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ITAT RULINGS 2011

AIT-2011-234-ITAT
Tata Power Co. Ltd. Vs. Addl. CIT, Mumbai

the question of setting off brought forward long term capital loss arises only after the income under the head capital gains is computed and that the processing in computing the income under the head capital gains must also taken into account section 54EC as well

AIT-2011-235-ITAT
M/s. Symantec software Solutions Private Ltd. Vs. ACIT, Mumbai

the margin of the assessee on international transaction is relevant and not the percentage of the AEs revenue in remunerating the assessee. The income from international transaction is computed having regard to only ALP and nothing else. Therefore, the arguments advanced by the assessee that the remuneration for marketing support services is more than 60% of the sale revenue of the AE is totally irrelevant because the ALP is a deemed price as, if the transaction between the two unrelated and uncontrolled parties. The price is compared in the contest of margin/profit of the assessee in relation to international transaction and not the share in the revenue of the AE. If net revenue of the AE is negative then the assessee would get no remuneration, which is however, irrelevant for the purpose of ALP determination. Thus, what is relevant is the margin/profit the assessee earned from international transaction and comparison of the same with the uncontrolled transactions.

AIT-2011-236-ITAT
Gajendra Kumar T Agarwal Vs. ITO, Mumbai

the assessee was indeed eligible for setting of losses of business of dealing in derivatives, incurred in the assessment years prior to the assessment year 2006-07, against the profits of the same business in assessment year 2006-07.

AIT-2011-239-ITAT
M/s. LG Asian Plus Ltd. Vs. ADIT (International Taxation), Mumbai

CIT(A) was not justified in holding that income from Index based or non-Index based derivatives be treated as ‘business income’, whether speculative or non-speculative. The impugned order is, therefore, set aside by holding that income from derivative transaction resulting into loss of Rs.11.27 crores is to be considered as short-term capital loss on the sale of securities which is eligible for adjustment against short-term capital gains arising from the sale of shares.

AIT-2011-241-ITAT
WSA Shipping (Bombay) Pvt. Ltd. Vs. ADIT (International Taxation), Mumbai

the parameters laid down in Sec. 163(1)(c) of the Act are satisfied. Under the above provisions agent includes a person from or through whom the non-resident is in receipt of any income, whether directly or indirectly. The appellants based on the debit notes raised by the non-resident make payment for transhipment of cargo. Thus the non­resident is in receipt of income from the appellant.

AIT-2011-243-ITAT
M/s. Louis Berger International Inc. Vs. DDIT (International Taxation), Hyderabad

reimbursable expenses being received in connection with the rendering of consultancy services is not taxable as ‘fees for technical services’ in accordance with clause (vii) of sub-section (i) of Section 9 of the I.T. Act, 1961 read with Part 4 of Article 12 of the DTAA with USA.

AIT-2011-244-ITAT
Bombay Real Estate Development Company Private Limited Vs. Assistant / Deputy Commissioner of Income Tax, Mumbai

Whether the CIT(A) erred in directing the AO to allow the deduction u/s 80-IB(10) to the assessee as allowable to a developer and builder for the Poisar Housing Project at Kandivali (E). - Whether the receipts of sale proceeds of development right would amount to income eligible for deduction u/s. 80-IB. - Whether mere sale of development rights would equate to activities of developer and builder eligible for deduction u/s. 80-IB. - Whether the assessee was entitled to deduction u/s. 80-IB(10) even though the development project was started prior to 01.10.1998

AIT-2011-245-ITAT
M/s. Laxmi Jewel Pvt. Ltd. Vs. ITO, Mumbai

the tax effect in this case if only Rs. 2,07,512/-. As per Instruction No. 3 of 2011 dated 09.02.2011 appeal before appellate Tribunal can be filed where the tax effect exceeds the monitory limit of Rs. 3,00,000/-. However, considering the similar situation where tax limits were modified by the CBDT Instruction No. 5 of 2008 the Hon'ble jurisdictional High Court in the case of CIT vs. Madhukar K. Inamdar (HUF) (supra) held that the circular will be applicable to the cases pending before the court either for admission or for final disposal. In view of the order of the jurisdictional High Court we hold that Instruction No. 3 dated 09.02.2011 is applicable for the appeal preferred by the Revenue. Therefore, the appeal is dismissed on the issue of tax effect involved.

