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Income Tax - Case Laws

Showing 141 to 160 of 889 Records

• 2019 (7) TMI 1665 - ITAT DELHI
  

  TDS u/s 194I - Disallowance u/s 40(a)(ia) - short deduction of tds - default u/s 201 - HELD THAT:- Assessee’s case is squarely covered by the judgment of the Hon’ble Calcutta High Court in the case of CIT vs. S.K. Tekriwal [2012 (12) TMI 873 - CALCUTTA HIGH COURT] had held that in case of any shortfall due to any difference of opinion as to the taxability of any item or nature of payments falling under the various TDS provisions, the assessee can be declared to be the assessee in default u/s 201 of the Act but no disallowance can be made by invoking provisions of section 40a(ia).

  The Hon’ble High Court of Calcutta observed that the provisions of section 40a(ia) have two limbs; one is where, inter alia, the assessee has to deduct tax and second where after deducting tax, inter alia, the assessee has to pay the same into government account. The Hon’ble High Court of Calcutta went to observe that there was nothing in the said section to treat, inter alia, the assessee as defaulter where there is a shortfall in deduction and further, section 40a(ia) refers only to the duty to deduct tax and pay to government account. Undisputedly, in the present appeal also, there is no allegation that the tax deducted was not paid into the government account and the only fault of the assessee is the failure on its part to deduct tax at the prescribed rate. This, as per the judgment of the Hon’ble High Court of Calcutta, does not attract disallowance u/s 40a(ia) - Decided in favour of assessee.

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• 2019 (7) TMI 1663 - ITAT DELHI
  

  TP Adjustment - comparable selection - selecting good comparables to the assessee on several ground including the functional dissimilarity, non availability of segmental data and diversified activities besides high end use brand worth - HELD THAT:- Companies unrelated to service of export of data processing and back office support undertaken by the assessee need to be deselected from final list of comparability. Services rendered by the assessee are only back office operations falling in the category of ITES and not KPO.

  eClerx is not a good comparable at all to the assessee. Apart from that no segmental information is also available. The reasoning given by the ld. DRP in respect of AY 2011-12 equally applies to the facts obtaining in this year also. We, therefore, find eClerx not a good comparable and have to be deleted from the list of comparables for benchmarking international transaction.

  Exclusion of M/s Accentia Technologies and Infosys BPO on the ground that in respect of each comparable, certain extraordinary events had occurred during the previous periods which distorted the profitability thereby increasing the margin, cannot be characterized as unreasonable.

  Rejection of comparable not on the ground of functional dissimilarity, but only because of a different accounting period - As gone through the financials of this CG Vak Software the income from software development product and services is separately mentioned and was also at page 26, the segment revenue and segment results are also provided. In these circumstances, we are of the considered opinion that in the absence of any finding that this company is functionally dissimilar, ld. TPO should have considered these figures to identify whether CG Vak Software is a suitable comparable with the assessee. We, therefore, direct ld. TPO to consider this entity for benchmarking the international transaction.

  M/s Informed Technologies Ltd. and M/s Micro genetics Systems Ltd. Ld. TPO rejected the same on the ground that both the Companies sales are below ₹ 5 Crores - As relying on case of Chris Capital [2015 (4) TMI 949 - DELHI HIGH COURT]we hold that so long as a company is functionally similar to the assessee merely because it does not match with the turnover, it cannot be rejected. We, therefore, direct ld. TPO to include Informed Technologies Ltd. in the list of comparables.

  Interest of credit period granted by the company under normal trade practices - HELD THAT:- We are of the considered opinion that if working capital adjustment is granted, then no separate adjustment or interest receivables is required. We are fortified in our decision by the decision in case of Kusum Healthcare P. Ltd.[2017 (4) TMI 1254 - DELHI HIGH COURT]

  TPO/AO has erroneously interchanged operating profit/operating cost margin of the companies, namely, eClerx Services Ltd. and Omega Healthcare Management Services P. Ltd. and it requires rectification - HELD THAT:- Since it is not a part of adjudication but only a mistake that had crept in the order, we are of the opinion that the same could be rectified by the ld. TPO/AO. We, therefore, direct the same.

  Deduction u/s 10A in respect of AEGSC(STP) Unit set up by the assessee during the financial year 2002-03 on the ground that the STP unit was set up after splitting up its existing business of FCE(EOU) Unit - HELD THAT:- We direct the learned AO to allow the deduction u/s 10A of the Act for the Asstt. Year 2010-11 in respect of AEGSC(STP) Unit set up by the assessee during the Financial Year 2002-03.

  Grant of full credit to the assessee as claimed in the return - HELD THAT:- We are of the opinion that the ends of justice would be met by directing the ld. AO to verify the credit of TDS and allow the same to the assessee.

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• 2019 (7) TMI 1662 - ITAT CHENNAI
  

  Addition of undisclosed stock - HELD THAT:- Admittedly, the assessee engaged itself in the business of export of cotton garments, fabrics, etc. The assessee filed the details of purchase invoices and the lorry details by which the same was transported. Export of goods is not in dispute. AO doubts the purchase alone. When the export is not in dispute, this Tribunal is of the considered opinion the assessee could not have exported the goods without any purchase.

