1. Income Tax Act, 1961 (43 of 1961) S.   2(47), 54 - Transfer - Agreement to sell - One can come to a conclusion that some right in respect of the capital asset in question had been transferred in favour of the vendee - A right in respect of the capital asset, viz, the property in question had been transferred by the appellants in favour of the vendee/transferee on 27th December, 2002 - The sale deed could not be executed for the reason that the appellants had been prevented from dealing with the residential house by an order of a competent court, which they could not have violated - Appellants were entitled to relief under Section 54 of the Act in respect of the long term capital gain which they had earned in pursuance of transfer of their residential property and used to purchase of a new asset/residential house. (S.C.)(175) P.L.R. 
  2. Income Tax Act, 1961 (43 of 1961) S.  10(23c)(vi) - Rejection of application for exemption from payment of tax - A perusal of the order reveals that a paragraph is quoted from a book titled as "Law and Procedure on Charitable Trusts and Religious Institutions" while holding that "State laws" prohibit office bearers from becoming life members - The order, however, does not refer to any "State law" that enacts such a prohibition - Accepting for a moment that there may be a situation where a charitable trust is created to camouflage the true intent of a family but this alone does not empower the Chief Commissioner of Income Tax to make such a general statement of law, without reference to the "State law" - Counsel for the respondent is unable to refer to legal provision in any statute, enacted by the State of Punjab, or in the Societies Registration Act, 1860 or in the Indian Trusts Act, 1882 as would enable us to affirm the opinion recorded by the Chief Commissioner of Income Tax - Order set aside.  (173) P.L.R. 
  3. Income Tax Act, 1961 (43 of 1961) S.  37 - Capital Expenditure - Corporate Membership and amount paid towards services and facilities of Golf Club, Chandigarh - Corporate membership of Rs.6 lacs was for a limited period of 5 years - The corporate membership was obtained for running the business with a view to produce profit - Such membership does not bring into existence an asset or an advantage for the enduring benefit of the business - It is an expenditure incurred for the period of membership and is not long lasting - By subscribing to the membership of a club, no capital asset is created or comes into existence. (176) P.L.R. 
  4. Income Tax Act, 1961 (43 of 1961) S.  56, 203 - TDS - Land Acquisition  v.  was unable to demonstrate that the interest received was not for delayed payment of the enhanced amount of compensation - In such a situation, it would be taxable as it falls under Section 56 of the Act as income from other sources - Land Acquisition Act, 1894 (1 of 1894). (174) P.L.R. 
  5. Income Tax Act, 1961 (43 of 1961) S.  80-1B(3), 14(g) - Is an incentive provision - It provides deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings - If a small scale industry, in the course of 10 years, stabilizes early, makes further investments in the business and it results in it's going outside the purview of the definition of a small scale industry, that should not come in the way of its claiming benefit under section 80-IB for 10 consecutive years, from the initial assessment year - Therefore the approach of the authorities runs counter to the scheme and the intent of the Legislature - Thereby they have denied the legitimate benefit, an incentive granted to the assessee - Both the said orders cannot be sustained - (2014)367 ITR 266 (Kar.) relied. (180) P.L.R. 
  6. Income Tax Act, 1961 (43 of 1961) S. 127 - Only if the authorities came to a valid conclusion such as on the basis of some substantiated material, either in the in the form of material documents or in the form of statements, the authorities would have a valid justification to transfer the cases under Section 127 of the Act - For a valid order under Section 127 of the Act, the reasons expressed must disclose an actual financial, commercial or other relevant nexus justifying the action. (179) P.L.R. 
  7. Income Tax Act, 1961 (43 of 1961) S. 194-A - TDS is only liable to be deducted on the enhanced amount and not on interest. (182) P.L.R.
  8. Income Tax Act, 1961 (43 of 1961) S. 245D(3) - The petitioner is entitled to at least 90 days to produce the information - Therefore, the observations of the ITSC, especially in paragraphs No.16 & 17 of the impugned order were not justified - Order passed by ITSC is quashed and set aside.  (179) P.L.R. 
  9. Income Tax Act, 1961 (43 of 1961) S. 246, 246-A - Against the assessment order, the assessee had remedy of filing an appeal under Section 246/246A of the Act - However, the assessee availed remedy of revision under Section 264 of the Act after the expiry of limitation for filing the appeal had elapsed but within the period prescribed under section 264 of the Act - On revision under Section 264 of the Act - Once the petitioner had taken recourse to revisional remedy under Section 264 of the Act and after the rejection of the petition, it was not open to have fallen back on statutory remedy of appeal under the Act. (175) P.L.R. 
  10. Income Tax Act, 1961 (43 of 1961) S. 260 C - Bagasse and Molasses both are byproducts and not scrap or waste - `Molasses' and `Bagasse' in the present case do not fall within the scope of scrap under the provisions of section 206C(1) and therefore no tax collected at source was required to be made by the assessee and in such a situation, demand of 1% of the sale price was unjustified - Once sub section (1) of Section 206C was not applicable, equally sub section (1A) thereof would also have no applicability to the present case. (179) P.L.R. 
  11. Income Tax Act, 1961 (43 of 1961) S. 276B - Petitioner was called upon to show cause why prosecution proceedings under Section 276B of the Act be not launched against it - Petition filed to quash a show cause notice - There are issues, however, which must in the first instance be decided by the authorities under the Act - Interference with the show cause notice at this stage is not warranted - The apprehension that in the event of the respondents deciding to launch the prosecution they may do so immediately can be allayed by granting the petitioner reasonable time to adopt appropriate proceedings against the decision - Directions that in the event of the decision being adverse to the petitioner, the respondents shall not implement the same for a period of six weeks after the service of such order upon the petitioner.  (179) P.L.R. 
  12. Income Tax Act, 1961 (43 of 1961) S. 276-B, 278-A - Petitioner firm was responsible for deduction of income tax of the amount payable to any person on account of interest during the accounting year 1984-85 - Petitioners were not aware of the fact that payment of tax deducted at source was to be made within seven days - They were under the impression that the amount could be deposited in the treasury at the time of filing of return - Total amount of tax involved was small/negligible - Complaint filed - Judicial Magistrate holding the petitioner guilty of offence and awarding a punishment of one year six months plus a fine of Rs.4,000/- - In the present case, the interest payable for default in making payment was Rs.426/- only - Deposited the amount with interest - Complaint lodged - Application of the assessee for compounding under Section 279(2) of the Act was accepted by the CCIT on 29.11.1999 vide Annexure P.6 whereby compounding was accepted on payment of compounding fee of Rs.2192/- - However, the same was subsequently reviewed on 16.3.2000 - Though the CCIT had determined the compounding fee at Rs.2192/-, however, the assessee shall deposit an additional amount of Rs.5000/- to show his bonafides - It is directed that the petitioners shall deposit Rs.5000/- in addition to the compounding fee of Rs.2192/- in order to avail the benefit of compounding. (176) P.L.R.  


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