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)

Barren land is not agriculture land and liable for capital gain tax Suresh kumar D . Shah (2012) 49 SOT 341 (HYD TRIB)

Extraction of oil from fruit / kernel is industrial activity and assessable as under rule 7 Oil Palm India (2012) 206 Taxman (KER HC)

Company supplying seeds to formers under agreement Supervising cultivation and after harvesting purchasing at fixed rate . Income from supply of seeds held not agriculture income Namdhari seeds (Karnataka HC) 341 ITR 342

Conversion of new seed into pea seeds constitutes agriculture income Rana gurjit singh (2012) 340 ITR 108 (p&h)

Compensation received on demolition of borrowell is agricultural income Ghyansham Mudgal 143 TTJ (UO) 60 (JP)

No penalty can be levied where income is estimated Whitline chemicals (guj) ITA 496/2012 at 15-1-13 Vatika construction P ltd.ITA 1246/2010 at 11.10.12 P Rojes (Maid) 5.2.13 ITA 341/2010

Third proviso to Section 254 (2A) was inserted by Finance Act 2008 to Overcome ruling of Bombay High Court in Narang coverseas 295 ITR 22 which said that ITAT could grant stay beyond 365 days where delay was not attributable to assessee.Seeton 254 (2A) specifically prohibited extension beyond 365 days even if delay not attributable to assessee. Delhi HC in Maruti Suzuki & Bombay HC in jethmal Fauzi Mal Soni also confirmed this third proviso to S.254 (2A) was not challenged. Now Delhi HC in Pepsi Foods Pvt.ltd. has struck down S. 254 (2A) third proviso being voilative of Act 14 Pepsi Foods P ltd. (Del HC ) 19.5.2015

Co.rendering highend KPO service is not comparable with co. rendering low end BPO services TNS Index (P) Ltd. (Hyd Trib ) 17.4.15 57TMC 165

Due to financial constraints assessee selling its shares to others JV partner at a price even lower than the price at which rights were referred resulting in loss.Held not a colorable device. SIEL Ltd. (Del HC ) 24.07.14 57 TMC 29

Misapproprition of money by power of attorney holder who had authority to operate bank account of assessee in money lending business is incidental to carrying on of business.Hence deductible in computing profits of business Badridas Daga (SC) 25.04.1958

Loss on transfer of compensation bonds issued to assessee in consideration of assignment of debt receivable (in US dollars) from Iraq Govt.is not covered by head capital gain and hence no indexation can be made. However loss can be claimed as bad debt because payment received in form of bonds for services rendered under contract would not alter the character of income Ircon International Ltd. (Del HC ) 15.5.15 57TMC 336

SC in Goetze India had held that although AO can not accept the claim of the assessee except through return or revised return but in the same decision, the hon'ble apex court made it clear that this did not impinge on the power of the Tribunal. The above position of law revisited by ITAT Delhi in Micron Instruments[2015] 63 taxmann.com 180 (Del Trib) and claim of CLU charges paid along with interest in instalment by factory already working for last 30 years allowed as revenue expenditure although claim made only by simple letter during assessment

Held By ITAT Chandigarh in Smart Value Product & Services Ltd ITA 685/2014 dtd 28-10-2015 that addition made by AO for negative stock by preparing monthly trading account is not sustainable. Similar decision has been given by ITAT Chandigarh in M/s Saqi Brothers V ITO ITA No. 279/Chd/1990 which has been confirmed by Hon’ble Punjab & Haryana High Court vide judgment ITR No. 70 of 1998 dated 31.10.2006

The assessee is an AOP but department wrongly issued PAN as Firm. Held by Gujrat High Court in Tulsi Mall AOP Vs CIT 2015 (12) TMI 1077 that Merely because PAN was issued by the Department erroneously, there cannot be any insistence that return should be filed in the same capacity

Punjab and Haryana High Court on deduction to LIC Employees u/s 10(14)

I.T.A. NO. 645 OF 2005 [1]

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

I.T.A. NO. 645 OF 2005

DATE OF DECISION: 21.04.2006

THE COMMISSIONER OF INCOME TAX, PATIALA

....APPELLANT

VERSUS

BRANCH MANAGER, LIC OF INDIA, SANGRUR (PUNJAB) ....RESPONDENT

CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL
HON'BLE MR. JUSTICE RAJESH BINDAL

PRESENT: DR. N.L. SHARDA, ADVOCATE

FOR THE APPELLANT-REVENUE.

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: