"Education is a progressive discovery of our own ignorance."
- Will Durant
"Education is a progressive discovery of our own ignorance."
- Will Durant
Amadeus Global Travel vs. DCIT (ITAT Delhi)
(i) The Amadeus system, by which subscribers in India are enabled to perform the functions of reservation and ticketing, represents a “business connection” because it extends to the Indian territory in the form of connectivity in India and generates income in India when the booking is completed on the subscribers’ computer;
(ii) In determining the extent of profits attributable to such business connection, one has to look into the factors like functions performed, assets used and risk undertaken. On facts, as the major part of the work was processed at the host computer in Germany, only 15% of the revenue accruing to the assessee in respect of bookings made in India can be said to have accrued or arisen in India;
(iii) In view of Circular No.23 of 23rd July 1969, where the income accruing in India is consumed by the payment made to the agents in India, no income is left to be taxed in India under the Act;
(iv) As the assessee has provided computers and connectivity to its subscribers, it has a ‘fixed place’ PE in India. As the Indian agent has the authority to entry into agreements with the subscribers and installs and configures the computers, and provides connectivity and is functionally and financially dependent on the assessee, there is also a ‘dependent agent’ PE in India;
(v) Only 15% of the revenue generated from the bookings made within India can be said to be attributable to the PE. Since the payment to the agent in India is more than what is the income attributable to the PE in India, it extinguishes the assessment and no further income is taxable in India under the DTAA.
See also Galileo International Inc vs. DDIT (ITAT Delhi) (6.1 MB), SET Satellite (Singapore) Pte Limited 106 ITD 175 & Rolls Royce Plc vs. DDIT
Sumit Bhattacharya vs. ACIT (ITAT Mumbai Special Bench)
(i) Amounts received by an assessee from the foreign holding company of his employer company on redemption of stock appreciation rights, being "fruits of employment" is chargeable to tax as "salaries" despite the absence of an employer-employee relationship (ii) there is a fundamental difference between stock options and stock appreciation rights.
See also: CIT vs. Infosys Technologies (Supreme Court)
Saurabh Srivastava vs. DCIT (ITAT Delhi Special Bench)
Consideration received by an assessee for agreeing not to compete constitutes a capital receipt even though (i) the period of restraint is only 18 months and (ii) the assessee continued service with the payer-company as Managing Director.
Ms. Mayawati vs. DCIT (ITAT Delhi)
s. 68 does not apply to an assessee who does not maintain books of
account. Balance sheet/statement of affairs and bank pass book do not
constitute 'books of account'. In considering the genuineness of the
"gifts", it must be borne in mind that in the case of a "political
figure who was working for the welfare of the downtrodden in a
missionary manner and on account of this social work", it is not
uncommon for donors to part away with their properties by giving
the same as gift to her. "No probe can easily be
made into such aspects of human psychology and the best persons to
explain such feelings and desires are those who advance and execute the
same." The fact that there is"lack of occassion" to make the gifts,
that the donors are unrelated to the donee and that the donors borrowed
funds to make the gifts are irrelevant circumstances.
Note: See also CIT vs. Mohankala (SC) on the test of pre-ponderence of probabality.
Glenmark Laboratory vs,. DCIT (ITAT Mumbai)
For purposes of s. 80HHC, the direct cost attributable to the earning of the DEPB license (equal to the value of the license on the date of receipt) has to be reduced from the direct cost of trading goods on the basis that the license is a reimbursement of the costs. The difference between the realisation proceeds of the DEPB license and its cost (i.e. the profit) will fall within s. 28(iiid) and 90% of that will have to be reduced from the profits of the business.
Note the principle laid down in Hero Exports (SC) was followed.
NTPC Employees PF Trust vs. ITO (ITAT Delhi)
As the trust was assessable in the status of an "individual", it was not liable to deduct TDS u/s 194A on payments to ex-employees and could not be treated as an assessee-in-default.
Note: The judgement in ONGC Ltd vs. ITO (TDS) (2005) 4 SOT 333 (Del) was not followed.
