ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))--PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Income --Disallowance of expenditure relating to exempt income--Rule 8D not applicable to years prior to 2008-09--Assessee working out disallowance under section 14A--No material to show disallowance computed by assessee unreasonable--Income-tax Act, 1961, s. 14A--Consolidated Finvest and Holdings Ltd. v. Asst. CIT (Delhi) . . . 67
International transactions --Arm’s length price--Determination--Software development and export--Cost plus method--Gross margin for related and unrelated party transactions--Discounting factors to be adopted--Transfer Pricing Officer rejecting discounting factors on project management cost and credit risk--Proper--Direction to Assessing Officer to arrive at arm’s length price based on acceptable discount factors--Income-tax Act, 1961, s. 92CA-- Deputy CIT v. American Megatrends India P. Ltd. (Chennai) . . . 56
Loss --Long term capital loss--Loans granted by assessee to company--Loan converted into redeemable cumulative preference shares--Redemption of 2 per cent redeemable cumulative preference shares resulting in long term capital loss--Department accepting genuineness of transactions in all earlier years--Department cannot treat whole transaction a bogus as last of series of transactions completed--No evidence to show that transaction a sham or bogus--Long term capital loss to be accepted and assessee to be permitted to carry it forward--Income-tax Act, 1961-- Consolidated Finvest and Holdings Ltd. v. Asst. CIT (Delhi) . . . 67
Volume 37 : Part 3 (Issue dated : 19-1-2015)
SUBJECT INDEX TO CASES REPORTED
Appeal to Appellate Tribunal --Competency of appeal by Department--Monetary limit--Instruction No. 5 of 2014 revising monetary limits--Applicable to pending cases--Tax effect less than prescribed limit--Appeal not maintainable--Instruction No. 5 of 2014 dated 10-7-2014--Income-tax Act, 1961, s. 268A-- Deputy CIT v. Piyush Apartment P. Ltd. (Delhi) . . . 340
Business expenditure --Administrative support services fee--Failure by assessee to establish its claim of receiving services--Matter remanded to Transfer Pricing Officer for readjudication--Income-tax Act, 1961-- Cisco Systems Capital (India) P. Ltd. v. Addl. CIT(Bangalore) . . . 343
----Depreciation--Vehicles used by employees for personal purpose--Depreciation allowable--Expenditure in maintenance of vehicles used by employees--Allowable--Income-tax Act, 1961-- Microsoft Corporation India P. Ltd. v. Addl. CIT (Delhi) . . . 290
----Disallowance--Excessive and unreasonable payments--Administrative support services fee--Company rendering services to assessee not in category of persons enumerated under section 40A(2)(b)--Failure to point out any particular expenditure excessive or unreasonable--Assessing Officer cannot make an ad hoc disallowance--Income-tax Act, 1961, s. 40A(2)(b)-- Cisco Systems Capital (India) P. Ltd. v. Addl. CIT (Bangalore) . . . 343
----Disallowance--Payments exceeding prescribed limit otherwise than by crossed cheques or crossed bank drafts--Assessee having no bank account at place of purchase--No doubt as to genuineness of purchases--Disallowance not justified--Income-tax Act, 1961, s. 40A(3)-- Radha Shyam Panda v. ITO (Cuttack) . . . 386
----Travelling and conveyance expenses--Commissioner receiving no remand report from Assessing Officer--No evidence for additions--Matter remanded for fresh adjudication--Income-tax Act, 1961-- Deputy CIT v. Yuvanshankar Raja (Chennai) . . . 355
Company --Book profits--Computation--Provision for doubtful debts part of operating expenses--Direction to Transfer Pricing Officer to recompute margins of comparable companies by including provision for bad and doubtful debts as operating expenses for computing profit and loss of comparable companies--Income-tax Act, 1961-- Kenexa Technologies P. Ltd. v. Deputy CIT (Hyd) . . . 306
Depreciation --Rate of depreciation--Higher rate--Routers and switches--Routers and switches integrated with computers to be treated as computer system--Entitled to higher rate of depreciation--Income-tax Act, 1961, s. 32-- Cisco Systems Capital (India) P. Ltd. v. Addl. CIT (Bangalore) . . . 343
----Rate of depreciation--ITG networking equipment--Included in block of computers--Entitled to higher rate of depreciation--Income-tax Act, 1961, s. 32-- Microsoft Corporation India P. Ltd. v. Addl. CIT (Delhi) . . . 290
Donation for charitable purpose --Special deduction--Conditions precedent for approval of institution--Assessee must fulfil conditions of clauses (i) to (v) of section 80G(5)--If objects charitable no right to deny approval--Registration under section 12AA is sufficient proof--Director of Income-tax rejecting application for grant of approval under section 80G(5)--Not proper--Income-tax Act, 1961, s. 80G(5)-- Sri Ramanuja Sahasrabdi v. DIT (Exemptions)(Hyd) . . . 303
