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DATE: March 9, 2016 (Date of pronouncement)
DATE: March 12, 2016 (Date of publication)
AY: 2004-05
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S. 80-IB(4): Subsidies (such as transport subsidy, Interest subsidy and power subsidy) paid to the assessee with the object of reducing the cost of production constitutes "profits derived from the business of the industrial undertaking" and is eligible for deduction u/s 80-IB. Liberty India 317 ITR 218 (SC) is distinguishable on facts

In Liberty India v. Commissioner of Income Tax 317 ITR 218 (SC)/ 2009 (9) SCC 328, what this Court was concerned with was an export incentive, which is very far removed from reimbursement of an element of cost. A DEPB drawback scheme is not related to the business of an industrial undertaking for manufacturing or selling its products. DEPB entitlement arises only when the undertaking goes on to export the said product, that is after it manufactures or produces the same. Pithily put, if there is no export, there is no DEPB entitlement, and therefore its relation to manufacture of a product and/or sale within India is not proximate or direct but is one step removed. Also, the object behind DEPB entitlement, as has been held by this Court, is to neutralize the incidence of customs duty payment on the import content of the export product which is provided for by credit to customs duty against the export product. In such a scenario, it cannot be said that such duty exemption scheme is derived from profits and gains made by the industrial undertaking or business itself

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DATE: February 18, 2016 (Date of pronouncement)
DATE: March 1, 2016 (Date of publication)
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S. 80HHC: Sale proceeds of scrap cannot be included in total turnover

The issue in these appeals pertains to the question whether the proceeds generated from the sale of scrap would be included in the total turnover. In the recent decision of this Court in Commissioner of Income Tax Vs. Punjab Stainless Steel Industries & Ors. reported in [2014] 364 ITR 144 (SC) it has been held that sale proceeds generated from the sale of scrap would not be included in the total turnover for the purpose of deduction under Section 80HHC of the Income Tax Act, 1961

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DATE: February 16, 2016 (Date of pronouncement)
DATE: February 22, 2016 (Date of publication)
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S. 12AA: Non disposal of an application for registration before the expiry of six months as provided u/s 12AA (2) results in deemed grant of registration

The short issue is with regard to the deemed registration of an application under Section 12AA of the Income Tax Act. The High Court has taken the view that once an application is made under the said provision and in case the same is not responded to within six months, it would be taken that the application is registered under the provision

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DATE: January 7, 2016 (Date of pronouncement)
DATE: January 25, 2016 (Date of publication)
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S. 271C: Penalty for failure to deduct TDS cannot be levied if Dept is unable to show contumacious conduct on the part of the assessee

We have carefully considered the rival submissions. In the instant case we are not dealing with collection of tax u/s 201(1) or compensatory interest u/s 201(1A). The case of the assessee is that these amounts have already been paid so as to end dispute with Revenue. In the present appeals we are concerned with levy of penalty u/s 271-C for which it is necessary to establish that there was contumacious conduct on the part of the assessee. We find that on similar facts Hon’ble Delhi High Court have deleted levy of penalty u/s 271-C in the cae of M/s. Itochu Corporation, reported in 268 ITR 172 (Del) and in the case of CIT Vs. Mitsui & Company Ltd. Reported in 272 ITR 545

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DATE: November 5, 2015 (Date of pronouncement)
DATE: November 26, 2015 (Date of publication)
AY: 1988-89
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S. 36(1)(iii): Law on when interest expenditure on loans diverted to sister concerns and directors can be allowed as business expenditure explained

Once it is established that there is nexus between the expenditure and the purpose of business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the Board of Directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. It further held that no businessman can be compelled to maximize his profit and that the income tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own view point but that of a prudent businessman

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DATE: April 17, 2015 (Date of pronouncement)
DATE: November 26, 2015 (Date of publication)
AY: 1991-92
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S. 143(1)/ 147: As a s. 143(1) intimation is not an assessment, there is no question of "change of opinion" by the AO

Can it be said that any “assessment” is done by them? The reply is an emphatic “no”. The intimation under Section 143(1)(a) was deemed to be a notice of demand under Section 156, for the apparent purpose of making machinery provisions relating to recovery of tax applicable. By such application only recovery indicated to be payable in the intimation became permissible. And nothing more can be inferred from the deeming provision. Therefore, there being no assessment under Section 143(1)(a), the question of change of opinion, as contended, does not arise

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DATE: October 6, 2015 (Date of pronouncement)
DATE: November 23, 2015 (Date of publication)
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CBDT & Govt are bound by their own interpretation of a statutory provision. Principle of "contemporanea expositio" explained. The word "or" can be interpreted as "and" if the former leads to unintelligible and absurd results

It is to be borne in mind that it is the Central Government which has framed the Rules as well as issued the notifications. If the Central Government itself is of the opinion that the rebate is to be allowed on both the forms of excise duties the government is bound thereby and the rule in-question has to interpreted in accord with this understanding of the rule maker itself. Law in this respect is well settled and, therefore, it is not necessary to burden this judgment by quoting from various decisions

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DATE: November 18, 2015 (Date of pronouncement)
DATE: November 20, 2015 (Date of publication)
AY: -
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S. 2(7) Interest-tax Act: Right to charge overdue interest on discounted Bills of Exchange is not “interest” as it does not arise on account of delay in repayment of any loan or advance. The right arises on account of default in the payment of amounts due under a discounted bill of exchange

Section 2(7) itself makes a distinction between loans and advances made in India and discount on bills of exchange drawn or made in India. It is obvious that if discounted bills of exchange were also to be treated as loans and advances made in India there would be no need to extend the definition of “interest” to include discount on bills of exchange. Indeed, this matter is no longer res integra. The Karnataka High Court’s view is directly contrary to the view of this Court in CIT v. Sahara India Savings & Investment Corpn. Ltd., (2009) 17 SCC 43, and, therefore, cannot be countenanced. “Loans and advances” has been held to be different from “discounts” and the legislature has kept in mind the difference between the two. It is clear therefore that the right to charge for overdue interest by the assessee banks did not arise on account of any delay in repayment of any loan or advance made by the said banks. That right arose on account of default in the payment of amounts due under a discounted bill of exchange.

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DATE: September 2, 2015 (Date of pronouncement)
DATE: November 16, 2015 (Date of publication)
AY: -
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Failure to give the assessee the right to cross-examine witnesses whose statements are relied up results in breach of principles of natural justice. It is a serious flaw which renders the order a nullity

Not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected

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DATE: July 29, 2015 (Date of pronouncement)
DATE: September 28, 2015 (Date of publication)
AY: -
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Entire law on the taxation of deceased persons and their estate explained in the context of the Income-tax Act and the Central Excise Act

The individual assessee has ordinarily to be a living person and there can be no assessment on a dead person and the assessment is a charge in respect of the income of the previous year and not a charge in respect of the income of the year of assessment as measured by the income of the previous year. Wallace Brothers & Co. Ltd. v Commissioner of Income-tax. By section 24B of the Income-tax Act the legal representatives have, by fiction of law, become assessees as provided in that section but that fiction cannot be extended beyond the object for which it was enacted

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