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Posted on by Dhaval Shah — No Comments ↓
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DATE: April 6, 2016 (Date of pronouncement)
DATE: April 13, 2016 (Date of publication)
AY: 2005-06
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S. 2(22)(d): Redemption of preference shares does not constitute "deemed dividend"

As can be seen by s. 2(22)(d), there should be a reduction of its capital and distribution to the shareholders out of the accumulated profits. Section 80(3) of the Companies Act states that the redemption of preference shares under this section by a company shall not be taken as reducing the amount of its authorised share capital. By virtue of section 80(3) redemption of preference shares cannot be considered as reduction of authorised share capital, therefore, treating them as deemed dividend does not arise, as the provisions of section 2(22)(d) can only be invoked only when there is distribution of accumulated profits by way of reduction of share capital. Therefore the question of invoking deemed dividend provision on this transaction does not arise, eventhough the redemption of shares are to be made out of the profits of the company by virtue of section 80(1) of the Companies Act. However, since it cannot be treated as reduction of authorised share capital by virtue of section 80(3) of the Companies Act, the amount received by assessee on redemption of preference shares cannot be treated as deemed dividend

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Posted on by itatbar — No Comments ↓
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DATE: December 22, 2015 (Date of pronouncement)
DATE: April 5, 2016 (Date of publication)
AY: 2007-08
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S. 271(1)(c): If show-cause notice does not delete inappropriate words whereby it was not clear as to whether the default is concealing particulars of income or for furnishing inaccurate particulars of income, the levy of penalty is invalid

The Tribunal quashed penalty proceedings initiated u/s 271(1)(c) for AY 2007-08 as penalty show cause notice failed to specify default committed by assessee i.e. the AO did not delete inappropriate words / parts whereby it was not clear as to the default committed by assessee was for concealing particulars of income or for furnishing inaccurate particulars of income

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Posted on by itatbar — No Comments ↓
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DATE: February 19, 2016 (Date of pronouncement)
DATE: April 5, 2016 (Date of publication)
AY: 2009-10
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CITATION:
Transfer Pricing - alleged excess investment in share capital of wholly owned subsidiary cannot be termed as loan and notional interest charged thereon

The Tribunal deleted TP addition on account of a) alleged excess consideration paid on investment in share capital of wholly owned subsidiary re-characterized as loan b) and notional interest thereon on the ground that i. Chapter X of the Act is inapplicable to an international transaction on capital account which does not result in income chargeable to tax

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Posted on by editor — No Comments ↓
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DATE: February 29, 2016 (Date of pronouncement)
DATE: March 7, 2016 (Date of publication)
AY: 2005-06
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CITATION:
Entire law on difference between premium (salami) paid to acquire a lease and rent paid to use a lease explained in the context of whether a lease results in a transfer u.s 2(47)

By its nature the salami being a non-recurring payment -made by a tenant to the landlord at the inception of the grant of the lease has a/ways been regarded as a receipt of a capital nature in the hands of the landlord. The finding that had been recorded by the Tribunal was that this payment was made to the assessee by the tenants for getting them accepted as tenants. In other words, it was by way of a premium or salami that these payments were received by the assessee as a consideration for granting monthly tenancies to the tenants. Obviously, it was a non-recurring payment made by the tenants to the assessee for the purpose of getting the monthly tenancy. Every payment by way of a salami or a premium need not necessarily be held to be of a capital nature or on capital account, but since prima facie that is the nature of such payment it is for the department to establish facts which would go to show that such payment was in the – nature of income and not on capital account

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Posted on by editor — No Comments ↓
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DATE: October 7, 2015 (Date of pronouncement)
DATE: November 18, 2015 (Date of publication)
AY: 2005-06
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S. 115JB: Even a non-taxable capital receipt credited to the P&L A/c cannot be excluded while computing the book profits. The fact that the notes to the A/cs state that the receipt is on capital account is irrelevant. Shivalik Venture distinguished

