Archive for October, 2009

Once the AO, at the very inception is not satisfied with the correctness of the claim of the assessee in respect of the expenditure incurred in relation to income not forming part of the total income under the Income-tax Act, there is no amount of expenditure to be determined and so, the "method prescribed" by rule 8D of the Income-tax Rules does not call for invocation. Full Article

When the legal charges paid in UK are accepted to be covered under section 9(1)(vii) of the Income-tax Act, then how it can be argued that similar charges paid in Hongkong be given a different treatment, more so when the relation of the services with the subject continues to remain the same. Full Article

There is no question of application of main provision of sub-section (2) of section 158BFA for imposing penalty even on the undisclosed income shown in the return in Form No.2B; there is nothing in the language of section 158BFA(2) to incorporate the requirement of payment of tax on the "undisclosed income" as a condition for application of the second proviso to said section. Full Article

If the business is carried on by the firm, then whether it is disclosed income or undisclosed income, is to be assessed in the hands of the firm and not in the hands of the partners; there is no machinery to assess the income of the firm in the hands of the partner, merely because it is not disclosed in the accounts of the firm; such assessment in the hands of the partner can not be justified merely because the income is pocketed by the partner. Full Article

When the assessee-company, a builder and developer of lands, resorted to cash borrowing in violation of section 269SS only because of the advantage which the ready cash back-up would give to it in negotiating the purchase of agricultural lands for development, penalty under section 271D would not be leviable on the facts and in the circumstances of the case. Full Article

Unless and until the terms and conditions of advance are known and agreed between the parties, assessee will not acquire any right to receive interest on the advanced loan and no income would accrue by way of interest. Full Article

The expression marketing as occurring in section 80P(2)(a)(iii) , is a comprehensive term; it does not mean merely buying and selling; it includes processing which may be necessary for making the agricultural produce marketable; hence, for the co-operative society with members being growers, the deduction under section 80P(2)(a)(iii) is available even if the agricultural produce is marketed without further processing or even if it is processed with the use of power. Full Article

No doubt a company can adopt a scientific method for valuation of the closing stock, but, such valuation of closing stock has to be adopted on a consistent basis and cannot be changed to suit the convenience of the assessee so as to deprive the revenue of legitimate tax. Full Article