Vardhman Developers
PFA
PFA
Expenditure towards repair and renovation of leased premises is capital in nature. Method for allocation of common expenses to different WIP projects of a builder explained
The assessee being a builder and developer, Accounting Standard 7 (AS-7), issued by the ICAI, titled, 'Construction Contracts', would not apply, so that the prescription of AS-9 and AS-2, based on general principles that govern any business, would apply for the revenue recognition and inventory valuation respectively. Only costs incurred toward a particular project, or otherwise related to construction activity, would stand to be allocated and, thus, capitalized as a part of the project cost
Kul Foundations PUNE I T A T
PFA
S. 12AA/80G(5): CIT, while granting registration or renewal, can only look at the nature of activities and is not concerned with potential violation of s. 11(5) or s. 13. Registration cannot be denied on ground that activities have not commenced
The allowability of the deduction under sections 11 and 12 of the Act is to be looked into by the Assessing Officer while completing the assessment in the hands of the assessee at the relevant time. Whether the said deduction under sections 11 and 12 of the Act is allowable or not to the Trust or the Institution by way of non-fulfillment of the conditions laid down in section 13(1)(b) of the Act is to be considered by the Assessing Officer while completing assessment in the hands of the assessee Trust or Institution. But the said violation by the Trust or Institution on account of provisions of section 13(1)(b) of the Act, if any, are not to be considered by the CIT while granting registration under section 12A of the Act Read more of this post
R.A.K. Ceramics P Limited
TPO/ DRP's action of reducing the quantum of royalty paid to AE by applying the "benefit test" is surprising and improper
It is an accepted principle of law that TPO has to determine the ALP by adopting any one of the methods prescribed u/s 92C of the Act. Mode and manner of computation of ALP under different methods have been laid down in rule 10B. Even, assuming that TPO has followed CUP method for determining ALP of royalty payment, as held by ld. DRP, it needs to be examined if it is strictly in compliance with statutory p
PFA
INCOME TAX REPORTS (ITR)
Appeal to Appellate Tribunal --Powers of Tribunal--Power to remand case--Commissioner (Appeals) analysing material on record and concluding that profits of assessee constituted capital gains--No new evidence produced before Commissioner (Appeals)--Order of remand on entire issue not justified--Remand restricted to finding whether part of capital gains were short-term capital gains--Income-tax Act, 1961-- Sanjeev Mittal v. CIT (Delhi) . . . 333
Disclosure of information --Effect of section 138--No inconsistency between Income-tax Act and Right to Information Act--Assessment proceedings confidential but information can be disclosed when it is in larger public interest--Application under Right to Information Act to intervene in assessment proceedings--No evidence that information was needed in public interest--Application not maintainable--Income-tax Act, 1961, s. 138--Right to Information Act, 2005, ss. 2, 3, 8, 11-- Dr. Naresh Trehan v. Rakesh Kumar Gupta (Delhi) . . . 342
Income or capital --Import of plant and machinery--Funds placed deposit for securing letters of credit from bank--Deposit incidental acquisition of plant and machinery for setting up factory--Interest earned on deposit to be adjusted against pre-operative cost of plant and machinery--Income-tax Act, 1961-- Phoenix Lamps India Ltd. v. CIT (All) . . . 377
Precedent --Effect of decision of Supreme Court in Bihar Public Service Commission v. Saiyed Hussain Abbas Rizwi [2012] 13 SCC 61-- Dr. Naresh Trehan v. Rakesh Kumar Gupta (Delhi) . . . 342
----Effect of decision of Supreme Court in CIT v. Calcutta Knitwears [2014] 362 ITR 673-- Gunjan Girishbhai Mehta v. Director of Investigation (Guj) . . . 382
