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Monthly (November 2014) + Consolidated (Jan to November 2014) Digest Of Imp Case Laws
The monthly digest of important case laws for the month of November 2014 and the consolidated digest for the period from January to November 2014 are available for download. In addition, the consolidated digest for the period from January 2013 to December 2013 as well as the consolidated digest for the period from January 2012 to December 2012 are also available for download.Premier Breweries Ltd vs. CIT (Supreme Court)
S. 37(1): principles for deduction of business expenditure reiterated
The question that was posed by the High Court was whether acceptance of the agreements, affidavits and proof of payment would debar the assessing authority to go into the question whether the expenses claimed would still be allowable under Section 37 of the Act. This is a question which the High Court held was required to be answered in the facts of each case in the light of the decision of this Court in Swadeshi Cotton Mills Co. Ltd. Vs. Commissioner of Income Tax 1967 (63) ITR 57 and Lachminarayan Madan Lal vs. Commissioner of Income Tax West Bengal 1972 (86) ITR 439
CIT vs. M/s S. M. Construction (Bombay High Court)
S. 271(1)(c): Law laid down in Zoom Comm 327 ITR 510 (Del) does not apply if claim of assessee is bona fide and not in defiance of the law
The decision of the Delhi High Court in Zoom Communication P. Ltd. 327 ITR 510 (Del) is not applicable in the present facts for the reason that in this case, the stand taken by the assessee cannot be said to be in defiance of law and thus not bonafide
CIT vs. Muzafar Nagar Development Authority (Allahabad High Court – Full Bench)
S. 12AA: Non disposal of an application for registration before the expiry of six months as provided u/s 12AA (2) would not result in deemed grant of registration. Assessee will have to file a Writ to compel CIT to consider application
Providing that an application should be disposed of within a period of six months is distinct from stipulating the consequence of a failure to do so. Laying down a consequence that an application would be deemed to be granted upon the expiry of six months can only be by way of a legislative fiction or a deeming definition which the Court, in its interpretative capacity, cannot create. That would be to rewrite the law and to introduce a provision which advisedly the legislature has not adopted
Commercial solvency no bar for winding-up petition admission where debt acknowledged |
HC admits petition filed for winding-up of Syrma Technology Pvt. Ltd. ('respondent co.') u/s 433 & 434 of Cos. Act, 1956 for its inability to pay debts; Rejects respondent co.'s contention that petition is not maintainable as it is running profitably and has employees working, states that "commercial solvency of a company cannot be a sole ground to reject the admission of a Company Petition, particularly when the debt is admitted...and other ingredients of Section 433 and 434 are present"; Holds that petitioner's claim was in nature of an 'admitted' and 'acknowledged' debt as petitioner sent invoices for goods which were duly delivered and quantified sums were duly admitted by respondent co. in various correspondences; Further rejects respondent co.'s contention that petitioner by signing payment receipt-cum-subrogation form had assigned and transferred to insurance co. all recovery rights it had against respondent co.; Holding it to be an invalid defence, states with respect to insurance contracts, "assured is entitled to proceed against the third party and its only obligation is to make good the amount paid by the insurer after having accounted for its own claim...A third party cannot be seen to take the defence that the claimant has already been paid out by the insurer and, consequently, avoid making payment on that ground"; Relies on SC observations in IBA Health (India) Pvt. Ltd. v. Info-Drive Systems Sdn. Bhd. and its own observations in Global Trust Bank Ltd. v. Killick Nixon Ltd.:Bombay HC |
The ruling was delivered by Justice S.J. Kathawalla. Advoactes Shyam Kapadia, Darshan Mehta and Hasmit Trivedi argued on behalf of petitioner while respondent was represented by Advocate Sandeep Parikh. |
[LSI-364-HC-2014-(BOM)] Click here to read facts, analysis and the copy of judgement. Click here to post your comment. |
RBI cautions banks on outsourced services quality; Advises high degree of care
RBI clarifies that outsourcing of any financial services by bank does not diminish obligations of banks, its Board and senior management, who have the ultimate responsibility for the outsourced activity; Advises banks to ensure that the service provider employs the same high standard of care in performing the services as would have been employed by the banks; Further, banks should not engage in outsourcing activities that would result in compromising / weakening their internal control, business conduct or reputation; RBI also clarifies that Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services by Banks shall also apply to subcontracted activities, states, "Before giving their consent, banks should review the subcontracting arrangements and ensure that these arrangements are compliant with the extant guidelines on outsourcing"; Further states, "An ageing analysis of entries pending reconciliation with outsourced vendors should be placed before the Audit Committee of the Board and banks should make efforts to reduce the old outstanding items therein at the earliest" : RBI
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RBI issues guidelines to encourage banks for revitalisation of distressed assets
In order to revitalise distressed assets, RBI further issues guidelines on sale of financial assets to Securitisation Company (SC)/ Reconstruction Company (RC); Permits banks to reverse the excess provision (when the sale is for a value higher than net book value (NBV)) on sale of non-performing assets (NPAs) (sold prior to February 26, 2014) to their profit and loss account; Banks can reverse excess provision arising out of sale of NPAs only when cash received is higher than NBV of NPAs sold to SCs/RCs; Quantum of excess provision reversed to P&L account will be limited to the extent to which cash received exceeds the NBV of NPAs sold, and shall be disclosed in bank's financial statements under 'Notes to Accounts' : RBI
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RBI reviews housing loan guidelines, relief for economically weaker/ low income borrowers
With a view to encourage availability of affordable housing to economically weaker sections and low income group borrowers, RBI notifies that where the cost of the house/dwelling unit does not exceed Rs.10 lakhs, banks may add stamp duty, registration and other documentation charges to the cost of the house/dwelling unit to calculate Loan to Value ratio; Notes that such amounts form 15% of cost of the house and place burden on economically weaker sections; Further on doubts raised on disbursal of loans, states that, "in cases of projects sponsored by Government/Statutory Authorities, they may disburse the loans as per the payment stages prescribed by such authorities, even where payments sought from house buyers are not linked to the stages of construction, provided such authorities have no past history of non-completion of projects" : RBI
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Rajya Sabha passes Insurance Bill with bipartisan support |
Rajya Sabha passes Insurance Bill with bipartisan support, FDI limit in insurance sector raised from 26% to 49%. |
Depreciation allowable even though asset was written off in books without adjusting block as it had no scrap value
March 11, 2015[2015] 55 taxmann.com 29 (Delhi - Trib.)
IT : Where certain assets forming part of block of assets were converted into stock-in-trade by deducting nominal value of Rs. 1 from block of assets and whenever same were sold surplus was offered for taxation, depreciation on said asset could not be disallowed by reducing value of same from block of assets
IT : Where assessee wrote off fixed assets in books but did not make any adjustment to block of assets as there was no scrap value for such asset, value of said fixed asset would not be reduced from block of assets while allowing depreciation
IT : Where assessee's changed accounting policy of recognising revenue on installation and acceptance of goods at premises of customers as against recognition of income on delivery as followed in earlier years was in compliance with AS-9 of ICAI and it was consistently followed thereafter, such change could not be rejected
In computing sec. 80-IA relief losses of eligible business not to be reduced if it was set-off from other income
March 12, 2015[2015] 55 taxmann.com 78 (Madras)
IT : Where assessee's company's losses had already been set off against income of business enterprise, assessee would be eligible for deduction claimed under section 80-IA
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