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Saturday, November 15, 2014

Link of Rachnatmak Sankalp

---------- Forwarded message ----------
From: Rachnatmak Sankalp <rachnatmak.sankalp@gmail.com>
Date: 2014-11-15 14:09 GMT+05:30
Subject: Link of Rachnatmak Sankalp
To:


"इंस्टीट्यूट ऑफ चार्टर्ड एकाउंटेंट्स के दिसंबर 2015 में होने वाले चुनाव के लिए वेस्टर्न रीजन में सेंट्रल काउंसिल के लिए महेश मडखोलकर द्धारा उम्मीदवारी प्रस्तुत किए जाने की घोषणा ने मंगेश किनरे की उम्मीदवारी के लिए समस्या पैदा कर दी है" शीर्षक रिपोर्ट पढ़ने के लिए Please click the Link :
http://www.rachnatmaksankalp.blogspot.in/2014/11/blog-post_14.html

Friday, November 14, 2014

No More Frivolous Or High-Pitched Assessments Allowed: CBDT To AOs


 

Dear Subscriber,

No More Frivolous Or High-Pitched Assessments Allowed: CBDT To AOs

The CBDT has issued an Office Memorandum dated 07.11.2014 setting out 12 steps that have to taken by the department to ensure a "non-adversarial tax regime". One of the important points made is that Assessing Officers must cease issuing "long and non-specific questionnaire" and making assessments without proper basis. It has been emphasized that each Range Head has to ensure that "frivolous additions or high-pitched assessments" are not made by the AOs. Important directives have also been given with regard to the withholding of refunds, recovery of demand, passing of remand orders and filing of appeals. At the end, the CBDT has warned that officers have to adhere to the instructions scrupulously and that non-adherence will be viewed seriously and disciplinary action initiated.


Regards,

 

Editor,

 

itatonline.org

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

Latest:

CIT vs. Dimension Apparels Ltd (Delhi High Court)

S. 143(3) assessment on amalgamating company is a nullity. U/s 170(2) assessment has to be on successor. Mistake cannot be cured u/s 292B. Participation by amalgamating company is irrelevant as there is no estoppel against a statute

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Four Important Judgements On Controversial Topics That You Must Be Aware Of



 

Dear Subscriber,

 

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


CIT vs. Dimension Apparels Ltd (Delhi High Court)

S. 143(3) assessment on amalgamating company is a nullity. U/s 170(2) assessment has to be on successor. Mistake cannot be cured u/s 292B. Participation by amalgamating company is irrelevant as there is no estoppel against a statute

(i) Section 481 of the Companies Act provides for dissolution of the company. The Company Judge in the High Court can order dissolution of a company on the grounds stated therein. The effect of the dissolution is that the company no more survives. The dissolution puts an end to the existence of the company. It […]


ITO vs. N. C. Cables Ltd (ITAT Delhi)

S. 147/ 151: Sanction by the CIT with word "approved" without recording satisfaction note renders reopening invalid

(i) A simple reading of the provisions of Sec. 151(1) with the proviso clearly show that no such notice shall be issued unless the Commissioner is satisfied on the reasons recorded by the AO that it is a fit case for the issue of notice which means that the satisfaction of the Commissioner is paramount […]


ACIT vs. Devesh Kumar (ITAT Delhi)

S. 147 Reopening solely on the basis of information received from the investigation wing & without independent application of mind is void

The AO proceeded to initiate proceedings u/s 147 of the Act and to issue notice u/s 148 of the Act on the basis of information received from Investigation Wing of the department in the form of a CD prepared by Shri Sanjay Shah and Shri Vishesh Prakash, ITOs of Unit V, New Delhi. Subsequently, the […]


Johnson & Johnson Ltd vs. ACIT (ITAT Mumbai)

"Innovative" method of department of forcing hapless assessees to give "consent letters" for tax recovery deplored and warning issued

At this time it came to the light that the AO has followed an innovative method of collecting taxes despite specific directions of the Bench. Therefore we had called the AO who had collected the revenue by flouting the directions of the Bench. Shri Vishal Makawane, DDIT (Inv), Unit-VII(1), Mumbai appeared before us and tendered […]


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Editor,

 

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

Latest:

CIT vs. C. Jaichander (Madras High Court)

S. 54EC: Assessee is eligible for deduction of Rs.1 Crore in respect of investment of Rs.50 Lakhs made in two different financial years. Proviso to s. 54EC seeking to curb this has effect from AY 2015-16

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Important Verdicts On Capital Gains/ Transfer, S. 14A/Rule 8D Disallowance And S. 271(1)(c) Penalty

 

Dear Subscriber,

 

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


CIT vs. C. Sugumaran (Madras High Court)

S. 2(47)(vi): A Power of Attorney which does not enable enjoyment of property does not result in a "transfer". CBDT Circular No.495 dated 22.9.1987 reads more into s. 2(47)(vi) than warranted

(i) There is no transfer to or enabling enjoyment of property in favour of the assessee in any manner and therefore, sub-clause (vi) of Section 2(47) of the Income Tax Act does not get attracted. Clause 21 of the power of attorney, which has been already referred to supra, clearly reveals that no consideration was […]


Cochin Stock Exchanges Limited vs. CIT (Kerala High Court)

S. 2(47)(v): Execution of a Power of Attorney in favour of the builder constitutes part performance u/s 53A of TOP Act and a "transfer" for capital gains

(i) On a reading of the above provision itself, it is clear that possession of the property has been handed over to the builder immediately on receipt of the first installment of the payment from the builder. As per clause (3), the total consideration is mentioned as Rs.8,83,50,400/- and Rs.3,00,00,000/- was to be paid as […]


ACIT vs. Dhampur Sugar Mill Pvt. Ltd (Allahabad High Court)

S. 14A/ Rule 8D: Interest expenditure attributable to a taxable business cannot be disallowed. Expenditure on creating assets which do not belong to the assessee is revenue expenditure

(i) Once it was duly established that no borrowed funds on which interest was paid had been invested for earning tax free income, no disallowance was permissible under Section 14A. The Tribunal has observed that under Rule 8D(2)(ii), a proportionate disallownace out of interest expenditure would be made in respect of interest expenditure which is […]


DCIT vs. Nepa Limited (ITAT Indore)

S. 271(1)(c): Penalty initiated without specifying whether it is for concealment or for furnishing inaccurate particulars is invalid

(i) It is incumbent upon the Assessing Officer to state whether penalty was being levied for concealment of particulars of income by the assessee or whether any inaccurate particulars of income had been furnished by the assessee. There are two different charges i.e. the concealment of particulars of income or furnishing of inaccurate particulars of […]


Poysha Goyal vs. ACIT (ITAT Delhi)

S. 271(1)(c): No penalty can be levied for a bona fide "wrong" claim which is not a "false" claim

The addition by way of disallowing the depreciation claimed has rightly been made in the quantum proceedings which fact has been accepted by the assessee by filing a revised return and not agitating the issue further. Considering the explanation offered by the assessee in the penalty proceedings, it is seen that repeatedly it is claimed […]


