As per section 260A of the Income Tax Act, an appeal shall lie to the High Court from order passed by ITAT, if the High Court is satisfied that the case involves a substantial question of law. In the context of Transfer Pricing, an issue arises that what circumstances substantial question of law arises. This […]
COMPENSATION FOR BUSINESS CLOSURE – WHETHER OPERATING OR NON-OPERATING FOR PLI COMPUTATION
Rule 10B of Income Tax Rules provides methodology for computation of ALP. Under TNMM, ‘net profit’ is used as benchmark for ALP computation. Rule 10B(1)(e)(i) provides for considering “net profit margin realised by the enterprise from an international transaction or SDT entered into with an associated enterprise”. Rule 10B(1)(e)(ii) provides for computation of ‘net profit […]
CIT V CHETAK ENTERPRISES [2020] 115 TAXMANN.COM 108 (SC), (2020) 423 ITR 267 (SC)
The erstwhile partnership firm M/s. Chetak Enterprises entered into an agreement with the Government of Rajasthan for construction of road and collection of road/toll tax. The construction of road was completed by the firm on 27.3.2000 and the same was inaugurated on 1.4.2000. The firm was converted into a private limited company on 28.3.2000 […]
DISPUTED TELEPHONE PAYMENT – WHETHER OPERATING OR NON-OPERATING FOR PLI COMPUTATION
Rule 10B of Income Tax Rules provides methodology for computation of ALP. Under TNMM, ‘net profit’ is used as benchmark for ALP computation. Rule 10B(1)(e)(i) provides for considering “net profit margin realised by the enterprise from an international transaction or SDT entered into with an associated enterprise”. Rule 10B(1)(e)(ii) provides for computation of ‘net profit […]
SECTION 47(xiiib) – TAX IMPLICATIONS OF CONVERSION OF COMPANY INTO LLP
Sec 56 of the LLP Act provides for conversion from private limited company into limited liability partnership. Third schedule of the LLP Act deals with procedure and effect of conversion of private limited company into LLP. On conversion, whole of the undertaking of the company shall be transferred to and shall vest in the limited […]
EXEMPTION U/S 54/54F – MEANING OF “COST OF RESIDENTIAL HOUSE”
Under section 54 and 54F provides for exemption from Long Term Capital Gains for certain investments. Under section 54, the Assessee should appropriate the capital gains towards “cost of the residential house purchased or constructed”. Similarly, under section 54F, the assessee should appropriate the net sale consideration towards “cost of new asset (purchased or constructed, […]
SUPREME COURT DECISION IN THE CASE OF ISHIKAWAJIMA-HARIMA HEAVY INDUSTRIES LTD V DIT [2007] 288 ITR 408 (SC) / (2007) 3 SCC 481 – ANALYSIS AND LEARNINGS
Background The Assessee is a company incorporated in Japan. It is engaged, inter alia, in the business of construction of storage tanks as also engineering etc. It formed a consortium with various parties and entered into an Agreement with Petronet LNG Limited (“LNG Petronet”) on 19-1-2001 for setting up a Liquefied Natural Gas (LNG) receiving, […]
PENALTY UNDER SECTION 271(1)(C) IN CASE OF ADDITIONS AS PER MAP RESOLUTION
Section 271(1)(c) provides that the AO or CIT(A) may levy a penalty where the assessee has concealed the particulars of his income or has furnished inaccurate particulars of his income. The Karnataka HC dealt with a situation as to whether penalty u/s 271(1)(c) can be levied where the addition is made as per MAP resolution […]
PENALTY UNDER SECTION 271(1)(c) IN CASE OF TP ADJUSTMENT
Section 271(1)(c) inter alia provides that the AO or CIT(A) may levy a penalty where the taxpayer has concealed the particulars of his income or has furnished inaccurate particulars of his income. Explanation 7 to s 271 provides that where transfer pricing addition is made under s 92C(4), the amount so added or disallowed […]
DIVIDEND INCOME – WHETHER OPERATING OR NON-OPERATING FOR PLI COMPUTATION
Rule 10B of Income Tax Rules provides methodology for computation of ALP. Under TNMM, ‘net profit’ is used as benchmark for ALP computation. Rule 10B(1)(e)(i) provides for considering “net profit margin realised by the enterprise from an international transaction or SDT entered into with an associated enterprise”. Rule 10B(1)(e)(ii) provides for computation of ‘net profit […]