“Section 12(3)(b)”
The decision most relied on for Section 12(3)(b) is CIT v. Gujarat Oil & Allied Industries (201 ITR 325), cited in 195 judgments on BharatTax.
Leading authorities on Section 12(3)(b)
The requirement to file an audit report along with the income tax return, as specified in provisions like Section 80J(6A) or 80-IA(7), is directory and not mandatory. Substantial compliance is achieved if the audit report is submitted at any time before the assessment is framed or completed, and benefits should not be denied merely due to a delay in furnishing it.
Profits of a business are computed under the head 'Profits and Gains of Business or Profession' and then reduced by specific receipts mentioned in Explanation (baa) to Section 80HHC. This means that for the purposes of Section 80HHC, only profits computed under the business head are considered, with subsequent adjustments for specified receipts.
A charitable trust that substantially satisfies the conditions for exemption under Section 11 should not be denied the exemption merely due to a delay in filing the audit report in Form 10B, especially when there are discretionary powers to condone such delays.
The Gujarat High Court held that Form No. 10, for exercising the option under section 11(2) to accumulate income, can be submitted during assessment proceedings, including before the Income Tax Appellate Tribunal, which is a continuation of assessment proceedings. Such submission constitutes sufficient compliance for claiming exemption under section 11.
Advice, such as that provided by a lawyer or a financial consultancy firm on loan modalities, constitutes 'technical service'. This interpretation is relevant in the context of fees for technical services, especially under tax treaties.
Receipts do not constitute 'fees for technical services' under Section 9(1)(vii) of the Income Tax Act and Article 12(4)(b) of a Double Taxation Avoidance Agreement (DTAA), specifically when interpreting the 'make available' clause.
When considering an application for condonation of delay, courts must adopt a liberal, pragmatic, and justice-oriented approach, understanding 'sufficient cause' in its proper spirit to serve the ends of justice and avoid legalizing injustice.
The Supreme Court decision in CBDT v. Oberoi Hotels India (P.) Ltd. is not applicable to cases concerning the denial of approval under Section 80-O of the Act when services were provided to a non-resident, as the facts and context of that decision are different.
