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III. Direct Taxes Case Laws:
1. ANZ Grindlays Bank Vs. DCIT, I.T.A. No. 32/2004, Date of Judgment: 01.03.2016, High Court of Delhi
Issue:
Whether
the provisions of Section 40(a)(iii) disentitles an assessee to claim a
deduction on account of Salaries paid to its employees, if the tax is
not paid within the specified time but is paid subsequently?
Held: No
Brief Facts
The
assessee was non-resident banking company and its principal place of
business was situated outside India. The Assessee transferred some of
its Employees from overseas to its branches in India for the business
carried on in India. The Assessee claimed deduction and TDS was deducted
on the remuneration that was payable to the expatriate employees in
India. The Assessee's head office situated overseas also made certain
payments to and/or for the benefit of such expatriate employees.
However, the Assessee did not account for such payments, which were in
the nature of salaries, allowances and perquisites, in its Profit and
Loss Account and also did not deduct TDS on it.
However,
in pursuant to the CBDT Circular No.685 dated 17/20th June, 1994, the
Assessee deducted and deposited TDS pertaining to the payments made by
HO from overseas for the benefit of the employees serving in India
alongwith interest due thereon, with the Income Tax Authorities. The
Assessee sought to claim a deduction of an amount of Rs.1,32,46,994/- in
respect of remuneration paid by HO. However, the CIT(A) rejected the
Assessee's claim by holding that such claim could not be made in
appellate proceedings. The ITAT held that since no tax had been deducted
at source under Chapter XVII B of the Act within the prescribed time,
no deduction under Section 40(a)(iii) was permissible.
Held
A plain
reading of Section 40(a)(iii) of the Act, as was in force, during the
relevant year indicates that no deduction would be allowable in respect
of any payments chargeable under the head “Salaries” if (a) the same are
payable outside India and (b) if tax has not been paid or deducted
thereon under Chapter XVII B of the Act. The added condition that the
tax must be deducted and paid within time, cannot be read in Section
40(a) (iii) of the Act. The plain language of the Section 40(a) (iii)
does not permit such interpretation. It can hardly be disputed that the
tax deposited by the Assessee was in discharge its obligations, as
imposed under Chapter XVII B of the Act. That being so, the Assessee had
also overcome the rigor of sub-clause (iii) of clause (a) of Section 40
of the Act as the necessary condition for applicability of the said
provision, that is, non-deduction and payment of TDS under Chapter XVII B
of the Act, no longer held good. Having complied with the said
obligation, the Assessee could not be denied the deduction which was
otherwise allowable under Section 37 of the Act.
(Please click here for judgment)
2. M/s Juhi Alloys Pvt. Ltd. Vs. CIT, I.T.A. No. 368/Lkw/2015, Date of Order: 24.02.2016, ITAT - Lucknow
Issue:
Whether
provisions of Section 263 of the Income Tax Act, 1961 can be invoked
only in the cases of lack of enquiry by the Assessing Officer and not in
the case of inadequate enquiry by the Assessing Officer?
Held: Yes
Brief Facts
The ld.
AO raised the queries, during the assessment proceedings, on all the
points on which objection had been raised by ld. CIT in the notice u/s
263 of the Act and replies were also submitted by the assessee.
Held
It was
held that this is not a case of lack of enquiry by the ld. AO or lack of
application of mind by the ld. AO. Merely because the ld. AO has
reached to a different conclusion and ld. CIT has different conclusion,
the assessment order cannot be said to be erroneous and prejudicial to
the interest of Revenue. Therefore, revisionary power u/s 263 of the Act
cannot be invoked by ld. CIT. Reliance was placed on the Judgement by
the Hon’ble Allahabad High Court in CIT vs. Krishna Capbox (P.) Ltd. [2015] 372 ITR 310 (All.).
(Please click here for judgment)
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