Sr. No. |
Particulars |
Case laws |
Accrual of income |
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Moneys retained by principal contractor
accrues only when it is actually received. |
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CIT vs. Ignifluid Boilers (I) Ltd. (283
ITR 295 (Mad)
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CIT vs. East Coast Construction and Ind.
Ltd. (283 ITR 297 (Mad))
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CIT vs. P & C Construction (P.) Ltd.
(318 ITR 113 (Mad))
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Retention money accrues to contractor
only when obligations under contract are fulfilled. |
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Interest on securities accrues only on
specified dates when it becomes due for payment. |
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In a case where the change in ownership
of shares is not registered and the assessee’s name is not registered in the
records of the company, assessee is merely a de facto owner of shares and it
has no right to receive dividend. Hence, no dividend accrues to the assessee
in such case. |
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Addition on account of duty drawback and
cash assistance on accrual basis is held to be unjustified. |
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Advance
Ruling |
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Merely because an assessee has filed a
return of income would not tantamount to pendency of proceedings and
Authority for Advance Rulings can proceed with the case. |
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Association of Persons (AOP) |
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Lease rent of land owned jointly by 65
persons assessable in the hands of co-owners individually and not in the
status of AOP. Interest earned by co-owners on loan given to lessee for
construction of hotel on leased land is assessable in the status of AOP. |
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Appeal |
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New Ground in the absence of appeal or
cross objection by other side - There is no prohibition in the Rules totally
precluding the Tribunal from considering any ground beyond those mentioned
in the memorandum of appeal filed by a party, whether the assessee or the
Department, in the absence of an appeal or cross objection by the other side
projecting the new ground. It is a settled principle that procedural law is
the hand-maid of justice. There cannot be any estoppel against the law.
However, the evidentiary facts in support of the new ground must be
available on record. |
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High Court has no power to review its
judgement u/s. 260A – |
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Appeal to High Court on the Grounds not
raised before Assessing Officer or Tribunal cannot be raised for time before
High Court u/s.260A. |
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Assessment - Intimation |
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The Assessing Officer cannot make
adjustments to the returned income to disallow claim of non-taxability of
receipt or to disallow claim for deduction for lack of proof of claim. |
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Disallowance can be made only on the
basis of information available in the Return and in the documents and
accounts accompanying it. Claims should be prima facie inadmissible.
Expenditure on presentation articles, ex gratia, cash purchases, prior year
expenses. Deduction u/s. 80HHC cannot be disallowed u/s. 143(1). |
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Assessment – Issue of Notice |
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Even in case of a reopened assessment
u/s. 147, issue of notice u/s. 143(2) within a period of 12 months is
statutory |
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The notice u/s. 16(2) (akin to notice
under s. 143(2)) is required to be issued even under the wealth tax
assessments and non-issue of such notice would render the assessment
invalid. |
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Notice served by affixture on the last
date after the office hours is not valid and assessment framed in pursuance
to such notice is not valid. It is even irrelevant if the assessee appeared
in the assessment proceedings. |
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The jurisdiction of AO to make assessment
u/s. 143(3) is based on issuance of notice u/s. 143(2) of the Act. Defect of
non-issue of notice cannot be cured by resorting to s. 292BB of the Act
which is applicable only with regard to “service of notice”. |
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Audit |
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Before a direction is given for audit of
accounts u/s. 142(2A), there is no need to give an opportunity to an
assessee of being heard. |
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Benami Transactions |
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The Benami Transactions Act does not
prohibit nominal transactions which fall u/s. 81 of the Indian Trusts Act. |
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Block Assessment |
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Provisions of S. 145 are not applicable
to computation of undisclosed income under the provisions of Chapter XIV-B.
Note - Amendment is made by the Finance Act, 2002, to make provision of
section 145 applicable to Chapter XIV-B). |
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Where income is already disclosed in the
audited balance sheet or that amount is duly accounted for in regular books
of account, such income/amount could not be treated as undisclosed income
for purposes of block assessment. |
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What is assessed under Chapter XIV-B is
undisclosed income of block period and not total income or loss of previous
year which is required to be assessed under regular assessment, scope of
which is very different from scope of assessment under block assessment. ITO
cannot estimate undisclosed income under Chapter XIV-B on arbitrary basis. |
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Assessment under Chapter XIV-B is to be
based on the material found/detected as a result of search and not
otherwise. |
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Addition under Chapter XIV-B cannot be
made merely on the basis of the report of the Departmental Valuer valuing
property higher than the cost of construction. |
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Income below taxable limit of any
previous year in block period is to be included as undisclosed income.
Note - Section 158BC
(c) is amended by the Finance Act, 2002, to exclude income below taxable
limit from the purview and scope of undisclosed income. |
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In case where an
assessee has paid advance tax but has not filed his return of income, such
income cannot be considered to be undisclosed income |
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Such other materials
or information as are available with Assessing officer’ – Does not include
material gathered during survey proceedings u/s 133A |
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Loss and unabsorbed
depreciation are to be set off against the total income in computing the
undisclosed income of the assessee for the block period |
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Notice for filing
return: Satisfaction must be of the officer issuing notice and not of
another officer. |
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If no incriminating
material is found during search proceedings, merely on the basis of
statement of third party, no addition can be made on account of undisclosed
income. |
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No addition can be
made in respect of unabated assessments in absence of incriminating material
found during search. |
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While initiating
assessment u/s. 153C of the Act, the AO of the person searched is required
to record a satisfaction that seized material belongs to a third person. A
general satisfaction without bringing on record any connection between the
seized material and the third person with respect to the relevant assessment
year renders the notice invalid and consequent assessment deserves to be set
aside. |
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Mere fact that the AO
of the person searched and the AO of the other person is the same person
does not, in any manner, obliterate the requirement of law necessitating the
recording of satisfaction u/s. 153C in the case of the person searched. |
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Business Expenditures |
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The cases where the expenditure is held
allowable: |
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Gujarat State Export Corpn. Ltd. vs.
CIT (209 ITR 649 (Guj.))
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American Express International Banking
Corp vs. CIT (258 ITR 601 (Bom.))
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CIT vs. Samtel Color Ltd. (19 DTR 295
(Del.))
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Bad debts |
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CIT vs. Girish Bhagwatprasad (256 ITR
772 (Guj.))
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CIT vs. Star Chemicals (Bombay) P Ltd.
(220 CTR 319 (Bom.))
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DIT vs. Oman International Bank SAOG
[223 CTR 382 (Bom.))
