Direct Tax Laws Sept 2011

Once one of the bars created by proviso to section 245R(2) is found to exist, AAR is enjoined by the very statute that created it, to decline jurisdiction to give a ruling - [2011] 13 taxmann 158 (AAR - New Delhi)

Where question raised in application is already pending before an Appellate Authority, though not at instance of applicant but at instance of a person who is immediately concerned with said question raised, the clause (i) of proviso to section 245R(2) is attracted and it would be appropriate for the Authority to decline jurisdiction to entertain application - [2011] 13 taxmann 157 (AAR - New Delhi)

In view of fact that section 28(va) was inserted by Finance Act, 2002 with effect from 1-4-2003, amount of non-compete fee received by assessee prior to that date was not taxable - [2011] 13 taxmann 156 (Karnataka)

For estimating assessee's income, GP rate should be fixed by taking into account GP rates of earlier years and subsequent years - [2011] 13 taxmann 152 (Delhi)

Where a partnership firm paid remuneration to assessee as a partner after deducting TDS and disclosed said payment in its return, remuneration income stood disclosed to department - [2011] 13 taxmann 147 (Karnataka)

Merely because advertisement/publicity expenditure benefited not only to assessee-company but also to its principals abroad, expenditure cannot be said to have been incurred for non-business purposes - [2011] 13 taxmann 160 (Mumbai - Trib.)(TM)

Lawful activities undertaken by an institution for overall prosperity of Tamilians should be treated as charitable activities for purpose of its registration under section 12AA - [2011] 13 taxmann 159 (Chennai - Trib.)

Where assessee challenged invocation of provisions of section 249(4)(b) on ground that since it had incurred loss in relevant year, it was not liable to pay tax of an amount equal to amount of advance tax, matter was to be remanded back to Commissioner (Appeals) - [2011] 13 taxmann 155 (Pune - Trib.)

Where assessee-company for setting up refinery had incurred expenditure on travelling, bidding for tenders, exploration activities, etc., same were to be allowed as revenue expenditure.Where assessee had been carrying on business through a permanent establishment in Oman and Qatar and was deriving income therefrom, it was only Oman and Qatar Government which was entitled to levy tax as per article 7 of DTAA between India and of aforesaid countries - [2011] 13 taxmann 151 (Mumbai - Trib.)

Where Assessing Officer has not rejected assessee's books of account under section 145(3), there is no justification for him to make a reference to DVO under section 142A - [2011] 13 taxmann 150 (Delhi - Trib.)

Where two companies merged in a comparable and, there was nothing on record to show that those two companies were also engaged in same business, assessee was justified in excluding apresaid comparable from list of comparables while determining ALP.Where assessee earned commission income in respect of direct sales by AEs, in view of fact that assessee was rendering warranty services for said sales, it could be concluded that commission income was operational income and, it was not to be excluded from assessee's profitability while determining ALP - [2011] 13 taxmann 149 (Mumbai - Trib.)

Where accreditation of a reputed foundation about quality of product is allowed to be used for sales promotion, payment of accreditation fee would not be 'royalty' as set out in article 13(3) of Indo-UK DTAA; it will be business income - [2011] 13 taxmann 148 (Mumbai - Trib.)

Capital gains earned by a Dutch company on transfer of shares held in an In

Capital gains earned by a Dutch company on transfer of shares held in an Indian company to a foreign company is taxable only in Netherlands

Income-tax : Capital gains earned by the applicant on transfer of shares would be covered by Article 13(5) of the Tax Treaty and shall be taxable only in the Netherlands, the State in which the transferor is a resident [Section 90 of the Income-tax Act, 1961 read with Article 13(5) of the India-Netherlands DTAA - Double Taxation Relief - Where agreement exists (Capital gains)]

l The applicant is required to file return of income under section 139 even if the capital gain is not taxable in India because instead of causing inconvenience to the applicant, the process of filing of return would facilitate the applicant in all future interactions with the Income-tax department - [2011] 10 taxmann.com 157 (AAR - New Delhi