TaxTMI 
TaxTMI 
TaxTMI 
2013 (9) TMI 192
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.... accepted by the Assessing Officer. 5. Appeal of the assessee before CIT(Appeals) was successful. According to him, decision of Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd v. Dy. CIT (328 ITR 81) was in assessee's favour. As per ld. CIT (Appeals), Rule 8D could not be applied for impugned assessment year. Nevertheless, he held that Section 14A enabled the Assessing Officer to make a reasonable disallowance. He sustained disallowance to 2% of the exempt income claimed by the assessee. 6. Now before us, learned D.R., strongly assailing the order of CIT (Appeals), submitted that Assessing Officer was justified in invoking Rule 8D for working out disallowance under Section 14A of the Act. 7. Per contra, learned A.R., in support of the order of CIT (Appeals), submitted that Hon'ble jurisdictional High Court in the case of Simpson & Co. Ltd. v. Dy. CIT [TC(A) No.2621 of 2006, dated 15.10.2012] had held 2% to be a reasonable estimation for disallowance to be made under Section 14A of the Act. 8. We have perused the orders and heard the rival submissions. Without doubt, Rule 8D was not applicable for impugned assessment year in view of the decision of Hon'ble B....
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....crore. 11. Assessee had entered into a Tripartite Agreement with UTI Bank and Wescare India Ltd., under which it held an operating lease for wind electric generators. M/s UTI Bank was the lessor. M/s Wescare India Ltd. was generating power out of such wind generators, and the electricity was to be fed in the grids of Tamil Nadu Electricity Board. Assessee was to get credit against the supply of electricity, from M/s Tamil Nadu Electricity Board. Assessee was to pay M/s Wescare India Ltd. an agreed amount based on number of units supplied by it to TNEB. Such payments were made through account payee cheques. As per the Assessing Officer, assessee was the owner of the windmills, and therefore, payment to M/s Wescare India Ltd. could not be allowed. He disallowed such a claim, as was done in the earlier assessment years. 12. Assessee's appeal before CIT(Appeals) was successful. CIT(Appeals), following his own earlier order for assessment years 2002-03 to 2006-07, deleted the addition made by the Assessing Officer. 13. Now before us, learned D.R., strongly assailing the order of CIT(Appeals), submitted that Revenue had gone on appeal against the order of CIT(Appeals) for earlier asse....
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....ections given in the orders of this Tribunal in I.T.A. No. 1635/Mds/2007, I.T.A. No. 2510/Mds/2007 and I.T.A. No. 1565/Mds/2008 dated 10.6.2011. 16. Ground No.3 is allowed for statistical purposes. 17. Vide its ground No.4, Revenue is aggrieved regarding deletion of disallowance of additional depreciation on plant and machinery. As per Revenue, items on which depreciation was claimed, were in the nature of office assets and not used in any manufacturing purpose. 18. Facts apropos are that Assessing Officer had disallowed a claim of additional depreciation of Rs. 9.58 lakh for a reason that plant and machinery on which such claim was preferred, was used for non-manufacturing purposes. 19. Assessee in its appeal before CIT(Appeals), argued that the machinery were used only for manufacturing purposes and nothing was kept in the corporate office. As per the assessee, even the software purchased was used for ordering material, which was used in the manufacturing process. 20. Ld. CIT(Appeals) was appreciative of assessee's contentions. According to him, assessee was a manufacturer of automobile spare parts and machinery purchased was utilized in its manufacturing activity. Therefore....