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Also see T.R.F. Limited vs. CIT (323
ITR 397 (SC))
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Interest expenditure |
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Expenditure on raising convertible
debentures is revenue expenditure |
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As there is no relationship of employer
and employee between a firm and its partners, benefit extended by the firm
to its partners is benefit to the firm itself. Accordingly, rent paid for
flat occupied by partners while discharging their outstation duties is not
deductible. |
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Payment made to State Government to claim
exemption from acquisition of land under Urban Land (Ceiling and Regulation)
Act, 1976 would result in benefit of enduring nature and was thus capital in
nature. |
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The expression ‘for the purpose of
business’ in Sec. 37 includes expenditure incidental to the carrying on of
business which may not be for the purpose of earning profit. |
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In case of a Company retirement gratuity
is deductible u/s. 37(1) S. 40(c) and 40 A(5) are not applicable.
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Disallowance u/s. 40A(3) - Cash payment
exceeding certain limit paid under exceptional circumstances, covered by
Rule 6DD (j) and genuineness of payment established, amount could not be
disallowed. |
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Liability to pay royalty accrues in terms
of agreement and not in the year in which RBI’s permission is granted.
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Royalty payable would accrue only in the
year in which approval by government is granted and not in the year in which
agreement was entered into. |
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Expenses on VRS are allowable in year of
payment.
Also refer to section
35DDA inserted by Finance Act, 1999 w.e.f. 1-4-2000). |
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The word “sum” in section 40A(3) refers
to single payment. |
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Amounts paid by the assessee to its
employees towards overseas maintenance allowance constitutes only
reimbursement for expenses incurred by the employees and would not form part
of the salary in the hands of the recipient. Hence, provisions of s.
40(a)(iii) would not be applicable. |
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Amendment by FA 2010 to provide the
extended time for payment is retrospective in nature w.e.f. 01.04.2005 and
hence no disallowance u/s. 40(a)(ia) can be made on that count. |
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The term “payable” usedin s. 40(a)(ia) of
the Act only indicates the nature of payments as referred to in s. 40(a)(ia)
and cannot be construed to categorize defaults on the basis of when the
payments are made. |
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The employees contribution towards the
provident fund and ESIC would qualify for deduction even if paid after due
date prescribed under the Provident Fund Act / ESI Act but before the due
date of filling the return of income. |
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The expenditure incurred on issue of
bonus shares is held to be revenue expenditure. |
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Partnership deed need not quantify
partner’s remuneration in order to be eligible for deduction.
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Disallowance of expenses u/s. 14A:
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CIT vs. Delite Enterprises (Bom)
(Unreported)
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CIT vs.
Corrtech Energy P. Ltd (372 ITR 97 (Guj))
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Cheminvest Ltd vs. CIT (378 ITR 33
(Del.))
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Encashment of bank guarantee by the
Apparel Export Promotion Council on failure to fulfill conditions of export
obligation is not penalty and hence allowable as compensatory in nature. |
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The difference between market price and
the option price of ESOP is deductible as expenditure |
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The provisions of s. 40(a)(ia) are not
applicable to the amount of expenditure which are already paid during the
year and is applicable only for the amounts payable as at the end of the
year. |
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When parties from whom purchases are made
could not be produced but corresponding sales have been proved, additions
cannot be made. |
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Capital Gains – Taxability |
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Surrender of tenancy right in exchange
for ownership flat in another building, does not attract liability to tax on
capital gains.
Note : In view of
change in law these decisions will not be applicable from A.Y. 1995-96. |
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Conversion of tenancy rights into
ownership rights and transfer thereafter. Cost to be taken of ownership
rights represented by its market value on date of conversion for the purpose
of computing Capital gains. Also, expenses incurred for removing encumbrance
to the transfer was allowable |
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When shares are purchased and sold by a
non-resident in India, Rule 115 has no application. Amounts are not to be
converted into foreign currency for calculating capital gains. |
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While computing capital gains on
redemption of preference shares, consideration received to be considered as
Nil if same amount was already taxed as dividends u/s. 2(22). |
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Split of capital gain arising from sale
of land and building is possible even if the assets are sold as one unit.
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CIT vs. Dr. D. L. Ramchandra Rao (147
CTR 314 (Mad.))
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CIT vs. C. R. Subramanian (242 ITR 342
(Kar.))
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CIT vs. Citibank N.A. (261 ITR 570 (Bom.))
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The definition of “capital assets” u/s.
2(14) is not of any relevance for the purpose of operation of S. 46(2). S.
46(2) operates independent of S. 2(14). |
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Cost of right shares should be price that
was paid for such shares plus diminishing in value of originally shares.
[The above decision to be read subject to amendment in S. 55(2)(aa) made
with effect from A.Y. 1996-97. |
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There is no transfer on a firm
registering itself as a company under Part IX of the Companies Act.
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In view of s. 45(4), on retirement of a
partner, capital gains would be liable to tax. |
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For the purpose of s. 45(4), dissolution
of firm alone would not be sufficient. There should be distribution of asset
also to trigger the section and attract the capital gains tax liability.
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When a retiring partner takes only money
towards value of his share in the firm and when there is no distribution of
capital asset/assets among the partners, there is no transfer of a capital
asset and consequently no profits or gains are chargeable to tax u/s. 45(4).
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No capital gain tax arises on the
Goodwill paid by a professional firm to a retiring partner. |
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Where under the terms of the development
agreement between the assessee and the developer, a limited power of
Attorney was intended to be given to the developer to deal with the property
and if the contract, read as a whole, indicates passing of or transferring
of complete control over the property in favour of the developer, then the
date of the contract would decide the year of chargeability. |
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Capital gains on transfer of development
rights in an immovable property was chargeable in the year in which actual
physical possession of the property is given to the purchaser even though
the agreement is entered into in earlier year. |
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Re-arranging shareholding of assessee
under a family settlement to avoid possible litigation among themselves and
necessity to control companies by major share holders to produce better and
active supervision would not amount to transfer of assets so as to attract
capital gains. |
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Assessee becoming owner of land though
operation of law- No cost of acquisition-Capital gains tax could not be
charged. |
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If without removing any encumbrance sale
or transfer could not effected then the amount paid for removing that
encumbrance will fall under clause (i) of section 48 and hence would be
eligible for deduction. |
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Assessee sold property and claimed the
deduction of, inter alia, amount paid to tenants to vacate the premises.
Such amount paid was held allowed as deduction from the sale value while
computing capital gains. |
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The renunciation of right to subscribe to
rights shares in favour of general public did not amount to transfer. The
loss suffered therein is a notional loss and hence not deductible. |
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In case of transfer by gift, will, trust,
etc indexed cost is to be determined with reference to holding by previous
owner. |
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Even if the house is purchased by making
payment of first instalment and the subsequent instalments are paid over the
period, the entire cost of acquisition is eligible for indexation from the
date of acquisition. |
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For the purpose of s. 2(14) of the Act,
distance for measurement of agricultural land from municipal limit should be
distance by road and not aerial route. Amendment to s. 2(14) w.e.f.
1-4-2014 is prospective in nature. |
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Capital Gains – Exemption |
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If assessee has acquired substantial
domain over new house and has made substantial payment towards cost of
construction within a period specified u/s. 54, then assessee can be said to
have complied with requirements for claiming exemption u/s 54 even if
construction of building is not completed within a specified period.
