Payments made for the purchase of the software: Scope of the definition of the term ‘Royalty’ as per India-USA tax treaty.

Sandvik Machining Solution vs. ACIT, Pune Outcome: In favour of Assessee Facts The Assessee is a company incorporated in Sweden, received payments for the Information Technology support services rendered by it to an Indian entity.The Assessing Officer opined that the payment received was taxable as 'Royalty’ as per section 9(1)(vi) of the Act, as well … Continue reading Payments made for the purchase of the software: Scope of the definition of the term ‘Royalty’ as per India-USA tax treaty.

Loan advanced to a group company which is neither a registered shareholder nor a beneficial owner: Applicability of provisions of ‘deemed dividend’ under section 2(22)(e)

Khorakiwala Holdings and Investments Pvt Ltd vs. ACIT Outcome: In favour of Assessee Facts The Assessee was a holding company owning 90.31% of equity shares of the capital of M/s. CISPL and M/s. CISPL further held 99% of the equity share capital of M/s. BTPL. All these companies were a group company of M/s. Wockhardt … Continue reading Loan advanced to a group company which is neither a registered shareholder nor a beneficial owner: Applicability of provisions of ‘deemed dividend’ under section 2(22)(e)

Disallowances regarding issues not covered in limited scrutiny: Jurisdiction of an assessing officer

Shri Narendrakumar Rameshbhai Patel vs. DCIT Outcome: Partial Facts The Assessing Officer issued a notice under section 143(2) only for the investigation of mismatch of income with form 26AS.However, in the present case, the Assessing Officer converted the limited scrutiny into complete scrutiny and added the capital receipt as business receipt without obtaining any approval … Continue reading Disallowances regarding issues not covered in limited scrutiny: Jurisdiction of an assessing officer

Can the scope of a Limited Scrutiny Assessment be Expanded u/s 143(2)?

A limited scrutiny assessment is one which is undertaken by the assessing officer when he/she finds certain discrepancies in the income tax return which he/she believes need to be investigated further. In essence, when the assessing officer has reason to believe that a certain amount of income of the assessee has escaped the tax net … Continue reading Can the scope of a Limited Scrutiny Assessment be Expanded u/s 143(2)?

ITAT Bangalore Decides: Can the Differential Amount Between the Bank Deposit and the Profit and Loss Account be Treated as Undisclosed Income?

Case name: Avalappa Gopal v. ITOForum: Bangalore ITATMember: Chandra Poojari Background The AO observed on comparison of assessee’s bank statement with the Profit and Loss account furnished by the assessee that there is a difference of around INR 15.56 lakhs between the two. The AO, thus, treated the same as undisclosed income of the assessee. … Continue reading ITAT Bangalore Decides: Can the Differential Amount Between the Bank Deposit and the Profit and Loss Account be Treated as Undisclosed Income?

Unexplained Cash Credits: Who bears the burden of proof?

Section 68 of the Income Tax Act, deals with unexplained credit whose nature and source cannot be satisfactorily explained by the assessee. Section 68 is an effective tool in the hands of the assessment authorities to prevent the conversion of black money into any other amount such as share premiums or share capital and escape … Continue reading Unexplained Cash Credits: Who bears the burden of proof?

The Big Picture of Vivad Se Vishwas: A Legal Analytics Case Study

The genesis of all lawsuits lies in a cost-benefit analysis. Fighting a case would rationally only make sense if the end result was to result in a net benefit to the litigant. Usually, said determination is made on the basis of opinions formulated using traditional tools of research. Legal research, as we know it today, … Continue reading The Big Picture of Vivad Se Vishwas: A Legal Analytics Case Study

ITAT Cochin Decides: Can Repairs to Improve an Asset be Classified as Capital Expenditure?

Case name: Kovilakam Hotels Pvt. Ltd. v. ACITForum: Cochin ITATMember: George George KLawyers (Assessee): K. Kittu Background The assessee is a private limited company running a 3-star bar attached hotel. The hotel was to be re-evaluated for re-classification as a 3-star hotel, and hence, the assessee spent INR 60.25 lakhs on repair and renovationThe return … Continue reading ITAT Cochin Decides: Can Repairs to Improve an Asset be Classified as Capital Expenditure?

Gujarat High court decides: Date considerations for eligibility of deduction u/s 80IB(10)?

Case Name: Sheetal Infrastructure Private Limited vs Asst. Commissioner of Income Tax, Circle 4(1)(1) Forum: Gujarat HC Judges: Sangeeta K. Vishen, Harsha Devani Lawyers (Assessee): B S Soparkar Background The assessee was granted approval (Raja Chitthi) for its office construction project Vedika-I by the Kudsan Gram Panchayat on 16-Mar-2005.Gandhinagar Urban Development Authority (GUDA) approved the … Continue reading Gujarat High court decides: Date considerations for eligibility of deduction u/s 80IB(10)?

OECD Transfer Pricing Guidance on Financial Transactions: Need to Introspect Arm’s Length Financial Arrangements

On 3 July 2018, the Organisation for Economic Co-operation and Development (‘OECD’) released the first public discussion draft on the transfer pricing aspects of financial transactions (‘the Discussion Draft’). What was in the Discussion Draft? Clarification on the application of the principles covering the accurate delineation of financial transactions Address specific issues related to the pricing of … Continue reading OECD Transfer Pricing Guidance on Financial Transactions: Need to Introspect Arm’s Length Financial Arrangements