TaxTMI 
TaxTMI 
2022 (9) TMI 830
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....ted as international transaction and should be; added to the total income of the assessee. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance made by the Assessing Officer amounting of Rs.64683703/- made u/s 14A of the Income-tax Act, 1961 (hereinafter referred as 'the Act') since, the dividend and interest on bonds, share of profit from firms are the sources of income of assessee and the assessee has incurred expenditure on salary and miscellaneous expenses. Thus, these expenditures are incurred for earning both type of income. Thus the provisions of the Section 14A of the Income-tax Act, 1961 are squarely applicable and the same was applied correctly during the course of the assessment proceedings. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance made by the Assessing Officer amounting of Rs. 2445047/- on account of foreign travel expenses as being in a nature of personal expenditure, however, the same should have been treated as capital expenditure as the same has been incurred by the employees of the assessee company with the aim of p....
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....s allowed @ 10% and @15% on electric works instead of claimed by the assessee @15% and 20% respectively. 9. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance made by the Assessing Officer amounting of Rs.29094637/- on account of Disallowance of Freebies to Doctors, as the same expenses are cannot be treated as discount as it is not reduced from sale price, rather some monetary benefit in kind were used to be given. 10. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance made by the Assessing Officer amounting of Rs. 3106820/- on account of Increase in Book Profit u/s 115JB (as Wealth lax expenditure), since there is no provision in section 115JB, that the assessee can claim wealth tax as expenditure and can reduce it from book profit. 11. For this and such other reasons, as may be urged at the time of the hearing, the order of the CIT(A) may be vacated and that of the Assessing Officer be restored. 12. The appellant craves, leave to add, amend, alter or delete any of the above grounds of appeal during the course appellate proceeding....
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....the earlier assessment years i.e. A.Ys. 2011-12 and 2012-13 pursuant to the remand order passed by this Tribunal, the Assessing Officer for the assessment year 2011-12 had allowed this expenditure after due verification of fact that the expenditure was incurred for the purpose of other than the projects of machinery, had allowed the expenditure. (iii) As regards to the disallowance of depreciation of Rs.1,38,153/- on items stainless steel table, tools, trollies used in the laboratory, the ld. CIT(A) following the decision of this Tribunal in assessee's own case for the assessment year 2001-02, allowed the depreciation at the rate applicable to the Plant & Machinery. (iv) As regards, the disallowance of Product Development Expenditure, the ld. CIT(A) taking into consideration the fact that in the earlier assessment years i.e. for the assessment year 2011-12 and 2012-13 pursuant to the order of the Tribunal, the ld. CIT(A) had allowed the deduction under the provisions of section 35(2AB) following the decision of the Hon'ble Gujarat High Court in the case of CIT vs. Cadila Healthcare Ltd., 31 taxmann.com 300 (Gujarat). (v) As regards to the disallowance of ....
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.... addition on account of transfer pricing adjustment on account of corporate guarantee commission of Rs.91,03,879/-. The factual matrix of the issue is as under : During the previous year relevant to the assessment year under consideration, the respondent-assessee had provided corporate guarantee for borrowing made by its foreign subsidiaries. Further, it had not charged any corporate guarantee commission. The respondent-assessee had also given corporate guarantee in favour of its subsidiaries viz. Serum International BV and Bilthoven Biologicals BV, Netherlands. On reference to the TPO u/s 92CA for benchmarking of the above international transactions, it was contented before the TPO that the corporate guarantee was given to the lenders for the loan taken by its AE is for the benefit of respondent-assessee and it is not in the nature of service being provided to its AE. It was also contended that providing corporate guarantee is a shareholder activities. Thus, it was contended that the transaction of corporate guarantee is not an international transaction u/s 92B of the Act. However, the TPO rejecting the above contentions proposed a TP adjustment of Rs.1,20,29,793/- at the ra....
