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Income Tax - Case Laws
Showing 21 to 40 of 366 Records
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2020 (7) TMI 772 - ITAT MUMBAI
Maintainability of appeal - low tax effect - HELD THAT:- Parties before us mutually agreed that this revenue appeal is to be dismissed as not maintainable in view of the recent Circular issued by the CBDT dated 08/08/2019 wherein the revenue has been directed to withdraw the appeal preferred by it before the Tribunal if the tax effect on the disputed issues is less than or equal to ₹ 50,00,000/-. It is well settled that this Circular is binding on the revenue authorities.
Respectfully following the said Circular, the appeal filed by the revenue is dismissed as not maintainable.
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2020 (7) TMI 764 - ITAT MUMBAI
Disallowance of interest - advance was paid out of interest-free funds comprising Reserves & Surplus of the company - why proportionate interest u/s 36(1)(iii) of the Act should not be disallowed as there seems to be no business connection between the advance paid and the business of assessee? - HELD THAT:- The undisputed facts are that the assessee has sufficient interest-free funds available with it as it is a listed company and has huge funds available with it. Even during the year, assessee has earned profit - Therefore, we are not in a position to concur with the conclusions drawn either by the CIT(A) or the Assessing Officer on this issue. The tax authorities cannot be allowed to sit on the chair of a businessman and decide what is right or wrong for the business.
In this case, we note that the assessee’s own funds are far more than the advance paid for booking of bungalow as is clear from the facts given hereinabove. Therefore both the authorities below have grossly erred while deciding the issue.
The case of assessee is squarely covered by the decision in the case of CIT vs Reliance Industries Ltd. [2019 (1) TMI 757 - SUPREME COURT] wherein has confirmed the order of PHALTON SUGAR WORKS LIMITED VERSUS COMMISSIONER OF WEALTH-TAX [1993 (8) TMI 41 - BOMBAY HIGH COURT] upholding the order of Tribunal wherein it has been held that where interest-free funds available with assessee were sufficient to meet the investments, it could be presumed that the investment was made from interest-free funds available with the assessee. We, therefore, respectfully following the same, set-aside the order of ld. CIT(A) and direct the Assessing Officer to delete the disallowance - Appeal of assessee is allowed.
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2020 (7) TMI 760 - SC ORDER
Demand of Outstanding dues including taxes - respondent-Company has gone in liquidation - HELD THAT:- As Official Liquidator has filed a report that the Respondent-Company (Moser Bear India Ltd.) is not financially viable and is under liquidation in proceedings pending before the National Company Law Tribunal. Even if the Appellant-Revenue were to succeed, the Official Liquidator is not in a position to pay the tax amount involved in these appeals.
Indisputedly, the respondent-Company has gone in liquidation. The Company in liquidation is not in a position to pay its outstanding dues including taxes. Moreover, the tax effect in the concerned appeals is just over ₹ 2,00,00,000/- (Rupees Two Crore Only).
Taking overall view of the matter, we deem it appropriate to dispose of these appeals, leaving the question of law open, to be decided in appropriate case. Ordered accordingly.
