1. Accounting – Method of Accounting – S. 145

Where there was neither any finding by the Assessing Officer that he was not able to deduce the correct income of the assessee on the basis of the changed method of accounting employed by the assessee, nor there was any evidence to demonstrate that the new method of accounting has not been consistently followed by the assessee, the High Court held that the change in method of accounting from mercantile to cash system was a bona fide change and the change in method of accounting cannot be rejected per se.

Echke Ltd. vs. CIT (2008) 5 DTR 1 (Guj.)

2. Accrual of Income – S. 5

Where the assessee was following mercantile system of accounting, any waiver of interest chargeable on accrual basis on the outstanding loans after the close of the accounting year would not stop the accrual of interest on the basis of real income theory.

H. P. Mineral & Industrial Corporation vs. CIT (2008) 7 DTR 345 (H.P.)

3. Appeal

Revenue cannot be asked to seek clearance of the High Powered Committee for the writ appeal filed by it which is pending for adjudication for fourteen (14) years.

Dy. CIT vs. Rajasthan State Electricity Board (2008) 7 DTR (Raj.) 377

4. Appeal – Additional Ground – S. 250(5)

Where the assessee’s claim for genuine expenditure in a subsequent year was rejected as the same pertained to an earlier year, additional ground with respect to the claim of the expenditure can be raised in the appeal for the earlier, if the appeal for that earlier year is pending adjudication before the CIT(A).

CIT vs. Vadilal Industries Ltd. (2008) 6 DTR 98 (Guj.)

5. Appeal – Monetary Limit for filing Appeal – Rule 60A

The Central Board of Direct Taxes Circular No. 2 of 2005, dated October 24, 2005, lays down a monetary limit for appeals to the High Court. It applicable only prospectively and it makes no reference to pending matters. However, it clearly provides that whenever there is substantial question of law, or a question of law which is likely to recur in future, the Department is no prohibited from filing and pursuing appeals.

CIT vs. Pithwa Engg. Works [2005] 276 ITR 519 (Bom) dissented from.

CIT vs. Chhajer Packaging and Plastics P. Ltd. (2008) 300 ITR 180 (Bom.)

Editorial Note: Circular has been printed in AIFTP Journal, July 2008 issue page No. 37.

6. Appeals – Jurisdiction of Commissioner (Appeals) – After Transfer – Ss. 251, 253

The appeal had been decided by J who had been transferred. J sought to discharge his duties as Commissioner (Appeals) and decided the appeal on October 3, 2006, though on the said date, A in fact, was holding the office of the Commissioner (Appeals), Allahabad. On October 3, 2006, when J passed the order in the appeal of the assessee, admittedly, he was already transferred by the order dated May 31, 2006, passed by the competent authority. On October 3, 2006, J had no jurisdiction to function as Commissioner (Appeals), Allahabad. It was held that the Tribunal was right in setting aside the order passed by him.

Dr. Vinod Kumar Rai vs. Income-tax Appellate Tribunal and Others (2008) 302 ITR 148 (All.)

7. Assessment – Addition to Income – S. 133A, 143

Assessing Officer can make additions on basis of materials collected during course of illegal survey.

CIT vs. Kamal & Co. (2008) 168 Taxman 246 (Raj.)

8. Audit – chartered Accountants - Maharashtra Value Added Tax Act, 2002 – S. 61

Section 61 of Maharashtra Value Added Tax Act which requires accounts of certain dealers to be audited by Chartered Accountants is constitutionally valid and it does not infringe article 14.

Sales Tax Practitioners’ Association of Maharashtra vs. State of Maharashtra (2008) 170 Taxman 371 (Bom.)

Editorial Note: SLP is rejected, see AIFTP Journal July’ 08 issue page no. 39

9. Block Assessment – Recording of satisfaction – S. 158BD

Assessing Officer must record his satisfaction about existence of undisclosed income before proceeding against a person other than one searched.

New Delhi Auto Finance (P) Ltd. vs. Jt. CIT (2008) 170 Taxman 276 (Delhi)

10. Business Disallowance – Actual Payment – S. 43B, 139(1)

Proviso to section 43B, which came into force with effect from 1-4-1988, is retrospective. For relevant assessment year, claim of assessee on account of sales tax / CST and PF shown in books of account as payable was allowable, if payment was made before due date prescribed under section 139(1).

