Dear Professional Colleagues, Sharing with you "Due Dates-October Month, Tax Updates and Compilation of Judicial Rulings of Supreme Court, High Court, Income Tax Appellate Tribunal including rulings in the area of International Taxation and Transfer Pricing_September '20". Hope you will find it useful and informative too.

1. TAX UPDATES – SEPTEMBER ‘20
REETIKA G AGARWAL, FCA
Contents
DUE DATES-OCTOBER MONTH 2020 ............................................................................................................5
DIRECT TAX: NOTIFICATIONS, CIRCULARS AND PRESS RELEASES.................................................................7
DOMESTIC TAX CASE LAWS ..........................................................................................................................8
SUPREME COURT......................................................................................................................................8
[Pr. CIT v Bluebird Software (P.) Ltd. [2020] 119 taxmann.com 348 (SC)] .........................................8
[Pr. CIT v Atul Ltd. [2020] 119 taxmann.com 287 (SC) (SC)]................................................................8
[National Co-operative Development Corporation v CIT [2020] 119 taxmann.com 137 (SC)]..........8
HIGH COURT .............................................................................................................................................8
[Sanjay Kaul v Pr. CIT [2020] 119 taxmann.com 470 (Delhi)] .............................................................8
[Asian Satellite Broadcast (P.) Ltd. v ITO [2020] 119 taxmann.com 481 (Bombay)]..........................8
[Pr. CIT v Hotels Ltd. [2020] 119 taxmann.com 487 (Bombay)]..........................................................8
[CIT v Apollo Tyres Ltd. [2020] 119 taxmann.com 336 (Kerala)] ........................................................8
[CIT v L & T Valdel Engineering (P.) Ltd. [2020] 119 taxmann.com 443 (Karnataka)]........................9
[Pr. CIT v HSI Automative Ltd. [2020] 119 taxmann.com 445 (Madras)] ...........................................9
[CIT v Celebrity Fashion Ltd. [2020] 119 taxmann.com 426 (Madras)] ..............................................9
[Polaris Consulting and Services Ltd. v Pr. CIT [2020] 119 taxmann.com 387 (Madras)] ..................9
[Narasimman Padmavathy v ITO [2020] 119 taxmann.com 330 (Madras)].......................................9
[Sri Ram Samaj v Jt. DIT [2020] 119 taxmann.com 334 (Madras)] .....................................................9
[State Bank of India v Vineet Agrawal [2020] 119 taxmann.com 322 (Bombay)] ...........................10
[CIT v Aztec Software Technology Ltd. [2020] 119 taxmann.com 318 (Karnataka)]........................10
[Kaveri Associates v ACIT [2020] 119 taxmann.com 310 (Karnataka)].............................................10
[Pr. CIT v Sumukha Synthetics [2020] 119 taxmann.com 234 (Madras)].........................................10
[CIT v M.A. Jacob & Company [2020] 119 taxmann.com 232 (Madras)]..........................................10
[New Woodlands Hotel (P.) Ltd. v ACIT [2020] 119 taxmann.com 202 (Madras)] ..........................10
[PPN Power Generating Company (P.) Ltd. v CIT [2020] 119 taxmann.com 198 (Madras)]............10
[Areva T & D (I) Ltd. v CIT [2020] 119 taxmann.com 171 (Madras)].................................................11
[DY. CIT v Hitachi Power Europe GmbH [2020] 119 taxmann.com 173 (Madras)] ..........................11
[UOI v Hashir [2020] 118 taxmann.com 511 (Kerala)] ......................................................................11
[Sri Nandhanam Educational & Social Welfare Trust v Reserve Bank of India [2020] 119
taxmann.com 133 (Madras)]..............................................................................................................11
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2. TAX UPDATES – SEPTEMBER ‘20
REETIKA G AGARWAL, FCA
[CIT v India Heritage Foundation [2020] 118 taxmann.com 512 (Karnataka)] ................................11
[Best Trading & Agencies Ltd. v DY. CIT [2020] 119 taxmann.com 129 (Karnataka)]......................11
[Pesco Beam Environmental Solutions (P.) Ltd. v Dy. CIT [2020] 119 taxmann.com 123 (Madras)]
............................................................................................................................................................11
[CIT v Thiru Arooran Sugar Ltd. [2020] 119 taxmann.com 126 (Madras)] .......................................11
[Pr. CIT v Solan District Truck Operators Transport Co-op. Society [2020] 119 taxmann.com 100
(Himachal Pradesh)]...........................................................................................................................11
[CIT v Authority For Advance Ruling [2020] 119 taxmann.com 80 (Delhi)] .....................................11
[CIT v Oliver Valves India (P.) Ltd. [2020] 118 taxmann.com 548 (Madras)] ...................................12
[Clean Wind Power Kurnool (P.) Ltd. v Dy. CIT [2020] 119 taxmann.com 64 (Delhi)] .....................12
[Omprakash T. Mehta v ITO [2020] 118 taxmann.com 551 (Bombay)] ...........................................12
[Shree Karthik Papers Ltd. v Dy. CIT [2020] 118 taxmann.com 467 (Madras)]................................12
[CIT v SPL Infrastructure (P.) Ltd. [2020] 118 taxmann.com 498 (Madras)].....................................12
[Tirunelveli District Central Co-operative Bank Ltd. v Jt. CIT [2020] 119 taxmann.com 21 (Madras)]
............................................................................................................................................................12
INCOME TAX APPELLATE TRIBUNAL ......................................................................................................13
[Confederation of Real Estate Developers Association of India. v ACIT [2020] 119 taxmann.com
491 (Mumbai - Trib.)] .........................................................................................................................13
[Smt. G Vijay Padma v ITO [2020] 119 taxmann.com 441 (Bangalore - Trib.)]................................13
[Siroya Developers v ITO [2020] 119 taxmann.com 440 (Mumbai - Trib.)] .....................................13
[Nilkanth Urban Co-operative Bank Ltd. v CIT [2020] 119 taxmann.com 369 (Pune - Trib.)]..........13
[Tata Sky Ltd. v Pr. CIT [2020] 119 taxmann.com 424 (Mumbai - Trib.)] .........................................13
[Dy. CIT v Veena Goyal [2020] 119 taxmann.com 362 (Jaipur - Trib.)].............................................13
[Dy. CIT v Central Academy Jodhpur Education Society [2020] 119 taxmann.com 355 (Jaipur -
Trib.)] ..................................................................................................................................................13
[Rajasthan Nursing Council v CIT (Exemption) [2020] 119 taxmann.com 354 (Jaipur - Trib.)]........13
[Anil Dev v Dy. CIT [2020] 119 taxmann.com 328 (Bangalore - Trib.)].............................................14
[Dr. Devika Gunasheela v Jt. CIT [2020] 119 taxmann.com 275 (Bangalore - Trib.)].......................14
[Dy. CIT v State Street Services (India) (P.) Ltd. [2020] 119 taxmann.com 276 (Bangalore - Trib.)]14
[Balji Electrical Insulators (P.) Ltd. v Dy. CIT [2020] 119 taxmann.com 266 (Ahmedabad - Trib.)] .14
[ITO v Scheme A1 of ARCIL CPS 002 XI Trust [2020] 119 taxmann.com 216 (Mumbai - Trib.)].......14
[Ram Prasad Meena v ITO [2020] 119 taxmann.com 217 (Jaipur - Trib.)] .......................................14
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3. TAX UPDATES – SEPTEMBER ‘20
REETIKA G AGARWAL, FCA
[Jhalana Wildlife Research Foundation v CIT (Exemption) [2020] 119 taxmann.com 210 (Pune -
Trib.)] ..................................................................................................................................................14
[Morakhia Copper and Alloys (P.) Ltd. v ACIT [2020] 119 taxmann.com 214 (Ahmedabad - Trib.)]
