ITR’S TRIBUNAL TAX REPORTS (ITR (TRIB)) -- PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Accounting --Valuation of opening and closing stock--Adjustment to be made on account of excise duty to value of opening stock and closing stock--Matter remanded--Income-tax Act, 1961, s. 145A-- Deputy CIT v. Petro Araldite P. Ltd. (Mumbai) . . . 198
Capital or revenue expenditure --Expenditure towards payment to group entities towards e-mail infrastructure, usage of virtual private network and network access debited as “software expenses†--Expenditure incurred for smooth and efficient running of business and for facilitating day-to-day business operations of assessee--No enduring benefit or creation of new asset to assessee--Expenditure not capital--Allowable--Income-tax Act, 1961, s. 37-- Evonik Degussa India P. Ltd. v. Asst. CIT-OSD (Mumbai) . . . 179
Company --Book profit--Computation--Lower of solitary figures of unabsorbed depreciation or loss brought forward for all earlier years taken together to be reduced for purposes of computing book profit under section 115JB--Income-tax Act, 1961, s. 115JB-- Deputy CIT v. Petro Araldite P. Ltd. (Mumbai) . . . 198
International transactions --Arm’s length price--Determination--Transactional net margin method--Selection of comparables--Functional profile of company and attributes of products and services provided to be seen--If products and services different comparison of profit level indicator with tested party difficult--Difference between risk profile of comparables and of assessee to be considered--Matter remanded--Assessee having no interest liability and no external borrowings--No interest cost to assessee--No agreement to charge associated enterprise interest on delayed payment--Transfer pricing adjustment not to be made on hypothetical and notional basis in absence of material to show under charging of real income--Addition of notional interest for delayed payment in collection of receivables from associated enterprises not permissible-- Evonik Degussa India P. Ltd. v. Asst. CIT-OSD (Mumbai) . . . 179
----Transfer pricing--Arm’s length price--Determination--Selection of comparables--Company having significant related party transactions--Functionally different companies--Not comparables--Income-tax Act, 1961-- Deputy CIT v. Petro Araldite P. Ltd. (Mumbai) . . . 198
----Transfer pricing--Computation of arm’s length price--Benefit of plus or minus 5 per cent. adjustment not available where only one comparable finally considered--Income-tax Act, 1961, s. 92C(2)-- Deputy CIT v. Petro Araldite P. Ltd. (Mumbai) . . . 198
----Transfer pricing--Computation of arm’s length price--Depreciation--Profit level indicator--Computation of operating profit--Adjustment on account of difference in capacity utilisation of assessee and comparable companies--Depreciation cannot be excluded--If depreciation of comparable company is allowed at rate of its operating cost instead of actual depreciation, if it is lower, adjustment will meet difference in capacity utilisation--Income-tax Act, 1961-- Deputy CIT v. Petro Araldite P. Ltd. (Mumbai) . . . 198
----Transfer pricing--Computation of arm’s length price--Profit margin of comparables to be applied only to value of international transactions of assessee with its associated enterprises--Adjustment to be worked out on basis of arm’s length price determined--Income-tax Act, 1961, s. 92C(2)-- Deputy CIT v. Petro Araldite P. Ltd. (Mumbai) . . . 198
PRINT EDITION
Volume 30 : Part 3 (Issue dated : 10-3-2014)
SUBJECT INDEX TO CASES REPORTED
Appeal to Appellate Tribunal --Scope of powers--Recitification of mistakes--Return--Revised return--Delay in filing return--Decision relying on in application not placed before Tribunal--Tribunal cannot traverse beyond ground raised before it--Income-tax Act, 1961, ss. 139(5), 254(2)-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 2) (Hyderabad) . . . 434
Bad debt --Guarantee furnished in connection with borrowing by subsidiary--Sale by assessee of its stake in subsidiary and settlement of guarantee with bank--Sum settled written off as not recoverable from subsidiary--If bank guarantee given at time of investment loss capital in nature and to be considered under capital gains--If guarantee extended later as part of business undertaken by subsidiary commercial expediency to be considered--Matter remanded-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
