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II. Direct Tax Case laws:
1. Krishak Bharti Cooperative Limited Vs. DCIT, ITA No. 1248/2010, Date of Judgment: 24.07.2013, Delhi High Court
Decision : In favor of assessee.
Section : 80I of the I.T. Act, 1961
Whether the ownership is necessary for consideration of service charges as profits and gains from industrial undertaking?
Held : No
The
service charges received on account of operating and maintenance of
another industrial undertaking which is an extension of the assessee
industrial undertaking shall be considered as profits and gains derived
from industrial undertaking. Section 80I, nowhere requires the ownership
of undertaking for being eligible for said deduction. The Hon’ble High
Court, on consideration of the facts, interpretation, and legislative
intention of law, decided in favor of assessee.
Since
there Is a direct nexus between the service charges and the industrial
undertaking, these can be said to be derived from the industrial
undertaking and accordingly, shall be considered as profits and gains
from industrial undertaking.
(Please click here for judgment)
2. M/s Pepsico India Holdings Private Limited Vs. DCIT Circle -
14(1), ITA No. 147/Del/2010, Date of Decision: 05-07-2013, ITAT - Delhi
Whether the disallowance on account of bad debt and advances written off is justifiable in law?
In
the present case the AO disallowed the assessee claim on account of bad
debt and advances written off. AO held that the bad debt and advances
written off were of capital in nature and hence disallowed and added to
the income of the assessee. To this the assessee appealed before the CIT
(A). The CIT (A) deleted the disallowance with regard to bad debt and
upheld the AO decision with respect to interest accrued on loan on the
grounds that it does not qualify for bad debt u/s 36(1) (vii). Section
36(1) (Vii) requires that the debt must be incidental to the business of
the assessee and since the assessee was engaged in the manufacture and
sale of soft drink so the same is not allowable.
On
appeal before the ITAT, the ITAT perused the Form 3-CD and observed
that providing loan to companies involved in the business of
manufacture of soft drink beverage is within the object of the
company. The ITAT held its decision in the favour of assessee and
allowed the assessee claim with respect to advances written off as
revenue in nature.
(Please click here for judgment)
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