CPT V24P7-Art1 (Content).pmd - Taxmann

of the above definition, the assessee could not
be considered to be in top level managerial
position. The assessee had been functioning
from India and, therefore, the income was
deemed to accrue and arise in India. In view
of the aforesaid facts, the order of the CIT(A)
was set aside and that of the AO was upheld.
Therefore, the salary received from non-resident
company in Poland was taxed.
Consultancy service isn’t supply of
‘technical or commercial knowledge’; can’t
be termed as ‘royalty’
In KPMG India (P.) Ltd. v. Dy. CIT [2012]
23 taxmann.com 224 (Mumbai - Trib.), the
assessee engaged KPMG Dallas and KPMG
Canada for rendering some consultancy service
and made payment towards professional fees
and reimbursement of expenses. The AO was
of the opinion that these payments were in the
nature of royalties under section 9(1)(vi) and
the relevant article dealing with royalties under
the respective ‘DTAAs’. AO disallowed the
same under section 40(a)(i) for non-deduction
of tax at source under section 195.
The Tribunal held in favour of assessee - It
was held that where payments to non-residents
were purely for professional services or
consultancy services, they could not be categorized
as royalties under article 12. Therefore, no liability
to deduct tax at source arose and, consequently,
section 40(a)(i) was not applicable.
Brought forward business loss to be
set-off with a commercial profit, even if
it is taxable under any other head
In Lavish Apartment (P.) Ltd. v. Asstt. CIT
[2012] 23 taxmann.com 414 (Delhi), the assesseecompany
was carrying on the business of sale
and purchase of properties and also earning
rental and other income. During the year, the
assessee set off the brought forward business
loss against income earned from letting out of
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property, car and computer hire charges and
commission income. The AO contended that
section 72(1) permitted adjustment of brought
forward business loss only against profits
assessed under the head “business”. Hence,
he disallowed the set off, as the rental income
and hire charges/commission were chargeable
to tax under head “income from house property”
and “income from other sources” respectively.
The CIT(A) allowed assessee’s appeal. The ITAT
held in favour of revenue.
The High Court held in favour of assessee -
It held that assessee was entitled to set off the
brought forward business loss from the business
profits taxable under any head of Income. The
High Court gave the following findings:
(a) Section 72(1) merely makes reference to
“the profits and gains of any business or
profession carried on by him” for the
purpose of set off;
(b) The condition that the computation of the
business income should be under the head
“profits and gains of business or profession”
is conspicuously absent;
(c) The income against which the loss is claimed
to be set-off should represent business income
judged by the application of commercial
principles, and not on an application of
the provisions of the Act; and
(d) The rental income, hire charges from car
and computer and the commission income
all represent the profits and gains of business
carried on by the assessee.
Therefore, the brought forward business loss
can be set off against these items of income.
In absence of relevant notification, land
within 8 kms. of municipal limits deemed
to be an ‘agricultural land’
In CIT v. Madhukumar N. (HUF) [2012] 23
taxmann.com 341 (Karnataka), the assessee
sold a piece of agricultural land for certain
consideration. AO held that said land was
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