ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB)) -- PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Appeal to Appellate Tribunal --Additional ground of appeal--Business expenditure--Whether or not liability for tax deduction at source not recovered from recipients of payments deductible in computation of assessee’s income--Purely legal issue but involving factual verification--Matter remanded--Income-tax Act, 1961, ss. 37, 201-- Bharti Airtel Ltd. v. Additional Commissioner of Income-tax (Delhi) . . . 475
Business expenditure --Disallowance--Payments liable to deduction at source--Interest paid to bank outside India--Whether chargeable to tax in hands of recipient--Matter remanded for adjudication de novo--Free airtime given as discount/trade margin to distributors on retail price of prepaid coupons--Whether commission on which tax required to be deducted at source under section 194H--Roaming charges paid to other telecommunications operators under a revenue-sharing arrangement whether liable to tax deduction at source under section 194J--Matter remanded--Income-tax Act, 1961, ss. 40(a)(ia), 194H, 194J-- Bharti Airtel Ltd. v. Additional Commissioner of Income-tax (Delhi) . . . 475
----Licence fee on revenue-sharing basis pertaining to periods post August 1, 1999--Allowable as revenue deduction--Employee compensation expenses on actual issuance of shares to employees under employee stock option plan--Allowable--Whether lease charges paid to IBM and Nortel fell in category of disguised purchase to be disallowed--Matter remanded for adjudication de novo--Income-tax Act, 1961, s. 37(1)-- Bharti Airtel Ltd. v. Additional Commissioner of Income-tax (Delhi) . . . 475
Business loss --Transfer of telecommunications infrastructure at nil value pursuant to scheme of arrangement--Loss on transfer debited to profit and loss account--Pursuant to scheme reserve of business restructuring created and equivalent amount transferred from Reserve to credit of profit and loss account--No effective debit to profit and loss account--Entries profit neutral and no adjustments to business income required--Addition for loss not permissible-- Bharti Airtel Ltd. v. Additional Commissioner of Income-tax (Delhi) . . . 475
International transactions --Arm’s length price--Determination--Adjustments to interest rate for loans to subsidiaries not warranted--Share application moneys--Not to be treated as interest-free loan to associate enterprise--No adjustment permissible for notional interest for period prior to allotment of shares--Income-tax Act, 1961, ss. 92(1), 92B, 133(6)-- Bharti Airtel Ltd. v. Additional Commissioner of Income-tax (Delhi) . . . 475
----Arm’s length price--Determination--Powers of Transfer Pricing Officer--Power to re-characterise transaction found to be substantially at variance with stated form-- Bharti Airtel Ltd. v. Additional Commissioner of Income-tax (Delhi) . . . 475
----Definition-- Explanation inserted by Finance Act, 2012 with retrospective effect from April 1, 2002--Effect--Residual clause covering “any other transaction having a bearing on profits, incomes, losses, or assets of such enterprises†--Effect--Transaction having no bearing on profits, incomes, losses or assets of such enterprise not an “international transaction†--Onus on Department to demonstrate that transaction has “bearing on profits, income, losses or assets†of enterprise--Corporate guarantee issued for benefit of associated enterprise which does not involve any cost to assessee--Not “international transaction†amenable to arm’s length price adjustment--Income-tax Act, 1961, s. 92B-- Bharti Airtel Ltd. v. Additional Commissioner of Income-tax (Delhi) . . . 475
Precedent --Not an authority for question which did not come up for consideration--Authority only for what it actually decides-- Bharti Airtel Ltd. v. Additional Commissioner of Income-tax (Delhi) . . . 475
PRINT EDITION
Volume 31 : Part 4 (Issue dated : 5-5-2014)
SUBJECT INDEX TO CASES REPORTED
Appeal to Appellate Tribunal --Powers of Tribunal--Depreciation--Intangible assets--Tenancy rights--Disallowance by Assessing Officer for failure to claim in return--Tribunal can admit--Income-tax Act, 1961, s. 254-- Amit P. Pandya v. Assistant CIT (Mumbai) . . . 414
Bad and doubtful debts --Public financial institution--Special provisions--State Industrial Investment Corporation--Definition--Government company providing long-term finance for industrial projects--Falls within purview of section 617 of Companies Act--Assessee fulfils both conditions to fall within meaning of “State Industrial Investment Corporation†under section 43D--Income-tax Act, 1961, s. 43D--Companies Act, 1956, s. 617-- Assistant CIT v. Tamil Nadu Power Finance and Infrastructure Development Corporation Ltd. (Chennai) . . . 447
Business expenditure --Disallowance of telephone expenses as personal in nature--Matter remanded--Income-tax Act, 1961-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513
