additions on account of unexplained  share capital, unexplained share application money, unexplained sundry  creditors, difference in the cost of construction being unexplained investment,  fixed deposit receipts purchased by the assessee and loading and unloading  expenses. The Commissioner (Appeals) deleted the addition of Rs.15,07,920 made  against the unexplained share capital, Rs. 3,13,500 out of the addition made  against the unexplained share application money of Rs.4,68,100, and Rs. 46,500  out of the addition made against the difference in the cost of construction of  Rs. 2,47,994, and confirmed the other additions made by the Assessing Officer.  The Commissioner (Appeals) rectified his order allowing further relief of Rs.  54,800 and Rs. 20,848 out of the total addition of Rs. 3,05,493 made on account  of unexplained sundry creditors for goods and expenses. The appeals filed by  the Department and the assessee were partly allowed by the Tribunal. On further  appeal by the Department&nbsp;&nbsp; the High Court  also confirmed the order of Tribunal and held that additions was rightly  deleted.(A.Y. 1988-89)<br \/>\n  <strong>CIT  v. Misra Preservers (P.) Ltd (2013) 350 ITR 222 (All) (High Court)<\/strong><br \/>\n  <strong>S.69: Unexplained investments-Source  of investment-Tribunal ought to have returned a specific finding whether  explanation offered by assessee satisfactory-Matter remanded. <\/strong><br \/>\n  Section 69 of the Income-tax Act,  1961, envisages two situations when an addition can be made on account of  unexplained investments. The first situation is where the assessee does not  offer any explanation about the nature and source of the investment. The second  situation is where the explanation offered by him is, in the opinion of the  Assessing Officer, not satisfactory. The Court allowing the appeal held  that&nbsp; the assessee had offered an  explanation but there was no express finding of the Commissioner (Appeals) or  of the Tribunal as to whether the explanation offered by the assessee was  satisfactory. Although an inference could possibly be gathered that the  Commissioner (Appeals) had found the explanation to be satisfactory the matter  could not be decided on inferences. The Tribunal is the final fact finding  authority and, therefore, it is incumbent on the Tribunal to return a finding  in clear and express terms. This is so, because it is only when the finding is  clear that a question of law based on those findings can be examined by the  court. Therefore, the matter was remitted to the Tribunal to return a clear  finding as to whether or not the explanation offered by the assessee was  satisfactory. (A. Y. 2008-2009)<br \/>\n  <strong>CIT v. AjaiShukla (2013) 350 ITR 594(<\/strong><strong>Delhi<\/strong><strong>)(High Court)<\/strong><br \/>\n  <strong>S.69B: Undisclosed investments  &#8211; Investment in property &#8211; Seized from the premises of assessee-Addition held  to be justified. (S.132)<\/strong><br \/>\n  Documents  pertaining to a property were found and seized from assessee&#8217;s premises. Assessee  submitted that said property papers were given by a property dealer for  verification. Name of purchaser of property was not mentioned in documents  ,further no one came forward to claim these documents .Even summons served on  owner of property came back being un served. In view of aforesaid, addition  under section 69B was justified.<br \/>\n  <strong>CIT <em>v. <\/em>Jai Pal  Aggarwal&nbsp; [2013] 212 Taxman 1(<\/strong><strong>Delhi<\/strong><strong>)(High  Court)<\/strong><br \/>\n  <strong>S.69B:Undisclosed investments  &#8211; Deposits &ndash;Dumb documents- Addition was not justified.<\/strong><br \/>\n  &nbsp;Assessing Officer found that interest on said  FDRs had not been shown in return. Accordingly, he made addition under section  69B. However, figures in seized documents did not correlate with any date or  details nor was document signed and, thus, it was a dumb document, therefore,  addition under section 69B was not&nbsp;  justified.<br \/>\n  <strong>CIT <em>v. <\/em>Jai Pal  Aggarwal&nbsp; [2013] 212 Taxman 1(<\/strong><strong>Delhi<\/strong><strong>)(High  Court)<\/strong><br \/>\n  <strong>S.69B: Undisclosed investments  &#8211; Investment in companies &ndash;Addition was held to be justified. (S.132).<\/strong><br \/>\n  Certain  documents seized showed that assessee had made investments in a company from 26-11-1993 to 10-2-1994.Seized papers contained date-wise  receipts of amount from assessee &#8211; Assessee took a plea that said company  belonged to his son. However, it was found that assessee&#8217;s son had not started  any business before 26-12-1994,there was no reason for assessee to make investment before 26-12-1994,therefore, addition under section 69B to assessee&#8217;s  income was justified.<br \/>\n  <strong>CIT v.Jai Pal Aggarwal [2013] 212 Taxman 1 (<\/strong><strong>Delhi<\/strong><strong>)(High  Court)<\/strong><br \/>\n  <strong>S.73: Losses &#8211; Speculation  business &#8211; Dealing in shares &ndash;Sham transaction &#8211; Justified in disallowing thee  loss. [S.43(5)]<\/strong><br \/>\n  Assessee  was engaged in business of sale and purchase of shares and government  securities. It sold shares of JP and HFCL at loss and set off loss against  profit from sale of shares. Sale and  purchase were made through a sister concern. There was no physical delivery of  shares and shares were sold on dates when prices were lowest. The court held  that&nbsp; the&nbsp;  Assessing Officer was justified in disallowing loss on sale of shares of  JP on ground that it was a sham transaction. And also the Assessing Officer was  right in treating loss in sale of shares of HFCL as speculation loss. Appeal of  revenue was allowed. (A.Y. 2001-02)<br \/>\n  <strong>CIT&nbsp; v.Vachanband Investment Ltd.(2013) 212 Taxman 131 (<\/strong><strong>Delhi<\/strong><strong>)(High  Court)<\/strong><br \/>\n  <strong>S.80HHC: Deduction-Export  business-Computation-Profits of the business-Interest from money lending is not  excludible for purpose of applying formula for computing export profits for  earlier year- law is amended with effect from Assessment year 1992-93. (S.80AB)<\/strong><br \/>\n  The  assessee&nbsp; is an individual engaged in  export business. For the assessment year 1991-92, he claimed deduction of Rs.  33,63,149 under section 80HHC of the Income-tax Act, 1961. The income-tax  authorities objected that the interest income, even if it was assessed as  business income on the footing that the assessee was carrying on money&nbsp; lending business, represented domestic  profits and not export profits and, therefore, a mechanism should be devised by  which the domestic profits were excluded from the profits of the business for  the purpose of applying the formula prescribed by section 80HHC. The Tribunal  held that the domestic business need not have any nexus with the export  business for the purpose of deduction under section 80HHC and hence interest  income could not be excluded from the profits of the business. On appeal the  Court held that the amendment made to clause (baa) of the Explanation below  section 80HHC defined &quot;profits of the business&quot; in such a manner as  to exclude receipts like interest, commission, etc., which did not have an  element of turnover, was introduced prospectively by the Finance (No. 2) Act,  1991, with effect from the assessment year 1992-93 and the amendment did not  operate retrospectively. Therefore, for the assessment years prior to the  assessment year 1992-93, it would not be permissible to exclude interest  receipts even if the business from which interest arose did not have an element  of turnover. Appeal of&nbsp; revenue was  dismissed. (A.Y.1991-92)<br \/>\n  <strong>CIT  v. Anil Chanana (2013) 350 ITR 247(<\/strong><strong>Delhi<\/strong><strong>) (High Court)<\/strong><br \/>\n  <strong>S. 80IA: &nbsp;Deduction &ndash;Industrial  undertakings-Computation-Provisions of section 80A(2) and 80AB shall apply.<\/strong><br \/>\n  The  assessee owned a hotel which was eligible for deduction u\/s 80IA. Since  sub-sec. (7) of S. 80IA provide for determination of amount of deduction  whereas section 80AB and S. 80A(2) provide for amount actually allowable while  computing total income, assessee&rsquo;s contention that provisions of S. 80A(2) and  80AB shall not be applicable, cannot be accepted. Matter remanded. (A.Ys.1999-2000  to 2005-06)<br \/>\n  <strong>Hotel &amp; Allied Trades P. Ltd.  v. Dy.CIT (2013) 140 ITD 309 (<\/strong><strong>Cochin<\/strong><strong>)(Trib.) <\/strong><br \/>\n  <strong>S.80IB: Deduction &#8211; Industrial  undertakings &#8211; Additional&nbsp;&nbsp; ground &#8211; Claim&nbsp; not made in return &#8211; Claim cannot be  entertained in view of specific provision of section 80A(5)&nbsp; which was inserted by Finance Act , 2009&nbsp; which is applicable retrospectively from the  Assessment year 2003-04. [S.80IB (5)]&nbsp;&nbsp;&nbsp; <\/strong><br \/>\n  Assessee  did not make a claim of deduction in AY 2003-04 and 2004-05, rather made the  claim for the first time before CIT (A) by filing an additional ground. It was  held that the provisions of S. 80IB(5) inserted by Finance Act, 2009 which are  applicable retrospectively from AY 2003-04, clearly provides that in case  assessee fails to make a claim in the return of income, the claim could not be  allowed. The provision was applicable for AY 2003-04 and 2004-05. Therefore, in  the view of these provisions which are quiet unambiguous and clear, claim of  assessee cannot be allowed. (A.Ys. 2003-04, 2004-05)<br \/>\n  <strong>Hindustan Colas Ltd. v. ACIT  (2013) 140 ITD 277\/151 TTJ 421(Mum)(Trib.)<\/strong><br \/>\n  <strong>S.80IB(10):  Deduction-Undertaking-Development and construction-Housing project- Open  terrace-Certificate of completion- Deduction allowed.<\/strong><br \/>\n  Assessee has undertaken the development and  construction of housing project hence eligible deduction. Assessee completed  the construction on 6th march 2006, corporation certified the  completion on 28th   Dec. 2007, one of the authorities namely CMDA had issued a  letter on 13th June, 2008 cannot be ground to reject the claim of  assessee. The Court also held that open terrace could not be the subject &ndash; matter  of inclusion as a built up&nbsp; area to deny  the benefit under section 80IB (10). Appeal of revenue was dismissed. (A.Y.  2005-06, 2006-07)<br \/>\n  <strong>CIT  v. Sanghvi&amp;Doshi Enterprises ( 2013) 81 DTR 75 (<\/strong><strong>Mad.<\/strong><strong>) (High Court)<\/strong><br \/>\n  Editorial:  Sanghvi&amp;Doshi Enterprise v.ITO( 2011) 141 TTJ 1 (TM )(Chennai)(Trib.)  affirmed.<br \/>\n  <strong>S.80IB(10): Deduction-Undertaking-Development  and construction-Housing project-Matter remanded to determine accrual of  income.&nbsp; <\/strong><br \/>\n  Assessee  company is engaged in the business of civil construction. It entered into  contract with land owners for development of residential cum commercial complex  on land. The assessee claimed deduction u\/s 80IB(10). It was noted from the  records that neither aggregate amount of sale agreement entered into nor  advance received there against had been mentioned. It was held that reasonable  certainty as to the realization of sale proceeds were crucial to income  recognition, and both sale agreement as well as advance received in pursuance  thereof were vital thereto. Matter was thus, remanded back to AO. (A.Y.  2008-09)<br \/>\n  <strong>Dy. CIT v. Vertex Homes P. Ltd.  (2013) 140 ITD 300 (Hyd.)(Trib.)&nbsp; <\/strong><br \/>\n  <strong>S.80JJA: Deduction-Bio-degraded  waste-Fuel briquettes from bagasse-Derived from-Eligible deduction.<\/strong><br \/>\n  The Assessee  is engaged in the business of fuel briquettes from bagasse .The assessee  claimed the deduction under section 8OJJAA.The Assessing Officer disallowed the  claim on the ground that (1) bagase is not waste,(2), it is not generated in  municipal \/urban limits&nbsp; i.e. , by local  authorities ;(3) it is not collected but it is purchased ; and (4) the process  does not involve any treatment or recycling of a biodegradable waste. In appeal  the Commissioner (Appeals) allowed the appeal of assessee. The Tribunal also  confirmed&nbsp; the order of Commissioner  (Appeals). On appeal by the revenue , the&nbsp;  Court held that bagasse is a biodegradable waste of sugar factory and  therefore , deduction under section 80J is allowable on the profits derived  from the business of manufacturing&nbsp; fuel  briquettes from bagasse; requirement of collecting biodegradable waste&nbsp; as provided under section 80JJA is  satisfied&nbsp; whether such waste is  collected on payment of consideration or without consideration. Accordingly the  appeal of&nbsp; revenue was dismissed.(A.Y.  2003-04 , 2004-05)<br \/>\n  <strong>CIT v. Padma S. Bora (Smt) (2013) 81  DTR 99 (Bom.)(High Court)<\/strong><br \/>\n  Editorial:  Judgment of&nbsp; Pune Tribunal in CIT v.  Padma S.Bora ( 2010) 133 TTJ 108(Pune)(Trib.) is affirmed.<br \/>\n  <strong>S.92C: Avoidance of tax &#8211; Transfer  Pricing &#8211; The &ldquo;Bright Line test&rdquo; can be applied to determine whether AMP  expenses incurred by assessee are excessive and&nbsp;  for the benefit of the brand owner- Adjustment in relation to  advertisement, marketing, and sale promotion expenses incurred by assessee for  creating or improving, marketing intangible for and on behalf of&nbsp; foreign AE is permissible. Expenses in  connection with sales which do not lead to brand promotion cannot be brought  within ambit of &lsquo;advertisement, marketing and promotion expenses&rsquo;. Correct  approach under TNMM is to consider operating profit from each international  transaction in relation to total cost or sales or capital employed ,etc of such  international transaction&nbsp; and not net  profit , total costs sales , capital employed of assessee as a whole on entity  level.&nbsp; (S. 92B , Rule&nbsp; 10A, 10B )<\/strong><strong> <\/strong><br \/>\n  &nbsp;L.G. Electronics Inc, a Korean  company, set up a wholly owned subsidiary in India (the assessee) to which it provided technical assistance. The  assessee agreed to pay royalty at the rate of 1% as consideration for the use  of technical know-how etc. The Korean company also permitted the assessee to  use its brand name and trade marks to products manufactured in India on a royalty-free basis. The AO, TPO &amp; DRP held that as the  Advertising, Marketing and Promotion (&ldquo;AMP expenses&rdquo;) expenses incurred by the  assessee were 3.85% of its sales and such percentage was higher than the  expenses incurred by comparable companies (Videocon &amp; Whirlpool), the assessee  was promoting the LG brand owned by its foreign AE and hence should have been  adequately compensated by the foreign AE. Applying the Bright Line Test, it was  held that the expenses up to 1.39% of the sales should be considered as having  been incurred for the assessee&lsquo;s own business and the remaining part which is  in excess of such percentage on brand promotion of the foreign AE. The excess,  after adding a markup of 13%, was computed at Rs. 182 crores. On appeal by the  assessee, the Special Bench had to consider the following issues: (i) whether  the TPO had jurisdiction to process an international transaction in the absence  of any reference made to him by the AO? (ii) whether in the absence of any  verbal or written agreement between the assessee and the AE for promoting the  brand, there can be said to be a &ldquo;transaction&ldquo;? (iii) whether a distinction can  be made between the &ldquo;economic ownership&rdquo; and &ldquo;legal ownership&rdquo; of a brand and  the expenses for the former cannot be treated as being for the benefit of the  owner? (iv) whether such a &ldquo;transaction&ldquo;, if any, can be treated as an  &ldquo;international transaction&ldquo;? (v) whether the &ldquo;Bright Line Test&rdquo; which is a part  of U. S. legislation can be applied for making the transfer pricing  adjustment? (vi) whether as the entire AMP expenses were deductible u\/s 37(1)  despite benefit to the brand owner, a transfer pricing adjustment so as to  disallow the said expenditure could be made? (vii) what are the factors to be  considered while choosing the comparable cases &amp; determining the cost\/value  of the international transaction of AMP expenses? (viii) whether, if as per  TNMM, the assessee&rsquo;s profit is found to be as good as the comparables, a  separate adjustment for AMP expenses can still be made? (ix) whether the  verdict in <a href=\"http:\/\/itatonline.org\/archives\/index.php\/maruti-suzuki-india-vs-acit-delhi-high-court-transfer-pricing-law-for-user-of-foreign-trademarks-advertisement-expenditure-laid-down\">Maruti Suzuki<\/a> India Ltd. v Add. CIT\/Transfer Pricing Officer( 2010)&nbsp; 328 ITR 210 (Del) has been  over-ruled\/ merged into the order of the <a href=\"http:\/\/itatonline.org\/archives\/index.php\/maruti-suzuki-india-vs-acit-supreme-court-high-courts-judgement-on-transfer-pricing-of-trademarks-brands-licensing-impliedly-reversed\/\">Supreme Court<\/a> so as to cease to have binding effect?<br \/>\n  By the  Majority (Hari Om Marathe, JM, dissenting)<br \/>\n  (i) Though s. 92CA (2A), inserted  w.e.f. 1.6.2011, which permits the AO to consider international transactions  not specifically referred to him does not apply as the TPO&rsquo;s order was passed  before that date, sub-sec (2B) to s. 92CA inserted by the Finance Act 2012  w.r.e.f. 1.6.2002 (which provides that the TPO can consider an international  transaction if the assessee has not furnished the s. 92E report) cures the defect  in the otherwise invalid jurisdiction at the time of its original exercise. The  assessee&rsquo;s argument that jurisdiction has to be tested on the basis of the law  existing at the time of assuming jurisdiction and that s. 92CA (2B) cannot  regularize the otherwise invalid action of the TPO is farfetched and not  acceptable because it will render s. 92CA(2B) redundant. The argument that s.  92CA(2B) should be confined only to such transactions which the assessee  perceives as international transactions but fails to report is also not  acceptable;<br \/>\n  (ii) The assessee&rsquo;s contention that in  the absence of any mutual agreement between the assessee and its foreign AE,  there is no &ldquo;transaction&rdquo; is not acceptable in view of the definition of that  term in s. 92F(v) which includes an &ldquo;arrangement or understanding&ldquo;. An informal  or oral agreement, which is latent, can be inferred from the attending facts  and circumstances and the conduct of the parties. As long as there exists some  sort of understanding between two AEs on a particular point, the same shall  have to be considered as a &ldquo;transaction&ldquo;, whether or not it has been reduced to  writing. However, the department&rsquo;s contention that the mere fact that the  assessee spent proportionately higher amount on advertisement in comparison with  other entities shows an understanding is also not acceptable. On facts, as it  was seen that the assessee not only promoted its name and products through  advertisements, but also the foreign brand simultaneously, and the fact that  the assessee&lsquo;s AMP expenses were proportionately much higher than those  incurred by other comparable cases, lent due credence to the inference of the  transaction between the assessee and the foreign AE for creating marketing  intangible on behalf of the latter;<br \/>\n  (iii) The assessee&rsquo;s contention that a  distinction should be made between the &ldquo;economic ownership&rdquo; of a brand and its  &ldquo;legal ownership&rdquo; and that AMP expenses towards the &ldquo;economic ownership&rdquo; of the  brand, which are routine in nature, cannot be allocated as being for the benefit  of the brand owner is not acceptable as it will lead to incongruous results.  While the concept of economic ownership of a brand is relevant in a commercial  sense, it is not recognized for the purposes of the Act;<br \/>\n  (iv) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The  assessee&rsquo;s argument that there is no &ldquo;international transaction&rdquo; is not  acceptable because the definition of that term in s. 92B(1) is inclusive. Under  clause (i) of the Explanation to s. 92B, a transaction of brand building is in  the nature of &ldquo;provision of service&rdquo; by the assessee to the AE. Clause (ii) of  the Explanation defines &ldquo;intangible property&rdquo; to include &ldquo;marketing related  intangible assets, such as, trademarks, trade names, brand names, logos&ldquo;.  