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II. Direct Taxes Case Laws:
1. DIT Vs. New Skies Satellite BV, I.T.A. No. 474/2012, Date of Pronouncement: 08.02.2016, High Court of Delhi
Whether
the provisions of DTAA can be re-interpreted subsequent to a
retrospective amendment made in the provisions of domestic law?
Held_No
In
brief_ the assessee is engaged in data transmission services providing a
number of critical processes required for satellite television
broadcast and satellite internet service. The assessee received income
by way of leasing of transponders of the satellites, the footprints
(area over which the satellite can transmit its signal) of which
included India. The AO contended that the receipt would be considered as
royalty u/s 9(1)(vi) of the Act and also under Article 12 (4) Indo
Netherlands DTAA.
On appeal before the hon’ble ITAT, the order was reversed in the favour of assessee, in light of the judgment of Asia Satellite Communications Co. Ltd. V. DIT [2011] 332 ITR 340 (Del),
while interpreting Section 9(1)(vi) in the context of such services. On
the other hand, the Revenue contended that the insertion of Explanation
4-6 to Section 9(1)(vi) of the Act would automatically extend to the
provisions of DTAA and the income of assessee is duly taxable.
The
Hon’ble High Court held that no amendment to the Act, whether
retrospective or prospective can be read in a manner so as to extend in
operation to the terms of an international treaty unless the said DTAAs
are amended jointly by both parties. However, the hon’ble Court has not
returned a finding on whether the amendment is in fact retrospective and
applicable to cases preceding the Finance Act of 2012 where there
exists no DTAA.
The appeal of the revenue stands dismissed.
(Please click here for judgment)
2. M/s Prabhat (A House of Hope for Special Children) Vs. CIT,
I.T.A. No. 687/Chd/ 2015, Date of order: 09.02.2016, ITAT - Chandigarh
Whether
the CIT (Exemption) can deny registration u/s 12AA of Income Tax Act,
1961 holding that assessee has not incurred any major expenditure on
account of Charity?
Held_ No
The
assessee filed an application in Form No. 10A before the CIT (Exemption)
for registration u/s 12AA of the Act. The CIT (Exemption) denied the
registration on the ground that the no major expenditure has been
incurred for charitable purposes.
The
Hon’ble ITAT held that the CIT (Exemption) has to only consider whether
the objects of the Trust are charitable in nature and whether the
activities carried on by the assessee are genuine or not. The CIT
(Exemption) cannot go beyond these two parameters while granting
registration u/s 12AA of the Act and the same have been incorporated in
the section itself. It was observed that amount was not expended for
charitable purposes; however, the expenditure incurred out of the
miniscule amount of donation received in its initial years was the
expense necessary to run the society. The aims and objects of the
assessee trust are charitable in nature and no adverse remarks as to the
genuineness of any of these activities have been made by the CIT
(Exemption). Therefore, the CIT (Exemption) is directed to grant
registration u/s 12AA of the Act to the assessee trust.
Thus, the appeal is allowed.
(Please click here for judgment)
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