  Now coming to the contention of the Ld.DR that the assessee had furnished additional material and therefore there is violation of Rule 46A of the Income Tax Rules, a mere perusal of the order of the Ld.CIT(A) shows that no additional material was filed.

  CIT(A) simply referred to the documents filed before the AO and observed that the documents submitted clearly proves goods under dispute has been received by the assessee and exported. It does not spoke anything about the additional material.

  The details of invoice and the details of transport by lorry are available before the AO as well as Ld.CIT(A). Having furnished the details of the purchase invoice and the details of lorry before the Assessing Officer, this Tribunal is of the considered opinion the assessee has discharged its onus. Therefore the burden of proof shifts on the shoulders of the Revenue. The material available on record clearly establishes that there was purchase and export. CIT(A) has rightly deleted the addition made by the AO. - Appeal of the Revenue is dismissed.

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• 2019 (7) TMI 1659 - ITAT GUWAHATI
  

  Validity of assessment u/s 153A - non obtaining prior approval of the Joint Commissioner of Income Tax as required as required u/s 153D - correctness of JCIT’s approval - HELD THAT:- As decided in GEETARANI PANDA, MANJUSMITA DASH VERSUS ACIT, CIRCLE-2 (2) , BHUBANESWAR. [2018 (7) TMI 1888 - ITAT CUTTACK] has taken into consideration the settled legal position on the very issue of sec. 153D approval in light of earlier provision sec. 158BG vis-a-vis sec. 153D (supra) to conclude that the JCIT is not to accord a mere mechanical approval but he has to apply his mind in order to ensure that the assessing authority conducts appropriate enquiry and investigation.

  And also that there is no undue or irrelevant addition made in the assessment in issue. We also find that the tribunal’s leading decision in case of PCIT vs. Shreelekha Damani [2015 (8) TMI 1250 - ITAT MUMBAI] stands affirmed in hon'ble Bombay high court in [2018 (11) TMI 1563 - BOMBAY HIGH COURT].

  We conclude in these facts and circumstances that the department has not proceeded to finalise the impugned assessment(s) in true light of the relevant mandatory provision sec. 153D of the Act mainly for the reason neither the Assessing Officer had sent anything more than the draft assessment order(s) nor the JCIT had an occasion to apply his mind to ensure the twin purpose of his statutory exercise (supra). We further make it clear that since the entire exercise was carried out from both the authorities’ end on the same date i.e. 28.03.2016 itself in absence all the corresponding records, the impugned approval does not satisfy the relevant parameters of law as settled in preceding case law. We therefore quash all the impugned assessment(s) framed u/s. 153A r.w.s. 143(3) for this precise reason alone. - Decided in favour of assessee.

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• 2019 (7) TMI 1655 - GUJARAT HIGH COURT
  

  Higher rate of depreciation on cranes - @ 15% or 30% - CIT(A) took the view that only the Hydra Cranes can be termed as “Motor Cranes” and accordingly allowed depreciation at the rate of 30% - why depreciation on cranes used in the business of running the same on hire should not be restricted to 15% instead of 30%? - Tribunal confirming the order of the Respondent in limiting allowance of depreciation to 15% as against the claim at the rate of 30% on various types of cranes used in hiring business under Section 32? - HELD THAT:- Disallowance is not sustainable. The Revenue has tried to dismiss the entire issue in the name of a mistake but it does not appear to be a mistake. We are saying so, because even independent of the principle of consistency, the assessee has a good case on merits.

  We fail to understand as to on what basis the Revenue authorities have come to the conclusion that the assessee is not in the business of hiring and that the main business of the assessee is construction. According to the Revenue authorities, the cranes are used by the assessee for his own business of construction. There is thumping documentary evidence on record to indicate that the assessee is very much in the business of hiring. The depreciation at the higher rate could not have been declined merely on the assumption that the cranes might have been used by the assessee for his own business of construction.

  In fact, it would be an error to take the view that for the purpose of claiming depreciation at the rate of 30% the assessee is obliged to establish that the cranes are used exclusively for the hiring business and that they are not used for any other purpose.

  Decision of this Court in the case of Deputy Commissioner of Income-Tax v. Pradip N.Desai (HUF), [2011 (7) TMI 304 - GUJARAT HIGH COURT] wherein this Court took the view that if the assessee is not involved in the business of hiring the vehicle on rent, then he is not entitled to claim higher depreciation under clause (2)(ii) of Entry-III of Appendix-I. There need not be any debate on the proposition of law as explained by this Court in the said judgment. However, as discussed above, there is thumping evidence on record to indicate that the assessee is involved in the business of hiring the cranes. He might be using the cranes for his personal construction business too, but that does not disentitle him to claim higher depreciation once it is shown that the assessee is in the business of hiring the cranes. - Decided in favour of assessee.

