ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB)) -- PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Deduction of tax at source --Payment to contractors--Trucks hired for such transport--Assessee in possession and control of trucks carrying out work of transportation--Tax not deductible on amount paid as hire charges--Income-tax Act, 1961, s. 194C-- Saiyad Saukatali Saiydamiya v. ITO (Ahmedabad) . . . 94
Fringe benefit tax --Sales promotion expenses--Amount not spent for direct or indirect benefit of employees--Assessee not liable to fringe benefit tax--Income-tax Act, 1961, s. 115WB(2)-- Assistant CIT v. Tata Motors Ltd . (Mumbai) . . . 71
International transactions --Arm’s length price--Determination--One comparable company alone to be taken for determination of arm’s length price--Benefit of ± 5 per cent. adjustment not available where only one comparable chosen--Difference in risk data--Adjustment required according to rule 10B and not by substituting current year’s data by multi-year data--No facts brought out by assessee for quantification of risk adjustment--No adjustment to be allowed--Income-tax Act, 1961, s. 92C--Income-tax Rules, 1962, r. 10B-- General Atlantic P. Ltd. v. Deputy CIT (Mumbai) . . . 75
Volume 25 : Part 1 (Issue dated : 15-7-2013)
SUBJECT INDEX TO CASES REPORTED
Appeal to Appellate Tribunal --Rectification of mistakes--Mistake apparent from record--Tribunal considering additional ground raised by assessee--No mistake apparent from record--Income-tax Act, 1961, s. 254(2)-- Cellular Mobile Telecom Services v. ITO (Chennai) . . . 67
Assessment --Unexplained cash credits--Sale of gold claimed to be gift from parents--No evidence produced by assessee of purchasers--Parents not wealth-tax assessees--Assessee filing wealth-tax return before completion of assessment--No details furnished except source of deposits into bank account--Additions on cash credits proper--Income-tax Act, 1961-- K. R. S. Suresh v. ITO (Chennai) . . . 32
----Validity of assessment--Assessment order-- Assessing Officer signing original assessment order as well as notice of demand--Absence of signature of Assessing Officer in assessment order copy would not vitiate assessment--Income-tax Act, 1961-- Dr. Mampilly Antony v. Deputy Director of Income-tax (International Taxation) (Cochin) . . . 91
Business expenditure --Accrued or contingent liability--Provision for post retirement medical benefits to employees--Actuarial valuation--Change method mandatory under revised Accounting Standard-15--Allowable--Entries in books of account not determinative of whether assessee earned any profit-- Glaxo Smithkline Consumer Healthcare Ltd. v. Additional CIT (Chandigarh) . . . 100
----Contributions to temples, churches, clubs, educational institutions and trade unions in lieu of advertising space--Disallowance only on small part of expenditure--No material to show expenditure was incurred for business purpose or for welfare of employees--Contribution made by way of charity not allowable--Income-tax Act, 1961, s. 37-- P. A. Jose v. Assistant CIT (Cochin) . . .1
----Deduction only on actual payment--Difference between deposit with Excise Department (balance of central excise duty lying in its personal ledger account) as on last date of year--Allowable as deduction--Income-tax Act, 1961, s. 43B-- Glaxo Smithkline Consumer Healthcare Ltd. v. Additional CIT (Chandigarh) . . . 100
----Disallowance of car expenses--Failure to produce logbook or record to establish use of car for purposes of proprietary business--Expenditure not allowable--Income-tax Act, 1961, s. 37-- Munish Gupta v. Deputy CIT (Chandigarh) . . . 29
----Interest on borrowed capital--Assessee must demonstrate that sufficient capital funds available--Assessing Officer to examine whether funds available in accounts of assessee and nature of deposit--Matter remanded-- P. A. Jose v. Assistant CIT (Cochin) . . .1
----Travelling expenses of wife of assessee--Wife qualified and visiting different places for purpose of business of husband--Expenditure allowable--Income-tax Act, 1961, s. 37-- Munish Gupta v. Deputy CIT (Chandigarh) . . . 29
Capital or revenue expenditure --Expenditure on interior work for setting up branch in newly leased premises--Creation of capital asset and expansion of profit-making apparatus--Capital expenditure-- P. A. Jose v. Assistant CIT (Cochin) . . .1
Deduction of tax at source --Fees for technical services--Stock exchange--Assessee a member of stock exchange making payment towards VSAT, transaction and lease line charges--Assessing Officer to verify assessee believed bona fide it was not liable to deduct tax for transaction charges and if so to allow deduction--Matter remanded--Income-tax Act, 1961, ss. 40(a)(ia), 194J-- Assistant CIT v. Twenty First Century Shares and Securities Ltd. (Mumbai) . . . 63
