Explore ITAT Mumbai’s decision on transfer pricing adjustment & interest receivable in international transactions, with key details & legal analysis.
Having regard to the circumstances of the case we are of the view that the balance of convenience is in granting conditional stay. As declared in the open court, assessee is directed to pay a sum of Rs. 75,00,000/- on or before 15th March 2012 and with regard to the balance outstanding demand assessee should furnish proper surety to the Assessing Officer. The Registry is directed to post the appeal for final hearing on 23rd April 2012. Since the date is announced in the open court the issuance of notice to the parties is dispensed with.
Assessee is thus entitled to claim deduction both under Sec.36(1)(vii) and Sec.36(1)(viia) of the Act. The only limitation is that the amount of deduction shall not exceed the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account. In the present case there is no dispute that provisions of Sec.36(1)(viia) applies to the Assessee and also the fact the amount of deduction relating to bad debts written off is limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account.
in case the assessment is set aside by the CIT(A) and setting aside become final, interest u/s. 220(2) has to be charged only after the expiry of 35 days from the date of service of demand notice pursuant to the fresh assessment order. In the case of the assessee, since the original order of assessment was confirmed by the CIT (A) but on further appeal, the Tribunal set aside the order of the CIT(A) and the issue restored to the AO, it was held that in terms of the circular, the interest u/s. 220(2) has to be charged only from the date of fresh assessment order.
Whether adjustment should be restricted only to the international transactions or can be extended to the entire turnover of the taxpayer? 2. Are the books of accounts liable to be rejected if there is a transfer pricing adjustment? 3. Prior to 1.10.2009, is the benefit of standard deduction of-+5% under the proviso to section 92C(2) of the Act available to the taxpayer?
Whether the interest on income-tax refund is to be considered as interest income falling within Article 11(2) of the tax treaty or as interest income attributable to permanent establishment or fixed base in India falling under Article 11(5) read with Article 7 of the tax treaty? 2. whether the expression ‘attributable’ as used in Article 11(5) of the tax treaty has to be construed as equivalent / narrower to the term ‘effectively connected’ as used under Interest Article in other tax treaties with India and thereby squarely covered by the Special Bench decision of Clough Engineering Ltd.
On applicability of Section 50C of the Act in absence of registered document -Capital gain has to be computed on the basis of sale consideration received or accruing to the taxpayer. Even if the document was not registered, the capital gain has to be computed on the basis of the sale consideration shown and received by the taxpayer unless there was material to show that the sale consideration was understated. In this case, the document was not registered and no stamp duty had been paid. Therefore, stamp duty value cannot be adopted for the purpose of computation of capital gain and the value shown in the agreement has to be adopted as there is no material to show that the taxpayer had understated the sale consideration.
MTV Asia LDC Vs. DCIT ITAT Held that The taxpayer did not provide any documentary evidence to substantiate various expenses incurred as well as no separate books of accounts were maintained for Indian operations. Therefore, application of Rule 10 of the Income-tax Rules 1962 prescribing computation of income on reasonable basis in case of non-resident is justifiable. Copies of tax computations filed with Singapore tax authorities reflect substantial losses to the taxpayer in respect of Global Operations. Therefore, margin applied by the AO are high. The transponder charges and programme charges constitute 95.88% of the revenue.
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.
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.