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Section 54 nowhere requires that to avail
exemption sale consideration itself should be utilised for purchase of new
house. |
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Expression “a residential house” should
not be understood to indicate a singular number. Assessee having purchased
two residential flats, exemption under section 54 was available, more so as
these flats are situated side by side and the builder as effected
modification of the flats to make it as one unit. |
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Exemption u/s. 54F of the Act would be
available in respect of entire built up area received by assessee wherein
consideration for sale of land is defined in terms of percentage of built up
areaon development of said land and not based on number of flats. |
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There is no condition laid down that the
amounts received from sale consideration alone should be utilized for
purchase or construction of a house property for claiming exemption u/s.
54F. |
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As per section 161, Trustee is entitled
to benefits available to beneficiary and therefore, trustee can claim
exemption u/s. 54 of the Act. - |
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Exemption u/s. 54E is available with
respect to capital gains chargeable u/s. 50 on transfer of depreciable
assets |
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The assessee entered into joint
development agreement for development of her residential property into 8
residential units. The assessee was entitled to get 4 flats as her share.
The assessee was entitled to benefit u/s. 54 in respect of entire value of
four flats. |
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The deposit in capital gain account
scheme by the time limit provided u/s. 139(4) is sufficient for claiming
deduction u/s. 54F |
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New residential house purchased by the
assessee need not be purchased by assessee in his own name or exclusively in
his name. The assessee purchasing residential house in name of his wife
would also be entitled to exemption u/s. 54F. |
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In case of where the assessee purchases
two residential flats, both adjacent to one another and having a common
meeting point, the exemption u/s. 54 cannot be denied – |
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Cash Credits |
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Department must show that investment made
by subscribers in the share applicaiton money with the assessee company
actually emanated from coffers of assessee to be treated as undisclosed
income of assessee. |
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CIT vs. Value Capital Services P. Ltd.
- 307 ITR 334 (Del.)
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CIT
vs. Stellar Investment Ltd. (192 ITR 287
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CIT vs. Sophia Finance Ltd., (205 ITR
98)) approved in CIT vs. Lovely exports Ltd. (2008) 216 CTR 195 (SC))
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Charitable Trusts |
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Contributions collected by organising
charity show and by taking advertisements in souvenir are voluntary in
nature for the purpose of S. 12(1). |
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Filing of audit report in Form 10B along
with return of income is a directory and not mandatory. |
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Philanthropy is not restricted to giving
a free treatment only to the extreme poor but also to giving treatment at a
concessional rate to those who are not poor but cannot afford normal cost.
Further there is also no bar on the concessional treatment to staff members
– The application for exemption cannot be rejected on such grounds. |
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In case of a Society running educational
institution, even if the property is purchased in name of director of
educational institution but transferred subsequently to educational
institution, the provisions of s. 10(23C)(iv) or s. 11 cannot be said to be
violated. |
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Clubbing of Income |
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Transfer of asset to spouse before
marriage, income from transferred asset is not to be included in total
income of assessee. |
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As per divorce decree, assessee created a
trust for benefit of minor child. Income from trust not includible in total
income of assessee . |
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Deductions from Income |
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A private trust having beneficiaries with
indeterminate shares is eligible for deduction u/s. 80L. |
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Status of trustees is that of individual
- deduction u/s. 80L allowable. |
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Discretion u/s. 80HHC(2)(a) for allowing
further time to bring sale proceeds into India is not dependent on making of
an application nor it is necessary that said discretion should be exercised
before expiry of period of six months. |
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The amount of sale proceeds from export
not brought into India within six months is not includible in total turnover
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Where income or other charges are found
to be part of operational income, Explanation (baa) could not be invoked. |
Note: The above decision has been
reversed in CIT vs. K. Ravindra Nathan Nair (295 ITR 228 (SC)) and CIT vs.
Dresser Rand India (P) Ltd (323 ITR 429 (Bom.)) |
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Section 80HH(9) only talks about priority
to be given to section 80HH, in case where assessee is entitled to deduction
u/s. 80-I as well as 80HH it does not refer to quantum. |
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Requirement of filing audit report
u/s.80–I along with the return is not mandatory and the claim for deduction
u/s.80-I is admissible even if the report is filed by the assessee before
completion of the assessment |
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Assessee having maintained separate books
of accounts for export business and local business deduction under section
80HHC is to be computed on the basis of total turnover, export turnover and
profits of the business of the export division alone and not the total
turnover and the profits of the entire business of the assessee.
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Under the provisions of s. 80-HHC –
Explanation (baa), netting of income from expenditure is not allowed. |
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The assessee had a contract for design,
development and resting of a software outside India. Under the contact, the
scope of work involved the provision of analysis, programming and testing
skills. The assessee had deputed qualified personnel under the contract. It
was therefore held that the assessee was engaged in onsite development of
computer software outside India and the assessee was entitled to deduction
u/s. 80-HHE. |
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S. 10A/ 10B deduction allowable without
set off of losses of non-eligible units |
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Interest income: |
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Exchange rate difference arises out of
and is directly related to the sale transaction involving export of goods of
the industrial undertaking and therefore, the difference on account of
exchange fluctuation is entitled to deduction u/s. 80-IB. |
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For claiming deduction u/s. 80-HHC,
foreign exchange need not be brought in India. If the sale proceeds from
foreign country are used for repayment of foreign currency loan directly
without bringing the foreign exchange in India, deduction cannot be denied.
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Pursuant to the introduction of the
clause (iiid) in s. 28 by Finance Act, 2005, entire sale consideration on
transfer of DEPB credit is assessable as business profits and not only the
profit from such DEPB credits. The law laid down by the special bench in
Topman Exports which was overruled in
CIT vs. Kalpataru Colours And Chemicals
328 ITR 362 (Bom) is now restored and approved in Topman Exports Ltd. 342
ITR 49 (SC).
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The option or privilege granted to the
assessee in claiming the depreciation cannot be availed for the purpose of
calculating the profits derived from industrial undertaking for Chapter VIA.
The depreciation is to be worked out while computing the deduction u/s.
80-IA even if not claimed in the computation of income. |
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Process of manufacturing: |
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Prior to A.Y. 05-06, a project approved
as “housing project” by local authority is eligible for deduction u/s.
80-IB(10) irrespective of extent of commercial user. |
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“Housing
Project” is eligible for deduction u/s. 80-IB(10) of the Act even if the
Developer is not “owner” of land. |
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Multiple housing project on 1 acre of
land is eligible for deduction u/s. 80-IB. |
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The retrospective effect to the
introduction of 3rd
and 4th
Proviso to s. 80HHC is ultra vires and constitutionally invalid. The said
amendment can only be held to be prospective in nature. |
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In relation to special deduction u/s
80-IA and as effect of rule 18C, on approval of indl. Park given by Commerce
Ministry, it is the Duty of CBDT to notify indl. park for benefits u/s.
