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DATE: January 1, 2015 (Date of pronouncement)
DATE: February 2, 2015 (Date of publication)
AY: 2009-10
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CITATION:
Disallowance u/s 14A r.w. Rule 8D cannot exceed the exempt income

The assessee only received Rs.1,82,362 as dividend income, therefore, there is no question of disallowance of Rs.14,58.412 by invoking section 14A r.w. Rule 8D. Disallowance u/s 14A r.w. Rule 8D cannot exceed the exempt income.

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DATE: January 30, 2015 (Date of pronouncement)
DATE: February 2, 2015 (Date of publication)
AY: 2006-07
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CITATION:
S. 54F is a beneficial provision which has to be construed liberally. Even if construction/ purchase of new house is not completed within stipulated period, deduction is admissible if investment is made

If the assessee has invested the money in construction of residential house, merely because the construction was not complete in all respects and it was not in a fit condition to be occupied within the period stipulated, that would not disentitle the assessee from claiming the benefit under section 54F

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DATE: January 22, 2015 (Date of pronouncement)
DATE: February 2, 2015 (Date of publication)
AY: -
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CITATION:
S. 2(15): Receiving fees simplicitor is not reason enough to hold that the activity is not a charitable activity. The fundamental essence of the activity has to be seen

The true test for deciding whether an activity is business activity is (i) whether the said activity undertaken with a profit motive, or (ii) whether the said activity has continued on sound and recognized business principles, and pursued with reasonable continuity. In a situation in which an activity is not undertaken with a profit motive or on sound and recognized business principles, such an activity cannot be considered to be a business activity

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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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CITATION:
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 29, 2015 (Date of pronouncement)
DATE: February 2, 2015 (Date of publication)
AY: 2007-08
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CITATION:
S. 9(1)(vii): Reimbursement of expenditure under cost-sharing agreement does not constitute "income" and there is no obligation to deduct TDS u/s 195

A perusal of the decision of the Supreme Court in Tejaji Farasram Kharawalla Limited (1967) 67 ITR 95 (SC) clearly shows that Supreme Court has categorically held that the reimbursement of the actual expenses would not be taxable in the hands of the person receiving the reimbursements

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DATE: January 19, 2015 (Date of pronouncement)
DATE: January 22, 2015 (Date of publication)
AY: 2009-10
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CITATION:
S. 14A/ Rule 8D: (i) Expenditure (like audit fees) required to be incurred irrespective of income cannot be disallowed, (ii) investments in subsidiaries are not to earn dividend income and cannot be considered for disallowance

It is also evident from the balance sheet of the Appellant Co., its investments in shares were only in two subsidiary companies. Such investments in subsidiary companies were made by the Appellant to acquire/promote the subsidiary companies which are in the media business and were not made purely for earning dividend income. Neither any dividend income has been earned since the time such investments were made in the shares of the subsidiary companies. Hence, such investments cannot be considered for disallowance u/s 14A read with Rule 8D

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DATE: January 14, 2015 (Date of pronouncement)
DATE: January 22, 2015 (Date of publication)
AY: 2008-09
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CITATION:
While delay in recovery of debt from AE is an "international transaction", it is a part of the transaction of sale and its ALP has to be evaluated on an overall basis

After the insertion of explanation to section 92B(1), the payment or deferred payment or receivable or any debt arising during the course of business fall under the expression international transaction as per explanation. Therefore, in view of the expanded meaning of the international transaction as contemplated under clause (i) (e) of explanation to section 92B(1), the delay in realization of dues from the AE in comparison to non-AE would certainly falls in the ambit of international transaction. However, this transaction of allowing the credit period to AE on realization of sale proceeds is not an independent international transaction but it is a closely linked or continuous transaction along with sale transaction to the AE. The credit period allowed to the party depends upon various factors which also includes the price charged by the assessee from purchaser. Therefore, the credit period extended by the assessee to the AE cannot be examined independently but has to be considered along with the main international transaction being sale to the AE

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DATE: January 21, 2015 (Date of pronouncement)
DATE: January 22, 2015 (Date of publication)
AY: 2007-08
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CITATION:
S. 5(1) r.w. Art 16(1) of DTAA: Taxability of stock options allotted outside India by foreign co to NOR employee for services rendered in India considered

Without ascertaining how much of the SOTP is attributable to services rendered in India, the entire amount cannot be made taxable only because the money was received in India. Therefore, we are of the view that the assessee having residential status of ‘not ordinarily resident’, only that portion of the stock awards and SOTP attributable to services rendered in India can form part of total income for the assessment year

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DATE: January 13, 2015 (Date of pronouncement)
DATE: January 21, 2015 (Date of publication)
AY: -
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CITATION:
S. 11 (charity) and 12AA (cancellation of registration): Important propositions of law laid down

s.12AA(3) has no retrospective effect as it is neither explanatory nor clarificatory in nature and the CIT has no power to rescind the order passed by the CIT prior to 1st Oct.2004. For an assessee to be classified as charitable under the residuary category i.e. “advancement of any other object of general public utility” u/s 2(15) of the Act, the following four factors have to be satisfied

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DATE: January 16, 2015 (Date of pronouncement)
DATE: January 21, 2015 (Date of publication)
AY: 2006-07
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CITATION:
(i) ALP of interest on loan granted to European AE has to be based on Euribor, (ii) If technical know-how is transferred by reserving certain rights, there is no "transfer" for s. 2(47) capital gains, (iii) interest u/s 244A is not taxable if withdrawn

Though, technical know-how is a capital asset, it does not necessarily follow that all receipts from exploitation of such asset are to be treated as capital receipts. Revenue receipts can also be generated by exploiting capital assets

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