Friday, April 18, 2014

Some Ccase Laws

 
ITAT's Guidelines to AOs for making additions under section 68 - IT : (A) No additions in respect of loan repayments can be made under section 68; additions cannot exceed new loans/credits received during year

[2012] 20 taxmann.com 87 (MUM. - ITAT)

IT: Payments made by transport contractor for hiring tankers to use them in transport contract business is not liable to TDS under section 194C

[2012] 20 taxmann.com 86 (KOL. - ITAT)

IT : Where assessee-contractor hired machinery to be used in contract business and payment was made on basis of measurement of work done, assessee was not liable to deduct tax of source under section 194C

[2012] 20 taxmann.com 81 (MUM. - ITAT)

IT : Since trust is an artificial judicial person and has to act through trustees or anybody authorized by trustees, acts of trustees or person so authorized have to be considered as acts on behalf of trust

[2012] 20 taxmann.com 80 (MUM. - ITAT)

IT/ILT : Transfer Pricing - Where rate charged by assessee for supplying food to AE running airlines business on per passenger basis was found to be highest, no adjustment could be made to arm's length price disclosed by assessee in respect of said transaction

[2012] 20 taxmann.com 79 (MUM. - ITAT)

IT/ILT : Transfer Pricing : Where exclusion of wrongly included comparable in transfer pricing study resulted in bringing mark up price shown by assessee within 5 per cent range of arithmetic mean of comparables, impugned adjustment made to arm's length price was to be set aside

[2012] 20 taxmann.com 90 (MUM. - ITAT)(SB)

3 new questions, after TM's orders, referred by AM to president would be unlawful - IT : After reasoned order of Third Member agreeing with JM, AM (minority) order referring 3 new questions to President, ITAT would be an unlawful order

[2012] 20 taxmann.com 78 (INDORE - ITAT)

Cost indexation of assets, acquired on partition of HUF, is computed from year in which HUF acquired same - IT : Where assessee acquires property on partition of HUF, index cost of acquisition is to be computed with reference to year in which HUF has acquired property and not year in which property came to assessee on partition

[2012] 20 taxmann.com 68 (CHENNAI - ITAT)

IT/ILT : No penalty could be levied under section 271G where assessee had substantially filed information required by TPO and finally arm's length price adopted by assessee was accepted by Assessing Officer

[2012] 20 taxmann.com 63 (PUNE - ITAT)

IT : Replacement of ring frames and balancing machines in textile mills is capital expenditure

[2012] 20 taxmann.com 56 (CHENNAI - ITAT)

Section 153C notice invalid if Assessing Officer not sure to whom seized materials belongs to - IT : Notice issued under section 153C is invalid if no satisfaction is recorded as to whom seized materials belonged

[2012] 20 taxmann.com 54 (CHENNAI - ITAT)

Tax actually deducted considered for section 234A while it is tax deductible for sections 234B & 234C - IT : Interest under section 234A is to be computed by excluding amount of tax actually deducted while interest under sections 234B and 234C are to be charged by excluding tax, which was deductible

[2012] 20 taxmann.com 57 (COCH. - ITAT)

IT : An order under section 254(2) does not have existence de hors the order under section 254(1), so that it recall is impermissible under section 254(2)

[2012] 20 taxmann.com 76 (COCH. - ITAT)

TDS under section 194-I in case of mere hiring of vehicle without any work by contractor - IT : Mere hiring of vehicle/plant or machinery/equipment where contractee is to only make available vehicle etc. and not required to do any work would attract TDS under section 194-I and not under section 194C

[2012] 20 taxmann.com 75 (AHD. - ITAT)

Exemption upto Rs. 1 crore available under section 54EC - Jaipur ITAT's holding otherwise not cited - IT : Assessee entitled to Rs. 1 crore deduction under section 54EC if he transfers capital asset after 30th September of a financial year and makes capital gain of Rs.1crore or more and invests Rs. 1 crore in specified bonds within 6 months of transfer-Rs.50 lakhs in financial year of transfer and Rs.50 lakhs in next financial year

