{"id":8400,"date":"2014-09-21T21:26:36","date_gmt":"2014-09-21T15:56:36","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?page_id=8400"},"modified":"2014-09-21T21:26:36","modified_gmt":"2014-09-21T15:56:36","slug":"digest-of-important-case-laws-may-2014","status":"publish","type":"page","link":"https:\/\/itatonline.org\/archives\/digest-of-important-case-laws-may-2014\/","title":{"rendered":"Digest Of Important Case Laws &#8211; May 2014"},"content":{"rendered":"<div class=\"clock\">\n<table border=\"0\">\n<tr>\n<td colspan=\"2\"><strong>Digest of important case law &#8211; May 2014 (Compiled by KSA Legal &#038; AIFTP)<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"264\" rowspan=\"2\" valign=\"top\">\n<script type=\"text\/javascript\"><!--\ngoogle_ad_client = \"ca-pub-6440093791992877\";\n\/* DLCenter_336x280 *\/\ngoogle_ad_slot = \"7705834990\";\ngoogle_ad_width = 336;\ngoogle_ad_height = 280;\n\/\/-->\n<\/script><br \/>\n<script type=\"text\/javascript\"\nsrc=\"http:\/\/pagead2.googlesyndication.com\/pagead\/show_ads.js\">\n<\/script><\/p>\n<\/td>\n<td width=\"271\" valign=\"top\">\n<script type=\"text\/javascript\"><!--\ngoogle_ad_client = \"ca-pub-6440093791992877\";\n\/* DLCenter_336x280 *\/\ngoogle_ad_slot = \"7705834990\";\ngoogle_ad_width = 336;\ngoogle_ad_height = 280;\n\/\/-->\n<\/script><br \/>\n<script type=\"text\/javascript\"\nsrc=\"http:\/\/pagead2.googlesyndication.com\/pagead\/show_ads.js\">\n<\/script><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td valign=\"top\"><\/td>\n<\/tr>\n<tr>\n<td colspan=\"2\">\n<div class=\"journal2\"><a href=\"http:\/\/itatonline.org\/archives\/?dl_id=1345\" target=\"_blank\">Download <strong>Monthly<\/strong> May 2014 Digest in pdf format <\/a><\/div>\n<\/td>\n<\/tr>\n<tr>\n<td colspan=\"2\">\n<div class=\"journal2\"><a href=\"http:\/\/itatonline.org\/archives\/?dl_id=1346\" target=\"_blank\">Download <strong>Consolidated Digest<\/strong> (Jan 2014 to May 2014) in pdf format<\/a><\/a> <\/div>\n<\/td>\n<\/tr>\n<tr>\n<td colspan=\"2\">\n<div class=\"journal2\"><a href=\"http:\/\/itatonline.org\/archives\/?dl_id=1187\" target=\"_blank\">Download <strong>Consolidated Digest<\/strong> (Jan 2013 to November 2013) in pdf format<\/a><\/div>\n<\/td>\n<\/tr>\n<tr>\n<td colspan=\"2\">\n<div class=\"journal2\"><a href=\"http:\/\/itatonline.org\/archives\/?dl_id=1087\" target=\"_blank\">Download <strong>Consolidated Digest<\/strong> (Jan 2012 to December 2012) in pdf format<\/a> <\/div>\n<\/td>\n<\/tr>\n<tr>\n<td colspan=\"2\">\n<div class=\"journal2\"><a href=\"http:\/\/itatonline.org\/archives\/index.php\/digest-of-important-case-laws-april-2014\/\">Looking for the Previous Month&#8217;s digest? Click here.<\/a><\/div>\n<\/td>\n<\/tr>\n<\/table>\n<\/div>\n<p><script type=\"text\/javascript\"><!--\ngoogle_ad_client = \"ca-pub-6440093791992877\";\n\/* DLCenter_728x90 *\/\ngoogle_ad_slot = \"3275635396\";\ngoogle_ad_width = 728;\ngoogle_ad_height = 90;\n\/\/-->\n<\/script><br \/>\n<script type=\"text\/javascript\"\nsrc=\"http:\/\/pagead2.googlesyndication.com\/pagead\/show_ads.js\">\n<\/script><\/p>\n<div class=\"journal\">\n<p><strong>Journals Referred <\/strong>: BCAJ, CTR, DTR, ITD, ITR, ITR (Trib),  Income Tax Review, SOT, Taxman, Taxation, TLR, TTJ, BCAJ, ACAJ,  www.itatonline.org\n <\/div>\n<div>\n<div style='float:left; margin-top:5px ; margin-left:5px ; margin-right:10px ; margin-bottom:5px ;'>\n<\/div>\n<p><strong>S. 2(1A) :  Agricultural Income &ndash; Assessee failed to explain source of agricultural income &ndash;  Exemption denied. <\/strong><br \/>\n  Assessee was required to  prove the agricultural income by documentary evidence and to produce the  concerned owner of the land. Being not satisfied with the explanation provided  by the assessee, Assessing Officer made addition by denying the exemption  claimed by the assessee on agricultural income. CIT (Appeals) and Tribunal  upheld the order passed by Assessing Officer. On appeal by the assessee to the High  Court, held dismissing the appeal, that the Assessee failed to provide adequate  material on the points raised by the Assessing Officer as well as the  Commissioner (Appeals) and even before the Tribunal no material was placed  except reiterating the facts pleaded before. When the assessee was not owner of  the land and the agreements were full of discrepancies pointed out by the  Assessing Officer, it was for the assessee to produce the owner to the  satisfaction of the Assessing Officer for examining or by acceptable evidences  or otherwise as also in meeting with the various defects\/discrepancies pointed,  which the assessee failed to do. (AY. 1994 &#8211; 95)<br \/>\n  <strong>Bhairavnath  Agrofin (P.) Ltd. &nbsp;.v. CIT (2014) 220  Taxman 1 (Mag.) \/ (2013) 259 CTR 51(2013) 354 ITR 276 (Raj) (HC)<\/strong><\/p>\n<p><strong>S. 2(22)(e) : Deemed dividend-D<strong>oes not apply to a  non-shareholder.