............................................................................................................................................................14
[Shriram Bahuuddeshiya Sevabhavi Sanstha v ITO [2020] 119 taxmann.com 203 (Pune - Trib.)]..15
[Fozia Khan v ITO [2020] 119 taxmann.com 187 (Jaipur - Trib.)]......................................................15
[Network Construction Company v CIT [2020] 119 taxmann.com 186 (Mumbai - Trib.)]...............15
[ACIT v Thiagarajar Mills Ltd. [2020] 119 taxmann.com 140 (Chennai - Trib.)] ...............................15
[Jairam G Kimmane v Dy. CIT [2020] 119 taxmann.com 99 (Bangalore - Trib.)]..............................15
[Narang International Hotels (P.) Ltd. v Dy. CIT [2020] 118 taxmann.com 454 (Mumbai - Trib.)]..15
[Dy. CIT v Cornerstone Property Investment (P.) Ltd. [2020] 118 taxmann.com 541 (Bangalore -
Trib.)] ..................................................................................................................................................15
[A.V.V.N. Prasad Reddy v ITO [2020] 118 taxmann.com 537 (Visakhapatnam - Trib.)]..................15
[Creative Museum Designers v ITO [2020] 118 taxmann.com 464 (Kolkata - Trib.)] ......................15
[Pattambi Service Co-operative Bank Ltd. v ITO [2020] 118 taxmann.com 523 (Cochin - Trib.)]....15
[Tata Motors Ltd. v Dy. CIT [2020] 118 taxmann.com 427 (Mumbai - Trib.)]..................................15
[Dy. CIT v Shewale & Sons [2020] 118 taxmann.com 426 (Pune - Trib.)].........................................16
[Amit Yadav RZ152 v ITO [2020] 118 taxmann.com 538 (Delhi - Trib.)]...........................................16
[Maruti Suzuki India Ltd. v CIT [2020] 119 taxmann.com 40 (Delhi - Trib.)]....................................16
[Devi Construction Company v Dy. CIT [2020] 118 taxmann.com 361 (Pune - Trib.)].....................16
INTERNATIONAL TAXATION CASE LAWS.................................................................................................16
[Growing Opportunity Finance (India) (P.) Ltd. v Pr. CIT [2020] 119 taxmann.com 386 (Madras-
HC)] .....................................................................................................................................................16
[DIT v Jeans Knit (P.) Ltd. [2020] 119 taxmann.com 305 (Karnataka)].............................................16
[Ampacet Cyprus Ltd. v Dy. CIT [2020] 119 taxmann.com 277 (Mumbai - Trib.)] ...........................16
[Digite Inc v ADIT [2020] 119 taxmann.com 339 (Delhi - Trib.)].......................................................16
TRANSFER PRICING CASE LAWS..............................................................................................................17
[Hyundai Motor India Ltd. v Dy. CIT [2020] 119 taxmann.com 302 (Madras-HC)] ..........................17
[Pr. CIT v Gulbrandsen Chemicals (P.) Ltd. [2020] 119 taxmann.com 52 (Gujarat)] ........................17
[DY. CIT v State Street Services (India) (P.) Ltd. [2020] 119 taxmann.com 276 (Bangalore - Trib.)]17
[Himalaya Drug Company v ACIT [2020] 119 taxmann.com 421 (Bangalore - Trib.)]......................17
[Haier Appliances India (P.) Ltd. v Dy. CIT [2020] 119 taxmann.com 428 (Delhi - Trib.)] ................17
[CLSA India (P.) Ltd. v Dy. CIT [2020] 119 taxmann.com 327 (Mumbai - Trib.)]...............................17
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4. TAX UPDATES – SEPTEMBER ‘20
REETIKA G AGARWAL, FCA
[B.G. India Energy Solutions (P.) Ltd. v Dy. CIT [2020] 119 taxmann.com 319 (Delhi - Trib.)].........17
[Microchip Technology (India) (P.) Ltd. v ACIT [2020] 119 taxmann.com 309 (Bangalore - Trib.)].18
[Elcome Technologies (P.) Ltd. v Dy. CIT [2020] 119 taxmann.com 233 (Mumbai - Trib.)] .............18
[EF Information Systems (P.) Ltd. v Dy. CIT [2020] 119 taxmann.com 152 (Bangalore - Trib.)]......18
[Dy. CIT v Agility Logistics (P.) Ltd. [2020] 119 taxmann.com 141 (Mumbai - Trib.)].......................18
[BT Global Communications India (P.) Ltd. v Addl. CIT [2020] 119 taxmann.com 120 (Delhi - Trib.)]
............................................................................................................................................................18
[S. Vinodkumar Diamonds (P.) Ltd. v Dy. CIT [2020] 118 taxmann.com 317 (Mumbai - Trib.)]......18
[Dy. CIT v Landis+ Gyr Ltd. [2020] 118 taxmann.com 293 (Kolkata - Trib.)].....................................18
[Colgate - Palmolive (India) Ltd. v Addl. CIT [2020] 118 taxmann.com 399 (Mumbai - Trib.)]........18
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5. TAX UPDATES – SEPTEMBER ‘20
REETIKA G AGARWAL, FCA
DUE DATES-OCTOBER MONTH 2020
[Source: www.incometaxindia.gov.in]
Date Nature of Compliance
07th Deposit of tax deducted/collected for the month of September, 2020.
07th Deposit of TDS for the period July 2020 to September 2020
15th Furnishing of Form 24G by an office of the Government where TDS/TCS for the month of
September, 2020 has been paid without the production of a challan
15th Issue of TDS Certificate for tax deducted under Section 194IA, 194-IB and 194M in August, 2020
15th Quarterly statement in respect of foreign remittances (to be furnished by authorized dealers) in
Form No. 15CC for quarter ending September, 2020
15th Quarterly statement of TCS deposited for the quarter ending September 30, 2020
15th Upload declarations received from recipients in Form No. 15G/15H during the quarter ending
September, 2020
15th Furnishing statement in Form no. 3BB by a stock exchange in respect of transactions in which
client codes been modified after registering in the system for the month of September, 2020
30th Furnishing of challan-cum-statement in respect of tax deducted under 194IA, 194-IB and 194M in
the month of September, 2020
30th Quarterly TCS certificate for the quarter ending September 30, 2020
31st Intimation by a designated constituent entity, resident in India, of an international group in Form
no. 3CEAB for the accounting year 2019-20.
31st Quarterly statement of TDS deposited for the quarter ending September 30, 2020
31st Furnishing of Annual audited accounts for each approved programmes under section 35(2AA)
31st Quarterly return of non-deduction of tax at source by a banking company from interest on time
deposit in respect of the quarter ending September 30, 2020
31st Due date for filing of ITR for the assessment year 2020-21 if the assessee (not having any
international or specified domestic transaction) is
(a) corporate-assessee or
(b) non-corporate assessee (whose books of account are required to be audited) or
(c) partner of a firm whose accounts are required to be audited).
