Some of the DT case laws

ACIT vs Elecon Engg. Co. Ltd., 189 Taxman 84 (SC)
S. 43A : A.Y. 1986-87 : Assessee company procured a foreign currency loan to finance purchase of plant and machinery. Since the amount was payable in installments, assessee booked forward contracts for entire outstanding amount. Delivery of foreign currency was obtained from time to time as per installment due and balance value of forward contract was rolled over. It was held that roll over charges represent the difference arising on account of change in the foreign exchange rates. Roll over charges paid/ received in respect of liabilities relating to the acquisition of fixed assets should be debited/ credited to the asset in respect of which liability was incurred. However, roll over charges not relating to the fixed assets should be charged to the profit and loss account.

ONGC vs CIT, 189 Taxman 292 (SC)
S. 43A : It was held that when assessee maintained its accounts on mercantile system of accounting and had complied with Accounting Standards laid down by the Central Government, loss suffered by assessee on account of fluctuation in rate of foreign exchange as on date of balance sheet could be allowed as expenditure u/s. 37(1) notwithstanding that liability had not been actually discharged. Further, in respect of foreign exchange loans in capital account, prior to amendment to s. 43A, assessee could adjust cost of imported assets acquired in foreign currency, on account of fluctuation in rate of exchange.

CIT vs H.E.G. Ltd., 189 Taxman 335 (SC)
S. 244A : A.Y. 1993-94 : During A.Y. 1993-94, amount paid by assessee towards TDS was Rs. 45,73,528 and tax paid after assessment was Rs. 1,70,00,320 aggregating to Rs. 2,16,73,848. Subsequently, assessee was entitled to refund of Rs. 2,16,73,848 which payment was made after 57 months. On this the department’s contention that word ‘any amount’ would not include interest which accrued to assessee for non refunding Rs. 45,73,528 for 57 months is not accepted.

JCIT vs Saheli Leasing & Industries Ltd., 191 Taxman 165 (SC)
S. 271 (1)(c) : Following its earlier decision in the case of Gold Coin Health Food (P) Ltd, 304 ITR 308, it was held that clause (a) of Explanation 4 to s. 271(1)(C) replaced w.e.f. 1-4-2003 was clarificatory in nature and would apply to all assessments even prior to A.Y. 2003-04. Hence, penalty could be levied in a case where addition of concealed income reduces returned loss and finally assessed income is also loss.

Prashant S. Joshi vs ITO, 189 Taxman 1 (Bom)
S. 147 : A.Y. 2005-06 & 2006-07 : It was held that the reasons recorded by AO for reopening an assessment, are only reasons which can be considered when formation of belief is impugned. The requirement of recording reasons is a check against arbitrary exercise of power. It is only on the basis of reasons recorded and on those reasons alone the validity of the order reopening the assessment is to be decided. The reasons recorded while reopening the assessment cannot be allowed to grow with the age and ingenuity. It was further held that an amount paid to a partner towards his share in net partnership assets (after taking deduction of liabilities and prior charges) does not involve an element of transfer of interest in the partnership assets within the meaning of s. 2(47).

Purity Techtextiles (P.) Ltd. vs ACIT, 189 Taxman 21 (Bom)
S. 147 : It was held that the reasons recorded by the AO for reopening the assessment are crucial and it is on the basis of those reasons alone that the validity of an order reopening an assessment has to be decided. Even when a reopening of assessment had taken place within the period of four years from the end of the relevant assessment year, yet it was apparent that AO did not have before him any additional material at all to form a belief that income had escaped assessment and therefore reopening was not justified.

CIT vs Hero Cycles Ltd., 189 Taxman 50 (P&H)
S. 14A : It was held that any disallowance u/s. 14A requires finding of incurring of expenditure and where it was found that for earning exempted income no expenditure was incurred, disallowance u/s. 14A cannot stand.

Umicore Finance Luxembourg, In re; 189 Taxman 250 (AAR)
S. 47 & 47A : It was held that u/s. 47A(3) what is deemed to be profit and gains of successor company is the amount of profit or gain arising from transfer of such capital asset not charged earlier. At the time when firm was registered as company under part IX of the Companies Act, the consequent vesting of assets in the company did not amount to transfer and hence no capital gain had arisen within the meaning of section 45. Hence, irrespective of violation of conditions, the deeming provisions of section 47A(3) cannot be invoked.