<\/strong><\/strong> <br \/>\n  The High Court  rejected the contention of the revenue that the definition of deemed dividend  u\/s. 2(22)(e) does not contemplate or does not stipulate any requirement of  assessee being a shareholder of the assessee like the one in the present case.  The view taken in the present case that the recipient\/assessee was not a  shareholder, thus is in consonance with the legal position noted by us  hereinabove. We are of the further view that this Court merely restated this  principle and which remains unaltered throughout from the case of&nbsp; <strong>Rameshwarlal Sanwarmal v\/s CIT(1980)<\/strong><strong>&nbsp;<\/strong>122  ITR 1 (SC). Followed CIT v.Universal Medicare Pvt Ltd (2010) 324 ITR 263  (Bom)(HC)(ITA No. 114 of 2012, dt. 04\/07\/2014. )<strong> <\/strong><br \/>\n  <strong>CIT . .v. Impact Containers Pvt. Ltd. <\/strong><strong>(Bom.) (HC) www.itatonline. org.&nbsp; <\/strong><br \/>\n  <strong>&nbsp;<\/strong><br \/>\n  <strong>S. 4 <\/strong><strong>: Charge of income-tax&ndash;Capital  or revenue-Grant of  subsidy for facilitating business operations is a revenue receipt. [S. 28(i)] <\/strong><br \/>\n  Where power tariff concession was not contingent  upon establishment of the unit but for the purpose of assisting the assessee in  carrying out business operations same had to be treated as revenue  receipt.(AY.1998-99)<br \/>\n  <strong>Brakes  India Ltd. &nbsp;.v.JCIT (2014) 363  ITR 13 \/ 222 Taxman 359 (<\/strong><strong>Mad.<\/strong><strong>)(HC)<\/strong><br \/>\n  <strong>&nbsp;<\/strong><br \/>\n  <strong>S. 4 : Charge of  income-tax&ndash;Tax Planning&ndash;Sale of shares to one of the group companies-Set off of  loss against long term gains was allowed. <\/strong><br \/>\n  The  assessee had purchased shares of Hindustan Development Corporation Ltd. from  two sellers, one of them was a scam tainted company. The assessee sold the  shares at a loss of Rs. 4,50,04,414 to one of its group companies. The  aforesaid loss was sought to be set off against the long term capital gains.  The AO disallowed the claim of setting off. On appeal, the CIT(A) held that the  purchase of the shares was genuine, but the sale was a colourable transaction  considering the fact that the assessee purchased the same scrip after sometime  and the sale to the group company was financed by the assessee himself. He  therefore upheld the order of the AO. On second appeal, the Tribunal had given  the findings of fact that the transaction of purchase and sale was supported by  contract notes and bills. Both the sale and purchase took place at the  prevalent market rate and payments were made by account payee cheques. These  transactions were duly confirmed not only by the brokers, but also by the  Inspector appointed by the AO. Furthermore, the alleged financing by the seller  for purchase of the shares was an insignificant part of the total purchase  price. The total purchase price was Rs. 18.99 crore, whereas the financing was  restricted to Rs. 2.60 crore on interest on commercial rates. The Tribunal held  that both the sale and purchase of shares were genuine transactions. The High  Court held that basis of suspicion, howsoever strong, it is not possible to  record any finding of fact. As a matter of fact, suspicion can never take the  place of proof. The finding arrived at by the Tribunal that both the sale and  purchase were genuine transactions was not even alleged by the revenue to have  not been based on evidence. Since the finding of the Tribunal was factually  correct, the Tribunal had no option but to direct the AO to give the benefit of  the losses suffered by the assessee, which he had disallowed. The appeal did  not raise any question of law and was therefore not to be admitted. (AY.  1995-96)<br \/>\n  <strong>CIT . .v. Lakshmangarh Estate  &amp; Trading Co. Ltd. (2014) 220 Taxman 122 (Mag.)(<\/strong><strong>Cal.<\/strong><strong>)(HC)<\/strong><\/p>\n<p><strong>S. 4 :Charge of income-tax-Security  deposit received by assessee for supply of cylinder&ndash;Not a trading receipt.