80-IA and CBDT has no power to conduct inquiry. |
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The Assessing Officer cannot disallow the
deduction claimed in the subsequent year without disturbing the claim made
in the first/ earlier years . |
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Demand in Abeyance |
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Discretion for keeping demand in abeyance
u/s. 220(6), if used, must be discretion of a reasonable man and with due
reason of such a man and not abrupt. |
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N. Rajan Nair vs. ITO (165 ITR 650 (Ker.))
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Dunlop India Ltd.vs. ACIT (183 ITR 532
(Cal.))
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Lalit Khanna vs. Controller of Estate
Duty (207 ITR 955 (All))
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CBDT inst. No. 334 dt. 3-4-1982 is to be
followed and recovery proceeding must be stayed, where assessed income is
substantially higher than the returned income, disputed tax shall remain in
abeyance. |
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Hon’ble ITAT has exclusive jurisdiction
and implied power to stay recovery proceeding during the pendency of appeal
or reference. |
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The CIT(A) has inherent power to stay
recovery proceeding during the pendency and final disposal of appeal before
the appellate authority. |
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Assessee need not approach the A.O. or
DCIT before applying to CIT(A) for stay of recovery of tax etc. CIT(A) bound
to consider direct application expeditiously. |
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There is no express provision which
authorizes the DCIT to review his own stay order. He has only power of
rectification and not power of review. |
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Power to grant stay on tax collection is
an inherent and incidental power of appellate authority for effective
exercise of appellate powe₹ |
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Authorities to dispose of stay
application in accordance to law. Parameters to be complied with by
authorities on stay applications laid down |
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|
When the assessee had already moved an
application for rectification u/s. 154 and the matter was pending, recovery
proceedings could not be carried out. |
|
-
|
For the purpose of ascertaining the
directors’ liability u/s. 179, the amount of demand does not include penalty |
|
Depreciation |
-
|
Where depreciation was claimed in the
original return but the claim was withdrawn while filing the revised return,
depreciation could not be enforced.
Note: Optional prior
to 1/4/2002 [CIT vs.
SreeSenhavalli Textiles P. Ltd. (259 ITR 77 (Mad.)] |
-
Shri Someshwar Sahakari Sakhar Karkhana
Ltd. (177 ITR 443 (Bom.))
-
Friends
Corporation (180 ITR 334 (P&H))
-
Also see Mahendra Mills (243 ITR 56
(SC))
|
-
|
Machinery purchased under IDBI deferred
payment scheme. Entire amount of bill of exchange will form part of actual
cost of asset for the purpose of depreciation. |
-
CIT vs. Widia (India) Ltd., (193 ITR
475 (Kar.))
-
Contrary view – Rajaram Bandekar (202
ITR 514 (Bom)) after referring Widia (India) Ltd.
|
-
|
Depreciation cannot be refused in respect
of motor vehicles on the ground that ‘vehicles’ are not registered in the
name of the assessee. |
|
-
|
Increased liability of forex loan
obtained for purchase of capital assets due to exchange rate fluctuations
forms part of actual cost for the purpose of depreciation. |
|
-
|
Depreciation is allowable on the house
acquired through acquisition of shares in co-operative society. |
|
-
|
Pharma building held as plant. |
|
-
|
Production studio for manufacture of
cinematographic films is plant. |
|
-
|
Explanation 4A to section 43(1) inserted
w.e.f. 1-10-1996 is not retrospective and does not apply to claim of
depreciation for A.Y. 1996-97. Accordingly, depreciation would be available
on assets purchased and given back of lease (sale and lease back) on cost. |
|
-
|
There is no requirement for filing return
for intermittent years for benefit of carry forward of unabsorbed
depreciation as in case of loss. |
|
-
|
Assessee is entitled to depreciation when
the best judgment assessment is made and income is estimated. |
|
-
|
Despite non-user of the assets,
depreciation is allowable, if it is part of “Block of assets”. |
|
-
|
Business information, contracts, records
etc are “intangible assets” & eligible for depreciation. |
|
-
|
To be an “intangible asset” u/s
32(1)(ii), the rights must be “in rem” and transferable. A “non-compete
right” is not an “intangible asset”. |
|
Diversion of Income |
-
|
Certain partners of assessee firm of
Chartered Accountants retired and firm was under legal obligation to pay
outstanding fees to retiring partne₹ Held, such fees cannot be treated as
assessee’s income. |
-
CIT vs. G. Basu & Co. (182 ITR 472
(Cal.))
-
CIT vs. Mulla & Mulla & Craigie, Blunt
& Caroe (190 ITR 198 (Bom.))
|
Dividend Income and Deemed Dividend Income |
-
|
Distribution of profit through redeemable
preference bonus shares constitutes “dividend” at the stage of redemption
involving release of assets. |
|
-
|
Dividend u/s. 2(22)(e) can be assessed
only in the hands of the registered shares holder.
Note:
Also see CIT vs. Bhaumik Color (P) Ltd.
[120 TTJ 865] (Mum.) (SB) where it
is held that ‘such shareholder’ in the concern to which loan is advanced
must be both a registered shareholding as also beneficial shareholding. |
|
-
|
S. 2(22)(e) does not apply to
“non-gratuitous” advances to substantial shareholder. |
|
-
|
S. 2(22)(e) of the Act does not apply to
“Trade Advances” as they are not loans and advances for the purpose of the
said section. |
|
Executor |
-
|
Assessment of income of the estate of
deceased person can be made only in the hands of the executor. Provisions of
s. 168 are mandatory. |
|
Firm |
-
|
On minor attending majority and electing
to become partner, if there is no change in loss sharing ratio, there is no
change in constitution of firm requiring fresh deed and/or registration
under I.T. Act. |
|
-
|
Where there is no interlacing and
interlocking of funds of two firms, even if partners’ profit sharing ratio
and nature of contracts are same, income of two firms cannot be clubbed. |
|
Gift Tax |
-
|
Premium paid on policies under Married
Women’s Property Act is not a gift to beneficiaries under policy. |
|
Gratuity
Exemption |
-
|
The words ‘completed service’ would mean
employees’ total service under different employers at different times. |
|
Hindu Undivided Family |
-
|
Mere fact that coparcener wrongly treats
HUF property as individual property does not make it so. |
|
-
|
Whether joint family property does not
loose its character merely because at one point of time there was only one
male member or one coparcener |
|
Income or Capital |
-
|
When dividends are received by the Co.
