Facts:

T. Jayachandran, a stockbroker, acted as a broker for Indian Bank in purchasing securities.

Indian Bank sought to save itself from high-interest rates by luring PSUs to make fixed-term deposits at higher interest rates.

Jayachandran purchased securities for Indian Bank at a prescribed price, including covering extra interest payable to PSUs.

Income Tax department raised a demand for additional tax, alleging that Jayachandran should be taxed on the sum payable to the PSUs as income.

Issues:

Whether the additional interest payable to PSUs could be assessed as the income of Jayachandran.

Held:

The court examined the nature of the relationship between Jayachandran and Indian Bank regarding the transactions. It considered evidence from criminal proceedings, including the findings of the CBI court, which acquitted Jayachandran and concluded that he acted as a broker for Indian Bank. Based on the evidence and conduct of the parties, including the acknowledgment by Indian Bank of demand drafts taken by Jayachandran, the court held that he acted as a broker and not as an individual dealer.

Therefore, the additional interest payable to the PSUs could not be considered his income.

Facts:

The accused, a vendor at M/s New Bikaner Sweet Center, was found to be in possession of adulterated ghee. The Food Inspector purchased a sample from the shop, which was later confirmed to be adulterated by both the Public Analyst and the Director, Central Food Laboratory.

Issues:

Whether storing adulterated food, even if meant for use in preparing other food items for sale, constitutes an offense under Section 7 of the Prevention of Food Adulteration Act, 1954.

How discrepancies between the reports of the Public Analyst and the Director, Central Food Laboratory, should be interpreted.

Held:

The court held that storing adulterated food for use in preparing other food items for sale also constitutes an offense under Section 7 of the Prevention of Food Adulteration Act, 1954. The court clarified that the law was amended to explicitly prohibit such actions, irrespective of whether the adulterated food was meant for direct sale or for use in other food preparations.

Regarding discrepancies between the reports of the Public Analyst and the Director, Central Food Laboratory, the court emphasized that the Director's certificate supersedes the report of the Public Analyst. The court declared that the certificate from the Director is final and conclusive evidence and should be considered as such.

The court set aside the acquittal of the accused and convicted them under Section 2 (ia) (a) (c) & (m) of the Act, punishable under Section 16 (1) (a), read with Section 7 of the Act. However, considering the age of the accused and the closure of their business, the court directed that the sentence be confined to the period already undergone.

Facts:

M/S Container Corporation of India Ltd. (CONCOR) is engaged in the business of handling and transportation of containerized cargo.

The company filed returns for the assessment years 2003-04 to 2005-06, claiming deductions under various heads, including Section 80-IA of the IT Act.

The dispute arose when the Assessing Officer rejected the deductions claimed by the company on profits earned from Inland Container Depots (ICDs) and rolling stocks.

The company appealed to higher authorities, leading to litigation.

Issues:

Whether the activities of the company qualify as infrastructure facilities under Section 80-IA(4) of the IT Act?

Whether the notifications issued by the CBDT supporting the company's claim remain valid despite subsequent amendments?

Held:

The ICDs qualify as inland ports eligible for deductions under Section 80-IA of the IT Act.

The notifications issued by the CBDT supporting the company's claim remain valid despite subsequent amendments.

The nature of work carried out at ICDs supports their classification as inland ports.

The judgment of the High Court, allowing the deduction on income earned from ICDs, is upheld, and the appeal is dismissed.

Facts:

The case involved M/s. Calcutta Export Company, a partnership firm engaged in manufacturing and exporting casting materials.

The Assessing Officer disallowed export commission charges paid by the assessee to M/s. Steel Crackers Pvt. Ltd. due to non-deposit of tax deducted at source (TDS) within the prescribed time.

The Commissioner of Income Tax (Appeals) allowed the appeal filed by the assessee.

The Revenue appealed against the decision before the Income Tax Appellate Tribunal (ITA), which upheld the decision of the Commissioner of Income Tax (Appeals).

The Revenue further appealed to the High Court, which also dismissed the appeal.

The Revenue then appealed to the Supreme Court.

Issues:

Whether the amendment made by the Finance Act, 2010 to Section 40(a)(ia) of the Income Tax Act, 1961, has retrospective effect, and if so, whether it applies to the case at hand.

Held:

The Court held that the amendment made by the Finance Act, 2010 to Section 40(a)(ia) should be interpreted liberally and applied retrospectively from the date of insertion of the provision, aligning with legislative intent and mitigating hardships faced by taxpayers. This decision was based on the curative nature of the amendment and its aim to remedy unintended consequences and ensure reasonable interpretation of provisions.

The Court cited previous judgments, including Allied Motors (P) Limited vs. CIT, Delhi, which supported giving retrospective effect to amendments aimed at rectifying anomalies.

Therefore, the assessee in the case was allowed to claim the benefit of the amendment, and the appeals were dismissed.

Facts:

HCL Technologies Ltd. is engaged in the development and export of computer software and provision of technical services.

Dispute arose regarding the inclusion or exclusion of certain expenses related to providing technical services outside India while computing deductions under Section 10A of the IT Act.

Issues:

Whether expenses related to providing technical services outside India should be excluded from the total turnover while calculating deductions under Section 10A of the IT Act.

Held:

The court held that the term "total turnover" should be interpreted in conformity with the context in which it is used. Since expenses excluded from export turnover must also be excluded from total turnover to align with legislative intent, any other interpretation would be impermissible.

Emphasizing the principle of harmonious construction and the need to avoid inconsistency or repugnancy between various sections of the statute, the court ruled that deductions for expenses related to the delivery of computer software and provision of technical services outside India should be allowed from both export turnover and total turnover in the same proportion.

