“specified agreement”
The decision most relied on for specified agreement is CIT v. Indian Oxyge Ltd. (218 ITR 337), cited in 19 judgments on BharatTax.
Leading authorities on specified agreement
Payments for the use of technical information, processes, or inventions under an agreement that prohibits disclosure after termination and is terminable before its specified period constitute revenue expenditure, not the acquisition of a capital asset.
Taxability of payments under a Double Taxation Avoidance Agreement (DTAA) depends on whether the term 'paid' is used, indicating taxation on a payment basis rather than on an accrual basis. If the DTAA specifies 'paid', tax liability arises only upon actual receipt of the sum.
Section 42 of the Income-tax Act allows deductions specified in an agreement between the assessee and the Central Government. Expenses incurred for business activities may be allowed as business expenditure even if not specifically deductible under Section 42.
Surcharge and education cess are chargeable on income-tax leviable under a Double Taxation Avoidance Agreement (DTAA) in addition to the income-tax, as per the rates specified in the DTAA. This applies even when assessing income under a DTAA.
