Letter [F.No.500/111/2009-FTD-1(Pt.)], dated 29-5-2012 The Finance Act 2012 has introduced certain clarificatory amendments in Section 2 clause (14), Section 2 clause (47), Section 9 and Section 195, of the Income Tax Act, 1961 (“Act”), with retrospective effect from 01.04.1962 or 01.04.1976, whereby meaning of various terms used in these sections have been clarified in order to remove any doubt regarding their interpretations. 2. These amendments have been introduced retrospectively in order to clarify the legislative intent and state the position of law from the date of coming into effect of these sections in the Act. 3. Doubts have been raised in various quarters about the implication of these amendments on the assessments that have already been completed and attained finality. 4. The Board, after due consideration, hereby directs that in case where assessment proceedings have been completed under section 143(3) of the Act, before the first day of April, 2012, and no notice for reassessment has been issued prior to that date; then such cases shall not be reopened under Section 147/148 of the Act on account of the abovementioned clarificatory amendments introduced by the Finance Act, 2012. However, assessment or any other order which stand validated due to the said clarificatory amendments in the Finance Act 2012 would of course be enforced. 5. This may be brought to the notice of all officers in your region immediately.
Monthly Archives: May 2012
B4U International Holdings Ltd. v DCIT I.T.A.No. 3326/Mum/2006 (Mum ITAT) Finance Act, 2012 introduced a retrospective amendment in the definition of the term ‘royalty’ by inserting Explanation 4 to 6 in s. 9(1)(vi) with retrospective effect from 1.6.1976. The same reads as under:
Retrospective amendment in “Royalty” u/s 9 of the I.T. Act made redundant in view of ...
CIT v Havells India Ltd (Del HC) [ITA No. 55/2012 & ITA No. 57/2012] The assessee, an Indian company, paid Rs. 14.71 lakhs to a US company for ‘KEMA’ certification which was necessary to enable it to sell its products in the European markets. The assessee claimed that though the said amount was ‘fees for technical services’ u/s 9(1)(vii), it was paid “for the purpose of earning income from a source outside India” (i.e. the exports) and so it was not taxable in India u/s 9(1)(vii)(b). The AO & CIT (A) rejected the claim though the Tribunal upheld it. On appeal by the department, HELD reversing the Tribunal:
S. 9(i)(viib): Export sales is not a “source of income outside India”
CHANCHAL KUMAR SIRCAR v ITO 2012-TIOL-268-ITAT-KOL Assessee is an individual. He filed his ROI claiming exemption under section 54EC. It was observed that the assessee had invested the amount in capital gain scheme in scattered manner which meant some amount invested by the assessee when he received part payment and the balance on the receipt of balance payment. The CIT was of the view that assessee ought to have deposited the entire amount in capital gain scheme
Piecemeal deposits of sale proceeds eligible for Sec 54EC benefits
CIT vs. High Energy Batteries (India) Ltd (Madras High Court) The assessee purchased an igni-fluid boiler from its sister concern and on the same day leased it back. The AO & CIT(A) relied on McDowell 154 ITR 148 and held the sale and lease back arrangement to be a sham & camouflage for a loan by the assessee to the sister concern and rejected the assessee’s claim for depreciation. However, the Tribunal allowed the claim on the ground that the transaction was not a “sham”. On appeal by the department, HELD dismissing the appeal:
Sale & Lease Back transactions are not “sham” transactions
INSTRUCTION NO. 01/2012 [F.NO.225/34/2011-ITA.II], DATED 2-2-2012 The issue of processing of returns for the Asst. Year 2011-12 and giving credit for TDS has been considered by the Board. In order to clear backlog of returns, the following decisions have been taken:
CBDT Instructions on processing returns for AY 2011-12
Sheetal Drape (India) Ltd. v. Additional Commissioner of Income-tax-4(3)IT Appeal NO.1323 (MUM.) of 2012 (Mum ITAT) Proviso to section 36(1)(iii) provides that no interest paid shall be allowed as deduction in respect of capital borrowed for acquisition of an asset for extension of existing business for any period beginning from the date on which the capital was borrowed for acquisition of the asset till the date on which the asset was first put to use.In this provision the reference is first to the existing business and then to its extension. It does not refer to setting up an altogether different or new business. In the absence of any specific statutory meaning to the expression ‘extension of existing business’, one has to go by its meaning as understood in common parlance. Assessee shifting its business from rented office to its own Office premises acquired with borrowed funds is extension of existing business within the meaning of proviso to section 36(1)(iii) The instant case is of ‘extension of existing business’ and not that of setting up of a new business, inasmuch as by having its own premises and doing the same business, the assessee will now be in position to carry on its operation at a much wider scale in a hassle free manner. This would obviously result in extension of its existing business.
Shifting from rented to own premises is extension of business – Therefore, interest not allowable ...
ACIT v ETC Industries Ltd. [2012] 21 taxmann.com 457 (Indore – Trib.) The deeming fiction created in section 50 modifies the provisions of section 48 only to the extent of modifying the term ‘cost of acquisition’.
Section 50C – Stamp duty valuation applies to both – depreciable and non-depreciable assets
ACIT vs. SIL Investment Ltd (ITAT Delhi) Delhi ITAT has provided detailed findings and observations on applicability of section 14A where Rule 8D has been applied arbitrarily without application of mind. Facts: For AY 2006-07, the assessee earned dividend of Rs. 17 lakhs and LTCG of Rs. 12 crores. The assessee claimed that it had incurred no expense to earn the tax-free income and so no s. 14A disallowance was permissible. However, the AO disallowed Rs. 2 crores under Rule 8D towards interest and admin expenditure. The CIT (A) accepted that no interest was incurred and deleted that disallowance. He also reduced the admin expenditure disallowance. On appeal to the Tribunal, HELD: