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Wednesday, May 30, 2012

Download Finance Act 2012

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Tue, May 29, 2012 at 9:47 AM
Subject: Message from EGroup of SolapurCAs Download Finance Act 2012
To: editor@itatonline.org


 

Dear Subscriber,


Download Finance Act 2012



The Finance Act 2012 as approved by the President on 28.05.2012 is available for download


(Click Here To Read More)


Regards,


Editor,


Section 9(1)(vii) "source of income": Delhi High Court Dissents From Madras HC

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Tue, May 29, 2012 at 9:48 AM
Subject: Message from EGroup of SolapurCAs S. 9(1)(vii) "source of income": Delhi High Court Dissents From Madras HC
To: editor@itatonline.org


 

Dear Subscriber,

 

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


CIT vs. Havells India Ltd (Delhi High Court)

S. 9(1)(vii)(b): Export sales is not a "source of income outside India". Expenditure on fully convertible debentures is deductible

 

The assessee, an Indian company, paid Rs. 14.71 lakhs to a US company for 'KEMA' certification which was necessary to enable it to sell its products in the European markets. The assessee claimed that though the said amount was 'fees for technical services' u/s 9(1)(vii), it was paid "for the purpose of earning income from a source outside India" (i.e. the exports) and so it was not taxable in India u/s 9(1)(vii)(b). The AO & CIT (A) rejected the claim though the Tribunal upheld it. On appeal by the department, HELD reversing the Tribunal:


(Click Here To Read More)


Regards,


Editor,


itatonline.org

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Latest:

CBDT Seeks Interns For Foreign Tax & Tax Research Division


TDS Defaulter is liable only for interest & penalty & not the tax: Allahabad High Court

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Tue, May 29, 2012 at 9:49 AM
Subject: Message from EGroup of SolapurCAs TDS Defaulter is liable only for interest & penalty & not the tax: Allahabad High Court
To: editor@itatonline.org


 

Dear Subscriber,

 

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


Jagran Prakashan Ltd vs. DCIT (TDS) (Allahabad High Court)


S. 194H: TDS Defaulter is liable only for interest & penalty & not the tax

 

The assessee, a publisher of newspapers, gave 10-15% trade discount to advertising agencies as per rules of the Indian Newspaper Society. The AO held that the said discount constituted "commission" and that the assessee ought to have deducted TDS u/s 194H and was liable as assessee-in-default u/s 201. The assessee filed a Writ Petition to challenge the said order. HELD by the High Court:


(Click Here To Read More)


Regards,


Editor,


itatonline.org

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Latest:

CIT vs. Havells India Ltd (Delhi High Court) S. 9(1)(vii)(b): Export sales is not a "source of income outside India". Expenditure on fully convertible debentures is deductible


Section 194A TDS: Discounting Charges Is Not “Interest”: Supreme Court

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Tue, May 29, 2012 at 3:18 PM
Subject: Message from EGroup of SolapurCAs S. 194A TDS: Discounting Charges Is Not "Interest": Supreme Court
To: editor@itatonline.org


 

Dear Subscriber,

 

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


CIT vs. Cargil Global Trading Pvt. Ltd (Supreme Court)

S. 194A TDS: Discounting Charges Is Not "Interest"

 

The assessee paid Rs. 3.97 Crores to an associate concern in Singapore on account of discounted charges for getting the export sale bills discounted. The AO held that that the discounting charges was "interest" u/s 2(28A) and that as there was no TDS, the expenditure had to be disallowed u/s 40(a)(i). This was reversed by the CIT (A) and Tribunal. The High Court (335 ITR 94 (Del) included in file) relied on Circular No.65 dated 2.09.1971, Circular No.674 dated 22.03.1993 & Vijay Ship Breaking 219 CTR 639 (SC) held that as the discounting charges were not in respect of any debt incurred or money borrowed and were merely discount of the sale consideration on sale of goods, it was not "interest" u/s 2(28A) and there was no obligation to deduct TDS thereon. On appeal by the department to the Supreme Court, HELD


(Click Here To Read More)


Regards,


Editor,


itatonline.org

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Latest:

Jagran Prakashan Ltd vs. DCIT (TDS) (Allahabad High Court) S. 194H: TDS Defaulter is liable only for interest & penalty & not the tax



Despite Retro Law In Finance Act 2012, "Royalty" Not Taxable: ITAT Mumbai

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Wed, May 30, 2012 at 9:48 AM
Subject: Message from EGroup of SolapurCAs Despite Retro Law In Finance Act 2012, "Royalty" Not Taxable: ITAT Mumbai
To: editor@itatonline.org


 

Dear Subscriber,

 

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


B4U International Holdings Ltd vs. DCIT (ITAT Mumbai)

Despite Retro Law By Finance Act 2012, "Royalty" Not Taxable as DTAA prevails

 

The assessee, a Mauritius company, made payment to Panamsat, USA, for hire of a "transponder satellite". The AO held that the said hire charges constituted "royalty" and that the assessee ought to have deducted TDS u/s 195 and that as it had not done so, the amount was to be disallowed u/s 40(a)(ia). Before the Tribunal, the department argued that though as per Asia Satellite 332 ITR 340 (Del), the hire charges were not assessable as "royalty", this verdict was no longer good law in view of the amendment to s. 9(1)(vi) by the Finance Act 2012 w.r.e.f. 1.4.1976 to provide that such hire charges shall be assessable as "royalty". HELD by the Tribunal:


(Click Here To Read More)


Regards,


Editor,


itatonline.org

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Latest:

DDIT vs. B4U International Holdings Ltd (ITAT Mumbai) Tax implications of a "Dependent Agent Permanent Establishment" explained



_

Tuesday, May 29, 2012

Letter written by a wife after her husband's death in an accident


---------- Forwarded message ----------
From: Tushar doctor <tushardoctor@gmail.com>
Date: Tue, May 29, 2012 at 6:01 PM
Subject: Letter written by a wife after her husband's death in an accident


Worth noting.  Life is so unpredictable!

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



"Few things I learnt after my husband's death:-

We always believe we will live forever. Bad things always happen to others.

Only when things hit us bang on your head you realise... Life is so
unpredictable....

My husband was an IT guy.all techie.And I am a chartered
accountant.Awesome combination you may think.


Techie guy so everything is on his laptop.his to do list. his e-bill
and his bank statements in his email. . He even maintained a folder
which said IMPWDS.wherein he stored all login id and passwords for all
his online accounts.And even his laptop had a password. Techie guy so
all the passwords were alpha-numeric with a special character not an
easy one to crack.Office policy said passwords needed to be changed
every 30 days.So every time I accessed his laptop I would realise it's
a new password again. I would simply opt for asking him 'What's the
latest password' instead of taking the strain to memorise it.

You may think me being a Chartered Accountant would means everything
is documented and filed properly. Alas many of my chartered accountant
friends would agree that the precision we follow with our office
documents and papers do not flow in to day to day home life. At office
you have be epitome of Reliability / Competent / Diligent etc but. at
home front there is always a tomorrow.

