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8/3/2019 Digest Case Laws October 2011
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MonthlyDigestofCaselaws(October2011) http://www.itatonline.org1
MONTHLYDIGESTOFCASELAWS(OCTOBER2011)
(JournalsReferred:ACAJ/BCAJ/BLR/CITC/CTR/DTR/ITD/ITR(Trib.)/ITR/SOT/SSC/TTJ/TLR
/Taxman/Taxation
/Tax
World,
www.itatonline.org)
S.4:Income CapitalreceiptBusinessincome Capitalgains.(S.28(i),45).
Assessee,administratorof theestateofdeceased,havingpurchased the right to receive the sale
proceedsoftheestatebyenteringintoanindenturewiththe legateeonaccountofclosepersonal
relationswith her and not for overriding commercial considerations. The transaction cannot be
construedasanadventure inthenatureoftrade.Thesaidreceiptcannotbetaxedevenascapital
gainsastheestatecontinuedtobetheownerofthepropertiesandassuchpaymentdidnotresult
inextinguishmentofassesseesrighthencetherewasnotransferofanycapitalasset.(A.Y.200405).
DyCITvNusliNevilleWadia(2011)61DTR218/141TTJ521(Mum)(Trib).
S.4: IncomeMethodofAccountingNPAs.
Income fromnonperformingassetsshouldbeassessedoncashbasisandnotonmercantilebasis
despiteoftheassesseemaintainingaccountsonmercantilebasis.
CITv.CanfinHomesLtd.(2011)201Taxman273(Kar.)(HighCourt).
S.5:Income Accrual Advancefromcustomerstowardsbookingofcruisetickets.
AssesseebeingengagedinthebusinessoftravelagencyasarepresentativeofRCCLbookingstickets
forthelatter'scruiseandentitledtobasecommissionof25%onallbookingsasperthetermsofthe
agreementbetweentheparties,thecommissionaccruestotheassesseewiththebookingoftickets
againstfullpaymentasperthemercantilesystemofaccountingfollowedbyhim;however,assessee
isentitledtocreditof10%onaccountoftravelagentscommissionwhichispayablebyhim.
CITv.
Gautam
R.
Chadha
(2011)
62
DTR
58
(Delhi)
(High
court)
S.5: IncomeAccrual Fixeddepositsinbanks Interest
Assesseesocietyheld fixeddeposits inbanks foratermexceedingmorethanoneyear. Ithadnot
shown any interest income from said FDsduringprevious yearon ground that income from FDs
wouldbeofferedtotaxonitsreceiptonmaturityonbasisofTDScertificate issuedbybank.Itwas
heldthattheassesseewasnotliabletodeclareinterestincomeaccruedbutnotdueintherelevant
assessmentyearasthesaidsumwasnotacknowledgedbybankorbytheassessee.(A.Y.200708).
PuriDistrictCoop.MilkProducersUnionLtd.v.ITO(2011)132ITD127(Cuttack)(Trib).
S.9(1): IncomedeemedtoaccrueorariseinIndiaPermanentEstablishment DTAAIndia
UK.
[Art.
5]
AssesseewasBritishCompany. Itsuppliedcertainpartsandequipmentsto Indiancustomers.RRIL
wasassessees100%subsidiarysetupinIndiathroughwhichitcarriedoutmarketingandsellingof
goodstoIndiancustomers.A.O.afterholdingRRILasPEoftheassessee,attributed100%ofprofits
earned from sale of goods to Indian customers to activities carried on in India. The Tribunal
restricted such attribution to35% holdings that profits attributed tomanufacturing activity and
researchanddevelopmentactivities, i.e.50%and15%,respectivelyhadtobeexcluded.Assessee
filedappealbeforetheHighCourtcontendingthatnetresearchanddevelopmentexpensesshould
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alsobereducedwhilecomputingoperatingprofits;andthatTribunalhadnotconsideredobjections
anddocumentsfiledby itonaspectofPEproperlyand,therefore,mattershouldberemandedfor
reconsideration.Heldthatexpensesonresearchanddevelopmentwerealreadytakencareofwhen
remunerationat
rate
of
35%
was
attributed
to
marketing
activities
in
India
on
which
global
profits
wasapportioned.FromtheorderoftheTribunalitwasclearthatwhileholdingthatRRILconstituted
PEof assessee, ithad undertaken critical analysisofmaterialon record includingobjections and
documentsfiledbytheassesseeandthereforetherewasnoreasontoremandthecasebacktothe
Tribunal.
RollsRoycePlcv.DIT(Internationaltaxation)(2011)202Taxman309(Delhi)(HighCourt)
S.9 (1) (i) : Incomedeemed to accrueorarise in India Factof OfficePEunderArticle5(2)
irrelevant if there isno ConstructionSitePEunderArticle5(3) DTAA IndiaNetherlands.
[Art.5(3),5(2)]
Theassesseehada siteorproject in India.UnderArticle5 (3)of the treaty, sucha siteor
projectisaPEonlyifitcontinuesforaperiodofmorethansixmonths.Astheassesseescontract
wascompleted
in
two
months,
there
was
no
PE
under
Article
5(3).
The
argument
that
the
Mumbai
officewasaPEunderArticle5(2)isnotacceptablebecausewhileArticle5(2)isageneralprovision,
Article5(3)isaspecificprovisionwhichprevailsoverArticle5(2).
CITv BKI/HAMv.o.f.(Uttarakhand)(HighCourt)(www.itatonline.org)
S.9(1)(vi): IncomedeemedtoaccrueorariseinIndiaRoyalty Software.
Considerationreceivedbytheapplicant,aSriLankanCompany, from ICEL forgiving ittherightto
useitscopyrightedsoftwareanduseitforlattersownpurposeswheneverandwhereverneededby
it istaxable inIndiaasroyaltyundercl.(v)ofExpln.2ofS.9(1)(vi)aswellasunderArt.12.2ofthe
IndoSriLankaDTAAandconsequently,provisionofwithholdingtaxu/s195isapplicable.
MillenniumITSoftwareLtd.,InRe(2011)62DTR1/338ITR391(AAR)
S.9(1): IncomedeemedtoaccrueorariseinIndiaPermanentestablishment Royaltyandfees
fortechnicalservicesDTAA India USA.(S.9(1)(vii)&90).
In thecontractof thekindundertakenby theassessee, if there isacompositeconsideration, the
samecanbeconvenientlysegregated indifferentcomponents. If theprofits fromsupplycontract
are held to be taxable separately, as the supply is amilestone in thewhole contract, then the
treatment meted out to profits on sale of equipment and consideration received for supply of
software will have to be different, as the two assets are of different nature involving different
profitabilities.TheA.O.bifurcated intheratioof30 :70.Astheassesseewasunwillingtogivethe
detailsthebifurcationmadebytheA.O.wasjustified.
