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DATE: September 29, 2015 (Date of pronouncement)
DATE: February 15, 2016 (Date of publication)
AY: 2006-07
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Expl to s. 37(1): Penalties & fines paid to SEBI, BSE etc for breach of regulatory/ procedural requirements are "compensatory" in nature and not for any purpose which is an ‘offense’ prohibited by the law

An ‘offence’ would be the one which will arise as a result to commission of an action which is prohibited by law, and, in all the given situations, no element of any consent of the parties involved can bring any change in its legal consequences. Similarly, any amount paid by the assessee, in the form of compensation, as a consequence of breach of contract between the two parties, cannot be said to be amount paid for any purpose which is an ‘offence’, prohibited by the law. In other words, under the income tax law, one is required to go into the real nature of the transactions and not to the nomenclature that may have been assigned by the parties. Thus, to decide such issues, we are required to see real substance under the Income Tax Law, and not merely its form. Thus, only those payments, which have been made by the assessee for any purpose which is an ‘offence’ or which is ‘prohibited by law’, shall alone would be hit by the explanation to section 37

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DATE: December 16, 2015 (Date of pronouncement)
DATE: January 15, 2016 (Date of publication)
AY: 2009-10 to 2012-13
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S. 254(2A): As the Third Proviso which restricts the power of the ITAT to grant stay beyond 365 days “even if the delay in disposing of the appeal is not attributable to the assessee” has been struck down in Pepsi Foods 376 ITR 87 (Del) as being arbitrary, unreasonable and discriminatory, the law laid down in Narang Overseas 295 ITR 22 (Bom) & Ronuk Industries 333 ITR 99 (Bom) that the ITAT has power to grant stay beyond 365 days has to be followed

The ratio of the decision of this Court in “Narang Overseas (P) Ltd.” (supra) would apply even to the substituted third proviso to Section 254(2A) of the Act. The basis of the decision in “Narang Overseas (P) Ltd.” (supra) was that the power to grant stay or interim relief has to be read as coextensive with the power to grant final relief. The object being that in the absence of the power to grant interim relief the final relief itself may be defeated. This Court thereafter followed the decision of the Apex Court in “CCE vs. Kumar Cotton Mills(P) Ltd., (2005(180) ELT 434 (SC)) and held that notwithstanding the pre-substituted third proviso to Section 254(2A) of the Act the Tribunal continues to have powers to grant interim relief. In the above view, therefore, the ratio of the decision in “Narang Overseas (P) Ltd.” (supra) would apply even in case of substituted third proviso to Section 254(2A) of the Act

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DATE: June 30, 2015 (Date of pronouncement)
DATE: July 29, 2015 (Date of publication)
AY: 1999-00
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S. 28(va)/ 115JA: non-compete consideration received prior to insertion of s. 28(va) is not taxable. Amount credited to reserves without a corresponding debit to the P&L A/c cannot be added to the "book profits"

To invoke clause (b) of the Explanation below Section 115JB (identical to Section 115JA) of the Act, two conditions must be satisfied cumulatively viz. there must be a debit of the amount to the Profit and loss account and the amount so debited must be carried to Reserves. Admitted position in this case is that there is no debit to the Profit and loss account of the amount of Reserves. The impugned order has in view of the self evident position taken a view that in the absence of the amount being debited to Profit and Loss account and taken directly to the reserve account in the balance sheet, the book profits as declared under the Profit and Loss account cannot be tampered with

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DATE: October 29, 2014 (Date of pronouncement)
DATE: December 4, 2014 (Date of publication)
AY: 2011-12
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S. 220(6): Law laid down on the guidelines that have to be followed while considering a stay application

(i) At the very outset, it must be pointed out that the manner in which the Assessing Officer has disposed of the application for stay by impugned order is in complete breach of the directions of this Court as set …

Slum Rehabilitation Authority vs. DDIT (Bombay High Court) Read More »

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DATE: September 19, 2014 (Date of pronouncement)
DATE: October 5, 2014 (Date of publication)
AY: 2007-08 and 2008-09
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(i) If the entity is a bank or other financial institution, the current interest rate applicable to the funds lent to the PE is deductible to the borrower (PE). However, as far as assessability in the hands of lender (HO) is concerned the same has to be excluded on the ground of mutuality as held by Special Bench in Sumitomo Corporation. (ii) MAT provisions in s. 115JB do not apply to foreign companies

(i) The decision of Spl. Bench in the case of Sumotomo Mitsubishi Banking Corporation (supra) which is a five member bench decision has elaborately considered the issue regarding deduction of interest paid by PE to head office and the interest …

The Bank of Tokyo- Mitsubishi UFJ Ltd vs. ADIT (ITAT Delhi) Read More »