Search Results For: 37(1)


Religare Commodities Ltd vs. ACIT (ITAT Delhi)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS: ,
COUNSEL: ,
DATE: January 4, 2017 (Date of pronouncement)
DATE: January 18, 2017 (Date of publication)
AY: 2008-09
FILE: Click here to view full post with file download link
CITATION:
S. 37(1): Stock Options (appreciation rights) are intended to motive employees and so the expenditure thereon is a deductible revenue expenditure. The discount (difference between market price and vesting price) is allowable upon vesting subject to reversal if the options lapse

The discount under ESOP is in the nature of employees cost and is hence deductible during the vesting period w.r.t. the market price of shares at the time of grant of options to the employees. The amount of discount claimed as deduction during the vesting period is required to be reversed in relation to the unvesting/lapsing options at the appropriate time. However, an adjustment to the income is called for at the time of exercise of option by the amount of difference in the amount of discount calculated with reference the market price at the time of grant of option and the market price at the time of exercise of option. No accounting principle can be determinative in the matter of computation of total income under the Act

Posted in All Judgements, Tribunal

Apollo Tyres Ltd vs. ACIT (ITAT Cochin)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS: , ,
COUNSEL:
DATE: January 10, 2017 (Date of pronouncement)
DATE: January 11, 2017 (Date of publication)
AY: 2010-11
FILE: Click here to view full post with file download link
CITATION:
S. 37(1): The loss on sale of shares of a wholly-owned subsidiary is allowable as a business loss if the investment in the subsidiary was made for commercial purposes

The objective of ATAG was undertaking sales and marketing related activities for the brand of the appellant in Singapore. The said factual assertion has not been rebutted by the AO in the impugned assessment order. There is nothing on record to show that the said subsidiary company was doing any activity completely independent and unrelated to the activities carried out by the appellant company. Thus, the claim of the appellant that the investment was made for commercial purposes and not for purpose of accretion of investment cannot be rejected

Posted in All Judgements, Tribunal

Reliance Infrastructure Ltd vs. CIT (Bombay High Court)

COURT:
CORAM: ,
SECTION(S): ,
GENRE:
CATCH WORDS: ,
COUNSEL:
DATE: December 20, 2016 (Date of pronouncement)
DATE: December 21, 2016 (Date of publication)
AY: 1983-84
FILE: Click here to view full post with file download link
CITATION:
S. 40(a)(ii): Foreign taxes are not hit by the bar in s. 40(a)(ii) and are deductible on the real income theory. After the insertion of the Explanation to s. 40(a)(ii) by the FA 2006, foreign taxes are not deductible only to the extent they are eligible for relief u/s 90 & 91. Amounts not eligible for DIT relief are deductible. The Explanation is declaratory and has retrospective effect

It is not disputed before us that some part of the income on which the tax has been paid abroad is on the income accrued or arisen in India. Therefore, to the extent, the tax is paid abroad on income which has accrued and/or arisen in India, the benefit of Section 91 of the Act is not available. In such a case, an Assessee such as the applicant assessee is entitled to a deduction under Section 40(a)(ii) of the Act. This is so as it is a tax which has been paid abroad for the purpose of arriving global income on which the tax payable in India. Therefore, to the extent the payment of tax in Saudi Arabia on income which has arisen / accrued in India has to be considered in the nature of expenditure incurred or arisen to earn income and not hit by the provisions of Section 40(a)(ii) of the Act. (q) The Explanation to Section 40(a)(ii) of the Act was inserted into the Act by Finance Act, 2006. However, the use of the words “for removal of dobuts” it is hereby declared “…….” in the Explanation inserted in Section 40(a)(ii) of the Act, makes it clear that it is declaratory in nature and would have retrospective effect. This is not even disputed by the Revenue before us as the issue of the nature of such declaratory statutes stands considered by the decision of the Supreme Court in CIT Vs. Vatika Township (P) Ltd. 367 ITR 466 and CIT Vs. Gold Coin Health Foods (P) Ltd. 304 ITR 308

Posted in All Judgements, High Court

CIT vs. M/s. D. Chetan & Co (Bombay High Court)

