NEWS

DIRECT TAX

1. CBDT notifies ‘Director General / Secretary, CCI’ u/s 138 for sharing of information.

[Ref: Notification No. 57/2020/F. No. 225/ 98/2019-ITA-II]

2. CBDT further extends due date for filing of ITR for AY 2019-20 till 30-09-2020.

[Ref: Notification No. 56/2020/ F. No. 370142/23/2020-TPL]

3. CBDT amends Forms for furnishing statement of income paid/credited by investment fund to its unit holder.

[Ref: Notification G.S.R. 469(E) [NO. 55/2020/ F. NO.142/22/2015-TPL], DATED 28-7-2020]

4. CBDT amends Rule 31AA and TCS statement to incorporate FA 2020 amendments.

[Ref: Notification G.S.R. 464(E) [NO. 54/2020/F. NO. 370142/22/2020-TPL], DATED 24-7-2020]

5. Cabinet Secretariat, Intelligence Bureau, NCB & NIA notified as Authority under Sec. 138.

[Ref: Notification No. S.O. 2411(E) [NO. 52/2020/F.NO. 225/53/2020-ITA.II], DATED 21-7-2020]

6. CBDT specifies procedures for notification of Sovereign Wealth Fund for the purpose of exemption u/s 10(23FE).

[Ref: Circular No. 15 OF 2020 [F. NO. 370142/26/2020/TPL], DATED 22-7-2020]

7. CBDT signs MoU for sharing ITR related information to Ministry of MSME

[Ref: PRESS RELEASE, DATED 20-7-2020]

8. Exemption notifications issued u/s 194N prior to its amendment by FA 2020 are valid.

[Ref: Circular No. 14/2020 [F. NO. 370142/27/2020-TPL], DATED 20-7-2020]

9. ITRs filed for AYs 2015-16 to 2019-20 can be verified by 30-09-2020.

[Ref: Circular No. 13/2020 [F. NO. 225/59/2020/ITA -II], DATED 13-7-2020]

10. CBDT notifies ‘NPS Tier II- Tax Saver Scheme, 2020’ for Sec. 80C deduction.

[Ref: Notification S.O. 2232(E) [NO. 45 /2020/F. NO.370142/26/2019-TPL], DATED 7-7-2020]

11. 50CA not applicable on transfer of shares through NCLT’s approved oppression & mismanagement resolution plan.

[Ref: Notification No. G.S.R. 423(E) [NO. 42/2020/F. NO. 370149/143/2019-TPL], DATED 30-6-2020]

12. Relaxed eligibility conditions of Sec. 9A apply to investment fund set up by Category-I FPIs.

[Ref: Notification No. S.O. 2148(E) [NO. 41/2020/F. NO. 142/15/2015-TPL- PART (1)], DATED 30-6-2020]

13. CBDT amends Rule 31A & Form 26Q/27Q to give effect of the Finance Act, 2020 amendments.

[Ref: NOTIFICATION G.S.R. 429(E) [NO. 43/2020/F. NO. 370142/11/2020-TPL], DATED 3-7-2020]

14. CBDT releases MLI synthesised text for India- Czechia Republic & India-Rusia tax treaties.

[Ref: Press Release]

15. CBDT grants Sec. 56(2)(x) exemption to investors receiving shares under Yes Bank Ltd. Reconstruction Scheme.

[Ref: NOTIFICATION G.S.R. 421(E) [NO. 40 /2020/F. NO.370149/143/2019-TPL], DATED 29-6-2020]

16. Employee opting for Sec. 115BAC eligible to claim exemption for tour, travel and conveyance exp.

[Ref: NOTIFICATION NO. G.S.R. 415(E) [ NO. 38/2020/F. NO.370142/15/2020-TPL], DATED 26-6-2020]

OECD

[Ref:-https://www.oecd.org]

1. Global Forum Secretariat delivers new toolkit to help countries become Party to the Convention on Mutual Administrative Assistance in Tax Matters.

2. OECD releases global tax reporting framework for digital platforms in the sharing and gig economy.

DOMESTIC TAX CASE LAWS

SUPREME COURT

1. ‘Palam Gas Service’ ruling requires no review; SC upholds TDS disallowance not confined to sum ‘payable’ only

[Shree Choudhary Transport Company v  ITO[2020] 118 taxmann.com 47 (SC)]

2. Amount received by assessee as non-competition fee on executing deed of covenant was not taxable under section 28(ii); it was exempt as capital receipt.

