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April, 2008 Dear Reader, We are once again with you with our monthly newsletter. As usual, in this newsletter, we have incorporated latest judgements, circulars etc. We have covered many subjects in this newsletter. You may select only those subjects in which you are interested by clicking the relevant following subjects : - |
Thanking you, manager@laws4india.com Arbitration & Conciliation Act Companies Act U/s.10F R/w section 10(1)(a), the proper forum to hear appeals on orders passed by company Law Boards is that High Court within jurisdiction of which, the company's regd. office is situated. Sumito Corp. V. CDC Finance Services 82 SCL 495 SC Companies Act Petitioner complaint that he did not receive notice of AGM was justifiably rejected by High Court, as the said petitioner was party to Board meeting that fixed AGM's date, venue and agenda and ack reg. service of notice on the petitioner was available on company's records. V. S. Krishnan V West Fort Hi-Tech Hospital Ltd. 83 CL 44 SCC Companies Act Since single judge passed ex-parte orders dismissing appeal on merit and not merely in 'Limine High Court is bound to hear the appeal against the said order. Vijay Kumar Karwa V O. L. Rohta Ltd. 83 SLC 44 SC Arms Length Price The onus is on the assessee to prove that international transaction is carried out at arms length price by providing information reg. nature of product / service provided and details of comparable transactions where assessee had failed to provide details of products sold or its quantities, comparable cases, asst is open to order u/s.263. Ranbaxy Lab V Addl. CIT 299 ITR AT 175 Delhi. Assessment Department claimed that notice u/s. 143(2) had been served within one year from the date of filing of the return but no proof was produced. In the face of assessee's affidavit that no such notice had been served, assessment made u/s. 144 is not valid. CIT V. Silver Streak Trading 169 Taxman 16 Del. Capital Gains Amount raised by sale of calves is not assessable as capital gain since there is in cost of acquisition. CIT V Janardhan Dass Cash Credit Amount were found credited in accounts of partners from saving bank a/c. copies of a/c. were produced initial onus on firm reg. identity financial capacity of partner is discharged. CIT V Kulwant Singh 299ITR 53 P & H Compounding of offences Where the authorities, after considering the matter on merit, held that compounding was not permissible under Income-tax Act in cases of offences under IPC, assessee's writ petition is dismissed. P. Soundarya V. CCIT 300 ITR 70 Mad. DTAA Air Port Authority entered into contract with US Company for hardware and software maintenance. By virtue of Article-7 payment to US Co. for hardware maintenance is not taxable in India and no TDS is required. For software maintenance, payment is liable to tax and TDS at 10% to be made. Air Ports Authority of India Vs. In Re 168 Taxman 158 AAR. DTAA Assessee was allowed credit for MAT u/s. 115JA before charging interest u/s. 234B. High Court dismissed Department Appeal on the ground that no substantial question of law arose. Supreme Court remanded the matter to High Court as substantial question of law is involved. CIT Vs. XPRO India 168 Taxman 181 S.C. DTAA In terms of ART XI dividend income derived by assessee from a Co. in Malaysia was not liable to be taxed in India for A.Y.92-93. DCIT V Torqouise Invest & Fin. 168 Taxman 107 SC. Exploration of oil Foreign Company was engaged in production of crude oil under Joint Venture with central Government. Depreciation on account of foreign exchange loss is admissible. CIT V. Enron Oil and Gas 169 Taxman 33 Uttarkhand. Exports Assessee Company was engaged in export and incurred expenses on travel, boarding, lodging of delegates visiting India with whom major part of exports had been made. Expenses are admissible. ACIT V. Saahib Forge 169 Taxman 83 Chd. Exports An assessee who had claimed deduction u/s. 80 HHF in one year is not debarred from claiming exemption u/s. 10A for next year if conditions are fulfilled. DCIT V. Interra Software 169 Taxman 80 Delhi Trib. Hospital - Charitable Trust Exemption had been granted from 1988-89 to 1994-95. There is no change of facts. There has to be principle of consistency and exemption should not be refused for A.Y. 1996-97 & 1997-98. DI (Exemption) V. Escorts Cardiac Hospital 300 ITR 75 Delhi. Industrial Undertaking Section 80-I(6) starts with non obstante clause and provides that A.O. has to treat the profits derived from the industrial undertaking as if such industrial is the only sources of income of assessee. However, it applies only to quantum of deduction. The gross total income u/s.80B (5) which is also referred to in Section 80-I (1) shall be arrived at after adjusting the losses of other divisions. If the gross total income is nil, assessee would not be entitled to deduction under Chapter