One fine morning my hubby expired in a bike accident on his way home
from office.. He was just 33.His laptop with all his data
crashed.everything on his hard disk wiped off.No folder of IMPWDS to
refer back to.His mobile with all the numbers on it was smashed.But
that was just the beginning. I realised I had lot to learn.

9 years married to one of the best human beings.with no kids.just the
two of us to fall back on..but now I stood all alone and lost.

Being chartered accountant helped in more ways than one but it was not
enough. I needed help.His saving bank accounts, his salary bank
accounts had no nominee.On his insurance his mom was the nominee and
it was almost 2 years back she had expired. but this was just a
start.. I didn't know the password to his email account where all his
e-bill came.I didn't know which expenses he paid by standing
instructions.

His office front too was not easy. His department had changed
recently.I didn't know his reporting boss name to start with.when had
he last claimed his shift allowance.his mobile reimbursement.

The house we bought with all the excitement.on a loan.thought with our
joint salary we could afford the EMI.when the home loans guys
suggested insurance on the loan.we decided the instead of paying the
premium the difference in the EMI on account of the insurance could be
used pay towards prepayment of the loan and get the tenure down.We
never thought what we would do if we have to live on a single
salary.So now there was huge EMI to look into .

I realised I was in for a long haul.

Road accident case. so everywhere I needed a Death certificate, FIR
report, Post Mortem report. For everything there were forms running
into pages.indemnity bonds.notary.surety to stand up for you.No
objections certificates from your co-heirs..

I learnt other than your house, your land . your car, your bike are
also your property... So what if you are the joint owner of the
flat.you don't become the owner just because your hubby is no more. So
what if your hubby expired in the bike accident.and you are the
nominee but if the bike is in a repairable condition .you have to get
the bike transferred in your name to claim the insurance.And that was
again not easy. the bike or car cannot be transferred in your name
without going through a set of legal documents. Getting a Succession
Certificate is another battle all together.

Then came the time you realise now you have to start changing all the
bills, assets in your name.Your gas connection, electricity meter,
your own house, your car, your investments and all sundries. And then
change all the nominations where your own investments are
concerned.And again a start of a new set of paperwork.

To say I was shaken.my whole life had just turned upside down was an
understatement.You realise you don't have time to morn and grieve for
the person with whom you spend the best years of your life. because
you are busy sorting all the paper work.

I realised then how much I took life for granted.I thought being a
chartered accountant I am undergoing so many difficulties.what would
have happened to someone who was house maker who wouldn't understand
this legal hotchpotch.

A sweet friend then told me dear this was not an end.you have no
kids.your assets will be for all who stand to claim.after my hubby's
sudden death.I realised it was time I took life more seriously. I now
needed to make a Will. I would have laughed if a few months back if he
had asked me to make one.But now life had taken a twist.

Lessons learnt this hard way were meant to be shared.After all why
should the people whom we love the most suffer after we are no
more.Sorting some paperwork before we go will at least ease some of
their grief.

1.      Check all your nominations...
It's a usual practice to put a name (i.e in the first place if you
have mentioned it) and royally forget about it. Most of us have named
our parent as a nominee for investments, bank accounts opened before
marriage. We have not changed the same even years after they are no
longer there with us. Even your salary account usually has no
nomination.. Kindly check all your Nominations.
-        Bank Accounts
-        Fixed Deposits, NSC
-        Bank Lockers
-        Demat Accounts
-        Insurance (Life, Bike or Car or Property)
-        Investments
-        PF & Pension Forms

2.      Passwords..
We have passwords for practically everything. Email accounts, Bank
accounts, even for the laptop you use. What happens when your next in
kin cannot access any of these simply because they do not know your
password... Put it down on a paper.

3.      Investments.
Every year for tax purpose we do investments. Do we maintain a excel
sheet about it. If so is it on the same laptop of which the password
you had not shared. Where are those physical investments hard copy.

4.      Will.
Make a Will. I know you will smile even I would.had I not gone through
all what I did.It would have made my life lot easier.a lot less
paperwork.I wouldn't had to provide an indemnity bond, get it
notarised, ask surety to stand up, no objections certificates from
others...

5.      Liabilities.
When you take a loan say for your house or car.Check out on all the
what ifs.what if I am not there tomorrow.what if I loose my job.Will
the EMI still be within my range.If not get an insurance on the
loan.The people left behind will not have to worry on something as
basic as their own house.

My battles have just begun...But let us at least try and make few
changes so that our loved ones would not suffer after we go.We do not
know what will happen in the future.But as the Scout motto goes: "Be
prepared "

__,_._,___
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Monday, May 28, 2012

CBDT Instruction On Grant Of TDS Credit For AY 2011-12

---------- Forwarded message ----------
From: CA. Rahul Bajaj <ca.rahulbajaj@gmail.com>
Date: Sat, May 26, 2012 at 6:02 PM
Subject: NashiCAs CBDT Instruction On Grant Of TDS Credit For AY 2011-12
To: Nasik CAs <nashicas@googlegroups.com>


CBDT Instruction On Grant Of TDS Credit For AY 2011-12

Instruction No. 4/2012 [F. No. 225/34/2011-ITA.II], dated 25-5-2012

 

The Board has decided to withdraw Instruction no. 01/2012 issued on 2nd February, 2012 on the subject above with immediate effect. The following decisions have been taken in this regard:

 

(i) In all returns (ITR-1 to ITR-6), where the difference between the TDS claim and matching TDS amount reported in AS-26 data does not exceed Rs. Five thousands, the TDS claim may be accepted without verification.

 

(ii) Where there is zero TDS matching, TDS credit shall be allowed only after due verification.

 

(iii) Where there are TDS claims with invalid TAN, the TDS credit for such claims is not to be allowed.

 

(iv) In all other cases TDS credit shall be allowed after due verification.


--
warm regards,
CA. Rahul Bajaj

Minimum Wages Act made applicable in CA Offices in Kerala


---------- Forwarded message ----------
From: CA. Rahul Bajaj <ca.rahulbajaj@gmail.com>
Date: Mon, May 28, 2012 at 5:36 PM
Subject: NashiCAs Minimum Wages Act made applicable in CA Offices in Kerala
To: Nasik CAs <nashicas@googlegroups.com>


Dear All,

What is something of this sort happens in Maharashtra?

Below notification FYI -

GOVERNMENT OF KERALA
Labour and Rehabilitation (E) Department
NOTIFICATION
G 0. (Ms.) No. 107/2011/LBR.   Dated, Thiruvananthapuram, 9th August, 2011.

S. R. O. No. 528/2011.—In exercise of the powers conferred by clause (a) of sub-section (1) of section 3 of the Minimum Wages Act, 1948 (Central Act XI of 1948) read with sub-section (2) of section 5 thereof, the Government of Kerala after considering the objections and suggestions received on the draft proposal previously published under Notification No. 10690/E1/2007/LBR dated 13th December, 2010 in the Kerala Gazette Extraordinary No. 2828 dated 14th December, 2010 as required under clause (b) of sub-section (1) of section 5 of the said Act and in consultation with the Minimum Wages Advisory Board constituted under section 7 of the said Act, hereby fix the minimum rates of wages payable to the employees employed in the 'Chartered Accountant Offices' in the State of Kerala as specified in the Schedule hereto annexed and fix the date of publication of this notification in the Gazette as the date from which the rates shall come into force.