Book profits --Computation--Export--Special deduction under section 80HHC--Not to be disallowed for purpose of computing book profits--Income-tax Act, 1961, ss. 80HHC, 115JB-- Deputy CIT v. Sumi Motherson Innovative Engineering Ltd. (Delhi) . . . 367
Business expenditure --Disallowance--Payments liable to deduction of tax at source--Payments to non-residents towards sales commission and legal and professional charges--Payments for services rendered abroad--Business income of foreign entity not having permanent establishment in India--Amounts not established to be taxable in India--Not to be disallowed--Income-tax Act, 1961, ss. 40(a)(i), 195(2)-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
----Expenditure for purpose of business--Pharmaceutical company--Expenditure incurred on doctors’ meeting and services--Matter set aside to examine whether for purposes of business--Observations on Code of Ethics Regulations issued by Medical Council of India not binding--Income-tax Act, 1961, s. 37(1)-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 2) (Hyderabad) . . . 434
----Expenditure incurred on entertainment software expenses--Details not furnished before Assessing Officer--Matter remanded--Income-tax Act, 1961-- Asst. CIT v. Nimbus Communications Ltd. (Mumbai) . . . 349
----Expenditure on conducting market feasibility study for extension of existing business for same products in Mauritius--Expenses deductible--No disallowance merely because expenses incurred outside India--Income-tax Act, 1961, s. 37-- Deputy CIT v. Sumi Motherson Innovative Engineering Ltd. (Delhi) . . . 367
----Expenditure on loose tools--Training expenses--Royalty expenses--Allowable-- Deputy CIT v. Sumi Motherson Innovative Engineering Ltd. (Delhi) . . . 367
----Expenditure towards sales promotion comprised of business promotion expenditure, gifts and compliments--Disallowance proper--Expenses on local doctors meet--Assessing Officer to examine whether incurred for purpose of business and impact of Board circular and Code of Ethics Regulations 2002, issued by Medical Council of India-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
----Issue of shares under employees’ stock option plan--Excess of market price of shares at date of grant of option over exercise price treated as employee compensation and amortised over vesting period--Deduction allowable-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
----Payment to research institution--Claim to deduction under section 35AC disallowed for failure to produce certificate--Alternative claim under section 37 to be considered--Income-tax Act, 1961, ss. 35AC, 37(1)-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
----Pharmaceutical company--Prices fixed by pricing authority--Interest on excess price charged by assessee paid to Government in pursuance of orders of Pricing Authority--Not penal in nature--Transactions contractual and principal allowed as deduction--Interest allowable--Income-tax Act, 1961, s. 37, Expln. -- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
Capital gains --Short-term or long-term capital gains--Date of acquisition of asset--Business--When set up--Application to Industrial Development Corporation for allotment of plot for setting up manufacturing unit--Not setting up of business--Date of allotment and taking possession of land--Is date of setting up of business--Sale of plot within three years--Gains to be taxed as short-term capital gains--Income-tax Act, 1961, s. 50B-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
Capital or revenue expenditure --Assessee acquiring 100 per cent. of share capital of company paying further sum over purchase consideration to get existing customer contracts assigned in its favour--Capital expenditure-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
Capital or revenue loss --Loss on sale of shareholding in company--Capital loss--To be considered under head “Capital gains†and set off or carried forward to be set off later in accordance with provisions of Act-- Dr. Reddy’s Laboratories Ltd. v. Addl. Addl. CIT (No. 1) (Hyderabad) . . . 393
Charitable purpose --Exemption--Principles governing computation of income of business will not apply to computation of income of charitable institution--Depreciation debited to account of charitable institution allowable to arrive at income available for application to charitable purpose--Income-tax Act, 1961, ss. 11, 12AA, 13-- A. P. Olympic Association v. Asst. Director of Income-tax (Exemption) (Hyderabad) . . . 314
