TaxTMI 
TaxTMI 
2010 (9) TMI 893
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.... to carry on banking business. The principal approval of Reserve Bank of India (RBI) obtained on 12-5-1998 and the final approval was granted by the RBI on 2-6-1998. The assessee filed the return of income for the assessment year 1999-2000 declaring the loss of Rs. 12,02,72,663. The return filed by the assessee was selected for scrutiny and assessment was completed under section143(3) of the Act. On the examination of the statement of accounts, the Assessing Officer was of the opinion that the expenses incurred from 12-5-1998 to 2-6-1998 cannot be allowed as a revenue expenses as the expenses incurred in the above period are only capital expenditure. The assessee contended that the expenditure incurred between 12-5-1998 to 2-6-1998 was mainly on salaries, professional fees, travelling etc. It was noticed by the Assessing Officer that the assessee has worked out the proportionate expenditure for the period from 12-5-1998 to 1-6-1998, which was base on the ratio of the number of days. The Assessing Officer rejected the claim of the assessee that the expenditure between 12-5-1998 to 1-6-1998 is allowable as revenue expenditure. Alternatively, the assessee pleaded that if the said expe....
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....uated at Ballard Estate, Mumbai. It was contended before the Assessing Officer that the amount was paid towards services rendered by M/s. Royal House Agency for identification of premises, negotiation and finalisation of MOU and other legal documentation of the premises at Ballard Estate at Mumbai. The deal could not be finalised. The Assessing Officer rejected the claim of the assessee on the reason that the said expenditure was incurred in connection with some property deal, which was never materialised. The Ld. CIT (A) confirmed the disallowance made by the Assessing Officer Now, the assessee is in appeal before us. 6. We have heard the rival submissions of the parties and also perused the paper book filed. The Ld. Counsel vehemently argued that the broker / agent were engaged by the assessee for identifying and acquiring a suitable premise. But, subsequently, the deal could not be materialised. It is argued that assessee has committed to the said agent and hence assessee made the payment. The Ld. Counsel referred to the letter issued by the RBI dated 2-6-1998 (P.92 of the paper book) in which the reference is made in respect of the premises for which M/s. Royal House Agency wa....
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....those expenses were not debited in the Indian books of the assessee-company. The assessee also contended that as the expenditure was incurred by the Singapore Hub and was related to the business of the Indian office and hence in view of the Article 7(3) of DTAA the same was allowable. The Assessing Officer also sought the explanation in respect of the some other expenditure. The Assessing Officer invoked Rule 10 of the Income-tax Rules, 1962 by giving the following reason:- "10. I am of the opinion that in the absence of production before me for verification audited accounts, bills, vouchers, invoices, etc., that the actual amount of the income in case of the non-resident assessee company cannot be definitely ascertained. The assessee has also not provided all the documentary evidences in respect of the expenses claimed. Therefore, I consider it necessary to invoke the provisions of Rule 10 of the Income-tax Rules, 1962 and to determine the income of the non-resident assessee company during the year under consideration. 11. Therefore, after considering the facts of the case, submissions of the assessee company and the materials on record, the business profit of the assessee compa....
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....of assessment to Income-tax may be calculated:- ( i) at such percentage of the turnover so accruing or arising as the Assessing Officer may consider to be reasonable, or ( ii) on any amount which bears the same proportion to the total profits and gains of the business of such person (such profits and gains being computed in accordance with the provisions of the Act), as the receipts so accruing or arising bear to the total receipts of the business, or ( iii) in such other manner as the Assessing Officer may deem suitable." As per the said Rule, the Assessing Officer is authorised to compute or determine income of the non-resident in the following situation. (i)The Assessee should be non-resident person. (ii)The Assessing Officer cannot definitely ascertain the actual amount of income accruing or arising to such non-resident, directly or indirectly from any business connection or any property or any asset or source of income in India. (iii)The said situation pre-supposes that the material or accounts available before the Assessing Officer are of such nature that it is difficult for the Assessing Officer to determine the actual income of the non-resident. From the scheme of th....