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Income Tax - Case Laws
Showing 1 to 20 of 645 Records
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2016 (10) TMI 1395 - CHHATTISGARH HIGH COURT
Validity of Revision u/s 263 - unexplained investment in shell companies - allegation of benami transactions in the name of individuals of village Kharora to induct share application money/share capital - HELD THAT:- In Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] made it clear that even incorrect assumption of facts would satisfy the requirement of order being erroneous. In case the orders are passed without applying the principle of natural justice or without application of mind then also the Commissioner can exercise his revisional powers - As expression prejudicial to the interest of the revenue has very vide connotation and was not confined to loss of tax. If the AO adopts one or two courses available under law and it results in loss of revenue then the order cannot be said to be erroneous or prejudicial to the interest of revenue within the meaning of Section 263 but where the view taken by the Income-tax Officer is unsustainable then the order passed by the Assessing Officer is not only erroneous but also prejudicial to the interest of Revenue.
As far as the present cases are concerned, the whole issue is, where did this huge amount of Rs. 39.08 crores came from? The Income Tax Officer issued a detailed notice and a questionnaire but in his order has not decided any of the questions raised by him. His order is totally a nonspeaking order and he has not even decided the issue as to from where money came into the hands of the so-called share holders of these shell companies.
We are of the considered view that the Commissioner of Income Tax was fully justified in issuing notice u/s 263 of the Act and further directing the Assessing Officer to pass a fresh order after considering the entire material. It is not as if the Appellants before us will not have an opportunity to present their case before the Assessing Officer. The Settlement Commission has clearly held that the manner in which these investments were made in these shell companies leaves many questions unanswered. Truth must be found out.
During search and seizure operations conducted in the office of Shri Sunil Kumar Agrawal, Chartered Accountant, 232 bank pass books of different individuals were found. All the pass books pertain to only two banks i.e. Union of India, Main Branch, Raipur and Union of India, Pandri Branch, Raipur. There has to be some explanation why all the villagers of Kharora would open bank accounts in Raipur. A number of these companies are having their registered office in the office of Shri Sunil Kumar Agrawal, Chartered Accountant. Therefore, CIT was justified in coming to the conclusion that there was ample material to point out that there may have been benami transactions in the name of individuals of village Kharora to induct share application money/share capital in the 13 shell companies. Decided against revenue.
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2016 (10) TMI 1394 - ITAT BANGALORE
TP Adjustment - comparable selection - Applicability of turnover filter - TPO has applied turnover slab of Rs.1 crore to Rs.200 crores for excluding some of the companies - HELD THAT:- As it gives ambiguous result as two entities having difference of Rs.1 crore cannot be considered as comparable, whereas on the other hand difference of Rs.199 crores can be considered as comparable company. Therefore, such classification of comparables on the basis of Rs.1 Crore to Rs.200 Crores of turnover is not appropriate and acceptable. The turnover, no doubt, is a relevant factor to be taken into account, but there should be some proper and reasonable parameter to apply the difference of turnover between the assessee and the comparable which may be a reasonable multiple.
This Tribunal in case of ITO Vs. Maxim India Integrated Circuit Design Pvt. Ltd. [2016 (3) TMI 1138 - ITAT BANGALORE] has taken a similar view as under. Accordingly, by applying the turnover filter of 10 times to the turnover of the assessee's on both sides the following 10 companies are directed to be excluded from the set of comparables as not satisfying the turnover filter of 10 times of the turnover of the assessee - i.e., R S Software (India) Ltd., Geometric Software Solutions Co. Ltd.,Tata Elxsi Ltd. (Seg.), Visual Soft Technologies Ltd. (Seg.),Sasken Communication Technologies Ltd. (Seg.), iGate Global Solutions, Flextronics (Seg.),L&T Infotech Ltd., Satyam and Infosys
Bodhtree Consulting Ltd., Exensys Software Solutions Ltd.,Sankhya Infotech Ltd., Four Soft Ltd. and Thirdware Solutions Ltd. be deselcted on functional dissimilarity with the software development services provider like the assessee.
