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Income Tax - Case Laws
Showing 1 to 20 of 735 Records
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2019 (9) TMI 1727 - ITAT DELHI
Income from house property - Determination of annual value or determined vacancy allowance - Deemed/assumed rental income - as argued property in question remained vacant throughout the year under appeal because no tenant could be found - CIT (A) held that the benefit of the vacancy allowance u/s 23(1)(c) of the Act is not available to the assessee as a property was not let out anytime, at least once - HELD THAT:- Having regard to the clear provisions of the Act, and harmonious reading of Section 23(1)(a) and 23(1)(c) of the Act, were hereby hold that the rent received by the assessee has to be treated as the annual value of the house and liable to tax under income from house property. The action of the ld. CIT (A) on this ground is hereby upheld.
Addition on account of cash and jewellery found from the residence of the Appellant and bank lockers in the names of family members of the Appellant during search and seizure operations - argument of the ld. AR that the jewellery was purchased with the imprest money of the company available with the assessee -HELD THAT:- Wealth Tax Return of Surpreet Suri and Kinty Suri[wife] shown a total amount of 2481.672 gms whereas the total jewellery found and recorded as per the panchanama pertaining to Surpreet Suri and Kinty Suri was 3622.15 gms. Since, the assessee has got two sons and no provision has been given by the revenue regarding the jewellery possessed by them in view of the Instruction No. 1916 dated 11.05.1994 in para (ii) and (iii), keeping in view the return income of the assessee which is 4.5 crores for the assessment year 2013-14, we hereby consider it fair to allow 200 gms of jewellery per person and thus, an amount of 740 gms can be treated as unexplained excess jewellery in the hands of the assessee against 2528 gms determined by the revenue.
This was due to the fact that the amount of jewellery of 1388 gms belonging to Narender Kaur Suri and Preet Pal Suri parents of the assessee, found at the residence of the assessee were treated in the hands of the assessee wrongly, even though the panchnama reveals clearly that the jewellery belongs to the parents of the assessee. The appeal of the assessee on this ground is treated as partly allowed.
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2019 (9) TMI 1722 - ITAT DELHI
Disallowance on account of bank interest expenses - CIT(A) deleted addition - HELD THAT:- As from the perusal of the records it can be seen that the loan procured was utilized by the assessee wholly and exclusively for its business as per clause 14 of the arrangement between third party contract bottling units (CBUs). The working capital is advanced to these CBUs so as to enable them to procure material, undertake manufacturing and maintain stocks and debtors for the assessee.
Assessee’s profit earning source is the arrangement with the CBUs wherein the assessee provides working capital to these CBUs to enable them to procure materials and carry out large scale manufacturing of alcoholic beverages and deliver the same to the assessee’s customers on its behalf. Thus, from this it is clear that working capital loan was taken by the assessee for its business purpose and use for business purposes only. CIT(A) was right in deleting this disallowance. Ground No. 1 of the Revenue’s appeal is dismissed.
Disallowance on account legal & Professional Fee Expenses and warehousing and demurrage charges - CIT(A) deleted addition - HELD THAT:- As admitted position that during the year there was no business activity, but during the said period the assessee incurred expenses on the maintenance of its business establishment. During the said year, the AO has not pointed out any bogus or expenditure of personal nature, which will warrant any disallowance. CIT(A) rightly held that by simply mentioning that the expenditures are not commensurate with the turnover, will not automatically prove that they have not been incurred wholly and exclusively for business purposes. Thus, there is no need to interfere with the findings of the CIT(A). Ground Nos. 2 and 3 are dismissed.
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2019 (9) TMI 1720 - ITAT CHENNAI
Admission of additional income in search - voluntary disclosures - Additional income admitted by virtue of service tax refund brought to tax u/s 41(1) - service tax refund accrued to the assessee in the assessment year under consideration or not? - HELD THAT:- As during the course of search u/s 132 Department has not impounded any incriminating documents or materials against the assessee. The Director of the assessee company voluntarily admitted additional income that would cover up all issues arising on account of stock, cash in hand, various omissions, commissions, assets, jewellery valuable, documents and on any instances where the search party is not satisfied on the explanations and clarifications given by us on any issues may be on account of large number of whole-sellers, agents, distributors, sub-agents, retailers in their own capacity and enormous volume of transactions, etc. Moreover, it was made it clear before the investigating authorities that the above admission of additional income was declared in good faith with a spirit of cooperation with the department and to buy peace of mind with the clear understanding that no penalty shall also be imposed and no prosecution proceedings will be initiated against any of their group concerns or any of the family members.
