INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION
ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
High Courts
Avoidance of tax --International transactions--No evidence of arrangement between assessee and its associated enterprises--Order of Transfer Pricing Officer--Not valid--Income-tax Act, 1961-- CIT v. Patni Computer Systems Ltd . (Bom) . . . 146
Exemption --Industrial undertaking--New industrial undertaking in free trade zone--Finding that new units established by assessee were separate and independent--Units entitled to exemption under section 10A--Income-tax Act, 1961, s. 10A-- CIT v . Patni Computer Systems Ltd . (Bom) . . . 146
Double taxation avoidance --Loss--Set-off of loss--Loss incurred by branch office in Sweden can be set off against other business profits--Double Taxation Avoidance Agreement between India and Sweden-- CIT v . Patni Computer Systems Ltd .
(Bom) . . . 146
Double Taxation Avoidance Agreement --Non-resident--Permanent establishment in India--Liaison office in India--Evidence that liaison office carrying on commercial activities--Income from such activities--Assessable in India--Double Taxation Avoidance Agreement between India and South Korea-- Jebon Corporation v. CIT
(Karn) . . . 151
Housing project --Special deduction--Housing project--Definition--Eligible and ineligible units in composite housing project--Assessee entitled to proportionate deduction in respect of units satisfying the extent of built-up area--That one of blocks in units exceeding built-up area of 1,500 sq. ft.--Would not nullify claim of assessee for entire project--Income-tax Act, 1961, s. 80-IB(10)-- Viswas Promoters P. Ltd. v . Asst. CIT
(Mad) . . . 169
Reassessment --Validity--Notice within four years--Scope of section 147 and section 45(2)--Conversion of capital asset into stock-in-trade and subsequent sale--Gains assessable as capital gains--Failure to assess such capital gains--Reassessment valid--Income-tax Act, 1961, ss. 45, 147-- CIT v . National Tyres and Rubber Co. of India Ltd . (Ker) . . . 163
PRINT EDITION
ITR Volume 355 : Part 3 (Issue dated : 22-7-2013)
SUBJECT INDEX TO CASES REPORTED IN THIS PART
HIGH COURTS
Business expenditure --Disallowance--Excessive and unreasonable payments--Payment to related person--Management fee--Payment to subsidiary company and not to director or relative of director--Section 40A(2)(b) not applicable--Subsidiary manufacturing goods for assessee and in view of labour unrest workers deployed for other purpose benefitting assessee--That subsidiary company not fulfilling its obligations would not render transaction illegal--Part of payment could not be disallowed--Income-tax Act, 1961, ss. 37, 40A(2)(b)-- CIT v. Raman Boards Ltd . (Karn) . . . 305
----General principles--Assessee manufacturing and exporting tea--Expenses on foreign travel of managers and their wives--Publicity expenses--Deductible--Income-tax Act, 1961, s. 37-- CIT v. Williamson Tea (Assam) Ltd . (Gauhati) . . . 323
Charitable purpose --Registration of trust--Certificate of registration--Effect of--Income-tax Act, 1961, s. 12AA-- Agricultural Produce Market Committee v . ITO
(Guj) . . . 384
Charitable trust --Charitable purpose--Exemption--Conditions precedent--Registration--Newly established trust--Non-commencement of charitable activity not a ground for denying registration--Income-tax Act, 1961, s. 12AA-- DIT v . Foundation of Ophthalmic and Optometry Research Education Centre (Delhi) . . . 361
Collection and use of bio-degradable waste for making briquettes --Special deduction under section 80JJA--Scope of section 80JJA--Special deduction not restricted to local bodies--Meaning of “collection†--Can be for consideration--Bagasse purchased by individual from sugar factory and used for making briquettes--Bagasse is “waste†--Assessee entitled to special deduction under section 80JJA--Income-tax Act, 1961, s. 80JJA-- CIT v. Smt. Padma S. Bora (Bom) . . . 368
Export --Special deduction--Computation of profits--Business profits should be reduced by unabsorbed depreciation and unabsorbed losses--Income-tax Act, 1961, s. 80HHE-- CIT v . Novell Software Development (I) Pvt. Ltd . (Karn) . . . 339
Export of computer software --Special deduction--Gain from fluctuation of foreign exchange--Ninety per cent. of amount not excludible in arriving at profits of business--Income-tax Act, 1961, s. 80HHE-- CIT v . Novell Software Development (I) Pvt. Ltd.
