The Bombay High Court today (12.8.2010) pronounced judgement in Godrej & Boyce vs. DCIT, the lead matter challenging the judgement of the Special Bench of the Tribunal in ITO vs. Daga Capital 117 ITD 169 on the applicability of s. 14A & Rule 8D.

After extensive hearing spread over several days, the Bombay High Court today (4.8.2010) reserved judgement in Godrej & Boyce vs. DCIT, the lead matter challenging the judgement of the Special Bench of the Tribunal in ITO vs. Daga Capital & the applicability of Rule 8D.

In Wallfort Shares & Stock Brokers, a Five Member Special Bench of the Tribunal (96 ITD 1 (Mum) (SB)) and the Bombay High Court (310 ITR 421 (Bom)) held that the ‘loss’ incurred by an assessee in ‘dividend-stripping’ transactions cannot be disallowed on the ground that it was ‘tax-planning’. The department’s SLP against the said judgement has been dismissed by the Supreme Court today, 6th July 2010.

In Topman Exports vs. ITO 318 ITR 87 (Mum)(SB)(AT) the Special Bench held that for purposes of s. 80HHC only the “profit” on sale of DEPB entitlements (i.e. the sale value less the face value) was required to be considered. In an appeal by the department, this judgement has been reversed by the Bombay High today, 29th June 2010.

Hon’ble Justice Ferdinho I. Rebello of the Bombay High Court has been appointed Chief Justice of the Allahabad High Court.

Constitution of Tax Bench in the Bombay High Court (June 2010): The Hon’ble Shri Justice Dr. D.Y. CHANDRACHUD & The Hon’ble Shri Justice J. P. DEVADHAR

The Bombay High Court has directed that appeals involving the following issues should be grouped and placed for hearing at an early date.

In an oral judgement delivered today (19th March 2010) in CIT vs. Asian Star Co Ltd ITA No. 200 OF 2009 and other cases, the Bombay High Court has dissented from the judgement of the Delhi High Court and held that the language of Expl. (baa) to s. 80HHC did not permit such netting off. It held that the Special Bench had traversed the limits of interpretation and virtually legislated in giving the deduction. It held that merely because s. 80HHC was an incentive provision was no ground for giving more deduction that what the statute permitted. It held that for purposes of Expl. (baa) to s. 80HHC, 90% of gross interest has to be reduced from business profits.

In the SLP filed against the judgement of the Karnataka High Court in CIT vs. Samsung Electronics, the Supreme Court has directed that all matters be placed for final hearing on 18th August, 2010.