The appeals filed by the Revenue were deemed devoid of merit and were dismissed. All connected matters were disposed of with no order as to costs.

Facts:

The appellant, Commissioner of Income Tax-VI, contested the allowance of deduction for lease equalization charges claimed by the respondent, Virtual Soft Systems Ltd., under the Income Tax Act, 1961.

The respondent filed its return of income for the Assessment Year 1999-2000, declaring a loss and claiming deduction for lease equalization charges.

The Assessing Officer disallowed the deduction claimed, leading to appeals by the respondent to higher authorities, ultimately reaching the High Court, which upheld the decision of the Income Tax Appellate Tribunal (ITAT).

Issues:

Whether deduction on account of lease equalization charges from lease rental income can be allowed under the Income Tax Act, 1961, based on the Guidance Note issued by the Institute of Chartered Accountants of India (ICAI)?

Held:

The Supreme Court held that the respondent is entitled to bifurcate lease rental income as per the accounting standards prescribed by the ICAI. The method of accounting recommended by the Guidance Note is valid for computing real income and is in accordance with accounting principles.

There is no express bar in the Income Tax Act against bifurcating lease rental income as per the accounting standards prescribed by the Guidance Note. The Court dismissed the appeal, affirming the decision of the High Court.

Decided on : 24-04-2018

Companies Act, 1956 - Section 211

Income Tax Act, 1961 - Section 145

Counsel for Appearing Parties

K. Radhakrishnan, Sr. Adv, Mrs. Anil Katiyar, Advocates, for the Appellants; Mrs. Rani Chhabra, Santosh Kumar-I, Nikhil Nayyar, Advocates, for the Respondents

Cases Referred

Commissioner of Income Tax-VII, New Delhi Vs. Punjab Stainless Steel Industries, (2014) 15 SCC 129

Facts:

The case pertains to M/S. Shree Rama Multi Tech Ltd., engaged in manufacturing.

Dispute related to Assessment Years 1999-2000, 2000-2001, and 2001-2002.

Initial assessment by the Assessing Officer modified based on a Tribunal decision.

Appeals filed before the Commissioner of Income Tax (Appeals) and reassessment proceedings initiated.

Tribunal allowed respondent's claim regarding deduction of interest income and remanded other issues to the Assessing Officer.

Revenue appealed before the High Court, which upheld the Tribunal's decision.

Issues:

Whether interest accrued on deposit of share application money is taxable income.

Whether the interest income can be deducted against public issue expenses.

Held:

The Supreme Court held that interest earned on share application money deposited in compliance with statutory requirements should be eligible for deduction against public issue expenses. The purpose of such deposits was not primarily to generate additional income but to fulfill statutory requirements. Therefore, the interest earned was incidental and not the prime purpose, making it eligible for deduction.

The Court dismissed the appeals and upheld the decision of the High Court, stating that the interest income earned from share application money was liable to be set off against public issue expenses.

Facts:

The case involved Cheran Properties Limited (Appellant) v. Kasturi and Sons Limited and Ors., where disputes arose between the parties regarding a business transaction. An agreement was entered into between various entities, including Kasturi and Sons Limited (KSL), Cheran Properties Limited (appellant), and others. The transaction involved the allotment of shares and subsequent disputes led to arbitral proceedings. An arbitral award was passed, directing certain actions, including the transmission of shares.

Issues:

Whether the appellant, who was not a signatory to the arbitration agreement, could be bound by the arbitral award?

Whether the National Company Law Tribunal (NCLT) had jurisdiction to order rectification of the register under Section 111 of the Companies Act, 1956?

Held:

The Court interpreted Section 35 of the Arbitration and Conciliation Act, 1996, which provides that an arbitral award is final and binding not only on the parties directly involved but also on persons claiming under them. The doctrine of 'claiming under' extends the scope of those who can be bound by the award to include entities deriving their capacity or position from a party to the proceedings.

In this case, the appellant, though not a signatory to the arbitration agreement, was found to claim under a party to the agreement. It was aware of the terms of the agreement and had sought to purchase shares in accordance with it. Therefore, the appellant could be bound by the arbitral award.

The Court affirmed the jurisdiction of the NCLT to order rectification of the register under Section 111 of the Companies Act, 1956, to effectuate the transmission of shares as mandated by the arbitral award.

The enforcement of the arbitral award was found to be equivalent to the enforcement of a decree of a civil court under Section 36 of the Arbitration and Conciliation Act, 1996. Therefore, the award could be enforced in the same manner as a court decree.

Decision: The appeals were dismissed, affirming the enforcement of the arbitral award against the appellant and the jurisdiction of the NCLT to order rectification of the register under the Companies Act, 1956.

Facts:

B.L. Passi filed an income tax return claiming a deduction under Section 80-O for income received from Sumitomo Corporation, Japan, for providing specialized industrial and commercial knowledge about the Indian automobile industry.

The Income Tax Department disallowed the deduction, leading Passi to appeal through various levels of adjudication, ultimately reaching the Supreme Court.

Issues:

Whether Passi was entitled to the deduction under Section 80-O of the Income Tax Act.

Held:

The court analyzed the nature of the services provided by Passi and the relevant provisions of Section 80-O. It noted that Passi claimed to have provided blueprints and information about the Indian automobile industry to Sumitomo Corporation, but failed to produce evidence such as the blueprints to substantiate his claim before the lower authorities.

The court emphasized that technical services, as per Section 80-O, involve the use of tools and machinery, which may not include managerial services. Since Passi couldn't prove the technical nature of the services provided or the basis for the alleged payment by Sumitomo Corporation, the court dismissed his appeal.

Additionally, the court affirmed the High Court's finding of a principal-agent relationship between Passi and Sumitomo Corporation, further supporting the denial of the deduction under Section 80-O.