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Court Decisions S. 2(14), 28(i), 45 & 111A : Business Income vs. Capital Gains Looking to the voluminous transactions in shares with repetition and continuity, profits therefrom were rightly treated as business income and not short – term capital gains. P.V.S Raju &Ors. vs. Addl. CIT (2012) 247 CTR (AP) 583 S. 5 : Accrual of income & raising of Pro-forma invoices Entire income representing pro-forma invoices raised by assessee on Government departments could not be treated as income since merely a meagre sum had actually been received; matter is remanded back to the AO to determine the taxability of pro-forma invoices in respect of those parties who have been remitting part payments and have accepted their liability and not in respect of those Government agencies who have never paid any amount. Airport Authority of India vs. Commissioner of Income Tax (2012) 247 CTR (Del) (FB) 149 S. 10A : Computation of deduction For the purpose of computing exemption u/s. 10A, when the export turnover in the numerator is to be arrived at after excluding communication expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator. CIT & Anr vs. Tata ELXSI Ltd. & Ors. (2012) 247 CTR (Kar) 334 Ss. 10A & 80I(9) : Reworking of deduction Profit margin as revealed by the assessee being a reasonable profit margin in comparison to other similar units and AO having failed to show that it is a course of business so arranged as to result in an inflated profit, provisions of s. 80I(9) could not be invoked to reduce deduction u/s. 10A. CIT & Anr vs. H.P Global Soft Ltd. (2012) 247 CTR (Kar) 562 S. 14A & 36(1)(iii); Income Tax Rules, 1962 ,r. 8D : Retrospective applicability Sub –ss (2) and (3) of s. 14A as well as r. 8D are prospective and not applicable retrospectively; however, even prior thereto, s. 14A required the AO to first reject the claim of the assessee with regard to the extent of such expenditure for cogent reasons and then to determine the amount of such expenditure on the basis of a reasonable and acceptable method of apportionment. Maxopp Investment Ltd. & Ors vs. CIT (Del) (2012) 247 CTR (Del) 162 S. 14A & 36(1)(iii) : Interest paid and disallowance Assessee engaged in money lending business, interest paid by him on money borrowed for his business which borrowals had been accepted in earlier assessments, is allowable as business expenditure. Rajendra Kumar Dabriwala& Ors vs. CIT (2012) 247 CTR (Cal) 206 S. 17(2), 192, 201(1) & 201(1A); Income Tax Rules, 1962, r. 3(5) : Perquisite value of education In computing the perquisite value of free/concessional education provided by assessee to wards of its teachers/staff, the cost of education per student exceeded ` 1,000 per month, and therefore entire perquisite value shall be reckoned to be included in the hands of receipt and assessee having deducted ` 1,000 per month per child in determining such perquisite there occurred a resultant short deduction of tax at source making the assessee liable to be treated as assessee in default under s. 201(1) and to interest u/ s. 201(1A). CIT vs. Director, Delhi Public School (2012) 247 CTR (P&H) 308 Ss. 28(iiib) & 28(iiid) : DEPB applicability at different points of time When DEPB is sold by a person, his profit on transfer of DEPB would be the sale value of DEPB less its face value which represents the cost of the DEPB and not the entire sum received by him on such transfer; DEPB is chargeable as income u/ cl. (iiib) of s. 28 in the year in which such person applies for DEPB credit against the exports whereas the profit on transfer of DEPB by that person is chargeable as income u/cl. (iiid) of s. 28 in his hands in the year in which he makes the transfer. Topman Exports vs. CIT (2012) 247 CTR (SC) 353 Ss. 31(i) & 37(1) : Capital vs. Revenue expenditure Expenditure incurred by assessee on reconditioning and overhauling of the machine, when there was no question of non-availability of old parts in the market had given the assessee a benefit of enduring nature and therefore, the amount was not allowable as current repairs u/s. 31(i) but was of capital nature; however, expenditure on repairs of other machines from time to time was allowable as current repairs, more so when similar expenditure was allowed for last so many years. Bharat Gears Ltd. vs. CIT (Del) (2012) 247 CTR Reports395 S. 37(1) : Capital vs. Revenue expenditure Expenditure incurred for removal of encroachments in and around the technical area of the airport for safety and security consideration is allowable as revenue deduction as the payment was made to facilitate its smooth functioning of the business i.e. in relation to carrying on the business in a profitable manner. Airport Authority of India vs. Commissioner of Income Tax (2012) 247 CTR (Del) (FB) 149 S. 43B : Deduction on actual payment Where the assessee had made the claim only