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2021 (12) TMI 1440
TP Adjustment - interest payment made by the assessee to its overseas associate enterprises @ 11% while adopting domestic prime lending rate only - HELD THAT:- As held that the currency involved herein is not Euro only, alleged safe harbor rules also do not pertain to these four assessment years. We thus affirm the TPO s identical action in all these four assessment years adopting LIBOR + 200 interest rate coming to 2.9% as against that claimed @ 11% at assessee s behest. Addition u/s 14A r.w.Rule 8D - HELD THAT:- Addition restricted to the extent of exempt income only in the CIT (A) s order in the light of Joint Investment (P) Ltd [ 2015 (3) TMI 155 - DELHI HIGH COURT ]
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2021 (12) TMI 1437
Loss in trading of cotton cloth - Classification of sale account of raw cotton - AO was of the view that the assessee had failed to explain the claim of wrongly classified sale of cotton cloth - assessee could not substantiate the wrong posting in the sale account so as to justify the loss in the sale of cotton cloth (as was computed by the AO) - HELD THAT:- It cannot be said that no documents or evidences were furnished by the assessee. We have also gone through the Certificate dated 27.3.2021 issued by M/s S. Karan Shama Co. , C.As, Ludhiana placed at page 8 of the paper book in which certain quantitative details pertaining to the cotton cloth and raw cotton have been certified. Apparently this Certificate was neither before the Assessing officer and nor before the Ld. CIT(A) and the assessee has filed it in the paper book for the ....... + More
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2021 (12) TMI 1435
Addition on account of consumption debtors - HELD THAT:- This Tribunal in the [ 2019 (4) TMI 204 - ITAT DELHI ] for Assessment Years 2008 09 and 2009 10 has considered a similar quarrel on identical set of facts and has decided the issue in favour of the assessee. Disallowance u/s 14A - HELD THAT:- The undisputed fact is that the assessee has earned exempt dividend income of Rs.18, 521/ only. But when the assessee filed return of income, the decision of the Hon'ble Delhi High Court [ 2015 (3) TMI 155 - DELHI HIGH COURT ] was not available with the assessee. The Hon'ble High Court has restricted the disallowance to the extent of exempt income. Similar view was taken in the case of Caraf Builders and Construction [ 2018 (12) TMI 410 - DELHI HIGH COURT ]. Since now we have the binding decision of the Hon'ble Jurisdict....... + More
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2021 (12) TMI 1434
Assessment u/s 153A - addition qua unabated assessment - incriminating material found during the course of search and seizure or not? - where no assessment proceeding for the year under consideration is pending, in that eventuality, in the absence of any incriminating material found during the course of search and seizure proceedings, whether the addition can be made qua unabated assessment for the said year? - HELD THAT:- Since, the facts of the instant case are exactly identical to the facts of the Smt. Sanjana Mittal Vs. DCIT [ 2019 (3) TMI 1757 - ITAT AMRITSAR] hence we hold that in the absence of incriminating material, in the case of the appellant assessee, no addition can be made qua unabated assessment for the year under consideration. Appeal of the assessee is allowed.
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2021 (12) TMI 1433
Assessment u/s 153A - Valid approval accorded u/s. 153D or not? - HELD THAT:- The Co-ordinate Bench in the case of Sh. Madan Lal. [ 2021 (8) TMI 1336 - ITAT AMRITSAR ] as held that approval which is granted in a mechanical, stereotype manner, without assigning any reasons and without considering the draft assessment order is not sustainable in the eyes of law. Thus where approval u/s.153D has been given in a mechanical manner and without application of mind in such cases assessment proceedings are to be vitiated. Appeals of the Assessee are allowed.
