Category: Tribunal

Archive for the ‘Tribunal’ Category


Nishant Construction Pvt. Ltd vs. ACIT (ITAT Ahmedabad)

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DATE: February 14, 2017 (Date of pronouncement)
DATE: March 18, 2017 (Date of publication)
AY: 2011-12
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CITATION:
S. 143(3): Loose papers which do not have full details are "dumb documents" and have no evidentiary value. The fact that the assessee sold goods at a concession does not mean that that the difference between sale value and market value can be assessed as income. The onus is on the AO to make inquiries from the buyers and bring incriminating evidence on record to show that the assessee sold flats at a higher rate

The AO has no power to disturb the sale price shown except in three cases. The first is under Section 145 of the Act. Where the sale of properties is part of the business of the assessee, the Assessing Officer, if he is of the opinion that the accounts are not correct and complete, may proceed to reject the books of accounts and thereafter make a best judgment assessment of the income in the manner prescribed by Section 144. The second is the case where Section 50C of the Act is invoked on the basis of the prices fixed by the Stamp Valuation Authorities of the State Government. That section, it is pointed out, however, applies only in the computation of capital gains and cannot be availed by the Revenue where the profits of the business are to be computed

Posted in All Judgements, Tribunal

JSW Steel Ltd vs. ACIT (ITAT Mumbai)

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DATE: January 13, 2017 (Date of pronouncement)
DATE: March 17, 2017 (Date of publication)
AY: 2004-05
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CITATION:
S. 41(1)/ 115JB: Entire law explained whether remission of a loan can be assessed as income u/s 41(1) and if not whether the same can be added to "book profit" for purposes of MAT tax u/s 115JB

Waiver of loan taken for acquisition of a capital asset and on capital account cannot be taxed u/s 41(1), as it is neither on revenue account nor a remission of a trading liability so as to attract tax in the year of remission. A capital surplus thus, in respect of waiver of loan amount cannot be regarded as being amount available for distribution through the profit & loss account. This follows from the very definition of expression ‘capital reserve’ that it must be accounted directly to the credit of the capital reserve account instead of being credited to the profit & loss account so as to ensure that it is not left for being distributed through the profit & loss account

Posted in All Judgements, Tribunal

DCIT vs. Ford India Limited (ITAT Chennai)

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DATE: January 31, 2017 (Date of pronouncement)
DATE: March 17, 2017 (Date of publication)
AY: 2011-12, 2012-13
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CITATION:
Taxability of "Other income" under DTAA: Income which is not chargeable under specific provisions of Articles 6 to 21 cannot be taxed under the residuary provision. Only income not covered by specific Articles (e.g. alimony, lottery income, gambling income, damages etc) can be charged as "Other income"

An income is of such a nature as, on satisfaction of conditions specified in the related provision, could be taxed under any of these specific treaty provisions, cannot be covered by this residuary clause. Take for example, income earned by a resident of a contracting state by carrying on business in the other contracting state. When, for example, article 5 provides that the income of resident of a contracting state, from carrying on business in the other contracting state, cannot be taxed in the source state unless such a resident has a permanent establishment in the other contracting state, i.e. source state, it cannot be open to the tax administration of source state to contend that even if it cannot be taxed as business income, it can be taxed as ‘other income’ nevertheless. It is important to bear in mind the import of expression ‘not expressly dealt with in the foregoing articles’.

