Advanced Search Options
Income Tax - Case Laws
Showing 101 to 120 of 366 Records
-
2020 (7) TMI 621 - ITAT DELHI
TP Adjustment - addition on account of provision of Software Development Services by the assessee to its AE - Comparability selection - HELD THAT:- Assessee is engaged in provision of Software Development Services to its AE. For benchmarking aforesaid international transaction, Transactional Net Margin Method (in short TNMM) is applied.
Where TNMM method is applied, it takes care of certain marginal differences between the functioning of the tested party and the finally selected comparables. However, if the module of working is different, then such a concern cannot be held to be functionally comparable and cannot be selected in the final list of comparables.
The Hon’ble Delhi High Court in Rampgreen Solutions vs. CIT [2015 (8) TMI 931 - DELHI HIGH COURT] while adjudicating similar issue of application of TNMM method and whether functionality being same was sufficient held that the comparable transaction/entities must be selected on the basis of similarity with the control transaction/entity. The comparability of controlled and uncontrolled transactions had to be judged inter alia, with reference to comparability factors as indicated under Rule 10B(2) of I.T. Rules.
Whether a concern which fails service revenue filter applied by the TPO, can this be excluded from final list of comparable? - We find that the TPO had mentioned the same to be at 74% whereas the learned AR for the assessee claims that it is 75% and on the other hand the learned DR for the Revenue points out that the employee service revenue filter comes to 84.93%. In view of the dis-similarity in the figures proposed by the AO / TPO, the learned AR for the assessee and learned DR for the Revenue, we remit this issue to the file of AO / TPO to verify the stand of the assessee and in case it fails to service revenue filter, which is proposed by the TPO himself then the said concern is to be excluded from the final list of comparable.
Exclusion of Persistent Systems Limited - As in assessee’s own case, relating to assessment year 2007-08 and pointed out that the said concern was held to be functionally similar to the assessee. The learned AR for the assessee fairly pointed out that the issue was decided against the assessee by the Tribunal. Accordingly, we find no merit in the plea of the assessee and the said concern i.e. Persistent Systems Limited is to be included in the final list of comparable.
Wipro Technology Services Limited concern having such huge brand value and owning intangibles cannot be compared with the concern providing BPO services. The Delhi Bench of the Tribunal in Bechtel India (P.) Ltd.[2016 (9) TMI 196 - DELHI HIGH COURT]had excluded Wipro Technology Services Limited on the ground of high related party transaction. We further find that the said concern was also engaged in sale of software products. In these facts and circumstances, we direct the exclusion of Wipro Technology Services Ltd,.
Sasken Communication Technologies Limited is not functionally comparables to the assessee and same needs to be excluded from the final list of comparable.
Thirdware Solutions Limited - we look at the annual report of the concern i.e. Thirdware Solutions Limited, we find that it was engaged in implementation and consulting services of software and business intelligence. It has also declared Revenue from sale of license, Software Services, export from SEZ and STPI. However, the segmental details are not available and the same is to be excluded from the final list of comparable.
Adjustment made on account of receivables from AE - case of the Revenue is that as the assessee has not received the amount due from the AEs, within the stipulated period then interest adjustment needs to be made on account of interest due on Receivables, as this was an International Transaction - HELD THAT:-The assessee during the year under consideration had not avail any loan from AEs or unrelated third parties and was not incurring any interest cost.
There was similar delay in receipt of receivables from others and the assessee was not charging any interest on delay in receipt of receivables against services rendered to unrelated third parties.
Following the ratio laid down in Kusum Healthcare Ltd.. [2017 (4) TMI 1254 - DELHI HIGH COURT] and also in line with the findings of the Tribunal in M/s. Global Logic India Ltd. (supra), we find no merit in making any adjustment on account of interest due on receivables from its AE.
Appeal of assessee allowed.
-
2020 (7) TMI 620 - ITAT DELHI
TP Adjustment - adjustment of arm’s-length price with respect to the outstanding debtors - HELD THAT:- It is apparent that associated enterprise is only paying assessee the amount which is enough for defraying expenditure to keep it afloat and keeping all other sums in the form of outstanding trade receivable. In view of above peculiar facts, where total shareholders funds are available with its associated enterprise as an interest free trade receivable clearly shows that outstanding receivable from the associated enterprise is not at all the transaction of sale of goods/services to the assessee. In view of this, agreeing with the view of the coordinate bench in assessee’s own case in earlier year, order of the learned transfer pricing officer cannot be found fault with in considering the overdue outstanding receivable from its associated enterprise as a separate international transaction.