(Karn) . . . 339
Income from house property --Annual value--Determination of annual value--Interest on security deposit cannot be added--Income-tax Act, 1961, s. 23-- CIT v. Shastha Pharma Laboratories P. Ltd . (Karn) . . . 316
Penalty --Loan in excess of specified limit in cash--Finding by Tribunal that explanation of assessee not reasonable--Finding of fact--Imposition of penalty--Valid--Income-tax Act, 1961, s. 271D-- Auto Piston Mfg. Co. P. Ltd . v . CIT
(P&H) . . . 414
Reassessment --Assessee, dealer in securities, making provision for purchases on short sales and reversing provision as and when sales completed--Objection of Revenue audit party to allowance of provision--Internal correspondence showing Assessing Officer not agreeing with objection and holding provision allowable--Notice for reassessment issued notwithstanding--No material to indicate subjective satisfaction of Assessing Officer--Notice on basis of audit objection not valid--Income-tax Act, 1961, ss. 147, 148-- Jagat Jayantilal Parikh v . Dy. CIT (Guj) . . . 400
----Limitation--Exclusion from limitation--Reassessment of income of assessee in pursuance of order of appellate authority in case of third party--Condition precedent for exclusion from limitation--Assessee must be given opportunity to be heard--Assessee giving loans to society--Society creating special corpus fund and earning interest but not disclosing interest in returns--Order of Tribunal on appeal by society that interest belonged to assessee--Notice of reassessment issued beyond period of six years to assessee without giving it opportunity to be heard--Notice barred by time--Income-tax Act, 1961, ss. 147, 148, 149, 150-- Rural Electrification Corporation Ltd . v . CIT (No. 1 )
(Delhi) . . . 345
----Limitation--Exclusion from limitation--Reassessment of income of assessee in pursuance of order of appellate authority in case of third party--Condition precedent for exclusion from limitation--Assessee must be given opportunity to be heard--Assessee giving loans to society--Society creating special corpus fund and earning interest but not disclosing interest in returns--Order of Tribunal on appeal by society that interest belonged to assessee--Notice of reassessment issued to assessee without giving him opportunity to be heard--Notice barred by time--Income-tax Act, 1961, ss. 147, 148, 149, 150-- Rural Electrification Corporation Ltd . v . CIT (No. 2 ) (Delhi) . . . 356
----Notice--Condition precedent--Belief that income has escaped assessment--Belief should be that of Assessing Officer--Notice based on opinion of Revenue audit party and not that of Assessing Officer--Condition not fulfilled--Reassessment not valid--Income-tax Act, 1961, ss. 147, 148-- Agricultural Produce Market Committee v. ITO (Guj) . . . 384
----Notice--Exemption--Long-term capital gains of infrastructure capital fund or company--Provision that investee company has to have approval under section 10(23G)--Investee company obtaining approval under section 10(23G)--Reopening of assessment requiring assessee, an investor company, to furnish approval not justified--Income-tax Act, 1961, ss. 147, 148-- RPG Cellular Investment and Holdings (P.) Ltd . v . Asst. CIT (Delhi) . . . 310
----Notice after four years--Conditions precedent--No indication in reasons recorded about failure on part of assessee to disclose fully and truly all material facts necessary for assessment--Revenue not entitled to raise question relating to expenses being of a capital nature, which assessee claimed as revenue--Income-tax Act, 1961, ss. 147, 148-- Rural Electrification Corporation Ltd . v . CIT (No. 2 ) (Delhi) . . . 356
----Notice after four years--No failure to disclose material facts by assessee--Objection raised by audit party considered during original assessment--Notice at the insistence of audit party--Not valid--Income-tax Act, 1961, ss. 147, 148-- Cadila Healthcare Ltd . v. Asst. CIT (OSD) (Guj) . . . 393
Recovery of tax --Interest--Delay in filing return--Interest under section 234A--Part of tax paid before return was due--Interest could not be levied on such part payment--Income-tax Act, 1961, s. 234A-- Bharatbhai B. Shah v . ITO (Guj) . . . 373
Search and seizure --Block assessment--Limitation--Undisclosed income--Special audit--Direction for special audit without giving opportunity to assessee--Direction given to extend period of limitation--Assessment barred by limitation--Income-tax Act, 1961, ss. 142(2A), 158BC-- CIT v. Subboji Rao C. H . (Karn) . . . 320
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Income-tax Act, 1961 :
