Legal Reference Library

The Amritsar bench of Income Tax Appellate Tribunal has recently rule that a Holding Company is entitled to get deduction in respect of the debt unrecovered from its subsidiary company under the provisions of the Income Tax Act, 1961. Coming to the facts of the case, the assessees, M/s Sarup Tanneries Ltd, is engaged in the business of manufacture and sale of leather goods, Shoe upper, soles etc. The Assessing Officer, while completing assessment for the relevant assessment year, has disallowed the claim made by the assessee in respect of loss written off due to its subsidiary company in US on ground that such losses claimed by assessee were not related to the business of assessee. On appeal, the Commissioner of Income Tax (Appeals) partly allowed the impugned order. The case was brought before the ITAT. The Revenue contended that reliance should be placed on the decision in Amalgamations Pvt. Ltd vs. CIT (1969) 226 ITR 188 (SC). The Tribunal found that the assessee had issued standby ...

The Supreme Court, in CIT vs M/S Yokogawa India Ltd, has held that Section 10A of the Income Tax Act is a provision for deduction and not exemption. However, the court clarified that the stage of deduction would be while computing the gross total income of the eligible undertaking and not at the stage of computation of the total income. The bench headed by Justice Ranjan Gogoi observed that introduction of the word ‘deduction’ in Section 10A by the amendment embodies a clear enunciation of the legislative decision to alter its nature from one providing for exemption to one providing for deductions. The court also said that though the difference between the two expressions ‘exemption’ and ‘deduction’, may appear to be the same i.e. immunity from taxation, the practical effect of it would be wholly different. The court also observed that retention of Section 80HHC and 80HHE of the Income Tax Act, despite the amendment of Section 10A, indicates that some additional benefits to eligible Se...