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Thursday, February 28, 2013

BUDGET HIGHLIGHTS

---------- Forwarded message ----------
From: SHAHMARS <shahmars@hotmail.com>
Date: Thu, Feb 28, 2013 at 2:46 PM
 


BUDGET HIGHLIGHTS
A. DIRECTTAXES
INDIVIDUAL/FIRMS
� No change in income tax slabs.
� Tax credit of Rs. 2,000/-for income upto Rs. 5 lakh.
� Super Rich Tax: Surcharge @ 10% for Income of More than 1 crore.
This surcharge is only for 1 year i.e. for FY 2013-14. (also apply to HUFs,
Firms, similar entities)
� Rajiv Gandhi Equity saving scheme liberalised. Investments in MFs
also covered. Eligible income limit raised from Rs. 10 lakh to Rs 12 lakh.
� Benefit to First Time home loan takers. Loan amount upto Rs 25 lakh
(will taken in FY 2013-14) will be allowed an additional deduction of Rs 1
lakh on account of interest payment. Unabsorbed deduction can be carried
forward to next year.
� Contributions made to the Central Government Health Scheme are
eligible for deduction under section 80D, also extended to contributions
made under similar scheme of state governments.
� Donation made to National children fund will eligible for 100%
deduction.
CORPORATES
� No change in Corporate Tax rate.
� 10% Surcharge for companies having income of more than Rs. 10 crore.
� Dividend distribution tax surcharge increased to 10% from 5%.
� Tax holiday for Power plants (U/S 80-IA) extended to 31st March
2014.
� 15% tax on dividend from subsidiaries will extended for one year
i.e. till 31st March 2014. Companies receiving the dividend will get credit
of the dividend received from foreign subsidiary and need not to pay DDT on
that portion.
� Investment linked incentive. Companies investing Rs 100 crore or
more in plant and machinery in April 1, 2013 to March 31, 2015 will be
allowed 15 per cent investment deduction allowance apart from depreciation.
� 20% final withholding tax on unlisted companies distributing the
profits by way of Buy Back route.
� Taxes on royalty and fees for technical services increased from 10%
to 25%.
Other Changes in DirectTaxes:
� TDS at 1% of land deals over Rs. 50 lakh.
� Reduction in STT on equity futures.
� Modified provisions under GAAR effective April 1, 2016.
� Amended DTC will be placed before parliament.
B. INDIRECTTAXES
1. ServiceTax
� No changes in Service tax rate.
� Reduction in abatement rate for under construction apartments having
carpet area of 2000 sq. feet or more.
� Two new services in Negative list – Vocational courses, testing
services.
� Benefit of service tax exemption to films exhibited in cinema halls.
� Levy of service tax on all air conditioned restaurants.
� Introduction of one-time scheme called 'Voluntary Compliance
Encouragement Scheme" compliance of service tax.
2. EXCISE/CUSTOMS
� SED on cigarettes hiked by 18%.
� Custom duty on imported motor vehicles hiked.
� Import duty on set-top boxes increased to 10% from 5%.
� Zero excise duty for cotton and manmade sector (spun yarn) at the
yarn, fabric and garment stages.
� Exemption to handmade carpets and textile floor coverings of coir or
jute from excise duty.
� Exemption to ships and vessels from excise duty.
� Proposed to increase the excise duty on SUVs from 27 percent to 30
percent.
� 4 percent excise duty imposed on silver manufactured from smelting
zinc or lead.
� Excise Duty @ 6% on mobile phones pricing more than Rs. 2,000/-.
C. ECONOMY/INVESTMENTS/EXPENDITURES/OTHERS:
Average economic growth rate in 11th Plan period is 8 per cent, highest ever
in any Plan period. Economic space constrains due to high fiscal deficit,
lower savings and investment and tight monetary policy.
Current account deficit continues to be high due to excessive dependence on
oil, coal and gold imports and slowdown in exports
To increase allocation for health, family welfare.
Allocation of Rs 1106 crore for alternative medicine industry.
Rs 37,330 crore allocated for Ministry of Health & Family Welfare.
Rs 110 crore to be allocated to the department of disability affairs
Additional sum of Rs 200 crore to Women and Child Welfare Ministry to
address issues of vulnerable women.
Rs 1069 crore allocated to Department of Aryush.
Rs 13,215 crore to be provided for mid-day meal scheme.
Rs 5,284 crore to various Ministries for scholarships for SC/ST, OBC and
minority students.
Medical colleges in six more AIIMS-like institutions to start functioning
this year;
Rs 1650 crore allocated for the purpose.
Rs. 65,867 crore allocated to Ministry of HRD.
Rs 4,727 crore to be allocated for medical education and research.
Rs 15,260 crore to be allocated to Ministry of Drinking Water and Sanitation
Rs 80,194 crore allocation for Ministry of Rural Development in 2013-14.
About Rs 33,000 crore for MGNREGA,
Rs 14,873 crore for JNNURM for urban transportation in 2013-14 against Rs
7,880 crore in the current fiscal
Rs 10,000 crore set aside for incremental cost for National Food Security
Bill over and above food subsidy Tax free bonds issue to be allowed up to Rs
50,000 crore in 2013-14 strictly on capacity to raise funds from the market
Simple norms for FIIs. Less than 10% stake to be seen as FII.
10% or more stake thrash hold to be seen as FDI.
FII can trade in Forex Derivatives.
Govt to set up India's first women's bank as a public sector bank by
October.
SIDBI's re-financing facility to MSMEs to be doubled to Rs 10,000 crore.


Tuesday, February 26, 2013

Important ruling of Mumbai Tribunal on conditions relating to amalgamation

---------- Forwarded message ----------
From: Nandkishore Hegde <hegdenandkishore@yahoo.com>
Date: Sun, Feb 24, 2013 at 2:17 PM

 

Dear colleagues,
 
Please find a summary of an important ruling of the Mumbai Tribunal relating to section 72A.
 
Facts
·         Pursuant to a scheme of amalgamation, Bayer TPU Pvt. Ltd. ('BTPU') and Bayer Specialty Products Pvt. Ltd. ('BSPPL') amalgamated with Bayer material Science Pvt. Ltd ('BMSPL / taxpayer').
 
·         The taxpayer claimed a set off of loss (pertaining to BTPU only) u/s 72A of the Income tax Act, 1961 ('the Act') in AY 2004-05. 
 
  Conditions required to be fulfilled by the amalgamated company u/s72A of the Act are:
 
a)       Hold atleast 75% of book value of fixed assets of amalgamating company for a period of 5 years;
b)       Continue the business of amalgamating company for a period of 5 years;
c)       Achieve 50% of installed capacity of such undertaking before the end of 4 years and continue to maintain the said minimum level till the end of 5 years from the date of amalgamation; and
d)       Furnish certificate in Form 62 showing particulars of production on achieving 50% installed capacity and for subsequent years falling within the period of 5 years from the date of amalgamation.
 
