2010-TIOL-NEWS-036, Dated: Friday, February 12, 2010

Income tax - Writ - Sec 234C, 119(2)(a) - Interest on delayed payment of advance tax - assessee files an application to the CBDT for waiver of interest - Board rejects it without attributing any reason - assessee goes in writ - held, while disposing an application under Section 119(2)(a) the Board acts as a quasi-judicial authority, and it should certainly give reasons even though the Act does not explicitly refer to the provision of such reasoning in the order - Once an application is entertained, it should be disposed of by giving reasons - Assessee's appeal allowed : MADRAS HIGH COURT ;

Income tax - Sec 36(1)(iii), 158BC - Block assessment - AO makes additions by disallowing interest expenditure, claim of loss and undisclosed investments in shares - CIT(A) and Tribunal delete the same - held, the CIT(A) and the Tribunal have found that apart from one unsigned letter allegedly indicating back to back transaction there is no evidence to prove that the assesse is involved in benami transactions - AO has made no inquiry even on remand order of the CIT(A) nor any information was gathered from the bank - additions are clearly based on assumptions and presumptions - no infirmity in Tribunal's order - Revenue's appeal dismissed : GUJARAT HIGH COURT ;

Income tax - capital gains - Assessee company borrows funds from its Director to buy a piece of land for building a hotel - for certain reasons the hotel could not be constructed - assesse sells off the property - also pays interest to the Director on borrowed fund and adds the same to the cost of acquisition of the asset for computing long-term capital gains - AO disallows - Tribunal grants relief to the assessee - held, since interest had accured on the loans, the same is to be added to the cost of acquisiton of the asset - Revenue's appeal dismissed : KARNATAKA HIGH COURT ;

M/s Asianet Communications Ltd Vs The DCIT, Chennai (Dated: December 11, 2009)

Income tax - Sec 40(a)(i), 195, 263 - Indo-US DTAA Art 26(3), Indo- UK DTAA Art 26(4)- Assessee is a TV broadcasting and software development company - makes payments to non-residents for hiring satellite transponders utilised for uplinking and downlinking of signals through earth stations - fails to deduct tax at source u/s 195 on the ground that the recipients had no PE in India and the payments made are not royalty as per Explanation 2 to Sec 9(1)(vi) - AO invokes provisions of Sec 40(a)(i) to make disallowance - Whether there is a process involved in uplinking and downlinking of TV programmes which attracts royalty provisions - Whether disallowance of such payments are discriminatory in terms of the DTAAs. : CHENNAI ITAT ;

2010-TIOL-74-ITAT-DEL

M/s A R Chadha & Co India (P) Ltd Vs DCIT,Co Circle - 1 (1), New Delhi (Dated: November 30, 2009)

Income Tax - Section 2(22)(e) - AO after considering the fact that the Assessee had taken an advance from the company where the Assesee is having holding of 47.5% of shares which is covered by the accumulated profit of the said company, the AO treats the amount as deemed dividend in the hands of the Assessee company and added the same to the total income - CIT(A) confirms AO's order - Held, loans and advances taken in earlier years ending on 31.03.2001 being the reserve and surplus for the year ended on 31.03.2001 could be treated as deemed dividend u/s. 2(22)(e) for the year ended on 31.03.2001. It is, clear that Assessee had received loans and advances. Issue remanded to AO for working out actual amount of loans or advances which could be treated as deemed dividend u/s. 2(22)(e) on the basis of observation made.

Section 2(22)(e) - On the issue of CIT(A) confirming the action of the AO in making an addition on account of deemed dividend u/s. 2(22)(e) in respect of amount received from another company indirectly related - Held, Assessee company cannot be said to be a registered share holder and a beneficiary. This issue is settled by the decision of Special Bench of Income Tax Appellate Tribunal Bombay Bench in the case of ACIT vs. Bhaumik Colour (P) Ltd. Addition deleted. Issue decided in favour of the Assessee

On the issue of CIT(A) confirming the AO action of not allowing the deduction on account of house tax against the Income From House Property.-Held, it is clear that Assessee has adopted a contradictory stand in claiming the house tax paid as, on the one hand, Assessee claimed the deduction on the date when the cheques were cleared, but, on the other hand, the Assessee claimed deduction on the basis of handing over the cheque to the MCD though the same was not cleared on 30.03.2002.CIT(A) order upheld. Assessee Ground rejected.Appeal partly allowed. : DELHI ITAT ;