RaytheonCompanyv.DCIT(2011)62DTR1(Del)(Trib)
S.9(1)
(vii)
:Income
deemed
to
accrue
or
arise
in
India
Installation
project
Permanent
establishmentDTAAIndiaSingapore.(Art5.3)
Four installation projects undertaken by the applicant, a Singaporean company, in India requires
settingup, fitting,placing andpositioningprojects coveredunderArt5.3of the IndoSingapore
DTAA, and all these projects being independent projects with no interconnection and
interdependenceamongstthem.ItcannotbesaidthattheapplicanthasaPermanentestablishment
intermsofart5.2oftheDTAAprovidedthatthedurationofeachoftheprojectsdoesnotexceed
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183days inone financialyearandtherefore, incomeearnedbytheapplicantform itsactivitiesof
executionoftheinstallationprojectisnotliabletotax inIndia.
TiongWoonProject&ContactingPteLtd(2011)61DTR337(AAR)/338ITR386(AAR)
S.10(23C)(via): ExemptincomesHospitalApplicationBeyondtime.
Application u/s 10(23C)(via) filed beyond time. Accounts not maintained properly. No evidence
regarding activities. Registration u/s 80G and exemption u/s 12A in prior years not conclusive.
Rejectionofapplicationwasjustified.
All India J.D.EducationalSocietyv.DirectorGeneralof income tax(exemptions) (2011)338 ITR
218(Delhi)(HighCourt).
S.10A:Exemptincomes Freetradezone CompetentauthorityFEMA RBI.
TheassesseemadeanapplicationtotheRBIon7102004seekingextensionoftimeforrealisation
of the export proceeds. The RBI granted approval in realisation of exports proceeds but said
approvalwasissuedinthecontextoftheprovisionsoftheFEMAandtherewasnoformalapproval
wasgrantedbytheRBIundersection10A.TheTribunalheldthatoncetheassesseehadappliedfor
extensionandhadcompletedalltheformalitiesandinresponsetheRBIhadtakentheremittances
onrecord,thennon issuanceofformal letterofapprovalbytheRBIcouldnotbeheldagainstthe
assessee, it must be held that the extension had been granted in substance and therefore the
benefitofsection10Ahadtobeallowed.ThecourtupheldtheorderoftheTribunal.(A.Y.200405).
CITvMorganStanleyAdvantageServices(P)Ltd(2011)202Taxman40(Bom)(HighCourt).
S.10A: Exemptincomes FreetradeZone Convertibleforeignexchange Localsales.
Section 10A provides for exemption only on profits derived on export proceeds received in
convertible foreign exchange.Benefit cannotbe extended to local salesmadebyunits in special
EconomicZone,whetheraspartofdomestic tariffarea salesoras interunitsaleswithinzoneor
unitsin
other
Zones.
(A.Y.
2004
05).
CITvElectronicControls&DischargeSystems(P)Ltd(2011)202Taxman33(Ker)(HighCourt).
S. 10A : Exempt incomes Free Trade Zone ExportOriented UndertakingExemptions under
sections10A,10B continue to exemptprofits& so lossofotherunits (eligible&noneligible,
includingB/floss)notliableforsetoffagainstsections10A,10Bprofits.
TwoissueswherebeforetheHighCourtforAY200102&onwards,(i)Whetherthelossincurredby
anoneligibleunit&(ii)whetherthebroughtforwardunabsorbed loss&unabsorbeddepreciation
oftheeligibleunithastobesetoffagainsttheprofitsoftheeligibleunitbeforeallowingdeduction
u/s10A/10B.
Heldthat(a)S.10Aallowsdeductionfromthetotal income.Thephrasetotal income ins.10A
meansthetotal incomeoftheSTPunitandnottotal incomeoftheassessee.Consequently,s.10Adeductionhastobegivenbeforecomputingtheprofits&gainsofbusinessunderChapterIV.
Thoughs.10Awasamendedtomakeitadeductionprovision,itcontinuestoremaininChapterIII
andwas notmoved to Chapter VIA. The result is that even now s. 10A is in the nature of an
exemptionprovisionandtheprofitsoftheeligibleunithavetobedeductedatsourcelevelanddo
notenterintothecomputationofincome.
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ofpropertybywayofcomplexactivities,therentincomederivedasownerofpropertybeassessed
as`IncomefromHouseProperty.
RomaBuilders(P)Ltd.v.Jt.CIT(2011)131ITD91/60DTR231(Mum)(Trib.)
S.28(1):BusinessincomeGiftsfromdevoteesonbirthdayVocationProfessionCapitalreceipt.
Assessee as religious head was not performing any religious rituals for his devotees for
consideration. He was doing charitable work and spiritualisation for benefit of mankind. Gift
receivedbyassessee fromdevoteesoutofnatural loveandaffection.Receiptcannotbe taxedas
incomefromanyvocationorprofession.
CITvGopalaNaickerBangarue(2011)Tax.L.R.686(Mad)(HighCourt).
S.32: DepreciationRate PrintersUPS.
PrintersandUPSfallwithintheclassofcomputerperipheralsandtherefore,eligiblefordepreciation
attherateof60%.
Haworth
(India)
(P)
Ltd.
v.
Dy.
CIT
(2011)
140
TTJ
446
(Delhi.)
(Trib).
S.32: Depreciation ComputerPeripheralsIntegralParts
Computer peripherals like printers scanners, servers, UPS, etc., form integral part of computer
systemonwhichhigherdepreciationof60%isallowable.[A.Y.200506]
ITOv.OmniGlobeInformationTechnologiesIndia(P)Ltd(2011)131ITD280(Delhi)(Trib).
S.35E:Deductionforexpenditureonprospectingetc,forminerals.
Wheretheassesseeincurredaloss,thedeductionundersection35Eisnotavailable.(A.Ys1997,98
&200001to200405).
SingareniColliweriesCompanyLtdvAsstCIT(2011)141TTJ593(Hyd)(Trib)
S.36(1)(ii): Businessexpenditure BonusorCommission CommissioninlieuofDividend.
Paymentofcommissiontodirectorsowningentirecapitalwerepaidcommissionfortheirhardwork
notallowedasitwaspaidinlieuofprofitordividendasitwasrevealedthattheprofitearnedwas
due to improved market conditions and not because of any extra services were rendered for
improvingtheperformanceofthecompany.
DalalBroachaStockBroking(P.)Ltdv.Addl.CIT131ITD36(Mum.)(SB)(Trib)
S.36(1)(iii): Businessexpenditure Interestpayableonloans.
Theassesseewasinthebusinessoftradinginsharesandhadclaimedinterestonloansobtainedfor
business. The shareshadbeen shownunder Investments in itsbooksand hence theAssessing
Officerdisallowed interestonborrowings. Itwasheld that treatment inbookswasnotconclusive
andgiven
the
nature,
volume
of
the
assessees
business,
it
was
clear
that
the
assessee
was
trading
in
sharesandhenceinterestcouldnotbedisallowed.
