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III. Useful Case Laws:
1. CIT Vs. Convertech Equipments Pvt. Ltd., ITA No. 669/2012 & 670/2012, C.M. APPL. 20042/2012, Date of Decision: 03-12-2012, High Court of Delhi
Whether commission paid to directors were allowable expenditure as per Section 36(1)(ii) of the Income Tax Act, 1961?”
It was noticed that while commission was paid as a form of remuneration for actual services rendered, dividend is a return of investment and is paid to all its shareholders equally. It was thus held that if the commission is paid for actual services rendered, section 36(1)(ii) will not apply. This decision was followed by this Court in CIT v. Career Launcher India Ltd. (2012) 250 CTR 240 (Del). These decisions apply to the present case. The substantial question of law in ITA No.669/2012 is answered in favour of the assessee.
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2. CIT Vs. M/S Ganapati Finance Ltd., ITA No. 475/2006, Date of Decision: 05-12-2012, High Court of Delhi
Whether Depreciation u/s 32 was allowable to the assessee on leased out LPG cyclinders and leased out Air Jet Spindle Assembly and Positar Disc?”
Held that, In the case of LPG cylinders, the transaction was only a financing transaction and was not a lease as there is no material to show that the assessee became the owner of the cylinders and leased them to Janta; in the case of airjet spindles and positar disc, the very existence of the assets and the genuineness of the purchase of the assets by the assessee was not proved. In both the cases, therefore, the assessee was not entitled to depreciation.
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