SCHEDULE

1. Basic Wages

Sl. No. Category/Work  Monthly Basic Wages
1 Office Manager, Administrative Manager, Audit Manager 7000
2 Senior Accountant, Senior Audit Staff,  Computer Operator 4890
3 Junior Accountant, Junior Audit Staff, Office Assistant 4450
4 Driver 4070
5 Attendar, Peon, Watchman 3990
6 Sweeper, Cleaner 3900
2. Dearness Allowance

In addition to the basic rate of wages, the employees shall be eligible for Dearness Allowance at the rate of 23.40 (Rupees Twenty three and Fourty paise) for every increase of one point above 130 points (New Series 1998-99=:100) of the Consumer Price Index Numbers published by the Department of Economics and Statistics for concerned District Headquarters.

For Idukki and Wayanad District Headquarters, Dearness Allowance shall be paid on, the basis of the Consumer Price Index Number published for Munnar and Meppadi centres respectively.

3. Service Weightage

The employees who have completed not less than five years of continuous service in any establishment or under any employer, as on the date of coming into force of this notification, shall be paid service weightage, at the rate of five per cent of the basic wages shown in the schedule for every completed year of service, adding to their basic wages, which shall not exceed fifteen percentage in total.

4.        Protection for Higher Wages

In case the employees in any post/category are at present gctting higher wages than the minimum wages fixed as per this notification, they shall be entitled to get such higher rates.

5. In the case of any post/category which is not included in the schedule above shall be eligible for the basic wages prescribed for equivalent post/ category.

By order of the Governor,

ANIL, X.,

Secretary to Government.

Explanatory Note

(This does not form part of the notification, but is intended to indicate its general purport.)

After considering the objections and suggestions, received on the preliminary notification issued as No. 10690/E1/2007/LBR dated 13th December, 2010 as provided under clause (b) of sub-section (1) of section 5 of the Minimum Wages Act, 1948 and in consultation with the Minimum Wages Advisory Board, Government have decided to fix the minimum rates of wages payable to the employees employed in the 'Chartered Accountant Offices' in the State of Kerala.

This notification is intended to achieve the above object.





Stamp Papers – No expiry period i.e. valid even after six month of Purchase

---------- Forwarded message ----------
From: CA RUNGTA PD <pdrungta@gmail.com>
Date: Sun, May 27, 2012 at 12:54 PM
Subject: NashiCAs Stamp Papers – No expiry period i.e. valid even after six month of Purchase
To: nashicas@googlegroups.com


Stamp Papers – No expiry period i.e. valid even after six month of Purchase

According to  Supreme Court Judgement dated 19-02-2008 in the case of  Thiruvengada Pillai vs. Navaneethammal and Anr., the stamp papers do not have any expiry period.

 

          The Indian Stamp Act, 1899, nowhere prescribes any expiry date for use of a stamp paper. Section 54 merely provides that a person possessing a stamp paper for which he has no immediate use (which is not spoiled or rendered unfit or useless), can seek refund of the value thereof by surrendering such stamp paper to the Collector provided it was purchased within the period of six months next preceding the date on which it was so surrendered. The stipulation of the period of six months prescribed in Section 54 is only for the purpose of seeking refund of the value of the unused stamp paper, and not for use of the stamp paper. Section ! 54 does not require the person who has purchased a stamp paper, to use it within six months. Therefore, there is no impediment for a stamp paper purchased more than six months prior to the proposed date of execution, being used for a document.

 

     Best Regards, 
CA Pramod Dayal Rungta
M.Com.,LL.B.,AICWA.,DISA(ICAI).,FCA
Treasurer EIRC ICAI (2012-13)

P.D.Rungta & Co. 
Chartered Accountants 

Board : +91 33 3028 2500 / 1
Direct Line : +91 33 3028 2502/3                                       
Cell : +91 98310 07253 
email:  
pdrungta@gmail.com

Head Office:
21, Hement Basu Sarani, 3rd Floor , Room .No.317 
Kolkata-700 001,West Bengal, India

Branches :                                                  
Bhagalpur | Khatima | Godda

Homepage : 
http://www.pdrungta.co.in/

"Save Paper! Save Trees! Before printing, Think about the environment"

A Candle loses nothing by lighting another candle" --- eServe 


DISCLAIMER NOTICE: The information in this email and attachments is confidential, proprietary to sender and is intended solely for the use of the individual to whom it is addressed. It may contain privileged or confidential information and should not be circulated or used for any purpose other than for what it is intended. If you have received this message in error, please notify the originator immediately. If you are not the intended recipient, you are notified that you are strictly prohibited from using, copying, saving, altering or disclosing the contents of this message. 

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Saturday, May 26, 2012

CBDT Instruction On Grant Of TDS Credit For AY 2011-12

---------- Forwarded message ----------
From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Sat, May 26, 2012 at 5:03 PM
Subject: Message from EGroup of SolapurCAs CBDT Instruction On Grant Of TDS Credit For AY 2011-12
To: editor@itatonline.org


 

Dear Subscriber,


CBDT Instruction On Grant Of TDS Credit For AY 2011-12



The CBDT has issued an important Instruction dated 25.05.2012 on the processing of returns & grant of TDS credit for AY 2011-12.


(Click Here To Read More)


Regards,


Editor,


itatonline.org

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Latest:

Dear UK Govt, Heal Thyself Before Preaching To India About Vodafone



ITR VOL 343 PART 4

 

INCOME TAX REPORTS (ITR)

Volume 343 : Part 4 (Issue dated 21-5-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Business expenditure --Foreign travel expenditure--Expenses for personal use--To be disallowed--Income-tax Act, 1961, s. 37-- Mira Kulkarni v. Asst. CIT  (Delhi) . . . 358

----Interest on borrowed capital--Depreciation--Exemption--Expenses allocated between exempt and non- exempt business--Tribunal justified in remanding matter to Assessing Officer to allocate depreciation and interest in the ratio of turnover between section 10A and non-section 10A activities--Income-tax Act, 1961, ss. 32, 36, 37-- CIT v. Sonata Software Ltd. (Bom) . . . 397

----Repair, maintenance, salary and local conveyance expenses--Expenses incurred not for assessee's business--Disallowance proper--Income-tax Act, 1961, s. 37-- Mira Kulkarni v. Asst. CIT (Delhi) . . . 358

Company --Dividend--Deemed dividend--Advance to shareholder--Advance by sister concern to assessee-company--Assessee not a shareholder in sister concern--Director of assessee-company holding majority of shares in both companies--Not relevant--Amount not assessable as deemed dividend--Income-tax Act, 1961, s. 2(22)(e)-- CIT v. MCC Marketing Pvt. Ltd. (Delhi) . . . 350

