Important Income Tax Case Laws - 2009

CMA. CS. Sanjay Gupta ("PROUD TO BE AN INDIAN")   (114155 Points)

29 November 2010  


1. Accounts – Valuation of Stock – S. 145

Valuation of slow moving and obsolete items of stock at 10 per cent of the cost was held to be justified especially when some the stock was sold in the subsequent year at 8.43 per cent of the cost.

CIT vs. Wolkem India Ltd. (2009) 18 DTR 190 (Raj)

2. Accounting – S.144, 145

The Tribunal had noticed the deficiencies pointed out by the Assessing Officer in the books of account stating the principle that a certain amount of guess work had to be applied in such cases. On appeal it was held, dismissing the appeal, that once the authorities had come to the conclusion that the books of account were not properly maintained and suffered from deficiencies, the Assessing Officer was justified in computing income on a reasonable basis in an appropriate manner.

National Plastics Inds. vs. ITO (2009) 309 ITR 191 (Bom)

3. Accrual of Income – Interest – S.5

Accrued interest which was receivable by the assessee only after the end of the previous year cannot be assessed to tax in the current year even though the assessee is following mercantile system of accounting.

CIT vs. FAL Industries Ltd. (2009) 17 DTR 308 (Mad)

4. Appeal – Block Assessment – 246 A (1) & 253 (1) Block Period: 1-4-1985 to 26-9-1995

Appeal against the order of the assessing officer simply giving effect to the order of the Tribunal would only lie before the Tribunal and not before the CIT (A) u/s. 246A(1) of the Act.

However, the High Court held that though the Tribunal was right in holding that the appeal was not maintainable before the CIT (A), it ought to have decided the assessee’s case on merits and not simply dismiss the appeal.

Paras Rice Mills vs. CIT & Anr. (2009) 18 DTR 149 (P&H)

5. Appeal CIT (A) Powers – S. 250

Additional Ground challenging the assessment on the ground of limitation can be raised first time before the CIT (A) in appeal against the fresh assessment order passed on remand, even though it was not raised either before the assessing authority or the CIT (A) in the first round of proceedings.

CIT vs. Smt. Madhu Patani (2009) 18 DTR 110 (Ker)

6. Appeal to Commissioner (Appeals) – S.143(1)

It was held that the appeal against intimation u/s. 143(1) relating to the assessment for the A.Y. 1996-97 was maintainable.

Balmukund Acharya vs. Dy. CIT (2009) 310 ITR 310 (Bom)

7. Appellate Tribunal – Powers – S. 254 (1)

Where the revenue authorities had challenged the action of the CIT (A) granting a partial relief to the assessee before the Tribunal and there was no appeal or cross objection filed by the assessee in absence of such appeal or cross objection, Tribunal could not grant 100 per cent relief to the assessee in appeal filed by the revenue.

CIT vs. Sisodia Marble & Granite (P) Ltd. (2009) 18 DTR 147 (Raj)

8. Appeal to Appellate Tribunal – Request for adjournment in absence of respective counsel. – S.254(1)

Where both the parties request for adjournment in the absence of their respective counsels, the Tribunal can consider their request or proceed to decide the case on the merits instead of dismissing the case. The technicalities should take a back seat as far as determination of rights of the parties are concerned. The parties should be afforded opportunity to address arguments on the merits instead of dismissing the case for default.

CIT vs. Avon Cycles Ltd. (2009) 309 ITR 247 (P&H)

9. Assessment – Partition – HUF – S. 171

Provisions of section 171 of the Act, deal with assessment after the division of the Hindu Undivided Family (HUF). Thus, before provisions of section 171 of the Act can be invoked, to assess the property even after partition, as a HUF, it should have been assessed as HUF before such partition also.

