(2012) 209 Taxman 252 (Del.)
~~~~ INCOME FROM SALARIES ~~~~
2. CIT(TDS) vs Director, Delhi Public
School
(2011) 202 Taxman 318 (P & H)
3. CIT vs Shankar Krishnan
(2012) 349 ITR 685 (Bom.)
~~~~ INC
4. Azimganj Estate P Ltd
(2012) 206 Taxman 308 (Cal.)
5. New Delhi Hotels Ltd. (2014)(Del.)
Selected cases – At a Glance
CA. Ashish Goyal, Advocate 1
– BY ICAI at a Glance – For May/ Nov. 2015
Summary
~~~~ EXEMPT INCOME ~~~~
(2012) 209 Taxman 252 (Del.)
Assessee-society claimed deduction u/s. 80P. AO wanted to
make disallowance u/s. 14A. It was held that section 14A
applies in respect to incomes which do not form part of total
income, i.e. incomes which are covered under chapter III
(Exempt Income); and not for chapter VIA (deductions). Thus,
no disallowance can be made.
~~~~ INCOME FROM SALARIES ~~~~
CIT(TDS) vs Director, Delhi Public
(2011) 202 Taxman 318 (P & H)
As per Rule 3(5) of the IT Rules, in case of concessional or free
education to children is a perquisite, and cost to employer shall
be the value of perquisite. However, if the cost does not
exceeds ` 1,000 per month per child, the perquisite value shall
be taken at NIL. Employer gave perquisite, the value of which
was more than ` 1,000 per month per child. Assessee claimed a
deduction of ` 1,000 per month per child. AO denied the same.
Held that the perquisite is not taxable if the value of same does
not exceed ` 1,000 per month per child. However, if the
perquisite value exceeds, ` 1,000 per month per child, the
entire amount is taxable.
Rent free accommodation provided by Employer to Assessee.
The accommodation was taken on rent by the employer. For
obtaining the accommodation, employer made a payment of
security deposit of ` 30 lacs. AO held that notional interest on
the security deposit @ 12% shall be added and treated as a
perquisite. Held, as per Rule 3, there is no concept of adding
this notional interest, while calculating the Fair Rental Value of
Rent Free/ Concessional accommodation. Notional interest
shall not be added.
~~~~ INCOME FROM HOUSE PROPERTY ~~~~
(2012) 206 Taxman 308 (Cal.)
Assessee was a builder. He constructed a building and some
flats of the building were unsold. Assessee gave them on rent.
Assessee contended that the rental income is tax
House Property. AO treated the same as business income
holding that the flats were stock in trade. High Court held that
the rental income was taxable under House Property head
even though the property was a stock-in-trade.
Ltd. (2014)(Del.) Assessee was a builder. He constructed a building and some
flats of the building were unsold. Assessee gave them on rent.
Assessee contended that the rental income is taxable under
House Property. AO treated the same as business income
holding that the flats were stock in trade. High Court
the rental income was taxable under House Property head
even though the property was a stock-in-trade.
Interestingly in CIT vs Ansal Housing Finance and Leasing Co.
Ltd (2013) (Del.), it was held that even if the house is not let
out the notional rental income is chargable under the head
House Property.
CA. Ashish Goyal, Advocate
For May/ Nov. 2015
society claimed deduction u/s. 80P. AO wanted to
make disallowance u/s. 14A. It was held that section 14A
applies in respect to incomes which do not form part of total
income, i.e. incomes which are covered under chapter III
ot for chapter VIA (deductions). Thus,
As per Rule 3(5) of the IT Rules, in case of concessional or free
children is a perquisite, and cost to employer shall
be the value of perquisite. However, if the cost does not
exceeds ` 1,000 per month per child, the perquisite value shall
be taken at NIL. Employer gave perquisite, the value of which
000 per month per child. Assessee claimed a
deduction of ` 1,000 per month per child. AO denied the same.
Held that the perquisite is not taxable if the value of same does
not exceed ` 1,000 per month per child. However, if the
1,000 per month per child, the
Rent free accommodation provided by Employer to Assessee.
