CIT v Gita Duggal ITA No. 1237/2011 (Del HC) dtd 21.02.2013 Background: Assessee was the owner of property in New Delhi comprising of the basement, ground floor, first floor and second floor. On 08.05.2006 she entered into a collaboration agreement with a developer for redeveloping the property. According to its terms, the assessee being desirous of getting the property redeveloped/reconstructed and not being possessed of sufficient finance and lacking in experience in construction, approached the builder to develop the property for and on behalf of the owner at the cost of the builder. The builder was to demolish the existing structure on the plot of land and develop, construct, and/or put up a building consisting of basement, ground floor, first floor, second floor and third floor with terrace at its own costs and expenses. In addition to the cost of construction incurred by the builder on development of the property, a further payment of Rs. four crores was payable to the assessee as consideration against the rights of the assessee. The builder was to get the third floor.
Monthly Archives: February 2013
Welspun Zucchi Textiles Ltd. v ACIT [ITA No 6539 (MUM.) OF 2009 & 898 (Mum.) of 2010] dtd 11.1.2013 Background: During the year under consideration, the assessee company had exported bathrobes to its associated enterprises in Italy. The said transactions were benchmarked by the assessee using CUP method as the most appropriate method. In order to determine the arms length price of these transactions, a reference was made by the AO to the TPO u/s 92CA(1) of the Act. Before the TPO, the assessee submitted the comparative chart of sales to AEs and non AEs. It was submitted that out of the total bathrobes exported to non AEs, about 95% bathrobes were exported to Wallmart USA at an average unit price of US Dollars 6.42 while the average unit price of export made by the assessee to its AEs in Italy was US Dollars 8.80. It was contended that since the price charged to AEs was more than the price charged to non AEs, the international transactions with AEs involving export of bathrobes should be considered at arms length.
CUP method fails where there are differences in location, market size and product prices sold ...
Export Credit Guarantee Corporation of India Ltd v Addln CIT Writ Petition No. 502 of 2012 (order dtd January 10/11, 2013) – Bombay HC Background: Assessee filed a return of income for AY 2006-07 on 28 November 2006 in which it offered income computed at Rs. 385.25 crores to tax under Section 44. An order of assessment was made on 17 November 2008 under Section 143(3) by which the total income was determined at Rs.386.08 crores after making certain disallowances. A notice was issued on 24 March 2011 to the assessee seeking to reopen the assessment. The assessee by a letter dated 18 November 2011 objected to the notice proposing to reopen the assessment for A.Y. 2006-07. The Assessing Officer by his order dated 22 November 2011 disposed of the objections.
Full disclosure in the return of income does not preempt the AO from reassessment – ...
Siemens Limited v CIT(A) IT APPEAL NO. 4356 (MUM.) OF 2010 Dtd 12.02.2013 – Mumbai ITAT Background: Assessee hired “Pehla Testing Laboratory” (PTL) of Germany for carrying out “type tests” of the circuit breakers manufactured by assessee in order to establish that the design and the product meets the requirement of the International Standards. Pehala Lab is accredited by National Accreditation Board for Testing & Calibration Laboratories (NABL) Germany, which carries out various kinds of tests for circuit breakers and other electronic devices to prove that the designs of the equipment meets the requirements of the international standards. This is a standard service provided by the Laboratory, which is done automatically by machines. It was submitted by the assessee during the course of assessment proceedings that the payment was purely for standard facility provided by the Laboratory which is done automatically by the machines without any human intervention. Further, the payment is in the nature of business income of PTL and since it does not have any Permanent Establishment in India, the same is not taxable in India as per the DTAA. However, the AO rejected the assessee’s contentions on the ground that the type of the services provided by the Pehla Lab is of highly technical in nature covered by section 9(1)(vii).