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2020 (7) TMI 754 - MADRAS HIGH COURT
Accrual of income - retention money on contract included in the Assessee's income for the AY.2009-10? - whether tribunal wrong in holding that the retention amounts cannot be considered as income of the Assessee because such amounts were still to be received, when the Assessee follows the Mercantile System of Accounting and income is to be assessed on "accrual basis"? - HELD THAT:- Assessee's own case for the previous Assessment Year 2008-2009 has been decided in favour of the Assessee [2014 (11) TMI 1233 - MADRAS HIGH COURT]. Since the issue raised in this appeal had already been decided against the department by the Supreme Court in Commissioner of Income Tax v. M/s Ignified Boilers India Ltd. [2006 (7) TMI 726 - SC ORDER] and in Commissioner of Income Tax v. East Coast Constructions & Industries Limited [2006 (12) TMI 574 - SC ORDER] no question of law arises for consideration. Decided in favour of the Assessee
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2020 (7) TMI 752 - ITAT MUMBAI
Chargeability of late fee under section 234E - whether Late fee can be levied prior to 1.6.2015, i.e. prior to enactment of section 234E? - diversified views of various High courts on issue - CIT(A) has decided the issue by following the decision of honourable Gujarat High Court in case of Rajesh Kourani [2017 (7) TMI 458 - GUJARAT HIGH COURT] - Though CIT(A) has noted the decision of Sri Fatheraj Singhvi[2016 (9) TMI 964 - KARNATAKA HIGH COURT] which is in favour of the assessee he has chosen not to follow the same also distinguished the decision of honourable Supreme Court in the case of Vegetable Products Ltd. [1973 (1) TMI 1 - SUPREME COURT] by referring that the said decision was in connection with penalty - HELD THAT:- CIT appeals has totally erred in distinguishing the decision of honourable Supreme Court in the case of vegetable products. The ratio arising from the said decision is that if two constructions are possible the one in favour of assessee should be applied. In the present case we note that the decision of honourable Karnataka High Court is in favour of the assessee. Accordingly we follow the said decision on the touchstone of ratio arising from honourable Supreme Court decision in the case of Vegetable Products Ltd. (supra). No decision contrary to this from the honourable jurisdictional High Court has been brought to our notice. Furthermore as referred by the assessee in grounds of appeal the issue is also covered in favour of the assessee
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2020 (7) TMI 751 - ITAT MUMBAI
Rectification of mistake - Addition u/s 68 - cases relied upon were ignored to be considered - company was dealing in providing the accommodation entries - addition was raised on account of third party statement - assessee alternate plea was that the assessee was earning the commission by providing accommodation entries, the only amount of commission could be added to the assessee’s taxable income and not entire amount of transaction - HELD THAT:- As stated that the applicant used to issue accommodation entries on commission basis @ 0.02% to 0.10%. On the basis of the said information, the noticed u/s 153C of the Act was issued. The assessment u/s 153C was completed treating the 4% as income. Subsequently, the PCIT-4 passed the order u/s 263 of the Act and thereafter the assessment u/s 144/142(1) r.w.s. 153C of the Act was competed by assessing the 100% addition. CIT(A) upheld the disallowance.
The applicant/appellant had produced the order of co-ordinate bench in the case of M/s. Chaitali Sales Agency Pvt. Ltd and Gold Star Finvest Pvt. Ltd. The said cases were related to same search in which the commission was assessed @ 0.15% of total deposits but the alternate contention was not dealing with the Hon’ble ITAT, therefore, the present Miscellaneous Application has been filed.
After perusing the order dated 25.03.2019, we noticed that the decisions in the case of Chaitali Sales Agency Pvt. Ltd. and Gold Star FinvestPvt. Ltd. were not dealt with. Subsequently these decisions were confirmed by the Hon’ble Bombay High Court. Applicability of these cases may effect the merits of the case also. So by not dealing these cases, there is mistake apparent on record, therefore, we recall the order dated 25.03.2019. Registry is directed to refix the case in due course of time.
These Miscellaneous Applications are hereby also allowed accordingly.
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2020 (7) TMI 747 - ITAT JAIPUR
Computation of capital gain - Disallowance of indexed cost of improvement claimed on sale of plot - computing the long term capital gain as against long term capital loss computed by the assessee - whether CIT(A) has erred in holding that agreement with contractor and his affidavit in respect of expenditure incurred on cost of improvement looks an afterthought story without any material & basis - HELD THAT:- The assessee owns a plot of land measuring 200 sq yards and a part of the said plot measuring 133.33 sq yards, has been sold during the year. On perusal of the sale deed so executed by the assessee, the description of the property sold is shown as residential plot no. 10 Plot No.10, Bajrang Nagar, Village- Cha Getor, Tehsil-Sanganer, District Jaipur and even the site plan attached with the sale deed depicts the plot of land and doesn’t show any constructed area thereon. At the same time, there is averment towards the end of the said sale deed that in the plot so sold, there is constructed area of 900 sq feet. We therefore find inconsistency in the sale deed so executed so far as the exact description of the property is concerned.
It unusual that construction of 900 sq feet as so claimed by the assessee has taken around eight months time to construct and thereafter, as soon as construction was completed, the assessee has sold the property in less than a month. If the intention of both the parties was to sell and purchase a constructed property, in such a scenario, the description of the property so stated in the sale deed should have been a constructed property instead of a plot of land. Further, what stops the assessee in submitting the affidavit of buyer and the photographs of the property in support of its claim rather than merely relying on a third party averments. Therefore, the third party averments can come to the aid of the assessee once it is proved that there was actual construction and then, in support of cost of construction, such averments may be examined along with proof of actual payment which again is absent in the instant case.
