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Archive for the ‘Tribunal’ Category


Lands End Co-operative Housing Society Ltd vs. ITO (ITAT Mumbai)

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DATE: January 15, 2016 (Date of pronouncement)
DATE: September 24, 2016 (Date of publication)
AY: 2009-10
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CITATION:
S. 80P(2)(d): Interest and dividend earned by a co-op society on investments with other co-operative societies is eligible for deduction. The question whether the co-op society is engaged in the business of banking for providing credit facilities to its members and the head under which the income is assessable is not material (Totagar’s Co-op Society 322 ITR 283 (SC) distinguished)

The Supreme Court in the case of Totagar’s Co-operative Sale Society Ltd held that a society has surplus funds which are invested in short term deposits where the society is engaged in the business of banking or providing credit facilities to its members in that case the said income from short term deposits shall be treated and assessed as income from other sources and deduction u/s 80(P)(2)(a)(i) would not be available meaning thereby that deduction u/s 80(P)(2)(a)(i) is available only in respect of income which is assessable as business income and not as income from other sources. Whereas in distinction to this , the provisions of section 80(P)(2)(d) of the Act provides for deduction in respect of income of a coop society by way of interest or dividend from its investments with other coop society if such income is included in the gross total income of the such coop society

Posted in All Judgements, Tribunal

ACIT vs. M/s. Majmudar & Co (ITAT Mumbai)

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DATE: August 19, 2016 (Date of pronouncement)
DATE: September 24, 2016 (Date of publication)
AY: 2009-10
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CITATION:
S. 10B: Export of Legal Services by a law firm to its overseas clients by transfer of customized electronic data constitutes export of "computer software" as per Explanation 2 to s. 10B and is eligible for deduction

The assessee has, by use of the legal database compiled by it over a period of more than 60 years (firm is in practice of law since 1943), earned reasonable amount of valuable foreign exchange for our country, thereby fulfilling the most core intention of the law for introduction of EOU Scheme under EXIM Policy and Section 10B of the Act. The assessee has also fulfilled the specific requirements of Section 10B of the Act, by providing Legal Services using Legal database

Posted in All Judgements, Tribunal

Sara Lee TTK Ltd vs. DCIT (ITAT Mumbai)

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DATE: August 24, 2016 (Date of pronouncement)
DATE: September 21, 2016 (Date of publication)
AY: 2007-08
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CITATION:
Transfer Pricing: The assessee is obliged to carry out a bench-marking exercise with independent comparables and prove that its transactions with AEs are at arms length. Mere fact that the transaction is approved by the RBI and Govt is not sufficient

The RBI approval/FIPB approval is not determinative of ALP and cannot be considered to be a valid CUP. Automatic route under which FIPB approvals or RBI approvals are granted have been devised for the “ease of doing business”. These approvals emanate from other legislation or policy and are not in relation to determination of Arm’s Length Price. The purpose of the RBI approval/FIPB approval is entirely different and cannot be equated with the arm’s length principle. The approvals of rates given by the DIPP and the RBI are for different purposes, like for promotion of industries, management of foreign exchange etc. and it varies in accordance with the business practices prevalent at different times which are clear from the RBI approvals themselves. Going by the relevant TP provisions as enshrined under the Act and relevant Rules, it is mandatory that the appellant has to independently benchmark its international transaction with independent comparables so as to arrive at arm’s length price

Posted in All Judgements, Tribunal

Gemorium vs. ITO (ITAT Jaipur)

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DATE: September 14, 2016 (Date of pronouncement)
DATE: September 21, 2016 (Date of publication)
AY: 2008-09
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CITATION:
S. 271B: Penalty for delay in furnishing tax audit report should not be imposed if there is no mala fide reason for the delay. Dispute with auditor is a reasonable cause u/s 273B for the delay in furnishing the tax audit report

The delay made by the assessee firm in filing the return of income is for the first time i.e. in A.Y. 2008-09 which was on account of dispute of audit fee between the assessee and the auditor. Hence, it appears that the dispute with the statutory auditor is a reasonable cause within the meaning of Section 273B as held in the case of Kripa Industries (I) Ltd. vs. JCIT by ITAT Pune Bench (2002) 76 TTJ 502 (Pune) that there is no mala fide reason for not obtaining the accounts audited in time and penalty u/s 271B should not be imposed

Posted in All Judgements, Tribunal

Anil Mahavir Gupta vs. ACIT (ITAT Mumbai)

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DATE: August 31, 2016 (Date of pronouncement)
DATE: September 20, 2016 (Date of publication)
AY: 2002-03
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CITATION:
S. 153A: Even in a case where only a s. 143(1) assessment is made, additions cannot be made without the backing of incriminating material if the s. 143(1) assessment has not abated

The making of an addition in an assessment under section 153A of the Act, without the backing of incriminating material, is unsustainable even in a case where the original assessment on the date of search stood completed under section 143(1) of the Act, thereby resulting in non-abatement of such assessment in terms of the Second Proviso to section 153A(1) of the Act

Posted in All Judgements, Tribunal

Little Servants of Divine Providence Providence Charitable Trust vs. ITO (ITAT Cochin)

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DATE: September 9, 2016 (Date of pronouncement)
DATE: September 20, 2016 (Date of publication)
AY: 2013-14
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CITATION:
S. 234E: Prior to the amendment to s. 200A w.e.f. 01.06.2015, the fee for default in filing TDS statements cannot be recovered from the assessee-deductor

