Contents A-2. SELECTED ORDERS OF ITAT n APRIL 25 - MAY 9, 2015 n 4

Size: px

Start display at page:

Download "Contents A-2. SELECTED ORDERS OF ITAT n APRIL 25 - MAY 9, 2015 n 4"

Thomasina Dennis
5 years ago
Views:

1 A-2 Contents CONTENTS LIST OF CASES u Adani Enterprises Ltd. v. Addl. CIT (Ahd.) 129 u Asstt. CIT v. Besson Musical Instrument (P.) Ltd. (Delhi)(URO) 102 u Asstt. CIT v. Ganesh (S.) (Mum.)(URO) 110 u Asstt. DIT v. Hyderabad Study Circle (Hyd.) 194 u Asstt. DIT v. Global Geophysical Services Ltd. (Delhi)(URO) 86 u Concorde Housing Corporation v. Dy. CIT (Bang.)(URO) 89 u Dy. CIT v. Baljit Securities (P.) Ltd. (Kol.) (URO) 82 u Dy. CIT v. Justice P.D. Dinakaran (Chennai)(URO) 76 u Dy. CIT v. Unique International (P.) Ltd. (Kol.)(URO) 73 u GVK Jaipur-Kishangarh Expressway (P.) Ltd. v. Addl. CIT (Jaipur) 205 u Garware Chemicals Ltd. v. Dy. CIT (Mum.) 223 u Jiya Devi Sharma (Smt.) v. Asstt. CIT (Jodhpur)(URO) 57 u KMR Educational Society v. Asstt. CIT (Hyd.) 163 u Kadakkal Educational Trust v. ITO (Cochin)(URO) 96 u Maximize Learning (P.) Ltd. v. Asstt. CIT (Pune) (URO) 62 u McKinsey Business Consultants Sole Partner Limited Liability Company MEPE v. Dy. DIT (Mum.) 178 u Metro Exporters (P.) Ltd. v. Asstt. CIT (Mum.) 215 u Municipal Commissioner v. Dy. CIT (Hyd.)(URO) 94 u Prem Prakash Gupta v. ITO (Jaipur)(URO) 58 u Prolifics Corporation Ltd. v. Dy. CIT (Hyd.)(URO) 104 u Rajnish Chaudhary (HUF) v. Addl. CIT (Delhi) 166 u Shri Nav Durga Bansal Cold Storage & Ice Factory v. ITO (Luck.)(URO) 90 u Sunita Bai (Smt.) v. Dy. CIT (Panaji)(URO) 98 u Vardhman Developers Ltd. v. ITO (Mum.)(URO) 107 u Vishal Madnani v. ITO (Luck.)(URO) 69 u WTO v. Ferrolite Products Ltd. (Kol.)(URO) 60 u Welgrow Line (India) (P.) Ltd. v. Asstt CIT (Chennai) 242 u Xerox India Ltd. v. Dy. CIT (Delhi)(URO) 70 u Zanav Home Collection v. Jt. CIT (Bang.) 184 SELECTED ORDERS OF ITAT n APRIL 25 - MAY 9, 2015 n 4

