Volume 53 : Part 5 (Issue dated : 30-1-2017)

S. 2(47) --Income--Method of accounting--Development of property--Recognition of revenue--Accounting Standard-9--Provision relating to deemed transfer as in case of capital assets not applicable to transactions of stock-in-trade--Income in respect of transfer of immovable property recognised only when risks, rewards and ownership of property transferred to buyer--Matching required to be done on accrual basis in respect of income offered to tax-- S. K. Properties v. ITO (Bang) . . . 607

S. 12AA --Charitable trust--Registration--Power of Commissioner limited to aspect of examining whether or not objects of trust charitable in nature--Not relevant to decide whether such trust is entitled to registration--Objects of trust charitable in nature--Registration cannot be denied-- Abacus Foundation v. CIT (Exemptions)(Kolkata) . . . 629

S. 14A --Income--Expenditure incurred in relation to earning income which does not form part of total income--Assessee disallowing expenditure in relevant assessment year--Assessing Officer to determine whether it was a case of double disallowance-- Apollo Tyres Ltd. v. Asst. CIT (Cochin) . . . 548

S. 32(1)(iia) --Depreciation--Additional depreciation--New plant and machinery--Additional depreciation not claimed in previous year--Assessee entitled to additional depreciation-- Apollo Tyres Ltd. v. Asst. CIT (Cochin) . . . 548

S. 35D --Amortisation of preliminary expenses--Issue of equity shares to qualified institutional buyers--Tribunal on identical issue for earlier year remanding matter to Assessing Officer for fresh consideration--Matter remitted to Assessing Officer for fresh consideration-- Apollo Tyres Ltd. v. Asst. CIT (Cochin) . . . 548

S. 35(2AB) --Scientific development expenditure--Weighted deduction--Expenditure incurred on in-house research and development facility--Entitled to weighted deduction-- Apollo Tyres Ltd. v. Asst. CIT (Cochin) . . . 548

----Scientific research and development expenses--Nature of expenses not disputed--Employee of assessee overall in-charge of research and development activities--Employee paid by German company and thereafter reimbursed by assessee--No inference that expense on research and development made outside India--Assessee entitled to deduction-- Apollo Tyres Ltd. v. Asst. CIT (Cochin) . . . 548

S. 36(1)(iii) --Interest on borrowed capital--Assessee investing borrowed funds through its sister concern in shares--Shares acquired in ordinary course of business--Shares disclosed in balance-sheet as stock-in-trade--Commercial expediency established--Interest deductible-- Divakar Solar System Ltd. v. Deputy CIT(Kolkata) . . . 516

S. 36(1)(va) --Business expenditure--Deduction only on actual payment--Assessee entitled to deduction if actual payment is made before return is filed--Contribution made after due date prescribed under relevant Act but before due date of filing of return--Assessee entitled to deduction-- Apollo Tyres Ltd. v. Asst. CIT(Cochin) . . . 548

S. 36(2) --Bad debt--Conditions precedent--Amount representing sales made by assessee in earlier years--Amount written off bad debts in books of account--Deductible-- Asst. CIT v. Dow Agrosciences India Private Limited(Mumbai) . . . 590

S. 37 --Business expenditure--Capital or revenue expenditure--Expenditure incurred for expansion of existing business--Revenue expenditure--Loan processing fee for expansion of plant--Revenue expenditure-- Apollo Tyres Ltd. v. Asst. CIT(Cochin) . . . 548

----Business expenditure--Capital or revenue expenditure--Pre-paid expenses--Expenditure did not in any way create any new asset on capital side--Allowable-- Apollo Tyres Ltd. v. Asst. CIT (Cochin) . . . 548

----Business expenditure--Commission payments--Tribunal in earlier year in assessee's case disallowing commission payments--On similar facts commission payments disallowed in current year-- Apollo Tyres Ltd. v. Asst. CIT (Cochin) . . . 548

----Business expenditure--Forward contracts on foreign exchange--Assessee making gains and loss on account of revaluation and claiming net loss--Net loss representing loss on account of restatement of debtors and creditors balances--Loss not a speculation loss-- Asst. CIT v. Dow Agrosciences India Private Limited (Mumbai) . . . 590

S. 37(1) --Business expenditure--Computers--Lease rental income--Assessing Officer to examine lease agreement in order to ascertain nature of lease and take appropriate decision in accordance with law-- Asst. CIT v. Dow Agrosciences India Private Limited (Mumbai) . . . 590

----Business expenditure--Disallowance--Payments prohibited by law--Demurrage paid by assessee in form of punitive charges not illegal payment or payment opposed to public policy--Payment under contractual obligation--Allowable as deduction-- Deputy CIT v. Ripley and Co. Ltd. (Kolkata) . . . 541

----Business expenditure--Sample expenses--Assessee failing to produce evidence--Assessee not appreciating specific queries raised by Assessing Officer--Assessee should be provided opportunity to prove claim-- Asst. CIT v. Dow Agrosciences India Private Limited (Mumbai) . . . 590

S. 38(2) --Income from house property--Business income--Assessee letting out part of premises to its business associates--Rental income--Income from house property-- Apollo Tyres Ltd. v. Asst. CIT (Cochin) . . . 548

S. 40A(2) --Business expenditure--Disallowance--Excessive and unreasonable payments--Payment made in excess of fair market value--Onus is on Department--No material comparable cases brought on record to prove that assessee's purchase price in excess of fair market value and by that process some benefit accrued to other person--No disallowance could be made-- Divakar Solar System Ltd. v. Deputy CIT(Kolkata) . . . 516

----Business expenditure--Disallowance--Excessive and unreasonable payments--Salary and professional fee--Payment made in excess of fair market value--Technical educational qualification not as a pre-requisite for rendering services--Assessee furnishing full details regarding nature of services provided--No disallowance could be made-- Divakar Solar System Ltd. v. Deputy CIT (Kolkata) . . . 516

S. 40A(2)(a) --Business expenditure--Commission--Commission payments made after tax deduction at source--Confirmations filed by way of contra accounts and debit notes--No distinction drawn between facts of current assessment year vis-a-vis in earlier years--Expenditure allowable-- Stallion Laboratories P. Ltd. v. ITO(Ahd) . . . 633

S. 41(1) --Capital gains--Computation--Property shown in balance-sheet as capital asset and not stock-in-trade--Liability standing in name of a trust--Amount of advance received towards sale of immovable property capital asset of assessee--Cost of acquisition of property on sale of property to be reduced-- ITO v. Fiesta Properties P. Ltd.(Mumbai) . . . 614

S. 43A --Depreciation--Additional depreciation--Provision relating effect of foreign exchange fluctuation in relation to asset acquired from abroad--Adjustment in actual cost of asset at time of payment--Provision cannot be invoked to tax unrealised foreign exchange gain as revenue receipts in hands of assessee-- Apollo Tyres Ltd. v. Asst. CIT (Cochin) . . . 548

----Income or capital--Foreign exchange fluctuation gains--Addition of amount for relevant assessment year offered for taxation in subsequent assessment year--Taxability of income in subsequent year also a subject matter of dispute--Addition deleted without going into merits-- Apollo Tyres Ltd. v. Asst. CIT (Cochin) . . . 548

S. 43B --Business expenditure--Deduction only on actual payment--Assessee entitled to deduction if actual payment is made before return is filed--Contribution made after due date prescribed under relevant Act but before due date of filing of return--Assessee entitled to deduction-- Apollo Tyres Ltd. v. Asst. CIT (Cochin) . . . 548

----Business expenditure--Deduction only on actual payment--Statutory dues--Additional claim made in revised computation--Appellate authorities entitled to consider new claim made subsequent to filing of return-- Asst. CIT v. Dow Agrosciences India Private Limited (Mumbai) . . . 590

S. 43B(f) --Business expenditure--Deduction only on actual payment--Provision for leave encashment--Supreme Court ordering stay of decision of High Court holding provision invalid and directing disallowance to be made in terms of provision during pendency of appeal--Assessing Officer to decide issue in accordance with final decision of Supreme Court-- Asst. CIT v. Dow Agrosciences India Private Limited(Mumbai) . . . 590

S. 51 --Capital gains--Computation--Property shown in balance-sheet as capital asset and not stock-in-trade--Liability standing in name of a trust--Amount of advance received towards sale of immovable property capital asset of assessee--Cost of acquisition of property on sale of property to be reduced-- ITO v. Fiesta Properties P. Ltd.(Mumbai) . . . 614

S. 68 --Cash credit--Unexplained cash credit--Advances received from customers towards supply of products later adjusted against subsequent sales--Assessee cannot force its customers to furnish their permanent account numbers--Reasonable to accept genuineness of advances received from its customers--In case advances not adjusted against subsequent sales assessee should be provided with an opportunity to explain reasons--Assessing Officer to decide in accordance with law-- Asst. CIT v. Dow Agrosciences India Private Limited (Mumbai) . . . 590

S. 80G --Charitable trust--Registration--Power of Commissioner limited to aspect of examining whether or not objects of trust charitable in nature--Not relevant to decide whether such trust is entitled to registration--Objects of trust charitable in nature--Registration cannot be denied-- Abacus Foundation v. CIT (Exemptions)(Kolkata) . . . 629

S. 80-IA --Appeal to Appellate Tribunal--Power to admit additional ground--Industrial undertaking--Special deduction--Windmill--Additional ground claiming deduction under section 80-IA--Assessing Officer to decide claim on merits-- Apollo Tyres Ltd. v. Asst. CIT (Cochin) . . . 548

----Industrial undertaking--Special deduction--Power generation unit--Tribunal in assessee's case allowing deduction in earlier year--Assessee entitled to deduction in current assessment year-- Apollo Tyres Ltd. v. Asst. CIT (Cochin) . . . 548

S. 234C --Advance tax--Failure or default in payment--Assessing Officer to compute interest under section 234C on returned income--Assessing Officer to compute interest chargeable under section 234D and payable under section 244A in accordance with law-- Asst. CIT v. Dow Agrosciences India Private Limited (Mumbai) . . . 590

S. 234D --Advance tax--Failure or default in payment--Assessing Officer to compute interest under section 234C on returned income--Assessing Officer to compute interest chargeable under section 234D and payable under section 244A in accordance with law-- Asst. CIT v. Dow Agrosciences India Private Limited (Mumbai) . . . 590

S. 244A --Advance tax--Failure or default in payment--Assessing Officer to compute interest under section 234C on returned income--Assessing Officer to compute interest chargeable under section 234D and payable under section 244A in accordance with law-- Asst. CIT v. Dow Agrosciences India Private Limited (Mumbai) . . . 590

S. 263 --Revision--Commissioner--Draft assessment order--Only a proposed order and no demand notice attached to it--No loss prejudicial to Revenue--Commissioner cannot revise draft assessment order-- Apollo Tyres Ltd. v. Asst. CIT(Cochin) . . . 548

S. 271(1)(c) --Penalty--Concealment of income--Furnishing inaccurate particulars of income--No finding by authorities that assessee either concealed income or filed inaccurate particulars of income--Assessee neither concealing income nor filing inaccurate particulars--Excess claim made by assessee under bona fide belief--Penalty not attracted-- Lata Hospitals Pvt. Ltd. v. Deputy CIT (Visakhapatnam) . . . 625

ITR Volume 391 : Part 2 (Issue dated : 13-2-2017)

S. 2(22)(e) --Deemed dividend--Loan to shareholder--Hindu undivided family--Payment made by family for purchase of shares constituting substantial interest in company--Share certificates issued in name of karta--Karta having more than 20 per cent. interest in and entitled to not less than 20 per cent. of income of family--Loan from company is deemed divided in hands of family-- Gopal and Sons (HUF) v. CIT (SC) . . . 1

S. 10(23C)(vi) --Charitable purposes--Donation to charitable institution--Approval for purposes of section 80G--Trust registered under section 12AA and income exempt under section 10(23C)--Surplus income utilised for charitable purposes--Trust entitled to approval for purposes of section 80G-- CIT v. Gulab Devi Memorial Hospital (P&H) . . . 73

----University or educational institution--Exemption--Circular to effect approvals granted on or after 1-12-2006 to operate in perpetuity till withdrawal--Assessee seeking exemption for 2008-09 but withdrawing it pursuant to CBDT Circular--Order of Commissioner holding application delayed and denying exemption--Contrary to law--Assessee entitled to exemption--Directions to Commissioner to pass fresh orders-- Param Hans Swami Uma Bharti Mission v. Chief CIT (P&H) . . . 131

S. 12AA --Charitable purposes--Donation to charitable institution--Approval for purposes of section 80G--Trust registered under section 12AA and income exempt under section 10(23C)--Surplus income utilised for charitable purposes--Trust entitled to approval for purposes of section 80G-- CIT v. Gulab Devi Memorial Hospital (P&H) . . . 73

S. 36(1)(iii) --Interest on borrowed capital--Conditions precedent for deduction--Law applicable--Effect of insertion of proviso to section 36(1)(iii) w.e.f. 1-4-2004--Capital borrowed for acquisition of asset--Asset not put to use in relevant accounting year--Interest not deductible-- Thukral Regal Shoes v. CIT (P&H) . . . 119

S. 68 --Cash credit--Share application money--Assessee furnishing documents to evidence genuineness of transactions and identity and creditworthiness of parties--Failure by Assessing Officer to conduct adequate and proper inquiry into materials while invoking section 68--No addition can be made under section 68-- Principal CIT v. N. C. Cables Ltd. (Delhi) . . . 11

S. 80G --Charitable purposes--Donation to charitable institution--Approval for purposes of section 80G--Trust registered under section 12AA and income exempt under section 10(23C)--Surplus income utilised for charitable purposes--Trust entitled to approval for purposes of section 80G-- CIT v. Gulab Devi Memorial Hospital (P&H) . . . 73

S. 133 --Assessment--Powers of Assessing Officer--Sale of immovable property--Law applicable--Effect of insertion of section 142A w.e.f. 15-11-1972--Assessing Officer can refer issue of consideration from sale to District Valuation Officer-- Kanaiyalal Dhansukhlal Sopariwala v. District Valuation Officer (Guj) . . . 56

S. 142A --Assessment--Powers of Assessing Officer--Sale of immovable property--Law applicable--Effect of insertion of section 142A w.e.f. 15-11-1972--Assessing Officer can refer issue of consideration from sale to District Valuation Officer-- Kanaiyalal Dhansukhlal Sopariwala v. District Valuation Officer (Guj) . . . 56

S. 143(2) --Search and seizure--Block assessment--Notice--Failure to serve notice under section 143(2)--Commissioner (Appeals) upholding assessment relying on Supreme Court decisions on different subjects and holding decision in Asst. CIT v. Hotel Blue Moon [2010] 321 ITR 362 per incuriam--Untenable--Order to be set aside-- Kiran Prakashan v. Department of Income-tax (Patna) . . . 31

S. 143(3) --Reassessment--Notice after four years--Original assessment done under section 143(3) examining all particulars--No new tangible material available showing income escaped assessment--Reassessment notice not valid-- Sopan Infrastructure P. Ltd. v. ITO (Guj) . . . 107

S. 147 --Reassessment--Notice--Validity--Condition precedent--No proper application of mind by sanctioning authority for issuing notice under section 147 or 148--Reassessment not valid-- Principal CIT v. N. C. Cables Ltd. (Delhi) . . . 11

----Reassessment--Notice after four years--Original assessment done under section 143(3) examining all particulars--No new tangible material available showing income escaped assessment--Reassessment notice not valid-- Sopan Infrastructure P. Ltd. v. ITO (Guj) . . . 107

----Reassessment--Notice after four years--Validity--Notice based on credible information received and belief of Assessing Officer--Failure by assessee to substantiate loss by producing evidence--Assessee participating in reassessment proceedings without pressing its earlier objections raised--Reassessment valid-- Rampuria Industries and Investments Ltd. v. Deputy CIT (Cal) . . . 18

S. 148 --Reassessment--Notice--Validity--Condition precedent--No proper application of mind by sanctioning authority for issuing notice under section 147 or 148--Reassessment not valid-- Principal CIT v. N. C. Cables Ltd. (Delhi) . . . 11

----Reassessment--Notice after four years--Original assessment done under section 143(3) examining all particulars--No new tangible material available showing income escaped assessment--Reassessment notice not valid-- Sopan Infrastructure P. Ltd. v. ITO (Guj) . . . 107

----Reassessment--Notice after four years--Validity--Notice based on credible information received and belief of Assessing Officer--Failure by assessee to substantiate loss by producing evidence--Assessee participating in reassessment proceedings without pressing its earlier objections raised--Reassessment valid-- Rampuria Industries and Investments Ltd. v. Deputy CIT (Cal) . . . 18

S. 154 --Rectification of mistakes--Mistake must be apparent--Debate over period for which interest was due--Part of period cannot be excluded in rectification proceedings-- Ajanta Manufacturing Limited v. Deputy CIT (Guj) . . . 33

S. 206C --Writ--Maintainability--Existence of alternative remedy--Collection of tax at source--Scrap--Definition--Whether cotton waste is scrap--Applicability of section 206C--Mixed question of law and fact--Writ petition against clarification of Joint Commissioner that cotton waste is scrap and tax to be collected on its purchase--Availability of alternative

statutory remedy--Writ petition not maintainable-- Amarjeet Beeton v. CIT (TDS) (P&H) . . . 124

S. 220 --Recovery of tax--Interest on arrears of tax--Waiver of interest--Conditions precedent--Hardship to assessee--Enforcement of law not a hardship--Assessee not co-operating in assessment or recovery proceedings--Interest cannot be waived-- Mookambika Associates v. Asst. CIT (Karn) . . . 26

----Recovery of tax--Stay of demand during pendency of appeal--Effect of circular and guidelines issued by CBDT--Deposit of part of demand--Refund to be adjusted against such deposit-- Jindal Steel and Power Ltd. v. Principal CIT (P&H) . . . 42

S. 244A --Rectification of mistakes--Mistake must be apparent--Debate over period for which interest was due--Part of period cannot be excluded in rectification proceedings-- Ajanta Manufacturing Limited v. Deputy CIT (Guj) . . . 33

----Refund--Interest on refund--Period for which interest payable--Exclusion of period of delay caused by assessee--Belated claim during assessment or revised return not a delay caused by assessee--Claim of assessee accepted on appeal by Commissioner (Appeals)--Time taken for appeal proceedings--Cannot be excluded-- Ajanta Manufacturing Limited v. Deputy CIT (Guj) . . . 33

S. 245C --Settlement of cases--Application for settlement of case--Maintainability--Application offering undisclosed foreign income and assets--Effect of Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015--Act coming into force w.e.f. 1-7-2015--Return filed on 21-5-2015 and notice under section 148 on 29-5-2015--Application for settlement maintainable-- Arun Mammen v. Union of India (Mad) . . . 23

S. 271(1)(c) --Penalty--Concealment of income or furnishing inaccurate particulars thereof--Set off of loss--Assessee claiming set off under different head in course of assessment proceedings--Appellate Tribunal not finding anything clandestine in manner of seeking opinion from chartered accountants--Does not amount to furnishing inaccurate particulars or concealment of income--Penalty not leviable-- Principal CIT v. Atotech India Ltd. (P&H) . . . 117

