The taxpayer instead of developing the land, transferred the development rights in respect of part of the land to a separate construction company.As per the agreement, the taxpayer jointly with the trust was required to convey the land to the proposed buyers. Instead of developing land, the taxpayer parted with the development rights in respect of part of the land forever. The possession of the land had also been given during the year along with development rights. This was an independent activity having no connection with the development of the remaining part of the land.
Provisions of section 40(a)(i) as it existed prior to it’s amendment by Finance Act, 2003, with “effect from 1-4-2004 provided for disallowance of payment made to a non-resident only where tax is not deducted at source’ on such payment at source. A similar payment to a resident does not result in disallowance in the event of non-deduction of tax at source, Thus a non- resident left with a choice of dealing with’ a resident for a non-resident in business would opt to deal with a resident rather than anon-resident owing to the provisions of section 40(a)(i).
As regards allegation of Withdrawal of exemption from Import Duty, it has been submitted that import of medical equipment had taken place in 1990 and does not pertain to the period under discussion. The duty exemption was withdrawn citing certain noncompliance, assessee has filed appeal before CESTAT challenging the order of withdrawal and that the assessee has complied with all the terms for exemption. The matter is subjudice before the said Tribunal. However, the machineries imported are used by the Hospital namely remote control X-ray system and whole body C.T. Scan. The exemption is with respect to duty under Customs Act and does not make the assessee non-charitable. It continues to render medical relief.
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,
