INCOME TAX REPORTS (ITR)
Volume 343 : Part 3 (Issue dated 14-5-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal to High Court --Income-tax Department--Failure to challenge order of Tribunal--Not precluded from questioning correctness of orders of assessment, particularly when question of law involved--Income-tax Act, 1961, s. 260A-- Catholic Syrian Bank Ltd . v. CIT . . . 270
Business expenditure --Banks--Bad and doubtful debts--Bad debts--Object of Legislature to promote rural banking--Scheduled commercial banks entitled to benefit of write-off of irrecoverable debts under section 36(1)(vii) in addition to deduction of provision for bad and doubtful debts under section 36(1)(viia)--Limit of deduction provided in proviso to section 36(1)(vii)--Income-tax Act, 1961, ss. 36(1)(vii), (viia), (2)(v)-- Catholic Syrian Bank Ltd . v. CIT . . . 270
Circulars --Binding nature--Scope of-- Catholic Syrian Bank Ltd . v. CIT . . . 270
Interpretation of taxing statutes --Strict interpretation--Construction to give effect to intention of Legislature-- Catholic Syrian Bank Ltd. v. CIT . . . 270
Appeal to Commissioner (Appeals) --Competency of appeal--Application for revision under section 264--Subsequent appeal to Commissioner (Appeals)--Not competent--Income-tax Act, 1961, ss. 246, 246A, 264-- Orissa Rural Housing Development Corporation Ltd . v. Asst. CIT (Orissa) . . . 316
Assessment --Return--Difference between revised return and corrections to original return--No prescribed sequence to issue of notices under sections 142(1) and 143(2)--Income-tax Act, 1961, ss. 139, 142, 143-- Orissa Rural Housing Development Corporation Ltd . v. Asst. CIT (Orissa) . . . 316
Capital or revenue expenditure --Assessee, tenant in premises, contributing to reconstruction of premises in lieu of continuing as tenant at same rent--No capital asset acquired but only commercial advantage--Expenditure is revenue expenditure--Income-tax Act, 1961-- CIT v. Talathi and Panthaky Associated P. Ltd .(Bom) . . . 309
Central Board of Direct Taxes --Trust--Petition for condonation of delay in selling shares--Board has power to condone delay--Income-tax Act, 1961, s. 119(2)(b)-- R. N. Shetty Trust v. Secretary, Central Board of Direct Taxes (Karn) . . . 294
Charitable purpose --Registration of trusts--Cancellation of registration--Publication and sale of Sarvodaya literature and Gandhian ideologies--Tribunal finding no violation of conditions under section 12AA(3)--Cancellation of registration by Commissioner not justified--Income-tax Act, 1961, s. 12AA(3)-- CIT v. Sarvodaya Ilakkiya Pannai (Mad) . . . 300
Income-tax --General principles--National Housing Board Act, 1987, does not override provisions of Income-tax Act--Procedure laid down in statute must be followed-- Orissa Rural Housing Development Corporation Ltd. v. Asst. CIT (Orissa) . . . 316
Loss --Business loss--Amalgamation of companies--Advances to employees by amalgamating company which could not be recovered--Business loss--Security deposit for obtaining lease of business premises--Not a business loss--Income-tax Act, 1961-- CIT v. Triveni Engineering and Industries Ltd . (Delhi) . . . 245
Non-resident --Non-resident company rendering services to ONGC of inspecting control system of units--Payment for services is fees for technical services and not as services in connection with extraction of mineral oil--Taxable under section 44D and not 44BB--Income-tax Act, 1961, ss. 9(1)(vii), Expln., 44BB, 44D, 115A-- CIT v. ONGC (Appx.) (Uttarakhand) . . . 267
Reassessment --Notice after four years--No reference to any failure on part of assessee to fully and truly disclose all material facts necessary for assessment--Amendment with retrospective effect to include in book profits amount set aside as provision for diminution in value of investment--Not a case of failure by assessee to disclose material facts--Not ground for reopening assessment beyond period of four years--Reassessment not valid--Income-tax Act, 1961, ss. 115JB, Expln. 1(i), 147-- DIL Ltd . v. Asst. CIT (Bom) . . . 296
----Reassessment after four years--Payment claimed as reimbursement of expenses to foreign principal--Return disclosing permission for payment without deduction of tax at source applied for--Revised return filed after receipt of permission claiming sum as not taxable--Assessment made after detailed enquiry accepting revised return--No case of failure to disclose fully or truly material facts--Reassessment not justified--Income-tax Act, 1961, ss. 148, 195(2)-- Monitor India Pvt. Ltd . v. Union of India (Bom) . . . 236