S. 12AA --Charitable purpose--Registration of trust--Certificate of registration--Effect of-- Agricultural Produce Market Committee v . ITO (Guj) . . . 384
----Charitable trust--Charitable purpose--Exemption--Conditions precedent--Registration--Newly established trust--Non-commencement of charitable activity not a ground for denying registration-- DIT v . Foundation of Ophthalmic and Optometry Research Education Centre (Delhi) . . . 361
S. 23 --Income from house property--Annual value--Determination of annual value--Interest on security deposit cannot be added-- CIT v. Shastha Pharma Laboratories P. Ltd . (Karn) . . . 316
S. 37 --Business expenditure--Disallowance--Excessive and unreasonable payments--Payment to related person--Management fee--Payment to subsidiary company and not to director or relative of director--Section 40A(2)(b) not applicable--Subsidiary manufacturing goods for assessee and in view of labour unrest workers deployed for other purpose benefitting assessee--That subsidiary company not fulfilling its obligations would not render transaction illegal--Part of payment could not be disallowed-- CIT v. Raman Boards Ltd . (Karn) . . . 305
----Business expenditure--General principles--Assessee manufacturing and exporting tea--Expenses on foreign travel of managers and their wives--Publicity expenses--Deductible-- CIT v. Williamson Tea (Assam) Ltd . (Gauhati) . . . 323
S. 40A(2)(b) --Business expenditure--Disallowance--Excessive and unreasonable payments--Payment to related person--Management fee--Payment to subsidiary company and not to director or relative of director--Section 40A(2)(b) not applicable--Subsidiary manufacturing goods for assessee and in view of labour unrest workers deployed for other purpose benefitting assessee--That subsidiary company not fulfilling its obligations would not render transaction illegal--Part of payment could not be disallowed-- CIT v. Raman Boards Ltd . (Karn) . . . 305
S. 80HHE --Export--Special deduction--Computation of profits--Business profits should be reduced by unabsorbed depreciation and unabsorbed losses-- CIT v . Novell Software Development (I) Pvt. Ltd . (Karn) . . . 339
----Export of computer software--Special deduction--Gain from fluctuation of foreign exchange--Ninety per cent. of amount not excludible in arriving at profits of business-- CIT v . Novell Software Development (I) Pvt. Ltd. (Karn) . . . 339
S. 80JJA --Collection and use of bio-degradable waste for making briquettes--Special deduction under section 80JJA--Scope of section 80JJA--Special deduction not restricted to local bodies--Meaning of “collection†--Can be for consideration--Bagasse purchased by individual from sugar factory and used for making briquettes--Bagasse is “waste†--Assessee entitled to special deduction under section 80JJA-- CIT v. Smt. Padma S. Bora
(Bom) . . . 368
S. 142(2A) --Search and seizure--Block assessment--Limitation--Undisclosed income--Special audit--Direction for special audit without giving opportunity to assessee--Direction given to extend period of limitation--Assessment barred by limitation-- CIT v. Subboji Rao C. H . (Karn) . . . 320
S. 147 --Reassessment--Assessee, dealer in securities, making provision for purchases on short sales and reversing provision as and when sales completed--Objection of Revenue audit party to allowance of provision--Internal correspondence showing Assessing Officer not agreeing with objection and holding provision allowable--Notice for reassessment issued notwithstanding--No material to indicate subjective satisfaction of Assessing Officer--Notice on basis of audit objection not valid-- Jagat Jayantilal Parikh v . Dy. CIT (Guj) . . . 400
----Reassessment--Limitation--Exclusion from limitation--Reassessment of income of assessee in pursuance of order of appellate authority in case of third party--Condition precedent for exclusion from limitation--Assessee must be given opportunity to be heard--Assessee giving loans to society--Society creating special corpus fund and earning interest but not disclosing interest in returns--Order of Tribunal on appeal by society that interest belonged to assessee--Notice of reassessment issued beyond period of six years to assessee without giving it opportunity to be heard--Notice barred by time-- Rural Electrification Corporation Ltd . v . CIT (No. 1 ) (Delhi) . . . 345