 
 
·         The Assessing officer disallowed the set off of brought forward loss of BTPU in the hands of taxpayer on the contention that the taxpayer did not fulfill conditions stipulated u/s 72A of the Act as it:
a)       Disposed off assets of the amalgamating company above the prescribed threshold in the first year of
amalgamation;
b)       Was unable to demonstrate that amalgamation was with a view to revive the business of amalgamating
company and for a genuine business purpose;
 
 
 
c)       Did not achieve production capacity of at least 50% of the installed capacity of the amalgamating company before end of 4 years from the date of amalgamation; and
d)       Failed to furnish certificate in Form 62 for availing the benefit u/s72A of the Act.
 
 
Observations and Ruling of Mumbai Tribunal
 
·         On facts, the taxpayer claimed set off of brought forward loss of BTPU only. Disposal of assets pertaining to BTPU accounted for only 10% of total assets of BTPU.
·         The limit for disposal of 25% of assets should be restricted only to disposal of assets relating to BTPU i.e. with respect to each amalgamating company whose loss is sought to be carried forward for set off.
·         Condition of achieving 50% of installed capacity of amalgamating company to be seen only at the end of prescribed period of four years. The period of 4 years had not completed as on the date of the order. Hence the Assessing officer was not required to examine this aspect.
·         On achieving desired level of production, the condition of ensuring revival of business automatically gets satisfied.
·         Certificate in Form No. 62 needs to be furnished only on attaining the 50% capacity;
·         Tribunal held that taxpayer was not in default in the year under consideration
 
This ruling provides useful guidance  on the   availability of  claim of  set off of losses by the amalgamated company in a scenario where multiple companies amalgamate into a single company, especially with reference to the conditions that are required to be satisfied under section 72A(2) of the I.T.Act..
 
Source: ITA Nos. 6666 & 6667/MUM/2009 dated 13 February 2013

_

Section. 54: High Court Takes Liberal View On Multiple Units Being One Residential House

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

CIT vs. Gita Duggal (Delhi High Court)

S. 54/54F: Several independent units can constitute "a residential house"

 

The assessee entered into a development agreement pursuant to which the developer demolished the property and constructed a new building comprising of three floors. In consideration of granting the development rights, the assessee received Rs. 4 crores and two floors of the new building. The AO held that in computing capital gains, the cost of construction of Rs. 3.43 crores incurred by the developer on the development of the property had to be added to the sum of Rs. 4 crores received by the assessee. The assessee claimed that as the said capital gains was invested in the said two floors, she was eligible for exemption u/s 54. The AO rejected the claim on the basis that the units on the said floors were independent & self-contained and not "a residential house" and granted exemption for only one unit. The CIT(A) and Tribunal upheld the assessee's claim by relying on B. Ananda Basappa 309 ITR 329 (Kar) and K.G. Rukminiamma 331 ITR 211 (Kar). On appeal by the department to the High Court HELD dismissing the appeal:

 

As held in B. Ananda Bassappa (SLP dismissed) & K G Rukminiamma, the Revenue's contention that the phrase "a" residential house would mean "one" residential house is not correct. The expression "a" residential house should be understood in a sense that building should be of residential in nature and "a" should not be understood to indicate a singular number. Also, s. 54/54F uses the expression "a residential house" and not "a residential unit". S. 54/54F requires the assessee to acquire a "residential house" and so long as the assessee acquires a building, which may be constructed, for the sake of convenience, in such a manner as to consist of several units which can, if the need arises, be conveniently and independently used as an independent residence, the requirement of the Section should be taken to have been satisfied. There is nothing in these sections which require the residential house to be constructed in a particular manner. The only requirement is that it should be for the residential use and not for commercial use. If there is nothing in the section which requires that the residential house should be built in a particular manner, it seems to us that the income tax authorities cannot insist upon that requirement. A person may construct a house according to his plans, requirements and compulsions. A person may construct a residential house in such a manner that he may use the ground floor for his own residence and let out the first floor having an independent entry so that his income is augmented. It is quite common to find such arrangements, particularly post-retirement. One may build a house consisting of four bedrooms (all in the same or different floors) in such a manner that an independent residential unit consisting of two or three bedrooms may be carved out with an independent entrance so that it can be let out. He may even arrange for his children and family to stay there, so that they are nearby, an arrangement which can be mutually supportive. He may construct his residence in such a manner that in case of a future need he may be able to dispose of a part thereof as an independent house. There may be several such considerations for a person while constructing a residential house. The physical structuring of the new residential house, whether it is lateral or vertical, cannot come in the way of considering the building as a residential house. The fact that the residential house consists of several independent units cannot be permitted to act as an impediment to the allowance of the deduction u/s 54/54F. It is neither expressly nor by necessary implication prohibited.

 

Contrast with ITO vs. Sushila Jhaveri 292 ITR (AT) 1 (Mum)(SB). On the question whether a non-jurisdictional High Court will prevail over the Special Bench see the line of cases where Virgin Creations (Cal HC) was followed in preference to Bharati Shipyard 132 ITD 53 (Mum)(SB).

(Click Here To Read More)

 

Regards,

 

Editor,

 

itatonline.org

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

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JCIT vs. Pilani Investment & Industries Corpn. Ltd (ITAT Kolkata)

S. 14A & Rule 8D: Expense specifically relatable to taxable income cannot be disallowed



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ST returns notified for July - Sept 12


The returns for the period from July - September 2012 has been notified and the due date has been stated as 25th March, 2013.
 
Click here for  text of the notification :
 
Regards,
-------
CA.C.V.PAWAR
0253-2319641. M-9423961209

New Form 26B to claim excess TDS deposited by Deductor


Income-tax Rules regarding refund of excess deposit of TDS by deductor has been amended in notification 11/2013 dated 19/02/2013. In this notification deductor can claim refund of excess TDS by filing the return electronically on New Form 26B with digital signature only .New rule 31A(3A) has been inserted under rule 31A. Further Director General of Income Tax Systems has been authorised to set the procedure to claim the refund. New form 26B is provided here under for download.

"Rule 31 A(3A) A claim for refund, for sum paid to the credit of the Central Government under Chapter XVII-B, shall be furnished by the deductor in Form 26B electronically under digital signature in accordance with the procedures, formats and standards specified under sub-rule (5).";

"(5) The Director General of Income-tax (Systems) shall specify the procedures, formats and standards for the purposes of furnishing and verification of the statements or claim for refund in Form 26B and shall be responsible for the day-to-day administration in relation to furnishing and verification of the statements or claim for refund in Form 26B in the manner so specified.".

