TaxTMI 
TaxTMI 
2011 (8) TMI 351
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....s, royalty or business income as it is not taxable under the treaty in the absence of PE, hence no tax was required to be deducted at source under section 195 of the Act." 3. The original assessment was completed under section 143(3) on 28-3-2006. Subsequently, the Commissioner of Income-tax issued a notice under section 263 dated 24-7-2006 proposing revision of assessment order on two issues namely i.e., Bandwidth charges and bad debts as in his view the assessment order is erroneous and prejudicial to the interest of revenue. Consequently, an order under section 263 dated 5-12-2007 was passed on two issues as proposed in the show cause notice. Thereafter, the Assessing Officer has passed consequential order under section 143(3) read with section 263 of Income-tax Act dated 29-12-2008 whereby Bandwidth charges of Rs. 3,39,01,115 and bad debts of Rs. 2,10,74,000 was disallowed. The assessee challenged the order passed by the Assessing Officer under section 143(3) read with section 263 before the CIT(A) who has confirmed the disallowance made in respect of Bandwidth charges, however, the CIT(A) deleted the addition made by the Assessing Officer on account of bad debts. Thus, the ....
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....by the CIT(A) then the decision of jurisdictional High Court is not applicable in case of assessee. He has pleaded that, the issue is now settled by the decision of Hon'ble Delhi High Court. 7. We have considered the rival contentions and carefully considered the relevant material on record. Undisputedly, the original assessment order passed on 28-3-2006 had been set aside by the CIT while passing the order under section 263 dated 5-12-2007. The CIT in show cause notice proposed to revise the assessment order on two grounds including the issue of deduction of tax under section 195 and consequently disallowance under the provisions of section 40(a) of Income-tax Act with regard to Bandwidth charges of Rs. 3,59,01,115 paid for providing net on cable to customers. The Commissioner of Income-tax has discussed the issue elaborately while passing the order under section 263 and held that these services rendered by Netherlands company are not simple solution offered to the assessee but these are technical in nature and the payment made by the assessee can be interpreted to be those for technical service. Accordingly, the CIT has held that the assessee was required to deduct the TDS und....
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....dwidth. It is thus seen that the amount paid to the Netherland party is royalty within the meaning of section 9(1)(vi) of Income-tax Act and is also covered by fees for technical services. The various case laws cited by the assessee have been taken care of and discussed hereinabove. The assessee was therefore required to deduct TDS under section 195 of the Income-tax Act since it has failed to deduct tax, section 40(a) become applicable and the expenditure is not allowable to be deducted against the income as it has been paid without deducting TDS thereon. As stated earlier the provision of Article 12(2) of agreement between India and Netherland also make it clear that the Royalty can be charges to tax in India within limit of 20 per cent. Said sum is covered under the definition of royalty under the Double Taxation Avoidance Agreement between India and Netherland. Article 12(3) of the DTAA required the matter to be sorted out between Netherland party and Jt. Secretariat FTD, CBDT and therefore the Assessing Officer/Netherland part would be required to make reference to the CBDT in this case. Such sum can also be covered as fees for technical services because fee for technical s....
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....n this regard. On a reading of the revisional order of the Commissioner we have no doubt in our mind that the direction of the Commissioner to the Income-tax Officer to determine the relief under section 80J after giving an opportunity of being heard to the assessee was only for the purpose of recomputation of the amount of relief under section 80J by reducing the value of work in progress from the capital employed as held by him in paragraphs 4 and 5 and by reducing the written down value of the assets by the extra shift allowance allowed in the past as held in paragraph 6 of the revisional order. The direction to the Income-tax Officer in the operative part of the order cannot be read in isolation. The order of the Commissioner read as a whole makes it abundantly clear that the Commissioner arrived at categorical and definite findings in regard to the contentions of the assessee about inclusion of work in progress in the capital employed for the purpose of claiming relief under section 80J of the Act and in regard to deductibility of extra shift allowance allowed in the past from the value of fixed assets for the very same purpose and remitted the matter to the Income-tax Offi....
