INCOME TAX REPORTS (ITR)
Volume 346 Part 6 (Issue dated 10-9-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal to High Court --Must give detailed reasons for overruling Tribunal--Setting aside order of Tribunal without hearing assessee--Not proper--Matter remanded for consideration afresh--Income-tax Act, 1961, s. 260A-- Rajesh Mahajan v. CIT
. . . 513
Central Board of Direct Taxes --Representation by assessee for re-quantification of assessments on ground erstwhile management paid huge amounts as taxes on fictitious income to convey false impression that income was genuine--Rejection of representation without hearing assessee--Not proper--Direction to assessee to file fresh representation and to CBDT to consider--Recovery proceedings to be stayed against bank guarantee to be furnished by assessee--Income-tax Act, 1961, s. 119-- Satyam Computer Services Ltd . v . CBDT . . . 566
Revision --Deduction allowed in assessment reversed by Commissioner--Tribunal setting aside revision--High Court--Setting aside order of Tribunal--Supreme Court--High Court should have remitted matter instead of deciding issues itself--Meanwhile assessment permitted to be made pursuant to revision and assessee in appeal against assessment--Direction to appellate authority to consider appeal uninfluenced by orders of Commissioner and High Court--Income-tax Act, 1961, ss. 80-IA, 263-- Teknika Components v. CIT . . . 570
Appeal to Commissioner (Appeals) --Powers of Commissioner (Appeals)--Powers co-terminous with those of Assessing Officer--Legal issue raised for the first time before Commissioner (Appeals)--Commissioner (Appeals) has power to consider--Income-tax Act, 1961, s. 112(1), second proviso-- Raj Rani Gulati (Smt.) v. CIT (All) . . . 543
Non-resident --Double taxation avoidance--Fees for included services--Employees of non-resident seconded to Indian company--Reimbursement of salaries, etc., of seconded employees--Nature of payment--Advance ruling--Managerial services under clause (a) or (b) of article 12(4)--To be tested with reference to qualifications prescribed under article 12(4)(b)--Ruling set aside and matter remanded--Income-tax Act, 1961, s. 9(1)(vii), Expln. 2--Double Taxation Avoidance Agreement between India and U. S. A., art. 12-- Verizon Data Services India P. Ltd. v. AAR (Mad) . . . 489
----Insurance business--Reinsurance commission received by U. K. company from Indian company--Finding that amount was not fees for technical services and was also not assessable under article 13 of DTAA--Finding of fact--Amount not assessable--Income-tax Act, 1961, s. 9(1)(vii)--Double Taxation Avoidance Agreement between India and the United Kingdom, art. 13(4)(c)-- Director of Income-tax v . Guy Carpenter and Co. Ltd. (Delhi) . . . 504
----Provisions of DTAA override provisions of Income-tax Act--Fees for technical services--Definition--Includes making available technical knowledge, expertise, skill or process--Meaning of “making available†--Recipient should be capable of using technical knowledge without reference to provider of service--Indian company prospecting for minerals--Agreement with Netherlands company whereby Netherlands company conducted geographical survey and provided data and maps to Indian company--Services would not enable Indian company to undertake survey--Technical knowledge not made available to Indian company--Ownership of data and maps vesting with Indian company--No development and transfer of plan or design--Amount paid by Indian company to Netherlands company not assessable in India--Income-tax Act, 1961, s. 90--Double Taxation Avoidance Agreement between India and the Netherlands, art. 12-- CIT v. De Beers India Minerals P. Ltd . (Karn) . . . 467
Precedent --Effect of decision of Supreme Court in Jute Corporation of India Ltd . v. CIT [1991] 187 ITR 688-- Raj Rani Gulati (Smt.) v. CIT (All) . . . 543
Purchase of immovable property by Central Government --Payment of consideration by Central Government--Effect of section 269UG--Payment to be made within one month of property vesting in Central Government--Stay of proceedings--Limitation not abrogated--Period of stay to be excluded while calculating limitation--Order of pre-emptive purchase on April 28, 2003--No payment of consideration till 2012--Order of purchase set aside--Income-tax Act, 1961, s. 269UG-- Sakhubai Raju Shinde v . Appropriate Authority (Guj) . . . 518