CIT vs. Shri Girija Smelters (P) Ltd (Andhra Pradesh High Court)

An ITO cannot carry out the functions of an authority under the Central Excise Act and arrogate to himself the power to determine the quantity of production, or the intricacies of the manufacturing process. He must seek assistance of the concerned authority

(i) Even where the authorities of the Central Excise Department doubt the accuracy of figures mentioned in the registers, or if they find it difficult to understand the complexity of the manufacturing process, they seek the help of the experts. Sometimes experts are on the rolls of the department itself, and on the other occasions, […]


ITO vs. Narinder Kaur Bhatia (ITAT Mumbai)

S. 54: Purchasing the undivided share of a co-owner in a new flat constitutes a "purchase" & is eligible for exemption

(i) The assessee purchased a residential flat on 08.01.1981, which was sold on 07.02.2007 for a sale consideration of Rs.1,25,00,000/-. The long term capital gain on such sale amounted to Rs.1,14,63,650/-. Before the said sale, assessee had entered into an agreement to purchase a residential flat, being flat no. 501 Elegant Orchid at Santacruz (west), […]


Regards,

 

Editor,

 

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

Latest:

S. 271(1)(c) Penalty Of Rs. 56.67 Cr Levied On Abhishek Manu Singhvi

Eminent Senior Advocate Abhishek Manu Singhvi, who has appeared in several landmark income-tax cases such as Vodafone, has been assessed to undisclosed income of Rs. 91.95 crore by the Income Tax Settlement Commission. Penalty of Rs. 56.67 Cr u/s 271(1)(c) has also been levied. The addition has been made inter alia in respect of the […]


Friday, November 7, 2014

ITR (TRIB) Volume 35 : Part 5 (Issue dated : 3-11-2014)

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

 

PRINT EDITION

Volume 35 : Part 5 (Issue dated : 3-11-2014)

SUBJECT INDEX TO CASES REPORTED

Appeal to Appellate Tribunal --Power to admit additional evidence--International transactions--Transfer pricing--Payment of corporate charges--Assessee not able to furnish complete break up of allocation of cost before completion of proceedings before Transfer Pricing Officer or Dispute Resolution Panel--Detailed invoice has important bearing for resolving transfer pricing dispute--To be admitted in interest of substantial justice and equity--Addl. evidence to be verified by Transfer Pricing Officer--Matter remanded--Income-tax Act, 1961-- Contitech India P. Ltd. v. Deputy CIT (Delhi) . . . 526

Assessment --Notice--Validity of service--Notice served by affixture--Nothing to justify service by affixture--Notice invalid--Assessment invalid--Income-tax Act, 1961, ss. 143(2), (3), 282, 292BB--Code of Civil Procedure, 1908, O. V, rr. 17 to 20-- Sanjay Badani v. Deputy CIT (Mumbai) . . . 536

Business expenditure --Provision for damages--Contracts for execution of work--Completion guarantee clause providing for liquidity damages to be discharged in event of delay in completion of work--Provision made by assessee in accordance with agreement--Assessee entitled to deduction--Income-tax Act, 1961-- Motorola Solutions India P. Ltd. v. Asst. CIT(Delhi) . . . 546

Capital or revenue expenditure --Software expenses--Assessing Officer to decide on basis of guidelines laid down by Special Bench in Amway India Enterprises v. Deputy CIT [2008] 301 ITR (AT) 1 (Delhi) [SB]--Matter remanded-- Motorola Solutions India P. Ltd. v. Asst. CIT(Delhi) . . . 546

----Sweat equity shares--Sweat equity shares issued for value addition provided by two persons in form of experience in new business concepts and professional experience--Value addition an intangible asset in hands of assessee--Expenditure on issue of shares is capital expenditure--Income-tax Act, 1961, s. 37-- Future Agrovet Ltd. v. Addl. CIT (Mumbai) . . . 519

Income --Disallowance of expenditure in relation to exempt income--Dividend--Assessee incurring indirect expenses such as management establishment expenses and other office overheads for making investment in shares and for earning dividend income--Disallowance justified--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Contitech India P. Ltd. v. Deputy CIT (Delhi) . . . 526

International transactions --Arm’s length price--Determination--Transactional net margin method--Advertising, marketing and promotion expenses--Guidelines laid down by Special Bench in L. G. Electronics India P. Ltd . v. Asst. CIT [2013] 22 ITR (Trib) 1 (Delhi) [SB] to be considered--Failure by Transfer Pricing Officer to consider request of assessee for inclusion of comparables and determine value of international transaction--Order set aside and matter remanded for consideration afresh--Income-tax Act, 1961-- Motorola Solutions India P. Ltd. v. Asst. CIT (Delhi) . . . 546

----Computation of arm’s length price--Transactional net margin method--Adoption of filters--Selection of comparables--Failure by assessee to provide earlier years’ data--Transfer Pricing Officer justified in using current year’s data--Loss-making companies excluded from comparables--Quantitative filters applied to reach reasonable conclusion regrading functional similarity--Companies generating more than 75 per cent. of export revenues from on-site operations--Excluded from comparables--Companies having branded/proprietary software to be excluded--Companies having more than 15 per cent. related party transactions--Not to be taken as comparable--Transfer Pricing Officer to consider inclusion or exclusion of comparable depending upon findings of related party transactions--Matter remanded--Companies functionally dissimilar cannot be treated as comparable--Matter remanded--Income-tax Act, 1961-- Motorola Solutions India P. Ltd. v. Asst. CIT (Delhi) . . . 546



SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Code of Civil Procedure, 1908

O. V, rr. 17 to 20 --Assessment--Notice--Validity of service--Notice served by affixture--Nothing to justify service by affixture--Notice invalid--Assessment invalid-- Sanjay Badani v. Deputy CIT (Mumbai) . . . 536

Income-tax Act, 1961

S. 143(2) --Assessment--Notice--Validity of service--Notice served by affixture--Nothing to justify service by affixture--Notice invalid--Assessment invalid-- Sanjay Badani v. Deputy CIT(Mumbai) . . . 536

S. 143(3) --Assessment--Notice--Validity of service--Notice served by affixture--Nothing to justify service by affixture--Notice invalid--Assessment invalid-- Sanjay Badani v. Deputy CIT(Mumbai) . . . 536

S. 282 --Assessment--Notice--Validity of service--Notice served by affixture--Nothing to justify service by affixture--Notice invalid--Assessment invalid-- Sanjay Badani v. Deputy CIT(Mumbai) . . . 536

S. 292BB --Assessment--Notice--Validity of service--Notice served by affixture--Nothing to justify service by affixture--Notice invalid--Assessment invalid-- Sanjay Badani v. Deputy CIT(Mumbai) . . . 536

