TaxTMI 
TaxTMI 
2009 (8) TMI 821
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.... of royalty paid to Oracle Corporation, USA. 1.2 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the provisions of section 40A(2) of the Income-tax Act, 1961 ('the Act') would override the special provisions contained in Chapter X of the Act. 1.3 The Ld. CIT(A) erred in not appreciating that section 40A(2) of the Act has an overriding effect over sections 28 to 44DA of the Act, being provisions of relating to computation of income under the head "Profit and gains of business or profession'. 1.4 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that fixing the royalty with reference to the Indian Published Price ('IPP') of the software, as....
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....d. As pointed out by the learned counsel for the assessee, a similar issue involving identical facts had arisen for the consideration of the Tribunal in assessee's own case for the earlier years and Delhi 'E' Bench of ITAT, vide its order dated 29.8.2008 passed for AYs 1999-2000, 2000-01 & 2001- 02, deleted the similar disallowance made by the AO and confirmed by the learned CIT(A) out of royalty payment for the following reasons given in paragraph Nos.11 & 12 of its order: "1. We have heard the submissions of both the parties and perused the material available on record and the judgments cited by the Ld AR of the assessee. Before proceedings further, we feel that the provisions of section 92 as appearing on the statute book during the r....
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.... profit being earned by the assessee is less than ordinary profit in this type of business and hence section 92 cannot be invoked. The Tribunal in this case has followed the Tribunal decision in the case of Nestle India Ltd. (supra) in which it was held by the Tribunal that the burden is on the Assessing Officer and not on the assessee to prove that the case falls under the provisions of section 92. Since in the present case also, this onus is not discharged by the revenue by bringing on record a comparable case to show that the profits earned by the assessee company is less than ordinary profit, we are of the considered opinion that the provisions of section 92 cannot be invoked in the present case to make any addition in the profit of the....
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....the decision of the Special Bench of Bangalore, ITAT in the case of Aztec Software Technology Services Ltd. v. Asstt. CIT [2007] 107 ITD 141 by discussion at pages181-182 which reads as under: "17. In view of the above judgments, the CIT(A) was not justified in holding that avoidance of tax is a condition precedent for invoking the provisions of section 92C/92CA of the Act. He was also not justified in attaching too much importance to Budget Speech, Notes on clauses, Memorandum to Finance Bills, apart from heading of the Chapter. The assessee can further derive no support from provision of section 52 or decision of the Hon'ble Supreme Court in the case of K.P. Varghese v. ITO [1981] 131 ITR 597 = (2002-TIOL-128-SC-IT) wherein profit on a....
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....r Profession". That means, it has overriding effect over the provisions contained in Chapter IV-D i.e., sections 28 to 44DA only. Hence, the provisions of section 40A(2) would not and cannot override the provisions contained in Chapter X of the Act. Even otherwise, if there are different provisions over the same subject then in law the specific provisions would prevail. So, even assuming that provisions of section 40A are attracted, these are the general provisions applicable to all transactions while the provisions of Chapter X are specific provisions relating to international transactions only. Therefore, the provisions of Chapter X which are more specific would apply to the present case. 20. At one stage of hearing, learned counsel fo....