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.45 : Capital gains- Income from other Sources – A receipt that is capital in nature cannot be assessed under the head income from other source- Tenancy right is a capital asset the surrender of which would attract capital gains – Amount is not taxable under capital gains as cost of acquisition of tenancy right is indeterminate [ S 10(3) 14, 48 ,56 ]
CIT v. D. P. Sandhu Bros. Chembur (P.) Ltd. (2005) 273 ITR 1/142 Taxman 713/193 CTR 578/185 Taxation 471 (SC)
S. 45: Capital gains – Goodwill — Initially generated goodwill — cannot be regarded as ‘Asset’ – Transfer does not give rise to capital gains tax [S. 2(14), 2(47), 48, 49, 50 , 55]
CIT v. B. C. Srinivasa Setty (1981) 128 ITR 294/5 Taxman 1/21 CTR 138 (SC)
S. 45: Capital gains – Retirement of a partner – Amount received in respect of his share in the partnership including goodwill – Amount not taxable as capital gains [S. 2(14), 2(47) ,48]
Addl. CIT v. Mohanbhai Pamabhai (1987) 165 ITR 166 (SC)
.S. 45: Capital gains – Conversion of proprietary business into firm – Amounts to transfer of interest in property to other partners – No consideration received – No capital gains tax [S. 2(47), 48]
CIT v. H. Rajan and H. Kannan (1999) 236 ITR 42/153 CTR 11 (SC)
45: Capital asset- Personal effects – Capital gains- Sovereigns and silver coins which were customarily used for puja purposes and other ritual purposes could not be designated as effects meant for personal use [ S.2(14) , Indian Income-Tax Act, 1922 , S. 2(4A), 12B]
H. H. Maharaja Rana Hemant Singhji v. CIT (1976) 103 ITR 61/1976 CTR 188 (SC)
S. 45: Capital gains –Transfer – Extinguishment of rights – Not limited to transfer – Extends to extinguishment of rights independent of or otherwise than on account of transfer. [S. 2 (47) (ii), 47(ii) , 47(vii), 49(2), Companies Act , 1956 , S 391(2) , 394 ]
CIT v. Grace Collis (2001) 248 ITR 323/115 Taxman 326/166 CTR 201 (SC)
S. 44AB: Audit of accounts – Only Chartered Accountants can audit accounts of business of an assessee – Income Tax Practitioners do not have the same expertise – Section does not violate Article 14 and 19 of the Constitution of India – Constitutionally validity of provision upheld [S. 288(2), Constitution of India, 1950: Art. 14 , 19]
T.D. Venkata Rao v. UOI (1999) 237 ITR 315/103 Taxman 621/153 CTR 203 (SC)
S. 43B : Certain deductions on actual payment-Tax, duty, cess or fee-Proviso clarifying that sums paid after accounting year but before due date for submission of return deductible is to be treated as retrospective. [ S. 43B ]
Allied Motors (P) Ltd v. CIT (1997) 224 ITR 677/139 CTR 364/91 Taxman 205 (SC)
S. 41(2) : Profits chargeable to tax – Balancing charge – Slump sale – Business as going concern – Gain is liable to tax u/s 41(2) on itemized basis if slump price is determined on valuation of each asset/liability – Body of individuals – Where firm has sold its business as a going concern, surplus arising out of transaction has to be assessed in status of BOI and not as a firm . [ S. 2(31)(iv) , 2(31)(v), 2(42C ) 4, 45 , 50B ]
CIT v. Artex Manufacturing Co (1997) 227 ITR 260/93 Taxman 357/141 CTR 290 (SC)
S. 40(a)(ia): Amounts not deductible – Failure to deduct tax at source – Payment exceeding Rs. 20,000 to each truck owners – Contract with a cement factory for transporting cement – Payment made to truck operator/owner amounts to payment made to a sub-contractor – Disallowance is not limited only to amount outstanding and this provision equally applies in relation to expenses that had already been incurred and paid by assessee- S. 40(a)(ia) as introduced by Finance (No.2) Act, 2004 with effect from 01.04.2005 is applicable to and from assessment year 2005-06 – Amendment by Finance Act 2014 is prospective – Disallowance held to be justified [S. 40A(3) , 194C]
Shree Choudhary Transport Co. v. ITO (2020) 426 ITR 289/192 DTR 161/315 CTR 849/272 Taxman 272 (SC)