1. Appeal – Appeal not filed by department – whether binding in other cases

The Supreme Court held that the department has not preferred an appeal in one case would not operate as a bar for the Department to prefer an appeal in another case where there is just cause for doing so or it is in public interest to do so or for a pronouncement by a higher court when divergent views are expressed by the Tribunals or the High Court.

2. Appeal – COD Approval

The Supreme Court in Oil & Natural Gas Commission vs. Collector of Central Excise [1995] Supp 4 SCC 541 while imposing the necessity for obtaining clearance from the Committee within one month did not indicate any rigid frame. The Supreme Court held that emphasis of one month’s time was to show the urgency needed
and mere existence of some delay in
approaching the committee does not makes the action illegal.

3. Book Profits – Company – Provision for Doubtful Debts – S. 115JA

Provision for bad and doubtful debts being a provision made to cover up the probable diminution in the value of asset i.e. debt receivable by the assessee, it can not be said to be a provision for liability and therefore, item (c) of the explanation to section 115JA is not attracted and the provision for doubtful debts can not be added back under Cl. (c).

4. Business Loss – Foreign Exchange Loss – S. 28

The foreign exchange loss on account of currency translation in production sharing contract for exploration of mineral oil is not a mere book entry and is allowable as a deduction.

5. Depreciation – Motor Trucks – S. 32

Higher depreciation to be allowed only if there is evidence that the assessee was in business of hiring out motor vehicles.

6. Income – Capital or Revenue – Subsidy – S. 4

Incentive subsidy under a scheme floated with a view to boost the tempo of establishing new sugar factories and substantial expansion of existing factories and to facilitate repayment of term loans for that purpose was capital in nature, notwithstanding the mechanism of price and duty differential through it was routed.

7. Local Authority – S. 10(20)

The Supreme Court held that the appellant which is an agricultural marketing committee established under the Delhi Agricultural Produce Marketing (Regulation) Act, 1998, to provide facilities for marketing agricultural produce and for performing other functions such as superintendence and direction and control of market, etc. was not a local authority under section 10(20) of the Act, as amended by the Finance Act, 2002.

8. Penalty – Loss to loss – S. 271(1)(c)

The Supreme Court overruled its earlier judgment of (2007) Virtual Soft System Ltd. vs. CIT (2007) 289 ITR 83 (SC). It held that Explanation 4 to section 271(1)(c)(iii) is clarificatory and not substantive and therefore would apply even to assessment year prior to April 1, 2003. It further held that what the Finance Act, 2002, intended was to make the position explicit which otherwise was implicit.

9. Precedent – Decision of High Court – Supreme Court – Retrospectively

A judicial decision acts retrospectively. According to Blackstonian theory, it is not the function of the Court to pronounce a "new rule" but to maintain and expound the "old one". In other words, judges do not make law they only discover or find the correct law. The law has always been the same. If a subsequent decision alters the earlier one, it (the later decision) does not make new law. It only discovers the correct principle of law which has to be applied retrospectively. To put it differently, even where an earlier decision of the court operated for quite some time, the decision rendered later on would have retrospective effect clarifying the legal position which was earlier not correctly understood.

It is no doubt true that the Court has accepted the doctrine of "prospective overruling". It is based on the philosophy; "the past cannot always be erased by new judicial declaration". It may, however, be stated that this is an exception to the general rule of doctrine of precedent.

10. Rectification of Mistake – Appellate Tribunal – S. 254(2)

Non consideration of decision of Jurisdictional High court or Supreme Court is a mistake apparent from record rectifiable under section 254(2).

11. Return Loss – Film Production Expenses – Rule 9A – S. 80

The Supreme Court was concerned with a case where the film was exhibited for less than 180 days. The rule states that when the film is exhibited for less than 180 days, deduction of the cost of production is to be allowed to the extent of the amount released during the period in the year and the balance amount shall be allowed in the next year. The assessee did not file a loss return under section 139(3) and the issue was whether section 80 would apply and the assessee would not be allowed the loss in the next year. The Supreme Court held that the balance cost of production had to be amortised under rule 9A(2) and then carried forward and allowed as deduction for the next year. This was not a business loss as contemplated by section 80 of the Act.

12. Trucks on hire – Depreciation – S. 32

The assessee was in the business of timber trading but also occasionally gave its trucks for hire. On the Tribunal deciding that the assessee is eligible for higher rate of deduction, the high court held that it is a question of fact and therefore refused to interfere. The Supreme Court held that a question of law arose and that the High Court would have to decide as to whether the
assessee was in the business of running of trucks on hire.