RECENT DECISIONS OF THE INCOME TAX APPELLATE TRIBUNAL
K.S. SATISH
Chartered Accountant Mysore
CHARITABLE TRUST
The objects of the assessee-market committee namely, to provide facilities for the marketing of agricultural produce of agriculturists, to provide storage & warehousing facilities, to prevent sale below the minimum support price fixed by the Government, etc., are objects for the advancement of general public utility within the meaning of section 2(15) and the assessee is eligible for registration under section 12AA held the Nagpur Bench in Agricultural Produce & Market Committee, Telhara & Ors. v. CIT (2005) 97 TTJ (Nag) 165.
INTEREST ON BORROWED CAPITAL
In P. Jayantilal & Co. (P) Ltd. v. DCIT (2005) 97 TTJ (Mum) 100 where the Assessing Officer, noticing that the assessee had cash on hand far in excess of its requirements, disallowed a portion of the interest paid on loans borrowed on the ground that cash was kept idle, the Mumbai `G' Bench held that disallowance of interest could not be made as the Assessing Officer had not established a correlation between borrowings made and withdrawal of borrowings for non-business purposes.
CAPITAL GAINS
The Mumbai `C' Bench in Heinrich de Fries GmbH v. JCIT (2005) 96 TTJ (Mum) 864 has taken the view that in respect of bonus shares issued before 1.4.1981, the assessee can take its cost of acquisition as its fair market value as on 1.4.1981 as per section 55(2)(aa).
CLUBBING OF INCOME
Section 64(1A) cannot be applied to agricultural income of minor children and, therefore, agricultural income of minor children cannot be included in the income of the assessee-father for rate purposes opined the Mumbai `G' Bench in Smt. Babita P. Kanungo v. DCIT (2005) 96 TTJ (Mum) 573.
CHAPTER VI-A
In Pankaj Jain v. ITO (2005) 97 TTJ (Asr) 28, the Amritsar Bench held that preparation of bread from maida, sugar and other raw materials through mechanised process constitutes manufacture and that the income derived by the assessee from sale of bread was eligible for deduction under section 80-IB.
ASSESSMENT
The Delhi `A' Bench (Special Bench) in Motorola Inc. v. DCIT (2005) 96 TTJ (Del) (SB) 1 has ruled that a notice calling for the return of income under section 142(1)(i) has to be issued after the end of the period specified in section 139(1) and before the end of the relevant assessment year and that such notice issued after the end of the relevant assessment year and the assessment made in pursuance of such notice are invalid.
REASSESSMENT
Where the assessee was assessed as an association of persons and the Assessing Officer issued a notice under section 148 to the assessee without mentioning its status and passed an order of reassessment in the status of registered firm, the reassessment made without issuing a notice under section 148 in the status of registered firm was illegal and liable to be quashed held the Lucknow Bench in Pushpa International v. ITO (2005) 96 TTJ (Luc) 631.
APPEAL
The Jodhpur Bench has in Kothari Departmental Stores (P) Ltd. v. Assessing Officer (2005) 97 TTJ (Jd) (TM) 278 taken the view that the assessee has to pay the fees for filing an appeal with the Tribunal not on the basis of the total income computed after giving effect to the order of the Commissioner (Appeals) but on the basis of the income determined by the Assessing Officer while making the assessment.
REVISION
In Peerless General Finance & Investment Co. Ltd. v. ACIT (2005) 96 TTJ (Kol) 834 where the Commissioner issued a notice under section 263 dated 29.3.2005 which was served on the assessee at 5.30 p.m. requiring it to show cause as to why the assessment order passed under section 143(3) allowing deduction of Rs. 657 crores towards liability of interest and bonus to certificate-holders without making necessary enquiries should not be set aside and calling upon the assessee to respond to the said notice by 11.30 p.m. on 30.3.2005 and the assessee could not comply with the notice, the Kolkata `B' Bench observed that the unreasonable short time of less than a day given to the assessee violated the principles of natural justice and held that the order passed by the Commissioner under section 263 was ab initio void.
TRIBUNAL
The question of validity of the assessment can be raised by way of an additional ground before the Tribunal in the appeal against the levy of penalty under section 271(1)(c) ruled the Delhi `C' Bench in Tidewater Marine International Inc. v. DCIT (2005) 97 TTJ (Del) 130.