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....authorities in their order. In view of the above, we do not find any infirmity in the finding of the Tribunal in the instant case. Accordingly, question No. 1 is answered in the affirmative and in favour of the Revenue. On the very same reasoning, question No. 2 is also answered in favour of the Revenue. In the facts and circumstances of the case, there shall be no order as to the costs." 9. Thus, it is settled as principle laid down by the Hon'ble jurisdictional High Court that only such issues can be agitated in appeal which have not attained finality by virtue of earlier order of the revisional authority. It is not open in such appeal to judge any point which has already been decided by the revisionary or appellate authority in their order. In the case in hand when the CIT while passing 263 order has given a definite finding on the issue of disallowance of Bandwidth charges under section 40(a) and the said order has attained the finality on account of not challenge by the assessee then the assessee can't be allowed to challenge such definite finding in an appeal filed against the orders passed by the Assessing Officer in pursuant to the revision order under section 263. Th....
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....s the assessee is not required to prove that the debts have actually gone bad. If the amount has been written off in the books of account by treating the same as unrecoverable debt during the year under consideration, the claim of the assessee is allowable. He has further submitted that without prejudice to the rights and contention of the assessee, the interest written off has to be allowed as business loss under section 37. As regards Rs. 4.15 lakhs the AR of the assessee has submitted that this amount includes Rs. 1.2 lakh as non-refundable rent deposits and Rs. 2.80 lakhs salary/staff advances which is a business loss as a result of the business discontinued by the assessee at Bhopal. He has relied upon the order of this Tribunal in case of Asstt. CIT v. Safe Enterprises [2011] 128 ITD 459/9 taxmann.com 121 (Mum.). He has also referred an unreported decision of Hon'ble Delhi High Court dated 11-5-2011 in case of Mohan Meakin Ltd. v. CIT [IT Appeal No. 405/2007]. However, the copy of the decision has not been produced before us. 13. On the other hand the learned Departmental Representative has submitted that for the claim of bad debts, the assessee has to bring on record the ....
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.... after 31-3-2001 and vanished. The Directors of the debtor company were also not available. The CIT(A) has given a finding that the assessee has extended money as Inter Corporate Deposit (ICD) to Digital Super Highway which is a group company of the assessee. Thus it was observed by the CIT(A) that the very reason of writing off the interest receivable and treating the same as bad was not found correct and acceptable. In other words, the very basis that the debtor company discontinued the operation and vanished and their Directors were not available has turned out to be incorrect and beyond acceptable fact. The assessee failed to qualify the test of an honest and bona fide decision of writing off debts. In view of the above facts emerged from the record, the explanation and contention of the assessee do not inspire confidence and accordingly we do not find any error or illegality in the impugned order of the CIT(A) qua the issue of disallowance of the amount written off in respect of interest receivable. 16. This issue is decided against the assessee. 17. As regards the claim of Rs. 4.15 lakhs written off on account of advances and deposits become unrecoverable. Since, the as....
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....cated by this Tribunal in the assessee's own case for the assessment year 1997-98 and assessment year 2003-04. For the assessment year 2003-04 in ITA No. 300/M/2007 vide order dated 26-3-2008 this Tribunal has decided this issue in paras 6 and 7 as under : "6. Similar issue arose before the Tribunal in assessee's own case in ITA No. 6178/Mum/2003 relating to assessment year 1997-98, wherein vide order dated 9-3-2007 (wherein JM is one of the Members), it was held as under : We have heard the rival submissions and perused the records. The facts being identical to the assessment year 1998-99 as the reopening and addition was made based on the same advertisement brochure, there was no merit in the present appeal filed by the revenue. In view of the fact that the sole basis for addition in the present case was advertisement brochure dated 15-6-1997, which was also the basis for making the addition in assessment year 1998-99, respectfully following the order of co-ordinate bench of Tribunal we dismiss the ground of appeal raised by the revenue and upheld the order of CIT(A) in cancelling the impugned addition on account of proportionate subscription from estimated subscribers. Thu....