the expenses on satellite link charges does not come within the scope of ‘telecommunication charges’ as provided in clause (iv) of Explanation 2 to section 10A and accordingly, the A.O. is directed not to exclude the same from export turnover.

tax partakes the nature of perquisites and was required to be offered for tax by grossing the same in view of sec. 195A of the Act. The assessee was thus required to offer such tax perquisites and pay tax thereon. However, such tax perquisites remained to be shown in the return of income filed by the assessee. - the penalty has been levied without appreciating the fact that the assessee was entitled to net pay from Daimler AG and Indian tax on salary received by the assessee from Daimler AG.

Once an income is not brought into India in convertible foreign exchange, the question of grant of deduction on that amount u/s 80RR does not arise. CIT(Appeals)-was right in not treating the TDS deducted from overseas fees as part of total receipts brought in India & eligible for deduction u/s 80RR of the Act. Coming to section 198, the deeming provisions refers to deductions of tax made under the Income-tax Act, 1961. Tax deducted at source in a foreign country, under their Laws, cannot be influenced by section 198 of the Indian Income-tax Act, 1961.

it has to be shown that the business of the assessee had been wholly or partly carried on from this office. There is no evidence to show that any business was carried on except that the address has been mentioned in the agreement. That by itself does not lead to inference of PE under these provisions. - It was used for exploitation of mineral oil when it was positioned at the appointed place for exploitation of mineral oil. It is the admitted position that if the time is reckoned from its positioning at the appropriate place, the period is less than 120 days. Therefore, it is held that the assessee did not have the PE in terms of Article 5(2)(j) also.

The provisions of Section 115 JB cannot be applied to the case of a banking company.

the provision of sections 87 and 88A to 88E also apply after the total income is computed under section 115JB of the Income Tax Act, 1961 and since the assessee’s total income includes the income from the taxable Securities Transactions, the assessee is entitled to a deduction of the amount equal to the STT paid by him in respect of the taxable Securities Transactions entered into in the course of business during the previous year.

CIT(A) is not justified in upholding the method adopted by the AO for calculating the interest u/s 244A of the Act by reducing the refund inclusion of the interest already granted from the tax refund to the assessee and computed the interest at the remaining amount .

Whether the CIT(A) has erred in deleting the disallowance of loss on obsolescence of inventory of Rs.96,36,531/- ? - Whether the CIT(A) has erred in deleting the disallowance of Rs.6,22,000/- on account of valuation of closing stock of finished gods ?

Special Bench: Whether the assessee is entitled to claim depreciation under section 32 of the Income Tax Act on the intangible assets termed 'Goodwill' acquired by the assessee for Rs. 10 crore.

approvals/registrations etc. amount to intangible assets entitled for depreciation u/s.32(1) (ii) of the Act. - while remanding the matter, the Commissioner of Income tax ought not to have given a specific direction to complete the assessment in a particular manner

the taxes paid by the employer on behalf of the employee is a perquisite within the meaning of section 17(2), which is not provided by way of monetary payment. Therefore, there is no reason not to exclude such payment of taxes from the total income of the assessee. In other words, taxes paid by the employer can be added only once in the salary of the employee. Thereafter, tax on such perquisite is not to be added again.

Whether CIT(A) has erred in law and on facts in directing to allow deduction u/s 80HHC of the Act in respect of export to Russia amounting to Rs.11,11,70,400/-. - Whether CIT(A) has erred in law and in facts while unrecognizing DEPB/License as export incentives covered under section 28(iiia) or 28(iii)(b) of I.T. Act-1961. - Whether  CIT(A) has erred while disallowing Public Issue Expenses of Rs.16,51,946/-.  - Whether CIT(A) has erred for not allowing 10% of DEPB/License instead of Export Incentives covered under section 28(iiia), (iiib) and 28(iiic) against indirect expenses for deduction u/s 80HHC(3)of I.T. Act.

Salman Khan was shooting a black duck which is prohibited under the law -some personal complaints have been lodged against the assessee which has nothing to do with professional activities and therefore expenditure incurred in defending against these allegation is definitely of personal nature and such expenditure cannot be allowed against the income from business and profession.

AIT-2010-460-ITAT
M/s. Gebbs Infotech Ltd. Vs. JCIT, Mumbai

Whether CIT (A) erred in not upholding the action of AO in not allowing set off of losses relying on Section 10B(6) of the Act and holding that the set off was not allowable u/s. 10A/10B. - Whether CIT (A) erred in not upholding the action of AO in not allowing deduction under Section 10B of the Act on receipt of Rs.3,60,04,610/- without appreciating the facts of the case. - Whether CIT (A) erred in not upholding the action of AO in not allowing deduction under Section 10B of the Act on proportionate amount worked out at Rs.1,74,34,738/-

In the assessment, the AO rejected the applicability of the Principle of Mutuality to the appellants and further added a sum of Rs.14,72,32,660/- to the income of the appellant by applying the provisions of section 68 of the Act on the basis that the genuineness, identity and creditworthiness of the donors could not be established. - organization is a charitable organization and is not formed by members, but is a TRUST, the principle that no person can make a profit out of himself, does not apply, and thus, we need not go into the other propositions canvassed by both the parties. Suffice to say that the principles of mutuality cannot be applied to this organization i.e. Lions Club International Foundation

CIT(A) erred in sustaining the penalty of Rs.1,47,603 u/s 271(1) (c) of IT Act being 100% of the tax sought to be evaded on the following two conditions  - i) adhoc disallowance of expenses Rs. 1,00,000/ - ii ) disallowance of claim u/s 80HHE Rs.3,03,370/-

The outstanding receivables is the financial result of the international transactions concluded by the assessee company with AE in USA and, therefore, the income effect arising, if any, to that outstanding receivables is very much a relevant aspect of ALP. Therefore, as a legal proposition we hold that the TPO is having the jurisdiction to examine the issue of outstanding receivables and noncharging of interest thereon. - AE has no working capital of its own to pay the assessee in time. It means that the AE was doing the business using the capital of assessee. AE collects money from clients as and when received even beyond normal period. It shows assessee is in fact financing the business of AE by accommodating delayed remittance of receivables.

