ITO v VEEDA CLINICAL RESEARCH PVT LTD ITA No.1406/Ahd/2009 (dated 28 June 2009) – Ahmedabad ITAT Background: During the year, the assessee made payments of GBP 35,600 to Veeda Clinical Research Ltd UK, for providing in-house training of its employees, and of GBP 8,500, made to Steve Matheson UK, for providing market awareness and development training to its employees. The payment was made without deducting tax at source under section 195 of the Act. The Assessing Officer disallowed the same under section 40(a)(i) of the Act. The CIT(A) also upheld the order of the AO.
Yearly Archives: 2013
CBDT issued a Circular dated 16th July 2013 giving its view on the controversial issue as to whether the profit of a unit eligible for deduction u/s 10A/ 10B has to be first set-off against the loss suffered by an ineligible unit before computing the available deduction u/s 10A/10B.
CBDT revamps settled position on inter-unit setoff of non-10A loss against 10A profits
CIT v M/s MANSUKH DEYING & PRINTING MILLS (Income Tax Appeal No.1133 of 2008 dtd 24/06/2013) Bombay High Court Background: During the assessment proceeding for the AY 1992-93, the AO had assessed an amount of Rs.2.63 Crores being goodwill as chargeable to capital gain tax on account of the fact that the above amount was debited to partners capital accounts during the AY 1992-93. The AO while passing the assessment order also directed that penalty proceedings be initiated under Section 271(1)(c) of the said Act against the assessee.
Penalty cannot be imposed merely on account of a different interpretation of provisions – Bom ...
M/s TATA AUTOCOMP SYSTEMS LTD v ACIT IT (TP)A No.7596/Mum/2012) Mumbai ITAT Background: During the year under consideration, the assessee received dividend income of Rs. 16,83,27,131 which was claimed to be exempt from tax. A disallowance of Rs. 1,34,95,120 was made u/s 14-A of the Act on account of expenses attributable to the said exempt income. The said disallowance comprises of interest at Rs. 1,28,72,969/- being 35% of the total interest which, according to the assessee, was the ratio between the investment fetching tax free income and total investment. The balance disallowance of Rs. 6,22,151/- was made on account of salary paid to a treasury person who, according to the assessee, was looking after the activity of earning tax free income.
Rule 8D upheld even after assessee had disallowed staff salary as attributable to exempt income ...
ACIT v Nimbus Comunications Ltd [2013] 34 taxmann.com 298 (Mumbai – Trib.) Facts • The assessee had given corporate guarantee of US $ 30,00,000 through ICICI Bank, U.K. for a term loan given to its AE namely Nimbus Communication Worldwide Ltd. • Another guarantee of US $ 1,50,00,000 was given by the assessee to the same Bank for the financial facility given to another AE namely Nimbus Sports International Pte Limited.
TP is applicable on commission on corporate guarantee given for loan availed by AE – ...
CIT v M/s Mahanagar Gas Limited [Income Tax Appeal No. 1978 of 2011] Dated : June 10, 2013 – Bombay High Court Background: Assessee filed its return of income for assessment year 2004-05 declaring a total income of Rs.100.76 crores. The Assessing officer noticed that the assessee had borrowed a sum of Rs.30 crores during the year and had paid total interest of Rs.613.26 lacs on the same. During the year, the assessee had invested an amount of Rs.4147 lacs in mutual funds. The Assessing Officer held that the borrowed funds were utilised for the purpose of investment in mutual funds and disallowed expenditure on account of interest under Section 36(1) (iii) on the ground that the above interest was not attributable to business carried on by the assessee.
Interest can’t be disallowed if investment is made from mixed funds (presuming sufficient own funds) ...
CIT v Pursarth Trading Co. (P.) Ltd. [IT Appeal (L) No. 123 of 2013] dtd March 13, 2013 (Bombay High Court) Background: The assessee sold its office premises and secured long term capital gains. However, being a depreciable asset computed its gains in terms of Section 50 of the Income-tax Act, 1961. The Assessing Officer disallowed the claim of the assessee to set off its carry forward long term capital loss against the long term capital gains made under Section 74 of the Act in view of Section 50 of the Act. The Commissioner of Income Tax (A) upheld the order of the Assessing Officer.
Long Term capital loss can be setoff against Short Term gain u/s 50 (if the ...
M/s BHORUKA ENGINEERING INDS LTD vs DCIT ITA No.120 of 2011 dated 9.4.2013 – Karantaka HC Background: Bhoruka Steel Limited (BSL) was incorporated in the year 1969. The company became a sick industrial company within the meaning of SICA.It was proposed that 30 acres of land along with building and structure to be disposed of. The valuers vide their valuation report dated 15.3.2002 valued the said land at Rs.25 Lakhs per acre. The company had received an offer from Bhoruka Financial Services Limited (BFSL), a public limited company and also one of the group Companies offered to purchase 30 acres of land for Rs.25 Lakhs per acre. Land measuring 15 acres was sold in favour of BFSL. The assessee company is a limited company whose shares are quoted in the stock exchange. The assessee is holding shares in BFSL. The assessee and other promoter shareholders are holding 98.73% shares in BFSL, whereas the public shareholders are holding the remaining shares. The assessee in the financial year related to the relevant assessment year 2006-07 sold its shareholdings in BFSL to the extent of 45,350 shares for a net consideration of Rs.20,29,08,626/- after paying Security Transaction Tax. The shares were sold to DLF Commercial Developers Limited. The assessee claimed the gain on sale of shares as exempt from taxation under Section 10 (38) of the Act.
Tax planning within 4 corners of law is not tax avoidance – Karnataka HC
Shervani Hospitalities Ltd v CIT [I.T.A. No. 804 of 2011 dated 28.05.2013] Delhi High Court Background: The assessee is a company engaged in hospitality services. For the AY 2001-02, the assessee filed its return declaring loss of Rs.43,15,328. The assessment was completed under Section 143(3) of the Act at a positive income of Rs.9,26,510. In the first appeal, the assessee substantially succeeded and most of the additions/disallowances were deleted. After giving the first appeal effect, the loss was determined at Rs.34,30,680. Aggrieved, the Revenue preferred an appeal before the Tribunal, which was substantially allowed vide order dated 25th April, 2008. Proceedings under Section 271(1)(c) of the Act were initiated and vide order dated 29th January, 2009, penalty of Rs.16,44,330/– was imposed inter-alia observing that the assessee had failed to substantiate the explanation regarding additions/disallowances made in the assessment order resulting in reduction of returned loss. It was observed that the losses claimed could not be justified before the Assessing Officer and the additions had been finally upheld by the Tribunal. Concealment penalty was upheld in the first appeal by the Commissioner of Income Tax (Appeals).