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Showing 161 to 180 of 190 Records

2012 (1) TMI 100 - DELHI HIGH COURT

Validity of reassessment proceedings – failure to issue notice u/s 143(2) within the period stipulated in the proviso to clause (ii) - effect of Section 292BB - petitioner had filed returns of income vide letter dated 19th November, 2009 in response of notice issued u/s 147/148, adopting their earlier returns u/s 139(1) – objections to the reopening were filed by petitioner on 13th July, 2010 and 19th July, 2010 and supplementary objections on 8th August, 2010 - A.O. issued notice u/s 143(2) on 23rd November, 2010 which is beyond the period of six months prescribed in the proviso to Section 143(2)(ii) - petitioner being foreign company, filed an application with the RBI for closure of their liaison office – NOC required from the Income Tax Department – Held that:- In the present case, the final assessment order has not been passed and only a draft assessment order u/s 144C has been passed. The proviso to section 292BB is applicable. The principle of estoppel u/s 292BB will, therefore, not apply. In respect of returns filed pursuant to notice u/s 148 after 1st October, 2005, it is mandatory to serve notice u/s 143(2), within the stipulated time limit. Thus, in present case, notice u/s 143(2) is deemed not to be served within the stipulated time. See ACIT vs. Hotel Blue Moon (2010 - TMI - 35251 - Supreme Court Of India.
In view of the aforesaid position, reassessment proceedings should not continue as no notice u/s 143(2) was served on the assessee within the stipulated time. Accordingly, the writ petition is allowed and a Writ of Certiorari is issued quashing the assessment proceedings pursuant to the notices u/s 148. A Writ of Mandamus is issued to the Department to issue NOC to the petitioner as per the needs and requirements of the RBI within the stipulated time – Decided in favor of petitioner.
2012 (1) TMI 97 - GUJARAT HIGH COURT

Validity of reopening of assessment previously framed after scrutiny beyond 4 years from the end of relevant A.Y. - assessment reopened on ground that income derived from the works contract would not qualify for deduction u/s 80IA - Explanation to Section 80IA added in year 2009 with retrospective effect from 1.4.2000 – A.Y. 05-06 – Held that:- By virtue of such retrospective amendment assessment previously framed after scrutiny could not have been reopened beyond the period of 4 years without any thing on record to suggest that the income chargeable to tax had escaped assessment for the failure on the part of the assessee to fully and truly disclose all material facts.
The suggestion that the assessee failed to disclose the nature of works executed and that the same was executed only as works contractor and not as a developer, cannot be accepted for two reasons. Firstly, the reasons recorded do not refer to such a ground. Secondly, when the assessee filed the return of income, the Explanation in question was not in picture. It would not be possible to expect the assessee to comply with the requirements of such Explanation by making disclosures in this regard which Explanation did not form part of the statute book when he filed his return – Decided in favor of assessee.
2012 (1) TMI 96 - DELHI HIGH COURT

Fringe Benefit Tax – car dealer - levy of FBT on car accessories provided free of cost to the customers – Revenue contending it to be sales promotion expenses - Held that:- Expenditure incurred on accessories which were supplied to customers who have purchased cars cannot be treated as sale promotion including publicity expenses under clause (D) of Section 115WB(2). Until and unless a customer purchases a car, no accessories are provided or furnished. The customer was not given a largesse but was offered and has managed to get a better deal for the consideration paid.
Revenue did not invoke clause (O) to sub-section (2) to Section 115WB. It was not the contention of the Revenue that the accessories given free of cost as gifts. This is rightly so as gifts are given or presented without consideration. Consideration, in the present case is inbuilt as per person/customer is paying consideration for purchase of the car. For gift under clause (O), the same should be paid without consideration. There is no finding to this effect by the Assessing Officer or by the tribunal. - Decided in favor of assessee.
2012 (1) TMI 92 - DELHI HIGH COURT