AR argument that if a working capital adjustment has been given to the assessee then there cannot be any addition/adjustment with respect to the outstanding receivable from its associated enterprise is devoid of any merit for the peculiar facts in this case wherein total shareholders funds are enjoyed by the associated enterprise as outstanding receivable.
No document whereby the assessee has made any request before the learned transfer pricing officer or before the learned dispute resolution panel with respect to granting of working capital adjustment. Even in the transfer pricing study report submitted by the assessee which is placed the learned authorised representative could not show us that assessee himself has claimed any working capital adjustment while preparing its comparability analysis.
In transfer pricing study report the assessee has stated what kind of assets it has employed and it has not stated that any working capital has been employed by the assessee. Even otherwise the assessee could not show us what is the difference in working capital of the assessee compared with comparable companies. Thus the adjustment of working capital was not at all there in case of assessee for this year. In view of this, we reject this argument. - Decided against assessee.
-
2020 (7) TMI 619 - ITAT MUMBAI
Unexplained cash credits u/s 68 - unsecured loans - parties have not responded to notice issued u/s 133(6) - HELD THAT:- Assessee has discharged its initial burden cast upon, it under the provisions of 68 - Once initial burden cast upon on the assessee has been discharged by filing necessary evidences, then the burden shifts to the revenue to prove that the credits found in the books of accounts of the assessee is income earned from undisclosed source of income.
AO has primarily relied upon the fact that the parties have not responded to notice issued u/s 133(6) to draw a conclusion against the assessee that the purported loans taken from those parties are non genuine in nature, ignoring legal position that non appearance of the parties to the proceedings before the Ld. AO cannot be a sole ground for taking adverse inference against the assessee, more particularly, when the assessee has filed necessary evidences to prove loans taken from above parties.
This legal position is supported in the case of CIT vs Lovely Exports Pvt.Ltd. [2008 (1) TMI 575 - SC ORDER ] held that if, the share application money is received by the assessee company from alleged bogus shareholders, the names are given to the Ld. AO, then the department is free to proceed to reopen their individual assessment in accordance with law, but the sum found credited in its books cannot be regarded as undisclosed income of the assessee. - Decided in favour of assessee.
-
2020 (7) TMI 618 - ITAT JAIPUR
Undervaluation of closing stock - method of valuation of the marble block - basis of valuing stock as defective stock on lumpsum basis or on estimated basis - AR submitted that during the year only stock of marble block is considered defective and valued at net realizable value - CIT(A) has returned a finding that there is no evidence to show 50% of stock of marble block is defective and also there is no justification for valuing such stock at 55% of its value - HELD THAT:- AO has returned a finding that even in the stock register, the assessee has not mentioned any stock as defective and no differentiation or marking was given in the stock register. AO has carried out the necessary verification of stock register and such a finding of the AO has not been rebutted before us and thus attains finality. Further, how the assessee has arrived at net realizable value @ 55% of cost is not clear.
AR has referred to range of value at which marble blocks were sold during the year and in the subsequent financial year 2015-16, however, what is the percentage of realization or at what profit/loss margins, the blocks were sold has not been specified - assessee has failed to justify the quantum of defective stock of marble blocks and its realizable value, thereby the addition made by the AO is hereby confirmed. In the result, the ground of appeal is dismissed.
Disallowance u/s 14A read with Rule 8D - HELD THAT:- As noted that investment in shares of SBBJ has been made in the earlier years as is evident from the computation done by the AO wherein there is no change in the value of investment at the beginning of the year and at the close of the year. In AY 2013-14, the ld CIT(A) has given a finding that interest free funds were more than investment made by the assessee and disallowance of interest was deleted which was subsequently upheld by the Coordinate Bench.
However, disallowance on account of administrative expenses was sustained at ₹ 13,414. Therefore, following the earlier year, the disallowance of administrative expenses of ₹ 2,974 as made by the AO is upheld for the impugned assessment year. In the result, the ground of appeal is dismissed.
