Month: May 2015

Archive for May, 2015


Hycron Electronics vs. ITO (ITAT Chandigarh)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS: , ,
COUNSEL: ,
DATE: May 27, 2015 (Date of pronouncement)
DATE: May 29, 2015 (Date of publication)
AY: 2009-10
FILE: Click here to view full post with file download link
CITATION:
S. 80-IC: The benefit of “substantial expansion” is applicable to units which were in existence at the time of announcement of scheme i.e. in AY 2004-05. Assesses who installed new units during this period and are now going for substantial expansion are not eligible to claim deduction u/s 80IC

If interpretation given by the assessee is to be accepted, the provision would become discriminatory for two classes of undertakings i .e. new units and old units. Because the old units would be entitled to 100% deduct ion on expansion for first five years and 25% thereafter whereas the new units would become entitled to deduction for 100% for first five years and again @ 100% on substantial expansion. Such discriminatory intention cannot be imputed to the Legislature.

Mitsubishi Corporation India Pvt. Ltd vs. DCIT (ITAT Delhi)

COURT:
CORAM: ,
SECTION(S): ,
GENRE: , ,
CATCH WORDS: ,
COUNSEL:
DATE: May 26, 2015 (Date of pronouncement)
DATE: May 29, 2015 (Date of publication)
AY: 2010-11
FILE: Click here to view full post with file download link
CITATION:
S. 40(a)(i): As there is no requirement in the Act to deduct TDS on purchases made from Indian residents, imposing such a condition while making payments to non-residents violates the non-discrimination provision in Article 24 of the DTAA

Article 24 provides in unequivocal terms that for the purposes of determining the taxable profits of an Indian enterprise, any disbursements made to a Japanese enterprise shall be deductible in the same manner as if it had been made to an Indian resident. When we examine the TDS provisions, it is noticed that no provision under the Chapter XVII of the Act stipulates for deduction of tax at source from payment made for the purchases made from an Indian resident. This position when contrasted with purchases made from a non-resident, imposes liability on the purchaser for deducting tax at source under section 195, subject to the fulfilment of other conditions. When we compare an Indian enterprise purchasing goods from an Indian party vis-a-vis from a Japanese party, there is possibility of an obvious discrimination in terms of disallowance of purchase consideration under section 40(a)(i) in so far as the purchases from a Japanese enterprise are concerned. It is this discrimination which is sought to be remedied by para 3 of Article 24

ITO vs. Paresh Arvind Gandhi (ITAT Mumbai)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: May 13, 2015 (Date of pronouncement)
DATE: May 29, 2015 (Date of publication)
AY: 2010-11
FILE: Click here to view full post with file download link
CITATION:
S. 69C: Law on treating purchases as "bogus" because the supplier is treated as a "hawala" dealer by the VAT authorities explained

The AO had not doubted the genuineness of the purchase but had made the disallowance of Rs.1.37 crores invoking the provisions of 69C of the Act. AO made the addition as the supplier was declared a hawala dealer by the VAT Department. It was a good starting point for making further investigation and taken it to logical end. However, the addition is not sustainable as the purchases had been made through A/c payee cheques that were duly reflected in the bank statement of the assessee ….

DIT vs. Lufthansa Cargo India (Delhi High Court)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS: ,
COUNSEL: ,
DATE: May 27, 2015 (Date of pronouncement)
DATE: May 29, 2015 (Date of publication)
AY: -
FILE: Click here to view full post with file download link
CITATION:
S. 9: Retrospective amendments seeking to tax income of non-residents does not affect the “source rule”. The amendment makes no any difference to the non-taxability of payments made to foreign companies if the income accrues abroad

While no doubt, the explanation is deemed to be clarificatory and for a good measure retrospective at that, nevertheless there is nothing in its wording which overrides the exclusion of payments made under Section 9(1)(vii)(b). The Supreme Court clarified this in GVK Industries Ltd. v. ITO 371 ITR 453 Thus, it is evident that the “source” rule, i.e the purpose of the expenditure incurred, i.e for earning the income from a source in India, is applicable

DCIT vs. Prescon Builders Pvt. Ltd (ITAT Mumbai)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: May 16, 2015 (Date of pronouncement)
DATE: May 29, 2015 (Date of publication)
AY: 2005-06, 2006-07
FILE: Click here to view full post with file download link
CITATION:
Dept's practice of filing appeals in a routine manner and without application of mind deprecated as it causes inconvenience to taxpayers

At least the senior officer such as Commissioner of Income Tax should have carefully perused the record and CIT(A)’s order before granting authorisation. The very fact that the AO filed the appeals without even verifying the year, which was mentioned in the grounds of appeal, also indicates that the appeals were filed in a routine manner which causes lot of inconvenience to the tax payers and such a practice should be deprecated

Mundra Woolen Mills (P) Ltd vs. ACIT (ITAT Jaipur)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS: ,
COUNSEL:
DATE: May 27, 2015 (Date of pronouncement)
DATE: May 28, 2015 (Date of publication)
AY: 2008-09
FILE: Click here to view full post with file download link
CITATION:
The severity of accusations and fury emerging from their language is highly derogatory, defamatory and contemptuous, sent with a scheme and clear intention to intimidate judicial officers to desist from passing an unfavorable order

