Since in the case under consideration, the expenditure claimed by the assessee is revenue in nature, therefore, the same is allowable u/s 37(1) of the Act and not u/s 35AB of the Act. The above view is supported by the fact that the Finance (No.2) Act, 1998 introduced from the asst. yr. 1999- 2000 on wards,
However, in view of the fact that the agreement has been accepted as genuine in the hands of one of the parties and economic consequences have also occurred because the assignee has made the payment to the Government, the transaction is necessarily be treated as genuine one, and for this reason,
Mumbai bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of JCIT v. State Bank of Mauritius Ltd. (2009-TIOL-712-ITAT-MUM) has held that the foreign company having Permanent Establishment (PE) in India cannot be taxed at the rate applicable to domestic company in view of insertion of Explanation 1 to section 90 of the Income-tax Act, 1961 (the Act) by Finance Act 2001 with retrospective effect from 1 April 1962. Accordingly, it will have to pay tax at the rate prescribed in the Finance Act (i.e. at higher rate) even if a taxpayer is covered by the provisions of the India-Mauritius tax treaty (the tax treaty).
Recently, the Mumbai bench of Income-tax Appellate Tribunal (the Tribunal) in the case of ACIT Vs United Motors (I) Ltd. (2009-TIOL-693-ITAT-MUM) has held that income from transfer of a leased premises without transferring its own business amounts to extinguishment of the taxpayer’s right in the capital asset as per section 2(47) of the Income-tax-tax Act, 1961 (the Act).
Section 70(3) of the Act postulates that for any assessment year where there is a loss in respect of long term capital asset, the asscssee shall be entitled to have the amount of such loss set off against the income, if any fas arrived at under a similar computation) made for the assessment year.
The assessee had two divisions, one at Dombivili and the other at Surat. The division at Surat was closed since two/ three years. The assessee claimed depreciation on the assets of the said Surat division which was rejected by the AO and the CIT (A) on the ground that the assets were not “used” and depreciation could not be allowed. On appeal by the assessee, HELD allowing the appeal:
We have heard learned counsel for the assessee. Learned counsel for the assessee drew our attention to various clauses in leave and license agreement and submitted that the premises were given purely on license basis with fixtures and fittings. It was also pointed out that under the license agreement, the assessee also retained duplicate key of the main entrance door, which indicates that the control and possession of the premises was always with the assessee.
Shri Somendra Khosla is a NRI, he is in the business of development of real estate and he is a man of substantial means, in my opinion, if he has decided to invest in the real estate in India, the genuineness cannot be doubted unless there is any evidence to the contrary. The Revenue has doubted the genuineness merely on the basis of presumption and suspicion ignoring the documentary evidences produced by the assessee, which establish the genuineness of transaction.
The Taxpayer incurred interest expenditure on the funds borrowed for investing in shares of a company, with a view to acquire controlling interest. The ITAT held that the interest expenditure incurred is not allowable under Section 57(iii)(Section) of the Indian Tax Law (ITL), since it is not incurred ‘wholly and exclusively’ for the purpose of earning dividend income.
Taxpayers in the infrastructure sector are often engaged in the execution of construction activities, which form a minor portion of a contract for the development of an infrastructure facility. This ruling provides guidance on whether a contactor simplicitor would be entitled to tax holiday under the ITL, in respect of the construction activities carried out by it. This ruling makes it clear that tax holiday would be denied to a person who merely executes any works contract/construction activity but does not own the infrastructure developed by it. The ruling also holds that the person who does not undertake development of the entire facility but develops only part of it would not be entitled to tax holiday benefit.
