ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 13 : Part 1 (Issue dated : 2-1-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Advance tax --Interest--Shortfall in payment of advance tax--Sum on which tax deductible at source to be reduced for calculation of sum on which interest leviable--Income-tax Act, 1961, ss. 209, 234B-- De Beers U. K. Ltd. v. Deputy CIT (International Taxation) (Mumbai) . . . 1
Appeal to Appellate Tribunal --Powers of Tribunal--Can consider argument connected with ground raised even if not considered by authorities below-- De Beers U. K. Ltd. v. Deputy CIT (International Taxation) (Mumbai) . . . 1
Capital or revenue expenditure --Expenditure for development of new product in same line of business--Is revenue expenditure--Income-tax Act, 1961, s. 37-- Deputy CIT v. Magnetic Meter Systems India Ltd. (Chennai) . . . 43
Deduction of tax at source --Payment for hire of cars on fixed rent owned and maintained by contractor--Section 194C, Explanation III(c) applicable--Income-tax Act, 1961, s. 194C, Expln. III(c)-- Ahmedabad Urban Development Authority v. Asst. CIT (Ahmedabad) . . . 73
----Payment made to carrier for transporting petroleum products and not for hire of tank trucks--Tax to be deducted under section 194C--Income-tax Act, 1961, s. 194C--CBDT Circular No. 681, dated 8-3-1994 and Circular No. 558, dated 28-3-1990 -- ITO v. Indian Oil Corporation (Marketing Division) (Delhi) . . . 79
----Payments made by school to bus operators providing pick and drop facility to school students--Not a case of hire of machinery but of service rendered by transport contractor to assessee--Section 194C applicable--Income-tax Act, 1961, ss. 194C, 194-I-- Lotus Valley Education Society v. Asst. CIT (Delhi) . . . 61
----Payments made by school to contractors for training students in horse riding--Technical services--Section 194J applicable--Income-tax Act, 1961, s. 194J-- Lotus Valley Education Society v. Asst. CIT (Delhi) . . . 61
----Works contract of hire of machinery--Payment made by assessee to transport service provider for hire of vehicles for transportation of its employees--Service contract--Tax to be deducted under section 194C--Income-tax Act, 1961, s. 194C--Circular No. 558, dated 28-3-1990, No. 715, dated 8-8-1995 and No. 713, dated 2-8-1995 -- Asst. CIT v. Accenture Services P. Ltd. (Mumbai) . . . 48
Double Taxation Avoidance Agreements --Construction--Internationally accepted meaning on common words placed by commentaries on Agreements can be considered -- De Beers U. K. Ltd. v. Deputy CIT (International Taxation) (Mumbai) . . . 1
Fees for technical services --Generally-- De Beers U. K. Ltd. v. Deputy CIT (International Taxation) (Mumbai) . . . 1
Interest on borrowed capital --Assessee-company acting as holding company for group companies--Advance to group company for placing interest-free security deposit with lessor for flat for providing accommodation to managing director and South Asia business head of group--Advance for business purpose--Interest proportionate to advance not to be disallowed--Income-tax Act, 1961, s. 36(1)(iii)-- Deputy CIT v. Monsanto Holdings P. Ltd. (Mumbai) . . . 90
International transactions --Arm's length price--Associated enterprise compensating assessee at cost plus 18.87 per cent. compared to cost plus seven per cent. in earlier year--Explanation that assessee costs budgeted at time of invoice and billed to associated enterprise and actual costs incurred lower than budgeted costs resulting in higher recovery and higher profitability--Certificate from associated enterprise that excess would not be recovered--Difference between assessee's price and that determined by Transfer Pricing Officer less than five per cent.--No addition called for--Income-tax Act, 1961, s. 92C--Income-tax Rules, 1962, r. 10B-- Deputy CIT v. Monsanto Holdings P. Ltd. (Mumbai) . . . 90
----Arm's length price--Transactional net margin method--Uncontrolled transaction whether comparable--Two companies under same holding company and doing similar work--Both to be taken as comparable--That comparable company doing own research in addition to contract research--Not to affect--Adjustments to operating profit margins of two comparables would get neutralised--Difference less than five per cent.--Assessee's price to be accepted--Income-tax Act, 1961, s. 92C--Income-tax Rules, 1962, r. 10B-- Deputy CIT v. Monsanto Holdings P. Ltd. (Mumbai) . . . 90
Non-resident --Diamond trading--Income received from "sightholders" as marketing contributions and for value added services--Marketing contributions taxable as royalty--Value added services including provision of confidential information based on commercial experience--Is transfer of technical know-how--Taxable as royalty and as fees for technical services--Tax to be at concessional rate if agreement entered into after 1-6-2005--Income-tax Act, 1961, ss. 9(1)(vii), Expln. 2, 90(2), 115A(1)(b) (AA), 195, 234B --Double Taxation Avoidance Agreement between India and the United Kingdom, art. 13-- De Beers U. K. Ltd. v. Deputy CIT (International Taxation) (Mumbai) . . . 1
