Income Tax Judgment of SC, HC and ITAT

The Tribunal placed reliance on the Chennai Tribunal ruling in the case of Tweezerman (India) Private Limited v. Addl. CIT, [2010] 4 ITR (Trib.) 130 (Chennai) which ruled that provisions of Section 80-IA(10) of the Act do not give an arbitrary power to the AO to determine the profits of the taxpayer. It is incumbent on the AO to show how ordinary profits were computed based on similar comparable case. The phrase ‘more than ordinary profits’ referred in Section 80-IA.. Full Article

Assessee has invested in purchase of new residential house at Rs. 70,80,620/- within the period of two years in which the transfer took place and therefore, the assessee was eligible for deduction u/s 54F(1) of the Act in respect of the said investment out of this deemed long term capital gains. In our considered opinion, the Assessing Officer was not justified in not granting exemption u/s 54F with reference to this investment made by the assessee in computing long term.. Full Article

It cannot be said that all tax planning is illegal/ illegitimate/impermissible. Applying the rationale of this decision to the case on hand, in the absence of any material to pronounce on the genuineness of the transaction herein, the mere fact that what had been purchased had been leased out to the vendor or that vendor had undertaken to pay the hire charges on behalf of the assessee to the hire purchase company, per se, cannot lead to a conclusion that the transaction .. Full Article

The taxpayer contended that the AO may invoke provisions of the Section 14A of the Act only after conducting necessary enquiries into the factual aspects. However, the Chennai Tribunal held that even in a case where the taxpayer claims that no expenditure was incurred in relation with the exempt income, the statute had provided for a presumptive expenditure which has to be disallowed by force of the statute. It means that even in a case where no expenditure is stated to .. Full Article

The taxpayer adjusted the interest expenditure against the interest income earned. After such adjustment no interest expenditure remained to be disallowed. The taxpayer offered expenditure other than interest of Rs. 111,521 for disallowance under Section 14A of the Act on the estimated basis. The Kolkata Tribunal held that there was no interest expenditure remaining after adjusting the interest credited to the Profit and Loss Account. Therefore, no part of interest paid.. Full Article

The Tribunal dismissed the taxpayer’s proposition that only real income should be taxed and noted that these arguments could not be accepted in the context of Chapter X - Special Provisions relating to Avoidance of Tax, of the Act. In this regard, reliance was placed on the decision of Perot System TSI (India) Limited. The Tribunal observed that RBI's approval was not sufficient from an Indian transfer pricing perspective as the character and substance of the transacti.. Full Article

The provisions of Transfer Pricing regulations contained in Section 92 belong to a separate code enacted for computing income from international transactions having regard to Arm’s Length Price (ALP) so as to confirm that there is no tax avoidance by the taxpayer. Operation of Transfer Pricing provisions ends when the Transfer Pricing Officer passes an order holding that the operating profit of the taxpayer is compatible with ALP norms and no adjustment is necessary. Full Article

AAR in the case of Dassault (supra) was a case of sale of shrink wrap software and the AAR has held that reproduction and adaptation envisaged by section 14(a)(i) and (vi) can contextually mean only reproduction and adaptation for the purpose of commercial exploitation. The ruling of the AAR in the case of Dassault (supra) was approved by the Hon'ble Delhi High Court in the case of DIT Vs. Ericsson AB,New Delhi (supra). It can therefore be said that the Hon'ble Delhi Hig.. Full Article