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

Pine Packaging Private Ltd V/s. CIT (Delhi HC) Compensation received from customer for under utilisation of taxpayer’s capacity was not profit derived from manufacture/production and was therefore not eligible for deduction under Section 80IC of the Income-tax Act,1961 Full Article

In this case, M/s Prudential Assurance Co. Ltd , a tax resident of UK, was denied the benefit of setting off of the business loss from sale of shares against the income from other sources by the Assessing Officer (‘AO’) on the ground that the assessee had no Permanent Establishment in India as per Article 5 of the India-UK Double Taxation Avoidance Agreement . The Honourable Mumbai Tribunal observed that the assessee chose to be ruled by the provisions of the Income.. Full Article

word 'transfer' does not include partition or family set­tlement. HC observed that it is well settled that a partition is not a transfer. What is recorded in a family settlement is nothing but a partition. Every mem­ber has an anterior title to the property which is the subject matter of a transac­tion, that is, partition or a family ar­rangement. So there is adjustment of shares, crystallization of the respective rights in family properties and therefore it cannot .. Full Article

Fees paid to regularise violation in construction of a building pursuant to state government ordinance forms part of construction cost and depreciation is allowable on such cost under Section 32 of the income-tax Act, 1961 (the Act). Further the Tribunal held that the restriction provided under Section 37 of the Act on deduction of penal expenditure is not applicable to depreciation claim covered under Section 32 of the Act. The Tribunal has also held that the Karnataka .. Full Article

There is no disagreement between the taxpayer and the AO that (a) in terms of the license agreement, the taxpayer has granted only right to use of a copyrighted article and not for the use of a copyright and (b) the copyright continue to remain with the CGI. The Special Bench of the Delhi Tribunal in the case of Motorola Inc has observed that if the payment was for a copyright, it was liable to be classified as ‘royalty’ under the Act as well as under the tax treaty. Full Article

Living allowance paid in addition to the regular salaries and benefits in India to the employees of Indian Company who are temporarily deployed in US will be exempt from tax. The deputation agreement between the taxpayers and the Indian Company clearly states that the additional compensation in the US has been paid in lump sum without any reference to meet personal expenses at the place where the duties of office or employment were to be performed. The additional compens.. Full Article

Assessee had acquired the business and also earned income out of the said transaction by cost plus basis. Thus, it can be seen that the assessee has not encountered the risk of having a single customer, whereas the same cannot be said as regards the comparables. As pointed out by the learned counsel for the assessee, the comparables were dealing in open market and therefore, they were prone to the marketing and technical risks. They would have incurred certain expenditur.. Full Article

The Tribunal observed that the commission paid was disallowed by invoking provisions under Section 36(1)(ii) and not by invoking Section 40A(2)(b)(ii) of the Act. This implies that the AO had not disputed the services rendered by Renu Munjal but he was of the opinion that dividend had been paid in the garb of commission because it actually reduced the corpus available for distribution as dividend. Section 36(1 )(ii) of the Act had been incorporated to check, inter-alia,.. Full Article