<\/strong><br \/>\n  Assessee was a manufacturer  and supplier of gas to customers in cylinders. It received security deposit  from customers for supply of cylinders. Assessing Officer took a view that  security deposit received by assessee from customers was part of trading  receipt. Tribunal finding that money received as security was never part of  sale price and that security money was refundable to customers, concluded that  said amount could not be brought to tax as trading receipt. The High Court held  that the security for gas cylinders received by the assessee could not be  treated as trading receipt and consequently, the substantial question of law  was answered against the Revenue and in favour of the assessee. (AY. 2006-07) <br \/>\n  <strong>CIT . .v. Munjal Gases.  (2014) 220 Taxman 124(Mag.) (P&amp;H)(HC.)<\/strong> <\/p>\n<p><strong>S. 4 : Charge of income-tax -Accrual&ndash;Charge  of notional interest for free period was held to be not justified. <\/strong><br \/>\n  Assessee&nbsp; entered into MOU with its collecting agent  not to charge interest on unremitted collections for a period of two months. It  was held that AO was not justified in making addition towards notional interest  relatable to such interest free period. <br \/>\n  <strong>CIT . .v.  Sahara India Mutual Benefit Co. Ltd (2014) 101 DTR 265 \/&nbsp; 220 Taxman 16 (All.)(HC)<\/strong><\/p>\n<p><strong>S. 4 : Charge  of income-tax-Deposit-Where assessee  was merely a custodian of deposit and income arose from deposits in form of  dividend, interest etc., the Tribunal was justified in holding that deposits  themselves could not amount to income chargeable to tax.<\/strong><br \/>\n  The assessee-firm ran some financial  schemes in which deposits were collected from the public. During assessment  proceedings, the AO held that deposits received represented revenue receipts  liable to tax. On appeal before Tribunal, it held that deposits in question  amounted to capital receipt which could not be brought to tax. On appeal by the  Revenue before High Court, the latter held that since the assessee was merely a  custodian of deposit and income arose from deposits in form of dividend,  interest etc., the Tribunal was justified in holding that deposits themselves  could not amount to income chargeable to tax.(AY. 1983-84)<\/p>\n<p><strong>CIT . .v. Sahara India Firms, <\/strong><strong>Lucknow<\/strong><strong> (2014) 221 Taxman 68 (All.)(HC)<\/strong><\/p>\n<p><strong>S. 5 : Scope of  total income-Accrual of income&ndash;Builder and developer &ndash;Advances received from  different parties&ndash;Advance receipt could not be taken as trading receipt of the  year under consideration.<\/strong><br \/>\n  The assessee company was a  builder and developer and received certain amount as advance from different  parties. The AO added the said amount in the total income. The Tribunal deleted  the addition on the ground that assessee being the developer, the profit will  arise on the transfer of the title of property and any advances received cannot  be treated as trading receipt of the year under consideration and the same was  accepted in the earlier years by the revenue. On appeal the High Court affirmed  the view of the Tribunal&nbsp;&nbsp; <br \/>\n  <strong>CIT . .v.  Shivalik Buildwell (P.) Ltd. (2014) 220 Taxman 3 (Mag.) (Guj.)(HC)<\/strong><\/p>\n<p><strong>S. 6(1) :<\/strong><strong> Residence in India &ndash; Individual &ndash; Stay less than 182 years in India-Employed prior to leaving India should not  effect his residential status-&nbsp; Salary income of assessee accrued or arose  during employment in China was not taxable in India. [5]<\/strong><br \/>\n  Assessee  contended that he was working in Whirlpool, China and salary accrued and arose in China only and that he was non-resident during  the relevant financial year. Therefore, he was not liable to be taxed in India. Tribunal held that the assessee was not  resident during the relevant period as he has left India for the purpose of employment outside India. His stay during the relevant financial  year was less than 182 days in India. Therefore, his status was non-resident  during the relevant financial year. He was already employed in Whirlpool India prior to the leaving India for working with Whirlpool China shall not effect the residential status  of the assessee. Held, all this fact clearly shows that salary income of the  assessee accrued and arose during the employment in China is not taxable in India. Where  status of assessee was a non-resident, fact that assessee was already employed  before leaving India should not  effect his residential status.