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ITAT RULINGS 2009

AIT-2009-393-ITAT
New Skies Satellites N.V. Vs Assistant Director of Income Tax, New Delhi

Special Bench Whether on the facts and circumstances of the above mentioned cases the income from Bandwidth/transmission charges for uplinking/downlinking signals/data transmission through the use of transponders in the satellite is taxable in the hands of above mentioned foreign companies in accordance with provisions of the Income Tax Act read with relevant provisions of Tax treaties with respective countries.
Question No.1
Whether on the facts and in the circumstances of the case, the services rendered by the assessees involved in these appeals, through their satellites for telecommunication or broadcasting, amount to ‘secret process’ or only ‘process’?
Answer
On the facts and in the circumstances of the case, the services rendered by the assessees involved in these appeals through their satellites for telecommunication or broadcasting amounts to “process.”

AIT-2009-396-ITAT
M/s Tower International Pvt. Ltd Vs. DCIT, New Delhi

whenever sales tax paid by an assessee by way of damages or penalty or interest is claimed as an allowable expenditure u/s 37(1) of Income-tax Act, 1961, the assessing authority is required to examine the scheme of provisions of the relevant statute providing for the payment of such impost notwithstanding the nomenclature of the impost as given by the statute, to find whether its compensatory or penal in nature

AIT-2009-398-ITAT
M/s Vertex Customer Services (India) Pvt. Ltd Vs. DCIT, New Delhi

Assessing Officer noted in assessment order that the assessee company has entered into international transactions with its associated enterprises. Since the amount of international transaction was in excess of Rs. 5 crores, a reference was made to the Transfer Pricing Officer (TPO) to determine the arm's length price in company was in the business of running a call centre. From the financial services provided, it was noted that there was substantial loss to the assessee during the year amounting to Rs. 4.27 crores. It was explained to the TPO that this was due to certain costs related to excess capacity and the certain cost related to the year being first year of operations and also there was provision for doubtful debt amounting to Rs. 22857529/-

AIT-2009-405-ITAT
M/s Jebon Corporation India Vs. DDIT, Bangalore

the LO is securing orders in India for the non-resident company. Hence, in view of Explanation 2(c), there is a business connection in respect of asst. year 2004-05 and subsequent asst. years
part of the trading activity in respect of supplies made to Indian customers is done by the LO and is in continuation of the trading activity of the South Korean Company. This show that there is a business connection and therefore any income accruing or arising from such business connection is taxable in the hands of the South Korean Company as per the provisions of section 9(1)(i) of the I T Act.

AIT-2009-411-ITAT
M/s Baker Technical Services Private Limited vs. ITO, Mumbai

Whether a different view can be taken from the view taken already by a different Bench in the case of the assessee itself ?
Whether the standard rent fixed under the Rent Control Act can be adopted as annual value while computing the income from the property for the assessment years 2000-01, 2002-03 and 2003-04 in the case of the assessee?"

AIT-2009-412-ITAT
Mr Dharmasingh M Popat Vs. ACIT, Mumbai

the assessee received salary at Rs.13,26,000/- from the said partnership firm and also received share in profit thereof at Rs. 40,25,600/-. The assessee claimed expenses of Rs. 14.27,819/- against these incomes and arrived at an income of Rs. 39,23,780/- out of which assessee claimed Rs. 40,25,600/- as exempt u/s. 10(2A) of the Act and, hence, finally showed a net loss of Rs. 1,01,819/- under the head profits and gains of business or profession.

AIT-2009-415-ITAT
M/s. B.T. Patil & Sons Belgaum Construction Private Limited Vs. ACIT, Kolhapur

Larger Bench: Whether on facts and circumstances of the case, the appellant assessee is entitled for claiming of deduction under the provisions of section 80-IA(4) in respect of the projects undertaken?
 Whether the Tribunal has to decide an issue on the basis of the law as it stands on the day of the passing of the order?
Section 80-IA (4) (even pre-amendment) applies to a “developer”. The difference between a “developer” and “contractor” is that the former designs and conceives new projects while the latter executes the same. As the assessee was merely executing the job of civil construction, it was not eligible u/s 80-IA (4). The assessee was also not the “owner” of the facility;

AIT-2009-417-ITAT
Smt. Vilasben J. Mehta vs. ITO, Ahmedabad

deleting the addition of Rs. 15,31,000/- and Rs. 9,86,861/- on account of unexplained cash deposits u/s 68 of the IT Act, 1961.
Commissioner of Income Tax(Appeals) before accepting the additional evidences filed before him which were not filed before the Learned Assessing Officer should have confronted the same to the Learned Assessing Officer before relying on the same and deleting the addition. Thus, there was violation of Rule 46A of the Income Tax Rule by the Learned Commissioner of Income Tax(Appeals)

AIT-2009-425-ITAT
Manjula J. Shah Vs. DCIT, Mumbai

Special Bench: While computing the capital gains in the hands of an assessee who had acquired the asset transferred under gift whether indexed cost of acquisition was to be computed with reference to the year in which the previous owner first held the asset or the year in which the assessee became the owner of the asset
for the purpose of computing long term capital gain arising from the transfer of a capital asset which had become property of the assessee under gift, the first year in which the capital asset was held by the assessee has to be determined to work out the indexed cost of acquisition as envisaged in Explanation (iii) to section 48 after taking into account the period for which the said capital asset was held by the previous owner. In that view of the matter, we hold that the indexed cost of acquisition of such capital asset has to be computed with reference to the year in which the previous owner first held the asset.