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• 2019 (7) TMI 1654 - ITAT MUMBAI
  

  Enhancement of income by CIT-A - Addition of sale consideration of shares - not allowing any opportunity to the appellant as provided in section 251(2) - HELD THAT:- As gone through the order of the Tribunal and noticed that this legal issue was not adjudicated. The learned Counsel for the assessee stated that he is only interested in recalling of the ground.

  DR could not controvert the above factual position and submissions of the learned Counsel for the assessee - As legal issue raised by assessee has not been adjudicated. Hence, the same requires adjudication. Hence, qua ground No. 3, the appeal of assessee is recalled.

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• 2019 (7) TMI 1653 - ITAT BANGALORE
  

  Stay petition - extension of stay on collection of outstanding disputed demand - delay in disposal of appeal - extension for a further period of 180 days - HELD THAT:- Delay in disposal of appeal is not attributable to the assessee. Therefore, the stay is extended for a further period of 180 days commencing from today i.e.25-07-2019 till the disposal of appeal whichever is earlier. We want to make clear that the assessee should seek adjournment in course of the hearing of this appeal without justifiable reasons and if the assessee does so, the stay granted by this order shall stand vacated automatically. It has been intimated that appeal has been fixed for hearing on 06-11-2019. Stay petition is allowed

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• 2019 (7) TMI 1649 - RAJASTHAN HIGH COURT
  

  Cessation of liability - Guarantee commission payable to the Government - treatment given to the amounts i.e. the payments payable to the State for standing guarantee and shown as fee - revenue or capital receipt - AO treating it as income under Section 41(1)(a) - HELD THAT:- Undoubtedly, the assessee claimed them to be revenue receipts. At the same time, the record also supports the findings of the CIT(A) and ITAT, in that the loan utilized by the assessee was for the capital purposes; the loan was in-fact given by the NDDB. The assessee continues to remain liable to repay those amounts. In these circumstances, the State instead of fully writing off the amounts, (repayable by the assessee) imposed an important condition that they would be utilized only for capital/rehabilitation purposes. This was therefore a significant factor i.e. the writing off was conditional upon use of the amount in the hands of the assessee which was for the purpose of capital.

  The ruling of T.V. Sundaram Iyengar & Sons Ltd. [1996 (9) TMI 1 - SUPREME COURT]in the opinion of this Court, would not apply. No substantial question of law.

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• 2019 (7) TMI 1647 - ITAT MUMBAI
  

  TP Adjustment - adjustment to the arm's length price of the corporate guarantee fee - HELD THAT:- We will proceed on the footing that the provision of corporate guarantee to AE is an international transaction under section 92B - we will deal with the issue whether determination of arm's length price on corporate guarantee fee @ 1.75% is proper. It is evident, the Transfer Pricing Officer has applied the rate of 1.75% on the basis of certain information obtained from Indian Banks on the rate of commission relating to various guarantee. Further, the Transfer Pricing Officer has also relied upon his own order passed in the assessment year 2012-13. It is also a fact that learned DRP has upheld the decision of the Transfer Pricing Officer by relying upon its order passed in assessment year 2012-13. Pertinently, while deciding assessee's appeal in assessment year 2012-13 [2019 (4) TMI 1847 - ITAT MUMBAI] the Tribunal has followed its own order passed in case of a sister concern of the assessee and held that corporate guarantee fee should be computed @ 0.5%. Facts being identical, respectfully following the aforesaid decision of the Co-ordinate Bench in assessee's own case, we direct the Assessing Officer to compute the corporate guarantee fee @ 0.5%. This ground is allowed.

  Addition on account of arm's length price of interest on interest free loans to AEs - HELD THAT:- If the loan has been advanced to the overseas AEs in foreign currency, it will be appropriate to compute the interest on such loan by applying prevailing LIBOR with basis points. However, the assessee is required to furnish the necessary supporting evidence to substantiate its claim. In view of the aforesaid, we restore the issue to the Assessing Officer for verifying the primary facts and thereafter considering assessee's plea of applying the appropriate LIBOR rate of interest. This ground is allowed for statistical purposes.

  Nature of receipt - interest subsidy received under the TUFS - as a capital receipt or revenue receipt - HELD THAT:- Following Tribunal in assessee's own case [2019 (4) TMI 1847 - ITAT MUMBAI] we hold that the interest subsidy received by the assessee being in the nature of capital receipt is not taxable, hence, the Assessing Officer is directed to delete the addition.

  MAT Computation u/s 115JB - non-reduction of interest subsidy while computing book profit u/s 115JB - HELD THAT:- As decided in own case [2019 (4) TMI 1847 - ITAT MUMBAI] interest subsidy which was required to be excluded from Book profit. We accordingly direct AO to exclude the TUF subsidy while computing book profit u/s.115JB.

