This Digest of case laws is prepared by KSA Legal and AIFTP from judgements reported in BCAJ, CTR, DTR, ITD, ITR, ITR (Trib), Chamber's Journal, SOT, Taxman, TTJ, BCAJ, ACAJ, www.itatonline.org and other journals
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S. 40(b)(iii) : Amounts not deductible-Working partner– Remuneration–Interest-Rejection of books of account and assessment adopting 8 Per cent. of gross turnover as net profit-Separate deduction towards interest on partner’s capital account and remuneration to partner is to be allowed, when net profit is estimated from gross receipts. [S. 133A]

Mayasheel Construction v. Dy.CIT (2020) 77 ITR 8 (SN) (Delhi) (Trib.)

S. 40(a)(ia) : Amounts not deductible-Deduction at source–Service rendered by foreign agent–Contradictory finding–New workmen-Should be regular workmen employed in financial year relevant to assessment year–Matter remanded to the AO. [S. 80JJA, 195,254(1)]

Aquarelle India P. Ltd. v. Dy. CIT (2020)77 ITR 2 (SN) (Bang.)(Trib.)

S. 37(1) : Business expenditure-Consultancy fee-Failure to submit original bills cannot be a ground for making disallowance– Disallowances cannot be made on ad-hoc basis. [S. 145]

ITO v. Ascendum KPS P. Ltd. (2020) 77 ITR 12 (SN) (Ahd.)(Trib.)

S. 36(1)(iii) : Interest on borrowed capital-Share application money is capital borrowed for purpose of business or profession until shares are allotted-Allowable as deduction. Consulting charges-Matter remanded to AO. [S. 37(1)]

Panarc Consulting Group Pvt. Ltd. v. ITO (2020) 77 ITR 50 (SMC) (SN) (Delhi)(Trib.)

S. 36(1)(iii) : Interest on borrowed capital-Advances for construction of factory building-No disallowance can be made-Reimbursement of expenses–Matter remanded. [S. 40(a)(ia)]

ACIT v. Transenergy Ltd. (2020) 77 ITR 74 (SN)(Chennai)(Trib.)

S. 36(1)(iii) : Interest on borrowed capital-Interest free loans and advances to related party-Free funds available-Presumption that investments from interest-free funds available-No disallowances can be made.

ATS Infrastructure Ltd. v. ACIT (2020) 77 ITR 70 (SN) (Delhi)(Trib.)

S. 32 : Depreciation-Not in business of running vehicles on hire-Not entitled to depreciation at higher rate.

Arihant Constructions v. ACIT (2020) 77 ITR 171 (SN) (Vishakha)(Trib.)

S. 28(i) : Business loss-Housing Finance-Pre-termination of loan– Onus on AO to show that loss claimed by assessee was tax evasion device-Matter remanded. [S. 254(1)]

L & T Housing Finance Ltd. v. Dy.CIT (2020) 77 ITR 85 (SN) / 186 DTR 153/203 TTJ 835 (Chennai)(Trib.)

S. 23 : Income from house property-Business income-Annual letting value-Non-resident Director-Flat used as residence as well as carrying on business–Notional value from property cannot be assessed as income from house property. [S.22, 23(1), 23(4), 28(i)]

Record Investments and Leasing Pvt. Ltd. v. ITO (2020) 77 ITR 76 (SMC) (SN) (Mum.)(Trib.)

S. 22 : Income from house property-Business income-Unsold flats-Stock in trade-No rental income to be computed when flats held as stock-in-trade. [S. 23(5), 28(i)]

Rafiahamad Rasul Patel v. ITO (2020) 77 ITR 16 (SN) (Pune)(Trib.)