Consequently, brand building is a &ldquo;provision of service&rdquo;. The fact that no consideration  is paid by the foreign AE is irrelevant;<br \/>\n  (v) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; While  a provision from a foreign legislation cannot be imported into the Indian  legislation, there is an inherent fallacy in the assessee&rsquo;s argument that the  bright line test cannot be adopted to determine the ALP of the international  transaction as it is not one of the recognized methods u\/s 92C. The bright line  test is a way of finding out the cost\/value of the international transaction,  which is the first variable under the TP provisions and not the second  variable, being the ALP of the international transaction. Bright line is a line  drawn within the overall amount of AMP expense. The amount on one side of the  bright line is the amount of AMP expense incurred for normal business of the  assessee and the remaining amount on the other side is the cost\/value of the  international transaction representing the amount of AMP expense incurred for  and on behalf of the foreign AE towards creating or maintaining its marketing  intangible. If the assessee fails to give any basis for drawing this line by  not supplying the cost\/value of the international transaction, and further by  not showing any other more cogent way of determining the cost\/value of such  international transaction, then the onus comes upon the TPO to find out the  cost\/value of such international transaction in some rational manner. On facts,  the cost\/value of the international transaction was determined at Rs. 161.21  crore while its ALP (after the 13% markup) was Rs. 182.71 crore. The assessee  was not entitled to claim a deduction for Rs. 161.21 crore and it was liable to  be taxed on the markup of Rs. 21.50 crore;<br \/>\n  (vi) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The  assessee&rsquo;s contention that once the entire AMP expense is found to be  deductible u\/s 37(1), then, no part of it can be attributed to the brand  building for the foreign AE notwithstanding the fact that the foreign AE also  got benefited out of such expense is not acceptable because the whole purpose  of transfer pricing is to provide a statutory framework which can lead to  computation of reasonable, fair and equitable profits and tax in India in the  case of multinational enterprises. The TP provisions prevail over the general  provisions. The exercise of separating the amount spent by the assessee in  relation to international transaction of building brand for its foreign AE for  separately processing as per s. 92 cannot be considered as a case of  disallowance of AMP expenses u\/s 37(1)\/ 40A(2). s. 37(1)\/40A(2) &amp; s. 92  operate in different fields;<br \/>\n  (vii) &nbsp;&nbsp;&nbsp;&nbsp; In  principle, it is necessary that properly comparable cases should be chosen  before making comparison of the AMP expenses incurred by them. However, the  argument that only such comparable cases should be chosen as are using the  foreign brand is not acceptable. The correct way to make a meaningful  comparison is to choose comparable domestic cases not using any foreign brand.  Also, several factors have to be considered for determining the cost\/value of  the international transaction of brand\/logo promotion through AMP expenses (14  illustrative issues set out). On facts, the TPO restricted the comparable cases  to only two without discussing as to how other cases cited by the assessee were  not comparable. Also, a bald comparison with the ratio of AMP expenses to sales  of the comparable cases without giving effect to the relevant factors cannot  produce correct result (matter remanded);<br \/>\n  (viii) &nbsp;&nbsp;&nbsp; There  is a basic fallacy in the assessee&rsquo;s contention that if the TNMM is adopted and  the net profit is at ALP, there is no scope for making an adjustment for AMP  expenses. TNMM is applied only on a transactional level and not on entity level  though it can be correctly applied on entity level if all the international  transactions are of sale by the assessee to its foreign AE and there is no  other transaction of sale to any outsider and also there is no other  international transaction. Where there are unrelated international  transactions, it is wrong to apply TNMM at an entity level. Further, even  assuming that in applying the TNMM on entity level for the transaction of  import of raw material the overall net profit is better than other comparables,  an adjustment can still be made by subjecting the AMP expenses to the TP  provisions. There is no bar on the power of the TPO in processing all  international transactions under the TP provisions even when the overall net  profit earned by the assessee is better than others. Earning an overall higher  profit rate in comparison with other comparable cases cannot be considered as a  licence to the assessee to record other expenses in international transactions  without considering the benefit, service or facility out of such expenses at  arm&lsquo;s length. All the transactions are to be separately viewed. Also, the  contention fails if any of the other methods (CUP etc) are adopted instead of  TNMM;<br \/>\n  (ix) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <a href=\"http:\/\/itatonline.org\/archives\/index.php\/maruti-suzuki-india-vs-acit-delhi-high-court-transfer-pricing-law-for-user-of-foreign-trademarks-advertisement-expenditure-laid-down\">Maruti Suzuki<\/a> 328 ITR 210 (Del) lays down the law that (a) brand promotion  expenses are an &ldquo;international transaction&rdquo;, (b) AMP expenses incurred by a  domestic entity which is an AE of a foreign entity are required to be  compensated by the foreign entity in respect of the brand building advantage  obtained by it &amp; (c) the factors required to be considered by the TPO. This  verdict has not be overruled by the <a href=\"http:\/\/itatonline.org\/archives\/index.php\/maruti-suzuki-india-vs-acit-supreme-court-high-courts-judgement-on-transfer-pricing-of-trademarks-brands-licensing-impliedly-reversed\/\">Supreme Court<\/a> except to the extent that directions were given to the TPO to  proceed in a particular manner. The verdict has also not merged into that of  the Supreme Court because the principles of law laid down by the High Court  have not at all been considered and decided by the Supreme Court. Consequently,  the law laid down therein continues to have binding force.<br \/>\n  Per Hari Om  Maratha, JM (dissenting):<br \/>\n  (i) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Before  making any transfer pricing adjustments, it is a pre-condition that there must  exist an &lsquo;international transaction&rsquo; between the assessee and its foreign AE.  The Department has proceeded on a presumption that because the AMP expenses are  supposedly higher than that incurred by other entities, there is an  &lsquo;international transaction&rsquo; discernible and a part of these expenses have to be  treated towards building of the LG Brand owned by the foreign AE. It is not  permissible to proceed on such presumption in the absence of a written  agreement or evidence to suggest any oral agreement between the parties;<br \/>\n  &nbsp;(ii) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Further, the assessee had not paid any &lsquo;brand-royalty&rsquo; to the  foreign AE though it got the benefit of the brand and earned revenue there from  which has been taxed. The AMP expenses have been paid to an unrelated entity in  India which has in turn paid tax thereon. As there is no shifting of  income to a different jurisdiction, neither Chapter X not the bright line  method has any application;<br \/>\n  (iii) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Also,  the concept of commercial ownership of a brand is a reality in modern global  business realm and it is as good as a legal ownership in so far as its effects  on sale of products in India is concerned. Any advertisement which is product-centric and even  entirely brand-centric will only enhance the sales of the products of that  brand in India. In no way is the brand owner benefited. Consequently, the AMP  expenses is not a case of brand-building\/ promotion and no &lsquo;covert transaction&rsquo;  between the Indian entity and its foreign AE can be presumed or inferred. The  Revenue has no power to re-characterize the AMP expenditure as routine and  non-routine expenditure;<br \/>\n  (iv) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; MarutiSuziki India Ltd v. Add. CIT \/Transfer  Pricing Officer ( 2010) &nbsp;328 ITR  210 (Del) cannot be regarded as a binding precedent after the verdict of  the Supreme Court in Maruti Suzuki India Ltd. v Add. CIT ( 2011) 335 ITR 121  (SC). The fact that a reference was made to the Special Bench itself shows that  because a covered issue cannot be referred to a Special Bench. (A. Y.  2007-2008)<br \/>\n  <strong>L.G. Electronics India Pvt. Ltd v.  .ACIT(2013)140 ITD 41\/ 22 ITR 1\/83 DTR 1\/152 TTJ 273(SB)(<\/strong><strong>Delhi<\/strong><strong>)(Trib.) <\/strong><br \/>\n  <strong>S.92C: Avoidance of tax- Transfer pricing &ndash;Computation  of Arm&rsquo;s Length Price &ndash; <\/strong><strong>Sale<\/strong><strong> Price  realized from AE much higher than ALP fixed by TPO &ndash; No recommendation by TPO  for adjustment &ndash; AO&nbsp; is not required to  make any adjustment. (S.10B(7), 80IA (10)<\/strong><br \/>\n  The Assessee is engaged  in sale and export of pasteurized crab meat. The Assessee entered&nbsp; in to&nbsp;  international transactions with its associated enterprise&nbsp; and showed sale price at Rs 24 Crores.  TPO&nbsp; on reference made by the Assessing  Officer , fixed arm&rsquo;s length price of goods at Rs 18 Crores. Assessing Officer  opined that receipts of assessee from sales to AE was in excess of arm&rsquo;s length  price&nbsp; and such excess was nothing but  income from other sources . The&nbsp;  Assessing Officer relying on provisions of section 10B(7)&nbsp; read with&nbsp;  section 80IA (8)&nbsp;&nbsp; and 80(IA)(10)&nbsp; added excessive receipts to income of  assessee. On&nbsp; appeal Commissioner  (Appeals) deleted the addition. On appeal by revenue , the Tribunal held  that,where sale price realised from AE was much higher than ALP fixed by TPO  and there was no recommendation by TPO for making any adjustment, Assessing  Officer was not at all required to make any adjustment in ALP. Accordingly the  appeal of revenue&nbsp; was&nbsp; dismissed.(A.Y. 2007-08)<br \/>\n  <strong>ACIT v. Handy Waterbase <\/strong><strong>India<\/strong><strong> (P.)  Ltd. (2013) 140 ITD 112 (Chennai)(Trib.)<\/strong><br \/>\n  <strong>S.92C: Avoidance of tax- Transfer pricing-  Computation of ALP &ndash; Assessing officer deducted from operating cost, only  material cost relatable to purchases from AEs &ndash; Not from Non AE&rsquo;s &ndash; Computation  of ALP of purchases from non-AEs erroneous &#8211; Matter remanded back<\/strong><br \/>\n  Assessee, engaged in auto  components manufacturing and sale, had international transactions with four  Associated Enterprises (AE). International transactions comprised of import of  raw materials, import of machinery and payment for royalty and technical  assistance. The Assessing officer divided total operating cost between&nbsp; material cost relatable to AEs and cost  relatable to non-AEs, which included both material cost as well as other costs.  Thus, Assessing officer deducted from operating cost, only material cost  relatable to purchases from AEs and not operating cost attributable to such  material cost. It was held that if along with&nbsp;  material cost paid to AEs, operational cost attributable to such cost  was also considered, then amount considered by TPO as ALP of AE purchases,  would have gone up significantly, and hence work out of ALP of purchases from  non-AEs had been erroneously done. Matter remanded back (A.Y. 2007-08)<br \/>\n  <strong>SL Lumax Ltd. v. ACIT (2013) 140 ITD 158  (Chennai)(Trib.)<\/strong><\/p>\n<p><strong>S.92C: &nbsp;Avoidance  of tax- Transfer pricing &ndash; Computation of ALP &ndash; Similar transactions with AE  for subsequent years accepted by TPO without any ALP adjustment &ndash; TP analysis  be considered as ALP.<\/strong><br \/>\n  Where similar  transactions with associated enterprises for subsequent years have been  accepted by TPO without any ALP adjustment, he should adopt TP analysis  conducted by assessee for relevant assessment year also to be at ALP. Revenue  could not be permitted to take a different approach&nbsp; in the relevant assessment year. Matter  Remanded back. (A.Y. 2006-07)<br \/>\n  <strong>Lenovo India P. Ltd. v. ACIT (2013) 140 ITD 127  (Bang.)(Trib.)<\/strong><br \/>\n  <strong>S.92C: Avoidance of tax- Transfer  pricing&#8211;Arm&rsquo;s length price&mdash;Secret information not be used against the assessee  without giving an opportunity.-Matter remanded.(S.133(6) )<\/strong><br \/>\n  Information  relied upon by Transfer Pricing Officer&nbsp;  is&nbsp; not available in public  domain. Secret information not to be used against assessee. No uniformity in  rejection of assessee&rsquo;s comparables and selection of comparables by Transfer  Pricing Officer. Proper and appropriate functions, assets and risk analysis  required to be done. Transfer Pricing Officer and Dispute Resolution Panel to  deal with assessee&rsquo;s objections and discuss them in order. Matter remanded.. (A. Y.2006-2007)<br \/>\n  <strong>Wills Processing Services (<\/strong><strong>India<\/strong><strong>) P. Ltd. v. Dy. CIT [2013] 21 ITR 1\/151 TTJ 555(Mum.)(Trib.)<\/strong><br \/>\n  <strong>S.92CA: Avoidance of tax &ndash;Transfer pricing-Arm&rsquo;s length  price&#8211;Comparables&#8211;Reference to Transfer Pricing Officer-Commissioner (Appeals)  deleting addition after considering revised Transfer Pricing Officer&rsquo;s remand  proceedings- held to be Justified-<br \/>\n  <\/strong>The  assessee-company&nbsp; is engaged in the  business of international transportation and domestic pickup and delivery  services.&nbsp; During the assessment year,  the assessee entered into international transactions with its associated  enterprises .&nbsp; The transactions were  reported by the assessee in Form 3CEB which was filed along with the return.  The Assessing Officer referred the case to the Transfer Pricing Officer for  determining the arm&rsquo;s length price in respect of the international transactions  entered into by the assessee. The Transfer Pricing Officer rejected the  comparable uncontrolled price method adopted by the assessee. He held that the  transactional net margin method was the appropriate method. Therefore, he made  an upward adjustment of Rs. 9.35 crores of the international transactions of  the assessee. The Commissioner (Appeals) considered that the Transfer Pricing  Officer wrongly considered the entity-wise margin of one of the comparable  companies for the purpose of benchmarking the assessee&rsquo;s margin under the  transactional net margin method. The matter was referred to the Commissioner  (TPO-II). He agreed with the assessee&rsquo;s contention and concluded that  consistency needed to be followed while calculating the margins of comparables  of the assessee. Considering this, the Commissioner (Appeals) deleted addition  made by the Assessing Officer. On appeal&nbsp;  the Tribunal held that&nbsp; (i) that  once the Transfer Pricing Officer accepted and adjusted the computations on the  basis of which the Commissioner (Appeals) deleted the addition there was no  ground to interfere with the order of the Commissioner (Appeals), which was to  be upheld.(A. Y. 2004-2005  )<br \/>\n  <strong>ACIT  v. UPS Jetair Express P. Ltd. (2013) 21 ITR 82 (Mum.)(Trib.)<\/strong><br \/>\n  <strong>S.94(7):Avoidance of tax &ndash;Adventure in the nature of trade-Loss on  units&nbsp; -Purchase of units of mutual funds  and sale thereof after realization of dividend at a&nbsp; loss- Matter remanded to give finding in the  course of business. [2(13)]<\/strong><br \/>\n  The court held that ultimately the intention and the circumstances  alone have to have a bearing on the question as to whether the transaction is  only of investment or in the nature of trade. Disallowance of a claim on the  ground that the transactions were for tax avoidance or evasion, could be  considered only after the in-depth investigation and proper recording and  marshalling of all relevant facts, so as to establish the motive of tax  avoidance. Matter remanded for reconsideration. (A. Y. 2001-2002)<br \/>\n  <strong>CIT  v. Allu Arvind Babu (2013) 350 ITR 387\/ 212 Taxman 260(Mad)(High Court)<\/strong><br \/>\n  <strong>S.94(7): Avoidance of tax &ndash; Transaction in  securities &ndash;Loss on sale of mutual funds- Units purchased within a period of  three months prior to record date &#8211; Sale made within a period of nine months  from record date &#8211; Conditions in section 94(7) were cumulatively satisfied &ndash;  Disallowance of short-term capital loss suffered by assessee justified.<\/strong><br \/>\n  Assessee purchased mutual  fund units on 20-10-2005. The Record date in respect of mutual fund units was 20-1-2006.&nbsp; The  assessee sold said mutual fund units at a loss on 6-2-2006. It was held that since units had been purchased  within a period of three months prior to record date and, thereupon, their sale  was made within a period of nine months from record date, relevant conditions  mentioned in section 94(7) were cumulatively satisfied and, thus, revenue  authorities were justified in disallowing short-term capital loss suffered by  assessee. Matter decided in against the assessee. (A.Y. 2006-07 )<br \/>\n  <strong>Krupeshbhai N. Patel v. Dy. CIT (2013) 140 ITD 176  (Ahd.)(Trib.)<\/strong><br \/>\n  <strong>S. 115JB: Company-Book Profit &ndash;  MAT &ndash; Unabsorbed depreciation &ndash; No carry forward loss &#8211; Not eligible to claim  deduction of brought forward depreciation while computing book profit under  section 115JB<\/strong><br \/>\n  It  was held that in terms of clause (iii) of Explanation 1 to S. 115JB, while  computing book profit, assessee is entitled to deduct amount of loss brought  forward or unabsorbed depreciation whichever is less as&nbsp; per books of accounts. It was therefore held  that where there was no carry forward loss as per books of account, assessee  was not eligible to claim deduction of brought forward depreciation while  computing book profit under section 115JB. (A.Y.2003-04)<br \/>\n  <strong>Hotel Allied Trades (P. ) Ltd. v.  Dy.CIT (2013) 140 ITR 309 (<\/strong><strong>Cochin<\/strong><strong>)(Trib.)<\/strong><br \/>\n  <strong>S.132. Search and seizure&#8211;Warrant of  authorization&mdash;Reason to believe-Existence of tangible material a  pre-requisite-Mere reason to suspect not sufficient, articles seized to be  released to assessee, <\/strong><br \/>\n  The assessee challenged the search  action. Allowing the petition the court held that&nbsp; the so-called information was undisclosed and  what exactly that information was, was also not known. At one place in the  affidavit of the Deputy Director of Income-tax, it had been mentioned that he  got information that there was a &quot;likelihood&quot; of the documents  belonging to the DS group being found at the residence of the assessee. That by  itself would amount only to a surmise and conjecture and not to solid  information and since the search on the premises of the assessee was founded on  this so-called information, the search would have to be held to be arbitrary.  When the search was conducted on January 21, 2011, no documents belonging to the DS  group were, in fact, found at the premises of the assessee. The warrant of  authorization was not in the name of the DS group but was in the name of the  assessee. In other words, the warrant of authorization under section 132(1) had  been issued in the name of the assessee and, therefore, the information and the  reason to believe were to be formed in connection with the assessee and not the  DS group. None of clause (a), (b) or (c) mentioned in section 132(1) stood  satisfied in the assessee&#8217;s case and, therefore, the warrant of authorization  was without any authority of law. Had the warrant of authorization been issued  in the name of the DS group and in the course of the searches conducted by the  authorized officer, the premises of the assessee had also been searched, the  position might have been different. But that had not happened in the case of  the assessee. The warrant of authorization was in the name of the assessee and,  therefore, it was absolutely necessary that the pre-conditions set out in  section 132(1) ought to have been fulfilled. Since those pre-conditions had not  been satisfied, the warrant of authorisation would have to be quashed. Once  that was the position, the consequence would be that all proceedings pursuant  to the search conducted at the premises of the assessee would be illegal and,  therefore, the prohibitory orders would also be liable to be quashed. The  jewellery\/other articles\/documents were to be unconditionally released to the  assessee.<br \/>\n  <strong>Madhu Gupta v. DIT(Inv (2013) 350 ITR 598\/256 CTR  21\/82 DTR 116( <\/strong><strong>Delhi<\/strong><strong>)(High Court)<\/strong><br \/>\n  <strong>S.132A: Income tax authorities-Powers-Requisition-Cash seized by  police authorities, reasonable explanation regarding cash, no evidence that  amount would not be disclosed to income-tax authorities, Order of requisition  held to be not valid.<\/strong><br \/>\n  The assessee, a cotton broker, carried with him cash of Rs. 11  lakhs collected from A in respect of the sale of cotton through him. The cash  was seized by the police authorities. The assessee furnished an explanation but  the police authorities did not accept the explanation and seized the cash. An  order was passed under section 132A and the amount was requisitioned by the  income-tax authorities. The income-tax officials recorded the statement of the  assessee wherein he stated that the amount had been arranged by RS through a shroff  of Kalupur against purchase of cotton. The income-tax officials surveyed the  business premises of RS and examined his books of account. RS corroborated the  statement of the assessee. RS&#8217;s accounts showed issuance of five cheques in  favour of STC. The accounts of the shroff showed that the five cheques issued  by RS had been deposited with them for discounting against which Rs. 11 lakhs  in cash had been handed over to the assessee. The assessee requested for  release of the cash but this was refused. On a writ petition : <\/p>\n<p>  Held, allowing the petition, that in view of the factual background, no  reasonable person could have come to the conclusion that the amount of Rs. 11  lakhs belonged to the assessee or that he would not disclose the amount to the  income-tax authorities under the provisions of the Act. In the circumstances,  on the basis of the material before him, the Director of Income-tax could not  have formed the requisite opinion as required under section 132A of the Act.  