Supreme Court Judgments — 2018

The Tribunal correctly held that the assessable value should be based on the price actually paid unless there are cogent reasons and proper exercise to reject the transaction value. The Assessing Officer failed to provide such reasons or conduct the necessary exercise.

The Supreme Court held that the repeal of the Gold Control Act, 1968, by the Gold (Control) Repeal Act, 1990, did not attract Section 6 of the General Clauses Act. The Court reasoned that the statement of objects and reasons for the 1990 Act clearly expressed a contrary intention. It highlighted that the objects and reasons described the Gold Control Act as having yielded discouraging results over 22 years, failing to achieve its objectives, and being a 'regressive measure' causing 'considerable dissatisfaction,' 'hardship,' and 'harassment' to artisans and goldsmiths. This indicated a legislative intent to extinguish all pending proceedings. The Court noted that in previous instances of amendments or repeals related to the Defence of India Rules, there was always an inbuilt savings clause, and Section 116(2) of the Gold (Control) Ordinance, 1968, also contained savings for show cause notices. Therefore, the show cause notice dated 01.06.1971 no longer survived. For the connected appeals concerning Wealth Tax references, the Court granted liberty to amend or delete questions within eight weeks, after which the writ petitions would be decided on merits, requesting expeditious hearing by the High Court.

The Supreme Court held that Urban Improvement Trusts are not Municipal Committees as contemplated by Section 10(20) Explanation Clause (iii). The Court found the High Court's reasoning to be erroneous and unsustainable.

The Supreme Court held that taxing statutes must be strictly construed, and nothing should be read into or implied. The benefits envisaged in a taxing statute must be extended strictly as per the restrictions and conditions therein. The Court noted that the Tamil Nadu Value Added Tax Act, 2006, does not confer any power on any authority to dilute the mandatory requirement under Section 19(11). Since the statute did not provide for any extension of time for claiming Input Tax Credit, which is a condition for claiming it, the submission that the period could have been extended by the assessing authority was unfounded and could not be accepted. The Court found no error in the judgment of the High Court, which had dismissed the writ petitions. Therefore, the appeals were dismissed. The Court also noted that the High Court had granted liberty to file statutory appeals in cases where assessments were finalized, which substantially protected the interests of the appellants.

The Supreme Court condoned any delay and granted leave to appeal. Given the tax effect and applicability of the CBDT Circular, the appeals were dismissed.

The Supreme Court held that substantial expansion does not create a new initial assessment year for claiming 100% exemption under Section 80-IC. The exemption rate reduces to 25% after the initial five years.

The Supreme Court held that the Tribunal was correct in observing that the Assessing Officer (AO) had breached the mandatory instructions issued by the CBDT in Instruction No. 3/2003 by not making a reference to the Transfer Pricing Officer (TPO). The Court found the conclusion of the Tribunal to be correct. However, the Supreme Court also held that the Tribunal ought to have accepted the submission made by the Departmental Representative and restored the matter to the file of the AO for making an appropriate reference to the TPO. The Court allowed the appeal to this extent, directing the AO to take appropriate steps in terms of Instruction No. 3/2003. The Court did not decide on the merits of the transfer pricing adjustment itself, as the primary issue was procedural compliance.

The Supreme Court held that exemption notifications should be interpreted strictly. The burden of proving the applicability of an exemption notification lies squarely on the assessee. In situations where there is ambiguity in an exemption notification, the benefit of such ambiguity must be interpreted in favour of the revenue, not the assessee. The Court explicitly overruled the ratio in the "Sun Export case" and all decisions that took a similar view, stating that the principle that ambiguity in a taxing statute should be construed in favour of the assessee does not apply to the construction of an exception or an exempting provision. Such provisions must be construed strictly, and any doubt or ambiguity must benefit the State. The Court distinguished between interpreting charging provisions and exemption notifications, emphasizing that while ambiguities in charging provisions may favour the assessee, ambiguities in exemption notifications favour the revenue. The Court noted that the instant civil appeal would be placed before an appropriate bench for considering the case on merits.

The Supreme Court held that tax exemption notifications must be interpreted strictly, and any ambiguity should be resolved in favour of the revenue, not the assessee. The ratio in the Sun Export Case, which favoured the assessee in case of ambiguity, was overruled.

The Supreme Court held that NOIDA, being constituted under the Uttar Pradesh Industrial Area Development Act, 1976, is a corporation established by a State Act. Therefore, the interest paid to it is exempt from TDS under Section 194A(3)(iii)(f) of the IT Act, 1961.

