Research Results Based on the Query


ACT
ARG
SCJ
HCJ

Query: Is waiver of loan taxable under Income Tax Act?

Revised Query: Is the waiver of a loan taxable under the Income Tax Act?



Likely Arguments


Potential Arguments by Opposing Counsel

1. Loan Waiver as Capital Receipt: Opposing counsel may argue that a loan waiver should be treated as a capital receipt and not subject to tax under the Income Tax Act. They may rely on case law and interpretations that support this position.

2. Gift Tax Exemption: Opposing counsel may argue that a loan waiver between individuals should be treated as a gift and may fall under the gift tax exemption provisions of the Income Tax Act. They may cite relevant sections and case law to support this argument.

3. Business Purpose Exemption: If the loan waiver is related to a business or profession, opposing counsel may argue that it should be exempt from tax under the provisions of Section 28 of the Income Tax Act. They may present evidence to show that the waiver is a normal business practice and should not be taxed as income.

Counterarguments

1. Section 41(1) Application: Counter opposing counsel's argument on loan waiver as a capital receipt by emphasizing the provisions of Section 41(1) of the Income Tax Act. Highlight that if the loan waiver is considered a remission or cessation of trading liability, it may be subject to tax under this section.

2. Gift Tax Exemption Limitations: Counter the argument of loan waiver being treated as a gift by pointing out the limitations of the gift tax exemption provisions. Emphasize that not all waivers can be classified as gifts and that specific criteria need to be met for the exemption to apply.

3. Business Purpose Taxability: If opposing counsel argues for exemption under Section 28 for business-related loan waivers, provide evidence to show that the waiver may still be considered as income derived from business or profession. Highlight that the benefit received from the waiver can be taxable under this section.

Optimal Defense Strategy

1. Comprehensive Analysis: Conduct a thorough analysis of the loan waiver transaction, considering all relevant factors such as the nature of the loan, the parties involved, and the purpose of the waiver. This will help in building a strong defense strategy based on the specific circumstances.

2. Legal Precedents: Gather relevant case law and interpretations that support your position on the taxability of the loan waiver. Use these precedents to strengthen your arguments and demonstrate consistency with past decisions.

3. Consult Tax Experts: Seek advice from tax experts or consultants to ensure a comprehensive understanding of the tax implications of the loan waiver. Their expertise can provide valuable insights and help in crafting a robust defense strategy.

4. Documentation and Compliance: Ensure that all documentation related to the loan waiver is in order and complies with the provisions of the Income Tax Act. Proper record-keeping and adherence to legal requirements will strengthen your defense in case of any challenges.

5. Negotiation and Settlement: Consider exploring negotiation and settlement options with the opposing counsel to reach a mutually beneficial resolution. This approach can help in avoiding prolonged legal proceedings and potential tax liabilities.

By following these strategies and presenting a well-researched and legally sound defense, you can effectively counter the arguments presented by the opposing counsel and protect your client's interests in the case of a loan waiver tax dispute.


Relevant Supreme Court Judgments
Year From: 1950, Year To: 2024

Result 1
Supreme Court of India
The Commissioner vs Mahindra And Mahindra Ltd. Through M.D.
Honourable Judges Abhay Manohar Sapre, R.K. Agrawal
Date of Judgment: 24 Apr 2018
Segment Number (Approximate Page Number): 4
Relevancy Score: 71.65
   
   
   

The short but cogent issue in the instant case arises whether waiver of loan by the creditor is taxable as a perquisite under Section 28 (iv) of the IT Act or taxable as a remission of liability under Section 41 (1) of the IT Act. 12) The first issue is the applicability of Section 28 (iv) of the IT Act in the present case. Before moving further, we deem it apposite to reproduce the relevant provision herein below:- “28. Profits and gains of business or profession.—The following income shall be chargeable to income-tax under the head “Profits and gains of business profession”,-- xxx (iv) the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession; x x x” 13) On a plain reading of Section 28 (iv) of the IT Act, prima facie, it appears that for the applicability of the said provision, the income which can be taxed shall arise from the business or profession. Also, in order to invoke the provision of Section 28 (iv) of the IT Act, the benefit which is received has to be in some other form rather than in the shape of money. In the present case, it is a matter of record that the amount of Rs. 57,74,064/- is having received as cash receipt due to the waiver of loan. Therefore, the very first condition of Section 28 (iv) of the IT Act which says any benefit or perquisite arising from the business shall be in the form of benefit or perquisite other than in the shape of money, is not satisfied in the present case. Hence, in our view, in no circumstances, it can be said that the amount of Rs 57,74,064/- can be taxed under the provisions of Section 28 (iv) of the IT Act. 14) Another important issue which arises is the applicability of the Section 41 (1) of the IT Act. The said provision is re-produced as under: “41. Profits chargeable to tax.- (1) Where an allowance or deduction has been made in the assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee (hereinafter referred to as the first-mentioned person) and subsequently during any previous year,- (a) the first-mentioned person has obtained, whether in cash or in any other manner whatsoever, any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by such person or the value of benefit accruing to him shall be deemed to be profits and gains of business or profession and accordingly chargeable to income-tax as the income of that previous year, whether the business or profession in respect of which the allowance or deduction has been made is in existence in that year or not; or x x x” 15) On a perusal of the said provision, it is evident that it is a sine qua non that there should be an allowance or deduction claimed by the assessee in any assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee.

Result 2
Supreme Court of India
The Commissioner vs Mahindra And Mahindra Ltd. Through M.D.
Honourable Judges Abhay Manohar Sapre, R.K. Agrawal
Date of Judgment: 24 Apr 2018
Segment Number (Approximate Page Number): 3
Relevancy Score: 69.41
   
   
   

The waiver of loan was done by the American Motor Corporation, who took over the Kaiser Jeep Corporation, as a measure of compensation for certain losses including goodwill, the benefit of association, and also for sudden change to the American Motor Corporation as a share holder which was credited by the Respondent to its account but was claimed as exemption from taxation being capital receipt. 7) Before concluding, it was contended that since an amount is waived off, for which the Respondent is claiming exemption, it actually amounts to income at the hands of the Respondent in the sense that an amount which ought to be paid by it is now not required to be paid. As a result, the case of the Revenue falls within the ambit of Section 28(iv) and, alternatively within Section 41 of the IT Act. Hence, the decision of the High Court is liable to be set aside. 8) Conversely, learned senior counsel for the Respondent submitted that the Kaiser Jeep International Corporation (KJIC) supplied the toolings and the loan was given by the Kaiser Jeep Corporation (KJC), hence, these transactions were independent transactions. The only relationship, which survived after the supply of toolings, was that of a lender and borrower. The purchase of toolings was not a transaction for the purchase of goods on credit in the ordinary course of business nor could it be equated to unpaid purchase consideration to be liquidated over a period of time. 9) Further, it was also submitted that it is very clear that the amount of $650,000 provided by KJC was in fact a loan on which interest was being paid regularly from time to time. It is also pointed out that in the books of account of the Respondent, this loan has been shown in the Balance Sheet under the heading “Loans-unsecured”. Hence, it is submitted that the said sum could not be brought to tax as it represents the waiver of a loan liability which was on the capital amount and is not in the nature of income. Accordingly, the High Court rightly upheld the order of the Tribunal and, hence, these appeals deserve to be dismissed. Discussion:- 10) The term “loan” generally refers to borrowing something, especially a sum of cash that is to be paid back along with the interest decided mutually by the parties. In other terms, the debtor is under a liability to pay back the principal amount along with the agreed rate of interest within a stipulated time. 11) It is a well-settled principle that creditor or his successor may exercise their “Right of Waiver” unilaterally to absolve the debtor from his liability to repay. After such exercise, the debtor is deemed to be absolved from the liability of repayment of loan subject to the conditions of waiver. The waiver may be a partly waiver i.e., waiver of part of the principal or interest repayable, or a complete waiver of both the loan as well as interest amounts. Hence, waiver of loan by the creditor results in the debtor having extra cash in his hand.

Result 3
Supreme Court of India
Bharat Commerce 7 Industries Ltd vs The Commissioner Of Income Tax, Central ...
Honourable Judges Sujata V.Manohar, D.P. Wadhwa
Date of Judgment: 05 Mar 1998
Segment Number (Approximate Page Number): 8
Relevancy Score: 61.65
   
   
   

They are statutory liabilities in respect of the obligations of the assessee which arise under the Income Tax Act and the Voluntary Disclosure of Income and Wealth Act, 1976 after the income of the assessee is determined and/or declared under the said Acts. They cannot be deducted before the determination of such income. The assessee, however, has drawn our attention to Section 80V of the Income Tax Act, 1961 which was in force during the assessment years with which we are concerned. Under Section 80V, "In computing the total income of an assessee there shall be allowed by way of deduction any interest paid by him in the previous year on any money borrowed for the payment of any tax due from him under this Act". Learned counsel for the respondent submitted that Section 80V will apply only to the payment of any tax under the Income Tax Act of 1961. It will not apply to payment of income-tax under the Voluntary Disclosure of Income and Wealth Act, 1976. We need not dwell on this submission because, even it we assume that Section 80V does apply it can apply only if the assessee has borrowed any money for payment of any tax and has paid interest in the relevant previous year on such borrowed money. In the present case, the assessee has not borrowed any money for the purpose of paying tax; nor has he paid any interest to any third party for such borrowing. The contention of the assessee seems to be, that he had avoided borrowing money for payment of tax by obtaining instalments from the department and paying interest. Therefore, the payment of interest should be considered as equivalent to his paying interest on borrowed money for payment of tax. The submission has to be stated to be rejected. Obtaining instalments from the department and paying interest cannot be considered as equivalent to borrowing money from a third party for payment of tax and paying interest on such borrowed money. The assessee's argument, if taken to its logical conclusion, would amount to saying that the assessee had, in effect, borrowed money from the income tax department to pay tax for which he was paying interest to the income tax department. Such is clearly not the case, as it cannot be. The assessee has placed reliance on a decision of the Andhra Pradesh High Court in the case of Commissioner of Income-Tax V. Bakelite Hylam Ltd. ([1988] 171 ITR 583).

Result 4
Supreme Court of India
Tarulata Syam And Ors vs Commissioner Of Income-Tax, West ...
Honourable Judges Ranjit Singh Sarkaria, P.N. Bhagwati, Syed Murtaza Fazalali
Date of Judgment: 28 Apr 1977
Segment Number (Approximate Page Number): 11
Relevancy Score: 60.81
   
   
   

It is submitted that only in the case of an advance or loan which remains outstanding at the end of the accounting year, Sec. 2(6A) (e) raises an irrebutable presumption that it was a payment of dividend under the cloak of a loan. It is maintained that if this construc- tion of Sec. 2(6A)(e) is not adopted, it will lead to ex- tremely oppressive, unreasonable and anamolous results, including double taxation. To illustrate his point Counsel compares and contrasts the position of a shareholder who promptly, after a short period, repays the loan in the same year, with one who does not do so but allows it to remain outstanding and be carried over to the next year, and there- after a dividend is declared. If the interpretation adopted by the High Court is correct---says Mr. Sharma--the share- holder in the prior case who had promptly repaid the loan would not be entitled under sub-clause (iii) of Clause (e) of s. 2(6A) to set off any part of the subsequently declared dividend against the loan which he had repaid earlier, but will have to pay double tax on the same item, once on it as deemed dividend and then on it as declared dividend. His liability cannot be reduced to the extent of the dividend; because at the date on which the dividend was declared, no loan was outstanding against which. it could be set off. As against the former, the latter shareholder who makes full use of the loan and does not repay any part of the loan in the same year, but leaves it unpaid till a dividend is declared next year, will get relief by set off of the subse- quently declared dividend, in whole or in part against the loan outstanding against him. Another example cited by Mr. Sharma is of a case where the accumulated profit, say is Rs. 9,000/- and the share- holder takes an advance or loan of Rs. 3,000/- and he repays it after a week, and again gets the same amount (Rs. 3,000/-) back as a loan, and again repays it after a week, and again retakes the same amount as loan--all the three loans being taken and repaid, in the same year. If the unrestricted interpretation of the provision, sought by the Revenue were to be adopted, the same amount of loan in all the three transactions of loan would be subjected to triple taxation.

Result 5
Supreme Court of India
Commissioner Of Income Tax vs Willamson Financial Services & Ors
Honourable Judges S.H. Kapadia, B. Sudershan Reddy
Date of Judgment: 12 Dec 2007
Segment Number (Approximate Page Number): 9
Relevancy Score: 60.71
   
   
   

In the first category is agricultural income whereas in the second category of exempted income is the income of local authorities and diplomatic officers. We are concerned with the first category. 28. In addition to the above two categories there is a third kind of income. These incomes are wholly or partly tax-free incomes on account of special deductions under Chapter VIA. We are essentially concerned with these tax-free incomes. 29. In the present matter we are required to adjudicate upon the fiction in Rule 8 vis-`-vis the computation contemplated by Chapter VIA in which Section 80B(5) finds place and which defines the expression gross total income as total income computed in accordance with the provisions of the said Act before making any deduction under Chapter VIA. Section 10(1) inter alia provides that agricultural income is not includible in the total income of the assessee. The result is that agricultural income is not only exempt from tax but, under the scheme of the I.T. Act, is also to be excluded from computation of the total income. Exemptions granted under the I.T. Act covers incomes which are exempt from Charge and also from total income of the assessee whereas there are incomes which are exempted from income-tax but they are to be included in the total income of the assessee. In the first case, we have agricultural income which is exempt from Charge as also from total income whereas in the second case we have incomes which are exempted from the Charge but they are included in the total income of the assessee, for example, at one point of time certain incomes were exempted under Sections 86 and 86A but expressly declared by Section 66 to be included in the total income. Section 110 indicates incomes which are free from the Charge but which are required to be included in the total income of the assessee. The effect of including exempted income in the total income of the assessee is of two-fold. Firstly, the rate of tax is determined with reference to the total income and, therefore, exempted income which is included in the total income would affect the rate of tax applicable to the chargeable portion of total income. Secondly, calculations in several cases have to be made with reference to total income. For example, tax relief under Section 80HH is restricted to the ceiling limit determined by reference to gross total income of the assessee which expression, as stated above, is defined in Section 80B(5) of the I.T. Act. It is also important to bear in mind that under Section 4 the levy is on total income of the assessee computed in accordance with and subject to the provisions of the I.T. Act. What is chargeable to tax under the I.T. Act is the profits and gains of a year. What is chargeable to tax under the I.T. Act is not gross receipts but income. Under the I.T. Act the tax is on income and not on gross receipts. Section 4 is the charging section. Section 5 defines gamut of total income.

Result 6
Supreme Court of India
Commissioner Of Income-Tax, Madras vs V. Mr. P. Firm, Muar
Honourable Judges J.C. Shah, S.M. Sikri
Date of Judgment: 26 Oct 1964
Segment Number (Approximate Page Number): 9
Relevancy Score: 60.56
   
   
   

The debts discharged in Japanese currency were excluded from the assets side in the balance sheet but the authority reserved for itself the right to treat any recoveries subsequently made as income. The contention is that the assessees having opted to accept the scheme, derived benefit thereunder, and agreed to have their discharged debts excluded from the asset side in the balance sheet subject to the condition that subsequent recoveries by them would be taxable income, they are now precluded, on the principle of "approbate and reprobate", from pleading that the income they derived subsequently by realization of the revived debts is not taxable income. The doctrine of "approbate and reprobate" is only a species of estoppel; it applies only to the conduct of parties. As in the case of estoppel, it cannot operate against the provisions of a statute. If a particular income is not taxable under the Income-tax Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine. Equity is out of place in tax law; a particular income is either exigible to tax under the taxing statute or it is not. If it is not the Income- tax Officer has no power to impose tax on the said income. The decision in Amarendra Narayan Roy v. Commissioner of Income-tax, West Bengal(1) has no bearing on the question raised (1) A.I.R. 1954 Cal. 271. before us. There the concessional scheme tempted the assessee to disclose voluntarily all his concealed income and he agreed to pay the proper tax upon it. The agreement there related to the quantification of taxable income but in the present case what is, sought to be taxed is not a taxable income. The assessee in such a case can certainly raise the plea that his income is not taxable under the Act. We, therefore, reject this plea. To appreciate the third argument it is necessary to notice the relevant terms of the Ordinance. The Ordinance was issued by the Malayan Government to regulate the relationship between the debtor and creditor in respect of debts incurred prior to and during the period of the enemy occupation of the territories comprising the federation of Malaya.