Posted in All Judgements, Tribunal

Ram Infrastructure Ltd vs. JCIT (ITAT Pune)

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DATE: December 30, 2016 (Date of pronouncement)
DATE: March 17, 2017 (Date of publication)
AY: 2009-10
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CITATION:
S. 251: The CIT(A) has no power to enhance by discovering a new source of income which is neither discussed in the assessment order nor mentioned in the return of income filed by the assessee

It is well settled law laid down by the Hon’ble Apex Court in Commissioner of Income Tax Vs. Shapoorji Pallonji Mistry, 44 ITR 891 (SC) and Commissioner of Income Tax Vs. Rai Bahadur Hardutroy Motilal Chamaria, 66 ITR 443 (SC) and subsequently followed by the Hon’ble Delhi High Court in Commissioner of Income Tax Vs. Sardari Lal & Co., 251 ITR 864 (Delhi)(SB) that the CIT(A) is not competent to enhance assessment in appeal by discovering new source of income not mentioned in return or consider by the Assessing Officer in assessment. We hold that the Commissioner of Income Tax (Appeals) has exceeded his jurisdiction in making addition u/s. 2(22)(e) of the Act as there is no reference of such income either in the return of income or in the assessment proceedings

Posted in All Judgements, Tribunal

Wadhwa Estate & Developers India Pvt. Ltd vs. ACIT (ITAT Mumbai)

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DATE: February 24, 2017 (Date of pronouncement)
DATE: March 11, 2017 (Date of publication)
AY: 2011-12
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CITATION:
S. 271(1)(c): Penalty cannot be levied if the omission to offer income, and the wrong claim of deduction, was by oversight and the auditors did not point it out. Also, the failure of the AO to specify the limb under which penalty u/s 271(1)(c) is imposed is a fatal error

Undisputedly, in the return of income assessee has failed to offer interest on fixed deposit amounting to ` 5,92,186 and loss claimed on account of fixed asset written–off amounting to Rs 1,82,242. It is also a fact on record that in the course of assessment proceedings, the assessee accepted the taxability of these items of income and offered them to tax. The assessee has explained that non–disclosure of aforesaid two items of income is due to oversight and due to the fact that neither in the tax audit nor in the statutory audit such omission was pointed out. We find merit in the aforesaid explanation of the assessee

Posted in All Judgements, Tribunal

Shapoorji Pallonji & Co. Ltd vs. DCIT (ITAT Mumbai)

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DATE: March 3, 2017 (Date of pronouncement)
DATE: March 11, 2017 (Date of publication)
AY: 2011-12
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CITATION:
S. 14A & Rule 8D: Disallowance under Rule 8D is not compulsory or mandatory. S. 14A(2) & Rule 8D cannot be invoked unless the AO examines the accounts and records the finding why the assessee's claim/ computation is not proper (entire law discussed and important judgements referred)

Thus, Rule 8D is not attracted and applicable to assessee who have exempt income and it is not compulsory and necessary that an assessee must voluntarily compute disallowance as per Rule 8D of the Rules. Where the disallowance or ‘nil’ disallowance made by the assessee is found to be unsatisfactory on examination of accounts, the assessing officer is entitled and authorised to compute the deduction under Rule 8D of the Rules. This pre-condition and stipulation as noticed below is also mandated in sub Rule (1) to Rule 8D of the Rules

Posted in All Judgements, Tribunal

Cairn UK Holdings Ltd vs. DCIT (ITAT Delhi)

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DATE: March 9, 2017 (Date of pronouncement)
DATE: March 10, 2017 (Date of publication)
AY: 2007-08
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CITATION:
S. 9(1)(i): The capital gains arising on transfer by a foreign company of shares in another foreign company holding assets in India is liable to tax in India. The argument that the transfer is a mere re-organisation of assets within the group and that there is no “real income” is not acceptable. The argument that the India-UK DTAA should be given a “static” interpretation and that the retrospective amendment to s. 9 by the Finance Act 2012 should be ignored is also not acceptable. Where the DTAA provides that the income shall be chargeable to tax in accordance with the provision of the domestic law, the said domestic law has to be the amended law

