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1. Additional Evidence S.
144, Rule 46A
The Assessee had given all
documents/ evidences to its counsel who failed to appear before the A.O. The
A.O. proceeding to make an ex parte assessment u/s 144 by treating addition to
unsecured loans and share application money as unexplained u/s 68. Before the
CIT(A) the Assessee filed additional evidence u/r 46A and pleaded that it
should not be made to suffer for no lapse on their part. The Tribunal held
that CIT(A) was not justified in refusing to admit additional evidence.
Anmol Colours India (P) Ltd.
vs. ITO, ITA No. 379/JP/2008, Bench A, A. Y. 2002-03, dt. 20-6-2008 BCAJ
p. 24, Vol. 40-B, Part 1, October 2008.
2. Appeal Binding
Precedent S. 260A
Appeal dismissed holding that
no substantial question of law arises amounts to affirmation of tribunals
decision on merits which becomes binding on Tribunal.
Medicare Investments Ltd. vs.
Jt. CIT (2008)114 ITD 34 (Delhi) (SB) / 304 ITR 44 (Delhi) (SB)(AT)
3. Appeal S. 234B
When the chargeability of
interest under section 234B itself is challenged the same is appealable.
ICICI Ltd. vs. Jt. CIT (2008)
119 TTJ 848 (Mum.)
4. Bad Debts Business Laws
S. 28, 36
Irrecoverable brokerage due
to the share broker was allowable as deduction on being written off as
irrecoverable.
Angel Capital & Debt Market
Ltd. vs. ACIT (2008) 118 TTJ 351 (Mum.)
5. Block Assessment Time
limit for completion of block assessment S. 158BE
On the day of the search (i)
panchnama prepared with the remark that search temporarily concluded for the
day to be commenced subsequently; and (ii) prohibitory order u/s 132(3)
issued. After a period, prohibitory order revoked and panchnama prepared with
the remark search is finally concluded. Held that the period of limitation
is to be computed from the date search was originally initiated and not from
later date of panchnama.
Nandlal M. Gandhi vs. ACIT,
IT(SS)A No. 11/Mum/2000, Bench E, Block period 1-4-1987 to 28-7-1997, dt.
16-6-2008 (Third Member) BCAJ pg. 270, Vol. 40-B, Part 2, November
2008/(2008) 13 DTR 35 (Mum.)
6. Book Profit S. 115JB
Provision for warranty is an
ascertained liability and it cannot be added while computing book profit under
section 115JB
Sony India (P) Ltd. vs. DCIT
(2008) 118 TTJ 865 (Del.)
7. Business Expenditure
Capital or Revenue S. 37(1)
Training expenses incurred on
personnel in relation to operation and maintenance of plant to be set up, was
held to be capital expenses as training was given before plant was set up,
though claimed during relevant previous year on ground that invoice was
received during relevant previous year and TDS was deducted and paid in said
year.
Gujarat Guardian Ltd. vs.
JCIT (2008) 174 Taxman 151 (Del.)
8. Business Expenditure S.
37(1)
Expenses on foreign tour by
assessee as a trade delegate of Bengal National Chamber of Commerce and
Industries (BNCCI), which was supported by a certificate issued by the BNCCI
that he was a member of delegation which visited China to promote trade &
business co-operation between India and China, was held to be an allowable as
business expenditure.
It was further held that, for
allowing expenditure of a foreign trip it is not necessary that it should
result in introduction of new methodology or an increase in production must
result because of foreign tour undertaken.
Ajit Kumar Ganguly vs. ACIT
(2008) 175 Taxman 38 (Kol.)
Loss on foreign exchange
fluctuation is not a notional loss and therefore, it is allowable as
deduction.
Sony India (P) Ltd. vs. DCIT
(2008) 118 TTJ 865 (Del.)
Provision for warranty is an
ascertained liability and therefore it is allowable as deduction.
Sony India (P) Ltd. vs. DCIT
(2008) 118 TTJ 865 (Del.)
Payment for accessing
National Stock Exchange for controlling trading functions was for business
purpose and allowable as business expenditure.
Angel Capital & Debt Market
Ltd. vs. ACIT (2008) 118 TTJ 351 (Mum.)
Ad hoc disallowance of 10%
out of commission payment to foreign agents, without pointing out any
discrepancy, and which was remitted after RBI clearance, was held to be
unjustified.
Malwa Industries Ltd. vs.