[2012] 20 taxmann.com 43 (DELHI - ITAT)

Notice pay recovered from employees serving for a shorter period is eligible for Sec. 10A deduction - IT : Amount of notice pay received by assessee from its employees working in software units was to be treated as income derived from its eligible business of export software and, thus, deduction under section 10A was to allowed on said income

[2012] 20 taxmann.com 42 (CHD. - ITAT)

Method of stock valuation, being arbitrary, has to be rejected even if it is being followed regularly -

IT : Arbitrary valuation of closing stock-in-trade, disregarding recognised practice of valuation either at cost or market price, whichever is lower, deserved to be rejected, even if same was being adopted uniformally year after year

[2012] 20 taxmann.com 44 (AHD. - ITAT)

IT/ILT : Transfer Pricing - Where royalty was paid in a continuous and phased manner and there was no comparable and no finding about ordinary profits, there would not be application of ALP

[2012] 20 taxmann.com 47 (DELHI - ITAT)

IT : As amended provisions of section 80HHC(3) had restricted deduction under section 80HHC, Assessing Officer was justified in initiating reassessment proceedings on said basis.

[2012] 20 taxmann.com 22 (MUM. - ITAT)


IT/ILT : Royalty paid by assessee in order to acquire right to use technical information and trademark for manufacture and sale of fabrics, is to be allowed as business expenditure

[2012] 20 taxmann.com 21 (DELHI - ITAT)


IT : Payment received by assessee, an insurance broking firm of UK, from Indian Insurance Companies for advising them about selection of reinsurer in international market cannot be treated as fees for technical services

[2012] 20 taxmann.com 39 (DELHI - ITAT)


TP : PLIs are ratios that measure relationship between profits and costs or resources - IT/ILT : Profit Level Indicators (PLIs) are ratios that measure relationship between profits and costs or resources

[2012] 20 taxmann.com 4 (BANG. - ITAT)

No penalty under section 272A if return not filed by charitable trust under bona fide belief that it is to be filed after getting approval under section 80G - IT: Where charitable trust was under a bona fide belief that return is to be filed only after securing recognition under section 80G, no penalty under section 272A was to be levied for delay in filing return

[2012] 20 taxmann.com 3 (DELHI - ITAT)

Section 194C and not section 194-I applicable in respect of payment made to transporters for pick and drop facility - IT : Payments made by assessee to transporters providing vehicles and driver to pick and drop employees is liable to TDS under section 194C and not section 194-I

[2012] 20 taxmann.com 2 (CHD. - ITAT)

Reference to TPO is issue-specific and not entity-specific, only referred transaction can be dealt by TPO - IT/ILT : In absence of reference being made by Assessing Officer to TPO, suo motu action taken by TPO in working out arm's length price of a particular international transaction, not referred to him by Assessing Officer, is not warranted under provisions of section 92CA

[2012] 20 taxmann.com 32 (CHENNAI - ITAT)

Commercial establishments/complexes exempt from WT even if not used by owner himself for carrying on his business - WT : Any property in nature of commercial establishments or complexes is exempt from Wealth-tax in terms of item (5) of section 2(ea)(i) of Wealth-tax Act,1957

[2012] 20 taxmann.com 31 (DELHI - ITAT)

ITAT on interpretation of expressions used in DTAA-'shall be taxed', 'may be taxed' and 'may also be taxed' - IT/ILT : In sphere of international taxation, there are two fundamental systems of taxation, one is based on residency of taxpayer and other is based on source of income

SC/HC
[2012] 20 taxmann.com 146 (DELHI)

IT : Participation by assessee in assessment proceedings on receipt of copy of notice can be deemed to be service of notice within ambit of section 148(1)

[2012] 20 taxmann.com 145 (BOM.)

