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DATE: June 4, 2015 (Date of pronouncement)
DATE: August 18, 2015 (Date of publication)
AY: 2008-09
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Transfer Pricing: The allotment of shares/ receipt of share application money by the assessee from the AE for a price less than the book value of the shares cannot be regarded as a “deemed loan” by the assessee to the AE and notional interest cannot be imputed thereon

Though the international transaction on capital account per se cannot call for any addition on account of transfer pricing adjustment because of the absence of any provision under the Act charging income from such transactions, but the transactions flowing out of such original transaction on capital account, having impact on the profitability of the assessee, would be required to pass the mandate of Chapter-X of the Act. In other words, if such offshoot transactions of the original transaction on capital account, such as, interest or depreciation are not at arm’s length price, then it is mandatory to determine their ALP and make addition, if any, on account of transfer pricing adjustment

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DATE: August 6, 2015 (Date of pronouncement)
DATE: August 10, 2015 (Date of publication)
AY: 2003-04
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S. 147: The revenue audit cannot perform functions of judicial supervision and a reopening based on the interpretation of the audit cannot be sustained. However, a reopening based on communication of the law or factual inaccuracy by the audit is valid

The logic in not sustaining the initiation of reassessment on the basis of interpretation of law by the audit party is that the internal auditor cannot be allowed to perform functions of judicial supervision over the Income-tax authorities by suggesting to the Assessing Officer about how a provision should be interpreted and whether the interpretation so given by the AO to a particular provision of the Act is right or wrong

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DATE: July 8, 2015 (Date of pronouncement)
DATE: July 27, 2015 (Date of publication)
AY: 2009-10
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Articles 13 & 15 of DTAA: Law on whether if a sum cannot be assessed as "fees for technical services" under the "make available" clause of Article 13, it can still be assessed as "Independent personal services" under Article 15 explained

The assessee’s contention that since the services contracted for the by the assessee with non-residents fall within the meaning of Article 13 but get excluded because of not `making available’ any technical knowledge etc., then such services cannot be once again considered under Article 15 is not acceptable. The precise question is that which of the two Articles, namely, 13 or 15, should have primacy in the facts and circumstances as are instantly prevailing?

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DATE: May 26, 2015 (Date of pronouncement)
DATE: May 29, 2015 (Date of publication)
AY: 2010-11
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S. 40(a)(i): As there is no requirement in the Act to deduct TDS on purchases made from Indian residents, imposing such a condition while making payments to non-residents violates the non-discrimination provision in Article 24 of the DTAA

Article 24 provides in unequivocal terms that for the purposes of determining the taxable profits of an Indian enterprise, any disbursements made to a Japanese enterprise shall be deductible in the same manner as if it had been made to an Indian resident. When we examine the TDS provisions, it is noticed that no provision under the Chapter XVII of the Act stipulates for deduction of tax at source from payment made for the purchases made from an Indian resident. This position when contrasted with purchases made from a non-resident, imposes liability on the purchaser for deducting tax at source under section 195, subject to the fulfilment of other conditions. When we compare an Indian enterprise purchasing goods from an Indian party vis-a-vis from a Japanese party, there is possibility of an obvious discrimination in terms of disallowance of purchase consideration under section 40(a)(i) in so far as the purchases from a Japanese enterprise are concerned. It is this discrimination which is sought to be remedied by para 3 of Article 24

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DATE: March 10, 2015 (Date of pronouncement)
DATE: March 27, 2015 (Date of publication)
AY: 2010-11
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Factors to be considered for classifying gains from sale of listed shares into "short-term capital gains" versus "business profits" explained

It is an undisputed fact that the assessee took delivery of such shares after making full payment and it was not a case of settling the transaction of purchase and sale of such shares during the settlement period itself. This is another reason to indicate that the intention of the assessee to hold them as Investment

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DATE: January 30, 2015 (Date of pronouncement)
DATE: February 2, 2015 (Date of publication)
AY: 2008-09
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S. 92C: Transactions which are not closely linked cannot be aggregated for determining ALP. Cherry-picking is not allowed. If there are a number of comparable uncontrolled transactions, the average price has to be taken

The mandate of this section is to determine the ALP of ‘an’ international transaction. The term ‘transaction’ has been defined under rule 10A(d) to mean ‘a number of closely linked transactions’. It follows that the ALP of more than one transaction can be determined as one unit, only if they are closely linked transactions. In such a case, the plural of international transactions shall be considered as a singular for the purposes of benchmarking as a single transaction

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DATE: January 16, 2015 (Date of pronouncement)
DATE: January 19, 2015 (Date of publication)
AY: 2003-04
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CITATION:
S. 153C: Even if the AO of the person searched and the 'other person' is the same, the recording of satisfaction by the AO having jurisdiction over the person searched is an essential and prerequisite condition for bestowing jurisdiction to the AO of the ‘other person. Impact of amendment by Finance (No. 2) Act 2014 w.e.f. 1.10.2014 considered

It is a clear-cut proposition that the recording of satisfaction by the AO having jurisdiction over the person searched is an essential and prerequisite condition for bestowing jurisdiction to the AO of the ‘other person.’ On a close comparative study, it is overt that in so far as the question of acquiring jurisdiction by the AO of the person other than the person searched is concerned, the provisions of section 153C are in pari materia with section 158BD

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DATE: December 4, 2014 (Date of pronouncement)
DATE: December 5, 2014 (Date of publication)
AY: 2007-08
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Transfer Pricing: Companies which are functionally similar to the assessee cannot be excluded merely because of high or low turnover

When a company is functionally similar to that of the assessee company, the same cannot be excluded merely because of its turnover at a higher or lower level. Here it is important to mention that sec. 92C(1) of the Income-tax …

Calibrated Healthcare Systems India Pvt. Ltd vs. ACIT (ITAT Delhi) Read More »

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DATE: November 28, 2014 (Date of pronouncement)
DATE: December 3, 2014 (Date of publication)
AY: 2004-05
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Transfer Pricing: Comparables with more than 25% RPTs have to be excluded. There are no fetters on the assessee's right to claim that a comparable included by him should be excluded

(i) The principal question about the exclusion of companies with more than 25% RPTs from the list of comparables on account of these becoming controlled transactions, has been fairly decided by various benches of the Tribunal. It has been held …

ACIT vs. Convergys India Service (P) Ltd (ITAT Delhi) Read More »

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DATE: November 28, 2014 (Date of pronouncement)
DATE: December 1, 2014 (Date of publication)
AY: 2006-07
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Transfer Pricing: Updated information not available at the time of the TP study but available at the stage of assessment has to be considered by AO

In the light of the facts on record, on a consideration of the same we are of the view that the reliance placed on the data available in the public domain at the time of the assessment proceedings which was …

ADIT vs. M/s I. M. Technologies (ITAT Delhi) Read More »