We are of the considered view that the assessee has failed to discharge the necessary onus placed on him in support of his claim of construction on the property at the time of sale and cost of construction as so claimed has therefore rightly been rejected by the lower authorities and the matter is decided against the assessee and in favour of the Revenue.
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2020 (7) TMI 745 - ITAT MUMBAI
Maintainability of appeal - low tax effect - HELD THAT:- As learned counsel rightly contends, this appeal of the Revenue is no longer maintainable in view of the recent CBDT Circular No. 17 of 2019 dated 08.08.2019. The mandatory limit for cases in which Revenue can challenge the relief granted by the CIT(A) now stands enhanced to ₹ 50 lakhs. This concession granted by the Central Board of Direct Taxes (CBDT) is retrospective in effect inasmuch as it applies to all pending appeals as well. In view of the above position, the appeal of the Revenue is no longer maintainable and must be dismissed as such.
On re-verification at the end of the Assessing Officer it comes out that the tax effect of more than ₹ 50 lakhs is being involved in the appeal or the appeal falls within the exemption clause of the Circular, then the Revenue will be at liberty to file Miscellaneous Application to recall the Tribunal order. The application should be filed within time limit prescribed in the Act.
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2020 (7) TMI 742 - ITAT DELHI
Disallowance of claim of set-off of “B/f unabsorbed Short Term Capital Loss against the current year’s income from Short Term Capital Gain - claim of the assessee is not tenable in view of the fact that in his statement recorded u/s 132(4), the assessee has not claimed the adjustment of brought forward loss on account of the short term capital gain declared - whether or not, the brought forward short term capital loss which has been duly allowed by the department in the earlier years is eligible to be set off against the short term capital gains of the current year declared by the assessee ? - HELD THAT:- We find that the assessee has filed the computation of income correctly. The computation filed is as per the scheme of computation provided in the Income Tax Act. The provisions of Section 74 clearly provides for set off of short term capital losses which can be allowed to be carried forward and set off against income, if any, under the head “capital gains” assessable for the assessment year in respect of any other capital asset.
The statute confers carry forward and set off of losses hence the same cannot be denied in the absence of any specific provisions or conditions laid down in the same statute to disallow such benefits. It is a fact on record that the short term capital loss which has been incurred in the assessment year 2007-08 and the same has been allowed by the revenue to be carried forward till the assessment year 2010-11, hence, the same cannot be disallowed to be set off against the short term capital gain earned by the assessee during the assessment year 2011-12. Appeal of the assessee is allowed.
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2020 (7) TMI 730 - MADRAS HIGH COURT
Deduction u/s 10B - set off of brought forward unabsorbed depreciation - deduction u/s 10B is to be allowed without considering the depreciation loss, when it was held in the case of Yokogawa India Ltd [2016 (12) TMI 881 - SUPREME COURT] that the deduction u/s 10B is to be allowed while computing the gross total income of the eligible undertaking under Chapter -IV of the Income Tax Act? - unabsorbed depreciation loss of Section 10B unit cannot be set off against other incomes - HELD THAT:- Issue involved in this appeal is covered by the decision in the assessee's own case in [2020 (3) TMI 814 - MADRAS HIGH COURT] by which, the assessee's appeal was allowed and the substantial questions of law were answered in favour of the assessee.
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2020 (7) TMI 729 - ITAT KOLKATA
Long Term Capital Loss on transfer of Government Securities - applying cost inflation index on transfer of assessee’s government securities - HELD THAT:- As decided in own case [2019 (12) TMI 958 - ITAT KOLKATA] we note that as per Section 2(42A) expression 'security’ shall have meaning assigned to Clause 11 of Securities Contracts Regulation Act, 1956 which includes government securities. The facts of this case are squarely applicable to the present case of the assessee.