S. 37 --Capital or revenue expenditure--Sweat equity shares--Sweat equity shares issued for value addition provided by two persons in form of experience in new business concepts and professional experience--Value addition an intangible asset in hands of assessee--Expenditure on issue of shares is capital expenditure-- Future Agrovet Ltd. v. Addl. CIT(Mumbai) . . . 519

S. 14A --Income--Disallowance of expenditure in relation to exempt income--Dividend--Assessee incurring indirect expenses such as management establishment expenses and other office overheads for making investment in shares and for earning dividend income--Disallowance justified--Income-tax Rules, 1962, r. 8D-- Contitech India P. Ltd. v. Deputy CIT(Delhi) . . . 526

Income-tax Rules, 1962

R. 8D --Income--Disallowance of expenditure in relation to exempt income--Dividend--Assessee incurring indirect expenses such as management establishment expenses and other office overheads for making investment in shares and for earning dividend income--Disallowance justified-- Contitech India P. Ltd. v. Deputy CIT (Delhi) . . . 526

 

 

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Posted by: CA RAJU SHAH <shahmars@hotmail.com>

ITR Volume 368 : Part 2 (Issue dated : 3-11-2014)

INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION

ONLINE EDITION

STATUTES AND NOTIFICATIONS

Notifications :

Income-tax Act, 1961 :

Notification under section 90 :

Agreement between the Government of the Republic of India and the Republic of Colombia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income . . . 295

Protocol amending the agreement between the Government of the Republic of India and the Government of the Polish People’s Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income . . . 283

 

PRINT EDITION

ITR Volume 368 : Part 2 (Issue dated : 3-11-2014)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Recovery of tax --Garnishee notice--Stock exchange--Membership card of stock exchange--Not a right but a privilege ceasing upon member being declared defaulter--Stock exchange having lien over member’s securities under rules--Stock exchange is secured creditor having priority over Government dues--Securities handed over to exchange are assets of member which can be liquidated on default--Income-tax Act, 1961, s. 226(3)(x), Sch. II, r. 26--Securities Contracts (Regulation) Act, 1956, ss. 7A, 8, 9, 30--Rules, Bye-Laws and Regulations of the Bombay Stock Exchange, rr. 5, 9, 16, 36 to 46-- Stock Exchange, Bombayv. V. S. Kandalgaonkar . . . 296

HIGH COURTS

Appeal to Commissioner (Appeals) --Jurisdiction--Inherent jurisdiction to deal with application for stay--Income-tax Act, 1961, s. 220(6)-- Gera Realty Estates v. CIT (Appeals)(Bom). . .366

Capital gains --Firm--Dissolution--Partnership assets converted into capital assets of partners at time of dissolution--Sale of assets not in stock-in-trade of dissolved firm--Whether the amount to be treated as long-term capital gains or short-terms capital gains--Department to decide--Income-tax Act, 1961-- Arvind Shamji Chheda v. CIT (Bom). . .368

Income from house property --Annual letting value--General principles for determining annual letting value--Income-tax Act, 1961, s. 23-- CIT v. Tip Top Typography (Bom) . . . 330

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 23 --Income from house property--Annual letting value--General principles for determining annual letting value-- CIT v. Tip Top Typography (Bom) . . . 330

S. 220(6) --Appeal to Commissioner (Appeals)--Jurisdiction--Inherent jurisdiction to deal with application for stay-- Gera Realty Estates v. CIT (Appeals) (Bom). . .366

S. 226(3)(x), Sch. II, r. 26 --Recovery of tax--Garnishee notice--Stock exchange--Membership card of stock exchange--Not a right but a privilege ceasing upon member being declared defaulter--Stock exchange having lien over member’s securities under rules--Stock exchange is secured creditor having priority over Government dues--Securities handed over to exchange are assets of member which can be liquidated on default-- Stock Exchange, Bombay v. V. S. Kandalgaonkar (SC). . . 296

Securities Contracts (Regulation) Act, 1956 :

S. 7A --Recovery of tax--Garnishee notice--Stock exchange--Membership card of stock exchange--Not a right but a privilege ceasing upon member being declared defaulter--Stock exchange having lien over member’s securities under rules--Stock exchange is secured creditor having priority over Government dues--Securities handed over to exchange are assets of member which can be liquidated on default-- Stock Exchange, Bombay v. V. S. Kandalgaonkar (SC). . . 296

S. 8 --Recovery of tax--Garnishee notice--Stock exchange--Membership card of stock exchange--Not a right but a privilege ceasing upon member being declared defaulter--Stock exchange having lien over member’s securities under rules--Stock exchange is secured creditor having priority over Government dues--Securities handed over to exchange are assets of member which can be liquidated on default-- Stock Exchange, Bombay v. V. S. Kandalgaonkar (SC). . . 296

S. 9 --Recovery of tax--Garnishee notice--Stock exchange--Membership card of stock exchange--Not a right but a privilege ceasing upon member being declared defaulter--Stock exchange having lien over member’s securities under rules--Stock exchange is secured creditor having priority over Government dues--Securities handed over to exchange are assets of member which can be liquidated on default-- Stock Exchange, Bombay v. V. S. Kandalgaonkar (SC). . . 296

S. 30 --Recovery of tax--Garnishee notice--Stock exchange--Membership card of stock exchange--Not a right but a privilege ceasing upon member being declared defaulter--Stock exchange having lien over member’s securities under rules--Stock exchange is secured creditor having priority over Government dues--Securities handed over to exchange are assets of member which can be liquidated on default-- Stock Exchange, Bombay v. V. S. Kandalgaonkar (SC). . . 296

 


Sunday, November 2, 2014

ITAT Explains Entire Law On Taxation Of Private Trusts And AOPs


 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.


DCIT vs. India Advantage Fund-VII (ITAT Bangalore)

Entire law on taxation of private specific/ discretionary trusts under revocable & irrevocable transfers and AOPs explained

(i) Private Trusts could be Fixed or Discretionary Trusts. A fixed trust is a trust in which the beneficiaries have a current fixed entitlement to such income as remains after proper exercise of the trustee's powers. On the other hand, a discretionary trust is one in which the beneficiaries have no such current fixed entitlement, but only a hope (spes) that the trustees in carrying out their duty to consider how much income might be paid to such beneficiaries will in their discretion pay that income to a particular beneficiary or beneficiaries. The beneficiaries have no interest in possession under the trust. There are various reasons why a settlor prefers to establish a discretionary trust rather than a fixed trust. Some of the important one's being – to protect the beneficiary against creditors; to continue to exercise control over young or improvident beneficiaries; to make adjustment according to circumstances. "When a trust is set up, there is no way of knowing how the beneficiaries will fare in the future; which of them will be most in need, which will be deserving, which spendthrift, which inebriate, which will marry millionaires and which missionaries". The trustee can take all these factors into consideration in making their decisions.