Deduction of tax at source --Non-resident--Income deemed to accrue or arise in India--Business connection--Mere entry in books of account of Indian payer does not mean that non-resident received payment in India--Failure to establish business connection--No income accrued in India--Tax need not be deducted at source--Income-tax Act, 1961, ss. 9, 40(a)(i)--Central Board of Direct Taxes Circular No. 23, dated 23-7-1969 --Circular No. 786, dated 7-2-2000-- CIT v. EON Technology P. Ltd.  (Delhi) . . . 366

Exemption --Export--Condition precedent for exemption under section 10A--Meaning of reconstruction of business--Sale of business not a reconstruction--Finding that there was no splitting up of business--Unit commencing production in October, 1994--Assessee entitled to exemption under section 10A--Income-tax Act, 1961, s. 10A-- CIT v. Sonata Software Ltd . (Bom) . . . 397

Industrial undertaking --Special deduction under section 80-IA--Condition precedent--Commencement of commercial production before 31-3-2000--Assessee commencing commercial production before specified date--Subsequent installation of new plant and machinery--Finding that there was no new industrial undertaking--Assessee entitled to special deduction under section 80-IA --Income-tax Act, 1961, s. 80-IA-- CIT v. Hindustan Pencils Ltd. (Bom) . . . 379

Penalty --Acceptance of deposit in cash exceeding prescribed limit--Share application money--Not "deposit" within meaning of section 269SS--Penalty cannot be imposed under section 271D--Income-tax Act, 1961, ss. 269SS, 271D-- CIT v. I. P. India P. Ltd. (Delhi) . . . 353

Precedent --Effect of decision of Supreme Court in CIT v. Kelvinator of India [2010] 320 ITR 561-- Sanand Properties P. Ltd. v. Joint CIT (Bom) . . . 388

Reassessment --Notice--Condition precedent--Tangible material to show escape of income from assessment--Assessee disclosing income from association of persons--Assessment after enquiry--Assessment of association of persons not reopened--Reassessment on the ground that share of income of assessee from association of persons escaped assessment--Notice not valid--Income-tax Act, 1961, s. 147-- Sanand Properties P. Ltd. v. Joint CIT (Bom) . . . 388

Revision --Commissioner--Amortisation of expenditure on voluntary retirement scheme--Commissioner disallowing on ground note in audit report created doubt whether expenditure actually incurred--Assessee clarifying that note written by auditor as a precautionary measure--Order under section 263 rightly quashed--Income-tax Act, 1961, ss. 35DDA, 263-- CIT v. Hero Auto Ltd . (Delhi) . . . 342

----Commissioner--Business expenditure--Provision for warranty claims--Commissioner failing to observe how and in what manner enquiry lacking and what default committed by Assessing Officer--Similar claim allowed in earlier years upheld by High Court--Order under section 263 rightly set aside--Income-tax Act, 1961, s. 263-- CIT v. Hero Auto Ltd. (Delhi) . . . 342

----Commissioner--No finding that order erroneous and prejudicial to interests of Revenue--Revision not permitted --Income-tax Act, 1961, s. 263-- ITO v. DG Housing Projects Ltd. (Delhi) . . . 329

AUTHORITY FOR ADVANCE RULINGS

Non-resident --Procurement of cellular telecommunication equipment, software and documentation from company in Sweden--Loans taken from Swedish banks guaranteed by Swedish Export Credits Guarantee Board--Banks transferring rights under agreement to Swedish company--Interest payments to Swedish company not taxable in India--Income-tax Act, 1961, s. 195--Double Taxation Avoidance Convention between India and Sweden, art. 11(3)-- Idea Cellular Limited, In re . . . 381

----Supply of rice par boiling and dryer plants by manufacturer in India to non-resident--Orders brought by non-resident agents--Commission payable to non-resident agents accrues in India--Taxable in India and tax deductible at source on payments to them--Income-tax Act, 1961, ss. 5(2)(b), 9(1)(i), 195-- SKF Boilers and Driers Pvt. Ltd. , In re . . . 385

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance Convention between India and Sweden :

Art. 11(3) --Non-resident--Procurement of cellular telecommunication equipment, software and documentation from company in Sweden--Loans taken from Swedish banks guaranteed by Swedish Export Credits Guarantee Board--Banks transferring rights under agreement to Swedish company--Interest payments to Swedish company not taxable in India-- Idea Cellular Limited, In re (AAR) . . . 381

Income-tax Act, 1961 :

S. 2(22)(e) --Company--Dividend--Deemed dividend--Advance to shareholder--Advance by sister concern to assessee-company--Assessee not a shareholder in sister concern--Director of assessee-company holding majority of shares in both companies--Not relevant--Amount not assessable as deemed dividend-- CIT v. MCC Marketing Pvt. Ltd. (Delhi) . . . 350

S. 5(2)(b) --Non-resident--Supply of rice par boiling and dryer plants by manufacturer in India to non-resident--Orders brought by non-resident agents--Commission payable to non-resident agents accrues in India--Taxable in India and tax deductible at source on payments to them-- SKF Boilers and Driers Pvt. Ltd. , In re  (AAR) . . . 385

S. 9 --Deduction of tax at source--Non-resident--Income deemed to accrue or arise in India--Business connection--Mere entry in books of account of Indian payer does not mean that non-resident received payment in India--Failure to establish business connection--No income accrued in India--Tax need not be deducted at source--Central Board of Direct Taxes Circular No. 23, dated 23-7-1969--Circular No. 786, dated 7-2-2000 -- CIT v. EON Technology P. Ltd. (Delhi) . . . 366

S. 9(1)(i) --Non-resident--Supply of rice par boiling and dryer plants by manufacturer in India to non-resident--Orders brought by non-resident agents--Commission payable to non-resident agents accrues in India--Taxable in India and tax deductible at source on payments to them-- SKF Boilers and Driers Pvt. Ltd. , In re (AAR) . . . 385

S. 10A --Exemption--Export--Condition precedent for exemption under section 10A--Meaning of reconstruction of business--Sale of business not a reconstruction--Finding that there was no splitting up of business--Unit commencing production in October, 1994--Assessee entitled to exemption under section 10A-- CIT v. Sonata Software Ltd . (Bom) . . . 397

S. 32 --Business expenditure--Interest on borrowed capital--Depreciation--Exemption--Expenses allocated between exempt and non- exempt business--Tribunal justified in remanding matter to Assessing Officer to allocate depreciation and interest in the ratio of turnover between section 10A and non-section 10A activities-- CIT v. Sonata Software Ltd. (Bom) . . . 397

S. 35DDA --Revision--Commissioner--Amortisation of expenditure on voluntary retirement scheme--Commissioner disallowing on ground note in audit report created doubt whether expenditure actually incurred--Assessee clarifying that note written by auditor as a precautionary measure--Order under section 263 rightly quashed-- CIT v. Hero Auto Ltd . (Delhi) . . . 342

S. 36 --Business expenditure--Interest on borrowed capital--Depreciation--Exemption--Expenses allocated between exempt and non- exempt business--Tribunal justified in remanding matter to Assessing Officer to allocate depreciation and interest in the ratio of turnover between section 10A and non-section 10A activities-- CIT v. Sonata Software Ltd. (Bom) . . . 397

