Case Laws for CA Final Exams

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Case laws relevant for May, 2013 and Nov, 2013 Examinations

Case laws relevant for Nov, 2012 Examinations
Click here to Download : Summary of DT Case Laws for Nov 2012  - CA Final
Click here to Download : Summary of IDT Case Laws for Nov 2012  - CA Final

Case laws relevant for May, 2012 Examinations

Click here to Download : Summary of DT Recent Case Laws for May 2012

  

Additional Case laws relevant for November, 2011 examinations

Click here to Download : Summary of DT Additional Case Laws for Nov2011

Click here to Download : Summary of IDT Additional Case Laws for Nov2011

  

Case laws relevant for May, 2011 and November, 2011 examinations

  • Indirect Tax Laws

      

    DT Recent Case Laws - CIT vs.Saurashtra Cement Ltd 2010 (SC)

    If Supplier fails to supply within stipulated time as per agreement which provides for Liquidated damages without proof of actual loss in this case & liquidated damages recvd by assessee will b CAPITAL RECEIPT because it was not recd in course of Profit earning process

     

    DT Recent Case Laws - CIT vs.Udupi Builders Pvt Ltd 2009 (Kar.)

    Company established Hotel industry based on subsidy ANNOUNCED byStateGovt to encourage tourism. bt Subsidy was RECEIVED AFTER COMPLETION OF PROJECT&commncemnt of business.
    Purpose of subsidy is imp &not the time of receipt(may b recvd even after10yrs).Hence it is CAPITAL RECEIPT
       

    DT Recent Case Laws - CIT vs.Kisan Sahkari Chinni Mills Ltd 2010(All.)

    Subsidy/grant recvd for recoupment of Capital Employed or repayment of Loan from FI for setting up/expansion of new sugar factory in not in course of trade.So,it is a CAPITAL RECEIPT NOT CHARGEABLE to TAX.
    Same decision was of CIT vs. Ponni Sugar & Chemicals Ltd 2008(SC)
      

    DT Recent Case Laws - Chandra Ranganathan v. CIT2010(SC)

    The SC held that amount recvd by employees retiring frm RBI opting for Optional Early Retirement Scheme are eligible for exemption u/s10(10C)
      

    DT Recent Case Laws - CIT vs Walfort Share & Stock Brokers Pvt Ltd 2010 (SC)

    Sec10(35),14A,94(7)
    Company purchasd cum-dividend units ofMF &then dividend declared.Company entitled2recv dividend&claimed exemptn u/s10(35)
    Thereafter company sold all Units(ex-dividend)at LOSS within3days&set off entire STCL.
    Deptt contended assessee incurred exp2earn tax free dividend ¬ allowed as per14A.
    SC held that its DIVIDEND STRIPPING ¬ covered by sec14A. Loss to the extend of Div Income wil b ignored
     

    DT Recent Case Laws - CIT v. Asian Hotels Ltd 2010(Del.)

    Notional Interest on intt free deposit given by tenant to landlord is NOT assessable either as PGBP or IHP
      

    DT Recent Case Laws - CIT v. Smt.A.Sivakami & Another 2010

    Assessee is eligible to claim depreciation on the busses not registered in her name but she is beneficial owner. Owner is a person who is entitled to receive income from property in his own right. Owner need not necessarily b lawful owner entitled to pass on the title of property to another

       

    DT Recent Case Laws - CIT v. Sundaram Clayton Ltd 2010 (Mad.)

    Exp on purchase of software component has to be treated as REVENUE exp. Also,upgradation of computer config is not a change of enduring nature & hence its REVENUE exp

      

    DT Recent Case Laws - Dr.Aswath N.Rao v. ACIT 2010 (Karn.)

    Exp incurred for purchase of 2nd hand medical equipment for use as spare parts for existing equipment is a REVENUE expenditure
     

    DT Recent Case Laws - CIT v. Neelavathi & Others2010(Karn.)

    Payment to Police & Gundas to keep away from Cinema Theatre run by assessee amounts to bribe/illegal payment.Hence deduction is NOT ALLOWABLE.
     

    DT Recent Case Laws - CIT v. Sagar Talkies 2010(Karn.)

    Assessee replaced the old sound system with a new Dolby stereo system. Since there was no change in seating capacity, the expenditure on such change of sound system could not be considered as capital expenditure
      

    DT Recent Case Laws - CIT v.Hindustan Zinc Ltd 2010(Raj.)