Exemption --Export oriented undertaking--Manufacture of plants--Supply in various sub-assemblies and components--Assembled machines partially disassembled for proper packaging for export, transportation and installation--Assessee entitled to exemption--Income-tax Act, 1961, s. 10B-- ITO v. Aar Ess Exim P. Ltd. (Delhi) . . . 14
Fringe benefits tax --Expenditure incurred on brand equity payment--No benefit arising to employees--Expenditure not liable to fringe benefit tax--Income-tax Act, 1961-- Assistant CIT v. Tata Power Co. Ltd. (Mumbai) . . . 58
----Business promotion expenses and gifts to travel agents and customers--No employer-employee relationship between assessee and beneficiaries--Assessee not liable to pay fringe benefits tax--Income-tax Act, 1961, s. 115WA-- Jet Airways (India) Ltd. v. Deputy CIT (Mumbai) . . . 36
----Free tickets issued by assessee to employees for private journeys--Method of computation--Cannot be equated with benefit provided by assessee to general public--Valuation by cost assigned to frequent flyer programme in assessee’s books--Method accepted by Department in assessee’s case since assessment year 1999-2000--To be adopted for this year also--Matter remanded--Income-tax Act, 1961, s. 115WC-- Jet Airways (India) Ltd. v. Deputy CIT (Mumbai) . . . 36
----Insurance expenses of employees--No details furnished whether expenses incurred as a statutory liability--Matter remanded--Income-tax Act, 1961, s. 115WA-- Jet Airways (India) Ltd. v. Deputy CIT (Mumbai) . . . 36
Income --Computation--Whether land is agricultural or not--Finding by Assessing Officer and Commissioner (Appeals) relying on reports of Inspector of Income-tax--Lacunae in all these issues--Order set aside and matter remanded for decision afresh--Income-tax Act, 1961-- Dr. Mampilly Antony v. Deputy Director of Income-tax (International Taxation) (Cochin) . . . 91
International transactions --Arm’s length price--Computation--Transactional net margin method--Payment of royalty by assessee to associated enterprise for use trademark--Deemed international transaction--Brand promotion of associated enterprise--Advertisement, marketing and promotion--Liable to be considered for determination of arm’s length price--Transaction not referred to Transfer Pricing Officer--Transfer Pricing Officer entitled to consider--Expenditure relating to market research service charges paid to selling agents, discount on sales and consumer market research expenses--Incurred in connection with sale--Not part of brand promotion--Selection of comparable cases using foreign brand not proper--No adjustment for advertisement expenses attributed to promotion of domestic brands--Matter remanded for adoption of prescribed method for determining arm’s length price in relation to advertisement, marketing and promotion expenditure--Income-tax Act, 1961, ss. 92B(2), 92CA-- Glaxo Smithkline Consumer Healthcare Ltd. v. Additional CIT (Chandigarh) . . . 100
Loss --Carry forward and set off--Speculation business--Assessee involved in trading in shares on own account and on behalf of customers--Income from trading in shares on assessee’s own account to be treated as speculation income--Carry forward of losses to be allowed accordingly--Assessee to be provided with reasonable opportunity of being beard--Matter remanded--Income-tax Act, 1961, s. 73, Expln. -- Nashik Capital Financial Services P. Ltd. v. Deputy CIT (Pune) . . . 48
Non-resident --Royalty--Payment for consultancy services rendered to Indian group company--Not royalty but business income--Double Taxation Avoidance Agreement between India and Indonesia, arts. 7, 12-- P. T. McKinsey Indonesia v. Deputy Director of Income-tax (International Taxation) (Mumbai) . . . 52
Penalty --Furnishing inaccurate particulars of income--Incorrect claim of set off of excess loss under short-term capital gains--Does not amount to furnishing inaccurate particulars--Assessee not liable to penalty--Income-tax Act, 1961, s. 271(1)(c)-- Assistant CIT v. M. Ravinder (Hyderabad) . . . 86
Reassessment --Notice--Condition precedent--Valid reason to believe that income had escaped assessment--Reassessment proceedings valid--Income-tax Act, 1961, s. 147-- Dr. Mampilly Antony v. Deputy Director of Income-tax (International Taxation) (Cochin) . . . 91
