Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Forum Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database More...
Extracts
Home List
← Previous Next →

Mr. K. Subramanian Versus The Assistant Commissioner of Income Tax, Circle-II, Erode.

Nature of receipt - compensation for loss of profit - capital or revenue - Held that:- As compensation received by the assessee is for the loss of earnings only it is revenue receipt exigible to tax and not a capital receipt - I.T.A.Nos.2514 & 2515/Mds. /2014 - Dated:- 26-2-2016 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND Shri Duvvuru RL Reddy, JUDICIAL MEMBER For The Appellant : Ms. K.C.Aarthy,Advocate For The Respondent : Mr. B.Nischal,JCIT, D.R ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER: .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ice. 2. Liquidated damages- Capital receipt 2.1. The Commissioner of Income tax (Appeals) erred in holding that compensation received by the appellant through waiver of Supplier s credit is revenue receipt liable to tax. 2.2. Commissioner of Income tax (Appeals) ought to have appreciated that the compensation received by the appellant through waiver of supper s credit is for the impairment of the capital asset and therefore ought to have treated the same as capital receipt. 2.3. Commissioner of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

a compensation for loss of profit since the said amount was received for the failure to generate the required units of electricity by the wind mills and therefore is a revenue receipt liable for tax. 4. Against this, the assessee is in appeal before the CIT(A). On appeal, the ld.CIT(A) observed that the claim of receipt of compensation as capital receipt was negatived by the AO for assessment year 2010-11 in assessee s own case and the same was upheld by the CIT(A)-I Coimbatore.CIT(A). Further o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

considered for deduction u/s.80-IA of the Act by the AO. Therefore, CIT(A) confirmed the order of the AO on this issue in treating the windmill compensation as revenue receipt. 5. At the outset, the ld. D.R drew our attention to the fact that this issue is squarely covered by the decision of co-ordinate Bench in assessee s own case for assessment year 2009-10 in ITA No.1652/Mds./2012 vide order dated 21th February, 2013. The ld.A.R could not controvert the submissions of the ld.D.R. 6. We have .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e suppliers for supply, erection and commissioning of the wind mills. In the agreement entered into by the assessee with the suppliers, there is a clause containing performance guarantee of the machineries supplied by the suppliers. As per this clause in the agreement, the wind mills shall generate guaranteed units per annum. In case the wind mills fail to generate the guaranteed number of units per annum, the supplier shall forego suppliers credit advanced to the assessee. The clauses contained .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ce of the prevailing TNEB rates. In the same manner, if the actual generation is only 4,00,000 units, then No.1 shall adjust for the shortfall of 1,25,000 units at rate, which shall be thrice of the prevailing TNEB rates, against the above supplier credit. 4. Notwithstanding anything mentioned hereinabove No.2 shall not under any circumstances be entitled to claim any amount more than J.25,00,000/- from No.1 towards generation loss. SWFL - Windmill V : 2.No. 1 has guaranteed a minimum generation .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the prevailing TNEB rates, against the above supplier credit. 4. Notwithstanding anything mentioned hereinaboveNo.2 shall not under any circumstances be entitled to claim any amount more than J.30,00,000/- from No.1 towards generation loss. 23. As can be seen from the above clauses of agreement with SWFL for wind mill IV & V, the supplier has guaranteed a minimum generation of 5.25 lakh units and 5.00 lakh units per annum respectively. Of this 5.25 lakhs Units, in case the actual generat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sum compensation paid for non performance of the asset or break down of the asset. The compensation paid to the assessee is only for the loss of generation of electricity and the compensation is for loss of earnings. Had the wind mill generated the guaranteed units of electricity, the assessee would have earned revenue out of such units, which is revenue receipt. 24. In the case of CIT v. Bombay Burmah Trading Corporation (supra), the assessee was given forest for lease for cutting and removing .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ffected the very structure of the operation of the assessee company and therefore constituted capital assets of the assessee company and the payments made for cancellation or sterilization of the rights under the leases would be capital receipts. In the present case, this is not the situation. The assessee has not received the compensation for termination of any agreement. The assessee received compensation only for the loss of generation of electricity. In assessee s case, the very structure of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e compensated at 5% of the price of the machinery without proof of actual loss and the total amount of damages shall not exceed 5% of the total price of the machinery. The supplier could not supply the machinery within the stipulated time and the assessee received Liquidated Damages from the supplier. The Hon'ble Supreme Court held that the damages to the assessee were directly and intimately linked with the procurement of capital asset ie., cement plant and therefore is a capital receipt. I .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     Latest Happenings     ↓  

Highlight: Notification regarding GST rate for branded cereal, pulses and flour

News: Notification regarding GST rate for branded cereal, pulses and flour

Highlight: Anti-dumping duty on import of bus/truck tyres from China

Highlight: Cabinet approves Extension of time period of the Scheme "Special Industry Initiative for J&K" (Sll J&K) - Udaan

Highlight: Non-payment of service tax - maintenance and repair charges - appellants had knowingly and deliberately shown the repair charges as job work charges to mislead about their taxability - demand confirmed.

Highlight: BAS - execution of the project of smart card for vehicle registration – implementing the SOC-VRC project - The fact that the Government has outsourced some part of the work and paid certain consideration for such outsourced work, does not make the activity subject to service tax.