[Shiv Raj Gupta v CIT [2020] 117 taxmann.com 871 (SC)]

3. SLP dismissed against High Court ruling that admitted refund amount could not have been retained by revenue authorities on ground that department may have a future demand against assessee arising out of pending assessment orders.

[Pr. CIT v Vodafone Idea Ltd. [2020] 117 taxmann.com 879 (SC)]

4. Where High Court upheld Tribunal’s order allowing partial relief to assessee under section 14A by taking a view that no investment was made by assessee in shares and securities out of interest bearing funds, SLP filed against said order was to be dismissed due to low tax effect.

[CIT v Weizmann Ltd. [2020] 115 taxmann.com 247 (SC)]

5. Where High Court disposed of revenue’s appeal by directing revenue to file same in Competent Court of jurisdiction, SLP filed against said order was to be dismissed due to low tax effect.

[CIT v Kuantum Papers Ltd. [2020] 115 taxmann.com 224 (SC)]

6. SLP dismissed due to low tax effect against High Court’s ruling that amount received as share application money by companies from companies in both of which assessee had beneficial interest, was not loan and advance for purposes of invoking section 2(22)(e).

[Pr. CIT v Vikas Oberoi [2020] 115 taxmann.com 261 (SC)]

7. SLP dismissed against High Court’s ruling that for purposes of penalty order under section 271(1)(c) read with section 275(1)(a) limitation begins to run from date of order of appellate tribunal was served upon Commissioner (Judicial).

[Pr. CIT v Indian Sugar Exim Corporation Ltd. [2020] 115 taxmann.com 267 (SC)]

HIGH COURT

1. Where Assessing Officer sought to reopen assessment in case of assessee on ground that assessee had wrongly claimed deduction under section 80-IB(10) as completion certificate for project was not obtained on or before stipulated date, however, said fact was a subject matter of consideration by Assessing Officer while passing Assessment Order and no new reasons had been recorded prior to issuance of impugned notice, reopening of assessment on bald assertion that assessee had failed to disclose fully and truly all material facts was not justified.

[S.S. Landmarks v ITO [2020] 117 taxmann.com 825 (Bombay)]

2. Where assessee filed writ petition challenging reassessment order on grounds that notice under section 148 was not served upon him, in view of fact that authorized representative appeared on behalf of assessee, therefore contention of assessee could not be countenanced in view of section 292BB.

[A.Chandrasekaran v ITO [2020] 117 taxmann.com 837 (Madras)]

3. Where Assessing Officer after making due enquiries found assesee’s claim for exemption of income as correct and, thus, dropped reassessment proceedings, since view taken by him was one of possible views, impugned revisional order passed under section 263 was to be set aside.

[CIT v International Society for Krishna Consciousness [2020] 117 taxmann.com 799 (Karnataka)]

4. Where assessee sold agricultural land and claimed capital gain from sale as exempt, since Tahsildar while submitting report to Assessing Officer had enclosed copies of computerised patta, which showed that land was wet land and deemed to be agricultural land, merely because an agriculture activity could not be done on said land for various reasons including natural causes, it was not cease to be an agricultural land, thus, same could not be considered as capital asset as per section 2(14) and capital gain arising from same was exempt from tax.

[Pr. CIT v K.P.R. Developers Ltd. [2020] 117 taxmann.com 822 (Madras)]

5. Where Tribunal allowed claim of assessee under section 80-IB(10) finding that building in question was completed within stipulated time, said finding being a finding of fact and revenue not having questioned that this finding was incorrect and had also not questioned veracity of completion/occupation certificate produced before Tribunal, appeal against order of Tribunal would not be maintainable.

[Pr. CIT v Rattanchand Rikhabdas Jain Chemical Works [2020] 117 taxmann.com 709 (Bombay)]

6. Amendment made by Finance Bill, 2016 to provisions of section 115BBE providing that no set off of any loss shall be allowed to assessee against deemed income under sections 68, 69, 69A to 69(2) could not be applied retrospectively.

[Pr. CIT v Aacharan Enterprises (P.) Ltd. [2020] 117 taxmann.com 745 (Rajasthan)]

7. Where bank/deductor, instead of generating form 26A, issued Manual Form 16A to assessee evidencing TDS towards tax paid for interest amount, assessee was to be directed to approach department by making application enclosing Form 16A and department would consider claim of assessee.

[Subramania Siva v ITO [2020] 117 taxmann.com 712 (Madras)]

8. Where Assessing Officer worked out profit on basis of contract/sub-contract income but failed to add interest income shown in books as other income, subsequently, on basis of audit objection, Assessing Officer was justified in invoked section 147/148 and reassessing ‘interest income’.