Revision --Commissioner--Condition precedent--No finding that assessment order erroneous and prejudicial to interests of Revenue--Assessee consistently following one method of computing income--Commissioner cannot assume jurisdiction and thrust his method on assessee--Income-tax Act, 1961, s. 263-- Aditya Builders v. CIT (Admn.) (Mumbai) . . . 77
----Commissioner--Erroneous and prejudicial to Revenue--Assessment order passed without proper enquiry--Order erroneous and prejudicial to Revenue--Order of revision valid--Income-tax Act, 1961, s. 263-- Krishan Gopal (HUF) v. CIT (Jaipur) . . . 69
----Commissioner--Issue of reconciliation of tax deducted at source and trading account in agricultural items--Assessment order passed without proper enquiry--Order erroneous and prejudicial to Revenue--Revision order valid--Income-tax Act, 1961, s. 263-- Krishan Gopal (HUF) v. CIT (Jaipur) . . . 69
----Powers of Commissioner--Scope of section 263--Opportunity to be given to assessee on verification of genuineness of outstanding creditors or debtors--Order of revision not valid--Income-tax Act, 1961, s. 263-- Krishan Gopal (HUF) v. CIT (Jaipur) . . . 69
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Double Taxation Avoidance Agreement between India and Indonesia :
Art. 7 --Non-resident--Royalty--Payment for consultancy services rendered to Indian group company--Not royalty but business income-- P. T. McKinsey Indonesia v. Deputy Director of Income-tax (International Taxation) (Mumbai) . . . 52
Art. 12 --Non-resident--Royalty--Payment for consultancy services rendered to Indian group company--Not royalty but business income-- P. T. McKinsey Indonesia v. Deputy Director of Income-tax (International Taxation) (Mumbai) . . . 52
S. 10B --Exemption--Export oriented undertaking--Manufacture of plants--Supply in various sub-assemblies and components--Assembled machines partially disassembled for proper packaging for export, transportation and installation--Assessee entitled to exemption-- ITO v. Aar Ess Exim P. Ltd. (Delhi) . . . 14
S. 37 --Business expenditure--Contributions to temples, churches, clubs, educational institutions and trade unions in lieu of advertising space--Disallowance only on small part of expenditure--No material to show expenditure was incurred for business purpose or for welfare of employees--Contribution made by way of charity not allowable-- P. A. Jose v. Assistant CIT (Cochin) . . .1
----Business expenditure--Disallowance of car expenses--Failure to produce logbook or record to establish use of car for purposes of proprietary business--Expenditure not allowable-- Munish Gupta v. Deputy CIT (Chandigarh) . . . 29
----Business expenditure--Travelling expenses of wife of assessee--Wife qualified and visiting different places for purpose of business of husband--Expenditure allowable-- Munish Gupta v. Deputy CIT (Chandigarh) . . . 29
S. 40(a)(ia) --Deduction of tax at source--Fees for technical services--Stock exchange--Assessee a member of stock exchange making payment towards VSAT, transaction and lease line charges--Assessing Officer to verify assessee believed bona fide it was not liable to deduct tax for transaction charges and if so to allow deduction--Matter remanded-- Assistant CIT v. Twenty First Century Shares and Securities Ltd. (Mumbai) . . . 63
S. 43B --Business expenditure--Deduction only on actual payment--Difference between deposit with Excise Department (balance of central excise duty lying in its personal ledger account) as on last date of year--Allowable as deduction-- Glaxo Smithkline Consumer Healthcare Ltd. v. Additional CIT (Chandigarh) . . . 100
S. 73, Expln. --Loss--Carry forward and set off--Speculation business--Assessee involved in trading in shares on own account and on behalf of customers--Income from trading in shares on assessee’s own account to be treated as speculation income--Carry forward of losses to be allowed accordingly--Assessee to be provided with reasonable opportunity of being beard--Matter remanded-- Nashik Capital Financial Services P. Ltd. v. Deputy CIT (Pune) . . . 48
S. 92B(2) --International transactions--Arm’s length price--Computation--Transactional net margin method--Payment of royalty by assessee to associated enterprise for use trademark--Deemed international transaction--Brand promotion of associated enterprise--Advertisement, marketing and promotion--Liable to be considered for determination of arm’s length price--Transaction not referred to Transfer Pricing Officer--Transfer Pricing Officer entitled to consider--Expenditure relating to market research service charges paid to selling agents, discount on sales and consumer market research expenses--Incurred in connection with sale--Not part of brand promotion--Selection of comparable cases using foreign brand not proper--No adjustment for advertisement expenses attributed to promotion of domestic brands--Matter remanded for adoption of prescribed method for determining arm’s length price in relation to advertisement, marketing and promotion expenditure-- Glaxo Smithkline Consumer Healthcare Ltd. v. Additional CIT (Chandigarh) . . . 100
