Now, we examine the MOU between India and US. As per this MOU, regarding para 4(b) of Article 12 of India US DTAA, it was provided that there will be no FTS if technology is not made available to the person acquiring the services. It was also specified that technology will be considered “made available” when the person acquiring the services is enabled to apply the technology.
‘Let us assume that Mr. ‘A’ purchases a machine which is very much required by him for his business purpose but for such acquisition of machine by him, he paid some extra price as per the A.O. This is not the case of the A.O. that using of machine for business purpose is not the main purpose of acquiring of machine and in that situation, in our humble opinion, the A.O. cannot invoke Exp.(3) to Section 43(1) of the Act.
Carrying out drug trial is essential for approval of the drug in question to be sold in the public and hence, in our considered opinion, clinical drug trial cannot be carried out inside an in-house research facility i.e. usually the laboratory.
The learned DR has opposed the submissions of the learned counsel for the assessee. He submitted that no cost of acquisition was incurred by the assessee as per the terms and conditions of the registered lease deed, and therefore in accordance with the provision of section 55(2)(a)(ii) of the Act, the cost of acquisition has to be taken at NIL. He referred to the term-4 of the lease deed dated 15.9.1966 wherein it was agreed that all the building and structure put up by the lessee on the said land remain the property of the lessee only.
Deeming of income accruing or arising in India are those situations where income has not actually accrued or arisen in India but still it will be deemed to accrue or arise in India. Hence, both the situations are mutually exclusive. If one case is falling within the ambit of income accrued and arisen in India, it cannot fall within the ambit of income deemed to accrue or arise in India and vice versa.
In this case penalty proceedings have been initiated by ld. CIT(A) pursuant to enhancement of income made by him vide his order dated 17.07.2012. The appeal against this order has been filed before the Tribunal on 4th October, 2012 which is in fact the first appeal of the assessee against the enhancement of income by ld. CIT(A). As the appellate proceedings are already on, we are not going into the merits of the case.
It is settled principle that the deeming fiction created under any provisions of the Act cannot be imported into a beneficial provisions of the Act. In this case, the addition made on account of disallowance of expenditure is due to the deeming fiction created by the penal section 40(a)(ia) of the Act. Thus, the effect of the same cannot be imported into a beneficial provision vis-a-vis section 80-IB(10) of the Act.
It is not pointed out as to how the expenses incurred are excessive or unreasonable therefore, such expenditure can be disallowed by invoking the provisions of Section 40(A)(2) of the Act. In view of this matter, we do not find any infirmity into the order passed by Ld. CIT(A). Therefore the appeal filed by the Revenue is dismissed.
As per Explanation 7; no penalty is leviable if the assessee proves that the price charged or paid in such transaction was computed in accordance with the provisions contained in Sec. 92C and in the manner prescribed under section in good faith and with due diligence.
Per Bench – Out of this bunch of ten appeals, there are various appeals of the assessee and the revenue for different assessment years against separate orders of Ld. CIT(A) VIII, Ahmedabad. All these appeals were heard together and are being disposed off by way of this common order for the sake of convenience.
