Saturday, July 25, 2015

Cost inflation index for 2015-16 is 1081. Notified on 24-07-2015.

Cost inflation index for 2015-16 is 1081. Notified on 24-07-2015.

-Regards
CA. C. V. PAWAR

Friday, July 24, 2015

MECHANISM TO MONITOR TENDERING-ICAI acts tough [1 Attachment]


---------- Forwarded message ----------
From: CA Tarun Ghia tarunghiaca@yahoo.co.in [SolapurCAs] <SolapurCAs@yahoogroups.com>
Date: Thu, Jul 23, 2015 at 9:33 AM
Subject: Message from EGroup of SolapurCAs MECHANISM TO MONITOR TENDERING-ICAI acts tough [1 Attachment]
To: SolapurCAs@yahoogroups.com



Dear Colleague, 

I am pleased to inform that  the Report of the Group under my convenorship, on the issue of responses to tendering by our members, has been accepted in toto and the Council has taken the decision to deal tough with the responses by our members to tendering : 

Based on my group report and consequent Çouncil decision, please read following ICAI Announcement which is also placed on ICAI website which in a nutshell means that : 

I. Response to tendering in the exclusive areas of practice of CAs like Audits and Attest Functions is now prohibited by the members, 

II. In other areas the response by our members is allowed as our members are competing with others. If we prohibit our members, the works will go away from profession, therefore, we have not prohibited. But in these other areas also now ICAI would monitor the responses. 

I am sure the effects will start coming soon as logically the tenders in audit and attest areas will fail. In other areas, our members will properly estimate the quantum of works and skills involved and consequent fees before responding to tenders and will adhere to minimum prescribed fees. 

With Regards, 
Tarun Jamnadas Ghia
Central Council Member, ICAI 


ANNOUNCEMENT- MECHANISM TO MONITOR TENDERING

 

With a view to contain the tendering system for attest functions, the Council at its special (338th) meeting considered the report of the Group constituted under the convenorship of CA. Tarun Jamnadas Ghia, Member, Central Council and decided as under:

 

1.          Tendering has been prohibited in the exclusive areas of practice of chartered accountants like audit and attestation services. i.e. those areas where the assignments can be performed only by chartered accountants.  In those areas, where alongwith chartered accountants, the other professionals can also apply for the tender, there is no restriction for the chartered accountants to respond to the tenders floated by authorities from time to time. 

 

2.                     Members are advised to adhere to the recommended scale of fees prescribed by ICAI in the context of various professional assignments. To ensure such adherence, a member responding to a tender should be required to furnish to  ICAI at the designated e-mail address pdc.tender@icai.in with estimated hours to be devoted by the partner/proprietor, paid CAs, other staff and the fees quoted in the tender. Such details will be furnished by the member within a period of fifteen days of his responding to the tender. If the member is successful in securing the tendered assignment, then the member will also furnish the actual hours devoted by the partner/proprietor, paid CAs and the staff within two months of completion of the assignment. 

 

3.                      Members are required to maintain cost sheet in the given format while submitting any tender/bid. The format of the same can be viewed at <hyperlink Cost Sheet >.

 

4.          Members are required to maintain the cost sheet compulsorily and submit a soft copy of the bid submitted by them in response to any tender within 15 days to ICAI.  The office can check whether recommended scale of fees has been followed or not in those bids, to ensure adherence to quality standards. 


Encl : format of submitting data 




For Format of Cost Sheet click here: https://drive.google.com/file/d/0B8GyRsbVIg8gTzVIeUt1ajNoM2JPYWlmblFHbmhRTTJRb2tZ/view?usp=sharing

ITR (TRIB) Volume 41 : Part 2 (Issue dated : 20-7-2015)

 

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

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Book profit --Computation--Export--Provisions of section 115JB not applicable to income accruing or arising after 1-4-2005 for business carried on in unit located in special economic zone--Income of special economic zone unit of assessee cannot be included while computing book profit under section 115JB--Income-tax Act, 1961, s. 115JB-- Hexagon Nutrition P. Ltd. v . Dy. CIT (Mumbai) . . . 5

Business expenditure --Disallowance--Payments liable to deduction of tax at source--Expenses incurred on advertisement--Assessing Officer to examine whether assessee not required to deduct tax at source for payments--Matter remanded--Income-tax Act, 1961--Hexagon Nutrition P. Ltd. v . Dy. CIT (Mumbai) . . . 5

Exemption --New industrial undertaking in special economic zone--Computation of deduction under section 10A--Deduction to be given at stage when profits and gains of business computed in first instance--Brought forward unabsorbed depreciation of unit cannot be set off against current profit of eligible unit for computing deduction under section 10A--Income-tax Act, 1961, s. 10A-- Hexagon Nutrition P. Ltd. v . Dy. CIT 
(Mumbai) . . . 5

----New industrial undertaking in special economic zone--Expenditure disproportionately apportioned among both eligible and non-eligible units--Assessing Officer scientifically allocating expenditure of non-eligible unit to eligible unit on basis of turnover ratio--Allocation of expenditure proper--Allocation of interest expenditure towards eligible unit out of interest expenditure allocated by Assessing Officer from non-eligible unit to eligible unit--Matter remanded--Income-tax Act, 1961, s. 10A-- Hexagon Nutrition P. Ltd. v . Dy. CIT (Mumbai) . . . 5

Rectification of mistakes --Deduction of tax at source--Assessing Officer treating assessee as assessee-in-default for non-deduction of tax at source--Assessing Officer passing rectification order on finding payment of tax by recipient--Assessee not in default of non-deduction of tax at source--Income-tax Act, 1961, ss. 154, 201(1)-- Dy. CIT (TDS) v . Reliance Communications Infrastructure Ltd. 
(Mumbai) . . . 1

 

PRINT EDITION

Volume 41 : Part 2 (Issue dated : 20-7-2015)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

