Where income is taxable on receipt basis it will be taxed only on actual received and interest under sec 234B and C also have same effect

Last updated: 26 June 2012

Court :
INCOME TAX APPELLAT TRIBUNAL

Brief :
The facts of the case for assessment year 2003-04 are that the assessee filed its return on 28.11.2003 showing total income of ` 2,45,83,770/-. The assessee is tax - resident of the USA and it is earning income of the nature of the royalty from Yum Restaurant India Ltd (“YUM” for short) under a technical license agreement. It claimed that its income is taxable @ 15% under the DTAA. In the course of assessment the AO found that it had claimed exemption u/s 10(6A) of the Act in respect of tax on royalty borne by Yum. This claim was considered by the AO after hearing the assessee. He came to the conclusion that the assessment has to be made either in accordance with the provisions contained in the Act or in the DTAA. The assessee cannot avail of the benefit of section 10(6A) and if the same time claimed that tax should be levied @ 15% under the DTAA. Since the assessee has claimed the exemption, the income has been taxed @ 20% as provided in the Act. Thus the additional tax payable has been worked out at ` 1229188/-. Interest under sections 234B and 234C has also been charged.

Citation :
Pizza Hut International LLC C/o Dinesh Mehta & Co. , CAs, 21, Daya Nand Road,Darya Ganj,New Delhi. (Appellant)Vs. Deputy Director of Income Tax,Circle 2(1), International Taxation, New Delhi.(Respondent)