----Disallowance--Payments liable to deduction of tax at source--Assessee having declaration in Forms 15G and 15H with it at time when interest paid to respective customer--Not liable to deduct tax at source--Delay in filing declaration with Department--Section 40(a)(ia) not attracted--Income-tax Act, 1961, ss. 40(a)(ia), 194A, 201-- Vijaya Bank v. ITO (Delhi) . . . 427
----Disallowance--Payments liable to deduction of tax at source--Non-resident--Commission to non-resident agents for services rendered outside India--No income accrued in India--Tax need not be deducted at source--Expenditure allowable under section 40(a)(i)--Income-tax Act, 1961, ss. 40(a)(i), 195-- Deputy CIT v. Farida Prime Tannery P. Ltd. (Chennai) . . . 461
----Disallowance--Payments liable to deduction of tax at source--Third party administrator for insurance company--Providing cashless services of paper work and guarantee of making payment to hospitals in which insured persons availed of medical services--Assessee not claiming any such expenditure in its profit and loss account--No disallowance under section 40(a)(ia)--Income-tax Act, 1961, s. 40(a)(ia)-- Assistant CIT v. Health India TPA Services P. Ltd. (Mumbai) . . . 407
----Expenditure incurred towards gifts allowable-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513
----Expenditure on account of training expenses for daughter of chairman-cum-managing director--Order set aside for earlier years to be continued for current year--Matter remanded--Income-tax Act, 1961, s. 37-- Dufon Laboratories P. Ltd. v. Deputy CIT (Mumbai) . . . 410
Business income or capital gains --Trading or investment--Assessee dealing in futures and options and doing share trading--Income assessable as business income--Income-tax Act, 1961, ss. 28, 45-- Amit P. Pandya v. Assistant CIT (Mumbai) . . . 414
Capital or revenue expenditure --Assessee a trader of opthalmic instruments--Expenditure incurred in conducting market research for betterment and expansion of its trading business--Revenue expenditure--Income-tax Act, 1961, s. 37-- Mehra Eyetech P. Ltd. v. CIT (Mumbai) . . . 420
----Claim that expenditure incurred for issue of shares to qualified institutional buyers and on fees paid to Registrar of Companies--Matter remanded for considering whether expenditure incurred to expand business globally by acquiring company doing similar business-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477
----Pre-operative expenses--Expenditure for setting up new manufacturing plant--Claim that there was no purchase of plant and machinery or construction during year--Assessing Officer to verify whether expenditure incurred for purchase and erection of plant and machinery or only administrative expenses--Matter remanded-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477
Capital or revenue receipt --Carbon credit--Receipt on account of carbon credit capital in nature--Not chargeable to tax under head business income or head capital gains--Income-tax Act, 1961-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513
----Sales tax subsidy received under State investment promotion scheme--Capital in nature and not chargeable to tax--Income-tax Act, 1961-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513
Company --Book profits--Computation--Telephone expenses--Disallowance of telephone expenses not permissible in computing book profit under section 115JB--Income-tax Act, 1961, s. 115JB-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513
Depreciation --Additional depreciation--Assessee entitled to additional depreciation at 20 per cent. and allowed 10 per cent. in earlier assessment year--Remaining 10 per cent. to be allowed in subsequent assessment year--Income-tax Act, 1961, s. 32(1)(iia)-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477
----Portion at corporate office let out to sister concern--Assessee not entitled to depreciation thereon--Income-tax Act, 1961, s. 32-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477
Exemption --Disallowance of expenditure incurred for earning income not includible in total income--Share income from firm--Commissioner (Appeals) restricting disallowance to ten per cent. of share income--No interference--Income-tax Act, 1961, s. 14A-- Deputy CIT v. Farida Prime Tannery P. Ltd. (Chennai) . . . 461
Housing projects --Special deduction under section 80-IB(10)--Law applicable--Amendment to section 80-IB(10) with effect from April 1, 2005 restricting built up area of shops and commercial establishments included in housing project--Prospective--Not applicable to projects approved prior to April 1, 2005--Income-tax Act, 1961, s. 80-IB(10)(d)-- ITO v. Velentine Developers (Mumbai) . . . 452
Income --Disallowance of expenditure incurred in relation to exempt income--Onus on assessee to show no expenses incurred--Matter remanded--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Amit P. Pandya v. Assistant CIT (Mumbai) . . . 414