----Reassessment--Limitation--Exclusion from limitation--Reassessment of income of assessee in pursuance of order of appellate authority in case of third party--Condition precedent for exclusion from limitation--Assessee must be given opportunity to be heard--Assessee giving loans to society--Society creating special corpus fund and earning interest but not disclosing interest in returns--Order of Tribunal on appeal by society that interest belonged to assessee--Notice of reassessment issued to assessee without giving him opportunity to be heard--Notice barred by time-- Rural Electrification Corporation Ltd . v . CIT (No. 2 ) (Delhi) . . . 356
----Reassessment--Notice--Condition precedent--Belief that income has escaped assessment--Belief should be that of Assessing Officer--Notice based on opinion of Revenue audit party and not that of Assessing Officer--Condition not fulfilled--Reassessment not valid-- Agricultural Produce Market Committee v. ITO (Guj) . . . 384
----Reassessment--Notice--Exemption--Long-term capital gains of infrastructure capital fund or company--Provision that investee company has to have approval under section 10(23G)--Investee company obtaining approval under section 10(23G)--Reopening of assessment requiring assessee, an investor company, to furnish approval not justified-- RPG Cellular Investment and Holdings (P.) Ltd . v . Asst. CIT (Delhi) . . . 310
----Reassessment--Notice after four years--Conditions precedent--No indication in reasons recorded about failure on part of assessee to disclose fully and truly all material facts necessary for assessment--Revenue not entitled to raise question relating to expenses being of a capital nature, which assessee claimed as revenue-- Rural Electrification Corporation Ltd . v . CIT (No. 2 ) (Delhi) . . . 356
----Reassessment--Notice after four years--No failure to disclose material facts by assessee--Objection raised by audit party considered during original assessment--Notice at the insistence of audit party--Not valid-- Cadila Healthcare Ltd . v. Asst. CIT (OSD) (Guj) . . . 393
S. 148 --Reassessment--Assessee, dealer in securities, making provision for purchases on short sales and reversing provision as and when sales completed--Objection of Revenue audit party to allowance of provision--Internal correspondence showing Assessing Officer not agreeing with objection and holding provision allowable--Notice for reassessment issued notwithstanding--No material to indicate subjective satisfaction of Assessing Officer--Notice on basis of audit objection not valid-- Jagat Jayantilal Parikh v . Dy. CIT (Guj) . . . 400
----Reassessment--Limitation--Exclusion from limitation--Reassessment of income of assessee in pursuance of order of appellate authority in case of third party--Condition precedent for exclusion from limitation--Assessee must be given opportunity to be heard--Assessee giving loans to society--Society creating special corpus fund and earning interest but not disclosing interest in returns--Order of Tribunal on appeal by society that interest belonged to assessee--Notice of reassessment issued beyond period of six years to assessee without giving it opportunity to be heard--Notice barred by time-- Rural Electrification Corporation Ltd . v . CIT ( No. 1 ) (Delhi) . . . 345
----Reassessment--Limitation--Exclusion from limitation--Reassessment of income of assessee in pursuance of order of appellate authority in case of third party--Condition precedent for exclusion from limitation--Assessee must be given opportunity to be heard--Assessee giving loans to society--Society creating special corpus fund and earning interest but not disclosing interest in returns--Order of Tribunal on appeal by society that interest belonged to assessee--Notice of reassessment issued to assessee without giving him opportunity to be heard--Notice barred by time-- Rural Electrification Corporation Ltd . v . CIT (No. 2 ) (Delhi) . . . 356
----Reassessment--Notice--Condition precedent--Belief that income has escaped assessment--Belief should be that of Assessing Officer--Notice based on opinion of Revenue audit party and not that of Assessing Officer--Condition not fulfilled--Reassessment not valid-- Agricultural Produce Market Committee v. ITO (Guj) . . . 384
----Reassessment--Notice--Exemption--Long-term capital gains of infrastructure capital fund or company--Provision that investee company has to have approval under section 10(23G)--Investee company obtaining approval under section 10(23G)--Reopening of assessment requiring assessee, an investor company, to furnish approval not justified-- RPG Cellular Investment and Holdings (P.) Ltd . v . Asst. CIT
(Delhi) . . . 310
