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Year: 2015

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DATE: January 9, 2015 (Date of pronouncement)
DATE: January 12, 2015 (Date of publication)
AY: 2005-06
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CITATION:
S. 50C: The consideration has to be determined on the basis of the circle-rate prevailing on the date of execution of sale deed and not on the basis of the circle-rate prevailing on the date of registration of the sale deed

It is manifest that u/s 50C, the value adopted by the stamp-valuation authority is deemed as the consideration for computation of capital gain. However, such valuation adopted by the stamp-valuation authority should be in respect of the transfer by the assessee, of the capital assets. This enhancement was beyond the control of the assessee (seller). It is also not the case of the revenue, that the buyer has given more than the consideration that has been accepted by the parties where they executed the agreement to sale.

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DATE: January 9, 2015 (Date of pronouncement)
DATE: January 12, 2015 (Date of publication)
AY: 2009-10
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CITATION:
Transfer Pricing: Law on making adjustments for 'risk' and 'location savings' explained

The arm’s length principle requires benchmarking to be done with comparables in the jurisdiction of tested party and the location savings, if any, would be reflected in the profitability earned by comparables which are used for benchmarking the international transactions. Thus in our view, no separate/additional allocation is called for on account of location savings

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DATE: January 7, 2015 (Date of pronouncement)
DATE: January 12, 2015 (Date of publication)
AY: 2008-09, 2009-10, 2010-11
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CITATION:
S. 40(a)(i): Usance charges paid by the Assessee on import of raw material from foreign countries attracts tax in India u/s 5(2)(b) r.w.s. 9(1)(v)(b)

From reading the decisions of the Hon’ble Supreme Court in CIT vs. Vijay Ship Breaking Corporation as reported in 314 ITR 309 (SC) and the Hon’ble Gujarat High Court (reported in 261 ITR 113) it is apparent that the Hon’ble Supreme Court has not reversed the decision in the case of CIT vs. Vijay Ship Breaking Corporation, 261 ITR 113 (supra) on the finding that the usance charges are not interest u/s 2(28A) except where an undertaking is engaged in the business of ship breaking in view of explanation (2) to Sec. 10(15)(iv)(c) inserted by the Taxation Laws (Amendment) Act, 2003 with retrospective effect

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DATE: January 9, 2015 (Date of pronouncement)
DATE: January 12, 2015 (Date of publication)
AY: 2009-10
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CITATION:
(i) Unabsorbed depreciation of AYs 1997-98 to 2001-02 is eligible for relief granted by amended s. 32(2) in AY 2002-03 (ii) Judgement of a non-jurisdictional High Court has to be preferred over the judgement of a Special Bench of the ITAT (iii) In the absence of exempt income, s. 14A disallowance cannot be added to s. 115JB book profits even if assessee has accepted s. 14A disallowance in the normal computation

The assessee may have accepted the disallowance under section 14A but once it is a settled legal position, in the light of the law laid down in CIT Vs Holcim India Pvt Ltd (Del) that there cannot be any disallowance under section 14A unless there is corresponding exempt income and the assessee has no such exempt income, adjustment under clause (f) of Explanation to Section 115JB (2) cannot indeed be made. The adjustment has to meet the tests of law and what cannot be considered to be ‘expenditure relatable to exempt income’ under the law, cannot be subjected to the adjustment either. There is no estoppel against the law. The mere fact that the assessee has accepted this disallowance affects that disallowance only and nothing more than that; it does not clothe such an adjustment, in computation of book profit under section 115JB, with legality

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DATE: January 6, 2015 (Date of pronouncement)
DATE: January 12, 2015 (Date of publication)
AY: 2009-10
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CITATION:
S. 22: Rent received from mobile phone company for use of terrace to install antenna is taxable as "Income from house property" and not as "Other sources"

The true test is whether the space rented out is part of the building or land appurtenant thereto. The rent is not for the antenna but for the space for installation of antenna. It is not the case of the Assessing Officer that the rent is for the antenna, and, therefore, it is wholly irrelevant whether antenna is part of the building or land appurtenant thereto. What is relevant is the space which has been rented out and, therefore, as long as the space, which has been rented out, is part of the building, the rent is required to be treated as “income from house property”.