(ii) When it comes to tax on income received by the Trust on behalf of the beneficiaries, there are some implications depending on whether the trust is a discretionary trust or a non-discretionary trust. As we have already seen in terms of Sec.164(1) a trust is assessed as a representative assessee in respect of income which it receives on behalf of its beneficiaries and if the beneficiaries are not certain or shares of beneficiaries are indeterminate, tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate. Explanation 1 to Sec.164 deems that in certain situations beneficiaries shall be deemed to be not identifiable or their shares are unascertained or indeterminate or unknown. These provisions have already been set out in the earlier part of this order and are not being repeated. The legislative history of the above provisions needs to be examined to find out the object of introduction of the Explanation. Sec. 164(1) was in the Act when it was enacted in 1962 but its wording underwent a change, introducing a concept of taxation at marginal rate in 1970 by the Finance Act of 1970 w.e.f. 1st April, 1970. The object and scope of this amendment were elaborated in a circular of the CBDT (Circular No. 45 dt. 2nd Sept., 1970).


Note: We have also posted a number of recent and important judgements on transfer pricing. Please browse them at your convenience.


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Editor,

 

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

Latest:

CIT vs. Holcim India P. Ltd (Delhi High Court)

S. 14A & Rule 8D disallowance cannot be made if there is no exempt income or if there is a possibility of the gains on transfer of the shares being taxable

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Section 43(5)(a): FX Loss Is Speculation And Not Hedging Loss: ITAT Mumbai

 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.


Araska Diamond Pvt. Ltd vs. ACIT (ITAT Mumbai)

S. 43(5)(a): Loss on foreign currency forward contracts by a manufacturer/ exporter is a "speculation loss" and not a "hedging loss"


In order that forward transactions in commodities may fall within proviso (a) to section 43(5) of the Act, it is necessary that the raw materials or merchandise in respect of which the forward transactions have been made by the assessee must have a direct connection with the goods manufactured or the merchandise sold by him. In other words raw material in respect of which the assessee has entered into forward transactions must be the same raw material which is used by him in his manufacturing business. We find that in the case under consideration assessee was not dealing in Foreign Exchange, therefore transactions entered into by it in Foreign Exchange cannot be held to be hedging transactions. As the assessee is dealing in diamonds and FC entered into only for diamonds would have been covered by the proviso (a) to the section 43(5) of the Act. (Contra view in Intergold (I) Ltd, Bombay Diamond Co. Ltd, Friends and Friends Shipping & Badridas Gauridu distinguished)


Note: Did you know that you can search for judgements on the basis of Court, Judge, Counsel, Section, Catch Words etc. Try it out and give us your feedback :)


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Latest:

Monthly (June 2014) + Consolidated (Jan to June 2014) Digest Of Imp Case Laws

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No Section 14A + Rule 8D Disallowance If No Exempt Income: Delhi High Court + ITAT Bangalore

 

Dear Subscriber,

 

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


CIT vs. Holcim India P. Ltd (Delhi High Court)

S. 14A & Rule 8D disallowance cannot be made if there is no exempt income or if there is a possibility of the gains on transfer of the shares being taxable.

(ii) Income exempt under Section 10 in a particular assessment year, may not have been exempt earlier and can become taxable in future years. Further, whether income earned in a subsequent year would or would not be taxable, may depend upon the nature of transaction entered into in the subsequent assessment year. For example, long term capital gain on sale of shares is presently not taxable where security transaction tax has been paid, but a private sale of shares in an off market transaction attracts capital gains tax. It is an undisputed position that assessee is an investment company and had invested by purchasing a substantial number of shares and thereby securing right to management. Possibility of sale of shares by private placement etc. cannot be ruled out and is not an improbability. Dividend may or may not be declared. Dividend is declared by the company and strictly in legal sense, a shareholder has no control and cannot insist on payment of dividend. When declared, it is subjected to dividend distribution tax;


Alliance Infrastructure Projects Pvt. Ltd vs. DCIT (ITAT Bangalore)

S. 14A & Rule 8D disallowance cannot be made if there is no exempt income. Cheminvest Ltd. vs. ITO 121 ITD 318 (Ahd) (SB) is not good law.


There is no dispute that the assessee had no exempt income during both the years involved. No doubt as mentioned by the DR, the Special Bench of this Tribunal in the case of Cheminvest Ltd. vs. ITO 121 ITD 318, had held that disallowance under section 14A could be made even in an year in which no exempt income was earned or received by the assessee. This decision of Special Bench of the Tribunal has been, in our opinion, impliedly overruled by various decisions of different High Courts, namely, CIT vs Shivam Motors P. Ltd. (All HC), CIT vs. Corrtech Energy Pvt. Ltd (Guj HC), CIT vs. Winsome Textile Industries Ltd 319 1TR 204 (P&H), CIT Vs.Delite Enterprises (Bom HC) & CIT vs. Lakhani Marketing (P&H HC). Therefore, unless and until there is receipt of exempted income for the concerned assessment years, s. 14A of the Act cannot be invoked.


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Latest:

Parmanand Tiwari vs. ITO (ITAT Kolkata)

Rule 37BA (credit for TDS) inserted w.e.f. 01.04.2009 to mitigate hardship to taxpayers has to be treated as being retrospective in nature


Transfer Pricing: Fraud In Determination Of LIBOR/ EURIBOR Has No Relevance For ALP: ITAT Hyderabad

 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.


Vijay Electricals Limited vs. ACIT (ITAT Hyderabad)

Fraud in determination of LIBOR/ EURIBOR no reason to discard it as ALP

The department claimed that in determining the ALP of an international transaction of loan by the assessee to its AE, LIBOR could not be treated as the ALP as there was a "fraud" regarding fixation of 'LIBOR' as evidenced by the fact that Barclays Bank & UBS were fined by the United States Department of Justice for attempted manipulation of the LIBOR and Euribor rates and ultimately UBS agreed to pay to regulators. HELD by the Tribunal:

Even though Revenue has raised additional grounds on the reason that LIBOR cannot be considered as a basis as it was fraudulently fixed, we are not in a position to agree with the additional grounds. Whether that was fraudulently fixed or not is not a consideration now, as it was the basis for all international transactions at that point of time as far as borrowing of funds are concerned. In fact, assessee's A.E. also obtained loan from a local branch at LIBOR plus basis only. Accordingly, assessee has justified the interest on the rate prevalent at that relevant point of time. Even though there may be same fraud involved in fixing the rate of international rates, as it became basis for subsequent international transactions at that point of time, We do not see any reason to differ from the LIBOR plus basis points for T.P. comparison. The Revenue cannot contend that rate of interest prevailing in India has to be adopted as the rates in India cannot be compared while loans are obtained abroad, even though funds are flown from India. What is required to be seen is whether the transaction is at arms length or not. Since, the international loan rates are based on LIBOR, we do not see any reason for differing from the Ld. CIT(A) order, which itself based on Coordinate Bench decisions that LIBOR plus basis points is at arm's length.


