TaxTMI 
TaxTMI 
2011 (7) TMI 1252
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.... made by the A.O. for a reason that windmills were purchased by the assessee after completion of a lease, on residual value and depreciation was denied in earlier assessment years 2003-04 and 2004-05. 3. In its appeal before ld. CIT(Appeals), assessee pointed out that this Tribunal in its order dated 26.3.2008 in I.T.A. No. 1964/Mds/2006 for assessment year 2003-04, had decided this issue in favour of assessee and held that assessee was eligible for claiming such depreciation. 4. Now before us, the only contention raised by the learned D.R. is that the above referred decision of the Tribunal in assessee's own case for assessment year 2003-04 has not been accepted. 5. Per contra, learned A.R. pointed out that the matter stood decided in favour of assessee by the Tribunal. 6. We have perused the orders and heard the rival contentions. The disallowance was deleted by ld. CIT(Appeals) relying on Tribunal order in assessee's own case for assessment year 2003-04 mentioned supra. Nothing has been brought on record to take a contrary view for impugned assessment year. Therefore, ground No.2 appeal of the Revenue stands dismissed. 7. Vide its ground No.3, Revenue's grievance is that ld....
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....was required to be made in every case. He, therefore, deleted the and made by the A.O. 10. Now before us, learned D.R. submitted that Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. v. DCIT (328 ITR 81) though had held that Rule 8D of Income-tax Rules, 1962 could not be applied retrospectively, there was a clear ruling that Section 14A of the Act had to be applied even in earlier years and A.O. was not precluded from making apportionment of expenditure between exempt and non-exempt income for disallowance, even without invoking Rule 8D or sub-section (2) and (3) of Section 14A of the Act. 11. Per contra, the learned A.R. submitted that assessee could not be fastened with a disallowance where no borrowed funds were used for the purpose of investments giving raise to dividend. 12. We have perused the orders and heard the rival contentions. The Assessing Officer made the disallowance relying on the decision in Daga Capital Management Pvt. Ltd. (supra) and applied Rule 8D. Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd.'s case (supra) had overturned the decision of Special Bench of this Tribunal on this aspect and held that Rule 8D....
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....e assessee and TDS ought have been deducted at 2% on such amount and not 1%. He, therefore, made pro rata disallowance of Rs. 62,21,744/-, relying on Section 40(a)(ia) of the Act. 15. In its appeal before ld. CIT(Appeals), argument of the assessee was that it had provided catering facilities for pursuant to the main drilling contract with ONGC. As per the assessee, it was its responsibility to provide catering facilities for ensuring due performance of the main contract and the sub-contract entered into with the catering services company was only for this purpose. With regard to the observation of the Assessing Officer that there was nothing mentioned in the agreement with ONGC regarding boarding and lodging or to whom the catering work should be entrusted, argument of the assessee was that primary operation of the assessee was providing drilling service under contracts with oil companies and but for such contracts, there was no question of giving any catering facilities to anybody. Reliance was also placed on certain paras of its agreement with ONGC and also the schedule of responsibilities in support of these contentions. Ld. CIT(Appeals) was appreciative of these contentions. H....
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....s section referred to as the subcontractor) in pursuance of a contract with the sub-contractor for carrying out, or for the supply of labour for carrying out, the whole or any part of the work undertaken by the contractor or for supplying whether wholly or partly any labour which the contractor has undertaken to supply shall, at the time of credit of such sum to the account of the sub-contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one per cent of such sum as income-tax on income comprised therein" What is required is that the person who is making payments to any resident should be doing so in pursuance of a contract with a subcontractor and such contract shall be for supply of labour or for carrying out all or any part of work undertaken by the assessee. We cannot say that the catering services given by the assessee whether to its employees engaged in rig operation or to ONGC employees did not form part of the work undertaken by the assessee through this main contract with ONGC. Assessee agreement with ONGC at Exhibit A(II)(5) which gives the schedule of responsibilities, ....
