----- Forwarded Message -----
From: Kapil Goel <advocatekapilgoel@gmail.com>
To: CA.KAPIL GOEL <kapilnkgoelandco@gmail.com>
Sent: Saturday, 29 June 2013 1:26 AM
Subject: [Gzb_CA Group -CA. VINAY MITTAL] Fwd: Hyd bench ITAT updates orders of 28.6.2013: Search based section 153C assessment pre-requisite document belongs to ass fav order (property real estate transaction:loose document case); Charitable trust amending objects/deed without civil court approval SC order in Kamla Town case dist. Ass Fav order; (so far objects remains charitable nature); International Taxation India USA DTAA/Tax treaty: Branch profits commercial profits computation (10%) even in Head offce/parent co. in LOSSES
From: Kapil Goel <advocatekapilgoel@gmail.com>
To: CA.KAPIL GOEL <kapilnkgoelandco@gmail.com>
Sent: Saturday, 29 June 2013 1:26 AM
Subject: [Gzb_CA Group -CA. VINAY MITTAL] Fwd: Hyd bench ITAT updates orders of 28.6.2013: Search based section 153C assessment pre-requisite document belongs to ass fav order (property real estate transaction:loose document case); Charitable trust amending objects/deed without civil court approval SC order in Kamla Town case dist. Ass Fav order; (so far objects remains charitable nature); International Taxation India USA DTAA/Tax treaty: Branch profits commercial profits computation (10%) even in Head offce/parent co. in LOSSES
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "B" : HYDERABAD ITA NO.400/H/2013
Ramoji Foundation vs.Director of Income Tax (Exemption)
Hyderabad
However, the DIT(E) opined that necessary amendment to the trust deed has to be made by approaching the appropriate Civil Court having jurisdiction over the matter. The DIT(E) has held that the amendment is not legally valid since the assessee has not followed the legal procedure by approaching the appropriate Civil Court having jurisdiction as held by the Supreme Court in the case of CIT vs. Kamala Town Trust 217 ITR 699. Hence, he was of the opinion that the original Clause 4(xii) still holds good and therefore, registration cannot be granted under section 12AA and rejected the same
6. We have heard both the parties. We are of the opinion that the
assessee has amended the trust deed and clause 4 (xii) reads as follows : xii) "To do such acts of public charity and of general public utility as may be decided upon by the Trustees from time
to time".
7. The DIT(E) has taken a view that necessary amendment to the trust deed has to be made by approaching the appropriate Civil Court having jurisdiction over the matter relying on the decision of Supreme Court in the case of CIT vs. Kamala Town Trust (1996) 217 ITR 699. The DIT(E) has wrongly understood the observations made by the Supreme Court. In that decision, the Hon'ble Supreme Court observed that in that particular case the A.P. High Court and the City Civil Court, Hyderabad had no jurisdiction under section 34 of the Trust Act and a suit has to be filed before the competent Civil Court for rectification. This is not applicable to amendment for all the trusts and a specific finding has been given by the Supreme Court on the facts of the case before it and is totally inapplicable in the present case of the assessee. Hence, the amendment of the trust deed need not be made by approaching the appropriate Civil Court. The amendment of the trust deed can be made for the purpose of registration under section 12AA of the Act and it would be suffice if the DIT(E) approves the amendment carried out in the Trust Deed. We, therefore, direct the DIT(E) to grant registration for the trust under section 12AA of the Income Tax Act, 1961. 8. In the result, appeal of the assessee is allowed
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH "B", HYDERABAD ITA Nos. 2056 & 2057/Hyd/2011
Assessment Years: 2005-06 & 2007-08
M/s Shouri Constructions, ...Appellant Vs.
Asst. Commissioner of Income-tax, …Respondent
The AO also recorded a statement from the mediator S. Venkateswara Rao alias Venkatesh who also deposed that he acted as a mediator for the sale of property in question and received the sale consideration from D. Nagarjuna Rao towards sale of the property and in turn has paid the sale consideration to the seller Sri T. Jayapal Reddy after retaining his commission.
HELD
When the document in question was not seized from the assessee but from a third party, who admittedly has made the entries therein and furthermore when the seized document neither mentions the name of the assessee or bears his signature, then by no stretch of imagination it can be said to be belonging to the assessee. Thus, the precondition for initiating proceeding u/s 153C is not satisfied. Therefore, the initiation of proceeding u/s 153C against the assessee is without jurisdiction. We, in the preceding paragraphs, have already held that the seized document on the basis of which proceeding u/s 153C was initiated cannot be said to be belonging to the assessee. Therefore, considered in the light of the ratios laid down in the judicial precedents referred to above, the assumption of jurisdiction u/s 153C has to be held as invalid and consequentially the assessment order passed must be declared as without jurisdiction. Accordingly, we set aside the order passed by the CIT(A) and allow the appeal of the assessee.
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD " A " BENCH, HYDERABAD ITA No.1651/Hyd/2011
Assessment Year 2006-07 Wellinx Inc. -vs ADIT (Int. Taxn.)-II,
Hyderabad. Hyderabad
It is the contention of the learned authorised representative for the assessee that as per Article-7(3) of IndoUS DTAA, any income arising out of specific services to the Head Office in USA is not to be considered. Article 7(3) of DTAA reads as….
11. As can be seen from the aforesaid Article extracted
hereinabove, it is in two parts. The first part of the aforesaid
Article relates to the activity carried on by the branch office which
is commercial and business in nature whereas the second part
relates to the activities which are not commercial in nature and
relates to specific services performed by the branch office. The
assessee's contention is that it is rendering services covered by
second part, hence the income arising on account of such specific
services cannot be considered for determining profit. However, a
reading of the said Article makes it very clear that the services
performed by the branch office are on account of outsourcing of
commercial activities by its Head Office, therefore income arising
out of such services rendered would be taxable under Article 7(3)
of DTAA, whereas if some non commercial activities are
specifically assigned by the Head Office to its branch office, then
income arising out of such activity would not be taxable. As is
evident from the permission granted by RBI, the branch office is
involved in the activities of customer care and medical
transcription services. Thus, it is very clear that the branch
office is also rendering services of commercial nature which has
been outsourced by the Head office.
12. After going through the order of of the CIT (A), it is quite
obvious that the assessee is only carrying out the normal
commercial activities of the Head Office i.e., a part of medical
transcription work and software development. The assessee has
also not brought on record to establish the fact that the activities
carried on by it is non commercial and in the nature of specific
services as per the instruction of the Head Office. After going through the
orders of the lower authorities, we do not find any infirmity in the
order of the CIT (A) in determining the profit at 10% which in
our view appears to be reasonable. So far as the assessee's
contention that the head office has suffered loss and hence there
cannot be any profit to the branch office, the same is not
acceptable as profit of the branch office has to be computed as
per the income earned by it.
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