The question as to whether the assessee had an option in law to claim partial depreciation in respect of any block of assets is remanded to the High Court to consider in the light of Mahendra Mills 243 ITR 56 (SC), the deletion of s. 34(1) and the insertion of Explanation 5 to s. 32 of the Act.

Commitment charges paid in respect of borrowed moneys are allowable as a deduction u/s 37(1) of the Act.

(i) Where the AO had accepted in the past that the warehousing charges received by the assessee was business income, he was not justified in reopening the assessment to assess the charges as property income in the absense of any change in the facts and circumstances. (ii) On merits, though the principle of res-judicata does not apply to income-tax proceedings, the principle of consistency does apply and it is not open to the AO to take a view different from that taken in earlier years on the same set of facts.

Note: See also Aipita Marketing vs. ITO (ITAT Mumbai)

(i) The Chairman of the Settlement Commission has the power to constitute a Special Bench and he is not required to give reasons or produce the material in support thereof.

(ii) It is not as if the moment an application is made and there is compliance of the requirements of Section 245-D that the Commission is bound to entertain the application and allow it. The Commission has then to consider whether the application is invalid under Section 245-D(2C). The Settlement Commission can treat the application as invalid meaning thereby non – est if the Applicant has not made a true and full disclosure and further must disclose how the income has been derived. If on the material it arrives at a conclusion even prima facie that there was no true and full disclosure it has then the right to declare the application as invalid.

(iii) On facts, there was no failure of the principles of natural justice as all the recorded statements were provided to the assessee. The argument that the documents were supplied at the time of the hearing and sufficient opportunity was not given is not acceptable as such plea was not taken before the Commission;

(iv) Though the Settlement Commission did not follow the correct procedure in hearing the application for privilege of documents by revenue, by directing the petitioners to leave the premises, that by itself could not vitiate the proceedings.

(i) While the arrears of the State have priority over private debts owed to ordinary or unsecured creditors, this priority does not extend over secured creditors (subject to statutory exception). The fact that the tax arrears are recoverable as arrears of land revenue makes no difference to this principle;

(ii) In view of s. 35 of the SARFAESI Act, secured creditors have priority over dues of the State;

(iii) The fact that the property was attached by the Revenue before its sale by the secured creditor is of no consequence because the attachment does not create any interest or lien in the property. The attachment may render the alienation void as against all claims enforceable against the attachment;

(iv) A sale by the secured creditor is equivalent to a sale by the owner of the property and vests the purchaser with all the rights and liabilities of the owner;

(v) In order to constitute a “succession”, there must be a transfer of the business and the identity and continuity of the business so transferred must be preserved. A mere transfer of assets is not sufficient to constitute “succession” and to make the transferee liable for the arrears of the transferor.

As s. 192 requires the employer to deduct tax on the “estimated income” of the employee, the test is whether he acted in a bona fide and honest manner. Where the employer allowed the employees deduction under sections 10(5) and 10(14) only on the basis of declarations filed by the employees without verifying actual expenditure incurred by the employee & maintaining records thereof, it could still be regarded as having acted in a bona fide manner.

Deduction under section 80M can be claimed even in respect of the interim dividend declared for the succeeding financial year before the due date.

High Court deprectaes the practice of the department in mechnaically filing frivolous appeals. Observes that it causes inconvenience and wastes the time of the Court and results in sidelining of important issues. It accordingly imposes costs of Rs. 10,000 on the Revenue to discourage such filings.

See also: CIT vs. Amar Tea Ltd (Bombay High Court) & Pradeep Sangodkar vs. State

The Supreme Court deprectaes the practice of the High Court in disposing of matters without recording reasons. Explains that while the Supreme Court itself, being the final court, may pass orders without reasons, the High Courts and lower courts are not entitled to do so as their orders are subject to appeal.