Regards,
-------
CA.C.V.PAWAR
PATIL DAWARE GIRASE PAWAR & ASSOCIATES
CHARTERED ACCOUNTANTS
0253-2319641. M-9423961209

For latest Updates visit Blogspot : http://canews1.blogspot.in

Changes in TDS Returns



Certain changes are brought by Income-tax (Second Amendment) Rules, 2013 with regard to the compliance to be made in respect of TDS and TCS, namely:
1) All statements to be furnished in Form nos. 24Q, 27Q and 26Q shall be furnished electronically and deductor has an option to furnish it under a digital signature;
2) Deductor can file statement in the new Form 26B to claim refund of the sum paid to the Central Government under Chapter XVII-B, provided:
a.      The credit of such sum has not been claimed by the deductor;
b.     No demand is outstanding against deductor
3) Following forms have been substituted:
a.      Form 15G – Declaration to be given for claiming certain receipts without TDS
b.     Form 15H - Declaration to be given by an Individual, who is above 60 years of age, for claiming certain receipts without TDS
c.      Form 16 – Certificate of tax deduction from salary
d.     Form 16A – Certificate for tax deduction from any other payment
e.      Form 27C - Declaration to be given for obtaining goods without collection of tax
f.       Form 27D – Certificate for tax collected at source
g.     Form 27EQ – Quarterly statement for tax collected at source
h.     Form 27Q – Quarterly statement for tax deducted at source
Regards,
-------
CA.C.V.PAWAR
0253-2319641. M-9423961209

Names of Audit Firms approved for appointment as Statutory Central Auditors in 25 Public Sector Banks for the year 2012-13



Names of Audit Firms approved for appointment as Statutory Central Auditors in 25 Public Sector Banks for the year 2012-13
Allahabad Bank, Kolkata
1
M/s N K Bhargava & Co, New Delhi
2
M/s M C Jain & Co, Kolkata
3
M/s Raghu Nath Rai & Company, New Delhi
4
M/s Khandelwal Kakani & Co, Indore
5
M/s Batliboi & Purohit , Mumbai
6
M/s Sarath & Associates, Hyderabad


Andhra Bank, Hyderabad
1
M/s Umamaheswara Rao & Co, Hyderabad
2
M/s R Subramanian & Company , Chennai
3
M/s Patro & Co, Bhubaneshwar
4
M/s Nataraja Iyer & Co, Hyderabad
5
M/s C R Sagdeo & Co, Nagpur
6
M/s Nag & Associates, Dankuni


Bank of Baroda, Mumbai
1
M/s S K Mittal & Co, New Delhi
3
M/s Ray & Ray, Kolkata
4
M/s N B S & Co, Mumbai
5
M/s Laxminiwas Neeth & Co, Hyderabad
5
M/s Brahmayya & Co, Chennai
6
M/s KASG & Co, Dhanbad


Bank of India, Mumbai
1
M/s Karnavat & Co, Mumbai
2
M/s L. B. Jha & Co, Kolkata
3
M/s S R B & Associates, Bhubaneshwar
4
M/s Sankaran & Krishnan, Chennai
5
M/s Chaturvedi & Shah, Mumbai
6
M/s Isaac & Suresh, Thiruvananthapuram


Bank of Maharashtra, Pune
1
M/s N Kumar Chhabra & Co, Chandigarh
2
M/s Kirtane & Pandit , Pune
3
M/s DSP & Associates, New Delhi  
4
M/s J C Bhalla & Co, New Delhi
5
M/s G Basu & Co, Kolkata
6
M/s Singh Ray Mishra & Co, Bhubaneswar


Canara Bank , Bangalore
1
M/s H K Chaudhry & Co, New Delhi
2
M/s K. Venkatachalam Aiyer & Co, Thiruvananthapuram
3
M/s S P Chopra & Co, New Delhi
4
M/s Loonker & Co, Mumbai
5
M/s P Chopra & Co, Karnal
6
M/s A R Das & Associates, Kolkata


Central Bank of India, Mumbai
1
M/s K S Aiyar & Co, Mumbai
2
M/s Ghiya & Co, Jaipur
3
M/s D Rangaswamy & Co, Chennai
4
M/s SAMSAND & Associates, New Delhi
5
M/s Kumar Chopra & Associates, New Delhi
6
M/s P K Subramaniam & Co, Raichur


Corporation Bank, Mangalore
1
M/s Vinod Kumar & Associates, New Delhi
2
M/s Suresh Chandra & Associates, New Delhi
3
M/s O P Totla & Co, Indore
4
M/s Rajendra K Goel & Co, New Delhi
5
M/s K. Varghese & Co, Kochi
6
M/s V Narayanan & Co, Chennai


Dena Bank, Mumbai
1
M/s B. K. Khare & Co, Mumbai
2
M/s Gandhi Minocha & Co, New Delhi
3
M/s S N Dhawan & Company, New Delhi
4
M/s P K Chopra & Co, New Delhi
5
M/s Avanish K Rastogi & Associates, Lucknow
6
M/s S C Bapna & Associates, Vadodara


Indian Bank,Chennai
1
M/s S Mohan & Co, New Delhi
2
M/s Raj K Aggarwal & Associates, New Delhi
3
M/s A B P & Associates, Bhubaneswar
4
M/s Sharp & Tannan, Mumbai
5
M/s Bhattacharya Das & Co, Kolkata
6
M/s Deoki Bijay & Co, Kolkata


Indian Overseas Bank, Chennai
1
M/s Badari Madhusudhan & Srinivasan, Bangalore
2
M/s B Thiagarajan & Co, Chennai
3
M/s S R Mohan & Co, Hyderabad
4
M/s Sankar & Moorthy, Thiruvananthapuram
5
M/s P R Mehra & Co, New Delhi
6
M/s Dass Khanna & Co, Ludhiana


Oriental Bank of Commerce, New Delhi
1
M/s Agiwal & Associates, New Delhi
2
M/s Jain Kapila Associates, New Delhi
3
M/s B Purushottam & Co, Chennai
4
M/s P L Tandon & Co, Kanpur
5
M/s Shah & Taparia, Mumbai
6
M/s Bansal R Kumar & Associates, New Delhi


Punjab & Sind Bank, New Delhi
1
M/s R M Lall & Co, Lucknow
2
M/s G S Goel & Co, New Delhi
3
M/s O P Tulsyan & Co, New Delhi
4
M/s S B G & Co, New Delhi
5
M/s B K Shroff & Co, Kolkata
6
M/s R Kothari & Company, Kolkata


Punjab National Bank, New Delhi
1
M/s Borkar & Muzumdar, Mumbai
2
M/s G S Madhava Rao & Co , Hyderabad
3
M/s Phillipos & Co, Bangalore
4
M/s K N Gutgutia & Co, Kolkata
5
M/s CVK & Associates, Mumbai
6
M/s Ramesh Kapoor & Co, Srinagar


Syndicate Bank
1
M/s Thakur Vaidyanath Aiyar & Co, New Delhi
2
M/s Chandiok & Guliani, New Delhi
3
M/s J N Sharma & Co, Kanpur
4
M/s Ramanlal G Shah & Co, Ahmedabad
5
M/s Sambhu N De & Co, Kolkata
6
M/s K N Goyal & Co, New Delhi


UCO Bank, Kolkata
1
M/s SBA Associates, Kolkata
2
M/s Ved and Company, Ghaziabad
3
M/s Dass Gupta & Associates New Delhi
4
M/s Baweja and Kaul, Jammu
5
M/s Gupta Sharma & Associates, Jammu
6
M/s A Kayes & Co, Kolkata


Union Bank of India, Mumbai
1
M/s Price Patt & Co, Chennai
2
M/s Singrodia Goyal & Co, Mumbai
3
M/s G S Mathur & Co, New Delhi
4
M/s Jindal & Co, New Delhi
5
M/s Shah Gupta & Co, Mumbai
6
M/s V Rohatgi & Co, Ranchi


