TaxTMI 
TaxTMI 
2016 (10) TMI 1056
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....ded to the computation of income which indicated that the amount of Rs. 2.60 crores received by the assessee, on sale of transfer of intellectual property by way of expertise and knowhow in the business relating to GIS (Global Information System) from its subsidiary, namely Global IP Technology Ltd, was exempt from tax- and the detailed reasons of such a claim. The Assessing Officer then examined the MOU entered into between the assessee and its subsidiary, i.e. Global IP technology Ltd, and concluded that "the assessee company has allowed to use right to technology, along with the trade name, to its subsidiary company" and "therefore, the consideration received by the assessee company is akin to transfer of trade name and brand name, associated with business, and right to carry on the business". He thus concluded that receipt in question is taxable under section 555(2)(a). Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. A further appeal before a coordinate bench of this Tribunal did not yield success either. The matter is right now pending before Hon'ble High Court. Hon'ble High Court has admitted the appeal against the decision of the T....
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....n the assessment, the Assessing Officer, after examination of the memorandum of understanding between the assessee and its subsidiary GIPL and noted that as per para 7 of the MOU, the assessee had retained the right to carry on the GIS related business and even the trade name of ORG had not been completely transferred to the subsidiary company. Only the right to use the technology and trade name "ORG-GIS" had been conferred on the transferee. It was, therefore, held that there was no transfer of capita! asset and hence the receipt of Rs. 2.60 crores amounted to revenue- recent, which was taxable. He further held that the consideration received by the assessee was akin to transfer of trade mark or brand name associated with the business and right to carry on the said business. Therefore, the said receipt if treated as capital was in lieu of transfer of brand name i.e. ORG and right to carry GIS business. He held, in that case, the said receipt was squarely covered by the provisions of section 55(2)(a) of the Income-tax Act for computing the capital gain for which the cost of acquisition was nil. Hence, the receipt was capital gain in the hands of the company. On both the grounds, he....
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....the Assessing Officer is satisfied that any person "has concealed particulars of his income or furnished inaccurate particulars of such income". By way of deeming provisions in Explanation 1 to sub-section 1, the amount added or disallowed in computing the total Income shall be deemed to represent the income in respect of which particulars have been concealed. Thus, any variation between the returned and assessed income shall be deemed to represent the income in respect of which particulars have been concealed. Thus, any variation between the returned and assed income shall be deemed to be the result of concealment/furnishing of inaccurate particulars of income. Explanation 1 states a rule of law that in every case of addition to the returned income, there is a presumption of concealment. This presumption is rebuttable. The onus of rebutting such presumption is on the tax payer. The presumption can be rebutted by offering a plausible explanation. Where no explanation is offered, the assessee would be liable for penalty. In the instant case, no plausible reply could be offered by the assessee by adducing any corroborative evidence. The same amounts to furnishing of inaccurate partic....
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.... observations of Hon'ble ITAT in the case of Kanbay Software India Ltd. (supra) needs mentioning which apparently are relied upon by the appellant. In para 63 it has been observed by the ITAT that there cannot be any concealment of particulars of income on the issues of legal interpretations. In para 60 of the order, the Tribunal has observed that expression concealment of income in its natural sense and grammatical meaning implies an income is being hidden, camouflage or covered up so as it cannot be seen, found or observed. The appellant has sought to interpret the above observation of the Tribunal to mean that once a mention is made of any judicial decision, penalty under section 271(1)(c) of the Act cannot be imposed because this involved different legal interpretations. Such interpretation of Hon'ble Tribunal's decision is contrary to the real finding of the Tribunal for two reasons. Firstly, the above observation of the Tribunal is made within the context of the peculiar facts of the case before the Hon'ble Bench. Secondly, if this observation is taken as a proposition of law that any disclosure made in the return of income or citing a case law is sufficient t....
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....llowances. That's not the scheme of the law, and there can hardly be any debate on this issue. Hon'ble Courts above have held it time and again that assessment proceedings and penalty proceedings are independent proceedings and while findings in quantum proceedings may be relevant, such findings cannot be decisive, in respect of penalty issue, at all. It is not the inadmissibility of a claim, but explanation for a claim having been made, which is crucial in the penalty proceedings. One has to examine explanation of the assessee, in a fair and objective manner and independent of decision on merits in the assessment proceedings, and then take a call whether or not such an explanation is an acceptable explanation or not. In CIT vs. Nathulal Agarwala & Sons [(1985) 153 ITR 292 (Pat) (FB)] Full Bench of Hon'ble Patna High Court had, inter alia, observed as follows : "As to the nature of the explanation to be rendered by the assessee, it seems plain on principle that it is not the law that the moment any fantastic or unacceptable explanation is given, the burden placed upon him would be discharged and the presumption rebutted. It is not the law and perhaps hardly can be that any an....
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....d outright as improbable. It is only on fine points of arrangements that it has been held to be a right to use, rather than outright transfer, which has been given to the subsidiary. Under these circumstances, in our considered view, the claim of the assessee cannot be held to a wholly unacceptable claim. 11. What is even more important is that the claim has been made in a very fair and transparent manner. In the computation of income, a copy of which was placed before us at page 73 of the paper-book, the assessee has made the following disclosure: "The assessee company has with effect from March 1, 2003 transferred the expertise and know-how in the business relating to Geographic Information System (GIS) to it's wholly owned subsidiary viz. Global IP Technology Pvt. Ltd., a company incorporated under the provisions of Companies Act, 1956 and having its registered office in New Delhi at a consideration of Rs. 2,60,00,000 pursuant to the Memorandum of Undertaking executed on March 26, 2003 between both the parties. The company claims that it is not liable to any capital gains tax in view of decision of Supreme Court in the case of CIT v/s B.C. Srinivasan Setty [(1981) 128 ITR 294....
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....rmation thus relates to furnishing of factually correct (sic-incorrect) details and information about income. In the present case, however, what has been treated as furnishing of inaccurate particulars is making of a claim which was not admitted by the AOI. an action not contested by the assessee. The admission or rejection of a claim is a subjective exercise and whether a claim is accepted or rejected has nothing to do with furnishing of inaccurate particulars of income. The authorities below have apparently proceeded to treat assessee's making an incorrect claim of income as furnishing of inaccurate particulars. What is a correct claim and what is an incorrect claim is a matter of perception. In our considered view, raising a legal claim, even if it is ultimately found to be legally unacceptable, cannot amount to furnishing of inaccurate particulars of income. 'Inaccurate', as we have noted above, is something factually incorrect and interpretation of law can never be a factual aspect. Just because an AO does not accept an interpretation, such an interpretation is not rendered incorrect. Even the judgments of Hon'ble Supreme Court are reversed by the Larger Benches of Hon'ble Sup....