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12-06-2010 - Recent Updates as on 12.06.2010
Saturday, June 12, 2010

1. The Commissioner of Income Tax21 Vs. M/s. Information Architects.

In Information Architechts: Alleged Non TDS on reimbursements and Disallowance u/s 40(a)(iii) – Bombay High Court

In so far as the second issue is concerned, it relates to the amounts paid by the assessee to its employees towards overseas maintenance allowance. These amounts were paid towards expenses at the rate of IEP 50 per day per employee. The Tribunal has correctly held that these amounts constitute only reimbursement for the expenses incurred by the employees at a particular amount per day and would not form part of the salary in  the hands of the recipients. Hence the question of applying sub clause (iii) of subsection (a) of Section 40 would not arise. The view of the Tribunal is correct and would not raise any substantial question of law."

(Click here for judgment)

   

2.  Prashant S. Joshi V/s. The Income-tax Officer Ward 19(2)(4) Parshant Joshi:

Reopening Section 148 after Earlier 143(1): Principles Laid Down - Bombay High Court

In the present case, having regard to the law laid down by the Supreme Court it was impossible for any prudent person to form a reasonable belief that the income had escaped assessment. The reasons which have been recorded could never have led a prudent person to form an opinion that income had escaped assessment within the meaning of section 147. In these circumstances, the petition shall have to be allowed by setting aside the notice under section 148.

(Click here for judgment)

    

3.  The Commissioner of Income Tax Versus M/s. ABG Heavy Industries Limited

ABG Heavy Industries: Section 80IA Infrastructure Facility - Bombay High Court

Now, it is in the background of the evolution of the law that the controversy in the present case would have to be considered. The contention of the Revenue is that the assessee was not engaged in developing the facility at all and that under the Contract that was entered into between the assessee and JNPT all that the assessee was required to carry out was to supply and install cranes at the Port. The submission cannot be accepted. The expression ‘development’ has not been artificially defined for the purposes of Section 80IA of the Act and must, therefore, receive its ordinary and natural meaning. Under the terms of the contract between the assessee and JNPT, the assessee undertook an obligation for supplying, installing, testing, commissioning and maintenance of Container Handling equipment namely, the cranes in question. JNPT has a dedicated Container Handling Terminal. The case of the assessee is that the only activity at the Terminal consists of the loading, unloading and storage of containers. Under the contract, the assessee was obligated to provide the equipment in question in an operable condition. The contract envisaged two different options; the first being one under which the assessee would carry out operation and maintenance of the equipment while the second consisted of an option to JNPT to carry out operations. The terms of the contract however made it clear that it was the obligation of the assessee to make the equipment available for operation for a stipulated minimum number of days during the year and made the assessee liable to liquidated damages in the event that this was not possible. JNPT by its letter dated 27th March 2000 clarified that the difference between the two options that had been given to the assessee consisted of a payment of  Rs.40,00,000/which was to be retained by JNPT in the event that the operators were provided by the Port for operating the cranes. At the same time, JNPT clarified that it was the responsibility of the assessee to guarantee the availability of the equipment; to ensure that the equipment is in operation on a round the clock basis; to provide for repairs and to ensure the operation and availability of the equipment in accordance with the terms of the contract.

A Port was defined to be included within the purview of the expression infrastructure facility. The obligations which the assessee assumed under the terms of the contract were not merely for supply and installation of the cranes, but involved a continuous obligation right from the supply of the cranes to the installation, testing, commissioning, operation and maintenance of the cranes for a term of ten years after which the cranes were to vest in JNPT free of cost. An assessee did not have to develop the entire port in order to qualify for a deduction under Section 80IA. Parliament did not legislate a condition impossible of compliance. A port is defined to be an infrastructure facility and the circular of the Board clarified that a structure for loading, unloading, storage etc. at a port would qualify for deduction under Section 80IA…

In the view which we have taken, all the assessment years in question to which this batch of appeals relates would be governed by the same principle. The subsequent amendment of Section 80IA (4A) of the Act to clarify that the provision would apply to an enterprise engaged in (i) developing; or (ii) operating and maintaining; or (iii) developing, operating and maintaining an infrastructure facility was reflective of a position which was always construed to hold the field.

(Click here for judgment)

 

What's New 

a.  New TDS Forms  16, 16A, 24G, 27D 

          (i)    Click for  Form 16

          (ii)   Click for  Form 16A

          (iii)  Click for  Form 24G

          (iv)  Click for  Form 27D

          (v)   Click for Annexure A

          (vi)  Click for  Annexure B

b.  CBDT-PR-CBDT notifies hike in gratuity threshold from Rs 3.5 lakh to 10 lakh  (Click for detail)

c.  KYC norms/AML standards/Combating of Financing of Terrorism (CFT)/Obligation of banks under Prevention of Money Laundering Act (PMLA), 2002  (Click for detail)

d.  Space-selling service: Any services provided by any person to any other person in relation to sale of space would be taxable from 1-5-2006 and not prior to that date  (Click for detail)

 

 

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"Voice of CA" 

    CA. Sanjay Kumar Agarwal, Founder - Voice of CA
Member  Central Council - ICAI
Former Chairman - NIRC
Mob : 9811080342,
agarwal.s.ca@gmail.com 
   
   
CA. Kapil Goel, Moderator-Direct Taxes
Mob:9910272806,
cakapilgoel@gmail.com 
 
CA. Sidharth Jain, Co-Moderator
sidhjasso@yahoo.com 
  
CA. Mukesh K Bansal, Co-Moderator-FEMA
Mob:9540022533,
mukbansal80@gmail.com 


 

 

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