The decisions relied upon by the assessee are applicable on the facts and circumstances where if an item of income or expenditure which is required to be disclosed in the P&L A/c prepared as per provisions of Schedule VI of the Companies Act but instead of disclosing the said item in the P&L A/c, it was disclosed in the Notes to the accounts, then such item of income or expenditure will be treated as part of the P&L A/c for the purpose of computing book profits u/s 115JB. Once P&L A/c is admittedly prepared as per Schedule VI of the Companies Act, then neither the AO has any power to tinker with it nor the assessee is permitted to claim exclusion or inclusion of any item of income or expenditure as the case may be, for the purpose of computing book profits u/s 115JB except the permissible adjustment provided under the Explanation to sec. 115JB of the Act itself

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DATE: December 31, 2014 (Date of pronouncement)
DATE: January 7, 2015 (Date of publication)
AY: 2006-07
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Transfer Pricing: Comparables have to be excluded by the turnover filter without a FAR analysis being required to be conducted. The AO cannot rely on information obtained u/s 133(6)

Turnover is an important filter which has to be adopted for determination of the ALP. The FAR analysis would not alter the turnover of the company. The TPO has drawn conclusions on the basis of information obtained by issue of notice u/s.133(6) of the Act. This information which was not available in public domain could not have been used by the TPO

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Posted on by editor — 14 Comments ↓
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DATE: December 5, 2014 (Date of pronouncement)
DATE: December 8, 2014 (Date of publication)
AY: 2008-09 to 2010-11
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(i) S. 153A: Even in non-pending assessments where no incriminating material is found, AO is not limited to assessing “undisclosed” income, (ii) revenue expenditure on leased premises is not hit by sub-section (1A) to s. 32 or Explanation 1 to s. 32, (iii) Even income voluntarily disclosed in search is liable for 2. 234B/C interest

(i) The circumstance where proceedings are not pending and no incriminating material is found in the course of search has been left unanswered by the Delhi High Court in Anil Kumar Bhatia 352 ITR 493 (Del). In this case, the …

M/s. Nandini Delux vs. ACIT (ITAT Bangalore) Read More »

Posted on by editor — 2 Comments ↓
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DATE: November 28, 2014 (Date of pronouncement)
DATE: November 29, 2014 (Date of publication)
AY: 2009-10
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CITATION:
Profits on sale of carbon credits is not a taxable revenue receipt

Carbon credit is in the nature of “an entitlement” received to improve world atmosphere and environment reducing carbon, heat and gas emissions. The entitlement earned for carbon credits can, at best, be regarded as a capital receipt and cannot be …

Subhash Kabini Power Corporation Ltd vs. CIT (ITAT Bangalore) Read More »

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DATE: November 14, 2014 (Date of pronouncement)
DATE: November 18, 2014 (Date of publication)
AY: 2010-11 & 2011-12
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The term "any sum" in s. 194LA TDS does not cover a case where there is no monetary consideration but Development Right’s Certificate (DRC) are issued

The issue that arises for consideration is as to whether provisions of s.194LA of the Act are applicable to a case where (a) there was no compulsory acquisition; (b) there was no payment of any monetary consideration. (i) The process …

Bruhat Bangalore Mahanagar Palike vs. ITO (ITAT Bangalore) Read More »

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DATE: October 10, 2014 (Date of pronouncement)
DATE: October 28, 2014 (Date of publication)
AY: 2005-06
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CITATION:
Second proviso to s. 40(a)(ia) inserted w.e.f. 1.4.2013 should be treated as retrospectively applicable from 1.4.2005 and no disallowance for want of TDS can be made if payee has paid tax thereon. Assessee must be given opportunity to file Form 26A

The undisputed fact is that the assessee has not deducted tax at source on the payments made to Uday Kumar Shetty. The fact that the payee has accounted for these payments in his books of account, financial statements and the …

G. Shankar vs. ACIT (ITAT Bangalore) Read More »