The Week That Was - Episode 26 (Feb 19, 2016)
CASE LAWS
2016-TII-96-ITAT-MUM-TP
TOPSGRUP ELECTRONIC SYSTEMS LTD Vs ITO : MUMBAI ITAT (Dated: February 19, 2016)
Income tax - ALP - investment in equity of AE - interest free loan - notional interest - potential income - purchase of equity on premium & recharacterisation of investment.
Whether where the international transactions of investing/subscribing in the equity capital of a foreign subsidiary does not result any income u/s 2(24)/potential income, the same is outside the purview of TP Regulations - YES: ITAT
Whether such transaction of investment in share capital of the subsidiary, on premium, can be recharacterised as an interest free loan to AE, merely on ground that the value at which the investment was made was far in excess of the book value as determined under Schedule III of the Wealth tax Act - NO: ITAT
Whether any addition can be made to the income of assessee on basis of such notional interest therefrom, which was not earned by the assessee - NO: ITAT
2016-TII-10-HC-DEL-INTL
ORACLE SYSTEMS CORPORATION Vs DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) : DELHI HIGH COURT (Dated: February 18, 2016)
Income Tax - Sections 44D, 115A (b) (A), 143(2), 147 & 148.
Keywords: reassessment of income - reasons to believe - enhancement of income.
Whether if the decision to re-open the assessment is not based on the audit objections but on independent reasons, it is apparent that the same is on account of a change in opinion - YES: HC
Whether even in case the proviso under Section 147 is not pressed into service, re-opening of assessment for the reasons disclosed by assessee would be considered as impermissible as it merely reflects an endeavor to charge enhanced tax on the basis of a change in opinion - YES: HC
Whether an assessing officer had power to review an Assessee's income that has escaped assessment on fulfillment of certain conditions - NO: HC