J. K. Industries Limited Vs CIT (High Court of Calcutta)- The expenditure may not have been incurred under any legal obligation, but yet it is allowable as business expenditure if it was incurred on grounds of commercial expediency. Thus, the borrowed fund advanced to a third party should be for commercial expediency if it is sought to be allowed under section 36(1)(iii) of the Act.
This appeal under section 260A of the Income-tax (“Act”), 1961 is at the instance of an assessee and is directed against an order dated September, 2002, passed by the Income-tax Appellate Tribunal, “B”Bench, Kolkata in Income-tax Appeal bearing ITA No. 1449 (Cal)/2000 for the Assessment Year- 1997-98 and thereby dismissing the appeal preferred by the assessee. Being dissatisfied, the assessee has come up with the present appeal.
Navelkar Estates Developers v CIT and ITO (Mumbai HC) The main contention of Shri V. R. Tamba, learned Counsel appearing for the Petitioner is that the reasons have not been furnished to the Petitioner/Assessee for issuing notice under section 148 of the Income Tax Act. Therefore, the Assessee is not in a position to file objections to the issue on notice.The learned Counsel appearing for the Petitioner points out to the case of GKN Driveshafts(India) Ltd. v. Income Tax Officer and others (2003) 1 SCC 72) wherein the Hon’ble Supreme Court has held that the Assessing Officer is bound to furnish the reasons within a reasonable time so that the Assessee can file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order.
Transstory (India) Ltd. Vs. ITO (ITAT Visakhapatnam)- The taxpayer was to pay royalty for only seven years and in respect of certain specified product, the royalty payable by the two group companies in China was for 20 years and it was based on sales of all the products. The only basis of adjustment made by the TPO is variation in rates of royalty paid by the taxpayer vis-a-vis the two group companies in China.
1. On the facts and in the circumstances of the case, the ld. CIT(A) erred in directing the AO, to allow the deduction u/s. 80-IB of the Act in respect of the profit of Hyderabad Unit without appreciating the fact that the branch has not carried out any manufacturing activity.
CIT v Alembic Glass Industries Limited (High Court of Gujarat) – The law is settled – if a business liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date.What should be certain is the incurring of the liability. It should be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied the liability is not a contingent one. The liability is in praesenti though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain.
DCIT, Mumbai Vs M/s Kaizen Commercial Pvt Ltd (ITAT Mumbai) Whether merely because a telecom Company has got licence and has bright future, it can be presumed that contemporaneous value of share, irrespective of its negative net worth on the day when it got licence, is on higher side and hence any addition in the hands of share holder on presumptive basis is tenable – Whether in the absence of any business relations, any addition can be made in the hands of assessee u/s 28(iv).
ADIT v ACM Shipping India Ltd. (ITAT Mumbai) – The taxpayer was wholly or almost wholly securing orders only for ACM UK. The freight invoice issued by the carriers show that the commission was paid by the Indian exporter to the taxpayer directly on behalf of the carriers. Further, the taxpayer was paying 50 percent of the commission earned to ACM UK for their services in getting contract with the ship owners and the customers. There is no evidence to show that the commission paid by the taxpayer was for services rendered outside India.
ACIT v Birla Soft Ltd. (ITAT, Delhi) -It would be wrong to consider different STP units of the taxpayer on a standalone basis, for the purpose of transfer pricing analysis, wherein the services provided by the units are same/similar and to same Associated Enterprises (‘AEs’). Further, Delhi ITAT also observed that current year data of an uncontrolled transaction is to be used for the purpose of comparability, while examining the international transactions with AEs.
Satara Cattle Feed Industries (P) Ltd. v ACIT (ITAT Pune) – The invocation of s 263 is unjustified if the AO has applied mind to the shortfall in income returned after considering the declaration of additional income during the survey in absence of any material or evidence to show that the reasons which have been accepted by the AO are incorrect or that the same was extraneous or false. Order of the AO must suffer from an incorrect assumption of fact or incorrect application of law so as to be considered as erroneous apart from meeting the requirements of the expression “prejudicial to the interests of Revenue”, to justify the invocation of s 263.