----Reassessment--Notice after four years--Conditions precedent--No indication in reasons recorded about failure on part of assessee to disclose fully and truly all material facts necessary for assessment--Revenue not entitled to raise question relating to expenses being of a capital nature, which assessee claimed as revenue-- Rural Electrification Corporation Ltd . v . CIT (No. 2 ) (Delhi) . . . 356
----Reassessment--Notice after four years--No failure to disclose material facts by assessee--Objection raised by audit party considered during original assessment--Notice at the insistence of audit party--Not valid-- Cadila Healthcare Ltd . v. Asst. CIT (OSD) (Guj) . . . 393
S. 149 --Reassessment--Limitation--Exclusion from limitation--Reassessment of income of assessee in pursuance of order of appellate authority in case of third party--Condition precedent for exclusion from limitation--Assessee must be given opportunity to be heard--Assessee giving loans to society--Society creating special corpus fund and earning interest but not disclosing interest in returns--Order of Tribunal on appeal by society that interest belonged to assessee--Notice of reassessment issued beyond period of six years to assessee without giving it opportunity to be heard--Notice barred by time-- Rural Electrification Corporation Ltd . v . CIT ( No. 1 ) (Delhi) . . . 345
----Reassessment--Limitation--Exclusion from limitation--Reassessment of income of assessee in pursuance of order of appellate authority in case of third party--Condition precedent for exclusion from limitation--Assessee must be given opportunity to be heard--Assessee giving loans to society--Society creating special corpus fund and earning interest but not disclosing interest in returns--Order of Tribunal on appeal by society that interest belonged to assessee--Notice of reassessment issued to assessee without giving him opportunity to be heard--Notice barred by time-- Rural Electrification Corporation Ltd . v . CIT (No. 2 ) (Delhi) . . . 356
S. 150 --Reassessment--Limitation--Exclusion from limitation--Reassessment of income of assessee in pursuance of order of appellate authority in case of third party--Condition precedent for exclusion from limitation--Assessee must be given opportunity to be heard--Assessee giving loans to society--Society creating special corpus fund and earning interest but not disclosing interest in returns--Order of Tribunal on appeal by society that interest belonged to assessee--Notice of reassessment issued beyond period of six years to assessee without giving it opportunity to be heard--Notice barred by time-- Rural Electrification Corporation Ltd . v . CIT (No. 1 ) (Delhi) . . . 345
----Reassessment--Limitation--Exclusion from limitation--Reassessment of income of assessee in pursuance of order of appellate authority in case of third party--Condition precedent for exclusion from limitation--Assessee must be given opportunity to be heard--Assessee giving loans to society--Society creating special corpus fund and earning interest but not disclosing interest in returns--Order of Tribunal on appeal by society that interest belonged to assessee--Notice of reassessment issued to assessee without giving him opportunity to be heard--Notice barred by time-- Rural Electrification Corporation Ltd . v . CIT (No. 2 ) (Delhi) . . . 356
S. 158BC --Search and seizure--Block assessment--Limitation--Undisclosed income--Special audit--Direction for special audit without giving opportunity to assessee--Direction given to extend period of limitation--Assessment barred by limitation-- CIT v. Subboji Rao C. H . (Karn) . . . 320
S. 234A --Recovery of tax--Interest--Delay in filing return--Interest under section 234A--Part of tax paid before return was due--Interest could not be levied on such part payment-- Bharatbhai B. Shah v . ITO (Guj) . . . 373
S. 271D --Penalty--Loan in excess of specified limit in cash--Finding by Tribunal that explanation of assessee not reasonable--Finding of fact--Imposition of penalty--Valid-- Auto Piston Mfg. Co. P. Ltd . v . CIT (P&H) . . . 414
ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB)) -- PRINT AND ONLINE EDITION
ONLINE EDITION
SUBJECT INDEX TO CASES REPORTED
Business expenditure --Disallowance--Payments liable to deduction of tax at source--Payment to non-resident outside India of advertisement expenditure in foreign currency--Non-resident not having permanent establishment in India--Remittance not liable to tax--Disallowance not justified--Expenditure incurred on advertisement on television films and commercial as well as other promotional films--Revenue in nature--Whether expenditure on advertisement incurred on product which was registered in assessee’s name--Matter remanded--Income-tax Act, 1961, ss. 37(1), 40(a)(i)--Double Taxation Avoidance Agreement between India and Switzerland, art. 22(1)-- Sandoz P. Ltd. v. Additional CIT (Mumbai) . . . 100