  Disallowance u/s14A r/w rule 8D - HELD THAT: -As could be seen from the details of fund available with the assessee as mentioned in DRP's order, own funds available with the assessee far exceeds the investment made. Prima-facie, a conclusion has to be drawn that the investments in exempt income yielding assets were made out of surplus funds available with the assessee. In that event, no disallowance of interest expenditure under rule 8D(2)(ii) can be made. Therefore, we direct the AO to examine assessee's claim factually and delete the disallowance made under rule 8D(2)(ii). As regards the disallowance of administrative expenditure under rule 8D(2)(iii), we are of the view that such disallowance needs to be upheld, as it has been correctly computed by the Assessing Officer.

  However, the disallowance already made by the assessee under section 14A of the Act has to be reduced. This ground is partly allowed.

  Disallowance u/s 14A r/w rule 8D to the book profit computed under section 115JB - HELD THAT:- Now it is fairly well settled that while computing the book profit under section 115JB of the Act, the Assessing Officer cannot make any adjustment by referring to the provisions of section 14A r/w rule 8D. However, the Assessing Officer has the power to make adjustment on account of expenditure incurred for earning exempt income as provided under clause (f) of Explanation-1 to section 115JB of the Act. Therefore, in the facts of the present case, we direct the Assessing Officer to make adjustment to the book profit in terms of Explanation- 1(f) to section 115JB of the Act by restricting it to the amount disallowed by the assessee voluntarily. This ground is partly allowed.

  Disallowance of interest expenditure by apportioning it to interest free loan advanced to associate entities - main contention of the assessee before learned DRP as well as before us is, since it had sufficient interest free fund available with it to take care of the loans advanced to the sister concern, no disallowance out of interest expenditure should be made - HELD THAT:- As applying the aforesaid principle, the Tribunal in assessee's own case in assessment year 2012-13 [2019 (4) TMI 1847 - ITAT MUMBAI] has deleted the disallowance of interest expenditure made under section 36(1)(iii) of the Act. As it appears, neither the Assessing Officer nor learned DRP have controverted assessee's claim regarding availability of surplus fund. What the Departmental Authorities have observed while disallowing interest expenditure is, the assessee failed to establish nexus between the advancement of interest free loan to the sister concern and the business expediency. Thus, in the aforesaid factual position, applying the ratio laid down by the Hon'ble Jurisdictional High Court in CIT v/s Reliance Utilities And Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT]as well as the decision of the Tribunal in assessee's own case cited supra, we hold that no disallowance under section 36(1)(iii) of the Act can be made. This ground is allowed.

  Disallowance of employees contribution to Provident Fund (PF) & ESIC - HELD THAT:- As seen from the factual details relating to payment of employees' contribution to PF & ESIC reproduced in the assessment order, all such payments were made before the due date of filing of return of income for the impugned assessment year in terms of section 139(1) of the Act. That being the case, as per the ratio laid down by the Hon'ble Jurisdictional High Court in Ghatge Patil Transports Ltd.. [2014 (10) TMI 402 - BOMBAY HIGH COURT] no disallowance can be made keeping in view the amended provisions of section 43B of the Act r/w the proviso. In fact, following the aforesaid decision of the Hon'ble Jurisdictional High Court, the Tribunal in assessee's own case in assessment year 2008- 09, has allowed assessee's claim of deduction towards employees' contribution on PF & ESIC while deciding the appeal [2019 (4) TMI 1847 - ITAT MUMBAI].

  Assessee's appeal is partly allowed.

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• 2019 (7) TMI 1644 - ITAT MUMBAI
  

  TP Adjustment - comparable selection - Functional similarity - HELD THAT:- Accentia Technologies Ltd. - From the annual report of the company as well as other material placed on record, it is noticed that the business model of the company is different from the assessee as it provides services in healthcare sector with the aid of software which is in the nature of KPO service. Moreover, during the year under consideration, this company has acquired another company which was a software development company having expertise in developing software relating to EMR, SaaS. It is also observed, due to the aforesaid acquisition the revenue of the company has substantially increased which certainly could have impacted the profitability. TPO has also accepted that the company has made acquisition during the year under consideration. However, he has tried to get over such fact by stating that the company acquired was in the same line of business. In our view, the aforesaid reasoning of the Transfer Pricing Officer is unacceptable. Thus this company cannot be a comparable to a BPO service provider. See B.C. MANAGEMENT SERVICES PVT. LTD. [2017 (12) TMI 255 - DELHI HIGH COURT]

  Acropetel Technologies Ltd. - Transfer Pricing Officer himself has stated that the company has three segments namely; engineering, design service, information technology service segment and healthcare segment. However, he has stated that only healthcare service segment was considered by him for comparability analysis. But nowhere the Transfer Pricing Officer has dealt with assessee’s contention with regard to unavailability of segmental details relating to export sales, employee cost, etc. Further, he has also not dealt with assessee‘s objection that substantial operation of software development activities were outsourced on sub–contract basis Learned DRP has also not considered the objections of the assessee property. As decided in CGI INFORMATION SYSTEMS AND MANAGEMENT CONSULTATION PVT. LTD. [2018 (4) TMI 567 - ITAT BANGALORE] this company from being treated as comparable since segmental information to apply certain filters are not available. Thus we exclude this company as a comparable.

