Saturday, January 3, 2015

ITR (TRIB)--Vol-37 Part-1 PRINT AND ONLINE EDITION

ITR (TRIB)--Vol-37 Part-1 PRINT AND ONLINE EDITION

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

~International transactions --Arm's length price--Determination--Most appropriate method--Assessee paying commission to associated enterprises and unrelated domestic agents depending upon services rendered--Comparable uncontrolled price method cannot be applied for determining arm's length price--Income-tax Act, 1961 s. 92C-- Amphenol Interconnect India P. Ltd. v. Deputy CIT (Pune) . . . 1

~Arm's length price--Determination--Most appropriate method--Comparable uncontrolled price method--Transactional differences with associated enterprises and third parties pertaining to similar products--Suitable adjustments cannot be made for volume, geographical, timing, risk and functional differences--Comparable uncontrolled price method not appropriate to determine arm's length price--Additions to be deleted--Income-tax Act, 1961, s. 92C-- Amphenol Interconnect India P. Ltd. v. Deputy CIT (Pune) . . . 1

~Special deduction --Donation to charitable institution--Approval of institution--No allegation with regard to charitable object of assessee or genuineness of activities--Assumption that assessee had commercial intentions and utilised its funds outside India--Reasons for denial of registration irrelevant and extraneous--Refusal of registration not valid--Income-tax Act, 1961, ss. 12A, 80G(5)(vi)-- George Institute for Global Health v. DIT (Exemption) (Hyd) . . . 24

PRINT EDITION

Volume 37 : Part 1 (Issue dated : 5-1-2015)

SUBJECT INDEX TO CASES REPORTED

~Advance tax --Interest--Failure by payer to deduct tax at source--Interest cannot be imposed on assessee under section 234B--Income-tax Act, 1961, ss. 234B, 234C-- Fugro Geoteam AS v. Addl. DIT (International Taxation) (Delhi) . . . 46

~Interest--Charging of interest under sections 234A, 234B and 234C mandatory and no discretion with Assessing Officer in that matter--Income-tax Act, 1961, ss. 234A, 234B, 234C-- Nandini Delux v. Asst. CIT (Bangalore) . . . 52

~Appeals --Competency of appeal--Monetary limits for appeal by Department--Instruction No. 5 of 2014--Limits applicable to pending cases--Failure by Department to point out exceptional circumstances for filing appeal despite monetary limit--Appeal to be dismissed in limine--CBDT Instruction No. 5 of 2014, dated 10-7-2014-- Deputy CIT v. Chetan Prakash Mittal (Delhi) . . . 28

~Assessment --Estimate of income--Additions for suppressed sales--Failure by Assessing Officer to bring corroborative material to substantiate unaccounted sales--Additions to be deleted--Income-tax Act, 1961-- Nandini Delux v. Asst. CIT (Bangalore) . . . 52

~Business expenditure --Disallowance--Payments liable to deduction of tax at source--Failure by assessee to deduct tax at source on payment--Expenditure to be disallowed--Scope of section 40(a)(i) and (ia)--Deduction to be allowed in accounting year in which tax has been paid--Income-tax Act, 1961, s. 40(a)(i), (ia)-- Termo Penpol Ltd. v. Asst. CIT (Cochin) . . . 87

~Capital gains --Full value of consideration--Sale agreement subjected to valuation for purpose of stamp duty payment--Section 50C applicable--Income-tax Act, 1961, s. 50C--Prakash Shantilal Parekh v. ITO (Mumbai) . . . 119

~Long-term or Short-term capital gains--Capital asset--Agreement to transfer flat to be constructed in new building--No question of handing over of possession when structure not in physical existence--Right to get new flat alone transferred--Transfer of capital asset under agreement within period of 36 months from date of purchase--Short-term capital gain--Income-tax Act, 1961-- Prakash Shantilal Parekh v. ITO (Mumbai) . . . 119

