Page 18 - BANKING FINANCE JANUARY 2016 ONLINE
P. 18
LEGAL UPDATE
Disparity in computing compensation Tax deduction can be
The discretion of the court to award doing work in the fields." He was not claimed on 'business ex-
compensation for loss or injury suffered given even the cost of the litigation up
by a person is guided by some criteria, to the Supreme Court. This judgment, penditure'
but often the decision can defy logic. Kantharaju vs Cholamandalam General
In an order passed by the Interest paid by a company on bor-
Supreme Court, an agricul- Insurance Co, contrasts with rowings from banks to advance
tural labourer suffered com- another recent decision in S.
pound fracture on the right Nihal Ahmed vs Dean, in money to its
leg in a road accident. The which candidates for profes- own subsidiary
motor accident compensa- sional colleges who lost one is 'business ex-
tion tribunal granted him Rs year due to the negligence penditure' on
10,000. of the authorities were which tax de-
awarded Rs 3 lakh each. duction can be claimed, the Su-
preme Court has ruled in its judg-
He appealed to the Supreme Court, In March 2015 the court ordered the ment, Hero Cycles Ltd vs CIT. In this
which felt that the amount "appears Maharashtra government to pay can- case, the company which was the
to be on the lower side." It raised the didates in a similar position to pay Rs promoter of Hero Fibres Ltd, took
compensation to Rs 35,000 maintain- 20 lakh each. While Kantharaju's pit- loans and paid interest on it. The
ing that it was reasonable "looking at tance will be paid by the insurance money was paid to the sister concern
the fact that he is an agricultural company, the student's bonanza will due to business expediency in view of
labourer and he has to use his legs for come from taxpayers. an undertaking given to financial in-
stitutions that it would provide addi-
Apex court favours levy of 'pollution charges' on com- tional margin to meet working capi-
tal for meeting any cash losses.
mercial vehicles in Delhi
When the company claimed deduction
The National Green Tribunal's order ing orders and will be effective for four on it as business expenditure, the rev-
imposing pollution charges, along with months on trial basis. The State or any enue authorities denied it. The com-
toll tax, on commercial vehicles criss- other bodies or association can seek pany moved the Punjab and Haryana
crossing Delhi may be nullified, with the modification later if necessary," the High Court but it dismissed the appeal
Supreme Court virtually agreeing with Bench said, indicating that its decision maintaining that when loans were
the plea in this regard, say- taken from banks at which interest
ing its order would "over- will nullify the NGT's order. was paid for purposes of business, the
ride" all the existing ones. interest component could not be
It also seemed to be in claimed as business expenditure. The
A three judge Bench headed agreement with the plea company moved the Supreme Court.
by Chief Justice H. L. Dattu that passenger buses, ve-
said this decision would be effective for hicles with essential com- Allowing its appeal, the apex court
four months and the government and modities, food articles and ambu- gave a wider meaning to the phrase
others, if affected, may come later for lances may be exempted from paying business expenditure. The judgment
modification. The Bench, which also in- "pollution compensatory charges". explained that the advance given to
cluded Justices Arun Mishra and Adarsh the sister concern was imperative.
Kumar Goel, perused the National Salve, who is the amicus curiae in a "The revenue authorities cannot put
Green Tribunal (NGT) order directing 1985 PIL filed by environmentalist MC themselves in the arm chair of the
payment of environmental compensa- Mehta, has sought directions to the businessman or in the position of the
tion charge by commercial vehicles en- Centre, Delhi Government and the board of directors and assume the role
tering Delhi and agreed with the plea Municipal Corporation of Delhi to en- to decide how much is the reasonable
of senior advocate Harish Salve that it sure "commercial vehicles entering the expenditure. The authorities cannot
should take up the issue. city of Delhi are required to pay a sum decide how a prudent businessman
of not less than Rs. 600 (for LCV and 2- would act," the judgment said.
"Our order will override all other exist- axle) and not less than Rs. 1200 ( for
3- axle and above).
18 | 2016 | JANUARY | BANKING FINANCE
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