ACIT (2008) 175 Taxman 40 (Chandigarh)
9. Business Income Income
from house property Ss. 22, 28
Income earned by a company
from leasing information technology park, constructed by it on land belonging
to the company (which land was initially taken on lease and was later on
acquired) which construction was financed by borrowings from banks secured on
immovable property of the company, and providing various amenities and
services is chargeable to tax under the head Business income and not Income
from house property.
Global Teck Park Pvt. Ltd.
vs. ACIT, ITA No. 1021/Bang/2007, A.Y. 2003-04, dt. 30-6-2008 BCAJ p. 392,
Vol. 40-B, Part 3, December 2008.
10. Cash Credit S. 68
Assessee disclosed the sale
of shares and receipt thereof in her Return of Income and claimed exemption
u/s 54EC, but could not produce broker and purchaser and even requisition u/s
133 (6) were returned unserved. Assessing Officer treated the sale proceeds of
shares as her unexplained cash credits u/s 68.
Held, that as the transaction
entered was duly supported by Bill, Contract Note, Delivery and transactions
having been reflected in Balance Sheets, and Assessing Officer having no
evidence, additions based merely on doubts can not be justified.
Km. Saumya Agrawal vs. ITO
(2008) 173 Taxman 60 (Agra)
11. Charitable Trust
Registration S. 12A(a)
The Assessee society
registered on 1-9-2005. The Assessee applied for registration on 10-4-2007
before the CIT who granted registration vide order dt. 7-11-2007 w.e.f.
1-4-2007. The Tribunal held that once the CIT is satisfied about objects the
trust and genuineness of activities, he is required to grant registration
w.e.f. 1-9-2005.
Note : Section 12AA has been
amended w.e.f. 1-6-2007
The Indus Entrepreneur vs.
The CIT II, ITA No. 32/JP/2008, Bench B, A.Y. 2003-4, dt. 20-6-2008 BCAJ
p. 26, Vol. 40-B, Part 1, October 2008.
12. Deduction Prepaid
Lease Rent S. 37
Prepaid lease rental which is
pertaining to the next financial year/s is not allowable in the year of
payment.
Dy. CIT vs. FAG Bearings
India Ltd. (2008) 115 ITD 53 (Ahd.)(SB) / 306 ITR 60 (AT)
13. Deduction S.
36(1)(iii)
Assessee a Banking Company,
though indulging in different types of business of advancing loans including
long term finances, can not per se be treated as financial institution, for
purpose of availing special deduction u/s 36(1) (viii). Further, also as the
notification for being recognized as financial corporation was not with
assessee bank, the deduction can not be availed.
ACIT vs. Federal Bank Ltd.
(2008) 175 Taxman 102 (Coch.)
14. Deduction S. 80RR
The denial of deduction u/s
80RR for remuneration received for doing consultancy work, was not justified,
on ground that Assessee was neither an author, playwright, artist, musician or
actor or a sportsman.
Held, Income derived by an
Individual relating to his professional activities, and being derived in
exercise of his profession is eligible for deduction u/s 80RR.
Brahma Dev Sharma vs. ACIT
(2008) 174 Taxman 62 (Del.)
15. Deduction S. 80-IA
r.w.s 80HHC
Deduction allowed u/s 80-IA
is not to be reduced from the profits of the business in computing the
deduction u/s 80HHC
J. B. Chemicals &
Pharmaceuticals Ltd. vs. ACIT, ITA No. 6044/Mum/2002, Bench B, A.Y. 1999
2000, dt. 30-7-2008 BCAJ p. 271, Vol. 40-B, Part 2, November 2008.
16. Deduction S. 80-IB
Benefit of deduction u/s
80-IB, cannot be allowed on interest income and miscellaneous income
surrendered during survey u/s 133A, as no nexus had been established by
assessee that same has been derived from an industrial undertaking.
DCIT vs. Shiva Fabricators
(P) Ltd. (2008) 174 Taxman 155 (Chandigarh)
17. Depreciation Stock
Exchange Membership Card S. 32
Stock exchange membership
card acquired after 1-4-1998 represents a commercial right/intangible asset
and therefore qualifies for depreciation u/s 32.
K. Damani Securities Pvt.
Ltd. vs. ITO, ITA No. 2568/Mum/2004, A.Y. 2001-02, dt. 22-10-2007 BCAJ p.
273, Vol. 40-B, Part 2, November 2008.
18. Depreciation Ss. 32,
43(1)
Vehicle was purchased by HUF
of Assessee, and on which no Depreciation was claimed, nor, same was used for
purpose of business. The vehicle was brought as business asset of Assessee in
his individual capacity after 3 years at original cost.
