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Direct Taxes
Tribunal
| Reepal Tralshawala, |
| Chartered Accountant |
REPORTED DECISIONS
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Deduction u/s. 80-IB – Duty Drawback – Eligible for
deduction – A.Y. 2001-02
ITO vs. Paramount Industrial Corpn. [2007] 109 TTJ 295 (Chd);
Order dated 31-7-2006
Income earned on account of duty drawback is income derived
from industrial undertaking eligible for deduction under section 80-IB. In the
absence of decision of apex court or of jurisdiction High Court, view
favourable to assessee has to be followed and hence, the decision of Gujarat
High Court in CIT vs. India Gelatine & Chemicals Ltd. (2005) 275 ITR
284 (Guj) followed.
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Deduction — Sec. 80-IB — Second hand machinery is
prohibited while formation of the industrial undertaking and not thereafter —
Second hand machinery purchased subsequently to meet additional requirements —
Entitled to deduction — A.Y. 2001-02
ITO vs. Laxmi Packers (2007) 14 SOT 303 (Mum); Order dated
23/2/2007
Clause (ii) of section 80-IB(2) prohibits the use of second
hand plant and machinery in the formation of the industrial undertaking
claiming deduction u/s.80-IB. The assessee-company was formed in Dec. 1999 and
started production by April 2000. At the time of commencement of production
the assessee was not using any plant or machinery previously used for any
purpose. The subsequent requirement of assessee necessitated purchase of
second hand machinery. Sec. 80-IB does not provide that the second hand plant
or machinery shall not be purchased during the year of formation of the
industrial undertaking. The requirement of section 80-IB is to be seen at the
time of when the industrial undertaking is formed and which is when it starts
the production. Thus, second hand machinery purchased subsequently to meet
additional requirements does not disentitle the claim of deduction
u/s.80-IB.
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Depreciation — Asset owned by partner used in firm’s
business — Sec. 32 — Partner entitled to claim depreciation against share
income, remuneration and interest received from such firm — A.Y. 2000-01 &
2001-02
Virendra K. Mehta vs. ACIT (2007) 109 TTJ 30 (Mum); Order
dated 19-7-2006
A partner who has used the assets owned by him for the
purposes of business of the firm in which he is a partner can claim
depreciation on such assets as a deduction allowable against the share income,
remuneration and interest received from such firm.
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Interest on interest on refund —S. 244A — Delay in
refund — Entitled to interest on interest due on amount of tax refundable —
A.Y. 1989-90 to 1991-92, 1995-96, 1997-98, 2001-02
DCIT vs. State Bank of Travancore [2007] 106 ITD 308
(Cochin); Order dated 21-7-2006
In section 244A of the Act, the Legislature has used the
words ‘where the refund of any amount becomes due to the assessee under this
Act’, which means that refund does not only consist of ‘tax’ refundable to the
assessee, but also interest due on the said ‘tax’ which has become payable by
virtue of the provisions of the Act to the assessee and which is not paid and
where there is a delay in payment of the said interest that will constitute
the refund. Therefore, the term ‘refund’ used in section 244A comprises of the
element of ‘tax’ and also ‘interest due’ on that particular amount of tax
which has been delayed by the department. Hence, the language used by the
Legislature in section 244A has enlarged the provision by giving clear
benefits to the assessee. Therefore, the principles applicable to the earlier
provisions of sections 214, 243 and 244 in respect of payment of interest by
the department on the delayed amount of tax refundable and interest due
thereon are also applicable to section 244A.
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Interest u/ss. 234B & 234C —Assessment u/s. 172(7) in
respect of shipping business of non-resident — Sec. 172 separate code in
itself and override all other provisions of the Act — Interest not chargeable
— A.Y. 1996-97
ACIT vs. Norasia Lines (Malta) Ltd. [2007] 109 TTJ 152 (Coch)(SB);
Order dated 5-3-2007
Section 172 being overriding and special and a complete
code in itself, question of invoking any other provision of the Act for
recovery of taxes and interest cannot arise. Thus, Non-resident assessed under
s. 172(7) in respect of shipping business is not liable to interest under ss.
234B and 234C.
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Loss – Set off - Ss. 10A, 80B(5) & 70 — Amendment in
sec. 10A w.e.f. 1-4-01 providing for deduction and not exemption — Loss in 10A
unit can be set off against profits of other units — A.Y. 2003-04
Honeywell International (India) (P) Ltd. vs. DCIT (2007)
108 TTJ 924 (Del); Order dated 2-2-2007
Provisions of sec. 10A as substituted w.e.f. 1-4-2001
provide for a deduction from income and not an exemption, and therefore, loss
pertaining to unit eligible for deduction under s. 10A can be set off against
profits of other units of the assessee.
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Reassessment — S. 148 — Law applicable — Notice issued
on 7-11-2000 – Amended provisions u/s. 153(2) w.e.f. 1-6-2001 shall apply —
Period of limitation reduced to one year from 2 years — Order of reassessment
passed on 13-2-2003 was barred by limitation — A. Y. 1996-97
ITO vs. O.M. Shahul Hameed (2007) 108 TTJ 977 (Chennai);
Order dated 28-4-2006
Law of limitation has been held to be procedural law always
having retrospective effect unless the amended statute provides otherwise.
Hence, the section under consideration cannot be termed as substantive law,
much less a statute of repose. When it is not so termed, the exposition
emanating from the above is that in such cases of adjective law or procedure
statute, amended provision would apply. Notice under section 148 having been
issued on 7-11-2000, period of limitation of one year as substituted for two
years by section 153(2) as amended by the Finance Act, 2001 w.e.f. 1-6-2001
shall apply and the reassessment completed on 13-2-2003 was barred by
limitation.
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