Due date for filing of return has been extended from October 31, 2020 to November 30, 2020
vides the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.
31st Audit report under section 44AB for the assessment year 2020-21 in the case of an assessee who
is also required to submit a report pertaining to international or specified domestic transactions
under section 92E
31st Report to be furnished in Form 3CEB in respect of ITs and SDTs
31st Due date for e-filing of report (in Form No. 3CEJ) by an eligible investment fund in respect of
arm's length price of the remuneration paid to the fund manager (if the assessee is required to
submit return of income on October 31, 2020).
Note: The report is required to be furnished by the due date of furnishing ITR under section
139(1). Due date for submission of return of income for the Assessment Year 2020-21 has
extended from October 31, 2020 to November 30, 2020 vide the Taxation and Other Laws
(Relaxation and Amendment of Certain Provisions) Act, 2020.
Page 5

6. TAX UPDATES – SEPTEMBER ‘20
REETIKA G AGARWAL, FCA
31st Due date for filing of audit report under section 44AB for the assessment year 2020-21 in the
case of a corporate-assessee or non-corporate assessee
The due date for filing of audit report for the assessment year 2020-21 has been extended from
September 30, 2020 to October 31, 2020 vide the Taxation and Other Laws (Relaxation and
Amendment of Certain Provisions) Act, 2020.
31st Statement by scientific research association, university, college or other association or Indian
scientific research company as required by rules 5D, 5E and 5F (if due date of submission of
return of income is October 31, 2020)
Note: The statement is required to be furnished by the due date of furnishing the return of
income under section 139(1). The due date for submission of return of income for the
Assessment Year 2020-21 has extended from October 31, 2020 to November 30, 2020 vide the
Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.
31st Application in Form 9A for exercising the option available under Explanation to section 11(1) to
apply income of previous year in the next year or in future (if the assessee is required to submit
return of income on October 31, 2020)
Note: The application is required to be furnished by the due date of furnishing the return of
income under section 139(1). The due date for submission of return of income for the
Assessment Year 2020-21 has extended from October 31, 2020 to November 30, 2020 vide the
Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.
31st Statement in Form no. 10 to be furnished to accumulate income for future application under
section 10(21) or 11(1) (if the assessee is required to submit return of income on October 31,
2020)
Note: The statement is required to be furnished by the due date of furnishing the return of
income under section 139(1). The due date for submission of return of income for the
Assessment Year 2020-21 has extended from October 31, 2020 to November 30, 2020 vide the
Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.
31st Due date for claiming foreign tax credit, upload statement of foreign income offered for tax for
the previous year 2019-20 and of foreign tax deducted or paid on such income in Form no. 67. (if
due date of submission of return of income is October 31, 2020)
Note: The statement is required to be furnished by the due date of furnishing the return of
income under section 139(1). The due date for submission of return of income for the
Assessment Year 2020-21 has extended from October 31, 2020 to November 30, 2020 vide the
Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.
31st Submit copy of audit of accounts to the Secretary, Department of Scientific and Industrial
Research in case company is eligible for weighted deduction under section 35(2AB) [if company
does not have any international/specified domestic transaction]
Note: The report is required to be furnished by the due date of furnishing the return of income
under section 139(1). The due date for submission of return of income for the Assessment Year
2020-21 has extended from October 31, 2020 to November 30, 2020 vide the Taxation and Other
Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.
Page 6

7. TAX UPDATES – SEPTEMBER ‘20
REETIKA G AGARWAL, FCA
DIRECT TAX: NOTIFICATIONS, CIRCULARS AND PRESS RELEASES
F. No. 225/150/2020-ITA-II CBDT further extends due date for filing of ITR for Assessment
year 2019-20 to 30-11-2020
F. No. 225/126/2020-ITA-II CBDT extends time limit for compulsory selection of returns
for complete scrutiny to 31-10-2020
ORDER F. NO.
225/155/2020/ITA.II, DATED 29-9-2020
CBDT authorizes Income-tax authorities to upload
information relating to GST return in Form 26AS
CIRCULAR NO. 17 OF 2020 [F.
No.370133/22/2020-TPL], DATED 29-9-
2020
No adjustment for discount/GST while calculating threshold
limit u/s 206C(1H)
PRESS RELEASE, DATED 26-9-2020 Scrip wise reporting in ITR is required only if LTCGs are
eligible for grandfathering
NOTIFICATION S.O. 3309 (E) [NO.
81/2020/F.NO.279/MISC./66/2014-SO-
ITJ (PT.)], DATED 25-9-2020
CBDT sets up NFAC & RFACs under Faceless Appeal Scheme,
2020
Notification No. 79/2020, F.
No.187/2/2019-ITA-I
CBDT authorizes ACIT/DCIT (NeAC) as prescribed authority to
issue scrutiny notice w.e.f. 13-08-2020
NOTIFICATION S.O. 3296(E) [NO.
76/2020/F.NO.370142/33/2020-
TPL], DATED 25-9-2020
CBDT notifies Faceless Appeal Scheme, 2020 applicable w.e.f.
September 25, 2020
NOTIFICATION G.S.R. 574(E) [NO.
75/2020/F. NO. 370142/8/2020-
TPL], DATED 22-9-2020
CBDT allows ‘insurer’ to make application for grant of non-
deduction of tax certificate u/s 195(3)
NOTIFICATION S.O. 3122(E) [NO.
74/2020/F. No. 178/42/2017-ITA-
I], DATED 11-9-2020
CBDT notifies ‘L&T Infra Debt Fund’ for the purpose of section
10(47) exemption
NOTIFICATION S.O. 2947(E) [NO. 71/
2020/F. NO. 225/136/2020-
ITA.II], DATED 31-8-2020
CBDT notifies ‘Scheduled Commercial Banks’ u/s 138 for
sharing of information
PRESS RELEASE, DATED 2-9-2020 Tax Dept. releases functionality for ‘Scheduled Commercial
Banks’ to check ITR filing status of PAN in bulk mode
PRESS RELEASE, DATED 25-9-2020 Govt. to study Vodafone’s arbitration case reward and take
decision on further course of action
CIRCULAR F. NO. 225/126/2020/ITA-
II, DATED 17-9-2020
CBDT lays down criteria on compulsory selection of ITRs for
scrutiny during FY 2020-21
NEWS UN proposes change in definition of royalties to include
‘Software payments’
NOTIFICATION S.O. 3088(E) [NO.
73/2020/F. NO. 300196/36/2017-ITA-
I], DATED 10-9-2020
‘District Mineral Foundation Trust’ notified for the purpose of
section 10(46) exemption
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8. TAX UPDATES – SEPTEMBER ‘20
REETIKA G AGARWAL, FCA
DOMESTIC TAX CASE LAWS
SUPREME COURT
1. Where High Court upheld Tribunal's order
setting aside addition made by AO under
section 153A on ground that said addition was
not based on any incriminating material found
during course of search, SLP filed against said
order was to be dismissed due to low tax effect.
