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INCOME TAX APPELLATE TRIBUNAL ORDER

2011-TIOL-723-ITAT -COCHIN

Shri Abdul Nazar Azad Vs ACIT, Trivandrum (Dated : July 25, 2011) Income Tax – Whether CIT(A) was justified in confirming the order of the AO in respect of (i) addition on account of low gross profit consequent to the rejection of its books of accounts and (ii) addition of Rs.22 lakhs as unexplained credit u/s 68

Addition of gross profit and estimation – When purchase of raw materials were not adequately accounted and evidenced by assessee and suppression in sales was also admitted, non-acceptance of book results qua trading profit upheld – Since the total purchases in assessees case and comparable case shows a difference of only 2%, AO directed to adopt a gross profit of 25% as against a declared rate of 23%

Unexplained credit in capital account – Since matter was purely factual, AO directed to properly verify sale proceeds and ensure that there is no duplication in additions – AO directed to pass a speaking order after allowing a reasonable opportunity to assessee

Also see analysis of the Order

2011-TIOL-722-ITAT -MUM

M/s Maharashtra State Electricity Distribution Co Ltd Vs ACIT, Mumbai (Dated: October 5, 2011) Income tax – Sections 40(a)(ia), 194I, 197(1), 271(c) - Stay of Recovery Proceedings – Whether when the assessee is required to deduct tax at source but fails to do so, the AO is justified in making addition u/s 40(a)(ia) - Whether when the assessee itself begins deducting tax at source later on, the recovery proceedings cannot be stayed as the assessee failed to prove a prima facie case in its favour.


The New India Assurance Co Limited Vs Addl.CIT, Mumbai (Dated: July 29, 2011) Income tax – Sections 44, 263, Rule 5 – Whether when the assessee-insurance company is required to compute the income as per the provisions of section 44 r.w.r. 5 as these are specific provisions for an insurance company and if the same are not followed, the CIT is justified in treating the order of the AO erroneous and prejudicial to the revenue but cannot direct the AO to examine any other point in the fresh assessment except those specific points identified during the proceedings u/s 263.


M/s Pinkhem Investment Pvt Ltd Vs DCIT, Mumbai (Dated: July 15, 2011)

Income tax – Sections 45, 143(3) - Capital Gain or Business Income – Whether where the revenue has accepted the profit on sale of shares held as investment as capital

gain in preceding years, it cannot be suddenly treated as business income when there is no material difference in the impugned year and the shares were held as investments and no borrowed funds were utilized for investment.


Reliance Infrastructure Ltd Vs Addl.CIT, Mumbai (Dated: September 28, 2011) Income Tax - Section 80IA - Whether for the purpose of deduction in the case of electricity company rate fixed by regulatory body has no relevance, and hence deduction of 80-IC is to be allowed having regard to the market price of the electricity sold by the assessee - Whether disputed stand by charge as settled by assessee with the generating company are required to be included in the market price.

2011-TIOL-718-ITAT -MAD

DCIT, Chennai Vs M/s A S Shipping Agencies Pvt Ltd (Dated: June 14, 2011) Income tax – Section 80IA – Whether when the warehouse is a part of Container Freight Station as a necessary infrastructure, and CFS can operate only if it provides minimum infrastructure facility then such warehousing facility is different from the stand alone warehousing facility operated outside Container Freight Station, and the deduction is to be allowed u/s 80IA on the profit arising on such warehousing facility.



DCIT, Chennai Vs M/s I P Rings Ltd (Dated: September 9, 2011) Income Tax – Section 148 – Whether merely because substantive material lies imbedded in documents furnished, which the AO could have uncovered but did not do so, can be a ground to deny or strike down a notice for reassessment - Whether the fact that the AO could have found the truth but he did not, preclude the AO from exercising the power of re -assessment to bring to tax the escaped income.


ITO, Chennai Vs Shri Sujith Cherian (Dated: June 13, 2011) Income tax – Section 2(14)(ii) – Whether the land sold by the assessee is an agricultural land or not on which the capital gain is exempt from tax.

2011-TIOL-715-ITAT -BANG

DCIT, Bangalore Vs M/s Intel Technology India Ltd (Dated: August 17, 2011) Income Tax - Section 10A - Whether in view of the formula given under the provisions of section 10A, expenses which are to be excluded from the ambit of export turnover are also required to be excluded from the quantum of total turn over.

2011-TIOL-714-ITAT -KOL

DCIT, Kolkata Vs Mr Arijit Mitra (Dated: August 12, 2011) Income tax – Section 2(14) – Whether the land which is situated in areas lying within a distance not exceeding 8 km from the local limits of such Municipalities or Cantonment Boards and are covered by the amended definitions of ‘capital asset', if such areas are, having regard to the extent of and scope for their urbanization and other relevant considerations, is notified by the Central Government in this behalf, shall continue to be excluded from the definition of Capital Asset and the capital gain will be exempt.

2011-TIOL-713-ITAT -AHM

DCIT, Mehsana Vs Apollo Construction Equipment Pvt Ltd (Dated: July 8, 2011) Income tax – Sections 14A, 80IA, Rule 8D – Whether when the interest expense could not be bifurcated between the business and exempted investment, the disallowance can be made u/s 14A after applying Rule 8D even prior to AY 2008-09 – Whether if the disallowance is made, the assessee is entitled to deduction u/s 80IA on the increased profit after disallowance.


Bright Play Centre Vs Addl.CIT, Vadodara (Dated: August 5, 2011) Income tax – Sections 269SS, 271D – Whether where the transactions are in the nature of current account and there is nothing on record to show that the transactions are attached with certain conditions or stipulation as to period of repayment, rate of interest, manner of repayment, etc. so as to treat the said transactions as loans or deposits, section 269SS will not apply and no penalty can be levied u/s 271D.


ACIT, Ahmedabad Vs Sukan Equipments (P) Ltd (Dated: August 5, 2011) Income tax – Sections 37, 40A(2A) – Whether the expense incurred to the shareholder who was a computer engineer M.S. from the U.S.A. for up-gradation of material management and development of web-site and other I.T. related assignments, can be disallowed u/s 40A(2A) when the expenditure was incurred much less than market rate – Whether the depreciation is rightly disallowed on the computer purchased at high price for which no supporting document was produced.