-
2020 (7) TMI 604 - MADRAS HIGH COURT
Capital Gains - Slump sale or sale of individual assets - whether the Tribunal was right in affirming the order passed by AO and holding that the transfer of the division is to be treated as a 'slump sale' and not sale of individual items and consequently, Section 50B was attracted? - to be taxed u/s 41(2) or under the head “capital gains” - HELD THAT:- CIT(A) rendered a factual finding that the assessee has assigned separate values for the immovables consisting of land and building and movables consisting of furnitures and fixtures, plant and machinery, patents, net current assets and therefore, concluded that the consideration for transfer cannot be called as a lump sum consideration. - It was decided that, the sale effected by the assessee does not constitute “slump sale” as per Section 2(42C) of the Act and hence the provisions of Section 50B will not be applicable.
We find that all that the Revenue stated was that CIT(A) erred in holding that the sale effected by the assessee does not constitute “slump sale” as per Section 2(42C) of the Act and hence provisions of Section 50B will not be applicable. The same grounds have been repeated, but not in the same format, but by adopting a different style.
Substantial question of law framed for consideration in this appeal undoubtedly are mixed questions of fact and law. The question of remanding the matter to the Tribunal for fresh consideration would not arise for the simple reason that the fact that the individual assets were separately valued as recorded by the CIT(A) was never disputed by the Revenue before the Tribunal. Therefore, on such admitted facts, if we examine the finding of the Tribunal, more particularly, in paragraph 13 of the order, we find that the same calls for interference.
As decided in Artex Manufacturing Company [1997 (7) TMI 7 - SUPREME COURT] value of the plant, machinery and dead stock though not mentioned in the agreement, but information was furnished by the assessee before the Income Tax Officer from which it became evident that the plant, machinery and dead stock were separately valued and therefore, it was held that it is not a case in which it cannot be said that the price attributed to the items transferred is not indicated and hence Section 41(2) of the 1961 Act cannot be applied. This decision would clearly support the case of the assessee, who had succeeded before the CIT(A) by establishing that the individual assets were separately valued and documents to the said effect were produced. Added to that the Revenue did not dispute such a factual position before the Tribunal and consequently, the finding rendered by the Tribunal does not merit acceptance. - Decided in favour of the assessee
-
2020 (7) TMI 603 - ITAT DELHI
Application of provision u/s 145 - whether books of account were produced before the ld AO or not? - HELD THAT:- Quantitative difference harped upon by AO is also with respect to the letter submitted by the assessee and the tax audit report. Quantitative difference also with respect to Raw materials and other materials it is necessary to examine the books of accounts of the assessee. In the present case, the whole addition is made by applying the provision of section 145(3).
The provisions of Section 145 (3) can only be applied if the assessing officer is not satisfied about the correctness or completeness of accounts of the assessee primarily. Therefore, even without examination of the books of accounts of the assessee which assessee has not produced despite called for by the assessing officer, application of the provisions of Section 145 (3) is premature.
As AR has agreed to produce the books of accounts before the assessing officer and the learned DR has also expressed his willingness on behalf of AO to examine it, therefore, in the interest of justice, we set aside the whole issue back to the file of the ld AO with a direction to the assessee to produce books of accounts and vouchers before him for examination.
AO is also directed to examine it and then decide the issue, following the order of the Hon'ble Delhi High Court as far as it relates to valuation, and decide the issue on merits with respect to the other grounds. Assessee is directed to produce the books of account before the AO within 120 days from the date of this order by taking prior appointment of the ld AO. - Appeal of assessee is partly allowed.
-
2020 (7) TMI 602 - ITAT DELHI
Determining the business loss by allowing carried forward loss - return is filed beyond the due date prescribed u/s 139(1) - HELD THAT:- The facts are very clear that the assessee filed return on 02.01.2013, which is beyond the due date prescribed u/s 139(1). In the return of income the assessee has declared loss consisting of business loss for the year and unabsorbed depreciation. As per the provision of section 139(3) to carry forward business loss u/s 72(1), assessee should have filed its return of income in time allowed u/s 139(1).
The above condition does not apply in case of unabsorbed depreciation in view of the provision of section 32(2) - AO has correctly held that business loss is not allowable to be carried forward and has allowed being unabsorbed depreciation to be carried forward. CIT (A) clearly referred to the provision of section 80 also The ld CIT (A) has also upheld the same view. - Decided against revenue.
