Jurisprudentiol– Tomorrow's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Income Tax - Indo German Tax Treaty

In view of the provisions of Article 24(4) of the Treaty, the disability on carry forward and set off of accumulated losses under Section 79 cannot be extended to the Indian subsidiaries - rigour of Section 79 must stand relaxed due to treaty override – ITAT

In view of the provisions of Article 24(4) of the Indo German tax treaty and in view of the discussions, the ITAT was of the considered view that the disability on carry forward and set off of accumulated losses on account of change in shareholding pattern, under Section 79 r.w.s 2(18), cannot be extended to the Indian subsidiaries of German parent companies as long as German parent companies are listed on a German stock exchange recognized under their domestic laws. To this extent, the rigour of Section 79 must stand relaxed due to treaty override.

Central Excise

Supplementary Invoice – No interest – Reliance placed on quashed High Court order – Revenue loses in High Court

The situation is the Bombay High Court order relied on by this High Court is no more valid and the issue is with a Five Member Larger Bench. Apparently these facts were not brought to the notice of the High Court and Revenue has lost one more case because it has not kept itself updated with the latest case law.

Income Tax

Set off of the loss suffered in any of the previous year in the block period against the income assessed in other previous years in the block period is not prohibited – Supreme Court

Only brought forward losses of the past years under Chapter VI and unabsorbed depreciation under Section 32(2) are to be excluded while aggregating the total income or loss of each previous year in the block period but set off of the loss suffered in any of the previous year in the block period against the income assessed in other previous years in the block period is not prohibited. The Settlement Commission had erred in disallowing the application of the assessee for set off of inter se losses and depreciation accruing in any of the previous year in the block period against the income returned/assessed in any other previous year in the block period.

Customs

Exemption – burden is on the claimant that he has satisfied the conditions of the exemption notification – Appellant failed to discharge burden - No reason to interfere with the concurrent findings of the authorities below – Supreme Court

It is well settled that Exemption Notification have to be read in the strict sense. In this case the appellant had led evidence of an expert, twice. It appears that the Operational Manual was not placed before him. No questions were asked to the expert on the terminology used in the Manual which described the imported items as "Heat Pump Type Air Conditioner". Therefore, on the facts and circumstances of the case, we do not see any reason to interfere with the concurrent findings recorded by the authorities below.”

See our columns tomorrow for the judgements