If the Department is prompted to bring to tax of the Service Tax Refund in view of the decision of the Hon’ble Supreme Court, which was delivered on 24.10.2013, the same should have been taxed in the relevant to the assessment year 2014-15 or it can be taxed as and when the said sum or any part thereof is actually received by way of refund from the concerned authorities.
AO has not discussed anything in the assessment order of receipt of service tax refund during the assessment year under consideration - Also service tax refund was not accrued to the assessee in the assessment year under consideration in lieu of the Hon’ble Supreme Court’s decision.
The provisions of section 41(1) of the Act warrant taxation of the benefit obtained, whether in cash or in any other manner whatsoever or accrued. By virtue of the judgement of the Hon’ble Supreme Court delivered on 24.10.2013 towards service tax refund, the Assessing Officer cannot held that the benefit of service tax refund accrues to the assessee in the assessment year 2015-16 automatically. Assessee also filed an undertaking before the AO by way of an affidavit that the actual receipt of the service tax refund will be offered to tax, we are of the considered opinion that the Assessing Officer was not factually and legally correct to bring the same to tax in the assessment year in which the assessee has not actually received the refund or accrued.
Balance addition towards variation in additional income admitted - assessee has not advanced any argument or the assessee has furnished any material evidence on record. When the assessee was asked to explain with regard to the short fall in income that was admitted under section 132(4) of the Act being ₹.80,53,26,740/-, before the ld. CIT(A), the assessee has explained about service tax refund of ₹.77.80 crores only and no reply was given on the difference amount of ₹.80,53,26,740- ₹.77,80,00,000. Accordingly, the balance addition of ₹.2,73,26,740/- stands confirmed.
Appeal filed by the assessee is partly allowed.
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2019 (9) TMI 1719 - CHHATTISGARH HIGH COURT
High pitched assessment - Entitlement to waive off the pre-deposit of 20% of the assessed tax liability - as contented assessment was calculated which is 78 times higher - HELD THAT:- The perusal of the assessment order would show that the detailed discussion has been made and it is out come after the seizure was made and the various documents were seized. The petitioner contended that the assessment has been made high pitched which is 78 times more. The Assessment Officer justifies the same in the order, which is of course subject matter of adjudication before the first appeal pending before the Commissioner, Income Tax (Appeals). In view of the facts of the case, we are not inclined to allow the application for interim relief. Accordingly, the same is rejected. Petitioner shall be at liberty to make request before the Assessment Officer for relaxation, which the Assessment Officer may decide in the facts & situation of this case.
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2019 (9) TMI 1715 - ITAT DELHI
Reopening of assessment u/s 147 - case of the assessee as completed us 153A - unexplained cash credit u/s 68 - HELD THAT:- We find that that the addition which is in dispute before us has been deleted by the Ld. First Appellate Authority in his order relying on the decision of the Hon’ble High Court in the case of Kabul Chawala [2015 (9) TMI 80 - DELHI HIGH COURT] and the Revenue challenged that order of the Ld. CIT(A) before the Tribunal. Thus, it is an admitted fact that very sum in respect of which the Assessing Officer reopened the proceeding, were the subject matter of the appeal before the Tribunal. We find that the third proviso mandates that no proceeding can be initiated to tax such income, which is subject matter of the appeal.
We are of the considered opinion that AO was not justified in reopening the assessment for assessing the income which was subject matter of the appeal before the Tribunal. Accordingly, we hold the reassessment in the instant case as void-ab-initio thus, the reassessment proceeding are accordingly quashed. Decided in favour of assessee.
