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DATE: February 18, 2015 (Date of pronouncement)
DATE: November 23, 2015 (Date of publication)
AY: 2008-09
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The object of introduction of Securities Transaction Tax (STT) was to end litigation on the issue of whether profit earned from delivery based sale of shares is capital gains or business profit. Merely because the assessee liquidates its investment within a short span of time, which had given better overall earning to the assessee, would not lead to the conclusion that the assessee had no intention to keep on the funds as investor in equity shares, but was actually intended to trade in shares

The idea behind introduction of security transaction tax is to end the litigation on the issue, whether the profit earned from delivery based sale of shares is capital gains for business profit. Thus, w.e.f. 01.10.2004; on the share transactions subjected to STT; concessional tax rate of 10% (which has been increased to 15% from AY 2009-10) are applicable in respect of STCG whereas no tax is chargeable in respect of LTCG. It is also noted that the CBDT vide its Circular no.4/2007, dated 15.06.2007 has also recognized possibility of two portfolios, i.e. one ‘Investment portfolio’ comprising of securities which are to be treated as capital assets and the other ‘Trading portfolio’ comprising of stock in trade which are to be treated as trading assets. In view of these facts, profit arose on shares in respect of delivery based transaction are liable to be taxed as capital gain and not as business income.

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DATE: February 18, 2015 (Date of pronouncement)
DATE: March 16, 2015 (Date of publication)
AY: 2003-04
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Applying commonsense approach, unclaimed liabilities are assessable as income even if not credited to P&L A/c

If an amount is received in course of trading transaction, even though it is not taxable in the year of receipt as being of revenue character, the amount changes its character when the amount becomes the assessee’s own money because of limitation or by any other statutory or contractual right

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DATE: February 25, 2015 (Date of pronouncement)
DATE: March 9, 2015 (Date of publication)
AY: 2008-09
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CITATION:
S. 2(47)(v)/(vi): Land ceases to be a capital asset on date of application for conversion into N. A. land. Pursuant to amendment to s. 53A of TOP Act , non-registered development agreement does not result in transfer u/s 2(47)(v). Law in Chaturbhuj Dwarkadas Kapadia 260 ITR 491 (Bom) does not apply after amendment to s. 53A

As provisions of section 53A was amended in 2001 by which additional condition of registration of the written agreement was introduced and since in the instant case the agreement was not registered, the decision rendered by Hon’ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia 260 ITR 491 with respect to relevant provisions of section 53A applicable in A.Y. 1996-97 will not be applicable to the facts of instant case

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DATE: January 2, 2015 (Date of pronouncement)
DATE: February 13, 2015 (Date of publication)
AY: 2003-04
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S. 147/151: Non-mentioning in the reasons that approval has been obtained from the CIT vitiates the reopening

Another major discrepancy noticed during the course of arguments is that there is no mention of authorization of a higher authority to initiate the current reassessment proceedings. Since there is no mention of the approval sought from the CIT on the reasons, as recorded by the AO to initiate reassessment proceedings, the entire initiation has been vitiated and become bad in law

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DATE: January 13, 2015 (Date of pronouncement)
DATE: January 19, 2015 (Date of publication)
AY: 2007-08
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S. 10B(4): The argument that s. 10B(4) lays down a computational formula and that all business profits (including DEPB receipts) should be eligible for deduction irrespective of the effective source is not acceptable

We are unable to subscribe to the view expressed per the decisions relied upon by the assessee, i.e., that in view of computational formula of section 10B(4), the entire profits of the business of the undertaking, irrespective of their immediate source, shall comprise the qualifying profits

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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: December 5, 2014 (Date of pronouncement)
DATE: January 9, 2015 (Date of publication)
AY: 2007-08, 2008-09
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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 8, 2014 (Date of pronouncement)
DATE: January 9, 2015 (Date of publication)
AY: 2008-09
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S. 43B/ 36(1)(va): High Court verdict in Hindustan Organics Chemicals 270 CTR 478 (Bom) decides that employees' contribution to PF is eligible for s. 43B even though that was not the issue before it. It also does not refer to any judicial precedents. Also, the Q framed by the dept and its representation before the High Court leaves much to be desired. However, the judgement is binding and has to be followed

However, again, it cannot be denied that per the said decision, which is judicially binding on us, the hon’ble court has abundantly clarified that the deduction in respect of the employee’s contribution (to the employee welfare funds) in the hands of the assessee-employer is governed by the provision of section 43B, so that where deposited by the due date of the filing of the return for the relevant year, shall be valid in terms of the amended s.43B, i.e., by Finance Act 2003, with effect from 01.04.2004, which amendment stands held by the apex court in Alom Extrusions Ltd. (supra) to the retrospective, so that it shall apply even to years prior to A.Y.2004-05. The hon’ble court, we note, does not discuss nor refer to any judicial precedents. The question of law framed by the Department, as well as its representation before the hon’ble court, leaves much to be desired. That, however, would not in any manner detract from or dilute its binding nature on us as a subordinate forum

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DATE: November 14, 2014 (Date of pronouncement)
DATE: November 17, 2014 (Date of publication)
AY: 2001-02
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S. 2(47((v)/(vi): Mere execution of a development agreement does not result in a "transfer" if the approval of the municality is delayed and the developer has not started work

The assessee had received advance amounts much earlier to the execution of development agreement, probably on the strength of the MOU. The property was encumbered with tenancy rights of many persons and the release of tenancy right was completed only …

Dilip Anand Vazirani vs. ITO (ITAT Mumbai) Read More »

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DATE: November 12, 2014 (Date of pronouncement)
DATE: November 17, 2014 (Date of publication)
AY: 2007-08
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S. 9(1)(vii): Separate agreements for supply & installation cannot be regarded as one composite contract. However, as the installation is an "assembly" project, it will not constitute "fees for technical services". Even if such services are FTS u/s 9(1)(vii) they are excluded from taxation in India by Article 14 of the India-Swiss DTAA as the recipient has no PE in India

(i) It is undisputed that the mailroom equipment comprised of various units and was hence a complex equipment. The bid document clearly stipulated that the units/components of the mailroom equipment would have to be installed and commissioned by trained and …

ITO vs. Bennet Coleman & Co. Ltd (ITAT Mumbai) Read More »