“Section 7(5)”
The decision most relied on for Section 7(5) is MOHD. HANIF QUARESHI AND OTHERS v. STATE OF BIHAR AND OTHERS. 381 7 (6 SCC 312), cited in 138 judgments on BharatTax.
Leading authorities on Section 7(5)
Where proceedings are initiated under Section 147, but the assessment is completed under Section 143(3), it is not a prerequisite that the assessee must have filed a return under Section 139.
If a Dependent Agency Permanent Establishment (DAPE) is remunerated at arm's length based on transfer pricing principles, no further profits can be attributed to the foreign enterprise. The principles of profit attribution under DTAA Article 7 are pari-materia to Section 9(1)(i) of the Income Tax Act.
The law of limitation must be applied with all its rigour, and courts cannot extend the period of limitation on mere equitable considerations or for casual explanations without sufficient cause. Parties must demonstrate diligence and a bona fide reason for the delay.
This case establishes principles for distinguishing operating leases from finance leases and determining if leased equipment constitutes a Permanent Establishment (PE). It also clarifies that reassessment proceedings initiated on borrowed satisfaction without independent application of mind are invalid.
Interest income, such as on income-tax refunds or fixed deposits, derived by a foreign entity with a Permanent Establishment (PE) in India is taxable under DTAA if the debt-claim is effectively connected or attributable to the PE. For DTAA purposes, the terms 'attributable' and 'effectively connected' are considered to have the same meaning.
An assessee can file a revised computation of income during ongoing assessment proceedings, even after the time limit for filing a revised return under section 139(5) has expired. This revised computation can be submitted without filing a revised return.
Reopening assessments beyond four years is permissible when specific information regarding foreign bank accounts is received, provided due process and prior approval are obtained.
Performing the job of grading diamonds in a laboratory and issuing a grading certificate does not constitute the transfer of technical skill, knowledge, or commercial experience to the customer. Such activities do not amount to the provision of technical services under Section 9(1)(vi) or Article 12 of a DTAA.
