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2019 (4) TMI 2125
TP Adjustment - comparable selection - Exclusion of Infosys BPO, Hartron Communications Ltd and Capgemini Business Services India P. Ltd - HELD THAT:- From a perusal of the order reproduced here in above and the objection raised by the assessee, it is clear that the assessee has raised multiple objections. But the DRP while passing the order had restricted to adjudication of one or two objections only and has not bothered to consider and pass an elaborate and reasoned order accepting or rejecting these comparables. We deem it appropriate to remand the matter back for examination of these comparables to the file of the TPO / AO by considering all the objections raised by the assessee. Needless to say while doing so, the TPO will also consider the binding precedent of the jurisdictional Tribunal in the matter of CGI Information System....... + More
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2019 (4) TMI 2124
TP Adjustment - restriction of adjustment to quantum of international transactions - HELD THAT:- We do not have any hesitation in holding that the transfer pricing adjustment should be restricted to the international transactions only and it cannot be applied to uncontrolled transactions. While determining ALP of international transactions, benchmarking has to be done only on AE transactions and not for entire turnover. Therefore, we direct the AO/TPO to restrict the adjustment on account of ALP to the extent of the transaction with AE only. Disallowance u/s 40(a) (i) on the domestic transaction - Since the assessee has not claimed any deduction of this expense in its profit and loss account, in computing the disallowance u/s 40(a)(i), this amount was excluded by the assessee in its tax return - HELD THAT:- The assessee has clearl....... + More
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2019 (4) TMI 2120
Disallowance of deduction u/s 80JJAA - Interpretation of Sec. 80JJAA as it existed at the relevant point of time - definition of regular workman [Excluding workman employed for a period of less than 300 days] - AO noticed that only 24 workman has completed 300 days of employment during the year under consideration and accordingly restricted the deduction - HELD THAT:- Legislature has made its intention clear in sub.sec.(3) of substituted sec.80JJAA, which is made applicable from AY 2017-18. Hence the provisions of sec.80JJAA as it stood at the relevant point of time alone are applicable for determining the quantum of deduction. Hence the provisions of sec.80JJAA as applicable to AY 2013-14, which was extracted alone should be considered for examining the claim of the assessee. We find force with the submission of the assessee. In....... + More
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2019 (4) TMI 2118
Validity of Order passed u/s 263 - assessee was given right to develop and maintain Toll Road and also right to collect the Toll for specific period - depreciation on intangible asset - PCIT directed AO to pass fresh assessment order in respect of depreciation claim of assessee with special emphasis on cost of project as claimed by the assessee in the light of CBDT Circular No.9/2014 dated 23.04.2014 and the order passed in North-Karnataka Expressway [ 2014 (11) TMI 351 - BOMBAY HIGH COURT] - HELD THAT:- Hon ble Delhi High Court in PCIT vs. Delhi Airport Metro Express Pvt. Ltd. ( 2017 (9) TMI 529 - DELHI HIGH COURT ) held if the PCIT is of the view that Assessing Officer did not undertake any enquiry, it became incumbent on the PCIT to conduct such enquiry. All that PCIT has done in the impugned order is to refer to the Circular of CB....... + More
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2019 (4) TMI 2110
TP adjustment done to manufacturing segment - not considering export incentives as part of operating revenues of appellant and comparables or reducing from cost to determine operating profits - HELD THAT:- As by respectfully following this judgment of Welspun Zucchi Textiles Ltd. [ 2017 (1) TMI 1037 - BOMBAY HIGH COURT ] we hold that the export incentives should be included in the operating profit of the assessee as well as the comparables. But it should be ensured that such export incentive is in respect of turnover of the present year only because if the export incentive is relatable to the turnover of an earlier year then the same cannot be included in the present year profit for TP analysis because in that situation, the profit will remain included in the numerator, but the corresponding turnover will not remain included in the den....... + More