The Supreme Court held that NOIDA is not a 'local authority' within the meaning of Section 10(20) of the Income Tax Act, 1961, as amended by the Finance Act, 2002. The Court reasoned that while NOIDA performs certain municipal functions, it lacks the essential features of a 'Municipality' as contemplated by Part IXA of the Constitution, particularly the democratic units of self-government. The Court found that NOIDA does not fit the definition of 'Municipality' under Article 243P(e). Regarding the 'industrial township' status, the Court held that the notification under the proviso to Article 243Q(1) provides an exception and relieves the mandatory requirement of constituting a Municipality, but it does not equate an industrial township with a Municipality as defined in Article 243P(e). The Court also affirmed that the Explanation to Section 10(20) provides an exhaustive definition of 'local authority', and the definition under Section 3(31) of the General Clauses Act, 1897, is no longer applicable post-amendment. Therefore, NOIDA is not covered by the definition of 'local authority'. The appeals were dismissed.

The Supreme Court held that annual lease rent payments are subject to TDS under Section 194-I. It also clarified that interest on lease premium is exempt from TDS under Section 194A(3)(f), and that the authorities are not local authorities under Section 10(20) post-amendment.

The Supreme Court held that NOIDA is not a local authority within the meaning of Section 10(20) of the Income Tax Act, 1961, after the amendments made by the Finance Act, 2002. The Explanation to Section 10(20) provides an exhaustive definition, and NOIDA does not fall within the specified categories.

The Supreme Court held that the 10-year limit under Section 80-IC(6) for counting prior deductions under Sections 80-IA and 80-IB is applicable only to industries located in the North-Eastern Region. For other regions, prior deductions do not count towards the 10-year period for Section 80-IC.

The Supreme Court held that the 'transaction value' as defined in Section 4(3)(d) of the Central Excise Act, 1944, as amended, statutorily includes additions to the 'normal price'. The measure of levy under Section 4 is not controlled by the nature of the levy, provided a reasonable nexus exists.

The Supreme Court held that the 'transaction value' as defined in Section 4(3)(d) of the Central Excise Act, 1944, as amended, statutorily includes additions to the 'normal price'. The measure of levy under Section 4 is not controlled by the nature of the levy, provided a reasonable nexus exists.

The Supreme Court held that the 'transaction value' as defined in Section 4(3)(d) of the Central Excise Act, 1944, as amended, statutorily includes additions to the 'normal price'. The measure of levy under Section 4 is not controlled by the nature of the levy, provided a reasonable nexus exists.

The Supreme Court held that the 'transaction value' as defined in Section 4(3)(d) of the Central Excise Act, 1944, as amended, statutorily includes additions to the 'normal price'. The measure of levy under Section 4 is not controlled by the nature of the levy, provided a reasonable nexus exists.

The Supreme Court held that the 'transaction value' as defined in Section 4(3)(d) of the Central Excise Act, 1944, as amended, statutorily includes additions to the 'normal price'. The measure of levy under Section 4 is not controlled by the nature of the levy, provided a reasonable nexus exists.

The Supreme Court held that the 'transaction value' as defined in Section 4(3)(d) of the Central Excise Act, 1944, as amended, statutorily includes additions to the 'normal price'. The measure of levy under Section 4 is not controlled by the nature of the levy, provided a reasonable nexus exists.

The Supreme Court held that the 'transaction value' as defined in Section 4(3)(d) of the Central Excise Act, 1944, as amended, statutorily includes additions to the 'normal price'. The measure of levy under Section 4 is not controlled by the nature of the levy, provided a reasonable nexus exists.

The Supreme Court held that the 'transaction value' as defined in Section 4(3)(d) of the Central Excise Act, 1944, as amended, statutorily includes additions to the 'normal price'. The measure of levy under Section 4 is not controlled by the nature of the levy, provided a reasonable nexus exists.

The Supreme Court held that the 'transaction value' as defined in Section 4(3)(d) of the Central Excise Act, 1944, as amended, statutorily includes additions to the 'normal price'. The measure of levy under Section 4 is not controlled by the nature of the levy, provided a reasonable nexus exists.

The Supreme Court held that the 'transaction value' as defined in Section 4(3)(d) of the Central Excise Act, 1944, as amended, statutorily includes additions to the 'normal price'. The measure of levy under Section 4 is not controlled by the nature of the levy, provided a reasonable nexus exists.

