INCOME TAX CASE-LAWS

SECTION 2(47)

CAPITAL GAINS – TRANSFER

Firm/partner, in case of : Where assessee-company made capital contribution in a partnership firm in form of land, shares and securities, since said firm was genuine which carried on its business activities regularly, even though in such a case, aforesaid contribution constituted transfer of capital asset, yet it did not result in any capital gain subjected to capital gain tax - [2017] 77 taxmann.com 350 (Bombay)

SECTION 14A

EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME

Where an assessee claims that no expenditure has been incurred by him in relation to exempt income, Assessing Officer can resort to Rule 8D only if having regard to accounts of assessee he is not satisfied with correctness of claim of assessee that no expenditure has been incurred by him in relation to income which does not form part of total income under Act - [2017] 78 taxmann.com 65 (Punjab & Haryana)

SECTION 28(i)

BUSINESS LOSS/DEDUCTIONS - ALLOWABLE AS

Forward exchange contracts : No disallowance of loss under forward contract just because assessee had Nil export turnover due to ban on export - [2017] 78 taxmann.com 17 (Visakhapatnam - Trib.)

SECTION 50C

CAPITAL GAINS - SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES

Leasehold rights : Section 50C will not be applicable while computing capital gains on transfer of leasehold rights in land and buildings - [2017] 77 taxmann.com 308 (Bombay)

SECTION 69B

UNDISCLOSED INVESTMENTS

Unaccounted purchases : Once raw material quantity that did not appear in regular books of account was discovered and could be inferred as a result of search, onus lay upon assessee to furnish full particulars as to cost of that raw material or average cost - [2017] 77 taxmann.com 345 (Delhi)

SECTION 69C

UNEXPLAINED EXPENDITURE

Bogus purchases : Where purchases of paddy recorded by assessee matched with purchases as per report of Agricultural Marketing Committee (AMC), Assessing Officer could not disallow a part of said purchases on ground that assessee failed to maintain proper books of account - [2017] 78 taxmann.com 17 (Visakhapatnam - Trib.)

SECTION 92B

TRANSFER PRICING - MEANING OF INTERNATIONAL TRANSACTION

Brand promotion/Marketing expenses : Matter was remanded back to Tribunal to decide whether reporting of AMP expenditure in regard to outbound business constituted an international transaction for which ALP determination was necessary - [2017] 78 taxmann.com 14 (Delhi)

SECTION 92C

TRANSFER PRICING - COMPUTATION OF ARM'S LENGTH PRICE

Comparables and adjustments/Comparables – Illustrations : A foreign company can be taken as a tested party provided assessee makes sure that necessary relevant information about tested party and sufficient data in relation to comparables is furnished to tax administration in order to verify selection and application of transfer pricing method - [2017] 77 taxmann.com 352 (Hyderabad - Trib.)

Comparables and adjustments/Comparables – Illustrations : In case of assessee-company rendering software development services to its AE, a company developing its own software products and a company which outsourced major portion of its work, could not be accepted as comparables while determining ALP - [2017] 77 taxmann.com 352 (Hyderabad - Trib.)

Comparables and adjustments/Adjustments - Allocation of cost : Where TPO made ALP adjustment by taking value of SAP implementation charges paid by assessee to its AE at nil, in view of fact that in succeeding year TPO had submitted a remand report to Commissioner (Appeals) accepting genuineness of payment in question, impugned adjustment was to be set aside and, matter was to be remanded back for disposal afresh -[2017] 78 taxmann.com 15 (Bangalore - Trib.)

SECTION 132

SEARCH AND SEIZURE

Statement made during search : Where statements recorded were corroborated by materials, there was no justification to reject statements, which merely explain documents seized - [2017] 77 taxmann.com 345 (Delhi)

SECTION 144C

TRANSFER PRICING - REFERENCE TO DRP

Scope of : In respect of proceedings which come under ambit of section 144C, there can be no application of section 153 - [2017] 78 taxmann.com 16 (Chennai - Trib.)

Scope of : Where DRP in terms of order passed under section 144C(5) gave directions to TPO and not to Assessing Officer, it resulted in a procedural defect and not a jurisdictional error that could invalidate proceedings in toto - [2017] 78 taxmann.com 16 (Chennai - Trib.)

SECTION 220

COLLECTION OF TAX AT SOURCE - WHEN TAX PAYABLE & WHEN ASSESSEE DEEMED IN DEFAULT

Stay of demand : Where factors that assessee had very little liquid income but had sufficient assets in form of immovable property were not considered by revenue while passing stay order and bank accounts of assessee were also hastily attached, order as to reconsidering stay application was justified - [2017] 78 taxmann.com 9 (Madras)