business purposes

The income from investment activity was offered as capital gains while the income from dealing activity was offered as business income. This position was accepted by the AO in the earlier years. In AY 2005-06, the AO took a different view and held that even the shares held on investment account had to be assessed as business income. The Tribunal allowed the assessee’s appeal (see 122 TTJ (Mum) 87). On appeal by the Revenue, HELD dismissing the appeal: Full Article

The assessee had two divisions, one at Dombivili and the other at Surat. The division at Surat was closed since two/three years. The assessee claimed depreciation on the assets of the said Surat division which was rejected by the AO and the CIT (A) on the ground that the assets were not “used” and depreciation could not be allowed. On appeal by the assessee, HELD allowing the appeal: Full Article

The definition of Capital asset continues in DTC. However the DTC classifies assets into two broad categories i.e. investment assets, and business assets. DTC envisages taxing income from transfer of investment assets as capital gains. Under the Income Tax Act 1961 (“Act”), income from transfer of capital assets even if used for business purposes was taxed as capital gain. DTC proposes to tax income from transfer of business capital assets as “business income” an.. Full Article

CASE LAW DETAILS Decided by: Mumbai High Court, In The case of: Topstar Mercantile Pvt. Ltd. (Formerly, Urvi Chemicals & Allied Industries Ltd) (Appellant)  V/s. The Asstt. Commissioner of Income Tax (Respondent), Appeal No.:, 1460 of 2009, Decided on:  26.08.2009 SUMMARY OF CASE LAW In assessment proceedings, the AO raised a query about disallowance of expenditure [...] Full Article

SUMMARY OF CASE LAW Once commercial angle of the expenditure is established as contemplated by section 37(1) of the Income-tax Act, there is no difference in the corporate membership or a membership of working partner in a club for the purpose of said section. CASE LAW DETAILS Decided by: ITAT, `D’ BENCH, MUMBAI, In The case [...] Full Article

Sunil Sethi v. DCIT- Where there was documentary evidence on record to substantiate the explanation of the assessee that the amount was given for the business purposes of the company, the same could not be considered to be deemed dividend in the hands of the assessee and the provisions of section 2(22)(e) were not applicable. Full Article

The concept of Deemed Dividend is embedded in Section 2(22)(e) of the Income-tax Act, 1961 and was also embedded in section 2(6A)(e) of the Indian Income-tax Act, 1922. In nutshell, the concept envisages taxing certain payments made by closely held companies by way of loans or advances to certain shareholders of the company or to the concerns/companies in which they have substantial interest. Full Article

Munjal Sales vs. CIT (Supreme Court) - (i) A firm seeking to claim deduction of interest paid on capital from its partners has to first satisfy the requirements of s. 36(1)(iii) and thereafter the limits imposed by s. 40(b)(iv). The fact that the said capital is not loans or advances is irrelevant. Full Article