Decades long Controversy over defining “Month “ whether Calender Month or Lunar Month

The word “month” has been mentioned in the Income tax law in number of provisions. However the term has not been defined in the Income tax law. Interpretation of the term poses number of issues especially in the interest calculation. However to understand the controversy around it, we shall have to start the journey from genesis as under:

No remand can be allowed by ITAT to improve upon the case of revenue Laxman Dass Makjija Agra Bench TM 313 ITR 123 AT; Amina ITAT Del TM 73 ITD 125; In SMC Share Brokers 109 TTJ 700 affirmed by DHC 288 ITR 345 Neema Sayal CHD ITAT 70 ITD 62; All ITAT TM 50 ITD 1;ZUARI LEASING ITAT TM 112 ITD 205

Decision of Co-ordinate Bench when no contrary decision of Bench itself is binding on ITAT Bench hearing the cases ITA 357/ASR/2010 ACIT Vs. S.S Embroiders.

On Embroidery machinery, 50% depreciation is allowable ITA 36837/2011/ASR dated 4-6-12 in Amit Emb.

Penalty for not quoting PAN in F.16A upheld by ITAT Amritsar ITA/ASR/2012 DATED 17-07-2012.

Punjab & Haryana High Court in Sudhir Nagpal and Bros. ITA 463/2009 explained that if individual co owners join their resources and acquire property in name of AOP, only then it could be assessed in hands of AOP.Mere accruing of income to more than one person shall not constitute AOP.

VDIS Cases on Sale of Jewellery for assesses : -Manoj Kumar Aggarwal (ITAT Spcl. Bench) on 25.07.08 ITA 404/2003 -Tejinder Singh HUF ITA 163/ASR/2003,However remanded by P&HHC on 08.02.2011 in 292 CTR352 to Special Bench for hearing on 04-04-11 -Kiran Deepak Kukreja 190 Taxmann 393(BOM HC) -Uttam Chand Jain 182 Taxmann 243(BOM HC) -Jagdish Mitter TA 268/2002 -Mohan Lal Aggarwal All HC ITA 136/2010 -Yogesh Chand Sharma ITA 131/Agra/2011 -Sanjay Mahipal ITA 452/DEC/2009 Note Transaction of Rishi Grover Prop Vishnu Jeweller held genuine by ITAT Amritsar. ITA 198 TO 202/ASR/2006 26.06.09. MA 55 TO 59/ASR/2010 of department dismissed by ITAT on 26.06.2012.

Capital gain on agriculture land with in 8 km from area not notified, not chargeable to taxable. Madhu Kumar N. HUF 78 DTR 391 (Kar HC)

Educational Institution providing advance to two organizations publishing magazine. Held that advance is incidental and ancillary to main objects. AP High Court quoted SC in Yogiraj Charity Trust 103 ITR 777 that if primary or dominant purpose is charitable , another object which may not be charitable but is incidental to primary object, would not prevent trust from being a valid trust Vijay Vani Education Trust (AP HC) 349 ITR 230

Assessee society providing citizen services to common people. Charging huge fees in addition to charges levied by State Government . Activities are not charitable. Sukhmani Society for Citizen Services (2012) 139 ITD 307 (ASR Trib.)

Marathon conducted in a commercial manner. Trust can not be said to be existing solely for charitable purpose. Hyderabad Runners Society (2012) 139 ITD 464 (HYD.)

Occupancy rights of company’s flat to shareholders of closely held company which occupancy rights could be transferred by shareholders, amounts to dividend u/s 2(22)(e) Shanti Kumar D. Majitha (Mum Trib.)

S. 2(22)(e) is not applicable to trade advance to sister concern in which shareholders of the company has substantial interest. Jay peem Granites (HYD.) 139 ITD 564.

Amount received for right to use network for 20 years shall be taxable over 20 years Reliance communication Infrastructure Ltd. 79 DTR 198 (BOM.)

Interest from Investment of surplus funds in bank not covered by character of mutuality and liable to tax. Societe De International 139 ITD 328 (Mum)

When mutual concern provides goods and services to non members also and profit flows from said transaction, it is chargeable to tax. Societe International De Telecommunication 139 ITD 328 (Mum Trib)

Compensation received from landlord for delay in actual delivery of leased premises. Pre-operative rent was credited to pre-operating expenses to be capitalized and post operative rent was credited to rent expenses. Held that no portion of compensation amount is taxable as revenue receipt. American Express (India) 79 DTR, 127 (Delhi Trib.)