CITv.AravindPrakashMalpani(2011)200Taxman41(Kar.)(Mag.)(HighCourt)
S.37(1): BusinessExpenditureExpendituretoprocurerawMaterial.
Expenditure incurred for the purpose of procuring the rawmaterial in thermal power station is
allowableexpenditure.
ACITv.ChettinadCementCorporationLtd.(2011)140TTJ100(Chennai)(Trib)
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S.37(1): BusinessExpenditure Brokenperiodinterest.
Brokenperiodinteresthastobeallowedifthesecuritieswereheldascurrentassets.
Jt.CIT
v.
Dena
Bank
(2011)
139
TTJ
81
(Mum.)
(Trib)
S.37(1):Businessexpenditure Capitalorrevenue Leaserentof99years.
Lease rentofRs.48,02,616/ paid toG.I.D.C forperiodof99 yearsheld tobe revenue innature.
Registrationof leasedeed isnot relevant fordeciding the issueofcapitalor revenue.HighCourt
confirmedtheorderoftribunal.
DY.CITvSunPharmaceuticalsIndLtd(2011)224Taxation456(Guj)(HighCourt).
S.37(1):Businessexpenditure Capitalorrevenue Softwareusage.
Softwareusageandproductdevelopmentexpenses incurredbytheassesseecompanyengaged in
internetrelatedservicesareallowableasrevenueexpendituretotheextentthesameareroutine
andperiodicexpensesnotresultingincreationofnewassets.(A.Y.200506).
DyCITvRediffComIndiaLtd(2011)61DTR426/47SOT310(Mum)(Trib).
S.37(1):Businessexpenditure Foreigntourexpenses.
Foreigntravelexpensesofdoctorpartnerforobtainingthe latest informationonthetechnological
advancements,concerningdentalimplantsareallowableasbusinessexpenditure.(A.Y200405)
DyCITvB2CImplants(2011)141TTJ638(Mum)(Trib).
S.37(1):Businessexpenditure Expenditureonforeigneducationofdirectorbeingsonofthe
majorshareholder.
Wheretheassesseecompanywasnotabletosubstantiatethatsendingofthedirectorfortraining
abroadwasforthebenefitofthebusinessoftheassessee,theexpensesincurredforforeigntraining
werenot
allowable
in
the
hands
of
assessee
company.
VisheshEntertainmentLtdvs.ACIT(2011)60DTR284(Mum)(Trib.)
S.37(1) : BusinessExpenditureCapitalorRevenueExpenditure Expenditureon Application
Software revenueinnature
The expenditure incurred for the purpose of installation of Oracle software for financial
accounting, inventoryandpurchaseheldtoberevenue innatureas itdidnotresult increationof
newassetoranewsourceof income.Thetestofenduringbenefit isnotacertainoraconclusive
test.Whatisrequiredtobeseenistherealintentandpurposeoftheexpenditureandwhetherthe
expenditureresultsincreationoffixedcapitalfortheassessee.Expenditureincurredwhichenables
theprofitmakingstructuretoworkmoreefficientlyleavingthesourceoftheprofitmakingstructure
untouched isexpense inthenatureofrevenueexpenditure.Testofenduringbenefitoradvantage
collapses insuch likecasesespecially incaseswhichdealwithtechnologyandsoftwareapplication
whichdonot in anymanner supplant the sourceof incomeor added to the fixed capitalof the
assessee
Followed:AlembicChemicalWorksCoLtdvCIT(1989)177ITR377(SC).
CITvAsahiIndiaSafetyClassLtd.(Delhi)(HighCourt)(www.itatonline.org)
S.37(1): BusinessExpenditureBenefittootherpersonNowrittenagreement.
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Iftheexpenditureisincurredforthepurposeofassesseesbusinessthennopartofthesamecanbe
disallowed merely because some other person has benefited out of the same, and there is no
writtenagreementwiththepayee/recipient.
CITv.
Agra
Beverages
Corp
Pvt.
Ltd.
(2011)
200
Taxman
43
(Delhi)
(Mag.)
(High
Court)
S.37(1): BusinessExpenditureGlowsignboards.
Expenditureincurredonglowsignboardsforpurposeofadvertisementbytheassessee isrevenue
expenditure.
CITv.OrientCeramics&IndustriesLtd.(2011)200Taxman64(Delhi)(Mag.)(HighCourt).
S.37(1): BusinessExpenditureForeignToursExpansionofexistingproject.
Expenditureincurredbytheassesseeonforeigntoursofitspersonnel,inconnectionwithexpansion
ofexistingprojectiseligiblefordeductionasrevenueexpenditure.
CITv.J.K.SyntheticsLtd.(2011)200Taxman101(Delhi)(Mag.)(HighCourt)
S. 40(a) (i) :Amounts not deductible NonResident Certificate by a Chartered Accountant
Deductionoftaxatsource.(S.195).
Acertificateissuedbyacharteredaccountantcannotbeaconclusivedeterminationoftaxabilityof
income in thehandsof the recipient.Questionof taxability in thehandsof the recipient remains
open and the assessee continues to have obligation to file all the relevant details, enabling
determinationofsuchliability,beforetherevenueauthorities.MatterwasremittedtotheAssessing
Officertoexaminethetaxabilityofthepaymentsinthehandsofrecipients,onmerits.(A.Y.200506).
DyCITvRediffComIndiaLtd(2011)61DTR426/47SOT310(Mum)(Trib).
S.40(a) (ia) :AmountnotdeductibleShortDeductionofTaxat sourceNodisallowance for
shortdeductionTDSdefault.
Whereit
is
acase
of
short
deduction
of
payment
as
against
non
deduction
of
TDS,
disallowance
u/s
40(a)(ia) couldnotbemade. ThoughS.40(a)(ia)provides foradisallowance ifamounts towards
rent, etc have been paidwithout deducting tax at source. It does not apply to a case of short
deduction of tax at source. As the assessee had deducted u/s 194C, itwas not a case of non
deductionofTDS.IfthereisashortfallduetodifferenceofopinionastowhichTDSprovisionwould
apply, the assesseemaybe treatedasadefaulteru/s201butnodisallowance canbemadeu/s
40(a)(ia).[Chandabhoy&Jassobhoy(ITATMumbai)followed]
DCITvS.K.Tekriwal(Kolkata)(ITAT)(www.itatonline.org)
S.40(a)(ia):Amountsnotdeductible Deductionoftaxatsource RetrospectiveAmendment.
WheretheassesseeactedbonafideinconformitywiththeprovisionofActandthelegalpositionin
not
deducting
tax
at
source,
retrospective
amendment
could
not
make
him
liable
and
therefore
no
disallowanceunders.40(a)(ia)wascalledfor.
SterlingAbraiveLtdv.ACIT(2011)57DTR361(Mum)(Trib)
S.40(b):AmountsnotdeductibleFirmPartnerInterestSalary.(S.28(i),29,32145).