CIT vs. Avery Cycle Inds. (P) Ltd. (2008) 170 Taxman 152 (P & H)

11. Business Expenditure – Compensation only against shipping – Contingent Liability – Not allowable – S. 37

That the assessee under the earlier contract was liable to make payment of a certain amount on compensation. However, that liability stood modified by a subsequent contract between the parties, which provided that the compensation under the earlier contract would be paid and payable by reimbursement by the assessee to the foreign company only if orders were placed by that foreign company with the assessee. Further, clause 2 of the second contract contemplated reimbursement by the assessee to the foreign company at 50 cents per ounce. Thus, the liability to pay compensation was contingent upon shipping per ounce. If for any reason in future the shipping was stopped, abandoned or could not take place, the liability to pay compensation to the extent of the goods not shipped would not arise. Thus, the liability which the assessee was claiming was not a fixed liability, but was a contingent liability and, therefore, the deduction sought by the assessee was not permissible under section 37 of the Act.

Mentha and Allied Products P. Ltd. vs. ACIT (2008) 302 ITR 144 (All.)

12. Business Expenditure – Repairs and renovation – S. 37(1)

Assessee, an advocate, occupied a rented premises for office use. During relevant assessment year, he carried out certain repairs and renovations in office premises in order to see that said premises was kept in a proper condition and professional activities were carried out effectively and smoothly. Since expenditure incurred by assessee was in connection with profession / business and for smooth working thereof, leaving fixed capital untouched, expenditure in question was revenue expenditure and, hence, allowable under section 37(1).

CIT vs. Dr. A. M. Singhvi (2008) 168 Taxman 136 (Raj.)

13. Business Expenditure – Replacement of machinery - S. 37

Expenditure incurred by assessee on replacement of machinery was allowable as revenue expenditure.

CIT vs. Fenner (India) Ltd. (2008) 169 Taxman 62 (Mad.)

14. Business Expenditure – S. 37 (1)

Expenditure on issue of debenture and collection of fixed deposit are revenue expenditure.

CIT vs. Southern Petrochemical Industries Corporation Ltd. (2008) 5 DTR 70 (Mad)

Amount spent on reconstruction of boundary wall is revenue in nature.

CIT vs. Mewar Oil & General Mills Ltd. (2008) 5 DTR 40 (Raj.)

Replacement of old worn out mono-sound system with a new stereo system in a cinema theatre which, did not result in increase in the capacity of the theatre was allowable as revenue expenditure.

CIT & Anr. vs. Sagar Talkies (2008) 7 DTR 81 (Kar.)

15. Business Income – Chargeable – S. 28(1)

Where assessee had invested certain amount in fixed deposits to secure a bank guarantee in order to acquire a contract work, interest accrued on such fixed deposits was to be treated as its business income.

CIT vs. Chinna Nachimuthu Constructions (2008) 170 Taxman 272 (Kar.)

16. Capital Gains – S. 54B

The assessee sold agricultural land which was used by him for agricultural purpose. Out of the sale proceeds the assessee purchased another agricultural land jointly along with his only dependent son and claimed exemption u/s. 54B of the Act on reinvestment. Assessing officer denied the asseesse’s claim of deduction u/s. 54B as the land was purchased by the assessee jointly with his son. On these facts the High Court held that as the land was purchased for agricultural purpose, merely because in the deed for purchase of land his son was shown as co-owner the exemption u/s. 54B could not be denied to the assessee.

CIT vs. Gurnam Singh (2008) 6 DTR 83 (P&H)

17. Capital Gains – Calves from cows – S. 45

Assessee having cows and deriving income from sale of milk. In the course of business assessee had calves from cows. The calves were sold. The receipts could not be charged to capital gains tax since there was no cost of acquisition.

Dy. CIT vs. Sri Surti Singh (2008)215 CTR (MP) 326

18. Capital or revenue expenditure – Replacement of machine – S. 37

It was held that expenditure on replacement of independent complete machinery is revenue expenditure entitled to deduction u/s. 37.

CIT vs. T.V.S. Sewing Needles Ltd. (2008) 302 ITR 13 (Mad.)

