Manori Properties Pvt. Ltd., Vs. Income Tax Officer 6(3)(3), Mumbai.The appellant has purchased debts of amount due to Rose Patel Mercantile Co. Ltd. for Rs.10,85,000/- by paying the said amount on 10-1-1996 Rs. 5,00,000/- and on 29-1-1996 Rs. 5,85,000/-. The amount was due from Qualitron Components Ltd. Unfortunately due to losses the company closed down its operations and ultimately wound up by the order of Gujarat High Court. The Assessing Officer has clearly pointed out that the said debts of Rs. 10,85,000/- was not trading debt. Therefore the conditions specified u/s. 16(1)(vii) r.w.s. 36(2) is not fulfilled as the amount has not been taken into consideration while arriving to the profit of the appellant company.
ACIT Vs M/s Tube Investments of India Ltd. (ITAT Chennai) – A perusal of the terms and conditions as also the invoices as found in the paper book clearly shows that sales tax and excise duty had been collected on the supply of materials by the vendors to the assessee. In these circumstances, in view of the finding of the Hon’ble Supreme Court in the case of Silver Oak Laboratories P. Ltd. in S.L.P. No. 18012/2009 dated 17-08-2010, referred to supra, we are of the view that the transaction involved in the present case is a contract for sale and not a contract for carrying out any works.
Recently ITAT Mumbai in the case of Standard Chartered Bank (Taxpayer) (ITA No. 3827/ MUM/ 2006) on the issue whether data processing charges paid by the Taxpayer would constitute ‘royalty’ under the Indian Tax Laws (ITL) and the India – Singapore Tax Treaty (Tax Treaty) held that the payments were made for use of a facility and not any process. Furthermore, in the absence of control or physical access to any equipment, it cannot be said that the payment was made for any use or right to use the equipment. Hence, payment would not amount to ‘royalty’ under the ITL and the Tax Treaty and would be business income not chargeable to tax in absence of PE.
The Delhi bench of the Income-tax Appellate Tribunal recently pronounced its ruling in the case of Haworth (India) Private Limited v. DCITwherein it upheld Revenue’s contention that arm’s length price can be determined under transactional net margin method even with one comparable company. Besides, the decision also deals with several other important aspects of the manner of application of TNMM, viz. method of making adjustments to the results, use of current year data, benefit of +/- 5% range and functional comparability.
Siva Industries & Holdings Ltd vs. ACIT (ITAT Chennai) -Once there is no claim of income which does not form part of the total income under the Act, there cannot be any disallowance in relation to an investment which may or may not give rise to any Oincome which does not form part of the total income. In the present case it is noticed thatnone of the investments made by the assessee has generated any dividend income which has been claimed by the assessee ato be not to form part of the total income. In the circumstances, as it is noticed that the assessee does not have any income which does not form part of the total income nor has the assessee made such a claim, we are of the view that no disallowance under sec. 14A can be made on the assessee for the relevant assessment year.
Filtrex Technologies Pvt. Ltd. v. ACIT – ITAT Bangalore held that payments made under a Technology Transfer Agreement ‘make available’ technical knowledge or experience, and hence, are taxable as Fees for Technical Services in terms of Article 12(4)(b) of Double Taxation Avoidance Agreement between India and Singapore. Also, payments made for services in the nature of marketing support and other administrative services do not ‘make available’ technology, and hence, cannot be held as FTS under Article 12 of DTAA between India and Singapore.
ITO vs. Radha Birju Patel (ITAT Mumbai) – Transactions carried out via Portfolio Management Scheme are clearly in the nature of transactions meant for maximization of wealth rather encashing the profits on appreciation in value of shares. The very nature of Portfolio Management Scheme is such that the investments made by the assessee are protected and enhanced and in such a circumstance, it cannot be said that Portfolio Management is scheme of trading in shares and stock. Whether, the assessee is engaged in the business of dealing in shares or investment in shares is essentially a question of fact and it has to be determined with regard to the entirety of the circumstances. Where the assessee is engaged in systematic activities of holding portfolio through a PMS Manager, it cannot, by any stretch of imagination, be said that the main object of holding the portfolio is to make profit by sale of shares during the course of maintaining the portfolio investment over the period. The high number of transactions shown in the statement is misleading because these are computer-split transactions and not independent transactions.
Atul G. Puranik vs. ITO (ITAT Mumbai) Section 50C applies only to a capital asst, being land or building or both, it cannot be made applicable to lease rights in a land. As the assessee transferred lease right for sixty years in the Plot and not land itself, the provisions of sec.50C cannot be invoked. A distinction has been drawn between ‘land or building’ on one hand and ‘or any rights in land or building’ on the other. Considering the fact that we are dealing with special provision for full value of consideration in certain cases u/s.50C, which is a deeming provision, the fiction created in this section cannot be extended to any asset other than those specifically provided therein.
DCIT v. Maruti Countrywide Auto Financial Services Pvt Ltd. Delhi Tribunal held that the expenditure incurred for business promotion and advertisement based on commercial expediency should not be considered for disallowances even if it incidentally benefits the other party. This judgement is in line with the judgement of Nestle India Ltd Vs DCIT. However, in this case, the Tribunal has not considered when the taxpayer is mandatorily required to use the trademark of the JV partner and creation of marketing intangibles.
ITAT Mumbai in the case of Islamic Republic of Iran Shipping Lines v. DCIT held that service tax collected from customers on behalf of the Government cannot be included in the total receipts while determining its presumptive income under section 44B of the Income-tax Act, 1961.
