Sec. 80-IA:Profit on sub-leasing of land was deductible

Sec. 80-IA: Profit on sub-leasing of land was deductible, being integral part of business of development of toll road

[2015] 57 taxmann.com 397 (Delhi - Trib.)

IN THE ITAT DELHI BENCH 'D'

Jaypee Infratech Ltd.

v.

Commissioner of Income-tax, Noida

Assessee-company was incorporated as a Special Purpose Vehicle (SPV) for developing operating and maintaining toll roads. Assessee entered into a concession agreement with Taj Expressway Development Authority (TEA) in terms of which assessee was to develop, operate and maintain six lane access controlled expressway toll road, it was granted by TEA, rights for land development of 25 million sq. mts. of land along proposed Expressway for commercial amusement, industrial, institutional and residential development. In terms of agreement, assessee could sub-lease developed or undeveloped land to sub-leases or land users. Assessee claimed that profit derived by it from toll road included profit from sale/sub-lease on development of land which formed intrinsic part of infrastructure facility. Thus, question came up for consideration was whether assessee company was eligible for exemption under section 80-IA(4)(i) in respect of its income from sale/sub-lease of land for assessment year under consideration

• Held, that assessee was in business of development of infrastructure facility of 'road including toll road' and its activities fell within ambit of clause (a) of Explanation to sub-section (4)(i) of section 80-IA. Thus, assessee was eligible for deduction on income earned from sub-lease/sale of land which was provided by the TEA to assessee with an absolute right to use it and said right was continuing during assessment year in question.

Sec. 36(1)(viii) deduction Not Allowed If

No sec. 36(1)(viii) deduction to co-operative bank as it failed to create special reserve in audited books

[2015] 57 taxmann.com 366 (Pune - Trib.)

IN THE ITAT PUNE BENCH 'A'

Shree Sharada Sahakari Bank Ltd.

v.

Income-tax Officer, Ward 6 (2), Pune

Section 36(1)(viii) of the Income-tax Act, 1961 - Financial corporation, reserve created by (Creation of reserve in books of account) - Assessment year 2009-10 - Whether where, assessee, a co-operative bank, failed to create a special reserve in its books of account out of eligible profits of relevant year, it was not eligible to claim benefit of deduction under section 36(1)(viii) - Held, yes [Paras 12 and 15] [In favour of revenue]

Refund of excise duty would be taxable u/s 41(1)

[2015] 57 taxmann.com 61 (Gujarat)

HIGH COURT OF GUJARAT

Deputy Commissioner of Income-tax (Assessment)

v.

Ahmedabad Advance Mills Ltd

Section 41(1) of the Income-tax Act, 1961 - Remission or cessation of trading liability (Excise duty refund) - Assessment year 1989-90 - Whether excise duty refund received by assessee under section 41(1) would be taxable - Held, yes [Para 4] [In favour of revenue]

New ITR 1, 2 and 4S Notified

Govt to simplify ITR Forms- New ITR-2A to come- Due Date extended to 31.08.2015 from 31.07.2015- No need for Foreign Travel and Dormant Bank A/c details

Income Tax Return Forms ITR 1, 2 and 4S Simplified for Convenience of the Tax Payers;

A New Form ITR 2A Proposed which can be Filed by an Individual or HUF who does not have Capital Gains, Income from Business/Profession or Foreign Asset/Foreign Income; In Form ITR 2 and the New Form ITR 2A, the Main Form will not Contain more than 3 Pages, and other Information will be Captured in the Schedules which will be Required to be filled only if applicable;

As the Software for these Forms is under Preparation, they are likely to be available for e-filing by 3^rd week of june 2015;Time Limit for Filing these Returns is also Proposed to be Extended up to 31.08.2015;

Only  Passport Number, if available, would be required to be given in forms Itr-2 and itr-2A. Details of Foreign Trips or Expenditure thereon are not required to be Furnished

Forms ITR 1, 2 and 4S for Assessment Year 2015-16 were notified on 15^th April 2015 (15.04.2015). In view of various representations, it was announced that these ITR forms will be reviewed. Having considered the responses received from various stakeholders, these forms are proposed to be simplified in the following manner for the convenience of the taxpayers:-

1) Individuals having exempt income without any ceiling (other than agricultural income exceeding Rs. 5,000) can now file Form ITR 1 (Sahaj). Similar simplification is also proposed for individuals/HUF in respect of Form ITR 4S (Sugam).

