| Delhi High Court: Adjustment of Losses of one unit with other unit for claiming exemption under Income Tax |
| Hon’ble Delhi High Court in this case held that losses of one unit which is not eligible for deduction can be adjusted against the profit of second unit while arriving at profit eligible for deduction u/s 80IC of the Income tax Act, 1961. |
| Case : CIT v. GRAVS Appliance Pvt. Ltd. (- ITA no. 745 of 2011 Dated:06-08-2012 ) |
| Issue Involved: Whether losses of one unit which is not eligible for deduction can be adjusted against the profit of second unit while arriving at profit eligible for deduction u/s 80IC of IT Act? |
| In favour of Assessee. |
| Held that each unit will be considered independently.
Assessing Officer not to adjust the losses of one Unit while computing the eligible profit in respect of Second Unit for granting deduction under section 80-IC of the Act. Hon’ble Court further clarified that the deduction cannot exceed the gross total income computed by the A.O. in this case, in view of Section-80A (2). |
| Delhi High Court: Cost of repairs and renovation incurred by the employer is not taxable income of the assessee as per provision of section 17(2)(iv). |
| In this case it has been held that by Honble Delhi High Court that the cost of repairs and renovation incurred by the employer on behalf of employee is not taxable income of the assessee. |
| Case : Scott R. Bayman vs CIT, ITA no. 285 of 2003, Dated:17-08-2012 |
| Issue Involved:Whether the amount spent by the employer towards the repair of building would be covered by clauses (iii) & (iv) of Sub-Section 2 of Section 17 of the Income Tax Act, 1961?†|
| In favour of Assessee. |
| Held that the provision of section 17(2)(iv) cannot be made applicable for the reason that it was not the obligation of the employee to carry out repairs and Renovations. As per their Service Contract, the employer had to provide the assessee with furnished accommodation including maintenance, security and services. The employer had to renovate and upgrade the facilities upto the mark having regard to assessee’s status in the company.
The express provision of Rule 3 of the Valuation Rules – which elaborates various contingencies in relation to the perquisite of rent free accommodation, rules out the intention of Parliament to treat expense in relation to improvement, repairs or renovations, as falling within the meaning of “perquisiteâ€. If the premises were to be valued at market value (of the rental), in case it increased as a result of the renovations, the only prescribed mode was to apply the method indicated by Rule 3(a)(iii) of the Valuation Rules. Therefore, the cost of repairs and renovation shall be deleted from the taxable income of the assessee. |