- Assessment year 1996-97 - Assessee-company, engaged in business of shares and security broker under National Stock Exchange, debited certain amount in profit and loss account as interest paid on delayed payment of security deposit for capital market - Assessing Officer disallowed said interest expenses on ground that without paying initial security deposit, assessee could not commence its business and, therefore, interest paid on delayed payment of security deposit was to be treated as payment on capital account - Whether interest would relate back to date when assessee was supposed to make deposit with NSE which allowed it to commence its business and, therefore, Assessing Officer was justified in treating interest as capital expenditure - Held, yes - CFL Securities Ltd. v. Dy. CIT (Mum.)

Interest-tax

Commissioner (Appeals)

Appeal to

- Assessment year 1998-99 - Whether procedure to be adopted by Commissioner (Appeals), while entertaining additional evidence, is that laid down in rule 46A(3) of the Income-tax Rules, 1962 which casts a statutory obligation on Commissioner (Appeals) not to take into account any additional evidence, unless Assessing Officer has been allowed a reasonable opportunity to rebut same - Held, yes -Assessee’s claim for deduction of interest on commercial paper, said to be earned by investing certain amount with a company, was rejected by Assessing Officer on ground that assessee had not filed any evidence or proof that said interest was exempt as per Act -However, Commissioner (Appeals) allowed assessee’s claim by accepting certificate issued by company, filed by assessee during appellate proceedings - Whether since no opportunity had been afforded to Assessing Officer by Commissioner (Appeals) before entertaining additional evidence, his action was clearly violative of rule 46A(3) - Held, yes - Asstt. CIT v. J & K Bank Ltd. (Asr.)

Interest-tax Act, 1974

- Section 15

Penalty

For failure to furnish information or document under section 92D

- Assessment year 2002-03 - Whether provisions of section 271G are quite different from provisions of section 271(1) and, therefore, no satisfaction need be recorded before initiating proceedings under section 271G - Held, yes - Cargill India (P.) Ltd. v. Dy. CIT (Delhi)

Transfer pricing

Maintenance and keeping of information and document by person entering into an international transaction

- Assessment year 2002-03 - Whether statutory scheme envisages that TPO shall first serve notice under section 92CA(2) requiring assessee to produce evidence in support of his computation of Arm’s Length Price (ALP) and it is only if complete information is not furnished, or otherwise, TPO is of view that more information on specified points is required from assessee, that he can issue notice under section 92D(3); there is no rationality in requiring information, documents from assessee first under section 92D(3) and thereafter provide opportunity to assessee to support its ALP - Held, yes - Whether further, notice under section 92D(3) cannot be vague but must require specific information or document which according to TPO is necessary for determination of ALP of international transactions - Held, yes - Whether under section 92D(3), it will not be possible to call for all information prescribed under rule 10D including supporting information and documents mentioned in rule 10D(3) in a routine or casual manner without application of mind as to what specific information is required to achieve said purpose; information, which has already been furnished by assessee either in audit report or in response to notice under section 92CA(2), would be of no use and there is no point in requiring same information again or require unprescribed information under section 92D(3) and cast additional burden on assessee; in all such cases, notice would no more remain valid notice under section 92D(3)/271G - Held, yes - In respect of international transactions carried by assessee during relevant year, Assessing Officer made reference to TPO for determination of ALP of those transactions - TPO issued notices and asked assessee to support and substantiate computation of ALP in said transactions - TPO further required assessee to furnish information including balance sheet, profit and loss account, statement of computation of income, audit report, tax report and also information and documents maintained as prescribed under section 92D, without specifying any particular information clause of rule 10D - Assessee submitted those documents, though with a delay of about one month - As regards delay, it was explained that same took place on account of a reasonable cause as its financial controller, being out of town, was not available to furnish information which was voluminous and highly technical in nature - However, Assessing Officer concluded that by not submitting required documents in time, assessee committed a default under section 271G and, thus, imposed penalty on assessee under section 271G -Whether since notices in question were issued by TPO without application of mind and without considering documents already placed by assessee on record and without consideration as to which of specific clauses of sub-rule (1) or other sub-rules of rule 10D was attracted or which relevant information was needed, said notices could not be treated as valid and legal notices in terms of section 92D(3) and failure of assessee to comply with such notices in time could not justify levy of penalty under section 271G - Held, yes - Whether moreover, since Assessing Officer recorded no finding on reasonable cause and imposed penalty without considering section 273B, imposition of impugned penalty on mere technical ground, was not sustainable - Held, yes - Cargill India (P.) Ltd. v. Dy. CIT (Delhi)

Wealth-tax

Net wealth

Debt owed

- Assessment years 1999-2000 and 2001-02 - Assessee-company had floated a scheme with object to enable its employees to own vehicles, i.e., motor car, so that employees may use their own vehicle in discharge of their official duties - As per scheme, a policy of vehicle loan was laid down, according to which, employees would have to pay certain percentage of cost of vehicle as initial contribution and loan would be to extent of remaining amount which was to be recovered from employees’ salary in sixty monthly instalments - As per scheme, vehicle was to remain in name of assessee-company till loan was completely repaid - Whether amount of monthly instalments collected from employees could be allowed as ‘debt owed’ by company against respective vehicles while computing net wealth of assessee - Held, yes - Thermax Ltd. v. Dy. CWT (Pune)

Valuation of assets

Others

- Assessment years 1999-2000 and 2001-02 - Assessee had adopted written down value (WDV) according to Income-tax Act, 1961 for valuation of motor cars for purpose of computing wealth-tax - Assessing Officer was of view that WDV as per books of account of assessee represented true market value of vehicles and, therefore, adopted value of those vehicles as per books of account of assessee - On appeal, Commissioner (Appeals) held that in absence of insurance value of cars, Assessing Officer was justified in adopting books WDV of vehicles as assessable value of same - Whether in view of decision of co-ordinate Bench of Tribunal in Samarth Knitters (P.) Ltd. v. Dy. CWT [1997] 60 ITD 657 (Mum.) that market value of motor cars could be estimated at 80 per cent of value as adopted for insurance purposes, issue was to be referred back to Assessing Officer to re-determine value of vehicle as per said case - Held, yes - Thermax Ltd. v. Dy. CWT (Pune)

Wealth-tax Act, 1957

- Section 2(m)

- Section 7

INCOME-TAX TRIBUNAL DECISIONS