ADIT v Fidelity Management Trust Co (ITAT Mumbai) The mere making of a claim, which was not sustainable in law, by itself, would not amount to furnishing inaccurate particulars when the assessee had made a bona fide claim relying on the advance ruling pronounced in the case of a sister concern which was reversed later on.
Power Pack Conductors v ITO (ITAT Mumbai)-When an assessment is reopened on a particular ground but during the course of assessment being finalised, no addition is made in respect of the ground on which assessment is reopened, other additions cannot be made in the course of such assessment proceedings.
Vipin P. Mehta v ITO (ITAT Mumbai) – ITAT accepts the assessee’s claim that he had the declarations of the payees in the prescribed form before him at the time when the interest was paid, he was not liable to deduct tax therefrom under section 194A. If he was not liable to deduct tax, section 40(a)(ia) is not attracted. There is no other ground taken by the Income-tax authorities to disallow the interest.
Six Continents Hotels Inc. v DCIT (ITAT Mumbai) -Marketing and reservation contribution received by the assessee, non-resident, owner of a trademark from Indian hotel owners with a corresponding obligation to use it for the agreed purposes are not Royalty or Fees for Included Services and they are in the nature of business income and since the assessee does not have a PE in India, the same are not taxable in India.
Atul G. Puranik Vs. ITO (ITAT Mumbai) – Where the assessee acquired rights in plot in exchange of plot owned by his father, then the market value of the land so received on the date of acquisition will be the cost of acquisition of such land.
DHL Lemur Logistics (P) Ltd. v DCIT (ITAT Mumbai) – A well reasoned and well discussed order also facilitates appreciation when the same is called in question before the superior forum. Keeping in view the decision of the Hon’ble Delhi High Court in the case of Vodafone Essar Ltd. (supra) as well as that of the coordinate bench of this Tribunal in the case of Gap International Sourcing India (P.) Ltd. (supra) and having regard to the fact that the DRP has passed the order giving directions to the AO under section 144C without giving proper consideration to the elaborate submissions made on behalf of the assessee on the main preliminary issue, we set aside the said order and remit the matter to the file of the DRP with a direction to consider the objections of the assessee on this issue as well as the other issues once again and pass a proper and speaking order giving direction under section 144C.
Assessee company in the present case is a fully owned subsidiary of Yahoo Inc, USA, which is engaged in the business of providing consumer services such as search engine, content and information on wide spectrum of topics, e-mail, chat, etc. It filed the return of income for the year under consideration on 30.10.2004 declaring total income of Nil after adjusting the brought forward losses to the extent of 3,91,47,123/-. During the course of assessment proceedings, it was noticed by the A.O. that the assessee has made a payment of 34,86,947/- to Yahoo Holdings (Hong Kong) Ltd. being cost of services/research material/advertisement media.
Recently, ITAT Mumbai (the Tribunal) in case of ACIT v. ACM Shipping India Ltd (2011) ITA No. 5085/MUM/2009 held that the commission received by the UK company for assisting the taxpayer in arranging cargo transportation was taxable as business income by virtue of their business connection in India. The Tribunal observed that reliance cannot be placed on Circular No. 23 dated 23 July 1969 since it has been withdrawn. The circular was issued in the context of sale of goods and may not apply to the current case since it relates to rendering of services.
Dalal Broacha Stock Broking Pvt Ltd vs. ACIT (ITAT Mumbai – Special Bench)- Provisions of section 36(1)(ii) will apply in case of all employees including share holder employees irrespective of the fact whether any extra services have been rendered or not. The issue whether payment of bonus or commission to an employee will be covered by the provisions of section 36(1)(ii) or section 37(1) is also settled by the judgment of Hon’ble Jurisdictional High Court in case of Subodh Chandra Poppatlal vs. CIT (24 ITR 586) in which the Hon’ble High Court while dealing with similar provisions of the old Act held that when an expenditure fell under section 10(2)(x) [which corresponds to section 36(1)(ii)], in the sense that it is an expenditure in the nature of bonus or commission paid to an employee for services rendered then its validity can only be determined by the tests laid down in section 10(2)(x) and not by the tests laid down in section 10(2)(xv) which corresponds to section 37(1).
LIC Housing Finance Ltd Vs DCIT (ITAT Mumbai)-The provisions of rule 8D of the Rules which have been notif ied with effect from March 24, 2008, would apply with effect from assessment year 2008-09. Even prior to assessment year 2008-09, when rule 8D was not applicable, the AO had to enforce the provisions of sub-section (1) of section 14A. For that purpose, the AO is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act. The AO must adopt a reasonable basis or method consistent with all the relevant facts and circumstances after furnishing a reasonable opportunity to the assessee to place all germane material on the record.
