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Income Tax - Case Laws
Showing 21 to 40 of 1116 Records
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2015 (10) TMI 2816
Disallowance u/s 14A r.w. Rules 8D(2)(ii) - HELD THAT:- As decided in own case [2015 (5) TMI 727 - ITAT DELHI] sole ground of the assessee is allowed with a direction to the AO that the disallowance u/s 14A read with Rule 8D(iii) of the I.T. Rules should also be made for the year under consideration in this appeal i.e. for A.Y. 2008-09 and the AO is also directed to give set off of amount of suomoto disallowance already made by the assessee in the computation of returned income.
We, therefore, by respectfully following the aforesaid referred to order restored this issue back to the file of the AO to be decided in accordance with the directions given vide order dated 20.05.2015 in assessee’s own case [2015 (5) TMI 727 - ITAT DELHI] for the assessment year 2008-09.
Disallowance on account of diminution in value of fertilizer bonds - assessee received Fertilizers Companies, Government of India, Special Bonds against the fertilizer subsidy from the Government of India, as per Scheme, against the sale of fertilizer - HELD THAT:- As decided in own case [2015 (5) TMI 727 - ITAT DELHI] for the assessment year 2008-09 e fertilizer bonds received by the assessee in lieu of cash subsidy also deserves to be given the same treatment as foreign exchange because foreign exchange is also received in lieu of cash/Indian National Rupee (INR) and the same is also shown as current trading assets in the books of accounts as per well accepted accounting principles. - Decided against revenue.
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2015 (10) TMI 2814
Non prosecution of appeal - HELD THAT:- When the matters were called up for hearing today, no one has appeared on behalf of the assessee. The assessee has not filed any adjournment applications also. The notices of hearing sent to the assessee have not returned unserved. In these circumstances, it appears that the ass-the appeals filed by the assessee are dismissed for non-prosecutionessee is not interested in prosecuting his appeals. The appeals filed by the assessee are, therefore, liable to be dismissed, for non-prosecution.
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2015 (10) TMI 2813
Disallowance of bogus expenses - action of the CIT(A) in disallowing expenses @ 2.5% as against 5% disallowed by the AO - HELD THAT:- We find that the assessee had claimed certain expenditure and no supporting evidences have been filed before the Assessing Officer. However, before the ld. CIT(Appeals), some vouchers were filed, which were perused in the presence of the AO and found that some vouchers are self-vouched. CIT(Appeals), keeping in view all the factors, restricted the disallowance from 5% to 2.5%. Therefore, we find no reason to interfere with the order passed by the CIT(Appeals) and accordingly, we dismiss the grounds raised by the Revenue.
Addition towards unexplained investment in land - HELD THAT:- CIT(A) satisfied about the source of fund in assessment year 2003-04 that it came from M/s LKS Petroleum India Pvt. Ltd. CIT(A) is not justified in giving direction to the Assessing Officer to consider the same in assessment year 2004-05. In our opinion, if the cheque is issued from LKS Petroleum India Pvt. Ltd and is duly reflected in the books of account of LKS Petroleum India Pvt. Ltd and they are filing return of income then there is no question of treating the same in the hands of assessee as unexplained investment in assessment year 2004-05. As such, the assessee has to explain the same before the Assessing Officer - we are remitting this issue to the file of the AO for fresh consideration.
Unexplained expenses - CIT(A) deleted the addition on the reasoning that this was duly reflected in the books of account of DMDK party - contention of the ld. DR is that DMDK party is not maintaining the proper books of account and the expenses are not reflected in the books of DMDK party - HELD THAT:- As submitted that it was reflected in the books of account of the DMDK party. However, no material has been furnished to show that this amount of ₹ 25 lakhs is duly accounted for in the books of account of DMDK party. As such, we are not in a position to express any opinion on this issue and this requires further verification at the end of the AO - Accordingly, we remit this issue back to the file of the Assessing Officer for verification after giving adequate opportunity of hearing to the assessee.
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2015 (10) TMI 2812
Short term capital loss on account of forfeiture of share warrants - whether the share warrants could be treated as a capital asset under Section 2(14)? - HELD THAT:- As decided in SHRI CHAND RATAN BAGRI [2010 (1) TMI 123 - DELHI HIGH COURT] the share warrant is a capital asset. It is stated that the Revenue has not filed an appeal against the said judgement on account of the low tax effect.
