Month: September 2010

Archive for September, 2010


Bombay Mercantile Coop Bank vs. CBDT (Bombay High Court)

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DATE: September 28, 2010 (Date of publication)
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It is well settled that in matters of condonation of delay a highly pedantic approach should be eschewed and a justice oriented approach should be adopted and a party should not be made to suffer on account of technicalities

Piem Hotels vs. DCIT (ITAT Mumbai)

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DATE: (Date of pronouncement)
DATE: September 24, 2010 (Date of publication)
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FILE: Click here to view full post with file download link
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S. 263 Revision only on ground of non-application of mind by AO not proper. Licenses & Approvals are “intangible asset” u/s 32(1)(ii) & eligible for depreciation

CIT vs. Vikas Polymers (Delhi High Court)

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DATE: (Date of pronouncement)
DATE: September 21, 2010 (Date of publication)
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Power u/s 263 cannot be exercised unless both conditions are satisfied i.e. the order is (i) erroneous and (ii) prejudicial to the interest of the revenue. There is a fine though subtle distinction between “lack of inquiry” and “inadequate inquiry”. It is only in cases of “lack of inquiry” that revisional powers u/s 263 can be exercised. Further, while lack of enquiry by the AO may render the assessment order “erroneous” it is not necessarily “prejudicial to the interests of the revenue”. The CIT must deal with the submissions of the assessee and give reasons as to how the order is erroneous and prejudicial to the interests of the revenue. A bare assertion is not sufficient. S. 263 proceedings cannot be initiated with a view to starting fishing and roving inquiries

Vodafone Essar Cellular vs. ACIT (Kerala High Court)

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DATE: (Date of pronouncement)
DATE: September 20, 2010 (Date of publication)
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FILE: Click here to view full post with file download link
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The argument that there is a “sale” of a Sim Card is not acceptable because a Sim Card has no value or use for the subscriber other than to get connection to the mobile network. The supply of the Sim Card is only for the purpose of rendering continued services by the assessee to the subscriber of the mobile phone. Consequently, the charges collected by the assessee at the time of delivery of Sim Cards or Recharge coupons is for rendering services to ultimate subscribers

Ajanta Pharma vs. CIT (Supreme Court)

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DATE: (Date of pronouncement)
DATE: September 10, 2010 (Date of publication)
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FILE: Click here to view full post with file download link
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If an assessee earns Rs.100 crores then while for AY 2001-02, the extent of deduction is 80% thereof, for purposes of computation of book profits, 100% of the profits are “eligible profits” and cannot be reduced to 80% by relying on s. 80HHC(1B). The idea is to exclude “export profits” from computation of book profits under s. 115JB which imposes MAT on deemed income

Techno Shares & Stocks vs. CIT (Supreme Court)

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DATE: (Date of pronouncement)
DATE: September 10, 2010 (Date of publication)
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CITATION:

Under Rule 5 of the BSE Rules, membership is a personal permission from the Exchange which is nothing but a “licence” which enables the member to exercise rights and privileges attached thereto. It is this licence which enables the member to trade on the floor of the Exchange and to participate in the trading session on the floor of the Exchange. It is this licence which enables the member to access the market. Therefore, the right of membership, which includes right of nomination, is a “licence” or “akin to a licence” which is one of the items which falls in s. 32(1)(ii). The right to participate in the market has an economic and money value. It is an expense incurred by the assessee which satisfies the test of being a “licence” or “any other business or commercial right of similar nature” in terms of s. 32(1)(ii)

GE India Technology Centre vs. CIT (Supreme Court)

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DATE: September 10, 2010 (Date of publication)
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The Karnataka High Court in CIT vs. Samsung Electronics 320 ITR 209 misunderstood the observations in Transmission Corporation of AP 239 ITR 387. The only issue raised in that case was whether TDS was applicable only to pure income payments and not to composite payments which had an element of income embedded in them. The controversy was different and the Court held that if some part of the payment was taxable, an application u/s 195(2) had to be made. The High Court’s interpretation completely loses sight of the plain words of s. 195(1) which in clear terms lays down that tax at source is deductible only from “sums chargeable” under the Act i.e. chargeable u/s 4, 5 and 9

Vodafone International Holdings B.V. vs. UOI (Bombay High Court)

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DATE: (Date of pronouncement)
DATE: September 8, 2010 (Date of publication)
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FILE: Click here to view full post with file download link
CITATION:

On facts, the argument that the transaction involved merely a sale of a share of a foreign company by one non-resident to another is not acceptable. It would be simplistic to assume that the entire transaction between the non-residents was fulfilled merely upon the transfer of a single share of the Cayman Islands company. The commercial and business understanding between the parties postulated that what was being transferred from one non-resident to the other was the controlling interest in Hutchison Essar, an Indian company. The object and intent of the parties was to achieve the transfer of control over the Indian company and the transfer of the solitary share of the Cayman Islands company was put into place as a mode of effectuating the goal

Infotech Software Dealers Association vs. UOI (Madras High Court)

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DATE: (Date of pronouncement)
DATE: September 3, 2010 (Date of publication)
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FILE: Click here to view full post with file download link
CITATION:

However, while software is “goods”, all transactions are not necessarily a “sale”. The transaction may be one which is either an ‘exclusive sale’ or ‘an exclusive service’ or one which has the elements of a sale and service. A perusal of a sample ‘End User Licence Agreement’ (EULA) shows that the dominant intention of the parties is that the developer keeps the copyright of each software is only the right to use with copyright protection. By the agreement, the developer does not sell the software as such. The Petitioner in turn enters into a EULA for marketing the software to the end-user. Accordingly, when a transaction takes place between the Petitioner and its customers, it is not the sale of the software as such, but only the contents of the data stored in the software which would amount to only service. To bring the deemed sale under Article 366(29A)(d) of the Constitution, there must be a transfer of right to use any goods and when the goods as such is not transferred, the question of deeming sale of goods does not arise and in that sense, the transaction would be only a service and not a sale

CIT vs. Baer Shoes (Madras High Court)

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DATE: (Date of pronouncement)
DATE: September 2, 2010 (Date of publication)
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FILE: Click here to view full post with file download link
CITATION:

The assessee had claimed deduction u/s 80HHC after a full disclosure of the material facts. As four years had elapsed from the end of the assessment year, the assessment could not be reopened in the absence of failure to disclose the material facts. The judgment of the Supreme Court is an expression of opinion on the interpretation of statute. Merely because a judgment has been rendered, the same cannot be a ground for reopening the assessment u/s 147 as it amounts to a change of opinion. Austin Engineering 312 ITR 70 (Guj) followed)

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