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III. Direct Tax Case laws:
1. ACIT Vs. M/s J.V. Strips Ltd., ITA No. 364/Del/2012, Date of Judgment: 05.07.2013, Income Tax Appellate Tribunal - Delhi
Issue No 1:
Whether
disallowance can be made u/s 14A of the IT Act read with rule 8D, where
borrowed funds have not been used for making investments?
Held: No
The term loan
taken by the assessee was for specific purposes and it cannot be alleged
without proof that the term loan granted by the bank for specific
purposes, were diverted for purposes other than for which it was
granted. Thus we have to uphold the finding of the ld. CIT (A) that the
borrowed funds had not been utilized for the purpose of making
investment in shares/mutual funds.
Issue No 2:
Whether
allowability of claim of amortization u/s 35D of the IT Act, 1961 have
to be considered in the first year of the claim only?
Held: Yes
In the case of
Janak Dehydration Pvt. Ltd. Vs. ACIT (2010) 134 TTJ (Ahd.), it has been
laid down that the condition precedent for allowing deduction u/s 80IB
has to be examined the initial year only. The principles laid down in
this case apply to the issue on hand. Once a claim for amortization is
examined in the initial year and allowed, it cannot be disallowed in
this latter years of amortization.
(Please click here for judgment)
2. Commissioner
of Income Tax Vs. M/s Himachal Gramin Bank, ITA No. 45 & 46 of
2008, Date of Decision: 06.11.2012, High Court of Himachal Pradesh
Issue:
Whether the
assessee bank was entitled to deduction u/s 80P (2) (a) (i) of the
Income Tax Act in respect of interest earned on deposits made even out
of the non SLR funds whereas the income so earned can not be said to be
earned from the normal banking business/activities?
Held: Yes
That the
investment of the funds by the banks including the non reserves was part
of the banking activities since no bank would like its reserve funds to
remain idle and not earn any interest. This is not only prudent
business management but is also a part of the activity of banking.
Therefore, the interest earned on such deposits is directly attributable
to the business of banking. The question is accordingly answered in
favour of the assessee and against the revenue.”
(Please click here for judgment)
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