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Archive for February, 2011

Ericsson AB vs. ADIT (Delhi High Court)


February 14th, 2011

The DRP, being an authority created under a statute and conferred with the powers, has the obligation to act as a body living to the expectations which the law mandates. The DRP has to afford adequate opportunity for personal hearing and deal with the issues urged by a speaking order which would reflect cogent reasons. This is apt to say so that no assessee can have any kind of apprehension that the approach to the DRP is perfunctory


All Judgements, High Court | 2 Comments »

CIT vs. Rockman Cycle Industries (Punjab & Haryana High Court – Larger Bench)


February 12th, 2011

The authorities can determine the true legal relation resulting from a transaction and if some device has been used by the assessee to conceal true nature of the transaction, it is the duty of the authority to unravel the device and determine its true character. However, the legal effect of the transaction cannot be displaced by probing into the “substance of the transaction”. The taxing authority must not look at the matter from its own view point but that of a prudent businessman. Each case will depend on its own facts. The exercise of jurisdiction cannot be stretched to hold a roving enquiry or deep probe


All Judgements, High Court | 2 Comments »

CIT vs. Escorts Ltd (Delhi High Court)


February 11th, 2011

As the department had examined the fundamental nature of the transaction in the earlier years and its nature remained unchanged, the department could not have changed its view as regards the nature of the transaction by dubbing it as erroneous. Though the principle of res judicata does not apply to income-tax proceedings, Courts have held that where a fundamental aspect of a transaction is found as having permeated through different assessment years, the revenue is not permitted to change its view unless there is a change in circumstances. The department is not entitled to re-open an assessment based on a fresh inference of transactions accepted by the revenue for several preceding years on the pretext of dubbing them as erroneous. Associated Food Products 280 ITR 377 (MP), Sirpur Paper Mills Ltd 114 ITR 404 (AP) & CIT vs Gopal Purohit 228 CTR 582(Bom) followed


All Judgements, High Court | No Comments »

Transfer Pricing Implications Of Business Restructuring by Multi Nationals


February 9th, 2011

The Australian Taxation Office has issued a ‘Taxation Ruling’ dated 9.2.2011 in which it has discussed the application of the transfer pricing provisions to business restructuring by multinational enterprises


AAR, Others | No Comments »

Hyderabad Chemicals Supplies Ltd vs. ACIT (ITAT Hyderabad)


February 9th, 2011

That s. 80-IA deduction has to be computed after deduction of the notional brought forward losses and depreciation of business even though they have been allowed set off against other income in earlier years is concluded by the ITAT Special Bench judgement in ACIT vs. Gold Mine Shares & Finance (P) Ltd 113 ITD 209 (SB) (Ahd) against the assessee. As regards the High Court judgements in Mewar Oil & General Mills 271 ITR 311 (Raj) (not followed by the Special Bench) & Velayudhaswamy Spinning Mills vs. ACIT 38 DTR 57 (Mad) (delivered after referring to the Special Bench), though a judgement of a non-jurisdictional High Court prevails over a judgement of the Special Bench, the former cannot be followed, even though it is the only High Court judgement on the point, if “rendered without having been informed about certain statutory provisions that are directly relevant


All Judgements, Tribunal | No Comments »

CIT vs. Mahindra Finlease Pvt Ltd (Delhi High Court)


February 8th, 2011

In the context of regular assessment proceedings, it has been held in Lalji Haridas vs. ITO 43 ITR 387 (SC) that even when there is no specific provision in the Act for protective assessment, the AO has power to make such a protective assessment under certain circumstances. This principle of law will apply to block assessment proceedings u/s 158BC & 158BD as well and the AO has the power to make a block assessment order on a protective basis


All Judgements, High Court | No Comments »

ACIT vs. R.K.B.K Fiscal Services Ltd (ITAT Kolkata)


February 7th, 2011

The share transfer agreement merely refers to the sale of shares and the non-compete covenant and fixes the consideration at Rs. 90 & Rs. 15 respectively but does not refer to any “transfer of controlling interest”. The other circumstances (AoA etc) support the view that there was no transfer of controlling interest


All Judgements, Tribunal | 2 Comments »

Paharpur Cooling Towers Ltd vs. CIT (Calcutta High Court)


February 7th, 2011

The Explanation to s.73 creates a fiction that the loss suffered by certain companies from the business of purchase & sale of shares shall be deemed to be speculation loss. The Explanation is not inconsistent with the object of introduction. The CBDT Circular dated 24.7.1976 cannot be treated as guide for interpretation of s. 73 when the provision is very clear and free from any ambiguity


All Judgements, High Court | No Comments »

Intel Asia Electronics Inc vs. ADIT (ITAT Bangalore)


February 4th, 2011

The CUP method for determining the ALP is suitable when goods of a similar type are sold by independent enterprises. In an isolated transaction of sale of the PE as a ‘going concern’ to the AE, there are no similar comparable independent transactions available for comparison. In order to determine the ALP in the absence of other identical transactions, the valuation by a registered valuer is the most appropriate means under CUP method. However, as the valuation report filed by the assessee is not reliable, the only option is to adopt the value of the assets sold as per the company law or income-tax WDV. As the depreciation rates prescribed by company law are static, the WDV of the assets so arrived at will not be at par with the net present market value and, therefore, the valuation of the assets based on the book value is not justifiable. The only reasonable approach is to value the assets by applying the depreciation rates as provided by the income-tax Act for it is more dynamic and so schemed to bring in a notional charge on the profit and loss account to arrive at the actual income of an assessee keeping in view of the depletion of the assets


All Judgements, Tribunal | No Comments »

CIT vs. Oasis Hospitalities Pvt Ltd (Delhi High Court)


February 4th, 2011

S. 68 provides that if the assessee is not able to give satisfactory explanation as to the “nature and source” of a sum found credited in his books, the sum may be treated as the “undisclosed income” of the assessee. The initial burden is on the assessee to explain the “nature and source” of the credit and to do so, the assessee is required to prove (a) Identity of the shareholder; (b) Genuineness of transaction; and (c) credit worthiness of shareholders


All Judgements, High Court | 1 Comment »