----Interest on borrowed capital--Allowable expenditure--Income-tax Act, 1961, s. 36(1)(iii)-- Sandoz P. Ltd. v. Additional CIT (Mumbai) . . . 100
Capital or revenue expenditure --Purchase of software including various packages and licence copy of software--Whether assessee obtained benefit of enduring nature--Matter remanded--Lease rent--Relevant documents and lease agreement not produced--Matter remanded-- Sandoz P. Ltd. v. Additional CIT (Mumbai) . . . 100
Export --Special deduction--Computation--Exclusion of excise duty from total turnover--Proper--Liability no longer required--Not liable to be reduced to extent of ninety per cent. while calculating eligible profits--Other income--Amounts realised from sale of scarp--Matter remanded to Assessing Officer for deciding afresh--Profits from statistical data processing activity--Deduction claimed under section 80HHE to be reduced and not 100 per cent. of profit--Income-tax Act, 1961, ss. 80HHC, Expln. (baa) , 80HHE-- Sandoz P. Ltd. v. Additional CIT (Mumbai) . . . 100
Method of accounting --Valuation of stock--Closing stock increased on account of unutilised Modvat credit--Corresponding opening stock of that year should also be increased-- Sandoz P. Ltd. v. Additional CIT (Mumbai) . . . 100
PRINT EDITION
Volume 25 : Part 2 (Issue dated : 22-7-2013)
SUBJECT INDEX TO CASES REPORTED
Charitable purpose --Exemption--Assessee running educational school and constructing a building--Reference to District Valuation Officer to estimate actual investment in construction of building--Huge difference between amount claimed to have been spent on construction and estimation made by District Valuation Officer--No evidence on record that construction cost used by managing trustee for his personal benefit--Building belonging to society and benefit going to society not managing trustee--No violation of section 13--Income-tax Act, 1961, s. 13-- Shri Amol Chand Varshney Sewa Sansthan v. Additional CIT (Agra) . . . 211
Exemption --Educational institution--Contributions to Lions Club and Fine Arts Academy--Lions Club is a social club, not social organisation to undertake social work as envisaged in study curriculum--Failure to furnish explanation regarding contributions to Fine Arts Academy--Exemption not allowable--Income-tax Act, 1961, s. 10(23C)(iiiab)-- Ganapathy Educational Trust v. Assistant Director of Income-tax (Exemption) (Chennai) . . . 231
International transaction --Transfer pricing--Arm’s length price--Determination--Transactional net margin method--Profit margin from transactions with associated enterprises and profit margin from similar transactions with non-associated enterprises--To be separately derived--No overlapping permissible--Figures of associated enterprise transactions including non-associated enterprise transactions--Not proper--Operating cost--Amortisation of value of investment--Depreciation transferred from revaluation reserve--Expenditure capitalised--Bill discounting--Fixed assets written off--Donations--Items not includible in operating cost--Uncontrolled transaction--Filter--Related party transactions not exceeding 25 per cent. of total revenue--Government company not comparable--± 5 per cent. not a standard deduction--Benefit of up to 5 per cent. allowable only if variation between price of international transaction and arm’s length price determined not exceed 5 per cent.--Payment of royalty and technical fee to associated enterprise pursuant to deemed approval by Reserve Bank of India under automatic approval scheme--Arm’s length price cannot be computed at nil--Income-tax Act, 1961, ss. 92B(1), 92C--Income-tax Rules, 1962, r. 10B(1)(e)-- ThyssenKrupp Industries India P. Ltd. v. Additional CIT (Mumbai) . . . 243
----Arm’s length price--Determination--Selection of comparables--Companies which have suffered merger or demerger, impacting financial results, those having supernormal profit, those functionally dissimilar, those acting as intermediary having outsourced their activity, those whose directors involved in fraud, those whose turnover exceeding Rs. 200 crores not to be treated as comparables--Matter remanded to determine arm’s length price afresh--Income-tax Act, 1961, s. 92C-- Capital IQ Information Systems (India) P. Ltd. v. Deputy CIT (International Taxation) (Hyderabad) . . . 185