Tirlochan Singh vs. CIT & Anr. (2009) 19 DTR 277 (P&H)

10. Block Assessment – Agent of non resident – Block Assessment not valid in the absence of satisfaction of any condition mentioned in section 163(1) – S. 158BD, 163(1)

During the course of search and seizure action at the residential premises of the Assessee it was found that Assessee’s non resident brother was maintaining some bank accounts. As the source of deposits in those banks was not explained assessment order under section 158BD was framed treating the Assessee as agent of his brother under section 163(1). The CIT(A) set aside the assessment order. Tribunal confirmed the same. Hon’ble Court held that neither assessee had any business connection with his non resident Indian brother, nor any income had come into existence as having been received by non-resident Indian so as to attract provisions of section 163(1)(c).

CIT vs. Rakeshchander Goel (2009) 177 Taxman 15 (Punj & Har)

11. Block Assessment – Penalty – 158 BFA (2)

Levy of penalty u/s. 158 BFA (2) is discretionary and not mandatory.

CIT vs. Satyendra Kumar Dosi (2009) 18 DTR 236 (Raj)

12. Business Expenditure – Administrative Expenses – S. 37(1)

Administrative Expenses incurred in connection with the modernization and expansion of the assessees existing units is allowable as revenue expenditure even though the assessee had capitalised these expenses in its books of accounts.

CIT vs. Triveni Engineering & Industries Ltd. (2009) 19 DTR 274 (Del)

13. Business Expenditure – Advice for 7 years – Revenue Expenditure

The Hon’ble Court held the expenditure as revenue on following reasons (i) under agreement assessee had acquired only ‘access’ to technical information, that is, know-how related to process of manufacture, which was not related to any secret process or patent rights or even right to use a trademark or trade name under agreement; (ii) there was no transfer of ownership with respect to process and know-how in favour of assessee; and (iii) under agreement the licenser was obliged to give advice only for a period of 7 years, payment made by assessee to it would be treated as revenue expenditure.

CIT vs J. K. Synthetics Ltd. (2009) 176 Taxman 355 (Del.)

14. Business Expenditure – Capital or Revenue – Expenditure incurred on development of website is revenue expenditure – S. 37(1)

The Assessee engaged in travel business, incurred certain expenditure towards development of website for the purposes of it’s business. This expenditure was claimed as revenue expenditure. The A. O treated the same as capital expenditure. Tribunal accepted the claim of the Assessee. The Hon’ble High Court upheld the Tribunal’s Order with the observation that merely because a particular expenditure may result in an enduring benefit would not make such an expenditure of capital nature as what is to be seen is real intent and purpose of expenditure and as to whether there is accretion of fixed capital of Assessee. As expenditure on website would not change the fixed capital of an assessee, even though website might provide enduring benefit to Assessee, expenditure incurred has to be regarded as revenue expenditure.

CIT vs. Indian Visit Com. (P) Limited. (2009) 176 Taxman 164 (Del.)

15. Business Expenditure – Corporate Membership Fee – S. 37(1)

Admission fees paid towards corporate membership of a club is allowable as expenditure for the purpose of assessee’s business.

CIT vs. Samtel Color Ltd. (2009) 19 DTR 295 (Del)

16. Business Expenditure – Excessive and unreasonable payments. – S.37(1)

Assessee apart from paying handling charges at the rate of 9.5 per cent to its sister concerns had paid handling charges at the same rate to other agents also.

Revenue had allowed similar rate in earlier years. Sister concerns paying tax at a higher rate. Hence it is not a case of evasion of tax. Under Board Cir. No. 6-P dated July 1968, no disallowance was a to be made under sec. 40A(2) in respect of payment made to the relatives and sister concern where there was no attempt to evade tax.

CIT vs. Indo Saudi Services (Travel) P.Ltd. (2009) 310 ITR 306 (Bom)

17. Business Expenditure – Incentive bonus is deductable expenditure – S.37(1)

The production incentive bonus is liable to be deducted while computing business income, but it would be allowed only when payment of bonus is made in assessment year in question.

CIT vs. Kisan Sahakari Chini Mills Ltd. (2009) 176 Taxman 265 (Uttarakhand)

18. Business Expenditure – Interest – S.40 A (2)

Where the interest paid by assessee to close relative and associate concern is not more than the rate at which interest was paid to other creditors the interest so paid cannot be disallowed by invoking the provisions of section 40 A (2).