Penalty --Concealment of income--Long-term capital gains arising as profit on sale of investments--Assessee showing profit on sale of investments but showing loss in return--Adjustment on account of understated loss cannot be treated as concealment of income--Issue not examined by authorities below--Matter remanded--Income-tax Act, 1961, s. 271(1)(c)-- Sabara Impex Ltd. v. ITO (Mumbai) . . . 68
----Furnishing inaccurate particulars of income--Wrongful write off of sundry balances--No evidence that assessee furnished inaccurate particulars of income--Penalty cannot be levied--Income-tax Act, 1961, s. 271(1)(c)-- Sabara Impex Ltd. v. ITO (Mumbai) . . . 68
Words and phrases --"Rent"--"Work"-- Lotus Valley Education Society v. Asst. CIT (Delhi) . . . 61
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Double Taxation Avoidance Agreement between India and the United Kingdom :
Art. 13 -- Non-resident--Diamond trading--Income received from "sightholders" as marketing contributions and for value added services--Marketing contributions taxable as royalty--Value added services including provision of confidential information based on commercial experience--Is transfer of technical know-how--Taxable as royalty and as fees for technical services--Tax to be at concessional rate if agreement entered into after 1-6-2005-- De Beers U. K. Ltd. v. Deputy CIT (International Taxation) (Mumbai) . . . 1
S. 9(1)(vii), Expln. 2 -- Non-resident--Diamond trading--Income received from "sightholders" as marketing contributions and for value added services--Marketing contributions taxable as royalty--Value added services including provision of confidential information based on commercial experience--Is transfer of technical know-how--Taxable as royalty and as fees for technical services--Tax to be at concessional rate if agreement entered into after 1-6-2005-- De Beers U. K. Ltd. v. Deputy CIT (International Taxation) (Mumbai) . . . 1
S. 36(1)(iii) -- Interest on borrowed capital--Assessee-company acting as holding company for group companies--Advance to group company for placing interest-free security deposit with lessor for flat for providing accommodation to managing director and South Asia business head of group--Advance for business purpose--Interest proportionate to advance not to be disallowed-- Deputy CIT v. Monsanto Holdings P. Ltd. (Mumbai) . . . 90
S. 37 -- Capital or revenue expenditure--Expenditure for development of new product in same line of business--Is revenue expenditure-- Deputy CIT v. Magnetic Meter Systems India Ltd. (Chennai) . . . 43
S. 90(2) -- Non-resident--Diamond trading--Income received from "sightholders" as marketing contributions and for value added services--Marketing contributions taxable as royalty--Value added services including provision of confidential information based on commercial experience--Is transfer of technical know-how--Taxable as royalty and as fees for technical services--Tax to be at concessional rate if agreement entered into after 1-6-2005-- De Beers U. K. Ltd. v. Deputy CIT (International Taxation) (Mumbai) . . . 1
S. 92C -- International transactions--Arm's length price--Associated enterprise compensating assessee at cost plus 18.87 per cent. compared to cost plus seven per cent. in earlier year--Explanation that assessee costs budgeted at time of invoice and billed to associated enterprise and actual costs incurred lower than budgeted costs resulting in higher recovery and higher profitability--Certificate from associated enterprise that excess would not be recovered--Difference between assessee's price and that determined by Transfer Pricing Officer less than five per cent.--No addition called for-- Deputy CIT v. Monsanto Holdings P. Ltd. (Mumbai) . . . 90
---- International transactions--Arm's length price--Transactional net margin method--Uncontrolled transaction whether comparable--Two companies under same holding company and doing similar work--Both to be taken as comparable--That comparable company doing own research in addition to contract research--Not to affect --Adjustments to operating profit margins of two comparables would get neutralised--Difference less than five per cent.--Assessee's price to be accepted-- Deputy CIT v. Monsanto Holdings P. Ltd. (Mumbai) . . . 90
S. 115A(1)(b)(AA) -- Non-resident--Diamond trading--Income received from "sightholders" as marketing contributions and for value added services--Marketing contributions taxable as royalty--Value added services including provision of confidential information based on commercial experience--Is transfer of technical know-how--Taxable as royalty and as fees for technical services--Tax to be at concessional rate if agreement entered into after 1-6-2005-- De Beers U. K. Ltd. v. Deputy CIT (International Taxation) (Mumbai) . . . 1