We direct the A.O./TPO to exclude these five companies namely (i) Bodhtree Consulting Ltd., (ii) Exensys Software Solutions Ltd., (iii) Sankhya Infotech Ltd., (iv) Four Soft Ltd. and (v) Thirdware Solutions Ltd. After exclusion of 10 companies on the ground of having turnover more than 10 times than the assessee and 5 companies as functionally not comparable only two companies are left which are as under :
i) Lanco Global Systems Ltd.
ii) Sasken Communication Technologies Ltd. (Seg.)
Accordingly, the TPO/A.O. is directed to recomputed the ALP by considering the benefit as per the proviso to section 92C.
Exclusion of expenses from the export turnover as well as total turnover while computing the deduction u/s 10A - HELD THAT:- The Hon’ble Karnataka High Court in the case of CIT v M/s Tata Elxsi Ltd. & Others [2011 (8) TMI 782 - KARNATAKA HIGH COURT] had held that while computing the exemption u/s 10A, if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded from the total turnover in the denominator.
Comaprable deselected on high turnover and functional dissimilarity - Accel Transmatic Ltd. (Seg.), Avani Cincom Technologies Ltd., Celestial Labs Ltd., E-Zest Solutions Ltd., Ishir Infotech Ltd.,KALS Information Systems Ltd. (Seg.) and Thirdware Solutions Ltd.
Claim of deduction regarding Employees Stock Compensation paid to the parent company - assessee has submitted that the assessee did not claim the deduction for a sum paid in respect of Employee Stock Option which was paid by the assessee to its parent company in lieu of the shares allotted to the employees of the assessee under Employeees Stock Option Scheme - HELD THAT:- There is no dispute that for the year under consideration the assessee did not claim the deduction in respect of the payment made to the parent company on account of Employees Stock Option and compensation. However we find that an identical issue has been considered in assessee's own case for the Assessment Year 2008-09 and it was held that it is an allowable deduction. Therefore, so far as the issue of allowability of the deduction is concerned it has been decided in favour of the assessee by this Tribunal by following the decision of the Special Bench in the case of Biocon Ltd. [2013 (8) TMI 629 - ITAT BANGALORE] However since the relevant to details of the claim has not been examined by the Assessing Officer
Apportionment of the expenditure between 10A and non-10A units is also required to be examined and verified. Therefore the claim of the assessee has to be apportioned between units eligible under Section 10A and the units which is not eligible for the deduction under Section 10A and then it has to be allowed against the respective income of the separate units. In view of the above facts and circumstances of the case, we set aside this issue to the record of the Assessing Officer for a limited purpose of verification and examination of the relevant record regarding apportionment of the amount between the 10A unit and non-10A unit.
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2016 (10) TMI 1393 - ITAT AHMEDABAD
Reopening of assessment - notice issued beyond four years - addition of the provision of FBT and the expenditure incurred on Social Forestry for earning exempt income - HELD THAT:- We find that the provision of FBT was mentioned in the Profit and Loss account which was before the AO at the time of original assessment proceedings. Therefore, it cannot be said that there was a failure on the part of the assessee to disclose truly and fully all the material facts before the AO.
So far as the expenditure Social Forestry for earning exempt income is concerned, we find that this amount was added by the A.O. in the computation of income as per the normal provisions of the Act. Therefore, it cannot be said full facts related to this issue were not disclosed before the A.O. at the time of original assessment.
We find that there was no failure on the part of the assessee to disclose truly and fully all the material facts before the Assessing Officer at the time of original assessment proceedings. In the light of the proviso to Section 147 of the Act, we do not find any error or infirmity in the findings of the ld. CIT(A). Appeal filed by the Revenue is accordingly dismissed.
Adjustment of MAT credit entitlement while computing book profit u/s. 115JB - AO noticed that the assessee has credited an amount as MAT credit entitlement which was not reduced from the net profit for computing book profit and there is no provision for any adjustment in respect of MAT credit entitlement credited to the Profit and Loss account - HELD THAT:- Provision for current tax is shown at Rs. 7,41,01,907/- and MAT credit entitlement has been separately shown at Rs. 6,13,84,689/- It can be further seen that the provision for current tax is shown at gross amount. The net amount comes to Rs. 1,27,17,218/-, if the MAT credit entitlement is reduced from provision for current tax. If the assessee had shown the net amount of Rs. 1,27,17,218/- and added back the same for the computation of book profit, the revenue would have accepted this computation. But for the accounting principles and set guidelines both the amounts were shown separately. Considering these facts in totality, we do not find any logic in making the addition for computing the book profit; the same has to be deleted. Ground accordingly dismissed.