-
2020 (7) TMI 601 - ITAT DELHI
Disallowance of royalty expenses - Disallowance u/s 40A(2)(b) - disallow the excessive or reasonable expenditure - AO has only questioned the fair market value of the expenses - HELD THAT:- In the instant case the AO has only compared royalty expenses of the preceding assessment year and no efforts have been made for identifying the fair market value of such expenses during relevant period, which is one of the requirement for invoking the provisions of section 40A(2)(b).
Under transfer pricing provisions the arm’s-length price is compared with similar transactions. Though the provisions of section 40A(2)(b) are general provision as compared to the specific provisions of the transfer pricing, the AO was required to compare the royalty expenses paid in case of the similar product by other companies during the relevant period. AO has not done any such exercise and only made basis of expenses paid in earlier years.
As assessee contended that in assessment year 2013-14 the transaction of the royalty expenses were subjected to transfer pricing provisions. As submitted that in assessment year 2013-14 average royalty payment was 2.99% of the sales, which stands accepted by the Department and therefore, no disallowance should be made in the year under consideration, where the royalty expenses are only 2.77% of the sales. This contention is rejected as the fair market value of the expenses have to be identified for the relevant year and percentile of the earlier year cannot be made basis for comparison. Disallowance made out of royalty expenses is deleted. The ground of the appeal is accordingly allowed.
Transaction of the royalty expenses between the assessee and its Associated Enterprises (AEs), is international transaction and therefore its arm’s-length price can be determined only under the transfer pricing provisions and not under the provision of the section 40A(2)(b) - when there is specific provisions for dealing with the issue of expenses paid to related party under transfer pricing provisions, the general provisions under section 40A(2)(b) of the Act should not be invoked. We have noticed that this issue was not raised before the lower authorities and it has been raised before us for the first time that too as oral argument and not either as regular ground or additional ground.
-
2020 (7) TMI 600 - ITAT MUMBAI
Bogus purchases - CIT-A restricting the disallowance to the extent of 12.5% - HELD THAT:- The assessee has categorically stated that the purchases were made in the form of Diary for distribution to the customers. At the worst it may be a case of inflating expenses. The assessing officer has not verified and examined the fact that the diaries were distributed on not.
CIT(A) after considering the contention of assessee restricted the addition to the extent of 12.5% of the alleged bogus purchases by following the decision in CIT vs. Simith P. Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT]. - despite furnishing sufficient evidence in the form of ledger accounts and payment through banking channel, the AO ny adverse material against the assessee. CIT(A) has brought the element avoidance of VAT and other charges to tax, embedded in such bogus purchases. Considering the peculiar facts of the present case, we do not find any infirmity in the order passed by ld CIT(A),which we affirmed. - Decided against revenue.
-
2020 (7) TMI 599 - ITAT MUMBAI
Royalty/ Fees for Technical Services - Receipt of Business Support Charges - whether what has been recovered from DIPL is the general maintenance and running cost of various global systems which does not amount to the definition of Royalty as prescribed under Explanation 2 to Section 9(1)(vi) ? - Whether appellant’s contention that business support charge receipt is reimbursement of cost incurred and hence not chargeable to tax ? - HELD THAT:- In the instant case, the appellant acts as the central coordinator for all Damco entities across the globe. As a central coordinator, the appellant procures from various service providers viz. insurance, procurement of various product and information technology related support services etc. needed by Damco entities across the globe. The appellant enters into ‘MSA’ with Damco operating entities and therefore, recovers the cost of procurement/provision from these entities. All these costs are only reimbursed to the appellant and there is no mark-up.
Receipt of business support charge is not taxable as fees for technical services/royalty under the Act or the relevant DTAA as the same is purely in the nature of reimbursement of cost.
Services/procurement rendered by the appellant are in the nature of coordinating services whereby various costs incurred are pooled together and charged/recovered as reimbursement costs on the basis of various allocation keys like number of Headcount/Headcount usages/Number of users/Country operational cost/Country revenue etc., which is uniformly applied across the group.
Reimbursement of cost related to Global Service Centre is in effect provided to the group by Maersk Global Services Centre and is in the nature of low end BPO and hence cannot come in the field of managerial, technical and consultancy. Similarly, the business support services related to procurement and issuance are also reimbursement of cost incurred for the benefit of the group companies and not technical, managerial or consultancy in nature. Similarly, reimbursement of cost towards administrative services cannot be held to be in the nature of technical, managerial and consultancy in nature.
