Saturday, November 15, 2014

Link of Rachnatmak Sankalp

---------- Forwarded message ----------
From: Rachnatmak Sankalp <rachnatmak.sankalp@gmail.com>
Date: 2014-11-15 14:09 GMT+05:30
Subject: Link of Rachnatmak Sankalp
To:


"इंस्टीट्यूट ऑफ चार्टर्ड एकाउंटेंट्स के दिसंबर 2015 में होने वाले चुनाव के लिए वेस्टर्न रीजन में सेंट्रल काउंसिल के लिए महेश मडखोलकर द्धारा उम्मीदवारी प्रस्तुत किए जाने की घोषणा ने मंगेश किनरे की उम्मीदवारी के लिए समस्या पैदा कर दी है" शीर्षक रिपोर्ट पढ़ने के लिए Please click the Link :
http://www.rachnatmaksankalp.blogspot.in/2014/11/blog-post_14.html

Friday, November 14, 2014

No More Frivolous Or High-Pitched Assessments Allowed: CBDT To AOs


 

Dear Subscriber,

No More Frivolous Or High-Pitched Assessments Allowed: CBDT To AOs

The CBDT has issued an Office Memorandum dated 07.11.2014 setting out 12 steps that have to taken by the department to ensure a "non-adversarial tax regime". One of the important points made is that Assessing Officers must cease issuing "long and non-specific questionnaire" and making assessments without proper basis. It has been emphasized that each Range Head has to ensure that "frivolous additions or high-pitched assessments" are not made by the AOs. Important directives have also been given with regard to the withholding of refunds, recovery of demand, passing of remand orders and filing of appeals. At the end, the CBDT has warned that officers have to adhere to the instructions scrupulously and that non-adherence will be viewed seriously and disciplinary action initiated.


Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

CIT vs. Dimension Apparels Ltd (Delhi High Court)

S. 143(3) assessment on amalgamating company is a nullity. U/s 170(2) assessment has to be on successor. Mistake cannot be cured u/s 292B. Participation by amalgamating company is irrelevant as there is no estoppel against a statute

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Four Important Judgements On Controversial Topics That You Must Be Aware Of



 

Dear Subscriber,

 

The following important judgements are available for download at itatonline.org.


CIT vs. Dimension Apparels Ltd (Delhi High Court)

S. 143(3) assessment on amalgamating company is a nullity. U/s 170(2) assessment has to be on successor. Mistake cannot be cured u/s 292B. Participation by amalgamating company is irrelevant as there is no estoppel against a statute

(i) Section 481 of the Companies Act provides for dissolution of the company. The Company Judge in the High Court can order dissolution of a company on the grounds stated therein. The effect of the dissolution is that the company no more survives. The dissolution puts an end to the existence of the company. It […]


ITO vs. N. C. Cables Ltd (ITAT Delhi)

S. 147/ 151: Sanction by the CIT with word "approved" without recording satisfaction note renders reopening invalid

(i) A simple reading of the provisions of Sec. 151(1) with the proviso clearly show that no such notice shall be issued unless the Commissioner is satisfied on the reasons recorded by the AO that it is a fit case for the issue of notice which means that the satisfaction of the Commissioner is paramount […]


ACIT vs. Devesh Kumar (ITAT Delhi)

S. 147 Reopening solely on the basis of information received from the investigation wing & without independent application of mind is void

The AO proceeded to initiate proceedings u/s 147 of the Act and to issue notice u/s 148 of the Act on the basis of information received from Investigation Wing of the department in the form of a CD prepared by Shri Sanjay Shah and Shri Vishesh Prakash, ITOs of Unit V, New Delhi. Subsequently, the […]


Johnson & Johnson Ltd vs. ACIT (ITAT Mumbai)

"Innovative" method of department of forcing hapless assessees to give "consent letters" for tax recovery deplored and warning issued

At this time it came to the light that the AO has followed an innovative method of collecting taxes despite specific directions of the Bench. Therefore we had called the AO who had collected the revenue by flouting the directions of the Bench. Shri Vishal Makawane, DDIT (Inv), Unit-VII(1), Mumbai appeared before us and tendered […]


Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

CIT vs. C. Jaichander (Madras High Court)

S. 54EC: Assessee is eligible for deduction of Rs.1 Crore in respect of investment of Rs.50 Lakhs made in two different financial years. Proviso to s. 54EC seeking to curb this has effect from AY 2015-16

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Important Verdicts On Capital Gains/ Transfer, S. 14A/Rule 8D Disallowance And S. 271(1)(c) Penalty

 

Dear Subscriber,

 

The following important judgements are available for download at itatonline.org.