AIT-2009-427-ITAT
Precision Drilling (Cyprus) Limited Vs. ADIT (International Taxation), Ahmedabad

The explanation submitted by the assessee, in our opinion, proved that the assessee has discharged his onus and has rebutted the presumptions available to the Revenue under Explanation 1 to section 271(1)(c). This explanation given by the assessee cannot be regarded to be a false explanation until and unless, in our opinion, the Revenue proves that the explanation given by the assessee is false. In our opinion, no penalty u/s 271(1)(c) can be imposed on the assessee.
even if the Tribunal has confirmed the addition does not mean that the assessee has concealed the income or has furnished inaccurate particulars of such income. When a disallowance is made merely on an estimate basis, the penalty cannot automatically be imposed

AIT-2009-432-ITAT
Jhawar Biotech Pvt. Ltd. Vs. ITO, Surat

how the deduction u/s.80-HHC should be computed in respect of receipts of DEPB received, Excise Refund and Drawback
profit element on DEPB licence will be covered by section 28(iiid) and, accordingly, by third proviso to section 80HHC(3) of the I.T. Act, 1961 as the turnover of the assessee exceeds Rs.10 crores This amount shall be excluded for the purpose of computing deduction u/s.80HHC of the I.T. Act, 1961, if condition laid down in that proviso are not satisfied . The face value of the DEPB licence will be covered u/s.28(iiib) of the I.T. Act, 1961 and, therefore, 90% thereof would be added to the export profits as per first proviso to section 80HHC(3) of the I.T. Act, 1961

AIT-2009-436-ITAT
M/s Kailash Nath & Associates Vs. ITO, New Delhi

Special Bench: Whether the receipt of Rs. 2.85 crores by the assessee from DCM for the termination of the agreement to build on the land belonging to DCM along with right to sell such portions of the super built area in the construction falling to the share of the assessee is a revenue receipt or a capital receipt?
Whether, on the facts and circumstances of the case, a sum of Rs. 2.85 crores has accrued t6 the assessee as income of the year under consideration or it was to be taxed in the year the said amount is received as held by the CIT(Appeals).?

AIT-2009-437-ITAT
M/s Intel Technology India Private Limited Vs. DCIT (LTU), Bangalore

the corresponding effect of the reduction of the expenses incurred in foreign currency from the Export Turnover be given by reducing it from the Total Turnover as well, for uniformity between the two components while computing the deduction u/s 10A of the Act.

AIT-2009-445-ITAT
M/s. Telco Construction Equipment Co. Ltd. Vs. CIT, Bangalore

Assessee paid taxes under MAT provisions u/s.115JB of the Income tax Act, 1961. While computing the profit under the MAT provisions, the three items were not added to the total profit for the relevant previous year. The first issue with regard to provision for warranty and FOC spares, whether it is an unascertained liability or not, stands now squarely covered in assessee's favour by the decision of the Hon'ble Supreme Court rejecting the SLP wherein their Lordships held that the provision for warranty under the contract with the customers is deductible while computing the total income.

AIT-2009-446-ITAT
M/s Xelo Pty Limited Vs. DCIT (International Taxation), Mumbai

As the assessee had made offshore supplies of equipment in the instant case worth Rs. 3.17 crores, the same or any part of it, in our considered opinion, cannot be considered as part of the consideration for rendition of services. As the component of supply contract and that of the rendition of services is with the same party and for common purpose, we are unable to find any logic in treating the entire amount as one composite payment attributable commonly both to the supply of equipment and rendering of services, more so when there is a specific identifiable amount relatable to the supply of equipments.
It is trite law that income accrues at the place where the title to goods passes to the buyers on the payment of price. Our view is fortified by the judgment of the Hon’ble Supreme Court in Seth Pushalal Mansighka (P) Ltd, Vs. CIT (1967) 66 ITR 159 (SC). As it is the case of offshore supply of equipment, it is axiomatic that this transaction got completed outside India. Further since; the payment was also received by the assessee in foreign–country, we are unable to find any income accruing or arising in India on this count.

AIT-2009-451-ITAT
M/s Dolphin Drilling Pte. Ltd. Vs. DCIT, Dehradun

AO has declined assessee’s claim of proper accounting of foreign transaction by observing that the assessee has claimed to have maintained its books of account in US$ and has also received revenues in US$, the assessee therefore, should have converted the business transactions in other currencies into US$ on the date of such transactions while the assessee has converted all transactions on 31.3.2004 in INR which is not in order in view of accounting principles.
Rule 115 provides for conversion of income in ‘foreign currency’ using the exchange rate on the specified date. The Rule does not require the assessee to first convert the income into USD or any other currency and subsequently convert the same into INR. Income from profits and gains of business is the culmination of the day to day business transactions. In other words, the requirement under Rule 115 to convert ‘income from profits and gains of business’ at the year end rate effectively implies that the day to day transactions are required to be converted at the year end rate.