2 Contents A-3 SUBJECT INDEX AGRICULTURAL INCOME - Burden of proof - Assessee s claim for agricultural income was allowable where land was cultivable, irrigated and had high yielding fruit bearing trees and potentional to earn income - Dy. CIT v. Justice P.D. Dinakaran (Chennai)(URO) 76 APPELLATE TRIBUNAL n Appeals to - Condonation of delay - Where assessee was prosecuting proceedings for approval under section 12AA bona fidely before wrong forum, a delay of 2353 days in filing appeal against impugned order denying registration was to be condoned - Kadakkal Educational Trust v. ITO (Cochin)(URO) 96 ASSESSMENT - Scrutiny assessment - Where assessee s case was selected for scrutiny after period prescribed as per CBDT Instruction No. 10 of 2004, dated , selection was not proper and, therefore, assessment framed consequent thereto was not valid - Vishal Madnani v. ITO (Luck.)(URO) 69 ASSOCIATION OF PERSON n Charge of tax where shares of members unknown - Society, in case of - Provisions of section 167B have no application to Society registered under Societies Act, 1860 or any other society formed in accordance on similar lines - KMR Educational Society v. Asstt. CIT (Hyd.) 163 BLOCK ASSESSMENT IN SEARCH CASES n Procedure for - Block assessment - Determination of total income in respect of assessment years for which assessments were already completed on date of search, shall not be influenced by items of income other than those based on material unearthed during course of search - Smt. Sunita Bai v. Dy. CIT (Panaji)(URO) 98 BUSINESS DISALLOWANCE n Cash payment exceeding prescribed limits - Rule 6DD/Exceptions - Where assessee purchased agricultural land through cash payment of Rs.4.8 lakhs as assessee had no bank account where said land was situated, section 40A(3) could not be invoked to disallow said cash payments - Smt. Jiya Devi Sharma v. Asstt. CIT (Jodhpur)(URO) 57 n Certain deductions to be allowed only on actual payment - Explanation 3C - There could be no disallowance under section 43B(1)(d) by invoking Explanation 3C, where interest payable was converted into equity shares as interest liability stood ceased to exist and not deferred as in case of conversion of interest loan or borrowing - Garware Chemicals Ltd. v. Dy. CIT (Mum.) 223 n Contribution to employees welfare trust, etc. - Conditions precedent - If contributions to employees welfare fund are made before due date of filing return, no disallowance is to be made - Dy. CIT v. Unique International (P.) Ltd. (Kol.)(URO) 73 SELECTED ORDERS OF ITAT n APRIL 25 - MAY 9, 2015 n 5

3 A-4 Contents BUSINESS EXPENDITURE n Allowability of - Currency swap loss - Where assessee company had entered into currency swap contracts for working capital loans which was pre-requisite for its business of export and import of commodities, loss incurred in said contract being in respect of circulating/working capital was an allowable expense under section 37(1) - Adani Enterprises Ltd. v. Addl. CIT (Ahd.) 129 BUSINESS LOSS/DEDUCTION n Allowable as - Land development expenses - Where assessee s claim regarding land development expenses was rightly allowed by Assessing Officer in original return and there was no material to deviate from earlier findings, ad hoc disallowance was not justified in assessment during search - Smt. Jiya Devi Sharma v. Asstt. CIT (Jodhpur)(URO) 57 CASH CREDITS - Gift - Where assessee had been able to show source of gift by his relative and creditworthiness of donor had also been established, said gift could not be added to assessee s income as income from other sources - Dy. CIT v. Justice P.D. Dinakaran (Chennai)(URO) 76 CHARITABLE OR RELIGIOUS TRUST n Registration procedure - Scope of - Where assessee s application seeking registration under section 12AA was rejected, matter was to be remanded back for disposal afresh giving one more opportunity to assessee to produce all details as required by Commissioner- Kadakkal Educational Trust v. ITO (Cochin)(URO) 96 CIRCULARS & NOTIFICATIONS/INSTRUCTIONS - CBDT Circular No. 14(SL-35), dated Circular F. No. 81/27/65-IT(B), dated Circular No. 549, dated Circular No. 715, dated CBDT Circular No. 275/201/95-IT(B), dated Circular No. 786, dated Instruction No. 3, dated CBDT Instruction No. 10 of 2004, dated Circular No. 7 of 2006, dated COMMISSIONER (APPEALS) n Powers of - Binding free of order - Order of lower judicial authority merges with that of appellate authorities and lower authority is bound to give effect to order of higher/appellate authority unless it has been set aside or modified, as case may be, by higher/highest Court to said appellate authority - Asstt. CIT v. S. Ganesh (Mum.)(URO) 110 COMPULSORY TAX AUDIT - Turnover - Where assessee, a licensed vendor for sale of stamps on commission was under a bona fide belief that he was not liable for audit of accounts under section 44AB as per SELECTED ORDERS OF ITAT n APRIL 25 - MAY 9, 2015 n 6

