- Block period 1-4-1988 to 23-12-1998 - Search warrants under section 132(1) issued in names of ‘R’, ‘A’ and ‘RK’ were carried out at their premises - As documents seized during said operation showed nexus between assessee and his associate business concerns with ‘R’, ‘A’ and ‘RK’ in matters relating to property dealings, competent authority also conducted a survey under section 133A at premises of assessee and his associate concerns and found a large number of incriminating documents belonging to assessee and his associate concerns resulting in conversion of survey action under section 133A into search action under section 132(1) by issue of consequential warrants of authorization in names of ‘R’, ‘A’ and ‘RK’ - No search warrant was, however, issued in name of assessee - On writ, assessee challenged search action in his premises on ground that no search warrant was issued in his name - High Court, however, upheld search action at premises of assessee considering incriminating documents found therefrom - Thereafter, Assessing Officer issued notice under section 158BD, read with section 158BC, to assessee calling for return for block assessment - Assessee did not file return and disputed issuance of notice under section 158BD on ground that since action was taken in his case under section 132(1), provisions of section 158BD were not applicable, and provisions of section 158BC would apply - Assessing Officer held that since search warrant was not issued in name of assessee, block assessment was to be completed in his case under section 158BD, read with section 158BC and not under section 158BC - He, therefore, rejected objection raised by assessee and completed block assessment - On appeal, Commissioner (Appeals) quashed block assessment holding that case was covered under section 158BC and not under section 158BD - Whether if premise belonging to assessee was also covered in authorization of search issued in name of other persons and books of account or documents indicating undisclosed income of assessee were found from said premises, it could be said that action under section 132(1) was taken in case of assessee - Held, no - Whether since search warrant was not issued in name of assessee, but books of account and documents belonging to assessee were found during course of search carried out in other cases, correct course for Assessing Officer was to issue notice under section 158BD, which he had done and, therefore, action under section 158BD was correctly taken against assessee - Held, yes - Asstt. CIT v. Vinod Goel (Asr.)

Business expenditure

Allowability of

- Assessment year 2002-03 - Whether interest arising on account of default on part of assessee in repaying interest-free sales-tax loan was compensatory in nature and, therefore, same could be allowed as deduction under section 37 and provisions of section 43B were not attracted in such case - Held, yes - Southern Electrodes Ltd. v. Asstt. CIT (Hyd.)

- Assessment year 1989-90 - Whether redemption fine levied on assessee-jeweller by custom authorities, for keeping primary gold and gold ornaments in his licensed premises without forming part of stock-in-trade in violation of provisions of Gold (Control) Act, 1968, could be allowed as business expenditure - Held, no - P. Soman v. ITO (Cochin)

- Assessment year 1997-98 - Assessee-company claimed expenditure incurred by it for purchase of computer software as revenue expenditure - Assessee had leased out computer along with software and had received lease rentals for such composite lease - Whether since life of software is not short, expenditure incurred on purchase of software would be capital in nature - Held, yes - Jt. CIT v. India Equipment Leasing Ltd. (Chennai)

Business income

Assessable as

- Assessment year 1997-98 - Whether sales tax collected by assessee-company on certain hire purchase transaction was liable to be taxed as trading receipt and fact that it was not so shown in account books of assessee but was credited to a contingency account on ground that matter in that respect was pending in Court, would not make a difference - Held, yes - Jt. CIT v. India Equipment Leasing Ltd. (Chennai)

Income

Accrual of

- Assessment year 2002-03 - Assessee was employed as a news correspondent of Japan Broadcasting Corporation (NHK) which had set up news bureau office at New Delhi - Assessee was deputed as bureau chief of Delhi office and his duties included investigation, writing, preparing and reporting of news of South Asia including India and neighbouring countries - During relevant previous year, assessee had spent 124 days outside India and his status was not ordinarily resident (NOR) - In his return of income, assessee excluded proportionate salary for 124 days from total income, on reasoning that his income for period of stay outside India was not taxable in India - Whether since travelling abroad of assessee was inextricably linked with his functions as chief at news bureau office, New Delhi and he continued to occupy rent-free accommodation provided in India throughout year, whole of salary income and bonus accrued to assessee in India and was liable to be taxed in India - Held, yes - Asstt. CIT v. Hiromi Hirose (New Delhi)

- Assessment year 1997-98 - Assessee was a non-banking financial company and was following mercantile system of accounting - As per its system of accounting, interest had accrued to it on NPAs - However, in its profit and loss account for relevant year, assessee did not credit interest income on NPAs on reasoning that as per Reserve Bank of India (RBI) Guidelines issued under 1934 Act, which were binding on it, income on NPAs was to be recognised only when it was actually received - Whether since RBI Guidelines have been issued only for purpose of effective supervision, management and control of monetary and credit system of country and not for taking interest income accrued as per section 5 out of scope of Act, same would not stop accrual of income under section 5 - Held, yes - Whether, therefore, assessee was required to credit interest income accrued on NPAs to its profit and loss account and said income would be assessed to tax on accrual basis - Held, yes - Jt. CIT v. India Equipment Leasing Ltd. (Chennai)

Income-tax Act, 1961

- Section 5

- Section 28(i)

- Section 37(1)

- Section 132

- Section 158BD

Search and seizure

General

- Whether when a search warrant is issued in name of a person, place to be searched is to be mentioned therein, but it is not necessary that such place or building must belong to that person in whose name search warrant is issued; such place or building may belong to some other person who is not covered in search warrant, if books of account or other documents, valuables, etc., belonging to person searched are suspected to be lying at such place or building - Held, yes - Whether very fact that books of account or documents belonging to person searched are not found from said premises and some incriminating documents belonging to other person not covered under search warrant are found, would neither invalidate or vitiate search proceeding, nor would it absolve person not searched, whose books and incriminating documents have been found, from proceedings against him - Held, yes - Asstt. CIT v. Vinod Goel (Asr.)

INCOME-TAX TRIBUNAL DECISIONS