Three Important Judgements On ITAT Stay Of Demand, S. 80-IB(10) And Transfer Pricing Inapplicability

The following are the important judgements on ITAT Stay of Demand, S. 80-IB(10) and Transfer Pricing Inapplicability:

CIT vs. Maruti Suzuki (India) Limited (Delhi High Court)

S. 254(2A): The Tribunal has no power to extend stay of demand beyond 365 days even if the assessee is not at fault. If dept seeks an adjournment, ITAT may either refuse it or dept should undertake not to recover the demand

(i) In view of the third proviso to s. 254(2A) of the Act substituted by Finance Act, 2008 with effect from 1st October, 2008, the Tribunal cannot extend stay beyond the period of 365 days from the date of first order of stay.

ITO vs. M/s Yash Developers (ITAT Mumbai)

S. 80-IB(10): Limit on extent of commercial area imposed by clause (d) of s. 80IB (10) inserted w.e.f. 1.4.2005 does not apply to projects approved before that date

In the assessee’s own case for the same project relating to AYs 2005-06 and 2006-07, which falls after the insertion of clause (d) to s. 80IB(10), the Tribunal held that the assessee is eligible for deduction u/s 80IB(10) in respect of the housing project. Not only this, in Manan Corporation 214 Taxmann 373 (Guj) it was held that the condition of limiting commercial establishment/shops to 2000 sq.ft, which has come into force w.e.f. 1.4.2005 would be applicable for projects approved on or after 1.4.2005 and where the approval of the project was prior to 31.3.2005, the amended provision would have no application for those projects. The Gujarat High Court placed heavily reliance on the decision of the Bombay High Court inBrahma & Associates 333 ITR 289 (Bom).

IJM (India) Infrastructure Ltd vs. ACIT (ITAT Hyderabad)

Transfer Pricing provisions do not apply if the AE is assessed in India & there is no chance of shifting of profits outside India or erosion of tax base

(iv) The object behind enactment of transfer pricing regulations is to prevent shifting of profits outside India as is brought out by Morgan Stanley 292 ITR 416 (SC) & Circular No. 14 to the Finance Act 2001. In the present case, there is no possibility of shifting of profits outside India or erosion of country’s tax base because the PE profits of the AE are assessable to tax in India. Therefore, the transactions with the AEs are outside the purview of the transfer pricing regulations.