CIT vs. Amrit Soap Co. (2009) 17 DTR 350

(P& H)

19. Business Expenditure – Penalty – Fine – S.37 (1)

Penalty, fines, etc paid by the assessee to State Electricity Board for violating power regulation (drawing extra load in peak hours) was allowable deduction u/s. 37 (1) of the Act. The Court further observed that if penalty is not for deliberate violation of law the same should be allowed as deduction.

CIT vs. Hero Cycles Ltd. (2009) 17 DTR

281 (P&H)

20. Business Expenditure – Production of Advertisment film – S. 37 (1)

Expenditure incurred on production of an advertisement film for promoting / marketing the assessee’s products was allowable as revenue expenditure.

CIT vs. Geoffrey Manners & Co. Ltd. (2009) 19 DTR 249 (Bom)

21. Business Expenditure – Sales tax deferred – S. 43 B

Amount of sales tax deferred under the State Government’s Deferment Scheme could not be disallowed u/s. 43 B of the Act.
CIT vs. Jyoti Jain (2009) 17 DTR (Raj) 286

22. Business Income vis-a-vis Capital Gain – S.28,45

Property held for several years in Capital Account and shown in Balance Sheet as a Capital Asset – Profit on sale of impugned property is to be assessed as Capital Gains and not as Business Income.

CIT vs. Dcm Ltd. (2009) 221 CTR (Del) 513

23. Capital Gain – Loan on Tenancy right – S. 45

Gain / loss arising on sale of a tenancy right in respect of a building which is held by a real estate dealer for a long time (more than 5 years) would be assessed as Capital gain / loss, even though the same was shown as stock – in – trade in its books of accounts.
CIT vs. Hitashi Estates Ltd. (2009) 18 DTR 206 (Del)

24. Capital Gain – Immovable property – S. 45

Capital gain on sale of immovable property was chargeable to tax in the year in which actual physical possession of the property is given to the purchaser even though the agreement is entered into in earlier year.

CIT vs. Geetadevi Pasari (2009) 17 DTR 280 (Bom)

25. Capital or Revenue: Foreign Exchange Rate Fluctuation: – S.37

It was held that loss on account of foreign exchange rate fluctuation allowable.

CIT vs. L. G. Electronics India P. Ltd. (2009) 309 ITR 265 (Delhi)

26. Cash Credits – Burden of Proof – Gift. – S. 56

Donee to establish not only the identity of donor but also his capacity to make a gift and actual receipt from him. Financial position of donor not suggesting his capacity to make gift or source from where gift made. Donor never visited house of assessee. Hence there was no love and affection. Transaction was not genuine, hence amount claimed as gift assessable as income of assessee.

Yash Pal Goel vs. CIT (2009) 310 ITR 75 (P&H)

27. Cash Credit – Capital contribution by partners – S. 68, 69

Capital contribution made by the partners on the first day of the commencement of the business could not be added in the hands of the firm. However, if the partners fail to discharge the onus of proving the source of such deposits by them in the firm, then the same could be added to the income of the partners concerned in term of section 69 of the Act.

CIT vs. Kewal Krishan & Partners (2009) 18 DTR 121 (Raj)

28. Cash Credit – Rejects of Books of accounts – S. 68, 145(3)

Where the assessing officer rejected the books of accounts maintained by the assessee and estimated the income by invoking provisions of section 145 (3) of the Act, no separate addition of cash credit u/s. 68 of the Act can be made in such case even though the assessee has failed to discharge the onus of explaining the credits in its books of account.

CIT vs. G.K. Contractor (2009) 19 DTR 305 (Raj)

29. Cash Credit – Share Application money – S. 68

(i) Share Application money – Existence of applicants accepted. Assessing Officer has not shown that the Applicants did not have means to make the investments and that such investments actually had come from the coffers of the Assessee Company. Addition is rightly deleted.

CIT vs. Value Capital Service (P) Ltd. (2009) 221 CTR (Del) 511

(ii) Where the identity and creditworthiness of the subscriber to the shares and the genuineness of the transaction is established, share application money received by the assessee cannot be added u/s. 68 of the Act as unexplained cash credit.

