Gist of latest important tax caselaws / judgements

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

INCOME TAX

SECTION 9

INCOME – DEEMED TO ACCRUE OR ARISE IN INDIA

The assessee, an event management company, engaged the services of a non-resident agent to bring the foreign Artists to India. The assessee paid remuneration to the Artists and commission to the agent. It deducted tax on the amounts paid to the Artists but did not deduct tax on the commission paid to the agents. - Sum paid to agent could not be deemed to have arisen from the personal activities in a contracting State in status of entertainer or athlete - Commission paid to the agent was not hit by Article 18(2) of India-UK DTAA, and, therefore, income arising to agent couldn't be said to be taxable in India - Director of Income-tax (International Taxation) v. Wizcraft International Entertainment (P.) Ltd. (2014) 45 taxmann.com 24 (Bombay)     SECTION 92C TRANSFER PRICING - COMPUTATION OF ARM’S LENGTH PRICE Comparables and adjustments/TNMM: Where in transfer pricing proceedings, TPO made adjustment to assessee's ALP in respect of software development services, in view of fact that two comparables selected by TPO were improper on account of very high turnover, impugned adjustment was to be set aside and, matter was to be remanded back for disposal afresh - Adaptec (India) (P.) Ltd. v. Assistant Commissioner of Income-tax (2014) 44 taxmann.com 236 (Hyderabad - Trib.)       SERVICE TAX SECTION 65(27) TAXABLE SERVICES - COMMERCIAL TRAINING OR COACHING SERVICES Prior to 27-2-2010, definition of 'vocational training institute' nowhere mandates that institute must be recognized or accredited; therefore, export import management and retail management and merchandising activities are exempt from service tax even if courses are not approved/affiliated - Commissioner of Service Tax, Delhi v. Ashu Exports (P.) Ltd. (2014) 44 taxmann.com 113 (Delhi)       CENTRAL EXCISE ACT SECTION 35G APPEALS - MAINTAINABILITY OF Question 'whether assessee can avail of SSI-exemption simultaneous with Cenvat credit in respect of goods' relates to interpretation of exemption notification and 'rate of duty' and not appealable before High Court - Commissioner of Central Excise, Mumbai v. BD Industries (2014) 44 taxmann.com 75 (Bombay)     SECTION 35K APPEALS - BINDING NATURE OF PRECEDENTS Where revenue had initiated coercive recovery during pendency of stay application of assessee, said proceedings were quashed and contempt proceedings against revenue were dropped after unconditional apology - Fashion Suitings (P.) Ltd. v. Superintendent, Central Excise & Service Tax (2014) 44 taxmann.com 84 (Rajasthan)

Gist of latest Important tax caselaws

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

INCOME TAX ACT

SECTION 12AA

CHARITABLE TRUST - PROCEDURE FOR REGISTRATION

Where there was no material on record to show that assessee-trust had carried out activities outside country or had applied any fund to such activities outside country, denial of registration under section 12AA was not justified - International Bhaktivedanta Institute Trust v. Director of Income-tax (Exemptions), Hyderabad (2014) 42 taxmann.com 330 (Hyderabad - Trib.)     Share application money : Where in support of receipt of share application money, assessee produced names, addresses and PAN of depositors which were sufficient to prove their identity and creditworthiness, Assessing Officer was not justified in making addition under section 68 in respect of amount in question - Commissioner of Income-tax (Central) v. Som Tobacco India Ltd. (2014) 42 taxmann.com 310 (Allahabad)     SECTION 92C TRANSFER PRICING - COMPUTATION OF ARM’S LENGTH PRICE Comparables and adjustments/CUP method : Where assessee-company engaged in manufacturing and marketing of speciality chemicals and printed circuit board, entered into cost sharing agreement with AE located abroad in terms of which certain group management cost was paid, in absence of proper examination of material brought on record in support of assessee's claim, TPO merely referring to CUP method could not determine ALP of management fee at nil - Atotech India Ltd. v. Assistant Commissioner of Income-tax, Circle -2, Gurgaon (2014) 42 taxmann.com 468 (Delhi - Trib.)

Summary of latest important tax caselaws

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

INCOME TAX ACT

SECTION 11

CHARITABLE OR RELIGIOUS TRUST - EXEMPTION OF INCOME FROM PROPERTY HELD UNDER

Depreciation : In case of assessee, a charitable trust, before computing application of 85 per cent of income under section 11, Assessing Officer has to allow claim for depreciation if requisite conditions are satisfied as allowance of said claim does not result in granting double benefit to assessee-trust - Assistant Director of Income-tax (Exemptions) –IV v. Mohamed Sathak Trust (2014) 42 taxmann.com 278 (Chennai - Trib.)     SECTION 13 CHARITABLE OR RELIGIOUS TRUST - DENIAL OF EXEMPTION Repayment of money to trustee : Where assessee, a trust registered under section 12A, received money from trustees for carrying on of its activities and those monies had been repaid to them or to their nominees as and when funds were available with assessee-trust, there was no violation of section 13(1) (c) and, therefore, assessee's claim for exemption under section 11 was to be allowed - Assistant Director of Income-tax (Exemptions) –IV v. Mohamed Sathak Trust (2014) 42 taxmann.com 278 (Chennai - Trib.)       SECTION 54 CAPITAL GAINS – PROFIT ON SALE OF PROPERTY USED FOR RESIDENTIAL HOUSE Expression 'a residential house' used in section 54 doesn't refer to a single residential house; it permits use of plural - The assessee was not attempting to evade tax when instead of one big house, assessee chose to purchase two small residential houses (out of the sales consideration) for his two sons to avoid litigation or disharmony amongst brothers - Therefore, the assessee was entitled to exemption under sec. 54 in respect of acquisition of two residential houses - Commissioner of Income-tax v. Khoobchand M. Makhija (2014) 43 taxmann.com 143 (Karnataka)       SECTION 92C TRANSFER PRICING - COMPUTATION OF ARM’S LENGTH PRICE Geographical location of market is of no consequence in judging comparability of an uncontrolled transaction under CUP method, unless market condition in which uncontrolled transactions have taken place are materially different - Held, Yes - No TP adjustment to be made on account of single transaction and unsecured loan extended to foreign subsidiary, on the reasoning that the subsidiary is under management and control of the lender-parent company, and the business risk is much lower - Bharti Airtel Ltd. v. Additional Commissioner of Income-tax (2014) 43 taxmann.com 50 (Delhi - Trib.)       SECTION 194H DEDUCTION OF TAX AT SOURCE - COMMISSION OR BROKERAGE ETC. Discount : Where Treasury Department sold stamp papers to stamp vendor and latter received certain amount from Treasury Department in lieu of subsequent sale of stamp papers to individuals, stamp vendor could not be treated as agent of Treasury Department and TDS was not liable to be deducted on above payment - Roorkee Stamp Vendor Association v. State of Uttarakhand (2014) 42 taxmann.com 271 (Uttarakhand)