2) At present individuals/HUFs having income from more than one house property and capital gains are required to file Form ITR-2. It is, however, noticed that majority of individuals/HUFs who file Form ITR-2 do not have capital gains. With a view to provide for a simplified form for these individuals/HUFs, a new Form ITR 2A is proposed which can be filed by an individual or HUF who does not have capital gains, income from business/profession or foreign asset/foreign income.

3)  In lieu of foreign travel details, it is now proposed that only Passport Number, if available, would be required to be given in Forms ITR-2 and ITR-2A. Details of foreign trips or expenditure thereon are not required to be furnished.

4) As regards bank account details in all these forms, only the IFS code, account number of all the current/savings account which are held at any time during the previous year will be required to be filled-up. The balance in accounts will not be required to be furnished. Details of dormant accounts which are not operational during the last three years are not required to be furnished.

5) An individual who is not an Indian citizen and is in India on a business, employment or student visa (expatriate), would not mandatorily be required to report the foreign assets acquired by him during the previous years in which he was non-resident if no income is derived from such assets during the relevant previous year.

6) As a measure of simplification, it has been endeavoured to ensure that in Form ITR 2 and the new Form ITR 2A, the main form will not contain more than 3 pages, and other information will be captured in the Schedules which will be required to be filled only if applicable.

As the software for these forms is under preparation, they are likely to be available for e-filing by 3^rd week of June 2015. Accordingly, the time limit for filing these returns is also proposed to be extended up to 31^st August, 2015 (31.08.2015). A separate notification will be issued in this regard.

Section 6 :HC : Forced stay' in India to be excluded for determining residential status

Forced stay' in India due to invalid impounding of passport to be excluded for determining residential status: HC

[2015] 57 taxmann.com 448 (Delhi)

HIGH COURT OF DELHI

Commissioner of Income-tax (C) -I

v.

Suresh Nanda

Where assessee was forced to stay in India for more than 182 days in a previous year due to impounding of passport found by courts to be wrongful and he was fighting court cases to get passport released so that he could travel outside India to maintain his NRI status, the period of such forced/unwilling stay in India cannot be counted for determining his residential status u/s 6. If assessee's stay in India without counting such forced stay is for less than 182 days, he retains his NRI status for tax purposes.

Section 48 : CII of the Year in which Asset was acquired by HUF

On sale of asset acquired after partition of HUF, CII had to be taken of the year in which asset was acquired by HUF

[2015] 57 taxmann.com 19 (Punjab & Haryana)

HIGH COURT OF PUNJAB AND HARYANA

Deputy Commissioner of Income-tax, Circle - I, Bathinda

v.

Sushil Kumar

Section 48, read with sections 47 and 49, of the Income-tax Act, 1961 - Capital gains - Computaion of (Date of acquisition of asset) - Assessment year 2009-10 - Whether, where capital asset was property of HUF prior to 1-4-1981 and assessee acquired absolute ownership on 19-5-1998 after partition of said HUF property, in such circumstances, date of acquisition of property by HUF being prior to 1-4-1981 would entitle assessee to calculate capital gains tax by taking cost inflation index for financial year 1981-82, and not 1998-99 - Held, yes [Para 12] [In favour of assessee]

Section 40A(3) :No Dis-allowance when the assessee had no bank account

No disallowance due to cash payment exceeding Rs. 20,000 for purchase of goods as assessee had no bank account therein

[2015] 57 taxmann.com 391 (Cuttack - Trib.)

IN THE ITAT CUTTACK BENCH

Radha Shyam Panda

v.

Income-tax Officer

Section 40A(3) of the Income-tax Act, 1961, read with rule 6DD of the Income-Tax Rules, 1962 - Business disallowance - Cash payment exceeding prescribed limits (Rule 6DD) - Assessment year 2008-09 - Assessee, engaged in wholesale trade of iron and steel, purchased goods and made payment in cash - Assessing Officer made addition on ground that payments exceeded prescribed limit in contravention of provisions of section 40A(3) - It was found that assessee had no bank account at place of purchase and cash payments were made on demand of seller - Whether since genuineness of purchases had not been doubted by Assessing Officer, disallowance of expenses under section 40A(3) was not justified - Held, yes [Para 10] [In favour of assessee]

Section 271(1)(c) : Concealment penalty levied

Concealment penalty levied as loss on sale of fixed assets was claimed in P&L account and in IT return

[2015] 57 taxmann.com 389 (Delhi)

HIGH COURT OF DELHI

Commissioner of Income-tax

v.