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2019 (9) TMI 1714 - ITAT CUTTACK
Maintainability of revenue appeal on low tax effect - scope of relaxation in the monetary limit in departmental appeals - HELD THAT:- Going by the prescription of amended Circular No. 17/2019, dated 8th August, 2019, we are of the view that the Revenue should have either not filed the instant appeal before the Tribunal or withdrawn the same as the tax effect in the appeal is admittedly less than the prescribed limit, i.e., Rs. 50,00,000/- for not filing the appeal, which is not maintainable as per the provisions of Section 268A of the Income Tax Act, 1961.
As keeping in view the order passed in the case of Dinesh Mudhavlal patel [2019 (8) TMI 752 - ITAT AHMEDABAD] we are of the view that the relaxation in the monetary limit in departmental appeals vide circular dated 8th August, 2019 shall be applicable to the pending appeals in addition to the appeals to be filed henceforth. Thus, the contention of ld D.R. is dismissed.
Accordingly, we dismiss the appeal filed by the Revenue without going into merits of the case.
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2019 (9) TMI 1713 - ITAT CHENNAI
Assessment of trust income - Exemption u/s 11 rejected - return was processed u/s 143(1) - admittedly registration was not available u/s 12AA - HELD THAT:- Admittedly, registration u/s 12AA of the Act was not available to the assessee during the year under consideration. Therefore, income of the assessee has to be computed commercially by allowing all the expenditure for earning the income. In other words, the total expenditure incurred by the assessee for earning the income has to be reduced and whatever remains has to be brought for taxation.
As rightly submitted by assessee, the corpus donation has also to be taken as income / receipt. Since such an exercise was not done, this Tribunal is of the considered opinion that the matter needs to be re-examined by the AO. Accordingly, orders of both the authorities below are set aside and the AO is directed to take the net income after reducing the expenditure and levy tax thereon. We are conscious that proceeding arises for considering is u/s 143(1) - This is prima facie adjustment, therefore, the AO while considering the matter, has to keep in mind the provisions of Section 143(1) of the Act which enables him to make prima facie adjustment. Both the appeals filed by the assessee are allowed for statistical purposes.
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2019 (9) TMI 1710 - ITAT MUMBAI
Taxability of profits of life insurance business - addition on account of Surplus disclosed in Form 1 of Actuarial Report - HELD THAT:- As decided in assessee own case [2017 (3) TMI 1696 - ITAT MUMBAI] relying on case of ICICI Prudential Insurance Co. Ltd [2012 (11) TMI 13 - ITAT MUMBAI] has held that “where assessee was carrying on life insurance business and Tribunal following a decision of Supreme Court, while determining assessee’s income under section 44, had taken into consideration total surplus as arrived at by actuarial valuation and further held that income from shareholders account was also to be taxed as a part of life insurance business, there was no substantial question of law arising for consideration”.
Reference was made to the decision in LIC of India vs. CIT [1963 (12) TMI 5 - SUPREME COURT] wherein the Hon'ble Supreme Court has held that the Assessing Officer has no power to modify the account after actuarial valuation is done. Decided against revenue.
Disallowance of loss from pension fund - assessee in the computation of income has claimed exemption u/s 10(23AAB) on account of surplus / deficit pension fund - AO disallowed the claim of the assessee and passed the assessment order by adding the amount on account of the provision for solvency margin and loss from Jeevan Suraksha Fund, inter alia, on the ground that the provision for solvency margin was not an ascertained liability and that income from Jeevan Suraksha Fund being exempt u/s 10(23AAB), the loss incurred from the said fund could not be adjusted against the taxable income - HELD THAT:- While deciding identical issue raised by the Revenue in assessee’s own case for assessment year 2011–12, [2017 (3) TMI 1696 - ITAT MUMBAI] held that (i) amount set apart by insurance company towards solvency margin as per the direction given by IRDA is to be excluded while computing actuarial valuation surplus, and (ii) pension fund like Jeevan Suraksha Fund would continue to be governed by provisions of section 44 irrespective of the fact that income from such fund is exempted, or not and, therefore, even after insertion of section 10(23AAB), loss incurred from pension fund like Jeevan Suraksha Fund has to be excluded while determining actuarial valuation surplus from insurance business u/s 44.
Revenue appeal dismissed.
