Search Results For: A.K. Sikri J.


ITO vs. Urban Improvement Trust (Supreme Court)

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DATE: October 12, 2018 (Date of pronouncement)
DATE: October 15, 2018 (Date of publication)
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S. 10(20) Interpretation of statutes: Law on whether "functional test" as laid down in UOI vs. R.C. Jain, (1981) 2 SCC 308 is still good law explained in the context of whether the statutory functions conducted by a municipal committee enables it to qualify as a 'local authority'

The High Court based its decision on the fact that functions carried out by the assessee are statutory functions and it is carrying on the functions for the benefit of the State Government for urban development. The said reasoning cannot lead to the conclusion that it is a Municipal Committee within the meaning of Section 10(20) Explanation Clause (iii). The High Court has not adverted to the relevant facts and circumstances and without considering the relevant aspects has arrived at erroneous conclusions. Judgments of the High Court are unsustainable

CIT vs. Classic Binding Industries (Supreme Court)

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DATE: August 20, 2018 (Date of pronouncement)
DATE: August 23, 2018 (Date of publication)
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S. 80-IC: An assessee who avails of deduction for a period of 5 years @ 100% of profits and gains is entitled to deduction on 'substantial expansion' for remaining 5 Assessment Years @ 25% (or 30% where the assessee is a company) and not @ 100% (Mahabir Industries v. PCIT 256 TM 201 (SC) distinguished)

As pointed out above, once the assessees had started claiming deduction under Section 80-IC and the initial Assessment Year has commenced within the aforesaid period of 10 years, there cannot be another initial Assessment Year thereby allowing 100% deduction for the next 5 years also when sub-section (3), in no uncertain terms, provides for deduction @ 25% only for the next 5 years. It may be asserted again that the assessees accept the legal position that they cannot claim deduction of more than 10 years in all under Section 80-IC

New Okhla Industrial Development Authority (NOIDA) vs. ACIT (Supreme Court)(S. 194-I)

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DATE: July 2, 2018 (Date of pronouncement)
DATE: July 10, 2018 (Date of publication)
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S. 194-I TDS: Amounts paid as part of the lease premium or biannual or annual payments for a limited/specific period towards acquisition of lease hold rights are not subject to TDS, being capital payments. Amounts constituting annual lease rent, expressed in terms of percentage (e.g. 1%) of the total premium for the duration of the lease, are rent and subject to TDS

(1) Amounts paid as part of the lease premium in terms of the time schedule (s) to the Lease Deeds executed between the petitioners and GNOIDA, or biannual or annual payments for a limited/specific period towards acquisition of lease hold rights are not subject to TDS, being capital payments; (2) Amounts constituting annual lease rent, expressed in terms of percentage (e.g. 1%) of the total premium for the duration of the lease, are rent, and therefore subject to TDS

CIT (TDS) vs. Canara Bank (Supreme Court)

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DATE: July 2, 2018 (Date of pronouncement)
DATE: July 10, 2018 (Date of publication)
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CITATION:
S. 194A TDS: Meaning of the expression "corporation" explained. Difference between "established by an Act" and "established under an Act" explained. Important principles of interpretation of fiscal statutes explained. Though NOIDA is not a "local authority", it is a "corporation established by the Act" and so payments to it are not liable to TDS u/s 194A

It is, therefore, clear that there is a well marked distinction between a body which is created by the statute and a body which after having come into existence is governed in accordance with the provisions of the statute. In other words the position seems to be that the institution concerned must owe its very existence to a statute which would be the fountainhead of its powers. The question in such cases to be asked is, if there is no statute would the institution have any legal existence. If the answer is in the negative, then undoubtedly it is a statutory body, but if the institution has a separate existence of its own without any reference to the statute concerned but is merely governed by the statutory provisions it cannot be said to be a statutory body

New Okhla Industrial Development Authority (NOIDA) vs. CCIT (Supreme Court)