AIT-2009-454-ITAT
M/s ARC Line (Mauritius) Vs. DDIT, (International Taxation), Mumbai.

the assessee is not liable to interest u/ 234B of the Income Tax Act, 1961 as it could not visualize that its income was taxable in India as DIT relief certificate was issued.

AIT-2009-458-ITAT
M/s Kirti Construction Vs. ITO, Baroda

The assessee, in our opinion, will be constructing the building at its own cost and will remain the owner of the building at its own without any interference from the landowner. The landowner does not have any right to share the buildings. The agreement does not envisage that the assessee will be working as a contractor or agent on behalf of the landowner. The agreement cannot be regarded to be the joint-venture or collaboration agreement. It is, in our opinion, the agreement for the sale of the land for a determined consideration under which the assessee is entitled to develop the project on the said land at its own cost in the manner in which he may decide

AIT-2009-465-ITAT
M/s. Sushila Milk Specialities Pvt. Ltd. Vs. ACIT, New Delhi

Special Bench: In view of the two decisions of the Hon 'ble Supreme Court namely Rajesh Kumar & Others vs. DCIT, 287 ITR 91 and Sahara India (Firm), 300 ITR 403, the assessment is required to be set aside to the file of the Assessing Officer to pass a fresh assessment as held in the case of Shri Rajesh Kumar vs. DCIT by ITAT in its order dated 3rd June 2008 and do not hold the assessment as time barred as held in the case of ACIT Vs. Rakesh Kumar. We, therefore, approve the view taken by the Tribunal in the case of Shri Rajesh Kumar and do not approve the decision of Tribunal in the case of ACIT vs. Rakesh Kumar

AIT-2009-467-ITAT
Besix Kier Dabhol S.A. Vs. ADIT (International Taxation)

the order passed u/s.263 has been set aside by the Tribunal. In such a case, instead of dismissing the appeal, the assessment so framed pursuant to the order u/s.263 should have been annulled. No assessment can stand when the very basis for the same, being the order u/s 263 does not survive. We, therefore, modify the finding given by ld CIT (A) and hold that in view of setting aside of the order u/s.263 by the Tribunal, the present proceedings flowing out of such order do not have legs to stand. Resultantly, the assessment so made pursuant to the order u/s.263 is set aside

AIT-2009-479-ITAT
Tata Communications Ltd. Vs. JCIT, Mumbai

Special Bench: when question is pending before the Hon’ble Bombay High Court, it is not right for the assessee to agitate same or part of the question before the Tribunal. The assessee has now to show the Hon’ble High Court that the conditions of section 80-IA are satisfied on the facts and in the circumstances of the case and that he is entitled to relief under the above section. As far as Tribunal is concerned, question has already been decided and the Tribunal is now functus officio, so far as deduction of eligibility of section 80-IA is concerned. It is for their Lordships of Hon’ble Bombay High Court to adjudicate on the correctness or otherwise of the decision of the Tribunal. In this view of the matter, as also bearing in mind the entirety of the case and the preceding discussions, we are of the considered view that the rectification petition filed by the assessee under section 254(2) of the Act must fail. No interference is thus called for

AIT-2009-480-ITAT
Mahindra & Mahindra Limited vs. DCIT, Mumbai

Special Bench: (i) Any party can raise additional ground on the question of limitation before the Tribunal for the first time, as it is a legal ground not requiring the investigation of the fresh facts.
(ii) Sec. 195(1) casts duty on the person responsible for paying or crediting to the account of a non-resident any sum chargeable to tax under this Act for deducting tax at source. On failure to deduct or pay to the Government after deducting, the person responsible is treated as assessee in default under section 201(1).
(iii) "Any such person" referred to in section 201(1) extends not only the person ducting and failing to deposit the tax but also the person failing to deduct the tax at source.
(iv) Where no time-limit is prescribed for taking an action under the statute, the action can be taken only within a reasonable time by harmoniously considering the scheme of the Act.

AIT-2009-487-ITAT
M/s C.B. Richard Ellis Mauritius Limited Vs. DDIT, (International Taxation), New Delhi

for claiming any debt as a bad debt, one has to satisfy following two conditions:(1) Debt is written off as bad debt in the Profit and Loss Account by making corresponding entry in the party account.
(2) Debt is taken in to account in computing the income of the assessee of the previous year in which debt is written off or in earlier previous year

AIT-2009-489-ITAT
Vodafone Essar Cellular Limited Vs. ACIT, Kochi

whether this margin of the distributors is commission or brokerage coming within the purview of section 194H of the Income Tax Act, 1961 or the margin is a discount as claimed by the assessee-company which is outside the purview of that section. The questions whether the assessee is in default and is liable to proceed under section 201(1) and 201(1A) are only consequential to the finding whether the margin of the distributors is commission/ brokerage or discount.

ITAT Rulings   Page1 Page2


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