Case Laws

 

ITR’S TRIBUNAL TAX REPORTS (ITR (TRIB))

Volume 20 : Part 4 (Issue dated : 10-12-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Advance tax --Interest--Entire income liable to deduction of tax at source--No liability to interest for failure to pay advance tax--Income-tax Act, 1961, ss. 195(2), 234B, 234C, 234D-- National Petroleum Construction Company v. Additional Director of Income-tax (International Taxation) (Delhi) . . . 545

Bad debt --Debt written off in books--Allowable-- Channel Guide India Ltd. v. Assistant CIT (Mumbai) . . . 438

Business expenditure --Disallowance--Firm--Remuneration to partner--Disallowance of salary on estimate without comparative study--No ground for restricting salary--Direction to Assessing Officer to allow claim of salary paid to partner--Income-tax Act, 1961, s. 40(b)-- S. B. Agencies v. Assistant CIT (Calcutta) . . . 507

----Expenditure on acquisition of trade mark written off--Allowed earlier--Allowable in assessment years 2002-03 and 2003-04 also--Order of Commissioner (Appeals) set aside--Income-tax Act, 1961-- Mettler Toledo India P. Ltd. v. ITO (Mumbai) . . . 461

----Foreign travel expenses--Expenses incurred on business and pleasure trips--Direction to Assessing Officer to bifurcate expenses of business and pleasure trips and disallow expenditure relating to pleasure trips--Matter remanded--Income-tax Act, 1961-- Creamline Dairy Products Ltd. v. Deputy CIT (Hyderabad) . . . 510

----Payment to non-resident for facility of satellite up-linking and telecasting programmes and consultancy charges--Not royalty but business income of non-resident--Not taxable in India in absence of permanent establishment--No tax deductible at source--Expenditure allowable--Income-tax Act, 1961, ss. 9(1)(vi), (vii), Expln. 2 , 40(a)(i)--Double Taxation Avoidance Agreement between India and Thailand, art. 7-- Channel Guide India Ltd. v. Assistant CIT (Mumbai) . . . 438

Business loss --Loan in foreign currency for working capital--Loss due to fluctuation in rate of foreign exchange--Loss deductible--Income-tax Act, 1961-- Mettler Toledo India P. Ltd. v. ITO (Mumbai) . . . 461

Capital gains --Computation of capital gains--Sale of entire business as going concern--Slump sale--Liable to capital gains under section 50B--Income-tax Act, 1961, ss. 2(42C), 50B-- Mettler Toledo India P. Ltd. v. ITO (Mumbai) . . . 461

Depreciation --Higher depreciation for motor vehicles used in business of leasing--Matter remanded-- Channel Guide India Ltd. v. Assistant CIT (Mumbai) . . . 438

Exemption --New industrial undertaking in free trade zone--Law applicable--Effect of insertion and subsequent omission of section 10A(9)--Change in ownership in accounting year relevant to assessment year 2004-05--Change genuine--Exemption cannot be denied for assessment year 2004-05--Income-tax Act, 1961, s. 10A--CBDT Circular No. 8 of 2002 dated 27-8-2002-- WNS Global Services P. Ltd. v. ITO (Mumbai) . . . 470

Export --Deduction under section 10B--To be computed without setting off any carried forward losses of earlier assessment years--Income-tax Act, 1961, s. 10B-- CIT (Asst.) v. Charon Tec P. Ltd. (Chennai) . . . 487

----Exemption--Total turnover--Computation--Expenditure incurred in internet charges excluded from export turnover to also be excluded from total turnover--Income-tax Act, 1961, s. 80HHC-- CIT (Asst.) v. Charon Tec P. Ltd. (Chennai) . . . 487

Income or capital --Joint venture between Indian company and foreign company--Foreign company providing guarantee for loans from foreign banks--Termination of joint venture agreement--Amounts paid by foreign company directly to foreign banks in discharge of guarantee obligations--Amounts not assessable in hands of assessee--Income-tax Act, 1961-- Luxor Writing Instruments P. Ltd. v. Deputy CIT (Delhi) . . . 518

Method of accounting --Assessee in earlier years declaring income at 1 per cent. of outside India revenue and 10 per cent. of inside India revenue after claiming expenses on which tax deducted at source--Practice adopted by Assessing Officer in earlier years--Department not bound by it if found in contravention of law-- National Petroleum Construction Company v. Additional Director of Income-tax (International Taxation) (Delhi) . . . 545

Non-resident --Special provision for computation of profits from provision of services or facilities in connection with prospecting for, or extraction or production of, mineral oils--Assessee engaged in installation of off-shore platform--Not facility falling within meaning of provision--Special provision not applicable to assessee--Income-tax Act, 1961, s. 44BB-- National Petroleum Construction Company v. Additional Director of Income-tax (International Taxation) (Delhi) . . . 545

