Section 32(1) not applicable If assessee is only permitted to use trade mark /brand name of foreign collaborator with certain conditions

PrintPDF

IN THE ITAT CHENNAI BENCH ‘B’

Fenner (India) Ltd.

v.

Additional Commissioner of Income-tax

IT APPEAL NOS. 722 & 1047 (MDS.) OF 2009

[ASSESSMENT YEAR 2005-06]

APRIL 23, 2012

 

With regard to the contention of the revenue that the assessee has acquired intangible asset and therefore depreciation is allowable under section 32(1); it is opined that the provisions of section 32(1) are applicable when the assessee acquires on or after 1-4-1998 and owns wholly or partly any know-how, patents, copy rights, trade mark, etc. and uses the same for the purpose of business or profession. In this case, the assessee has not either owned wholly or partly any know-how, patents, copy rights, trade mark, etc. so as to apply the provisions of section 32(1). The assessee is only permitted to use trade mark and brand name of the foreign collaborator with certain conditions. Therefore, the provisions of section 32(1) are not applicable to the facts of the assessee’s case. 

No Capital gain tax firm if it doesn’t distribute any capital asset to retiring partners

PrintPDF

IN THE ITAT MUMBAI BENCH ‘F’

Income-tax Officer – 25(3)(4)

v.

Fine Developers

IT APPEAL NO. 4630 (MUM.) OF 2011

[ASSESSMENT YEAR 2008-09]

OCTOBER 12, 2012

 

Allocation of assets of the firm to the retiring partners is the basis for invocation of provisions of Section 45(4). In the case under consideration, neither there was any dissolution nor other event took place that had an effect of allocation of exclusive interest in any capital asset to the retiring partners. In these circumstances, FAA was justified in holding that conditions of Section 45(4) were not fulfilled. In our opinion the firm or the continuing partners were not liable to be taxed under the head ‘capital gains’, as held by the FAA. Retiring partners had relinquished their rights in the assets of the firm and in lieu of that firm had paid the retiring partners money lying in their capital account. Obviously, assessee-firm had not transferred any right in capital asset to the retiring partners rather it is the retiring partners who have transferred the rights in capital assets in favour of the continuing partners. So, even if capital gain has to be taxed it has to be in the hands of the retiring partners not in the case of the assessee-firm.

Carry forward business losses & depreciation cannot be set off against profits of an undertaking while working out claim u/s. 10B

PrintPDF

IN THE ITAT MUMBAI BENCH ‘A’

ASB International (P.) Ltd.

v.

Deputy Commissioner of Income tax, Circle-1

IT Appeal Nos. 245, 7040 to 7042 (Mum.) of 2011

[Assessment years 2005-06 to 2007-08]

JUNE 29, 2012

Since the provisions of section 10A and 10B are similar in nature and as the jurisdictional High Court decided the issue while considering the provisions of section 10B also respectfully following the above, we uphold the contention of assessee that carry forward business losses and depreciation cannot be set off to the profits of the undertaking while working the claim u/s 10B. Therefore, AO is directed to do the needful in light of the above principles laid down.

Splitting of cash payment to circumvent the provisions of law attracts Section 40A(3)

PrintPDF

IN THE ITAT JODHPUR BENCH

Vaishali Builders & Colonizers

v.

Additional Commissioner of Income-tax,

IT APPEAL NO. 391 (JODH.) OF 2011

[ASSESSMENT YEAR 2008-09]

JULY 25, 2012

 

The assessee did not produce sale deed or the agreement during the course of arguments to prove that part cash payments were made in instalments for purchase of land. If it was advance money given to the villagers for purchase of land in instalment, there was no necessity to make payment in cash in instalment. It could be paid by cheques/drafts. Further if the amount was paid at the time of execution of sale deed, the villager/seller would not accept cash payments in instalments everyday during the whole year after the execution of sale deed. Therefore, it is clear that the books of account of the assessee have been manipulated to circumvent the provisions of law. The assessee has, thus, failed to prove genuine payments in instalments to the villagers in cash. Hon’ble Supreme Court in the case of CIT v. Durga Prasad More [1971] 82 ITR 540 and in the case of Sumati Dayal v. CIT[1995] 214 ITR 801 held that “the Courts and Tribunals have to judge the evidences before them by applying the test of human probabilities after considering the surrounding circumstances.”