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....se of CIT vs. Everest Kento Cylinders Ltd., 378 ITR 57 (Bom.) held that the Corporate Guarantee cannot be treated on par with Bank Guarantees, as the considerations which are applied for issuance of Corporate Guarantee are distinct and separate from bank guarantee and the Hon'ble Jurisdictional High Court held that the corporate guarantee fees charged at the rate of 0.5% cannot be called in question. The ratio of this decision was subsequently followed by the Hon'ble Bombay High Court in the case of CIT vs. Glenmark Pharmaceuticals Ltd., 398 ITR 439. The order of the ld. CIT(A) is based on the decision of the Hon'ble Bombay High Court in the case of Everest Kento Cylinders Ltd. referred to supra. 10. In view of the above, we find no illegality and perversity in the finding of the ld. CIT(A) restricting the TP adjustment on account corporate guarantee commission at the rate of 0.5%. Hence, we do not find any merit in the ground of appeal no.1 filed by the Revenue. Accordingly, ground of appeal no.1 stands dismissed. 11. Ground of appeal no.2 challenges the correctness of the finding of the ld. CIT(A) in holding that the provisions of section 14A have no application in the abse....
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....f Rule 8D to compute the amount of disallowance u/s 14A, merely because AO did not expressly record the satisfaction, would not per se justify the ld. CIT(A) to conclude that no satisfaction was recorded to reject the Assessing Officer conclusion placing on the decision of the Hon'ble Delhi High Court in the case of Indiabulls Financial Services Ltd. vs. DCIT, 395 ITR 242 (Delhi.). Thus, he submits that the order of the ld. CIT(A) deleting the addition cannot be sustained in the eyes of law. 13. On the other hand, ld. Sr. Counsel submits that from the perusal of the assessment order, it would reveal that the Assessing Officer without recording the satisfaction, as to how the claim of the assessee that only expenditure of Rs.1,35,00,000/- was incurred to earn exempt income is incorrect, cannot resort to the provisions of section 14A of the Act. He placed reliance on the decision of the Hon'ble Delhi High Court in the case of CIT vs. Taikisha Engineering India Ltd., 370 ITR 338 (Del) and PCIT vs. Moonstar Securities Trading and Finance Co. (P) Ltd, 105 taxmann.com 274. 14. We heard the rival submissions and perused the material on record. The issue in the present ground of appe....
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....n the present case, the AO vide para 7.6 merely observed that the assessee company made substantial investments in mutual funds and therefore, incurred substantial expenditure to earn the exempt income and in the circumstances, he was of the opinion that rule 8D has to be applied. Therefore, the question that comes up for consideration before us is whether the above observation made by the AO amounts to satisfaction as envisaged u/s 14A(2). It is a settled position of law that the satisfaction recorded by the AO should be based on the objective material and cannot be subjective. From mere reading of para 7.6, it is clear that the AO has not recorded satisfaction regarding the correctness of suo motu disallowance offered by the assessee u/s 14A and mere rejection of the explanation of the assessee per se, cannot be said to be a satisfaction as envisaged u/s 14A(2). The ratio laid down by the Hon'ble Delhi High Court in the case of PCIT vs. Moonstar Securities Trading and Finance Co. (P) Ltd (supra) and PCIT vs. Keshav Power Ltd., 112 taxmann.com 323 as well as the Hon'ble Bombay High Court in the case of Pr.CIT vs. Reliance Capital Asset Management Ltd (supra) is squarely applicable....
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....he ld. CIT(A), the Revenue is in appeal before us in the present ground of appeal no.3 challenging the correctness of finding of the ld. CIT(A). 16. It is contended that the ld. CIT(A) ought not to have held that the foreign travel expenses incurred by the employees is capital in nature, inasmuch as, the foreign tours were undertaken by the employees of the respondent-assessee company for the purpose of procurement of machinery. As regards to the foreign travel expenses of wife of the director of the respondent-assessee company, he submitted that expenditure incurred by Mrs. B.Z. Poonawalla is purely personal expenditure and cannot be allowed for deduction. 17. On the other hand, ld. Sr. Counsel submits that the visit of employees is for the purpose of running business as some more plant and machinery was intended to be purchased. If the visit was either to take a decision whether it was suitable for its business or not or for any other such purpose, it cannot be said that the expenditure incurred on such visits is on account of capital outlay. In this connection, he placed reliance on the decision of the Hon'ble Bombay High Court in the case of Bralco Metal Industries (P.....