  Crossdomain Solutions Ltd - Department has failed to substantiate the nature of information gathered by the Transfer Pricing Officer to consider the company as a comparable to the assessee. If the financial results of the company for the impugned assessment year are not available, as alleged by the assessee, the company cannot be considered as a comparable. Moreover, from the decisions relied upon by the learned Sr. Counsel for the assessee, it is noticed that the company has been excluded as a comparable in case of a BPO service provider since it is engaged in providing KPO service. In view of the aforesaid, we hold that this company cannot be treated as comparable to the assessee. Accordingly, the Assessing Officer is directed to determine the arm's length price of the international transaction with the AE after excluding the aforesaid three companies namely Accentia Technologies Ltd., Acropetel Technologies Ltd. and Crossdomain Solutions Ltd. from the list of comparables.

  Disallowance of depreciation on goodwill - HELD THAT:- When the assessee has paid capital gain tax at the time of transfer of goodwill and the Department has accepted it, it cannot be said that the assessee has adopted a colourable device. Moreover, the scheme of amalgamation between the assessee and Tracmail AR Services Pvt. Ltd., having been approved by the Hon'ble Jurisdictional High Court, no doubt can be raised with regard to the transparency or genuineness of such transaction. Thus, when the assessee by virtue of such amalgamation has received back the goodwill in its book, depreciation has to be allowed on goodwill. As regards the doubt raised by learned DRP that the assessee cannot claim depreciation on the entire amount of goodwill, it must be observed that the assessee has claimed goodwill on the opening WDV only and not on the entire amount. It is now fairly well settled that goodwill being an intangible asset, depreciation has to be allowed.

  Depreciation on additional goodwill arising on amalgamation - HELD THAT:- In case of Pruthvi Brokers and Shareholders Pvt. Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT] has held that even if the assessee has failed to claim a deduction either in the return of income or by filing revised return of income, the assessee can make such claim subsequently. Even in case of Goetz India Ltd. [2006 (3) TMI 75 - SUPREME COURT] has held that there is no restriction on the appellate authorities in entertaining a fresh claim of deduction made by the assessee.

  Therefore, keeping in view the ratio laid down in the aforesaid decisions, the decision of learned DRP in rejecting assessee’s claim is unsustainable, hence, deserves to be set aside. However, since the Departmental Authorities have not examined assessee’s claim, both factually and legally, we are inclined to restore the issue to the Assessing Officer for examining assessee’s claim on its own merit. While doing so, the Assessing Officer is also directed to take note of the fact whether such claim was allowed in any other assessment year. Ground is allowed for statistical purposes.

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• 2019 (7) TMI 1636 - SC ORDER
  

  Addition to the declared sale consideration received by the assessee for transfer of its shares - difference between the declared consideration and the market value of the property to tax - AO was of the opinion that the sale consideration was grossly inadequate given that the most significant or substantial asset held by the company was some immovable property - AO rejected the sale value and referred the issue to the District Valuation Officer (DVO) - HELD THAT:- Special Leave Petitions are dismissed.

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• 2019 (7) TMI 1635 - ITAT CHENNAI
  

  Disallowance u/s.36(1) (va) r.w.s. 2(24)(x) - contribution by the employees, towards welfare funds, remitted after due date prescribed in the respective enactments - HELD THAT:- In the present case, admittedly the contribution received from employees’’ for PF and ESI are not credited by the respondent to the employee’s account within due date stipulated under the relevant statute, but before the due date of filing of return.

  We find that the decision of the Hon’ble Madras High Court in the case of Unific Management Services (India) Ltd. Vs. DCIT [2018 (10) TMI 1386 - MADRAS HIGH COURT] is by a single judge, however a contrary view was taken by the Division Bench of Hon’ble Jurisdictional High Court in the case of Industrial Security & Intelligence India Pvt Ltd. [2015 (7) TMI 1063 - MADRAS HIGH COURT]wherein held assessee had remitted the employees contribution beyond the due date for payment, but within the due date for filing the return of income - Decided against revenue.

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• 2019 (7) TMI 1621 - ITAT MUMBAI
  

  Disallowance u/s 14A r.w. Rule 8D (2)(ii) of the Rules - HELD THAT:- We are of the view that the disallowance of interest expenses should be made after the net off interest only. Accordingly, this issue is decided in favour of the assessee against the revenue in the manner as indicative above.

  Expenditure in view of the provisions u/s 14A of the Act r.w. Rule 8D (2)(iii) of the Rules - HELD THAT:- In the case decided by Special Bench of Delhi titled as ACIT Vs. Vireet Investment P. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] it is specifically held that those investments which yielded the exempt income is liable to be considered for assessing the expenditure to earn the exempt income in view of the provisions u/s 14A of the Act r.w. Rule 8D(2)(iii) of the Rules.

