Recent Important Tax caselaws / judgements

Below are the recent important tax caselaws related to Income tax, Service tax in brief. The citation is made available for your benefit :

INCOME TAX ACT

SECTION 12A

CHARITABLE OR RELIGIOUS TRUST - REGISTRATION OF

Trust established under State Act : Provisions of section 12A (1)(b) are mandatory and, therefore, even if a trust is incorporated under a State Act, it is bound to get its accounts audited in case its total income without giving effect to provisions of sections 11 and 12 exceeds maximum amount not chargeable to tax - Vice Chancellor, Vishweshwaraiah Technological University v. Commissioner of Income-tax, Belgaum (2014) 42 taxmann.com 205 (Panaji - Trib.)     SECTION 32 DEPRECIATION - ADDITIONAL DEPRECIATION Wind Electric Generator : Additional depreciation was to be allowed on setting up of wind electric generator to an assessee who was engaged in manufacture and sale of chemicals - Commissioner of Income-tax-I v. Diamines & Chemicals Ltd. (2014) 42 taxmann.com 193 (Gujarat)       SECTION 35 SCIENTIFIC RESEARCH EXPENDITURE Applicability of : Where assessee, engaged in business of development of vaccines and bio-pharmaceuticals, claimed product development expenditure being interest on loan and cost of consumable, in view of fact that said expenditure had nothing to do with scientific research, provisions of section 35(1) (i) or (iv) had no application to assessee's case and, thus, its claim for deduction was to be rejected - Deputy Commissioner of Income-tax, Circle -1(3), Hyderabad v. Bharat Biotech International Ltd. (2014) 42 taxmann.com 204 (Hyderabad - Trib.)       SECTION 92C TRANSFER PRICING - COMPUTATION OF ARM’S LENGTH PRICE Comparables and adjustments : Where in transfer pricing proceedings, TPO made adjustment in respect of import of raw material from AE located abroad, in view of fact that assessee had imported raw material of superior quality and, moreover, it had also obtained comparative rate of sale, in similar product manufactured by independent parties which showed that assessee was importing even at a higher rate, impugned adjustment made by authorities below was to be set aside - Merck Ltd. v. Assistant Commissioner of Income-tax, Circle -6(3) (2014) 42 taxmann.com 275 (Mumbai - Trib.) Comparables and adjustments : Where in course of transfer pricing proceedings, Assessing Officer made addition to assessee's ALP on account of notional interest charged on loan granted to AE, in absence of any independent uncontrolled transaction available on record in that regard, impugned addition was not sustainable - Crest Animation Studios Ltd. v. Assistant Commissioner of Income-tax, 11(1) (2014) 42 taxmann.com 222 (Mumbai - Trib.)       SECTION 145 METHOD OF ACCOUNTING - SYSTEM OF ACCOUNTING Project completion method v. Percentage completion method : In construction business of one concern of assessee, income may be declared by following project completion method, while in other, percentage completion method is followed - Commissioner of Income-tax –V v. Umang Hiralal Thakkar (2014) 42 taxmann.com 194 (Gujarat)       SERVICE TAX SECTION 65(19) TAXABLE SERVICES - BUSINESS AUXILIARY SERVICES Merely provision of space (with furniture) as accommodation to banks/financial institutions in premises of an automobile dealer may not amount to Business Auxiliary Services (BAS) and may constitute renting; however, some promotion activity falling under section 65(19) is done, it would amounts to BAS - Pagariya Auto Center v. Commissioner of Central Excise, Aurangabad (2014) 42 taxmann.com 371 (Mumbai - CESTAT) (LB)       RULE 2(l) CENVAT CREDIT - INPUT SERVICE Where, during relevant time, revenue demanded Service Tax under reverse charge and assessee paid service tax, then, Cenvat credit thereof cannot be denied for reason that later it was decided that service tax itself was not payable - Aksh Technologies Ltd. v. Commissioner of Central Excise, Jaipur-I (2014) 42 taxmann.com 396 (New Delhi - CESTAT)