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Direct Tax Laws
  
 SC/HC
  
 [2014] 48 taxmann.com 323 (Bombay)
Non-recovery of advance from affiliates due to security scam held as genuine advance; HC allows bad-debts claim -IT: Where assessee could not recover amount advanced to associate company on account of security scam, since said event could not be foreseen, Assessing Officer was not justified in rejecting assessee's claim for write off of said amount under section 36(1)(vii) taking a view that loan was not given in ordinary course of business Read Morenew
  
 [2014] 49 taxmann.com 249 (SC)
SC discusses evils of retro law; proviso to sec. 113 levying surcharge in block assessment cases held prospective -IT : SC discusses the evils of retrospective law while upholding the principle "that unless a contrary intention appears, a law is presumed to be prospective" but stops short of holding substantive retrospective amendments hurting tax payers as unconstitutional Read More
  
 [2014] 48 taxmann.com 294 (Bombay)
No deemed dividend on disbursement of advance if recipient-co. wasn’t a shareholder in lending company -IT : Where certain companies advanced money to assessee-company in which one director of assessee was holding more than 10 per cent equity shares, since assessee itself was not shareholder of those lending companies, impugned addition made by Assessing Officer by invoking provisions of section 2(22)(e) was not sustainable Read More
  
 [2014] 48 taxmann.com 347 (Kerala)[2014] 362 ITR 664 (Kerala)
No requirement to collect info/evidence for every year within block of 6 years to initiate sec. 153A proceedings -IT: There is no requirement under provisions of Act requiring department to collect information and evidence for each and every year for six previous years in order to initiate proceedings under section 153A Read More
  
 [2014] 48 taxmann.com 287 (Gujarat)
HC debars assessee from filing rectification request for second time when first request was rejected by ITAT -IT : When first rectification application was rejected by Tribunal, second rectification application on same issue is not maintainable at all Read More
  
 [2014] 48 taxmann.com 289 (Rajasthan)[2014] 268 CTR 207 (Rajasthan)
No reassessment to deny provision of exp. if all facts were available before AO during original assessment -IT : Where all facts relating to amount taken to balance sheet as provision for project development and registration charges on sale of plot were available before Assessing Officer at time of framing of original assessment, reopening of assessment by successor Assessing Officer could not be sustianed Read More
  
 [2014] 48 taxmann.com 295 (SC)
Supreme Court allows revenue to withdraw SLP with a liberty to file review petition before High Court -IT : Supreme Court could allow revenue to withdraw special leave petition filed before it with liberty to file review petition before High Court Read More
  
 [2014] 48 taxmann.com 243 (Bombay)
While following its earlier order ITAT shall indicate issue dealt in it and date of previous judgment -IT/ILT : Where any order passed by Tribunal in prior assessment years is followed for successive years in relation to same assessee, then, reference to order must be correctly denoted Read More
  
 [2014] 49 taxmann.com 125 (Delhi)
High Court interprets words ‘substantially’; lays down 50% threshold for indirect transfer of capital assets -IT/ILT : There can be no recourse to Explanation 5 to enlarge scope of section 9(1) so as to bring to tax gains or income that may arise from transfer of an asset situated outside India, which does not derive bulk of its value from asset situated in India Read More
  
 [2014] 48 taxmann.com 349 (Karnataka)
Exp. on non-compete fees is in nature of capital exp.; eligible for depreciation, rules HC -IT : Expenditure incurred for acquiring non-compete right is capital in nature entitled to depreciation under section 32(1)(ii) Read More
  
 [2014] 48 taxmann.com 238 (Bombay)
Inland haulage charges are part of income from operation of ships; not taxable under India-Belgium DTAA -IT/ILT: Inland Haulage Charges earned by assessee being part of income derived from operation of ships in international traffic are covered under article 8 of Double Tax Avoidance Agreement (DTAA) entered into between India and Belgium and consequently not taxable as business profits in India Read More
  
 [2014] 48 taxmann.com 296 (Gujarat)
Interest paid to minors on their deposits with firm was to be clubbed under sec. 64 as it was capital investment -IT : Where amount credited in account of minor in partnership firm was to be treated as capital investment, interest paid on such account would be clubbed under section 64(1)(iii) with income of assessee Read More
  
 [2014] 48 taxmann.com 187 (Kerala)[2014] 363 ITR 311 (Kerala)
Scrutiny assessment set aside by HC as it was made without issuing notice under section 143(2) -IT : Where no notice was issued under section 143(2) to assessee, assessment made under section 143(3) was to be set aside Read More
  
 [2014] 48 taxmann.com 375 (Karnataka)
HC upholds reassessment as assessee failed to pay capital gains tax under domestic laws in view of India-UK DTAA -IT/ILT: Where in terms of article 14 of Indo-UK DTAA, assessee was a resident of India and he had to pay capital gains in terms of domestic law of this country, if he did not pay same and merely gave a note along with returns, to which Assessing Officer had not applied his mind, reassessment was justified Read More
  
