Case Law Details

Case Name : Jet Lite (India) Ltd. Vs CIT (Delhi High Court)
Appeal Number : Income Tax (Appeal) nos. 204 & 205 of 2002
Date of Judgement/Order : 04/11/2015
Related Assessment Year :
Courts : All High Courts (3894) Delhi High Court (1227)

Brief of the Case

Delhi High Court held In the case of Jet Lite (India) Ltd. vs. CIT that the ITAT has rightly pointed out that the supplement rental was within the ambit of the original provision of Section 10(15A). Post amendment w.e.f. 1st April 1996, if any payment had to be brought within the exclusionary portion of Section 10(15A), then it must be shown (i) that the lessor either had supplied the spares or provided any facility or service in connection with operation of the leased aircraft; and (ii) the payment has been made by the lessee in consideration of such spares/facilities/services.

In the given case, revenue was unable to point out any clause in the agreement that required the lessor to provide facilities or services in connection with the leased aircraft. Therefore, the supplemental rent did not fall within the ambit of the exclusionary provisions of Section 10 (15A). Consequently, there was no obligation on the Assessee to deduct the tax at source under Section 195.

On the matter of unexplained cash credit, it was held that the Assessee has to prima facie prove (1) the identity of the creditor/subscriber; (2) the genuineness of the transaction, namely, whether it has been transmitted through banking or other indisputable channels; (3) the creditworthiness or financial strength of the creditor/subscriber. In the given case, the onus on the Assessee of providing some prima facie material to establish the identity, genuineness and creditworthiness of the said 65,185 persons was not discharged by the Assessee. Accordingly, addition confirmed on the assessee.

Facts of the Case

The assessee entered into an Aircraft Parts Lease-Purchase Agreement (APLPA) dated 24th August 1993 with AAR Aviation Trading Inc. (AAR) in terms of which Sahara, which was engaged in the business of running a schedule airline, agreed to take on hire certain aircraft parts on the terms and conditions set out in the APLPA. Sahara was to pay AAR a rental of USD 199,370 on a bi-annual basis. The lease was for a period of three years and in terms of Clause 22 of the APLPA, Sahara had an option, on the termination of the lease, to purchase all the parts at the price of USD 50,000.

During the FY 1994-95, Sahara paid USD 199,370 each on half yearly basis. On this payment the assessee did not deduct any TDS. The assessee applied to the Assistant Commissioner of Income Tax, who was at the relevant time the AO having jurisdiction, to ascertain as to whether it was under any obligation to deduct TDS in respect of the said payments. ACIT issued no objection certificates permitting the assessee to remit the amount. At the end of the lease period, assessee exercised the option under Clause 22 of the APLPA and remitted a sum of USD 50,000 without deducting tax at source treating them as the payment did not represent income chargeable to tax in India.

The AO raised objections on the grounds that the payments amounted to royalty. Pursuant to the AO’s orders requiring that TDS should be deducted @ 10%, Sahara deducted the tax as directed and filed appeals against the AO’s order.

Training and manpower development

Further assessee entered into Training Agreements on 30th January 1996 with Hughes Flight Trading Limited (HFTL) in terms of which HFTL which operated a flight crew training facility at Fleming Way Crawley West Sussex England agreed to provide ground and flight simulator training to the assessee flight crews on the terms and conditions set out in the said agreement. HFTL was to make available to assessee’s flight crews and instructors, training equipment including a flight simulator appropriate to the aircraft for use in flight simulator training. Sahara was to pay HFTL GBP 171 per hour for the use of the flight simulator without any instructor of HFTL being present. The payments were made pursuant to the said agreement made by Sahara without deducting tax at source during the FYs 1994-95 to 1998-99 as such. Sahara was of the view that no part of the payment made for the use of the flight simulator was chargeable to tax in India.

Payment of supplemental lease rent

The assessee had taken two aircrafts on lease for a period of six years from International Lease Finance Corporation (ILFC) and separate agreements were entered into in respect of each aircraft. The assessee was required to to pay lease rent @ USD 240,000 per month with effect from 31st December 1995 and USD 241,000 with effect from 1st January 1995. The assessee was also required to pay supplemental lease rent in the form of reserves @ USD 234 per hour. These reserves were categorised as ‘airfreight reserves’, ‘engine reserves’ and ‘landing gear reserves’ and were created to meet the cost of expenditure incurred by the lessee in respect of the deficiencies and work specified. The assessee was entitled to reimbursement from such reserves after the work was completed and the airframe or engine had left the repair agency by submitting invoices and proper documentation in respect thereof. On the termination date of the agreement if any balance was left in the said reserve, it would be retained by the lessor. Similar payments on account of supplemental lease rent were also made by Sahara to other non-resident foreign companies i.e. AMTEC, Malaysian Airlines and Lufthansa during the FYs 1997-98 to 1998-99.