IT : Application for stay of demand should be decided by Commissioner (Appeals) after taking due note of submission which had been made by assessee regarding additions made by Assessing Officer

[2012] 20 taxmann.com 144 (DELHI)

IT: Assessee having followed a reasonable basis of valuation of closing stock, which had been regularly followed and accepted by department in earlier years and in subsequent year and GP rate declared by it being higher than GP rate declared in immediate preceding year, addition made in assessee's hand on account of undervaluation of closing stock was not justified

[2012] 20 taxmann.com 143 (KER.)
IT : Explanation 10 to section 43(1) is prospective in nature applicable to depreciable assets after 1-4-1999

[2012] 20 taxmann.com 142 (KAR.)

IT : Expenditure incurred by assessee-company for maintenance of accommodation provided to its employees on rental basis cannot be treated as fringe benefit and hence fringe benefit tax cannot be levied on same

[2012] 20 taxmann.com 85 (KER.)

IT : Where there were two sale agreements available for sale of assessee firm, one supported by evidences should be adopted and sale consideration mentioned therein is to be accepted

[2012] 20 taxmann.com 84 (KER.)

IT : Where assessee while disclosing income under VDIS 1997 did not comply with condition of scheme and failed to remit tax, Assessing Officer could reopen assessment and taxed same under section 69A

[2012] 20 taxmann.com 83 (MAD.)

IT : Prior to 1-4-1988, in view of exclusion provided in section 47(ii), distribution of assets on dissolution of AOP does not attract capital gain

[2012] 20 taxmann.com 69 (DELHI)

IT : Assessing Officer being satisfied with explanation of assessee in original assessment proceedings that payment made for consultancy services outside India were not chargeable under Act as per clause (vii) of sub-section (1) of section 9, he could not re-open assessment for taxing payment on mere change of opinion

[2012] 20 taxmann.com 67 (KAR.)

IT : Without providing assessee opportunity to cross-examine payee, who made statements during search in his cases, business expenditure could not be disallowed

[2012] 20 taxmann.com 64 (MP)

IT : Amount paid in advance for purchase of machinery, would be treated as an investment deposit for purpose of section 32AB and assessee would be entitled for deduction of said amount

[2012] 20 taxmann.com 55 (MAD.)

Section 12AA does not distinguish between trust with charitable purpose and religious purpose - IT : Section 12AA does not make any difference between trusts created with object of charitable and religious purposes

[2012] 20 taxmann.com 58 (PUNJ. & HAR.)

IT : Where assessee engaged in construction business in foreign countries used cars of foreign make for its business and claimed depreciation on said cars, disallowance of claim for depreciation relying upon second proviso to section 32(1)(ii) was wrong

[2012] 20 taxmann.com 74 (SC)

IT : SC Stays Madras HC's ruling ([2011] 16 taxmann.com 399) that President of ITAT has no power to write ACRs of members

[2012] 20 taxmann.com 46 (AP)

IT : In view of failure of assessee to file application seeking exemption under section 10(23C) within prescribed time period, Commissioner was justified in denying exemption by invoking fourteenth proviso to section 10(23C)(vi)

[2012] 20 taxmann.com 45 (DELHI)

IT : Penalty under section 271(1)(c) could not be levied where due to bona fide doubt as to assessability of income in hands of assessee-AOP under section 167B(2), a return showing nil taxable income was filed.

[2012] 20 taxmann.com 41 (ALL.)

Paucity of liquidity restricts usage of assets but depreciation is still allowed - IT : AO not justified in disallowing depreciation on plant and machinery on ground that mill had remained closed due to lack of liquid funds

[2012] 20 taxmann.com 40 (ALL.)

In case of co-owners of a property, the threshold limit for TDS under section 194-I applies to each co-owner - IT : Where property in question leased out to a bank was owned by various co-owners and each owner was having a definite and ascertainable share in property, threshold limit for purpose of deduction of tax at source under section 194-I would apply to each of co-owners separately

[2012] 20 taxmann.com 48 (KER.)