S. 276B --Offences and prosecution--Compounding of offences--Failure by assessee to deposit amount deducted as tax at source--Rejection of application for compounding on basis of guidelines by Central Board of Direct Taxes--Assessee's failure to deposit amount collected beyond its control--Chief Commissioner should consider objective facts on merits before exercising jurisdiction--Order rejecting application for compounding not sustainable-- Sports Infratech P. Ltd. v. Deputy CIT (Delhi) . . . 98

S. 279(2) --Offences and prosecution--Compounding of offences--Failure by assessee to deposit amount deducted as tax at source--Rejection of application for compounding on basis of guidelines by Central Board of Direct Taxes--Assessee's failure to deposit amount collected beyond its control--Chief Commissioner should consider objective facts on merits before exercising jurisdiction--Order rejecting application for compounding not sustainable-- Sports Infratech P. Ltd. v. Deputy CIT (Delhi) . . . 98

S. 281(1), proviso --Recovery of tax--Attachment and sale of property--Transfer to defraud Revenue--Bona fide purchase without notice and for adequate consideration--Order declaring purchase void in breach of principles of natural justice and to be quashed-- Arvindkumar Kuberbhai Patel v. Deputy CIT (Guj) . . . 103

Volume 54 : Part 1 (Issue dated : 13-2-2017)

S. 14A --Income--Expenditure incurred in relation to earning income which does not form part of total income--Assessing Officer not to apply method prescribed by Rules straightaway without considering whether claim made by assessee in respect of such expenditure is correct--Satisfaction of Assessing Officer must be arrived at on an objective basis--Assessing Officer not following guidelines of objective satisfaction--Assessing Officer not recording reasoning for his dissatisfaction with regard to claim of assessee--Authorities ignoring mandate of section 14A--Disallowance not sustainable-- J. M. Financial Services Ltd. v. Joint CIT (OSD) (Mumbai) . . . 120

----Income--Expenditure incurred in relation to income which does not form part of total income--Assessing Officer to recalculate disallowance in terms of rule 8D according to guidelines given by Tribunal taking average investment from which exempt income received-- Yashoda Health Care Services P. Ltd. v. Deputy CIT (Hyd) . . . 26

S. 32(1), Expln. 1 --Revision--Commissioner--Capital or revenue expenditure--Depreciation--Expenditure on modifying and improving leased property allowed as revenue expenditure--Order prejudicial to interests of Revenue--Assessee can claim depreciation on value spent on such improvement or changes in structure--Revision valid-- MSA Motors v. Addl. CIT (Hyd) . . . 8

S. 43(5) --Speculative business--Loss--Assessee carrying out transactions in cash segment and futures segment and final outcome profit--Both segments part of composite business of assessee--Business of assessee cannot be segregated to arrive at profit and loss in both transactions independently or separately--Profit or loss against both segments be adjusted or set off against each other-- J. M. Financial Services Ltd. v. Joint CIT (OSD) (Mumbai) . . . 120

S. 50C --Capital gains--Long-term capital gains--Full value of consideration--Assessee requesting reference to District Valuation Officer--Request not to be denied--Assessing Officer to make reference to District Valuation Officer-- Nitin R. Bhuva v. ITO (Chennai) . . . 14

S. 54 --Capital gains--Long-term capital gains--Exemption--Sale of residential house property and investment sale consideration in another residential property--Conversion of two flats into one flat--Assessee acquiring flats with intention to use them as one residential unit--Whether flats constructed as such by builder or flats altered or combined into one at the instance of assessee--No distinction--Assessee entitled to exemption-- Asst. CIT v. Sanjay B. Pahadia (Mumbai) . . . 37

S. 54F --Capital gains--Long-term capital gains--Exemption--Sale of residential house property and investment sale consideration in another residential property--Conversion of two flats into one flat--Assessee acquiring flats with intention to use them as one residential unit--Whether flats constructed as such by builder or flats altered or combined into one at the instance of assessee--No distinction--Assessee entitled to exemption-- Asst. CIT v. Sanjay B. Pahadia (Mumbai) . . . 37

S. 73 --Speculative business--Loss--Assessee carrying out transactions in cash segment and futures segment and final outcome profit--Both segments part of composite business of

assessee--Business of assessee cannot be segregated to arrive at profit and loss in both transactions independently or separately--Profit or loss against both segments be adjusted or set off against each other-- J. M. Financial Services Ltd. v. Joint CIT (OSD) (Mumbai) . . . 120

S. 147 --Reassessment--Notice--Reasons recorded speaking underassessment of tax--Assessee disclosing lower sale consideration--Assessing Officer has reason to believe that income had escaped assessment--Reassessment valid-- Nitin R. Bhuva v. ITO (Chennai) . . . 14

----Reassessment--Notice--Valid notice--Want of notice--Reopening on basis of information from Investigation Wing--No valid notice served upon assessee either through registered post or through affixture--Reassessment not valid-- Auram Jewellery Exports P. Ltd. v. Asst. CIT (Delhi) . . . 1

S. 148 --Reassessment--Notice--Reasons recorded speaking underassessment of tax--Assessee disclosing lower sale consideration--Assessing Officer has reason to believe that income had escaped assessment--Reassessment valid-- Nitin R. Bhuva v. ITO (Chennai) . . . 14

----Reassessment--Notice--Valid notice--Want of notice--Reopening on basis of information from Investigation Wing--No valid notice served upon assessee either through registered post or through affixture--Reassessment not valid-- Auram Jewellery Exports P. Ltd. v. Asst. CIT (Delhi) . . . 1

S. 153A --Search and seizure--Assessment in search cases--Unexplained investment--Claim that part of sum surrendered during search covered by purchase by cheque--Bank account showing assessee paying certain sum for purchasing jewellery--Opportunity given to assessee to submit details to Assessing Officer to substantiate claim that jewellery purchased were included in jewellery found during search-- P. Rama Devi v. Deputy CIT (Hyd) . . . 30

S. 263 --Revision--Commissioner--Capital or revenue expenditure--Depreciation--Expenditure on modifying and improving leased property allowed as revenue expenditure--Order prejudicial to interests of Revenue--Assessee can claim depreciation on value spent on such improvement or changes in structure--Revision valid-- MSA Motors v. Addl. CIT (Hyd) . . . 8

Income-tax Rules, 1962

R. 8D --Income--Expenditure incurred in relation to earning income which does not form part of total income--Assessing Officer not to apply method prescribed by Rules straightaway without considering whether claim made by assessee in respect of such expenditure is correct--Satisfaction of Assessing Officer must be arrived at on an objective basis--Assessing Officer not following guidelines of objective satisfaction--Assessing Officer not recording reasoning for his dissatisfaction with regard to claim of assessee--Authorities ignoring mandate of section 14A--Disallowance not sustainable-- J. M. Financial Services Ltd. v. Joint CIT (OSD) (Mumbai) . . . 120

----Income--Expenditure incurred in relation to income which does not form part of total income--Assessing Officer to recalculate disallowance in terms of rule 8D according to

guidelines given by Tribunal taking average investment from which exempt income received-- Yashoda Health Care Services P. Ltd. v. Deputy CIT(Hyd) . . . 26

ITR Volume 391 : Part 3 (Issue dated : 20-2-2017)

S. 10(37) --Exemption--Compensation received on compulsory acquisition of agricultural land--Notification under section 4 and declaration under section 6 of Land Acquisition Act issued in respect of assessee's land--Award passed thereafter by Collector fixing compensation--Assessee entering into negotiations for higher compensation--Does not change character of transaction to voluntary sale--Assessee entitled to exemption-- Balakrishnan v. Union of India (SC) . . . 178

S. 10A --Exemption--Newly established industrial undertakings in free trade zones--Hundred per cent. export oriented undertaking--Amendment with effect from 1-4-2001--Effect--Nature of benefit becomes one of deduction--But deduction to be granted computing gross total income of eligible undertaking under Chapter IV and not at stage of computation of total income under Chapter VI-- CIT v. Yokogawa India Ltd. (SC) . . . 274

S. 10B --Exemption--Newly established industrial undertakings in free trade zones--Hundred per cent. export oriented undertaking--Amendment with effect from 1-4-2001--Effect--Nature of benefit becomes one of deduction--But deduction to be granted computing gross total income of eligible undertaking under Chapter IV and not at stage of computation of total income under Chapter VI-- CIT v. Yokogawa India Ltd. (SC) . . . 274

----Export--Special deduction--Hundred per cent. export oriented undertaking--Exemption--Export turnover--Definition--Benefit under section 10B not excluded--Deduction under section 80HHC not to be denied where assessee has availed of exemption under section 10B-- Mahavir Spinning Mills Ltd. v. CIT (P&H) . . . 290

S. 14A --Income--Disallowance of expenditure in relation to exempt income--"In relation to"--Applies to earning exempt income--Bank--Securities constituting stock-in-trade--Income derived on purchase and sale of securities is business income and not exempt--Expenditure incurring in relation thereto not falling within ambit of section 14A--Disallowance improper-- Principal CIT v. State Bank of Patiala (P&H) . . . 218

S. 37 --Capital or revenue expenditure--Expenditure incurred on replacement of old fittings with new--Expenditure creating advantage of enduring nature--Expenditure capital in nature-- U. P. Hotels Ltd. v. CIT (All) . . . 203

S. 40(a)(iib) --Business expenditure--Disallowance of expenditure--Fee or charge levied exclusively on or appropriated from State Government undertaking by State Government--Provision brought w.e. f. 1-4-2014--Not retrospective--Government undertaking engaged in canalization of liquor, beer and rectified spirit--Privilege fees levied by State Government paid in accounting years relevant to assessment years 2010-11, 2011-12 and 2012-13--Deductible-- Karnataka State Beverages Corporation Limited v. CIT (Karn) . . . 185

S. 55A --Capital gains--Full value of consideration--Assessing Officer not bound to accept statement in sale deed--Initial burden on Department to prove additional consideration was paid--Assessing Officer not finding consideration to be understated--Not entitled to determine fair market value merely because parties interrelated--Consideration stated in sale document higher than valuation by stamp authority--Full value of consideration received by or accruing to assessee to be taken into consideration for computing capital gains--Market price of

property not relevant for this purpose--Reference to Valuation Officer was without jurisdiction-- Principal CIT v. Quark Media House India Pvt. Ltd. (P&H) . . . 145

S. 57(iii) --Income from other sources--Deduction--Expenditure incurred wholly and exclusively for earning income--Interest on money borrowed for purchase of shares--No dividend declared on shares--No proof that expenditure was not laid out wholly and exclusively for earning income--Difference between purpose of expenditure and motive for expenditure--No evidence that shares had been purchased in order to gain control of company--Interest deductible-- Smt. Satish Bala Malhotra v. CIT (P&H) . . . 256

S. 80HHC --Export--Special deduction--Hundred per cent. export oriented undertaking--Exemption--Export turnover--Definition--Benefit under section 10B not excluded--Deduction under section 80HHC not to be denied where assessee has availed of exemption under section 10B-- Mahavir Spinning Mills Ltd. v. CIT (P&H) . . . 290

S. 92 --International transactions--Arm's length price--Comparables accepted for earlier assessment years excluded--Onus on Department to justify exclusion--Loss suffered in a particular year does not exclude a company from comparability analysis-- CIT v. Welspun Zucchi Textiles Ltd. (Bom) . . . 211

----International transactions--Arm's length price--Determination of operating profit and total cost--Export business--DEPB includible in determining operating profit and depreciation includible in determining total costs as in comparable companies-- CIT v. Welspun Zucchi Textiles Ltd. (Bom) . . . 211

S. 92B --International transactions--Transfer Pricing Officer--Advertisement, marketing and promotion expenditure--Travel agency--Whether outbound business constituted international transaction for which arm's length price to be determined--Matter remitted to Appellate Tribunal-- Le Passage to India Tour and Travels (P) Ltd. v. Deputy CIT (Delhi) . . . 207

S. 92C --International transactions--Arm's length price--Comparables accepted for earlier assessment years excluded--Onus on Department to justify exclusion--Loss suffered in a particular year does not exclude a company from comparability analysis-- CIT v. Welspun Zucchi Textiles Ltd. (Bom) . . . 211

----International transactions--Arm's length price--Determination of operating profit and total cost--Export business--DEPB includible in determining operating profit and depreciation includible in determining total costs as in comparable companies-- CIT v. Welspun Zucchi Textiles Ltd. (Bom) . . . 211

Volume 54 : Part 2 (Issue dated : 20-2-2017)

S. 2(24)(x) --Business expenditure--Deduction only on actual payment--Contribution to Employees State Insurance Corporation not paid before due dates--Not deductible-- Deputy CIT v. Sales India Pvt. Ltd. (Ahd) . . . 272

S. 14A --Income--Expenditure incurred in relation to earning exempt income which does not form part of total income--Assessee not claiming any exempt income--No disallowance could be made--Disallowance restricted in view of offer made by assessee-- Merck Specialities P. Ltd. v. Asst. CIT (Mumbai) . . . 256

S. 36(1)(iii) --Business expenditure--Interest on borrowed capital--Furniture deposit--For purpose of assessee's business and for use of existing furniture for which assessee not paying rent--Deductible-- Deputy CIT v. Sales India Pvt. Ltd.(Ahd) . . . 272

S. 36(1)(v) --Business expenditure--Gratuity--Condition that employer should not have any control over funds of irrevocable trust created exclusively for benefit of employees--Payment towards LIC group leave encashment scheme--Deductible-- Deputy CIT v. A. P. Beverages Corporation Ltd. (Hyd) . . . 228

S. 36(1)(va) --Business expenditure--Deduction only on actual payment--Contribution to Employees State Insurance Corporation not paid before due dates--Not deductible-- Deputy CIT v. Sales India Pvt. Ltd. (Ahd) . . . 272

S. 37 --Business expenditure--Disallowance--Transportation and staff welfare expenses--Assessing Officer to re-examine documents furnished by assessee and make disallowance only to the extent of vouchers not produced by assessee-- Tata Ficosa Automotive Systems Ltd. v. Deputy CIT (Pune) . . . 203

----Business expenditure--Liquor business--Privilege fee or special privilege fee paid to Government--Deductible-- Deputy CIT v. A. P. Beverages Corporation Ltd.(Hyd) . . . 228

----Business expenditure--Premium paid to LIC--Whether reduced by interest credited by LIC--Assessing Officer to verify plea-- Deputy CIT v. A. P. Beverages Corporation Ltd. (Hyd) . . . 228

S. 40A(2)(a) --Business expenditure--Disallowance--Excessive and unreasonable payments--Administrative service charges--Allowable-- Tata Ficosa Automotive Systems Ltd. v. Deputy CIT (Pune) . . . 203

S. 40A(2)(b) --Business expenditure--Disallowance--Excessive or unreasonable payments--Payments to related party--No disallowance in earlier years--Issue decided in assessee's favour in earlier year--No disallowance could be made-- Deputy CIT v. Sales India Pvt. Ltd. (Ahd) . . . 272

S. 43(6) --Depreciation--Assessee purchasing business from its sister concern--Intangible assets--Transferor company obtaining valuation reports from two valuers--Details of bifurcation of intangibles given in report not known--Developments after Commissioner

(Appeals) deciding matter--If difference in values in valuation reports section 43(6) may applicable--Alternate ground of assessee that entire expenses allowable as business expenditure not adjudicated by Commissioner (Appeals)--Commissioner (Appeals) to decide issue afresh-- Merck Specialities P. Ltd. v. Asst. CIT(Mumbai) . . . 256

S. 43B --Business expenditure--Deduction only on actual payment--Contribution to Employees State Insurance Corporation not paid before due dates--Not deductible-- Deputy CIT v. Sales India Pvt. Ltd. (Ahd) . . . 272

S. 43B(f) --Business expenditure--Deduction only on actual payment--Provision for leave salary--Commissioner (Appeals) directing Assessing Officer to take necessary consequential action in pursuance of final outcome of special leave petition filed before Supreme Court--Interest of assessee taken into consideration by Commissioner (Appeals)--Assessing Officer would take necessary action after pronouncement of judgment by Supreme Court-- Merck Specialities P. Ltd. v. Asst. CIT(Mumbai) . . . 256

S. 80G --Donations for charitable purposes--Special deduction--Chief Minister's Relief Fund--Contribution deductible-- Deputy CIT v. A. P. Beverages Corporation Ltd. (Hyd) . . . 228

S. 80P(2)(a)(vi) --Co-operative society--Special deduction--Co-operative federation--Assessee entitled to deduction-- ITO v. Nashik District Labour Societies Co-operative Federation (Pune) . . . 253

S. 92CA --International transactions--Transfer pricing--Arm's length price--Determination--Service industry--Working capital adjustment not to be denied on ground of non-matching of working capital adjustment with financials--Opportunity to be given to assessee to get financials corrected--Assessing Officer to examine assessee's claim for grant of working capital adjustment on merits-- Comverse Network Systems India P. Ltd. v. Asst. CIT (Delhi) . . . 158

----International transactions--Transfer pricing--Arm's length price--Software development--Selection of comparables--Functional comparability in current year only--Right of assessee to object regarding functional dissimilarity--Assessee not owning intangibles or technical know-how and rendering software development services to its associated enterprise on cost plus basis--Software product company having intellectual property rights over some of products developed by it not comparable--Companies said to be functionally dissimilar--Excludible from list of comparables-- Comverse Network Systems India P. Ltd. v. Asst. CIT (Delhi) . . . 158

S. 145A --Valuation of stock--Valuation of closing stock--Whether inclusive method of accounting or exclusive method of accounting applicable--Both parties requesting matter needs verification--Assessing Officer to decide afresh-- Merck Specialities P. Ltd. v. Asst. CIT (Mumbai) . . . 256

S. 153A --Search and seizure--Assessment in search cases--Undisclosed income--Purchase and sale of shares--Long-term capital gains--Assessing Officer not making any attempt to collect details from return filed by share broker--Assessee selling shares through another

broker by dematerialising shares--Dematerialisation of shares would not happen without physical shares--Long-term capital gains on sale of shares declared by assessee to be accepted-- Deputy CIT v. Smt. Asha V. Mehta(Mumbai) . . . 191

S. 201(1A) --Deduction of tax at source--Failure to deduct--Assessee in default--Recipient having no taxes payable and claiming refund--Question of "withholding any tax money" belonging to Department did not arise--Levy of interest not warranted-- Right Address Ltd. v. ITO (TDS) (Kolkata) . . . 287

S. 271(1)(c) --Penalty--Concealment of income--Bogus purchase and sale of shares--Commissioner (Appeals) cancelled additions made by Assessing Officer--Penalty rightly deleted-- Deputy CIT v. Smt. Asha V. Mehta (Mumbai) . . . 191

ITR Volume 391 : Part 4 (Issue dated : 27-2-2017)

S. 2(14) --Capital gains--Firm--Dissolution--By order of court business continued by partners with controlling interest pending completion of winding up--Assets of firm ultimately put to sale in winding up and outgoing partners receiving net share of value of assets of firm after deduction of liabilities--Asset sold was capital asset and gains from transfer thereof capital gains--Specific and separate valuation for land, building and machinery--Not a case of "slump sale"-- Vatsala Shenoy v. Joint CIT (SC) . . . 363

S. 2(15) --Charitable purpose--Definition--Education--Special deduction--Donations to charitable institutions--Renewal of approval--Nothing on record showing activities of assessee not charitable--Surplus funds utilised for setting up new institutions--Surplus not distributed as profits amongst members of society--Assessee eligible for approval-- CIT v. Dr. Virendra Swaroop Educational Foundation (All) . . . 386

