TAXMAN

Vol. 169, Part 1, for the week of April 19 – April 25, 2008

CONTENTS

statutes

q circular

Income-tax Act

- Mandatory electronic payment of tax by certain categories of taxpayers with effect from 1-4-2008

q NOTIFICATIONS

Income-tax Act

- Section 35(1)(ii) of the Income-tax Act, 1961 - Scientific research expenditure - Approved scientific research associations/institutions

- Section 35AC, read with Explanation (b) thereto, of the Income-tax Act, 1961 - Eligible projects or schemes, expenditure on - Notified eligible projects or schemes

Tax Reports

Table of cases

CIT v. Anop Udai Works (Raj.)

CIT v. Assam State Book Production & Publication Corpn. Ltd. (Gau.)

CIT v. BHEL (Delhi)

CIT v. Best Plastics (P.) Ltd. (Delhi)

CIT v. Bindal Apparels (Delhi)

CIT v. Electronics Consortium (P.) Ltd. (Delhi)

CIT v. Fenner (India) Ltd. (Mad.)

CIT v. G.G. Medical Health Care Ltd. (Delhi)

CIT v. Ganga Bani Mercantile & Finance (P.) Ltd. (Gau.)

CIT v. Harpal Singh (Punj. & Har.)

CIT v. Hero Exports (Punj. & Har.)

CIT v. Honda Siel Power Products Ltd. (Delhi)

CIT v. Indian National Theatre Trust (Delhi)

CIT v. Kannaiyan (S.) (Mad.)

CIT v. Karanbir Singh (Punj. & Har.)

CIT v. Mathana Model Co-op. Credit & Service Society Ltd. (Punj. & Har.)

CIT v. National Marble & Sanitary (Delhi)

CIT v. Roshan D. Nariman (Mrs.) (Bom.)

CIT v. Sant Ram Mangat Ram (Punj. & Har.)

CIT v. Sharad Sharma (All.)

CIT v. Silver Streak Trading (P.) Ltd. (Delhi)

CIT v. V.P. Agarwal, Prop. Agarwal Scientific Glass Industry (All.)

Diversified Global Finlease Ltd. v. CIT (Delhi)

Evershine Platers v. CIT (All.)

Haji N. Abdulla v. ITSC (Bom.)

Jayashree Tea & Industries Ltd. v. CIT (Cal.)

Lakshmi Precision Screws Ltd. v. CIT (Punj. & Har.)

Roger Enterprises (P.) Ltd. v. CIT (Delhi)

Union of India v. Income-tax Bar Asscn., Lucknow (SC)

subject index

Appellate Tribunal

Powers of

- Whether where all facts were on record of case and additional ground urged by assessee before Tribunal was only of legal nature, no substantial question of law arose for consideration from Tribunal’s order allowing assessee to raise additional ground - Held, yes - CIT v. Honda Siel Power Products Ltd. (Delhi)

Assessing Officer

- Assessment year 1999-2000 - Tribunal quashed assessment made by Additional Commissioner holding that Additional Commissioner, as per definition in section 2(7A), could not be an authority to perform or exercise all or any of powers and functions of an Assessing Officer to make an assessment of income - Whether in view of amendment to section 2(7A) by Finance Act, 2007 with retrospective effect from 1-6-1994, Tribunal was not justified in its action and was to be directed to hear matter afresh on merits - Held, yes - CIT v. Bindal Apparels (Delhi)

Jurisdiction of

- On basis of a search in case of a company and documents seized therein, Assessing Officer at Guwahati issued notice under section 158BD to assessee and completed block assessment - Tribunal quashed assessment order holding that registered office of assessee being situated in West Bengal, only Chief Commissioner at Calcutta had jurisdiction of case and revenue authorities at Guwahati did not have any jurisdiction to proceed against assessee - Whether in absence of any other relevant material to decide principal place of business of assessee, mere fact that its registered office was situated at Calcutta was of no consequence to debar jurisdiction of Assessing Officer at Guahati - Held, yes - Whether, therefore, reasoning adopted by Tribunal in quashing assessment order was not correct and matter was to be remitted back to it to re-examine issue of jurisdiction after due consideration of material or record - Held, yes - CIT v. Ganga Bani Mercantile & Finance (P.) Ltd. (Gau.)