Refund --Writ--Writ will not normally issue to direct refund--Income-tax Act, 1961--Constitution of India, art. 226-- Orissa Rural Housing Development Corporation Ltd . v. Asst. CIT (Orissa) . . . 316
Return --Validity of return--Effect of section 139(9)--Return filed electronically and ITR-V form sent by ordinary post as required--Non-receipt of ITR-V form within time--Order declaring return invalid--Not justified--Assessee given time to file ITR-V form--Income-tax Act, 1961, s. 139(9)-- Crawford Bayley and Co . v. Union of India (Bom) . . . 232
Non-resident --Fees for technical services--Royalty--Permanent establishment--Contract for installation of terminal for discharge of crude oil from vessels stationed in sea--Payment for mobilization and de-mobilization relating to use of equipment for undertaking installation work--Is royalty--Installation ancillary and subsidiary to use of or enjoyment of right to use equipment--Payment for installation is fees for technical services--Work including preparatory services in relation to drawing, design engineering, procurement, transportation--Duration of performing preparatory activities not to be excluded--Deemed to have permanent establishment without presence of office building--Services or facilities in connection with exploration, exploitation or extraction of mineral oils for more than 183 days during year--Income taxable on presumptive basis and not as fees for technical services or royalty--Income-tax Act, 1961, ss. 9(1)(vii), 44BB--Double Taxation Avoidance Agreement between India and Singapore, arts. 5, 12-- Global Industries Asia Pacific Pte. Ltd. , In re . . . 253
----Informatics software and services company--Sale of software products and updation and maintenance through reseller in India--Payments therefor are royalty, not business income--Payments liable to tax in India--Income-tax Act, 1961, s. 195(1)--Double Taxation Avoidance Agreement between India and Japan, arts. 7, 12-- Acclerys KK , In re . . . 304
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Art. 226 --Refund--Writ--Writ will not normally issue to direct refund-- Orissa Rural Housing Development Corporation Ltd . v. Asst. CIT (Orissa) . . . 316
Double Taxation Avoidance Agreement between India and Japan :
Arts. 7, 12 --Non-resident--Informatics software and services company--Sale of software products and updation and maintenance through reseller in India--Payments therefor are royalty, not business income--Payments liable to tax in India-- Acclerys KK , In re (AAR) . . . 304
Double Taxation Avoidance Agreement between India and Singapore :
Arts. 5, 12 --Non-resident--Fees for technical services--Royalty--Permanent establishment--Contract for installation of terminal for discharge of crude oil from vessels stationed in sea--Payment for mobilization and de-mobilization relating to use of equipment for undertaking installation work--Is royalty--Installation ancillary and subsidiary to use of or enjoyment of right to use equipment--Payment for installation is fees for technical services--Work including preparatory services in relation to drawing, design engineering, procurement, transportation--Duration of performing preparatory activities not to be excluded--Deemed to have permanent establishment without presence of office building--Services or facilities in connection with exploration, exploitation or extraction of mineral oils for more than 183 days during year--Income taxable on presumptive basis and not as fees for technical services or royalty-- Global Industries Asia Pacific Pte. Ltd. , In re (AAR) . . . 253