Thus we hold that the receipt of business support charge is not taxable as fees for technical services/royalty under the Act or the relevant DTAA as the same is purely in the nature of reimbursement of cost.- Decided in favour of assessee.
-
2020 (7) TMI 598 - ITAT MUMBAI
Difference in receipt shown in the Profit & Loss account and as per TDS certificate - receipt of labour charges - HELD THAT:- On verification of the TDS certificate in Form no.16A, by Unity Infra Projects Ltd., learned Commissioner (Appeals) has also recorded a finding of fact that such certificate shows labour charges. As rightly observed by Commissioner (Appeals), AO has not made any in–depth enquiry to ascertain the correctness of assessee‘s claim regarding the receipt of labour charges. By simply issuing a notice under section 133(6) of the Act to Unity Infra Projects Ltd., the AO has finished his part of the job without pursuing the concerned party any further even after not receiving any reply. Thus, the facts on record clearly show lack of proper enquiry by the Assessing Officer. It is a well settled legal principle that without making proper enquiry and bringing contrary material on record to falsify assessee‘s claim, the AO cannot make addition purely on conjecture and surmises.
Addition u/s 69 - HELD THAT:- As found by learned Commissioner (Appeals) that the payments were made from the current account standing in the name of Rounaq Construction, a proprietary concern of the assessee. As established from the facts on record that the investments in house property were out of business income of the assessee. To substantiate such claim, copy of bank statements was also furnished by the assessee. The aforesaid factual finding of the Commissioner (Appeals) remains uncontroverted before us - as established on record that source of investment in house property has been properly explained by the assessee. That being the case, the addition made has been rightly deleted by learned Commissioner (Appeals). This ground is dismissed.
Addition of sundry creditors - HELD THAT:- AO does not dispute the fact that the assessee has received quite substantial amount from Unity Infra Projects Ltd. towards labour charges, whereas, on the other hand, he disbelieves the expenditure incurred by the assessee towards labour charges. This, is completely unreasonable and illogical. When the work entrusted to the assessee is labour intensive and the assessee has shown receipt towards labour charges, it has to be accepted that the assessee must have incurred quite substantial amount towards labour charges. AO has not made any in-depth enquiry except making certain general queries with regard to the labour charges. In these circumstances, the addition made purely on conjecture and surmises cannot be sustained.
We are inclined to agree with the conclusion reached by the learned Commissioner (Appeals). As regards the contention of the Departmental Representative that the assessee has furnished various evidences before learned Commissioner (Appeals) which were not submitted before the Assessing Officer, hence, the provision of rule–46A has been violated, we are unable to accept it. Firstly, the Revenue has not raised any specific ground challenging violation of rule 46A; secondly, the Revenue has failed to point out as to what is the fresh evidence filed before learned Commissioner (Appeals) which was not available before the Assessing Officer.
-
2020 (7) TMI 597 - ITAT MUMBAI
Assessment u/s 153A - enhancement of income without following the mandatory/statutory requirement - non complying with the provisions of section 251(2) - HELD THAT:- We set aside the order of learned Commissioner (Appeals) on the issue and restore the matter back to his file for deciding afresh after complying with the provisions of section 251(2) of the Act. As regards second contention of the assessee that in the absence of any incriminating material, the disputed addition could not have been made, we must observe that since we have restored the issue back to the file of learned Commissioner (Appeals) for not complying with the provisions of section 251(2) of the Act, it is not desirable for us to express any conclusive opinion on the aforesaid contention of the assessee.
However, it is trite law, in absence of any incriminating material found as a result of search, no addition can be made in an unabated assessment completed under section 153A r/w section 143(3). Appeal is allowed for statistical purposes.
Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [2020 (5) TMI 359 - ITAT MUMBAI].
-
2020 (7) TMI 596 - ITAT AGRA
Interest income on FDR’s - FDR's pledged for security purposes in obtaining the contract business - whether business income or income from other sources? - HELD THAT:- Undisputedly, the documents now admitted are required to be examined by the Tribunal or by the lower authorities. Since the documents are running into more than 64 pages and we have heard the matter on virtual platform, therefore, the detailed examination of the documents at the stage of Tribunal is not possible. Hence, considering the limitations, we deem it appropriate to remand the matters to the file of CIT(A), pertaining to the issue involved with the direction to examine these documents (1 to 64) filed on 11.07.2019 before the Tribunal in both the appeals , in accordance with law and to find out whether the interest earned by the assessee on FDRs was intrinsically related to the business of the assessee or not. If it is found on examination that the interest income is related to the business of the assessee, the same may be considered as business income and accordingly the income of the assessee is computed by applying the NP rate.
