Month: August 2011

Archive for August, 2011


CIT-DR vs. M/s. Simoni Gems (ITAT Mumbai)

COURT:
CORAM:
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: (Date of pronouncement)
DATE: August 31, 2011 (Date of publication)
AY:
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CITATION:

We are of the view that the conduct of the learned CIT(A) in addressing correspondence to the Hon’ble Members in respect of an appeal which has been heard and under consideration for passing orders is improper. It is an attempt to interfere with the due course of any judicial proceeding and tends to interfere with or obstructs or tends to obstruct the administration of justice and as such would be “Criminal contempt” within the meaning of the Contempt of Courts Act, 1971. The allegations made in the letters dated 23.3.2010 and 24.3.2010 are serious enough to warrant an action seeking protection of the Hon’ble High Court in exercise of its powers to punish for contempt of the sub-ordinate Courts and Tribunals. In our opinion, there cannot be a fitter case for imposition of exemplary costs on the learned Departmental Representative, who in our view, is responsible for such a M.A. and for wasting the time of the Tribunal by raising frivolous arguments and making blatantly false submissions. The cost should have to be recovered from the salary of the delinquent employee, who is responsible for such actions and entry made in his service record on the adverse comments made against the D.R. by the Tribunal. We however refrain from doing so in the hope that such indiscretion would not be repeated in future and also in view of the letter of apology filed by the D.R.

Posted in All Judgements, Tribunal

CIT vs. M/s Khemchand Motilal Jain (Madhya Pradesh High Court)

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

While kidnapping is an offense, paying ransom is not; Bar in Explanation 1 to s. 37(1) not attracted The assessee, engaged in manufacture and sale of bidis, sent its whole-time director to a forest area for purchase of tendu leaves.

Posted in All Judgements, High Court

ACIT vs. Anchor Health and Beauty Care Pvt Ltd (ITAT Mumbai)

COURT:
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DATE: (Date of pronouncement)
DATE: August 27, 2011 (Date of publication)
AY:
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CITATION:

On merits, though the accreditation fees permitted the assessee the use of name of British Dental Health Foundation, it did not constitute “royalty” under Article 13 of the India-UK DTAA because it did not allow the accredited product to use, or have a right to use, a trademark, nor any information concerning industrial, commercial or scientific experience so as to fall within the definition of the term. The purpose of the accreditation by a reputed body was to give certain comfort level to the end users of the product and to constitute the USP of the product. The term “royalty” cannot be construed as per its normal connotations in business parlance but has to be construed as per the definition in Article 13. The amount constituted “business profits” and as the recipient did not have a PE in India, it was not taxable in India

Posted in All Judgements, Tribunal

International Business Machines Corp v Comm of Taxation (Federal Court of Australia)

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

On facts, the argument that the SLA is in essence a distributorship agreement for the marketing of IBM computer programs and that the IP licenses granted to IBMA is only to enable it to carry on the function of a distributor is not acceptable. The SLA is not a distribution agreement which confers distribution rights independently of the grant of IP rights. There is no reference in the SLA to the payments being for the exercise of general distributorship rights. Rather, the payments are described as being for the acquisition of the stated IP rights. The detail of the SLA concerns the definition of IP and IP rights. There is no such detail with respect to distribution rights. The rights/content granted by the SLA are, in each case, rights/content of a kind contemplated by Article 12(4) and so the whole of the consideration is assessable as “royalty”

Posted in All Judgements, Supreme Court

DCIT vs. RBS Equities India Ltd (ITAT Mumbai)

COURT:
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DATE: (Date of pronouncement)
DATE: August 26, 2011 (Date of publication)
AY:
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CITATION:

Explanation 1 to s. 271(1)(c) does not apply to transfer pricing adjustments. Penalty for transfer pricing adjustments is governed by Explanation 7 to s. 271(1)(c). Under Explanation 7 to s. 271(1)(c), the onus on the assessee is only to show that the ALP was computed by the assessee in accordance with the scheme of s. 92 C in “good faith” and with “due diligence. The assessee adopted the TNMM and no fault was found with the computation of ALP as per that method. Instead, the method was rejected on the ground that CUP method was applicable. It is a contentious issue whether any priority in the methods of determining ALPs exists. So, when TNMM is rejected, without any specific reasons for inapplicability of the TNMM and simply on the ground that a direct method is more appropriate to the fact situation, it is not a fit case for imposition of penalty. The expression ‘good faith’ used alongwith ‘due diligence’, which refers to ‘proper care, means that not only must the action of the assessee be in good faith, i.e. honestly, but also with proper care. An act done with due diligence would mean an act done with as much as care as a prudent person would take in such circumstances. As long as no dishonesty is found in the conduct of the assessee and as long as he has done what a reasonable man would have done in his circumstances, to ensure that the ALP was determined in accordance with the scheme of s. 92 C, deeming fiction under Explanation 7 cannot be invoked