Assessee partnership firm paid interest to partners on their capital account and claimed the
deduction. Assessing officer held that as the assessee has not claimed depreciation in books of
account however claimed depreciation in the computation, he reworked the capital balances of
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partnersby reducing the cumulative amountofdepreciation therefrom and allowed the interest
computedonsuchreducedcapitalbalances.TheTribunalheldthat intermsofsection40(b),read
withsection28(i)and29AssessingOfficerisnotentitledtodisallowpaymentofinteresttopartners
byre
working
capital
account
balances
of
partners.
(A.Ys
1999
2000
&
2002
03).
SwarajEnterprisesvITO(2011)132ITD488(Visakhapatanam)(Trib).
S.40(b)(v):AmountnotdeductiblePartnershipDeedmustquantifyorlaydownthemannerof
quantifyingremunerationtopartners
S.40(b) (i) to (v)whichprescribe theconditions fordeductionof remunerationpaid toapartner
requires that thepaymentshouldbeauthorizedby,andbeinaccordancewith the termsof the
partnershipdeed.Thismandatesthatthequantumofremunerationorthemannerofcomputing
thequantumofremunerationshouldbestipulated inthepartnershipdeedandshouldnotbe left
undetermined,undecidedortobedeterminedordecidedonafuturedate;
SoodBrij&AssociatesvCIT(Delhi)(HighCourt)(www.itatonline.org)
S.40(b)
(v)
:Amounts
not
deductible
Interest,
Salary,
etc.
paid
by
firm
to
partner.
Section40(b)(v)doesnotlaydownthatremunerationpayabletopartnershouldbefixedormethod
ofremunerationshouldbeprovidedforinthepartnershipdeed.Allthatthesaidsectionprovidesis
that iftheremunerationpaidtopartner is inaccordancewiththepartnershipdeedanddoesnot
exceed the aggregate amount laid down in the said section, then the same shall be eligible for
deduction.Circularno.739whichstatesthatamountofremunerationshouldbeprovidedforinthe
deed,cannotoverridethestatutoryprovisionsandmustyieldtothesubstantiveprovisions.
DurgaDassDevkiNandanv.ITO(2011)200Taxman318(HP)(HighCourt).
S.40A(2):Amountsnotdeductible Purchasetransactionfromassociateconcerns.
Assessing Officer did not call upon the assessee to furnish any evidence regarding purchase
transactionfrom
associate
concern,
no
disallowance
could
be
made
applying
provisions
of
section
40A(2)(b),whentherewerenocommentsuponthematerialplacedbeforehimduringthecourse
ofremandproceedings. (A.Y200405)
DyCITvB2CImplants(2011)141TTJ638(Mum)(Trib).
S.40A(2):AmountsnotdeductiblePaymentofinteresttoassociatedconcern.
Obtaining the unsecured loan @ 11% from associated concern was commercially expedient as
assessee could earn more income from such borrowed funds and secured loans were neither
availableeasilynortheywereenoughtocaterthebusinessneedsoftheassesseeasitdidnothave
enough security and/or provision of guarantee for obtaining such loan and therefore no
disallowanceu/s40A(2)wascalledfor.
Addl.CITvReligareFinvestLtd.(2011)62DTR46(Delhi)(Trib).
S.41(1):Profitschargeabletotax Businessincome Remissionofliability Unclaimedbalances.
Theassesseewasashippingagentprovidingservicestoshipsandactedasoffshorerepresentative.
During the course of its business, the assessee was required tomake deposits on behalf of its
customersonvariousaccountswiththeMumbaiPortTrust.Afterrecoveringthecharges,Mumbai
PortTrustusedtorefundtheamountswhich inturn,wereadmittedlyreturnedbytheassesseeto
itsprincipalasandwhendemanded.Therefundofamount lyingwiththeassessee formorethan
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S.72 :Carryforwardandsetoff SpeculationbusinessDerivatives Samebusiness.(S.43(5),73,
263).
Lossfrom
trading
in
derivatives
treated
as
speculation
loss
in
earlier
years
carried
forward.
The
said
loss canbe set off against the profit from samebusiness. i.e. allowable against theprofit from
trading in derivatives after amendment. Revision order of commissioner under section 263was
quashedonmerit.(A.Y200607).
GajendraKumarT.AgrwalvITO(2011)11ITR 640(Mum)(Trib).
S.73:Lossinspeculationbusiness Billsrediscountingbusiness Saleandpurchaseofshares.
Assesseewasmainlydoingbusinessofbilldiscounting/rediscounting,undercontractualobligation
betweentheassesseeandpartiestothebills.Billswererediscountedandplacedonlyascollateral
security.TheTribunalheldthatactivityofbillsrediscountingwouldamounttograntingofloansand
advancesandaccordingly,Explanationtosection73wouldnotbeapplicable,hencelossonaccount
ofsaleandpurchaseofsharescouldnotbetreatedasspeculation losses,thoughtheobjectclause
ofmemorandum
of
Association
showed
that
advancing
the
money
was
only
ancillary
object.(A.Y.199697).
MomayaInvestments(P)LtdvITO(132ITD604(Mum)(Trib).
S.80HHC: DeductionExportProfitofBusinessForpurposeofS.115JA/JBdeductiontobe
computedasperP&Lprofitandnotnormalprovisions.
Thedeductionu/s80HHCistobeworkedoutnotonthebasisofregularincometaxprofitsbutithas
tobeworkedoutonthebasisoftheadjustedbookprofits inacasewheres.115JA isapplicable.
Accordingly,thedeductionclaimedbytheassesseeu/s80HHC&80HHEhastobeworkedoutonthe
basisofadjustedbookprofitu/s115JAandnotonthebasisoftheprofitscomputedunderregular
provisionsoflawapplicabletocomputationofprofitsandgainsofbusiness.
Viewof
Special
Bench
in
DCIT
vSyncome
Formulations
106
ITD
193
upheld.
CITv.BhariInformationTechSystems(SupremeCourt)(www.itatonline.org)
S.80IA:Deduction Industrialundertaking Setoffof Carryforwardlosses.
Aftersetoffofcarried forward losses, the incomeof theassessee for theA.YwasRs.14,57,200/
while the profit from industrial undertaking were Rs 98.43 lacs . The Tribunal restricted the
deductiontoRs14,57,200.TheHighcourtupheldtheorderofTribunal(A.Y.199697).
CITvTridossLaboratoriesLtd(2011)224Taxation382(Bom)(HighCourt).
S.80IB: Deduction Profits&GainsfromIndustrialUndertakingsProduction
Theword production iswider in scope than manufacture andwould include byproducts and
otherresidualproductsresultingduringthecourseofmanufacture.Hencetheactivityofconverting
boulder into grits/stone chips/powder may not be manufacturing but would amount to
production and therefore the assessee would be entitled to deduction u/s. 80IB on the said
activity.
CIT v.Mallikarjun Georesources Associates (2011) 201 Taxman 86 (Uttarakhand) (Mag.) (High
court)
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S. 80IB : Deduction Profits&Gains from IndustrialUndertakings Refund of Excise Duty
Transportsubsidy.