Shri Sohil Rajnikant Jhaveri Vs ACGT, Mumbai (Dated: July 20, 2011) Gift Tax - Section 4(1)(a) - Whether introduction of capital assets in the form of capital contribution in Partnership firm can be regarded as transfer - Whether consideration can be determined for such transfer, if not, whether it can be alleged that the consideration was adequate or inadequate - Whether deeming provisions of

section 4 of Gift Tax can be invoked in such situation alleging that the consideration was inadequate.

2011-TIOL-709-ITAT -DEL

DCIT, New Delhi Vs M/s Jay Pee Ventures Pvt Ltd (Dated: October 7, 2011)

Income tax – Sections 14A, 32(1), Rule 8D – Whether disallowance u/s 14A by applying Rule 8D is warranted in a case where the assessee failed to discharge the onus placed upon him in establishing that the borrowed funds were not utilized for the investment in shares / mutual funds – Whether the printer, scanner etc are entitled to depreciation @ 60%.


ITO, New Delhi Vs M/s Safe Ensure Administrative Facilities Pvt Ltd (Dated: June 24, 2011) Income tax – Sections 36(1)(va), 37 – Condonation of delay – Whether where the employees' contribution to PF and ESI is deposited before the due date of filing of return, no disallowance can be made – Whether where the AO has not pointed out any discrepancy between the claim of the assessee and the details furnished, no disallowance can be made on adhoc basis – Whether where the delay for filing of appeal is not satisfactorily explained, the delay was correctly not condoned.


DCIT, New Delhi Vs Shiva Swaroop Mathur (Dated: September 16, 2011) Income tax – Fair Market Value – Whether the fair market value of the property as on 1.4.1981 is correctly determined on the basis of the registered valuers report in which the valuer has neither estimated the FMV on the basis of any comparable rate nor had taken circle rate as notified by the government authority.


M/s BTA Cellcom Limited Vs ITO, New Delhi (Dated: June 30, 2011) Income tax – Sections 143(3), 144 - Whether the amount received in advance against the services to be rendered in future is to be treated as income even if the services are not rendered - Whehter such a sum is to be treated as debt due if the services are to be rendered in future.


M/s Jas Gold Finlease Ltd Vs ITO, New Delhi (Dated: September 16, 2011) Income Tax - Section 68, Rule 46A - Whether the CIT(A) is justified in allowing additional evidence submitted by the assessee on the fact that opportunity was granted to the AO but he did not make any comments on merit - Whether the small share capital contributed by the applicants can be added as an unexplained credit when the identity has not been disputed and the amounts have been taken through

account payee cheques but no PAN detail has been submitted.

2011-TIOL-704-ITAT -INDORE

M/s Sanwaria Agro Oils Limited Vs ACIT, Bhopal (Dated: May 30, 2011) Income tax – Sections 37, 40A(2b), 158BE – Whether while computing the limitation of period for completing the block assessment u/s 158BE, the period commencing from the day on which the AO directs the assessee to get its account audited u/s 142(2A) and ending on the day on which the assessee was requested to furnish a report of such audit under that sub section, shall be excluded – Whether where the AO observed on the basis of various loose papers found during the search and the statements recorded that a concern was a benami concern of the assessee, the CIT (A) is not correct in deleting the addition treating it not a benami concern stating that it was separate entity – Whether no disallowance can be made u/s 40A(2B) for the expenses incurred to sister concern where the revenue could not prove that the expenditure was more than the prevalent market rate - Whether the expenditure incurred for foreign educatio n of the director is an allowable business expenditure.


DCIT, New Delhi Vs M/s Japfa Comfeed India Pvt Ltd (Dated: June 30, 2011) Income tax – Sections 35D(ii), 50C, 271(1)(c) – Whether where the facts are clearly disclosed in the return of income, penalty cannot be levied u/s 271(1)(c) even if the claim of the assessee is rejected as it cannot be construed as furnishing of inaccurate particulars of income


Triyogi Narayan Singh Vs ITO, Kolkata (Dated: June 25, 2011) Income Tax - Sections 40(a)(ia), 143(3), 144, 147, 194C - Whether, without framing an assessment u/s 143(3), AO has power to reopen an assessment under section 147 if his action is in accordance of the provisions of explanation 2 of section 147 - Whether AO has power to assessee all incomes which come to his notice during reassessment proceedings - Whether failure to produce books before AO confers power on AO to complete the assessment under section 144 - Whether making of payments to subcontractor transporters is different from making of payments to transporters and hence TDS is required to be deducted in former case.

2011-TIOL-701-ITAT -COCHIN

M/s K H Floor Gallery (P) Ltd Vs ACIT, Palakkad (Dated: July 29, 2011) Income Tax - Section 40(a)(ia) - Whether in view of the facts that the shipment charges are paid directly and there is no engagement of any agent and goods are booked directly from the buyer it can not be said that there is no privity of contract between the assessee and the shipment company and hence no disallowance is permissible under section 40(a)(ia) of the Act.


ITO, Mumbai Vs Dr Ranjit Mukherjee (Dated: August 30, 2011) Income Tax - Sections 37, 133A - Whether for rejecting books of accounts positive material has to be brought on record by the AO when the book results of the assessee are audited - Whether AO can disturb the result or reject the books of an year in relation to which not a single query has been raised by the survey team at the time of survey - Whether disallowance of expenses on adhoc basis is permissible when it is not in dispute that the expenses were incurred wholly and exclusively for the purpose of business.


M/s Elof Hanson (India) Pvt Ltd Vs DCIT, Mumbai (Dated: June 17, 2011) Income Tax - Sections 4, 36(1)(iv), 145A - Whether in case of project completion method income has to be assessed on the completion of project, and hence if the AO desires to tax it on year wise basis credit is to be given in that year in which it has been offered for taxation - Whether contributions made to approved superannuation fund is allowable deduction - Whether un-utilized modvat credit is to be included in closing stock.


Mr Hardik Bhadresh Bengali Vs ITO, Mumbai (Dated: February 15, 2011) Income Tax - Sections 28, 192, 194J - Whether when assessee teaches mathematics to students enrolled with a Tutorial, fees received for the services are to be treated as 'salary' or professional income.


