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Friday, February 28, 2014

Maharashtra Government started single window online services for Investors for 31 different types of services

Maharashtra Government started single window online services for Investors for 31 different types of services


The Maharashtra government has started Maharashtra Industry, Trade & Investment facilitation cell (MAITRI).   The Investor facilitation service enable domestic as well as cross border investors to submit regulatory documents at one web portal.  This will improve faster clearance time and also improve the transparency.  On http://ifc.mahaebiz.com investor can apply online for different services of pre-commission stage, post-commission stage and post production stage.

Investor needs to register first on the register page of mahaebiz.com i.e.http://ifc.mahaebiz.com/UM_Pages/UserRegistration.aspx and after registration he can login with credentials and can submit the forms for different types of services.   

Following 31 services are provided on http://ifc.mahaebiz.com/HomeAllServicesAnon.aspx on this URL.

Sr. No.

Name Of Services

Location of Industry

Name of Department

URL

1

Approval of Mega Project

Any

Industries Department

http://ifc.mahaebiz.com/FillFormAnon.aspx?AMId=524

2

BTAL permission for agri land

Outside MIDC

Directorate of Industries (DoI)

http://ifc.mahaebiz.com/FillFormAnon.aspx?AMId=518

3

N A Permission for Agri Land

Outside MIDC

Revenue Department

http://ifc.mahaebiz.com/FillFormAnon.aspx?AMId=525

4

Zone Change for Agri Land under BTAL

Outside MIDC

Urban Development Department

http://ifc.mahaebiz.com/FillFormAnon.aspx?AMId=528

5

EM-I Registration

Any

Directorate of Industries (DoI)

http://ifc.mahaebiz.com/FillFormAnon.aspx?AMId=530

6

Land Allotment

MIDC

Land

http://ifc.mahaebiz.com/FillFormAnon.aspx?HidePartA=1&AMId=526

7

Stamp Duty Exemption

Any

Directorate of Industries (DoI)

http://ifc.mahaebiz.com/FillFormAnon.aspx?AMId=523

8

Water availability consent

Any

Irrigation Department

http://ifc.mahaebiz.com/FillFormAnon.aspx?AMId=527

9

Environment Clearence for BUA greater than 20000sqm

Any

Environment Department

http://ifc.mahaebiz.com/FillFormAnon.aspx?AMId=529

10

Building Plan Approval

MIDC

Planning

http://ifc.mahaebiz.com/FillFormAnon.aspx?AMId=34

11

Building Plan Approval(UDD)

Outside MIDC

Urban Development Department

Not yet specified.

12

Factory Plan Approval (DISH)

Any

Labour Department

http://ifc.mahaebiz.com/FillFormAnon.aspx?AMId=521

13

Consent to Establish

Any

Maharashtra Pollution Control Board (MPCB)

http://220.225.78.4/WebSite/egov_consent_app_frm.aspx

14

Water Supply Connection

MIDC

E&MD

http://ifc.mahaebiz.com/FillFormAnon.aspx?AMId=18

15

Permission for Mortgage

MIDC

Land

http://ifc.mahaebiz.com/FillFormAnon.aspx?AMId=14

16

Provisional Fire Approval

MIDC

Fire

http://ifc.mahaebiz.com/FillFormAnon.aspx?AMId=24

17

Provisional Fire Approval - UDD

Outside MIDC

Maharashtra Fire Services

http://mahafireservice.gov.in/Site/Information/eApproval.aspx

18

Electrical Connection NOC

MIDC

E&MD

http://ifc.mahaebiz.com/FillFormAnon.aspx?AMId=22

19

CST & VAT Registration

Any

Sales Tax Department

http://www.mahavat.gov.in/ERegistration/

20

Final Fire Approval

MIDC

Fire

http://ifc.mahaebiz.com/FillFormAnon.aspx?AMId=25

21

Final Fire Approval - UDD

Outside MIDC

Maharashtra Fire Services

http://mahafireservice.gov.in/Site/Information/eApproval.aspx

23

Consent to Operate

ALL

Maharashtra Pollution Control Board (MPCB)

220.225.78.4/WebSite/egov_consent_app_frm.aspx

24

Permission for Drainage Connection

MIDC

E&MD

http://ifc.mahaebiz.com/FillFormAnon.aspx?AMId=36

25

Line Charging NOC

Any

Public Works Department (PWD)

Not yet specified.

26

Power Connection

Any

Maharashtra State Electricity Distribution Corporation Limited (MSEDCL)

http://wss.mahadiscom.in/wss/wss?uiActionName=getNewConnectionRequest

27

Boiler Permission

Any

Labour Department

http://ifc.mahaebiz.com/FillFormAnon.aspx?AMId=519

28

Registration Under Factories Act 1948

Any

Labour Department

http://ifc.mahaebiz.com/FillFormAnon.aspx?AMId=522

29

EM-II Registration

Any

Directorate of Industries (DoI)

http://ifc.mahaebiz.com/FillFormAnon.aspx?AMId=531

30

Permission for Contract labour

Any

Labour Department

http://ifc.mahaebiz.com/FillFormAnon.aspx?AMId=520

31

Professional Tax Registration

Any

Sales Tax Department

http://www.mahavat.gov.in/PTRC_PTECRegistration/

 