S. 37 --Business expenditure--Foreign travel expenditure--Expenses for personal use--To be disallowed-- Mira Kulkarni v. Asst. CIT (Delhi) . . . 358

----Business expenditure--Interest on borrowed capital--Depreciation--Exemption--Expenses allocated between exempt and non- exempt business--Tribunal justified in remanding matter to Assessing Officer to allocate depreciation and interest in the ratio of turnover between section 10A and non-section 10A activities-- CIT v. Sonata Software Ltd. (Bom) . . . 397

----Business expenditure--Repair, maintenance, salary and local conveyance expenses--Expenses incurred not for assessee's business--Disallowance proper-- Mira Kulkarni v. Asst. CIT (Delhi) . . . 358

S. 40(a)(i) --Deduction of tax at source--Non-resident--Income deemed to accrue or arise in India--Business connection--Mere entry in books of account of Indian payer does not mean that non-resident received payment in India--Failure to establish business connection--No income accrued in India--Tax need not be deducted at source--Central Board of Direct Taxes Circular No. 23, dated 23-7-1969--Circular No. 786, dated 7-2-2000-- CIT v. EON Technology P. Ltd. (Delhi) . . . 366

S. 80-IA --Industrial undertaking--Special deduction under section 80-IA--Condition precedent--Commencement of commercial production before 31-3-2000--Assessee commencing commercial production before specified date--Subsequent installation of new plant and machinery--Finding that there was no new industrial undertaking--Assessee entitled to special deduction under section 80-IA-- CIT v. Hindustan Pencils Ltd. (Bom) . . . 379

S. 147 --Reassessment--Notice--Condition precedent--Tangible material to show escape of income from assessment--Assessee disclosing income from association of persons--Assessment after enquiry--Assessment of association of persons not reopened--Reassessment on the ground that share of income of assessee from association of persons escaped assessment--Notice not valid-- Sanand Properties P. Ltd. v. Joint CIT  (Bom) . . . 388

S. 195 --Non-resident--Procurement of cellular telecommunication equipment, software and documentation from company in Sweden--Loans taken from Swedish banks guaranteed by Swedish Export Credits Guarantee Board--Banks transferring rights under agreement to Swedish company--Interest payments to Swedish company not taxable in India-- Idea Cellular Limited, In re (AAR) . . . 381

----Non-resident--Supply of rice par boiling and dryer plants by manufacturer in India to non-resident--Orders brought by non-resident agents--Commission payable to non-resident agents accrues in India--Taxable in India and tax deductible at source on payments to them-- SKF Boilers and Driers Pvt. Ltd. , In re (AAR) . . . 385

S. 263 --Revision--Commissioner--Amortisation of expenditure on voluntary retirement scheme--Commissioner disallowing on ground note in audit report created doubt whether expenditure actually incurred--Assessee clarifying that note written by auditor as a precautionary measure--Order under section 263 rightly quashed-- CIT v. Hero Auto Ltd . (Delhi) . . . 342

----Revision--Commissioner--Business expenditure--Provision for warranty claims --Commissioner failing to observe how and in what manner enquiry lacking and what default committed by Assessing Officer--Similar claim allowed in earlier years upheld by High Court--Order under section 263 rightly set aside-- CIT v. Hero Auto Ltd.  (Delhi) . . . 342

----Revision--Commissioner--No finding that order erroneous and prejudicial to interests of Revenue--Revision not permitted-- ITO v. DG Housing Projects Ltd.  (Delhi) . . . 329

S. 269SS --Penalty--Acceptance of deposit in cash exceeding prescribed limit--Share application money--Not "deposit" within meaning of section 269SS--Penalty cannot be imposed under section 271D-- CIT v. I. P. India P. Ltd. (Delhi) . . . 353

S. 271D --Penalty--Acceptance of deposit in cash exceeding prescribed limit--Share application money--Not "deposit" within meaning of section 269SS--Penalty cannot be imposed under section 271D-- CIT v. I. P. India P. Ltd. (Delhi) . . . 353

 



ITR VOL 343 PART 5 AND ITR (TRIB) VOL 16 PART 1



 

INCOME TAX REPORTS (ITR)

Volume 343 : Part 5 (Issue dated 28-5-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Business income --Remission or cessation of trading liability--Scope of section 41--Liability to creditors outstanding for more than four years--Liability shown in accounts of assessee-company--Amount not assessable as income under section 41(1)--Income-tax Act, 1961, s. 41(1)-- CIT v. Shri Vardhman Overseas Ltd. (Delhi) . . . 408

Industrial park --Special deduction under section 80-IA--Scheme formulated under section 80-IA--Scheme cannot override provisions of the section--Requirement in section 80-IA that industrial park must be developed before 31st March, 2006--No requirement that industrial park should be operational before 31st March, 2006--Refusal of approval of industrial park because it was not operational on 31st March, 2006--Not valid--Income-tax Act, 1961, s. 80-IA-- Silver Land Developers Pvt. Ltd. v. Empowered Committee (Bom) . . . 439

Interpretation of taxing statutes --Legal terms-- CIT v. Shri Vardhman Overseas Ltd . (Delhi) . . . 408

Investment allowance --Scope of section 32A--Investment allowance can be claimed in respect of machinery and plant used in job work--Income-tax Act, 1961, s. 32A-- CIT v. Firma Hi-Tech (AP) . . . 507

Non-resident --Swiss company supplying hardware and software as well as installing and commissioning cellular services--Agreements concluded in foreign country--Goods manufactured outside India and sold outside India--No business connection in India--Supply of software integral part of sale agreement--Payment not a royalty--No income accrued or arose in India--Income-tax Act, 1961, s. 9--Double Taxation Avoidance Agreement between India and Sweden, art. 13-- Director of Income-tax v. Ericsson A. B. (Delhi) . . . 470

Penalty --Concealment of income--Claim for depreciation based on transaction of sale and simultaneous lease of assets--Finding that assessee had been cheated and there was no sale--No concealment of income--Penalty could not be imposed--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Sangeeta Leasing (Delhi) . . . 428

----Concealment of income--Disallowances of expenditure on foreign travel and provision for warranty--Deleted by High Court--Penalty could not be imposed--Disallowance of marketing expenditure and additions to closing stock--Matter before Assessing Officer on remand in quantum proceedings--Penalty infructuous--Disallowance of part of provision for obsolescence--Finding by Tribunal that disallowance made on ad hoc basis--No concealment of income--Penalty could not be imposed--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. Nokia India Pvt. Ltd . (Delhi) . . . 434

Precedent --Effect of decision of Supreme Court in Lalji Haridas v. ITO [1961] 43 ITR 387-- CIT v. Mahindra Finlease P. Ltd . (Delhi) . . . 464

Search and seizure --Block assessment--Protective assessment--Assessing Officer has power to make protective assessment--Income-tax Act, 1961, ss. 158BC, 158BD-- CIT v. Mahindra Finlease P. Ltd. (Delhi) . . . 464