Since the aforementioned judgment of this Court holds the field, no substantial question of law arises in this appeal.
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2015 (10) TMI 2810
Tax rate for royalty income - Determination of tax liability on income earned by way of Royalty earned by the assessee in India - India-USA DTAA - different rates for different payments - income arising out of agreements entered prior to 01.06.2005 were offered under the provisions of DTAA at the rate of 15% and income arising on account of agreements entered after 01.06.2005, were offered for taxas per the provisions of Section 115A of the Act, at 10% - HELD THAT:- We find that the issue raised by the Revenue in this appeal is squarely covered by the decision of the coordinate bench in IBM World Trade Corporation v. DDIT [2012 (5) TMI 58 - ITAT BANGALORE] CIT (A) has reproduced this decision in its entirely in his order. Nothing has been brought before us by the Revenue to take a different view. Especially so since the decision relied on by the CIT (A) was that of the assessee itself for an earlier year on the same set of facts.- Decided against revenue.
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2015 (10) TMI 2809
Reopening of assessment u/s 147 - AO sought to reopen the assessment after the period of limitation prescribed u/s 147 - HELD THAT:- As per the first proviso to section 147, the AO can reopen the assessment after expiry of four years from the end of the relevant AY where the assessee is in default in filing of its return of income u/s 139 or failed to respond to notices u/s 142(1), 148 or failed to fully and truly disclose all information necessary to complete the assessment of its income. In the present case, AO could have reopened the assessment by the end of AY 2009-10 - AO has issued notice u/s 148 of the Act on 25/02/2011. Therefore, the AO has sought to reopen the assessment after the period of limitation prescribed u/s 147 of the Act, even though there was no failure of the assessee to disclose fully and truly all material facts necessary for the assessment of its income. The AO has not recorded any finding to such a default committed by the assessee and also assessee was not at fault. Hence, we dismiss the revenue appeal as not sustainable.
For AY 2006-07 depreciation was claimed on goodwill which is not as per section 32(ii) of the Act - From the Fixed Assets Schedule filed by the ld. AR, he has clearly demonstrated that the goodwill was wrongly capitalized instead of clubbing the sales tax liability with the cost of plant & machinery. We do not find any escapement of income to the revenue as the depreciation will be same when calculated on the revised plant & machinery cost.
AO has completed original assessment after making due enquiry and proper application of mind on the issues on which assessment was reopened. Even otherwise, the AO relied on the assessee’s explanation on the issue vide letter No. TCPL/15/08, dtd. Nil, which was very much available on record before AO while completing the assessment u/s 143(3) on 19/12/2008. Hence, no new evidence has come to the notice of the AO. Hence, in our view, reopening in the present case was on change of opinion after passing of the assessment order. We dismiss the revenue appeal for this year also. - Decided in favour of assessee.
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2015 (10) TMI 2808
Deduction u/s.80IA - claim denied in respect of the profits relating to captive generation of power which could not be considered as profits “derived from” an identification industrial undertaking - Whether CIT(Appeals) erred in holding that the assessee was entitled to deduction u/s.80IA from the two power generating units situated in the main manufacturing plants producing news print and writing paper, set up for captive consumption as they did not qualify to be considered as separate industrial undertakings within the meaning of clause (iv) of sub-section (4) of sec 80IA? - HELD THAT:- As decided in own case [2011 (6) TMI 776 - ITAT CHENNAI] assessee is bound to succeed in these appeals. Its claim for deduction under Section 80-IA of the Act has to be allowed in respect of its power generated from TG-3 Boiler 4 and TG-4 Boiler 5 units as well.
Initial assessment year referred to in section 80IA(5) - unabsorbed depreciation and carried forward losses of the earlier years which had already been set off against the other income to be carried forward and taken into consideration for the purpose of computation of deduction u/s.80IA - HELD THAT:- As decided in Velayudhaswamy Spinning Mills (P) Ltd [2010 (3) TMI 860 - MADRAS HIGH COURT] eligible business were the only source of income during the previous year relevant to initial assessment year and every subsequent assessment years. When the assessee exercises the option, the only losses of the years beginning from initial assessment year alone are to be brought forward and no losses of earlier years which were already set off against the income of the assessee. Looking forward to a period of ten years from the initial assessment is contemplated. It does not allow the Revenue to look backward and find out if there is any loss of earlier years and bring forward notionally even though the same were set off against other income of the assessee and the set off against the current income of the eligible business, Once the set off is taken place in earlier year against the other income of the assessee, the Revenue can not rework the set off amount and bring it notionally. Fiction created in sub-section does not contemplate to bring set off amount notionally. Fiction is created only for the limited purpose and the same can not be extended beyond the purpose for which it is created.