The issue is whether such a levy could be effected in the course of intimation under section 200A. The answer is clearly in negative. No other provision enabling a demand in respect of this levy has been pointed out to us and it is thus an admitted position that in the absence of the enabling provision under section 200A, no such levy could be effected. As intimation under section 200A, raising a demand or directing a refund to the tax deductor, can only be passed within one year from he end of the financial year within which the related TDS statement is filed, and as the related TDS statement was filed on 19th February 2014, such a levy could only have been made at best within 31st March 2015. That time has already elapsed and the defect is thus not curable even at this stage

Posted in All Judgements, Tribunal

Praful Chandaria vs. ADIT (ITAT Mumbai)

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DATE: August 26, 2016 (Date of pronouncement)
DATE: September 20, 2016 (Date of publication)
AY: 2002-03
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CITATION:
Entire law on whether consideration for alienation of rights under a "Call Option agreement" for shares is taxable as "capital gains" or as "income from other sources" in the context of the India-Singapore DTAA explained

In common parlance, a call option is reckoned as a contract in which the holder (buyer) has the right (but not an obligation) to buy a specified quantity of a security/shares at a specified price (strike price) within a fixed period of time. For the writer (seller) of a call option, it represents an obligation to sell the underlying security at the strike price if the option is exercised. The call option writer is paid a premium for taking on the risk associated with the obligation. Here in the present case, there is very peculiar agreement/ arrangement, where the strike price has been mentioned as US $ 1 and the fixed period of time for exercising the call option has been fixed for 150 years. This factum itself means that the call option in the shares have been given for perpetuity. Not only that, an irrevocable power of attorney has also been executed in favour of the ING Bank in respect of all the shares in PHIL confirming that, assessee will not at any time purport to revoke the same, which inter-alia shows that assessee has alienated a substantive and valuable rights as an owner of the shares in perpetuity, albeit without dejure alienating the shares itself

Posted in All Judgements, Tribunal

Nimesh N. Kampani vs. ACIT (ITAT Mumbai)

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DATE: June 16, 2016 (Date of pronouncement)
DATE: September 8, 2016 (Date of publication)
AY: 2009-10
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CITATION:
S. 37(1): Expenditure incurred by a director in engaging lawyers to defend himself against cases filed for violation of the law by the Company of which he is a director is not personal expenditure but is allowable as business expenditure

Mr. Nimesh Kampani has been mentioned as one of the accused among several others, for non-payment of these fixed deposits by Nagarjuna Finance Limited. The Andhra Pradesh Government had since filed suit against directors of Nagarjuna Finance Limited including Mr. Kampani. To defend himself, Mr. Kampani has appointed various advocates to represent his case before various courts viz, District Court, High Court of Andhra Pradesh, Supreme Court of India. As the expenditure is incurred to protect his business interest the same is required to be allowed u/s. 37(1) of the Act. Accordingly we direct the A.O. to allow legal expenses of Rs.40,72,750/-

Posted in All Judgements, Tribunal

M. G. Contractors Pvt. Ltd vs. DCIT (ITAT Delhi)

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DATE: June 21, 2016 (Date of pronouncement)
DATE: September 8, 2016 (Date of publication)
AY: 2006-07
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CITATION:
As per CBDT Instruction No. 9/2013 dated 22.07.2013, appeals against imposition of penalty or levy of interest in which the aggregate of penalty imposed or interest levied by the AO is more than Rs. 3 crore in the cities of Mumbai and Delhi are to be argued by the CIT(DR) and matters other than this are to be argued by the Senior DR

As per CBDT Instruction No. 9/2013 dated 22.07.2013, appeals against imposition of penalty or levy of interest in which the aggregate of penalty imposed or interest levied by the AO is more than Rs. 3 crore in the cities of Mumbai and Delhi are to be argued by the CIT(DR) and matters other than this are to be argued by the Senior DR

Posted in All Judgements, Tribunal

Jitendra Kumar Soneja vs. ITO (ITAT Mumbai)

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DATE: August 12, 2016 (Date of pronouncement)
DATE: September 5, 2016 (Date of publication)
AY: 2007-08
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CITATION:
Compensation received by flat owner from builder for hardship caused due to redevelopment of the building is a non-taxable receipt and has to be reduced from the cost of the flat. Amount received from builder to meet rental costs during the redevelopment is also not taxable as income

It is elementary that the connotation of income howsoever wide and exhaustive, take into account only such capital receipts are specifically taxable under the provisions of the Income tax Act. Section 2(24)(vi) provides that income includes “any capital gains chargeable under section 45”, and, thus, it is clear that a capital receipt simplicitor cannot be taken as income. Hon’ble Supreme Court in the case of Padmraje R. Kardambande vs CIT (195 ITR 877) has observed that “..,, we hold that the amounts received by the assessee during the financial years in question have to be regarded as capital receipts, and, therefore, (emphasis supplied by us), are not income within meaning of section 2(24) of the Income tax Act….” This clearly implies, as is the settled legal position in our understanding, that a capital receipt in principle is outside the scope of income chargeable to tax and a receipt cannot be taxed as income unless it is in the nature of revenue receipt or is brought within the ambit income by way of a specific provision in the Act

Posted in All Judgements, Tribunal

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