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. 37(1) – Business expenditure –Commission to directors against personal guarantee – Matter remitted to the AO to verify whether as per the bank documentation, director eligible for commission.

Eastman Industries Ltd. v. ACIT (2018) 63 ITR 181 (Delhi) (Trib.)

S. 37(1) : Business expenditure – Capital or revenue-Royalty paid in the nature of spectrum charges to Government of India as a percentage of revenue on regular basis – Also, license fee paid for telecommunication services to Government of India based on revenue share and on regular basis – Held, both are revenue expenditure – S. 35ABB is not applicable.[S.35ABB]

Dy. CIT v. Vodafone Essar Digilink Ltd. (2018) 193 TTJ 150 / 64 ITR 392/ 170 ITD 430 / 166 DTR 233 (Delhi)(Trib.)

S. 37(1): Business expenditure – Compounding fees paid to RBI for post-facto approval from FIPB – Held, amount compensatory in nature and therefore, allowable as deduction. [Expln.]

Dy. CIT v. Sodexo Food Solutions India P. Ltd. (2018) 66 ITR 52 (SN) (Mum.)(Trib.).

S. 37(1): Business expenditure –Capital or revenue- Expenses on renovation and refurbishing of a leased property – Held, expenses incurred to facilitate carrying out of catering / canteen services at the leased premises and formed integral part of profit earning process of assessee’s business – Held, revenue expenditure.

Dy. CIT v. Sodexo Food Solutions India P. Ltd. (2018) 66 ITR 52 (SN)(Mum.)(Trib.)

36(1)(iii) : Interest on borrowed capital – Interest in share capital of other companies – Held, for business purpose therefore, no disallowance u/s 36(1)(iii). Such investment as well as such interest cannot be considered for computing disallowance u/s. 14A. [S. 14A, R. 8D(2)(ii)]

CIT v. VBC Ferro Alloys Limited (2018) 63 ITR 633 (Hyd.)(Trib.)

S. 32 – Depreciation –UPS and Date drive part of computer system and eligible for higher rate of depreciation

Eastman Industries Ltd. v. ACIT (2018) 63 ITR 181 (Delhi) (Trib.)

S. 28(i) : Business loss – Mark to market loss in derivative transactions – derivatives held as stock-in-trade – valued on the principle of cost or market value whichever is lower – Held, allowable.

Edel Commodities Ltd. v. Dy. CIT (2018) 194 TTJ 86 (Mum.)(Trib.)

S. 13 : Denial of exemption-Trust or institution-Investment restrictions – Land and interest free loan given to a trust not registered u/s 12AA – Held, objects of the assessee and the recipient trust were same would not make the latter a registered trust u/s 12AA – Denial of exemption is justified . [S. 11, 12AA]

DIT(E) v. Paramasiva Naidu Muthuvel Raj Education Trust (2018) 66 ITR 3 (SN.) (Chennai.)(Trib.)

S. 10A : Free trade zone – Sale by the assessee to HO outside India would amount to Export eligible for deduction u/s 10A of the Act.

Dy. CIT v. Virage Logic International (2018) 63 ITR 10 (SN)(Delhi)(Trib.)

S. 4 :Charge of income-tax – Discrepancy in AIR data and Form 26AS – Assessee disputed certain transaction reflected in AIR data but claimed credit of TDS – Held, not permissible – Held, AO to verify whether credit of TDS wrongly taken and whether the income does not belong to the assessee. [ Form 26AS]

Edel Commodities Ltd. v. Dy. CIT (2018) 194 TTJ 86 (Mum.)(Trib.)