Author: abhishek

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Renting out of counters to counter holders executing the sale and purchase of goods and provision of cash collection counters, staff facility is business Income

Renting out of counters to counter holders executing the sale and purchase of goods and provided facility of collection counter of sales proceeds manned by its own staff, packaging and delivery facility using its own staff, further counters were furnished by assesse, is  not a case of exploiting the property simpliciter, but a case where the objective of earning profits by conducting of the department store was merely facilitated by the use of the property. Hence assessable as business income and not income from house property.

Asiatic Stores & Soda Fountain[2017] 86 taxmann.com 211 (Mumbai – Trib.) SEPTEMBER  27, 2017

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Mere fact that one donation received by it may be bogus would not establish that activities of trust were not genuine or that activities were not being carried out in accordance with objects of trust, just as one swallow does not make the summer

However, if there were multiple bogus transactions of similar kind, it would lead to conclusion that activities of trust were not genuine and, in such a case, registration granted to it could be cancelled under section 12AA(3)

 

Jagannath Gupta Family Trust[2017] 86 taxmann.com 104 (Calcutta) SEPTEMBER  18, 2017

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Deduction under section 54B is allowable on purchase of agricultural lands not through registered sale deed and another through an agreement to sell

Anil Bishnoi[2017] 86 taxmann.com 217 (Chandigarh – Trib.) SEPTEMBER  27, 2017

If someone has sold a property, consequently the other person has purchased the said property. If the transfer of property is complete as per the definition of transfer u/s 2(47) of the Act, the assessee is made labile to pay tax on the capital gains earned by him, on the same analogy, the transfer is also complete in favour of the purchaser also. The provisions cannot be interpreted in a manner to say that transfer vis-a-vis selling is complete but vis-a-vis purchase is not complete in respect of same transaction. In view of this, the word ‘Purchase’ cannot be interpreted and detached from the definition of word ‘transfer’ as given u/s 2(47) of the Act. When the transfer takes effect as per the provisions of section 2(47) of the Act, if a liability to pay tax arise in the case of the seller, the consequent right to get deduction on the purchase of property accrues in favour of the purchaser, if he otherwise is so eligible to claim it as per the relevant provisions of the Act.

For the claim of deduction u/s 54 of the Act, the registration of sale deed is not necessary. It is enough if the assessee has paid the consideration, acquired the possession with full rights and has fulfilled other requirements of the provisions of the Act:-

1. Sh. Sanjeev Lal etc. v. CIT 269 CTR 001(SC) 2014
2. CIT v. T.N. Aravinda Reddy [1979] 12 CTR 0423 (SC)
3. CIT v. K. Jelani Basha [2002] 256 ITR 0282 (Madras)
4. CIT v. Ram Gopal [2015] 372 ITR 498 (Delhi)
5. Balraj v. CIT [2002] 254 ITR 22 (Delhi)
6. CIT v. R.L. Sood [2000] 245 ITR 727 (Delhi)
7. CIT v. Dr Laxmichand Narpal Nagda, [1995] 211 ITR 804 (Bom.)
8. CIT v Mrs. Shahzada Begum, [1988]73 CTR 0229 (A.P.)
9. S. Dabir Singh, Jalandhar v. Department of Income Tax, ITA No. 27 (Asr.)/2015
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Where assessee-trust’s hospital availed services of some doctors, since there did not exist employer-employee relationship between parties, assessee was justified in deducting tax at source under section 194J while making payments of professional fee to doctors

Dr. Balabhai Nanavati Hospital[2017] 86 taxmann.com 107 (Mumbai – Trib.) SEPTEMBER  8, 2017

Chandigarh ITAT in the case of IVY Health Life Sciences where the facts are almost identical to the case of the appellant, in that case also, the professional doctors were paid on the basis of fees received from the patients. Their remuneration was not fixed and they were also free to render services to the patients as they considered appropriate in terms of time or duration. Such professional doctors were also not entitled to PF, ESI, LTC and any other perquisites or retirement benefits. In these circumstances therefore, it was held by Hon’ble Chandigarh ITAT that there was no employer and employee relationship between the assessee and the professional doctors. Hence the assessee had rightly deducted tax at source under section 194J from the payments made to the professional doctors

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Where assessee hospital had sold old medical equipments, under buyback arrangement, to its vendors against purchase of new machinery, such sale could not be categorized as ‘scrap sale’; therefore, no TDS was to be deducted under section 206C

The word ‘scrap’ itself in ordinary parlance presupposes manufacture, processing or industrial activity.

In running a medical hospital question of generation of scrap is inconceivable. Therefore provisions of s.206C of the Act, ‘Prima Facie’ are not applicable to the assessee.

 

Dr. Balabhai Nanavati Hospital[2017] 86 taxmann.com 107 (Mumbai – Trib.) SEPTEMBER  8, 2017

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TDS for Maintenance Contracts for technical equipments is covered by S.194C and not 194J

Dr. Balabhai Nanavati Hospital[2017] 86 taxmann.com 107 (Mumbai – Trib.) SEPTEMBER  8, 2017

AMC was necessary to keep medical equipments and other hospital equipments in good working condition and this process was normally carried out by skilled mechanics and not any qualified technician. Through these AMCs, the assessee was carrying out routine normal maintenance which was covered by the provisions of section 195C and these were not technical services covered under section 194J.

 

As per Q. No. 29 of CBDT Circular No 7 dated 8-8-1995, Routine, normal maintenance contracts which includes supply o spares will be covered tinder Section 194C. However, where technical services are rendered, the provision of Section 1 94J will apply in regard to the deduction at source.

 

Held in  Ultra Entertainment Solutions Ltd  where in the election was regarding the nature of payments made by the assessee to another person ,  who was engaged by the assessee is to carry out all operations connected with the selling of online lottery tickets on behalf of the assesse, that tax is deductible u/s 194J

 

ITAT, Ahmedabad in the case of Gujarat State Electricity Corporation Ltd. vs. ITO, 3 SOT 468 (Ahd), wherein it was held that the payments made by the assessee company to Gujarat Electricity Board for entire operation and maintenance 6r’Power plant under a comprehensive contract could not be treated as payment “fees for professional services as contemplated in section 194J but were covered by section 194C of the Act”.

 

 

Decision dated 30.09.2011 in ITA Nos. 3059 to 3061 & 3081/Ahd./2009 of Ahmedabad Tribunal in the case of Nuclear Power Corporation Ltd, it has been held that repairs and annual maintenance of computers do not involve services of technical nature so as to be assessable as “fees for technical services” u/s 9(1)(vii) of the Act and hence the assessee was required to deduct TDS under Section 194C of the Act and not under Section 194J of the Act.

 

 

Hon’ble Madras High Court in the case of Skycell Communications Ltd. 251 ITR 53 (where it was held that the installation and operation of sophisticated equipments with a view to earn income by allowing customers to avail of the benefit of the user of such equipment does not result in the provision of technical service to the customer for a fee)

 

Similar decisions by the Bench of Mumbai Tribunal in the case of Dy. CIT v. Asian Heart Institute & Research Centre (P.) Ltd. [2017] 82 taxmann.com 250