Simplified summary of Significant legal decisions


Simplified summary of Significant legal decisions – Income-tax

 

Some students approached me to simplify the latest case laws in minimum possible words and I readily obliged them. This is for your exam-eve reading. For doubts please refer to the ICAI publication . kindly send give me your feedback on the usefulness. I have added a few clarificatory notes, where necessary. 

 

 

35D

CIT v. Tamil Nadu Road Development Co. Ltd. (2009) 316 ITR 380 (Mad.)

 

The expenditure incurred by the assessee on techno -economic feasibility report for  the manufacture of a new product  eligible u/s NOT CAPITAL Exp 

 

36(1)

CIT v. Mihir Textiles Ltd. (2009) 316 ITR 403 (Guj.) following  SC in

Deputy CIT v. Core Health Care Ltd. [2008] 298 ITR 194 .

 

committment charges for issuing debentures deductible as business expenditure, as money was borrowed  for  meeting the working capital needs of the existing business

2(31)

AOP

CIT v. Laxmi Pd. and Sons (2009) 316 ITR 330 (All.)

 

AOP a voluntary association .  Forced association of persons on account of inheriting joint property under a will or such other circumstances not being voluntary would not constitute AOP.

Author’s note : it can still be a BOI as held in CIT Vs  Shanmukham

CIT v. T. George and M. Syed Alavi (2009) 316 ITR 333 (Ker.)

However, written intention necessary if documents show common intention to do something to earn income

28 /80I

DEPB

Liberty India v. CIT (2009) 317 ITR 218 (SC)

DEPB do not form part of the income derived from manufacture

44BB

Director of Income Tax (International Taxation) v. Schlumberger Asia Services Ltd.(2009) 317 ITR 156 (Uttrakhand)

Reimbursement of expenses towards customs duty be included for computing profits under section 44BB i.e exploration activites

131

Impounding books

Subha and Prabha Builders P Ltd. vs. ITO (2009) 318 ITR 29 (Karn).

 

Extension of the maximum period of retention of 15 days of books of accounts and documents impounded can NOT be granted indefinitely U/s 131 with the prior approval of the higher authority for a reasonable period and not for an indefinite period.

2(22)(e)

Deemed Dividend

CIT v. Ambassador Travels (P) Ltd. (2009) 318 ITR 376 (Del.)

Financial transactions by the assessee, a travel agency with two sister concerns for  booking of resorts for the customers etc  in normal business transactions as a part of its day-to-day business activities NOT to be treated as deemed.

80-IA

 

CIT v. Jagdishprasad M. Joshi (2009) 318 ITR 420 (Bom.)

Interest income earned by the assessee on fixed deposits with a bank and other interest income eligible U/s  80-IA IF THEY ARE IN THE NATURE OF BUSINESS INCOME

Author’s Note: this decision should be read wth the reasoning given for DEPB above. One view could be that interest on forced deposit can be business income e.g. sales tax deposit , or margin money and other interest may NOT be business income

194J

CIT v. Bharti Cellular Ltd. (2009) 319 ITR 139 (Del.)

Payments made by the assessee to MTNL / other companies for the services provided through interconnect / port / access / toll DO NOT attract TDS U/s as there is no human interface. Services provided by robots and machines ARE NOT  Managerial and Consultancy Services

 

32(1)(iia)

Addl. Dep.

 CIT v. VTM Limited (2009) 319 ITR 336 (Mad.)

An assessee manufacturing textile goods claim additional depreciation under section 32(1)(iia) on setting up of a windmill operational connectivity of the activity is NOT required so long as the assessee produces any article or thing .

Capital/Revenue

CIT v. Udupi Builders P. Ltd. (2009) 319 ITR 440 (Kar.)

Subsidy received under a government scheme for establishing hotel industry is CAPITAL  even if  received by the assessee after completion of the hotel projects and commencement of the business?

 



Source : ICAI supplementary study material -