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2019 (9) TMI 1709 - ITAT KOLKATA
Assessment proceedings u/s 153C(1) - determining the six assessment years - HELD THAT:- As going by sec. 153A (1)(b) applicable in such a scenario except that to the extent of its exclusion in view of the first proviso to sec. 153C(1), the six assessment years in this taxpayer’s case preceding the assessment year relevant to the previous year in which the search is conduced (AY 2017-18 herein since the reference to date of search brings us to August, 2016) are 2016-17, 2015-16, 2014-15, 2013-14 2012-13 assessment year 2011-12 and not beyond that.
Hon'ble Delhi high court’s twin decisions RRJ Securities Ltd [2015 (11) TMI 19 - DELHI HIGH COURT] and SSP Aviation Ltd. [2012 (4) TMI 335 - DELHI HIGH COURT] decide the very question in assessee’s favour going by the very reasoning. We conclude in these facts that the impugned assessments in assessment years 2009-10 and 2010-11 not sustainable in law. The same stand quashed.
Assessment proceedings u/s 153C(1) - addition u/s 68 - Whether any incriminating material found or seized during the course of search? - HELD THAT:- Although the search assessment provision nowhere contemplates that addition should be strictly made on the basis of evidence found in the course of search or other post search material or information available with the AO which can be related to the evidence found, it does not mean that an assessment can be arbitrarily made without any relevance or nexus with the seized material.
Such an assessment under this provision has to be made only on the basis of seized material. Learned CIT-DR fails to dispute that there is no such incriminating material so far as the twin sec. 68 addition(s) of cash deposits in question.
We accordingly hold that the impugned assessment(s) deserve to be quashed for this precise reason alone since they are not based on any incriminating material found or seized during the course of search.
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2019 (9) TMI 1708 - ITAT RAJKOT
Disallowance of expenses claimed against the gross income in the absence of any documentary evidence - Non justify the claim made against the income from other sources - HELD THAT:- As primary onus lies on the assessee to justify the nature of the income shown under the head other sources but the assessee has failed to clarify the same. Similarly, the assessee has not specified the nature of the expenses against such gross income based on any cogent material.
Generally, the income cannot the generated without incurring the expenses qua to the income. But it does not apply to each and every kind of income. For example, in case the assessee has invested his own fund in the bank account and earning interest income thereon. Then, there cannot be any claim of the expenses against such income. Yet, if the assessee claims any expense against such income, then the onus lies on the assessee to justify such expenses based on the documentary evidence.
The provisions of section 57 of the Act requires that the expenditure against the income from other sources will be deducted provided it is not in the nature of capital expenditure and laid out or expended wholly and exclusively for the purpose of making or earning such income. Thus, it is the duty of the assessee to justify that the deduction claimed by him was incurred in connection with the impugned gross income. But the assessee, failed to do so. Therefore, we do not find any reason to interfere in the finding of the authorities below. Hence the ground of appeal of the assessee is dismissed.
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2019 (9) TMI 1703 - BOMBAY HIGH COURT
Maintainability of appeal - low tax effect - HELD THAT:- Appellants on instructions seek to withdraw the Appeals. This for the reason that the tax effect involved in all these Appeals is less than the threshold limit of rupees one crore provided in the Central Board for Direct Taxes (CBDT) Circular No.17 of 2019 dated 8 August 2019.
All these Appeals are disposed of as withdrawn.
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2019 (9) TMI 1702 - ITAT AHMEDABAD
Disallowance u/s 14A - expenditure incurred on earning exempt income - HELD THAT:- It is seen that the lower authorities dealt with interest expenditure and that too on proportionate basis in the said case than direct one whereas the issue before us is that of administrative expenditure disallowance. We observe in this facts that the impugned administrative expenses disallowance is not alike former two limbs since falling in different head as well as the fact that it has to be based on computation formula only. There is no dispute that we are dealing with assessment year 2008-09 i.e. starting point of application of Rule 8D of IT Rules. The assessee admittedly has not challenged the relevant computation @ 5% given in the above statutory computation formula. We conclude in these facts that both the lower authorities have acted as per law in invoking the impugned disallowance in relation to assessee's exempt income amounting to Rs.7.7 crores.More so when the assesses has not discharged prima facie onus even to justify its suo-motu lump sum disallowance of Rs.2 lakhs only. The impugned disallowance is accordingly confirmed in principle.
