Statutes Monday -22-October-2009

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Online PR News – 22-October-2009 – – Case Laws-Direct Tax Laws -From Itat

Determination of true character of a receipt in hands of assessee - It is absurd to say that an amount can be a capital receipt only if it is reduced from the cost of the assets; it is only a form of accounting which may be relevant in certain situations - ACIT v. Sanghi Textiles Ltd. [ITA No. 346/Hyd/04]

Treatment of a revised return which is defective - A defective return filed under any of the provisions of the Income-tax Act, 1961 can be rectified; it is not that only the return filed under section 139(1) can be rectified; the discretion given in section 139(9) is not to treat the return as invalid without giving an opportunity to the assessee to remove the defect - Sanghi Textiles Ltd. v. ACIT [ITA No. 559/Hyd/2003]

Computation of undisclosed income in case no incriminating document was found during search - As long as there is an evidence to the undisclosed income of the assessee, that would be sufficient to clothe the Assessing Officer with the powers to add to such evidence any further material or information that may pertinent or necessary to reach a logical conclusion but there has to be a certain and specific nexus between the evidence found as a result of search and income proposed to be assessed in the block assessment - ACIT v. Surindra Engg. Co. P. Ltd. [IT (SS) A. No. 253/M/2005]

Scope for reduction of eligible profits u/s 80HHC by invoking provisions of section 80-IA(9) of IT Act, 1961 - To invoke the provisions of section 80-IA(9) it is the condition that the deduction u/s 80HHC and section 80-IA has to be in respect of the same undertaking - ACIT v. Grasim Industries Ltd. [ITA Nos. 4201 to 4204/Mum/06]

Computation of deductions under section 80HHC/80-IB of IT Act, 1961 - Interest on margin money deposits cannot be considered as income derived from the business for the purpose of granting deduction under section 80-IB and section 80HHC - Avanti Feeds Ltd. v. DCIT [ITA Nos. 1170 & 1153/Hyd./04]

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When penalty u/s 271E is not leviable for violation of section 269T of IT Act, 1961 - If the assessee had bona fide belief that cash transactions in a current account are not hit by section 269T, which belief is vindicated by the judgment of the Madras High Court in CIT v. Idhayam Publications Ltd. 285 ITR 221, even that can be considered as reasonable cause u/s 273B and on that ground also the penalty is liable to be cancelled - Canara Housing Development Co. v. Addl. CIT [ITA No. 1425/Bang/2008]

Allowability of interest liability payable on deep discount bonds - If any expenditure has not fallen due for payment, but for which a liability has been accrued, the same is to be allowed in computing the income of the assessee when the assessee is consistently following mercantile system of accounting - Gujarat Toll Road Investment Co. Ltd. v. ACIT [ITA No. 2901/Ahd/2006]

Cancellation of reassessment on ground that AO has not followed prescribed procedure for service of notice - The service by affixture is to be made only if it is not possible to effect service through normal means - DCIT v. K. G. Singhania [ ITA No. 281 & 282 (ASR)/2008]

If expenditure claimed as deduction is in accordance with provisions of PSC i.e. section 42 of IT Act, 1961, then it has to be allowed - The provisions of section 40 cannot be invoked where the income is to be computed under section 42 of the Act - Cairn Energy India Pty. Ltd. v. ACIT [ITA Nos. 208 to 211 (Mds)/2006]

For how many years carry forward of MAT credit is allowable u/s 115JAA(3) of IT Act, 1961? - There is no ambiguity in the language of sub-section (3) of section 115JAA; the carry forward is available for a total of six (1+5) years; the period of ‘five assessment years’, mentioned in sub-paragraph (2) of the paragraph 45.4 of the CBDT Circular No. 763 dated 18-2-1998, contradicts with what is stated in sub-section (3) of section 115JAA; it is trite law that statutory provisions prevail over a Circular in case of a contradiction between the two - ITO v. Data Software Research Company (International) Pvt. Ltd. [ITA No. 1602/Mds/2008]

Applicability of section 45(4) of IT Act, 1961 in case of distribution of capital asset on retirement of one partner - The term used in section 45(4) ‘distribution of capital assets on the dissolution of a firm or otherwise’ cannot be extrapolated to bring retirement of one partner into the ambit of this section - ACIT v. Goyal Dresses [ITA No. 1478/Mds/2007]

Securities Laws -Statutes

Revision of transaction charges by the stock exchanges - Circular No. MRD/DoP/SE/Cir-14/2009, dated 14-10-2009