~Capital or revenue expenditure --Expenditure incurred on renovation of leased premises--Assessee not acquiring new asset or income-earning apparatus--No enduring benefit to assessee--Expenditure revenue in nature--Income-tax Act, 1961-- Nandini Delux v. Asst. CIT (Bangalore) . . . 52

~Charitable purpose --Charitable trust--Registration--Assessee undertaking limited activity--Nature of objects and genuineness of activities of trust to be appreciated--Failure by assessee to file activity report before Tribunal--Matter to be re-examined by Commissioner--Income-tax Act, 1961, s. 12AA-- Christian Women's Association v. CIT (Cochin) . . . 30

~Computation of income--Depreciation--Claim to depreciation on assets owned by it--Not a case of double deduction--Income-tax Act, 1961, s. 11-- ITO v. Ramananda Adigalar Foundation (Chennai) . . . 80

~Registration of trusts--Assessee not having commenced any of charitable activities enumerated in trust deed--Not entitled to registration--Income-tax Act, 1961, s. 12AA--Progressive Educational and Charitable Trust v. CIT (Cochin) . . . 84

~Depreciation --Wind electric generators--Integral part of windmill unit--Entitled to higher rate of depreciation--Income-tax Act, 1961, s. 32-- Deputy CIT v. Lanco Infratech Ltd . (Hyd) . . . 95

~Exemption --New industrial undertaking in free trade zone--Profits of undertaking--Unabsorbed business loss--Depreciation--Deduction to be calculated before reducing unabsorbed loss and depreciation from profits of undertaking--Income-tax Act, 1961, s. 10A-- Canam International P. Ltd. v. Asst. CIT (Delhi) . . . 38

~Export --Exemption--Profits of undertaking--Share application money--Income from variation in rates of foreign exchange--Whether to be excluded from total income--Matter remanded--Income-tax Act, 1961, s. 10A-- Canam International P. Ltd. v. Asst. CIT (Delhi) . . . 38

~Income --Expenditure incurred in earning income not forming part of total income--Disallowance--Investments to incorporate special purpose vehicles for road projects--Investments not for earning dividend income--Expenses and interest not to be disallowed--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D(2)(iii)-- L & T Infrastructure Development Projects Ltd. v. ITO (Chennai) . . . 10

~International transactions --Arm's length price--Determination--Administrative and management support services--Selection of comparables--Companies having related party transactions to extent of 88.23 per cent. cannot be considered as comparable--Functionally dissimilar companies excluded and functionally similar to be included--Foreign exchange gain to be included in operating income--Matter remanded to Transfer Pricing Officer to recompute arm's length price after affording opportunity of being heard--Income-tax Act, 1961--CISCO Systems (India) P. Ltd. v. Deputy CIT (Bangalore) . . . 133

~Arm's length price--Determination--Service of replacement of spares to customers--Matter remanded to Transfer Pricing Officer to determine arm's length price in light of directions of Tribunal for assessment year 2006-07--Income-tax Act, 1961-- CISCO Systems (India) P. Ltd. v. Deputy CIT (Bangalore) . . . 133

~Arm's length price--Determination--Software development services--Transactional net margin method--Selection of comparables--Companies having export turnover less than 75 per cent. of total sales to be excluded--Functionally different companies cannot be treated as comparable--Functionally similar companies to be included--Matter remanded to Transfer Pricing Officer for decision afresh--Income-tax Act, 1961, s. 92CA-- CISCO Systems (India) P. Ltd. v. Deputy CIT (Bangalore) . . . 133

~Arm's length price--Determination--Transactional net margin method--Selection of comparables--Computation of operational profit to total cost--Non-operative items of income and expenses to be excluded--Income-tax Act, 1961-- Deputy CIT v. Exxon Mobil Gas (India) P. Ltd. (Delhi) . . . 22

~Non-resident --Presumptive tax--Income from exploration of mineral oils--Income from service of 3D seismic data processing--Income taxable only under section 44BB and not as fees for technical services--Income-tax Act, 1961, s. 44BB-- Fugro Geoteam AS v. Addl. DIT (International Taxation) (Delhi) . . . 46