  In the instant case, the whole investment has been considered for assessing the expenditure to earn the exempt income which is not justifiable. Accordingly, the finding of the CIT(A) is hereby order to be set aside and the issue is remanded to the AO to decide the matter of controversy afresh and to consider the investment which yielded exempt income for assessing the expenditure to earn the exempt income in view of the provisions u/s 14A of the Act r.w. Rule 8D(2)(iii) of the Rules in view of the decision of the special Bench in case of ACIT Vs. Vireet Investment P. Ltd(supra) in accordance with law.

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• 2019 (7) TMI 1620 - ITAT DELHI
  

  TDS u/s 194H - reimbursement of trade scheme to promoters was in the nature of incentives and discounts to retailers and did not contain any element of commission - HELD THAT:- The matter has been accordingly restored by the Tribunal to the AO for factual verification whether the transaction is only of reimbursement. Now the assessee in additional ground claiming that reimbursement is of trade discount and therefore not liable for deduction of tax at source.

  Now the assessee wants to decide this issue by the Tribunal, whereas the learned DR is of the view that this issue should also be restored back to the AO for deciding along with the earlier direction of the Tribunal. We agree with the view of the Ld. DR, because once the Tribunal has taken the decision for verification of the transaction whether it is reimbursement, then, it is appropriate to restore for verification whether the reimbursement is for trade discount. In our opinion the issue raised in additional ground is connected with the issue raised in the original ground and thus may be examined by the Assessing Officer along with the verification of the ground restored by the Tribunal (supra).

  We note that assessee has claimed before us that the trade discount was given by the sale promoters to the retailers and the assessee has reimbursed the same to the sale promoters. In this regard, we direct the Assessing Officer to verify the trade schemes floated by the assessee for giving trade discounts to the retailers and agreement among the assessee, sale promoters and retailers if any in respect of trade discount. The Assessing Officer may also verify from the accounts of the sale promoters as well as the retailers to ascertain whether the reimbursement was for trade discounts. If on verification, it is found so, then no disallowance would be required in view of no liability of deducting tax at source on trade discounts.

  Transfer Pricing adjustment on account of Advertisement, Marketing and Sales Promotion Expenses [AMP] - HELD THAT:- It can be seen that the operating margin excluding AMP and selling and distribution expenses of the assessee for the year under consideration is 28.03% whereas that of the comparables is 10.60% which is much higher and if the operating margin including all the operating expenses is taken, the same is 7.04% in the case of the appellant and 5.11% in the case of comparables. The margin excluding AMP expenses only is 27.04% in the case of the appellant and 6.63% in the case of comparables. In the light of the recisions of the Hon’ble High Court discussed elsewhere and in the of the factual matrix exhibited hereinabove, we are of the considered opinion that the impugned addition on account of AMP expenditure is uncalled for and deserves to be deleted.

  Disallowance of provision for transit breakages on the ground that same is contingent in nature - HELD THAT:- AO shall allow the actual transit breakages for AY 2001-02 as revenue expenditure consistent with the settled legal position. The Assessees would also be permitted to get the benefit of the reversal of the provision for transit breakages made in the AYs in question accordance with law.

  Disallowance of being trade scheme reimbursement to sales promoters for non-deduction of tax under section 40(a)(ia) - HELD THAT:- Ground remanded back to the file of the Assessing Officer for verification of the documentary evidences filed by the assessee and decide whether the impugned disbursement were reimbursement and if found so, the same might be allowed as deduction. The respective grounds of the appeal are accordingly allowed for statistical purposes.

  Disallowance u/s 40(a)(ia) - reimbursement made to the sale promoters were in respect of trade discount and therefore the assessee was not required to deduct tax at source and thus no disallowance was required - HELD THAT:- Since we have already adjudicated the additional ground raised by the assessee in assessment year 2007-08, to have consistency in our decision on the issue in dispute, the additional ground raised in all the respective appeals are restored back to the file of the Assessing Officer with directions identical to the directions issued in assessment year 2007-08. Thus, the additional grounds raised by the assessee are accordingly allowed for statistical purposes.

  Disallowance u/s 40A(3) for payment made in cash on the basis of the documents seized from the premises of Sri Sameer Goyal - HELD THAT:- It is nothing but a dumb document which requires no consideration. Moreover, it is an undisputed fact that the documents were seized from the premises of Samir Goyal and, therefore, any relevance to be deduced from the same has to be in the case of Samir Goyal and not the assessee keeping in mind that the assessment has been framed u/s 153A of the Act. We, accordingly, do not find any merit in the addition and direct the Assessing Officer to delete the same.

  Disallowance u/s 40A(3) - HELD THAT:- Such payments do not attract the provisions of section 40A(3) of the Act. Moreover, the assessee has also furnished the ledger account of M/s Sky View in the books of the assessee for the period 01.04.2007 to 31.03.2011. It appears that the Assessing Officer has not examined the details from correct perspective. In the interest of justice and fair play, we restore this issue to the file of the Assessing Officer. The Assessing Officer is directed to verify from the ledger account of Sky View and verify whether payments have been made by A/c payee cheques/RTGS and after satisfying himself, no addition need be made u/s 40A(3).

