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II. Direct Taxes Case Laws:
1. Housing
and Urban Development Corpn. Ltd. Vs. DCIT, I.T.A. No. 348/2003 &
247/2004, Date of Order: 21.07.2016, High Court of Delhi
Issue:
Whether the interest earned from Investments made by the way of
short term deposits with public undertakings in form of securities and
bonds will be covered under the meaning of interest under Section 2(7)
of the Interest Tax Act, 1974?
Held_No
Brief Facts:
The assessee is in the business of financing housing projects
promoted by various organisations including the State Governments.
During its course of business, the assessee deposits surplus funds
available to it with various companies. During the relevant assessment
year it had deposited its surplus funds with the Steel Authority of
India Limited (SAIL). The AO contended that the interest earned by the
assessee on these deposits shall fall within the definition of
‘interest’ under terms of Section 2(7) of the Interest Tax Act, 1974.
The CIT(A) upheld the order of the AO. Further, ITAT upheld the same
order stating that since money had been placed at the disposal of the
SAIL under a contract, it could partake the character of a loan for
which compensation of interest has been paid by SAIL to the assessee.
Aggrieved by which, assessee is in appeal before the High Court.
Held:
It was held that the two expressions ‘loans’ and ‘deposits’ are to be
taken different. Moreover, the word ‘means’ in the definition of the
interest u/s 2(7) of the Interest Tax Act, 1974 purports to be
exhaustive and there is no scope of going beyond the definition of
interest. The definition uses an expression means and that is followed
by “interest on loans and advances” and hence it should be considered as
being exhaustive of the entire definition. However, the legislature has
intended to 'include' other two transactions under the definition but
those two transactions do not include interest on deposits. It is
therefore not acceptable that the expression “interest on loan and
advances” should include “interest on deposits”. Therefore, the question
of law is answered in the favour of the assessee.
(Please click here for judgment)
2. RC Golden Granites Pvt. Ltd. Vs. ITO, I.T.A No. 897, 898, 899, 900/Mds/2016, Date of Pronouncement: 22.07.2016, ITAT - Chennai
Issue:
Whether the approval granted by the Development Commissioner for
100% EOU further ratified by the Board of Approval will be an eligible
criterion for claiming exemption u/s 10B of the Income Tax Act, 1961?
Held_Yes
Brief Facts:
The assessee company is engaged in the business of manufacturing and
export of Monument Granite and is registered as 100% Export Oriented
Unit (EOU) in Special Economic Zone (SEZ) Tambaram and eligible for
exemption u/s 10B of the Income Tax Act, 1961. The Assessing Officer
while passing the consequential order for giving effect to the order of
CIT-V passed in decision of the revised petition filed by the assessee
u/s 264 contended that the assessee has not fulfilled the conditions for
claiming the said deduction u/s 10B as the assessee has not submitted
the approval of the Board constituted for the same purpose and moreover
there is nothing in any of the circulars or instruction implying that
approval for purpose for purposes of an STP/EOU/EPZ also entitled a unit
to benefit u/s 10B. CIT(A) upheld the order of the AO. Aggrieved by
which, assessee appealed to the Tribunal.
Held:
It was held that Board has ratified the approval of 100% EOU. As per
CBDT Instruction No. 02/2009 that the approval of Development
Commissioner in case of 100% export oriented unit as ratified by the
Board of Approval will be eligible for claiming deduction u/s 10B of the
Income Tax Act, 1961. Moreover, the moment the decision / approval of
the Development Commissioner is ratified by the Board of Approval it
will relate back to the date on which the approval was granted by the
Development Commissioner.
(Please click here for judgment)
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