ITR (TRIB) Volume 31 : Part 3 (Issue dated : 28-4-2014)

 

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

 

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Assessment --Business expenditure--Disallowance--Failure by assessee to prove that Assessing Officer not provided opportunity of hearing--Appeal to be dismissed--Income-tax Act, 1961-- Indivision Investment Advisors Ltd. v. Assistant CIT (Mumbai) . . . 452

Business expenditure --Prior period expenses on freight and breakage--Failure by Department to show that liability for each expenditure crystallised in year under consideration--Matter remanded to Commissioner (Appeals) to readjudicate and decide issue in accordance with law--Income-tax Act, 1961-- Millennium Beer Industries Ltd. v. Deputy CIT (Delhi) . . . 462

Business loss --Business--Setting up of business--Claim of loss on account of first year of operation--Assessing Officer holding business had not commenced--No finding as to date of setting up of business--Order set aside and matter remanded for consideration afresh whether expenses allowable and extent thereof to which-- Indivision Investment Advisors Ltd. v. Assistant CIT (Mumbai) . . . 452

Depreciation --Goodwill--Is asset eligible for depreciation under Explanation 3(b) to section 32(1)--Income-tax Act, 1961, s. 32(1), Expln. 3(b) -- Millennium Beer Industries Ltd. v. Deputy CIT (Delhi) . . . 462

Income --Expenditure in relation to incomes not forming part of total income--Dividend--To be considered on judicial pronouncements--Order set aside and matter remanded for decision afresh--Income-tax Act, 1961, s. 14A-- Millennium Beer Industries Ltd. v. Deputy CIT (Delhi) . . . 462

Rebate --Securities transaction tax--Rebate allowable where income assessed on book profit basis under section 115JB--But only with reference to tax on business income by way of securities transactions disclosed by assessee and assessed as such--Income-tax Act, 1961, ss. 88E, 115JB-- Deputy CIT v. Arcadia Share and Stock Brokers P. Ltd. (Mumbai) . . . 459

 

PRINT EDITION

Volume 31 : Part 3 (Issue dated : 28-4-2014)

SUBJECT INDEX TO CASES REPORTED

Business expenditure --Capital or revenue expenditure--Amortisation of preliminary expenses--Stamp duty charges including charges pertaining to issue of bonus shares and initial public offering--Expenditure relating to issue of bonus shares revenue in nature--Stamp duty charges included within scope of section 35D--Income-tax Act, 1961, s. 35D-- OnMobile Global Ltd. v. Additional CIT (Bangalore) . . . 348

Capital or revenue expenditure --Expenses incurred for filing patent application--To protect patent and not create patent--Expenses are revenue in nature--Deduction allowable--Income-tax Act, 1961, s. 37(1)-- OnMobile Global Ltd. v. Additional CIT (Bangalore) . . . 348

----Legal and professional charges incurred in connection with acquisition of company in France--Expenditure revenue in nature--Deduction allowable--Income-tax Act, 1961, s. 37(1)-- OnMobile Global Ltd. v. Additional CIT (Bangalore) . . . 348

Depreciation --Rate of depreciation--Purchase of media resource boards--Media resource boards operate along with servers and computers--Fit into definition of “computer component“--To be classified as “computers“--Depreciation at rate of 60 per cent. allowable--Income-tax Act, 1961-- OnMobile Global Ltd. v. Additional CIT (Bangalore) . . . 348

Exemption --Export--Assessee’s activity of “developing content“ and “conversion of procured content into mobile readable format“ qualify to be classified as “content development“ or “data processing“ specified in notification--Assessee rendering information technology enabled services--Satisfying conditions of export of computer software and repatriation of exports proceeded in convertible foreign exchange--Assessee entitled to deduction under section 10A--Income-tax Act, 1961, s. 10A--Notification S. O. No. 890(E) (FR. No. 142/49/2000-TPL), dated 26.9.2000-- OnMobile Global Ltd. v. Additional CIT (Bangalore) . . . 348