Unexplained Investment – Search conducted – assessee declared undisclosed investment of Rs.42,65,924/- - A.O. made addition of Rs 61,64,407/ on ground of undisclosed stock - CIT(A) deleted addition of Rs 23,08,033/- as assessee established that belonged to third parties – balance addition was deleted by Tribunal – Held that:- Assessee in their explanation had pointed out that the valuation reports had taken the value of 24 carat gold at Rs.790 per gram but did not correspondingly reduce the value of 18 carat and 22 carat gold. Further, even the stock, recorded in the books of account, was valued as per the market rates, which is not correct, and under the mercantile system of accounting an assessee is entitled to value the stock in hand (declared stock) at “cost price or market price, whichever is lower”. The assessee had valued the stock at cost price. The cost price as recorded in the books was not rejected or adversely commented upon in the assessment order. Thus an obvious mistake has been corrected by the Tribunal – Decided in favor of assessee.
2012 (1) TMI 91 - DELHI HIGH COURT

Deduction u/s 43B in respect of interest paid on additional sales-tax - Tribunal rejected the claim on the ground that interest did not fall within the expression “any sum payable” used in Section 43B – Held that:- It is clear in Section 17-A (2) of the Himachal Pradesh General Sales Tax Act, 1968 that once there is a notice of demand for the tax and the same is not paid then interest becomes automatically payable. In this regard, Tribunal, not having considered the said provisions of Himachal Pradesh General Sales Tax Act has committed an error in law – Decided in favor of assessee.
2012 (1) TMI 86 - DELHI HIGH COURT

Contract Construction activity - Commissioner exercised revisionary powers u/s 263 on the ground that A.O. had not examined whether the assessee was following completion method or percentage completion method and whether the said expenditure could be claimed as an expense in the A.Y. in question - non-inquiry by the Assessing Officer with regard to squared up loans – Tribunal quashed the order of Commissioner on ground that expenditure would be allowed as assessee has commenced business activities – Held that:- There was error on the part of the A.O. in not making verification and inquiries, regarding both the aspects discussed aforesaid, which were required and the assessment order was prejudicial to the interest of the Revenue. The tribunal has completely ignored the said aspect and has proceeded on an entirely different basis which was not edifice and foundation of the order passed by the CIT u/s 263 of the Act. Order of Tribunal quashing CIT order is set aside – Decided in favor of Revenue.
2012 (1) TMI 82 - ALLAHABAD HIGH COURT

Business expenditure - dis-allowance of travelling expenses, lease hold expenses, investment allowance, part of foreign travelling expenses – Held that:- Since assessee has not pressed before Tribunal the matter of dis-allowance of travelling expenses, lease hold expenses and investment allowance hence, this question does not arise for adjudication in the present appeal. Further, Tribunal has not found any good ground to interfere in such part dis-allowance of foreign travelling expenses and appellant could not persuade us to take a contrary view. Therefore, appeal is dismissed.
2012 (1) TMI 81 - ALLAHABAD HIGH COURT

Best judgement assessment – Lower G.P. Rate in comparison to last A.Y. - assessee contesting estimation of G.P. Rate based on previous records and G.P. of last year – Held that:- In the instant case, the addition is made on the estimate basis, which is a question of fact as laid down in the case of Utkal Road Lines vs. Registrar, Income Tax Appellate Tribunal (2009 - TMI - 206552 - Orissa High Court).
The Tribunal is a final fact finding authority and has already given the partial relief. No substantial question of law is emerging from the impugned order – Decided against the assessee.
2012 (1) TMI 80 - ALLAHABAD HIGH COURT

Penalty u/s 271D – Proceedings u/s 269 SS initiated on finding during search that assessee had received money exceeding Rs. 20,000/- in cash from 46 persons – assessee contending it to be share application money – Held that:- It is on record that the CIT (Appeals) had held the entire amount in dispute related to the share application money and was treated as having been fully explained. This Court has already held that share application money can not be called deposit within the meaning of section 269 SS or 269 T of the Act and, therefore, in our considered opinion, the Tribunal had rightly upheld the order of the CIT (Appeals) deleting the penalty – Decided in favor of assessee.
2012 (1) TMI 77 - DELHI HIGH COURT

Society registered u/s 12A & 80G - pledged FDRs with a bank to enable some other societies to obtain loan from a bank – few members of the management committee of the respondent society and other two societies are common – Revenue contending violation of Section 13(1)(c)(ii) read with Section 13(3) and Explanation 3 (ii) – non-utilization of grant received fully – Held that:- A.O. has not been able to record any finding that the persons in control of the management of the three societies had, at any point of time, not less than 20% shares in the profits of such concern. This being the position, invocation of Section 13(1) (c) (ii) has to fail and is accordingly rejected.
Grants were received for specific purposes/projects from the government, non-government, foreign institutions etc. In case of specific tied up grants, money is received for specific purposes and is to be utilized for the same. Unutilized amount has to be refunded back to the funding agencies. On the basis of the evidences placed on record, it is seen that the appellant is not free to use the funds voluntarily as per its will and, thus, these are not voluntary contribution as per Section 12 of the Act - Decided against the Revenue
2012 (1) TMI 76 - KARNATAKA HIGH COURT