----Expenditure in relation to income not includible in taxable income--Dividend--Assessing Officer working out disallowance applying rule 8D(2)(iii)--Onus of proving not discharged by assessee--Disallowance confirmed--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Dufon Laboratories P. Ltd. v. Deputy CIT (Mumbai) . . . 410
----Interest--Interest under section 244A allowable on refund of prepaid taxes after giving credit of brought forward minimum alternate tax--Income-tax Act, 1961, ss. 244, 115JAA-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513
Industrial undertaking --Special deduction--Computation of profits--Generation of power for captive use--Discretion on assessee to adopt market value for power used captively--Assessing Officer can adopt different value only when value adopted by assessee does not correspond to market value--Income-tax Act, 1961, ss. 80-IA, 80-IA(8)-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513
----Special deduction--Sale of carbon credits in respect of emissions generated in assessee’s gas turbine unit under emission reduction certificate issued in terms of Kyoto Protocol--Carbon credit a privilege generated in course of business activity--Not a capital asset or receipt--Income on sale of carbon credit a revenue receipt--But not profit “derived from†industrial undertaking--Assessee not entitled to deduction in respect of carbon credits--Income-tax Act, 1961, ss. 2(14), (24)(vd), 28(iv), 80-IA-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477
International transactions --Arm’s length price--Assessee engaged in manufacture and marketing of tyres--Deputing employees to associated enterprise in South Africa--Deputed employees remaining on payroll of assessee but working for associated enterprise--Salaries paid by assessee but subsequently recovered from associated enterprise without a mark up--Not a simple case of deputing employees for learning techniques but of rendering services to associate enterprises--Adjustment by making a 5 per cent. mark-up not proper--Before making adjustment, services rendered by similarly placed industries to be determined on basis of appropriate method--Matter remanded--Income-tax Act, 1961, s. 92C(2)-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477
Penalty --Furnishing inaccurate particulars of income--Carry forward and set off of business loss against capital gains on advice of consultant--Assessee not be punished for mistakes committed by counsel or advisors--Penalty to be deleted--Income-tax Act, 1961, s. 271(1)(c)-- Sigma Steel Industries v. ITO (Chandigarh) . . . 424
Rebate --Securities transaction tax--Dealer in shares--Assessment order stating rebate granted but in actual fact not granted--Matter remanded for appropriate action consistent with law--Income-tax Act, 1961, s. 88E-- Amit P. Pandya v. Assistant CIT (Mumbai) . . . 414
Scientific research expenditure --Weighted deduction--Matter remanded--Income-tax Act, 1961, s. 35(2AB)-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477
Unexplained income --Search and seizure--Assessee surrendering additional income at time of search but only partly shown in return--No justification for crediting entire sum in books of account--Income unexplained in absence of availability of source--Matter remanded--Income-tax Act, 1961, s. 132-- Assistant CIT v. VMR Promoters P. Ltd . (Delhi) . . . 435
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 617 --Bad and doubtful debts--Public financial institution--Special provisions--State Industrial Investment Corporation--Definition--Government company providing long-term finance for industrial projects--Falls within purview of section 617 of Companies Act--Assessee fulfils both conditions to fall within meaning of “State Industrial Investment Corporation†under section 43D-- Assistant CIT v. Tamil Nadu Power Finance and Infrastructure Development Corporation Ltd. (Chennai) . . . 447
S. 2(14) --Industrial undertaking--Special deduction--Sale of carbon credits in respect of emissions generated in assessee’s gas turbine unit under emission reduction certificate issued in terms of Kyoto Protocol--Carbon credit a privilege generated in course of business activity--Not a capital asset or receipt--Income on sale of carbon credit a revenue receipt--But not profit “derived from†industrial undertaking--Assessee not entitled to deduction in respect of carbon credits-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477
S. 2(24)(vd) --Industrial undertaking--Special deduction--Sale of carbon credits in respect of emissions generated in assessee’s gas turbine unit under emission reduction certificate issued in terms of Kyoto Protocol--Carbon credit a privilege generated in course of business activity--Not a capital asset or receipt--Income on sale of carbon credit a revenue receipt--But not profit “derived from†industrial undertaking--Assessee not entitled to deduction in respect of carbon credits-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477
