The second respondent (referred to as the `Developer’) entered into a development agreement with the owners of certain lands at Bachupally village, Qutubullapur Mandal, Ranga Reddy District, for constructing independent houses and multistoried Apartment buildings with common facilities in a layout known as `Hill County township’. The landowners as the first party, the developer as the second party and the first respondent who wanted to acquire an apartment therein as the third party entered into an agreement for sale dated 16.10.2006 under which the land-owners agreed to sell an undivided share equivalent to 87 sq.yds. out of a total extent of 16.95 acres to the first respondent and the developer agreed to construct a residential apartment measuring 1889 sq.ft. for the first respondent. The total consideration for the undivided share in the land, apartment and car parking space was agreed as Rs.55,89,368. The agreement contemplating the entire price being paid in installments, that is 10% on booking, 85% in seven instalments upto 15.3.2008 and 5% at the time of delivery. Clause (14) of the said agreement dated 16.10.2006 provided for settlement of disputes by arbitration.
Assistant Commercial Taxes Officer Versus M/s Makkad Plastic Agencies- The assessment of the assessee-respondent for the Assessment Year 2001-02 was completed by the Assessing Officer under Section 29(7) of the Rajasthan Sales Tax Act, 1994 [for short “the Act of 1994”] holding that the tax on “thermo ware” and “vacuum ware”, which were the articles sold by the assessee-respondent during the relevant assessment year, should be levied Sales Tax at 10 per cent instead of 8 per cent, treating them as separate articles from plastic goods/products. Consequently, the liability of difference of tax at 2 per cent along with surcharge, interest and penalty was also levied.
Authority for Advance Ruling (AAR) in the case of D.B.Zwirn Mauritius (AAR No. 879 of 2011) (Judgment date: 28 March 2011) dealt with the issue of taxability of capital gains on sale of shares by a Mauritian entity under the Income-tax Act, 1961 (the Act) or India-Mauritius tax treaty (the tax treaty). The AAR held that the applicant, holding tax residence certificate, was eligible for the tax treaty benefits. Accordingly, under Article 13(4) of the tax treaty the taxpayer is not liable to pay capital gains tax in India in respect of the transfer of shares held in an Indian company.
SC rejects claim of firms using HSD in captive units- The Supreme Court (SC) has dismissed a batch of appeals by various companies claiming credit of duty paid on high speed diesel oil used in their captive electricity generating plants. The Rajasthan high court had earlier rejected their contention in the case, Sangam Spinners Ltd vs Union of India. Their argument was that they had acquired accrued and vested right and it could not be taken away retrospectively by an Act of Parliament, in this case, the Finance Act, 2000. Since the companies were unable to pass on the burden to the customers, they would have to bear the entire burden themselves, and that too retrospectively, and therefore such a provision violated Article 14 of the Constitution (equality). The revenue authorities, on the other hand, contended that the 2000 Act was not a validating Act, but explanatory in nature in order to clarify and put in proper perspective the legal position as some tribunals had misinterpreted departmental notifications. The Supreme Court ruled that the subsequent changes made by Parliament were clarificatory and the companies were not entitled to the credit of duty.
Mumbai Income-tax Appellate Tribunal in the case of Devendra Motilal Kothari v. DCIT , has held that fees for portfolio management services are not inextricably linked with the particular instance of purchase and sale of shares and hence cannot be allowed as a deduction while computing capital gains.
Authority for Advance Rulings has rendered an important ruling in the case of Transworld Garnet Company Ltd. dealing with the issue of whether or not the non-availability of the indexation benefit under the provisions Second proviso to section 48 of the Income-tax Act, 1961 to non-residents amounts to discrimination under the India-Canada Double Tax Avoidance Agreement . After considering the various provisions of the Act and Article 24 of the tax treaty, the AAR held that the denial of indexation benefits to the applicant does not amount to discriminatory treatment under the tax treaty.
Lucknow Income-tax Appellate Tribunal in the case of Sanjiv Gupta v. DCIT , held that Circular No. 7 of 2009 dated 22 October, 2009 withdrawing the Circular No. 23 of 1969 dated 23 July, 1969 would be effective only prospectively from 22 October, 2009. The Circulars are briefly explained in the following table.
Assessing Officer’s stand that ‘provision of computation of income under Section 11′ does not contain any provision which may entitle an assessee to claim weighted deduction for any expenses incurred’ is not acceptable as Section 11 provides that the income of the Trust is to be computed on commercial basis i.e. as per normal accounting principles. Normal Accounting Principles clearly provide for deducting depreciation to arrive at income. Income so arrived at (after deducting depreciation) is to be applied for charitable purpose.
This question came up for discussion in the above mentioned case before their Lordships, and it was held that non-payment of costs, does not entail the dismissal of the suit. Order XVII rule (1) of the CPC provides that the court may, if sufficient cause is shown, at any stage of the suit, grant time to the parties or to any of them and may from time to time adjourn the hearing of the suit for the reasons to be recorded in writing. Rule (2) of this order provides that in every such case the court shall fix a day for the further hearing of the suit and shall make such order as to cost occasioned by the adjournment or such higher costs as the court deem fit.
Richter Holding Ltd v. ADIT – The Vodafone controversy continues – To determine taxability of acquisition of shares of a non-resident company holding majority shares in an Indian company by another non-resident, it may be necessary for the fact finding authority to lift the corporate veil to look into the real nature of transaction to ascertain virtual facts.