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....ssee was that it had correctly deducted the tax as prescribed under the Act. According to the assessee, the services rendered by the non-resident entities were in connection with prospecting and extracting or production of mineral oils in India. Hence, under sub-section (2) of Section 44BB, profit of such entities could be considered at 10% of their receipts. Assessee also brought to the notice of the ld. CIT(Appeals) that Section 44BB of the Act started with a nonobstante clause and, therefore, prevailed over other provisions of the Act. As for the contention of the A.O. that assessee had not followed the procedure prescribed under sub-section (2) of Section 195 of the Act, argument of the assessee was that the word used in sub-section (2) of Section 195 was "may" and hence, it was not mandatory in nature. Reliance was also placed on CBDT Circular No.759 dated 18th November, 1997 and also Circular No.10 dated 9th October, 2002. As per the assessee, its Chartered Accountant had certified that the deduction was required to be made at 4% only. Therefore, as per the assessee, it was under bonafide belief that the deduction was correctly done. As for the reliance placed by the A.O. on ....
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....3. Per contra, the learned A.R. placing reliance on an order of coordinate Bench of this Tribunal in the case of Frontier Offshore Exploration (India) Ltd. v. DCIT in I.T.A. No. 200/Mds/2009 dated 4th February, 2011, submitted that the decisions relied on by the A.O. as well as ld. CIT(Appeals) and also learned D.R. were all considered by the co-ordinate Bench of this Tribunal and on similar set of facts it was held that there was no violation of provisions of Section 195 of the Act warranting disallowance under Section 40(a)(ia) of the Act. Further, reliance was also placed on the decision of Hon'ble Apex Court in the case of GE India Technology Centre Pvt. Ltd. v. CIT (327 ITR 456). 24. We have perused the orders and heard the rival contentions. The payments were made by the assessee to non-residents. The payment made to International Tubular F2E was for rental and repairs to machinery and payment made to International Offshore Management was for drilling services. This has been mentioned by the Assessing Officer at para 6 of his assessment order. However, as per the Assessing Officer, it was not for the assessee to decide whether Section 44BB could be applied to such non-re....
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....the assessment year 2003-043 would no more constitute good law. To err is human. To continue the error is not bravery. If we are to accept the contention of the Revenue that the provisions of sec. 44BB is relating only to the non-resident for the purpose of his assessment, then one should also keep in mind that the non-resident's assessment comes into play when he files his return. The non-resident would file his return only when the assessee has made the payment and if the assessee has made the payment to the non-resident, where is the question that the assessee is to deduct TDS at a lower rate after the assessment has been done on the non-resident? Section 44BB is a special provision as it is mentioned in the cause title to the said provision itself. As per the provisions of sec. 44BB(1) a sum equal to 10% of the aggregate of the amount specified in sub-section (2) is deemed to be the profits and gains of such business chargeable to tax under the head "profits and gains of business or profession". It is because the provision of sec.44BB has quantified the deemed income of the non-resident assessee at 10%, it has opened with the clause "Notwithstanding anything to the contrary" co....
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....provisions provided in sections 28 to 41 and 43 and 43A of the Act. Once the provisions of sections 28 to 41 and sections 43 & 43A stand excluded, the method of computing the business income of the non-resident on the basis of the books of accounts goes out of the picture. Then it is only the provisions of section 44AD, 44AE & 44AF which could be applied and the same obviously do not apply to the income of the non-resident companies. The Hon'ble Supreme Court while dealing with its own decision in the case of Transmission Corporation of A.P. Ltd., referred to supra, has categorically explained that the tax was liable to be deducted by the payer of the gross amount if such payment included in it an amount which was exigible to tax in India. This is not so in the present case. Here on account of the special provisions of sec. 44BB, 10% of the gross amount payable to the non-residents deemed as the income chargeable to tax in India. In the present case it is noticed that the assessee has deducted tax at the specified rate on the 10% of the Bare Boat charges paid to the Norway company who is the non-resident, computed as per the provisions of sec. 44BB. In the circumstances, we are....
