ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))--PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Business expenditure --Accrual of liability--Assessee receiver of services--Assessee liable to bear service tax--Disallowance not justified--Income-tax Act, 1961-- Johnson and Johnson Ltd. v. CIT-LTU (Mumbai) . . . 719
----Accrual of liability--Research and development cess--Payment in accordance with agreement and guidelines of Reserve Bank of India--Payment cannot be treated as international transaction--Disallowance not proper--Income-tax Act, 1961-- Johnson and Johnson Ltd. v. CIT-LTU (Mumbai) . . . 719
----Disallowance--Excessive and unreasonable payments--Payments to legal counsel--Failure by Assessing Officer to establish excessiveness of payment--Disallowance not justified--Income-tax Act, 1961, s. 40A(2)(b)-- Johnson and Johnson Ltd. v. CIT-LTU(Mumbai) . . . 719
----Expenditure incurred on distribution of free samples to promote business--Failure by assessee to prove genuineness of claim--Payment of fringe benefits tax will not establish business purpose--Disallowance restricted to 2 per cent.--Income-tax Act, 1961-- Johnson and Johnson Ltd. v. CIT-LTU (Mumbai) . . . 719
----Expenditure on professional sponsorship--Failure by assessee to show that entire expenditure incurred for purpose of business--Commercial expediency to be considered--Disallowance of 2 per cent. reasonable--Income-tax Act, 1961-- Johnson and Johnson Ltd. v. CIT-LTU (Mumbai) . . . 719
----Publicity and sales promotion expenses--Disallowance on assumption of excessive payment not permissible--Failure by Transfer Pricing Officer to follow procedure for determining arm's length price--Disallowance not justified--Income-tax Act, 1961--Income-tax Rules, 1962, r. 10B-- Johnson and Johnson Ltd. v. CIT-LTU (Mumbai) . . . 719
----Travelling expenses--Failure by Dispute Resolution Panel to point out expenses not in connection with business activity of assessee--Disallowance not justified--Income-tax Act, 1961-- Johnson and Johnson Ltd. v. CIT-LTU (Mumbai) . . . 719
Capital or revenue expenditure --Expenditure incurred on production of advertisement film in respect of products dealt in by assessee--Revenue expenditure--Income-tax Act, 1961, s. 37-- Johnson and Johnson Ltd. v. CIT-LTU (Mumbai) . . . 719
Deduction of tax at source --Fees for technical services--Provision of link service to transmit issue of debit notes, billing statement and information relating to tickets electronically amongst agents and airlines operating in India--Payment not in nature of fees for technical services--No requirement to deduct tax at source--Income-tax Act, 1961, s. 195(2)--Double Taxation Avoidance Agreement between India and France, art. 13-- Deputy DIT (International Taxation) v. IATA BSP India (Mumbai) . . . 706
Depreciation --Testing equipment--Depreciation allowable on testing equipment provided to laboratory and hospitals--Income-tax Act, 1961, s. 32-- Johnson and Johnson Ltd. v. CIT-LTU (Mumbai) . . . 719
International transactions --Arm’s length price--Determination--Payment of royalty--Payment in accordance with Reserve Bank of India guidelines--Transfer Pricing Officer cannot make disallowance on basis that payment excessive and unnecessary--Income-tax Act, 1961, s. 92C(1)-- Johnson and Johnson Ltd. v. CIT-LTU (Mumbai) . . . 719
Valuation of stock --Change in method of valuation of stock--Assessee not increasing closing stock by value of Modvat credit available at close of accounting year--Assessing Officer adjusting opening stock of purchase and closing stock including duties--Assessing Officer to adjudicate afresh in light of section 145A--Matter remanded--Income-tax Act, 1961, s. 145A-- Johnson and Johnson Ltd. v. CIT-LTU (Mumbai) . . . 719
Volume 36 : Part 4 (Issue dated : 15-12-2014)
SUBJECT INDEX TO CASES REPORTED
Advance tax --Interest--Tax deducted at source on entire amount received by assessee--Assessee not liable to pay advance tax--Interest cannot be imposed under section 234B--Income-tax Act, 1961, s. 234B-- ITO (International Taxation) v. Linklaters and Paines(Mumbai) . . . 558
Assessment --Assessing Officer referring matter to Departmental Valuation Officer without rejecting books of account--Reference illegal--Report of Valuation Officer cannot be made on basis for bringing unexplained investment to tax--Income-tax Act, 1961, s. 143(2)-- Deputy CIT v. Satish Cold Storage (Lucknow) . . . 435