2011-TIOL-697-ITAT -CUTTACK

Torsteel Limited Vs ACIT, Bhubaneswar (Dated: June 17, 2011)

Income Tax - Sections 40(a)(ia), 143(3), 194J - Whether service of assessment order is procedural and cannot be fatal to the proceedings even if it is served beyond two years - Whether rigours of section 40(a)(ia) cannot be invoked where TDS is deducted and deposited before the filing of return of income.


Shri Prakashchandra Vs ITO, Surat (Dated: October 5, 2011) Income Tax - Sections 40(a)(ia), 44AB, 144A, 194C(1) & (2) - Whether payment made to a contractor by the assessee in his oral capacity is liable to TDS, and consequently disallowance under section 40A(ia) is warrantaed if TDS was not deducted.


Shri Nagesh Chundur Vs A CIT, Chennai (Dated: June 1, 2011) Income tax – Section 10A – Whether where the unit is originally started as DTA and subsequently converted into a 100% EOU with STPI registration, the assessee is entitled to exemption u/s 10A with reference to the period available to the existing units out of the 10 consecutive years.


M/s KMG Infotech Private Limited Vs ACIT, Bangalore (Dated: July 1, 2011) Income Tax - Section 10B - Whether parity between the numerator and denominator is to be maintained while computing deduction of section 10B, and thus the amounts which are to be excluded from the figure of export turnover are required to be excluded from the ambit of total turnover also - Whether sales made to local entities operating in STTP can be termed as deemed export and form part of export turnover for the purpose of section 10A.


Indusind Bank Limited Vs Addl.CIT, Mumbai (Dated: June 17, 2011) Income tax – Sections 37, 145A - Whether the interest on government securities will become taxable on the date of coupon date as the assessee receives the right of the interest in the said securities only on the said date and it does not become due on day to day basis – Whether the loss on account of unmatured forward contracts as on the last date of financial year is allowable as expenditure – Whether the loss on account of change in accounting policy for the value of investment as per the directions of the RBI is to be disallowed.


Dharmendra Sinh Vs ACIT, Baroda (Dated: June 30, 2011) Income tax – Sections 132, 153A - Whether where the assessee had produced the details regarding the expenditure incurred on construction of house and the deviation between the cost of construction and the value determined by DVO is minor, no addition can be made for such deviation as undisclosed investment.


M/s HDFC Bank Ltd Vs DCIT, Mumbai (Dated: June 29, 2011) Income tax – Sections 14A, 37, 36(1)(viia), 40(a)(ia) – Whether where there is no nexus of exempt income, section 14A cannot be applied for disallowance – Whether where the loss is due to diminution in the value of permanent investment, the amortization of loss is an allowable expenditure for the remaining period of maturity – Whether when the income of interest in the hands of the recipient is exempted then no tax is deductible under Chapter XVII-B and consequently no disallowance is called for u/s 40(a)(ia) of the Act.


ACIT, Mumbai Vs M/s Lemuir Air Express (Dated: May 11, 2011) Income Tax - Sections 41(1), 143(3), 148 - Whether the assessee's liability ceases to exist on the sale of its international cargo business in respect of the total creditors and such amount should have been written back in the year under consideration.


ITO, New Delhi Vs M/s Indian Oil Panipat Power Consortium Ltd (Dated: June 30, 2011) Income Tax - Section 271(1)(c) - Whether when all particulars pertaining to a claim are disclosed in ROI, even then the assessee can be penalised for concealment under section 271(1)(C).


DCIT, New Delhi Vs M/s Fidelity Business Services India (P) Ltd (Dated: June 17, 2011) Income Tax - Sections 10A, 147, 148, Rule 27 – Whether the assessee is justified to raise notice of motion under Rule 27, instead of a cross appeal before Tribunal, when CIT(A) order in favour of the assessee, deleted the disallowance made by the AO but upheld the validity of reassessment proceedings against the assessee.


ACIT, New Delhi Vs Modi Revlon Pvt Ltd (Dated: October 21, 2011) Income Tax - Sections 40A(2) - Whether when the non-resident technology partner does not pass on proprietory right to assessee on transfer of knowhow, the royalty paid by the assessee under a knowhow transfer agreement is revenue or capital expenditure - Whether brand promotion expenses warrant part disallowance on the ground that the benefit also accrued to other related parties.



DCIT, New Delhi Vs M/s CMR Design Automation Pvt Ltd (Dated: July 21, 2011) Income Tax - Section 36(1)(ii) - Whether section 36(1)(ii) is applicable to commission and bonus paid to the director of the assessee company under a Board resolution.


Container Corporation Of India Ltd Vs ACIT, New Delhi (Dated: June 17, 2011)

Income Tax - Sections 80IA, 271(1)(c) - Whether penalty under section 271(1)(c) is leviable vis-à-vis debatable issues - Whether penalty can be imposed on an issue for

which Special Bench has been constituted.


Core Jewellery Pvt Ltd Vs ITO, Mumbai (Dated: April 13, 2011) Income Tax - Section 10A - Whether “unrealized export” can be included in the quantum of “export turnover” - Whether after the amendment of the earlier circular of RBI it can be said that the power of extension is done away with - Whether netting of export for the purpose of deduction under section 10A is permissible.


Whistling Woods International Ltd Vs ITO, Mumbai (Dated: June 18, 2010) Income tax - Sections 28, 57 – Whether it can be said that after the pronoucement of Bokaro Steel verdict the law propounded in Tuticon Alkali case is no more a good law, and hence all types of incomes attributable to surplus funds earned before the commencement of business is required to be reduced from the quantum of capital work in progress.


M/s ICICI Realty Ltd Vs DCIT, Mumbai (Dated: June 30, 2011) Income Tax - Sections 23(1)(b), 147, 148 - Whether AO can brush aside actual rent received and reopen assessment on the ground that the sister concern per se earned higher rent from the property located in the vicinity of the assessee's property - Whether reasons alone are to be seen while scrutinizing the jurisdiction of AO under section 147.



M/s Maa Vaishno Devi Vs DCIT, Indore (Dated: September 25, 2011) Income Tax - Section 80IB – Whether receipt of ‘excess cash' over and above the agreed business consideration is a receipt “derived from” Industrial Undertaking and hence available for deduction of 80IB - Whether the receipt of interest income and income from other sources can be said to be a receipt derived from Industrial Undertaking.