Result 7
Supreme Court of India
Commissioner Of Income Tax vs Willamson Financial Services & Ors
Honourable Judges S.H. Kapadia, B. Sudershan Reddy
Date of Judgment: 12 Dec 2007
Segment Number (Approximate Page Number): 8
Relevancy Score: 60.47
   
   
   

However, the State Legislature would have no power to make any law which would have the effect of levying tax on the aforestated 40% of such income on which tax is payable under the I.T. Act by virtue of the provisions of the I.T. Act. The computation of income from tea has to be in accordance with the relevant provisions of the enactments relating to the Indian Income-tax and the deductions towards various expenses incurred for earning the income shall be liable under the said enactments relating to Indian Income- tax. Thus, where computation of income from cultivation, manufacture and sale of tea is made in accordance with the provisions of the I.T. Act, the Agricultural Income-tax Officer would have no option but to accept the computation by the A.O. under 1961 Act and treat 40% of such income, as business income and the balance 60%, as agricultural income. 25. To the above extent there is no dispute. The question before us is whether computation of Section 80HHC Deduction could be said to be part of computation provision under the 1961 Act, particularly, provisions dealing with computation of income under the head Business Income and particularly when the said Deduction has to be made from gross total income under Chapter VIA 26. The term agricultural income has been defined under Section 2(1A) of the 1961 Act. It is exempted from tax under 1961 Act because Parliament has no power under the Constitution to levy tax on agricultural income. The word income has been defined in Section 2(24) of the said Act to include profits and gains. The term total income is defined in Section 2(45) of the said Act. The definition of the term total income involves two ingredients  firstly, that the income must consist of the total amount of income referred to in Section 5 and secondly, it must be computed in the manner laid down in the Income-tax Act. Therefore, the manner of computation laid down by the I.T. Act forms an integral part of the definition total income. The correct method of approach is to treat nothing as being charged to tax until by the process of computation laid down by the said Act, the status of income, profits and gains, emerges. This principle is very important for deciding the present case. We repeat that computation laid down by the said Act forms an integral part of the definition of total income. Section 4 charges the total income of an assessee to income-tax. Section 5 of the I.T. Act defines total income. 27. At this stage we have to analyse Chapter III which deals with Incomes which do not form part of total income. Section 10 groups in one place various incomes which are exempt from tax. The incomes enumerated in Section 10 are not only excluded from the taxable income of the assessee but also from his total income.

Result 8
Supreme Court of India
Kanchan Udyog Limited vs United Spirits Limited
Honourable Judges Navin Sinha, Ranjan Gogoi
Date of Judgment: 19 Jun 2017
Segment Number (Approximate Page Number): 9
Relevancy Score: 59.79
   
   
   

Waiver can also be a voluntary surrender of a right. The doctrine of waiver has been applied in cases where landlords claimed forfeiture of lease or tenancy because of breach of some condition in the contract of tenancy. The doctrine which the courts of law will recognise is a rule of judicial policy that a person will not be allowed to take inconsistent position to gain advantage through the aid of courts. Waiver some times partakes of the nature of an election. Waiver is consensual in nature. It implies a meeting of the minds. It is a matter of mutual intention. The doctrine does not depend on misrepresentation. Waiver actually requires two parties, one party waiving and another receiving the benefit of waiver. There can be waiver so intended by one party and so understood by the other. The essential element of waiver is that there must be a voluntary and intentional relinquishment of a right. The voluntary choice is the essence of waiver. There should exist an opportunity for choice between the relinquishment and an enforcement of the right in question…..” 23. Waiver could also be deduced from acquiescence, was considered in Waman Shriniwas Kini vs. Ratilal Bhagwandas & Co., 1959 Supp (2) SCR 21, observing as follows: “13……Waiver is the abandonment of a right which normally everybody is at liberty to waive. A waiver is nothing unless it amounts to a release. It signifies nothing more than an intention not to insist upon the right. It may be deduced from acquiescence or may be implied….” 24. Exhibit ‘C’ was a loan application, submitted by the appellant to the WBIDC. There is no evidence that it was prepared together with the respondent. The intent and purpose of a loan application is entirely different, relevant only for the purpose of the borrower vis-à-vis the lender. The most fundamental characteristic a prospective lender will want to examine in a loan application are assessment of the Credit History of the Borrower, Cash Flow History and Projections for the Business, Collateral that is Available to Secure the Loan and Character of the Borrower. The profitability projections in such an application are only broad estimates based on assumptions and presumptions of the borrower intended to convince the lender of the viability of its project, in absence of which the loan application itself may not be considered. The appellant’s projections in it of assumed estimated profitability for viability of the project also went completely awry from its own admission that there was no likelihood of profit in the next 5 to 6 years. Viability of the project for sanction of loan cannot lead to an automatic presumption of profits, in the facts of the case, especially when there is evidence that the appellant did not even deploy manpower in accordance with the projections made by it in the loan application. It was not sanctioned on basis of the assumption of the appellant for earning profits.

Result 9
Supreme Court of India
Navnitlal C. Javeri vs K. K. Sen, Appellate Assistant ...
Honourable Judges P.B. Gajendragadkar, K.N. Wanchoo, M. Hidayatullah, Raghubar Dayal, J.R. Mudholkar
Date of Judgment: 28 Oct 1964
Segment Number (Approximate Page Number): 2
Relevancy Score: 59.72
   
   
   

When they deliberately refused to distribute the accumulated profits as dividends but adopted the device of advancing the profits by way of loan to one of the shareholders, it was with the object of evading the payment of tax by the company on the accumulated profits. Section 12(1B) provides that if a controlled company adopts the device of making a loan to one of its shareholders, he will be deemed to have received the amount out of the accumulated profits as dividend and would be liable to pay tax on his income. The word "income" in Entry 82 in List I of the 7th Schedule to the Constitution must receive a wide interpretation depending on the facts of each case. Having regard to the fact that the Legislature was aware of the devices to evade tax, it would be within its competence to devise a fiction for treating an ostensible loan as the receipt of the dividend. [919 A-H. 920 H; 921 C-D] (ii) The absence of a provision enabling the income-tax officer to consider in each case whether the loan was genuine or the result of a device does not make the section go beyond the competence of the Legislature. [921 D-E] If the Legislature thought that in almost every case the advances or loans were the result of a device to evade tax, it would be competent to it to prescribe a fiction and hold that in cases of such advances or loans, tax should be recovered from the shareholder on the basis that he had received a dividend. [921 G-H] (iii) Section 12(lB) does,not impose an unreasonable restriction on the appellant's fundamental rights under Art. 19(1) (f) and (g) of the Constitution. [922 A] The section does not affect the appellant's right to borrow money. There is no element of unfairness, because the other shareholders have deliberately agreed to make the loan or the advance and the shareholder to whom the loan is advanced deliberately takes it with a view to assist the company to evade the payment of tax and to have the benefit of the use of the amount subject to the payment of interest. The company receives interest, the shareholder enjoys the use of the money and in the process the payment of tax is evaded.

Result 10
Supreme Court of India
Tuticorin Alkali Chemicals And ... vs Commissioner Of Income Tax, Madras
Honourable Judges S.P. Bharucha, Suhas C. Sen, M. Jagannadha Rao
Date of Judgment: 08 Jul 1997
Segment Number (Approximate Page Number): 5
Relevancy Score: 59.23
   
   
   

In other words, if the capital of a Company is fruitfully utilised instead of keeping it idle the income thus generated will be of revenue and not accretion of capital. Whether the Company raised the capital by issue of shares or debentures or by borrowing will not make any difference to this principle. If borrowed Capital is used for the purpose of earning income that income will have to be taxed in accordance with law. Income is something which flows from the property. Something received in place of the property will be capital receipt. The amount of interest received by the Company flows from its investments and is its income and is clearly taxable even though the interest amount is earned by utilising borrowed capital. It is true that the Company will have to pay interest on the money borrowed by it. But that cannot be a ground for exemption of interest earned by the Company by utilizing the borrowed funds as its income. It was rightly pointed out in the case of Kedar Narain Singh v. Commissioner of Income Tax, (6 I.T.R. 157) that "anything which can properly be described as income is taxable under the Act unless expressly exempted". The interest earned by the assessee is clearly its income and unless it can be shown that any provision like Section 10 has exempted it from tax, it will be taxable. The fact that the source of income was borrowed money does not detract anything from the revenue character of the receipt. The question of adjustment of interest payable by the Company against the interest earned by it will depend upon the provisions of the Act. The expenditure would have been deductible as incurred for the purpose of business if the assessee's business had commenced. But that is not the case here. The assessee may be entitled to capitalise the interest payable by it. But what the assessee cannot claim is adjustment of this expenditure against interest assessable under Section 56. Section 57 of the Act sets out in its clauses (i) to (iii) the expenditures which are allowable as deduction from income assessable under Section 56. It is not the case of the assessee that the interest payable by it on term loans are allowable as deduction under Section 57 of the Act. If that be so, under which other provision of law can the assessee claim deduction or set-off of his income from other source against interest payable on the borrowed fund?

Result 11
Supreme Court of India
Commissioner Of Income-Tax, Andhra ... vs H. E. H. Mir Osman Ali Khan
Honourable Judges J.C. Shah, S.M. Sikri
Date of Judgment: 25 Oct 1965
Segment Number (Approximate Page Number): 17
Relevancy Score: 59.01
   
   
   

If there was a State law prescribing rates, it would afford the criterion for scaling down the Indian rate of tax; if there was no State law prescribing the rate, the schedule of rates annexed to the Order would govern the taxation. If the assessee was not liable to pay tax under the State law, his non-liability related only to the domain of exemption. It would be incongruous to say that a person exempted from taxation was paying a nil rate. This would be an obvious attempt to subvert the scheme of the Order to reach a desired result. We, therefore, hold, agreeing with the High Court, that the assessee was not entitled to any exemptions under the said Order. We shall now take up the first part of the 4th question which reads : "Whether on the facts of the case the interest received by the Assessee in respect of 3% Nizam Government Income-tax free loan, 1360-70 Fasli of the face value of Rs. 1,45,200, the 2 1/2% Nizam Government Income-tax free development loan, 1364-69 fasli of the face value of Rs. 1.05 crores, the 21% Nizam Government loan, 1363-73 fasli of the face value of Rs. 200, and the 21% Hyderabad Government loan, 1384 fasli of the face value of Rs. 8 crores was exempt from tax." This question relates only to the assessment year 1951-52. The securities were issued by the Hyderabad State free from income-tax. The High Court held that they were exempt from income-tax under S. 8 of the Act. Under S. 8 of the Act, tax shall be payable by an assessee under the head "interest on securities" in respect of the interest receivable by him on any of the securities of the State Government. But, under the third proviso thereto, the income-tax payable on the interest receivable on the securities of the State Government issued income-tax free shall be payable by the State Government. It was argued for the Revenue that the expression "securities of a State Government" in the proviso does not include the securities issued by the Hyderabad State. This contention was sought to be sustained on the basis of the definition of "Government securities" in s. 3(24) of the General Clauses Act, 1897, which reads : "Government securities" shall mean securities of the Central Government or of any State Government, but in any Act or Regulation made before the commencement of the Constitution shall not include securities of the Government of any Part B State."

Result 12
Supreme Court of India
Bharat Commerce 7 Industries Ltd vs The Commissioner Of Income Tax, Central ...
Honourable Judges Sujata V.Manohar, D.P. Wadhwa
Date of Judgment: 05 Mar 1998
Segment Number (Approximate Page Number): 7
Relevancy Score: 58.91
   
   
   

Sub-section (2), however, provides that if the Commissioner is satisfied on an application made in this behalf by the declarant, that the declarant is unable, for good and sufficient reasons, to pay the full amount of income-tax in respect of the voluntarily disclosed income in accordance with sub-section (1), he may extend the time for payment of the amount which remains unpaid or allow payment of the amount which remains unpaid of allow payment by instalments if the declarant furnishes adequate security for the payment thereof. However, an amount which is not less than one-half of the amount of income-tax payable in respect of the Voluntarily disclosed income has to be paid on or before 31st of day of march. 1976, and the remainder, on or before the 31st day of March, 1977. Under Section 6, if the amount of income-tax is not paid on or before 31st of March, 1976 the declarant is liable to pay simple interest at 12 per cent per annum on the amount remaining unpaid from 1st of April, 1976 to the date of payment and "the rules made thereunder shall, so far as may be, apply as if the interest payable under this section were interest payable under sub-section (2) of Section 220 of that Act (i.e. Income Tax Act, 1961)". The interest, therefore, which is payable for delayed payment of income-tax on the voluntarily disclosed income is of the same nature as interest on income-tax under the Income Tax Act. Payment of such interest cannot be considered as expenditure incurred wholly or exclusively for the purposes of business of the assessee. For the reasons which we have set out above in C.A. No. 5509 of 1985, in the present case also the tax which is required to paid under the Voluntary Disclosure of Income and Wealth Act, 1976 is a tax on the declared income of the assessee which was not disclosed earlier and is disclosed under the said Act. Income-tax is payable by virtue of the said Act. It is nevertheless a tax on income and shares all characteristics of such tax. When the assessee is liable to pay interest on delayed payment of such tax, it is on account of his not paying income-tax within the prescribed period. We do not see any reason why any distinction can be made between such interest and interest paid under the Income Tax Act, 1961. Both payments do not have any nexus with the business of the assessee.

Result 13
Supreme Court of India
Engineering Analysis Centre Of ... vs The Commissioner Of Income Tax
Honourable Judges Rohinton Fali Nariman, B.R. Gavai, Hrishikesh Roy
Date of Judgment: 02 Mar 2021
Segment Number (Approximate Page Number): 47
Relevancy Score: 58.9
   
   
   

He therefore differentiated between the language used in section 9 and section 195 of the Income Tax Act and argued that the deductions made under section 195, not being in the nature of tax at all and at a stage prior to the person responsible for paying defaulting, and being declared an assessee in default (under section 201 of the Income Tax Act), the DTAA provisions would not apply at all. 54. There is no doubt that section 9 of the Income Tax Act refers to persons who are non-residents and taxes their income as income which is deemed to accrue or arise in India, thus, making such persons assessees under the Income Tax Act, who are liable to pay tax. There is also no doubt that the “person responsible for paying” spoken of in section 195 of the Income Tax Act is not a non-resident assessee, but a person resident in India, who is liable to make deductions under section 195 of the Income Tax Act when payments are made by it to the non-resident assessee. The submission of the learned Additional Solicitor General is answered by the judgment of this Court in GE Technology (supra). This judgment, after setting out section 195 of the Income Tax Act, held: “8. The most important expression in Section 195(1) consists of the words chargeable under the provisions of the Act. A person paying interest or any other sum to a non- resident is not liable to deduct tax if such sum is not chargeable to tax under the IT Act. For instance, where there is no obligation on the part of the payer and no right to receive the sum by the recipient and that the payment does not arise out of any contract or obligation between the payer and the recipient but is made voluntarily, such payments cannot be regarded as income under the IT Act. 9. It may be noted that Section 195 contemplates not merely amounts, the whole of which are pure income payments, it also covers composite payments which have an element of income embedded or incorporated in them. Thus, where an amount is payable to a non-resident, the payer is under an obligation to deduct TAS in respect of such composite payments. The obligation to deduct TAS is, however, limited to the appropriate proportion of income chargeable under the Act forming part of the gross sum of money payable to the non-resident. This obligation being limited to the appropriate proportion of income flows from the words used in Section 195(1), namely, “chargeable under the provisions of the Act”. It is for this reason that vide Circular No. 728 dated 30-10-1995 CBDT has clarified that the tax deductor can take into consideration the effect of DTAA in respect of payment of royalties and technical fees while deducting TAS. It may also be noted that Section 195(1) is in identical terms with Section 18(3-B) of the 1922 Act. xxx xxx xxx 11. While deciding the scope of Section 195(2) it is important to note that the tax which is required to be deducted at source is deductible only out of the chargeable sum.