Incentive on carbon credit is capital in nature - capital or revenue receipt - HELD THAT:- Similar issue was decided by the Andhra Pradesh High Court in the case of CIT v. My Home Power Ltd [2014 (6) TMI 82 - ANDHRA PRADESH HIGH COURT] wherein it was held that income received from sale of carbon credit is considered as capital receipt and not business receipt and not liable for tax under the Act. Accordingly, we agree with the finding of the Commissioner of Income-tax(Appeals) on this ground and dismiss the ground of appeal taken by the Revenue.
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2015 (10) TMI 2807
Estimation of 25% profits on unverifiable purchases - HELD THAT:- Both the parties agreed that the issue in question may be set aside to the file of the AO to decide the same afresh after the judgement rendered in the case of Anuj Kumar Varshney & Others vs. ITO [2015 (4) TMI 533 - ITAT JAIPUR] after giving the assessee a reasonable opportunity of being heard in accordance with law. Ground No. 2 of the assessee is allowed for statistical purposes.
Disallowance of expenses - HELD THAT:- We find merit in the arguments of the ld. DR that the assessee has neither denied the deficiency in the record in question nor has given any improvement in compliance of the record. In view of all these defects, there is no mitigating circumstance to disturb the estimate made by the AO. Assessee has not given any reason to suggest that the estimate is either arbitrary or unjustified. In view thereof, I see no infirmity in the order of the ld. CIT(A). Ground No. 4 of the assessee is dismissed.
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2015 (10) TMI 2800
Loss arising on transfer of assets - Loss under the head 'Income from Business or Profession' OR 'Loss from Short Term Capital Gains' - whether the amount of loss is to be treated as short term capital loss as claimed by the assessee or as business loss as treated by the lower authorities? - HELD THAT:- Since the findings of the Ld. CIT(A) for A.Y. 2006-07 have been reversed by the Tribunal by order dated [2014 (1) TMI 1599 - ITAT MUMBAI] and it is also an admitted fact that the investment pattern/ share transaction activity is almost identical to that of the earlier assessment year, hence, applying the same ratio and for the sake of principle of consistency, we hold that the short term capital loss returned by the assessee has to be treated as such and not as business income of the assessee. This issue is accordingly decided in favour of the assessee.
Disallowance u/s 14A in relation to the expenditure incurred for earning of exempt income - HELD THAT:- A perusal of the assessment order reveals that the AO has not followed the guidelines of objective satisfaction as laid down by the Hon’ble Bombay high Court in the case of Godrej & Boyce [2010 (8) TMI 77 - BOMBAY HIGH COURT] while making the disallowance . He without recording any reasoning for his dissatisfaction with regard to the working/claim of the assessee, straightway applied Rule 8D against the mandate of the provisions of section 14A of the Income Tax Act. The ld. CIT(A) also ignored the mandate of the provisions of section 14 A, while confirming the disallowance.
So keeping in view of the overall facts and circumstances of the case, we restore this issue back to the file of the AO with a direction that the AO will give opportunity to the assessee to place on record all the relevant facts including its accounts and then examine the computation/calculation made in this regard by the assessee having regard to the accounts of the assessee. The AO will be at liberty to call for any record/evidences or statement etc. from the assessee as may be required by him for deciding the issue under consideration. After going through the details provided by the assessee, the AO will decide the issue by way of a speaking order in the light of the observations made above.
Disallowance of interest expenditure on interest free loan given - HELD THAT:- As observed that the Hon’ble Bombay High Court in the case of “CIT vs. Reliance Utilities and Power Ltd” [2009 (1) TMI 4 - BOMBAY HIGH COURT] has held that if there are funds available, both interest free and over draft and/or loans taken, then a presumption would arise that investments would be out of the interest free fund generated or available with the company, if the interest free funds were sufficient to meet the investment. Similar proposition can be applied in the case of assessee also. If the assessee is able to prove that sufficient own funds were available with the assessee then it has to be presumed that interest free loans were advanced by the assessee out of his own funds. This is required to be demonstrated from his accounts by the assessee before the AO. Further the assessee has claimed that it is a case of double disallowance. We accordingly restore the matter to the file of the AO to decide this issue afresh and also to verify as to whether any double disallowance has been made on this issue and to decide the issue in accordance with law.