[Pr. CIT v Bluebird Software (P.) Ltd. [2020] 119
taxmann.com 348 (SC)]
2. Where Assessing Officer initiated reassessment
on ground that during assessment under
section 143(3) loss on sale of stores was
wrongly allowed as business loss, but Tribunal
set aside reassessment holding it to be change
of opinion and Tribunal’s order was upheld by
High Court, SLP against High Court’s order was
to be dismissed.
[Pr. CIT v Atul Ltd. [2020] 119 taxmann.com
287 (SC) (SC)]
3. Where core business of assessee corporation
was to receive funds from Central Government
and then advance same loans and grants to co-
operative societies, merely because grants
benefited a third party, it would not render
disbursement as application of income and not
expenditure and thus, expenditure incurred in
course of and for purpose of business would be
an allowable deduction under section 37(1).
[National Co-operative Development
Corporation v CIT [2020] 119 taxmann.com 137
(SC)]
********
HIGH COURT
1. Where assessee was not a regular investor in
shares and had invested only in high risk stocks
of obscure companies with no business activity
or asset which were identified as 'Penny Stocks',
Assessing Officer had correctly concluded that
assessee had entered into a pre-arranged sham
transaction so as to convert unaccounted
money into accounted money in guise of capital
loss; alleged short term capital loss was rightly
disallowed.
[Sanjay Kaul v Pr. CIT [2020] 119 taxmann.com
470 (Delhi)]
2. Where assessee during assessment submitted
that it had transferred equity shares of ZEE to
its related entity at nil consideration to
consolidate onshore media assets including
shares of listed companies and requested to
treat said transfer as gift not liable to tax under
section 45 and Assessing Officer passed
assessment order accepting said claim but after
more than four years, section 148 notice was
issued to assessee on basis of CIT(A)'s decision
in case of group entity that said transfer was
nothing but colourable device, since
communication between assessee and
Assessing Officer clearly demonstrate that
assessee had disclosed all primary facts
regarding said transfer during assessment, it
was a clear case of change of opinion and, thus,
section 148 notice would no longer survive.
[Asian Satellite Broadcast (P.) Ltd. v ITO [2020]
119 taxmann.com 481 (Bombay)]
3. Sum paid to BMC for increasing floor space
index is not a commercial right and should be
added in cost of building.
[Pr. CIT v Hotels Ltd. [2020] 119 taxmann.com
487 (Bombay)]
4. Where assessee paid subscription or
membership fee to club on behalf of its
employees, said amount was to be allowed as
deduction under section 37(1).
[CIT v Apollo Tyres Ltd. [2020] 119
taxmann.com 336 (Kerala)]
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9. TAX UPDATES – SEPTEMBER ‘20
REETIKA G AGARWAL, FCA
5. Where assessee claimed exemption under
section 10A in respect of its new unit, since
assessee was engaged in site development of
software program and programs were delivered
at premise of client at work site in foreign
country and activities of assessee finally
culminated at work site of clients outside India
and there was no need for full fledged
infrastructure facility in India, thus, industrial
undertaking of assessee was independent of all
undertakings which it already possessed,
assessee was to be allowed exemption under
section 10A on its new unit.
[CIT v L & T Valdel Engineering (P.) Ltd. [2020]
119 taxmann.com 443 (Karnataka)]
6. Where assessee gave up its claim of deduction
under section 35(1)on account of scientific
expenses paid to a research association as
admittedly conditions required for claiming
such expenditure under said section was not
satisfied by assessee, since there was no
dispute that said expenditure was incurred in
ordinary course of business, Tribunal was right
in allowing alternate claim of assessee toward
scientific expenses under section 35(1) as
revenue expenditure under section 37(1).
[Pr. CIT v HSI Automative Ltd. [2020] 119
taxmann.com 445 (Madras)]
7. In terms of section 14A, only expenditure,
which was proved to be incurred in relation to
earning of tax free income, could be disallowed
and such provision could not be extended to
disallow expenditure, which was assumed to
have been incurred for earning tax free income.
To apply provisions of section 14A, Assessing
Officer should have recorded a finding as to
how sub-section (1) of section 14A would stand
attracted. In absence of any such finding,
disallowance made was not justifiable.
[CIT v Celebrity Fashion Ltd. [2020] 119
taxmann.com 426 (Madras)]
8. Where assessee-company claimed that no
expenditure was incurred to earn exempt
income and section 14A disallowance was not
called for, but it could not substantiate that fact
before lower authorities and it was found that
there was substantial increase in investment
and value of assets of assessee, Assessing
Officer was justified in making disallowance
under section 14A read with rule 8D.
[Polaris Consulting and Services Ltd. v Pr. CIT
[2020] 119 taxmann.com 387 (Madras)]
9. Where Income-tax Officer treated cash
deposited by assessee in saving bank account
during demonetization period as unexplained
money of assessee but there was no
explanation for source and nature of cash
deposited and assessee filed writ petition which
was dismissed by Single Judge holding that
assessee should file statutory appeal before
appellate authority, since Act provides effective
and sufficient forum for any aggrieved party to
work out their remedy, writ appeal filed by
assessee against order passed by Single Judge
was liable to be dismissed.
[Narasimman Padmavathy v ITO [2020] 119
taxmann.com 330 (Madras)]
10. Where assessee-trust engaged in running
educational institutions, earned income from
letting out of community hall, Kalyana
Mandapam and Gnanvapi and utilized surplus
income from letting out for objects of trust i.e.
running educational institution and providing
medical relief to poor, assessee-trust is entitled
to exemption under section 11.
[Sri Ram Samaj v Jt. DIT [2020] 119
taxmann.com 334 (Madras)]
11. Where assessee-bank offered to tax entire
interest receipt from money advanced as credit
without claiming any exemption under section
10(15) as details were not fully collected and
when said details were received from other
branches, same were submitted during
assessment but AO denied said exemption to
assessee and, it approached Commissioner
(Appeals) who gave direction to Assessing
Officer to allow exemption which was allowed
accordingly, issuance of section 148 notice to
disallow said exemption after 4 years of
completion of assessment was without
Page 9

10. TAX UPDATES – SEPTEMBER ‘20
REETIKA G AGARWAL, FCA
jurisdiction and illegal, particularly when
assessee bank had made full and true
disclosure.
[State Bank of India v Vineet Agrawal [2020]
119 taxmann.com 322 (Bombay)]
12. Where Assessing Officer held that expenditure
incurred by assessee-company, engaged in
business of computer software development
and services, in foreign currency on traveling,
professional charges and on-site service charges
which were for development of software at
client's site outside India was not to be
excluded from export turnover for purpose of
deduction under section 10A, since view taken
by Assessing Officer was a plausible view and
same could not said to be erroneous, invocation
of section 263 against said order was
unjustified.
[CIT v Aztec Software Technology Ltd. [2020]
119 taxmann.com 318 (Karnataka)]
13. Where in notice issued under section 271(1)(c)
there was no mention that assessee had
concealed income or furnished inaccurate
particulars of income, order imposing penalty
under section 271(1)(c) was to be quashed.
[Kaveri Associates v ACIT [2020] 119
taxmann.com 310 (Karnataka)]
14. Where assessee had entered into agreement
with a company for conversion work on job
work basis and paid conversion charges in cash
as bank account of said company could not be
operated because of order of attachment
passed by ESI department, assessee was
entitled to exemption under rule 6DD in respect
of payment made in cash and thus, no
disallowance under section 40A(3) was called
for.