Respectfully following the judgment of Sundararn Finance Limited [2017 (7) TMI 661 - ITAT CHENNAI] we note that it is abundantly clear that Government Securities are entitled to Indexation Benefits. Therefore, we note that Government Securities are different from Bond and Debenture for the purpose of the 3rd proviso to Sec. 48 of the Act (4th proviso after amendment) and therefore the benefit of indexation should be granted to the assessee on the redemption of these Government Securities. - Decided in favour of assessee.
Set off of brought forward long term capital loss against the short term capital gain computed u/s 50 - HELD THAT:- Assessee’s long term capital loss in issue arose on sale / transfer of the relevant block of assets i.e. its that building only. It had also claimed depreciation thereupon in the preceding assessment years. Its computation of the consequential capital gains came to be covered u/s 50 resulting in short term capital loss as a special provision arising on sale of depreciable assets. The Revenue’s only plea during the course of hearing is that such capital gains or loss; which are computed u/s 50 of the Act are not eligible for set off against long term capital gains brought forward. We find no merit in the Revenue’s instant stand.
Hon'ble Bombay high court’s decision in Commissioner of Income Tax vs. Ace Builders [2005 (3) TMI 36 - BOMBAY HIGH COURT] as upheld in V.S.Dempo Company Ltd. [2016 (10) TMI 62 - SUPREME COURT] holds that the impugned deeming fiction treating long term capital gains / losses as short once are applicable in specified circumstances only u/s 50 of the Act. And also that they are very much eligible for all other deduction provisions under the Act - Such capital gains are very much entitled to be set off against the brought forward long term capital loss as held on unabsorbed depreciation. We see no reason to interfere with the CIT(A)’s findings accepting assessee’s set off claim therefore. The Revenue fails in the instant second substantive ground.
Disallowance u/s 14A r.w. Rule 8D(2)(ii) & (iii) - HELD THAT:- This tribunal’s co-ordinate bench decisions right from assessment year(s) 2008-09 to 2010-11, 2013-14 and 2015-16 have consistently held that the impugned proportionate interest disallowance does not apply in case of interest free funds having been invested in exempt income yielding investments. We also reiterate that this assessee has rather earned exempt interest income as well (supra). We therefore go by judicial consistency to affirm the CIT(A)’s appellate order under challenge.
The Revenue’s case is not is no different qua the third head of administrative expenditure as well since the CIT(A) has only directed the Assessing Officer to compute the same after considering the exempt income yielding investment only as per this tribunal’s order in RIE Agro Ltd. vs. DCIT [2013 (9) TMI 156 - ITAT KOLKATA]as upheld in jurisdictional high court [2013 (12) TMI 1517 - CALCUTTA HIGH COURT] - We thus reject the Revenue’s instant third substantive ground as well.
Disallowance u/Sec.40(a)(ia) - assessee’s failure in deducting TDS on payments made to various parties - HELD THAT:- As from a perusal of the case file as well as in CIT(A)’s appellate order’s detailed discussion that the assessee’s impugned payments pertain to either outright purchases of raw material or without involving any contractual relationship nor they exceeds amounts exceeding threshold limit of ₹30,000/- for deducting TDS. This tribunal’s co-ordinate bench decision in assessment year 2013-14 [2019 (12) TMI 1281 - ITAT KOLKATA] has declined the Revenue’s similar argument as well. We thus adopt judicial consistency qua this issue in absence of any distinction on facts or law pinpoint as Revenue’s behest.
Educational cess disallowance u/s 40(a)(ii) - Addition made in the course of assessment and deleted in the lower appellate proceedings - HELD THAT:- We notice that hon'ble Bombay high court’s decision in Sesa Goa Limited [2020 (3) TMI 347 - BOMBAY HIGH COURT]as well as in Chambal Fertilisers and Chemicals Ltd. [2018 (10) TMI 589 - RAJASTHAN HIGH COURT] hold that the clinching expression “cess” does not form part of sec. 40(a)(ii) of the Act so as be disallowed. We adopt the very reasoning mutatis mutandis hold the CIT(A)’s appellate action deleting the impugned addition - Revenue’s appeal is dismissed.
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2020 (7) TMI 728 - ITAT JAIPUR
Penalty u/s 271(1)(c) - whether for concealment of particulars of income or furnishing of inaccurate particulars of income? - Long Term Capital Gain earned on sale of agricultural land which was jointly held in equal share with his brother Sunil Sharma - HELD THAT:- AO has not clearly mentioned the limb, on the basis of which, penalty was proposed to be imposed. AO in assessment order or penalty notices did not specify the limb under which the penalty was initiated and simply issued a pre-printed notice without striking off the unnecessary portions of the notice.