Exchange Fluctuation on repayment of Foreign Currency Term Loan - revenue or capital expenditure - HELD THAT:- Foreign Exchange Fluctuation loss on account of working capital is at Rs. 183.67 lacs. Since, this loss is attributable to the working capital requirement, therefore, it has been considered as a revenue loss. This needs to be verified by the A.O. In the interest of justice and fair play, we restore this issue to the files of the A.O. A.O. is directed to examine the aforementioned chart by calling for necessary details from the assessee. The assessee is directed to provide necessary details for examination. Needless to mention, the A.O. shall give a reasonable opportunity of being heard to the assessee before deciding this issue afresh. In the result, Ground treated as allowed for statistical purpose.
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2016 (10) TMI 1392 - ITAT CHANDIGARH
Condonation of delay - Appeal filled as time barred by 26 days - CIT(Appeals) instead of considering the submissions of the assessee found that appeal of the assessee is late by 26 days and since no application for condonation of delay has been filed therefore, appeal of the assessee has been dismissed - HELD THAT:- Matter requires re-consideration at the level of the ld. CIT(Appeals). CIT(Appeals) noted the facts of the case and written submission of the assessee in the impugned order but did not pass any order on merit. He has held that appeal is time barred by 26 days and in absence of application for condonation of delay, appeal was dismissed.
There is no fact mentioned in the impugned order if any opportunity was given to the assessee to file application for condonation of delay in this regard. Further, there appears justification in the contention of ld. counsel for the assessee that appeal before ld. CIT(Appeals) was not time barred by 26 days.
CIT(Appeals), before considering the appeal to be time barred should have given sufficient opportunity to the assessee to explain the time barring matter and should have given oppor tunity to the assessee to file application for condonation of delay in this regard. The order of the ld. CIT(Appeals) therefore, vitiate due to these reasons.
Set aside the orders of the ld. CIT(Appeals) and restore the matter in issue to the file of ld. CIT(Appeals) with direction to re-decide appeal of the assessee by giving opportunity to the assessee to file application for condonation of delay.
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2016 (10) TMI 1390 - ITAT MUMBAI
Assessment u/s 153A - approval u/s.153D without application of mind - HELD THAT:- Approval has been given u/s.153D of the Act without application of mind.
Assessment u/s.153A of the Act is wrong against law and facts and is not liable to be sustained in the eyes of law, therefore the assessment order u/s 153A is hereby ordered to be set aside
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2016 (10) TMI 1389 - ITAT PUNE
Nature of expenditure - Payment of royalty - Revenue or capital expenditure - HELD THAT:- Whether the payment of royalty by assessee to Carraro SpA, Italy is revenue or capital in nature, has been laid to rest by the Tribunal while deciding the appeal of the Department [2013 (2) TMI 877 - ITAT PUNE] for assessment years 2003-04 and 2004-05 decided the issue in favour of the assessee by holding royalty payment as revenue expenditure. Royalty paid in respect of goods sold in domestic market and the amount of royalty pertains to and is necessarily an expense incurred to earn sales revenue during the year, hence same is revenue expenditure.
Amortization of loose tools - principle of consistency - uniformity in treatment and consistency when the facts and circumstances in different years are identical - HELD THAT:- We would like to observe that loose tools refer to patterns/dies further required to manufacture components according to design and technology specifications of the assessee. These components are used in the products manufactured by the assessee. Undisputedly, the dies and designs are provided by the assessee to the suppliers of the components. Merely for the reason that the loose tools are in possession of the suppliers of the components, it does not mean that the loose tools ceases to be the assets of the assessee. The assessee has provided the loose tools to the suppliers of the components for its own convenience. It is not the case of the revenue that the assessee has charged for the dies/patterns (loose tools) from the suppliers.
Hon'ble Supreme Court of India in the case of Radhasoami Satsang [1991 (11) TMI 2 - SUPREME COURT] and Gopal Purohit [2010 (1) TMI 7 - BOMBAY HIGH COURT] has emphasized on the principle of consistency. There should be uniformity in treatment and consistency when the facts and circumstances in different years are identical, particularly in the case of same assessee.
