:Bangalore bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of Bosch Ltd. v. CIT [2009-TIOL-736-ITAT-BANG]held that the taxpayer company was entitled to claim depreciation on the skill and the know-how brought by the employees of the transferee company classified as ‘business information’ under the category of ‘other identifiable intangibles’ (goodwill) under section 32(ii) of the Income-tax Act, 1961 (the Act).
Recently, the Mumbai bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of Kotak Mahindra Bank Ltd. v. ACIT (2010-TII-ITAT-MUM-INTL) dealt with the issue of whether passing of an order by the AO is necessary for filing an appeal before the Commissioner of Income-tax (Appeals) [CIT(A)] under section 248 of the Income-tax Act, 1961 (the Act) for a declaration that no tax was deductible on such income. The Tribunal held that Section 248 of the Act does not require any order being passed by the AO as a condition precedent for filing an appeal before CIT(A) . Further, the taxpayer also fulfilled all the necessary conditions required by the provision of the Act. Therefore, the taxpayer was right in filing an appeal before the CIT (A).
ADIT v. Reliance Infocomm Ltd. – It is held that the assessee would be entitled to interest on the refund under the provisions of clause (b) of section 244A(1) of the Income-tax Act, 1961 if the refund became due under an order passed in any appeal or any other proceeding, as referred to in section 240 of the Act.
The taxpayer, a manufacturer and exporter of chemicals had more than 97.5 percent of its sales to its associated enterprise (“AE”). It benchmarked the sales to AEs under the Comparable Uncontrolled Price (“CUP”) method based on the average price charged by the AEs to the customers. The Revenue observed that the non-AEs who purchased the chemicals paid a higher price and adopted the price charged to the non-AEs as the CUP. The taxpayer stated that the AEs operated in the insulation industry and that the non-AEs were in the aerospace sector, which also resulted in the difference in pricing. It also contended that the AE came into existence for the reason that its ultimate customers required long term warranties on the product and were more comfortable dealing with an American firm than directly with the taxpayer. It was also pointed out that the ALP determined by the Revenue turned out to be higher than even the price ultimately charged to the buyers by the AEs. It also stated that the sale to non-AEs were in small quantities and non-recurrent, which cannot be compared directly with the sales to the AEs. However, the Revenue rejected taxpayer’s contentions after considering various aspects concerning the comparability of sales to non-AEs including differences in turnover, quantity, customer profiles and geography. On appeal, the Tribunal accepted the contentions of the taxpayer and ruled that there was no case for the Revenue in making the adjustments and accordingly, the sales to the AEs were held to be at arm’s length.
The Mumbai bench of Income-tax Appellate Tribunal (the Tribunal) in the case of Kishori Sharad Gaitonde v ITO (ITA No. 1561/M/09) held that for attracting the provisions of Section 50C of the Income-tax Act, 1961 (the Act) a capital gains should arise from the sale of land or building or both. However, since in the present case the taxpayer earned capital gains from the transfer of tenancy right which is not a capital asset, being land or building or both, the Tribunal held that Section 50C of the Act was not applicable to the instant case.
The Bombay High Courthas, in a recent ruling’ in the case of McKinsey and Company Inc, United States v. Union of India , held that there must be a valid and acceptable basis for making a departure from the order passed by a superior official and that the hierarchical discipline should be observed while implementing the fiscal legislation. In the absence of that, the exercise of the powers by the Assessing Officer would be arbitrary and open to challenge.
Explore the judgment on whether the tower with antenna qualifies as capital goods. Adjudicating pre-deposit directives under Cenvat Credit Rules.
The assessee, a statutory body established under the Chartered Accountants Act 1949 for regulating the profession of Chartered Accountants, obtained exemption u/s 10(23C)(iv) pursuant to a notification issued by the CBDT. The notification provided that the exemption would not apply to profits and gains of business unless the business was incidental to the attainment of the objectives of the assessee and separate books of accounts were maintained.
In a recent ruling in the case of ACIT v. Fiat India Pvt. Ltd. [2010-TII-30-ITAT–MUM-TP], the Mumbai Bench of the Income-tax Appellate Tribunal, while deciding the case in favour of the assessee, accepted various adjustments made while determining arm’s length price, as they had been sufficiently explained and evidenced by the assessee. The Tribunal also ruled that for an asset intensive industry, the appropriate Profit Level Indicator (“PLI”) shall be Profit Before Interest and Tax and not Profit before Depreciation Interest and Tax
The Mumbai Bench of the Income Tax Appellate Tribunal (‘the Tribunal’), in the case of ITO v. Zydus Altana Healthcare Pvt. Ltd. [2010-TI I-29-ITAT–MUM-TP], while deciding the case in favour of the assessee, ruled that the determination of arm’s length price should be based on the functional and asset profile of a company and profit margins earned by comparable companies should be adjusted for functional differences between the tested party and the comparables. The Tribunal also ruled that in case an assessee’s income is exempt from tax (and taxable in the overseas jurisdiction), this factor should be considered by the revenue authorities while undertaking a tax assessment since in such a situation, there is no benefit to the assessee in charging its associated enterprise a lower mark-up.