[Pr. CIT v Sumukha Synthetics [2020] 119
taxmann.com 234 (Madras)]
15. Where assessee had not offered income at first
instance but only after search under section 132
offered additional income and subsequently
filed settlement application, and Settlement
Commission granted waiver of interest, but
subsequently, rectified order rejecting waiver of
interest and directed that interest under section
234B shall be charged up to date of order under
section 245D(4), in view of decision of Supreme
Court that Settlement Commission cannot re-
open its concluded proceedings by invoking
section 154 so as to levy interest under section
234B in view of section 245-I, subsequent order
passed by Settlement Commission based on
subsequent legal position on issue, was
remanded back to Settlement Commission.
[CIT v M.A. Jacob & Company [2020] 119
taxmann.com 232 (Madras)]
16. Sum paid to employees which was duly
recorded in ‘Register of wages of person
employed’ couldn’t be questioned.
[New Woodlands Hotel (P.) Ltd. v ACIT [2020]
119 taxmann.com 202 (Madras)]
17. Where assessee engaged in generation of
power prayed for deletion of impugned
additions made under normal provisions of Act
as well as under section 115JB on ground that
receipts from sale of power to Tamilnadu
Generation and Distribution Corporation had
been subjected to tax in subsequent year,
Assessing Officer was to be directed to reopen
assessments from years 2010-11 to 2014-15 on
this issue alone and examine whether assessee
had paid taxes on these receipts, which addition
had been sustained in impugned assessment
year 2009-10 and after affording an opportunity
to assessee, redo assessment only on this
aspect.
[PPN Power Generating Company (P.) Ltd. v CIT
[2020] 119 taxmann.com 198 (Madras)]
18. Transfer of assessee's non-transmission and
distribution business in exchange of issuance
and allotment of equity shares under a scheme
of arrangement approved by High Court is not a
slump sale exigible to capital gain tax under
section 50 as transfer pursuant to approval of
scheme of arrangement is not a contractual
transfer but a statutorily approved transfer and
cannot be brought within definition of word
'sale'.
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11. TAX UPDATES – SEPTEMBER ‘20
REETIKA G AGARWAL, FCA
[Areva T & D (I) Ltd. v CIT [2020] 119
taxmann.com 171 (Madras)]
19. SetCom can’t declare application invalid citing
non-disclosure of full & true income if issue
needs to be settled.
[DY. CIT v Hitachi Power Europe GmbH [2020]
119 taxmann.com 173 (Madras)]
20. Where money had been seized by police from a
person and deposited in criminal court,
appropriate remedy open to Income Tax Officer
was to apply under section 226(4) for payment
of money towards tax and other amounts due
and not to issue any command to Court
demanding release of cash.
[UOI v Hashir [2020] 118 taxmann.com 511
(Kerala)]
21. Where, though cause of action was available to
petitioner at earlier point of time, to claim
interest at rate of 9 per cent on FDs kept with
bank, after date of maturity till date of transfer
of amount, petitioner not having claimed same
in earlier writ petition, petitioner was estopped
from filing second writ petition on same cause
of action Bank also could not be said to have
unlawfully enriched itself by withholding
petitioner's FDs amount, as it had paid
applicable rate of 4 per cent interest from date
of maturity till date of payment.
[Sri Nandhanam Educational & Social Welfare
Trust v Reserve Bank of India [2020] 119
taxmann.com 133 (Madras)]
22. Where section 263 order was no more in
existence, order passed by Assessing Authority
in accordance with directions issued by
Commissioner under section 263 would be in
fructuous.
[CIT v India Heritage Foundation [2020] 118
taxmann.com 512 (Karnataka)]
23. Interest paid to creditor deductible from FDs
interest as it was made out of surplus arose
from restructuring process.
[Best Trading & Agencies Ltd. v DY. CIT [2020]
119 taxmann.com 129 (Karnataka)]
24. As per section 249(4) unless and until assessee
has paid income tax due on income returned by
him, no appeal under Chapter XX will be
admitted and Statute neither gives any
discretion to appellate authority to entertain an
appeal nor extend time for paying self
assessment tax, except in respect of cases
falling under section 249(4)(b) in terms of
proviso under said section.
[Pesco Beam Environmental Solutions (P.) Ltd.
v Dy. CIT [2020] 119 taxmann.com 123
(Madras)]
25. Where Tribunal while remitting back issue of
section 14A disallowance had directed
Assessing Officer to consider assessee's own
fund, i.e., capital and reserves as available for
investment, which yields exempted income and
thereafter to apply formula in rule 8D and also
exclude investments in subsidiaries, Tribunal,
having chosen to remand matter to Assessing
Officer for a fresh consideration, could have
avoided qualifying remand especially when
questions of law are being raised by both
revenue as well as assessee and, thus, matter
be remanded for a fresh consideration to
Assessing Officer.
[CIT v Thiru Arooran Sugar Ltd. [2020] 119
taxmann.com 126 (Madras)]
26. Interest on delayed refund becomes part of
principle amount and, thus, delayed interest
includes interest for not refunding principle
amount as well as interest on delayed refund.
[Pr. CIT v Solan District Truck Operators
Transport Co-op. Society [2020] 119
taxmann.com 100 (Himachal Pradesh)]
27. A question cannot be said to be pending under
clause (i) of proviso to section 245R(2) upon
issuance of a mere notice under section 143(2)
especially when it has been issued in a standard
pre-printed format and questions raised before
Authority for Advance Ruling do not appear to
be forming subject matter of said notice.
[CIT v Authority For Advance Ruling [2020] 119
taxmann.com 80 (Delhi)]
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12. TAX UPDATES – SEPTEMBER ‘20
REETIKA G AGARWAL, FCA
28. Where assessee company was a 100 percent
Export Oriented Unit (EOU), engaged in
business of assembling and exporting valves,
management fee earned by assessee in nature
of export services which was incidental to
business of export of valves would partake
character of profit and gain.
[CIT v Oliver Valves India (P.) Ltd. [2020] 118
taxmann.com 548 (Madras)]
29. Where assessee filed an instant writ petition
seeking a direction to revenue to remove
technical glitches and enable TRACES portal so
that assessee could file its refund application
for excess tax deduction at source (TDS)
deposited by it, since in impugned case scrutiny
and verification of TDS amount paid had to be
manually done according to established
procedure, assessee was to be directed to
follow said procedure forthwith and once
assesee follow aforesaid procedure, revenue
was to be directed to decide assessee's request
within thereafter.
[Clean Wind Power Kurnool (P.) Ltd. v Dy. CIT
[2020] 119 taxmann.com 64 (Delhi)]
30. Where assessee sold a plot of land and received
sale consideration in three instalments and
during relevant assessment year, assessee
offered to tax only amount of consideration
which was received during previous year, since
assessee had declared full facts and sale
agreement at first instance and assessee had
never suppressed any material fact from
revenue, no penalty under section 271(1)(c)
could be levied upon assessee for not furnishing
entire sale consideration received by it on sale
of plot of land during relevant assessment year.
[Omprakash T. Mehta v ITO [2020] 118
taxmann.com 551 (Bombay)]
31. Amendment brought in sub-section (2) of
section 115BBE by Finance Act, 2016, whereby
set off of losses against income referred to in
section 68 was denied, would be effective from
1-4-2017.