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....e Revenue is dismissed. 25. Vide its ground No.5, grievance raised by the Revenue is that CIT(Appeals) deleted apportionment of expenditure on Research & Development to the units on which assessee had claimed deduction under Section 10B of the Act. 26. Assessee had claimed deduction under Section 10B on two units, viz. Apache Exports and Roll Tec Engineering. Assessing Officer found that the assessee had claimed scientific research expenditure, but no part thereof was allocated to these units. Assessing Officer, therefore, indulged in an apportionment of such expenditure over these two units. Though assessee claimed that products manufactured by it from such units, were time tested ones, and no R&D efforts were required for it, this was not accepted by the Assessing Officer. Result was that the claim of deduction under Section 10B was reduced by an amount of Rs. 27,37,344/- for Apache Exports and the loss claimed on Rolltec Engineering increased by Rs. 54,12,000/-. 27. In its appeal before CIT(Appeals), argument of the assessee was that the scientific research expenses were incurred for developing new products and not in relation to any of the items manufactured from the units f....
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....Assessee also claimed a sum of Rs. 5,84,49,176/- as expenditure incurred in relation to R&D under Section 35(1)(iv) of the Act. Though the assessee mentioned that the products manufactured in the units for which 10B was available, were time tested products, A.O. was of the opinion that assessee was manufacturing Pad Assembly from its Apache Export Unit and DIH Brakes, Adaptor Casting Machine, Air, Calliper Assembly and Piston Assembly from its Rolltec Engineering Unit. As per A.O., the new products developed could be used extensively for export purposes. However, we find nothing is available on record to show what tangible benefit, if any, assessee had derived on account of the research work. Whether any such earlier research had helped the assessee with regard to its activities in the units on which it had claimed deduction under Section 10B of the Act, is also not on record. CIT(Appeals) had given relief to the assessee accepting its claim that it had not incurred any such expenditure with reference to the units on which 10B deduction was claimed. We are of the opinion that the matter requires a fresh look by the Assessing Officer. Assessing Officer has to verify whether the rese....
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....R., supporting the order of CIT(Appeals), placed reliance on the decision of Hon'ble Bombay High Court in the case of Hindustan Unilever Ltd. v. DCIT (325 ITR 102). 39. We have perused the orders and heard the rival submissions. No doubt, Hon'ble Karnataka High Court in the case of Yokogawa India Ltd. (supra) had held that exemption under Section 10A was to be allowed without set off of brought forward unabsorbed loss and depreciation from earlier assessment year or current assessment year from a non-STP unit. Special Bench of this Tribunal in the case of Scientific Atlanta India Technology (P.) Ltd. v. Asstt. CIT [2010] 38 SOT 252 (Chennai) had also held that deduction under Section 10A was undertaking specific. The analogy will clearly apply in the case of units on which deduction is claimed under Section 10B as well, since Section 10A and Section 10B are similarly worded. Nevertheless, issue before Hon'ble Karnataka High Court, was regarding claim of deduction under Section 10A, on profits of an EOU, without setting off of brought forward loss of earlier years. In our opinion, the issue before Hon'ble Karnataka High Court was entirely different from the issue raised by the Reve....
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.....08 lakh 3. Clearing charges to Showatech Inc. - Rs. 1,19,71,578/- 4. Warehousing charges to Showatech Inc. - Rs. 75,81,230/- 5. Freight charges to Showatech Inc. - Rs. 41,73,843/- 6. Freight & Warehousing charges to Volvo Logistics - Rs. 1,12,82,138/- Assessing Officer disallowed the above claim under Section 40(a)(i) of the Act. 43. In its appeal before CIT(Appeals), argument of the assessee was that export commission, and professional and consultancy charges were paid for rendering services outside India and the agents concerned had no permanent establishment in India. The amounts paid were the business income of the concerned non-residents. Therefore, acc....
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....le to deduct tax at source. In this regard it is important to have a look at the explanations given by the assessee on the payments effected by it to the Non-residents. With regard to commission, assessee had before Assessing Officer, given a copy of the letter issued to the non-resident party which read as follows:- "Assistance You will render full assistance and co-operation with regard to the follow up of schedules and other correspondence that emanate from customers from time to time regarding the agreed products. You will also be required to ensure the consignments are cleared, warehoused and distributed by nominated agents for onward delivery to customers. Expenses incurred on account of the above will be reimbursed by Brakes India and shall be supported by relevant basic documents. All other expenses related to the specific products including ASN (Advance Shipment Note) submission, sample certification, training and other direct expenses related to subject merchandise will be reimbursed. Supporting documents will have to be provided with the invoices. A copy of the agreement entered with nominated ....