United Bank of India, Kolkata
1
M/s George Read & Co, Kolkata
2
M/s D K Chhajer & Co, Kolkata
3
M/s M Choudhury & Co, Kolkata
4
M/s M C Bhandari & Co, Kolkata
5
M/s Ramesh C Agrawal & Company, Allahabad
6
M/s Dinesh Mehta & Company, New Delhi


Vijaya Bank, Bangalore
1
M/s S Viswanathan, Chennai
2
M/s Rao Associates, Bangalore
3
M/s Contractor Nayak & Kishnadwala, Mumbai
4
M/s Mukund M Chitale & Co, Mumbai
5
M/s Karra & Co, Chennai
6
M/s N C Mittal & Co, New Delhi


State Bank of India
1
M/s Singhi & Co, Kolkata
2
M/s S C M  Associates, Bhubaneshwar
3
M/s Todi Tulsyan & Co, Patna
4
M/s S N Nanda & Co, New Delhi
5
M/s Prakash & Santosh , Kanpur
6
M/s K B Sharma & Co, Jammu
7
M/s ADD & Associates, Kolkata
8
M/s V Soundararajan & Co, Chennai
9
M/s V P Aditya & Co, Kanpur
10
M/s S Venkatram & Co, Chennai
11
M/s S Jaykishan, Kolkata
12
M/s T R Chadha & Co, New Delhi
13
M/s Dhamija Sukhija & Co, Srinagar
14
M/s Sriramamurthy & Co, Vishakhapatnam


State Bank of Bikaner & Jaipur, Jaipur
1
M/s Agarwal Anil & Co, New Delhi
2
M/s S Daga & Co, Hyderabad
3
M/s M K Aggarwal & Company, New Delhi
4
M/s Chaturvedi & Company, Kolkata
5
M/s Uberoi Sood & Kapoor, New Delhi
6
M/s P S D & Associates, Jaipur


State Bank of Hyderabad, Hyderabad
1
M/s Rao & Narayan, Vijayawada
2
M/s S Mann & Co, New Delhi
3
M/s Elias George & Co, Kochi
4
M/s Khanna & Annadhanam, New Delhi
5
M/s Sharma Goel & Co, New Delhi
6
M/s SRI Associates, Kolkata


State Bank of Mysore, Bangalore
1
M/s B L Ajmera & Co, Jaipur
2
M/s Bhasin Raghavan & Company, New Delhi
3
M/s M K P S & Associates. Bhubaneshwar
4
M/s K P Rao & Co, Bangalore
5
M/s Maharaj N R Suresh and Co, Chennai
6
M/s Bubber Jindal & Co, New Delhi


State Bank of Patiala, Patiala
1
M/s Gupta Gupta & Associates, Jammu
2
M/s Abhijit Dutt & Associates, Kolkata
3
M/s S L Gangwal & Co, Jaipur
4
M/s Rawla & Co, New Delhi
5
M/s Sreedhar Suresh & Rajagopalan, Chennai
6
M/s Patel Mohan Ramesh & Co, Bangalore


State Bank of Travancore, Thiruvananthapuram
1
M/s G K Rao & Co, Hyderabad
2
M/s Abraham & Jose, Thrissur
3
M/s Jagdish Chand & Co, New Delhi
4
M/s B V Rao & Co, Vishakhapatnam
5
M/s R G N Price & Co Chennai
6
M/s Sridhar & Co, Thiruvananthapuram



Regards,
-------
CA.C.V.PAWAR
0253-2319641. M-9423961209

Saturday, February 23, 2013

High Court Explains Entire Law On Lifting Corporate Veil To Tax Offshore Transfers


Dear Subscriber,

 

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

Sanofi Pasteur Holding SA vs. Dept of Revenue (Andhra Pradesh High Court)

Gains arising on sale of shares of foreign company by NR to NR not taxable in India under India-France DTAA even if the foreign co only held Indian assets

 

Two French companies named "Murieux Alliance" ('MA') and "Groupe Industrial Marcel Dassault" ("GIMD") held shares in another French company named "ShanH". MA & GIMD acquired shares in an Indian company named "Shantha Biotechnics Ltd" ("Shantha"). The shares in Shantha were transferred to ShanH. MA and GIMD subsequently sold the shares in ShanH to another French company named "Sanofi Pasteur Holding". The assessees filed an application for advance ruling claiming that as the two French companies had sold the shares of another French company to a third French company, the gains were not chargeable to tax in India. The department opposed the application on the ground that ShanH was formed with no purpose other than to hold the shares of the Indian company and that the transaction was taxable in India. The AAR upheld the department's plea on the ground that the French company's (ShanH) only asset were the shares in the Indian company & so when its shares were sold, what really passes were the underlying assets and the control of the Indian company and so the French company was a facade and a scheme for avoidance of tax. On appeal by the assessee to the High Court, HELD reversing the AAR:

 

(i) ShanH was incorporated as part of the policy that all off-shore investments must be made through a subsidiary incorporated in France. It is not the case of the Revenue that in 2006 itself ShanH was conceived as a preordained scheme to avoid tax in India. The Revenue's case about when ShanH became a tax avoidance scheme is ambivalent and incoherent. ShanH is an entity of commercial substance and business purpose. Though a subsidiary of MA/GIMD, it is not a mere nominee or alter ego of MA/GIMD and there is nothing to show that they exercised overriding control over it. The creation of subsidiaries for investment is a legitimate practice. ShanH is accordingly the true and beneficial owner of the Indian company's shares. When the shares of ShanH were sold, it was the sale of shares of a French company and it cannot be said that the control, management or underlying assets of the Indian company were sold so as to attract tax on capital gains in India (Azadi Bachao Andolan 263 ITR 706 (SC) & Vodafone International 341 ITR 1 (SC) followed);

 

(ii) Article 14(5) of the India-France DTAA which exempts capital gains from shares representing more than 10% holding from tax in India does not permit a see through on whether the alienation of shares by ShanH is an alienation of the control, management or assets of the Indian company. It cannot be said that an actual alienation of the ShanH shares amounts to a deemed alienation of the Indian company's shares. The fact that the value of the shares of ShanH was because of the value of the Indian company's assets is irrelevant;

 

(iii) The retrospective amendment to s. 9(1) so as to supersede the verdict in Vodafone International and to tax off-shore transfers does not impact the provisions of the India-France DTAA because the DTAA overrides the Act;

 

(iv) The Revenue's argument that as the term "alienation" is not defined in the DTAA, it should have the meaning of the term "transfer" in s. 2(47) as retrospectively amended is not acceptable because as per Article 31 of the Vienna Convention, a treaty has to be interpreted as per good faith and in accordance with the ordinary meaning. Though Article 3(2) provides that a term not defined in the treaty may be given the meaning in the Act, this is not applicable because the term "alienation" is not defined in the Act. In some DTAA's, the term "alienation" is defined to include the term "transfer" but not in the India-France DTAA;

 

(v) Even assuming that the controlling rights or assets in India held by the Indian company were transferred on the alienation of the French company's shares, the cost of acquiring those rights and assets in the Indian company and their date of acquisition cannot be determined. It is also not possible to determine the exact or rationally approximate consideration (out of the total consideration for the transaction in issue), apportionable to these assets/rights. As the computation provisions fail, the charging provisions also fail (BC Srinivasa Shetty 128 ITR 294 (SC), PNB Finance 307 ITR 175 (SC) & Dana Corporation 32 DTR 1 (AAR) followed);

 

(v) The AAR has no power to review its own order. Having admitted the application, the AAR cannot at a later stage invoke clause (iii) of the Proviso to s. 245R(2)(iii) & decline to rule on the application;

 

See also Richter Holding 339 ITR 199 (Kar), Aditya Birla Nuvo 59 DTR 1 (Bom) & Taxing International Transactions By Lifting The Corporate Veil

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Sunil Kumar Yadav vs. UOI (CAT)

As there is prima facie merit in the allegation regarding improper Collegium & mala fides, interim stay on transfer of ITAT Member cannot be vacated


Exemption u/s 54/54F is available for a residential house whether it consists of several units.



