ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB)) -- PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Business expenditure --Disallowance--Payments subject to deduction of tax at source--Assessee acting as sub-agent of advertising agencies on commission basis--Not required to deduct tax from payments to advertising agencies--Payments deductible--Income-tax Act, 1961, ss. 40(a)(ia), 194C--CBDT Circular No. 452, dated 17.3.1986-- ITO v. Honest Publicity (Ahmedabad) . . . 792
Insurance business --Computation of profits--Special provision--Non obstante clause--Annual average of surplus arrived at by adjusting surplus or deficit disclosed by actuarial valuation made in accordance with Insurance Act, 1938--Actuarial valuation to be accordance with unamended 1938 Act--Policyholders’ and shareholders’ account to be consolidated for arriving at deficit or surplus without taking into consideration transfer of funds from shareholders’ account to policyholders’ account--Section 14A not applicable to insurance business--Assessee entitled to exemption under section 10(23AAB) of surplus of participating pension business and dividend under section 10(34)--Incomes in shareholders’ account to be considered as arising out of life insurance business--Not to be taxed as income from other sources--Negative reserve part of actuarial valuation--Assessing Officer has no power to modify amount after actuarial valuation done--Depreciation allowable on assets capitalised in accounts--Income-tax Act, 1961, ss. 10(23AAB), (34), 14A, 32, 44, Sch. I, Part A, r. 2--Insurance Act, 1938--Insurance Regulatory and Development Authority Act, 1999--Insurance Regulatory and Development Authority (Actuarial Report and Abstract) Regulations, 2000--Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditor’s Report of Insurance Companies) Regulations, 2002-- ICICI Prudential Insurance Co. Ltd. v. Asst. CIT (Mumbai) . . . 715
Volume 28 : Part 3 (Issue dated : 9-12-2013)
SUBJECT INDEX TO CASES REPORTED
Business expenditure --Disallowance--Commission liable to deduction of tax at source--“Sale scheme expenses†debited to profit and loss account--Benefit given by way of credit note to distributors--Amount not part of invoice--No provision in agreement for such discount over and above invoice price--Whether discount or commission--Failure by assessee to produce scheme under which benefit given to distributors--Matter remanded to Assessing Officer to verify and decide issue in accordance with law--Income-tax Act, 1961, s. 40(a)(ia)-- SKOL Breweries Ltd. v. Assistant CIT (Mumbai) . . . 465
----Disallowance--Excessive or unreasonable payments--Failure of assessee to produce books of account and bills and vouchers for verification--Disallowance of 15 per cent. from total expenditure proper--Income-tax Act, 1961, s. 40A(2)-- Brigade Global Services P. Ltd. v. ITO (Hyderabad) . . . 411
----Disallowance--Payments liable to deduction of tax at source--Fees for technical services--Human skill involved in internet bandwidth facilities availed of by assessee--Payment in nature of fees for technical services--Assessee under obligation to deduct tax at source--Income-tax Act, 1961, s. 40(a)(ia)-- Brigade Global Services P. Ltd. v. ITO (Hyderabad) . . . 411
----Disallowance--Payments subject to tax deduction at source--Production of additional evidence before Commissioner (Appeals) in form of revised tax deduction at source return in Form 26Q4 filed subsequent to assessment--Assessing Officer should be granted opportunity to examine additional evidence--Matter remanded--Income-tax Act, 1961, s. 40(a)(ia)--Income-tax Rules, 1962, r. 46A-- Assistant CIT v. Shimoga District Milk Producers Societies Union Ltd. (Bangalore) . . . 369
----Disallowance--Payment subject to deduction of tax at source--Royalty--Definition for purpose of disallowance-- Explanation 2 to section 9(1)(vi) applicable--Payment to group company towards licence fees representing annual charges for up-gradation of accounting software--Payment for transfer of any right to use or right to use computer software--Not royalty as provided under Explanation 2 to section 9(1)(vi)--Amount not be to disallowed under section 40(a)(i)--Income-tax Act, 1961, ss. 9(1)(vi), Expln. 2, 40(a)(i)-- SKOL Breweries Ltd. v. Assistant CIT (Mumbai) . . . 465
----Disallowance--Sum liable to deduction of tax at source--Provision not applicable to depreciation--Sum paid for acquisition of brand from non-resident and capitalised in accounts--Depreciation cannot be denied for failure to deduct tax at source on payment--Income-tax Act, 1961, ss. 32(1)(ii), 40(a)(i)-- SKOL Breweries Ltd. v. Assistant CIT (Mumbai) . . . 465
----Interest on borrowed capital--Loans advanced to group companies at lower rate of interest--Disallowance only to extent of advance given by assessee during year and only for period for which advance remained with group concerns--Whether assessee had its own funds for making advance to be seen--Matter remanded--Income-tax Act, 1961, s. 36(1)(iii)-- SKOL Breweries Ltd. v. Assistant CIT (Mumbai) . . . 465