CIT vs. Samir Bio – Tech P. Ltd. (2009) 17 DTR 224 (Del)

(iii) Where the identity of the shareholders were established, all the shareholders were income tax assessees and disclosed the transaction in their accounts which were reflected in their income – tax return also, simply because the monies were received as share application money by a private limited company in cash, the same cannot be treated as cash credit under section 68 of the Act.

Bhav Shakti Steel Mines (P) Ltd. vs. CIT (2009) 18 DTR 194 (Del)

(iv) Share application money was received by the assessee through account payee cheque from a Company which is regularly assessed to tax and having a substantial amount of paid up capital. Further, the subscribing Company was also a member of the National Stock Exchange (NSE) and involved in purchase and sale of shares of other Companies. The onus in respect of veracity and genuineness of the transaction was held to be established and additions u/s. 68 of the Act was not sustainable.

CIT vs. Gangour Investments Ltd. (2009) 18 DTR 242 (Del)

30. Charitable Purpose – S. 11 & 13

Assessee a charitable trust constructed a building by borrowing funds from outside as well as investing its own corpus funds. The building so constructed was let out to a concern in which its trustees were directors. The rental income so received by the trust was utilised for the purpose of repaying the loan. A.O. held that the assessee was not entitled to benefit u/s. 11 and 12 of the Act as the rental income received by the assessee was not utilised for the object of the trust and also that the building so constructed was let out to the concerned in violation of section 13 (1) (c) of the Act. On these facts the Hon’ble High Court held that the income derived from renting out the building was used for repayment of loans with the ultimate object of applying the income, after the loans had been fully repaid, towards charitable objects of the trust. Therefore the application of rental income for the repayment of loan was towards charitable object. Further, the rent received by the trust was more than the standard rent as computed under the rent control laws, as such, no benefit was derived by any interested person, therefore provisions of section 13 (1) (c) were also not attracted.

DIT (Exemption) vs. Span Foundation (2009) 17 DTR 283 (Del)

31. Charitable Trust – S. 11

The CIT rejected the application for condonation of delay in filing Form No. 10, before the expiry of time allowed u/s. 139 (1) of the Act, being notice for accumulation of income by the trust. On writ filed by the assessee trust the High Court considering the fact that the assessee was a State Government undertaking and has been registered u/s. 12A of the Act since many years and also the fact that the delay in filing Form No. 10 was because the chartered accountant of the trust was not able to finalize the accounts in time, the High Court quashed the order of the CIT and directed him to pass appropriate orders.

Kerala Rural Employment & Welfare Society vs. Asstt. Director of Income-tax & Anr. (2009) 18 DTR 300 (Ker)

32. Deduction – Audit Report – Industrial Undertaking – S.80 IA

For the purpose of claming deduction u/s. 80 IA of the Act, the prescribed audit report in Form No. 10 CCD is to be furnished along with the return of income itself. Deduction cannot be allowed to the assessee if the same is filed during the course of assessment proceedings before the assessing officer.

CIT vs. Jyoti Jain (2009) 17 DTR (Raj) 286

33. Deduction – Old unit merging with a larger new unit – Eligible for deduction – S. 80IA

The true test to claim deduction under Section 80-IA is not whether new industrial undertaking connotes expansion of existing business of assessee but whether it is all the same a new and identifiable undertaking, separate and distinct from existing business. The reconstruction of business or an industrial undertaking must necessarily involve concept that original business or undertaking does not cease functioning and its identity is not lost or abandoned. The Section 80IA approves a situation in which an old existing smaller industrial undertaking is absorbed by a new and much bigger industrial undertaking.

CIT vs. Mahaan Foods Ltd. (2009) 177 Taxman 274 (Delhi)

34. Deduction – Industrial undertaking – Revised return – S. 80IB

The Assessee inadvertently not claimed the deduction in its return though documents such as Form No. 10 CCB were furnished during assessment proceeding. Deduction is admissible even in the absence of a revised return.