Exemption u/s 54/54F is available for a residential house whether it consists of several units.

CIT Vs. Gita Duggal, ITA No. 1237/2011, Judgment delivered on: 21.02.2013, High court of Delhi

Section 54/54F uses the expression a residential house. The expression used is not a residential unit. There is nothing in these sections which require the residential house to be constructed in a particular manner. The only requirement is that it should be for the residential use and not for commercial use.

We are therefore, unable to see how or why the physical structuring of the new residential house, whether it is lateral or vertical, should come in the way of considering the building as a residential house. We do not think that the fact that the residential house consists of several independent units can be permitted to act as an impediment to the allowance of the deduction under Section 54/54F. It is neither expressly nor by necessary implication prohibited.

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Friday, February 22, 2013

ITR VOL 351 PART 1 AND


 

INCOME TAX REPORTS (ITR)

Volume 351 Part 1 (Issue dated 25-2-2013)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Appeal to Appellate Tribunal --Power to consider additional evidence--Management expenses--Tribunal can remit matter to Assessing Officer to consider additional evidence--Income-tax (Appellate Tribunal) Rules, 1963, r. 29-- CIT v . Text Hundred India Pvt. Ltd. (Delhi) . . . 57

Assessing Officer --Powers--International transaction--Arms length price--Duty to determine whether transaction is international transaction--Reference to Transfer Pricing Officer--Reference does not include entire gamut of transactions between assessee and its associated enterprise--Income-tax Act, 1961, s. 92CA-- CIT v. Amadeus India Pvt. Ltd. (Delhi) . . . 92

Assessment --Duty of assessee to disclose primary facts--†Primary†--Meaning of--Income-tax Act, 1961, ss. 147, 148-- Remfry and Sagar v . CIT (Delhi) . . . 75

Capital gains --Exemption--Transfer of capital asset and investment of net consideration in purchase or construction of residential house--New residential house need not be purchased by assessee in his own name or exclusively in his name--Assessee purchasing residential house in name of his wife--Assessee entitled to exemption under section 54F--Income-tax Act, 1961, s. 54F-- CIT v . Kamal Wahal (Delhi) . . . 4

Capital or revenue receipt --Tests--Assessee receiving amount in terms of release agreement--Compensation for loss of source of income--Capital receipt--Not taxable--Income-tax Act, 1961-- Khanna and Annadhanam v . CIT (Delhi) . . . 110

International transaction --Arms length price--Determination--Reference to Transfer Pricing Officer--When can be made--Powers of Assessing Officer and Transfer Pricing Officer--Evidence of international transaction between associated concerns--Reference to Transfer Pricing Officer valid--Assessing Officer need not consider objections of assessee--Notice by Transfer Pricing Officer to assessee--Not valid--Income-tax Act, 1961, ss. 92A, 92B, 92C, 92CA, 92F, 144C-- Veer Gems v. Asst. CIT
(Guj) . . . 35

----Arms length price--Transfer Pricing Officer--Jurisdiction--Provision empowering Transfer Pricing Officer to determine arms length price of any international transaction other than that referred to him--Prospective in operation--Income-tax Act, 1961, s. 92CA-- CIT v . Amadeus India Pvt. Ltd . (Delhi) . . . 92

----Determination of arms length price--Royalty--No reduction to be made because of failure of customers to pay for product--Income-tax Act, 1961, s. 92C-- CIT v . CA Computer Associates India P. Ltd . (Bom) . . . 69

----Transfer Pricing Officer--Powers--Restricted to determining arm̢۪s length price--No power to determine arms length of transaction not referred to him--Income-tax Act, 1961, s. 92CA-- CIT v . Amadeus India Pvt. Ltd. (Delhi) . . . 92

Penalty --Furnishing inaccurate particulars--Short-term capital gains--Assessing Officer treating amount as income from business--Amount reported in return--Treating income under some other head not inaccurate particulars--Tribunal rightly deleting penalty--Income-tax Act, 1961, s. 271(1)(c)-- CIT v . Amit Jain (Delhi) . . . 74

Reassessment --Notice--Condition precedent--Licence fee for use of goodwill--Claim based on terms and conditions of licence agreement--Failure to file licence agreement in original assessment--Failure on part of assessee to furnish primary facts fully and truly at time of original assessment--Notice valid--Income-tax Act, 1961, ss. 147, 148-- Remfry and Sagar v. CIT (Delhi) . . . 75

----Notice--Notice need not contain list of documents required to be furnished, but not actually furnished, by the assessee--Income-tax Act, 1961, ss. 147, 148-- Remfry and Sagar v . CIT (Delhi) . . . 75

----Notice--Share application money--Information from Investigation Wing that assessee one of beneficiaries of accommodation entries--No evidence to show that Assessing Officer did not receive information and had not applied his mind to information--Share applicants confirming factum of application for shares and of funds for such shares in response to notice under section 133(6) at time of original assessment--Reassessment on ground information neither available with Department nor did assessee disclose information at time of assessment proceedings--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Pardesi Developers and Infrastructure Pvt. Ltd . v . CIT
(Delhi) . . . 8

----Notice after four years--Incorrect allowance of deduction in respect of royalty received from foreign enterprise--Incorrect allowance of deduction in respect of export profit--Incorrect allowance of deduction in respect of profits and gains from newly established undertakings--Assessing Officer raising specific queries and considering material before him--Club expenses specifically mentioned in tax audit report--Assessing Officer duty bound to go through before completing assessment--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- Ranbaxy Laboratories Ltd. v. Deputy CIT
(Delhi) . . . 23

Revision --Commissioner--Powers--Conditions precedent--Condonation of delay--Appeal to Commissioner (Appeals)--Order rejecting appeal--Further revision before Commissioner not maintainable--Income-tax Act, 1961, s. 264(4)-- K. H. Traders v. CIT (Ker) . . . 1

Unexplained investment --Valuation of property--Reference to District Valuation Officer--No material found in search to justify reference--Tribunal finding valuation based on incomparable sales--Taxation of amount as unexplained investment not permissible in law--Income-tax Act, 1961, s. 69-- CIT v. Abhinav Kumar Mittal
(Delhi) . . . 20

