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S. 271(1)(c) Penalty + 14A On Trading Stock + FTS + 40(a)(i) TDS

DATE: (Date of pronouncement)
DATE: September 3, 2012 (Date of publication)

ACIT vs. Ashok Raj Nath (ITAT Delhi) Click here to download the judgement (ashok_raj_penalty_143_2.pdf)

Despite s. 143(2) notice, Revised ROI saves from s. 271(1)(c) penalty
Merely because a notice u/s 143(2) had already been issued and the assessee filed revised return thereafter, disclosing additional income towards capital gains, which was not correctly shown in the original return, does not tantamount to detection of concealment of income u/s. 271(1)(c) of the Act (Suresh Chandra Mittal 251 ITR 9 (SC) followed) {see also Radheshyam Sarda (ITAT Indore)}
Esquire Pvt. Ltd vs. DCIT (ITAT Mumbai) Click here to download the judgement (esquire_14A_stock_in_trade.pdf)

S. 14A does not apply to dividend on shares held for trading purposes

If the dividend income is incidental to trading activity, following the principles laid down in CCI Ltd vs. JCIT 206 Taxman 563 (Kar), expenditure incurred in acquiring shares cannot be apportioned to the dividend for making disallowance u/s 14A. As held in CIT vs. Smt. Leena Chandran 339 ITR 296 (Ker) interest paid on funds borrowed for acquisition of shares in the form of investment would only attract disallowance under section 14A {see also Yatish Trading 129 ITD 237 ; Contra: American Express }

DCIT vs. Dodsal Pvt. Ltd (ITAT Mumbai)Click here to download the judgement (Dodsal_seperate_contract_integral_supply.pdf)

Installation & commissioning services are an integral part of supply and not assessable as "fees for technical services" despite seperate contract
Though there was a seperate contract for supply and a seperate one for installation and commissioning services, the said services had to be treated as "ancillary and subsidiary as well as inextricable and essentially linked to the sale/supply of the equipment" and, therefore, was not chargeable to tax in India in the hands of the Canadian company as "fees for included services". Consequently, the s. 40(a)(i) disallowance was not sustainable.
Channel Guide India Ltd vs. ACIT (ITAT Mumbai) Click here to download the judgement (channel_guide_TDS_40_a_i.pdf)

S. 40(a)(i) disallowance cannot be made on basis of retrospective law
At the time the payments were made, the rentals for user of satellite were not chargeable to tax as "royalty" u/s 9(1)(vi) as per Asia Satellite 332 ITR 340 (Del) & B4U International and so there was no obligation of TDS. The retrospective amendment by FA 2012 cannot create an obkligation for TDS because the law cannot possibly compel a person to do something which is impossible to perform

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