This article summarizes a recent ruling of the Mumbai Income Tax Appellate Tribunal (ITAT) [2009-TIOL-707-ITAT-MUM] in the case of Cipla Investments Ltd. (Taxpayer) on taxability of waiver of loan. The ITAT held that since the loan received was on capital account, its subsequent waiver too was on capital account. Hence, the loan waived was not liable to be taxed as profits and gains from its business (business income) under the provisions of the Indian Tax Law (ITL). The ITAT also held that waiver would not be taxable as business income if a taxpayer was not allowed deduction of the loan amount earlier.
A partnership firm is a separate entity than that of its partners under the Income-tax Act and therefore, partners vis-à-vis partnership firm would stand on the same footing of shareholders vis-à-vis company; accordingly , income charged in the hands of partnership firm cannot be treated as being a non-exempt income in the hands of a partner of such firm and, therefore, provisions of section 14A would be applicable in computing the total income of such partner in respect of his share in the profits of such firm.
The rule of construction of a charging section is that before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section. No one can be taxed by implication. A charging section has to be construed strictly. If a person has not been brought within the ambit of the charging section by clear words, he cannot be taxed at all.
he assessee, a civil contractor, claimed deduction u/s 80-IA (4) in respect of the profits from infrastructure projects executed by it. The lower authorities rejected the claim on the ground that the assessee was a mere contractor and not a developer. On appeal, the Judicial Member upheld the claim on the ground that the assessee was a developer. The Accountant Member dissented and after taking note of the Explanation to s. 80-IA then proposed to be inserted by the Finance Bill 2007 w.r.e.f 1.4.2000, rejected the claim.
The assessee transferred a capital asset which was received by her by way of gift on 1.2.2003. The previous owner had acquired the capital asset on 29.1.1993. In computing capital gains, the assessee claimed that the indexed cost of acquisition had to be worked out by taking the date of acquisition by the previous owner.
The assessee, a partner in a firm, received ‘share of profit’ and ‘salary’ from the firm. While the ‘share of profit’ was exempt u/s 10(2A), the ‘salary’ was taxable as business income u/s 28 (v). The assessee claimed deduction for business expenditure incurred by him. The AO held that as the assessee had exempt income, s. 14A applied and a part of the expenditure had to be disallowed.
As can be seen from the above the adjustment made by the assessee is according to the provisions of the Act. Since both the industrial galas fall within the block the WDV is increased by the actual cost of the asset falling within the block and reduced by the amount payable in respect of the asset sold. Accordingly we do not find any mistake in assessee’s working of the block of assets which is according to the provisions of section 43(6)(c). The A.O.’s action in denying the inclusion of asset within the block is on the condition that the asset was not put to use.
Admittedly, it is a case of sale of shares. In this regard, share purchase agreement was entered into on 27.1.2005 and final delivery of shares took place on 1/15.4.2005. In the share purchase agreement, detailed provisions were made restricting the vendors from exercising various rights in relation to shares. Revenues’ main contention is that on account of substantial extinguishment of rights in pursuance to share purchase agreement
Searches conducted by the Income Department are important means for unearthing black money. However, under the scheme before insertion of special procedure for assessment of search cases, valuable time is lost in trying to relate the undisclosed incomes to the different years. Tax evaders generally manage to divert the focus to procedural and legal issues and often invent new evidence to explain undisclosed income. By the time search r
Admittedly there was no DTAA with Hongkong for the relevant year. As such we will restrict ourselves in examining the provisions of section 9(l)(vii) in order to ascertain the deductibility or otherwise of tax at source from the payment so made to the firm of legal advisors at Hongkong.