Company --Book profits--Accumulated book losses--Reduction in capital resulting in cancellation of paid-up capital--Losses to be allowed--Income-tax Act, 1961, s. 115JB, Expln. (iii) -- Deputy CIT v. Sumi Motherson Innovative Engineering Ltd. (Delhi) . . . 367
Depreciation --Rate of depreciation--Moulds used in plastic business--Reduction from 40 per cent. to 25 per cent.--Not proper-- Deputy CIT v. Sumi Motherson Innovative Engineering Ltd. (Delhi) . . . 367
----Vehicles pending for registration in name of assessee--Depreciation allowable-- Deputy CIT v. Sumi Motherson Innovative Engineering Ltd. (Delhi) . . . 367
Exemption --Capital gains--Set off--Income not forming part of total income--Long-term capital gains on transfer of specified asset on which securities transaction tax paid--Gains includes loss--Profit or loss arising from transfer irrelevant for computing total income--Loss on transfer of specified asset on which securities transaction tax paid cannot be set off against gains from transactions on which securities transaction tax not paid assessable under capital gains--Income-tax Act, 1961, s. 10(38)-- Deputy Director of Income-tax (International Taxation) v. Asia Pacific Performance SICAV (Mumbai) . . . 333
----Export--Computation of exemption under section 10B--Foreign exchange gain to be considered part of export turnover not foreign exchange loss--Income-tax Act, 1961, s. 10B-- MPS Ltd. v. Asst. CIT (Chennai) . . . 324
----Export--Deduction allowable on profits and gains of undertaking and not on profit according to profit and loss account--Matter remanded--Income-tax Act, 1961, s. 10B-- MPS Ltd. v. Asst. CIT (Chennai) . . . 324
Export --Exemption--Computation of exemption--International transactions--Arm’s length price--Not permissible for Assessing Officer to work out exemption on basis of arm’s length price profit generated out of order of Transfer Pricing Officer--Income-tax Act, 1961, ss. 10B, 92CA(3)-- MPS Ltd. v. Asst. CIT (Chennai) . . . 324
----Exemption--Special deduction--Computation--Allocation of expenditure--Overhead cost of corporate unit--To be allocated on basis of turnover--Income-tax Act, 1961, ss. 10B, 80-IB, 80-IC-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
Income --Disallowance of expenditure in earning tax-free income--Dividend--Rule 8D applicable only prospectively--Disallowance for years prior to assessment year 2008-09 to be made on reasonable basis--Dividend income from substantial investment in foreign company not exempted from tax--Disallowance to be made on reasonable basis--Matter remanded--Income-tax Act, 1961, s. 14A--Income-tax Rules 1962, r. 8D-- Asst. CIT v. Nimbus Communications Ltd. (Mumbai) . . . 349
Industrial undertaking --Special deduction--Allocation on basis of turnover--Tribunal decision based on assessee’s own case in earlier assessment year--No reason to differ from order of Tribunal--Income-tax Act, 1961, ss. 10B, 80-IB-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 2) (Hyderabad) . . . 434
International transactions --Arm’s length price--Determination--Assessee granting loan to associated enterprises--Interest on loan amount calculated at 3.26 per cent.--Calculation mistake in working out interest--No dispute as to rate--Mistake accepted by assessee--Difference to be added to total income--Income-tax Act, 1961-- Asst. CIT v. Nimbus Communications Ltd. (Mumbai) . . . 349
----Arm’s length price--Determination--Interest on advances to subsidiaries--Rate to be applied--Assessing Officer to modify adjustment on basis of rate of interest received on deposits made with banks and public companies--Income-tax Act, 1961, s. 92CA-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
----Arm’s length price--Determination--Receivables outstanding from associated enterprises--Computation of arm’s length price in respect of excessive credit period--Outstanding balances cannot be added to total income of assessee--Income-tax Act, 1961, s. 92B-- Asst. CIT v. Nimbus Communications Ltd. (Mumbai) . . . 349
----Arm’s length price--Determination--Transactional net margin method--Net operating profit margin--Computation--Varying denominator but numerator constant--No warrant for substituting “net operating profit†with “cash profits†thereby excluding depreciation from total operating costs--Depreciation a vital integral part of total operating costs--Comparison of composite figure of operating profit which envelop overall effect of all items of operating expenses and revenues--Income-tax Rules, 1962, r. 10B(1)(e)-- Deputy CIT v. Sumi Motherson Innovative Engineering Ltd. (Delhi) . . . 367