19. Carry forward and set off of loss – S. 72A

As both amalgamating and amalgamated companies are hospitals, they are not industrial undertakings” within the meaning of Sec. 72A(7)(aa). Therefore, amalgamated company is not entitled to C/F and set off unabsorbed depreciation of amalgamating company u/s 72A.

Asstt. CIT vs Apollo Hospitals Enterprises Ltd. (2008) 215 CTR (Mad) 460

20. Cash Credit – Gift – S. 68

Gift Deeds and affidavits of NRI donors produced. In the absence of anything to justify that the alleged transactions were by way of money laundering, no addition could be made in the hands of donee for absence of blood relationship between donor and the donee.

CIT vs. Padam Singh Chauhan (2008) 215 CTR (Raj) 303

Where the credit balance reflected in the accounts of the assessee pertained to earlier year and no fresh loans were taken during the year under consideration, provisions of section 68 were not attracted in the assessee’s case.

CIT vs. Usha Stud Agricultural Farms (2008) 5 DTR 335 (Del.)

21. Charitable trust – Exemption – Breach of terms of trust deed – S. 11

Assessing Officer denying benefit of exemption to a charitable cum religious trust on ground that trust violated terms of trust deed. It was held that breach of conditions would not disentitle assessee from getting benefits which it has been getting in previous years.

CIT vs. Karimia Trust (2008) 302 ITR 57 (Jharkhand.)

22. Charitable Trust – S. 12A

Non – consideration of application for registration of charitable trust u/s. 12A of the Act by the Income-tax authorities within the time fixed u/s. 12AA(2) of the Act would result in deemed grant of registration to the trust. The Court further, observed that the deemed registration granted to the trust may at worst cause loss of some revenue or tax payable by an assessee, on the other hand taking a contrary view and holding that not taking a decision within time fixed by section 12AA would mean leaving the assessee totally at the mercy of Income Tax authorities as the Act does not provide any remedy for such non decision.

Society for Promotion of Education Adventure Sport & Conservation of Environment vs. CIT & Anr. (2008) 5 DTR 329 (All)

23. Deduction – Manufacturing – S. 80-IA

Receipts obtained against transportation of sleepers of railway site which is incidental to the assessee’s manufacturing activity. Therefore, entitled to deduction u/s 80-IA.

CIT vs Arvind Construction Co. Ltd. (2008) 215 CTR (Del) 363

24. Deemed dividend – S. 2(22)(e)

Amount of loan advanced by the company to partners of a firm, which is not a shareholder in company, cannot be assessed as deemed dividend in the hands of the firm, even though all the partners of the firm are shareholders of the company.

CIT vs. Hotel Hilltop (2008) 5 DTR 46 (Raj.)

25. Depreciation – S. 32

Depreciation u/s. 32 of the Act cannot be denied to the assessee on the building purchased by the assessee only on the ground that the building acquired by him was not registered as required under the Registration Act, when under the agreement for purchase of building the assessee had made substantial payment to the seller and also taken possession of the premises.

Deepak Nitrite vs. CIT (2008) 7 DTR 313 (Guj.)

26. Depreciation at higer rate : Commercial vehicles on hire purchase basis – S. 32

The assessee-company, which carried on the business of leasing out commercial vehicles on hire purchase basis, claimed depreciation at 40 per cent on all the leased out commercial vehicles. The Assessing Officer disallowed the claim and restricted the deprecation to 24 per cent on the ground that the assessee-company itself had not utilized the commercial vehicles on hire.

It was held, that the assessee was entitled to the higher rate of depreciation.

The Supreme Court has granted special leave to the Department to appeal against this judgment : see [2008] 299 ITR (St.) 92-Ed.]

CIT vs. Shiva Tex Yarn Ltd. (2008) 302 ITR 20 (Mad.)

27. Depreciation – unabsorbed depreciation – set off against capital gains – S. 32

Assessee company claimed set-off of capital gains against brought forward unabsorbed depreciation on ground that as per amended provisions of section 32(2) with effect from 1-4-1997, cumulated unabsorbed depreciation brought forward as on 1-4-1997 could be set off against income under any other head for assessment year 1997-98 and seven subsequent years. Assessing Officer rejected assessee’s claim and brought capital gains to tax. Whether in view of amendment to section 32 with effect from 1-4-1997, assessee was entitled to set off of unabsorbed depreciation brought forward as on 1-4-1997 against capital gains of relevant assessment year.