  Disallowance of payment made to certain parties under section 37(1) due to nonverification or nonproduction of the parties - HELD THAT:- As per details in the chart furnished by the ld. counsel for the assessee, it can be seen that in respect of four parties, the assessee has done no transaction. Therefore, there is no point in issuing notice u/s 133(6) of the Act to these parties.

  In respect of other parties, since the assessee has furnished complete details in the form of invoice, agreement, CST registration certificates and copies of ledger account, the Assessing Officer should have pointed out specific errors/defects in these direct evidences. In our considered opinion, assessment has been framed without proper verification. We, therefore, restore this issue to the file of the Assessing Officer with the direction to examine the documentary evidences furnished by the assessee and if necessary, can verify the transaction from the recipient parties.

  Disallowance of cash payment u/s 40A(3) - HELD THAT:- Issue in dispute need verification by the Assessing Officer as to whether the payment has been made by the cheque and if found so, the Assessing Officer is directed to delete the addition. The issue in dispute is accordingly restored to the file of the Assessing Officer for necessary verification from the bank statement of the assessee. The assessee is directed to produce necessary evidence in support of its claim before the Assessing Officer. The ground of the appeal is accordingly allowed for statistical purposes.

  Undisclosed sales - HELD THAT:- Contention of the assessee regarding breakage of bottled cases during transit and reconciliation of the same with records of the Excise Authorities have not been verified by the lower authorities. Accordingly, we restore the issue in dispute to the file of the learned Assessing Officer for verification of the claim of the assessee and decide the issue in dispute in accordance with law. Though, the issue should have been restored to the Ld. Dispute Resolution Panel, however, to avoid proceedings in the case at multiple stages, we have restored this issue to the file of the Assessing Officer. The ground of the appeal is accordingly allowed for statistical purposes.

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• 2019 (7) TMI 1618 - ITAT DLEHI
  

  TP Adjustment - MAM selection - TNMM or CUP method - non grant of Royalty and Product Development fee - HELD THAT:- Tribunal held that the assesee had been consistently following the TNMM method as accepted by the authorities and, therefore, it is not open for the TPO to apply the CUP method abruptly without assigning any reason and such an act of the TPO amounts to deciding the issue by sitting in the armchair of the businessman/assessee.

  Tribunal held that the application of benefit test is impermissible and as a matter of fact the payment of royalty and product development fee are intrinsically interlined with the production and sales and can only be decided under TNMM. On this premise, the Tribunal set aside the impugned order and remanded the issue back to the ld. TPO to decide it afresh after providing an opportunity to the assessee. With this view of the matter, we set aside order and remand the issue relating to the royalty and product development fee to the file of the ld. TPO for deciding it afresh - Appeal is allowed for statistical purposes.

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• 2019 (7) TMI 1613 - ITAT HYDERABAD
  

  Revision u/s 263 - enhanced sale consideration received by the assessee due to the delay in the sale transaction on account of the fault of the buyer of the property termed as ‘interest’ - HELD THAT:- It is pertinent to mention that there is no finding by the Ld. CIT as to what was the rate of interest charged by the assessee for the delayed payment. It can be only construed that the entire payment received by the assessee was only on account of ‘sale consideration’. Therefore, there is no mistake committed by the Ld. AO while passing his order, being prejudicial to the interest of the Revenue. Hence the finding of the Ld. CIT on this count is erroneous.

  Granting deduction u/s. 54F - assessee has not constructed the house within the stipulated period provided under the Act in order to claim the benefit of deduction - HELD THAT:- Various higher judiciaries cited by the assessee before the Ld.CIT has held that if the assessee invests the entire capital gains for construction of the residential house within the stipulated period and if there is a delay in the construction due to the fault of the builder / promoter wherein the assessee has no control over the builder/promoter for such delay then the assessee cannot be held to be in fault and shall be entitled for the benefit of deduction u/s 54F of the Act. Considering these decisions which are also cited in the Order of the Ld. CIT the order of the Ld. AO for granting deduction U/s. 54F of the Act has merits and not erroneous. Therefore, the finding of the Ld. CIT that the order of the Ld. AO is prejudicial to the interest of the Revenue is devoid of merits. Considering these facts and circumstances of the case, we are to the considered view that the Ld. CIT is not right in his rem to invoke his powers U/s. 263 of the Act on these two counts in the case of the assessee. We hereby quash the order of the Ld. CIT passed U/s. 263 - Decided in favour of assessee.

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• 2019 (7) TMI 1610 - ITAT BANGALORE
  

  Exemption u/s 54F - whether the assessee is eligible for deduction u/s. 54F in respect of both the house property purchased by the assessee or not? - HELD THAT:- Provisions of section 54F (1) has been amended by Finance (No. 2) Act, 2014 w.e.f. 01.04.2015. In the pre amended provisions, the following words were part of sub section (1) of section 54F “constructed, a residential house”. But as per the amended provisions, these words are replaced by the following words “constructed, one residential house in India”. Specific provision of section 54F, after the amendment w.e.f. 01.04.2015 i.e. Assessment Year 2015-16, deduction is allowable u/s. 54F(1) only in respect of one residential house purchased or constructed by the assessee and hence, on this aspect, we find no infirmity in the order of CIT(A) and we hold that the assessee is not eligible for deduction u/s. 54F(1) in respect of both the house properties purchased by the assessee.

