S. 9(1)(i) : Income deemed to accrue or arise in India-Business connection-Non-resident trust-Investment in Indian Portfolio companies-Beneficial provisions of India-UAE DTAA-Not chargeable to tax in India either by virtue of application of section 61 read with section 63 or on an application of section 161 conjointly with provisions of article 24 of India-UAE DTAA. [S. 5, 61, 63, 115AD, 161, Art. 24]
Assessee, a non-resident, based in New Jersey, is a revocable and determinant trust settled by Abu Dhabi Investment Authority (ADIA) through the deed of settlement with Equity Trust Jersey Ltd. (ETJL) acting as trustee of a trust. It filed nil return. Trustee of assessee-trust (ETJL) and ADIA had filed an application before AAR claiming tax exemption on interest earned from the investment made in a non-convertible debenture of Indian portfolio companies as per article 24 of India-UAE DTAA. AAR held that said interest income was taxable in India as income from investment in debt portfolio in India had been received or accrued to assessee-trust in India and was taxable under section 5 read with section 9(1)(i). Assessing Officer in accordance with ruling of AAR taxed interest income as per section 115AD. On appeal the Tribunal held that assessee had filed a writ petition before High Court challenging ruling pronounced by AAR wherein High Court had held that income earned by assessee-trust is not chargeable to tax in India either by virtue of application of section 61 read with section 63 or an application of section 161, conjointly with provision of article 24 of India-UAE DTAA. Since addition to taxable income as proposed by the Assessing Officer on the basis of AAR ruling which had already been reversed by the High Court, same is set aside. (AY. 2016-17 to 2018-19)
Green Maiden A 2013 Trust v. ACIT (IF) (2023) 203 ITD 599 (Mum) (Trib.)

S. 9(1)(v) : Income deemed to accrue or arise in India-Interest-Interest paid by Indian Branch of assessee-Japanese bank to its overseas head office was not chargeable to tax in India-DTAA-India-Japan [Art. 11]
Held that interest paid by the Indian Branch of the assessee-Japanese bank to its overseas head office is not chargeable to tax in India (AY. 2012-13 to 2017-18)
DCIT v. Mizuho Bank Ltd (2023) 199 ITD 523 (Mum.)(Trib.)

S. 9(1)(v) : Income deemed to accrue or arise in India-Interest- Income-Deemed to accrue or arise in India-Interest paid by branch to head office-Branch had borrowed from overseas head office-Head office is not connected to PE branch in India-Income of head office is not taxable in India-DTAA-India-France. [Art. 7 12]
The AO held that interest income of overseas branch/HO would be taxable under Article 12 at a rate of 10 percent. On appeal the Tribunal held that the Assessee being a head office of a banking company and having branches in the form of a permanent establishment in India, in such cases, provision of article 7 was to be applied but since the assessee branch had borrowed from an overseas head office and debt claim of the head office was connected to PE branch in India, interest received by head office from its branches in India is not taxable in hands of the head office in view of provision of DTAA. (AY. 2020-21)
BNP Paribas v. ACIT [2024] 162 taxmann.com 671 (Mum)(Trib.)

S. 9(1)(vi) : Income deemed to accrue or arise in India-Royalty-Subscription fees received by the assessee from its customers for providing access to databases and journals is not royalty-DTAA-India-USA. [Art. 12(3)]
Held that the subscription fees received by the assessee from its customers for providing access to databases and journals were not royalty as customers did not acquire copyright, and therefore, such fees were not liable to be taxed in India. (AY. 2021-22)
American Chemical Society v. Dy. CIT (IT) (2024) 111 ITR 38 (SN) /161 taxmann.com 354 (Mum)(Trib.)

S. 9(1)(vii) : Income deemed to accrue or arise in India-Fees for technical services-Supply of equipment-Offshore sale of goods-Not taxable as FTS-DTAA-India-Ireland. [S. 5, 9(1)(vi), Art. 12]
Assessee, an Ireland-based company, is engaged in manufacturing highly sophisticated complex, technologically advanced, and expensive equipment. It had supplied equipment to Indian customers and claimed the same as the offshore sale of goods and claimed that since revenue had accrued outside India as per provisions of section 5, the same was not taxable in India-Assessing Officer was of the view that the assessee was providing sophisticated equipment’s to its client which could be put to use by it only as well as rendering support services and had taxed receipt from the offshore sale of goods as fees for technical services. On appeal, the Tribunal held that the assessee had submitted copies of invoices and purchase order, and in the invoices description of the sale of equipment, number of quantity, price of an item sold and details of buyer to whom shipment of goods was provided which demonstrated that assessee had received amount on sale of equipment.
The Assessing Officer had not brought on record any clinching evidence to substantiate that assessee had received impugned amount for rendering of services. Accordingly the addition is deleted. (AY. 2018-19)
Baker Hughes EMEA Unlimited Company v. CIT IT (2023) 201 ITD 43 (Mum) (Trib.)