If you have a practice in Transfer Pricing, check out our growing collection of important judgements. You can search on the basis of Court, Judge, Counsel, Section, Catch Words etc. 


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

Latest:

Araska Diamond Pvt. Ltd vs. ACIT (ITAT Mumbai)

S. 43(5)(a): Loss on foreign currency forward contracts by a manufacturer/ exporter is a "speculation loss" and not a "hedging loss"

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Important Verdict On S. 132B + 5 Judgements On Controversial Topics

 

Dear Subscriber,

 

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


DCIT vs. Spaze Tower Pvt. Ltd (ITAT Delhi)

Expl 2 to S. 132B, though inserted w.e.f. 1.6.2013, is retrospective and seized cash cannot be adjusted against advance-tax liability


(i) As per provisions of section 132B of the Act the assets seized u/s 132 or requisitioned u/s 132A may be adjusted towards the amount of any "existing liability". The Explanation 2 to section 132B of the Act inserted by the Finance Act, 2013 w.e.f. 1.6.2013 clarifies that for removal of doubts it is hereby […]


Shanti Enterprise vs. ACIT (Gujarat High Court)

S. 275(1A): Assessee's claim for refund of penalty with interest cannot be defeated by inaction of revenue


(i) What is provided by Section 275(1A) is that the order imposing or enhancing or reducing or cancelling the penalty may be passed on the basis of the assessment as revised by giving effect to the order in appeal. The concerned authority was thus required to make specific order for cancelling the penalty by giving […]


Padinjarekara Agencies Pvt. Ltd vs. ACIT (ITAT Cochin)

S. 115JB: AO entitled to tinker with P&L A/c if assessee's claim not permitted by accounting principles


The question that had arisen was whether the Assessing officer was entitled to disturb the net profit shown by the assessee in the profit and loss account prepared as per the Companies Act, 1956.in order to enable anybody to understand the implication of such deviation, it was made mandatory for the companies to disclose the […]


ITO vs. Rakam Money Matters P. Ltd (ITAT Delhi)

S. 68: Law regarding addition of share application money as unexplained credit explained


The only issue here is the addition of Rs.60 lacs made by the Assessing Officer as unexplained credit on account of the share application money. On going through the facts of the case, we notice that assessee has filed the relevant details which it could have filed in support of its contention of having received […]


The Nanded District Central Co-op. Bank Ltd vs. DCIT (ITAT Pune)

Grant given to safeguard the interests of depositors, though used for meeting SLR requirements of RBI relatable to its banking activity, is still capital in nature


The objective of the Government of Maharashtra to give grant to the assessee was to protect the interests of farmers and depositors from the Nanded district and for the said purpose the Government deemed it fit to provide financial assistance to the assessee-bank to enable it to regularize its functioning. Pertinently, the functioning of the […]


Munshi Mini Rice Mill vs. ITO (ITAT Kolkata)

Failure to record detailed reasons in assessment order does justifying s. 147 action. There is a statutory presumption that AO has applied his mind while passing assessment order


Section 147 of the Act, as substituted w.e.f. 01.04.1989 does not postulates conferment of power upon the AO to initiate reassessment proceeding upon his mere change of opinion. Further, if 'reason to believe' of the AO is founded on an information which might have been received by the AO after the completion of assessment, it […]


Regards,

 

Editor,

 

itatonline.org

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

Latest:

Vijay Electricals Limited vs. ACIT (ITAT Hyderabad)

Fraud in determination of LIBOR/ EURIBOR no reason to discard it as ALP


Two Important Verdicts On TDS Credit + S. 271(1)(c) Penalty + Anti-Corruption Pledge By Dept

 

Dear Subscriber,

Parmanand Tiwari vs. ITO (ITAT Kolkata)

Rule 37BA (credit for TDS) inserted w.e.f. 01.04.2009 to mitigate hardship to taxpayers has to be treated as being retrospective in nature


The proviso to sub-rule (2) of Rule 37BA of the Rules mitigates the hardship faced by assessee for claiming credit of TDS whereby deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of other person in the information relating to deduction of tax as referred to in sub-rule (1) of Rule 37BA of the Rules. In such provisions of law, the assessee should have been allowed credit for TDS in the given set of facts and circumstances of the case. The only issue is that the amended provision is applicable w.e.f. 01.04.2009 and the relevant assessment year involved is 2008-09. Whether the amended Rule as amended by Amendment Rules, 2009 is a beneficial provision mitigating the hardship of the assessee and in turn the same can be declared as retrospective and will apply to all pending matters. Similar issue was dealt by Hon'ble Supreme Court in the case of Allied Motors Pvt. Ltd. Vs. CIT (1997) 224 ITR 677 (SC), wherein it has been held that "the provisions of the first proviso, which has newly been inserted by the Finance Act, 1987, with effect from 1st April, 1998, to section 43B is remedial in nature, designed to eliminate unintended consequences which may cause undue hardship to the assessee and which made the provision unworkable or unjust in a specific situation, and is of clarificatory nature and, therefore, has to be treated as retrospective with effect from 1st April, 1984, the date on which section 43B has newly been inserted by the Finance Act, 1983." Similarly, here also the Rule was inserted by the Amendment Rules, 2009 to remove the hardship faced by assessees and to give true meaning to the provision of section 199 of the Act


Times Guaranty Ltd vs. ACIT (ITAT Mumbai)

S. 271(1)(c): Wrong claim for depreciation by showing a finance or loan transaction as a lease transaction attracts penalty


The contention that whether a transaction is a lease transaction or a finance transaction is a debatable legal
issue, we are not inclined to accept this argument also. Whether a transaction is a lease transaction or a loan transaction, in our view, is a factual issue which is to be decided after appreciation of the relevant facts. If the facts show that the assessee has put a wrong claim of depreciation by showing a finance or loan transaction as a lease transaction, certainly the claim is to be disallowed. However, in cases, where from the facts and evidences on the file it can be shown that the transaction was real or genuine, the relief of claim of depreciation is to be allowed. In the case in hand, from the facts, it was clearly established that the assessee had put a wrongful claim of depreciation and thereby had furnished inaccurate particulars of income for the purpose of concealment of real income, hence, the penalty proceedings were correctly  initiated by the AO.


Income-tax Department To Take Anti-Corruption Pledge

The Directorate General of Income Tax (Vigilance) has issued a letter dated 14.10.2014 stating that the department shall be observing the theme of "Combating Corruption — Technology as an enabler". It is stated that the Observance of the Vigilance Awareness Week every year is a step towards promoting integrity whereby all the stake holders arc enthused to fight the malaise of corruption. In line with the CVC's suggestion, the Chief Commissioners have been advised to consider undertaking various activities during the Vigilance Awareness Week such as display of banners, posters, organizing debates, lectures, etc and also to take a "pledge" that corruption will be avoided.