S. 14A --Exemption--Disallowance of expenditure incurred for earning income not includible in total income--Share income from firm--Commissioner (Appeals) restricting disallowance to ten per cent. of share income--No interference-- Deputy CIT v. Farida Prime Tannery P. Ltd. (Chennai) . . . 461
----Income--Disallowance of expenditure incurred in relation to exempt income--Onus on assessee to show no expenses incurred--Matter remanded-- Amit P. Pandya v. Assistant CIT (Mumbai) . . . 414
----Income--Expenditure in relation to income not includible in taxable income--Dividend--Assessing Officer working out disallowance applying rule 8D(2)(iii)--Onus of proving not discharged by assessee--Disallowance confirmed-- Dufon Laboratories P. Ltd. v. Deputy CIT (Mumbai) . . . 410
S. 28 --Business income or capital gains--Trading or investment--Assessee dealing in futures and options and doing share trading--Income assessable as business income-- Amit P. Pandya v. Assistant CIT (Mumbai) . . . 414
S. 28(iv) --Industrial undertaking--Special deduction--Sale of carbon credits in respect of emissions generated in assessee’s gas turbine unit under emission reduction certificate issued in terms of Kyoto Protocol--Carbon credit a privilege generated in course of business activity--Not a capital asset or receipt--Income on sale of carbon credit a revenue receipt--But not profit “derived from†industrial undertaking--Assessee not entitled to deduction in respect of carbon credits-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477
S. 32 -- Depreciation--Portion at corporate office let out to sister concern--Assessee not entitled to depreciation thereon-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477
S. 32(1)(iia) --Depreciation--Additional depreciation--Assessee entitled to additional depreciation at 20 per cent. and allowed 10 per cent. in earlier assessment year--Remaining 10 per cent. to be allowed in subsequent assessment year-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477
S. 35(2AB) --Scientific research expenditure--Weighted deduction--Matter remanded-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477
S. 37 --Business expenditure--Expenditure on account of training expenses for daughter of chairman-cum-managing director--Order set aside for earlier years to be continued for current year--Matter remanded-- Dufon Laboratories P. Ltd. v. Deputy CIT (Mumbai) . . . 410
----Capital or revenue expenditure--Assessee a trader of opthalmic instruments--Expenditure incurred in conducting market research for betterment and expansion of its trading business--Revenue expenditure-- Mehra Eyetech P. Ltd. v. CIT (Mumbai) . . . 420
S. 40(a)(i) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Non-resident--Commission to non-resident agents for services rendered outside India--No income accrued in India--Tax need not be deducted at source--Expenditure allowable under section 40(a)(i)-- Deputy CIT v. Farida Prime Tannery P. Ltd. (Chennai) . . . 461
S. 40(a)(ia) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Assessee having declaration in Forms 15G and 15H with it at time when interest paid to respective customer--Not liable to deduct tax at source--Delay in filing declaration with Department--Section 40(a)(ia) not attracted-- Vijaya Bank v. ITO (Delhi) . . . 427
----Business expenditure--Disallowance--Payments liable to deduction of tax at source--Third party administrator for insurance company--Providing cashless services of paper work and guarantee of making payment to hospitals in which insured persons availed of medical services--Assessee not claiming any such expenditure in its profit and loss account--No disallowance under section 40(a)(ia)-- Assistant CIT v. Health India Tpa Services P. Ltd. (Mumbai) . . . 407
S. 43D --Bad and doubtful debts--Public financial institution--Special provisions--State Industrial Investment Corporation--Definition--Government company providing long-term finance for industrial projects--Falls within purview of section 617 of Companies Act--Assessee fulfils both conditions to fall within meaning of “State Industrial Investment Corporation†under section 43D-- Assistant CIT v. Tamil Nadu Power Finance and Infrastructure Development Corporation Ltd. (Chennai) . . . 447
S. 45 --Business income or capital gains--Trading or investment--Assessee dealing in futures and options and doing share trading--Income assessable as business income-- Amit P. Pandya v. Assistant CIT (Mumbai) . . . 414
S. 80-IA --Industrial undertaking--Special deduction--Computation of profits--Generation of power for captive use--Discretion on assessee to adopt market value for power used captively--Assessing Officer can adopt different value only when value adopted by assessee does not correspond to market value-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513
