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1 Contents A-9 FOUNDER EDITOR U.K. BHARGAVA EDITOR RAKESH BHARGAVA HONY. COORDINATING EDITORS DR. VINOD K. SINGHANIA AND VINAY JAIN Taxman weekly comes in Eight volumes. Annual Subscription : Rs for Eight volumes for the year Single copy is Rs. 150 only. Back years volume Rs. 500 per volume for paper back and add Rs. 75 per volume for Hard case binding. Taxman weekly is published on every Saturday. NON-RECEIPT OF PART MUST BE NOTIFIED WITHIN 60 DAYS OF THE DUE DATE. Editor does not necessarily agree with the views expressed in magazine section of Taxman weekly. Material published in this part is the exclusive copyrighted property of Taxman and cannot be reproduced or copied in any form or by any means without written permission of publisher. This publication is sold with the understanding that authors/editors and publishers are not responsible for the result of any action taken on the basis of this work nor for any error or omission to any person, whether a purchaser of this publication or not. All disputes are subject to jurisdiction of the Delhi High Court. Address your editorial and subscription correspondence to Taxmann Allied Services (P.) Ltd., 59/32, New Rohtak Road, New Delhi Printed and Published by Amit Bhargava on behalf of Taxmann Allied Services (P.) Ltd. and Printed at Tan Prints (India) Pvt. Ltd., 44 Km. Mile Stone, National Highway, Rohtak Road, Village Rohad, Distt. Jhajjar (Haryana) and Published at 59/32, New Rohtak Road, New Delhi Editor : Rakesh Bhargava Phone : Fax : sales@taxmann.com ISSN : MODE OF CITATION [2015] 231 Taxman...(...) TOTAL PAGES [160] STATUTES C ONTENTS q CIRCULARS - Section 276C, read with section 276D, of the Income-tax Act, Offences and prosecution - Wilful attempt to evade tax, etc. - Clarification on prosecution of tax evaders - PRESS RELEASE, DATED Section 119 of the Income-tax Act, Income-tax authorities - Instructions to subordinate authorities - Condonation of delay in filing refund claim and claim of carry forward losses under section 119(2)(b) - CIRCULAR NO. 9/2015 [F.NO. 312/22/2015-OT], DATED Section 92CC of the Income-tax Act, Transfer pricing - Advance Pricing Agreement (APA) - Clarifications on rollback provisions of Advance Pricing Agreement Scheme - CIRCULAR NO.10/2015 [F.NO. 500/7/2015- APA-II], DATED Section 10 of the Wealth-tax Act, Wealth-tax Authorities - Instructions to subordinate authorities - Clarifications on amendment brought out by Finance Act, 2013, w.r.e.f in Wealth-tax Act for purpose of claiming refund of wealth-tax paid on agricultural land as per provisions of said Act prior to Finance Act, CIRCULAR NO. 11/2015 [F.NO. 325/02/2014-WT], DATED Section 119 of the Income-tax Act, Income-tax authorities - Instructions to subordinate authorities - Extension of due date of filing return of income for Assessment Year ORDER [F.NO. 225/154/2015/ ITA.II], DATED q INSTRUCTION - Section 199 of the Income-tax Act, Deduction of tax at source - Credit for tax deducted - Non-deposit of tax deducted at source - INSTRUCTION NO. 275/29/2014-IT-(B), DATED TAX REPORTS : TABLE OF CASES u Asstt. CIT v. Netley B Estate (SC) 760 TAXMAN q JUNE 20 - JUNE 26, 2015 u 11