----Transfer pricing--Computation of arm’s length price--Foreign exchange fluctuation cannot be excluded in reckoning operating margin--Income-tax Act, 1961, s. 92CA-- Capital IQ Information Systems (India) P. Ltd. v. Deputy CIT (International Taxation) (Hyderabad) . . . 185
Non-resident --Fringe benefits tax--Existence of employer-employee relationship necessary to invoke section 115WA--Non-resident company engaging consultants on retainership basis for its projects in India--Tax deducted at source under section 194C or 194J--Such persons not eligible for retirement or superannuation or gratuity benefits--Fringe benefits tax not attracted--Income-tax Act, 1961, ss. 115WA, 194C, 194J--Circular No. 8 of 2005 dated 29-8-2005-- Joshi Technologies International Inc. v. Assistant Director of Income-tax (International Taxation) (Ahmedabad) . . . 170
Search and seizure --Block assessment--Set off and carry forward of losses--Bar applies to losses arising from transactions accounted for--Losses of block period from unaccounted transactions can be set off--Income-tax Act, 1961, s. 158BC-- Heatshrink Technologies Ltd. v. Assistant CIT (Mumbai) . . . 269
----Block assessment--Undisclosed income--Matters finalised in proceedings following income-tax survey not to be considered in block assessment--Income-tax Act, 1961, s. 158BC-- Heatshrink Technologies Ltd. v. Assistant CIT (Mumbai) . . . 269
SECTIONWISE INDEX TO CASES REPORTED IN THIS PART
Income-tax Act, 1961 :
S. 10(23C)(iiiab) --Exemption--Educational institution--Contributions to Lions Club and Fine Arts Academy--Lions Club is a social club, not social organisation to undertake social work as envisaged in study curriculum--Failure to furnish explanation regarding contributions to Fine Arts Academy--Exemption not allowable--Income-tax Act, 1961, Ganapathy Educational Trust v. Assistant Director of Income-tax (Exemption) (Chennai) . . . 231
S. 13 --Charitable purpose--Exemption--Assessee running educational school and constructing a building--Reference to District Valuation Officer to estimate actual investment in construction of building--Huge difference between amount claimed to have been spent on construction and estimation made by District Valuation Officer--No evidence on record that construction cost used by managing trustee for his personal benefit--Building belonging to society and benefit going to society not managing trustee--No violation of section 13-- Shri Amol Chand Varshney Sewa Sansthan v. Additional CIT (Agra) . . . 211
S. 92B(1) --International transaction--Transfer pricing--Arm’s length price--Determination--Transactional net margin method--Profit margin from transactions with associated enterprises and profit margin from similar transactions with non-associated enterprises--To be separately derived--No overlapping permissible--Figures of associated enterprise transactions including non-associated enterprise transactions--Not proper--Operating cost--Amortisation of value of investment--Depreciation transferred from revaluation reserve--Expenditure capitalised--Bill discounting--Fixed assets written off--Donations--Items not includible in operating cost--Uncontrolled transaction--Filter--Related party transactions not exceeding 25 per cent. of total revenue--Government company not comparable--± 5 per cent. not a standard deduction--Benefit of up to 5 per cent. allowable only if variation between price of international transaction and arm’s length price determined not exceed 5 per cent.--Payment of royalty and technical fee to associated enterprise pursuant to deemed approval by Reserve Bank of India under automatic approval scheme--Arm’s length price cannot be computed at nil-- ThyssenKrupp Industries India P. Ltd. v. Additional CIT (Mumbai) . . . 243
S. 92C --International transactions--Arm’s length price--Determination--Selection of comparables--Companies which have suffered merger or demerger, impacting financial results, those having supernormal profit, those functionally dissimilar, those acting as intermediary having outsourced their activity, those whose directors involved in fraud, those whose turnover exceeding Rs. 200 crores not to be treated as comparables--Matter remanded to determine arm’s length price afresh-- Capital IQ Information Systems (India) P. Ltd. v. Deputy CIT (International Taxation) (Hyderabad) . . . 185