Further assessee also entered into an agreement dated 8th/9th May 1996 with Sochata, France, which was engaged in the business of maintaining and operating certain facilities for the repair, maintenance, overhaul, modification and functional testing of aircraft engine including accessories, parts and components. Pursuant to the said agreement Sahara paid, on 25th September 1996, a sum of Rs. 3,08,60,702 (equivalent to USD 8,63,719.63) and, on 24th January 1997, a sum of Rs. 2,89,19,958 (equivalent to USD 8,04,002.18) respectively in the FY 1996-97. Again it was of the view that the amount did not represent income chargeable to tax in India and no deduction of tax at source was made.

Further the assessee agreed that as a result of the flying operation, several parts of the aircrafts were required to be repaired /replaced. The spares were acquired in three modes. The first was an outright purchase; the second was exchange involving sending of the defective part to the non-resident company which in turn sent a part in lieu thereof. The non-resident company would raise a bill on a proforma basis for the part replaced as well as levy a charge. The third mode was by sending the defective part for repairs and assessee used to pay a charge for the repair carried out. According to Sahara, it was advised that no tax was required to be deducted in respect of the parts purchased, exchanged or repaired and therefore, it remitted the amounts without deducting tax at source.

Unexplained cash credits

From the balance sheet filed by the Assessee along with return it was noted by the AO that for the AY 1996-97 Sahara raised share capital of Rs. 10,87,89,090 and received premium amount of Rs. 44,60,35,269 and share application money of Rs. 7,50,000. Sahara claimed to have mobilized the above amount by way of private placement of shares from 65,285 persons through a network of establishments maintained by its sister concern M/s. Sahara India (Firm). AO asked to furnish the details of shares issued during the year of Rs. 25,000 or more by a notice dated 10th September 1998 under Section 142 (1). The assessee was also asked to furnish the addresses of the top 100 share holders who were allotted shares during the year.

The assessee was able to furnish the addresses of 92 such persons. Notices under Section 133 (6) were issued to 92 such persons, but notice to the remaining 8 persons could not be sent. Only 17 of those notices sent were replied to, while 25 notices were returned unserved with the remarks „not known‟, „refused‟, „incomplete address‟, „dead‟, „left indefinitely‟ etc. 50 persons to whom notices were sent did not reply. The AO was not convinced by the statement of assessee and it was found evasive as the shares were not quoted in the stock exchange and hence were not transferable in the market. Observing that the Assessee had concealed some very vital facts with regard to the issue and transfer of the shares, the AO treated the sum of Rs. 55,55,89,359 as unexplained credit in the books of the Assessee under Section 68 as undisclosed income of the Assessee.

Interest on borrowed capital

The case of the Revenue was that the interest bearing funds were being diverted as interest free advances to sister concerns. The Assessee had paid interest to two sister concerns, namely, M/s. Sahara India Mutual Benefits Co. Ltd. at 24% and M/s. Sahara India Corporation Limited. The case of the Revenue was that while the Assessee had to borrow funds from its sister concerns for carrying on its business on which interest has been claimed under Section 36 (1) (iii), the Assessee had allowed its other sister concerns to retain interest bearing funds without charging any interest. Therefore, the proportionate interest relatable to the funds retained by the sister concerns was stated to be not for the purpose of business.

Foreign Travel Expenses

The Assessee had claimed foreign travelling expenses amounting to Rs. 2,21,33,253. According to the Assessee, these expenses were incurred for the purpose of training of the pilots abroad. Further the training was imparted by technical experts for the purposes of the business of the Assessee. The AO disallowed the above expenses in the sum of Rs. 44,26,650.

Staff welfare expenses

This issue concerns the deletion of Rs. 54,06,701 on account of claim made by the Assessee as staff welfare. The Assessee categorised the expenditure under two heads – meetings and conveyance expenditure and staff welfare expenditure. Observing that it was unclear that the staff welfare expenditure was actually incurred for the staff of the Assessee itself and that the expenditure claimed under both heads was excessive, the AO treated the entire expenses claimed as entertainment expenses under Section 37 (2) and added the same to the income of the Assessee on the basis that the amount.

