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Taxability of subsidies: Supreme Court stays judgement of the Delhi High Court in CIT vs. Bhushan Steels And Strips which held that if the recipient has the flexibility of using it for any purpose and is not confined to using it for capital purposes, the subsidy is revenue in nature and is taxable as profits
Bhushan Steel vs. CIT
(2017) TaxCorp(LJ) 14000 (SC)
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Taxability of subsidies: A subsidy granted by the Govt to achieve the objects of acceleration of industrial development and generation of employment is capital in nature and not revenue. The fact that the incentives are not available unless and until commercial production has started, and that the incentives are not given to the assessee expressly for the purpose of purchasing capital assets or for the purpose of purchasing machinery is irrelevant. The object has to be seen and not the form in which it is granted
CIT vs. Chaphalkar Brothers Pune
(2017) TaxCorp(LJ) 13999 (SC)
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S. 80-IB: The incentive meant for small scale industrial undertakings cannot be availed by undertakings which do not continue as small scale industrial undertakings during the relevant period. Each assessment year is a different assessment year. The fact that the object of legislature is to encourage industrial expansion does not mean that the incentive should remain applicable even where on account of industrial expansion, the small scale industrial undertakings ceases to be small scale industrial undertakings. The fact that in the initial year eligibility was satisfied is irrelevant
DCIT. vs. Ace Multi Axes Systems Ltd.
(2017) TaxCorp(LJ) 13965 (SC) · Section. 80-IB
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Taxability of mesne profits: High Court's approach of dismissing the Dept's appeal only because the Tribunal relied on Narang Overseas 111 ITD 1 (Mum) (SB) and the appeal against which had been dismissed for non-removal of defects is not correct. The High Court ought to decide the question on merits
Goodwill Theatres Pvt. Ltd.
(2017) TaxCorp(LJ) 13964 (SC)
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S. 68 Bogus share capital: Law laid down in Subhlakshmi Vanijya Pvt. Ltd vs. CIT 155 ITD 171 (Kol), Rajmandir Estates 386 ITR 162 (Cal) etc that the CIT is entitled to revise the assessment order u/s 263 on the ground that the AO did not make any proper inquiry while accepting the explanation of the assessee insofar as receipt of share application money is concerned cannot be interfered with
Daniel Merchants Private Limited vs. ITO
(2017) TaxCorp(LJ) 13944 (SC) · Section 68
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Low Tax Effect Circular: The view of the two-judge bench in Suman Dhamija & Gemini Distilleries that CBDT's low tax Circular dated 09.02.2011 cannot be given retrospective effect cannot be followed as it is contrary to the three-judge bench verdict in Surya Herbal. A beneficial circular has to be applied retrospectively while an oppressive circular has to be applied prospectively. Circular dated 9.2.2011 has retrospective operation except for two caveats: (i) The Circular should not be applied ipso facto when the matter has cascading effect and/or (ii) where common principles are involved in subsequent group of matters or a large number of matters
DIT. vs. S. R. M. B. Dairy Farming (P) Ltd.
(2017) TaxCorp(LJ) 13912 (SC)
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S. 43B: Advance deposit of central excise duty in the Personal Ledger Account (PLA) constitutes actual payment of duty within the meaning of s. 43B and the assessee is entitled to the benefit of deduction of the said amount
CIT vs. Modipon Limited
(2017) TaxCorp(LJ) 13885 (SC) · Section 43B
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It is trite that when two views are possible, one which favours the assessees has to be adopted. Circulars are binding on the Department. The Government itself has taken the position that where whole of excise duty or service tax is exempted, even the Education Cess as well as Secondary and Higher Education Cess would not be payable. This is the rational view
SRD Nutrients Private Limited vs. CCE
(2017) TaxCorp(LJ) 13825 (SC)
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SC - The expression “due” only means that a refund becomes due if there is an order under the Act which either reduces or waives tax or interest. It is of no matter that the interest that is waived is discretionary in nature. Claim of interest allowed.
M/s. K. Lakshmanya And Company Versus Commissioner of Income Tax & Another
(2017) TaxCorp(LJ) 13796 (SC) · http://taxcorp.in/FileOpenDT.aspx?ID=70299&Category=Judgment&CategoryType=Zip
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SC - When the collection is illegal, there is corresponding obligation on the revenue to refund such amount with interest in as much as they have retained and enjoyed the money deposited.