Book profit --Computation--Special economic zone unit--Profit of special economic zone unit not required to be included in computing book profit--Income-tax Act, 1961, s. 115JB-- G Jewelcraft Ltd. v. ITO (Mumbai) . . . 521
Business expenditure --Disallowance--Payment to non-resident--Payment liable to deduction of tax at source--Effect of insertion of Explanation 2 to section 195 by Finance Act, 2012 with retrospective effect from 1.4.1962--Not possible for assessee to foresee obligation to deduct tax at source--Amendment passed subsequently should not be considered for penalising assessee--Income-tax Act, 1961, ss. 40(a)(ia), 195, Expln. 2 -- ITO v. Clear Water Technology Services P. Ltd. (Bangalore) . . . 528
----Disallowance--Payment to non-resident--Payment liable to deduction of tax at source--Payment business income in hands of non-resident not fees for technical services--Non-resident not having permanent establishment in India--Tax not chargeable in hands of non-resident--No obligation on assessee to deduct tax at source--Income-tax Act, 1961, s. 40(a)(ia)-- ITO v. Clear Water Technology Services P. Ltd. (Bangalore) . . . 528
----Expenditure incurred on ISO certification fee--Routine expense on annual basis cannot be disallowed--Income-tax Act, 1961-- Deputy CIT v. Insilco Ltd. (Delhi) . . . 439
----Expenses incurred on renovation and maintenance on monthly basis--Deduction allowable--Income-tax Act, 1961-- Deputy CIT v. Insilco Ltd. (Delhi) . . . 439
Capital gains --Full value of consideration--Sale of property--Valuation of property by stamp duty authorities higher than declared value--Failure by Assessing Officer to analyse issue objectively--Additions deleted--Income-tax Act, 1961, s. 50C-- Smt. Reshma R. Daryanani v. ITO (Mumbai) . . . 496
Capital or revenue expenditure --Subsidy received for electronic and women workmen--Revenue in nature--Income-tax Act, 1961-- Avalon Technologies P. Ltd. v. Asst. CIT(Chennai) . . . 567
Cash credits --Sources of creditor compensation from Government--Creditworthiness and genuineness of transactions proved with sufficient evidence--Additions to be deleted--Income-tax Act, 1961, s. 68-- Vaishnavi Educational Society v. Deputy CIT (Hyd) . . . 446
Double taxation relief --Non-resident--Income deemed to accrue or arise in India--Assessee rendering services to clients in connection with projects in India--Assessee entitled to benefit of DTAA--Assessee having permanent establishment in India--Profits attributable to projects in India taxable in India--Reimbursement of expenses--Evidence that expenses had been incurred--Not assessable as income of assessee--Income-tax Act, 1961, s. 90--Double Taxation Avoidance Agreement between India and the U. K. arts. 5, 7-- ITO (International Taxation) v. Linklaters and Paines (Mumbai) . . . 558
Exemption --Educational institution--Total receipts must be less than one crore to avail of exemption under section 10(23C)--Eligibility of assessee to be determined--Matter remanded--Income-tax Act, 1961, s. 10(23C)(iiiad)-- Vaishnavi Educational Society v. Deputy CIT (Hyd) . . . 446
----Export--Computation of income--Unabsorbed depreciation and unabsorbed business loss--Carry forward and set off--Unabsorbed depreciation to be deducted before allowing deduction under section 10A--Unabsorbed business loss to be deducted only from profit available after allowing deduction under section 10A--Income-tax Act, 1961, s. 10A-- G Jewelcraft Ltd. v. ITO (Mumbai) . . . 521
----New industrial undertaking in free trade zone--Loss--Carry forward of loss and set off--Carry forward of loss of non-eligible unit to be allowed without setting off profits of section 10B unit--Income-tax Act, 1961, s. 10B-- ITO v. Clear Water Technology Services P. Ltd.(Bangalore) . . . 528
Export --Exemption--Failure to bring foreign exchange into India within six months from end of financial year--Failure to establish any extension granted beyond six months--Assessee not eligible for exemption under section 10A--Income-tax Act, 1961, s. 10A(3)-- Avalon Technologies P. Ltd. v. Asst. CIT (Chennai) . . . 567
Export oriented undertaking --Exemption--Freight expenses--Freight charges excluded from export turnover to be excluded from total turnover also--Income-tax Act, 1961, ss. 10A, 10B-- Avalon Technologies P. Ltd. v. Asst. CIT (Chennai) . . . 567
----Exemption--Interest--Interest received on delayed payments from debtors to be treated as business income--Creditors debt no longer payable and written back--Not to be treated as business income--Income-tax Act, 1961, s. 10A-- Avalon Technologies P. Ltd. v. Asst. CIT(Chennai) . . . 567