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2019 (4) TMI 2104
CIT(A) passed ex parte order - Addition u/s 69 - HELD THAT:- From perusal of the order of the ld. CIT(A), it is clear that he has not decided the issue on merit and had just upheld the order of the A.O. on the plea that the appellate authority cannot substitute its own judgment in place of the judgment of the A.O. unless it is shown that the judgment of the A.O. was biased, irrational, vindictive or capricious. As per provisions of Section 250(6) CIT(A) has to pass order in writing giving reasons for his conclusion. However, the order passed by the ld. CIT(A) are not in terms of provisions of Section 250(6) of the Act. Therefore, in the substantial interest of justice, we set aside the ex parte order of the CIT(A) and restore the matter back to the file of the CIT(A) for deciding the issue afresh after providing reasonable and effec....... + More
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2019 (4) TMI 2103
TP Adjustment - action of the CIT(A) in accepting the segment reporting prepared by the assessee company - Revenue alleged that the segment reporting was prepared by the assessee company without having regard to the nature of business - HELD THAT:- As decided in Lummus Technology Heat Transfer BV [ 2014 (3) TMI 23 - ITAT DELHI] wherein it was held that segmental results could not be rejected on the ground that the same was not audited. The TPO/DRP was required to examine the segmental results if the same were maintained in the ordinary course of business. On perusal of, inter alia, the aforesaid decisions, in the matter of CSR Technology (India) (P.) Ltd [ 2017 (12) TMI 809 - ITAT DELHI] held that the AO/TPO/DRP erred in disregarding the segmental result of the taxpayer by proceeding to consider the margin of the taxpayer at the enti....... + More
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2019 (4) TMI 2101
Late deposits of employees Contribution towards PF and ESI - amount paid before the due date of filing of return of income u/s 139(1) - HELD THAT:- The issue is covered by a series of decisions of Hon ble Jurisdictional High Court including the decision in case of PCIT vs. Rajasthan State Beverages Corporation Ltd [ 2016 (8) TMI 1317 - RAJASTHAN HIGH COURT] as held that the amounts in question were deposited on or before the due date of furnishing of the return of income and taking in consideration judgment of this Court in Commissioner of Income Tax Vs. State Bank of Bikaner Jaipur [ 2014 (5) TMI 222 - RAJASTHAN HIGH COURT] and Commissioner of Income Tax Vs. Jaipur Vidyut Vitaran Nigam Ltd. [ 2014 (1) TMI 1085 - RAJASTHAN HIGH COURT] question decided against the revenue. Decided in favour of assessee.
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2019 (4) TMI 2099
Rate of tax applicable to domestic companies and/or co-operative banks - Scope of provisions of Article 26 (Non-discrimination) of the India-France tax treaty - HELD THAT:- The above issue is covered against the assessee by a series of orders passed by various Co-ordinate Benches in assessee s own case [ 2013 (8) TMI 1173 - ITAT MUMBAI] a foreign company was 48% compared to 38% applied in case of domestic companies. The assessee had argued that it was discriminatory and not in accordance with law. Reference was made to non-discrimination clause in the Treaty, as per which there should not be any discrimination between the domestic and the non-resident company. Tribunal, however, referred to the Explanation in the Section 90, inserted in the IT Act with retrospective effect from 01-04- 1962 as per which the higher tax rate in case o....... + More
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2019 (4) TMI 2098