 

Business expenditure --Disallowance--Income of assessee to be computed under section 11--Disallowance cannot be made under section 40(a)(ia) by applying commercial principles--Income-tax Act, 1961, s. 40(a)(ia)-- ITO (Exemptions)-II v . Kalinga Cultural Trust (Hyd) . . . 147

----Disallowance--Payments liable to deduction of tax at source--Purchase of intellectual property rights--Depreciation cannot be denied for failure to deduct tax at source on payment--Income-tax Act, 1961, ss. 40(a)(i), 195-- SAB Miller India Ltd. v . Addl. CIT(Mumbai) . . . 167

----Disallowance--Payments liable to deduction of tax at source--Sale price discounts--Relationship between assessee and distributors in relation to sale and purchase of product needing examination--Matter remanded--Income-tax Act, 1961, ss. 40(a)(ia), 194H-- SAB Miller India Ltd. v . Addl. CIT (Mumbai) . . . 167

----Disallowance--Payments liable to deduction of tax at source--Trading of film rights--Sale of world negative rights on perpetual and permanent basis--Not a case of payment of royalty--Assessee not required to deduct tax at source--No question of disallowance--Income-tax Act, 1961, ss. 40(a)(ia), 194J-- Dy. CIT v . V. Rama Krishna 
(Hyd) . . . 157

----Disallowance--Payments subject to deduction of tax at source--Software charges to enable electronic fund transfer facility-- Explanation 4 to section 9(1)(vi) applicable--Provisions of section 40(a)(i) not applicable on payments hit by prospective amendment--Disallowance not proper--Income-tax Act, 1961, ss. 9(1)(vi), Expln. 4 , 40(a)(ia)-- SAB Miller India Ltd. v . Addl. CIT (Mumbai) . . . 167

----Disallowance--Payments to non-resident--Failure to deduct tax at source--Draft assessment order incorporating additions made by Assessing Officer--Assessee not raising objections to draft assessment order--Assessee cannot raise issue before Tribunal--Income-tax Act, 1961, ss. 40(a)(ia), 144C(8)-- Aptean Software India P. Ltd. v . ITO 
(Bang) . . . 246

----Factory expenses--Expenses not fully supported by vouchers and bills--Failure by assessee to file detailed submissions against findings of Assessing Officer--Disallowance of one-fifth of expenses proper--Income-tax Act, 1961-- Swastik Industries v . ITO (Ahd) . . . 277

----Interest on borrowed capital--Loans advanced to group companies at lower rate of interest--Whether advances given out of own funds--Matter remanded for verification--Income-tax Act, 1961, s. 36(1)(iii)-- SAB Miller India Ltd. v . Addl. CIT 
(Mumbai) . . . 167

Capital or revenue expenditure --Club membership fee--Revenue expenditure--Income-tax Act, 1961-- SAB Miller India Ltd. v. Addl. CIT (Mumbai) . . . 167

Charitable purpose --Exemption--Denial of exemption on ground that assessee receiving money for endorsing products of companies on claiming of health and nutritional benefits--Endorsement cannot be medically or scientifically incorrect--No violation of provisions of section 2(15)--Assessee entitled to exemption--Income-tax Act, 1961, ss. 2(15), 11-- Asst. DIT (Exemptions) v . Indian Medical Association 
(Delhi) . . . 222

Depreciation --Goodwill--Payments made to retiring partners for acquiring commercial rights disclosed as goodwill--Assessee entitled to depreciation on goodwill--Income-tax Act, 1961--Swastik Industries v . ITO (Ahd) . . . 277

Exemption --Charitable purpose--Assessee carrying on charitable activity for relief of poor, disabled and persons affected by natural calamities--Assessee modifying objects after registration--Failure by assessee to submit details of work undertaken or amounts spent in places affected by natural calamities--One more opportunity to be given to assessee to submit all details--Assessing Officer to examine change in objects of memorandum of association and date of approval of modified objects by Director of Income-tax (Exemptions)--Matter remanded--Income-tax Act, 1961, s. 11-- Dy. DIT (Exemptions)-III v . Operation Blessing India (Hyd) . . . 176

----Charitable purpose--Assessee constructing temple and letting out function hall--Assessee registered as charitable institution and no change in its aims and objects--Exemption allowed in earlier assessment year--Rule of consistency to be followed--Proviso to section 2(15) cannot be applied to deny exemption under section 11--Income-tax Act, 1961, ss. 2(15), 11-- ITO (Exemptions)-II v . Kalinga Cultural Trust (Hyd) . . . 147

----Undertaking in Special Economic Zone--Computation of deduction--Amount reduced from export turnover required to be proportionately reduced from total turnover--Income-tax Act, 1961, ss. 10A, 10AA-- Dy. CIT v . Timken India Manufacturing P. Ltd. (Bang) . . . 208

Export --Exemption--Telecommunication charges and travelling expenses incurred in foreign currency excluded from export turnover--To be excluded from total turnover--Income-tax Act, 1961, s. 10A-- Aptean Software India P. Ltd. v . ITO 
(Bang) . . . 246

Income --Accrual of income--Advance received by actor--Remains advance until crystallising as income on fulfilment of obligation specified in agreement--Not to be treated as income--Income-tax Act, 1961-- R. S. Suriya v . Asst. CIT 
(Chennai) . . . 282

----Accrual of income--Payments received by actor from film production companies--Whether already treated as income of assessee for earlier assessment years--Matter remanded--Income-tax Act, 1961-- R. S. Suriya v . Asst. CIT 
(Chennai) . . . 282

Income from undisclosed sources --Assessee receiving cement bags without payment of consideration--Assessee to justify his claim--Matter remanded--Income-tax Act, 1961-- R. S. Suriya v . Asst. CIT (Chennai) . . . 282