 [2014] 48 taxmann.com 222 (Delhi)[2014] 268 CTR 173 (Delhi)
Foreign Co. had to file return in response to sec. 148 notice even if issue of existence of PE was in dispute -IT/ILT: Even where existence of PE of petitioner non-resident company was in dispute, if petitioner had not filed return in response to notice issued under section 148, it did not act strictly in accordance with law Read More
  
 [2014] 48 taxmann.com 279 (Madhya Pradesh)[2014] 266 CTR 111 (Madhya Pradesh)
Waiver of loan couldn’t be held as remission under sec. 41(1) if loan amount was never claimed as deductible exp. -IT: Where principal amount of loan being never been claimed by assessee as its expenditure, its waiver would not amount to income of assessee Read More
  
 [2014] 48 taxmann.com 239 (Kerala)
HC asks for afresh proceeding as ITAT simply allowed exp. in year of payment of TDS without considering provisions -IT : Where without interpreting law, Tribunal, simply based on concession given by counsel, proceeded to opine that expenditure could be claimed in year of payment of TDS, matter was to be remanded Read More
  
 [2014] 48 taxmann.com 171 (Bombay)
Income from leasing of equipment wasn’t income from house property if earlier it was taxed as business income -IT : Once department had assessed income from hiring of office equipments along with property as business income in preceding assessment year, then without anything being brought on record to deviate from said finding, revenue could not assess such hire charges as income from property Read More
  
 [2014] 48 taxmann.com 172 (Karnataka)
‘Capital’ includes borrowed capital to compute limit on investment by trust in institute where trustee is director -IT: Word 'capital' as appearing in section 13(4) includes not only share capital but even borrowed capital and, therefore, where investment made by assessee-trust in another institute in which trustees were directors, did not exceed 5 per cent of total capital of said Institute, assessee's claim for exemption of income could not be denied on account of violation of provisions of section 13(4) Read More
  
 [2014] 48 taxmann.com 184 (Karnataka)
Time-limit to rectify mistake under sec. 154 could go beyond 6 months but on merits; HC considers CBDT’s circular -IT : Assessing Authority can pass order in respect of application under section 154, even after expiry of 6 months on merit in accordance with law Read More
  
 [2014] 48 taxmann.com 180 (Allahabad)[2014] 363 ITR 62 (Allahabad)
No disallowance for TDS default from commission paid to NR as Circular No. 786 was effective in year of payment -IT/ILT: Disallowance under section 40(a)(i) for year 2008-09 be deleted since circular No. 786 was applicable which obliged assessee not to deduct TDS Read More
  
 [2014] 48 taxmann.com 189 (Bombay)
Mere disallowance of claim raised by L&T would not justify imposition of concealment penalty on it -IT : Where imposition of penalty under section 271(1)(c) was set aside by Tribunal on findings of fact that merely because assessee raised a claim which was eventually disallowed did not mean that ingredients of clause (c) were satisfied so as to justify imposition of penalty, no substantial question of law arose from said finding of Tribunal Read More
  
 [2014] 48 taxmann.com 151 (Bombay)
Circuitous transfer of funds to shareholder’s firm wasn’t deemed dividend if Co. got back its fund on same day -IT : Circuitous transfer of funds to shareholder’s firm wasn’t deemed dividend if Co. got back its fund on same day Read More
  
 [2014] 48 taxmann.com 118 (Delhi)
Liability arose due to book entries were outside the ambit of sec. 269SS, rules HC -IT: Object of section 269SS is to prevent transaction in currency; it is not intended to affect cases where a debt or a liability arises on account of book entries Read More
  
 [2014] 48 taxmann.com 109 (Karnataka)[2014] 363 ITR 156 (Karnataka)
Issue of disallowance couldn’t be raised before CIT(A) if disallowance was made by CIT in revisional proceedings -IT: Matter remanded where revenue submitted that assessee could not raise issue of disallowance of bad debts before first appellate authority when disallowance was upheld by Commissioner in revision Read More
  
 [2014] 48 taxmann.com 124 (Punjab & Haryana)[2014] 360 ITR 121 (Punjab & Haryana)[2013] 263 CTR 707 (Punjab & Haryana)
No concealment penalty if assessee didn’t intend to furnish inaccurate of land specifying municipal limits -IT: Where assessee claimed that his agricultural land was situated beyond 8 kms. of municipal limits and produced some certificates regarding said property, concealment penalty should not be imposed Read More
  
 [2014] 48 taxmann.com 147 (Gujarat)[2014] 366 ITR 146 (Gujarat)
No reassessment after 4 years to disallow exp. on TDS default if assessee had disclosed all facts during assessment -IT : When it was not established that there was failure on part of assessee to disclose truly and correctly all material facts, assessment could not be reopened after expiry of four years to disallow interest on ground that no interest was offered on loan advanced and to disallow rent on ground that TDS was not deducted thereon Read More
  
