Volume 36 : Part 5 (Issue dated : 22-12-2014) SUBJECT INDEX TO CASES REPORTED Business expenditure --Bad debt--Advances written off--Failure by assessee to establish nature of advance and circumstances constituting write off--Not allowable--Income-tax Act, 1961, s. 28-- Element K India P. Ltd. v. ITO (Delhi) . . . 604 ----Disallowance--Payment subjects to deduction of tax at source--Assessee deducting tax at source under wrong provision resulting in short deduction of tax--Expenditure not to be disallowed--Income-tax Act, 1961, s. 40(a)(ia)-- Element K India P. Ltd. v. ITO (Delhi) . . . 604 ----Expenses on computer consumables and small accessories, repairs and maintenance--Failure by assessee to demonstrate expenses were revenue in nature--Not allowable--Income-tax Act, 1961-- Element K India P. Ltd. v. ITO (Delhi) . . . 604 Capital or revenue expenditure --Purchase of software for use as component in manufacture of product for export--Raw material not asset of business--Expenditure on purchase revenue in nature--Income-tax Act, 1961, s. 37-- Lampex Electronics Ltd. v. Deputy CIT (Hyd) . . . 672 Capital or revenue receipt --Business of power generation--Sale of carbon credits--Transfer of sale receipts to sister concern--Sale of carbon credit not directly linked with power generation--Capital receipt--Income-tax Act, 1961, s. 80-IA-- Deputy CIT v. Sree Rayalaseema Green Energy Ltd. (Hyd) . . . 627 Charitable purpose --Charitable trust--Exemption--Renewal of registration under section 80G--Registration enures in perpetuity--Fresh application in writing for renewal of exemption not required--Commissioner can withdraw approval only in accordance with law--Income-tax Act, 1961, ss. 12AA, 80G(5)-- Dream and Beauty Charitable Trust v. CIT (Chandigarh) . . . 686 ----Computation of income--Cost of acquisition of asset treated as application of income for purpose of exemption--Depreciation on assets allowable--Income-tax Act, 1961, s. 11--Deputy DIT (Exemptions) v. Sri Rangalatchumi Educational Trust (Chennai) . . . 654 Donation to charitable institution --Approval of institution--Dominant object of trust for benefit of particular community and religious in nature--Contravening provisions of section 80G(5)--Denial of approval justified--Income-tax Act, 1961, s. 80G(5)-- Yug Chetna Parmarth Trust v. CIT (Agra) . . . 693 Income --Expenditure in relation to income not includible in taxable income--Dividend--Assessee carrying on business and at same time making investment in shares--Primary responsibility upon assessee to specify expenditure incurred for earning exempt income--Assessee denying incurring of expenditure in dealing with shares--Rule 8D to be applied--Income-tax Act, 1961, s. 14A--Income-tax Rules, 1962, r. 8D-- East West Rescue P. Ltd. v. Deputy CIT (Delhi) . . . 660 International transactions --Arm’s length price--Determination--Software development services--Selection of comparables--Turnover filter--Company with advertisement, marketing and distribution expenses less than 3 per cent. of sales to be included--Related party transactions--Company with revenues from related party transactions less than 25 per cent. of total income can be taken as comparable--Functionally similar companies to be included--Companies having high turnover and functionally different companies to be excluded--Software product companies not comparable with companies in software services--Comparables which had suffered merger or demerger to be excluded--Matter remanded to Transfer Pricing Officer to determine inclusion or exclusion of comparables--Income-tax Act, 1961, s. 92CA-- Element K India P. Ltd. v. ITO (Delhi) . . . 604 ----Determination of arm’s length price--Transactional net margin method--Software and information technology enabled services--Selection of comparables--Companies having functional dissimilarity, high turnover, super normal profit and varying profit margin to be excluded from comparables--Company rendering high end knowledge process outsourcing services cannot be compared with assessee rendering low end information technology services--Failure by Transfer Pricing Officer to examine comparables in functions, asset and risk analysis--Matter remanded to Transfer Pricing Officer for fresh consideration--Income-tax Act, 1961, s. 92CA-- PTC Software (India) P. Ltd. v. Deputy CIT (Pune) . . . 578 Revision --Commissioner--Depreciation--Windmill--Failure by Assessing Officer to record reasons for allowing higher depreciation on windmill and copper wound transformer and other electrical items used in DP yard--Non-application of mind to materials filed--Revision proper--Income-tax Act, 1961, ss. 32, 263-- Peekay Steel Castings P. Ltd. v. Assistant CIT (Cochin) . . . 677 ----Commissioner--Income from house property--Business--Business income or income from house property--Assessing Officer accepting statement of computation of income under head “House property†--Order neither erroneous nor prejudicial to interests of Revenue--Revision to tax income as business income--Change of opinion--Issue concluded in earlier orders cannot not be revised--Revision barred by limitation--Income-tax Act, 1961, s. 263-- K. Raheja IT Park (Hyderabad) P. Ltd. v. CIT (Hyd) . . . 632 SECTIONWISE INDEX TO CASES REPORTED IN THIS PART Income-tax Act, 1961 S. 11 --Charitable purpose--Computation of income--Cost of acquisition of asset treated as application of income for purpose of exemption--Depreciation on assets allowable-- Deputy DIT (Exemptions) v. Sri Rangalatchumi Educational Trust (Chennai) . . . 