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DATE: July 2, 2018 (Date of pronouncement)
DATE: July 3, 2018 (Date of publication)
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S. 10(20): Law on whether an industrial township referred to in proviso to Article 243Q is equivalent to a "municipality" and a "local authority" explained. Law on interpretation of statutes as to the scope of an "Explanation" and "Proviso" explained. There is no concept of "equity" or "presumption" or "intendment" in a taxing statute. Only the language has to be seen

What she argued was that looking to the nature of the functions enjoined upon the appellant committee, it must be deemed to be a municipal committee within the meaning of that expression in clause (iii) of the Explanation. We regret our inability to accept that submission. We say so for two distinct reasons. Firstly because the expression “municipal committee” appears in a taxing statute and must, Therefore, be construed strictly. It is fairly well-settled by a long line of decisions rendered by the Supreme Court that while interpreting a taxing statute, one has simply to look to what is clearly stated therein. There is, in fiscal statutes, no room for any intendment nor is there any equity about the levy sanctioned under the same

Mahabir Industries vs. PCIT (Supreme Court)

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DATE: May 18, 2018 (Date of pronouncement)
DATE: May 19, 2018 (Date of publication)
AY: 2008-09, 2009-10
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CITATION:
S. 80-IC: The fact that the assessee has earlier availed deduction u/s 80-IA & 80-IB is of no concern because deduction u/s 80-IC is available from the "initial year" i.e. the year of completion of substantial expansion. The inclusion of period for the deduction availed u/s 80-IA & 80-IB, for the purpose of counting ten years, is provided in sub-section (6) of s. 80-IC and it is limited to those industrial undertakings or enterprises which are set-up in the North-Eastern Region

If the assessee had earlier availed deduction under Section 80-IA and Section 80-IB, that would be of no concern inasmuch as on carrying out substantial expansion, which was carried out and completed in the Assessment Year 2006-07, the assessee became entitled to deduction under Section 80-IC from the initial year. The term ‘initial year’ is referable to the year in which substantial expansion has been completed, which legal position is stated by the High Court itself and even accepted by the Department as it has not challenged that part of the judgment. The inclusion of period for the deduction is availed under Section 80-IA and Section 80-IB, for the purpose of counting ten years, is provided in sub-section (6) of Section 80-IC and it is limited to those industrial undertakings or enterprises which are set-up in the North-Eastern Region. By making specific provision of this kind, the Legislature has shown its intent, namely, where the industry is not located in North- Eastern State, the period for which deduction is availed earlier by an assessee under Section 80-IA and Section 80-IB will not be reckoned for the purpose of availing benefit of deduction under Section 80-IC of the Act.

Skylight Hospitality LLP vs. ACIT (Supreme Court)

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DATE: April 6, 2018 (Date of pronouncement)
DATE: April 10, 2018 (Date of publication)
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S. 292-B: A s. 148 notice issued in the name of a company which does not exist upon its conversion into a LLP is valid if there is material to show that the issue in the name of the company was a clerical mistake. The object and purpose behind s. 292-B is to ensure that technical pleas on the ground of mistake, defect or omission should not invalidate the assessment proceedings, when no confusion or prejudice is caused due to non-observance of technical formalities

Object and purpose behind Section 292-B is to ensure that technical pleas on the ground of mistake, defect or omission should not invalidate the assessment proceedings, when no confusion or prejudice is caused due to nonobservance of technical formalities. The object and purpose of this Section is to ensure that procedural irregularity(ies) do not vitiate assessments. Notice/summons may be defective or there may be omissions but this would not make the notice/summon a nullity. Validity of a summon/notice has to be examined from the stand point whether in substance or in effect it is in conformity and in accordance with the intent and purpose of the Act. This is the purport of Section 292B

Maxopp Investment Ltd vs. CIT (Supreme Court)