Wednesday, February 26, 2014

Highlights of the Maharashtra State Interim Budget 2014

Highlights of the Maharashtra State Interim Budget 2014

Tuesday, 25 February 2014

The deputy chief minister (Finance), Ajit Pawar presented the Maharashtra State Interim budget speech, today, on 25ThFebruary 2014. There is neither new tax proposal nor revision in existing tax laws. However, commodities of daily use such as food grains, pulses, turmeric, chillies, etc. period of tax exemption is increase up to 31St March 2015. Similarly, tax exemptions of wheat, rice, their floor, jaggery, turmeric, tamarind, coriander, seeds, fenugreek, chillies, parsley, coconut, papad, wet dates, currants and raisins, solopuri chaddars, towels and tea will continue until 31st March 2015.

 Economic and social Review of the State:

  •          Per capita annual income grown to Rs. 1,05,493
  •         Energy production has grown to 89,465 million KW/Hour.
  •         Literacy rate climbed to 82.9 percent.
  •         Birth rate has declined from 21 to 16.7, the death rate from 7.5 to 6.3 and infant mortality rate has declined from 48 to 25.
  •         Food, employment, housing and health issues focused with schemes for the farmers, landless labourers, minorities and other socio-economically distressed citizens.

 Food Security:

  •         National Food Security Scheme is being implemented from 1st February 2014. Out of total 8.77 crore beneficiaries nearly 1.77 crore beneficiaries will be covered by the State Government.
  •          For implementation of public distribution system provision of Rs. 2,253 crore on account of capital expenditure and to cover deficit provision of Rs. 761 crore.

 

Employment Guarantee Scheme: 

  •         Increase in Jawahar Well subsidy amount from Rs.1 lakh to Rs. 2.5 lakh.
  •         Employment Guarantee Scheme extended to ‘C’ category Municipal Councils.

 

Housing for Poor

  •          Unit cost enhanced under Indira Awaas Yojana, target of 1,82,663 houses in the year 2014-15.
  •          An outlay of Rs. 675 crore for basic services to urban poor, integrated housing and slum development programme.
  •          An outlay of Rs. 333 crore for Ramai Awaas Yojana.

 

Health: 

  •          Rajiv Gandhi Jeevandayee Arogya Yojana extended to entire State with a provision of Rs. 698 crore.
  •          Emergency medical services will be provided with fully equipped ambulances and doctors.

 

Agriculture: 

  •          Subsidy to farmers for plastic lining of farms Ponds.
  •          An outlay of Rs. 8,215 crore for Irrigation Projects.

 

Women Development: 

  •          One time retirement benefit to Anganwadi Workers and  Helpers.
  •          Substantial increase in honorarium of Anganwadi Workers and Helpers.
  •          An outlay of Rs. 187 crore for implementation of SukanyaYojana.
  •          Manodhairya Yojana for rehabilitating women and child victims of sexual assault and acid attack. Establishment of new counselling centers also.
  •          Swayamsiddha Training Programme for self-defence of women.

 

Minority Development: 

  •          An outlay of Rs. 131 crore for madarsa modernization, pre-matric scholarship and development of minority concentrated rural area.

 

Technical and Professional Education: 

  •          Establishment of Technical University for technical and professional courses.
  •          Every year approximately 5 lakh Students getting scholarship to pursue professional courses.

 

Industrial Development:

 

  •          State leads Industrial Development.
  •          Approval to 25 new mega projects with an investment of Rs. 9,725 crore.
  •          Provision of Rs. 2,500 crore for implementation of Industrial Incentive Scheme.

 

Concession in Electricity Rates:

 

  •          An out lay of Rs. 9,000 crore for electricity subsidy.

 

Road Development:

 

  •          An outlay of Rs. 2,836 crore for roads development.
  •          An outlay of Rs.395 crore for Backward region Development Fund.

 

MIHAN:

  •          An outlay of Rs. 250 crore for land acquisition and rehabilitation under MIHAN project.
  •          An outlay of Rs. 165 crore for Airport Development.
  •          Nagpur Metro Railway Project proposal submitted to Central Government.
  •          An outlay of Rs. 1,600 crore for Jawaharlal Nehru National Urban Renewal Mission.
  •          An outlay of Rs. 450 crore for Suvarna Jayanti Nagorathan Abhiyan.

 

Police:       

  •          Creation of 61,494 posts of Police Personnel in 5 phases, 1st phase having estimated expenditure of Rs. 566 crore.
  •          Enhancement in honorarium of Home Guards and Civil Defence Personnel.

 

Other: 

  •          Hike in pension of pensioners above 80 years of age
  •          Development plan of Rs. 2,378 crore approved for Sinhastha Kumbh Mela.
  •          Tax relief in essential commodities
  •          District annual plan of Rs. 5,902 crore
  •          State annual plan of Rs. 51,222 crore

Regards,
-------
CA.C.V.PAWAR

Sunday, February 23, 2014

Four Important Judgements On S. 14A/ Rule 8D, S. 10(23C) Exemption, S. 147 Reopening Writ And Duty of Tribunal

 

Dear Subscriber,

 

The following important judgements are available for download at itatonline.org.

