Admittedly, the return was processed u/s 143(1), as per the assessment order, on 15.05.2002 and the notice u/s 148 was issued on 28.03.2008. Therefore, as per section 151, the Assessing Officer was required to obtain the sanction of Joint Commissioner of Income tax as four years had lapsed from the end of relevant assessment year.
What is to be seen in the instant case, is whether the claim for deduction of depreciation u/s 32 of the Act, made by the assessee was bona-fide and whether all the material facts relevant thereto have been furnished and once it is so established, the assessee cannot be held liable for concealment penalty u/s 271(1)(c) of the Act.
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.
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.
A perusal of the above contents of the written submissions filed by the assessee before the TPO shows that the data was provided by the assessee before the TPO concerning the international transaction pertaining to availing of intra group services by the assessee from its associate enterprises.
Corpus donation could not be considered as general donation in AY 2006-07 and 2007-08, merely on the ground of its utilisation in AY 2008-09 for giving corpus donation to other charitable institutions. Further, as per instruction No. 1132/CBDT dated 05.01.1978, it has been clarified that the payment of a sum by one charitable trust to another for utilization by the donee trust towards its charitable objects is proper application of income for charitable purposes in the hands of the donor trust, and the donor trust will not loose exemption u/s 11.
In short the department’s argument that the Commissioner (Appeals) has not properly adjudicated the matter and hence the issue should be set aside cannot be accepted as Assessing Officer at the time of the assessment was of the view that the facts are same and when the issue travelled to the Commissioner (Appeals) without explaining the basis of coming to certain conclusions, made general observations.
The undisputed fact in the present case remained that the tax on the entire income received by the assessee was required to be deducted at appropriate rates by the respective payers u/s 195(2) of the Act. Had the payer made the deduction of tax at the appropriate rate, the net tax payable by the assessee would have been Nil. Thus there was no liability to pay advance tax by the assessee.
Even if the contract was considered to be a turnkey contract, entire contract revenue could not be taxed in India but only so much of the profit as was attributable to the PE India was liable to Indian taxation.
