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IMPORTANT JUDGMENTS

IMPORTANT JUDGMENTS. BY DR. RAKESH GUPTA FCA, FCS, FICWA, LLB, Ph.D EX-MEMBER,INCOME TAX APPELLATE TRIBUNAL RAKESH RAJ & ASSOCIATES NEW DELHI .

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IMPORTANT JUDGMENTS

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  1. IMPORTANT JUDGMENTS BY DR. RAKESH GUPTA FCA, FCS, FICWA, LLB, Ph.D EX-MEMBER,INCOME TAX APPELLATE TRIBUNAL RAKESH RAJ & ASSOCIATES NEW DELHI

  2. REASSESSMENTIn re-assessment, Provisions relating to regular assessments to apply and Time of 12 months in which to issue notice under section 143(2) Applies to reassessments. Failure to issue notice within time limit would entail the Return deemed accepted and Assessing Officer thereafter loses jurisdiction to make assessment – RAJ KUMAR CHAWLA VS. ITO 277 ITR 225 (DELHI) (SB)(AT), CIT vs M.CHELLAPAN 198 CTR 490(Mad).

  3. OTHER DECISIONS • DR. K.C.VERMA VS ITO 84 ITD 33 (DEL), • ACIT VS BAIKUNTH NATH SINGHAL 89 ITD 109(AGRA) • B.D. GUPTA VS. DCIT 90 ITJ 915 (AGRA) • ITO VS. AMBALAL JAIN 90 TTJ 1056 (JODH) • MRS. C. MALATHY VS. ITO 89 TTJ 939 (CHENNAI) • ACIT VS. SANTOSH KUMAR 87 ITD 107 (ALL.) • MRS. C. MALATHY VS. ITO 88 ITD 37 (CHENNAI) • EVEN IN CASE OF RETURN FILED U/S 148, PROVISIONS OF SECTION 143 INCLUDING 143(2) APPLIES AS WAS HELD IN THE FOLLOWING DECISIONS: • 236 ITR 480(SC) • 256 ITR 481 (P&H)

  4. REASSESSMENT • REASSESSMENT ORDER ON A GROUND DIFFERENT FROM ONE ON WHICH PROCEEDING WAS INITIATED IS INVALID QUA SUCH GROUND • M.P.IRON STORE VS CIT 189 CTR 154(P&H) • AMARINDER SINGH DHIMAN VS CIT269ITR378(P&H) • VIPIN KHANNA VS CIT255ITR220(P&H)

  5. BUSINESS EXPENDITURE Provision for future liability under warranty when Warranty clause is part of sale document – It is then Committed liability and Can be construed as arising in definite terms in accounting year though actual quantification is deferred to future date – Provision for future warranty expenses made on basis of figures for past years is allowable in year of sale – CIT VS. VINITEC CORPORATION PVT.LTD. 278 ITR 337 (DEL).

  6. DISALLOWANCE UNDER SECTION 43B Statutory liabilities of sales tax, ESI contribution, PF contribution, etc. paid after the close of previous year but before the due date for filing of return under section 139(1) could not be disallowed under section 43B – CIT VS. ALEMBIC GLASS INDUSTRIES LTD. 197 CTR 514 (GUJ).

  7. PF AND ESI EMPLOYER’S CONTRIBUTIONS IN RELATION TO AND PRIOR TO A.Y. 2003-04 PAID BELATEDLY-POSITION OF DISALLOWANCE ADDL.CIT VS. VESTAS RRB INDIA LIMITED 92 ITD 1 (DEL). -JAGATDAL JUTE & INDUSTRIES LTD. VS. DY.CIT 91 TTJ 770 (CAL). –MINWOOL ROCK FIBRES LTD. VS. JCIT 87 TTJ 1133 (NAG) -DY.CIT VS. MOUNT SHIVALIK BREWERIES LIMITED 90 TTJ 692 (CHD.`B’).

  8. DUTY DRAWBACKDuty drawback being integral part of pricing of goods, is part of the cost of production of the industrial undertaking hence `derived from’ industrial undertaking and eligible for deduction under section 80J – CIT VS. INDIA GELATINE & CHEMICALS 194 CTR 492 (GUJ).

  9. SALARY – RELIEF UNDER SECTION 89 Compensation received under voluntary retirement scheme is covered by the word `salary’ as defined in section 17 and assessee is entitled to the benefit of section 10(10C) as well as relief under section 89 in respect of such compensation – CIT VS. G.V. VENUGOPAL 193 CTR 661 (MAD).

  10. SCRUTINY ASSESSMENTScrutiny assessment in violation of CBDT circular is invalid as Circular by way of Press Release was issued under section 119(1) and same was binding on IT authorities – CIT VS. SMT. NAYANA P. DEDHIA 192 CTR 526 (AP).