IT : A self-serving retraction, without anything more cannot dispel statement made under oath under section 132(4)

[2012] 20 taxmann.com 26 (KAR.)

IT/ILT : Consideration paid for transfer of right to use software/computer programme is royalty under section 9

[2012] 20 taxmann.com 19 (DELHI)

IT : Where assessee was shareholder of a company, but it was not beneficial owner of these shares, on advance made by said company to assessee, no deemed dividend would arise

[2012] 20 taxmann.com 10 (GUJ.)

IT : Where assessee during previous year had participated in development of its main and ancillary objects, it could not be said that business of assessee was not set up during previous year

2012-TIOL-235-HC-DEL-IT + Superior story

CIT Vs Superior Crafts (Dated : March 6, 2012)

Income tax - 40A(2), (3), 142(2A) - Whether when the stock of finished goods is taken for different number of days for closing stock as compared to preceding year as per the export of goods, the same cannot be treated as change in the method of valuation of stock - Whether when the assessee joins hands with AEs to place bulk orders for purchase of raw materials at competitive price and transfers the same to them at cost or lesser price, any addition is warranted on such a ground - Whether section 40(A)(2) comes into play when there is no provision for making any addition on account of lower sale consideration as compared to the market value - Whether when the explanation of the assessee is sought for specific disallowance u/s 40A(2) and 40A(3), no disallowance can be made u/s 37 as no opportunity was given to the assessee to explain the same . - Revenue's appeal dismissed: DELHI HIGH COURT

2012-TIOL-173-ITAT-RAJKOT

Vrundavan Ceramics Pvt Ltd Vs DCIT, Rajkot (Dated : September 9, 2011)

Income Tax - Sections 28, 145 - Whether suppression of turnover is sufficient to reject books of accounts, and there is no need to point out specific defect in books - Whether rejection of books and estimation of profit are two different things - Whether before framing an assessment on estimated basis the results of other comparable are to be considered. - Assessee's appeal partly allowed: RAJKOT ITAT

2012-TIOL-172-ITAT-KOL

Kapil Dey Vs ITO, Kolkata (Dated : November 25, 2011)

Income Tax - Sections 44AF, 147, 148 - Whether there is any requirement of maintaining books of accounts when the income is computed / estimated u/s 44AF - Whether any addition u/s 69C is permissible vis-a-vis bank deposits which have direct nexus with the receipts of business. - Assessee's appeal allowed: KOLKATA ITAT

Areva T & D India Ltd Vs DCIT (Dated : March 30, 2012)

Income tax - Sections 32(1)(ii), 143(3) - Business or commercial rights of similar nature - Whether when assessee pays for business and commercial rights like business claims, business records, contracts and skilled employees in a slump sale of a running business, such rights are akin to a licence, eligible for depreciation u/s 32(1)(ii) as intangible assets. - Assessee's appeal allowed: DELHI HIGH COURT

2012-TIOL-233-HC-DEL-IT

Pal Enterprises Vs CIT (Dated : March 26, 2012)

Income Tax - Sections 28(iiid), 80HHC(3), 148 - Whether premium earned on sale of DEPB is to be treated as profit chargeable to tax u/s 28(iiid). - Assessee's appeal allowed: DELHI HIGH COURT

2012-TIOL-232-HC-MUM-IT

M/s De Souza Hotels Pvt Ltd Vs CCIT, Goa (Dated : March 29, 2012)

Income Tax - Writ - Sections 119(2), 234B, 234C - Whether the Petitioner is entitled for waiver of interest under Sections 234B and 234C when paragraph 2(d) of the Order F. No. 400/29/2002-IT(B), issued u/s 119(2)(a) does not apply to sections 234B and 234C. - Writ Petition dismissed : BOMBAY HIGH COURT

2012-TIOL-171-ITAT-KOL

Machinery Agencies (India) Vs DCIT, Kolkata (Dated : February 17, 2012)

