TMI Blog2014 (7) TMI 1299X X X X Extracts X X X X X X X X Extracts X X X X ..... have a retrospective effect. In this case expressly they have been made retrospective. In the matter of taxation, equity has no place. When a law has been amended with retrospective effect Court has to proceed on the basis that the amendment was always there with effect from 1st June, 1976. Therefore, the transaction which took place during the financial year 2007-08 could not have been saved, in any case. The second submission of Mr. Murarka is, therefore, not acceptable. First question formulated above is answered in the affirmative and in favour of the revenue. Second question is a consequential question and is also answered in the affirmative and in favour of the revenue. - ITAT No. 19 of 2013 GA No. 188 of 2013 - - - Dated:- 23-7-2014 - Mr. Girish Chandra Gupta And Sudip Ahluwalia, JJ. For Appellant : Mr. S. N. Dutta, Advocate For Respondent : Mr. R. K. Murarka, Advocate with Mrs. S. Roy Chowdhury, Advocate The Court : The subject matter of challenge in this appeal is a judgment and order dated 19th June, 2012 by which the learned Income Tax Appellate Tribunal agreeing with the views of the CIT (A) dismissed an appeal p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t though the assessee company provided the liability for payment of ₹ 2,62,25,400/- as on 31/03/2008 but out of this total liability, ₹ 42,10,500/- already paid on 03/04/2008 i.e. the next financial year. In the meantime, the company incurred huge loss in derivative transaction due to global financial crisis amounting to ₹ 22.00 Crores. (Approx). In this context the company requested to GMPL to waive the liability and give us relief from the huge payment burden for the survival of the company and the foreign company after considering our present financial condition, gave consent to waive this liability and accordingly we have added back as income and reflected in profit loss account for taxation purpose in the next financial year amounting to ₹ 2,20,14,900/-. The assessing officer concluded that the aforesaid payments were on account of technical services within the meaning of Explanation 2 to Clause (vii) of sub-section (1) of Section 9. He also referred to the Explanation introduced by the Finance Act, 2010 with effect from 1st June, 1976 which has been placed below the sub-section (2) of Section 9 of the Act. Aggrieved by the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Singapore company and as no evidence is on record which in any manner proved that the services were rendered in India, the fees for consultancy services were not chargeable to tax in India. The learned Tribunal has endorsed the views of the CIT(A). Aggrieved by the order of the learned Tribunal, the revenue has come up in appeal. The questions, which fall for determination are: (a) Whether the sum of ₹ 3,00,22,646/- paid or credited to the account of the foreign resident by the assessee on account of service rendered in relation to forex derivative transactions is chargeable to tax in India under Section 9(1)(vii) of the Income Tax Act; (b) In case the answer to the first question is in the affirmative, whether the assessee was liable to deduct tax. Mr. Dutta, learned Advocate appearing for the revenue-appellant, submitted that payment on account of technical services to a non-resident is chargeable under Section 9(1)(vii). He drew our attention to Explanation 2, which provides as follows: Explanation [2] : For the purposes of this clause, fees for technical services means any consideration (including any lump s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed is a word of indefinite import. In taxing statutes it is used in the sense of an occupation or profession which occupies the time, attention and labour of a person, normally with the object of making profit. To regard an activity as business there must be a course of dealings, either actually continued or contemplated to be continued with a profit-motive, and not for sport or pleasure. In Narain Swadeshi Weaving Mills v. Commissioner of Excess Profits Tax, Das, J., delivering the judgment of the Court observed: The word business connotes some real, substantial and systematic or organised course of activity or conduct with a set purpose . He contended that since the word business is a word of indefinite import , it cannot be said that the services rendered by the non resident was not in course of their business. It should, therefore, be held that the income accrued to the non resident on account of business. Since the non resident does not have any permanent establishment in this country, under Article 7 of the Double Taxation Avoidance Agreement, the income would not be taxable in India. The second submission advanced by Mr. Murarka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons . Therefore, the case of the assessee is that some sort of service was rendered in lieu whereof the aforesaid sum was paid or credited. During hearing we are told that the service was advisory in nature. A copy of the agreement dated 14th April, 2007 claimed to have been entered into between the assessee and the non-resident was also placed on record. Clause 5 thereof reads as follows: 5) It is here in agreed under this MOU between ASF and GMPL that GMPL will provide expert guidance and consultancy using either its own in house expertise or by outsourcing the same to ASF for all its forex deals related to derivatives, futures and options entered into by ASF from this date till 31/3/2008. From Clause 5 it appears that the non-resident agreed to provide expert guidance and consultancy in lieu of the agreed consideration. Money was payable on account of a specific purpose indicated above. It is not, therefore, possible for us to hold that the aforesaid sum accrued to the non-resident on account of business profit as contended by Mr. Murarka. For the aforesaid reasons, the first submission of Mr. Murarka is rejected. The second submission advanced by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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