Difference between purchase price and redemption price of debentures offered for taxation over a period of six years. Apex court upheld order of ITAT and reversed order of High court relying upon judgement of Bombay High Court in Taparia Tools Ltd. 260 ITR 102 (BOM)-Rakesh Shantilal Mardia (2012) 210 Taxmann 565(SC)

Guarantee commission to recognized when guarantee is issued and not over period of guarantee Shinhan Bank (2012)54 SOT 140 (Mum Trib)

Income from Deferred guarantee does not accrue or arise in the year in which agreement is entered but spread over the period to which commissions relates BNP Paribas (2012) 79 DTR 310 (Mum Trib.)

Singapore bank registered as FII, taking loan in foreign currency to invest in debentures and entered into forward contract to safeguard from foreign exchange fluctuation. Forward contract was terminated Held resulting gain is capital gain and exempt under Art 13 of DTAA Citi Corp Investment Bank (2012) 54 SOT 119 (Mum) (Trib)

Merely because educational institution has generated surplus income. it would not cease to exist for educational purposes Sanatan Dharam Shiksha Samiti (P&H) 253 ITR 518

A Trust predominantly engaged in ancilliary or incidental objects which are not related to any charitable purpose and does not carry on any activity relating to its main object of charitable nature (SCENTIFIC RESEARCH) is not entitled to exemption. Viswesvarya Indus R&D Centre (2012) 79 DTR387(BOM) HC

Capital gain applied for charitable purposes not by acquiring a new asset but for other charitable purpose Claim for exemption is allowed A1 Ameen Education Society (2012) 139 ITD 245 (Bang Trib)

Shares received towords corpus sold in compliance of cl (iia) of S.13(1)(a)(iii) requiring holding up to one year only. It is not violation of 11(1)(a) and assessee corpus donations can not be treated as general donations. Sera Foundation 79 DTR 210 (DEL Trib)

CIT/Director is not required to examine whether the trust has actually carried on charitable activities. Foundation of Ophthalmic and Optometry Research Education Centre [2012] 79 DTR 178 (DEL HC)

Objects altered without consent of department is not sufficient ground for invoking 12AA(3); Payment of commission for soliciting students for studying in Edu Institution can not be lead to conclusion that assessee was not imparting education Kirupanidhi Educational Trust (2012) 139ITR 228 (Bang Trib)

Registration of educational Institution can not be cancelled as surplus was utilized for educational purposes; it is no where provided that trust can not be constituited by family; it is also not provided that trust can not have number of units Rajasthan Vikas Sanstha 78 DTR 411 (Jodhpur Trib)

If some deficiencies are found in books of accounts some guess work has to be applied by A.O National Plastic Incus (2009) ITR 309 191

Fall in sale without showing any material to prove sale outside books, does not warrant rejection of books. Ravi Agricultural Industries121 TTJ 903 (Agra) (TM)

For genuine difficulties for changing method of accounting from merchantile to cash for interest income-change is genuine Coromandal Investment (P) Ltd. (Guj) 225CTR 313

Promoter holding shares with sole motive of retaining control cannot be recognized as stock in trade. Pal enterprises ITA 1994/Mum/2005

Assessee has option to follow different method of accounting for different sources of income under business income Mehul J Somaiya ITA 7118/MUM/2007

Accrued interest receivable by assessee only after end of previous year cannot be assessed to tax in current year even though assessee following mercantile system. FAL Industries 17 DTR 308 (MAD) (2009)

Once an order of refund of sales tax is passed, the same has to be treated as income notwithstanding pendency of appeal against refund order. Beirsdorf (India) LTD 28 DTR 188(Bom)

Additions made for understatement of sale to co-ops which was merely 5% of total sale by comparing sale price to sale to other individuals without bringing any material on record was unjustified. Rabindranath (kol) 180 taxmann 104

Additional evidence which goes to the root of the matter has to be considered. ITAT confirming order of CIT A without considering Addl. Evidence is Hyper Technical approach. Daljeet kaur (2009) 212 taxation 46(MP) Smt Prabhavati Shah (1998) 231 itr 1(Bom) B.L Choudhary [1976] 105 ITR 371

