- Assessment year 2002-03 - Whether in order to serve a charitable purpose, it is not necessary that object of assessee-trust should be to benefit whole of mankind or all persons living in a Country or State; it will be more than sufficient if its intention is to benefit a section of public as distinguished from specified individuals - Held, yes - Whether where Trust established before commencement of Act for benefit of a particular religious community, bar under section 13(1)(b) would not be applicable, and trust will be entitled to exemption in respect of its entire income - Held, yes - Rajkot Visha Shrimali Jain Samaj v. ITO (Rajkot) (SMC)

Deductions

Exporters

- Assessment year 2001-02 - Whether profits on unrealised sale proceeds form part of computed business profits and, hence, it cannot be excluded from total turnover for purposes of computing deduction under section 80HHC - Held, yes - Asstt. CIT v. Ishar International (All.)

Income escaping assessment

Non-disclosure of primary facts

- Assessment year 1998-99 - Whether where a return is processed under section 143(1)(a), Assessing Officer is not required to scrutinize facts and figures in return filed by assessee as he is bound to accept return without adjustment and, therefore, question of forming an opinion at stage of processing return does not arise - Held, yes - Assessee was dealing in purchase and sale of shares/debentures, etc. - Assessing Officer processed under section 143(1)(a) return of income filed by assessee and issued intimation on 9-9-1999 accepting returned income - Subsequently, Assessing Officer on finding that assessee’s income had escaped assessment, reopened said assessment under section 147 and issued notice under section 148 within a period of four years from end of assessment year 1998-99, i.e., on 5-3-2003 - Whether re-assessment proceedings were validly initiated in instant case - Held, yes - Khazana Holdings (P.) Ltd. v. Asstt. CIT (Mum.)

Income from house property

Deemed Owner

- Assessment year 2001-02 - Whether a lessee can be treated to be owner of property, if lease is for a considerable long time, say for 99 years, and lessee has right to construct property and to sell property constructed by him - Held, yes - One ‘H’, owner of a property, executed a lease in favour of assessee for a period of 9 years and 11 months - By said agreement, ‘H’ transferred certain rights to assessee including right to sub-let premises and to realise rent from sub-tenant - Assessee sub-let premises to a company and realised rent from it - Assessee claimed its rental income to be assessed as ‘income from other sources’ - However, Assessing Officer assessed it as income from house property invoking section 27 - Whether since period of lease in question was less than statutory period of 12 years as mentioned in section 269UA(f), assessee could not be said to be deemed owner or beneficial owner - Held, yes - Whether, moreover, since (i) rights exercised by assessee were referable to agreement with ‘H’; (ii) while ‘H’ was owner of property, there could not be second owner like assessee; and (iii) it could not be said that assessee was realizing rent in his own right, assessee could not be said to be beneficial owner - Held, yes - Whether, therefore, rental income realized by assessee was to be assessed under head ‘Other sources’ and not under head ‘House property’ - Held, yes - Bindals Developers (P.) Ltd. v. ITO (Delhi)

Income-tax Act, 1961

- Section 11

- Section 27(iiib)

- Section 44AA

- Section 73

- Section 80HHC

- Section 145

- Section 147

Losses

In speculation business

- Assessment year 1998-99 - Assessee-company which was engaged in business of trading in purchase and sale of shares had incurred loss in said business and claimed set-off of same against its other income, i.e., dividend income under section 71 - Whether loss in business of shares incurred by assessee was loss from speculation business as per provisions of section 73, and, consequently, assessee was not entitled to set-off same against dividend income - Held, yes - Khazana Holdings (P.) Ltd. v. Asstt. CIT (Mum.)

Maintenance of accounts by certain persons carrying on profession or business

- Assessment year 2004-05 - Whether for applicability of section 44AA(2), circumstance that Assessing Officer was unable to compute income of assessee due to non-maintenance of accounts must exist and without completing assessment, Assessing Officer cannot come to conclusion that he was unable to compute income of assessee due to non-maintenance of accounts - Held, yes - Whether, therefore, as per section 44AA(2) only after completion of assessment, Assessing Officer may initiate proceedings for levy of penalty under section 271A - Held, yes - C.H. Aboobacker Haji v. ITO (Cochin)

Method of accounting

Rejection of accounts

- Assessment year 2001-02 - Assessee was manufacturer and exporter of carpets - Assessing Officer noticed that manufacturing process involved weavers, payments to whom were not fully verifiable and were not correlated to amount of work done by them - Therefore, Assessing Officer rejected books of assessee and applied gross profit rate of 18.5 per cent as against 18.1 per cent as declared by assessee – Whether, on facts, section 145 was applicable - Held, yes - Asstt. CIT v. Ishar International (All.)

Words and phrases

- ‘object of general public utility’ as occurring in section 2(15) of the Income-tax Act, 1961

INCOME-TAX TRIBUNAL DECISIONS