On facts, the allegation against the Judge was that he did not prepare judgments on his own but got it prepared through some body else. The view of the High Court that it is not possible to hold an enquiry and that holding of such enquiry should be dispensed with in view of the fact that if an enquiry is held the same may lead to the question of validity of several judgments rendered by the Judge is a legal and valid ground for not holding an enquiry. There was also no necessity for giving the Judge any opportunity of hearing before removal from service

In view of Para 11 of CBDT Instruction No.3/2011 dated 9th February, 2011, liberty is granted to the Department to move the High Court by way of review within four weeks.

The clear legislative intent of s. 36(1)(vii) & 36(1)(viia) together with the circulars issued by the CBDT demonstrate that the deduction on account of provision for bad and doubtful debts u/s 36(1)(viia) is distinct and independent of s. 36(1)(vii) relating to allowance of bad debts. The legislative intent was to encourage rural advances and the making of provisions for bad debts in relation to such rural branches. The functioning of such banks is such that the rural branches were practically treated as a distinct business, though ultimately these advances would form part of the books of accounts of the head office. An interpretation which serves the legislative object and intent is to be preferred rather than one which subverts the same. The deduction u/s 36(1)(vii) cannot be negated by reading into it the limitations of s. 36(1)(viia) as it would frustrate the object of granting such deductions. The Revenue’s argument that this would lead to double deduction is not correct in view of the Proviso to s. 36(1)(vii) which provides that in respect of rural advances, the deduction on account of the actual write off of bad debts would be limited to excess of the amount written off over the amount of the provision which had already been allowed u/s 36(1) (viia) (Southern Technologies 320 ITR 577 (SC) & Vijaya Bank 323 ITR 166 (SC) referred)

For Expl (baa) to s. 80HHC, netting of income from expenditure is allowed The AO & CIT(A) computed s. 80HHC deduction by deducting 90% of the gross interest received from the profits of business. However, the Tribunal, relying on Lalsons …

ACG Associated Capsules Pvt. Ltd vs. CIT (Supreme Court) Read More »

DEPB is “cash assistance” receivable against exports under the scheme of the Government. While the face value of the DEPB falls under clause (iiib) of s. 28, the difference between the sale value and the face value of the DEPB (the “profit”) will fall under clause (iiid) of s. 28. The High Court was not right in taking the view that the entire sale proceeds of the DEPB realized on transfer of the DEPB and not just the difference between the sale value and the face value of the DEPB represent profit on transfer of the DEPB. DEPB represents part of the cost incurred by a person for manufacture of the export product and hence even where the DEPB is not utilized by the exporter but is transferred to another person, the DEPB continues to remain as a cost to the exporter. When DEPB is transferred, the entire sum received on such transfer does not become his profits. It is only the amount that he receives in excess of the DEPB which represents his profits on transfer of the DEPB

In view of this Court’s Order in the case of CIT vs. Bhari Information Technology Systems upholding the judgment of the Special Bench of Tribunal in DCIT vs. Syncome Formulations (I) Ltd 106 ITD 193, the impugned judgment of the High Court is set aside and the judgments of the ITAT in these cases stand affirmed

The High Court’s finding that, applying the “nature and character of the transaction” test, the transfer of the CGP share was not adequate in itself to achieve the object of consummating the transaction between HTIL and VIH and that there was a transfer of other “rights and entitlements” which were “capital assets” is not correct because the transaction was one of “share sale” and not an “asset sale”. It had to be viewed from a commercial and realistic perspective. As it was not a case of sale of assets on itemized basis, the entire structure, as it existed, ought to have been looked at holistically. A transfer of shares lock, stock and barrel cannot be broken up into separate individual components, assets or rights such as right to vote, right to participate in company meetings, management rights, controlling rights, control premium, brand licences and so on as shares constitute a bundle of rights. The sum of US$ 11.08 bn was paid for the “entire package” and it was not permissible to split the payment and consider a part of it towards individual items (Mugneeram Bangur 57 ITR 299 (SC) followed)

Article 5(5) of the DTAA provides that “when a person, not an independent status to whom paragraph 6 applies, acting on behalf of an enterprise and has and habitually exercises in a Contracting State authority to conclude contracts on behalf of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State for any activities which that person undertakes for the enterprise.” There is no dispute that Dell AS is not an independent agent. The expressions “on behalf” and “have authority to conclude contracts on behalf of” in Article 5(5) mean that the contracts must be legally binding. These expressions must be given their normal meaning as per the Vienna Convention. This is also supported by the Commentary on the OECD Model Convention on which the DTAA is based. A similar view has been taken by the Conseil d’Etat of France in Zimmer (included with the Appeal Court’s order). As the language of the Article is clear, it is not possible to adopt the “functional approach” proposed by the Revenue. Consequently, Dell Products does not have permanent establishment in Norway

Having heard learned counsel on both sides, we are of the view that the High Court ought not to have dismissed the appeals without considering the following questions, which, according to us, did arise for consideration. They are formulated as under … (C) Whether on the facts and circumstances of the case and in law the Hon’ble Tribunal was right in holding that sales tax incentive is a Capital Receipt?” Accordingly, the civil appeals are allowed, impugned orders are set aside and the cases are remitted to the High Court to decide the questions, formulated above, in accordance with law.”

Under Rule 4, a person on the select panel has no vested right to be appointed to the post for which he has been selected, but he has a right to be considered for appointment. The candidates in the wait-list, not having been approved by the Appointments Committee, were not persons selected for appointment pursuant to the decision that further appointments would be made only after the amendment of the Rules. As the Central Government is both the rule making authority as well as the appointing authority of any member of the ITAT, if it has taken a decision to undertake appointments in future after amendment of the rules, it is difficult for the Court to hold that the reason given by the Government for not making any further appointments because of the proposed amendments to the rules is not a justifiable or proper reason and that the decision of the Government in not approving the wait list of candidates recommended by the Selection Board is not proper. The High Court’s reliance of Rule 4(a) was wrong because this had been inserted on 26.04.2004 and was not in the mind of the Appointments Committee when it took the decision on 26.04.2006 and 31.08.2007 to make further appointments only after the Rules were amended. As the immediate need for filling up the vacancies has been met by the appointment of the 16 Members, the Court cannot compel the Government to make the appointments from the wait-listed candidates by a writ of mandamus