TaxTMI 
TaxTMI 
2024 (6) TMI 1215
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....esent appeal is confined to computation of book profit under section 115JB of Income-tax Act, 1961 (in short 'the Act'). 3. Briefly the facts are, the assessee, a resident corporate entity, is stated to be engaged in the business of flying, operating, letting on hire, lease and charter hire of helicopters and providing aviation services in respect of helicopters. For the assessment year under dispute, the assessee filed its return of income on 30.11.2015 declaring NIL income under the normal provisions of the Act and book-profit of Rs.10,72,11,670/- under section 115JB of the Act. In course of assessment proceedings, while examining the book-profit computed by the assessee, the Assessing Officer noticed that the assessee has reduced an amount of Rs.43,60,42,388/-, being the lower of the brought forward loss or unabsorbed depreciation, in terms of clause (iii) under Explanation 1 to section 115JB of the Act. Noticing this, the Assessing Officer called upon the assessee to furnish a detailed working. In response, the assessee furnished its reply, stating that the deduction has been incorrectly computed and the correct figure of deduction should be Rs. 51,20,83,841/-. In this conte....
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....ted, assessee's claim can be factually verified by the Assessing Officer and the book profit can be computed accordingly. 7. Learned Departmental Representative agreed for restoration of the issue to the Assessing Officer for factually verifying assessee's claim. 8. Having considered rival submissions and perused the materials on record, we are of the view that assessee's claim of deduction for computing book profit under section 115JB of the Act requires fresh verification in the light of the Chart furnished by the assessee, which has been reproduced in the order. Accordingly, the issue is restored back to the Assessing Officer for fresh adjudication after factually verifying assessee's claim by referring to the Chart depicted above. Needless to mention, the Assessing Officer must provide reasonable opportunity of being heard before deciding the issue. Grounds are allowed for statistical purposes. ITA Nos.1482 to 1487/Del/2020 (Revenue's Appeals) AYs: 2011-12 to 2016-17 9. The common issue arising in all these appeals relates to disallowance made under section 40(a)(i) of the Act. Of course, in ITA No.1482/Del/2020 pertaining to assessment year 2011-12, there is additi....
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....t was submitted, in absence of a specific provision dealing with FTS under the treaty, no tax can be levied at the hands of the UAE entities in absence of PE in India, either under Article 7 or 22 of the treaty provision. Therefore, there was no statutory requirement upon the assessee to deduct tax at source. 12. The Assessing Officer, however, did not find merit in the submissions of the assessee. He held that activity of repair and maintenance of helicopters constituted consultancy, technical and managerial services, hence, qualifies as FTS under Section 9(1)(vii) of the Act. Accordingly, he completed the assessments for all the assessment years under dispute by treating the payments made to the foreign entities as FTS and thereby disallowing payments under section 40(a)(i) of the Act. Against the additions so made, assessee preferred appeals before learned Commissioner (Appeals). Being convinced with the submissions of the assessee, learned Commissioner (Appeals) deleted the additions in all the assessment years. 13. While doing so, learned Commissioner (Appeals) observed that the repair and maintenance activities are undertaken on helicopter parts and not on the helicopte....
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....ate authority has applied the make available condition by relying upon the Most Favoured Nation (MFN) clause in the Protocol, however, in view of the ratio laid down by the Hon'ble Supreme Court in case of Assessing Officer (International Taxation) Vs. Nestle SA [2023] 458 ITR 756 (SC), the make available condition contained in other DTAAs cannot be imported into the treaties with Spain, Netherlands and France without specific notification by the Government. 17. Without prejudice, he submitted that even payments made to the residents of Spain, Netherlands and France cannot fall into the category of FTS as they are not in the nature of technical, consultancy or managerial services. He submitted, the services are for repair/overhaul of parts of the helicopters sent to those countries and no part of the service was rendered in India. He submitted, the services are in the nature of routine maintenance and repair of helicopter parts and, as such, are standardized services. Thus, he submitted, they cannot fall in the definition of FTS, either under Section 9(1)(vii) of the Act or the respective treaty provisions. In support of such contention, he relied upon a decision of the Hon'ble ....