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2015 (10) TMI 2798
Demanding the tax deducted at source from the assessee who has suffered a deduction - deduction of TDS by the 2nd respondent - Seeking for mandamus directing the 1st respondent to reflect the TDS amount, which has been deducted by the 2nd respondent herein while paying rent, and to treat the 2nd respondent as the defaulter and also directing the 1st respondent to recover the dues from them - According to the petitioners, the 2nd respondent deducted TDS and though necessary details were furnished to the authority concerned by the petitioners, recovery proceedings are sought to initiated - HELD THAT:- There is no dispute that the 2nd respondent was a tenant under the petitioners herein. Now, the petitioners claim that the 2nd respondent vacated the premises long back. It is the specific case of the petitioners that though the 2nd respondent company effected TDS, it had failed to remit the same into the account of the Income Tax Department.
This is a disputed fact which cannot be resolved in this writ petition without any material and in the absence of the 2nd respondent. Having regard to the fact that the deduction of TDS from the amount payable to the petitioners towards rent as well as remittance of the same were to be made by the 2nd respondent, this court deems it appropriate to direct the respondents 1 and 3 to consider the letter/representation of the petitioner in this regard after issuing necessary notice to the 2nd respondent and to conduct an enquiry and to pass appropriate orders on merits and in accordance with law. The said exercise shall be completed within a period of four weeks from the date of receipt of a copy of this order.
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2015 (10) TMI 2797
Credit for TDS - CIT(A) deleted the disallowance made by the AO u/s.199 in view of 1st and 2nd proviso - HELD THAT:- This issue is squarely covered in favour of the assessee by the decision of the Tribunal in assessee’s own case [2015 (11) TMI 9 - ITAT CHENNAI] wherein held we are not in a position to express any opinion whether the assessee is having any element of income from subscription charges received from various parties. Therefore, if the entire subscription received by the assessee is transferred to M/s. Sun TV and the assessee is entitled only for commission on subscription income, then the Tribunal’s decision relied by the assessee’s counsel is applicable. Accordingly, we are remitting the entire issue back to the file of the Assessing Officer to consider the issue afresh in the light of the above observation.
Respectfully following the aforesaid decision of the Tribunal, we are remitting the entire issue back to the file of the Assessing Officer for fresh consideration - Appeal of the Revenue is partly allowed for statistical purposes.
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2015 (10) TMI 2794
Disallowance of 25% of the royalty and treating the same as capital expenditure - assessee entered into a license and technical assistance agreement (royalty agreement) with its parent company for licensing of the technical information including method of manufacture and improvements with respect to the products and technical services - HELD THAT:- It is pertinent to note that for the year under consideration, royalty paid by the assessee was under the same agreement as it was paid for the assessment year 2004-05. The Hon’ble High Court has decided this issue [2015 (1) TMI 240 - KARNATAKA HIGH COURT] after considering the relevant clauses of the agreement and therefore, the issue of payment of royalty is now covered by the decision of the Hon’ble High Court in the assessee’s own case. Respectfully following the decision of the Hon'ble jurisdictional High Court, we allow the claim of the assessee and the addition made by the AO on this account is deleted.
Disallowance of doubtful advances written off - assessee did not produce any break-up of the amounts as well as advances and as per the AO the advances were capital in nature - HELD THAT:- New facts have been brought before us by the assessee stating that the assessee has now restricted the claim after netting the amount payable to WMS to the balance of amount ₹ 1,34,000/- only which was to be written off on this account as against the original claim of ₹ 1,14,05,413/-. Further, the assessee has produced additional evidence which is required to be verified and examined. Accordingly, in the facts and circumstances and in the interest of justice, we set aside this issue to the record of the AO to adjudicate the same after considering the facts as well as the additional evidence brought before us. This ground is partly allowed for statistical purposes.