Revenue appeal dismissed.
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2016 (10) TMI 1387 - ITAT INDORE
Disallowance of commission expenses - Whether allowable business expenditure? - HELD THAT:- All the agents have confirmed that they have rendered the services and also received the commission. All the commission agents are being assessed to income tax and they have deposited tax liability after claiming normal business expenditure for earning such business income. Such income has been disclosed by the agent and identity of the commission agent is proved.
We find that the agents have rendered the services, motivated the agriculturists, compilation of their requirements, submission of return relating to land records, prepare the file from Jan Panchayat office, arranging delivery of goods by Marketing Federation sites, supply of pipe, installation of pipes to the agriculturists and maintenance of pipes for the prescribed period. Therefore, the assessee has made these services.
The Market Federation did not require any middleman for giving order to the company but when the notice was issued to Market Federation, they have explained why the services of middleman is required. Therefore, this has been explained by the Marketing Federation itself. Therefore, CIT(A) has allowed the claim. Moreover, the assessee has also claimed that it has earned more revenue after deputing the middleman commission agent. Therefore, it may be allowed. Therefore, we are of the view that the learned CIT(A) is justified in his action and our interference is not required at all. Decided against revenue.
Disallowance u/s 14A r.w.r. 8D - HELD THAT:- As decided in Kamal Kumar Jagdish Prasad [2016 (6) TMI 1474 - ITAT INDORE] no stretch of imagination can Section 14A or Rule 8D be interpreted so as to mean that the entire tax exempt income is to be disallowed. The window for disallowance is indicated in Section 14A, and is only to the extent of disallowing expenditure “incurred by the assessee in relation to the tax exempt income”. This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. The question of law is answered in favour of the assessee.
Thus we set aside the orders of the authorities below with the direction to the Assessing Officer to consider the above High Court judgments cited above and decide the issue in view thereof, after affording a reasonable opportunity of being heard to the assessee. Appeal of the assessee is allowed for statistical purposes.
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2016 (10) TMI 1386 - ITAT DELHI
TP Adjustment - Normal Gross Profit Mark-Up over Cost computation - inclusion of abnormal loss in the cost of consumption of Raw Material for the purposes of calculation - whether abnormal loss is purely during the course of normal manufacturing operations and does not constitute/is not attributable to any international transaction between assessee co. and its AE - HELD THAT:- As apparent that the assessee has incurred certain costs which are extraordinary in nature. However, the claim of the assessee is half-hearted as assessee has not furnished the details of the cancellation of order and what are the materials, which were procured by the assessee against which order of the buyer who got bankrupt. Further, there are no details available that what the realisable value of those materials is and how the valuation loss were determined.
Agreeing with the contention of the assessee that extraordinary cost/ abnormal cost cannot be included in the cost for working PLI of the assessee, but assessee has prove first about the actual loss incurred leading concrete evidences. We set aside this issue to the file TPO/AO to examine with respect to quantity, price and quality or specification of the material revalued with respect to the material which was purchased or designed by the assessee specifically for that buyer who cancelled the orders and gone bankrupt. The appellant is also directed to furnish all this information to justify its claim and also to show the nature and extent of extraordinary loss incurred by the assessee with evidences.
Directions given by the Ld. Dispute resolution panel with respect to the selection of certain companies which were incurring persistent losses - grievance of the assessee was only with respect to the only one comparable that is Scott industries Ltd. - TPO has refused to give effect to the direction of the LD. DRP on the ground that the annual report of the company is not available in public domain. It was submitted by the Ld. authorized representative that assessee has submitted the copy of the profit and loss account of the party for 3 years from prowess database, which has not been considered by the Transfer pricing officer. DR also submitted that same may be considered if the proper information is provided by the appellant to the Ld. assessing officer. We set aside ground of the appeal of the appellant to the file of TPO to consider the letter submitted for exclusion of the above comparable, as directed by the Ld. DRP, if he is satisfied about the correctness of the information, which should be reliable and authentic.
