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.
The requirement of recording of reasons and communication thereof has been read as an integral part of the concept of fair procedure and safeguard to ensure observance of the rule of law. We may point out that a ‘decision’ does not merely mean the ‘conclusion’. It embraces within its fold the reasons forming basis for the conclusion.[Mukhtiar Singh Vs. State of Punjab,(1995)1SCC 760(SC)].
DCIT v. Sports Station (India) (P.) Ltd. As is apparent from the impugned order, the Assessing Officer did not bring any material on record for holding that the payment of interest at the rate of 15 per cent per annum to unsecured creditors was excessive and how interest at the rate of 12 per cent per annum was reasonable or represented fair market value for the services and facilities.
The assessee is an individual who is the Managing Director of Cadence Design Systems India Pvt.Ltd. For the AY 2004-05, he filed a return of income at `1,75,05,081/- comprising of salary income at `1,02,72,400/- from Cadence Design Systems India Pvt.Ltd. and salary income of `65,97,305/- from Cadence Design System Inc.,USA. The assessee has been granted stock option under an incentive stock option agreement dated17th September, 1993with Cadence Design Systems,USA. During the year under consideration, the assessee sold the stock options and received the sum of `11,36,829/- on sale of such stock options. The same was declared as long term capital gain. The Assessing Officer assessed the same as short term capital gain and also levied penalty under Section 271(1)(c) thereon at `2,50,102/- being the difference between the tax as short term capital gain and tax as long term capital gain on the sum of `11,36,829/-. The learned CIT(A) cancelled the penalty. Hence, the Revenue is in appeal.
Hon’ble Delhi High Court in the case of Vardhman Overseas Ltd. (supra) has observed that section 41(1) has been incorporated in the Act to cover a particular facts situation. Section applies where a trading liability was allowed as a deduction in earlier years in computing the business income of the assessee and the assessee has obtained a benefit in respect of such trading liability in later year by way of remission or cessation of the liability. In such a case, the section says that whatever benefit has arisen to the assessee in the later year by way of remission of the liability will be brought to tax in that year.
ACIT v. Result Services (P.) Ltd. – The assessee is paying rent to the holding company as reimbursement since last many years. This position has been accepted by the department all through and it has been never disputed even when provisions for TDS were on statute since 1994. Section 194-I of the Income-tax Act, 1961 was inserted in Act w.e.f. 01.06.1994. Similarly, this position was also not disputed even after the amendment in section 40(a)(ia) of the Act by the Taxation Law (Amendment) Act, 2006 w.e.f. 1.4.2006.
We find that certain fresh documents have been produced before CIT(A) and CIT(A) without calling for remand report or confronting such material to the Assessing Officer has passed the impugned order in a very precise manner to delete the impugned addition which is not justified. So, action of the CIT(A) is not only violative of Rule 46A of the I.T. Rules, but also against the natural justice because sufficient and cogent reasons have not been given in this case.
Having regard to the nature of the asset, if the AO is of the opinion, that valuation of the capital asset is required, but such reference can be made only to ascertain the fair market value, therefore, the applicability of section 55A(b)(ii) is also limited one. We have read section 50C alongwith these connected sections and then arrived at a conclusion that the AO is empowered to refer for valuation of a capital asset under specific circumstances as prescribed under this section provision of section 50C where he has found that the consideration received is less than the stamp duty.
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.
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.