Garware Wall Ropes Ltd vs. ACIT (ITAT Mumbai)

No S. 14A/ Rule 8D disallowance if primary object of investment is to hold controlling stake in group concern and not to earn tax-free income

We find merit and substance in the contention of the assessee that no expenditure had been incurred by the assessee for earning the exempt income on this point because the investment has been made by the assessee in the group concern and not in the shares of any un-related party. Therefore, the primary object of investment is holding controlling stake in the group concern and not earning any income out of investment. Further the investment were made long back and not in the year under consideration. Therefore, in view of the fact that the investment are in the group concern we do not find any reason to believe that the assessee would have incurred any administrative expenses in holding these investments. The AO has not brought on record any material to show that the assessee has incurred any expenditure in relation to the income which does not form part of the total income


Visvesvaraya Technological University vs. ACIT (Karnataka High Court)

S. 10 (23C): An institution which regularly makes more than 10% – 15% surplus is existing for profit & is not eligible for exemption

In our opinion, “Surplus” cannot be more than 10% – 15% so as to meet contingencies or unforeseen expenditure. If an University or an educational institution under the guise of “surplus” start making huge profit, in our opinion, it would cease to exist for net making profit and in that event would not be entitled for exemption under this provision. On facts, the University collects huge sums which are 3-4 times more than the requirement. Such “surplus” which is invested in fixed deposits and fetches huge interest cannot be stated to be “incidental”


Dholadhar Investment Pvt. Ltd vs. CIT (Delhi High Court)

S. 254: Tribunal is not required to consider pleadings, material etc to which its pointed attention is not drawn

It is true, as held by the Supreme Court in a long line of cases that the Tribunal is duty-bound to consider all the grounds, the evidence produced and consider the contentions of the parties before it and all other material brought to its notice in a judicial spirit and should not feel incommoded by technicalities: The duty is limited to the points raised before it. It would be placing an impossible burden on the Tribunal if it is ordained to rule upon aspects and contentions which were not raised by the parties before it or to deal with pleadings, evidence or material to which its pointed attention was not drawn in the course of the proceedings and which lies buried in the forest of papers filed by the parties


CROWN Consultants Pvt. Ltd. vs. CIT (Bombay High Court)

S. 147: Assessee is not entitled to challenge validity of reopening on a ground not stated in objections to AO

Just as the revenue cannot improve upon its case for reopening before the Court and but must stand or fall by the reasons recorded for reopening the assessment, the same test would be applicable in case of an assessee i.e. it must stand or fall by its objection to the grounds for reopening of assessment. It is not open to the assessee to urge fresh objections before the Court which the AO had no occasion to deal with, unless of course the notice to reopen is ex-facie without jurisdiction not requiring consideration of any argument such as beyond limitation


Regards,

 

Editor,

 

itatonline.org

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

Latest:

CBDT Order Promoting CsIT/ DsIT to Chief Commissioners of Income-tax


Four Important Judgements On Transfer Pricing Law

 

Dear Subscriber,

 

The following important judgements are available for download at itatonline.org.

DCIT vs. Panasonic AVC Networks India Co Ltd (ITAT Delhi)

Transfer Pricing: Adjustment to profit margin for “capacity underutilization” can be made. In choosing comparables, there cannot be a cherry picking for deciding parameters of rejection. All comparables must face the same test

Under Rule 10B (1)(e)(ii), an adjustment to the net profit margin has to be made for “capacity underutilization”. Capacity underutilization by enterprises is an important factor affecting net profit margin in the open market because lower capacity utilization results in higher per unit costs, which, in turn, results in lower profits. Of course, the fundamental issue, so far as acceptability of such adjustments is concerned, is reasonable accuracy embedded in the mechanism for such adjustments, and as long as such an adjustment mechanism can be found, no objection can be taken to the adjustment. On facts, the CIT(A)’s approach is reasonable and the adjustments are on a conceptually sound basis


DCIT vs. Air Liquide Engineering India (ITAT Hyderabad)

Transfer Pricing: TPO cannot sit in judgement on commercial expediency. RBI approval means the payment is at ALP. If overall TNMM analysis done, royalty cannot be analyzed separately

The TPO is not entitled to sit on judgment on the business and commercial expediency of the assessee in paying royalty to its’ parent company as per the provisions of the Act as laid down clearly by the Delhi High Court in EKL Appliances 345 ITR 241. It is also noted that various Tribunals such as DCIT vs. Sona Okegawa Precision Forgings (ITA No. 5386/Del/2010), Hero Motocorp (ITA No 5130/Del/2010), ThyssenKrupp Industries (ITA No 6460/Mum/2012), Abhishek Auto Industries (ITA No 1433/Del/2009) have taken a view that RBI approval of the Royalty rates itself implies that the payments are at Arm’s Length and hence no further adjustment needs to be made viewed from this angle too. Furthermore, we are of the opinion that once TNMM has been applied to the assessee company’s transaction, it covers under its ambit the Royalty transactions in question too and hence separate analysis and consequent deletion of the Royalty payments by the TPO seems erroneous. We draw support from Cadbury India (ITA No 7408/Mum/2010 and ITA No.7641/Mum/2010 wherein the ITAT upheld the use of TNMM for Royalty


