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2012 (5) TMI 10 - AT - Income TaxCapital or revenue expenditure - Repairs and maintenance - Enduring nature - substantial repair had undertaken for rig - AO was of the view that expenditure has been incurred before commencement of business - Held that: it could not be said that the business was not set up. There was no necessity to employ Engineers because the Director was competent to render advisory services for setting up the business. Meeting and discussions, was therefore an indication of setting up of business. Following the said view and considering the entirety of the evidences placed on record, as also the totality of the circumstances, it appears that no capital asset had come into existence through which the assessee has obtained enduring benefit. - Decided in favor of assessee. Regarding head Office expenditure - Held that:- the contracting States have kept in mind the provisions of the tax laws of the contracting States and to avoid any conflict in the provisions of the tax laws vis-à-vis the provisions of Treaty, as also to streamline the applicable provisions of law, it was decided to incorporate that, for the purposes of determining the profits of a permanent establishment, there shall be allowed deduction of expenses incurred for the purposes of the business of the permanent establishment including general administrative expenses but in accordance with the provisions and also subject to the limitations of the tax laws of that State. Therefore by this amendment in the Article the applicability of provisions of section 44C has been enforced, nevertheless with effect from 1st day of April-2008. Regarding previous year income - AO has noticed that as per Schedule XIV - notes to the accounts, the said claim was confirmed by Cairn India Pvt. Ltd. On the other hand, as per the assessee, the claim was still under dispute and the claim was not recognized by the said party - Held that: It is worth to note that the final payment was received from the said party in the F.Y. 2006-07 as per the TDS certificate given by the assessee and that fact has also been noted by the AO - once the admitted factual position is that the payment in question has actually been received in the F.Y. 2006-07, i.e. A.Y. 2007-08 and that fact has been noted by the AO himself, inter alia, further reaffirmed by ld. AR that in the next Financial Year it was duly recognized in the books of accounts - Appeal is partly allowed
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