2010 (10) TMI 597 - ITAT, DELHI

DTAA between India and U.K. - Reopening - Scrutiny - Set off and carry forward of loss - Fees for technical services - Income escaping assessment - whether assessee has disclosed all material facts fully and truly - assessee has been filing consolidated statement of accounts of its activities in India which consists of the gross income from all the projects and gross expenses supposedly pertaining to the gross receipts - Held that the services in question are technical services within the meaning of provisions of the Income-tax Act, 1961 and that the allowability of expenses is governed by provisions of section 44D of the Income-tax Act, 1961

carry forward business loss is a statutory right allowable to the assessee by section 72 of the Act - Once profits and gains of business are computed, it is necessary that carry forward business loss has to be set off against profits and gains of business of the years under review

under section 32(2), again the assessee’s contention is correct that when you compute profits and gains of business, you compute profits and gains of various businesses of the assessee and then unabsorbed depreciation would become current year’s depreciation whenever you compute profits and gains of business or any business other than the business in which section 44D has been invoked

Regarding applicability of section 44AB - whether it needed to get separate tax audit report for different projects in India or was one tax audit report enough as the assessee was taxed on all its projects as a foreign company in India - It is first principle of tax that a corporate entity whether Indian or foreign is liable for tax as a single entity by clubbing all income that arises to it from various sources against same head of income or under various heads of income

Regarding interest u/s 234B and 234D - As far as charging of interest under section 234B is concerned, admittedly the entire income of the assessee, i.e., a foreign company is liable for deduction of tax at source under section 195 of the Income-tax Act - Insofar as ground of charging interest under section 234D is concerned for assessment year 2002-03, the Delhi SB in the case of ITO v. Ekta Promoters (P.) Ltd. [2008 -TMI - 65270 - ITAT DELHI-E ] has held that it can only be charged from assessment year 2004-05

Regarding pleading against double taxation of profits from Haldia Bolpur Project, IOCL Project and Budge Budge Project, respectively - Assessing Officer is directed to verify from the profit and loss account filed before him as to whether there was any income declared by the assessee for these three projects in assessment year 2003-04 at all. If there is no income in the year under review, then the amounts taken by him are directed to be deleted

Regarding KBPL Expansion Project - Assessing Officer is directed to tax this also on net basis as there is no change in the facts and circumstances of the case or in the contract and on the same contract in the previous three years, the Assessing Officer himself has taken the profit of these projects on net basis only - In result, all the appeals are allowed in part