Income --Computation of income--Disallowance of expenditure related to exempt income--Expenses incurred at place of location of manufacturing facilities directly related to manufacturing activities--Expenses not related to investment activities--Selling and distribution expenses, salary paid to directors and motor car expenses incurred by assessee directly related to manufacturing activities--Salary paid to accountant and telephone expenses of director indirectly related to exempted income--Expenditure incurred on payment of rent relating to director's residence and godown--Disallowance can be calculated only after considering all expenditure incurred by assessee--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Elegant Marbles and Grani Industries Ltd. v. Deputy CIT (Mumbai) . . . 338

----Computation--Disallowance of expenditure in relation to exempt income--Principles governing--Shares held as stock-in-trade--Disallowance of expenditure permissible--Shares held both as investment and as stock-in-trade--Apportionment of expenditure relating to taxable and exempt income--Direct expenditure to be set off against relevant income and apportionment to be done for indirect expenditure--Rule 8D applies--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- D. H. Securities P. Ltd. v. Deputy CIT (Mumbai) . . . 381

Industrial undertaking --Special deduction--Deduction in respect of employment of new workmen--Assessee engaged in development and manufacture of software covered within definition of industrial undertaking--Payments to workmen not employed in supervisory capacity--Assessee entitled to deduction--Income-tax Act, 1961, s. 80JJAA-- OnMobile Global Ltd. v. Additional CIT (Bangalore) . . . 348

International transactions --Associated enterprise--Contention of assessee that entity in question was not associated enterprise in year in question--Failure by Assessing Officer to ascertain relationship of associated enterprise from documents--Matter remanded--Income-tax Act, 1961-- Oren Hydrocarbons P. Ltd. v. Assistant CIT (Chennai) . . . 343

Non-resident --Fees for technical services--Permanent establishment--Local office only facilitating communication of head office with Indian company and not involved in supervisory activities--Local office not allowed to do trading, commercial or industrial activity--Not a supervisory permanent establishment in India--Income taxable as fees for technical services and liable to tax at 20 per cent.--Double Taxation Avoidance agreement between India and Japan, arts. 7, 12(2), (5)-- Sumitomo Corporation v. Deputy CIT (Delhi) . . . 310

Penalty --Concealment of income--Search and seizure--Penalty imposed based on seized document--Document relating to group of companies not assessee alone--Assessing Officer acted upon misconception--Penalty to be cancelled--Income-tax Act, 1961, s. 271(1)(c)-- Concorde Housing Corporation v. Deputy CIT (Bangalore) . . . 299

Rebate --Securities transaction tax--Minimum alternate tax--Book profits--Assessee entitled to rebate in computation of liability under section 115JB--Income-tax Act, 1961, ss. 88E, 115JB-- D. H. Securities P. Ltd. v. Deputy CIT (Mumbai) . . . 381

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance agreement between India and Japan

Art. 7 --Non-resident--Fees for technical services--Permanent establishment--Local office only facilitating communication of head office with Indian company and not involved in supervisory activities--Local office not allowed to do trading, commercial or industrial activity--Not a supervisory permanent establishment in India--Income taxable as fees for technical services and liable to tax at 20 per cent.-- Sumitomo Corporation v. Deputy CIT (Delhi) . . . 310

Arts. 12(2) --Non-resident--Fees for technical services--Permanent establishment--Local office only facilitating communication of head office with Indian company and not involved in supervisory activities--Local office not allowed to do trading, commercial or industrial activity--Not a supervisory permanent establishment in India--Income taxable as fees for technical services and liable to tax at 20 per cent.-- Sumitomo Corporation v. Deputy CIT (Delhi) . . . 310

Arts. 12(5) --Non-resident--Fees for technical services--Permanent establishment--Local office only facilitating communication of head office with Indian company and not involved in supervisory activities--Local office not allowed to do trading, commercial or industrial activity--Not a supervisory permanent establishment in India--Income taxable as fees for technical services and liable to tax at 20 per cent.-- Sumitomo Corporation v. Deputy CIT (Delhi) . . . 310

 

Income-tax Act, 1961

S. 10A --Exemption--Export--Assessee’s activity of “developing content“ and “conversion of procured content into mobile readable format“ qualify to be classified as “content development“ or “data processing“ specified in notification--Assessee rendering information technology enabled services--Satisfying conditions of export of computer software and repatriation of exports proceeded in convertible foreign exchange--Assessee entitled to deduction under section 10A-- OnMobile Global Ltd. v. Additional CIT (Bangalore) . . . 348