NG Technologies Ltd

Section 271(1)(c), read with section 28(i), of the Income-tax Act, 1961 - Penalty - For concealment of income (Disallowance of claim, effect) - Assessment year 2006-07 - Whether where assessee claimed loss on sale of fixed assets in profit and loss account which was a capital loss, same was contrary to basic principles of accountancy - Held, yes - Whether since assessee did not file revised return for same voluntarily but had filed revised return after Assessing Officer confronted assessee and they were asked to explain claim of loss in question in profit and loss account penalty under section 271(1)(c) was sustainable - Held, yes [Paras 17 and 20] [In favour of revenue]

Section 194C :When the Section 194C is not applicable

Contract of manufacturing goods as per specification without supply of material isn't a work contract under sec. 194C

[2015] 57 taxmann.com 371 (Karnataka)

HIGH COURT OF KARNATAKA

Commissioner of Income-tax, Bangalore

v.

Allergan India (P.) Ltd.

Section 194C of the Income-tax Act, 1961 - Deduction of tax at source - Contactors/sub-contractors, payments to (Works contract) - Assessment years 2009-10 to 2011-12 - Assessee was engaged in business of trading of ophthalmic products - It had entered into an agreement with PHL under which PHL had agreed to manufacture and sell to assessee certain pharmaceutical and contact lens care products on a principal to principal basis - Specifications had been given, according to which PHL had to manufacture and supply products - Property in goods passed on to assessee only on delivery - Raw materials required in manufacture of product were purchased by PHL itself and not from assessee - Whether, on facts, contract entered into by assessee was contract of sale and not a contract for carrying on any work within meaning of section 194C - Held, yes [Paras 6, 12 & 13][In favour of assessee]

Section 2(15) : Trust working for relief of poor

Trust working for relief of poor on behalf of NGOs like UNICEF or Care India would be entitled to Sec. 11 relief

[2015] 57 taxmann.com 111 (Delhi - Trib.)

IN THE ITAT DELHI BENCH 'F'

Praxis Institute of Participatory Practices

v.

Director of Income-tax (Exemption), Laxmi Nagar, New Delhi

Section 2(15), read with sections 11 and 80G, of the Income-tax Act, 1961 - Charitable purpose (Training program) - Most of NGOs related to WHO/UNO, etc. did not have any experience of connecting/collecting poor and needy people like destitute orphans, sex workers, drug addicts - Assessee-society had experience in said field - Assessee, a society was engaged in providing consultancy workshop training program, conducting research on behalf of above NGOs - Whether activities carried out by assessee would come under terms 'charitable purpose' in terms of section 2(15) and, thus, assessee's claim for exemption under section 11 and continuance of exemption under section 80G(5)(vi) was to be allowed - Held, yes [Para 20][In favour of assessee]

Circulars and Notifications : CBDT Circular No. 7 of 2010, dated 27-10-2010

Section 80 :Belated return , Loss assessed couldn't be carried forward

Loss assessed couldn't be carried forward if return declaring income was filed belatedly

[2015] 57 taxmann.com 395 (Calcutta)

HIGH COURT OF CALCUTTA

Peerless General Finance & Investment Co. Ltd.

v.

Commissioner of Income-tax, Kolkata-I

Section 80, read with section 139, of the Income-tax Act, 1961 - Losses - Loss return (Carry forward and set off) - Assessment years 1985-86 and 1986-87 - Assessee filed returns declaring certain income after expiry of time extended by Assessing Officer for filing return - Assessments were, however, made at net loss - Whether assessee-company was entitled to carry forward and set off business loss determined and assessed by Assessing Officer - Held, no [In favour of revenue]

Section 2(47 : No Transfer if the Possession not Given

No ‘transfer’ arose if possession of asset was never given under an agreement to sell

[2015] 57 taxmann.com 27 (Bangalore - Trib.)