COURT:
CORAM: ,
SECTION(S): ,
GENRE:
CATCH WORDS: , ,
COUNSEL:
DATE: October 1, 2016 (Date of pronouncement)
DATE: October 10, 2016 (Date of publication)
AY: 2009-10
FILE: Click here to view full post with file download link
CITATION:
37(1)/43(5): Loss suffered in foreign exchange transactions entered into for hedging business transactions cannot be disallowed as being “notional” or “speculative” in nature. S. Vinodkumar Diamonds is not good law as it lost sight of Badridas Gauridas 261 ITR 256 (Bom)

It appears that in S. Vinodkumar, the Tribunal held the forward contract on facts before it to be speculative in nature in view of Section 43(5) of the Act. However, it appears that the decision of this court in CIT vs. Badridas Gauridas (P) Ltd. (134) Taxman Pg. 376 was not brought to the notice of the Tribunal when it rendered its decision in S. Vinodkumar (supra). In the above case, this court has held that forward contract in foreign exchange when incidental to carrying on business of cotton exporter and done to cover up losses on account of differences in foreign exchange valuations, would not be speculative activity but a business activity

Posted in All Judgements, High Court

Haryana State Road & Bridges Development Corporation Ltd vs. CIT (P&H High Court)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: September 29, 2016 (Date of pronouncement)
DATE: October 8, 2016 (Date of publication)
AY: 2010-11
FILE: Click here to view full post with file download link
CITATION:
S. 37(1): While expenditure for purchase of a capital asset is capital expenditure, guarantee commission to acquire the asset on installment terms is revenue expenditure

Expenditure incurred for the purchase of the machinery was undoutedly capital expenditure; for it brought in an asset of enduring advantage. But the guarantee commission stands on a different footing. By itself, it does not bring into existence any asset of an enduring nature; nor did it bring in any other advantage of an enduring benefit. The acquisition of the machinery on installment terms was only a business exigency

Posted in All Judgements, High Court

Nimesh N. Kampani vs. ACIT (ITAT Mumbai)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: June 16, 2016 (Date of pronouncement)
DATE: September 8, 2016 (Date of publication)
AY: 2009-10
FILE: Click here to view full post with file download link
CITATION:
S. 37(1): Expenditure incurred by a director in engaging lawyers to defend himself against cases filed for violation of the law by the Company of which he is a director is not personal expenditure but is allowable as business expenditure

Mr. Nimesh Kampani has been mentioned as one of the accused among several others, for non-payment of these fixed deposits by Nagarjuna Finance Limited. The Andhra Pradesh Government had since filed suit against directors of Nagarjuna Finance Limited including Mr. Kampani. To defend himself, Mr. Kampani has appointed various advocates to represent his case before various courts viz, District Court, High Court of Andhra Pradesh, Supreme Court of India. As the expenditure is incurred to protect his business interest the same is required to be allowed u/s. 37(1) of the Act. Accordingly we direct the A.O. to allow legal expenses of Rs.40,72,750/-

Posted in All Judgements, Tribunal

Silicon Graphics Systems (India) Pvt. Ltd vs. DCIT (ITAT Delhi)

COURT:
CORAM: ,
SECTION(S): ,
GENRE:
CATCH WORDS: , ,
COUNSEL:
DATE: August 24, 2016 (Date of pronouncement)
DATE: September 2, 2016 (Date of publication)
AY: 2009-10
FILE: Click here to view full post with file download link
CITATION:
S. 37(1): Foreign exchange fluctuation loss arising consequent to restatement of current liabilities as per the year end rates in accordance with Accounting Standard-11 (AS-11) is allowable as a deduction

The accounting standard-11 provides that at each balance sheet date the outstanding foreign currency monetary items should be reported using the closing rates. It clarifies that that when the transaction is not settled in the same accounting period in which it had occurred then in all the intervening period till the transaction is settled, the exchange differences have to be duly accounted for

Posted in All Judgements, Tribunal

CIT vs. Vinergy International Pvt. Ltd (Bombay High Court)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS: , ,
COUNSEL: ,
DATE: August 11, 2016 (Date of pronouncement)
DATE: August 20, 2016 (Date of publication)
AY: 2009-10
FILE: Click here to view full post with file download link
CITATION:
S. 37(1): Foreign exchange loss is not a "notional" or "speculation" loss and is allowable as a deduction. CBDT's Instruction No. 3 of 2010 which deals with foreign exchange derivative transactions (forward contracts) is not applicable to cases of losses in dealings with foreign exchange

