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IV. Direct Taxes Case Laws:
1. Oracle System Corporation Vs. DDIT, W.P.(C) 1873/2013 & CM No. 3570/2013, Date of Order: 08.10.2015, High Court of Delhi
Whether
in case of reopening of assessment beyond 4 years from the end of the
assessment year, the pre-conditions is that the reasons recorded for
reopening the assessment should allege that there has been failure on
the part of the assessee to fully and truly disclose all the material
facts necessary for the assessment.
Held Yes
Without
going into great detail, the simple point taken by the learned counsel
for the assessee is that this is a case of reopening of assessment
beyond 4 years from the end of the assessment year and therefore the
first proviso of section 147 of the Income Tax Act, 1961 would come into
play. One of the pre-conditions for reopening of assessment stipulated
in the first proviso is that there must be failure on the part of the
assessee to fully and truly disclose all the material facts necessary
for the assessment. It is the case of the petitioner/assessee that the
reasons recorded for reopening the assessment do not even allege that
there has been any failure on the part of the assessee to fully and
truly disclose all the material facts necessary for the assessment.
In the
recorded reasons, there is no whisper of the petitioner having failed to
disclose fully and truly all material facts necessary for his
assessment. Therefore, the necessary ingredient for inviting the
provisions of Section 147 is missing. As such, the initiation of the
re-assessment proceedings pertaining to assessment year 2004-05 does not
have the backing of law. Consequently, the impugned notice under
Section 148 and all proceedings pursuant thereto including the order
disposing of the objections are set aside.
(Please click here for judgment)
2. Seagram Distilleries Pvt. Ltd. Vs. CIT, I.T.A. No. 898/2009, Date of Order: 06.10.2015, High Court of Delhi
Whether
provision for transit breakages has a scientific basis or is contingent
in nature and as such is not an allowable deduction while computing the
total income of the Assessees.
Held Yes
To summarise the legal position as far as the Assessees are concerned:
(a)
There is no reasonable scientific method adopted by the Assessees to
estimate the transit breakages so as to justify creating of provision
for such breakages.
(b) The
provision would, in the circumstances, be a provision for a contingent
liability and, therefore, in terms of the AS 29 ought not be recognised.
(c)The
actual transit breakages as and when they occur are allowable as revenue
expenditure in the accounting year in which such breakages occur.
(Please click here for judgment)
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