A foreign company was in receipt of income from assessee on account of sale of shares. Section 163(1)(c) uses the words “from or through” and not through”. Hence assessee could be to treated as agent of non resident. Utkal Investment Ltd 120 TTJ 67(Mum)

For effective and co-ordinate investigation, income tax cases can be transferred Shree Ram Vessel Scrap PVT LTD (Guj HC)23.01.13 ITA 16883/2012

Assessee a shareholder along with other shareholders sold all the shares of company to “R” could not be treated indirect transfer of flats owned by company to “R” Hence provisione of Section 50C could not be applied to transaction of sale of shares. Irfan Abdul Kader Fazlani (Mum Trib) 29 TMC424

Scope and power of CIT u/s 12A/12AA favoring Assesse 1)Saint Kabir Education Trust (ITAT Asr)41 DTR 267 2)Dream Land Edu Trust (ITAT Asr)109 TTJ 850 3)DN Memorial Trust ITA 618/Asr/2011 4) Surya Educational Trust (P&H HC)15 TMC 123 5)Spring Dale Edu Society(P&H HC)16 TMC 285 6) Tishir Shiksha Prasar Samiti 217 TMC 525 7)Gagan Education society 145 TTJ 230 8)Divine Health Services ITA 417/2010

Providing Machinery without manpower cannot be termed as carrying out work by P & M owner. 194C held not applicable 30 TMC 235 (Hyd Trib ) Note however covered by 194 I I w;e;f 13-07-2006

Section 14 A is not applicable to share application money Rainy investment (p) LTD 30 TMC 169 16-01-2013

For registration of newly registration trust u/s 12 AA ,objects for which it was formed should be examined and not its activities which is yet to be commenced AVS Educational trust (Chennai Trib )18-06-2013

Guidelines of land value fixed by sub register is only a guideline value to ascertain market value of land for collection of stamp duty and can not be sole basis to fix market value on 1.1.81 R.Vidhyadharan (Cochin Trib.) 30 TMC 130 21.12.12

Deposit of money in FD cannot be constructed as deposit in capital gain bonds for claiming exemption u/s 54 EC R.Vidhyadharan 30 TMC 130 (Cochin) 21.12.12

Brand creation expenditure is deferred revenue exp. Fine Jewellery 30 TMC 323 (Mum Trib)

Assessee can not be asked to prove source of source or origin of origin Zafa Ahmed (All HC) 10.01.13 ITA 71/2002 Relying upon Anita Rice Mills 282 ITR 236

Foreign exchange Fluctuations gain on share capital raised in foreign country and repatriated to India on need basis for working capital not a revenue receipt. Due consideration be given to source of funds and not to the ultimate use of funds Jagjit industries (Del HC) 337 ITR 21

S.54 F exemption is available on house constructed on agriculture land -Om Parkash Goyal ITA 647 /JP /2011/2.02.12

For 2(42A) calculation of 12m /36m ,” more then 12m/36m immediately preceeding date of transfer , date of transfer to be excluded. Month = calendar Month as defined in Gen Clauses Act 1897. If asset acquired on 2nd Jan period of 12m to expire on 1st Jan . Hence if asset sold on 2nd jan it is LTCA Bharti Ramola Gupta(Del HC)72 DTR 387

Expenditure on back up support and maintenance of existing software is revenue in nature. Asahi India Safety Glass Ltd (2011) 245CTR 529(Del)

Interest free loan to directors and sister concerns commercial expediency of transactions to be examined Southern Bottler ITA 225/2004 ( P & H ) 7.5.13 S. A BUILDERS (SC) 288 ITR 1 applied

“………… The Supreme Court in Commr. of Agrl. IT vs. The Plantation Corporation of Kerala Ltd. (2000) 164 CTR (SC) 502 : AIR 2000 SC 3714 was concerned with whether the "Explanation" at the bottom of s. 5 of the Agrl. IT Act applied to the entire section or to only one of the clauses thereof. It was held that an Explanation below a particular clause/sub-section is intended to be an Explanation to that specific or particular clause/sub-section but when at the bottom of the section, is generally meant to explain the entire section……………”Quoted in Bagri Foundation 344 ITR 0193 (Delhi High Court)