Writ --Best judgment assessment--Rectification of mistake--Disallowance of interest paid on capital account and remuneration to partners--Opportunity of hearing--Contentions not raised before appellate authority cannot be raised for first time before High Court--Income-tax Act, 1961, ss. 144, 154--Constitution of India, art. 226-- P. P. Abdul Khader and Co . v. CIT (Ker) . . . 17

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Constitution of India :

Art. 226 --Writ--Best judgment assessment--Rectification of mistake--Disallowance of interest paid on capital account and remuneration to partners--Opportunity of hearing--Contentions not raised before appellate authority cannot be raised for first time before High Court-- P. P. Abdul Khader and Co . v. CIT (Ker) . . . 17

Income-tax Act, 1961 :

S. 54F --Capital gains--Exemption--Transfer of capital asset and investment of net consideration in purchase or construction of residential house--New residential house need not be purchased by assessee in his own name or exclusively in his name--Assessee purchasing residential house in name of his wife--Assessee entitled to exemption under section 54F-- CIT v . Kamal Wahal (Delhi) . . . 4

S. 69 --Unexplained investment--Valuation of property--Reference to District Valuation Officer--No material found in search to justify reference--Tribunal finding valuation based on incomparable sales--Taxation of amount as unexplained investment not permissible in law-- CIT v. Abhinav Kumar Mittal (Delhi) . . . 20

S. 92A --International transaction--Arm̢۪s length price--Determination--Reference to Transfer Pricing Officer--When can be made--Powers of Assessing Officer and Transfer Pricing Officer--Evidence of international transaction between associated concerns--Reference to Transfer Pricing Officer valid--Assessing Officer need not consider objections of assessee--Notice by Transfer Pricing Officer to assessee--Not valid-- Veer Gems v. Asst. CIT (Guj) . . . 35

S. 92B --International transaction--Arm̢۪s length price--Determination--Reference to Transfer Pricing Officer--When can be made--Powers of Assessing Officer and Transfer Pricing Officer--Evidence of international transaction between associated concerns--Reference to Transfer Pricing Officer valid--Assessing Officer need not consider objections of assessee--Notice by Transfer Pricing Officer to assessee--Not valid-- Veer Gems v. Asst. CIT (Guj) . . . 35

S. 92C --International transaction--Arm̢۪s length price--Determination--Reference to Transfer Pricing Officer--When can be made--Powers of Assessing Officer and Transfer Pricing Officer--Evidence of international transaction between associated concerns--Reference to Transfer Pricing Officer valid--Assessing Officer need not consider objections of assessee--Notice by Transfer Pricing Officer to assessee--Not valid-- Veer Gems v. Asst. CIT (Guj) . . . 35

----International transaction--Determination of arm̢۪s length price--Royalty--No reduction to be made because of failure of customers to pay for product-- CIT v . CA Computer Associates India P. Ltd . (Bom) . . . 69

S. 92CA --Assessing Officer--Powers--International transaction--Arm̢۪s length price--Duty to determine whether transaction is international transaction--Reference to Transfer Pricing Officer--Reference does not include entire gamut of transactions between assessee and its associated enterprise-- CIT v. Amadeus India Pvt. Ltd.
(Delhi) . . . 92

----International transaction--Arm̢۪s length price--Determination--Reference to Transfer Pricing Officer--When can be made--Powers of Assessing Officer and Transfer Pricing Officer--Evidence of international transaction between associated concerns--Reference to Transfer Pricing Officer valid--Assessing Officer need not consider objections of assessee--Notice by Transfer Pricing Officer to assessee--Not valid-- Veer Gems v. Asst. CIT (Guj) . . . 35

----International transaction--Arms length price--Transfer Pricing Officer--Jurisdiction--Provision empowering Transfer Pricing Officer to determine arms length price of any international transaction other than that referred to him--Prospective in operation-- CIT v . Amadeus India Pvt. Ltd . (Delhi) . . . 92

----International transaction--Transfer Pricing Officer--Powers--Restricted to determining arms length price--No power to determine arms length of transaction not referred to him-- CIT v . Amadeus India Pvt. Ltd. (Delhi) . . . 92

S. 92F --International transaction--Arms length price--Determination--Reference to Transfer Pricing Officer--When can be made--Powers of Assessing Officer and Transfer Pricing Officer--Evidence of international transaction between associated concerns--Reference to Transfer Pricing Officer valid--Assessing Officer need not consider objections of assessee--Notice by Transfer Pricing Officer to assessee--Not valid-- Veer Gems v. Asst. CIT (Guj) . . . 35

S. 144 --Writ--Best judgment assessment--Rectification of mistake--Disallowance of interest paid on capital account and remuneration to partners--Opportunity of hearing--Contentions not raised before appellate authority cannot be raised for first time before High Court-- P. P. Abdul Khader and Co . v. CIT (Ker) . . . 17

S. 144C --International transaction--Arms length price--Determination--Reference to Transfer Pricing Officer--When can be made--Powers of Assessing Officer and Transfer Pricing Officer--Evidence of international transaction between associated concerns--Reference to Transfer Pricing Officer valid--Assessing Officer need not consider objections of assessee--Notice by Transfer Pricing Officer to assessee--Not valid-- Veer Gems v. Asst. CIT (Guj) . . . 35

S. 147 --Assessment--Duty of assessee to disclose primary facts--†Primary --Meaning of-- Remfry and Sagar v . CIT (Delhi) . . . 75

----Reassessment--Notice--Condition precedent--Licence fee for use of goodwill--Claim based on terms and conditions of licence agreement--Failure to file licence agreement in original assessment--Failure on part of assessee to furnish primary facts fully and truly at time of original assessment--Notice valid-- Remfry and Sagar v. CIT
(Delhi) . . . 75

----Reassessment--Notice--Notice need not contain list of documents required to be furnished, but not actually furnished, by the assessee-- Remfry and Sagar v . CIT
(Delhi) . . . 75

----Reassessment--Notice--Share application money--Information from Investigation Wing that assessee one of beneficiaries of accommodation entries--No evidence to show that Assessing Officer did not receive information and had not applied his mind to information--Share applicants confirming factum of application for shares and of funds for such shares in response to notice under section 133(6) at time of original assessment--Reassessment on ground information neither available with Department nor did assessee disclose information at time of assessment proceedings--Notice not valid-- Pardesi Developers and Infrastructure Pvt. Ltd . v . CIT (Delhi) . . . 8

----Reassessment--Notice after four years--Incorrect allowance of deduction in respect of royalty received from foreign enterprise--Incorrect allowance of deduction in respect of export profit--Incorrect allowance of deduction in respect of profits and gains from newly established undertakings--Assessing Officer raising specific queries and considering material before him--Club expenses specifically mentioned in tax audit report--Assessing Officer duty bound to go through before completing assessment--Notice not valid-- Ranbaxy Laboratories Ltd. v. Deputy CIT (Delhi) . . . 23

S. 148 --Assessment--Duty of assessee to disclose primary facts--†Primary --Meaning of-- Remfry and Sagar v . CIT (Delhi) . . . 75

----Reassessment--Notice--Condition precedent--Licence fee for use of goodwill--Claim based on terms and conditions of licence agreement--Failure to file licence agreement in original assessment--Failure on part of assessee to furnish primary facts fully and truly at time of original assessment--Notice valid-- Remfry and Sagar v. CIT (Delhi) . . . 75

