“Section 205(1)”
The decision most relied on for Section 205(1) is CIT v. Sophia Finance Ltd. (205 ITR 98), cited in 295 judgments on BharatTax.
Leading authorities on Section 205(1)
To discharge the burden of proof under Section 68 for share capital or share application money, an assessee must establish the identity of the shareholders and the genuineness of the transaction, confirming that the payment was truly made by them.
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.
Payments for strategic counselling and advisory services are not royalty if they do not involve imparting information concerning industrial, commercial, or scientific experience, but rather are for business promotion, marketing, publicity, or financial advisory services.
The essential condition for carrying on business, trade, or commerce is the making of a profit. Business is defined as repeated activity in the nature of trade, commerce, or service with a profit motive, distinguishing it from liberal arts, professions, or agriculture.
Once tax has been deducted at source (TDS), the bar of section 205 applies, preventing the deductee from being asked to pay the tax again, even if the deductor fails to deposit the tax or issue TDS certificates.
The tax department cannot speculate to deny the benefit of tax deducted at source by the employer to the petitioner.
A penalty can be levied on the ground that only a minimum amount was imposed as penalty, and concealment penalty can be levied based on an estimated addition. Explanations to Section 271(1)(c) raise a presumption of deliberate concealment.
If a deductor deducts TDS but does not deposit it into the government account, the assessee is not liable for that TDS.
