Analysis of HC, SC and ITAT Judgment on Taxation and Corporate Law

In the case of Vikas Road Carriers Ltd. v. ITO [2010-TIOL-417-ITAT-MUM] the Mumbai Bench of the Income-tax Appellate Tribunal ("the Tribunal"), ruled that, in light of the very typical facts of the case, no disallowance could be made under section 40(a)(ia) of the Income Tax Act, 1961 ("the Act"), for non-withholding of tax since the payments to the transporters were less than Rs. 20,000 each, and less than Rs. 50,000 in a year to any party and hence did not attract the .. Full Article

Recently, the Delhi bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of ACIT Vs M/s Toshiba India Private Limited (2010-TII-14-ITAT-DEL-TP) has rejected the Assessing Officer’s approach of cherry picking the comparables and proposing an arbitrary Transfer Pricing adjustment. Full Article

THE Delhi high court has ruled that the tax authorities cannot initiate assessment proceedings simply on belief of escapement of tax, or belief that some income has escaped tax, effectively curbing powers of the revenue department to open past cases. Full Article

The impugned order confirms the demand against the appellant under the category Business Auxiliary Services without specifying which specific sub-clause covered the activities rendered by UTL. We find that no tax liability can be confirmed against a person without putting him/it on notice as to its liability. It is essential that the liability is indicated in the notice with reference to the specific statutory provision. In the instant case, the impugned proceedings did .. Full Article

The Tribunal held that mere existence of subsidiary does not by itself constitute the subsidiary company a PE of the parent company. The main condition for constitution of PE is carrying on of business in India. However, no operations in respect of the manufacture and sale of parts and Completely Knocked Down (CKD) kits to subsidiary was carried out by the taxpayer in India. Full Article

Recently, the Kerala High Court in the case of Vodafone Essar Cellular Limited v. ACIT held that the discount given by the taxpayer at the time of sale of SIM Cards or Recharge coupons to the distributors is commission for the services rendered to the taxpayer. Accordingly, the taxpayer was liable to deduct tax at source on the commission under Section 194H of the Income-tax Act, 1961 (the Act). Full Article

The Bangalore Bench of the Income Tax Appellate Tribunal (the Tribunal) has, in case of SAP Labs India Private Limited (the taxpayer), confirmed the benefit of 5 percent variation as a standard deduction, to the taxpayer as provided in Section 92C(2) of the Income Tax Act, 1961 (the Act). The Tribunal has further confirmed the inclusion of foreign exchange gain as part of the sale proceeds of the taxpayer and rejected abnormally high profit companies as comparables. Full Article

The assessee let out property on a rent of Rs. 90,000 per month and also received interest-free security deposit of Rs. 8.58 crores. The property was not subject to the Rent Control Act. The assessee claimed that only the rent could be taken into account for determining the ‘annual value’ of the property and not the notional interest on the deposit. The AO determined the ‘annual value’ u/s 23(1)(a) by adding Rs. 30 lakhs of notional interest. The CIT (A) and Trib.. Full Article

M/s Frick India Ltd Vs DCIT (ITAT Delhi) - There was a composite agreement titled as 'intellectual property license and non compete agreement' vide which several valuable rights including the right to use the trademark, technical know-how including right to export to 30 countries have been granted over a long period of ten years to the assessee, which gave rise to a benefit of enduring nature. However, the AO has allowed the same as revenue expenditure without applicatio.. Full Article

As per statutory provision under section 65(105) (zzn) of the Finance Act, 1994 taxable service means any service provided or to be provided - (zzn) to any person, by air craft operator, in relation to transport of goods by aircraft. The definition of the term aircraft appears in Section 65(3A) of the said Act Passenger aircraft is not excluded. The meaning of the goods is assigned from the term sale used in Sale of Goods Act, 1930. Full Article