Friday, February 19, 2010



Volume 1 : Part 8




>> Where dispute relating to method of billing for supplies, liability arises only on settlement : ITO v. Sicgil India Pvt. Ltd. (Chennai) p. 749

>> Deduction u/s. 80-IB to be worked out after setting off of loss of earlier year : ITO v. Sicgil India Pvt. Ltd. (Chennai) p. 749

>> Where order under appeal not erroneous or based on insufficient material and not needing fresh evidence, restoration of matter not justified : ITO v. Sicgil India Pvt. Ltd. (Chennai) p. 749


>> Assessment cannot be set aside solely on ground that direction for special audit invalid : Jai Bhawani Concast P. Ltd. v. Dy. CIT (Delhi) p. 762


>> Addition in respect of items not mentioned in inventory of closing stock justified : Jai Bhawani Concast P. Ltd. v. Dy. CIT (Delhi) p. 762


>> Charging of interest in respect of advance tax is consequential in nature : Jai Bhawani Concast P. Ltd. v. Dy. CIT (Delhi) p. 762


>> Income from sale of shares held as investment treated as long-term capital gain and not business income : Suresh Kumar Seksaria v. Asst. CIT (Mumbai) p.783


>> Building owned by assessee and building taken on lease treated as building owned by assessee under Expln. 1 to s. 32(1), fall under same block of assets : AO computing depreciation on WDV of block of assets u/s. 43(6)(c) justified : Anand and Anand v. Asst. CIT (Delhi) p. 788


>> Short fall between individual WDV and amount realised on transfer to be reduced from aggregate WDV of block of assets : Anand and Anand v. Asst. CIT (Delhi) p. 788


>> Assessee not entitled to exclusion of capital gains in computation of book profit under Explanation to s. 115JB : S. 54EC not applicable : Growth Avenue Securities P. Ltd v. Dy. CIT (Delhi) p. 807



>> Rajasthan High Court ruling on clamp down of rent arrears irks Supreme Court

A Rajasthan High Court ruling, giving retrospective effect of the special provision for assessing arrears of rent provided under section 25B of the Income-tax Act, has irked the Supreme Court.


A Bench comprising Justices of Supreme Court took strong exception to the High Court ruling on the issue. The High Court had said that the provisions of section 25B of the Income-tax Act is clarificatory in nature and should be given retrospective effect.


The advocate on behalf the Trust, said "The High Court failed to appreciate that the question or issue regarding section 25B of the Income-tax Act did not at all arise out of the orders of the Appellate Tribunal and therefore, the High Court did not have the jurisdiction under section 250A of the Income-tax Act to go into or decide that question", in its Special Leave Petition. Section 25B was inserted by the Finance Act, 2000 which lays down that where the owner of the property received any amount, by way of arrears of rent from such property, the amount so received, after deducting a sum equal to one-fourth of such amount for repairs of, and collection of rent from, the property, shall be deemed to be the income chargeable under the head "income from house property" as the income of the previous year in which such rent is received. This will be the position even if the assessee is not the owner of that property in the year of receipt of enhanced rent. It was made effective from April 1, 2001. However, the question was left open whether it can be applied retrospectively.


DMRAWA Trust said, "the High Court completely failed to appreciate that section 25B was inserted into IT Act by the Finance Act, 2000 with effect from April 1, 2001 and therefore, section 25B could not in law be given retrospective effect in respect of any earlier assessment years".


Secondly, "the High Court completely failed to appreciate that legal position prevailing prior to April 1, 2001 as laid down by several High Court judgments was entirely different from that contained in section 25B and that the said previously obtaining legal position was consequently and materially changed by the amendment made by insertion of section 25B in IT Act and therefore, section 25B could not possibly be considered to be a clarificatory provision", said the Trust.


On appeal, the ITAT had said that the amount of retrospective rent increase could not be included in the annual value of the property. It had also held Department's reassessment notices as illegal. It was challenged by the Department in the High Court. [Source : dated February 8, 2010]



>> BDT to fight back advance tax payments of top companies

Big corporations will now find it difficult to defer their advance tax payments. In a bid to meet its revenue collection targets, the Central Board of Direct Taxes (CBDT) has decided to monitor advance tax payments by top companies and persuade them not to defer such payment as self-assessment tax for the next financial year.


CBDT convened a meeting of Chief Commissioners of income-tax to discuss strategies for achieving the revenue collection target budgeted at Rs. 3.7 lakh crore for the current financial year (2009-10) and internally reset at Rs. 4 lakh crore. The strategies discussed during the meeting also included monitoring tax payments of loss-making companies, liable to minimum alternate tax (MAT) at an enhanced rate of 15 per cent., and persuading them to make such payment as advance tax during the current financial year. They also decided to monitor tax deducted at source (TDS) deposits by private deductors as well as State Governments and local bodies. The Government said it would also focus on the collection of tax arrears, as well as tax demand raised in scrutiny assessments during 2009-10.


The Revenue Department will have to collect over Rs. 1.2 lakh crore as direct taxes in the next three months to meet its target of Rs. 3.7 lakh crore.


Last year, the Government had missed its target of Rs. 3.45 lakh crore due to the economic slowdown, but this year it is relying on direct tax collections to make up for any shortfall in indirect tax receipts. [Source : dated February 5, 2010]

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