Result 14
Supreme Court of India
Kesoram Industries & Cotton Mills Ltd vs Comnmissioner Of Wealth Tax, (Central) ...
Honourable Judges J.C. Shah, S.M. Sikri
Date of Judgment: 24 Nov 1965
Segment Number (Approximate Page Number): 19
Relevancy Score: 58.66
   
   
   

With this background let us look at the provisions of the Income-tax Act and the decisions bearing on them to ascertain whether a liability to pay income-tax and super- tax on the income of the accounting year is a debt within the meaning of s. 2 (m) of the Wealth Tax Act. The first question is, whether s. 3 of the Indian Income-tax Act, 1922, or s. 2 of the Finance (No. 2) Act, 1957, is the charging section. The Revenue contends that the Finance Act is the charging section and that, therefore, the liability accrued only on the first day of April 1957, while the assessee says that s. 3 of the (3) (1941) 45 C.W.N. 519. Income-tax Act is the charging section and that the Finance Act only prescribed the rate of tax payable. Uninfluenced by judicial decisions let us at the outset look at the relevant provisions of the two Acts. Under S. 3 of the Incometax Act, where any Central Act enacts that income-tax shall be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, the said Act. The expression charged" is used both in the case of the Central Act, i.e., the Finance Act, and the Income-tax Act. It could not have been the intention of the Legislature to charge the income to income-tax under two Acts. Necessarily, therefore, they are used in two different senses. The tax is to be charged for that year in accordance with, and subject to, the provisions of the Income-tax Act; but the said charge will be in accordance with the rates prescribed under the Finance Act. This construction will harmonize the apparent conflict between the two Acts. When you look at s. 2 of the Finance Act, it shows that income-tax shall be charged at the rates specified in Part I of the First Schedule, and super-tax, for the purpose of s. 55 of the Income-tax Act, 1922, shall be charged at the rates specified in Part 11 of the First Schedule. The primary object of the Finance Act is only to prescribe the rates so that the tax can be charged under the Income-tax Act. The Income-tax Act is a permanent Act, whereas the Finance Act is passed every year and its main purpose is to fix the rates to be charged under the Income- tax Act for that year.

Result 15
Supreme Court of India
Bharat Commerce 7 Industries Ltd vs The Commissioner Of Income Tax, Central ...
Honourable Judges Sujata V.Manohar, D.P. Wadhwa
Date of Judgment: 05 Mar 1998
Segment Number (Approximate Page Number): 5
Relevancy Score: 58.56
   
   
   

If income-tax itself is not a permissible deduction under Section 37, any interest payable for default committed by the assessee in discharging his statutory obligation under the Income Tax Act, which is calculated with reference to the tax on income cannot be allowed as a deduction. In the present case section 80V of the income Tax Act is not attracted because Section 80V was inserted in the Income Tax Act only with effect from 1st of April, 1976. In the premises the High Court has rightly answered the question in favour of the revenue and against the assessee. The appeal is, therefore, dismissed with costs. C.A. Nos. 3355-56/1993 These appeals relate to assessment years 1977-78 and 1978-79. The following question was referred to the High Court under Section 256(1) of the Income Tax Act, 1961 at the instance of the revenue:- "Whether on facts and circumstances of the case and in law the Tribunal was right in holding that the assessee was not entitled to the deduction of Rs. 2,94,082 in assessment year 1977-78 and Rs. 43,142/- assessment year 1978-79 being the interest payable on account of additional liability for income-tax and sur-tax on account of the disclosure of income made under the Voluntary Disclosure of Income and Wealth Act, 1976 u/s 37 or 36(1) (iii) of the Income-tax Act, 1961?." The assessee disclosed certain income under the voluntary Disclosure of Income and Wealth Act, 1976. As a result the assessee became liable to pay income-tax and sur-tax. The assessee applied for payment of income-tax and sur-tax by instalments under the provisions of the Voluntary Disclosure of Income and Wealth Act, 1976. The assessee was granted these instalments. The assessee was also required to pay interest under Section 6 of the said Act for delayed payment of income-tax and sur-tax. The assessee paid by way of such interest, a sum of Rs. 2,82,106/- in assessment year 1977-78 and a sum of Rs. 36,370/- in assessment year 1978-79. The claim of the assessee for deduction of these amounts was rejected by the revenue authorities. At the instance of the assessee the above question has been raised, The High Court has also answered the question against the assessee.

Result 16
Supreme Court of India
Commissioner Of Income Tax, Bhopal vs M/S. Shelly Products And Another
Honourable Judges N. Santosh Hegde, B.P. Singh
Date of Judgment: 08 May 2003
Segment Number (Approximate Page Number): 12
Relevancy Score: 58.48
   
   
   

Similarly the deduction of tax at source is also provided for in the Act and failure to comply with the provisions attracts the penal provisions against the person responsible for making the payment. It is, therefore, quite apparent that the Act itself provides for payment of tax in this manner by the assessee. The Act also enjoins upon the assessee the duty to file a return of income disclosing his true income. On the basis of the income so disclosed, the assessee is required to make a self-assessment and to compute the tax payable on such income and to pay the same in the manner provided by the Act. Thus the filing of return and the payment of tax thereon computed at the prescribed rates amounts to an admission of tax liability which the assessee admits to have incurred in accordance with the provisions of the Finance Act and the Income Tax Act. Both the quantum of tax payable and its mode of recovery are authorized by law. The liability to pay income tax chargeable under section 4(1) of the Act thus, does not depend on the assessment being made. As soon as the Finance Act prescribes the rate or rates for any assessment year, the liability to pay the tax arises. The assessee is himself required to compute his total income and pay the income tax thereon which involves a process of self-assessment. Since all this is done under authority of law, there is no scope for contending that Article 265 is violated. What then is the effect of the failure to make an order of assessment after the earlier assessment made is set aside or nullified in appropriate proceedings ? If the assessing authority cannot make a fresh assessment in accordance with the provisions of the Act it amounts to deemed acceptance of the return of income furnished by the assessee. In such a case the assessing authority is denuded of its authority to verify the correctness and completeness of the return, which authority it has while framing a regular assessment. It must accept the return as furnished and shall not in any event raise a demand for payment of further taxes. Accepting the income as disclosed in the return of income furnished by the assessee, it must refund to the assessee any tax paid in excess of the liability incurred by him on the basis of income disclosed. Even if the tax paid is found to be less than that payable, no further demand can be made for recovery of the balance amount since a fresh assessment is barred. In other words, the tax paid by the assessee must be accepted as it is, and in the event of the tax paid being in excess of the tax liability duly computed on the basis of return furnished and the rates applicable, the excess shall be refunded to the assessee, since its retention may offend Article 265 of the Constitution. We cannot lose sight of the fact that the failure or inability of the revenue to frame a fresh assessment should not place the assessee in a more disadvantageous position than in what he would have been if a fresh assessment was made.

Result 17
Supreme Court of India
Orissa State Warehousing Corporation vs Commissioner Of Income Tax
Honourable Judges Umesh C Banerjee, M.Srinivasan
Date of Judgment: 01 Apr 1999
Segment Number (Approximate Page Number): 5
Relevancy Score: 58.33
   
   
   

In the present context, there is no doubt as to the meaning of the words used in the Section by reason of the language used, neither there is any difficulty in ascertaining the statutory intent. Incidentally, it cannot but be said that an exemption is an exception to the general rule and since the same is opposed to the natural tenor of the statute, the entitlement for exemption, therefore, ought not to be read with any latitude to the tax-payer or even with a wider conotation as is being suggested by Dr. V. Gauri Shankar but to restrict its application to the specific language used depicting the intent of the legislature. In fine, on behalf of the assessee, it has been contended that interest on fixed deposit is incidental to the business income and when the business income is not taxable then and in that event, it would be incorrect to include the interest income earned on that within the purview of tax. Similar however, was the submission before the Tribunal and the Tribunal accepting the same recorded the following in its order pertaining to the same as below: "It is a surprising proposition that when the income itself is not taxable how the interest earned on such income becomes taxable. There is no doubt that the income earned on any income is taxable but what is required to look into is the circumstances and incidental activity of the appellant. The incidental activity of the appellant taxes me to consider that the interest earned by it is not taxable. Moreover I am fortified in my view with the decision of the Jaipur Bench of the Tribunal. 7. I have also considered the facts on record. I have heard both the parties. I have taken into consideration the case law relied on by the learned counsel for the assessee. After examining everything the cumulative effect which comes to indicate is the interest income earned by the appellant on the exempted income cannot be brought to tax." The above excerpts go to show that the Tribunal has proceeded on the basis, as if the deposits are totally exempt in terms of Section 10(29) of the Act but unfortunately there is neither any factual support nor any sanction in law. Section 10(29) is categorical in its language and this exemption is applicable only in the circumstances as envisaged under the Section as noticed herein before.

Result 18
Supreme Court of India
Basheshar Nath vs The Commissioner Of Income-Tax,Delhi & ...
Honourable Judges Natwarlal H. Bhagwati, S.K. Das, J.L. Kapur
Date of Judgment: 19 Nov 1958
Segment Number (Approximate Page Number): 5
Relevancy Score: 58.32
   
   
   

But it must be made clear that there is no absolute rule, or one formulated in the abstract, as to the applicability of that doctrine to fundamental rights and such applicability must depend on (1) the nature of fundamental right to which it is sought to be applied and (2) the foundation on the basis of which the plea is raised. The true test must be whether the fundamental right is one primarily meant for the benefit of individuals or for the benefit of the general public. Where, therefore, the Constitution vested the right in the individual, primarily intending to benefit him and such right did not impinge on the rights of others, there could be a waiver of such right provided it was not forbidden by law or did not contravene public policy or public morals. As in the instant case the respondents who had raised the plea, had failed to prove the necessary facts on which it could be sustained, the plea of waiver must fail. Per Subba Rao, J.-Apart from the question as to whether there could be a waiver in respect of a fundamental right, s. 5(1) of the Taxation of Income (Investigation Commission) Act, 1947, having been declared void by this Court in M. Ct. Muthiah v. The Commissioner of Income-tax, Madras, as being violative of the fundamental right founded on Art' 14 Of the Constitution and such decision being binding on all courts in India, the Commissioner of Income-tax had no jurisdiction to continue the proceedings against the appellant under that Act and the appellant could not by a waiver of his right confer jurisdiction on him. No distinction could be made under Art. 13(1) of the Con- stitution between the constitutional incompetency of a legislature and constitutional limitation placed on its power of legislation, for a statute declared void on either ground would continue to be so, so long as the inconsistency continued. As the inconsistency of S. 5(1) of the Act with Art. 14 continued, it must continue to be void. Keshavan Madhava Menon v. The State of Bombay, [1951] S.C.R. 228; Behram Khurshed Pesihaka v. State of Bombay, [1955] 1 S.C.R. 613 and Bhikaji Narain Dhakras v. State of Madhya Pradesh, [1955] 2 S.C.R. 589, referred to.

Result 19
Supreme Court of India
Commissioner Of Income-Tax, Kerala vs South Indian Bank Ltd. Trichur
Honourable Judges J.C. Shah, S.M. Sikri
Date of Judgment: 23 Nov 1965
Segment Number (Approximate Page Number): 4
Relevancy Score: 57.86
   
   
   

As we agree with the High Court on the construction of the notification issued by the Central Government, we do not propose to express our opinion on the rival contentions of the parties based upon the provisions of s. 8 of the Income- tax Act. Section 8 of the Income-tax Act provides for the computation of income and deductions therefrom under the head "interest on securities". Section 60 of the Act confers a power on the Central Government to make an exemption, reduction in rate, or other modifications in respect of income-tax in favour of any class of income or in regard to the whole or any part of any income of any class of persons. This power is conferred on the Government to meet special situations de hors s. 8. If s. 8 of the Income- tax Act makes an exemption in respect of a particular income, there is no scope or occasion for invoking the special power conferred on the Central Government under S. 60A of the Income-tax Act. Unless we accept the contention that the notification under S. 60A was issued by the Central Government in superabundant caution to cover the same ground occupied by s. 8-we need not attribute any such redundancy to the Central Government-we do not see any reason why the notification should not be construed on its own terms in its application to the question of rebate raised in this, case. The said notification reads : "No income-tax shall be payable by an assessee on the interest receivable on the following income-tax free loans issued by the former Government of Travancore or by the former Government of Cochin, provided that such interest is received within the territories of the State of Travancore-Cochin and is not brought into any other part of the taxable territories to which the said Act applies. Such interest shall, however, be included in the total income of the assessee for the purposes of Section 16 of the Indian Income- tax Act, 1922 It is common case that this notification applies to the securities in question. It will be noticed that this notification does not refer to the provisions of s. 8 of the Income-tax Act at all. It gives a total exemption from income-tax to an assessee in respect of the interest receivable on Income-tax ' free loans mentioned therein.

Result 20
Supreme Court of India
Engineering Analysis Centre Of ... vs The Commissioner Of Income Tax
Honourable Judges Rohinton Fali Nariman, B.R. Gavai, Hrishikesh Roy
Date of Judgment: 02 Mar 2021
Segment Number (Approximate Page Number): 22
Relevancy Score: 57.58
   
   
   

Under section 4(2), in respect of income chargeable under sub-section (1) thereof, income tax shall be deducted at source or paid in advance, depending upon the provisions of the Income Tax Act. Importantly, under section 5(2) of the Income Tax Act, the total income of a person who is a non-resident, includes all income from whatever source derived, which accrues or arises or is deemed to accrue or arise to such person in India during such year. This, however, is subject to the provisions of the Income Tax Act. Certain income is deemed to arise or accrue in India, under section 9 of the Income Tax Act, notwithstanding the fact that such income may accrue or arise to a non-resident outside India. One such income is income by way of royalty, which, under section 9(1)(vi) of the Income Tax Act, means the transfer of all or any rights, including the granting of a licence, in respect of any copyright in a literary work. 26. That such transaction may be governed by a DTAA is then recognized by section 5(2) read with section 90 of the Income Tax Act, making it clear that the Central Government may enter into any such agreement with the government of another country so as to grant relief in respect of income tax chargeable under the Income Tax Act or under any corresponding law in force in that foreign country, or for the avoidance of double taxation of income under the Income Tax Act and under the corresponding law in force in that country. What is of importance is that once a DTAA applies, the provisions of the Income Tax Act can only apply to the extent that they are more beneficial to the assessee and not otherwise. Further, by explanation 4 to section 90 of the Income Tax Act, it has been clarified by the Parliament that where any term is defined in a DTAA, the definition contained in the DTAA is to be looked at. It is only where there is no such definition that the definition in the Income Tax Act can then be applied. This position has been recognised by this Court in Azadi Bachao Andolan (supra), which held: “21. The provisions of Sections 4 and 5 of the Act are expressly made “subject to the provisions of this Act”, which would include Section 90 of the Act. As to what would happen in the event of a conflict between the provision of the Income Tax Act and a notification issued under Section 90, is no longer res integra.” “28. A survey of the aforesaid cases makes it clear that the judicial consensus in India has been that Section 90 is specifically intended to enable and empower the Central Government to issue a notification for implementation of the terms of a Double Taxation Avoidance Agreement. When that happens, the provisions of such an agreement, with respect to cases to which they apply, would operate even if inconsistent with the provisions of the Income Tax Act. We approve of the reasoning in the decisions which we have noticed.