Rallis India Ltd. vs ACIT, 190 Taxman 1 (Bom)
S. 147 : Earlier Supreme Court in HCL Comnet System has held that provision for bad and doubtful debts cannot be regarded as provision for liability. Subsequently, s. 115JB was amended by Finance Act, 2009 with retrospective effect from 1-4-2001. Yet this amendment was enacted in to a law after the AO had exercised the power to reopen the assessment in the present case by notice dated 16-7-2008. As a result the date on which AO exercised his jurisdiction u/s. 148, the amendments brought in by Finance Act 2009 was not in existence. In the circumstances, there was no warrant for re-opening the assessment in exercise of power conferred u/s. 147.

CIT vs Varanasi Auto Sales (P) Ltd., 190 Taxman 60 (All)
S. 32 : Assessee company purchased trucks in the name of directors of company and claimed depreciation. AO rejected the claim of depreciation. The Tribunal allowed the claim on the ground that the purchase of trucks in the name of directors was just for convenience and funds for purchase was invested by assessee company. Further, income received by truck was offered to tax by company as de facto owner. The decision of Tribunal was upheld.

Arthur Anderson & Co. vs ACIT, 190 Taxman 279 (Bom)
S. 147 : A.Y. 2003-04 : In its return of income, assessee disclosed certain interest income as income from other sources. In notes to computation of income, it was disclosed that said interest income represented difference between interest received u/s. 244A and interest paid u/s. 220. During the course of assessment, AO had raised a query regarding said income and after considering assessee’s reply, passed an assessment order. Later AO had issued a notice u/s. 148 on the ground that entire interest u/s. 244A was required to be offered for taxation. On writ, it was held that, since assessee has disclosed fully and truly all material facts, reopening of assessment could not be sustained. Further, referring to SC decision in the case of Harshad Shantilal Mehta, it was held that interest paid u/s. 220(2) could not be considered as tax for the purpose of business disallowances.

CIT vs Anuj A. Sheth HUF, 190 Taxman 330 (Bom)
S. 112 : A.Y. 2001-02 : During the relevant year, assessee entered into eight sale transaction of shares. In one transaction, shares being bonus shares their cost was Nil and therefore entire sale consideration was considered as long-term capital gains. Out of remaining seven transactions, one resulted in long-term capital gains with indexation and in remaining transactions assessee reported long-term capital loss with indexation. Assessee set off long-term loss against long-term gain and paid tax of 10% on net long-term capital gain. It was held that there is nothing in the proviso to s. 112 which deprive an assessee of indexation benefit where there is resultant loss. Accordingly the contention of the revenue, that assessee is entitled to set off u/s. 70, but without the benefit of indexation, is not accepted.

CIT vs Apar Industries Ltd., 190 Taxman 353 (Bom)
S. 234B, 244A, 115JAA : A.Y. 2000-01 : MAT credit, to which assessee is entitled, must be given before computing interest payable u/s. 234B. Further, interest u/s. 244A is allowable on tax refundable after giving MAT credit
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Tribunal Decisions
DCIT vs Angel Broking Ltd., 3 ITR (Trib) 294 (Mum)
S. 40(a)(ia), 194J : Assessee company, engaged in the business of stock broking, was a member of the Bombay and National Stock Exchange. As a member, assessee paid VSAT charges, lease line charges, bolt charges, demate charges, etc. According to AO all these charges are in the nature of fees for technical services and hence assessee ought to have deducted tax at source u/s. 194J. Accordingly he denied deduction for such expenses u/s. 40(a)(ia). It was held that such services provided by stock exchange cannot be considered as technical services. The facts that such services were not available to the public at large but only to registered members by itself would not make the services in question as technical services.

Mustaq Ahmed vs DCIT, 124 ITD 312 (Chennai)
Article 26 of India Singapore Tax treaty: Assessee was a citizen of Singapore and non-resident under the Act. For the relevant assessment year (A.Y. 2004-05) he was granted deduction u/s. 80HHC. Commissioner was of the opinion that assessee being non-resident was not eligible for deduction u/s. 80HHC. Assessee has relied on Articlee 26 of DTAA. It was noted that clause (4)(a) of article 26 of DTAA clearly mentioned that these paragraph would not be construed as obliging Contracting State to grant to the resident of other Contracting State any personal allowances, reliefs, reductions and deductions which it grants to its own residents. Accordingly it was held that s. 80HHC which provides for deduction to residents in India could not be superseded by non discrimination clause of DTAA.

Relq Software (P) Ltd. vs ITO, 125 ITD 101 (Bang)
S. 10A : A.Y. 2004-05 : It was held that business loss or unabsorbed depreciation of non-STPI unit of assessee could not be set off from its income of STPI unit for computing deduction u/s. 10A. Further, payment made by assessee in foreign exchange to engineers employed on site for development of software could not be excluded from its export turnover for computing deduction u/s. 10A.