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DATE: January 30, 2015 (Date of pronouncement)
DATE: February 2, 2015 (Date of publication)
AY: 2006-07
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Entertainment tax subsidy is a capital receipt even though the source is the public who visit the cinema hall after it becomes operational

A subsidy of such nature cannot possibly be granted by the Government directly. Entertainment tax is leviable on the admission tickets to cinema halls only after the facility becomes operational. Since the source of the subsidy is the public at large which is to be attracted as viewers to the cinema halls, the funds to support such an incentive cannot be generated until and unless the cinema halls become functional

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DATE: January 22, 2015 (Date of pronouncement)
DATE: January 23, 2015 (Date of publication)
AY: 2009-10
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S. 2(15)/ 10(23C)(iv): If the definition of "charitable purpose" is construed literally, it is violative of the principles of equality & unconstitutional. If the dominant object is not to carry on business or trade or commerce, then an incidental or ancillary activity for which a fee is charged does not destroy the character of a charitable institution

The expression “charitable purpose”, as defined in Section 2(15) cannot be construed literally and in absolute terms. It has to take colour and be considered in the context of Section 10(23C)(iv) of the said Act. It is also clear that if the literal interpretation is given to the proviso to Section 2(15) of the said Act, then the proviso would be at risk of running foul of the principle of equality enshrined in Article 14 of the Constitution India. In order to save the Constitutional validity of the proviso, the same would have to be read down and interpreted in the context of Section 10(23C)(iv) because, in our view, the context requires such an interpretation. The correct interpretation of the proviso to Section 2(15) of the said Act would be that it carves out an exception from the charitable purpose of advancement of any other object of general public utility and that exception is limited to activities in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business for a cess or fee or any other consideration. In both the activities, in the nature of trade, commerce or business or the activity of rendering any service in relation to any trade, commerce or business, the dominant and the prime objective has to be seen. If the dominant and prime objective of the institution, which claims to have been established for charitable purposes, is profit making, whether its activities are directly in the nature of trade, commerce or business or indirectly in the rendering of any service in relation to any trade, commerce or business, then it would not be entitled to claim its object to be a ‘charitable purpose’. On the flip side, where an institution is not driven primarily by a desire or motive to earn profits, but to do charity through the advancement of an object of general public utility, it cannot but be regarded as an institution established for charitable purposes

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DATE: January 20, 2015 (Date of pronouncement)
DATE: January 23, 2015 (Date of publication)
AY: 2007-08
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S. 2(22)(e) has to be construed strictly. If assessee is not a shareholder of lending co, s. 2(22)(e) does not apply even if funds are ultimately paid by Co in which assessee is a shareholder

The submission on behalf of the Revenue made before us is that one has to look at the substance of the transaction and that if one looks at the substance, then the Assessee would be chargeable to tax. This is not acceptable as fiscal status have to be interpreted strictly. Section 2 (22)(e) of the Act creates a fiction by bringing to tax an amount as dividend when the amount so received is otherwise then dividend. On a strict interpretation of Section 2(22)(e) of the Act, unless the Assessee is the shareholder of the company lending him money, no occasion to apply it can arise

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DATE: January 19, 2015 (Date of pronouncement)
DATE: January 21, 2015 (Date of publication)
AY: 2003-04
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S. 147: Assessment cannot be reopened in the absence of "fresh material"

The order passed by the assessing authority extracted above unmistakably shows that even at that stage it had no fresh material available to it so as to exercise the jurisdiction available under Sections 147/148 of Income Tax Act. It was, thus, taking a fresh call on the subject of assessment of income (i.e. re-assessment), drawing conclusions and inferences from the same very material that had been scrutinized in the original assessment proceedings

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DATE: December 17, 2014 (Date of pronouncement)
DATE: January 10, 2015 (Date of publication)
AY: 1996-97
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S. 80-IA/ 80HHC: Despite the introduction of 'block of assets' depreciation cannot be thrust on the assessee while computing quantum of eligible deduction

Depreciation is optional to the assessee and once he chooses not to claim it, the Assessing Officer cannot allow it while computing the income. Further, once depreciation is optional, it will be optional for block of assets also. It is not necessary that the depreciation is allowable or not allowable as a whole. The assessee can claim it partly also in respect of certain block of assets and not claim in respect of other block of assets. Accordingly, for purposes of sections 80HHC and 80-IA, depreciation not claimed for by the assessee cannot be allowed as a deduction despite the introduction of the concept of block of assets

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DATE: June 24, 2014 (Date of pronouncement)
DATE: December 23, 2014 (Date of publication)
AY: -
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S. 40(a)(ia): Despite stay by High Court, Special Bench verdict In Merilyn Shipping is binding on the ITAT due to judicial discipline

The Tribunal had to consider whether in view of the Special Bench verdict in Merilyn Shipping & Transport 146 TTJ 1 (Vizag), a disallowance u/s 40(a)(ia) could be made in respect of the amounts that have already been paid during …

CIT vs. Janapriya Engineers Syndicate (Andhra Pradesh High Court) Read More »

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DATE: December 17, 2014 (Date of pronouncement)
DATE: December 23, 2014 (Date of publication)
AY: 2006-07
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S. 254(2): If the Tribunal accepts that a mistake has crept in the order, interests of justice is served if the entire order is recalled (suo moto by the ITAT) & appeal re-heard. Appeals should not be disposed off in “light hearted” and “casual manner”

During the pendency of the Appeal before the High Court, the Tribunal passed an order on the Miscellaneous Application and revived the appeal filed before it for hearing afresh on merits in relation to withdrawal of deduction u/s 36(1)(viia). However, …

State Bank of India vs. DCIT (Bombay High Court) Read More »

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DATE: December 18, 2014 (Date of pronouncement)
DATE: December 22, 2014 (Date of publication)
AY: 2005-06
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Transfer Fees recd by Co-op Hsg Soc from incoming & outgoing members (even in excess of limits) is exempt on the ground of mutuality

The assessee, a Co-operative Housing Society, received a sum of Rs.39,68,000 on account of transfer of flat and garage and credited it to ‘general amenities fund’ as well as ‘repair fund’. The assessee claimed that the said receipt is exempted …

CIT vs. Darbhanga Mansion CHS Ltd (Bombay High Court) Read More »

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DATE: December 11, 2014 (Date of pronouncement)
DATE: December 17, 2014 (Date of publication)
AY: 2007-08
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S. 45/ 48: Gains on sale of TDR received as additional FSI as per the D. C. Regulations has no cost of acquisition and is not chargeable to capital gains

Only an asset which is capable of acquisition at a cost would be included within the provisions pertaining to the head “Capital gains” as opposed to assets in the acquisition of which no cost at all can be conceived. In …

CIT vs. Sambhaji Nagar Coop. Hsg. Society Ltd (Bombay High Court) Read More »

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DATE: December 15, 2014 (Date of pronouncement)
DATE: December 17, 2014 (Date of publication)
AY: -
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Article 19(1)(g): Levy of service-tax on Advocates is constitutional

A Writ Petition was filed to challenge the levy of service-tax on advocates. It was claimed that an advocate renders services which cannot be said to be commercial or business like. They cannot be equated with the service providers mentioned …

P. C. Joshi vs. UOI (Bombay High Court) Read More »