The assessee let out property on a rent of Rs. 90,000 per month and also received interest-free security deposit of Rs. 8.58 crores. The property was not subject to the Rent Control Act. The assessee claimed that only the rent could be taken into account for determining the ‘annual value’ of the property and not the notional interest on the deposit. The AO determined the ‘annual value’ u/s 23(1)(a) by adding Rs. 30 lakhs of notional interest. The CIT (A) and Tribunal deleted the addition by holding that the rateable value as determined by the MCD had to be taken as the “fair rent” u/s 23(1) (a) and the notional interest could not be added either u/s 23(1)(a) or u/s 23(1)(b). On appeal by the department HELD:
M/s Frick India Ltd Vs DCIT (ITAT Delhi) – There was a composite agreement titled as ‘intellectual property license and non compete agreement’ vide which several valuable rights including the right to use the trademark, technical know-how including right to export to 30 countries have been granted over a long period of ten years to the assessee, which gave rise to a benefit of enduring nature. However, the AO has allowed the same as revenue expenditure without application of mind and without keeping in view the stand taken in earlier years by the AO which was also confirmed by the CIT(A) on the very same facts.
Pearey Lal Bhawan Association Vs M/S Satya Developers Pvt Ltd (Delhi High Court) – Service Tax: whether the burden of service tax, levied on the service or facility of leasing (of the suit premises) should be borne by the lessor (i.e. the service provider) or the lessee (i.e. the defendant, user). – that unless a different intention appears from the terms of the contract, in case of the imposition or increase in the tax after the making of a contract, the party shall be entitled to be paid such tax or such increase. Although there is no explicit provision to that effect, enabling lessors such as the plaintiff, to the service tax component, this Court is of the view that there is sufficient internal indication in the Act, through Section 83 read with Section 12-A and Section 12-B suggesting that the levy is an indirect tax, which can be collected from the user (in this case, the lessee). This issue, is therefore, answered in the plaintiff’s favour, and against the defendant.
As per statutory provision under section 65(105) (zzn) of the Finance Act, 1994 taxable service means any service provided or to be provided – (zzn) to any person, by air craft operator, in relation to transport of goods by aircraft. The definition of the term aircraft appears in Section 65(3A) of the said Act Passenger aircraft is not excluded. The meaning of the goods is assigned from the term sale used in Sale of Goods Act, 1930.
Notwithstanding anything contained in the provisions of Section 76, 77 or 78, no penalty shall be imposable on the assessee for any failure referred to in the said provisions, if the assessee proves that there was reasonable cause for the said failure.” In other words, the assessee has to establish reasonable cause for the failure which could otherwise attract penalty under the said provisions of law. The letter dated 24th August, 2006 merely informs the Department that the appellants were not aware of the statutory provisions.
Royalty paid by a taxpayer computed even on sales made to the Associated Enterprise is at arm’s length. Further, a taxpayer paying royalty to its Associated Enterprise can make additional payments for technical services rendered by personnel deputed by the Associated Enterprise.
Central Bank of India v. DCIT- In view of non-discrimination clause under the India-USA tax treaty, the non-resident should be given same treatment as given to resident’s taxpayers. Accordingly, the payment made to USA entities cannot be disallowed on account of non deduction of tax at source.
In a recent ruling, ITAT Mumbai held that no disallowance under section 14A of the Income-tax Act, 1961 is attracted in the case of a life insurance company. The Tribunal also held that disallowance of software expenses and of expenses incurred for increase in authorised share capital, is not attracted in view of the special provisions of section 44 of the Act read with the relevant rules in the First Schedule to the Act.
Tiger Steel Engineering India Pvt. Ltd. („the assessee?) is registered with Central Excise Department for the manufacture of pre-fabricated steel buildings, falling under Chapter 94 of Central Excise Tariff Act, 1985. The assessee also avails of the CENVAT credit facility under CENVAT Credit Rules, 2004 („CENVAT Rules?). From 1 January 2007 to 30 June 2008, the assessee cleared its finished goods, namely, pre-fabricated building without payment of Central Excise duty to a unit located in Special Economic Zone („SEZ?) under a letter of undertaking. These goods so cleared to SEZ without payment of duty were regarded as exports and accordingly, the assessee filed six refund claims in respect of the unutilized CENVAT credit under Rule 5 of the CENVAT Rules. The refund claims filed by the assessee were rejected by the Original Adjudicating authority and on appeal to the Commissioner (Appeals), the order of the Adjudicating authority was set aside by concluding that the supplies to SEZ units amount to exports for the purpose of Rule 5 of CENVAT Rules. The Department has filed the present appeal against the said order to the Customs Excise & Service Tax Appellate Tribunal („CESTAT?).
S. 234D inserted by the FA 2003 w.e.f. 1.6.2003 is in the nature of a substantive provision and applies only for the AY 2004-05 and onwards and is not retrospective. A provision by which an authority is empowered to levy and collect interest, even if construed as forming part of the machinery provisions, is substantive law for the simple reason that in the absence of contract or usage interest can be levied under law and it cannot be recovered by way of damages for wrongful detention of the amount. ITO vs. Ekta Promoters 305 ITR 1 (SB) (Del) approved)
