The assessee made a claim for working capital adjustment before the TPO. The TPO made a detailed analysis exhibiting how such an adjustment is to be granted. According to the assessee, the TPO made reference to Rule 10B(3) demonstrating comparability adjustment. On the strength of this Rule, the TPO opined that Indian transfer pricing provisions prescribed only reasonable accurate adjustment. He also pointed out that thereafter the TPO made reference to OECD Commentary and also the judicial precedents on comparability adjustment.
Since the provisions of section 10A and 10B are similar in nature and as the jurisdictional High Court decided the issue while considering the provisions of section 10B also respectfully following the above, we uphold the contention of assessee that carry forward business losses and depreciation cannot be set off to the profits of the undertaking while working the claim u/s 10B. Therefore, AO is directed to do the needful in light of the above principles laid down.
The voluntary contribution received by a trust created only for charitable or religious purposes is to be deemed as income u/s. 11 of the Act. In case some of the objects of the trust are charitable and some of the objects can be termed as non charitable then such a trust will not be covered u/s. 12 because then it is not a trust created wholly for charitable purposes.
Allocation of assets of the firm to the retiring partners is the basis for invocation of provisions of Section 45(4). In the case under consideration, neither there was any dissolution nor other event took place that had an effect of allocation of exclusive interest in any capital asset to the retiring partners. In these circumstances, FAA was justified in holding that conditions of Section 45(4) were not fulfilled. In our opinion the firm or the continuing partners were not liable to be taxed under the head ‘capital gains’,
The giving of reasons in support of their conclusions by judicial and quasi-judicial authorities when exercising initial jurisdiction is essential for various reasons. First, it is calculated to prevent unconscious, unfairness or arbitrariness in reaching the conclusions. The very search for reasons will put the authority on the alert and minimise the chances of unconscious infiltration of personal bias or unfairness in the conclusion.
Assessee has duly disclosed the gifts and there was no concealment in this regard. Only the assessee has failed to produce the alleged donor that the penalty has been imposed. I further find that section 271(1(c) of the Act postulates imposition of penalty for furnishing of inaccurate particulars and concealment of income.
The only other issue is against the decision of the learned CIT(A) for treating sum of Rs. 1,37,49,302 being payment of living allowance by the Indian company to expatriates as fees for technical services in the hands of the appellant. The facts apropos this issue are that the experts of the assessee deputed for rendering services to HME and HCM received living allowances as per the agreement entered into between the assessee and HME and HCM. The Assessing Officer included this amount in fees for technical services and assessed it accordingly. No relief was allowed in the first appeal.
Provisions of Section 10A are beneficial provisions; the explanation given by the CBDT in Circular No.697 dated 23.11.1999 entitling the assessee to the benefits of S.10A; and also the legal position that the Act has not restricted the assessee from outsourcing of certain services necessary for producing an article or a thing, say, web maintenance in this case, assessee should be held as eligible for relief under S.10A of the Act.
It is seen from the material on record that there is no contract of employment between the assessee-company and non-whole time directors. They were also not paid any fixed remuneration. The Board’s resolution dated May 15, 2002, which has been extracted in the impugned order of the Commissioner of Income-tax (Appeals) provides for payment of remuneration/ commission not exceeding one per cent.
The Assessing Officer has been entrusted the role of an investigator, prosecutor as well as adjudicator under the scheme of the Income-tax Act. If he commits an error while discharging the aforesaid roles and consequently passes an erroneous order causing prejudice either to the assessee or to the State Exchequer or to both, the order so passed by him is liable to be corrected.
