Tuesday, September 24, 2013

Sec 51 of I T Act >



Dec 14, 2012 - The examples he cites include “unless repugnant to the context or meaning ... vswami said... Reproduce below, what i wrote in the article, INVESTOR PROTECTION - A MYTH? ... deed), just as in any other contract agreement, in the initial paragraphs, are set out the ... Subscribe to: Post Comments (Atom) ...

May 29, 2015 - vswami said. ... of legal drafting of private contract agreements, between two parties, ... Apart from the largely noted deficiency in drafting, another root ... on a transaction intended to be covered in any such agreement . .... Post a Comment .... Agreements and Takeover Regulations · Consilience 2015: Net ...


Two flats merged into one must get tax exemption: Bombay ...

timesofindia.indiatimes.com › CityMumbai
- If two adjacent flats are bought from different people through two agreements ... Two flats merged into one must get tax exemption: Bombay HC.

Reasoning: Per Layout Plans,  to have only one common  kitchen ?!


Further, as the dispute was only as to the year of taxability and as the rate of tax remained the same the dispute raised by the Revenue is entirely academic or at best may have a minor tax effect. There was, therefore, no need for the Revenue to continue with this litigation when it was quite clear that not only was it fruitless (on merits) but also that it may not have added anything much to the public coffers. It is hoped that the Revenue implements its litigation policy a little more practically and a little more seriously.

clumsy drafting
not all angles kept in view
impulsive jegislation
tax audit
previous instences glare >
S 80 J x S 80K

<> year in which to adjust
     - ideal to ensure on day one while accounting / audit of accounts



..........the assessee received additional amount of 7,07,76,547/- and net amount after deduction of TDS at Rs.  4,10,50,397/- on account of interest @ 15% per annum. The Assessing Officer while completing assessment treated the said amount of 7,07,76,547/- as interest income and taxed the same @ 48%. The assessee challenged the order of the Assessing Officer before the CIT(A) inter alia contended that the additional consideration received from Castrol UK is exempted under the provisions of Article 13(4) of Indo Mauritius Treaty because the said amount was nothing but capital gain arising to the assessee from transfer of shares. Alternatively the assessee contended that the receipt of the amount in question is not the interest under Article 11 of the Indo Mauritius Treaty because it is not an income from debt claim and there is no debtor-creditor relationship between the assessee and Castrol UK. The CIT(A) did not accept the contention of the assessee and upheld the action of the AO.
In the case of CIT Vs Govinda Choudhury and Sons (supra) the Hon’ble Supreme Court has decided the nature of income received as interest as under:
“This brings us to a consideration ofthe second question. The sum of Rs. 2, 77,692 was received by the assessee as interest on the amounts which were determined to be payable by the assessee in respect of certain contracts executed by the assessee and in regard to the payments under which there was a dispute between the two parties. The assessee is a contractor. His business is to enter into contracts. In the course of the execution of these contracts, he has also to face disputes with the State Government and he has also to reckon with delays in payment of amounts that are due to him. If the amounts are not paid at the proper time and interest is awarded or paid for such delay, such interest is only an accretion to thi assessee’s receipts from the contracts. It is obviously attributable and incidental to the business carried on by him. It would not be correct, as the Tribunal has held, to say that this interest is totally de hors the contract business carried on by the assessee. It is well settled that interest can be assessed under the head “Income from other sources” only if it cannot be brought within one or the other ofthe specific heads of charge. We find it difficult to comprehend how the interest receipts by the assessee can be treated as receipts which flow to him de hors the business which is carried on by him. In our view, the interest payable to him certainly partakes of the same character as the receipts for the payment of which he was otherwise entitled under the contract and which payment has been delayed as a result of certain disputes between the parties. It cannot be separated from the other amounts granted to the assessee under the awards and treated as “income from other  sources”. The second question is, therefore, answered in favour ofthe assessee and against the Revenue.”
7. In the case in hand the interest is received in pursuance to the directions of the SEBI and due to delay in completion of the process of buy back of shares as prescribed under the SEBI regulations. The real acquisition of shares took place only in the month of November 2001 and prior to the said date it cannot be said that the interest was paid due to delay in the payment of consideration. Therefore, we held that the additional amount received by the assessee being 15% interest from 8.8.2000 to 22.11.2001 is part of sale consideration and accordingly will be treated as part of capital gain and not the income from interest. The other decisions relied upon by the assessee are not applicable on the facts of the case because in those cases the issue was either the interest received on delayed trade receipts and therefore there was no dispute of revenue or capital receipt or the payment was as compensation for delay in construction.

The directions given were, inter alia, as under:
“In the light of above observation, forfeited amount is not liable to be taxed as income or chargeable gain under the provisions of the act till there is sale of property. The legal position to this effect is supported from provisions of sec. 51 of the Income Tax Act, 1961 and various judgments referred to above.
However, the Assessing Officer is required to ensure that as and when the property is sold, the forfeited amount is adjusted towards the cost of the property for the purpose of computation of capital gain. Moreover, if the AO chooses to treat the forfeited amount otherwise she may do so after recording proper reasons in the body of the assessment order and after meeting out the legal position on the issue.”


.........Hence, we do not find any infirmity in the Ld. Commissioner of Income Tax (Appeals)’s direction that “as directed by the Addl. Commissioner of Income Tax, earned money so received and forfeited is to be adjusted against the cost of property and capital gain is to be worked out on the basis of the resultant cost as and when the property is sold. Accordingly, we uphold the order of the Ld. Commissioner of Income Tax (Appeals) and decide the issue in favour of the assessee.”

9. Before us, the learned counsel for the appellant/revenue sought to invoke the provisions of section 56(2)(vi) of the said Act. However, we find that this plea had not been raised before the Tribunal. Consequently, we are not inclined to entertain this plea of the learned counsel for the appellant. Even otherwise, before a plea based on section 56(2)(vi) of the said Act can be taken, a foundation has to be laid that the transaction was without any consideration. No such foundational plea had been taken before the Tribunal. Apart from this, we find that the Tribunal has rightly noted that the provisions of section 51 of the said Act would come into play as it specifically covers this type of a transaction. Once the transaction has been held to be genuine, there is no question of the transaction being without any consideration. Consequently, we find no merit in the revenue’s appeal, much less any substantial question of law for our consideration. The appeal is dismissed.

IT : Where assessee received only a meagre amount out of sale consideration and had not parted with possession of property, transaction could not be treated as transfer within meaning of section 2(47)
IT : Deletion of addition in hands of recipient cannot be a ground to disallow expenditure incurred by assessee for business purpose
IT : Expenditure incurred in earlier years for setting up business cannot be allowed as deduction
IT : When assessee had incurred expenditure wholly and exclusively for purpose of business, it could not be disallowed on reason that it was not stipulated in memorandum of understanding
IT : In real estate business, payment of sub-agents' fee is allowable
IT : Expenditure incurred by assessee engaged in real estate business towards consultancy services provided by architect with regard to site plan, etc., was allowable
IT : Expenditure incurred by assessee for keeping constant surveillance over its land was allowable as business expenditure
[2013] 32 taxmann.com 373 (Hyderabad - Trib.)
Mali Florex Ltd.
Deputy Commissioner of Income-tax*
IT APPEAL NOS. 891 & 1017-1018 (HYD.) OF 2011
[ASSESSMENT YEARS 2007-08 & 2008-09]
SEPTEMBER  28, 2012 

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