Sunday, December 4, 2011

Direct Tax Laws Oct 27


Direct Tax Laws

-> Amount paid by assessee-company to Bank for services rendered in connection with issue of shares to increase capital base of company, could not be allowed as revenue expenditure - [2011] 15 taxmann 371 <Bangalore - Trib.)

-> Article 14 : DTAA between India and France - Where transactions of sale of shares by foreign entities involving another foreign company, having controlling interest in an Indian company, are part of scheme for avoidance of tax, gain arising from such transaction is taxable in India, even if it is not an alienation of shares of an Indian company - [2011] 16 taxmann 21 <New Delhi)

-> Assessee himself having treated income as business income and had suddenly changed to heading 'agricultural income' - [2011] 16 taxmann 9 <Karnataka)

-> Assessee was assessable in respect of gross interest received from department on income-tax refund and not merely on not interest remaining after set off of interest paid to department on account of late payment of tax - [2011] 15 taxmann 381 <Pune - Trib.)<TM)

-> Assessee was entitled to receive interest under section 214(1A) on difference between advance tax and tax assessed under section 251 from first day of assessment year till day of passing regular assessment order under section 143(3) - [2011] 15 taxmann 365 <Delhi - Trib.)

-> Assessee was not liable to deduct tax at source from commission payment to non-resident which was not rendering any service or performing any activity in India itself - [2011] 15 taxmann 391 <Delhi)

-> Computation of undisclosed income should be based on material seized during search - [2011] 15 taxmann 394 <Karnataka)

-> Consideration received by assessee from a company on letting his name 'S' to be used in company's name and its product would be taxable under head 'Capital gains' - [2011] 15 taxmann 388 <Chennai - Trib.)

-> Deduction under section 80P(2) cannot be denied to co-operative society engaged in producing and marketing of sugar from sugarcane grown by members - [2011] 16 taxmann 14 <Punjab and Haryana)

-> Enhanced compensation alongwith interest received by assessee on account of acquisition of his land would be taxed in assessment year in which it was received - [2011] 15 taxmann 366 <Delhi - Trib.)

-> Even where assessee deducted gross payment made to sub-contractor from its gross income from contract and had shown commission income separately in profit & loss account, TDS liability under section 194C would arise - [2011] 15 taxmann 380 <Ahmedabad - Trib.)

-> Expenditure incurred by assessee-company for installation of a common effluent treatment plant under infrastructure upgradation scheme was to be allowed as revenue expenditure - [2011] 15 taxmann 370 <Chennai - Trib.)

-> Expenses incurred by assessee on installation of an accounting software to enable management to run its business more effectively and efficiently would be revenue expenditure - [2011] 15 taxmann 382 <Delhi)

-> In case of direct nexus between borrowing and advancing of money, interest spent is to be deducted from interest earned - [2011] 15 taxmann 386 <Delhi - Trib.)

-> Liaison office of non-resident assessee in India performing activities of selection of right goods and negotiation of price as part of purchasing process as per assessee's instructions cannot be considered PE of assessee in India - [2011] 15 taxmann 358 <Mumbai - Trib.)

-> Merely because Assessing Officer had decided to disallow certain expenses on ad hoc basis after making necessary enquiry, that by itself cannot be a ground to invoke powers under section 263 - [2011] 15 taxmann 384 <Delhi - Trib.)

-> Once assessment proceedings are initiated under section 158BD for computing undisclosed income of person other than person searched, based on evidence found in course of search, then it would be open to Assessing Officer to make use of any other information available with him for making block assessment - [2011] 15 taxmann 393 <Kerala)

-> Ownership of toll road under State-private joint-venture on Build, Own, Operate and Transfer <BOOT) basis rests with private party till transfer, entitling it to depreciation on same - [2011] 15 taxmann 387 <Ahmedabad - Trib.)

-> Penalty under section 271(1)(c) was imposable where assessee wrongly claimed set off of loss incurred in capacity of a partner of a firm against his individual income - [2011] 16 taxmann 11 <Delhi - Trib.)

-> Proceedings under section 147 cannot be initiated when time available for issuing notice under section 143(2) has not expired - [2011] 16 taxmann 12 <Lucknow - Trib.)