It shall be noteworthy that till 28-4-15 these professionals had no objection with the bench as no grievance whatsoever was raised. The casual way of adjournment against final chance shows their casual attitude of taking the judicial process for granted. The emphatic demand that – if other matters were adjourned, our appeal should also have been adjourned; amounts to dictating the terms to the court. It reflects their inaptitude in failing to appreciate the vital fact that thus adjournment was granted as a final chance which was agreed by them. “They keep ‘holier than thou attitude’; if I commit wrong or disobey there is nothing wrong in it but if the bench doesn’t conduct itself in my desired way then bench is by default wrong and I raise scandalous tirade against bench.” To show their might they shoot frivolous complaints, file litany of motivated RTIs proclaiming to be RTI activist. These brazenly scandalous acts have been unleashed by them with swagger of impunity and recklessness without realizing that when the appeal is pending orders such threats construe contempt of court. …..

Perhaps they are enraged on their own professional inaptitude which became visible in open court proceedings, it requires self introspection and hard preparation of appeal; instead they have misdirected their self fury on the bench indiscriminately. Their own professional infirmities can be improved from their side by mending their unprofessional attitude. They cannot score brownie points by telling the world that they can get desired orders by threatening to harm judicial officers and their delinquent conduct is justified.

Ballabh Das Agarwal vs. ITO (ITAT Kolkata)

COURT:
CORAM: ,
SECTION(S): ,
GENRE:
CATCH WORDS: ,
COUNSEL:
DATE: May 22, 2015 (Date of pronouncement)
DATE: May 27, 2015 (Date of publication)
AY: 2008-09
FILE: Click here to view full post with file download link
CITATION:
S. 40(a)(ia) second proviso was inserted by FA 2012 to rectify the unintended consequence of disallowance in the hands of the payer even if the payee has paid tax. It is curative and retrospective in operation. Assessee's claim of having obtained declarations u/s 197A from the payees should not be disbelieved without evidence. Assessee is not expected to go into the correctness of the declarations filed by the payees

The second proviso to section 40(a)(ia) of the Act inserted by the Finance Act, 2012 is curative in nature and intended to supply an obvious omission, take care of an unintended consequence and make the section workable. Section 40(a)(ia) without the second proviso resulted in the unintended consequence of disallowance of legitimate business expenditure even in a case where the payee in receipt of the income had paid tax. It has for long been the legal position that if the payee has paid tax on his income, no recovery of any tax can be made from the person who had failed to deduct the income tax at source from such amount

Aspect Software Inc vs. ADIT (ITAT Delhi)

COURT:
CORAM: ,
SECTION(S): ,
GENRE:
CATCH WORDS: ,
COUNSEL:
DATE: May 18, 2015 (Date of pronouncement)
DATE: May 27, 2015 (Date of publication)
AY: 2004-05, 2010-11
FILE: Click here to view full post with file download link
CITATION:
Consideration for supply of software (whether with or without equipment) is not taxable as "royalty" if there is no transfer of right in the copyright to the software

There was no transfer of any right in respect of copyright by the assessee and it was a case of mere transfer of a copyrighted article. The payment is for a copyrighted article and represents the purchase price of an article. Hence, the payment for the same is not in the nature of royalty under Article 12 of the Tax Treaty. The receipts would constitute business receipts in the hands of the Assessee and is to be assessed as business income subject to assessee having business connection/ PE in India

DCIT vs. Reliance Communications Infrastructure Ltd (ITAT Mumbai)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: May 25, 2015 (Date of pronouncement)
DATE: May 27, 2015 (Date of publication)
AY: 2007-08 to 2010-11
FILE: Click here to view full post with file download link
CITATION:
ITAT laments non-representation/ inept-representation of matters before it by the Revenue. Suggests guidelines to remedy the state of affairs

it is noticed that some of the DRs had never had exposure to the functions of the Tribunal except the formal court observation as part of their training programme, which sometimes result in not supporting the stand of the Revenue effectively and in turn may affect a genuine case of the Revenue for want of proper prosecution. We would take this opportunity to suggest that any official, on being assigned the duty of DR, should be made to sit in the court room for observation at least for 15 days so that their services can be used effectively at a later stage.

CIT vs. Usha Saboo (P&H High Court)

COURT:
CORAM: ,
SECTION(S): ,
GENRE:
CATCH WORDS:
COUNSEL:
DATE: May 15, 2015 (Date of pronouncement)
DATE: May 27, 2015 (Date of publication)
AY: 1994-95
FILE: Click here to view full post with file download link
CITATION:
Where the agreement between the parties (for sale of shares) indicates that the lump-sum consideration was in respect of two or more promises (i.e. sale of shares & non-compete covenant), it is liable to be bifurcated and apportioned between each of the assets (Vodafone distinguished)

It is difficult to understand how the mere fact that the parties have not apportioned the consideration between the two assets which were being dealt with by this agreement can make any difference to the rights of the parties. The position might have been different if the market value of the shares could not be ascertained. Then it might be said that it is difficult to put a proper value upon the shares and to put a proper value for the consideration. But when the market value is available and when it is known for what price these shares could be purchased or sold, there is no difficulty whatsoever in the apportionment

Top