Jurispruden tiol – Tomorrow's cases

By Vijay Kumar

Income Tax

Legal Corner Icon — the image was hosted by the publisher and was not captured.ICICI Bank's remittance towards rating fees to Moody's Investors Service is not assessable to tax in India and not liable to TDS u/s 195 : ITAT

Whether the remittance of US $45,000 towards rating fees to Moody's Investors Service is an income in the hands of the recipient and is assessable to tax in India and whether the assessee is liable to deduct tax under section 195 of the Act on such remittance?

Commercial information with regard to ratings as per international practice was supplied to the assessee. For bringing the remittance or fees within the definition of ‘fee for included services', it should be against the availability of technical knowledge, expertise, skill, know-how or process or consist of the development and transfer of a technical plan or technical design. Unless and until the non-resident made these items available to the assessee, fees paid inter alia on that would not fall within the definition of fees for included services.

Likewise consultancy service is in the context of advisory service. Categories of technical and consultancy services are to some extent overlapping because consultancy service can also be technical service. However, the category of consultancy service also includes advisory service, whether or not expertise in technology is required to perform it.

Remittances made in the instant case are not in the nature of ‘fees for included services' as such are not taxable in India . The assessee cannot be held to be responsible/liable for deduction of tax under section 195 of the Act.

Central Excise

Otis ordered to pay pre-deposit of Rs 50 lakhs in Central Excise valuation case by Tribunal

THE appellants are engaged in the business of manufacture of parts and components of elevators/lifts, erection/installation of lifts and also maintaining/servicing of already erected lifts/elevators. They were clearing parts and components of lifts on payment of duty for erection at the site. The duty on these parts and components of lifts was being paid on the basis of cost of production, margin of profit as per the applicants say. Price list declarations from time to time supported by the Chartered Accountant certificate were being filed.

The departmental internal audit was of prima facie opinion that head office expenses ought to be proportionately included in the assessable value to determine the cost of production of the parts.

Consequently, the jurisdictional machinery churned out several show cause notices alleging the above audit contention. Simultaneously, the department also initiated proceedings against the appellants for the alleged non-inclusion of research and development expenses in the assessable value of parts/components manufactured by them .

Central Excise - Rail Assembly front Seat and Adjuster Assembly slider seat – parts of motor vehicles, not seats: SC

Classification : rail assembly for seats:

It is clear that Chapter Heading 8708.00 covers parts and accessories of motor vehicles and this chapter heading is wide enough in its scope so as to cover all accessories of motor vehicles whereas Chapter heading 9401.00 covers all type of seats and parts thereof. Chapter 9401 covers all types of seats and not only the seats of a car and a seat is complete even without the rail assembly front seat, adjuster/assembly slider seat and rear back lock assembly. They are not essential parts of the seat. Chapter heading 9401 covers only the parts of seats and not accessories to the seats. A 'part' is an essential component of the whole without which the whole cannot function. Chapter heading 8708 covers both the 'parts' as well as 'accessories'. The items manufactured by the assessee are only adjuncts. These are to be affixed on the floor of motor vehicles. When seats are affixed on these rails, seats can slide back and forth with the operation of a lever forming part of other rail assembly front seat adjuster. This enables the driver or the passenger, to adjust the position of the seat to suit his comfort and convenience.