CPT V24P7-Art1 (Content).pmd - Taxmann

Landmark Rulings
their two daughters. Subsequently, the parents
were added as additional beneficiaries, when
the original beneficiaries relinquished their rights.
The said trust was dissolved and the assets
were equally distributed among the parents.
The AO made addition of amount received by
parents to their total income. On appeal, CIT(A)
held that the amount received by parents would
be taxable as gift under section 56(2)(v), on
following grounds:
(a) Neither there was specific transfer nor
gift by both the daughters to their parents;
(b) As the sum was received without consideration
and the said trust did not fall
within the ambit of the word “Relative”.
The Tribunal held in favour of assessee - It
was held that undisputedly, the assessee had
received the amount on dissolution of trust in
the capacity of beneficiaries. Therefore, the
amount received by the parents could not be
termed as amount received by the beneficiaries
“without consideration”. Therefore, addition
made by AO was deleted and assessee’s claim
had been allowed.
690
Statement by Tribunal in open Court
doesn’t constitute an order, not rectifiable
under section 254
In Hari Om Soni v. ITO [2012] 23 taxmann.com
349 (Agra - Trib.), the assessee filed miscellaneous
application seeking rectification of the order
passed by the Tribunal. Assessee contended
that there was a mistake in the order of Tribunal
as the Tribunal announced in the open Court
that the issue stood settled in favour of the
assessee.
The Tribunal held in favour of revenue - It was
held that raising and discussing queries during
course of hearing for exploration of correct
facts of case does not constitute an order under
section 254(1). The order of Tribunal is said
to be in accordance with section 254(1) only
when order bears signature of both Members
August 1 to 15, 2012 u TAXMANN’S CORPORATE PROFESSIONALS TODAY u Vol. 24 u 70
}
and is communicated to parties. Therefore,
mere pronouncement during course of hearing
in open Court does not amount to order under
section 254(1) and same is not rectifiable under
section 254(2).
Service provided for support to
representative office in India, not exempted
under India-Poland DTAA
In Dy. CIT v. Mohan Balakrishnan
Pookulanagara [2012] 21 taxmann.com 115
(Ahmedabad - Trib.), the assessee was employed
by a Polish company. As per terms of
employment, assessee was a ‘service provider’
and he was to support establishment of
company’s representative office at Bangalore.
The assessee claimed that salary received from
non-resident company in Poland was exempt
from tax on the basis of Indo-Poland DTAA.
The AO opined that the certificate issued by
the Polish company referred the assessee as
a ‘service provider’, which showed that assessee
was not a part of top level management and,
therefore, the conditions specified in Article
17(2) of the Indo-Poland DTAA were not fulfilled.
Accordingly, the AO rejected the assessee’s
claim. On appeal, the CIT(A) allowed the
assessee’s claim.
The Tribunal held in favour of assessee - It
held that the function to support an establishment
and preparing organization can at best be termed
as a management function but cannot be equated
with ‘Top Level Managerial Position’. Business
dictionary defines top management as ‘The
highest ranking executives (with titles such as
Chairman/Chairperson, CEO, Managing Director,
President, Executive Directors, Executive vice-
Presidents, etc.) responsible for entire enterprise.
Top management translates the policy
(formulated by the Board of Directors) into
goals, objectives and strategies and ‘projects
a shared vision of future’. It makes decisions
that affect everyone in the organization and
is held entirely responsible for the successes
and failures of the enterprise. Viewed in light
}