Search and seizure --Block assessment--Assessment of third person--Conditions precedent--Discovery during search that undisclosed income belonged to third person--Notice under section 158BD--Valid--That validity of warrant of authorisation in qu estion--Does not affect validity of block assessment of third person--Income-tax Act, 1961, s. 158BD-- Gunjan Girishbhai Mehta v. Director of Investigation (Guj) . . . 382
Total income --Inclusions in total income--Income of minor admitted to benefits of partnership--Provision in Partnership deed for contribution of capital by minor--Interest on contribution includible in total income of parent--Income-tax Act, 1961, s. 64(1)(iii)-- CIT v. Shardaben Kishorebhai Patel (Guj) . . . 364
Assessment --Valuation Officer--Whether report of, called for by Assessing Officer, can be made basis for assessment--Appeal dismissed leaving question open--Income-tax Act, 1961, s. 131(1)(d)-- CIT v. Om Prakash Bagadia (HUF) . . .670
Depreciation --Studio, whether plant--Supreme Court--Low tax effect--Appeal not entertained--Income-tax Act, 1961, s. 32-- CIT v. Navodaya . . . 637
Reassessment --Notice--Change of opinion--Original assessment completed under section 143(1)--No question of change of opinion--Main issue not addressed by High Court--Order set aside and matter remanded to Tribunal--Income-tax Act, 1961, ss. 143(1), 147, 148-- Deputy CIT v. Zuari Estate Development and Investment Company Ltd. . . . 661
Business expenditure --Disallowance--Advertisement expenses--Expenditure incurred not in nature of advertisement--Rule 6B not applicable--No disallowance could be made--Income-tax Rules, 1962, r. 6B--Income-tax Act, 1961, s. 37-- CIT v. Dharamsi Morarji Chemicals Co. Ltd. (Bom) . . . 545
----Disallowance--Expenditure on guest house--Depreciation not allowable--Income-tax Act, 1961-- CIT v. Dharamsi Morarji Chemicals Co. Ltd. (Bom) . . . 545
----Disallowance--Expenses on motor car--Rule relating to computation of such benefit or perquisite in hands of employee not relevant--Income-tax Act, 1961, s. 37-- CIT v. Dharamsi Morarji Chemicals Co. Ltd. (Bom) . . . 545
----Disallowance--Premium for group insurance policy--Not salary or perquisite--No disallowance could be made--Income-tax Act, 1961, s. 40A(5)--CIT v. Dharamsi Morarji Chemicals Co. Ltd. (Bom) . . . 545
----Ex gratia payments to retiring employees--Deductible--Income-tax Act, 1961, s. 37-- CIT v. Dharamsi Morarji Chemicals Co. Ltd. (Bom) . . . 545
----Production incentives--Tribunal allowing incentive payments in earlier years--No evidence to establish nature of payments different in current year--Incentive payments allowable--Income-tax Act, 1961, s. 37-- CIT v. Dharamsi Morarji Chemicals Co. Ltd. (Bom) . . . 545
Capital gains --Computation of capital gains--Cost of acquisition of capital asset--Valuation of land by District Valuation Officer based on comparable sale instance--Valuation accepted by other co-owners--Computation of capital gains based on such valuation--Justified--Income-tax Act, 1961-- Prabhu Dayal Rangwala v. CIT (Delhi) . . . 596
----Exemption--Investment of net consideration in purchase of a residential house--Acquisition of plot and substantial domain over new house--Requirements for claiming exemption complied with--Entitled to exemption--Circular No. 667, dated 18-10-1993--Income-tax Act, 1961, s. 54-- CIT v. Smt. G. Venkata Laxmi (T & AP) . . . 572
Cash credits --Gift--Genuineness of transactions--Burden of proof on assessee--Tribunal finding that assessee had not proved that gift was genuine--Addition justified--Income-tax Act, 1961, s. 68-- Sarita Aggarwal v. ITO (Delhi) . . . 586
Dividend --Deemed dividend--Assessee-company receiving amount from its sister company--Assessee not a registered or beneficial owner of shares in that company--Assessee not liable to pay tax--Circular No. 495, dated 22-9-1987--Income-tax Act, 1961, s. 2(22)(e)-- CIT v. Printwave Services P. Ltd. (Mad) . . . 665