Alternate contention that both the lower authorities have erred in not excluding the average investment made in growth oriented debt funds and fixed maturity plan funds - We find that this is more a computation exercise wherein investment made in relation to taxable income has to be excluded for the purpose of computing disallowance in question. We thus direct the Assessing Officer to frame consequential computation as per law.
TP Adjustment - Financial Guarantee given by the appellant on behalf to its Associate Enterprise (A.E) - HELD THAT:- We find that recent Co-ordinate Bench in M/s Suzlon Energy Ltd.- [2017 (4) TMI 1406 - ITAT AHMEDABAD] wherein as holds that such a guarantee does not amount to an international transaction under section 92BTPO had himself taken financial guarantees given by various institutions as the relevant bench mark for the performance guarantee adjustment in question. We hold in these facts and circumstance assessee’s second substantive ground is accepted.
Disallowance of recruitment and training expenses - Revenue challenged the order passed by CIT (A) in deleting 20% of such expenses - HELD THAT:- As perused the records including the order passed by the co-ordinate Bench in [2013 (4) TMI 995 - ITAT AHMEDABAD] in assessee’s own case whereby and whereunder the issue has been decided in favour of the assessee as held that there is no evidence in the possession of the AO to hold that a particular expenditure on training was not business related. In fact, the argument of the appellant appears to be logical that considering the nature of the services provided a training of the technical staff is always a business necessity and because of the trained staff the appellant's revenue has substantially gone up - direct the AO to delete the disallowance on account of recruitment and training expenses.
Disallowance by restricting the deduction u/s.10A - HELD THAT:- It appears that the issue is squarely covered by the Hon’ble Apex Court in the matter of CIT v/s. Yokogawa India Ltd [2016 (12) TMI 881 - SUPREME COURT] wherein it has been held that “section 10A is a deduction section. However, the stage of the deduction would be while computing the gross total income of the eligible undertaking under chapter IV of the Act and not at the stage of computation of the total income under chapter VI”.
It is an undisputed fact that the issue in the present appeal is identical to that of earlier assessment year and the exchange fluctuation gain was held to be arising from export business in assessment year 2001- 02 to 2005-06. Nothing has been brought on record by Revenue to controvert the findings of Ld. CIT(A) and, therefore, we find no reason to interfere in order of CIT(A) on this issue.
Upward adjustment by recomputing the ALP of the international transactions of software services distributed by MUK - HELD THAT:- Based on the facts and evidences provided by the appellant for AY 07-08 [2013 (4) TMI 995 - ITAT AHMEDABAD] and the conclusions of the ITAT Ahmedabad bench for identical facts for AY 06-07 [2012 (5) TMI 206 - ITAT AHMEDABAD] the appellant's contentions find favour. Therefore, MUK's operations can be considered to be correctly characterized as a distributor and a return based on sales which incentives MUK to generate more revenue appears to be appropriate. Decided against revenue.
Disallowance on account of Human Resource Management function - HELD THAT:- As decided in assessee own case [2012 (5) TMI 206 - ITAT AHMEDABAD] A. V. 2006-07 facts and figures have revealed that following the said business strategy the business growth as a whole was much higher than the impugned compensation amount. This allegation is also to be ruled out that those very employees were otherwise regular employees of the assessee-company and they have been absorbed after their return for the period for which they were sent abroad and worked "offshore" with AEs. It is true that such employees are the regular group of experts but they have been paid by AEs when worked on-site abroad, which means the burden of salary for the "offshore" period was in fact borne by AEs, otherwise to maintain bunch of trained employees the MIL had to incur the expenditure on salary. Therefore, there was an argument of counter claims and in support reliance was placed on Boston Scientific International VV [2010 (4) TMI 876 - ITAT MUMBAI]. For these reasons we also hold that the secondee-provider is not akin to recruitment service-provider or that "secondment" is different from "recruitment". Finally, we hold that there was no legal basis for the impugned upward adjustment and the same is hereby directed to be deleted. This ground is allowed.
