DEDUCTION U/S 80P(2)(a)(iii) IS AVAILABLE FOR PURCHASES FROM MEMBER SOCIETIES AS WELL AS FROM INDIVIDUAL GROWERS.
Deduction u/s 80 P(2)(a)(iii) on sale of agricultural produce is also available to an apex society whose members are other societies who are not the direct growers of the agriculture product. It was held that society engaged in the marketing of agriculture produce of its members would mean not only such societies which deal with produce raised by the members who are individuals but also such societies which are members thereof who may have purchased such goods from the agriculturists. This judgment is by a 3 members bench and was given on 13.5.98. other two decisions on the subject viz. Assam Cooperative Apex Marketing Society Ltd. -Vs -Addl. CIT 201 ITR 338(SC) and U. P. Cooperative Cane Union Fed. Ltd. 237 ITR 574(this judgment was delivered earlier on 30.1.97) which held that deduction u/s.80P(2)(a)(iii) would be available only to a society having growers/direct agriculturists as members, is therefore, overruled. Similarly CIT -Vs -Kerala State Cooperative Marketing Ltd. 207 ITR 319 (Ker) is also reversed. [Followed in - 246 ITR 488 (Del.)]

TDS U/S. 194C(1) APPLIES TO ANY WORK AND NOT TO WORK CONTRACTS ALONE AND ALSO ON TOTAL SUM PAID.
Section 194C(1) for deduction of tax at source applies to "any work" which could be carried through contract and is not confined to work-contract only. The percentage deductible as TDS u/s. 194C(1) is to be applied on total sum paid or credited to the account of contractor and not merely on income component thereof. There is no duty or right of the person deducting the tax on such payments/credits, to determine income of the contractor. [Further explained/followed/applied in - 209 ITR 660 (Bombay): 211 ITR 861 (Del.): 219 ITR 486 (Cal.):219 ITR511 (P & H):236 ITR 993 (Ker.):248 ITR 216 (S.C)]

FINALITY OF THE ORDER U/S. 245I IS NO BAR FOR WRIT JURISDICTION. [RELIED ON - 42 ITR 770(SC0; 73 ITR 626 9SC); 176 ITR 169(SC)]
(i) Finality of orders u/s. 245-I is no bar to jurisdiction of High Court under Article 226 and that of Supreme Court Under Article 136 or 32.
(ii) Appeal preferred directly under Article 136 of the Constitution in the Supreme Court cannot be any different that it would be if the assessee had first approached the High court under Article 226 and then come up in appeal under Article 136.
(iii) The finality attached to the order of ITSC under Section 245I is in relation to the matters dealt with by the Commission. There will not be any finality on the matters not covered in the Settlement order.
(iv) Jurisdiction of the High Court or Supreme Court to interfere in the orders of ITSC is limited to judicial review
only i.e to see
(i) Whether the order is contrary to any provision of the Act.
(ii) Whether principles of natural justice have been followed or not and
(iii) Whether there is any ground of fraud, bias or malice and has it prejudiced the petitioner.

IMPOST OF PENAL NATURE IS TO BE DISAALOWED.
Whenever any statutory impost paid by an assessee by way of damages or penalty or interest is claimed as an allowable expenditure u/s. 37(1) of IT Act, the A.O. is required to examine the concerned statute to find out whether such payment of impost is compensatory or penal in nature. Impost purely of compensatory in nature has to be allowed while that penal in nature has to be disallowed. If payment is of composite in nature, the A.O has to make bifurcation on reasonable basis and allow that part oonly which is compensatory in nature. [Followed/applied in -245 ITR 314 (MAD);218 ITR(AP):233 ITR 757 (MAD):236 ITR 881 (BOM):248 ITR 167(BOM):248 ITR 285(DEL):206 ITR 302(BOM):209 ITR 840 (BOM):211 ITR 444 (SC): & 233 ITR 199 (SC)]

DEDUCTION U/S. 80T TO BE ALLOWED ON CAPITAL GAINS AMOUNT AND NOT ON NET INCOME AFTER ADJUSTMENT OF BUSINESS LOSS.
There was Long Term Capital gains and also business Loss. Deduction u/s. 80T is allowable on Capital Gains amount and not on net income after adjusting business loss against Long Term Capital Gains. However, where there is Long Term Capital Gains and also Long Term Capital Loss on sale of shares, then deduction u/s. 80T has to be allowed on net after adjusting Long Term Capital Loss against Long Term Capital Gains.[also MSP Nadar & Sons- VS- CIT 201 ITR 1044(SC), Distributors (Baroda) P.Ltd.Vs- Union of India 205 ITR 433] [Followed /relied in 205 ITR 433 (SC): 215 Itr 358(MAD):216 ITR510 (AP): 224 ITR 604(SC): 233 ITR 178 (KER): 237 ITR 561 (GUJ): 243 ITR 26 (SC): 243ITR 403 (MAD): 228 ITR 305(BOM);]

INCOME FROM CAR RACING IS TAXABLE.THE WORD INCOME IS OF WIDEST AMPLITUDE.
The question is whether Income from car racing is taxable. Definition of income isn entry 82 List I Sch. VII of Constitution and u/s.2(24)(IX)is inclusive and is of widest amplitude. Even if any receipt does not fall within the items mentioned in Sec. 2(24), it might still be income if it has the nature of income. The word "income" of widest amplitude should be given its natural and grammatical meaning. [Applied in 251 itr 360 (del.)]

Royalty paid by a company to the firm (partners were directors) for use of brand name - ceiling on deduction u/s 40C is not applicable. [Followed in -209 ITR 318 (MAD); Applied in 207 ITR 410(Bom.); 240 ITR 74 (Bom)]

Amount paid by partner in a firm towards his share of tax payable by the firm on income voluntarily disclosed by the firm is deductible as his "debt owed" in computing his net Wealth.
[CWT - VS - Sharma B.K. ITR 32 folllowed.]

CREDIT ENTRY IN THE BOOKS OF INDIAN CO. OF AMOUNT OF RAYALTY PAYABLE TO NON-RESIDENT COMPANY AMOUNTS TO RECIEPTS BY NR COMPANY AND IS LIABLE TO TAX IN INDIA.
As per collaboration agreement Indian Company was Paying Royalty to a non-resident company @ 5% on all sales effected. Such royalty was credited by the Indian Company in its books. The non-resident company did not declare such receipts of royalty in its return on the matter back to A. O to enquire whether accounting of Royalty is done on cash basis. High Court held that even if accounts are kept on cash basis, the royalty is taxable u/s 5(2)(b) of I.T Act. It is immaterial that it should be actually received by the NR Company in U.K. in Pounds Sterling. Order of High Court was confirmed.

Tractors were imported by State Trading Corporation, which were sold by the assessee their agent, but at higher price than what was agreed with the STC. Difference of price charged, over that fixed by STC, was debited to sales account but not refunded to the customers. Hon'ble Supreme Court held that there was no right to the customer to ask for refund. Therefore, excess amount charged from the customer is income of the assessee, as per mercantile system of accounting.