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II. Direct Tax Case laws:
1. CIT Vs. Jain Esports Pvt. Ltd., ITA No. 235/2013, Date of decision: 24.05.2013, Delhi High Court
Decision: In favour of Assessee
Section: 41(1) of Income Tax Act, 1961
Assessment Year: 2008- 09
Cases referred:
1. CIT v. Sugauli Sugar Works (P). Ltd.: [1999] 236 ITR 518 (SC)
2. Bombay Dyeing and Manufacturing Co. Ltd.’ v. State of Bombay: AIR 1958 SC 328
Whether liability outstanding for several years amounts to cessation of liabilities on account of efflux of time?
Held No.
In
order to attract the provisions of Section 41(1) of the Act, there
should have been an irrevocable cession of liability without any
possibility of the same being revived. As the assessee continued to
acknowledge the credit balances in the subsequent period, there could be
no cessation of its liability to pay the creditors.
(Please click here for judgment)
2. CIT Vs. Sh. Rajnish Ahuja, ITA No. 27 of 2013 (O&M), Date of decision: 02.04.2013, Punjab & Haryana High Court
Decision: In favour of assessee
Section: 40A of Income Tax Act, 1961
Assessment Year: 2006-07
Whether
sales made to sister concerns at lesser rate amounts to violation of
any provision of law where such sister concern is paying tax in higher
bracket.
Held No.
The provisions of Section 40-A of the Act could not have been invoked
as no payment has been made to the sister concerns for any item of
expenditure, which the assessee might have claimed as revenue
expenditure. Further, a tax payer can manage his affairs to reduce tax
liability within the frame work of law and that the sale of goods at a
lesser price to the sister concerns than to the non-sister concerns,
does not violate any provision of law.
(Please click here for judgment)
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