    Assessee incurred exp for alteration of dam(constructed by State Govt)to ensure sharing of water(required in large quantity)with S.Govt. without hving right or ownership in dam/water.Its an OPERATIONAL exp &REVENUE in nature
      

    DT Recent Case Laws - TRF Ltd v.CIT2010(SC)

    After1.4.1989,its not necessary for assessee2establish that debt, in fact,has become irrecoverable.Its enough if bad debt is written off as irrecoverable in a/c of assessee.(No need2prove)
      

    DT Recent Case Laws - CIT v. Samtel Color Ltd 2010 (Del.)

    Corporate Membership admission fees of club paid by company is fully allowable as REVENUE expenditure.
    Employee can be substituted at any point of time.Test of Sec37 is that it should be incurred wholly & exclusively for purpose of business & not towards capital account.
      

    DT Recent Case Laws - CIT V.DCM Ltd 2010 (Del.)

    Assessee had 4units of textile business.1UNIT(not whole business)closed down&borrowed money to pay retrenchment compensation to employees.
    Such retrenchment compensation&interest on borrowed money wil b treated as REVENUE exp.
    but if closure of ENTIRE BUSINESS, then it wud b a CAPITAL exp
      

    DT Recent Case Laws - CIT v. Mihir Textiles Ltd 2009 (Guj)

    Money borrowed by issue of debentures is in nature of LOAN &cannot assume as investment.So,exp in nature of commitment charges at the time of issuing such debenture wud b on REVENUE a/c only.Hence allowable as deduction u/s36(1)
    Same decision in DCIT v. Core Health Care Ltd2008
      

    DT Recent Case Laws - Navin Jindal v. ACIT 2010 (SC)

    For determining whether capital gain on renounciation of right to subscribe for additional shares is short-term or long-term, period of holding wud b from date on which such right to subscribe for additional shares comes into existence(i.e. when company passes resolution)
      

    DT Recent Case Laws - Hindustan Unilever Ltd v. DCIT 2010 (Bom.)

    For exemption u/s 54EC, the capital gain shud be INVESTED in longterm specified asset within 6months from date of transfer. If,assessee made payment within 6months,then exemption cannot b denied merely bcoz bond was issued(or date of allotment) after expiry of 6months.
      

    DT Recent Case Laws - P.P.Menon v. CIT 2010 (Ker.)

    One Partner take over land & building of firm on its dissolution. He sold L&B in just 3days.The benefit of including period of holding of previous owner u/s2(42A) read with Sec49(1)(iii)(b) can b availed only if dissolution was bfore 1.4.1987. Thus, in this case it will be STCG/STCL.

    DT Recent Case Laws - Lalitaben Hariprasad v. CIT 2010 (Guj)

    Lalitaben Hariprasad v. CIT 2010 (Guj)
    Members in HUF - Father, Mother, 2Sons & that HUF has Residential HP. Father & Mother took 1/2 share each of that RHP & paid 1433000each to sons. High court observed that COA of 1/4th share of HP being proportion to each members u/s 49(1)(i), the COA of HUF will b COA to members. But here, ADDITIONAL SHARE ACQUIRED at the time of partition, therefore 1433000 can b claimed as COA in the hands of each assessee on subsequent sale.
      

    DT Recent Case Laws - CIT v. Sri Hariram Hotels Pvt LTD 2010(Karn.)

    Company borrowed loan from its director to purchase land & put up a Hotel Project.But project cudn't get materialized & company sold that land.Company passed resolution to pay interest on that loan & claimed interest paid to directors after sale. Here, Passing resolution for pmt of intt is not relevant since intt starts accruing as soon as loan is taken.Hence intt paid is allowed as exp.
      

    DT Recent Case Laws - CIT v.GurnamSingh2010(P&H)

    Assessee claimed exemption u/s54B of AgriculturalLand purchased by him along with his son out of sale proceeds of agricultural land.Son was co-owner.
    Revenue objected:land is regd in his son's name.
    Decision: No contrary to provision of law&hence assessee is entitled to exemptn u/s54B
      

    DT Recent Case Laws - CIT v. Chandni Buchar 2010(P&H)

    A.O. added in TI of assessee,the difference between purchase price DISCLOSED in SALE DEED&purchase price adopted for paying STAMP DUTY.High Court decided that 50C is a deeming provision for bringing the difference to capital gain tax.Valuation for STAMP duty calculation wud not ipso facto substitute of actual sale consideratn.Here,assessee proved the consideration of sale deed with original bank statement.Hence this addition is deleted.

