Search Results For: Pramod Kumar (AM)


Doshi Accounting Services Pvt Ltd vs. DCIT (ITAT Ahmedabad Special Bench)

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DATE: December 26, 2018 (Date of pronouncement)
DATE: December 29, 2018 (Date of publication)
AY: 2007-08, 2008-09
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Guidelines specified to ensure expeditious hearing of cases referred to Special Benches and Third Members: Inordinate delay in fixation of hearing of Special Bench & Third Member cases is inappropriate and contrary to the scheme of the Act. It also reduces the efficacy and utility of the mechanism to deal with important matters

We share the anguish of the learned counsel. The sequence of events, as set out above, does clearly shows inordinate delay in the special bench case being taken up. It appears that despite specific requisition by the learned Judicial Member and for the reasons best known to the persons concerned, the Registry has not taken care to do the necessary follow up and ensure that the matter is listed for hearing expeditiously, so as to ensure timely disposal of appeals referred to the special benches. The importance of timely disposal of special bench cases and Third Member cases can hardly be over-emphasised. These cases deserve to be taken up on top priority basis. We are of the view that such an inordinate delay in fixation of hearing of special benches cases, particularly when stay is granted, is not only inappropriate and contrary to the scheme of the Act, but it does reduce the efficacy and utility of the mechanism of special benches to deal with important matters on which there is divergence of views by the division benches or which are otherwise of wider ramifications and national importance. Similarly, inordinate delays in disposal of Third Member cases, by itself, makes the expression of dissenting opinion less effective and useful. We, therefore, deem it fit and proper to formulate the following guidelines with a view to ensure the expeditious hearing of cases referred to Special Benches and Third Members

Farrukhabad Investment (India) Ltd vs. DCIT (ITAT Agra Third Member)

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DATE: August 9, 2018 (Date of pronouncement)
DATE: October 5, 2018 (Date of publication)
AY: 1997-98
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S. 271(1)(c) Penalty: Law explained on whether penalty can be imposed where (i) income is added or disallowance is made on estimate basis, (ii) books of account cannot be produced for reasons beyond control, (iii) disallowance is made as per retrospective insertion of s. 37(1) Explanation & (iv) allegation regarding concealment vs. furnishing inaccurate particulars is vague & uncertain

Where income is estimated or disallowance of expenses i made on estimate basis, there can be no penalty. The raison d’etre for non-imposition of penalty in both the situations is that there is a lack of precision as to concealment of income or furnishing of inaccurate particulars of income. It is only an estimation shorn of any certainty or accuracy

Pee Aar Securities Ltd vs. DCIT (ITAT Delhi)

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DATE: August 23, 2018 (Date of pronouncement)
DATE: August 30, 2018 (Date of publication)
AY: 2005-06
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S. 68 Bogus share capital: A private limited co cannot say that it has no clue about the subscribers to its share capital. The genuineness of the transaction has to be determined by ground realities and not by documents like PAN cards, board resolutions, share certificates etc. Even shell cos have these documents. If the assessee is not able to produce the brains behind these companies and the documents with respect to their financials, the transaction cannot be regarded as genuine

As the things stand now, genuineness of transactions is to be examined in the light of the prevailing ground realities, and that is precisely what we have done. We are of the considered view that there is nothing to establish genuineness of the share subscription transactions on the facts of this case. The assessee does not know anything about these companies or these persons. The assessee has no documents about their financial activities or their balance sheets. The assessee is a private limited company and these entities could not have therefore been rank outsiders like walk in investors and yet the assessee does not throw enough light on these entities. A lot of emphasis is placed on bank transactions, on PAN cards and on board resolutions but all these factors have to be present in the cases of shell companies involved in money laundering as well. Nothing, therefore, turned on these documents so far as genuineness aspect is concerned. It is also a settled legal position that the onus of the assessee, of explaining nature and source of credit, does not get discharged merely by filing confirmatory letters, or demonstrating that the transactions are done through the banking channels or even by filing the income tax assessment particulars

Moet Hennessy India Pvt Ltd vs. ACIT (ITAT Delhi)

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DATE: August 23, 2018 (Date of pronouncement)
DATE: August 30, 2018 (Date of publication)
AY: 2009-10
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S. 92B Transfer Pricing of AMP Expenditure: In the absence of material to suggest that there was an "arrangement, understanding or action in concert" with respect of the AMP expenditure incurred by the assessee, the TPO is not justified in coming to the conclusion that there was an international transaction u/s 92B and that the assessee should have recovered an amount from its AE. The request of the Dept for a remand to the TPO is not acceptable. A remand to the assessment stage cannot be a matter of routine; it has to be so done only when there is anything in the facts and circumstances to so warrant or justify