[Shree Karthik Papers Ltd. v Dy. CIT [2020] 118
taxmann.com 467 (Madras)]
32. Where assessee-contractor made payment to
sub-contractors for project of road laying in
power plant and, assessing authority disallowed
entire payment as all sub-contractors were not
produced upon issuance of summons, since
most of contractors had furnished their
statements along with return of income except
two sub-contractors and assessee to buy peace
and avoid litigation offered 10 per cent of total
expenditure incurred towards sub-contractors,
no further disallowance was called for.
[CIT v SPL Infrastructure (P.) Ltd. [2020] 118
taxmann.com 498 (Madras)]
33. Having regard to the overall scheme of the
chapter XVII and particularly, by reading Section
194N along with Section 201 of the Act, it can
be safely concluded that if the sum received by
the assessee will not be an income at his hands,
then, the question of deduction under Section
194N of the Act will not arise.
[Tirunelveli District Central Co-operative Bank
Ltd. v Jt. CIT [2020] 119 taxmann.com 21
(Madras)]
************
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13. TAX UPDATES – SEPTEMBER ‘20
REETIKA G AGARWAL, FCA
INCOME TAX APPELLATE TRIBUNAL
1. Where assessee-trust, set up to address
national issues relating to real estate sector,
earned revenue from activities of holding
conventions, exhibitions etc., since activities
that were carried out by assessee were with
sole intent of attaining object for which trust
was established, activities of assessee would
not be hit by exclusion carved out in definition
of 'charitable purpose' in section 2(15) and as
such, assessee was eligible for exemption under
section.
[Confederation of Real Estate Developers
Association of India. v ACIT [2020] 119
taxmann.com 491 (Mumbai - Trib.)]
2. RTC couldn’t be considered as conclusive
evidence to prove that assessee’s land was
agricultural land.
[Smt. G Vijay Padma v ITO [2020] 119
taxmann.com 441 (Bangalore - Trib.)]
3. Where assessee firm utilised its interest bearing
funds for overdrawing of capital by its partner,
rate of interest received by assessee firm from
its partner, which was in excess as in
comparison to rate on which funds were
raised/borrowed by firm from third parties,
same was liable to be assessed as income of
assessee firm from "other sources".
[Siroya Developers v ITO [2020] 119
taxmann.com 440 (Mumbai - Trib.)]
4. Where assessee co-operative bank made
payment of interest to HUF and unregistered
firms, since both of these entities were
'members' of assessee admitted by way of an
application made by them to bank and then
passing a resolution to extent of their admission
as members of bank in its board of directors
meeting, no deduction of tax at source was to
be made under section 194A on such payments
of interest.
[Nilkanth Urban Co-operative Bank Ltd. v CIT
[2020] 119 taxmann.com 369 (Pune - Trib.)]
5. Where assessee, engaged in business of
providing DTH services, sold set top Box (STB) &
hardware and recharge coupon vouchers to
distributors at a discounted rate and also
provided also provided certain discount/bonus
or credits to customers/subscribers for taking
subscription directly from company's website,
discount so offered could not be considered as
commission and, hence, not liable for deduction
of tax at source under provisions of section
194H.
[Tata Sky Ltd. v Pr. CIT [2020] 119
taxmann.com 424 (Mumbai - Trib.)]
6. For invoking provisions of section 2(22)(e),
there must be a payment by way of advance or
loan, hence, where this vital aspect was missing
in case of assessee as neither there was any
payment nor company made any advance or
loan to assessee, thus debit balance worked out
by assessee company will not fall within ambit
of provisions of section 2(22)(e) and thus are
not applicable in case of assessee.
[Dy. CIT v Veena Goyal [2020] 119
taxmann.com 362 (Jaipur - Trib.)]
7. Once there was a violation of section 13(1)(c) or
section 13(1)(d) by a trust registered under
section 12AA, then entire income of trust was
not chargeable to tax at maximum marginal
rate (MMR) and its only that part of income
which had violated said sections would suffer
MMR as per proviso to section 164(2).
[Dy. CIT v Central Academy Jodhpur Education
Society [2020] 119 taxmann.com 355 (Jaipur -
Trib.)]
8. Where assessee council was a statuary
authority established under Rajasthan Nursing
Council Act, 1964 to provide for registration of
nurses, midwives, health visitors and auxiliary
nurse-midwives in State, activities of assessee
were qualified activities of general public utility
and, thus, fall under charitable activities as
defined under section 2(15) and it was to be
granted registration section 12AA.
[Rajasthan Nursing Council v CIT (Exemption)
[2020] 119 taxmann.com 354 (Jaipur - Trib.)]
9. Name appearing in purchase deed won’t
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14. TAX UPDATES – SEPTEMBER ‘20
REETIKA G AGARWAL, FCA
establish assessee as owner of residential house
for computing sec. 54F relief.
[Anil Dev v Dy. CIT [2020] 119 taxmann.com
328 (Bangalore - Trib.)]
10. Where assessee was denied benefit of
deduction under section 54F on ground that
assessee owned more than one residential
houses, other than new asset on date of
transfer of original asset, since properties were
in fact not residential houses owned by it and
assessee had only given lease of vacant land
and obtained rent for land and not for any
building, and thus, assessee did not own more
than one residential house, other than new
asset on date of transfer of original asset,
deduction u/s. 54F should be allowed to
assessee.
[Dr. Devika Gunasheela v Jt. CIT [2020] 119
taxmann.com 275 (Bangalore - Trib.)]
11. Depreciation is a statutory deduction and not
an outgoing expenditure, therefore, section
40(a)(i) does not apply to such a deduction.
[Dy. CIT v State Street Services (India) (P.) Ltd.
[2020] 119 taxmann.com 276 (Bangalore -
Trib.)]
12. Where all requisite conditions for allowance of
interest are fulfilled, it is not open to revenue to
make a part disallowance, unless there is a
positive finding recorded that a part of amount
borrowed is not used for purpose of business.
[Balji Electrical Insulators (P.) Ltd. v Dy. CIT
[2020] 119 taxmann.com 266 (Ahmedabad -
Trib.)]
13. Assessee-trust set up by Asset Reconstruction
Co. (India) in pursuance to SARFAESI Act and RBI
Guidelines for purpose of liquidating/recovering
NPAs acquired from banks Assessing Officer had
held that assessee was an Association of
Persons (AOP) and not a trust and brought to
tax entire surplus in income and expenditure
account.
[ITO v Scheme A1 of ARCIL CPS 002 XI Trust
[2020] 119 taxmann.com 216 (Mumbai - Trib.)]
14. No sec. 69A additions if assessee had sufficient
fund from past years incomes for making
investment.
[Ram Prasad Meena v ITO [2020] 119
taxmann.com 217 (Jaipur - Trib.)]
15. Where Commissioner (Exemption) denied
benefits under section 80G to assessee
company, registered under section 12AA, for
reason that assessee failed to produce any
evidence about having incurred any
expenditure in its financial statements towards
charitable object of company, since when
Commissioner (Exemption) rejected assessee's
application under section 80G, profit and loss
account of assessee showing expenditure
incurred by assessee on charitable activities was
not prepared and same were prepared a little
later, matter was to be remanded.