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....see was that the building was purchased in ordinary course of business and was rented out to generate additional revenue. Hence, as per the assessee, the rental income should be assessed as its business income. However, the CIT(Appeals) was not impressed. According to him, decision of Hon'ble Apex Court in the case of Shambu Investments Pvt. Ltd. v. CIT (263 ITR 143) and that of Hon'ble jurisdictional High Court in the case of CIT v. Chennai Properties Ltd. (266 ITR 685) (Mad) did not allow any other treatment for rental income received from letting out of building. 32. Now before us, learned A.R., strongly assailing the order of ld. CIT(Appeals), submitted that letting out was in the course of assessee's business. 33. Per contra, learned D.R. supported the order of ld. CIT(Appeals). 34. We have perused the orders and heard the rival contentions. What was let out was building and not plant, machinery or any other asset. It is settled law that when a building is let out, the income has to be computed as income from house property. It was not letting out of a complex nature involving machinery and services. In our opinion, ld. CIT(Appeals) rightly applied the decision of H....
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....this regard could not be produced. Though in an earlier year, in assessee's own case it was held that when there was no concept of record dates, disallowance under Section 94(7) of the Act could not be made, ld. CIT(Appeals) decided to confirm the view of A.O. since assessee could not furnish details of the schemes in the relevant previous year. 38. Now before us, learned A.R., assailing the order of ld. CIT(Appeals), submitted that relevant investments on which dividends were received on short term capital loss claimed had no record date. Nevertheless, he admitted that assessee was unable to produce any evidence in this regard. 39. Per contra, learned D.R. supported the order of ld. CIT(Appeals). 40. We have perused the orders and heard the rival contentions. It is for the assessee to show that the short term capital loss claimed by it were all on mutual investments, for which there was no record date. Assessee could not produce any details. In fact, nothing was brought on record to show how the computation made by the Assessing Officer reproduced at para 36 above was not acceptable. We are, therefore, of the opinion that the disallowance was rightly done. No interference is re....
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....s capital work in progress, deduction under Section 35D could not be allowed. 47. In its appeal before CIT(Appeals), contention of the assessee was that assessee was engaged in the business of oil drilling and rigs hired and purchased were used by the assessee for drilling and other oil field services. Therefore, according to assessee, such exploration of oil came within the meaning of "mining" and therefore, clause (aa) of sub-section (7) of Section 72A clearly applied and it was an industrial undertaking. Further, as per the assessee, the oil rig purchased, though not put to use during the year, such purchase was only an extension of industrial undertaking and the moment the purchase was complete, the extension of industrial undertaking was also complete. Though ld. CIT(Appeals) accepted the contention of the assessee that it was an industrial undertaking, he was of the opinion that assessee though it had purchased the oil rig, had never put it to use in relevant previous year. According to ld. CIT(Appeals), extension of industrial undertaking could not be treated as complete just by effecting a purchase. He was, therefore, of the opinion that Section 35D had no application in t....
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....claim, but through a revised return, no doubt, in the case of Goetze (India) Ltd. (supra), Hon'ble Apex Court held that an A.O. could not entertain a claim made otherwise than by way of revised return. However, here the assessee had claimed the whole of the amount as revenue expenditure. The letter filed by the assessee was only an alternative claim that amount if not allowed in one go, it should be considered amortization under Section 35D of the Act. Assessee might have made a claim under a particular Section, but if the claim though not allowable under that section, but was allowable under another section, then it cannot be considered as a fresh claim, though the allowance under the latter Section could be given only in a gradated manner. The claim, nevertheless, was always there and we cannot consider it as claim of allowance made for the first time. In any case, Assessing Officer himself had considered the claim of the assessee under Section 35D of the Act. He did not allow the claim for two reasons. Primary reason was that assessee, according to him, was not an industrial undertaking and second reason was that assessee had not completed extension of its industrial underta....