Assessing Officer invoked
provisions of the explanation to section 43(1), and reduced the original cost
of Rs. 3,86,607/- to Rs. 2,00,000/-, and computed depreciation accordingly.
Held, that as statute does not give discretion for purpose of the Explanations
3 to S. 43(1) to enforce Depreciation, as two of the prescribed conditions
needs to be fulfilled to justify and substitute the cost of WDV as claimed by
the Assessee, and accordingly, Assessee was entitled to depreciation on
original cost of vehicle as claimed.
Shashikant Janardan Kulkarni
vs. ITO (2008) 173 Taxman 116 (Pune)
19. Disallowance S. 40A(2)
Once it is decided that
services have been rendered by an agent, then quantum of Commission to be paid
is purely at discretion of assessee, and revenue cannot sit in judgment over
same, and restrict the claim by reducing the % of commission, as being
excessive or un-reasonable.
Gujarat Guardian Ltd. vs.
JCIT (2008) 174 Taxman 151 (Del.)
20. Educational Institutions
S. 10(23C)(vi)
The eligibility of exemption
u/s 10(23C) has to be determined with reference to the objects of the
institution. Further, exemption cannot be denied if there results some surplus
after meeting the expenditure incurred towards the activities, to attain the
objects.
Arvind Bhartiya Vidyalaya
Samiti vs. ACIT (2008) 173 Taxman 119 (Jai.)
21. Expenditure S. 37
Amount spent on the prizes
given under the lottery system allowed as business expenditure.
Eyetech Industries vs. ACIT,
ITA No. 1799/Mum/2005, A.Y. 2001-02, dt. 31-7-2008 BCAJ pg. 273, Vol. 40-B,
Part 2, November 2008.
22. Expenditure S. 37(1)
Interest free loan to a
relative of a partner for purchase of flat which was used for the purpose of
business of the assessee cannot be disallowed.
DCIT vs. Parthas Power House,
ITA No.50 & 51/Cochin/2007, A.Ys. 2003-04 & 2004-05, dt. 12-6-2008 BCAJ p.
272, Vol. 40-B, Part 2, November 2008.
23. Expenditure in relation
to exempt income Disallowance S. 14A
Section 14A applies to all
heads of income which disallows expenditure incurred in relation to income not
forming part of total income.
ITO vs. Daga Capital Management (P) Ltd. (2008) 119 TTJ 289 (SB) (Mum.)
24. Export Difference in
foreign exchange receipt S. 80HHC
Sale proceeds of export
received in subsequent year or after end of year, then the difference in
foreign exchange rate gains to be included in the turnover of the relevant
year of export and not in the year of such receipt.
ACIT vs. Prakash L. Shah
(2008) 306 ITR 1 (Mum.)(SB)(AT)
25. Housing Project
Deduction S. 80-IB(10)
The Assessee purchased land
in 1996 and wall was constructed. Original plan expired after validity period
of one year. Revised plan was approved and commencement certificate issued on
30-9-2000. User of land for non-agricultural purposes was permitted on
28-6-2001. The A.O. disallowed the claim for deduction u/s 80-IB(10) on the
ground that the condition i.e. commencement of the construction after
1-10-1998 was not satisfied. The Tribunal held that expenses incurred for
change of land use and other administrative/ other land development expenses
incurred prior to statutory approvals, which have been received after
1-10-1998 cannot result into commencement of the project before 01-10-1998,
Hence, deduction u/s 80-IB allowed.
ITO. vs. Shri Vimalchand M.
Dhoka, ITA Nos. 5520/Mum/2005, Bench A, A. Y. 2002-03, dt.19-5-2008 - BCAJ
p. 23, Vol. 40-B, Part 1, October 2008.
26. Income Waiver of loan
S. 2(24)
Waiver of loan obtained and
utilized for purchasing any capital assets is not taxable as it is a capital
receipt.
Fidelety Textiles P. Ltd vs.
ACIT (2008) 305 ITR 97 (Chennai)(TM)(AT)
27. Interest Ss. 14A,
36(1)(iii)
Dividend Income earned which
was exempt u/s 10(33) by the Assessee company carrying on business of dealing
in shares and securities, is incidental to its business activity, and, action
of Assessing Officer disallowing proportionate interest paid on the
investments made out of borrowed funds invoking provisions of section 14A was
held not justified.
It was further held that
entire expense is allowable u/s 36(1) (iii), as borrowed funds were utilized
for purchase of shares which were kept as stock-in-trade.