AIT-2011-246-ITAT
M/s. ST Microelectronics Private Limited Vs. CIT, New Delhi

addition made on account of adjustment recommended by the TPO in the arms length price of the international transactions entered by the assessee with its associate enterprises. - The assessee has not acquired any ownership in the alleged license and the license’s self life is less than two years. The nature of assessee’s business is such that which required computer software. Therefore, the expenses incurred by the assessee for obtaining the license to use the software is to be treated as revenue expenditure.

AIT-2011-248-ITAT
Bechtel International Inc., USA Vs. ADIT (International Taxation), Mumbai

the sustenance of disallowance of expenses of Dabhol Power Project of Rs.1,52,87,952/-.the assessee has proved that the assessee has revived its business. Mere inactivity for a limited period does not mean that the assessee’s business ceased to exists or that it did not carry on business at all.

AIT-2011-251-ITAT
M/s Arts Beauty Exports Vs. DCIT, New Delhi

Assessee has demonstrated that finished product is a commercially “distinct commodity i.e. 5 indoor games”, which are very popular in foreign countries. It is pleaded that individual components are ordered as raw/ semi-finished components, which are carved, polished, finished putting various emblems and designs thereon. Thereafter the requisite games are polished, packed in different packings and the finished product works as a distinct and separate commercial commodity i.e. complete set of 5 games whereas purchases are for different items. The scope and meaning of words “manufacture and production of article or thing”, as used in Section 10B has close relationship with the definition of “manufacture” in SEZ Act and the meaning referred to in Foreign Trade Policy of India. Section 10B, SEZ Act and Foreign Trade policy are mutually interdependent and the meaning of these words is to be taken in harmonious backdrop and not in contradictory context

AIT-2011-255-ITAT
KRA Holding & Trading P. Ltd. Vs. DCIT, Pune

whether the income earned on sale of shares is to be assessed under the head profits and gains of business or profession’ or under the head capital gains’ - the activity amounting to ‘an adventure in the nature of trade’. Therefore, the securities the Portfolio management activity is an investment activity and neither the business activity nor in question are held to be the investments by the Tribunal in the first round and consequently, when such securities are transferred by way of sale, the resultant gains have to be dealt with as per the provisions of section 48 of the Act.

AIT-2011-256-ITAT
M/s. A C M Shipping India Ltd. Vs. ADIT (International Taxation), Mumbai

The appellant is ACM Shipping India Limited, is engaged in the business of ship broking and arranges for transportation of cargo from India to other countries. The appellant is a subsidiary of ACM Shipping Ltd. is a foreign company incorporated in UK-AO found that ACM UK is the holding majority of the shares of the appellant. The appellant was also procuring business for ACM UK and that the activities of the appellant were carried out wholly for the ACM UK and therefore, the Indian company becomes agency PE of the UK company as per article 5 of the Indo-UK DTAA. Hence the profits attributable to Indian operations are taxable in India. Accordingly the appellant herein was directed to deduct tax at source before making payments to ACM UK. CIT(A) held that there is no accrual of income to the non-resident in India.

AIT-2011-263-ITAT
Gujarat Information Technology Fund Vs. ITO, Ahmedabad

the investment in F.D. does not violate any of the provisions either under SEBI guidelines or of the trust-deed. In fact there is no express prohibition of investment in FD as per regulation 12(d). Therefore, as per above discussion, we hold that ld. CIT(A) was justified in granting exemption u/s 10(23FB) on interest income of Rs.75.56 lacs earned from bank deposits

AIT-2011-264-ITAT
Shri Kailashpati Gupta Vs. ITO, Mumbai

The AO referred to the fact that the Singapore Tax Authorities have informed the Indian Tax Authorities that the donor had not disclosed the fact of his having an NRI account with IOB, Nariman Point, Mumbai and, therefore, the genuineness and credit worthiness of the alleged donor had not been established. The assessee was examined in the course of assessment proceedings by the Assessing Officer and after such examination the Assessing Officer was of the view that the assessee was not in a position to establish relationship with the donor. Further the AO also found that from the very same donor four family members of the assessee had also received gifts. The AO was of the view that there was no blood relationship between the donor and the donee. For all the above reasons the AO treated the gifts in question as bogus and added the value of the gift as unexplained cash credit under section 68 of the Act

