BUSINESS TAXATION

Ο Sec. 271C – Volkswagen India (P.) Ltd. vs. ACIT

[2017] 81 taxmann.com 8 (Pune Trib.)

Disallowance of expenses on account of short deduction merely because applicability of sec 194J and 194C was debatable does not attract penalty u/s 271C

♦ Honda Siel Cars India Ltd. vs. CIT

[2017] 82 taxmann.com 212 (SC)

Where a new business was set up with technical knowhow provided by a Japanese company under Technical Collaboration Agreement and lump sum royalty was paid it was held that technical know-how fee paid was not only for running the business but for bringing the new business into existence and then for running and sustaining it and hence it provided enduring benefit of the business being capital expenditure

♦ Sec. 2(47) – B.A.Mohota Textiles Traders Pvt. Ltd. vs. DCIT

ITA No. 73/Mum/2002 (Bom HC)

While family arrangement/settlement does not amount to “transfer” u/s 2(47) as it only recognizes “pre-existing rights” between the parties, the same applies only to members of the families and not to transfers made by corporate entities

♦ Sec. 68 – Arceli Realty Limited vs. ITO

ITA No. 6492/Mum/2016 (Mum Trib.)

In present case, assessee had discharged his onus by proving genuineness, identity of lender, creditworthiness and source of source of such funds as per conditions laid down u/s 68 and hence addition in respect of share application money was rightly deleted based on various judicial court decisions considering the fact that AO had merely relied upon information received from investigation wing and without making any independent enquiry.

Further AO even did not provide cross-examination opportunity which itself vitiates principle of natural justice

Sec. 2(22)(e) – Clarification on trade advances / commercial transactions

Circular No. 19/2017 [F.NO.279/MISC./140/2015/ITJ] dt. 12.06.2017

CBDT has clarified that trade advances is not covered as per Sec. 2(22)(e) and accordingly directed the department to avoid filing of appeal or withdrawal of appeals.