Assessment u/s 144C - eligible assessee - Validity of draft assessment order - as argued assessee not being an eligible assessee as defined u/s 144C(15) AO could not have passed the draft assessment order under section 144C(1) - whether the assessee can be termed as an eligible assessee u/s 144C(15)(b) to empower the Assessing Officer to pass the draft assessment order under section 144C(1)? - whether the assessee can fit into the definition of a foreign company as provide du/s 144C(15)(b)(ii)? - HELD THAT:- The definition of firm under section 2(23) of the Act includes a limited liability partnership. Further, in the draft assessment order passed under section 144C of the Act for the assessment year 2016 17, the status of the assessee has been shown as firm. Thus, from these facts, it becomes clear that the assessee is not a....... + More
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2019 (4) TMI 2095
TP Adjustment - comparable selection - upper limit on turnover while selecting the comparable companies - HELD THAT:- Decision rendered by the Tribunal in the case of Genesis Integrated Systems (I) P. Ltd. [ 2011 (8) TMI 952 - ITAT BANGALORE] lays down the correct law on the application of turnover filter and that decision has to be followed. In the decision rendered in the case of Genesis Integrates Systems (I) Pvt.Ltd., it has been held that companies with turnover of above Rs.200 crores cannot be compared with companies with turnover of less than Rs.200 Crores. In view of the aforesaid decision of the Tribunal, we hold that the CIT(A) erred in not accepting the claim of assessee for excluding of companies, whose turnovers were more than Rs. 200 Crores and those companies remain un-comparable with assessee, because assessee s turn....... + More
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2019 (4) TMI 2094
TP adjustment towards interest of outstanding receivables from its Associated Enterprise - HELD THAT:- Undisputedly, the Transfer Pricing Officer has determined the arm's length price of the interest chargeable on outstanding receivable from the AE by applying the rate of 6.56% as per Bloomberg database. However, it is noticed that before the Transfer Pricing Officer and learned DRP the assessee had submitted that as per LIBOR rate of interest the interest chargeable on such outstanding receivable is LIBOR plus 0.5%. The aforesaid contention of the assessee has not at all been considered by the Transfer Pricing Officer and learned DRP. As held in various judicial precedents, interest on outstanding receivables has to be charged by applying LIBOR rate as applicable in the country of residence of AE. In view of the aforesaid, we dire....... + More
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2019 (4) TMI 2090
Addition u/s 68 - procurement of accommodation entries through share application money from nondescript companies - HELD THAT:- As on perusal of the bank accounts of the share applicant companies filed in the paper book before us, we find that money has been deposited on various dates and almost equal amount has been withdrawn within a short period leaving a very small nominal balance. This trend has been observed almost in all the share applicants. The share applicants have paid share premium of Rs. 90 per share, whereas on perusal of the financial statement of the company for the year under consideration, we find that net profit during the year under consideration has been shown at Nil. We do not find any financial rational behind making investment by the share applicants companies at huge premium of Rs. 90 per share. No explanati....... + More
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2019 (4) TMI 2089
Disallowance on account of derecognized interest - CIT-A deleted the addition - HELD THAT:- After perusing the aforesaid order of the Hon ble High Court of Delhi [ 2014 (5) TMI 1225 - DELHI HIGH COURT] we note that the issue in dispute has been decided in favour of the assessee and therefore, Ld. CIT(A) has observed that since the issue has been decided in earlier years in favour of the assessee in its own case by the Hon ble High Court, the addition to income on this account made in the impugned order was rightly deleted. Hence, in our considered opinion there is no illegality or infirmity in the finding of the Ld. CIT(A) on the issues in dispute, therefore, we uphold the action of the Ld. CIT(A) on the issues in dispute and reject the grounds raised by the Revenue.