 [2014] 48 taxmann.com 115 (Bombay)
Severance pay of employees allowable under Sec. 35DDA when assessee had just outsourced its production facility -IT : Where assessee having transferred its manufacturing facility of alcoholic beverages to another company, claimed deduction of severance pay of employees in terms of section 35DDA, in view of fact that it was a case of running its business more efficiently and not a case of closure of business, assessee's claim for deduction was to be allowed Read More
  
 [2014] 49 taxmann.com 49 (Karnataka)
Kingfisher Airlines 'a king of not so good times': HC held it as an assessee-in-default for failure to remit TDS -IT : Where assessee-company having deducted tax at source from salaries paid to it employees, did not remit same to Central Government account, Assessing Authority was justified in holding assessee to be "assessee-in-default" and directing it to pay amount so deducted with interest Read More
  
 [2014] 48 taxmann.com 57 (Madras)[2013] 359 ITR 673 (Madras)
Sharing of license fee among affiliates entailing benefits to business operations of assessee was allowable -IT: Reopening was not justified where Assessing Officer had actually before him all relevant materials at time of original assessment itself Read More
  
 [2014] 48 taxmann.com 105 (Bombay)
HC disallows deduction of bad-debts as assessee had made fake book entries to evade taxes -IT : Assessee's claim for bad debt could not be allowed where false book entries were made to avoid tax liability Read More
  
 [2014] 48 taxmann.com 50 (Kerala)[2014] 361 ITR 184 (Kerala)
Even MAT companies are liable to pay interest under section 234C for deferment of advance tax -IT : Deductions under section 80HHD would be computed by taking assessee's all hotel units together Read More
  
 ITAT
  
 [2014] 48 taxmann.com 285 (Mumbai - Trib.)[2014] 31 ITR(T) 420 (Mumbai - Trib.)
Market research exp. incurred by trader was in nature of revenue exp., says ITAT -IT: Expenditure incurred on market research by a trader cannot bring into existence any capital assets; hence, it is revenue expenditure Read Morenew
  
 [2014] 48 taxmann.com 389 (Chennai - Trib.)
TP adjustments set aside as objection of assessee on the business activity of comparables weren't addressed by TPO -IT/ILT : Where assessee had not been provided with list of comparables and its objections regarding business activities of comparables had not been addressed, ALP to be redetermined Read Morenew
  
 [2014] 48 taxmann.com 351 (Mumbai - Trib.)[2014] 29 ITR(T) 652 (Mumbai - Trib.)
Rent paid to a depot agent under a composite service agreement would attract 194C and not sec. 194-I TDS -IT : Where payment made to a depot agent by assessee under agency service agreement was described as rentals paid for premises and specifications were also earmarked and it was for composite services, arrangement would fall under definition of 'rent' provided under section 194C and not under section 194-I Read More
  
 [2014] 48 taxmann.com 241 (Mumbai - Trib.)
Business loss can’t be carried forward which could be set-off with short-term capital gains in relevant year itself -IT: Addition made in respect of unsold property falling within block of assets could not be reduced while computing short-term capital gain on sold property Read More
  
 [2014] 48 taxmann.com 374 (Hyderabad - Trib.)[2014] 30 ITR(T) 434 (Hyderabad - Trib.)
ITAT denies to accept LIBOR to determine ALP of interest; approves rate accepted by assessee in earlier year -IT/ILT : Where assessee filed application contending that LIBOR linked interest rate had to be applied in order to determine ALP of interest in respect of loan granted to AE, since assessee had accepted rate of 7 per cent in earlier year and that was basis for directing to adopt 7 per cent by Tribunal during relevant year as well, said direction did not require any interference Read More
  
 [2014] 48 taxmann.com 292 (Mumbai - Trib.)
Non-filing of Form 3CA would not impose penalty when assessee had filed audit report under Companies Act -IT: Where assessee, a builder, filed audit report under section 224 of Companies Act, 1956, in such a case even though no separate report in Form 3CA as required under section 44AB had been filed, it would not lead to levy of penalty under section 271B Read More
  
 [2014] 48 taxmann.com 344 (Delhi - Trib.)
TPO couldn’t adopt TNMM to make TP adjustment without showing that segmental accounts were manipulated -IT/ILT: Where assessee, engaged in business of rendering inbound, outbound and domestic travel services to AEs, submitted accounts of inbounds and outbounds segments separately showing that international transactions were entered into at ALP, in absence of any evidence to show that those segmental accounts were manipulated, TPO was not justified in adopting TNMM and making addition to assessee's ALP on basis of weighted margin earned by external comparables Read More
  
 [2014] 48 taxmann.com 324 (Chennai - Trib.)
Profit on sale of shares deemed as capital gains as investment in shares was made along with regular business -IT : In case of a share broker earning exempted income from investment in shares, 10 per cent of such exempted income was to be attributed towards expenditure for earning of such exempted income Read More
  
