Key Decisions

Suresh Nanda - It was held that if a non-resident is otherwise compelled to stay in India due to unavoidable circumstances such as seizure of Passport by an Investigation agency for the purpose of computing his residential status, he will be treated as non-resident and for the number of days for which he was compelled to stay in India shall be excluded. The above said judgment was upheld by the Hon’ble Delhi High Court and later by the Supreme Court as well.

Ardent Steel Limited - The Hon’ble Chhattisgarh High Court held that issuance of notice under section 148 means the dispatch of the notice by the Assessing Officer irretrievably.

Burberry India Limited - In the case of a distributor the resale price method is the most appropriate method for bench marking.

Claridges Hotel Private Limited -There is no law against employing the relatives or sons or daughters of a shareholder/owner if they are otherwise duly qualified/experienced to hold the position. This is not a valid ground for making the disallowance. Also, the Assessing Officer cannot decide on the reasonableness and commercial expediency of a particular expenditure as has been laid down by the Hon'ble Apex Court in the case of S.A. Builders reported in 288 ITR 01 (SC).

ELEL Hotels Private Limited - Payment made to rescind the operator management agreement is revenue expense.

Xerox India Limited - When payment of royalty is based on year to year basis on the net sales of the assessee and at no point of time the assessee is entitled to become the exclusive owner of the technical know-how, then such payment of royalty has to be recognised as revenue expenditure and deductible u/s 37(1).

York Tech Pvt. Ltd. - Once the section had been repealed without any savings clause relating to domestic purchases, any notice issued after the omission of the section even if in respect of the year prior to the omission of the section shall be void.

Shipra Estate Ltd. & Jai Krishan Estate Pvt Ltd.- The open to sky area is not to be included in the overall floor area of the residential flat for the purpose of computing the super built up area under section 80IA.

G.D Foods Private Limited- Only real income can be taxed in the hands of the assessee. When books of account seized during the course of search show that the assessee had actually incurred losses or had income lesser than that shown in the return of income, no addition on account of bogus purchases and scrap sales could be made.

Prakash Industries Limited - Share capital received through banking channels qualifies the test of section 68 of the Act and the blank transfer deeds found during the course of search does not constitute incriminating evidence. The material found during the course of first search cannot be used for making assessment consequent to the second search which took place after a short period.

Pony Infrastructure - "Information collection exercise" cannot be a substitute for the reasons for reopening and when no tangible material available with the AO and Assessee has disclosed all information at the time of original assessment, therefore reopening is not justified in this case.

NIIT Limited - When the lease rentals constitute the real business income, the financial lease expenses cannot be disallowed treating it as capital expenditure.

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