SARGENT & LUNDY v ADIT [ITA No.8986/Mum/2010 (Mum ITAT)] dtd 24.07.2013 Background: The assessee is tax resident of USA. It is a consulting firm engaged in providing services to the power industry by providing engineering based services. The assessee received a sum of Rs.2,22,16,154/- from L&T Limited for rendering consulting and engineering services in relation to Ultra Mega Power projects. The assessee entered into agreement to provide ‘consulting and engineering services’ required by L&T “in the preparation of technical designs” for Ultra Mega Power Projects. L&T was to bid for setting up power projects. It engaged the services of the assessee for technical evaluation and preparation of necessary designs and documents. The assessee did not offer this income in the return on the pretext that such sum was not taxable as the services do not make available technical knowledge, experience, skill or know how within the meaning of FIS as per Article 12(4) of the DTAA between India & USA. However, the AO held that the services rendered were in the nature of ‘consulting and engineering services in preparation of the technical designs basis in the form of review of designs for Ultra Mega Power Projects and therefore was covered u/s 9(i)(vii) of the Act as well as includible in the scope of ‘Fees for included services’ under Article 12 of the DTAA.
Monthly Archives: July 2013
Gitanjali Exports Corporation Ltd v DCIT ITA Nos.6947&6948/Mum/2011 dated 08-05-2013 (Mum ITAT) Background: Assessee had SEZ units which were engaged in the business of trading in jewellery and diamonds. Assessee claimed the profits therefrom as exempt u/s 10AA in the return of income. The AO disallowed the deduction under section 10AA by observing that the exemption claimed u/s. 10AA is applicable only for manufacturing unit as per the Act, whereas the assessee was involved in trading activities. AO observed that for the purpose of Section 10AA of the Act, manufacture is defined under clause (iii) in Explanation 1 that “(iii) ‘Manufacture’ shall have the same meaning as assigned to it in clause (r) of section 2 of the Special Economic Zones Act 2005”. However, there is no such definition for services.
Mumbai ITAT confirms trading activities (import for the purpose of re-export) to be eligible u/s ...
ITO v VEEDA CLINICAL RESEARCH PVT LTD ITA No.1406/Ahd/2009 (dated 28 June 2009) – Ahmedabad ITAT Background: During the year, the assessee made payments of GBP 35,600 to Veeda Clinical Research Ltd UK, for providing in-house training of its employees, and of GBP 8,500, made to Steve Matheson UK, for providing market awareness and development training to its employees. The payment was made without deducting tax at source under section 195 of the Act. The Assessing Officer disallowed the same under section 40(a)(i) of the Act. The CIT(A) also upheld the order of the AO.
FTS can be ‘made available’ only if the technology is transferred – Ahd ITAT
CBDT issued a Circular dated 16th July 2013 giving its view on the controversial issue as to whether the profit of a unit eligible for deduction u/s 10A/ 10B has to be first set-off against the loss suffered by an ineligible unit before computing the available deduction u/s 10A/10B.
CBDT revamps settled position on inter-unit setoff of non-10A loss against 10A profits
CIT v M/s MANSUKH DEYING & PRINTING MILLS (Income Tax Appeal No.1133 of 2008 dtd 24/06/2013) Bombay High Court Background: During the assessment proceeding for the AY 1992-93, the AO had assessed an amount of Rs.2.63 Crores being goodwill as chargeable to capital gain tax on account of the fact that the above amount was debited to partners capital accounts during the AY 1992-93. The AO while passing the assessment order also directed that penalty proceedings be initiated under Section 271(1)(c) of the said Act against the assessee.
Penalty cannot be imposed merely on account of a different interpretation of provisions – Bom ...
M/s TATA AUTOCOMP SYSTEMS LTD v ACIT IT (TP)A No.7596/Mum/2012) Mumbai ITAT Background: During the year under consideration, the assessee received dividend income of Rs. 16,83,27,131 which was claimed to be exempt from tax. A disallowance of Rs. 1,34,95,120 was made u/s 14-A of the Act on account of expenses attributable to the said exempt income. The said disallowance comprises of interest at Rs. 1,28,72,969/- being 35% of the total interest which, according to the assessee, was the ratio between the investment fetching tax free income and total investment. The balance disallowance of Rs. 6,22,151/- was made on account of salary paid to a treasury person who, according to the assessee, was looking after the activity of earning tax free income.