Applicability of the transfer pricing adjustment only to transactions with related parties - No hesitation in holding that the transfer pricing adjustment should be restricted to the international transactions only and it cannot be applied to uncontrolled transactions. Recently in CIT V Hindustan Unilever Limited [2016 (7) TMI 1245 - BOMBAY HIGH COURT] has held that While determining ALP of international transactions, benchmarking has to be done only on AE transactions and not for entire turnover. Therefore respectfully following that decision we direct ld TPO/AO to restrict the adjustment on account of ALP to the extent of the transaction with AE only.
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2016 (10) TMI 1381 - ITAT NEW DELHI
Exemption u/s 11 - Registration u/s 12AA - Doctrine of Mutuality - Addition to the income of the assessee, the interest received from Bank, interest received on IT refund and interest received from Cable Operator simply because the interest income was received from 3rd parties - HELD THAT:- We find that assessee has been granted exemption u/s. 11 by virtue of registration u/s. 12AA granted by the CIT, Ghaziabad w.e.f. 24.4.2007 and principle of Doctrine of Mutuality has been accepted by the ITAT in assessee’s own case relying on ALL INDIA ORIENTAL BANK OF COMMERCE WELFARE SOCIETY [2003 (1) TMI 704 - DELHI HIGH COURT] as directed to grant the assessee the exemption in respect of the interest on the bank by applying the principle and doctrine of mutuality.Therefore find considerable cogency in the contention of the Assessee’s AR that the issue involved in ground nos. 1 and 2 are squarely covered by the ITAT decision as aforesaid.
Allowance of expenses which were in. the nature of recurring, office and administrative expenses incurred in the course of earning income - Both the revenue authorities have not discussed this issue in their respective orders, therefore, the ground is remitted back to the file of the AO for fresh consideration, as per law, after giving adequate opportunity of being heard to the assessee.
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2016 (10) TMI 1379 - ITAT MUMBAI
Product Registration Expenses - Nature of expenses - revenue or capital expenditure - whether CIT(A) erred in not treating product registration charges as capital expenditure? - HELD THAT:-Assessee filed the copies of registration certificate issued by the Health and Drug administration of various countries such as Zambia, Ghana, Georgia, Vietnam, Nigeria, Ukrain, etc. with the registration number and the details of products and expiry period of the license.
The fees were paid towards vendor registration, quality control checks, testing and verification of such products for human consumption, impact over environment over disposal, etc. After passing the said tests, the concerned Government allows sale of such products in the Country.
On the said facts and circumstances the CIT(A) has relied upon the case decided in the case of Panacea Biotech Ltd. [2012 (2) TMI 15 - DELHI HIGH COURT] and case of Cadilla Healthcare Ltd. [2013 (3) TMI 539 - GUJARAT HIGH COURT] No distinguishable facts and law has been placed on record by the revenue at the time of arguments.
Additional evidence which relevant to the facts of the case, can be taken into consideration during appellate proceeding in accidence with law. The CIT(A) has passed the orders judiciously and correctly which does not require to be interfere with at this appellate stage. Decided against revenue.
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2016 (10) TMI 1378 - ITAT BANGALORE
Validity of the assessment order passed u/s 153C - necessity of recording satisfaction - Whether satisfaction was recorded by the A.O. in the case of searched person that the incriminating material found during the course of search belongs to the assessee? - HELD THAT:- As decided in assessee husband case SHRI GALI JANARDHANA REDDY [2016 (11) TMI 530 - ITAT BANGALORE] no satisfaction was recorded by the AO in his capacity as AO of the searched person because it is seen that the so-called satisfaction note prepared by the AO is in his capacity as AO of assessee, although he happens to be the AO of the searched persons also, it could not be shown by the revenue that any satisfaction note was prepared by him as AO of searched persons and therefore, under these facts, this is to be accepted that no satisfaction was recorded by the AO of searched person.
As case of M/s. Gopi Apartment [2014 (5) TMI 158 - ALLAHABAD HIGH COURT] and case of Calcutta Knitwears [2014 (4) TMI 33 - SUPREME COURT] and Manish Maheshwari [2007 (2) TMI 148 - SUPREME COURT] are applicable and therefore, respectfully following these judgments, we hold that in the present case, notice issued by the AO u/s. 153C of the I.T. Act deserves to be quashed - Decided in favour of assessee.