The warrant of authorisation issued by him, therefore, was vitiated as having  been issued without the condition precedent for exercise of powers under  section 132A being satisfied. The warrant of authorisation as well as the order  under section 132A were liable to be quashed. The assessee was entitled to the  seized amount along with interest.<br \/>\n  <strong>Prakash  Jaichand Shah v.DIT (Investigations) (2013) 350 ITR 336 (Guj)(High Court)<\/strong><\/p>\n<p><strong>S.142(2A): Assessment-Enquiry before  assessment-Special audit-Natural justice-Complexity of accounts and  safeguarding interests of revenue is conditions cumulative, notice on basis of  notes of accounts is not valid. <\/strong><br \/>\n  In order to direct special audit under section 142(2A) of the  Income-tax Act, 1961, the Assessing Officer must form an opinion with regard to  twin conditions, viz., nature and complexity of accounts and the interests of  the revenue. Additionally, special audit requires approval of the Chief  Commissioner or the Commissioner. Further, the power under section 142(2A) is  not to be lightly exercised, and it is to be based on the foundation of  available material. A genuine and honest attempt must be made to understand the  accounts since an order under the provisions not only entails a heavy monetary  burden but it also causes a lot of inconvenience to the assessee. Section  142(2A) is not a provision by which the Assessing Officer delegates his powers  and functions, which he can perform, to the special auditor. The provision has  been enacted to enable the Assessing Officer to take the help of a specialist,  who understands accounts and accounting practices to examine the accounts when  they are complex and the Assessing Officer feels that he cannot understand them  and comprehend them fully, till he has help and assistance of a special  auditor. Interest of the revenue is the other consideration. An order under  section 142(2A) directing special audit entails civil consequences and,  therefore, the principles of natural justice in the form of hearing have to be  complied with, albeit this does not require an elaborate hearing. The notice  under the section may contain briefly the issues that the Assessing Officer  thinks to be necessary and need not be detailed ones. An order of approval by  the Commissioner\/Director should not be granted or passed mechanically but  should be done having regard to materials on record. Questions should be raised  with regard to accounts and entries and only when the explanation offered is  not satisfactory, or verification is not possible without the help and  assistance of a special auditor, action under section 142(2A) is required. For  the assessment year 2005-06, the recommendation for special audit was made on October 17, 2007, within two days after the books of account  were produced on October 15, 2007. The Assessing  Officer had not obtained comments\/findings on the Comptroller and  Auditor-General&#8217;s report but he had directed the special auditor to obtain it  and then give his opinion. Considering&nbsp;  the facts of the case&nbsp; the notices  under section 142(2A) relating to the assessment years 2003-04 to 2009-10 were  not valid and were liable to be quashed.(A. Y. 2003-2004 to 2009-2010 )<br \/>\n  <strong>Delhi<\/strong><strong> Development Authority v. UOI  (2013) 350 ITR 432 (<\/strong><strong>Delhi<\/strong><strong>) (High Court)<\/strong><\/p>\n<p><strong>S.142(2A): Assessment&mdash;Enquiry before  assessment-Special audit&#8211;Limitation&#8211;Failure to record reasons, High Court  giving liberty to Department to pass a fresh order-Fresh order cannot be  challenged on ground of limitation-Reference to special audit is&nbsp; held to be justified. (S.153A, 153B)<\/strong><br \/>\n  The Assessing Officer is required to  find out the income to be brought to tax. He has to apply the accepted methods  of accounting and if there are any inaccuracies, he may direct the assessee to  assist him by explaining and to reconcile such accounts. He is not a specialist  accountant or an auditor to find out the methods adopted by the assessee for  assessing the income to be taxed. He is not required to act as an investigator  or a specialist auditor nor does he have a team of assistants to enter into the  web to decipher the codes and to demystify the procedures adopted in the  accounting methods to find out and arrive at the aggregate income to be  assessed to tax. The assessees challenged the directions under section 142(2A)  of the Income-tax Act, 1961, for special audit on the ground that no reasons  were given in the order. The assessee relied on the principles of natural  justice to challenge the order. Held, dismissing the petitions, (i) that the  assessees not having challenged the observations of the High Court, giving  liberty to the Department to proceed with a fresh order in accordance with law  they could not be permitted now on the principles of equity to challenge the  fresh order on the ground of limitation. Any advantage gained in such  circumstances must be neutralised. The prescription of limitation by itself  should not be permitted to confer an advantage on the assessees for such delay.  The defect complained of in the notice was at best a lapse, which could be  corrected by serving a proper notice and recording of reasons. The court did  not hold that the reasons were not sufficient. It held that the reasons were  not recorded. It observed that reasons must be recorded in the order to show  application of mind on the part of the officer concerned on the basis of the  material available on record. The submissions that after the earlier notice was  set aside, a fresh notice could not be issued, was thus devoid of any substance  and must be rejected. On facts reference to special&nbsp; audit&nbsp;  held to be justified.( A. Y. 2002-2003,  to 2008-2009)<br \/>\n  <strong>ATS Infrastructure Ltd. v. ACIT (2013) 350 ITR  563\/256 CTR 46 (All.)( High Court)<\/strong><br \/>\n  <strong>Prateek Resorts &amp;Builders (P) Ltd. v. ACIT (  2013) 256 CTR 46(All.)(High Court)<\/strong><br \/>\n  <strong>S.142A: Assessment &#8211; Valuation Officer &ndash; DVO &ndash; AO  did not reject books of account maintained by assessee &#8211; Made reference to DVO  &ndash; Reference without jurisdiction (S.145 )<\/strong><br \/>\n  Assessing Officer without  rejecting books of account maintained by assessee made reference under section  142A to DVO, for valuation of factory building of assessee. Assessing Officer  made addition on basis of cost of construction estimated by&nbsp; DVO.&nbsp;  Commissioner (Appeals) confirmed the addition and reduced some addition.  On appeal to Tribunal the held that Commissioner (Appeals) for estimation of  construction cost on basis of DVO&rsquo; s report could not be approved particularly  when Assessing Officer made reference to DVO without rejecting books of account  . Assessee&rsquo;s appeal was allowed. (A.Y. 2004-05)<br \/>\n  <strong>Prahalad Kumar Jindal v. ACIT (2013) 140 ITD 147 (<\/strong><strong>Agra<\/strong><strong>.)(Trib.)<\/strong><br \/>\n  <strong>S.143(3): Assessment &ndash; Loose papers-Addition to  total income of certain amounts as sale consideration &ndash; No direct evidence of  receiving money &ndash; Loose papers merely in nature of an offer which was made to  assessee &ndash; Addition not sustainable.<\/strong><br \/>\n  Assessee sold certain  land at a consideration of Rs. 10.62 crores. In course of search, Assessing  Officer recovered certain documents which showed two figures of Rs. 22.61  crores and Rs. 14.75 crores. Assessing Officer opined that those figures  related to sale of land.Therefore, in absence of any direct evidence about  receiving on money, it was to be concluded that such loose papers were merely  in nature of an offer which was made to assessee. Hence, addition made by  Assessing Officer on basis of those loose papers was not sustainable.  (AY2006-07 to 2009-10)<br \/>\n  <strong>Krupeshbhai N. Patel v. Dy. CIT (2013) 140 ITD 176  (Ahd.)(Trib.)<\/strong><br \/>\n  <strong>S.143(3): Assessment-Income-Computation-Interest-Broken  period-<\/strong><br \/>\n  Interest  paid in respect of broken period to be set off against interest received in  respect of broken period.(  A. Y.1997-1998 )<br \/>\n  <strong>Asst. DIT (IT )v. Credit Agricole Indosuez [2013]  21 ITR&nbsp; 345(Mum.)Trib.)<\/strong><br \/>\n  <strong>S.144C: Assessment-Reference to Dispute Resolution  panel &ndash;Transfer pricing- Non Speaking Order &ndash; Order violation of provisions  &ndash;Set aside <\/strong><br \/>\n  Where DRP confirmed  addition made by Assessing Officer without passing a speaking order, said order  being in violation of provisions of section 144C, was to be set aside. Matter  was remanded back to decide both on TP and non TP issues . (A.Y. 2006-07)<br \/>\n  <strong>Ford <\/strong><strong>India<\/strong><strong> (P.)  Ltd. v. Dy. CIT (2013) 140 ITD 171 (Chennai)(Trib.)<\/strong><br \/>\n  <strong>S.145: Assessment &#8211; Method of accounting &ndash; Hire &ndash; purchase &#8211; Indexing  system followed by assessee there cannot be Mercantile system&nbsp; for purposes of assessment, appeal dismissed.<br \/>\n  <\/strong>The  assessee which is engaged in the business of leasing, hire-purchase and  finance. Finance charges represented the interest component of the hire-purchase  monthly instalments paid by hirers to the assessee. The assessee had itself  credited Rs. 12,33,700 under this head in its profit and loss account for the  assessment year 1987-88. However, in its return of income the finance charges  were reduced to Rs. 6,71,326 on the ground that the amount of Rs. 5,62,374 did  not accrue as income though credited as such in the profit and loss account  during the assessment year. The Assessing Officer did not accept this deduction  and took into account the credited amount of Rs. 12,33,700 while computing the  income under this head. The assessee credited Rs. 12,33,700 towards finance  charges in its books of account and this figure was arrived at by adopting the  &quot;indexing&quot; or &quot;sum of digits&quot; system of accounting. The Assessing  Officer&#8217;s order was upheld by the Tribunal. On appeal to the High Court :Held,  dismissing the appeal, that there was no indication of the assessee&#8217;s  hire-purchase agreements reflecting bifurcation of the equated monthly  installments into principal and interest components. In the absence thereof,  the common and accepted usage of the indexing system of accounting in the  hire-purchase trade must be held to be valid as otherwise the rate of interest  under the mercantile system in so far as the later equated monthly installments  are concerned would be far higher and contrary to the rate prescribed in the  assessee&#8217;s agreements. Further, as the assessee had itself employed this system  of accounting in its books of account, applying the law laid down in Sanjeev  Woolen Mills case [2005] 279 ITR 434,the Department was bound to accept the  same for the assessment proceedings. Appeal of assessee was dismissed. (A. Y.1987-1988)<br \/>\n  <strong>Chakra  Financial Services Ltd. v CIT(2013) 350 ITR 396(AP) (High Court)<\/strong><br \/>\n  <strong>S.147: Reassessment- Change of  opinion-Within period of four years-If there is no fresh tangible material&nbsp; reassessment is not valid-Reasons cannot be  supplemented \/improved upon later. (S.148)<\/strong><br \/>\n  When  assessee disclosed&nbsp; all relevant facts  ,even in case of reopening of assessment within period of four years from the  end of the relevant assessment year , the Assessing Officer has reason to  believe that income chargeable to tax has escaped assessment on the basis&nbsp; of tangible material , there being no fresh  tangible material which would warrant taking a view different from one taken  during the regular assessment proceedings , reopening was not sustainable. The  reasons recorded at the time of issuing notice&nbsp;  cannot be&nbsp; supplemented \/improved  upon later. Writ petition of assessee was allowed and notice was quashed.(A.Y.  2007-08)<br \/>\n  <strong>NDT Systems v.ITO( 2013) 81  DTR 1 (Bom.)(High Court)<\/strong><br \/>\n  <strong>S.147: Reassessment- Change of  opinion- Beyond four years-Third proviso- Merger-There was no failure on part  of assessee to disclose full and true particulars, and order of original  assessment was merged with order of the appellate Authority, hence the&nbsp; reassessment held to be invalid. [S.80IA (8)].<\/strong><br \/>\n  The  assessee is in the business of generation of distribution of electricity.  Deduction under section 80IA was allowed under section 143  (3).Reassessment&nbsp; notice was issued on  the ground that the assessee has claimed excess deduction under section&nbsp; 80IA.Reasseswsment order was challenged&nbsp; before the Commissioner (Appeals) .  Commissioner (Appeals) held that there was no failure on the part of assessee  hence&nbsp; the reassessment was not valid.  Tribunal also confirmed&nbsp; the order of  Tribunal. On appeal by revenue the court held that order of&nbsp; Maharastra Electricity Regulatory Commission  was passed by MERC&nbsp; on 1st &nbsp;July , 2004 and that order specifically dealt  with fixation of tariff rate for consumer and had nothing to do with the actual  profits earned by a power generation plant ; The Court held that reopening of  assessment was also barred by in view of the third proviso section 147&nbsp; since the quantum of deduction&nbsp; under section 80IA was subject matter of  appeal before the Commissioner (Appeals)&nbsp;  and the Tribunal&nbsp; and  consequently&nbsp; , the order of original  assessment had merged with the order of the appellate authority. Accordingly  the appeal of revenue was dismissed.(A.Y. 2001-02)<br \/>\n  <strong>CIT v. Reliance Energy Ltd (  2013) 81 DTR 130 \/255 CTR 357(Bom.)(High Court) <\/strong><br \/>\n  <strong>S.147: Reassessment-Change of  opinion-Third proviso- Merger-Order of original assessment was merged with  order of the appellate Authority, hence the&nbsp;  reassessment held to be invalid. [S.80IA(8)].<\/strong><br \/>\n  The  Court held that reopening of assessment was&nbsp;  barred by in view of the third proviso section 147&nbsp; since the quantum of deduction&nbsp; under section 80IA was subject matter of  appeal before the Commissioner (Appeals)&nbsp;  and the Tribunal&nbsp; and  consequently&nbsp; , the order of original  assessment had merged with the order of the appellate authority. Accordingly  the appeal of revenue was dismissed.(A.Y. 2003-04)<br \/>\n  <strong>CIT v. Reliance Energy Ltd (  2013) 81 DTR 138\/255 CTR 365 (Bom.)(High Court) <\/strong><br \/>\n  <strong>S.147: Reassessment-Non-disclosure  of primary facts-losses &ndash; Facts is different recorded reasons was held to be  not valid hence&nbsp;&nbsp; reassessment held to be  in valid. <\/strong><br \/>\n  While  making assessment for assessment year 1996-97, Assessing Officer held that loss  in shares had been fraudulently claimed. Accordingly assessment for relevant  year was reopened assigning reasons that position mentioned in assessment year  1996-97 also existed in relevant year. As facts of subsequent year was  altogether different from facts of relevant year, reasons recorded by Assessing  Officer was not valid. Thus accordingly, reassessment proceedings were to be  quashed.(A.Y. 1995-96)<br \/>\n  <strong>CIT  v. <\/strong><strong>Kanodia &amp; Sons (2013) 212 Taxman 55 (Mag.)(All.)(High Court)<\/strong><br \/>\n  <strong>S.147: Reassessment-Notice after four  years &#8211; Change of opinion &#8211; Inspection report indicating two different  units-Reopening on basis of report to withdraw deduction under section 80-IA is  a change of opinion held to be&nbsp; not  valid. (S.80IA, 148)<\/strong><br \/>\n  The assessment was&nbsp; completed under section 143(3) and deduction  under section 80IA was allowed. The assessment was reassessed after four  years&nbsp; on the inspection report  indicating different units to withdraw&nbsp;  the deduction under section 80IA . The assessee&nbsp; challenged the reassessment proceedings&nbsp; allowing the petition, the Court held that  this was&nbsp; not&nbsp; a case where the assessee has failed to  disclose&nbsp; fully and truly all material  facts and the pre- conditions&nbsp; for  triggering the exception in the proviso to section 147 were not satisfied, thus  reassessment was set aside. (A. Y. 2000-2001)<br \/>\n  <strong>NTPC Ltd. v. Dy. CIT (2013) 350 ITR 614( <\/strong><strong>Delhi<\/strong><strong>)(High Court)<\/strong><br \/>\n  <strong>S.147: Reassessment &#8211; Notice after  four years &#8211; on the basis of complaint of&nbsp;  Director of assessee &#8211; Held to be valid. (S.148)<\/strong><br \/>\n  The assessee is engaged in the  business of running hotels consisting of five independent units. For the  assessment year 2003-04, the assessee&#8217;s case was selected for scrutiny and  after issuing notices under sections 143(2) and 142(1) of the Income-tax Act,  1961, and after examining the details furnished by the assessee, an assessment  order was passed under section 143(3). Thereafter, notice under section 148 was  issued to reopen the assessment. The assessee challenged the reassessment  dismissing the writ petition the court held that; Director of assessee complaining before statutory authority that assessee  had siphoned off monies as foreign travelling expenses and under agreement no  obligation of assessee to incur such expenses. No details furnished at time of  original assessment towards travelling expenses. No denial of such a clause in  agreement. On facts failure to disclose fully and truly all material facts on  the basis&nbsp; of Complaint constituting  tangible material hence reassessment held to be valid<strong>.<\/strong>(A.Y.  2003-04)<br \/>\n  <strong>Rambagh Palace Hotels P. Ltd. v. Dy. CIT (2013)  350 ITR 660 (<\/strong><strong>Delhi<\/strong><strong>)(High Court)<\/strong><br \/>\n  <strong>S.147: Reassessment-Notice after four  years &#8211; Travelling&nbsp; and repair and  maintenance- Reassessment held to be invalid. (S.148)<\/strong><br \/>\n  For the assessment year 2004-05, the  return declaring loss of the assessee was first processed and accepted under  section 143(1) but was later selected for scrutiny and notice was issued under  sections 143(2) and 142(1). Questionnaires were also issued calling for details  relating to fixed assets, loans and advances, opening and closing inventory, sundry  debtors, loss on sale of fixed assets, repairs and maintenance expenses,  details of travelling expenses for foreign visits, etc., and these queries were  answered by the assessee and the information was submitted. The assessment was  completed. The notice under section 148 was issued beyond the period of four  years on the ground that the expenditure was debited under the head  &quot;repairs and maintenance of building and additions to fixed assets&quot;,  but the amounts were actually siphoned off by illegal withdrawals. On a writ  petition: <\/p>\n<p>  Held, allowing the petition, that not  only did the assessee furnish all the relevant details relating to the purchase  of fixed assets, repairs and maintenance of buildings but also the details  relating to the foreign travel expenses. The proceedings relating to the  original assessment also showed that the Assessing Officer had raised queries  regarding repairs and maintenance of building, plant and furniture which were  answered by the assessee. No query would appear to have been raised in relation  to the foreign travel expenses in regard to which the assessee had furnished  the relevant details. Therefore, it could not be said that there was any  failure on the part of the assessee to submit full and true particulars at the  time of the original assessment. It was for the Assessing Officer to examine  the details and draw the appropriate inferences. The notice under section 148  issued for the assessment year 2004-05 was, therefore, without jurisdiction.  (A.Y.2004-05)<br \/>\n  <strong>Rambagh Palace Hotels P. Ltd. v. Dy. CIT (2013)  350 ITR 660(<\/strong><strong>Delhi<\/strong><strong>)(High Court)<\/strong><br \/>\n  <strong>S.147: Reassessment-Complaint by  director &ndash;Reassessment held to be valid. (S.143(1), 148)<\/strong><br \/>\n  For the assessment year 2005-06, the  return of the assessee declaring nil income was processed under section 143(1)  and an intimation was issued on June 6, 2006. On March 30,   2012, notice  under section 148 was issued reopening the assessment on the ground that the  complaint filed by one of the directors before the Company Law Board regarding  irregularities in the accounts of the assessee. On a writ petition:<\/p>\n<p>Held, dismissing the petition, that  there was no scrutiny assessment under section 143(3) in the first instance ;  the return filed by the assessee was merely processed under section 143(1). The  most basic and indispensable requirements for the validity of the notice under  section 148 were satisfied. There was a complaint filed by one of the directors  before the Company Law Board alleging irregularities such as illegal siphoning  off of the company&#8217;s funds by the other two directors in the guise of fixed  assets, repairs and maintenances, travelling expenses, etc. This complaint  constituted tangible material on the basis of which action to reopen the  assessment could be taken in good faith ; the belief entertained by the  Assessing Officer on the basis of the complaint which had been filed with some  responsibility by one of the directors of the assessee, could not be said to be  a mere pretence nor could the belief be said to be divorced from the material.  