ACIT, Bhopal Vs M/s Bharat Oman Refineries Limited (Dated: September 14, 2011) Income Tax - Whether the receipts and payments on account of tender form and recovery of house accommodation and furniture & fixture provided with house accommodation are liable to tax when the business has not been fully set up.

2011-TIOL-679-ITAT -HYD

ACIT, Hyderabad Vs M/s Hyderabad Study Circle (Dated: May 13, 2011) Income Tax - Sections 2(15), 10(23C), 143(3), 147, 148 - Whether presence of new material is sine qua-non in a case where earlier assessment is completed under section 143(3) - Whether objection of the audit wing is sacrosanct and can be relied on for reopening a completed assessment without any fresh material.


DCIT, Hyderabad Vs M/s National Mineral Development Corporation Limited (Dated: July 8, 2011) Income Tax - Sections 143(3), 144A, 147, 244A - Whether when taxes are paid by the assessee in response to the demand notice, such cases fall within the purview of section 244A (1)(a).


ITO, New Delhi Vs M/s Elsamex India Pvt Ltd (Dated: September 16, 2011) Income Tax – Sections 194C, 194I, 201 – Whether amount received as rent against furniture and fixture attracts the provisions of section 194I and not of section 194C


DCIT, Ahmedabad Vs Jay Chemicals Industries Ltd (Dated: May 31, 2011) Income tax – Sections 36(1)(iii), 80HHC, 80IA – Whether the assessee is entitled to deduction u/s 80HHC where the net profit is in negative after excluding the profit on sale of DEPB licence and other income – Whether the assessee is entitled to deduction u/s 80IA where the objections raised by the AO that the unit was not a separate unit, no separate books of account were maintained, the address of the unit was not specifically mentioned, the project was not approved by the government authority and the plant and machinery were not owned by the unit, were found incorrect – Whether the interest is rightly disallowed by the AO u/s 36(1)(iii) without observing that the assessee had sufficient own funds for investment and part of the loans were given in the preceding years in which no disallowance was made.


DCIT, Mumbai Vs M/s Edelweiss Capital Ltd (Dated: February 15, 2011) Income Tax - Sections 28, 36(1)(vii), Rule 27 - Whether in absence of any finding on an alternative plea raised before the CIT (A), the ITAT has power to take cognizance of such plea - Whether advances made in respect of a capital asset on their forfeiture should be treated as business loss - Whether charges paid for the development of website though providing enduring benefit shall be treated as revenue in view of the regular up-gradation and the use of the same in day to day to business operations.


Shri Mahendra Mittal Vs ACIT, Mumbai (Dated: January 5, 2011) Income Tax - Section 271(1)(c) - Whether for the purpose of Section 271(1)(c), further satisfaction of AO is required when the assessee himself admits and offers an undisclosed income to tax - Whether an immunity from the penalty under Explanation 5 to section 271(1)(c) can be claimed when the time limit for filing of the return has expired long back.


ITO, Delhi Vs M/s Kaliashpati Developers (I) Pvt Ltd (Dated: March 31, 2011) Income Tax - Section 68 - Whether addition u/s 68 can be made when assessee has submitted the addresses, PAN, details, return of income, details of the bank account from where the money have been received and when the transactions have been confirmed.


ACIT, Kolkata Vs M/s North City Developers (Dated: July 14, 2011) Income Tax – Section 80IB – Whether only the incomes having 'direct nexus' with the development and sale of housing units are to be regarded as ‘profits from such housing projects' and not profits from some other activities which may be attributable to and not exactly derived from the housing project for the purpose of section 80-IB of the Act – Whether the receipts for ‘extra work', ‘CESC/Generator charges' and ‘for common installations and facilities' by the assessee, for which proportionate additional separate costs are payable by the purchasers/ buyers of different flats forming part of the housing project, are eligible to deduction u/s 80-IB(10) of the Act – Whether the profits for extra work carried out after handing over of possession to the buyers can be included in the separate Profit & Loss Account of the undertaking doing the development of housing project business and hence entitled to deduction u/s 80-IB(10) - Whether the AO was justified in not allowing deduction u/s 80IB on the ground that the assessee, who followed completion contract method of accounting, has not obtained completion certificate from the local authority, prior to 31-03-2007, and so, the condition prescribed in clause (a)(ii) of section 80IB(10) was not satisfied.



ITO, Mumbai Vs Shri Laiq Ahmed Shaikh (Dated: September 9, 2011) Income Tax - Section 80(IB) - Whether area of balcony and thickness of walls have to be excluded or included respectively in the total area of flats for the purposes of deduction of section 80(IB).


M/s Royal Western India Turf Club Ltd Vs DCIT, Mumbai (Dated: August 26, 2011) Income Tax – Sections 144, 250, Rule 46A – Whether in the case of delay in filing of

the appeal, a liberal and pragmatic view has to be taken in the matter of condonation of delay – Whether the ex-parte order passed by the Assessing Officer due to shortage of time and completing the assessment in summary manner and on test check basis can be sustained in law - Whether the order of CIT(A) in not admitting the additional evidence under Rule 46A and non-consideration of the written submissions filed alongwith paperbook, without giving any valid reason, is sustainable in law.


M/s Inautix Technologies India Pvt Ltd Vs ACIT, Chennai (Dated: August 9, 2011) Income Tax - Section 10A - Whether expenses which are not includable in the ambit of export turnover are also not to be included in the figure of total turnover - Whether where the exchange gain is inextricably linked with the business profits the same are eligible for deduction of 10A - Whether loss attributable to separate activity can be considered in computing deduction of section 10A.


M/s Tube Investments Of India Ltd Vs ACIT, Chennai (Dated: September 9, 2011) Income Tax – Sections 133A, 271(1)(c), 275(1)(a) – Whether merely because the explanation of the assessee is not accepted, levy of penalty becomes automatic – Whether merely because certain additions made in the assessment order have been sustained in appeal, penalty automatically becomes leviable.


M/s Camay Wafer (India) Pvt Ltd Vs ACIT, Mumbai (Dated: September 9, 2011) Income Tax – Sections 132(1), 139(1), 153A, 271(1)(c) – Whether the disclosure of income in two stages after the search and seizure proceedings can support the assessee's claim that the incomes were offered voluntarily and hence the penalty proceedings was bad in law.



