INCOME TAX REPORTS (ITR)
Volume 349 Part 6 (Issue dated 24-12-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Amortisation of preliminary expenses --Scope of section 35D--Proposal to expand capacity of production--Expenditure on issue of shares--Expenditure to be amortised--Income-tax Act, 1961, s. 35D-- CIT v . Ashok Leyland Ltd . (Mad) . . . 663
Association of persons or individuals --Co-owners inheriting property from their ancestors--No evidence to show that they acted as an association of persons--Plinths rental income--Assessable in status of individual--Section 167B not applicable--Income-tax Act, 1961, s. 167B-- Sudhir Nagpal v. ITO (P&H) . . . 636
Business expenditure --Provision for post-sale customer service--Whether deductible--Matter remanded--Tribunal directed to apply principles laid down by the Supreme Court in Rotork Controls India P. Ltd . v. CIT [2009] 314 ITR 62--Income-tax Act, 1961, s. 37-- CIT v . Infosys Technologies Ltd. (No. 5 ) (Karn) . . . 610
Capital or revenue expenditure --Amount spent by assessee for acquisition of membership of clubs--Sum paid by assessee for obtaining ISO-9001 certificate--Revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v . Infosys Technologies Ltd. (No. 1 ) (Karn) . . . 582
----Amount spent towards acquiring membership of club--Expenses towards repairs and renovation of leased premises to house office of assessee--Revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v. Infosys Technologies Ltd. (No. 2 ) (Karn) . . . 588
----Amounts paid by assessee to clubs for obtaining membership--Revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v . Infosys Technologies Ltd. (No. 3 ) (Karn) . . . 598
----Company--Expenditure on acquiring membership of club--Revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v . Infosys Technologies Ltd. (No. 5 ) (Karn) . . . 610
----Expenditure on obtaining corporate membership in clubs, obtaining ISO certificate and repair and maintenance of leased premises--Revenue expenditure--Income-tax Act, 1961, s. 37-- CIT v . Infosys Technologies Ltd. (No. 4 ) (Karn) . . . 606
Depreciation --Additional depreciation--Effect of clause (iia) of section 32(1)--Assets acquired after 30-9-2004--Statutory stipulation that restriction to 50 per cent. of amount allowable under section 32(1)(iia)--Assessing Officer restricting depreciation to 50 per cent.--Proper--Income-tax Act, 1961, s. 32(1)(iia)-- M. M. Forgings Ltd. v. Addl. CIT (Mad) . . . 673
Exemption --Export--Software technology park--Sale of software--Entitled to exemption--Income-tax Act, 1961, s. 10A-- CIT v . Infosys Technologies Ltd. (No. 3 ) (Karn) . . . 598
Export --Special deduction under section 80HHE--Computation of special deduction--Gains on exchange rate variation--Includible in total turnover and export turnover--Income-tax Act, 1961, s. 80HHE-- CIT v . Infosys Technologies Ltd. (No. 5 )
(Karn) . . . 610
Export of computer software --Special deduction--Computation of profits--Expenses pertaining to technical services outside India--Excludible from turnover--Income-tax Act, 1961, s. 80HHE-- CIT v. Infosys Technologies Ltd. (No. 2 ) (Karn) . . . 588
----Special deduction--Computation of profits--Foreign exchange expenditure--Excludible from turnover--Income-tax Act, 1961, s. 80HHE-- CIT v . Infosys Technologies Ltd. (No. 3 ) (Karn) . . . 598
Income --Computation of income--Disallowance of expenditure incurred in earning non-taxable income--Difference between exemption and special deduction--Section 14A not applicable in cases of special deductions given under Chapter VI-A--Income-tax Act, 1961, s. 14A, Chapters III, VI-A-- CIT v . Kribhco (Delhi) . . . 618
Income from other sources --Company exporting software--Gains due to fluctuations in rate of exchange--Not assessable as income from other sources--Income-tax Act, 1961, s. 56-- CIT v. Infosys Technologies Ltd. (No. 4 ) (Karn) . . . 606
----Rent received from letting out plinths--Not house property--Assessable as income from other sources--Income-tax Act, 1961, ss. 26, 56-- Sudhir Nagpal v . ITO (P&H) . . . 636
