December 2024

In a landmark depreciation ruling, the Supreme Court overturned the Madras High Court’s decision and held that Sundaram Spinning Mills was entitled to claim extra shift allowance on machinery added during the assessment year 1970-71. The allowance must be calculated based on the double and triple shift operations of the entire manufacturing unit, not limited to the actual working hours of the newly installed machinery alone. This judgment establishes a favorable precedent for industrial taxpayers claiming depreciation benefits under Section 32 of the Income Tax Act, 1961.

In this landmark Supreme Court judgment, the Court addressed two critical issues in sales tax jurisprudence. First, it affirmed that freight components in controlled commodity pricing under the Cement Control Order constitute part of the ‘sale price’ for tax purposes, following established precedent. More significantly, the Court established a vital principle for tax professionals: penalty provisions cannot be invoked when assessees act under bona fide belief regarding debatable legal positions. The judgment creates a protective shield for taxpayers who genuinely contest legal interpretations, emphasizing that penalty requires deliberate falsity, not mere legal disagreement. This decision balances revenue collection with taxpayer rights in complex statutory interpretation scenarios.

In this landmark Supreme Court judgment, the Revenue’s appeal was dismissed, affirming the assessee’s entitlement to interest on interest. The Court reinforced the principle that when the Revenue withholds interest payments due to the assessee, it must compensate by paying interest on that withheld amount. This decision strengthens taxpayer rights and ensures fair compensation for delayed interest payments by tax authorities.

In a significant ruling on judicial accountability, the Supreme Court overturned the Bombay High Court’s dismissal of writ petitions challenging Income Tax reassessment proceedings. The Court underscored the constitutional mandate under Article 226 for reasoned orders, holding that cryptic dispositions without addressing substantive grounds violate procedural justice. This judgment reinforces the principle that courts must engage with all arguments raised, particularly in tax matters involving Section 148 reassessments, ensuring transparency and fairness in judicial review.

In this landmark Supreme Court judgment, the bench of Justices A.M. Khanwilkar and Dinesh Maheshwari settled a recurring controversy regarding the retrospective application of low tax effect circulars. The Court authoritatively held that Instruction Order No. 5/2008 applies to appeals filed before its issuance date, following the three-judge bench precedent in Surya Herbal Ltd. This decision reinforces the principle that revenue circulars aimed at reducing litigation burden apply to pending matters, subject only to specific exceptions like cascading effects. The judgment streamlines appeal disposal in low-value tax disputes and clarifies the Department’s procedural obligations in citing binding precedents.