Sonali Chetan Shah Vs ITO, Mumbai (Dated: July 15, 2011) Income Tax - Section 23(1)(i) - Whether the notional interest on the interest free security deposit can be considered while determining the ALV in respect of the Flat let-out as per the leave and license agreement.


Addl. CIT, New Delhi Vs M/s The Ganga Kisan Sahkari Chinni Mills Ltd (Dated: June 20, 2011)

Income Tax - Section 37(1) - Whether expenses incurred to meet statutory cess levied by state Govt. in order to carry on the business smoothly are expenses incurred wholly and exclusively for the purpose of business.


Abhiram Seth Vs JCIT, New Delhi (Dated: September 30, 2011) Income Tax – Sections 45, 143(1)(a), 147 – Whether when the assessee is given the option not to pay for the purchase of shares at the time of allotment under the ESOP Scheme but the same is to be deducted at the time of sale of shares, no transfer can be said to have taken place - Whether when shares, not transferred physically, are held for three years before redemption, such a valuable right is to be treated as capital asset, liable to capital gains tax.



M/s Eicher Motors Limited Vs DCIT, New Delhi (Dated: September 16, 2011)

Income Tax – Sections 14A, 37(1) – Whether the interest paid on borrowed has to be disallowed under the provision of section 14A where the assessee fails to prove that no borrowed fund was utilized for investment in assets which generated tax free income – Whether the provisions for warranty based on scientific study and calculated on the basis of actuarial and past history of case is an allowable deduction.


Shri Sureshchandra Agarwal Vs ITO, Mumbai (Dated: September 14, 2011) Income Tax - section – 2(47) – Transfer of Properties Act – Section – 53(A) – Whether when assessee sells out an old flat and buys a new one, having received full consideration, Sec 54 benefits cannot be claimed if the registration of sale deed of the old flat is delayed more than a year - Whether handing over of possession without execution of registered sale deed is good enough to treat a transaction as transfer.


2011-TIOL-661-ITAT -VIZAG

Ch Krishna Kannaiah Vs ITO, Tanuku (Dated: July 13, 2011)

Income tax – Sections 54B, 54F, 133A, 263 – Whether when there are two views possible on an issue, and the favourable one is relied upon by the assessee, revisionary powers u/s 263 can still be invoked on the ground that the other view was not taken by the assessee.


DCIT, Bangalore Vs M/s Golflink Software Park P Ltd (Dated: May 31, 2011)

Income Tax - Section 14 - Whether income from a commercial property developed suitably to run software Technology Park is taxable under the head business income.


Nuclear Power Corporation of India Ltd Vs ITO, Surat (Dated: September 30, 2011) Income Tax - Sections 9(1)(vii), 17(2), 17(2)(vi), 192, 194C, 194I, 194J, 197, 200, 201(1A), 250; Rule 3; CBDT Circular No 715 of 1995 - Whether lumpsum food allowance provided by the assessee company to its employees working in a remotely located plant amounts to perquisite, liable to tax - Whether payments made by the assessee towards maintenance contracts amount to fees for technical services u/s 194J.



DCIT, New Delhi Vs BTA Cellcom Ltd (Dated: September 30, 2011)

Income Tax - Section 32 - Whether computer accessories like Network, RAM, Surf Controller, S.T. Couplers, Call classifiers, Digital card and Analog card, etc are entitled to depreciation at the higher rate of 60% - Whether if the asset falls under a particular block of asset and the same is not used during the relevant year, the depreciation can still be claimed.


ITO, New Delhi Vs Nandi Promoters Pvt Ltd (Dated: April 21, 2011) Income Tax - Sections 269SS, 271D - Whether any sum received in cash attracts penalty under section 271-D - Whether contention of the assessee that it has received share application money can be accepted without there being any evidence on record to establish any increase in authorized share capital.


M/s NRB Bearings Ltd Vs DCIT, Mumbai (Dated: September 20, 2011) Income Tax - Section 32(1)(iia) - Whether where an assessee who operates several units, expands one of the units and enhances the capacity for the purpose of additional depreciation the increased capacity has to be seen with reference to the whole business or individual unit.


Shri Viren P Choksey Vs ACIT, Mumbai (Dated: August 19, 2011)

Income Tax - Section 271(1)(c) - Whether penalty is leviable in a case where assessee in order to buy peace of mind offers peak credit of certain transactions particularly when income attributable to these transactions has been accepted as

correct - Whether an explanation of the assessee on the basis of which penalty proceedings are dropped for two years can be interpreted in different manner for another year for justifying penalty.


DCIT, Nadiad Vs Shri Ajay Kumarlal Tehalyani (Dated: June 30, 2011) Income Tax - Section 32(1)(iia) - Whether where an assessee who operates several units, expands one of the units and enhances the capacity for the purpose of additional depreciation the increased capacity has to be seen with reference to the whole business or individual unit.



M/s Jindal Photo Ltd Vs DCIT, New Delhi (Dated: September 23, 2011) Income Tax - Sections 14A, 80IB, Rule 8D - Whether insurance claim u/s 80IB is not admissible - Whether Rule 8D can be invoked when no satisfaction has been recorded by the AO regarding the assessee's calculation being incorrect.

2011-TIOL-652-ITAT -PUNE

Ratilal G Solanki Vs ACIT, Pune (Dated: June 30, 2011) Income Tax - Sections 132(1), 158BFA (2) - Whether penalty u/s158BFA (2) can be imposed where there is difference in estimation of undisclosed income


M/s Vastukar Vs ITO, Balasore (Dated: August 12, 2011) Income tax – Sections 40(a)(ia), 69 - Whether the assessee is liable to deduct tax at source at the payment made to its landlord as the same is not claimed by the assessee as expenditure but included in the capital work in progress – Whether the addition is rightly made u/s 69 of the Act even though the assessee explained that the amount received was from the prospective buyer.


Shri Vir Vikram Vaid Vs DCIT, Mumbai (Dated: September 9, 2011) Income Tax - Section 2(22)(e), 17(2)(iv), 143(1) - Whether when individual assessee, who is a Director in the company, lets out his own premises to the company, expenses incurred on renovation of the premises are to be treated as deemed dividend in the hands of the individual assessee who also holds majority share in the company.



