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III. Direct Tax Caselaw:
1. Commissioner of Income Tax-I, Ludhiana Vs. M/s Abhishek Industries ltd., I.T.A. No. 60 & 61 of 2012 (O&M), Date of decision: 06.02.2013, High Court of Punjab and Haryana at Chandigarh
“Sales tax subsidy & discount earned from the early payments are not eligible for deduction from “profits of business” for the purpose of computing deduction u/s 80HHC of the Act.
Clause (1) of Explanation (baa) permits deduction of profit by 90% for the purposes of Section 80HHC if the profits relates to receipts by way of brokerage, commission, interest, rent, charges or any other receipt of similar nature. The sales tax subsidy cannot be said to be either brokerage, commission, interest, rent or charges. Nor it is anyway similar to such expression. Therefore, neither the sales tax subsidy nor the profits from discounts on early payments is of similar nature to brokerage, commission, interest, rent or charges, which may allow the revenue to deduct profit to the extent of the 90% of such sum for the purposes of Section 80HHC.
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2. The CIT - II, Amritsar Vs. Vidya Sagar Saini, I.T.A. No. 80 of 2012, date of decision: 13.02.2013, Punjab & Haryana High Court
In best judgment assessment there is always a certain degree of guess work. In the present case after rejecting the books of accounts, the Assessing Officer assessed the net profit at the rate of 13%, which the Commissioner of Income Tax (Appeals) reduced to 8%. Such rate of profit has been affirmed by the Tribunal. It would be a pure finding of fact that what should be net rate of profit from the work of a civil contract. Therefore applying 8% as net profit rate is not so arbitrary or perverse, so as to warrant any interference in the facts of the present case.
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3. CBDT Directive Regarding Adjustment of Refunds Against Demand
The Directorate of Income-tax (Systems) has issued a letter dated 21.03.2013 drawing attention to the judgement of the Delhi High Court in Court on Its Own Motion vs. CIT where directions were issued that the department has to follow the procedure prescribed in s. 245 before making any adjustment of refund payable by the CPC. As the Court has held that the assessee must be given an opportunity to file a response before any adjustment of refund is made, the Assessing Officers have been directed to comply with the High Court’s order and communicate their findings on adjustable demand to the CPC which will then process the refund and adjust the demand.
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