The complaint constituted relevant material for the belief. Therefore, the  notice issued under section 148 was within the jurisdiction. The fact that the  assessee submitted all the details to the Assessing Officer along with the  return was not relevant where only an intimation under section 143(1) was  issued after merely processing the return without any scrutiny. There should,  however, be reason to believe that income had escaped assessment and this  condition had been satisfied in respect of the (A. Y,.2005-06.)<br \/>\n    <strong>Rambagh Palace Hotels P. Ltd. v. Dy. CIT (2013)  350 ITR 660(<\/strong><strong>Delhi<\/strong><strong>)(High Court)<\/strong><br \/>\n    <strong>S.147: Reassessment-Within four  years-Tangible material-No query was raised in the course of assessment hence  as there is no application of mind by Assessing Officer notice held to be&nbsp; valid. (S.148) <\/strong><br \/>\n  When an assessment is sought to be  reopened within a period of four years from the end of the relevant assessment  year, the test to be applied is whether there is tangible material to do so.  What is tangible is something which is not illusory, hypothetical or a matter  of conjecture. Something which is tangible need not be something which is new.  An Assessing Officer who has plainly ignored the relevant material in arriving  at an assessment acts contrary to law. If there is an escapement of income in  consequence, the jurisdictional requirement of section 147 of the Income-tax  Act, 1961, would be fulfilled on the formation of a reason to believe that  income has escaped assessment. The reopening of the assessment within a period  of four years is in these circumstances within the jurisdiction. The Court  held, dismissing the petition that no query was raised during the course of the  assessment and the assessment order would ex facie disclose that the Assessing  Officer had not applied his mind to any of the points on the basis of which the  assessment was reopened. Therefore, there was tangible material for the  Assessing Officer to reopen the assessment. Reassessment held to valid on  facts. (A.Y. 2006-2007 )<br \/>\n  <strong>Export Credit Guarantee Corporation of India Ltd.  v. Add. CIT (2013) 350 ITR 651 (Bom.) (High Court)<\/strong><br \/>\n  <strong>S.147: Reassessment&#8211;Notice&#8211;Single judge permitting assessee to  file objections to notice and directing Assessing Officer to take decision  after considering objections-Failure to file objections-Assessee to file  objections and order to be passed after considering objections. (S.133A, 148) <\/strong><br \/>\n  The assessee was engaged in jewellery business.  During the survey conducted under section 133A of the Income-tax Act, 1961, in  the assessee&#8217;s premises on February 1, 2006, the managing partner of the assessee admitted  certain irregularities in the books of account and offered Rs. 1.5 crores as  additional income for investments made by the partners in the business of the  assessee for the assessment year 2006-07. The income already projected for  advance tax payment in 2006-07 was Rs.1 crore and the amount of Rs. 1.5 crores  was over and above the estimated income for the year 2006-07 so that the total  income projected was Rs. 2.5 crores and the assessment was completed. Notice  was issued for reassessment. On a writ petition, the single judge found that  the proceedings were only at the notice stage and it was for the assessee to  submit objections and it was for the officer to take the proceedings to the  logical conclusion by passing appropriate orders in accordance with law, after  considering the objections. Since the time for submitting objections was over,  the single judge granted a further period of one month. On appeal&nbsp; held dismissing the appeal, that this was a  case where the assessee had not cared to file any objection to the notice. It  was in the exercise of discretionary jurisdiction that the single judge  permitted the assessee to file objections. In fact, the stand of the Revenue  was that the objections would certainly be considered. Therefore, the  objections which the assessee had filed must necessarily be considered and  reasons must be given. In the above circumstances, interference is declined and  the writ petition is dismissed. However, since the time for submitting the  objections is already over, the petitioner is granted a further period of  &quot;one month&quot; to submit the same. The proceedings shall be finalised in  accordance with law, as expeditiously as possible, at any rate, within three  months thereafter. (A. Y. 2006-2007)<br \/>\n  <strong>Alappat  Jewels v. Asst. CIT (2013) 350 ITR 471( Ker)(high Court)<\/strong><br \/>\n  <strong>S.147:Reassessment-Audit objection-Royalty-Beyond four years-Change  of opinion-Audit objection that royalty payment resulted in capital  benefit&nbsp; cannot constitute tangible  material hence reassessment held to be not valid. (S.148)<\/strong><br \/>\n  Allowing the writ petition of the petitioner the Court held that  (i) the assessing authority cannot keep improving his case from time to time  and that the reassessment proceedings have to stand or fall on the basis of  what was stated in the reasons recorded under section 148(2) of the Income-tax  Act, 1961, and nothing more. No failure to furnish full and true particulars  relating to the royalty payments, including the failure to file the relevant  agreements, had been alleged in the reasons recorded. If anything, the reasons  are an admission that it was the Assessing Officer who did not draw the  inference that the royalty payments were capital in nature. It was for him to  draw the appropriate inference and not for the assessee to tell him what  inference of fact or law should be drawn from the primary facts furnished.  Therefore, the reassessment notices after four years from the end of the  assessment years 2002-03 and 2003-04 were quashed as also the consequent  proceedings. The court also held that opinion expressed by audit that payment  of royalty resulted in a capital benefit could not constitute a tangible  material on the basis of which the assessment could be reopened. (A. Y.2002-2003, to 2004-2005)<br \/>\n  <strong>Xerox  Modicorp Ltd. v.Dy. CIT (2013) 350 ITR 308\/81 DTR 321\/255 CTR 342 (<\/strong><strong>Delhi<\/strong><strong>) (High Court)<\/strong><br \/>\n  <strong>S.147:  Reassessment &ndash; Notice &#8211; Assessing Officer has power to issue notice of  reassessment. (S. 143(1), 143(2), 148)<\/strong><br \/>\n  In  Asst. CIT v. Rajesh Jhaveri Stock Brokers P. Ltd. [2007] 291 ITR 500 (SC)the  Supreme Court held that so long as the ingredients of section 147 of the  Income-tax Act, 1961, are fulfilled, the Assessing Officer is free to initiate  proceeding under section 147 and failure to take steps under section 143(3)  will not render the Assessing Officer powerless to initiate reassessment  proceedings even when intimation under section 143(1) had been issued.( A. Y.  2000-2001)<br \/>\n  <strong>D.T.T.D.C.  Ltd. v<em>. <\/em>Dy. CIT (2013) 350 ITR 216 (<\/strong><strong>Delhi<\/strong><strong>)(High Court)<\/strong><br \/>\n  <strong>S.147:Reassessment &#8211; Issue not&nbsp; mentioned in recorded reasons &#8211; Explanation 3  -Reassessment held to be justified. (S.35D, 148)<\/strong><br \/>\n  The assessment was  completed under section 143(3).The assessment was reopened on the ground that  the assessee had debited Rs.44,90,600 towards &lsquo;loss on sale of investment&rsquo;&nbsp; allowed as&nbsp;  business expenditure&nbsp; though it is  a capital in nature. In the reassessment proceedings the Assessing Officer  disallowed the preliminary expenses though the said expenses were not referred  in he reasons record. On appeal the Tribunal held that&nbsp; Explanation 3 to section 3 to section 147  inserted by the Finance (No 2) Act , 2009&nbsp;  , provides that the Assessing Officer may assessee or reassess the  income in respect of any issue , which has escaped assessment , if such issue  comes to his notice subsequently in the course of the proceedings under section  147 notwithstanding&nbsp; that the reasons for  such issue have not been included in the reasons recorded under sub section (2)  of section 148 . Therefore in view of explanation 3 to section 147 inadmissible  claim of deduction of miscellaneous expenses under section 35D&nbsp; could be disallowed by the Assessing Officer  in the course of reassessment&nbsp; even  though the same did not find in the reasons recorded under section 148(2).  Appeal of assessee dismissed. (A.Y. 2005-06)<br \/>\n  <strong>Instant Holdings Ltd&nbsp; v. Dy.CIT ( 2013) 81 DTR 35(Mum.)(Trib.)<\/strong><br \/>\n  <strong>S.147: Reassessment &#8211; Merger &#8211; Rectification  &#8211; Merger of rectification proceeding with reassessment proceedings &#8211; validity  of proceedings &ndash;Reassessment was held to be valid. (S.143(1), 148, 154)<\/strong><br \/>\n  Assessment  was completed under section 143(1) of the Act. Thereafter the&nbsp; notice was issued under section 154\/155&nbsp; of the Act&nbsp;  for rectifying certain mistakes. Subsequently the Assessing Officer  issued notice under section 147\/148 .Before Commissioner (Appeals) it was  contended that no reopening&nbsp; can be made  after due date of completing scrutiny assessment under section 143(3) has been  allowed&nbsp; to be lapsed by the Assessing  Officer . It was also contended that there should not be simultaneous&nbsp; action under&nbsp;  section 154 and 147 . Commissioner (Appeals) held that reassessment was  void ab-initio. On appeal by revenue the Tribunal up held the validity of  reassessment and directed the Commissioner (Appeals) to decide on merits. The  Tribunal held that reassessment proceedings, validity of those proceedings  could not be challenged on ground that there could not be a simultaneous action  by Assessing Officer u\/s 154 and 147. (A.Y. 2002-03)<br \/>\n  <strong>Hotel Allied Trades (P. ) Ltd. v.  Dy.CIT (2013) 140 ITR 309 (<\/strong><strong>Cochin<\/strong><strong>)(Trib.)<\/strong><br \/>\n  <strong>S.147:Reassessment &ndash; Income  escaping assessment &ndash; Consideration for development agreement spread over in  three years &ndash; Capital Gain to be taxed only in final year &ndash; Reassessment Valid<\/strong><br \/>\n  Assessee  entered into development agreement with builder and received consideration in  installment, spread over three financial years. Assessing Officer issued a  notice for reopening for three&nbsp;&nbsp;  assessment years . It was held that issue of notice for all three years  were valid though finally A.O. brought capital gains to tax only in AY 2003-04.  Thus, the reopening of assessment&nbsp; held  to be valid. (A.Y. 2003-04)<br \/>\n  <strong>G. Sreenivasan v. Dy.CIT (2013)  140 ITD 235 (<\/strong><strong>Cochin<\/strong><strong>)(Trib.)&nbsp;&nbsp; <\/strong><br \/>\n  <strong>S.147: Reassessment &#8211; Export business-Original  reason dropped &#8211; Assessing&nbsp; Officer&nbsp; cannot assess other escaped income if  original reason dropped. (S.80HHC, 148)<\/strong><strong> <\/strong><br \/>\n  The AO issued a notice u\/s 148 to reopen the  assessment for AY 2003-04 on the ground that the assessee had wrongly computed  s. 80HHC deduction. However, in the reassessment order, the AO did not make any  addition for the s. 80HHC claim and made additions in respect of other  unconnected issues. The Tribunal held that as the AO had made no addition in  respect of the issue for which the s. 148 notice was issued, he had no  jurisdiction to assess any other income. On appeal by the department to the  High Court, HELD dismissing the appeal:<\/p>\n<p>S.147 empowers the AO to reopen an assessment if he  has reason to believe that income has escaped assessment. If the requirements  of giving jurisdiction to the AO to reopen the assessment are satisfied, he may  also assess any other escaped income which comes to his notice subsequently in  the course of the proceedings. Prior to the insertion of Explanation 3 to s.  147 by the Finance Act 2009 w.e.f. 1.4.1989, it was clear that if the reason  for which the assessment is reopened fails, the AO could not proceed to assess  other income which had escaped assessment. For assuming jurisdiction to frame  an assessment u\/s 147 what is essential is a valid reopening. If the very  foundation of the reopening is knocked out, any further proceeding in respect  to such assessment naturally would not survive. Explanation 3 to s. 147 does  not change this position. Explanation 3 to s. 147 was inserted to counter the  view taken by some courts (CIT v. Atlas Cycle Industries (1989) 180 ITR 319  (P&amp;H) &amp; Travancore Cements Ltd. v. ACIT (2008) 305 ITR 170 (Ker.) that  even if the jurisdiction was validly exercised, the AO could not assess the  other escaped income that was not referred to in the reasons. It merely  clarifies the existing law and does not expand the powers of the AO u\/s 147. If  the AO drops the ground for which the notice for reopening was issued, it means  he had no &ldquo;reason to believe&rdquo; that income had escaped assessment and so he has  no jurisdiction to assess the other escaped income (CIT v. <a href=\"http:\/\/itatonline.org\/archives\/index.php\/cit-vs-jet-airways-i-ltd-bombay-high-court-s-147-reopening-is-invalid-if-ao-does-not-assess-income-for-which-reasons-were-recorded-and-s-148-notice-was-issued\/\">Jet Airways<\/a>(I) Ltd. (2011) 331 ITR 236 (Bom), <a href=\"http:\/\/itatonline.org\/archives\/index.php\/ranbaxy-laboratories-ltd-vs-cit-delhi-high-court-if-ao-does-not-assess-income-for-which-reasons-were-recorded-us-147-he-cannot-assess-other-income-us-147\/\">Ranbaxy  Laboratories<\/a> Ltd. v. CIT (2011) &nbsp;336 ITR 136 (Del.) &amp;Major Deepak Mehta 344 ITR 641  (Chhattisgarh) followed; Majinder Singh  Kang v. CIT (2012) &nbsp;344 ITR 358 (P  &amp; H) not followed)(A.Y.2003-04)<br \/>\n    <strong>CIT v. Mohmed Junded Dadani (Guj.)(High Court) <\/strong><br \/>\n    <strong>S.148:Reassessment &#8211; Notice Failure to issue notice  &#8211; Reassessment not valid, section 292BB does not have retrospective effect. [S.143(2)]<\/strong><strong> <\/strong><br \/>\n  The A.O. issued a notice u\/s 148 to make a  reassessment. However, as a notice u\/s 143(2) was not issued, the Tribunal  quashed the reassessment. The Department filed an appeal before the High Court  where it relied on s. 292BB (which provides that the failure to issue notice  cannot be objected to if the assessee has appeared in the proceeding), inserted  by the Finance Act 2008 w.e.f. 1.4.2008 and argued that the said provision was  retrospective in operation and the reassessment was valid. Held by the High  Court dismissing the appeal:<br \/>\n  &nbsp;The issue of a notice u\/s.143(2) is  mandatory. The failure to do so renders the reassessment void (CWT v. HUF  of&nbsp; H. H. Late Shri. <a href=\"http:\/\/itatonline.org\/archives\/?p=49\">J.M. Scindia<\/a> (2008) 300 ITR 193 (Bom.)  followed). S.292BB was inserted w.e.f. 1.4.2008 and came into operation  prospectively for AY 2008 &#8211; 2009 and onwards.<br \/>\n  <strong>CIT v Salman Khan (Bom.)(High Court) www.itatonline.org. <\/strong><br \/>\n  <strong>S.153A: Assessment-Search or requisition-Assessment  is mandatory even if no incriminating material is found. Distinction between  &ldquo;developer&rdquo; and &ldquo;works contractor&rdquo; in s. 80-IA(4) explained.(S. 80IA (4) )<\/strong><strong> <\/strong><br \/>\n  A search and seizure action u\/s.132 was conducted  on the premises of the assessee. No incriminating material or evidence was found  to indicate that there was any undisclosed income. The AO passed an order u\/s.  153A for AY 2000-01 to 2005-06 in which he took the view that the assessee was  not entitled to claim deduction u\/s 80IA(4) on the ground that it was a  contractor and not a developer of infrastructure projects. The Tribunal had to  consider two issues: (a) whether if the assessments for the concerned years  have attained finality and no incriminating material is found in the course of  the search, the AO has jurisdiction to proceed u\/s 153A and (b) how to  distinguish between a &ldquo;developer&rdquo; and a &ldquo;works contractor&rdquo; for purposes of s.  80-IA(4). HELD by the Tribunal:<\/p>\n<p>(i) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Three  possible circumstances emerge on the date of initiation of search u\/s 132(1):  (a) proceedings are pending; (b) proceedings are not pending but some  incriminating material is found in the course of search, indicating undisclosed  income and\/or assets and (c) proceedings are not pending and no incriminating  material has been found. Circumstance (a) is answered by the Act itself, that  is, since the proceedings are still pending, all those pending proceedings are  abated and the AO gets a free hand to make the assessment. Circumstance (b) has  been answered in <a href=\"http:\/\/itatonline.org\/archives\/index.php\/cit-vs-anil-kumar-bhatia-delhi-high-court-s-153a-applies-if-incriminating-material-is-found-even-if-assessments-are-completed\/\">Anil Bhatia<\/a> to  hold that while there is no question of any abatement since no proceedings are  pending, the AO is entitled to reopen the assessment (without having to comply  with the strict conditions of s. 147, 148 and 151) and bring the undisclosed  income to tax. Also, in <a href=\"http:\/\/itatonline.org\/archives\/index.php\/all-cargo-global-logistics-ltd-vs-dcit-itat-mumbai-special-bench-scope-of-s-153a-80ia4-explained\/\">All Cargo  Global Logistics Ltd<\/a> v. Dy. CIT ( 2012) 137 ITD 287 (Mum)(SB)  it was held that in the case of a non-abated assessment, an assessment u\/s 153A  has to be made on the basis of incriminating material. Circumstance (c) has  been kept open and left unanswered. Circumstance (c) has to be answered to say  that even where there is\/are no pending proceedings and no incriminating  material has to be found, the AO is still required to pass an order u\/s 153A  though the assessed income will have to be the same as the originally assessed  income as there was no incriminating material. Accordingly, the assessee&rsquo;s  argument that when there is no incriminating material or assets, then there is  no jurisdiction to proceed u\/s 153A is not acceptable. S. 153A contains a  non-obstante clause and is triggered automatically whenever a search is  undertaken. The fact that no incriminating material was found has no bearing on  the applicability of s. 153A;<\/p>\n<p>(ii) S. 80IA(4) allows deduction to &ldquo;any enterprise  carrying on the business of (i) developing or (ii) operating and maintaining or  (iii) developing, operating and maintaining any infrastructure facility&rdquo;. The  Explanation provides that it shall not apply to &ldquo;business which is in the  nature of a works contract&rdquo;. Whether an assessee is a developer or works  contractor depends on the nature of the work undertaken by the assessee. The  word &lsquo;contractor&rsquo; is used to denote a person entering into an agreement for  undertaking the development of infrastructure facility. Every agreement entered  into is a contract. Therefore, the contractor and the developer cannot be  viewed differently. Every contractor may not be a developer but every developer  is a contractor. Contracts involving design, development, operating and  maintenance, financial involvement, and defect correction and liability period  cannot be called as simple works contract. A case where in an undeveloped area,  infrastructure is developed and handed over to the Government cannot be  considered as a mere works contract but has to be considered as a development  of infrastructure facility. If the contract is composite, it will have to be  segregated so as to allow deduction on the parts that involve design,  development, operating and maintenance, financial involvement etc and to deny  on those which are pure works contracts. On facts, the assessee had made  substantial investments in fixed assets and was exposed to various kinds of  risks. It was not a mere contractor. It is enough if the assessee is a developer.  It need not also maintain &amp; operate the infrastructure facility (Patel Engineering Ltd v. Dy. CIT (  2004) 94 ITD 411 (Mum) &amp;GVPR  Engineers Ltd (included in file) followed)( A. Y. 2000 &ndash; 01 to 2005-06)<br \/>\n    <strong>ACIT v. Pratibha Industries Ltd.( Mum.)