In so far as claiming the amount set out towards warranty is concerned, the apex court in the case of Rotark Controls India P. Ltd. v. CIT [2009] 314 ITR 62 has held that the principle is that the historical trend indicates that a large number of sophisticated goods were being manufactured in the past and the facts show that defects existed in some of the items manufactured and sold, then provision made for warranty in respect of such sophisticated goods would be entitled to deduction from the gross receipts under section 37.
We have heard both sides. The provision of security at the Calcutta guest house has no nexus or relation with the business of manufacture of the assessees, who are manufacturers of ‘Titanium-di-oxide’, ‘Ferrous Sulphate’ etc., in Tuticorin. Therefore, the security service for the guest house cannot be considered as an input service so as to make credit of tax paid on such services admissible to the assesses. I, therefore, uphold the impugned order and reject the appeal.
When a partnership firm is dissolved and the erstwhile partner receives stock, it is a capital asset in his hands. When that asset is introduced into a business as stock, it gets converted into stock-in-trade. The value of this stock will have to be the market value on the date of introduction. The Tribunal’s reasoning that the assessee cannot value the stock introduced in the business at market value because that was not the price she paid for it is flawed because if the assessee on having received her distributed share of stock of jewellery from the dissolved firm had sold it, and thereafter commenced her proprietorship business of jewellery again; within short span; by buying the jewellery from the market from the proceeds of stock sold on dissolution of the erstwhile firms, the stock of the proprietorship concern would without doubt be valued at market value. The same principle would apply if the assessee used her share of the stock obtained from the dissolved firm in the new business.
Delhi High Court in the case of CIT v. Sandan Vikas (India) Ltd. (ITA No. 348 of 2011) (Judgement date: 24 February 2011, Assessment Year: 2005-06) held that the taxpayer was eligible to claim weighted deduction on in-house Research and Development (R&D) expenditure from the year in which the taxpayer made an application to the Department of Scientific and Industrial Research (DSIR). The High Court observed that the provisions of the Income-tax Act, 1961 (the Act) does not suggest or imply that the cut-off date mentioned in the certificate issued by the DSIR will be the cut-off date for eligibility of weighted deduction on the expenditure incurred on in-house R&D to avail benefit of Section 35(2AB) of the Act.
Delhi bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of Intelsat Corporation (ITA No. 5443/D/2010) (Judgment Date: 4 March 2011, Assessment Year: 2007-08) held that income received by the non-resident taxpayer from leasing of transponder capacity and bandwidth cannot be taxed as ‘royalty’ under the provisions of Income-tax Act, 1961 (the Act).
Recently, the Mumbai bench of the Income-tax Appellate Tribunal (the Tribunal), in the case of Bharat Bijlee Limited v. ACIT (ITA NO. 6410/MUM/2008) (Judgment Date: 11 March 2011, Assessment Year: 2005-06) , held that where a business undertaking is transferred against issue of bonds / shares, the transaction is not a “Slump Sale” as defined under Section 2(42C) of the Income-tax Act, 1961 (the Act) and therefore provisions of section 50B of the Act relating to computation of capital gains in case of Slump Sale are not applicable to such transfer.
If a search under section 132 of the Income Tax Act, 1961 is challenged on the ground that information leading to reasons to believe for authorising search was irrelevant then how should this question be resolved? Should the court, Look into the records and decide it alone; or Disclose the information to the aggrieved person and then adjudicate upon it, after hearing the parties (a)The Director of Income-tax (Investigation) Kanpur had jurisdiction to authorise the search;
Mumbai bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of ITO v. TCFC Finance Limited (ITA No.1299/Mum/2009) (Judgement date- 9 March 2011 Assessment Year 2004-05) held that the provisions of Minimum Alternate Tax (MAT) deals with amount of provision for diminution in the value of any asset and not with the value of asset which remains after diminution. Once provision is made for diminution in the value of any asset, the same has to be added for computing book profit, regardless of the fact whether or not any balance value of the asset remains after diminution.
The Bombay HC last week quashed the decision of the Customs, Excise, Service Tax Appellate Tribunal which held the Director General of Foreign Trade (DGFT), the licensing authority under the Foreign Trade (Development & Regulation) Act, did not have the powers to amend licences with retrospective effect. The CESTAT ruling was challenged by Bhilwara Spinners Ltd, manufacturers of yarn, which were granted ‘export promotion capital goods’ licence to import capital goods. The terms had to be changed due to market circumstances.
Tenders or public auction best way to sell state properties- The Supreme Court (SC) has declared “inviting tenders from the public or holding public auction is the best way for disposal of properties belonging to the state.” In this case, Kerala Finance Corp vs Vincent Paul, the borrower failed to repay the loan and the state finance corporation tried to dispose of the mortgaged property. But the process was entangled in civil suits. The SC ssaid the corporation has not framed rules or guidelines for sale of properties owned by them. Therefore the court itself framed rules to be followed by the corporation till it formed its own guidelines.