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....ssee was already going on and it was in connection with the running business that some more plant or machinery were intended to be purchased. If the visit was either to take a decision whether it was suitable for its business or not or for any other such purpose, it will not convert the expenditure incurred on the managing director's visit into an expenditure of a capital nature. Where a decision is taken to purchase the machinery and the purchase has in fact been made in pursuance of such decision, it may be possible for the revenue to contend that the expenditure should be added to the cost of the machinery but in a case where a decision is taken note to purchase the machinery it would not be possible to treat the expenditure as part of the cost of any machinery because no machinery, as such, is purchased. In such an event, either it may be disallowed altogether or it may be allowed treating it as a revenue expenditure. In aforesaid circumstances, applying the decision of the Supreme Court in CIT v. Malayalam Plantations Ltd. [1964] 53 ITR 140 it was to be held that the Tribunal was not justified in holding the expenditure in question was capital expenditure and in disal....
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....s well settled that items of expenditure are to be considered from the point of view of a normal, prudent businessman. The test merely means that the Court will place itself in the position of a businessman and find out whether the expenses incurred could be said to have been laid out for the purpose of the business. It seems that in the ultimate analysis the matter would depend on the status of the parties as spelt out and the nature or character of the trade or venture, the purpose for which the expenses were incurred and the object which was sought to be achieved in incurring those expenses. 5. Applying normal, prudent businessman's approach, we do not think that the expenses incurred by the assessee on a foreign trip of the wife of the company's President could be said to be not for the purposes of the business of the assessee-company. Considering the concurrent finding of fact recorded by both the authorities below, in our view, the expenditure would be allowable as deduction while computing the profit and gains of the business." In view of the law laid down by the Hon'ble Jurisdictional High Court in the case of Alfa Laval (I) Ltd. (supra), it cannot be sa....
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.... 22. We heard the rival submissions and perused the material on record. The issue in the present ground of appeal no.4 relates to determination of whether stainless steel tables, stools, trollies used in the laboratory constitutes a plant and machinery or furniture. Admittedly, the stainless steel tables, stools, trollies were used in the laboratory i.e. for the purpose of production and processing of chemical test. We find from the order of the Tribunal in assessee's own case (supra) that the Tribunal taking into consideration the ratio of the decision of the Hon'ble Bombay High Court in the case of CIT vs. Parke Devis, 214 ITR 587 (Bom.) wherein it was held that if the scientists or lab technicians used the said stainless steel tables, stools, trollies, racks as part of the production of vaccine and other should be classified as plant and machinery, accordingly, the depreciation should be allowed at the rate applicable to plant and machinery. We do not see any illegality and perversity in the decision of this Tribunal in the earlier assessment year 2001-02. Even the ld. CIT(A) only followed the order of the Tribunal for the assessment year 2001-02 in deciding the issue. Therefore....
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....s in appeal before us in the present ground of appeal no.5 challenging the correctness of the decision of the ld. CIT(A). 24. The ld. CIT-DR submits that the ld. CIT(A) ought not to have granted weighted deduction in respect of clinical trial expenditure, inasmuch as, the same was not approved by DSIR in terms of provisions of section 35(2AB) of the Act. 25. On the other hand, ld. Sr. Counsel submits that the Assessing Officer denied the claim for weighted deduction of expenditure incurred amounting to Rs.4,19,75,171/- on the ground that the expenditure was incurred outside approved facilities. The reasoning of the Assessing Officer was not approved by the Hon'ble Gujarat High Court in the case of Cadila Healthcare Ltd. (supra) and following the ratio laid down by the Hon'ble Gujarat High Court in the case of Cadila Healthcare Ltd. (supra), the Assessing Officer had accepted the expenditure incurred on clinical trial outside the approved facility as eligible for weighted deduction u/s 35(2AB) for the assessment years 2011-12 and 2012-13 pursuant to the remand made by this Tribunal. Thus, it is submitted that on the parity of the same reasoning, the order of the ld. CIT(A) req....
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....be outside the in-house research facility. Thus the restricted meaning suggested by the Revenue would completely make the explanation quite meaningless. For the scientific research in relation to drugs and pharmaceuticals made for its own peculiar requirements, the Legislature appears to have added such an explanation. 17. In the case Dy. CIT v. Mastek Ltd. [2012] 210 Taxman 432/25 taxmann.com 133 (Guj.) and connected matters, a Division Bench of this Court had touched on the aspect of what can be termed as scientific research. In the context, certain observations made by the Bench may be of some relevance. "25. It can thus be seen that the term scientific research in the context of the deduction allowable under section 35(1) of the Act would include wide variety of activities. It can also be appreciated that every scientific research need not necessarily result into the ultimate goal with which it may have been undertaken. Often times in the field of research and invention, the efforts undertaken may or may not yield fruitful results. What is to be ascertained is whether any scientific research was undertaken and not whether such scientific research resulted into....