If the AO was of the view that the assessee has concealed the income or furnishing inaccurate particulars of income then he should have deleted or not mentioned the other limb for imposition of penalty i.e. concealing the particulars of income. The above act of the AO clearly shows that the entire exercise of initiation of penalty proceedings has been done without application of mind.
With regard to the merits of the penalty so levied, we find that it was an inadvertent human error while taking the costs of acquisition at the time of computation of capital gain. It was a bonafide and unintentional mistake which was rectified during the course of assessment itself - In case of Price Water House Coopers P. Ltd. [2012 (9) TMI 775 - SUPREME COURT] held that ‘ the assessee should have been careful but in absence of due care in a case did not mean that assessee was guilty of either furnishing inaccurate particulars or attempting to conceal the income. Thus no penalty can be levied for a bona fide/inadvertent/human error’.
Hon'ble M.P. High Court in case of CIT vs. SKY Auto Products Pvt. Ltd. [2004 (4) TMI 28 - MADHYA PRADESH HIGH COURT] held that where the assessee, a new businessman claimed depreciation for the full year in the first year of starting production though he was entitled only to fractional depreciation, it was a case of bonafide mistake on the part of the assessee. Such a ground cannot be a good ground for imposition of penalty u/s 271(1)(c).
Hon'ble Supreme Court in the case of M/s. K.C. Builders vs. ACIT [2004 (1) TMI 7 - SUPREME COURT] held that mere omission from the return of an item of receipt does neither amount to be concealment nor deliberate furnishing of inaccurate particulars of income unless and until there is some evidence to show or some circumstances found from which it can be gathered that the omission was attributable to an intention or desire on the part of the assessee to hide or conceal the income so as to avoid the imposition of tax thereon. In the view of the above there was neither concealment nor the assessee furnished the inaccurate particulars of income. - Decided in favour of assessee.
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2020 (7) TMI 725 - MADRAS HIGH COURT
Maintainability of appeal - memo of appeal was filed in the name of the company which lost its identity after its merger - scheme duly sanctioned by the High Court under the provisions of the Companies Act - HELD THAT:- By virtue of scheme of amalgamation all the existing and the future litigation of the transferor company will be transferred and continued in the name of transferee company viz., M/s.Accenture Services Private Limited with effect from 1st April 2012. This M/s. Accenture Services Private Limited has subsequently merged with the M/s. Accenture Solutions Private Limited. By virtue of this merger, all the litigations pursued against or by both M/s. Zenta Knowledge Services Private Limited and M/s.Accenture Services Private Limited shall automatically be transferred and will be continued in the name of transferee company viz., M/s. Accenture Solutions Private Limited.
When such being the position, without considering the order of the High Court in the matter of amalgamation and the automatic transfer of litigations of transferor companies into transferee company, the Tribunal has simply rejected the appeal, on the ground that the appeal was filed in the name of non-existing person. We do not agree with the said finding of the Tribunal as the same is not legally sustainable.
Therefore, we are inclined to set aside the order of the Tribunal dated 14 September 2016, with request to the Tribunal to decide the appeals of the assessee (M/s.Accenture Solutions Pvt. Ltd.,) and the Revenue and the cross appeal of the assessee, on merits and in accordance with law.
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2020 (7) TMI 724 - DELHI HIGH COURT
Withholding of grant of refund - order under Section 143 (3) has been passed and the scrutiny assessment has concluded - HELD THAT:- This Court in similar circumstances in M/S. Fis Payment Solutions & Services India Pvt. Ltd [2020 (3) TMI 1243 - DELHI HIGH COURT] has observed that withholding of refund prima facie appears to be without any justification.
We direct the respondents to refund the amounts for the assessment year along with interest as applicable, to the petitioner within six weeks from today. In case the respondents have any valid justification for withholding the refund, or any part thereof, they shall file their counter affidavits positively within the same period clearly stating as to why the refund/partial refund is not due. No further time shall be granted for the said purpose.