Disallowance computed u/s.14A r.w.Rule 8D(2)(iii) while computing the Book Profit u/s 115JB - HELD THAT:- We note that in the recent judgment passed in the case of ACIT vs. Vireet Investment Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] has held that the disallowances made u/s 14A r.w.r. 8D cannot be the subject matter of disallowances while determining the net profit u/s 115JB of the Act.
Thus it can be concluded that the disallowance made under section 14A r.w.r. 8D cannot be resorted while determining the expenses as mentioned under clause (f) to explanation 1 to section 115JB.
TP Adjustment - Comparable selection - determining the arm’s length price of the international transaction of provision of software services rendered by P &C Division of the appellant to its AE - HELD THAT:- As decided in Revenue’s appeal [2018 (3) TMI 1881 - ITAT AHMEDABAD] excluding two entities M/s. Accentia Technologies Limited and M/s. Cross Domain Solutions Limited. very entities are not to be taken as comparables since the former one underwent extra ordinary merger event whereas the latter entity provided high-end KPO services.
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2019 (9) TMI 1700 - ITAT KOLKATA
Disallowance of Misc. construction expenses - Addition on estimated basis - failure of the assessee in producing supporting bills and vouchers - HELD THAT:- It is a well-established principle that ad hoc disallowance made by an Assessing Officer without proper verification of the facts is bad in law and in gross violation of the principles of natural justice.
Scheme of the Act does not authorize the Assessing Officer to make a disallowance according to his wishes, rather it provide that he should first point out the defects in the accounts of the assessee.
In the instant case, since ad hoc disallowance is made by making general observation, we do not find any merit in the addition made by the AO, That being so we decline to interfere in the order passed by ld CIT(A), his order on this issue is hereby upheld and grounds of appeal raised by the Revenue is dismissed.
Depreciation on goodwill - goodwill as acquired during merger - As per AO goodwill is not reflected in the post-merger audited financial statement and the tax audit report of the assessee - HELD THAT:- As assessee has submitted that post approval of merger by the Hon’ble High Court of Delhi and Hon’ble Calcutta High court, the audited financial statement for FY 2006-07 clearly reflected the amount of goodwill that arose pursuant to the merger. The same was also filed with the A.O. vide letter dated 21st March, 2014. Though in the tax audit report the tax auditor has not considered the depreciation on goodwill, but the same cannot be the basis of disallowance. We find that such disallowance made by the AO is erroneous. On appeal by assessee, CIT(A) has appreciated the facts of the assessee company and deleted the addition. We decline to interfere in the order passed by the ld. CIT(A), his order on this issue, is hereby upheld and the grounds of appeal raised by the revenue are dismissed.
Addition on account of bad debts - CIT-A deleted the addition - HELD THAT:- As amount mentioned as opening balance in the details submitted before the AO is the unrealized amount which is nothing but unrealized amounts against invoices raised by the assessee on PWD & IRCON during the FYs 2001-02, 2004-05 and 2005-06 which were offered to tax as income in the earlier years and on becoming irrecoverable, the same has to be allowed as bad debts during the relevant assessment year under the provisions of section 36(1)(vii) of the Act. CIT(A) has rightly deleted the addition made by assessing officer. Decided against revenue.
Unreconciled closing balance - excess liability shown by the assessee company in the books of accounts and thus difference added back to the total income of the assessee - HELD THAT:- We note that the difference in liability is primarily on account of the accounting of service tax. Counsel submits that it is not the case where excess expenditure has been recorded for which liability has arisen. The amount of service tax for which liability is reflected is not claimed by the assessee as an expense - liability so created has subsequently been paid by the assessee. The difference in accounting treatment followed by the both the parties cannot lead to any addition as unexplained liability. Therefore, question of overstating the expenditure of accounting for unexplained purchases does not arise. Decided in favour of assessee.
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2019 (9) TMI 1698 - ITAT MUMBAI
Taxability of managements fees as ‘Royalty’ - India-Netherlands Treaty - whether payment received by assessee are on account of reimbursement? - HELD THAT:- We have noted that on almost similar set of fact and on the basis of same service agreement between the assessee and VOIPL, the Assessing Officer for A.Y. 2009-10 treated the amount received on account of various services rendered by assessee as royalty, however, on appeal before the Tribunal, the same was held as reimbursement of cost vide order [2016 (11) TMI 1249 - ITAT MUMBAI].