[Suresh Chand Gupta v Pr. CIT [2020] 117 taxmann.com 731 (Allahabad]

9. Where assessee submitted a rectification application stating that if amounts involved in TDS were rectified, he would be legally entitled to a refund of Rs. 3.34 crores and in view of financial hardship being faced by assessee, Assessing Authority was to pass order on rectification application within 3-4 weeks time.

[Unitac Energy Solutions (India) (P.) Ltd. v Pr. CIT [2020] 117 taxmann.com 713 (Kerala)]

10. Where assessee filed a writ petition against an order of Income Tax Officer bringing an amount received by assessee on account of family arrangement/re-arrangement under section 28(ii)(a), since Income Tax Officer had not acted without jurisdiction, writ court should not interfere with impugned order, thus, impugned writ petition could not be entertained.

[Abul Kalam v Asst. CIT [2020] 117 taxmann.com 717 (Calcutta)]

11. Obsolete stock which was not disposed off or sold was allowable as expenditure under section 37(1).

[CIT v Gigabyte Technology (India) Ltd. [2020] 117 taxmann.com 670 (Bombay)]

12. Where no product was manufactured by another unit of assessee company, engaged in business of manufacture and export of pharmaceuticals, Tribunal was unjustified in allocating research and development expenditure to said unit of assessee when no such products were manufactured in said unit of assesssee during relevant year.

[Microlabs Ltd. v Asst. CIT [2020] 117 taxmann.com 674 (Karnataka)]

13. Process of converting raw urad into urad dhal is a manufacturing activity undertaken by assessee and therefore, assessee would be entitled to deduction under section 80-IA.

[CIT v Smt. S. Mahalakshmi [2020] 117 taxmann.com 621 (Madras)]

14. Where assessee-company omitted to claim deduction under section 43B on account of interest paid on loan, since allowability of deduction under section 43B on account of interest payment was a debatable issue and it required further investigation, said omission to claim deduction in original return was not a mistake coming within purview of section and in case of such omission only remedy available was under section 139(5).

[Nagaraj & Co. (P.) Ltd. v Asst. CIT [2020] 117 taxmann.com 618 (Madras)]

15. Where assessee was granted stay of demand on payment of 20 per cent of disputed tax demand and thereafter an attachment order was passed in terms of section 226(3) so as to insist assessee to pay such 20 per cent of tax demand, impugned attachment order would result in denial of benefit originally conferred upon assessee of allowing stay on payment of 20 percent of tax, therefore, impugned order of attachment was unjustified and same was to be set aside.

[Dhanalakshmi Srinivasan Chit Funds P. Ltd. v Pr. CIT [2020] 117 taxmann.com 690 (Madras)]

16. Where assessee had not conducted any other activity other than holding land as investment, finding recorded by Tribunal that transaction of sale of land was a capital transaction and income therefrom had to be treated as long-term capital gain and not business income was neither perverse nor arbitrary.

[CIT v Kishan House Builders Association [2020] 117 taxmann.com 687 (Karnataka)]

17. Admitted refund amount cannot be retained on ground that department may have a future demand against assessee arising out of pending assessment orders. Section 241A granting power to Assessing Officer to withhold refund applies for assessment years after 1-4-2017 and not for earlier assessment years.

[Vodafone Idea Limited v Asst. CIT [2020] 117 taxmann.com 597 (Bombay)]

18. Where Assessing Officer disposed off application for stay of demand filed by assessee by way of passing a cryptic non-speaking order holding that assessee must immediately pay 20 per cent of tax demand, since impugned order did not deal with aspects of prima facie case, financial stringency and balance of convenience, same was to be set aside.

[Ganapathy Haridaass v ITO [2020] 117 taxmann.com 626 (Madras)]

19. Where assessee, engaged in real estate business, received certain land as stock in trade in partition of joint family property and, thus, there was no conversion of capital asset into stock in trade, provisions of section 45(2) did not apply to assessee’s case.

[CIT v C. Ramaiah Reddy [2020] 117 taxmann.com 540 (Karnataka)]

20. Interest on loan couldn’t be disallowed if interest free advances were made out of interest free funds.

[Pr. CIT v Shapoorji Pallonji & Co. Ltd. [2020] 117 taxmann.com 625 (Bombay)]

21. Where claim of assessee for long term capital gains had been allowed in assessment order based on true and full disclosure of all material by assessee, Assessing Officer could not have had a re-look into said issue pursuant to notice issued under section 148.