----Taxability in India--Permanent establishment--Turnkey project--Meaning of--Assessee having project office prior to award of contract and contract taking two years to complete--Project office was its permanent establishment--Assessee taxable on receipts attributable to it--Income attributable to permanent establishment not to extend to activities carried out outside India--Assessee having a permanent establishment in respect of installation and commissioning--All activities prior to installation and commissioning carried out in the U. A. E.--Profits attributable to supplies, erection and fabrication not taxable in India--Double Taxation Avoidance Agreement between India and the U. A. E., arts. 5(1), (2)(h), 7(1), (2), (3), (6)-- National Petroleum Construction Company v. Additional Director of Income-tax (International Taxation) (Delhi) . . . 545

----Taxability in India--Resident of Thailand, licensee of satellites owned by Government of Thailand--Service charges received from television channels for providing facility of broadcasting programmes through transponders located in satellites--Not royalty--Not taxable in India--Income-tax Act, 1961, s. 9(1)(vi)--Double Taxation Avoidance Agreement between India and Thailand-- Shin Satellite Public Co. Ltd. v. Deputy Director of Income-tax (International Taxation) (Delhi) . . . 427

Precedent --High Court--Different views of High Court--Decision favourable to assessee to be followed-- CIT (Asst.) v. Charon Tec P. Ltd. (Chennai) . . . 487

Reassessment --Validity--Assessee manufacturing curds and ghee--Additional depreciation granted on machinery used for standardisation and pasteurisation of milk--Machinery not required for assessee’s business--Reassessment to withdraw additional depreciation--Valid--Income-tax Act, 1961, ss. 32, 147-- Creamline Dairy Products Ltd. v. Deputy CIT (Hyderabad) . . . 510

----Validity--Export--Special deduction under section 80HHC allowed after scrutiny--Reassessment proceedings on ground that deduction was excessive--Not valid--Income-tax Act, 1961, ss. 80HHC, 147-- CIT (Dy.) v. Lee Pharma P. Ltd. (Hyderabad). . . 499

Refund --Interest on refund--No evidence to hold that assessment proceedings delayed due to assessee’s failure to produce relevant details--Assessee entitled to interest from date of payment till date of refund--Income-tax Act, 1961, s. 244A-- Metso Minerals (I) P. Ltd. v. Deputy CIT (Delhi) . . . 494

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance Agreement between India and Thailand :

Art. 7 -- Business expenditure--Payment to non-resident for facility of satellite up-linking and telecasting programmes and consultancy charges--Not royalty but business income of non-resident--Not taxable in India in absence of permanent establishment--No tax deductible at source--Expenditure allowable-- Channel Guide India Ltd. v. Assistant CIT (Mumbai) . . . 438

Double Taxation Avoidance Agreement between India and the U. A. E. :

Art. 5(1), (2)(h) --Non-resident--Taxability in India--Permanent establishment--Turnkey project--Meaning of--Assessee having project office prior to award of contract and contract taking two years to complete--Project office was its permanent establishment--Assessee taxable on receipts attributable to it--Income attributable to permanent establishment not to extend to activities carried out outside India--Assessee having a permanent establishment in respect of installation and commissioning--All activities prior to installation and commissioning carried out in the U. A. E.--Profits attributable to supplies, erection and fabrication not taxable in India-- National Petroleum Construction Company v. Additional Director of Income-tax (International Taxation) (Delhi) . . . 545

Art. 7(1), (2), (3), (6) --Non-resident--Taxability in India--Permanent establishment--Turnkey project--Meaning of--Assessee having project office prior to award of contract and contract taking two years to complete--Project office was its permanent establishment--Assessee taxable on receipts attributable to it--Income attributable to permanent establishment not to extend to activities carried out outside India--Assessee having a permanent establishment in respect of installation and commissioning--All activities prior to installation and commissioning carried out in the U. A. E.--Profits attributable to supplies, erection and fabrication not taxable in India-- National Petroleum Construction Company v. Additional Director of Income-tax (International Taxation) (Delhi) . . . 545

Income-tax Act, 1961 :

S. 2(42C) --Capital gains--Computation of capital gains--Sale of entire business as going concern--Slump sale--Liable to capital gains under section 50B-- Mettler Toledo India P. Ltd. v. ITO (Mumbai) . . . 461

S. 9(1)(vi), (vii), Expln. 2 -- Business expenditure--Payment to non-resident for facility of satellite up-linking and telecasting programmes and consultancy charges--Not royalty but business income of non-resident--Not taxable in India in absence of permanent establishment--No tax deductible at source--Expenditure allowable-- Channel Guide India Ltd. v. Assistant CIT (Mumbai) . . . 438