S. 2(42C) --Capital gains--Firm--Dissolution--By order of court business continued by partners with controlling interest pending completion of winding up--Assets of firm ultimately put to sale in winding up and outgoing partners receiving net share of value of assets of firm after deduction of liabilities--Asset sold was capital asset and gains from transfer thereof capital gains--Specific and separate valuation for land, building and machinery--Not a case of "slump sale"-- Vatsala Shenoy v. Joint CIT (SC) . . . 363

S. 37 --Business expenditure--Deduction only on actual payment--Export and import business--Misdeclaration--Evasion of customs duty--Search and arrest--Bail order by court on condition assessee deposit amount to be appropriated towards differential liability by customs authorities--Recovery of customs duty from amount deposited by assessee evident from order of Principal Commissioner of Customs--Allowable expense-- Principal CIT v. Praveen Saxena (Delhi) . . . 365

S. 43B --Business expenditure--Deduction only on actual payment--Export and import business--Misdeclaration--Evasion of customs duty--Search and arrest--Bail order by court on condition assessee deposit amount to be appropriated towards differential liability by customs authorities--Recovery of customs duty from amount deposited by assessee evident from order of Principal Commissioner of Customs--Allowable expense-- Principal CIT v. Praveen Saxena (Delhi) . . . 365

S. 45 --Capital gains--Firm--Dissolution--By order of court business continued by partners with controlling interest pending completion of winding up--Assets of firm ultimately put to sale in winding up and outgoing partners receiving net share of value of assets of firm after deduction of liabilities--Asset sold was capital asset and gains from transfer thereof capital gains--Specific and separate valuation for land, building and machinery--Not a case of "slump sale"-- Vatsala Shenoy v. Joint CIT (SC) . . . 363

S. 54 --Capital gains--Exemption--Investment of gains in residential house within time prescribed--Construction not completed and failure to deposit proceeds in capital gains account--Denial of exemption--Appeal to High Court--Amendment of appeal paper to include arbitral award arising out of agreement with builder entered into more than a year after passing of order by Appellate Tribunal--Arbitral award is settlement of dispute between builder and assessee--Not a continuation of original transaction--Non-compliance with

statutory provisions--Amendment impermissible-- Rasiklal M. Parikh v. Asst. CIT (Bom) . . . 395

S. 54F --Capital gains--Exemption--Investment of gains in residential house within time prescribed--Construction not completed and failure to deposit proceeds in capital gains account--Denial of exemption--Appeal to High Court--Amendment of appeal paper to include arbitral award arising out of agreement with builder entered into more than a year after passing of order by Appellate Tribunal--Arbitral award is settlement of dispute between builder and assessee--Not a continuation of original transaction--Non-compliance with statutory provisions--Amendment impermissible-- Rasiklal M. Parikh v. Asst. CIT (Bom) . . . 395

S. 80G(5) --Charitable purpose--Definition--Education--Special deduction--Donations to charitable institutions--Renewal of approval--Nothing on record showing activities of assessee not charitable--Surplus funds utilised for setting up new institutions--Surplus not distributed as profits amongst members of society--Assessee eligible for approval-- CIT v. Dr. Virendra Swaroop Educational Foundation (All) . . . 386

S. 80-I --Special deduction--Industrial undertaking--Old machinery used in old unit and depreciation claimed on it in earlier assessment year--Assessee entitled to benefit of deduction on machinery under section 80-I-- CIT v. Popular Art Palace P. Ltd. (Raj) . . . 352

S. 80-I(2) --Special deduction--Industrial undertaking--Forklift truck used in old unit and ready for use in new unit--Not plant and machinery--Assessee not entitled to benefit envisaged under section 80-I(2)-- CIT v. Popular Art Palace P. Ltd. (Raj) . . . 352

S. 80-IA(8) --Industrial undertaking--Special deduction--Power of Assessing Officer to determine price of goods or services in case of inflation of profits--No proven transaction or arrangement between assessee's unit and his wife's unit--Finding of fact by Commissioner (Appeals) that there was no transfer of goods or services, inter se, resulting in extraordinary profits--That the two units had common customers by itself not sufficient to infer transfer of profits--Order of Appellate Tribunal holding inflation of profits by assessee--Erroneous--Matter remanded-- Malay N. Sanghvi v. ITO (Bom) . . . 382

S. 80-IA(10) --Industrial undertaking--Special deduction--Power of Assessing Officer to determine price of goods or services in case of inflation of profits--No proven transaction or arrangement between assessee's unit and his wife's unit--Finding of fact by Commissioner (Appeals) that there was no transfer of goods or services, inter se, resulting in extraordinary profits--That the two units had common customers by itself not sufficient to infer transfer of profits--Order of Appellate Tribunal holding inflation of profits by assessee--Erroneous--Matter remanded-- Malay N. Sanghvi v. ITO (Bom) . . . 382

S. 80-IB --Industrial undertaking--Special deduction--Power of Assessing Officer to determine price of goods or services in case of inflation of profits--No proven transaction or arrangement between assessee's unit and his wife's unit--Finding of fact by Commissioner (Appeals) that there was no transfer of goods or services, inter se, resulting in extraordinary profits--That the two units had common customers by itself not sufficient to infer transfer of profits--Order of Appellate Tribunal holding inflation of profits by assessee--Erroneous--Matter remanded-- Malay N. Sanghvi v. ITO (Bom) . . . 382

S. 132(4) --Penalty--Concealment of income--Search and seizure--Immunity from penalty--Finding that assessee declared additional income in return filed under section 153A in response to notice under section 153C--Assessee fulfilling all conditions for being entitled to immunity from penalty under Explanation 5(2) to section 271(1)(c)--Disclosure in return filed under section 153A amounts to extension of disclosure made under section 132(4)--Penalty cannot be levied-- Principal CIT v. Gopal Das Kothari (HUF) (Cal) . . . 390

S. 145 --Accounting--Gross profit rate--Assessing Officer estimating gross profit rate at 35 per cent.--Commissioner (Appeals) and Appellate Tribunal abruptly deducting profit without assigning reasons--Estimate of 32 per cent. to be adopted considering average profit of six years shown by assessee-- CIT v. Popular Art Palace P. Ltd. (Raj) . . . 352

S. 153A --Penalty--Concealment of income--Search and seizure--Immunity from penalty--Finding that assessee declared additional income in return filed under section 153A in response to notice under section 153C--Assessee fulfilling all conditions for being entitled to immunity from penalty under Explanation 5(2) to section 271(1)(c)--Disclosure in return filed under section 153A amounts to extension of disclosure made under section 132(4)--Penalty cannot be levied-- Principal CIT v. Gopal Das Kothari (HUF) (Cal) . . . 390

S. 153C --Penalty--Concealment of income--Search and seizure--Immunity from penalty--Finding that assessee declared additional income in return filed under section 153A in response to notice under section 153C--Assessee fulfilling all conditions for being entitled to immunity from penalty under Explanation 5(2) to section 271(1)(c)--Disclosure in return filed under section 153A amounts to extension of disclosure made under section 132(4)--Penalty cannot be levied-- Principal CIT v. Gopal Das Kothari (HUF) (Cal) . . . 390

S. 158BC --Search and Seizure--Block assessment--Undisclosed income--Additions to income based on facts--Justified-- R. Ramachandran Nair v. Deputy CIT (Ker) . . . 343

Chapter XIX-A --Writ--Settlement of cases--Computation of income--Settlement Commission empowered to pass assessment order as it deems fit but in accordance with provisions--Commissioner filing report before Settlement Commission does not have any adjudicatory role and is entitled to file writ petition against order of Settlement Commission-- CIT v. Settlement Commission (I. T. and W.T.) (Ker) . . . 374

S. 245D --Settlement of cases--Condition precedent--Full and true disclosure of income and manner in which it had been derived--Search operations and returns filed under section 153A--Application for settlement of cases--Applications allowed and order passed under section 245D(2C)--Subsequent inquiry under section 245D(3)--Finding that there had been no full and true disclosure of income and manner in which it was earned--Rejection of applications under section 245D(4)--Justified-- Lal Bahadur Singh v. Union of India (Patna) . . . 305

----Settlement of cases--Writ--Powers of High Court limited-- Lal Bahadur Singh v. Union of India (Patna) . . . 305

S. 245D(4) --Writ--Settlement of cases--Computation of income--Settlement Commission empowered to pass assessment order as it deems fit but in accordance with provisions--Commissioner filing report before Settlement Commission does not have any adjudicatory

role and is entitled to file writ petition against order of Settlement Commission-- CIT v. Settlement Commission (I. T. and W.T.) (Ker) . . . 374

S. 271(1)(c) --Penalty--Concealment of income--Search and seizure--Immunity from penalty--Finding that assessee declared additional income in return filed under section 153A in response to notice under section 153C--Assessee fulfilling all conditions for being entitled to immunity from penalty under Explanation 5(2) to section 271(1)(c)--Disclosure in return filed under section 153A amounts to extension of disclosure made under section 132(4)--Penalty cannot be levied-- Principal CIT v. Gopal Das Kothari (HUF) (Cal) . . . 390

Volume 54 : Part 3 (Issue dated : 27-2-2017)

S. 10(20) --Exemption--Local authority--Interest earned from funds received from market committees for investing in capital projects temporarily placed in deposit--Earning of interest not business of assessee--Interest assessable under head "Income from other sources"--Entitled to exemption--Miscellaneous income--Contribution to provident fund and gratuity fund--Entitled to exemption-- Haryana State Agricultural Marketing Board v. Asst. CIT (Chandigarh) . . . 368

S. 10(38) --Company--Book profit--Computation--Disallowance under section 14A--Expenditure relatable to dividend income which was exempt--Includible--Dividend paid or proposed--Assessing Officer to look into making of a separate addition after adoption of net profit as starting point and rework book profit-- Informed Technologies India Ltd. v. Deputy CIT (Mumbai) . . . 397

S. 10A --Export oriented undertaking--Deduction--Disallowance under section 14A--Deduction under section 10A to that extent to be enhanced-- Informed Technologies India Ltd. v. Deputy CIT (Mumbai) . . . 397

S. 14A --Company--Book profits--Computation of income--Expenditure in relation to earning exempt income which does not form part of total income--Disallowance always a part of expenditure debited to profit and loss account--Disallowance should be added to book profits for purpose of computing tax liability--Amount of addition should be restricted to actual disallowance-- Karnataka State Industrial Infrastructure Development Corporation Ltd. v. Deputy CIT (Bang) . . . 425

----Export oriented undertaking--Deduction--Disallowance under section 14A--Deduction under section 10A to that extent to be enhanced-- Informed Technologies India Ltd. v. Deputy CIT (Mumbai) . . . 397

----Income--Computation of income--Expenditure incurred in relation to earning exempt income which does not form part of total income--No borrowed funds utilised for investment--Source of investment out of grants received from Government of Karnataka or out of profits earned by assessee--Assessing Officer failing to show direct nexus between borrowed funds and tax-free investments--No disallowance could be made-- Karnataka State Industrial Infrastructure Development Corporation Ltd. v. Deputy CIT (Bang) . . . 425

S. 23(1)(c) --Income from house property--Annual letting value--Property let in earlier period and vacant for whole relevant year--Vacancy of property not for self-occupation by assessee--Assessee holding property for purpose of letting out--Annual value of property to be taken at nil-- Informed Technologies India Ltd. v. Deputy CIT(Mumbai) . . . 397

S. 37 --Business expenditure--Contribution to public welfare fund--Assessee set up for development of infrastructure--Contribution made pursuant to objectives for which assessee set up--Contribution to Chief Minister Fund deductible-- Karnataka State Industrial Infrastructure Development Corporation Ltd. v. Deputy CIT(Bang) . . . 425

S. 54F(4) --Capital gains--Exemption--Investment in residential house--Assessee investing substantially more than net consideration in purchase of plot--Construction of house completed within prescribed time limit of three years--Assessee entitled to exemption-- Smt. Nirmala Yadav v. ITO (Jodhpur) . . . 387

S. 115JB --Company--Book profit--Computation--Disallowance under section 14A--Expenditure relatable to dividend income which was exempt--Includible--Dividend paid or proposed--Assessing Officer to look into making of a separate addition after adoption of net profit as starting point and rework book profit-- Informed Technologies India Ltd. v. Deputy CIT (Mumbai) . . . 397

----Company--Book profits--Computation--Amount withdrawn from any reserve if credited to profit and loss account--Reduction permissible only if such provision had gone to increase book profits in year of creation of reserve--Assessee not satisfying condition--Provision for bad and doubtful debts not deductible-- Karnataka State Industrial Infrastructure Development Corporation Ltd. v. Deputy CIT(Bang) . . . 425

S. 115P --Company--Dividend--Dividend distribution tax--Requirement that tax to be paid to credit of Central Government within fourteen days--Assessee declaring dividend on 25-9-2009 and paying tax on 6-10-2009--No interest could be levied-- Informed Technologies India Ltd. v. Deputy CIT (Mumbai) . . . 397

S. 147 --Reassessment--Notice--Undated reasons--No suggestion in reasons that Assessing Officer made any positive enquiry before coming to conclusion that income chargeable to tax escaped assessment--Reopening on borrowed satisfaction--Impermissible-- Charanjiv Lal Aggarwal v. ITO (Amritsar) . . . 349

S. 148 --Reassessment--Notice--Undated reasons--No suggestion in reasons that Assessing Officer made any positive enquiry before coming to conclusion that income chargeable to tax escaped assessment--Reopening on borrowed satisfaction--Impermissible-- Charanjiv Lal Aggarwal v. ITO (Amritsar) . . . 349

S. 263 --Revision--Commissioner--Assessing Officer issuing detailed notice and calling for each and every detail in respect of issues raised by Commissioner--Assessee furnishing full details and assessment completed--Commissioner cannot say that Assessing Officer had not conducted "proper enquiry of issues before completion of assessment"--Assessing Officer taking conscious decision estimating net profit from business after considering nature and complexity of books of account maintained by assessee--No specific instance of erroneous decision taken by Assessing Officer pointed out--Revision not valid-- G. V. R. Associates v. ITO (Visakhapatnam) . . . 307

----Revision--Commissioner--Erroneous and prejudicial to Revenue--Depreciation--Assessee holding concession for 30 years from Delhi Metro Rail Corporation under Build-Operate-Transfer Scheme--Assessing Officer making enquiries regarding additions to fixed assets and assessee giving details including bills of purchase of plant and machinery--Assessment completed thereafter allowing depreciation not erroneous--Commissioner not establishing that order passed by Assessing Officer unsustainable in law--View taken by Assessing Officer a plausible view supported by various judicial precedents--Revision not valid-- Delhi Airport Metro Express Pvt. Ltd. v. Principal CIT (Delhi) . . . 358

S. 271(1)(c) --Penalty--Concealment of income--Furnishing inaccurate particulars of income--Satisfaction of Assessing Officer mandatory--Assessing Officer not certain whether he has to proceed on basis that assessee has concealed his income or had furnished inaccurate particulars of its income--Assessing Officer failed to apply his mind at time of issuing penalty notice to assessee--Levy of penalty invalid-- Prince Consultancy P. Ltd. v. Deputy CIT (Mumbai) . . . 334

S. 274 --Penalty--Concealment of income--Furnishing inaccurate particulars of income--Satisfaction of Assessing Officer mandatory--Assessing Officer not certain whether he has to proceed on basis that assessee has concealed his income or had furnished inaccurate particulars of its income--Assessing Officer failed to apply his mind at time of issuing penalty notice to assessee--Levy of penalty invalid-- Prince Consultancy P. Ltd. v. Deputy CIT (Mumbai) . . . 334

ITR Volume 392 : Part 2 (Issue dated : 20-3-2017)

S. 2(15) --Exemption--Charitable purpose--Registration--Cancellation--Assessee a housing development authority constituted under Act of Legislature--No activities demonstrating that assessee not genuine trust--No material indicating that assessee or its affairs not carried out in accordance with object of trust--Registration cannot be cancelled-- DIT (Exemptions) v. Maharashtra Housing and Area Development Authority (Bom) . . . 240

S. 9(1)(vi) --Income--Computation of income--Amounts not deductible--Assessee dealer in computer software--Transaction one of purchase and sale--Payment not in nature of royalty and provisions of section 9(1)(vi) not applicable--Tax not deductible at source--Expenditure not to be disallowed for failure to deduct tax at source-- CIT v. Vinzas Solutions India Pvt. Ltd. (Mad) . . . 155

S. 9(1)(vii), Expln. 2 --Non-resident--Shipping business--Fees for technical services--Automated software-based communication system set up and maintained by assessee for use of its agents enabling them to access customer and documentation information--Common facility provided to agents--Integral part of shipping business to enable agents to discharge their role more effectively--Payments by agents on pro rata basis for use of facility--No finding that profit element embedded in payments--Payments received from agents are reimbursement of expenses incurred on system--Not fees for technical services and not taxable in India-- DIT (International Taxation) v. A. P. Moller Maersk A/S (SC) . . . 186

S. 10(26) --Exemption--Scheduled tribe--Scope of section 10(26)--Member of scheduled tribe should reside in areas specified in section 10(26)--Notification of State Government specifying such areas --Assessee's claim for exemption to be determined if he were residing in such area--Matter remanded-- Hara Kanta Pegu v. Union of India (Gauhati) . . . 247

S. 11 --Charitable purpose--Income from property--Income whether spent for charitable purpose--Disallowance of repayments of loans from trustees and family members treating them as transfer of trust funds--Disclosure of details of creditors by assessee--Principle of preponderance of probabilities--Whether funds advanced to trustees and their relatives disqualifying assessee to exemption--Duty of Assessing Officer to record finding supported by evidence--Claim on account of accumulated deficit not adjudicated--Matter remanded to Assessing Officer for fresh adjudication-- Devi Kamal Trust Estate v. DIT (Exemption) (Cal) . . . 178

S. 12AA --Exemption--Charitable purpose--Registration--Cancellation --Assessee a housing development authority constituted under Act of Legislature--No activities demonstrating that assessee not genuine trust--No material indicating that assessee or its affairs not carried out in accordance with object of trust--Registration cannot be cancelled-- DIT (Exemptions) v. Maharashtra Housing and Area Development Authority (Bom) . . . 240

S. 13(1)(c) --Charitable purpose--Income from property--Income whether spent for charitable purpose--Disallowance of repayments of loans from trustees and family members treating them as transfer of trust funds--Disclosure of details of creditors by assessee--Principle of preponderance of probabilities--Whether funds advanced to trustees and their relatives disqualifying assessee to exemption--Duty of Assessing Officer to record finding supported by evidence--Claim on account of accumulated deficit not adjudicated--Matter remanded to

Assessing Officer for fresh adjudication-- Devi Kamal Trust Estate v. DIT (Exemption) (Cal) . . . 178

S. 14A --Income--Computation of income--Disallowance of expenditure relating to exempt income--Assessee declaring exempt long-term capital gains and declaring expenditure disallowable against it--Assessing Officer treating income as business income and not long-term capital gains--Shares held by assessee treated as stock-in-trade--Deletion of disallowance justified--No substantial question of law arose-- CIT v. G. K. K. Capital Markets (P.) Ltd. (Cal) . . . 196

S. 40(a)(ia) --Income--Computation of income--Amounts not deductible--Assessee dealer in computer software--Transaction one of purchase and sale--Payment not in nature of royalty and provisions of section 9(1)(vi) not applicable--Tax not deductible at source--Expenditure not to be disallowed for failure to deduct tax at source-- CIT v. Vinzas Solutions India Pvt. Ltd. (Mad) . . . 155