(AY.2006-07)<strong><\/strong><br \/>\n  <strong>ACIT<\/strong><strong> .v. Raj Jain (2014) 146 ITD 651 \/ (2013)  38 taxmann.com 133 (<\/strong><strong>Delhi<\/strong><strong>)(Trib.)<\/strong><\/p>\n<p><strong>S.  9(1)(i) :<\/strong><strong> Income deemed to accrue or  arise in <\/strong><strong>India<\/strong><strong> &#8211; Business connection -DTAA  would apply when a recipient of interest does not have a PE in a country where  he has received interest-DTAA-India &ndash;France [Art 12]<\/strong><br \/>\n  The assessee, a French company, having a  PE in India,  earned interest on refund of income tax in India.  The issue that arose before the High Court was whether the same is covered by  sub-articles (1) and (2) of article 12 of India-France DTAA. The High Court  held that a plain reading of these provisions make it absolutely clear that  Sub-Articles (1) &amp; (2) apply <em>inter  alia<\/em> when the recipient of interest does not have a PE in the country,  where he has received interest. There is no dispute that the respondent  assessee had a permanent place of business in India  and, accordingly, the interest earned in India on  the refund of income tax is not covered by Sub-Articles (1) &amp; (2) of  Article 12 of the said Treaty.<br \/>\n  <strong>DIT .v. Pride Foramer SAS (2014) 221 Taxman 305  (Uttarakhand) (HC)<\/strong><br \/>\n  &nbsp; <br \/>\n  <strong>&nbsp;S. 9(1)(i) : Income deemed to accrue or arise  in <\/strong><strong>India<\/strong><strong> &#8211; Business connection-Permanent  Establishment-Commission is taxable in India- DTAA-India-Finland [Art.5]<\/strong><br \/>\n  Assessee  Finland  company executed a contract with Nhava Sheva Port Trust (NSPT) for supply of tractors  and trailers. It engaged an Indian company Usha Sales for rendering certain  specific services in India.  Assessee paid an agreed commission to Usha Sales. Assessee had PE in India in  form of Usha Sales and that certain percentage of sale of trailers was also  taxable in India.  Assessee had not been able to convince on fact that Usha Sales was not a PE of  assessee and it was an independent branch by itself. Indian company should be  treated as a PE, and not as an agent of independent status.(AY. 1989-90)<br \/>\n  <strong>ADIT  (IT). .v. Oy Sisu AB (2014) 146 ITD 572 \/ (2013) 38 taxmann.com 81 (Mum.)(Trib.)<\/strong><\/p>\n<p><strong>S. 9(1)(i) : Income  deemed to accrue or arise in <\/strong><strong>India<\/strong><strong> &#8211; Business connection- Permanent Establishment-DTAA-India-USA. [S.90].<\/strong><br \/>\n  The Tribunal held that the  agreement entered is an independent agreement on principal to principal basis  and held that there is no PE of the assessee company in India as there is neither any  office in India nor it has any business  connection in India nor has carried out any  business activities in India. Assessee company is a  standalone legal independent entity. As there is no PE, the question of attribution  of profits does not arise. <br \/>\n  <strong>Addl. DIT . .v.  Lucent Technologies GRL LLC (2014) 159 TTJ 589 \/ 29 ITR 132 (Mum.)(Trib.)<\/strong><br \/>\n  <strong>Dy. DIC . .v.  Reliance Infocom Ltd. (2014) 159 TTJ 589 \/ 29 ITR 132 (Mum.)(Trib.)<\/strong><br \/>\n  <strong>S. 9(1)(i) : Income deemed to accrue or arise in India &ndash;Business  profits- Profit on services rendered by company &#8211; not taxable in India if  non-resident company does not have PE in India-DTAA-India-Singapore. [Art.7].<\/strong><br \/>\n  The applicant is a  resident company engaged in the business of producing and distributing  television programmes. It mainly produces reality shows and has also ventured  into soap operas. For one of its productions, for the purpose of shooting the  show outside India,  the applicant engaged NAPL, a Singapore  based Company, to procure the services of one CPH as an executive producer for  the show. As per the terms of the agreement, NAPL was responsible for the  overall production and also for handling business issues. The agreement also  provided that NAPL will provide specialized services to aid in the production  of programmes for which NAPL agreed to commission its representative to CPH who  was an executive producer. As per the agreement the applicant was to pay a  total consideration of US Dollar 49,000 to NAPL for their services for the  show. The applicant sought advance ruling on whether the payments made by the  applicant to NAPL will be treated as business income, and since it does not  have a Permanent Establishment (PE) in India,  whether the payments made by the Applicant to NAPL would be chargeable to tax  in India.