----Income--Computation of income--Disallowance of expenditure related to exempt income--Expenses incurred at place of location of manufacturing facilities directly related to manufacturing activities--Expenses not related to investment activities--Selling and distribution expenses, salary paid to directors and motor car expenses incurred by assessee directly related to manufacturing activities--Salary paid to accountant and telephone expenses of director indirectly related to exempted income--Expenditure incurred on payment of rent relating to director's residence and godown--Disallowance can be calculated only after considering all expenditure incurred by assessee-- Elegant Marbles and Grani Industries Ltd. v. Deputy CIT (Mumbai) . . . 338

S. 14A --Income--Computation--Disallowance of expenditure in relation to exempt income--Principles governing--Shares held as stock-in-trade--Disallowance of expenditure permissible--Shares held both as investment and as stock-in-trade--Apportionment of expenditure relating to taxable and exempt income--Direct expenditure to be set off against relevant income and apportionment to be done for indirect expenditure--Rule 8D applies-- D. H. Securities P. Ltd. v. Deputy CIT (Mumbai) . . . 381

S. 35D --Business expenditure--Capital or revenue expenditure--Amortisation of preliminary expenses--Stamp duty charges including charges pertaining to issue of bonus shares and initial public offering--Expenditure relating to issue of bonus shares revenue in nature--Stamp duty charges included within scope of section 35D-- OnMobile Global Ltd. v. Additional CIT (Bangalore) . . . 348

S. 37(1) --Capital or revenue expenditure--Expenses incurred for filing patent application--To protect patent and not create patent--Expenses are revenue in nature--Deduction allowable-- OnMobile Global Ltd. v. Additional CIT (Bangalore) . . . 348

----Capital or revenue expenditure--Legal and professional charges incurred in connection with acquisition of company in France--Expenditure revenue in nature--Deduction allowable-- OnMobile Global Ltd. v. Additional CIT (Bangalore) . . . 348

S. 80JJAA --Industrial undertaking--Special deduction--Deduction in respect of employment of new workmen--Assessee engaged in development and manufacture of software covered within definition of industrial undertaking--Payments to workmen not employed in supervisory capacity--Assessee entitled to deduction-- OnMobile Global Ltd. v. Additional CIT (Bangalore) . . . 348

S. 88E --Rebate--Securities transaction tax--Minimum alternate tax--Book profits--Assessee entitled to rebate in computation of liability under section 115JB-- D. H. Securities P. Ltd. v. Deputy CIT (Mumbai) . . . 381

S. 115JB --Rebate--Securities transaction tax--Minimum alternate tax--Book profits--Assessee entitled to rebate in computation of liability under section 115JB-- D. H. Securities P. Ltd. v. Deputy CIT (Mumbai) . . . 381

S. 271(1)(c) --Penalty--Concealment of income--Search and seizure--Penalty imposed based on seized document--Document relating to group of companies not assessee alone--Assessing Officer acted upon misconception--Penalty to be cancelled-- Concorde Housing Corporation v. Deputy CIT (Bangalore) . . . 299

 

Income-tax Rules, 1962

R. 8D --Income--Computation--Disallowance of expenditure in relation to exempt income--Principles governing--Shares held as stock-in-trade--Disallowance of expenditure permissible--Shares held both as investment and as stock-in-trade--Apportionment of expenditure relating to taxable and exempt income--Direct expenditure to be set off against relevant income and apportionment to be done for indirect expenditure--Rule 8D applies-- D. H. Securities P. Ltd. v. Deputy CIT (Mumbai) . . . 381

----Income--Computation of income--Disallowance of expenditure related to exempt income--Expenses incurred at place of location of manufacturing facilities directly related to manufacturing activities--Expenses not related to investment activities--Selling and distribution expenses, salary paid to directors and motor car expenses incurred by assessee directly related to manufacturing activities--Salary paid to accountant and telephone expenses of director indirectly related to exempted income--Expenditure incurred on payment of rent relating to director's residence and godown--Disallowance can be calculated only after considering all expenditure incurred by assessee-- Elegant Marbles and Grani Industries Ltd. v. Deputy CIT (Mumbai) . . . 338