Tilda Riceland Pvt Ltd vs. ACIT (ITAT Delhi)

Transfer Pricing: No bar on reliance of private database u/R 10D(3). Nuances of the CUP Method under Rule 10B(1)(a)(i) explained

(i) Rule 10 D(3) is only illustrative in nature and merely describes the information required to be maintained by the assessee under section 92D “shall be supported by authentic documents, which may include the following …”. The logic employed by the Transfer Pricing Officer that since databases compiled by private entities is not included in rule 10D (3), such databases cannot be relied upon by the assessee is clearly fallacious inasmuch as an item not being included in illustrative list of required documents does not take outside the ambit of ‘acceptable document’ for the required purposes. In any event, all that Tips Software does is to collect the data, compile the same in easy to refer format and make it available to the end-user of such data online. The data is public data maintained by the customs department at various ports. It was also open to the TPO to, if he had any doubts, call for further information from this database supplier and examine authenticity of the data so furnished. His summary rejection of the data as unreliable on a technical ground is not tenable in law


Lummus Technology Heat Transfer BV vs. DCIT (ITAT Delhi)

Transfer Pricing: Unaudited segmental accounts can be relied upon for comparing profitability of controlled transactions with uncontrolled transactions. While size is relevant in entity level comparison, it is not relevant in transaction level comparison within the same entity

(i) In applying the Transactional Net Margin Method (TNMM) under Rule 10B(1)(e) it is not necessary that the net profit computations, in the case of internal comparables (i.e. assessee’s transactions with independent enterprise), have to be based on the audited books of accounts or the books of accounts regularly maintained by the assessee. All that is necessary for the purpose of computing arm’s length price, under TNMM on the basis of internal comparables, is computation of net profit margin, subject to comparability adjustments affecting net profit margin of uncontrolled transactions, on the same parameters for the transactions with AEs as well as Non AEs, i.e. independent enterprises, and as long as the net profits earned from the controlled transactions are the same or higher than the net profits earned on uncontrolled transactions, no ALP adjustments are warranted. It is not at all necessary that such a computation should be based on segmental accounts in the books of accounts regularly maintained by the assessee and subjected to audit


Regards,

 

Editor,

 

itatonline.org

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

Latest:

Monthly (Nov 2013) + Consolidated (Jan to Nov 2013) Digest Of Imp Case Laws


Three Important Judgements On Taxability Of FTS, Accrual Of Foreign Salary And S. 40(a)(i) TDS Disallowance Under Retro Law

 

Dear Subscriber,

 

The following important judgements are available for download at itatonline.org.

DIT vs. Nisso Lwai Corporation, Japan (Andhra Pradesh High Court)

Design & Engineering drawings are in the nature of “plant” and consideration thereof is not assessable as “fees for technical services” if delivered outside India

The assessee company provided design and engineering services, manufacture, delivery, technical assistance through supervision of erection and commissioning etc., to establish compressor house-I for RINL. The payments were made by RINL separately for each of the services/equipments provided/supplied by the assessee. It, inter alia, included payment made towards supply of design and engineering drawings. The assessee company claimed the said payment is not taxable under the Indian Income Tax Act as it was a transaction of sale of goods that has taken place outside India. In our view the decision of Delhi ITAT Bench in the case of Mannesman Demag Sack AG Vs.Add.CIT reported in (2008), 119 TTJ (Del) 543, on which reliance was placed by Ld DR, is not applicable to the facts of the instant case. In the case of Mannesman Demag Sack, supra, the decision was rendered on the basis of the terms of the contract which provided that technical services shall include supply of design and drawings. Hence on the facts of the case, the Tribunal held that design and drawing charges are in the nature of fee for technical services. However, it may be pertinent to note that the Tribunal in that case, accepted the alternative contention of the assessee that the said fee cannot be assessed in India, unless it is shown that some part of work has emanated from Indian territories. Hence on a conspectus of the matter, we are of the view that the amount received by the assessee for supply of design and engineering drawings is in the nature of plant and since the preparation and delivery has taken place outside Indian territories, the same can not be subjected to tax in India


Arvind Singh Chauhan vs. ITO (ITAT Agra)

Salary income accrues at the place where the services are rendered and not where the appointment letter is received. If salary, after accrual abroad, is brought into India, it is not taxable on receipt basis. S. 6(5) which deals with residential status is redundant

The next objection of the Assessing Officer is that the money was received in India, since, beyond any dispute or controversy, the salary cheques were credited to the assessee’s account with HSBC, Mumbai. So far as this aspect of the matter is concerned, the law is trite that ‘receipt’ of income, for this purpose, refers to the first occasion when assessee gets the money in his own control – real or constructive. What is material is the receipt of income in its character as income, and not what happens subsequently once the income, in its character as such is received by the assessee or his agent; an income cannot be received twice or on multiple occasions. As the bank statement of the assessee clearly reveals these are US dollar denominated receipts from the foreign employer and credited to non resident external account maintained by the assessee wi th HSBC Mumbai . The assessee was in lawful right to receive these monies, as an employee, at the place of employment, i .e. at the location of its foreign employer, and it is a matter of convenience that the monies were thereafter transferred to India. These monies were at the disposal of the assessee outside India, and, it was in exercise of his rights to so dispose of the money, that monies were transferred to India