<br \/>\n  The Authority for  Advance Ruling held that the Article 7 of the India-Singapore Tax Treaty  provides that &quot;the profits of an enterprise of a Contacting   State  shall be taxable only in the State unless the enterprise carries on business in  the other Contracting   State  through a permanent establishment situated therein. If the enterprise carries  on business as aforesaid, the profits of the enterprise may be taxed in the  other State but only so much of them as is directly or indirectly attributable  to that permanent establishment. The Authority, on the facts of the case, further  held that NAPL is a resident company of Singapore.  The applicant is an Indian enterprise and for its business activities outside India  the services of NAPL were utilized and payment for the services were also  received outside India.  There was nothing on record to show that NAPL had PE in India.  In the absence of any PE in India,  the profits arising out of the transactions for services rendered by NAPL were  not taxable in India.<br \/>\n  <strong>Endemol <\/strong><strong>India<\/strong><strong> (P.) Ltd., In re (2014) 222 Taxman 59 (<\/strong><strong>AAR<\/strong><strong>)<\/strong><\/p>\n<p><strong>&nbsp;S. 9(1)(vi) : Income deemed to accrue or arise  in India&ndash;Royalty- Consideration paid for transfer of right to use  software\/computer programme in respect of copyright is &#8216;royalty&#8217; <\/strong> <br \/>\n  The High Court following the  decisions of the Karnataka High Court in the case of CIT &nbsp;.v. Samsung Electronics Co. Ltd. (2012) 345  ITR 494 and&nbsp; CIT &nbsp;.v. Synopsis International Old Ltd. (2012) 28  taxmann.com 162 held that consideration paid by the Indian customers or end  users to the assessee, a foreign supplier, for transfer of the right to use the  software\/computer programme in respect of the copyrights falls within the  meaning of &#8216;royalty&#8217; as defined in section 9 (1) (vi) of the Act. (A.Y.  2002-2003) <br \/>\n  &nbsp;<strong>CIT &nbsp;.v. Customer Asset <\/strong><strong>India<\/strong><strong> (P.) Ltd. (2014) 222 Taxman  37 (Mag.) (Karn.)(HC)<\/strong><\/p>\n<p><strong>S. 9(1)(vi) :  Income deemed to accrue or arise in India &ndash;&nbsp;  Royalty &#8211; <strong>Fee received for &ldquo;<\/strong><em>foreign exchange deal matching system services<\/em><strong>&rdquo;  constitutes &ldquo;<\/strong><em>royalty<\/em><strong>&rdquo;-DTAA-India-UK. [Art. 12]<\/strong><\/strong> <br \/>\n  The Tribunal had to  consider whether the consideration for services offered by the assessee of &ldquo;<em>foreign exchange deal matching system<\/em>&rdquo;  was assessable as &ldquo;royalty&rdquo; under Article 12(3) of the India-USA DTAA. The  &ldquo;foreign exchange deal matching system&rdquo; facilitates the Indian subscribers i.e.  Banks to deal in the foreign exchange with the other counterparts who are ready  for the transaction of purchase and sale of foreign currency. The role of the  deal matching system is to provide a platform where both purchaser and seller  find the respective match for the intended transaction of purchase and sale.  HELD by the Tribunal:<br \/>\n  The assessee is  facilitating its clients to use its system and application programming  interface which is subscriber interface for use with the related services  including Auto quote service. The assessee is also providing the equipment with  pre-loaded software to its subscribers and network used for provision of the  services. The assessee grants subscribers limited license of software to  install and use at the site. The said license can be sub-licensed by the  subscriber. The subscriber\/user can also view, manipulate and create the  derived data from information for their individual use. Further the subscriber  can Store information, manipulate information for its use and also distribute  or redistribute information and Drive Data to anyone to a limited extent so far  as it is not done in a systematic manner. The subscribers are allowed to use  the information and even to manipulate and Drive the Data to anyone for their  individual use. Thus it is clear that it is subscribers who are using the  information and system of the assessee for their commercial\/business purposes.  