CIT vs. C. Sugumaran (Madras High Court)

S. 2(47)(vi): A Power of Attorney which does not enable enjoyment of property does not result in a "transfer". CBDT Circular No.495 dated 22.9.1987 reads more into s. 2(47)(vi) than warranted

(i) There is no transfer to or enabling enjoyment of property in favour of the assessee in any manner and therefore, sub-clause (vi) of Section 2(47) of the Income Tax Act does not get attracted. Clause 21 of the power of attorney, which has been already referred to supra, clearly reveals that no consideration was […]


Cochin Stock Exchanges Limited vs. CIT (Kerala High Court)

S. 2(47)(v): Execution of a Power of Attorney in favour of the builder constitutes part performance u/s 53A of TOP Act and a "transfer" for capital gains

(i) On a reading of the above provision itself, it is clear that possession of the property has been handed over to the builder immediately on receipt of the first installment of the payment from the builder. As per clause (3), the total consideration is mentioned as Rs.8,83,50,400/- and Rs.3,00,00,000/- was to be paid as […]


ACIT vs. Dhampur Sugar Mill Pvt. Ltd (Allahabad High Court)

S. 14A/ Rule 8D: Interest expenditure attributable to a taxable business cannot be disallowed. Expenditure on creating assets which do not belong to the assessee is revenue expenditure

(i) Once it was duly established that no borrowed funds on which interest was paid had been invested for earning tax free income, no disallowance was permissible under Section 14A. The Tribunal has observed that under Rule 8D(2)(ii), a proportionate disallownace out of interest expenditure would be made in respect of interest expenditure which is […]


DCIT vs. Nepa Limited (ITAT Indore)

S. 271(1)(c): Penalty initiated without specifying whether it is for concealment or for furnishing inaccurate particulars is invalid

(i) It is incumbent upon the Assessing Officer to state whether penalty was being levied for concealment of particulars of income by the assessee or whether any inaccurate particulars of income had been furnished by the assessee. There are two different charges i.e. the concealment of particulars of income or furnishing of inaccurate particulars of […]


Poysha Goyal vs. ACIT (ITAT Delhi)

S. 271(1)(c): No penalty can be levied for a bona fide "wrong" claim which is not a "false" claim

The addition by way of disallowing the depreciation claimed has rightly been made in the quantum proceedings which fact has been accepted by the assessee by filing a revised return and not agitating the issue further. Considering the explanation offered by the assessee in the penalty proceedings, it is seen that repeatedly it is claimed […]


CIT vs. Shri Girija Smelters (P) Ltd (Andhra Pradesh High Court)

An ITO cannot carry out the functions of an authority under the Central Excise Act and arrogate to himself the power to determine the quantity of production, or the intricacies of the manufacturing process. He must seek assistance of the concerned authority

(i) Even where the authorities of the Central Excise Department doubt the accuracy of figures mentioned in the registers, or if they find it difficult to understand the complexity of the manufacturing process, they seek the help of the experts. Sometimes experts are on the rolls of the department itself, and on the other occasions, […]


ITO vs. Narinder Kaur Bhatia (ITAT Mumbai)

S. 54: Purchasing the undivided share of a co-owner in a new flat constitutes a "purchase" & is eligible for exemption

(i) The assessee purchased a residential flat on 08.01.1981, which was sold on 07.02.2007 for a sale consideration of Rs.1,25,00,000/-. The long term capital gain on such sale amounted to Rs.1,14,63,650/-. Before the said sale, assessee had entered into an agreement to purchase a residential flat, being flat no. 501 Elegant Orchid at Santacruz (west), […]


Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

S. 271(1)(c) Penalty Of Rs. 56.67 Cr Levied On Abhishek Manu Singhvi

Eminent Senior Advocate Abhishek Manu Singhvi, who has appeared in several landmark income-tax cases such as Vodafone, has been assessed to undisclosed income of Rs. 91.95 crore by the Income Tax Settlement Commission. Penalty of Rs. 56.67 Cr u/s 271(1)(c) has also been levied. The addition has been made inter alia in respect of the […]


Friday, November 7, 2014

ITR (TRIB) Volume 35 : Part 5 (Issue dated : 3-11-2014)

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))--PRINT AND ONLINE EDITION