Donation for charitable purposes --Approval of trust for purposes of section 80G--Enquiry to find out if donee would be eligible for exemption under section 11--Approval cannot be denied because donee did not fulfil conditions prescribed for exemption of its income--Income-tax Act, 1961, ss. 11, 80G-- CIT v. Shree Govindbhai Jethalal Nathavani Charitable Trust (Guj) . . . 619
Exemption --Export--Computation of exemption--Losses of unit entitled to exemption not to be set off against income from unit not eligible for exemption--Income-tax Act, 1961, s. 10B-- CIT v. Kei Industries Ltd. (Delhi) . . . 574
Export --Infrastructure development--Special deduction under sections 80HHC and 80-IA--Computation of special deduction under section 80HHC--Effect of sub-section (9) of section 80-IA--Special deduction allowed under section 80-IA must be taken into account in computing special deduction under section 80HHC--Income-tax Act, 1961, ss. 80HHC, 80-IA-- CIT v. Atul Intermediates (Guj) . . . 638
Industrial undertaking --Special deduction--Other income--Not excludible--Income-tax Act, 1961, s. 80-I-- CIT v. Dharamsi Morarji Chemicals Co. Ltd. (Bom) . . . 545
Investment allowance --Higher rate of allowance--Installation of machinery for manufacturing sulphuric acid--Assessee entitled to investment allowance--Income-tax Act, 1961, s. 32A-- CIT v. Dharamsi Morarji Chemicals Co. Ltd. (Bom) . . . 545
----Tribunal allowing in respect of ten items--Reference thereagainst dismissed--Assessee entitled to investment allowance--Income-tax Act, 1961, s. 32A-- CIT v. Dharamsi Morarji Chemicals Co. Ltd. (Bom) . . . 545
Precedent --Effect of decision of Supreme Court in CIT v. Calcutta Knitwears [2014] 362 ITR 673-- CIT v. Sudhir Dhingra (Delhi) . . . 555
Reassessment --Validity--Reassessment proceedings on the basis of change of opinion--Not valid--Tax on capital gains based on material on record for assessment year 1989-90--Reassessment proceedings to recompute capital gains--Not valid--Income-tax Act, 1961, ss. 45, 147-- Prabhu Dayal Rangwala v. CIT (Delhi) . . . 596
Scientific research expenditure --Development and research--Deferred revenue expenditure--Not allowable--Expenditure relatable to relevant year alone allowable--Income-tax Act, 1961, s. 35(1)(i)-- Banyan Networks Pvt. Ltd. v. Asst. CIT (Mad) . . . 566
Search and seizure --Assessment in search cases--Unexplained investment--Additional evidence--Assessee should have pursued before assessing authority or before Commissioner (Appeals)--Tribunal finding no reliability could be placed on submissions made by assessee--Finding of fact--Income-tax Act, 1961, s. 153A-- P. Madhurajan (HUF) v. Asst. CIT (Mad) . . . 630
----Block assessment--Assessment of third person--Notice under section 158BC--Limitation--No period of limitation prescribed by law--Notice within five months of note of satisfaction--Not barred by limitation--Income-tax Act, 1961, s. 158BC-- CIT v. Sudhir Dhingra (Delhi) . . . 555
----Block assessment--Undisclosed income--Condition precedent--Participation by assessee in proceedings--Not a bar to challenging jurisdiction--Warrant of authorisation not containing name of assessee--Block assessment pursuant thereto not valid--Income-tax Act, 1961, s. 158BC-- CIT v. Jolly Fantasy World Ltd. (Guj) . . . 530
Advance ruling --Jurisdiction of Authority--Applicant a non-resident--Assessing Officer not informed of application before Authority--Application admitted--Income-tax Act, 1961, s. 245(2)-- Soregam S. A., Belgium, In re . . . 660
----Jurisdiction of Authority--Bar in case of avoidance of tax--Ruling sought on questions relating to fees for technical services--Income from royalty and interest declared in return and taxability conceded--That no ruling sought thereon not a device to avoid tax--Application admitted--Income-tax Act, 1961, s. 245(2)-- Magotteaux International S. A., Belgium, In re . . . 658
