During the assessment year 2005-06, the Taxpayer sold fabrics worth INR 66,101,237 to its associated enterprise, M/s Spin International Inc., incorporated in the U.S., and relied on the Comparable Uncontrolled Price Method (“CUP Method”) to justify the arm’s length nature of such transaction. Upon examination of the Form 3CEB submitted by the Taxpayer, the Assessing Office (“AO”) found that in respect of two qualities of materials, the items were sold to the associated enterprise at much lower price compared to the price charged in comparable uncontrolled transactions entered into by the Taxpayer.
The assessee is not entitled to adjustment of 5 per cent as stipulated u/s 92C(2), where only one of the several methods specified u/s 92C(1) is applied by the assessee to determine the arm’s length price
The argument that “controlling interest” was transferred with the shares was not acceptable as the share purchase agreement had been signed by the Power of Attorney (“POA”) holder. In the absence of the copy of the same, which would determine whether
Section 43B opens with a non obstante clause which means that it controls the operation of other provisions of the Income-tax Act in that section 43B will have overriding effect notwithstanding other provisions under which a deduction may otherwise be allowable.
Income Tax Appeal – Share Application Money Dispute | Abhisek Saraf’s Cash Contribution | ITAT Kolkata Decision | Penalty under s. 271D
It is a settled principle that the power of levying penalty or not is discretionary and not mandatory. The law requires that whenever the AO is to exercise his discretion then it is the AO alone who is to exercise that discretion and the appellate authority cannot exercise that discretion on the part of the AO.
This Tax Alert summarizes a recent ruling of the Special Bench (SB) of Kolkata Income Tax Appellate Tribunal (ITAT) in the case of Shree Capital Services Ltd. (Taxpayer) vs. ACIT (ITA No. 1294 (Kol) of 2008) in which the SB held that, prior to financial year 2005-06 (assessment year 2006-07), derivative transactions in shares were covered by the definition of speculative transactions (ST). The SB further held that the exception to the definition of ST, from tax year 2005-06, in respect of eligible derivative transactions carried out on recognized stock exchanges, is not clarificatory in nature and does not have a retrospective effect for earlier years.
Recently, the Special Bench of the Kolkata Income-tax Appellate Tribunal (the Tribunal) in the case of Shree Capital Services Ltd. v. ACIT (2009-TIOL-542-ITAT-KOL-SB) while dealing with a case prior to the amendment to section 43(5) of the Income-tax Act, 1961 (the Act) exempting derivative transaction as speculative in nature, held that the derivative transactions will be considered as speculative transaction under section 43(5) of the Act. Further, it was also held that the above referred amendment to section 43(5) of the Act is perspective in nature and comes into effect from Assessment Year (AY) 2006-07.
Speculative transaction is a transaction in which contract for purchase and sale of any commodity is settled otherwise than by actual delivery. It is not in dispute that in the case of transaction in derivatives, the transaction is always settled otherwise than by actual delivery.
The assessee co-operative society did not conform to the stipulation and limitation of the types of activities in which a banking company is allowed to engage as per the Banking’ Regulation Act, 1949.