 [2014] 48 taxmann.com 291 (Mumbai - Trib.)[2014] 31 ITR(T) 338 (Mumbai - Trib.)
Exp. incurred at a place where manufacturing facilities were carried out were outside the ambit of sec. 14A -IT: Expenses directly incurred in relation to manufacturing activities could not be disallowed under section 14A Read More
  
 [2014] 48 taxmann.com 155 (Mumbai - Trib.)
Management fee paid to Danish firm for managing shipping companies wasn’t FTS under India-Denmark DTAA -IT/ILT: Freight income is taxable in hands of shipping companies for whom assessee was acting as representative to carry out obligation for filing of return of income as well as managing entire affairs Read More
  
 [2014] 48 taxmann.com 293 (Mumbai - Trib.)[2014] 159 TTJ 21 (Mumbai - Trib.)
Remission of sale-tax loan on prepayment of loan amount won’t be deemed as remission of liability under sec. 41(1) -IT : Where in terms of 'Madhya Pradesh Government Conversion of Amount of Deferred Tax into Loan Liability Scheme, 1989', sales-tax payable was converted into loan which was repaid on an early date, concession received on said pre-payment of loan did not amount to remission or cessation of liability so as to attract relevant provisions of Act Read More
  
 [2014] 48 taxmann.com 380 (Bangalore - Trib.)
Manufacturing and trading segment of vehicles could be combined for TP analysis as both segments were interlinked -IT/ILT : Where assessee was engaged in manufacturing and selling of vehicles, in view of fact that both segments were interlinked, a combined approach was to be adopted and since in terms of said approach profit margin earned by assessee was within premissible range of plus/minus five per cent of arithmatic mean margin earned by comparables, adjustment made to assessee's ALP was to be set aside Read More
  
 [2014] 48 taxmann.com 286 (Chandigarh - Trib.)[2014] 31 ITR(T) 424 (Chandigarh - Trib.)[2014] 162 TTJ 6 (Chandigarh - Trib.)(UO)
No penalty for setting off unabsorbed depreciation and losses against capital gains on wrong advice of counsel -IT: No penalty is to be levied under section 271(1)(c) for setting off brought forward loss and depreciation on wrong advice of counsel Read More
  
 [2014] 49 taxmann.com 275 (Bangalore - Trib.)
Sum paid for importing service manuals which contained instructions for usage of equipment wasn't royalty -IT/ILT : Where assessee, in course of business of importing and selling of visual and information technology equipments like projectors, LCD cables, projector lamps etc. within India, also imported manuals and software which contained operating and servicing instructions for use of those equipments, since said service manuals were not protected by any licence or copyright and they could be used by anybody who purchased them without any restriction on right to transfer or usage, it was a case of Read More
  
 [2014] 48 taxmann.com 348 (Agra - Trib.)[2013] 28 ITR(T) 161 (Agra - Trib.)
Corpus donations of private religious trust weren’t taxable; ITAT denies to interfere with order of CIT(A) -IT : Where Commissioner (Appeals) relying upon three decisions of different Benches of Tribunal, accepted assessee's claim that donation received from 'B' was towards corpus of trust, in view of fact that facts in cases relied upon were identical to facts involved in assessee's case, impugned order did not require any interference Read More
  
 [2014] 48 taxmann.com 290 (Amritsar - Trib.)[2014] 162 TTJ 1 (Amritsar - Trib.)
No TDS liability of individual under sec. 194H if his turnover didn’t exceed sec. 44AB limit in preceding year -IT: Where assessee's turnover did not exceed prescribed amount in immediate preceding year, TDS provisions under section 194H was not applicable Read More
  
 [2014] 48 taxmann.com 244 (Visakhapatnam - Trib.)
Bank couldn’t be treated as an assessee-in-default merely due to some technical defects in Form 15G declarations -IT: Where depositors had furnished declaration in prescribed manner requesting deductor not to deduct tax at source, deductor was under a statutory obligation not to deduct tax and in aforesaid circumstances, deductor could not be penalized for not deducting tax at source Read More
  
 [2014] 48 taxmann.com 280 (Chennai - Trib.)
Rectification wasn’t permissible if no mistake was pointed out in order of ITAT; review petition dismissed -IT : Where assessee had filed review petition against order of Tribunal and grounds raised therein were general in nature and further assessee could not point out any specific mistake in said order, petition was to be dismissed Read More
  
 [2014] 48 taxmann.com 299 (Delhi - Trib.)
Royalty on variants of product couldn't be disallowed if royalty on original products were considered at ALP -IT/ILT: Where TPO had accepted 'most appropriate method' followed by assessee and approved arm's length price of royalty rate determined by asseesee, with respect to payment of royalty of products, claim of assessee on payments of royalty on variants of products was to be allowed Read More
  