Considering the decision of co-ordinate bench of A.Y. 2009-10 [2016 (11) TMI 1249 - ITAT MUMBAI], which was followed in A.Y. 2013-14 & 2014-15 [2017 (11) TMI 1912 - ITAT MUMBAI] wherein the similar payments received pursuant to the same agreement was treated that payment received by assessee are on account of reimbursement and does not fall under the definition of ‘Royalty’ as defined in Article-12(4) of the India- Netherlands Tax Treaty. Decided in favour of assessee.
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2019 (9) TMI 1697 - ITAT MUMBAI
Estimation of income - bogus purchases - purchase from the grey market - HELD THAT:- Making purchases through the grey market gives the assessee savings on account of non-payment of tax and others at the expense of the exchequer.
As regards the quantification of the profit element embedded in making of such bogus/unsubstantiated purchases by the assessee, as held in the case of Haji Adam & Co [2019 (2) TMI 1632 - BOMBAY HIGH COURT] the addition in respect of bogus purchases is to be limited to the extent of bringing the gross profit rate on such purchases at the same rate as of other genuine purchases.
Thus set aside the matter to the file of the assessing officer with the direction to restrict the addition as regards the bogus purchases by bringing the gross profit rate on such bogus purchases at the same rate as that of the other genuine purchases. Assessee's appeal is partly allowed.
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2019 (9) TMI 1694 - ITAT JAIPUR
TP Adjustment in respect of the payment of interest to related parties - interest paid to the related parties is at 15% per annum whereas the interest paid to the unrelated parties varies from 13.20% to 15.60% - assessee claimed that the Specified Domestic Transaction interest to the related parties at 15% is at Arm’s Length - HELD THAT:- We find that for rejecting the Internal CUP as most appropriate method by the TPO, no plausible reason have been given except the statement that for the purpose of benchmarking, he proposed External CUP as most appropriate method. Once the transaction of interest paid to the unrelated parties is available on record, then the Internal CUP should be preferred as against the External CUP as most appropriate method for determination of Arm’s Length Price. Assessee has paid interest to 16 related parties and 15 unrelated parties. Therefore, almost equal numbers of transactions of payment of interest to related parties as well as unrelated parties have been entered into by the assessee during the year under consideration.
Once the average effective rate of interest paid to the unrelated parties is not in dispute at 15.36%, then the Specified Domestic Transactions of payment of interest to the related parties have to be tested with the Internal CUP being average rate of interest paid to the unrelated parties.
The assessee has also taken a plea before the authorities below that the payment of interest to the unrelated parties is bi-monthly/quarterly as against annually to the related parties. This is also a cost adding factor in respect to the unrelated party payment of interest.
Assessee has paid the effective average rate of interest inclusive of brokerage at 15.36%, then the payment of interest to related parties at 15% is at Arm’s Length. It is also pertinent to note that even by applying the Arm’s Length Interest at 14.50% based on the Internal CUP which is an average of 15 transactions then the tolerance range provided under second proviso to section 92C(2) is also applicable in the case of the assessee and, therefore, in any case the Specified Domestic Transactions price falls in the tolerance range of (+)(-) 3%. Accordingly, the addition sustained by the ld. CIT (A) is deleted.
Disallowance of Employees Contribution to PF & ESI paid after the due date as provided under the relevant Acts. However, it was paid before the due date of filing the return of income under section 139(1) - HELD THAT:- As this issue is decided in favour of the assessee and the addition made by the AO on account of payment of employees contribution to PF and ESI before the due date of filing the return under section 139(1) is deleted.
