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"20 May 2012" Archive

Compensation for under utilisation of production capacity not eligible for deduction u/s. 80IC

Pine Packaging Private Limited Vs Commissioner of Income Tax (Delhi High Court)

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...

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DTAA cannot create any fresh tax liability which is not provided under Income Tax Act

The Prudential Assurance Co. Limited Vs. The Asstt. Director of Income-tax (ITAT Mumbai)

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 Tax...

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No capital gains tax on share transfer under family arrangement

CIT Vs R. Nagaraja Rao (Karnataka High Court)

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 ...

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Living allowance on deputation or for temporarily deployment Outside India not taxable

Income Tax Officer Vs Shri Saptarshi Ghosh (ITAT Kolkata)

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...

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ITAT directs to allow risk adjustment on the comparables margin vis-a-vis the taxpayer’s

M/s Intellinet Technologies India Pvt.Ltd. Vs The Income-tax Officer (ITAT Bangalore)

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 ...

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Commission paid to director was not in lieu of dividend and therefore allowed u/s.36(1)(ii)

Hero Honda Finlease Ltd. Vs Addl. CIT (ITAT Delhi)

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 actuall...

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Additional Depreciation can not be denied on the ground that electricity is not an article or thing

N.T.P.C. Limited Vs. Deputy Commissioner of I.T. (ITAT Delhi)

Reference was made to the decisions of Apex Court rendered in the case of M.P. Electricity Board 35 STC 188 (sic). In this case it was held that electricity is goods within the meaning of section 2(3) of Central Province and Virar Sales-tax Act. This decision was rendered in the context of the language of a particular statute. As such thi...

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If non-resident agent operates outside country, no part of his income arises in India

M/s. Armayesh Global Vs A.C.I.T.-12 (3) (ITAT Mumbai)

Agreement between the assessee and the Non Resident is only for rendering services which cannot be considered as technical services and as there is no PE to the said non resident in India, the amount does not accrue or arise in India and further as there is no need for deducting the amount under section 195, there is no violation of provi...

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Contribution towards costs of research / for the use of process or formula is Royalty

Re. A” Systems, The Netherlands (AAR Delhi)

On the terms of the agreement, it appears to us, that it is only an agreement to share the product of the Research and Development allegedly without payment of royalty, but paying a consideration for the use described as the contribution towards the costs of the researchincurred by that particular party. This payment occurs only on use of...

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Consideration for Grant of the use or consideration for right to use is Royalty

Re. ThoughtBuzz Pvt. Ltd. (AAR Delhi)

The applicant is in the business of gathering, collating and making available or imparting information concerning industrial and commercial knowledge, experience and skill and consequently the payment received from the subscriber would be royalty in terms of clause (iv) of Explanation 2 to Section 9(1)(vi) of the Act. If so, the subscript...

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