INCOME TAX
ITAT Deletes Fees Related To The Period Of Tax Deduction Prior To June 1, 2015
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the levy of late fees of INR 40,000 related to the period of the tax deduction prior to 01.06.2015.The two-member bench of Rahul Chaudhary (Judicial Member) and M. Balaganesh (Accountant Member) has relied on the decision of Karnataka in the case of Fatehraj Singhvi Vs. Union of India in which it was held that the notice under Section 200A of the Income Tax Act for computing late fee under Section 234E of the Income Tax...
Any sum paid to an employee as a bonus or commission to be allowed as a deduction: ITAT Delhi
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that any sum paid to an employee as a bonus or commission for services rendered has to be allowed as a deduction.The bench of Saktijit Dey has observed that the reasonableness of the payment or the adequacy of services rendered by the employee is not relevant factors in deciding the allowability of a deduction.The disabling provision of section 36(1)(ii) provides that "if the sum so paid is in lieu of profit or dividend," it...
Contract For Extended Warranty Of Bentley Cars, Entered Into By Exclusive Dealer With Indian Customers, Does Not Constitute A Dependent Agent PE In India: ITAT
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that contract for extended warranty of Bentley Cars, entered into by an exclusive dealer with the Indian customers, does not constitute a dependent agent PE in India. The Bench of Saktijit Dey (Judicial Member) and Dr. Brr Kumar (Accountant Member) noted that the assessee/exclusive dealer of Bentley Cars purchased the extended warranty from a unit of the Bentley Pre-Administrative Services, which it further sold to...
Liquidated Damages Received By Shipping Company, Not Exempt Under 'Tonnage Tax Scheme': ITAT
The Visakhapatnam Bench of theIncome Tax Appellate Tribunal (ITAT)has ruled that liquidated damages received by a shipping company cannot be included in computation of tonnage tax and therefore, they are not exempt under the 'Tonnage Tax Scheme', as provided under Chapter XIIG of the Income Tax Act, 1961. The bench of Duvvuru RL Reddy (Judicial Member) and S Balakrishnan (Accountant Member) held that the liquidated damages are not directly received from the shipping activity and that...
Income Tax Exemption Eligible On Activities Undertaken For Advancement Of General Public Utility: ITAT
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that the income tax exemption under Section 11 of the Income Tax Act is eligible for activities undertaken for the advancement of general public utility.The two-member bench headed by Pramod Kumar (Vice President) and Rahul Chaudhary (Judicial Member) has observed that the activities of the appellant were directed toward the benefit of investors and potential investors, forming part of the general public and not limited to the...
Tax Cases Weekly Round-Up: 16 October To 22 October, 2022
Supreme Court Valuation Of Shares For The Purpose Of Gift Tax Should Take Into Consideration Limitation And Restrictions: Supreme Court Case Title: Deputy Commissioner of Gift Tax Versus M/s BPL Limited Citation: 2022 LiveLaw (SC) 848 The Supreme Court has held that the valuation of shares for the purpose of gift tax must take into consideration the limitations and restrictions. The division bench of Justice Sanjiv Khanna and Justice J.K. Maheshwari has observed that the...
ITAT Deletes Disallowance u/s 14A Against Toyota As No Exempted Income Was Earned
The Banglore Bench of the Income Tax Appellate Tribunal (ITAT) has deleted the disallowance under section 14A of the Income Tax Act against Toyota as no exempted income was earned.The two-member bench headed by N.V. Vasudevan (Vice President) and Padmavathi S (Accountant Member) has noted that the AO has made the disallowance on the basis that the investment could potentially earn income, which substantiates the contention of the assessee that in the year under consideration the assessee has not...
Statutory Authorities, Professional Bodies Like ICAI Entitled To Income Tax Exemption If Amounts Charged By Them Are Nominal To Cover Costs : Supreme Court
The Supreme Court has pronounced a significant judgment on the scope of exemption for "charitable purposes" under Section 2(15) of the Income Tax Act 1961 in relation to statutory authorities and professional bodies.With effect from 01.04.2009, after the Finance Act 2009, a proviso was added to the section to state : "Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of...
Vodafone Idea Not Liable To Deduct TDS On Discount Allowed To Distributors On Purchase Of Prepaid SIM Cards And Recharge Vouchers: ITAT
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that Vodafone Idea is not liable to Deduct Tax at Source (TDS) on the discount allowed to the distributors on purchase of prepaid SIM Cards and recharge vouchers. The Bench of Vikas Awasthy (Judicial Member) and M. Balaganesh (Accountant Member) held that since the relationship between the assessee Company and the distributors was only that of a principal to principal and not that of a principal to agent, therefore,...
Advancement Of General Public Utility Won't Be "Charitable Purpose" For Income Tax Exemption If It Is Done As Business : Supreme Court
In a significant judgment, the Supreme Court has held that entities created with the object of advancing general public utility cannot seek exemption under the Income Tax Act 1961 under the head "charitable purposes" if they are engaging in any trade, business, commerce or providing any service for any consideration.However, in the course of carrying out the general public utility, the assessee can engage in incidental trade or business or provide services for consideration and can generate...
Payment Made By Assessee To Non-Resident Supplier Amount To "Royalty" And Liable To Deduct TDS: ITAT
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that the payment made by the assessee to the non-resident supplier would amount to royalty and there is an obligation on the part of the assessee to deduct tax at source.The two-member bench of T.R. Senthil Kumar (Judicial Member) and Annapurna Gupta (Accountant Member) has observed that the introduction of Explanation 5 in Section 9(1)(iv) of the Income Tax Act has enlarged the scope of the definition of "Royalty".As per...
IT Exemption To Defence Personnel Invalidated From Service Due To Disability: ITAT Rejects Revenue's Contention
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that income tax exemption shall be available to Defence Forces personnel who have been invalidated from service on account of bodily disability while in service.The two-member bench of Chandra Mohan Garg (Judicial Member) has deleted the addition made by the A.O. on account of disability pension not exempt from tax as the assessee had taken premature retirement at his own request.The appellant/assessee is a retired employee of...