Disallowance of administrative fee by invoking the provisions of sec.40A(2) - excess payment to the related party - assessee has submitted that the provisions of sec.40A(2) are not applicable to the said transaction when the assessee has already reported the transaction as international transaction which was referred by the AO to the TPO for determination of the ALP - HELD THAT:- There is no dispute that the transaction has been reported by the assessee as international transaction which was also accepted by the AO and the TPO as an international transaction. Thus, once a particular transaction is admitted as international transaction then the same falls in the ambit of the provisions of X chapter of the Act which are specific provisions to deal with such transactions between the assessee and its AE. Therefore, once the transaction is undisputedly subject matter of Chapter X of the IT Act, then the other general provisions of the Act cannot be applied simultaneously.
AO, having considered the transaction being international transaction and making a reference to the TPO for determination of the ALP cannot go back to the provisions of sec.40A(2) for determining the reasonableness of the price paid by the assessee. Our attention was invited by assessee that for the assessment year 2001-02 to 2002-03 the payment in question was subjected to MAP and only 25% is charged to tax. Therefore, it was accepted by the department that the services were rendered by the AE to the assessee in India. We further note that the AO has not conducted any inquiry or investigation to find out the excessiveness of the payment made by the assessee to its AE.
In the case in hand, when the AO has not conducted any inquiry or brought out any material on record to prove that payment made by the assessee is excessive and unreasonable making an adhoc disallowance by invoking the provisions of sec.40A(2) of the Act is not justified.
TP adjustment in respect of administrative service fee - HELD THAT:- TPO is not empowered to determine the ALP at nil though the quantum/size has to be decided along with ALP to be determined as per Chapter X of the Act. The assessee has also filed additional evidence in support of its claim that the AE has rendered services. Since additional evidence filed by the assessee is relevant and material document in adjudicating the issue, and further when the TPO has not determined the ALP as per the provisions of chapter X as well as the IT Rules, therefore, in the facts and circumstances in the case as well as in the interest of justice, the issue is set aside to the record of the AO/TPO for adjudication of the same after considering the relevant evidence as well as in the light of the above observations.
Levy of interest u/ss.234A and 234B is mandatory and consequential. Therefore, no separate finding is required.
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2015 (10) TMI 2793
TP Adjustment - Selection of MAM - TNMM OR Cost Plus Method (CPM) - what is the most appropriate method, on the facts of this case, for determining the arm’s length price of the exports made by the assessee to its associated enterprises (AEs) abroad - HELD THAT:- Whether the transactions are with associated enterprises resident in India or with associated enterprises resident outside India, the prices at which such transactions are entered into with such enterprises cannot be taken as “comparable uncontrolled price” for the purpose of determining the arm’s length price.
As for the question as to whether the transactions with associated enterprises can, in any situations, be considered as a valid input for ascertainment of arm’s length price under the CUP method, we find the issue is covered, in favour of the assessee, by decision of a coordinate bench in the case of Sabic Innovative Plastic India Pvt Ltd Vs DCIT [2013 (9) TMI 596 - ITAT AHMEDABAD].
No reasons to take any other view of the matter than the view so taken by us in the case of Gemstone [2015 (11) TMI 185 - ITAT AHMEDABAD]. Respectfully following this decision, we hold that the authorities below indeed erred in not applying the TNMM for ascertaining the arm’s length price of assessee’s transactions with the associated enterprises. We direct the AO/TPO to compute the ALP on the basis of the transactional net margin method. With these directions, we remit the matter to the file to the assessment stage for fresh determination of arm’s length price. As the matter is being remitted to the assessment stage, it will be open to the assessee to take such other plea, on merits, on ascertainment of ALP under the TNMM as the assessee may deem fit and the same will have to be disposed of by way of a speaking order, in accordance with the law and after giving a fair and reasonable opportunity of hearing to the assessee. All those issues regarding computation part, as on now, are quite academic and wholly hypothetical.
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2015 (10) TMI 2792
Revision u/s 263 - CIT(A) has dismissed the appeal of the assessee on the basis that the assessee has not challenged the order of the CIT u/s 263 - HELD THAT:- As gone through the order of the CIT(A) and find that the CIT(A) has not decided the appeal but has held the order of the AO as erroneous and set aside the same to the Assessing Officer for de novo consideration.
CIT(A) was not justified in dismissing the appeal of the assessee on the basis that the order of the CIT u/s 263 of the Act has become final as no appeal is preferred against the same.We restore this appeal to the file of the learned CIT(A) to decide the same on merits. Appeal is allowed for statistical purposes.
