C&C Construction Pvt Ltd vs. CIT (Delhi High Court)

S. 260A: High Court has no power to consider issue not raised before Tribunal. The assessee filed an appeal before the Tribunal in which it argued that it had constructed a “temporary construction” which was eligible for 100% depreciation. This was rejected by the Tribunal on the basis that the construction was permanent. Before the High Court, the assessee argued for the first time that the expenditure was “revenue” in nature and admissible as business expenditure. HELD not permitting the assessee to raise the plea.

CWT Vs. Smt. Neena Jain 2011 P&H High Court

As per Sec. 2(ea), "assets" mean, inter alia, any building, whether used for residential or commercial purposes or for the purpose of maintaining a guest house or otherwise including a farm house situated within 25 kms from local limits of any municipality or a cantonment board. The Definition of "assets" under Sec. 2(ea) also includes urban land.
The High Court opined that the words "any building" could not be read in isolation and had to be harmoniously construed with the remaining portion of Sec.2(ea) i.e., whether the building was used for residential or commercial purposes or for the purpose of maintaining a guest house, because an incomplete building could not be possibly either be used for residential or commercial purposes or for the purposes of maintaining a guest house. Therefore, the word "building" has to be interpreted to mean a completely built structure having a roof, dwelling place, walls, doors, windows, electric and sanitary fittings, etc.
Consequently, the incomplete building is not an asset chargeable to wealth tax.

CIT v. Saurashtra Cement Ltd. (2010) Supreme Court

The assessee, a cement manufacturing company, entered into an agreement with a supplier for purchase of additional cement plant. One of the conditions in the agreement was that if the supplier failed to supply the machinery within the stipulated time, the assessee would be compensated at 5% of the price of the respective portion of the machinery without proof of actual loss. The assessee received Rs.8.50 lakhs from the supplier by way of liquidated damages on account of his failure to supply the machinery within the stipulated time. The Department assessed the amount of liquidated damages to income-tax. However, the Appellate Tribunal held that the amount was a capital receipt and the High Court concurred with this view.
The Apex Court affirmed the decision of the High Court holding that the damages were directly and intimately linked with the procurement of a capital asset i.e., the cement plant, which lead to delay in coming into existence of the profit-making apparatus. It was not a receipt in the course of profit earning process. Therefore, the amount received by the assessee towards compensation for sterilization of the profit earning source, not in the ordinary course of business, is a capital receipt in the hands of the assessee.

Dy CIT v Hotel Excelsior Ltd (2011) Delhi Tribunal

Since the assessee is in Hotel business its building is not merely a structure of four walls but includes all such things as are necessary to give the building better look and is a matter of attraction for the customers, therefore Landscaping done by assessee in its hotel is to be treated as “building” and depreciation is allowable.
Payments made by assessee to NDMC for unauthorized occupation , construction of diesel storage tanks and fire fighting tanks and covering sanitary lines without approval in respect of the hotel acquired by it from the Central Government formed part of purchase consideration as these payments were made to perfect the title of the assessee in the property and the amount being capitalized the assessee is entitled for depreciation.

ACIT vs. Maersk Global Service Center (ITAT Mumbai)

The assessee, a captive service provider rendering back office support services to its AEs, earned an adjusted Net Cost plus Margin of 7.90%. The assessee adopted TNMM and computed the mean of margins earned by the comparables at 7.62%. The TPO held that “No companies were identified as comparables” by the assessee and after selecting 12 companies as comparables, determined an arithmetic mean of 27.80% and made an adjustment of Rs. 10.49 crores. The CIT(A) deleted the addition. On appeal by the department, HELD dismissing the appeal.

CIT vs. Manjula J. Shah (Bombay High Court)

The assessee’s daughter purchased a flat on 29.1.1993 at a cost of Rs.50.48 lakhs. She gifted the flat to the assessee on 1.2.2003. The assessee sold the flat on 30.6.2003 for Rs. 1.10 crores. In computing LTCG, the assessee took the indexed cost of acquisition under Explanation (iii) to s. 48 on the basis that she “held” the flat since 29.1.1993. The AO held that as the assessee had “held” the flat from 1.2.2003, the cost inflation index for 2002-03 would be applicable. The CIT (A) and the Special Bench of the Tribunal upheld the claim of the assessee. On appeal by the department, HELD dismissing the appeal.

Director of IT vs. Maersk Co. Ltd., as Agent of Henning Skov (2011) Uttarakhand High Court

Advance tax is not payable on the salary of an employee in as much as the obligation to deduct tax at source is upon the employer under section 192, upon failure on the part of the employer to deduct at source, the assessee (employee) only becomes liable to pay the tax directly under section 191 and does not become liable to pay interest under section 234B.

CIT vs. Jyoti Plastic Works Pvt Ltd (Bombay High Court)

For Sec.80-IB “workers” need not be “employees”
The assesee was engaged in the manufacture of goods by using job workers; its total number of permanent employees was less than ten. The department relied on Venus Auto Pvt Ltd vs. CIT 321 ITR 504 (All) and claimed that the non-employment of at least 10 workers was in breach of s. 80IB(2)(iv) and deduction u/s 80IB was not admissible. This was reversed by the Tribunal. On appeal by the department, HELD dismissing the appeal.

ACIT vs. The Total Packaging Services (ITAT Mumbai)

For s. 80-IB, Modvat credit is “derived” from industrial undertaking
The assessee availed/set off Modvat credit of excise duty of earlier years amounting to Rs. 1.93 crores. The AO held that s. 80-IB deduction was not admissible on the said Modvat credit on the ground that the “source of the income was government policy imposing excise duty at differential rate” and it was not “derived” from the industrial undertaking. This was reversed by the CIT (A). On appeal by the department, HELD dismissing the appeal.

ITO vs. Indian Oil Corporation (ITAT Delhi)

The assessee entered into contracts with transporters for transporting petroleum products from the plant to various destinations. The assessee deducted TDS u/s 194C at 2% on the basis that the transportation contract was “work”. The AO held that the contract was a “hiring” of vehicles on the basis that
(i)the assessee had exclusive possession and usage,
(ii)the use was for a fixed tenure,
(iii)the tankers were customized to the assessee’s requirements
Thus TDS ought to have been u/s 194-I at 10%. The assessee was held to be in default u/s 201. On appeal, the CIT (A) reversed the AO. On appeal by the department, HELD dismissing the appeal.