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....ials, stationery etc.. Such expenditure were capitalized in books of account and amortized over a period of 5 years, the respondent-assessee company claimed that the treatment given in the books of account is in consonance with the Accounting Standard - 26. However, in the return of income, this expenditure incurred on Research & Development and products though capitalized in the books of account was claimed as deduction as revenue expenditure u/s 37(1) or u/s 35(1)(iv) of the Act. The Assessing Officer was of the opinion that such expenditure is capital in nature and cannot be allowed as revenue expenditure and, accordingly, disallowed the same. On appeal before the ld. CIT(A), the ld. CIT(A) following the decision of the Tribunal for the assessment year 2008-09 onwards allowed said expenditure is revenue expenditure u/s 35(1)(iv) of the Act. Being aggrieved by the decision of the ld. CIT(A), the Revenue is in appeal before us in the present appeal ground of appeal no.6. 28. The ld. CIT-DR submits that the expenditure was incurred in the process of developing a new product and, therefore, the same should be held to be capital expenditure and cannot be allowed as deduction....
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....Rs.69,80,96,800/- through SEZ-Unit -IV to UNICEF which is a United Nation (UN) program headquartered in New York City that provides humanitarian and developmental assistance to children and mothers in developing countries. The UNICEF undertakes various projects all over the world and distributes essential items as vaccines, medicines for children, nutritional supplement, emergency shelter and educational supplies. The respondent-assessee company had entered into contract with UNICEF and had supplied vaccines manufactured in Special Economic Zone, Hadapsar, Pune, Maharashtra to be supplied all over the world. The respondent-assessee company made supply of some of the required vaccines in India as per delivery instructions by UNICEF. It had received the sale proceeds in convertible foreign exchange, even in respect of supplies made in India. The assessee is at no stage privy to the arrangement between UNICEF and its beneficiaries in India or abroad. The Assessing Officer was of the opinion that since the sales were delivered in India and were not exported out of India, the respondent-assessee was not entitled for deduction u/s 10AA of the Act and, accordingly, denied the deduction u/....
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.... 32. The ld. CIT-DR submits that the CIT(A) grossly erred in allowing the benefit of deduction u/s 10AA even in respect of deemed exports made to UNICEF against the plain provisions of section 10AA of the Act. 33. The ld. Sr. Counsel submits that the provisions of section 10AA were introduced in the Income Tax Act, 1961 by SEZ Act, 2005. The object behind enactment of SEZ Act, 2005 is only to promote the exports in order to augment the foreign exchange earnings. In this regard, he also referred to the decision of the Hon'ble Kerala High Court in the case of Girnar Industries vs. CIT, 338 ITR 277 (Kerala) and also the decision of the Hon'ble Delhi High Court in the case of PCIT vs. Macquarie Global Services (P.) Ltd., 102 taxmann.com 272 (Delhi). He further submits that the provisions of section (1) of section 10AA provides that while computing the total income of the respondent-assessee company, an entrepreneur, who begins to manufacture or produce articles or things or provide any services from a unit established in Special Economic Zone shall be entitled for deduction of the profits derived from such unit. Taking us through the provisions of sub-section (1) of section 10AA, h....
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....respondent-assessee company is not eligible for deduction of its profits derived from sale of vaccine to UNICEF for its projects in India, as the goods were not exported outside India. On appeal before the ld. CIT(A), the ld. CIT(A) placing reliance on the decision of the Hon'ble Supreme Court in the case of J.B. Boda & Co. (P.) Ltd. (supra) and the decision of the Hon'ble Karnataka High Court in the case of Metal Closures (P.) Ltd. (supra) allowed the claim of the respondent-assessee company by treating the sales made to UNICEF for its projects in India as "Deemed Exports". The correctness of this finding of the ld. CIT(A) is under challenge before us. For better appreciation of issue on hand, it is apt to reproduce the relevant provisions of section 10AA of the Act :- "Special provisions in respect of newly established Units in Special Economic Zones. 10AA. (1) Subject to the provisions of this section, in computing the total income of an assessee, being an entrepreneur as referred to in clause (j) of section 2 of the Special Economic Zones Act, 2005, from his Unit, who begins to manufacture or produce articles or things or provide any services during the pre....