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2021 (12) TMI 1432
Revision u/s 263 - AO had passed an Order Giving Effect (OGE) allowing full relief to the assessee - As per CIT allowing relief to the assessee in the OGE without conducting fresh examination as directed by AO and without passing fresh assessment order has rendered the OGE erroneous and prejudicial to the interests of revenue - HELD THAT:- We notice that the Tribunal, vide its order [ 2016 (10) TMI 1374 - ITAT BANGALORE] has restored following three issues to the file of AO for examining them afresh on Disallowance u/s 14A of the Act, Whether Royalty income is eligible for computing deduction u/s 10A/10AA of the Act and Whether foreign currency expenses should be reduced from export turnover for computing deduction u/s 10A/10AA. As observed by the Ld PCIT, the AO has failed to pass a fresh assessment order u/s 143(3) r.w.s. 254 o....... + More
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2021 (12) TMI 1428
TP Adjustment - Corporate Guarantee Fee - assessee had charged guarantee fee of 0.25% - HELD THAT:- We find that identical issue arose in assessee s own case in A.Y. 2010-11 [ 2018 (2) TMI 2030 - ITAT DELHI] and the Co-ordinate Bench of Tribunal decided the issue in favour of the assessee. Transaction of corporate guarantee fee charged at 0.25% by the assessee from its AEs to be at Arm s Length rate and accordingly deleted the addition made by TPO. Revenue has not pointed to any distinguishing feature in the facts of the case in the year under consideration and that of the earlier years. Revenue has also not placed any material on record to demonstrate that the aforesaid decision of the Co-ordinate Bench of Tribunal in assessee s own case for A.Y. 2010-11 2012-13 has been stayed/ set aside/ overruled by higher judicial forum. On ....... + More
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2021 (12) TMI 1425
Bogus LTCG - Capital Gains Generated on Sale of Penny Stock - realince on third party information - A.O. has accepted the statements recorded by some other officers of the Department in some unconnected proceeding and believed it as a gospel truth against the Appellant and relying on it proceeded to draw inference against the Appellant - genuineness of claim of Long Term Capital Gain u/s 10(38) of the Act for sale of equity shares of listed companies denied - HELD THAT:- AO failed to perform his twin duties that of the investigator and adjudicator resulting in the additions being vitiated in the process. The entire disallowances in this case is based on third party information gathered by the Investigation Wing of the Department which have not been independently subjected to further verification by the A.O., who has not provided t....... + More
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2021 (12) TMI 1423
TP Adjustment - exclude M/s. Karvy Consultants Limited from the final list of comparables - HELD THAT:- When the Tribunal had given a specific direction in the first round of litigation to exclude all comparables having annual turnover of less than Rs.5 crores in ITeS segment, in our view, the TPO has exceeded his brief in including M/s. Karvy Consultants Ltd. as comparable in spite of the fact that its turnover from ITeS segment is below the threshold limit of Rs.5 crores. Pertinently, while deciding assesse s appeal in assessment year 2002-03, the Tribunal [ 2012 (3) TMI 208 - ITAT DELHI] had excluded M/s. Karvy Consultants Ltd. as a comparable since its turnover from ITeS segment was less than Rs. 5 crores. Thus, in view of the aforesaid, we do not find any infirmity in the decision of the Commissioner (Appeals) in excluding M/s. Karvy Consultants Ltd. as a comparable. Ground raised is dismissed.
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2021 (12) TMI 1422
TP Adjustment - comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee as engaged in the business of providing Software Development Services, Provision of Technical Support Services and Provision of Sales and Marketing support services to its Associate Enterprises (AEs) need to be deselected. Amortization of goodwill as operating expenses while computing the operating margin of provisions of sales and marketing - contention of the appellant before DRP that amortization of goodwill is treated as operating cost depreciation on the same should be allowed as a deduction u/s 32 - HELD THAT:- DRP rejected the claim by returning finding that the amortization of goodwill debited to P L account was allowed as a deduction and no claim u/s 32 was made in the return of income. No fallacy in the findings of ....... + More
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2021 (12) TMI 1421
TP Adjustment - Comparable adjustment - application of turnover filter - HELD THAT:- We hold that the 8 companies listed in Sl.No.(a) to (i) in paragraph -13 of this order, which the assessee seeks exclusion and whose turnover in the current year is more than Rs.200 Crores should be excluded from the list of comparable companies. This Tribunal in the case of Barracuda Networks India Private Limited [ 2022 (5) TMI 322 - ITAT BANGALORE ] has also reiterated the application of turnover filter on the same lines as indicated above. This Tribunal in the case of Barracuda Networks India Private Limited [ 2022 (5) TMI 322 - ITAT BANGALORE ] has excluded R.S.Software (India) Ltd., from the list of comparable companies on the ground that the related party transaction of this company was above 15%. Following the said decision, we direct exclus....... + More
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2021 (12) TMI 1420
Validity of draft assessment order passed in violation section 144C - AO treating the draft order as final order by issuing the notice of demand under section 156 the Act and notice initiating penalty proceeding under section 271(1)(c) - HELD THAT:- As per section 144C of the Act, it is mandatory for the Ld.AO to pass Draft Assessment Order in accordance with the procedure laid down therein. We have noticed that the coordinate Bench in the case of Suretex Prohphylactics (India) Ltd., [ 2021 (4) TMI 120 - ITAT BANGALORE] considered similar issue. In the present case, the AO passed the draft assessment order u/s. 143(3) r.w.s. 144C(13) of the Act on 21.12.2016 which is accompanied with demand notice issued u/s. 156 of the Act dated 21.12.2016 and it is also noticed that in the draft assessment order itself, the AO recorded the statem....... + More
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2021 (12) TMI 1418
Income deemed to accrue or arise in India - receipts of the appellant are in the nature of Royalties within the ambit of Explanation 2 to section 9(i)(vi) and Article 12(3) of the India-USA Double Taxation Avoidance Agreement ( DTAA ) - HELD THAT:- We find force in the contention of the ld. counsel for the assessee. A similar quarrel was considered and decided by this Tribunal [ 2021 (10) TMI 1389 - ITAT DELHI] we direct the Assessing Officer to treat the income of the assessee as not liable to tax in India. Appeal of assessee allowed.