Exemption --Export--Exemption under section 10B--Assessee having export-oriented unit and other units--Assessing Officer allocating part of expenses of other units to export oriented units on basis of percentage turnover--Expenses incurred at other units having no connection with export oriented units--Expenses of other units cannot be allocated to export oriented units--Assessee eligible for full claim under section 10B--Income-tax Act, 1961, s. 10B-- GTL Ltd. v. Asst. CIT (Mumbai) . . . 376
Income --Accrual--Grants--Income from internal resources--Assessee to meet all expenses from amounts given by Government grant--Amount of other income adjusted by Government against grant to be considered as part of grant and not chargeable to tax--Amount not adjusted by Government is not grant and chargeable to tax--Matter remanded--Income-tax Act, 1961-- Inland Waterways Authority of India v. Addl. CIT (Delhi) . . . 332
----Addition on basis of discrepancy in remuneration received for two films--Basis for making addition “receipt†contradictory to findings of Assessing Officer--Each fact requiring detailed verification--Matter remanded--Income-tax Act, 1961-- Deputy CIT v. Yuvanshankar Raja (Chennai) . . . 355
Income from undisclosed sources --Cash deposits in bank--Assessee recording remuneration received in cash in books of account and depositing it in bank--Cannot be considered as unaccounted money--Income-tax Act, 1961-- Deputy CIT v. Yuvanshankar Raja (Chennai) . . . 355
Interest on borrowed capital --Assessee advancing interest-free funds to sister concern from cash credit account--Whether advance given out of assessee’s own funds to be determined--No addition required if assessee substantiate its claim--Matter remanded--Income-tax Act, 1961, s. 36(1)(iii)--Radha Shyam Panda v. ITO (Cuttack) . . . 386
International transactions --Arm’s length price--Computation--Operational costs--Foreign exchange loss to be considered as operative in nature--Included in profit level indicator of assessee--Direction to Transfer Pricing Officer to consider only foreign exchange loss attributable to associated enterprises transactions--Matter remanded--Income-tax Act, 1961--Kenexa Technologies P. Ltd. v. Deputy CIT (Hyd) . . . 306
----Arm’s length price--Determination--Comparable uncontrolled price method--Price to be treated as at arm’s length price if price paid for controlled transactions same as price paid for uncontrolled transactions under similar circumstances--Comparable price can be in terms of formulae, including interest rate, for computing amount--Price to be treated as arm’s length price when pricing mechanism for associated enterprise and independent enterprise is same--Income-tax Rules, 1962, r. 10BA-- Toll Global Forwarding India P. Ltd. v. Deputy CIT (Delhi) . . . 391
----Arm’s length price--Determination--Marketing support services--Selection of comparables--Engineering services rendered by five comparables--Functionally different and not comparable--Matter remanded to Transfer Pricing Officer for decision afresh--Income-tax Act, 1961, s. 92CA-- Microsoft Corporation India P. Ltd. v. Addl. CIT (Delhi) . . . 290
----Arm’s length price--Determination--Software development services--Selection of comparables--Functionally dissimilar companies to be excluded--Software product companies not comparable with companies rendering software services--Segmental information for associated and non-associated enterprises--Transfer Pricing Officer to verify whether assessee maintained separate books of account which were audited by auditors--Matter remanded--Income-tax Act, 1961, s. 92CA-- Kenexa Technologies P. Ltd. v. Deputy CIT (Hyd) . . . 306
----Transfer pricing--Arm’s length price--Working capital adjustment--Requiring verification by Transfer Pricing Officer--Matter remanded--Income-tax Rules, 1962, r. 10B--Kenexa Technologies P. Ltd. v. Deputy CIT (Hyd) . . . 306
Reassessment --Notice--Condition precedent--Reason to believe income had escaped assessment--Details filed by assessee examined by Assessing Officer and Commissioner in assessment proceedings--In current assessment year Department examining details and coming to different conclusion--No reason to believe income had escaped assessment to reopen proceedings--Initiation of reassessment proceedings invalid--Income-tax Act, 1961, ss. 10B, 148-- GTL Ltd. v. Asst. CIT (Mumbai) . . . 376
Search and seizure --Income on suspense account--Regular transactions duly recorded in books of account--No infirmity deletion of addition--Income-tax Act, 1961-- Deputy CIT v. Yuvanshankar Raja (Chennai) . . . 355
----Undisclosed income--Date of search falling with financial year 2005-06 relevant to assessment year 2006-07--Source of income can be examined only for assessment year 2006-07--Income-tax Act, 1961-- Deputy CIT v. Yuvanshankar Raja (Chennai) . . . 355
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 10B --Exemption--Export--Exemption under section 10B--Assessee having export-oriented unit and other units--Assessing Officer allocating part of expenses of other units to export oriented units on basis of percentage turnover--Expenses incurred at other units having no connection with export oriented units--Expenses of other units cannot be allocated to export oriented units--Assessee eligible for full claim under section 10B-- GTL Ltd. v. Asst. CIT(Mumbai) . . . 376