The accommodation was taken on rent by the employer. For
obtaining the accommodation, employer made a payment of
security deposit of ` 30 lacs. AO held that notional interest on
@ 12% shall be added and treated as a
perquisite. Held, as per Rule 3, there is no concept of adding
this notional interest, while calculating the Fair Rental Value of
Rent Free/ Concessional accommodation. Notional interest
Assessee was a builder. He constructed a building and some
flats of the building were unsold. Assessee gave them on rent.
Assessee contended that the rental income is taxable under
House Property. AO treated the same as business income
holding that the flats were stock in trade. High Court held that
the rental income was taxable under House Property head
trade.
Assessee was a builder. He constructed a building and some
flats of the building were unsold. Assessee gave them on rent.
Assessee contended that the rental income is taxable under
House Property. AO treated the same as business income
lding that the flats were stock in trade. High Court held that
the rental income was taxable under House Property head
trade.
CIT vs Ansal Housing Finance and Leasing Co.
, it was held that even if the house is not let
out the notional rental income is chargable under the head NPA, Indore
6. Joseph George and Co.
(2011) 328 ITR 161 (Ker.)
7. CIT vs Asian Hotels Ltd.
(2012) 323 ITR 490 (Del.)
8. CIT vs Hariprasad Bhojnagarwala
(2012) 342 ITR 69 (Guj)(FB)
~~~~ INCOME UNDER HEAD BUSINESS/ PROFESSION ~~
9. CIT vs Jagatjit Industries
(2011) 337 ITR 21 (Del.)
10. CIT vs Saurashtra Cement Ltd.
(2010) 325 ITR 422 (SC)
11. CIT vs Handicrafts and Handlooms
Export Corporation of India
(2014)(Del.)
12. CIT vs Kisan Sahkari Chini Mills Ltd.
(2010) 328 ITR 27 (All.)
13. CIT vs Rasoi Ltd.
(2011) 335 ITR 438 (Cal.)
Selected cases – At a Glance
CA. Ashish Goyal, Advocate 2
This case is contrary to the earlier Supreme Court judgment in
Karanpura Development co. Ltd. (1962)(SC)(FB)
If the building of bank has been let out for a long term, income
from such letting out is to be treated as House Property
income and not business income. Earlier decision of Universal
Plast (SC) applied.
Tenant made deposits with landlord. Notional interest
therefrom cannot be taken as house property income. Decision
confirmed in CIT vs Moni Kumar Subha (Del.)(FB)
CIT vs Hariprasad Bhojnagarwala AO held that assessee was an HUF. HUF cannot hold property
as Self Occupied Property (SOP) as only an individual person
can hold property as SOP. Held, a firm, which is a fictional
entity and can have artificial persons as its members, cannot
hold property for SOP purpose. However, HUF comprises of
groups of individuals. The family can reside in the house, which
belongs to HUF. Therefore HUF can hold property as SOP and
its value can be taken at NIL.
~~~~ INCOME UNDER HEAD BUSINESS/ PROFESSION ~~~~
Assessee received share capital in foreign currency. Due to
foreign exchange fluctuation, there arose a gain. Assessee
contended that the gain shall be treated as a capital receipt.
Tribunal held that if the share capital was used for acquiring
fixed asset, the gain shall be treated as capital receipt,
otherwise, it shall be treated as a revenue receipt.
On appeal, High Court held that it is not the “utilization of
fund” but the “source of fund”, that is important. Since the
amount has been raised by way of share capital, the entire
receipt is capital receipt.
T vs Saurashtra Cement Ltd. Liquidated damages received by assessee from supplier for
delay in supply of plant were directly and intimately linked
with procurement of capital asset and therefore same was
capital receipt.
CIT vs Handicrafts and Handlooms Assessee was subsidiary of State Trading Corporation of India
(STC). Assessee was in losses. In order to protect the capital
investment, STC provided a grant to the assessee company
(Being subsidiary company). AO treated the grant as a revenue
receipt. Held, the grant received was a Capital receipt, as the
grant was not received during the course of trade or
performance of trade.