DCIT vs. Virola International (ITAT Agra)

S. 195 TDS obligation depends on law prevailing on date of payment and is not affected by retrospective amendment. No s. 40(a)(i) disallowance can be made if that law did not require TDS to be deducted

In accordance with the law laid down in Ishikawajma-Harima Heavy Industries, which was good law at the time of the remittance, unless the services are rendered in India, the same cannot be brought to tax as ‘fees for technical services’ u/s 9. Though the law was amended retrospectively, so far as tax withholding liability is concerned, it depends on the law as it existed at the point of time when payments, from which taxes ought to have been withheld, were made. The tax deductor cannot be expected to have clairvoyance of knowing how the law will change in future. A retrospective amendment in law does change the tax liability in respect of an income, with retrospective effect, but it cannot change the tax withholding liability, with retrospective effect. As there is no material whatsoever to establish that the design and development services were rendered in India, the assessee did not have any liability under s. 195 r.w.s. 9(1)(vii) to deduct tax at source from these payments. As a corollary thereto, no disallowance can be made in respect of these payments u/s 40(a)(i)


Regards,

 

Editor,

 

itatonline.org

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

Latest:

CBDT Circular On Payment Of Dividend Distribution Tax By Mutual Funds


Thursday, February 20, 2014

ITR (TRIB) Volume 30 : Part 1 (Issue dated : 24-2-2014)


 

ITR’S TRIBUNAL TAX REPORTS (ITR (TRIB)) -- PRINT AND ONLINE EDITION

 

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Business expenditure --Disallowance--Sums liable to deduction of tax at source--Amendment of section 40(a)(ia) by Finance Act, 2010--Remedial and curative in nature--Retrospective effect--No disallowance where tax deducted at source deposited before date of filing of return--Income-tax Act, 1961, s. 40(a)(ia)-- ITO v. Naresh Kumar (Delhi) . . . 123

Non-resident --Fees for technical services--Deduction of tax at source--Appeal to Appellate Tribunal--Additional ground that deduction of tax at source should be not at 15 per cent. but at 10 per cent.--Ground not raised before Assessing Officer or Commissioner (Appeals)--Matter remanded--Income-tax Act, 1961, s. 115A(1)(b)(BB)-- Bajaj Holdings and Investments Ltd. v. Additional DIT (International Taxation) (Mumbai) . . . 117

----Fees for technical services--Payment to non-resident for developing inkjet printers and ink--Agreement for supply of technology to assessee--Agreement allowing assessee to file patent application, design application and intellectual property rights--Technology made available--Payment was fees for technical services and liable to deduction of tax at source--Income-tax Act, 1961, s. 195--Double Taxation Avoidance Agreement between India and the United Kingdom, art. 13(2)-- Bajaj Holdings and Investments Ltd. v. Additional DIT (International Taxation) (Mumbai) . . . 117

----Taxability in India--Fees for technical services--Definition--Agreement for making available technical knowledge, expertise, skill and know-how--Services rendered by assessee falling within definition in DTAA--Payment received by assessee taxable in India as fees for included services--Double Taxation Avoidance Agreement between India and the U. S. A., art. 12(4)(b)-- Avion Systems Inc. v. Deputy DIT (International Taxation) (Mumbai) . . . 128

 

PRINT EDITION

Volume 30 : Part 1 (Issue dated : 24-2-2014)

SUBJECT INDEX TO CASES REPORTED

Appeal to Appellate Tribunal --Rectification of mistake--Error apparent from record--Application challenging findings of Tribunal arrived at on merits--Not permissible--Income-tax Act, 1961, s. 254(2)-- Willis Processing Services India P. Ltd. v. Deputy CIT (Mumbai) . . . 129

Business expenditure --International transactions--Arm’s length price--Inclusion of amounts in overall advertisement, marketing and promotion expenses for working out transfer pricing adjustment--No justification for disallowing entire amount under section 37(1) as not having been incurred “wholly and exclusively†for business purpose--Income-tax Act, 1961, ss. 37(1), 92-- Whirlpool of India Ltd. v. Deputy CIT (Delhi) . . . 29

Donations for charitable purpose --Special deduction--Approval of institution--Application for--Entry passed by Commissioner that accounts produced and 95 per cent. of donations found used for charitable purpose--Not granting approval but observing that approval can be granted after verification of objects--Inference that Commissioner not satisfied about utilisation of income for charitable purpose--Burden of proof on assessee to establish trust incurred expenditure not exceeding 5 per cent. of total income for religious purpose--Assessee̢۪s income and expenditure account showing no expenditure for charitable activity--Direction of High Court to Commissioner to either grant or reject approval after verifying books of account--Limitation prescribed under rule 11AA(6) not applicable--Consequence of not passing order within prescribed time not to deem approval to have been granted--Income-tax Act, 1961, s. 80G(5B)--Income-tax Rules, 1962, r. 11AA-- Nilackal St. Thomas Church & Ecumenical Centre Trust v. CIT (Cochin) . . . 19