Regards,

 

Editor,

 

itatonline.org

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

Latest:

Interglobe Enterprises Ltd vs. DCIT (ITAT Delhi)

No disallowance u/s 14A & Rule 8D can be made towards exempt income earned on strategic investments

__._,_.___

ITR (TRIB) Volume 35 : Part 2 (Issue dated : 13-10-2014)

 

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

 

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Assessment --Best judgment assessment--Sufficient opportunity of hearing given to assessee by Assessing Officer and Commissioner (Appeals)--Failure by assessee to appear or produce evidence in support of return--Ex parte order disallowing expenses based on materials available on record--No interference--Income-tax Act, 1961, ss. 142(1), 143(2), 144--Income-tax (Appellate Tribunal) Rules, 1963, r. 29-- Shivangi Steel P. Ltd. v.Asst. CIT (Agra) . . . 341

International transactions --Arm’s length price--Determination--Selection of comparables--Failure by Department to furnish assessee with information obtained under section 133(6)--Selection of comparables vitiated--Fluctuating margins of company not reason to establish differences in functional profile warranting exclusion--Companies for which independent function, asset and risk analysis not carried out to be excluded from comparables--Companies developing software products, having significant intangibles, huge revenues, rendering knowledge process outsourcing services and product development services and having related party transaction in excess of 15 per cent. to be excluded from comparables--Income-tax Act, 1961, s. 92CA-- 3 DPLM Software Solutions Ltd. v. Deputy CIT (Bangalore) . . . 305

----Arm’s length price--Risk adjustment--Risk adjustment to be made to margins of comparables for bringing them on par with assessee--Matter remanded--Income-tax Act, 1961-- 3 DPLM Software Solutions Ltd . v. Deputy CIT (Bangalore) . . . 305

PRINT EDITION

Volume 35 : Part 2 (Issue dated : 13-10-2014)

SUBJECT INDEX TO CASES REPORTED

Appeal to Appellate Tribunal --Rectification of mistake--Powers to rectify mistakes on record--Issue thoroughly considered and decided on merits cannot be reviewed--Application dismissed--Income-tax Act, 1961, s. 254(2)-- Deputy CIT v. Arvind M. Kariya (Mumbai) . . . 164

Assessment --Scrutiny of cases--CBDT instructions--Instruction prescribing time limit of three months from date of filing of return for scrutiny--Notice under section 143(2) issued after three months--Assessment not valid--Income-tax Act, 1961, s. 143(2)-- Vishal Madnani v.ITO (Lucknow) . . 130

Business expenditure --Accrual of liability--Liability pertaining to earlier year crystallising in year in question--Deduction cannot be denied on ground that expenditure related to earlier period--Income-tax Act, 1961-- Bearingpoint Property Services P. Ltd. v. Deputy CIT(Bangalore) . . . 177

----Business--Setting up of business and commencement of business--Distinction--Revenue expenses incurred during year of setting up of business eligible for deduction--Income-tax Act, 1961 , s. 3-- Jcdecaux Advertising India P. Ltd. v. Deputy CIT (Delhi) . . . 211

----Disallowance--Payments liable to deduction of tax at source--Payment to hotel for boarding--Hotel not working on behalf of assessee as contractor--Section 194C not applicable for payments made by customer to hotel--Income-tax Act, 1961, s. 194C--Ratnagiri Impex P. Ltd. v. Deputy CIT (Bangalore) . . . 239

----Wholly and exclusively for purpose of business--Expenditure incurred on foreign travel by directors--Possibility of involvement of personal expenditure--Disallowance made on estimate basis should be fair and justifiable estimate--Disallowance restricted to extent of 25 per cent. of expenditure--Income-tax Act, 1961-- Ratnagiri Impex P. Ltd. v. Deputy CIT(Bangalore) . . . 239

----Year in which allowable--Expenditure of earlier period paid in accounting year in question-- Sum not to be disallowed where demand raised and accepted by assessee in earlier year--Assessing Officer to verify issue--Matter remanded--Income-tax Act, 1961--Gujarat Guardian Ltd. v. Deputy CIT (Delhi) . . . 217

Capital gains --Exemption--Sale of residential property and construction of flat--Assessee constructing flat prior to date of transfer of residential house--Deduction available only if assessee constructs new house within three years after date of transfer--Assessee not entitled to claim deduction in respect of cost of new flat--Income-tax Act, 1961, s. 54--Farida A. Dungerpurwala v. ITO (Mumbai) . . . 205

----Short-term capital gains--Sale of property--Fair market value--Departmental Valuation Officer assessing value of property on basis of comparable sale instances of earlier years--Value cannot be treated as fair market value--Sale instances of dates proximate to date of sale of property of assessee to be considered--Matter remanded--Income-tax Act, 1961--Rupakula Srinivas v. ITO (Hyd) . . . 245

Capital or revenue expenditure --Expenditure incurred on computer peripherals supply expenses--Commissioner (Appeals) granting relief without finding about nature of expenditure--Matter remanded to Assessing Officer to examine details--Income-tax Act, 1961-- Gujarat Guardian Ltd. v. Deputy CIT (Delhi) . . . 217

----Expenditure incurred on glow sign boards and on hoardings--No enduring benefit for assessee--Revenue expenditure--Income-tax Act, 1961, s. 37-- Gujarat Guardian Ltd. v.Deputy CIT (Delhi) . . . 217

----Expenditure incurred on software licence fee, purchase and development of miscellaneous software and hosting and maintenance of website and charges for internet bandwidth connectivity--Revenue--Income-tax Act, 1961-- Gujarat Guardian Ltd. v. Deputy CIT (Delhi) . . . 217

----Expenditure on horticulture--To facilitate the operations by providing better environment--Revenue expenditure--Income-tax Act, 1961, s. 37-- Gujarat Guardian Ltd. v. Deputy CIT(Delhi) . . . 217

----Expenditure on security for staff colony--Expenditure incurred for welfare of employees and general public interest allowable as revenue deduction--Income-tax Act, 1961, s. 37--Gujarat Guardian Ltd. v. Deputy CIT (Delhi) . . . 217

Cash credits --Failure by assessee to furnish confirmation letters from creditors in time before Assessing Officer and Commissioner (Appeals)--Confirmation letters produced before Tribunal--Genuineness of confirmation letters to be verified--Matter remanded--Income-tax Act, 1961, s. 68-- Govindaraj (S.) v. ITO (Chennai) . . . 160

Charitable purpose --Exemption--Advance for availing of infrastructure facilities--Reasonableness of charges to be ascertained to ensure compliance with provisions of section 13(2)(c)--Matter remanded--Income-tax Act, 1961, ss. 13(1)(c), (2)(c), (3)(a)--Deputy CIT (Exemptions)-II v. Sri Vekkaliamman Educational and Charitable Trust(Chennai) . . 135

----Exemption--Computation of income applied for charitable purposes--Depreciation to be reduced for determining percentage of funds--Income-tax Act, 1961-- Deputy CIT (Exemptions)-II v. Sri Vekkaliamman Educational and Charitable Trust (Chennai) . . 135