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2019 (9) TMI 1693 - ITAT BANGALORE
TP Adjustment - Comparable selection - turnover filter - HELD THAT:- In the case of Genisys Integrating Systems (India) P Ltd [2011 (8) TMI 952 - ITAT BANGALORE] has relied upon the opinion expressed by Dun and Bradstreet that the grouping of companies having turnover of Rs.1.00 crore to Rs.200 crores as comparable with each other was held to be proper. Since certain decisions were rendered divergent views expressed by various benches in the case of Autodesk India (P) Ltd (2018 (7) TMI 1862 - ITAT BANGALORE] and expressed the view that the CIT(A) was right on the issue of application of turnover filter by following the ratio laid down in the case of Genisys Integrating Systems (India) P Ltd (2018 (7) TMI 1862 - ITAT BANGALORE]
In the instant case, the assessee seeks exclusion of above said five companies by applying turnover filter as per the ratio laid down in the case of Genisys Integrating Systems (India) P Ltd (supra). Appeal of the assessee is treated as allowed.
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2019 (9) TMI 1692 - BOMBAY HIGH COURT
Deduction u/s 80IA - activities undertaken by the assessee do not fall within clause (d) of the explanation no section 80IA(4) defining the term infrastructure facilities - ITAT allowed deduction - HELD THAT:- The impugned order of the Tribunal allowed Respondent- Assessee’s appeal, inter alia, placing reliance on the decision of the Delhi High Court in the case of Container Corporation of India Ltd. v. Asstt. Commissioner of Income Tax [2012 (5) TMI 260 - DELHI HIGH COURT] and also placing reliance on the decision of this Court in the case of C.I.T. v. Continental Warehousing Corporation [2015 (5) TMI 656 - BOMBAY HIGH COURT]
Appellant very fairly states that the view taken by the Delhi High Court in the case of Container Corporation of India Ltd. (supra) and by this Court in the case of Continental Warehousing Corporation (supra) has been upheld by the Apex Court in the case of CIT v. Continental Warehousing Corporation [2018 (5) TMI 359 - SUPREME COURT] No substantial question of law.
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2019 (9) TMI 1689 - ITAT PUNE
Chargeability of interest received under the Land Acquisition Act - compulsory acquisition of land - As per assessee it is capital receipt and not chargeable to tax - whether interest which was received under section 28 of LAC Act is to be treated as part of compensation or not? - HELD THAT:- Hon'ble Supreme Court in CIT Vs. Ghanshyam (HUF) [2009 (7) TMI 12 - SUPREME COURT] and in other cases had held that interest awarded under section 28 of LAC Act was in the nature of solatium and was an integral part of compensation. Also further held that interest received under section 34 of LAC Act was on account of delayed payment of compensation and was revenue receipt. Though the amounts received under sections 28 and 34 of LAC Act are termed as interest but two stands at different pedestal in so far as the Income Tax Act is concerned.
Such is the proposition laid down by Pune Bench of Tribunal in Shri Madhav Pandharinath Kande Vs. ITO [2019 (7) TMI 1928 - ITAT PUNE]. The Hon’ble Apex Court in CIT Vs. Chet Ram (HUF) [2017 (9) TMI 1532 - SUPREME COURT] talks of the year of taxability which is not in dispute. In the totality of the same, we allow the plea of assessee that interest received under section 28 of LAC Act is to be treated as part of compensation and is not to be charged as income from other sources in the hands of assessee. Thus, modified grounds of appeal raised by assessee are allowed.
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2019 (9) TMI 1688 - CALCUTTA HIGH COURT
Nature of receipts - interest subsidy receipt by the assessee from the government - capital receipt or revenue receipt - HELD THAT:- The question proposed is covered by our decision Principal Commissioner of Income Tax, Central-2, Kolkata versus Ankit Metal & Power Ltd.[2019 (7) TMI 878 - CALCUTTA HIGH COURT].
Whether petition is a question of fact and not admissible under Section 260A of the Income Tax Act? - As the respondent is represented by learned Counsel, issuance and service of notice of appeal are dispensed with.
Let informal paper books be filed by the appellant’s advocate-on-record by 15th November, 2019, serving a copy thereof on the advocate-on-record for the respondent at least seven days before the date of hearing of this appeal.
On the prayer of Mr. J.P. Khaitan, learned senior counsel appearing for the respondent, leave is granted to file their cross objection in the said appeal by 30th September, 2019. List this appeal on 27th November, 2019.
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