ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))--PRINT AND ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Depreciation --Rate of depreciation--Higher rate--Computer--Cisco switches--To be included in block of computers--Entitled to higher rate of depreciation--Income-tax Act, 1961-- BMW Indi a P. Ltd. v. Asst . CIT (Delhi) . . . 231
International transactions --Transfer pricing--Arm’s length price--Determination--Advertising, marketing and promotion expenses--Expenses incurred on after sales support costs for company dealers and salesman bonus--To be excluded--Income-tax Act, 1961--BMW India P. Ltd. v. Asst. CIT (Delhi) . . . 231
----Transfer pricing--Arm’s length price--Determination--Assessee promoting brand building for parent company--Advertising, marketing and promotion expenses--Transfer Pricing Officer applying mark-up of 15.27 per cent. on reimbursement of expenses--Matter remanded to Transfer Pricing Officer to pass fresh order of assessment following order for earlier year in assessee’s case--Income-tax Act, 1961, s. 92C-- BMW India P. Ltd. v. Asst. CIT (Delhi) . . . 231
Volume 38 : Part 4 (Issue dated : 16-3-2015)
SUBJECT INDEX TO CASES REPORTED
Business expenditure --Deduction only on actual payment--Electricity Board collecting electricity duty and surcharge from customers--Electricity duty not remitted to Government within stipulated time under Kerala Electricity Duty Act--Provisions of section 43B applicable--Section 43B not applicable to surcharge--Disallowance not justified--Income-tax Act, 1961, s. 43B-- Asst. CIT v. Kerala State Electricity Board (Cochin) . . . 458
----Disallowance--Failure to deduct tax at source on payments--Payment towards transactions in securities through stock exchange under head “depository charges†without deducting tax at source--Tax paid by recipient--No disallowance can be made under section 40(a)(ia)--Income-tax Act, 1961, ss. 40(a)(ia), 194C, 194J-- Arcadia Share and Stock Brokers P. Ltd. v. Deputy CIT (Mumbai) . . . 491
----Disallowance--Payments liable to tax deduction at source--Internet charges paid to foreign company--Payments not taxable in India in terms of Double Taxation Avoidance Agreement--Failure by Assessing Officer to establish that data storage charges falling under fees for technical services--Disallowance not attracted--Income-tax Act, 1961, s. 40(a)(i)--Asst. CIT v. Vishwak Solutions P. Ltd. (Chennai) . . . 522
----Expenditure incurred on advertisement, sponsorship and brand-building--Expenditure in nature of selling costs--Not capital expenditure--Expenditure allowable--Income-tax Act, 1961-- Vardhman Developers Ltd. v. ITO (Mumbai) . . . 512
----Expenditure incurred on employee and director remuneration--Failure by assessee to specify duties allotted to different employees and functional responsibility of directors--50 per cent. of personnel costs including director’s remuneration to be allocated to work in progress--Income-tax Act, 1961-- Vardhman Developers Ltd. v. ITO (Mumbai) . . . 512
----Transportation charges--Assessee showing income from tanker more than income deemed to be shown under section 44AE after claiming depreciation--Disallowance of 50 per cent. of total expenses based on consumption of diesel alone not justified--Income-tax Act, 1961, s. 44AE-- Pushpak Auto Centre v. ITO (Delhi) . . . 447
Capital or revenue expenditure --Expenditure incurred on purchase of software--Application software for developing software for clients--No enduring benefit--Revenue expenditure--Income-tax Act, 1961, s. 37-- Deputy CIT v. ITC Infotech India Ltd. (Kolkata) . . . 401
----Expenditure incurred on repair and renovation of rented premises--Expenditure towards making premises functional in accordance with assessee’s requirements--Expenditure capital in nature--Income-tax Act, 1961, s. 37-- Vardhman Developers Ltd. v. ITO (Mumbai) . . . 512
----Licence fee paid towards purchase of computer software--Revenue in nature--Income-tax Act, 1961-- Deputy CIT v. Graziano Transmission India P. Ltd. (Delhi) . . . 426
----Payment towards right to use trademark--Assessee not entitled to become exclusive owner of trademark--Payment revenue in nature--Income-tax Act, 1961, s. 37(1)-- Deputy CIT v. Graziano Transmission India P. Ltd. (Delhi) . . . 426