S. 12AA: Procedure for registration-Trust or institution-Failure to examine the documents filed-Matter remanded. [S. 11, Form No 10A]
The Tribunal set aside the rejection order of the CIT (E) on the ground that the Commissioner had failed to examine the genuineness of the documents produced before him.
Panchkuva Cloth Merchant Association v. CIT (2021) 190 ITD 1 (Ahd.) (Trib.)

S. 37(1) : Business expenditure-Contribution made by a stock exchange towards Core SGF is treated as an allowable expenditure-Statutory business expense necessary for carrying on its operations. [S. 10(23EA), 10(23EE)]
The Tribunal held that the contribution to Core SGF was a statutory obligation mandated by SEBI regulations, which the assessee had no control over. Since the contribution was incurred exclusively for business purposes, it qualified as an allowable expenditure under Section 37(1) of the Income-Tax Act, 1961. The fact that no defaults occurred during the year did not change the nature of the expenditure, as the contribution was still a mandatory business expense. (AY. 2016-17, 2017-18)
National Stock Exchange of India Ltd. v. Dy. CIT [2024] 159 taxmann.com 472 (Mum)(Trib.)

S. 40(a)(ia) : Amounts not deductible-Deduction at source-Copies of PAN along with copies of invoices of transportation bill etc. is furnished-Disallowance cannot be made on technical grounds. [S. 194C (7)]
The Tribunal held that where the assessee had furnished copies of PAN along with copies of invoices of transportation bill comprising the complete address of transporter, phone no. and complete particulars of goods loaded through transportation and thereby led full evidence to establish genuineness of payment made for freight to transporters, same could not have been disallowed simply for technical lapse under section 194(7) of the Act. (AY. 2012-13)
Mohmed Shakil Mohmed Shafi Mutawalli v. ITO (2022) 192 ITD 130 (Ahd.)(Trib.)

S. 44C : Non-resident-Head office expenditure-Salary-Employees had offered their global income in India for tax-Disallowance is deleted.
Assessee-bank paid a salary to two Canadian nationals who were on secondment to Indian operations of the assessee. The AO disallowed a claim of deduction of salary on the ground that said salary was in nature of head office expenditure and the same was disallowed u/s.44C. Tribunal held held that said employees had continually worked for Indian branches of assessee-bank and both had offered their global income in India for tax. Since revenue had not brought on record any relevant materials to disprove these material facts and evidence, the disallowance of the claim of deduction of salary was deleted. (AY. 2003-04, 2005-06 to 2009-10)
Bank of Nova Scotia v. ADIT (IT) [2024] 160 taxmann.com 10 (Mum)(Trib.)

S. 48 : Capital gains-Mode of Computation-Stamp duty and registration charges-Paid as per terms of the agreement-Allowable as deduction-Remanded for verification. [S. 45]
The assessee had shown long-term capital gain on the sale of immovable property and also claimed deduction of stamp duty and registration charges in respect of society transfer fees paid by assessee out of aforesaid capital gain amount. The assessing Officer had disallowed claim of expenses on ground that assessee had not furnished supporting document regarding payment of aforesaid expenditure .DRP dismissed the appeal on the ground that Form No 35A was not signed by the Authorised representative. On appeal the Tribunal held that since the assessee had actually incurred said expenses as per terms and conditions of agreement and there was evidence of payment as reflected in copy of bank statement, Assessing Officer is directed to allow the claim of the assessee after verification of the copy of agreement and copy of bank statement filed by assessee. Matter remanded. (AY. 2020-21)
Kishore Bhagwandas Ramnani v. ITO (2024) 111 ITR 148 / 206 ITD 491 (Mum.)(Trib.)

S. 68 : Cash credits-No cash deposited-Loan received through banking channel-Addition is deleted.
The loan is received through a normal banking channel and there is no cash deposit in the lender’s account before the loan is granted, the addition u/s. 68 is not justified, as the transaction is considered genuine.(AY. 2012-13)
ACIT v. Karsangiri Buddhgiri Goswami [2021] 189 ITD 227 (Ahd)(Trib.)

S. 69A: Unexplained money-Search-Sale agreement-Addition cannot be when land transfer transaction has not materialized. [S. 132]
Held that when a land sale transaction has not materialized, and the part payment is returned, mere possession of a sale agreement during a search cannot justify the addition of unexplained income u/s. 69A of the Income Tax Act, 1961.(AY. 2012-13)
ACIT v. Karsangiri Buddhgiri Goswami [2021] 189 ITD 227 (Ahd)(Trib.)