RefundofExciseDutyhasadirectnexustothemanufacturingactivityoftheassesseeandhencethe
samequalifies
for
deduction
under
section
80
IB.
Transport subsidy & Interest Subsidy Transport & Interest Subsidies received by the assessee,
cannot be said to be derived from the industrial activity and the same would not qualify for
deductionundersection80IB.
CITv.MeghalayaSteelsLtd.(2011)201Taxman135(Gau.)(Mag)(HighCourt)
S.80IB(10): DeductionHousingprojects OwnershipofLand.
When the assessee has taken possession of land after the payment of full consideration and
developed it, theassesseehas fulfilledall the conditions laiddown in section80IB(10), therefore
entitledtodeductionundersection80IB.
ACITv.C.Rajini(Smt)(2011)140TTJ218(Chennai)(Trib)
S.92C:AvoidanceoftaxTransferpricingComputationofArmsLengthPrice.
The High Court made certain observations on merits, while remanding the matter to the TPO,
virtuallyconcludingthematter.TheTPOwasdirectedtoproceedwiththematteruninfluencedby
theobservations/directionsgivenbytheHighCourt.
MarutiSuzukiIndiaLtd.v.Addl.CIT[2011]335ITR121(SC)
S.115AD:ForeignInstitutionalInvestorsShorttermcapitallossfromexchangetradedderivative
transactions.(S.43(5)
Sec.43(5)hasnoapplicationtoFIIsinrespectof`securitiesasdefined inExplanationtoS.115AD,
incomefromwhosetransferisconsideredasshorttermorlongtermcapitalgain.Inthefactsofthe
case,IncomefromderivativetransactionsresultingintolossofRs.12.27croreswastobeconsidered
asshort
term
capital
loss
on
the
sale
of
securities
which
is
eligible
for
adjustment
against
short
term
capitalgainsarisingfromthesaleofsharesandnotspeculationloss.
LGAsianPlusLtdv.ACIT (2011)60DTR159(Mum)(Trib.)
S.115J : CompanyBookProfitsUnabsorbeddepreciation Brought forward losses. (Companies
ActS.205).
Assessee hasshownlossofRs16,48,74,073/ intheprecedingyearandclaimeddepreciationofRs
13,85,66,473/ forthesaidprecedingyear.Oncethebroughtforward isarrivedataftertakinginto
account thedepreciation,itistheamount ofdepreciationwhichislessthantheloss,istobesetoff
intermsofclause(iv)ofexplanationtosection115J forcomputingthebookprofit.(A.Y.199091)
PeicoElectronics&ElectricalsLtdvCIT(2011)61DTR401(Cal)(HighCourt).
S.115JA:CompanyBookprofits Company PriorperiodexpensesProvisionforbadanddoubtful
debt.(S.115JB).
Priorperiodexpenditureandanyprovision forbadanddoubtfuldebt,cannotbedeductedwhile
computingbookprofitundersections115JA,115JB.(A.ys1997,98&200001to200405).
SingareniColliweriesCompanyLtdvAsstCIT(2011)141TTJ593(Hyd)(Trib).
S.115JA: Company BookProfits ProvisionforBadDebt.
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Whileworkingoutbookprofit,provisionforbaddebthastobeaddedbacktothenetprofitunder
section115JAExpl.(g).
ACITv.ChettinadCementCorporationLtd.(2011)140TTJ100(Chennai)(Trib)
S.115JB:CompanyBookProfitsPowerofAssessingOfficer.
Once theaccounts including theprofitand lossaccountarecertifiedby theauthoritiesunder the
CompaniesAct ,1956, it isnotopen to theAssessing Officer to contend that theprofitand loss
accounthasnotbeenprepared inaccordancewith theprovisionsofCompaniesAct ,1956.Hence
theTribunalwasright indeletingtheadditionof1.98CroresmadebytheAssessingOfficerwhile
computingthebookprofitsundersection115JB.
CITvAdbhutTradingCoPvtLtd(2011)338ITR94(Bom)(HighCourt).
S.132 : Search and SeizureAuthorisationu/s132(1)Noticeu/s131(1A) afterwarrantu/s
132(1)
Section131(1A) isonly an enabling sectionand itdoesnot in anymanner effect the search and
seizureoperation carried on under 132. For the purpose ofjudging the actionof the concerned
authority with respect to search and seizure, S.132 alone has to be considered. S. 132 is an
independentcodeitself.Materialscollectedbeforesearchshowedthatofficerconcernedcouldhave
reason tobelieve that the petitionerwere in possession ofmoney, bullion etc.,wholly or partly
undisclosedincomeorassetandthereforetherewasreasontobelievewithinmeaningofS.132(1).
Further,after searchand seizureoperation, thepoweru/s131(1A)cannotpossiblybe invoked in
viewofitsplainlanguageandifthepowerisinvoked,itwillnotinanymanneraffectthevalidityof
thesearchandseizureoperation.S.131(1A)and132shouldbeinterpretedharmoniously.
V.S.Chaudan(Dr)&Anr.vDIT(Inv)(2011)62DTR67(All)(HighCourt).
S.132: SearchandSeizureWarrantofAuthorisation
Theopinion
or
the
belief
so
recorded
must
clearly
show
whether
the
belief
falls
under
clause
(a)
or
(b)or(c)ofsection132(1)oftheAct.Thesatisfactionnoteshoulditselfshowtheapplicationofmind
and the formationofopinionby theofficerordering thesearch. Inorder tojustify theaction the
authoritymusthave relevantmaterialson thebasisofwhichhecan formanopinion thathehas
reasontobelievethatactionagainstapersonu/s132oftheActisneeded.Thebeliefshouldnotbe
basedonsomesuspicionordoubt.
VisaComtradeLtd.vUOI(2011)338ITR343(Orissa)(HighCourt)
S. 144C : Dispute Resolution Panel Power to enhance Confined to issues raised in draft
assessmentorder Futurelossesallowableasdeduction
U/s144C(5),theDRPcan issuedirectionsonly inrespectoftheobjectionsraisedbytheassessee
and the objections are to be in terms of the variation proposed in the draft order. S. 144C (8)
restrictsthe
powers
of
the
DRP
to
confirm,
reduce
or
enhance
the
variations
proposed
in
the
draft
assessmentorder.Hence,theDRPsdirectionshavetobewithreferencetotheobjectionstothe
variationsproposedinthedraftorder.(GEIndiaTechnologyCentrevs.DRP(Kar)followed);
As regards the deduction for future losses,Accounting StandardAS7 requires expected loss
(difference between probable contract costs and contract revenues) to be recognised as an
expenseimmediatelyirrespectiveofwhetherworkhascommencedandthestageofcompletionof
activity. Accordingly, estimated or foreseeable losses are allowable as a deduction. (Jacobs
EngineeringPrivateLtd(ITATMumbai)&MazagaonDock29SOT356followed).