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....chinery or plant along with the return of income61 for the assessment year relevant to the previous year in which such plant or machinery was first put to use. (3) Where any amount credited to the Special Economic Zone Reinvestment Reserve Account under clause (ii) of sub-section (1),- (a) has been utilised for any purpose other than those referred to in sub-section (2), the amount so utilised; or (b) has not been utilised before the expiry of the period specified in sub-clause (i) of clause (a) of sub-section (2), the amount not so utilised, shall be deemed to be the profits,- (i) in a case referred to in clause (a), in the year in which the amount was so utilised; or (ii) in a case referred to in clause (b), in the year immediately following the period of three years specified in sub-clause (i) of clause (a) of sub-section (2), and shall be charged to tax accordingly : Provided that where in computing the total income of the Unit for any assessment year, its profits and gains had not been included by application of the provisions of sub-section (7B) of section 10A, the undertaking, being the Unit shall be ent....
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....the period specified in that section; (iii) it is not formed by the transfer to a new business, of machinery or plant previously used for any purpose. Explanation.-The provisions of Explanations 1 and 2 to sub-section (3) of section 80-IA shall apply for the purposes of clause (iii) of this sub-section as they apply for the purposes of clause (ii) of that subsection. (5) Where any undertaking being the Unit which is entitled to the deduction under this section is transferred, before the expiry of the period specified in this section, to another undertaking, being the Unit in a scheme of amalgamation or demerger,- (a) no deduction shall be admissible under this section to the amalgamating or the demerged Unit, being the company for the previous year in which the amalgamation or the demerger takes place; and (b) the provisions of this section shall, as they would have applied to the amalgamating or the demerged Unit being the company as if the amalgamation or demerger had not taken place. (6) Loss referred to in sub-section (1) of section 72 or sub-section (1) or sub-section (3) of section 74, in so far as such loss relates to the....
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.... out of India from a Special Economic Zone by land, sea, air, or by any other mode, whether physical or otherwise; (iii) "manufacture" shall have the same meaning as assigned to it in clause (r) of section 2 of the Special Economic Zones Act, 2005; (iv) "relevant assessment year" means any assessment year falling within a period of fifteen consecutive assessment years referred to in this section; (v) "Special Economic Zone" and "Unit" shall have the same meanings as assigned to them under clauses (za) and (zc) of section 2 of the Special Economic Zones Act, 2005. Explanation 2.-For the removal of doubts, it is hereby declared that the profits and gains derived from on site development of computer software (including services for development of software) outside India shall be deemed to be the profits and gains derived from the export of computer software outside India. For the purpose of deciding the issue on hand, the provisions of sub-section (1) and sub-section (7) of section 10AA of the Act are relevant. Sub-section (1) of section 10AA provides that while computing the total income of the assessee, the income derived at from it unit who be....
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....erations in a Special Economic Zone or unit subject to the modifications specified in the Second Schedule." In pursuance of clause (27) of the SEZ Act, section 10AA was inserted to provide for a deduction to an entrepreneur as defined in clause (j) of section 2 of the SEZ Act, 2005 from such unit under the Act. Clause (ii) of Explanation I to section 10AA defines "Export" as follows :- "(ii) "Export" in relation to the Special Economic Zones" taking goods or providing services out of India from a Special Economic Zone by land, sea, air, or by any other mode, whether physical or otherwise." The definition of "export" in clause (m) of section 2 of the SEZ Act, 2005 is in conformity with clause (ii) of section 10AA and it reads as under :- "(m) "Export" means- (i) taking goods, or providing services, out of India, from a Special Economic Zone, by land, sea or air or by any other mode, whether physical or otherwise ; or (ii) supplying goods, or providing services, from the domestic tariff area to a unit or developer; or (iii) supplying goods, or providing services, from one unit to another unit or developer, in the same or different Sp....