CIT Vs. Ramco Intl. (2009) 221 CTR (P & H) 491

35. Depreciation – condition precedent use of machinery: – S.32

It was held that where machinery is installed but found defective it will amount to use of machinery. Hence assessee was entitled to depreciation.

CIT vs. Chamundeshwari Sugar Ltd. (2009) 309 ITR 326 (Karn.)

36. Depreciation – Dumper – S. 32

Where a civil contractor was required to transport earth from one place to another and its business receipt includes charges for transportation of such earth. The assessee was entitled to higher rate of depreciation on trucks / dumper.

CIT vs. S.C. Thakur & Bros. (2009) 18 DTR 271 (Bom)

37. Depreciation – Ready to use – S. 32

Assessee is entitle to claim deprecation on emergency spare parts of machinery, which are kept ready for use but, were not actually used during the relevant year.

CIT vs. Insilco Ltd. (2009) 20 DTR 65 (Del)

38. Double Taxation Avoidance – Treaty will prevail over provisions of Income Tax Act. – S.90

It was held, income from receipt of royalties as set out in sec. 9(1) (vi) are taxable in India whether or not the non-resident has a place of residence, or place of business or business connection in India. However, the correct interpretation of the Double Taxation Avoidance Agreement would be to include the royalties from patents, copyrights or trade marks and the like within the expression “industrial” or “commercial” profits. This income would not be royalties within the meaning of the Double Taxation Avoidance Agreement but would fall under the expression “commercial or industrial profits.” In the absence of a permanent establishment, such income would not be taxable in India.

CIT vs. Siemens Aktiongesellschaft (2009) 310 ITR 320 (Bom), (2009) 177 Taxman 81 (Bom)

39. Exemption – Export oriented undertaking – S.10 B

Activity of cutting, polishing and sizing of granites amounts to production in case of assessee engaged in activity entitled to exemption u/s. 10 B of the Act.

CIT vs. Fateh Granite (P) Ltd. (2009) 20 DTR 257 (Bom)

40. Expenses – Training fee before installation of plant to be capitalised – S. 32

The expenses incurred by Assessee towards training fees of it’s personnel before setting up of plant were to be capitalized as part of plant and machinery and depreciation was to be allowed in respect of the same.

CIT vs. Gujarat Guardian Ltd. (2009) 177 Taxman 434 (Del.)

41. Export – Deduction – S. 80 HHC

Amount received by the assessee towards quality claim for raw materials does not form part of the ‘total turnover’ for the purpose of calculating deduction u/s. 80 HHC of the Act.

CIT vs. Smt. K.R. Ushasree (2009) 18 DTR 113 (Ker)

42. Export – Deduction – Local Sales – S.80 HHC

For the purpose of computing deduction u/s. 80 HHC of the Act, local sales does not form part of the ‘total turnover’.

CIT vs. FAL Industries Ltd. (2009) 17 DTR 308 (Mad)

43. Income – Accrual – Duty draw back – S. 5

Duty drawback and cash assistance could not be charged to tax on accrual basis.

CIT vs. Bajaj Auto Ltd. (2009) 20 DTR 241 (Bom)

44. Income from other source – Relinquishing right – S. 56

Receipt by the assessee a partner for relinquishing his right in the firm so as to enable the firm to sell its land, pending the final decree for dissolution was liable to be assessed as income from other sources.

Smt. Visalakshy Kumaran vs. CIT (2009) 18 DTR 139 (Ker)

45. Income from House Property – S. 22

Where the assessee had sold the flat, received entire sale consideration and handed over the possession of the flat to the purchaser however, registered sale deed was still not executed, under these circumstance, it was held that the assessee ceases to be the owner of the flat for the purpose of section 22 of the Act.

Pallonji M. Mistry (Decd.) vs. CIT (2009) 19 DTR 286 (Bom)

46. Income from other sources / business income hotel – S.28, 56

Lease of Hotel under agreement for 33 years with option of further renewal for 33 years Assessee had no intention to resume hotel business. It was held that amount received by assessee is income from other sources and not business income.