Assessment

Additions to income

- Assessment year 1993-94 - Assessing Officer made addition to income of assessee ‘on protective basis’ on basis of information that assessee had received certain amount of commission from ‘K’ and same had been deposited in a current account opened in assessee’s name with a bank - Assessee denied receipt of such commission and had also lodged FIR with police station for fraudulently opening of bank account in its name - Commissioner (Appeals) as well as Tribunal deleted said addition - Whether since there was nothing to indicate that commission was in fact paid to assessee, Tribunal was justified in deleting addition - Held, yes - CIT v. G.G. Medical Health Care Ltd. (Delhi)

Issue of notice

- Assessment year 1997-98 - For relevant assessment year, assessee filed return of income on 30-11-1997 - Allegedly, a notice under section 143(2) was issued to assessee on 28-11-1998 fixing case for hearing on 8-12-1998, but no one appeared on behalf of assessee - Thereafter, Assessing Officer issued another notice on 21-10-1999 and completed assessment under section 144 - Whether when assessee had filed an affidavit before Assessing Officer stating that it had not received any notice prior to notice dated 21-10-1999, onus was clearly upon revenue to show that notice dated 28-11-1998 was, in fact, served upon assessee within time prescribed by law and it having failed to discharge said onus, affidavit of assessee should be accepted as correct - Held, yes - CIT v. Silver Streak Trading (P.) Ltd. (Delhi)

On remand

- Assessment year 1972-73 - For relevant assessment year, Assessing Officer comple-ted assessment of assessee under section 143(3) - Commissioner, exercising powers under section 263, set aside assessment order and restored matter to Assessing Officer for making fresh assessment - However, on assessee’s appeal, Tribunal, vide order dated 31-12-1979 set aside order of Commissioner - On reference at instance of revenue, High Court set aside Tribunal’s order and restored that of Commissioner - Meanwhile, in pursuance of Commissioner’s order passed under section 263, Assessing Officer framed fresh assessment order - On appeal, Commissioner (Appeals) annulled said fresh order on ground that order of Commissioner giving jurisdiction to Assessing Officer to make fresh assessment had been set aside by Tribunal on 31-12-1979 - Tribunal upheld order of Commissioner (Appeals) - Whether since order of Tribunal dated 31-12-1979 had been set aside by High Court, order of Commissioner had revived automatically and, therefore, Assessing Officer had jurisdiction to pass fresh assessment order in pursuance thereof - Held, yes - Whether therefore, Tribunal was not justified in upholding order of Commissioner (Appeals) whereby he had annulled fresh assessment order - Held, yes - CIT v. V.P. Agarwal, Prop. Agarwal Scientific Glass Industry (All.)

Business disallowance

Cash payments exceeding prescribed limits

- Assessment year 1992-93 - Whether where assessee was regularly making payments in cash beyond permissible limit to its contractors in a city where banking facilities were available, such payments were rightly disallowed - Held, yes - Evershine Platers v. CIT (All.)

Business expenditure

Allowability of

- In its return of income for relevant assessment year, assessee did not claim any deduction on account of leave encashment liability - Assessing Officer completed assessment on 8-3-2000 - Subsequently, assessee filed revision application claiming deduction of liability on account of leave encashment, in terms of a Supreme Court decision in Bharat Earth Movers v. CIT [2000] 245 ITR 428 which was delivered on 9-8-2000 - Commissioner dismissed said application holding that benefit of said decision could not be extended to assessee since assessment had been completed before such judgment was delivered - Whether Commissioner rightly dismissed revision application - Held, yes - Jayashree Tea & Industries Ltd. v. CIT (Cal.)

- Whether expenditure incurred for renovation of leased premises would be revenue expenditure and section 32(1A) would not be attracted - Held, yes - Roger Enterprises (P.) Ltd. v. CIT (Delhi)

- Assessment year 1996-97 - Whether expenditure incurred by assessee on replacement of machinery was allowable as revenue expenditure - Held, yes - CIT v. Fenner (India) Ltd. (Mad.)

