As the undertaking was transferred as a going concern and there was no evidence on record to show that the compensation had been arrived at on an item-wise allocation of the various assets of the undertaking and there was no “cost of acquisition” of the undertaking, capital gains was not chargeable.
Where the assessee entered into an agreement for transfer of its industrial undertaking under which the buyer agreed to pay it interest on the unpaid consideration w.e.f 1.3.1977 and subsequently on 30.6.1978 the parties agreed to defer the date of commencement of interest to 1.7.1979 and the question arose whether the interest foregone by the assessee could be assessed for the AYs 1979-80 and 1980-81 under the accrual system of accounting, HELD:
The object behind enactment of s. 271 (1) (c) read with Explanations indicate that the said section has been enacted to provide for a remedy for loss of revenue and they create the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing return. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability unlike the matter of prosecution under Section 276C.
While circulars and instructions issued by the Board are binding on the authorities under the respective statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the circular should be given effect to and not the view expressed in a decision of the SC or the High Court.
Levy of interest is for compensating the revenue from loss suffered by non-deposit of tax by the assessee within the time specified therefor. This principle should also be applied for determining whether any hardship had been caused or not. A genuine hardship means a genuine difficulty. It cannot be concluded that a person having large assets would never be in difficulty as he can sell those assets and pay the amount of interest levied.
Provision for bad and doubtful debts cannot be added to the “book profits” for purposes of section 115JA because they merely represent the dimunition in the value of an asset and are not a provision for an unascertained liability.
Where the Government formulated a scheme of subsidy to encourage the setting up of sugar factories and to make them viable under which new sugar factories were entitled to a subsidy in the form of enhancement of free sale sugar quota and excise duty rebate thereon which could only be used for repayment of loans taken for the unit and the question arose whether such subsidy was taxable HELD, in determining whether the subsidy is capital or revenue, the “purpose” test had to be adopted. The source of the subsidy, its form and the point of time when it is paid are irrelevant. On facts, held, following Sahney Steel 228 ITR 253 that the subsidy was capital in nature.
Where the assessee had filed a SLP in the Supreme Court to challenge the ruling of the AAR without first filing a writ petition in the High Court, it was directed to withdraw the SLP and file a writ petition.
Where the Tribunal had dismissed the appeal filed by the assessee by holding that it was not entitled to exemption u/s 11 and subsequently, on an application filed by the assessee u/s 254(2), recalled the said order on the ground that it had not considered a judgement of the jurisdictional High Court and that there was a mistake apparent from the record and the question arose whether such recall was justified, HELD, upholding the order of the Tribunal:
Where in respect of the asst. year 1990-91, the assessee claimed deduction under section 80-HHC on traded goods on the proportion that the export turnover bore to the total turnover even though there were no profits from the export activity and the High Court held, relying on IPCA Laboratories vs. CIT 266 ITR 521 (SC), that in the absence of export profits deduction u/s 80-HHC was not available, HELD, reversing the judgement of the High Court that in accordance with the CBDT Circular issued under the then prevailing s. 80-HHC, deduction was allowable on the proportionate basis notwithstanding the absence of profits from the export activity and the judgement in IPCA Laboratories had no application.