Voltas Ltd vs. ACWT (ITAT Mumbai Special Bench)
The SB has considered whether the value of an immovable asset owned by an assessee is includible in the net wealth of the owner/assessee or the lessee in terms of s.4(8)(b) of the WT Act read with s. 269UA(f) the IT Act where the term of the lease is (i) exceeding 12 months but less than 12 years;and/or (ii) exceeding 12 years.
Galileo International Inc vs. DDIT (ITAT Delhi) (6.1 MB)
(i) On facts, held that the assessee has a fixed place PE and an agency PE in India (ii) only that part of the profits as are arising due to the assets and activities of the PE can be brought to tax in India (iii) as per Circular No. 23 dated 23.7.1979 and Morgan Stanley 292 ITR 406 (SC), if the income attributable to the PE is less than the remuneration to the dependent agent, it extinguishes the assessment and requires no further exercise for computation of income.
Note: See also SET Satellite (Singapore) Pte Limited 106 ITD 175 & Rolls Royce
Plc vs. DDIT.
Rolls Royce Plc vs. DDIT (ITAT Delhi)
(i) jurisdiction u/s 147 can be exercised even on the basis of a prima facie opinion (ii) On facts, the wholly owned subsidiary constituted a 'business connection' as well as a 'permanent establishment' (iii) the total profits of the enterprise have to be apportioned on the basis of various factors affecting accrual of income. First, the economically significant activities and responsibilities (in the context of activities and responsibilities undertaken by the enterprise as a whole) undertaken through the PE have to be identified through a functional and factual analysis. Then, the remuneration of such dealings should be determined by applying, by analogy the principles developed for the application of the arm's length principle between associated enterprises, by reference to the functions performed, assets used and risk assumed by the enterprise through the PE and through the rest of the enterprise. The profits of the foreign enterprise can be apportioned between manufacturing, R&D and marketing. The marketing profits shall be chargeable to tax in India.
JCIT vs. Cable Corporation of India Ltd (ITAT Mumbai)
A sale-cum-lease back transaction with APSEB cannot be regarded as a 'sham' or as a 'financing tranasction'. The assessee-purchaser is eligible for depreciation.
Note: The judgement of the Supreme Court in Asea Brown Boveri Ltd. vs. IFCI 154 TM 512 was distinguished.
See also: Orix Auto vs. ACIT (ITAT Mumbai): The decision of the Supreme Court in Asea Brown Boveri vs. IFCI 154 Taxman 512 does not lay down the proposition that in all cases of lease, only the lessee shall be treated as the owner and entitiled to depreciation.
Vijay Power Generators Ltd vs. ITO (ITAT Delhi)
Where the AO initiated penalty on the basis that the alleged shareholders were "fictititous identities" but climed down from that position in the assessment order and held by using less-strong expressions that the "genuineness of the transaction was doubtful" or "not proved", he could not be said to have reached "satisfaction" for initiating penalty.
ACIT vs. Aurangabad Holiday Resorts (ITAT Pune)
(i) The issue of notice under s. 143 (2) is mandatory for block assessment proceedings. If notice u/s 143 (2) is not issued, the assessment order passed u/s 158BC is not valid.
(ii) Where there is a conflict between the Special Bench of the ITAT and a non-jurisdictional High Court, the High Court decision has to be followed. Godavari Devi Saraf 119 ITR 589 (Bom) reconciled with Thana Electricity 206 ITR 727 (Bom) and followed.
(iii) Where the appeal is decided on a preliminary issue, not necessary to decide the other issues in the appeal.
Note: The Tribunal followed the decision of the Gauhati High Court in Bandana Gogoi vs. CIT 289 ITR 28 (Gau) instead of the ITAT Lucknow Special Bench in Naval Kishore vs. DCIT 87 ITD 407.
See also:Atul Glass Industries vs. DCIT (ITAT Delhi), Vin Vish Corporation vs. ACIT (ITAT Mumbai) & Tulika Mishra vs. JCIT (ITAT Delhi).
