1. CIT Vs. Oriental Structural Engineers Pvt. Ltd., ITA No. 605/2012 Del/2011 Date of Decision: 15.01.2013, High Court of Delhi
Section 14A & Rule 8D of the Income Tax Act, 1961
Whether
disallowance u/s 14A of the Act can be made in case where investment
made out of “commercial expediency” to earn taxable income.
Held: No
The assessee
borrowed funds and invested in shares of subsidiary companies. The
assessee had to form Special Purpose Vehicles (SPVs) in order to obtain
contracts from the NHAI and the SPVs so formed engaged the company as
contract to execute the works awarded to them (i.e. SPVs) by the NHAI.
In its profit and loss account, the assessee has shown the turnover from
execution of these contracts and therefore no expense and interest
attributable to the investments made by the assessee in the SPVs on
account of commercial expediency can be disallowed u/s 14A r.w. Rule 8D
because it cannot be termed as expense /interest incurred for earning
exempted income.
(Please click here for judgment)
2. Chalasani Venkateswara Rao Vs. ITO, ITA No. 70 of 2000, Date of Order: 03.08.2012, High Court of Andhra Pradesh
Section 45(4) of the Income Tax Act, 1956
Whether a
sum of money paid to partner on dissolution in respect of full &
final settlement of his share is regarded as a transfer and liable to
tax u/s 45(4) of the Act.
Held_No
In the instant
case, a partnership firm was dissolved & the assessee partner
received an amount for final settlement of his share in the partnership
whereas, all the assets of the firm will vest in the hands of other
partner. The AO was of the contention that, the assessee partner sold
his share of right on the assets to the other partner. So, it will be
liable to capital gain u/s 45(4). But the hon’ble High Court has held
that the amount received by any partner in full & final settlement
of his share & such adjustment of his right is not a ‘transfer’ in
the eye of law.
(Please click here for judgment)