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2021 (12) TMI 1414
Assessment u/s 153C - sufficient incriminating material seized during the search action - During the search, various evidences were collected, which explained inter alia, the modus operandi of the business of providing accommodation entries in the nature of bogus sales and unsecured loans - HELD THAT:- Admission was given when corroborative evidence was unearthed during the course of search. All these clinching and corroborative evidences along with the statements given during the search constitute incriminating evidence against the appellant. Even the appellant, Shri Anoop Y. Jain (part of statement reproduced by AO in para 5 of the assessment order), Shri Manish S Jain and Shri Sachin Pareek had accepted the entire modus operandi during the course of search in statement recorded u/s. 131 of the Act. In this case, therefore, ....... + More
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2021 (12) TMI 1406
Bogus LTCG - Addition u/s 68 - penny stock purchases - exemption u/s 10(38) denied - CIT-A deleted the addition - HELD THAT:- After due consideration of the findings of the learned CIT(A), we do not find any error in it. The shares were purchased long back in 2000-2001 and sold after retaining them for more than 10 years. There is nothing with the Assessing Officer to treat it as a bogus investment to earn profit in a short span of time. Therefore, the appeal of the Revenue is devoid of any merit and, accordingly, it is dismissed.
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2021 (12) TMI 1403
TP Adjustment - comparable selection - functional dissimilarity - HELD THAT:- As assessee in engaged in the business of provision of Software Development Services (SWD services) and in development, design and implementation of software programmes. Assessee also acts as consultant on matters relating to IT enabled services to its wholly owned holding company, thus companies functionally dissimilar with that of assessee need to deselected .
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2021 (12) TMI 1398
Reopening of assessment u/s 147 OR 153C r.w.s. 153A - additional grounds - As argued no failure on the part of the assessee to disclose fully and truly necessary facts for completion of the assessment - HELD THAT:- The assessee has raised additional grounds for both the assessment years. The issue raised in the additional grounds is that the assessment completed u/.s 147 r.w.s. 143 of the Act is bad in law. The contention of the assessee is that there was a search in the premises of M/s.Davanam Jewellers Private Limited and during the course of search, there were certain material found pertaining to the assessee. Assessment orders for A.Y. 2006-2007 and A.Y. 2007-2008 ought to have been completed u/s 153C r.w.s. 153A of the Act and not u/s 147 r.w.s. 143(3) of the Act The issue raised in the additional grounds, namely, whether the....... + More
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2021 (12) TMI 1394
Assessment u/s 153C - HELD THAT:- An assessment is valid even in absence of the foregoing incriminating material. Their lordships rather observe that whilst framing an assessment u/s 153A / 153C, AO is nowhere barred from taking cognizance of any other material as well. Whether the assessee s return(s) in issue would be treated as invalid being belated ones or not ? - Our reply is negative in assessee s favour and against the department. This is because of the fact that the assessee had filed its return(s) under the Income Declaration Scheme, 2016 on 04.08.2016 followed by the search in issue dt.04.07.2017. Revenue s argument that it had not filed any return in the corresponding assessment year u/s 139(1) we are of the opinion that the decision as to whether the income sought to be added as under the head undisclosed income has ....... + More
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2021 (12) TMI 1391
Disallowance of interest on belated payment of non compete fees - CIT-A deleted the addition - as per AO CIT(A) erred in deleting disallowance of interest paid on non-compete fees without appreciating the fact that said expenditure is capital in nature and not to be allowed as revenue expenditure by specific legislative mandate vide section 28(va) - HELD THAT:- We find that the Ld. CIT(A) has deleted additions made by the AO towards disallowance of interest paid on belated payment of non-compete fees by following the decision of ITAT, Chennai Benches in assessee s own case for assessment year 2000-01 where it was clearly held that liability to pay interest was contractual obligation and thus, the same is allowable expenditure u/s. 37(1) of the Act. The fact remains unchanged. The Revenue fails to bring on record any contrary judgments ....... + More
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2021 (12) TMI 1378
Disallowance u/s 14A r.w.r 8D - CIT-A restricted disallowing to exempt income earned by the assessee - HELD THAT:- We find that the total exempt income earned by the assessee during the year was Rs.382/-. Ld. AO noted that assessee has huge investments mainly on unquoted strategic investments in subsidiary companies and proceeded to make a disallowance u/s 14A at Rs.21,15,14,527/- u/s 14A of the Act read with Rule 8D(2) of the Income-tax Rules, 1962. CIT (A) referring to the judgments of Hon ble Delhi High Court in case of Cheminvest Limited [ 2015 (9) TMI 238 - DELHI HIGH COURT] and CIT vs. Holcim India Pvt. Ltd. [ 2014 (9) TMI 434 - DELHI HIGH COURT] held that disallowance u/s 14A cannot exceed the exempt income. The aforesaid finding of the ld. CIT (A) is in accordance with law as propounded by the Hon ble Delhi High Court. So....... + More