John Deers Equipments vs. ITO (ITAT Pune)
Where there are no tax demands against the recipient of the amounts from which taxes are allegedly required to be deducted nor the authorities have invoked primary liability against the recipient, the payer cannot be held liable as assessee-in-default for failure to deduct tax at source.
Note: The Hon'ble Bench has taken judicial notice of itatonline.org and referred to a decision reported herein.
Ganesh Benzoplast vs. ACIT (ITAT Mumbai)
Expenditure on issuing fully convertible debentures is revenue in nature and allowable as a deduction.
Note: The decision of the Special Bench in Ashima Syntex Ltd vs. ACIT 100 ITD 247 was distinguished.
Mafatlal Securities vs. JCIT (ITAT Mumbai)
(i) An oral pronouncement by the Bench of the decision on the appeal during the hearing is not an order and can be changed; (ii) Even an order sheet entry signed by the Members of the Bench is not an order; (iii) Even if the oral pronouncement is an order, the Bench has plenary jurisdiction to take a different view to prevent miscarriage of justice; (iv) For purposes of the Explanation to s. 73, business loss constitutes negative profit and cannot be ignored i.e. absolute figures have to be taken to determine whether the main income is from business or from other sources.
Aipita Marketing vs. ITO (ITAT Mumbai)
Even where an Intimation is issued u/s 143 (1), it cannot be reopened u/s 147 of the Act in the absence of fresh material with the AO.
Note: The decision of the Supreme Court in ACIT vs. Rajesh Jhaveri 291 ITR 500 was distinguished.
Atul Glass Industries vs. DCIT (ITAT Delhi)
(i) The issue of notice under s. 143 (2) is mandatory for block assessment proceedings. If notice u/s 143 (2) is not issued, the assessment order passed u/s 158BC is not valid. (ii) Where there is a conflict between the Special Bench of the ITAT and a non-jurisdictional High Court, the High Court decision has to be followed.
Note: The Tribunal followed the decision of the Gauhati High Court in Bandana Gogoi vs. CIT 289 ITR 28 (Gau) instead of the ITAT Lucknow Special Bench in Naval Kishore vs. DCIT 87 ITD 407.
See also: Vin Vish Corporation vs. ACIT (ITAT Mumbai) & Tulika Mishra vs. JCIT (ITAT Delhi).
N. H. Securities Ltd vs. DCIT (ITAT Mumbai)
There is a difference between funds paid by way of an advance/loan and funds paid under a mutual, open or current account. Funds paid through a running account in the ordinary course of business does not constitute "deemed dividend" u/s 2 (22) of the Act.
Dhariwal Industries Ltd vs. ACIT (ITAT Pune - Special Bench)
(1) "Guthka" is a tobacco preparation and its manufacture is not eligible for deduction under sections 80-I & 80-IA. Law on interpretation of statutes discussed in detail.(2) Where the AO passed an order mechanically and without conscious consideration of the issue, the CIT was entitled to revise it under s. 263 of the Act.
Videsh Sanchar Nigam Ltd vs. CIT (ITAT Mumbai - Special Bench)
While the Bench agreed that the telecommunication services provided by VSNL through its earth stations were neither basic nor cellular for purposes of s. 80IA(4C) and therefore deduction was not available, they dissented on whether the said earth stations constituted an "undertaking". The majority view is that the said stations do not constitute an "undertaking".
Tulika Mishra vs. JCIT (ITAT Delhi)
The issue of notice under s. 143 (2) is mandatory for block assessment proceedings. If notice u/s 143 (2) is not issued, the assessment order passed u/s 158BC is null and void.
Note: The Tribunal followed the decision of the Gauhati High Court in Bandana Gogoi vs. CIT 289 ITR 28 (Gau) instead of the ITAT Lucknow Special Bench in Naval Kishore vs. DCIT 87 ITD 407.
See also: Vin Vish Corporation vs. ACIT (ITAT Mumbai)
Orix Auto vs. ACIT (ITAT Mumbai)
The decision of the Supreme Court in Asea Brown Boveri vs. IFCI 154 Taxman 512 does not lay down the proposition that in all cases of lease, only the lessee shall be treated as the owner and entitiled to depreciation.
