“Section 4(7)”
The decision most relied on for Section 4(7) is Set Satellite Pte Ltd. v. CIT (307 ITR 205), cited in 96 judgments on BharatTax.
Leading authorities on Section 4(7)
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.
When bad debts written off were not allowed as a deduction, any subsequent recovery from such bad debts cannot be brought to tax. This principle is upheld even if a deduction for provisions for bad and doubtful debts was allowed under section 36(1)(viia).
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.
Disallowance of expenditure under Section 14A requires a proximate cause establishing the relationship between the expenditure and the exempt income. The expenditure must have a real, dominant, and immediate relationship with income not forming part of the total income.
This case is cited for the proposition that deductions under sections 80IA and 80IAB of the Income Tax Act, 1961, are not available for infrastructure facilities unless they are specifically enumerated in the relevant sub-sections.
The court examines a transaction involving the purchase and sale of UTI units with a short holding period, highlighting the cum-dividend purchase in relation to a booking closing date.
Where the Assessing Officer has not made independent inquiries to disprove the creditworthiness of creditors, whose affidavits and statements disclose their source of income, an addition made under Section 68 is rightly deleted. The revenue cannot rely on surmises, suspicion, or probabilities to decide the fate of the assessee.
Payment of tax under section 172(3)/(4) of the Income-tax Act is treated as advance tax, entitling non-residents to refunds and interest on such refunds in case of regular assessment under section 172(7).