Revisionary powers of Commissioner u/s 263 - DTAAs with Canada and Thailand - Tribunal set aside the revisional orders of the Commissioner remanding matter to the A.O. to rework the credit in respect of Canadian and Thailand Tax claimed under Double Taxation Avoidance Agreement - Held that:- It is the duty of the assessing authority to support every conclusion and finding by it with reasons and if the assessing authority had failed in that, more so in extending a tax relief to the assessee, the order definitely constitutes an order not merely erroneous but also prejudicial to the interest of the revenue and therefore while the commissioner was justified in exercising the jurisdiction u/s 263, the tribunal was definitely not justified in interfering with this order of the commissioner in its appellate jurisdiction - Decided against the assessee.
Reduction in tax relief on recomputation by A.O. - subject matter of appeal before Tribunal – Held that:- Tribunal had not examined the appeals of the assessee on its merits, but had simply allowed the appeals based on the premise that the revisional orders of the commissioner had been set aside by it and the revisional orders having now been restored by us in terms of the judgment in the above two appeals, the matter again has to necessarily go back to the tribunal - Decided in favor of Revenue.
2012 (1) TMI 73 - ALLAHABAD HIGH COURT

Relief u/s 89(1) - ex-gratia payment received under VRS scheme – Revenue allowed exemption u/s 10(10C) but denied relief u/s 89(1) – Held that:- Similiar controversy is settled by the two Division Bench decisions of this Court in case of CIT vs Harendra Natah Tripathi and CIT vs Subhash Chand Goyal [2010 (7) TMI 754 - ALLAHABAD HIGH COURT] and their being no decision to the contrary. Relief u/s 89(1) is also admissible in such a case. Present appeal does not raise any question of law which requires to be decided by this Court – Decided in favor of assessee.
2012 (1) TMI 72 - DELHI HIGH COURT

Validity of reopening of assessments - unexplained credits – amount received from company(entry provider) – assessee contending the amount to be share application money and discrediting the reasons recorded for reopening the assessment - information received by the A.O. from DIT (Inv.), who was in charge of the investigation into groups that operate as entry providers or entry operators - Held that:-Material present before the A.O. at the time of recording reasons for reopening the assessment did show a link between entry provider, with the petitioner herein together with date on which the entry was taken, the cheque or DD number, the name of the bank and branch and the account number. With such precise material before the A.O., the existence of which is beyond challenge, it can hardly be said that the A.O. could not have had even a prima facie belief that income chargeable to tax had escaped assessment in the hands of the assessee. - Decided against the assessee.
2012 (1) TMI 65 - ALLAHABAD HIGH COURT

Unexplained cash credit – deposit received – Revenue contending it to be adjustment entry & lender party to be non existing firm – Held that:- Tribunal has observed that lender company was having sufficient cash in hand, deposited the same in bank account and issued cheque in favor of assessee. lender company is an income tax assessee. Books of accounts together with Financial statements were produced. All these were taken sufficient by the Tribunal to prove the identity and source of the creditor. No infirmity is found in the order – Decided against the Revenue.
2012 (1) TMI 60 - ITAT PUNE