Regarding the business expediency, the assessee has not filed any evidence before the authorities below and nothing is clarified as to what were the other relevant factors, for which the cash payment has been made and no specific Rule has been explained u/r 6DD, which is applicable to the case of the assessee. The ld. counsel for the assessee argued that for purchase of agricultural land and payment made to the villagers, the provisions of section 40A(3) may not be applied as provided in exception to Rule 6DD. We have gone through the Rule 6DD applicable now and prior to amendment also, in which none of the exception has been provided for making payment in cash for purchase of land. It is, however, provided that above rule can be avoided if payment is made for purchase of agricultural produce which is not the case of the assessee at all. The assessee is dealing in real estate and in land and as such, it was for the assessee to establish that the cash payments have been made for business exigencies, which the assessee has failed to prove in this case. Further Rule 6DD(j) would not apply in this case because the assessee failed to prove that on the date of payment whether banks were closed either on account of holiday or strike. The ld. CIT(A), therefore, rightly noted in his finding that the assessee has not satisfied as to under which Rule, the assessee’s case would fall. In the case of Trivedi Corporation Pvt. Ltd. (supra), ITAT Ahmedabad Bench considered the issue of disallowance u/s. 40A(3) in respect of cash payment made to Gujrat State Electricity Board, which was considered as one of the undertaking of the State Government. Therefore, it was considered to be a payment made to Government Body and was falling in exception. The case law cited by the ld. counsel for assessee would not support the case of the assessee because they are based on their own facts and that the theory of real income would not apply for dealing with the issue of section 40A(3) of the IT Act. Considering the facts and circumstances and above discussion, it is very clear that the assessee consciously split up the payments in whole of the year, which is impracticable, illogical as noted above and it was done just to circumvent the provisions of law. There was no justification for the assessee to split up the transactions of crores of rupees in small payments of Rs. 15,000/- to Rs. 20,000/- everyday. Whatever plea was taken before the authorities below was not supported by any evidence. Therefore, the assessee failed to prove any business expediency or other facts for making staggered payments in cash. The case of the assessee would not fall in any exception to Rule. The assessee deliberately and consciously split up the payments in part so as to circumvent the provisions of law. We, therefore, do not find any justification to interfere with the orders of the authorities below. There is no merit in these grounds of appeal by the assessee. Same are accordingly dismissed.

To revise claim made in Original Return filing of revised return is must

PrintPDF

IN THE ITAT CHENNAI BENCH ‘C’

Assistant Director of Income-tax (International Taxation)

v.

Litostroj

IT APPEAL NOs. 1241, 1429 & 2132 TO 2135 (mad.) of 2010

[ASSESSMENT YEARS 2004-05, 2006-07 & 2007-08]

MARCH 30, 2012

 

 Assessees had filed revised computation during the course of assessment proceedings, applying Section 44BBB for computing their respective income, whereas initially they had returned their income based on the audited books of accounts. Application of Section 44BBB of the Act for computing the income was first made through such revised computation. Hon’ble jurisdictional High Court in the case of CIT v. Shriram Investments (TCA 344 of 2005 dated 16.6.2012) relying on the decision of Hon’ble Apex Court in the case of Goetze (India) Ltd. v. CIT [2006] 284 ITR 323 has clearly held that for making a claim other than what was originally made in return of income, filing of a revised return is mandatory. Neither the A.O. nor the CIT(Appeals) have considered these fundamental aspects regarding status and validity of a claim made other than through revised return. Further, assessees had also not placed before A.O. various details regarding erection charges received and break-up of the work done by them to M/s TNEB for verifying whether their billings included any fee for technic service. We are, therefore, of the opinion that the matter requires a re-visit by the A.O. for considering the issues de novo. We, therefore, set aside the orders of authorities below and remit it back to the file of the A.O. for consideration afresh in accordance with law.

Service tax paid on maintenance of garden eligible for input service credit

PrintPDF

CESTAT, BANGALORE BENCH

BASF India Ltd.

v.

Commissioner of Central Excise, Mangalore

FINAL ORDER NO. 70 of 2012

APPEAL NO. ST/560 of 2008

FEBRUARY 3, 2012

 

Landscaping of factory or garden certainly would fall within the concept of modernization, renovation, repair, etc. of the office premises. At any rate, the credit rating of an industry is depended upon how the factory is maintained inside and outside the premises. The Environmental law expects the employer to keep the factory without contravening any of those laws. That apart, now the concept of corporate social responsibility is also relevant. It is to discharge a statutory obligation, when the employer spends money to maintain their factory premises in an eco-friendly, manner, certainly, the tax paid on such services would form part of the costs of the final products. In those circumstances, the Tribunal was right in holding that the service tax paid in all these cases would fall within the input services and the assessee is entitled to the benefit thereof.

Tribunal cannot consider validity of retrospective amendment

PrintPDF

HIGH COURT OF KERALA

M. Abdul Rehuman Kunju

v.

Assistant Commissioner of Income-tax, Circle-I, Kollam

I T Appeal Nos. 50 & 63 of 2012

August 3, 2012

 

The validity of a provision cannot be considered or adjudicated upon by the Tribunal constituted under the Act. Section 260A provides for an appeal from every order passed by the Appellate Tribunal. If it involves a substantial question of law, such question of law should arise from the order of the Tribunal. If the Tribunal cannot consider the validity of a retrospective amendment, no doubt such question does not arise from its order and the jurisdiction conferred on the High Court under section 260A cannot also enable the High Court to consider such validity or otherwise.