S. 80-O : Royalties – Foreign enterprises -Fees for technical services rendered to foreign entity — Explanation added with effect from 1-4-1992 — Fees for services rendered in India- Not entitled to deduction – Principle of consistency or doctrine of precedents would not apply when there is change in law.

S. 80IC : Special category States -Initial Assessment Year —Substantial expansion- Claimed 100% deduction for five years- Cannot claim deduction at 100 Per Cent. beyond period of five years on ground of substantial expansion.

S. 45(4) : Capital gains – Distribution of capital asset – Dissolution of firm -Change in constitution of firm -Retirement of some partners and induction of new partners — No revaluation of assets — Businesses continued — Firm reconstituted and not dissolved-Not liable to pay capital gains tax . [ S. 45,187(2) ]

S.37 (1): Business expenditure —Travelling expenditure of wife of Company’s Senior Executive accompanying him abroad for his medical treatment — Expenditure is held to be not allowable . [ S.264 ]

S. 36(1)(iii) :Interest on borrowed capital -Commercial expediency – Interest free advance to third parties -Interest paid is held to be allowable as deduction .

S. 11 : Property held for charitable purposes – Accumulation of income- Explanation of purposes for which funds accumulated was furnished during course of assessment proceedings is a sufficient compliance . [ S.11(2), form No 10 ]

S. 10 (23C): Educational institution- Registration u/s 12AA is not mandatory to claim exemption.[ S.12AA, 10 (23C(iiiad)]

S. 68 : Cash credits – Share premium-The fact that the premium is abnormally high as per test of human probabilities is not sufficient-The AO has to lift the corporate veil & determine whether any benefit is passed on to the shareholders/directors. Directions issued to AO to establish whether assessee company was used as a vehicle to pass on the benefit to shareholders/directors- Tribunal directed the AO to verify all the funds and cash flow management of the company for both AY. 2009-10 & 2010-11. AO should not resort to rely on circumstantial evidence or on test of human probabilities but on factual evidence of passing of benefit to the shareholders/directors- Addition was deleted subject to verification . [S.28(iv),56 ]

S. 40(a)(ia): Amounts not deductible – Deduction at source -The second proviso to S. 40(a)(ia) is beneficial to the assessee and is declaratory and curative in nature. Accordingly, it must be given retrospective effect.[ S.201(1) ]

S. 9(1)(i): Income deemed to accrue or arise in India – Business connection -Fixed place permanent establishment- Facts of the case clearly point to the fact that the assessee’s employees were not merely liaisoning with clients and the headquarters office. E-mail communications and chain mails indicate that with respect to clients and possible contracts of GE with Reliance CS-1, GE Oil & Gas, Bongaigaon Refinery, Draft LOA for WHRU (E-mail from Andrea Alfani (GE Overseas) to Vivek Venkatachalam (GEIIPL) and Riccardo Procacci (GEII) on proposed & connected matters mail to send Reliance, including comments to RIL on the proposed letter of acceptance and relevant attachments. Also, asked them whether they wanted to send the e-mail themselves to RIL or for it to be sent directly-These appear to show important role for Vivek and Riccardo in the negotiating process – These suggest that substantive work on the BHEL contract was done in India by amix of GE overseas and GE India team – Kind of activity i.e . manufacture and supply of highly specialised and technically customised equipment , the “ core activity “ of developing the customer (identifying a client) approaching that customer , communicating the available options , discussing technical and financial terms of the agreement , even price negotiations , needed collaborative process in which the potential client along with GE’s India employees and its experts , had to intensely negotiate the intricacies of the technical and commercial parameters of the articles etc .- Considering all the aspects the it is clearly revealed that the GE carried on business in India through its fixed place of business ( i.e. the premises ) through premises . Accordingly the order of the Tribunal is affirmed – The assessee cannot selectively quote on certain parts of the commentary –rather, must read the spirit of the entire commentary- Order of Tribunal is affirmed – DTAA-India- USA [ S.90,art.4, 5(1),5(3) ]