Tax Cases Weekly Round-Up: 04 December To 10 December 2022

Supreme Court Concessional Rate Of Sales Tax Not Applicable On Oxygen As It Is Not A Raw Material For Manufacture Of Steel: Supreme Court Case Title: State of Jharkhand and others Versus Linde India Limited and Another The Supreme Court has held that the main function of oxygen in manufacturing steel is to reduce the carbon content; therefore, it can be considered a refining agent but not a raw material, so the concessional rate of sales tax is not available on oxygen. The division bench of Justice M.R. Shah and Justice M.M. Sundresh has set aside the order passed by the Jharkhand High Court and restored the orders passed by assessing officers to revisional authority—the Joint Commissioner. Delhi High Court Delhi High Court Allows Income Tax Deduction On Loss On Forward Cover Purchase Contracts For Foreign Exchange Case Title: PCIT Versus Simon India Ltd. The Delhi High Court has held that reinstatement of year-end losses on forward cover purchase contracts is allowable in spite of the fact that the forward contracts have not been closed. The division bench of Justice Vibhu Bakharu and Justice Purushaindra Kumar Kaurav, while upholding the findings of the tribunal, held that the loss on account of forward contracts cannot be considered speculative. Bombay High Court Expenditure On Development Of New Product, Shown As 'Capital Work In Progress'; Deductible As Revenue Expenditure, If Project Is Subsequently Abandoned: Bombay High Court Case Title: Pr. Commissioner of Income Tax versus Trigent Software Limited The Bombay High Court has ruled that the expenditure incurred on development of a new product, in respect of the same business already carried on by the assessee, which subsequently failed to come into existence and was abandoned, is eligible for deduction as revenue expenditure. The bench of Justices Dhiraj Singh Thakur and Abhay Ahuja observed that though the assessee had treated the expenditure incurred on development of a new product as 'Capital work in progress' in its books of accounts, however, since no new asset came into existence which would be of an enduring benefit to the assessee, the expenditure incurred was revenue and not capital in nature. Madras High Court Ingenuine Documents Submitted By Clients For Form 15CB, CA Cannot Be Prosecuted Under PMLA: Madras High Court Case Title: Murali Krishna Chakrala Versus Deputy Director, Citation: 2022 LiveLaw (Mad) 495 The Madras High Court has held that the chartered accountant (CA) is not required to go into the genuineness or otherwise of the documents submitted by his clients. "A Panel Advocate, who has no means to go into the genuinity of title deeds and who gives an opinion based on such title deeds, cannot be prosecuted along with the principal offender. Applying the same anomaly, we find that the prosecution of Murali Krishna Chakrala, in the facts and circumstances of the case at hand, cannot be sustained," the division bench of Justice P. N. Prakash and Justice G. Chandrasekharan observed. TDS Exemption Not Applicable On Cash Withdrawal By Primary Agricultural Credit Co-Operative Societies: Madras High Court Case Title: Molasi Primary Agricultural Versus ITO The Madras High Court has held that the TDS exemption under Section 194N of the Income Tax Act is not applicable to cash withdrawal by primary agricultural credit co-operative societies. The bench of Justice Anitha Sumanth has noted that the provisions of Section 194 N provide for a mandatory deduction of 2% of cash withdrawals and the object is to discourage and drive the move toward a cashless or cash-free economy. Attachment By Tax Dept. Subsequent To A Mortgage Favouring Secured Creditors Has No Legs: Madras High Court Case Title: Tax Recovery Officer Versus Union Bank of India The Madras High Court has held that the orders of attachment passed by the Tax Recovery Officer or Income Tax Department were subsequent to the mortgage created in favour of the secured creditors and have no legs. The division bench of Justice R. Mahadevan and Justice Mohammed Shaffiq has observed that even if recovery proceedings are quashed for any reason, the bankers' and financial institutions' rights to claim priority in terms of Section 31 B of the Recovery of Debts and Bankruptcy Act and Section 26 E of the SARFAESI Act would still be available. The right to recover under the Income Tax Act, of 1961, must yield to the provisions under the SARFAESI Act and the Recovery of Debts and Bankruptcy Act, and thus, the exercise of attachment may not serve any useful purpose. Gujarat High Court GST Tribunal Not Constituted After Lapse Of 5 Years Of Introduction Of GST: Gujarat High Court Issues Notice Case Title: M/S Firmenich Aromatics Production (India) Pvt. Ltd. Versus Union Of India The Gujarat High Court has issued a notice to the central and state...

Tax Cases Weekly Round-Up: 04 December To 10 December 2022

Mariya Paliwala

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