CIT vs. Pioneer Asia Packing (P) Ltd. (2008) 170 Taxman 127 (Mad.)

28. Income – S. 2(13) & 45

Where the assessee had no intention to sell the purchased land at a profit nor the assessee was a regular dealer in real estate, piecemeal sale of land by the assessee would constitute disposal of ‘capital asset’ and not an ‘adventure in the nature of trade’ and surplus thereof was taxable under the head capital gains.

CIT vs. Sohan Khan (2008) 7 DTR 361 (Raj.)

Stock left with the assessee on sale of the plant and machinery by the creditors in satisfaction of their dues would not constitute a capital asset and accordingly, the profit arising out of sale of such stock could not be taxed as capital gain.

CIT vs. Poddar Industrial Corporation (2008) 6 DTR 340 (All)

29. Income from undisclosed sources – S. 69

In the absence of any material on record to show that there was any unexplained investment made by this assessee which was reflected by the unaccounted sales, no interference with the Tribunal’s finding is called for and only the gross profit on the said amount can be brought to tax.

CIT vs. Gurubachhan Singh J. Juneja (2008) 215 CTR (Guj) 509

30. Industrial undertaking – Deduction – S. 80-IA

Reconstruction of business already in existence – Assessee having set up industrial undertaking with latest technology and increased capacity with fresh investments Rs. 104.85 lakhs as against investment of Rs. 20.86 lakhs in old plant and machinery which was less than 20 per cent of total investment. It could not be inferred that assessees new unit was a result of reconstruction of old business, hence, entitled to deduction u/s. 80- IA.

CIT vs. Mohan Foods Ltd. (2008) 216 CTR (Del) 148

31. Interest on refund – S. 214

The High Court following the decision of Apex Court in the case of Modi Industries Ltd. vs. CIT [(1995) 216 ITR 759 (SC) held that assessee was entitled to interest u/s. 214 of the Act from the prescribed date to the actual date on which refund of advance tax was ordered.

CIT vs. P. K. Industries (2008) 6 DTR 37 (P&H)

32. Interest Tax Act, 1974 – S. 2(7)

Interest earned on Government securities by the assessee is not interest on loans and advances; accordingly the same is not liable to Interest Tax under the provisions of the Interest Tax
Act 1974.

CIT vs. The Bank of Rajasthan Ltd. (2008) 5 DTR 245 (Raj.)

33. Interpretation – “any other person” – Trustee Is not an employee hence amount paid cannot be disallowed – Rule 6D

The true scope of the rule of ejusdem generis is that the words of general nature following specific and particular words should be construed as limited to things which are of the same nature as those specified. When the particular words pertaining to a class, category or genus are followed by general words, the general words are construed as limited to the things of the same kind as those specified. The phrase “any other person” in rule 6D(2) of the Income-tax Rules, 1962, would draw its colour from the preceding word, namely, “employee”.

Held accordingly, that a trustee was not an employee or not akin to an employee and the amounts paid to trustees by the trust could not be disallowed under rule 6D(2).

CIT vs. Shivalik Drug (Family Trust) (2008) 300 ITR 339 (All..)

34. Manufacturer – Deduction – S. 80-IB

Assessee engaged in purchasing rectified sprit and then blending and bottling it into Indian Made Foreign Liquor (IMFL) is said to be engaged in manufacturing for the purpose of claiming deduction u/s. 80-IB of the Act.

CIT vs. Vinbros & Co. (2008) 6 DTR 25 (Mad.)

35. Manufacture – twisting and texturising of partially oriented yarn – S. 80IA

Twisting and texturising of Partially Oriented Yarn (POY) amounts to manufacturing or production of an article or thing distinct from commodity involved in manufacture and, therefore, entitled for deduction under section 80IA.

CIT vs. Emptee Poly – Yarn (P) Ltd. (2008) 170 Taxman 332 (Bom.)

36. Partnership Firm – Ss. 40(b) & 145

Where book results of the assessee are rejected and profit is estimated by applying a flat rate of profit, salary and interest to the partners of the assessee firm are to be allowed separately in terms of the partnership deed even though the assessee was following cash system of accounting and amounts of salary and interest were not actually paid to the partners.

