ACIT v Nimbus Comunications Ltd [2013] 34 taxmann.com 298 (Mumbai – Trib.) Facts • The assessee had given corporate guarantee of US $ 30,00,000 through ICICI Bank, U.K. for a term loan given to its AE namely Nimbus Communication Worldwide Ltd. • Another guarantee of US $ 1,50,00,000 was given by the assessee to the same Bank for the financial facility given to another AE namely Nimbus Sports International Pte Limited.
Monthly Archives: June 2013
CIT v M/s Mahanagar Gas Limited [Income Tax Appeal No. 1978 of 2011] Dated : June 10, 2013 – Bombay High Court Background: Assessee filed its return of income for assessment year 2004-05 declaring a total income of Rs.100.76 crores. The Assessing officer noticed that the assessee had borrowed a sum of Rs.30 crores during the year and had paid total interest of Rs.613.26 lacs on the same. During the year, the assessee had invested an amount of Rs.4147 lacs in mutual funds. The Assessing Officer held that the borrowed funds were utilised for the purpose of investment in mutual funds and disallowed expenditure on account of interest under Section 36(1) (iii) on the ground that the above interest was not attributable to business carried on by the assessee.
Interest can’t be disallowed if investment is made from mixed funds (presuming sufficient own funds) ...
CIT v Pursarth Trading Co. (P.) Ltd. [IT Appeal (L) No. 123 of 2013] dtd March 13, 2013 (Bombay High Court) Background: The assessee sold its office premises and secured long term capital gains. However, being a depreciable asset computed its gains in terms of Section 50 of the Income-tax Act, 1961. The Assessing Officer disallowed the claim of the assessee to set off its carry forward long term capital loss against the long term capital gains made under Section 74 of the Act in view of Section 50 of the Act. The Commissioner of Income Tax (A) upheld the order of the Assessing Officer.
Long Term capital loss can be setoff against Short Term gain u/s 50 (if the ...
M/s BHORUKA ENGINEERING INDS LTD vs DCIT ITA No.120 of 2011 dated 9.4.2013 – Karantaka HC Background: Bhoruka Steel Limited (BSL) was incorporated in the year 1969. The company became a sick industrial company within the meaning of SICA.It was proposed that 30 acres of land along with building and structure to be disposed of. The valuers vide their valuation report dated 15.3.2002 valued the said land at Rs.25 Lakhs per acre. The company had received an offer from Bhoruka Financial Services Limited (BFSL), a public limited company and also one of the group Companies offered to purchase 30 acres of land for Rs.25 Lakhs per acre. Land measuring 15 acres was sold in favour of BFSL. The assessee company is a limited company whose shares are quoted in the stock exchange. The assessee is holding shares in BFSL. The assessee and other promoter shareholders are holding 98.73% shares in BFSL, whereas the public shareholders are holding the remaining shares. The assessee in the financial year related to the relevant assessment year 2006-07 sold its shareholdings in BFSL to the extent of 45,350 shares for a net consideration of Rs.20,29,08,626/- after paying Security Transaction Tax. The shares were sold to DLF Commercial Developers Limited. The assessee claimed the gain on sale of shares as exempt from taxation under Section 10 (38) of the Act.
Tax planning within 4 corners of law is not tax avoidance – Karnataka HC
Shervani Hospitalities Ltd v CIT [I.T.A. No. 804 of 2011 dated 28.05.2013] Delhi High Court Background: The assessee is a company engaged in hospitality services. For the AY 2001-02, the assessee filed its return declaring loss of Rs.43,15,328. The assessment was completed under Section 143(3) of the Act at a positive income of Rs.9,26,510. In the first appeal, the assessee substantially succeeded and most of the additions/disallowances were deleted. After giving the first appeal effect, the loss was determined at Rs.34,30,680. Aggrieved, the Revenue preferred an appeal before the Tribunal, which was substantially allowed vide order dated 25th April, 2008. Proceedings under Section 271(1)(c) of the Act were initiated and vide order dated 29th January, 2009, penalty of Rs.16,44,330/– was imposed inter-alia observing that the assessee had failed to substantiate the explanation regarding additions/disallowances made in the assessment order resulting in reduction of returned loss. It was observed that the losses claimed could not be justified before the Assessing Officer and the additions had been finally upheld by the Tribunal. Concealment penalty was upheld in the first appeal by the Commissioner of Income Tax (Appeals).
Mens rea is not required to impose penalty for concealment – Del HC
ITO v SHASTHA PHARMA LABORATORIES PVT LTD [ ITA No.83/2007 ; ITA No.84/2007] – Karnataka High Court Background: The assessee, for the assessment years 1998-99 and 1997-98 disclosed the lease rent income of Rs.6,00,000/-. The assessee had received Rs.80,00,000/- as lease rent deposit. The AO held that the interest on deposit should be taken into account for computation of the rent received by the assessee. Therefore, he assessed the annual letting value of Rs.20,40,000/- which includes notional interest in respect of the deposit. The CIT(A) dismissed the appeal filed by the assessee by upholding the order of the Assessing Authority.
Notional interest on deposit cannot be added as income from house property – Kar HC
CIT v Jaimal Ram Kasturi [D.B. IT APPEAL NO.145 of 2006] – Rajasthan High Court Background: The assessee is engaged in liquor business and during the period relevant to assessment year 1991-1992, the income of the assessee was assessed at Rs.4,15,32,865/- as against the declared profit of Rs.3,87,66,937/- by adopting a net profit rate of 20.5% as against the declared rate of 19.13% after rejecting the books of accounts of the assessee, under Section 145 of the Act. The AO held that the profit of the country liquor business of the assessee had to be determined in comparison with other analogous assessee engaged in the same line of business because considering the stiff competition for acquiring monopoly rights, it could be reasonably presumed that the assessees were likely to have profit comparable with each other. The AO compared the case of the assessee with a contractor of the adjoining area, M/s Malu Khan & Party, Bikaner, who had shown the net profit at 22.70% for the period in question; and assessed the assessee by taking 20.5% net profit instead of 19.13% as declared by him.