AIT-2011-265-ITAT
M/s. Rudraksh Developers Vs. ITO, Baroda

(i) Whether the Id. CIT(A) erred in allowing the deduction u/s 801B(10) to the assessee, who was not granted approval by the local authority to carry on the business of an undertaking developing and building housing projects, in contravention of a plain reading of section 80IB(10) r.w.s. 80IB(1), Explanation to section 80IB(10) and rule 18BBB.

AIT-2011-270-ITAT
Exxon Mobil Company India P. Ltd. Vs. DCIT, Mumbai

The assessee is a company of the Exxon Mobile Corp. Group of US and is responsible for information dissemination, maintaining customer relationship and market development for its AE Exxon Mobile Chemical Co. USA. It is also providing application research and technical services and back office support services to the AE.

AIT-2011-273-ITAT
M/s. Dalal Broacha Stock Broking Pvt. Ltd. Vs. Addl. CIT, Mumbai

Special Bench; the payment of commission of Rs.1.20 crores to the three working directors was in lieu of dividend and the same is not allowable as deduction under section 36(1)(ii). - the payment of commission to the three director employees had been rightly considered by the authorities below under the provisions of section 36(1)(ii) and that the provisions of section 37(1) will not be applicable in such cases

AIT-2011-277-ITAT
Yahoo India P. Ltd. Vs. DCIT, Mumbai

the payment made by assessee in the present case to Yahoo Holdings (Hong Kong) Ltd. was for services rendered for uploading and display of the banner advertisement of the Department of Tourism of India on its portal. The banner advertisement hosting services did not involve use or right to use by the assessee any industrial, commercial or scientific equipment and no such use was actually granted by Yahoo Holdings (Hong Kong) Ltd. to assessee company. Uploading and display of banner advertisement on its portal was entirely the responsibility of Yahoo Holdings (Hong Kong) Ltd. and assessee company was only required to provide the banner Ad to Yahoo Holdings (Hong Kong) Ltd. For uploading the same on its portal. Assessee thus had no right to access the portal of Yahoo Holdings (Hong Kong) Ltd. and there is nothing to show any positive act of utilization or employment of the portal of Yahoo Holdings (Hong Kong) Ltd. by the assessee company. the payment made by assessee to Yahoo Holdings (Hong Kong) Ltd. for the services rendered for uploading and display of the banner advertisement of the Department of Tourism of India on its portal was not in the nature of royalty but the same was in the nature of business profit and in the absence of any PE of Yahoo Holdings (Hong Kong) Ltd. in India, it was not chargeable to tax in India. Assessee thus was not liable to deduct tax at source from the payment made to Yahoo Holdings (Hong Kong) Ltd. for such services and in our opinion, the payment so made cannot be disallowed by invoking the provisions of section 40(a) for non-deduction of tax

AIT-2011-278-ITAT
IBM India P. Ltd. Vs. DCIT, Bangalore

CIT (A) had erred in denying the claim of relief u/s 10A of the Act on account of non-maintenance of separate books of account; - (2) the Ld. CIT (A) erred in holding that the assessee is ineligible to claim relief u/s 10A of the Act in respect of work sub-contracted as the assessee had provided disclaimers to such contractors etc.,

AIT-2011-282-ITAT
EDS Electronics Data Systems India (P) Ltd. Vs. DCIT, New Delhi

where all facts regarding the claim have been furnished and there is no averment of falsity in the facts, penalty cannot be levied merely because a claim has been made even if the claim is found to be wrong by the assessing authority. There is no averment in this case that any false fact or wrong fact has been furnished by the assessee. The issue is only as to whether deduction u/s 80HHE is admissible on interest income or to put it differently as to whether interest income forms a part of “profits of business”. the facts of this case do not warrant levy of penalty.