    DT Recent Case Laws - CIT v.Kiran Enterprises 2010(HP)

    C.Govt.Scheme Freight Subsidy recvd is not a profit derived from business & not operational profit.So,it cant b treated as profit derived from business for purpose of 80-IA
     

    DT Recent Case Laws - Liberty India v.CIT2009(SC)

    DEPB Scheme benefit &Duty Drawback are not profit derived from eligible business/industrial undertaking u/s80-IB. So,it cant b treated as profit derived from business undertaking for purpose of 80-IB
       

    DT Recent Case Laws - CIT v. Nestor Pharmaceuticals Ltd.2010

    (Imp CaseLaw of Sec80IB)

    Fact:
    *Trial Run production in March1998
    *Commercial Production started in April1998
    *Sale of 1unit water cooler & A.C. in March98 to get regn under Excise Act & Sales Tax Act
    Case:
    Period of exemption from & upto which AY?
    Decision:
    Since company had sold in March98,so it had crossed the stage of trial prodctn & final saleable had mfrd & sold. With this sale, marketable quality was established. Thus, the condition of 80IB were fulfilled in March98 & hence 5yrs will b from AY98-99
      

    Admin's Announcement

    Dear Members !
    We please to inform you that we have completed the recent case laws which are COMMON for both PCC/IPCC & Final Students.
    Now today onwards we will send VERY VERY IMP CaseLaws for CA Final May2011 exams.
    Please do read all the sms of case laws because these may cover approx 10-12marks.
       

    DT Recent Case Laws - N.J.Jose & Co Pvt Ltd v. ACIT 2010 (Ker)


    Assessee claimed exemption u/s 54E /54EC.
    Computatn of Book Profit u/s115J / 115JB doesn't provide for any deductn of 54E /54EC.So,Captial Gain shud b included in BookProfit for levy of MAT.
    It shud b noted that LTCG exempt u/s10(38) is included for BookProfit u/s115JB
      

    DT Recent Case Laws - CIT v. Laxmi Pd.& Sons 2009 (All)


    AOP cant b constituted by inheritance under will bcoz its forced association.Volutary Association is necessary for AOP u/s2(31)
      

    DT Recent Case Laws - CIT v.George & M.Syed Alavi 2009 (Ker)


    The accounts,seized from persons,were mutually complementary &were proof of their joint investments in slaughter tapping &sharing of profit on sale of Latex&Timber.
    It is justified to tax in the hands of AOP bcoz Status of AOP need not to b proved through written agreement.
      

    DT Recent Case Laws - Subha & Prabha Builders P Ltd v. ITO 2009 (Karn)


    Income Tax Authorities hv power u/s131 to impound &retain books etc for Max 15days.Extension can b granted by prior approval of higher authorities but not for indefinite period.EXTENSION can only ONE TIME & can be in DAYS, & not in Months or years
      

    DT Recent Case Laws - Lodhi Property Co Ltd 2010 v. Under Secretary,(ITA-II), Department of Revenue 2010 (Del)

    IMP CASE

    Assessee, to file ITR of Loss, reachd at room of Central Revenue Bldng whr his return was2b accepted bcoz he was sent frm1room to another.
    So,ITR not accepted.
    Next day,ITR along wid letter of circumstnces delivered2office of DCIT.
    CBDT,by non-speaking order rejected the request of assessee2condone delay u/s119.

    HC Decision:Its genuine hardship on assessee so 1day delay has 2b condoned byCBDT u/s119(2)(b) ANY OTHER RELIEF UNDER THE ACT

    DT Recent Case Laws - CIT v.Tony Electronics Ltd 2010 (Del)

    Once appeal against order passed by AO is preferred & is decided by appellate authority(AA), the order of AO, MERGES with order of AA. After merger,ORIGINAL ORDER CEASES to EXIST &ORDER of AA PREVAILS.Thus,4yrs for Sec154(7) has 2b counted FROM ORDER OF APPELLATE AUTHORITY
      

    DT Recent Case Laws - Aventis Pharma Ltd v.ACIT 2010 (Bom.)

    Power u/s147 to re-open an assessment is conditional on formation of REASON TO BELIEVE that taxable income has escaped assessment.

    Existence of TANGIBLE MATERIAL is ESSENTIAL to safegaurd against arbitrary excercise of this power.

    Mere change of opinion is not sufficient.