International transactions --Arm’s length price--Advertisement and marketing--Failure by Transfer Pricing Officer to carry out study with reference to functions performed by comparables selected by him regarding functions performed by assessee with regard to its marketing and distribution activities--Discount and sales commission directly attributable to selling activities of assessee to be excluded from components selected by Transfer Pricing Officer--Expenses in connection with sponsorship and sales promotion to be examined by Transfer Pricing Officer--Transfer Pricing Officer to carry out detailed functional analysis of comparables--Matter remanded--Income-tax Act, 1961-- Zimmer India P. Ltd. v . Dy. CIT(Delhi) . . . 188

----Arm’s length price--Determination--Software development services--Transactional net margin method--Selection of comparables--Companies having enormous turnover and functionally dissimilar cannot be treated as comparables--Income-tax Act, 1961, s. 92CA--Aptean Software India P. Ltd. v . ITO (Bang) . . . 246

Interpretation of statutes --Interpretation of law as it exists and not as it ought to be in light of value notions-- Addl. DIT (International Taxation) v . Baker Hughes Singapore Pte. Ltd.(Delhi) . . . 212

Judicial discipline --Advance tax--Interest--Tribunal bound by decision of jurisdictional High Court--Interest under section 234B cannot be levied--Income-tax Act, 1961, s. 234B-- Addl. DIT (International Taxation) v . Baker Hughes Singapore Pte. Ltd. (Delhi) . . . 212

Non-resident --Presumptive tax--Computation--Whether unpaid invoices includible in gross revenues for purposes of computing presumptive income--No factual findings--Matter remanded--Income-tax Act, 1961, s. 44BB-- Addl. DIT (International Taxation) v . Baker Hughes Singapore Pte. Ltd. (Delhi) . . . 212

----Taxability in India--Payments for educational and consultancy services to Indian entities--Failure by authorities to examine nature of services actually provided by assessee--Tribunal consistently deciding issues in favour of assessee in earlier years that fees for advisory services not taxable in India--Direction to delete addition of all receipts--Income-tax Act, 1961-- Partners Harvard Medical International Inc. v . Asst. DIT (International Taxation)(Mumbai) . . . 183

Presumptive tax --Non-resident--Prospecting for, or extraction or production of mineral oils--Income of assessee liable to tax at 10 per cent. under section 44BB on basis of binding decision of co-ordinate Bench--Income-tax Act, 1961, ss. 44BB, 44DA-- Addl. DIT (International Taxation) v . Baker Hughes Singapore Pte. Ltd. 
(Delhi) . . . 212

Unexplained investment --Gold jewellery--Assessee’s father eminent personality in profession of acting for nearly 40 years--Failure by Assessing Officer to take into consideration financial status of assessee--Additions to be deleted--Income-tax Act, 1961, s. 69-- R. S. Suriya v . Asst. CIT (Chennai) . . . 282

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961

s. 2(15) --Charitable purpose--Exemption--Denial of exemption on ground that assessee receiving money for endorsing products of companies on claiming of health and nutritional benefits--Endorsement cannot be medically or scientifically incorrect--No violation of provisions of section 2(15)--Assessee entitled to exemption-- Asst. DIT (Exemptions) v . Indian Medical Association (Delhi) . . . 222

----Exemption--Charitable purpose--Assessee constructing temple and letting out function hall--Assessee registered as charitable institution and no change in its aims and objects--Exemption allowed in earlier assessment year--Rule of consistency to be followed--Proviso to section 2(15) cannot be applied to deny exemption under section 11-- ITO (Exemptions)-IIv . Kalinga Cultural Trust (Hyd) . . . 147

s. 9(1)(vi), Expln. 4 --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Software charges to enable electronic fund transfer facility-- Explanation 4to section 9(1)(vi) applicable--Provisions of section 40(a)(i) not applicable on payments hit by prospective amendment--Disallowance not proper-- SAB Miller India Ltd. v . Addl. CIT(Mumbai) . . . 167

s. 10A --Exemption--Undertaking in Special Economic Zone--Computation of deduction--Amount reduced from export turnover required to be proportionately reduced from total turnover-- Dy. CIT v . Timken India Manufacturing P. Ltd. 
(Bang) . . . 208

----Export--Exemption--Telecommunication charges and travelling expenses incurred in foreign currency excluded from export turnover--To be excluded from total turnover-- Aptean Software India P. Ltd. v . ITO (Bang) . . . 246

s. 10AA --Exemption--Undertaking in Special Economic Zone--Computation of deduction--Amount reduced from export turnover required to be proportionately reduced from total turnover-- Dy. CIT v . Timken India Manufacturing P. Ltd. 
(Bang) . . . 208

s. 11 --Exemption--Charitable purpose--Assessee carrying on charitable activity for relief of poor, disabled and persons affected by natural calamities--Assessee modifying objects after registration--Failure by assessee to submit details of work undertaken or amounts spent in places affected by natural calamities--One more opportunity to be given to assessee to submit all details--Assessing Officer to examine change in objects of memorandum of association and date of approval of modified objects by Director of Income-tax (Exemptions)--Matter remanded-- Dy. DIT (Exemptions)-III v . Operation Blessing India (Hyd) . . . 176

----Exemption--Charitable purpose--Assessee constructing temple and letting out function hall--Assessee registered as charitable institution and no change in its aims and objects--Exemption allowed in earlier assessment year--Rule of consistency to be followed--Proviso to section 2(15) cannot be applied to deny exemption under section 11-- ITO (Exemptions)-IIv . Kalinga Cultural Trust (Hyd) . . . 147