AUTHORITY FOR ADVANCE RULINGS

Non-resident --Indian company closely held by group holding companies in U. S. A., Singapore and Mauritius--Scheme for buy-back of shares by Indian company--Holding company in Mauritius alone accepting offer to buy-back shares--Capital gains claimed not chargeable in India under Double Taxation Avoidance Agreement with Mauritius--No dividend distributed by Indian company since introduction of dividend distribution tax--Considerable profits allowed to accumulate over years--Scheme for buy-back accepted only by Mauritius holding company--Device to avoid tax in India--Profits arising to be treated as deemed dividend and taxable in India--Indian company to deduct tax at source on sale proceeds--Income-tax Act, 1961, ss. 2(22), 46A, 115-O, 195, 245R(2)--Double Taxation Avoidance Agreement between India and Mauritius, arts. 10(2), (4), 13(4)-- A , In re . . . 455

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance Agreement between India and Mauritius :

Arts. 10(2), (4), 13(4) --Non-resident--Indian company closely held by group holding companies in U. S. A., Singapore and Mauritius--Scheme for buy- back of shares by Indian company--Holding company in Mauritius alone accepting offer to buy-back shares--Capital gains claimed not chargeable in India under Double Taxation Avoidance Agreement with Mauritius--No dividend distributed by Indian company since introduction of dividend distribution tax--Considerable profits allowed to accumulate over years--Scheme for buy-back accepted only by Mauritius holding company--Device to avoid tax in India--Profits arising to be treated as deemed dividend and taxable in India--Indian company to deduct tax at source on sale proceeds-- A , In re (AAR) . . . 455

Double Taxation Avoidance Agreement between India and Sweden :

Art. 13 --Non-resident--Swiss company supplying hardware and software as well as installing and commissioning cellular services--Agreements concluded in foreign country--Goods manufactured outside India and sold outside India--No business connection in India--Supply of software integral part of sale agreement--Payment not a royalty--No income accrued or arose in India-- Director of Income-tax v. Ericsson A. B.  (Delhi) . . . 470

Income-tax Act, 1961 :

S. 2(22) --Non-resident--Indian company closely held by group holding companies in U. S. A., Singapore and Mauritius--Scheme for buy- back of shares by Indian company--Holding company in Mauritius alone accepting offer to buy-back shares--Capital gains claimed not chargeable in India under Double Taxation Avoidance Agreement with Mauritius--No dividend distributed by Indian company since introduction of dividend distribution tax--Considerable profits allowed to accumulate over years--Scheme for buy-back accepted only by Mauritius holding company--Device to avoid tax in India--Profits arising to be treated as deemed dividend and taxable in India--Indian company to deduct tax at source on sale proceeds-- A , In re (AAR) . . . 455

S. 9 --Non-resident--Swiss company supplying hardware and software as well as installing and commissioning cellular services--Agreements concluded in foreign country--Goods manufactured outside India and sold outside India--No business connection in India--Supply of software integral part of sale agreement--Payment not a royalty--No income accrued or arose in India-- Director of Income-tax v. Ericsson A. B.  (Delhi) . . . 470

S. 32A --Investment allowance--Scope of section 32A--Investment allowance can be claimed in respect of machinery and plant used in job work-- CIT v. Firma Hi-Tech  (AP) . . . 507

S. 41(1) --Business income--Remission or cessation of trading liability--Scope of section 41--Liability to creditors outstanding for more than four years--Liability shown in accounts of assessee-company--Amount not assessable as income under section 41(1)-- CIT v. Shri Vardhman Overseas Ltd. (Delhi) . . . 408

S. 46A --Non-resident--Indian company closely held by group holding companies in U. S. A., Singapore and Mauritius--Scheme for buy- back of shares by Indian company--Holding company in Mauritius alone accepting offer to buy-back shares--Capital gains claimed not chargeable in India under Double Taxation Avoidance Agreement with Mauritius--No dividend distributed by Indian company since introduction of dividend distribution tax--Considerable profits allowed to accumulate over years--Scheme for buy-back accepted only by Mauritius holding company--Device to avoid tax in India--Profits arising to be treated as deemed dividend and taxable in India--Indian company to deduct tax at source on sale proceeds-- A , In re (AAR) . . . 455

S. 80-IA --Industrial park--Special deduction under section 80-IA--Scheme formulated under section 80-IA--Scheme cannot override provisions of the section--Requirement in section 80-IA that industrial park must be developed before 31st March, 2006--No requirement that industrial park should be operational before 31st March, 2006--Refusal of approval of industrial park because it was not operational on 31st March, 2006--Not valid-- Silver Land Developers Pvt. Ltd. v. Empowered Committee  (Bom) . . . 439

S. 115-O --Non-resident--Indian company closely held by group holding companies in U. S. A., Singapore and Mauritius--Scheme for buy- back of shares by Indian company--Holding company in Mauritius alone accepting offer to buy-back shares--Capital gains claimed not chargeable in India under Double Taxation Avoidance Agreement with Mauritius--No dividend distributed by Indian company since introduction of dividend distribution tax--Considerable profits allowed to accumulate over years--Scheme for buy-back accepted only by Mauritius holding company--Device to avoid tax in India--Profits arising to be treated as deemed dividend and taxable in India--Indian company to deduct tax at source on sale proceeds-- A , In re (AAR) . . . 455

S. 158BC --Search and seizure--Block assessment--Protective assessment--Assessing Officer has power to make protective assessment-- CIT v. Mahindra Finlease P. Ltd. (Delhi) . . . 464

S. 158BD --Search and seizure--Block assessment--Protective assessment--Assessing Officer has power to make protective assessment-- CIT v. Mahindra Finlease P. Ltd. (Delhi) . . . 464

S. 195 --Non-resident--Indian company closely held by group holding companies in U. S. A., Singapore and Mauritius--Scheme for buy- back of shares by Indian company--Holding company in Mauritius alone accepting offer to buy-back shares--Capital gains claimed not chargeable in India under Double Taxation Avoidance Agreement with Mauritius--No dividend distributed by Indian company since introduction of dividend distribution tax--Considerable profits allowed to accumulate over years--Scheme for buy-back accepted only by Mauritius holding company--Device to avoid tax in India--Profits arising to be treated as deemed dividend and taxable in India--Indian company to deduct tax at source on sale proceeds-- A , In re (AAR) . . . 455

S. 245R(2) --Non-resident--Indian company closely held by group holding companies in U. S. A., Singapore and Mauritius--Scheme for buy- back of shares by Indian company--Holding company in Mauritius alone accepting offer to buy-back shares--Capital gains claimed not chargeable in India under Double Taxation Avoidance Agreement with Mauritius--No dividend distributed by Indian company since introduction of dividend distribution tax--Considerable profits allowed to accumulate over years--Scheme for buy-back accepted only by Mauritius holding company--Device to avoid tax in India--Profits arising to be treated as deemed dividend and taxable in India--Indian company to deduct tax at source on sale proceeds-- A , In re (AAR) . . . 455

S. 271(1)(c) --Penalty--Concealment of income--Claim for depreciation based on transaction of sale and simultaneous lease of assets--Finding that assessee had been cheated and there was no sale--No concealment of income--Penalty could not be imposed-- CIT v. Sangeeta Leasing (Delhi) . . . 428

