Adverting to the present case, it is clearly evident that ‘reasons recorded’ were not provided to the assessee despite categorical directions by the ITAT and even when the so-called “reasons recorded” have been supplied after a gap of almost 11 years, it is amply clear from the face of it that the ‘reasons’ were not recorded prior to the issuance of notice under Section 148.
Recording of reasons in support of a decision on a disputed claim by a quasi-judicial authority ensures that the decision is reached according to law and is not the result of caprice, whim or fancy or reached on grounds of policy or expediency. A party to the dispute is ordinarily entitled to know the grounds on which the authority has rejected his claim.
AO has not given any reason for disallowing the claim. We also find that the AO has simply followed the findings of earlier assessment years. As similar additions in earlier assessment year has been deleted by Ld. CIT(A) which has been accepted by the Revenue as Committee on Dispute declined to give permission to the department to proceed with the appeal , findings of the Ld. CIT(A) become final. As Ld. CIT(A) has rightly pointed out that after the amendment in Section 36(1)(vii), the assessee is not required to demonstrate that the debt is bad .
The whole case revolves upon the lease deed dated 24.12.2004 executed between the lessor, Smt. Sudha Saraswat and the assessee-society through which the land measuring 5150.48 sq. meter was let out to assessee society for 30 years. Copy of the lease deed is appended with the assessment order. The assessee paid Rs. 10,000/- as premium and agreed to pay Rs. 150/- per month as rent of the demised property, i.e., 1800/- per annum.
Tribunal is not empowered to pass an order ‘thereon’ on the subject-matter which is not in appeal as per the appeal memo to be adjudicated upon. As far as the question of withdrawal of cross-objection is concerned, in the light of the above discussion, had the cross-objection was not withdrawn, even then, such a legal issue was beyond the scope of the adjudication through a cross-objection under section 253(4) because the impugned legal issue was altogether an independent as well as a separate issue.
Section 195 of the Act clearly states that any person responsible for paying to a non resident any interest or any other sum chargeable under the provisions of this Act shall at the time of credit of such income will income tax thereon at the rate inforce at the time of payment or credit. Therefore, the first test to be applied for deduction of TDS is to see whether income in the hands of payee is taxable in India or not.
By virtue of offering personal guarantee and collateral security for the benefit of the company, the liquidity position of the assessee had gone down. In the strict sense if it is to be construed the amount forwarded by the company to the assessee was not in the shape of advances or loans. The arrangement between the assessee and the company was merely for the sake of convenience arising out of business expediency. In the facts and circumstances of the case, it is not appropriate to hold that the amount withdrawn by the assessee partakes the character of deemed dividend under the provisions of section 2(22)(e).
DIC Asia Pacific Pte Ltd vs. ADIT Article 2(1) of the applicable tax treaty provides that the taxes covered shall include tax and surcharge thereon. Once we come to the conclusion that education cess is nothing but an additional surcharge, it is only corollary thereto that the education cess will also be covered by the scope of Article 2. Accordingly, the provisions of Article 11 and 12 must find precedence over the provisions of the Income Tax Act and restrict the taxability, whether in respect of income tax or surcharge or additional surcharge – whatever name called, at the rates specified in the respective article.
It is a fact that the assessee was employed as ‘Service Provider’ and during the period under dispute he was providing the service from Bangalore in India. As per the Co¬operation agreement dated 14.12.2004 entered into between the assessee and the Polish Company, the function of the assessee was ‘to support establishing and preparing organization of the company’s representative office in India by the date of 31st May 2005’. We are of the view that the function to support establishing and preparing organization can at best be termed as a management function but cannot be equated with ‘Top Level Managerial Position’.
Delhi High Court has upheld that ‘payment on account of goodwill is similar to assets like patents, copyrights, trademarks, licences referred to in the definition of the block of assets in the senses that the function of all these assets is to restrict their misuse and to earn maximum profits in the business. The function of goodwill acquired by the assessee also is the same in view of the fact that it maximizes the profits of the company. Since the function of intangibles defined in the Act and the intangible acquired by the assessee is the same, the assets are similar. Therefore, the assessee’s goodwill being a valuable commercial asset similar to other intangibles specified in the definition of block of assets is eligble to depreciation’.