Whether CIT[A] erred in applying the provisions of section 94(7) and setting off dividend income of Rs. 97,90,628 of assessment year 2002-03 against the short term capital loss of Rs. 1,06,03,428 of the assessment year 2003-04. Consequently, the learned CIT[A] erred in reducing the appellant’s claim for short term capital loss by Rs. 97,90,628 on the ground that provisions of section 94(7) of the Income Tax Act, 1961 are applicable in the appellant’s case.

the law laid down in the Dilip Sheroff case as to the meaning of word ‘concealment’ and ‘inaccurate’ continues to be a good law because what was overruled in the Dharmender Textile case was only that part in Dilip Sheroff case where it was held that mensrea was a essential requirement of penalty u/s 271(1)(c). The Hon’ble Apex Court also observed that if the contention of the revenue is accepted then in case of every return where the claim is not accepted by the AO for any reason, the assessee will invite the penalty u/s 271(1)(c). This is clearly not the intendment of legislature.

whether the sale of “off the shelf software product” by US based non-resident companies to independent Indian distributors is taxable in the hands of such non-resident companies as royalties within the meaning of Explanation 2 to section 9(1)(vi) of the Act as well as under Article 12 of Double Taxation Avoidance Agreement between India and US.

CIT(A) was right in holding that the monies received by the assessee company from Indian Branch is not in the nature of ‘Fees for included services’ within the meaning of Article 12(4) of the India-US Treaty. - CIT(A) was right erred in holding that since there is no PE in India the income so arising in India cannot be taxed under Article 7 as ‘business profits’.

whether the ld CIT(A) is justified in holding that the amount received by the appellant from the subscribers are in the nature of fees for technical services to the extent of subscription fees received for providing information/data on various products like financial/ forex/ commodity market and  ‘royalty’ for use of equipments such as shared printer, matrix etc., and accordingly, entire receipts are liable to tax @ 20% on gross basis u/s  44D r.w.s 115A.

 supply of software to Reliance does not amount to any transfer of copyright and payment can be only for purchase of copyrighted article and does not amount to royalty within the meaning of Article 12(3) of the DTAA.

the expenditure incurred by the assessee on leased premises, cannot be treated as capital expenditure and has to be allowed as Revenue expenditure. - the finding of the Tribunal that 12.5% of net ad revenues is arms length price, was not challenged by the Revenue, we uphold the findings of the first appellate authority.

the factum of the contract involved being a composite contract, of itself, per se, is not conclusive of the offshore supply portion thereof being taxable in India. This, particularly so, when undisputedly, the consideration for the offshore supply stands separately determined in the contract. It may be underlined that herein, undisputedly, all parts of the transactions have taken place outside India. - CIT(A) fell in error in confirming the taxation of the revenue earned from offshore supply of equipment to IOCL in India, even though such revenue had neither accrued or arisen in India, nor was it attributable to the activities of the assessee’s project office in India.

Special Bench: Whether in the facts and circumstances of the case, the remission of deferred sales tax liability is chargeable to tax as business income of the assessee u/s.41(1) being remission of trading liability or the same is exempt from tax as capital receipt being remission of loan liability - the deferred sales tax liability Rs.4,14,87,984/- being the difference between the payment of net present value Rs.3,37,13,393/- against the future liability of Rs.7,52,01,378/- credited by the assessee under the capital reserve account in its books of account is a capital receipt and cannot be termed as remission/cessation of liability and consequently no benefit has arisen to the assessee in terms of sec.41(1)(a) of the Income Tax Act, 1961.

the assesse is indeed justified in claiming deduction on account of interest paid on borrowings from its shareholders/ joint venture companies.

the amount of Rs.2,31,79,465/- which represents interest income and income from insurance, should be taxable as business income without appreciating the fact that the interest income is to be taxed as “Income from other sources” as per the Income Tax Act, 1961 unless and until the assessee is in the business of money lending, which is not the case here. - Once it is held that the disputed expenses are directly related to the Indian Project then the provisions of section 44C of the Act will not come into operation.

in the case of a trader where shares are held as stock-in-trade no part of interest on borrowed funds can be disallowed u/s 14A as incurred in relation to Dividend income.  - the interest on borrowed funds used for trading activity is an allowable expenditure under section 36(1)(iii) and the same cannot be treated as the expenditure for earning the dividend income which is incidental to the trading activity.

When the audit report was not required to be filed along with the “e” return of income filed and in view of the Circular no.9/2006 then no penalty can be levied u/s 271B on the ground of non-filing of the audit report.

when the assessee is prevented from deducting tax u/s 195, the question of his not performing the obligation under law does not arise and thus he cannot be held a defaulter. - the assessee cannot be held to be an assessee in default in terms of section 201 and 201(1A) of the Act. This is a case of impossibility of performance and the assessee is released from the obligation and hence the assessee is not an assessee in default.