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Tally Solutions Pvt. Ltd vs. ACIT (ITAT Bangalore)

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DATE: June 21, 2016 (Date of pronouncement)
DATE: August 20, 2016 (Date of publication)
AY: 2007-08
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CITATION:
Transfer Pricing: Argument that transaction of extending credit period to AEs cannot be regarded as “international transaction” in the absence of any income arising therefrom is not acceptable. Observations in Vodafone vs. UOI 368 ITR 1 (Bom) are in a different context. The transaction of extending credit period to AEs is closely linked with the transaction of providing services to the AE and is not a separate transaction. Both transactions have to be aggregated for determination of ALP

Extending credit period for realization of sales to the AE is a closely linked transaction with the transaction of providing services to the AE and therefore cannot be treated as an individual and separate transaction of advance or loan. Accordingly, we direct the A.O/TPO to redo the exercise of determination of ALP by considering the credit period allowed in realization of sales proceeds as closely linked transaction with the transaction of providing services to the AE and therefore both has to be clubbed and aggregated for the purpose of determination of ALP

Posted in All Judgements, Tribunal

Hyundai Rotem Company vs. ACIT (ITAT Delhi)

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DATE: August 5, 2016 (Date of pronouncement)
DATE: August 20, 2016 (Date of publication)
AY: 2010-11
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CITATION:
Transfer Pricing: The TPO is required to be consistent in matters relating to selection of comparables. If a comparable has been included or rejected in an earlier year, he is not entitled to take a different view in a later year if there is no change in circumstances

Without any proper reason or change in the functionality and financial data, it cannot be held that these companies are to be excluded/included (as prayed for herein above), in the intermediary period of the assessment year under consideration. The TPO has to bring some material on record to show as to why these comparables which were excluded/included (as prayed for herein above) in the earlier year and also in succeeding year, cannot be excluded/included in the year under consideration

Posted in All Judgements, Tribunal

Rajeev B. Shah vs. ITO (ITAT Mumbai)

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DATE: July 8, 2016 (Date of pronouncement)
DATE: August 10, 2016 (Date of publication)
AY: 2010-11
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CITATION:
S. 54F: If the assessee has made full payment to the builder for purchase/ construction of a new residential house but is not able to get the title of the flat registered in his name or is unable to get the possession of the flat within the prescribed period due to fault of the builder, the assessee cannot be denied deduction u/s 54F

It is a fact that the assessee has invested this amount of Rs.18,60,000/- in purchase of residential house within the stipulated period prescribed u/s 54F of the Act. But, it is not in the assessee’s hand to get the flat completed or to get the flat registered in his name, because it was incomplete. The intention of the assessee is very clear that he has invested almost the entire sale consideration of land in purchase of this residential flat. It is another issue that the flat could not be completed and the matter is pending before the Hon’ble Bombay High Court seeking relief by the assessee by filing suit for direction to the Builder to complete the flat. It is impossible for the assessee to complete other formalities i.e. taking over possession for getting the flat registered in his name and this cannot be the reason for denying the claim of the assessee for deduction u/s 54 of the Act

Posted in All Judgements, Tribunal

Bastimal K Jain vs. ITO (ITAT Mumbai)

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DATE: June 8, 2016 (Date of pronouncement)
DATE: August 10, 2016 (Date of publication)
AY: 2010-11
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CITATION:
S. 54: The date of "purchase" of the new residential house is the date when the assessee receives possession and not the date of the agreement of purchase

Just to encourage assessee, Section 54 is enacted to give relief of exemption from capital gains in the case of assessee selling existing residential units and acquiring any other residential unit. This has to be done within a period of one year either before or after the date of sale of the first house property. If that is done so, capital gains arising on transfer of the first house property will be exempt to the extent of investment in the second house property as stipulated in Section 54. The flat in cities is the most common and a peculiar feature. The builder has to take plans of construction in his own name and sometimes in the names of his vendors and start construction. He invites prospective customers, enters into agreement for sale of flats proposed to be constructed by him and at times, demands the payment of price in one or more instalment. He may sometimes to finance his own construction activity, gives discounts and accepts lesser payment. The price paid before construction is complete, will be different from the price demanded by the vendors after the flat is constructed

