NDV Associates

Notional interest on loan given to non-resident AE taxable under transfer pricing provisions

No TDS under section 194H required on payment of brokerage paid to an agency for facilitating derivatives trade

Deletion of penalty under section 271(1)(c) by Commissioner (Appeals) without recorded any finding as to whether or not assessee discharged onus in terms of Explanation 1 to section 271(1)(c) was not justified

Reliance on CA's opinion which dealt with accounting for expense (not its deductibility under the Act) will not save assessee from penalty under section 271(1)(c)

• The expert opinion furnished by CA was that there should be no problem with assessee in claiming expenditure as revenue in financial statements; the opinion was not in respect of claim under Income-tax Act; therefore, it can be said that the explanation tendered by assessee (against imposition of penalty) is not bona fide.

Important:

Where assessee-company was assessed under section 143(3), section 147 (first proviso) cannot be invoked merely by reason of a retrospective amendment to section 115JB

• Where assessee-company had disclosed fact of debit to P&L account towards provision for diminution in value of unquoted investments by an entry on expenditure side 'diminution in value of investments Rs. 15,33,22,500/-' and also by way of a Note appended to balance sheet which clearly explained said entry made in P&L account (and thus it was not a case where entry was imbedded in account books and required some more diligence than a cursory look at accounts to find it out) and Assessing Officer examined and enquired into said diminution in value in original assessment proceedings, it could not be said that assessee had failed to disclose fully and truly all material facts and first proviso to section 147 could not be invoked by reason of a retrospective amendment to section 115JB

• Where, however, return was not 'assessed' but only 'processed' under section 143(1)(a), the first proviso to section 147 is not applicable and assessment can be reopened after expiry of 4 years from the end of relevant assessment year if AO has 'reason to believe' that a particular item which had to be added to 'book profit' under section 115JB by virtue of a retrospective amendment but had not been so added and income has escaped assessment