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DATE: March 11, 2015 (Date of pronouncement)
DATE: March 23, 2015 (Date of publication)
AY: 2009-10
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CITATION:
Companies, if authorized by the MoA & AoA, are competent to make and receive gifts. Natural love and affection is a not necessary requirement for a gift. The gift is neither taxable as income s. 56 (pre-amendment) nor as capital gain nor as income u/s.2(22)(e) nor u/s.115JB

Three elements are essential in determining whether or not a gift has been made, a) delivery. b) donative intent,’ and c) acceptance by the donee. Companies are competent to make and receive gifts and natural love and affection are not necessary requirement. Only requirement for company is to make gifts as per respective memorandum and article of association, which authorize the company for the same

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DATE: February 11, 2015 (Date of pronouncement)
DATE: February 16, 2015 (Date of publication)
AY: 2006-07, 2007-08
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CITATION:
S. 115JB: Distinction between "reserve" & "provision" explained. Statutory reserve created u/s 45-IC of RBI Act is not a "diversion of income at source" and cannot be excluded from book profits

Diversion of income at source by way of overriding title as a principle is applicable when under a statutory or contractual obligation or under the provisions of Memorandum and Articles of Association, the earning is divested and the assessed has no title over a particular receipt. When such charge exists, the amount or income so charged must be excluded from income of the assessed as income never reaches his hands and in fact belongs to a third person. Thus, the income stands diverted at source. Diversion of income at source implies that income or the amount mentioned therein belongs to a third party and was not income of the assesse

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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:
(i) Unabsorbed depreciation of AYs 1997-98 to 2001-02 is eligible for relief granted by amended s. 32(2) in AY 2002-03 (ii) Judgement of a non-jurisdictional High Court has to be preferred over the judgement of a Special Bench of the ITAT (iii) In the absence of exempt income, s. 14A disallowance cannot be added to s. 115JB book profits even if assessee has accepted s. 14A disallowance in the normal computation

The assessee may have accepted the disallowance under section 14A but once it is a settled legal position, in the light of the law laid down in CIT Vs Holcim India Pvt Ltd (Del) that there cannot be any disallowance under section 14A unless there is corresponding exempt income and the assessee has no such exempt income, adjustment under clause (f) of Explanation to Section 115JB (2) cannot indeed be made. The adjustment has to meet the tests of law and what cannot be considered to be ‘expenditure relatable to exempt income’ under the law, cannot be subjected to the adjustment either. There is no estoppel against the law. The mere fact that the assessee has accepted this disallowance affects that disallowance only and nothing more than that; it does not clothe such an adjustment, in computation of book profit under section 115JB, with legality

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DATE: October 17, 2014 (Date of pronouncement)
DATE: October 24, 2014 (Date of publication)
AY: 2008-09
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CITATION:
Various arguments on the applicability of s. 14A & Rule 8D where the AO has not recorded satisfaction, where the shares are held in strategic/ subsidiary companies, held as stock-in-trade, where there are surplus funds and the quantum of disallowance under Explanation (f) to s. 115JA/ 115JB considered

(i) When it is said that rule 8D is mandatory (i.e., AY 2008-09 onwards), all that is meant is where the said expenditure cannot be reasonably ascertained with reference to the assessee’s accounts, toward which the AO is to issue …

HSBC Invest Direct (India) Ltd vs. DCIT (ITAT Mumbai) Read More »

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DATE: October 17, 2014 (Date of pronouncement)
DATE: October 21, 2014 (Date of publication)
AY: 2005-06
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CITATION:
S. 115JB: AO entitled to tinker with P&L A/c if assessee's claim not permitted by accounting principles

The question that had arisen was whether the Assessing officer was entitled to disturb the net profit shown by the assessee in the profit and loss account prepared as per the Companies Act, 1956.in order to enable anybody to understand …

Padinjarekara Agencies Pvt. Ltd vs. ACIT (ITAT Cochin) Read More »

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DATE: September 30, 2014 (Date of pronouncement)
DATE: October 12, 2014 (Date of publication)
AY: 2004-05
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CITATION:
S. 115JB: Cost of use of land amortized in books cannot be added back for computing book profits

This is a land taken for use from the State government without transferring the title for relief and rehabilitation for land evacuees because of submerges and where construction of such alternative facility is a condition for setting up a project. …

ACIT vs. NHPC Ltd (ITAT Delhi) Read More »

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DATE: September 19, 2014 (Date of pronouncement)
DATE: October 5, 2014 (Date of publication)
AY: 2007-08 and 2008-09
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CITATION:
(i) If the entity is a bank or other financial institution, the current interest rate applicable to the funds lent to the PE is deductible to the borrower (PE). However, as far as assessability in the hands of lender (HO) is concerned the same has to be excluded on the ground of mutuality as held by Special Bench in Sumitomo Corporation. (ii) MAT provisions in s. 115JB do not apply to foreign companies

(i) The decision of Spl. Bench in the case of Sumotomo Mitsubishi Banking Corporation (supra) which is a five member bench decision has elaborately considered the issue regarding deduction of interest paid by PE to head office and the interest …

The Bank of Tokyo- Mitsubishi UFJ Ltd vs. ADIT (ITAT Delhi) Read More »