1.  COMMISSIONER OF INCOME TAX Vs M/s SAMSUNG INDIA ELECTRONICS LTD, ITA No.39/2010, Dated: April 20, 2011, HIGH COURT OF DELHI

Section 40A(2)(a) of the Act contemplates that there should be some material available before the Assessing Officer for invoking Section 40A(2)(a) of the Act to initiate action to disallow or refuse to deduct the excessive or unreasonable expenditure mentioned there under. But, at the same time, before taking any final decision by invoking the power under Section 40A(2)(a) of the Act, either allowing or disallowing such expenditure incurred as excessive or unreasonable, such decision of the Assessing Officer should be based on reasons well-founded, which are judiciously acceptable and in which event, the finding or decision arrived at stating that the expenditure is excessive or unreasonable and the same cannot be allowed or deducted, certainly would become purely a question of fact, which the Court cannot interfere, in view of the ratio laid down in Commissioner of Income Tax v. T.T. Krishnamachary & Co. where under it is held that the finding that the payment was not excessive, as another party has also purchased at increased price, is one of the facts; even if it is presumed that section 40A(2)(b) is attracted in the instant case, on the facts of this case still the outcome has to be against the Revenue.

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2.  COMMISSIONER OF INCOME TAX Vs DELHI GOLF CLUB LTD, ITA No.1757 of 2010, Dated: March 30, 2011, HIGH COURT OF DELHI

Whether assessee registered u/s 12A can be said to be carrying on commercial activities merely on the ground that the golf course was allowed to be used by casual members or non-members on a higher fee and hence, casual membership fee charged from them is to be construed as business.

After giving careful consideration, the High Court was of the opinion that no substantial question of law is involved in the present case and the appeal warrants to be dismissed in limini; not only this position is accepted by the department that the assessee/Club would be a “charitable” in nature having regard to the objective for which it is established namely the promotion of the game of golf or sport, this position remains unchallenged for over six decades. This consistency in the approach is maintained except in the assessment in question. Curiously, even thereafter for subsequent assessment years, the department reverted to this position as is clear from the assessment for the assessment year 2007-08. These facts are sufficient to hold that no question of law arises; in this backdrop the High Court are constrained to observe that the AO gave undue focus to the issue of casual membership when this aspect had been examined earlier by the Department and it was accepted that this was incidental activity of the Golf Club being part and parcel of the overall running of the Trust and accruals there from are utilized/applied for the same purpose as set forth by the assessee.