National Engineering Industries Ltd. (the taxpayer) had entered into a License & Technical Assistance agreement with Brenco Inc., USA on 19th August, 2002 which expired on 25th June, 2007. Under the agreement the taxpayer was required to pay a certain amount as royalty to Brenco Inc.
The Delhi bench of the Income Tax Appellate Tribunal (Tribunal) recently pronounced its ruling in the case of Airtech Private Limited (Appeal no. ITA 3591 Del )/2010) on documentation aspect of transfer pricing (TP). The Tribunal held that contemporaneous TP Documentation was to be maintained by the taxpayer annually as the transaction was separate and was influenced by changing market dynamics.
The Hyderabad Bench of the Income-Tax Appellate Tribunal [the Tribunal] has in the case of M/S Convergys Information Management (India) (F) Ltd. v. DCIT [ITA no. 299/Hl/2009] , held that in a cost plus arrangement expenses incurred post the date of entering into agreement has to be marked up, as no customer would pay mark up before entering into agreement.
The Supreme Court thus held that the attempt of the High Court to read down the provision by way of substituting the word “OR” by an “AND” is erroneous and therefore interest in case of wrong availment of cenvat credit has to be paid from the date of availment of credit and not date of utilisation.
Though currently dividend income is exempt, the above decision lays down a principle that brought forward business loss can be set off against other sources of income which are in the nature of business income, though chargeable to tax under another head of income. Similar position has also been affirmed by the Mumbai Tribunal2 wherein it was held that brought forward business losses can be set off against the capital gains arising from a business or profession, though chargeable to tax under any other head of income.
It is mandatory for the AO to issue notice u/s 143 (2). The issuance and service of notice u/s 143 (2) is mandatory and not procedural. If the notice is not served within the prescribed period, the assessment order is invalid
The proviso to Section 14A only bars reassessment/rectification and not original assessment on the basis of the retrospective amendment. The proviso does not stipulate and state that Section 14A of the Act cannot be relied upon during the course of the original assessment proceedings. The Assessing Officer was, therefore, required to disallow expenses incurred for earning exempt or tax free income.
In the last Video Conference as also through a Message from the Chairman’s Desk, all the CCITs were requested to personally monitor processing of Returns & expeditiously issue refunds. Still, out of around 61.4 lac Returns entered in the system but not yet processed, around 6.39 lac Returns have refund claims. All CCITs are once again advised to please ensure that all pending refunds are necessarily issued by March 15 2011. As no data is available with the Systems regarding refund returns received but still not entered, all the CCITs are requested to provide on or before Feb 28, 2011 details of such cases to DIT (Sys) – III , New Delhi at dit3.systems@incometaxindia.gov.in.
The Central Bureau of Investigation has filed a chargesheet in the Court of Chief Metropolitan Magistrate, Tis Hazari Courts, Delhi against an ex-MLA of Punjab Vidhan Sabha from Sangrur Constituency for violation of provisions of Foreign Contribution Regulation Act (FCRA), 1976.
The Economic Survey on Friday pegged the fiscal deficit for 2010-11 at 4.8 per cent, lower than the Budgetary estimates of 5.5 per cent, on the back of higher realisation from 3G spectrum auction and buoyancy in revenues. India’s fiscal deficit had ballooned to 6.3 per cent of the GDP in 2009-10 in view of stimulus spending worth billions of dollars to combat global financial meltdown, and was pegged at 5.5 per cent for the current fiscal.
