Two Imp Verdicts On Controversial Issues

M/s Yash Society vs. CCIT (Bombay High Court)

S. 10(23C)(via): Institution consistently generating surplus, utilizing the surplus to buy assets, spending meager amount on treatment of poor patients is not existing “solely for philanthropic purpose” and “not for the purpose of profits”. Fact that exemption has been allowed in the past does not mean exemption has to be continued

The intention of the legislature in making provisions of section 10 (23C)(via) is that an institution shall exist solely for philanthropic purpose and not for the purpose of profits. The expression “solely for philanthropic purpose” and “not for the purpose of profits” spells out a clear intention of the legislature that the institution should not merely exist for philanthropic purpose but existence shall not be for profits. Satisfaction of this twin test by an institution claiming a deduction would entitle it for the benefit of the provisions of section 10 (23C)(via) of the Act

 

International Computers Indian Manufacture vs. CIT (Bombay High Court)

S. 32: Expenditure allowable u/s 35D cannot be capitalized to asset for claim of depreciation
A plain reading of section 35D indicates that the Legislature has thought it appropriate to give a special benefit to the assessee in respect of expenditure specified in sub-section (2) incurred before commencement of business or after the commencement of business, in connection with the extension of industrial undertaking or in connection with setting up a new industrial unit. This provision allows amortisation of the specific category of expenditures incurred by the assessee, by way of deduction of an amount equal to one-tenth of such expenditure for each of the ten successive previous years as provided therein. The legislature, therefore, having specifically provided for amortisation of the preliminary expenditure which includes expenditure incurred for issuance of shares by the assessee in connection with the issue of shares, the said expenditure on issue of shares is not eligible for depreciation