1. CIT Vs. Sahara India (Firm), ITA No. 181/2005, Date of Pronouncement: 20.11.2013, High Court of Allahabad
Whether the
AO is justified in treating the deposits received by assessee from
public under various schemes as its revenue income.
Held: No
In the instant
case, the assessee is engaged in the business of collecting deposits
from the public under different financial schemes but the AO has made
addition by treating the deposits as revenue income. The Hon’ble court
dismissed the appeal in view of the facts that the assessee is merely a
custodian of the deposit and no part of the deposit is the income of the
assessee. The income arises from the deposits i.e. dividend, interest
etc only. The reliance is placed on CIT v. Sahara Investment India Ltd.
[2004] 266 ITR 641/136 Taxman 61 (All.) wherein it was held that when
amount is deposited into a bank, then such deposit does not become the
income of the Bank but it is capital for the bank in the form of
borrowed capital. Income is ordinarily that which flows out of capital.
The court has to see the true nature of the receipts and not go only by
the entry in the books of account.
(Please click here for judgment)
2. Mrs. Madhu Kaul Vs. CIT, ITA No. 89 of 1999, Date Of Pronouncement: 17.01.2014, High Court of Punjab and Haryana
Whether allotment letter or payment of first installment has entitled the assessee to claim a long term capital gain.
Held_Yes
In the instant
case, assessee claims LTCG on sale of flat by considering dated of
issuance of allotment letter/ date of payment of first installment as
date of acquisition and contended that identification of flat or
physical delivery of possession is irrelevant as right to hold property
stands crystalised upon allotment and payment of first installment.
However, the AO considered it as STCG by contending that mere allotment
and/or payment of the first installment without identification of the
flat or delivery of possession does not confer any right in the flat
which was allotted to assessee later on. Since, allotment letter could
be cancelled at any time and it does not confer any right in any
specific unit but merely confers a right to be allotted a unit.
Therefore, definition of transfer contained in Section 2(47) of the Act
has to be read against the assessee.
Hon’ble High Court has held that mere fact that possession was
delivered later, does not detract from the fact that the allottee was
conferred a right to hold property on issuance of an allotment letter.
The payment of balance installments, identification of a particular flat
and delivery of possession are consequential acts, that relate back to
and arise from the rights conferred by the allotment letter. Thus,
appeal is allowed by placing reliance on Vinod Kumar Jain v.
Commissioner of Income Tax Ludhiana and others (ITA No.140 of 2000).
(Please click here for judgment)
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