By majority opinion, the Tribunal found that the assessee cannot claim any credit for the TDS on the income which is not offered for taxation. The Tribunal further found that the benefit for the TDS is to be allowed as per the provisions of the Income-tax Act u/s. 199.
CIT Vs. Kalpataru Colours and Chemicals – section 28(iiid) covers only the “profit” (difference between sale consideration and face value of the DEPB credit) and that the “face value” is assessable u/s 28(iiib) is not correct. The entire amount received on transfer of the DEPB credit is “profits” and falls under s. 28(iiid). There was no basis or justification for the Tribunal to hold that the face value of the DEPB credit can be reduced from the sale consideration. It is not permissible to bifurcate the proceeds of the DEPB into “face value” and “excess of face value”. The approach of the Tribunal is misconceived and unsustainable. As the assessee had an export turnover exceeding Rs.10 crores and did not fulfill the conditions set out in the third proviso to s. 80HHC (3), it was not entitled to a deduction u/s 80HHC on the amount received on transfer of DEPB.
Authority for Advance Rulings (AAR) concluded that gains derived from the transfer of shares by a Mauritius company to its wholly owned subsidiary in India would not be taxable in India under the Indian Income Tax Act (ITA), nor would such gains be subject to the Minimum Alternate Tax (MAT) (Praxair Pacific Limited (A.A.R. No. 855/2009)). The AAR further clarified that benefits under the India-Mauritius tax treaty would be available to the Mauritius Company.
P&H High Court in a ruling in the case of Vinod Kumar Jain Vs. CIT held that Assessee gets title to the properly on the issuance cf an allotment letter and the payment cf instalments is only a consequential action upon which the delivery of possession flows and in calculation of holding period the period from the date of allotment and upto the date of possession will also be counted.
Delhi High Court Ruling: Transfer Pricing – Sec 92 – An important ruling by the Hon’ble High Court wherein it has been held that the methodology to be adopted by the Revenue Authorities for making an adjustment should be equitable and fair, and has ruled on the payment for the use of intangible assets and attributing arm’s length consideration for activities carried out by the licensee, etc. [Maruti Suzuki India Limited – W.P. 6876/2008]
In this case the ITAT has held that the agreements entered into by the assessee, viewed together in their entirety, pertain to a single transaction of purchase of assets. Accordingly, the amount paid for non-compete fees was considered to be for acquisition of a business and capital in nature. The ITAT has also observed that each case would need to be decided in the background of its peculiar facts and circumstances. Thus, if the facts in another case are different (e.g. in the case of a continuing business) it may be possible to distinguish the ruling of the ITAT.
An important proposition reiterated by this ruling is that conversion of UTI units into Tax free bonds would not be treated as transfer for the purpose of section 45 of the ITA. This principle laid down by the Tribunal is important as similar logic could apply to „conversion? of other forms of instruments, e.g. conversion of preference shares to equity shares for which there is no specific exemption under the law.
Prudential Assurance Company Limited (‘the Petitioner’ or ‘the Company’), a sub-account duly registered with the Securities and Exchange Board of India (‘SEBI’) filed a writ petition (Writ petition no.866 of 2010 ) with the Bombay High Court against the show-cause notice issued under section 263 of the Income Tax Act, 1961 issued by the Commissioner of Income-tax (Commissioner). The Commissioner was seeking to revise an assessment order determined on the basis of a ruling of the Authority for Advance Ruling (‘the AAR’) in the case of Fidelity Northstar Fund (AAR No. 678/2006). The Bombay High Court has quashed a show-cause notice issued by the Commissioner and held that the assessment order passed by the Assessing Officer (AO) after applying the AAR ruling in petitioner’s own case, cannot be regarded erroneous or prejudicial to the interests of the tax department. Further, the High Court also observed that as per section 245S of the Income-tax Act, 1961 (the Act), the ruling in the case of Fidelity Northstar Fund cannot displace the binding character of the advance ruling rendered between the Petitioner and the tax department.
Income-tax Appellate Tribunal , in the case of DDIT v. Nederlandsche Overzee Baggermaatschappiji BV. has analysed whether the lease of a dredger would be considered a bare boat charter or a wet lease. After analysis of the facts of the case, it held that the lease was a bare boat lease, and that a dry lease of equipment does not result in a permanent establishment.
ITAT Mumbai in the case of Satellite Television Asia Region v. ADIT held that the Assessing Officer cannot consider the assessee a Permanent Establishment blocker or conduit company when there are commercial reasons for its existence. This means that they cannot tax the entire advertisement revenues in the hands of parent company.