CIT vs. Supreme Builders (2008) 7 DTR 174 (P&H)

37. Penalty – Concealment of income – S. 271(1)(c)

Bogus claim for depreciation on non-existing assets. However withdrawal of claim in revised return after search. It was held that levy of penalty was justified.

Where the assessee’s explanation was not found to be false, even though the assessee could not substantiate his explanation in respect of the additions made by the Assessing Officer and the same were confirmed by the Appellate Authority. The High Court held that the case of the assessee was not covered by Explanation 1(A) to section 271(1)(c) of the Act as the Explanation offered by the assessee was not found as lacking bonafide, as all the relevant facts with respect
to the additions were already disclosed by the assessee.

CIT vs. Ram Prakash (2008) 6 DTR 295 (All)

Assessee a co-operative society engaged in manufacture of sugar claimed deduction u/s. 80P of the Act on the basis of various decision of High Courts, its claim was held to be a bonafide claim by the assessee and penalty u/s. 271(1)(c) of the Act was not leviable in such case.

CIT vs. Budhewal Co-operative Sugar Mills Ltd. (2008) 6 DTR 31 (P&H)

Where assessee had furnished particulars of her income in Part IV of return, there was no concealment and penalty could not be levied under section 271(1)(c).

CIT vs. Mrs. Roshan D. Nariman (2008) 169 Taxman 1 (Bom.)

38. Penalty – Concealment of Income – Recording of satisfaction – S. 271(1)(c)

Assessing Officer imposed penalty under section 271(1)(c) on assessee on ground that in its profit and loss account, assessee had not reflected excess stock though assessee had placed certain documents before Assessing Officer which explained discrepancy in value of closing stock to some extent. Mere mention of discrepancy in figures in assessment order, which had some bona fide explanation, did not meet requirement of recording by Assessing Officer of his satisfaction that penalty proceedings must be initiated. Therefore, in absence of express words to that effect, no such satisfaction was even discernible from assessment order and, hence, penalty proceedings initiated against assessee could not be sustained.

CIT vs. National Marble & Sanitary (2008) 169 Taxman 32 (Delhi)

39. Penalty – Revised return to buy peace – Penalty deleted – S. 271(1)(c)

The declaration of income made by the assessee-company in the revised return and the explanation that it had done so to buy peace with the Department and to avoid protracted litigation was accepted by the Assessing Officer. The assessment was completed accepting the net income returned in the revised return of income. Not only did the assessment order not reflect any satisfaction as required under section 271(1) of the Act but even the show cause notice dated September 17, 2001, was silent with reference to the satisfaction arrived at by the Assessing Officer as to the concealment of income by the assessee-company. Nothing had been placed before the court by the Revenue to show that any other material was available with the Assessing Officer to the effect that the assessee had concealed its income. Hence, it was held that penalty could not be imposed.

V.V. Projects and Investments P. Ltd. vs. Dy. CIT (2008) 300 ITR 40 (AP.)

40. Reassessment – After four years, valid – S. 147

Prima facie to claim benefit under section 80-IB of the Income-tax Act, 1961, on the relevant date one of the requirements was that the size of the plot of land should be a minimum of one acre. The size of the land was not mentioned in the return. Hence, there was no true disclosure of the exact size of the plot when the new construction commenced. In order to invoke the extraordinary jurisdiction of the court the petitioner must also make out a case that no part of the relevant material had been kept out from the Assessing Officer. The information was in the annexures and consequently Explanation 2(c)(iv) of section 147 would apply. The reassessment proceedings after four years were held to be valid.

Girilal and Company vs. S.L. Meena, ITO & Others (2008) 300 ITR 432 (Bom)

41. Reassessment – Limitation – If there is no failure on the part of assessee – Assessment cannot be reopened after 4 years – S. 148

It was clear that there was no fault of the assessee. Even if it were deemed to be escaped assessment within the meaning of Explanation 2(c)(ii) of section 147, in view of the undisputed fact that there was no fault of the assessee, the delay could not be condoned. Limitation was applicable under the proviso appended to section 147. Limitation of four years had already expired. The reassessments were barred by time. The application of section 147 is subjected to the proviso as the proviso is qualified with the words “provided that”. Therefore, by virtue of the proviso, the whole application of section 147 is dependent on the failure on the part of the assessee for the escaped assessment. It was not available where the fault was of the Assessing Officer and that could be corrected under section 154 where also the limitation of four years is provided for its application. Therefore, even the correction, if not termed as reassessment, was also barred by time.