by way of a provision in the P & L a/c and no actual payment was made by the assessee in respect of the interest payable to the financial institutions, no deduction could be granted in accordance with s. 43B. CIT vs. Lotus Roofings (P) Ltd. (2012) 247 CTR (Mad) 458 Ss. 68 & 69 : Unexplained cash credit Once adequate evidence/material is given, which would prima facie discharge the burden of the assessee in providing the identity of shareholders, genuineness of the transaction and creditworthiness of the shareholders, thereafter in case such evidence is to be discarded or it is proved that it has “created” evidence, the Revenue is supposed to make thorough probe before it could nail the assessee and fasten the assessee with such a liability u/s 68; AO failed to carry his suspicion to logical conclusion by further investigation and therefore addition u/s 68 was not sustainable. CIT vs. Kamdhenu Steel & Alloys Ltd. & Ors. (2012) 248 CTR Reports (Del) 33 S. 80 – IC : Assembling amounts to manufacture Producing of TV sets by purchasing and assembling items like cabinet, chassis, IC, picture tube, etc. could be held to be manufacturing activity and therefore, assessee engaged in such activity is entitled to deduction u/s 80 – IC. CIT vs. I. Tech Electronics (2012) 248 CTR (Gau) 108 S. 80HHC, 80HHC(3), third proviso & 80HHC, Expln (baa) : DEPB and export deduction When DEPB accrues to the assessee in one previous year and it transfers the DEPB certificate in another previous year, only ninety per cent of the profits on the transfer of the DEPB covered u/cl. (iiid) of s. 28 and not ninety per cent of the entire sale value including the face value of the DEPB has to be excluded to arrive at the “profits of the business” u/cl. (baa) of Explanation to s. 80HHC; where the export turnover of an assessee exceeds ` 10 crores, it does not get the benefit of addition of ninety per cent of export incentives u/ cl. (iiid) of s. 28 to its export profits, but it would have the benefit of exclusion of a smaller figure from the “profits of the business” u/cl. (baa) of Explanation to s. 80HHC which would ultimately result in computation of a bigger export profit. Topman Exports vs. CIT (SC) (2012) 247 CTR Reports 355 S. 80HHC, Expln. (baa) : Computation of deduction Ninety per cent of the net interest or net rent which has been included in the profits of the assessee as computed under the head “Profits and gains of business or profession” and not the gross interest or gross rent, is to be deducted u/cl. (1) of Expln. (baa) to s. 80HHC for determining the profits of the business. ACG Associated Capsules (P) Ltd. vs. CIT(SC) (2012) 247 CTR Reports 373 S. 115WA &115WB(2)(B) & 115WB(2)(D) : Free supply of accessories & FBT Expenditure incurred by a car dealer on accessories which were supplied free of cost to the customers who purchased car can neither be regarded as hospitality within the meaning of cl. (B) of s. 115WB(2) nor can be treated as sales promotion expenses u/cl. (D) as consideration thereof is inbuilt in the price of the car and, therefore, provisions of such accessories to customers is not covered u/ s. 115WA. T & T Motors Ltd. vs. Asstt. CIT (Del) (2012) 247 CTR Reports 384 Ss. 139(1) & 139(5) : Fresh claim can be made only through valid revised return Assessee cannot revise his return of income by way of filing a revised statement of income after filing original return; in the absence of the revised return as provided u/ s. 139(5), the AO is bound to make assessment on the basis of original return. Orissa Rural Housing Development Corporation Ltd vs. Assistant Commissioner of Income Tax (2012) 247 CTR (Ori) 137 Ss. 142(1) & 143(2) : No sequence for issue of notices There is no sequence prescribed as to in what manner notices u/ss. 142(1) and 143(2) are to be issued, therefore, there is nothing to say that the notice under s. 142(1) should precede notice under s. 143(2). Orissa Rural Housing Development Corporation Ltd vs. Assistant Commissioner of Income Tax (2012) 247 CTR ( Ori) 137 Ss. 143(1)(c) & 199; Income Tax Rules, 1962 r. 37BA : Credit for TDS As per s. 199 r/w r. 37BA, assessee is entitled to credit based on TDS certificate only in the assessment year in which income from which tax is deducted is assessed. CIT vs. Smt. Pushpa Vijoy & Anr. (2012) 247 CTR Reports (Ker) 576 S. 143, 260A & 261 : Each year is a separate year Merely because the order of the Special Bench of the Tribunal relating to earlier assessment years was not assailed in appeal by the Department itself, it cannot take away the right of the Revenue to question the correctness of the assessment order on the same issue in the relevant assessment year, particularly when a question of law is involved which goes to the very root of the matter. Catholic Syrian Bank Ltd. vs. CIT (2012) 248 CTR Reports (SC) 1 |
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