The Supreme Court held that the 'transaction value' as defined in Section 4(3)(d) of the Central Excise Act, 1944, as amended, statutorily includes additions to the 'normal price'. The measure of levy under Section 4 is not controlled by the nature of the levy, provided a reasonable nexus exists.

The Supreme Court held that the 'transaction value' as defined in Section 4(3)(d) of the Central Excise Act, 1944, as amended, statutorily includes additions to the 'normal price'. The measure of levy under Section 4 is not controlled by the nature of the levy, provided a reasonable nexus exists.

The Supreme Court held that the 'transaction value' as defined in Section 4(3)(d) of the Central Excise Act, 1944, as amended, statutorily includes additions to the 'normal price'. The measure of levy under Section 4 is not controlled by the nature of the levy, provided a reasonable nexus exists.

The Supreme Court held that the 'transaction value' as defined in Section 4(3)(d) of the Central Excise Act, 1944, as amended, statutorily includes additions to the 'normal price'. The measure of levy under Section 4 is not controlled by the nature of the levy, provided a reasonable nexus exists.

The Supreme Court held that the measure of levy under Section 4 of the Central Excise Act, 1944, is not controlled by the nature of the levy. As long as a reasonable nexus exists between the measure and the nature of the levy, Sections 3 and 4 operate in their respective fields. The Court affirmed the view in 'Bombay Tyre International Ltd.' as the correct exposition of the law. Furthermore, the 'transaction value' as defined in Section 4(3)(d) by the Amendment Act, 2000, statutorily incorporates additions to the 'normal price' under the old Section 4, which were held permissible in 'Bombay Tyre International Ltd.', and also gives effect to the changed description of excise levy introduced in Section 3 by the 2000 Amendment. The Court found no discernible difference between the statutory concept of 'transaction value' and the judicially evolved meaning of 'normal price'. The questions referred were answered accordingly.

The Supreme Court held that the 'transaction value' as defined in Section 4(3)(d) of the Central Excise Act, 1944, as amended, statutorily includes additions to the 'normal price'. The measure of levy under Section 4 is not controlled by the nature of the levy, provided a reasonable nexus exists.

The Supreme Court held that the 'transaction value' as defined in Section 4(3)(d) of the Central Excise Act, 1944, as amended, statutorily includes additions to the 'normal price'. The measure of levy under Section 4 is not controlled by the nature of the levy, provided a reasonable nexus exists.

The Supreme Court held that the 'transaction value' as defined in Section 4(3)(d) of the Central Excise Act, 1944, as amended, statutorily includes additions to the 'normal price'. The measure of levy under Section 4 is not controlled by the nature of the levy, provided a reasonable nexus exists.

The Supreme Court held that the 'transaction value' as defined in Section 4(3)(d) of the Central Excise Act, 1944, as amended, statutorily includes additions to the 'normal price'. The measure of levy under Section 4 is not controlled by the nature of the levy, provided a reasonable nexus exists.

The Supreme Court held that material found during a simultaneous survey at a connected person's premises can be used in the block assessment of the assessee. The decisions relied upon by the assessee were found to be not laying down the correct law.

The Supreme Court held that material or evidence found or collected during a survey conducted simultaneously at the premises of a connected person can be utilized while making a block assessment of an assessee under Section 158BB read with Section 158BH of the Income Tax Act, 1961. The Court reasoned that such information would fall under the purview of 'and such other materials or information as are available with the Assessing Officer and relatable to such evidence' as stipulated in Section 158BB. Therefore, the Assessing Officer was justified in using the adverse material collected during the survey in the block assessment. The Court found that the decisions relied upon by the assessee did not lay down the correct law. Consequently, the impugned orders of the High Court and Tribunal were set aside, and the orders passed by the Assessing Officer making the block assessment were restored. No issue was expressly left undecided.

The Supreme Court found that the High Court's reliance on the Baby Marine Exports case was not appropriate given the distinct facts. The Court noted that Explanation (baa) of Section 80HHC specifically reduces deductions for certain receipts.