Forum: Input tax credit

Forum: Cess paid instead of SGST

Forum: Excise duty credit on finished stock at additional place of business.

Circular: Amendments in Hand Book of Procedures 2015-20 –reg.

News: Cabinet approves Extension of time period of the Scheme "Special Industry Initiative for J&K" (Sll J&K) - Udaan

Highlight: Constitution of National Anti-profiteering Authority (NAA) under GST-reg. - Trade Notice

Highlight: Amendments in Hand Book of Procedures 2015-20 –reg. - Various amendments are made in Chapter-4 of Hand Book of Procedures 2015-2020.

Forum: GST rates on mobile recharge business

Circular: Constitution of National Anti-profiteering Authority (NAA) under GST-reg.

Forum: import purchase

Highlight: Sharing of expenses - BAS - promotion of business of group companies - sharing of expenditure for common facilities cannot be treated as service by one to another in such arrangement.

News: RBI Reference Rate for US $

Forum: 3B mistake

Article: Credit of unsold stock [Section 140(3)] - Actual Credit as well as Notional Credit - Part-I - GST Transitional provisions

Circular: Certain Clarifications sought on Construction Services provided in the Real Estate Sector – reg.

News: Anti-dumping duty on import of bus/truck tyres from China

News: Fast-track GST refund, else ₹ 65K cr may be stuck: Exporters

Highlight: It is open to the Settlement Commission to use best judgment in arrival of the figure. Nonetheless it has to explain the manner in which the best judgment figure has been arrived at by the Settlement Commission - HC

Highlight: Deemed dividend u/s 2(22)(e) - advances given to societies - in the absence of legal right of the assessee in the said society the amount advanced cannot be treated as deemed income.

Highlight: When electrical installations are treated as plant and machinery the depreciation has to be allowed @ 25% as per provisions contained u/s 32

TMI Note: Capital Gain - transfer of right in the land or transfer of land itself - addition u/s 50C - Harassment to the honest tax payers

Highlight: Option to avail composition scheme under GST by electronically filing an intimation in FORM GST CMP-02 and FORM GST ITC-03 upto 30-9-2017 - See Rule 3(3A)

TMI Note: Does ICDS apply for the purposes of computing exemption u/s 11 to 13.

Highlight: Voluntary Reporting of Estimated Current Income and Advance Tax Liability - CBDT issues draft notification

TMI Note: Certain ICDS provisions are inconsistent with judicial precedents. Whether these judicial precedents would prevail over ICDS.

Highlight: Provisions of ICDS shall prevail w.e.f. AY 2017-18 to the transactional issues dealt therein over earlier judicial pronouncements.

Notification: Levy of anti dumping duty on New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16 originating in, or exported from China PR

News: Voluntary Reporting of Estimated Current Income and Advance Tax Liability

TMI Note: In case of conflict between ICDS and other specific provisions of the Income-tax rules, 1962 governing taxation of income like rules 9A, 9B etc. of the Rules, which provisions shall prevail.

TMI Note: Does ICDS apply to computation of Minimum Alternate Tax (MAT) u/s 115JB of the Act or Alternate Minimum Tax (AMT) u/s 115JC of the Act.

TMI Note: Where a term has not been defined under ICDS, nor under the Act, but has different interpretations given to it by the courts in tax cases, and in ICAI Accounting Standards, which interpretation would prevail while interpreting ICDS.

TMI Note: Whether the provisions of ICDS apply to a non-resident who claims the benefit of a double taxation avoidance agreement (DTAA).

TMI Note: In case any of the ICDS provisions is contrary to a circular or press release issued by the CBDT, which would prevail over the other.

TMI Note: ICDS-I requires disclosure of significant accounting policies and other ICDS requires specific disclosures. Where is the taxpayer required to make such disclosures specified in ICDS.

Notification: Income Computation and Disclosure Standards (ICDS) - New ICDS to be effective from AY 2017-18

News: RBI Reference Rate for US $

Highlight: GST - Detention of goods under transport - discrepancy in documents - the statutory provisions provide a mechanism for adjudication following detention of goods including for the provisional release thereof pending adjudication - HC

Highlight: Reassessment - first few paragraphs of the assessment order dealt with objections and disposed of accordingly - Unfortunately, the manner in which the AO has decided the issue is wholly unsustainable in law - HC

Highlight: Business expenditure u/s 37 - liquidated damage - breach of contract terms - Expenditure was not incurred for any purpose which is an offence or which is prohibited by law - cannot be disallowed - HC

Highlight: Valuation - inclusion of reimbursement of expenses - managing participation of clients in certain mela, fairs, promotional activities etc. - They are liable to service tax on the gross amount received - They cannot restrict their tax liability to only agency commission

Highlight: TDS liability - ITAT confirmed the liability - We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by single paragraph conclusion - HC

Highlight: Reopening of assessment - sufficiency of material available with the AO to form a belief that income chargeable to tax had escaped assessment - bogus purchases - seller refused to respond - notice would not be interfered with - HC

Highlight: Exemption u/s 11 - education activities - transport and hostel facilities surplus cannot be considered as business income of the assessee society

News: Draft Notification for insertion of new rule 39A in the Income-tax Rules, 1962 – comments and suggestions-reg.



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version