[Jhalana Wildlife Research Foundation v CIT
(Exemption) [2020] 119 taxmann.com 210
(Pune - Trib.)]
16. Where assessee employer failed to deposit an
amount towards employee contribution on
account of ESI with concerned department on
or before due date prescribed in law and
Assessing Officer by invoking provisions of
section 36(1)(va) read with section 2(24)(x)
made addition of aforesaid amount to income
of assessee, impugned addition made to income
of assessee was justified.
[Morakhia Copper and Alloys (P.) Ltd. v ACIT
[2020] 119 taxmann.com 214 (Ahmedabad -
Trib.)]
17. For availing exemption u/s 11 etc., an assessee
needs to separately pass the test u/s 115BBC
subject to the exceptions If a particular receipt
turns out to be anonymous donations, the same
gets caught within the mischief of section
115BBC and hence mars the exemption of
income to that extent notwithstanding that the
assessee applied 85% of such anonymous
donations for the objects of the trust Section
13(7) clearly provides that nothing contained in
section 11 or section 12 shall operate so as to
exclude from the total income of the previous
Page 14

15. TAX UPDATES – SEPTEMBER ‘20
REETIKA G AGARWAL, FCA
year of the person in receipt thereof, any
anonymous donation referred to in section
115BBC on which tax is payable in accordance
with the provisions of that section.
[Shriram Bahuuddeshiya Sevabhavi Sanstha v
ITO [2020] 119 taxmann.com 203 (Pune -
Trib.)]
18. Where assessee sold a residential house and
claimed deduction under section 48 on account
of commission paid to agent in respect of such
sale, since preparation of documents being sale
deed, purchase of stamp duty and other
documents and formalities required assistance
and help of a well versed person who have
experience of such work, Assessing Officer was
to be directed to allow 2 per cent of sale
consideration as expenditure on account of
commission paid to real estate agent by
assessee.
[Fozia Khan v ITO [2020] 119 taxmann.com 187
(Jaipur - Trib.)]
19. Provisions of section 50C could not be
applicable to sale of development rights in
respect of buildings.
[Network Construction Company v CIT [2020]
119 taxmann.com 186 (Mumbai - Trib.)]
20. Change of method for valuing stock is valid if
method was as per AS prescribed by ICAI.
[ACIT v Thiagarajar Mills Ltd. [2020] 119
taxmann.com 140 (Chennai - Trib.)]
21. Assessee sold land/property, but capital gain on
same had not been disclosed in return of
income Assessee took a stand that property was
an agricultural land and therefore was not a
capital asset and capital gain on sale of
agricultural land was not exigible to tax.
[Jairam G Kimmane v Dy. CIT [2020] 119
taxmann.com 99 (Bangalore - Trib.)]
22. Department could not keep search action in
abeyance for a long period of almost one year
from date of last authorization more so, when
after a period of one year nothing was searched
but only prohibitory order passed one year back
was converted into deemed seizure.
[Narang International Hotels (P.) Ltd. v Dy. CIT
[2020] 118 taxmann.com 454 (Mumbai - Trib.)]
23. Interest paid on borrowed funds which were
used for acquisition of land which was an
inventory was allowable under section 36(1)(iii).
[Dy. CIT v Cornerstone Property Investment
(P.) Ltd. [2020] 118 taxmann.com 541
(Bangalore - Trib.)]
24. As per proviso to section 50C, with effect from
1-4-2003, stamp duty value of property on date
of execution of agreement to sell should be
adopted instead of value on date of execution
of sale deed, for determination of capital gains.
[A.V.V.N. Prasad Reddy v ITO [2020] 118
taxmann.com 537 (Visakhapatnam - Trib.)]
25. Where assessee, a non-profit entity, was
awarded a contract of construction of a
museum by RBI, since assessee was to execute
work as directed by RBI as a contractor in lieu of
money, actual work not being charitable in
nature, asessee was not eligible for section 11
benefit.
[Creative Museum Designers v ITO [2020] 118
taxmann.com 464 (Kolkata - Trib.)]
26. Where Assessing Officer denied assessee's claim
of deduction under section 80P for reason that
assessee was essentially doing business of
banking and disbursement of agricultural loans
by it was only minuscule as per narration in loan
extracts in audit reports, since narration in loan
extracts in audit reports by itself may not be
conclusive to prove whether loan was
agricultural or non-agricultural, Assessing
Officer was to be directed to examine afresh
nature of each loan disbursement.
[Pattambi Service Co-operative Bank Ltd. v ITO
[2020] 118 taxmann.com 523 (Cochin - Trib.)]
27. There is no provision in section 115BBD to
eliminate dividend income received from
specified foreign company before setting off of
loss.
[Tata Motors Ltd. v Dy. CIT [2020] 118
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16. TAX UPDATES – SEPTEMBER ‘20
REETIKA G AGARWAL, FCA
taxmann.com 427 (Mumbai - Trib.)]
28. In order to get deduction under section 80-
IB(10) after completion of project, completion
certificate has to be obtained from concerned
authority i.e. Municipal Corporation.
[Dy. CIT v Shewale & Sons [2020] 118
taxmann.com 426 (Pune - Trib.)]
29. Where assessee did not deduct TDS on amount
paid on account of shipment charges to a
company during year under consideration,
Assessing Officer had rightly made disallowance
under section 40(a)(ia) of 30 per cent of said
expense.
[Amit Yadav RZ152 v ITO [2020] 118
taxmann.com 538 (Delhi - Trib.)]
30. 10% embargo on payment of interest wasn’t
applicable if refund arising due to self-
assessment tax before 01-06-2016.
[Maruti Suzuki India Ltd. v CIT [2020] 119
taxmann.com 40 (Delhi - Trib.)]
31. Where assessee challenged disallowance made
under section 36(1)(iii) on ground that it had
surplus interest free funds available in form of
capital contribution of partners for making
investment in non-business purposes, in view of
fact that once assessee paid interest on capital
contributed by partners, it no more remained
interest free fund, notwithstanding definition of
interest under section 2(28A) read in
juxtaposition to section 40 (b), plea raised by
assessee was to be rejected.
[Devi Construction Company v Dy. CIT [2020]
118 taxmann.com 361 (Pune - Trib.)]
***********
INTERNATIONAL TAXATION CASE LAWS
1. Where issue relating to section 90 of Income-
tax Act read with Double Taxation Avoidance
Agreement between India and USA had not
been raised before Assessing Officer or before
Commissioner (Appeals) or before Tribunal, but
for first time assessee had raised issue before
this Court and said issue had also been raised in
substantial questions of law, occasion to deal
with said issue in this tax case Appeal did not
arise.
[Growing Opportunity Finance (India) (P.) Ltd.
v Pr. CIT [2020] 119 taxmann.com 386
(Madras-HC)]
2. Sum paid to NR for quality check couldn’t be
held as FTS as it requires no technical
knowledge.
[DIT v Jeans Knit (P.) Ltd. [2020] 119
taxmann.com 305 (Karnataka)]
3. Matter referred to Larger Bench to examine
connotations of expression 'paid' appearing in
article 11 as in various decisions of Tribunal,
there was no discussion about connotations of
expression 'paid' and these decisions simply
proceed on basis that since expression 'paid' is
used in article 11(1) of India Cyprus tax treaty,
taxability of interest can only be on cash basis.
