Therefore, it emerges that MAT payable u/s 115JB is only income tax and does not include surcharge or education cess. Therefore, if only income tax is paid under the provisions of section 115JB it is natural that tax credit u/s 115JAA will only be of income tax and not of surcharge and education cess.
Since the assessee only distributed the income in terms of the agreement and this did not amount to incurring of an expenditure nor the assessee claimed any, there was no infirmity in the findings of the Commissioner (Appeals) in deleting the disallowance under section 40(a)(ia).
It is settled law that suspicion howsoever strong, it cannot take place of actual evidence and, hence, the contention of the revenue that assessee was in possession of cash throughout the period of six assessment years has to be rejected.
Admittedly, the assessee has not served for the period of five years. The assessee has not rendered enough services to warrant emoluments of Rs. 1,21,83,494. It is assessee’s submission that during the year under consideration he has not created a debt or a right to receive the payment equivalent to Rs. 1,21,83,494. Hence, it cannot be said that the income equivalent to total emolument of Rs. 1,21,83,494 has accrued to the assessee.
Assessing Officer has nowhere held in the impugned order that any concession was given by the employer to its employees and they have provided the accommodation on a concessional rates. Assessing Officer straightway applied Rule 3 without first establishing the case that the appellants have provided any concession in the shape of accommodation to its employees.
CIT-DR has contended that compensation should be regarded as normal business receipt received in the normal course of business, we find that the same had not been received in lieu of undertaking any negative covenants not to compete with Schneider in India but on the contrary the assessee continues to carry on the same line of business.
No material whatsoever was brought on record by the Assessing Officer to the effect that the payment of Rs. 1,20,00,000 was for the assessee not to engage in any business. Even so, the Assessing Officer opined that the compensation of Rs.1,20,00,000 was not a capital receipt liable to capital gains, but was a business receipt falling under “business income” and that rather, the “compensation” was for not carrying out any activity in relation to the business of the Company, which was taxable under section 28(va).
Admittedly, vehicles have been taken under a finance lease arrangement and not under operational lease, Article 2.2 of the agreement entered into by assessee with LPIN provides for arrangement for the registration & insurance of the vehicles and inter alia, stipulates that vehicles shall be insured and registered in the name of the client, i.e., the assessee as required under the Motor Vehicles Act, 1988.
Thus, the assessee had earned the benefit as soon as he had purchased the new plant and machinery in full but it is restricted to 50% in that particular year on account of period of usages. Such restrictions cannot divest the statutory right. Law does not prohibit that balance 50% will not be allowed in succeeding year.
The reliance placed on Hon’ble Supreme Court judgment in the case of Empire Jute Co. Ltd. (supra) is well placed as the expenditure incurred by the assessee has direct nexus with its income generating apparatus. Respectfully following various judgments mentioned and relied on by CIT(A) we see no infirmity in his order, which is upheld. The assessee’s cross objection being only in support of CIT(A) order, is rendered infructuous.