Air travel tax

This issue concerns the addition of Rs. 10,17,553 made on account of disallowance of the air travel tax (or passenger service fee) incurred by the Assessee. The question was whether the said expenditure is covered under Section 43 B of the Act. The payment challans were filed by the Assessee along with its reply dated 24th March 1999. The AO held that since evidence for payment of the amount in the sum of Rs 10,17,553 could not be produced, the same was to be disallowed under Section 35B and added the said amount back to the income of the Assessee.

Contention of the Revenue

Payment of supplemental lease rent

The ld counsel of the revenue submitted that by way of amendment to Section 10 (15A) of the Act, the payment for providing spares, facilities or services in connection with the operation of lease aircraft was specifically excluded. Prior to 1st April 1996 such payments were exempted and the approval given by the CBDT related back to 31st January 1995, i.e., AY 1995-96 during which exemption was available. It is pointed out that under the agreement in question the lease payment for the aircraft was separately mentioned and the payment for maintenance reserve was separately mentioned. In these circumstances, it is submitted that the ITAT erred in holding that the maintenance reserve was in the nature of the lease.

Held by CIT (A)

CIT (A) dismissed the appeal of the assessee.

Subscription to share capital

CIT (A) held that since the AO has chosen to enquire only into the genuineness of 100 shareholders, no additions could have been made in respect of the other 65,185 shareholders. The CIT(A) noticed that out of these 100 persons, the AO himself had stated that 17 shareholders had furnished replies and 50 of persons to whom notices were served, did not respond. However, as the notices sent were duly received, the existence of these 50 persons was duly proved. The CIT (A), therefore, directed the AO to delete the additions with respect to these 67 persons. With respect to the group of 25 persons in relation to whom the notices were returned with comments such as “refused”, “dead” , “left indefinitely”, etc, the CIT(A) held that they certainly “were in existence and their identity is duly proved.”   With respect to those persons who, according to AO, were not traceable and the 8 other persons to whom the AO had not issued notices for want of addresses, the CIT (A) restored the matter back to the AO and also directed the Assessee to furnish necessary evidence to prove their identity.

Payment of supplemental lease rent

CIT (A), deleted the addition, and concluded that the supplementary rent paid by the Assessee was not taxable as the agreement in question was entered into after the amendment to Section 10 (15A).

Training and manpower development

CIT (A) by order dated 5th December 2000, upheld the order of the AO. It was held that the payments were in the nature of fees for technical services as defined under Section 9(1)(vii) of the Act and hence tax was deductible under Section 195(1).

Interest on borrowed capital

The CIT (A) allowed the claim of the Assessee after observing that the AO did not hold the interest payment to be excessive or unreasonable and it was found factually that “not a single paisa has been advanced to the four sister concerns out of the borrowed funds” and that the AO has himself accepted that “the outstanding amounts were on account of the trading connections.” Accordingly, the addition of Rs. 1,42,76,534 made by the AO was deleted.

Foreign Travel Expenses

The CIT (A) found that the decision of the AO was ill founded, without proper appreciation of the facts of the Assessee‟s case and that the entire foreign travelling expenses were incurred after obtaining approval from the R.B. I. for purchase of foreign currency from the market which can never be done as an afterthought. It was observed that the agreement of the Assessee with Hughes Flight Training Ltd. clearly provided that the latter was not to give training to the flight crews in India. The CIT (A) demarcated the expenditure incurred on travel of relatives of the directors and confirmed an addition to that extent in the sum of Rs.2200. The expenditure on travel in which the destination of the journeys were not mentioned was also separated and this expenditure in the sum of Rs.8,26,638 was restored the matter back to the AO for a fresh determination so as to give an opportunity to the Assessee to produce the necessary evidences.

Staff welfare expenses

The CIT (A) reversed the AO‟s order on the ground that it was not clear what kind of evidence the AO was expecting.

Air travel tax

The CIT (A), following its earlier order dated 23rd March 1999 for AY 1994-95 and order dated 29th December 1999 for A. Y. 1995-96 in AY, held that Section 43B does not apply.

Held by ITAT

ITAT upheld the order of the CIT (A).

Subscription to share capital

The ITAT upheld the order of the CIT (A) and held that the Assessee had proved identity of the shareholders.

Payment of supplemental lease rent

ITAT upheld the order of CIT (A). It was held that there should be an inextricable link between expenditure for spares/facility and operation of aircraft and that the payment was exempt under Section 10 (15A).