2 A-10 Contents u Chakiat Agencies (P.) Ltd. v. Asstt. CIT (Mad.) 773 u CIT v. Amrik Singh (Punj. & Har.) 731 u CIT v. Atlas Export Enterprise (Mad.) 804 u CIT v. Avery Cycle Inds Ltd. (Punj. & Har.) 814 u CIT v. C.J. International Hotels (P.) Ltd. (Delhi) 818 u CIT v. DD Industries Ltd. (Delhi) 784 u CIT v. Eastman Spinning Mills (P.) Ltd. (Mad.) 801 u CIT v. Freedom Board & Paper Mills (Punj. & Har.) 719 u CIT v. Gujarat Alkalies & Chemicals Ltd. (Guj.) 787 u CIT v. KEI Industries Ltd. (Delhi) 697 u CIT v. Lalit Kumar Poddar (Delhi) 816 u CIT v. Micra India (P.) Ltd. (Delhi) 809 u CIT v. Nitish Rameshchandra Chordia (Bom.) 724 u CIT v. Paul Noel Rodrigues (Kar.) 811 u CIT v. Shriram Chits (Karnataka) (P.) Ltd. (Kar.) 780 u Dy. CIT v. Sushil Kumar (Punj. & Har.) 788 u DIT v. Kodava Samaja (Kar.) 708 u G. M. Foods v. IT & WT SC (Cal.) 793 u Harbhajan Singh Chadha v. DIT (All.) 735 u ICICI Bank Ltd. v. Dr. Ramsingh, Dy. CIT (Bom.) 796 u Nopany Marketing Co. (P.) Ltd. v. CIT (Cal.) 802 u Peerless General Finance & Investment Co. Ltd. v. CIT (Cal.) 714 u Plus Paper Food Pac Ltd. v. ITO (Bom.) 747 u Prabhu Dayal Rangwala v. CIT (Delhi) 790 u Punsumi Engineers Ltd. v. CIT (Raj.) 800 u Rajendra Kumar Gupta v. CIT (All.) 820 u Somerset Place Co-operative Housing Society Ltd. v. ITO (Bom.) 806 u Totgars Co-Operative Sale Society Ltd. v. ITO (Kar.) 794 SUBJECT INDEX ASSESSMENT n Issue of notice - In case of amalgamation - Where assessee-company had amalgamated with transfereecompany, notice under section 153C ought to have sent to latter, and since such notice had not been issued to transferee-company, assessment made in hands of assessee-company was a nullity - CIT v. Micra India (P.) Ltd. (Delhi) 809 n Time-limit for completion of - Sub-section (2A) - Section 153(2A) is attracted to a block assessment framed in pursuance to an order under section 250 and Chapter XIVB - CIT v. Paul Noel Rodrigues (Kar.) 811 TAXMAN q JUNE 20 - JUNE 26, 2015 u 12

3 Contents A-11 BAD DEBTS - Conditions precedent - Where petitioner-bank claimed bad debts on basis of deduction claimed in earlier assessment order without taking into account rectification made in quantum of provision created under section 36(1)(viia) in earlier year, initiation of reassessment proceedings was justified - ICICI Bank Ltd. v. Dr. Ramsingh, Dy. CIT (Bom.) 796 BUSINESS EXPENDITURE n Allowability of - Claim during assessment - Claim of revenue expenditure made for first time in course of assessment proceeding without revising return of income, was allowable under section 37(1) - CIT v. Gujarat Alkalies & Chemicals Ltd. (Guj.) Interest on hire purchase, etc. - Interest on hire purchase in relation to new plant and interest and commitment charges in relation to expansion of existing plant, were deductible either under section 36(1)(iii) or 37(1) - CIT v. Gujarat Alkalies & Chemicals Ltd. (Guj.) Lease rent - Lease rent paid for machinery and equipments taken on lease for establishing a new plant, for period during which new plant had not commenced production, was revenue expenditure - CIT v. Gujarat Alkalies & Chemicals Ltd. (Guj.) 787 BUSINESS INCOME n Compensation - Termination of agency - Where consideration received by assessee was only towards termination of agency, income received by assessee was to be treated as business income and not as capital gain - Chakiat Agencies (P.) Ltd. v. Asstt. CIT (Mad.) 773 BUSINESS LOSS/DEDUCTIONS n Allowable as - Bid-loss - Where assessee-company did not produce relevant materials in respect of bidloss occurred, claim of bid-loss could not be allowed - CIT v. Shriram Chits (Karnataka) (P.) Ltd. (Kar.) 780 CAPITAL GAINS n Capital asset - Agricultural land - Where agricultural land sold by assessee was situated beyond 8 kms from municipal limits when measured through road distance, profit from sale of said land was not taxable - CIT v. Nitish Rameshchandra Chordia (Bom.) 724 n Computation of - Date of acquisition of asset - Where capital asset was property of HUF prior to and assessee acquired absolute ownership on by way of partition, assessee was entitled to calculate capital gains tax by taking Cost Inflation Index for financial year Dy. CIT v. Sushil Kumar (Punj. & Har.) 788 n Reference to valuation officer - Reopening of assessment - No reassessment by Assessing Officer on basis of valuation report of DVO if Assessing Officer had accepted valuation during assessment - Prabhu Dayal Rangwala v. CIT (Delhi) 790 CASH CREDIT - Loans/advance - Where identity and creditworthiness of parties had been established from whom assessee had taken loans and advances, no addition under section 68 could be made - CIT v. Lalit Kumar Poddar (Delhi) 816 TAXMAN q JUNE 20 - JUNE 26, 2015 u 13