S. 43B --Business expenditure--Deduction only on actual payment--Bank interest--Amount credited by assessee written back upon waiver of partial interest--Interest remaining outstanding after conversion of write off into loan--If income to be considered then loss also to be considered for relevant assessment year--Interest allowable as deduction-- Sunil Synchem Ltd. v. CIT (Raj) . . . 165

S. 57 --Income from other sources--Deductions--Amount wholly spent for earning income--Loan for purchase of shares--Interest/service charges deductible-- CIT v. Virat Investment and Mercantile Co. (Delhi) . . . 202

S. 115A --Non-resident--Shipping business--Fees for technical services--Automated software-based communication system set up and maintained by assessee for use of its agents enabling them to access customer and documentation information--Common facility provided to agents--Integral part of shipping business to enable agents to discharge their role more effectively--Payments by agents on pro rata basis for use of facility--No finding that profit element embedded in payments--Payments received from agents are reimbursement of expenses incurred on system--Not fees for technical services and not taxable in India-- DIT (International Taxation) v. A. P. Moller Maersk A/S (SC) . . . 186

S. 132 --Writ--Maintainability--Undisclosed income--Search and seizure--Warrant of authorisation--Scope of enquiry by court into validity of search warrant--Evidentiary value of seized documents--Competent authority can resort to provisions of section 132--Writ petition not maintainable-- Aditya Narayan Mahasupakar v. Chief CIT (Orissa) . . . 131

S. 144C --Dispute resolution--Scope of section 144C--Forwarding of draft assessment order--Meaning of "forwarding" in section 144C--Actual service of copy of draft assessment order necessary--Time limit of nine months from end of month in which draft order forwarded to assessee for Dispute Resolution Panel to pass order--Receipt of draft assessment order dated 26-3-2014 on 22-8-2014--Jurisdiction of Dispute Resolution Panel to pass order did not lapse on 31-12-2014-- Rain Cements Ltd. v. Deputy CIT (T&AP) . . . 253

----Dispute Resolution--Writ--Powers of High Court--Time limit of nine months for Dispute Resolution Panel to pass order--Cannot be treated as going to root of matter--High Court can

remand case to Dispute Resolution Panel even though time limit would have expired-- Rain Cements Ltd. v. Deputy CIT (T&AP) . . . 253

S. 153 --Writ--Maintainability--Undisclosed income--Search and seizure--Warrant of authorisation--Scope of enquiry by court into validity of search warrant--Evidentiary value of seized documents--Competent authority can resort to provisions of section 132--Writ petition not maintainable-- Aditya Narayan Mahasupakar v. Chief CIT (Orissa) . . . 131

S. 153A --Writ--Maintainability--Undisclosed income--Search and seizure--Warrant of authorisation--Scope of enquiry by court into validity of search warrant--Evidentiary value of seized documents--Competent authority can resort to provisions of section 132--Writ petition not maintainable-- Aditya Narayan Mahasupakar v. Chief CIT (Orissa) . . . 131

S. 161 --Representative assessee--Trustee--Assessment--Effect of section 164(1) and Circular No. 281 dated 22-9-1980--Sufficient if beneficiaries identifiable and shares capable of being determined based on trust deed-- CIT v. India Advantage Fund-VII (Karn) . . . 209

S. 164 --Representative assessee--Trustee--Assessment--Effect of section 164(1) and Circular No. 281 dated 22-9-1980--Sufficient if beneficiaries identifiable and shares capable of being determined based on trust deed-- CIT v. India Advantage Fund-VII (Karn) . . . 209

S. 194J --Income--Computation of income--Amounts not deductible--Assessee dealer in computer software--Transaction one of purchase and sale--Payment not in nature of royalty and provisions of section 9(1)(vi) not applicable--Tax not deductible at source--Expenditure not to be disallowed for failure to deduct tax at source-- CIT v. Vinzas Solutions India Pvt. Ltd. (Mad) . . . 155

S. 254(1) --Appeal to Appellate Tribunal--Order of Appellate Tribunal--Rule requiring order to be pronounced within ninety days of conclusion of hearing--Tribunal passing order beyond period of 90 days from date of conclusion of its hearing--Assessee seeking rectification on ground delay operated to its prejudice--Tribunal to consider rectification application afresh-- Otters Club v. DIT (Exemptions) (Bom) . . . 244

S. 260A --Appeal to High Court--Finality of findings of fact by Tribunal--Finding when can be termed perverse-- CIT v. India Advantage Fund-VII (Karn) . . . 209

S. 263 --Revision--Erroneous and prejudicial to Revenue--Assessing Officer allowing deduction on account of payment of commission to sister concern--Commissioner disallowing expenses--No income escaped taxation and no prejudice or loss caused to Revenue--Provisions of section 263 not attracted--Tribunal right in deleting disallowance-- CIT v. Micromatic Grinding Technologies Ltd. (All) . . . 268

Volume 54 : Part 5 (Issue dated : 13-3-2017)

S. 9(1)(vii)(b) --Income deemed to accrue or arise in India--Technical services--Non-resident--Services rendered by proprietor of firm--Double taxation avoidance--Whether services dependent personal services or independent personal services--Period of stay in India relevant--Day of arrival and day of departure--One of the days excludible to consider period of stay--Period of stay in India less than ninety days--Amount not taxable in India--Question of disallowance under section 40(a)(ia) does not arise-- Spectrum Power Generation Ltd. v. Asst. CIT (Hyd) . . . 751

S. 11 --Charitable purpose--Charitable trust--Exemption--Whether or not character of trust charitable--Predominant objects of trust to be examined--Trust achieving medical relief through several methods and yoga one method--Legislature removing all doubts by inserting yoga in definition as charitable purpose--Propagation of yoga itself is a charitable purpose--Charging of fee to meet a part of cost for rendering charitable services--Would not alter charitable character of services--Trust entitled to exemption-- Patanjali Yogpeeth (Nyas) v. Addl. DIT (Exemptions) (Delhi) . . . 616

S. 11(1)(c) --Charitable purpose--Charitable trust--Exemption--Activities undertaken outside India by assessee neither substantiated nor expenditure quantified--Denial of exemption not justified-- Patanjali Yogpeeth (Nyas) v. Addl. DIT (Exemptions)(Delhi) . . . 616

S. 12 --Charitable purpose--Charitable trust--Exemption--Whether or not character of trust charitable--Predominant objects of trust to be examined--Trust achieving medical relief through several methods and yoga one method--Legislature removing all doubts by inserting yoga in definition as charitable purpose--Propagation of yoga itself is a charitable purpose--Charging of fee to meet a part of cost for rendering charitable services--Would not alter charitable character of services--Trust entitled to exemption-- Patanjali Yogpeeth (Nyas) v. Addl. DIT (Exemptions) (Delhi) . . . 616

S. 40(a)(ia) --Income deemed to accrue or arise in India--Technical services--Non-resident--If services considered as dependent personal services--Article 16 of Agreement would be applicable on which Commissioner (Appeals) holding amount not taxable--If services considered as independent personal services--Period of ninety days relevant--Day of arrival and day of departure--One of the days excludible to consider period of stay--Seven trips made by non-resident coming to less than ninety days period--Amount not taxable in India applying provisions of Agreement--Question of disallowance under section 40(a)(ia) does not arise-- Spectrum Power Generation Ltd. v. Asst. CIT (Hyd) . . . 751

S. 80-IA --Revision--Commissioner--Infrastructure development deduction--Special deduction--Assessing Officer making enquiries and assessee filing adequate replies--Assessing Officer applying his mind taking a plausible view that project undertaken by assessee was not works contract--Revisional order not pointing out how view of Assessing Officer incorrect--Commissioner not referring to document, clause or agreement to hold project was works contract--No error in assessment order so as to cause prejudice to Revenue--Revision not valid-- Unipro Techno Infrastructure P. Ltd. v. Principal CIT (Chandigarh) . . . 726

S. 115BBC --Charitable purpose--Charitable trust--Exemption--Anonymous donations--Organising yoga camps not disputed--Trust noting names and addresses of donors--Assessing Officer failing to verify donors--Treatment of receipt as anonymous donation not justified-- Patanjali Yogpeeth (Nyas) v. Addl. DIT (Exemptions)(Delhi) . . . 616

S. 263 --Revision--Commissioner--Infrastructure development deduction--Special deduction--Assessing Officer making enquiries and assessee filing adequate replies--Assessing Officer applying his mind taking a plausible view that project undertaken by assessee was not works contract--Revisional order not pointing out how view of Assessing Officer incorrect--Commissioner not referring to document, clause or agreement to hold project was works contract--No error in assessment order so as to cause prejudice to Revenue--Revision not valid-- Unipro Techno Infrastructure P. Ltd. v. Principal CIT (Chandigarh) . . . 726

ITR Volume 392 : Part 3 (Issue dated : 27-3-2017)

S. 11 --Charitable purpose--Exemption--Exclusion from exemption--Effect of section 13--Trust established before enactment of Income-tax Act, 1961--Section 13 not applicable--Charitable and religious purposes--Major activities charitable and a few religious activities--Trust entitled to exemption-- Shri Mahavir Sthan Nyas Samiti v. Union of India (Patna) . . . 301

S. 12A --Charitable purposes--Charitable trust--Registration--Scope of section 12A--Enquiry into objects of trust--Application of income not relevant-- CIT v. Gopi Ram Goyal Charitable Trust (Raj) . . . 285

S. 12AA --Charitable purposes--Charitable trust--Registration--Scope of section 12A--Enquiry into objects of trust--Application of income not relevant-- CIT v. Gopi Ram Goyal Charitable Trust (Raj) . . . 285

S. 13 --Charitable purpose--Exemption--Exclusion from exemption--Effect of section 13--Trust established before enactment of Income-tax Act, 1961--Section 13 not applicable--Charitable and religious purposes--Major activities charitable and a few religious activities--Trust entitled to exemption-- Shri Mahavir Sthan Nyas Samiti v. Union of India (Patna) . . . 301

S. 36 --Business expenditure--Year in which allowable--Interest on borrowed capital--Interest paid for two years but not claimed in those years--Transaction rescinded and borrowed sums repaid--Interest deductible as prior period expenditure-- CIT v. Nav Sansar Agro Products (Delhi) . . . 399

S. 40(a)(ia) --Appeal to High Court--Deduction of tax at source--Additional evidence--Application for production of additional evidence to show payee had paid income-tax on amounts in question--Documents relevant to payment of tax by deductee--Matter remanded to Assessing Officer for examination of additional evidence adduced-- Gopal Cotton Industries Pvt. Ltd. v. CIT (P&H) . . . 276

----Business expenditure--Disallowance--Amounts liable to deduction of tax at source--Documents showing payment of tax on sums in question by payee produced before court--Matter remanded to Assessing Officer to consider documents and dispose of matter-- Gopal Cotton Industries Pvt. Ltd. v. CIT (P&H) . . . 276

S. 68 --Penalty--Concealment of income--Cash credits--Settlement of cases--Surrender of cash credits for assessment years 1977-78 to 1980-81 by assessee during course of hearing and not at time of filing settlement application--Accepted by Settlement Commission and immunity granted--Claim to deduction of interest on cash credits as expenditure in succeeding assessment years--Surrender not in contemplation at that time but made later-- Incorrect claim cannot

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amount to furnishing inaccurate particulars--Penalty proceedings cannot be initiated-- Ashirbad Enterprises v. CIT (Patna) . . . 289

S. 80G --Special deduction--Donation to charitable institution--Registration of institution for purposes of section 80G--Law applicable--Effect of omission of proviso to section 80G(5)(vi) w.e.f 1-10-2009--No requirement of renewal of registration in case of valid registration on 1-10-2009-- Shri Mahavir Sthan Nyas Samiti v. Union of India (Patna) . . . 301

S. 80-IA --Industrial undertaking--Special deduction--Computation--Loss in year prior to initial assessment year already absorbed cannot be notionally brought forward and set off against profits of eligible business-- Principal CIT v. GRT Hotels and Resorts Pvt. Ltd. (Mad) . . . 440

S. 92CA --Penalty--Concealment of income--Recomputation of arm's length price of specified domestic transaction not carried out at arm's length--Transactional net margin method or comparable uncontrolled price method--Difference in method leading to rejection of loss claimed in respect of genuine new line of business--Penalty cannot be imposed-- Principal CIT v. Mitsui Prime Advanced Composites India Pvt. Ltd. (Delhi) . . . 280

S. 132 --Penalty--Concealment of income--Cash credits--Settlement of cases--Surrender of cash credits for assessment years 1977-78 to 1980-81 by assessee during course of hearing and not at time of filing settlement application--Accepted by Settlement Commission and immunity granted--Claim to deduction of interest on cash credits as expenditure in succeeding assessment years--Surrender not in contemplation at that time but made later-- Incorrect claim cannot amount to furnishing inaccurate particulars--Penalty proceedings cannot be initiated-- Ashirbad Enterprises v. CIT (Patna) . . . 289

S. 147 --Reassessment--Notice--Conditions precedent--Assessing Officer must have reason to believe income had escaped assessment--Opinion of audit party not conclusive--Notice under compulsion by audit party--Not valid-- Reckit Benckiser Healthcare India P. Ltd. v. Deputy CIT (Guj) . . . 336

----Reassessment--Notice--Reason to believe--Information received from Directorate of Revenue Intelligence regarding bogus purchases by assessee--Existence of tangible material--Further conditions cannot be imposed as to nature of discussion in recording reasons for notice--Directions to Appellate Tribunal to hear Department's appeals on merits-- Principal CIT v. Paramount Communication Pvt. Ltd. (Delhi) . . . 444

----Reassessment--Notice--Validity--Audit--Notice based solely on

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objections of audit party--Not valid-- Torrent Power S.E.C. Ltd. v. Asst. CIT (Guj) . . . 330

----Reassessment--Notice--Validity--Opinion of audit party--Evidence that opinion was considered and Assessing Officer concluded that income had escaped assessment--Only one out of several reasons for reassessment having basis--Notice valid-- Elecon Engineering Co. Ltd. v. Asst. CIT (Guj) . . . 404

S. 148 --Reassessment--Notice--Conditions precedent--Assessing Officer must have reason to believe income had escaped assessment--Opinion of audit party not conclusive--Notice under compulsion by audit party--Not valid-- Reckit Benckiser Healthcare India P. Ltd. v. Deputy CIT (Guj) . . . 336

----Reassessment--Notice--Reason to believe--Information received from Directorate of Revenue Intelligence regarding bogus purchases by assessee--Existence of tangible material--Further conditions cannot be imposed as to nature of discussion in recording reasons for notice--Directions to Appellate Tribunal to hear Department's appeals on merits-- Principal CIT v. Paramount Communication Pvt. Ltd. (Delhi) . . . 444

----Reassessment--Notice--Validity--Audit--Notice based solely on objections of audit party--Not valid-- Torrent Power S.E.C. Ltd. v. Asst. CIT (Guj) . . . 330

----Reassessment--Notice--Validity--Opinion of audit party--Evidence that opinion was considered and Assessing Officer concluded that income had escaped assessment--Only one out of several reasons for reassessment having basis--Notice valid-- Elecon Engineering Co. Ltd. v. Asst. CIT (Guj) . . . 404

S. 158BB(1) --Search and seizure--Block assessment--Undisclosed income--To be determined on basis of material found during course of search--No incriminating material found during search--Additions made on basis of evidence gathered from extraneous source and on basis of statement or document received subsequent to search--Not forming part of undisclosed income for block period--Assessing Officer has no jurisdiction to make additions under section 158BC-- CIT v. Pinaki Misra (Delhi) . . . 347

S. 158BC --Search and seizure--Block assessment--Procedure--Notice--Provision requiring notice to provide time of "not less than 15 days"--Assessing Officer issuing notice to file return "within 15 days"--Invalid notice--Assessment on basis of invalid notice illegal-- Surya Dev Kumawat v. CIT (Raj) . . . 369

----Search and seizure--Block assessment--Undisclosed income--To

be determined on basis of material found during course of search--No incriminating material found during search--Additions made on basis of evidence gathered from extraneous source and on basis of statement or document received subsequent to search--Not forming part of undisclosed income for block period--Assessing Officer has no jurisdiction to make additions under section 158BC-- CIT v. Pinaki Misra (Delhi) . . . 347

S. 245H --Penalty--Concealment of income--Cash credits--Settlement of cases--Surrender of cash credits for assessment years 1977-78 to 1980-81 by assessee during course of hearing and not at time of filing settlement application--Accepted by Settlement Commission and immunity granted--Claim to deduction of interest on cash credits as expenditure in succeeding assessment years--Surrender not in contemplation at that time but made later--Incorrect claim cannot amount to furnishing inaccurate particulars--Penalty proceedings cannot be initiated-- Ashirbad Enterprises v. CIT (Patna) . . . 289

S. 260A --Appeal to High Court--Powers of High Court--Findings of fact binding on High Court unless perverse-- CIT v. Bagmane Developers P. Ltd. (Karn) . . . 379

S. 263 --Revision--Commissioner--Accounting--Method of accounting--Assessee changing method of accounting in accordance with Accounting Standard 7--Known and recognised method of accounting and approved as proper--Not erroneous and prejudicial to Revenue--Revision not warranted-- Principal CIT v. A 2 Z Maintenance and Engineering Services Ltd. (Delhi) . . . 273

----Revision--Condition precedent--Order should be erroneous and prejudicial to Revenue--Failure to make necessary enquiries--Order of revision--Valid-- Shri Mahavir Sthan Nyas Samiti v. Union of India (Patna) . . . 301

----Revision--Erroneous and prejudicial to Revenue--Additional depreciation--Estimated downward revision of sales--Revision on these two points set aside by High Court--Appeal to Supreme Court--Subsequent events obviating need to go into justification for revision--Matter closed-- CIT v. NTPC Ltd. (SC) . . . 426

Chapter XXI --Purchase of immovable property by Central Government--Subsequent auction sale of property--Sale on "as is where is and whatever there is" basis--Liability of auction purchaser to pay outstandings pertaining to property not known at time of auction--Demand for unearned incremental charges in 1991--Auction purchaser liable to pay charges-- Ashwin Bhagwandas Choksey v. Appropriate Authorities (Bom) . . . 394

S. 271(1)(c) --Penalty--Concealment of income--Cash credits--

Settlement of cases--Surrender of cash credits for assessment years 1977-78 to 1980-81 by assessee during course of hearing and not at time of filing settlement application--Accepted by Settlement Commission and immunity granted--Claim to deduction of interest on cash credits as expenditure in succeeding assessment years--Surrender not in contemplation at that time but made later--Incorrect claim cannot amount to furnishing inaccurate particulars--Penalty proceedings cannot be initiated-- Ashirbad Enterprises v. CIT (Patna) . . . 289

----Penalty--Concealment of income--Recomputation of arm's length price of specified domestic transaction not carried out at arm's length--Transactional net margin method or comparable uncontrolled price method--Difference in method leading to rejection of loss claimed in respect of genuine new line of business--Penalty cannot be imposed-- Principal CIT v. Mitsui Prime Advanced Composites India Pvt. Ltd. (Delhi) . . . 280

Volume 55 : Part 1 (Issue dated : 27-3-2017)