S. 70 : Set off of loss-One source against income from another source-Same head of income-Short-term capital loss-Under provisions of section 70(2), STCL arising from any asset could be set off against STCG arising from any other asset under a similar computation made irrespective of different rate of tax. [S.70(2)]
The assessee, a tax resident of the USA, was registered with the Security Exchange Board of India (SEBI) as a Foreign Portfolio Investors (FPI) for carrying out investment activity in Indian capital markets. The assessee claimed short-term capital gain (STCG) on the sale of derivatives taxable at rate of 30 per cent and during the year, the assessee had also claimed short-term capital loss (STCL) taxable at rate of 15 percent and the same was set off at against the STCG which was taxable at rate of 30 percent as referred above. In addition to that, the assessee had also claimed brought forward STCL taxable at the rate of 15 per cent to set off against the balance STCG earned on sale of derivatives. The Assessing Officer after referring to provisions of section 70(2) held that the STCG on derivatives taxable at rate of 30 per cent and STCL taxable at the rate of 15 per cent were not falling under similar computation and, therefore, disallowed the claim of set off. DRP affirmed the order of the AO. On appeal, the Tribunal held that under provisions of section 70(2), STCL arising from any asset could be set off against STCG arising from any other asset under a similar computation made irrespective of different rates of tax. (AY. 2020-21)
JS Capital LLC. v. ACIT (IT) (2024) 206 ITD 142 (Mum)(Trib.)

S. 92C : Transfer pricing-Arm’s length price-Avoidance of tax-International transaction-Adjustments-Operating profit/Cost-Additional evidence produced-Matter remanded to the TPO. [S. 254(1)]
The Transfer Pricing Officer (TPO) rejected the aggregation approach and instead evaluated the marketing support services separately using the Transactional Net Margin Method (TNMM). The TPO observed that the assessee received a 5% mark-up as per the inter-company agreement. By selecting comparable companies, the TPO determined that the margin of comparable was 17.04% of the operating cost, which was higher than the assessee’s 5% markup. Consequently, the TPO proposed a transfer pricing adjustment. The assessee filed additional evidence showing that its actual operating margin from marketing support services was 18.64%, based on certified segmental accounts. In light of the new evidence, the matter was remanded back to the TPO for reconsideration. (AY. 2013-14)
Boehringer Ingelheim India (P.) Ltd. v. ITO [2023] 150 taxmann.com 240 (Mum)(Trib.)

S. 92C : Transfer pricing-Arm’s length price-Avoidance of tax-International transaction-Guarantee fee-data under the CUP method was not available and data margins under TNMM were readily available, it would be appropriate to apply TNMM as a most appropriate method. [R. 10B ]
Assessee-bank’s overseas branches had executed interbank indemnities against which assessee had issued guarantees on behalf of clients of overseas branches and received a commission for guarantees issued by it on behalf of its overseas branches and paid a commission for guarantees issued by overseas branches on its behalf and guarantee issued by assessee bank branch was fully secured by a back to back interbank indemnity issued by overseas branches. The Assessee had benchmarked the above transaction of interbank indemnities by using TNMM. Since no public information on a third-party to the third-party transaction of similar or identical services was found that reflected characteristics of services provided and, thus, data under the CUP method was not available and data margins under TNMM were readily available, it would be appropriate to apply TNMM as the most appropriate method. (AY. 2003-04 , 2005-06, 2009-10)
Bank of Nova Scotia v. ADIT (IT) [2024] 160 taxmann.com 10 (Mum)(Trib.)

S. 92C : Transfer pricing-Arm’s length price-Avoidance of tax-International transaction Guarantee commission-Data under the CUP method was not available and data margins under TNMM were readily available, it would be appropriate to apply TNMM as MAM. [S. 92CA]
During the relevant year, the assessee bank issued a guarantee on behalf of its clients. In return for Income, the assessee received a commission for said services. The Assessee adopted TNMM as MAM to benchmark the guarantee fee earned by it. TPO, however, applied the CUP method as MAM and, accordingly, made certain additions to the assessee’s ALP. The Tribunal held that since data under the CUP method was not available, TNMM would be MAM hence addition made was deleted. (AY. 2014-15 )
Bank of Nova Scotia v. Dy. CIT [2024] 160 taxmann.com 177 (Mum)(Trib.)

S. 115VI : Income from shipping business-Relevant shipping income (Provision written back)-excess provision/sundry credit balance written back was related to the operation of ships, same was required to be considered as income from core activities.
Held that AO observed that the assessee had declared certain income in nature of excess provision/sundry credit balance written back which would not qualify to be categorized as shipping income from core activity. The tribunal held that thus since excess provision/sundry credit balance written back was related to the operation of ships, the same was required to be considered as income from core activities. (AY. 2010-11, 2012-13)
Shipping Corporation of India v. Add. CIT [2024] 164 taxmann.com 472 (Mum)(Trib.)