4 Contents A-5 circular No. 452 and ICAI guidelines, penalty under section 271B was not to be imposed - Prem Prakash Gupta v. ITO (Jaipur)(URO) 58 DEDUCTION OF TAX AT SOURCE n Contractors/sub-contractors, payments to - Advertisement - Where for payment of advertisement charges not exceeding Rs. 20,000, provisions of section 194C would not apply - Municipal Commissioner v. Dy. CIT (Hyd.)(URO) 94 n Rent - Freight Charges - Where assessee, engaged in business of freight forwarding, paid certain amount to Government agencies, for use of premises, it was in nature of rent and, thus, assessee was liable to deduct tax at source while making said payment - Welgrow Line (India) (P.) Ltd. v. Asstt CIT (Chennai) 242 DEPRECIATION n Allowance of - Expiry of lease - Where no sum was realised on discard of an asset, depreciation would be continued to be allowed on WDV of corresponding block of assets - Metro Exporters (P.) Ltd. v. Asstt. CIT (Mum.) 215 n Allowance/rate of - Rectification of mistake - Where Tribunal confirmed disallowance of depreciation treating asset as building but it was brought to notice that relevant amount represented repair and renovation expenditure of building taken on lease, matter was to be readjudicated - Metro Exporters (P.) Ltd. v. Asstt. CIT (Mum.) Block of assets - Where assessee wrote off fixed assets in books but did not make any adjustment to block of assets as there was no scrap value for such asset, value of said fixed asset would not be reduced from block of assets while allowing depreciation - Xerox India Ltd. v. Dy. CIT (Delhi)(URO) 70 - Block of assets - Where certain assets forming part of block of assets were converted into stock-in-trade by deducting nominal value of Re. 1 from block of assets and whenever same were sold surplus was offered for taxation, depreciation on said asset could not be disallowed by reducing value of same from block of assets - Xerox India Ltd. v. Dy. CIT (Delhi)(URO) 70 EDUCATIONAL INSTITUTIONS - Coaching institutes - A coaching institute giving coaching to students for various competitive examinations is eligible for exemption under section 10(23C)(iiiad) - Asstt. DIT (Exemptions) v. Hyderabad Study Circle (Hyd.) 194 EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME - Condition precedent - Matter be readjudicated where no satisfaction was recorded by Assessing Officer prior to effecting disallowance under section 14A - Metro Exporters (P.) Ltd. v. Asstt. CIT (Mum.) Dividend - Where assessee had earned dividend from shares held as stock-in-trade, rule 8D would not be applicable so as to disallow related expenditure - Dy. CIT v. Baljit Securities (P.) Ltd. (Kol.) (URO) 82 INCOME n Deemed to accrue or arise in India - Business profit - Where a Greece company had provided assistance in form of borrowed SELECTED ORDERS OF ITAT n APRIL 25 - MAY 9, 2015 n 7

5 A-6 Contents service to Indian associate, and earned income, in absence of FTS clause in India-Greece DTAA, it was business profit which was covered under Article 3 of DTAA between India and Greece - McKinsey Business Consultants Sole Partner Limited Liability Company MEPE v. Dy. DIT (Mum.) Business profit - No TDS on export commission paid to NR agent for rendering services abroad in absence of his PE in India - Zanav Home Collection v. Jt. CIT (Bang.) 184 INCOME-TAX ACT, Section 2(1A) 76 - Section 2(15) 89 - Section Section 9 178, Section 10(23C) Section 12AA 96 - Section 14A 215, 83 - Section 28(i) 57 - Section Section Section , 216, 71 - Section Section 37(1) Section 40A(3) 58 - Section 40A(9) 73 - Section 43(5) Section 43B Section 44AB 58 - Section 44B 86 - Section 64 77, 78 - Section Section 69 57, 78 - Section 72A 73 - Section Section 92C Section 92CA 62 - Section Section , Section Section 153C 98 - Section Section 167B Section 194C 94 SELECTED ORDERS OF ITAT n APRIL 25 - MAY 9, 2015 n 8