S. 2(22)(e) --Dividend--Deemed dividend--Assessee-company receiving amount from its sister company--Assessee not a registered or beneficial owner of shares in that company--Assessee not liable to pay tax-- CIT v. Printwave Services P. Ltd. (Mad) . . . 665
S. 10B --Exemption--Export--Computation of exemption--Losses of unit entitled to exemption not to be set off against income from unit not eligible for exemption-- CIT v. Kei Industries Ltd. (Delhi) . . . 574
S. 11 --Donation for charitable purposes--Approval of trust for purposes of section 80G--Enquiry to find out if donee would be eligible for exemption under section 11--Approval cannot be denied because donee did not fulfil conditions prescribed for exemption of its income-- CIT v. Shree Govindbhai Jethalal Nathavani Charitable Trust (Guj) . . . 619
S. 32 --Depreciation--Studio, whether plant--Supreme Court--Low tax effect--Appeal not entertained-- CIT v. Navodaya (SC). . . 637
S. 32A --Investment allowance--Higher rate of allowance--Installation of machinery for manufacturing sulphuric acid--Assessee entitled to investment allowance-- CIT v. Dharamsi Morarji Chemicals Co. Ltd. (Bom) . . . 545
----Investment allowance--Tribunal allowing in respect of ten items--Reference thereagainst dismissed--Assessee entitled to investment allowance-- CIT v. Dharamsi Morarji Chemicals Co. Ltd. (Bom) . . . 545
S. 35(1)(i) --Scientific research expenditure--Development and research--Deferred revenue expenditure--Not allowable--Expenditure relatable to relevant year alone allowable-- Banyan Networks Pvt. Ltd. v. Asst. CIT (Mad) . . . 566
S. 37 --Business expenditure--Disallowance--Advertisement expenses --Expenditure incurred not in nature of advertisement--Rule 6B not applicable--No disallowance could be made-- CIT v. Dharamsi Morarji Chemicals Co. Ltd. (Bom) . . . 545
----Business expenditure--Disallowance--Expenses on motor car--Rule relating to computation of such benefit or perquisite in hands of employee not relevant-- CIT v. Dharamsi Morarji Chemicals Co. Ltd. (Bom) . . . 545
----Business expenditure--Ex gratia payments to retiring employees--Deductible-- CIT v. Dharamsi Morarji Chemicals Co. Ltd. (Bom) . . . 545
----Business expenditure--Production incentives--Tribunal allowing incentive payments in earlier years--No evidence to establish nature of payments different in current year--Incentive payments allowable-- CIT v. Dharamsi Morarji Chemicals Co. Ltd. (Bom) . . . 545
S. 40A(5) --Business expenditure--Disallowance--Premium for group insurance policy--Not salary or perquisite--No disallowance could be made--CIT v. Dharamsi Morarji Chemicals Co. Ltd. (Bom) . . . 545
S. 45 --Reassessment--Validity--Reassessment proceedings on the basis of change of opinion--Not valid--Tax on capital gains based on material on record for assessment year 1989-90--Reassessment proceedings to recompute capital gains--Not valid-- Prabhu Dayal Rangwala v. CIT (Delhi) . . . 596
S. 54 --Capital gains--Exemption--Investment of net consideration in purchase of a residential house--Acquisition of plot and substantial domain over new house--Requirements for claiming exemption complied with--Entitled to exemption-- CIT v. Smt. G. Venkata Laxmi (T & AP) . . . 572
S. 68 --Cash credits--Gift--Genuineness of transactions--Burden of proof on assessee--Tribunal finding that assessee had not proved that gift was genuine--Addition justified-- Sarita Aggarwal v. ITO (Delhi) . . . 586
S. 80G --Donation for charitable purposes--Approval of trust for purposes of section 80G--Enquiry to find out if donee would be eligible for exemption under section 11--Approval cannot be denied because donee did not fulfil conditions prescribed for exemption of its income-- CIT v. Shree Govindbhai Jethalal Nathavani Charitable Trust (Guj) . . . 619
