Legal Reference Library

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...

Girish Bansal vs. UOI (Delhi High Court) Entire law on concept of "revenue receipt", "capital receipt" and "casual income" explained in the context of taxability of compensation received for cancellation of a sale deed of immovable property. If the AO claims that the receipt is a capital gain, he cannot change his stand to contend that it is a revenue receipt. (i) The Revenue cannot be permitted to shift its stand from one forum to another. The consistent case of the Revenue is to be tested at various levels for its correctness. It is possible that in the interregnum there might be decisions of the Supreme Court which might support or negate the case of the Revenue. That would then have to be taken to its logical end. In the circumstances, the Court is not prepared to permit the Revenue to urge a new plea for the first time in this Court. Having held that it could not be in the nature of capital gain it was not open to the Revenue to seek to bring it t...

For allowing / disallowing any expenditure under Section 37 of the Act, the basic thing to be seen as to whether the expenditure was incurred for furtherance of business interest of the Assessee or not. It is a fact that in this case because of the expenditure incurred no new assets came into existence. The expenditure was incurred considering the old relation with the supplier and to avoid future business complications. If an assessee makes payment which is compensatory nature, it has to be allowed. In this case, the payment was made in pursuance of an agreement and that was of compensatory nature i.e.it was not penal, hence it was to be allowed Article referred: http://itatonline.org/archives/2016/05/