TAXMAN
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Vol. 168, Part 1, for the week
of March 15 – March 21, 2008 |
q NOTIFICATIONS
Chartered
Accountants Act
- Section 4 of the Chartered Accountants Act,
1949 - Entry of names in the Register - Notified fee
- Section 5 of the Chartered Accountants Act,
1949 - Fellows and Associates - Notified fee
- Section 6 of the Chartered Accountants Act,
1949 - Certificate of practice - Notified fee
- Section 19 of the Chartered Accountants Act,
1949 - Register - Notified fee
- Section 20 of the Chartered Accountants Act,
1949 - Removal from the Register - Notified additional fee
Income-tax Act
- Section 35(1)(ii)
of the Income-tax Act, 1961 - Scientific research expenditure - Approved
scientific research associations/institutions
- Section 35(2AB)(1)
of the Income-tax Act, 1961 - Scientific research expenditure - Notified
article or thing
- Section 115AC of the Income-tax Act, 1961 - Global
Depository Receipts - Tax on income from bonds or Global Depository Receipts
purchased in foreign currency or capital gains arising from their transfer -
Notified Scheme
q RULES/Amendment
RULES
IT (Appellate
Tribunal) (Amendment) Rules, 2006
- Income-tax (Appellate Tribunal) (Amendment)
Rules, 2006 - Substitution of rule 34; and insertion of rule 32A
Tax Reports
Table
of cases
Ajay Kumar Shah Jagati
v. CIT (SC)
Budhewal
Co-Op. Sugar Mills Ltd. v. CIT (Punj. & Har.)
CIT v. Enron
Oil & Gas India Ltd. (Uttarakhand)
CIT v. Mahavir
Alluminium Ltd. (
CIT v.
Motorola India Ltd. (Punj. & Har.)
CIT v.
Paramjit Kaur (Smt.) (Punj. & Har.)
Mansinh
Hansraj Khatau v. Union of
Munjal
Sales Corpn. v. CIT
(SC)
subject index
Business
expenditure
Allowability of
- Assessment year 1993-94 -
Assessee-co-operative society claimed deduction of additional sugarcane price
paid to sugarcane growers as a business expenditure - Claim was disallowed by
lower authorities - On appeal, Tribunal found that assessee unilaterally
enhanced sugarcane price and created an additional liability in that respect by
making a provision towards additional sugarcane price, without, however, making
any actual payment to sugarcane growers; that such additional liability was
shown only in those assessment years when assessee had earned huge profits; and
that said liability was directly taken to share capital account with a view to
enhance its capital base, but without payment of taxes in respect of related
amount - On basis of said findings, Tribunal upheld disallowance, holding that
action of assessee was not bona fide and was employed to avoid payment
of dues to exchequer - Whether there was any infirmity in order of Tribunal - Held,
no - Budhewal Co-Op. Sugar Mills Ltd. v. CIT (Punj. &
Har.)
Capital gains
Transfer
- Assessment year 1989-90 - Assessee entered
into an agreement to sell certain land to ‘K’ for Rs. 25 lakh - Subsequently, said
land was divided into plots and 24 sub-divided plots were transferred by
assessee to nominees of ‘K’ for consideration of Rs. 15.2 lakh in relevant
assessment year - Assessing Officer worked out capital gain on entire
consideration of Rs. 25 lakh, rejecting assessee’s contention that since he had
not given possession of entire area of land and continued to be in possession
of land not transferred, section 2(47) was not applicable - Order of
Assessing Officer was upheld by Commissioner (Appeals), but Tribunal allowed
assessee’s appeal - Whether since no revenue or municipal records had been
produced which could have indicated as to whether entire land or a part thereof
stood conveyed and delivered to ‘K’ at relevant time and on facts, it was not
clear as to how many plots stood conveyed and how many plots remained with
assessee, Tribunal could not have allowed appeal in favour of assessee - Held,
yes - Whether, therefore, matter was to be remitted to Tribunal for fresh
consideration in accordance with law after considering relevant documents - Held,
yes - Ajay Kumar Shah Jagati v. CIT (SC)
Circulars and
Notifications
- Notification No. F. No.