 

PRINT EDITION

Volume 35 : Part 5 (Issue dated : 3-11-2014)

SUBJECT INDEX TO CASES REPORTED

Appeal to Appellate Tribunal --Power to admit additional evidence--International transactions--Transfer pricing--Payment of corporate charges--Assessee not able to furnish complete break up of allocation of cost before completion of proceedings before Transfer Pricing Officer or Dispute Resolution Panel--Detailed invoice has important bearing for resolving transfer pricing dispute--To be admitted in interest of substantial justice and equity--Addl. evidence to be verified by Transfer Pricing Officer--Matter remanded--Income-tax Act, 1961-- Contitech India P. Ltd. v. Deputy CIT (Delhi) . . . 526

Assessment --Notice--Validity of service--Notice served by affixture--Nothing to justify service by affixture--Notice invalid--Assessment invalid--Income-tax Act, 1961, ss. 143(2), (3), 282, 292BB--Code of Civil Procedure, 1908, O. V, rr. 17 to 20-- Sanjay Badani v. Deputy CIT (Mumbai) . . . 536

Business expenditure --Provision for damages--Contracts for execution of work--Completion guarantee clause providing for liquidity damages to be discharged in event of delay in completion of work--Provision made by assessee in accordance with agreement--Assessee entitled to deduction--Income-tax Act, 1961-- Motorola Solutions India P. Ltd. v. Asst. CIT(Delhi) . . . 546

Capital or revenue expenditure --Software expenses--Assessing Officer to decide on basis of guidelines laid down by Special Bench in Amway India Enterprises v. Deputy CIT [2008] 301 ITR (AT) 1 (Delhi) [SB]--Matter remanded-- Motorola Solutions India P. Ltd. v. Asst. CIT(Delhi) . . . 546

----Sweat equity shares--Sweat equity shares issued for value addition provided by two persons in form of experience in new business concepts and professional experience--Value addition an intangible asset in hands of assessee--Expenditure on issue of shares is capital expenditure--Income-tax Act, 1961, s. 37-- Future Agrovet Ltd. v. Addl. CIT (Mumbai) . . . 519

Income --Disallowance of expenditure in relation to exempt income--Dividend--Assessee incurring indirect expenses such as management establishment expenses and other office overheads for making investment in shares and for earning dividend income--Disallowance justified--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Contitech India P. Ltd. v. Deputy CIT (Delhi) . . . 526

International transactions --Arm’s length price--Determination--Transactional net margin method--Advertising, marketing and promotion expenses--Guidelines laid down by Special Bench in L. G. Electronics India P. Ltd . v. Asst. CIT [2013] 22 ITR (Trib) 1 (Delhi) [SB] to be considered--Failure by Transfer Pricing Officer to consider request of assessee for inclusion of comparables and determine value of international transaction--Order set aside and matter remanded for consideration afresh--Income-tax Act, 1961-- Motorola Solutions India P. Ltd. v. Asst. CIT (Delhi) . . . 546

----Computation of arm’s length price--Transactional net margin method--Adoption of filters--Selection of comparables--Failure by assessee to provide earlier years’ data--Transfer Pricing Officer justified in using current year’s data--Loss-making companies excluded from comparables--Quantitative filters applied to reach reasonable conclusion regrading functional similarity--Companies generating more than 75 per cent. of export revenues from on-site operations--Excluded from comparables--Companies having branded/proprietary software to be excluded--Companies having more than 15 per cent. related party transactions--Not to be taken as comparable--Transfer Pricing Officer to consider inclusion or exclusion of comparable depending upon findings of related party transactions--Matter remanded--Companies functionally dissimilar cannot be treated as comparable--Matter remanded--Income-tax Act, 1961-- Motorola Solutions India P. Ltd. v. Asst. CIT (Delhi) . . . 546



SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Code of Civil Procedure, 1908

O. V, rr. 17 to 20 --Assessment--Notice--Validity of service--Notice served by affixture--Nothing to justify service by affixture--Notice invalid--Assessment invalid-- Sanjay Badani v. Deputy CIT (Mumbai) . . . 536

Income-tax Act, 1961

S. 143(2) --Assessment--Notice--Validity of service--Notice served by affixture--Nothing to justify service by affixture--Notice invalid--Assessment invalid-- Sanjay Badani v. Deputy CIT(Mumbai) . . . 536

