Petro Araldite P Ltd v DCIT (IT APPEAL NO. 6217 (MUM.) OF 2012 dtd 18.1.2013) Mumbai ITAT Background: Assessee is a concern engaged in the manufacture of `Specialty Chemicals’. Its main product is Epoxy Resins. The chemicals manufactured by it are used in the industries operating in Paints, Civil engineering applications, Structural composites, Electrical insulation material, Adhesive and Tooling material. The assessee followed Transactional Net Margin Method (TNMM) to benchmark its international transactions in a composite way for all such transactions taken together. It adopted Profit Level Indicator (PLI) as Operating Profit / Sales which was shown at 4.20%.
Monthly Archives: March 2013
CIT v M/s Chelslind Textiles Ltd (ITA No: 361/2009 dtd 04/03/2009) – Karnataka HC Background: Assessee claimed deduction u/s 10B amounting to Rs.4,75,30,724/- on the business income of Rs.5,36,70,676. During the course of assessment proceedings, the AO allowed the deduction claimed by the assessee. The Commissioner of Income-tax observed that the AO allowed the deduction without setting-off unabsorbed depreciation amount of Rs.4,26,23,711. Therefore, the CIT in his jurisdiction under Section 263 of the Income Tax Act was of the view that the same resulted in excess deduction allowed under Section 10B of the Act and incorrect determination of loss was carried forward. Therefore, he set-aside the said order and directed the Assessing Officer to re-compute the total income after setting-off the unabsorbed depreciation. Further,the question arose as to whether an assessee incurring losses in the 10A unit has an option to opt out of the benefit under section 10A(8) and make inter-source and inter-head set-off u/s 72.
An assessee can opt out of 10A/10B exemption in the year of loss – Karnataka ...
Sunil Sachdeva v ACIT (IT APPEAL NO. 4179 (DELHI) OF 2011) Delhi ITAT Background: During the course of assessment proceedings, Assessing Officer noticed that assessee sold shares of M/s Capital Advertising Pvt. Ltd. for a sale consideration of Rs. 5,62,87,500/-. Assessee claimed deduction of Rs. 1,22,23,250/- u/s. 54F of the I.T. Act. The assessee has invested Rs. 1,22,23,250/- on 31.7.2008 in the special gain account maintained with the Syndicate Bank. The CIT(A) made an enhancement by holding that assessee is not eligible for deduction u/s. 54F(1) on the payment of Rs. 55,70,800/-. This has been denied on the ground that the payment was made by M/s Capital Advertising Pvt. Ltd. wherein the assessee was Director and not by the assessee himself.
Reimbursement of cost of property entitled to 54F deduction – Delhi ITAT
Zavata India Pvt Ltd v ITO [IT APPEAL NO. 628 (HYD.) OF 2008 dtd 31-01-2013] Hyd ITAT Background: Assessee is in the business of rendering back office processing services in the field of health-care administration. Its services are not akin to call centre services, wherein tele-communication expenses constitute more than 24%. The assessee’s service centre is registered under the Software Technology Parks of India and provides services exclusively to Samsung Data Corporation USA (SDC US), its Associate Enterprise (AE). The SDC US markets services in USA. The revenue sharing policy was determined at the ratio of 85:15 on the gross receipts received from third parties. For the financial year 2003-04, i.e. AY 2004-05, the assessee filed return of income and claimed deduction under S.10A to the extent of Rs. 3,15,69,530.
Once TPO has accepted ALP, AO cannot say that assessee has earned more than ordinary ...
DCIT v Gulshan Investment Co Ltd. (I.T.A. No.: 666/ Kol. / 2012 dtd March 11, 2013) (Kolkata ITAT) The assessee is engaged in the business of share trading. During the course of assessment proceedings, the AO noticed that while the assesse has earned dividend income of Rs 18,91,556, the assessee has not made any disallowance under section 14A in respect of “expenses relatable to the above exempt income”. The AO also noticed that the assessee had paid interest of Rs 10,34,315. The assessee contended that disallowance under section 14A of the Income Tax Act, read with rule 8D of the Income Tax Rules, is not applicable in the case of the assessee since the shares were kept as stock in trade. However, the AO did not accept the contentions of the assessee and computed the disallowance under Rule 8D by applying 0.5% of the average stock-in-trade.
14A is applicable to shares held as stock-in-trade; but Rule 8D cannot be applied – ...
CLSA Ltd v ITO (Intl Taxation) [ITA No. 2010 (MUM.) OF 2008 dtd 18.01.2013] (Mum ITAT) Background: Assessee is a Company incorporated in Hongkong and belongs to the CLSA Group of companies. During the year, CLSA India (CLSAI) paid an amount of Rs. 7,73,58,162 to the assessee-company as “Referral Fees”. Before the AO, it was explained that it has business relationship with various financial institutions outside India which required services of a broker in relation to the investment activities carried out by such Institution in Indian capital market. It was submitted that the assessee referred such overseas institutional clients to CLSAI acting as India stock broker for which it received referral fees from CLSAI. The AO held that the fees was in the nature of fees for technical services received by the assessee and the same, therefore, was chargeable to tax in its hands in India.
Referral fees is equivalent to export commission & therefore, cannot be regarded as FTS – ...
The Union Budget for 2013-14 was presented by the Finance Minister in the Parliament on 28th February 2013. The Finance Minister stated in his speech that the underlying theme of this year’s tax proposals is “clarity in tax laws, a stable tax regime, a non-adversarial tax administration, a fair mechanism for dispute resolution, and an independent judiciary.” Most of the direct tax proposals in the Finance Bill, 2013 are effective from the financial year commencing on 1 April 2013, unless otherwise specified. Please click here to refer to the key Direct tax proposals made in the Budget 2013-14