Reassessment --Not permissible on mere change of opinion--Assessing Officer in original assessment calling for specific information relating to material before him--Reasonable presumption that he considered material filed before him and material called for by him before making assessment order--Facts indicating officer aware not merely of transactions between assessee and parent company but also details thereof--Reopening of assessment based only on mere difference of opinion and not on basis of new material or provision of law or judgment--Reassessment liable to be quashed--Income-tax Act, 1961, s. 148-- Rabo India Finance Limited v. Deputy CIT (Bom) . . . 528
Revision --Condition precedent--Order of Assessing Officer should be erroneous and prejudicial to Revenue--Non-exclusion of interest while computing special deduction under section 80HHC and allowance of capital expenditure--Order erroneous and prejudicial to Revenue--Revision of order--Valid--Income-tax Act, 1961, s. 263-- TTK LIG Ltd. v. Asst. CIT (Mad) . . . 452
Writ --High Court--Power to entertain petition against ruling of Authority for Advance Rulings--Constitution of India, art. 226--Income-tax Act, 1961, s. 245S-- Verizon Data Services India P. Ltd . v . AAR (Mad) . . . 489
Advance ruling --Authority--Jurisdiction--Power to decline ruling if satisfied that adequate materials not before it--Admission of application for ruling on stated questions notwithstanding--Income-tax Act, 1961, s. 245R(2), (4)-- Orient Green Power Pte. Ltd., In re . . . 557
----Authority--Jurisdiction--To consider validity of transaction--Duty of applicant to establish validity of transaction once Department disputes it-- Orient Green Power Pte. Ltd. , In re . . . 557
Non-resident --Fees for technical services--Provision of seismic data acquisition and processing for company engaged in oil exploration--Not a mining project or the like--Not activity falling within exception to “technical services†--Income not assessable under section 44BB--Taxable as fees for technical services--Sub-contractor is permanent establishment and all income attributable thereto taxable--Income-tax Act, 1961, ss. 9(1)(vii), Expln. 2, 44BB--Double Taxation Avoidance Agreement between India and Austria, arts. 5(3), 7(1)-- C. A. T. Geodata Gmbh, In re . . . 549
----Information technology sharing agreement between non-resident and Indian subsidiary for provision of wide area network, messaging system, licence user rights and application support--Services involving hardware controlled by non-resident--Constitutes permanent establishment--Income of non-resident taxable in India--Income constitutes fees for technical services--Income-tax Act, 1961, ss. 9(1)(vi), (vii), Expln. 2(iva), 195--Double Taxation Avoidance Agreement between India and France, arts. 5, 7, 13-- AREVA T & D India Limited, In re . . . 456
----Transfer of substantial shareholding in Indian company to its subsidiary without consideration--Transaction authorised by resolution of board of directors and evidenced by memorandum of gift--No material to establish transaction authorised under articles of association and carried out in manner specified in articles--Department disputing genuineness of transaction--Ruling declined--Income-tax Act, 1961, ss. 47(iii), 56(2)(viia), 245R(2), (4)--Companies Act, 1956, ss. 82, 108-- Orient Green Power Pte. Ltd. , In re . . . 557
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 18 : Part 4 (Issue dated : 10-09-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Business expenditure --Deduction only on actual payment--Provident fund and ESI contributions made before filing return-- Allowable--Income-tax Act, 1961, ss. 36(1)(va), 43B-- Deputy CIT v. Eastern Medikit Ltd. (Delhi) . . . 457
----Disallowance--Payments subject to deduction of tax at source--Deduction from payments towards works contract--Provision applicable to contracts entered into on or after October 1, 2009--Not applicable for assessment year 2007-08--Income-tax Act, 1961, s. 40(a)(ia)-- Deputy CIT v. Eastern Medikit Ltd. (Delhi) . . . 457
Cash credits --Burden of proof--Creditworthiness of creditor and genuineness of transaction established by production of assessment documents of creditors--Bank statements showing loan repaid--Additions not proper--Income-tax Act, 1961, s. 68-- Abhik Jain v. ITO (Delhi) . . . 497
