Recent important tax caselaws / judgements

SECTION 2(15)

CHARITABLE OR RELIGIOUS PURPOSE

Land dealings : Where assessee-trust was carrying out following activities: purchase of land at nominal cost, then level and clear it, cut into plots and sell of plots at much higher prices, and charging of fees and fines, activities of assessee were not charitable in nature within meaning of proviso to section 2(15) - Improvement Trust v. Commissioner of Income-tax (2014) 41 taxmann.com 403 (Amritsar - Trib.)     SECTION 10(23C) CHARITABLE/RELIGIOUS INSTITUTIONS University not tax-exempt under Art 289(1) of the Constitution as 'State' in Art 289 doesn't include University - Visvesvaraya Technological University v. Assistant Commissioner of Income-tax (2014) 42 taxmann.com 237 (Karnataka)       SECTION 45 CAPITAL GAINS - CHARGEABLE AS Business income v. Capital gains - Share dealings : Where assessee-corporation along with private entrepreneurs made investment in shares of companies which were formed with object of promoting agro/horticulture based industry in State, income arising from subsequent sale of those shares was to be taxed as 'capital gain' and not as a 'business income' - Commissioner of Income-tax v. Punjab Agro Industries Corporation Ltd. (2014) 41 taxmann.com 328 (Punjab & Haryana)       SECTION 268A FILING AN APPEAL BY INCOME-TAX AUTHORITY Monetary limit : Appeal cannot be dismissed without considering merits of case, solely on ground of low tax effect, where notional tax effect exceeds monetary limit prescribed by Board - Commissioner of Income-tax v. Anjani Fabrics Ltd (2014) 41 taxmann.com 361 (Gujarat)    Source : Taxmann

Important latest income tax caselaws / judgements

SECTION 2(14)
CAPITAL GAINS - CAPITAL ASSETS

Agricultural land : If a land is adjacent to a municipality and is urban land covered under section 2(14), though municipality and land fall in different States, land will continue to be urban land - Commissioner of Income-tax v. Smt. Anjana Sehgal 40 taxmann.com 485 (Punjab & Haryana)

 

 

SECTION 12A

CHARITABLE OR RELIGIOUS TRUST - REGISTRATION OF

Founder trustee committed heinous crimes : Where assessee, a public religious trust, made applications seeking registration under sections 12A and 80G, registration could not be declined merely because once upon a time assessee's founder trustee had been accused of heinous crimes and he was awarded life imprisonment - Sri Premananda Trust v. Assistant Commissioner of Income-tax 40 taxmann.com 514 (Chennai - Trib.)

 

 

 

SECTION 36(1)(iii)

INTEREST ON BORROWED CAPITAL

Interest free loan to related parties : Unless nexus between interest free advance to related party and interest bearing borrowing is established, disallowance of interest would not be justified - Marudhar Hotels (P.) Ltd.v.Joint Commissioner of Income-tax 40 taxmann.com 475 (Jodhpur - Trib.)

  

 

 

SECTION 37(1)

BUSINESS EXPENDITURE - ALLOWABILITY OF 

Repair and renovation expenses : Where renovation expenses included both revenue and capital expenses and it was difficult to bifurcate same, disallowance of 50 per cent of such expenditure as capital expenditure was proper - SICOM Ltd. v. Joint Commissioner of Income-tax 40 taxmann.com 469 (Mumbai - Trib.)

 

 

SECTION 45

CAPITAL GAINS - CHARGEABLE AS 

Capital gains v. Business income : Where under a development agreement with a developer assessee merely realised sale proceeds of capital asset held for 30 years, same would give rise to 'capital gains', and not 'business income' - Marudhar Hotels (P.) Ltd.v.Joint Commissioner of Income-tax 40 taxmann.com 475 (Jodhpur - Trib.)

 

 

SECTION 194H

DEDUCTION OF TAX AT SOURCE - COMMISSION OR BROKERAGE, ETC.

Credit card collection charges : Payment to bank for collecting money paid through credit card is business expenditure - Marudhar Hotels (P.) Ltd.v.Joint Commissioner of Income-tax 40 taxmann.com 475 (Jodhpur - Trib.)

 

 

SECTION 254

APPELLATE TRIBUNAL - POWERS OF

Power to admit additional grounds : Where determination of correct status of assessee impacts ultimate tax liability, such an issue can be admitted for first time before Tribunal even if it was not raised before lower authorities - Income-tax Officer v. Sew Precision Joint Venture 40 taxmann.com 515 (Pune - Trib.)