 [2014] 48 taxmann.com 283 (Delhi - Trib.)[2014] 160 TTJ 416 (Delhi - Trib.)
AO couldn’t treat agricultural income as income from other sources when assessee had filed due records -IT: Where assessee, in support of his claim of earning agricultural income, produced relevant agricultural record and, moreover, income so earned had been returned and accepted by Department year after year, impugned order passed by Assessing Officer that income in question was taxable as 'income from other sources' was to be set aside Read More
  
 [2014] 48 taxmann.com 284 (Mumbai - Trib.)[2014] 159 TTJ 415 (Mumbai - Trib.)
Gain arising from sale of inherited land after its conversion into smaller plots was taxable as business profits -IT: Where assessee converted ancestral land into smaller plots and after providing road, parking space etc., sold same over a period of years, assessee's claim that he converted capital asset i.e. land into stock-in-trade and, thus, income arising from sale of land was taxable as business income was to be accepted Read More
  
 [2014] 49 taxmann.com 149 (Delhi - Trib.)
Erecting bus queue shelters by advertising Co. isn’t pre-operative exp. even if they aren’t yet ready for advertisement -IT: Where in pursuance of contract awarded by NDMC for construction of Bus Queue Shelters (BQS), assessee entered into manufacturing agreement with third party for manufacture and installation of BQS and also made advance payment, assessee's business could be said to commence in relevant year and, therefore, revenue authorities were not justified in rejecting assessee's claim for deduction of certain expenses taking a view that said expenses were in nature of pre-operative expenses as business w Read More
  
 [2014] 48 taxmann.com 129 (Jodhpur - Trib.)
Income generated by Museum from ancillary activities couldn’t be deemed as business receipt; sec. 11 relief allowed -IT : Where assessee, was settled with object of establishing a museum portraying pictures, paintings, antique coins etc., its activities were to be regarded as falling under category of 'general public utility' within meaning of section 2(15) Read More
  
 [2014] 48 taxmann.com 175 (Mumbai - Trib.)
No withholding taxes from freight paid to foreign shipping Co. or to its agent which was assessed under sec. 172 -IT/ILT: Where assessee claims that tax is not required to be deducted at source as payment of freight has been made to foreign shipping company, in such a case, assessee has to show that shipping companies to whom payments have been made are not only non-residents but also that they have been assessed under section 172 Read More
  
 [2014] 48 taxmann.com 188 (Mumbai - Trib.)[2014] 29 ITR(T) 531 (Mumbai - Trib.)
Advance to a screenplay writer for sale of rights of his film to be taxed in year in which he performed his work -IT : Where assessee, a screenplay writer, received certain amount as advance for sale of negative rights of his film which was to be adjusted subsequently on signing formal agreement with purchaser, amount so received was to be considered as income of assessee in year in which he performed his part of work and not during relevant assessment year even if assessee was following cash system of accounting Read More
  
 [2014] 48 taxmann.com 174 (Mumbai - Trib.)[2014] 33 ITR(T) 133 (Mumbai - Trib.)
Revised audit report filed after completion of assessment should be considered by CIT to allow sec. 80-IB relief -IT: Even if revised audit report for purpose of claiming deduction under section 80-IB is filed after date of passing of assessment order, same should be taken into cognizance for examining allowability of deduction Read More
  
 [2014] 48 taxmann.com 176 (Chennai - Trib.)
Comparables with high turnover, abnormal profits and high capital infrastructure to be excluded for TP study -IT/ILT: Where TPO made certain addition to assessee's ALP in respect of providing customer support services to its AE, in view of fact that one of comparables selected by TPO was improper as it was earning abnormal profits on account of its huge turnover and high capital infrastructure, impugned addition was to be set aside Read More
  
 [2014] 48 taxmann.com 224 (Chennai - Trib.)[2014] 29 ITR(T) 753 (Chennai - Trib.)
ITAT directs AO to allow 80% depreciation on windmill as it was erected before Sept. 30, 2007 -IT: When assessee had erected windmill, generated wind power and sold it to state electricity board prior to 30th September of year, income from which was taxed, depreciation was to be allowed at full rate Read More
  
 [2014] 48 taxmann.com 178 (Mumbai - Trib.)
Payer couldn’t be subject to interest for TDS default if payee wasn’t subjected to tax on similar payments in past -IT/ILT: Payer couldn’t be subject to interest for TDS default if payee wasn’t subjected to tax on similar payments in past Read More
  
 [2014] 48 taxmann.com 185 (Chandigarh - Trib.)[2013] 28 ITR(T) 77 (Chandigarh - Trib.)[2013] 158 TTJ 132 (Chandigarh - Trib.)
No concealment penalty if amount surrendered in search wasn’t disclosed in return but advance tax was paid on it -IT-I : Where pursuant to search proceedings, assessee filed his return wherein amount surrendered was not disclosed due to unintentional mistake, in view of fact that surrendered income had been duly reflected in cash flow chart and balance sheet and moreover, assessee had paid advance tax on said amount, there being no concealment of particulars of income, impugned penalty order passed under section 271(1)(c) was to be set aside Read More
  