(Trib.)www.iatonline.org. <\/strong><br \/>\n    <strong>S.153C: Assessment-Income of any other person-  Search and seizure-Approval-Failure to Obtain JCIT&rsquo;s Approval Renders s. 153C  Assessment Order Void. (S.132, 144, 153D)<\/strong><strong> <\/strong><br \/>\n  Pursuant to search &amp; seizure action u\/s 132 on  the premises of a third party, certain documents belonging to the assessee were  found and seized pursuant to which a notice u\/s 153C was issued to the assessee  and assessment u\/s 153C r.w.s. 144 were framed. In passing the assessment  orders, the A.O. (ITO) omitted to obtain the consent of the JCIT as mandated by  S.153D. Before the Tribunal, the assessee argued that the failure to obtain the  JCIT&rsquo;s consent rendered the assessment a nullity. The Tribunal {Akil Gulamali Somki  v. ITO (2012) 137 ITD 94 (Pune)} upheld the plea on the basis that as the  heading to s. 153D refers to a &ldquo;prior approval&rdquo; and uses negative wording and  the word &ldquo;shall&rdquo;, compliance of s. 153D is mandatory and cannot be waived by  the assessee. Reliance was also placed on Clause 9 of the Manual of Office  Procedure which makes it clear that an assessment order under Chapter XIV-B can  be passed only with the previous approval of the JCIT and that the approval  must be in writing and stated to have been obtained in the body of the  assessment order. On appeal by the Department to the High Court, held  dismissing the appeal:<\/p>\n<p>Though the question raised proceeds on the basis  that approval of the JCIT was given as he had corrected the draft assessment  order and the changes were incorporated by the AO in the final assessment  order, the finding of fact was recorded by the Tribunal is that no prior  approval of the Joint Commissioner was taken before the ITO passed the order.  In view of the above, there is no reason to entertain the proposed question and  the appeal is dismissed.<br \/>\n    <strong>CIT v. Akil Gulamali Somji (Bom)(High Court) www.itatonline.org. <\/strong><br \/>\n    <strong>S.154: Assessment &#8211; Rectification of mistake &#8211; Tax  on STCG &#8211; Clerical error &#8211; Assessee did not showed STCG under Schedule CG of  e-return &#8211; Depicted same under Schedule SI &#8211; Gain taxable at special rate  10%&nbsp; appeal of assessee was allowed. [S.  111A, 143(1)]<\/strong><br \/>\n  The assessee filed e.  return. The Assessing Officer received the intimation under section 143(1). The  Assessing Officer computed the tax payable on short term capital gain at 30  percent as against at the rate of 10 percent under section 111A. The assessee  moved application under section 154. The Assessing Officer held that short term  capital gains had not been shown under section 111A&nbsp; at Schedule CG of e. return. Commissioner  (Appeals) up held the order of Assessing Officer. On appeal the Tribunal held  that where due to clerical error, assessee did not showed STCG under Schedule  CG of e-return, but depicted same under Schedule SI. It was held that Income  chargeable at special rates, gains would be taxable at special rate of 10 per  cent. (A.Y. 2008-09)<br \/>\n  <strong>Shrikant Real Estates (P.)Ltd. v. ITO (2013) 140  ITD 155\/152 TTJ 30\/22 ITR 266 (Mum.)(Trib.)<\/strong><br \/>\n  <strong>S.154: Assessment- Rectification  of mistakes- Free Trade Zone &ndash; Depreciation and brought forward losses &ndash;Held  benefit of tax holiday availed from AY 1999-2000, its exemption period was  continuing hence, S. 10A(6) not applicable, hence rectification was not justified.  (S.10A)<\/strong><br \/>\n  Assessee,  a S.10A unit claimed deduction for depreciation and brought forward losses  which were allowed.&nbsp; Assessing Officer  found that claim for depreciation and brought forward business loss for AY had  been wrongly allowed as assessee, a section 10A unit, had violated S.10A(6).  Assessing Officer passed the order under section 154 and rejected the claim. In  appeal Commissioner (Appeals) confirmed the order of Assessing Officer. On  appeal the Tribunal held that since assessee chose to avail benefit of tax  holiday from AY 1999-2000, its exemption period was continuing and therefore S.  10A(6) would not apply. Accordingly the rectification order was quashed and  appeal of assessee was allowed.&nbsp; (A.Y.  2003-04 &amp; 2004-05)<br \/>\n  <strong>Tata Consultancy Services Ltd. v.  ACIT (2013) 140 ITD 325 (Chennai)(Trib.) <\/strong><\/p>\n<p><strong>S.158BC: Block assessment &#8211; Procedure-Undisclosed  income-Fixed deposits.<\/strong><br \/>\n    <strong>FDRs in names of employees found to be bogus,  addition to income&nbsp; is held to be  justified. Deletion of amounts representing FDRs in names of friends and  relatives of managing director as there was no evidence regarding genuineness  of FDRs&#8211;Matter remanded. (Block period 1-4-1986 to 28-11-1996)<\/strong><br \/>\n    <strong>Hastalloy India Ltd. v. Dy. CIT (2013) 350 ITR 52 (AP)  (High Court) <\/strong><\/p>\n<p><strong>S.158BD:Block assessment-Undisclosed income of any other  person-Recording of satisfaction-Satisfaction -Block assessment made without  such satisfaction&nbsp; is held to be&nbsp; invalid. (S.158BC)<\/strong><br \/>\n  The Tribunal held that mere forwarding of such books of account by  itself was insufficient to conclude that the Assessing Officer, having  jurisdiction over the Mody group of cases, was satisfied that any undisclosed  income was found or detected, as a result of the search, on the basis of which,  proceedings under section 158BD of the Income-tax Act, 1961, could have been  initiated against the assessee. On appeal the Court dismissing the appeal held  that in the communication from the Assessing Officer of the searched person to  the Assessing Officer of the assessee, there was no recording of any  satisfaction that any undisclosed income belonged to the assessee. The  communication merely indicated that the books of account pertaining to the  assessee were seized and were lying in the custody of the Assessing Officer in  respect of the Mody group of cases. There was no satisfaction recorded by the  Assessing Officer of the Mody group of companies that any undisclosed income  belonged to the assessee. The very first mandatory condition precedent for  assuming jurisdiction under section 158BD and subsequently under section 158BC  had not been satisfied. Thus, the entire proceedings were without jurisdiction.  (Block period 1-4-1986 to 2-11-1996)<br \/>\n  <strong>CIT  v.Intercontinental Trading and Investment Co. Ltd. (2013) 350 ITR 316\/81 DTR  314 (<\/strong><strong>Delhi<\/strong><strong>)(High Court)<\/strong><br \/>\n  Editorial: Ratio of&nbsp; Manish Maheshwari  v. ACIT (2007) 289 ITR 341 (SC) applied.<br \/>\n  <strong>S.194A: Deduction at source &ndash; Interest  &ndash; Firm &ndash; Partner &#8211; Interest paid by partner to firm, tax is deductible at  source on such interest.<\/strong><br \/>\n  The assessees borrowed money from the  firms in which they were partners and paid interest to the firms. The Dy. CIT (TDS)  noticed that the assessee did not deduct tax at source under the provisions of  section 194A&nbsp; on the interest so paid to  the firms. After hearing the assessees, the Dy. CIT (TDS) levied penalty under  section 201(1) of the Act equivalent to the amount of tax liable to be deducted  at source and levied interest under section 201(1A) of the Act for the period  from the closing of the relevant financial year to May 31, 2009 for the  assessment years 2005-06 to 2007-08. The Commissioner (Appeals) confirmed the  penalties and interest. On appeal to the Tribunal&nbsp; held that t the Income-tax Act recognises a  partner and a firm as different &quot;persons&quot;, despite the legal  relationship between them as prevailing under the Partnership Act. Further  section 194A provides exemption from the obligation imposed under that section  only in respect of interest paid or credited by a firm to its partner. The Act  does not provide such exemption to the interest paid or credited by a partner  to his firm. Tax is deductible at source on the interest paid by the partner to  the firm. Penalty levied was directed to be deleted after verification of  facts. (A.Y.2005-2006 to&nbsp; 2008-2009 )<br \/>\n  <strong>Thomas Muthoot v. Dy. CIT&nbsp; [2013] 21 ITR&nbsp;  133\/55&nbsp; SOT 390(<\/strong><strong>Cochin<\/strong><strong>.)(Trib.)<\/strong><br \/>\n  <strong>S.194C: Deduction at source-Lorry booking business-Not liable to  deduct tax at source.<\/strong><br \/>\n  Assessee collecting freight charges from  clients who intended to transport their goods through separate transporters  and&nbsp; paying to transporters entire amount  collected from clients after deducting his commission. There is&nbsp; noprivity of contract of carriage of goods  between assessee and his clients, assessee&nbsp;  is not a person responsible but &nbsp;only a facilitator hence not liable to deduct  tax at source. Appeal of revenue was dismissed.(A. Y.2007-2008)<br \/>\n  <strong>CIT  v. Hardarshan Singh (2013) 350 ITR 427(<\/strong><strong>Delhi<\/strong><strong>) (High Court)<\/strong><br \/>\n  <strong>S.194H: Deduction&nbsp;&nbsp; at source &ndash; Commission or brokerage &ndash;  Relation of principal and agent &ndash; Discount was treated as commission for  provision of S. 194H hence the assessee was held to&nbsp; be liable to deduct tax at source. <\/strong><br \/>\n  Assessee  was engaged in the business of providing telecom services across country. To  market its products and services, assessee appointed persons called &ldquo;channel  Partners (CP)&rdquo;. To enable its customer to use its services, assessee gave  starter packs as well as recharge vouchers to its CPs. While MRP value of the  products were fixed at time of raising invoices, product was priced at  discounted price agreed to between assessee and CP. It was held that the  relationship between the assessee and its distributors was that of principal  and agent and thus, difference between MRP of product and price actually  charged constituted commission which would fall under realm of provisions of  section 194H. The Assessee was held to be liable to deduct tax at source on  such payment .Appeal of assessee was dismissed. (A.Y. 2005-06 &amp; 2008-09)<br \/>\n  <strong>Tata Teleservices Ltd. v. Dy.CIT  (2013) 140 ITD 451 (Bang.)(Trib.)<\/strong><br \/>\n  <strong>S.194H:Deduction&nbsp; at source &ndash; Commission or brokerage &ndash; Bank  Charges &ndash; Payment to bank for utilization of credit card facilities is not in  nature of commission&nbsp; hence section&nbsp; 194H is&nbsp;  not applicable. <\/strong><br \/>\n  Assessee  had arrangement with several banks whereby customers of assessee, who also held  credit card of such banks, could make payment for communication service  utilized by them from assessee through credit cards. It was held that the  payment to bank for utilization of credit card facilities would be in nature  bank charge and not in nature of commission within meaning of section  194H.Assessee is not liable to deduct tax at source on such payments. Appeal of  assessee was allowed. (AY 2005-06 &amp; 2008-09)<br \/>\n  <strong>Tata Teleservices Ltd. v. Dy.CIT  (2013) 140 ITD 451 (Bang.)(Trib.)<\/strong><br \/>\n  <strong>S.201: Deduction&nbsp; tax at source &#8211; Failure to deduct or pay &ndash; Firm  &ndash; Partner &ndash; Penalty &#8211; Matter remanded.<\/strong><br \/>\n  The Tribunal  held that penalty under section 201(1) is&nbsp;  compensatory in nature. Failure to deduct tax at source on interest paid  by partner to firm. Penalty is not leviable if no tax is payable by firm. Matter  remanded. (A.Y. 2005-2006, to&nbsp;  2008-2009)<br \/>\n  <strong>Thomas Muthoot v. Dy. CIT&nbsp; [2013] 21 ITR&nbsp;  133\/55 SOT 390 (<\/strong><strong>Cochin<\/strong><strong>.)(Trib.)<\/strong><br \/>\n  <strong>S.201(IA): Deduction at source-Failure  to deduct or pay-Interest-Firm-Partner-Matter remanded.<\/strong><br \/>\n  No tax was  deducted at source on interest paid by partner of firm. The Tribunal held  that&nbsp; interest is&nbsp; not payable if no tax is payable by firm.  Matter remanded. (A.Y. 2005-2006 to&nbsp;  2008-2009)<br \/>\n  <strong>Thomas Muthoot v. Dy. CIT&nbsp; [2013] 21 ITR&nbsp;  133 \/ 55 SOT 390(<\/strong><strong>Cochin<\/strong><strong>.)(Trib.) <\/strong><br \/>\n  <strong>S.215: Advance tax-Interest  payable by assessee-Application of mind is necessary-Order of Tribunal  deletion&nbsp; of interest held to be  justified. (S.217)&nbsp; <\/strong><br \/>\n  That  even if any provision of law is mandatory and provides for charging of tax or  interest, such charge by the Assessing Officer should be specific and clear and  the assessee must be made to know that the Assessing Officer had applied his  mind and had ordered the charging of interest. The mandatory nature of charging  of interest and the actual charging of interest by application of mind and the  mention of the provision of law under which such interest is charged are two  different things. The appeal filed by the department is dismissed.  (A.Y.1988-1989)<br \/>\n  <strong>CIT  v. Misra Preservers (P.) Ltd (2013) 350 ITR 222(All)(High Court)<\/strong><\/p>\n<p><strong>S.220:  Collection and recovery &#8211; Waiver of interest &ndash; Hardship &#8211; Attachment of entire  properties &#8211; Entire liabilities subsequently satisfied by appropriation of  compensation, Authorities to reconsider waiver application. <\/strong><br \/>\n  The&nbsp; application for waiver of interest liability  of Rs.8,54,476 under section 220(2A) of the IT Act, 1961, was rejected and  subsequently the entire interest liability of the assessee was satisfied by  appropriating amounts from out of Rs.18,06,402 remitted by a corporation which  was due to the assessee in a land acquisition proceedings. The reasons for  rejecting the application were (i) that the assessee did not produce any proof  that he had no other business or source of income, and (ii) there had not been  any co-operation extended to the Department during the recovery proceedings. On  a writ petition&nbsp;&nbsp; the Court held that the  assessee&nbsp; prima facie, proved by the fact  that the entire properties of the assessee were under attachment and that the  entire liabilities were subsequently cleared by making appropriation of the  compensation. Therefore, the order rejecting the application could not be  sustained. Commissioner&nbsp; directed to pass  the order according to law.<br \/>\n  <strong>Anto  Nitto v.CIT [2013] 350 ITR 305(Ker.)(High Court)<\/strong><br \/>\n  <strong>S.220: Collection and recovery-Interest-Waiver-Partial  waiver can be given.<\/strong><br \/>\n  &nbsp;In a writ  petition filed in the High Court the Court held that section 220(2A) of the  Income-tax Act, 1961, is an incentive to defaulter\/Assessees to co-operate with  the Department and to remit the tax voluntarily at the earliest and, therefore,  compliance should be rewarded by taking a liberal view and approach. The  Commissioner or the Chief Commissioner need not always waive the amount of  interest in full but can grant waiver or reduction partially. What is indicated  by the provision is that relief to be granted under section 220(2A) should be  proportionate to the extent of satisfaction of the conditions stated therein.  In other words, if the conditions are partially satisfied the assessee should  be given partial relief, i.e., partial waiver which should be in proportion to  the extent of satisfaction of the conditions and Application for stay of recovery proceedings cannot be construed as  non-co-operation as entire arrears paid within six months, partial relief under  section 220(2A) granted. The Writ petition was allowed.( A. Y.2006-2007  )<br \/>\n  <strong>Arun Sunny v. Chief CIT [2013] 350 ITR  147(Ker.)(High Court)<\/strong><br \/>\n  <strong>S.220: Collection and  recovery-Interest-Rejection of waiver application for&nbsp; interest held to be justified.<\/strong><br \/>\n  Assessee  partner in two firms and having substantial agricultural income. Assessment was  necessitated on account of addition to taxable income of firm of which assessee  was a partner. Assessee not satisfying conditions. Payment of interest would  not cause genuine hardship&nbsp; Rejection of  application for waiver of interest was held to be justified<br \/>\n  <strong>K. C. Mohanan vChief CIT( 2013) 350 ITR 461(  Ker)(High Court)<\/strong><br \/>\n  <strong>S.234A: Advance tax &ndash; Interest &#8211; Waiver  of interest &#8211; Commissioner waiving one-third of interest &#8211; No further waiver of  interest (S.234B )<\/strong><br \/>\n  That interest under sections 234A and  234B could be waived by the Chief Commissioner, only if the conditions  specified in Notification F. No. 400\/29\/2002-IT (B), dated June   26, 2006, are  satisfied. The first condition requires seizure of documents in search and  seizure operations and the second condition was applicable only where interest  is charged under section 234C. The third condition was applicable only in cases  where the statute has been amended retrospectively and the fourth condition was  applicable only where the return is filed voluntarily. None of these grounds  were applicable and in spite of this, one-third of the interest had been waived  up to the assessment year 1992-93. Since the conditions specified in the  notification were not available, the assessee could not seek waiver of interest  levied under sections 234A and 234B. Therefore, the order rejecting waiver of  interest had to be sustained.<br \/>\n  <strong>K. C. Mohanan v. Chief CIT (2013) 350 ITR 461 (Ker)(High  Court)<\/strong><br \/>\n  <strong>S.234B: Advance tax &ndash; Interest  &#8211; Notice of demand &#8211; Specific order-Levy of interest was deleted. (S.156) <\/strong><br \/>\n  Interest  under section 234B cannot be charged in notice of demand issued under section  156 in absence of any specific order demanding interest in assessment,  reassessment or rectification order. (A.Y. 1996-97)<br \/>\n  <strong>CIT v.Ruchira Papers Ltd. (2013) 212 Taxman 9 (HP)(High  Court)<\/strong><br \/>\n  <strong>S.234C: Advance tax &ndash; Interest &ndash; Mandatory  &#8211; Waiver of interest &#8211; Assessee not filing application for waiver of interest  hence no opinion could be expressed whether assessee&#8217;s case is covered by  circulars.<\/strong><br \/>\n  During the assessment year 2004-05,  the assessee contended that its principal informed it by letter dated November   4, 2004, that  it was entitled to the additional incentive of Rs. 6,07,44,583. The incentive  was paid in view of the sale of Rs. 636 crores in the previous year 2003-04 in  which the growth of 9.8 per cent. over the last year was recorded. Prior  thereto, the assessee was not aware that the income towards the growth  incentive would become payable and could not have presumed that it would be  entitled to the substantial payment towards growth incentive before the letter  dated November 4, 2004, was received by it. The assessee had  paid the advance tax of Rs. 1.25 crores on December 14, 2004. The Tribunal upheld the interest  charged by the Assessing Officer under section 234C amounting to Rs. 4,17,074.  On appeal Held, dismissing the appeal, that the Central Board of Direct Taxes  had issued circulars in this regard and the Chief Commissioners and the  Director General have been given power to reduce the interest payable under  sections 234A, 234B and 234C in specified and specific cases. Since the  assessee had not filed any application no opinion could be expressed whether  the assessee&#8217;s case was covered under the circulars. If deemed appropriate, the  assessee could make an application. (A.Y<strong>.<\/strong>2004-2005)<br \/>\n  <strong>Bill and Peggy Marketing India Pvt. Ltd. v. ACIT  (2013) 350 ITR 465(<\/strong><strong>Delhi<\/strong><strong>)(High Court)<\/strong><br \/>\n  <strong>S.244: Interest &#8211; Interest on refund &ndash;  Intimation &ndash; DTAA &ndash; <\/strong><strong>India<\/strong><strong> &ndash; <\/strong><strong>France<\/strong><strong> [S.143(1)].<\/strong><br \/>\n  Interest  assessable in year in which refund granted and not in year in which proceedings  under section 143(1)(a) attain finality.If interest reduced on account of  assessment under section 143(3) reduced interest to form part of income of that  year.Assessing Officer to adopt rate at which interest on income-tax refund  charged under Double Taxation Avoidance Agreement between India and France. (A.Y.1997-1998)<br \/>\n  <strong>Asst. DIT (IT) v. Credit Agricole Indosuez [2013]  21 ITR&nbsp; 345(Mum.)(Trib.)<\/strong><br \/>\n  <strong>S.253: Appeal &#8211; Appellate Tribunal &#8211; Duty of  Tribunal &#8211; Duty to examine facts carefully.<\/strong><br \/>\n  That the order of the Tribunal did not disclose the facts considered on the  basis of which it arrived at the conclusion in respect of the fixed deposits  made by the friends and relatives of the managing director to the tune of Rs.  21,60,000. Admittedly, reasons are the links between the materials on which  certain conclusions are based on the actual conclusions. In the absence of  reasons based on consideration of facts by the Tribunal in the order to support  its conclusion as regards the fixed deposit receipts of Rs. 21,60,000 its order  could not be sustained. Matter remanded.<br \/>\n  <strong>Hastalloy India Ltd. v. Dy. CIT&nbsp; (2013) 350 ITR 52(AP) (High Court) <\/strong><br \/>\n  <strong>S.254(1): Appellate Tribunal &ndash; Order &#8211; Duty of Tribunal to give  its own reason.<\/strong><br \/>\n  The Court observed that&nbsp;  there was no discussion in the order of the Tribunal about the  respective arguments of the parties. It did not contain the points for  determination and its findings thereon. Even an order of affirmation by a higher  authority requires that the authority should give its own reasons, may be, in  brief for its concurrence with the order appealed. The Tribunal is under a  legal obligation to record its own finding on the submissions of the parties,  may be in brief, depending upon the facts and circumstances of the case. But if  it does not contain any reason such an order is no order in the eyes of law and  cannot be allowed to stand. In the opening portion of the order, the Tribunal  noticed the grounds raised by the assessee in the memo of appeal. It had taken trouble  to reproduce them but left them undecided. Definitely, the case merited a  different treatment at the hands of the Tribunal. (A.Y. 1991-1992 )<br \/>\n  <strong>Abhyudaya  Pharmaceuticals v. CIT( 2013) 350 ITR 358 (All) (High Court)<\/strong><br \/>\n  <strong>S.254(1):Appellate Tribunal-Powers &#8211; Additional  evidence &#8211; No power to declare retrospective effect of amendment.