Industrial undertaking --Special deduction--Computation of profits--Export incentives earned from DEPB scheme--Assessee not entitled to deduction--Income-tax Act, 1961, s. 80-IA-- M. M. Forgings Ltd . v . Addl. CIT (Mad) . . . 673
New industrial undertaking --Special deduction--Tribunal allowing deduction by considering gross income from two units of assessee--Subsequent Supreme Court decision interpreting section--Matter remanded to Tribunal for fresh hearing in the light of Supreme Court decision--Income-tax Act, 1961, ss. 80HH, 80-I-- CIT v . Itarsi Oils and Flours Mills Ltd . (Chhattisgarh) . . . 654
Precedent --Effect of decision of Supreme Court in Rotork Controls India P. Ltd . v. CIT [2009] 314 ITR 62-- CIT v . Infosys Technologies Ltd. (No. 5 ) (Karn) . . . 610
Reassessment --Notice--Validity--Discovery in subsequent assessment year that cash credits could not be proved--Notice valid--Income-tax Act, 1961, ss. 147, 148--Constitution of India art. 226-- Dewas Soya Ltd . v. Addl. CIT (MP) . . . 676
----Notice--Validity--Reassessment after four years--No allegation of failure to disclose material facts necessary for assessment--Notice based on subsequent decision of court and legislative amendment--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Voltas Ltd . v . Asst. CIT (Bom) . . . 656
----Notice after four years--Amendment in section 80HHC with retrospective effect--No failure on part of assessee to disclose fully and truly all material facts relevant for purpose of assessment--Reassessments not valid--Income-tax Act, 1961, ss. 80HHC, 147, 148-- CIT v . K. Mohan and Co. (Exports) (Regd.) (Bom) . . . 653
----Specific information received that income escaped assessment--Tribunal finding Assessing Officer recorded reasons for reopening assessment--Finding of fact--Income-tax Act, 1961, ss. 68, 147, 148-- Contel Medicare Systems P. Ltd . v . CIT (Delhi) . . . 649
Salary --Perquisite--Valuation of perquisite--Rental accommodation provided by employer--Effect of rule 3--Actual amount of rent or 10 per cent. of salary, whichever is lower--Valuation cannot be on notional basis--Interest-free advance given by employer--Notional interest cannot be taken into consideration--Income-tax Act, 1961--Income-tax Rules, 1962, r. 3-- CIT v . Shankar Krishnan (Bom) . . . 685
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))
Volume 20 : Part 6 (Issue dated : 24-12-2012)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
Appeal --Appealable orders--Appeal to Commissioner (Appeals)--Assessing Officer finalising draft order subsequent to dismissal of assessee’s application before Dispute Resolution Panel--Dispute Resolution Panel dismissing assessee’s application as invalid without giving any directions to Assessing Officer--Assessment not made pursuant to Dispute Resolution Panel’s order--Assessment order appealable before Commissioner (Appeals)--Income-tax Act, 1961, ss. 143(3), 144C-- Nomura Services India P. Ltd. v. ITO (Mumbai) . . . 745
Business expenditure --Expenditure must be incurred with sole object of furthering trade or business interest of assessee unmixed with other consideration--Expenditure for purpose which is illegal--Sums paid to Municipal Corporation to compound violations of municipal and environmental laws--Main purpose of expenditure to avoid sealing of premises in which business carried on--Expenditure not exclusively as trader but also as owner of asset--Not allowable--Income-tax Act, 1961, s. 37(1), Expln. -- Arun Kumar Gupta (HUF) v. Assistant CIT (Delhi) . . . 727
----Expenditure on cars and telephones--Disallowance of one-fifth for personal use--Reasonable--Income-tax Act, 1961, s. 38(2)-- Arun Kumar Gupta (HUF) v. Assistant CIT (Delhi) . . . 727
Deduction of tax at source --Non-resident--Royalty--Payment received by foreign company for granting licence for live terrestrial television rights to assessee--Not royalty--Assessee need not deduct tax at source--Income-tax Act, 1961, ss. 9, 195(2)-- Deputy Director of Income-tax (International Taxation) v. Nimbus Communications Ltd. (Mumbai) . . . 754
----Payments to contractors--Aggregate payments to transporter exceeding prescribed limit--Absence of contract irrelevant--Assessee liable to deduct tax--Income-tax Act, 1961, s. 194C-- ITO v. Navjivan Synthetics (Ahmedabad) . . . 712