East West Hotels Ltd vs. Dy. CIT (2009) 309 ITR 149 (Karn)

47. Income from undisclosed sources – S. 69A

Addition u/s 69A in respect of unexplained jewellery and unaccounted sales – Assessing Officer makes the addition merely by relying on the findings of Directorate of Revenue Intelligence and Commissioner of Customs. In the absence of any independent enquiry made by the Assessing Officer, no addition is sustainable.

CIT vs. Vignesh Kumar Jewellers. (2009) 222 CTR (Mad) 79

48. Interest – S. 234 B

Where the payer fails to deduct tax at source on the payments made by him to the payee, no interest u/s. 234 B of the Act can be imposed on the payee.

Director of Income – tax (International Taxation) vs. NCG Network Asia LLC (2009) 18 DTR 203 (Bom), (2009) 222 CTR 86 (Bom)

49. Interest Tax Act, 1974 – S. 4 (2)

Interest earned on refinancing operations is not taxable interest under the Interest – tax Act, 1974.

HP State Industrial Development Corporation ltd. vs. CIT (2009) 17 DTR 26 (HP)

50. Interest Income – S. 56

Interest income which accrued to the assessee during the pre – operative period on the funds kept with the bank which, were specifically earmarked for purchase of capital asset constitute capital receipt and could not be taxed under the head income from other source.

Indian Oil Panipat Power Consortium Ltd. vs. I.T.O. (2009) 20 DTR 107 (Del)

51. Loss – Carry forward – Return filed – S. 72

The assessee claimed a lesser amount of loss in its return filed. Subsequently, during the assessment proceeding before the assessing officer claimed a higher amount of loss. The High Court held that the claim of the assessee of a higher loss was correct and allowed the assessee to carry forward and set off the same in subsequent years.

CIT vs. Nalwa Investments Ltd. (2009) 19 DTR 235 (Del)

52. Method of Accounting – S.145

FIFO Method changed to average cost method on account of practical difficulties faced by assessee it was held that it was a reasonable ground for changing method of accounting.

CIT vs. H.P. State Civil supplies Corpn. Ltd. (2009) 309 ITR 102 (HP)

53. Mistake apparent on record Non consideration of provision of Act – error apparent on record – S.154

It was held that the Assessing Officer had not taken into consideration clause (v) of the Explanation to sub sec. (2) of sec. 115JA of the Act. The assessees being industrial undertakings located in a backward state or district were entitled to 100 per cent, exemption in terms of sec. 80IB and 80IA of the Act. The orders passed by the assessing officer suffered from error apparent on the face of the record having been passed without considering the provisions of the Act.

CIT vs. Kushal Bagh Minerals P. Ltd. (2009) 310 ITR 125 (Raj)

54. Penalty – Block Assessment – S. 158 BFA (2)

(i) Levy of penalty is discretionary and not mandatory. As the undisclosed income represents the estimation of opening capital prior to the block period and the said capital cannot be treated as undisclosed income for the first assessment year in the block period, the Tribunal is right in deleting the penalty.

CIT vs. Satyendra Kumar Doshi (2009) 222 CTR ( Raj) 258

(ii) Search and Seizure – Determination of undisclosed income with regard to surrender of income – Levy is discretionary and not mandatory. As block assessment is made on the basis of bonafide surrender by the Assessee de hors any evidence of undisclosed income found during search, the levy of penalty u/s 158 BFA (2) is not sustainable.

CIT vs. Harkarandas Ved Pal (2009) 222 CTR (Del) 438

55. Penalty – Concealment – S. 271(1)(c)

The Tribunal had held that penalty u/s. 271 (1) (c) of the Act was not leviable because of a bona fide claim of deduction by the assessee u/s. 80 HHC of the Act supported by the certificate of a Chartered Accountant. The Tribunal also noted that when the claim was preferred by the assessee there was a conflicting judicial opinion on the issue. On these undisputed facts recorded by the Tribunal and also by the CIT (A), the High Court declined to hold that the order of the Tribunals erroneous.