Training and manpower development

The ITAT upheld the order of the CIT (A). It was held that the payments were in the nature of fees for technical services chargeable to tax in the hands of recipient under Section 9 (1 )(vii) as well as under provisions of the agreement

Interest on borrowed capital

The ITAT accepted the factual finding that the Assessee had allowed its sister concerns to retain the amount as a result of the trading transactions. Further the entire amount was taken by the Assessee for the business purpose. Therefore, there could be no disallowance of interest.

Foreign Travel Expenses / Staff welfare expenses

ITAT upheld the order of the CIT (A).

Air travel tax

The ITAT followed its order dated 8th August 2008 in ITA No. 294/Luc/2000 which held that Section 43B is only attracted when the Assessee claims deduction for any sum payable by way of tax or duty under any law for the time being in force, and, where, as in the case of the Assessee, no charge is claimed or made to the profit or loss account, there was no question of disallowing the amount taken to the balance sheet on the liabilities side or of “adding back” and deleted the addition.

Held by High Court

Unexplained cash credit u/s 68

In the case of CIT v. Sophia Finance Limited (1994) 205 ITR 98 [FB, (Delhi)] which was dealing matter of section 68, it was held that The Assessee has to prima facie prove (1) the identity of the creditor/subscriber; (2) the genuineness of the transaction, namely, whether it has been transmitted through banking or other indisputable channels; (3) the creditworthiness or financial strength of the creditor/subscriber. The Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices. Further it was held that the AO is duty bound to investigate the creditworthiness of the creditor/subscriber the genuineness of the transaction and veracity of the repudiation.

In CIT v. Steller Investment Limited (1991) 192 ITR 287 (Del) it was observed that even if it be assumed that the subscribers to the increased share capital were not genuine, nevertheless, under no circumstances, can the amount of share capital be regarded as undisclosed income of the assessee. It may be that there are some bogus shareholders in whose names shares had been issued and the money may have been provided by some other persons.

Both the above decisions were again considered by the Division Bench of this Court in CIT v. Lovely Exports Limited 299 ITR 268 (Del). Thereafter, in CIT v. Nova Promoters and Finance (P) Limited (2012) 342 ITR 169 (Del) it was held that where the complete particulars of the share applicants such as their names and addresses, income tax file numbers, their creditworthiness, share application forms and share holders’ register, share transfer register etc. are furnished to the Assessing Officer and the Assessing Officer has not conducted any enquiry into the same or has no material in his possession to show that those particulars are false and cannot be acted upon, then no addition can be made in the hands of the company under sec. 68. In CIT v. Nipun Builders and Developers (2013) 350 ITR 407 (Del) it was held that the point at which the initial onus on the Assessee to prove the unexplained discredit would stand discharged depends upon the facts and circumstances of each case. In Commissioner of Income Tax v. N.R. Portfolio Pvt. Ltd. 206 (2014) DLT 97 (DB) the Court reiterated the need of the Assessee to satisfy the AO about the “identity, creditworthiness and genuineness” of the creditors.

In the given case, we are of the view that there was no justification for the CIT (A) to have deleted the addition made by the AO in respect of the 65,185 shareholders on the ground that the AO did not conduct any enquiry. When the AO sought details of shareholders who invested Rs. 25,000 or more, the Assessee was able to furnish the addresses of only the top 100 shareholders. The only conclusion that was possible in this regard was that reached by the AO, viz., that the Assessee was unable to establish the identities of the 65,185 persons in respect of an amount of Rs. 55,55,89,359. The onus on the Assessee of providing some prima facie material to establish the identity, genuineness and creditworthiness of the said 65,185 persons was not discharged by the Assessee.   Accordingly, the Court sets aside the orders of the CIT (A) and the ITAT as regards the deletion of the addition ordered by the AO in the sum of Rs. Rs. 55,55,89,359 under Section 68 on the ground of the failure by the Assessee to establish the identity of the 65,185 shareholders who are stated to have contributed the aforementioned sum. However, the orders of the CIT (A) as confirmed by the ITAT deleting the addition made in respect of the amount brought in by 50 + 17 shareholders are upheld. Also, the order of the CIT (A), affirmed by the ITAT, remanding the matter to the AO in respect of 8 persons and some part of 25 persons who were not traceable and whose addresses had not been furnished is upheld.