S. 23 --Income from house property--Annual value--Deemed rental value--Plea that property uninhabitable--Facts not clear--Assessing Officer to decide issue after taking into account all facts and circumstances of case-- Manish Dhirajlal Popat v. Addl. CIT (Mumbai) . . . 71

S. 37 --Business expenditure--Personal use of car--Disallowance to one-tenth of expenses-- Shree Tirupati Motors v. Asst. CIT (Lucknow) . . . 109

S. 40A(2)(b)(iv) --Business expenditure--Disallowance--Excessive and unreasonable payments--Payment person referred to in section 40A(2)(a)--Wife of son of partner not relative--No disallowance on salary payments to her-- Shree Tirupati Motors v. Asst. CIT (Lucknow) . . . 109

S. 40A(3) --Business expenditure--Disallowance--Cash payments in excess of specified limit--Sales promotion and miscellaneous expenses not exceeding specified limit--No ad hoc disallowance-- Shree Tirupati Motors v. Asst. CIT(Lucknow) . . . 109

S. 64(1)(iv) --Income--Inclusions in total income--Whether interest from funds transferred by assessee to wife to be clubbed in hands of assessee or not--Finding contradictory and no facts or evidence on record--Assessing Officer to decide afresh-- Manish Dhirajlal Popat v. Addl. CIT (Mumbai) . . . 71

S. 80P(2)(a) --Co-operative society--Special deduction--Assessee providing credit facility as well as housing facility--Entitled to deduction to extent of income relating to business of banking or providing credit facilities to its members--Assessee not maintaining separate accounts to depict profits attributable to both segments--Assessing Officer to arrive at figure of profits--Interest earned on deposits eligible for deduction-- ITO v. Vidarbha Premier Co-operative Housing Society (Nagpur) . . . 28

S. 139(6) --Return--Validity of return--Assessing Officer not finding returns filed by assessee invalid and completing assessment--Contention that returns filed by assessee invalid not tenable-- Anil Kumar v. ITO (Amritsar) . . . 97

S. 143(2) --Assessment--Enquiry--Notice--Issuance of notice mandatory--Notice issued beyond dates specified in Instruction--Notice to be issued by Income-tax Officer but notice issued by Assistant Commissioner--Notice invalid and consequently assessment void-- Krishnendu Chowdhury v. ITO (Kolkata) . . . 52

----Assessment--Validity of assessment--Omission on part of Assessing Officer to issue notice under section 143(2)--Defect incurable--Issuance of notice mandatory-- Anil Kumar v. ITO (Amritsar) . . . 97

S. 195 --Non-resident--Double Taxation Avoidance Agreements--Applicable where more beneficial to assessee--Deduction of tax at source--Payment to non-residents--Fees for technical services--Double Taxation Avoidance Agreements specifying lower rate of tax for fee of technical services--Overrides higher rate of deduction prescribed in section 206AA in case of payees failing to furnish their permanent account numbers-- Nagarjuna Fertilizers and Chemicals Ltd. v. Asst. CIT (Hyd) . . . 1

S. 200A --Deduction of tax at source--Fees for delay in filing statement of tax deduction at source--Levy of fees while issuing intimation under section 200A--Amendment in section 200A allowing computation of fee under section 234E while processing statement of tax deducted at source is prospective--Assessing Officer not empowered to charge fees prior thereto-- Vidya Vardhani Education and Research Foundation v. Deputy CIT (Pune) . . . 78

S. 206AA --Non-resident--Double Taxation Avoidance Agreements--Applicable where more beneficial to assessee--Deduction of tax at source--Payment to non-residents--Fees for technical services--Double Taxation Avoidance Agreements specifying lower rate of tax for fee of technical services--Overrides higher rate of deduction prescribed in section 206AA in case of payees failing to furnish their permanent account numbers-- Nagarjuna Fertilizers and Chemicals Ltd. v. Asst. CIT(Hyd) . . . 1

----Permanent account numbers--Provision prescribing higher rate of tax deduction at source where recipient fails to furnish number to payer--Not applicable to non-resident payees not under an obligation to obtain permanent account numbers--Provisions of section 206AA--Would not override provisions of Double Taxation Avoidance Agreements to extent they are more beneficial to assessee--Beneficial provision of Agreement will override machinery provisions of section 206AA-- Nagarjuna Fertilizers and Chemicals Ltd. v. Asst. CIT (Hyd) . . . 1

S. 234E --Deduction of tax at source--Fees for delay in filing statement of tax deduction at source--Levy of fees while issuing intimation under section 200A--Amendment in section 200A allowing computation of fee under section 234E while processing statement of tax deducted at source is prospective--Assessing Officer not empowered to charge fees prior thereto-- Vidya Vardhani Education and Research Foundation v. Deputy CIT (Pune) . . . 78

S. 292BB --Assessment--Validity of assessment--Omission on part of Assessing Officer to issue notice under section 143(2)--Defect incurable--Issuance of notice mandatory-- Anil Kumar v. ITO (Amritsar) . . . 97

ITR Volume 392 : Part 4 (Issue dated : 3-4-2017)

S. 10(8) --Exemption--Remuneration from foreign State under technical assistance agreement with Government of India--Salary received under agreement--Entitled to exemption-- Dr. Jyoti Vajpayee v. CIT (All) . . . 518

S. 10(20) --Deduction of tax at source--Development and construction business--Lease premium--Rent--Land leased from Greater Noida Industrial Development Authority--Payments of lease premium and rent to lessor--Amounts paid as premium capital payments not subject to deduction of tax at source-- Annual lease rent subject to deduction of tax at source--Tax not deducted at source at insistence of lessor Noida authority--Directions issued to Noida authority to make payments in compliance with provisions of law-- Rajesh Projects (India) Pvt. Ltd. v. CIT (TDS)-II (Delhi) . . . 483

----Exemption--Local authority--Greater Noida Industrial Development Authority--Not municipality or local authority--Not entitled to benefit of section 10(20)-- Rajesh Projects (India) Pvt. Ltd. v. CIT (TDS)-II (Delhi) . . . 483

S. 14A --Income--Computation of income--Disallowance of expenditure in relation to exempt income--Nexus between increase in exempt income and expenses when compared to previous assessment year--Incumbent upon Assessing Officer to enquire and determine whether there is nexus-- Principal CIT v. U. K. Paints (India) Pvt. Ltd. (Delhi) . . . 552

S. 44AD(1) --Presumptive taxation--Civil construction business--Special provision for computing profits and gains of business--Gross receipts of assessee exceeding Rs. 40 lakhs--Section 44AD not applicable-- CIT v. Ram Kumar (P&H) . . . 561

S. 68 --Cash credit--Burden of proof--Cash credit in name of partner of assessee-firm--Onus on assessee to prove source--Explanation of assessee not satisfactory--Ability of partner to contribute amount in cash to assessee not substantiated by supporting documents--Liable to tax in hands of assessee-- R. A. Himmatsinghka and Co. v. Asst. CIT (Patna) . . . 587

S. 69C --Unexplained expenditure--Genuineness of export transactions--Mere vouchers of import and export challans of customs clearance not proof of physical delivery of material--Failure by assessee to produce foreign sellers--Paper transactions to avail of tax benefits--Amounts to bogus purchase--Finding of Appellate Tribunal based on statement of power of attorney holder of foreign seller--Statement cannot be relied on--Finding perverse and to be set aside-- CIT v. Bright Future Gems (Raj) . . . 580

S. 131 --Reassessment--Notice--Assessment reopened based on information received from Investigation Wing--Assessee beneficiary of accommodation entries from absconding entry operators of money laundering scam--Cash credits--Share capital--Failure of share applicants to appear in response to summons--Assessee unable to explain details of identity, creditworthiness and genuineness of transactions--Concurrent findings of fact by authorities--Reassessment justified-- Paramount Intercontinental Pvt. Ltd. v. ITO (Delhi) . . . 505

S. 132 --Search and seizure--Assessment in search cases--Notice under section 153A--Valuation of property--Sale consideration disclosed by assessee in return--Absence of seizure of any new material during search--Fresh examination unjustified-- Principal CIT v. Smt. Anita Rani (Delhi) . . . 501

----Search and seizure--Block assessment--Notice--Tribunal quashing notice on ground that warrant of authorisation not issued in name of assessee--Finding of Tribunal not supported by original form--Findings required to be revalued and reappreciated after verifying documents--Matter remanded-- CIT v. V. K. Rana (Raj) . . . 449

S. 147 --Reassessment--Notice--Assessment reopened based on information received from Investigation Wing--Assessee beneficiary of accommodation entries from absconding entry operators of money laundering scam--Cash credits--Share capital--Failure of share applicants to appear in response to summons--Assessee unable to explain details of identity, creditworthiness and genuineness of transactions--Concurrent findings of fact by authorities--Reassessment justified-- Paramount Intercontinental Pvt. Ltd. v. ITO (Delhi) . . . 505

----Reassessment--Notice--Limitation--Meaning of "issue" in section 148--Date of issue would be date on which notice is handed over to Postal Department--Notice handed over to Postal Department before expiry of time--Notice not barred by limitation--Reasons for notice recorded--Notice valid-- Rajesh Sunderdas Vaswani v. C. P. Meena, Deputy CIT (Guj) . . . 571

----Reassessment--Notice--Validity--Wrong claim for deduction--Notice valid-- Palakkad Dist. Co-operative Bank Ltd. v. Addl. CIT (Ker) . . . 539

----Reassessment--Validity--Writ--Composite order rejecting objections and reassessing income--Assessee having alternate remedy of appeal--No prejudice caused to assessee--Writ will not issue to quash reassessment-- Palakkad Dist. Co-operative Bank Ltd. v. Addl. CIT (Ker) . . . 539

S. 148 --Reassessment--Notice--Assessment reopened based on information received from Investigation Wing--Assessee beneficiary of accommodation entries from absconding entry operators of money laundering scam--Cash credits--Share capital--Failure of share applicants to appear in response to summons--Assessee unable to explain details of identity, creditworthiness and genuineness of transactions--Concurrent findings of fact by authorities--Reassessment justified-- Paramount Intercontinental Pvt. Ltd. v. ITO (Delhi) . . . 505

----Reassessment--Notice--Limitation--Meaning of "issue" in section 148--Date of issue would be date on which notice is handed over to Postal Department--Notice handed over to Postal Department before expiry of time--Notice not barred by limitation--Reasons for notice recorded--Notice valid-- Rajesh Sunderdas Vaswani v. C. P. Meena, Deputy CIT (Guj) . . . 571

----Reassessment--Notice--Validity--Wrong claim for deduction--Notice valid-- Palakkad Dist. Co-operative Bank Ltd. v. Addl. CIT (Ker) . . . 539

S. 153A --Search and seizure--Assessment in search cases--Notice under section 153A--Valuation of property--Sale consideration disclosed by assessee in return--Absence of seizure of any new material during search--Fresh examination unjustified-- Principal CIT v. Smt. Anita Rani (Delhi) . . . 501

S. 158BC --Search and seizure--Block assessment--Notice--Tribunal quashing notice on ground that warrant of authorisation not issued in name of assessee--Finding of Tribunal not

supported by original form--Findings required to be revalued and reappreciated after verifying documents--Matter remanded-- CIT v. V. K. Rana (Raj) . . . 449

S. 194A --Deduction of tax at source--Exemption--Development and construction business--Land leased from Greater Noida Industrial Development Authority--Interest on lump sum lease premium--Within ambit of section 194A--Exempted from deduction of tax at source-- Rajesh Projects (India) Pvt. Ltd. v. CIT (TDS)-II (Delhi) . . . 483

S. 194-I --Deduction of tax at source--Development and construction business--Lease premium--Rent--Land leased from Greater Noida Industrial Development Authority--Payments of lease premium and rent to lessor--Amounts paid as premium capital payments not subject to deduction of tax at source--Annual lease rent subject to deduction of tax at source--Tax not deducted at source at insistence of lessor Noida authority--Directions issued to Noida authority to make payments in compliance with provisions of law-- Rajesh Projects (India) Pvt. Ltd. v. CIT (TDS)-II (Delhi) . . . 483

S. 220(2) --Recovery of tax--Attachment of property--Property jointly owned by four co-owners including assessee--Sale of property during pendency of recovery proceedings--Assessee paying entire amount of tax due along with interest--Transaction of sale cannot be declared null and void-- Nitaben Harishbhai Shah v. TRO (Guj) . . . 619

S. 234E --Deduction of tax at source--Constitutional validity of provisions--Section 234E laying down fees for late filing of return or statement of tax deducted at source--Section 234E valid-- Sree Narayana Guru Smaraka Sangam Upper Primary School v. Union of India (Ker) . . . 457

S. 264 --Revision--Powers of Commissioner under section 264--Application for exemption after long delay--Commissioner has power to consider claim-- Dr. Jyoti Vajpayee v. CIT (All) . . . 518

Volume 55 : Part 2 (Issue dated : 3-4-2017)

S. 2(15) --Charitable purposes--Exemption--Participatory research to educate poor and deprived--Activities within scope of education under section 2(15)--Receiving research and training grant and profits will not change character of institution established solely for educational purpose--Invocation of proviso to section 2(15) to deny claim of exemption under sections 11 and 12 not justified-- Society for Participatory Research in Asia v. ITO (Exemption) (Delhi) . . . 149

S. 11 --Charitable purposes--Exemption--Participatory research to educate poor and deprived--Activities within scope of education under section 2(15)--Receiving research and training grant and profits will not change character of institution established solely for educational purpose--Invocation of proviso to section 2(15) to deny claim of exemption under sections 11 and 12 not justified-- Society for Participatory Research in Asia v. ITO (Exemption) (Delhi) . . . 149

S. 12 --Charitable purposes--Exemption--Participatory research to educate poor and deprived--Activities within scope of education under section 2(15)--Receiving research and training grant and profits will not change character of institution established solely for educational purpose--Invocation of proviso to section 2(15) to deny claim of exemption under sections 11 and 12 not justified-- Society for Participatory Research in Asia v. ITO (Exemption) (Delhi) . . . 149

S. 12A --Charitable purposes--Exemption--Participatory research to educate poor and deprived--Activities within scope of education under section 2(15)--Receiving research and training grant and profits will not change character of institution established solely for educational purpose--Invocation of proviso to section 2(15) to deny claim of exemption under sections 11 and 12 not justified-- Society for Participatory Research in Asia v. ITO (Exemption) (Delhi) . . . 149

S. 36(1)(iii) --Business expenditure--Interest on borrowed capital--Assessee paying interest on capital raised from partners--Commissioner (Appeals) reducing proportionate interest made by Assessing Officer in previous year--If partial relief given by Commissioner (Appeals) taken into account funds to extent of partner's capital could not be treated as interest-free--Assessing Officer to recompute amount disallowable bearing in mind methodology approved by Commissioner (Appeals) in previous year-- Asst. CIT v. Allied Gems Corporation (Bombay) (Mumbai) . . . 198

S. 37 --Business expenditure--Foreign travel expenses--Finding that partners of assessee actually visited countries concerned and subsequently substantial business generated from such countries--Expenses deductible--Foreign exchange purchased for foreign travel--Disallowance restricted in the absence of details-- Asst. CIT v. Allied Gems Corporation (Bombay) (Mumbai) . . . 198

S. 37(1), Expln. 1 --Business expenditure--Expenses against prohibited by law--Pharmaceutical companies--Expenses on gift articles and samples of medicines to medical practitioners--Purely for promotion of assessee's product as brand reminder--Free sample of medicine only to prove efficacy and to establish trust of doctors on quality of drugs--Not free gifts to medical practitioners--Deductible-- Deputy CIT v. PHL Pharma P. Ltd. (Mumbai) . . . 168

S. 57(iii) --Income from other sources--Deduction--Setting up of business--Pre-operative expenses--Necessary for maintaining corporate identity--Allowable-- Asst. CIT v. L. S. Cable India P. Ltd. (Delhi) . . . 232

S. 80-IB(10) --Housing project--Special deduction under section 80-IB(10)--Entire deduction cannot be disallowed for not complying with conditions of section for some units--Proportionate disallowance to be made-- ITO v. Kuber Developers(Raipur) . . . 222

S. 142(2A) --Assessment--Special audit--Failure by Assessing Officer to give assessee opportunity of being heard before sending proposal for special audit--Opportunity given only by Commissioner before according approval for special audit--Assessment vitiated--Limitation for conclusion of invalid assessment cannot be extended-- ITO v. Vilsons Particle Board Industries Ltd. (Pune) . . . 114

S. 263 --Revision--Commissioner--Absence of assessment order--Order whether erroneous or prejudicial to Revenue cannot be determined--Allowability of provision for standard assets was in favour of assessee--Revision not valid-- Pali Central Co-operative Bank Ltd. v. CIT (Jodhpur) . . . 237

S. 271AAB --Penalty--Undisclosed income discovered in search--Notice issued not relating to provisions of section 271AAB--Notice issued under section 271(1)(c) and penalty levied under section 271AAB--Penalty not valid-- Sandeep Chandak v. Asst. CIT (Lucknow) . . . 209

----Penalty--Undisclosed income discovered in search--Notice--Natural justice--Opportunity of being heard must be real, effective and not illusory--Assessee given only two working days--Not proper opportunity of being heard--Order against principles of natural justice-- Sandeep Chandak v. Asst. CIT (Lucknow) . . . 209

----Penalty--Undisclosed income discovered in search--Three different situations and different rates on which penalty has to be imposed--Notice should be specific and unambiguous so that proper compliance can be made by assessee--Assessing Officer not specifying notice in respect of which clause penalty going to be levied on assessee--Penalty not sustainable-- Sandeep Chandak v. Asst. CIT (Lucknow) . . . 209

Volume 55 : Part 3 (Issue dated : 10-4-2017)

S. 11 --Charitable purpose--Exemption--Disqualification--No wholesale denial of exemption for violations of provisions--Income subject-matter of violation only taxable--Assessee incurring various expenses on tour and travel of trustees, officials, faculties of trust for attending various seminars on World Peace activities abroad--Activities constituting part of education--Nothing to show that any student had been denied admission for not giving donation--Donations not siphoned off by trustees or relatives--Exemption could not be denied-- Maharashtra Academy of Engineering and Educational Research v. Deputy CIT (Pune) . . . 242

----Charitable purpose--Exemption--No prohibition as regards fee concession--Assessing Officer directed to bring to tax concession in fees given to relatives of trustees only--Founder apart from using his own car also using vehicle of trust--Disallowance of entire expenditure on account of vehicle maintenance not justified--Fifty per cent. of vehicle maintenance alone taxable--Foreign tour expenses and purchase of personal article--Not objects of trust--Taxable--Local tours by trustees for objects of trust--Capital expenditure would be considered as application of income--Expenditure on account of tax deduction at source arrears of earlier year would be considered as application of income-- Maharashtra Academy of Engineering and Educational Research v. Deputy CIT (Pune) . . . 242

----Charitable purpose--Exemption--Pending writ petition against denial of exemption--In the absence of any approval as on date for relevant assessment years--Assessee not entitled to exemption-- Maharashtra Academy of Engineering and Educational Research v. Deputy CIT (Pune) . . . 242

