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II. Direct Taxes Case Laws:
1. Teletube Electronics Ltd Vs. CIT, I.T.A. No. 38/2002, Date of Order: 24.09.2015, High Court of Delhi
Whether
the Tribunal was right in holding that transaction of lease of
facilities was a case of sale of leasehold rights, whether a transaction
pertaining to land and building or of plant and machinery could be
treated as sale of either the leasehold rights in respect of the land or
the sale of the plant and machinery itself?
Held No.
In the
present case the land is not a depreciable asset and that as far as the
building and plant and machinery were concerned, the ownership thereof
remained in the Assessee and, therefore, it could not be said that
either the asset itself have been sold or the block of assets ceased to
be in existence.” The ITAT appears to acknowledge that the ownership of
the assets continued with the Assessee. However, the ITAT proceeded to
hold that the “leasehold rights” and “not the asset itself” was sold. It
is not understood how the ITAT has arrived at the concept of sale of
leasehold rights because a sale connotes absolute transfer of rights
with no reversion of any part thereof to the original owner. There has
to be an extinguishment of ownership rights in order that a transaction
can be said to be a 'sale'. Here, as noted earlier, the lessee does not
even have the right of sub-letting the facilities. The leasehold right
is only for a period of ten years and at the end of that period the
leased facilities revert to the owner. Consequently, the Court is unable
to agree with the conclusion of the ITAT that in the present case there
was a “sale” of leasehold rights by virtue of the lease agreement in
question.
(Please click here for judgment)
2. Ram
Piyari Devi Charitable Trust and Anr vs. DGIT, WP(C) 4725/2012 & CM
No.9795/2012, Date of Order: 24.09.2015, High Court of Delhi
Whether
denial of exemption under Section 10(23C)(vi) is correct, where the
application has been rejected on the ground that in the Statement of
Objects of the Trust, there are various activities mentioned and, as
such, it was held that the petitioner is not existing solely for the
purposes of education as envisaged in Section 10(23C) (vi) of the Act.
Held No.
It is
not denied by the revenue that the only activity that the petitioner is
indulging in is education namely running of a school and no other
activity. The requirements of Section 10(23C) (vi) as laid down by the
Supreme Court are: (i) existence of an educational institution and (ii)
approval of the prescribed authority for the purposes of grant of
exemption for which an application in the prescribed form has been
filed. In the present case, the petitioner satisfies both the tests.
There is admittedly an educational institution in existence and the
petitioner has also moved an application in the prescribed form. The
inquiry conducted by the Director General with regard to the application
of funds and generation of profit is to be conducted post the grant of
approval. If the above conditions are satisfied, in the first instance,
the Competent Authority is to grant approval. The Competent Authority is
empowered to impose conditions while granting such approval. The
inquiry whether the conditions had been complied with or not, as
envisaged by the third proviso to Section 10(23C), is to be conducted
post grant of approval and not as a condition precedent to grant of
approval.
(Please click here for judgment)
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