from another co. and the two companies are amalgamated in the same financial
year no dividend income arises. |
|
-
|
Notional interest on interest free
advance cannot be assessed on the ground that interest ought to have been
charged. |
|
-
|
Amount received by partner on
relinquishment of his share in firm is Capital receipt. |
|
-
|
Deposits received by manufacturer of soft
drinks for bottles and crates cannot be considered to be income. |
|
-
|
Surplus on purchasing and redemption of
own debentures do not constitute income. |
|
-
|
Amount received as loan by the assessee
for trading activity and ultimately, retained in the business upon waiver of
the loan is taxable under s. 28(iv) of the Act. |
|
-
|
Whether the waiver of a loan is taxable
as income or not depends on the purpose for which the loan was taken. If the
loan was taken for acquiring a capital asset, the waiver thereof would not
amount to any income exigible to tax u/s 28(iv) or 41(1). On the other hand,
if the loan was taken for a trading purpose and was treated as such from the
very beginning in the books of account, its waiver would result in income
more so when it was transferred to the P&L A/c in view of decision of
Supreme Court in TV Sundaram Iyengar 222 ITR 344 (SC) |
|
-
|
Trading liability shown as outstanding in
books and not written back cannot be taxed on account of remission or
cessation of liability merely on account of passage of time |
|
-
|
A family settlement does not result in a
transfer and compensation received to remove inequalities in family
settlement is not taxable as income. |
|
-
|
Cessation of liability to repay loan
taken for capital purposes is not assessable as income |
|
-
|
The purchaser paying earnest money but
failing to pay balance consideration. Upon the forfeiture of earnest money
by assessee, such amount received by assessee was a capital receipt. |
|
-
|
The normal meaning of income not to
include capital receipts unless specified and hence the amounts received on
issue of share capital including premium being on capital account cannot be
brought to tax. |
|
-
|
Entertainment tax subsidy granted to
assessee for meeting the costs relating to setting up of multiplex cinema
halls and making it operational was a capital receipt. |
|
Income from House Property |
-
|
Notional interest on interest free
deposit would not form part of actual rent received or receivable under
section 23(1)(b) of the Act. |
-
CIT vs. J. K. Investors (Bombay) Ltd.
(248 ITR 723 (Bom.))
-
CIT vs. Asian Hotels Ltd. (323 ITR 490
(Del.))
-
CIT vs. Hemraj Mahabir Prasad Ltd (148
Taxman 623))
|
-
|
Having regard to concept of “annual
value” income from house property in existence for less than one year would
be assessable as income from other sources and not under house property
chapter. |
|
-
|
For determining the “annual letting
value”in respect of properties which are subject to rent control legislation
and where standard rent has not been fixed, the same shall be determined in
accordance with the relevant rent control legislation. |
|
-
|
Section 23(1)(a) of the Act requires
determination of the “fair rent” being “the sum for which the property might
reasonably be expected to let from year to year”. If the Assessing Officer
finds that the actual rent received is less than the “fair/market rent‟
because the assessee has received abnormally high interest free security
deposit, he can undertake necessary exercise in that behalf. However, by no
stretch of imagination, the notional interest on the interest free security
can be taken as determinative factor to arrive at the “fair rent‟. |
|
Interest Payable |
-
|
Charge of interest at 2% “pm or part
thereof” does not mean that interest is to be paid for full month even if
delay is less than a month. Interest must be charged only for period of
delay and not for full month. |
|
Interest u/ss. 234A/B/C/244A |
-
|
Self assessment tax paid is to be treated
as tax paid in pursuance of assessment for purpose of interest u/s. 244(1A)
of the Act. |
|
-
|
Shortfall in payment of advance tax in
view of income being determined u/s. 115J would attract interest u/s. 234B
and 234C of the Act. |
|
-
|
Where the payer fails to deduct tax at
source on the payments made by him to the payee, no interest u/s. 234B of
the Act can be imposed. |
|
-
|
Where the assessee had made a request for
adjustment of seized cash against advance tax liability, though the amount
remained unadjusted, interest cannot be levied u/s. 234B and 234C after the
date of application for such adjustment made by the assessee. |
|
-
|
Where the liability for payment of
advance tax could not have been anticipated because of a subsequent
amendment with retrospective effect covering the year under consideration,
interest could not be levied either u/s. 234B or s. 234C of the Act. |
|
-
|
In relation to interest u/s 234A/B/C,
employer bound to deduct tax at source and thus there is no question of
employee paying advance tax. Employee is entitled to take into account
amount of tax deductible though not actually deducted while calculating
interest. |
|
-
|
Assessee, a civil contractor, receiving
payments from Govt. Depts. after TDS. The CPC did not issue refund in full
due to mistmach between details uploaded by deductor and details furnished
by assessee in return. It was held that such mis-match was not attributable
to assessee and hence the assessee entitled to refund with interest. |
|
International Taxation |
-
|
The liaison office of the Assessee in
India was engaged in purchase of goods and also carrying out vendor
identification and recommendation, review of costing data, quality control
and uploading of material prices into internal product data management
system. Such activities are not confined to purchase of goods for export
alone. On these facts, the liaison office can be said to be a permanent
establishment of the foreign company and income attributable to it would
assessable in India. |
|
Interpretation and Principles |
-
|
When it does not make a difference to the
Department, it should not contest whether a particular income is taxable in
one year or the next. |
|
-
|
In absence of a decision from the
jurisdictional H.C. the Tribunal is bound by decision of any other H.C. if
there are no conflicting judgments.
Note: However,
conversely held in Consolidated
Pneumatic Tool Co. (India) Ltd. vs. CIT (209 ITR 277 (Bom)
that the decision of one High Court is not binding on Courts or Tribunals
outside its territorial jurisdiction. Only decisions of SC are binding on
all courts of India. |
|
-
|
Binding nature of precedents explained. |
|
-
|
If two contrary judgments passed by the
same High Court on an identical issue, the High Court is entitled to follow
either decision. |
|
-
|
If construction of a particular provision
is considered in a particular way for a long time it should not normally be
departed from. |
|
-
|
When explanation is added to a section
with effect from a particular date, the court cannot travel beyond that date
while interpreting the section before the addition. |
|
-
|
It is the duty of tax authorities to
assess tax liability correctly. |
|
-
|
Provisions of a fiscal statute have to be
construed strictly. Court is not supposed to give a liberal meaning to make
it just and serve justice. It is only when the language is not clear or is
ambiguous that the court can lean towards the object for which it was
enacted. |
|
-
|
Words not defined in a statute which
deals with matters relating to general public must be presumed to have been
used in their popular meaning rather that a narrow, legal or technical
sense. |
|
-
|
Circulars which are in force during the
relevant assessment year is the circular which would be applicable and
subsequent circulars either withdrawing or modifying the earlier circular
have no application. |
|
-
|
Any benefit derived by the assessee
within framework of law is legitimate and it is only colourable devices and
dubious method that are to be discouraged. If result of normal transaction
is tried to be achieved through a scheme, with only intention to avoid tax,
then such scheme can be described as colourable device even though such
scheme may be within framework of law. |
|
Minimum Alternative Tax |
-
|
Deduction u/s. 80-HHC is to be worked out
on the basis of the adjusted books profits u/s. 115JB of the Act. |
Note:
Decision in the case of CIT vs. Ajanta Pharma Ltd. (318 ITR 252 (Bom.)