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2016 (10) TMI 1374 - ITAT BANGALORE
TP Adjustment - interest on loans from its AEs - HELD THAT:- Sasken India earns mostly in foreign currency with 80% of its sales and some of the domestic sales being in foreign currency. As per the newly introduced Safe Harbour rules by the CBDT, the prescribed ALP rate is the base rate of SBI if the loan to Indian subsidiaries outside India is in Indian currency. All these facts are acknowledged by the TPO in his order.
As pleaded that the impugned loan to its AEs were out of its own funds , not out of borrowed funds, the loans are given in US dollars, interest was received in Indian rupees and when such transactions between it and its AEs are in international transactions the ratio of the above cases ie the transaction would have to be looked upon by applying commercial principles in regard to international transaction and in such cases the domestic prime lending rate would not have applicability and the international rate fixed being LIBOR would come into play.
On the facts and circumstances of the case, we are of the considered opinion that the issue requires to be examined by the TPO afresh in the light of the above materials and the ratios and accordingly remit the issue to the TPO.
Disallowance u/s 14A - AR pleaded that the disallowance made u/s 14A read with rule 8D(2)(iii) has been made without demonstrating the incorrectness of the claim of the assessee that it has not incurred any expenditure towards earning exempt income. The said disallowance is therefore bad in law - HELD THAT:- We are of the considered opinion that the issue requires to be examined by the AO afresh in the light of the above amendments and accordingly remit the issue to the AO.
Addition under the caption ‘Excess deduction' u/s.10A /10AA - HELD THAT:- On the facts and circumstances of the case, it is clear that neither the AO has examined these issues properly nor they received due attention at the hands of the DRP. We are of the considered view that the above issues are required to be adjudicated by the AO afresh in the light of the above ratio and if the facts are similar to apply the above ratios accordingly and hence these issues are also remitted to the AO.
Short credit of TDS - assessee submitted that since the AO has not allowed TDS credit -TDS credit should be fully allowed as claimed in the return of income - HELD THAT:- We find that the DRP has directed the AO to verify the credit from the record, vis-à-vis, the claim made by the assessee and give credit to it accordingly. We direct the AO to give credit to the amount claimed by the assessee.
Deduction u/s.10A - HELD THAT:- DRP had followed the judgment of Hon’ble jurisdictional High Court in the case of Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] in directing exclusion of items deducted from export turnover from total turnover also for working out the deduction u/s.10A - Just for the reason that appeal has been filed by the Revenue against the judgment of jurisdictional High Court would not be a reason not to follow the jurisdictional High Court’s judgment. We do not find any lacunae in the order of the DRP - In the result, appeal of the Revenue stands dismissed.
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2016 (10) TMI 1373 - ITAT JAIPUR
Addition u/s 40A(3) - return of income was filed by the assessee on presumptive basis u/s 44AF - HELD THAT:- We find merit in the submission of assessee that similar issue was decided by this Bench in favour of assessee as respectfully following the decision of ITAT Ahemdabad Bench in the case of Gopalsingh R Rajpurohit [2004 (7) TMI 271 - ITAT AHMEDABAD] hold that once the assessee has filed his return u/s 44AF, no further disallowance can be made u/s 40A(3) of the Act. It is noteworthy that in this case no trading irregularity was found and addition has been sustained only on technical issue of Section 40A(3) of the Act. The presumptive system of tax u/s 44AF starts with non-obstante clause and overrides other provisions. There is no justification in making the addition which is deleted. Since the addition is deleted on merits, there is no need to go into alternative ground. Thus the appeal of the assessee is allowed.
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2016 (10) TMI 1372 - ITAT MUMBAI
Income deemed to accrue or arise in India - ‘royalty’ received from the Indian entity - existence of PE in India - Income taxable in India either under the Income Tax Act or under India-USA DTAA - AO did not accept the claim of the assessee and assessed the royalty @ 15% under India-USA DTAA - HELD THAT:- The very issue of existence of PE in India has been considered by the Hon’ble ITAT. The income of the assessee company does not qualify for the definition of Royalty in term of income tax Act 1961. The AO himself has accepted in the assessment order that the income of the assessee cannot be taxed as Royalty. Once the income of the assessee company does not qualify under the definition of Royalty, the income has to be held as business income. The business income cannot be taxed in the absence of PE in India. We have seen that the Hon’ble ITAT has categorically held that the WBPIPL is not the PE of the assessee company.