  11. MANDATORY “SATISFACTION” IN THE ASSESSMENT ORDER FOR ASSUMING VALID JURISDICTION TO IMPOSE PENALTY UNDER SECTION271(1)(C) • CIT V RAM COMMERCIAL ENTERPRISES LTD.(2000) 246 ITR 568 (DELHI) • DIWAN ENTERPRISES V CIT(2000) 246 ITR 571 (DELHI) • CIT V MUNISH IRON STORE(2003) 263 ITR 484(P&H) • CIT V S R FRAGNANCES LTD.(2004) 270 ITR 560 (DELHI)

  12. 5. CIT V BR SHARMA(2005) 275 ITR 303 (DELHI)6. CIT V MAYAR INDIA LTD.(2005) 142 TAXMAN 230(DELHI)7. CIT V VIKAS PROMOTERS (P) LTD.(2005) 145 TAXMAN 300 (DELHI), 194 CTR 384(DEL)8. CIT V GLOBE SALES CORPORATION(2005) 145 TAXMAN 530(DELHI)

  13. RECORDING OF SATISFACTION BEFORE ASSUMPTION OFJURISDICTION U/S 158BD • AMITY HOTELS PVT.LTD. VS. CIT 272 ITR 75 (DEL). • KIRAN ENGG.PVT.LTD. VS. DY.CIT 91 TTJ 40 (DEL `B’). • RAKESH KUMAR JAIN VS. ACIT 89 TTJ 203 (DEL `C’). • Vishwanath Prasad vs Asstt. CIT 86 ITD 516 (All). • MADAN LAL JALAN & ORS. VS. ACIT 87 TTJ 596(ALL) • Janki Exports P Ltd. vs UOI 193CTR 730(Del)/145Taxman820(Del)

  14. IDENTITY OF THE SHAREHOLDER IF PROVED IS THE DUE DISCHARGE OF BURDEN OF PROOF • BARKHA SYNTHETICS LTD VS ACIT 197 CTR 432 (RAJ) • CIT VS ACHAL INVESTMENT LTD 268 ITR 211(DEL)

  15. LAND & BUILDING ARE TWO SEPARATE AND DISTINCT ASSETS AND HENCE SALE CONSIDERATION MAY BE BIFURCATED TO COMPUTE SEPARATE CAPITAL GAINS • CIT VS CITI BANK 182 CTR 635 (Bom) • CIT VS LAKSHMI B. MENON 264 ITR 76 (KER)

  16. WHILE COMPUTING CAPITAL GAIN ON SALE OF FLAT OF HOUSING SOCIETY, DATE OF ACQUISITION OF SHARE IN SOCIETY IS RELEVANT FOR DETERMINING LONG TERM OR SHORT TERM • CIT VS JINDAS PANCHAND GANDHI 279 ITR 552 (Guj)

  17. SHARE APPLICATION MONEY ACCEPTED IN CASH WHETHER TO ATTRACT PENTLY U/S 271D • BHALOTIA ENGINEERING WORKS (P) LTD. VS. CIT 275 ITR 399 (JHARKHAND) • JAGVIJAY AUTO FINANCE LTD. VS. ACIT 52 ITD 504 (JAIPUR) • PRABHAWSHALI CHIT (P) LTD. VS. ACIT 49 ITD 566 (DELHI)

  18. INCOME FROM HOUSE PROPERTY AND DEDUCTION UNDER SECTION 24(1)(vi)Transaction of allotment of property under installment scheme gives rise to relationship of borrower and lender between the allottee and the concerned authority and, therefore, interest portion of the installments paid by the assessee constituted interest on borrowed capital deductible under section 24(1)(vi) – CIT VS. MASTER SUKHWANT SINGH 196 CTR 122 (P&H).

  19. INCOME FROM HOUSE PROPERTY Notional interest on interest free loan received from lessee can neither be a determining factor nor a component to be taken into consideration for determining the annual value- CIT vs Hemraj Mahabir Prasad Ltd. 199 CTR 105(Cal)

  20. FILING OF AUDIT REPORTS AND OTHER EVIDENCES WITH THE RETURN IS MANDATORY OR DIRECTORY?Filing of audit report along with return is Not mandatory and Audit report filed before completion of assessment is Sufficient compliance with condition CIT V. GUPTA FABS 274 ITR 620 (P&H).

  21. INCOME FROM UNDISCLOSED SOURCE OF FIRMDeposits by partners on first day of business are Not assessable as income from undisclosed sources of firm CIT VS. JAISWAL GRAIN STORES 272 ITR 136 (ALL)

  22. PENALTY UNDER SECTION 271(1)(C) IN THE CASE OF LOSS ASSESSED • CIT VS ADITYA CHEMICALS LTD-197 CTR 241(Del) • CIT VS R.G.SALES P LTD 278 ITR 140(CAL) • CIT VS ZAM ZAM TANNERS 197 CTR 221(ALL) • CIT VS ROCKSTEEL P LTD 143 TAXMAN 304 (P&H)

  23. THANK YOU

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