The information is made available by the assessee through its system and other  equipments installed at the site of the subscriber to facilitate the  connectivity with the assessee&rsquo;s system \/ router located in Geneva. The platform of transacting the purchase  and sale is commercial equipment allowed to be used by clients \/ subscribers  for commercial purposes. The nature of service rendered by the assessee  includes the information concerning commercial use by the subscriber. Further  the entire system of the assessee including the equipments and connectivity  facility is provided at the site of the subscriber. Therefore, the assessee is  providing the service in the form of information and solution to the need of  the subscribers by providing the matching party. Also, the Indian subscribers  have been granted a license to use the software for their internal business,  which can be sub-licensed by them. The Indian clients are paying for use and  right to use of equipment (scientific, commercial) along with software for  which license was granted by assessee. It is not a case of simplicitor payment  for access to the portal by use of normal computer and internal facility but  the access is given only by use of computer system and software system provided  by the Assessee under license. Accordingly, by allowing the use of software and  computer system to have access to the portal of the assessee for finding  relevant information and matching their request for purchase and sale of  foreign exchange amount to imparting of information concerning technical,  industrial, commercial or scientific equipment work and payment made in this  respect constitutes royalty.) (ITA No. 6947\/Mum\/2012,dt. 18.07.2014.)(AY.  2009-10) <br \/>\n  <strong>Reuters  transaction Services Ltd. .v. DDIT (Mum.)(Trib.), www.itatonline.org<\/strong><\/p>\n<p><strong>S. 9(1)(vii) : Income deemed  to accrue or arise in India&ndash;Fees for technical services- Payment to a  non-resident for production of programmes for broadcasting and telecasting not  treated as &#8216;fees for technical service&#8217;-DTAA-India-Singapore. [Art.12]<\/strong><br \/>\n  The applicant is a resident company engaged in the business of  producing and distributing television programmes. It mainly produces reality  shows and has also ventured into soap operas. For one of its productions, for  the purpose of shooting the show outside India, the applicant engaged NAPL,  a Singapore based Company, to procure  the services of one CPH as an executive producer for the show. As per the terms  of the agreement, NAPL was responsible for the overall production and also for  handling business issues. The agreement also provided that NAPL will provide  specialized services to aid in the production of programmes for which NAPL  agreed to commission its representative to CPH who was an executive producer.  As per the agreement the applicant was to pay a total consideration of US  Dollar 49,000 to NAPL for their services for the show. The applicant sought  advance ruling on whether the payments made by the applicant to NAPL, for  services rendered are chargeable to tax in India as &#8216;fees for technical  services&#8217;.<br \/>\n  The Authority for Advance Rulings held that the services were  rendered outside India and the non-resident company  namely NAPL did not have any presence in India. There was no material to  support that the technical knowledge, expertise, skill \/ know-how or process  was made available to the applicant by enabling it to apply the technology  independently. Thus, none of the conditions of the Article 12.4 of the India-Singapore  Treaty were fulfilled. Therefore, the consideration paid for services rendered  by NAPL to the applicant was not covered by fees for technical services in  terms of Article 12.4 of the India-Singapore Tax Treaty.<br \/>\n  <strong>Endemol <\/strong><strong>India<\/strong><strong> (P.) Ltd., In re (2014) 222  Taxman 59 (<\/strong><strong>AAR<\/strong><strong>)<\/strong><\/p>\n<p><strong>S. 10(20A) : Housing  Boards&ndash;Conditions precedent&ndash;Authority constituted in <\/strong><strong>India<\/strong><strong>.<\/strong><br \/>\n  Assessee was a public company  incorporated under the Companies Act 1956. It was set up for purpose of  development, granting financial assistance and marketing products of small  scale industries and also constructing and managing industrial estates. It was  fully controlled by the State Government. It had filed NIL returns for A.Ys.  1998-99 to 2000-2001 claiming exemption under section 10(20A). During the  course of assessment proceedings, the AO held that the assessee was not an  authority constituted in India by or under any law but a  Corporation incorporated under the Companies Act. He concluded that the  assessee had not fulfilled the provisions contained under section 10(20A) to  avail exemption and was not dealing in housing accommodations for the purpose  of planning, development and improvement of cities, towns, villages or both.  