----Charitable purpose--Exemption--Denial of exemption on ground that assessee receiving money for endorsing products of companies on claiming of health and nutritional benefits--Endorsement cannot be medically or scientifically incorrect--No violation of provisions of section 2(15)--Assessee entitled to exemption-- Asst. DIT (Exemptions) v . Indian Medical Association (Delhi) . . . 222

s. 36(1)(iii) --Business expenditure--Interest on borrowed capital--Loans advanced to group companies at lower rate of interest--Whether advances given out of own funds--Matter remanded for verification-- SAB Miller India Ltd. v . Addl. CIT 
(Mumbai) . . . 167

s. 40(a)(i) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Purchase of intellectual property rights--Depreciation cannot be denied for failure to deduct tax at source on payment-- SAB Miller India Ltd. v . Addl. CIT 
(Mumbai) . . . 167

s. 40(a)(ia) --Business expenditure--Disallowance--Income of assessee to be computed under section 11--Disallowance cannot be made under section 40(a)(ia) by applying commercial principles-- ITO (Exemptions)-II v . Kalinga Cultural Trust 
(Hyd) . . . 147

----Business expenditure--Disallowance--Payments liable to deduction of tax at source--Sale price discounts--Relationship between assessee and distributors in relation to sale and purchase of product needing examination--Matter remanded-- SAB Miller India Ltd. v . Addl. CIT (Mumbai) . . . 167

----Business expenditure--Disallowance--Payments liable to deduction of tax at source--Trading of film rights--Sale of world negative rights on perpetual and permanent basis--Not a case of payment of royalty--Assessee not required to deduct tax at source--No question of disallowance-- Dy. CIT v . V. Rama Krishna 
(Hyd) . . . 157

----Business expenditure--Disallowance--Payments subject to deduction of tax at source--Software charges to enable electronic fund transfer facility-- Explanation 4 to section 9(1)(vi) applicable--Provisions of section 40(a)(i) not applicable on payments hit by prospective amendment--Disallowance not proper-- SAB Miller India Ltd. v . Addl. CIT (Mumbai) . . . 167

----Business expenditure--Disallowance--Payments to non-resident--Failure to deduct tax at source--Draft assessment order incorporating additions made by Assessing Officer--Assessee not raising objections to draft assessment order--Assessee cannot raise issue before Tribunal-- Aptean Software India P. Ltd. v . ITO 
(Bang) . . . 246

s. 44BB --Non-resident--Presumptive tax--Computation--Whether unpaid invoices includible in gross revenues for purposes of computing presumptive income--No factual findings--Matter remanded-- Addl. DIT (International Taxation) v . Baker Hughes Singapore Pte. Ltd. (Delhi) . . . 212

----Presumptive tax--Non-resident--Prospecting for, or extraction or production of mineral oils--Income of assessee liable to tax at 10 per cent. under section 44BB on basis of binding decision of co-ordinate Bench-- Addl. DIT (International Taxation) v . Baker Hughes Singapore Pte. Ltd. (Delhi) . . . 212

s. 44DA --Presumptive tax--Non-resident--Prospecting for, or extraction or production of mineral oils--Income of assessee liable to tax at 10 per cent. under section 44BB on basis of binding decision of co-ordinate Bench-- Addl. DIT (International Taxation) v . Baker Hughes Singapore Pte. Ltd. (Delhi) . . . 212

s. 69 --Unexplained investment--Gold jewellery--Assessee’s father eminent personality in profession of acting for nearly 40 years--Failure by Assessing Officer to take into consideration financial status of assessee--Addition to be deleted-- R. S. Suriya v . Asst. CIT(Chennai) . . . 282

s. 92CA --International transactions--Arm’s length price--Determination--Software development services--Transactional net margin method--Selection of comparables--Companies having enormous turnover and functionally dissimilar cannot be treated as comparables-- Aptean Software India P. Ltd. v . ITO (Bang) . . . 246

s. 144C(8) --Business expenditure--Disallowance--Payments to non-resident--Failure to deduct tax at source--Draft assessment order incorporating additions made by Assessing Officer--Assessee not raising objections to draft assessment order--Assessee cannot raise issue before Tribunal-- Aptean Software India P. Ltd. v . ITO 
(Bang) . . . 246

s. 194H --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Sale price discounts--Relationship between assessee and distributors in relation to sale and purchase of product needing examination--Matter remanded-- SAB Miller India Ltd.v . Addl. CIT (Mumbai) . . . 167

s. 194J --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Trading of film rights--Sale of world negative rights on perpetual and permanent basis--Not a case of payment of royalty--Assessee not required to deduct tax at source--No question of disallowance-- Dy. CIT v . V. Rama Krishna 
(Hyd) . . . 157

s. 195 --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Purchase of intellectual property rights--Depreciation cannot be denied for failure to deduct tax at source on payment-- SAB Miller India Ltd. v . Addl. CIT 
(Mumbai) . . . 167

s. 234B --Judicial discipline--Advance tax--Interest--Tribunal bound by decision of jurisdictional High Court--Interest under section 234B cannot be levied-- Addl. DIT (International Taxation) v . Baker Hughes Singapore Pte. Ltd. 
(Delhi) . . . 212

__._,_.___

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

ITR Volume 375 : Part 3 (Issue dated : 20-7-2015)

 

INCOME TAX REPORTS (ITR)

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURT

Non-resident --Income deemed to accrue or arise in India--Fees for technical services--Meaning of technical services--Commission for procuring export orders--No fees for technical services--Amount could not be deemed to accrue or arise in India--Income-tax Act, 1961, s. 9(1)(vii)-- DIT (International Taxation) v. Panalfa Autoelektrik Ltd. (Delhi) . . . 34

Reassessment --Notice--Limitation--Condition precedent for reassessment--Valid notice before limitation--Notice must give reasons--Notice after four years must have prior sanction under section 151--Notice issued prior to limitation which were not valid--Valid notice issued after limitation--Reassessment proceedings not valid--Income-tax Act, 1961, ss. 147, 148, 151-- Lal Chand Agarwal v. CIT (All) . . . 48