- Assessment year 1997-98 -Assessee was a lease finance company - It had paid certain amount to two persons allegedly for rendering certain services - Assessee had also paid excess salary to some of its employees who were relatives of director - Assessing Officer held that amount paid to said two persons was in fact interest-free advance and, therefore, added notional interest on that amount to income of assessee - He also disallowed part of amount paid towards excess salary - Whether since assessee neither furnished any materials or documents to show that said two parties rendered services to it, nor established reasonableness of payment of excess salary, Assessing Officer was justified in his action - Held, yes - Diversified Global Finlease Ltd. v. CIT (Delhi)

Capital gains

Computation of

- Assessment year 1984-85 - Whether it is only in a case of inheritance/acquisition along with mortgage where assessee perfects his title by getting mortgage discharged, that assessee would be entitled to get deduction of mortgage debt; where charge is created by assessee himself, it cannot be said that amount of mortgage debt paid out of sale proceeds be deductible while calculating capital gains - Held, yes - Assessee mortgaged his house property to bank against a loan - For discharge of mortgaged debt, assessee sold house property - Out of total sale consideration received, he discharged mortgaged debt and received balance amount - Assessing Officer calculated capital gains on basis of entire sale proceeds and made addition to income of assessee - However, Tribunal deleted addition holding that there was an overriding charge against sale proceeds of property and assessee was not liable for capital gains in respect of amount paid to bank in discharge of loan - Whether since assessee had himself created charge over property, it was a case of application of income received by assessee and not of diversion of income by overriding charge - Held, yes - Whether therefore, assessee was not entitled to deduction of amount paid to bank in discharge of loan in computation of capital gains - Held, yes - CIT v. Sharad Sharma (All.)

Central Board of Direct Taxes

Instructions to subordinate authorities

- Assessment year 1995-96 - Assessee’s return was taken up for scrutiny in violation of CBDT circular providing that if returned income is 30 per cent more than income of earlier assessment year, assessee’s case should not be scrutinised under Instruction No. 1922, dated 9-3-1995 - Whether circulars issued by CBDT are binding on officers of department and, therefore, assessment order passed pursuant to such scrutiny was to be set aside - Held, yes - CIT v. Best Plastics (P.) Ltd. (Delhi)

Charitable or religious trust

Exemption of income from property held under

- Assessment year 1980-81 - Assessee was a charitable trust - For relevant assessment year, it exercised its option in Form 10, read with rule 17, to accumulate certain amount for purposes of trust and stated that amount accumulated had been invested in Government securities or with banks in form of three fixed deposits of Rs. 3,80,000 which included a deposit of Rs. 1 lakh placed with bank on 17-5-1976 - Assessee had also claimed exemption in respect of sum of Rs. 50,000 shown as loan to Centre for Art and Culture - Whether fixed deposit of Rs. 1 lakh made with bank more than two years prior to previous year in question could qualify as accumulation of income for purposes of availing of exemption - Held, no - Whether, however, Rs. 50,000 deposited with Centre for Art and Culture should be treated as an application of income of trust and, therefore, should be construed as such for purpose of exemption - Held, yes - CIT v. Indian National Theatre Trust (Delhi)

Deductions

Exporters

- Assessment year 1996-97 - Whether clause (baa) of Explanation to section 80HHC only provides that where income from business or profession contains any income of kind stipulated therein, 90 per cent thereof is to be excluded, and not that even if income is not included in profits and gains of business, still a deduction of 10 per cent of such profits is to be granted on account of expenses - Held, yes - Whether since definition of ‘indirect cost’ under section 80HHC does not in any way bring within its fold any expense incurred by an assessee for getting export incentives something which comes into picture after goods have already been exported, assessee would not be entitled to deduct 10 per cent of earning from export incentives, etc., as expenses from indirect cost for purpose of calculation of export profits - Held, yes - CIT v. Hero Exports (Punj. & Har.)

Depreciation

Terminal allowance

- Assessment year 1983-84 - Assessee, engaged in manufacture of sarees, claimed terminal allowance under section 32(1)(iii) towards alleged discarded copper rolls - Assessing Officer disallowed assessee’s claim on ground that manufacturing process of assessee could not have been undertaken without such rolls, but no new rolls were purchased in relevant assessment year which led to conclusion that rolls in question were not discarded or destroyed by assessee but were only revalued and amount claimed by assessee was depreciated value of existing rolls - Commissioner (Appeals) upheld disallowance, but Tribunal held that amount claimed by assessee was in respect of discarded rolls itself and its manufacturing process continued as it was having with it other stock of usable rolls - While holding so, Tribunal overlooked fact that there was no other stock of usable rolls but entire stock of rolls had been claimed by assessee to have been discarded - Whether on facts, proposition of discarding, as stated by assessee and accepted by Tribunal, appeared to be seriously questionable and question as to whether instant case was one of discarding or revaluation of rolls, arose from order of Tribunal for consideration of High Court - Held, yes - CIT v. Anop Udai Works (Raj.)