[B. Kasi Viswanathan v ITO [2020] 117 taxmann.com 565 (Madras)]

22. Where revenue attached certain properties belonging to petitioner’s late mother so as to recover tax demand from petitioner on premise that said properties being inherited from his mother belonged to assessee in his individual capacity, since petitioner’s mother had already made a Will and transferred said property to a trust much before such tax demand arose and, thus, said property did not belong to petitioner, impugned attachment order was to be set aside.

[Rajesh T. Shah v TRO [2020] 117 taxmann.com 549 (Bombay)]

23. Where Assessing Officer issued notice under section 148 to non-existing company, it was a substantive illegality and not procedural violation of nature adverted to in section 292-B, hence, not curable.

[eMudhra Ltd. v Asst. CIT [2020] 117 taxmann.com 550 (Karnataka)]

24. Where assessee company, engaged in business of distribution of electricity in Delhi, had no right to appropriate efficiency gain amount and said amount was at disposal of Delhi Electricity Regulatory Commission (DERC), said amount could not be included in business profit of assessee.

[Dy. CIT v Tata Power Delhi Distribution Ltd. [2020] 117 taxmann.com 463 (Delhi)]

25. In case of exports income in form of duty drawback and cash compensatory assistance accrues only when same is sanctioned by custom authorities and not when assessee raises a claim in respect thereof.

[CIT v Asea Brown Boveri Ltd. [2020] 117 taxmann.com 415 (Karnataka)]

26. Sections 234B and 234C interest aren’t leviable when taxes are payable under MAT provisions.

[Pr. CIT v Mangalore Refinery & Petrochemicals Ltd. [2020] 117 taxmann.com 391 (Bombay)]

27. Waiver of loan cannot be brought to tax under Section 28(iv).

[Essar Shipping Limited v CIT [2020] 117 taxmann.com 389 (Bombay)]

28. Validity of reassessment proceedings could not be upheld on ground that assessee earned bogus long term capital gain on sale of shares when assessee gave full details of its share transactions carried out in relevant year at time of completing assessment under section 143(3).

[Gateway Leasing (P.) Ltd. v Asst. CIT [2020] 117 taxmann.com 442 (Bombay)]

29. Where assessee inadvertently omitted to make claim for deduction under section 10B in respect of two 100 per cent Export Oriented Undertakings, however, all necessary facts for claiming deduction under section 10B were already on record, Commissioner (Appeals) in exercise of his plenary/co-terminus powers, as well as Tribunal, ought to have entertained claim.

[Sesa Goa Ltd. v Addl. CIT [2020] 117 taxmann.com 548 (Bombay)]

INCOME TAX APPELLATE TRIBUNAL

1. Where assessee society, registered under Societies Registration Act, 1860, was holding status of AOP, in view of fact that income of its members during relevant year exceeded basic exemption limit, having regard to provisions of section 167B(2), income of assessee was liable to be taxed at maximum marginal rate.

[Air Force Navy Farm Owners Welfare Association v ITO [2020] 117 taxmann.com 906 (Delhi – Trib.)]

2. Assessee, while determining eligible profit, is not required to notionally reduce losses arising from eligible business in earlier years already set off against other business of assessee in terms of sections 70, 71 and 72 prior to exercise of option of ‘initial assessment year’; losses arising subsequent to earmarking of ‘initial assessment year’ would, however, continue to be governed by embargo placed in section 80-IA(5).

[Dy. CIT v Chhotabhai Jethabhai Patel & Co. [2020] 117 taxmann.com 938 (Ahmedabad – ITAT)]

3. It is not necessary that materials before AO should conclusively prove that income had escaped assessment.

[Harshvardhan Constructions v ITO [2020] 117 taxmann.com 818 (Mumbai – Trib.)]

4. Books of account couldn’t be rejected just because assessee didn’t maintain stock register.

[Paramount Impex v Asst. CIT [2020] 117 taxmann.com 802 (Chandigarh – Trib.)]

5. Holding period for purpose of capital gains has to be reckoned from date of allotment of flat and not date of possession of flat.

[Yogesh Mavjibhai Gala v Pr. CIT [2020] 117 taxmann.com 783 (Mumbai – Trib.)]

6. Where assessee claimed exemption of income applied outside India for educational purpose under section 11(1)(c), in view of fact that assessee had specific approval from CBDT for said purpose, claim so raised was to be allowed.