Sahkari Chini Mills Ltd. Subsidy received for repayment/ recoupment of loan and
capital employed. Whether revenue receipt or capital receipt?
Following Ponney Sugar (SC), it was held that the receipt was
capital receipt.
Assessee received subsidy by way of financial assistance in the
period of crisis for promotion of the industries. AO held that
since subsidy was 90% of sales-tax paid i.e. it was a sales
refund, therefore, same is revenue receipt. High Court held
that if the object ofthe subsidy is to be enable the assessee to
run a business more profitably, the receipt is revenue receipt.
CA. Ashish Goyal, Advocate
to the earlier Supreme Court judgment in
Karanpura Development co. Ltd. (1962)(SC)(FB)
If the building of bank has been let out for a long term, income
from such letting out is to be treated as House Property
income and not business income. Earlier decision of Universal
Tenant made deposits with landlord. Notional interest
therefrom cannot be taken as house property income. Decision
CIT vs Moni Kumar Subha (Del.)(FB)
AO held that assessee was an HUF. HUF cannot hold property
as Self Occupied Property (SOP) as only an individual person
can hold property as SOP. Held, a firm, which is a fictional
entity and can have artificial persons as its members, cannot
d property for SOP purpose. However, HUF comprises of
groups of individuals. The family can reside in the house, which
belongs to HUF. Therefore HUF can hold property as SOP and
Assessee received share capital in foreign currency. Due to
foreign exchange fluctuation, there arose a gain. Assessee
contended that the gain shall be treated as a capital receipt.
that if the share capital was used for acquiring
fixed asset, the gain shall be treated as capital receipt,
otherwise, it shall be treated as a revenue receipt.
On appeal, High Court held that it is not the “utilization of
that is important. Since the
amount has been raised by way of share capital, the entire
Liquidated damages received by assessee from supplier for
plant were directly and intimately linked
with procurement of capital asset and therefore same was
Assessee was subsidiary of State Trading Corporation of India
(STC). Assessee was in losses. In order to protect the capital
investment, STC provided a grant to the assessee company
(Being subsidiary company). AO treated the grant as a revenue
receipt. Held, the grant received was a Capital receipt, as the
not received during the course of trade or
Subsidy received for repayment/ recoupment of loan and
capital employed. Whether revenue receipt or capital receipt?
ollowing Ponney Sugar (SC), it was held that the receipt was
Assessee received subsidy by way of financial assistance in the
period of crisis for promotion of the industries. AO held that
tax paid i.e. it was a sales-tax
refund, therefore, same is revenue receipt. High Court held
that if the object ofthe subsidy is to be enable the assessee to
run a business more profitably, the receipt is revenue receipt. NPA, Indore
14. CIT vs Rassi Cement Ltd.
(2013) 351 ITR 169 (A.P.)
15. Bharat Gears Ltd.
(2011) 337 ITR 370 (Del.)
16. CIT vs Modi Industries Ltd.
(2011) 339 ITR 467 (Del.)
17. CIT vs Sagar Talkies
(2010) 325 ITR 133 (Karn.)
18. Shanti Bhushan
(2011) 336 ITR 26 (Del.)
19. CIT vs Smt. A. Sivakami and
Another
(2010) 322 ITR 64 (Mad.)
20. I.C.D.S. Ltd.
(2013) 350 ITR 527 (SC)
Selected cases – At a Glance
CA. Ashish Goyal, Advocate 3
However, if the object of the subsidy is to setexpand
existing unit, same is capital receipt. in present case, it
was held that subsidy was capital receipt.
Power subsidy received from State Government, year after
year. The same was based on actual power consumption and
has nothing to do with investment subsidy given for
establishment of industries in backword area or expanding
industries. Same was held to be revenue receipt.
A machinery had outlived its utility; had broken down many
years back nad was no in use. It was repaired for which huge
expenditure eas incurred by replacing vital parts in order to
make it functional. Assessee claimed same as revenue
expenditure. It was held that the expenditure was of such
nature that it brought into existence a new machinery
altogether and consequently, and therefore it was capital
expenditure, on which only depreciation can be allowed.
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