Sunday, December 15, 2013


Section 68: Cash Credit

The Gujarat High Court has held that partners  having declared unsecured loan given to assessee-
firm in their independent returns, said amount could not be added in hands of assessee-firm.

Section 37(1): General Expenditure

The Bombay High Court has held that payment on account of gratuity, retrenchment
compensation and leave encash ment made to workers in connection with VRS on closure of

business was allowable as revenue expenditure.

The Allahabad High Court has held that where  by providing scholarship, business of assessee-
coaching institute was expanded, same would be allowable as business expenditure.

Section 43B: Deduction on payment basis

The Punjab & Haryana High Court has held  that where assessee deposited employer’s and
employees contribution to PF and ESI after expiry of due date but prior to filing return of income
under section 139(1), amount so deposited could not be disallowed by invoking provisions of section


Section 40A(3): Dis allowance for cash payments exceeding Rs 20000

The Karnataka High Court has held that payment  made to government concern in cash in excess of amount prescribed under section 40A(3) would be allowable.

Section 45, read with section 2(47): Income from Capital Gains

The Allahabad High Court has held that Capital  gains would be charged only on receipt of sale
consideration after development of land; and not when agreement was signed for development of


Section 271(1)(c): Penalty for concealment of  Income

The Allahabad High Court has held that where  assessee admitted undisclosed income found during search and he was ready to make payment of  tax, no penalty was to be levied.

Section 54EC, read with section 50: Exemptions  from Capital Gains

The Gujarat High Court has held that where capital  gain arose out of long-term capital asset was invested in specified assets, exemption under section 54EC could not be denied on account of fact that deeming fiction of short-term capital gain was created under section 50.

Section 50C: Capital Gains on sale of land or  building or both

The Mumbai ITAT bench has held that Section 50C cannot be invoked to a transfer of leasehold rights.

Section 92C: Computation of Arm Length Price

The Ahmedabad ITAT bench has held that where assessee granted loan to its foreign subsidiary
company which was subsequently converted into equity capital, in view of fact that as per loan agreement interest was not chargeable in such a situation, addition made by TPO/Assessing Officer on account of notional interest was to be set aside.


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