Exemption --Educational institution--Assessee not entitled to deduction if collection of capitation fees from students for purpose of giving admission proved--Matter remanded--Income-tax Act, 1961, ss. 11, 12A-- Deputy DIT (Exemption) v. Chaitanya Memorial Education Society (Hyderabad) . . . 120

Export --Exemption--Deduction allowed in first year--Assessing Officer not entitled to disallow claim for subsequent assessment year without disturbing order of earlier year--Whether two existing units merged and consolidated to bring into existence new unit by restructuring during year--Matter remanded--Computation of export turnover--Satellite link charges--Not “telecommunication charges†--Not to be excluded from export turnover--Technical service fee--Not to be excluded from export turnover--Income-tax Act, 1961, s. 10A-- Willis Processing Services (I) P. Ltd. v. Deputy CIT (Mumbai) . . . 39

International transactions --Arm’s length price--Advertisement, marketing and sales promotion expenses--“Pricing adjustment†passed on to dealers and distributors as “extra trade discount†--To be excluded from total advertisement, marketing and promotion expenses--Sum representing salaries paid to demonstrators engaged at dealers’ and distributors’ outlets in connection with sale of products--Correct nature of amount decisive and not nomenclature given by parties--Assessing Officer or Transfer Pricing Officer to decide afresh after ascertaining correct nature of amount--Matter remanded-- Whirlpool of India Ltd. v. Deputy CIT (Delhi) . . . 29

----Arm̢۪s length price--Determination--Power of Transfer Pricing Officer to carry out fresh search for comparables--Selection of comparables--Related party transactions ranging from 10 to 25 per cent. of total revenue can be considered--Exclusion of comparables--Only on basis of factors enumerated in Rules--Entity cannot be excluded solely on basis of high profit or loss--Classification of slab range on basis of turnover from Rs. 1 crore to Rs. 200 crores not practically workable--Turnover not criterion prescribed in rule--Adjustment for risk only if proved by proper data and accurate calculation--Extraordinary events like mergers and de-mergers--Whether company became functionally different and should be excluded to be seen--Allegation of fraud against directors--Business or results not influenced or affected--Company not to be excluded--Income-tax Act, 1961, ss. 92C(2), (3), 92CA(3), 92F(iv), 133(6)--Income-tax Rules, 1962, r. 10B(2), (3), (4)--Notification No. S. O. 890(E) dated 26-9-2000-- Willis Processing Services (I) P. Ltd. v. Deputy CIT (Mumbai) . . . 39

----Arm̢۪s length price--Determination--Selection of comparables--Entities selected by assessee--Assessee not precluded at later stage from seeking their exclusion on cogent grounds--Income-tax Rules, 1962, r. 10B(4)-- Tata Power Solar Systems Ltd. v. Deputy CIT (Mumbai) . . . 1

----Arm̢۪s length price--To be determined on international transactions undertaken by assessee and not in relation to assessee̢۪s entire turnover-- Tata Power Solar Systems Ltd. v. Deputy CIT (Mumbai) . . . 1

Royalty or business profits --Business expenditure-- Disallowance--Payments subject to deduction of tax at source--Payments to non-resident in connection with satellite link charges--Payment for use of standard facility not involving use or right to use equipment--Payment not royalty but business profits--Not taxable in India in absence of permanent establishment in India--Assessee not liable to deduct tax at source on payment--No question of disallowance of payment--Income-tax Act, 1961, s. 40(a)(ia)-- Willis Processing Services (I) P. Ltd. v. Deputy CIT (Mumbai) . . . 39

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961

S. 10A --Export--Exemption--Deduction allowed in first year--Assessing Officer not entitled to disallow claim for subsequent assessment year without disturbing order of earlier year--Whether two existing units merged and consolidated to bring into existence new unit by restructuring during year--Matter remanded--Computation of export turnover--Satellite link charges--Not “telecommunication charges†--Not to be excluded from export turnover--Technical service fee--Not to be excluded from export turnover-- Willis Processing Services (I) P. Ltd. v. Deputy CIT (Mumbai) . . . 39

S. 11 --Exemption--Educational institution--Assessee not entitled to deduction if collection of capitation fees from students for purpose of giving admission proved--Matter remanded-- Deputy DIT (Exemption) v. Chaitanya Memorial Education Society (Hyderabad) . . . 120

S. 12A --Exemption--Educational institution--Assessee not entitled to deduction if collection of capitation fees from students for purpose of giving admission proved--Matter remanded-- Deputy DIT (Exemption) v. Chaitanya Memorial Education Society (Hyderabad) . . . 120

S. 37(1) --Business expenditure--International transactions--Arm’s length price--Inclusion of amounts in overall advertisement, marketing and promotion expenses for working out transfer pricing adjustment--No justification for disallowing entire amount under section 37(1) as not having been incurred “wholly and exclusively†for business purpose-- Whirlpool of India Ltd. v. Deputy CIT (Delhi) . . . 29