Payment of supplemental lease rent

A perusal of Section 10 (15A) as existed with effect from 21st January 1989 and substituted with effect from 1st April 1996 shows that prior payments made for acquisition of an aircraft or an aircraft engine on lease, were exempted from taxation but from 1st April 1996, the Legislature has excluded the payments made for providing spares, facilities or services in connection with the operation of the leased aircraft from the ambit of the exemption under Section 10(15A).

The ITAT has examined the object behind amending Section 10 (15A) with effect from 1st April 1996. If any payment had to be brought within the exclusionary portion of Section 10(15A), then it must be shown (i) that the lessor either had supplied the spares or provided any facility or service in connection with operation of the leased aircraft; and (ii) the payment has been made by the lessee in consideration of such spares/facilities/services. The ITAT has rightly pointed out that the supplement rental was within the ambit of the original provision of Section 10 (15A).

Revenue was unable to point out any clause in the agreement that required the lessor to provide facilities or services in connection with the leased aircraft. Therefore, the supplemental rent did not fall within the ambit of the exclusionary provisions of Section 10 (15A). Since prior to 1st April 1996 such payments continued to be exempted under Section 10 (15A), they were not chargeable to tax. Consequently, there was no obligation on the Assessee to deduct the tax at source under Section 195.

Training and manpower development

The agreement dated 30th January 1996 between Sahara and HFTL has been discussed in the order dated 12th February 2002 of the ITAT. It has referred to the submissions of the learned counsel for the Assessee to the effect that what was provided to Sahara’s personnel was the facility of training on a simulator without an instructor. A higher rate of 256 pounds per hour was charged for providing training on the simulator with an instructor whereas Sahara was charged 171 pounds per hour which was the rate applicable for providing a simulator without an instructor. The ITAT however appears to have in its order dated 12th February 2002 gone by Clause 14 of the said agreement which talked of HFTL providing free training to the instructors of the Assessee. Although the ITAT states that the invoice showed the payment “for use of the simulator alone” it held that it did not mean that “technical knowledge was not provided by UK company.” What was perhaps missed was that the payment had to be for providing such technical knowledge and not merely for use of the simulator. The personnel of HFTL having experience is one thing but the question of payment for such technical services is another.

The other aspect which has not be sufficiently been examined by the ITAT is the purport of the expression “make available” occurring in Article 13 (4) (c) of the DTAA. In interpreting a similar clause occurring in the DTAA with Netherlands the Karnataka High Court in CIT v. De Beers India Minerals (P.) Ltd. [2012] 346 ITR 467 (Kar) held that “payment of consideration would be regarded as ‘fee for technical/included services’ only if the twin test of rendering services and making technical knowledge available at the same time is satisfied.” The decision of this Court in DCIT v. Guy Carpenter & Co Ltd. [2012] 346 ITR 504 (Del)is also relevant in this regard.

As regards AY 1996-97, the ITAT has indeed abruptly ended its discussion after extracting a passage from its order dated 12th February 2002 and has not rendered any opinion. Apart from the fact that the said order of the ITAT, for the reasons discussed above, is found not to have addressed certain important aspects, the issues highlighted by the CIT (A) in the order dated 3rd March 2000 have not been addressed. For e.g., the fact that no payment was made to CML and that tax was deducted by the Assessee while making payment to JPT was not dealt with by the ITAT. Further the insertion of an Explanation below Section 9 (2) of the Act with retrospective effect from 1st June 1976, making the place of rendering services redundant, has not been considered. Again, it is necessary for the ITAT to consider, in the context of the agreement with HFTL and the Article 13 (4) (c) of the DTAA with UK, whether any technology was ‘made available’ to the Assessee and whether there was payment for such services. Consequently on the issue of payment for payment for training and manpower development the Court remands the matter for both periods i.e. FYs 1994-95 to 1998-99 and AY 1996-97 to the ITAT for a fresh decision in accordance with law.

Payment for the computerised reservation system

On the issue of disallowance of Rs. 1,77,82,789 for non-deduction of TDS from payment to non-residents for computerized reservation system, the Court finds that no objection was raised in AY 1995-96 with respect to the certificates issued by ITO (TDS). The ITAT also confirmed that the said certificate issued by ITO (TDS) was valid. The Revenue has not able to persuade this Court to hold that the said decision is perverse. The Assessee has made the payment after obtaining the said certificates. The issue is decided in favour of the Assessee and against the Revenue.