Income tax - Sections 143(3), 263 - Whether revisionary powers can be invoked on the ground that the AO did not take the DVO's report into consideration as the same was received after the passing of the assessment order - Whether the sale consideration of a property can be substituted by market price by invoking the powers u/s 263. - Assessee's appeal allowed: KOLKATA ITAT

2012-TIOL-170-ITAT-KOL

M/s MD Muslim Sheikh Vs ITO, Murshidabad (Dated : November 29, 2011)

Income Tax - Sections 69, 145 - Whether method of accounting consistently followed by the assessee can be discarded without proving that the method followed by the assessee results in distorted profits - Whether any addition under section 69 is permissible even where the linkage of payments made to agent and material purchased has been established. - Assessee's appeal partly allowed: KOLKATA ITAT

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2012-TIOL-169-ITAT-MUM + Cybertech story

Cybertech Systems & Software Ltd Vs CIT, Mumbai (Dated : March 2, 2012)

Income tax - Sections 10B, 10BB, 80HHE, 80-O, 234B, 234C - Whether as per Sec 10BB, the meaning of computer programme also includes a 'process' or 'management of electronic data' - Whether human resource service rendered in the course of development of software programme also falls within the meaning of computer programme as per amended Sec 10B and also Sec 10BB - Whether engagement of programmer and imparting training to them in the process of development and customisation of software programme is also eligible for Sec 10B benefits. - Assessee's appeal allowed: MUMBAI ITAT

2012-TIOL-168-ITAT-MUM

ADIT, Mumbai Vs India Itme Society (Dated : December 12, 2011)

Income Tax - Sections 10(23C)(vi), 147, 253(4) - Income Tax Appellate Tribunal Rules - Rule 22 & 27 - Whether delay of five years in filing cross objections can be condoned on the ground that the assessee was not conversant with the technicalities of the proceedings before the ITAT - Whether a legal plea de hors of the filing of cross objections can be raised at any time - Whether assessment order for one year constitutes material for reopening for other years - Whether approval u/s 10(23C)(vi) once granted has to be followed blindly and the AO has no power to examine the activities of the assessee under scrutiny assessment. - Revenue's appeal partly allowed: MUMBAI ITAT

2012-TIOL-167-ITAT-MUM

Sunidhi Consultancy Services Ltd Vs DCIT, Mumbai (Dated : January 11, 2012)

Income Tax - Section 73 - Whether in terms of provisions of explanation to section 73, loss or profit on account of valuation of shares, in the case of Company carrying on trading of shares, is speculative in nature - Whether expenses incurred on higher education of director's son, who was not taken as an employee of the company, can be claimed as business expenditure. - Assessee's appeal dismissed: MUMBAI ITAT

2012-TIOL-166-ITAT-MUM

ACIT, Mumbai Vs M/s Tarak Chemicals Pvt Ltd (Dated : December 30, 2011)

Income Tax - Section 28(v)(a) - Whether amount received upon complete termination of business operations is taxable as `Capital gain' particularly when right to manufacture is also abandoned. - Revenue's appeal dismissed: MUMBAI ITAT

2012-TIOL-165-ITAT-MUM

M/s Trinetram Consultants Pvt Ltd Vs DCIT, Mumbai (Dated : December 16, 2011)

Income Tax - Section 28 - Whether contention that the shares were held as investment gets diluted when there is no evidence to show that the transactions of shares were delivery based. - Assessee's appeal dismissed : MUMBAI ITAT




SERVICE TAX SECTION

2012-TIOL-385-CESTAT-MUM + Union story

Union Bank Of India Vs CCE & ST (LTU), Mumbai (Dated : March 7, 2012)

Payment made by Union Bank of India to Society for Worldwide Inter-bank Financial Telecommunication (SWIFT) for transfer of funds to member Banks is liable to Service tax under `Banking and other Financial Services' on reverse charge basis – no prima facie case in favour. – Pre-deposit ordered ( Para 2): MUMBAI CESTAT