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DredgingInternationalNVvADIT(Mumbai)(ITAT)(www.itatonline.org)
S.147:ReassessmentNoticeu/s142(2)
Thereis
no
requirement
of
notice
u/s
143(2)
in
the
case
of
reassessment
u/s
147
CITv.MadhyaBharatEnergyCorpn.Ltd.(2011)62DTR37(Delhi)(HighCourt)
S.147:ReassessmentBeyondfouryearsRetrospectiveamendmentS.80HHC
Duringthecourseofassessmentproceedings forA.Y.200102&200203,assesseesclaim for
deduction u/s 80HHC was allowed. After the expiry of four years from the end of relevant
assessment year an amendment to S. 80HHCwas broughtwith retrospective effect from 0104
1998.Itwasadmittedpositionthattheconditionswerenotthereinatthetimeoffilingofreturnnor
at the time oforiginal assessments.A.O. issued noticeu/s 148. The Tribunal, on examination of
materialonrecord,concludedthatalltherelevantfactswereavailableonrecordandthatitcannot
besaidthatassesseehadfailedtodisclosefullyandtrulyallmaterialfacts,andthusnoreopening
couldbedone.Held that, theTribunal rightlyconcluded thatproviso to section147couldnotbe
invokedmerely
because
there
was
an
amendment
in
future
which
was
introduced
retrospectively
andcoveredperiodinquestion,andthusTribunalorderhastobeconfirmed.
CITv.GaneshRiceMills(2011)202Taxman96(All)(HighCourt)(Mag)
S.147:ReassessmentIncomeescapingassessment.
Duringthesearchnobooksofaccountordocumentsormoneyorbullionorjewelleryoranyother
valuablearticlesor thingswere found. Itwasasolitarystatementoftheassessee,which toowas
retractedimmediatelythereafter.Furthermore,apartfromthestatementtherewerenoparticulars
coming forward namely who were the dummy subscribers, whether shares from the socalled
dummysubscribersweretransferredinthenameoftheassesseeorassesseeremainedthebenami
ownerthereofandwasinthecontrolandpossessionsofthoseshares,etc.Nosuchquestionswere
evenput
by
the
A.O.
to
the
assessee
after
recording
the
statement.
Thus
the
only
material
for
issuanceofnoticeu/s148wasthestatementrecordedu/s132(4).Evenifthestatementwastobe
believed, thatwouldhavebeen thebasis for issuing thenotice forA.Y.19951996andnotA.Y.
19941995.ItwasmerelyafigmentofimaginationonthepartoftheCIT(A)thatstatementshould
notbebelievedtotheextentthatthatcashwaspaidinthecurrentfinancialyeari.e. 19941995as
normallysuchcashispaidatthetimeofpurchaseofsharesbythesocalleddummysubscribers.It
wasnotevenrecordedinthereasonstobelievebytheA.O.ThereforetheorderoftheCIT(A)on
thataspectwasclearlyerroneousandjustifiablysetasidebytheTribunal.
CITv.BelaJain(Smt)(2011)202Taxman90(Delhi)(HighCourt)(Mag)
S.158BC:BlockofassessmentSearchandSeizureValidity Jointwarrant.
Warrantofauthorizationissuedinthenamesofthreecompaniesincludingassessee,separatedonly
byacomma
without
the
word
and
between
companies
is
not
awarrant
in
the
joint
names
of
three
companiesand,therefore,theblockassessmentorderframedintheindividualnameoftheassessee
companywasnotinvalid.
RadanMultimediaLtdvs.DCIT(2011)58DTR129(Mum)(Trib).
S.168: ExecutorsIncomeAdministrator(S.4.)
Amount receivedby theadministrator (Assessee)ondistributionoutof theaccumulated fundsof
theestateofthedeceasedinhiscapacityasatransfereeofthelegateesinterestwasnottaxablein
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hishands,sincetheassesseehadonlyacquiredtherightstosaleproceedsofthepropertiesandthe
estatewascontinuingandwasbeingadministeredbytheassessee,hecouldnotbetreatedasthe
residuelegatee.(A.Y.200405).
DyCIT
vNusli
Neville
Wadia
(2011)
61
DTR
218(Mum)
(Trib)
/141
TTJ
521(Mum).
S.194A :Deductionoftaxatsource Interestotherthan interestonsecurities Reimbursement
Commission Interest(S.28A).
Assesseecompanyutilizedunspentcreditlimitofothercompanyforimportinggoodsforwhichbank
chargedinterest,whichwaspaidbysaidcompanyonbehalfofassessee.Assesseereimbursedsuch
amountofinteresttosaidcompany.Itclaimedthatinrealityitpaidcommissiontothatcompanyfor
utilising itsunspentcredit limitandtherefore,provisionsofsection194Awerenotapplicable.The
courtheldthatamountpaidbytheassesseewouldclearlycomewithinthedefinitionof interest
under section 2 (28A) and assesseewas liable to deduct TDS from the said amount in terms of
section194A.(A.Y.200203)
BhuraExportsLtdvITO(2011)202Taxman88(Cal)(HighCourt).
S.194H:Deductionoftaxatsource Commission DiscountFranchisee.
Franchiseeactsonbehalfoftheassesseeforsellingstartuppackandprepaidrechargecouponsto
the customers of assessee and all the trappings of liability as agent, of the franchisee towards
assesseesubsistandthereforediscount giventothefranchiseewas infactcommission,subjectto
TDSundersection194H.(A.Y.200304 and200405).
BharatiCellularLtdvAsstCIT(2011)61DTR225(Cal)(HighCourt).
S.194J: DeductionofTaxSource TransactionchargespaidtoBSE feesfortechnicalservices
In the instant case, there is direct linkage between the managerial services rendered and the
transaction charges levied by the stock exchange. The BOLT system provided by the BSE is a
completeplatform
for
trading
in
securities.
A
stock
exchange
manages
the
entire
trading
activity
carried on by its members and accordingly renders managerial services. Consequently, the
transaction charges constituted fees for technical servicesu/s194J and the assesseeought to
havedeductedTDS.However,on facts,because from1995 to2005no taxwasdeductedandno
objectionwasraisedbytheAOandbecausefromAY200607onwardstheassesseehaddeducted
TDS,therewasabonafidebeliefthatnoTDShadtobededucted,hencenodisallowanceu/s40(a)(i)
canbemadeforAY200506.
CITvKotakSecuritiesLimited(Bombay)(HighCourt)(www.itatonline.org)
S.195:DeductionoftaxatsourceOthersumsNonresidentIncomedeemedtoaccrueorarise in
IndiaBusinessinformation.(S.201).
TheassesseehadimportedbusinessinformationreportsfromDunandBrandstreet,USAandmade
remittancesin
respect
thereof
without
deducting
tax
at
source.
