CPT V24P7-Art1 (Content).pmd - Taxmann
CPT V24P7-Art1 (Content).pmd - Taxmann CPT V24P7-Art1 (Content).pmd - Taxmann
Landmark Rulings under an agreement and agreed not to engage in any call centre, BPO and IT-enabled services for a period of two years and also agreed not to solicit business done by company ‘E’. Company ‘P’ also acquired certain shares from another director to increase its shareholding in company ‘E’ up to 50%. The assessee showed the gain on transaction as capital gain. During assessment the AO taxed it as business profits on the ground that the shares were not held as capital assets. The Tribunal held in favour of revenue - It was held that the gain from transactions was to be taxed as business profits under section 28(va) on the following grounds: (a) The shares of company ‘E’ were not purchased by the assessee as an investor, as he was the original founder/promoter of the company; (b) Investment made by the assessee was in the nature of business asset of the assessee; and (c) The company ‘P’ had purchased 50 per cent of the entire equity shares of company ‘E’. Therefore, the transfer of shares by the assessee to company ‘P’ was not the transfer of a capital asset within the meaning of section 2(14) but was, in fact, a transfer/renunciation of control over the company ‘E’ in favour of the purchaser ‘P’. Therefore, the gain arising in the said transaction could not be taxed as capital gain under section 45 or under section 50B and had to be assessed as business income under section 28(va). 694 When matter is remanded, section 220(2) interest is to be charged from the date of fresh demand notice In CIT v. Chika overseas (P) Ltd. [2012] 23 taxmann.com 315 (Bombay), demand was raised against the assessee by an assessment order. On appeal filed by assessee, the CIT(A) partially allowed the claim of assessee. Subsequently, the Tribunal set-aside the order of AO and August 1 to 15, 2012 u TAXMANN’S CORPORATE PROFESSIONALS TODAY u Vol. 24 u 74 } directed the AO to pass a fresh assessment order. Fresh assessment order was passed by AO and, consequently, fresh demand notice was served on the assessee. Assessee paid the demand after expiry of thirty days from the date of service of demand notice. AO held that assessee was liable to pay interest under section 220 from the date of original demand notice, as demand was paid beyond 30 days from the date of service of notice. CIT(A) held in favour of assessee. The Tribunal also upheld the order of CIT(A). The High Court held in favour of assessee - It held that since demand had finally crystallized on fresh assessment order, assessee was not liable to pay interest under section 220 for period prior thereto. Therefore, assessee was liable to pay interest for non-payment of demand from the date of fresh assessment order. Production of media content software on beta-cam tape qualifies for deduction under section 10B In Asstt. CIT v. Sri Adhikari Brothers Television Network Ltd. [2012] 23 taxmann.com 322/137 ITD 154 (Mum. - Trib.), assessee set-up a new unit for production of media content software which was exported on beta-cam tape to foreign parties. AO denied claim of deduction under section 10B on ground that production of a media content programme on a beta-cam tape could not be equated with an article or thing and, therefore, assessee did not satisfy basic condition of manufacture and production of an article or a thing prescribed in section 10B. The Tribunal held in favour of assessee - It was held that incorporeal rights contained in beta-cam tapes are ‘goods’ or ‘merchandise’. As a result, production of media content software on beta-cam tape qualifies for deduction under section 10B, as it amounts to ‘goods’ or ‘merchandise’. Therefore, the assessee’s claim to allowability of deduction under section 10B was upheld. } }
‘Approach road’ treated as a part of factory building for depreciation In CIT v. Sunshine Glass Indus (P.) Ltd. [2012] 23 taxmann.com 336 (Rajasthan), the assessee constructed approach road to factory and claimed depreciation thereon. The AO held that approach road could not be said to be a part of the factory and no depreciation was admissible thereon. Assessee contended that the road was constructed within factory premises and, therefore, it should be treated as a part of building for the purpose of depreciation. On appeal, CIT(A) held that approach road could not be said to be a part of factory owned by assessee and no depreciation was admissible thereon. On further appeal, the Tribunal allowed the claim of assessee and directed that cost of construction of roads should be treated as part of building for the purpose of depreciation. The High Court held in favour of assessee - It held that roads constructed inside and within boundary wall of premises, be it a building or factory, are meant to augment utilization thereof. Such roads are eventually intended to augment utilization of building/factory by providing access thereto. Therefore, as in the present case road was constructed within factory premises, it had to be treated as a part of building. Therefore, the revenue’s appeal was dismissed and the order of Tribunal was upheld. August 1 to 15, 2012 u TAXMANN’S CORPORATE PROFESSIONALS TODAY u Vol. 24 u 75 } 695
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‘Approach road’ treated as a part of<br />
factory building for depreciation<br />
In CIT v. Sunshine Glass Indus (P.) Ltd.<br />
[2012] 23 taxmann.com 336 (Rajasthan), the<br />
assessee constructed approach road to factory<br />
and claimed depreciation thereon. The AO held<br />
that approach road could not be said to be a<br />
part of the factory and no depreciation was<br />
admissible thereon. Assessee contended that<br />
the road was constructed within factory premises<br />
and, therefore, it should be treated as a part<br />
of building for the purpose of depreciation.<br />
On appeal, CIT(A) held that approach road<br />
could not be said to be a part of factory owned<br />
by assessee and no depreciation was admissible<br />
thereon. On further appeal, the Tribunal allowed<br />
the claim of assessee and directed that cost of<br />
construction of roads should be treated as part<br />
of building for the purpose of depreciation.<br />
The High Court held in favour of assessee -<br />
It held that roads constructed inside and within<br />
boundary wall of premises, be it a building<br />
or factory, are meant to augment utilization<br />
thereof. Such roads are eventually intended to<br />
augment utilization of building/factory by<br />
providing access thereto. Therefore, as in the<br />
present case road was constructed within factory<br />
premises, it had to be treated as a part of<br />
building. Therefore, the revenue’s appeal was<br />
dismissed and the order of Tribunal was upheld.<br />
August 1 to 15, 2012 u TAXMANN’S CORPORATE PROFESSIONALS TODAY u Vol. 24 u 75<br />
}<br />
695
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