AIT-2011-287-ITAT
M/s Taj T V Ltd. Vs.
ADIT (International Taxation), Mumbai

the assessee is entitled to interest under section 244A of the Act in respect of excess payment of tax in response to the order of the Assessing Officer under section 201 read with sections 195, 201(1A) and 250 of the Act.

AIT-2011-288-ITAT
M/s Southend Enterprises Pvt. Ltd. Vs. ITO, New Delhi

There is no evidence on record that the assessee received any amount over and above the consideration stated in the registered sale deeds. Section 48 of the Act regarding mode of computation provides that the computation of capital gains shall be made on the basis of full value of the consideration received or accruing as a result of the transfer of the capital asset. The words used are the “consideration received and accruing” and not the words “fair market value”. Therefore, in absence of any evidence that the consideration actually received by the assessee was more than the consideration mentioned in the sale deeds, the computation of capital gains could not be made on the basis of the fair market value of the property.

AIT-2011-296-ITAT
Shri Sachin R Tendulkar Vs. ACIT, Mumbai

the income received by the assessee from modelling and appearing in T.V. commercials and similar activities can be termed as income derived from the profession of “an artist”. As admitted by the ld. D.R., the assessee can have more than one profession. Therefore, there is no bar on the part of the assessee to have its second profession as an artist apart from playing cricket. In this view of the matter, we are of the considered opinion that the amount of Rs. 5,92,31,211/- received by the assessee amounts to income derived by the assessee in the exercise of his profession as an artist and therefore entitled to deduction u/s 80RR of the Act.

AIT-2011-297-ITAT
M/s iPolicy Network Pvt. Ltd. Vs. ITO, New Delhi

A bare reading of the pre amended proviso will clearly reveal that in a case where more than one price is determined by the most appropriate method, the arm’s length price shall be taken to be the arithmetical mean of such prices, or at the option of the assessee, a price which may vary from the arithmetical mean for an amount not exceeding 5% of such arithmetical mean. The arithmetical mean in the present case is 15.64% and by adopting the same, the arm’s length price has been determined at Rs. 15,08,43,128/-. The arithmetical mean in the present case has been computed on the basis of three comparables, therefore, it is a case where more than one price is determined by the most appropriate method which is TNMM. If it is so, then, 5% of a price which is determined by calculating the arithmetical mean is to be taken as the relevant difference for computing the benefit of safe harbour of +/- 5%. In other words, the safe harbour has to be computed with reference to arm’s length price determined by the TPO

AIT-2011-299-ITAT
Patni Computer Systems Ltd. Vs. DCIT, Pune

the assessee was entitled to set-off of losses sustained by the 10A eligible units against the normal business income.- the mere fact that the requisite permissions from STPI refer them as expansions of the existing units, would not dis-entitle the assessee from the claim of deduction under section 10A of the Act.

AIT-2011-304-ITAT
Mr Hitesh Satishchandra Doshi Etemia Vs. JCIT, Mumbai

Whether CIT(A) has erred in treating the business income on account of trading in shares as short term capital gain by applying the share holding period for short term capital gain as more than 30 days but less than 1 year.

AIT-2011-313-ITAT
Prakruti Constructions Pvt. Ltd. Vs. ITO, Mumbai

CIT was not justified in not following the decision of the Special Bench of the Tribunal in Brahma Associates (supra) and has further erred in violating the Rule of Judicial Discipline as it is settled law that the decision of the jurisdictional Tribunal or Special Bench of the Tribunal and the jurisdictional High Court is binding on the authorities working under that jurisdiction. In this view of the matter, we are of the view that it is a case of mere change of opinion as to the true construction of the provision, could not also give rise to “reason to believe” that income had escaped assessment , and, therefore, the proceedings initiated under sect ions 147/148 of the Act are invalid and consequently the order of the re-assessment passed by the AO is annulled.

AIT-2011-322-ITAT
Star Cruise India Travel Services Pvt. Ltd. Vs. ADIT (International Taxation), Mumbai

tax is not deductible at source under section 195 of the Act, on payments made to Star Cruise Management Limited, Isle of Man, out of sale proceeds of cruise tickets booked by the assessee, and, therefore, consequential levy of tax and interest under section 201(1) and 201(1A) by the Assessing Officer was not justified.