IN THE ITAT BANGALORE BENCH 'A'

Abdul Wahab

v.

Deputy Commissioner of Income-tax, Central Circle 1(3), Bangalore

Section 2(47), read with section 45, of the Income-tax Act, 1961 - Capital gains - Transfer (Immovable property) - Assessment year 2006-07 - Whether, where assessee entered into an agreement for sale of property with a partnership firm in which possession of property to said firm was to be delivered on date of registration of sale deed and there was nothing to show that possession was ever delivered by assessee to purchaser in part performance of agreement for sale, there was no transfer within meaning of section 2(47)(v) - Held, yes [Paras 12 and 16] [In favour of assessee]

Section 2(47) : No Transfer. if power of attorney executed without any consideration

No transfer of property under income-tax Act on execution of power of attorney without any consideration

[2015] 57 taxmann.com 20 (Madras)

HIGH COURT OF MADRAS

Commissioner of Income-tax, Chennai

v.

C. Sugumaran

Section 2(47) of the Income-tax Act, 1961 - Capital gains - Transfer (Immovable property/Power of attorney) - Assessment year 2009-10 - One 'V', who was actual owner and vendor of property, executed a registered power of attorney in favour of assessee without any consideration - Thereafter, property was registered in name of assessee's wife for certain sum by a sale deed - Assessing Officer computed capital gains in hands of assessee - Whether there was no transfer or enabling enjoyment of property in favour of assessee in any manner and, therefore, sub-clause (vi) of section 2(47) was not attracted - Held, yes - Whether, therefore, assessee could not be treated as owner of said property for computing capital gains in his hands - Held, yes [Para 11] [In favour of assessee]

Circulars and Notifications : Circular No. 495 dated 22-9-1987

Interest on Refund of Self Assessment Tax

Even refund of excess self-assessment tax paid by assessee would be entitled to interest

[2015] 57 taxmann.com 283 (Punjab & Haryana)

HIGH COURT OF PUNJAB AND HARYANA

Commissioner of Income-tax

v.

Punjab Chemical & Crop Protection Ltd

Section 244A, read with sections 140A and 154, of the Income-tax Act, 1961 - Refunds - Interest on (Self assessment tax) - Assessment year 1989-90 - Whether tax deducted at source, advance tax and also tax paid by way of self assessment, after its adjustment against tax liability of assessee on a regular assessment, loses its original character and becomes tax paid in pursuance of liability - Held, yes - Whether therefore, it could not be held that assessee was only entitled to interest on tax deducted at source or advance tax but not on self assessment tax paid under section 140A which was found to be paid in excess - Held, yes [Para 11][In favour of assessee]

When the Interest earned on FDR is not treated as Taxable: case Law

Interest earned on sums kept in FD out of sums granted by Govt. for infra development wasn't taxable

[2015] 57 taxmann.com 349 (Karnataka)

HIGH COURT OF KARNATAKA

Commissioner of Income-tax, Bangalore

v.

Karnataka State Agricultural Produce Processing & Export Corporation Ltd

Section 4 of the Income-tax Act, 1961 - Income - Chargeable as (Interest) - Assessment year 2008-09 - Assessee was a Government owned company, engaged in trading in agricultural produce - In order to facilitate infrastructure facilities, for increasing export of horticultural produce, a sum of Rs. 10 crores was granted to assessee by State Government - Before utilisation of said grant, it was temporarily kept in fixed deposits and interest was earned - It was found that assessee was acted as a nodal agency for implementation of said scheme and there was no profit motive as entire fund entrusted and interest accrued from deposits had to be utilised only for purposes of scheme originally granted - Further, whole of fund belonged to State exchequer and assessee had to channelise them to achieve objects of centrally sponsored scheme of infrastructural development as specified in Government order - Whether, interest earned on depositing these grants was not an income in hands of assessee - Held, yes [Para 17][In favour of assessee]

Non-refundable membership fee has to be apportioned and taxed during period of membership

Non-refundable membership fee has to be apportioned and taxed during period of membership, rules Gujarat High Court

[2015] 56 taxmann.com 429 (Gujarat)

HIGH COURT OF GUJARAT

Commissioner of Income-tax

v.

