S. 32(1): Depreciation-Goodwill-Amalgamation of companies-Excess purchase consideration over net assets recorded as goodwill-Fallacy of Assessing Officer in treating goodwill as transferred from amalgamating to amalgamated company-Goodwill generated only as result of amalgamation, not asset transferred-Statutory provisions relied on inapplicable-Goodwill created as result of amalgamation allowable for depreciation-Appellate Tribunal-Scheme of amalgamation-National Company Law Tribunal’s order approving amalgamation attaining finality-Revenue ought to redress grievance before appropriate forum-Having failed to do so, cannot raise ground before Tribunal. [S. 254(1)]

S. 28(i): Business loss-Foreseeable losses-Construction Contracts-Percentage of competition method-loss can be claimed in the manner provided under Accounting Standard 7 ‘Construction Contract’-For quantification of loss, the ITAT directed the AO to quantify the claim and allow it in accordance with the law. [S.37(1), AS 7]

S.14A: Disallowance of expenditure-Exempt income-Book profits-Computation-Assessee’s suo motu disallowance-Further disallowance in computation of book profits under section 115JB unjustified-Addition deleted-Disallowance where entire investment made out of interest-free own funds-No disallowance warranted-CBDT Circular No. 5 of 2014 cannot override express provisions of section 14A-Disallowance not legally tenable-Effect of Explanation inserted by Finance Act, 2022 with effect from 1-4-2022-Amendment prospective, not retrospective-Disallowance for earlier year not tenable-Suo motu disallowance-Assessee’s own interest-free funds in excess of investment-No disallowance warranted-Assessing Officer required to record dissatisfaction with correctness of suo motu disallowance-Non-recording of satisfaction precluding recourse to rule 8D-No further disallowance warranted. [S. 115JB, R. 8D]

S. 14A: Income-Expenditure relating to exempt income-Investment being share of profit in joint venture, current account transaction for loans given-Provision inapplicable-Disallowance rightly deleted. [R. 8D]

S. 10(10B): Compensation-Workmen-Voluntary Retirement Scheme on closure of the company-Entitled to exemption-Gratuity-Salary includes gratuity-Relief to be provided under section 89 in taking net gratuity amount. [S 10(10)(C), 17(iii), 89]

S. 9(1)(vii): Income deemed to accrue or arise in India-Fees for technical services-Non-resident-Fees for included services-Assessee engaged to provide concept drawings and design for statue of Sardar Vallabhbhai Patel-No development of technical design or transfer of technical plan-Drawings project-specific, not usable elsewhere-No technical know-how made available-Consideration not taxable as fees for included services in India-DTAA-India-USA [S.90, Art. 14(4)(b)]

S. 9(1)(vi) : Income deemed to accrue or arise in India-Royalty-Effect of Supreme Court decision in Engineering Analysis Centre of Excellence P. Ltd. v. CIT (2021) 432 ITR 471 (SC)-Software licence fees, global wide area network connectivity, and global technology charges not royalty-Order of Commissioner (Appeals) upheld-DTAA-India-UK.

S. 9(1)(i): Income deemed to accrue or arise in India-Business connection-Permanent Establishment-Dependent Agent Permanent Establishment-Construction Permanent Establishment-Offshore supply-Attribution of profits-Artificial splitting of contracts-Fees for Technical Services-“Make available” clause-Additions were deleted-DTAA-India-UK.[S.44BB,90, Art. 5, 13(4)(c)]

S. 263: Commissioner-Revision of orders prejudicial to revenue–No revision where Assessing Officer rightly made no disallowance under section 14A as interest-free funds exceeded investments-Commissioner cannot invoke section 263 on an issue which is the subject matter of appeal before the Commissioner (Appeals)-Failure to refer specified domestic transaction to Transfer Pricing Officer does not render assessment erroneous where CBDT Instruction is not attracted. [S. 14A, 92BA, 92CA 250, Rule 8D]

S. 263: Commissioner-Revision of orders prejudicial to revenue-Where the AO, after examining the assessee’s eligibility for exemption under section 10(21), adopted a possible view that incidental receipts were eligible for exemption, the Commissioner could not invoke section 263 merely because he held a different opinion on a debatable issue. [S. 10(21)]