Income --Disallowance of expenditure relating to exempt income--Rule 8D applicable to assessment year 2008-09--Assessing Officer justified in making disallowance--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Xander Advisors India P. Ltd. v. Asst. CIT(Delhi) . . . 499
Income from undisclosed sources --Assessee filing documents showing withdrawals of cash--Failure by Assessing Officer to show that amount withdrawn by assessee utilised in manner other than as represented--Onus on Department to show that explanation by assessee should not be accepted--Evidence furnished by assessee not appreciated by Assessing Officer--Matter remanded--Income-tax Act, 1961-- Harjit Singh v. ITO(Chandigarh) . . . 575
Industrial undertaking --Special deduction under section 80-IA--Computation--Losses from assessment year earlier to initial assessment year adjusted against other income--Notional losses not to be adjusted against income of assessee arising in current assessment year--Income-tax Act, 1961, s. 80-IA-- Asst. CIT v. Patankar Wind Farms P. Ltd. (Pune) . . . 510
International transactions --Arm’s length price--Determination--Assessee showing arm’s length price within plus or minus five per cent. range--Assessee no need to make separate claim--Transfer Pricing Officer bound to give benefit of plus or minus five per cent.--Income-tax Act, 1961-- D. E. Shaw India Software P. Ltd. v. Asst. CIT (Hyd) . . . 462
----Arm’s length price--Determination--Operating expenditure--Irrecoverable expenses--Expenditure not recovered to be excluded from operating expenses while arriving at profit level indicator--Matter remanded to Assessing Officer to examine nature and extent of expenditure--Income-tax Act, 1961-- D. E. Shaw India Software P. Ltd. v. Asst. CIT (Hyd) . . . 462
----Arm’s length price--Determination--Risk adjustment--Enhancement of risk adjustment to one per cent. proper--Income-tax Act, 1961-- D. E. Shaw India Software P. Ltd. v. Asst. CIT (Hyd) . . . 462
----Arm’s length price--Determination--Selection of comparables--Company having abnormally high profit margin, involved in manufacturing and research and development service, 3 per cent. employee cost and paying value added tax not comparable to assessee involved in export of computer software--Income-tax Act, 1961-- D. E. Shaw India Software P. Ltd. v. Asst. CIT (Hyd) . . . 462
----Arm’s length price--Determination--Selection of comparables--Substantial variation in computation of margin between transfer pricing study of assessee and that of Transfer Pricing Officer--Matter requiring re-examination--Matter remanded--Income-tax Act, 1961-- D. E. Shaw India Software P. Ltd. v. Asst. CIT (Hyd) . . . 462
----Arm’s length price--Selection of comparables--No segmental data of advisory services by companies available--Company on an entity level cannot be considered as comparable--To be excluded from list of comparables--Income-tax Act, 1961-- Xander Advisors India P. Ltd. v. Asst. CIT (Delhi) . . . 499
----Transfer pricing--Arm’s length price--Determination--Most appropriate method--Change from comparable uncontrolled price method to transactional net margin method--Matter remanded--Income-tax Act, 1961, s. 92CA-- Deputy CIT v. Insilco Ltd. (Delhi) . . . 439
Penalty --Concealment of income or furnishing of inaccurate particulars thereof--Claim to exemption under bona fide impression that gains from sale of agricultural land exempt from tax--Failure by authorities to establish that assessee consciously concealed particulars of income or deliberately furnished inaccurate particulars of income--No scope for levy of penalty--Income-tax Act, 1961, s. 271(1)(c)-- G. K. Properties P. Ltd. v. ITO (Hyd) . . . 544
Search and seizure --Block assessment--Penalty--Document of agreement for sale seized--Return filed under section 158BC--No provision for filing revised return--Assessing Officer assessing income in hands of assessee on protective basis--Department disputing allowance of payment as expenditure in hands of payer--Assessing Officer not able to reach firm conclusion--Penalty cannot be imposed--Income-tax Act, 1961, ss. 158BC, 158BFA(2)-- Mohd. Khasim v. Asst. CIT (Bangalore) . . . 471
----Educational institution--Anonymous donations--Assessee furnishing names and addresses of donors--Identity of donors and capacity to give donation not mandatory--Income-tax Act, 1961, s. 115BBC-- Vaishnavi Educational Society v. Deputy CIT (Hyd) . . . 446
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Double Taxation Avoidance Agreement between India and the U. K.
