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-Business of cinema photographic films, Legal fees-Dispute of film-Allowable as deduction whether the film would release or not would be irrelevant-Abandoned project-Service charges paid to a marketing company related to a film-film which was subsequently abandoned and never released-Allowable as business loss-Interest expenditure-Project abandoned-Capital or revenue-Allowable as deduction[S. 28(i), 36(1)(iii ) Rule 9A]

Steller Films (P.) Ltd. v. ACIT (2023) 198 ITD 682 (Mum) (Trib.)

S.37(1): Business expenditure-Capital or revenue-Premium paid on foreign exchange forward contracts-Amortized as revenue expenditure over life of contract. [Accounting Standard (AS)-11]

CLP Wind Farm (India) Ltd. v. DCIT (2023) 198 ITD 690 (Ahd) (Trib.)

S. 37(1) : Business expenditure-Foreign travel expenses-Business of real estate development and construction-To understand global trend of business-Business man point of view-Travel expenditure-Ad-hoc disallowance of 25 percent is not Sales promotion expenses-Allowed as deduction.

Well Wisher Construction (P.) Ltd. v. DCIT (2023) 198 ITD 268 (Mum) (Trib.)

S. 36(1)(va): Any sum received from employees–Any failure to pay employee’s contribution to PF/ESI, within prescribed due date under respective Act or scheme will result in negating employer’s claim for deduction permanently forever under section 36(1)(va).[S.43B (b)]

Suresh Electricals. v. DCIT (2023) 198 ITD 487 (Bang) (Trib.)

S. 36(1)(va): Any sum received from employees-Paid before due date of filing of return-Allowable as deduction-Explanation to section 43B by Finance Act, 2021 was only prospective and not retrospective. [S. 43B, 139(1)]

Geekay Facility Management (P.) Ltd. v. DCIT (2023) 198 ITD 13 (Mum) (Trib.) Jabalpur Motors Ltd. v. ADCIT (2023) 198 ITD 528 (Jabalpur) (Trib.)

S. 36(1)(iii) :Interest on borrowed capital-Own funds-Advance of loan-Assessing Officer is directed to work out figure of interest disallowance considering figure of assessee’s own fund.

Samira Constructions (India) Ltd. v. DCIT (2023) 198 ITD 264 (Mum) (Trib.)

S. 36(1)(ii):Bonus or commission-Bonus paid to employees-No finding-Certificate from Auditor-Assessing Officer was to be directed to factually verify certificate issued by auditor and allow deduction-Cash credits-Additional evidence-Matter is remanded to the Assessing Officer. [S. 68]

Karam Singh Malik. v. ITO (2023) 198 ITD 678 (SMC) (Delhi) (Trib.)

S. 35 : Expenditure on scientific research-Amendment to provisions of rule 6(7A)(b) with effect from 1-7-2016, whereby prescribed authority can quantify expenditure eligible for weighted deduction under sub-section (2AB) of section 35, would apply only from assessment year 2017-18.[S. 35(2AB), 263, R.6(7A)(b)]

Reliance Industries Ltd. v. ACIT (2023) 198 ITD 158 (Mum) (Trib.)

S. 32 : Depreciation-Motor car-Registered in the name of director-Disallowance of depreciation is not justified. [S. 2(11)]

Well Wisher Construction (P.) Ltd. v. DCIT (2023) 198 ITD 268 (Mum) (Trib.)

S. 31 : Repairs-Rented premises-temporary weather shed-Capital or revenue-Entitled to depreciation at rate of 100 per cent-Entire amount of expenditure incurred on construction of shed was to be allowed as revenue in nature. [S.32, 37(1)]

KHS Machinery (P.) Ltd. v. ACIT (2023) 198 ITD 649 (Ahd) (Trib.)