----Industrial undertaking--Special deduction--Sale of carbon credits in respect of emissions generated in assessee’s gas turbine unit under emission reduction certificate issued in terms of Kyoto Protocol--Carbon credit a privilege generated in course of business activity--Not a capital asset or receipt--Income on sale of carbon credit a revenue receipt--But not profit “derived from†industrial undertaking--Assessee not entitled to deduction in respect of carbon credits-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477
S. 80-IA(8) --Industrial undertaking--Special deduction--Computation of profits--Generation of power for captive use--Discretion on assessee to adopt market value for power used captively--Assessing Officer can adopt different value only when value adopted by assessee does not correspond to market value-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513
S. 80-IB(10)(d) --Housing projects--Special deduction under section 80-IB(10)--Law applicable--Amendment to section 80-IB(10) with effect from April 1, 2005 restricting built up area of shops and commercial establishments included in housing project--Prospective--Not applicable to projects approved prior to April 1, 2005-- ITO v. Velentine Developers (Mumbai) . . . 452
S. 88E --Rebate--Securities transaction tax--Dealer in shares--Assessment order stating rebate granted but in actual fact not granted--Matter remanded for appropriate action consistent with law-- Amit P. Pandya v. Assistant CIT (Mumbai) . . . 414
S. 92C(2) --International transactions--Arm’s length price--Assessee engaged in manufacture and marketing of tyres--Deputing employees to associated enterprise in South Africa--Deputed employees remaining on payroll of assessee but working for associated enterprise--Salaries paid by assessee but subsequently recovered from associated enterprise without a mark up--Not a simple case of deputing employees for learning techniques but of rendering services to associate enterprises--Adjustment by making a 5 per cent. mark-up not proper--Before making adjustment, services rendered by similarly placed industries to be determined on basis of appropriate method--Matter remanded-- Apollo Tyres Ltd. v. Assistant CIT (Cochin) . . . 477
S. 115JAA --Income--Interest--Interest under section 244A allowable on refund of prepaid taxes after giving credit of brought forward minimum alternate tax-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513
S. 115JB --Company--Book profits--Computation--Telephone expenses--Disallowance of telephone expenses not permissible in computing book profit under section 115JB -- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513
S. 132 --Unexplained income--Search and seizure--Assessee surrendering additional income at time of search but only partly shown in return--No justification for crediting entire sum in books of account--Income unexplained in absence of availability of source--Matter remanded-- Assistant CIT v. VMR Promoters P. Ltd . (Delhi) . . . 435
S. 194A --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Assessee having declaration in Forms 15G and 15H with it at time when interest paid to respective customer--Not liable to deduct tax at source--Delay in filing declaration with Department--Section 40(a)(ia) not attracted-- Vijaya Bank v. ITO (Delhi) . . . 427
S. 195 --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Non-resident--Commission to non-resident agents for services rendered outside India--No income accrued in India--Tax need not be deducted at source--Expenditure allowable under section 40(a)(i)-- Deputy CIT v. Farida Prime Tannery P. Ltd. (Chennai) . . . 461
S. 201 --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Assessee having declaration in Forms 15G and 15H with it at time when interest paid to respective customer--Not liable to deduct tax at source--Delay in filing declaration with Department--Section 40(a)(ia) not attracted-- Vijaya Bank v. ITO (Delhi) . . . 427
S. 244 --Income--Interest--Interest under section 244A allowable on refund of prepaid taxes after giving credit of brought forward minimum alternate tax-- Shree Cement Ltd. v. Additional CIT (Jaipur) . . . 513
S. 254 --Appeal to Appellate Tribunal--Powers of Tribunal--Depreciation--Intangible assets--Tenancy rights--Disallowance by Assessing Officer for failure to claim in return--Tribunal can admit-- Amit P. Pandya v. Assistant CIT (Mumbai) . . . 414
S. 271(1)(c) --Penalty--Furnishing inaccurate particulars of income--Carry forward and set off of business loss against capital gains on advice of consultant--Assessee not be punished for mistakes committed by counsel or advisors--Penalty to be deleted-- Sigma Steel Industries v. ITO (Chandigarh) . . . 424
R. 8D --Income--Disallowance of expenditure incurred in relation to exempt income--Onus on assessee to show no expenses incurred--Matter remanded-- Amit P. Pandya v. Assistant CIT (Mumbai) . . . 414
----Income--Expenditure in relation to income not includible in taxable income--Dividend--Assessing Officer working out disallowance applying rule 8D(2)(iii)--Onus of proving not discharged by assessee--Disallowance confirmed-- Dufon Laboratories P. Ltd. v. Deputy CIT (Mumbai) . . . 410
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