4 A-12 Contents CHARITABLE OR RELIGIOUS TRUST n Registration procedure - Cancellation of registration - If case of assessee falls in first proviso to section 2(15) and, therefore, benefit of registration under section 12A is not available, this is a matter to be considered by Assessing Officer but, registration cannot be cancelled on that ground - DIT v. Kodava Samaja (Kar.) 708 CIRCULARS AND NOTIFICATIONS/INSTRUCTIONS - CBDT Circular No. 772, dated Instruction No. 17/2008, dated Circular No. 3/240, dated DEDUCTION OF TAX AT SOURCE n Consequence of failure to deduct or pay - Direct payment - Assessing Officer has jurisdiction to demand amount of tax not deducted at source by order passed under sub-sections (1) and (1A) of section Nopany Marketing Co. (P.) Ltd. v. CIT (Cal.) Period of limitation - Initiation of proceedings under section 201 against assessee after 9 years from end of relevant financial year was time barred - CIT v. C.J. International Hotels (P.) Ltd. (Delhi) 818 DEDUCTIONS n Profits and gains from infrastructure undertakings - Computation of deduction - Where losses in year earlier to initial assessment year already set off against other income of earlier years, such earlier losses could not be considered again for computing admissible deduction under section 80-IA - CIT v. Eastman Spinning Mills (P.) Ltd. (Mad.) 801 DEEMED DIVIDEND - Loans or advances to shareholders/business transactions - Advances received by assessee shareholder under an agreement to do job work for company could not be treated as deemed dividend - CIT v. Amrik Singh (Punj. & Har.) Loans or advances to shareholders - Where person borrowing money from company was neither a registered shareholder nor a beneficial shareholder in assessee company, provision of section 2(22)(e) would not be applicable - CIT v. C.J. International Hotels (P.) Ltd. (Delhi) 818 DEPRECIATION n Additional depreciation - Where assessee engaged in business of production and export of textiles, entered into separate business of generation of power and installed one windmill, it would be eligible for additional depreciation on windmill under section 32(1)(iia) - CIT v. Atlas Export Enterprise (Mad.) 804 n Allowance/Rate of - Windmill electric generator - Where Assessing Officer had granted 50 per cent depreciation on windmill electric generator as claimed by petitioner bank, re-opening of assessment on ground of wrong allowance of depreciation was a mere change of opinion and, hence, unjustified - ICICI Bank Ltd. v. Dr. Ramsingh, Dy. CIT (Bom.) 796 n Unabsorbed depreciation - Reopening of assessment - Where in course of assessment made under section 143(3) TAXMAN q JUNE 20 - JUNE 26, 2015 u 14

5 Contents A-13 assessee brought entire relevant evidence on record, Assessing Officer could not initiate reassessment proceedings merely on basis of change of opinion that assessee s claim for set off of brought forward unabsorbed depreciation against long term capital gain was not allowable - Plus Paper Food Pac Ltd. v. ITO (Bom.) 747 EXPORT ORIENTED UNDERTAKING - Computation of deduction - Where loss suffered by assessee in a unit entitled for exemption under section 10B, cannot be set off against income from any other unit not eligible for such exemption - CIT v. KEI Industries Ltd. (Delhi) 697 HIGH COURT n Appeal to - Condonation of delay - Where assessee took voluntary decision not to assail order of Tribunal and accepted same, only because assessee succeeded on same issue 5 years later, same could not be a sufficient cause to condone delay of 5 years in filing appeal before High Court - Somerset Place Co-operative Housing Society Ltd. v. ITO (Bom.) 806 INCOME FROM OTHER SOURCES n Deductions - Administrative and other expenses - Where assessee a co-operative society, earned interests on deposits kept with scheduled banks only net interest income, i.e., interest income reduced by administrative expenses and other proportionate expenses to earn said income had to be brought to tax under section 56 - Totgars Co-Operative Sale Society Ltd. v. ITO (Kar.) 794 INCOME-TAX ACT, Section 2(14) Section 2(22) 731, Section 10B Section 12AA Section 28(i) Section 28(ii) Section , 797, Section 36(1)(iii) 784, Section 36(1)(vii) Section 37(1) Section Section 55A Section Section Section 69A Section Section Section 80-IA Section Section 142A 720 TAXMAN q JUNE 20 - JUNE 26, 2015 u 15