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2015 (10) TMI 2791
Addition u/s 68 on account of unexplained capital - CIT(A) deleted the addition - HELD THAT:- Since in the remand report the Assessing Officer himself has accepted that the assessee has explained the details of the source of capital introduced, no addition in this case is warranted. In fact, Revenue’s grievance in filing the appeal, while the Assessing Officer himself is accepted the veracity, is not justified. Hence, we uphold the order of the learned CIT(A).
Difference in loan account as per bank statement and balance-sheet - CIT(A) deleted the addition - we find that when in the remand report the Assessing Officer himself has accepted the veracity of the assessee’s claim that this addition has been made by oversight of the Assessing Officer, we find that the learned CIT(A) was justified in deleting the addition.
Disallowance of payment of wages - CIT(A) deleted the addition - HELD THAT:- The assessee derives income from the supply of labours for industrial operation. The percentage of wages to the gross receipt is consistent with that returned in the preceding assessment year, except for marginal increase. In the subsequent assessment year also, the Assessing Officer has accepted the wages paid, except a minor disallowance of ₹ 70,000/-. Under these circumstances, in our considered opinion, the ad-hoc disallowance is not sustainable
When confronted in this regard that there has been a marginal increase in the percentage of wages to the gross receipt and the fact that wages are not 100% verifiable, the learned Counsel of the assessee agreed for a small disallowance. We also find that one of the pleas in support of the deletion of the addition taken by the learned Counsel of the assessee relied upon the learned CIT(A) is the fact that in the subsequent assessment year the payment of wags was accepted by the Assessing Officer, except for the minor disallowance of ₹ 70,000/- - Disallowance of wags to the extent of ₹ 1 lac will meet the ends of justice. Accordingly, we modify the order of the learned CIT(A) and hold that the disallowance to the extent of ₹ 1 lac out of wage expenses is sustainable and accordingly, the disallowance of ₹ 1 lac is upheld.
Unexplained cash credit u/s 68 - CIT(A) has given a finding that the fresh loan taken during the year was only ₹ 2,00,000/- - AO has rejected the same on the ground that the assessee’s creditors are persons of little means having yearly income of ₹ 1 lacs and bank statement reflects cash deposit - HELD THAT:- CIT(A) has held that, on perusal of bank statements, he found that the assessee had made cash withdrawal from the same bank account and the assessee has discharged the burden of proving the creditworthiness of the lender and the genuineness of the loan transaction; hence, the CIT(A) deleted the addition. There is no presumption that persons with smaller incomes cannot make any savings whatsoever. Doubts raised by the Assessing Officer regarding the bank statement with regard to the deposit can be subject matter of verification in the hands of the lender and not the assessee. This is more so when the lender is filing the income-tax return. In these circumstances, in our considered opinion, there is no infirmity in the order of the learned CIT(A); accordingly, we uphold the same.
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2015 (10) TMI 2790
TP Adjustment - Determination of ALP under TNMM - MAM selection - Accurate adjustments if CUP method is followed - HELD THAT:- There are a number of differences in the international transaction and the non AE export rates considered by the TPO for comparability analysis. As put forth by the assessee, these differences, inter alia, include impact due to adopting simple average instead of weighted average, quantity based price variation, quality based price variation, analysis cost absorption based price variation, market based price variation, key customer based price variation, forward contract based price variation etc.
These differences materially affect the computation of ALP of the international transaction. Even though the assessee has computed the adjustments to be given for these differences, the same will not make the ‘Internal CUP’ as the most appropriate method. Reasonably accurate adjustments cannot be made to eliminate these differences. Internal CUP fails to be a most appropriate method on the basis of facts and circumstances of the case and law applicable.
DRP as to how TNMM is the most appropriate method. As rightly observed by the DRP, TNMM requires establishing comparability at a broad functional level. It requires comparison between net margins derived from the operation of the uncontrolled parties and net margin derived by an associated enterprise on similar operation. The assessee in the present case has chosen comparables in the similar industry under the TNMM. The DRP had directed the TPO to make comparability analysis under the TNMM and subsequently the TPO has not determined any TP adjustment thereby concluding that the international transactions are at ALP even under the TNMM.
As concluded that the TNMM is the most appropriate method. The assessee has relied on various decisions in support of the proposition that accurate adjustments should be given if CUP method is followed. Regarding adjustments to be given under the internal CUP. Since it is held that TNMM is the most appropriate method on the basis of facts and circumstances of the case and law applicable, the decisions relied on and the assessee’s cross objections are not being dealt.