S. 115VI : Income from shipping business-Interest income on deposits placed with banks and financial institutions out of funds temporarily lying idle-said deposits were in nature of business income and related to core shipping activity.
Held that where assessee, a tonnage tax company, received interest income on deposits placed with banks and financial institutions out of funds required for business but temporarily lying idle, since funds were nothing but funds required for running shipping business, income by way of interest arising from said deposits was in nature of business income and related to core shipping activity. (AY. 2010-11, 2012-13)
Shipping Corporation of India v. Add. CIT [2024] 164 taxmann.com 472 (Mum)(Trib.)

S. 148 : Reassessment-Notice-Deceased-Cash deposit-Notice is in the name of dead person is invalid-Oder is quashed and set aside.[S.69A, 147]
Held that once the assessee is dead no valid assessment or reassessment can be made in the name of the deceased. Accordingly, the proceeding initiated by the Assessing Officer against the deceased is not tenable in the eyes of the law and is set aside. (AY. 2017 18)
ACIT v. Fakhruddin Taiyebali Padaria [2025] 171 taxmann.com 93 (Mum.)(Trib.)

S. 195: Deduction at source-Non-resident-Reimbursement of demurrage charges paid by the assessee to a non-resident shipping company-Provision is not applicable. [S. 172]
The tribunal held that section 195 would not apply to reimbursement of demurrage charges paid by the assessee to a non-resident shipping company and that same would be covered by section 172 of the Act. (AY. 2016-17)
Gokul Refoils & Solvent Ltd. v. DCIT (IT) (2021) 186 ITD 711 (Ahd.)(Trib.)

S. 201 : Deduction at source-Failure to deduct or pay Royalties/fees for technical services-Payment made to US-based company towards cost reimbursement on which parties had equal right to use and not paid amount to royalty, levy of interest u/s. 201(1A) is unjustified-DTAA-India-USA. [S. 9(1)(vi), 195, 201 (IA), Art, 12]
The AO passed order u/s. 201(1) and held that remittance made by the assessee to GTRC was nothing but royalty as per provisions of s.9 (1)(vi) as well as in terms of article 12 of DTAA between India and USA. Held that when the assessee had explained with support of agreement and copies of invoices that payment made was towards cost reimbursement of joint research project on which both parties had equal right to use and did not amount to royalty as per section 9(1)(vi) and not covered under clause 3 of article 12 as royalties and fees for included services of India USA DTAA. Therefore, levy of interest u/s. 201(1A) was not justified. (r.w.s. 195 and 201 and article 12 of DTAA between India and USA)(AY. 2012-13, 2013-14)
Pandit Deendayal Petroleum University-PDPU. v. ITO (2021) 189 ITD 110 (Ahd.)(Trib.)

S. 254(2) : Appellate Tribunal-Rectification of mistake apparent from the record Powers of Condonation of delay-Reasonable cause for non-appearance and delay in filing Miscellaneous Application-Delay is condoned. [S. 254(1), ITAT R. 24]
The appeal was dismissed vide ITAT order as none appeared on behalf of the assessee on the date of the hearing. The Assessee had explained the reason for not filing a Miscellaneous Application within the prescribed time supported by an affidavit and copies of other documents/details. The previous tax consultant had not attended to the tax matter satisfactorily and the new tax consultant had obtained various documents, these circumstances and his ill health caused a delay in filing this appeal against the ex parte order which was passed on account of non-prosecution. Considering the facts, it appeared that there was reasonable cause for non-appearance and delay in filing a Miscellaneous Application. Delay in filing Miscellaneous Application was to be condoned. (AY. 2012-13)
Rameshbhai V. Prajapati v. Dy. CIT [2021] 188 ITD 773 (Ahd)(Trib.)

S. 263 : Commissioner-Revision of orders prejudicial to revenue Business expenditure-TDR expenses-capital or revenue-Stock in trade-Projection completion method-Revision order is quashed-Once record are transferred to jurisdictional Assessing Officer on completion of assessment, jurisdictional Principal Commissioner assumes jurisdiction-Commissioner can exercise power under section 263 over order passed by faceless assessment unit. [S. 37(1), 144B, 145]
TDR is directly linked to the assessee’s stock-in-trade and was an expenditure incurred to carry on regular business operations. The TDR expenses is revenue in nature as they facilitated the construction activity, forming part of the cost of the stock-in-trade. Mere differences of opinion cannot be grounds for revision. The revision order under Section 263 passed by the Principal Commissioner is invalid. Tribunal also held that once record are transferred to jurisdictional Assessing Officer on completion of assessment, jurisdictional Principal Commissioner assumes jurisdiction. Commissioner can exercise power under section 263 over order passed by faceless assessment unit .(AY. 2018-19 )
RDC Ventures v. PCIT [2024] 159 taxmann.com 395 (Mum)(Trib.)

Posted on: March 26th, 2025