RECENT DECISIONS ON INCOME TAX
K.S.
Satish
Chartered
Accountant, Mysore
INCOME FROM HOUSE PROPERTY
Where the assessee, an
owner of a house property, received excessive interest-free
deposit from the tenant in lieu of rent, the usufructus
from such deposit can be considered as rent held the Mumbai
`D' Bench in Tivoli Investment & Trading Co. (P) Ltd.
v. ACIT (2004) 90 ITD 163 (Mum).
REVENUE EXPENDITURE
In J.M. Shares &
Stock Brokers Ltd. v. DCIT (2004) 83 TTJ 1052 (Mum), the
Mumbai `D' Bench held that expenditure incurred on issue
of partly convertible debentures, to the extent it related
to the convertible portion, constituted revenue expendi-ture
even though the conversion took place in the same year.
BUSINESS INCOME
Where the assessee-company
carrying on the business of purchase and sale of shares
and debentures was allotted debentures with detachable
warrants by Reliance Industries Ltd. and it sold the detachable
warrants, the sale proceeds of the detachable warrants
constituted its trading receipts taxable under section
28 as the detachable warrants received by it during the
course of business was its stock-in-trade held the Mumbai
`J' Bench in J.T. Holdings (P) Ltd. v. ITO (2004) 89 ITD
569 (Mum).
SECTION 43A
In Apollo Tyres Ltd. v.
ACIT (2004) 89 ITD 235 (Del) (SB), the Delhi `E' Bench
(Special Bench) has expressed the view that profit arising
from cancellation of foreign exchange forward contracts
constitutes a capital receipt which should be reduced
from the cost of plant and machinery for the purchase
of which foreign loans were raised by the assessee.
SECTION 50(2)
Section 50(2) cannot be
applied on the ground that new machinery was acquired
in the previous year after the sale of old machinery when
the written down value of old machinery and cost of new
machinery acquired exceeded the sale proceeds of old machinery
ruled the Chandigarh `B' Bench in DCIT v. Everest Woollen
Mills (P) Ltd. (2004) 83 TTJ 1057 (Chd).
CHAPTER VI-A
In Sunrise Metal Industries
v. ITO (2004) 89 ITD 406 (Mum), the Mumbai `H' Bench was
of the view that the assessee can be said to be engaged
in the manufacture of copper rods, wires, sheets, plates,
etc., and, therefore, entitled to deduction under section
80-1A even when the major activity of manufacture namely,
hot rolling was done on job work basis by outside parties
but under the direct control and supervision of the assessee
and at the risk of the assessee.
INTEREST
The Delhi `E' Bench has
in Sutlej Industries Ltd. v. ACIT (2004) 84 TTJ 80 (Del)
taken the view that interest on refund of excess self-assessment
tax paid has to be granted not from the date of payment
of self-assessment tax but from the date of assessment
order.
APPEAL
In an appeal against an
order levying penalty under section 158BFA(2), the Commissioner
(Appeals) cannot direct the Assessing Officer to charge
interest under section 158BFA(1) ruled the Pune Bench
in C.P. Nanda v. DCIT (2004) 84 TTJ 125 (Pune).
TRIBUNAL
The Delhi `A' Bench in
ITO v. Selchem Engineers (P) Ltd. (2004) 84 TTJ 101 (Del),
while holding that the Department could not prefer an
appeal against the order of the Commissioner (Appeals)
which was in confirmity with the Circular issued by the
Central Board of Direct Taxes, awarded costs to the assessee
under section 254(2B) for having been dragged into appellate
proceedings before the Tribunal inspite of a direct Circular
issued by the Board.
PENALTY
Penalties under sections
271D and 271E could not be levied on the assessee-firm
for cash loans exceeding Rs. 20,000 borrowed from and
repaid to the sister-concern which had common partners
through a current account as the transactions were considered
genuine and similar penalties levied in respect of the
same transactions on the sister-concern were cancelled
by the Tribunal held the Jodhpur Bench in ACIT v. G.P.
Taparia (2004) 84 TTJ 34 (Jd).