CIT(A) is duty bound to grant personal hearing and opportunity to the assessee as well as Assessing Officer, from whom CIT(A) may also seek remand report from Assessing Officer, if required. The ld. CIT(A) shall also consider various decisions relied upon by the assessee including the decision of Tribunal in the assessee’s case for earlier years.
Computation of taxable income - HELD THAT:- We direct the Assessing Officer to compute the taxable income of the assessee after giving benefit of interest to partners ,remuneration to the partners and depreciation. The taxable income of the assessee would be subject to outcome on the issue of interest on FDRs.
NP rate @ 8% - HELD THAT:- In the present case, the assessee relied upon his own cases for the subsequent years .Though found that the assessee has not challenged the NP rate of 8% applied for assessment year 2012-13 and 2013-14 in which the turnover of the assessee was 17.17 crores and 22 crore respectively, whereas the turnover in the present year was 19.27 crores. However considering the peculiar facts and circumstance of the case we restrict the net profit rate to 7.75% instead of 8% as held by the lower authorities. In the result the relevant ground of appeal of assessee is, accordingly, partly allowed.
-
2020 (7) TMI 595 - ITAT DELHI
Existence of PE - addition on account of salary reimbursement cost treated as fee for technical services - royalty income was offered to tax in India on the basis of tax rates prescribed in DTAA between India and Singapore i.e. @ 10% - AO was of the view that the person employed by the assessee, working under the Indian entity, were seconded to India; the salary of the said person was reimbursed by the Indian entity and hence taxable in the hands of the assessee.
HELD THAT:- The evidences need to be seen in their entirety as the burden of proving that the foreign assessee has a PE in India and consequently it has to be taxed on the business generated by such PE is initially on the Revenue. Such is the proposition laid down by Hon’ble Supreme Court in ADIT vs E-funds IT Solutions Inc. [2017 (10) TMI 1011 - SUPREME COURT] In such a scenario, the question of taxability of service PE in India of the assessee company is answered in the negative. The evidences have also been gone into by the CIT(A), who has given detailed finding.
DR for the Revenue has failed to controvert the said finding of the CIT(A). In the absence of the same, it cannot be said that the assessee had service PE in India.
Another aspect which is to be kept in mind for the taxability of service PE is that the expenses of salary cost needs to be deducted from the business income generated by the PE in India, which in the present case would be NIL.
There will be no income attributable to the PE. We find no merit in the stand of the Revenue in this regard.
Taxability in the hands of the assessee company i.e. income arising on account of deputation of Mr. Vinod Mahboobani and whether the same constitute service PE - We find no merit in the stand of the Assessing Officer in this regard, i.e. existence of service PE and provision of technical services; the same cannot co-exist. In any case under Article 12 of DTAA, the clause of “make available” needs to be fulfilled to hold existence of PE for technical services. In the absence of fulfillment of “make available” clause, it is not possible to hold that there is taxability of FTS under Article 12 of the DTAA.
We find no merit in the stand of the Assessing Officer in treating the reimbursement received by the assessee company from YRIPL on account of salary payment as FTS. We have already held in the paras above that Mr. Vinod Mahboobani was working as an employee of YRIPL and not as an employee of the assessee company. The reimbursement of salary had no element of income and was not taxable. In any case since Mr. Vinod Mahboobani had already paid taxes in India on the aforesaid salary, the same amount being taxed as FTS in the hands of the assessee company, would amount to double taxation. Upholding the order of the CIT(A), we dismiss the ground of appeal raised by the Revenue.
Attribution of business income to the alleged PE of the assessee company in India - AO has failed to establish his case and where none of the conditions specified in Article 5(8) of the DTAA have been satisfied, then it cannot be said that the assessee had any DAPE in India. In any case, the marketing activities undertaken by the YRMPL were on behalf of the YRIPL and its franchisees and in the absence of any link whatsoever with the business of the assessee company, there is no merit in attribution of contribution made by the Independent third-party franchisees, to constitute PE of the assessee company in India.