----Arm’s length price--Interest on loans to associated enterprises--Assessee accepting interest rate at 7 per cent. in earlier assessment years--No reason to modify direction of Tribunal to adopt 7 per cent. rate--Income-tax Act, 1961-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 2) (Hyderabad) . . . 434
----Transfer pricing--Arm’s length price--Grant of corporate guarantee to associate enterprises for financial facility without charging commission--No indication of business strategy in not charging commission--Clear benefit accruing to associated enterprises--Guarantee commission should have been charged at arm’s length price--Rate of guarantee fee to be recomputed--Income-tax Act, 1961-- Asst. CIT v. Nimbus Communications Ltd. (Mumbai) . . . 349
----Transfer pricing--Computation of arm’s length price--Profit split method--Transfer pricing report not in accordance with prescribed rules--Method of application of profit split method not correct--Matter remanded--Income-tax Act, 1961, s. 92CA(1)--Income-tax Rules, 1962, r. 10B(1)(d)-- ITO v. Net Freight (India) P. Ltd. (Delhi) . . . 441
Penalty --Concealment of income--Furnishing inaccurate particulars--Failure to furnish reasons and disclosures in support of claim--Explanation inconsistent and assessee not able to substantiate claim--Failure to prove bona fides--Penalty imposed proper--Income-tax Act, 1961, s. 271(1)(c)-- Deputy Director of Income-tax (International Taxation) v. Asia Pacific Performance SICAV (Mumbai) . . . 333
Return --Revised return--Time limit for filing--Return filed on November 29, 2006 and revised return on October 29, 2007--Second revised return on December 24, 2009--Beyond time limit and cannot be treated as valid return--Income-tax Act, 1961, s. 139(5)-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 10(38) --Exemption--Capital gains--Set off--Income not forming part of total income--Long-term capital gains on transfer of specified asset on which securities transaction tax paid--Gains includes loss--Profit or loss arising from transfer irrelevant for computing total income--Loss on transfer of specified asset on which securities transaction tax paid cannot be set off against gains from transactions on which securities transaction tax not paid assessable under capital gains-- Deputy Director of Income-tax (International Taxation) v. Asia Pacific Performance SICAV (Mumbai) . . . 333
S. 10B --Exemption--Export--Computation of exemption under section 10B--Foreign exchange gain to be considered part of export turnover not foreign exchange loss-- MPS Ltd. v. Asst. CIT (Chennai) . . . 324
----Exemption--Export--Deduction allowable on profits and gains of undertaking and not on profit according to profit and loss account--Matter remanded-- MPS Ltd. v. Asst. CIT (Chennai) . . . 324
----Export--Exemption--Computation of exemption--International transactions--Arm’s length price--Not permissible for Assessing Officer to work out exemption on basis of arm’s length price profit generated out of order of Transfer Pricing Officer-- MPS Ltd. v. Asst. CIT (Chennai) . . . 324
----Export--Exemption--Special deduction--Computation--Allocation of expenditure--Overhead cost of corporate unit--To be allocated on basis of turnover-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
----Industrial undertaking--Special deduction--Allocation on basis of turnover--Tribunal decision based on assessee’s own case in earlier assessment year--No reason to differ from order of Tribunal-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 2) (Hyderabad) . . . 434
S. 11 --Charitable purpose--Exemption--Principles governing computation of income of business will not apply to computation of income of charitable institution--Depreciation debited to account of charitable institution allowable to arrive at income available for application to charitable purpose-- A. P. Olympic Association v. Asst. Director of Income-tax (Exemption) (Hyderabad) . . . 314
S. 12AA --Charitable purpose--Exemption--Principles governing computation of income of business will not apply to computation of income of charitable institution--Depreciation debited to account of charitable institution allowable to arrive at income available for application to charitable purpose-- A. P. Olympic Association v. Asst. Director of Income-tax (Exemption) (Hyderabad) . . . 314