Capital or revenue receipt --Receipt on sale of carbon credit--Capital in nature--Income-tax Act, 1961-- Asst. CIT v. INTEX (Chennai) . . . 496
Cash credits --Assessee dealing in resale of petroleum products--Creditors, mainly agriculturists, depositing cash to ensure regular supply of diesel--Deposits genuine--Addition not justified--Income-tax Act, 1961-- Pushpak Auto Centre v. ITO (Delhi) . . . 447
Charitable purpose --Computation of income--Depreciation--Precedent--High Court--Decision of jurisdictional High Court binding upon authorities within its jurisdiction--Commissioner (Appeals) justified in granting relief--Income-tax Act, 1961-- Deputy DIT (Exemption) v. Bhardwaj Welfare Trust (Delhi) . . . 482
Company --Minimum alternate tax--State Electricity Board--Is owned by either Central or State Government--Provisions of section 115JB not applicable--Income-tax Act, 1961, s. 115JB--Asst. CIT v. Kerala State Electricity Board (Cochin) . . . 458
Exemption --Export oriented undertaking--Condition precedent for exemption--Approval by Board appointed by Central Government as 100 per cent. export oriented undertaking--Approval under Software Technology Park of India not sufficient--Income-tax Act, 1961, ss. 10A, 10B-- Asst. CIT v. Vishwak Solutions P. Ltd. (Chennai) . . . 522
Income --Disallowance of expenditure in relation to exempt income--Assessee earning sufficient exempt income in assessment year earlier to assessment year 2008-09--Rule 8D not retrospective--Percentage of exempt income can constitute reasonable disallowance--Expenses equal to 4 per cent. of exempt income reasonable disallowance--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- Ciba India Ltd. v. Deputy CIT (Mumbai) . . . 474
Income from undisclosed sources --Cash deposits in bank--Cash surrendered on search and duly reflected in wealth-tax return and accepted--Cash cannot thereafter be treated as undisclosed income--Income-tax Act, 1961-- Asst. CIT v. Joginder Paul (Chandigarh) . . . 486
Industrial undertaking --Special deduction under section 80-IA--Computation--Loss in year earlier to initial assessment year already absorbed cannot be notionally brought forward and set off against profits of eligible business for current year--Income-tax Act, 1961, s. 80-IA--Asst. CIT v. Intex (Chennai) . . . 496
----Special deduction under section 80-IC--Profits of undertaking--Subsidies such as transport and interest are part of business profits and gains from industrial undertaking--Deduction allowable--Income-tax Act, 1961, s. 80-IC-- Asst. CIT v. Manas Salt Iodisation Industries P. Ltd. (Gauhati) . . . 502
International transactions --Arm’s length price--Determination--Customer directly entering into contract with either assessee or its associated enterprises--Internal arrangement between assessee and associated enterprises--Marketing and administrative functions performed by associated enterprises and provided to assessee--Risk profiles of associated enterprises remain same in both contracts--Contracts directly with associated enterprises not governed by technical strengths of entities--Transfer pricing adjustments to be deleted--Income-tax Act, 1961-- Deputy CIT v. ITC Infotech India Ltd. (Kolkata) . . . 401
Reassessment --Notice after four years--Condition precedent--No allegation of failure by assessee to disclose material facts truly and fully--Notice invalid--Income-tax Act, 1961, ss. 143(3), 147, 148-- Nezone Foods P. Ltd. v. Asst. CIT (Gauhati) . . . 464
Revision --Powers of Commissioner--Scope of power--Commissioner cannot pass final orders on subjects in revision--Order under section 263 invalid--Income-tax Act, 1961, s. 263-- Asst. CIT v. Manas Salt Iodisation Industries P. Ltd. (Gauhati) . . . 502
Undisclosed investment --Parties cancelling agreement by marking cross on it--No proper identification of land--Assessee or persons related to assessee not party to agreement for sale--No evidence to prove payment in respect of purchased property--Suspicion cannot take place of legal proof--Addition based on cancelled document to be deleted--Income-tax Act, 1961, s. 69B-- Deputy CIT v. R. P. Import and Export P. Ltd. (Chandigarh) . . . 436