The
Assessing
Officer
held
that
the
assesseewas liable todeduct taxatsource.Tribunal setaside theorderofAssessingOfficer.The
Courtheld that theAuthority forAdvanceRulingshadheld that the saleofbusiness information
reports by the subsidiaries of Dun and Brand Street,USA in Spain, Europe and the U.K. to the
assesseedidnotattracttheprovisionsofsection195.ThoughthedecisionoftheAuthoritywasnot
bindinginthepresentcase,sincethedecisionofAuthorityrelatedtothesamebusinessinformation
reportsimportedbytheassesseeandnofaultinthedecisionoftheAuthoritywaspointedout,the
decisionoftheTribunalwasaffirmed.
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DirectorofIncomeTaxvDunandBrandStreetInformationServicesIndiaP.Ltd(2011)338ITR95
(Bom)(HighCourt).
S.201
:Consequence
of
failure
to
deduct
or
pay
Assessee
in
default
Deduction
of
tax
at
source
Limitation.
When therewasnoperiodof limitation fixed forexercisingpowerunder section201at relevant
pointof time, there isnoquestionof invokinga reasonableperiodof limitation forapplying the
provisionofsection201.(A.Y.200203).
BhuraExportsLtdvITO(2011)202 Taxman88(Cal)(HighCourt).
S.220:Whentaxpayableandwhenassesseedeemedtobeindefault Collectionand recoveryof
taxWaiverofinterest.
Petitionforwaiverofinterestundersection220(2)canbefiledevenafterinteresthasbeenpaidby
theassessee.(A.Y.199394).
JewellersOmPrakashvChiefCIT(2011)202Taxman71(Delhi)(HighCourt).
S.234B:Interest Bookprofit Company.(S.234C).
Interest is chargeable under sections 234B, 234Con failure to pay advance tax in respectof tax
payableundersections115JA/115JB. (A.Ys199798&200001to200405).
SingareniColliweriesCompanyLtdvAsstCIT(2011)141TTJ593(Hyd).
S.244A: InterestonrefundsAdjustmentofamountseized.
Afterasearchconductedatassesseespremises, itfiled itsreturnof income.However, itfailedto
payselfassessmenttaxdueasperreturnandrequestedauthoritiestoadjustamountoftaxdueout
of amount seized from its office and its chairman. Subsequently, assessment order came to be
passed making assessment at a lesser amount and, consequently, assessee became entitled to
refund.Held
that,
clause
(b)
of
S.244A
was
attracted
and
assessee
was
entitled
to
refund
with
interest.
CITv.IslamicAcademyEducation(2011)202Taxman276(Kar)(HighCourt).
S.245R : Procedureonreceiptofapplication AdvanceRulings PendencyofproceedingsNotice
undersections.143(2)and147.
Noticesundersection143 (2)and147havingbeen issuedtotheapplicantbythetime it filedthe
applicationundersection245Qseekingrulingonthequestionastowhethertheamountsreceived
bytheapplicantare liabletotax inIndiaundertheprovisionsoftheIncomeTaxAct,thequestion
raisedistheveryquestionpendingadjudicationbeforetheAssessingOfficer sofarasthatparticular
incomeisconcernedandtherefore,applicationisliabletoberejectedunderprovisotosection245R
(2).
SepcoIIIElectricPowerConstructionCorporation(2011)243CTR529/61DTR49/202Taxman149
(AAR).
S.246A: AppealableOrdersCommissioner(Appeals)Taxdeterminedaspersection246(1)(a)
Reliefinrespectofundersection90orsection91
Section246A(1)(a)covers issueofnotallowingreliefinrespectofwithholdingtaxundersection90
orsection91.
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CapgeminiBusinessServices(India)Ltd.v.Dy.CIT(2011)131ITD396(Mum.)
S.251:PowersofCommissioner(Appeals)Newclaim Nonfilingofrevisedreturn.
Whenthe
assessee,
during
the
course
of
assessment
claimed
the
cost
of
acquisition
of
the
capital
assetasperthevaluationreportstatingthefairmarketvalueason1stApril1981,theAOshould
haveentertainedthesaidclaimandCIT(A)alsoerredinnotconsideringtheclaim,whichisalegally
permissibleclaim.
GopiS.Shivnani(Mrs)v.ITO(2011)57DTR18 /139TTJ308(Mum)(Trib)
S.251: PowersoftheCommissioner(Appeals)Omissiontoclaiminthereturn.
Wheretheassesseehadnotclaimeddeductionu/s80IBinthereturnofincomeandfactsrelatingto
thatdeductionhavealsonotbeenshowntobeexistingonrecord,CITwasnotjustifiedindirecting
theA.O.toconsidertheclaiminaccordancewithlaw.
ACITv.ParabolicDrugsLtd.(2011)62DTR73(Delhi)(Trib)
S.254(1): Ordersof AppellateTribunalDutyofTribunal.
ItisthedutyoftheTribunaltofollowdecisionofjurisdictionalHighCourt.TribunalcannotholdHigh
Courtdecisionerroneousbecauseitdidnotconsiderrelevantprovision.
NationalTextileCorporationLtd.(M.P.)v.CIT(2011)338ITR371(MP)(HighCourt)
S.254(1): OrdersofAppellateTribunalPowers PowerofEnhancement.
The arrears of rent & damages received by the assessee were claimed as not taxable by the
assessee,being capital receiptswhereas theDepartment contended that the samewere taxable,
beingonrevenueaccount.TheTribunalremandedthematterbacktoconsiderwhetherthesame
couldamounttoCapitalGains,beingreceivedforsurrenderoftenancy.Itwasnoteventhecaseof
theDepartment that thesewere capitalgains. Itwasheld that theTribunalcannotenhance the
scopeof
the
appeal
by
adjudicating
on
grounds
not
raised
by
the
Appellant.
JasmineCommercialsLtd.v.CIT(2011)200Taxman338(Cal.)(HighCourt)
S.254(2) :OrdersofAppellateTribunalRectificationofmistakesPowers Jurisdictionof Income
taxAppellateTribunal,whichoriginallyheardmatter,torecallitsorder
TheTribunalomittedtoconsideranissue.AMiscellaneousapplicationwasmovedseekingtorecall
theorder.Thetribunalrecalledtheorderandregistrywasdirectedtofixtheappealasfarasground
regarding rent receiptwas concerned. Assessee moved instant application seeking admission of
additional ground that reopening was bad in law. Held that the statute permits bench, which
originallyheardthematter,torecallitsorderinitsentiretyortorecallinalimitedwayortopassa
corrigendumorcorrectcertain mistakesapparentfromrecordandbenchhasnojurisdictiontogo
into otherissuesotherthanonewhichwasrecalled.Hence,Assesseewasnotentitledtoraiseany
additionalground.(A.Y.19992000).
TokhemEnterprisesvITO(2011)132ITD375(Mum)(Trib).
S.254(2): OrdersofAppellateTribunal Rectification ofmistakes RevieworRecalloftheorder.
Tribunalcannotrecall itspreviousorderunlesstherearemanifesterrorswhichareobvious,clear
andselfevident.