Capital or revenue expenditure --Assessee, a co-operative society engaged in dairy development--Expenditure incurred to construct building for milk producers’ co-operative societies--No capital asset in hands of assessee--Grant to facilitate carrying out of business objects more effectively--Revenue expenditure--Income-tax Act, 1961-- Assistant CIT v. Shimoga District Milk Producers Societies Union Ltd. (Bangalore) . . . 369
----Payments to clubs towards entrance fee, subscription and other services-- Allowable--SKOL Breweries Ltd. v. Assistant CIT (Mumbai) . . . 465
Depreciation --Condition precedent--User of asset--Asset can be said to be in use when kept ready for use--Mining equipment and consumables kept ready for use when machines of sub-contractor broke down--Assessee entitled to depreciation--Income-tax Act, 1961, s. 32-- Assistant CIT v. Ashok Doshi (Jodhpur) . . . 389
----Rate of depreciation--Assessee already having Maruti van--Purchase of Tavera car for undertaking supervision at mine site for which Maruti van not suitable--No material to substantiate personal use--Depreciation to extent of 50 per cent. allowable--Income-tax Act, 1961, s. 32-- Assistant CIT v. Ashok Doshi (Jodhpur) . . . 389
----Rate of depreciation--Tippers--Purchase of tankers and tippers for giving them on hire--Assessee engaged in business of mining--Tippers not part of plant and machinery--Depreciation at 40 per cent. allowable--Income-tax Act, 1961, s. 32-- Assistant CIT v. Ashok Doshi (Jodhpur) . . . 389
Exemption --Charitable purpose--Educational institution--Object of assessee to promote education in practice of management and related subjects--Assessee eligible for exemption--Income-tax Act, 1961, ss. 2(15), 11-- Ahmedabad Management Association v. Joint DIT (Exemption) (Ahmedabad) . . . 349
----Export--Disallowance of expenditure by Assessing Officer on computing income--Claiming of exemption for inflated business income as additional ground before Appellate Tribunal--Deduction allowable on account of disallowance of expenditure--Income-tax Act, 1961, s. 10A-- Brigade Global Services P. Ltd. v. ITO (Hyderabad) . . . 411
Income --Income not includible in total income--Awards in case of sportsman who is not professional--Awards not in nature of income--Assessee not liable to tax--Income-tax Act, 1961, s. 10(17A)--CBDT Circular No. 447 of 1986, dated 22-1-1986-- Abhinav Bindra v. Deputy CIT (Delhi) . . . 376
----Income not includible in total income--Share of profits received by partner from firm--Amount credited in capital account verifiable from bank account of firm--Amount not taxable--Income-tax Act, 1961, s. 10(2A)-- Assistant CIT v. Ashok Doshi (Jodhpur) . . . 389
International transactions --Arm’s length price--Determination--Press Note in respect of foreign direct investment policy prescribing percentage of royalty allowed under automatic route--Only for remittance of foreign exchange--Not substitute for determination of arm’s length price under provisions of Act--International transactions of assessee constituting only 3.93 per cent. of its total operating cost--Comparison of entity-level results in contravention of transfer pricing regulations--Comparable uncontrolled price method adopted by assessee in subsequent years not disputed by Department--Determination of arm’s length price remanded to Assessing Officer considering appropriate comparables--Income-tax Act, 1961, s. 92CA-- SKOL Breweries Ltd. v. Assistant CIT (Mumbai) . . . 465
----Determination of arm’s length price--Assessment--Dispute Resolution Panel--Direction of Dispute Resolution Panel binding on Assessing Officer--Matter remanded to pass fresh assessment order in accordance with directions of Dispute Resolution Panel--Income-tax Act, 1961, s. 144C(13)-- Diamond Management and Technology Consultants Ltd. v. Assistant DIT (International Taxation) (Mumbai) . . . 359
----Transfer pricing--Arm’s length price--Selection of comparables--Companies having extraordinarily high profit or loss excludible as comparables--New company--Financial data of only four months available--Part period data cannot be taken and company considered as comparable--Company rejected by co-ordinate Bench on similar issue is not comparable--Income-tax Act, 1961-- BA Continuum India P. Ltd. v. Assistant CIT (Hyderabad) . . . 445
----Transfer pricing--Computation of arm’s length price--Depreciation has impact on profit margin--Adjustment for depreciation to be made in computing arm’s length price--Income-tax Act, 1961-- BA Continuum India P. Ltd. v. Assistant CIT (Hyderabad) . . . 445
----Transfer pricing--Computation of arm’s length price--Difference between arm’s length price determined by Transfer Pricing Officer and assessee within range of plus or minus 5 per cent.--Assessee entitled for deduction of 5 per cent--Income-tax Act, 1961-- Brigade Global Services P. Ltd. v. ITO (Hyderabad) . . . 411
