Therefore, in view of the Hon’ble Bombay High Court’s decision (supra), we, set aside the orders of the lower authorities and direct the Assessing Officer not to apply Rule 8D in the present case since the assessment year under appeal is 2005-06 and Rule 8D is applicable only from the assessment year 2008-09.
The provisions of Transfer Pricing regulations contained in Section 92 belong to a separate code enacted for computing income from international transactions having regard to Arm’s Length Price (ALP) so as to confirm that there is no tax avoidance by the taxpayer. Operation of Transfer Pricing provisions ends when the Transfer Pricing Officer passes an order holding that the operating profit of the taxpayer is compatible with ALP norms and no adjustment is necessary.
Apex Court in the case of Goetze (India) Ltd. v. CIT [2006] 284 ITR 323 has clearly held that for making a claim other than what was originally made in return of income, filing of a revised return is mandatory. Neither the A.O. nor the CIT(Appeals) have considered these fundamental aspects regarding status and validity of a claim made other than through revised return.
The case of the assessee is that the assessee could not comply with the provisions of section 54 within the time prescribed for reasons beyond her control, inasmuch as the money, which was blocked by her by paying advances to procure the property, was not realized within the time and, therefore, she could not make any alternative investment within the prescribed time. It is the case of the assessee that the acquisition of the property has been completed in 2001-02 and, therefore, deduction under section 54 may be granted, condoning the period of delay caused in complying with the time-limit prescribed under section 54.
The assessee was in the business of offset printing and typesetting. It admittedly had converted this land and factory building into stock-in-trade. The Minutes of the assessee-company did the conversion of the land and factory building into stock-in-trade and the business assets of the assessee no more survived as the business asset eligible for depreciation. Once this happens, the business of the assessee would be deemed to have been discontinued.
Where Land Revenue records showed no crop was cultivated and no agricultural activity was undertaken on the land owned by the assessee before sale thereof and assessee produced no evidence of user for agricultural purposes other than sketchy and vague statements of neighbours, denial of deduction by AO under section 54B deserved to be upheld.
The taxpayer contended that the AO may invoke provisions of the Section 14A of the Act only after conducting necessary enquiries into the factual aspects. However, the Chennai Tribunal held that even in a case where the taxpayer claims that no expenditure was incurred in relation with the exempt income, the statute had provided for a presumptive expenditure which has to be disallowed by force of the statute. It means that even in a case where no expenditure is stated to have been incurred, the AO had to apply Rule 8D of the Rules. Therefore, the statutory presumption under Section 14A of the Act substitutes the requirement of factual evidence and the question of enquiry does not arise.
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.
Software used by the assessee cannot be considered independent, but, only as a part of the service rendered by the assessee to its clients with regard to the development of BSC. By means of the Balance Score Card system developed by the assessee, the clients were getting an advantage which went much beyond the period of agreement between the assessee and its clients.