On a careful consideration of all these factors, including the inconsistency in the approach of the AO/TPO with respect to the AMP expenditure being in the nature of an international transaction as expenditure incurred on behalf of the assessee, including the quantum and nature of expenditure and including lack of any material to suggest that there was “an arrangement, understanding or action in concert” with respect of the expenditure incurred by the assessee and including the fact that, in our considered view, the expenditure incurred by the assessee was in nature of bonafide business expenditure in furtherance of its legitimate business interests, we are of the considered view that there is no legally sustainable basis for the TPO coming to the conclusion that there was an international transaction, under section 92B, on the facts of this case

Skaps Industries India Pvt Ltd vs. ITO (ITAT Ahmedabad)

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DATE: June 21, 2018 (Date of pronouncement)
DATE: June 23, 2018 (Date of publication)
AY: 2013-14, 2014-15
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S. 90(2) DTAA: The failure to submit a 'Tax Residency Certificate' (TRC) as required by s.90(4) is not a bar to the grant of benefits under the DTAA. However, the assessee is required to produce reasonable evidence of the entitlement of the foreign entity to benefits under the DTAA

Section 90(4), in the absence of a non-obstante clause, cannot be read as a limitation to the treaty superiority under Section 90(2), we are of the considered view that an eligible assessee cannot be declined the treaty protection under section 90(2) on the ground that the said assessee has not been able to furnish a Tax Residency Certificate in the prescribed form. De hors the statutory provision under Section 90(4), the assessee has to satisfy his eligibility for treaty protection nevertheless and the onus of satisfying the same by any other mode, i.e. other than a TRC, appears to be much more demanding than furnishing of a TRC. To be entitled for Indo US tax treaty benefits in India, a foreign enterprise has to establish that it is a resident of the other contracting state, i.e. the United States

Nokia Networks OY vs. JCIT (ITAT Delhi Special Bench)

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DATE: June 5, 2018 (Date of pronouncement)
DATE: June 7, 2018 (Date of publication)
AY: 1997-98
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Entire law explained on (a) whether a subsidiary of a foreign company constitutes "business connection" and/ or "fixed Permanent Establishment" and/or "Dependent Agent Permanent Establishment" of assessee in India, (b) whether any attributes of profits on account of signing, network planning and negotiation of off-shore supply contracts in India could be attributed to such business connection/ permanent establishment and (c) whether notional interest on delayed consideration of supply of equipment and licensing of software taxable in the hands of assessee as interest from vendor financing

HELD by majority in favour of the assessee:

According to the Supreme Court in Formula One World Championship Ltd. vs. CIT, reported in 394 ITR 80 (SC), the ‘disposal test’ is paramount which needs to be seen while analyzing fixed place PE under Article 5(1). Though in our humble understanding, the test of permanency qua fixed place has been slightly diluted by the Hon’ble Court but not the “disposal test”. Again this judgment of Hon’ble Supreme Court has been reiterated and referred extensively in a subsequent judgment by the Hon’ble Supreme Court in the case of ADIT vs. E-Fund IT Solution (2017) 86 taxmann.com 240, wherein the Hon’ble Apex Court had quoted extensively the same views and commentaries and also the judgment of Formula One World Championship Ltd. and held that there must exist a fixed place in India which is at disposal of foreign enterprise through which they carry on their own business. In that case, the Indian subsidiary company of the foreign enterprise was rendering support services which enabled the foreign enterprise in turn to render services to its client and the outsourcing of work to the Indian subsidiary was held to be not giving rise to fixed place of PE. This judgment of the Hon’ble Supreme Court nearly clinches the issue before hand in so far as role of Indian subsidiary while deciding the fix place PE.

HELD by minority in favour of the revenue:

The assessee company had a PE in India by way of the premises and existence of its Indian subsidiary Nokia India Pvt Ltd, and that the profit attributable to the specified operations of this PE are 3.75% of total sales of the equipment in India. The plea of the assessee against the existence of business connection and the existence of permanent establishment is to be rejected, and plea of the assessee on the attribution of profit is to be partly accepted in the terms

Rajat B Mehta vs. ITO (ITAT Ahmedabad)