The Supreme Court held that for computing deduction under Section 10A of the Income Tax Act, 1961, expenses like freight, telecommunication, and insurance attributable to the delivery of computer software, which are deducted from export turnover, must also be deducted from total turnover. The Court reasoned that any other interpretation would lead to an "inadvertent, unlawful, meaningless and illogical result" and cause "grave injustice" to the assessee, which could not have been the intention of the legislature. The Court emphasized the principle of harmonious construction and cited the Karnataka High Court's decision in CIT vs. Tata Elxsi Ltd. regarding the ordinary meaning of words in context. Similarly, the Court held that expenses incurred in foreign exchange for providing technical services outside India should also be excluded from total turnover, applying the same principle to ensure the calculation formula is not futile, unworkable, or absurd. The appeals filed by the Revenue were dismissed as devoid of merit.

The Supreme Court held that the services rendered by the appellant were not technical services within the meaning of Section 80-O. The appellant failed to prove the rendition of technical services or provide relevant documents to substantiate the basis of the payment received.

The Supreme Court held that the amendment to Section 40(a)(ia) by the Finance Act, 2010, being curative in nature, should be applied retrospectively from the date of insertion of the provision. This allows the assessee to claim the deduction.

The Tribunal and High Court upheld the validity of the second notice issued under Section 158BD. The Supreme Court agreed that the Assessing Officer was justified in issuing a fresh notice under Section 158BD after recording satisfaction that undisclosed income belonged to the appellant.

The Supreme Court held that the respondent acted as a broker for Indian Bank and held the additional interest amount in trust to be paid to PSUs. Therefore, this amount could not be considered the respondent's income.

The Supreme Court held that interest earned on share application money, statutorily required to be kept in a separate account until share allotment, is not taxable as income from other sources. It is adjustable against public issue expenses as it is incidental to raising share capital.

The Supreme Court held that the amount received on redemption of SARs prior to April 1, 2000, could not be taxed as perquisite or business income. The Court found no retrospective applicability of amendments that would allow for such taxation.

The Tribunal held that re-opening of a completed assessment based solely on a change of opinion by the Assessing Officer, without any new material, is not permissible. The issue regarding the allocation of common expenses and Section 10A deduction was already considered during the original assessment.

The Supreme Court held that Inland Container Depots (ICDs) can be considered as 'Inland Ports' for the purpose of claiming deduction under Section 80-IA. The court found that the High Court's decision allowing the deduction was correct and did not warrant interference.

The Supreme Court held that the bifurcation of lease rental into capital recovery and finance income, as per the Guidance Note issued by ICAI, is a valid method to compute real income. There is no express bar in the IT Act against such bifurcation.

The Supreme Court held that if share application money is deposited in a bank due to a statutory mandatory requirement, the accrued interest is not liable to be taxed and is eligible for deduction against public issue expenses. The Court reasoned that such interest is inextricably linked with the company's requirement to raise share capital and is thus adjustable towards the expenditures involved in the share issue. The issue of shares relates to the company's capital structure, and expenses incurred in connection therewith are to be capitalized. The purpose of such a deposit is to comply with statutory requirements, and any interest accrued is merely incidental. The Court relied on its earlier decisions in Commissioner of Income Tax v. Bokaro Steel Ltd. and Commissioner of Income Tax v. Karnal Co-operative Sugar Mills Ltd. The Court affirmed the High Court's decision upholding the Tribunal's view that the interest income earned out of share application money is liable to be set off against public issue expenses. The appeals were dismissed.

The Supreme Court held that the amount received by the respondent on redemption of SARs prior to April 1, 2000, is not taxable as a perquisite under Section 17(2) of the Income Tax Act, 1961. The Court found that the amendment inserting clause (iiia) in Section 17(2) by the Finance Act, 1999, was effective from April 1, 2000, and was later omitted by the Finance Act, 2000. Since the transaction occurred before April 1, 2000, it could not be covered by this clause in the absence of an express provision for retrospective effect. The Court rejected the Revenue's argument that the amount could be taxed under Section 17(2)(iii), emphasizing that a receipt must be made taxable before it can be treated as income and that taxing provisions should be construed strictly. Regarding the alternative plea under Section 28(iv), the Court held that its applicability is confined to transactions arising from business or profession, which was not the case here. Therefore, the appeals filed by the Revenue were dismissed.

The Supreme Court held that income earned in Sikkim was taxable only under the Sikkim State Income Tax Rules, 1948, and not under the Indian Income Tax Act, 1961, to avoid double taxation. Consequently, the issue of deduction under Section 80TT became academic.

The Supreme Court held that coconut oil packed in small sachets/containers, suitable for use as hair oil, is classifiable under Heading 3305. This classification is based on the post-amendment tariff, the common parlance test, and the product's intended use.