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DATE: May 22, 2015 (Date of pronouncement)
DATE: May 27, 2015 (Date of publication)
AY: 2008-09
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CITATION:
S. 40(a)(ia) second proviso was inserted by FA 2012 to rectify the unintended consequence of disallowance in the hands of the payer even if the payee has paid tax. It is curative and retrospective in operation. Assessee's claim of having obtained declarations u/s 197A from the payees should not be disbelieved without evidence. Assessee is not expected to go into the correctness of the declarations filed by the payees

The second proviso to section 40(a)(ia) of the Act inserted by the Finance Act, 2012 is curative in nature and intended to supply an obvious omission, take care of an unintended consequence and make the section workable. Section 40(a)(ia) without the second proviso resulted in the unintended consequence of disallowance of legitimate business expenditure even in a case where the payee in receipt of the income had paid tax. It has for long been the legal position that if the payee has paid tax on his income, no recovery of any tax can be made from the person who had failed to deduct the income tax at source from such amount

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DATE: May 13, 2015 (Date of pronouncement)
DATE: May 26, 2015 (Date of publication)
AY: 2008-09
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S. 14A Rule 8D(2)(iii): Even strategic investment in group concerns for purposes of control & not for earning dividend attracts disallowance. Plea that no expenditure is incurred to earn dividend is not acceptable because earning dividend is not an automatic process.

The term ‘expenditure’ as per section 14A would include the expenditures that are related to investments made i.e. expenditures on administration, capital expenses, travelling expenses, operating expenses etc. It is difficult to accept that the assessee company was making investments decisions to the tune of Rs.6,31,637 lakhs of public money without incurring a single penny out of its pocket. Such decisions are highly strategic in nature and are required to be made by highly qualified and experienced professionals. The same would also require market research and analysis. The assessee company by acquiring controlling interest in the subsidiary companies would also be required to attend board meetings and make policy decisions with regard to the aforesaid huge amount of investments made. By no stretch of imagination, it can be assumed that such activities were done without incurring any expenditure

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DATE: May 13, 2015 (Date of pronouncement)
DATE: May 26, 2015 (Date of publication)
AY: 2008-09
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CITATION:
S. 194-I applies only to amounts paid for “use” of the land and not for amounts paid to “acquire” the rights. Distinction between “lease premium” and “rent” explained

The purport of section 194 I of the Act is not to bring in its purview payments of any or every kind. Only those payments which are in the nature of “use” of land come within the ambit of section 194 I of the Act. The word “use” is therefore of prime importance for transactions where the consideration paid for the property would be termed as “rent”. The term “use “according to us has to be interpreted keeping in mind the relationship between the landlord and the tenant. The same cannot be extended to bring within its purview exploitation of any kind with reference to the property by changing its identity for its own benefit and thereafter selling it for profit

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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: December 2, 2014 (Date of pronouncement)
DATE: December 4, 2014 (Date of publication)
AY: 2008-09 & 2009-10
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S. 2(15)/ 11: Entire law on what is "charitable purpose" and scope of Proviso inserted by Finance (No.2) Act 2009 w.r.e.f. 01.04.2009 explained

(i) The purpose for which the assessee association, i.e. The Indian Chamber of Commerce, was established is a charitable purpose within the meaning of S. 2(15) of the Act. The assessee is carrying out the said activities which are incidental …

Indian Chamber of Commerce vs. ITO (ITAT Kolkata) Read More »

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DATE: November 5, 2014 (Date of pronouncement)
DATE: November 11, 2014 (Date of publication)
AY: 2004-05
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CIT(A) cannot decline to condone delay in filing appeal and still decide it on merits

We are of the view that in case CIT(A) chose not to condone the delay, he has no business to adjudicate the appeal on merits. For this, we are of the view that first of all, the appeal should be …

Dr. Murari Mohan Kokey vs. ITO (ITAT Kolkata) Read More »

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DATE: April 30, 2014 (Date of pronouncement)
DATE: November 3, 2014 (Date of publication)
AY: 2006-07
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S. 195: Reimbursement of share of costs towards administrative and management support services in connection with technology updates etc is not taxable

The assessee company is a member of the international organization of Ernst & Yound and its several associate concerns worldwide. Ernst & Young Global Services LLP and Ernst Young UK LLP provide administrative and management support services in connection with …

DCIT vs. Ernst & Young Pvt. Ltd (ITAT Kolkata) Read More »

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DATE: October 27, 2014 (Date of pronouncement)
DATE: October 28, 2014 (Date of publication)
AY: 2006-07
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S. 50C: AO cannot straightaway adopt stamp duty value as consideration for capital gains but must offer assessee benefit of reference to DVO for valuation

It is difficult to accept the proposition that the assessee had accepted that the price fixed by the District Sub Registrar was the fair market value of the property. No such inference can be made as against the assessee because …

ITO vs. Onkarmal Kajaria Family Trust (ITAT Kolkata) Read More »

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DATE: October 21, 2014 (Date of pronouncement)
DATE: October 24, 2014 (Date of publication)
AY: 2009-10
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CITATION:
Rule 8D(ii) & 8D(iii) do not apply to shares held as stock-in-trade. Loss arising out of derivatives from the income arising out of buying and selling of shares

(i) Both trading of shares and derivative transactions are not coming under the purview of Section 43(5) of the Act which provides definition of “speculative transaction” exclusively for purposes of section 28 to 41 of the Act. Again, the fact …

DCIT vs. Baljit Securities Private Limited (ITAT Kolkata) Read More »

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DATE: October 14, 2014 (Date of pronouncement)
DATE: October 21, 2014 (Date of publication)
AY: 2007-08
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Failure to record detailed reasons in assessment order does justifying s. 147 action. There is a statutory presumption that AO has applied his mind while passing assessment order

Section 147 of the Act, as substituted w.e.f. 01.04.1989 does not postulates conferment of power upon the AO to initiate reassessment proceeding upon his mere change of opinion. Further, if ‘reason to believe’ of the AO is founded on an …

Munshi Mini Rice Mill vs. ITO (ITAT Kolkata) Read More »