 [2014] 48 taxmann.com 173 (Delhi - Trib.)
Section 251 empowers CIT (Appeals) to remit case back to Assessing Officer instead of deciding it -IT : Commissioner (Appeals) is empowered under section 251(1)(c) to remit case back to file of Assessing Officer instead of deciding it Read More
  
 [2014] 48 taxmann.com 186 (Mumbai - Trib.)[2013] 157 TTJ 892 (Mumbai - Trib.)
Value of derivative transactions in commodities at MCX won’t be included in turnover for tax audit purposes -IT : Value of sale transactions of commodity through MCX without delivery cannot be considered as turnover for purpose of section 44AB and, therefore, failure on part of assessee to get its accounts audited in such a case, would not lead to levy of penalty under section 271B Read More
  
 [2014] 48 taxmann.com 94 (Hyderabad - Trib.)
Investment in share capital of overseas subsidiaries not to be deemed as an international transaction -IT/ILT : Following order passed in case of Vijai Electricals Ltd. v. Addl. CIT [2013] 60 SOT 77 (URO)/36 taxman.com 386 (Hyd.), it was to be concluded that amount representing investment in share capital of subsidiaries outside India was not in nature of transaction referred to section 92B and, thus, transfer pricing provisions were not applicable to such a transaction Read More
  
 [2014] 48 taxmann.com 181 (Rajkot - Trib.)[2014] 29 ITR(T) 628 (Rajkot - Trib.)
AO is duty bound to refer matter to DVO if assessee objects to stamp duty valuation -IT: Where assessee had clearly objected before Assessing Officer against adoption of stamp duty valuation, it was duty of Assessing Officer to refer valuation of property to Valuation Cell of Income-tax Department Read More
  
 [2014] 48 taxmann.com 111 (Hyderabad - Trib.)
ALP of corporate guarantee couldn’t be compared with yield on domestic bonds without analysing AE’s solvency -IT/ILT : Where TPO made addition to assessee's ALP taking a view that assessee had not charged any fee for corporate guarantee for taking loans in USA given on behalf of its AE, since TPO could not arrive at credit rating of AE without there being any analysis on creditworthiness of AE and, moreover, addition made by TPO on basis of difference between domestic bond yield and that of loan availed in USA could not be accepted as domestic yield so as to compare it with loans in US and rates charged Read More
  
 [2014] 48 taxmann.com 156 (Mumbai - Trib.)
Exp. on repair and renovation of rented premises used for the purpose of business is revenue in nature -IT : Where assessee incurred expenditure on repairs and renovation of rented premises but neither any capital asset had been created nor enduring benefit had been derived and it was incurred merely for carrying on its business efficiently, it had to be treated as revenue in nature Read More
  
 [2014] 48 taxmann.com 145 (Mumbai - Trib.)
Concealment penalty imposed for claiming interest paid under Income-tax Act as business expenditure -IT: Where assessee-company had committed an error in preparing its return of income and its action in claiming impugned interest levied and paid under sections 234A, 234B and 234C as a business expenditure was a misrepresentation, levy of penalty in respect of impugned claim was justified Read More
  
 [2014] 48 taxmann.com 126 (Pune - Trib.)
Co. incurring abnormal losses due to winding-up of relation with key clients are excludible from comparable lists -IT/ILT : A company having incurred super losses due to extraordinary events, like winding up of relationship with clients, filing of bankruptcy by some clients, etc., is to be excluded from comparables list; simultaneously company earning super profit should also have to be excluded from list of comparables Read More
  
 [2014] 48 taxmann.com 122 (Delhi - Trib.)[2014] 159 TTJ 425 (Delhi - Trib.)
Manufacturers of ‘air springs assembly and other metals parts’ are eligible to claim benefit of sec. 80-IC -IT: Where assessee engaged in manufacturing of 'air springs assembly and other metal parts' claimed deduction under section 80-IC, in view of fact that imported material as well as local materials were used in manufacturing process which resulted in a final product quite distinct from components used and had distinct usage too, assessee's claim for deduction was to be allowed Read More
  
 [2014] 48 taxmann.com 153 (Ahmedabad - Trib.)[2014] 32 ITR(T) 250 (Ahmedabad - Trib.)
No revision to disallow sec. 10AA deductions to a SEZ unit duly approved and recognized under SEZ Act -IT: Revision on ground that assessee had not fulfilled eligibility conditions as SEZ was unjustified where it was found that assessee was duly granted approval by SEZ authorities to set up SEZ unit, it was recognized as an entrepreneur under SEZ Act and was also granted renewal of approval for trading by competent authority under SEZ Act Read More
  
