Legal News & Views

A ruling by the Mumbai bench of the Income Tax Appellate Tribunal spells welcome relief for taxpayers who have paid huge sums as prepayment or foreclosure charges on early repayment of their housing loans.  Such taxpayers can claim prepayment charges as deductible under the head income from house property and could set it off against other heads of income, such as salary income. This will help in saving tax.  Hearing an appeal filed by Windermere Properties, the tribunal examined the definition of interest. Interest on housing loan is admissible as a deduction under income from house property. The bench comprising R K Gupta and R S Syal observed, "The appellant had obtained a loan from HDFC for acquisition of property. The bank accepted the early repayment of loan on receipt of prepayment charges (of Rs 1.56 crore). It is obvious that these prepayment charges have a live and direct link with the housing loan."  Dismissing the stand taken by the Tax department, the ...

A copy of the order in original was sent to the assessee by speed post whereas the legal requirement under section 37C of the Central Excise Act, 1944 is to send it by registered post with acknowledgement due. The purpose of this kind of dispatch by registered post with acknowledgment due under Section 37C  is to ensure delivery of the postal article to the addressee and to enable him to acknowledge its receipt.   The purpose of section 37C cannot be served by a mere speed post without acknowledgment due required under the above provision of law. Thus, the dispatch of the order-in-original to the assessee via speed post was not in accordance with section 37C. CESTAT, BANGALORE BENCH Balarami Reddy & Co. v. Commissioner of Central Excise, Hyderabad P.G. Chacko, Judicial Member – This application filed by the appellant seeks waiver and stay in respect of the adjudged dues. On a perusal of the records and hearing both sides, we are of the view that the ...

As reported in the Hindusthan Times on 5th May:-  http://www.hindustantimes.com/India-news/NewDelhi/Property-can-be-sold-on-power-of-attorney/Article1-1054964.aspx In a judgment that will benefit lakhs of Delhi residents living in co-operative housing societies and DDA flats, the Delhi High Court has quashed a Delhi government circular banning property sale in the Capital through general power of attorney (GPA). The court found that the directions in the circular, issued by the revenue department on April 27 last year, were contrary to the Supreme Court judgment dated October 11, 2011. The HC order will increase the number of saleable properties in Delhi and could bring down the value of freehold properties. According to realty watchers, on an average, around 20% of properties are registered through GPA transfers — a common way of selling leasehold properties and those that don’t have a clear title. The judgment came on a petition filed by a company, Pace Developers and ...

S. Vinodkumar Diamonds Pvt. Ltd vs. ACIT (ITAT Mumbai)  The assessee, a dealer in diamonds, entered into forward contracts in US dollars. Some of the contracts were cancelled during the year and some were outstanding at the end of the year. The assessee suffered a loss of Rs. 4.02 crores on account of the cancellation and “marked to market” of the said forward contracts and claimed that sum as a deduction. The AO & CIT(A), relied on Instruction No. 03/2010 dated 23-3-2010 and held that the said loss arose on account of a “speculative transaction” while the assessee claimed that it arose out of a “hedging transaction”. HELD by the Tribunal: There is a difference between a “speculative transaction” and a “hedging transaction”. S. 43(5) defines a “speculative transaction” to mean a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery or transfer of th...

Amruta Organics Pvt. Ltd vs. DCIT (ITAT Pune) The assessee filed a return declaring a loss of Rs. 16 lakhs in which it had made a wrong claim of depreciation. The AO disallowed the claim and levied 100% penalty which was upheld by the CIT(A). Before the Tribunal, the assessee claimed that its’ Directors were technical persons not knowing the intricate provisions of the Act but were dependent on the advice of professionals for preparing income tax returns. It claimed that it had committed a bona fide mistake and that there was no intention to evade taxes. HELD by the Tribunal upholding the plea:   A mere mistake in making of a claim in the return of income would not ipso facto reflect concealment or furnishing of inaccurate particulars of income in terms of s. 271(1)(c). The wrong claim of depreciation cannot be said to be made with an intention to evade taxes in as much as even after the disallowance of depreciation, the resultant income of the assessee remains a loss. T...

The popular press and TV are blazing with the "Saradha Story' and everyone is looking for someone to blame ignoring a one of the or perhaps the most important culprit and also the victim - Us - The people of Bengal. This can be easily seen from the ill informed and sarcastic attitude - like calling this company a 'Chit Fund'. There has always been a tendency among those in the populace not interested in financial companies to refer to them sarcastically as "Chit Fund"-  not because that's what they may be but because of phonetic association of the word with "Cheat", not knowing or caring to know that 'Chit Funds' are companies governed by the Chit Fund Act and are among still respectable organisations in Andhra, Tamil Nadu etc. These funds have been fulfilling a very specific need among the investors there for many decades while those in West Bengal seem to  be hot air balloons. This is because and here I am speaking from personal ex...

Refusing to grant relief to, the Maharashtra State Consumer Disputes Redressal Commission rapped three “ignorant” flat purchasers for not getting the necessary information before making the payment. The three paid a total of Rs. 53 lakh to a developer, Terrain Infrastructure Private Limited, for booking three flats at Vakola in Santacruz (East). They moved the consumer commission after the builder failed to give them possession.  “These complainants are well-educated and not illiterate persons and certainly they are well aware about provisions of law,” the bench of presiding member Dhanraj Khamatkar and member Narendra Kawde said.  “None of these complainants have produced the receipts issued to them by the opponents [developer] against the payments made,” the bench said. “Before parting with such huge amounts, the complainants should have insisted on receipts.” Two of the complaints, Ghatkopar resident Karishma Lalwani and Byculla resident Dr Bhawarlal Jain had paid ...