When a notification is issued exercising the powers conferred under sub-section (3) of Section 90A of the Act, it can have effect only on those types of agreement mentioned in sub-section (1) thereof. If such a notification goes beyond that mandate, it will have to be ignored to the extent it goes overboard. Even if the term may be taxed has been given a meaning by the Government through a Notification No. 90A(3) of the Act, so as to extend such meaning to terms used in a Double Taxation Avoidance Agreement, it will have to be ignored.
From decision in case of CGG Veritas Services, SA (supra) it is clear that (i) fee for technical services having business PE or fixed place of profession will be assessable under section 44DA, (ii) fee for technical services without having business PE or fixed place of profession will be assessable under section 115A. The Tribunal has further held that fee for technical services from assessment year 2011-12, whether rendered in connection with prospecting for or extraction or production of mineral oil, will be assessable either under section 44DA or under section 115 depending upon the fact whether such receipts are effectively connected with PE or fixed place of profession or not.
In the case of Hyundai Heavy Industries Ltd. v. Union of India [2011] 12 taxmann.com 309/201 Taxman 237 of Uttarakhand High Court (Uttarakhand), it has been observed that a jurisdictional Commissioner is not to be nominated as a member of the DRP under rule 3(2) of the Rules. By doing this, the principle that justice must not only be done but seen to be done would be ensured. In the instant case, there was no dispute that one of the members of DRP was the DIT (TP-I)/jurisdictional Commissioner of the assessee when the draft assessment order was passed. Therefore, there was merit in the submissions of the assessee that the order passed by the DRP is liable to be set aside as the same is contrary to the observations of the High Court of Uttarakhand.
ACIT v. Subhash Sevaram Bhavnani Assessee sold his residential house on consideration of sum of Rs. 35,00,000/- on 03.11.2007 and has spent a sum of Rs. 30,44,695/- on purchase of plot and on construction of a residential house thereon. The construction of this residential house was completed in the month of March, 2008. Since the construction was completed within three years of transfer of capital asset, the ratio as laid down in the case of Subramaniya Bhat (supra) is applicable to the facts of this case as it has been clearly held in that case that for claiming deduction u/s 54, the construction of the house should be completed within the prescribed time limit and date of commencement of construction is not material for claiming deduction.
In the instant case, the admitted facts were that the objects of the assessee society were for welfare of resident of the colony and other maintenance services of the colony. Section 12AA requires that the Commissioner(Appeals) is to satisfy himself about the objects of the society and genuineness of the activities. Whether the object of the society was charitable or not was to be examined. Section 2(15) provides the definition of charitable purposes.
It is an admitted position that the air freight is paid to the agents on the actual basis and that the bills and air freight documents have been directly issued by the foreign airlines. The agents, while accepting payments for air freight components, have acted merely as agents of the respective airlines and have not received the air freight payments in their own right. In copies of airway bills, the name of these agents is shown as ‘Issuing carrier’s agent, further the agent’s code is given as ‘Agent’s IATA code’. There is thus enough material to demonstrate that the persons having received money for the air freight have received the same in their capacity as ‘issuing carrier’s agent’, i.e., agent of the airline concerned. The air freight payment is thus made to the foreign airlines, though through the agents. Therefore, the payments cannot be said to have been made to a resident company. Accordingly, the provisions of section 194C do not come into play.
DDIT V. Satellite Television Asian Region Ltd. It is an admitted fact that the assessee is a non-resident company having its principal place of business at Honkong and the various Channel Companies are also non-resident companies based in Honkong. Hence, the payment in question is made by a non-resident company to a non-resident company. In the return of income, while computing the taxable income, the assessee has shown his taxable income and also claimed deduction of the cost of advertising airtime procured from the Channel Companies on principal-to-principal basis outside India.
Here, we are concerned with the meaning of term fees for technical services as given in para 4 of Article 12. The FTS has been defined as the payment of any amount in consideration of service for ‘managerial’ or technical’ or ‘consultancy in nature, which is quite similar to definition given in Explanation 2 to Section 9(1)(vii). Looking to the nature of services provided by the assessee as has been described above, it is amply evident that it is mostly in the nature of ‘audit work’ wherein the auditors of the assessee visit the sites of the client’s and evaluate the clients quality system as prescribed in International Standard for ISO 9001/2, ISO 14001, QS 9000 etc.
The other factor which governs the happening of transfer is the handing over of possession. This section says “and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession continues in possession in part performance of the contract and has done some act in furtherance of the contract”. Retention of possession is open of the facet of part performance of contract. The agreement in question can be said to be a distinct transaction that has given rise to the event of allowing the contractor to enter into the property.
Provisions of section 12AA, which were inserted w.e.f. 01.04.1997 provides for procedure to be followed for registration under section 12AA. The provisions of section 12AA provides that the CIT shall pass an order in writing either granting or refusing to grant registration under section 12AA, whereas no such specific requirement of passing an order in writing is provided under the provisions of section 12A. Provisions of sub-section 3 of section 12AA provides that registration granted to the trust/institution either under section 12AA after 01.04.1997 or registration granted under section 12A prior to 01.04.1997 shall be cancelled by the CIT by passing an order in writing if the Commissioner is satisfied that the activities of such trust or institutions are not genuine or are not being carried out in accordance with the objects of the trust or institution.