----Transfer pricing--Computation of arm’s length price--Selection of comparables--Companies having abnormal loss or profit and functionally different companies to be excluded--Income-tax Act, 1961-- Brigade Global Services P. Ltd. v. ITO (Hyderabad) . . . 411
----Transfer pricing--Computation of arm’s length price--Selection of comparables--Super profit making companies--Outsourcing company and functionally different companies to be excluded from comparables--Selection of company having extraordinary events depends upon its influence on profit margin--Matter remanded to consider adjustments to be made before arriving at arm’s length--Income-tax Act, 1961, s. 92CA-- Google India P. Ltd. v. Deputy CIT (Bangalore) . . . 403
-- --Transfer pricing--Exemption--Export--Computation of export turnover--Expenses on freight, telecommunication charges, or insurance attributable to delivery of articles or providing technical services outside India--To be excluded from export turnover--Income-tax Act, 1961, s. 10B(4)-- Brigade Global Services P. Ltd. v. ITO (Hyderabad) . . . 411
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 2(15) --Exemption--Charitable purpose--Educational institution--Object of assessee to promote education in practice of management and related subjects--Assessee eligible for exemption-- Ahmedabad Management Association v. Joint DIT (Exemption) (Ahmedabad) . . . 349
S. 9(1)(vi), Expln. 2 --Business expenditure--Disallowance--Payment subject to deduction of tax at source--Royalty--Definition for purpose of disallowance--Explanation 2 to section 9(1)(vi) applicable--Payment to group company towards licence fees representing annual charges for up-gradation of accounting software--Payment for transfer of any right to use or right to use computer software--Not royalty as provided under Explanation 2 to section 9(1)(vi)--Amount not be to disallowed under section 40(a)(i)-- SKOL Breweries Ltd. v. Assistant CIT (Mumbai) . . . 465
S. 10(2A) --Exemption--Income not includible in total income--Share of profits received by partner from firm--Amount credited in capital account verifiable from bank account of firm--Amount not taxable-- Assistant CIT v. Ashok Doshi (Jodhpur) . . . 389
S. 10(17A) --Income--Income not includible in total income--Awards in case of sportsman who is not professional--Awards not in nature of income--Assessee not liable to tax--CBDT Circular No. 447 of 1986, dated 22-1-1986-- Abhinav Bindra v. Deputy CIT (Delhi) . . . 376
S. 10A --Exemption--Export--Disallowance of expenditure by Assessing Officer on computing income--Claiming of exemption for inflated business income as additional ground before Appellate Tribunal--Deduction allowable on account of disallowance of expenditure-- Brigade Global Services P. Ltd. v. ITO (Hyderabad) . . . 411
S. 10B(4) --International transaction--Transfer pricing--Exemption--Export--Computation of export turnover--Expenses on freight, telecommunication charges, or insurance attributable to delivery of articles or providing technical services outside India--To be excluded from export turnover-- Brigade Global Services P. Ltd. v. ITO (Hyderabad) . . . 411
S. 11 --Exemption--Charitable purpose--Educational institution--Object of assessee to promote education in practice of management and related subjects--Assessee eligible for exemption-- Ahmedabad Management Association v. Joint DIT (Exemption) (Ahmedabad) . . . 349
S. 32 --Depreciation--Condition precedent--User of asset--Asset can be said to be in use when kept ready for use--Mining equipment and consumables kept ready for use when machines of sub-contractor broke down--Assessee entitled to depreciation-- Assistant CIT v. Ashok Doshi (Jodhpur) . . . 389
----Depreciation--Rate of depreciation--Assessee already having Maruti van--Purchase of Tavera car for undertaking supervision at mine site for which Maruti van not suitable--No material to substantiate personal use--Depreciation to extent of 50 per cent. allowable-- Assistant CIT v. Ashok Doshi (Jodhpur) . . . 389
----Depreciation--Rate of depreciation--Tippers--Purchase of tankers and tippers for giving them on hire--Assessee engaged in business of mining--Tippers not part of plant and machinery--Depreciation at 40 per cent. allowable-- Assistant CIT v. Ashok Doshi (Jodhpur) . . . 389
S. 32(1)(ii) --Business expenditure--Disallowance--Sum liable to deduction of tax at source--Provision not applicable to depreciation--Sum paid for acquisition of brand from non-resident and capitalised in accounts--Depreciation cannot be denied for failure to deduct tax at source on payment-- SKOL Breweries Ltd. v. Assistant CIT (Mumbai) . . . 465
