Search Results For: Delhi High Court


Triune Projects Pvt. Ltd vs. DCIT (Delhi High Court)

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DATE: November 22, 2016 (Date of pronouncement)
DATE: December 8, 2016 (Date of publication)
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S. 2(42C)/ 50B: The fact that certain assets of the "undertaking" are left out of the sale transaction because it would cause inconvenience for the purchaser does not mean that the transaction is not a "slump sale". To expect a purchaser to buy and pay value for defunct or superfluous assets flies in the face of commercial sense

The sale transaction was reported for a total consideration of Rs.45.83 crores. The sale was for a going concern, which included ongoing service contracts, employment contracts and other tangible assets, and intangible assets such as technical know-how etc. To expect a purchaser to buy and pay value for defunct or superfluous assets flies in the face of commercial sense. Unfortunately, the Revenue’s understanding is that in a going concern the buyer is bound to pay good money, transact and purchase bad and irrecoverable debts. Not only does it fly in the face of common and commercial understanding, but it is not even a pre-condition , as is evident from the definition of “undertaking”, cited in Explanation (1) to Section 2 (19) (A) of the Act

Posted in All Judgements, High Court

IndiaBulls Financial Services Ltd vs. DCIT (Delhi High Court)

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DATE: November 21, 2016 (Date of pronouncement)
DATE: December 6, 2016 (Date of publication)
AY: 2009-10
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S. 14A Rule 8D: The fact that the AO did not expressly record his dissatisfaction with the assessee's working does not mean that he cannot make the disallowance. The AO need not pay lip service and formally record dissatisfaction. It is sufficient if the order shows due application of mind to all aspects

Undoubtedly, the language of Section 14A presupposes that the AO has to adduce some reasons if he is not satisfied with the amount offered by way of disallowance by the assessee. At the same time Section 14A (2) as indeed Rule 8D(i) leave the AO equally with no choice in the matter inasmuch as the statute in both these provisions mandates that the particular methodology enacted should be followed. In other words, the AO is under a mandate to apply the formulae as it were under Rule 8D because of Section 14A(2). If in a given case, therefore, the AO is confronted with a figure which, prima facie, is not in accord with what should approximately be the figure on a fair working out of the provisions, he is but bound to reject it. In such circumstances the AO ordinarily would express his opinion by rejecting the disallowance offered and then proceed to work out the methodology enacted

Posted in All Judgements, High Court

Sushila Devi vs. CIT (Delhi High Court)

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DATE: October 21, 2016 (Date of pronouncement)
DATE: November 8, 2016 (Date of publication)
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Strictures: Department's recalcitrance to release the assessee's seized jewellery, even though it is so small as to constitute "stridhan" and even though no addition was sustained in the assessee's hands, is not "mere inaction" but is one of "deliberate harassment"

This court is of opinion that the respondent’s recalcitrance is not mere inaction; it is one of deliberate harassment. Unarguably, the first round of assessment proceedings culminated in no addition of the jewellery or its value in the hands of the petitioner’s husband. The matter ought to have rested there, because the further proceedings were at the behest of the petitioner’s husband who was aggrieved by the additions made (and not aggrieved by the decision on issues in his favour). The ITAT’s decision to proceed de novo, nevertheless strengthened the respondents’ obduracy and hardened their resolve not to release the jewellery. The de novo order did not result in any addition on that aspect at all; still the respondents cling to another ingenious argument- that till the petitioners’ husband’s tax demands are satisfied, they can detain the jewellery

Posted in All Judgements, High Court

Woodward Governor (India) Ltd vs. ACIT (Delhi High Court)

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DATE: October 5, 2016 (Date of pronouncement)
DATE: November 1, 2016 (Date of publication)
AY: 1997-98
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S. 147: Even if the claim for s. 80-IA deduction is contrary to Pandian Chemicals 262 ITR 278 (SC) and Liberty India 317 ITR 218 (SC), the assessment cannot be reopened (beyond 4 years) in the absence of tangible material. The reasons recorded for the reopening cannot be improved or supplemented later

The rationale furnished by the revenue in its counter affidavit and reiterated in the court during the hearing was that a component of income which was otherwise inadmissible but escaped the notice of the AO, because of the ratio in Liberty India and Pandian (supra) is unpersuasive. Besides, the lack of any reference to objective material, cannot in any way improve the case of the revenue – much less its reference to otherwise binding judgments that could have been the basis of a valid revision by the revenue under Section 264. It goes without saying that statutory orders containing reasons are to be judged on the basis of what is apparent and not what is explained later, as the validity of those orders does not improve with time or on account of better explanations furnished in the course of legal proceedings (refer M.S. Gill and Anr. vs. Chief Election Commissioner AIR 1978 SC 581)

Posted in All Judgements, High Court

Pradeep Khanna vs. ACIT (Delhi High Court)

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DATE: August 11, 2016 (Date of pronouncement)
DATE: August 30, 2016 (Date of publication)
AY: -
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S. 14A Rule 8D: The AO must examine the accounts closely and determine if at all any expenditure could be ascribed to the tax exempt dividend/interest earned by the assessee. If the tax exempted income was earned without the interference of any employee the question of attributing any expenditure cannot arise at all

Sub-rule (1) categorically and significantly states that the Assessing Officer having regard to the account of the assessee and on not being satisfied with the correctness of the claim of expenditure made by the assessee or claim that no expenditure was incurred in relation to income which does not form part of the total income under the Act, can go on to determine the disallowance under subrule (2) to Rule 8D of the Rules. Sub-rule (2) will not come into operation until and unless the specific precondition in sub-rule (1) is satisfied. Thus, section 14A (2) of the Act and rule 8D (1) in unison and affirmatively record that the computation or disallowance made by the assessee or claim that no expenditure was incurred to earn exempt income must be examined with reference to the accounts, and only and when the explanation/claim of the assessee is not satisfactory, computation under subrule (2) to rule 8D of the Rules is to be made