[Ampacet Cyprus Ltd. v Dy. CIT [2020] 119
taxmann.com 277 (Mumbai - Trib.)]
4. Amount received by assessee, a US based
company, from sale of copyrighted software
products/licences was in nature of business
income which in absence of assessee's PE of
India, could not be brought to tax said amount
was not as 'royalty' under article 12 of India-
USA DTAA.
[Digite Inc v ADIT [2020] 119 taxmann.com 339
(Delhi - Trib.)]
**********
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17. TAX UPDATES – SEPTEMBER ‘20
REETIKA G AGARWAL, FCA
TRANSFER PRICING CASE LAWS
1. Where Transfer Pricing Officer (TPO) finding
that royalty paid by assessee-company to its
holding company was higher than average
royalty paid by four comparable companies
made additions to income of assessee and
assessee filed an instant writ petition against
same, since statutory remedies were available
in system, assessee ought to have approached
Tribunal before approaching this Court, thus,
instant writ petition could not be entertained.
[Hyundai Motor India Ltd. v Dy. CIT [2020] 119
taxmann.com 302 (Madras-HC)]
2. Where assessee, engaged in manufacturing of
chemicals, had sold said products to AE and
non-AE and applied TNMM to benchmark said
transaction but TPO relying upon internal CUP
made addition to assessee's ALP in respect of
various products sold to AE, since intra AE
transactions were fundamentally different
character in economic circumstances and
contractual terms and these cannot be
compared with the independent transactions
entered into by assessee, TNMM applied by
assessee was correct method and application of
CUP method was not justified.
[Pr. CIT v Gulbrandsen Chemicals (P.) Ltd.
[2020] 119 taxmann.com 52 (Gujarat)]
3. Where assessee was engaged in providing ITES
and revenue sought inclusion of company
engaged in medical transcription services falling
under ITES, however, at same time revenue
sought exclusion of another company also
engaged in medical transcription services,
revenue's approach to TP study being not
uniform, issue of comparability of company
sought for inclusion was to be set aside to TPO
for afresh consideration.
[DY. CIT v State Street Services (India) (P.) Ltd.
[2020] 119 taxmann.com 276 (Bangalore -
Trib.)]
4. Where assessee obtained approval for
marketing its products, however, exported
finished goods to AEs located in respective
countries which in turn marketed goods and
assessee had not collected any amount over
and above selling price either from domestic
customers or from non-AEs, it could not be said
that AEs had exploited product
registration/license obtained by assessee from
various Governments and accordingly royalty
TP-adjustment was to be deleted.
[Himalaya Drug Company v ACIT [2020] 119
taxmann.com 421 (Bangalore - Trib.)]
5. Where assessee-company, engaged in
distribution of consumer durable products of its
A.E. in India, purchased finished goods from its
AE which owned intangible rights containing
brand name in respect of said goods, the A.O.
made addition on account of alleged
international transaction resulting from AMP
expenses incurred by assessee by applying
bright line test, since Bright line test as applied
by TPO was not appropriate, said transaction be
benchmarked by applying RPM and adjustment
be made accordingly.
[Haier Appliances India (P.) Ltd. v Dy. CIT
[2020] 119 taxmann.com 428 (Delhi - Trib.)]
6. Where TPO determined ALP of intra-group
services being availed by assessee from its AEs
on an ad-hoc basis without applying any of
prescribed methods as per section 92C(1), since
TPO did not follow mandate of section 92C in
determining ALP, matter was to be restored to
file of Assessing Officer/TPO for determination
of ALP of said international transactions by
method prescribed under section 92C(1), read
with Rule 10AB and 10B of Income-tax Rules,
1962.
[CLSA India (P.) Ltd. v Dy. CIT [2020] 119
taxmann.com 327 (Mumbai - Trib.)]
7. ALP of management service couldn’t be taken
as NIL if assessee achieved huge sales volume
with aid of said service.
[B.G. India Energy Solutions (P.) Ltd. v Dy. CIT
[2020] 119 taxmann.com 319 (Delhi - Trib.)]
8. Where assessee was rendering software
development services to AE, a company having
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18. TAX UPDATES – SEPTEMBER ‘20
REETIKA G AGARWAL, FCA
related party transactions in excess of 15
percent could not be accepted as comparable.
[Microchip Technology (India) (P.) Ltd. v ACIT
[2020] 119 taxmann.com 309 (Bangalore -
Trib.)]
9. Comparability of a case has to be considered on
year to year basis and, therefore, merely
because a case has been held to be comparable
for one year cannot per se be considered as
comparable for succeeding year as well
Whether a particular company is a comparable
or not is an exercise which has to be carried out
every year in case of an assessee considering
facts of that specific year.
[Elcome Technologies (P.) Ltd. v Dy. CIT [2020]
119 taxmann.com 233 (Mumbai - Trib.)]
10. Where inclusion of a company in comparable
list was not challenged by assessee before DRP,
comparability of said company was to be
restored to TPO/Assessing Officer for
consideration afresh.
[EF Information Systems (P.) Ltd. v Dy. CIT
[2020] 119 taxmann.com 152 (Bangalore -
Trib.)]
11. Where assessee-company entered into
international transaction with its AE and in
course of such transactions had paid freight
expenses and CUP method was adopted to
benchmark said transaction, since said method
was accepted in earlier years, in absence of any
change in facts and circumstances, TPO could
not make addition to assessee's ALP by applying
TNMM during relevant year.
[Dy. CIT v Agility Logistics (P.) Ltd. [2020] 119
taxmann.com 141 (Mumbai - Trib.)]
12. Where MAP resolution was passed on 29-1-
2018, i.e., much after order passed by Assessing
Officer/TPO/DRP making protective adjustment
for assessment year 2013-14,on account of
business restructuring that had take place in
assessment year 2010-11, issue was to be
restored to file of Assessing Officer/TPO for
deciding issue afresh in light of MAP resolution.
[BT Global Communications India (P.) Ltd. v
Addl. CIT [2020] 119 taxmann.com 120 (Delhi -
Trib.)]
13. Where assessee was adopting uniform policy
for not charging interest on export receivables
from both AEs as well as non-AEs, no addition
to assessee's ALP on account of notional
interest in respect of delay in export receivables
from AEs was warranted.
[S. Vinodkumar Diamonds (P.) Ltd. v Dy. CIT
[2020] 118 taxmann.com 317 (Mumbai - Trib.)]
14. Liability for payment of R&D Cess is that of
assessee and, thus, same should not be covered
within contractual payment of royalty or as
income of foreign company while determining
ALP of royalty payment made to AE.
[Dy. CIT v Landis+ Gyr Ltd. [2020] 118
taxmann.com 293 (Kolkata - Trib.)]
15. Where TPO made certain adjustment to
assessee's ALP in respect of AMP expenses
incurred by taking a view that same resulted in
brand building of AE, in absence of any
agreement between assessee and AE obliging
assessee to incur AMP expenses on behalf of
AE, no international transaction could be said to
have taken place and, thus, impugned
adjustment was to be set aside.
[Colgate - Palmolive (India) Ltd. v Addl. CIT
[2020] 118 taxmann.com 399 (Mumbai - Trib.)]
*************
Disclaimer: Above said information are taken
from publically available resources and believed
to be accurate.
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