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II. Direct Taxes Case Laws:
1. Seagram
Distilleries Pvt. Ltd. (Now Pernod Ricard India Pvt. Ltd.) Vs. CIT,
I.T.A. No. 898-901/2009, Date of Order: 06.10.2015, Delhi High Court
Whether
provision for transit breakages has a scientific basis or is contingent
in nature and as such is not allowable deduction while computing the
total income of the Assessees.
Held: Yes
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. The provision would, in the circumstances, be a provision for
a contingent liability and, therefore, in terms of the AS 29 ought not
to be recognized. Under AS 29 a 'provision' is defined to mean “a
liability which could be measured only by using a substantial degree of
estimation.” The word 'liability' is defined as “a present obligation of
the enterprise arising from past events, the settlement of which is
expected to result in an outflow from the enterprise of resources
embodying economic benefits. The actual transit breakages as and when
they occur are allowable as revenue expenditure in the accounting year
in which such breakages occur. Consequently, the question framed is
answered in favour of the Revenue and against the Assessees.
(Please click here for judgment)
2. ITO Vs. Ramesh Kr. Jajodia, I.T.A. No. 2166/Kol/2013, Date of Order: 07.10.2015, ITAT - Kolkata
Whether
carry forward of speculation loss transaction allowed when not claimed
in the original return and the return was filed within due date however
wrongly shown u/s. 139(4) of the Act?
Held: Yes
The
assessee filed his return of income for the relevant Y 2009-10 u/s.
139(1) of the Act through e-filing. The assessee filed the return
before the due date but u/s 139(4). The assessee disclosed loss u/s.
43(5) of the Act, from speculative transaction at Rs.17,35,409/- which
was not claimed in the original return of income but total income was
worked out on the basis of positive income. This return was not
processed u/s. 143(1) of the Act by CPC, Bangalore accepted the
acknowledgment of return of income. After noticing the omission to give
effect to the losses u/s. 43(5) of the Act amounting to Rs.17,35,409/-
from speculative transaction, it was incorporated in the return of
income which was revised u/s. 139(5) of the Act on 22.12.2009 which was
then again revised. Accordingly, assessee moved rectification
application, which was also rejected by the ACIT, CPC, Bangalore.
Consequently, speculative loss derived u/s. 43(5) of the Act was
denied. Aggrieved, assessee preferred appeal before CIT(A), who allowed
the claim to which revenue appealed to ITAT which held that the
assessee revised the return within the time allowed u/s. 139(5) of the
Act. Even otherwise, this disallowance of loss claimed in speculative
transactions u/s. 143(5) of the Act cannot be disallowed by acting u/s.
143(1) of the Act. Because this is a highly debatable issue and
debatable issue cannot be adjudicated while passing intimation u/s.
143(1) of the Act. Hence, it was held dismissing the appeal of revenue
that the CIT(A) rightly deleted the addition.
(Please click here for judgment)
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