63-Ad. (AT)/97, dated 16-9-1997
- CBDT Circular No. 772, dated 27-12-1998
High Court, appeals
to
- Assessment year 1996-1997 - Assessee filed
its return of income and assessment order was passed by Assessing Officer at
Bangalore - Commissioner, in exercise of jurisdiction under section 263, set
aside order of Assessing Officer holding that same was erroneous and
prejudicial to interest of revenue - However, on appeal, Tribunal (Bangalore)
vacated order of Commissioner - Revenue filed appeal against that order in
Punjab and Haryana High Court - Assessee raised a preliminary objection
concerning maintainability of appeal and territorial jurisdiction of Court to
entertain same - Revenue contended that jurisdiction of Court is required to be
determined on basis of location of office of Assessing Officer, which in
instant case would be at Gurgaon after transfer of case under section 127 on
assessee’s request - Whether jurisdiction of Court is to be determined on basis
of place of passing of assessment order by Assessing Officer, and not on basis
of Assessing Officer who exercises jurisdiction over assessee after transfer of
case and, therefore, assessee’s preliminary objection that Punjab and Haryana
High Court had no territorial jurisdiction over an order passed by Assessing
Officer at Bangalore was to be sustained - Held, yes - CIT v. Motorola
India Ltd. (Punj. & Har.)
Income escaping
assessment
Non-disclosure of
primary facts
- Assessment year 1989-90 - Whether Assessing
Officer can assume jurisdiction for reassessment proceedings, provided he has
reasons to believe, but same cannot be taken recourse to on basis of reasons to
suspect - Held, yes - Assessing Officer had initiated reassessment
proceedings on basis of information received from department’s survey wing that
a demand draft, got prepared by assessee, was not accounted for in her books of
account - Whether since Assessing Officer had not examined and corroborated
information so received before recording his own satisfaction of escaped income
and initiating reassessment proceedings, it could be said that Assessing
Officer had acted only on basis of suspicion and, therefore, issuance of notice
under section 148 for reassessment proceedings was invalid - Held, yes -
CIT v. Smt. Paramjit Kaur (Punj. & Har.)
Interest on
borrowed capital
- Assessment years 1993-94 to 1997-98 - Whether
section 40 is not a stand alone section; it is corollary to sections 30 to 38
and its object is to put limitation on amount of deduction which assessee is
entitled to under sections 30 to 38 - Held, yes - Whether after
enactment of Finance Act, 1992, every assessee including a firm has to
establish, in first instance, its right to claim deduction under one of
sections between sections 30 to 38 and in case of firm, if it claims special
deduction, it has also to prove that it is not disentitled to claim deduction
by reason of applicability of section 40(b) - Held, yes -
Whether, therefore, in case of a firm to claim deduction in respect of interest
paid on capital borrowed from third parties (apparently partners), firm is
required to establish, in first instance, that it is entitled to claim
deduction under section 36(1)(iii), and secondly that it is not
disentitled to claim such deduction on account of applicability of section 40(b)(iv)
- Held, yes - Munjal Sales Corpn. v. CIT (SC)
- Assessment years 1993-94 to 1997-98 - Assessee’s
claim for deduction under section 36(1)(iii) was disallowed on ground
that it had given interest-free advances to its sister concerns from
interest-bearing loans taken from third parties - On appeal, Tribunal deleted
disallowance for assessment years 1992-93 and 1993-94, holding that assessee
had given such advance from its own funds, but upheld disallowances for
assessment years 1994-95 to 1996-97 - Whether once it was found that
interest-free loans granted in August/September 1991 continued up to assessment
year 1997-98; that said loans were advanced for business purpose; and that
interest paid to third parties (partners) did not exceed 18/12 per cent per
annum, assessee was entitled to deduction under section 36(1)(iii), read
with section 40(b)(iv) - Held, yes - Munjal Sales
Corpn. v. CIT (SC)
Income-tax Act,
1961
- Section 2(47)
- Section 36(1)(iii)
- Section 37(1)
- Section 42
- Section 119
- Section 145A
- Section 147
- Section 260A
Method of
accounting
Valuation of stock
in certain cases
- Assessment year 1999-2000 - For relevant
previous year ending on 31-3-1999, assessee made an adjustment on account of
modvat credit in opening stock as on 1-4-1998 - Assessing Officer held that in
view of section 145A, assessee could not make a change in valuation of opening
stock, although a change in closing stock may be made - Whether to give effect
to section 145A, if there is a change in closing stock as on 31-3-1999,
corresponding adjustment must be made in opening stock as on 1-4-1998, subject,
however, to a condition that such adjustment should not result in double
deduction for same expenditure - Held, yes - Whether since no adjustment
was made by assessee in profit and loss account for year ending 31-3-1998, question
of double deduction did not arise and, therefore, adjustment made by assessee
was to be allowed - Held, yes - CIT v. Mahavir Alluminium Ltd.
