“Section 12(7)”

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.

This case establishes principles for distinguishing operating leases from finance leases and determining if leased equipment constitutes a Permanent Establishment (PE). It also clarifies that reassessment proceedings initiated on borrowed satisfaction without independent application of mind are invalid.

Beneficial statutes, especially procedural provisions, can be given retrospective effect if they are enacted for the benefit of the community as a whole, applying the doctrine of fairness, even without an explicit retrospective provision.

For an activity to be considered 'business' under income tax law, it must occupy time, attention, and labour with a normal object of making profit. Profit motive is an important factor, and the activity should involve a continuous course of dealings between two or more persons.

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.

The requirement to furnish an audit report along with the return of income under Section 80IA(7) of the Income Tax Act, 1961, is directory and not mandatory, and will be satisfied if the report is filed during the assessment proceedings.

If a tax treaty does not have a specific clause for fees for technical services (FTS), then such income should be treated as business income. This business income can be taxed in India only if there is a permanent establishment (PE) in India and the income is attributable to the activities of that PE.

Interest on an income-tax refund is taxable as business income under Article 7 of the India-UK Double Taxation Avoidance Treaty (DTAA) if the assessee has a permanent establishment (PE) in India. This is because such interest is effectively connected with the PE.