dissented from. |
-
|
Only that book profit which is approved
at annual general meeting of the shareholders of the company had to be
considered. |
|
Method of Accounting |
-
|
Fact that the assessee had maintained his
accounts on cash basis would not convert every kind of receipt as income
unless the receipt could be held to have accrued as income; i.e., assessee
had acquired a right to receive the said sum as income. |
|
-
|
The term ‘obtained’ used in S. 41(1)
cannot be given a meaning “capable of being obtained”. It contemplates
actual receipt of amount. For S. 41(1), system of accounting followed is of
no relevance. |
|
-
|
The tax department is not obliged to
adjust opening stock value in a case where assessee suo motu voluntarily
changed method of closing stock valuation. |
|
-
|
While estimating net profit after
rejecting accounts, depreciation is required to be worked out separately. |
|
-
|
Principles laid down in ALA Firm (189 ITR
285 (SC)) would not apply to a situation where stock in trade of a
proprietary concern has been transferred to partnership as a part of capital
contribution. |
|
-
|
Corollary to principles enunciated by SC
in ALA firm (189 ITR 285), Opening stock of new firm which was constituted
by some partners of dissolved firm is to be valued at market price. |
|
-
|
To give effect to s. 145A, if there is
any change in the closing stock at the end of the year then there must
necessarily be a corresponding adjustment made in the opening stock of that
year. |
|
Mutuality Concept |
-
|
On the principles of mutuality, surplus
of contribution made by members of cement manufacturer association held not
assessable as association’s income. |
|
-
|
Transfer fees received by the assessee,
whether from out going or incoming members, was not liable to tax on the
Ground of mutually. |
|
-
|
Since object of contribution in form of
non-occupation charges was for purpose of increasing society’s funds, which
could be used for objects of society’s, non-occupancy charges were also not
taxable in the hands of assessee being governed by principle of mutuality. |
|
-
|
TDR Premium received by a Co-operative
housing Society from its members is exempt on ground of “mutuality” |
|
PAN |
-
|
Delay in allotting PAN - In a writ
petition filed for non-allotment of Permanent Account Number by the
Income-tax authorities, it was held that in the case of issuance of PAN
number and card, the maximum period is three months from the date of
application. |
|
Penalty |
-
|
Waiver u/s. 273A or u/s. 18B of W.T. Act
may be made at one stroke for one or more assessment years but not again for
the same assessee. |
|
-
|
The requirement of getting books of
accounts audited could arise only where the books of accounts itself are not
maintained. The assessee committing the default of not maintaining the books
cannot be subjected to penalty for subsequent default of not carrying out
the audit. |
|
-
|
There is a distinction between an
infraction of law committed in the carrying on of a lawful business and an
infraction of law committed in a business inherently unlawful and
constituting a normal incident of it. Penalty for breach of Customs Act
falls in the former case and is not deductible. |
|
-
|
Penalty cannot be imposed u/s.271(1)(c)
where agreed assessment of cash credit is made as “undisclosed income” and
department has failed to prove that amount is concealed income of the assessee. |
|
-
|
Assessee having filed return previously,
no penalty under s. 271 (1) (c) could be imposed by invoking Explanation. 3
for A.Y. 1997-98 – The amendment by the Finance Act, 2002 w.e.f. 1st
April, 2003, by which the worlds “who has not previously been assessed under
this Act” were omitted - would not apply to assessment year in question. |
|
-
|
Legal opinion contained in tax audit
Manual published by the Bombay
Chartered Accountants Society
constituted reasonable cause for the bona fide belief of the assessee that
the provisions of s. 44AB are not applicable in its case and therefore,
penalty under section 271B is not leviable. |
|
-
|
Penalty under section 158BFA(2) is
discretionary and not mandatory. |
|
-
|
Assessee having surrendered additional
income along with an explanation in the revised return filed in pursuance of
notice under section 148, and the assessing authority having not taken, any
objection that the assessee’s explanation was not bona fide, penalty under
section 271(1)(c) is not leviable. |
|
-
|
Assessee filing return and receiving
notices of initiation of penalty proceedings. Penalty order was passed after
death of assessee, the Court held that no penalty can be levied against
legal representative. |
|
-
|
Making a wrong claim of deduction in not
at par with the concealment or giving inaccurate information – Hence no
penalty can be levied u/s. 271(1)(c). |
|
-
|
Loss suffered on sale of machinery was
wrongly set off against profits of business. When the said mistake was
realized, he accepted the decision of the Assessing Officer. In such
circumstances, it cannot be said that the mistake committed in furnishing
the inaccurate particulars due to negligence of the counsel was not a
deliberate attempt to evade tax. |
|
-
|
The change in the year of taxability
would not call for penalty action u/s. 271(1)(c). |
|
-
|
Prior to A.Y. 2003-04, the provisions of
expln. 3 to S. 271(1)(c) is not applicable to existing assessees and
non-furnishing of the return would not tantamount to concealment of
particulars of income by an existing assessee and penalty u/s. 271(1)(c)
cannot be levied. |
|
-
|
When the surrender of income is made on
condition that no penalty would be levied and the department has no other
evidence of concealment of income, no penalty is leviable in such case. |
|
-
|
Repayment of loans or deposits otherwise
than by account payee cheque or draft and repayment by debit of account
through journal entries contravenes provision of s. 269T and hence penalty
provisions are applicable. But the Court held that the penalty can be
avoided on showing reasonable cause. |
|
-
|
Only if payee fails to pay tax directly,
the payer can be held to be in default. If the tax is paid by payee, the
liability of payer is only for interest and penalty. |
|
-
|
If a wrong claim is due to mistake of a
Chartered Accountant or a tax consultant, no penalty can be levied on the
Assessee. |
|
-
|
If income is not offered due to
inadvertent mistake of the Assessee, no penalty can be levied on the
addition made. |
|
-
|
If the quantum appeal is admitted by the
High Court, it amounts to debatable issue and hence penalty cannot be levied
on such addition admitted by High Court.
Note: Contrary view in
the case of CIT vs. Dharamshi B. Shah (366 ITR 140 (Guj)) |
-
CIT vs. Nayan Builders & Developers (368
ITR 722 (Bom)
-
CIT vs. Thistle Properties Pvt. Ltd.
(Bom) (ITA No. 2344 of 2013 dated 22.03.2016)
-
CIT vs. Liquid Investment Trading Co.