Exemption --Export--Method of computation--Communication charges to be excluded from export turnover as well as total turnover--Income-tax Act, 1961, s. 10A-- Assistant CIT v. Ckar Systems P. Ltd. (Hyderabad) . . . 817
Income from undisclosed sources --Purchases by assessee not shown in accounts of seller--Evidence of purchase furnished--No addition can be made to income of assessee--Income-tax Act, 1961-- ITO v. Navjivan Synthetics (Ahmedabad) . . . 712
Interest on borrowed capital --Onus on assessee to establish that borrowings used for business purposes--Loans and advances to relatives--No material to suggest assessee discharged onus--No findings of Commissioner (Appeals) on these aspects--Order set aside and matter remanded for decision afresh--Income-tax Act, 1961, s. 36(1)(iii)-- Arun Kumar Gupta (HUF) v. Assistant CIT (Delhi) . . . 727
International transactions --Determination of arm’s length price--Assessee wholly owned subsidiary of the U. S. A. company--Assessee facilitating sourcing of apparel merchandise from India--Transactional net margin method with cost plus 15 per cent. remuneration most appropriate method--Income-tax Act, 1961, s. 92CA-- GAP International Sourcing (India) P. Ltd. v. Assistant CIT (Delhi) . . . 779
----Determination of arm’s length price--International transaction of subsidiary company with parent company--Details of agreement submitted--Rate charged by assessee comparable to rate of uncontrolled parties--Adoption of comparable uncontrolled price--Justified--Income-tax Act, 1961, s. 92CA-- Assistant CIT v. Ckar Systems P. Ltd. (Hyderabad) . . . 817
----Transfer pricing--Determination of arm’s length price--Dispute Resolution Panel--Objections to draft order in Form 35A--Can be filed by assessee or its agent--Section 140 not applicable to Form 35A--No requirement that Form 35A filed by assessee to be signed by its managing director or director--Income-tax Act, 1961, s. 140--Income-tax (Dispute Resolution Panel) Rules, 2009, r. 4-- Nomura Services India P. Ltd. v. ITO (Mumbai) . . . 745
Non-resident --Income deemed to accrue or arise in India--Business connection--Foreign company granting licence for live terrestrial television rights in India to assessee--Not having business connection in India--Income therefrom not deemed to have accrued or arose in India--Income-tax Act, 1961, s. 9--Double Taxation Avoidance Agreement between India and Singapore, art. 12(3)-- Deputy Director of Income-tax (International Taxation) v. Nimbus Communications Ltd. (Mumbai) . . . 754
----Royalty--Income deemed to accrue or arise in India--Subscription fee paid for use of information collected and compiled in field of oil and gas exploration on website under agreement--Technical information made available by non-transferable and non-inclusive licence--Payment was in nature of technical consultancy--Covered under definition of royalty--Income-tax Act, 1961, s. 9(1)(vi)--Double Taxation Avoidance Agreement between India and the U. K., art. 13(3)-- ONGC Videsh Ltd. v. ITO (International Taxation) (Delhi) . . . 767
Penalty --Concealment of income--Furnishing of inaccurate particulars--Expenditure incurred on higher education abroad of son of managing director claimed under staff and labour training expenses--Grounds raised in appeal not raised before Commissioner (Appeals)--Matter remanded--Income-tax Act, 1961, s. 271(1)(c)-- Deputy CIT v. Inox India Ltd. (Ahemdabad) . . . 763
----Furnishing inaccurate particulars of income--Cessation of business--Claim that research and development carried out not sufficient to justify expenditure--No evidence to support claim--Case of false claim--Penalty leviable--Income-tax Act, 1961, s. 271(1)(c)-- Assistant CIT v. Harvey Heart Hospitals Ltd. (Chennai) . . . 722
Reassessment --Notice--Income escaping assessment--Information received by Assessing Officer from investigation wing regarding escapement of income--Assessing Officer recording detailed reasons--Reopening of assessment valid--Income-tax Act, 1961, ss. 147, 148-- ITO v. Contel Medicare Systems P. Ltd. (Delhi) . . . 701