----Burden on assessee to prove genuineness of gifts--Donor not related to assessee--No occasion for gift--Addition justified--Income-tax Act, 1961, s. 68-- Saroj Bala v. ITO (Delhi) . . . 411
----Business income--Deemed income--Credits old and not written off in books of account--Liabilities not ceasing--Sections 41(1) and 68 not applicable--Income-tax Act, 1961, ss. 41(1), 68-- Deputy CIT v. Eastern Medikit Ltd. (Delhi) . . . 457
Deduction of tax at source --Payment to non-resident--Failure to deduct--Order holding payer assessee in default--Limitation--Order for assessment years 2003-04 to 2005-06 passed after four years--Barred by limitation--Income-tax Act, 1961, s. 201-- Assistant CIT v. Catholic Relief Services (Delhi) . . . 430
Income from undisclosed sources --Unexplained money--Cash book showing shortage of cash--No evidence that money used for earning unaccounted income by entering into undisclosed transactions--Addition to be deleted--Income-tax Act, 1961, s. 69A-- Deputy CIT v. Eastern Medikit Ltd. (Delhi) . . . 457
Interest on borrowed capital --Interest-free unsecured loans advanced to subsidiary company--No finding regarding nexus between borrowing and lending--Matter remanded--Income-tax Act, 1961, s. 36(1)(iii)-- Deputy CIT v. Eastern Medikit Ltd. (Delhi) . . . 457
Non-resident --Double Taxation Avoidance Agreement between Singapore and India--Consultancy charges with regard to financial transactions paid outside India--Articles 7 and 12 of Double Taxation Avoidance Agreement and residuary article 23 not applicable--Amount not taxable in India--Income-tax Act, 1961, ss. 40(a)(i), 195--Double Taxation Avoidance Agreement between India and Singapore, arts. 7, 12, 23-- Deputy CIT v. Andaman Sea Food P. Ltd. (Kolkata) . . . 509
----International transaction--Determination of arm’s length price--Royalty--Agreement for provision of technical know-how exclusively to assessee and for user of trade mark--No lump sum payment--Royalty payable on each transaction--Profits by Indian company not low--Determination of arm’s length price at nil--Not justified--Income-tax Act, 1961, s. 92-- KHS Machinery P. Ltd. v. ITO (Ahmedabad) . . . 479
----Payment towards reinsurance risk of Indian insurance companies with international insurance companies--Not fee for technical services--Not taxable in India--Income-tax Act, 1961, s. 9--Double Taxation Avoidance between India and the U. K., art. 13(4)(c)-- Guy Carpenter and Co. Ltd. v. Assistant Director of Income-tax (International Taxation) (No. 2) (Delhi) . . . 414
Search and seizure --Undisclosed income--No proper explanation regarding certain investments and advances--Additions to income--Justified--Fixed deposits and Kissan Vikas Patras--Explanation that amounts belonged to relatives not examined--Matter remanded--Income-tax Act, 1961, s. 132-- Rajan Satia v. Assistant CIT (Chandigarh) . . . 444
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Double Taxation Avoidance between India and the U. K. :
Art. 13(4)(c) --Non-resident--Payment towards reinsurance risk of Indian insurance companies with international insurance companies--Not fee for technical services--Not taxable in India-- Guy Carpenter and Co. Ltd. v. Assistant Director of Income-tax (International Taxation) (No. 2) (Delhi) . . . 414
Double Taxation Avoidance Agreement between India and Singapore :
Art. 7 --Non-resident--Double Taxation Avoidance Agreement between Singapore and India--Consultancy charges with regard to financial transactions paid outside India--Articles 7 and 12 of Double Taxation Avoidance Agreement and residuary article 23 not applicable--Amount not taxable in India-- Deputy CIT v. Andaman Sea Food P. Ltd. (Kolkata) . . . 509
Art. 12 --Non-resident--Double Taxation Avoidance Agreement between Singapore and India--Consultancy charges with regard to financial transactions paid outside India--Articles 7 and 12 of Double Taxation Avoidance Agreement and residuary article 23 not applicable--Amount not taxable in India-- Deputy CIT v. Andaman Sea Food P. Ltd. (Kolkata) . . . 509
