A Writ Petition was filed challenging the order dated 17.7.2008 of the Appellate Tribunal for Foreign Exchange, Janpath, New Delhi, (hereinafter `the Tribunal’), on various grounds with which this Court is not concerned. By that order, the Tribunal refused to dispense with the pre-deposit of penalty by the appellant and the concluding portion of that order is:
ITO vs. M/s Prasad Production (ITAT Chennai Special Bench). The assessee made a remittance to IMAX Canada towards technology transfer fee without deduction of tax at source. The AO took the view that the consideration was “fees for technical services” u/s 9 (1)(vii) and that tax ought to have been deducted at source as per Transmission Corporation 239 ITR 587 (SC). He accordingly held the assessee to be an “assessee-in-default” u/s 201 though the CIT(A) reversed the same.
Prasad Production Ltd. (“Taxpayer”) was awarded a contract by the Government of the State of Andhra Pradesh to establish IMAX Theatre at Hyderabad. The Taxpayer entered into an agreement with IMAX Ltd., Canada for purchase of the system (which included supply of equipment, installation, testing and initial training) as well as transfer of technology. As per the agreement, the total consideration for purchase of the system was US$ 1,365,000 and US$ 950,000 was towards technology transfer fee.
The assessee purchased US-64 Units of the UTI in May 1990 for Rs. 3.75 crs, received dividend thereon of Rs. 45 lakhs and sold the units in July 1990 for Rs. 3.25 crs. The assessee claimed that deduction u/s 80M was available on the dividend and that a short-term capital loss of Rs. 51.61 lakhs on purchase and sale of units was allowable.
In a recent judgment of Western Maharashtra Development Corporation Limited vs. Bajaj Auto Limited, the Bombay High Court has held (among other things) that in case of a “public company”, its shares are freely transferrable under the Companies Act, 1956 (the Act) even if the Articles of Association (the Articles) contain restrictive provisions relating to transfer of shares.
When the assessee is a consignment agent, as the definition of C&F agent includes consignment agents, CESTAT was not right in holding that the service provided by a consignment agent is not covered by section 65(25) of the Finance Act, 1994.
If there was a surplus of agricultural income in the hands of the assessee for these impugned assessment years, there would have been no question of claiming expenses by way of deduction or question of allowing the same as deduction in computing the business income of the assessee company. The expenses relating to agricultural operations cannot be allowed as expenditure in computing the business income for the simple reason that agricultural income does not form part of the total income under the IT Act.
Mumbai bench of Income-tax Appellate Tribunal (the Tribunal) in the case of DCIT v. Bombay Diamonds Co. Ltd. (ITA no. 7488/Mum/07) held that if the books of accounts of the taxpayer which are not prepared in accordance with part II and part III of schedule VI to the Companies Act, 1956, the Assessing Officer (AO) can make adjustment in the book profits under section 11 5JB of the Income-tax Act, 1961 (the Act) even if the books of accounts are audited or certified by the auditors and accepted by the shareholders.
Mumbai Income-tax Appellate Tribunal (the Tribunal) in the case of DDIT v. Star Cruises (India) Travels Services Pvt. Ltd [2010-TIOL-04-ITAT-MUM] has held that merely booking of different cruise tour packages for M/s. Star Cruises Management Ltd. (M/s. SMCL) foreign company by the taxpayer cannot per se be decisive for holding that M/s. SMCL is having ‘business connection’ in India within the meaning of section 9(1)(i) of the Income-tax Act, 1961 (the Act). Accordingly, it cannot be said that income has been accrued to M/s. SMCL in India in respect of the booking of tour packages of Cruise made by taxpayer in India.
the agreement was on a principal to principal basis, (ii) the manufacturer had his own establishment where the product was manufactured, (iii) the materials required in the manufacture of the article or thing was obtained by the manufacturer from a person other than the assessee and (iv) the property in the articles passes only upon the delivery of the product manufactured, the contract was one of “sale” and there was no obligation to deduct tax u/s 194C. The fact that the assessee imposed restrictions on the manufacturer as to quality of the goods, user of trade marks etc are merely matters of business expediency.