Art. 5 --Double taxation relief--Non-resident--Income deemed to accrue or arise in India--Assessee rendering services to clients in connection with projects in India--Assessee entitled to benefit of DTAA--Assessee having permanent establishment in India--Profits attributable to projects in India taxable in India--Reimbursement of expenses--Evidence that expenses had been incurred--Not assessable as income of assessee-- ITO (International Taxation) v. Linklaters and Paines (Mumbai) . . . 558
Art. 7 --Double taxation relief--Non-resident--Income deemed to accrue or arise in India--Assessee rendering services to clients in connection with projects in India--Assessee entitled to benefit of DTAA--Assessee having permanent establishment in India--Profits attributable to projects in India taxable in India--Reimbursement of expenses--Evidence that expenses had been incurred--Not assessable as income of assessee-- ITO (International Taxation) v. Linklaters and Paines (Mumbai) . . . 558
S. 10(23C)(iiiad) --Exemption--Educational institution--Total receipts must be less than one crore to avail of exemption under section 10(23C)--Eligibility of assessee to be determined--Matter remanded-- Vaishnavi Educational Society v. Deputy CIT (Hyd) . . . 446
S. 10A --Exemption--Export--Computation of income--Unabsorbed depreciation and unabsorbed business loss--Carry forward and set off--Unabsorbed depreciation to be deducted before allowing deduction under section 10A--Unabsorbed business loss to be deducted only from profit available after allowing deduction under section 10A-- G Jewelcraft Ltd. v. ITO (Mumbai) . . . 521
----Export oriented undertaking--Exemption--Freight expenses--Freight charges excluded from export turnover to be excluded from total turnover also-- Avalon Technologies P. Ltd. v. Asst. CIT (Chennai) . . . 567
----Export oriented undertaking--Exemption--Interest--Interest received on delayed payments from debtors to be treated as business income--Creditors debt no longer payable and written back--Not to be treated as business income-- Avalon Technologies P. Ltd. v. Asst. CIT(Chennai) . . . 567
S. 10A(3) --Export--Exemption--Failure to bring foreign exchange into India within six months from end of financial year--Failure to establish any extension granted beyond six months--Assessee not eligible for exemption under section 10A-- Avalon Technologies P. Ltd. v. Asst. CIT (Chennai) . . . 567
S. 10B --Exemption--New industrial undertaking in free trade zone--Loss--Carry forward of loss and set off--Carry forward of loss of non-eligible unit to be allowed without setting off profits of section 10B unit-- ITO v. Clear Water Technology Services P. Ltd. (Bangalore) . . . 528
----Export oriented undertaking--Exemption--Freight expenses--Freight charges excluded from export turnover to be excluded from total turnover also-- Avalon Technologies P. Ltd. v. Asst. CIT (Chennai) . . . 567
S. 14A --Income--Disallowance of expenditure relating to exempt income--Rule 8D applicable to assessment year 2008-09--Assessing Officer justified in making disallowance-- Xander Advisors India P. Ltd. v. Asst. CIT (Delhi) . . . 499
S. 40(a)(ia) --Business expenditure--Disallowance--Payment to non-resident--Payment liable to deduction of tax at source--Effect of insertion of Explanation 2 to section 195 by Finance Act, 2012 with retrospective effect from 1.4.1962--Not possible for assessee to foresee obligation to deduct tax at source--Amendment passed subsequently should not be considered for penalising assessee-- ITO v. Clear Water Technology Services P. Ltd.(Bangalore) . . . 528
----Business expenditure--Disallowance--Payment to non-resident--Payment liable to deduction of tax at source--Payment business income in hands of non-resident not fees for technical services--Non-resident not having permanent establishment in India--Tax not chargeable in hands of non-resident--No obligation on assessee to deduct tax at source--ITO v. Clear Water Technology Services P. Ltd. (Bangalore) . . . 528
S. 50C --Capital gains--Full value of consideratio--Sale of property--Valuation of property by stamp duty authorities higher than declared value--Failure by Assessing Officer to analyse issue objectively--Additions deleted-- Smt. Reshma R. Daryanani v. ITO (Mumbai) . . . 496
