Month: April 2010

Archive for April, 2010


CIT vs. Dresser Rand India (Bombay High Court)

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DATE: April 29, 2010 (Date of publication)
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In Bangalore Clothing Co 260 ITR 371 (Bom) it was held that If an item of income is closely linked with business operations and constitutes “operational income”, it cannot be excluded under Explanation (baa) to s. 80HHC. This proposition is inconsistent with the law in Ravindranathan Nair and is no longer good law. The submission that Bangalore Clothing was impliedly approved in Baby Marine Exports 290 ITR 323 (SC) is not acceptable because that judgement turned on the fact that the export house premium was an integral part of the consideration for the sale realized by the assessee, a supporting manufacturer

Posted in All Judgements, High Court

ADIT vs. Valentine Maritime (Mauritius) (ITAT Mumbai)

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DATE: (Date of pronouncement)
DATE: April 26, 2010 (Date of publication)
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For computing the threshold time limit under Article 5(2)(i), the activities of a foreign enterprise on a particular site or a particular project etc have to be seen and not on all the activities in a tax jurisdiction as whole. Each building site, construction project, assembly project or supervisory activities in connection therewith has to be viewed on a standalone basis. This is on the assumption that the different business activities are not so inextricably interconnected that they are required to be viewed as a coherent whole

Posted in All Judgements, Tribunal

Vijaya Bank vs. CIT (Supreme Court)

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DATE: (Date of pronouncement)
DATE: April 25, 2010 (Date of publication)
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Pursuant to the Explanation inserted w.r.e.f. 1.4.1989 a mere provision for bad debt is not entitled to deduction u/s 36(1)(vii). However, in the present case, besides debiting the P&L A/c and creating a provision for bad debts, the assessee had also obliterated the said provision by reducing the corresponding amount from the debtors account in the Balance Sheet. Consequently, the figure in the loans and advances in the Balance Sheet was shown net of the provision for bad debts

Posted in All Judgements, Supreme Court

Shri Jethmal Faujimal Soni vs. ITAT (Bombay High Court)

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DATE: (Date of pronouncement)
DATE: April 16, 2010 (Date of publication)
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The 3rd Proviso to s. 254 (2A) is a stringent provision as a result of which even if the delay in disposing of the appeal is not attributable to the assessee, the stay has to stand vacated in any event upon the lapse of a period of 365 days. Having regard to the nature of the provision which has been enacted by Parliament, the Tribunal is under a bounden duty and obligation to ensure that the appeal is disposed off, so as to not result in prejudice to the assessee, particularly in a situation where no fault can be found with the conduct of the assessee. The fact that an issue was pending before the Special Bench was not a reason for the Tribunal not to dispose of the appeal, particularly since the consequence of the inability of the Tribunal to do so would result in the vacating of the order of stay. It is unfortunate that the Tribunal simply adjourned the appeal merely on the ground of the pendency of an identical issue before the Special Bench. The state of affairs which has come to pass could well have been avoided by the appeal being taken up for final disposal

Posted in All Judgements, High Court

ITO vs. M/s Prasad Production (ITAT Chennai Special Bench)

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DATE: April 11, 2010 (Date of publication)
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As regards Samsung Electronics 320 ITR 209 (Kar), a judgement of a non-jurisdictional High Court need not be followed where there are conflicting High Court judgements or where the judgement is rendered per incuriam (Kanel Oil 121 ITD 596 (Ahd)) or where the correct legal position was not brought to the notice of the High Court (Lalsons Enterprises 89 ITD 25 (Del) (SB). Apart from the judicial conflict, the alternative TDS procedure as per the CBDT Circulars was not brought to the attention of the High Court. Consequently, the judgement of the Special Bench in Mahindra & Mahindra 313 ITR 263 (AT)(Mum) (which held that s. 195 (1) did not apply if the payment was not chargeable to tax) has to be followed in preference to that of Samsung Electronics

Posted in All Judgements, Tribunal

Porrits & Spencer (Asia) vs. CIT (P&H High Court)

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DATE: April 9, 2010 (Date of publication)
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The argument of the revenue based on McDowell & Co cannot be accepted because the judgment rendered therein by Justice Chinnappa Reddy has been explained in detail by the later judgment in Azadi Bachao Andolan. It is well settled that if a smaller Bench of the Supreme Court has later on explained its earlier larger Bench then the later judgment is binding on the High Court. (Precedents referred to). Accordingly, the view expressed in Azadi Bachao Andolan has to be accepted as binding and it cannot be said that the principle of law laid down by the House of Lords in Duke of Westminster as applied in Azadi Bachao Andolan is no longer applicable. Moreover, no such principles having been laid down in the majority judgment in McDowell & Co

Posted in All Judgements, High Court

CIT vs. Glenmark Pharmaceuticals (Bombay High Court)

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DATE: (Date of pronouncement)
DATE: April 5, 2010 (Date of publication)
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The argument of the Revenue that the restrictions imposed on the manufacturer to (a) utilise the formula provided by the assessee, (b) affix the trade-mark of the assessee, (c) manufacture as per specifications provided by the assessee and (iii) deal exclusively with the assessee show that the contract is not one of sale is not acceptable because this has not been the understanding of the law at any point of time even by the CBDT and judicial precedents. Though a product is manufactured to the specifications of a customer, the agreement would constitute a contract for sale, if (i) the property in the article passes to the customer upon delivery and (ii) the material that was required was not sourced from the customer / purchaser, but was independently obtained by the manufacturer from a third party

Posted in All Judgements, High Court

CIT vs. Asian Star Co (Bombay High Court)

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DATE: April 5, 2010 (Date of publication)
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FILE: Click here to view full post with file download link
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Once Parliament has legislated both in regard to the nature of the exclusion and the extent of the exclusion, it would not be open to the Court to order otherwise by rewriting the legislative provision. The task of interpretation is to find out the true intent of a legislative provision and it is clearly not open to the Court to legislate by substituting a formula or provision other than what has been legislated by Parliament. It is not open to say that something more than the 10% statutorily provided should also be allowed. In Shri Ram Honda Power Equip 289 ITR 475 the Delhi High Court has not adequately emphasized the entire rationale for confining the deduction only to the extent of ninety per cent of the excludible receipts and it cannot be followed

Posted in All Judgements, High Court