----Reassessment--Notice--Notice need not contain list of documents required to be furnished, but not actually furnished, by the assessee-- Remfry and Sagar v . CIT (Delhi) . . . 75

----Reassessment--Notice--Share application money--Information from Investigation Wing that assessee one of beneficiaries of accommodation entries--No evidence to show that Assessing Officer did not receive information and had not applied his mind to information--Share applicants confirming factum of application for shares and of funds for such shares in response to notice under section 133(6) at time of original assessment--Reassessment on ground information neither available with Department nor did assessee disclose information at time of assessment proceedings--Notice not valid-- Pardesi Developers and Infrastructure Pvt. Ltd . v . CIT (Delhi) . . . 8

----Reassessment--Notice after four years--Incorrect allowance of deduction in respect of royalty received from foreign enterprise--Incorrect allowance of deduction in respect of export profit--Incorrect allowance of deduction in respect of profits and gains from newly established undertakings--Assessing Officer raising specific queries and considering material before him--Club expenses specifically mentioned in tax audit report--Assessing Officer duty bound to go through before completing assessment--Notice not valid-- Ranbaxy Laboratories Ltd. v. Deputy CIT (Delhi) . . . 23

S. 154 --Writ--Best judgment assessment--Rectification of mistake--Disallowance of interest paid on capital account and remuneration to partners--Opportunity of hearing--Contentions not raised before appellate authority cannot be raised for first time before High Court-- P. P. Abdul Khader and Co . v. CIT (Ker) . . . 17

S. 264(4) --Revision--Commissioner--Powers--Conditions precedent--Condonation of delay--Appeal to Commissioner (Appeals)--Order rejecting appeal--Further revision before Commissioner not maintainable-- K. H. Traders v. CIT (Ker) . . . 1

S. 271(1)(c) --Penalty--Furnishing inaccurate particulars--Short-term capital gains--Assessing Officer treating amount as income from business--Amount reported in return--Treating income under some other head not inaccurate particulars--Tribunal rightly deleting penalty-- CIT v . Amit Jain (Delhi) . . . 74

Income-tax (Appellate Tribunal) Rules, 1963 :

R. 29 --Appeal to Appellate Tribunal--Power to consider additional evidence--Management expenses--Tribunal can remit matter to Assessing Officer to consider additional evidence-- CIT v . Text Hundred India Pvt. Ltd. (Delhi) . . . 57

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

Volume 22 : Part 1 (Issue dated : 25-2-2013)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Appeal to Appellate Tribunal --Power to admit additional evidence--State at which party can seek admission of additional evidence--Tribunal can suo motu require additional evidence even after conclusion of hearing--Income-tax (Appellate Tribunal) Rules, 1963, r. 29-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----Powers of Tribunal--No power to declare retrospective effect of amendment unconstitutional--Income-tax Act, 1961, s. 254-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

Charitable purpose --Registration of trust--Cancellation--Amendment of section 2(15) barring exemption where receipts exceed Rs. 10 lakhs--Not sufficient reason for cancellation of registration under section 12A(a)--Income-tax Act, 1961, ss. 2(15), 12A(a)-- Madras Motor Sports Club v. Director of Income-tax (Exemptions) (Chennai). . .175

International transactions --â€Å“Transaction --Definition--Arrangement, understanding or action in concert, whether formal or in writing--Transaction can be inferred from attending circumstances--Income-tax Act, 1961, s. 92F(v)--Income-tax Rules, 1962, rr. 10A, 10B-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----Arms length price--Burden of proof--Change of law--Is on assessee to establish that transaction recorded at arms length price--Primary duty of assessee to declare arms length price--If assessee does not, Assessing Officer free to determine arms length price on basis of material--Income-tax Act, 1961, ss. 92, 92B-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----Arms length price--Determination of cost of brand or logo promotion through advertisement, marketing and promotion expenses incurred by Indian associated enterprise for its foreign entity--Factors to be considered--Income-tax Act, 1961, ss. 92, 92B, 92C, 92CA, 92F(v)--Income-tax Rules, 1962, rr. 10A, 10B-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----Arms length price--Determination--By any of five prescribed methods--Combination of one or more of five methods not permitted--Express reference to any method not necessary if in substance computation was by any of prescribed methods--Income-tax Act, 1961, s. 92C-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----Arms length price--Determination--Provisions for allowance of business expenditure not applicable--Income-tax Act, 1961, ss. 37, 40A(2), 92C-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----Arms length price--Transactional net margin method--Operating profit from each international transaction in relation to total cost or sales or capital employed--No provision to set off negative adjustment with positive adjustment on account of different international transactions--Profit mark-up should be of comparable uncontrolled transaction--Bright line test employed to determine cost or value of international transaction--Proper--Restriction of comparable cases to two without discussing how other cases cited by assessee not comparable--Not proper--Arbitrary determination of mark-up at 13 per cent.--Not proper--Orders not void ab initio but defective--Orders set aside and matters remanded for decision afresh--Income-tax Act, 1961, ss. 92, 92B, 92C, 92CA, 92F(v)--Income-tax Rules, 1962, rr. 10A, 10B-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----Provision of services by one associated enterprise to another--Not restricted to services provided by assessee in regular course of business--Income-tax Act, 1961, ss. 92, 92B--Income-tax Rules, 1962, rr. 10A, 10B-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----Transfer pricing--Failure by assessee to furnish report in respect of transaction--Transaction coming to notice of Transfer Pricing Officer during course of proceedings--Amendment empowering Transfer Pricing Officer to consider it--Operates even for period prior to June 1, 2011--Income-tax Act, 1961, ss. 92CA(2B)-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

Interpretation of taxing statutes --Primary rule is strict or literal interpretation-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

Precedent --Effect of decision of Supreme Court in Maruti Suzuki India Ltd. -- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----Judgments of foreign courts only of persuasive value-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act 1961 :

S. 2(15) --Charitable purpose--Registration of trust--Cancellation--Amendment of section 2(15) barring exemption where receipts exceed Rs. 10 lakhs--Not sufficient reason for cancellation of registration under section 12A(a)-- Madras Motor Sports Club v. Director of Income-tax (Exemptions) (Chennai). . .175

S. 12A(a) --Charitable purpose--Registration of trust--Cancellation--Amendment of section 2(15) barring exemption where receipts exceed Rs. 10 lakhs--Not sufficient reason for cancellation of registration under section 12A(a)-- Madras Motor Sports Club v. Director of Income-tax (Exemptions) (Chennai). . .175

S. 37 --International transactions--Arms length price--Determination--Provisions for allowance of business expenditure not applicable-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

S. 40A(2) --International transactions--Arms length price--Determination--Provisions for allowance of business expenditure not applicable-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