    DT Recent Case Laws - CIT v.Earnest Export Ltd 2010 (Bom)

    Tribunal\'s power u/s254(2) is limited to rectification of a mistake apparent on record.Tribunal cannot change its own view by substituting a view which it believes shud hv been taken in first instance.
    In this case,Tribunal u/s254(2) virtually reconsidered the entire matter and come to a different conclusion.This amounted to reappreciation of correctness of earlier decision which is beyond the scope of power u/s254(2) 
      

    DT Recent Case Laws - Deepak Kumar Garg v.CIT 2010 (MP)

    Power to review is not an inherent power&must b conferred by law specifically.Under provision of Sec260A(7),Power of re-admission/restoration of appeal is always with High Court However,such power2restore appeal cant b treated2b power to review the earlier order passed on merits
       

    DT Recent Case Laws - CIT v.Reliance Petro Product Pvt. Ltd. 2010 (SC)

    V.Imp.Case
    CIT v.Reliance Petro Product Pvt Ltd 2010 (SC)
    CIT v.Vijay Kumar Jain2010 (Chhattisgarh)
    Penalty u/s271(1)(c)can b levied only wen there is CONCEALMENT of particulars of income/furnishing INACCURATE or FALSE particulars of income
    e.g.1.Making an incorrect claim(i.e. which has been disallowed)wud not,by itself,tantamount to furnishing inaccurate particulars.
    2.Levy of penalty u/s271(1)(c)on the basis of addition made on a/c of application of highr rate of NP by applying Sec145,consequent2rejection of books
      

    DT Recent Case Laws - UOI v.Bhavecha machinery & Others 2010 (MP)

    Prosecution Proceeding u/s276CC can b attracted only where there is clear, cogent & reliable evidence that failure to file return in time was WILLFUL & there shud b no possible doubt of its being WILLFUL. The failure must be INTENTIONAL, DELIBERATE, CALCULATED & CONSCIOUS with COMPLETE KNOWLEDGE of LEGAL CONSEQUENCES.

    DT Recent Case Laws - CIT v.Bharti Cellular Ltd 2009 (Del.)

    194J & 9(1)(vii):
    Sec194J would not attract on pmt to MTNL/other Co. for services provided through Interconnect / Port Access etc bcoz such services DIDNOT involve any HUMAN INTERFACE & so it cud not b regarded as Technical Services u/s194J.
     

    DT Recent Case Laws - CIT v.Japan Airlines Co.Ltd 2010 (Del.)

    TDS u/s194-I wil attract on pmt of Landing & Parking Charges to Airport Authority of India. becoz Rent defined u/s194-I has wider meaning& includes use of land. Court says:when the wheels of aircraft touches the surface of airfield,USE of LAND immediately begins.Parking the aircraft is also use of Land.
       

    DT Recent Case Laws - East India Hotels Ltd v. CBDT 2010 (Bomb.)

    Services rendered by Hotel to its customer e.g.House Keeping,Bank Counter,beauty saloon,car rental,health club etc would not amounts to CARRY OUT ANY WORK to attract 194C.Work in this sec has 2b understood in LIMITED SENSE & wud extend only to service contracts specially included in clause(iv) of Explntn to194C(7)
       

    DT Recent Case Laws - CIT v. Assam Mineral Dev.Co. Ltd 2010 (Gau.)

    Intt u/s234B & 234C is mandatory in nature.So,it can b levied on the basis of intt calculation gvn in Computation Sheet(in Form Prescribed,Signed,initialed) annexed to Assessment Order, eventhough direction to charge such intt is not mentioned in the Assessment Order
       

    DT Recent Case Laws - CIT v.Emilio Ruiz Berdejo 2010 (Bomb.)

    Employee is not liable to pay intt u/s 234A, 234B, 234C where the employer has failed to TDS, but has later paid such tax with intt u/s 201(1A)


    DT Recent Case Laws - GE India Tech Centre Pvt Ltd v.CIT & another 2010 (SC)

    The expression "CHAREABLE UNDER PROVISION of ACT" in Sec195(1) shows that remittance has got 2b a TRADING RECEIPT, THE WHOLE OF PART OF WHICH IS LIABLE TO TAX IN INDIA.
    If no tax liability, then no question of TDS.
      

    DT Recent Case Laws - CIT v. Director,Prasar Bharti 2010(SC)

    TDS Provision of Sec194H wud get attracted on retention of a %age(eg 15%commision)of advertising charges collected frm customers by advertising agencies for pymnt2 Doordarshan 4telecast advertisements.Wen agent pays 85%of Ad charges,he is free2appropriate as his income

    DT Recent Case Laws - Kanchanganga Sea Foods Ltd v. CIT & ITO 2010 (SC)

    TDS Provision of Sec195 will b attracted in case of Payment(either in money or IN KIND)of Charter fee to NON-Resident(NR) for chartering fishing vessels,by way of percentage of fish catch done outside territorial water of India but brought to an Indian Port for verification&valuation b4 dispatch of same to NR
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