CIT vs. Lakhani India Ltd. (2009) 17 DTR 304 (P&H)

56. Penalty – Concealment of Income – Non filing of Return – S.271(1)(c)

It was held that penalty can be imposed for concealment for the non-filing of return by an assessee who had been assessed for several A.Y. prior to the A.Y. 1984-85.

CIT vs. U.P. State Handloom Corpn. (2009) 310 ITR 54 (All)

57. Prosecution – S. 276 CC & 278 B

Where the delay in filing the return was explained by the accused firm due to the illness of the old part – time accountant of the accused firm, the cause shown by the accused firm was held to be a reasonable cause for delay in filing the return of its income.
UOI vs. Bhavecha Machinery & Ors. (2009) 17 DTR 387 (MP)

58. Reassessment – Interest Tax – S. 10
Reopening of assessment to tax interest on accrual basis instead of receipt basis was held to be invalid. Further the High Court held that the order passed by the CIT (A) in another assessee’s case cannot be a reason to reopen the assessment of the assessee.

HP State Industrial Development Corporation ltd. vs. CIT (2009) 17 DTR 26 (HP)

59. Reassessment – Opportunity to cross examine – S.148

There was reassessment on basis of statements made by certain individuals. Assessee was not given opportunity to cross examine those individuals. It was held that proceedings were valid up to the point of time of recording statements, and the proceedings after recording statements of individuals were set aside.

CIT vs. Sanjeev Kumar Jain (2009) 310 ITR 178 (P&H)

60. Reassessment – Service of Notice – S. 148

Service of notice u/s. 148 of the Act upon the assessee is the precondition for framing assessment u/s. 147 of the Act. Thus, where the notice was not served upon the assessee for reassessment for the year 2001 – 02 the reassessment framed u/s. 147 of the Act was held to be bad in law. The court further held that the provisions of section 292 BB of the Act cannot be invoked by the revenue in the assessee’s case as the provisions were introduced from 1-4-2008 which were not applicable to assessment year under consideration.

CIT vs. Mani Kakar (2009) 18 DTR 145 (Del)

61. Recovery – Civil – S. 281

Where the Department desires to declare the transaction entered into by the assessee in default as void under the provisions of section 281 (1) of the Act, the department being in the position of a creditor has to file a civil suit for a declaration that the transfer is void.

Ryan Plast vs. I.T.O. & Ors. (2009) 19 DTR 285 (Bom)

62. Rectification – Mistake Apparent on Record – Tribunal – S. 254 (2)

Where the Tribunal rejected the Appeal and also the rectification application relying upon the decisions which were neither cited by the departmental representative nor the assessee who had any notice of the same and also without taking into consideration the vital statements, the High Court on writ filed by the assessee remanded the matter to the Tribunal to decide it afresh after hearing both the parties in accordance with law.

Naresh K. Pahuja vs. I.T.A.T. & Ors. (2009) 19 DTR 273 (Bom)

63. Rectification of mistake apparent on record – Levy of surcharge on tax under section 113 was a debatable issue on the date when tribunal passed the order – S. 113, 254(1)

The Assessing Officer, after passing the Assessment Order realized that surcharge leviable on tax under section 113 has not been charged. The Assessing Officer passed an order under section 154 levying the surcharge. The order passed under section 154 was upheld in appeal by CIT(A). On an appeal, Tribunal vide it’s order dated 6-5-2005 held that non charging of surcharge could not be stated to be a mistake apparent from record, and that any issue which was debatable one, could not be subject matter of an order under Section 154. On an appeal by the Department the department relied on the decision of the Apex Court in the case of CIT vs. Suresh N. Gupta (2008) 297 ITR 322 (SC). The Hon’ble Court held that when the Tribunal passed the order the issue before it was a debatable one. Therefore, Tribunal order did not require any interference.

CIT vs. Kirti kumar Shah (2009) 176 Taxman 29 (Raj.)

64. Refund – Interest – S. 244A

Assessee is entitled to interest on the amount of interest allowable u/s. 244A of the Act.

CIT vs. H.E.G. Ltd. (2009) 19 DTR 316 (M.P.)