Vin Vish Corporation vs. ACIT (ITAT Mumbai)
Issue of notice u/s 143 (2) is mandatory in block assessment proceedings. Where a notice u/s 143 (2) is not issued or is issued beyond the period of limitation, the block assessment order is null and void.
DCIT vs. Glaxo Smithkline (ITAT Chandigarh - Special Bench)
The 5 Member Bench of the Tribunal has held (by majority) that the balance in the excise PLA at the year end is deductible under s. 43B. However, unutiized modvat credit was unanimously held not deductible.
As the judgement is very voluminous, a copy can be obtained from the Bar Association's office on payment of regular copying charges.
Aztek Software vs. ACIT (ITAT Bangalore - Special Bench)
The 5 Member Bench of the Tribunal has considered in detail the circumstances in which an order for transfer pricing can be made under Chapter X of the Act.
Nestle India Ltd vs. DCIT (ITAT Delhi)
Expenditure on advertisement of products dealt in by the assessee is allowable as a deduction even though the brand name/trade mark belongs to a foreign company and the foreign company also derives benefit from such expenditure.
Ansaldo Energia vs. ADIT (ITAT Chennai)
(a) Powers of the CIT (A) to enahance are not confined to matters considered by the AO, (b) On facts, there was no breach of natural justice, (c) On facts, the four contracts were a consolidated contract and the corporate veil could be lifted and profits estimated.
DCIT vs. Patni Computers (ITAT Pune)
In a year of profit, the assessee is entitled to opt for the DTAA and claim that the off-shore profits are not chargeable to tax. In a year of loss he is entitled to opt for the Act and claim that the off-shore losses should be allowed even though the result may be anamolous.
ACIT vs. Rogini Garments (ITAT Chennai - Special Bench)
Relief under section 80-IA should be deducted from profits and gains of business before computing relief under section 80-HHC of the Act.
JCIT vs. Mukund Ltd (ITAT Bombay - Special Bench)
Premium paid to acquire land on leasehold for a period of 99 years is capital expenditure and cannot be allowed as a deduction even on a proportionate basis over the period of lease.
ITO vs. Ms. Sushila M. Jhaveri (ITAT Bombay - Special Bench)
Exemption under sections 54 and 54F is allowable in respect of one residential house only. If the assessee has purchased more than one residential house, the choice is with the assessee to avail the exemption in respect of either house. When more than one unit is purchased which are adjacent to each other and are converted into one house for the purpose of residence by having common passage, common kitchen etc, then it is a case of investment in one residential house and the assessee is entitled to exemption.
DDIT vs. Set Satellite (Singapore) Pte Ltd (ITAT Bombay)
The tax liability of a foreign enterprise, in respect of its dependent agency permanent establishment, is not extinguished by making an arms length payment to the dependent agent. A profit has to be attributed to the dependent agent permanent establishment over and above the arms length fees paid to the dependent agent as otherwise the whole concept of agency PE will be rendered meaningless.
Ravindra K. Mariwala vs. JCIT (ITAT Bombay)
In view of the substitution of s. 74(1) w.e.f 1st April 2003 to the effect that long-term capital loss can only be set off against long-term capital gain and the Memorandum explaining the Finance Bill which provided that the prospective amendment was “to rectify an anomaly”, the earlier decision of the Tribunal which held pre-amendment that long-term capital loss can only be set-off against long-term capital gains suffers from an apparent mistake which can be rectified.
SKOL Breweries Ltd vs. ACIT (ITAT Bombay)
The department was directed to refund moneys collected in defiance of a stay order granted by the Tribunal. The Tribunal has also framed guidelines on how the department should conduct itself in matters relating to stay of demand.
DCIT vs. Syncome Formulations (ITAT Mumbai Special Bench)
The deduction under section 80-HHC in a MAT assessment ( u/s 115JA) has to be worked out on the basis of the adjusted book profit and not on the basis of the profit computed under the regular provisions of law applicable to the computation of profits and gains of business or profession.