Tag: ITAT

Supreme Court Allows Business Expense Deduction for Firm in “Lull Period” Between Contracts
2Jan By The Legal ChamberNo Comments
Supreme Court

Supreme Court Allows Business Expense Deduction for Firm in “Lull Period” Between Contracts

The Supreme Court held that a temporary lull in business activities does not amount to cessation of business. The absence of a permanent establishment or a subsisting contract is not determinative; continuous business efforts, such as correspondence and bidding, suffice to constitute "carrying on business" for claiming deductions under Sections 37 and 71 and carry-forward of depreciation under Section 32(2) of the Income Tax Act. Facts Of The Case: The appellant, Pride Foramer S.A., a French non-resident company engaged in oil drilling, was awarded a 10-year contract by ONGC in 1983, which concluded in 1993. A subsequent drilling contract was awarded only in October 1998, formalized in January 1999. During the interregnum assessment years (1996-97, 1997-98, 1999-2000), the comp...
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Supreme Court: Prosecution Without Confirmed Penalty is Abuse of Process
30Sep By The Legal ChamberNo Comments
Supreme Court

Supreme Court: Prosecution Without Confirmed Penalty is Abuse of Process

The Supreme Court quashed the prosecution under Section 276C(1) of the Income Tax Act, 1961, holding that its continuation after a conclusive settlement order granting immunity from penalty was an abuse of process. The Revenue's action was in blatant disregard of its own binding circulars which mandated prosecution only after penalty confirmation by the ITAT. Facts Of The Case: A search u/s 132 of the Income Tax Act, 1961, was conducted at the appellant's residence on 24.04.2016, leading to the seizure of unaccounted cash. Based on this, the Revenue initiated prosecution u/s 276C(1) for the Assessment Year 2017-2018, alleging a wilful attempt to evade tax. The appellant's petition before the High Court to quash these proceedings was dismissed. Subsequently, the appellant filed an...
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Key Income Tax Ruling: Supreme Court Divided on Limitation Period Under Sections 144C & 153
11Sep By The Legal ChamberNo Comments
Supreme Court

Key Income Tax Ruling: Supreme Court Divided on Limitation Period Under Sections 144C & 153

The Supreme Court delivered a split verdict on the interplay between Sections 144C and 153 of the Income Tax Act, 1961. The key legal question was whether the detailed procedure and timelines under Section 144C for eligible assessees operate within or in addition to the limitation period prescribed under Sections 153 for passing assessment orders. The divergence of opinion led to the matter being referred to a larger bench for final determination. Facts Of The Case: The case involved several foreign companies, including Shelf Drilling Ron Tappmeyer Ltd., engaged in oil exploration in India. For Assessment Years 2014-15 and 2018-19, the companies filed returns declaring losses. Their cases were selected for scrutiny, and the Assessing Officers passed draft assessment orders ...
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No Double Benefits: Supreme Court Clarifies Double Deduction Rules Under Income Tax Act
3Jun By The Legal ChamberNo Comments
Supreme Court

No Double Benefits: Supreme Court Clarifies Double Deduction Rules Under Income Tax Act

The Supreme Court ruled that Section 80-IA(9) of the Income Tax Act, 1961, bars double deductions on the same profits under both Sections 80-IA and 80-HHC. It held that while deductions can be computed separately under different provisions, the total deduction cannot exceed the eligible profits of the business. The Court upheld the Bombay High Court’s interpretation, clarifying that Section 80-IA(9) restricts the allowability—not computation—of deductions, ensuring taxpayers do not claim overlapping benefits under Chapter VI-A. Facts Of The Case: The case involved Shital Fibers Limited, which filed its income tax return for the Assessment Year 2002-03, declaring a taxable income of ₹46,99,293 and claiming deductions under Sections 80-HHC (export profits) and 80-IA (industrial undertaking...
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