TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether the payment made to LIC under the group gratuity insurance scheme was deductible as contribution to an approved gratuity fund or as business expenditure. (ii) Whether 5% of premium collected from allottees and forfeiture of earnest money or premium could be treated as taxable income. (iii) Whether interest on delayed payment of premium or instalments formed part of eligible business income for deduction under section 80IA.
Issue (i): Whether the payment made to LIC under the group gratuity insurance scheme was deductible as contribution to an approved gratuity fund or as business expenditure.
Analysis: The payment was held to be actual expenditure and not a mere provision for gratuity. The absence of express approval by the Commissioner did not defeat the claim because the application for approval had remained undecided beyond the statutory period, giving rise to deemed approval by operation of law. In that situation, the gratuity fund was to be treated as approved. The deduction was therefore also supportable on the footing that the expenditure was incurred wholly for business purposes and was not capital or personal in nature.
Conclusion: The issue was decided in favour of the assessee.
Issue (ii): Whether 5% of premium collected from allottees and forfeiture of earnest money or premium could be treated as taxable income.
Analysis: The addition was found to rest on conjecture and surmises. The nature of the assessee's public development activity and the character of the receipts were not properly examined. On the facts, the assumption of taxable income at 5% of the premium collected was held to be unsupported in law.
Conclusion: The issue was decided in favour of the assessee.
Issue (iii): Whether interest on delayed payment of premium or instalments formed part of eligible business income for deduction under section 80IA.
Analysis: The finding of the first appellate authority that such interest had a business link was not displaced, yet the claim under section 80IA was denied without reversing that finding. The resulting approach was held to be contradictory and legally unsustainable.
Conclusion: The issue was decided in favour of the assessee.
Final Conclusion: The Tribunal's order was set aside and the matter was remanded for fresh decision on the issues decided, with the assessee succeeding on the substantive legal questions addressed.
TaxTMI 