~Presumptive tax--Income from exploration of mineral oils--Reimbursement of mobilisation and demobilisation charges outside India--Taxable--Income-tax Act, 1961-- Fugro Geoteam AS v. Addl. DIT (International Taxation) (Delhi) . . . 46

~Penalty --Concealment of income--Non-inclusion of allowances in return of income--Allowances in form of reimbursement cannot be treated as income in hands of assessee--No concealment of income--Penalty cannot be levied--Income-tax Act, 1961, s. 271(1)(c)--Soumya Prakash Pattnaik v. Asst. CIT (Cuttack) . . . 35

~Furnishing inaccurate particulars of income--Industrial undertaking--Special deduction--Assessee furnishing details regarding deduction--Penalty cannot be levied on estimated addition--Income-tax Act, 1961, ss. 80-IC, 271(1)(c)-- Octave Exports v. Deputy CIT(Chandigarh) . . . 100

~Furnishing inaccurate particulars of income--Industrial undertaking--Special deduction--Small-scale industrial unit--Assessee furnishing details regarding deduction--Assessee not guilty of filing inaccurate particulars of income--Penalty cannot be levied--Income-tax Act, 1961, ss. 80-IB, 271(1)(c)-- Deputy CIT v. Parabolic Drugs Ltd. (Chandigarh) . . . 16

~Reassessment --Income escaping assessment--Reason to believe--Purchase of property and entering into sale agreement--Failure by assessee to file return and disclose fully and truly all material facts necessary for assessment--Valid reason to believe income chargeable to tax escaped assessment--Income-tax Act, 1961, ss. 147, 148-- Prakash Shantilal Parekh v. ITO (Mumbai) . . . 119

~Revision --Commissioner--Condition precedent--Order erroneous and prejudicial to Revenue--Both conditions to be satisfied--Industrial undertaking--Special deduction--Assessing Officer including receipt from sale of carbon credits in eligible profits--Order not prejudicial to Revenue--Income-tax Act, 1961, ss. 80-IA, 263-- Subhash Kabini Power Corporation Ltd. v. CIT (Bangalore) . . . 106

~Search and seizure --Assessment in search cases--Undisclosed income--Business expenditure--Disallowance--Once assessment reopened Assessing Officer can determine total income and pass assessment order--Section 153A does not prohibit Assessing Officer from disallowing expenditure--Income-tax Act, 1961, ss. 132, 153A-- Nandini Delux v. Asst. CIT (Bangalore) . . . 52

~Wealth-tax --Net wealth--Transfer of assets--Wife of assessee purchasing residential house and jewellery out of interest-free cash loan given by assessee--Cash loan not “asset†--No transfer of asset--Amount cannot be added to net wealth of assessee--Wealth-tax Act, 1957, s. 4(1)(a)(i)-- Shah Rukh Khan v. Asst. CWT (Mumbai) . . . 1

~SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

~Income-tax Act, 1961

~S. 10A --Exemption--New industrial undertaking in free trade zone--Profits of undertaking--Unabsorbed business loss--Depreciation--Deduction to be calculated before reducing unabsorbed loss and depreciation from profits of undertaking-- Canam International P. Ltd. v. Asst. CIT (Delhi) . . . 38

~Export--Exemption--Profits of undertaking--Share application money--Income from variation in rates of foreign exchange--Whether to be excluded from total income--Matter remanded-- Canam International P. Ltd. v. Asst. CIT (Delhi) . . . 38

~S. 11 --Charitable purpose--Computation of income--Depreciation--Claim to depreciation on assets owned by it--Not a case of double deduction-- ITO v. Ramananda Adigalar Foundation (Chennai) . . . 80

~S. 12AA --Charitable purpose--Charitable trust--Registration--Assessee undertaking limited activity--Nature of objects and genuineness of activities of trust to be appreciated--Failure by assessee to file activity report before Tribunal--Matter to be re-examined by Commissioner--Christian Women's Association v. CIT (Cochin) . . . 30