Transfer Pricing – adjustment in ALP – Working Capital Adjustment to the unadjusted margins of the comparable companies – Held that:- Working capital is a factor which influence the price in the open market and constitutes a subject matter for adjustments in the matters relating to ALP in Transfer Pricing. It is the duty of the TPO to apply the provisions of rule 10B(1)(e). Net profit margin arising out of the comparable uncontrolled transactions should be adjusted to take into account differences, if any between the international transactions and filtered comparables of uncontrolled transactions or enterprises entering into such transactions, which could materially affect the amount of the net profit margin in the open market. Therefore, working capital adjustment is to be allowed while determining the Arm's Length operating Margin of the Comparables.
Non granting of adjustments related to import expenses – Held that:- No doubt, a higher import content of raw material by itself does not warrant an adjustment in operating margins, but what is to be really seen is whether this high import content was necessitated by the extraordinary circumstances beyond assessee's control. Therefore, the issue should be set aside to the files of the TPO with direction to examine the claim of the assessee relating to the import cost factor and eliminate the difference if any.
Applicability of proviso to section 92C(2) – Held that:- Tribunal in case of Cummins India LTD vs CIT (2011 - TMI - 207660 - ITAT PUNE) has decided in favor of the assessee in support of grant of deduction of 5%, when multiple prices in establishing the arithmetic mean are involved. Thus the assessee's ground on this issue is allowed.
Incorrect computation of TP adjustment on the entire manufacturing segment sales instead of computing it sales relatable to the import of the components and spares procured from the AEs only – principle of proportionality - Held that:- TP adjustments are to computed not considering the entity level sales. Rather it should be done ideally considering the relatable sales drawing the quantitative relationship to the imports from the AEs, i.e. controlled cost.
Issues related to International transaction pertaining to export of components and spares, short grant of TDS/SA and charging of interest u/s 234B and 234C of the Act – Held that:- Matters are remitted back to file of A.O. to grant necessary relief.
Issues being decided in favor of assessee for statistical purpose. We remand these grounds with the direction to the AO to rework the addition.
2012 (1) TMI 59 - HIMACHAL PRADESH HIGH COURT

Minimum Alternative Tax - computation of Book profit for the purpose of MAT – reduction of book profit by deduction allowable u/s 80HHC (Export Benefit) - whether deduction under clause (iv) of the Explanation to Section 115JB to be computed on the basis of the book profits and not on the basis of profits computed under the provisions of the Act – Held that:- The issue is no more res integra and has been decided in case of Ajanta Pharma Limited versus CIT (2010 - TMI - 77381 - Supreme Court).
2012 (1) TMI 58 - ALLAHABAD HIGH COURT

Exemption u/s 10(10C) - ex-gratia payment received under VRS scheme – Revenue contending dis-allowance of exemption on ground that employer itself has not given any exemption U/s.10(10C) to its employees – Held that:- Similar controversy is settled by the two Division Bench decisions of this Court in case of CIT vs Harendra Natah Tripathi and CIT vs Subhash Chand Goyal (2010 -TMI - 208707 - ALLAHABAD HIGH COURT) and their being no decision to the contrary, the present appeal does not raise any question of law which requires to be decided by this Court. Further, relief u/s 89(1) is also admissible in such a case – Decided in favor of assessee.
2012 (1) TMI 52 - SUPREME COURT

Scope of total income - Revenue seeks to tax the capital gains arising from the sale of the share capital of CGP on the basis that CGP, whilst not a tax resident in India, holds the underlying Indian assets. - Held that:- Applying the look at test in order to ascertain the true nature and character of the transaction, we hold, that the Offshore Transaction herein is a bonafide structured FDI investment into India which fell outside India’s territorial tax jurisdiction, hence not taxable. The said Offshore Transaction evidences participative investment and not a sham or tax avoidant preordained transaction. The said Offshore Transaction was between HTIL (a Cayman Islands company) and VIH (a company incorporated in Netherlands). The subject matter of the Transaction was the transfer of the CGP (a company incorporated in Cayman Islands). Consequently, the Indian Tax Authority had no territorial tax jurisdiction to tax the said Offshor Transaction.

FDI flows towards location with a strong governance infrastructure which includes enactment of laws and how well the legal system works. Certainty is integral to rule of law. Certainty and stability form the basic foundation of any fiscal system. Tax policy certainty is crucial for taxpayers (including foreign investors) to make rational economic choices in the most efficient manner. Legal doctrines like “Limitation of Benefits” and “look through” are matters of policy. It is for the Government of the day to have them incorporated in the Treaties and in the laws so as to avoid conflicting views. Investors should know where they stand. It also helps the tax administration in enforcing the provisions of the taxing laws. As stated above, the Hutchison structure has existed since 1994. According to the details submitted on behalf of the appellant, we find that from 2002-03 to 2010-11 the Group has contributed an amount of ₹ 20,242 crores towards direct and indirect taxes on its business operations in India.

