Once the three conditions pointed out by the Supreme Court in the judgment of Madhav Prasad Jatia v. CIT [1979] 118 ITR 200 are satisfied, the assessee would be entitled to deductions in respect of the interest and charges paid on the loans; the matter would be different only in a case where after borrowing the funds from the bank, the assessee utilizes those very funds by giving interest free loans to others.
The department filed an appeal in the High Court and claimed that as the Tribunal’s order was received on a particular date, the appeal was on time. However, the assessee obtained information from the Tribunal under the Right to Information Act and pointed out that the order was served on an earlier date and that the appeal was belated. HELD taking a serious view of the matter and summoning the Revenue Secretary and Chairman CBDT.
In a recent decision in the case of Tecumseh India Pvt. Ltd. v. ACIT [2010-TIOL-408-ITAT-DEL-SE3], the Special Bench of Delhi Income-tax Appellate Tribunal (the Tribunal) has held that non-compete fees inextricably linked with the acquisition of a business constitute capital expenditure.
The assessee-company allotted shares to four companies. The allottee companies were active as per the records of the ROC and were allotted PAN and assessed to income-tax. Though the assessee filed a return, no assessment u/s 143(3) was made. The AO s
The assessee let out property on a rent of Rs. 90,000 per month and also received interest-free security deposit of Rs. 8.58 crores. The property was not subject to the Rent Control Act. The assessee claimed that only the rent could be taken into account for determining the ‘annual value’ of the property and not the notional interest on the deposit. The AO determined the ‘annual value’ u/s 23(1)(a) by adding Rs. 30 lakhs of notional interest. The CIT (A) and Tribunal deleted the addition by holding that the rateable value as determined by the MCD had to be taken as the “fair rent” u/s 23(1) (a) and the notional interest could not be added either u/s 23(1)(a) or u/s 23(1)(b). On appeal by the department HELD:
Pearey Lal Bhawan Association Vs M/S Satya Developers Pvt Ltd (Delhi High Court) – Service Tax: whether the burden of service tax, levied on the service or facility of leasing (of the suit premises) should be borne by the lessor (i.e. the service provider) or the lessee (i.e. the defendant, user). – that unless a different intention appears from the terms of the contract, in case of the imposition or increase in the tax after the making of a contract, the party shall be entitled to be paid such tax or such increase. Although there is no explicit provision to that effect, enabling lessors such as the plaintiff, to the service tax component, this Court is of the view that there is sufficient internal indication in the Act, through Section 83 read with Section 12-A and Section 12-B suggesting that the levy is an indirect tax, which can be collected from the user (in this case, the lessee). This issue, is therefore, answered in the plaintiff’s favour, and against the defendant.
S. 234D inserted by the FA 2003 w.e.f. 1.6.2003 is in the nature of a substantive provision and applies only for the AY 2004-05 and onwards and is not retrospective. A provision by which an authority is empowered to levy and collect interest, even if construed as forming part of the machinery provisions, is substantive law for the simple reason that in the absence of contract or usage interest can be levied under law and it cannot be recovered by way of damages for wrongful detention of the amount. ITO vs. Ekta Promoters 305 ITR 1 (SB) (Del) approved)
ITAT was justified in law in holding that the amount of Rs. 63,46,000 paid by the assessee for acquiring technical know-how was allowable as revenue expenditure? The Tribunal was justified in its opinion that the payment made in question was allowable as revenue expenditure and not as capital expenditure allowable for deprecation under Section 32 of the Act .
Briefly stated the relevant facts of the present case are that on 14th September, 2004, a survey under Section 133A of the Act was conducted out on the respondent-assessee?s business premises. During the course of survey, the tax officials noticed some discrepancies in stock and cash in hand. During the said survey, respondent-assessee surrendered an amount of ` 99,50,000/- and offered the same for the purposes of taxation. The additional income offered included a sum of Rs. 45,00,000/- on account of excess stock found during the course of survey and offered by one of the partners of the respondent-assessee as additional income.
Delhi High Court Ruling: Transfer Pricing – Sec 92 – An important ruling by the Hon’ble High Court wherein it has been held that the methodology to be adopted by the Revenue Authorities for making an adjustment should be equitable and fair, and has ruled on the payment for the use of intangible assets and attributing arm’s length consideration for activities carried out by the licensee, etc. [Maruti Suzuki India Limited – W.P. 6876/2008]