S. 143(3) --Assessment--Notice--Validity of service--Notice served by affixture--Nothing to justify service by affixture--Notice invalid--Assessment invalid-- Sanjay Badani v. Deputy CIT(Mumbai) . . . 536

S. 282 --Assessment--Notice--Validity of service--Notice served by affixture--Nothing to justify service by affixture--Notice invalid--Assessment invalid-- Sanjay Badani v. Deputy CIT(Mumbai) . . . 536

S. 292BB --Assessment--Notice--Validity of service--Notice served by affixture--Nothing to justify service by affixture--Notice invalid--Assessment invalid-- Sanjay Badani v. Deputy CIT(Mumbai) . . . 536

S. 37 --Capital or revenue expenditure--Sweat equity shares--Sweat equity shares issued for value addition provided by two persons in form of experience in new business concepts and professional experience--Value addition an intangible asset in hands of assessee--Expenditure on issue of shares is capital expenditure-- Future Agrovet Ltd. v. Addl. CIT(Mumbai) . . . 519

S. 14A --Income--Disallowance of expenditure in relation to exempt income--Dividend--Assessee incurring indirect expenses such as management establishment expenses and other office overheads for making investment in shares and for earning dividend income--Disallowance justified--Income-tax Rules, 1962, r. 8D-- Contitech India P. Ltd. v. Deputy CIT(Delhi) . . . 526

Income-tax Rules, 1962

R. 8D --Income--Disallowance of expenditure in relation to exempt income--Dividend--Assessee incurring indirect expenses such as management establishment expenses and other office overheads for making investment in shares and for earning dividend income--Disallowance justified-- Contitech India P. Ltd. v. Deputy CIT (Delhi) . . . 526

 

 

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Posted by: CA RAJU SHAH <shahmars@hotmail.com>

ITR Volume 368 : Part 2 (Issue dated : 3-11-2014)

INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION

ONLINE EDITION

STATUTES AND NOTIFICATIONS

Notifications :

Income-tax Act, 1961 :

Notification under section 90 :

Agreement between the Government of the Republic of India and the Republic of Colombia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income . . . 295

Protocol amending the agreement between the Government of the Republic of India and the Government of the Polish People’s Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income . . . 283

 

PRINT EDITION

ITR Volume 368 : Part 2 (Issue dated : 3-11-2014)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Recovery of tax --Garnishee notice--Stock exchange--Membership card of stock exchange--Not a right but a privilege ceasing upon member being declared defaulter--Stock exchange having lien over member’s securities under rules--Stock exchange is secured creditor having priority over Government dues--Securities handed over to exchange are assets of member which can be liquidated on default--Income-tax Act, 1961, s. 226(3)(x), Sch. II, r. 26--Securities Contracts (Regulation) Act, 1956, ss. 7A, 8, 9, 30--Rules, Bye-Laws and Regulations of the Bombay Stock Exchange, rr. 5, 9, 16, 36 to 46-- Stock Exchange, Bombayv. V. S. Kandalgaonkar . . . 296

HIGH COURTS

Appeal to Commissioner (Appeals) --Jurisdiction--Inherent jurisdiction to deal with application for stay--Income-tax Act, 1961, s. 220(6)-- Gera Realty Estates v. CIT (Appeals)(Bom). . .366

Capital gains --Firm--Dissolution--Partnership assets converted into capital assets of partners at time of dissolution--Sale of assets not in stock-in-trade of dissolved firm--Whether the amount to be treated as long-term capital gains or short-terms capital gains--Department to decide--Income-tax Act, 1961-- Arvind Shamji Chheda v. CIT (Bom). . .368

Income from house property --Annual letting value--General principles for determining annual letting value--Income-tax Act, 1961, s. 23-- CIT v. Tip Top Typography (Bom) . . . 330

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 23 --Income from house property--Annual letting value--General principles for determining annual letting value-- CIT v. Tip Top Typography (Bom) . . . 330

S. 220(6) --Appeal to Commissioner (Appeals)--Jurisdiction--Inherent jurisdiction to deal with application for stay-- Gera Realty Estates v. CIT (Appeals) (Bom). . .366

S. 226(3)(x), Sch. II, r. 26 --Recovery of tax--Garnishee notice--Stock exchange--Membership card of stock exchange--Not a right but a privilege ceasing upon member being declared defaulter--Stock exchange having lien over member’s securities under rules--Stock exchange is secured creditor having priority over Government dues--Securities handed over to exchange are assets of member which can be liquidated on default-- Stock Exchange, Bombay v. V. S. Kandalgaonkar (SC). . . 296

