Month: June 2011

Archive for June, 2011


Vineetkumar Raghavjibhai Bhalodia vs. ITO (ITAT Rajkot)

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DATE: (Date of pronouncement)
DATE: June 29, 2011 (Date of publication)
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CITATION:

S. 56(2)(v) exempts gifts from a “relative”. Though the definition of the term “relative” does not specifically include a Hindu Undivided Family, a ‘HUF” constitutes all persons lineally descended from a common ancestor and includes their mothers, wives or widows and unmarried daughters. As all these persons fall in the definition of “relative”, an HUF is ‘a group of relatives’. As a gift from a “relative” is exempt, a gift from a ‘group of relatives’ is also exempt since the singular will include the plural

Posted in All Judgements, Tribunal

Titanor Components Limited vs. ACIT (Bombay High Court At Goa)

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DATE: (Date of pronouncement)
DATE: June 27, 2011 (Date of publication)
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CITATION:

There is a well known difference between a wrong claim made by an assessee after disclosing all the true and material facts and a wrong claim made by the assessee by withholding the material facts. It is only in the latter case that the AO is entitled to proceed u/s 147. The power conferred by s. 147 does not provide a fresh opportunity to the AO to correct an incorrect assessment made earlier unless the mistake in the assessment so made is the result of a failure of the assessee to fully and truly disclose all material facts necessary for assessment. Further, it is necessary for the AO to first state that there is a failure to disclose fully and truly all material facts. If he does not record such a failure he would not be entitled to proceed u/s 147. (Hindustan Lever 268 ITR 332 (Bom) followed)

Posted in All Judgements, High Court

Yum! Restaurants (India) Pvt Ltd vs. ACIT (ITAT Delhi)

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DATE: (Date of pronouncement)
DATE: June 27, 2011 (Date of publication)
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FILE: Click here to view full post with file download link
CITATION:

Merely because a company is showing losses, it does not lose its status of comparable if the other criteria depict its status as a comparable because the declaration of loss is an incident of business which is at par with profit. However, while the assessee considered these companies on the basis of their FAR Analysis i.e. (function performed, assets employed and risk assumed), the TPO held that FAR of a company indicated the avowed objective of the company and the tools that it sought to employ to achieve that objective but it was the financial result which decided whether that company has been successfully in achieving the objective or not. The TPO held that if the assessee’s contention based on FAR analysis only is accepted then the process of choosing comparable will not proceed beyond the matching of FAR. All types of other tests i.e. data base screening, quality and quantitative screening or use of diagnostic with ratios will be rendered meaningless and unnecessary. Further, while the assessee itself applied a filter of persistent operative losses and companies on that basis, what was the basis for inclusion of the loss making companies? The loss making companies had not been excluded simplicitor on the ground that they are declaring loss but the TPO had pointed out that their comparablity has been taken into consideration by the assessee on the basis of FAR analysis and other aspects have not been considered

Posted in All Judgements, Tribunal

Yahoo India Pvt Ltd vs. DCIT (ITAT Mumbai)

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DATE: (Date of pronouncement)
DATE: June 24, 2011 (Date of publication)
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FILE: Click here to view full post with file download link
CITATION:

The word “use” in relation to equipment occurring in clause (iva) of Expl to s. 9(1)(vi) is not to be understood in the broad sense of availing of the benefit of an equipment. The context and collocation of the two expressions “use” and “right to use” followed by the word “equipment” indicate that there must be some positive act of utilization, application or employment of equipment for the desired purpose. If an advantage was taken from sophisticated equipment installed and provided by another, it could not be said that the recipient/customer “used” the equipment as such. The customer merely made use of the facility, though he did not himself use the equipment. What is contemplated by the word “use” in clause (iva) of Expl 2 to s. 9(1)(vi) is the customer came face to face with the equipment, operated it or controlled its functions in some manner. But if it did nothing to or with the equipment and did not exercise any possessory rights in relation thereto, it only made use of the facility created by the service provider who was the owner of the entire network and related equipment and there was no scope to invoke clause (iva) in such a case because the element of service predominated (ISRO Satellite 307 ITR 59 (AAR), Dell International 305 ITR 37 (AAR) & Asia Satellite 332 ITR 340 (Del) followed; Frontline Soft 12 DTR 131 (Hyd) held not good law)

Posted in All Judgements, Tribunal

Dalal Broacha Stock Broking Pvt Ltd vs. ACIT (ITAT Mumbai – Special Bench)

