CIT Vs. M/s K.G. Denim Ltd. (Madras HC) – The Assessing Officer is not entitled to touch the profit and loss account prepared by the assessee as per the provisions contained in the Companies Act, while arriving at the book profit under Section 115J and the book profit so arrived at should be the basis for taxation and therefore, the computation under Section 80HHC should be limited to the case of profits of eligible category only. The Tribunal has also come to the conclusion that in view of the non obstante clause available in Section 115JA it was clear that the provisions is a self-contained one and no other provision would have effect on it and thereby it was to be implemented as contained in the said provision.
Assessee-company under the tripartite agreement, in particular, clause 4.1 was under no obligation whatsoever to contribute any money to its wholly owned subsidiary YRMPL. The facts as found also show that whatever was spent by the assessee-company by way of advertisements towards liability to advertisers such as O&M and HTA etc. was allowed. Furthermore, the facts also reveal that the total contributions received during the period by YRMPL was Rs 2.64 crores out of which it had admittedly spent Rs 2.19 crores and the balance Rs 44.44 lacs remained unspent. The point to be noted is that what the assessee-company in law could not have claimed directly, that is, by making a provision for advertising expenditure could it then be allowed to claim an amount as an expense merely on account of the fact that it had set up an intermediary in the form of a wholly owned subsidiary
Attention of Authorised Dealer Category – I (AD Category – I) banks is invited to A.P.(DIR Series) Circular No. 39 dated December 8, 2008 and A.P. (DIR Series) Circular No. 58 dated March 13, 2009 on the captioned subject. In terms of Para 4 B of A.P (DIR Series) Circular No. 39 dated December 8, 2008, Reserve Bank has been considering proposals from Indian companies for buyback of FCCBs out of their internal accruals, under the approval route up to a total amount of USD 50 million of the redemption value per company, subject to a minimum discount of 25 per cent on the book value.
The directions contained in this circular have been issued under sections 10(4) and 11 (1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions/approvals, if any, required under any other law.
As announced in Para 107 of the Annual Policy Statement 2009-10 and considering the continuing pressure on credit spreads in the international markets, it has been decided to extend the relaxation in all–in-cost ceilings, under the approval route, until December 31, 2009. This relaxation will be reviewed in December 2009.
The Council of the ICWAI at its 251st Meeting held on 12-13 February 2009 decided as below: Mandatory application of Cost Accounting Standards
In Dharmendra Textile Processors’ case (supra), Their Lordships have held that that penalty under section 271(1)(c) provides remedy for loss of revenue. A penalty under section 271 (1)(c) involves payment of an additional amount, which is a civil liability to provide for remedy for loss of revenue, while a sentence of imprisonment under section 276 C means loss of individual liberty which does not help revenue in anyway except as serving as a deterrent for the potential defaulters.