AIT-2011-323-ITAT
M/s Deloitte Consulting India Pvt.
Limited Vs. DCIT, Hyderabad

the assessee is a company which derives income from Software Development and IT Enabled Services. For the assessment year under consideration, it has filed the return of income on 20-10-2004 showing income of Rs.4,68,64,880/-. During the previous year, the assessee has entered into International transactions with its associated enterprises.

AIT-2011-324-ITAT
Sanjay Gala Vs. ITO (International Taxation), Mumbai

In the assessment order, the AO had not treated the bonus shares as foreign exchange assets and had not allowed the benefits available u/s 115C of the Act. - the bonus shares acquired by the assessee are covered by section 115C(b) of the Act, and the same are eligible for benefit u/s 115F of the Act.

AIT-2011-341-ITAT
Shin Satellite Public Co. Ltd. Vs. DDIT (International Taxation), New Delhi

the service charges received by the assessee from various TV channels on account of providing facility of broadcasting their programmes through the transponders located in the satellites are not liable to be taxed as royalty in India.

AIT-2011-349-ITAT
M/s. L&T Transportation Infrastructure Limited Vs. ITO, Chennai

the assessee is eligible for deduction u/s.80-IA only in respect of road business income which are derived from developing operating and maintaining road and income which were derived by the assessee from roadside amenities are not allowable as deduction u/s.80-IA of the Act. - CIT(A) was right in allowing depreciation claim of the assessee on project assets at the rate of 10% applicable to building.

AIT-2011-350-ITAT
M/s. MSK Projects (India) Ltd. Vs. ACIT, Baroda

The AO simply disallowed the interest because the deduction was found not allowable.The assessee declared all the particulars in the balance sheet and from there itself the AO made disallowance out of the interest. No finding has been given by the AO that the return and the particulars filed by the assessee were inaccurate, erroneous or false. It is settled law that on mere making of claim which is not sustainable at law, by itself will not amount to furnishing of inaccurate particulars regarding income of the assessee

AIT-2011-357-ITAT
M/s. Summit Securities Limited Vs. DCIT, Mumbai

Special Bench: Whether the AO was right in adding the amount of liabilities being reflected in the negative net worth ascertained by the auditors of the assessee to the sale consideration for determining the capital gains on account of slump sale - the reference to the Special Bench cannot be withdrawn merely for the reason that the Hon’ble High Court has admitted the identical question of law in another case.

AIT-2011-360-ITAT
M/s DHL Operations BV, Netherlands Vs. JDIT (International Taxation), Mumbai

merely because the assessee has made a bonafide claim, and the Revenue has rejected the claim on a different legal interpretation, a penalty u/s 271(1)(c) cannot be levied. Thus we uphold the contention of the assessee that there is no furnishing of inaccurate particulars of income in this case.

AIT-2011-367-ITAT
Rajesh Kr. Drolia Vs. DCIT, Kolkata

Special Bench: Whether Ld. CIT(A) erred in law as well as in fact in allowing deduction u/s. 80-IB to the assessee on the income earned from ‘job work’ which comprises of repairs and maintenance? - Whether Ld. CIT(A) erred in law as well as in fact in treating the income from repairing and maintenance at par with the income from manufacturing for the purpose of Sec.80-IB?”

AIT-2011-373-ITAT
Anchor Health and Beauty Care Pvt Ltd. Vs. ACIT, Mumbai

Assessing Officer noticed that the assessee has paid a sum of Rs 11,71,826 as accreditation panel fees to British Dental Health Foundation UK, but has not deducted tax at source from the same.

AIT-2011-374-ITAT
TII Team Telecom International Pvt. Ltd. Vs. ADIT (International Tax), Mumbai

the AO wrongly held that the amount of Rs 3,00,44,506 received by the assessee for the supply of software is in the nature of ‘royalty’ which is liable for taxation in India. - the payment for software, by no stretch of logic, can be treated as a payment for “a process” liable to be taxed as royalty.

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