Delhi High Court judgment on Writ Petition No. 328, 340/2010 – Ravina and Associates vs CIT. Stay on recovery of tax demand. Key details here.
CIT vs. Dinesh Kumar Goel- The assessee running coaching classes followed mercantile system of accounting. Total fees for the entire course, which may be of two years duration was taken in advance at the time of admission of the students. For the A.Y. 1997-1998, the assessee claimed that the fees received in the relevant year were to be carried forward to the next assessment year as they related to the next financial year. The Assessing Officer rejected the claim on the ground that the assessee was following the mercantile system of accounting. The Tribunal allowed the assessee’s claim.
DIT Vs Brahamputra Capital Financial Services Ltd (Delhi High Court)- When assessee advances interest-bearing loans to a sister concern but declares the same as NPA in the balance-sheet as per RBI guidelines, even then interest can not be treated as realised and the same is not taxable income. The provisions of section 145 of IT Act cannot override section 5 of the Act; if income has neither actually accrued nor received within the meaning of section 5; whatever section 145 may say, such income cannot be charged to tax even though a book keeping entry may have been made recognizing such hypothetical income.
Geofin Investment (P) Ltd vs. CIT (Delhi High Court) – Learned counsel for the petitioner Geofin Investment (P) Limited, submits that the tribunal had erred in dismissing the application under Section 254(2) of the Income Tax Act, 1961 (Act, for short) as the tribunal in its order dated 13th October, 2010, had referred to and relied upon decision of another ITAT Bench which had not not been cited at the time of hearing. He submits that the order passed by the tribunal dated 13th October, 2010 under Section 254(1) of the Act, should have been recalled. Hoourable High Court do not find any merit in the said contention. Under Section 254(2), a mistake apparent from the record can be rectified.
Delhi High Court in the case of CIT v. Oracle India Pvt. Ltd. (ITA No. 383 of 2009, 987 of 2010, 1242 of 2010 and 1247 of 2010) held that once the Transfer Pricing Officer (TPO) has accepted a royalty payment to be at arm’s length, the Assessing Officer (AO) could not disallow the expenditure by applying Section 37 of the Income–tax Act, 1961 (the Act). The High Court further observed under Section 37 of the Act the AO had powers only to examine whether the expenditure claimed has been actually expended and was incurred wholly and exclusively for the purpose of business, and not its reasonableness, which lies solely in the domain of the businessman.
Delhi High Court in the case of CIT v. M/s Mediworld Publications Pvt. Ltd ( ITA no 549 of 2011) held that transfer of intangible assets with right to carry on business was taxable as capital gains and not as business income.
CIT vs. Safetag International India Pvt Ltd (Delhi High Court)- In the present case, the assessee did not ask for these ‘reasons to believe’. The assessee rather participated in the reassessment proceedings. When the reassessment orders were passed and the assessee felt aggrieved there against, the assessee filed appeal before the CIT (A). In this appeal, he challenged the validity of reassessment proceedings, which was the course of action available to the assessee.
CIT Versus Sadhu Forging Ltd (Delhi HC) – Assessee in giving heat treatment for which it had earned labour charges and job-work charges, it can thus be said that the appellant had done a process on the raw material which was nothing but a part and parcel of the manufacturing process of the industrial undertaking. These receipts cannot be said to be independent income of the manufacturing activities of the undertakings of the assessee and thus could not be excluded from the profits and gains derived from the industrial undertaking for the purpose of computing deduction under Section 80IB. These were gains derived from industrial undertakings and so entitled for the purpose of computing deduction under Section 80IB. There cannot be any two opinions that manufacturing activity of the type of material being undertaken by the assessee would also generate scrap in the process of manufacturing. The receipts of sale of scrap being part and parcel of the activity and being proximate thereto would also be within the ambit of gains derived from industrial undertaking for the purpose of computing deducting under Section 80IB.
CIT Versus Narayan Securities Pvt. Ltd. (Delhi HC)- The Tribunal relied upon the case of ITO v. Smt. Darshan Kaur of the Amritsar Bench of the Tribuanl and also the case titled CIT v. Atlas Cycle Industries, 180 ITR 319 and CIT v. M.P. Iron Traders 189 CTR 154, holding that the assumption of jurisdiction to frame the assessment by invoking Section 147 of the Income Tax Act was not justifiable in this case and consequently quashed the assessment framed under Section 143(3)/147. It is against this impugned order that the appeal has been preferred by Revenue. The present case is squarely covered by the judgment of this Court in ITA No. 148/2008 titled as Ranbaxy Laboratories Limited v. Commissioner of Income Tax, pronounced today, i.e., 3rd June, 2011 by this Court.
National Agricultural Co-Operative Marketing Federation of India Ltd. Versus CIT (DELHI HC)- In fact the liability on account of interest was to be deductable only when it gets crystallized into a certain liability and that took place only on this court passing a decree and awarding interest after the date of the award till the date of realization. Thus, we are of the view that the liability did not crystallize in the three assessment years 1996-97, 1997-98 and 1998-99,but only came to be crystallized in the year 2000-2001, when this court passed decree on 28th January, 2000 and, therefore, the assessee could not claim deduction for the same in the assessment years 1996-97, 1997-98 and 1998-99. We thus, answer question in affirmative in favour of the Revenue and against the assessee and consequently dismissed the appeal.