Search and seizure --Block assessment--Undisclosed income--Reasonable explanation for amounts discovered--Additions could not be made in block assessment--Income-tax Act, 1961-- CIT v. Rakesh Goyal (All) . . . 60

PRINT EDITION

ITR Volume 375 : Part 3 (Issue dated : 20-7-2015)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Housing project --Special deduction--Change of law with effect from April 1, 2005--Benefit restricted to cases where area utilised for shops and commercial establishments does not exceed 5 per cent. of aggregate built-up area of housing project or 2,000 sq. feet, whichever was less--Not to apply to projects where approval of local authority granted prior to April 1, 2005--Even if project completed thereafter--Income-tax Act, 1961, s. 80-IB(10)-- CIT v.Sarkar Builders . . . 392

Income-tax --General principles--Principle that law as on first day of assessment year applies--Not absolute--Exception by express or necessary implication possible-- CIT v.Sarkar Builders . . . 392

HIGH COURTS

Advance tax --Interest--Assessee following project completion method of accounting for its building projects--Assessee for earlier assessment year accepting that income derived from parking charges assessable--Assessee not filing return and not paying advance tax for parking charges--Interest payable by assessee--Income-tax Act, 1961, s. 234B-- Sudhir G. Borgaonkar v. Asst. CIT (Bom) . . . 322

Appeal to Commissioner (Appeals) --Powers of Commissioner (Appeals)--Power to conduct further inquiry--Income-tax Act, 1961, s. 250-- CIT v. Jansampark Advertising and Marketing P. Ltd. (Delhi) . . . 373

Business expenditure --Capital or revenue expenditure--Fluctuation in price of foreign currency--Increase in price of raw material--Extra amount paid deductible as revenue expenditure--Income-tax Act, 1961-- CIT v. Tony Electronics Ltd. (Delhi) . . . 431

Cash credits --Share application money--Effect of section 68--Burden of proof--Burden on assessee to prove identity of creditor, its creditworthiness and genuineness of transaction--Assessing Officer finding that burden had not been discharged--Commissioner (Appeals) and Tribunal not conducting proper enquiry--Addition by Assessing Officer could not be deleted--Matter remanded--Income-tax Act, 1961, s. 68-- CIT v. Jansampark Advertising and Marketing P. Ltd. (Delhi) . . . 373

Depreciation --Finding that assessee was manufacturing articles--Assessee entitled to depreciation--Income-tax Act, 1961, s. 32-- CIT v. Tony Electronics Ltd. (Delhi) . . . 431

Housing project --Special deduction--Development of housing--Scope of section 80-IB(10)--Assessee undertaking housing projects allotted by Railway Welfare Organisation and Delhi Development Authority--Entitled to special deduction under section 80-IB(10)--Income-tax Act, 1961, s. 80-IB-- CIT v. VRM India Ltd. (Delhi) . . . 414

Income --Diversion of income by overriding title--General principles--Salary or pension received by member of religious congregation--Rules of religious congregation obliging members to vow of poverty--Consequent handing over of amount to religious congregation--Obligation based on personal law--Religious congregation would not usually have legal right to receive amount--Amount not diverted at source--Direction to deduct tax at source on payments of salary or pension to member of religious congregation--Valid--Income-tax Act, 1961-- Fr. Sabu P. Thomas v. Union of India (Ker) . . . 352

Income from undisclosed sources --Alleged suppression of sales--Finding by Commissioner (Appeals) and Tribunal that there was no suppression of sales--Deletion of addition justified--Income-tax Act, 1961-- CIT v. Tony Electronics Ltd. (Delhi) . . . 431

Industrial undertaking --Special deduction--Special deduction under sections 80HH, 80-I and 80-IA--Condition precedent--Manufacture of article--Assembling of cassettes from finished components amounts to manufacture--Assessee entitled to special deductions--Income-tax Act, 1961, ss. 80HH, 80-I, 80-IA-- CIT v. Tony Electronics Ltd. (Delhi) . . . 431

Loss --Business loss--Accounting--Rejection of accounts--Accounts could not be rejected merely because trial production could not be proved--Allowance of loss based on facts--Justified--Income-tax Act, 1961-- CIT v. Tony Electronics Ltd. (Delhi) . . . 431

Reassessment --Notice--Condition precedent--Reason to believe income has escaped assessment--Notice not stating that income had escaped assessment--Notice to verify details--Not valid--Income-tax Act, 1961, ss. 147, 148-- Nivi Trading Ltd. v. Union of India(Bom) . . . 308

Salary --Profits in lieu of salary--Scope of section 17--Industrial drives system--Restrictive covenant--Assessee with specialised knowledge forming private limited company--Joint venture between private limited company and foreign company--Foreign company paying consideration to assessee under non-competition agreement--No relation of master and servant between foreign company and assessee--Amount received under non-competition agreement not assessable as profit in lieu of salary--Income-tax Act, 1961, s. 17-- G. Raveendran v. CIT (Mad) . . . 326

Scientific research expenditure --Weighted deduction--Denial of deduction by Assessing Officer on ground machinery required to be installed and commissioned before expiry of relevant previous year--Not proper--Income-tax Act, 1961, s. 35(2AB)-- CIT (LTU) v. Biocon Ltd. (Karn) . . . 306

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 17 --Salary--Profits in lieu of salary--Scope of section 17--Industrial drives system--Restrictive covenant--Assessee with specialised knowledge forming private limited company--Joint venture between private limited company and foreign company--Foreign company paying consideration to assessee under non-competition agreement--No relation of master and servant between foreign company and assessee--Amount received under non-competition agreement not assessable as profit in lieu of salary-- G. Raveendran v. CIT(Mad) . . . 326

S. 32 --Depreciation--Finding that assessee was manufacturing articles--Assessee entitled to depreciation-- CIT v. Tony Electronics Ltd. (Delhi) . . . 431