Valuation of stock --Assessing Officer not considering opening stock of work-in-progress--Addition not justified--Income-tax Act, 1961, s. 145A-- ITO v. Navjivan Synthetics (Ahmedabad) . . . 712
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Double Taxation Avoidance Agreement between India and Singapore :
Art. 12(3) --Non-resident--Income deemed to accrue or arise in India--Business connection--Foreign company granting licence for live terrestrial television rights in India to assessee--Not having business connection in India--Income therefrom not deemed to have accrued or arose in India-- Deputy Director of Income-tax (International Taxation) v. Nimbus Communications Ltd. (Mumbai) . . . 754
Double Taxation Avoidance Agreement between India and the U. K. :
Art. 13(3) --Non-resident--Royalty--Income deemed to accrue or arise in India--Subscription fee paid for use of information collected and compiled in field of oil and gas exploration on website under agreement--Technical information made available by non-transferable and non-inclusive licence--Payment was in nature of technical consultancy--Covered under definition of royalty-- ONGC Videsh Ltd. v. ITO (International Taxation) (Delhi) . . . 767
S. 9 --Deduction of tax at source--Non-resident--Royalty--Payment received by foreign company for granting licence for live terrestrial television rights to assessee--Not royalty--Assessee need not deduct tax at source-- Deputy Director of Income-tax (International Taxation) v. Nimbus Communications Ltd. (Mumbai) . . . 754
----Non-resident--Income deemed to accrue or arise in India--Business connection --Foreign company granting licence for live terrestrial television rights in India to assessee--Not having business connection in India--Income therefrom not deemed to have accrued or arose in India-- Deputy Director of Income-tax (International Taxation) v. Nimbus Communications Ltd. (Mumbai) . . . 754
S. 9(1)(vi) --Non-resident--Royalty--Income deemed to accrue or arise in India--Subscription fee paid for use of information collected and compiled in field of oil and gas exploration on website under agreement--Technical information made available by non-transferable and non-inclusive licence--Payment was in nature of technical consultancy--Covered under definition of royalty-- ONGC Videsh Ltd. v. ITO (International Taxation) (Delhi) . . . 767
S. 10A --Exemption--Export--Method of computation--Communication charges to be excluded from export turnover as well as total turnover-- Assistant CIT v. Ckar Systems P. Ltd. (Hyderabad) . . . 817
S. 36(1)(iii) --Interest on borrowed capital--Onus on assessee to establish that borrowings used for business purposes--Loans and advances to relatives--No material to suggest assessee discharged onus--No findings of Commissioner (Appeals) on these aspects--Order set aside and matter remanded for decision afresh-- Arun Kumar Gupta (HUF) v. Assistant CIT (Delhi) . . . 727
S. 37(1), Expln. --Business expenditure--Expenditure must be incurred with sole object of furthering trade or business interest of assessee unmixed with other consideration--Expenditure for purpose which is illegal--Sums paid to Municipal Corporation to compound violations of municipal and environmental laws--Main purpose of expenditure to avoid sealing of premises in which business carried on--Expenditure not exclusively as trader but also as owner of asset--Not allowable-- Arun Kumar Gupta (HUF) v. Assistant CIT (Delhi) . . . 727
S. 38(2) --Business expenditure--Expenditure on cars and telephones--Disallowance of one-fifth for personal use--Reasonable-- Arun Kumar Gupta (HUF) v. Assistant CIT (Delhi) . . . 727
S. 92CA --International transactions--Determination of arm’s length price--Assessee wholly owned subsidiary of the U. S. A. company--Assessee facilitating sourcing of apparel merchandise from India--Transactional net margin method with cost plus 15 per cent. remuneration most appropriate method-- GAP International Sourcing (India) P. Ltd. v. Assistant CIT (Delhi) . . . 779
