----- Forwarded Message -----
From: Kapil Goel <advocatekapilgoel@gmail.com>
To: CA.KAPIL GOEL <kapilnkgoelandco@gmail.com>
Sent: Friday, 8 February 2013 3:03 AM
Subject: [Gzb_CA Group -CA. VINAY MITTAL] Bombay high court capital gains (new bunglow for exemption u/s 54F demolished within 3 yrs time: not impact earlier exemption) (shares sale by practicing doctor cap. gains & broker's pool account for delivery OK); land held for 10 yrs cap gains; Business head (SAP software scrapped revenue expense) (sham bad debt rev fav) Product development revenue expense HELD
From: Kapil Goel <advocatekapilgoel@gmail.com>
To: CA.KAPIL GOEL <kapilnkgoelandco@gmail.com>
Sent: Friday, 8 February 2013 3:03 AM
Subject: [Gzb_CA Group -CA. VINAY MITTAL] Bombay high court capital gains (new bunglow for exemption u/s 54F demolished within 3 yrs time: not impact earlier exemption) (shares sale by practicing doctor cap. gains & broker's pool account for delivery OK); land held for 10 yrs cap gains; Business head (SAP software scrapped revenue expense) (sham bad debt rev fav) Product development revenue expense HELD
Included in this Bombay high court update:
a) Business head issues
i) SAP software scrapped and full costs claimed as revenue loss allowed
ii) Product development expense not intangibles but allowable revenue expense
iii) section 35(2AB) scientific research deduction
iv) fake and shame bad debts (rev fav) implication of proceedings before special Metropolitan Magistrate for debtor recovery
b) Capital gains issues
i) new bunglow purchased for section 54F rebate demolished within 3 years: not effect exemption claimed
ii) Land sale: business gains or capital gains
iii) sale of shares delivery through broker pool account :not speculative in nature
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL (L) NO. 1285 OF 2012 M/s. Aarti Industries So far as question (d) is concerned, the respondent assessee had during the relevant assessment year incurred expenses of Rs.41.44 lacs for purchase and installation of SAP accounting package in place of Tally accounting package used
by it earlier. However, the respondent assessee found that the SAP accounting package did not work appropriately and consequently scraped the same, while reverting back to the Tally accounting
package. In the above circumstances, the respondent assessee
classified the expenditure of Rs.41.44 lacs as revenue expenditure. We note that the Tribunal has allowed the expenditure incurred on SAP accounting package as being an expenditure incurred for carrying on a business as SAP accounting package had to be
scraped since it was purchased. This scraping of SAP accounting package was a business decision taken by the respondent assessee
and we find no fault with the order of the Tribunal allowing the
same as revenue expenditure
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL (L) No.1121 OF 2012 Softlink International Pvt.Ltd b) Whether on the facts and in the circumstances of the
case and in law, the Tribunal was correct in holding that the
product development expenditure was of revenue nature, though
the expenditure resulted in an advantage of enduring nature of
the assessee and also the assessee had treated the same as
intangible assets in its accounts? So far as question (b) is concerned, the Counsel for
the revenue states that the Tribunal in the impugned order has
relied upon its decision in the matter of CIT v. Renu Electronics
Pvt. Ltd. for granting benefit to respondent assessee. The
revenue carried the Tribunal order in the matter of Renu
Electronics (supra) in appeal to this Court and by order dated
15/2/2010 this Court has dismissed the revenue's appeal.
Consequently, no occasion to entertain the question (b) as
formulated would arise.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL NO. 166 OF 2013M/s. Aarti Industries
In first appeal, the Commissioner of Income Tax (Appeals) (the CIT(A)) allowed the respondent assessee's appeal for weighted deduction under Section 35(2AB) of the Act. This was on the
ground that according to him the respondent had infact incurred expenditure for setting up an in house R & D facilities. The mere fact that the approval letter by the prescribed authority was issued later i.e. on 06.07.2001 should not deprive the respondent of the benefit particularly as the approval letter mentioned the date and the year for which the approval is granted. Further, the certificate/approval
letter from the relevant authorities was issued on 06.07.2001 stating that the approval is granted up to 31.03.2003. This is for the reason that the Tribunal records and upholds the finding of the
CIT(A) that the respondent assessee had incurred expenditure for setting up in house R & D facilities. Further, the approval letter from the prescribed authorities also certified that such expenditure was incurred. Once such a certificate/approval letter has been issued by the prescribed authorities it must follow that the explanation provided under Section 35(2AB) of the Act has been satisfied
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL NO. 998 OF 2011 Baguio Investment Pvt. Ltd The basic dispute which arises in this case is whether the income arising on the sale of land is to be treated as sale of stock in trade and charged under the head 'income from business' or as
sale of investment charged under the head of 'capital gains'. The finding of fact recorded by the CIT(A)
and upheld by the tribunal is that: a) the respondent company
has been disclosing the land in its books of accounts as a investment and not as stock in trade; b) The land sold was held for a period of 10
years by the respondent assessee; and c) No steps were taken for development of property by the respondent assessee during the
period it held the land. In the above circumstances, decision of
the Tribunal based on concurrent finding of fact recorded by the CIT(A) and by the Tribunal does not raise any question of law. This is particularly so as the revenue has not urged that the concurrent
finding of fact are perverse.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION Dr.Ramesh C.Shah 4th February, 2013. INCOME TAX APPEAL NO. 1063 OF 2011 this appeal by the revenue the basic issue is
whether income earned by the respondent assessee is to be
taxed on sale of shares as short term capital gain as contended
by the assessee or income from business as contended by the
revenue. The CIT (A) as well as the Tribunal found as a matter
of fact that considering the CBDT circular and the test laid down
therein the income earned on sale of shares would have to be
taxed as gain from short term capital gain and not as business
income. The Tribunal found that almost 95 % of the funds for
investment in shares belongs to the assessee. Further, the shares
were always shown as investment in his balance sheet and
considered to be an investment. The dividend earned was Rs.8.36
lacs on the investment of Rs.2.77 crores also establishes that the
intention of the respondent was to earn dividend income. Moreover, as observed by the CIT(A) the respondent-assessee
was a busy Doctor and would not have time to deal in share
transaction on day to day basis. Thus, the Tribunal on the above
facts concluded that income earned on sale of shares held for
less than six months are to be taxed under the head Capital Gain.
