Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2010 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2010 (10) TMI 690 - AT - Income TaxExemption u/s 10B - a lease transaction would qualify to be a `transfer’ within the meaning of the term as used in section 10B(2)(iii), which provides that an eligible undertaking under the section should not be formed by the transfer to a new business of plant and machinery that stands previously used for any purpose - This issue or aspect of the matter stands settled, in the context of different provisions, similarly or identically worded, and bearing, as such, the same condition as in section 10B(2)(iii), by the higher courts of law, including the apex court, as in the cases of CIT v. Narang Dairy Products (1996 -TMI - 5505 - SUPREME Court) and Bajaj Tempo Ltd. v. CIT (1992 -TMI - 5372 - ITAT PUNE); the latter being relied upon by the assessee itself - In the facts of the present case, the assessee itself neither disputes, nor possibly could, this aspect of the matter, so that we find no basis, or even the reason, for the ld. CIT(A)’s finding of the said reliance by the AO as being misconceived Assessee’s undertaking could not be formed but for the transfer of plant and machinery, and which, therefore, apart from being much in excess of the statutorily prescribed ratio of 20%, has played a significant role in the setting up of its undertaking, apart from other assets/resources, equally crucial, and similarly transferred or even shared, so that it is not a new undertaking or even a substantially so. Under the circumstances, we, therefore, hold that the assessee’s undertaking does not fulfil the conditions stipulated u/s. 10B(2) and, as such, is not qualified for the benefit conferred by the said section - Decided against the assessee Regarding disallowance of consultancy charges - No doubt, the onus for a disallowance u/s. 40A(2)(a) is on the Revenue, but the same can only be on the basis of the primary details and the information supplied in support by the assessee - The term `consultancy’ is too wide and vague to provide any definite understanding of the services rendered by him, particularly as the assessee has a whole range of professional and, further, who stand paid much less in comparison - In the present case, however, it is just the reverse, with the assessee claiming full tax exemption, while the remuneration allowed to its resident director, being in respect of services rendered in India, is only fully taxable in India - Secondly, if anything, it only goes to show that the arrangement was entered into on purely commercial considerations, and is not tainted by any ulterior motive of tax avoidance - In the result, both the Revenue’s appeal and the assessee’s CO are partly allowed
|