CIT and Another vs. Saipem Spa (2008) 300 ITR 133 (Uttarakhand)

42. Reassessment – S. 147

Assessment of an assessee cannot be reopened after four years, only on the ground that as per T.D.S certificate the work done was shown at a higher amount than the work done shown in the return of income filed by the assessee. The T.D.S. certificate is not concerned with the work done by the assessee. As such, it cannot be said that there was no failure on the part of the assessee to disclose truly and fully all the material information with respect to the particulars of its income.

Ganesh Valabhai Family Trust vs. Dy. CIT (2008) 5 DTR 317 (Guj.)

43. Reassessment – When original assessment was available and assessment was completed u/s. 143(3) – Reassessment is not valid – S. 148

There was no failure on the part of the assessee to disclose voluntarily and truly all material facts and the issue of scrap was generated during the manufacturing process was before the Assessing Officer. The Tribunal had accepted the manner in which the scrap generated was disposed of and the Tribunal had accepted the material of accounts when the scrap was finally sold. Stock register of the scrap generated was not maintained. But this information was available with the Assessing Officer when the assessment was made under section 143(3) of the Act. There was no reason warranting the reopening of the concluded assessment.

Niba India and Another vs. Smt. Arti Handa, Asstt. CIT and Other (2008) 300 ITR 283 (Bom.)

44. Reassessment notice on basis of retractment – Not valid – Ss. 147, 148

Statement of third party that loan to him from assessee was not genuine. There was retraction of statement and subsequent death of third party. It was held that notice based on such statement was not valid.

Indian Express Newspapers (Bombay) P. Ltd. and Another vs. UOI (2008) 300 ITR 351 (Bom)

45. Reassessment with the reason to believe – S. 148

Reopening of assessment on the opinion of another Assessing Officer on the same set of documents is invalid under the law.

CIT vs. Shree Rajasthan Syntex Ltd. (2008) 217 CTR (Raj.) 209

46. Rectification of mistake – Cannot be made to nullify effect of Tribunals order – S. 154

Assessment completed under section 144 in status of registered firm. Assessing Officer disallowed interest and salary paid to partners, Tribunal allowed deduction. Subsequently the Assessing Officer noticed that as assessment was made u/s. 144 the status of the firm should have been taken as AOP and again disallowed interest and salary. It was held that, Assessing Officer could not change status of assessee to association of persons and withdraw deduction in rectification proceedings after decision of Tribunal.

CIT vs. Kartar Singh and Co. (2008) 302 ITR 66 (P&H.)

47. Rectification of mistake – S. 154

While disposing of the appeal against the order u/s. 154 passed by the Assessing Officer rectifying certain mistakes in the order passed by him u/s. 143(3) of the Act the CIT (A) cannot set aside assessment order passed by the Assessing Officer made under 143(3) of the Act which had attained finality, as no appeal was preferred against the order u/s. 143 (3) passed by the Assessing Officer.

R. B. L. Banarsi Dass & Co. P. Ltd. vs. CIT (2008) 7 DTR 388 (P&H)

48. Rectification of mistake – S. 254

Tribunal has to follow the decision of the jurisdictional High Court without making any comment upon the judgment that it did not take into consideration a particular provision of law.

National Textile Corporation Ltd. (M.P.) vs. CIT (2008) 5 DTR 117 (MP)

49. Return of Income – S. 139(9)

Return of income which is not signed by the person authorised under the Act has to be treated as defective and is amendable to the provisions of sections 292 and 139(9) of the Act. Thereafter, when the assessee files another return duly signed by the authorised person, the return so filed by the assessee cannot be treated as non est return and the refund thereon cannot be denied to the assessee.