[Tata Education and Development Trust v Asst. CIT [2020] 117 taxmann.com 946 (Mumbai – Trib.)]

7. Where assessee was beneficial owner of deposits in foreign bank accounts and declined to sign consent waiver so as to enable Income-tax Department to obtain all necessary details from said account, additions in respect of assessee’s foreign bank account was justified.

[Renu T Tharani v Dy. CIT [2020] 117 taxmann.com 804 (Mumbai – Trib.)]

8. As per provision of section 71(2A) and explanatory memorandum to Finance Act, 2004 amending provision of section 71(2A) w.e.f 01.04.2005, losses under head income from business or profession, including unabsorbed depreciation, if any cannot be set off against income assessable under head salaries.

[Harbans Singh Bawa v Asst. CIT [2020] 117 taxmann.com 817 (Mumbai – Trib.)]

9. where assessee, engaged in construction of flats, was consistently following completed contract method of accounting and said method had been accepted by revenue authorities in past, there was no justification on part of Assessing Officer to change same and to determine income of assessee on estimate basis in assessment year in question.

[CIT v Banjara Developers & Constructions (P.) Ltd. [2020] 117 taxmann.com 747 (Karnataka)]

10. Advocate welfare fund trustee committee established under Bar Council of Delhi being engaged in safeguarding rights, privileges and interest of advocates, its dominant purpose is advancement of general public utility within meaning of section 2(15).

[Advocate Welfare Fund Trustee Committee. V CIT [2020] 117 taxmann.com 701 (Delhi – Trib.)]

11. It was a highly debatable issue whether in pre-amendment provisions of section 54F i.e. in assessment year 2011-12 and earlier, word ‘assessee’ meant an individual only or it also included an ‘HUF’ who can claim deduction under section 54B; powers under section 154 could not be exercised to diallow claim of HUF, when issue was already examined by Assessing Officer in scrutiny assessment proceedings.

[Sandeep Bhargava (”HUF’) v Dy. CIT [2020] 117 taxmann.com 677 (Chandigarh – Trib.)]

12. Where assessee declared long term capital gain arising from sale of shares as exempt under section 10(38), in view of fact that there were certain entry operators providing accommodation entries in respect of bogus share transactions and assessee was one of beneficiaries, Assessing Officer was justified in reopening assessment.

[Suresh Kumar Agarwal v Asst. CIT [2020] 117 taxmann.com 678 (Delhi – Trib.)] 

13. Where Assessing Officer made addition to assessee’s income under section 68 in respect of capital gain earned from sale of shares by taking said transaction as bogus, in view of fact that shares were purchased and sold through security broker by online portal and, moreover, securities transaction tax was also paid, impugned addition was to be deleted.

[Suresh Kumar Agarwal v Asst. CIT [2020] 117 taxmann.com 678 (Delhi – Trib.)]

14. Where clearing functions of RBI were divested to assessee and its primary objective was to administer payment settlement system for larger benefit of general public and not to run clearing system in a commercial manner or on a commercial basis, assessee’s activities were charitable.

[National Payments Corporation of India v Dy. CIT [2020] 117 taxmann.com 645 (Mumbai – Trib.)]

15. Scrap sold by railway being certainly not usable due to its breakage or wear and tear and TCS being paid on its purchase by assessee, same would be subjected to TCS during resale.

[Pramod Kumar Jain v ITO [2020] 117 taxmann.com 649 (Jaipur – Trib.)]

16. Where, assessee, a civil contractor, transferred development rights of a property to a builder and received part payment for same, provisions of section 2(47)(v) would not apply to said transaction as same were applicable only in case of capital assets held by assessee.

[ITO v Abdul Kayum Ahmed Mohd. Tamboli [2020] 117 taxmann.com 637 (Mumbai – Trib.)]

17. To determine fair market value of share allotted in lieu of purchase consideration payable for an acquired asset, an assessee has two choices – He may adopt either NAV method or DCF method; Assessing Officer can determine fresh valuation but cannot change method of valuation opted by Assessee.

[Flutura Business Solutions (P.) Ltd. v ITO [2020] 117 taxmann.com 567 (Bangalore – Trib.)]

18. Mumbai ITAT quashed assessment done in name of ‘Satyam Computer’ as Co. got merged with ‘Tech Mahindra’.

[Satyam Computer Services Ltd. v Dy. CIT [2020] 117 taxmann.com 593 (Mumbai – Trib.)]

19. Income from relinquishing rights under an agreement should be assessed under the head income from capital gains.

[Chandrashekar Naganagouda Patil v Dy. CIT [2020] 117 taxmann.com 520 (Bangalore – Trib.)]