6 Contents A-7 - Section 194-I Section Section Section 271(1)(c) 89 INDIVIDUAL n Assessable as - HUF v. Individual - Where HUF wrongly showed capital gain on sale of land in hands of it while land was property of individual and not property of HUF, capital gain would not be income of HUF - Rajnish Chaudhary (HUF) v. Addl. CIT (Delhi) 166 LOSSES n Carry forward and set off of loss in case of amalgamation, etc. - Conditions precedent - Unless amalgamating company was engaged in business for three or more years as on date of amalgamation, amalgamated company could not claim set off of brought forward unabsorbed business loss and depreciation of amalgamating company against its income - Dy. CIT v. Unique International (P.) Ltd. (Kol.)(URO) 73 n In speculation business - Share trading loss - Where assessee, a share broking company, incurred loss in its delivery based trading while earned profit on non-delivery based trading, assessee would be allowed to set off - Dy. CIT v. Baljit Securities (P.) Ltd. (Kol.) (URO) 82 METHOD OF ACCOUNTING n Change of - Illustrations - Where assessee s changed accounting policy of recognising revenue on installation and acceptance of goods at premises of customers as against recognition of income on delivery as followed in earlier years was in compliance with AS-9 of ICAI and it was consistently followed thereafter, such change could not be rejected - Xerox India Ltd. v. Dy. CIT (Delhi)(URO) 70 n Estimation of income - Personnel cost/work-in-progress - 50 per cent of personnel costs of construction business that included managerial and supervisory costs was to be included in project cost as managerial and supervisory costs for project execution - Vardhman Developers Ltd. v. ITO (Mum.)(URO) 107 n Valuation of stock - Advertisement, Sponsorship and brand-building expenses - Where assessee was in construction business, advertisement, sponsorship and brand-building expenses which were only in nature of selling costs of construction business, would not be capitalized - Vardhman Developers Ltd. v. ITO (Mum.)(URO) 107 NON-RESIDENTS n Mineral oil, business for prospecting/exploration, etc., in case of - Computation of receipts - It is duty of Assessing Officer to determine correct tax liability of assessee - Asstt. DIT v. Global Geophysical Services Ltd. (Delhi)(URO) 86 PENALTY n For concealment of income - Disallowance of claim, effect of - Where AO wrongly presumed that rough working of tax SELECTED ORDERS OF ITAT n APRIL 25 - MAY 9, 2015 n 9

