The CBDT has issued Circular (No: 10/DV/2013) dated 16/12/2013 providing ‘Departmental View‘ on the controversial issue surrounding section 40(a)(ia) of the Income-tax Act, 1961. In case of Merilyn Shipping & Transports v Addln CIT /[2012] 136 ITD 23 (VISAKHAPATNAM), it was held that: “The word ‘payable’ used in section 40(a)( ia) is to be assigned strict interpretation, in view of the object of Legislation, which is intended from the replacement of the words in the proposed and enacted provision from the words ‘amount credited or paid’ to ‘payable’. Hence, it has to be concluded that provisions of section 40(a )(ia) are applicable only to the amounts of expenditure which are payable as on the date 31st March of every year and it cannot be invoked to disallow expenditure which has been actually paid during the previous year, without deduction of TDS.”
Monthly Archives: December 2013
ITO v SMT BINA GUPTA [ITA No.4074/Del/2012 (dtd 18/10/2013) (Delhi ITAT)] Background: Assessee sold house on 13.06.2008 on which long term capital gain was shown at Rs.31,00,369. Deduction u/s 54 was claimed for entire capital gain on a/c of investment in house. Assessee has also sold a plot at Sradhapuri, Meerut on 10.11.2008 on which Long Term Capital Gain is shown at Rs.19,89,914/-. Deduction u/s 54F has been claimed for this entire amount on a/c of investment in the same houseas mentioned above. The AO found that the assessee had advanced monies to the builder on agreement and deposited money in capital gains scheme. The AO held that since no house had been purchased till the date of assessment order as two years period had lapsed, deduction u/s 54 and 54F was to be disallowed.
Deduction u/s 54-54F allowed if delivery of house could not be obtained but entire payment ...
eBay International AG v DDIT [IT APPEAL NO. 8907 (MUM.) OF 2010 dated 11.09.13] Mumbai ITAT Background: The Assessee is a company incorporated under law of Switzerland and is a tax resident of Switzerland. The assessee operated India specific websites (www.ebay.in and www.b2motors.ebay.in) that provides an online platform for facilitating the purchase and sale of goods and services to users based in India. The assessee has entered into marketing support agreements with eBay India and eBay Motors which are eBay group companies, for availing certain support services in connection with its Indian specific websites. Assessee earned revenues amounting to Rs. 12,00,39,045/- from the operations of these websites during the year. The assessee contended that these revenues are taxable as business profits in India as per the provisions of Article 7 of the Treaty only if the assessee has a permanent establishment (‘PE’) in India as per provisions of Article 5 of the Treaty i.e. DTAA. The assessee contended that did not have any PE in India and as such no amount would be taxable in respect of the consideration received from the operations of the above mentioned websites.
Distinction between ‘Dependant Agents’ & ‘Dependant Agent PEs’ brought out in eBay case – Mum ...
D. H. Securities Pvt. Ltd vs. DCIT (ITAT Mumbai) (Third Member) Background: The assessee claimed that as it was engaged in the business of trading in shares, its main object is to earn profit on purchase and sale of shares and not to earn dividend income from such shares. It claimed that the accrual of tax-free dividend on such shares was merely incidental to the holding of shares as stock-in-trade and that no disallowance could be made u/s 14A and Rule 8D. It also claimed that though the assessee had not incurred any direct or indirect expenditure to earn the said dividend, the AO had made the disallowance on a presumptive basis. The Division Bench referred the dispute to a Third Member in view of the difference of opinion between the Benches. Before the Third Member, the assessee relied on CCI Ltd 71 DTR (Kar) 141 , India Advantage Securities, Yatish Trading etc in which the law had been laid down that s. 14A & Rule 8D does not apply to securities held as stock-in-trade. The department reied on Godrej & Boyce Manufaturing Co 328 ITR 81 (Bom) (where it was held that Rule 8D is mandatory) and Daga Capital 117 ITD 169 (Mum) (SB) (where it was held that s. 14A applies to stock-in-trade).