Legal Reference Library

In DCIT Vs. M/s Beas Valley Corporation Ltd.,  the ITAT Chandigarh held that the interest from Bank deposits prior to the period of commencement of the business is Capital receipt. It further allowed the assesses’ claim to set off the interest so received on short term deposit during the year on the loan received against the interest payable on PFC loan so as to reduce the cost of project. Assessee, Beas Valley Power is a Government Company promoted by HPSEBL to execute the 100 MW UHL Stage -III in Joginder Nagar Distt. Mandi. While completing the assessment against the assessee- Company, the AO noted that the interest on bank deposits earned by the Company before the commencement of business is a taxable income and should have be shown under the head ” Income from other sources”. Article referred: http://www.taxscan.in/interest-bank-deposits-prior-period-commencement-business-capital-receipt-itat-chandigarh/8515/

Having treated the difference under the head “Business”, the Assessing Officer disallowed the broken period interest payment, which gave rise to the dispute. It was open to the Department to assess the above difference under the head “Interest on securities” under section 18. However, they chose to assess the interest under the head “Business” and, while doing so, the Department taxed broken period interest received,but disallowed broken period interest payment. It is in this light that one has to read the judgment of the Karnataka High Court and the Supreme Court in Vijaya Bank Ltd’s case [1991] 187 ITR 541. In that case, the facts were as follows. During the assessment year under consideration, Vijaya Bank entered into an agreement with Jayalakshmi Bank Limited, whereby Vijaya Bank took over the liabilities of Jayalakshmi Bank. They also took over assets belonging to Jayalakshmi Bank. These assets consisted of two items, viz., Rs.58,568 and Rs.11,630.00. The said amount...

DCIT vs. Fritz D. Silva (ITAT Mumbai) The controversy before us is as to whether the interest paid by the assessee on loans taken for acquiring the shares in the past can be allowed as a deduction u/s 48 as cost of acquisition while computing capital gain on sale of such shares. On this aspect, the Ld. Representative for the respondent assessee relied upon the Judgment of Hon’ble Madras High Court in the case of Trishul Investments Ltd. 305 ITR 434 (Madras) which is directly on the point. In the case before the Hon’ble Madras High Court, the assessee was carrying on the business of investment in shares/securities and the profit derived from sale of shares was held subject to capital gains. Apart from other issues, the Revenue had contested the order of the Tribunal wherein the assessee was allowed the interest liability incurred on borrowings utilized to acquire the shares, while determining the cost of acquisition of shares for the purpose of computing capital gain. As per the Hon’...

In a recent judgment Union of India Vs. M/s. Ambica Construction, the issue raised before the Hon'ble Supreme Court was in regard to the power of the Arbitrator to award pendente lite interest when contract contains bar for grant of interest in a case covered by the Arbitration Act, 1940 . A Division Bench of this Court had doubted the correctness of the decisions in Board of Trustees for the Port of Calcutta v. Engineers-De-Space-Age (1996) and Madnani Construction Corporation (P) Ltd. v. Union of India and Others (2010). In view of the decision of the Constitution Bench judgment in Secretary, Irrigation Department, Government of Orissa & Ors. v. G.C. Roy (1992) and Executive Engineer, Dhenkanal Minor Irrigation Division, Orissa & Ors. v. N.C. Budharaj (D) by L.Rs. & Ors. (2001) which held that the Arbitrator had the jurisdiction and authority to award interest for pre-reference period, pendente lite and future period if there was no express bar in the contract reg...

Who is Necessary to Proper Party Order 1 Rule 10 of the Code of Civil Procedure, 1908 Razia Begum v. Anwar Begum, [1959] SCR 1111, relied on. Amon v. Raphael Tuck & Sons Ltd., (1956) 1 All E.R. 273 and Dollfus Mieg et Compagnie S.A. v. Bank of England, (1950) 2 All E.R. 611, referred to. National Textile Workers’ Union, etc. v. P.R. Ramakrishnan and Ors., [1983] 1 SCR 922, distinguished. Meaning of Necessary or Proper Party Whether Court could direct plaintiff to add lessee as defendant in suit. Whether Court has discretion to direct a plaintiff, though dominus litis, to implead a person as a necessary party. The Supreme Court of India in Ramesh Hiranand Kundanmal Vs. Municipal Corporation, Greater Bombay, (1992) 2 SCC 524 : 1992 (2) SCR 1 : JT 1992 (2) SC 136 : 1992 (1) Scale 530 : 1992 (1) CCC 594 : 1992 (1) RCR 644 : 1992 (2) UJ 181 held that a party can be joined as defendant even though the plaintiff does not think that he has any cause of action against him. ...

Dealing with the question that the interest received by banks after bills of exchange have been discounted by them and a party defaults and hence has to pay compensation by way of interest as payment is made after the date stipulated in the bill of exchange is liable to tax under the Interest Tax Act, 1974, the bench of Dr. A.K. Sikri and R.F. Nariman, JJ held that the Interest Tax Act, unlike the Income Tax Act, 1961 has focused only on a very narrow taxable event which does not include interest payable on default in payment of amounts due under a discounted bill of exchange. Interpreting Section 2(7) of the Interest Tax Act, the Court said that interest is chargeable to tax under the Interest Tax Act only if it arises directly from a loan or advance which is clear from the word “on” used in the said Section. Stating that “Loans and advances” has been held to be different from “discounts” and the legislature has kept in mind the difference between the two, it was explained that inter...

Mcdermott International Inc vs Burn Standard Co. Ltd. & Ors on 12 May, 2006 Supreme Court of India Mcdermott International Inc vs Burn Standard Co. Ltd. & Ors on 12 May, 2006 Author: S.B. Sinha Bench: B.P. Singh, S.B. Sinha CASE NO.: Appeal (civil) 4492 of 1998 PETITIONER: Mcdermott International Inc. RESPONDENT: Burn Standard Co. Ltd. & Ors. DATE OF JUDGMENT: 12/05/2006 BENCH: B.P. Singh & S.B. Sinha JUDGMENT: J U D G M E N T I.A. NOS.2-3 IN CIVIL APPEAL NO. 4492 OF 1998 S.B. SINHA, J : INTRODUCTION Oil was discovered in the Bombay High Region in 1974 whereupon a plan of rapid development of off-shore oil and gas production was embarked by the Government of India through Oil and Natural Gas Commission (ONGC). With a view to achieve exploration of production programme, ONGC appointed contractors to fulfill substantial portions of its off-shore construction requirements. Burn Standard Company Limited (for short "BSCL") was interested in the second st...