Recently, the Delhi bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of Technip Italy Spa v. ACIT (2010-TII-133-ITAT-DEL-INTL) after applying the decision of the Supreme Court in the case of Ishikawajima-Harima Heavy Industries Ltd. v. DIT [2007] 288 ITR 408 (SC) held that the income from offshore supply of equipment on a Cost Insurance Freight (CIF) basis under a composite contract is not taxable in India.
TAX is payable on import of all software , even if the sale does not involve exercise of copyright, according to a Delhi tax tribunal order in a case relating to Microsoft . While the order, passed on October 28, is significant in terms of the liability to withold tax from payments made while importing software, the Delhi Income-Tax Appellate Order (ITAT) attracted the attention of tax professionals on account of its observation that questioned the sanctity of tax treaties.
Payment has been made for architectural consultancy in connection with forging shed, lab construction and site visits. Thus the services were clearly linked towards activity in capital field. Even the consultants bill has been made. by narrating that ‘assuming total cost of civil works 20 lacs @ 3% = Rs. 60,000/-. On this amount service tax has been added. Thus we find that authorities below are correct in holding that this expenditure falls in the capital field. Excise duty and sales tax cannot form part of the turnover for the purposes of section 80HHC. Section 80HHC is governed by section 80AB and unabsorbed losses of earlier years u/s 72 have to be set off in computing eligible profits for the purposes of section 80HHC.
The law laid down in the Dilip Sheroff case as to the meaning of word ‘concealment’ and ‘inaccurate’ continues to be a good law because what was overruled in the Dharmender Textile case was only that part in Dilip Sheroff case where it was held that mensrea was a essential requirement of penalty u/s 271(1)(c). The Hon’ble Apex Court also observed that if the contention of the revenue is accepted then in case of every return where the claim is not accepted by the AO for any reason, the assessee will invite the penalty u/s 271(1)(c). This is clearly not the intendment of legislature
The Delhi bench of Income-tax Appellate Tribunal (the Tribunal) in the case of DDIT v. Virage Logic International (ITA No. 494(Del) 2010) held that transfer of a computer software by an Indian branch of a foreign company [approved as 100 percent Export Oriented Unit (EOU) by Software Technology Parks of India (STPI)] to its head office is a transaction eligible for claiming tax benefits under section 1 0A of the Income-tax Act, 1961 (the Act).
Recently, the Delhi bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of ACIT Vs M/s Toshiba India Private Limited (2010-TII-14-ITAT-DEL-TP) has rejected the Assessing Officer’s approach of cherry picking the comparables and proposing an arbitrary Transfer Pricing adjustment.
M/s Frick India Ltd Vs DCIT (ITAT Delhi) – There was a composite agreement titled as ‘intellectual property license and non compete agreement’ vide which several valuable rights including the right to use the trademark, technical know-how including right to export to 30 countries have been granted over a long period of ten years to the assessee, which gave rise to a benefit of enduring nature. However, the AO has allowed the same as revenue expenditure without application of mind and without keeping in view the stand taken in earlier years by the AO which was also confirmed by the CIT(A) on the very same facts.
Royalty paid by a taxpayer computed even on sales made to the Associated Enterprise is at arm’s length. Further, a taxpayer paying royalty to its Associated Enterprise can make additional payments for technical services rendered by personnel deputed by the Associated Enterprise.
The moot question that arises for our consideration in the present case is whether, on the facts of the present case, the interest earned by the assessee on fixed deposit is assessable as profit of the business of undertaking for the purpose of computing the deduction available to the undertaking under section 10A of the Act.
Section 147 authorizes and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for assessment year has escaped assessment. It is also well settled that words reason to believe used in section 147 of the Act are stronger than the words is satisfied.
