Month: December 2011

Archive for December, 2011


R. K. Jain vs. UOI (Delhi High Court)

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DATE: December 11, 2011 (Date of publication)
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The ACR & the Follow up file are an integral part of the ACR record of the officer. In Arvind Kejriwal vs. CPIO AIR 2010 Delhi 216 it was held that except in cases involving overriding public interest, the ACR record of an officer cannot be disclosed to any person other than the officer himself/herself. As the CIC has not examined whether larger public interest justifies the disclosure of the information sought by the Petitioner in this case, matter remanded with the direction the information should be disclosed if the CIC comes to a conclusion that larger public interest justifies the disclosure

Star India Ltd vs. ACIT (ITAT Mumbai)

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DATE: December 9, 2011 (Date of publication)
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The argument that the AO was bound to follow the jurisdictional High Court’s order in Shirke Construction 246 ITR 429 till it was overruled is not acceptable because the AO, being part of the revenue machinery, should follow judicial decisions as long as he can do so without sacrificing the legitimate interests of the revenue. If the AO does not raise demands on issues which have been decided in favour of the assessee by the jurisdictional High Court, even though the department is in appeal against the same, the interests of the revenue will be prejudiced and remain unprotected. While the AO is bound by the higher judicial authorities and has to loyally execute the directions contained in those orders, he is not prevented from taking the same stand, as he took in those assessments though he cannot collect the demand

CIT vs. Sumangal Overseas Ltd (Delhi High Court)

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DATE: December 9, 2011 (Date of publication)
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In penalty proceedings, it has to be seen whether the claim was bona fide or it was bogus and result of falsehood. On facts, there was no dispute on the genuineness of the advances. A trading loss has a wider connotation than a bad debt. While a bad debt may also be a trading loss, a trading loss need not necessarily be a bad debt. A bad debt may not fall within the purview of s. 36(1)(vii) but may well be regarded as being eligible for deduction as being a “trading loss”. Accordingly, the claim was neither mala fide nor false but was bona fide and made after disclosure of facts (CIT vs. Reliance Petroproducts 322 ITR 158 (SC) followed)

Dell Products vs. State (Supreme Court, Norway)

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DATE: December 8, 2011 (Date of publication)
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Article 5(5) of the DTAA provides that “when a person, not an independent status to whom paragraph 6 applies, acting on behalf of an enterprise and has and habitually exercises in a Contracting State authority to conclude contracts on behalf of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State for any activities which that person undertakes for the enterprise.” There is no dispute that Dell AS is not an independent agent. The expressions “on behalf” and “have authority to conclude contracts on behalf of” in Article 5(5) mean that the contracts must be legally binding. These expressions must be given their normal meaning as per the Vienna Convention. This is also supported by the Commentary on the OECD Model Convention on which the DTAA is based. A similar view has been taken by the Conseil d’Etat of France in Zimmer (included with the Appeal Court’s order). As the language of the Article is clear, it is not possible to adopt the “functional approach” proposed by the Revenue. Consequently, Dell Products does not have permanent establishment in Norway

DCIT vs. Eversmile Construction Co Pvt Ltd (ITAT Mumbai)

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DATE: (Date of pronouncement)
DATE: December 5, 2011 (Date of publication)
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FILE: Click here to view full post with file download link
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S. 153A requires the AO to make the assessment afresh and compute the “total income” in respect of each of the relevant six assessment years. There is no inhibition on the jurisdiction of the AO on the including of new income and likewise there is no restriction on the assessee to claim any deduction which was not allowed in the original assessment. The determination of total income u/s 153A has to be done afresh without any reference to what was done in the original assessment. The fact that there was an addition in the original assessment does not preclude the assessee from contesting it in the s. 153A proceedings. As it is a fresh exercise of framing assessment of “total income”, the assessee is not estopped from arguing about the merits of his case qua the additions made in the original assessment. Debarring the assessee from making a claim about the deductibility of any item, which was earlier disallowed, counters the very concept of fresh assessment of total income (Sun Engineering Works 198 ITR 297 (SC) & Goetze (India) Ltd 284 ITR 323 (SC) distinguished)

CIT vs. Arvind Kumar Jain (Delhi High Court)

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DATE: (Date of pronouncement)
DATE: December 5, 2011 (Date of publication)
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S. 2(22)(e) provides that any “loan or advance” by a closely held company to a substantial shareholder shall be assessed as “deemed dividend“. The purpose is to tax accumulated profits distributed in the form of loans. Bearing this purpose in mind, the word “advance” has to be read in conjunction with the word “loan”. The attributes of a loan are that it involves a positive act of lending coupled with acceptance by the other side of the money as loan: it generally carries interest and there is an obligation of re-payment. The term “advance” may or may not include lending. The word “advance” if not found in conjunction with the word “loan” may or may not include the obligation of repayment. If it does then it would be a loan. Applying the doctrine of noscitur a sociis, the word “advance” means such advance which carries with it an obligation of repayment. Trade advance which are in the nature of money transacted to give effect to a commercial transactions do not fall within the ambit of s. 2(22)(e) (CIT Vs. Raj Kumar 318 ITR 462 followed)

Uttam Bir Singh Bedi vs. UOI (Madras High Court)

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DATE: (Date of pronouncement)
DATE: December 4, 2011 (Date of publication)
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The Tribunal is a judicial body and while the President exercises administrative control over the Benches, he has no power to write the ACRs of the Members. Further, being a judicial body, the Tribunal should have judicial autonomy and therefore, the Government cannot act like a reviewing authority

CIT vs. Samsung Electronics Co Ltd (Karnataka High Court)

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DATE: (Date of pronouncement)
DATE: December 4, 2011 (Date of publication)
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FILE: Click here to view full post with file download link
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U/s 9(1)(vi) of the Act & Article 12 of the DTAA, “payments of any kind in consideration for the use of, or the right to use, any copyright of a literary, artistic or scientific work” is deemed to be “royalty“. Under the Copyright Act, 1957, a software programme constitutes a “copyright”. A right to make a copy of the software and use it for internal business by making copy of the same and storing it on the hard disk amounts to a use of the copyright u/s 14 (1) of that Act because in the absence of such a licence, there would have been an infringement of the copyright. Accordingly, the argument that there is no transfer of any part of the copyright and the transaction involves only a sale of a copyrighted article is not acceptable. The amount paid to the supplier for supply of the “shrink-wrapped” software is not the price of the CD alone nor software alone nor the price of licence granted. It is a combination of all. In substance unless a licence was granted permitting the end user to copy and download the software, the CD would not be helpful to the end user

CIT vs. Reliance Industries Ltd (Supreme Court)

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DATE: (Date of pronouncement)
DATE: December 2, 2011 (Date of publication)
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Having heard learned counsel on both sides, we are of the view that the High Court ought not to have dismissed the appeals without considering the following questions, which, according to us, did arise for consideration. They are formulated as under … (C) Whether on the facts and circumstances of the case and in law the Hon’ble Tribunal was right in holding that sales tax incentive is a Capital Receipt?” Accordingly, the civil appeals are allowed, impugned orders are set aside and the cases are remitted to the High Court to decide the questions, formulated above, in accordance with law.”

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