S. 9(1)(vi )--Non-resident--Taxability in India--Resident of Thailand, licensee of satellites owned by Government of Thailand--Service charges received from television channels for providing facility of broadcasting programmes through transponders located in satellites--Not royalty--Not taxable in India-- Shin Satellite Public Co. Ltd. v. Deputy Director of Income-tax (International Taxation) (Delhi) . . . 427

S. 10A --Exemption--New industrial undertaking in free trade zone--Law applicable--Effect of insertion and subsequent omission of section 10A(9)--Change in ownership in accounting year relevant to assessment year 2004-05--Change genuine--Exemption cannot be denied for assessment year 2004-05-- WNS Global Services P. Ltd. v. ITO (Mumbai) . . . 470

S. 10B --Export--Deduction under section 10B--To be computed without setting off any carried forward losses of earlier assessment years-- CIT (Asst.) v. Charon Tec P. Ltd. (Chennai) . . . 487

S. 32 --Reassessment--Validity--Assessee manufacturing curds and ghee--Additional depreciation granted on machinery used for standardisation and pasteurisation of milk--Machinery not required for assessee’s business--Reassessment to withdraw additional depreciation--Valid-- Creamline Dairy Products Ltd. v. Deputy CIT (Hyderabad) . . . 510

S. 40(a)(i) -- Business expenditure--Payment to non-resident for facility of satellite up-linking and telecasting programmes and consultancy charges--Not royalty but business income of non-resident--Not taxable in India in absence of permanent establishment--No tax deductible at source--Expenditure allowable-- Channel Guide India Ltd. v. Assistant CIT (Mumbai) . . . 438

S. 40(b) --Business expenditure--Disallowance--Firm--Remuneration to partner--Disallowance of salary on estimate without comparative study--No ground for restricting salary--Direction to Assessing Officer to allow claim of salary paid to partner-- S. B. Agencies v. Assistant CIT (Calcutta) . . . 507

S. 44BB --Non-resident--Special provision for computation of profits from provision of services or facilities in connection with prospecting for, or extraction or production of, mineral oils--Assessee engaged in installation of off-shore platform--Not facility falling within meaning of provision--Special provision not applicable to assessee-- National Petroleum Construction Company v. Additional Director of Income-tax (International Taxation) (Delhi) . . . 545

S. 50B --Capital gains--Computation of capital gains--Sale of entire business as going concern--Slump sale--Liable to capital gains under section 50B-- Mettler Toledo India P. Ltd. v. ITO (Mumbai) . . . 461

S. 80HHC --Export--Exemption--Total turnover--Computation--Expenditure incur-red in internet charges excluded from export turnover to also be excluded from total turnover-- CIT (Asst.) v. Charon Tec P. Ltd. (Chennai) . . . 487

----Reassessment--Validity--Export--Special deduction under section 80HHC allowed after scrutiny--Reassessment proceedings on ground that deduction was excessive--Not valid-- CIT (Dy.) v. Lee Pharma P. Ltd. (Hyderabad). . . 499

S. 147 --Reassessment--Validity--Assessee manufacturing curds and ghee--Additional depreciation granted on machinery used for standardisation and pasteurisation of milk--Machinery not required for assessee’s business--Reassessment to withdraw additional depreciation--Valid-- Creamline Dairy Products Ltd. v. Deputy CIT (Hyderabad) . . . 510

----Reassessment--Validity--Export--Special deduction under section 80HHC allowed after scrutiny--Reassessment proceedings on ground that deduction was excessive--Not valid-- CIT (Dy.) v. Lee Pharma P. Ltd. (Hyderabad). . . 499

S. 195(2) --Advance tax--Interest--Entire income liable to deduction of tax at source--No liability to interest for failure to pay advance tax-- National Petroleum Construction Company v. Additional Director of Income-tax (International Taxation) (Delhi) . . . 545

S. 234B --Advance tax--Interest--Entire income liable to deduction of tax at source--No liability to interest for failure to pay advance tax-- National Petroleum Construction Company v. Additional Director of Income-tax (International Taxation) (Delhi) . . . 545

S. 234C --Advance tax--Interest--Entire income liable to deduction of tax at source --No liability to interest for failure to pay advance tax-- National Petroleum Construction Company v. Additional Director of Income-tax (International Taxation) (Delhi) . . . 545

S. 234D --Interest--Entire income liable to deduction of tax at source--No liability to interest for failure to pay advance tax-- National Petroleum Construction Company v. Additional Director of Income-tax (International Taxation) (Delhi) . . . 545

S. 244A --Refund--Interest on refund--No evidence to hold that assessment proceedings delayed due to assessee’s failure to produce relevant details--Assessee entitled to interest from date of payment till date of refund-- Metso Minerals (I) P. Ltd. v. Deputy CIT (Delhi) . . . 494