Hind Samachar Ltd. vs. UOI & Ors. (2008) 5 DTR 88 (P&H)

50. Return of Income – signed by managing director – S. 139(9), 292B

A return of income is required to be signed mandatorily by managing director of company and in his absence, due to certain reasons, by any director thereof. A return of income which is signed and verified by a person other than one authorised under Act, shall be treated to be defective which would be amenable to provisions of sections 292B and 139(9) and assessing authority, in such circumstances, shall provide an opportunity to assessee to rectify that defect under section 139(9) before treating same to be invalid and non est.

Hind Samachar Ltd. vs. Union of India (2008) 169 Taxman 302 (P & H)

51. Revision – S. 264

Where the Commissioner exercising its revisional authority u/s. 264 of the Act, directed the Assessing Officer to adjudicate and examine a specific issues. However, the assessment was framed by the Assessing Officer on a higher income by assuming more powers than that of revisional authority. The action of the Assessing Officer was held patently illegal and without jurisdiction.

N. Seetharaman vs. CIT (2008) 6 DTR 238 (Mad.)

52. Service of Notice – S. 282

In absence of any evidence in the form of postal receipt to demonstrate that the notice u/s. 148 of the Act was actually sent by registered post and was actually served upon the assessee, the notice is deemed not to be served upon the assessee.

CIT vs. Avtar Singh (2008) 5 DTR 55 (P&H)

53. Service of notice not served on proper person – assessment not valid – S. 147, 148

Where revenue had not been able to produce any material to show that any notice under section 148 was served upon assessee before framing assessment under section 147, Tribunal was justified in annulling that assessment as in valid.

CIT vs. Laxmi Narain (2008) 168 Taxman 128 (P & H)

54. Technical services – S. 9(i)(vii)

Assessee using internet bandwidth of one US party T for providing access to its subscribers and the payment was made to T – As there is no privity of contract between the customers of assessee and T, the court held that no technical services were provided by T to the assessee within the meaning of sec. 9(1)(vii) and the assessee need not deduct TDS from payments made to T.

CIT vs. Esstel Comunicación (P) Ltd. (2008) 217 CTR (Del) 102

55. Tribunal – Power of Tribunal – S. 254

The Hon’ble High Court after considering the decision of Apex Court in the case of Goetze (India) Ltd. vs. CIT (2006) 284 ITR 323 (SC) held that Tribunal had power to allow deduction of expenditure to the assessee to which it was otherwise entitled even though no claim was made by the assessee in its return of income.

CIT vs. Jai Parabolic Springs Ltd. (2008) 6 DTR 233 (Del.)

56. Undisclosed investment – S. 69

No addition as unexplained investment u/s. 69 can be made on account of difference in valuation of stock, where there is a finding recorded by the Tribunal that the Assessing Officer had not pointed out any discrepancy in the quantity of stock hypothecated by the assessee with bank the discrepancy was only on account of valuation.

CIT vs. Laxmi Engg. Industries (2008) 5 DTR 106 (Raj.)

57. Valuation – Reference to Valuation Officer – S. 16A

The assessee filed his return of wealth which was supported by valuation report of registered valuer. The Wealth Tax Officer during the assessment proceedings made addition to the wealth of the assessee without making reference to valuation cell u/s. 16A of the Wealth Tax Act. The High Court held that when the assessee’s valuation of the property was supported by a report of the registered valuer, the WTO cannot evaluate property of the assessee by adopting his own formula without making a reference to the valuation cell.

CWT vs. Raghunath Singh Thakur (2008) 6 DTR 56 (HP)

58. Valuation – S. 145

Where the assessee had valued the rejected goods lying as closing stock at market price on the basis of the quotation of a third party, in absence of any evidence with the Assessing Officer, he could not substitute the valuation of the goods with the price which the assessee realised subsequently on sale of these goods.

Voltamp Transformers Ltd. vs. CIT (2008) 7 DTR 84 (Guj.)

59. Valuation of stock – S. 145 A

For the purpose of valuation of closing stock, section 145A of the Act provides that only taxes duties, cess or fees actually paid by the assessee to bring the goods to place of its location would form part of the value stock. Accordingly, there is no justification on the part of the Assessing Officer to add excise duty to the price of the raw material, etc while computing the value of goods in closing stock, as the goods had not left the premises of the assessee.

ACIT vs. D & H Secheron Electrodes P. Ltd. (2008) 5 DTR 279 (MP)