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Month: December 2010

Archive for December, 2010

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Posted on by editor
COURT:
CORAM:
SECTION(S):
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CATCH WORDS:
COUNSEL:
DATE: (Date of pronouncement)
DATE: December 4, 2010 (Date of publication)
AY:
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CITATION:

U/s 45Q of the RBI Act read with the NBFCs Prudential Norms (Reserve Bank) Directions 1998, it was mandatory on the part of the assessee not to recognize the interest on the ICD as it had become a NPA. The assessee was bound to compute income having regard to the recognized accounting principles set out in Accounting Standard AS-9. AS-9 provides that if there are uncertainties as to recognition of revenue, the revenue should not be recognized. Accordingly, the argument of the revenue that the interest on the NPA can be said to have accrued despite it being a NPA is not acceptable. Southern Technologies vs. JCIT 320 ITR 577 (SC) distinguished. Elgi Finance 293 ITR 357 (Mad) followed

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Posted on by editor
COURT:
CORAM:
SECTION(S):
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CATCH WORDS:
COUNSEL:
DATE: (Date of pronouncement)
DATE: December 2, 2010 (Date of publication)
AY:
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CITATION:

In view of Godrej Boyce Mfg Co 328 ITR 81 (Bom) Rule 8D is applicable only prospectively i.e. from AY 2008-09 and not for earlier years. The facts showed that the assessee had made the investment in shares out of its own funds and the borrowed funds were entirely utilized for the purpose of its business. The investment in shares in the current year was made from a separate bank account where the surplus funds generated in that year were deposited. The argument that the assessee could have utilized its surplus funds in repaying the borrowings instead of investing in shares and by not doing so, there was diversion of borrowed funds towards investment in shares to earn dividend income is not acceptable in view of CIT vs. Hero Cycles Ltd 323 ITR 518 where it was held, distinguishing Abhishek Industries 286 ITR 1 (P&H), that if investment in shares is made by an assessee out of own funds and not out of borrowed funds, disallowance u/s 14A is not sustainable. Accordingly, the disallowance of interest on borrowed funds was deleted

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Posted on by editor
COURT:
CORAM:
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: (Date of pronouncement)
DATE: December 1, 2010 (Date of publication)
AY:
FILE: Click here to view full post with file download link
CITATION:

Revenue Secretary & CBDT Chairman summoned by Delhi High Court to redress inefficiencies in functioning of the income-tax department

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