S. 9(1)(vii) --Non-resident--Fees for technical services--Royalty--Permanent establishment--Contract for installation of terminal for discharge of crude oil from vessels stationed in sea--Payment for mobilization and de-mobilization relating to use of equipment for undertaking installation work--Is royalty--Installation ancillary and subsidiary to use of or enjoyment of right to use equipment--Payment for installation is fees for technical services--Work including preparatory services in relation to drawing, design engineering, procurement, transportation--Duration of performing preparatory activities not to be excluded--Deemed to have permanent establishment without presence of office building--Services or facilities in connection with exploration, exploitation or extraction of mineral oils for more than 183 days during year--Income taxable on presumptive basis and not as fees for technical services or royalty-- Global Industries Asia Pacific Pte. Ltd. , In re (AAR) . . . 253
S. 9(1)(vii), Expln. --Non-resident--Non-resident company rendering services to ONGC of inspecting control system of units--Payment for services is fees for technical services and not as services in connection with extraction of mineral oil--Taxable under section 44D and not 44BB-- CIT v. ONGC (Appx.) (Uttarakhand) . . . 267
S. 12AA(3) --Charitable purpose--Registration of trusts--Cancellation of registration--Publication and sale of Sarvodaya literature and Gandhian ideologies--Tribunal finding no violation of conditions under section 12AA(3)--Cancellation of registration by Commissioner not justified-- CIT v. Sarvodaya Ilakkiya Pannai (Mad) . . . 300
S. 36(1)(vii) --Business expenditure--Banks--Bad and doubtful debts--Bad debts--Object of Legislature to promote rural banking--Scheduled commercial banks entitled to benefit of write-off of irrecoverable debts under section 36(1)(vii) in addition to deduction of provision for bad and doubtful debts under section 36(1)(viia)--Limit of deduction provided in proviso to section 36(1)(vii)-- Catholic Syrian Bank Ltd . v. CIT (SC) . . . 270
S. 36(1)(viia) --Business expenditure--Banks--Bad and doubtful debts--Bad debts--Object of Legislature to promote rural banking--Scheduled commercial banks entitled to benefit of write-off of irrecoverable debts under section 36(1)(vii) in addition to deduction of provision for bad and doubtful debts under section 36(1)(viia)--Limit of deduction provided in proviso to section 36(1)(vii)-- Catholic Syrian Bank Ltd . v. CIT (SC) . . . 270
S. 36(2)(v) --Business expenditure--Banks--Bad and doubtful debts--Bad debts--Object of Legislature to promote rural banking--Scheduled commercial banks entitled to benefit of write-off of irrecoverable debts under section 36(1)(vii) in addition to deduction of provision for bad and doubtful debts under section 36(1)(viia)--Limit of deduction provided in proviso to section 36(1)(vii)-- Catholic Syrian Bank Ltd . v. CIT (SC) . . . 270
S. 44BB --Non-resident--Fees for technical services--Royalty--Permanent establishment--Contract for installation of terminal for discharge of crude oil from vessels stationed in sea--Payment for mobilization and de-mobilization relating to use of equipment for undertaking installation work--Is royalty--Installation ancillary and subsidiary to use of or enjoyment of right to use equipment--Payment for installation is fees for technical services--Work including preparatory services in relation to drawing, design engineering, procurement, transportation--Duration of performing preparatory activities not to be excluded--Deemed to have permanent establishment without presence of office building--Services or facilities in connection with exploration, exploitation or extraction of mineral oils for more than 183 days during year--Income taxable on presumptive basis and not as fees for technical services or royalty-- Global Industries Asia Pacific Pte. Ltd. , In re (AAR) . . . 253
----Non-resident--Non-resident company rendering services to ONGC of inspecting control system of units--Payment for services is fees for technical services and not as services in connection with extraction of mineral oil--Taxable under section 44D and not 44BB-- CIT v. ONGC (Appx.) (Uttarakhand) . . . 267
S. 44D --Non-resident--Non-resident company rendering services to ONGC of inspecting control system of units--Payment for services is fees for technical services and not as services in connection with extraction of mineral oil--Taxable under section 44D and not 44BB-- CIT v. ONGC (Appx.) (Uttarakhand) . . . 267
S. 115A --Non-resident--Non-resident company rendering services to ONGC of inspecting control system of units--Payment for services is fees for technical services and not as services in connection with extraction of mineral oil--Taxable under section 44D and not 44BB-- CIT v. ONGC (Appx.) (Uttarakhand) . . . 267