Pankaj Piyush Trade &
Investment Ltd. vs. ACIT (Mum.) 174 Taxman 93
28. Interest Ss. 234A,
234B
As the interest income on
compensation / enhanced compensation would be taxable only when dispute
pertaining to acquisition of land is finally settled, the levy of interest u/ss.
234A and 234B cannot be justified, prior to settlement of dispute as Assessee
was neither liable to file Return nor was required to pay advance tax in the
year which it belonged but settled subsequently.
ITO vs. Smt. Sarbati Devi
(2008) 174 Taxman 124 (Del.)
29. Interest on Borrowed
Capital Ss. 2(28A), 36(1)(iii)
Pre-payment premium, being
interest paid on moneys borrowed for business purpose and allowable as revenue
expenses is deductible in year of accrual thereof, as the Act does not
recognize concept of deferred expenditure. Thus action of Assessing Officer
allowing deduction of one-tenth holding same as capital in nature was held as
not justified.
Gujarat Guardian Ltd. vs.
JCIT (2008) 174 Taxman 151 (Del.)
30. Interest on Borrowed
Capital S. 36(1)(iii)
Assessee made advances to
related parties for business considerations and business expediency. No
proportionate interest paid by assessee on borrowed capital can be disallowed.
Yamaha Motor India (P) Ltd.
vs. ACIT (2008) 118 TTJ 395 (Del.)
31. Loss Return Ss. 74,
80, 139
Assessee is entitled for
claim of carry forward of Capital Loss made in the Revised Return filed within
time prescribed u/s 139 (5), on realization of mistake, made in Original
Return, which too was filed within time allowed u/s 139(1).
Sat Pal Sachdeva vs. ACIT
(2008) 174 Taxman 157 (Chandigarh)
32. Manufacture S. 80-IB
Business of the assessee,
which is producing masala of different varieties, is manufacture of goods or
is processing of goods and hence deduction u/s 80-IB is to be allowed.
ACIT vs. Empire Spices &
Foods Mumbai Ltd., ITA No. 4477/Mum/2006, A.Y. 2003-04, dt. 18-9-2008 BCAJ
p. 391, Vol. 40-B, Part 3, December 2008.
33. Mistake Appeal on
Record S. 254
When the fact of pendency of
Departmental appeal was not pointed out at the time of hearing of the appeal
of the assessee, it cannot be said that the Tribunal has committed an error
while hearing only the assessees appeal.
ACIT vs. Changepond
Technologies Pvt. Ltd., M.P. No. 137/Mds/08, A.Y. 03 04, dt. 14-8-2008
BCAJ p. 394, Vol. 40-B, Part 3, December 2008.
34. New Industrial
Undertaking S. 80-I, 80HHA
Process of standardization
and pasteurization of milk does not amount to manufacture / production for
purpose of claiming deduction under section 80-I and 80 HHA.
B. G. Chitale vs. Dy. CIT
(2008) 115 ITD 97 (Pune)(SB) / 305 ITR 81 (Pune)(AT)
35. Outstanding unsecured
loan for more than ten years S. 41(1)
Unsecured loan not being any
trading transaction neither written off nor transferred to Profit & Loss and
remained outstanding for more than 10 years could not be brought to tax under
the provisions of section 41(1) of the Act.
Inderson Leathers (P) Ltd.
vs. Addl. CIT (2008) 114 ITD 242 (Asr.)
36. Penalty S. 271(1)(c)
Concealment penalty can not
be composed only on ground that some additions had been made in the Assessment
which were subsequently, confirmed in Appeal. Further, it was held that though
findings given in Assessment is a good evidence, same is not conclusive in
penalty proceedings. For penalty, it has to be seen that additions made are
based on material from which an inference can be drawn that Assessee has
concealed Income
ITO vs. Ravi Khurana (2008)
173 Taxman 26 (Delhi)
A) The denial of deduction by
cancelling the assessment, by Commissioner acting u/s 263 pursuant to
subsequent judgment of the Supreme Court would not constitute concealment or
furnishing of inaccurate particulars.
B) Imposition of penalty u/s
271(1) (c) on expenses of foreign travel of Directors disallowed by A.O and
upheld by Tribunal for non business consideration, without holding that claim
for expenses reflected any falsity or lacking in bonafide was held to be not
justified as it was merely difference of opinion as regards allowability of
claim.
ACIT vs. Vijay Kiran Hotels
(P) Ltd (2008) 175 Taxman 126 (Chandigarh)
37. Profits derived from
Industrial undertaking Ss. 10A & 10B
Foreign exchange gain is
includible in the profits eligible for deduction under sections 10A & 10B.