2012-TIOL-384-CESTAT-DEL

M/s G S Sondh Fabricators Vs CCE, Ludhiana (Dated : February 2, 2012)

Service Tax - Commissioning and Installation - Demand - Service provider claims he is not in receipt of show cause notice, is eligible for exemption for small unit and did not get opportunity to argue his case either before the adjudicating authority or the appellate authority. Matter remanded to the adjudicating authority to decide the case afresh. (Para 3) - Matter remanded:DELHI CESTAT

2012-TIOL-383-CESTAT-DEL

Vandana Travels & Tours Vs CCE & ST, Allahabad (Dated : January 25, 2012)

Service Tax - Rent-a-cab Service - Demand - Service provider claims he is not in receipt of show cause notice, is eligible for exemption for small unit and did not get opportunity to argue his case before the adjudicating authority. Partial pre-deposit ordered. Matter remanded to the adjudicating authority to decide the case afresh. (Para 7) - Matter remanded: DELHI CESTAT

CENTRAL EXCISE SECTION

CIRCULAR

excircular964

Clarification regarding classification of structural components of Boiler and admissibility of CENVAT credit on these structural components – reg.

CASE LAWS

2012-TIOL-230-HC-MAD-CX + Visaka story

M/s Visaka Industries Ltd Vs CESTAT, Chennai (Dated : February 14, 2012)

Central Excise – Stay / Pre-deposit – Grant of Stay Pending disposal of case – though discretion is available, same has to be exercised judiciously – Followed the decision of Apex Court in the case of Ravi Gupta Vs. Commissioner of Sales Tax, Delhi - 2009-TIOL-47-SC-CT - Ordered for furnishing of Bank Guarantee for Rs.4.5 Crores (Para 30). - Appeal Partly Allowed: MADRAS HIGH COURT

2012-TIOL-382-CESTAT-DEL

CCE, Jaipur Vs Vansthali Textile Industries Ltd (Dated : November 22, 2011)

Central Excise - 100% EOU - Exemption Notification - Whether furnace oil is 'consumable' - Contention of Revenue is that furnace oil is not a "consumable" as given in the Import Export Policy and that furnace oil is not consumed in the manufacture of terry towels.

HELD - Steam is required for manufacture of terry towels and furnace oil obtained was used for producing steam and steam was consumed in manufacture of terry towels. Hence, furnace oil is to be considered as "consumable" and benefit of exemption notification is allowed. Appeal dismissed. (Para 8): DELHI CESTAT

CUSTOMS SECTION

NOTIFICATION

dgft10not110

Validity of extension for export of 6,50,000 tons of wheat products upto 31.03.2013

CASE LAWS

2012-TIOL-381-CESTAT-BANG

P M Abdul Nazer Vs CC, Cochin (Dated : August 11, 2011)

Customs – Seizure of foreign origin gold biscuits resulting in absolute confiscation and levy of penalty – Gold biscuits found covered with cellophane tapes and kept concealed inside a long cylindrical cloth cover tied around abdomen of the carrier – No valid documents produced to prove licit import of foreign origin gold biscuits resulting in seizure – Carrier deposed under s. 108 of Customs Act, 1962 that appellant provided money for purchase of gold biscuits, which was also admitted by appellant in his statement under s. 108 ibid – Evidence on record indicates that carrier was carrying gold biscuits only at the instance of the appellant for a monetary consideration – Appellant could not adduce evidence of licit nature of goods – No evidence of any valid claim by the carrier or anybody else on the gold biscuits – Absolute confiscation of goods under s. 111(d) ibid upheld – Penalty of Rs. 3.6 lakhs disproportionate vis-à-vis value of goods determined by authorities – In the facts and circumstances of the case, quantum of penalty reduced to Rs. 1 lakh – Sections 108, 111(d), 112, 121 and 125 of Customs Act, 1962 - Appeal disposed of :BANGALORE CESTAT

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