Coming to the decision of the Hon’ble Delhi High Court in case of DIT Vs. New Skies Satellite BV wherein the Hon’ble High court has held that in relation to applicability of Article 3(2) of the relevant DTAAs, that it can apply only to terms not defined in the DTAA. Since the relevant DTAAs in the case before them defined ‘royalty’, Article 3(2) could not be applied. For terms which are defined under the DTAA, there is no need to refer to the laws in force in the Contracting States, especially to deduce the meaning of the definition under the DTAA. Further, the court has held that neither act of parliament supply or alter the boundaries of DTAA or supply redundancy to any part of its. Similarly, according to us, the provisions of DTAA where it simply provides that particular income would be chargeable to tax in accordance with the provisions of domestic laws, such article in DTAA also cannot the limit the boundaries of domestic tax laws. In view of this, we do not find any force in the argument of the assessee and dismiss ground No. 3.12 of the appeal

Posted in All Judgements, Tribunal

Anita D Kanjani vs. ACIT (ITAT Mumbai)

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DATE: February 13, 2017 (Date of pronouncement)
DATE: March 6, 2017 (Date of publication)
AY: 2011-12
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CITATION:
Capital gains: While s. 2(42A) uses the term "held", the other provisions use the terms "acquired", "purchased" and "owner". Accordingly, for considering whether an asset is a "long-term capital asset", the period of holding must be computed on a de facto basis. The letter of allottment, even though not "ownership", must be taken as the date of holding the asset

Perusal of the definition of the term “short-term capital asset” in section 2(42A) shows that the legislature has used the expression ‘held’. It is further noted by us that in various other allied or similar sections, the legislature has preferred to use the expression ‘acquired’ or ‘purchased’ e.g. in section 54 / 54F. Thus, it shows that the legislature was conscious while making use of this expression. The expressions like ‘owned’ has not been used for the purpose of determining the nature of asset as short term capital asset or long term capital asset. Thus, the intention of the legislature is clear that for the purpose of determining the nature of capital gain, the legislature was concerned with the period during which the asset was held by the assessee for all practical purposes on de facto basis. The legislature was apparently not concerned with absolute legal ownership of the asset for determining the holding period. Thus, we have to ascertain the point of time from which it can be said that assessee started holding the asset on de facto basis

Posted in All Judgements, Tribunal

Nagarjuna Fertilizers and Chemicals Limited vs. ACIT (ITAT Hyderabad) (Special Bench)

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DATE: February 13, 2017 (Date of pronouncement)
DATE: February 22, 2017 (Date of publication)
AY: 2011-12
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CITATION:
S. 206AA does not have an overriding effect over the other provisions of the Act. By virtue of s. 90(2), the provisions of the Treaty override s. 206AA to the extent they are beneficial to the assessee. Consequently, the payer cannot be held liable to deduct tax at higher of the rates prescribed in s. 206AA in case of payments made to non-resident persons in spite of their failure to furnish the PAN

In view of the above discussion, we are of the view that the provisions of section 206AA of the Act will not have a overriding effect for all other provisions of the Act and the provisions of the Treaty to the extent they are beneficial to the assessee will override sect ion 206AA by virtue of section 90(2). In our opinion, the assessee therefore cannot be held liable to deduct tax at higher of the rates prescribed in section 206AA in case of payments made to non-resident persons having taxable income in India in spite of their failure to furnish the Permanent Account Numbers

Posted in All Judgements, Tribunal

HITT Holland Institute of Traffic Technology B.V. vs. DDIT (ITAT Kolkata)

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DATE: February 8, 2017 (Date of pronouncement)
DATE: February 20, 2017 (Date of publication)
AY: 2010-11
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CITATION:
Entire law on Permanent Establishment, Force of Attraction principle, taxability of software embedded in hardware as royalty, make available of technical services etc explained (all important judgements referred)

Some provide for taxing profits/income from all transactions whether they are attributable to PE or not or whether they are of the same kind of transactions carried on by the PE or not, which is referred to as “Full Force of Attraction” principle. As to which principle is applicable in a given case depends on the clauses of the convention between two countries. Article 7(1) of the DTAA between India and Netherlands provides for taxing profits of the enterprise in the other state only to the extent they are attributable to the PE in the other state, adopting “No Force of Attraction” principle

Posted in All Judgements, Tribunal