----Reassessment--Notice--Condition precedent--Reason to believe income had escaped assessment--Details filed by assessee examined by Assessing Officer and Commissioner in assessment proceedings--In current assessment year Department examining details and coming to different conclusion--No reason to believe income had escaped assessment to reopen proceedings--Initiation of reassessment proceedings invalid-- GTL Ltd. v. Asst. CIT(Mumbai) . . . 376
S. 32 --Depreciation--Rate of depreciation--Higher rate--Routers and switches--Routers and switches integrated with computers to be treated as computer system--Entitled to higher rate of depreciation-- Cisco Systems Capital (India) P. Ltd. v. Addl. CIT (Bangalore) . . . 343
----Depreciation--Rate of depreciation--ITG networking equipment--Included in block of computers--Entitled to higher rate of depreciation-- Microsoft Corporation India P. Ltd. v. Addl. CIT (Delhi) . . . 290
S. 36(1)(iii) --Interest on borrowed capital--Assessee advancing interest- free funds to sister concern from cash credit account--Whether advance given out of assessee’s own funds to be determined--No addition required if assessee substantiate its claim--Matter remanded-- Radha Shyam Panda v. ITO (Cuttack) . . . 386
S. 40A(2)(b) --Business expenditure--Disallowance--Excessive and unreasonable payments--Administrative support services fee--Company rendering services to assessee not in category of persons enumerated under section 40A(2)(b)--Failure to point out any particular expenditure excessive or unreasonable--Assessing Officer cannot make an ad hoc disallowance-- Cisco Systems Capital (India) P. Ltd. v. Addl. CIT (Bangalore) . . . 343
S. 40A(3) --Business expenditure--Disallowance--Payments exceeding prescribed limit otherwise than by crossed cheques or crossed bank drafts--Assessee having no bank account at place of purchase--No doubt as to genuineness of purchases--Disallowance not justified-- Radha Shyam Panda v. ITO (Cuttack) . . . 386
S. 80G(5) --Donation for charitable purpose--Special deduction--Conditions precedent for approval of institution--Assessee must fulfil conditions of clauses (i) to (v) of section 80G(5)--If objects charitable no right to deny approval--Registration under section 12AA is sufficient proof--Director of Income-tax rejecting application for grant of approval under section 80G(5)--Not proper-- Sri Ramanuja Sahasrabdi v. DIT (Exemptions) (Hyd) . . . 303
S. 92CA --International transactions--Arm’s length price--Determination--Marketing support services--Selection of comparables--Engineering services rendered by five comparables--Functionally different and not comparable--Matter remanded to Transfer Pricing Officer for decision afresh-- Microsoft Corporation India P. Ltd. v. Addl. CIT (Delhi) . . . 290
----International transactions--Arm’s length price--Determination--Software development services--Selection of comparables--Functionally dissimilar companies to be excluded--Software product companies not comparable with companies rendering software services--Segmental information for associated and non-associated enterprises--Transfer Pricing Officer to verify whether assessee maintained separate books of account which were audited by auditors--Matter remanded-- Kenexa Technologies P. Ltd. v. Deputy CIT (Hyd) . . . 306
S. 148 --Reassessment--Notice--Condition precedent--Reason to believe income had escaped assessment--Details filed by assessee examined by Assessing Officer and Commissioner in assessment proceedings--In current assessment year Department examining details and coming to different conclusion--No reason to believe income had escaped assessment to reopen proceedings--Initiation of reassessment proceedings invalid-- GTL Ltd. v. Asst. CIT (Mumbai) . . . 376
S. 268A --Appeal to Appellate Tribunal--Competency of appeal by Department--Monetary limit--Instruction No. 5 of 2014 revising monetary limits--Applicable to pending cases--Tax effect less than prescribed limit--Appeal not maintainable--Instruction No. 5 of 2014 dated 10-7-2014-- Deputy CIT v. Piyush Apartment P. Ltd. (Delhi) . . . 340
R. 10B --International transactions--Transfer pricing--Arm’s length price--Working capital adjustment--Requiring verification by Transfer Pricing Officer--Matter remanded-- Kenexa Technologies P. Ltd. v. Deputy CIT (Hyd) . . . 306
R. 10BA --International transactions--Arm’s length price--Determination--Comparable uncontrolled price method--Price to be treated as at arm’s length price if price paid for controlled transactions same as price paid for uncontrolled transactions under similar circumstances--Comparable price can be in terms of formulae, including interest rate, for computing amount--Price to be treated as arm’s length price when pricing mechanism for associated enterprise and independent enterprise is same-- Toll Global Forwarding India P. Ltd. v. Deputy CIT (Delhi) . . . 391
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