Posted in All Judgements, Tribunal

ACIT vs. M/s Dattani Development (ITAT Mumbai)

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DATE: July 27, 2016 (Date of pronouncement)
DATE: August 10, 2016 (Date of publication)
AY: 2007-08
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CITATION:
S. 50C: Land purchased by a builder with the knowledge that there are encumbrances on it and development is not feasible is a “capital asset” and not “stock-in-trade”. The gains on transfer of such land is assessable as capital gains and not as business profits. S. 50C applies to development agreements if the effect of the development agreement read with the conveyance deed is that the entire land with ownership rights are transferred

Section 50C of the Act is clearly applicable even to the sale of development rights in the land as was held in the decisions relied upon by the learned DR as detailed above , more-so we have already held that in-fact the assessee has not only sold development rights in the land but the assessee sold the entire land with ownership rights in the land if the development agreement are read in conjunction with deed of confirmation / conveyance executed by the assessee which are placed in paper book filed with the Tribunal. Thus, the land which was sold during the previous year by the assessee, thus keeping in view our above discussions in the light of facts and circumstances of the case, was a capital asset within the provisions of Section 2(14) of the Act and the valuation of the land as per stamp duty valuation authorities as per section 50C of the Act was rightly adopted by the AO as full value of consideration

Posted in All Judgements, Tribunal

Sita Bai Khetan vs. ITO (ITAT Jaipur)

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DATE: July 27, 2016 (Date of pronouncement)
DATE: August 5, 2016 (Date of publication)
AY: 2010-11
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CITATION:
S. 50C: Valuation is a matter of estimation and some degree of difference is bound to be there. If the difference between the stamp duty valuation and the declared sale consideration is less than 10%, addition u/s 50C should not be made

Valuation is always a matter of estimation where some degree of difference is bound to occur. The difference between the valuation adopted by the Stamp Valuation Authority and declared by the assessee is less than 10%

Posted in All Judgements, Tribunal

ADIT vs. Baan Global BV (ITAT Mumbai)

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DATE: June 13, 2016 (Date of pronouncement)
DATE: August 4, 2016 (Date of publication)
AY: 2006-07
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CITATION:
S. 9(1)(vi)/ Article 12: Consideration received for sale of computer software programme in CD Rom is not assessable as “royalty”. The retrospective amendment in Explanation 4 to section 9(1)(vi) to tax such receipts as royalty has no application to DTAA if the definition of the term “royalty” in the DTAA has remained unchanged

The retrospective amendment brought into statute with effect from 01.06.1976 cannot be read into the DTAA, because the treaty has not been correspondingly amended in line with new enlarged definition of ‘royalty’. The alteration in the provisions of the Act cannot be per se read into the treaty unless there is a corresponding negotiation between the two sovereign nations to amend the specific provision of “royalty” in the same line. The limitation clause cannot be read into the treaty for applying the provisions of domestic law like in Article 7 in some of the treaties, where domestic laws are made applicable. Here in this case, the ‘royalty’ has been specifically defined in the treaty and amendment to the definition of such term under the Act would not have any bearing on the definition of such term in the context of DTAA. A treaty which has entered between the two sovereign nations, then one country cannot unilaterally alter its provision

Posted in All Judgements, Tribunal

Jaipuria Infrastructure Developers vs. ACIT (ITAT Delhi)