S. 194C -- Deduction of tax at source--Payment made to carrier for transporting petroleum products and not for hire of tank trucks--Tax to be deducted under section 194C--CBDT Circular No. 681, dated 8-3-1994 and Circular No. 558, dated 28-3-1990 -- ITO v. Indian Oil Corporation (Marketing Division) (Delhi) . . . 79
---- Deduction of tax at source--Payments made by school to bus operators providing pick and drop facility to school students--Not a case of hire of machinery but of service rendered by transport contractor to assessee--Section 194C applicable-- Lotus Valley Education Society v. Asst. CIT (Delhi) . . . 61
---- Deduction of tax at source--Works contract of hire of machinery--Payment made by assessee to transport service provider for hire of vehicles for transportation of its employees--Service contract--Tax to be deducted under section 194C--Circular No. 558, dated 28-3-1990, No. 715, dated 8-8-1995 and No. 713, dated 2-8-1995 -- Asst. CIT v. Accenture Services P. Ltd. (Mumbai) . . . 48
S. 194C, Expln. III(c) -- Deduction of tax at source--Payment for hire of cars on fixed rent owned and maintained by contractor--Section 194C, Explanation III(c) applicable-- Ahmedabad Urban Development Authority v. Asst. CIT (Ahmedabad) . . . 73
S. 194-I -- Deduction of tax at source--Payments made by school to bus operators providing pick and drop facility to school students--Not a case of hire of machinery but of service rendered by transport contractor to assessee--Section 194C applicable-- Lotus Valley Education Society v. Asst. CIT (Delhi) . . . 61
S. 194J -- Deduction of tax at source--Payments made by school to contractors for training students in horse riding--Technical services--Section 194J applicable-- Lotus Valley Education Society v. Asst. CIT (Delhi) . . . 61
S. 195 -- Non-resident--Diamond trading--Income received from "sightholders" as marketing contributions and for value added services--Marketing contributions taxable as royalty--Value added services including provision of confidential information based on commercial experience--Is transfer of technical know-how--Taxable as royalty and as fees for technical services--Tax to be at concessional rate if agreement entered into after 1-6-2005-- De Beers U. K. Ltd. v. Deputy CIT (International Taxation) (Mumbai) . . . 1
S. 209 -- Advance tax--Interest--Shortfall in payment of advance tax--Sum on which tax deductible at source to be reduced for calculation of sum on which interest leviable-- De Beers U. K. Ltd. v. Deputy CIT (International Taxation) (Mumbai) . . . 1
S. 234B -- Advance tax--Interest--Shortfall in payment of advance tax --Sum on which tax deductible at source to be reduced for calculation of sum on which interest leviable-- De Beers U. K. Ltd. v. Deputy CIT (International Taxation) (Mumbai) . . . 1
---- Non-resident--Diamond trading--Income received from "sightholders" as marketing contributions and for value added services--Marketing contributions taxable as royalty--Value added services including provision of confidential information based on commercial experience--Is transfer of technical know-how--Taxable as royalty and as fees for technical services--Tax to be at concessional rate if agreement entered into after 1-6-2005-- De Beers U. K. Ltd. v. Deputy CIT (International Taxation) (Mumbai) . . . 1
S. 271(1)(c) -- Penalty--Concealment of income--Long-term capital gains arising as profit on sale of investments--Assessee showing profit on sale of investments but showing loss in return--Adjustment on account of understated loss cannot be treated as concealment of income--Issue not examined by authorities below--Matter remanded-- Sabara Impex Ltd. v. ITO (Mumbai) . . . 68
---- Penalty--Furnishing inaccurate particulars of income--Wrongful write off of sundry balances--No evidence that assessee furnished inaccurate particulars of income --Penalty cannot be levied-- Sabara Impex Ltd. v. ITO (Mumbai) . . . 68
R. 10B -- International transactions--Arm's length price--Associated enterprise compensating assessee at cost plus 18.87 per cent. compared to cost plus seven per cent. in earlier year--Explanation that assessee costs budgeted at time of invoice and billed to associated enterprise and actual costs incurred lower than budgeted costs resulting in higher recovery and higher profitability--Certificate from associated enterprise that excess would not be recovered--Difference between assessee's price and that determined by Transfer Pricing Officer less than five per cent.--No addition called for-- Deputy CIT v. Monsanto Holdings P. Ltd. (Mumbai) . . . 90
----International transactions--Arm's length price--Transactional net margin method--Uncontrolled transaction whether comparable--Two companies under same holding company and doing similar work--Both to be taken as comparable--That comparable company doing own research in addition to contract research--Not to affect--Adjustments to operating profit margins of two comparables would get neutralised--Difference less than five per cent.--Assessee's price to be accepted-- Deputy CIT v. Monsanto Holdings P. Ltd. (Mumbai) . . . 90
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