S. 80HHC --Export--Infrastructure development--Special deduction under sections 80HHC and 80-IA--Computation of special deduction under section 80HHC--Effect of sub-section (9) of section 80-IA--Special deduction allowed under section 80-IA must be taken into account in computing special deduction under section 80HHC-- CIT v. Atul Intermediates (Guj) . . . 638
S. 80-I --Industrial undertaking--Special deduction--Other income--Not excludible-- CIT v. Dharamsi Morarji Chemicals Co. Ltd. (Bom) . . . 545
S. 80-IA --Export--Infrastructure development--Special deduction under sections 80HHC and 80-IA--Computation of special deduction under section 80HHC--Effect of sub-section (9) of section 80-IA--Special deduction allowed under section 80-IA must be taken into account in computing special deduction under section 80HHC-- CIT v. Atul Intermediates (Guj) . . . 638
S. 131(1)(d) --Assessment--Valuation Officer--Whether report of, called for by Assessing Officer, can be made basis for assessment--Appeal dismissed leaving question open-- CIT v. Om Prakash Bagadia (HUF) (SC). . .670
S. 143(1) --Reassessment--Notice--Change of opinion--Original assessment completed under section 143(1)--No question of change of opinion--Main issue not addressed by High Court--Order set aside and matter remanded to Tribunal-- Deputy CIT v. Zuari Estate Development and Investment Company Ltd. (SC). . . 661
S. 147 --Reassessment--Notice--Change of opinion--Original assessment completed under section 143(1)--No question of change of opinion--Main issue not addressed by High Court--Order set aside and matter remanded to Tribunal-- Deputy CIT v. Zuari Estate Development and Investment Company Ltd. (SC). . . 661
----Reassessment--Validity--Reassessment proceedings on the basis of change of opinion--Not valid--Tax on capital gains based on material on record for assessment year 1989-90--Reassessment proceedings to recompute capital gains--Not valid-- Prabhu Dayal Rangwala v. CIT (Delhi) . . . 596
S. 148 --Reassessment--Notice--Change of opinion--Original assessment completed under section 143(1)--No question of change of opinion--Main issue not addressed by High Court--Order set aside and matter remanded to Tribunal-- Deputy CIT v. Zuari Estate Development and Investment Company Ltd. (SC). . . 661
S. 153A --Search and seizure--Assessment in search cases--Unexplained investment--Additional evidence--Assessee should have pursued before assessing authority or before Commissioner (Appeals)--Tribunal finding no reliability could be placed on submissions made by assessee--Finding of fact-- P. Madhurajan (HUF) v. Asst. CIT (Mad) . . . 630
S. 158BC --Search and seizure--Block assessment--Assessment of third person--Notice under section 158BC--Limitation--No period of limitation prescribed by law--Notice within five months of note of satisfaction--Not barred by limitation-- CIT v. Sudhir Dhingra (Delhi) . . . 555
----Search and seizure--Block assessment--Undisclosed income--Condition precedent--Participation by assessee in proceedings--Not a bar to challenging jurisdiction--Warrant of authorisation not containing name of assessee--Block assessment pursuant thereto not valid-- CIT v. Jolly Fantasy World Ltd. (Guj) . . . 530
S. 245(2) --Advance ruling--Jurisdiction of Authority--Applicant a non-resident--Assessing Officer not informed of application before Authority--Application admitted-- Soregam S. A. Bengium, In re (AAR). . . 660
----Advance ruling--Jurisdiction of Authority--Bar in case of avoidance of tax--Ruling sought on questions relating to fees for technical services--Income from royalty and interest declared in return and taxability conceded--That no ruling sought thereon not a device to avoid tax--Application admitted-- Magotteaux International S. A. Belgium, In re (AAR). . . 658
Obama Administration sides against Google in copyright appeal; Basmati rice to get IPR protection
Obama Administration sides against Google in copyright appeal; Basmati rice to get IPR protection