Posted in All Judgements, High Court

Pr. CIT vs. Bharat Sanchar Nigam Ltd (Delhi High Court)

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DATE: August 1, 2016 (Date of pronouncement)
DATE: August 5, 2016 (Date of publication)
AY: 2005-06
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S. 80IA(2A): As the words "derived from" are absent, there is no requirement to prove "first degree nexus" of the receipts with the eligible business. All receipts of the undertaking are eligible for 100% deduction

The legislature having ousted applicability of sub-section (1) and (2) in the opening sentence brought in for the purposes of time line sub-section (2) into play but made no efforts whatsoever to put the assessee under sub-section (2A) to meet the stringent requirements that the profits so contemplated were to be “derived from”. The requirements of the first degree nexus of the profits from the eligible business has not been brought into play

Posted in All Judgements, High Court

CIT vs. M. M. Aqua Technologies Ltd (Delhi High Court)

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DATE: July 22, 2016 (Date of pronouncement)
DATE: August 3, 2016 (Date of publication)
AY: 1996-97
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S. 43B: Issue of debentures to fund the interest liability does not amount to “actual payment” of the interest so as to qualify for deduction under Explanation 3C to Section 43-B

The question which has to be decided is whether the decision of this court in CIT vs. M. M. Aqua Technologies Ltd, which held that because of Explanation 3C to Section 43-B, any adjustment other than actual payment does not qualify for deduction under Section 43-B. As is evident from the discussion, the assessee’s review is premised on two major arguments, i.e. that the judgments of the Supreme Court in Standard Chartered Bank v Andhra Bank, 2006 (6) SCC 94 and Sunrise Associates vs Govt. of NCT of Delhi & Ors. 2006 (5) SCC 603, have categorically held that debentures (issued in favour of the bank, in this case to discharge interest liability) amounted to payment and that such debentures, being actionable claims and securities, were to be deemed paid once issued

Posted in All Judgements, High Court

CIT vs. Halliburton Export Inc (Delhi High Court)

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DATE: July 11, 2016 (Date of pronouncement)
DATE: July 14, 2016 (Date of publication)
AY: 2009-10, 2010-11
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CITATION:
S. 9(1)(vi): Though in Infrasoft 220 Taxman 273 (Del) the impact of the amendment to s. 9(1)(vi) on the question whether consideration received for sale of pre-packaged software was “royalty” or “fee for technical services” or "business income" was not examined, it is not required to be examined because u/s 90 (3) provides that the Act prevails only if it is more beneficial compared to the DTAA

The short question considered by the Court in Director of Income Tax v. Infrasoft Limited (2014) 220 Taxman 273 (Del) was whether the term “royalty” covered by Article 12 (3) of the DTAA would apply in the context of sale of pre-packaged copyrighted software. The Court stated that it has not examined the effect of the subsequent amendment to Section 9 (1) (vi) of the Act and also whether the amount received for use of software would be royalty in terms thereof for the reason that the Assessee is covered by the DTAA, the provisions of which are more beneficial

Posted in All Judgements, High Court

Technip Singapore Pte Ltd vs. DIT (Delhi High Court)

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DATE: June 2, 2016 (Date of pronouncement)
DATE: June 4, 2016 (Date of publication)
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Law on whether "installation or construction activity" constitutes a PE under Article 5 and whether "mobilisation/ demobilisation charges" can be treated as "royalty" u/s 9 (1) (vi) & Article 12 (3) (b) of the DTAA and whether "installation charges" could be treated as "Fees for Technical Services" under Explanation 2 below s. 9 (1) (vii) read with Article 12 (4) (a) of the India-Singapore DTAA explained

Therefore, on two counts the finding of the AAR on FTS cannot be sustained. The first being that the installation services are not incidental to the mobilisation/demobilisation service. The contract was in fact for installation, erection of equipment. Mobilisation/demobilisation constituted an integral part of the contract. Secondly, the AAR has proceeded on a factual misconception that the dominion and control of the equipment was with IOCL. It was erroneously concluded that the payment for such mobilisation/demobilisation constitutes royalty. In that view of the matter, the consideration for installation cannot not be characterized as FTS and brought within the ambit of Article 12.4(a) of the DTAA. The resultant position is that no part of the income earned by the Petitioner from the contract with IOCL can be taxed in India

Posted in All Judgements, High Court

Girish Bansal vs. UOI (Delhi High Court)

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DATE: April 28, 2016 (Date of pronouncement)
DATE: June 4, 2016 (Date of publication)
AY: 1993-94, 1994-95
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CITATION:
Entire law on concept of "revenue receipt", "capital receipt" and "casual income" explained in the context of taxability of compensation received for cancellation of a sale deed of immovable property. If the AO claims that the receipt is a capital gain, he cannot change his stand to contend that it is a revenue receipt

The sum of Rs.20 lakhs received by the Assessees was in the context of the cancellation of the sale certificate and the sale deed executed in their favour in relation to an immovable property and neither Assessee was dealing in immovable property as part of his business. While it could if at all be said to be in the nature of a capital receipt, what is relevant for the present case is that the Revenue has been unable to make out a case for treating the said receipt as of a casual and non-recurring nature that could be brought to tax under Section 10(3) read with Section 56 of the Act. Following the decision in Cadell Weaving Mill (supra), there can be no manner of doubt that what is in the nature of capital receipt, cannot be sought to be brought to tax by resorting to Section 10(3) read with Section 56 of the Act

Posted in All Judgements, High Court