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 695 - AT - Income TaxRemission of liability - Addition u/s 41 - Held that: assessee’s case is that no amount has been transferred to the profit and loss account. It was merely a book entry whereby sundry debtors amounting to Rs. 1,08,94,578/ and corresponding amount payable to Emery, USA where adjusted while passing a reversal entry in the books of account - Commissioner of Income Tax (Appeals)’s himself agreed that provision of section 41(1) will not apply unless the assessee has been granted an allowance or deduction in respect of liability which has ceased - Thus against the debtors (which were on account of Emery USA) there was corresponding liability towards Emery USA - Consequently, mere book entry of setting off sundry debtors with sundry creditors cannot constitute income - Decided in favor of the assessee Regarding disallowance of communication expense - Royalty - DTAA between India and USA - Assessing Officer observed that the nature of service appeared to be that of fee for technical service on which applicable TDS has not been deducted. He held that this squarely falls under the ambit of section 40(a)(i) - assessee submission is that the payment is being made for reimbursement of communication expenses incurred on behalf of the assessee by Emery USA - The subject of reimbursement are for EMCON connectivity data circuit expenses and not for the use of any industrial, commercial or scientific equipment provided by SITA. Even the amount charged to the assessee is only a part of the total expenses incurred by the Emery USA on behalf of the various concerns - the payment was made merely for availing communication facility for transmitting data without there being any right conferred upon the assessee for use of any secret process or formula - Decided in favor of the assessee Reduction of income in the revised return - AO observed that assessee was given a number of opportunities to explain the nature of system failure reasons why it was not noticed at the time of audit and how was the system error removed and correct income computed - In reply the assessee submitted that error crept into account while revenue data was transferred from the front end server to the back end accounting system recording the revenue - ld. Counsel of the assessee submitted that company is not in a position to reconcile the detail in this regard and submitted that no purpose will be served if the matter is remitted to the files of the AO to give the assessee an opportunity to submit the details required in this regard - Decided against the assessee Regarding interest u/s 234D - Hon’ble Kerala High Court in the case of Kerala Chemicals and Proteins Ltd. in [TMI - 76873 - KERALA HIGH COURT] had held that retrospective operation to substantial provision of law providing for interest cannot be given. It was further held that admittedly section 234D was introduced by Finance Act, 2003 w.e.f. 1.6.2003 - The interest involved would be levied from 1.6.2003 till the date of completion of assessment as held by the Hon’ble Kerala High Court - Appeal is allowed by way of remand to AO
|