S. 68 : Cash credits – Share premium-The fact that the premium is abnormally high as per test of human probabilities is not sufficient-The AO has to lift the corporate veil & determine whether any benefit is passed on to the shareholders/directors. Directions issued to AO to establish whether assessee company was used as a vehicle to pass on the benefit to shareholders/directors- Tribunal directed the AO to verify all the funds and cash flow management of the company for both AY. 2009-10 & 2010-11. AO should not resort to rely on circumstantial evidence or on test of human probabilities but on factual evidence of passing of benefit to the shareholders/directors- Addition was deleted subject to verification . [S.28(iv),56 ]

S. 40(a)(ia): Amounts not deductible – Deduction at source -The second proviso to S. 40(a)(ia) is beneficial to the assessee and is declaratory and curative in nature. Accordingly, it must be given retrospective effect.[ S.201(1) ]

S. 9(1)(i): Income deemed to accrue or arise in India – Business connection -Fixed place permanent establishment- Facts of the case clearly point to the fact that the assessee’s employees were not merely liaisoning with clients and the headquarters office. E-mail communications and chain mails indicate that with respect to clients and possible contracts of GE with Reliance CS-1, GE Oil & Gas, Bongaigaon Refinery, Draft LOA for WHRU (E-mail from Andrea Alfani (GE Overseas) to Vivek Venkatachalam (GEIIPL) and Riccardo Procacci (GEII) on proposed & connected matters mail to send Reliance, including comments to RIL on the proposed letter of acceptance and relevant attachments. Also, asked them whether they wanted to send the e-mail themselves to RIL or for it to be sent directly-These appear to show important role for Vivek and Riccardo in the negotiating process – These suggest that substantive work on the BHEL contract was done in India by amix of GE overseas and GE India team – Kind of activity i.e . manufacture and supply of highly specialised and technically customised equipment , the “ core activity “ of developing the customer (identifying a client) approaching that customer , communicating the available options , discussing technical and financial terms of the agreement , even price negotiations , needed collaborative process in which the potential client along with GE’s India employees and its experts , had to intensely negotiate the intricacies of the technical and commercial parameters of the articles etc .- Considering all the aspects the it is clearly revealed that the GE carried on business in India through its fixed place of business ( i.e. the premises ) through premises . Accordingly the order of the Tribunal is affirmed – The assessee cannot selectively quote on certain parts of the commentary –rather, must read the spirit of the entire commentary- Order of Tribunal is affirmed – DTAA-India- USA [ S.90,art.4, 5(1),5(3) ]

S. 2(ea) : Asset- Agricultural land–Capital gains-Measurement of distance -Distance of land from municipal limits aerially, not by road, and which have been substituted by Finance Act, 2013 with effect from 1-4-2014 are prospective in operation-Conversion of land from Agricultural use to non agricultural use though the land was converted into non-agricultural purposes, cultivation of the land for agricultural purposes till the date of sale continued unabated and as such, the land should be treated as agricultural land-Not liable to wealth tax. [S. 17, 2(14)(iii)(b)]

S. 271D : Penalty–Takes or accepts any loan or deposit-Business of civil construction-Adjustment of loan towards sale of flat– Provision is held to be applicable–levy of penalty is held to be justified. [S.269SS, 269T]

S. 271AAB : Penalty-Search initiated on or after 1st day of July 2012-Disclosure of undisclosed income-Disclosed manner of earning of income and paid tax along with interest-liable to pay penalty at 10% and not at 30%. [S. 132(4)]

S. 269T : Repayment of loans and deposits-Otherwise than by account payee cheque or account payee bank draft–Provision is applicable in case of adjustment of loan towards sale of flats- Payment of interest in cash provision is not applicable. [S. 271E]

S. 145 : Method of accounting-Survey-In the course of survey incriminating material was found indicating unaccounted sale of flats -Rejection of books of account and estimation of income at 11 percent of gross sales is held to be justified. [S.69]

S. 54B : Capital gains-Land used for agricultural purposes -Purchase of agricultural land prior to sale of agricultural land – Exemption is not available-Stamp duty paid is to be considered as part of cost of purchase of agricultural land. [S. 45]

S. 48 : Capital gains–Indexation-Cost of improvement-Expenditure on levelling of agricultural land for purpose of irrigation from canal, benefit of indexed cost of improvement was to be granted. [S. 45]