Sony India (P) Ltd. vs. DCIT
(2008) 118 TTJ 865 (Del.)
38. Reassessment Reason to
believe S. 148
No reopening is permissible
merely on the ground that Balance Sheet revealed some NRI gifts and where
there was no investigation or any evidence having any live link or nexus with
the reason to believe that there was escapement of income. Reopening on such
facts is void ab initio and bad-in-law.
ACIT vs. O. P. Chawala (2008)
114 ITD 69 (Delhi) (TM) / 306 ITR 328 (Delhi) (TM) (AT)
39. Reassessment Service
of Notice S. 148
A. O. could not have assumed
any jurisdiction to complete assessment / reassessment unless legal and valid
notice in accordance with the provisions of law was issued and served. Mere
participation in the reassessment proceedings cannot be validated the
reassessment proceedings.
Anil Kumar Goel vs. ITO
(2008) 115 ITD 245 (Luck.)
40. Remission of liability
or cessation of trading liability S. 41(1)
Remission or cessation of
liability on account of waiver of loan which was not claimed as deduction in
any year cannot be brought to tax u/s. 41(1) in any year.
Coastal Corpn. Ltd. vs. Jt.
CIT (2008) 307 ITR 78 (Visakhapatnam) (AT)
41. Re-opening S. 147
Assessee HUF filed Return
without disclosing Capital Gain arising on sale of an agricultural land.
However, Assessee disclosed the same by way of Note, below the Capital
Account, stating that Capital Gain is not taxable, as deduction u/s 54B is
available on Gain being investment in another agricultural land, Return was
originally accepted
u/s 143(1)(a), and later same
was re-opened u/s 148 on ground that Capital Gain is not included in the
Return of Income. Held, that as original assessment was completed u/s
143(1)(a), no opinion was formed therein, and it can not be said that
reassessment was on basis of change of opinion, and thus re-opening was
justified.
Section 54 B : It was held
that deduction u/s 54 B is available to all the Assessee. The word Assessee
is not qualified by any class of Assessee and HUF is eligible for deduction
u/s 54 B.
K. S. Jain & Sons (HUF) vs.
ITO (2008) 173 Taxman 114 (Del.)
42. Search & Seizure
Jurisdiction Ss. 132A, 158BC
Jurisdiction to complete
assessment u/s. 158BC is conferred on the concerned A.O. only on physically
handing over all the relevant books of account/documents or assets
requisitioned u/s. 132A of the Act.
ACIT vs. Sonu Verma (2008)
115 ITD 37 (Asr.)(SB) / 305 ITR 406 (Asr.)(SB)(AT)
43. Speculation transactions
S. 43(5)
The loss suffered in F & O
transactions could not be considered as speculation loss under section 43(5).
R.B.K. Securities Ltd. vs.
ITO, ITA No. 2465/Mum/2006, Bench B, A.Y. 2003-04, dt. 21-7-2008 BCAJ p.
27, Vol. 40-B, Part 1, October 2008.
44. TDS Credit for Tax
Deducted when income not assessable in relevant A.Y. S. 199
Credit for Tax Deducted at
Source, if income is not assessable in relevant assessment year, shall be
allowed on pro-rata basis; i.e., in proportion in which such income is offered
for taxation in different assessment years.
Pradeep Kumar Dhir vs. ACIT
(2008) 303 ITR 45 (Chand.) (TM)(AT)
45. TDS Credit for Tax
Deducted when no TDS certificate is furnished by employer S. 199
In such case TDS could not be
recovered from assessee in view of section 205 of the Income-tax Act.
Capt . J. G. Joseph vs. Jt.
CIT (2008) 303 ITR 395 (Mum.)(AT)
46. Transfer Pricing S.
92C
Transfer pricing provisions
are to prevent shifting of profits outside India and the assessee is claiming
benefits under section 10A. The transfer pricing provisions ought not to be
applied to the assessee.
Philips Software Centre (P)
Ltd. vs. ACIT (2008) 119 TTJ 721 (Bang.)
47. Tribunal Power S.
254
Tribunal has no jurisdiction
to examine validity of the order for appointment of special auditor under
section 142(2A) in the course of appeal before it.
ACIT vs. Badri Ram Choudhary
(2008) 118 TTJ 492 (Jd.)
48. Unexplained Investment
S. 69
Assessees Income cannot be
assessed on basis of statement of a third party, unless there is a material to
corroborate that statement. Burden shifts on the revenue to prove that
Assessee had deliberately suppressed his Income.
ITO vs. Dr. R. L. Narang
(2008) 174 Taxman 96 (Chand.)
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