S. 35(2AB) --Scientific research expenditure--Weighted deduction--Denial of deduction by Assessing Officer on ground machinery required to be installed and commissioned before expiry of relevant previous year--Not proper-- CIT (LTU) v. Biocon Ltd. (Karn) . . . 306

S. 68 --Cash credits--Share application money--Effect of section 68--Burden of proof--Burden on assessee to prove identity of creditor, its creditworthiness and genuineness of transaction--Assessing Officer finding that burden had not been discharged--Commissioner (Appeals) and Tribunal not conducting proper enquiry--Addition by Assessing Officer could not be deleted--Matter remanded-- CIT v. Jansampark Advertising and Marketing P. Ltd.(Delhi) . . . 373

S. 80HH --Industrial undertaking--Special deduction--Special deduction under sections 80HH, 80-I and 80-IA--Condition precedent--Manufacture of article--Assembling of cassettes from finished components amounts to manufacture--Assessee entitled to special deductions-- CITv. Tony Electronics Ltd. (Delhi) . . . 431

S. 80-I --Industrial undertaking--Special deduction--Special deduction under sections 80HH, 80-I and 80-IA--Condition precedent--Manufacture of article--Assembling of cassettes from finished components amounts to manufacture--Assessee entitled to special deductions-- CITv. Tony Electronics Ltd. (Delhi) . . . 431

S. 80-IA --Industrial undertaking--Special deduction--Special deduction under sections 80HH, 80-I and 80-IA--Condition precedent--Manufacture of article--Assembling of cassettes from finished components amounts to manufacture--Assessee entitled to special deductions-- CITv. Tony Electronics Ltd. (Delhi) . . . 431

S. 80-IB --Housing project--Special deduction--Development of housing--Scope of section 80-IB(10)--Assessee undertaking housing projects allotted by Railway Welfare Organisation and Delhi Development Authority--Entitled to special deduction under section 80-IB(10)-- CITv. VRM India Ltd. (Delhi) . . . 414

S. 80-IB(10) --Housing project--Special deduction--Change of law with effect from April 1, 2005--Benefit restricted to cases where area utilised for shops and commercial establishments does not exceed 5 per cent. of aggregate built-up area of housing project or 2,000 sq. feet, whichever was less--Not to apply to projects where approval of local authority granted prior to April 1, 2005--Even if project completed thereafter-- CIT v. Sarkar Builders (SC). . . 392

S. 147 --Reassessment--Notice--Condition precedent--Reason to believe income has escaped assessment--Notice not stating that income had escaped assessment--Notice to verify details--Not valid-- Nivi Trading Ltd. v. Union of India (Bom) . . . 308

S. 148 --Reassessment--Notice--Condition precedent--Reason to believe income has escaped assessment--Notice not stating that income had escaped assessment--Notice to verify details--Not valid-- Nivi Trading Ltd. v. Union of India (Bom) . . . 308

S. 234B --Advance tax--Interest--Assessee following project completion method of accounting for its building projects--Assessee for earlier assessment year accepting that income derived from parking charges assessable--Assessee not filing return and not paying advance tax for parking charges--Interest payable by assessee-- Sudhir G. Borgaonkar v.Asst. CIT (Bom) . . . 322

S. 250 --Appeal to Commissioner (Appeals)--Powers of Commissioner (Appeals)--Power to conduct further inquiry-- CIT v. Jansampark Advertising and Marketing P. Ltd. (Delhi) . . . 373

 

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

Top CA Firms, E&Y, Deloitte, KPMG & PWC, Hauled Up For Alleged Illegal Practice Of law


---------- Forwarded message ----------
From: 'editor@itatonline.org' itatonline.org@gmail.com [SolapurCAs] <SolapurCAs@yahoogroups.com>
Date: Fri, Jul 17, 2015 at 3:49 PM
Subject: Message from EGroup of SolapurCAs Top CA Firms, E&Y, Deloitte, KPMG & PWC, Hauled Up For Alleged Illegal Practice Of law
To: SolapurCAs@yahoogroups.com


 

Dear Subscriber,

Top CA Firms, E&Y, Deloitte, KPMG & PWC, Hauled Up For Alleged Illegal Practice Of law

The Society of Indian Law Firms, a collective of India's Premier Law Firms, has filed a complaint dated 18th June 2015 with the Bar Council of India claiming that the big four CA firms, E&Y, Deloitte, KPMG & PWC, are carrying on unauthorized practice of law and that this contravenes section 29 of the Advocates Act which provides that only Indian citizens who are enrolled with the State Bar Councils as advocates have the right to practice the profession of law in India. The Complaint has given specific instances of the alleged violation of law by E&Y, Deloitte, KPMG and PWC. 


Regards,

 

Editor,

 

itatonline.org

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

Latest:

G. Indhirani vs. DCIT (ITAT Chennai)

S. 234E: Prior to the amendment to s. 200A w.e.f. 01.06.2015, the fee for default in filing TDS statements cannot be recovered from the assessee-deductor while processing the s. 200A statement. However, the AO is entitled to pass a separate order u/s 234E to levy the fee within the limitation period


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Tuesday, July 21, 2015

Judgments and Infomration [3 Attachments]


 
[Attachment(s) from Dipak Shah djshah1944@yahoo.com [SolapurCAs] included below]




CIT vs. SMCC Construction India Ltd (Delhi High Court)

by editor
Although the payment is spread over a period of 10 years, it does not make the Assessee the owner of the technical knowhow. The very nature of the license agreement is that it is not of a permanent nature. The benefit to the Assessee as a result of payment of royalty for technical knowhow was not of an enduring nature, and therefore cannot be construed to be a capital expenditure