S. 13(1)(c) --Charitable purpose--Exemption--Disqualification--No wholesale denial of exemption for violations of provisions--Income subject-matter of violation only taxable--Assessee incurring various expenses on tour and travel of trustees, officials, faculties of trust for attending various seminars on World Peace activities abroad--Activities constituting part of education--Nothing to show that any student had been denied admission for not giving donation--Donations not siphoned off by trustees or relatives--Exemption could not be denied-- Maharashtra Academy of Engineering and Educational Research v. Deputy CIT (Pune) . . . 242

S. 40(a)(ia) --Deduction of tax at source--Commission or brokerage--Hawkers delivering newspapers and magazines on his own and not on behalf of assessee as agent--Amount paid by assessee to hawkers in nature of discount--Amount could not be treated as commission merely on basis of nomenclature used by assessee in his books of account-- Abhijit Majumder v. ITO (Kolkata) . . . 361

S. 142(2A) --Assessment--Special audit--Assessing Officer not giving opportunity of being heard to assessee before directing to get its accounts audited--Opportunity granted only by Commissioner--Limitation for completion of assessment cannot be extended in view of illegal order--Assessment barred by limitation-- Maharashtra Academy of Engineering and Educational Research v. Deputy CIT(Pune) . . . 242

S. 147 --Reassessment--Scope of provisions--Assessing Officer making no addition on issue on which assessment reopened--Assessing Officer cannot make other additions-- Maharashtra Academy of Engineering and Educational Research v. Deputy CIT (Pune) . . . 242

S. 153(2) --Assessment--Special audit--Assessing Officer not giving opportunity of being heard to assessee before directing to get its accounts audited--Opportunity granted only by Commissioner--Limitation for completion of assessment cannot be extended in view of illegal order--Assessment barred by limitation-- Maharashtra Academy of Engineering and Educational Research v. Deputy CIT(Pune) . . . 242

S. 194H --Deduction of tax at source--Commission or brokerage--Hawkers delivering newspapers and magazines on his own and not on behalf of assessee as agent--Amount paid by assessee to hawkers in nature of discount--Amount could not be treated as commission merely on basis of nomenclature used by assessee in his books of account-- Abhijit Majumder v. ITO (Kolkata) . . . 361

ITR Volume 393 : Part 4 (Issue dated : 8-5-2017)

S. 2(14) --Reassessment--Income escaping assessment--Sale of agricultural land--Capital asset--Assessment completed on basis land fell outside municipal limits and no capital gains arising--Subsequent cash deposits in bank indicating full consideration not disclosed by assessee--Information rendering genuineness of municipal corporation certificate produced by assessee doubtful--Notice for reassessment proper-- Thakorbhai Maganbhai Patel v. ITO (Guj) . . . 612

S. 35(1)(iv) --Business expenditure--Special deduction--Computation--Scientific research expenditure--Independent research centre--Expenditure on research not to be reduced from profits and gains of eligible undertaking for computing special deduction-- CIT v. Torrent Pharmaceuticals Ltd. (Guj) . . . 625

S. 35(2AB) --Expenditure on scientific research--Weighted deduction--Development of in-house research and development facility--Assessee entitled to weighted deduction-- CIT v. Torrent Pharmaceuticals Ltd. (Guj) . . . 625

S. 35AB --Business expenditure--Expenses incurred for use of technical know-how--Deductible--Matter remitted to Assessing Officer for adjudication-- CIT v. Torrent Pharmaceuticals Ltd. (Guj) . . . 625

S. 36(1)(iii) --Interest on borrowed capital--Borrowed funds spent on incomplete project--Capitalised interest--Expenditure incurred for business purpose--Deductible expenditure-- CIT v. Torrent Pharmaceuticals Ltd. (Guj) . . . 625

S. 37 --Business expenditure--Accrued or contingent liability--Award of damages with interest in arbitration made rule of court--Assessee disputing award of damages and interest thereon and dispute pending before Division Bench--Grant of stay by Division Bench does not relieve assessee from liability of interest--Entitled to deduction on interest-- National Agricultural Co-operative Marketing Federation of India Ltd. v. CIT (Delhi) . . . 666

----Business expenditure--Accrued or contingent liability--Redemption of debentures--Premium--Assessee's obligation to debenture-holders in praesenti--Allowable expenditure-- CIT v. Torrent Pharmaceuticals Ltd. (Guj) . . . 625

----Business expenditure--Expenses incurred for use of technical know-how--Deductible--Matter remitted to Assessing Officer for adjudication-- CIT v. Torrent Pharmaceuticals Ltd. (Guj) . . . 625

----Business expenditure--Interest--Interest on bank loan--Mercantile system of accounting--Interest neither paid nor entries in books of account showing it to have accrued--Dispute pending in suit--Deduction cannot be claimed-- CIT v. Hanuman Sugar Industries Ltd. (Cal) . . . 561

----Business expenditure--Interest on borrowed capital--Interest-free advance to another concern for purpose of business--Assessee proving availability of interest-free funds--Nothing on record to prove advances made from borrowed funds--Deletion of disallowance proper-- CIT v. Torrent Pharmaceuticals Ltd. (Guj) . . . 625

S. 40(a)(i) --Business expenditure--Accrued or contingent liability--Award of damages with interest in arbitration made rule of court--Assessee disputing award of damages and interest thereon and dispute pending before Division Bench--Grant of stay by Division Bench does not relieve assessee from liability of interest--Entitled to deduction on interest-- National Agricultural Co-operative Marketing Federation of India Ltd. v. CIT (Delhi) . . . 666

S. 41(1) --Business income--Deemed profits--Remission or cessation of trading liability--Amalgamation of companies--Set off of accumulated losses of amalgamating company by amalgamated company--To be of net losses--Amalgamating company allowed deduction of interest accrued on borrowings for years prior to amalgamation with assessee--As part of scheme of amalgamation creditors waiving interest for period prior to effective date--Interest waived becomes income chargeable to tax--To be adjusted to arrive at accumulated losses of amalgamating company which assessee entitled to set off-- McDowell and Company Ltd . v. CIT (SC) . . . 570

S. 48(2) --Capital gains--Slump sale--Depreciable assets--Sale of entire business as running concern--Not a case of sale of block of assets governed by section 50(2)--Assets cannot be considered short-term capital assets--Sale is slump sale and to be taxed as such-- CIT v. Equinox Solution Pvt. Ltd. (SC) . . . 566

S. 50(2) --Capital gains--Slump sale--Depreciable assets--Sale of entire business as running concern--Not a case of sale of block of assets governed by section 50(2)--Assets cannot be considered short-term capital assets--Sale is slump sale and to be taxed as such-- CIT v. Equinox Solution Pvt. Ltd. (SC) . . . 566

S. 54F --Capital gains--Exemption--Sale of long-term capital asset and investment of net consideration in residential house--Failure by assessee to obtain allotment letter under provision of Maharashtra Ownership of Flats Act, 1963--Developer lacking approval for construction at material time--Assessee not complying with mandatory condition under section 54F to avail of exemption-- Rasiklal M. Parikh v. Asst. CIT (Bom) . . . 536

S. 69 --Reassessment--Unexplained investment--Purchase of land--Assessment treating difference between price paid by assessee and valuation by stamp duty authority as unexplained investment--Enhancement sought in assessee's appeal on basis of valuation report of District Valuation Officer--Commissioner (Appeals) holding no addition permissible either on basis of report of Departmental Valuation Officer or of valuation of stamp duty authority--Assessment cannot be reopened thereafter on basis of information of District Valuation Officer--Notice unsustainable-- Akshar Infrastructure Pvt. Ltd. v. ITO (Guj) . . . 658

S. 72A --Business income--Deemed profits--Remission or cessation of trading liability--Amalgamation of companies--Set off of accumulated losses of amalgamating company by amalgamated company--To be of net losses--Amalgamating company allowed deduction of interest accrued on borrowings for years prior to amalgamation with assessee--As part of scheme of amalgamation creditors waiving interest for period prior to effective date--Interest waived becomes income chargeable to tax--To be adjusted to arrive at accumulated losses of amalgamating company which assessee entitled to set off-- McDowell and Company Ltd . v. CIT (SC) . . . 570

S. 80HH --Business expenditure--Special deduction--Computation--Scientific research expenditure--Independent research centre--Expenditure on research not to be reduced from profits and gains of eligible undertaking for computing special deduction-- CIT v. Torrent Pharmaceuticals Ltd. (Guj) . . . 625

----Business expenditure--Special deduction--Job charges--Deduction allowable under section 80HH-- CIT v. Torrent Pharmaceuticals Ltd. (Guj) . . . 625

S. 80HHC, cl. 1, Expln. (baa) --Export business--Computation of profits--Ninety per cent. of net interest or net rent included in profits and not of gross interest or gross rent, to be deducted-- CIT v. Torrent Pharmaceuticals Ltd. (Guj) . . . 625

S. 80-I --Business expenditure--Special deduction--Computation--Scientific research expenditure--Independent research centre--Expenditure on research not to be reduced from profits and gains of eligible undertaking for computing special deduction-- CIT v. Torrent Pharmaceuticals Ltd. (Guj) . . . 625

S. 132 --Assessment--Special audit--Search and seizure--Block assessment--Enquiry before assessment--Nature and complexity of accounts--Share trading--Assessing Officer can direct special audit having regard to volume and multiplicity of transactions and nature and complexity of accounts--Direction for special audit on basis of volume of total trades and multiplicity of transactions including nature and complexity of accounts--Within jurisdiction of Assessing Officer--Assessing Officer can direct special audit only on basis of material discovered from assessee--Assessing Officer statutorily empowered to seek such particulars as are necessary for completion of assessment--Once conditions satisfied directions by Assessing Officer for special audit justified--Question of assessment order would arise only on completion of special audit-- Sharad Kantilal Shah v. Deputy CIT (Bom) . . . 594

----Search and seizure--Assessment in search cases--Assessment of third person--Documents stored in pen drives seized during course of search--Validity of satisfaction note recorded by Assessing Officer having jurisdiction over the assessee and persons in respect of whom search conducted--Expression "belonged to assessee"--While construing a document expressions are not to be interpreted literally--Appellate Tribunal allowing appeal on hyper technical ground with regard to satisfaction note--Findings set aside--Directions to rehear on merits-- Principal CIT v. Super Malls Pvt. Ltd. (Delhi) . . . 557

S. 133A --Search and seizure--Assessment in search cases--Assessment of third person--Documents stored in pen drives seized during course of search--Validity of satisfaction note recorded by Assessing Officer having jurisdiction over the assessee and persons in respect of whom search conducted--Expression "belonged to assessee"--While construing a document expressions are not to be interpreted literally--Appellate Tribunal allowing appeal on hyper technical ground with regard to satisfaction note--Findings set aside--Directions to rehear on merits-- Principal CIT v. Super Malls Pvt. Ltd. (Delhi) . . . 557

S. 139 --Income Declaration Scheme, 2016--Assessee not filing returns for assessment year 2010-11 onwards owing to internal problems--Declaration under Scheme for assessment year 2010-11 onwards--Advance tax paid and tax deducted at source for those years--Assessee entitled to credit of advance tax amounts previously paid pertaining to assessment years for which declaration filed-- Kumudam Publications Pvt. Ltd. v. CBDT (Delhi) . . . 599

S. 142(1) --Reassessment--Best judgment assessment--Failure to file return--Failure to comply with notices issued--Corroborative evidence and materials including movable and immovable assets and statements of third parties--Sufficient opportunity of hearing given to assessee--Concurrent findings by appellate authorities--Reassessment valid--Derivation of income from legal or illegal sources immaterial--Attachment of properties under Criminal Law Amendment Ordinance, 1944 and liability of forfeiture to State Government not material--Liability to tax remains so long as it is income of particular assessment year-- Dr. Gauri Shankar Prasad v. ITAT (Patna) . . . 635

S. 142(2A) --Assessment--Special audit--Appointment of special auditor--Effect of section 142(2A)--Accounts complex--Assessee given opportunity to be heard--Appointment of special auditor--Justified-- Ulhas Securities Pvt. Ltd. v. Deputy CIT (Guj) . . . 514

----Assessment--Special audit--Search and seizure--Block assessment--Enquiry before assessment--Nature and complexity of accounts--Share trading--Assessing Officer can direct special audit having regard to volume and multiplicity of transactions and nature and complexity of accounts--Direction for special audit on basis of volume of total trades and multiplicity of transactions including nature and complexity of accounts--Within jurisdiction of Assessing Officer--Assessing Officer can direct special audit only on basis of material discovered from assessee--Assessing Officer statutorily empowered to seek such particulars as are necessary for completion of assessment--Once conditions satisfied directions by Assessing Officer for special audit justified--Question of assessment order would arise only on completion of special audit-- Sharad Kantilal Shah v. Deputy CIT (Bom) . . . 594

S. 143(3) --Reassessment--Income escaping assessment--Sale of agricultural land--Capital asset--Assessment completed on basis land fell outside municipal limits and no capital gains arising--Subsequent cash deposits in bank indicating full consideration not disclosed by assessee--Information rendering genuineness of municipal corporation certificate produced by assessee doubtful--Notice for reassessment proper-- Thakorbhai Maganbhai Patel v. ITO (Guj) . . . 612

S. 144 --Reassessment--Best judgment assessment--Failure to file return--Failure to comply with notices issued--Corroborative evidence and materials including movable and immovable assets and statements of third parties--Sufficient opportunity of hearing given to assessee--Concurrent findings by appellate authorities--Reassessment valid--Derivation of income from legal or illegal sources immaterial--Attachment of properties under Criminal Law Amendment Ordinance, 1944 and liability of forfeiture to State Government not material--Liability to tax remains so long as it is income of particular assessment year-- Dr. Gauri Shankar Prasad v. ITAT (Patna) . . . 635

S. 147 --Reassessment--Income escaping assessment--Sale of agricultural land--Capital asset--Assessment completed on basis land fell outside municipal limits and no capital gains arising--Subsequent cash deposits in bank indicating full consideration not disclosed by assessee--Information rendering genuineness of municipal corporation certificate produced by assessee doubtful--Notice for reassessment proper-- Thakorbhai Maganbhai Patel v. ITO (Guj) . . . 612

----Reassessment--Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Loans and cost of construction of hospital accepted in scrutiny assessment--Notice on grounds that loans were not genuine and cost of construction was

inflated--No failure to disclose material facts necessary for assessment--Notice not valid-- Dr. Rajivraj Ranbirsingh Choudhary v. Asst. CIT (Guj) . . . 650

----Reassessment--Unexplained investment--Purchase of land--Assessment treating difference between price paid by assessee and valuation by stamp duty authority as unexplained investment--Enhancement sought in assessee's appeal on basis of valuation report of District Valuation Officer--Commissioner (Appeals) holding no addition permissible either on basis of report of Departmental Valuation Officer or of valuation of stamp duty authority--Assessment cannot be reopened thereafter on basis of information of District Valuation Officer--Notice unsustainable-- Akshar Infrastructure Pvt. Ltd. v. ITO (Guj) . . . 658

S. 148 --Accounting--Rejection of accounts--Method of accounting consistently followed and accepted by Revenue in earlier years--Method cannot be rejected-- Manjusha Estates P. Ltd. v. ITO (Guj) . . . 644

----Reassessment--Income escaping assessment--Sale of agricultural land--Capital asset--Assessment completed on basis land fell outside municipal limits and no capital gains arising--Subsequent cash deposits in bank indicating full consideration not disclosed by assessee--Information rendering genuineness of municipal corporation certificate produced by assessee doubtful--Notice for reassessment proper-- Thakorbhai Maganbhai Patel v. ITO (Guj) . . . 612

----Reassessment--Notice--Change of opinion--Reopening on mere change of opinion by subsequent Assessing Officer not permissible-- Orient News Prints Ltd. v. Deputy CIT (Guj) . . . 527

----Reassessment--Notice after four years--Validity--Failure to disclose material facts necessary for assessment--Loans and cost of construction of hospital accepted in scrutiny assessment--Notice on grounds that loans were not genuine and cost of construction was inflated--No failure to disclose material facts necessary for assessment--Notice not valid-- Dr. Rajivraj Ranbirsingh Choudhary v. Asst. CIT (Guj) . . . 650

----Reassessment--Unexplained investment--Purchase of land--Assessment treating difference between price paid by assessee and valuation by stamp duty authority as unexplained investment--Enhancement sought in assessee's appeal on basis of valuation report of District Valuation Officer--Commissioner (Appeals) holding no addition permissible either on basis of report of Departmental Valuation Officer or of valuation of stamp duty authority--Assessment cannot be reopened thereafter on basis of information of District Valuation Officer--Notice unsustainable-- Akshar Infrastructure Pvt. Ltd. v. ITO (Guj) . . . 658

S. 153A --Assessment--Special audit--Search and seizure--Block assessment--Enquiry before assessment--Nature and complexity of accounts--Share trading--Assessing Officer can direct special audit having regard to volume and multiplicity of transactions and nature and complexity of accounts--Direction for special audit on basis of volume of total trades and multiplicity of transactions including nature and complexity of accounts--Within jurisdiction of Assessing Officer--Assessing Officer can direct special audit only on basis of material discovered from assessee--Assessing Officer statutorily empowered to seek such particulars as are necessary for completion of assessment--Once conditions satisfied directions by

Assessing Officer for special audit justified--Question of assessment order would arise only on completion of special audit-- Sharad Kantilal Shah v. Deputy CIT (Bom) . . . 594

----Search and seizure--Assessment in search cases--Assessment of third person--Documents stored in pen drives seized during course of search--Validity of satisfaction note recorded by Assessing Officer having jurisdiction over the assessee and persons in respect of whom search conducted--Expression "belonged to assessee"--While construing a document expressions are not to be interpreted literally--Appellate Tribunal allowing appeal on hyper technical ground with regard to satisfaction note--Findings set aside--Directions to rehear on merits-- Principal CIT v. Super Malls Pvt. Ltd. (Delhi) . . . 557

S. 153C --Search and seizure--Assessment in search cases--Assessment of third person--Documents stored in pen drives seized during course of search--Validity of satisfaction note recorded by Assessing Officer having jurisdiction over the assessee and persons in respect of whom search conducted--Expression "belonged to assessee"--While construing a document expressions are not to be interpreted literally--Appellate Tribunal allowing appeal on hyper technical ground with regard to satisfaction note--Findings set aside--Directions to rehear on merits-- Principal CIT v. Super Malls Pvt. Ltd. (Delhi) . . . 557

S. 210 --Income Declaration Scheme, 2016--Assessee not filing returns for assessment year 2010-11 onwards owing to internal problems--Declaration under Scheme for assessment year 2010-11 onwards--Advance tax paid and tax deducted at source for those years--Assessee entitled to credit of advance tax amounts previously paid pertaining to assessment years for which declaration filed-- Kumudam Publications Pvt. Ltd. v. CBDT (Delhi) . . . 599

S. 269UD --Purchase of immovable property by Central Government--Payment of consideration--Re-vesting of property--Appropriate authority not required to examine consequences of non-payment of amount by Department in absence of factual basis before it regarding payment--Transferee should prove payment made by it in pursuance of execution of agreement to sell--Re-vesting of property can be claimed only by transferor and not by transferee--Failure by transferee to prove payment made by it--Transferee not entitled to re-vesting of property-- Magadh Stock Exchange Association v. Union of India [FB] (Patna) . . . 581

----Purchase of immovable property by Central Government--Writ petition--Setting aside of order of purchase for want of compliance of principles of natural justice--Fresh order passed in compliance with principles of natural justice within two months--Order valid-- Magadh Stock Exchange Association v. Union of India [FB] (Patna) . . . 581

