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RAJIV SHAKDHER
Commissioner of Income Tax-ii – Appellant
Versus
Mitsubishi Corporation India P. Ltd. – Respondent
JUDGMENT
[Physical Hearing/Hybrid Hearing (as per request)]
Rajiv Shakdher, J.
Preface
1. This appeal concerns Assessment Year (AY) 2006-07. Via the instant appeal, the appellant/revenue seeks to assail the order dated 23.08.2013 passed by the Income Tax Appellate Tribunal [in short, "Tribunal"].
1.1. The record shows that the instant appeal was admitted on 29.04.2014 when the coordinate bench framed the following questions of law:
"(i) Whether the ITAT fell into error in holding that Section 40(a)(i) of the Income Tax Act, 1961 cannot be applied in view of the provisions of the Double Tax Avoidance Agreement between the Indian (sic) and Japan and India and the US?
(ii) Whether the ITAT fell in error in reversing the findings of the DRP with respect to the existence of the PEs in India?.
2. Since there was a difference of opinion between the judges who comprised the division bench concerning the answers to the questions of law framed on 29.04.2014, the matter was referred to a third judge. In the first instance, the bench which rendered the decision consisted of Hon'ble Mr Justice S. Muralidhar (as he then was) and Hon'ble Ms Justice Prathiba M. Singh.
2.1. A perusal of the decision dated 1
The obligation to deduct tax at source arises only when payments are chargeable to tax in India, as affirmed by the court's interpretation of Section 40(a)(i) and relevant DTAAs.
The obligation to deduct tax at source arises only from payments that are chargeable to tax under the Income Tax Act; non-chargeable payments to non-residents do not require TDS.
Business expenses allowable under section 37 if business nexus proven, despite TDS lapses or informal arrangements; pure reimbursements without profit element escape section 40(a)(ia); section 14A pe....
Mandatory Ind-AS transition permits revenue-neutral one-time deduction for POCM margin reversal; consistent accounting methods upheld if bona fide; interest on construction inventory borrowings fully....
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