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....ithin the definition of "fees for technical services" given under Explanation 2 to Section 9(1)(vii) of the Act. By virtue of such services, the concerned recipients had not made available to the assessee any new technique or skill which assessee could use in its business. The services rendered by the said parties related to clearing, warehousing and freight charges, outside India. The logistics service rendered was essentially warehousing facility. In our opinion, this cannot be equated with managerial, technical or consultancy services. Even if it is considered as technical service, the fee was payable only for services utilized by the assessee in the business or profession carried on by the said non-residents outside India. Such business or profession of the non-residents, earned them income outside India. Thus, it would fall within the exception given under sub-clause (b) of Section 9(1) of the Act. In any case, under Section 195 of the Act, assessee is liable to deduct tax only where the payment made to non-residents is chargeable to tax under the provisions of the Act. In the circumstances mentioned above, assessee was justified in having a bona fide belief that the payments ....
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....machinery or plant acquired and installed after 31st March, 2005. The said sub-clause (iia) of Section 32(1) reads as under:- "32 (1) In respect of depreciation of - (i) .............................. (ii) .............................. (iia) in the case of any new machinery or plant (other than ships and aircraft), which has been acquired and installed after the 31st day of March, 2005, by an assessee engaged in the business of manufacture and production of any article or thing, a further sum equal to twenty per cent of the actual cost of such machinery or plant shall be allowed as deduction under clause (ii): Provided that no deduction shall be allowed in respect of - (A) any machinery or plant which, before its installation by the assessee, was used either with....
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.... in I.T.A. No. 1069/Mds/2010 dated 6th January, 2012, at para 15, held as under:- "15. We have considered the rival submissions. A perusal of the provisions of section 32 as applicable for the relevant assessment year clearly shows that additional depreciation is allowable on the plant and machinery only for the year in which the capacity expansion has taken place which has resulted in the substantial increase in the installed capacity. In the assessee's case this took place in the assessment year 2005-06 and the assessee has also claimed the additional depreciation during that year and the same has also been allowed. Each assessment year is separate and independent assessment year. The provisions of section 32 of the Act do not provide for carry forward of the residual additional depreciation, if any. In the circumstances, the finding of the learned CIT(A) on this issue is on a right footing and does not call for any interference. Consequently, ground No.1 of the assessee's appeal stands dismissed." We are therefore of the opinion that CIT(Appeals) was justified in following the view taken by coordinate Bench of this Tribunal. 56. Ground No.1 of the ass....
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.... had to deduct tax at source under Section 195 of the Act. He applied Section 40(a)(i) and made a disallowance of Rs. 15.72 lakh. 63. Appeal of the assessee before CIT(Appeals) was not successful. CIT(Appeals) held that Section 40(a)(i) was attracted relying on the decision of Delhi Bench of this Tribunal in the case of Gracemac Corpn. v. Asstt. DIT [2010] 42 SOT 550. 64. Now before us, learned A.R., assailing the orders of lower authorities, submitted that software was only a license that was purchased. There was no royalty involved in the payment effected. According to him, Hon'ble Delhi High Court in the case of DIT v. Nokia Networks (253 CTR 417) had held that consideration paid for supply of software was not taxable. Reliance was also placed on the decision of same High Court in the case of DIT v. Ericsson A.B., New Delhi (343 ITR 470). 65. We have perused the orders and heard the rival submissions. The nature of software, which was acquired by the assessee, is not at all clear from the orders of authorities below. Except for mentioning that it was for purchasing "Virtual Lab Durable Software for Fatigue Rig", no other information is forthcoming. The question whether the pa....