Result 21
Supreme Court of India
Kesoram Industries & Cotton Mills Ltd vs Comnmissioner Of Wealth Tax, (Central) ...
Honourable Judges J.C. Shah, S.M. Sikri
Date of Judgment: 24 Nov 1965
Segment Number (Approximate Page Number): 21
Relevancy Score: 57.47
   
   
   

No liability to tax attached to the income of this company until the passing of the Act of 1925, and it was then to be taxed at the rate appropriate to a company." The observations appear to be rather wide. Be that as it may, the subsequent decisions of the Judicial Committee made it abundantly clear that the liability to tax arises during the accounting year though its quantification is postponed to a later date. In Maharaja of Pithapuram v. Commissioner of Income- tax,Madras ( 2 ) . the Privy Council explained the scope of s. 3 of the Income-tax Act, 1922. Lord Thankerton, speaking for the Board, laid down two principles, namely, (i) "under the express terms of s. 3 of the Indian Income-tax Act, 1922, the subject of charge is not the income of the year of assessment, but the income of the previous year; and (ii) "the Indian Income-tax Act, 1922, as amended from time to time, forms a code, which has no operative effect except so far as it is rendered applicable for the recovery of tax imposed for a particular fiscal year by a Finance Act." A combined reading of the said two principles leads to the position that though the Income-tax Act has no operative effect till the Finance Act is passed, after the passing of the said Act, the charge to tax would be under the Income- tax Act in terms of the relevant (1) (1927) L R. 55 I.A. 14,17. (2) (1945) 13 I.T.R. 221, 223. provisions of the said Act. In Doorga Prosad v. The Secretary of State(1) the Judicial Committee held that income-tax was calculated and assessed by reference to the income of an assessee for a given year, but it was due when demand was made under ss. 29 and 45 of the Income-tax Act. The Judicial Committee in that decision was not considering the question of liability to pay income,-tax but only the payability. The Federal Court in Chatturam v. Commissioner of Incometax, Bihar(2), after considering the relevant English decisions, held that the liability to pay tax was founded on ss. 3 and 4 of the Income-tax Act which were the charging sections. It quoted with approval the observations of Sargant, L.J., in Williams v. Henry Williams, Ltd.(3). wherein the learned Judge held that the liability was definitely and finally created by the charging section and the subsequent provisions as to assessment and so on were machinery only for the purpose of quantifying the liability.

Result 22
Supreme Court of India
Ahmed Ibrahim Sahigra Dhoraji vs Commissioner Of Wealth Tax, Gujarat
Honourable Judges E.S. Venkataramiah, R.S. Pathak
Date of Judgment: 07 Apr 1981
Segment Number (Approximate Page Number): 15
Relevancy Score: 57.38
   
   
   

It is true that the Finance Act in question merely levied a fixed rate of tax in respect of all the income disclosed without allowing deductions exemptions and set-off under the relevant income-tax law yet its function was no more than that of a Finance Act passed annually even though it made certain alterations with regard to filing of declaration and computation of taxable income It was however urged on behalf of the Department that the nature of the declaration which was dependent upon the volition of the declarant and the fact that the liability to tax the amount mentioned therein was contingent upon the willingness of the declarant to disclose the amount ought to make a difference. We do not think so because any such voluntary disclosure by an assessee even in the absence of section 68 would have exposed him to an assessment or reassessment as the case may be being made in respect of the sum disclosed as part of the income of the relevant assessment year and of course with the additional liability to payment of interest and levy of penalty and perhaps with the right to claim deductions if any admissible in the circumstances of the case and the benefit of other procedural rights. The voluntary character of the declaration cannot therefore alter the character of the tax. There is also no substance in the contention that in the absence of the allocation of the amount disclosed amongst different assessment years the tax payable under section 68 cannot be termed as a tax on income because such allocation would not achieve any additional purpose in the scheme of section 68 Irrespective of the other income which may have been determined in an ordinary proceeding under the relevant law of income-tax a fixed rate of tax is payable under section 68(3) and hence the amount disclosed being treated as the income of any particular year would not make any difference regarding the quantum of tax. Nor is there any other purpose to be served by such allocation. Section 68 is in the nature of a package deal but the net result achieved is that the declarant is treated as having discharged all his liability in respect of the said income under the income-tax law. There is one other circumstance which may be noticed here. The tax levied under section 68 can be only a tax on income. If we hold it otherwise it may become a tax on wealth itself.

Result 23
Supreme Court of India
Basheshar Nath vs The Commissioner Of Income-Tax,Delhi & ...
Honourable Judges Natwarlal H. Bhagwati, S.K. Das, J.L. Kapur
Date of Judgment: 19 Nov 1958
Segment Number (Approximate Page Number): 62
Relevancy Score: 57.24
   
   
   

It is to be remembered that in 1953-1954 when the discriminatory procedure of the Act was applied to him and the report against him was made by the Commission on which the settlement is based, the assessee did not know, nor had it been declared by a court of competent jurisdiction that s. 5(1) of the Act was ultra vires. In his application for a settlement, he said clearly in paragraph 3 that the Commission announced - it as its view that the income, profits and gains that had escaped assessment in the hands of the assessee was Rs. 4,47,915. The assessee also knew that under the Act this finding was final and binding on him. If in these circumstances, the assessee made an application for settlement, can it be said that it is a voluntary or intentional relinquishment of a known right ? I venture to think not. It has been said that ' waiver' is a troublesome term in the law. The generally accepted connotation is that to constitute ' waiver', there must be an intentional relinquishment of a known right or the voluntary relinquishment or abandonment of a known existing legal right, or conduct such as warrants an inference of the relinquishment of a known right or privilege. Waiver differs from estoppel in the sense that it is contractual and is an agreement to release or not to assert a right; estoppel is a rule of evidence. (See Dawson Bank Limited v. Nippon Menkwa Kabushiki Kaisha) (1). What is the known legal right which the assessee intentionally relinquished or agreed to release in 1953-1954 ? He did not know then that any part of the Act was invalid, and I doubt if in (1) (1935) L.R.62 I.A.100,108. the circumstances of this case, a plea of 'waiver' can be founded on the maxim of 'ignorance of law is no excuse'. I do not think that the maxim 'ignorance of law is no excuse' can be carried to the extent of saying that every person must be presumed to know that a piece of legislation enacted by a legislature of competent jurisdiction must be held to be-invalid, in case it prescribes a differential treatment, and he must, therefore, refuse to submit to it or incur the peril of the bar of waiver being raised against him. I do not think that such pre-science is a necessary corollary of the maxim.

Result 24
Supreme Court of India
Commissioner Of Income-Tax Bombay vs Chugandas And Co., Bombay
Honourable Judges J.C. Shah, S.M. Sikri
Date of Judgment: 29 Jul 1964
Segment Number (Approximate Page Number): 4
Relevancy Score: 57.23
   
   
   

By the Indian Income-tax Act 11 of 1922 the basis of taxation was altered and by s. 3 of that Act, charge for tax was imposed upon the income of the previous year. When Act 1 1 of 1922 was brought into force on April 1, 1922, two assessments in respect of the same income for the year 1921-22 had to be made. The income for 1921-22 was accordingly charged to tax twice: it was charged under Act 7 of 1918 and it was also charge,' to tax under s. 3 of Act 1 1 of 1922 read with the appropriate Finance Act, resulting in double taxation in respect of the income for that year. But with a view to make the number of assessments equal to the number of years during which the business was carried on the Legislature enacted the exemption prescribed by s. 25(3). This benefit was however restricted only to the income, profits and gains of business, profession or vocation on which tax had been charged under the provisions of the Indian Income-tax Act, 1918. By enacting s. 25(3) the Legislature intended to exempt the income, profits and gains resulting from the activity styled business, profession or vocation from tax when the business, profes- sion or vocation is discontinued if tax was charged in respect thereof under the Act of 1918. That much is clear. But that is not the whole problem. What is to be regarded --is income, profits and gains of business, profession or vocation within the meaning of s. 25(3) for which exemption may be obtained on discontinuance raises a problem on which there was a difference of opinion in the High Court. In the judgment under appeal, Tendolkar, J., was of the view that by this expression only income, profits and gains of business chargeable to tax under the head "profits and gains of business, profession or vocation" under s. 10 read with s. 6(iv) stood exempt from liability under s. 25(3)_. S. T. Desai, J., held that s. 25(3) exempted from liability to tax all income, profits and gains earned by conducting a busi- ness, profession or vocation irrespective of whether they were chargeable to tax under the head "profits and gains of business, profession or vocation", and with this view K. T. Desai, J., to whom the case was referred for opinion. agreed. To appreciate the point in dispute, it is necessary to bear in mind the scheme of the Act for computing the taxable income.

Result 25
Supreme Court of India
Commissioner Of Income Tax vs Willamson Financial Services & Ors
Honourable Judges S.H. Kapadia, B. Sudershan Reddy
Date of Judgment: 12 Dec 2007
Segment Number (Approximate Page Number): 11
Relevancy Score: 56.99
   
   
   

It is not exhaustive. That is why Section 2(24) defines income as including a particular category of receipts. Mere gross receipt cannot be taxed as income. 37. Section 80HHC inter alia states that in computing the total income a deduction, to the extent of profits derived by the assessee from exports has to be taken into account. The important words are profits derived from the export. The word derived would mean derived from the source. That source has to be in Section 14. Income covered by Section 10(1) i.e. agricultural income, which is not chargeable to tax, does not fall in Section 14 and, therefore, it will not fall under various computation sections commencing from Section 15 to Section 59. Section 14 classifies all income into five enumerated heads for the purpose of charge of income-tax and computation of total income. As stated hereinabove, exempted income is different from tax-free income. In the present case, we are concerned with both these types of income. Agricultural income falls in the category of exempted income. It is neither chargeable nor includible in the total income. On the other hand, deduction under Chapter VIA is for income which forms part of total income but which is tax-free. In the present case, we have to balance both these types of income, namely, exempted income vis-`-vis tax-free income. Thus, it is clear that income, covered under Section 10 and Section 11 which is not chargeable to tax, does not fall under Section 14 and under various computation sections from Section 15 to Section 59. However, on account of legal fiction built into Rule 8(1), which applies to composite income, a part of the composite income/integrated income is agricultural income and the balance is the business income. The object of Rule 8(1) is to disintegrate the two. If the income from agriculture cannot be computed under 1961 Act then the income from agriculture has to be arrived at in a normal commercial manner. There is no scope for computing such income by complying with the computation section under the I.T. Act. In other words, the real income has to be taken into account for the purpose of considering the exemption under Section 10(1). This position emerges in a case where we have to deal solely with agricultural income. However, as stated above, in this case we are concerned with the composite income. Therefore, we have to interpret Rule 8(1) of the1962 Rule. 38. At the outset, it may be noticed that Rule 8(1) uses the word income. In the entire rule the word total income is not mentioned. Further, Rule 8(1) refers to income derived from the sale of tea cultivated and manufactured. In the case of an assessee deriving income, not from composite activity, one has to calculate agricultural income in the commercial sense.

Result 26
Supreme Court of India
Basheshar Nath vs The Commissioner Of Income-Tax,Delhi & ...
Honourable Judges Natwarlal H. Bhagwati, S.K. Das, J.L. Kapur
Date of Judgment: 19 Nov 1958
Segment Number (Approximate Page Number): 61
Relevancy Score: 56.98
   
   
   

Babu Rao's case (2) merely followed Gopal Das Mohta (1) and gave no separate reasons. Laxmanappa Jamkhandi's case (3) dealt with an order under s. 8(2) of the Act and said at p. 772:- " From the facts stated above it is plain that the proceedings taken under the impugned Act XXX of 1947 concluded so far as the Investigation Commission is concerned in September, 1952, more than two years before this petition was presented in this Court. The assessment orders under the Income-tax Act itself were made against the petitioner in November, 1953. In these circumstances we are of the opinion that -he is entitled to no relief under the provisions of Article 32 of the Constitution. It was held by this Court in Ramjilal v. Income-tax Officer, Mohindar- garh, [1951] S.C.R. 127, that as there is a special pro. vision in Article 265 of the Constitution, that no tax shall be levied or collected except by authority of law, clause (1) of Article 31 must therefore be regarded as concerned with deprivation of property otherwise than by the imposition or collection of tax, and inasmuch as the right conferred by Art. 265 is not a right conferred by Part III of the Constitution, it could not be enforced under Article 32. In view of this decision it has to be held that the petition under Article 32 is not maintainable in the situation that has arisen and that even otherwise in the peculiar circumstances that have arisen it would not be just and proper to direct the issue of any of the writs the issue of which is discretionary with this Court." Here, again, there is no reference to the doctrine of waiver, and the case was decided on the ambit and scope of Art. 32 of the Constitution. I would hold, therefore, that the decisions of this Court relied on by the learned Attorney General do (1) [1955] 1 S.C.R. 773. (2) [1954] 26 I.T.R. 725. (3)[1955] 1 S.C.R.769. not help him in establishing waiver. Let me now examine the circumstances on which the learned Attorney General founds his plea of waiver. Indeed, it is true that the assessee submitted to the discriminatory procedure applied to him by the Commission; he also asked for a settlement under which he agreed to pay 75% of his alleged tax liability and a small amount of penalty; he made some payment in instalments even after Muthia's decision in December, 1955. Do these circumstances amount to waiver ?

Result 27
Supreme Court of India
Supdt. Of Taxes, Dhubri & Ors vs Onkarmal Nathmal Trust Etc. Etc
Honourable Judges A.N. Ray, Hans Raj Khanna, Kuttyil Kurien Mathew, M. Hameedullah Beg, Y.V. Chandrachud
Date of Judgment: 01 May 1975
Segment Number (Approximate Page Number): 33
Relevancy Score: 56.97
   
   
   

The next question is: Did the acts or conduct of the petitioners respondents or anything else in the case operate as a waiver or an estoppel which prevented them from agitating the serious question whether the right of the taxing authorities to realise any tax from them under the Act had become extinguished by lapse of time with the Commissioners power to issue notices prescribed by Section 7(2) of the Act ? If a waiver is a matter of agreement and not of an inference from any misleading conduct, the parties concerned must apply their minds to the subject matter of what is waived by an agreement between them before any alleged waiver can arise. It is contended here on behalf of the State that it must be assumed that the respondent waived their right to get a notice under Section 7(2) of the Act when they obtained the injunctions from the High Court. The authorities cited on behalf of the appellant, which have been discussed by my learned Brother Mathew, do afford grounds for contending that a compliance with a provision intended for the benefit of a party may be waived by the party for whose protection it is designed. But, even in such cases, I think it must be at least present to the mind of the party waiving a right by adopting a course of action what the underlying assumption is or what the consequence of its conduct is going to be. One can only make an assumption on which an injunction rest if it flows necessarily from the language, of the Court's order or anything else on record. But, there is nothing here, either in the Court's orders or anywhere else on record to provide a basis for such an assumption. Furthermore, the waiver, even where both sides have agreed to waive the operation of a statutory provision, cannot extend to a case in which the effect may be either to oust the jurisdiction conferred by statute or to confer a jurisdiction which, according to the statute, is not there. In other words, if a notice under Section 7(2) of the Act is a condition precedent to the exercise of jurisdiction to make the best judgment assessment, I do not think that the doctrine of waiver will confer jurisdiction so as to enable parties to avoid the effect of violating a mandatory provision on a jurisdictional matter even by agreement.

