Date: Thu, Sep 20, 2012 at 10:34 AM
Subject: Message from EGroup of SolapurCAs S. 80-IB(10)(d) + Diversion By Overrding Title + Speculative Transaction
To: editor@itatonline.org
The following important judgements are available for download at itatonline.org.
| ITO vs. Everest Home Construction (ITAT Mumbai) |
| S. 80-IB(10)(d) cap on commercial area inserted w.e.f. AY 2005-06 applies to projects approved earlier |
| Though the assessee's project, when it was commenced in the year 2003, was in compliance with s. 80-IB(10) as it then stood, the law prevailing in the year of completion of the project has to be seen. As the Project breached the ceiling of maximum commercial area imposed by s. 80-IB(10)(d) inserted w.e.f. 1.4.2005 (lesser of 2000 sq. ft or 5% of aggregate BU area), the assessee is not eligible for s. 80-IB(10) relief (Saroj Sales Corp vs. ITO 115 TTJ Mum 485 not followed; Brahma Associates 333 ITR 289 (Bom) & Reliance Jute 120 ITR 921 (SC) referred) |
| Shroff Eye Centre vs. ACIT (ITAT Delhi) |
| Concept of "diversion of income by overriding title" explained |
| As there was an absolute contractual obligation imposed on the continuing firm/partners by the partnership deed to pay an amount of 2% of the gross receipts subject to maximum of 3 lacs pa to the legal heir of the deceased partner, it was a first charge on the receipts of the continuing firm/partners and constituted a diversion of income by overriding title |
| ACIT vs. Arnav Akshay Mehta (ITAT Mumbai) |
| S. 43(5)(d): Notification treating MCX as "recognised stock exchange" on 22.5.2009 to be treated as retrospective and applying since 1.4.2006 |
| Proviso to s. 43(5)(d) inserted w.e.f. 1.4.2006 provides that a derivative transaction on a recognized stock exchange shall not be a "speculative transaction". MCX Stock Exchange was notified as a recognized stock exchange on 22.5.2009. Though the recognition came later, MCX has to be treated as a recognized stock exchange w.e.f. 1.4.2006 because the provisions providing for recognition are purely procedural and will have retrospective effect. |
| DCIT vs. Mitchell Drilling International Pty. Ltd (ITAT Delhi) |
| Service tax is not part of "Gross Receipts" for purposes of s. 44BB |
| S. 44BB is a special provision, treating 10% of the aggregate amount specified in sub-s. (2) of s. 44BB as deemed profits and gains of the non-resident. The amount referred in sub-s. (2) of s. 44BB are the amounts (a) paid to the assessee (whether in or out of India) on account of the provision of services and facilities in connection with, or supply of plant and machinery on higher used, or to be used, in the prospecting for, or extraction or production of, mineral oils in India … etc. Service-tax is a statutory liability like custom duty and reimbursement of custom duty & service-tax paid by the assessee cannot form part of amount for the purpose of deemed profits u/s 44BB as oit does not involve any element of profit. Accordingly, it cannot be included in the total receipts for determining the presumptive income. |
| Lira Goswami vs. ACIT (ITAT Delhi) |
| If there is no doubt that expenditure has been incurred, disallowance is not sustainable |
| While computing the tax liability of an assessee the AO is obliged to compute the correct income of the assessee. Once in substance he is in agreement that the expenditure has been incurred for earning the professional income, no disallowances is sustainable in law. Nowhere the AO has doubted that the expenditure claimed as deduction has been incurred by the assessee. In alleging that the expenditure has been deducted in computing the income from other sources, the AO has ignored the fact that in the return of income, the gross amount of interest income, without any deduction, has been shown under the head "income from other sources" and the income under the head "profits and gains of business or profession" has been shown in the tax return on net basis after deducting the expenditure incurred. |
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