----Penalty--Concealment of income--Disallowances of expenditure on foreign travel and provision for warranty--Deleted by High Court--Penalty could not be imposed--Disallowance of marketing expenditure and additions to closing stock--Matter before Assessing Officer on remand in quantum proceedings--Penalty infructuous--Disallowance of part of provision for obsolescence--Finding by Tribunal that disallowance made on ad hoc basis--No concealment of income--Penalty could not be imposed-- CIT v. Nokia India Pvt. Ltd . (Delhi) . . . 434

 

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))

Volume 16 : Part 1 (Issue dated : 28-05-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Assessment --Revised computation of income--Assessing Officer passing order based on original return--Direction to consider revised computation of income after opportunity to assessee of being heard--Matter remanded--Income-tax Act, 1961-- Rachana S. Talreja v. Deputy CIT (Mumbai) . . . 53

Business expenditure --Disallowance of sums on which tax deductible at source--Applies only to sums "payable" as on date of balance-sheet, i.e., March 31 of year in question--Not to sums already paid during year without deduction of tax at source--Income-tax Act, 1961, s. 40(a)(ia)-- Merilyn Shipping and Transports v. Addl. CIT [SB] (Visakhapatnam) . . . 1

----Disallowance--Cannot exceed expenditure actually claimed by assessee--Disallowance unjustified--Income-tax Act, 1961, s. 14A-- Gillette Group India P. Ltd. v. Asst. CIT (Delhi) . . . 57

----Disallowance--Payments in cash exceeding prescribed limit--Payments by distributor to service provider--Assessee not covered under rule 6DD--Transaction between principal and agent--Does not attract provision of section 40A(3)--Income-tax Act, 1961, s. 40A(3)--Income-tax Rules, 1962, r. 6DD-- Koottummal Groups v. ITO (Cochin) . . . 66

Capital gains --Computation of capital gains--Adoption of stamp duty value under section 50C--Sale of property by owner and simultaneous surrender of tenancy rights by assessee--Section 50C not applicable in case of transfer of tenancy--Income-tax Act, 1961, ss. 45, 50C-- Deputy CIT v. Tejinder Singh (Kolkata) . . . 45

----Exemption--Condition precedent--Investment of sale consideration in specified securities within six months of sale--Part of sale consideration received on transfer of possession and balance subsequently--Investment in specified securities within six months of receipt of amounts--Sufficient for getting benefit of section 54EC--Fact that investment was beyond six months of deemed sale--Not relevant--Income-tax Act, 1961, ss. 45, 54EC-- Chanchal Kumar Sircar v. ITO (Kolkata) . . . 91

Double taxation avoidance --Provisions of domestic law applicable if more advantageous--Income-tax Act, 1961, s. 90(2)-- Sumitomo Mitsui Banking Corporation v. Deputy Director of Income-tax [SB] (Mumbai) . . . 116

Export --Special deduction--Telecommunication charges and implementation expenses--To be excluded from export turnover and total turnover--Income-tax Act, 1961, s. 10A-- Four Soft Ltd. v. Deputy CIT (Hyderabad) . . . 73

Fringe benefits --Gift--Meaning of--Presents to stocktists according to volume of sales--Not a gift but expenditure on sales promotion--Income-tax Act, 1961, s. 115WB--CBDT Circular No. 8, dated August 29, 2005-- Birla Corporation Ltd. v. Deputy CIT (Kolkata) . . . 60

International transactions --Transfer pricing--Computation of arm's length price--Exchange rate fluctuation--Assessee's margin falling within arm's length range--No adjustment required to be made on margin declared by assessee--Income-tax Act, 1961, s. 92CA-- Four Soft Ltd. v. Deputy CIT (Hyderabad) . . . 73

----Transfer pricing--Computation of net margin--Only cost related to transaction with associated enterprises to be considered--Assessing Officer to verify veracity of segmental financials prepared by assessee--Income-tax Act, 1961, s. 92CA-- Four Soft Ltd. v. Deputy CIT (Hyderabad) . . . 73

----Transfer pricing--Corporate guarantee provided by assessee to subsidiary does not fall within international transaction--No transfer pricing adjustment required--Income-tax Act, 1961, ss. 92B, 92C-- Four Soft Ltd. v. Deputy CIT (Hyderabad) . . . 73

----Transfer pricing--International loan--Comparables to be LIBOR based--Matter remanded--Income-tax Act, 1961-- Four Soft Ltd. v. Deputy CIT (Hyderabad) . . . 73

Interpretation of taxing statutes --Intention of Legislature--Words found in Finance Bill dropped in final enactment--Effect-- Merilyn Shipping and Transports v. Addl. CIT [SB] (Visakhapatnam) . . . 1

----Literal meaning-- Merilyn Shipping and Transports v. Addl. CIT [SB] (Visakhapatnam) . . . 1

Non-resident --Royalty--U. S. company selling software to its distributor in India and distributor reselling it to customers--Income received by non-resident was not royalty but business profits--U. S. company not having permanent establishment in India--Income not taxable in India--Income-tax Act, 1961, s. 9--Double Taxation Avoidance Agreement between the U. S. A. and India, art. 12-- Novel Inc. v. Deputy Director of Income-tax (International Taxation) (Mumbai) . . . 101

----Taxability in India--Foreign bank--Payments of interest by branch in India on advances by head office--Branch office not a separate entity--Payment is to itself and not taxable--No tax deductible at source--Payments deductible in computation of profits of permanent establishment in terms of Double Taxation Avoidance Agreement--Income-tax Act, 1961, ss. 40(a)(i), 9(1)(v)(c), 90(2), 195--Double Taxation Avoidance Agreement between India and Japan, arts. 7, 11, 23-- Sumitomo Mitsui Banking Corporation v. Deputy Director of Income-tax [SB] (Mumbai) . . . 116

Precedent --Judicial discipline-- Sumitomo Mitsui Banking Corporation v. Deputy Director of Income-tax [SB] (Mumbai) . . . 116

Words and phrases --"Payable"-- Merilyn Shipping and Transports v. Addl. CIT [SB] (Visakhapatnam) . . . 1

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance Agreement between India and Japan :

Art. 7 --Non-resident--Taxability in India--Foreign bank--Payments of interest by branch in India on advances by head office--Branch office not a separate entity--Payment is to itself and not taxable--No tax deductible at source--Payments deductible in computation of profits of permanent establishment in terms of Double Taxation Avoidance Agreement-- Sumitomo Mitsui Banking Corporation v. Deputy Director of Income-tax [SB] (Mumbai) . . . 116

Art. 11 --Non-resident--Taxability in India--Foreign bank--Payments of interest by branch in India on advances by head office--Branch office not a separate entity--Payment is to itself and not taxable--No tax deductible at source--Payments deductible in computation of profits of permanent establishment in terms of Double Taxation Avoidance Agreement-- Sumitomo Mitsui Banking Corporation v. Deputy Director of Income-tax [SB] (Mumbai) . . . 116