-Additional  evidence after hearing is also permissible. (Appellate Tribunal) Rules 1963  Rule 29)<\/strong><br \/>\n  The Tribunal has no power  to declare retrospective effect of amendment unconstitutional The Tribunal  suomotu require additional evidence even after conclusion of hearing .(A.Y.  2007-08)<br \/>\n  <strong>L.G. Electronics India P. Ltd. v. ACIT (2013) 140  ITD 41 \/ 22 ITR 1\/83 DTR 1\/152 TTJ 273 (SB)(<\/strong><strong>Delhi<\/strong><strong>)(Trib.) <\/strong><\/p>\n<p><strong>S.260A: Appeal-High  Court-Substantial question of law-Meaning-Principle of consistency in tax  matters.<\/strong><br \/>\n  An  appeal under section 260A of the Income&ndash;tax Act 1961, will lie before the High  Court if the appellant is able to satisfy the Court that it involves a substantial  question of law. In order to be substantial, a question of law must be  debatable, not previously settled under the law of the land or binding  precedent, and must have a material bearing on the decision of the case, if  answered either way ,in so far as the rights of the parties before it are  concerned. The High Court in exercise of its second appellate jurisdiction  should normally accept all findings of facts recorded by the first appellate  court, being form of facts. Adequacy of materials or possibilities of another  view on facts, is no ground for High Court to entertain a second appeal. The  High Court can on facts&nbsp; interfere only  after it reaches the conclusion that, in view of the materials on record , no  person duly instructed in law can reach that conclusion.&nbsp;&nbsp;&nbsp;&nbsp;<br \/>\n  <strong>Dy.  CIT v. Sulabh International Social Service Organisation (2013) 350 ITR 189 (<\/strong><strong>Patna<\/strong><strong>) (High Court)<\/strong><br \/>\n  <strong>S.263: Commissioner &#8211; Revision of  orders prejudicial to revenue &#8211; Error of Assessing Officer should be  &quot;unsustainable&quot;-Disallowance under section 14A, debatable, hence  revision held to be&nbsp;&nbsp; not warranted. (S.10(33),  14) <\/strong><br \/>\n  Whether the deduction under section  14A was warranted, was a debatable fact. In any event, even if it were not  debatable, the error by the Assessing Officer was not  &quot;unsustainable&quot;. Possibly he could have taken another view; yet, that  he did not do so, would not render his opinion an unsustainable one, warranting  exercise of section 263.(A. Y. 2002-2003)<br \/>\n  <strong>CIT v. DLF Ltd. (2013) 350 ITR 555 (<\/strong><strong>Delhi<\/strong><strong>)(High Court)<\/strong><br \/>\n  <strong>S.263: Commissioner-Revision  of order prejudicial to revenue-Non-residents &#8211; Mineral oil, business for  prospecting\/exploration, etc. (S.44BB)<\/strong><br \/>\n  Where  Assessing Officer did not analyse as to whether payment received by assessee  was in respect of services rendered or facilities provided in connection with  prospecting for extraction or production of mineral oils or it was received  only by way of sale price of goods\/materials sold by assessee, may be outside  India and, thus, there was failure on part of Assessing Officer to ascertain  whether said revenue would or could come under provisions of section 44BB,  Commissioner rightly revised said order under section 263.Appeal of assessee  was dismissed. (A.Y.2006-07)]<br \/>\n  <strong>M-I Overseas Ltd. v.DIT (IT) [2013] 212 Taxman  190 (Uttarakhand)(High Court)<\/strong><br \/>\n  <strong>S.263: Commissioner &#8211; Revision  of order prejudicial to revenue &#8211; Business expenditure -Capital or revenue &#8211; Revision  held to be not justified.<\/strong><br \/>\n  Assessee  paid certain amount towards regulatory fee and stamp duty and claimed deduction  of same as a revenue expenditure. Assessing Officer allowed claim of deduction.  Commissioner issued on assessee a notice under section 263 stating that license  fee, loan arrangement charges and stamp duty were capital expenditure.  Assessing Officer before passing assessment order made an enquiry and directed  his mind on all aspects. View adopted by him was clearly one among two  plausible views that could have been taken. Commissioner did not specifically  furnish any reasons to say why original assessment order was unsupportable in  law .Commissioner could not have validly exercised his revisionary power under  section 263 in instant case.(A.Y. 2004-05)<br \/>\n  <strong>CIT v.Vodafone Essar South Ltd. (2013) 212 Taxman 184 (<\/strong><strong>Delhi<\/strong><strong>)(High  Court)<\/strong><br \/>\n  <strong>S.263: Commissioner &#8211; Revision of  order prejudicial to revenue &#8211; Capital gains &ndash; Exemption &ndash; Investment in bonds  &ndash; Beyond Prescribed time limit&nbsp; &#8211; As no  evidence to justify the delay, order under section 263&nbsp; was held to be justified. (S.54EC.)<\/strong><br \/>\n  Assessee  sold agricultural land&nbsp; on 10-1-2006 and invested the sale  consideration in Rural Electrification Corporation Ltd. bonds&nbsp; on 27-1-2007 which is beyond the prescribed  time limit. The assessee claimed exemption u\/s.54EC. The claim was allowed by  the Assessing Officer&nbsp; under section  143(3). Commissioner under section 263 directed the Assessing Officer to  disallow the claim. The Assessee filed an appeal before the Tribunal .The  assessee submitted that delay was due to unavailability of applied forms.  However, it was held that there was no evidence to show that assessee had  applied for bonds but due to their unavailability, failed to invest within  time. The Tribunal also held that it could be accepted that the time-limit for  investment extended by Notification up to 31-12-2006 can&nbsp; be stretched up to 27-01-2007&nbsp;  by exercising jurisdiction under the Act. Hence, in the view of above  stated legal position withdrawal of exemption u\/s 54EC by commission was  justified. Note: Notification No.&nbsp; S.O.  2146(E) dated 22\/12\/2006.&nbsp;&nbsp; (A.Y. 2006-07)<br \/>\n  <strong>Anuradha Venkatesan (Smt) v. ITO  (2013) 140 ITD 421 (Chennai)(Trib.) <\/strong><br \/>\n  <strong>S.251: Commissioner (Appeals) &ndash; Powers  &ndash; Revision &#8211; Commissioner under section 264 has no power to pass an order  prejudicial to assessee, issues which are not subject matter of revision under  section cannot be enhanced by the Commissioner (Appeals)(S.35AB, 264)<\/strong><br \/>\n  The  Assessing officer allowed the claim of assessee for deduction under section  35AB in respect of technical know- how&nbsp;  fees. The Assessee filed petition under section 264 in respect of claim  under section 80IB which the assessee had omitted to make in the original  return. Commissioner restored the issue regarding allowability of claim under  section 80IB of the Act to the Assessing Officer .Assessing Officer in fresh  assessment proceedings disallowed the claim under section 80IB. On appeal the  Commissioner (Appeals) suomotu disallowed the claim under section 35AB.In  appeal before the Tribunal it was argued that Commissioner (Appeals) could not  have consider the deduction under section 35AB which is beyond his  jurisdiction. The Tribunal held that the Assessing Officer&nbsp; was correct in not considering any issue  other than the claim of deduction under section 80IB&nbsp; made by assessee in the application&nbsp; under section 264&nbsp; before Commissioner&nbsp; as he had no such jurisdiction. No&nbsp; doubt it is true that Commissioner (Appeals)  while deciding an appeal has plenary power and can also consider any issue&nbsp; which has been omitted by&nbsp; the Assessing Officer. On the facts the  Commissioner (Appeals) can not consider any issue which is beyond the  jurisdiction of Assessing Officer .In the fresh Assessment proceedings the  Assessing Officer had no jurisdiction to consider any issue other than the  claim under section 80IB&nbsp;&nbsp; and therefore,  it cannot be said that in not considering the claim of deduction under section  35AB, the Assessing Officer had failed to do something which was necessary in  the assessment. Commissioner (Appeals) has no power to act on which the  Assessing Officer has&nbsp;&nbsp; no jurisdiction.  Accordingly the order of Commissioner (Appeals) was set aside on this issue. (A.Y.2003-04)<br \/>\n  <strong>Hindustan Colas Ltd. v. ACIT  (2013) 140 ITD 277\/151 TTJ 421 (Mum.)(Trib.)<\/strong><br \/>\n  <strong>S.269SS: Deposits &#8211; loans &#8211; Mode  of repayment &#8211; Penalty was deleted. (S.269T, 271D, 271E)<\/strong><br \/>\n  Assessing  Officer found that assessee-hostel had accepted and repaid amounts of  loans\/deposits otherwise than by cross &#8211; cheques \/ drafts in contravention of  provisions of sections 269SS and 269T. Assessee contended that some expenditure  was incurred by hostel or school students and amount was reimbursed to hostel  by managing trustee of school, and it did not become a deposit or loan given or  taken by way of cash. It therefore contended that there was no contravention of  provisions of sections 269SS and 269T and they were not liable to pay penalty  under sections 271D and 271E. Assessing Officer did not accept submission of  assessee and imposed penalty under sections 271D and 271E, respectively. Since  there was nothing on record to show that above transactions were attached with  certain conditions or stipulation as to period of repayment, rate of interest,  manner of payment, etc., so as to treat transactions as loan or deposits,  penalty could not be levied upon assessee. Appeal of revenue was dismissed.<br \/>\n  <strong>ITO v. V S Hostel&nbsp; (2013) 212  Taxman 61 (Mag.)(Guj.)(High Court)<\/strong><br \/>\n  <strong>S.271(1)(c): Penalty-Concealment- Survey-Surrender  of income without explanation attracts penalty. (S.133A)<\/strong><strong> <\/strong><br \/>\n  A survey u\/s.133A was conducted on the assessee&rsquo;s  premises in the course of which certain documents belonged to certain entities  who had applied for shares in the assessee company were found. The AO called  upon the assessee to prove the nature and source of the monies received as  share capital, the creditworthiness of the applicants and the genuineness of  the transactions. The assessee offered Rs. 40.74 lakhs as income from other  sources &ldquo;to avoid litigation and to buy peace&rdquo;. It was made clear that in  making the surrender, there was no admission of concealment. The A.O. completed  the assessment by adding the said sum and levied penalty u\/s 271(1)(c) for  furnishing inaccurate particulars of income u\/s. 271(1)(c). This was upheld by  the CIT(A) though reversed by the Tribunal (included in file) on the ground  that there was no material to show any concealment and even in the penalty  order it was not specified as to the particular credit in respect of which the  penalty was being imposed. It was also emphasized by the Tribunal that the  assessee had made it clear while surrendering that there was no admission of  concealment and that the offer was made in a spirit of settlement. On appeal by  the Department to the High Court, HELD reversing the Tribunal:<\/p>\n<p>When the AO called upon the assessee to produce  evidence as to the nature and source of the amount received as share capital,  the creditworthiness of the applicants and the genuineness of the transactions  the assessee simply folded up and surrendered the sum of Rs. 40.74 lakhs by  merely stating that it wanted to &ldquo;buy peace&ldquo;. In the absence of any explanation  in respect of the surrendered income, the first part of clause (A) of  Explanation 1 to s. 271(1)(c) is attracted because the nature and source of the  amount surrendered are facts material to the computation of total income. The  absence of any explanation regarding the receipt of the money, which is in the  exclusive knowledge of the assessee leads to an adverse inference against the  assessee and is statutorily considered as amounting to concealment of income  under the first part of clause (A) of the Explanation to s. 271(1)(c) and  penalty has to be levied.<br \/>\n    <strong>CIT v. MAK Data Ltd (<\/strong><strong>Delhi<\/strong><strong>)(  High Court)www.itatonline.org. <\/strong><br \/>\n    <strong>S.271(1)(c): Penalty &#8211; Concealment  &#8211; &nbsp;False claims &#8211; Levy of penalty was  held to be justified. <\/strong><br \/>\n  An  amount was Rs 10.81 lakhs was paid to PM (P) Ltd which was assessees sister  concern. These payments were made through&nbsp;  a debit note raised at the close of the year. Tribunal has given the  finding that&nbsp; no such amounts were paid.  This finding of&nbsp; Tribunal was accepted by  assessee . On appeal by the assessee against the confirmation of penalty the  court held that where Tribunal had reached a finding of fact that appellant had  filed inaccurate particulars regarding its income by showing false\/exaggerated  expenses, it would be concluded that there was a concealment of income on part  of appellant, leading to imposition of penalty under section 271(1)(c) upon  appellant .Appeal of assessee was dismissed..(A.Y.1989-90)<br \/>\n  <strong>Sanghvi Swiss Refills (P.)  Ltd. <em>v. ACIT <\/em>(2013)81 DTR 40\/ 212 Taxman 66 (Mag.) (Bom.) (High Court)<\/strong><br \/>\n  <strong>S.271(1)(c): Penalty &ndash;  Concealment-As there was no clarity on law levy of penalty was held to be not  justified. [S.78(2), 170(1)]<\/strong><br \/>\n  Assessee  succeeded to business of a partnership firm by way of family settlement. He  claimed set off of losses of erstwhile firm. Claim of assessee was disallowed  by Assessing Officer, Commissioner and Tribunal on ground that section 78(2)  did not entitle assessee to set off losses. High Court however, held that such  claim was not allowable in view of section 170(1). Meanwhile, penalty was  imposed on ground that assessee had made a false claim .High Court, on appeal,  noted that there was absolutely no discussion of section 170 in order of  Commissioner (Appeals) and Tribunal which was applicable provision as regards  succession. Moreover, Assessing Officer as also Commissioner (Appeals) was  under misapprehension that assessee was not a successor .There was lack of  clarity by income-tax authorities right up to Tribunal itself and, hence,  imposition of penalty was not warranted. Appeal of assessee was allowed.<br \/>\n  <strong>Pramod Mittal v.CIT [2013] 212 Taxman 64  (Mag.)(<\/strong><strong>Delhi<\/strong><strong>)(High  Court)<\/strong><br \/>\n  <strong>S.271(1)(c): Penalty  &ndash;Concealment- AOP- Deletion of penalty held to be justified.(S.167B)<\/strong><br \/>\n  Assessee,  an AOP, was constituted for carrying on business of procuring orders on behalf  of RIL for supply of purified trephthalic acid. In respect of assessment years  in question, assessee filed a return of income at nil. During course of  assessment proceeding, assessee was required to explain as to why income should  not be charged to tax in hands of AOP by applying provisions of section  167B(2). According to assessee, it had distributed profit amongst its members  as per their respective shares which were defined in joint venture agreement  and all of them had shown their respective shares as income under provisions of  section 167A, and, therefore, section 167B(2) was not applicable. Assessing  Officer rejected assessee&#8217;s explanation and assessed entire income in hands of  AOP under section 167B(2).On second appeal, Tribunal referred matter to Special  Bench which upheld order passed by Assessing Officer. Thereupon, Assessing  Officer taking a view that assessee had deliberately shown income in hands of  members of AOP in order to evade taxes, passed a penalty order under section 271(1)(c).Tribunal,  however, set aside penalty order. On revenue&#8217;s appeal, it was noted that when  assessee had filed nil return, there were two views possible inasmuch as  Tribunal itself was in doubt as to which of two views were to be preferred and  it was for this very reason that Tribunal had passed referral order requiring  matter to be considered by a Special Bench. In view of above, it could not be  said that assessee could not have had such a doubt in its mind when it had  indeed filed its return. Therefore, Tribunal was justified in setting aside  penalty order. Appeal of revenue was dismissed. (A.Y.2003-04,2004-05).<br \/>\n  <strong>CIT  v.<\/strong><strong>Pradeep Agencies Joint Venture&nbsp; (2013) 212 Taxman 72 (Mag.)(<\/strong><strong>Delhi<\/strong><strong>)(High  Court)<\/strong><br \/>\n  <strong>S.271(1)(c): Penalty &ndash; Concealment  &#8211; No explanation was filed &#8211; Penalty was held to be justified. [S.94(7)].<\/strong><br \/>\n  Assessee-company  engaged in business of sale and purchase of shares claimed certain loss on sale  of shares. Assessing Officer disallowed amount for not complying with  provisions of section 94(7) and assessed it as income of assessee. Assessing  Officer, thereafter imposed penalty under section 271(1)(c).On appeal,  Commissioner (Appeals) deleted penalty but on appeal by revenue Tribunal  reversed order of Commissioner (Appeals).When assessee-company had been  availing services of a chartered accountant and in spite of that no reply was  filed by it for non-compliance with provisions of section 94(7) while working out  income shown in income-tax return, Explanation 1 to section 271(1)(c) was  directly applicable and penalty was rightly imposed by Assessing Officer.  Appeal of assessee was dismissed. (A.Y. 2005-06 )<br \/>\n  <strong>VSB Investment (P.) Ltd. v. CIT<em> (<\/em>2013) 212 Taxman 59 (Mag.)(P&amp;H)(High  Court)<\/strong><br \/>\n  <strong>S.271(1)(c): Penalty &ndash;  Concealment &#8211; Revised return &#8211; After detection &#8211; Levy of penalty was justified. <\/strong><br \/>\n  Assessee&#8217;s  case was taken up for scrutiny and concealment of income had been detected by  Assessing Officer. Assessee filed revised return. An amount was surrendered on  ground of buying peace with department. However, it was a specific concealment  for a particular month which was detected by Assessing Officer and not a case  where addition was made in income on estimate and surmise. Since it was clear  case of concealment of income and furnishing of wrong particulars of income,  penalty was correctly imposed. Appeal&nbsp; of  assessee was dismissed.(A.Y..1993-94)<br \/>\n  <strong>Standard Hind Co. v. CIT(2013) 212 Taxman 74 (Mag.)(All.)(High Court)<\/strong><br \/>\n  <strong>S.271(1)(c): Penalty &ndash; Concealment &#8211; Transfer  pricing &#8211; Computation of ALP &ndash; Debate at the time of filing return as to  whether current year data can be used or multiple year data has to be used &ndash;  Assessee adopting multiple year data, bona fide exercise levy of penalty held  to be not justified. (S.92C)<\/strong><br \/>\n  Assessee, engaged in  providing market support services, returned nil income and computed arm&#8217;s  length price of its transactions on basis of multiple year data. TPO being of  opinion that current year data was to be used, added some comparables and made  transfer pricing adjustment. The Assessing Officer made addition to assessee&#8217;s  income and initiated penalty proceedings. It was held that where at time of  filing return, there was a legal debate as to whether current year data can be  used or multiple year data has to be used, assessee&#8217;s adopting multiple year  data was a bona fide exercise. The assessee acted in bonafide manner in  conducting its transfer pricing study and arriving at arm&rsquo;s length price . The  explanation is bonafide hence levy of penalty&nbsp;  under section 271(1)(c ) is not warranted.&nbsp; (A.Y. 2006-07)<br \/>\n  <strong>Verizon Communication <\/strong><strong>India<\/strong><strong> (P.)  Ltd. v. Dy. CIT (2013) 140 ITD 122 (<\/strong><strong>Delhi<\/strong><strong>)(Trib.)<\/strong><br \/>\n  <strong>S.271(1)(c): Penalty &ndash; Concealment &#8211; surrender of income &#8211; Levy of  penalty held to be valid. <\/strong><br \/>\n  During the course of assessment proceedings, the Assessing Officer  after obtaining details of creditors, issued notice under section 133(6) of the  Act to N and G. In the light of the details reflected in the copy of account of  the assessee received from these parties vis-a-vis the books of account of the  assessee, the Assessing Officer noticed differences. The assessee surrendered  the amount. Accordingly in terms of the surrender of the amount, the Assessing  Officer added the amount and initiated penalty proceedings under section  271(1)(c). This was upheld by the Commissioner (Appeals). On appeal to the  Tribunal&nbsp;&nbsp; held that&nbsp; as a result of enquiries made by the  Assessing Officer, the assessee did not reconcile the difference in the account  of the two parties and instead surrendered the amount as income of the year  under consideration. In the course of penalty proceedings, the assessee did not  bring any material before the Assessing Officer to rebut the inferences drawn  by the Assessing Officer in the course of assessment proceedings. The assessee  claimed before the Assessing Officer and the Commissioner (Appeals) that the  addition was accepted in order to purchase peace of mind and to bring an end to  the issue. But this explanation was tendered only after the Assessing Officer  confronted the evidence in the form of copies of account of the assessee in the  books of the two parties. Apparently, only when the assessee was cornered, the  assessee surrendered the amount. The surrender was not voluntary. The levy of  penalty was valid.