 [2014] 48 taxmann.com 127 (Delhi - Trib.)
Exp. reimbursed to NR agent in relation to export sales couldn’t be disallowed treating it as post-sales exp. -IT/ILT: Where in terms of sales agreement, assessee had agreed to bear expenses relating to export sales carried out on its behalf by consignment agent located abroad, assessee's claim for deduction of said expenses could not be rejected taking a view that same were in nature of post sales expenses Read More
  
 [2014] 48 taxmann.com 117 (Bangalore - Trib.)
Co-op. society exempted from withholding of taxes under sec. 194A on interest paid to its members: ITAT -IT : Where assessee, a co-operative society, carrying on banking business, paid interest income to members on both time deposits and on deposits other than time deposits, it was not required to deduct tax at source under section 194A by virtue of exemption granted vide clause (v) of sub-section (3) of said section Read More
  
 [2014] 48 taxmann.com 82 (Ahmedabad - Trib.)
ITAT makes sec. 14A disallowance by estimating 2% of dividend income as incidental exp. for earning dividend -IT : When assessee had not furnished details of expenditure, reasonable estimation of expenditure attributable to dividend income has to be made at 2 per cent of gross dividend income; section 14A disallowance is to be made of said amount Read More
  
 [2014] 48 taxmann.com 149 (Mumbai - Trib.)
Sums paid to DTH operators for placement of channels in a particular frequency couldn’t be deemed as royalty -IT/ILT : Channel placement fee paid by assessee to cable TV operator/DTH provider could not be regarded as royalty in terms of Explanation 2 to section 9(1)(vi) Read More
  
 [2014] 48 taxmann.com 83 (Mumbai - Trib.)
ITAT directs AO to consider sec. 41(1) additions after verifying statement of accounts of creditors -IT : Where assessee furnished before Tribunal, for first time, statement of accounts from concerned creditors so as to confirm/prove discharge of total liability, matter was to be restored back to Assessing Officer Read More
  
 [2014] 49 taxmann.com 88 (Mumbai - Trib.)
ITAT's jibe at CA over his absurd advice; doubts efficacy of CPE programmes designed by ICAI -IT : Where assessee filed appeal with a delay of more than eight years against denial of deduction under section 80-O contending that said delay was caused due to advice given by Chartered Accountant to effect that since appeal on similar issue was already pending before Tribunal for earlier year and it was only on basis of decision in said appeal, a rectification application could have been filed before Assessing Officer, it was opined that said absurd advice could not have been given by Charte Read More
  
 [2014] 48 taxmann.com 86 (Lucknow - Trib.)
Reassessment notice was invalid if issued after obtaining approval of Commissioner instead of Joint Commissioner -IT : Notice issued under section 148 after obtaining sanction from Commissioner is void ab initio Read More
  
 [2014] 48 taxmann.com 104 (Mumbai - Trib.)
Indian branch could claim deduction for head-office expenditure even if it was not recorded in its books -IT/ILT: Expenditure met out by head office with regard to business operation of assessee branch in India allowable under section 44C Read More
  
 [2014] 48 taxmann.com 123 (Ahmedabad - Trib.)[2013] 28 ITR(T) 523 (Ahmedabad - Trib.)
Sec. 40A(2) disallowance upheld as assessee failed to provide comparable data on market price of its services -IT : Penalty under section 271(1)(c) cannot be imposed merely on ground that there were defects in account books of assessee and flat rate of profit is applied to arrive at gross profits of assessee Read More
  
 [2014] 48 taxmann.com 112 (Hyderabad - Trib.)[2014] 33 ITR(T) 160 (Hyderabad - Trib.)
TP adjustments on basis of comparables with higher related party transactions aren’t justified -IT/ILT : Where TPO made certain addition to assessee's ALP in relation to international transactions entered into with AE relating to software development services, in view of fact that in case of one comparable selected by TPO, there was merger of another company which resulted in its earning high operating margin and, moreover, some other comparables were found inappropriate on account of functional difference and related party transactions, impugned addition was to be set aside and, matter wa Read More
  
 [2014] 48 taxmann.com 108 (Mumbai - Trib.)
Proceedings couldn’t be initiated for TDS default if re-assessment time-limit against payee had expired -IT : No order under section 201(1)/201(1A) can be passed where revenue has not taken any action against payee and further time limit for taking action against payee under section 147 has also expired Read More
  
 [2014] 48 taxmann.com 128 (Hyderabad - Trib.)[2014] 32 ITR(T) 44 (Hyderabad - Trib.)
Role of TPO is to determine ALP of International Transaction which can’t be stretched to reject transaction -IT/ILT : Role of TPO is to determine arm's length price of a transaction, however, he cannot reject entire payment under provisions of section 92CA Read More
  
 [2014] 48 taxmann.com 120 (Delhi - Trib.)[2014] 31 ITR(T) 93 (Delhi - Trib.)
Reassessment quashed as it was made without issuing notice under sec. 143(2) -IT: Assessment completed without issue of notice under section 143(2) is invalid Read More
  
