The fact that the assessee is a regulatory body does not mean it cannot pursue an ‘object of general public utility’ which qualifies to be a charitable activity u/s 2(15). The scope of the expression ‘any other object of general public utility’ is very wide, though it excludes objects of private gain such as an undertaking for commercial profit even though the undertaking may subserve general public utility. On facts, as the assessee was engaged in the activities of “prevention, control or abatement of pollution”, its objects were of general public utility

Vide Notification dated 3rd June 2009, Rule 13E was inserted in the Income Tax Appellate Tribunal Members (Recruitment and Conditions of Service) Rules, 1963 to provide that “The President, the Senior Vice-President, the Vice-President and the Members of the Tribunal shall not practice before the Tribunal after retirement from the service of the Tribunal”. The Special Bench had to consider whether the said Notification applied to Members who resigned / retired before the date of issue of the said Notification and allied issues.

In granting approval to the ESOP, the RBI had stipulated that no payment could be made while exercising the right to purchase shares. Accordingly, there was no “cost of acquisition” and in accordance with B. C. Srinivasa Setty 128 ITR 294 (SC), the gains could not be taxed.

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.

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

It is beyond comprehension how expenditure incurred on the project itself can be disallowed on the ground that it was incurred prior to setting up the project office. When computing the income of the project as a whole including that part which relates to the period anterior to the setting up of the project office, there can be no question of not allowing such expenditure which is relatable to the period prior to the setting up of the project. If the expenditure is identifiable with the project, it has to be allowed as a deduction under the matching concept.

The fact that the proviso to s. 112 uses the words ‘before giving effect to the second proviso to s. 48’ does not mean that the benefit of the lower rate can be given only to those cases eligible for the indexation benefit. Even non-residents who are not eligible for indexation are eligible for the lower rate of 10%.

Para 13.1 of Accounting Standard 7 (AS-7) mandates that a foreseeable loss on the entire contract should be provided for in the financial statements irrespective of the amount of work done and the method of accounting followed; The fact that AS-7 has not been notified by the Central Government as an accounting standard for purposes of s. 145 (2) is not relevant; In principle, anticipated losses on incomplete projects are allowable as a deduction subject to their being calculated as per AS-7.