Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (3) TMI 1320 - AT - Income TaxPayment made on account of corporate services - ALP determining - Held that:- How assessee has received the financial services which have led to the benefits to the assessee to the tune of ₹ 8.88 crores. Therefore, we set aside the order of Assessing Officer and direct him to re-compute the amount of adjustment by reducing 50% of ₹ 8.88 crores from the total Corporate service charges i.e. ₹ 7,99,31,741/- minus ₹ 4.44 crores (i.e. 50% of ₹ 8.88 crores) i.e. (Rs. 7,99,31,741 – ₹ 4,44,00,000) = ₹ 3,55,31,741/-. The Assessing Officer may also examine the amount of benefit calculated by the assessee and verify the amount if the conclusion is different, the Assessing Officer may decide the issue accordingly. Otherwise adjustment shall be made for ₹ 3,55,31,741/-. Payment of commission to the non resident parties to the file of Assessing Officer for reexamination in terms of direction contained in the order of Tribunal for assessment year 2006-07. Therefore, this aspect is allowed for statistical purposes. Disallowance u/s 14A - Held that:- If there is no exempt income then provisions of section 14A cannot be invoked. Therefore, in our opinion, if there was no income during the year then no disallowance is called for. Since in the case before us investment itself has been written off, therefore, there could not be any income. Accordingly we delete this addition. Disallowance of proportionate interest in terms of provisions of section 36(1)(iii) - Held that:- No particular loan has been taken for the asset which has been shown under the head ‘capital work in progress’ then disallowance could not have been made. However, each loan and its utilization requires fresh examination, therefore, we remand this issue to the file of Assessing Officer with a direction to ascertain details of various loans and how they were fully utilized and then only decide the issue in accordance with law. TDS u/s 194H - non deduction of tds - Held that:- It is not clear from the records whether these amount pertains to bank charges because Schedule 20 simply shows financial charges, therefore, we remit this matter back to the file of Assessing Officer with a direction to verify whether assessee has paid bank charges to different banks, then no disallowance is required to be made otherwise the issue may be decided in accordance with the law. Ex. gratia paid for earlier years u/s 43B read with section 36(1)(ii) - Held that:- Ex.gratia payment made to employees which consists of bonus payment over and above the Bonus Act should be allowed as business expenditure. Therefore, if sum of the ex.gratia payment was payable for that year, the same was required to be allowed on accrual basis as part of the business expenditure. Since this aspect has not been examined by the Assessing Officer, therefore, we set aside his order and remand the matter back to his file for reexamination of the computation of the ex.gratia payment and if some of the ex.gratia payment pertains to the assessment before us i.e. Assessment year 2009-10, then the same should be allowed on accrual basis as business expenditure otherwise the issue may be decided in accordance with law. Taxable income on account of provisions written back - Held that:- No details are available in assessment order. We have also gone through paper book but do not find any detail therein, therefore, in the interest of justice we set aside the order of Assessing Officer and remit the same back to his file to examine whether any claim of expenditure was allowed in the earlier years when this provision was created. If no such expenses was allowed then writing back of the provisions cannot be treated as income, However, if such expenditure was allowed in the earlier years then the same is required to be added in the income. Therefore, he should decide the issue after examining these facts. Penalty on custom duty - Held that:- Firstly the amount is ₹ 0.2 million i.e ₹ 2 lakhs and not ₹ 20 lakhs. Secondly, a contingent liability represents a liability which may arise or not arise on happening of a particular event and it is not the actual liability. Therefore, it cannot be said that assessee has claimed this amount as expenditure. Accordingly the amount mentioned under the head ‘contingent liability’ cannot be disallowed, therefore, we set aside the order of Assessing Officer and delete this addition. Revenue expenditure - payment of royalty - Held that:- We set aside the order the Assessing Officer and hold that expenditure incurred for payment of royalty is allowable and therefore, delete the addition. Disallowance on account of training expenses - Held that:- In any case when separate disallowance has been made for ₹ 14,82,137/- on account of training expenses this would amount to double disallowance. Therefore, in the interest of justice we set aside the order of Assessing Officer and remit the same back to his file for re-examination of the issue and, the same should be decided after considering the contention of double disallowance on account of training expenses as well as after verification of the supporting bills filed before the DRP. Bad debt which are clearly allowable, by writing off such amounts because simply an amount has been shown as discount the same cannot be disallowed. Therefore, we set aside the order of Assessing Officer and delete this addition. TDS u/s 195 - reimbursement of expenses incurred on the training of a particular employee abroad - Held that:- Merely reimbursement of expenses incurred on the training of a particular employee abroad cannot be termed as fee for technical services. Even if, assuming for the argument sake that this would amount to fee for technical services, then it is to be seen that such service was rendered in India, which has not happened. Therefore, in our opinion this amount of reimbursement of expenses does not attract provisions of section 195 and tax was not deductible. Accordingly we set aside the order of Assessing Officer and delete this addition. MAT computation - provision for wealth tax and provision for FBT - Held that:- Wealth Tax is not enumerated in the provision to section 115JB, therefore, the same cannot be added to the book profits. This position was also confirmed by the Hon'ble Bombay High Court in the case of CIT v Echjay Forgings Pvt. Ltd [2001 (2) TMI 56 - BOMBAY HIGH COURT]. In our opinion, the same logic would apply in case of FBT. Therefore, we set aside the order of Assessing Officer and direct him to reduce the provision for wealth tax and provision for FBT from the book profit.
|