Result 28
Supreme Court of India
Madurai Distt. Central Cooperative ... vs The Third Income-Tax Officer, Madurai
Honourable Judges Y.V. Chandrachud, Ranjit Singh Sarkaria, A.C. Gupta
Date of Judgment: 28 Jul 1975
Segment Number (Approximate Page Number): 3
Relevancy Score: 56.91
   
   
   

Exigencies of the Financial year determine the scope and nature of the provisions of the Finance Act. The primary purpose of the Finance Act is to describe the rates at with the Income Tax will be charged under the Income Tax Act but that does not mean that new and distinct tax cannot be charged under Finance Act. Therefore, what is not income under the Income Tax Act can be made income by the Finance Act. An exemption granted by the Income Tax A, t can be withdrawn by the Finance Act or the efficacy of that exemption may be reduced by the imposition of a new charge. [141D-E; G-H] 4. The contention of the appellant that surcharges are nothing but income tax and, therefore, expression income tax occurring in Sec. 4 and 81 of the Act includes surcharges and AS such exempted cannot be accepted. The case of the C.I.T. Kerala vs. K. Srinivasan distinguished. There the essential point for determination was whether surcharge is additional mode or rate for charging income tax. The Court held there that it was so. The question before us is whether even if the surcharge is an additional mode or rate for charging income to the Finance Act of 1963 authorises by its terms the levy of additional surcharge on income which is exempt from income tax under the Income Tax, Act, 1961. The residual income as defined by the 1963 Finance Act is not the same as the business income of a Cooperative Bank which is exempted under see. 81. The additional surcharge is a distinct charge not dependent for its leviability on the assessee's liability to pay income tax or Super Tax. The decision of Allahabad High Court in Allahabad District Co- operative Bank Ltd vs. Union of India over-ruled. [143D-E] 5. The additional surcharge though levied by the Finance Act 1963 independently of the Income Tax Act is but a mode of levying tax on a portion of the assessee's income computed in accordance with the definition in section 2(8) of the Finance Act 1963. [147F] ARGUMENTS For The Appellant 1. Under section 81 read with section 4 of the Income- tax Act, 1961, income tax is not payable by the appellant. a Co-operative Society, in respect of its income from banking business.

Result 29
Supreme Court of India
Bharat Commerce 7 Industries Ltd vs The Commissioner Of Income Tax, Central ...
Honourable Judges Sujata V.Manohar, D.P. Wadhwa
Date of Judgment: 05 Mar 1998
Segment Number (Approximate Page Number): 2
Relevancy Score: 56.85
   
   
   

In the case of Smt. Padmavati Jaikrishna V. Additional Commissioner of Income-Tax, Gujarat ([1987] 166 ITR 176) the assessee borrowed money for the purpose of discharge of her liabilities for the payment of income-tax, wealth-tax and annuity deposit. She paid interest on this borrowed amount. The income earned by the assessee was income from other sources. hence the allowable deduction would have been under Section 57(3). In respect of the payment of annuity deposit this Court said that the dominant purpose of making the annuity deposit was not to earn income but to meet the statutory liability of making the deposit. The liability for payment of income-tax and wealth-tax was a statutory liability. Therefore, the expenditure in the form of interest which was paid was not expenditure wholly or exclusively for the purpose of earning income. Hence it could not allowed as a deduction under Section 57(3) of the Income Tax Act, 1961. In the case of East India Pharmaceutical Works Ltd. V. Commissioner of Income-Tax ([1997] 224 ITR 627) this court held that interest on an overdraft for payment of income-tax was not expenditure wholly and exclusively incurred for the purpose of business and was not deductible under Section 37 of the Income Tax Act. This Court affirmed the decision in the case of Smt. Padmavati Jaikrishna (supra). A similar view has been taken by a number of High Courts in earlier decision. In the case of Aruna Mills Limited v. Commissioner of Income-Tax Ahmedabad ([1957] 31 ITR 153) the Bombay High Court was concerned with a similar question. It held that the interest which an assessee had to pay under sub-section 7 of Section 18A of the India Income- Tax Act, 1922 for having under-estimated the tax payable by him by way of advance tax, cannot be claimed as business expenditure under Section 10(2) (xv) of the said Act. The Court observed that it was difficult to understand how, when a business man commits default in discharging his statutory obligation, the consequences of that default could constitute an expenditure exclusively incurred for the purpose of his business. The same view was taken in the case of orient General Industries Limited v. Commissioner of Income-Tax ([1994] 209 ITR 490), where the Calcutta High has held that interest paid for delay in filing the income-tax return has no connection with the business of the assessee.

Result 30
Supreme Court of India
Kesoram Industries & Cotton Mills Ltd vs Comnmissioner Of Wealth Tax, (Central) ...
Honourable Judges J.C. Shah, S.M. Sikri
Date of Judgment: 24 Nov 1965
Segment Number (Approximate Page Number): 28
Relevancy Score: 56.84
   
   
   

Tax under that Act is directed to be charged in accordance with and subject to the provisions of the Act in respect of the income of the previous year of the assessable entities, but the charge imposed (1) [1883] 11 Q.B.D. 518,527. by the Income-tax Act is an inchoate or incomplete charge. Until the Annual Finance Act is passed, imposition of the charge of income-tax does not on the plain words used in S. 3, become complete or effective, for, income-tax is to be charged in accordance with the Income-tax Act, when the Finance Act for the year enacts that the tax shall be charged at the rate or rates prescribed thereby. Liability to be taxed is therefore declared by the Income-tax Act, but the liability does not give rise to a present ,obligation to pay a sum of money until the Finance Act becomes operative. It may be recalled that the liability to pay wealth-tax becomes crystallized on the valuation date though the tax is levied for the assessment year, and on the valuation date there is normally no completed or effective charge for income-tax pay,able for the assessment year. Section 67B, inserted in the Act by the Income-tax Law (Amendment) Act 12 of 1940, on which reliance is placed by the Company was enacted merely to maintain continuity of the levy of tax. It operates only on the first day of the assessment year, i.e., after the valuation date and not before. If on the first day of the financial year the Finance Act for charging income-tax for that year has not been enacted, the basic provisions of s. 3 of the Act read with the provisions in force in the preceding year or with the provision then introduced in the Bill before Parliament whichever is more favourable to the assessee applies. The existence on the statute book of s. 67B does not, in my judgment, convert what is an inchoate liability on the valuation date, i.e., on the last day of the previous year, into a completed Decisions of Courts on the nature of the charge created by s.3 of the Income-tax Act are unanimous, In Commissioner of Income-tax v. Western India Turf Club Ltd.(1), the Western India Turf Club-which was originally an unincorporated association, was registered on April 1, 1925 as a company limited by guarantee. The company was sought to be assessed to supertax on the income in the assessment year commencing on April 1, 1925 at the rate applicable to an unincorporated association.

Relevant High Court Judgments
Year From: 1950, Year To: 2024

Result 1
Madras High Court
M/S.Kothari International Trading ... vs The Assistant Commissioner Of ...
Honourable Judges N.Kirubakaran, P.Velmurugan
Date of Judgment: 10 November 2020
Segment Number (Approximate Page Number): 14
Relevancy Score: 68.99
   
   
   

In such situation, extraction of Paragraphs 9 to 18 has become necessary, which is as under:- "9.Further, it was also submitted that it is very clear that http://www.judis.nic.in TCA.133 & 135 of 2019 the amount of $650,000 provided by KJC was in fact a loan on which interest was being paid regularly from time to time. It is also pointed out that in the books of account of the Respondent, this loan has been shown in the Balance Sheet under the heading ''Loans-unsecured.'' Hence, it is submitted that the said sum could not be brought to tax as it represents the waiver of a loan liability which was on the capital amount and is not in the nature of income. Accordingly, the High Court rightly upheld the order of the Tribunal and, hence, these appeals deserve to be dismissed. DISCUSSION:- 10. The term ''Loan'' generally refers to borrowing something, especially a sum of cash that is to be paid back along with the interest decided mutually by the parties. In other terms, the debtor is under a liability to pay back the principal amount along with the agreed rate of interest within a stipulated time. 11. It is a well-settled principle that creditor or his successor may exercise their ''Right of Waiver'' unilaterally to absolve the debtor from his liability to repay. After such exercise, the debtor is deemed to be absolved from the liability of repayment of loan subject to the conditions of waiver. The waiver may be a partly waiver i.e., waiver of part of the principal or interest repayable, or a complete waiver of both the loan as well as interest amounts. Hence, waiver of loan by the creditor results in the debtor having extra cash in his hand. It is receipt in the hands of the debtor/assessee. The short but cogent issue in the instant case arises whether waiver of loan by the creditor is taxable as a perquisite under Section 28(iv) of the IT Act of Taxable as a remission of liability under Section 41 (1) of the IT Act. 12.The first issue is the applicability of Section 28(iv) of the It Act in the present case.

Result 2
Madras High Court
M/S.Kothari International Trading ... vs The Assistant Commissioner Of ...
Honourable Judges N.Kirubakaran, P.Velmurugan
Date of Judgment: 10 November 2020
Segment Number (Approximate Page Number): 13
Relevancy Score: 66.41
   
   
   

Accordingly, the CIT (Appeals) confirmed the order of the Assessing Officer including the waiver amount to the income of the assessees and dismissed the appeal in respect of disallowance being deduction claimed as debts written back in the Profit & Loss account. 22. The said dismissal order was challenged before the Income Tax Appellate Tribunal. The Tribunal also found that the waiver of the interest by the ICICI was benefitted by the assessee and so, taxable and waiver of the loan can be construed to be income under Section 28 (iv) of the Act and also it is income under Section 41(1) of the Act. Challenging the same, the assessee has filed the present appeal. 23. Now the point for consideration is that as to whether the waiver of the loan can be considered to be income either under section 28(iv) or under section 41(1) of the Income Tax Act. The learned counsel for the appellant relied on the decisions in CIT Vs. Mahindra & Mahindra reported in (2018) 404 ITR 0001 (SC). http://www.judis.nic.in TCA.133 & 135 of 2019 24. The Income Tax Appellate Tribunal held that the loan amount waived by the ICICI Bank is necessarily to be considered as revenue income and hence it is taxable. This has been based on the earlier decisions of this court in the case of Ramaniyam Homes Pvt. Ltd (2016) 384 ITR 530 and Iskraemeco Regent Ltd., Vs, CIT (2011) 331 ITR 317. However, the learned counsel for the assessees have relied on the decisions of the Honourable Supreme Court in the case of CIT Vs. Mahindra and Mahindra, decided on 24th April 2018, wherein, it is held that the waiver of the loan by the creditor is neither taxable as the very first condition of Section 28(iv) of the Act which says any benefit or perquisite arising from the business shall be in the form of benefit or perquisite other than in the shape of money, is not satisfied in the said case and therefore, the waiver of the loan amount cannot be taxed under Section 28(iv) of the Act. 25. However, it is pertinent to mention herein the points considered by the Honourable Supreme Court in the above said case (CIT Vs. Mahindra & Mahindra) as to in what circumstances, the order passed holding Section 28(iv) and Section 41(1) of the IT Act does not apply in the said case.

Result 3
Madras High Court
M/S.Kothari International Trading ... vs The Assistant Commissioner Of ...
Honourable Judges N.Kirubakaran, P.Velmurugan
Date of Judgment: 10 November 2020
Segment Number (Approximate Page Number): 12
Relevancy Score: 65.68
   
   
   

Commissioner of Income-Tax passed the Assessment Order on 13.11.2009, holding that the Principal amount waived by ICICI should be taxed u/s.28(iv) or Section 41(1) relying on the decision of CIT Vs. T.V.Sundaram Iyengar & Sons 222 ITR 344. The said order was challenged before the Commissioner of Income Tax (Appeals), Chennai-1. The CIT (Appeals) pointed out that no enquiry has been conducted in the course of assessment proceedings and there http://www.judis.nic.in TCA.133 & 135 of 2019 is nothing on record to show that the explanation was called for from the assessee. Therefore, the CIT (Appeals) following the decision of Delhi High Court in Logitronics (P) Ltd., Vs. CIT (2011) 333 ITR 386/197 Taxman 349/9 taxmann.com 302 and Rollatainers Ltd., Vs. CIT (2011) 339 ITR 54/15 taxmann.com 111 (Delhi) which followed the decision of Madras High Court in Iskraemeco Regent Ltd., and expounded the law that if a loan had been taken for acquiring a capital asset, waiver thereof would not amount to any income leviable to tax. In the said decision, it is further held that when the loan amount borrowed for acquiring an asset gets wiped off by repayment, two entires are made in the books of account, one in the profit and loss account where payments are entered and another in the balance sheet where the non-payment of loan amount is reflected on the side of the liability. But, when a portion of the loan is reduced, not by repayment, but by the lender writing it off (either under a onetime settlement scheme or otherwise), only one entry gets into the books, as a natural entry. A doubt entry system of accounting will not permit of one entry. Therefore, when a portion of the loan is waived, the total amount of loan shown on the liabilities side of the balance sheet is reduced and the amount shown as capital reserves is increased to the extent of waiver. Alternatively, the amount representing the waived portion of the loan is shown as a capital receipt in the profit and loss account itself. In view of the above, the http://www.judis.nic.in TCA.133 & 135 of 2019 waiver of principal amount would constitute income falling under Section 28(iv) being the benefit arising for the business. Thus, the CIT (Appeals) held that even the waiver of principal amount would constitute income falling under Section 28(iv) being a benefit arising for the business.

Result 4
Madras High Court
Commissioner Of Income Tax vs M/S. Ramaniyam Homes P Ltd
Honourable Judges V.Ramasubramanian, T.Mathivanan
Date of Judgment: 22 April 2016
Segment Number (Approximate Page Number): 11
Relevancy Score: 64.22
   
   
   

33. On the basis its analysis of the decision of this Court in Iskraemeco Regent Limited, the Delhi High Court came to the conclusion in paragraph 23 of the report that 'in the context of waiver of loan amount, what follows from the reading of the aforesaid judgment would be that the answer would depend upon the purpose for which the loan was taken.' If the loan had been taken for acquiring the capital asset, waiver thereof would not amount to any income exigible to tax. But, if the loan was for trading purpose and was treated as such from the beginning in the books of account, the waiver thereof may result in the income more so when it was transferred to the profit and loss account. 34. In Rollatainers, the Delhi High Court was again concerned with a case where in terms of a corporate debt restructuring package worked out between the assessee and the bank, a portion of the principal and interest were waived. The Income Tax Appellate Tribunal held that the waiver of the working capital loan utilised towards the day-to-day business operations resulted in manifest in the revenue field and hence, was taxable in the year of waiver. 35. Finding on facts that the term loans in question were taken for the purchase of capital assets from time to time and these amounts did not come into the possession of the assessee on account of any trading transactions, the Delhi High Court reiterated the opinion rendered in Logitronics. 36. Therefore, the law as expounded by the Delhi High Court appears to be that if a loan had been taken for acquiring a capital asset, waiver thereof would not amount to any income exigible to tax. If the loan is taken for trading purposes and was also treated as such from the beginning in the books of account, the waiver thereof may result in the income, more so when it is transferred to the profit and loss account. 37. But, the Delhi High Court, both in Logitronics as well as in Rollatainers, did not take note of one fallacy in the reasoning given in paragraph 27.1 of the decision of this Court in Iskraemeco Regent Limited. In paragraph 27.1 of the decision in Iskraemeco Regent Limited, this Court held that Section 28(iv) speaks only about a benefit or perquisite received in kind and that therefore, it would have no application to any transaction involving money.