Educational institutions

- Assessment years 1981-82 to 1988-89 and 1990-91 to 1996-97 - Whether basic requirement of section 10(22) is existence of educational purposes, that is, imparting of education by way of teaching or training, etc. - Held, yes - Whether assessee-company, doing activities of preparing, printing, production, publication, sale, supply of text books, supplementary books, etc., could not be considered as an educational institution and, consequently, it was not entitled to deduction under section 10(22) - Held, yes - CIT v. Assam State Book Production & Publication Corpn. Ltd. (Gau.)

High Court, reference to

- Assessment year 1974-75 - Revenue sought reference, inter alia, on questions (1) as to whether order of Government of India dated 27-3-1974, read with section 396 of Companies Act, insofar as it provided that losses of amalgamated company shall form part of losses of amalgamating company was operative not only for purpose of company law but also for purposes of income-tax assessments of amalgamated company excluding specific provisions of Income-tax Act, 1961 governing carried forward and set-off of unabsorbed depreciation and (2) as to whether corporate veils of amalgamating company and amalgamated company could be lifted to find out whether shareholders of said two companies were same and on that basis, Tribunal was right in holding that two companies were not two separate assessees - Whether since revenue had not obtained approval of Committee on Disputes to pursue litigation, reference was to be returned unanswered - Held, yes - CIT v. BHEL (Delhi)

Income

Accrual of

- Assessment year 1986-87 - In respect of acquisition of certain land in year 1962, assessee received enhanced compensation and interest in relevant year - However, matter regarding quantum of compensation had not attained finality and was still fluid - Whether revenue was not entitled to tax amount of interest received by assessee till such time proceedings in reference to compensation attained finality - Held, yes - CIT v. Karanbir Singh (Punj. & Har.)

Income escaping assessment

General

- Whether where subject-matter of proceedings was a particular assessment year, subsequent assessments in respect of other assessment years could not be reopened - Held, yes - Jayashree Tea & Industries Ltd. v. CIT (Cal.)

Information

- Position prior to 1-4-1989 - Assessment year 1981-82 - Assessee-firm was dissolved on 30-7-1980 and a proprietary concern of one of its partners came into existence - Assessment of firm was completed by adopting value of closing stock at original cost which was method adopted by firm - Subsequently, on advice of audit party that stock of firm on dissolution should be valued at market price, Assessing Officer reopened assessment and added difference between market value of stock and cost price of stock to income of assessee - Whether, in view of decision of Supreme Court in Indian & Eastern Newspaper Society v. CIT [1979] 119 ITR 996 wherein it was held that opinion of an internal audit party of income-tax department on a point of law cannot be regarded as ‘information’ within meaning of section 147(b) for purpose of reopening an assessment, reassessment proceedings initiated against assessee were ab initio void and, therefore, were liable to be cancelled - Held, yes - CIT v. Sant Ram Mangat Ram (Punj. & Har.)

Income-tax Act, 1961

- Section 2(7A)

- Section 5

- Section 10(22)

- Section 11

- Section 32

- Section 32A

- Section 37(1)

- Section 40A(3)

- Section 48

- Section 69

- Section 69B

- Section 80HHC

- Section 115J

- Section 119

- Section 124

- Section 139

- Section 143

- Section 147

- Section 245C

- Section 254

- Section 256

- Section 271(1)(c)

- Section 271B

Investment allowance

- Whether investment allowance and additional depreciation can be allowed on photostat machine - Held, no - CIT v. Electronics Consortium (P.) Ltd. (Delhi)

Penalty

For concealment of income

- Whether where assessee had furnished particulars of her income in Part IV of return, there was no concealment and penalty could not be levied under section 271(1)(c) - Held, yes - CIT v. Mrs. Roshan D. Nariman (Bom.)