Posted in All Judgements, Tribunal

ADIT vs. TII Team Telecom International Pvt Ltd (ITAT Mumbai)

COURT:
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SECTION(S):
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DATE: (Date of pronouncement)
DATE: August 26, 2011 (Date of publication)
AY:
FILE: Click here to view full post with file download link
CITATION:

Under Article 12 (3) of the India-Israel DTAA, royalty is defined inter alia to mean payments for the “use of” a “copyright” or a “process”. There is a distinction between “use of copyright” and “use of a copyrighted article”. In order to constitute “use of a copyright”, the transferee must enjoy four rights viz: (i) the right to make copies of the software for distribution to the public, (ii) The right to prepare derivative computer programmes based upon the copyrighted programme, (iii) the right to make a public performance of the computer programme and (iv) The right to publicly display the computer programme. If these rights are not enjoyed, there is no “use of a copyright”. The consideration is also not for “use of a process” because what the customer is paying for is not for the “process” but for the “results” achieved by use of the software. It will be a “hyper technical approach totally divorced from ground business realities” to hold that the use of software is use of a “process”. Motorola Inc 96 TTJ 1 (Del) (SB) and Asia Sat 332 ITR 340 (Del) followed. Gracemac Corp 42 SOT 550 (Del) not followed

Posted in All Judgements, Tribunal

GE India Technology Centre Pvt Ltd vs. DRP (Karnataka High Court)

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SECTION(S):
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DATE: (Date of pronouncement)
DATE: August 17, 2011 (Date of publication)
AY:
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CITATION:

As the AO had accepted that the assessee was eligible for s. 10A deduction and had only proposed a variation on the quantum, the DRP had no jurisdiction to hold that the assessee was not at all eligible for s. 10A deduction

Posted in All Judgements, High Court

CIT vs. K. Raheja Corporation Pvt Ltd (Bombay High Court)

COURT:
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SECTION(S):
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DATE: (Date of pronouncement)
DATE: August 16, 2011 (Date of publication)
AY:
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CITATION:

Counsel for the Revenue could not point as to how interest on borrowed funds to the extent of Rs.2.79 crores was attributable to earning dividend income which are exempt u/s 10(33) of the Act. Therefore, in the absence of any material or basis to hold that the interest expenditure directly or indirectly was attributable for earning the dividend income, the decision of the Tribunal in deleting the disallowance of interest made u/s 14A cannot be faulted

Posted in All Judgements, High Court

DCIT vs. Summit Securities Limited (ITAT Mumbai Special Bench)

COURT:
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SECTION(S):
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DATE: (Date of pronouncement)
DATE: August 12, 2011 (Date of publication)
AY:
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CITATION:

The objection to the Special Bench hearing the issue only on the ground that the High Court has admitted the appeal is not acceptable for two reasons. Firstly, the mere fact that a superior authority is seized of an issue identical to the one before the lower authority does not create any impediment on the powers of the lower authority in disposing off the matters involving such issue as per prevailing law. If the suggestion is accepted, there would be chaos and the entire working of the Tribunal will come to standstill. Secondly, the Special Bench was constituted at the assessee’s request because it then wanted an “escape route” from a potential adverse view. The assessee cannot now argue that the Special Bench be deconstituted. Such “vacillating stand” cannot be approved

Posted in All Judgements, Tribunal

LS Cable Limited vs. DIT (AAR)

COURT:
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SECTION(S):
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COUNSEL:
DATE: (Date of pronouncement)
DATE: August 6, 2011 (Date of publication)
AY:
FILE: Click here to view full post with file download link
CITATION:

The clauses in the offshore supply contract agreement regarding the transfer of ownership, the payment mechanism in the form of letter of credit which ensures the credit of the amount in foreign currency to the applicant’s foreign bank account on receipt of shipment advice and insurance clause establish that the transaction of sale and the title took place outside Indian Territory. The ownership and property in goods passed outside India. The transit risk borne by the applicant till the goods reach the site in India is not necessarily inconsistent with the sale of goods taking place outside India. The parties may decide between them as to when the title of the goods should pass. As the consideration for the sale portion is separately specified, it can well be separated from the whole. (Ishikwajima Harima 288 ITR 410 (SC) & Hyosung Corporation 314 ITR 343 (AAR) followed; Ansaldo Energia SPA 310 ITR 237 (Mad) distinguished)

Posted in AAR, All Judgements
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