Tivoli Investment and Trading Co vs. ACIT (ITAT Mumbai)- the municipal value or standard rent is not binding on the AO but is a guiding factor for determining the reasonable rent expected to be fetched by the property. If the AO finds that the actual rent received is less than the fair market rent because of the abnormally high interest-free security deposit, he can undertake necessary exercise in that behalf. However, the notional interest on interest free security cannot be taken as determinative factor to arrive at fair rent.
M/s J.K. Aluminium Co vs. ITO (ITAT Delhi) – The assessee is a firm engaged in the business of manufacture of aluminum wire rods at IGP, SIDCO, Phase-II Samba, Jammu & Kashmir. During the assessment proceedings, the assessee had filed computation of taxable income wherein deduction u/s 80IB amounting to Rs 5,85,84,089/- was claimed. The A.O went through the details and found that the assessee had received excise duty refund of Rs 5,68,41,800/- during the financial year. The A.O by applying ratio laid down by the Supreme Court in the case of Liberty India vs. CIT 225 CTR 233 and the decision of ITAT, Amritsar Bench, in the case of M/s Shree Balaji Alloys vs. ITO in ITA No.255/Asr/2009 for the assessment year 2005-06 did not accept the assessee’ s claim for relief u/s 80IB of the Act in relation thereto. When this was proposed to the assessee, the assessee furnished a judgment of Delhi High Court in the case of CIT vs. Dharampal Premchand Ltd. 317 ITR 353 wherein this issue has been claimed to have been decided in its favour. The A.O, however, taking support from the decision of the Supreme Court, went on to disallow the claim of the assessee in respect of this excise duty refund. On Appeal Honorable ITAT Allow the claim of the Assessee relying on the Supreme Court decision in the case of Dharam Pal Prem Chand Ltd.
Susi Sea Foods Pvt. Ltd. v. ACIT – Business losses carried forward beyond a period of eight years could be deducted in computing the book profit and hence the limitation of eight years for carry forward and set off of business losses under the normal tax provisions is not applicable while computing book profit under section 115JA of the Income tax Act, 1961.
Sapient Corporation Pvt Ltd vs. DCIT (ITAT Delhi) – When loss making companies have been taken out from the list of comparables by the TPO, Zenith Infotech Ltd. which showed super profits should also be excluded. The fact that assessee has himself included in the list of comparables, initially cannot act of estoppel particularly in light of the fact that the AO had only chosen the companies which are showing profits and had rejected the other companies which showed loss (Quark System vs. DCIT 38 SOT 307 (SB) followed).
ACIT vs. Clough Engineering Ltd (ITAT Delhi – Special Bench)- Under Article 11(4) of the DTAA, interest from indebtedness “effectively connected” with a PE of the recipient is taxable under Article 7 and not under Article 11. Though the interest was connected with the PE in the sense that it has arisen on account of TDS from the receipts of the PE, it was not “effectively connected” with the PE either on the basis of asset-test or activity-test. The payment of tax was the responsibility of the foreign company and the fact that it was discharged by way of TDS did not establish effective connection of the indebtedness with the PE. In order to be “effectively connected”, it is not necessary that the interest income has to be necessarily business income in nature. Even interest assessable under “other sources” can qualify.
ITO vs. Hemandas J. Pariyani The issue is whether the amount received by the society and its member on account of transferable development rights is taxable under capital gains. The issue in dispute is covered by the decision of the ITAT in the case of Jethalal v DCIT wherein it was held that transferable development rights granted by the Development Control Regulations for Greater Mumbai, 1991, qualifying for equivalent floor space index having no cost of acquisition, sale thereof does not give rise to taxable capital gains. Since the facts of the case under consideration is identical to that of the decision of the ITAT in the said case, the CIT(A) was justified in directing the AO not to charge capital gains tax on the compensation received by the assessee even on a protective basis. Amount received by the society and its member on account of transferable development rights is not taxable under capital gains.
S. 194C defines work to include carriage of goods and passengers by any mode of transport other than railways while s. 194-I defines rent to mean payment for use of plan (which is defined in s. 43 to include vehicles). As the cars were owned and maintained by the contractor and all expenditure was borne by the contractor, the contract was for carriage of passengers for which the assessee paid a fixed amount. Therefore, the payment of vehicle hire charges fell within the scope of s. 194C and was not rent for s. 194-I.
The Lakshmi Vilas Bank Ltd Vs Addl.CIT, Tiruchirapalli (ITAT Chennai) -Where the AO has considered all the points, on the basis of which the CIT initiated proceedings u/s 263, following the decision of the ITAT and High Court in the case of the assessee itself, proceedings initiated u/s 263 are not valid as it is not prejudicial to the interests of the Revenue.
Recently ITAT Mumbai held that in the case of Chiranjeev Lal Khanna v. ITO held that considering the facts of the case and clauses in the agreement, the taxpayer has transferred land and building to the developer would be chargeable to tax as capital gains. Accordingly, Section 50C of the Income-tax Act, 196 1(the Act) would be applicable.
DCIT v. AIG Home Finance India Ltd. The taxpayer was a housing finance company. The taxpayer had claimed deduction under section 36(1)(viii) of the Income-tax Act (ITA) in respect of securitization income earned from the business of long term housing finance. The Assessing Officer (AO) denied the deduction to the taxpayer on the basis that the taxpayer had received the proceeds on loan securitization and not the interest income. The Commissioner of Income-tax (Appeals) allowed the claim of the taxpayer. Aggrieved by the decision of the Commissioner of Income-tax (Appeals), the AO preferred an appeal before the Tribunal.