- Assessment year 2001-02 - Assessing Officer imposed penalty under section 271(1)(c) on assessee on ground that in its profit and loss account, assessee had not reflected excess stock though assessee had placed certain documents before Assessing Officer which explained discrepancy in value of closing stock to some extent - Whether mere mention of discrepancy in figures in assessment order, which had some bona fide explanation, did not meet requirement of recording by Assessing Officer of his satisfaction that penalty proceedings must be initiated - Held, yes - Whether therefore, in absence of express words to that effect, no such satisfaction was even discernible from assessment order and, hence, penalty proceedings initiated against assessee could not be sustained - Held, yes - CIT v. National Marble & Sanitary (Delhi)

For failure to get accounts audited

- Assessment year 2004-05 - As assessee-co-operative society failed to get its accounts audited within stipulated date, a show-cause notice under section 271B was issued to it - Assessee submitted copy of audit report along with its reply stating that it being a co-operative society was required to get its accounts audited by auditor appointed by Registrar, Co-operative Societies and since auditor was not appointed by Registrar within stipulated time, audit report could not be submitted in time - Assessing Officer rejected assessee’s explanation and imposed penalty upon it - Whether any penalty could be levied upon assessee - Held, no - CIT v. Mathana Model Co-op. Credit & Service Society Ltd. (Punj. & Har.)

Return of income

- Whether question as to whether return is to be filed in a particular Form or not is to be decided by statutory authority and not by Court - Held, yes - High Court permitted assessees to file income-tax returns in Form Saral 2-D instead of Forms ITR-1 to ITR-8 due to paucity of time and non-availability of adequate number of forms - Whether since time for filing return in prescribed Form had been extended, impugned order was to be set aside and all assessees, who had already filed return in Form Saral 2-D pursuant to impugned order, were to be directed to file return in prescribed Form till extended date - Held, yes - Union of India v. Income-tax Bar Asscn., Lucknow (SC)

Settlement Commission

Application for settlement of cases

- Block period 1-4-1990 to 27-2-2001 - Whether there cannot be a fresh application in respect of same subject-matter, if first application is rejected after assuming jurisdiction, as Settlement Commission is a quasi-judicial authority - Held, yes - Pursuant to a search, petitioner filed block return disclosing undisclosed income of Rs. 22,22,351 - Block assessment order was passed determining petitioner’s undisclosed income at Rs. 82,68,217 - Petitioner filed an appeal against block assessment order and during pendency of same, he filed application under section 245C(1) before Settlement Commission offering Rs. 10 lakh as additional income - Application was rejected on grounds that at time of filing application there was no valid pendency of any proceeding as entire adjudication tax was not paid in pending appeal; and that there was no full and true disclosure of undisclosed income - Petitioner filed second application on basis that there was valid proceeding pending and offered a higher amount of Rs. 15 lakh as additional income - Settlement Commission was satisfied as regards pendency of proceeding, but rejected application on ground that making of full and true disclosure is a one-time activity - Petitioner filed writ petition challenging such rejection - Whether when Settlement Commission had recorded a finding that there was no true disclosure, it would then be a finding of fact and in subsequent proceeding it would not be open to Settlement Commission to review said finding in absence of any power to consider any fresh materials or cause of action - Held, yes - Whether, therefore, holding of Settlement Commission that considering finding recorded in first application, it would not be open to consider second application, could not be said to be without jurisdiction - Held, yes - Whether a person, who seeks to invoke jurisdiction of Commission, must come and disclose true facts and since nothing had happened between first disclosure and second disclosure warranting petitioner to disclose a larger quantum, finding arrived at by Commission that there was no full and true disclosure did not suffer from any error and, therefore, writ petition was to be dismissed - Held, yes - Haji N. Abdulla v. ITSC (Bom.)

Undisclosed investments

- Assessment years 2001-02 and 2002-03 - Assessee purchased certain agricultural land from ‘S’ at Rs. 2.30 lakhs per acre and got sale deed registered accordingly - Subsequently, Assessing Officer, on receiving information from Assistant Director (Investigation) that in his statement, ‘S’ had admitted that he had sold land in question at Rs. 4 lakhs per acre, issued notice under section 148 - Thereafter, relying on S’s statement, though same had been retracted later on Assessing Officer assessed value of land purchased by assessee at Rs. 4 lakh per acre and made additions under section 69B - Whether since there was no material or evidence before Assessing Officer to conclude that assessee had paid a consideration over and above amount mentioned in registered sale deed and, moreover, at time of assessment of ‘S’, sale value of said land was taken as indicated in registered sale deed and that assessment had become final, addition made by Assessing Officer was without any basis - Held, yes - CIT v. Harpal Singh (Punj. & Har.)