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2019 (4) TMI 2085
Non appearance by assessee on the date of hearing - Reasonable cause for non-representation on the date of hearing - HELD THAT:- Last opportunity of hearing was given to the assessee fixing the date of hearing on 02/04/2019. Despite this, the assessee remained unrepresented. In the aforementioned peculiar facts and circumstances of the case, in the absence of any representation on behalf of the assessee or petition seeking time, it can be safely presumed that the assessee is not serious in pursuing the appeal filed. Accordingly the only alternative left is to dismiss the appeal of the assessee in limine. Support is drawn from the order of the Tribunals in Commissioner of Income Tax vs. Multi Plan India (P) Ltd. [ 991 (5) TMI 120 - ITAT DELHI-D ] and Estate of Late Tukojirao Holka vs. CWT [ 1996 (3) TMI 92 - MADHYA PRADESH HIGH COURT....... + More
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2019 (4) TMI 2084
Stay petition - Addition u/s 68 - claim of exemption u/s 10 (38) denied - HELD THAT:- We find out of the total tax demand of Rs.28,12,330/- the assessee has already paid an amount of Rs.14,12,500/- plus Rs.8,50,000/- which is more than 50% of the total demand. We, therefore, find merit in the argument of the Ld. Counsel for the assessee that full stay should be granted to the remaining amount. We, therefore, grant stay on the realization of the balance outstanding demand for a period of 6 months from the date of this order or the order of the Tribunal whichever is earlier. The request of the assessee for out of turn hearing is also accepted and the appeal is fixed for hearing on 11.06.2019 which was announced in the open court. It was further announced that no separate notice of hearing shall be sent to which both the parties agreed....... + More
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2019 (4) TMI 2080
Reopening of assessment u/s 147 - reason to believe OR reason to suspect - Whether assessee has duly filed return of income for the assessment year under consideration? - Assessee has alleged that the AO in his reason record for reopening of assessment stated that the assessee has not filed any return of income for the assessment year under consideration whereas the assessee has duly filed return of income for the assessment year under consideration - HELD THAT:- Respectfully following the ratio of judgement of Hon`ble Jurisdictional High Court in the case of Sunrise Education Trust v. Income Tax Officer[ 2018 (2) TMI 1471 - GUJARAT HIGH COURT] wherein it was held that when the AO in the reasons recorded proceeded on the erroneous footing that the assessee has not filed return of income at all and when it is not in dispute tha....... + More
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2019 (4) TMI 2079
Validity of assessment order passed u/s 144C - as per assessee the conditions prescribed for invoking the said provisions do not exist in the present case - HELD THAT:- In the instant case, the assessee herein is an eligible assessee. However, there is no variation in the income or loss returned, which is prejudicial to the interests of the assessee. Hence the second condition prescribed in sec.144C(1) was not satisfied. Hence the approach of the AO in adopting the procedure prescribed in sec.144C of the Act is not in accordance with the mandate of law. We get support for our view from the decisions rendered by Chennai bench and Pune bench of Tribunal in the cases referred above. Hence the assessment order passed by the AO gets vitiated and the same is liable to be quashed. - Decided in favour of assessee.
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2019 (4) TMI 2073
Income accrued in India - Attribution of the income - Addition holding that the assessee has permanent establishment in India - addition on account attribution of income being recipient of such commission income - HELD THAT:- Assessee earned sales revenue from India arising from above business activity. The rights and responsibilities under the agency agreements between the Assessee and Hempel India created Agency Permanent Establishment (PE) of the assessee in India as per Article 5(4) of the India - Singapore Tax Treaty. In consideration of the services rendered by the Hempel India to the assessee, the former charges commission based on percentage of sales to the later under the arm's length principle. In view of the above, the learned Counsel for the assessee took us through the Tribunals order in assessee's own case for A....... + More
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2019 (4) TMI 2072
Depreciation on the goodwill and knowhow - determination is what is the actual cost in the hands of the respondent-assessee company - HELD THAT:- The provisions of s. 32 of the Act lays down that the depreciation shall be allowed to the assessee on the actual cost of the asset. The term actual cost is defined under the provisions of s. 43(1) of the Act. The expression actual cost had come-up for interpretation before Hon ble High Court of Delhi in the case of CIT V. Dalmia Dadri Cement Ltd.[ 1980 (2) TMI 51 - DELHI HIGH COURT] In the present case, admittedly there was no cost involved on the acquisition of goodwill, know-how in the hands of the firm. The goodwill, know-how was merely created by book entry by debiting the goodwill, know-how and crediting partners accounts. This partners account was not treated as a part of capit....... + More