~Charitable purpose--Registration of trusts--Assessee not having commenced any of charitable activities enumerated in trust deed--Not entitled to registration-- Progressive Educational and Charitable Trust v. CIT (Cochin) . . . 84

~S. 14A --Income--Expenditure incurred in earning income not forming part of total income--Disallowance--Investments to incorporate special purpose vehicles for road projects--Investments not for earning dividend income--Expenses and interest not to be disallowed-- L & T Infrastructure Development Projects Ltd. v. ITO (Chennai) . . . 10

~S. 32 --Depreciation--Wind electric generators--Integral part of windmill unit--Entitled to higher rate of depreciation-- Deputy CIT v. Lanco Infratech Ltd . (Hyd) . . . 95

~S. 40(a)(i) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Failure by assessee to deduct tax at source on payment--Expenditure to be disallowed--Scope of section 40(a)(i) and (ia)--Deduction to be allowed in accounting year in which tax has been paid-- Termo Penpol Ltd. v. Asst. CIT (Cochin) . . . 87

~S. 40(a)(ia) --Business expenditure--Disallowance--Payments liable to deduction of tax at source--Failure by assessee to deduct tax at source on payment--Expenditure to be disallowed--Scope of section 40(a)(i) and (ia)--Deduction to be allowed in accounting year in which tax has been paid-- Termo Penpol Ltd. v. Asst. CIT (Cochin) . . . 87

~S. 44BB --Non-resident--Presumptive tax--Income from exploration of mineral oils--Income from service of 3D seismic data processing--Income taxable only under section 44BB and not as fees for technical services-- Fugro Geoteam AS v. Addl. DIT (International Taxation)(Delhi) . . . 46

~S. 50C --Capital gains--Full value of consideration--Sale agreement subjected to valuation for purpose of stamp duty payment--Section 50C applicable-- Prakash Shantilal Parekh v. ITO(Mumbai) . . . 119

~S. 80-IA --Revision--Commissioner--Condition precedent--Order erroneous and prejudicial to Revenue--Both conditions to be satisfied--Industrial undertaking--Special deduction--Assessing Officer including receipt from sale of carbon credits in eligible profits--Order not prejudicial to Revenue-- Subhash Kabini Power Corporation Ltd. v. CIT (Bangalore) . . . 106

~S. 80-IB --Penalty--Furnishing inaccurate particulars of income--Industrial undertaking--Special deduction--Small-scale industrial unit--Assessee furnishing details regarding deduction--Assessee not guilty of filing inaccurate particulars of income--Penalty cannot be levied-- Deputy CIT v. Parabolic Drugs Ltd. (Chandigarh) . . . 16

~S. 80-IC --Penalty--Furnishing inaccurate particulars of income--Industrial undertaking--Special deduction--Assessee furnishing details regarding deduction--Penalty cannot be levied on estimated addition-- Octave Exports v. Deputy CIT (Chandigarh) . . . 100

~S. 92CA --International transactions--Arm's length price--Determination--Software development services--Transactional net margin method--Selection of comparables--Companies having export turnover less than 75 per cent. of total sales to be excluded--Functionally different companies cannot be treated as comparable--Functionally similar companies to be included--Matter remanded to Transfer Pricing Officer for decision afresh--CISCO Systems (India) P. Ltd. v. Deputy CIT (Bangalore) . . . 133

~S. 132 --Search and seizure--Assessment in search cases--Undisclosed income--Business expenditure--Disallowance--Once assessment reopened Assessing Officer can determine total income and pass assessment order--Section 153A does not prohibit Assessing Officer from disallowing expenditure-- Nandini Delux v. Asst. CIT (Bangalore) . . . 52

~S. 147 --Reassessment--Income escaping assessment--Reason to believe--Purchase of property and entering into sale agreement--Failure by assessee to file return and disclose fully and truly all material facts necessary for assessment--Valid reason to believe income chargeable to tax escaped assessment-- Prakash Shantilal Parekh v. ITO (Mumbai) . . . 119

