Section 32A — the law in short
What the courts have decided on section 32A, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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CIT v Karnataka Power Corporation
Supreme CourtHelps taxpayer
My generating station building was designed and built so that the machinery cannot work without it. Is it a building or is it plant?
It can be plant. The Supreme Court dismissed the Revenue's appeal and held that where it is found as a fact that a building has been so planned and constructed as to serve the assessee's special technical requirements, it qualifies as plant. The Commissioner (Appeals) had found that the generating station building could not be separated from the machinery and that the machinery could not work without that special construction, and the Tribunal and the High Court had affirmed. The Court also confined Anand Theatres to buildings used as hotels or cinema theatres, holding that its observations will not always apply otherwise.
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CIT v Emirates Commercial Bank Ltd
High CourtCuts both waysOverruled
Our head office sent staff to work on the Indian branch and debited us the cost. Does the s.44C five per cent ceiling apply to it?
No. Section 44C imposes a ceiling on head office expenditure of a common nature — expenditure incurred for various branches, or for the head office and the branch — that has to be allocated. Expenditure incurred exclusively for the Indian branch is outside s.44C altogether, even where the head office paid it first and recovered it by debit note.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