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2020 (7) TMI 723 - MADRAS HIGH COURT
Agricultural income - Whether Tribunal was right in presuming the assessee earned agricultural income merely relying on Chitta and Adangal extracts issued by VAO? - HELD THAT:- Tax case appeals are dismissed on account of the low tax effect. The substantial questions of law framed are left open. In the event the tax effect in the respective cases is above the threshold limit fixed in the said circular, liberty is granted to the Revenue to make a mention to this Court to restore the appeals to be heard and decided on merits.
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2020 (7) TMI 722 - GUJARAT HIGH COURT
Addition of undisclosed interest income - proportion of investment in shares of Ashima Synthetics Ltd - HELD THAT:- Tribunal is final fact finding authority and on perusal of the impugned order passed by the Tribunal it is clear that the Tribunal has considered the submissions made on behalf of the assessee as well as revenue and thereafter has arrived at findings of fact. Tribunal has sustained the addition with regard to the interest income as it was found as a matter of fact that the interest calculated by the assessing officer was a gross calculation about amount to be received and paid by the group as a whole. The Tribunal, therefore, has rightly added sustained the addition of net difference on the item products holding the same to be undisclosed income by directing the Assessing Officer to add proportionate amount of net difference in the interest in proportion to the interest of shares of Ashima Syntex Ltd. by the respondent assessee.
Disallowance of contrived loss - only ground for disallowing such loss was that there was no proof of delivery of shares prior to the date of search - Disallowance in block assessment proceedings - HELD THAT:- Tribunal has arrived at finding of fact after considering the material evidence on record so as to hold that the assessee is entitled to the claim of the contrived losses suffered by it. The Tribunal has also rightly considered the fact that in the assessment under the block period only the undisclosed income, which is found from the seized material can only be considered for the addition as in the total income of the assessee. In the facts of the case, the assessee has already disclosed the losses by making necessary entries in the books of accounts and therefore, the assessing officer and CIT(A) were not justified in disallowing the contrived losses claimed by the assessee. The Tribunal has also taken into consideration the factual aspect of the matter that the sale bills were issued by the brokers, the payments were made by cheque by the respective buyer of the shares and such transactions are duly reflected in the books of accounts. In such circumstances, it cannot be said that the Tribunal has committed any error in holding that the assessee is entitled to claim the contrived losses in the total income for the respective year by the respective assessee.
It cannot be stated that the impugned order of the Tribunal is without any reason whatsoever so as to remand the matter back to the Tribunal. Even if the matter is remanded back to the Tribunal, the ultimate result arrived at by the Tribunal in the impugned order relying upon the facts emerging from the records the same would not be different in any view of the matter. In such circumstances, we do not find any merit in the appeal - Decided in favour of assessee.
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2020 (7) TMI 721 - KARNATAKA HIGH COURT
TDS u/s 195 - liability for deduction of tax - whether payments made by the assessee cannot be treated as royalty ? - HELD THAT:- Substantial question of law framed by this Court is answered in favour of the revenue and against the assessee in 2015 (6) TMI 1205 - KARNATAKA HIGH COURT]
In the event the assessee succeeds before the Apex Court, it is clear that this order also cannot come into effect. The assessing authority shall therefore, pass an order under Section 260(1A)of the Act, based on the outcome of the assessee’s appeal before the Apex Court. If the assessee loses his battle before the Apex Court, then before giving effect to this order, the assessing authority shall consider the application of Art. 24(4) of the DTAA between India and the Netherlands. Though the said question is not raised by the assessee before the authorities, the same being purely a question of law and the said DTAA being a beneficial piece of delegated legislation, if the assessee is entitled to the benefit of the same, that cannot be denied to it.
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2020 (7) TMI 720 - ITAT MUMBAI
Disallowance of provision for warranty while computing book profits u/s.115JB - HELD THAT:- Disallowance made under normal provisions of the Act, ITAT had set aside to the file of the ld. AO - We also find that there is absolutely no finding recorded by the ld. CIT(A) in his appellate order as to whether the provision has been made on a scientific basis based on past history of the assessee.
Since, the same issue has been set aside to the file of the ld.AO under normal provisions of the Act, we deem it fit and appropriate in the interest of justice and fair play to remand this ground also to the file of the ld. AO as the decision in this case would be depending on the outcome of the decision taken by the ld. AO under normal provisions of the Act. Accordingly, the ground raised by the assessee is set aside to the file of the ld. AO for denovo adjudication in accordance with law.