The loss was not on account of derivatives but are in fact losses and gains in foreign exchange relating to the purchase and sales transactions i.e. creditors and debtors outstanding as on 31st March, 2010. Therefore, Instruction No.3 of 2010 issued by the CBDT would have no application to the facts of the present case. In fact, the issue arising herein would be covered by the principles laid down by the Apex Court in Woodward Governor India (P) Ltd. (supra). Accordingly, as the impugned order of Tribunal followed by the decision of the Apex Court in Woodward Governor India (P) Ltd. (supra) which governs the issue, the question as proposed does not give rise to any substantial question of law

Posted in All Judgements, High Court

DIT vs. Citibank N. A. (Bombay High Court)

COURT:
CORAM: ,
SECTION(S): , , ,
GENRE: ,
CATCH WORDS: , , ,
COUNSEL:
DATE: March 11, 2015 (Date of pronouncement)
DATE: July 8, 2016 (Date of publication)
AY: 1999-00
FILE: Click here to view full post with file download link
CITATION:
Law laid down by the Tribunal in (i) Central Bank of India v/s. DCIT 42 SOT 450 that under Art 26(3) of India-USA DTAA payments to Non-Residents are equated with payments to Residents & so s. 40(a)(i) disallowance is not valid and (ii) in DCIT v/s. Bank of Baharain & Kuwait 132 TTJ (Mum) 505 that loss arising from unmatured foreign exchange contracts is not a notional loss but is allowable as a definite liability is final as Dept has not challenged these verdicts and the issue cannot be raised in case of other assessees

The Assessee during subject Assessment Year made payment through Master Card International and Visa Card International being assessment and equipment fees. The payments were made by the Assessee without deducting tax at source. In view of the above, the Assessing Officer & CIT(A) disallowed the entire amount of fees remitted, aggregating to Rs.82.33 lakhs in terms of Section 40(a)(i) of the Act. The Tribunal allowed the Appeal of the Assessee by followed its decision in the case of Central Bank of India v/s. DCIT 42 SOT 450 – wherein on similar facts, it was held that even if no TDS is deducted, the payments made to Visa Card International and Master Card International on account of fees could not be disallowed in view of Article 26(3) of Indo-US Double Taxation Avoidance Agreement (DTAA)

Posted in All Judgements, High Court

CIT vs. CitiBank N.A. (Supreme Court)

COURT:
CORAM: ,
SECTION(S): , ,
GENRE:
CATCH WORDS:
COUNSEL: ,
DATE: August 12, 2008 (Date of pronouncement)
DATE: July 6, 2016 (Date of publication)
AY: -
FILE: Click here to view full post with file download link
CITATION:
Interest paid for broken period should not be considered as part of the purchase price, but should be allowed as revenue expenditure in the year of purchase of securities. American Express vs. CIT 258 ITR 601 (Bom) affirmed, Vijaya Bank 187 ITR 541 (SC) distinguished

It was argued on behalf of the Revenue, that in view of the judgment in Vijaya Bank Ltd.’s case [1991] 187 ITR 541 (SC), even if the securities were treated as part of the trading assets, the income therefrom had to be assessed under section 18 of the Act and not under section 28 of the Act as income from securities can only come within section 18 and not under section 28. We do not find any merit in this argument. Firstly, as stated above, Vijaya Bank Ltd.’s case [1991] 187 ITR 541 (SC) has no application to the facts of this case. Secondly, in the present case, the Tribunal has found that the securities were held as trading assets. Thirdly, it has been held by the Supreme Court in the subsequent decision reported in the case of CIT v. Cocanada Radhaswami Bank Ltd. [1965] 57 ITR 306, that income from securities can also come under section 28 as income from business. This judgment is very important. It analyses the judgment of the Supreme Court in United Commercial Bank Ltd.’s case [1957] 32 ITR 688, which has been followed by the Supreme Court in Vijaya Bank Ltd.’s case [1991] 187 ITR 541. It is true that once an income falls under section 18, it cannot come under section 28. However, as laid down by the Supreme Court in Cocanada Radhaswami Bank Ltd.’s case [1965] 57 ITR 306, income from securities treated as trading assets can come under section 28. In the present case, the Department has treated income from securities under section 28.

Posted in All Judgements, Supreme Court