SudhakarM.Shettyv.ACIT(2011)139TTJ687(Mum.)(Trib)/58DTR289
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S.260A:Appeal HighCourtTaxeffectlessthan4LakhsReferencereturnedunanswered.
In view of Instructionno 2/2005 dated24102005 , issued byCBDT, ithas tobe directed that
wherevertax
effect
is
less
than
4lakhs
,department
should
not
file
appeal
under
section
260A,
unlessquestionof law involvedorraised inappeal isofrecurringnature which istobesettledby
HighCourt.
CITvVitesseeTradingLtd(2011)202Taxman242(Bom)(HighCourt).
S.260A:AppealHighCourtCondonationofDelayHugeStakes.
When huge stakes are involved, the High Court should not dispose of the appeals fled by the
Department merely on the ground of delay. High Court may consider imposing costs on the
Departmentforthedelayanddecidetheappealonmerit.
CITv.WestBengalInfrastructureDevelopmentFinanceCorpn.Ltd.(2011)56DTR351(SC)
S.
263
:
Revision
of
orders
prejudicial
to
revenue
Two
views
One
of
the
possible
view.
WheretheAssessingOfficerhastakenoneofthepossibleviewswhichresulted in lossofrevenue,
theordercannotbetreatedaserroneousandtheCommissionercannot invokejurisdictionunder
section263.
CITv.KelvinatorofIndiaLtd.(2011)201Taxman88(Delhi)(Mag.)(HighCourt).
S. 271D : Penalty Loan or deposit Income offered by Director Entry in books of account of
Companybyjournalentry.(S.269SS).
ThepremisesofK,adirectoroftheassesseecompanyweresearchedbytheIncomeTaxAuthorities.
Duringthecourseofsearch,incriminatingdocumentsregardingunaccountedexpenditure incurred
byKwereseized.Intheproceedingsinitiatedundersection153C,Kofferedfortaxtheundisclosed
expenditure incurred by him for and on behalf of the company for construction activities.
Accordinglyjournal
entries
were
passed
in
the
books
of
the
company.
Assessing
Officer
was
of
the
opinion that the assessee has violated section 269SS and accordingly levied the penalty but the
Tribunaldeleted.HighCourtconfirmedtheorderofTribunal.
CITvMottaConstructionP.Ltd(2011)338ITR66(Bom)(HighCourt).
S.271G:Penalty TransferPricing NoPenaltyforfailuretorespondtoomnibusnotice
S.271Gauthorizesthelevyofpenaltyiftheinformation/documentsprescribedbys.92D(3)arenot
furnished. Rule 10D prescribes a voluminous list of information and documents required to be
maintainedand it isonly inrarecasesthatallclauseswouldbeattracted.Someofthedocuments
maynotbenecessary incaseofsomeassessees.Before issuinganoticeu/s92D(3),theAOhasto
applyhismindtowhatinformationanddocumentsarerelevantandnecessaryfordeterminingALP.
Anoticeu/s92D(3)isnotroutineandcannotbecasuallyissuedbutrequiresapplicationofmindto
consider thematerialon record andwhat further informationon specificpoints is required.Thenoticecannotbevagueorcallforunprescribedinformation.
DCITvLeroySomer&Controls(India)(P)Ltd.(Delhi)(ITAT)(www.itatonline.org)
S.281:Certaintransferstobevoid RecoveryoftaxSaleandattachmentofpropertyofassessee
indefault.
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Property transferredbyassesseeduringpendencyof recoveryproceedings, canbe attachedand
soldwithout filingsuit,assection281statutorilydeclaringsuchtransferasvoidprovides forsuch
mode.Noticetotransfereeisinvariablynotnecessarybeforetakingsuchaction.
KarnailSingh
vUOI
(2011)
Tax.L.R.
648
(P&
H).(High
Court).
Interpretations.
PrecedentDecisionofjurisdictionalHighCourtBindingnature
Tribunalhas to follow thedecisionof thejurisdictionalHighCourtwithoutmakinganycomment
uponthesaiddecision,it isnotpermissiblefortheTribunaltosidetrackand/orignorethedecision
of thejurisdictional high courton the ground that itdidnot take into consideration aparticular
provisionoflaw.
DeputyCommissionerof IncomeTaxv.GujaratAmbujaCementsLtd (2011)57DTR179 (Mum.)
(Trib.)
Precedent AdvanceRulings.
DecisionofAuthorityonsimilarfactsinrespectofsamesubjectmattercanbefollowed.
DirectorofIncomeTaxvDunandBrandStreetInformationServicesIndiaP.Ltd(2011)338ITR95(
Bom)(HighCourt).
GiftTax.
S.4 :DeemedgiftTransferofassetswithoutconsiderationTransferofsharesofcompany from
onegrouptoanother.(S.5(1)(xiv).
Theassesseecompanywasmanagedbytwogroupsofshareholders,KandP.Disputescroppedup
regardingtheentitlementtothesumofRs80Lakhsreceivable fromS forthesaleofsurplusFSI.
According to the decreeof court, theK group transferred all its shares in the assessee to the P
group.Intheannualaccounts,thevalueofthepropertiesalienatedtotheKgroupwasshownatRs
35Lakhs.
The
Assessing
Officer
held
that
the
assessee
had
gifted
Rs
35
lakhs
without
any
considerationand such amountwas exigible to gift tax.Theorderwas confirmedbyCIT(A) and
Tribunal.OnreferencetheCourtheld that theKgrouphadrelinquishedandwaived itsright, title
andinterestinthepropertyandalsotheconsiderationwhichtheassesseewastoreceiveoutofthe
landtransactionandinlieuthereofitgotpropertiesfreefromallliabilitiesonownershipbasis.The
consideration was the transfer of property in favour of K group. The consideration for the
transactioncouldbespeltoutfromtheawardofthearbitrator.Therewasnogiftexigibletotax.
PananlalSilkMillsPLtdvCGT(2011)338ITR1(Bom)(HighCourt).
Editorial. Judgement ofMumbai Tribuanl Panalal SilkMills Pvt. Ltd vDCIT (1993) 44 ITD (458)
reversed.
WritPetitions:
WritMaintainability FoundationalFactstobeEstablished.(Article226)
Where the foundational factshad tobe established, the assesseeoughtnot tohave filed awrit
petition.
CocaColaIndiaInc.v.Addl.CIT&Ors.[2011]336ITR1(SC)
ServiceTaxActivationofSIM
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Theamountreceivedbythecellularcompanyfrom itssubscriberstowardsSIMcardsformspartof
thetaxablevalue for levyofservicetax,asSIMcardsareneversoldasgoods independentofthe
services provided and therefore, the valueof the taxable service is calculatedon the gross total
amountreceived
by
the
operator
from
the
subscribers.
IdeaMobileCommunicationsLtd.v.CCEC(2011)59DTR209(SC).
Disclaimer : The contents of this document are solely for informational purpose. It does not constitute
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