Purchase of technical know-how couldn't be taxed as royalty, says ITAT

IT/ILT : Purchase of technical know-how could not be taxed as royalty and, therefore, provisions of section 195 were not applicable

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[2015] 54 taxmann.com 377 (Ahmedabad - Trib.)

IN THE ITAT AHMEDABAD BENCH 'A'

Income Tax Officer (International Taxation), Baroda

v.

Heubach Colour (P.) Ltd.

Section 9, read with sections 195 and 220, of the Income-tax Act, 1961 and article 12of the Model OECD Convention - Income - Deemed to accrue or arise in India (Royalty) - Assessment year 2007-08 - Assessee-company was in business of manufacturing and sale of colour pigments and fine chemicals - It acquired Arocia business from 'CL', a non-resident company and paid certain sum to 'CL' claimed to be for intangibles assets, trademarks and goodwill - Assessing Officer treated assessee as assessee-in-default holding that payment was covered by section 9(1)(vi) and, therefore, assessee was required to deduct tax under section 195 treating payment as royalty - Whether purchase of technical know-how could not be treated as royalty and, therefore provisions of section 195 were not applicable - Held, yes [Para 6] [In favour of assessee]

Assessee not entitled to interest on refund of excess self-assessment tax paid by him, rules Delhi HC

IT : Refund of excess self-assessment paid by assessee would not be eligible for interest under section 244A as the provisions of section 244A would not apply thereto

AO couldn’t make addition of unaccounted stock when he failed to point out defects in book of accounts

IT : Where Assessing Officer could not point out any defect in books of account maintained by assessee, he was not supposed to make addition of unaccounted closing stock being difference in stock on mathematical calculation

AO couldn’t make addition of deemed dividend when assessee wasn’t a shareholder of lending Co.

IT: Where assessee itself was not shareholder of lending company, addition made by Assessing Officer by invoking provisions of section 2(22)(e) was not sustainable

Interest on sums lent to foreign AE is to be benchmarked at LIBOR and not at domestic prime lending rate

IT/ILT : While benchmarking international transactions where assessee had advanced money to its AE and charged interest, international rates fixed being LIBOR + rate would be applicable and not domestic prime lending rates

HC exempts interest earned by trust on funds deposited in foreign bank following order of CBDT

IT : Once income derived from property held under by assessee-trust was applied in accordance with charitable objects in view of specific exemption granted by a special order issued by CBDT, there would be no violation of section 13(1)(d) so as to deny exemption

IT : In view of specific exemption granted by CBDT to assessee-trust, interest accrued in foreign bank was held not taxable

HC dismissed condonation plea of revenue alleging non-service of order as it was false explanation of revenue

IT: If explanation for delay in filing appeal is found to be concocted or demonstrate through negligence in prosecuting cause, then, it would be a legitimate exercise of discretion not to condone delay

ITAT quashed sec. 153C block proceedings as AO didn't record satisfaction that seized docs belonged to other person

IT : Where Assessing Officer of 'B', 'P' and 'MB' did not record any satisfaction that some money, bullion, jewellery or books of account or other documents found from these persons belonged to assessee, initiation of proceedings under section 153C on assessee was void ab initio

ITAT rightly determined market value of land on 1-4-1981 after considering doc of 1984 in respect of nearby land

IT: Where Tribunal determined fair market value of land inherited by assessee before 1-4-1981 by considering document of 1984 in respect of nearby land and after allowing certain deductions, no interference was required with such determination

Mere non-registration of asset in name of assessee doesn’t lead to denial of deprecation claim thereon

IT: Where certain assets were already transferred to assessee-society, assessee's claim for depreciation could not be rejected merely because those properties had not yet been registered in name of assessee

IT: Merely because revenue authorities rejected assessee's claim for depreciation on account of non-registration of assets in name of assessee, it could not form a ground to pass penalty order under section 271(1)(c)

CPC (TDS) – How to close Short Payment Defaults using Online Correction facility

CPC (TDS) -Advisory for closure of Short Payment Defaults using Online Correction facility before allowing Conso Files

As you may be aware that at the time of filing TDS statements, it is mandatory to quote the challan particulars through which TDS payments have been made. The TDS forms prescribe quoting of such challans and the underlying deductee transactions corresponding to such challans.