Securities Contracts (Regulation) Act, 1956 :

S. 7A --Recovery of tax--Garnishee notice--Stock exchange--Membership card of stock exchange--Not a right but a privilege ceasing upon member being declared defaulter--Stock exchange having lien over member’s securities under rules--Stock exchange is secured creditor having priority over Government dues--Securities handed over to exchange are assets of member which can be liquidated on default-- Stock Exchange, Bombay v. V. S. Kandalgaonkar (SC). . . 296

S. 8 --Recovery of tax--Garnishee notice--Stock exchange--Membership card of stock exchange--Not a right but a privilege ceasing upon member being declared defaulter--Stock exchange having lien over member’s securities under rules--Stock exchange is secured creditor having priority over Government dues--Securities handed over to exchange are assets of member which can be liquidated on default-- Stock Exchange, Bombay v. V. S. Kandalgaonkar (SC). . . 296

S. 9 --Recovery of tax--Garnishee notice--Stock exchange--Membership card of stock exchange--Not a right but a privilege ceasing upon member being declared defaulter--Stock exchange having lien over member’s securities under rules--Stock exchange is secured creditor having priority over Government dues--Securities handed over to exchange are assets of member which can be liquidated on default-- Stock Exchange, Bombay v. V. S. Kandalgaonkar (SC). . . 296

S. 30 --Recovery of tax--Garnishee notice--Stock exchange--Membership card of stock exchange--Not a right but a privilege ceasing upon member being declared defaulter--Stock exchange having lien over member’s securities under rules--Stock exchange is secured creditor having priority over Government dues--Securities handed over to exchange are assets of member which can be liquidated on default-- Stock Exchange, Bombay v. V. S. Kandalgaonkar (SC). . . 296

 


Sunday, November 2, 2014

ITAT Explains Entire Law On Taxation Of Private Trusts And AOPs


 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.


DCIT vs. India Advantage Fund-VII (ITAT Bangalore)

Entire law on taxation of private specific/ discretionary trusts under revocable & irrevocable transfers and AOPs explained

(i) Private Trusts could be Fixed or Discretionary Trusts. A fixed trust is a trust in which the beneficiaries have a current fixed entitlement to such income as remains after proper exercise of the trustee's powers. On the other hand, a discretionary trust is one in which the beneficiaries have no such current fixed entitlement, but only a hope (spes) that the trustees in carrying out their duty to consider how much income might be paid to such beneficiaries will in their discretion pay that income to a particular beneficiary or beneficiaries. The beneficiaries have no interest in possession under the trust. There are various reasons why a settlor prefers to establish a discretionary trust rather than a fixed trust. Some of the important one's being – to protect the beneficiary against creditors; to continue to exercise control over young or improvident beneficiaries; to make adjustment according to circumstances. "When a trust is set up, there is no way of knowing how the beneficiaries will fare in the future; which of them will be most in need, which will be deserving, which spendthrift, which inebriate, which will marry millionaires and which missionaries". The trustee can take all these factors into consideration in making their decisions.

(ii) When it comes to tax on income received by the Trust on behalf of the beneficiaries, there are some implications depending on whether the trust is a discretionary trust or a non-discretionary trust. As we have already seen in terms of Sec.164(1) a trust is assessed as a representative assessee in respect of income which it receives on behalf of its beneficiaries and if the beneficiaries are not certain or shares of beneficiaries are indeterminate, tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate. Explanation 1 to Sec.164 deems that in certain situations beneficiaries shall be deemed to be not identifiable or their shares are unascertained or indeterminate or unknown. These provisions have already been set out in the earlier part of this order and are not being repeated. The legislative history of the above provisions needs to be examined to find out the object of introduction of the Explanation. Sec. 164(1) was in the Act when it was enacted in 1962 but its wording underwent a change, introducing a concept of taxation at marginal rate in 1970 by the Finance Act of 1970 w.e.f. 1st April, 1970. The object and scope of this amendment were elaborated in a circular of the CBDT (Circular No. 45 dt. 2nd Sept., 1970).


Note: We have also posted a number of recent and important judgements on transfer pricing. Please browse them at your convenience.


Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

CIT vs. Holcim India P. Ltd (Delhi High Court)

S. 14A & Rule 8D disallowance cannot be made if there is no exempt income or if there is a possibility of the gains on transfer of the shares being taxable

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