~S. 148 --Reassessment--Income escaping assessment--Reason to believe--Purchase of property and entering into sale agreement--Failure by assessee to file return and disclose fully and truly all material facts necessary for assessment--Valid reason to believe income chargeable to tax escaped assessment-- Prakash Shantilal Parekh v. ITO (Mumbai) . . . 119

~S. 153A --Search and seizure--Assessment in search cases--Undisclosed income--Business expenditure--Disallowance--Once assessment reopened Assessing Officer can determine total income and pass assessment order--Section 153A does not prohibit Assessing Officer from disallowing expenditure-- Nandini Delux v. Asst. CIT (Bangalore) . . . 52

~S. 234A --Advance-tax--Interest--Charging of interest under sections 234A, 234B and 234C mandatory and no discretion with Assessing Officer in that matter-- Nandini Delux v. Asst. CIT (Bangalore) . . . 52

~S. 234B --Advance tax--Interest--Failure by payer to deduct tax at source--Interest cannot be imposed on assessee under section 234B-- Fugro Geoteam AS v. Addl. DIT (International Taxation) (Delhi) . . . 46

~Advance-tax--Interest--Charging of interest under sections 234A, 234B and 234C mandatory and no discretion with Assessing Officer in that matter-- Nandini Delux v. Asst. CIT (Bangalore) . . . 52

~S. 234C --Advance tax--Interest--Failure by payer to deduct tax at source--Interest cannot be imposed on assessee under section 234B-- Fugro Geoteam AS v. Addl. DIT (International Taxation) (Delhi) . . . 46

~Advance-tax--Interest--Charging of interest under sections 234A, 234B and 234C mandatory and no discretion with Assessing Officer in that matter-- Nandini Delux v. Asst. CIT (Bangalore) . . . 52

~S. 263 --Revision--Commissioner--Condition precedent--Order erroneous and prejudicial to Revenue--Both conditions to be satisfied--Industrial undertaking--Special deduction--Assessing Officer including receipt from sale of carbon credits in eligible profits--Order not prejudicial to Revenue-- Subhash Kabini Power Corporation Ltd. v. CIT (Bangalore) . . . 106

~S. 271(1)(c) --Penalty--Concealment of income--Non-inclusion of allowances in return of income--Allowances in form of reimbursement cannot be treated as income in hands of assessee--No concealment of income--Penalty cannot be levied-- Soumya Prakash Pattnaik v. Asst. CIT (Cuttack) . . . 35

~Penalty--Furnishing inaccurate particulars of income--Industrial undertaking--Special deduction--Assessee furnishing details regarding deduction--Penalty cannot be levied on estimated addition-- Octave Exports v. Deputy CIT (Chandigarh) . . . 100

~Penalty--Furnishing inaccurate particulars of income--Industrial undertaking--Special deduction--Small-scale industrial unit--Assessee furnishing details regarding deduction--Assessee not guilty of filing inaccurate particulars of income--Penalty cannot be levied--Deputy CIT v. Parabolic Drugs Ltd. (Chandigarh) . . . 16

Income-tax Rules, 1962

~R. 8D(2)(iii) --Income--Expenditure incurred in earning income not forming part of total income--Disallowance--Investments to incorporate special purpose vehicles for road projects--Investments not for earning dividend income--Expenses and interest not to be disallowed-- L & T Infrastructure Development Projects Ltd. v. ITO (Chennai) . . . 10

Wealth-tax Act, 1957


~S. 4(1)(a)(i) --Wealth-tax--Net wealth--Transfer of Assets--Wife of assessee purchasing residential house and jewellery out of interest-free cash loan given by assessee--Cash loan not “asset†--No transfer of asset--Amount cannot be added to net wealth of assessee-- Shah Rukh Khan v. Asst. CWT (Mumbai) . . . 1

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