65. Relief u/s. 10(10C) – Voluntary Retirement – S. 10(10C)

It was held that amounts up to five lakhs of rupees received on voluntary retirement entitled to exemption under sec. 10(10C). Amount in excess of five lakhs of rupees was entitled to relief under sec. 89.

CIT vs. Koodathil Kallyatan Ambujakshan (2009) 309 ITR 113 (Bom)

66. Reserves for Shipping Business – S.33AC(1)

It was held that it was clear from sec. 33AC(1) as applicable to the A.Y. 94-95 that the only requirement prescribed was that the assessee must be a Govt. company or a company formed and registered in India with the main object of carrying on the business of operation of ships. There was no such requirement that the assessee in order to be eligible for deduction had to actually operate ships or that the amount in respect of which deduction was to be allowed and credited to the reserve account had to be the income earned from shipping business. It was further held that Amendment to section 33AC with effect from April 1, 1996 was not clarificatory or retrospective.

Gal Offshore Services Ltd vs. CIT (2009) 309 ITR 125 (Bom)

67. Return – Validity of Return – Defective Return – S.139

It was held that where the return did not bear the signature of the assessee and had not also been verified by her, the return was an absolutely invalid return as it had a glaring inherent defect which could not be cured in spite of the deeming effect of sec. 292B.
CIT vs. Harjinder Kaur (2009) 310 ITR 71 (P&H)

68. Revision – Power to Revise – S.263

Assessing Officer partially disallowed claim under sec. 80-I. Commissioner (Appeals) accepted entire claim. Commissioner (Appeals) taking different view is not a case of an order erroneous and prejudicial to revenue. Hence Commissioner u/s. 263 could not withdraw special deduction under sec. 80-I in revision proceedings.

CIT vs. Nirma Chemicals Works P. Ltd. (2009) 309 ITR 67 (Guj)

69. Revision – S.263

Order u/s 263 as per the direction of earlier CIT - Assessing Officer passing the revised Order as per the revised return filed by the Assessee. In the absence of any error or anything unsustainable in law in the said Order, the Order could not be revised by the subsequent CIT.

Virendra Kumar Jhamb vs. CIT (2009) 222 CTR (Bom) 88

70. Search and Seizure – S. 132(5)

It was held, that when a public trust like the petitioner which ran a number of educational institutions had claimed exemption in view of the provisions of sec. 10(22) of the Act, the officer passing orders u/s. 132(5) had to find out at least prima facie as to why and how such trust was not entitled to exemption. The order to the extent that he refused to consider the plea of the petitioner for exemption u/s. 10(22) of the Act was liable to be quashed.

Anjuman Hami E- Islam and Ors. vs. CIT (2009) 310 ITR 37 (Bom)

71. Tax Deduction at Source – Liabilitity on payee – Interest – S.234B

Scope of chargeability – income subject to TDS – When a duty is cast on the payer to deduct tax at source, on the failure of the payer to do so, no interest can be imposed on the payee Assessee u/s 234B

Director of IT (International Taxation) vs. NGC Network Asia Ltd. (2009) 222 CTR 86 (Bom), 18 DTR 203 (Bom)

72. Tax Deduction at Source – Works contract – S. 194 & 201 (1)

Payments made by the assessee to the employees employed by it on daily wage basis cannot be said to be a contractual payment, as such the assessee in such cases was not required to deduct tax from such payments u/s. 194 C of the Act.

Where the assessee had produced confirmation from the parties to whom payments were made, confirming the fact that they have included the amount received from the assessee as their income and paid taxes thereon, the assessee cannot be treated as assessee in default under the provisions of section 201 (1) of the Act for non deduction of tax at source.

CIT vs. Dewan Chand (2009) 17 DTR 337 (Del)

73. Transfer Pricing – Constitutional validity of provisions – S.92, 92A

It was held that Chapter X dealing with Transfer Pricing was Constitutionally Valid. Article 14 of the Constitution applies even to a taxing statute, it does not prevent the legislature from making classification having intelligible differentia and nexus with the object of classification.

Coca Cola India Inc. vs. ACIT (2009) 309 ITR 194 (P&H)