Full Bench: whether MAT credit admissible in terms of Section 115JAA has to be set off against the tax payable (assessed tax) before calculating interest under Sections 234A, B and C of the Income Tax Act, 1961. There is no provision under Section 115JAA which postpones the right of the assessee to claim set off to the determination of the total income by the A.O. in the first assessment year. Entitlement right to claim set off is different from the quantum quantification.
Income Tax – Section 158BD – Whether recording of satisfaction is mandatory before notice u/s 158BD is issued – Whether statement of one of searched parties can have the sactity of ‘books of accounts’. – Revenue’s appeals dismissed
Reimbursable expenditure and the fee payable for technical services under DTAA between India and USA- the reimbursable expenditure received by the assessee cannot form part of the total income. – since the development of infrastructure falls within the industrial policy of Government of India specific approval may not be required for claiming exemption u/s. 10(6A) of the Act. – what was reimbursed is the service tax paid by the assessee to the Government account. therefore, such an amount cannot form part of technical fee. In other words, it cannot be treated as trading receipt. In view of the above, in our opinion, the reimbursement of service tax cannot form part of the total income of the assessee. – fee received by the assessee towards technical services / consultancy would fall under Article 12 and not under Article 7. Therefore, tax has to be levied only at 15% and not at 20%. – there is no liability to pay the advance tax wherever the tax was deducted at source. Therefore, interest was not chargeable u/s. 234B of the Act.
The brief facts which give rise to the aforesaid issue are that the Respondent imported Crude Palm Stearin through Kakinada Port and filed Bills of Entry declaring the goods as industrial grade Crude Palm Stearin falling under Ch. Sub Heading No. 15 11 90 90 of the Customs Tariff Act, 1975
The assessee had paid a sum of Rs.2 crores to M/s. Procter & Gamble India Ltd (PGI) towards technical know how fees in assessment year 1994-95. The assessee had amortized the expenditure over a period of six years and claimed deduction of Rs.33,33,333/- being 1/6th of the payment during the year.
Swatanter Kumar J.- Before the Income-tax Appellate Tribunal, the Income-tax Officer, Ward-II New Delhi, while preferring an appeal against the order of the Commissioner of Income-tax (Appeals) dated December 1, 1999, relating to the assessing year 1996-97, raised the following issue
Whether, on the facts and in the circumstances of the case, the dividend received by the assessee on the shares held by him as stock-in-trade of his share business was earned income ?
Mumbai bench of the Income-tax Appellate Tribunal (the Tribunal) held that interest income earned on fixed deposit made for the purpose of business should be considered as business income and not as income from other sources. Further, the Tribunal held that salary and welfare expenses of taxpayer’s staff will not be covered under section 44C of the Income-tax Act, 1961 (the Act) since the expenses are directly related to the Indian Project. The Tribunal also held that the payment made for procurement services cannot be considered to be a payment towards fees for technical services as per India-Korea Tax Treaty (the tax treaty) since procurement services were purely commercial in nature and had nothing to do with rendering of any technical managerial or consultancy services.
ITAT Delhi held that a captive service provider assuming minimal risks, cannot be compared to a large company like Infosys Technologies Limited which assumes all risks leading to greater rewards.
The ITAT Delhi held where a taxpayer engaged in rendering advertising and related services to its Associated Enterprises (AEs) is also acting as an intermediary between the AEs and the third party vendor to rent advertisement space from the vendor, costs recovered by the taxpayer from the AEs for such renting and then passed on to the vendors (pass-through costs) would not be value adding costs for the taxpayer and would, therefore, not be taken into account for computing net profit margin (Operating Profit / Total Cost) of the taxpayer for applying the Transactional Net Margin Method (TNMM).