----International transactions--Determination of arm’s length price--International transaction of subsidiary company with parent company--Details of agreement submitted--Rate charged by assessee comparable to rate of uncontrolled parties--Adoption of comparable uncontrolled price--Justified-- Assistant CIT v. Ckar Systems P. Ltd. (Hyderabad) . . . 817
S. 140 --International transactions--Transfer pricing--Determination of arm’s length price--Dispute Resolution Panel--Objections to draft order in Form 35A--Can be filed by assessee or its agent--Section 140 not applicable to Form 35A--No requirement that Form 35A filed by assessee to be signed by its managing director or director-- Nomura Services India P. Ltd. v. ITO (Mumbai) . . . 745
S. 143(3) --Appeal--Appealable orders--Appeal to Commissioner (Appeals)--Assessing Officer finalising draft order subsequent to dismissal of assessee’s application before Dispute Resolution Panel--Dispute Resolution Panel dismissing assessee’s application as invalid without giving any directions to Assessing Officer--Assessment not made pursuant to Dispute Resolution Panel’s order--Assessment order appealable before Commissioner (Appeals)-- Nomura Services India P. Ltd. v. ITO (Mumbai) . . . 745
S. 144C --Appeal--Appealable orders--Appeal to Commissioner (Appeals)--Assessing Officer finalising draft order subsequent to dismissal of assessee’s application before Dispute Resolution Panel--Dispute Resolution Panel dismissing assessee’s application as invalid without giving any directions to Assessing Officer--Assessment not made pursuant to Dispute Resolution Panel’s order--Assessment order appealable before Commissioner (Appeals)-- Nomura Services India P. Ltd. v. ITO (Mumbai) . . . 745
S. 145A --Valuation of stock--Assessing Officer not considering opening stock of work-in-progress--Addition not justified-- ITO v. Navjivan Synthetics (Ahmedabad) . . . 712
S. 147 --Reassessment--Notice--Income escaping assessment--Information received by Assessing Officer from investigation wing regarding escapement of income--Assessing Officer recording detailed reasons--Reopening of assessment valid-- ITO v. Contel Medicare Systems P. Ltd. (Delhi) . . . 701
S. 148 --Reassessment--Notice--Income escaping assessment--Information received by Assessing Officer from investigation wing regarding escapement of income--Assessing Officer recording detailed reasons--Reopening of assessment valid-- ITO v. Contel Medicare Systems P. Ltd. (Delhi) . . . 701
S. 194C --Deduction of tax at source--Payments to contractors--Aggregate payments to transporter exceeding prescribed limit--Absence of contract irrelevant--Assessee liable to deduct tax-- ITO v. Navjivan Synthetics (Ahmedabad) . . . 712
S. 195(2) --Deduction of tax at source--Non-resident--Royalty--Payment received by foreign company for granting licence for live terrestrial television rights to assessee--Not royalty--Assessee need not deduct tax at source-- Deputy Director of Income-tax (International Taxation) v. Nimbus Communications Ltd. (Mumbai) . . . 754
S. 271(1)(c) --Penalty--Concealment of income--Furnishing of inaccurate particulars--Expenditure incurred on higher education abroad of son of managing director claimed under staff and labour training expenses--Grounds raised in appeal not raised before Commissioner (Appeals)--Matter remanded-- Deputy CIT v. Inox India Ltd. (Ahemdabad) . . . 763
----Penalty--Furnishing inaccurate particulars of income--Cessation of business--Claim that research and development carried out not sufficient to justify expenditure--No evidence to support claim--Case of false claim--Penalty leviable-- Assistant CIT v. Harvey Heart Hospitals Ltd. (Chennai) . . . 722
Income-tax (Dispute Resolution Panel) Rules, 2009 :
R. 4 --International transactions--Transfer pricing--Determination of arm’s length price--Dispute Resolution Panel--Objections to draft order in Form 35A--Can be filed by assessee or its agent--Section 140 not applicable to Form 35A--No requirement that Form 35A filed by assessee to be signed by its managing director or director-- Nomura Services India P. Ltd. v. ITO (Mumbai) . . . 745
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