Jeans Knit (P.) Ltd v DCIT [ITA No: 19 & 23 (BANG.) OF 2010] (Bangalore ITAT) Background: The assessee is a 100% export oriented undertaking and is engaged in the business of manufacturing and export of garments. During the relevant financial year, the assessee made remittances to M/s Sharp Eagle International Ltd. (SEL), a non-resident company incorporated in Hongkong. The AO observed that the assessee made these remittances without deduction of tax at source as per provision of sec. 195(1) read with sec. 9(i)(vii) of the Act. The assessee submitted that SEL was acting on directions of the assessee for inspection of fabrics, timely dispatch of material etc. and for these services, the assessee paid 12.5% of imported value as charges to the non- resident company. The AO held that the charges paid to the non-resident company are fees for technical services (FTS) as defined in explanation 2 to sec. 9(1)(vii) and therefore, held the assessee to be defaulter u/s 201(1A) for non deduction of tax. The assessee filed an appeal before the CIT(A) and the CIT(A) also upheld the order of the AO.
Daily Archives: July 27, 2012
CIT v HSBC Securities & Capital Markets India (P.) Ltd. [ITA No: 657 OF 2007] (Bombay HC) Background: The assessee filed its return of income showing loss of Rs. 1,65,29,711 comprising of loss of Rs 1,72,31,711 arising out of the purchase and loss of shares and income from other sources of Rs 7,02,000. The AO passed assessment order under section 143(3) holding the aforesaid loss as speculation loss by virtue of explanation to section 73. Before the CIT(A), the assessee argued that “the explanation refers to the words “income which is chargeable under the heads” and since in the Appellant’s case, the only income which is included in gross total income is dividend income, the gross total income mainly consists of “Income from other sources” and therefore, explanation does not apply to Appellants case.“ The CIT(A) partly allowed the assessee’s appeal. However, the ITAT reversed the claim of assessee and invoked explanation to section 73 to treat the aforesaid loss as speculation in nature.