20. Assessing Officer could not have rejected books of account of assessee and estimated gross profit at rate of 12 per cent of total sales turnover as against rate of 8.36 per cent without providing assessee an opportunity to present his claim.

[Ramanlal K. Darji v ITO [2020] 117 taxmann.com 410 (Mumbai – Trib.)]

21. Where assessee was only a dealer in scrap and scrap sold by assessee was not a result of manufacture or mechanical working of materials, assessee would not be liable to deduct TCS under section 206C.

[Lala Bharat Lal & Sons v ITO [2020] 117 taxmann.com 411 (Lucknow – Trib.)]

22. Foreign tax credit, as per India USA-Treaty, is allowable to an assessee; claim raised before Assessing Officer for FTC paid subsequent to filing of return was to be allowed.

[Price water house Coopers (P.) Ltd. v Asst. CIT [2020] 117 taxmann.com 371 (Kolkata – Trib.)] 

23. Where assessee, engaged in real estate business, had established its company, borrowed funds for purchase of portion of land in own name and further gave loan to associates for acquisition of land and then entered into development agreement for development of township, it could be concluded that assessee set up its business during relevant year.

[Jindal Realty (P.) Ltd. v Asst. CIT [2020] 117 taxmann.com 419 (Delhi – Trib.)]

24. Where assessee, engaged in work of storage and maintenance of warehouse for food grains procured by FCI, paid rent to a State Government Undertaking i.e. Krishi Upaj Mandi Samiti, whose income was exempt under section 10(26AAB), assessee could not be treated as assessee in default for not deducting tax at source under section 194-I while making said payment of rent.

[M.P. Warehousing & Logistics Corporation v Asst. CIT [2020] 117 taxmann.com 420 (Indore – Trib.)]

25. Extension of time given by Commissioner in getting books of account audited under section 142(2A) was illegal and, thus, assessment completed after due date was void ab initio.

[Asst. CIT v Soul Space Projects Ltd. [2020] 117 taxmann.com 395 (Delhi – Trib.)]

26. Where assessee for relevant year had estimated his undisclosed income to tune of Rs. 3 crore from his illegal activity of providing accommodation entry after survey on his premises but he could recover only Rs. 1.38 crore during relevant year, balance sum to be allowed as a deduction to assessee.

[Uday Shankar Mahawar v Asst. CIT [2020] 117 taxmann.com 396 (Kolkata – Trib.)]

27. Where assessee-company made provision of interest not on individual basis but made on lump sum basis on total amount of deposit collected under GFDA scheme floated by it, if in any of individual account holder interest payable exceed Rs. 2,500 in a Financial year, on crediting of same to different account than account of depositors, TDS liability of deductor cannot be eliminated.

[Dy. CIT v Sahara India Financial Corporation Ltd. [2020] 117 taxmann.com 374 (Delhi – Trib.)]

28. Where without examining return, Assessing Officer issued notice under section 143(2)/142(1) and questionnaire in a mechanical manner and served these on spot on date of filing of return, assessment order passed under section 143(3) was to be quashed.

[Hemant Mittal v ITO [2020] 117 taxmann.com 390 (Delhi – Trib.)]

29. Where Assessing Officer made addition to assessee’s income by invoking provisions of section 2(22)(e) on ground that assessee was holding more than ten percent shareholding in both lender and borrower companies, in view of fact that as per annual return filed before ROC, assessee had already transferred its shareholding in borrower company to lender company before advancement of loan out of surplus funds, impugned addition was to be deleted.

[Asst. CIT v Gurdeep Singh [2020] 117 taxmann.com 451 (Chandigarh – Trib.)]

30. Wind mills for which income and expenditure could be separately ascertained, constituted separate undertaking;on its sale along with assets and all liabilities, capital gains was to be computed as a slump sale under section 50B (2).

[Asst. CIT v Devi Sea Foods Ltd. [2020] 117 taxmann.com 440 (Visakhapatnam – Trib.)]

31. Where Assessing Officer noticing that assessee sold cashew kernels to its sister concerns at value much lower than cost of production disallowed loss incurred by assessee on such sales, since transactions entered into by assessee with its sister concerns were genuine and bona fide and price charged by assessee from its sister concerns were in conformity with normal commercial practice whereby assessees got huge order in large quantities with timely recovery of debts, impugned loss was to be allowed.

[R. Pratap v Asst. CIT [2020] 117 taxmann.com 502 (Cochin – Trib.)]