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....over, if a particular provision of statute has been incorporated in order to give effect to the provision of another enactment, the provision should be interpreted in the sense in which they harmonise with the object of the statute and which effectuate the object of the Legislature, as held by the Hon'ble Supreme Court in the case of New India Sugar Mills Ltd. Commissioner of Sales Tax, Bihar, AIR 1963 SC 1207 and Land Acquisition Officer and Mandal Revenue Officer vs. Narsaiha JT 2001 (3) SC p. 161. Therefore, placing purposive interpretation on the provisions of subsection (7) of section 10AA of the Act, the purport of term "Export" cannot be different from the meaning assigned to it in SEZ Act, 2005. Furthermore, if we are to hold that in view of the provisions of sub-section (7) of section 10AA, the assessee is not entitled to deduction u/s 10AA(1) on the premises that the goods were not exported outside India, it would cause violence to the provisions of sub-section (1) of section 10AA of the Act. It is settled principle of construction of the statute, when a language of statute is clear of unambiguous, the courts are to interpret the same in its literal sense and not to gi....
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....n. Furthermore, the CBDT Circular No.1/2013 dated 17.01.2013 in the context of provisions of section 10AA/10A/10B had clarified that the profits and gains derived from services for development of software outside India would also be deemed as profits derived from exports, which means that the CBDT had itself recognized deemed exports as exports. The Hon'ble Karnataka High Court in the case of Anil Kumar vs. ITO, 343 ITR 33 in the context of interpretation of the provisions of section 80HHC of the Income Tax Act after making a reference to the decisions of the Hon'ble Supreme Court in the case of CIT vs. Silver and Arts Palace, 259 ITR 684, CIT vs. Suresh (B.), 313 ITR 149, J. B. Boda & Co. P. Ltd. vs. CBDT, 223 ITR 271 (SC) and CIT vs. Bombay Burmah Trading Corporation, 242 ITR 298 (SC) held that the deduction u/s 80HHC cannot be denied to an assessee purchasing goods from one foreign country and transferring to another foreign country in the absence of any such requirement under the provisions of section 80HHC and they need not be any two-way traffic for bringing the goods from a foreign country into Indian shores and thereafter exporting that goods from Indian shores to off....
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....dia where the assessee has a branch office, ware-house, or other establishment, if that date is taken into consideration as the starting point for six months time to bring back the foreign currency, it would cause injustice to the assessee. Therefore, Explanation (2) makes it clear that only when the assessee sells such goods or merchandise from such branch office, warehouse or establishment, such transfer shall be deemed to be export out of India and six months period is to be computed from the date of such sale from a territory to an ultimate purchaser. 15.Explanation (aa ) makes it clear that in what circumstances it will not be an export out of India. Any transaction by way of sale or otherwise in a shop, emporium or any other establishment situated in India not involving clearance at Customs station though the goods are exported out of India would not fall within the phrase 'export of India' and the assessee is not entitled to the benefit of deduction. In other words, it is only in cases as mentioned in the said explanation, it can be said that it is not export out of India and in all other cases, it, amounts to export out of India. In fact this provision was ....
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....igh Courts, including the Rajasthan High Court itself in ITO v. Vaibhav Textiles [2002] 238 ITR 346. Reliance was placed on a number of orders of the Income-Tax Tribunal following the view taken in Ram Babu's case [1996] 222 ITR 606 (All.), consistently and the law laid down therein. In fad, even in the case of the respondent-assessee, for the previous assessment years, the Tribunal had taken the same view. Although the Revenue attempted to canvass against the view by seeking references under sections 256(1) and (2) of the Act, the attempt failed. There was no further challenge to the settled consistent judicial view taken on the issue. It was also pointed out that the judgment of the Allahabad High Court in Ram Babu's case [1996] 222 ITR 606, had been challenged by the Revenue before this court, but the special leave petition, was summarily dismissed. In view of this position, the Tribunal felt that consistency of the judicial decision should he respected and followed." 17. Therefore, it is clear if a transaction in question is by way of sale, in a shop, emporium or an establishment situated in India and it does not involve clearance at any customs station, then i....