ACIT, Mumbai Vs M/s BSES Ltd (Dated: September 30, 2011) Income Tax – Sections 80IA, 80IB, 115JB, 143(3), 147, 148 – Whether based on the MERC Order for tariff determination for sale of power, which was not available at the time of completion of original assessment, it can be construed that the assessee did not disclose full facts, and hence there was a reason to believe by the AO for invoking the reassessment provisions u/s 148 – Whether the orders of the AO having merged with that of appellate authorities, the AO loses his jurisdiction to reopen the assessment – Whether the parameters for reopening the assessment on the basis of ‘Reason to believe' has to examined only at the time of issue of notice u/s 147 r w s 148 or also at the time of completion of assessment.


De Beers India Private Limited Vs DCIT, Mumbai (Dated: September 5, 2011)

Income Tax - Sections 35E, 37(1) - Whether matching principle can be applied to disallow the claim of expenses ignoring corresponding receipt of income, attributable to the expenses even if net result is loss.


Mata Vaishno Estates Vs ITO, Karnal (Dated: May 31, 2011) Income tax – Sections 24, 40(b) – Whether the assessee firm is entitled to claim deduction for the interest paid on the capital of the partners u/s 24(b) from the ‘income from house property' – Whether the interest paid to the partner on their capital contribution can be equate d as borrowed funds - Whether the interest amount paid on capital of partners cannot be allowed as deduction u/s 40(b) against the income from house property as no deduction can be claimed from the house property income other than the deduction u/s 24 – Whether the assessee can claim for the change of the status of the firm by only filing the revised return under the status of AOP.


Jayshree Motors Private Limited Vs ITO, Kolkata (Dated: September 23, 2011) Income Tax – Sections 36(1)(iii), 40(a)(ia), 69C, 194J – Whether assessee is required to deduct tax at source when the payments are actually made to employees of the company on account of salary dues to them – Whether addition u/s 69C of the Act is justified for non production of the bills/ vouchers in respect of some of the fixed assets purchased by the assessee – Whether the onus to establish that the loan funds on which assessee is paying interest are not utilized in giving the loans to the sister concern is on assessee – Whether the notional interest could be disallowed in case the assessee fails to discharge its onus.


Annapurna Agencies Vs DCIT, Ahmedabad (Dated: July 21, 2011) Income Tax - Sections 36(1)(iii), 37, 143(1), 271(1)(b) - Whether merely incurring business expenditure and paying by cheque apart from deducting tax at source on such payments are not enough to claim business expenses - Whether assessee is required to establish that such expenses were incurred wholly and exclusively for the purpose of business - Whether interest paid on capital can be disallowed notionally ignoring that no disallowance was made in earlier year in which such advances were made and the assessee had sufficient interest free funds - Whether failure to attend proceedings before AO attracts penalty for non-appearance.



DCIT, Mumbai Vs M/s Hindustan Lever Ltd (Dated: August 19, 2011) Income Tax - Sections 80HHC 80IA(9), 143(3), 147, 148 - Whether restriction placed by section 80-IA (9) is limited to the extent of allowance of deduction and not the computation of deduction available under chapter-VI - Whether reopening of an assessment after the lapse of four years is not tenable when all material facts were duly disclosed by the assessee.


Skypak Service Specialists Ltd Vs DCIT, Mumbai (Dated: May 31, 2011) Income tax – Sections 2(24)(x), 36(1)(va), 41(1) – Whether the wavier of principal amount of loan is a capital receipt or revenue receipt – Whether the loss claimed on sale of long term capital asset is allowable as the price of the shares at which the sales were made was supported by the net worth as reflecting in the balance sheet of the company – Whether the addition for employees contribution of PF is wrongly made u/s 2(24) when the amount was deposited before the due date of filing of income tax return.


DCIT, Mumbai Vs M/s Stup Consultants Pvt Ltd (Dated: September 9, 2011) Income Tax – Sections 44AA, 115JB, 145 – Companies Act - Sections 209, 210 - Whether the provisions of Section 209(3) of the Companies Act, 1956 overrides the provisions of section 145 of the Act so far as the maintenance of the books of accounts is concerned – Whether the choice in the matter of selection of the method of accounting u/s 145 of the Act is not available to corporate Assessees in view of the provisions of Section 209(3) of the Companies Act, 1956 - Whether the Accounting Standards issued by the ICAI in the context of the books of accounts reflecting true state of affairs of business has to be mandatorily followed for determining total income under the Act – Whether no option is available to the assessee under the Income Tax Act, 1961 to adopt any system of accounting except mercantile system of accounting.


Mr Vivek Kedia Vs ITO, Mumbai (Dated: September 23, 2011) Income Tax – Sections 68, 131, 133(6) – Whether CIT(A) is justified in confirming the addition made u/s 68 of the Act by adding the entire credits in the various bank accounts as unexplained credits – Whether if the additions were made merely on the basis of the bank statement, then the same ought to be made applying peak addition theory.


DCIT, Kolkata Vs M/s Bihariji Ispat Udyog Ltd (Dated: September 6, 2011) Income Tax - Sections 36(1)(iii), 68 - Whether any addition under section 68 is permissible when the advances are received by account payee cheques and interest and shares have been paid and allotted against these advances - Whether any disallowance of interest paid as per the norms of section 36(1)(iii) is not sustainable if the advances are made because of commercial expediency.


ACIT, VisakhapatnamVs Visakhapatnam Cooperative Bank Ltd (Dated: August 29, 2011) Income Tax - Section 194A - Whether in terms of section 194A(3)(v), a co-operative society is exempt from deduction of TDS on payments of interest paid to its members - Whether amount of interest paid by a co -operative bank, which provides loans only to the members who subscribed for shares, is appropriation profits or it re duces the quantum of actual interest chargeble.


Woodward Governor India Ltd Vs Addl.CIT, New Delhi (Dated: September 16, 2011) Income Tax – Sections 37(1), 145 - Whether provision for warranty on sales made during the relevant previous year is an ascertained liability and hence allowable as a deduction in the computation of income.


Shv Energy Lpg Infrastructure Pvt Ltd Vs DCIT, Mumbai (Dated: July 22, 2011 ) Income Tax - Section 271(1)(c) - Whether making provisions without actually writting off during the year but in the next year can be said to be concealment of income or furnishing of inaccurate particulars of income.


M/s J M Financial Ltd Vs ITO, Mumbai (Dated: April 20, 2011) Income Tax - Sections 22, 36(1)(iii) - Whether rental income can be treated as

business income even though the assessee is not in the business of letting out property - Whether interest and other expenses are allowable when there is no evidence of any business activities after formulation of the joint venture company.