----Exemption--Disqualification--Payment under contract awarded to concern of one of managing trustees--Contract awarded on competitive basis--Profit reasonable--Disqualification not attracted--Income-tax Act, 1961, s. 13(1)(c), (2)(c), (3)(a)-- Deputy CIT (Exemptions)-II v. Sri Vekkaliamman Educational and Charitable Trust (Chennai) . . 135

Depreciation --Assessee leasing out trucks--Higher wear and tear due to rough use--Assessee entitled to higher rate of depreciation-- Deputy CIT v. Chemm Finance Ltd.(Bangalore) . . . 167

----Leased rolling mill rollers found to be not in existence--Not eligible to claim depreciation when lease itself a bogus transaction--Income-tax Act, 1961, s. 133A-- Deputy CIT v. Chemm Finance Ltd. (Bangalore) . . . 167

Exemption --Charitable purpose--Disqualification--Purchase of gold for award of gold medals to students and sale of surplus gold--Investment in gold bullion in violation of provisions of section 11(5)--Assessee liable to tax on income from sale of gold--Income-tax Act, 1961, s. 11(5)-- Deputy CIT (Exemptions)-II v. Sri Vekkaliamman Educational and Charitable Trust(Chennai) . . 135

Export --Exemption--Computation--Expenses reduced from export turnover to be reduced from total turnover also--Income-tax Act, 1961, s. 10A-- Bearingpoint Property Services P. Ltd. v. Deputy CIT (Bangalore) . . . 177

Income --Computation of income--Disallowance of expenditure relating to exempt income--Assessee to be allowed to substantiate its working of disallowance under section 14A with reference to its accounts--Satisfaction or dissatisfaction of Assessing Officer regarding claim to be recorded--Matter remanded--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- NSDL E-Governance Infrastructure Ltd. v. Asst. CIT (Mumbai) . . . 152

----Expenditure in relation to income not includible in taxable income--Assessing Officer to determine expenditure on basis of acceptable and reasonable apportionment--Facts to be analysed and decision taken in light of decision of Delhi High Court--Matter remanded--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Gujarat Guardian Ltd. v. Deputy CIT (Delhi) . . . 217

International transactions --Arm’s length price--Determination--Selection of comparables--Failure to furnish assessee with information obtained under section 133(6) vitiates selection of comparables--Companies for which independent function, asset and risk analysis not carried out to be excluded from comparables--Companies developing software products, significant intangibles, huge revenues, rendering knowledge process outsourcing services, product development services and having related party transactions in excess of 15 per cent. to be excluded from comparables--Income-tax Act, 1961, s. 92CA--Bearingpoint Property Services P. Ltd. v. Deputy CIT (Bangalore) . . . 177

Penalty --Concealment of income--Assessee furnishing complete particulars regarding stock of rice and selling of rice husk--Additions made solely on estimation without concrete evidence--Penalty to be deleted--Income-tax Act, 1961, s. 271(1)(c)-- Prem Chand v. Asst. CIT (Chandigarh) . . . 174

----Concealment of income or furnishing inaccurate particulars thereof--Denial of carry forward of long-term capital loss on ground of change in majority shareholding in assessee--Not a case of furnishing of inaccurate particulars or concealment of income in return--Penalty not warranted--Income-tax Act, 1961, s. 271(1)(c)-- Century Metal Recycling P. Ltd. v.Deputy CIT (Delhi) . . 143

Reassessment --Income escaping assessment--Prima facie understatement in sale value--Assessment can be reopened--Income-tax Act, 1961, s. 147-- Rupakula Srinivas v. ITO(Hyd) . . . 245

Reassessment--Income escaping assessment--Whether reasons recorded not sufficient for reopening of assessment--Assessee must prove--Income-tax Act, 1961, ss. 147, 148--Deputy CIT v. Chemm Finance Ltd. (Bangalore) . . . 167

----Notice--Validity--Notice under section 143(2) issued after expiry of twelve months from end of month in which return filed but before expiry of time limit for making assessment or reassessment--Notice valid--Income-tax Act, 1961, ss. 143(2), 148, 153(2)-- Deputy CIT v. Chemm Finance Ltd. (Bangalore) . . . 167

Refund --Interest on excess refund--Assessment completed after 1-6-2003--Section 234D applicable--Income-tax Act, 1961, s. 234D-- NSDL E-Governance Infrastructure Ltd. v. Asst. CIT (Mumbai) . . . 152

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961

S. 3 --Business expenditure--Business--Setting up of business and commencement of business--Distinction--Revenue expenses incurred during year of setting up of business eligible for deduction-- Jcdecaux Advertising India P. Ltd. v. Deputy CIT (Delhi) . . . 211

S. 10A --Export--Exemption--Computation--Expenses reduced from export turnover to be reduced from total turnover also-- Bearingpoint Property Services P. Ltd. v. Deputy CIT(Bangalore) . . . 177

S. 11(5) --Exemption--Charitable purpose--Disqualification--Purchase of gold for award of gold medals to students and sale of surplus gold--Investment in gold bullion in violation of provisions of section 11(5)--Assessee liable to tax on income from sale of gold-- Deputy CIT (Exemptions)-II v. Sri Vekkaliamman Educational and Charitable Trust (Chennai) . . 135

S. 13(1)(c) --Charitable purpose--Exemption--Advance for availing of infrastructure facilities--Reasonableness of charges to be ascertained to ensure compliance with provisions of section 13(2)(c)--Matter remanded-- Deputy CIT (Exemptions)-II v. Sri Vekkaliamman Educational and Charitable Trust (Chennai) . . 135

----Charitable purpose--Exemption--Disqualification--Payment under contract awarded to concern of one of managing trustees--Contract awarded on competitive basis--Profit reasonable--Disqualification not attracted-- Deputy CIT (Exemptions)-II v. Sri Vekkaliamman Educational and Charitable Trust (Chennai) . . 135

S. 13(2)(c) --Charitable purpose--Exemption--Advance for availing of infrastructure facilities--Reasonableness of charges to be ascertained to ensure compliance with provisions of section 13(2)(c)--Matter remanded-- Deputy CIT (Exemptions)-II v. Sri Vekkaliamman Educational and Charitable Trust (Chennai) . . 135

----Charitable purpose--Exemption--Disqualification--Payment under contract awarded to concern of one of managing trustees--Contract awarded on competitive basis--Profit reasonable--Disqualification not attracted-- Deputy CIT (Exemptions)-II v. Sri Vekkaliamman Educational and Charitable Trust (Chennai) . . 135

S. 13(3)(a) --Charitable purpose--Exemption--Advance for availing of infrastructure facilities--Reasonableness of charges to be ascertained to ensure compliance with provisions of section 13(2)(c)--Matter remanded-- Deputy CIT (Exemptions)-II v. Sri Vekkaliamman Educational and Charitable Trust (Chennai) . . 135