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....ng the amount to the foreign reinsurers first and receiving the commission due to the appellant later, the arrangement by which the appellant remitted the reinsurance premia, after retaining the fee due to it for technical services rendered will satisfy the requirement of section 80-O of the Income-tax Act." In answering the said question, it held as under:- "..the objective was to encourage Indian companies to develop technical know-how and to make it available to foreign companies so as to augment the foreign exchange earnings of this country and establish a reputation of Indian technical knowhow for foreign countries. The objective was to secure that the deduction under the section shall be allowed with reference to the income which is received in convertible foreign exchange in India or having been received in convertible foreign exchange outside India, is brought to India by and on behalf of taxpayers in accordance with the foreign exchange regulations." Then it proceeded to hold as under:- "..It seems to us that a "two-way traffic" is unnecessary. To insist on a formal remittance to the foreign reinsurers first and thereafter to receive the....
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....us judgments and after noticing the judgments of the Apex Court, it is held that, ".. The direct shipment of goods to another country without touching base in India should not be an impediment to the assessee from claiming the benefits of s. 80-HHC, if it was otherwise entitled to do so. When third country trade is a recognized feature of the new import-export policy and procedure of the Government of India, there is no reason to deny deduction under s. 80HHC solely on the ground that the exports were not made ex- India. It is undisputed that the assessee had earned foreign exchange for the country. The focus and emphasis of foreign polity is to increase the foreign reserves of the country. "Export" literary means sending goods to another country. So, the word "export" does not mean only sending goods out of one's own country to another. The wordings of s. 80HHC do not provide for such an interpretation at all as distinguished from the expression "from India to a place outside India" as appearing in sub-s. (1) of s.80HHE. The assessee is entitled for deduction under s. 80HHC on profit of shipment in respect of plant and machinery sold in Bangladesh.: 22. In th....
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.... we are of the view that the authorities have not properly understood the object and intent of the Parliament in making these provisions and they have misread the section. Therefore, the impugned order passed by the three authorities is vitiated and cannot be sustained in law. The substantial questions of law are answered in favour of the assessee and against the revenue. Hence, we pass the following :-" Applying the ratio of the above decision to the facts of the present case, the provisions of section 10AA(1) does not require that the goods manufactured in SEZ unit should be exported outside of India. In any event, they need not be a two-way traffic of exporting goods outside India and thereafter importing that goods into India. It is a mere empty useless formality. Therefore, in the light of the foregoing discussion, we are of the considered opinion that the benefit of deduction under the provisions of section 10AA cannot be denied to an assessee merely on the ground that the assessee had not exported the goods outside India despite the fact that the consideration was received in convertible foreign exchange in India. We do not find any fallacy in the reasoning of the ld. ....
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....(SC). 38. We heard the rival submissions and perused the material on record. The issue in the present ground of appeal that comes up for consideration is, as to whether the civil works and electrical works forms part of the actual cost of windmill or not for the purpose of allowance of depreciation. It is trite law as held by the Hon'ble Supreme Court in the case of Challapalli Sugars Ltd. (supra) that all the expenses incurred on the civil works to bring an asset into existence should be capitalized. Admittedly, in the present case, the civil works and electrical works are part and parcel of the windmill and cannot be treated separately from the windmill. Without executing civil works and electrical works, the windmill cannot be installed. The Hon'ble Rajasthan High Court in the case of CIT vs. K. K. Enterprises, 108 DTR 109 (Raj.) had observed that the civil work and foundation is necessary for strong foundation and no windmill could be installed without having a strong foundation. As such depreciation on the cost of civil work should be allowed at the rate applicable to the windmill. Similarly, the electrical items, components and common power evacuation too are integral part....
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....aign period the field managers of Serum, collect the data from these stockists for individual doctors who have purchased vaccines from them. The stockists provide copies of all their sales invoices. The field managers also take summary statements from the stockists, doctor-wise for processing the doctor's claims regarding the ongoing sales promotion campaign. These claims are submitted and settled on the basis of the agreed terms of the sales promotion campaign." Thus, it is contended that the scheme formulated does not amount to professional misconduct by medical professionals attracting the provisions of Medical Council (Professional Conducts, Etiquettes and Ethics) Regulation Act, 2002. The ld. CIT(A) considering the scheme of the Act and the decision of the Tribunal in assessee's own case for the assessment years 2010-11 and 2012-13 deleted the addition of Rs.2,90,94,637/- on account of freebies given to doctors. Being aggrieved by the decision of the ld. CIT(A), the Revenue is in appeal before us in the present ground of appeal no.9. 40. The ld. CIT-DR submits that the issue in the present ground of appeal no.9 is squarely covered by decision of the Hon'ble Supreme Co....