ITAT Mumbai in this case was of the view that the perusal of AS 14 does not support the contention of the taxpayer that the investment by the taxpayer over the net assets taken over should be treated as goodwill. It was held that unless the fair valuation of assets, including any goodwill, is carried out and investment is earmarked towards purchase of goodwill, there is no question of apportioning any amount of consideration towards purchase of goodwill. The consideration in the form of cancellation of investments cannot be said to have been made for purchase of assets at book value, when the fair value of each asset and liability is much higher.
India does not subscribe to the OECD model; hence, the commentary may have only persuasive value. However, it is needed to examine whether the India office was carrying on any essential and significant part of the activity in the scheme of business of the assessee. The Tribunal concurred with the decision of the case laws relied on by the assessee holding that where the RBI does not find any violation of an condition(s) imposed on its functioning, it shall be presumed to be carrying on preparatory or auxiliary activities until established otherwise. The Tribunal relied on the decision of the HC in the case of UAE Exchange Centre, where it was held that an LO cannot be construed as a PE unless its activities exceeds the permitted activities or the department is able to establish the contrary.
In the instant case, the assessee did not account the interest income as there was uncertainty about its recovery. The apprehension or the situation foreseen by the assessee has been vindicated by the subsequent developments, which were well highlighted in the written submissions furnished before us. Hence we are of the view that the decision taken by the assessee for not accounting the accrued interest on the reason that there was uncertainty about its recovery cannot be found fault with. It may also be noted that the assessee itself has become defunct.
The dispute is regarding assessment of income receivable by the assessee from the transfer of development rights. The case of the assessee is that granting of development rights was an integral part of development project which was one indivisible project and therefore, the income had to be assessed @ 25% as part of the development project. We, are however unable to accept the claim made by the assessee.
Assessee claimed set off of brought forward business loss of Rs. 64. 11 lakh for assessment year 1998-99 against the income of the relevant year i.e. assessment year 2006-2007. The assessee company was asked to submit its shareholding pattern as on 3 1st March, 1998 and 31st March, 2006. From the shareholding pattern submitted by the assessee which has been reproduced in the assessment order, the A.O. observed that as on the year ending 1998 M/s. Concept Reality & Securities Limited held 1,22,280 equity shares, being 58.12% of the total capital.
As per the amended law, development of infrastructure facility is sufficient for claim of deduction under section 80-IA(4) with effect from assessment year 2002-03. The relevant assessment year under consideration is also assessment year 2002-03 for which amended provisions of law is applicable.
As far as trade advances are concerned, there is no question of applicability of the provisions of section. 194. On facts, the Commissioner (Appeals) collected the details of advances categorized into trade advances and processing charges. Though he restricted the applicability of TDS provisions only to cash advances,
The assessee is a company engaged in the business of supply of LPG to its customers. It supplied the LPG cylinders to its customers on lease basis and collected security deposits. The customers can return the cylinders and take back the security deposits. It was observed by the Assessing Officer that the customers have returned the cylinders and taken back the security deposits.
In this case as found by the Commissioner of Income-tax (Appeals) the Assessing Officer in the course of assessment proceedings had called for the particulars regarding various items of income going into the computation of deduction under section 80HHC, for which the assessee had given the requisite details and particulars. Now the Assessing Officer has reopened the assessment to hold that the very same items of receipt has to be excluded in computing relief under section 80HHC. In other words, the Assessing Officer, on a reappraisal of the very same details, which was called for by him and furnished by the assessee, would like to come to a different conclusion. This clearly tantamounts to reopening is merely on a change of opinion.
While scrutinizing the balance sheet of the assessee, during the course of assessment proceedings, it was noticed by the Assessing Officer that the assessee has taken loan of Rs. 3,57,428/- from M/s. Third Eye Qualitative Researchers Pvt. Ltd. of which she is a director having substantial interest. Accordingly, the said loan of Rs. 3,57,428/- was added as deemed dividend u/s. 2(22)(e) of the I.T. Act. The AO sought explanation u/s. 271(1)(c) r.w. Explanation-1. The assessee furnished detailed reply dt. 6.3.2009. The explanation of the assessee was rejected by AO who levied minimum penalty of Rs. 1,20,310/-.