Result 5
Madras High Court
Commissioner Of Income Tax vs M/S. Ramaniyam Homes P Ltd
Honourable Judges V.Ramasubramanian, T.Mathivanan
Date of Judgment: 22 April 2016
Segment Number (Approximate Page Number): 10
Relevancy Score: 64.12
   
   
   

The principal amount written off was directly taken to the balance sheet under the head 'capital reserve' and it was not offered for taxation. The Assessing Officer looked at the expanded meaning of the expression 'income' under Section 2(24) and held that the principal amount of loan written off was nothing but gain/income in the hands of the assessee by relying upon Section 28(iv) and 41(1). The assessee's first appeal was allowed by the Commissioner, but his order was reversed by the Income Tax Appellate Tribunal, forcing the assessee to file a tax case appeal before the High Court of Delhi. 30. In Logitronics, two substantial questions of law were taken up for consideration by the Delhi High Court and they are as follows : "(1) Whether the Tribunal was right in law in holding that taxability of waiver of loan would be governed by the purpose for which the loan was taken, in as much as, though waiver of loan taken/ utilized for acquiring capital asset does not constitute income, however, waiver of loan taken for the purpose of business/trading activity gives rise to income taxable under the Act ? and (2) Whether waiver of loan, a subsequent event has the effect of changing the nature and character of loan, a capital receipt into a trading receipt and therefore, the ratio of the judgment of the Honourable Supreme Court in CIT Vs. T.V. Sundaram Iyengar & Sons Limited [(1996) 222 ITR 344], wherein unclaimed deposits received in the course of trading transaction were held to be taxable is applicable to waiver of loan?" 31. Before proceeding with the discussion on the substantial questions of law, the Delhi High Court took note of the broad scheme of the Act and posed a question to itself as to what would be the character of waiver of part of the loan at the hands of the assessee, though such waiver definitely brings some benefit to the assessee. If the waiver of the part of the loan brings a capital receipt, then only the capital gains tax would be chargeable under Section 45 and if not, the question was whether remission of loan was no income at all. 32. The Delhi High Court started with the decision of the Supreme Court in T.V.Sundaram Iyengar & Sons and after analysing the same in great detail, the Delhi High Court took note of the decision of this Court in Iskraemeco Regent Limited, on which, heavy reliance is placed in this case by the assessee.

Result 6
Madras High Court
M/S.Kothari International Trading ... vs The Assistant Commissioner Of ...
Honourable Judges N.Kirubakaran, P.Velmurugan
Date of Judgment: 10 November 2020
Segment Number (Approximate Page Number): 19
Relevancy Score: 63.44
   
   
   

28. Therefore, the assessing officer, while considering the matter, gave fresh opportunity and issued show cause notice to the assessees calling for certain particulars from the assessee and asked to explain (i) the circumstances under which the loan has been taken from ICICI Bank and whether any interest has been paid (ii) Details of advances made by the assessee, the year in which it http://www.judis.nic.in TCA.133 & 135 of 2019 was made. (iii) Account copies of the creditors viz., Anusha International, Nutech Organics Ltd and steps taken for recovery. (iv) Any provision has been made for bad debts in the earlier years preceding to the previous year. Subsequently, the Manager (Taxation) of the assessees appeared and filed certain details. But during the hearing, the assessing officer raised questions to the Authorised Representative and issued show cause notice that he has not furnished required particulars and the particulars furnished was not sufficient to consider their case. Even after granting sufficient time and opportunities, the Authorised Representative could not furnish any other materials to substantiate the claim by production of books. Further the Assessing Officer has held that the only fact available on record is the receipt of money by the assessee. Therefore, based on the available records, found that the waiver of the loan is the taxable income. Therefore, challenging the order of the Assessing Officer, once again, the assessees filed the appeal before the CIT (Appeals). He also found that the assessees have not produced sufficient materials, so too, the Income Tax Appellate Tribunal. 29. Now coming to the conclusion, the only point to be decided herein is whether the loan amount waived by the bank is taxable income or not. As already stated, in the decision referred by the learned counsel for the appellants http://www.judis.nic.in TCA.133 & 135 of 2019 in the case of CIT Vs. Mahindra and Mahindra, the assessees have submitted entire records and books of accounts. Therefore, from the facts, the Tribunal found that the loan amount has been shown in the Balance Sheet under the head "Loans-unsecured", and hence, could not be brought to tax as it represents the waiver of a loan liability which was on the capital amount and is not in the nature of income.

Result 7
Madras High Court
M/S.Kothari International Trading ... vs The Assistant Commissioner Of ...
Honourable Judges N.Kirubakaran, P.Velmurugan
Date of Judgment: 10 November 2020
Segment Number (Approximate Page Number): 10
Relevancy Score: 63.26
   
   
   

Further it was claimed before the Assessing Officer that it is neither income under Section 28(iv) of the Income Tax Act nor it can be assessed under Section 41(1) of the Act. The Assessing Officer, however, found that the waiver of the loan taken by the assessees is a benefit arising out of the business and hence, it is assessable as income. But when the Assessing Officer called for the particulars and also called for the records, the assessees have not produced the same before http://www.judis.nic.in TCA.133 & 135 of 2019 the Assessing Officer. Further to verify in this regard, the Assessing Officer, vide letter dated 08.10.2009, called for information from the ICICI u/s.133(6) of the Income Tax Act, for which, no reply has been received from them. Even during the hearing, it was raised with the Authorised Representative of the assessees to show cause as to why claim cannot be disallowed as the decisions in which he relied upon were not applicable to their case and added that no materials like books and documents and any other proof to prove the same in response to the questions asked vide letter dated 13.07.2009, were filed. Moreover, the Bank also not furnished any information sought for in this regard. Hence, even after granting time and opportunity, the Authorised Representative did not furnish any other materials to substantiate the claim by production of books. The only facts available on record is that the receipt of money by the assessees. Therefore, since the assessees had not furnished any particulars or documents to substantiate their case, the Assessing Officer found that the waiver of the loan is the income and is taxable based on the decision of the Apex Court in the case of M/s.T.V.Sundaram Iyengar & Sons Ltd., Vs. CIT (222 ITR 344). 19. The learned Standing Counsel further submits that the order of the Assessing Officer has been challenged before the CIT (Appeals). The CIT http://www.judis.nic.in TCA.133 & 135 of 2019 (Appeals) also observed and referred to the order of Assessing Officer and found that the assessee failed to furnish any material to substantiate that the debts were actually written off. Further, in the absence of books and materials, the waiver of the loan by the Bank, is added as taxable income.

Result 8
Madras High Court
M/S.Kothari International Trading ... vs The Assistant Commissioner Of ...
Honourable Judges N.Kirubakaran, P.Velmurugan
Date of Judgment: 10 November 2020
Segment Number (Approximate Page Number): 9
Relevancy Score: 61.35
   
   
   

Thus, neither Section 41(1) which talks of remission http://www.judis.nic.in TCA.133 & 135 of 2019 or benefit in respect of loss, expenditure or trading liability nor sec 28 (iv) will have application in the instant case. (vi) The decision of the Madras High Court in the case of CIT Vs. Ramaniyam Homes (P) Ltd., 384 ITR 530 (Mad) relied on by the Tribunal has not become final and a Review Application has been admitted by this Court in Review Appeal No.63 of 2018 and the same is pending. 15. After hearing the learned counsel for the assessees/appellants and also the learned Standing counsel for the Revenue, this court framed the following substantial question of law:- "Whether the Tribunal was right in law in holding that the Principal amount of loan waived by the ICICI Bank should be taxed as income under Section 28(iv) of the Act." 16. The assessees have credited the loan, written back in the profit and loss account. Subsequently loss was added to the business. The assessee claimed before the Assessing Officer that the waiver of the loan by the bank does not constitute income and it is a capital receipt, therefore, it is not taxable in the hands of the assessees. All the receipts in connection with the business are not Trading Receipts. Since the assessee company has not utilized the http://www.judis.nic.in TCA.133 & 135 of 2019 amount for business purpose, waiver of the loan cannot be considered to be income either under Section 41(1) of the Act or Section 28(iv) of the Act. 17. The learned counsel for the assessees would submit that the controversy in the present case is covered by the decision in CIT Vs. Mahindra and Mahindra Limited ((2018) 404 ITR 1 (SC) in which the Honourable Supreme Court has held that waiver of the loan by the Bank is not taxable either under Section 28(iv) of the Act or under Section 41(1) of the Act as it is not a trading liability on which some deduction was claimed in the earlier year which is being remitted or waived by the Bank. 18. The learned Standing counsel for the Revenue would submit that the assessee borrowed loan and loan was waived by the ICICI/lender. The assessees claimed that it is a capital receipt in the hands of the assessee.

Result 9
Madras High Court
M/S.Kothari International Trading ... vs The Assistant Commissioner Of ...
Honourable Judges N.Kirubakaran, P.Velmurugan
Date of Judgment: 10 November 2020
Segment Number (Approximate Page Number): 21
Relevancy Score: 61.02
   
   
   

When the loan amount borrowed for acquiring an asset gets wiped off by repayment, two entries are made in the books of account, one in the profit and loss account where payments are entered and another in the balance sheet where the amount of unrepaid loan is http://www.judis.nic.in TCA.133 & 135 of 2019 reflected on the side of the liability. But, when a portion of the loan is reduced, not by repayment, but by the lender writing it off (either under a one time settlement scheme or otherwise), only one entry gets into the books, as a natural entry. A double entry system of accounting will not permit of one entry. Therefore, when a portion of the loan is waived, the total amount of loan shown on the liabilities side of the balance sheet is reduced and the amount shown as Capital Reserves, is increased to the extent of waiver. Alternatively, the amount representing the waived portion of the loan is shown as a capital receipt in the profit and loss account itself. These aspects have not been taken note of in Iskraemeco Regent Ltd." The Income Tax Appellate Tribunal, after referring to the decision of this Court in CIT Vs Ramaniyam Homes P.Ltd., (2016) 384 ITR 530, pointed out in clear terms that the loan amount borrowed for acquiring an asset gets wiped off by repayment. But when a portion of the loan is reduced, not by repayment, but by the lender writing it off either under a one time settlement scheme or otherwise, only one entry gets into the books, as a natural entry. When a portion of the loan is waived, the total amount of loan shown on the liabilities side of the balance sheet is reduced and the amount shown as capital reserves, is increased to the extent of waiver. 32. A careful perusal of the Assessment order and the subsequent orders of the Appellate Authority show that in the absence of particulars sought for by http://www.judis.nic.in TCA.133 & 135 of 2019 the Assessing Officer and substantiating records and books of accounts with regard to the previous assessment orders for the previous years, they have arrived at the decision that waiver of the loan is based on the receipt and the income is taxable under section 28(iv) and 41(i) of the Act. Therefore, it is the duty of the assessees to furnish all the particulars including the accounts of the previous years.

Result 10
Madras High Court
M/S.Kothari International Trading ... vs The Assistant Commissioner Of ...
Honourable Judges N.Kirubakaran, P.Velmurugan
Date of Judgment: 10 November 2020
Segment Number (Approximate Page Number): 11
Relevancy Score: 60.89
   
   
   

The assessing officer, CIT(Appeals) and also the Income Tax Appellate Tribunal, based on the earlier decisions rendered by this court, Honourable Supreme Court and also the Appellate Tribunal, came to the conclusion that the waiver of the interest is an income taxable u/s.28(iv) of the Act and also Section 41(1) of the Income Tax Act. 20. The only ground raised in the present appeals is that the waiver of the loan cannot be considered to be an income either u/s.28(iv) or under Section 41(1) of the Act. The learned counsel for the assessees has placed reliance on the following decisions:- (i) CIT Vs. Mahindra and Mahindra Limited ((2018) 404 ITR 1 (SC)) (ii) Tirunelveli Motor Bus Service Co Ltd., Vs. CIT 78 ITR 55 SC (iii) CIT VS Rayala Corporation Ltd 218 Taxman 11 (Mad) (iv) CIT Vs. Bhawan Va Path Nirman (Bohra) & Co. 258 ITR 440 Raj (v) CIT R.Radhika TCA 1224 of 2008 (Mad) (vi) Narayan Chettiar Indutries Vs ITO 277 ITR 426 Mad. http://www.judis.nic.in TCA.133 & 135 of 2019 21. A careful perusal of the entire materials placed before this court, would go to show that the appellants are Income Tax assessees. The return of income was submitted by the assessees on 29.10.2004. The case was selected for scrutiny under Computer Aided Scrutiny Selection (CASS) and notice u/s.142(1) calling for certain information was sent and the Assessing Officer completed the assessment on 30.08.2006 u/s.143(3) of the Act and since the assessment completed was considered to be erroneous and prejudicial to the interest of revenue, notice under Section 263 was issued by the Commissioner of Income Tax by proceedings dated 27.03.2009 to the assessee on 15.10.2009. In this regard the Commissioner found that the Assessing Officer has not applied his mind while completing the assessment and no information has been called for on the application of Section 41(1) or Section 28(iv) of the Act. So directed the Assessing Officer to call for necessary details from the bank. Thereafter, case was posted for hearing on 14.07.2009 and the Asst.

Result 11
Madras High Court
Commissioner Of Income Tax vs M/S. Ramaniyam Homes P Ltd
Honourable Judges V.Ramasubramanian, T.Mathivanan
Date of Judgment: 22 April 2016
Segment Number (Approximate Page Number): 13
Relevancy Score: 60.88
   
   
   

In our considered view, the waiver of a portion of the loan would certainly tantamount to the value of a benefit. This benefit may not arise from "the business" of the assessee. But, it certainly arises from "business". The absence of the prefix "the" to the word "business"makes a world of difference. 40. We shall now turn our attention to the distinction sought to be made between the waiver of a portion of the loan taken for the purpose of acquiring capital assets on the one hand and the the waiver of a portion of the loan taken for the purpose of trading activities on the other hand. 41. It appears that in so far as accounting practices are concerned, no such distinction exists. Irrespective of the purpose for which, a loan is availed by an assessee, the amount of loan is always treated as a liability and it gets reflected in the balance sheet as such. When a repayment is made in monthly, quarterly, half yearly or yearly instalments, the instalment is divided into two components, one relating to interest and another relating to a portion of the principal. To the extent of the principal repaid, the liability as reflected in the balance sheet gets reduced. The interest paid on the principal amount of loan, will be allowed as deduction, in computing the income under the head "profits and gains of business or profession", as per the provisions of the Act. 42. But, Section 36(1)(iii) makes a distinction. The amount of interest paid in respect of capital borrowed for the purpose of business or profession is allowed as deduction under Section 36(1)(iii), in computing the income referred to in Section 28. But, the proviso thereunder states that any amount of interest paid in respect of capital borrowed for acquisition of an asset for extension of existing business or profession, whether capitalised in the books of account or not for any period beginning from the date on which the capital was borrowed for the acquisition of the asset, till the date on which such asset was put to use, shall not be allowed as deduction. 43. Therefore, it is clear that the moment the asset is put to use, then the interest paid in respect of the capital borrowed for acquiring the asset, could be allowed as deduction.

Result 12
Bombay High Court
Unit Trust Of India And Anr. vs P.K. Unny And Ors.
Honourable Judges S.H. Kapadia, V.C. Daga
Date of Judgment: 19 April 2001
Segment Number (Approximate Page Number): 52
Relevancy Score: 58.99
   
   
   

Under the Interest-tax Act, the loan contract can be changed by the credit institution. Had it been a tax on income, no such provision could have been made under the Interest-tax Act. Even if a credit institution incurs a loss in a given year, the levy would be maintained because it is on gross receipt. Under the Income-tax Act because it is a tax on income, an assessee who incurs expenditure to earn income is entitled to claim deduction in respect of such expenses. It is not so under the Interest-tax Act [see Section 6 of the Interest-tax Act.] Similarly, under Section 18 of the Interest-tax Act, interest tax is an allowable deduction in computing the income of a credit institution assessable under the Income-tax Act. Under Section 18 of the Interest-tax Act, the income of a credit institution chargeable to income-tax under the head "Profits and gains of business or profession" is deductible from the income under that head. Therefore, it is clear that interest tax is deductible as expense. Therefore, Interest-tax Act cannot be compared with the Income-tax Act. If one keeps in mind the two concepts, viz., "income" vis-a-vis "tax on income", the entire problem stands resolved. Whenever the Legislature uses the words "tax on income" as in the case of Section 32 of the UTI Act, it refers to computable income. It cannot refer to gross income. This difference is also noticed by us when we discussed herein- above, the scheme of the UTI Act. There is one more way of looking at this problem. The word "income" in Section 32(1) of the UTI Act is in the company of the word "profits or gains". The word "profits" represents difference. It does not refer to gross profits. Numerous judgments on lack of legislative competence have been cited before us in which the word "income" has been interpreted by the Supreme Court. However, those judgments have no application to the facts of the present case. In this case, we are not reading the word "income" under any of the entries under the Constitution. The entries in the Constitution refer to the legislative field. Therefore, the numerous authorities cited on behalf of the UTI in the context of entry 82 of List I have no application.

