TaxTMI 
TaxTMI 
2026 (3) TMI 1283
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion of the Supreme Court in the case of Saravana Mills Ltd (293 ITR 201) and similar other decisions especially when such expenditure was not debited in the Profit & Loss Account but only claimed in the Income Tax Adjustment Statement?" 4. This question is covered by a decision of this Court in the assessee's own case in Commissioner of Income Tax v TVS Motors Limited [364 ITR 1 (Mad)] for AY 2003-04. After a detailed discussion, and referring to the cases in CIT Vs. Mahalakshmi Textile Mills Ltd [66 ITR 710], Commissioner of Income Tax Vs. Saravana Spinning Mills P. Ltd. [293 ITR 201], CIT Vs. Sri Mangayarkarasi Mills P. Limited [315 ITR 114] and CIT Vs. Ramaraju Surgical Cotton Mills [294 ITR 328], the issue was held in favour of the assessee and the relevant paragraphs are extracted below:- '31. Applying the ratio of the decision cited above, when we look into the facts of the above cases, it is evident that with regard to the moulds and dies attached to the machinery like press designs specification, moulds and dies are not independent of the plant and machinery, but are parts of the machinery. Once the dies are worn out, the machines cannot turn out the product to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xample that when the picture tube in a television set is replaced, such repairs would come within the connotation of the phrase "current repairs". Thus, applying these two decisions, we have no hesitation in rejecting the Revenue's appeal. We hold that the claim being considered as current repairs, the same would fall under Section 31 of the Act as current repairs. To that extent, we modify the order of the Tribunal.' This question of law is hence answered in favour of the assessee. 5. The second question of law, discussion and conclusion thereupon, are as below:- Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that 100% depreciation on the cost of "structures" had to be granted even though the said assets had a long life and the expenditure had resulted in assets/advantage of enduring nature? 6. The assessing officer effected a disallowance in respect of a claim of 100% depreciation qua certain constructions at the area offices of the assessee at Coimbatore and Delhi. The order of assessment does not contain any discussion as to the nature of those constructions and the officer has proceeded me....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssue and answer the question in favour of the assessee. 11. The third question of law, discussion and conclusion in regard thereto are as follows:- Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in deleting the disallowance of weighted deduction under Section 35/35(2AB) in respect of work-in-progress? 12. The question relates to expenditure on research and development and on identical facts and legal position for the previous assessment year ie., AY 2003-04, the Tribunal had accepted the claim of the assessee. The conclusion was challenged by the Revenue and in TVS Motors Limited (Footnote supra 1), this Court has confirmed the order of the Tribunal finding that reliance on the decision reported in CIT v Rane Brake linings Ltd. [255 ITR 395] was correct. 13. We do not have the benefit of that decision of the Tribunal. However, since both parties would accede to the position that this issue is covered in favour of the assessee, this question of law is answered in favour of the assessee. 14. The fourth question of law, discussion and conclusion are below:- Whether on the facts and in the circumstanc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....claim of expenditure only on actual payment. Since in this case, entry tax has not been paid but only set-off, Section 43B would act as a bar to such claim. 18. Though, there may be some merit in the submissions, since the adverse decision of the Court on this very issue for the previous year has been accepted by the Department, there is no reason for us to hold otherwise. This question is answered in favour of the assessee. 19. The fifth question of law, discussion and conclusion in relation thereto, are set out below :- Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in deleting the addition made by the Assessing Officer towards difference between sales tax deferred loan amount and the settlement made against the loan on Net Present Value basis?" 20. The assessee had, in the computation statement, disclosed an amount of Rs. 36,97,26,960/- as a discount on prepayment of Karnataka Sales Tax Deferral Loan, treating the same as capital and reducing the same from computation of business income. 21. The explanation tendered by the assessee was this. The Karnataka State Government has extended a sales tax deferr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ringing a particular receipt as "income" within the ambit thereof and found that those conditions are not satisfied in the present case. The High Court also repelled the contention of the Revenue that the assessee obtained the benefit of reduction of sales tax liability under Section 43B of the Act as per the CBDT Circular No. 496 dated 25th September, 1987. The relevant portion of the discussion in this behalf reads as under: "It is not possible to agree with Mr. Gupta. Because, premature payment of Sales Tax already collected but its remittance to the Government, as Mr. Gupta envisages, is not covered by this provision else the subsections and particularly section 43B(1) would have been worded accordingly. Therefore Section 43B has no application. Insofar as applicability of section 41(1)(a), there also the applicability is to be considered in the light of the liability. It is a loss, expenditure or trading liability. In this case, the scheme under which the Sales Tax liability was deferred enables the Assessee to remit the Sales Tax collected from the customers or consumers to the Government not immediately but as agreed after 7 to 12 years. If the amount is not to be i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....4th proviso to section 38 of the Bombay Sales Tax Act, 1959, the Assessee accepted the offer of SICOM, the implementing agency of the State Government, paid an amount of Rs. 3,37,13,393/- to SICOM, which, according to the Assessee, represented the NPV of the future sum as determined and prescribed by the SICOM. In other words, what the Assessee was required to pay after 12 years in 6 equal installments was paid by the Assessee prematurely in terms of the NPV of the same. That the State may have received a higher sum after the period of 12 years and in installments. However, the statutory arrangement and vide section 38, 4th proviso does not amount to remission or cessation of the Assessee's liability assuming the same to be a trading one. Rather that obtains a payment to the State prematurely and in terms of the correct value of the debt due to it. There is no evidence to show that there has been any remission or cessation of the liability by the State Government. We agree with the Tribunal that one of the requirement of section 41(1)(a) has not been fulfilled in the facts of the present case."' 27. The aforesaid view of the High Court has been upheld, the Supreme Court expr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the DTAA between India & UK and Article12 of the DTAA between India & Singapore. 34. The CIT (Appeals) negated the submission that the services were non-technical in nature. On an examination of the detailed documentation that had been placed before the officer, being the contracts and agreements inter se parties, and noting the nature of services rendered, he concluded that the services amounted to technical services, liable to deduction of tax at source. 35. However, both treaties contain the 'make available' clause as per which, the remittances would be liable to tax only if, in addition to the rendition of technical services, the technology relating to those services had itself been made available to the payer / assessee. The CIT (Appeals) thus accepted the case of the assessee, as the know-how relating to the technical services had, admittedly not be transferred to the assessee. Assailing the conclusion of the CIT(A), appeal was filed by the Revenue before the Tribunal that rejected the appeal. Hence the present appeal. 36. The services rendered by the payees are, undoubtedly, technical in nature. In fact, the assessee has not challenged the finding of the CIT(A) in t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... payment described in paragraph 3 is received ; or (b) make available technical knowledge, experience, skill, know-how or processes, which enables the person acquiring the services to apply the technology contained therein ; or (c) consist of the development and transfer of a technical plan or technical design, but excludes any service that does not enable the person acquiring the service to apply the technology contained therein. 39. As per Articles 13(4)(c) and 12(4)(b) technical services are defined as services where technical knowledge, experience, skill, know how or the processes, are made available to the payer. It is only if the process behind the technical service is transferred to the payer, that liability would be attracted under the DTAA. (See Commissioner of Income tax & Anr v De Beers India Minerals (P) Ltd [346 ITR 467]). 40. In the present appeal, it is nobody's case that the expertise of the payee had been made available to the assessee so as to enable the assessee to obtain ECB without the assistance of the payee henceforth, and in future. Applying the provisions of Section 90, the more beneficial of the position between domestic and treaty ....