Payment received as non-competition fee under a negative covenant was always treated as a capital receipt till AY 2003-04. It is only by s. 28(va) inserted by FA 2002 w.e.f. 1.4.2003 that the said capital receipt is now made taxable. S. 28(va) is amendatory and not clarificatory

Parliament is constitutionally restricted from enacting legislation with respect to extra-territorial aspects or causes that do not have, nor expected to have any, direct or indirect, tangible or intangible impact(s) on or effect(s) in or consequences for: (a) the territory of India, or any part of India; or (b) the interests of, welfare of, well-being of, or security of inhabitants of India, and Indians. In all other respects, Parliament may enact legislation with extra-territorial effect. This power is not subject to tests of “sufficiency” or “significance” or in any other manner requiring a pre-determined degree of strength. All that is required is that the connection to India be real or expected to be real, and not illusory or fanciful

5 Judge Bench of the Supreme Court recalls law requiring PSUs to obtain COD approval

S. 115J/115JA are special provisions. For purposes of advance tax the evaluation of current income and the determination of the assessed income had to be made in terms of the statutory scheme comprising s. 115J/115JA. Hence, levying of interest was inescapable. The assessee was bound to pay advance tax under the scheme of the Act. S. 234B is clear that it applies to all companies. There is no exclusion of s. 115J/115JA in the levy of interest u/s 234B (Kwality Biscuits Ltd vs. CIT 243 ITR 519 (Kar) (SLP dismissed in 284 ITR 434) considered)

The assessee’s argument that as the creation of the revaluation reserve was not debited to the P&L A/c, the withdrawal from the reserve should be excluded from the P&L A/c in terms of clause (i) of the Explanation to s. 115JB(2) read with the Proviso is not acceptable because had the assessee deducted the full depreciation from the profit before depreciation in AY 2001-02 it would have shown a loss and could not have paid the dividends. Therefore, the assessee credited the amount to the extent of the additional depreciation from the revaluation reserve to present a more healthy balance sheet to its shareholders enabling the assessee possibly to pay out a good dividend. It is precisely to tax these kinds of companies that MAT provisions had been introduced. The object of MAT provisions is to bring out the real profit of the companies. The thrust is to find out the real working results of the company. Thus, the reduction sought by the assessee under clause (i) to the Explanation to s. 115JB(2) in respect of depreciation has been rightly rejected by the AO

Department’s Appeals Should Not be Dismissed For Delay

The scheme of s. 115JA (1) and 115JAA shows that right to set-off the tax credit follows as a matter of course once the conditions of s. 115JAA are fulfilled. The grant of credit is not dependent upon determination by the AO except that the ultimate amount of tax credit to be allowed depends upon the determination of total income for the first assessment year. Accordingly, the assessee is entitled to take into account the set off while estimating its liability to pay advance tax. If this interpretation is not given, there will be absurdity

Judgement of the P&H High Court in Coca Cola India Inc vs. ACIT 309 ITR 194 on transfer pricing in cases not leading to “erosion of tax revenue” nullified

Judgement of the Delhi High Court in Maruti Suzuki vs. ACIT 328 ITR 210 (Del) on transfer pricing of trademarks & brands licensing nullified

Complications arise in cases where the fair market value is required to be assigned to transactions between related parties u/s 40A(2). The CBDT should examine whether Transfer Pricing Regulations can be applied to domestic transactions between related parties u/s 40A(2) by making amendments to the Act. The AO can be empowered to make adjustments to the income declared by the assessee having regard to the fair market value of the transactions between the related parties and can apply any of the generally accepted methods of determination of arm’s length price, including the methods provided under Transfer Pricing Regulations