S. 269UG --Purchase of immovable property by Central Government--Payment of consideration--Re-vesting of property--Appropriate authority not required to examine consequences of non-payment of amount by Department in absence of factual basis before it regarding payment--Transferee should prove payment made by it in pursuance of execution of agreement to sell--Re-vesting of property can be claimed only by transferor and not by transferee--Failure by transferee to prove payment made by it--Transferee not entitled to re-vesting of property-- Magadh Stock Exchange Association v. Union of India [FB] (Patna) . . . 581

S. 269UH --Purchase of immovable property by Central Government--Payment of consideration--Re-vesting of property--Appropriate authority not required to examine

consequences of non-payment of amount by Department in absence of factual basis before it regarding payment--Transferee should prove payment made by it in pursuance of execution of agreement to sell--Re-vesting of property can be claimed only by transferor and not by transferee--Failure by transferee to prove payment made by it--Transferee not entitled to re-vesting of property-- Magadh Stock Exchange Association v. Union of India [FB] (Patna) . . . 581

S. 271(1)(b) --Reassessment--Best judgment assessment--Failure to file return--Failure to comply with notices issued--Corroborative evidence and materials including movable and immovable assets and statements of third parties--Sufficient opportunity of hearing given to assessee--Concurrent findings by appellate authorities--Reassessment valid--Derivation of income from legal or illegal sources immaterial--Attachment of properties under Criminal Law Amendment Ordinance, 1944 and liability of forfeiture to State Government not material--Liability to tax remains so long as it is income of particular assessment year-- Dr. Gauri Shankar Prasad v. ITAT (Patna) . . . 635

S. 271(1)(c) --Penalty--Concealment of income--Search and seizure conjointly with police--Additions made to assessee's income pursuant to seizure of imported goods by customs authorities in assessee's and his brother's premises--Additions made in quantum proceedings--Levy of penalty improper-- Rama Natha Gadhavi v. ITO (Guj) . . . 590

S. 276CC --Reassessment--Best judgment assessment--Failure to file return--Failure to comply with notices issued--Corroborative evidence and materials including movable and immovable assets and statements of third parties--Sufficient opportunity of hearing given to assessee--Concurrent findings by appellate authorities--Reassessment valid--Derivation of income from legal or illegal sources immaterial--Attachment of properties under Criminal Law Amendment Ordinance, 1944 and liability of forfeiture to State Government not material--Liability to tax remains so long as it is income of particular assessment year-- Dr. Gauri Shankar Prasad v. ITAT (Patna) . . . 635

Volume 55 : Part 6 (Issue dated : 1-5-2017)

S. 2(47) --Business income--Transfer--Assessee in terms of memorandum of understanding giving right of passage and all kinds of privileges and rights to transferee--Constructive transfer in favour of transferee--Sum received assessable as business income-- Deputy CIT v. Ramesh Batta (Delhi) . . . 612

S. 6(1)(a), (b) --Residence--Conditions precedent for considering Indian citizen or person of Indian origin a resident--Effect of Explanation 1(a) to section 6(1)(c)--Stay of 182 days in India--Economic or legal relationship with India not relevant-- Addl. DIT v. Sudhir Choudhrie (Delhi) . . . 681

S. 32(1)(i), (iia) --Depreciation--Additional depreciation--Change of law--Amendment in 2012 extending benefit of additional depreciation to assessees engaged in generation of power--Does not mean assessee not entitled to additional depreciation on power plant and windmill for earlier years-- Asst. CIT v. Mangalam Cement Ltd.(Jaipur) . . . 651

----Reassessment--Notice--Additional depreciation--Notice to withdraw additional depreciation--Reasons recorded self-contradictory and could not form basis to initiate reassessment proceedings--Assessing Officer allowing assessee's claim of depreciation under section 32(1)(ii) and additional depreciation under section 32(1)(iia) in original assessment--Examining claim of additional depreciation during reassessment proceedings--Change of opinion-- Asst. CIT v. Mangalam Cement Ltd.(Jaipur) . . . 651

S. 40(a)(ia) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Failure by assessee to deduct tax at source on film distribution commission--Whether payment already made and not outstanding at end of close of financial year relevant to assessment year 2010-11--Assessing Officer to examine issue--Matter remanded-- Asst. CIT v. Madhusudhana Reddy (Chennai) . . . 629

S. 69C --Search and seizure--Unexplained expenditure--Assessee preparing chart according to contents of seized documents--Assessee explaining each entry through entries in day book journal voucher and ledger account of advances--All expenditure mentioned in seized documents duly reflected in regular books of account of assessee--No justification to make addition-- Vijay Kumar Sood v. Deputy CIT(Chandigarh) . . . 640

S. 271(1)(c) --Penalty--Concealment of income or furnishing inaccurate particulars of income--False claim by assessee towards expenditure on film advertisement and agricultural income--Assessee acquiring film on minimum guarantee scheme and not required to incur any advertisement expenses--Failure by assessee to produce any evidence regarding carrying on agricultural operations--Penalty for furnishing inaccurate particulars of income attracted-- Asst. CIT v. Madhusudhana Reddy(Chennai) . . . 629

S. 147 --Reassessment--Notice--Additional depreciation--Notice to withdraw additional depreciation--Reasons recorded self-contradictory and could not form basis to initiate reassessment proceedings--Assessing Officer allowing assessee's claim of depreciation under

section 32(1)(ii) and additional depreciation under section 32(1)(iia) in original assessment--Examining claim of additional depreciation during reassessment proceedings--Change of opinion-- Asst. CIT v. Mangalam Cement Ltd.(Jaipur) . . . 651

S. 148 --Reassessment--Notice--Additional depreciation--Notice to withdraw additional depreciation--Reasons recorded self-contradictory and could not form basis to initiate reassessment proceedings--Assessing Officer allowing assessee's claim of depreciation under section 32(1)(ii) and additional depreciation under section 32(1)(iia) in original assessment--Examining claim of additional depreciation during reassessment proceedings--Change of opinion-- Asst. CIT v. Mangalam Cement Ltd.(Jaipur) . . . 651

S. 153A(1)(a) --Search and seizure--Capital gains--Cost of acquisition--Fair market value--Cost adopted by assessee accepted in regular assessments for earlier years--Downward revision of cost of acquisition not justified where no incriminating material found during search-- Deputy CIT v. Ramesh Batta (Delhi) . . . 612

Income-tax Rules, 1962

R. 9B(1) --Business expenditure--Film distributor--Expenditure on advertisement of film--Assessee acquiring film rights on minimum guarantee basis--Advertisement expenses to be incurred by producer in terms of agreement--Assessee not entitled to deduction-- Asst. CIT v. Madhusudhana Reddy (Chennai) . . . 629

ITR Volume 394 : Part 2 (Issue dated : 29-5-2017)

S. 11 --Charitable purposes--Charitable trust--Exemption--Accumulation of income --Accumulation for achieving objects of trust--Details not furnished--Not relevant--Exemption cannot be denied-- CIT (Exemptions) v. Gokula Education Foundation (Karn) . . . 236

S. 37 --Business loss--State Government Corporation--Constituted for industrial development--Main objects financing of long and medium term loans--Guarantees and underwriting operations--Finding that loans to companies in liquidation had become bad debts--Writing off of investments in companies in liquidation proper--Investments constituting stock-in-trade--Erosion of capital leading to fall in value of shares established--Revaluation of only loss making shares at market value permissible-- CIT v. Tamilnadu Industrial Investment Corpn. Ltd. (Mad) . . . 255

S. 40(a)(ia) --Business expenditure--Disallowance--Deduction of tax at source--Payments to contractors and sub-contractors--Liability to deduct tax at time of credit to account of payee or at time of payment--Provision mandatory and applies to all assessees regardless of method of accounting followed--Provision for disallowance of sums payable to contractors where tax not deducted at source and paid to Government--"Payable"--Includes not only sums payable but also sums paid to contractors-- Palam Gas Service v. CIT (SC) . . . 300

S. 56 --Best judgment assessment--Search and seizure--Assessment in search cases --Agricultural income not declared in return but shown in statements of account during proceedings--Extent of land owned by assessee sufficient to generate income--Concurrent findings of fact--Not to be interfered with-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Income from fishing boats revealed in a seized diary--Absence of explanation--Concurrent findings of adjudicating authorities--Estimate sustainable-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Interest on fixed deposits not declared in returns--Estimate of interest by Assessing Officer at 10 per cent. per annum in absence of explanation by assessee--Proper-- P. P. Bhaskaran v. CIT (Ker) . . . 258

S. 68 --Best judgment assessment--Search and seizure--Assessment in search cases--Agricultural income not declared in return but shown in statements of account during proceedings--Extent of land owned by assessee sufficient to generate income--Concurrent findings of fact--Not to be interfered with-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Block assessment--Undisclosed business income--Estimate of profits--Adoption of net profit rate at 5 per cent. by authorities on revised suppressed turnover--In accordance with statutory mandates--Not to be interfered with-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Income from fishing boats revealed in a seized diary--Absence of explanation--Concurrent findings of adjudicating authorities--Estimate sustainable-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Interest on fixed deposits not declared in returns--Estimate of interest by Assessing Officer at 10 per cent. per annum in absence of explanation by assessee--Proper-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Cash credits--Amounts shown as paid towards share application--Permanent account numbers of applicants produced and mode of payment explained--No direct or indirect relationship between company and share applicants--Amounts not assessable as income of assessee-- CIT v. ARL Infratech Ltd. (Raj) . . . 383

S. 69 --Best judgment assessment--Search and seizure--Assessment in search cases--Advance of interest-free loans--Established business practice--Estimate of interest on conjecture--Not warranted-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Block assessment--Undisclosed business income--Estimate of profits--Adoption of net profit rate at 5 per cent. by authorities on revised suppressed turnover--In accordance with statutory mandates--Not to be interfered with-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Block assessment--Unexplained investment--Satisfactory explanation by assessee--Non-production of corroborative material by Department--Deletion of addition by Appellate Tribunal justified-- P. P. Bhaskaran v. CIT (Ker) . . . 258

S. 69A --Best judgment assessment--Search and seizure--Assessment in search cases--Block assessment--Undisclosed business income--Estimate of profits--Adoption of net profit rate at 5 per cent. by authorities on revised suppressed turnover--In accordance with statutory mandates--Not to be interfered with-- P. P. Bhaskaran v. CIT (Ker) . . . 258

S. 69B --Best judgment assessment--Search and seizure--Assessment in search cases--Block assessment--Undisclosed business income--Estimate of profits--Adoption of net profit rate at 5 per cent. by authorities on revised suppressed turnover--In accordance with statutory mandates--Not to be interfered with-- P. P. Bhaskaran v. CIT (Ker) . . . 258

S. 69C --Best judgment assessment--Search and seizure--Assessment in search cases--Block assessment--Undisclosed business income--Estimate of profits--Adoption of net profit rate at 5 per cent. by authorities on revised suppressed turnover--In accordance with statutory mandates--Not to be interfered with-- P. P. Bhaskaran v. CIT (Ker) . . . 258

S. 132 --Best judgment assessment--Search and seizure--Assessment in search cases--Advance of interest-free loans--Established business practice--Estimate of interest on conjecture--Not warranted-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Agricultural income not declared in return but shown in statements of account during proceedings--Extent of land owned by assessee sufficient to generate income--Concurrent findings of fact--Not to be interfered with-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Block assessment--Undisclosed business income--Estimate of profits--Adoption of net profit rate at

5 per cent. by authorities on revised suppressed turnover--In accordance with statutory mandates--Not to be interfered with-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Block assessment--Unexplained investment--Satisfactory explanation by assessee--Non-production of corroborative material by Department--Deletion of addition by Appellate Tribunal justified-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Estimate of income if bona fide and rational, lack of proof to support is immaterial--Burden of proof--Is on assessee to prove undisclosed income declared in return filed before search and to establish non-concealment of income--Court cannot substitute its "best judgment" for that of assessing authority-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Income from fishing boats revealed in a seized diary--Absence of explanation--Concurrent findings of adjudicating authorities--Estimate sustainable-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Interest on fixed deposits not declared in returns--Estimate of interest by Assessing Officer at 10 per cent. per annum in absence of explanation by assessee--Proper-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Search and seizure--Assessment in search cases--General principles--Jurisdiction of authorities--Reason to believe--Failure by assessee to comply with notices issued under sections 142(1) and 143(2)--Cannot be said that there is no reason for search--Notice under section 153A proper and legal-- Liberty Marine Syndicate Pvt. Ltd. v. Principal CIT (Orissa) . . . 277

----Writ--Search and seizure--Assessment in search cases--Notice--Scope of interference by High Court--Availability of alternative remedy--No allegation of mala fides or malicious proceeding--Issue pertaining to factual determination--Writ court cannot assume power of appellate court-- Liberty Marine Syndicate Pvt. Ltd. v. Principal CIT (Orissa) . . . 277

S. 142(1) --Search and seizure--Assessment in search cases--General principles--Jurisdiction of authorities--Reason to believe--Failure by assessee to comply with notices issued under sections 142(1) and 143(2)--Cannot be said that there is no reason for search--Notice under section 153A proper and legal-- Liberty Marine Syndicate Pvt. Ltd. v. Principal CIT (Orissa) . . . 277

S. 143(2) --Search and seizure--Assessment in search cases--General principles--Jurisdiction of authorities--Reason to believe--Failure by assessee to comply with notices issued under sections 142(1) and 143(2)--Cannot be said that there is no reason for search--Notice under section 153A proper and legal-- Liberty Marine Syndicate Pvt. Ltd. v. Principal CIT (Orissa) . . . 277

S. 144 --Best judgment assessment--Search and seizure--Assessment in search cases--Advance of interest-free loans--Established business practice--Estimate of interest on conjecture--Not warranted-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Agricultural income not declared in return but shown in statements of account during proceedings--Extent of land owned by assessee sufficient to generate income--Concurrent findings of fact--Not to be interfered with-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Block assessment--Undisclosed business income--Estimate of profits--Adoption of net profit rate at 5 per cent. by authorities on revised suppressed turnover--In accordance with statutory mandates--Not to be interfered with-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Block assessment--Unexplained investment--Satisfactory explanation by assessee--Non-production of corroborative material by Department--Deletion of addition by Appellate Tribunal justified-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Estimate of income if bona fide and rational, lack of proof to support is immaterial--Burden of proof--Is on assessee to prove undisclosed income declared in return filed before search and to establish non-concealment of income--Court cannot substitute its "best judgment" for that of assessing authority-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Income from fishing boats revealed in a seized diary--Absence of explanation--Concurrent findings of adjudicating authorities--Estimate sustainable-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Interest on fixed deposits not declared in returns--Estimate of interest by Assessing Officer at 10 per cent. per annum in absence of explanation by assessee--Proper-- P. P. Bhaskaran v. CIT (Ker) . . . 258

S. 144A --Revision--Scope of powers of Commissioner--Definition of record--Includes all records relating to any proceedings--Not confined to return of income and assessment order in case of assessee--Order passed on another party treating lease rent received by it from assessee as its income--Application by assessee for revision on basis of order--Order can be considered and applied to allow deduction in assessee's hands--Remedy under section 264 appropriate-- Selvamuthukumar v. CIT (Mad) . . . 247

S. 153A --Best judgment assessment--Search and seizure--Assessment in search cases--Advance of interest-free loans--Established business practice--Estimate of interest on conjecture--Not warranted-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Agricultural income not declared in return but shown in statements of account during proceedings--Extent of land owned by assessee sufficient to generate income--Concurrent findings of fact--Not to be interfered with-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Block assessment--Undisclosed business income--Estimate of profits--Adoption of net profit rate at 5 per cent. by authorities on revised suppressed turnover--In accordance with statutory mandates--Not to be interfered with-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Block assessment--Unexplained investment--Satisfactory explanation by assessee--Non-production of corroborative material by Department--Deletion of addition by Appellate Tribunal justified-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Estimate of income if bona fide and rational, lack of proof to support is immaterial--Burden of proof--Is on assessee to prove undisclosed income declared in return filed before search and to establish non-concealment of income--Court cannot substitute its "best judgment" for that of assessing authority-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Income from fishing boats revealed in a seized diary--Absence of explanation--Concurrent findings of adjudicating authorities--Estimate sustainable-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Interest on fixed deposits not declared in returns--Estimate of interest by Assessing Officer at 10 per cent. per annum in absence of explanation by assessee--Proper-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Penalty--Notice--Limitation--Starting date of limitation--Date of letter of Assessing Officer recommending initiation of penalty proceedings--No penalty can be levied after expiry of financial year in which quantum proceedings completed or beyond six months from month in which penalty proceedings initiated whichever is later--Orders imposing penalty barred by limitation-- Principal CIT v. Mahesh Wood Products Pvt. Ltd. (Delhi) . . . 312

----Search and seizure--Assessment in search cases--General principles--Jurisdiction of authorities--Reason to believe--Failure by assessee to comply with notices issued under sections 142(1) and 143(2)--Cannot be said that there is no reason for search--Notice under section 153A proper and legal-- Liberty Marine Syndicate Pvt. Ltd. v. Principal CIT (Orissa) . . . 277

----Writ--Search and seizure--Assessment in search cases--Notice--Scope of interference by High Court--Availability of alternative remedy--No allegation of mala fides or malicious proceeding--Issue pertaining to factual determination--Writ court cannot assume power of appellate court-- Liberty Marine Syndicate Pvt. Ltd. v. Principal CIT (Orissa) . . . 277

S. 158B --Best judgment assessment--Search and seizure--Assessment in search cases--Advance of interest-free loans--Established business practice--Estimate of interest on conjecture--Not warranted-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Agricultural income not declared in return but shown in statements of account during proceedings--Extent of land owned by assessee sufficient to generate income--Concurrent findings of fact--Not to be interfered with-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Block assessment--Undisclosed business income--Estimate of profits--Adoption of net profit rate at 5 per cent. by authorities on revised suppressed turnover--In accordance with statutory mandates--Not to be interfered with-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Block assessment--Unexplained investment--Satisfactory explanation by assessee--Non-production of corroborative material by Department--Deletion of addition by Appellate Tribunal justified-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Estimate of income if bona fide and rational, lack of proof to support is immaterial--Burden of proof--Is on assessee to prove undisclosed income declared in return filed before search and to establish non-concealment of income--Court cannot substitute its "best judgment" for that of assessing authority-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Income from fishing boats revealed in a seized diary--Absence of explanation--Concurrent findings of adjudicating authorities--Estimate sustainable-- P. P. Bhaskaran v. CIT (Ker) . . . 258

----Best judgment assessment--Search and seizure--Assessment in search cases--Interest on fixed deposits not declared in returns--Estimate of interest by Assessing Officer at 10 per cent. per annum in absence of explanation by assessee--Proper-- P. P. Bhaskaran v. CIT (Ker) . . . 258

S. 179 --Recovery of tax--Public company--Recovery from director--Corporate veil--Lifting of--Principles governing--Scope of section 179--Fiduciary position of assessee holding 98.33 per cent. of shares--Finding that company did business outside its objects--Assessee cannot be absolved of liability to tax dues claiming to be director of public limited company-- Ajay Surendra Patel v. Deputy CIT (Guj) . . . 321

