Commissioner of Income-tax v. Catapharma (India) (P.) Ltd.- Section 80HHC of the Income-tax Act, 1961 – Deductions – Exporters – Assessment year 1997-98 – Whether excise duty and sales tax form part of total turnover while computing deduction under section 80HHC – Held, no.
An Indian company engaged in computer software business set up a trading office in Japan. The company’s Japan branch suffered loss, which it claimed as deduction from profits earned in India. The assessing officer, however, held that since the profits of the trading office are taxable in Japan only, any loss incurred by the firm in respect of its trading office is not allowable as deduction from the income which is taxable in India.
The Income Tax Department has moved the Supreme Court against the ruling by a quasi-judicial body which held that foreign firms are not liable to pay tax on assignment amount charged from their Indian subsidiaries if contracts are signed outside the country. The I-T department challenged the decision of Authority of Advance Ruling (AAR) in a case concerning Swiss firm Honeywell Technologies SARL, which had received a fee from Honeywell Turbo India for supplying equipment to Tata Motors.
Central Board of Direct Taxes (CBDT) has recently issued Instruction (Income Tax) No. 9/2006, dated 7th November, 2006 (157 Taxman St.23/16 CAPJ St. 739) covering all aspects of procedure to be followed for conduct of revenue audit and also for dealing with audit objections including remedial actions to be taken by the departmental authorities. The present instruction is said to be issued in suppression of earlier instructions nos. 159, 484, 499, 612, 828, 854, 1046, 1057, 1071, 1176, 1205, 1473, 1598, 1609, 1928 & 1971.
The Government has come to the rescue of high net worth individuals on the borderline from an additional tax liability that goes beyond the income in excess of Rs 10 lakh. By way of a rule of thumb, the financial world condescends to grant the hallowed status of high net worth (HNW) individuals on those with assets of Rs 5 crore and more. The income-tax law on this touchstone ought to have imposed surcharge of 10 per cent on those having income of Rs 1 crore or more assuming 20 per cent return on wealth to be normal as a rule of thumb.
The Supreme Court has ruled that the companies have statutory obligation to deduct tax at sources (TDS) on interest payments for the loans taken in the name of its directors. The revenue department is empowered to impose interest on such a company for not deducting tax by declaring it assessee in default, the apex court said.
the Court direct the department to accept the return Forms which are submitted by the taxpayers, subject to a genuine difficulty. After acceptance of those return Forms, on scrutiny if it is found by the concerned officer that there is no genuine difficulty on the part of the taxpayer in giving the details required in various columns, those Forms may finally be treated as not filed as required, and they will be subject to final decision taken by the concerned officer. However, it is also made clear that if under the rules no Annexures are required to be attached then no Annexures shall be attached to the return Form.
Gross total income in Chapter VI-A means the total income computed in accordance with the provisions of the Act before making any deduction under the said Chapter VI-A. Thus, the only deductions which are excluded by that definition are those under Chapter VI-A. More importantly the total income has to be computed in accordance with the provisions of the Income Tax Act. Obviously, the provisions of Income Tax Act includes section 32-AB.