  Applicability of the proviso (a)(ii) to section 54F (1) - In respect of the applicability of this proviso, this is the only submission of ld. AR of assessee in para 13 of written submissions as reproduced above that since as per the claim of the assessee, deduction is allowable in respect of the property purchased on 28.04.2014 and the assessee has not purchased any other property after this date, this proviso is not applicable. In this regard, we find no merit in this contention of ld. AR of assessee because as per the proviso (a)(ii) of section 54F (1) as reproduced above, this is not the requirement that no other property other than the new property should be purchased after the purchase of new asset. In fact, the requirement of the proviso is this that if the assessee purchases any residential house other than the new asset within the period of one year after the date of transfer of original asset, deduction is not allowable u/s. 54F (1). Hence whether the deduction u/s. 54F (1) is allowable in respect of second property or first property, it is not material because in both the situations, the proviso will be operating and as a result, the assessee will not be eligible for deduction u/s. 54F (1). - Decided against assessee.

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• 2019 (7) TMI 1609 - ITAT MUMBAI
  

  Penalty u/s 271D - accepting in cash loan/ deposit/ transactions made through journal entries in excess of ₹20,000/-in violation of the provisions of section 269SS - reasonable cause under section 273B - CIT-A deleted addition as genuineness of transactions made through journal entries is not in doubt and consequently there is a reasonable cause for accepting in cash loan/ deposit/ transactions made through journal entries in excess of ₹20,000/- - HELD THAT:- In view of the judgement of Lodha developers Pvt. Ltd [2018 (2) TMI 603 - BOMBAY HIGH COURT] and Triumph International Finance (I) Ltd [2012 (6) TMI 358 - BOMBAY HIGH COURT] wherein it is held that where loan / deposit has been repaid by day to day accounts of the parties through journal entries, it must be held that the assessee has committed default for the contravention of provisions of section 269SS or 269T as the case may be.

  But the Hon’ble Bombay High Court has clarified the position with effect from 12.06.2012 date when the judgement was pronounced and prior the date of decision of Hon’ble Bombay High Court in the case of Triumph International Finance (I) Ltd (supra) there was a reasonable cause for the assessee to receive deposit of loan or repayment of the same through journal entries. Accordingly, the assessee’s case is squarely falls under a reasonable cause under section 273B of the Act and therefore, in our view, penalty levied by the addl. CIT under section 271D of the Act has rightly been deleted by CIT(A). - Decided against revenue.

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• 2019 (7) TMI 1608 - ITAT AHMEDABAD
  

  Exemption claimed u/s. 11 - Charitable object u/s 2(15) - assessee is a authority established by the Government of Gujarat u/s. 27 of the Gujarat Town Planning Act with an object to develop Gandhinagar Urban Area in controlled and disciplined manner - HELD THAT:- Following the decision of Ahmedabad Urban Development Authority vs. ACIT [2017 (5) TMI 1468 - GUJARAT HIGH COURT] and CIT Vs. Gujarat Industrial Development Corporation [2017 (7) TMI 811 - GUJARAT HIGH COURT] wherein the claim of the assessee has been allowed Considering the fact that the assessee was a statutory body, an Authority constituted under the provisions of the Act, to carry out the object and purpose of Town Planning Act and collected regulatory fees for the object of the Acts, no services were rendered to any particular trade, commerce or business; and whatever income was earned by the assessee even while selling the plots (to the extent of 15% of the total area covered under the Town Planning Scheme) was required to be used only for the purpose to carry out the object and purpose of the Town Planning Act and to meet the expenditure of providing general utility service to the public such as electricity, road, drainage, water etc. and the entire control was with the State government and accounts were also subjected to audit and there was no element of profiteering at all.

  The activities of the assessee could not be said to be in the nature of trade, commerce and business and therefore, the proviso to Section 2(15) of the Act was not applicable so far as the assessee was concerned. Therefore, the assessee was entitled to exemption under section 11 - Decided in favour of assessee.

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• 2019 (7) TMI 1604 - ITAT JAIPUR
  

  Addition u/s 68 - Bogus LTCG on sale of shares - HELD THAT:- When the assessee has produced all the relevant documentary evidences to establish the genuineness of the transaction and there is no contrary evidence to doubt the correctness of the evidences produced by the assessee then treating the transaction of purchase and sale as sham by the AO is not justified. The assessee has also produced the financial statements of M/s. Kailash Auto Finance Ltd. to show that the company has earned a handsome profit - alleged SEBI order was also subsequently revoked. Therefore, all these facts established the genuineness of the transaction. Hence we do not find any error or illegality in the order of the ld. CIT (A) in deleting the addition made by the AO under section 68 of the IT Act by treating the Long Term Capital Gain on sale of shares as unexplained cash credit. - Decided in favour of assessee.

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