S. 179(1) --Recovery of tax--Public company--Recovery from director--Corporate veil--Lifting of--Principles governing--Scope of section 179--Fiduciary position of assessee holding 98.33 per cent. of shares--Finding that company did business outside its objects--Assessee cannot be absolved of liability to tax dues claiming to be director of public limited company-- Ajay Surendra Patel v. Deputy CIT (Guj) . . . 321

S. 194C --Business expenditure--Disallowance--Deduction of tax at source--Payments to contractors and sub-contractors--Liability to deduct tax at time of credit to account of payee or at time of payment--Provision mandatory and applies to all assessees regardless of method of accounting followed--Provision for disallowance of sums payable to contractors where tax not deducted at source and paid to Government--"Payable"--Includes not only sums payable but also sums paid to contractors-- Palam Gas Service v. CIT (SC) . . . 300

----Deduction of tax at source--Failure to deduct--Payments to contractor--Liability of deductor to pay interest not affected even where payee files nil return or return showing loss--Liability unaffected whether before and after amendment by Finance Act, 2010-- CIT (TDS) v. Punjab Infrastructure Development Board (No. 1 ) (P&H) . . . 195

S. 200 --Business expenditure--Disallowance--Deduction of tax at source--Payments to contractors and sub-contractors--Liability to deduct tax at time of credit to account of payee or at time of payment--Provision mandatory and applies to all assessees regardless of method of accounting followed--Provision for disallowance of sums payable to contractors where tax not deducted at source and paid to Government--"Payable"--Includes not only sums payable but also sums paid to contractor-- Palam Gas Service v. CIT (SC) . . . 300

S. 201(1A) --Deduction of tax at source--Failure to deduct--Payments to contractor--Liability of deductor to pay interest not affected even where payee files nil return or return showing loss--Liability unaffected whether before and after amendment by Finance Act, 2010-- CIT (TDS) v. Punjab Infrastructure Development Board (No. 1 ) (P&H) . . . 195

S. 206C(1C) --Collection of tax at source--Toll plaza--Build-operate-transfer agreement between assessee and third party--Liability of assessee to collect tax and applicability of section 206C(1C) to be determined only in light of contract--Contract not produced before court--Matter remanded to Appellate Tribunal-- CIT (TDS) v. Punjab Infrastructure Development Board (No. 2 ) (P&H) . . . 213

S. 206C(7) --Collection of tax at source--Failure to collect--Interest--Toll plaza--Concessionaire agreement--Licensor not absolved of liability for interest even if concessionaire has paid tax or filed nil return-- CIT (TDS) v. Punjab Infrastructure Development Board (No. 3 ) (P&H) . . . 216

S. 245D --Offences and prosecution--Evidence--Entries in loose sheets of paper and other material inadmissible as evidence of transactions--Findings of Settlement Commission disregarding such evidence as inadmissible and unreliable--No ground to direct investigation on basis thereof-- Common Cause (A Registered Society) v. Union of India (SC) . . . 220

S. 245D(4A) --Settlement of cases--Provision for abatement of proceedings where no order passed by cut-off date--Proceedings to be treated as abated only where failure owing to reasons attributable to applicant--Applicant cannot be punished for inability of Settlement Commission to dispose of its application within period specified in section 245D(4A)--Section 245HA(1)(iv) must apply only where applicants have by some wilful act or omission, prevented Settlement Commission from fulfilling its statutory duty under section 245D(4A)--Provisions not to be struck down as unconstitutional--Interpretation by Bombay High Court confirmed by Supreme Court--Settlement Commission already disposed of application--Writ petition infructuous--Constitution of India, art. 226-- Bajaj Polyset P. Ltd. v. Union of India (All) . . . 316

S. 245HA(1)(iv) --Settlement of cases--Provision for abatement of proceedings where no order passed by cut-off date--Proceedings to be treated as abated only where failure owing to reasons attributable to applicant--Applicant cannot be punished for inability of Settlement Commission to dispose of its application within period specified in section 245D(4A)--Section 245HA(1)(iv) must apply only where applicants have by some wilful act or omission, prevented Settlement Commission from fulfilling its statutory duty under section 245D(4A)--Provisions not to be struck down as unconstitutional--Interpretation by Bombay High Court confirmed by Supreme Court--Settlement Commission already disposed of application--Writ petition infructuous--Constitution of India, art. 226-- Bajaj Polyset P. Ltd. v. Union of India (All) . . . 316

S. 253 --Appeal to Appellate Tribunal--Application for rectification--Limitation--Application filed beyond period of limitation--Not maintainable-- S. P. Balasubrahmanyam v. Asst. CIT (Mad) . . . 366

S. 254 --Appeal to Appellate Tribunal--Application for rectification--Limitation--Application filed beyond period of limitation--Not maintainable-- S. P. Balasubrahmanyam v. Asst. CIT (Mad) . . . 366

S. 263 --Revision--Scope of powers of Commissioner--Definition of record--Includes all records relating to any proceedings--Not confined to return of income and assessment order in case of assessee--Order passed on another party treating lease rent received by it from assessee as its income--Application by assessee for revision on basis of order--Order can be considered and applied to allow deduction in assessee's hands--Remedy under section 264 appropriate-- Selvamuthukumar v. CIT (Mad) . . . 247

S. 264 --Revision--Scope of powers of Commissioner--Definition of record--Includes all records relating to any proceedings--Not confined to return of income and assessment order in case of assessee--Order passed on another party treating lease rent received by it from assessee as its income--Application by assessee for revision on basis of order--Order can be considered and applied to allow deduction in assessee's hands--Remedy under section 264 appropriate-- Selvamuthukumar v. CIT (Mad) . . . 247

S. 269SS --Penalty--Notice--Limitation--Starting date of limitation--Date of letter of Assessing Officer recommending initiation of penalty proceedings--No penalty can be levied after expiry of financial year in which quantum proceedings completed or beyond six months from month in which penalty proceedings initiated whichever is later--Orders imposing penalty barred by limitation-- Principal CIT v. Mahesh Wood Products Pvt. Ltd. (Delhi) . . . 312

S. 269T --Penalty--Notice--Limitation--Starting date of limitation--Date of letter of Assessing Officer recommending initiation of penalty proceedings--No penalty can be levied after expiry of financial year in which quantum proceedings completed or beyond six months from month in which penalty proceedings initiated whichever is later--Orders imposing penalty barred by limitation-- Principal CIT v. Mahesh Wood Products Pvt. Ltd. (Delhi) . . . 312

S. 271C --Collection of tax at source--Failure to collect--Interest--Toll plaza--Concessionaire agreement--Licensor not absolved of liability for interest even if concessionaire has paid tax or filed nil return-- CIT (TDS) v. Punjab Infrastructure Development Board (No. 3 ) (P&H) . . . 216

S. 271D --Penalty--Notice--Limitation--Starting date of limitation--Date of letter of Assessing Officer recommending initiation of penalty proceedings--No penalty can be levied after expiry of financial year in which quantum proceedings completed or beyond six months from month in which penalty proceedings initiated whichever is later--Orders imposing penalty barred by limitation-- Principal CIT v. Mahesh Wood Products Pvt. Ltd. (Delhi) . . . 312

S. 271E --Penalty--Notice--Limitation--Starting date of limitation--Date of letter of Assessing Officer recommending initiation of penalty proceedings--No penalty can be levied after expiry of financial year in which quantum proceedings completed or beyond six months from month in which penalty proceedings initiated whichever is later--Orders imposing penalty barred by limitation-- Principal CIT v. Mahesh Wood Products Pvt. Ltd. (Delhi) . . . 312

S. 275(1)(c) --Penalty--Notice--Limitation--Starting date of limitation--Date of letter of Assessing Officer recommending initiation of penalty proceedings--No penalty can be levied after expiry of financial year in which quantum proceedings completed or beyond six months from month in which penalty proceedings initiated whichever is later--Orders imposing penalty barred by limitation-- Principal CIT v. Mahesh Wood Products Pvt. Ltd. (Delhi) . . . 312

Volume 56 : Part 3 (Issue dated : 29-5-2017)

S. 9(1)(vii) --Business expenditure--Disallowance--Payments liable for deduction of tax at source--Management consultancy fees paid to holding company--Holding company rendering service in India--Liable to tax in India--Assessee to deduct tax under section 9(1)(vii)-- Asst. CIT v. Sterlite Industries (India) Ltd.(Chennai) . . . 377

S. 10B --Exemption--Export oriented unit--Research expenditure--Assessing Officer to verify whether research provided tangible benefit to unit and compute such data with regard to research expenditure incurred in earlier years--Assessee entitled to set off loss in units for which exemption claimed against profits in other units-- Brakes India Ltd. v. Deputy CIT (Chennai) . . . 341

S. 11(2) --Charitable purpose--Exemption--Accumulation of income--Failure to spend accumulated funds within prescribed time--Matter remanded for reconsideration-- Annadhanam Scheme Fund v. Asst. DIT (Exemptions)(Chennai) . . . 296

S. 11(3)(c) --Charitable purpose--Exemption--Accumulation of income--Failure to spend accumulated funds within prescribed time--Matter remanded for reconsideration-- Annadhanam Scheme Fund v. Asst. DIT (Exemptions)(Chennai) . . . 296

S. 12AA --Charitable purpose--Exemption--Accumulation of income--Failure to spend accumulated funds within prescribed time--Matter remanded for reconsideration-- Annadhanam Scheme Fund v. Asst. DIT (Exemptions)(Chennai) . . . 296

S. 14A --Income--Computation--Expenditure incurred in relation to income not forming part of total income--Assessee having substantial interest-free funds exceeding investments in tax-free securities--No disallowance of interest in hands of assessee--Matter remanded for verification whether assessee having interest-free funds exceeding investment in tax-free securities-- Strides Shasun Ltd. v. Asst. CIT(Mumbai) . . . 419

----Income--Expenditure incurred in earning income which not forming part of total income--Period prior to introduction of rule 8D--Tribunal uniformly estimating expenditure at two per cent.--Commissioner (Appeals) without any basis making disallowance on estimate basis instead of disallowing two per cent.--Not justified-- Asst. CIT v. Sterlite Industries (India) Ltd. (Chennai) . . . 377

----Income--Expenditure incurred in relation to income not forming part of total income--Interest--Assessee shifting credit facility to subsidiaries--Assessee not charging interest on outstanding receivables--No commercial expediency--Disallowance of interest at LIBOR + 300 points-- Strides Shasun Ltd. v. Asst. CIT(Mumbai) . . . 419

----Income--Expenditure incurred in relation to income not forming part of total income--Interest--No disallowance on notional basis of interest in respect of overseas investments-- Strides Shasun Ltd. v. Asst. CIT (Mumbai) . . . 419

----Income--Expenditure incurred in relation to income which does not form part of total income--Assessing Officer to disallow expenditure to extent of exempted income only-- Brakes India Ltd. v. Deputy CIT (Chennai) . . . 341

----Income--Expenditure incurred in relation to income which not forming part of total income--Investment in a company more than borrowed funds--Whether or not investment is for business purpose to be seen--Relationship between assessee and investment company not on record--Assessing Officer to re-examine purpose for which investment made and relationship between them-- Asst. CIT v. Sterlite Industries (India) Ltd. (Chennai) . . . 377

S. 32 --Depreciation--Additional depreciation--Machinery installed in second half of preceding on which 50 per cent. of additional depreciation allowed--Machinery already used in previous year--Balance 50 per cent. additional depreciation cannot be allowed in following year-- Brakes India Ltd. v. Deputy CIT (Chennai) . . . 341

----Depreciation--Charitable purpose--Assessee not carrying on any business or profession--Assessee claiming depreciation in respect of assets used as tool for carrying out charitable object of institution--Not entitled to depreciation--Commercial principle or customary principle--Does not override specific provision-- Music Academy Madras v. Deputy DIT (Exemptions) (Chennai) . . . 301

----Depreciation--Rate of depreciations--UPS equipment power saving device--Entitled to higher depreciation at sixty per cent.-- Brakes India Ltd. v. Deputy CIT(Chennai) . . . 341

S. 35(2AB) --Scientific research expenditure--Weighted deduction--Charges and expenses related to land and building not excludible--Expenditure incurred on repairs, rent not forming part of cost of land and building-- Brakes India Ltd. v. Deputy CIT(Chennai) . . . 341

S. 35D --Business expenditure--Amortisation of expenses--Issue of foreign currency convertible bonds--Assessee already in business--Expenses for issue of debentures need not be amortised--Entitled to deduction--Accounting Standard 26-- Asst. CIT v. Sterlite Industries (India) Ltd. (Chennai) . . . 377

S. 36(1)(iii) --Interest on borrowed capital--Assessee advancing monies to its foreign subsidiary companies--Whether profit shifted to other nations--Transfer Pricing Officer to examine-- Asst. CIT v. Sterlite Industries (India) Ltd. (Chennai) . . . 377

S. 37 --Business expenditure--Amortisation of expenses--Issue of foreign currency convertible bonds--Assessee already in business--Expenses for issue of debentures need not be amortised--Entitled to deduction--Accounting Standard 26-- Asst. CIT v. Sterlite Industries (India) Ltd. (Chennai) . . . 377

----Business expenditure--Donation to Rajiv Gandhi Relief and National Welfare Trust--Donation towards corporate social responsibility--Donation not in contravention of any law--

Donated amount deductible even though not for earning any business income-- Asst. CIT v. Sterlite Industries (India) Ltd. (Chennai) . . . 377

S. 40(a)(i) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Assessee nominating foreign company to represent assessee outside India--Entire advice outside India and no technical knowledge made available to assessee--Assessee not liable to deduct tax at source-- Asst. CIT v. Sterlite Industries (India) Ltd. (Chennai) . . . 377

----Business expenditure--Disallowance--Payments liable to deduction of tax at source--Leased telephone lines--Reimbursement expenses--Assessee to demonstrate payment does not include any profit element so as to deduct tax at source and only reimbursement of actual expenses--Matter remanded-- Brakes India Ltd. v. Deputy CIT(Chennai) . . . 341

----Business expenditure--Disallowance--Payments liable for deduction of tax at source--Management consultancy fees paid to holding company--Holding company rendering service in India--Liable to tax in India--Assessee to deduct tax under section 9(1)(vii)-- Asst. CIT v. Sterlite Industries (India) Ltd. (Chennai) . . . 377

S. 54F --Capital gains--Exemption--Condition precedent--Net consideration on sale of long-term capital asset must be invested in residential house before due date for filing return under section 139 and if there any balance, it should be deposited in specified bank--Failure by assessee to deposit balance in capital gains account before due date for filing return--Assessee entitled to exemption only for amount paid towards acquisition of new residential house before due date for filing return-- Smt. Basaribanu Mohd. Rafiq Latiwala v. ITO (Mumbai) . . . 315

S. 80GGB --Donation to political parties--Special deduction--Amendment incorporating words "or an electoral trust" not applicable--Contribution to trust and not to any political party directly--Not entitled to deduction-- Asst. CIT v. Sterlite Industries (India) Ltd. (Chennai) . . . 377

S. 80-IA --Infrastructure development undertakings--Special deduction--Assessee using power for captive consumption-- Asst. CIT v. Sterlite Industries (India) Ltd.(Chennai) . . . 377

S. 80-IB --Export--Special deduction--Computation--Export profits not to be reduced by deduction allowed under section 80-IB-- Asst. CIT v. Sterlite Industries (India) Ltd. (Chennai) . . . 377

----Industrial undertaking--Special deduction--Assessee eligible for deduction from sixth year to tenth year--Whether Assessing Officer changed year of claim to ninth year and tenth year arbitrarily--Issue infructuous-- Asst. CIT v. Sterlite Industries (India) Ltd. (Chennai) . . . 377

----Industrial undertaking--Special deduction--Foreign exchange fluctuation on sale of finished goods--Assessing Officer to verify whether profit on foreign exchange fluctuation due to sale of finished goods--Unclaimed liabilities written back--Not profit of current year--Interest received from customers--Assessing Officer to verify whether interest received for delayed payment of sale price or for any other reasons--Scrap sale--Assessing Officer to verify whether assessee generated scrap sales during its own manufacturing activity or scrap

sale a separate business--Interest on employees loan--Assessing Officer to verify claim-- Asst. CIT v. Sterlite Industries (India) Ltd.(Chennai) . . . 377

S. 92D --Penalty--International transaction--Failure to maintain document and information as required under section 92D--Matter remanded with a direction to record actual services said to be rendered by assessee--Assessing Officer also re-examine penalty-- Asst. CIT v. Sterlite Industries (India) Ltd. (Chennai) . . . 377

S. 143(3) --Search and seizure--Block assessment--Regular assessment--Simultaneous assessment on for regular assessment and another for block period--Addition in block assessment separate and distinct--Whether any income formed part of undisclosed income in block assessment included in regular assessment--Assessing Officer to examine-- Asst. CIT v. Sterlite Industries (India) Ltd. (Chennai) . . . 377

S. 145 --Accounting--Change in method of accounting--Change in terms of Accounting Standard 1 to guard assessee from fluctuation market--Change in method not due to mala fide intention of assessee--Assessee continuing to follow method even though loss at initial year--Loss would be set off in subsequent year and would be revenue neutral--Accounting Standard 1-- Asst. CIT v. Sterlite Industries (India) Ltd. (Chennai) . . . 377

S. 145A --Method of accounting--Assessee changing method of accounting and consistently following subsequent years--Department cannot doubt method of accounting followed by assessee--Revenue neutral-- Asst. CIT v. Sterlite Industries (India) Ltd. (Chennai) . . . 377

S. 158BC --Search and seizure--Block assessment--Regular assessment--Simultaneous assessment on for regular assessment and another for block period--Addition in block assessment separate and distinct--Whether any income formed part of undisclosed income in block assessment included in regular assessment--Assessing Officer to examine-- Asst. CIT v. Sterlite Industries (India) Ltd. (Chennai) . . . 377

S. 195 --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Assessee nominating foreign company to represent assessee outside India--Entire advice outside India and no technical knowledge made available to assessee--Assessee not liable to deduct tax at source-- Asst. CIT v. Sterlite Industries (India) Ltd. (Chennai) . . . 377

----Deduction of tax at source--Denial of tax deduction at source credit--Assessee having bona fide belief that payments not warranting application of section 195--Assessee has no obligation to deduct tax at source-- Brakes India Ltd. v. Deputy CIT(Chennai) . . . 341

S. 234C --Advance tax--Interest--Interest under section 234C and 234D is consequential and mandatory-- Brakes India Ltd. v. Deputy CIT (Chennai) . . . 341

S. 234D --Advance tax--Interest--Interest under section 234C and 234D is consequential and mandatory-- Brakes India Ltd. v. Deputy CIT (Chennai) . . . 341

S. 271AA --Appeal to Commissioner (Appeals)--Maintainability--Penalty--Failure to keep and maintain information and document--Initiation of proceedings but no order passed--Not a subject matter of appeal-- Asst. CIT v. Sterlite Industries (India) Ltd. (Chennai) . . . 377

S. 271G --Appeal to Commissioner (Appeals)--Maintainability--Penalty--Failure to keep and maintain information and document--Initiation of proceedings but no order passed--Not a subject matter of appeal-- Asst. CIT v. Sterlite Industries (India) Ltd. (Chennai) . . . 377

----Penalty--International transaction--Failure to maintain document and information as required under section 92D--Matter remanded with a direction to record actual services said to be rendered by assessee--Assessing Officer also re-examine penalty-- Asst. CIT v. Sterlite Industries (India) Ltd. (Chennai) . . . 377