The Hindu Business Line : Sometimes some people can ride on a tractor

IS TRACTOR a road transport vehicle? This question came up before the Allahabad High Court recently when deciding the case of an investment allowance claim by a UP Government undertaking which was giving on hire tractors fitted with trolleys. Since the benefit was not available for office appliances and road transport vehicles, the case assumed importance.

On one side, the assessee claimed that tractors were not such vehicles, but the Department stressed on the definition in the Motor Vehicles Act — that tractor means "a motor vehicle which is not itself constructed to carry any load (other than equipment) used for the purpose of propulsion but excludes a road roller."

The court observed that the Income-Tax Act has not defined the expression `road transport vehicle' and so it becomes necessary to rely on common parlance. "In our opinion, road transport vehicles would mean vehicles which are used for transportation of goods or passengers on roads. A tractor is not basically used for transportation of goods or passengers on roads. It is machinery used for tilling agricultural land. No doubt sometimes some people can ride on a tractor but that is not its main purpose." The ruling went in favour of the assessee.

How about commuting to office in a tractor?

Cinema hall is no house

ANOTHER case that the Income-Tax Department took before the Allahabad High Court was more interesting: Whether a cinema hall is a house for the purpose of the Wealth Tax Act. Remember that law exempts `one house or part of a house belonging to the assessee' from net wealth. But the problem is that house has not been defined in the statute. Other words that the Act uses are `building' and `property'.

The court did not agree with the assessee that all buildings should be regarded as houses. "In common parlance a house means a place where people live," said Justice M. Katju. "Of course a residential building can also be given for commercial purpose and yet it will remain a house. However, by no stretch of imagination can a cinema hall be regarded as a house. No one ever calls a cinema hall a house."

In the process of delivering the judgment, the court had to `respectfully disagree with the view taken by the Rajasthan High Court' that cinema hall is a house.

Thus, to say `house full' may, in fact, be wrong.

Such a petty amount!

THE Indore Bench of the Madhya Pradesh High Court had to point out that the amount involved in the Bhagwan Cloth Stores case was "a petty amount of Rs 8,400, covering four assessment years." It said: "We are afraid it was not advisable for the Revenue to seek reference in the case involving such a petty amount." Nothing new for the Department because it had taken up cases of such magnitude, right up to their logical end of being discarded at the altar of high courts.

The order makes a mention of the CBDT circular that is against making reference where the amount involved is less than Rs 1 lakh. It would be an interesting costing exercise to compute total costs for each case that the Department takes up for litigating.

Catch some sleep on rigs?

THE High Court of Uttaranchal had to decide whether free accommodation provided to employees on rig in high seas is perquisite. The Department had slapped a demand on Hyundai Heavy Industries Co Ltd, seeking interest for short payment of TDS. The company argued that it had employed technicians on the rigs, and they were "required to work during a period continuously for 35/28 days." During this period, they were given "free meals and free boarding". The court did not find any merit in the Department's stand.

While the decision went in favour of the assessee, the case shows how the Revenue can pursue its interests in choppy waters too.

`Total' confusion

WHEN discussing the Bharat Earth Movers Ltd case recently, the Karnataka High Court had to sort out a doubt that arose in the minds of taxman — whether sales tax collected by the assessee on its sales could be treated as part of `total turnover' for the purpose of Section 80HHC. To recap, the formula where this becomes relevant is: Profit of export = profit of business x (export turnover / total turnover).

The judgment notes, "The word `total' is affixed to the word `turnover', not with the intention of adding Sales Tax, Entry Tax, Excise Duty and so on to the `turnover' but in contra-distinction from `export turnover'." Mathematically, it was explained that if sales tax did not form part of export turnover (in the numerator), "it has to be excluded from the other." To so include would be `illogical and arbitrary.' And some parting words: "While logic need not always be the basis for a taxing provision, it does not follow that a taxing provision logically made, should be interpreted illogically or asymmetrically, merely because it is a taxing statute."

Gold gift to daughter

WHEN Sundaram Achari, a goldsmith, gave 51 sovereigns to his daughter at the time of her marriage, and subsequently filed a nil return before the Gift Tax Officer, the latter wouldn't agree. Achari averred that he was only fulfilling his obligation under the Hindu Adoptions and Maintenance Act — where maintenance is defined as to include, in the case of an unmarried daughter, reasonable expenses of and incident to her marriage.

But the GTO argued that any gift given to daughter at the time of marriage could not be called expenses incurred and incidental to the marriage.

The Kerala High Court had this to say: "Ordinarily, so far as the father is concerned, when a daughter is given in marriage, as per the custom prevailing in every community, be it Hindus, Christians, or Muslims, there is an obligation to give gold ornaments to the daughter at the time of marriage for being worn by the daughter.

"From the point of view of a father, whatever expenses are incurred, which are having a direct connection with the marriage, are expenses of and incidental to the marriage."

Yet, don't conclude that you can give any amount of gold to your daughter at the time of marriage, because the court has laid down a `reasonableness test' which is a matter for the assessing officer to decide in each case.

Tailpiece

"Heard the PM on TV?"

"Yes, will the FM too announce the Budget on the telly?"

Detaxification@TheHindu.co.in

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