Moreover, we are informed that even for the earlier assessment
years gain on sale of shares has been taxed by the revenue as
short term capital gain and not as business income. In view of the fact that the decision of the Tribunal
taxing the gain made on sale of shares under the capital gain is
based on a concurrent finding of fact, no question of law arises.
Thus, we do not entertain this appeal.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL (L) NO. 1583 OF 2012 Ms. Chhaya B. Parekh The basic dispute between the parties is whether the respondent assessee is entitled to benefit of Section 54F of the Income Tax Act, 1961 (the Act) when the asset is demolished within a
period of three years from its purchase The revenue does not ispute the entitlement of the respondent assessee under Section 54F of the Act on the purchase of the bungalow property. However, the grievance of the revenue is that as the respondent had demolished
the bungalow within 3 years of its purchase, the same would amount to transfer and would be hit by Section 54F(3) of the Act. Consequently, in the previous year relevant to the assessment year
under consideration the capital gain tax would be payable on the amounts not charged due to the benefit availed of Section 54F of the Act as held by the assessing officer in his order dated 30.10.2009. By order dated 16.05.2012, the Tribunal dismissed the appeal of the revenue by placing reliance upon the decision of the Apex Court in the matter of Vania Silk Mills P. Ltd. v. CIT, reported in 191 ITR 647. In the above case, the Apex Court has held that when an asset is destroyed, there is no question of transfer taking place under the Act.
The Apex court held that in terms of the Act that the words 'Extinguishment of any right' in Section 2(47) of the Act, does not include an extinguishment of right on account of destruction Thus, a destruction of assets when not on account of any transfer would not be hit by Section 54F(3) of the Act Counsel for the revenue seeks to
distinguish the decision of the Apex Court in the matter of Vania Silk Mills P. Ltd. (Supra) that the destruction in that case took place because of fire and hence it was involuntary. This distinction is
of no consequence. In our view of the decision of the Apex Court in Vania Silk Mills (Supra) would squarely apply to the facts of the present case.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL NO. 161 OF 2011
Commissioner of Income Tax24 ..Appellant versus Smt. Beena Rathi During the assessment proceeding, the Assessing Officer
concluded that the Short Term Capital Gains offered by respondent assessee for tax was in fact speculation profit as the delivery of shares purchased and sold were not transferred into Demat
account but kept by the broker in his pool account. We note the the Tribunal, has decided the issue on a finding of fact that the shares
purchased and sold by the respondent assessee were
actually delivered on her behalf by the broker from pool account. In second appeal, the Tribunal by its order dated 25.09.2009 allowed the respondent assesseee's appeal. The Tribunal held on facts
that there is no dispute that share transaction entered into by the respondent assessee was settled by actual delivery of scrips from the pool account of broker. The Tribunal held following the decision
of Rajasthan High Court in the matter of Sripal Satpal v. ITO reported in 217 CTR page 337 that actual delivery of goods for a transaction to be non speculative, need not be by the assessee himself but could also be by his agent. On the aforesaid view, the Tribunal rightly held that the transaction of purchase and sales of shares were ultimately settled by actual delivery of scrips to the buyer from the pool account of the broker. In the circumstances, the Tribunal concluded that
transaction is not speculation transaction on application of Section 43(5) of the Act.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL (L) NO.1645 OF 2012
Shri. Rajkumar U. Bhansali. Even otherwise on merits the impugned order of the
Tribunal is based on a finding of fact that the transaction in respect of which the deduction as bad debts is claimed by the
appellant is not a genuine transaction. Consequently, no question
of writing off a fictitious debt can arise. Further, the appellant
himself has admitted in the proceeding before the Special
Metropolitan Magistrate and the Judge of the Court of Small
Causes Mumbai that the alleged debtor had never placed any
order of goods nor did the alleged debtor sign any cheque in
respect of which proceedings were instituted by the appellant herein. Since the decision is based on a finding of fact, even on
merits, we see no reason to entertain the present appeal
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