Interest Between Indian Branch And Overseas Head Office Not Taxable: ITAT Mumbai

The Income Tax Appellate Tribunal (ITAT), Mumbai, on 8 October held that interest transactions between an Indian permanent establishment and its overseas Head Office or branches do not constitute taxable income under domestic law, as they represent transactions with oneself. Further that Section 14A of the Income Tax Act, 1961, cannot apply to such receipts. A Bench comprising Judicial Member Beena Pillai and Accountant Member Bijayananda Pruseth partly allowed cross-appeals filed by American...

Rejection Of Tax Claim Alone Cannot Mean Concealment: ITAT Mumbai Deletes ₹1.23 Crore Penalty

The Income Tax Appellate Tribunal (ITAT), Mumbai, has held that merely because a taxpayer's claim is rejected, it does not mean the taxpayer concealed facts or gave a false explanation.The tribunal made the observation while deleting a ₹1.23 crore penalty imposed on Cyqurex Systems Pvt. Ltd. under Section 270A of the Income Tax Act. The penalty arose from the company's claim of ₹7.41 crore as revenue expenditure on software development.A bench comprising Judicial Member Challa Nagendra Prasad...

ITAT Ahmedabad Deletes ₹18.76 Lakh Disallowance On Herbalife Distributor's Commission To Wife's Firm

On 1 October, the Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) held that commission paid by a Herbalife distributor to his wife's proprietary concern cannot be treated as excessive or unreasonable merely by comparing it with a different line of business. Vice-President Dr. B.R.R. Kumar and Judicial Member Rahul Chaudhary deleted the Rs. 18.76 lakh disallowance made under Section 40A(2)(b) of the Income Tax Act, 1961, holding that the reasonableness of expenditure must be...

ITAT Mumbai Upholds Capital Gains Exemption After Two Adjacent Flats Amalgamated Into One

The Income Tax Appellate Tribunal (ITAT) at Mumbai held that amalgamation of two adjacent flats into a single residential unit can qualify for capital gains exemption where the earlier flat loses its independent existence. A Bench of Judicial Member Pawan Singh and Accountant Member Girish Agrawal dismissed the appeal filed by the Deputy Commissioner of Income Tax-6(1)(2), Mumbai against the order of the Commissioner of Income Tax (Appeals) and upheld the exemptions claimed by Amit...

Captive Power Transfers: ITAT Mumbai Allows Consumer-Side Electricity Rates As Internal CUPs For Transfer Pricing

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that electricity rates actually paid by an assessee's cement manufacturing units to state power distribution companies can be used as internal comparable uncontrolled prices for benchmarking electricity supplied by its captive power plants.The dispute turned on whether the 2013 amendment bringing specified domestic transactions within the arm's-length pricing framework required captive power plants to be benchmarked against...

Live Cricket Broadcasting Fees Not Royalty Under India-UK DTAA: Delhi ITAT

The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that fees received by the England and Wales Cricket Board (ECB) for granting live broadcasting rights of cricket matches cannot be treated as royalty taxable in India under the India-UK Double Taxation Avoidance Agreement (DTAA).The bench comprising Judicial Member Vikas Awasthy and Accountant Member Krinwant Sahay also held that a ₹6.26 crore release fee received by ECB from IPL franchises for allowing English players to participate...

Customer Referral Services Without Technical Know-How Not FTS Under India-Netherlands DTAA: Delhi ITAT

The Delhi Income Tax Appellate Tribunal (ITAT) on 30 September held that commission earned for referring potential customers does not qualify as Fees for Technical Services (FTS) under Article 12(5)(b) of the India-Netherlands DTAA where the referral activity does not involve making technical knowledge, skill or know-how available to the Indian entity. A Bench comprising Judicial Member Vikas Awasthy and Accountant Member Naveen Chandra allowed Mitsubishi Electric Europe B.V.'s appeal for...

ITAT Delhi Dismisses Appeals Against Sahara Airlines After Claims Extinguished In CIRP

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has recently dismissed a batch of appeals involving Sahara Airlines Ltd., now known as Jet Lite (India) Ltd., after finding no material to show that the Income Tax Department's claims for the assessment years involved were admitted in the resolution or liquidation proceedings.The CIRP of Jet Airways (India) Ltd. was admitted by the NCLT on June 20, 2019, on an application filed by the State Bank of India under the Insolvency and...

ITAT Delhi Sets Aside Rejection Of Charitable Status On Ground Scholarships Paid In India Were For Overseas Studies

The Delhi Income Tax Appellate Tribunal (ITAT) has directed the tax department to grant Oxonian India Foundation registration as a charitable organisation and approval under Section 80G. It held that scholarships paid in India to Indian students studying abroad cannot be treated as money spent outside India merely because the students later pursue their education overseas.“Admittedly, there is no dispute tha t the funds are being utilized on the scholarships to the Indian students and amount is...

ITAT Delhi Quashes Reassessment Against Company Over Defective Notice

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has quashed the reassessment proceedings against RNT Metals Pvt. Ltd. for assessment year (AY) 2021-22, holding that the notice issued under Section 148 did not provide the statutory period prescribed for filing the return. It also quashed the company's regular assessment for AY 2022-23, holding that, in the circumstances of the case, the Assessing Officer could not continue the pending Section 143(3) assessment after a Section 132...

Foreign Award Interest Becomes Judgment Debt After HC Deems Award A Decree, Not Taxable In India: ITAT Delhi

The Income Tax Appellate Tribunal (ITAT), Delhi, has held that interest awarded under a foreign arbitral award loses its separate character as “interest” once the award is enforced and deemed to be a decree by the Delhi High Court. The tribunal ruled that the interest received as part of the decree was not taxable in India.“To our mind therefore, the damages, including the interest has assumed the character of a 'judgement debt' and is beyond the purview of Indian Income Tax Act,” the tribunal...

ITAT Delhi Rejects Nil MFN Rate Under India-Netherlands DTAA Over Lack Of Specific Notification

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that a 1999 notification amending the India-Netherlands tax treaty only reduced the tax rate on interest from 15% to 10% and did not extend the Nil-rate exemption available under the India-USA or India-Italy treaties.The bench of Judicial Member Vikas Awasthy and Accountant Member Naveen Chandra held that the absence of a specific notification extending the exemption meant that the benefit could not be imported through the...