REPORTED DECISIONS

1. Block assessment – S. 158BC – Notice u/s. 158BC – Is procedural in nature – Defects – Curable – Not to render block assessment null & void – Block period 1-4-1988 to 12-3-1999

Smt. Krishna Verma vs. ACIT [2007] 107 ITD 1 (Del)(SB)

Notice u/s. 158BC in case of a person in whose case a search action u/s. 132 has been conducted is a procedural notice issued after acquisition of jurisdiction. Any curable defect in notice served u/s. 158BC on a person, in whose case a search u/s. 132 has been conducted, cannot render block assessment proceedings to be null & void.

2. Deduction – Sec. 80-IB – Housing Project vis-à-vis commercial project – Project approved by local authority as housing project – Shops included in housing project – Entitled to deduction u/s. 80-IB(10) – A.Y. 2003-04

Harshad P. Doshi vs. ACIT (2007) 109 TTJ 335 (Mum); Order dated 28-1-2007

As per the clarification issued by CBDT under F.No. 205/3/2001/IT A-II dated 4-5-2001 to the effect that any project as approved by a local authority as housing project should be considered adequate for the purpose of deduction under section 80IB(10). In view of the same, once the project is approved by the local authority as a housing project, deduction u/s. 80-IB(10) would be eligible for the entire housing project and no disallowance could be made on account of shops included in it.

3. Deduction – Sec. 80HHC – Fifth proviso – Word ‘or’ is used and not ‘and’ between clauses (a) and (b) – Export turnover less than 10 crores and loss from export without considering incentives – Fifth proviso applicable – Assessee entitled to set off 90% of any one of export incentives – A.Y. 2002-03

Mehta Manufactures vs. ITO (2007) 15 SOT 92 (Mum); Order dated 9-2-2007

The total turnover of the assessee was below Rs. 10 crores and the net profit included receipt of duty drawback and DEPB. Since the assessee had loss from exports without considering export incentives, the case fall within the fifth proviso and thus, the assessee was entitled to set off of 90% of any one of the export incentives specified under clauses (iiia) to (iiie) of section 28. The word ‘or’ has been intentionally used between clauses (a) and (b) in the fifth proviso to section 80HHC, which cannot be substituted with the word ‘and’ and hence, the AO was correct in reducing the deduction u/s. 80HHC.

5. Deemed Dividend vis-à-vis Distributed profits – Ss. 2(22), 10(33) & 115O – Deemed dividend u/s. 2(22)(e) is excluded from Chapter XII-D – Distribution tax not to be levied on company with respect to deemed dividend – Deemed dividend not exempted u/s. 10(33) – A.Ys. 1995-96, 1996-97 & 1998-99

ITO vs. Kalyan Gupta [2007] 107 ITD 34 (Mum); Order dated 24-7-2006

Section 10(33) mandates that dividends referred to in section 115-O shall not be included in the total income of the assessee. Section 115-O is part of Chapter XII-D, and levies tax on the profits distributed by domestic companies by way of dividends. By virtue of Explanation, deemed dividend referred to in section 2(22)(e) has been excluded from the ambit of Chapter XII-D, which means under the said Chapter, tax is not levied on the company with regard to deemed dividend. Consequently the exemption provided under section 10(33) is not applicable to ‘deemed dividend’ referred to in section 2(22)(e).

6. TDS – Sec. 199 – Entitled to credit only to the extent of income relatable is assessable – If relatable income not shown or not assessable in a particular assessment year, benefit of TDS not entitled – A.Y. 2003-04

Pardeep Kumar Dhir vs. ACIT [2007] 107 ITD 118 (Chd)(TM); Order dated 27-4-2007

As per provisions of section 199, credit is to be given to the assessee for the amount so deducted in the assessment made under the Act for that assessment year for which such income is assessable. So, the important conditions for getting benefit of TDS as per section 199 are : (a) the assessee should produce the certificate for the amount of TDS; (b) show that income subjected to TDS is disclosed in the return of the assessment year as ‘assessable’. Thus, any amount which has not been assessed in any year but referred in the TDS certificate cannot be claimed u/s. 199.

7. Salary – Perquisite – S. 17(2) – No perquisite where uniform standard rent charged from all employees – Rule 3 not to apply when there is no perquisite – A.Ys. 1996-97 to 2001-02

State Bank of India vs. ACIT (2007) 106 ITD 589 (Mum); Order dated 5-7-2006

Furniture and other appliances were provided to the bank officers on the basis of the entitlement of each category of officers in accordance with the circular issued by the bank from time to time. In this respect, the bank charged standard rent, which was uniformly charged from the officers falling in one category and there was no discrimination or concession in favour of any particular officer of that category. The applicability of rule 3 would arise only when there is a perquisite under section 17(2) and the value of such perquisite is therefore required to be determined. In the instant case, there was benefit or amenity granted or provided at concessional rates. Therefore, when there was no perquisite, the question of valuation of such perquisite could not arise under rule 3.