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DATE: June 27, 2016 (Date of pronouncement)
DATE: July 14, 2016 (Date of publication)
AY: 2006-07, 2007-08
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CITATION:
An assessment made u/s 153A only on the basis of pre-search enquiries and because the parties did not appear in response to s. 133(6) summons is not valid if no incriminating material was found in search. A s. 143(1) Intimation is deemed to be a completed assessment if no notice u/s 143 (2) has been issued prior to the date of search. The ratio of CIT vs. Kabul Chawla 380 ITR 173 (Del) has to be understood by perusing the judgment in entirety and not by picking up the favourable sentences and by ignoring the unfavourable ones

The AO has not made assessment on the basis of incriminating material unearthed during search and seizure operation conducted u/s 132 rather proceeded u/s 153A of the Act on the basis of some pre-search enquiries to make an addition as has specifically been recorded in para 6 of the assessment order that, “Pre search enquiries revealed that M/s Jaipuria Infrastructure Developers Pvt. Ltd., the flagship company involved in the real estate business of the S.K. Jaipuria group is indulged in inflating the cost of the project by debiting bogus expenses by raising bills from the non-existing parties or the entry providers.

Posted in All Judgements, Tribunal

ACIT vs. Jindal Power Limited (ITAT Raipur)

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DATE: June 23, 2016 (Date of pronouncement)
DATE: July 4, 2016 (Date of publication)
AY: 2008-09
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CITATION:
S. 37(1): Expenditure on Corporate Social Responsibility (CSR), though voluntary, is allowable as business expenditure. Explanation 2 to s. 37(1) inserted w.e.f. 01.04.2015 is not retrospective. It applies only to CSR expenditure referred to in s. 135 of the Companies Act and not to voluntary CSR expenditure

The amendment in the scheme of Section 37(1), which has been introduced with effect from 1st April 2015, cannot be construed as to disadvantage to the assessee in the period prior to this amendment. This disabling provision, as set out in Explanation 2 to Section 37(1), refers only to such corporate social responsibility expenses as under Section 135 of the Companies Act, 2013, and, as such, it cannot have any application for the period not covered by this statutory provision which itself came into existence in 2013. Explanation 2 to Section 37(1) is, therefore, inherently incapable of retrospective application any further. In any event, as held by Hon’ble Supreme Court’s five judge constitutional bench’s landmark judgment, in the case of CIT Vs Vatika Townships Pvt Ltd [(2014) 367 ITR 466 (SC)], the legal position in this regard has been very succinctly summed up by observing that “Of the various rules guiding how legislation has to be interpreted, one established rule is that unless a contrary intention appears, legislation is presumed not to be intended to have a retrospective operation

Posted in All Judgements, Tribunal

R K P Company vs. ITO (ITAT Raipur)

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DATE: June 24, 2016 (Date of pronouncement)
DATE: July 4, 2016 (Date of publication)
AY: 2010-11
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CITATION:
S. 40(a)(ia): When there are conflicting judgements of non-jurisdiction High Courts, the Tribunal is not permitted to choose based on its perception of what the correct law is because it will amount to sitting in judgement over the High Courts’ views. Instead, it has to follow the view which is in favour of the assessee even if it believes that this view is not the correct law. Second proviso to s. 40(a)(ia) inserted by FA 2013 should be treated as retrospectively applicable from 1st April 2005

It will be wholly inappropriate for us to choose views of one of the High Courts based on our perceptions about reasonableness of the respective viewpoints, as such an exercise will de facto amount to sitting in judgment over the views of the High Courts something diametrically opposed to the very basic principles of hierarchical judicial system. We have to, with our highest respect of both the Hon’ble High Courts, adopt an objective criterion for deciding as to which of the Hon’ble High Court should be followed by us. We find guidance from the judgment of Hon’ble Supreme Court in the matter of CIT vs. Vegetable Products Ltd. [(1972) 88 ITR 192 (SC)]. Hon’ble Supreme Court has laid down a principle that “if two reasonable constructions of a taxing provisions are possible, that construction which favours the assessee must be adopted”. This principle has been consistently followed by the various authorities as also by the Hon’ble Supreme Court itself

Posted in All Judgements, Tribunal

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