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DATE: (Date of pronouncement)
DATE: June 23, 2011 (Date of publication)
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CITATION:

The device adopted by the assessee was obviously with the intention to avoid payment of full taxes. There is obvious tax avoidance. S. 36(1)(ii) is intended to prevent escape from taxation by describing the payment as bonus or commission when in fact it should have reached the shareholders as profit or dividend (Loyal Motor 14 ITR 647 (Bom) referred)

Posted in All Judgements, Tribunal

CIT vs. Indian Hotels Co Ltd (Supreme Court)

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DATE: (Date of pronouncement)
DATE: June 22, 2011 (Date of publication)
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CITATION:

The department filed a SLP challenging the order of the Bombay High Court dismissing an application requesting condonation of delay of 656 days in filing the appeal. The delay was explained as having been caused by “several facts such as non traceability of case records, procedural formalities involved in the Department and the papers are to be processed through different officers in rank for their comments, approval etc. and then the preparation of the draft of appeal memo, paper book and the administrative difficulties such as shortage of staff“. HELD dismissing the SLP: In our opinion, the said explanation does not make out a sufficient cause for condonation of delay in filing the appeal before the High Court. In that view of the matter, we do not find any ground to interfere with the impugned judgment. The Special Leave Petition is dismissed on the ground of delay as well as on merits.

Posted in All Judgements, Supreme Court

CIT vs. Gopal Purohit (Supreme Court)

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DATE: (Date of pronouncement)
DATE: June 21, 2011 (Date of publication)
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FILE: Click here to view full post with file download link
CITATION:

The Supreme Court vide order dated 15.11.2010 dismissed the Department’s Special Leave Petition against the judgment of the Bombay High Court in CIT vs. Gopal Purohit 228 CTR 582 (Bom) where it was held that (a) it was open to an assessee to maintain two separate portfolios, one relating to investment and another relating to business of dealing in shares, (b) that a finding of fact had been arrived at by the Tribunal as regards the two distinct types of transactions namely, those by way of investment and those for the purposes of business, (c) that there should be uniformity in treatment and consistency when facts and circumstances are identical particularly in the case of the assessee and (d) that entries in books of account alone are not conclusive in determining the nature of income though they have a bearing

Posted in All Judgements, Supreme Court

Raytheon Company vs. DDIT (ITAT Delhi)

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DATE: (Date of pronouncement)
DATE: June 21, 2011 (Date of publication)
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FILE: Click here to view full post with file download link
CITATION:

In a turnkey contract, in which the assessee is under obligation to supply the equipment and the software and also install them, the profit is taxable on completion of each milestone and not at the time of handing over the functioning system to the contracting party. The department’s argument that in a works contract, mere supply of equipment and software is of no consequence till installation and so profits should be taxed at that stage is not correct because even if “turnkey”, the taxable events in the execution of a contract may arise in several stages in several years if the obligations under the contract are distinct ones. The supply profits are consequently not taxable as it accrued on supply outside India

Posted in All Judgements, Tribunal

Exxon Mobil Company India Pvt Ltd vs. DCIT (ITAT Mumbai)

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DATE: (Date of pronouncement)
DATE: June 20, 2011 (Date of publication)
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FILE: Click here to view full post with file download link
CITATION:

While in principle, it is correct that if loss making units are excluded, abnormal profit making units should also be excluded, on facts, the TPO had rightly rejected the loss making companies as not being comparable. In principle, neither loss making units nor high profit making units can be eliminated from the comparables unless, there are specific reasons for eliminating the same which is other than the general reason that a comparable has incurred loss or has made abnormal profits

Posted in All Judgements, Tribunal

Grameen Initiative for Women vs. DIT (E) (ITAT Mumbai)

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DATE: (Date of pronouncement)
DATE: June 12, 2011 (Date of publication)
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FILE: Click here to view full post with file download link
CITATION:

In Bhraman Madhav Murthi Mandal vs Joint Charity Commissioner, the Court dealt with the issue whether a company holding property for public religious and charitable purposes is required to be registered under the Public Trust Act. This does not mean that registration as a public trust is a condition precedent for grant of registration u/s 12A. There is no requirement in the Income-tax Act that the institution constituted for advancement of charity, must be registered as a trust under the Public Trusts Act (Agriculture Produce and Market Committee 291 ITR 419 (Bom) & Disha India Micro Credit (Del) followed)

Posted in All Judgements, Tribunal