Gurship Education Trust Vs DIT, Mumbai (Dated: September 28, 2011) Income Tax – Section 2(15), 11, 12A, 12AA – Whether the activity of imparting training to merchant navy cadets can be termed as a charitable activity and hence, the assessee is entitled to be recognized as a charitable Trust u/s 11 of the Act - Whether registration of the trust u/s 12AA can be refused on the ground that the activities of imparting the training to the merchant navy cadets are not in nature of Educational activities within the meaning of section 2(15) of the Act.



Alma Mater Agencies (P) Ltd Vs ITO, New Delhi (Dated: August 26, 2011)

Income Tax - Sections 22, 56 - Whether income received from a fully furnished property, let out with certain amenities such as security and ACs is liable to be taxed under the head 'income from other sources' merely because the same was assessed as income from other sources in earlier years.


ITC Limited Vs DCIT, Kolkata (Dated: September 8, 2011) Income Tax – Sections 37(1), 40A(9) – Whether the Staff Recreation Club and Staff Club for which the assessee has incurred the expenses can be said to be for the welfare of its employees and hence the provisions of section 40A(9) of the Act are not attracted in such circumstances – Whether expenditure incurred on such activities is allowable u/s 37(1) of the Act.


DCIT, Kolkata Vs M/s Swaraj Marketing (Dated: August 26, 2011) Income Tax - Section 4 - Whether statutory amounts such as service tax collected on behalf of Govt. can be treated as income of assessee when the same has been paid to the Govt - Whether an income which is offered for taxation in previous assessment year can be taxed in the succeeding year merely because the payer of such income is following cash system of accounting.


Growth Avenues Ltd Vs JCIT, Surat (Dated: May 19, 2011) Income tax – Sections 269SS, 269T, 271D, 271E – Whether the penalty can be levied u/s 271D / 271E for the amount received and repaid in cash in the hands of the

assessee company though as per the statement of the lender the amount was given to and repaid by the directors in their individual capacity.


ITO, Mumbai Vs Riyaz Qureshi Ahmed (Dated: July 29, 2011)

Income Tax - Section 56(2)(vi) - Whether when assessee fails to substantiate source of deposits in brothers' NRI accounts, payments received as gift can be subjected to tax.



Bharati Airtel Ltd Vs ACIT, Bhubaneswar (Dated: September 23, 2011) Income Tax – Sections 133A, 194H, 201, 201(1A) – Whether the discount offered by the cellular company to its distributors on SIM cards and recharge coupons is in the nature of 'commission' on which tax is required to be deducted under the provisions of Section 194H.


Bhubaneswar Development Authority Vs CIT, Bhubaneswar (Dated: August 25, 2011) Income Tax - Section 12AA - Whether, to obtain registration u/s 12AA, submission of full financial statements before the CIT is necessary - Whether when such submission is not made, it calls for fresh consideration.


ITO, Bhubaneswar Vs M/s Silicon Institute Of Technology (Dated: September 23, 2011) Income Tax – Sections 11, 12A – Whether the mere fact that a society or body is making systematic profit, even though the profit is utilised only for charitable purpose, yet it cannot be said that it can claim exemption u/s 11 of the Act – Whether the activity of the assessee-trust to derive income out of educational activity cannot be treated as a charitable activity.


Vigyan Bharati Charitable Trust Pandra Vs Addl.CIT, Bhubaneswar (Dated: August 12, 2011) Income tax – Sections 201, 201(1A), 271C, 273B – Whether penalty can be levied on the amount which is tax deducted at source but not deposited to the government account and is paid only after TDS survey conducted on the assessee.

2011-TIOL-625-ITAT -PUNE-TM

Sandvik Asia Ltd Vs Dy.CIT, Pune (Dated: September 13, 2011) Income Tax – Section 36(1)(iii), 37(1) – Whether the interest paid to the income tax department on late payment of tax can be claimed as deduction while computing the business income of the assessee - Whether the interest received from and paid to the income tax department can be adjusted or netted against each other.



ACIT, Mumbai Vs M/s ECD Electronics (P) Ltd (Dated: April 29, 2011) Income Tax - Sections 14A, 28, 36(1)(iii) - Whether the profit/loss earned from the business of dealing in shares can be treated under the head “profits and gains of business or profession - Whether CIT(A) is justified in treating the interest expenditure incurred in relation to the said business as allowable u/s.36(1)(iii) with direction to disallow the expenditure incurred by the assessee in relation to the earning of dividend income u/s.14A.


Chakala, Andheri Vs ACIT, Mumbai (Dated: April 20, 2011) Income tax - Capital vs Revenue Expenditure - Sections 28(iiid), 32, 80HHC 145A - Whether the expenses incurred by the assessee for printing cylinders / dyes are capital in nature or revenue when the life of such items used in printing job is short - Whether the assessee is entitled to higher depreciation on the UPS as these are the "Automatic voltage controller machines" listed under the head "Energy Saving Devices" as an electrical instrument eligible for 100% depreciation - Whether no disallowance can be made for the interest expenditure for the amount which was given on loan by the assessee to its sister concern at a reduced rate of interest if it was given out of own funds - Whether the disallowance was wrongly made on adhoc basis for the leave encashment without determining the amount for which the deduction was claimed on the basis of actuarial valuation after change of the basis of claim on actual payment basis - Whether the assessee is entitled to deduction u/s 80HHC on DEPB income even when the conditions as per the third proviso to section 80HHC (3) is not fulfilled - Whether the assessee is entitled to higher depreciation on the cars used for hiring though hiring of cars was not the main object of the assessee - Whether the assessee is entitled to depreciation on the building which was not registered in the name of the assessee but had right of ownership by making full payment and getting the possession of the building.


Mr Pravin Bhimshi Chheda Vs DCIT, Navi Mumbai (Dated: May 31, 2011) Income tax – Section 2(22)(e) – Whether the amount given by a company, in which the assessee had substantial interest, to a concern for purchase of material and the said amount is given as a loan by the concern to a partnership firm in which the assessee had substantial interest, is to be treated as deemed dividend u/s 2(22)(e) in the hands of the assessee particularly when the partnership firm returned the money on the same day to the company which had given the amount to the concern for purchase of material and the genuineness of the purchase transaction was proved.