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DATE: December 17, 2014 (Date of pronouncement)
DATE: January 10, 2015 (Date of publication)
AY: 1996-97
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CITATION:
S. 80-IA/ 80HHC: Despite the introduction of 'block of assets' depreciation cannot be thrust on the assessee while computing quantum of eligible deduction

Depreciation is optional to the assessee and once he chooses not to claim it, the Assessing Officer cannot allow it while computing the income. Further, once depreciation is optional, it will be optional for block of assets also. It is not necessary that the depreciation is allowable or not allowable as a whole. The assessee can claim it partly also in respect of certain block of assets and not claim in respect of other block of assets. Accordingly, for purposes of sections 80HHC and 80-IA, depreciation not claimed for by the assessee cannot be allowed as a deduction despite the introduction of the concept of block of assets

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DATE: December 5, 2014 (Date of pronouncement)
DATE: January 9, 2015 (Date of publication)
AY: 2007-08, 2008-09
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CITATION:
Bogus purchases: Merely because a party has admitted to indulging in sham/ accommodation transactions does not mean that all his transactions with the assessee should be treated as sham

We cannot accept a bald statement made by the AO that any transaction/business done with a party would be sham, simply because the opposite party besides doing regular business was also indulging in providing accommodation entries. Simply on the basis of statement given by the third party, that they were also providing accommodation entries as well, the conduct of the assessee cannot be doubted and held to be sham

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DATE: December 5, 2014 (Date of pronouncement)
DATE: January 9, 2015 (Date of publication)
AY: 2008-09
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CITATION:
Additions made solely on the basis of AIR information are not sustainable in law. The AO has to prove that assessee has received income from a particular source. The assessee cannot be expected to prove the negative

It has been held time and again by this Tribunal that the additions made solely on the basis of AIR information are not sustainable in the eyes of the law. If the assessee denies that he is in receipt of income from a particular source, it is for the AO to prove that the assessee has received income as the assessee cannot prove the negative

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DATE: December 10, 2014 (Date of pronouncement)
DATE: January 9, 2015 (Date of publication)
AY: 2008-09
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CITATION:
S. 50C/ 271(1)(c): Even if s. 50C is applicable, computing capital gain de hors it does not amount to furnishing inaccurate particulars of income or concealment of income for levy of penalty u/s 271(1)(c)

The Assessing Officer has not given any finding that the sale consideration disclosed by the assessee is not actual amount received as per the agreement of sale. The addition was made by invoking the deeming provisions of section 50C whereby the full value of consideration was adopted as per the valuation of the stamp duty authority for levy of stamp duty. The assessee has disclosed all relevant details as well as documents in support of its computation of Short term Capital Gain by taking into consideration the actual sale consideration received by the assessee. Consequently penalty u/s 271(1)(c) cannot be levied

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DATE: December 17, 2014 (Date of pronouncement)
DATE: January 9, 2015 (Date of publication)
AY: 2008-09
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CITATION:
S. 56(2)(vi): Amounts received under a Power of Attorney for making investments cannot be treated as income in the hands of the recipient

Section 56 of the Act deals with income from other sources. Sub-clause (vi) to section 56 (2) was inserted by taxation laws (amendment) Act, 2006, with effect from 01/04/2007. The plain reading of the aforementioned statutory provisions reveals that it is intended to tax a receipt of money without consideration. The impugned amount was received by the assessee for making the investment on behalf of Ustad Zakir Hussain, on the basis of Power of Attorney. If the provisions of the Act and the content of the Power of Attorney are kept in juxtaposition and analyzed then it can be concluded that the mutual funds, purchase and sold by the assessee were made on behalf of Shri Zakir Hussain

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