Unexplained investments

- Assessment year 1992-93 - Assessee was connected with a firm - A search was conducted at premises of that firm wherein certain sum was seized - As firm was not able to furnish source of that sum, Assessing Officer treated that sum as undisclosed income and made individual assessments in hands of persons including assessee in whose names sum stood invested in banks - However, Tribunal held that since there were claims by public in respect of said amount, it was not proper to treat amount as income from undisclosed source of various assessees and directed Assessing Officer to examine all aspects of matter including criminal proceedings - Whether substantial question of law arose out of order of Tribunal - Held, no - CIT v. S. Kannaiyan (Mad.)

Zero-tax companies

- Assessment year 1988-89 - For relevant assessment year, Assessing Officer worked out book profits by adjusting brought forward unabsorbed depreciation against current income of assessee - Subsequently, Commissioner observed that as per section 115J, unabsorbed loss or unabsorbed depreciation, whichever is less, is to be deducted from book profits and as in instant case, no business loss was incurred by assessee, brought forward depreciation was not to be taken into account while working out book profit for purpose of section 115J - Thus, he held that assessment order was erroneous and prejudicial to interest of revenue and cancelled same under section 263 - On appeal, Tribunal upheld order of Commissioner - In reference, assessee submitted before High Court, that issue in question was squarely covered in its favour by a decision of Supreme Court in Surana Steels (P.) Ltd. v. Dy. CIT [1999] 104 Taxman 188 and also for assessment year 1989-90 in its own case, High Court answered similar question of law in favour of assessee and against revenue - Revenue could not controvert said factual and legal position - Whether in view of said decisions, Tribunal was correct in law in upholding order of Commissioner - Held, no - Lakshmi Precision Screws Ltd. v. CIT (Punj. & Har.)

magazine

features

q FINANCE BILL, 2008

GOPAL NATHANI, Chartered Accountant

- Budget fineprints

T.C.A. RAMANUJAM, Chief Commissioner

- Budget and its blessings

T.C.A. SANGEETHA, Advocate

- The Finance Bill and the corporate sector

V.N. AGARWAL, Chartered Accountant

- Budget 2008 - Charitable institutions hit

V. SWAMINATHAN

- Monitoring of Income-tax law and current year’s budget

JAGMOHAN BHATIA, Advocate

- Central budget 2008-09

q miscellanea

- Article browser

case digest/itat

q table of cases digested

Asstt. CIT v. Hari Singh (Delhi - Trib.)

ITO v. Naren Traders & Consultants (Mum. - Trib.)

Iyshvakoo Radhu v. Asstt. CIT (Delhi - Trib.)

q subject index to cases digested

Income-tax

Bad debts

- Assessment year 2003-04 - Assessee was following mercantile system of accounting - It received a work order from ‘I’ as a sub-contractor in respect of Taj Corridor Work - In relevant previous year, assessee raised certain bill upon ‘I’ and accounted for income in books - However, ‘I’ disputed liability in respect of Rs. 46 lakhs stating that same would not be paid to assessee till embankment work would be completed - ‘I’ again intimated to assessee that it had received instruction from ‘N’, a Government of India Undertaking, to stop Taj Corridor Work immediately and, therefore, impugned amount of Rs. 46 lakhs was not payable to assessee - Assessee wrote off said amount in its books of account of previous year relevant to assessment year in question and claimed deduction of same under section 36(1)(vii) - Assessing Officer disallowed assessee’s claim holding that ‘I’ had not disowned liability and payment had been withheld till such time embankment work was to be completed - On appeal, assessee contended that impugned amount had not accrued to it as income - It further contended that since contractor had not accepted bill, debt became bad in year in which bill was not accepted and, therefore, it was entitled to deduction - Whether accrual of income is dependant upon right to receive amount and till such time right comes into existence in sense that it becomes legally enforceable, income does not accrue to assessee - Held, yes - Whether, therefore, deferment of payment of Rs. 46 lakhs for non-completion of embankment work lead to inference that income had not accrued to assessee - Held, yes - Whether moreover circumstances existed in instant case that impugned amount was not to be received and might, in fact, never be received, and since debt had actually written off which was a prima facie evidence that it had become bad, assessee was entitled to deduction under section 36(1)(vii) - Held, yes - Iyshvakoo Radhu v. Asstt. CIT (Delhi - Trib.)