Result 13
Bombay High Court
Serum Institute O India Private Limited vs Unon Of India Through Secretary ...
Honourable Judges K. R. Shriram, Neela Gokhale
Date of Judgment: 4 December 2023
Segment Number (Approximate Page Number): 25
Relevancy Score: 56.45
   
   
   

No doubt, the Income Tax Act takes into account two points of time all which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in book-keeping an entry is made about a hypothetical income, which does not materialise. 21 Before the amendment through the Finance Act, 2015, the Supreme Court applied the "purpose test" to determine whether a subsidy was a capital or revenue receipt. In the landmark cases of Sahney Steel and Press Works Ltd. (Supra) and Ponni Sugars and Chemicals Ltd. (Supra), the Court held that if the subsidy's purpose was to help the assessee run the business more profitably or meet daily business expenses, it was considered a revenue receipt (and thus taxable). Conversely, if the subsidy aimed at setting up a new unit or expanding an existing unit, it was deemed a capital receipt (and not taxable). The Finance Act, 2015, significantly altered the landscape by introducing sub-clause (xviii) to Section 2(24) of the Act. This amendment defined any assistance in the form of subsidy, grant, cash incentive, duty drawback, waiver, concession, or reimbursement provided by the Central or State Government as income, hence taxable, unless used to determine the actual cost of an asset. This amendment sought to end disputes by making all subsidies taxable unless they fell under an exclusion category; 22 There is very limited scope in challenge to constitutional Gauri Gaekwad 36/68 WP-3735-2021.doc validity. The fulcrum of the constitutional challenge is the question of legislative competence. Every legislation is an experiment in achieving certain desired ends and trial and error method is inherent in every such experiment. The law is very clear that the legislature should be allowed some play in the joints because it has to deal with complex problems which do not admit of solution through any doctrine or straight jacket formula and this is particularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature. Every legislation particularly in economic matters cannot provide for all possible situations or anticipate all possible abuses.

Result 14
Madras High Court
Commissioner Of Income Tax vs M/S. Ramaniyam Homes P Ltd
Honourable Judges V.Ramasubramanian, T.Mathivanan
Date of Judgment: 22 April 2016
Segment Number (Approximate Page Number): 9
Relevancy Score: 56.03
   
   
   

In the third last paragraph of its judgment, the Supreme Court summarised the principle as follows : "In other words, the principle appears to be that if an amount is received in the course of trading transaction, even though it is not taxable in the year of receipt as being of revenue character, the amount changes its character when the amount becomes the assessee's own money because of limitation or by any other statutory or contractual right. When such a thing happens, commonsense demands that the amount should be treated as income of the assessee." 28. In Solid Containers Limited Vs. D.C.I.T. [308 ITR 417], a Bench of the Bombay High Court was concerned with a case, in which, a loan obtained by the assessee during the previous year for business purposes was written back as a result of the consent terms between the parties. The assessee claimed that the loan was the capital receipt and was not claimed as deduction from the taxable income as expenses and hence, it did not come under Section 41(1). The Assessing Officer held that the credit balances written back was the income of the assessee that arose out of the business activity and hence, liable to tax under Section 28. The Tribunal relied upon the decision in T.V.Sundaram Iyengar & Sons and upheld the contention of the Revenue. Before the High Court, the assessee relied upon a judgment of the Bombay High Court in Mahindra & Mahindra Limited Vs. C.I.T. [261 I.T.R. 501] to the effect that in relation to such transactions, Section 28(iv) was not attracted. But, the Bombay High Court followed the decision in T.V.Sundaram Iyengar & Sons and rejected the claim of the assessee. 29. In Logitronics, the Delhi High Court was concerned with the very same questions that we are called upon to deal with in this case. In the case before the Delhi High Court, the assessee availed a loan from the State Bank of India, but failed to discharge its liability. The loan was categorized as a non performing asset and proceedings for recovery have been initiated. During the pendency of those proceedings, a One Time Settlement was arrived at and a portion of the loan as well as interest were waived. In the return filed by the assessee, they showed the interest waived as income, but not the amount of loan waived.

Result 15
Bombay High Court
Serum Institute O India Private Limited vs Unon Of India Through Secretary ...
Honourable Judges K. R. Shriram, Neela Gokhale
Date of Judgment: 4 December 2023
Segment Number (Approximate Page Number): 10
Relevancy Score: 55.91
   
   
   

The subsidy is benefit provided by the Government, who could not invest capital or generate employment, but instead encourage private sectors to develop industry in specific areas by providing capital incentives to them, thereby reducing their capital cost. These incentives by any legal connotations do not come within the meaning of income. The impugned sub-clause is contrary to the well settled principles that under Act, only "real income" is taxable. The subsidy received in nature of waiver, concession or exemption cannot take character of income, thus not being exigible to income tax under the Act. The Supreme Court in Poona Electric Gauri Gaekwad 16/68 WP-3735-2021.doc Supply Co. Ltd. V/s. CIT7 has held that income tax is a tax on the real income, i.e., the profits arrived at on commercial principles subject to the provisions of the Act. In view of these observations of the Supreme Court, a subsidy is not real income and cannot be sought to be taxed under the Act. The assistance in nature of "waiver or concession or reimbursement" cannot be in the nature of income as there is no receipt in these cases. Such assistance is not an income under any of the five heads of income. Thus, such assistance is not an income, and merely by amending the definition or artificially expanding the definition of word "income", any receipt will not take the characteristics. The impugned sub-clause is only intended for those subsidies which are revenue receipts, and the manner in which such receipts are to be computed for the purpose of taxation under the Act. However, since the impugned sub-clause does not make any distinction between a capital receipt and revenue receipt, the same is contrary to the very purpose for which it has been introduced, therefore, is liable to be struck down; (i) The importance of Sahney Steel & Press Works Ltd. (Supra) lies in the fact that it has discussed and analysed the entire case law and it has laid down the basic test to be applied in judging the character of a subsidy. That test is that the character of the receipt in the hands of the assessee has to be determined with respect to the purpose for which the 7. AIR 1966 SC 30 Gauri Gaekwad 17/68 WP-3735-2021.doc subsidy is given. In such cases, one has to apply the purpose test. The point of time at which the subsidy is paid is not relevant. The source is immaterial.

Result 16
Madras High Court
Sunil Kapoor vs Commissioner Of Income Tax
Honourable Judges R.Sudhakar, R.Karuppiah
Date of Judgment: 25 February 2015
Segment Number (Approximate Page Number): 10
Relevancy Score: 54.94
   
   
   

For better clarity, the relevant portion of the order is quoted hereunder :- It is clear from the above cited passage that if a controlled company adopted a device of making a loan or advance to one of its shareholders such a shareholder would be deemed to have received the said amount out of the accumulated profits and would be liable to pay tax on the basis that he had received the said loan by way of dividend. Whether the loan is ultimately repaid to the company or not is immaterial. This decision would seem to answer all the contentions raised by Mr. Choudhury against the assessment of the amount as dividend. Further, as pointed out by both the Accountant Member and the President of the Income-tax Appellate Tribunal, neither the Bombay High Court nor the Madras High Court, who had also an occasion to consider this question, had any doubts that the liability to tax attached as soon as the loan was taken from the company. For instance, in the Madras case of K. M. S. Lakshmana Aiyar v. Additional Income-tax Officer, it was observed that under section 2(6A)(e) a loan or advance by a controlled company to its shareholder would attract tax liability though such a loan might be repaid subsequently even during that year. Again, the Bombay High Court in Navnit Lal C. Javeri v. K. K. Sen, from which the aforesaid appeal was taken to the Supreme Court, has observed as follows : "The tax is attracted at the point of time when the said loan is borrowed by the members." We have, therefore, no hesitation in holding that the liability to be taxed attaches to any amount taken as a loan by a shareholder from the company at the moment the loan is borrowed and it is immaterial whether the loan is repaid before the end of the accounting year or not. The answer to the question referred must, therefore, be in the affirmative and in favour of the department. 16. The Supreme Court in the case of Smt. Tarulata Shyam & Ors. Vs - Commissioner of Income Tax, West Bengal (1977 (108) ITR 345 (SC)), which appeal is a product of the above referred to decision from the Calcutta High Court, has culled out the situation in which the payments made to a shareholder are to be treated as taxable dividend, wherein five conditions have been laid down for the purpose of determination of the head on which the amount is to be taxed.

Result 17
Bombay High Court
Pushpa Sanchalal Kothari vs Aarti Uttam Chavan
Honourable Judges Vibha Kankanwadi
Date of Judgment: 25 November 2020
Segment Number (Approximate Page Number): 10
Relevancy Score: 54.76
   
   
   

To construe Section 269-SS of the Income Tax Act as a competent enactment declaring as illegal and unenforceable all transactions of loan, by cash, beyond Rs. 20,000/-, in my opinion, cannot be countenanced. 15. Yet, another reason for this opinion is Section 271-D of the Income Tax Act, which reads thus :- "271-D. Penalty for failure to comply with the provisions of Section 269-SS. (1) If a person takes or accepts any loan or deposit in contravention of the provisions of Section 269-SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted. 2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner." 16. In that if a person takes or accepts any loan or deposit in Apeal-322-2017.odt contravention of Section 269-SS is liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted, as may be imposed by the Joint Commissioner. 17. The contravention of Section 269-SS of the Income Tax Act though visited with a stiff penalty on the person taking the loan or deposit, nevertheless, the rigor of Section 271-D of the Income Tax Act is whittled down by Section 273-B of the Income Tax Act, on proof of bonafides. It cannot, therefore, be said that the transaction of the nature brought before this court could be declared illegal, void, and unenforceable. 18. Though the facts and issue involved in above case was different, but the purpose and scope of those sections under Income-Tax Act as explained by Hon'ble Supreme Court would support the decision in Krishna Morajkar (supra). 19. Therefore, in this case also, accused cannot take benefit of such infraction by complainant to show the transaction in Income-Tax returns. Complainant in this case had the capacity to advance the said amount to accused. Thus, from the complaint and the deposition of the complainant/ appellant the factum of giving of loan stands established. Complainant had proved beyond reasonable doubt that the disputed cheque Exhibit-37 was issued by the accused towards the "legally enforceable debt or liability". Presumption under Section 139 of N.I. Act was in favour of complainant. Though accused has Apeal-322-2017.odt adduced evidence in rebuttal, however, she has failed to discharge the said presumption. 20. Complainant had issued statutory notice within statutory period.

Result 18
Madras High Court
Tirunelveli District Central vs The Joint Commissioner Of Income ...
Honourable Judges G.R.Swaminathan
Date of Judgment: 27 July 2020
Segment Number (Approximate Page Number): 11
Relevancy Score: 54.75
   
   
   

It is true that Section 198 of the Act states that the sum deducted in accordance with Section 194N of the Act for the purpose of computing the income of an assessee should not be deemed to be the income received. But having regard to the overall scheme of the chapter and particularly, by reading Section 194N along with Section 201 of the Act, one can safely come to the conclusion that if the sum received by the assessee will not be an income at his hands, then, the question of deduction under Section 194N of the Act will not arise. The Hon'ble Supreme Court in a recent decision reported in (2019) 13 SCC 747 (Commissioner of Income Tax Vs. M/s. Vasisth Chay Vyapar Limited) observed that income tax is levied on income. If income does not result at all, there cannot be levy of tax. Even if an entry of hypothetical income is made in the books of account, but, if the income does not result at all, http://www.judis.nic.in W.P.(MD)No.6102 of 2020 and etc batch then there is neither accrual nor receipt of income and no tax can be levied. This principle laid down in the decision of the Hon'ble Supreme Court reported in 1962 46 ITR 144 SC - (Commissioner of Income Tax Vs. Shoorji Vallabdhas and Co) has been reiterated in a decision of the Hon'ble Bombay High Court reported in 2019 (417) ITR 169-(Rupesh Rashmikant Shah Vs. Union of India), which held as follows:- "The provision for deduction of tax at source is not a charging provision. It only makes deduction of tax at source on payment of same, which, in the hands of payee, is income. If the payee has no liability to pay tax on such income, the liability to deduct tax at source in the hands of the payer cannot be fastened." 18.Though the learned counsel appearing for the writ petitioners strongly relied on a decision of the Hon'ble http://www.judis.nic.in W.P.(MD)No.6102 of 2020 and etc batch Supreme Court reported in [2009] 312 ITR 225 (Commissioner of Income Tax vs. M/s. Eli Lilly and Company (India) Private Limited) the said decision itself clarifies that it should be understood only in the context of computation of salaries. Hence, I refrain from discussing it.

Result 19
Bombay High Court
Unit Trust Of India And Anr. vs P.K. Unny And Ors.
Honourable Judges S.H. Kapadia, V.C. Daga
Date of Judgment: 19 April 2001
Segment Number (Approximate Page Number): 45
Relevancy Score: 54.73
   
   
   

Thirdly, Section 18 shows the meaning of the word "income" as understood by the Legislature while enacting the Interest-tax Act. The said section shows that the Legislature has referred to the income of a credit institution chargeable to income-tax under the aforestated two heads. These words namely "chargeable to income-tax" go with the word "income" of a credit institution. Therefore, one cannot read the word "income" in the said section in isolation from the words "chargeable to income-tax". It shows that the word "income" in Section 18 refers to computed income and not gross income. Lastly, Section 18 provides for deduction to an assessee under the Income-tax Act by making payment of interest-tax, a charge against the profits of the assessee. It is for this reason that the Legislature has referred to the aforestated two heads of income, viz., "profits and gains of business or profession" or "income from other sources". This clearly shows that as distinguished from tax on income, the burden of interest-tax may be passed on to the persons taking loans and advances. Therefore, the interest-tax is very similar to an indirect levy. This aspect is also borne out by Section 26C of the Interest-tax Act which lays down that notwithstanding anything contained under the term loan agreement sanctioned by the credit institution, it shall be lawful for the credit institution to vary the agreement and to increase the rate of interest to the extent to which such credit institution is liable to pay the interest-tax under this Act. Therefore, Section 26C also shows that the interest-tax is not a tax on income as contended on behalf of the UTI. Therefore, on a bare reading of the Interest-tax Act, 1974, we are of the view that the interest-tax is not a tax on income ; that it is a tax on gross receipt of interest; that even if the net result of business of a credit institution is a loss, yet, such credit institution will have to pay interest-tax on the gross interest ; that no deductions are allowed while computing interest chargeable to interest-tax except the bad debt. Had it been a tax on income then it would have been subject to process of computation of income as per the Income-tax Act. In fact, no exemption is allowed to the UTI under Section 28 from the charge of interest-tax.

Result 20
Bombay High Court
Rupesh Rashmikant Shah vs Union Of India And 8 Ors
Honourable Judges Akil Kureshi, S.J. Kathawalla
Date of Judgment: 8 August 2019
Segment Number (Approximate Page Number): 4
Relevancy Score: 54.58
   
   
   

INCOME TAX PROVISIONS: 11. Before recording rival stands, we may briefly refer to applicable provisions contained in the said Act. 12. Section 2(24) of the Act defines the term 'income'. Section 2(28A) defines 'interest'. Section 56 pertains to income from other sources, relevant portion of which reads as under: wp.2902.2016(J).doc "Income from other sources. 56.(1) Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income-tax under the head "Income from other sources", if it is not chargeable to income-tax under any of the heads specified in section 14, items A to E. (2) In particular, and without prejudice to the generality of the provisions of sub-section (1), the following incomes, shall be chargeable to income-tax under the head "Income from other sources", namely:- (viii) income by way of interest received on compensation or on enhanced compensation referred to in clause (b) of section 145A." 13. Sub-section (2) of section 56 thus provides that in particular and without prejudice to the generality of the provisions of sub- section (1), the following incomes, contained in various clauses therein would be chargeable to income tax under the head income from other sources. Clause (viii) refers to income by way of interest received on compensation or on enhanced compensation referred to in clause (b) of section 145A. Subsection (1) of section 56 provides that income of every kind which is not to be excluded from the total income would be chargeable to tax as income from other sources if it is not chargeable under any of the heads specified in items (A) to (E) of section 14. wp.2902.2016(J).doc 14. Section 145A(b) as it stood at the relevant time reads thus: Notwithstanding anything to the contrary contained in section 145 - (b) interest received by an assessee on compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the year in which it is received." Sub-section (1) of section 194A of the Act enjoins any person other than an individual or Hindu Undivided Family responsible for paying to a resident any income by way of interest to deduct tax at source at the prescribed rates.