----International transaction--Transfer pricing--Arm’s length price--Determination--Transactional net margin method--Profit margin from transactions with associated enterprises and profit margin from similar transactions with non-associated enterprises--To be separately derived--No overlapping permissible--Figures of associated enterprise transactions including non-associated enterprise transactions--Not proper--Operating cost--Amortisation of value of investment--Depreciation transferred from revaluation reserve--Expenditure capitalised--Bill discounting--Fixed assets written off--Donations--Items not includible in operating cost--Uncontrolled transaction--Filter--Related party transactions not exceeding 25 per cent. of total revenue--Government company not comparable--± 5 per cent. not a standard deduction--Benefit of up to 5 per cent. allowable only if variation between price of international transaction and arm’s length price determined not exceed 5 per cent.--Payment of royalty and technical fee to associated enterprise pursuant to deemed approval by Reserve Bank of India under automatic approval scheme--Arm’s length price cannot be computed at nil-- ThyssenKrupp Industries India P. Ltd. v. Additional CIT (Mumbai) . . . 243
S. 92CA --International transactions--Transfer pricing--Computation of arm’s length price--Foreign exchange fluctuation cannot be excluded in reckoning operating margin-- Capital IQ Information Systems (India) P. Ltd. v. Deputy CIT (International Taxation) (Hyderabad) . . . 185
S. 115WA --Non-resident--Fringe benefits tax--Existence of employer-employee relationship necessary to invoke section 115WA--Non-resident company engaging consultants on retainership basis for its projects in India--Tax deducted at source under section 194C or 194J--Such persons not eligible for retirement or superannuation or gratuity benefits--Fringe benefits tax not attracted-- Joshi Technologies International Inc. v. Assistant Director of Income-tax (International Taxation) (Ahmedabad) . . . 170
S. 158BC --Search and seizure--Block assessment--Set off and carry forward of losses--Bar applies to losses arising from transactions accounted for--Losses of block period from unaccounted transactions can be set off-- Heatshrink Technologies Ltd. v. Assistant CIT (Mumbai) . . . 269
----Search and seizure--Block assessment--Undisclosed income--Matters finalised in proceedings following income-tax survey not to be considered in block assessment-- Heatshrink Technologies Ltd. v. Assistant CIT (Mumbai) . . . 269
S. 194C --Non-resident--Fringe benefits tax--Existence of employer-employee relationship necessary to invoke section 115WA--Non-resident company engaging consultants on retainership basis for its projects in India--Tax deducted at source under section 194C or 194J--Such persons not eligible for retirement or superannuation or gratuity benefits--Fringe benefits tax not attracted-- Joshi Technologies International Inc. v. Assistant Director of Income-tax (International Taxation) (Ahmedabad) . . . 170
S. 194J --Non-resident--Fringe benefits tax--Existence of employer-employee relationship necessary to invoke section 115WA--Non-resident company engaging consultants on retainership basis for its projects in India--Tax deducted at source under section 194C or 194J--Such persons not eligible for retirement or superannuation or gratuity benefits--Fringe benefits tax not attracted-- Joshi Technologies International Inc. v. Assistant Director of Income-tax (International Taxation) (Ahmedabad) . . . 170
Income-tax Rules, 1962 :
R. 10B(1)(e) --International transaction--Transfer pricing--Arm’s length price--Determination--Transactional net margin method--Profit margin from transactions with associated enterprises and profit margin from similar transactions with non-associated enterprises--To be separately derived--No overlapping permissible--Figures of associated enterprise transactions including non-associated enterprise transactions--Not proper--Operating cost--Amortisation of value of investment--Depreciation transferred from revaluation reserve--Expenditure capitalised--Bill discounting--Fixed assets written off--Donations--Items not includible in operating cost--Uncontrolled transaction--Filter--Related party transactions not exceeding 25 per cent. of total revenue--Government company not comparable--± 5 per cent. not a standard deduction--Benefit of up to 5 per cent. allowable only if variation between price of international transaction and arm’s length price determined not exceed 5 per cent.--Payment of royalty and technical fee to associated enterprise pursuant to deemed approval by Reserve Bank of India under automatic approval scheme--Arm’s length price cannot be computed at nil-- ThyssenKrupp Industries India P. Ltd. v. Additional CIT (Mumbai) . . . 243