VI-A. Synco Industries Ltd. Vs. A.O. 168 Taxman 224 SC. Industrial Undertaking Section 80-I cannot be stretched to limit whereby income of Industrial Undertaking can be reinvested in non-industrial undertaking and exemption can be claimed to the ensuing income. Thus bank interest is not eligible for exemption. CIT Vs. Kothari Products 168 Taxman 236 All. Industrial Undertaking Assessee was engaged in providing telecommunication service. It set up two earth stations and claimed them as two new industrial undertaking for the purpose of Section 80-I. Tribunal held that they are set up to bring improvement in existing system and not new undertaking. VSML V CIT 111 ITD 190 Mum SB. Industrial undertaking There is difference in language between Sec.80HH & 80-IB. Customs duty draw back derived from business of industrial undertaking is entitled to special deduction u/s. 8o-IB. CIT V. Eltek SGS P. Ltd. 300 ITR 6 Delhi. Industrial undertaking Where assessee earned interest of Rs.7,43,721/- but paid interest of Rs.10,93,267/- and thus interest earned was less than paid, there was no income on account of interest included in profit of business and nothing was to be reduced from income for calculating relief u/s. 80-IA. ITO V. Naren Traders 169 Taxman 36 Mum. Trib. Industrial undertaking 'Tobacco preparation is prohibited item for industrial undertaking vide Schedule XI. A.O's order assuming that "GUTKA" is "PAN MASALA" is erroneous as it is tobacco preparation. Assessee is not entitled to deduction u/s. 80-I A. Dhariwal Ind. Ltd. V. ACIT 300 ITR AT. 50 Pune S.B. / 111 ITD 379 Pune S.B. Informers Reward at 7.5 percentage of extra tax collected as a result of information collected from informer will be given to them. However, there is no legal right to claim the same and the onus is in the informer to prove that additional revenue had been generated. Manish Hansraj Khatau V. Union of India 169 Taxman 12 Bom. Interest Deductions provided by Section 30 to 38 are limited by Section 40. Assessee claming deduction u/s.36(1)(iii) is also required to establish that it is not disentitled u/s.40 Assessee's contention that Section 40 is a stand-alone section having no correction with Section 36(1)(iii) is rejected. Munjal Sales Corpn. V CIT (2008) 3 SCC 185 Mesne Profit Mesne profit received by the assessee for wrongful deprivation of use and occupation of the property constitutes capital receipt not chargeable to tax. Narang Overseas Ltd. V ACIT 111 ITD 1 Mum SB New Industrial Unit Assessee is having two industrial units one in oil and the other in chemicals. Assessee incurred loss in oil unit and profit in chemical unit. Gross total income should include both profit in chemical unit and loss in oil unit. If result is nil, assessee is not entitled to special deduction. Synco Ind. Ltd. V A.O. 299 ITR 444 SC Non-resident NRO deposit acquired with convertible foreign exchange in a banking Co. which is not a private company as per Companies Act, shall be treated as "foreign exchange asset' u/s.115C (b). Interest from the account is chargeable to tax at 20% and bank is required to deduct tax at 20%. V Ravi Narayanan In. Re. 168 Taxman 65 AAR Penalty Assessee's turnover was Rs.1.13 Crore & Rs.1.14 Crore for A.Y.88-89 & 89-90. As Statutory Audit Report was not submitted penalty of Rs.56,509/- & Rs.57,290/- was levied. As assessee does not maintain books of a/c. the question of audit of the book does not arise. Penalty was deleted. CIT V Bisault Tractors 299 ITR 219 All. Penalty Amount disclosed during search u/s.132(4) / Expl. 5 u/s.271(1)(c) need not pertain to one year. Where assessee disclosed income spread over more than one year he is entitled to immunity. CIT V Kanhailal 299 ITR 19 Raj. Penalty Statement made u/s.132(4) need not specify manner in which disclosed income was earned. CIT V Mahendra C Shah 299 ITR 305 Guj. Penalty From a reading of the assessment order, it is not possible to discern any satisfaction on the part of A.O. that penalty proceedings must be initiated against the assessee u/s. 271(1)(c). Penalty cannot be levied. (i) CIT V. Shriram Piston & Rings 169 Taxman 148 Del.(ii) CIT V. Wise Global Limited 169 Taxman 155 Del. Penalty In the original return, depreciation of Rs.44,42,129/- on solar equipment was claimed. In the revised return, claim for depreciation was withdrawn. A.O. completed the assessment as per revised return. Penalty cannot be levied as no satisfaction is recorded regarding concealment. V.V. Projects V. DCIT 300 ITR 40 A.P. Precedent Where there are conflicting views, view favourable to assessee is to be preferred. Narang overseas Ltd. V. ACIT 300 ITR AT-1 Mum SB. Retraction During search it was found that cash receipts were not fully accounted assessee offered income of Rs.107 lakhs as undisclosed income. However in the return of income he disclosed only Rs.8,43,598/- for A.Y.97-98 & Rs.6008098 for A.Y.98-99. As the retraction of admission