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1 - 10 of 14 (0.45 seconds)Section 37 in The Income Tax Act, 1961 [Entire Act]
Shree Bharkha Synthetics Ltd. vs Assistant Commissioner Of Income Tax on 28 November, 2001
However, there is also
a contrary judgment of Hon'ble High Court of Madhya Pradesh in the case of
Shree Synthetics Ltd. vs. CIT (303 ITR 451), in which it has been held that
Section 35D being a special provision will prevail over general provisions of
the Act and that, in view of specific provision of section 35D(2)(c)(iv),
expenditure incurred even on non convertible debentures is required to be
amortised. The ld. AR has argued that there being conflicting judgments, the
interpretation which is favourable to the assessee should be adopted in view
of the judgment of Hon'ble Supreme Court in the case of Vegetable Products
Ltd. (88 ITR 192).
C.I.T. Udaipur vs M/S Secure Meters Ltd on 20 November, 2008
He also referred to the judgment of Hon'ble High Court of
Rajasthan in case of CIT vs. Secure Meters Ltd. (321 ITR 611), it which it has
been held that position has to be seen at the time of issue of debentures and
that the fact that at a future point of time the debenture was convertible was
not relevant for deciding the allowability of expenditure. It was pointed out
that SLP filed by revenue against the said judgment has been dismissed by
the Hon'ble Supreme Court.
The Commissioner Of Income-Tax vs South India Corporation (Agencies) ... on 31 August, 2006
He also referred to the judgment of Hon'ble High
Court of Madras in the case of CIT vs. South India Corporation (Agencies) Ltd.
(290 ITR 217) in which it was held that the issue of shares was a future event
14 ITA No.2308/M/10
AY .05-06
and position had to be seen at the time of issue of debenture and the Hon'ble
Court accordingly upheld allowability of expenditure as revenue in nature.
5.3 The ld. DR on the other hand strongly supported the orders of
authorities below. It was argued that section 35D was a special provision for
amortization of certain expenses incurred in connection with the expansion
and extension of business and, therefore, it will have precedence over general
provisions of section 37.
India Cements Ltd., Madras vs Commissioner Of Income-Tax, Madras on 8 December, 1965
AY .05-06
5.6 However CBDT vide Circular No.56 dated 19.3.1971 has clarified that
provisions of section 35D do not supersede any other provisions of Income-
tax Act under which expenditure is allowable as deduction against profit. It
has also been clarified that any expenditure incurred which is allowable as
deduction in view of the judgment of Hon'ble Supreme Court in case of India
Cements Ltd. vs. CIT (60 ITR 52) will not be covered by the provisions of
section 35D. The Hon'ble Supreme Court in the said case have held that
expenditure incurred in connection with borrowing of capital for the purpose
of existing business is required to be allowed as business expenditure. There
are also judgments of several High Courts as mentioned in para 5.2 earlier in
which it has been held that expenditure incurred in connection with issue of
debentures even if it is fully convertible is allowable as revenue expenditure
and is not required to be amortised under section 35D.
Finance Act, 2012
Section 9 in The Income Tax Act, 1961 [Entire Act]
Section 91 in The Income Tax Act, 1961 [Entire Act]
C.I.T.,Delhi vs M/S.Bharti Cellular Ltd on 12 August, 2010
It has also
been pointed out that though there has been amendment in section 9(1)(vi)
by the Finance Act, 2012 with retrospective effect i.e. 1.6.1976 by inserting
Explanation-(V) as per which royalty included any consideration in respect of
any right, property or information irrespective of the fact whether the
9 ITA No.2308/M/10
AY .05-06
possession or control of such right or property or information is with the
payer or not, or whether such right, property or information is used directly
by payer, or whether location of such right, property or information is situated
in India or not, such amendment was not available at the time of payment
being made by the assessee and therefore the assessee could not be
expected to deduct tax at source as held by the Tribunal in case of Channel
Guide (I) Ltd. (supra). Moreover, it was also submitted that no such
amendments were made in the definition of royalty in the treaty and
therefore the assessee was entitled to relief under the provisions of treaty. It
has also been argued that interest of the assessee was protected under non
discrimination clause of the treaty as per which non-resident company could
not be discriminated vis-à-vis the domestic company and since there was no
provision for deduction of tax on royalty in case of domestic company in the
relevant year, the non-resident companies also were not required to deduct
the same.