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]
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2020 (7) TMI 719 - ITAT BANGALORE
Transfer Pricing Adjustment - Selection of comparable - HELD THAT:- Accropetal Technologies Ltd. - Observations of the DRP is a finding that the employee cost of Accropetal Technologies Ltd., is less than 25% of its total cost. However, we find that in form No.35A (form of objection before DRP) the Assessee has raised para 6.4.2 (Page-40 of Form No.35A), the objection for exclusion of this company is only on the basis of functional comparability and revenue recognition method followed by this company. Both the filters employed by the DRP for excluding this company from the list of comparables does not figure in the objection of the Assessee at all.
This aspect has not been highlighted or taken as a ground of appeal by the revenue in its appeal. Therefore the only ground of appeal of the revenue against the directions of the DRP is that the directions of the DRP amount to a set aside of the issue to the TPO/AO. Since we have come to the conclusion that the directions of the DRP cannot be construed as a set aside of the issue to the TPO/AO, we find no merits in Gr.No.2 raised by the revenue.
Companies functionally dissimilar with that of assessee need to be deselected from final list who is into provision of low end IT enabled services.
Gains/loss arising from fluctuation of foreign currency as being operating in nature - HELD THAT:- The Hon’ble Delhi High Court in the case of PCIT Vs. B.C.Management Services (P) Ltd.[2017 (12) TMI 255 - DELHI HIGH COURT] held that foreign exchange gain has to be regarded as part of operating income by following its own order in Pr. CIT v. Cashedge India (P.) Ltd. [2016 (5) TMI 1348 - DELHI HIGH COURT].Respectfully following the said decision, we uphold the directions of the DRP and dismiss ground raised by the revenue.
Working capital adjustment - HELD THAT:- On going through the TPO's order as well as annexure D referred to in the transfer pricing order on working capital adjustment, we find that the AO has not given any basis for restricting the adjustment to 1.71%. In all the cases relating to transfer pricing adjustment, this Tribunal has been directing to give working capital adjustment on actual basis and the TPO having arrived at 5.97% ought to have adopted the same instead of restricting it to 1.71 %. - remand this issue to the file of the AO/TPO for working out the ALP after giving adjustment of working capital as per the calculation of the AO in annexure D annexed to the transfer pricing order. This ground of appeal is accordingly allowed.
Deduction u/s.10A - HELD THAT:- From case of CIT v. Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] we are of the view that communication charges and expenses incurred in foreign exchange should be excluded both from export turnover and total turnover. We are of the view that as of today, law declared by the Hon'ble High Court of Karnataka which is the jurisdictional High Court is binding on us. Moreover, the order of the Hon’ble Karnataka High Court has been upheld by the Hon’ble Supreme Court in the case of CIT v. HCL Technologies Ltd. [2018 (5) TMI 357 - SUPREME COURT]. The grounds are decided accordingly dismissed.
Non granting full credit of TDS deducted and consequently levying interest u/s 234B and C and non granting interest under Section 244A contrary to the directions of the DRP - HELD THAT:- We are of the view that these grounds are factual in nature and therefore the AO must be directed to verify the same and grant them/rectify the same in accordance with law. We hold and direct accordingly.
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2020 (7) TMI 718 - MADRAS HIGH COURT
Benefit of carry forward of losses u/s 72(A) - brought forward losses of the amalgamating company - non fulfilling requirement of filing of the requisite information in Form No.62 for the third assessment year - HELD THAT:- We do not think that the requirement of filing of the requisite information in Form No.62 for the third assessment year can be said to be a condition precedent or a mandatory condition to allow the Assessee to carry forward such losses under Section 72A of the Act.
The said condition of filing the Form No.62, at best, is only directory and non compliance thereof would not disentitle the Assessee to claim such carry forward losses to be set off against the profits of the Assessee company. There is no dispute before us that the fact of crossing of the 50% of installed capacity of its production stood achieved by the Assessee in the present case in the fourth year, as would be clear from the order of the Commissioner of Income Tax (Appeals) for AY 2007-08, which is produced on record and quoted above.
No substantial question of law, as claimed by the Revenue Department
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