(Delhi)
Mineral oil,
business for prospecting/exploration of, etc., deduction in case of
- Assessment years 1998-99 to 2000-2001 -
Assessee, a non-resident company, was engaged in production of crude oil along
with its joint venture partners under Production Sharing Contract (PSC) entered
into with Central Government - Assessee debited foreign exchange loss to its
profit and loss account on basis of accounting procedure set out in PSC
stipulating that expenditure incurred in foreign exchange by co-venturer during
any particular month had to be converted into Indian rupee at rate which had to
be determined at end of calendar month - Whether depreciation claimed by
assessee on account of foreign exchange loss was admissible to it under section
42 - Held, yes - CIT v. Enron Oil & Gas India Ltd. (Uttarakhand)
Tax informers
Reward to
- Chairman of CBDT made an announcement in a
press conference to effect that rate of reward to those furnishing information
about concealed income has been stepped up from 2.5 per cent to a minimum of
7.5 per cent of extra tax which would be generated as a result of such
information and in suitable cases, reward might go up to 10 per cent -
Plaintiff filed various petitions providing information regarding concealed
income/gains of different persons and claimed that he was entitled to reward of
10 per cent of amount of tax plus penal interest realised by Government
- Department, though did not deny entitlement of a person to reward if case was
made out, but submitted that no additional revenue was generated on basis of
alleged information supplied by plaintiff - Whether plaintiff had no legal
right to claim such reward, unless department actually generated additional
income or revenue - Held, yes - Whether once plaintiff came with a
positive case and claimed reward, burden lay upon him to prove that department
had generated additional revenue and, in absence of any evidence to prove same,
plaintiff was not entitled to get any reward - Held, yes - Mansinh
Hansraj Khatau v. Union of India (Bom.)
magazine
q FINANCE BILL, 2008
srinivasan
anand g, Chartered Accountant
- Your Guide to Finance Bill, 2008
v.k.
subramani, Chartered
Accountant
- Budget 2008 - Reverse mortgage and tax
implication
t.n.
pandey, Ex-Chairman, cbdt
- New set of tax incentives in Finance Bill,
2008 despite experts’ view for their elimination
b.s.
madhusudhan, Joint-General
Manager
- A Budget to be balanced?
a.p.
agrawal, Advocate
- Budget 2008-2009 - Repeating the same
mistakes
v.
swaminathan, Chartered
Accountant
- Budget-time thoughts
q MISCELLANEA
- Article Browser
case
digest/itat
q table of cases digested
Asstt. CIT v. Sahib Forge (Chd.
- Trib.)
Dy.
CIT v. Interra Software (
Pioneer Equity Trade (
q subject index to cases digested
Income-tax
Business
expenditure
ALLOWABILITY
OF
- Assessment year 2002-03 - Whether where
assessee-company, engaged in business of export of goods, incurred expenses on
account of travelling, boarding and lodging of business delegates who visited
India for business promotional avenues to whom major portion of export was
transacted, such expenses could not be said to be for pleasure trip or expenses
for non-business purposes and, therefore, same were allowable under section
37(1) - Held, yes - Asstt.CIT .v. Sahib Forge (Chd. -
Trib.)
