DDIT Vs. Solid Works Corporation (ITAT Mumbai) – The ruling of the AAR in the case of Dassault (supra) was approved by the Hon’ble Delhi High Court in the case of DIT Vs. Ericsson AB,New Delhi (supra). It can therefore be said that the Hon’ble Delhi High Court has held that consideration paid merely for right to use cannot be held to be royalty. This ratio laid down by the Hon’ble Delhi High Court would also apply when shrink wrap software is sold.
The Chennai bench of the Income Tax Appellate Tribunal recently pronounced its ruling in the case of SSL-TTK Ltd. (Appeal no. ITA No. 544/Mds/2011), wherein the Tribunal ruled that a notice issued by the Transfer Pricing Officer [“TPO”] under section 92CA (3) of the Act cannot be considered as a notice issued under Section 92D (3) and hence non-compliance of the taxpayer would not attract levy of penalty under Section 271 G1 of the Act. Further, the taxpayer had made substantial compliance of filing the information as required by the letter issued by the TPO and the arm’s length price was accepted by the TPO.
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 High Court’s decision in the case of Mamta Enterprises [2004] 266 ITR 356 (Kar) relied by the tax department is also not applicable to the facts of the case.
Prakash Securities Private Limited Vs. ACIT (ITAT Mumbai) -Asst. Comm. of Income Tax The dispute is regarding disallowance of expenses relating to exempt income under section 14A of the IT Act. Under the provisions of Section 14(2) and 14(3), expenses relating to exempt income are required to be computed as per method prescribed by the Government. The Government has since notified the method in the form of Rule 8D w.e.f. 1.4.2008.
Section 149 of the 1961 Act, which provides the period limitation, categorically provides that no notice under Section 148 shall be issued after the period prescribed has lapsed. Once a notice is issued within the period of limitation, jurisdiction becomes vested in the Assessing Officer to proceed to reassess.
ACIT vs. Ishverlal Manmohandas Kanakia (ITAT Mumbai) – The issue raised by the Assessee is that while computing capital gain cost of improvement should also be capable of being determined. The dispute in the case decided by Tribunal in the case of Jethalal D.Mehtha (supra) and Maheshwar Prasad-2 CHS Ltd. (supra) was while computing capital gain cost of acquisition of the capital asset was not capable of determination.
The sum in question was not paid for transfer of any intangible right in respect of manufacture, production or process of cement. The provisions relating to capital gains are therefore not attracted. The amount was paid for ‘not carrying out any activity in relation to any business’ and would fall within the ambit of Sec.28(va)(a) of the Act. The payment in question clearly falls under the category of a payment for ‘not carrying out any activity in relation to any business’ which at the relevant point of time of accrual in the hands of B.V.Raju, viz., 27.10.1999, was a capital receipt not chargeable to tax.
ITO Vs. Hindustan Oil Exploration Co. Ltd. (ITAT Mumbai)- Definition given in Explanation to sec. 42, section 293A as well as in various clauses of Production Sharing Contract it does not require to undergo any process of any physical or composition change but after the process of separation of gas, water and other sedimentary elements become commercial commodity. Therefore, commercial production of mineral oil as per sec. 80IB (9) involves the activity of extracting oil from underneath of surface and transport it for sale and nothing else.
AIA Engineering Ltd Vs. Add CIT (ITAT Ahmedabad)- It was held that investment made by AIA Engineering Limited (AIA India or the assessee) in Vega Industries (Middle East) FZE (Vega UAE) shall not be treated as investment in a proprietary concern of AIA India though Vega UAE had no other shareholder.Vega UAE is considered to be established as an independent corporate entity with separate financial liability from those of its owner in accordance with the memorandum of incorporation and the only situation where the owner will be treated as personally responsible is regarding the omission of some specified information.
ACIT Vs. Agility Logistics Pvt. Ltd. (ITAT Mumbai)- ITAT held that the sharing of net revenues (i.e., amounts billed to customers less third party costs) in a 5o:5o ratio between the origin and destination companies in a consistent manner in controlled as well as uncontrolled transactions, constitutes a comparable uncontrolled price (CUP). In coming to its conclusion, the Tribunal took into account the fact that the 5o:5o model is a common industry practice.
