Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (7) TMI 723 - AT - Income TaxTP Adjustment in respect of provision of software development services - Comparable selection - HELD THAT:- We direct exclusion of Larsen & Toubro Infotech Ltd. and CG VAK Software Exports Ltd. We also direct inclusion of M/s. R. systems International Ltd. and M/s. Akshay Software Technologies Ltd. Accordingly, we direct the AO/TPO to redetermine the ALP of the transactions. Addition made u/s. 28(iv) - AO noticed from the notes given under Fixed Asset Schedule of the Annual Report that the assessee has received tangible assets free of cost from its holding company (AE), i.e., ARM Limited, UK - AO proposed to assess the above said amount as income of the assessee u/s. 28(iv) of the Act as it was a benefit received in exercise of profession - HELD THAT:- We notice that the Ld. DRP has observed that the assets received free of cost has been capitalized in the books of account. Accordingly, the Ld. DRP has held that the same is liable to be taxed u/s. 28(iv) of the Act. In fact, the assessee has shown the assets received free of cost as note under Fixed Assets Schedule, meaning thereby, they have not been included as assessee's own fixed assets. Hence the above said observation of Ld. DRP is against the facts. Benefit liable to be taxed u/s. 28(iv) of the Act need not always be "revenue" in nature. Suppose a businessman receives a Car on achieving the sales target, the value of Car is liable to be assessed u/s. 28(iv) of the Act, even though it constitutes capital asset in the hands of that businessman. If the right of ownership of the products/assets have been transferred to the assessee, then their value is liable to be assessed as benefit u/s. 28(iv) of the Act. On the other hand, if the right of ownership has been retained by the AE and they have been sent to the assessee for utilizing them in the work executed by the assessee for AE, then the value of assets cannot be assessed as benefit u/s. 28(iv) of the Act. We notice that these factual aspects have not been brought on record either by the assessee or by the AO, without which it would not be possible to determine about applicability of provisions of sec. 28(iv) - this issue requires fresh examination at the end of AO in the light of principles discussed supra. Accordingly, we restore this issue to the file of the AO. We also direct the assessee to furnish relevant details to the AO and also clarify to the satisfaction of the AO as to whether the right of ownership of the assets/products received free of cost has been transferred to it or not. Non-granting of MAT credit - As this issue requires factual verification, we restore this issue to the file of the AO.Appeal of assessee is treated as allowed for statistical purposes.
|