S. 68 --Cash credits--Sources of creditor compensation from Government--Creditworthiness and genuineness of transactions proved with sufficient evidence--Additions to be deleted--Vaishnavi Educational Society v. Deputy CIT (Hyd) . . . 446
S. 80-IA --AIndustrial undertaking--Special deduction under section 80-IA--Computation--Losses from assessment year earlier to initial assessment year adjusted against other income--Notional losses not to be adjusted against income of assessee arising in current assessment year-- Asst. CIT v. Patankar Wind Farms P. Ltd. (Pune) . . . 510
S. 90 --Double taxation relief--Non-resident--Income deemed to accrue or arise in India--Assessee rendering services to clients in connection with projects in India--Assessee entitled to benefit of DTAA--Assessee having permanent establishment in India--Profits attributable to projects in India taxable in India--Reimbursement of expenses--Evidence that expenses had been incurred--Not assessable as income of assessee-- ITO (International Taxation) v. Linklaters and Paines (Mumbai) . . . 558
S. 92CA --International transactions--Transfer pricing--Arm’s length price--Determination--Most appropriate method--Change from comparable uncontrolled price method to transactional net margin method--Matter remanded-- Deputy CIT v. Insilco Ltd. (Delhi) . . . 439
S. 115BBC --Search and seizure--Educational institution--Anonymous donations--Assessee furnishing names and addresses of donors--Identity of donors and capacity to give donation not mandatory-- Vaishnavi Educational Society v. Deputy CIT (Hyd) . . . 446
S. 115JB --Book profit--Computation--Special economic zone unit--Profit of special economic zone unit not required to be included in computing book profit-- G Jewelcraft Ltd. v. ITO(Mumbai) . . . 521
S. 143(2) --Assessment--Assessing Officer referring matter to Departmental Valuation Officer without rejecting books of account--Reference illegal--Report of Valuation Officer cannot be made on basis for bringing unexplained investment to tax-- Deputy CIT v. Satish Cold Storage (Lucknow) . . . 435
S. 158BC --Search and seizure--Block assessment--Penalty--Document of agreement for sale seized--Return filed under section 158BC--No provision for filing revised return--Assessing Officer assessing income in hands of assessee on protective basis--Department disputing allowance of payment as expenditure in hands of payer--Assessing Officer not able to reach firm conclusion--Penalty cannot be imposed-- Mohd. Khasim v. Asst. CIT(Bangalore) . . . 471
S. 158BFA(2) --Search and seizure--Block assessment--Penalty--Document of agreement for sale seized--Return filed under section 158BC--No provision for filing revised return--Assessing Officer assessing income in hands of assessee on protective basis--Department disputing allowance of payment as expenditure in hands of payer--Assessing Officer not able to reach firm conclusion--Penalty cannot be imposed-- Mohd. Khasim v. Asst. CIT(Bangalore) . . . 471
S. 195, Expln. 2 --Business expenditure--Disallowance--Payment to non-resident--Payment liable to deduction of tax at source--Effect of insertion of Explanation 2 to section 195 by Finance Act, 2012 with retrospective effect from 1.4.1962--Not possible for assessee to foresee obligation to deduct tax at source--Amendment passed subsequently should not be considered for penalising assessee-- ITO v. Clear Water Technology Services P. Ltd.(Bangalore) . . . 528
S. 234B --Advance tax--Interest--Tax deducted at source on entire amount received by assessee--Assessee not liable to pay advance tax--Interest cannot be imposed under section 234B-- ITO (International Taxation) v. Linklaters and Paines (Mumbai) . . . 558
S. 271(1)(c) --Penalty--Concealment of income or furnishing of inaccurate particulars thereof--Claim to exemption under bona fide impression that gains from sale of agricultural land exempt from tax--Failure by authorities to establish that assessee consciously concealed particulars of income or deliberately furnished inaccurate particulars of income--No scope for levy of penalty-- G. K. Properties P. Ltd. v. ITO (Hyd) . . . 544
R. 8D --Income--Disallowance of expenditure relating to exempt income--Rule 8D applicable to assessment year 2008-09--Assessing Officer justified in making disallowance-- Xander Advisors India P. Ltd. v. Asst. CIT (Delhi) . . . 499
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