Income Tax Tax Deductions related News, Article, Notification, Judgments covering all section Including Section 80C, 80D, 80TTA, 80HHC, 80JJA
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Supreme Court in the case of P. R. Prabhakar v. CIT [2006] 284 ITR 548 where the order of the Special Bench cited (supra) stands approved. It was clarified that the amendment made to clause (baa) of the Explanation below Section 80HHC which defines “profits of the business” in such a manner as to exclude receipts like interest, commission etc. which did not have an element of turnover, was introduced prospectively by the Finance (No.2) Act, 1991 w.e.f. the assessment year 1992-93 and the amendment did not operate retrospectively.
This is not denied that the assessee is engaged in the business of providing credit facilities to its members. The credit facilities cannot be provided until and unless the assessee receives the deposits. It cannot always be provided out of its own capital. Receiving of the deposit is necessary and essential for advancing the money on credit and earning the interest income. The deposits may not have been derived from the income for providing the credit facilities to the members.
That apart, the learned counsel for the assessee has rightly contended that the provisions of section 80IA(5) of the Act applies in computing the profits of an eligible business for the purposes of working out the quantum of deduction for the initial assessment year and for every subsequent year thereafter. The incentive deductions both under section 80 IA and 80 IB of the Act have the concept of initial assessment year in respect of almost all eligible business.
Regarding, the issue of technology transfer fee receipts, whether it constitutes operational income or not, learned counsel brought the analogy of these receipts to the developmental works receipts, which is adjudicated by the hon’ble Karnataka High Court in the case of Motor Industries Co. Ltd. (supra). In our opinion, there is a need for finding the fact on the comparability of these receipts on account of developmental work vis-a-vis technology transfer fees raised before us. In case, these receipts are comparable, in our opinion, the assessee is entitled for claiming deduction under section 80HHC as an operational income in view of the finding of the Karnataka High Court in the case of Motor Industries Co. Ltd. (supra).
For these reasons, we have come to the conclusion that the Petitions would have to be allowed. We accordingly allow the Petitions by quashing and setting aside the notices under section 148 of the Income-tax Act, 1961 purporting to re-open the assessment for A.Ys. 2005-06, 2006-07, 2007-08 and 2008-09. Rule is made absolute in the aforesaid terms. There shall be no order as to costs.
Ld. Counsel of the assessee submitted that that even if any freight, telecommunication or insurance expense during the year, are reduced from the export turnover, such sums will also have to be reduced from the total turnover of the company for the purpose of computation of deduction u/s. 10A.
Revenue submitted that any research and development activity carried out by the head office would automatically ensure to the benefit of the units/industrial undertakings. He submitted that the head office itself does not manufacture any medicines, the benefit of the research and development would be utilized for manufacturing the products and the products would obviously be manufactured by the units.
We find that both the Commissioner of Income Tax (Appeals) as well as the Tribunal have arrived at a finding of fact that Assessing officer did not have any reasonable belief to come to the conclusion that that there has been any escapement for the assessment year 2003-04. The order of MERC dated 01.07.2004 specifically deals with regard to fixing of the tariff rate at which power has to be supplied to the consumer.
The case of the petitioners is that the impugned explanation below sub-section (13) to section 80IA provides for a levy of tax which was hitherto unknown. It is, therefore, urged that the Court should examine the reasonableness of such provision particularly when the same is brought into operation with retrospective effect. Section 80IA(4) provides for deduction under certain circumstances. If such deductions are withdrawn with retrospective effect, surely there would be a case of providing for a levy which was till then not known.
In this view of the matter, we opine that the Tribunal was correct in taking the view that the Appellate Commissioner was not justified in reversing the view taken by the Assessing Officer and the order of the Tribunal is proper, does not suffer from any error of law and therefore we answer the questions posed in the affirmative to hold that the Tribunal was correct in taking the view that the assessee was not entitled to claim the benefit of deduction even before adjusting unabsorbed depreciation of the earlier years.