CIT vs. SMCC Construction India Ltd (Delhi High Court)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS: ,
COUNSEL:
DATE: July 3, 2015 (Date of pronouncement)
DATE: July 15, 2015 (Date of publication)
AY: 2008-09, 2009-10, 2010-11
FILE: Click here to download the file in pdf format
CITATION:
S. 37(1): The very nature of a license agreement is that it is not of a permanent nature. The fact that the payment is spread over a period of 10 yearst does not make the assessee the owner of the technical knowhow. The payment is not of an enduring nature
The department argued before the High Court that the reliance placed by the ITAT on the decisions in Premier Automobiles Ltd. vs. CIT, (1984) 150 ITR 28 (Bom) and Travancore Sugars and Chemicals Ltd. vs. CIT (1966) 62 ITR 566 (SC), to hold that the payment of technical knowhow fees is revenue in nature is misplaced because in those cases the assessees were manufacturing units and therefore different considerations would apply. It was urged that inasmuch as the essential business of the Assessee was entirely dependent on the technical knowhow provided by SMCL, the benefit to the Assessee was of an enduring nature and the expenditure incurred should be treated as capital expenditure. HELD by the High Court dismissing the appeal:
A perusal of the TCA shows that the payment by the Assessee to SMCL is for the technical knowhow given to the Assessee as a Licensee. Although the payment is spread over a period of 10 years, it does not make the Assessee the owner of the technical knowhow. The very nature of the license agreement is that it is not of a permanent nature. The view taken by the CIT (Appeals), and concurred with by the ITAT, cannot in the circumstances be said to be improbable or contrary to the settled legal position. The Court, therefore, concurs with the view of the CIT (A) and the ITAT that the benefit to the Assessee as a result of payment of royalty for technical knowhow was not of an enduring nature, and therefore cannot be construed to be a capital expenditure.

Related Judgements

  1. Amway India vs. DCIT (ITAT Delhi Special Bench) 
    (i) The question whether expenditure is on capital or revenue account should be decided from the practical and business view point and in accordance with sound accountancy principles. The three tests applied to decide the nature of expenditure are the…Read more ›
  2. CIT vs. Asahi India Safety Glass Ltd (Delhi High Court) 
    The test of enduring benefit is not a certain or a conclusive test which the courts can apply almost by rote. What is required to be seen is the real intent and purpose of the expenditure and whether the expenditure results in creation of fixed capital for the assessee….
  3. Airport Authority of India vs. CIT (Delhi High Court – Full Bench) 
    The question that has to be considered is whether the expenditure is incurred for initiating the business or for removing an obstruction to facilitate an existing business. Expenditure incurred for running the business or working it, with a view to produce profits is in the nature of revenue expenditure….
  4. Pitney Bowes India Pvt Ltd vs. CIT (Delhi High Court) 
    In the books, the assessee treated the non-compete expenditure as capital in nature. Warding off competition in business even to a rival dealer will constitute capital expenditure. It is not necessary that the non-compete fee has to be paid to create monopoly rights. The non-compete agreement was to last…
  5. CIT vs. Eicher Ltd (Delhi High Court) 
    Non-compete compensation paid to an employee for an indefinite period is business expenditure and not capital expenditure as no capital asset or benefit of enduring benefit came into existence. While the lenght of the period of the covenant is important, it is not decisive. What is more important is…

Deccan Education Society vs. ACIT (ITAT Pune)

by editor
None of the persons who have deposed against the assessee by stating that they had given donation for the purpose of getting admission has complained to the Government for any such violation by the society. It is also to be noted that those persons have filled up the requisite proforma stating that they have given donation to the assessee voluntarily and not for seeking admission. Even some of them claimed deduction u/s.80G, a fact stated by the assessee and not controverted by the Departmental Representative. Therefore, changing the stands after their wards completed their education from the institutions run by the assessee trust are contradictory

Deccan Education Society vs. ACIT (ITAT Pune)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS: , , ,
COUNSEL:
DATE: July 13, 2015 (Date of pronouncement)
DATE: July 15, 2015 (Date of publication)
AY: 2008-09
FILE: Click here to download the file in pdf format
CITATION:
S. 10(23C) (iiiab): Law on treating an educational institution as running with a profit motive and treating the donations received by it as "capitation fee" on the basis of the allegation of the persons who have made the said donation explained
(i) The exemption u/s 10(23C) (iiiab) is available to the society as a whole which has been formed for the sole purpose of establishing, running, managing or assisting schools and colleges in different fields. It is the trust or the society that has to apply for registration and claim exemption. Had it been the intention of the legislature to grant exemption only to the institutions individually or independently and not to the society as a whole, the language would have been different. The society or trust may run more than one institutions. Therefore, the argument of the Revenue that it should be institution specific and not the Society as a whole in our opinion is not correct.
(ii) As regards the question whether the trust is for profit motive, it is the allegation of the Revenue that the assessee trust was collecting the capitation fee in the garb of donation and was therefore running with a profit motive. We find the Assessing Officer has not reported the violation, if any, by the assessee trust to the Government of Maharashtra for taking any action for violation of The Maharashtra Educational Institutions (Prohibition of Capitation Fee) Act, 1987. None of the persons who have deposed against the assessee by stating that they had given donation for the purpose of getting admission has complained to the Government for any such violation by the society. It is also to be noted that those persons have filled up the requisite proforma stating that they have given donation to the assessee voluntarily and not for seeking admission. Even some of them claimed deduction u/s.80G, a fact stated by the assessee and not controverted by the Departmental Representative. Therefore, changing the stands after their wards completed their education from the institutions run by the assessee trust are contradictory. Further, it is also a fact that all donations received by the assessee trust are recorded in the books of account. There is no allegation by the Revenue that any part of such donation has been siphoned off for the benefit of any of the trustees or related persons. Nothing has been brought on record that any student has been denied admission for not giving donation. Merely because some of the donors stated that they have given the donation for admission the same in our opinion will not disentitle the society from getting exemption which is existing solely for educational purposes and which is otherwise entitled to the exemption (Chief CIT Vs. Geetanjali University Trust 352 ITR 433, Shikshana Prasaraka Mandali Vs. CIT Central Pune vide ITA Nos.1348 and 1349/PN/2010 order dated 27-03-2014, Sadvidya Educational Institution Vs. Add.CIT, Padanilam Welfare Trust Vs. Dy.CIT 10 ITR 479, Queen's Educational Society vs. CIT Civil Appeal No.5167/2008 order dated 16-03-2015, Pine Grove International Charitable Trust Vs. Union of India 327 ITR 73 followed)