6 A-14 Contents - Section Section 145A Section Section , Section 234B Section 234D Section 260A Section 271(1)(c) 800 INTEREST, CHARGEABLE AS - Computation of - Interest under section 234B would be computed upto date of admission of application by Settlement Commission under section 245D(1) and not up to date of order of Settlement Commission under section 245D(4) - G. M. Foods v. IT & WT SC (Cal.) 793 INTEREST ON BORROWED CAPITAL - Acquisition of capital asset - Where assessee, a dealer of vehicles, having taken loan, used certain amount for booking of showroom, in view of fact that assessee had sufficient surplus funds for making said advance and, moreover, it was a commercial decision which could not have been gone into unless Assessing Officer had concrete material to contend that transaction was a sham, assessee s claim for interest on borrowed capital could not be rejected - CIT v. DD Industries Ltd. (Delhi) Interest on interest free advance to directors - Interest on interest free advance to directors was not allowable under section 36(1)(iii) - CIT v. Avery Cycle Inds Ltd. (Punj. & Har.) Purchase of plant - Interest paid on money borrowed for purchase and installation of plant and machinery was allowable under section 36(1)(iii) - CIT v. Avery Cycle Inds Ltd. (Punj. & Har.) 814 KARNATAKA AGRICULTURAL INCOME-TAX ACT, 1957 n Assessment in case of discontinued company, firm or association - Validity of retrospective amendment to section 26(4) - Retrospective amendment made to section 26(4) of Karnataka Agricultural Income-tax Act is constitutionally valid - Asstt. CIT v. Netley B Estate (SC) 760 KARNATAKA AGRICULTURAL INCOME-TAX ACT, Section LOSSES n In speculation business - Intra-day trading of shares - Before disallowing assessee s claim of loss on account of intraday trading in shares as speculative loss, a clear finding was to be given as to whether intraday purchases and sales made were jobbing transactions - CIT v. Lalit Kumar Poddar (Delhi) 816 n Loss return - Carry forward and set off - Where assessee filed return declaring income after expiry of time extended by Assessing Officer for filing return but assessment was made at loss, assessee would not be allowed benefit of carry forward of losses under section 80 - Peerless General Finance & Investment Co. Ltd. v. CIT (Cal.) 714 TAXMAN q JUNE 20 - JUNE 26, 2015 u 16

7 Contents A-15 METHOD OF ACCOUNTING IN CERTAIN CASES - Stock valuation - While computing income of assessee-manufacturer, excise duty could not be included in opening and closing stock - CIT v. Avery Cycle Inds Ltd. (Punj. & Har.) 814 PENALTY n For concealment of income - Disallowance of claim, effect of - Where assessee claimed depreciation on imported plant and machinery which it could not clear from port authorities, since assessee knew that said claim was never allowable, penalty was to be levied under section 271(1)(c) - Punsumi Engineers Ltd. v. CIT (Raj.) 800 REFUND n Interest on excess - Applicability of - As section 234D was in force on date of assessment and did not operate retrospectively, assessee would be required to pay interest on excess refund from date on which section 234D came into force - CIT v. Avery Cycle Inds Ltd. (Punj. & Har.) 814 SEARCH AND SEIZURE - Search warrant - Where warrant of authorisation indicated premises where search and seizure operation was to be conducted and said premises had not been partitioned by metes and bounds, while searching said premises, search of portions occupied by petitioners in said premises was valid and proper, even though their names were not mentioned in authorisation of search, in such case provisions of section 158BD would be attracted - Harbhajan Singh Chadha v. DIT (All.) 735 UNEXPLAINED MONEY - Gift - Immunity provided to bond holders of India Development Bond in US dollars under section 6 of Remittance of Foreign Exchange and Investment in Foreign Exchange Bonds (Immunity and Exemptions) Act, 1991, is not available to gifts found to be bogus routing unaccounted money of bond holder through such bonds, by purchasing bonds for consideration in India - Rajendra Kumar Gupta v. CIT (All.) 820 VALUATION OFFICER, ESTIMATE BY, IN CERTAIN CASES - Scope of - Where books of account in respect of cost of construction are maintained, reference to DVO cannot be made without rejecting said books of account on some legal or justified basis - CIT v. Freedom Board & Paper Mills (Punj. & Har.) 719 MAGAZINE : FEATURES u Delhi High Court on applicability of AMP Expenses//Krishan Malhotra 9 TAXMAN q JUNE 20 - JUNE 26, 2015 u 17

8 A-16 Contents TAXMAN q JUNE 20 - JUNE 26, 2015 u 18

Contents A-5. q CIRCULARS

Contents A-5. q CIRCULARS Contents A-5 FOUNDER EDITOR U.K. BHARGAVA EDITOR RAKESH BHARGAVA HONY. COORDINATING EDITORS DR. VINOD K. SINGHANIA AND VINAY JAIN Taxman weekly comes in Eight volumes. Annual Subscription : Rs. 6500 for