Thus, respectfully following the decision of the Hon’ble ITAT in the assessee’s own case [2011 (12) TMI 195 - ITAT MUMBAI] we are of the view that the income of the assessee is not taxable in India and we direct the AO to delete the addition proposed on this account - Decided in favour of assessee.
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2016 (10) TMI 1370 - ITAT CHANDIGARH
Exemption u/s 10(23C) (iiiab) - CIT(A) rejecting the claim of the assessee - HELD THAT:- The assessee filed a letter written by the Principal Secretary, Government of Punjab, Deptt. of Technical Education & Industrial Training, Chandigarh, to The Chief Commissioner of Income Tax, Aayakar Bhawan, Chandigarh Memo No. 01/02/2014-4TE2/821193/1 dated 17.8.2016, wherein it is claimed among other things that the revenue generated by the Institute belongs to the Consolidated Fund of the Government and the same has been permitted to be retained by the Institution for achieving the objectives of the society as yearly grant. This letter was not before the lower authorities, when the issue of grant of exemption u/s 10(23C)(iiiab) has been adjudicated.
CIT(A) has to consider this letter, as the contents therein go to the root of the matter and take a fresh view on the matter. The claim made in this letter require verification. Thus, we set aside all these appeals to the file of the CIT(A) for de novo adjudication in accordance with law. Appeal allowed for statistical purposes.
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2016 (10) TMI 1369 - ITAT RAJKOT
Disallowance of deduction u/s. 80IA(4) - deduction from the profits of developing the infrastructure facility - AO noticed that assessee has claimed deduction under the provision of section 80-IA(4) against its work contract income which the Assessing Officer said is not in accordance with law - HELD THAT:- Assessee entered into a contract with the government and the nature of work carried out shows that the assessee carried the work directly and it has employed various resources as stated above. Assessee has made huge investments in all kinds of resources for its business, namely plant and machineries, structures at sites, working capital, human resources, technical expertise etc.
Assessee possesses its own technical knowledge of how to develop and lay roads, dams, bridges etc.. The assessee has purchased and employed its own materials for development and construction of the infrastructure facility. The entire planning of its business as also the work has been done by the assessee and not by the Government.
Assessee can be said to be a developer and cannot be denied deduction from the profits of developing the infrastructure facility though it may not operate or maintain the same, particularly in view of the in insertion of the word or in sec.80-IA(4) of the act. In view of the facts and circumstances as stated above and legal legal findings as referred in the above judicial pronouncements, we considered that the assessee is entitled to a deduction under section 80IA(4) of the act, therefore, we uphold of the order of the learned CIT (A) - Appeal of the revenue is dismissed.
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2016 (10) TMI 1368 - ITAT BANGALORE
Validity of orders passed u/s 201(1) and 201(1A) - validity of Assessment u/s 153(2A) order passed by the A.O. as barred by limitation - HELD THAT:- CIT (A) has held that the provisions of section 153 (2A) does not apply to orders passed u/s 201 (1) and 201 (1A). It is noted by him in Para 3.2 of his order that as per the A.O. Section 153 (2A) of the Act applies to only orders enumerated therein and does not cover orders passed u/s 201 (1) and 201 (1A).
CIT (A) has reproduced the provisions of section 153 (2A) and since section 201 is not refereed therein, he confirmed the assessment order on this aspect. Now we examine the applicability of the judgment rendered in the case of CIT vs. Jodhan Real Estate Development Corporation Pvt. Ltd. [2004 (7) TMI 43 - RAJASTHAN HIGH COURT] - We find that in that case, fresh order passed u/s 104 was also in dispute as time barred and the tribunal held in that case that it is time barred and this tribunal order was upheld by Hon’ble Rajasthan High Court.
We are of the considered opinion that if section 153 (2A) is applicable to order passed u/s 104 then there is no reason or basis to hold that it is not applicable to order passed u/s 201 and 201 (1A). Accordingly, we hold that all these orders passed by the A.O. u/s 201 and 201 (1A) are time barred. Hence these are quashed.