7 A-8 Contents payable shown in seized documents related to assessee alone, but same actually belonged to group of companies, no penalty was to be levied - Concorde Housing Corporation v. Dy. CIT (Bang.)(URO) 89 RECTIFICATION OF MISTAKES n Apparent from records - Limitation period - For purpose of rectification under section 154, limitation starts from date on which original assessment order is passed by subordinate authority and not date when he had passed consequential order in terms of directions issued by appellate authority in remand - Shri Nav Durga Bansal Cold Storage & Ice Factory v. ITO (Luck.)(URO) 90 RENT, RATES, TAXES, REPAIRS AND INSURANCE FOR BUILDINGS - Business expenditure - Expenditure on total renovation of old premise is only capital expenditure - Vardhman Developers Ltd. v. ITO (Mum.)(URO) 107 REPAIRS AND INSURANCE OF MACHINERY, PLANT AND FURNITURE - Maintenance of highways - Where assessee had undertaken maintenance of a highway on BOT basis for a specified period under an agreement with NHAI, assessee would be allowed to claim deduction under section 31(i) on alternatively under section 37(1) - GVK Jaipur- Kishangarh Expressway (P.) Ltd. v. Addl. CIT (Jaipur) 205 SCIENTIFIC RESEARCH EXPENDITURE - Sub-section (1)(ii) - Where assessee-company was manufacturing musical instrument and incurred R&D expenses for developing prototypes of its products to be supplied to specific customers as per their specifications, assessee would be entitled for deduction under section 35(1)(i) - Asstt. CIT v. Besson Musical Instrument (P.) Ltd. (Delhi)(URO) 102 SPECULATIVE TRANSACTIONS - Currencies - Provisions of section 43(5) do not apply to currencies and, therefore, loss incurred by assessee in currency swap contract cannot be denied to be set off against other heads of income taking it as speculative loss - Adani Enterprises Ltd. v. Addl. CIT (Ahd.) 129 TRANSFER OF ASSETS n For benefit of spouse, etc. - Gift - Inclusion of agricultural income of wife of assessee in income of assessee was unjustified where she was having independent source of income, had cultivable land in her name and carrying on agricultural operations - Dy. CIT v. Justice P.D. Dinakaran (Chennai)(URO) 76 - In case of Children/Gifts - Where nothing was brought on record to show that land cultivated by relatives was in any way owned by assessee, agricultural income of relatives could not be added in hands of assessee - Dy. CIT v. Justice P.D. Dinakaran (Chennai)(URO) 76 - In case of spouse - Where wife of assessee was an independent assessee having separate Permanent Account Number (PAN) and had been filing her separate return of income who had been able to explain source of gifts received from her brother, said gift could not be added to assessee s income - Dy. CIT v. Justice P.D. Dinakaran (Chennai)(URO) 76 - Relatives - Agricultural income of some companies to which land was leased out by relatives of assessee could not be treated as unexplained income of assessee - Dy. CIT v. Justice P.D. Dinakaran (Chennai)(URO) 76 - Unexplained money - Where daughters of assessee received gift by way of bank deposit from their uncle, on confirmation of gift by uncle, they being close relatives, there was no SELECTED ORDERS OF ITAT n APRIL 25 - MAY 9, 2015 n 10

8 Contents A-9 reason to add bank deposit in income of assessee - Dy. CIT v. Justice P.D. Dinakaran (Chennai)(URO) 76 TRANSFER PRICING n Computation of arm s length price - Comparables and adjustments - Transaction of providing loans to subsidiary whether a direct loan or providing credit for initial expenditure, which is stated to be reimbursable, calls for transfer pricing adjustment - Prolifics Corporation Ltd. v. Dy. CIT (Hyd.)(URO) 104 n Reference to TPO - Reassessment - Under provisions of section 92CA, a reference to TPO for computation of arm s length price in relation to international transactions is permissible only in course of assessment proceedings - Maximize Learning (P.) Ltd. v. Asstt. CIT (Pune) (URO) 62 UNEXPLAINED INVESTMENTS - Construction expenses - Where seized sale deed revealed that assessee had purchased a residential plot and there was no evidence to establish that said investment was out of past savings, addition as unexplained investment was justified - Smt. Jiya Devi Sharma v. Asstt. CIT (Jodhpur)(URO) 57 WEALTH-TAX ACT, 1957 n Asset - Commercial establishment - No wealth-tax leviable on let out factory premises - WTO v. Ferrolite Products Ltd. (Kol.)(URO) 60 WEALTH-TAX ACT, Section 2(ea) 60 SELECTED ORDERS OF ITAT n APRIL 25 - MAY 9, 2015 n 11

MODE OF CITATION : [2015] 153 ITD

MODE OF CITATION : [2015] 153 ITD REGULAR BENCH 625-722 VOL. 153 ISSUE 6 JUNE 23 - JULY 7, 2015 TOTAL PAGES [164] ISSN : 0972-8155 AUTHORISED FORTNIGHTLY OF INCOME-TAX APPELLATE TRIBUNAL (MINISTRY OF LAW & JUSTICE) MODE OF CITATION : [2015]