Unique Mercantile Service (P.) Ltd

Section 28(i) of the Income-tax Act, 1961 - Business income - Year in which chargeable (Membership fee) - Assessment years 1989-90 to 2001-02 - Assessee-company engaged in business of providing facility cards to members on payment of one-time fee, apportioned membership fee over entire period of their membership - Assessing Officer rejected claim of spreading over of membership fee and brought to tax entire receipt in year in which cards were issued - Whether where services were rendered partially, revenue earning was to be proportionate to degree of completion of service - Held, yes - Whether, therefore, assessee was justified in spreading over amount of membership fee and expenses - Held, yes [Para 7][In favour of assessee]

Section 48-Cost of Acquisition of land to partner would be deemed as its book value

Cost of Acquisition of land to partner would be deemed as its book value on date of transfer on dissolution of firm

[2015] 57 taxmann.com 352 (Hyderabad - Trib.)

IN THE ITAT HYDERABAD BENCH 'B'

Bimco Electrical Products (P.) Ltd.

v.

Assistant Commissioner of Income-tax, Circle-1 (3), Hyderabad

I. Section 48, read with section 45, of the Income-tax Act, 1961 - Capital gains - Computation of (Cost of acquisition) - Assessment year 2006-07 - Land in question was allotted to a partnership firm in 1973 at Rs. 10,000 per acre - In 1987 said firm revalued land at Rs. 13,40,000 and credited partners' accounts - On 1-10-1991, firm was dissolved and assessee-company took over its assets and liabilities - Assessee sold aforesaid land and adopted cost of acquisition of land at Rs. 13,40,000 - Assessing Officer adopted cost of acquisition of land at Rs. 10,000 per acre and computed capital gains - Whether in terms of section 45(4) book value of land as on date of transfer, i.e., Rs. 13,40,000, should be taken as consideration paid by assessee to partnership firm and thus, cost of acquisition in its hands - Held, yes [Paras 9 and 10][In favour of assessee]

Section 194C: No TDS on Payments to NR Shipping Co or its Agents

TDS liability doesn't arise on payments made to NR shipping Cos or its agents

[2015] 57 taxmann.com 350 (Ahmedabad - Trib.)

IN THE ITAT AHMEDABAD BENCH 'B'

Income Tax Officer, Ward-1(2), Ahmedabad

v.

Anchor Cagrolines (P.) Ltd.

Section 194C, read with section 40(a)(ia), of the Income-tax Act, 1961 - Deduction of tax at source - Contractors/sub-contractors, payments to (Payment to agent of non-resident shipping company) - Assessment year 2005-06 - Assessee made payment to shipping companies - Assessing Officer by invoking section 40(a)(ia) disallowed said payments on ground that no TDS was deducted - On appeal, Commissioner (Appeals) after verifying all copies of bills of lading and exports found that all payments were made to agent of non-resident shipping companies - He held that assessee was not required to deduct TDS under section 194C and, therefore, no disallowance could be made under section 40(a)(ia) - Whether order passed by Commissioner (Appeals) was justified - Held, yes [Para 4.3] [In favour of assessee]

Circulars and Notifications : CBDT Circular No. 723, dated 19-9-1995

Form 49C

The last date for filing of Form 49C is almost there and it’s 30th May 2015 which was notified vide Notification No.5/2012 dated 6-2-2012 with effect from 1st April 2012.

Form 49C is primarily required to be filed by Non-residents having Liaison office(s) in India. It is to be filed in pursuance of Section 285 of the Income Tax Act and in accordance with rule 114DA of the Income Tax Rules.

Section 285 of Income Tax Act, 1961 read with rule 114DA mandates that Every person, being a non-resident having a liaison office in India set up in accordance with the guidelines issued by the Reserve Bank of India under the Foreign Exchange Management Act, 1999 (42 of 1999), shall, in respect of its activities in a financial year, prepare and deliver or cause to be delivered to the Assessing Officer having jurisdiction, within sixty days from the end of such financial year, a statement in form 49C of its activities.

Section 68: When Gifts could not be held as unexplained

Gifts couldn’t be held as unexplained if identity and relationship of donor were known

[2015] 57 taxmann.com 84 (Delhi)

HIGH COURT OF DELHI

Commissioner of Income-tax

v.