S. 115JB, Expln. 1(i) --Reassessment--Notice after four years--No reference to any failure on part of assessee to fully and truly disclose all material facts necessary for assessment--Amendment with retrospective effect to include in book profits amount set aside as provision for diminution in value of investment--Not a case of failure by assessee to disclose material facts--Not ground for reopening assessment beyond period of four years--Reassessment not valid-- DIL Ltd . v. Asst. CIT (Bom) . . . 296
S. 119(2)(b) --Central Board of Direct Taxes--Trust--Petition for condonation of delay in selling shares--Board has power to condone delay-- R. N. Shetty Trust v. Secretary, Central Board of Direct Taxes (Karn) . . . 294
S. 139 --Assessment--Return--Difference between revised return and corrections to original return--No prescribed sequence to issue of notices under sections 142(1) and 143(2)-- Orissa Rural Housing Development Corporation Ltd . v. Asst. CIT (Orissa) . . . 316
S. 139(9) --Return--Validity of return--Effect of section 139(9)--Return filed electronically and ITR-V form sent by ordinary post as required--Non-receipt of ITR-V form within time--Order declaring return invalid--Not justified--Assessee given time to file ITR-V form-- Crawford Bayley and Co . v. Union of India (Bom) . . . 232
S. 142 --Assessment--Return--Difference between revised return and corrections to original return--No prescribed sequence to issue of notices under sections 142(1) and 143(2)-- Orissa Rural Housing Development Corporation Ltd . v. Asst. CIT (Orissa) . . . 316
S. 143 --Assessment--Return--Difference between revised return and corrections to original return--No prescribed sequence to issue of notices under sections 142(1) and 143(2)-- Orissa Rural Housing Development Corporation Ltd . v. Asst. CIT (Orissa) . . . 316
S. 147 --Reassessment--Notice after four years--No reference to any failure on part of assessee to fully and truly disclose all material facts necessary for assessment--Amendment with retrospective effect to include in book profits amount set aside as provision for diminution in value of investment--Not a case of failure by assessee to disclose material facts--Not ground for reopening assessment beyond period of four years--Reassessment not valid-- DIL Ltd . v. Asst. CIT (Bom) . . . 296
S. 148 --Reassessment--Reassessment after four years--Payment claimed as reimbursement of expenses to foreign principal--Return disclosing permission for payment without deduction of tax at source applied for--Revised return filed after receipt of permission claiming sum as not taxable--Assessment made after detailed enquiry accepting revised return--No case of failure to disclose fully or truly material facts--Reassessment not justified-- Monitor India Pvt. Ltd . v. Union of India (Bom) . . . 236
S. 195(1) --Non-resident--Informatics software and services company--Sale of software products and updation and maintenance through reseller in India--Payments therefor are royalty, not business income--Payments liable to tax in India-- Acclerys KK , In re (AAR) . . . 304
S. 195(2) --Reassessment--Reassessment after four years--Payment claimed as reimbursement of expenses to foreign principal--Return disclosing permission for payment without deduction of tax at source applied for--Revised return filed after receipt of permission claiming sum as not taxable--Assessment made after detailed enquiry accepting revised return--No case of failure to disclose fully or truly material facts--Reassessment not justified-- Monitor India Pvt. Ltd . v. Union of India (Bom) . . . 236
S. 246 --Appeal to Commissioner (Appeals)--Competency of appeal--Application for revision under section 264--Subsequent appeal to Commissioner (Appeals)--Not competent-- Orissa Rural Housing Development Corporation Ltd . v. Asst. CIT (Orissa) . . . 316
S. 246A --Appeal to Commissioner (Appeals)--Competency of appeal--Application for revision under section 264--Subsequent appeal to Commissioner (Appeals)--Not competent-- Orissa Rural Housing Development Corporation Ltd . v. Asst. CIT (Orissa) . . . 316
S. 260A --Appeal to High Court--Income-tax Department--Failure to challenge order of Tribunal--Not precluded from questioning correctness of orders of assessment, particularly when question of law involved-- Catholic Syrian Bank Ltd . v. CIT (SC) . . . 270
