“Taxsutra Database”, a true Income-tax research tool, is an archive of over 108430+ Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR (Trib) and also includes recent ‘unreported handpicked rulings of SC, HC & ITAT’. It is a completely integrated service with the following features:
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We are glad to present to you the 214th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!
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Expert Column
With a view to curb tax avoidance, BEPS Action Plan 6 imposes minimum standards to prevent grant of treaty benefits obtained by circumvention of either the treaty itself (e.g. treaty shopping through conduit finance arrangements) or of domestic tax legislations. Under the MLI provisions, Article 7 (which deals with prevention of treaty abuse and is applicable as a minimum standard), prescribes Principal Purpose Test (‘PPT’) as one of the measures to prevent treaty abuse.
In this regard, Vrinda Bagaria (Advocate) analyses the interplay of domestic general anti-avoidance rules (‘GAAR’) and treaty GAAR or the Principal Purpose Test (‘PPT’). Illustrating by way of an example on perpetual securities, the author explains that uncertainties in application and conflicting results of domestic GAAR, often render it unsuitable for prevention of treaty abuse in international context whereas “PPT ensures a consistent approach to meet common objectives of both states, in accordance with the treaty provisions.” Similarly, the author elucidates on the interplay of LOB (Limitation of Benefit) and PPT. The author also discusses about transactions which might lead to overlap of PPT and domestic GAAR. While signing off the author states that, “...while the MLI reveals prospects for ‘cooperative multilateral solution’, differing approaches adopted by states and the current stream of unilateral measures in digital taxation indicate that the road to multilateralism is far.”
Click here to read the article titled, “Interplay of Domestic GAAR and PPT – An Overview”
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Key Takeaways from Handpicked Rulings
1) ITAT: Section 115BBE does not apply to business receipts / business turnover – ITAT quashes revision order u/s 263 passed by PCIT made on the ground that AO failed to tax the undisclosed income of Rs.3,65,933/- as per provisions of sec. 115BBE (Tax on income referred to in sec. 68, 69 etc.); Explains that “business activity related income may not ordinarily get placed u/s 68 to section 69D of the Act”; Notes that, AO treated the undisclosed amount in bank account as undisclosed business receipt or turnover of the assessee, and hence, held that the provisions of section 115BBE does not apply; ITAT further held that, there is no concept of "partial application of mind", it should be either application of mind or non-application of mind......Click here to read and download ITAT order
2) SC: Right of daughter in coparcenary is by birth, it is not necessary that father coparcener should be living as on 9.9.2005 (date of amendment to the Hindu Succession (Amendment) Act, 2005) - SC holds that (i) Section 6 of the Hindu Succession Act, 1956 confer status of coparcener on the daughter born before or after amendment in the same manner as son with same rights and liabilities. (ii) The rights can be claimed by the daughter born earlier with effect from 9.9.2005 with savings as provided in Section 6(1) as to the disposition or alienation, partition or testamentary disposition which had taken place before the 20th day of December, 2004................Click here to read and download SC judgment
3) HC: Approval in terms of Sec. 10(17A) may either be express or implied, and in the latter – HC allows petitioner’s (Senior Security Advisor to the Union Home Ministry and an ex-an IPS officer, instrumental in Veerappan’s case) writ, sets aside CIT direction to the AO to allow the claim of exemption u/s 10(17A) on land allotted by State Government as ‘award’, only if the petitioner is able to produce an order granting approval of exemption by the Government of India u/s 10(17A)(ii); States that for purpose of Sec. 10(17A), “...‘approval’ of the Centre may either be express or implied, and in the latter, gleaned from surrounding circumstances and events.”,..........Click here to read and download HC Judgment
4) ITAT: Deletes concealment penalty levied on account of debatable issue of addition u/s. 43B on unclaimed expenditure - ITAT sets aside the order of the CIT(A) and directs the AO to cancel penalty levied u/s 271(1)(c) on account of addition u/s 43B of non-payment of service tax liability when the same has not been debited in the Profit & Loss Account nor claimed as an expenditure, which has become a debatable issue; Notes that CIT(A) in the assessee’s own case for AY 2012-13, deleted the addition of unpaid service tax which was added back by the assessee in its revised computation of income, and Revenue had ...........Click here to read and download ITAT order
5) ITAT: Assessment proceedings initiated u/s. 153C without issuance of notice thereunder, devoid of valid jurisdiction – ITAT sets aside the order passed by lower authorities, holds that notice is mandatory and a condition precedent for taking action against the assessee u/s 153C; ITAT ............Click here to read and download ITAT order
6) ITAT: No notional interest income taxable on security deposit held by assessee-owner – ITAT holds that addition made by the AO on account of notional income on the security deposit cannot be held to be legally valid; Assessee owned a property and received a security deposit for leasing the property, during the year, no rent was offered to tax and on inquiry it was found that the said property had been sold in year 2013-14, hence no income from rentals was offered; However, Assessee continued to hold the security deposit of Rs. 5 crores as the lease agreement had a lock-in-period; AO treated the security deposit as an underlying asset and an interest amount deemed to have derived from such a security deposit of Rs.63 lakh has been brought to tax under the head “income from other sources” which was confirmed by CIT(A); ITAT observes that the addition ........Click here to read and download ITAT order
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Over 108430+Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR(Trib) and which also includes recent unreported handpicked ruling
Completely integrated service with all the latest cases powered by an advanced search engine to provide a seamless user experience
Search results supported by active filters around Court Level, Location, Case Numbers and Citation
A Unique Bulls Eye application to further enhance search by including "Exact words", "Any of these", "none of these"
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Vrinda Bagaria (Advocate) analyses the interplay of domestic general anti-avoidance rules (‘GAAR’) and treaty GAAR or the Principal Purpose Test (‘PPT’). Illustrating by way of an example on perpetual securities, the author explains that uncertainties in application and conflicting results of domestic GAAR, often render it unsuitable for prevention of treaty abuse in international context whereas “PPT ensures a consistent approach to meet common objectives of both states, in accordance with the treaty provisions.” Similarly, the author elucidates on the interplay of LOB (Limitation of Benefit) and PPT. The author also discusses about transactions which might lead to overlap of PPT and domestic GAAR. While signing off the author states that, “...while the MLI reveals prospects for ‘cooperative multilateral solution’, differing approaches adopted by states and the current stream of unilateral measures in digital taxation indicate that the road to multilateralism is far.” 