Ramesh Suri

Section 68 of the Income-tax Act, 1961 - Cash credit (Gifts) - Whether where identity and relationship of donor was known, amount received by assessee by way of gift from said donor could not be treated as income from undisclosed source- Held , yes [Para 7] [In favour of assessee]

No denial of sec. 11 relief to hospital

No denial of sec. 11 relief to hospital just because it didn't provide concessional treatment to poor patients

[2015] 57 taxmann.com 333 (Pune - Trib.)

IN THE ITAT PUNE BENCH 'B'

Income-tax Officer, Ward -3, Ahmednagar

v.

Noble Medical Foundation & Research Centre

Section 2(15), read with section 11, of the Income-tax Act, 1961 - Charitable or religious purpose (Medical relief) - Assessment year 2008-09 - Assessee-trust, running a multi-speciality hospital, claimed exemption of income under section 11 - Assessing Officer denied exemption on grounds that earning of profit was pre-dominant activity of trust and charitable activity was only incidental; and that assessee had failed to provide concessional treatment to indigent/poor patients - Whether since assessee was engaged in carrying on activities for attaining objects of providing medical relief to people at large which has been recognised as charitable activity under Act, merely because surplus was generated from hospital activities could not be ground to deny exemption under section 11 - Held, yes - Whether under Act, there is no provision for providing a percentage of concession to indigent/poor patients and, therefore, this could not be a ground to disallow claim of exemption under section 11 to assessee-trust, which otherwise was entitled to deduction under section 11 - Held, yes [Paras 17 to 23] [In favour of assessee]

Section 13 of the Income-tax Act, 1961 - Charitable or religious trust - Denial of exemption (Sub-section (1)(c)) - Assessment year 2008-09 - Assessee-trust, running a multi-speciality hospital, claimed exemption of income under section 11 - Assessing Officer denied exemption on that Dr. K, managing trustee, himself alone had diverted income by using trust infrastructure for his profit/gains, in clear violation of provisions of sections 13(1)(c), read with section 13(2)(b) and 13(2)(g) - Whether in view of fact that 72 per cent of total receipt of trust were attributable to service of Dr. K, against which he was paid only consultancy fee that for looking after his patients in trust hospital, Dr. K had engaged associate doctors and he was paying for that services; that Dr. K had made available services of his laboratory to patients of trust hospital at concessional rate; and that Dr. K had made available large land to trust to carry on its activities of running hospital, amount paid to Dr. K, could not be said to be unreasonable and, therefore, provisions of section 13(1)(c) were not attracted - Held, yes [Paras 21 & 22] [In favour of assessee]

Circulars and Notifications : CBDT Circular No. 11, dated 19-12-2008

Section 92C A fraudulent company can't be chosen as comparable

A fraudulent company can't be chosen as comparable for TP study as its financial results aren't reliable

[2015] 57 taxmann.com 368 (Pune - Trib.)

IN THE ITAT PUNE BENCH 'B'

Oceans Connect (I) (P.) Ltd.

v.

Assistant Commissioner of Income-tax, Circle-1 (2), Pune

Section 92C of the Income-tax Act, 1961 - Transfer pricing - Computation of arm’s length price (Comparables and adjustments/Comparables - Illustrations) - Assessment year 2005-06 - Assessee was a wholly owned subsidiary of 'O' Ltd., UK - It was set up to provide call centre services to its parent company - Assessee had charged its Associate Enterprise at cost + 12 per cent basis - TPO on basis of average profit margin earned by two comparables selected by him, made certain addition to assessee's ALP - Whether since companies selected by TPO were involved in fraud on account of which their financial results could not be considered as correct and reliable, impugned addition was to be set aside and, matter was to be remanded back for disposal afresh - Held, yes [Para 16][In favour of assessee/Matter remanded]

When the Subsidy is held not to be educed from Actual Cost of Asset for Depreciation calculation

Subsidy for setting-up industry in backward area couldn’t be reduced from actual cost of asset to compute depreciation

[2015] 57 taxmann.com 95 (Kolkata - Trib.)

IN THE ITAT KOLKATA BENCH 'A'

Universal Cables Ltd.

v.