S. 40(a)(ia) --Royalty or business profits--Business expenditure-- Disallowance--Payments subject to deduction of tax at source--Payments to non-resident in connection with satellite link charges--Payment for use of standard facility not involving use or right to use equipment--Payment not royalty but business profits--Not taxable in India in absence of permanent establishment in India--Assessee not liable to deduct tax at source on payment--No question of disallowance of payment-- Willis Processing Services (I) P. Ltd. v. Deputy CIT (Mumbai) . . . 39

S. 80G(5B) --Donations for charitable purpose--Special deduction--Approval of institution--Application for--Entry passed by Commissioner that accounts produced and 95 per cent. of donations found used for charitable purpose--Not granting approval but observing that approval can be granted after verification of objects--Inference that Commissioner not satisfied about utilisation of income for charitable purpose--Burden of proof on assessee to establish trust incurred expenditure not exceeding 5 per cent. of total income for religious purpose--Assessee̢۪s income and expenditure account showing no expenditure for charitable activity--Direction of High Court to Commissioner to either grant or reject approval after verifying books of account--Limitation prescribed under rule 11AA(6) not applicable--Consequence of not passing order within prescribed time not to deem approval to have been granted-- Nilackal St. Thomas Church & Ecumenical Centre Trust v. CIT (Cochin) . . . 19

S. 92 --Business expenditure--International transactions--Arm’s length price--Inclusion of amounts in overall advertisement, marketing and promotion expenses for working out transfer pricing adjustment--No justification for disallowing entire amount under section 37(1) as not having been incurred “wholly and exclusively†for business purpose-- Whirlpool of India Ltd. v. Deputy CIT (Delhi) . . . 29

S. 92C(2) --International transactions--Arm̢۪s length price--Determination--Power of Transfer Pricing Officer to carry out fresh search for comparables--Selection of comparables--Related party transactions ranging from 10 to 25 per cent. of total revenue can be considered--Exclusion of comparables--Only on basis of factors enumerated in Rules--Entity cannot be excluded solely on basis of high profit or loss--Classification of slab range on basis of turnover from Rs. 1 crore to Rs. 200 crores not practically workable--Turnover not criterion prescribed in rule--Adjustment for risk only if proved by proper data and accurate calculation--Extraordinary events like mergers and de-mergers--Whether company became functionally different and should be excluded to be seen--Allegation of fraud against directors--Business or results not influenced or affected--Company not to be excluded--Notification No. S. O. 890(E) dated 26-9-2000-- Willis Processing Services (I) P. Ltd. v. Deputy CIT (Mumbai) . . . 39

S. 92C(3) --International transactions--Arm̢۪s length price--Determination--Power of Transfer Pricing Officer to carry out fresh search for comparables--Selection of comparables--Related party transactions ranging from 10 to 25 per cent. of total revenue can be considered--Exclusion of comparables--Only on basis of factors enumerated in Rules--Entity cannot be excluded solely on basis of high profit or loss--Classification of slab range on basis of turnover from Rs. 1 crore to Rs. 200 crores not practically workable--Turnover not criterion prescribed in rule--Adjustment for risk only if proved by proper data and accurate calculation--Extraordinary events like mergers and de-mergers--Whether company became functionally different and should be excluded to be seen--Allegation of fraud against directors--Business or results not influenced or affected--Company not to be excluded--Notification No. S. O. 890(E) dated 26-9-2000-- Willis Processing Services (I) P. Ltd. v. Deputy CIT (Mumbai) . . . 39

S. 92CA(3) --International transactions--Arm̢۪s length price--Determination--Power of Transfer Pricing Officer to carry out fresh search for comparables--Selection of comparables--Related party transactions ranging from 10 to 25 per cent. of total revenue can be considered--Exclusion of comparables--Only on basis of factors enumerated in Rules--Entity cannot be excluded solely on basis of high profit or loss--Classification of slab range on basis of turnover from Rs. 1 crore to Rs. 200 crores not practically workable--Turnover not criterion prescribed in rule--Adjustment for risk only if proved by proper data and accurate calculation--Extraordinary events like mergers and de-mergers--Whether company became functionally different and should be excluded to be seen--Allegation of fraud against directors--Business or results not influenced or affected--Company not to be excluded--Notification No. S. O. 890(E) dated 26-9-2000-- Willis Processing Services (I) P. Ltd. v. Deputy CIT (Mumbai) . . . 39

S. 92F(iv) --International transactions--Arm̢۪s length price--Determination--Power of Transfer Pricing Officer to carry out fresh search for comparables--Selection of comparables--Related party transactions ranging from 10 to 25 per cent. of total revenue can be considered--Exclusion of comparables--Only on basis of factors enumerated in Rules--Entity cannot be excluded solely on basis of high profit or loss--Classification of slab range on basis of turnover from Rs. 1 crore to Rs. 200 crores not practically workable--Turnover not criterion prescribed in rule--Adjustment for risk only if proved by proper data and accurate calculation--Extraordinary events like mergers and de-mergers--Whether company became functionally different and should be excluded to be seen--Allegation of fraud against directors--Business or results not influenced or affected--Company not to be excluded--Notification No. S. O. 890(E) dated 26-9-2000-- Willis Processing Services (I) P. Ltd. v. Deputy CIT (Mumbai) . . . 39