(Del) (ITA No. 240 of 2009 dated 05.10.2010)
|
-
|
If the Assessee does not offer income
under the bonafide belief that the same was not taxable and upon query of
the Assessing Officer, the assessee immediately offered that amount to tax,
no penalty should be levied. Ignorance of law caused by complicated
provisions of the Act amounts to bonafide belief. |
|
-
|
If the amount is received in cash by
assessee from her father in law for purchasing property and the transaction
is genuine and source is disclosed for such transaction, no penalty could
not be imposed for violation of s. 269SS of the Act. |
|
-
|
Transaction of loan between a firm and
its partner does not attract s. 269SS. |
|
Powers and Duties of Tribunal |
-
|
If Tribunal holds an expenditure to be
capital expenditure, it is duty of Tribunal, even without an alternative
submission, to pass necessary consequential orders suo motu for allowing
development rebate and depreciation. |
|
-
|
Tribunal has power to grant relief even
though no specific appeal or cross-objection was filed by the assessee,
however, such relief was claimed before the Assessing Officer. |
|
Powers of A.O. |
-
|
Existence of pending proceedings is a
condition precedent to exercise of power u/s. 131(1) by the Assessing
Officer. |
|
Prosecution |
-
|
A company being a juristic person cannot
be prosecuted u/s. 276B. The principal officer of the Co. is liable for
prosecution. |
|
-
|
In view of existing guidelines issued by
the CBDT, where an accused is more than seventy years of age, any
prosecution against him should be dropped. |
|
Reassessment |
-
|
If the explanation of assessee is
accepted in original assessment and the same is rejected in the
re-assessment proceedings, it would amount to change of opinion which is not
permissible and that hence such assessment is liable to be quashed. |
-
M.J. Pharmaceticals Ltd. vs. DCIT (297
ITR 119 (Bom.))
-
Asteroids Trading and Investments P.
Ltd. vs. DCIT (308 ITR 190 (Bom.))
-
Asian Paints Ltd. vs. DCIT (308 ITR 195
(Bom.))
|
-
|
Reopening after four years where
assessment completed u/s. 143(3) and where there was no failure on part of
assessee to disclose fully and truly all material facts, is bad in law. |
-
Bhor Industries Ltd. vs. ACIT (183 CTR
248 (Bom))
-
Parikh Petrol Chem. Agencies (P.) Ltd.
vs. ACIT (129 Taxman 574 (Bom.))
-
CIT vs. Maharashtra Sugar Mills Ltd.
(263 ITR 180 (Bom.))
-
Caprihans India Ltd. vs. Dy. CIT (132
Taxman 123 (Bom.))
|
-
|
In absence of new material to form a
belief that the assessee’s income for the relevant year had escaped
assessment, other than the facts disclosed by the assessee before the
Assessing Officer during earlier years, reopening of assessment was not
valid. The Assessing Officer merely relied upon the audit objection. |
|
-
|
The validity of the re-assessment has to
be seen on the face of the reasons recorded and cannot be supported by the
affidavit. What is written in the reasons recorded can only be seen and not
beyond that. |
-
Aayojan Developers vs. ITO (335 ITR 234
(Guj.))
-
Godrej Industries Ltd vs. DCIT (377 ITR
1 (Bom.))
-
Nirmal Bang Securities Pvt. Ltd. vs. ACIT (382 ITR 93 (Bom.))
|
-
|
Reopening on the basis of subsequent
Supreme court decision is not valid. |
|
-
|
The CIT’s Sanction u/ss. 148/151 if
mechanical and without reasons is invalid. |
|
-
|
In the present case, the notice based on
report from DIT that credit entry in accounts of assessee was an
accommodation entry. Before reopening, the Assessing Officer did not examine
the evidence received from DIT. It was held that the notice u/s. 148 was not
valid |
|
-
|
Reopening of assessment based on revenue
audit objection is invalid. |
|
-
|
Unless there is fresh material available
with the Assessing Officer, even the return which is accepted vide
intimation u/s. 143(1) cannot be reopened. |
|
-
|
Reopening of assessment on the basis of
CBDT Instruction directing remedial action in case of audit objection is
invalid since CBDT cannot compel the Assessing Officer to issue notice u/s.
148 of the Act. Instruction issued by CBDT cannot override the statutory
powers to be exercised by Assessing Officer u/s. 147 of the Act. |
|
-
|
Even in case where no assessment order is
passed and assessment is completed by Intimation under Section 143(1) of the
Act, the sine qua non to issue a reopening notice is reason to believe that
income chargeable to tax has escaped assessment. |
|
Rectification |
-
|
ITO can rectify order in respect of
matters not the subject matter of appeal, there is merger of his order in
that of AAC’s only in respect of matters which were the subject matter of
appeal. |
|
-
|
Tribunal cannot amend its order because
it failed to consider arguments as this is not a mistake apparent from
record. |
|
-
|
Where the Tribunal refers to any decision
not referred to in the course of arguments or in the order of lower
authorities, it would render the order liable for rectification u/s. 254(2). |
|
-
|
The Appellate Tribunal need not blindly
follow the earlier decision if it did not reflect the correct position in
law. |
|
-
|
Issue whether the deduction u/s. 80-IB in
respect of Duty Drawback is available is a debatable issue and hence no
rectification is permitted. |
|
-
|
The assessment based on the Supreme Court
decision cannot be rectified on subsequent retrospective amendment of law. |
|
-
|
The Tribunal, while passing a judgement,
relied upon an order without giving an opportunity to either parties. The
order of tribunal is said to be suffering from mistake apparent on record
u/s. 254 of the Act. |
|
-
|
There is no bar in making an application
for rectification of the order u/s. 254(2) even if an appeal has been filed
against the order of the Tribunal before the High Court. |
|
Refund |
-
|
Adjustment of refund without giving prior
intimation to the assessee u/s. 245 is illegal. |
|
-
|
A.O. is entitled to determine quantum of
refund also in a regular assessment. |
|
Relief |
-
|
Assessee was not entitled to full relief
u/s 91 as deduction of 50% was allowed to him u/s. 80RRA. Relief u/s 91 is
available only in respect of income which is subjected to double taxation. |
|
Revised Return |
-
|
A revised return can be filed only if
there was any omission, mistake or wrong statement in the original return.
Otherwise it would not fall within the ambit of S. 139(5). |
|
Salary Income |
-
|
For perquisite valuation u/r. 3(a)(iii),
fair rental value of accommodation is to be determined with reference to
standard rent payable under Rent Control Act. |
|
-
|
Power given to Board to identify ‘fringe
benefit’ and ‘amenity’ cannot be challenged on ground that it is unguided,
arbitrary and such powers suffers from vice of excessive delegation. |
-
BHEL Employees’ Association vs. Union
of India (261 ITR 15 (Kar.))
-
Aditya Cement Staff Club vs. Union of
India (131 Taxman 609 (Raj.))