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.... details of maintenance/repair, sample copies of invoices, sample copies of airway bills evidencing that the parts of the helicopters were sent outside India for carrying out necessary repair and sample copies of Form 15CB and 15CA etc. The Assessing Officer, however, held that the services rendered by the non-residents are technical and consultancy in nature, hence, quantifies as FTS requiring withholding of tax under section 195. 19. On a careful reading of section 195(1) of the Act, it is very much clear that the provision gets triggered only when the payment made to the non-resident entity is chargeable to tax under the provisions of the Act. Thus, what is required to be examined is whether the payments made by the assessee to nonresidents are chargeable to tax under the provisions of Act. As discussed earlier, in the assessment years in dispute the assessee has made payment to entities resident in USA, UK, UAE, Australia, Canada, Singapore, Spain, Netherlands and France. Undisputedly, India has entered into DTAAs with all these countries. However, the provisions in the treaties with the respective countries are at variance. 20. Insofar as taxability of FTS is concerned, ....
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....lity of FTS. Thus, in absence of any such provision, the payments made to the residents of UAE can either be taxed as business income or as other income in terms with Article 7 or 22, respectively. On reading of Article 7 it becomes clear that business profits can be taxed in the source country only if the resident of other country has a PE in the source country. In the facts of the present appeal, admittedly, none of the entities had any PE in India. Therefore, the payments made to them cannot be taxed in India as business profits. Even, they cannot be taxed as other income in India as Article 22 of India - UAE treaty makes it clear that the other income can only be taxed in the country of residence. Thus, in our view, the payments made to the entities in UAE are not taxable in India as per the treaty provisions, hence, there is no requirement for deduction of tax at source on the payments made. 24. The only countries that are left now is the second category comprising of Netherlands, Spain and France. Admittedly, the definition of FTS in the treaty provisions with these countries are wider in scope and do not contain the make available clause. However, it requires to be examin....
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....warding charges, lodging boarding charges, etc. He also found that the amount had become irrecoverable owing to non-fulfillment of certain conditions. Thus, he held that it represented the business loss of the assessee, which is allowable as deduction under section 37 of the Act. 27. We have considered rival submissions and perused the materials on record. Undisputedly, the Assessing Officer has disallowed assessee's claim primarily for the reason that the assessee failed to furnish adequate evidence in support of its claim. However, learned Commissioner (Appeals) after examining the facts and materials on record has recorded the following factual findings: i. The amount in dispute represents the advances given earlier by the assessee in its normal course of business for purchase of spare & consumables, repairs and maintenance, freight & clearing forwarding charges, lodging boarding charges, etc. ii. The amount has become irrecoverable owing to nonfulfillment of certain conditions. iii. Advances were pertaining to two to three years prior to assessment year 2011-12 and that no expenses were booked by the assessee. 28. The Revenue has not brought any....
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....A 4,29,52,440 0 о MAT crede af 2009-10 (36 45,57 871) 29,48.95.074 (65,94,52.945) 165,94,52.945 33,78.47,514 34,33,83,665 33,78,47514 2,11,74,206 33,78,47,514 36.45.57 871 33,78.47,514 Lifted No MAT adjustments set off. Only the figures of brought forward business 2010-11 31,89,47,614 36.06.03.908 (4.97.16.294) (4.97,16.294) 38.75.83.808 34.33,83.665 34,33,83 665 NA 38.75.63.808 36.45,57 871 36,45,57 371 loa in in Colum WAT 2011-12 (16.87,00,176) 27.50,10,606 (44.37,10.782)(44,37,10.782) 66,25,74.4141 2012-13 1,74,70,153 26,00,66,072 (24,15,84,919) (24,1584.019) 00,41,59,333 2013-14 37,23,76,228 30,38,44,7431 6.05.31,485 6.85,31,485 2014-15 38,12,90 434 20,23,60,604 8,80,29,830 5,40,14,375 MAT COMPUTATION FOR AY 2015-16 50.84,54,596 50,84.54.596 adjustment of 66,25,74,414 53,32,58,047 53,32,58,047 30.29 245 MAT 49.58.61.714 49,50/51,714 adjustment of 50,41,59.333 53,3258,047 53,32,58,047 1,25,92,882 MAT MAI 9041,50.333 42.73.30,229 42,73,30,229 adjustment of 90,41,59,333 40,47 26,562 46,47,26,582 6.85.31,485 MAT 90.41.59.333 32.25,19,958 32,29,19,988 adjustment....