S. 92 --International transactions--Arms length price--Burden of proof--Change of law--Is on assessee to establish that transaction recorded at arms length price--Primary duty of assessee to declare arms length price--If assessee does not, Assessing Officer free to determine arms length price on basis of material-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----International transactions--Arms length price--Determination of cost of brand or logo promotion through advertisement, marketing and promotion expenses incurred by Indian associated enterprise for its foreign entity--Factors to be considered-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----International transactions--Arms length price--Transactional net margin method--Operating profit from each international transaction in relation to total cost or sales or capital employed--No provision to set off negative adjustment with positive adjustment on account of different international transactions--Profit mark-up should be of comparable uncontrolled transaction--Bright line test employed to determine cost or value of international transaction--Proper--Restriction of comparable cases to two without discussing how other cases cited by assessee not comparable--Not proper--Arbitrary determination of mark-up at 13 per cent.--Not proper--Orders not void ab initio but defective--Orders set aside and matters remanded for decision afresh-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----International transactions--Provision of services by one associated enterprise to another--Not restricted to services provided by assessee in regular course of business-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

S. 92B --International transactions--Arms length price--Burden of proof--Change of law--Is on assessee to establish that transaction recorded at arms length price--Primary duty of assessee to declare arms length price--If assessee does not, Assessing Officer free to determine arms length price on basis of material-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----International transactions--Arms length price--Determination of cost of brand or logo promotion through advertisement, marketing and promotion expenses incurred by Indian associated enterprise for its foreign entity--Factors to be considered-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----International transactions--Arms length price--Transactional net margin method--Operating profit from each international transaction in relation to total cost or sales or capital employed--No provision to set off negative adjustment with positive adjustment on account of different international transactions--Profit mark-up should be of comparable uncontrolled transaction--Bright line test employed to determine cost or value of international transaction--Proper--Restriction of comparable cases to two without discussing how other cases cited by assessee not comparable--Not proper--Arbitrary determination of mark-up at 13 per cent.--Not proper--Orders not void ab initio but defective--Orders set aside and matters remanded for decision afresh-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----International transactions--Provision of services by one associated enterprise to another--Not restricted to services provided by assessee in regular course of business-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

S. 92C --International transactions--Arms length price--Determination--By any of five prescribed methods--Combination of one or more of five methods not permitted--Express reference to any method not necessary if in substance computation was by any of prescribed methods-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----International transactions--Arms length price--Determination--Provisions for allowance of business expenditure not applicable-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----International transactions--Arms length price--Determination of cost of brand or logo promotion through advertisement, marketing and promotion expenses incurred by Indian associated enterprise for its foreign entity--Factors to be considered-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----International transactions--Arms length price--Transactional net margin method--Operating profit from each international transaction in relation to total cost or sales or capital employed--No provision to set off negative adjustment with positive adjustment on account of different international transactions--Profit mark-up should be of comparable uncontrolled transaction--Bright line test employed to determine cost or value of international transaction--Proper--Restriction of comparable cases to two without discussing how other cases cited by assessee not comparable--Not proper--Arbitrary determination of mark-up at 13 per cent.--Not proper--Orders not void ab initio but defective--Orders set aside and matters remanded for decision afresh-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

S. 92CA --International transactions--Arms length price--Determination of cost of brand or logo promotion through advertisement, marketing and promotion expenses incurred by Indian associated enterprise for its foreign entity--Factors to be considered-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----International transactions--Arms length price--Transactional net margin method--Operating profit from each international transaction in relation to total cost or sales or capital employed--No provision to set off negative adjustment with positive adjustment on account of different international transactions--Profit mark-up should be of comparable uncontrolled transaction--Bright line test employed to determine cost or value of international transaction--Proper--Restriction of comparable cases to two without discussing how other cases cited by assessee not comparable--Not proper--Arbitrary determination of mark-up at 13 per cent.--Not proper--Orders not void ab initio but defective--Orders set aside and matters remanded for decision afresh-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

S. 92CA(2B) --International transactions--Transfer pricing--Failure by assessee to furnish report in respect of transaction--Transaction coming to notice of Transfer Pricing Officer during course of proceedings--Amendment empowering Transfer Pricing Officer to consider it--Operates even for period prior to June 1, 2011-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

S. 92F(v) --International transactions--Transaction --Definition--Arrangement, understanding or action in concert, whether formal or in writing--Transaction can be inferred from attending circumstances-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----International transactions--Arms length price--Determination of cost of brand or logo promotion through advertisement, marketing and promotion expenses incurred by Indian associated enterprise for its foreign entity--Factors to be considered-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----International transactions--Arms length price--Transactional net margin method--Operating profit from each international transaction in relation to total cost or sales or capital employed--No provision to set off negative adjustment with positive adjustment on account of different international transactions--Profit mark-up should be of comparable uncontrolled transaction--Bright line test employed to determine cost or value of international transaction--Proper--Restriction of comparable cases to two without discussing how other cases cited by assessee not comparable--Not proper--Arbitrary determination of mark-up at 13 per cent.--Not proper--Orders not void ab initio but defective--Orders set aside and matters remanded for decision afresh-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

S. 254 --Appeal to Appellate Tribunal--Powers of Tribunal--No power to declare retrospective effect of amendment unconstitutional-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

Income-tax Rules, 1962 :

R. 10A --International transactions--Arms length price--Determination of cost of brand or logo promotion through advertisement, marketing and promotion expenses incurred by Indian associated enterprise for its foreign entity--Factors to be considered-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----International transactions--Arms length price--Transactional net margin method--Operating profit from each international transaction in relation to total cost or sales or capital employed--No provision to set off negative adjustment with positive adjustment on account of different international transactions--Profit mark-up should be of comparable uncontrolled transaction--Bright line test employed to determine cost or value of international transaction--Proper--Restriction of comparable cases to two without discussing how other cases cited by assessee not comparable--Not proper--Arbitrary determination of mark-up at 13 per cent.--Not proper--Orders not void ab initio but defective--Orders set aside and matters remanded for decision afresh-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----International transactions--Transaction --Definition--Arrangement, understanding or action in concert, whether formal or in writing--Transaction can be inferred from attending circumstances-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----International transactions--Provision of services by one associated enterprise to another--Not restricted to services provided by assessee in regular course of business-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

R. 10B --International transactions--Arms length price--Determination of cost of brand or logo promotion through advertisement, marketing and promotion expenses incurred by Indian associated enterprise for its foreign entity--Factors to be considered-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----International transactions--Arms length price--Transactional net margin method--Operating profit from each international transaction in relation to total cost or sales or capital employed--No provision to set off negative adjustment with positive adjustment on account of different international transactions--Profit mark-up should be of comparable uncontrolled transaction--Bright line test employed to determine cost or value of international transaction--Proper--Restriction of comparable cases to two without discussing how other cases cited by assessee not comparable--Not proper--Arbitrary determination of mark-up at 13 per cent.--Not proper--Orders not void ab initio but defective--Orders set aside and matters remanded for decision afresh-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----International transactions--Transaction --Definition--Arrangement, understanding or action in concert, whether formal or in writing--Transaction can be inferred from attending circumstances-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

----International transactions--Provision of services by one associated enterprise to another--Not restricted to services provided by assessee in regular course of business-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1

Income-tax (Appellate Tribunal) Rules, 1963 :

R. 29 --Appeal to Appellate Tribunal--Power to admit additional evidence--State at which party can seek admission of additional evidence--Tribunal can suo motu require additional evidence even after conclusion of hearing-- L. G. Electronics India P. Ltd. v. Assistant CIT [SB] (Delhi) . . .1