Deputy Commissioner of Income-tax, Circle-6, Kolkata

Section 43(1) of the Income-tax Act, 1961 - Actual cost (Subsidy) - Assessment years 2008-09 to 2009-10 - Assessee was engaged in business of manufacturing and sale of Cables and Cable wires - It had put up a new project - Industrial investment promotion assistance in form of subsidy was given to assessee as project was located in backward area - Maximum ceiling of assistance was equivalent to fixed capital investment only - Subsidy was not given for meeting a part of capital expenditure incurred by assessee but as incentive for establishing or expansion of an unit and not for specific purpose of meeting a portion of cost of assets - Whether subsidy was in nature of capital receipt - Held, yes - Whether subsidy receipt should not be reduced from actual cost of fixed assets under section 43(1) for computing depreciation under provisions of Act - Held, yes [Paras 16 and 19][In favour of assessee]

Assessee liable to pay secs. 234B and 234C interest if Advance tax Not Paid

Assessee liable to pay secs. 234B and 234C interest if he didn’t discharge advance tax liability on specified dates

[2015] 57 taxmann.com 34 (Mumbai - Trib.)

IN THE ITAT MUMBAI BENCH 'D'

Rajshri Production (P.) Ltd.

v.

Additional Commissioner of Income-tax -11(1), Mumbai

Section 234B, read with sections 234C and 154, of the Income-tax Act, 1961 - Interest - Chargeable as (Rectification) - Assessment year 2008-09 - Appellate order was passed holding that sum total of tax deducted at source from assessee and MAT credit was more than 90 per cent of assessed tax and, hence, interest under sections 234B and 234C was not chargeable - Later on, Assessing Officer noticed that tax payable was Rs.1.94 crore and advance tax paid was Rs.1.78 crore and, thus, there was shortfall of Rs. 15.60 lakh - On his rectification application, Commissioner (Appeals) held that, since advance tax payable was more than Rs.10,000, same would attract interest - Whether since as provided in sections 207 and 208, assessee's liability to pay advance-tax within time prescribed under section 211 existed on last date for payment of advance tax or at least on last date of financial year and it was not case that such liability arose subsequently after passage of last date for payment of advance tax or after last date of financial year, assessee was liable to pay advance tax for year under consideration - Held, yes - Whether on failure to pay advance tax on stipulated dates, interest was to be recalculated after giving assessee credit of taxes paid - Held, yes [Para 5] [In favour of revenue]

Section 132 :Jewellery can be released after furnishing bank guarantee

Jewellery can be released after furnishing bank guarantee even if its actual ownership is to be determined

Seized jewellery could be released on furnishing of bank guarantee by Karta of HUFs even if it was not cleared whether jewellery belonged to HUFs or Karta

■■■

[2015] 57 taxmann.com 5 (Bombay)

HIGH COURT OF BOMBAY

M.N. Navale (Bigger HUF)

v.

Somnath M. Wajale, Deputy Commissioner of Income-tax, Central Circle -2 (2), Pune

Section 132 of the Income-tax Act, 1961 - Search and seizure - General (Release of seized assets) - Assessment years 1999-2000 to 2009-10 - In course of search revenue seized jewellery from a premises a larger HUF, a smaller HUF and Karta was present at said premises - Whether where issue of ownership of seized jewellery was a matter which was pending for final adjudication, release of seized jewellery on furnishing of a bank guarantee provided by Karta would not be prejudicial to interest of revenue - Held, yes [Para 13] [In favour of assessee]

Circulars and Notifications : CBDT's Circular, dated 21-1-2009

A developer can change its method of accounting

A developer can change its method of accounting if there is uncertainty in ultimate collection of revenue

[2015] 57 taxmann.com 400 (Hyderabad - Trib.)

IN THE ITAT HYDERABAD BENCH 'B'

Additional Commissioner of Income-tax, Central Range-3, Hyderabad

v.

Hill County Properties Ltd.

Uncertainty in ultimate collectibility of revenue justifies change of method of accounting by property developer from percentage of completion to recognition of income based on registration of agreements for sale or completion of possession and consequential reversal of revenue on cancellations/legal cases. This is so especially where such uncertainty is evidenced by cancellations of property bookings and National Consumer Dispute Redressal Commission upholding cancellation and dismissal by Supreme Court of SLP against NCDRC orders