TAXMAN
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Vol. 165, Part 4, for the week of December 8 – December 14, 2007
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CONTENTS
statutes
q notifications
Income-tax Act
- Section 90 of the Income-tax Act, 1961 - Double taxation agreement
- Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion
with Foreign Countries - Amendments in DTAA with Government of the
Income-tax (Fifteenth
Amendment) Rules, 2007
- Income-tax (Fifteenth Amendment) Rules, 2007 - Insertion of rule
18DE and Form 10CCBBA
Tax Reports
Table
of cases
Bharat Nidhi Ltd. v. CIT (
CIT v. Hughes
Escorts Communications (
Hero Exports v. CIT (SC)
Honda Siel Power Products Ltd. v. CIT (SC)
J.K. Industries Ltd. v. UOI (SC)
subject index
Appellate Tribunal
Powers of
- Assessment year 1991-92 - Whether when prejudice results from an
order attributable to Tribunal’s mistake, error or omission, then it is duty of
Tribunal to set it right - Held, yes - During relevant year,
assessee had taken a term ‘loan’ in foreign exchange for import of machinery -
On account of fluctuation in foreign exchange rate, liability of assessee to
repay loan in terms of rupees went up - By referring to provisions of section
43A, assessee enhanced figure of WDV of block of assets and claimed
depreciation accordingly - Assessing Officer disallowed assessee’s claim of
enhanced depreciation - Tribunal held that since there was no actual payment
after fluctuation, assessee was not entitled to claim benefit under section 43A
- Assessee filed rectification application under section 254(2) stating that in
deciding ground against assessee, Tribunal inadvertently had not referred to
decision of Samtel Color Ltd. dated 10-12-2001 wherein
Tribunal held that enhanced depreciation was allowable even on notional
increase in cost of asset on account of fluctuation in exchange rates and
despite fact that additional liability resulting from said fluctuation had not
been paid by assessee and, therefore, an error apparent from record had crept
in Tribunal’s order, and same should be rectified - Tribunal acknowledged its
mistake of not considering aforesaid judgment of co-ordinate Bench of Tribunal
even when same was cited before it and, accordingly, rectified its order by
allowing assessee’s claim - However, High Court set aside Tribunal’s order
holding that in guise of rectification, Tribunal had, in fact, reviewed its
earlier order which fell outside scope of section 254(2) - Whether High Court
was justified in interfering with order of Tribunal passed under section 254(2)
- Held, no - Honda Siel Power Products Ltd. v.
CIT (SC)
Business expenditure
Allowability of
- Assessment year 1995-96 - Assessee-company, incorporated with
object of setting up satellite business communication systems, placed a
purchase order dated 28-7-1994 with a foreign company for purchase of a Very
Small Aperture Terminal (VSAT) equipment - Assessee claimed that date on which
purchase order was placed should be reckoned as date on which its business was
set up and expenditure incurred by it after such date could not be capitalized
but was to be treated as revenue expenditure - Assessing Officer disallowed
assessee’s claim holding that business was said to be set up only in March,
1995 when it completed installation of VSAT after receiving satellite signals
therein - There was no question of assessee having to place a purchase order
for purpose other than that of its business - In different activities involved
in assessee’s business, first step was purchase of VSAT equipment and
application to DOT for licence and receipt of satellite signals were
consequential stages - Whether business of assessee should be held to have been
set up on 28-7-1994 - Held, yes - Whether expenditure
incurred by assessee after such date would be deductible as revenue expenditure
- Held, yes - CIT v. Hughes
Escorts Communications (Delhi)
Companies Act, 1956
Balance-sheet and
profit and loss account
Form
and contents of
- Whether Companies (Accounting Standards) Rules, 2006 framed under
section 642(1), which adopts Accounting Standards (‘AS’) 22 issued by Institute
of Chartered Accountants of India, suffers from vice of excessive delegation
and same is incongruous/inconsistent with provisions of Act including Schedule
VI - Held, no - Whether AS 22 insofar as
it relates to deferred taxation is inconsistent with and ultra
vires provisions of Companies Act, 1956, Income-tax Act, 1961 and
Constitution of India - Held, no - J.K.
Industries Ltd. v. UOI (SC)
Companies Act, 1956
- Section 211
Deductions
Exporters
- Assessment years 1994-95 to 1997-98 - Assessee was engaged in
business of export of trading goods - It earned income from export as well as
from export incentives, interest, etc. (other income) for which it had one
common pool of expenses - Assessee attributed 10 per cent of other income as
expenses incurred for earning said income and reduced same from indirect cost
of trading goods - Assessee, thereafter, deducted balance indirect cost as well
as direct cost from export income while computing deduction under section 80HHC
- Assessing Officer held that full amount of indirect cost would be deductible
from export income - Whether Assessing Officer was justified - Held, no - Hero
Exports v. CIT (SC)
Income-tax Act, 1961
- Section 37(1)
- Section 80HHC
- Section 140(c)
- Section 254
Return of income
By whom to be signed
- Assessee filed its return signed by its secretary, but, on being
pointed out by Assessing Officer removed defect and filed a fresh return duly
signed by its Managing Director - Assessing Officer while completing
assessment, held that original return was invalid - Commissioner (Appeals) held
that original return suffered from a curable defect, which was cured by
assessee by filing a return duly signed by its MD - Whether since assessee had
made an error in nature of a defect which was removed by filing a fresh return
signed by its MD, Tribunal was wrong in treating initial return as an invalid
return on ground that it had not been signed in accordance with provisions of
section 140(c) - Held, yes - Bharat
Nidhi Ltd. v. CIT (Delhi)
Words and Phrases
- ‘indirect cost’ and ‘attributable to exports’ as occurring in
section 80HHC of the Income-tax Act, 1961
magazine
case digest/itat
table of cases
RBF Rig Corpn. LIC (RBFRC) v. Asstt.
CIT (
Subject Index
Income-tax
Perquisite, not
provided by monetary payment
- Assessment year 2004-05 - Whether payment of tax on behalf of
employee at option of employer is a non-monetary perquisite fully covered by
sub-clause (iv) of clause (2) of section 17 and, thus, exempt under
section 10(10CC) and is not liable to be
included in total income of employee - Held, yes -
Whether taxes paid by employer can be added only once in salary of employee and
thereafter, tax on such perquisite is not to be added again - Held, yes - RBF
Rig Corpn. LIC (RBFRC) v. Asstt. CIT (
Income-tax Act, 1961
- Section 10(10CC)