Unexplained investments --Difference between purchases as debited in trading account and in terms of certificates of tax collected at source--Failure by assessee to reconcile difference--Difference properly treated as unexplained investment--Income-tax Act, 1961, s. 69-- Debasish Banerjee v. ITO (Kolkata) . . . 469
Valuation of stock --Failure by assessee to show “net profit†the same under both “inclusive method†and “exclusive method†--Assessee to be given opportunity to demonstrate working--Assessing Officer to adjust opening stock with correct amount that actually adjusted in closing stock of immediately preceding year if assessee fails to furnish workings--Amount adjusted in closing stock cannot be allowed as deduction--Matter remanded--Income-tax Act, 1961, s. 145A-- Ciba India Ltd. v. Deputy CIT (Mumbai) . . . 474
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
S. 10A --Exemption--Export oriented undertaking--Condition precedent for exemption--Approval by Board appointed by Central Government as 100 per cent. export oriented undertaking--Approval under Software Technology Park of India not sufficient-- Asst. CIT v. Vishwak Solutions P. Ltd. (Chennai) . . . 522
S. 10B --Exemption--Export oriented undertaking--Condition precedent for exemption--Approval by Board appointed by Central Government as 100 per cent. export oriented undertaking--Approval under Software Technology Park of India not sufficient-- Asst. CIT v. Vishwak Solutions P. Ltd. (Chennai) . . . 522
S. 14A --Income--Disallowance of expenditure in relation to exempt income--Assessee earning sufficient exempt income in assessment year earlier to assessment year 2008-09--Rule 8D not retrospective--Percentage of exempt income can constitute reasonable disallowance--Expenses equal to 4 per cent. of exempt income reasonable disallowance--Ciba India Ltd. v. Deputy CIT (Mumbai) . . . 474
S. 37 --Capital or revenue expenditure--Expenditure incurred on purchase of software--Application software for developing software for clients--No enduring benefit--Revenue expenditure-- Deputy CIT v. ITC Infotech India Ltd. (Kolkata) . . . 401
----Capital or revenue expenditure--Expenditure incurred on repair and renovation of rented premises--Expenditure towards making premises functional in accordance with assessee’s requirements--Expenditure capital in nature-- Vardhman Developers Ltd. v. ITO(Mumbai) . . . 512
S. 37(1) --Capital or revenue expenditure--Payment towards right to use trademark--Assessee not entitled to become exclusive owner of trademark--Payment revenue in nature-- Deputy CIT v. Graziano Transmission India P. Ltd. (Delhi) . . . 426
S. 40(a)(i) --Business expenditure--Disallowance--Payments liable to tax deduction at source--Internet charges paid to foreign company--Payments not taxable in India in terms of Double Taxation Avoidance Agreement--Failure by Assessing Officer to establish that data storage charges falling under fees for technical services--Disallowance not attracted-- Asst. CIT v. Vishwak Solutions P. Ltd. (Chennai) . . . 522
S. 40(a)(ia) --Business expenditure--Disallowance--Failure to deduct tax at source on payments--Payment towards transactions in securities through stock exchange under head “depository charges†without deducting tax at source--Tax paid by recipient--No disallowance can be made under section 40(a)(ia)-- Arcadia Share and Stock Brokers P. Ltd. v. Deputy CIT (Mumbai) . . . 491
S. 43B --Business expenditure--Deduction only on actual payment--Electricity Board collecting electricity duty and surcharge from customers--Electricity duty not remitted to Government within stipulated time under Kerala Electricity Duty Act--Provisions of section 43B applicable--Section 43B not applicable to surcharge--Disallowance not justified-- Asst. CIT v. Kerala State Electricity Board (Cochin) . . . 458
S. 44AE --Business expenditure--Transportation charges--Assessee showing income from tanker more than income deemed to be shown under section 44AE after claiming depreciation--Disallowance of 50 per cent. of total expenses based on consumption of diesel alone not justified-- Pushpak Auto Centre v. ITO (Delhi) . . . 447