-> Revision of AO's order where Assessing Officer after examining various details of case had disallowed a part of purchases made under section 40A(3) - [2011] 16 taxmann 13 <Mumbai - Trib.)

-> Rule 8D of Income-tax Rules 1962, which was introduced by virtue of Notification No. 45/2008, dated 24-3-2008, is prospective in operation and cannot be regarded as being retrospective - [2011] 15 taxmann 390 <Delhi)

-> Temporary wooden structure and partition for running Computer Centre is eligible to 100% depreciation.NBFC can claim deduction of irrecoverable loans and advances under section 36(1)(vii) if there is an actual write off in books - [2011] 15 taxmann 392 <Madras)

-> Terms 'exempt income' and 'deduction from income' are two different propositions and, therefore, where assessee's income was not exempt under section 10 rather same was eligible for deduction under section 80P, assessee's case was not hit by provisions of section 14A - [2011] 16 taxmann 10 <Delhi - Trib.)

-> Transfer Pricing - Where assessee-company had entered into international transaction with its AE and in course of assessment assessee had furnished all details and documents in respect of these transactions which was accepted to be one confirming to arm's length price, no penalty could be levied on assessee under section 271AA - [2011] 16 taxmann 5 <Mumbai - Trib.)

-> Tribunal was justified in holding that case of assessee was a fit case for stay of outstanding demand beyond period of 365 days as per provisions of section 254(2A) - [2011] 15 taxmann 369 <Bombay)

-> When an assessee writes off a debt or part thereof as irrecoverable in accounts for previous year, same can be allowed as deduction under section 36(1)(vii) and, no further proof is necessary - [2011] 15 taxmann 373 <Andhra Pradesh)

-> Where after completion of search proceedings, assessee did not file a block return rather, it filed a regular return belatedly which was rejected by Assessing Officer, it did not make assessee liable to penalty under section 158BFA - [2011] 15 taxmann 375 <Chennai - Trib.)

-> Where assessee borrowed certain amount for its business purpose and earned interest on unutilized portion of loan interest income was taxable as business income - [2011] 16 taxmann 8 <Bombay)

-> Where assessee entered into agreements with finance companies to provide access to their customer database, it was not a contract for service and, thus, assessee was not required to deduct tax at source while making payments to finance companies - [2011] 16 taxmann 6 <Chennai - Trib.)

-> Where assessee showed purchase value of shares as debit to profit and loss account and, further, closing stock of shares was valued at cost or market value whichever was less, it was to be held that assessee treated shares as stock-in-trade and, thus, fall in value of same was allowable as business loss - [2011] 15 taxmann 385 <Mumbai - Trib.)

-> Where assessee-authority carried on systematic activity of development and sale of immovable properties which was incidental to its main object of town planning, exemption under section 11 was available to assessee only if it maintained separate books of account for aforesaid activity - [2011] 15 taxmann 389 <Delhi - Trib.)

-> Where Assessing Officer at time of passing assessment order, charged interest under a non-existent provision, it constituted a glaring, patent and obvious mistake which had to be rectified under section 154 - [2011] 16 taxmann 15 <Chennai - Trib.)

-> Where Assessing Officer could not rebut assessee's contention that no expenditure had been incurred to earn exempt income under section 10(33) and, moreover, rule 8D of Income-tax Rules, 1962, was also not applicable for assessment year in question, disallowance made under section 14A on ad hoc basis was to be set aside - [2011] 15 taxmann 376 <Delhi - Trib.)

-> where Assessing Officer had not brought out any specific expenditure which had been incurred by assessee for earning of tax exempt dividend income, disallowance of expenses invoking provisions of section 14A was not justified - [2011] 15 taxmann 383 <Delhi - Trib.)

-> Where interest earned on FDRs had direct nexus with assessee's export business, assessee should be allowed netting of such interest from interest paid by it to bank in terms of Explanation (baa) of section 80HHC - [2011] 15 taxmann 361 <Delhi)

-> Where Tribunal remanded an issue back to Assessing Officer for disposal afresh, subsequent decision of Supreme Court on said issue did not make Tribunal's order erroneous on face of record which could be rectified under section 254 (2) - [2011] 15 taxmann 367 <Lucknow - Trib.)

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