Domestic Direct Taxation

Recent Updates

1. ITR filed by assessee in Kerala till Feb 28, 2019 to be deemed as filed within due dates

[Ref:-CBDT Order Under section 119(2) of the Income Tax Act 1961 F.No. 225/15/2019/ITA.II]

2. Norms for Angel tax relaxed; no tax on issuance of shares up to Rs. 25 crore

[Ref: Notification G.S.R. 127(E) Dated 19.02.2019]

3. Section 87A rebate increased: no tax on income upto Rs. 5 lakh

[Ref:-Budget Speech-2019]

4. Monetary limits prescribed for filing of IT appeals are made applicable to wealth tax appeals

[Ref:-Circular No. 05/2019 [F.NO. 279/Misc/M-84/2018-ITJ, Dated 05-02-2019]

5. Aadhaar-PAN linking is mandatory now which has to be completed till 31.3.2019 by the PAN holders requiring filing of Income Tax Return.

[Ref:-https://www.taxmann.com/fileopennew.aspx?id=222330000000017955&mode=home&page=ts]

6. Tax recovery from ‘Travel Khana’ isn’t on account of angel tax

[Ref:-Press Release Dated 08th Feb 2019]

Recent Judicial Pronouncements

Domestic Taxation

1. Notice issued for reassessment is invalid if assessee lost its existence
[Ref:-ACIT vs. Dharmnath Shares & Services (P) Ltd. [2018] 100 taxmann.com 416 (SC)]

2. Shares sold after holding them more than 12 months:- Assessee has option to treat gain as LTCG or Business Income
[Ref:-PCIT vs. Hardik Bharat Patel [2018] 100 taxmann.com (Bombay)]

3. HC treated gains from sale of shares as STCG in absence of repetitive transactions of sale & purchase
[Ref:-PCIT vs. Hardik Bharat Patel [2018] 100 taxmann.com (Bombay]

4. ITAT deleted Sec. 271C penalty as SBI was under bona fide belief that foreign travel also included in LTA claim
[Ref:-State Bank of India v Assistant Commissioner of Income Tax, (TDS) Jaipur [2019] 101 taxmann.com 61 (Jaipur – Trib.)]

5. No sec. 263 revision to disallow certain exp. if assessee’s entire income was eligible for sec. 80P deduction
[Ref:-Goghat Thana Large Sized Primary Cooperative Agricultural Marketing Society Ltd. v Assistant Commissioner of Income Tax, Circle -1, Hooghly [2018] 100 taxmann.com 460 (Kolkata – Trib.)]

6. CBDT’s circular can’t put a new condition for grant of a benefit available under Income-tax Act; SLP dismissed
[Ref:-Principal Commissioner of Income-tax v GEE Square Exports [2018] 100 taxmann.com 460 (Kolkata- Trib.]

International Taxation

1. There could have been no disallowance under section 40a(i) if assessee made payment to Swiss entity without deduction of tax at source under section 195 for testing services since there was no transfer of technology
[Ref: Anjani Synthetics Ltd. v Dy CIT [2019] 101 taxmann.com 136 (Ahmedabad – Trib.)]

2. Once payment has been received by Indian entity from non-resident assessee has been accepted to be at arm length price, then no further attribution of profits can be made
[Ref: ESS Advertising (Mauritius) SNC et Compagnie v Deputy Director of Income Tax [2019] 101 taxmann.com 312 (Delhi – Trib.)]

3. Where commission has been paid by assessee to non-resident foreign agents for carrying out activities outside India, neither the said payment is taxable nor it could be treated as FTS.
[Ref: Dy CIT v Mc Fills Enterprise (P.) Ltd [2019] 101 taxmann.com 212 (Ahmedabad – Trib.)]

Transfer Pricing

1. TPO cannot make adhoc deductions on the basis of man hour and cost of service per hour. TPO is bound to follow one of methods prescribed under section 92C(1) to determine Arm’s Length Price.
[Ref: CLSA India (P.) Ltd. v Dy.CIT [2019] 101 taxmann.com 388 (Mumbai – Trib.)]

2. TPO could not determine the ALP of corporate management fees as Nil on the basis that the assessee did not any benefit from the payment of said charges.
[Ref: Terex Equipment (P.) Ltd.v ACIT [2018] 100 taxmann.com 418 (Delhi – Trib.)]

3. Company having huge brand value and intangible cannot be a comparable to company involved in providing ITES services to AE
[Ref: Maersk Global Service Centre India (P.) Ltd. v ACIT [2018] 100 taxmann.com 435(Mumbai – Trib.)]

4. ALP of corporate guarantee cannot be determined on the basis of bank guarantee
[Ref: CIT(LTU) v Glenmark Pharmaceuticals Ltd [2019] 101 taxmann.com 84 (Bombay)]

5. Assessee involved in providing highly technical services like asset reconstruction and management services cannot be compared with company involved in marketing support services
[Ref: Beam Global Spirits & Wine (India) (P.) Ltd. v Dy.CIT [2019] 101 taxmann.com 118 (Delhi – Trib)]

6. Assessee involved in providing ITES services could not be compared with company involved in KPO services
[Ref: PCIT v PTC Software (I) (P.) Ltd [2019] 101 taxmann.com 117 (Bombay)]

7. TPO could not determine the ALP of management services unit charges paid by assessee to its AE as Nil on the ground that these services were duplicative in nature.
[Ref: B.G. India Energy Solutions (P.) Ltd. v Dy.CIT [2019] 101 taxmann.com 360 (Delhi -Trib.)]

8. Addition of notional interest could not be made to assessee’s ALP if the amount has been provided by assessee to enter into business transaction on its behalf to its AE
[Ref: PCIT v KSS Ltd [2019] 101 taxmann.com 357 (Bombay)]