Assessee has no PE in India and no business undertaken in India, hence no fixed place PE also. - Decided in favour of assessee.
-
2020 (7) TMI 594 - ITAT VISAKHAPATNAM
Violation of rule 46A - CIT-A deleted addition without giving opportunity to the AO and seeking remand report - HELD THAT:- CIT(A) after examining each and every detail directed the AO to delete the addition. CIT(A) has not violated rule 46A of the I.T. Rules and adjudicated the issue after examining all the details. We are of the opinion that no remand report is required, for the reason that the expenditure incurred by the assessee is very clear from the records. Therefore, the ld. CIT(A) rightly directed the Assessing Officer to delete the addition.
Expenditure incurred on construction, based on the submissions made by the assessee - HELD THAT:- The addition made by the Assessing Officer is deleted by the ld.CIT(A) by considering the relevant material available on record, no interference is warranted, therefore same is dismissed.
Exemption u/s 11 - expenditure to the extent of 85% - HELD THAT:- It is very clear that assessee’s total income for the year under consideration is ₹ 16,66,37,767/-, the expenditure of the assessee is ₹ 14,82,12,178/- the assessee has spent more than 85% of the income for the year under consideration. As per section (11)(1)(a), the income accumulated by the assessee is less than 15%, therefore the entire income of the assessee is exempt u/sec. 11(1). We have examined the entire facts and circumstances of the case and find that assessee is running the trust in accordance with the objects. The activities carried by the assessee in running the trust are charitable in nature, the expenditure incurred by the assessee is also a genuine expenditure. CIT(A) after examining the details in respect of expenditure incurred by the assessee gave a finding that the assessee has applied his income more than 85%, therefore as per section 11(1), the entire income of the assessee is exempt. We find no reason to interfere with the order passed by the ld. CIT(A).
-
2020 (7) TMI 574 - DELHI HIGH COURT
Refund of income tax inadvertently paid on interest received under Section 28 of the Land Acquisition Act, 1894 for various assessment years - applications filed by the petitioners u/s 119(2)(b) - HELD THAT:- Different High Courts subsequent to the judgment of CIT Vs. Ghanshyam Dass HUF [2009 (7) TMI 12 - SUPREME COURT] have held that tax is payable on the interest received under Section 28 of the Land Acquisition Act, under the head “income from other sources”.
Most of the applications filed by the petitioners are barred by limitation under the same circular dated 9th June, 2015, relied upon by the learned counsel for the petitioners.
Keeping in view the limited prayer sought in the writ petitions, the same are disposed of with a direction to the respondent to decide the applications filed by the petitioners within eight weeks in accordance with law. All the rights and contentions of the parties, including the plea of maintainability, are left open.
-
2020 (7) TMI 573 - MADRAS HIGH COURT
Validity of Reopening of assessment - validity of reasons to believe - change of opinion - disallowance of improvement cost of land claimed by the assessee and the assessee had shown the sale of the land under the head of “short term capital gain - as per AO correct market value of the property that should have been adopted by the assessee @ 50% of value fixed by the District Revenue Officer u/s 50C as two persons including the assessee had done the business and each of them shared the profit on equal ratio - HELD THAT:- The assessee is expected to file his return of income along with his books and documents. It is for the Assessing Officer to consider the same in accordance with law and complete the assessment. The assessee is not there to advice the Assessing Officer as to how he should go about in assessing the income of the assessee, as it is the statutory duty of the Assessing Officer. Admittedly, the Sale Deed dated 02.05.2008, is only the document, which is the subject matter of the assessment. This document was very much available with the Assessing Officer when he completed the assessment under Section 143(3), dated 05.12.2011. At that juncture, all that the Assessing Officer was concerned about is the claim made by the assessee as expenses for the improvement of the land by levelling, sand filling, road laying etc.
The stand taken by the assessee was disbelieved, as no material evidence was produced by the assessee to substantiate such expenses. Based on the very same document, the assessment was reopened by serving notice on 26.03.2014, stating that the assessee should have adopted the value of the land as computed by the District Revenue Officer under the Indian Stamp Act for the purposes of computation of the stamp duty payable on such instrument.