Free trade zone
- Assessment year 2002-03 - Whether explicit
language of sub-section (5) of section 80HHE cannot be read so as to mean that
once assessee has claimed deduction under section 80HHE in respect of profits
of an eligible business, it would be debarred for all times to claim deduction
under any other provisions of Act in respect of profits of such business for
any other assessment year - Held, yes - Assessee-company, engaged in
business of development and export of computer software, set up an industrial
undertaking/unit in an Export Processing Zone and started commercial operations
in previous year relevant to assessment year 1997-98 - In initial assessment
year 1997-98, it suffered loss in said unit and, therefore, did not claim
exemption under section 10A - However, in assessment year 1998-99, it claimed
deduction under section 80HHE in relation to profits of said unit - Thereafter,
from assessment year 1999-2000 onwards, assessee claimed exemption under
section 10A in respect of profits derived from said unit and same was allowed
till assessment year 2001-02 - For relevant assessment year, Assessing Officer
rejected assessee’s claim of exemption under section 10A on ground that since
assessee was allowed deduction under section 80HHE in assessment year 1998-99,
it became ineligible for claiming exemption under section 10A for any other
assessment year on basis of provisions of sub-section (5) of section 80HHE -
Whether Assessing Officer was justified in rejecting assessee’s claim for
relevant assessment year - Held, no - Dy.CIT v. Interra
Software (India) (P.) Ltd. (
Losses
IN SPECULATION
BUSINESS
- Assessment year 2002-03 - Whether provisions
of Explanation to section 73 apply only where any part of business of a
company to which provisions apply consists in both purchase and sale of shares
of other companies and not purchase alone - Held, yes - Whether where
assessee-company was engaged in business of share broking and only in
immediately preceding assessment year, it had purchased certain shares of
another company and that was solitary transaction carried out by it in shares
of other companies on its own account and no part of such shares was sold in
immediately preceding assessment year or during relevant assessment year, it
could not be said that assessee’s business consisted in purchase and sale of
shares of company and, therefore, provisions of Explanation to section
73 were not applicable to assessee - Held, yes - Pioneer Equity Trade
(India) (P.) Ltd. v. ITO
(Mum. - Trib.)
Words and Phrases
- ‘Consists in’ as
occurring in Explanation to section 73 of the Income-tax Act, 1961
Income-tax Act,
1961
- Section 10A
- Section 37(1)
- Section 73
special leave petitions decided by supreme
court of
q Table of cases
CIT v.
Adyar Gate Hotel Ltd.
CIT v. Central Bank
of
CIT v. Central Bank
of
CIT v.
Grathim Trading Investment (P.) Ltd.
CIT v.
Herbalife International
CIT v.
Hilltop Holdings India Ltd.
CIT v.
Industrial Credit & Investment Corpn. of India Ltd.
CIT v.
Jarmarks Export House Ltd.
CIT v.
K.K.S.K. Leather Processor (P.) Ltd.
CIT v.
Lincon Polymers (P.) Ltd.
CIT v.
Madhusudan Industries Ltd.
CIT v.
Mapco Industries Ltd.
CIT v.
Modi Spg. & Wvg. Mills Co. Ltd.
CIT v.
Mohit Marketing Ltd.
CIT v.
Motor Industries Ltd.
CIT v.
Namdang Tea Company (
CIT v. Oil &
Natural Gas Commission
CIT v. Rajeev Ship
Breakers
CIT v. Sanjiv
Puri
CIT v.
Saraswati Kunj Co-Op. H.B. Soc.
CIT v. Shubham
Constructions
CIT v.
Tamilnadu Mercantile Bank Ltd.
CIT v.
United Leasing Ltd.
CIT v. Vijaya V.
Karvekar
CIT v.
Vimgi Investment (P.) Ltd.
CWT v. Hazrat Pir
Shah-E-Alam Roza Estate Trust
CWT v. J.K.
Charitable Trust
DIT
(Exemption) v.
ITO v. Kamini
Hanskamal Grover
Jt. CIT v.
V.S. Dempo & Co. (P.) Ltd.
Subbanna Gowramma Family
Trust v. CIT
Union of