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DATE: February 9, 2018 (Date of pronouncement)
DATE: February 10, 2018 (Date of publication)
AY: 2011-12
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S. 54: The expression “cost of the residential house so purchased” in s. 54 is not confined to the cost of civil construction but includes furniture and fixtures if they are an integral part of the purchase. The fact that the assessee did not make the claim is no reason to deny the claim if he is otherwise entitled to it (Scope of Srinivas R Desai 155 TTJ 743 (Ahd) expanded)

The expression used in the statute is “cost of the residential house so purchased” and it does not necessarily mean that the cost of the residential house must remain confined to the cost of civil construction alone. A residential house may have many other things, other than civil construction and including things like furniture and fixtures, as its integral part and may also be on sale as an integral deal. There are, for example, situations in which the residential units for sale come, as a package deal, with things like air-conditioners, geysers, fans, electric fittings, furniture, modular kitchens and dishwashers. If these things are integral part of the house being purchased, the cost of house has to essentially include the cost of these things as well

Vodafone India Services Pvt Ltd vs. DCIT (ITAT Ahmedabad)

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DATE: January 23, 2018 (Date of pronouncement)
DATE: January 24, 2018 (Date of publication)
AY: 2012-13
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Transfer Pricing: Important law explained on whether termination of Option rights under an agreement can be treated as a "deemed international transaction" under section 92B(2) of the Act read with Rule 10B (4) in the light of the judgements in Vodafone's own cases of the Supreme Court (341 ITR 1) and the Bombay High Court (385 ITR 169).

When we interpose the aforesaid statutory definition in Section 92C(1), we find that the expression ‘international transaction’ means “an arrangement, understanding or action in concert etc between two or more associated enterprises, either or both of whom are non-residents, in the nature of purchase, sale or lease of tangible or intangible property, or provision of services, or lending or borrowing money, or any other an arrangement, understanding or action in concert having a bearing on the profits, income, losses or assets of such enterprises ……..”. Therefore, in order to ascertain whether a particular transaction or not is an international transaction or not, the necessary preconditions which are to be satisfied are (a) that it is in the nature “an arrangement, understanding or action in concert etc”; (b) that it is between two or more associated enterprises, either or both of whom are non-residents; and (c) that it has a bearing on the profits, income, losses or assets of such enterprises

Claris Life Sciences Limited vs. DCIT (ITAT Ahmedabad) (Special Bench)

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DATE: September 26, 2017 (Date of pronouncement)
DATE: October 4, 2017 (Date of publication)
AY: 2008-09
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S. 140A/ 221(1): Law explained on whether an assessee who defaults on paying self assessment tax u/s 140A while filing the return of income is liable for penalty u/s 221(1) if he files a revised return of income and pays the tax thereon at the time of filing the revised return of income

As a plain reading of the above statutory provisions would show, the lapse, referred to in section 140A(1), is the failure “to pay such (admitted) tax together with interest payable under any provision of this Act for any delay in furnishing the return or any default or delay in payment of advance tax, before furnishing the return” and the lapses punishable under section 221(1) are the lapses in respect of “default in making a payment of tax”. The default triggering the penal liability under section 221(1) is the default in making payment of tax, and that the default in payment is tax is with reference to the filing of the income tax return. Viewed thus, default is committed at the point of time when a return of income is filed without making payment of the admitted tax liability. Clearly, therefore, the assessee committed a default in not paying the admitted tax liability when it filed the original income tax return, without payment of admitted tax liability, on 30th September 2008. To this extent, there is no dispute or ambiguity at all.The question then arises as to what is the impact of filing a revised income tax return

Hyundai Motor India Limited vs. DCIT (ITAT Chennai)

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DATE: April 27, 2017 (Date of pronouncement)
DATE: May 9, 2017 (Date of publication)
AY: 2009-10
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Transfer Pricing AMP Adjustment: Entire law on whether the advertisement expenditure incurred by the Indian AE towards brand of a foreign company can be treated as an “international transaction” and whether a notional adjustment can be made in the hands of the Indian AE towards compensation receivable from the foreign AE for “deemed brand development” explained

A service has to be conscious activity and it cannot be a subliminal exercise- as is the impact on brand value in this case. A service, by definition, is an act of helping, or doing something on behalf of, someone. A passive exercise cannot be defined as a service. Every benefit accruing to an AE, as a result of dealing with another AE, is not on account of service by the other AE. What I benchmarked is not the accrual of ‘benefit’ but rendition of ‘service’. All benefits are not accounts or services by someone, just as all services do not result in benefits to the parties. The expressions ‘benefit’ and ‘service’ have different connotations, and what is truly relevant, for the purpose of definition of ‘international transaction’ in Indian context, is ‘service’- not the benefit. There is no rendition of service in the present context

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