Gulshan Malik v CIT (IT APPEAL NO. 55 OF 2014 dated 14.03.2014) – Delhi High Court Background: The assessee and his wife had booked an apartment vide an application dated 31.07.2004, by payment of a booking amount of Rs. 2,00,000/-on 3.08.2004 and consequently, it is claimed, acquired rights or interests in the same. The builder DLF issued a letter dated 6.08.2004 provisionally allotting the apartment and two parking spaces. A buyer’s agreement was executed on 4.11.2004 between DLF and the allottees. Per the payment schedule, a total payment of Rs. 87,12,500/- was made from 31.07.2004 to 03.08.2006 towards the purchase of the apartment. Following this, the Assessee entered into an agreement to sell dated 2.11.2007 to sell their booking rights/rights or interest in the apartment. In the computation of income, the assessee declared a long term capital gain of Rs. 31,35,740/- on the sale of booking rights/extinguishment of rights in the apartment (period between acquisition and sale of the booking rights in the apartment was claimed to be 39 months and 2 days). An exemption was claimed under Section 54 of the Act, 1961 as the same was invested in purchase of another apartment in June 2008.
Yearly Archives: 2014
Maersk Global Centres (India) Pvt. Ltd vs. ACIT (ITAT Mumbai Special Bench) Transfer Pricing: Companies in ITES cannot be classified into low-end BPO services and high-end KPO services for comparability analysis but have to be classified based on the functions performed. Comparables with abnormal profit margins cannot be discarded per se but must be examined to determine whether the high margins are due to normal business conditions or not
TP: Potential comparables cannot be excluded merely on the ground that their profit is abnormally ...
CIT v Motorola India Electronics (P) Ltd. (ITA NO.447 OF 2007) (Kar HC) (dated 11.12.2013) Background: The assessee had outstanding borrowings by way of External Commercial Borrowings. The borrowings were for the business of STP undertaking. The Government had formulated a policy on pre-payment and the policy stated that approval of pre-payment would be granted only to the extent of 10% of the outstanding loan. Hence, it is required to temporarily park the funds, until the date of repayment, and also keep paying the interest on the loans. The assessee took a business decision to place these funds with various sister concerns as inter-corporate deposits. The assessee claimed that the interest income as derived from the business of export of articles or things or computer software and the same is eligible for exemption under section 10A of the Act. The AO disallowed the exemption claimed with respect to the interest income.
Interest income is “profit derived from business of undertaking” eligible for 10A/10B benefit – Karnataka ...
ACIT v Casio India Co P Ltd I.T.A .No.-6135/Del/2012 (Delhi ITAT) Dated 13/12/2013 Background: Assessee is a wholly owned subsidiary of Casio and Computer Company Ltd., Japan (hereinafter called `Casio Japan’). The assessee distributes watches and consumer information products and other related products of Casio Japan, in India. The assessee entered into certain international transactions with Casio Japan which were benchmarked on ‘Transactional Net Margin Method’ (TNMM). On a reference made by the AO, the Transfer Pricing Officer (TPO) noticed that the assessee incurred a certain sum on the Advertising, Marketing & Promotion (AMP) expenses. Out of that, a sum of Rs.2,63,50,982/- was held to be towards developing marketing intangibles for the Associated Enterprise (AE). As against that, only a sum of Rs.1,02,13,645/- was reimbursed by the AE. Adding in mark-up of 14.93% on the differential amount, the TPO proposed adjustment accordingly.
LG Electronics ruling on AMP Expenses is applicable even for distributors – Del ITAT
CIT v Bholanath Poly Fab (P.) Ltd [2013] 40 taxmann.com 494 (Gujarat) Background: Assessee is engaged in the business of trading in finished fabrics. For the assessment year 2005-06, the Assessing Officer held that the purchases worth Rs. 40,69,546 were unexplained. Assessing Officer had issued notice to all parties from whom such purchases were allegedly made. Such notices were returned unserved by the postal authorities with the remark that the address was incomplete. He, therefore, disallowed such expenditure claimed by the assessee and computed the total income of Rs. 41,10,187. The Commissioner rejected the appeal, upon which the assessee went in further appeal before the Tribunal. The Tribunal, substantially allowed the assessee’s appeal.
If it is proved that goods are actually purchased (even though the parties are bogus), ...
CBDT Circular No. 1 of 2014 Rajasthan High Court in the case of CIT(TDS) vs. Rajashthan Urban Infrastructure held that the words “any sum paid” used in Section 194J of the Income Tax Act, relate to “fees for professional services or fees for technical services”. In terms of the agreement, the amount of Service Tax was to be paid separately and was not included in the fees. Accordingly, it was decided that if Service tax is payable in addition to professional/ technical fees under the contract, the withholding tax will be restricted to the professional fees. The CBDT vide CBDT Circular No. 1 of 2014 dated 13.01.2014 has decided in exercise of powers u/s 119 that wherever the terms of the agreement/ contract between the payer and the payee, the service tax component comprised in the amount is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/payable without including such service tax component. The aforesaid circular should apply to all kinds of payments made to residents.
No TDS on service tax component – CBDT Circular
CIT v Bhargav Book Depot [2013] 40 taxmann.com 213 (Allahabad) Background: Assessee deals in printing and publication of books/diaries and sale thereof. During the course of assessment proceeding, the AO found that the assessee had sold Bhargav Dictionary though its sister concern “Sri Ganga Pustkalay” and had offered a discount of 3% whereas it had offered a discount of 0.5% less to other whole sellers . The AO further found that the sale price of dictionary was lesser by 18% when it was sold to M/s Sri Ganga Pustakalay. The difference of half percent was disallowed under Section 40-A (2) (a) and (b) of the Act and addition of Rs.15,97,401 was also made under Section 40-A (2) (a) and (b) of the Act. The matter was carried in appeal. The Commissioner of Income Tax (Appeals) has accepted the claim of the assessee and deleted the addition, which order has been upheld by the Tribunal on an appeal preferred by the Revenue.