S. 13 --Charitable purpose--Exemption--Principles governing computation of income of business will not apply to computation of income of charitable institution--Depreciation debited to account of charitable institution allowable to arrive at income available for application to charitable purpose-- A. P. Olympic Association v. Asst. Director of Income-tax (Exemption) (Hyderabad) . . . 314
S. 14A --Income--Disallowance of expenditure in earning tax-free income--Dividend--Rule 8D applicable only prospectively--Disallowance for years prior to assessment year 2008-09 to be made on reasonable basis--Dividend income from substantial investment in foreign company not exempted from tax--Disallowance to be made on reasonable basis--Matter remanded-- Asst. CIT v. Nimbus Communications Ltd. (Mumbai) . . . 349
S. 35AC --Business expenditure--Payment to research institution--Claim to deduction under section 35AC disallowed for failure to produce certificate--Alternative claim under section 37 to be considered-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
S. 37 --Business expenditure--Expenditure on conducting market feasibility study for extension of existing business for same products in Mauritius--Expenses deductible--No disallowance merely because expenses incurred outside India-- Deputy CIT v. Sumi Motherson Innovative Engineering Ltd. (Delhi) . . . 367
S. 37, Expln. --Business expenditure--Pharmaceutical company--Prices fixed by pricing authority--Interest on excess price charged by assessee paid to Government in pursuance of orders of Pricing Authority--Not penal in nature--Transactions contractual and principal allowed as deduction--Interest allowable-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
S. 37(1) --Business expenditure--Expenditure for purpose of business--Pharmaceutical company--Expenditure incurred on doctors’ meeting and services--Matter set aside to examine whether for purposes of business--Observations on Code of Ethics Regulations issued by Medical Council of India not binding-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 2) (Hyderabad) . . . 434
----Business expenditure--Payment to research institution--Claim to deduction under section 35AC disallowed for failure to produce certificate--Alternative claim under section 37 to be considered-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
S. 40(a)(i) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Payments to non-residents towards sales commission and legal and professional charges--Payments for services rendered abroad--Business income of foreign entity not having permanent establishment in India--Amounts not established to be taxable in India--Not to be disallowed-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
S. 50B --Capital gains--Short-term or long-term capital gains--Date of acquisition of asset--Business--When set up--Application to Industrial Development Corporation for allotment of plot for setting up manufacturing unit--Not setting up of business--Date of allotment and taking possession of land--Is date of setting up of business--Sale of plot within three years--Gains to be taxed as short-term capital gains-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
S. 80HHC --Book profits--Computation--Export--Special deduction under section 80HHC--Not to be disallowed for purpose of computing book profits-- Deputy CIT v. Sumi Motherson Innovative Engineering Ltd. (Delhi) . . . 367
S. 80-IB --Export--Exemption--Special deduction--Computation--Allocation of expenditure--Overhead cost of corporate unit--To be allocated on basis of turnover-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
----Industrial undertaking--Special deduction--Allocation on basis of turnover--Tribunal decision based on assessee’s own case in earlier assessment year--No reason to differ from order of Tribunal-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 2) (Hyderabad) . . . 434
S. 80-IC --Export--Exemption--Special deduction--Computation--Allocation of expenditure--Overhead cost of corporate unit--To be allocated on basis of turnover-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
S. 92B --International transactions--Arm’s length price--Determination--Receivables outstanding from associated enterprises--Computation of arm’s length price in respect of excessive credit period--Outstanding balances cannot be added to total income of assessee-- Asst. CIT v. Nimbus Communications Ltd. (Mumbai) . . . 349