Both the CIT(A) and the ITAT upheld the order of the AO. On further appeal, the  High Court upholding the orders held that to claim exemption, the person must  be an authority and the said authority should be constituted in India by order  under any law, such law should be enacted either for the purpose of dealing  with and satisfying the need for housing accommodation or for the purpose of  planning, development or improvement of cities, towns and villages or for both.  The assessee was incorporated pursuant to the resolution of the Government of  Karnataka, but not constituted under any law. It was incorporated for the  purpose of achieving certain objects and cannot be equated with the authority  constituted in India by or under any law enacted.  From the object of the assessee, it cannot be treated as an authority under  article 12 of the Constitution of India. Since the assessee is not discharging  the functions of housing accommodation and for the purpose of planning and  development of the Cities, towns and villages, the assessee does not fall under  the purview of Section 10(20A) of the Act. (AY. 1998-99 to 2000-01)<br \/>\n  <strong>Karnataka<\/strong><strong> <\/strong><strong>State<\/strong><strong> Small  Industries Development Corpn. Ltd. .v. <\/strong><strong>ACIT<\/strong><strong> (2014) 220  Taxman 4 (Mag.) \/ (2013) 40 taxmann.com 212 (Karn.)(HC) <\/strong><\/p>\n<p><strong>S.  10(23C)(iiiac) : Hospital-Maternity hospital &ndash; No treatment of illness-Not  eligible for exemption.<\/strong><br \/>\n  Tribunal held that a &nbsp;maternity hospital is not hospital for  treatment of illness, etc. Hence, not eligible for exemption under section  10(23)(iiiac). (AY. 2009-10)<br \/>\n  <strong>Dy. CIT .v.  Nehru Prasutika Asptal Samiti (2014) 159 TTJ 813 \/ (2013) 26 ITR 376 \/ 145 ITD  8 (<\/strong><strong>Agra<\/strong><strong>)(Trib.)<\/strong><\/p>\n<p><strong>S. 10(23C)(iiiad)  : Educational institution-Educational- Others objects-Merely having the other  objects &ndash;Exemption cannot be denied. <\/strong><br \/>\n  It was held that when save  and except educational activity the assessee did not carry on any other  activity, merely because there exists object which is not related to  educational activities, is not sufficient to deny the benefit of s.  10(23C)(iiad).<strong><\/strong>(AYs. 2006-07, 2007-08)<br \/>\n  <strong>Geetanjali  Education Society .v. ADIT(E) (2014) 101 DTR 337 \/ 223 Taxman 167 \/ 267 CTR 369  (Karn.)(HC)<\/strong> <br \/>\n  &nbsp;&nbsp;&nbsp;&nbsp; <br \/>\n  <strong>&nbsp;S. 10(23G) : Infrastructure  undertakings-Amalgamation-Benefit which has accrued to investor \/ assessee  cannot be taken away just because investee company which had originally been  approved u\/s.10(23G) by Government has amalgamated into another company. [R.  2E]<\/strong> <br \/>\n  Assessee, engaged in business of investment, had  claimed exemption u\/s. 10(23G) in respect of long term capital gain which arose  on account of sale of equity shares of a company named RSPCL. On date of  acquisition of shares, RSPCL had been exempted u\/s. 10(23G) and also on date of  sale of shares, RSPCL had enjoyed the said exemption. AO disallowed the  exemption on the ground that RSPCL had cesed to exit from 1-04-2003 due to amalgamation with other  company and exemption was not available to the assesse unless the new company  was eligible enterprises approved by the competent authority. On appeal the Tribunal  held that benefit which has accrued to investor\/assessee cannot be taken away  just because investee company which had originally been approved u\/s. 10(23G)  by Government has amalgamated into another company. Approval given u\/s. 10(23G)  had not been withdrawn as provided in rule 2E. Hence, exemption u\/s. 10(23G)  was admissible to assessee. (AY.2004-05)<br \/>\n  <strong>Goa<\/strong><strong> Trading (P.) Ltd. .v. ITO  (2014) 146 ITD 737 \/ (2013) 40 taxmann.com 379 (Mum.)(Trib.)<\/strong><\/p>\n<p><strong>S. 10A : Free  trade zone -Initiated production in 1999 &ndash; Prior to its registration as STPI in  2002&ndash;Benefit cannot be denied.