Directs investigation against Ericsson for unreasonable patent licensing terms, unfair jurisdiction clause
CCI directs investigation against Telefonaktiebolaget L M Ericsson (Publ) ('Ericsson') on 'abuse of dominance' complaint filed by proposed licencee (informant, brand owner of iBall) of its Standard Essential Patents ('SEPs') used in mobile phones & wireless technologies; Informant alleged that Ericsson gave threats of patent infringement proceedings without disclosing SEPs so infringed by informant, forced it to enter into one sided & onerous non-disclosure agreement for global patent licensing arrangement for all the patents of Ericsson, demanded unreasonably high royalties, debarred informant from getting disputes adjudicated in India; CCI notes that Ericsson is the largest holder of SEPs used in mobile communications like 2G, 3G and 4G patents used for smart phones etc, and owns 33,000 patents, also observes absence of other alternate technology in Indian market, thus, holds that Ericsson was dominant in relevant market of "Standard Essential Patents for 2G, 3G and 4G technologies in GSM standard compliant mobile communication devices in India"; Observes that Ercisson being member of European Telecommunications Standards Institute (an NGO, officially recognized by the European Union, which produces globally applicable standards for Information and Communication Technologies), had agreed to issue licences to use its SEPs based on FRAND (fair, reasonable & non-discriminatory) terms; However, notes Ericsson, instead of providing FRAND terms, forced informant to execute non-disclosure agreement, imposed excessive and unfair royalty, holds it as "abuse of dominance in violation of section 4 of the Act"; Also observes that, "imposing a jurisdiction clause debarring the Informant from getting the disputes adjudicated in the country where both the parties are engaged in doing business and vesting the jurisdiction in a foreign land, prima facie, appears to be unfair"; Relies on its observations in Micromax Informatics Limited v. Telefonaktiebolaget LM Ericsson (Publ) and Intex Technologies (India) Limited v. Telefonaktiebolaget LM Ericsson (Publ):CCI
Delhi High Court by order dated 22.05.2015 issued Notice to Central Government on the validity of new provisions of Audit under service tax
In the Delhi High Court Mega Cabs Pvt. Ltd. filed writ petition (C) No. 5192/2015 challenging the validity of
Rule 5A(2) of the Service Tax Rules as substituted by Notification No. 23/2014-ST, dated 05.12.2014, clause (k) of sub-section (2) of section 94 of the Finance Act, 1994 as inserted w.e.f. 06.08.2014 by the Finance Act, 2014 and also the Circular No. 181/7/2014-ST dated 10.12.2014 directing departmental officers to conduct audit of the service tax assessees as provided in the departmental instructions. In the matter, Delhi High Court has entertain the said writ petition and by order dated 22.05.2015 please to issue Notice to the Union of India, Ministry of Finance, and also to the Service Tax (Audit) Department, Delhi. It may be noted that earlier Rule 5A(2) was struck down as ultra vires by the Hon'ble Delhi High Court in the matter of Travelite (India) v UOI 2014 (35) S.T.R. 653 (Del.), after that amendment was made by the Finance Act, 2014 by inserting clause (k) of sub-section (2) of section 94 and on the basis of that sub-rule (2) to Rule 5A has been again enacted. Whereas in Circular No. 181/7/2014-ST dated 10.12.2014, stand has been taken by the Government that Travelite (India) judgment can now be distinguished as a clear statutory backing for the rule now exists in section 94(2)(k) of the said Act. Now, both have been challenged in the aforesaid writ petition that clause (k) suffered from the vice of excessive delegation of legislative power by the Parliament and unconstitutional and sub-rule (2) is ultra vires to the Finance Act, 1994, illegal & bad under the law.
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