“Section 153(5)”
The decision most relied on for Section 153(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 153(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.
The Arm's Length Price for loans advanced to Associate Enterprises must be determined by the rate of interest prevalent in the country where the loan is received or consumed, taking into account the currency of the loan.
Payments for transponder services do not constitute payment for the use of equipment and therefore do not qualify as royalty income under section 9(1)(vi) of the Income-tax Act for a non-resident. The use of satellite transponder services by broadcasters is not considered the use of equipment.
The case establishes that in the modern virtual world, an entity's virtual presence, rather than just physical presence, is key to determining its operational extent, especially when equipment is placed at customer premises. This principle guides the characterization of payments to non-residents, often as royalty, attracting withholding tax under Section 195, considering statutory explanations for deemed accrual of income.
The 'use or right to use' of an asset, which is a condition for royalty income, is satisfied when possession and control are given to the hirer for their beneficial use, even if the owner retains ultimate ownership.
Payments made for interconnect usage charges to foreign telecom operators are not considered 'royalty' under Section 9(1)(vi) of the Income-tax Act, 1961, nor are they subject to tax withholding under Section 195 of the Act.
A jurisdictional defect cannot be rectified by a corrigendum, and mistakes in assessment orders must be faced by the concerned party.
Consideration paid for the 'use' or 'right to use' equipment is taxable as royalty, even if there is no actual present use, as the right to use in the future triggers the royalty clause.
