|
II. Direct Taxes Case Law:
1. M/s. Mother Hospital Pvt. Ltd. Vs. CIT, Civil Appeal No. 3360 of 2006, Date of Pronouncement: 08.03.2017, Supreme Court of India
Issue
Whether assessee can be treated as the owner of a property for the
purpose of Section 32 of the Income Tax Act, 1961 where a registered
deed has not been executed for lease and merely construction cost is
reimbursed by the assessee?
Brief facts
The assessee company was running a super specialty hospital in which
shares are held by seven persons closely related to each other. Earlier a
partnership firm Mother Hospital had been constituted and 4.3 acres of
land belonged to the firm. The purpose of the partnership firm was to
run a super specialty hospital and, accordingly, the firm started
construction of the hospital building. Since it was felt expedient to
form a private limited company to run and manage the hospital (then
under construction), a company was formed for the said purpose and was
incorporated on 30.12.1988. Thereafter, an agreement was entered into
between the firm and the company by which it was agreed that the firm
will complete the construction of the building and hand over possession
of the same on completion, on the condition that the entire cost of
construction of the building should be borne by the company and the firm
had a lien on the building till the company will paid the full amount.
The
company took possession of the building on its completion. Since the
ownership of the land had to remain with the firm, it was also agreed
that the land would be given on lease by the firm to the company and
therefore assessee company charged depreciation on the same. However,
the AO has rejected the claim on the grounds that the assessee had not
become the owner of the property. Appeal preferred by the assessee
before the CIT(A) met with the same fate. However, in further appeal
before the ITAT, the assessee succeeded. However, the Revenue appealed
before the Hon’ble High Court against the order of the ITAT and the
Hon’ble High Court set aside the aforesaid order of ITAT. Being
aggrieved with the same, the assessee preferred appeal before the
Hon’ble Supreme Court.
Held:
The Hon’ble Supreme Court has affirmed the order of Hon’ble High
Court and held that the title in the immovable property cannot pass when
its value is more than Rs.100/- unless it is executed on a proper stamp
paper and is also duly registered with the sub-Registrar. Nothing of
the sort took place. In the absence thereof, it could not be said that
the assessee had become the owner of the property. Explanation (1) to
Section 32 of the Income Tax Act, attracts only when assessee holds a
lease right or other right of occupancy and any capital expenditure is
incurred by the assessee on the construction of the structure. However,
In the instant case, records show that the construction was made by the
firm. It is a different thing that the assessee had reimbursed the
amount. The construction was not carried out by the assessee himself.
Therefore, the explanation also would not come to the aid of the
assessee.
Therefore, the appeal of the assessee is dismissed.
(Please click here for judgment)
2. M/s. Andrew Telecommunications India Pvt. Ltd. Vs. PCIT,
Writ Petition No. 1021 of 2016, Date of Order: 13.12.2016, High Court of
Bombay
Issue
Whether demand raised in assessment year can be adjusted against
pending refunds of earlier assessment years in order to comply with
conditions for grating of stay and to what extent that adjustment can be
made?
Held:Yes, only 15% of the demand may be adjusted, out of total amount due.
Brief Facts
The petitioner is engaged in the business of manufacturing base
station antennas, microwave antennas etc. & trading in related
products. The assessee filed a return for the AY 2012-13, declaring loss
of Rs.10,23,16,807/- against which the petitioner was served with a
notice of demand for Rs.16,90,79,380/- after scrutiny assessment. The
assessee applied for an unconditional stay of demand until disposal of
CIT (A), which was rejected. Further the authorities proceeded to adjust
the total refund amount of Rs.12,25,45,340/- which is due to the
petitioner for AYs 2006-07 & 2007-08 against the aforesaid demand as
per O.M. dated 29.02.2016 issued by CBDT. Therefore, the assessee filed
writ petition in the Hon’ble High court on the grounds that the
assessing officer is obliged to grant stay of the demand on payment of
15% of the disputed amount and as per para 4(E)(iii) of the O.M., only
15% of the amount can be adjusted against any pending refund.
Held:
The Hon’ble High Court held that the impugned assessment order can be
stayed subject to adjustment of an amount of Rs.2,53,61,907/- (15% of
the total demand of Rs.16,90,79,380/-) being adjusted out of the refund.
Thus, the petition is partly allowed. The impugned order, rejecting the application for stay, is set aside.
(Please click here for judgment)
|
New User? 
Subscribe Now