-
P. N. Tiwari vs. Union of India (133
Taxman 482 (All.))
|
Scientific Research |
-
|
Expenditure on approach road to research
laboratories was expenditure of scientific nature and entitled for deduction
u/s. 35 notwithstanding that the road may be used for other purposes. |
|
Search and Seizure |
-
|
Immovable property cannot be seized in
proceedings u/s. 132. |
|
-
|
Assessment made based on search warrant
issued in the name of dead person held to be invalid. |
|
Settlement Commission |
-
|
Principles relating to Settlement
Commission laid down:
-
Legality of Settlement Commission’s
order u/s. 245D(1) could always be examined in writ jurisdiction while
examining ultimate final order passed by Settlement Commission u/s.
245D(4).
-
While passing order u/s. 245D(4)
Settlement Commission is obliged to take into account the report submitted
by Commissioner u/s. 245D(1)/(3).
-
Mere co-operation of an assessee could
not be basis or criteria for granting immunity from prosecution and
penalty; it is obligatory on the part of Settlement Commission to address
itself on question as to whether full and true disclosure of income and
mode and manner in which such income had been derived had been done by the
applicant or not.
|
|
-
|
Application made for settlement after
time-limit for issue of notice u/s. 143(2) but before completion of
assessment was held to be valid. |
|
-
|
Consideration of question whether
requirement of full and true disclosure satisfied cannot be postponed to
later stage. |
|
-
|
Just because additional disclosure of
income was made by way of goodwill measure, it does not establish that
original application did not contain a full and true disclosure of income. |
|
Speculative transaction / Speculative
business |
-
|
The Govt. notification dated 25-1-2006
for treating income/loss from derivative transaction in shares as regular
business income would be effective from 1.4.2005 and hence the transactions
for A.Y. 2006-07 would be regarded as non-speculative transactions. |
|
Survey |
-
|
Documents cannot be impounded u/s. 133A.
Once survey operation is started during the business hours, it may continue
even after business hou₹ |
|
Set off and Carry Forward of Losses |
-
|
The expression ‘be entitled to’ in S. 71
does not mean that an assessee has an option in the matter of set off of
business loss against income under any other head.
Also see
CIT vs. Mahendra Kanhiyalal (HUF) 202 ITR
701 (Guj) for a different view |
|
-
|
Loss from share trading activity has to
be first considered and set off against the other business income in order
to determine what the gross total income comprises off. If the gross total
income, after such set off comprises of income from other heads, the
Explanation to s. 73 would not apply. |
|
-
|
Deeming provisions of s. 73 applies to
the entire business and hence once it is proved that part of the business
involves in purchase and sale of shares, the entire resultant profit or loss
has to be treated as part of the speculative business and not only the part
of it. |
|
Tax Clearance (TC) u/s. 230(1) |
-
|
Person giving guarantee for TC u/s.
230(1) can be held liable only for taxes o/s on date of departure and not
for liabilities arising long thereafter. |
|
Tax Collection at Source |
-
|
Tax is recoverable on price paid; i.e.,
inclusive of excise duty.
Note : Principle laid
down in this decision may equally apply to tax deduction at source (TDS) and
TDS may be required to be deducted on amounts inclusive of Service Tax and
other taxes. |
|
Tax Deduction at Source |
-
|
Payments made by the assessee to the
employees employed by it on daily wage basis cannot be said to be a
contractual payment, as such the assessee in such cases was not required to
deduct tax from such payments u/s. 194C of the Act. |
|
-
|
No deduction of Tax at Source required
where remittance to non-resident was only for reimbursement of expenditure
incurred by the non-resident. |
|
-
|
Discount given by the State Government to
stamp vendors is not commission or brokerage and is not liable to TDS u/s.
194H. |
|
-
|
Printing of labels as per assessee’s
specifications amounts to sale and not a works contract liable to TDS u/s.
194C. |
|
-
|
Assessee being a C & F agent, collected
freight charges from exporters who intended to send goods through a
particular airline and paid amount to airline or its general agents. For
such services rendered, assessee charged commission from airlines. Since
contract was actually between exporter and airline and assessee was only an
intermediary, assessee was not liable to deduct tax u/s. 194C. |
|
-
|
Once a decree is passed, it is a
judgement and order of the Court which culminates into final decree being
passed which has to be discharged only on payment of amount due under the
said Decree and therefore the judgement debtor is not liable to TDS on
interest component of decree. |
|
-
|
Transfer pricing provisions would not be
attracted to the contribution of shares of India Company if the contribution
of shares to its subsidiary company is without any consideration. As no
capital gains are chargeable, the provisions for withholding tax would not
be applicable. |
|
-
|
The words, “carrying out any work” in S.
194 C are limited to any work which, on being carried out, culminates in to
a product or result. If the assessee renders services to its customers do
not involve carrying out any work which result into production of the
desired object, it would be outside the preview of s. 194C. |
|
-
|
In a case where the assessee is running
coaching classes for competitive exams, the agreement with franchisees
entered into by the assessee does not amount to works contract and hence No
TDS liability arises on the same. |
|
-
|
“Transaction
charges” paid to BSE is “fees for technical services” u/s 194-J and hence
liable to TDS. Non-deduction or non-payment of such TDS results in
disallowance of deduction u/s. 40(a)(ia). However, since in this case, the
department and the assessee, both were unaware of the correct position in
law for years, the Court held that no disallowance may be made in such bonafide cases. |
|
-
|
Transactions in securities like
sub-brokerage paid on mutual fund, shares transactions are not liable to s.
194H. |
|
-
|
The banks providing swiping machine to
assessee where the amount punched in swiping machine credited to account of
retailer by bank, it cannot be said that the bank is acting as agent and
hence there is no obligation to deduct tax at source u/s. 194H.
Consequently, no disallowance is warranted u/s. 40(a)(ia) also. |
|
Trust |
-
|
Income of trust carrying on business is
not the income of trustees and it belongs to the beneficiaries. |
|
Valuation of Stock |
-
|
Value of Closing Stock of dissolved firm
if taken at market price, then value of Opening Stock of reconstituted firm
should be taken at market price. |
|
Writ |
-
|
Writ cannot be issued if there is an
adequate alternate remedy under the Income-tax Act. |
|
WEALTH-TAX (W.T.) |
-
|
Association of Persons (AOP) |
|
|
|
-
Orient Club vs. WTO (123 ITR 395 (Guj.)
-
Orient Club vs. CWT (136 ITR 697 (Bom.)
-
Willingdon Sports Club vs. C.B. Patil,
Addl. WTO (137 ITR 83 (Bom.))
|
-
|
Assets |
|
|
Mere possession or joint possession
unaccompanied by the right to be in possession or ownership of property
would not bring the property within the definition of net wealth for it
would not have been an asset belonging to the assessee. |
|
|
An incomplete building under construction
is not an asset and is not liable to WT as it neither falls within the
definition of a building nor within the purview of ‘Urban Land’. |
|
-
|
Debts owed |
|
|
Security deposit received against the
lease of chargeable property is debt owned and that the deposit invested in
securities exempt from wealth-tax is not relevant. The said debt is
deductible while computing the net wealth |
|