was made after three months, in the absence of any material to support retraction, assessment of undisclosed income at Rs.107 lakhs is justified. Carpenters Classics V DCIT 299 ITR at 124 Bang. Revision Assessee had not claimed deduction on account of leave encashment liability in the return. After Supreme Court's decision in Bharat Earth Movers 245 ITR 428, it filed revision petition claiming deduction. High Court upheld CIT's order u/s. 264 rejecting the claim as assessment had been completed prior to Supreme Court's decision. Jayshree Tea V. CIT 169 Taxman 6 Cal. Revision In computing the cost of construction of a property, A.O. allowed 10 percent of rebate on account of personal supervision. As the assessee was non-resident and remained abroad for the entire period of construction, A.O's order was held to be erroneous. V. Selladura V. Chief CIT 169 Taxman 111 Mad. RIT 2005 Wife filed complaint against husband under Anti-dowry Act that she had paid dowry of Rs.10 Lakhs. Husband filed Tax Evasion Petition against her and under RTI Act sought details of steps taken by Income-tax Department. Central Information Commissioner directed the Department to furnish the information after completion of enquiries and tax recovery proceedings. Department was not furnishing the information. High Court directed that since information is being furnished only after investigation process is complete, no prejudice would be caused to supply the information. DIT vs. Bhagat Singh 168 Taxman 190 Del. Settlement Application Second application disclosed more income compared to that in first application - Multiple disclosures militate against the very basis of settlement and hence not maintainable. Haji N. Abdulla V ITSC 299 ITR 119 Bom. Special Deduction Co-op. Society has to prove that it is entitled to deduction u/s. 80 P(2)(a)(vi) in this year. The fact that the deduction was allowed in earlier year and succeeding year is not the sole criterion. Bandi Co-op. Lab & Const. Society V. CIT 300 ITR 107 P & H. Speculation Business Where assessee Company had only purchased shares of another company and not sold them during the year or next year Expl. To Sec.73 will not apply as the said provision covers cases where both purchases and sales are made. Pioneer Equity Trade P. Ltd. V. ITO 169 Taxman 80 Mum. Trib. Survey A.O. can make additions on the basis of materials collected during course of illegal survey CIT V Kamal & Co. 168 Taxman 246 Raj Tax Payment Electronic payment of taxes has been made mandatory w.e.f. 01-04-2008 for companies and in the case of non-corporate assessees persons to whom provisions of Sec.44 AB are applicable. Circular No.DGBA GAD No.H10875/42-01-038/2007-08 dated 10-04-2008. 169 Taxman St.2 TDS Assessee Co under agreement with Cyprus Co. took over a ship on rent with an option to buy. It did not exercise the option but paid rent without deducting tax. The payment were held to be hire charges for use of ship and not for purchase. Ship is an equipment under ART 12 of DTAA and payment is royalty u/s.9(1)(vi). Hence assessee was quality of failed to deduct tax. Nest Asia Maritime Ltd. V ITO International Taxation 111 ITD 155 Chennai Trust In a case where the CIT does not pass order granting or refusing registration of trust as laid down in Section 12AA (2) i.e. within a period of six months from the end of the month in which application for registration u/s.12A was filed, registration would be deemed to have been granted. Bhagwad Swarup Paramarth Dham Trust V CIT 111 ITD 175 Delhi SB. Unexplained money During search certain sheets containing calculations were found. A.O. added the same u/s. 69A. Additions were deleted as per assessee's claim that they were rough calculations and revenue failed to prove that they represented sale of stock in hand. CIT V. Ravi Kumar 169 Taxman 150 P & H. Wealth Tax Assessee leased its property. The lessee subleased it at higher rent. For the purpose of Wealth Tax, the original lease rent should be taken into account and not the higher rent charged from the sub-lessee. CWT V. Akshya Textiles Pvt. Ltd. 169 Taxman 303 Bom. Securities and Exchange Board of India Service Tax Assessee was receiving commission for procuring and passing on export orders to some other company and had not handled any goods. It would not come within the ambit of clearing and forwarding agent services. CCE Vs. Wintac Ltd. 13 STT 146 Cestat, Bang. Service Tax Where assessee has received amounts in connection with various expenditure on behalf of its clients which are not directly relatable to service rendered, then no service tax can be levied on it. GAC Shipping India Vs. CC & E 13 STT 154 Cestat, Bang. Chartered Accountant Where return of income was filed by chartered accountant, no duty is coat upon him to adjudicate on the constitution of firm. Daljeet Singh Anand v Inst. of C.A. 299 ITR 353 Del. |
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