S. 264 --Appeal to Commissioner (Appeals)--Competency of appeal--Application for revision under section 264--Subsequent appeal to Commissioner (Appeals)--Not competent-- Orissa Rural Housing Development Corporation Ltd . v. Asst. CIT (Orissa) . . . 316
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 15 : Part 6 (Issue dated : 14-05-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Business income --Remission or cessation of trading liability--When deemed income--Waiver by creditor--Amount not claimed as deduction in earlier assessment years--Condition not fulfilled--Sum cannot be treated as deemed business income--Income-tax Act, 1961, s. 41(1)-- Smt. M. R. Banu v. Deputy CIT (Chennai) . . . 662
Exemption --Export of computer software--Computation--Sum reduced from export turnover to be reduced also from total turnover--Income-tax Act, 1961, s. 10A-- Kodiak Networks (India) P. Ltd. v. Asst. CIT (Bangalore) . . . 610
Export --Exemption--Computation--Charges incurred by assessee excluded from export turnover, to be excluded from total turnover also--Income-tax Act, 1961, s. 10A-- Deputy CIT v. Deloitte Consulting India P. Ltd. (Hyderabad) . . . 573
International transactions --Arm's length price--Determination--Selection of comparables not mentioned in draft order--Assessee to be given opportunity to object to data of new comparables--No restriction on date up to which data in public domain can be considered--Assessee need not be informed about process used to collect information from parties--Entitled to information collected from parties to be used against it--To be granted opportunity to cross examine parties--Turnover filter to be used--Assessee to be given standard deduction of 5 per cent. before making adjustments for transfer price--Income-tax Act, 1961, ss. 92C, 92CA, 144C--Income-tax Rules, 1962, r. 10D-- Kodiak Networks (India) P. Ltd. v. Asst. CIT (Bangalore) . . . 610
----Arm's length price--Transfer pricing--Transactional net margin method--Comparable uncontrolled transactions--Only current year's data to be used--Tolerance band of five per cent. not a standard deduction--Authorities not required to demonstrate motive of assessee to shift profits outside India by manipulating prices--Objection to analysis not taken before Transfer Pricing Officer or in appeal--Not to be considered by Tribunal--Comparable accepted and agreed to by assessee before Transfer Pricing Officer--Assessee not entitled to object its inclusion--Company whose turnover twenty times that of assessee--To be excluded--Where no materially significant related party transactions existing--Company to be excluded from list of comparables--Companies not having export business whereas assessee having full-fledged export business--Functions, risks and assets different--Companies not to be considered comparable--Income-tax Act, 1961, s. 92CA(1)--Income-tax Rules, 1962, r. 10B(4)-- Deputy CIT v. Deloitte Consulting India P. Ltd. (Hyderabad) . . . 573
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 10A --Exemption--Export of computer software--Computation--Sum reduced from export turnover to be reduced also from total turnover-- Kodiak Networks (India) P. Ltd. v. Asst. CIT (Bangalore) . . . 610
----Export--Exemption--Computation--Charges incurred by assessee excluded from export turnover, to be excluded from total turnover also-- Deputy CIT v. Deloitte Consulting India P. Ltd. (Hyderabad) . . . 573
S. 41(1) --Business income--Remission or cessation of trading liability--When deemed income--Waiver by creditor--Amount not claimed as deduction in earlier assessment years--Condition not fulfilled--Sum cannot be treated as deemed business income-- Smt. M. R. Banu v. Deputy CIT (Chennai) . . . 662
S. 92C --International transactions--Arm's length price--Determination--Selection of comparables not mentioned in draft order--Assessee to be given opportunity to object to data of new comparables--No restriction on date up to which data in public domain can be considered--Assessee need not be informed about process used to collect information from parties--Entitled to information collected from parties to be used against it--To be granted opportunity to cross examine parties--Turnover filter to be used--Assessee to be given standard deduction of 5 per cent. before making adjustments for transfer price-- Kodiak Networks (India) P. Ltd. v. Asst. CIT (Bangalore) . . . 610