(A. Y.2007-2008&nbsp; )<br \/>\n  <strong>Ajay  Jain v.ACIT [2013] 21 ITR 41 (<\/strong><strong>Delhi<\/strong><strong>)(Trib.)<\/strong><br \/>\n  <strong>S.271B: Penalty &ndash; Penalty &#8211; Failure  to get accounts&nbsp; audited &#8211; Business  Income &#8211; Tax Audit &#8211; Turnover &#8211; Online buying and selling of commodities being  speculative in nature not liable for penalty. (S.44AB)<\/strong><br \/>\n  Assessee  is engaged in online buying and selling commodities through commodity exchange,  as a speculative activity, wherein no physical delivery was taken or given,  total transaction booked with such commodity exchange could not be considered  as &lsquo;turnover&rsquo; for purpose of considering liability of assessee to get accounts  audited u\/s.44AB. Buying and selling the units&nbsp;  was a&nbsp; speculative transaction .No  delivery has taken place hence&nbsp;&nbsp; Levy of  penalty was deleted . (A.Y.2006-07)<br \/>\n  <strong>Banwari Sitaram Pasari HUF v.  ACIT (2013) 140 ITD 320 (Pune)(Trib.) <\/strong><br \/>\n  <strong>S.281B: Provisional  attachment- There is no provision in statute which gives preferential rights to  dues of State under Act. &#8211; (S.13(2) of the Securitization and Reconstruction of  Financial Assets and Enforcement of Security Interest Act, 2002.)&nbsp; <\/strong><br \/>\n  A  company availed loan from petitioner and mortgaged certain property to secure  loan advanced to it .Since said company defaulted in making payments of loan,  petitioner initiated proceedings under section 13(2) of the Securitization and  Reconstruction of Financial Assets and Enforcement of Security Interest Act,  2002.Thereupon, petitioner took possession over property and put it on sale.  Impugned property had been provisionally attached under section 281B with prior  approval of Commissioner and, it was on said basis, revenue claimed  preferential right to realize its dues being crown debt. There is no provision  in statute which gives preferential rights to dues of State under Act.  therefore, petitioner as secured creditor had preference over dues of  department in respect of secured assets. In view of aforesaid, instant writ  petition was to be disposed of with a direction to petitioner to remit any  excess amount, after adjusting its dues, to revenue being preferential creditor  amongst unsecured creditors. Writ petition of assessee was allowed.<br \/>\n  <strong>Axis Bank Ltd. v. CIT (2013) 212 Taxman 19 (Mag.)(P  &amp; H)(High Court)<\/strong> <\/p>\n<p><strong>S.281B: Provisional attachment  &#8211; Validity period &#8211; Extinguish after passing of assessment order. (S.144C) <\/strong><br \/>\n  Provisional  attachment order passed under section 281B and notices\/letters issued to bank  and sundry debtors of petitioner for not to make payment to petitioner would  cease to operate after passing of assessment order. Validity period of six  months of provisional attachment order would be extinguished after passing of  assessment order.(A.Y.2008-09)<br \/>\n  <strong>Motorola Solutions <\/strong><strong>India<\/strong><strong> (P.)Ltd. v. CIT [2013] 212  Taxman 35 (P &amp; H)(High Court)<\/strong><br \/>\n  <strong>S.292BB: Notice deemed to be valid in certain  circumstances &#8211; Reassessment-Section 292BB does not have retrospective effect. (S.143(2),  148)<\/strong><strong> <\/strong><br \/>\n  The AO issued a notice u\/s 148 to make a  reassessment. However, as a notice u\/s.143(2) was not issued, the Tribunal  quashed the reassessment. The Department filed an appeal before the High Court  where it relied on s. 292BB (which provides that the failure to issue notice  cannot be objected to if the assessee has appeared in the proceeding), inserted  by the Finance Act 2008 w.e.f. 1.4.2008 and argued that the said provision was  retrospective in operation and the reassessment was valid. HELD by the High  Court dismissing the appeal:<\/p>\n<p>The issue of a notice u\/s 143(2) is mandatory. The  failure to do so renders the reassessment void ( CWT v. HUF of&nbsp; H. H. Late Shri. <a href=\"http:\/\/itatonline.org\/archives\/?p=49\">J.M.Scindia<\/a> (2008) 300 ITR 193 (Bom.)  followed). S. 292BB was inserted w.e.f. 1.4.2008 and came into operation  prospectively for AY 2008 &ndash; 2009 and onwards.<br \/>\n    <strong>CIT v Salman Khan (Bom)(High Court) www.itatonline.org. <\/strong><br \/>\n    <strong>S.292C: Presumption as to  assets, books of account, etc. &nbsp;&#8211; Search  and Seizure &#8211; Addition on the basis of documents is held to be justified.<\/strong><br \/>\n  Pursuant  to a search at assessee&#8217;s premises, certain documents were found and one of  such documents contained working of interest at rate of 3 per cent on total sum  of Rs. 3 lakh . Assessee was directed to explain contents of document found  during course of search &#8211; Assessee explained that contents of said document  were rough working and no loan was given out. Assessing Officer rejected  assessee&#8217;s explanation and brought to tax principal amount of Rs. 3 lakh and  interest thereon. Commissioner (Appeals) and Tribunal confirmed order of  Assessing Officer. On basis of material recovered during search, lower  authorities had rightly drawn presumption in terms of section 292C .therefore,  impugned addition was to be confirmed. Appeal of assessee was&nbsp; dismissed. (A.Y.1998-99)<br \/>\n  <strong>Hiren Vasantlal Shah v. ACIT (2013) 212 Taxman 23 (Mag.)(Guj.)(High  Court)<\/strong> <\/p>\n<p>  <strong>Gift-tax Act, 1958<\/strong><br \/>\n  <strong>S.4(1)(c): Deemed gift &#8211; Revocable gift  of shares &#8211; Donor revoking gift but bonus shares continued with donee- Matter  remanded [S.11, 16(1)]<\/strong><strong> <\/strong><br \/>\n  The assessee owned 6000 shares of Hero  Cycles. On 20.02.1982, he executed a deed of revocable transfer in favour of  M\/s. Yogesh Chandra. The deed permitted the assessee to, after completion of 74  months from the date of transfer but before the expiry of 82 months from the  said date, exercise the power of revoking the gift. In other words, there was a  window of 8 months within which the gift could be revoked. The deed of  revocable transfer specifically stated that the gift shall not include any  bonus shares or right shares received and\/or accruing or coming to the  transferee from Hero Cycles by virtue of ownership of the said shares.  Effectively, therefore, only a gift of 6000 equity shares was made by the  assessee to the transferee. On 29.09.1982 &amp; 31.5.1986, the company issued  4000 and 10,000 bonus shares to the transferee. On 15.6.1988, the assessee  revoked the gift with the result that the 6000 shares gifted to the transferee  came back to the assessee. However, the 14,000 bonus shares allotted to the  transferee while it was the holder of the equity shares of the company  continued with the transferee. In AY 1982-83, the GTO relied on McDowell and  Co. Ltd. v. Commercial Tax Officer ( 1985)154 ITR 148 (SC) and held that the revocable  transfer was only for the purpose of reducing the wealth tax liability and was  void. He, however, made a protective gift-tax assessment. The Tribunal and the  High Court (CGT vs. Satya Nand Munjal  (2002) 256 ITR 516 (P&amp;H)) reversed the AO and held that a revocable  transfer was valid even if its object was to avoid wealth-tax. The assessee was  held liable to pay gift-tax u\/r 11 of the Gift-tax Act. In AY 1989-90 the AO  &amp; CIT(A) held that the 14,000 shares belonged to the assessee and as the  revocation was only with respect to the 6,000 shares and the 14,000 bonus  shares continued with the transferee, there was a chargeable gift to that  extent. The Tribunal reversed the AO &amp; CIT(A). On appeal by the department,  the High Court reversed the Tribunal and held that the assessee was liable to  gift tax on the value of the bonus shares gifted by him to the transferee  applying the principles of Escorts  Farms (Ramgarh) Ltd. v CIT (1996) 222 ITR 509 (SC). On appeal by the  assessee to the Supreme Court, held:<br \/>\n  The fundamental question is whether  there was in fact a gift of 14,000 bonus shares made by the assessee to the  transferee. The answer to this question lies in s. 4(1)(c) of the Gift-tax Act  which provides that &ldquo;where there is a release, discharge, surrender, forfeiture  or abandonment of any debt, contract or other actionable claim or of any  interest in property by any person, the value of the release, discharge,  surrender, forfeiture or abandonment to the extent to which it has not been  found to the satisfaction of the AO to have been bona fide, shall be deemed to  be a gift made by the person responsible for the release, discharge, surrender,  forfeiture or abandonment&ldquo;. On facts, the assessee had made a valid revocable  gift of 6000 equity shares in the company on 20.2.1982 to the transferee. The  only event that took place in AY 1989-90 was the revocation of the gift by the  assessee on 15.6.1988. The question whether the revocation of the gift of the  original shares in AY 1989-90 constitutes a gift of the bonus shares that were  allotted to the transferee on 29.09.1982 and 31.05.1986 requires to be answered  in the light of s.4(1)(c). The question of applicability of Escorts Farms has to be decided after  a finding is reached on the applicability of the first part of s. 4(1)(c)  (matter remanded).(A.Y.1989-90)<br \/>\n  <strong>SatyaNandMunjal v. CGT( 2013) 350 ITR  640\/256 CTR 121\/82 DTR 284(SC)&nbsp; <\/strong><br \/>\n  <strong>Om<\/strong><strong> PrakashMunjalv.CIT( 2013) 256 CTR 121\/82 DTR 284(SC)<\/strong><br \/>\n  <strong>S.16B: Revocable gift-Interest-Matter  remanded. <\/strong><br \/>\n  The High  Court held&nbsp; inter alia, that since  gift-tax was leviable on the revocable transfer of equity shares by the  assessee to Y , interest was liable to be paid&nbsp;  by the assessee&nbsp; on the gift -tax  levied. On appeal, the Supreme Court set aside the judgment of the High Court  and remanded the matters for fresh consideration&nbsp; on the merits of the case.(A.Y. 1989-90)<br \/>\n  <strong>Satya Nand Munjal v. CGT (2013) 350 ITR  649\/256 CTR 127\/82 DTR 275(SC) <\/strong><br \/>\n  <strong>&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;<\/strong><br \/>\n  <strong>Interest &ndash;tax Act,  1974.<\/strong><br \/>\n  <strong>S.2(5): Interest &ndash;Credit  institution.-Chargeable interest. <\/strong><br \/>\n  Interest  tax collected by a credit institution cannot partake character of chargeable  interest and, thus no interest tax would be exigible on it.<br \/>\n  <strong>CIT v. Haryana Financial Corpn. (2013) 212 Taxman 25 (Mag.)  (P&amp;H) (High Court)<\/strong><br \/>\n  <strong>S.2(5): Interest &#8211; Non banking  financial institution &#8211; Financial transaction &#8211; Hire purchase &ndash;Matter remanded.<\/strong><br \/>\n  Tribunal  has remitted the matter to original authority to have a fresh look, in to  matter both aspect of relevance of board circular and judgment of Supreme Court  in case of Sundaram Finance v. State of Kerala, AIR 1966 SC 1178. Appeal of revenue was  dismissed.(A.Y.1998-99)<br \/>\n  <strong>CIT v. Standard Chartered  Finance Ltd ( 2013) 212 Taxman 24 (Mag.) (Karn.)(High Court)&nbsp;&nbsp; <\/strong><\/p>\n<p><strong>S.2(5B): Financial Company  -Lease charges-Discounting charges.<\/strong><br \/>\n  Where  factual aspect as to whether assessee was a financial company and whether  interest earned under three heads namely, lease charges, hire purchase charges  and bill discounting charges, were chargeable to tax under Interest-tax Act  being not clear, matter was to be remanded back to lower authorities for  reconsideration -Matter remanded.<br \/>\n  <strong>CIT v.Motor &amp; General Finance Ltd. (2013) 212 Taxman 76(  Mag.)(<\/strong><strong>Delhi<\/strong><strong>)(High  Court)<\/strong><br \/>\n  <strong>S.2(7): Interest &ndash;Finance  charges-Separate Accounts. <\/strong><br \/>\n  Assessee-bank  received finance charges in case of lease transactions entered into by it with  its customers where customers purchased machinery from finances provided by  assess. Assessing Officer held that amount received by assessee was liable to  interest tax. On appeal, Appellate Authorities held that amount collected by  assessee was hire purchase charges and not interest and, therefore, there was  no liability to pay tax as such. In view of concurrent finding of fact recorded  by Appellate Authorities, no case for interference was made out. Appeal of&nbsp; revenue was dismissed. When assessee had  maintained a separate account in respect of amounts collected from customers  towards interest-tax, amounts so collected by assessee were not &#8216;interest&#8217;  within meaning of section 2(7) and, hence, could not be treated as chargeable  interest. Appeal of revenue was dismissed.<br \/>\n  <strong>CIT <em>v. <\/em>Karnataka Bank  Ltd. (2013)212 Taxman 78( Mag.)(Karn.)(High Court)<\/strong><br \/>\n  <strong>S.10: Reassessment &ndash; Non &#8211; disclosure  of primary facts-Reassessment held to be valid. (S.8, 10A). <\/strong><br \/>\n  Assessee  filed return of chargeable interest voluntarily, which had not been processed \/  finalized by Assessing Officer. Later on, Assessing Officer issued a notice  under section 10 to reopen assessment on ground that certain interest chargeable  to tax had escaped assessment on account of non-disclosure by assessee.  Assessing Officer passed a reassessment order and brought to tax certain amount  of interest. Appellate authorities having found that Assessing Officer had not  processed original return filed by assessee within limitation period of two  years from end of assessment year under consideration, held that reopening of  assessment was barred by time. Situations may develop where Assessing Officer  may be inactive, may be indecisive or may be for justifiable reasons or  deliberately does not conclude assessment, but to hold or opine that even a  re-assessment is not possible in such situations will be virtually amounting to  re-writing contents of section 10 .Since a reopening is permitted even in a  situation where an assessment order is passed, but that has resulted in  escapement of some chargeable interest to tax, reopening is also permitted  where a return is filed, but no assessment order is passed within time  permitted for passing an assessment order under section 10A .Section 10 is a  specific enabling provision only to remedy such situations and only criteria is  escapement of such chargeable interest to tax for whatever reason may be; while  invoking section 10 it can only be within parameters mentioned in section 10  and not with reference to time stipulations provided for concluding an  assessment or passing assessment order under section 8.Reopening held to be  justified.(A.Y.1997-98).<br \/>\n  <strong>CIT  v. <\/strong><strong>Standard Chartered Finance Ltd.&nbsp;  (2013) 212 Taxman 79 (Mag.)(Karn.)(High Court)<\/strong><br \/>\n  <strong>&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;- <\/strong><br \/>\n  <strong>Wealth-tax Act, 1957<\/strong><br \/>\n  <strong>S.2(ea): Assets &ndash;Lease for 99  years-Used for the purpose of business-Land&nbsp;  is exempt.<\/strong><br \/>\n  &nbsp;Assessee had been allocated land in question  on 99 years lease by State Industrial Corporation. WTO denied exemption under  section 2(ea)(i)(3) and subjected land to wealth tax on ground that assessee  was not doing any business therefrom for last number of years. In fact it was  found that assessee had carried on its business utilizing aforesaid asset for  this purpose, and this position was even accepted by department as well.On  facts&nbsp; land in question held by assessee  was exempt from wealth-tax under section 2(ea)(i)(3).(A.Y.2001-02 to 2004-05)<br \/>\n  <strong><em>CIT v. <\/em><\/strong><strong>Sohna  Forge (P.) Ltd. [2013] 212 Taxman 82 (Mag.)(<\/strong><strong>Delhi<\/strong><strong>)(High  Court)<\/strong><br \/>\n  <strong>S.2.(ea): Assets-Surplus of income-Presumption-Exception-No  presumption -Addition of income from undisclosed sources in earlier years&nbsp; is not&nbsp;  treated as surplus available in assessee&#8217;s hands to be treated as wealth  for purpose of wealth-tax for&nbsp;  latter&nbsp; years.<\/strong><br \/>\n  The Income-tax Officer, for the assessment years 1985-86 to  1988-89, found that the total surplus available with the assessee by way of  income being Rs. 21,15,164 and the total wealth disclosed by the assessee being  Rs.97,25,000, the increase in the wealth was to the tune of Rs. 76,09,836. That  income of Rs. 76,09,836 was taken to be income from undisclosed sources. The  total available surplus available with the assessee during the assessment years  1973-74 to 1976-77 was declared to be Rs. 21,15,164 based on the assessed  income of the assessee for the three years. The Tribunal upheld the assessment.  On appeals :<br \/>\n  Held, dismissing the appeals, that the addition of Rs. 23,59,461  made from the assessment years 1963-64 to 1970-71 could not be held to be  assets in the hands of the assessee after the period of more than eight years  and, therefore, no tax could be imposed on the basis of such addition of Rs.  23,59,461 treating it to be wealth for the purpose of wealth-tax for the years  1985-86 to 1988-89 and onwards.(A. Y. 1985-1986, to 1988-1989)<br \/>\n  <strong>Gyan  Chand Jain v. CWT (2013) 350 ITR 353 (Jharkhand)(High Court)<\/strong><br \/>\n  <strong>S.4: Deemed wealth-Asset-&#8216;belonging  to&#8217;-Allotment of land-Liable to wealth tax.<\/strong><br \/>\n  Assessee  was allotted certain land by State Government. It constructed sheds thereon and  rented out same to industrialists. Assessing Officer observed that though  income from those sheds had been reflected in income of assessee, in return of  wealth tax aforesaid shed were not shown as &#8216;assets&#8217; of assessee. Assessing  Officer, therefore, added value of those sheds towards assets of assessee &#8211; On  appeal, Tribunal held that property in question could not be treated to be  assets of assessee since same had only been allotted to it and was actually  transferred in its favour in a later year.&nbsp;  Since assessee was deriving rental income from sheds, property should be  deemed to be belonging to assessee and was liable to be included in its assets.<br \/>\n  <strong>CIT  v.<\/strong><strong>H. P. Small Industries &amp; Export Corp. (2013)  212 Taxman 84 (Mag.) (HP.) (High Court)<\/strong><br \/>\n  <strong>S.5(i): Exemptions &#8211; Property  held by charitable and religious trust &ndash;Exemption is held to be available. <\/strong><br \/>\n  Assessee  trust was constituted with object to provide educational facilities in catering  .One &#8216;K&#8217; transferred movable and immovable properties of hotel &#8216;V&#8217; to  assessee-trust for providing catering education therein .Said transfer was  treated as gift in hands of &#8216;K&#8217; but on appeal levy of gift tax was set aside by  Tribunal holding that there was no gift and it was only a permission granted  for a college to manage same free of rent. In case of assessee, Assessing  Officer treated assets of hotel &#8216;V&#8217; as assessee&#8217;s wealth and computed wealth  tax liability payable by assessee .when assessee was not liable to pay any  income-tax on income derived by it from activity carried on by it and &#8216;K&#8217; was  held not liable to pay gift-tax for transfer of property in assessee&#8217;s favour,  levy of wealth tax on very same property on ground that activity conducted by  assessee in respect of property did not constitute a charitable or religious  purpose was unjustified. Appeal of revenue was dismissed.(A.Y. 1986-87)<br \/>\n  <strong>CIT  v.<\/strong><strong>Manipal<\/strong><strong> <\/strong><strong>Hotel    &amp; Restaurant<\/strong><strong> <\/strong><strong>Management<\/strong><strong> <\/strong><strong>College<\/strong><strong> Trust&nbsp; [2013] 212 Taxman 86  (Mag.)(Karn.)(High Court)<\/strong><br \/>\n  <strong>S.7: Valuation of assets &#8211;  Immovable property &ndash; Let out property &#8211; Interest free deposits-Annual  rent-Addition was up held:<\/strong><br \/>\n  Assessee  let out its property on annual rent of Rs. 4.42 lakhs. It also received  interest free deposits of Rs. 31.50 lakhs from tenant &#8211; While computing fair  market value of property let out, Assessing Officer added interest at rate of  14 per cent on Rs. 31.50 lakhs to figure of annual rent. Commissioner (Appeals)  as well as Tribunal held that interest amount could not be added to annual rent  to compute fair market value of property. It is undisputed that as per Schedule  III, rule 5, where an owner has accepted an amount or deposit, not being an  advance payment towards rent for a period of 3 months or less, an amount  calculated at rate of 15 per cent per annum on amount of deposit outstanding  from month to month shall be added to compute annual rent. In view of  aforesaid, computation made by Assessing Officer by adding interest on security  deposit to figure of annual rent was to be upheld. Appeal of revenue was up  held.&nbsp; (A.Y.1985-86 to 1987-88)<br \/>\n  <strong>CWT v.M G Builders Co. (2013) 212 Taxman 15 (Mag.) (<\/strong><strong>Delhi<\/strong><strong>) (High  Court)<\/strong><br \/>\n  <strong>S.7: Value of assets &#8211;  Immovable property &#8211; Slums on property has to be considered for the purpose of  valuation of property. <\/strong><br \/>\n  Assessee  acquired 50 per cent of share in a property. He acquired same under registered  sale deed .AAC accepted valuation of assessee whereunder apart from  consideration mentioned in sale deed and market value of the property,  impediments like ownerships slums on property were also taken into  consideration in coming to fair market value. On appeal, Tribunal declined to  interfere with finding recorded by AAC .On facts, valuation accepted by  Tribunal was just and proper and represented true market value of property.  (A.Y.1996-97 to 2003-04)<br \/>\n  <strong>CIT v. S.K. Ramprasad&nbsp; (2013)  212 Taxman 15 (Mag.)(Karn.)(High Court)<\/strong><br \/>\n  <strong>S.16: Assessment &ndash;Notice-  Reassessment-Order passed without issuing mandatory notice held to be in valid.  (S.16(2), 16(4), 17) <\/strong><br \/>\n  A  notice under section 17 was issued to assessee on ground that authority had  reason to believe that wealth had escaped assessment &#8211; Assessee did not file  any return, in response to said notice. Assessing Authority issued a notice  under section 16(4) calling upon assessee to produce accounts books and other  documents for verification. Instead of producing books as sought for in said  notice, assessee filed returns under section 16(4)(i).Thereafter, Assessing  Authority passed assessment order .Assessee challenged said order before  Appellate Commissioner on ground that notice under section 16(2) was not issued  before passing an order of assessment which was mandatory. Appellate  Commissioner taking a view that notice issued under section 16(4) would satisfy  requirement of law as well as principles of natural justice, dismissed  assessee&#8217;s appeal. On further appeal, Tribunal held that impugned order of  assessment passed without complying with requirement of section 16(2) was  invalid. On appeal by revenue the Court held that since Assessing Officer had  neither given a notice under section 16(2) nor a notice as contemplated in  proviso to section 16(5) and passed impugned order, order so passed was  violative of principles of natural justice , therefore, Tribunal was justified  in setting aside impugned assessment order.(A.Y.1999-2000 to 2003-04)<br \/>\n  <strong>CWT v. Prameela Krishna (Smt) (2013) 212 Taxman 16 (Mag.)  (Karn.)(High Court)<\/strong><br \/>\n  <strong>S.24: Appellate Tribunal  &ndash;Power- Appeal-Rectification of mistake-No power to review.<\/strong><br \/>\n  Assessee  is an individual belonging to royal family of Patiala. In course of wealth-tax proceedings, department  had bifurcated residential land bounded by four walls of property into  different segments and adopted different rates of land . On appeal, Tribunal  considered facts of case and proceeded to hold that value of residential house  and land appurtenant to residential house might be valued as per provisions of  section 7(4). However, in same order, Tribunal proceeded to hold that  classification of land into different categories, area of land and valuation of  land, was fair and reasonable . In view of apparent contradictions in  Tribunal&#8217;s order, assessee filed a miscellaneous application .Tribunal thus  recalled its order for a limited purpose of determining valuation of land  appurtenant to residential house in question. Subsequently, Tribunal concluded  that there was no contradiction in findings recorded On facts, approach adopted  by Tribunal in impugned order smacked review of earlier order. therefore,  impugned order was to be set aside and, matter was to be remanded back with a  direction to Tribunal to reconcile figuring in earlier order instead of writing  a perfunctory order. Matter remanded (A.Y.1972-73 to 1984-85)<br \/>\n  <strong>Raja Malwinder Singh v. CWT (2013) 212 Taxman 17 (Mag.) (P  &amp; H)(High Court)<\/strong> <\/p>\n<p>  <strong>Excise and Customs.<\/strong><br \/>\n  <strong>Excise and Customs-Stay- Recovery-CBEC Circular  that demand should be recovered even if stay application is not disposed of for  no fault of assessee is arbitrary, unjustified &amp; unlawful-Digital data  records- For better administration and control to safe guard the interest of  revenue as well as fairness to assessees, Union of India Ministry of Finance  requested to give these suggestions serious and urgent consideration.<\/strong><strong> <\/strong><\/p>\n<p>The Central Board of Excise and Customs (CBEC)  issued <a href=\"http:\/\/www.itatonline.org\/info\/index.php\/cbec-circular-on-recovery-dated-01-01-2013-connected-legal-developments\/\" target=\"_blank\">Circular No. 967\/01\/  2013 &ndash; CX dated 01.01.2013<\/a> to deal with recovery of  demand. The Circular provided that (i) even if a stay application is pending,  steps for recovery must be initiated thirty days after the filing of the appeal  if no stay is granted, (ii) if the Commissioner (Appeals) has confirmed a  demand, recovery has to be initiated immediately despite s. 35F permitting the  assessee to move the Tribunal for a dispensation of the requirement of deposit  and (iii) if the Tribunal has confirmed the demand, recovery should be  initiated immediately despite the statute providing a time period for filing an  appeal to the High Court. The Circular was challenged by the assessees on the  ground that recovery of the demand even when the assessee is not responsible  for the delay in disposal of the stay application\/ appeal and during the  pendency of the time period for filing an appeal was arbitrary and violative of  Article 14 of the Constitution. Held by the High Court upholding the plea:<\/p>\n<p>(i) Though in Krishna Sales (Collector of Customs Bombay v. Krishna Sales (P)  Ltd.(1994) 73 ELT 519 (SC) it was held that the mere filing of an appeal does  not operate as a stay or suspension of the order appealed against, where the  delay in the disposal of an appeal or a stay application arises due to a  failure of the Appellate Authority to dispose of the appeal or the stay  application and the assessee is not at fault, there is no reason or  justification to penalize the assessee by recovering the demand in the  meantime. Administrative reasons for non-disposal of the stay application may  include lack of adequate infrastructure, unavailability of the officer  concerned before whom the stay application has been filed, absence of a Bench  before the CESTAT for the decision of an application for stay or the sheer  volume of work. In such a situation, where an assessee has done everything  within his control by moving an application for stay and which remains pending  because of the inability of the Commissioner (Appeals) or the CESTAT to dispose  of the application within thirty days, it would be a travesty of justice if  recovery proceedings are allowed to be initiated in the meantime. The  protection of the revenue has to be necessarily balanced with fairness to the  assessee. That was why, even though a specific statutory provision came to be  introduced by Parliament in s. 35C(2A) to the effect that an order of stay  would stand vacated where the appeal before the Tribunal was not disposed of  within 180 days, the Supreme Court held in COC &amp;C.Ex.(Ahd) v. Kumar Cotton Mills Pvt. Ltd.( 2005)  180 ELT 434 (SC) that this would not apply to a situation where the appeal had  remained pending for reasons not attributable to the assessee.<\/p>\n<p>(ii) Also initiation of recovery proceedings  without allowing the assessee, the time which is allowed by the statute for  filing an appeal and for applying for a waiver of pre-deposit or for filing an  appeal to the High Court is not justified. The circular is in terrorem and its  plain effect and consequence is to deprive the assessee of the remedy which is  provided under the law of moving, as the case may be, the CESTAT, the High  Court or the Supreme Court against an order of adjudication of the competent  appellate forum. There is no justification to commence recovery immediately  following an order in appeal where the limitation period for challenging the  decision of the Appellate Authority has not expired. The Circular is to that  extent patently arbitrary and violative of Article 14 of the Constitution. The  Department&rsquo;s argument that the field officers who initiate recovery action have  no means of verifying the status of the stay application is not justified. The  Ministry of Finance should take steps to ensure that proceedings before all the  authorities are recorded in the electronic form. This will provide transparency  and accountability in the functioning of all authorities. However, if the  failure to dispose of the stay application is because of the conduct of the  assessee, the revenue would be justified in commencing recovery action. <\/p>\n<p><strong>Larsen &amp; Toubro Limited v.  UOI(2013) (288) E.L.T. 481 (Bom.) (High Court) <\/strong> <\/p>\n<p><strong>Service  Tax .<\/strong><br \/>\n    <strong>Service tax &#8211; CBEC Circulars on CA&rsquo;s liability to  pay higher service tax rate on services rendered\/ invoice raised before  01.04.2012 but payment received thereafter is ultra vires.<\/strong><strong> <\/strong><br \/>\n  Rule 2(e) of the Point of Taxation Rules, 2011  inserted w.e.f. 01.04.2011 defined &ldquo;point of taxation&rdquo; as the point in time  when a service shall be deemed to have been provided. Consequent to the  insertion of s. 66B, the rate of service tax was enhanced from 10% to 12%  w.e.f. 01.04.2012. The High Court had to consider what would be the rate of tax  where (a) the service is provided by the chartered accountants prior to  01.04.2012 (b) the invoice is issued by the CAs prior to 01.04.2012 but (c) the  payment is received after 01.04.2012. On facts, as the services were rendered  before 01.04.2012 and even the invoices were raised before that date and it was  only that the payment was received after the said date, the Petitioner claimed  that Rule 4(a)(ii) of the Point of Taxation Rules, 2011 applies and the point  of taxation shall be the date of issuance of the invoice. However, the service  tax authorities issued Circular No.154 dated 28.03.2012 and <a href=\"http:\/\/www.itatonline.org\/info\/index.php\/clarification-on-service-tax-payable-where-invoice-raised-before-1-4-2012\/\">Circular No.158 dated 08.05.2012<\/a> that  in respect of invoices issued on or before 31st March 2012 the point of  taxation shall be the date of payment. The Petitioner filed a Writ Petition to  challenge the said Circulars. HELD by the High Court upholding the plea:<br \/>\n  Rule 4 of the Point of Taxation Rules, 2011 which  has continued even after 01.04.2012 is clearly the answer. It provides for a  specific situation namely determination of the point of taxation in case of  change in effective rate of tax. As per Rule 4, whenever there is a change in the  effective rate of tax in respect of a service, the point of taxation shall be  determined in the manner set out in the Rule. Sub-clause (ii) of Clause (a) of  Rule 4 provides that where the taxable service has been provided before  01.04.2012 and the invoice was also issued before 01.04.2012, but the payment  is received after 01.04.2012, then the date of issuance of invoice shall be  deemed to be the date on which the service was rendered and, consequently, the  point of taxation. The result is that where the services of the chartered  accountants were actually rendered before 01.04.2012 and the invoices were also  issued before that date, but the payment was received after the said date, the  rate of tax will be 10% and not 12%. The circulars in question have not taken  note of this aspect, and have proceeded on the erroneous assumption that the  old Rule 7 continued to govern the case notwithstanding the introduction of the  new Rule 7 which does not provide for the contingency that has arisen in the  present case. Consequently, the circulars are quashed as being contrary to the  Finance Act, 1994 and the Point of Taxation Rules, 2011. A Circular which is  contrary to the Act and the Rules cannot be enforced (<a href=\"http:\/\/itatonline.org\/archives\/index.php\/cce-vs-ratan-melting-supreme-court-5-judges\/\">Ratan  Melting &amp; Wire Industries<\/a> followed)<br \/>\n  <strong>Delhi<\/strong><strong> Chartered Accountants Society v. UOI (<\/strong><strong>Delhi<\/strong><strong>)(High  Court) www.itatonline.org <\/strong><br \/>\n  <strong>Allied Laws.<\/strong><br \/>\n  <strong>Service matter &#8211; Promotion of  income-tax Inspectors &#8211; Direct recruits &ndash; promotes.&nbsp; <\/strong><br \/>\n  where  examination and selection process of direct recruits could not be completed  within recruitment year itself, modification\/amendment in manner of determining  inter se seniority between direct recruits and promotees, carried out through  Office Memorandum dated 7-2-1986, and compilation of instructions pertaining to  seniority in Office Memorandum dated 3-7-1986 leave no room for any doubt that  &#8216;rotation of quotas&#8217; principle would be fully applicable to direct recruits.  Direct recruits will, therefore, have to be interspaced with promotees of same  recruitment year. Claim of promotees that direct recruit Income-tax inspectors  in such a case should be assigned seniority with reference to date of their  actual appointment in Income-tax Department; and not date of original\/first  examination\/selection, was to be declined.<br \/>\n  <strong>UOI <em>v. <\/em>N.R. Parmar&nbsp; [2013] 212 Taxman 97 (SC)<\/strong> <\/p>\n<p>  <strong>Interpretation of taxing statues.<\/strong><br \/>\n  <strong>Precedent- Judgment of Foreign  Courts- Persuasive value.<\/strong><br \/>\n  The  judgment of Foreign Courts have only persuasive value.<br \/>\n  <strong>L.G. Electronics India P. Ltd v.  ACIT (2013)140 ITD 41\/ 22 ITR 1\/83 DTR 1\/152 TTJ 273 (SB) (<\/strong><strong>Delhi<\/strong><strong>) (Trib.) <\/strong><\/p>\n<p>  <strong>Circulars<\/strong><br \/>\n  10 of 2012dated 31st   December, 2012(2013) 350 ITR  (ST) 31.<br \/>\n  Reg- Certificate Search  and seizure, 132, read with 153A, 153C etc.<br \/>\n  1 of 2013 dated 17th January,   2013 &#8211; Issues relating to  export of computer software &ndash;Direct tax benefits &ndash;Clarification (2013) 350 ITR  (St) 34. <\/p>\n<p>  Service  Tax-Circular no 967\/01\/2013 &ndash;CX. dt 1st&nbsp; January, 2013 &ndash;Recovery of confirmed demand during pendency of stay  application &ndash;Reg &ndash;(201) 255 CTR (Statutes) 25 <\/p>\n<p><strong>Income -tax Appellate Tribunal.<\/strong><br \/>\n  ITATs Practice note, dt 1st  Jan., 2013 &#8211; Section 255 of the IT&nbsp; Act,  1961&mdash;E. Bench-Procedure of-Practice note for hearing appeals &amp; applications  fixed before ITAT Allahabad Bench, Allahabad (2013) 255 CTR (Statutes ) 30<br \/>\n  ITAT&rsquo;s&nbsp; note on department&rsquo;s General Grienvances in  the matter of representation and adjudication of cases fixed before each bench  of ITAT&nbsp; Delhi (2013) 212 Taxman 102  (ST).<br \/>\n  Life centenary  celebration of Shri K. Sadgoplachari (Former president of ITAT) &ndash; Speech  Justice Sri&nbsp; S. Ranganthan (2013) 21 ITR  (Trib.)(Journal) P. 1<br \/>\n  <strong>&nbsp;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8211;&nbsp; <\/strong><br \/>\n  <strong>Articles-Sections.<\/strong><br \/>\n  S. 2(19AA): Demerger-  Some critical aspects of company and income tax laws by Dr. K.R. Chandatre  (2013) 255&nbsp; CTR (Articles)&nbsp; 65<br \/>\n  S.5(2)(b): Commission to  non-resident agents-Whether Accruing or Arising in India by Pradip Kapashi, Gautam Nayak (2013 ) BCAJ  &ndash;January &ndash;P.40<br \/>\n  S.9(1)(vi): Controversy  around software royalty refuses to settle-An analysis of the decision of Delhi  High Court in Nokia net works by Abhishekworah ( 2013) 212 Taxman 1 (Mag)<br \/>\n  S. 11: Non &ndash;Profit organizations  under DTC an appraisal ( 2013) 350 ITR ( Journal) 41<br \/>\n  S.14A: Business  expenditure-Applicability of section 14A&nbsp;  to income covered by deductions under chapter VI-A by R. Raghunathan  (2013) 255&nbsp; CTR (Articles) 30.<br \/>\n  S.37(1): Business  expenditure- How convincing is the Calcutta High Court decision under section  37(1) of the Income-tax Act , 1961 by T.N. Pandey (2013) 350&nbsp; ITR (Journal)&nbsp;  51<br \/>\n  S.37(1): Business  expenditure-Explanation to section 37(1) of the IT&nbsp; Act 1961&nbsp;  by T.N. Pandey (2013) 255 CTR (Articles) 53<br \/>\n  S.40(a)(ia): Amounts not  deductible- Amendments to section 40(a)(ia) does it apply to pending  assessments by R. Raghunathan ( 2013) 255 CTR(Articles) 73<br \/>\n  &nbsp;S.44BB: Oil and natural gas- Income-tax  assessment of non-resident oil and natural gas exploration companies? by Tarun  Jain (2013) 350 ITR (Journal) 77<br \/>\n  S.45: Does sale of  self-generated &lsquo;copyrights&rsquo; invite capital gains tax? By T.N. Pandey&nbsp; (2013) 350 ITR (Journal) 33<br \/>\n  S.45: Capital gains-When  tax planning goes haywire by T.C.A. Sangeetha (2013) 255 CTR 26.<br \/>\n  S.45: Is goodwill  received by a retiring partner&nbsp; taxable  as capital gain.? By O.P. Srivastav (2013) 350 ITR (Journal) 58<br \/>\n  S.52: Capital gains-  Understatement- Understatement of sale price in property deals &ndash;A case for  reincarnation of section 52 by Gopal Nathani (2013) 350 ITR (Journal) 73<br \/>\n  S.139(5): Revised  return-Withdrawal of claim by letter &ndash;Not a case of revised return &ndash;by Gopal  Nathani (2013)350 ITR (Journal) 66<br \/>\n  S.143(3): Assessment-  Section 143(3) verses section 115JB-The plight of AO by Minu Agrwal (2013) 255  CTR (Articles)1<br \/>\n  S.145: Event occurring  after the end of accounting year vis-vis revised return by V.K. Subramani  (2013) 212 Taxman 9 (Mag.)S.147: Reopening of assessment vis-&agrave;-vis Finance  Minister&rsquo;s Assurance and CBDT Instruction- by Tarun Jain, ( 2013) 350 ITR  (Journal) 12.<br \/>\n  S.154: Rectification-  Judicial resentment for consecutive&nbsp;  amendments, by Minu Agarwal (2013) 255&nbsp;  CTR (Articles) 49<br \/>\n  S.179: Company-Recovery-  Tax interest and penalty by T.C.A. Ramanujam (2013) 255 CTR (Articles) 51<br \/>\n  S.179: Recovery &#8211; Even a  Director of public Limited company can be held liable for recovery&nbsp; of tax dues of the company &#8211; An analysis, by  Krishna Malhotra, Vinayak Srivastava, (2013) 212 Taxman 91 (Mag.)<br \/>\n  S.194J: Deduction at  source- Fees for professional or technical services-Are liable to Authors for  Articles by T.N. Pandey (2013) 350 (Journal) 69<br \/>\n  S.195:&nbsp; &ldquo;TDS liability spread up on whole of the sale  consideration and not just limited to the amount of estimated capital gains on  sale of immoveable property&hellip;..&rdquo; .the legal position revisited by Amit Aggarwal,  Alok Pareek (2013) 212 Taxman 5 (Mag)<br \/>\n  S.195: Deduction at  source- TDS on commission paid tp Foreign Agents divergent views by Raghav  Kumar Bajaj (2013) 212 Taxman 109 (Mag.)<br \/>\n  S.237: Refund: Does  section 237 contemplate a refund assessment-by Minu Agarwal (2013) 255&nbsp; CTR (Articles) 25<br \/>\n  S.271(1)(c): A land mark  judgment from the Apex court on penalty for concealment of&nbsp; income by V. Pattabhiraman (2013) 212 Taxman  27 (Mag.)<br \/>\n  S.271(1)(c): Penalty-Concealment-Human  error in filing ITRs &ndash;Is PWC case a guarantee against penalty by Gopal Nathani  ( 2013)350 ITR (Journal) 89&nbsp;<br \/>\n  <strong>Articles-Subjects.<\/strong><br \/>\n  <strong>A.<\/strong><br \/>\n  Accounts- Other  comprehensive income- Some points to ponder- by S. Ramachnadran (2013) 255&nbsp;  CTR (Articles) 4<br \/>\n  <strong>B.<\/strong><br \/>\n  Budget 2013-14-Extension  of tax neutrality for mergers to also LLPs by T.N. Pandey (2013) 350 ITR  (Journal) 93.<br \/>\n  <strong>F.<\/strong><br \/>\n  Fringe Benefit tax (FBT):  -No fringe benefit tax leviable on expenditure for non-employees like  entertainment, sales promotion, etc by Mukesh Patel ( 2013) 212 Taxman 89  (Mag.)<\/p>\n<p><strong>G.<\/strong><br \/>\n  GAAR-An Indian and  International perspective&nbsp; by Sumit Singh  Bagri and Uzma Naseem (2013) 212 Taxman 30 (Mag.)<br \/>\n  General- Revisiting of  the earlier decisions by the Supreme Court- ByT.N.Pandey (2013) 255&nbsp;&nbsp; CTR 44 (Articles) 44.<\/p>\n<p><strong>I.<\/strong><br \/>\n  Interpretation \/Statutes-  The literal rule revisited&nbsp; by S.  Narayana (2013) 255 CTR (Articles) 57<\/p>\n<p><strong>S.<\/strong><br \/>\n  Service tax- Concept of  bundled&nbsp; services under the new service  taxation scheme from I st July , 2012 by T.N. Pandey (2013) 255 CTR (Article)  14<\/p>\n<p>Service Tax &#8211; Services by  foreign diplomatic mission located in India&nbsp; by Dr.  Sanjay Agarwal (2013) 255 CTR (Article) 22 <\/p>\n<p>Service tax- Exemption on  inpute services to exporters. By&nbsp; Dr.  Sanjiv Agarwal (2013) 255 CTR (Articles) 46 <\/p>\n<p><strong>T.<\/strong><br \/>\n  A tally of the tax law-  by V. Pattabiraman, Audit Officer (2013) 350 ITR (Journal) 1 Tax world.<\/p>\n<table border=\"1\" cellspacing=\"0\" cellpadding=\"5\">\n<tr>\n<td width=\"90%\" valign=\"top\">\n<p>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":"<p>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 &hellip;<\/p>\n<p class=\"read-more\"> <a class=\"\" href=\"https:\/\/itatonline.org\/archives\/digest-of-important-case-law-january-2013\/\"> <span class=\"screen-reader-text\">Digest of important case law &#8211; January 2013<\/span> Read More &raquo;<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"open","ping_status":"closed","template":"","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"footnotes":""},"class_list":["post-6436","page","type-page","status-publish","hentry"],"acf":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/pages\/6436","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=6436"}],"version-history":[{"count":0,"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/pages\/6436\/revisions"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/archives\/wp-json\/wp\/v2\/media?parent=6436"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}