S. 92CA --International transactions--Arm’s length price--Computation--Transactional net margin method--Payment of royalty by assessee to associated enterprise for use trademark--Deemed international transaction--Brand promotion of associated enterprise--Advertisement, marketing and promotion--Liable to be considered for determination of arm’s length price--Transaction not referred to Transfer Pricing Officer--Transfer Pricing Officer entitled to consider--Expenditure relating to market research service charges paid to selling agents, discount on sales and consumer market research expenses--Incurred in connection with sale--Not part of brand promotion--Selection of comparable cases using foreign brand not proper--No adjustment for advertisement expenses attributed to promotion of domestic brands--Matter remanded for adoption of prescribed method for determining arm’s length price in relation to advertisement, marketing and promotion expenditure-- Glaxo Smithkline Consumer Healthcare Ltd. v. Additional CIT (Chandigarh) . . . 100
S. 115WA --Fringe benefits tax--Business promotion expenses and gifts to travel agents and customers--No employer-employee relationship between assessee and beneficiaries--Assessee not liable to pay fringe benefits tax-- Jet Airways (India) Ltd. v. Deputy CIT (Mumbai) . . . 36
----Fringe benefits tax--Insurance expenses of employees--No details furnished whether expenses incurred as a statutory liability--Matter remanded-- Jet Airways (India) Ltd. v. Deputy CIT (Mumbai) . . . 36
S. 115WC --Fringe benefits tax--Free tickets issued by assessee to employees for private journeys--Method of computation--Cannot be equated with benefit provided by assessee to general public--Valuation by cost assigned to frequent flyer programme in assessee’s books--Method accepted by Department in assessee’s case since assessment year 1999-2000--To be adopted for this year also--Matter remanded-- Jet Airways (India) Ltd. v. Deputy CIT (Mumbai) . . . 36
S. 147 --Reassessment--Notice--Condition precedent--Valid reason to believe that income had escaped assessment--Reassessment proceedings valid-- Dr. Mampilly Antony v. Deputy Director of Income-tax (International Taxation) (Cochin) . . . 91
S. 194J --Deduction of tax at source--Fees for technical services--Stock exchange--Assessee a member of stock exchange making payment towards VSAT, transaction and lease line charges--Assessing Officer to verify assessee believed bona fide it was not liable to deduct tax for transaction charges and if so to allow deduction--Matter remanded-- Assistant CIT v. Twenty First Century Shares and Securities Ltd. (Mumbai) . . . 63
S. 254(2) --Appeal to Appellate Tribunal--Rectification of mistakes--Mistake apparent from record--Tribunal considering additional ground raised by assessee--No mistake apparent from record-- Cellular Mobile Telecom Services v. ITO (Chennai) . . . 67
S. 263 --Revision--Commissioner--Condition precedent--No finding that assessment order erroneous and prejudicial to interests of Revenue--Assessee consistently following one method of computing income--Commissioner cannot assume jurisdiction and thrust his method on assessee-- Aditya Builders v. CIT (Admn.) (Mumbai) . . . 77
----Revision--Commissioner--Erroneous and prejudicial to Revenue--Assessment order passed without proper enquiry--Order erroneous and prejudicial to Revenue--Order of revision valid-- Krishan Gopal (HUF) v. CIT (Jaipur) . . . 69
----Revision--Commissioner--Issue of reconciliation of tax deducted at source and trading account in agricultural items--Assessment order passed without proper enquiry--Order erroneous and prejudicial to Revenue--Revision order valid-- Krishan Gopal (HUF) v. CIT (Jaipur) . . . 69
----Revision--Powers of Commissioner--Scope of section 263--Opportunity to be given to assessee on verification of genuineness of outstanding creditors or debtors--Order of revision not valid-- Krishan Gopal (HUF) v. CIT (Jaipur) . . . 69
S. 271(1)(c) --Penalty--Furnishing inaccurate particulars of income--Incorrect claim of set off of excess loss under short-term capital gains--Does not amount to furnishing inaccurate particulars--Assessee not liable to penalty-- Assistant CIT v. M. Ravinder (Hyderabad) . . . 86
-CA.RAJU SHAH
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