Related Judgements

  1. Sinhgad Technical Education Society vs. ACIT (ITAT Pune) 
    Though s. 153C confers jurisdiction if the AO is "satisfied" that "documents" seized belong to a person other than the person referred to in s. 153A so as to be able to assess that other person, the document must have prima facie incriminating information. The document seized must not…
  2. Queens Educational Society vs. CIT (Supreme Court) 
    The 13th proviso to Section 10(23C) is of great importance in that assessing authorities must continuously monitor from assessment year to assessment year whether such institutions continue to apply their income and invest or deposit their funds in accordance with the law laid down. Further, it is of great…
  3. St. Lawrence Educational Society vs. CIT (Delhi High Court) 
    To decide whether the institution exists solely for education and not to earn profit the test of predominant object of the activity has to be seen to decide. The purpose does not lose its character merely because some profit arises from the activity. It is not possible to carry…
  4. Ashoka Education Foundation vs. CIT (ITAT Pune) 
    While granting the exemption or renewal of exemption under section 80G(5) of the Act, the role of CIT is limited to look into the nature of activities being carried on by the institution or fund and the violation if any, of the provisions of section 13 of the Act…
  5. CIT vs. Raunaq Education Foundation (Supreme Court) 
    Though the assessee trust issued a receipt in March 2002 when it received the cheque dated 22.4.2002, it was clearly stated in its record that the amount of donation was receivable in future and it was shown as donation receivable in the balance sheet as on 31.3.2002. Also Apollo…

ITO vs. Late Som Nath Malhotra (ITAT Delhi)

COURT:
CORAM: ,
SECTION(S): ,
GENRE:
CATCH WORDS: ,
COUNSEL:
DATE: July 2, 2015 (Date of pronouncement)
DATE: July 15, 2015 (Date of publication)
AY: 2003-04
FILE: Click here to download the file in pdf format
CITATION:
S. 148/ 292BB: Issue of notice in the name of the deceased person renders the assessment order null and void even if the order is passed in the name of the legal heir. The fact that the legal heir attended the proceedings does not make it a curable defect u/s 292BB
The AO recorded the reasons for issuing the notice u/s 148 of the Act in the name of the deceased assessee and got the approval of the Addl. CIT also in the same name. The AO issued notice dated 31.03.2010 u/s 148 of the Act in the name of the deceased assessee and also mentioned in the body of the assessment order that the notice u/s 148 of the Act was issued and served upon the assessee by Post within the statutory time period prescribed. Though the legal heir of the deceased assessee informed the AO that the assessee had expired and the return in the name of deceased assessee was filed by the legal heir, the AO did not issue any notice u/s 148 of the Act or 143(2) of the Act in the name of the legal heir. Therefore, the assessment framed by the AO on the basis of the notice issued u/s 148 of the Act in the name of the deceased assessee was invalid and void ab initio ( CIT Vs Suresh Chand Jaiswal 325 ITR 563 (All.) followed)

Related Judgements

  1. UKT Software Technologies vs. ITO (ITAT Delhi) 
    The law relating to validity of the assessment proceedings in absence of issuance of notice u/s 143(2), in a case where the AO proceeded to frame the assessment in pursuance of a return is well established. If the assessment is framed u/s 143 (3), either read with s. 158…
  2. Computer Engineering Services India (P) Ltd vs. ACIT (ITAT Delhi) 
    For making the assessment, it is absolutely essential that the person so to be assessed should be in existence at the time of making the assessment. In the present case the assessment has been framed by the AO on a date when the present assessee was not in existence…
  3. Bharat Sewa Sansthan vs. DCIT (ITAT Lucknow) 
    In the instant case, undisputedly the return was not filed under section 139(1) of the Act, it was rather a belated return as it was filed on 19.1.1995 and due date for filing of return was 31.10.1993. The return of…Read more ›
  4. CWT vs. Estate of Late HMM Vikramsinghji of Gondal (Supreme Court) 
    Important principles of law on taxation of discretionary & specific trust explained
    A discretionary trust is one which gives a beneficiary no right to any part of the income of the trust property, but vests in the trustees a discretionary power to pay him, or apply for his benefit, such…
  5. ITO vs. Lal Chand Agarwal (ITAT Agra Third Member) 
    The Act makes a clear distinction between "issue of notice" and "service of notice". S. 149 which prescribes the period of limitation provides that no notice u/s 148 shall be "issued" after the expiry of the limitation period. The "service" of the notice is necessary u/s 148 only to…

ITO vs. Late Som Nath Malhotra (ITAT Delhi)

by editor
The AO issued notice dated 31.03.2010 u/s 148 of the Act in the name of the deceased assessee and also mentioned in the body of the assessment order that the notice u/s 148 of the Act was issued and served upon the assessee by Post within the statutory time period prescribed. Though the legal heir of the deceased assessee informed the AO that the assessee had expired and the return in the name of deceased assessee was filed by the legal heir, the AO did not issue any notice u/s 148 of the Act or 143(2) of the Act in the name of the legal heir. Therefore, the assessment framed by the AO on the basis of the notice issued u/s 148 of the Act in the name of the deceased assessee was invalid and void ab initio

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Attachment(s) from Dipak Shah djshah1944@yahoo.com [SolapurCAs] | View attachments on the web

3 of 3 File(s)


Posted by: Dipak Shah <djshah1944@yahoo.com>