Art. 23 --Non-resident--Taxability in India--Foreign bank--Payments of interest by branch in India on advances by head office--Branch office not a separate entity--Payment is to itself and not taxable--No tax deductible at source--Payments deductible in computation of profits of permanent establishment in terms of Double Taxation Avoidance Agreement-- Sumitomo Mitsui Banking Corporation v. Deputy Director of Income-tax [SB] (Mumbai) . . . 116

Double Taxation Avoidance Agreement between the U. S. A. and India :

Art. 12 --Non-resident--Royalty--U. S. company selling software to its distributor in India and distributor reselling it to customers--Income received by non-resident was not royalty but business profits--U. S. company not having permanent establishment in India--Income not taxable in India-- Novel Inc. v. Deputy Director of Income-tax (International Taxation) (Mumbai) . . . 101

Income-tax Act, 1961 :

S. 9 --Non-resident--Royalty--U. S. company selling software to its distributor in India and distributor reselling it to customers--Income received by non-resident was not royalty but business profits--U. S. company not having permanent establishment in India--Income not taxable in India-- Novel Inc. v. Deputy Director of Income-tax (International Taxation) (Mumbai) . . . 101

S. 9(1)(v)(c) --Non-resident--Taxability in India--Foreign bank--Payments of interest by branch in India on advances by head office--Branch office not a separate entity--Payment is to itself and not taxable--No tax deductible at source--Payments deductible in computation of profits of permanent establishment in terms of Double Taxation Avoidance Agreement-- Sumitomo Mitsui Banking Corporation v. Deputy Director of Income-tax [SB] (Mumbai) . . . 116

S. 10A --Export--Special deduction--Telecommunication charges and implementation expenses--To be excluded from export turnover and total turnover-- Four Soft Ltd. v. Deputy CIT (Hyderabad) . . . 73

S. 14A --Business expenditure--Disallowance--Cannot exceed expenditure actually claimed by assessee--Disallowance unjustified-- Gillette Group India P. Ltd. v. Asst. CIT (Delhi) . . . 57

S. 40(a)(i) --Non-resident--Taxability in India--Foreign bank--Payments of interest by branch in India on advances by head office--Branch office not a separate entity--Payment is to itself and not taxable--No tax deductible at source--Payments deductible in computation of profits of permanent establishment in terms of Double Taxation Avoidance Agreement-- Sumitomo Mitsui Banking Corporation v. Deputy Director of Income-tax [SB] (Mumbai) . . . 116

S. 40(a)(ia) --Business expenditure--Disallowance of sums on which tax deductible at source--Applies only to sums "payable" as on date of balance-sheet, i.e., March 31 of year in question--Not to sums already paid during year without deduction of tax at source-- Merilyn Shipping and Transports v. Addl. CIT [SB] (Visakhapatnam) . . . 1

S. 40A(3) --Business expenditure--Disallowance--Payments in cash exceeding prescribed limit--Payments by distributor to service provider--Assessee not covered under rule 6DD--Transaction between principal and agent--Does not attract provision of section 40A(3)-- Koottummal Groups v. ITO (Cochin) . . . 66

S. 45 --Capital gains--Computation of capital gains--Adoption of stamp duty value under section 50C--Sale of property by owner and simultaneous surrender of tenancy rights by assessee--Section 50C not applicable in case of transfer of tenancy-- Deputy CIT v. Tejinder Singh (Kolkata) . . . 45

----Capital gains--Exemption--Condition precedent--Investment of sale consideration in specified securities within six months of sale--Part of sale consideration received on transfer of possession and balance subsequently--Investment in specified securities within six months of receipt of amounts--Sufficient for getting benefit of section 54EC--Fact that investment was beyond six months of deemed sale--Not relevant-- Chanchal Kumar Sircar v. ITO (Kolkata) . . . 91

S. 50C --Capital gains--Computation of capital gains--Adoption of stamp duty value under section 50C--Sale of property by owner and simultaneous surrender of tenancy rights by assessee--Section 50C not applicable in case of transfer of tenancy-- Deputy CIT v. Tejinder Singh (Kolkata) . . . 45

S. 54EC --Capital gains--Exemption--Condition precedent--Investment of sale consideration in specified securities within six months of sale--Part of sale consideration received on transfer of possession and balance subsequently--Investment in specified securities within six months of receipt of amounts--Sufficient for getting benefit of section 54EC--Fact that investment was beyond six months of deemed sale--Not relevant-- Chanchal Kumar Sircar v. ITO (Kolkata) . . . 91

S. 90(2) --Double taxation avoidance--Provisions of domestic law applicable if more advantageous-- Sumitomo Mitsui Banking Corporation v. Deputy Director of Income-tax [SB] (Mumbai) . . . 116

----Non-resident--Taxability in India--Foreign bank--Payments of interest by branch in India on advances by head office--Branch office not a separate entity--Payment is to itself and not taxable--No tax deductible at source--Payments deductible in computation of profits of permanent establishment in terms of Double Taxation Avoidance Agreement-- Sumitomo Mitsui Banking Corporation v. Deputy Director of Income-tax [SB] (Mumbai) . . . 116

S. 92B --International transactions--Transfer pricing--Corporate guarantee provided by assessee to subsidiary does not fall within international transaction--No transfer pricing adjustment required-- Four Soft Ltd. v. Deputy CIT (Hyderabad) . . . 73

S. 92C --International transactions--Transfer pricing--Corporate guarantee provided by assessee to subsidiary does not fall within international transaction--No transfer pricing adjustment required-- Four Soft Ltd. v. Deputy CIT (Hyderabad) . . . 73

S. 92CA --International transactions--Transfer pricing--Computation of arm's length price--Exchange rate fluctuation--Assessee's margin falling within arm's length range--No adjustment required to be made on margin declared by assessee-- Four Soft Ltd. v. Deputy CIT (Hyderabad) . . . 73

----International transactions--Transfer pricing--Computation of net margin--Only cost related to transaction with associated enterprises to be considered--Assessing Officer to verify veracity of segmental financials prepared by assessee-- Four Soft Ltd. v. Deputy CIT (Hyderabad) . . . 73

S. 115WB --Fringe benefits--Gift--Meaning of--Presents to stocktists according to volume of sales--Not a gift but expenditure on sales promotion--CBDT Circular No. 8, dated August 29, 2005-- Birla Corporation Ltd. v. Deputy CIT (Kolkata) . . . 60

S. 195 --Non-resident--Taxability in India--Foreign bank--Payments of interest by branch in India on advances by head office--Branch office not a separate entity--Payment is to itself and not taxable--No tax deductible at source--Payments deductible in computation of profits of permanent establishment in terms of Double Taxation Avoidance Agreement-- Sumitomo Mitsui Banking Corporation v. Deputy Director of Income-tax [SB] (Mumbai) . . . 116

Income-tax Rules, 1962 :

R. 6DD--Business expenditure--Disallowance--Payments in cash exceeding prescribed limit--Payments by distributor to service provider--Assessee not covered under rule 6DD--Transaction between principal and agent--Does not attract provision of section 40A(3)-- Koottummal Groups v. ITO (Cochin) . . . 66