S. 133(6) --International transactions--Arm̢۪s length price--Determination--Power of Transfer Pricing Officer to carry out fresh search for comparables--Selection of comparables--Related party transactions ranging from 10 to 25 per cent. of total revenue can be considered--Exclusion of comparables--Only on basis of factors enumerated in Rules--Entity cannot be excluded solely on basis of high profit or loss--Classification of slab range on basis of turnover from Rs. 1 crore to Rs. 200 crores not practically workable--Turnover not criterion prescribed in rule--Adjustment for risk only if proved by proper data and accurate calculation--Extraordinary events like mergers and de-mergers--Whether company became functionally different and should be excluded to be seen--Allegation of fraud against directors--Business or results not influenced or affected--Company not to be excluded--Notification No. S. O. 890(E) dated 26-9-2000-- Willis Processing Services (I) P. Ltd. v. Deputy CIT (Mumbai) . . . 39

S. 254(2) --Appeal to Appellate Tribunal--Rectification of mistake--Error apparent from record--Application challenging findings of Tribunal arrived at on merits--Not permissible-- Willis Processing Services India P. Ltd. v. Deputy CIT (Mumbai) . . . 129

Income-tax Rules, 1962

R. 10B(2) --International transactions--Arm̢۪s length price--Determination--Power of Transfer Pricing Officer to carry out fresh search for comparables--Selection of comparables--Related party transactions ranging from 10 to 25 per cent. of total revenue can be considered--Exclusion of comparables--Only on basis of factors enumerated in Rules--Entity cannot be excluded solely on basis of high profit or loss--Classification of slab range on basis of turnover from Rs. 1 crore to Rs. 200 crores not practically workable--Turnover not criterion prescribed in rule--Adjustment for risk only if proved by proper data and accurate calculation--Extraordinary events like mergers and de-mergers--Whether company became functionally different and should be excluded to be seen--Allegation of fraud against directors--Business or results not influenced or affected--Company not to be excluded--Notification No. S. O. 890(E) dated 26-9-2000-- Willis Processing Services (I) P. Ltd. v. Deputy CIT (Mumbai) . . . 39

R. 10B(3) --International transactions--Arm̢۪s length price--Determination--Power of Transfer Pricing Officer to carry out fresh search for comparables--Selection of comparables--Related party transactions ranging from 10 to 25 per cent. of total revenue can be considered--Exclusion of comparables--Only on basis of factors enumerated in Rules--Entity cannot be excluded solely on basis of high profit or loss--Classification of slab range on basis of turnover from Rs. 1 crore to Rs. 200 crores not practically workable--Turnover not criterion prescribed in rule--Adjustment for risk only if proved by proper data and accurate calculation--Extraordinary events like mergers and de-mergers--Whether company became functionally different and should be excluded to be seen--Allegation of fraud against directors--Business or results not influenced or affected--Company not to be excluded--Notification No. S. O. 890(E) dated 26-9-2000-- Willis Processing Services (I) P. Ltd. v. Deputy CIT (Mumbai) . . . 39

R. 10B(4) --International transactions--Arm̢۪s length price--Determination--Power of Transfer Pricing Officer to carry out fresh search for comparables--Selection of comparables--Related party transactions ranging from 10 to 25 per cent. of total revenue can be considered--Exclusion of comparables--Only on basis of factors enumerated in Rules--Entity cannot be excluded solely on basis of high profit or loss--Classification of slab range on basis of turnover from Rs. 1 crore to Rs. 200 crores not practically workable--Turnover not criterion prescribed in rule--Adjustment for risk only if proved by proper data and accurate calculation--Extraordinary events like mergers and de-mergers--Whether company became functionally different and should be excluded to be seen--Allegation of fraud against directors--Business or results not influenced or affected--Company not to be excluded--Notification No. S. O. 890(E) dated 26-9-2000-- Willis Processing Services (I) P. Ltd. v. Deputy CIT (Mumbai) . . . 39

----International transactions--Arm̢۪s length price--Determination--Selection of comparables--Entities selected by assessee--Assessee not precluded at later stage from seeking their exclusion on cogent grounds-- Tata Power Solar Systems Ltd. v. Deputy CIT (Mumbai) . . . 1

R. 11AA --Donations for charitable purpose--Special deduction--Approval of institution--Application for--Entry passed by Commissioner that accounts produced and 95 per cent. of donations found used for charitable purpose--Not granting approval but observing that approval can be granted after verification of objects--Inference that Commissioner not satisfied about utilisation of income for charitable purpose--Burden of proof on assessee to establish trust incurred expenditure not exceeding 5 per cent. of total income for religious purpose--Assessee̢۪s income and expenditure account showing no expenditure for charitable activity--Direction of High Court to Commissioner to either grant or reject approval after verifying books of account--Limitation prescribed under rule 11AA(6) not applicable--Consequence of not passing order within prescribed time not to deem approval to have been granted-- Nilackal St. Thomas Church & Ecumenical Centre Trust v. CIT (Cochin) . . . 19