<\/strong><br \/>\n  High Court held that in order  to claim deduction, under section 10A, twin conditions are that an undertaking  in hardware technology park or software technology park must be in existence  commencing its production on or after 1-4-1994 and it should not have been  formed by splitting up or reconstruction of an existing business. Assessee was  in software technology park and registered as STPI in 2002 and further assessee  was not formed by splitting up or reconstruction of business already in  existence, mere fact that assessee was in existence since 1999, i.e., prior to  date of registration on 27-3-2002, would not disentitle assessee from claiming  benefit under section 10A (AYs. 2003-04 to AY 2005-06)<br \/>\n  <strong>Nagesh Chundur .v.  CIT (2014) 220 Taxman 47 \/ (2013) 358 ITR 521 \/ 39 taxmann.com 190 (<\/strong><strong>Mad.<\/strong><strong>)(HC) <\/strong><\/p>\n<p><strong>S.  10A : Free trade zone-Export turnover-Total turnover-Where any expenditure is  to be reduced from export turnover, same is to be excluded from total turnover  also. <\/strong><br \/>\n  AO  reduced the communication expenses from the export turnover for computation of  deduction u\/s. 10A. CIT(Appeals) without appreciating the fact that the  communication expenses were consisting of telephone charges, and internet  charges which were incurred in normal course of business and not specifically  for the purpose of delivery of software outside India, should have directed to  be excluded from the export turnover for computing the deduction under section  10A. Tribunal held that if these communication expenses are to be excluded from  the export turnover, then the same should also be excluded from the total turnover  for computing the deduction u\/s. 10A. (AY.  2005-06)<br \/>\n  <strong>Intoto  Software <\/strong><strong>India<\/strong><strong> (P.) Ltd. .v. ACIT (2014) 146 ITD 360 \/ (2013) 35 taxmann.com 421 (Hyd.)(Trib.)<\/strong> <\/p>\n<p><strong>S. 10B : <\/strong><strong>Export oriented undertaking-Mistake in mentioning the  section in the return for claiming the exemption&ndash;Exemption cannot be denied. [S.80IB,  251] <\/strong><br \/>\n  Assessee was eligible for exemption  under section 10B and it had been found to be in order except that instead of  mentioning exemption under section 10B, while e-filing return, it was wrongly  on account of typographical error mentioned section 80-IB, it could not be said  to be such a mistake by which exemption could be disallowed out rightly.&nbsp;(AY.2008-09) <br \/>\n  <strong>CIT  .v.Rajasthan Fasteners  (P.) Ltd. (2014) 363 ITR 271 \/ 222 Taxman 100 (Mag.) \/ 266 <\/strong><strong>CTR <\/strong><strong>401 (Raj.)(HC) <\/strong><br \/>\n  <strong>&nbsp;<\/strong><br \/>\n  <strong>S. 10B : Export oriented undertaking-Trading-Granite monumental  slabs-Held to be eligible deduction.[S.10B]<\/strong><br \/>\n  The assessee is  a manufacturer and exporter of granite monumental slabs. During the course of  the assessment proceedings the Assessing Officer noticed that the assessee  company has purchased granites to the extent of Rs.42,62,996\/- and the same was  exported. The only question before us is whether the assessee is eligible for  the deduction under section 10B in respect of trading profits or not. The Tribunal  held that in the case of T. Two International (P) Ltd. &nbsp;.v. ITO (26 SOT 583) (Mum) has observed that  to allow deduction u\/s 10A the material consideration is export of eligible  goods and not whether those goods are manufactured or purchased by the  assessee. Profits from both, the self-manufactured as well as trading in goods  have been made eligible for deduction u\/s 10A of the Act. However, this court  is of the opinion that section 10A and section 10B are similar. The Tribunal  followed its own order in the case of T. Two International (P) Ltd. (supra) and  allowed assessee&rsquo;s Appeal. (AY. 2005-06)&nbsp; <strong><\/strong><br \/>\n  <strong>GTP Granites Ltd. &nbsp;.v. <\/strong><strong>ACIT<\/strong><strong> (2014) 61 SOT  36 (URO) \/ (2013) 26 ITR369 (Chennai )(Trib.) <\/strong><\/p>\n<p><strong>S. 11 :  Property held for charitable or religious purposes &#8211; Interest on FDR.<\/strong><br \/>\n  The Tribunal held that the  interest earned by assessee charitable trust on investment of surplus funds in  FDR&rsquo;s is directly incidental to main activities hence eligible for exemption  under section 11. (AY. 2009-10)<br \/>\n  <strong>Dy. CIT &nbsp;.v. Nehru Prasutika Asptal Samiti (2014) 159  TTJ 813 \/ (2013) 26 ITR 376 \/ 145 ITD 8 (<\/strong><strong>Agra<\/strong><strong>)(Trib.)<\/strong><\/p>\n<table border=\"1\" cellspacing=\"0\" cellpadding=\"5\">\n<tr>\n<td width=\"90%\" valign=\"top\">The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. 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