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By Vijay Kumar

Income Tax

Purchase of machinery - damages received for breach of contract, on capital account - price of machinery stands reduced and so does depreciation - A 50 year old dispute settled : High Court

YOU buy a machine and claim depreciation. The machine develops trouble and you fight with the supplier, who after three years pays you some amount of money as compensation/damages or whatever you call. Now should depreciation claim be altered from the year in which you bought the machine?

This important question of law was before the High Court for the Assessment year 1958-59, for the previous year of 1957. The litigation pertains to the year 1957 - yes, the High Court could actually peruse a letter written in 1958! Maybe this case is worth preserving in the tax museum for posterity to understand that a tax case could actually run for fifty years!

Capital gains made but cost of acquisition not apparent : AO needs to determine cost as per settled principles of law : Karnataka HC

IN a case of transfer of capital asset where capital gain is made but where cost of acquisition is not apparent, what is the right course to be adopted by the Income Tax? This was the query before the Karnataka High Court which held that where a capital asset is acquired and subsequently transferred, then the capital gain is to be charged to tax u/s 45 and even if cost of acquisition can't be made out from the relevant deed or agreement, it is to be determined as per settled principles of law having regard to facts and circumstances leading to acquiring and subsequent transfer of the said asset.

Central Excise

Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty; Suppression means failure to disclose full information with the intent to evade payment of duty; When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression - Supreme Court

The issue before the Supreme Court was excisability of Ready Mix concrete, but without going into that question, the Supreme Court decided the issue on the question of limitation.

See our columns Monday for the judgements