Block assessment in search cases

Undisclosed income

- Block assessment period 1-4-1989 to 31-3-1999 - A search was conducted under section 132(1) at residential as well as business premises of assessee - Assessing Officer noticed that out of total deposits of Rs. 2,25,588 found in bank account of assessee, assessee could furnish satisfactory explanation only with respect to sum of Rs. 1,02,374, and, therefore, Assessing Officer treated balance amount of Rs. 1,23,180 as undisclosed income of assessee under section 158B(b) and, accordingly, made addition - Commissioner (Appeals) found that assessee was a retired employee who had put in 30 years of service and on post-retirement had been carrying on practice of Unani medicines and was earning income therefrom which had been reflected in returns with effect from assessment year 1990-91; that assessee was a regular income-tax payee; and that deposits in bank account were of small amounts ranging from 1,000 to Rs. 2,000 - On aforesaid findings Commissioner (Appeals) held that deposits could not be said to be unexplained and, therefore, deleted addition - Whether Commissioner (Appeals) was justified in deleting addition - Held, yes - Asstt. CIT v. Hari Singh (Delhi - Trib.)

Undisclosed income of any other person

- Block assessment period 1-4-1989 to 31-3-1999 - Whether section 158BD is not an authority to Assessing Officer to rope in an assessee other than person searched within provisions of Chapter XIV-B unless and until existence of undisclosed income belonging to such person is discernible from material, documents or information that is in possession of Assessing Officer; and investigation required in this connection relatable to material found during search, if any, is to be carried out prior to recording of satisfaction contemplated under section 158BD - Held, yes - Whether satisfaction referred to in section 158BD is to be based upon material before Assessing Officer and same should be clearly identified by Assessing Officer for reason that it is to be handed over to Assessing Officer of person in whose case section 158BD is sought to be invoked - Held, yes - Asstt. CIT v. Hari Singh (Delhi - Trib.)

Deductions

Profits and gains from infrastructure undertakings

- Assessment year 1998-99 - Assessee had earned interest amounting to Rs. 7,43,721 and shown it as receipt in profit and loss account whereas it had paid interest of Rs. 10,93,267 to others and debited it to profit and loss account - Assessee contended that since interest earned by it was less than interest paid, there was no income on account of interest included in profit of business and hence nothing was to be reduced from income for calculating deduction under section 80-IA - Whether assessee’s contention was to be upheld - Held, yes - ITO v. Naren Traders & Consultants (Mum. - Trib.)

Income-tax Act, 1961

- Section 36(1)(vii)

- Section 80-IA

- Section 158BD

special leave petitions decided by supreme court of india

q Table of cases

Asstt. CIT v. Perfect Pumps (P.) Ltd.

C.R. Steel & Tubes (P.) Ltd. v. Asstt. CIT

CIT v. Anand International

CIT v. Anand Kumar

CIT v. Arunachal Pradesh Forest Corpn. Ltd.

CIT v. Bharat Aluminium Co. Ltd.

CIT v. Central Bank of India

CIT v. Divine Leasing & Finance Ltd.

CIT v. Eligi Tyre & Thread Ltd.

CIT v. Girish Ishwar Lal Parekh

CIT v. K.K.S.K. Leather Processor (P.) Ltd.

CIT v. Kannan (S.)

CIT v. Lakshmi Mills Co. Ltd.

CIT v. Premier Polytronics (P.) Ltd.

CIT v. R.P.G. Transmission Mill Ltd.

CIT v. Relaxo Footwears Ltd.

CIT v. Saroja (B.)

CIT v. Shubham Construction

CIT v. Vaibhav J. Shah

CIT v. Varinder Agro Chemical Ltd.

CIT v. Vijay V. Karvekar

Competent Authority SAFEMA/NDPSA v. Haroon Jusab Bhaya and Harco

Union of India v. Niranjan R. Dave