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III. Direct Tax Caselaws:
1. CIT Vs. MAK Data Ltd., ITA No. 415/2012, Date of decision 22.01.2013, Delhi High Court
Whether
the voluntary surrender of income for taxation by the assessee without
any supporting evidences is liable for penalty u/s 271(1)(c)?
Held Yes:
where
the amount is merely offered for taxation with no underlying
explanation as to its source, it could not be considered as voluntary
and thereby attracts the clause A of Explanation 1 to section 271(1)(c).
(Please click here for judgment)
2. CIT Vs. Sahu Enterprises Pvt. Ltd., ITA No. 43 OF 2006 Date of decision 20.02.2013, Allahabad High Court
Whether
the interest paid on borrowed funds, advanced to the sister concern/
directors and their family members for non-business purposes is eligible
for deduction u/s 36(i)(iii) of Income Tax Act, 1961?
Held
No, where the borrowed funds were advanced to the sister concerns/
directors of the assessee for personal purposes without any interest,
interest on borrowed capital is not allowable u/s 36(1)(iii) of the Act.
In the instant case, the assessee could not produce any evidences
with respect to the advances that they were made for business purposes.
Neither was any efforts made by the directors for repayment nor was any
efforts made by the assessee for recovery of the same. Moreover, since a
heavy amount of borrowed funds was advanced for personal use without
any interest, it enhanced the loss of the assessee and therefore, the
return of income were filed by showing loss. As the intention of the
statute in allowing the deduction of interest paid u/s 36(i)(iii) is not
met, the same was disallowed by the Hon’ble High Court.
(Please click here for judgment)
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