As rightly pointed out by the learned counsel for the assessee the words “or assessable” stood inserted by Finance (No.2) Act, 2009 w.e.f., 01.10.2009 and this provision has been held to be prospective and this issue was considered in the case of R.Sugantha Ravindran [2013 (3) TMI 271 - MADRAS HIGH COURT]. Therefore, the revenue cannot refer to Section 50C of the Act to non-suit the assessee.
As decided in CALCUTTA DISCOUNT COMPANY LIMITED [1960 (11) TMI 8 - SUPREME COURT] duty of the assessee is to make full and true disclosure of all primary facts and once it is done, it is for the Assessing Authority to decide what inference of fact or law could be drawn there from. The law does not require the assessee to state the conclusion that could reasonably be drawn from the primary facts and if there were, in fact, some reasonable grounds for thinking that there had been any non-disclosure as regards any primary facts, which could have a material bearing on the question of “under assessment”, that would be sufficient to give jurisdiction to the ITO to issue notices under Section 34 (1922 Act) and whether these grounds are adequate or not for arriving at a conclusion that there was a non-disclosure of material facts could not be opened for the Court's investigation. Tribunal was right in allowing the assessee's appeal.
-
2020 (7) TMI 572 - MADRAS HIGH COURT
Deduction u/s 32AB - HELD THAT:- Correctness of the finding rendered by the CIT(A) was tested by the tribunal and the tribunal confirmed the finding by observing that the CIT(A) has restored the issue to the file of the Assessing Officer with a direction to verify the evidences to be furnished by the assessee, to show that the purchase of machinery was made during the period under consideration, so as to be eligible for the deduction of the claim under Section 32AB of the Act and pass consequential orders.
Interest on deposits in IDBI - whether should be treated as business income purely because the deposits were made to comply with statutory provisions under the Income Tax Act? - HELD THAT:- Tribunal noted that the CIT(A) has held that the interest received by the assessee from the deposits made in IDBI should be treated as business income only. These findings of fact coupled with law was affirmed by the tribunal in the impugned order and we agree with the elaborate reasoning given by the CIT(A). Thus, we find that no substantial question of law arises for consideration in this appeal. - Decided against revenue.
-
2020 (7) TMI 571 - MADRAS HIGH COURT
Reopening of assessment u/s 147 - mandation of formation of belief by the Income Tax Officer - reference to views and objections of the audit party - HELD THAT:- Gujarat High Court in Adani Exports [1998 (12) TMI 51 - GUJARAT HIGH COURT] wherein it has been held that though the audit objection may serve as information, the basis of which the Income Tax Officer can act, the ultimate action must depend directly and solely on the formation of belief by the Income Tax Officer on his own, where such information passed on to him by the audit that income has escaped assessment.
Underlying legal principles is that the independence of the Assessing Officer cannot be interfered or questioned. No person can advice the AO to proceed with the assessment in a particular fashion. It is for the Assessing Officer to assess the books of accounts of the assessee and to frame the assessment. On the other hand, if the AO relies upon the borrowed material, it would be amounting to abdicating his duty as an AO. Thus, we find that the decision taken by the CIT(A) as affirmed by the tribunal, does not call for any interference. - Decided against revenue.
-
2020 (7) TMI 570 - MADRAS HIGH COURT
Amendment made to Section 40(a)(ia) by Finance Act, 2010 - retrospective effect - HELD THAT:- Substantial questions of law framed for consideration in this appeal were answered against the Revenue in the decision of the Hon’ble Supreme Court in the case of CIT Vs. Calcutta Export Company [2018 (5) TMI 356 - SUPREME COURT] as amended provision of Sec 40(a)(ia) of the IT Act should be interpreted liberally and equitable and applies retrospectively from the date when Section 40(a)(ia) was inserted i.e., with effect from the Assessment Year 2005-2006 so that an assessee should not suffer unintended and deleterious consequences beyond what the object and purpose of the provision mandates.
As the developments with regard to the Section recorded above shows that the amendment was curative in nature, it should be given retrospective operation as if the amended provision existed even at the time of its insertion. Since the assessee has filed its returns on 01.08.2005 i.e., in accordance with the due date under the provisions of Section 139 IT Act, hence, is allowed to claim the benefit of the amendment made by Finance Act, 2010 to the provisions of Section 40(a)(ia) of the IT Act. - Decided against revenue.
............
|