32. While initiating reassessment proceedings, Assessing Officer is supposed to provide complete details of reasons recorded and not merely few extracts of said reasons so that assessee can prepare its defence effectively against proposed reopening of assessment.

[Wimco Seedlings Ltd. v Jt. CIT [2020] 117 taxmann.com 425 (Delhi – Trib.)]

33. Where assessee entered into two sale deeds for sale of its lands, however sale transactions could not materialize as post dated cheques issued in discharge of consideration had been dishonoured, thus, no transfer of land having taken place and no real income having arisen to assessee, assessee would not be exigible to capital gains tax.

[Asst. CIT v Ijyaraj Singh [2020] 117 taxmann.com 424 (Jaipur – Trib.)]

34. When income of assessee is determined on estimate basis then no penalty under section 271(1)( c) can be imposed for concealment and furnishing inaccurate particulars of income.

[Anil Abhubhai Odedara v ITO [2020] 117 taxmann.com 490 (Rajkot – Trib.)]

INTERNATIONAL TAXATION

1. Where assessee, a Korean company, was awarded a project by ONGC for purpose of surveys, design, etc., in view of fact that assessee was not carrying on its core business through its Project Office in India, said Project Office would not constitute permanent establishment within meaning of article 5(1) of DTAA between India and Korea.

[DIT v Samsung Heavy Industries Co. Ltd. [2020] 117 taxmann.com 870 (SC)]

2. Documents that tax authorities prepare in connection with a MAP would not be disclosed.

[Kevin Mccabe v Commissioners for Her Majesty’s Revenue and Customs [2020] 117 taxmann.com 444 (FTT – UK)]

3. Where ONGC paid certain amount to assessee, a US based company, for rendering its professional legal services abroad, since said services did not ‘make available’ any knowledge or skill to ONGC within meaning of article 12 of India-US DTAA, payment in question was not liable to tax in India as ‘fee for technical services’.

[ONGC v Dy. CIT [2020] 117 taxmann.com 867 (Delhi – Trib.)]

4. Where payment was made to two foreign scientists for Independent scientific services covered under Article 14 being rendered by them, no tax was required to be deducted at source by assessee as they had no fixed PE in India nor had they stayed in India for 183 days or more.

[Poddar Pigments Ltd. v Asst. CIT [2020] 117 taxmann.com 728 (Delhi – Trib.)]

5. Interest income earned by a Mauritius based Foreign Institutional Investor, on foreign currency loans and debt securities was exempt under Article 11(3)(c) of Indo-Mauritius DTAA.

[DY. CIT v HSBC Bank (Mauritius) Ltd. [2020] 117 taxmann.com 750 (Mumbai – Trib.)] 

6. Where assessee, a Singapore based company, seconded its employee to an Indian concern for carrying out business operations of its restaurant outlets in India efficiently, in view of fact that said employee worked under direct supervision and control of Indian concern and, moreover, his salary cost was reimbursed to assessee on cost to cost basis, amount so paid was not liable to tax in India as fee for technical services.

[DY. DIT v Yum! Restaurants (Asia) (P.) Ltd. [2020] 117 taxmann.com 759 (Delhi – Trib.)]

7. Where assessee, a Singapore based company, was engaged in business of promotion, development, marketing and maintenance of Computerized Reservation System (CRS), had its wholly owned subsidiary in India which was exclusively performing marketing and distribution of CRS and was also securing business for assessee by entering into subscription agreement with various travel agents, it could be regarded as assessee’s fixed PE in India.

[Sabre Asia Pacific (P.) Ltd. v Dy. CIT [2020] 117 taxmann.com 756 (Mumbai – Trib.)]

8. Where there was no apparent mistake in decision of Tribunal to direct Assessing Officer to verify assessee’s claim regarding stay of employees/personnel in India for rendering service during relevant previous year, application filed by assessee for rectification of order passed by Tribunal was to be set aside.

[Link Laters LLP v Dy. CIT [2020] 117 taxmann.com 429 (Mumbai – Trib.)]

TRANSFER PRICING CASE LAWS

1. Where arrangements under which respondent sold its right to purchase uranium to its foreign subsidiaries as also arrangements under which it purchased uranium from those subsidiaries later on were commercially rational and parties were dealing with each other at arm’s length, appeal for invoking transfer pricing provisions was to be dismissed.