S. 92CA --International transactions--Arm’s length price--Determination--Interest on advances to subsidiaries--Rate to be applied--Assessing Officer to modify adjustment on basis of rate of interest received on deposits made with banks and public companies-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
S. 92CA(1) --International transactions--Transfer pricing--Computation of arm’s length price--Profit split method--Transfer pricing report not in accordance with prescribed rules--Method of application of profit split method not correct--Matter remanded-- ITO v. Net Freight (India) P. Ltd. (Delhi) . . . 441
S. 92CA(3) --Export--Exemption--Computation of exemption--International transactions--Arm’s length price--Not permissible for Assessing Officer to work out exemption on basis of arm’s length price profit generated out of order of Transfer Pricing Officer-- MPS Ltd. v. Asst. CIT (Chennai) . . . 324
S. 115JB --Book profits--Computation--Export--Special deduction under section 80HHC--Not to be disallowed for purpose of computing book profits-- Deputy CIT v. Sumi Motherson Innovative Engineering Ltd. (Delhi) . . . 367
S. 115JB, Expln. (iii) --Company--Book profits--Accumulated book losses--Reduction in capital resulting in cancellation of paid-up capital--Losses to be allowed-- Deputy CIT v. Sumi Motherson Innovative Engineering Ltd. (Delhi) . . . 367
S. 139(5) --Appeal to Appellate Tribunal--Scope of powers--Recitification of mistakes--Return--Revised return--Delay in filing return--Decision relying on in application not placed before Tribunal--Tribunal cannot traverse beyond ground raised before it-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 2) (Hyderabad) . . . 434
----Return--Revised return--Time limit for filing--Return filed on November 29, 2006 and revised return on October 29, 2007--Second revised return on December 24, 2009--Beyond time limit and cannot be treated as valid return-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
S. 195(2) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Payments to non-residents towards sales commission and legal and professional charges--Payments for services rendered abroad--Business income of foreign entity not having permanent establishment in India--Amounts not established to be taxable in India--Not to be disallowed-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 1) (Hyderabad) . . . 393
S. 254(2) --Appeal to Appellate Tribunal--Scope of powers--Recitification of mistakes--Return--Revised return--Delay in filing return--Decision relying on in application not placed before Tribunal--Tribunal cannot traverse beyond ground raised before it-- Dr. Reddy’s Laboratories Ltd. v. Addl. CIT (No. 2) (Hyderabad) . . . 434
S. 271(1)(c) --Penalty--Concealment of income--Furnishing inaccurate particulars--Failure to furnish reasons and disclosures in support of claim--Explanation inconsistent and assessee not able to substantiate claim--Failure to prove bona fides--Penalty imposed proper-- Deputy Director of Income-tax (International Taxation) v. Asia Pacific Performance SICAV (Mumbai) . . . 333
R. 8D --Income--Disallowance of expenditure in earning tax-free income--Dividend--Rule 8D applicable only prospectively--Disallowance for years prior to assessment year 2008-09 to be made on reasonable basis--Dividend income from substantial investment in foreign company not exempted from tax--Disallowance to be made on reasonable basis--Matter remanded-- Asst. CIT v. Nimbus Communications Ltd. (Mumbai) . . . 349
R. 10B(1)(d) --International transactions--Transfer pricing--Computation of arm’s length price--Profit split method--Transfer pricing report not in accordance with prescribed rules--Method of application of profit split method not correct--Matter remanded-- ITO v. Net Freight (India) P. Ltd. (Delhi) . . . 441
R. 10B(1)(e) --International transactions--Arm’s length price--Determination--Transactional net margin method--Net operating profit margin--Computation--Varying denominator but numerator constant--No warrant for substituting “net operating profit†with “cash profits†thereby excluding depreciation from total operating costs--Depreciation a vital integral part of total operating costs--Comparison of composite figure of operating profit which envelop overall effect of all items of operating expenses and revenues-- Deputy CIT v. Sumi Motherson Innovative Engineering Ltd. (Delhi) . . . 367
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