Free tickets

AO disallowed the 50% of free ticket expenses which worked out to Rs. 30,40,170. The ITAT following its order dated 8th August 2008 in the case of the Assessee in ITA No. 470/Del/99 accepted the submission of the Assessee that the free charged tickets were being issued on account of business promotion to various persons and merely because they have been issued to spouses or infants or where full names had not been given it cannot be presumed that they were not for business purposes. It was held that “this discretion of the management at the time of issue of FOCs is of the issuance thereof and the Department to the best of our understanding has no right to question the prudency of the decision.” There was no basis for disallowance of 50% of such expenses. The view taken by the CIT (A) as concurred with by the ITAT appears to be plausible. The disallowance of 50% of these expenses appears to be not based on any material. Accordingly, the said issue is answered in favour of the Assessee and against the Revenue.

Interest on borrowed capital

The Court finds that the ITAT has concurred with the finding of the CIT (A) which turned on facts. The Court is not persuaded that the said decision is perverse or suffers from any legal infirmity. Accordingly, the issue is decided in favour of the Assessee and against the Revenue.

Foreign travel expenses

The Court finds no reason to interfere with the decision of the ITAT on this aspect.

Consultancy charges

The next issue concerns the disallowance of consultancy charges of Rs.21,60,000 on the ground that no reliable documentary evidence has been furnished by the Assessee. On this aspect the ITAT, for the AY 1995-96 held that the services rendered by Sahara India International Corporation Limited („SIICL‟) to the Assessee was in connection with the lease of two aircrafts and the payment made to it for the services rendered. The Revenue had been unable to show as to how such payment should be treated as unreasonable. The Court finds that even in the present appeal the Revenue has been unable to show that the said payment has been excessive or unreasonable. The issue is decided in favour of the Assessee and against the Revenue.

Staff welfare expenses

The Court finds that the CIT (A) was right in observing that it was not necessary for every employee to sign a voucher and that the AO has erred in treating the staff welfare expenses as entertainment expenses. However, the CIT (A) found that the expenses claimed as conveyance expenses were in the nature of entertainment expenses as defined by Section 37(2)(iii) and directed the AO to restrict the disallowance insofar as conveyance expenses of Rs. 7,31,324.The Court is unable to find any illegal infirmity in the order of the CIT (A) as upheld by the ITAT. The issue is decided in favour of the Assessee and against the Revenue.

Advertisement and publicity expenses

The issue concerns the addition of Rs. 10,37,367 on account of disallowance of advertisement and publicity expenses as they were not related to AY 1996-97. As rightly pointed out by the ITAT, as per the mercantile system of accounting, bills received by the Assessee in respect of advertisement services pertaining to the previous year and continued during the year was booked only when it was crystallized. The issue has been answered in favour of the Assessee by the decision of the Gujarat High Court in Saurashtra Cement and Chemical Industries v. CIT 213 ITR 523 which observed that merely because the expenditure relates to an earlier year, it does not become a liability payable in the earlier year unless it can be said that the liability was determined and crystallized in the year in question on the basis of maintaining accounts on the mercantile basis. Consequently, the issue is answered in favour of the Assessee and against the Revenue.  

Air travel tax

The Court upholds the order of the ITAT which affirmed the order by the CIT (A) deleting the above addition. The issue is decided in favour of the Assessee and against the Revenue.

Limitation under Section 201 of the Act

This issue that requires to be decided in ITA Nos. 204 and 205 of 2002 concerns limitation under Section 201 of the Act. The ITAT came to the conclusion that the order under Section 201 of the Act for the FY 199495 was barred by limitation since it was not issued within four years from the end of the said AY. The order for AY 1994-95 was passed on 10th May 2000. The other orders in respect of AY 1995-96 to 1998-99 were within the period of limitation.

The Court has heard the submissions of Mr. Rohit Madan, learned counsel for the Revenue at length. The payment in question for the AY 1995-96 pertained to the payment made to Jeppson & Co. for navigational data. It is noticed that the issue is covered by the decision in CIT v. Mak Japan Broadcasting (2007) 305 ITR 222 and it is answered in favour of the Assessee and against the Revenue. This amendment to Section 210 of the Act with effect from 1st April 2010 provided for an extended limitation period of seven years. However, that amendment was prospective as held in Bhura Exports Limited v. The Income Tax Officer (TDS) (2014) 365 ITR 548 (Cal).Consequently, the said issue is decided in favour of the Assessee and against the Revenue.

Accordingly all appeals disposed of.

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Category : Income Tax (26307)
Type : Judiciary (10581)
Tags : CA Deepak Aggarwal (390) high court judgments (4201) section 195 (143) TDS (953)

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