Payment to sub-contractors for transportation of LPG cylinders would be subject to TDS under Sec. 194C

IT: Where assessee entered into a contract with IOC for carriage of LPG cylinders, in view of fact that assessee in turn got transportation of cylinders done through three parties by entering into sub-contracts with them, payments of freight charges made to sub-contractors were covered by section 194C(2) and, thus, assessee was required to deduct tax at source while making payments in question

IT : Provisions of section 40(a)(ia) are applicable not only to amount which are shown as outstanding on closing of relevant previous year, but to entire expenditure which became liable for payment at any point of time during year under consideration and which was also paid before closing of year

Amount paid at any time without deducting tax therefrom would be hit by Sec.40(a)(ia) disallowance

IT : Where assessee challenged disallowance made by Assessing Officer on account of non-deduction of tax at source while making payments to sub-contractors on ground that disallowance under section 40(a)(ia) could only be made in respect of sums remaining outstanding at end of year, following order passed by Gujarat High Court in case of CIT v. Sikandar Khan N. Tanvar [2013] 357 ITR 312/[2014] 220 Taxman 256/[2013] 33 taxmann.com 133 plea raised by assessee was to be rejected

IT : In order to determine admissibility of an expenditure under mercantile method of accounting, what is relevant is point of time when liability to pay sum accrues or arises and, therefore, as long as such a liability arises during relevant previous year, same has to be allowed as a deduction

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AO can’t decide issue of jurisdiction himself without referring matter to concerned DG, Chief CIT or CIT

IT : Where an assessee calls in question jurisdiction of Assessing Officer, then Assessing Officer shall, if not satisfied with correctness of claim, refer matter for determination under sub-section (2) of section 124 before assessment is made to Chief Commissioner or Director General and Commissioner; he cannot decide issue of jurisdiction himself

No liability of bank to withhold tax from cap gains remitted to a non-resident when it was merely acting as broker

Where assessee-bank was only acting as an authorized dealer to brokers of foreign residents in transferring funds in respect of share transactions, which resulted in gains, it was not liable to withhold tax under section 195.

CBDT extends due date for obtaining Tax Audit Report u/s 44AB upto 30-11-2014

In exercise of power conferred by section 119 of the Income-tax Act (‘the Act’), the Central Board of Direct Taxes (CBDT) hereby extends the due date for obtaining and furnishing of the report of audit under section 44AB of the Act for Assessment Year 2014-15 in case of assessees who are not required to furnish report under section 92E of the Act from 30th day of September, 2014 to 30th November, 2014.

It is further clarified that the tax audit report under section 44AB of the Act filed during the period from 1st April, 2014 to 24th July, 2014 in the pre-revised Forms shall be treated as valid tax audit report furnished under section 44AB of the Act.

Deduction on children’s education u/s. 80C & 80E

The cost of educating our children is rising consistently. It’s a matter of concern for all of us. One relief is the tax benefit provided for spending on children’s education. The Income Tax Act provides a direct deduction on account of fees paid for the education of dependent children. The act also provides for deduction on account of interest on loans taken for higher education of children.

Service Tax – Finance Act, 2014 makes Advertisements Costly

The Finance Bill, 2014 received assent from Hon’ble President on 6^th of August 2014. The main impact of this budget leads to make the advertisements costly. As per Section 66D(g) selling of space for advertisements in print media is only falls under NegativeList. The definition of “print media”as per Section 65B(39a) states as follows:

MCA displays list of companies not filed Form 5INV

MCA has started to display list of Companies who have not filed Form 5INV. Form 5 INV is required to be filed by the company/Corresponding New Bank which shall contain investor wise details of unclaimed and unpaid amounts in respect of dividends, debentures, deposits, etc. The details of unclaimed and unpaid amounts shall need to be provided as on the Annual General Meeting (AGM) date. This form is to be filed annually within 90 days from the date of AGM.

MCA is displaying the list of Companies not filed Form 5INV ROC wise and Consolidated. Link for the same is as follows :-

• Companies not filed Form 5INV,ROC Wise
• Companies not filed Form 5INV,Consolidated

IMP - Before the self-certifying documents, pl. write the purpose on it.

In ordinary course we keep issuing and submitting our KYC documents (identity and residential proofs..such as PAN card, electricity bill etc.) to various people. For housing or car or other loans, bank accounts,or even for buying new sim card we submit these documents. At almost all these places they ask for self certification on these documents. We immediately sign those documents and hand over. Just imagine your self certified copies are freely available in the hands of such persons & those documents can be used by him for EVERYTHING! Its really serious and its been seen that in most of the terrorist activities, KYC documents are sourced from the SIM card sellers. Hence, please inculcate a habit of writting the purpose for which you are submitting the self certified KYC Documents so that those documents cannot be used again.