Direct TAX CASE LAW - JULY 2023

 

§  Bangalore ITAT in the recent judgement held that Compulsorily Convertible Debentures are not in the nature of Equity and hence, interest till the date of conversion should be allowed as deduction.  

 

§  Delhi ITAT in case of Sapein Funds Limited held that Mauritius based Collective Investment Vehicle (‘CIV’) eligible to India-Mauritius DTAA and not subject to tax in India

 

§  Bangalore ITAT in the case of Allstate India held that Interest Income Received On Temporary FDs Is Eligible For Exemption

 

§  Mumbai ITAT in the case of GMR Warora Energy  held that expenses For Community Development, Environment Health & Safety . 

 

§  The Delhi ITAT held that holds that the services provided by the taxpayer to the Service Recipient (SR) are recurring, and the SR continuously relies on the taxpayer for these services. Despite requiring technical knowledge, the provision of these services does not empower the SR to independently apply this knowledge in their business. Accordingly, no withholding was required as per India- UK DTAA 

 

§  Delhi ITAT held that Reimbursement for Salary Cost to EY US Not Taxable as FTS.

 

§  Bangalore ITAT in the case of Sandeep Patwari & Subhsankar Chakraborty held that Form 67 is not mandatory but directory & procedural & foreign tax credit is a substantive right and procedural obligation cannot deny substantive right. 

 

§  Section 80 of the Income-tax Act, 1961 (IT Act) restricts the carry forward of losses under the head 'Capital Gains' and 'Profit and Gains from Business or Profession' if the return of loss is not filed within the time limit. It may so happen that after filing the original tax return within the timeline, the revised tax return may contain losses. Whether such a loss can be carried forward? In this regard, recently Delhi Tax Tribunal has held that Long term capital loss cannot be allowed to be carried forward if a fresh claim is made by way of filing a revised tax return

 

§  During the period between 2007 and 2012, many companies were raising capital by issuing shares at a huge premium.  The Income-tax department had re-opened assessment of all such companies that had issued shares at a price higher than the book value of the company.  In many cases, the return was processed u/s 143(1) of the Income-tax Act, and hence the Revenue Authorities claimed the reopening of assessment to be in due compliance of law.  Recently, the Bombay High Court has, in a Writ Petition [SLS Energy Pvt. Ltd. v. ITO (Writ Petition No 331 of 2016, decision dated 27 June 2023)], quashed reopening of such assessments as being beyond the jurisdiction of the Assessing Officer.  This decision lays down many important principles. Primarily, it sheds much light on the question of whether re-opening of assessment can be a subject matter of challenge when the return was only processed u/s 143(1).