word ‘transfer’ does not include partition or family settlement. HC observed that it is well settled that a partition is not a transfer. What is recorded in a family settlement is nothing but a partition. Every member has an anterior title to the property which is the subject matter of a transaction, that is, partition or a family arrangement. So there is adjustment of shares, crystallization of the respective rights in family properties and therefore it cannot be construed as a transfer in the eyes of law.
Living allowance paid in addition to the regular salaries and benefits in India to the employees of Indian Company who are temporarily deployed in US will be exempt from tax. The deputation agreement between the taxpayers and the Indian Company clearly states that the additional compensation in the US has been paid in lump sum without any reference to meet personal expenses at the place where the duties of office or employment were to be performed. The additional compensation received by the taxpayers was in the form of a special allowance or benefit.
Assessee had acquired the business and also earned income out of the said transaction by cost plus basis. Thus, it can be seen that the assessee has not encountered the risk of having a single customer, whereas the same cannot be said as regards the comparables. As pointed out by the learned counsel for the assessee, the comparables were dealing in open market and therefore, they were prone to the marketing and technical risks. They would have incurred certain expenditure on marketing services and also to safeguard the technical use by them.
The Tribunal observed that the commission paid was disallowed by invoking provisions under Section 36(1)(ii) and not by invoking Section 40A(2)(b)(ii) of the Act. This implies that the AO had not disputed the services rendered by Renu Munjal but he was of the opinion that dividend had been paid in the garb of commission because it actually reduced the corpus available for distribution as dividend. Section 36(1 )(ii) of the Act had been incorporated to check, inter-alia, private companies from avoiding tax by distributing their profits to their members (showing them to be their employees) by way of commission and not by way of dividend. The AO was not correct in holding that the corpus for paying the dividend had reduced as it does not reflect the correct legal position with reference to section 36(1 )(ii) of the Act.
Reference was made to the decisions of Apex Court rendered in the case of M.P. Electricity Board 35 STC 188 (sic). In this case it was held that electricity is goods within the meaning of section 2(3) of Central Province and Virar Sales-tax Act. This decision was rendered in the context of the language of a particular statute. As such this meaning cannot be extended to the facts of the present case
Agreement between the assessee and the Non Resident is only for rendering services which cannot be considered as technical services and as there is no PE to the said non resident in India, the amount does not accrue or arise in India and further as there is no need for deducting the amount under section 195, there is no violation of provisions of section 195 and accordingly the same cannot be disallowed under section 40(a)(ia).
On the terms of the agreement, it appears to us, that it is only an agreement to share the product of the Research and Development allegedly without payment of royalty, but paying a consideration for the use described as the contribution towards the costs of the researchincurred by that particular party. This payment occurs only on use of the product of the research and not otherwise. This payment can hence only be understood as a consideration for the use of the process or formula developed by that member. It would satisfy the definition of royalty under Explanation 2 to Section 9(1 )(vi) of the Act. The applicant is either the recipient of the consideration or the conduit through which the consideration is paid to the concerned party.
The applicant is in the business of gathering, collating and making available or imparting information concerning industrial and commercial knowledge, experience and skill and consequently the payment received from the subscriber would be royalty in terms of clause (iv) of Explanation 2 to Section 9(1)(vi) of the Act. If so, the subscription received is royalty liable to be taxed as such under the Act.
In view of providing better services to its stakeholders and ensuring correctness of names approved through online mode (i.e. through STP mode without backend processing by RoC user), Ministry has decided to provide a facility for verification of such names by the RoC user on a real time basis for immediate action.
Q1. What is PMLA? PMLA refers to the Prevention of Money Laundering Act, 2002. Q2. When did the Prevention of Money Laundering Act come into force? The Prevention of Money Laundering Act, 2002 has come into force with effect from 1 July, 2005. The Act was amended by Prevention of Money Laundering (Amendment) Act 2009 w.e.f 01.06.2009.