Result 21
Gujarat High Court
Sarabhai Chemicals Pvt. Ltd. (Now Known ... vs The Commissioner Of Income-Tax
Honourable Judges K.A. Puj
Date of Judgment: 6 February 2002
Segment Number (Approximate Page Number): 43
Relevancy Score: 54.56
   
   
   

It was held that since the assessee had made no application for reduction or waiver of interest under Section 215, no question arose of the relevant authority having denied improperly interest or waiver of interest. [e] The decision of the Madras High Court in M.N. Kanagasabai Chettiar v. Commissioner of Income Tax, reported in 75 ITR 672 was cited for relying upon the observations to the effect that the company cannot, by a self-serving resolution of the board of directors, alter the situation and voluntarily give certain tax benefits to the assessee and gain certain advantages to itself under the guise and in the exercise of the indoor management of the company. [f] The Supreme Court in Central Manganese case (supra) approved the decision of this Court in Bhikhoobhai N. Shah v. Commissioner of Income Tax, reported in 114 ITR 197, in which it was held that, waiver or reduction of interest pre-supposses that liability has been incurred by the assessee, and that if no liability has been incurred, then there is no question of exercise of discretion of waiver or reduction of interest. It was also held that the assessee in an appeal against the Order of assessment cannot question the interest assessed if he does not deny his liability to be assessed to such interest under Section 215 of the Act. [g] The decision in State Bank of Travancore v. Commissioner of Income Tax, reported in 158 ITR 102 was relied upon on behalf of the Revenue for the proposition that notion of real income cannot be brought into play where income has accrued according to the accounts of the assessee and there is no indication by the assessee treating the amount as not having accrued and that, once accrual takes place, the same cannot be defeated by any theory of real income. It was held that the concept of real income cannot be so used as to make accrued income non-income simply because after the event of accrual, the assessee neither decides to treat it as a bad debt nor claims deduction, but still enters the same with a diminished hope of recovery in the suspense account.

Result 22
Karnataka High Court
M/S. Vidya Investment And Trading vs Union Of India
Honourable Judges B.V.Nagarathna
Date of Judgment: 7 February 2014
Segment Number (Approximate Page Number): 25
Relevancy Score: 54.54
   
   
   

The tax is on income and not on gross receipts. It was further held that agricultural income is not only exempt from tax under the Income-tax Act but the scheme of the Act it is also to be excluded from computation of the total income. Income covered by Sections 10 and 11, which is not chargeable to tax, does not fall under Section 14 and under the various computation sections, Section 15 to Section 59. Exempted income is tax-free income. On the other hand, deduction under Chapter VI-A is for income which forms part of total income but is free of tax. 26. Thus, what emerges from the aforesaid rulings is that, the expression "total income" as defined in sub-section (25) of Section 2 of the Act is distinct from the expression total income used in Section 10 of the Act. Sub-section (45) of Section 2 defines total income in the context of Section 5 and as is computed in the manner laid down in the Act. Once the total income is determined, the tax would have to be paid in accordance with the rate envisaged. But what Section 10 states is that certain incomes do not form part of total income. In fact, the heading of Chapter-III itself states "incomes which do not form part of total income". Thus, the concept of total income has to be interpreted as income which is not includable for the purpose of computation of tax. 27. Keeping in mind the rules of interpretation elaborated above while considering sub-section (2A) of Section 10, along with the decisions discussed above, what surfaces is the fact that the Act intended that certain incomes cannot be included in the gross total income of a person while computing the tax payable thereunder. 28. A perusal of Section 10 of the Income-tax Act would make it clear that the Parliament intended that certain incomes should not be included in the total income of a person i.e., gross total income. Examples are, agricultural income; any sum received by an individual as a member of a Hindu undivided family, where such sum has been paid out of the income of the family and in the case of a person being a partner of a firm, which is separately assessed as share in the total income of the firm. While the expression "total income" in the beginning of Section 10, would refer to total income of a person as computed from Chapter-IV onwards, the expression total income in the heading of the Chapter is quite different.

Result 23
Madras High Court
Commissioner Of Income Tax vs M/S. Ramaniyam Homes P Ltd
Honourable Judges V.Ramasubramanian, T.Mathivanan
Date of Judgment: 22 April 2016
Segment Number (Approximate Page Number): 3
Relevancy Score: 54.5
   
   
   

10. On the only remaining issue namely the deletion of the principal portion of the term loan waived by the bank, the Tribunal held in para 12 of its order that the term loan had admittedly been used by the assessee for acquiring capital assets. Therefore, the Tribunal followed the decision of this Court in Iskraemeco Regent Limited and confirmed the order of the first Appellate Authority. Hence, this appeal by the revenue. 11. Before taking up the rival contentions for consideration, it may be necessary to have a look at the decision of this Court in Iskraemeco Regent Limited, since the first Appellate Authority as well as the Tribunal have merely followed the said decision. 12. In Iskraemeco Regent Limited, the assessee admittedly availed a loan from the bank for the purchase of capital assets. When the assessee became a sick industrial undertaking, they approached the BIFR. Under a Scheme of Rehabilitation sanctioned by the BIFR, a one time settlement was arrived at between the assessee and the Bank. The assessee credited the waiver of principal amount to the capital reserve account in the balance sheet treating it as capital in nature. But, the Assessing Officer treated the amount as income under Section 28(iv) read with Section 2(24). The assessee's appeal was dismissed by the Commissioner, following the judgment of the Supreme Court in CIT v. T.V.Sundaram Iyengar & Sons Ltd. [222 ITR 344]. But, the said decision was reversed by a Bench of this Court in a Tax Case Appeal filed by the assessee in Iskraemeco Regent Limited. This Court held that a loan transaction has no application with respect to Section 28(iv) of the Income Tax Act and that the same cannot be termed as an income within the purview of Section 2(24). In paragraph 29 of the judgment, this Court held that Section 28(iv) has no application to loan transactions and that therefore, it cannot be termed as income taxable as a receipt.

Result 24
Delhi High Court
M/S One Point Reality Private Limited vs Income Tax Officer Ward 76(2), Delhi
Honourable Judges Yashwant Varma
Date of Judgment: 13 February 2024
Segment Number (Approximate Page Number): 109
Relevancy Score: 54.2
   
   
   

Under Section 4(2), in respect of income chargeable under sub-section (1) thereof, income tax shall be deducted at source or paid in advance, depending upon the provisions of the Income Tax Act. Importantly, under Section 5(2) of the Income Tax Act, the total income of a person who is a non-resident, includes all income from whatever source derived, which accrues or arises or is deemed to accrue or arise to such person in India during such year. This, however, is subject to the provisions of the Income Tax Act. Certain income is deemed to arise or accrue in India, under Section 9 of the Income Tax Act, notwithstanding the fact that such income may accrue or arise to a non-resident outside India. One such income is income by way of royalty, which, under Section 9(1)(vi) of the Income Tax Act, means the transfer of all or any rights, including the granting of a licence, in respect of any copyright in a literary work. 31. That such transaction may be governed by a DTAA is then recognised by Section 5(2) read with Section 90 of the Income Tax Act, making it clear that the Central Government may enter into any such agreement with the Government of another country so as to grant relief in respect of income tax chargeable under the Income Tax Act or under any corresponding law in force in that foreign country, or for the avoidance of double taxation of income under the Income Tax Act and under the corresponding law in force in that country. What is of importance is that once a DTAA applies, the provisions of the Income Tax Act can only apply to the extent that they are more beneficial to the assessee and not otherwise. Further, by Explanation 4 to Section 90 of the Income Tax Act, it has been clarified by Parliament that where any term is defined in a DTAA, the definition contained in the DTAA is to be looked at. It is only where there is no such definition that the definition in the Income Tax Act can then be applied. This position has been recognised by this Court in Azadi BachaoAndolan [Union of India v. Azadi BachaoAndolan, (2004) 10 SCC 1] , which held : (SCC pp.

Result 25
Madras High Court
Date Of Reserving The Judgment vs P.Mani
Honourable Judges R.Mala
Date of Judgment: 6 March 2015
Segment Number (Approximate Page Number): 5
Relevancy Score: 54.16
   
   
   

It is observed by the learned Judicial Magistrate in the judgment that the complainant has produced a copy of the income tax account in which he has stated that during the financial year 1999 2000, he has received Rs.42,100/- from the house property and from the business and from other sources, he did not derive any income and in this context, it is unbelievable that he was running money lending business and textile business. The observation is proper. 4[e] It is admitted that the appellant is income tax assessee. It is his evidence that he has included the loan in his income tax account. In this context, in the absence of production of income tax returns, it is to be held that the loan transaction should not have been shown in the account. As per the settled position of law, when the income tax assessee fails to produce income tax returns containing the loan transaction, it should have been observed that the alleged loan transaction is a an illegal one. Further, he has not disputed the genuineness of Exs.D1 to D3 and the evidence of PW2 with regard to these documents. 10.2. In the decision reported in (2008) 4 Supreme Court Cases 54, Krishna Janardhan Bhat v. Dattatraya G.Hegde, it was held that other principles of legal jurisprudence, namely, presumption of innocence as a human right and the doctrine of reverse burden introduced by S.139 should be delicately balanced. Such balancing acts would largely depend upon the factual matrix of each case, the materials brought on record and having regard to legal principles governing the same. Further, it was held that as per Section 269-SS, Income Tax Act, any advance taken by way of loan of more than Rs.20,000 had to be made by an account payee cheque. 10.3. The decision reported in 2014 (8) SCALE 669, Ramdas S/o Khelunaik v. Krishnanand S/o Vishnu Naik does not apply to the facts of the present case because it was held therein that the case has been filed as if it was for borrowal of money. In paragraph 9 of the said decision, it was stated as follows: 9. ... We find from the record that admittedly, the accused appellant deals with sale and purchase of landed properties and the respondent-complainant works as a Lorry Driver under him with a salary of Rs.2,500/- p.m. and Rs.20/- per day towards miscellaneous expenses (bhatta).

Result 26
Allahabad High Court
U.P. Bhumi Sudhar Nigam vs Commissioner Of Income Tax
Honourable Judges R.K. Agrawal, Prakash Krishna
Date of Judgment: 3 December 2004
Segment Number (Approximate Page Number): 11
Relevancy Score: 54.06
   
   
   

18. In the case of Siddheshwar Sahakari Sakhar Karkhana Ltd. (supra) the apex Court has held that the assessee merely acted as an agent in collecting the amounts towards the Chief Minister Relief Fund, Late Y.B. Chavan Memorial Fund and Hutment Fund and remitting the same to the Government or to the trustees in truth and in substance, the money collected by the assessee was not reaching the assessee as part of its income but the collection was made for and on behalf of the person to whom it is payable. It had no manner of right or title over the same money, therefore, these receipts should not treated as income of the assessee. 19. In the case of Jit & Pal X-Ray (P) Ltd. (supra) this Court has held that the fundamental principle is that an application of income is an allocation of one's own income after it accrues or has arisen, although such application may be under a contract or obligation, whereas diversion of income is that which diverts away or deflects before it accrues or reaches the assessee and it is received by him only for the benefit of the person who is entitled to the income under an overriding charge or title. There is a distinction between the obligation to spend money in a particular manner attached to an income, and a similar obligation attaching to the source of the income. If the obligation is on the source of the income it is a case of diversion of income by overriding title, but if the obligation is to spend the money in a particular manner it is only an application of the income. 20. In the case of Godhra Electricity Co. Ltd. (supra) the apex Court has held that income-tax is a levy on income. No doubt, the IT Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all there cannot be a tax, even though in bookkeeping, an entry is made about the hypothetical income which does not materialise. 21. In the case of National Handloom Development Corporation Ltd. (supra) this Court has held that a basic concept in IT law is that the assessee must have received or have acquired a right to receive the income before it can be taxed. There must be a debt owed to him by somebody, if the amount is to be taxed on mercantile (accrual) basis.

Result 27
Bombay High Court
Bombay High CourtThe Commissioner Of Income Tax , Central ... vs Associated Capsules Pvt. Ltd
Honourable Judges S.C.Dharmadhikari
Date of Judgment: 5 December 2014
Segment Number (Approximate Page Number): 14
Relevancy Score: 54.05
   
   
   

J.V.Salunke,PA ITXA.450.2013.Judgment.doc provided also that, notwithstanding anything contained in this Act or in the rules made thereunder but subject to such conditions as the State Government or the Commissioner may by general or special order specify, where a dealer to whom incentives by way of deferment of sales tax or purchase tax or both under the 1979 Scheme the 1983 Scheme or as the case may be, the Electronic Scheme falling under the Package Scheme of Incentives designed by the State Government or of the tax under the 1988 or the 1993 Package Scheme of Incentives designed by the State Government have been granted by virtue of eligibility Certificate, and where a loan liability equal to the amount of any such tax payable by such dealer has been raised by the SICOM or the relevant Regional Development Corporation or the District Industries Centre concerned then such tax shall be deemed, the public interest, to have been paid." This provision of Sales Tax Act read with Circular No. 674 reproduced above makes it very clear that conversion into loan of any tax collected would also be deemed payment of tax u/s. 43B. Thus the deferral of sales tax or conversion into loan are on the same footing so far section 43B is concerned. In fact, the said section says that even where a loan liability has been raised, equal to the amount of tax payable, this loan amount also shall be deemed in the public interest to be payment of sales tax. Therefore, even if it is presumed that deferred sales tax liability was converted into loan, the same would be remission within the ambit of revenue/trading receipt/expenditure and would attract provisions of section 41. There are various other documents which show that appellant, itself, has treated the repayment of deferred sales tax on account of repayment of tax and not as repayment of loan. In this regard, the complete set of documents which show the repayment of this amount are at page nos. 153 to 196 of paper book. A letter dated 08.09.2003 by one, Mr. Mahendra Kulkarni, Deputy Manager of the appellant addressed to Joint Director of Industries is very relevant. ..... Then another letter dated 10.02.2003 addressed by the appellant to the Dy. Commissioner of Sales Tax (Adm.) wherein appellant has requested Dy. Commissioner of Sales Tax (Adm.) to issue "Certificate of Payment of deferred tax at the Net Present Value".

Result 28
Allahabad High Court
Jagran Prakashan Limited vs The Deputy Commissioner Of Income Tax ...
Honourable Judges Ashok Bhushan, Prakash Krishna
Date of Judgment: 23 May 2012
Segment Number (Approximate Page Number): 50
Relevancy Score: 53.92
   
   
   

Section 4 of the Act is quoted as below: " 4 (1) Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions (including provisions for the levy of additional income-tax) of, this Act in respect of the total income of the previous year of every person : Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly. (2) In respect of income chargeable under sub-section (1), income-tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act." Interpreting the similar provisions of the Income Tax Act, 1922, the Federal Court in 15 ITR 302 Chatturam Vs. Commissioner of Income Tax held that section imposes income tax upon a person in respect of his income. While interpreting Sections 3,4 and 22 of Income Tax Act, 1922 following was laid down by the Federal Court: " The liability to pay tax is founded on Sections 3 and 4 of the Income Tax Act, which are the charging sections. Section 22 etc. are the machinery sections to determine the amount of tax. Lord Dunedin in Whitney Vs. Commissioners of Inland Revenue stated as follows:- " Now, there are three stages in the imposition of a tax. There is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment, that ex hypothesi has already been fixed. But assessment particularizes the exact sum which a person liable has to pay. Lastly, come the methods of recovery if the person taxed does not voluntarily pay."


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