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Friday, May 14, 2010



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Wednesday, December 02, 2009

Blog Post for Installing the Apture Plugin for Blogging

Effectively Representing Your Clients – Examination Issues (Video)


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Wednesday, October 22, 2008

CIT v Gujarat Siddhi Cement Ltd (SC) - Investment Allowance under Sec 32-A of IT Act, 1961 Allowable on Subsequent Years' Cost Increases Attributable to Foreign Exchange Rate Fluctuations

In  CIT v Gujarat Siddhi Cement Ltd (SC),  the taxpayer had acquired Plant and Machinery,  the price of which was payable in foreign exchange.  During the previous year relevant to the Assessment Year 1993-94 (being a year subsequent to the  year of installation of the Plant and Machinery),  consequent to an adverse fluctuation in the rate of exchange,  the cost of the Plant and Machinery stood increased,  pursuant to the provisions of Section 43-A of the Income-tax Act, 1961 ("Act").  The taxpayer claimed the Investment Allowance under Section 32-A of the Act,  in respect of the increase in the cost of the Plant and Machinery.  This claim was negatived by the Assessing Officer for the reason that the Plant and Machinery had been installed in an earlier year and not in the year in which the increase in its cost had occurred.   In appellate proceedings,  while the Commissioner(Appeals) upheld the disallowance,  the Appellate Tribunal and the High Court directed acceptance of the taxpayer's claim. 

Upon the Revenue preferring an appeal to the Supreme Court,  the Court held that its decision in  CIT v Arvind Mills (1992 Supp (2) SCC 190)  was concerned with the allowability of the Development Rebate under Section 33 and not the Investment Allowance under Section 32-A and that, at the relevant time,  sub-section (2) of Section 43-A (omitted subsequently) specifically disentitled a taxpayer from claiming the Development Rebate in respect of cost increases attributable to foreign exchange  rate fluctuations. In effect,  the Court held that the ratio of Arvind Mills (supra) had no application to the Investment Allowance under Section 32-A and that,  accordingly,  the Investment Allowance could not be denied in respect of the increased cost,  even if such increased cost occurred in a year different from the year of installation of the relevant asset.

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Saturday, October 18, 2008

Vijay Ship Breaking Corpn & Ors v CIT (SC) -- Shipbreaking entitled to Deductions under Sections 80-HH & 80-I; Usance Interest NOT Subject to TDS under Section 195

By a judgment delivered on October 1,  2008,  in  Vijay Ship Breaking Corpn and Ors v CIT,  the Supreme Court of India has held as follows :
(1)   Profits derived from Shipbreaking are eligible for deductions under Sections 80-HH and 80-I of the Income-tax Act,  1961 ("Act").
(2)   Usance Interest paid to a non-resident is  NOT  subject to deduction therefrom of income-tax at source ("TDS") under Section 195 of the Act.

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Monday, September 15, 2008

Check out IN.com

Dear Raj On Blogger.com,

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Raj Kapadia

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Wednesday, October 17, 2007

Claiming My Blog on CPABlogs.com

This post is being made in order to enable me to claim my blog on CPABlogs.com

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Saturday, March 31, 2007

CIT v Baby Marine Exports (SC) - Export House Premium Recd by Supporting Manufacturer Eligible for Sec 80-HHC Deduction

After what appears to be an eternity, there is some good news on the tax front for Indian exporters. In a judgment delivered on March 30, 2007 in the case of CIT v Baby Marine Exports [in Civil Appeals No 281-284 and 286 of 2006], the Supreme Court of India has held that "export house premium", received by a supporting manufacturer from a Trading House or an Export House which has exported goods manufactured by such supporting manufacturer, constitutes part of the profits derived by such supporting manufacturer from the sale of goods or merchandise to such Trading House or Export House, "..... because it is an integral part of business operation of the respondent which consists of sale of goods by the respondent to the export house.". Consequently, a supporting manufacturer is entitled to a deduction under Section 80-HHC in respect of such "export house premium".

Even more important are the following important determinations of the Court :

"Section 80HHC was incorporated with the object of granting incentive to earners of foreign exchange. This Court in Sea Pearl Industries v. CIT Cochin (2001) 2 SCC 33 also observed that the object of Section 80HHC is to grant incentive to earners of foreign exchange. In IPCA Laboratory Ltd. v. Dy. Commissioner of Income Tax, Mumbai reported in (2004) 12 SCC 742 this Court has taken the same view. This Court in the said judgment observed that Section 80HHC has been incorporated with a view to provide incentive to export houses and this Section must receive liberal interpretation.
In Bajaj Tempo Ltd. v. Commissioner of Income Tax, Bombay reported in (1992) 3 SCC 78, this Court while interpreting Section 15-C of the Income Tax Act, 1922 observed that the Section, read as a whole, was a provision, directed towards encouraging industrialization by permitting an assessee setting up a new undertaking to claim benefit of not paying tax to certain extent on the capital employed. Similarly, Section 80 HHC has also been incorporated to give incentive for the earners of the foreign exchange. We must always keep the object of the Act in view while interpreting the Section. The legislative intention must be the foundation of the court's interpretation."

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