Indian Tax Solution
Transfer Pricing: Law explained as to when the \"Resale Price Method\" (RPM) can be used with respect to related parties under Rule 10B (1)(b) + Law on determining arm?s length rate of the corporate guarantee commission/fee explained.
If the AO has not rejected the books of account, it means that the assessee has maintained the books of accounts in accordance with the prescribed standards as per s. 145 of the Act. If so, the AO is not entitled to make any addition on account of sale of goods out of books or for investment in stock out of undisclosed sources.
S. 271(1)(c): Bogus purchases cannot be assessed as \'unexplained expenditure\' u/s 69C if the transactions are duly disclosed and payments are through banks. The fact that the sellers are not traceable and the assessee surrendered the bogus purchases does not justify levy of penalty. Mere non-striking of the options in the s. 274 notice does not render the penalty proceedings void if the assessment order shows due application of mind.
S. 271(1)(c) penalty proceedings are \"quasi-criminal\" and ought to comply with the principles of natural justice. The non-striking of the irrelevant portion in the show-cause notice means that the AO is not firm about the charge against the assessee and the assessee is not made aware as to which of the two limbs of s. 271(1)(c) he has to respond. The fact that the assessment order is clear about the charge against the assessee is irrelevant (Samson Perinchery (Bom) followed, Kaushalya 216 ITR 660 (Bom) distinguished).
Transfer Pricing AMP Adjustment: Entire law on whether the advertisement expenditure incurred by the Indian AE towards brand of a foreign company can be treated as an \"international transaction\" and whether a notional adjustment can be made in the hands of the Indian AE towards compensation receivable from the foreign AE for \"deemed brand development\" explained.
Plea that the appeal was mistakenly withdrawn on the advice of Counsel and that the same should be restored should be backed by evidence. If the assessee voluntarily withdraws the appeal, he cannot seek restoration on the ground that the withdrawal was an apparent mistake.
Purchases cannot be treated as bogus merely on the basis of the statements and affidavits filed by the alleged vendors before the sales-tax department. The said statements cannot be relied upon without cross-examination of the parties.
If the difference between the sale consideration of the property shown by the assessee and the FMV determined by the DVO u/s 50C(2) is less than 10%, the AO is not justified in substituting the value determined by the DVO for the sale consideration disclosed by the assessee.
There is no occasion to read Article 9 as confined to enabling ALP adjustment in respect of only domestic entities.
The AO is bound to grant deduction if the R&D facility is approved by the competent authority. He has no jurisdiction in sit in judgement over the approval. The fact that the competent authority did not file the report with the department as prescribed is a technical lapse for which the assessee is not liable.
If the AO takes the view that the income referred to in the reasons has not escaped assessment, he loses jurisdiction to assess other escaped income that comes to his notice during reassessment.
The proviso to s. 50C inserted by the Finance Act 2016 w.e.f. 01.04.2017 to provide that the stamp duty valuation of property on the date of execution of the agreement to sell should be adopted instead of the valuation on the date of execution of the sale deed is curative and intended to remove an undue hardship to the assessee and an apparent incongruity.
In valuing the shares of a privately held co, the \"enterprise valuation\" has to be taken by valuing even the assets held by subsidiaries of the Company. It is common for the sellers to charge a \"controlling premium\" for the sale of the shares. Such transfers to enable restructuring and re-aligning the shareholding pattern are genuine and bona fide. The alleged excess consideration for the sale of the shares cannot be treated as \"unexplained income\".
Attitude of the Revenue in not returning seized assets despite assessee having succeeded in appeal is clearly arbitrary and shows an attitude of undue harassment to the assessee in the garb of public Revenue. Interest of public revenue does not authorize Revenue Authorities to work without any authority and create or cause all kinds of harassment to innocent people on the pretext of statutory authority.Ã?Â
Law explained as to when a \"power of attorney\" holder of a non-resident can constitute a \"dependent agent\", \"fixed place of business\" and a \"permanent establishment\" under Article 5 of the DTAA. The fact that the physical presence of the non-resident in India is nominal is irrelevant.