Scheme of sub-sections (8), (10) and (12) of Section 132 makes it amply clear that there is a statutory obligation on the Revenue to communicate to the person concerned not merely the Commissioner’s approval but the recorded reasons on which the same has been obtained and that such communication must be made as expeditiously as possible
Income arising on account of offshore services and offshore supply of equipments would not be taxable. If the assessee is not liable to tax in view of the Article 8 (sic) of DTAA between India and Japan, then, irrespective of the amendment to section 9(1) of the Act, the assessee would not be liable to tax.
We notice that in this respect the provision is silent. We may therefore record that the interpretation adopted by the Tribunal in the impugned judgment would ordinarily give rise to a question of law particularly when it is pointed out that there is no previous decision of any High Court on the subject However, the issue has been made sufficiently clear by the CBDT Circular No.17/2008 dated 26-11-2008. In the said circular, this very issue has been examined and clarified in the following manner:—
A perusal of the impugned order passed by the Commissioner specifies that what was pending consideration before him was the application filed by the respondent for renewal of exemption certificate issued under section 80(G) of the Income Tax Act. The order passed by the Commissioner further specifies that a notice was issued to the respondent as to why the renewal application cannot be rejected. No notice was issued by the Commissioner to the respondent calling upon them to show cause with regard to violation committed by them to cancel the exemption certificate granted under section 80(G). In the absence of any such notice, the Commissioner committed an illegality in cancelling the exemption certificate granted in favour of the respondent.
In the present case the reasons disclose that the Assessing Officer reached the belief that there was escapement of income on going through the return of income filed by the assessee after he accepted the return under Section 143(1) without scrutiny, and nothing more.
The reasoning recorded by the assessing officer cannot be said to be totally irrelevant, as the relevancy is in the context of escapement of income for the assessment year and the information may be from any source outside and an information with reference to any earlier year is outside the purview of the record of the current assessment year.
Even a notional loss can be claimed by way of a business loss and as a deductible item in computing the income of the assessee for the year, as it is a computation on notional basis, it is made dependent on the manner of conduct of the assessee in respect of the earlier assessment period and particularly as to the assessee has been following this uniformly over a period of years and the test being when there was a notional gain as to whether it had been offered for tax etc.
It has also been argued that retrospectivity was not permissible because this amendment to the definition of “taxable service” is not merely clarificatory but brings about a substantive liability of taxation upon the service providers. It has also been contended that by giving a retrospective effect to this amendment to the definition of taxable service, the service provider is also saddled with liability to pay interest as well as penalty on the default in payment of service tax for the past period.
The bunch of correspondence relied upon by the petitioner has been collectively annexed as annexure “C” to the petition and referred to at paragraph 8 of the petition. The affidavit-in-opposition deals with paragraph 8 of the petition at paragraph 9 thereof and does not question the authenticity of the copy documents appended as annexure C to the petition.
No appeal is required to be filed when tax effect is less than Rs. 2 lakhs. The conditions mentioned in Clause-3 of the Circular dated 27.3.2000, are not attracted in this appeal. The circular has been issued by the Central Board of Direct Taxes and is binding upon the Department.
