RECENT DECISIONS
ON INCOME TAX
Compilation
by
K.S.
Satish
Chartered
Accountant, Mysore
NOT
INCOME
Interest
on arrears of salary awarded by the court is not assessable
as income since the grant of interest and rate of interest
were in the absolute discretion of the court opined the
Punjab & Haryana High Court in CIT v. B. Rai (2003)
264 ITR 617 (P & H).
CHARITABLE
TRUST
The Bombay High Court in CIT v. Institute of Banking (2003)
264 ITR 110 (Bom) has taken the view that the assessee,
a charitable trust was entitled to depreciation on assets
even though the cost of assets was fully allowed in the
earlier year as application of income under section 11.
NOT
AN ADVENTURE IN THE NATURE OF TRADE
In
CIT v. Smt. Saraswati Jaiswal (2003) 264 ITR 358 (MP)
where the agricultural land inherited by the assessee
was compulsorily acquired by the Jabalpur Development
Authority, the assessee accepted developed plots from
the Authority instead of cash compensation and sold some
of the plots during the relevant previous year, the Madhya
Pradesh High Court held that the Tribunal was right in
coming to the conclusion that the transaction was not
an adventure in the nature of trade.
BUSINESS
INCOME
Where
the assessee, a co-operative society constructed a building
complex having shops and godowns for its members and let
out portions of the building to banks and Post & Telegraph
Department for running a post office with a view to provide
amenities to its members for promotion of their trade,
the rent received from the banks and Post & Telegraph
Department is assessable as business income ruled the
Gujarat High Court in CIT v. Surat Textile Market Co-operative
Shops & Warehouse Society Ltd. (2003) 264 ITR 289
(Guj).
BUSINESS
EXPENDITURE
The
Bombay High Court has in CIT v. B.G. Shirke & Co.
(2003) 264 ITR 83 (Bom) opined that contributions made
by the assessee-firm to the trusts created by it for the
welfare of its employees were deductible under section
37.
SECTION
68
Where
the identity of the shareholders is not established and
their creditworthiness and genuineness of the transaction
are not proved, the amount of share capital is assessable
under section 68 ruled the Calcutta High Court in CIT
v. Nivedan Vanijya Niyojan Ltd. (2003) 263 ITR 623 (Cal).
CHAPTER
VI-A
The
Karnataka High Court has in A.S. Mani v. UOI & Ors.
(2003) 264 ITR 5 (Kar) taken the view that it is not necessary
for the assessee to be physically outside India and physically
render service outside India for the purpose of claiming
deduction under section 80-RRA.
CIRCULARS
Circulars
issued by the Central Board of Direct Taxes are binding
on the Department and the Department is precluded from
challenging the correctness of the Circulars even on the
ground that they are inconsistent with the provisions
of the Act held the Madras High Court in CIT v. Investment
Trust of India Ltd. (2003) 264 ITR 506 (Mad).
PENALTY
In
Shri Swastik Steels Pvt. Ltd. v. ACIT (2003) 264 ITR 447
(Bom), the Bombay High Court has held that penalty under
section 271B cannot be levied for the delay in obtaining
the audit report for the assessment year 1993-94 when
the delay was due to non-completion of accounts for the
earlier assessment year namely, assessment year 1992-93.
PROSECUTION
Where
the Assessing Officer filed a complaint against the directors
of a company charging them under section 276B read with
section 278B for failure to deposit tax deducted at source
by the company from payments to contractors with the Central
Government but there was no material therein to prima
facie show that they were in charge of the affairs of
the company and responsible for the conduct of its day-to-day
affairs, they cannot be prosecuted for the offence committed
by the company held the Bombay High Court in Homi Phiroze
Ranina & Ors. v. State of Maharashtra & Ors. (2003)
263 ITR 636 (Bom).
Note
: KSCAA and the contributors
to the news bulletin do not accept any responsibility
for the views expressed in the articles/opinions. Readers/users
are requested to consult the official text of the relevant
publications, Circulars, Notifications, Acts and Judicial
pronouncements cited in the news bulletin.