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2015 (10) TMI 2789
Trading addition - Estimation of income - contract receipts - rejection of books of assessee - case was selected for scrutiny and an order u/s 143(3) passed - CIT-A allowed net profit rate at 6% of the gross receipts, before depreciation, interest and remuneration to partners - HELD THAT:- We find from the records that in the absence of the any specific findings by the AO, the ld. CIT(A) has rightly applied the net profit rate of 6% by deleting the addition made by the AO considering the past history of the assessee.
In absence of any specific finding by the AO to justify increase in net profit rate from 5.72% to 8% and in light of past assessment history of the assessee which has been duly considered by the ld. CIT(A) and following the decision of Gupta K.N. Construction Company [2015 (5) TMI 315 - RAJASTHAN HIGH COURT] we find no infirmity in the order of the ld. CIT(A) where net profit rate of 6% before depreciation, interest and remuneration to partners had been adopted. - Decided against revenue.
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2015 (10) TMI 2788
Disallowance deduction u/s 54F - apply provisions of Section 50C for computing the capital gain - As per AO property was commercial plot and lease deed was issued for the use of commercial activity only. There was no evidence with the assessee that any construction has been done on it - nature of investment was commercial, which cannot be considered for deduction u/s 54F - HELD THAT:- The plot was allotted by the JDA itself shows that it was a commercial plot and on that the assessee constructed some room - copy of agreement dated 31/7/2010 made with M/s Kalyani Engineering, Jhotwara, Jaipur for construction as per map provided by the assessee. The total contract amount was ₹ 10.50 lacs. There was a receipt for payment of ₹ 19,281/- for filling the soil.
Another evidence is a copy of boundary constructed on the plot, which shows that the assessee had made some investment in construction, therefore, the ld AO is directed to verify these detail payments and construction made by M/s Kalyani Engineering, Jhotwara, Jaipur and also consider the case law cited by the assessee i.e. ACIT Vs. Om Prakash Goyal [2012 (8) TMI 547 - ITAT JAIPUR] - set aside this issue to the file of Assessing Officer to reconsider all the evidences furnished by the assessee and make spot inquiry for use of the plot, electricity connection and other facilities created by the assessee to decide the nature of building. Assessee’s appeal is allowed for statistical purposes only.
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2015 (10) TMI 2787
Disallowance u/s 14A - Assessee submitted disallowance cannot exceed the amount of dividend income - HELD THAT:- As relying on JOINT INVESTMENTS PVT LTD VERSUS COMMISSIONER OF INCOME TAX [2015 (3) TMI 155 - DELHI HIGH COURT] by no stretch of imagination can Section 14A or Rule 8D be interpreted so as to mean that the entire tax-exempt income is to be disallowed. The window for disallowance is indicated in Section 14A, and is only to the extent of disallowing expenditure “incurred by the assessee in relation to the tax-exempt income”. This proportion or portion of the tax-exempt income surely cannot swallow the entire amount as has happened in this case.”
Respectfully following the decision of Hon’ble High Court, direct for restricting the disallowance u/s 14A to ₹ 28,55,485/-. - Decided partly in favour of assessee.
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2015 (10) TMI 2786
TDS u/s 195 - payment made for rendering of any managerial or consultancy service rendered by non resident agent without TDS - Addition u/s. 40(a)(ia) - whether or not the payments in question can be treated as managerial or consultancy service rendered by non-resident? - HELD THAT:- The facts of the present case are akin to the facts of the decision in Toshoku Ltd.'s case [1980 (8) TMI 2 - SUPREME COURT]. In the instant case also the assessee engaged the services of non-resident agent to procure export orders and paid commission. The assessee is not liable to deduct tax at source when the non-resident agent provides services outside India on payment of commission.
Services rendered by the non-resident agent can at best be called as a service for completion of the export commitment and would not fall within the definition of fees for technical services, we are the firm view that section 9 of the Act is not applicable to the case on hand and, consequently, section 195 of the Act does not come into play. In view of the above finding, the decision of the Supreme Court in Transmission Corporation of A.P. Ltd.'s [1999 (8) TMI 2 - SUPREME COURT] relied upon by the learned standing counsel for the Revenue is not applicable to the facts of the present case. We find no infirmity in the order of the Tribunal in confirming the order of the Commissioner of Income-tax (Appeals).' - Decided against revenue.
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