The Director of Income Tax (International Taxation) Versus M/s Set Satellite (Singapore) Pte. Ltd.
(2017) TaxCorp(LJ) 13795 (SC) · http://taxcorp.in/FileOpenDT.aspx?ID=70300&Category=Judgment&CategoryType=Zip
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SC - Assessment in the hands of non-existing amalgamating company is void and not curable u/s 292B
Spice Enfotainment Vs. CIT
(2017) TaxCorp(LJ) 13792 (SC) · Section. 292B
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Low Tax Effect Circular: The CBDT cannot issue any circular having retrospective operation. Consequently, instruction/circular issued on 9.2.2011 directing withdrawal of low tax effect appeals applies only to appeals filed after that date and not to pending appeals. The fact that the CBDT itself vide Circular dated 10.12.2015 directed that the instruction to withdraw low tax effect appeals will apply retrospectively to pending appeals has no bearing
CIT. vs. Gemini Distilleries
(2017) TaxCorp(LJ) 13751 (SC)
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S. 44BB: Amounts received as “mobilisation fee” on account of provision of services and facilities in connection with the extraction etc. of mineral oil in India attracts s. 44BB and have to be assessed as business profits. S. 44BB has to be read in conjunction with ss. 5 and 9 of the Act. Ss. 5 and 9 cannot be read in isolation. The argument that the mobilisation fee is “reimbursement of expenses” and so not assessable as income is not acceptable because it is a fixed amount paid which may be less or more than the expenses incurred. Incurring of expenses, therefore, would be immaterial. Also, the contract was indivisible
Sedco Forex International Inc vs. CIT
(2017) TaxCorp(LJ) 13750 (SC) · Section. 44BB
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SC - Amount received by the non-resident company towards mobilization/demobilisation fees for oil rigs is taxable u/s. 44BB.
SEDCO FOREX INTERNATIONAL INC. Vs COMMISSIONER OF INCOME TAX
(2017) TaxCorp(LJ) 13736 (SC)
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SC - CBDT instruction 3/2011 laying down monetary appeal filing limits for Revenue’s appeals is not retrospective in operation.
Gemini Distilleries Vs. The CIT
(2017) TaxCorp(LJ) 13729 (SC)
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Permanent Establishment (PE) under Article 5 of DTAA: Entire law on concept of “fixed place of business”, “service PE” and “agency PE” explained. The fact that there is close association and dependence between the US company and the Indian companies is irrelevant. The functions performed, assets used and risk assumed, is not a proper and appropriate test to determine whether there is a location PE
ADIT. vs. E-Funds IT Solution Inc.
(2017) TaxCorp(LJ) 13728 (SC)
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Entire law on the valuation of immovable properties under the 'rent capitalisation' method versus the 'land and building' method explained in the context of s. 7(2) of the Wealth-tax Act, 1957. Also, law on taking the view in favour of the assessee if two reasonable constructions of a statute are possible explained
Bimal Kishore Paliwal vs. CWT
(2017) TaxCorp(LJ) 13727 (SC)
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S. 2(22)(e): Any payment by a closely-held company by way of advance or loan to a concern in which a substantial shareholder is a member holding a substantial interest is deemed to be “dividend” on the presumption that the loans or advances would ultimately be made available to the shareholders of the company giving the loan or advance. However, the legal fiction in s. 2(22)(e) does not extend to, or broaden the concept of, a “shareholder”
CIT. vs. Madhur Housing And Development Co.
(2017) TaxCorp(LJ) 13726 (SC) · Section. 2(22)(e)
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SC - The Indian company only renders support services which enable the assessees in turn to render services to their clients abroad. This outsourcing of work to India would not give rise to a fixed place PE. Also, MAP agreement for earlier year cannot be considered as precedent for subsequent years.
E-Funds IT Solution Inc. ACIT
(2017) TaxCorp(LJ) 13709 (SC)
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SC - If two reasonable constructions of taxing statute are possible, that construction which favours the assessee must be adopted. The above proposition cannot be read to mean that under two methods of valuation if the value which is favourable to assessee should be adopted.
Bimal Kishore Paliwal and Ors. Vs. Commissioner Of Wealth Tax
(2017) TaxCorp(LJ) 13699 (SC)
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