S. 36(1)(iii) --Business expenditure--Interest on borrowed capital--Loans advanced to group companies at lower rate of interest--Disallowance only to extent of advance given by assessee during year and only for period for which advance remained with group concerns--Whether assessee had its own funds for making advance to be seen--Matter remanded-- SKOL Breweries Ltd. v. Assistant CIT (Mumbai) . . . 465
S. 40(a)(i) --Business expenditure--Disallowance--Payment subject to deduction of tax at source--Royalty--Definition for purpose of disallowance--Explanation 2 to section 9(1)(vi) applicable--Payment to group company towards licence fees representing annual charges for up-gradation of accounting software--Payment for transfer of any right to use or right to use computer software--Not royalty as provided under Explanation 2 to section 9(1)(vi)--Amount not be to disallowed under section 40(a)(i)-- SKOL Breweries Ltd. v. Assistant CIT (Mumbai) . . . 465
----Business expenditure--Disallowance--Sum liable to deduction of tax at source--Provision not applicable to depreciation--Sum paid for acquisition of brand from non-resident and capitalised in accounts--Depreciation cannot be denied for failure to deduct tax at source on payment-- SKOL Breweries Ltd. v. Assistant CIT (Mumbai) . . . 465
S. 40(a)(ia) --Business expenditure--Disallowance--Commission liable to deduction of tax at source--“Sale scheme expenses†debited to profit and loss account--Benefit given by way of credit note to distributors--Amount not part of invoice--No provision in agreement for such discount over and above invoice price--Whether discount or commission--Failure by assessee to produce scheme under which benefit given to distributors--Matter remanded to Assessing Officer to verify and decide issue in accordance with law-- SKOL Breweries Ltd. v. Assistant CIT (Mumbai) . . . 465
----Business expenditure--Disallowance--Payments liable to deduction of tax at source--Fees for technical services--Human skill involved in internet bandwidth facilities availed of by assessee--Payment in nature of fees for technical services--Assessee under obligation to deduct tax at source-- Brigade Global Services P. Ltd. v. ITO (Hyderabad) . . . 411
----Business expenditure--Disallowance--Payments subject to tax deduction at source--Production of additional evidence before Commissioner (Appeals) in form of revised tax deduction at source return in Form 26Q4 filed subsequent to assessment--Assessing Officer should be granted opportunity to examine additional evidence--Matter remanded-- Assistant CIT v. Shimoga District Milk Producers Societies Union Ltd. (Bangalore) . . . 369
S. 40A(2) --Business expenditure--Disallowance--Excessive or unreasonable payments--Failure of assessee to produce books of account and bills and vouchers for verification--Disallowance of 15 per cent. from total expenditure proper-- Brigade Global Services P. Ltd. v. ITO (Hyderabad) . . . 411
S. 92CA --International transactions--Arm’s length price--Determination--Press Note in respect of foreign direct investment policy prescribing percentage of royalty allowed under automatic route--Only for remittance of foreign exchange--Not substitute for determination of arm’s length price under provisions of Act--International transactions of assessee constituting only 3.93 per cent. of its total operating cost--Comparison of entity-level results in contravention of transfer pricing regulations--Comparable uncontrolled price method adopted by assessee in subsequent years not disputed by Department--Determination of arm’s length price remanded to Assessing Officer considering appropriate comparables-- SKOL Breweries Ltd. v. Assistant CIT (Mumbai) . . . 465
----International transactions--Transfer pricing--Computation of arm’s length price--Selection of comparables--Super profit making companies--Outsourcing company and functionally different companies to be excluded from comparables--Selection of company having extraordinary events depends upon its influence on profit margin--Matter remanded to consider adjustments to be made before arriving at arm’s length-- Google India P. Ltd. v. Deputy CIT (Bangalore) . . . 403
S. 144C(13) --International transactions--Determination of arm’s length price--Assessment--Dispute Resolution Panel--Direction of Dispute Resolution Panel binding on Assessing Officer--Matter remanded to pass fresh assessment order in accordance with directions of Dispute Resolution Panel-- Diamond Management and Technology Consultants Ltd. v. Assistant DIT (International Taxation) (Mumbai) . . . 359
R. 46A ----Business expenditure--Disallowance--Payments subject to tax deduction at source--Production of additional evidence before Commissioner (Appeals) in form of revised tax deduction at source return in Form 26Q4 filed subsequent to assessment--Assessing Officer should be granted opportunity to examine additional evidence--Matter remanded-- Assistant CIT v. Shimoga District Milk Producers Societies Union Ltd. (Bangalore) . . . 369
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