ACIT, Mumbai Vs Shailesh Mulchand Nissar (Dated: June 28, 2011) Income tax - Sections 40(a)(ia), 194J - Whether disallowance can be made u/s 40(a)(ia) in respect of Transaction charges, Leaseline and VSAT charges etc., paid to Stock Exchange, without deduction of tax at source.


DCIT, Kolkata Vs Nicco Uco Alliance Credit Ltd (Dated: May 6, 2011) Income Tax- Sections 143(2) 147, 148, 292BB - Whether service of scrutiny notice u/s 143(2) is a condition precedent for framing an assessment under section 147 read with 143(3) - Whether provisions of section 292BB can cure such sort of jurisdictional error.


Jindal Steel & Alloys Ltd Vs ACIT, Mumbai (Dated: February 28, 2011) Income tax – Sections 10(34), 14A, 115JB, 36(1)(iii), 115JB, Rule 8D – Whether where there is no income exempt u/s 10(34), the disallowance can be made u/s 14A while computing the ‘book profits' u/s 115JB of the Act.


M/s Brakes India Ltd Vs DCIT, Chennai (Dated: June 10, 2011) Income Tax - Sections 80-IB, 80HHC - Whether, even if the details of other income are not on record, the benefits of Sec 80IB are available to it - Whether the receipt of scrap sale is to be included in the total turnover while computing the deduction u/s 80HHC.

2011-TIOL-617-ITAT -MUM-SB

Bennett Coleman & Co Ltd Vs Addl.CIT, Mumbai (Dated: September 30, 2011) Income Tax – Sections 45, 48 - Whether the loss arising on account of reduction in share capital can be subjected to provisions of section 45 r.w.s. 48 and, thus, such loss can be allowed as capital loss – Whether notional loss or income can be subjected to the provisions of the Income Tax Act – Whether assessee's rights can be said to have been extinguished upon reduction of share capital for the purpose of charging under capital gains. Also see analysis of the Order


ITO, Mumbai Vs Shri Nitin P Mavani (Dated: April 15, 2011)

Income Tax - Rule 9A - Whether Rule 9A is applicable where the assessee is unable to commercially exploit the serial for a period of six years and hence write off the aggregate cost of production.


DCIT, Hyderabad Vs M/s Sankhya Infotech Ltd (Dated: April 21, 2011) Income Tax - Sections 10A(3), 40(a)(ia), 143(3), 147 - Whether the provisions of Explanation (2) to section 10A(3) are applicable to the issue of repatriation of remittances into India - Whether the RBI's letter of approval is applicable for those invoices for which have not fallen


Gujarat State Financial Corporation Vs CIT, Ahmedabad (Dated: August 12, 2011) Income Tax - Sections 143(1), 147, 263 - Whether scope of assessment under section 147 is akin to regular assessment and hence the AO can assess other items also which may come to its notice during reassessment - Whether if AO fails to examine them, the order is to be termed as erroneous and prejudicial to the interest of revenue.


M/s Navnirman Infrastructure Vs DCIT, Ahmedabad (Dated: May 13, 2011)

Income tax – Section 40(a)(ia) – Whether no disallowance can be made u/s 40(a)(ia) if the TDS deducted is deposited after the end of the FY but before the due date of filing the ITR as per the retrospective amendment made w.e.f 1.4.2005 which is clarificatory in nature.


M/s Enam Securities Pvt Ltd Vs DCIT, Mumbai (Dated: May 20, 2011) Income tax – Sections 2(47), 37, 73 – Whether where the major income of the assessee is from shares trading, the explanation to section 73 is applicable and the losses are correctly treated as speculation losses – Whether the assessee is entitled to claim the benefit of indexation on redemption of preference shares of the group concern and the redemption will be treated as transfer of shares within the meaning of section 2(47) – Whether the penalty levied by the Stock Exchange and NSCCL for late paying or for nonpayment of margin money is for the offence for violation of the law and disallowable.


Sri Damodar Prasad Agarwal Vs ITO, Kolkata (Dated: June 30, 2011) Income Tax - Sections 254, 268 - Whether instruction of CBDT prescribing monetary limits for filing appeal before the ITAT is applicable to pending cases also and hence appeal of the revenue is not maintainable.

2011-TIOL-610-ITAT -LKW

M/s ZAZ Fashions Vs ACIT, Kanpur (Dated: March 14, 2011) Income Tax - Sections 40(a)(ia), 143(3), 144, 145, 194C - Whether rejection of books on account of non-maintenance of stock register and also the failure to prove the trading result is justifiable - Whether it is incumbent on the AO to estimate the profits in a reasonable manner.


ITO, Mumbai Vs Shri Tilak Kunverji Gada (Dated: July 22, 2011)

Income Tax – Sections 247(i), 2(47)(v), 54EC - Whether when all rights in a property are relinquished, and possession is handed over to the buyer, it can be said that the transfer of land has taken place and hence the gain attributable to such transfer is taxable in that year. Also see analysis of the Order


ACIT, Chennai Vs M/s Shriram Chits Tamilnadu Pvt Ltd (Dated: June 24, 2011) Income tax – Section 37 - Whether where the assessee has advanced money to its sister concern out of its own funds with whom the assessee is maintaining a current account, no disallowance can be made for the interest paid on borrowed funds – Whether the bad debts cannot be disallowed merely stating that no legal action was taken by the assessee for recovery of the same – Whether the administration expenses which are not directly related to any construction project can be disallowed and can be treated as cost of the project – Whether the amount paid as compensation for non completion of the business commitments can be disallowed merely because the project could not be started.


M/s Sri Lakshmi Comptech Vs ITO, Srikakulam (Dated: July 18, 2011) Income tax - Whether deduction under section 10A can be availed for the period during which the assessee had not got the approval to be treated as STPI unit - Whether exports proceeds, which are brought into the country after expiry of six months limit, are eligible for Sec 10A benefits.


ACIT, Mumbai Vs M/s K M G Jewellery (Dated: July 27, 2011)

Income Tax - Section 10A - Whether a firm enjoying deduction of section 10A, upon alteration in its constitution, will lose the benefit of 10A for all subsequent years - Whether reinstatement of original constitution of such firm, after few years, would also not be sufficient for Sec 10A deduction.

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