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2016 (10) TMI 1367 - ITAT PUNE
Deduction u/s.80IA - operating of Container Freight Station (CFS) - scope of term infrastructure facilities - HELD THAT:- As decided in own case [2012 (5) TMI 260 - DELHI HIGH COURT] held that an ICD is not a port but It Is an inland port. The case of CFS is similarly situated In the sense that both carry out similar functions. i.e.. warehousing, customs clearance and transport of goods from. Its location to the seaports and vice versa by railway or by trucks in containers. Thus, the issue is no longer res integra. Respectfully following this decision, it Is held that a CFS is an Inland port whose Income is entitled to deduction u/s 80-IA(4).
Since the Ld.CIT(A) while deciding the issue in favour of the assessee has followed the decision of the Tribunal in assessee’s own case as well as various other decisions, therefore, in absence of any contrary material brought to our notice against the decision of the Tribunal in assessee’s own case, we do not find any infirmity in the order of the CIT(A) allowing the claim of deduction u/s.80IA(4). Merely because the Revenue has filed an appeal before the Hon’ble High Court, the same in our opinion cannot be a ground to take a contrary view than the view taken by the Tribunal especially in absence of any order reversing the decision of the Tribunal. Accordingly, we uphold the order of the CIT(A) and the grounds raised by the Revenue are dismissed.
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2016 (10) TMI 1365 - ITAT KOLKATA
Revision u/s 263 - treatment to income - compensation received under compromise - As per CIT AO wrongly assumed the facts as transfer of capital asset which is incorrect inasmuch as the assessee never had any trade mark right in Southeast Asia and transfer of capital asset does not arise - According to the CIT, the agreement that was entered into between the assessee and M/s. Group Danone is in the nature of non-compete agreement, not to launch the biscuit products under the trade mark ‘TIGER’ in Singapore and Malaysia and the amount that was received by the assessee was towards loss of profits on account of the assessee company’s inability to launch its products in Singapore and Malaysia and only because the assessee withdrew its right to expand business in Singapore and Malaysia, and consequently incurred loss of future profit, which they could have otherwise arranged, the compensation was paid - HELD THAT:- It could be seen from the submissions of the assessee before the AO, the assessee placed reliance on so many decisions in respect of their contentions to object the treatment of the amount either as business income or as capital gain. Having considered all these facts and also the law laid down in such decisions, the AO consciously reached a conclusion that the income is to be treated as capital gain but not as either capital receipt or business income. This is one of the probable views that could have validly be taken. By no stretch of imagination could it be said that the AO mechanically passed this order taking the view that the income has to be charged as capital gain. The AO made enquiries, called for details of such income and having considered the submissions of the assessee in respect of all the three probable views i.e. capital receipt, business income and capital gain, the AO for the reasons recorded in his order at page nos. 7 to 10, came to the conclusion that the income in dispute has to be charged as capital gain but not as capital receipt or business income. In this factual context, we are called upon to examine the question whether the CIT is justified in terming the order of AO as erroneous and without proper enquiry or on wrong assumption of the facts.
In JMC Projects (India) Ltd. [2015 (12) TMI 1510 - GUJARAT HIGH COURT] held that the power u/s. 263 of the Act cannot be exercised when though addition has been made on the footing or the premise which are not to the satisfaction of the Commissioner to make additions on better premise with better reasoning or on different application of legal principles.
We are of the firm conclusion that the Assessment Order is not the result of non application of mind or wrong assumption of facts or without any proper enquiry. And it, therefore, follows that assumption of jurisdiction u/s. 263 of the Act by the Ld. CIT is unwarranted and the order cannot be sustained. We, therefore, quash the same. Appeal of assessee is allowed.
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2016 (10) TMI 1364 - BOMBAY HIGH COURT
Reopening of assessment u/s 147 - Whether reasons as recorded do not indicate any reason to believe that income chargeable to tax has escaped assessment? - HELD THAT:- The reasons, as recorded merely indicate that there was client code modification which lead to a non genuine loss. The reasons do not indicate, how the aforesaid facts led to the AO having reason to believe that income chargeable to tax has escaped assessment. Therefore, prima facie there is absence of link between information obtained and escapement of income chargeable to tax. Thus, the reasons, as recorded, do not prima facie indicate the reasons to believe that income chargeable to tax has escaped assessment.
The contention on behalf of the Revenue that this would be done at the time of assessment, does not satisfy the jurisdictional requirement of AO having reason to believe that the income chargeable to tax has escaped assessment at the time of issuing the impugned notice.
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