654 S. 12AA --Charitable purpose--Charitable trust--Exemption--Renewal of registration under section 80G--Registration enures in perpetuity--Fresh application in writing for renewal of exemption not required--Commissioner can withdraw approval only in accordance with law--Dream and Beauty Charitable Trust v. CIT (Chandigarh) . . . 686 S. 14A --Income--Expenditure in relation to income not includible in taxable income--Dividend--Assessee carrying on business and at same time making investment in shares--Primary responsibility upon assessee to specify expenditure incurred for earning exempt income--Assessee denying incurring of expenditure in dealing with shares--Rule 8D to be applied--East West Rescue P. Ltd. v. Deputy CIT (Delhi) . . . 660 S. 28 --Business expenditure--Bad debt--Advances written off--Failure by assessee to establish nature of advance and circumstances constituting write off--Not allowable--Element K India P. Ltd. v. ITO (Delhi) . . . 604 S. 32 --Revision--Commissioner--Depreciation--Windmill--Failure by Assessing Officer to record reasons for allowing higher depreciation on windmill and copper wound transformer and other electrical items used in DP yard--Non-application of mind to materials filed--Revision proper-- Peekay Steel Castings P. Ltd. v. Assistant CIT (Cochin) . . . 677 S. 37 --Capital or revenue expenditure--Purchase of software for use as component in manufacture of product for export--Raw material not asset of business--Expenditure on purchase revenue in nature-- Lampex Electronics Ltd. v. Deputy CIT (Hyd) . . . 672 S. 40(a)(ia) --Business expenditure--Disallowance--Payment subjects to deduction of tax at source--Assessee deducting tax at source under wrong provision resulting in short deduction of tax--Expenditure not to be disallowed-- Element K India P. Ltd. v. ITO (Delhi) . . . 604 S. 80-IA --Capital or revenue receipt--Business of power generation--Sale of carbon credits--Transfer of sale receipts to sister concern--Sale of carbon credit not directly linked with power generation--Capital receipt-- Deputy CIT v. Sree Rayalaseema Green Energy Ltd.(Hyd) . . . 627 S. 80G(5) --Charitable purpose--Charitable trust--Exemption--Renewal of registration under section 80G--Registration enures in perpetuity--Fresh application in writing for renewal of exemption not required--Commissioner can withdraw approval only in accordance with law--Dream and Beauty Charitable Trust v. CIT (Chandigarh) . . . 686 ----Donation to charitable institution--Approval of institution--Dominant object of trust for benefit of particular community and religious in nature--Contravening provisions of section 80G(5)--Denial of approval justified-- Yug Chetna Parmarth Trust v. CIT (Agra) . . . 693 S. 92CA --International transactions--Arm’s length price--Determination--Software development services--Selection of comparables--Turnover filter--Company with advertisement, marketing and distribution expenses less than 3 per cent. of sales to be included--Related party transactions--Company with revenues from related party transactions less than 25 per cent. of total income can be taken as comparable--Functionally similar companies to be included--Companies having high turnover and functionally different companies to be excluded--Software product companies not comparable with companies in software services--Comparables which had suffered merger or demerger to be excluded--Matter remanded to Transfer Pricing Officer to determine inclusion or exclusion of comparables-- Element K India P. Ltd. v. ITO (Delhi) . . . 604 ----International transactions--Determination of arm’s length price--Transactional net margin method--Software and information technology enabled services--Selection of comparables--Companies having functional dissimilarity, high turnover, super normal profit and varying profit margin to be excluded from comparables--Company rendering high end knowledge process outsourcing services cannot be compared with assessee rendering low end information technology services--Failure by Transfer Pricing Officer to examine comparables in functions, asset and risk analysis--Matter remanded to Transfer Pricing Officer for fresh consideration-- PTC Software (India) P. Ltd. v. Deputy CIT (Pune) . . . 578 S. 263 --Revision--Commissioner--Depreciation--Windmill--Failure by Assessing Officer to record reasons for allowing higher depreciation on windmill and copper wound transformer and other electrical items used in DP yard--Non-application of mind to materials filed--Revision proper-- Peekay Steel Castings P. Ltd. v. Assistant CIT (Cochin) . . . 677 ----Revision--Commissioner--Income from house property--Business--Business income or income from house property--Assessing Officer accepting statement of computation of income under head “House property†--Order neither erroneous nor prejudicial to interests of Revenue--Revision to tax income as business income--Change of opinion--Issue concluded in earlier orders cannot not be revised--Revision barred by limitation-- K. Raheja IT Park (Hyderabad) P. Ltd. v. CIT (Hyd) . . . 632 Income-tax Rules, 1962 R. 8D --Income--Expenditure in relation to income not includible in taxable income--Dividend--Assessee carrying on business and at same time making investment in shares--Primary responsibility upon assessee to specify expenditure incurred for earning exempt income--Assessee denying incurring of expenditure in dealing with shares--Rule 8D to be applied--East West Rescue P. Ltd. v. Deputy CIT (Delhi) . . . 660
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