 [2014] 48 taxmann.com 47 (Bangalore - Trib.)
TP adjustment for transactions with AE set aside as comparables had functional differences and higher turnover -IT/ILT : Where TPO made addition to assessee's ALP in respect of software research and development support services rendered to its AE, in view of fact that some of comparables selected by TPO were improper on account of functional difference and high turnover, impugned adjustment was to be set aside and, matter was to be remanded back for disposal afresh Read More
  
 [2014] 48 taxmann.com 116 (Agra - Trib.)
Mere possibility of doing any commercial activity by trust couldn’t cause rejection of Sec. 80G approval -IT : Even if there was a possibility that assessee institution would engage in a commercial activity with help of community centre assessee was building, this could not be reason enough to decline assessee's application for grant of approval under section 80G Read More
  
 [2014] 48 taxmann.com 65 (Bangalore - Trib.)
Reference to TPO was invalid if no incriminating material was found during search proceedings -IT/ILT: Where Assessing Officer passed draft assessment orders which were served on assessee on 22-11-2011 and, thereupon, DRP having considered assessee's objections, dispatched its directions to assessee on 16-8-2012, it was to be concluded that impugned draft order had been passed in confirmity with provisions of section 144C(12) and, it could not be held barred by limitation merely on ground that DRP had issued those directions to Assessing Officer after expiry of prescribed time period i.e. Read More
  
 [2014] 48 taxmann.com 89 (Hyderabad - Trib.)
ITAT directs fresh examination to determine whether property was acquired compulsorily to attract sec. 194L TDS -IT : Where assessee municipal corporation acquired land with structure but did not deduct TDS under section 194L on compensation related to structure portion, matter was remanded back to decide whether property was acquired by mutual consent or by way of compulsory acquisition Read More
  
 [2014] 48 taxmann.com 113 (Delhi - Trib.)
TPO couldn’t compute ALP of indenting business on basis of profit earned from non-AE in trading business -IT/ILT: Where assessee, a wholly owned subsidiary of foreign company, carried out indenting and trading transactions in India on its own, action of TPO in determining ALP in respect of indenting business by applying profit percentage earned by assessee from non-AE transactions under 'Trading business' segment could not be upheld Read More
  
 Statutes
  
ORDER [F.NO.225/268/2014/ITA.II]
CBDT extends due date for filing of return by two months for income-tax assessees in State of J&K -IT/ILT : Section 119 of the Income-Tax Act, 1961 - Income-Tax Authorities - Instructions to Subordinate Authorities – Extension of Due-Date for Filing Returns of Income from 30-9-2014 to 30-11-2014 by Assessees in State of Jammu & Kashmir Read Morenew
  
NOTIFICATION NO.42/2014 [F.NO.503/4/2004-FTD-II]
Govt. notifies comprehensive DTAA with Bhutan -IT/ILT : Section 90 of the Income-Tax Act, 1961 - Double Taxation Agreement - Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with Foreign Countries - Bhutan Read More
  
INSTRUCTION NO. 6/2014 [F. NO. 225/229/2014/ITA.II
Instruction to select cases for scrutiny – Trust availing of relief after cancellation of approval under scanner -IT/ILT: Section 143 of the Income-Tax Act, 1961 - Assessment - General - Compulsory Manual Selection of Cases for Scrutiny During Financial Year 2014-15 Read More
  
 News
  
Voda case: Deadline for arbitrator to be dragged -Voda case: Deadline for arbitrator to be dragged [17-09-2014] Read Morenew
  
Fresh tax demand on foreign investors -Fresh tax demand on foreign investors [17-09-2014] Read Morenew
  
HC Defers Plea on Tax Audit, Leaves CAs Edgy -HC Defers Plea on Tax Audit, Leaves CAs Edgy [16-09-2014] Read More
  
Accounting Professionals Move Court for Clarity on Tax Audit Deadline -Accounting Professionals Move Court for Clarity on Tax Audit Deadline [15-09-2014] Read More
  
Delhi HC joins dots on indirect transfer debate -Delhi HC joins dots on indirect transfer debate [08-09-2014] Read More
  
Manufacturing Units in SEZs May Get Tax Incentives -Manufacturing Units in SEZs May Get Tax Incentives [08-09-2014] Read More
  
CBDT Warns Against Making People Wait -CBDT Warns Against Making People Wait [06-09-2014] Read More
  
CBDT Rationalises Norms for Scrutiny of Tax Returns -CBDT Rationalises Norms for Scrutiny of Tax Returns [05-09-2014] Read More
  
CBDT drops Rs. 15- cr cap for transfer pricing scrutiny -CBDT drops Rs. 15- cr cap for transfer pricing scrutiny [05-09-2014] Read More
  
Black money in polls: I-T to send teams on EC order -Black money in polls: I-T to send teams on EC order [04-09-2014] Read More