S. 69 --Unexplained investments--Difference between purchases as debited in trading account and in terms of certificates of tax collected at source--Failure by assessee to reconcile difference--Difference properly treated as unexplained investment-- Debasish Banerjee v. ITO (Kolkata) . . . 469
S. 69B --Undisclosed investment--Parties cancelling agreement by marking cross on it--No proper identification of land--Assessee or persons related to assessee not party to agreement for sale--No evidence to prove payment in respect of purchased property--Suspicion cannot take place of legal proof--Addition based on cancelled document to be deleted-- Deputy CIT v. R. P. Import and Export P. Ltd. (Chandigarh) . . . 436
S. 80-IA --Industrial undertaking--Special deduction under section 80-IA--Computation--Loss in year earlier to initial assessment year already absorbed cannot be notionally brought forward and set off against profits of eligible business for current year-- Asst. CIT v. Intex(Chennai) . . . 496
S. 80-IC --Industrial undertaking--Special deduction under section 80-IC--Profits of undertaking--Subsidies such as transport and interest are part of business profits and gains from industrial undertaking--Deduction allowable-- Asst. CIT v. Manas Salt Iodisation Industries P. Ltd. (Gauhati) . . . 502
S. 115JB --Company--Minimum alternate tax--State Electricity Board--Is owned by either Central or State Government--Provisions of section 115JB not applicable-- Asst. CIT v. Kerala State Electricity Board (Cochin) . . . 458
S. 143(3) --Reassessment--Notice after four years--Condition precedent--No allegation of failure by assessee to disclose material facts truly and fully--Notice invalid-- Nezone Foods P. Ltd. v. Asst. CIT (Gauhati) . . . 464
S. 145A --Valuation of stock--Failure by assessee to show “net profit†the same under both “inclusive method†and “exclusive method†--Assessee to be given opportunity to demonstrate working--Assessing Officer to adjust opening stock with correct amount that actually adjusted in closing stock of immediately preceding year if assessee fails to furnish workings--Amount adjusted in closing stock cannot be allowed as deduction--Matter remanded-- Ciba India Ltd. v. Deputy CIT (Mumbai) . . . 474
S. 147 --Reassessment--Notice after four years--Condition precedent--No allegation of failure by assessee to disclose material facts truly and fully--Notice invalid-- Nezone Foods P. Ltd. v. Asst. CIT (Gauhati) . . . 464
S. 148 --Reassessment--Notice after four years--Condition precedent--No allegation of failure by assessee to disclose material facts truly and fully--Notice invalid-- Nezone Foods P. Ltd. v. Asst. CIT (Gauhati) . . . 464
S. 194C --Business expenditure--Disallowance--Failure to deduct tax at source on payments--Payment towards transactions in securities through stock exchange under head “depository charges†without deducting tax at source--Tax paid by recipient--No disallowance can be made under section 40(a)(ia)-- Arcadia Share and Stock Brokers P. Ltd. v. Deputy CIT (Mumbai) . . . 491
S. 194J --Business expenditure--Disallowance--Failure to deduct tax at source on payments--Payment towards transactions in securities through stock exchange under head “depository charges†without deducting tax at source--Tax paid by recipient--No disallowance can be made under section 40(a)(ia)-- Arcadia Share and Stock Brokers P. Ltd. v. Deputy CIT (Mumbai) . . . 491
S. 263 --Revision--Powers of Commissioner--Scope of power--Commissioner cannot pass final orders on subjects in revision--Order under section 263 invalid-- Asst. CIT v. Manas Salt Iodisation Industries P. Ltd. (Gauhati) . . . 502
R. 8D --Income--Disallowance of expenditure in relation to exempt income--Assessee earning sufficient exempt income in assessment year earlier to assessment year 2008-09--Rule 8D not retrospective--Percentage of exempt income can constitute reasonable disallowance--Expenses equal to 4 per cent. of exempt income reasonable disallowance--Ciba India Ltd. v. Deputy CIT (Mumbai) . . . 474
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