----Charitable purpose--Exemption--Disqualification--Payment under contract awarded to concern of one of managing trustees--Contract awarded on competitive basis--Profit reasonable--Disqualification not attracted-- Deputy CIT (Exemptions)-II v. Sri Vekkaliamman Educational and Charitable Trust (Chennai) . . 135

S. 14A --Income--Computation of income--Disallowance of expenditure relating to exempt income--Assessee to be allowed to substantiate its working of disallowance under section 14A with reference to its accounts--Satisfaction or dissatisfaction of Assessing Officer regarding claim to be recorded--Matter remanded-- NSDL E-Governance Infrastructure Ltd. v. Asst. CIT (Mumbai) . . . 152

----Income--Expenditure in relation to income not includible in taxable income--Assessing Officer to determine expenditure on basis of acceptable and reasonable apportionment--Facts to be analysed and decision taken in light of decision of Delhi High Court--Matter remanded-- Gujarat Guardian Ltd. v. Deputy CIT (Delhi) . . . 217

S. 37 --Capital or revenue expenditure--Expenditure incurred on glow sign boards and on hoardings--No enduring benefit for assessee--Revenue expenditure-- Gujarat Guardian Ltd.v. Deputy CIT (Delhi) . . . 217

----Capital or revenue expenditure--Expenditure on horticulture--To facilitate the operations by providing better environment--Revenue expenditure-- Gujarat Guardian Ltd. v. Deputy CIT(Delhi) . . . 217

----Capital or revenue expenditure--Expenditure on security for staff colony--Expenditure incurred for welfare of employees and general public interest allowable as revenue deduction-- Gujarat Guardian Ltd. v. Deputy CIT (Delhi) . . . 217

S. 54 --Capital gains--Exemption--Sale of residential property and construction of flat--Assessee constructing flat prior to date of transfer of residential house--Deduction available only if assessee constructs new house within three years after date of transfer--Assessee not entitled to claim deduction in respect of cost of new flat-- Farida A. Dungerpurwala v. ITO (Mumbai) . . . 205

S. 68 --Cash credits--Failure by assessee to furnish confirmation letters from creditors in time before Assessing Officer and Commissioner (Appeals)--Confirmation letters produced before Tribunal--Genuineness of confirmation letters to be verified--Matter remanded--Govindaraj (S.) v. ITO (Chennai) . . . 160

S. 92CA --International transactions--Arm’s length price--Determination--Selection of comparables--Failure to furnish assessee with information obtained under section 133(6) vitiates selection of comparables--Companies for which independent function, asset and risk analysis not carried out to be excluded from comparables--Companies developing software products, significant intangibles, huge revenues, rendering knowledge process outsourcing services, product development services and having related party transactions in excess of 15 per cent. to be excluded from comparables-- Bearingpoint Property Services P. Ltd. v. Deputy CIT (Bangalore) . . . 177

S. 133A --Depreciation--Leased rolling mill rollers found to be not in existence--Not eligible to claim depreciation when lease itself a bogus transaction-- Deputy CIT v. Chemm Finance Ltd. (Bangalore) . . . 167

S. 143(2) --Assessment--Scrutiny of cases--CBDT instructions--Instruction prescribing time limit of three months from date of filing of return for scrutiny--Notice under section 143(2) issued after three months--Assessment not valid-- Vishal Madnani v. ITO (Lucknow) . . 130

----Reassessment--Notice--Validity--Notice under section 143(2) issued after expiry of twelve months from end of month in which return filed but before expiry of time limit for making assessment or reassessment--Notice valid-- Deputy CIT v. Chemm Finance Ltd.(Bangalore) . . . 167

S. 147 --Reassessment--Income escaping assessment--Prima facie understatement in sale value--Assessment can be reopened-- Rupakula Srinivas v. ITO (Hyd) . . . 245

----Reassessment--Income escaping assessment--Whether reasons recorded not sufficient for reopening of assessment--Assessee must prove-- Deputy CIT v. Chemm Finance Ltd.(Bangalore) . . . 167

S. 148 --Reassessment--Income escaping assessment--Whether reasons recorded not sufficient for reopening of assessment--Assessee must prove-- Deputy CIT v. Chemm Finance Ltd. (Bangalore) . . . 167

----Reassessment--Notice--Validity--Notice under section 143(2) issued after expiry of twelve months from end of month in which return filed but before expiry of time limit for making assessment or reassessment--Notice valid-- Deputy CIT v. Chemm Finance Ltd.(Bangalore) . . . 167

S. 153(2) --Reassessment--Notice--Validity--Notice under section 143(2) issued after expiry of twelve months from end of month in which return filed but before expiry of time limit for making assessment or reassessment--Notice valid-- Deputy CIT v. Chemm Finance Ltd.(Bangalore) . . . 167

S. 194C --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Payment to hotel for boarding--Hotel not working on behalf of assessee as contractor--Section 194C not applicable for payments made by customer to hotel-- Ratnagiri Impex P. Ltd. v. Deputy CIT (Bangalore) . . . 239

S. 234D --Refund--Interest on excess refund--Assessment completed after 1-6-2003--Section 234D applicable-- NSDL E-Governance Infrastructure Ltd. v. Asst. CIT (Mumbai) . . . 152

S. 254(2) --Appeal to Appellate Tribunal--Rectification of mistake--Powers to rectify mistakes on record--Issue thoroughly considered and decided on merits cannot be reviewed--Application dismissed-- Deputy CIT v. Arvind M. Kariya (Mumbai) . . . 164

S. 271(1)(c) --Penalty--Concealment of income--Assessee furnishing complete particulars regarding stock of rice and selling of rice husk--Additions made solely on estimation without concrete evidence--Penalty to be deleted-- Prem Chand v. Asst. CIT (Chandigarh) . . . 174

----Penalty--Concealment of income or furnishing inaccurate particulars thereof--Denial of carry forward of long-term capital loss on ground of change in majority shareholding in assessee--Not a case of furnishing of inaccurate particulars or concealment of income in return--Penalty not warranted-- Century Metal Recycling P. Ltd. v. Deputy CIT (Delhi) . . 143

 

Income-tax Rules, 1962

R. 8D --Income--Computation of income--Disallowance of expenditure relating to exempt income--Assessee to be allowed to substantiate its working of disallowance under section 14A with reference to its accounts--Satisfaction or dissatisfaction of Assessing Officer regarding claim to be recorded--Matter remanded-- NSDL E-Governance Infrastructure Ltd. v. Asst. CIT (Mumbai) . . . 152

----Income--Expenditure in relation to income not includible in taxable income--Assessing Officer to determine expenditure on basis of acceptable and reasonable apportionment--Facts to be analysed and decision taken in light of decision of Delhi High Court--Matter remanded-- Gujarat Guardian Ltd. v. Deputy CIT (Delhi) . . . 217

 

 

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Posted by: CA RAJU SHAH <shahmars@hotmail.com>