[Her Majesty The Queen v Cameco Corporation [2020] 117 taxmann.com 588 (FDC)]

2. Where there was no cost incurred to provide corporate guarantee, ALP in respect of old guarantees was to be determined at 3 per cent and in respect of fresh guarantees issued during year, ALP should be determined at 1 per cent.

[Mahindra & Mahindra Ltd.  v Dy. [2020] 117 taxmann.com 518 (Mumbai – Trib.)]

3. Where revenue failed to bring on record any contract or arrangement between assessee and its AE for making AMP expenses for promotion of brand of its AE, such AMP transaction would not represent international transaction between assessee and its AEs.

[Reckitt Benckiser (I) Pvt. Ltd. v DY. CIT [2020] 117 taxmann.com 519 (Kolkata – Trib.)] 

4. Where outstanding receivable from associated enterprise was more than shareholders funds available with assessee implying that total profit earned by assessee was enjoyed by its associated enterprise out of India fully, TPO could not be faulted in considering overdue outstanding receivable from its associated enterprise as a separate international transaction and making addition on account of arm’s length price.

[Techbooks International (P.) Ltd. v Asst. CIT [2020] 117 taxmann.com 851 (Delhi – Trib.)]

5. In case of interest free loan given to AE, arm’s length rate of notional interest has to be determined on basis of rate of interest charged in country where such loan is received.

[Dy. CIT v Mercator Ltd. [2020] 117 taxmann.com 914 (Mumbai – Trib.)]

6. When clause (i) of section 92BA has been omitted by Finance Act, 2017 with effect from 01-04-2017, without any saving clause of General Clauses Act, it would be treated as said clause never existed in Statute Book and, thus, impugned revisional proceedings initiated by Commissioner under section 263 in respect of specified domestic transactions referred to in clause (i) of section 92BA in relevant assessment year, deserved to be quashed.

[Raipur Steel Casting India (P.) Ltd. v Pr. CIT [2020] 117 taxmann.com 944 (Kolkata – Trib.)]

7. Where was no material on file to prove that assessee company had incurred any cost in providing corporate guarantee and transaction qua corporate guarantee entered into by assessee company with its AE was held not to be an international transaction, ALP of compensation for providing corporate guarantee could not have been determined.

[Asst. CIT v Spentex Industries Ltd. [2020] 117 taxmann.com 782 (Delhi – Trib.)]

8. Following order passed by Co-ordinate Bench of Tribunal in assessee’s own case in earlier assessment year, addition to ALP in respect of notional interest on interest free loan given to Indian subsidiary was to be confirmed at rate of LIBOR plus 2 percent.

[Sabre Asia Pacific (P.) Ltd. v Dy. CIT [2020] 117 taxmann.com 756 (Mumbai – Trib.)]

9. Pendency of assessee’s appeal before Tribunal against transfer pricing adjustment could not deprive right of Assessing Officer to pass a rectification order under section 154 in order to withdraw MAT credit wrongly allowed in course of assessment.

[Fiserv India (P.) Ltd. v Asst. CIT [2020] 117 taxmann.com 585 (Delhi – Trib.)]

10. No addition of notional interest could be made to assessee’s ALP in respect of amount paid to AE for allotment of shares and said transaction was not found bogus or sham on basis of material on record.

[Voltas Limited v Asst. CIT [2020] 117 taxmann.com 547 (Mumbai – Trib.)]

11. Where assessee gave certain amount as share application money to AE, since nothing had been brought on record to suggest that transaction in question was sham, TPO could not treat such transaction as a loan and charge interest thereon on notional basis.

[Astral Poly Technik (P.) Ltd. v Dy. CIT [2020] 117 taxmann.com 664 (Ahmedabad – Trib.)]

12. No addition could be made to ALP in respect of notional interest for delay in collection of outstanding receivables from AE where working capital adjustment had already been provided which took into account impact of said aspect.

[DHR Holding India (P.) Ltd. v DY. CIT [2020] 117 taxmann.com 469 (Delhi – Trib.)]

13. Where, assessee, engaged in online selling of travel products and solutions, had presence in different countries through group companies, AMP expenditure incurred by it on brand ‘MMT’ exclusively owned by it, did not result in any international transaction.

[Make My Trip (India) (P.) Ltd. v DY. CIT [2020] 117 taxmann.com 421 (Delhi – Trib.)]

14. AMP spend, in absence of an explicit arrangement between assessee and AE for incurring AMP expenditure, could not have been considered as an international transaction.

[NGC Network (India) (P.) Ltd. v Addl. CIT [2020] 117 taxmann.com 367 (Mumbai – Trib.)] 

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