Art. 23 --Non-resident--Double Taxation Avoidance Agreement between Singapore and India--Consultancy charges with regard to financial transactions paid outside India--Articles 7 and 12 of Double Taxation Avoidance Agreement and residuary article 23 not applicable--Amount not taxable in India-- Deputy CIT v. Andaman Sea Food P. Ltd. (Kolkata) . . . 509
S. 9 --Non-resident--Payment towards reinsurance risk of Indian insurance companies with international insurance companies--Not fee for technical services--Not taxable in India-- Guy Carpenter and Co. Ltd. v. Assistant Director of Income-tax (International Taxation) (No. 2) (Delhi) . . . 414
S. 36(1)(iii) --Interest on borrowed capital--Interest-free unsecured loans advanced to subsidiary company--No finding regarding nexus between borrowing and lending--Matter remanded-- Deputy CIT v. Eastern Medikit Ltd. (Delhi) . . . 457
S. 36(1)(va) --Business expenditure--Deduction only on actual payment--Provident fund and ESI contributions made before filing return-- Allowable-- Deputy CIT v. Eastern Medikit Ltd. (Delhi) . . . 457
S. 40(a)(i) --Non-resident--Double Taxation Avoidance Agreement between Singapore and India--Consultancy charges with regard to financial transactions paid outside India--Articles 7 and 12 of Double Taxation Avoidance Agreement and residuary article 23 not applicable--Amount not taxable in India-- Deputy CIT v. Andaman Sea Food P. Ltd. (Kolkata) . . . 509
S. 40(a)(ia) --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Deduction from payments towards works contract--Provision applicable to contracts entered into on or after October 1, 2009--Not applicable for assessment year 2007-08-- Deputy CIT v. Eastern Medikit Ltd. (Delhi) . . . 457
S. 41(1) --Cash credits--Business income--Deemed income--Credits old and not written off in books of account--Liabilities not ceasing--Sections 41(1) and 68 not applicable-- Deputy CIT v. Eastern Medikit Ltd. (Delhi) . . . 457
S. 43B --Business expenditure--Deduction only on actual payment--Provident fund and ESI contributions made before filing return-- Allowable-- Deputy CIT v. Eastern Medikit Ltd. (Delhi) . . . 457
S. 68 --Cash credits--Burden of proof--Creditworthiness of creditor and genuineness of transaction established by production of assessment documents of creditors--Bank statements showing loan repaid--Additions not proper-- Abhik Jain v. ITO (Delhi) . . . 497
----Cash credits--Burden on assessee to prove genuineness of gifts--Donor not related to assessee--No occasion for gift--Addition justified-- Saroj Bala v. ITO (Delhi) . . . 411
----Cash credits--Business income--Deemed income--Credits old and not written off in books of account--Liabilities not ceasing--Sections 41(1) and 68 not applicable-- Deputy CIT v. Eastern Medikit Ltd. (Delhi) . . . 457
S. 69A --Income from undisclosed sources--Unexplained money--Cash book showing shortage of cash--No evidence that money used for earning unaccounted income by entering into undisclosed transactions--Addition to be deleted-- Deputy CIT v. Eastern Medikit Ltd. (Delhi) . . . 457
S. 92 --Non-resident--International transaction--Determination of arm’s length price--Royalty--Agreement for provision of technical know-how exclusively to assessee and for user of trade mark--No lump sum payment--Royalty payable on each transaction--Profits by Indian company not low--Determination of arm’s length price at nil--Not justified-- KHS Machinery P. Ltd. v. ITO (Ahmedabad) . . . 479
S. 132 --Search and seizure--Undisclosed income--No proper explanation regarding certain investments and advances--Additions to income--Justified--Fixed deposits and Kissan Vikas Patras--Explanation that amounts belonged to relatives not examined--Matter remanded-- Rajan Satia v. Assistant CIT (Chandigarh) . . . 444
S. 195 --Non-resident--Double Taxation Avoidance Agreement between Singapore and India--Consultancy charges with regard to financial transactions paid outside India--Articles 7 and 12 of Double Taxation Avoidance Agreement and residuary article 23 not applicable--Amount not taxable in India-- Deputy CIT v. Andaman Sea Food P. Ltd. (Kolkata) . . . 509
S. 201 --Deduction of tax at source--Payment to non-resident--Failure to deduct--Order holding payer assessee in default--Limitation--Order for assessment years 2003-04 to 2005-06 passed after four years--Barred by limitation-- Assistant CIT v. Catholic Relief Services (Delhi) . . . 430
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