Bulletin No.A135 dated 21 October 2021

BULLETIN(Issue No.135) DT.21-10-2021

Compiled by Vinod Kumar Goel, Advocate

 

CASE LAWS

Assistant Commissioner of Income-tax, Circle 6(1) Vs. Karle International (P.) Ltd., [2021] 130 taxmann.com 453 (SC)

Section 10B, read with section 70, of the Income-tax Act, 1961 - Export oriented undertaking (Computation of deduction) - Assessment year 2008-09 - High Court by impugned order held that section 10B does not contain any prohibition to prevent an assessee from setting off losses from one source against income from another source under same head of income as prescribed under section 70 and, therefore, loss sustained by assessee-company from its hundred per cent Export Oriented Unit (EOU) which was entitled to exemption under section 10B could be set-off against profit of its other units under same head of income - Whether SLP filed against impugned order was to be dismissed - Held, yes [Para 2] [In favour of assessee]

Principal Commissioner of Income-tax, Ajmer Vs. Nitin Spinners Ltd. [2021] 130 taxmann.com 402 (SC)

Section 4 of the Income-tax Act, 1961 - Income - Chargeable as (Subsidy) - Assessment year 2013-14 - Assessee, textile manufacturer, received subsidy for repayment of loan taken for building and plant and machinery under Technology Upgradation Fund Scheme of Government and claimed same as capital receipt - Assessing Officer treated same as revenue receipt - High Court by impugned order held that since objective of subsidy scheme was to enhance technology apparatus of assessee by assisting in acquiring machinery; and that subsidy so received was utilized for repayment of loans taken by assessee to set up new unit, as was intention of subsidy, amount so received was towards capital stream and, therefore, was not taxable - Whether special leave petition against impugned order was to be dismissed - Held, yes [Para 2] [In favour of assessee]

Section 4 of the Income-tax Act, 1961 - Income - Chargeable as (Subsidy) - Assessment year 2013-14 - Assessee, textile manufacturer, received subsidy under Focus Market Scheme - Assessing Officer treated same as revenue receipt - It was found that subsidy was given by Central Government to enhance Indian export potential in international market - High Court by impugned order held since it was not granted to meet cost of expenditure, said amount was not an export incentive, but rather capital receipt and, therefore, not taxable - Whether special leave petition filed against impugned order was to be dismissed - Held, yes [Para 2] [In favour of assessee]

Section 4 of the Income-tax Act, 1961 - Income - Chargeable as (Subsidy) - Assessment year 2013-14 - Assessee, textile manufacturer, received subsidy from Central Government towards electricity duty - Assessing Officer treated same as revenue receipt - It was found that electricity subsidy was granted under Rajasthan Investment Promotion Scheme - High Court by impugned order held since it was granted in larger public interest and was linked to capital interest, same could not be brought to tax as revenue receipt - Whether special leave petition against impugned order was to be dismissed - Held, yes [Para 2] [In favour of assessee]

Principal Commissioner of Income-tax (Central) Vs. Goa Coastal Resorts and Recreation (P.) Ltd. [2021] 130 taxmann.com 379 (SC)

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income (Recording of satisfaction) - High Court by impugned order held that where there was no record of satisfaction by Assessing Officer in relation to any concealment of income or furnishing of inaccurate particulars by assessee in notice issued for initiation of penalty proceedings under section 271(1)(c), same being sine qua non for initiation of such proceedings, Tribunal had rightly ordered to drop penalty proceedings - Whether Special Leave Petition filed against impugned order was to be dismissed - Held, yes [Para 2] [In favour of assessee]

Deputy Commissioner of Income-tax Vs. Surbhit Impex (P.) Ltd. [2021] 130 taxmann.com 315 (Mumbai- Trib.)

Where assessee did not make payment for goods purchased from parties, as same were of inferior quality and treated said parties as trading liabilities, since proceedings against assessee for recovery with respect to these amounts were still in progress, such amount could not be treated as ceased liabilities under section 41(1)(a).

Michael E Desa Vs. Income Tax Officer International Taxation, Ward-1(1), Mumbai [2021] 130 taxmann.com 314 (Mumbai- Trib.)

Where assessee, NRI, sold a property and earned capital gain and also reported a long-term capital loss on sale of certain shares in company (VCAM) and Assessing Officer was of view that long-term capital loss on account of equity shares of company (VCAM) appears to be prima facie fictitious and not entitled to be adjusted against any taxable income, since ownership is transferred, consideration is paid and transaction is complete, benefit of this long-term capital loss could not be denied to assessee only on ground that if assessee had not taken these proactive measures, he would have paid more taxes and, thus, Assessing Officer is directed to allow set-off of this long-term capital loss on sale of shares in VCAM against long-term capital gains on sale of property.

Assistant Commissioner of Income Tax Vs. Life Insurance Corporation of India Ltd. [2021] 131 taxmann.com 26 (Mumbai- Trib.)

Assessment was reopened in case of assessee on ground that excessive foreign tax credit could not be allowed to assessee - Further, a reassessment order was passed withdrawing inadmissible foreign tax credit - Assessee moved an instant separate petition under rule 27 before Tribunal seeking that entire reassessment proceedings to be quashed - Whether correct legal position was that foreign tax credit, in respect of taxes paid abroad, could never exceed Indian tax liability in respect of related income taxed abroad as also in India - Held, yes - Whether, further, if entire reassessment proceedings were to be quashed, Assessing Officer would be in a worse position vis-à-vis position of him if he was not to come in appeal, in sense that even admitted liability in respect of the incorrect foreign tax credits would stand nullified - Held, yes - Whether, further, appeal of Assessing Officer being dismissed on merits, instant petition under rule 27 was wholly academic and infructuous - Held, yes.

 

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