Tribunal has power to extend the period of stay beyond 365 days u/s.254(2A), third proviso, even if the delay in disposing off the appeal is not attributable to the assessee, there may be several other reasons for not disposing of the appeal by the ITAT.
The provisions of Penalty levied u/s 272B of Income Tax Act, 1961 are prospective i.e. it is applicable from the date of insertion of sub-clause (iv) to section 139A(5B) of the Act i.e. 01.06.2006.
From a perusal of the order of assessment, we find that all the submissions of the assessee before the Assessing Officer and his findings thereon are only in respect of whether the payment made by the assessee to the consultant M/s. IBM Corporation, USA was or was not taxable in India as royalty under Article 12(3) of the India-USA, DTAA or as Fees for included services under Article 12(4) of the India-USA, DTAA.
It is seen that the assessee has itself accepted that TNMM is similar to CPM excepting that CPM is based on gross margins whereas TNMM is based on net margins. The assessee has also accepted that if proper selection criteria are adhered to application of TNMM would also result in the fact that the price at which the assessee has undertaken the international transactions are at arm’s length.
A perusal of the statutory provisions makes it clear that it does not provide a blanket deduction i.e. in order to succeed in a claim of deduction; the concerned assessee has to derive profits and gains from any business referred to in sub-section (4). Further, sub-section (4) prescribes applicability of clause i.e. the case in which the deduction provision would apply. It is in this sub-section that the legislature has enumerated the nature of the undertakings, their activities in contributing raising of infrastructure.
Deeming of income accruing or arising in India are those situations where income has not actually accrued or arisen in India but still it will be deemed to accrue or arise in India. Hence, both the situations are mutually exclusive. If one case is falling within the ambit of income accrued and arisen in India, it cannot fall within the ambit of income deemed to accrue or arise in India and vice versa.
After considering the rival submissions and examining the record, there is no bona fide reason for excluding the above amount from the computation of income by assessee. As seen from the computation statement, assessee has not even claimed the tax credit for the amount deducted in Korea as the same has to be given credit in the hands of the principal company in Japan.
The proviso to sub-section (1) to section 209, inserted by the Finance Act, 2012 is prospective in nature and not with retrospective effect. The proviso was brought into operation with effect from 1-4-2012, therefore, the assertion of revenue is disagreed with. Even otherwise, the language used in section 209(1) is regarding payment of advance tax in the financial year, therefore, the proviso is not attracted for the impugned assessment year.
Section 44AD deems the net profit rate at 8% in cases where accounts are not maintained and turnover is up to Rs. 40.00 lacs. This however, does not mean that profit will lower when the turnover is more than Rs. 40.00 lacs.
A bare look at section 254(2) of the Act, which deals with rectification, makes it amply clear that a ‘mistake apparent from the record’ is rectifiable. In order to attract the application of section 254(2), a mistake must exist and the same must be apparent from the record. The power to rectify the mistake, however, does not cover cases where a revision or review of the order is intended.