S. 92CA --International transactions--Arm's length price--Determination--Selection of comparables not mentioned in draft order--Assessee to be given opportunity to object to data of new comparables--No restriction on date up to which data in public domain can be considered--Assessee need not be informed about process used to collect information from parties--Entitled to information collected from parties to be used against it--To be granted opportunity to cross examine parties--Turnover filter to be used--Assessee to be given standard deduction of 5 per cent. before making adjustments for transfer price-- Kodiak Networks (India) P. Ltd. v. Asst. CIT (Bangalore) . . . 610
S. 92CA(1) --International transactions--Arm's length price--Transfer pricing--Transactional net margin method--Comparable uncontrolled transactions--Only current year's data to be used--Tolerance band of five per cent. not a standard deduction--Authorities not required to demonstrate motive of assessee to shift profits outside India by manipulating prices--Objection to analysis not taken before Transfer Pricing Officer or in appeal--Not to be considered by Tribunal--Comparable accepted and agreed to by assessee before Transfer Pricing Officer--Assessee not entitled to object its inclusion--Company whose turnover twenty times that of assessee--To be excluded--Where no materially significant related party transactions existing--Company to be excluded from list of comparables--Companies not having export business whereas assessee having full-fledged export business--Functions, risks and assets different--Companies not to be considered comparable-- Deputy CIT v. Deloitte Consulting India P. Ltd. (Hyderabad) . . . 573
S. 144C --International transactions--Arm's length price--Determination--Selection of comparables not mentioned in draft order--Assessee to be given opportunity to object to data of new comparables--No restriction on date up to which data in public domain can be considered--Assessee need not be informed about process used to collect information from parties--Entitled to information collected from parties to be used against it --To be granted opportunity to cross examine parties--Turnover filter to be used--Assessee to be given standard deduction of 5 per cent. before making adjustments for transfer price-- Kodiak Networks (India) P. Ltd. v. Asst. CIT (Bangalore) . . . 610
R. 10B(4) --International transactions--Arm's length price--Transfer pricing--Transactional net margin method--Comparable uncontrolled transactions--Only current year's data to be used--Tolerance band of five per cent. not a standard deduction--Authorities not required to demonstrate motive of assessee to shift profits outside India by manipulating prices--Objection to analysis not taken before Transfer Pricing Officer or in appeal--Not to be considered by Tribunal--Comparable accepted and agreed to by assessee before Transfer Pricing Officer--Assessee not entitled to object its inclusion--Company whose turnover twenty times that of assessee--To be excluded--Where no materially significant related party transactions existing--Company to be excluded from list of comparables--Companies not having export business whereas assessee having full-fledged export business--Functions, risks and assets different--Companies not to be considered comparable-- Deputy CIT v. Deloitte Consulting India P. Ltd. (Hyderabad) . . . 573
R. 10D --International transactions--Arm's length price--Determination--Selection of comparables not mentioned in draft order--Assessee to be given opportunity to object to data of new comparables--No restriction on date up to which data in public domain can be considered--Assessee need not be informed about process used to collect information from parties--Entitled to information collected from parties to be used against it --To be granted opportunity to cross examine parties--Turnover filter to be used--Assessee to be given standard deduction of 5 per cent. before making adjustments for transfer price-- Kodiak Networks (India) P. Ltd. v. Asst. CIT (Bangalore) . . . 610
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