Transfer outside India - held that:- On transfer of shares of a foreign company to a nonresident off-shore, there is no transfer of shares of the Indian Company, though held by the foreign company, in such a case it cannot be contended that the transfer of shares of the foreign holding company, results in an extinguishment of the foreign company control of the Indian company and it also does not constitute an extinguishment and transfer of an asset situate in India. Transfer of the foreign holding company’s share off-shore, cannot result in an extinguishment of the holding company right of control of the Indian company nor can it be stated that the same constitutes extinguishment and transfer of an asset/ management and control of property situated in India.

Section 9 has no “look through provision” and such a provision cannot be brought through construction or interpretation of a word ‘through’ in Section 9. In any view, “look through provision” will not shift the situs of an asset from one country to another. Shifting of situs can be done only by express legislation.

Capital gains are chargeable under Section 45 and their computation is to be in accordance with the provisions that follow Section 45 and there is no notion of indirect transfer in Section 45. - Section 9(1)(i), therefore, in our considered opinion, will not apply to the transaction in question or on the rights and entitlements, stated to have transferred, as a fall out of the sale of CGP share, since the Revenue has failed to establish both the tests, Resident Test as well the Source Test.

Deduction of TDS u/s 195 - Territorial jurisdiction - Article 246 of the Constitution gives Parliament the authority to make laws which are extra-territorial in application. Article 245(2) says that no law made by the Parliament shall be deemed to be invalid on the ground that it would have extra territorial operation. Now the question is whether Section 195 has got extra territorial operations. It is trite that laws made by a country are intended to be applicable to its own territory, but that presumption is not universal unless it is shown that the intention was to make the law applicable extra territorially.

Section 195, in our view, would apply only if payments made from a resident to another non-resident and not between two nonresidents situated outside India. In the present case, the transaction was between two non-resident entities through a contract executed outside India. Consideration was also passed outside India. That transaction has no nexus with the underlying assets in India.

Order of Bombay High Court set aside - decided in favor of assessee.
2012 (1) TMI 48 - DELHI HIGH COURT

Preemptive purchase by the Central Government u/s 269 UD (1) - apparent consideration appeared to be understated - petitioner(transferee) argued for rebate to be allowed in the value of property determined by appropriate authority on following grounds - Appropriate authority, has ignored the encumbrances, suits and disputes with regard to the property – Held that:- Disputes with third party could have a depressing effect on the fair market value of the property. In present case disputes and suits were between the transferors and the petitioner which were ultimately settled , and not between transferors and third parties. Therefore value for a property has been rightly determined which was free from any disputes or suits.
No title deeds to the property are available - absence of the title deeds to the property depresses its value – Held that:- Appropriate authority were informed about the loss of the original title deed to the subject property and the issue of a public notice in the newspaper regarding the loss of the original title deed was directed by this Court. No claim was made or dispute raised by any person on the subject property in response to the notice in the newspaper. Therefore, such loss of the original title deed cannot be said to have had any adverse impact on the fair market value of the property.
Subject property was wrongly compared with another property - properties, considering their widely different locations, cannot be compared – Held that:- properties appear to be located in substantially comparable locations, both having quick access to schools, commercial areas, markets, etc. Further, petitioner has also not been able to bring on record any sale instance in the vicinity of the subject property.
There are 9 transferors involved in the property - Held that:- Since no merit is found in the first argument of the petitioner, this limb of the argument also is rejected.
Authority should record a finding of understatement of the sale consideration in order to justify the pre-emptive purchase of the property – Held that:- No requirement is laid down that the appropriate authority must record a finding of actual understatement. In present case, Petitioner has been informed of the sale instance of another property & its proposed comparison in the show cause notice. Thus a prima facie case of understatement of the true sale consideration was made out . Petitioner has been given full liberty of rebutting the allegation of under-statement of the apparent consideration which he has not attempted . Therefore the presumption has been rightly drawn about understatement. - Decided against the petitioner.
2012 (1) TMI 40 - GUJARAT HIGH COURT

Validity of re-opening of assessment beyond the period of four years from the end of the relevant A.Y. 2004-05 - reasons recorded does not allege failure on the part of the assessee to disclose fully all material facts – Held that:- The only reason for re-opening of assessment was that the housing project developed by the petitioner occupied commercial establishment exceeding 5% of the constructed area. Admittedly, clause (d) of section 80IB(10) restricting commercial construction, not to be in excess of 5% was introduced subsequently and does not have retrospective effect. In that view of the matter, there was no scope for reopening the assessment already closed. Further, there is no allegation that the assessee had concealed any material particularly – Decided in favor of assessee.