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DATE: February 12, 2018 (Date of pronouncement)
DATE: March 16, 2018 (Date of publication)
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S. 14A/ Rule 8D - Applicability to shares held for controlling interest or as stock-in-trade: The argument that S. 14A & Rule 8D will not apply if the "dominant intention" of the assessee was not to earn dividends but to gain control of the company or to hold as stock-in-trade is not acceptable. S. 14A applies irrespective of whether the shares are held to gain control or as stock-in-trade. However, where the shares are held as stock-in-trade, the expenditure incurred for earning business profits will have to be apportioned and allowed as a deduction. Only that expenditure which is "in relation to" earning dividends can be disallowed u/s 14A & Rule 8D. The AO has to record proper satisfaction on why the claim of the assessee as to the quantum of suo moto disallowance is not correct

The first and foremost issue that falls for consideration is as to whether the dominant purpose test, which is pressed into service by the assessees would apply while interpreting Section 14A of the Act or we have to go by the theory of apportionment. We are of the opinion that the dominant purpose for which the investment into shares is made by an assessee may not be relevant. No doubt, the assessee like Maxopp Investment Limited may have made the investment in order to gain control of the investee company. However, that does not appear to be a relevant factor in determining the issue at hand. Fact remains that such dividend income is non-taxable. In this scenario, if expenditure is incurred on earning the dividend income, that much of the expenditure which is attributable to the dividend income has to be disallowed and cannot be treated as business expenditure. Keeping this objective behind Section14A of the Act in mind, the said provision has to be interpreted, particularly, the word ‘in relation to the income’ that does not form part of total income. Considered in this hue, the principle of apportionment of expenses comes into play as that is the principle which is engrained in Section 14A of the Act

Danamma @ Suman Surpur vs Amar (Supreme Court)

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DATE: February 1, 2018 (Date of pronouncement)
DATE: March 14, 2018 (Date of publication)
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CITATION:
Hindu Undivided Family (HUF) Law: The very factum of birth in a coparcenary creates the coparcenary. Therefore the sons and daughters of a coparcener become coparceners by virtue of birth. The amendment to s. 6 of the Hindu Succession Act, 1956 in 2005 statutorily recognizes the rights of coparceners of daughters as well since birth. Consequently, married daughters can be said to be the coparceners in the HUF and are entitled to the ancestral property even if they were born prior to the amendment to the Hindu Succession Act

Section 6, as amended, stipulates that on and from the commencement of the amended Act, 2005, the daughter of a coparcener shall by birth become a coparcener in her own right in the same manner as the son. It is apparent that the status conferred upon sons under the old section and the old Hindu Law was to treat them as coparceners since birth. The amended provision now statutorily recognizes the rights of coparceners of daughters as well since birth. The section uses the words in the same manner as the son. It should therefore be apparent that both the sons and the daughters of a coparcener have been conferred the right of becoming coparceners by birth. It is the very factum of birth in a coparcenary that creates the coparcenary, therefore the sons and daughters of a coparcener become coparceners by virtue of birth

CIT vs. Essar Teleholdings Ltd (Supreme Court)

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DATE: January 31, 2018 (Date of pronouncement)
DATE: February 1, 2018 (Date of publication)
AY: 2003-04
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CITATION:
S. 14A/ Rule 8D: Entire law on whether the computation provisions of Rule 8D is retrospective explained in the light of established principles of interpretation of statutes read with verdicts in Vatika Townships 367 ITR 466 (SC), Gold Coin Health 304 ITR 308 (SC) and other verdicts

There is no indication in Rule 8D to the effect that Rule 8D intended to apply retrospectively. Applying the principles of statutory interpretation for interpreting retrospectivity of a fiscal statute and looking into the nature and purpose of subsection (2) and subsection (3) of Section 14A as well as purpose and intent of Rule 8D coupled with the explanatory notes in the Finance Bill, 2006 and the departmental understanding as reflected by Circular dated 28.12.2006, we are of the considered opinion that Rule 8D was intended to operate prospectively.

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