As the AO had not made any disallowance u/s 14A, the Tribunal could not have not touched the question of s. 14A and made observations prejudicial to the assessee while remanding the matter. It had no jurisdiction to issue directions to the AO decide afresh on the touchstone of s. 14A and Daga Capital Management Pvt. Ltd. Accordingly, the order of the Tribunal to the extent it directed consideration of applicability of s. 14A was quashed & set aside.
In Ishikawakima-Harima it was held that fees for technical services was not assessable to tax u/s 9(1)(vii) if the twin conditions of it being rendered in India and utilized in India were not satified. The amendment to s. 9 (1) suggests that the criterion of residence, place of business or business connection of a non-resident in India have been done away with for fastening the tax liability. However, the criteria of rendering service in India and the utilization of the service in India as laid down in Ishikawajma-Harima to attract tax liability u/s 9(1)(vii) remains untouched and unaffected by the Explanation to s. 9(1).
A ‘derivative’ is a security representing the value of the underlying stocks and shares and must be given the same treatment as that given to the stocks and shares. Also, s. 43 (5) uses the term “commodity” in a wide sense and covers ‘derivatives’. Further, the fact that s. 43(5)(d) exempts certain derivatives from the ambit of the definition of ‘speculative transaction’ shows that they would otherwise have come within that term as otherwise the amendment would be redundant.
There is not a single order made by the Apex Court which relates to a dispute between Union of India and a State, or a Department of Union of India and a State, or a Public Sector Undertaking of Union of India and a State. Hence, it is not possible to expand the scope of directions made by the Apex Court so as to include a dispute between a Department of the Central Government and a State Government Undertaking.
Where an assessee is assessed to a loss, it may be said either that he has been assessed to a nil income and is permitted to carry forward the loss or that he is assessed to the loss figure. Whichever way one looks at it the assessed income is “less” than Rs. I lakh and s. 253 (a) would apply. If, on the other hand, one takes the view that to an assessee assessed to a loss clauses (a) or (b) or (c) of s. 253 cannot apply as they postulate assessment out of a positive figure than, it is only clause (d) which applies and, even so, the fee payable would be Rs.500/.
The assessee became liable to pay “penalty” for overloading wagons under the rules of the Railways. The question arose whether the said “penalty” was disallowable under the Explanation to s. 37 (1) which provides that “expenditure incurred for any purpose which is an offence or which is prohibited by law” shall not be allowable. HELD, deciding in favour of the assessee:
The substance of the matter had to be looked into and given preference over the form. Though the amount was termed “penalty”, it was essentially of a commercial nature and incurred in the normal course of business and was consequently allowable.
Expl. (baa) to S. 80HHC defines the term “profits of the business” to mean the profits under the head “profits and gains” as reduced by 90% of the sum referred to in s. 28 (iiid). The 2nd & 3rd Provisos to s. 80HHC (3) provide that the profits computed there under shall be increased by the said 90% amount computed in the proportion of export turnover to total turnover. S. 28 (iiid) refers to “any profit on the transfer of the Duty Entitlement Pass Book Scheme (‘DEPB’)”. The Special Bench had to consider whether the entire amount received on sale of DEPB entitlements represents ‘profits’ chargeable u/s 28 (iiid) or the profit referred to therein requires any artificial cost to be imputed. HELD deciding in favour of the assessee: only the “profit” (i.e. the sale value less the face value) is required to be considered for purposes of s. 80HHC.
In Rajendra Prasad Moody 115 ITR 522 the Supreme Court held that interest on monies borrowed for purchase of shares was allowable as a deduction u/s 57 (iii) irrespective of whether or not there is any yield of dividend to the assessee. It was held that the words “expenditure incurred for making or earning the income” in s. 57 (iii) did not mean that income actually had to be earned for the allowability of the expenditure. The converse of this principle is now applicable. i.e. s. 14A disallows expenditure “in relation to income which does not form part of total income” and in order for the expenditure to be disallowed, actual income need not be earned
A debenture, when issued, is a loan. The fact that it is convertible does not militate against it being a loan. In accordance with India Cement 60 ITR 52 (SC), expenditure on a loan is always revenue in nature even if the loan is taken for capital purposes. Consequently, the expenditure on convertible debentures is admissible as revenue expenditure.
The fixing of the cut-off date u/s 245 D (4A) (1), the abatement of proceedings u/s 245HA (1)(iv) & the making available of confidential information u/s 245HA (3) for no fault of the applicant are ultra vires the Constitution. In order to save these provisions from being struck down as being unconstitutional, they will have to be read down as applying only to cases where the Settlement Commission is unable to pass an order on or before 31.3.2008 for any reason attributable on the part of the applicant. The expression “reasons attributable” should be reasonably construed. If in the writ petition, the applicant has urged that it was not responsible for the non-disposal of the application and the same is not denied by the revenue, the circumstance should be considered in favour of the applicant;