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Income Tax - Case Laws
Showing 181 to 200 of 9151 Records
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2015 (12) TMI 1615
Revision u/s 263 - "prejudicial to the interest of revenue" - multiple share transfers by assessee - Held that:- On verification of the notices and u/s 142, the questionnaires and replied thereto, we find that the AO probed into the aspects of each of the related concerned, facts relating to the multiple share transfers by the assessee company repeated over the short span of time, facts relating to the purchase of shares by the assessee with no adequate funds from Universal for consideration lower than the market price, raising of the funds through the OFCDs route from the INSTANT and clearing of the liabilities to the Universal etc. We also examined and the following annexures reflect the fact of verification of the details relating to the Share purchase transactions from the UNIVERSAL for the lower price. When the AO formed an opinion on an issue ( ie amount of premium on the OFCD), the CIT cannot sit on the judgment seat as the review officer u/s the provision of section 263 of the Act. Judgmental law does not permit the same.
The assessee purchased the shares from the said Zensar, KEC, Spencer and Co Ltd and the transactions are considered by the AO genuine. Fact of verification of the share purchase transaction is very much on records. We find the AO is aware of and informed of the facts relating to the purchase price of the said shares, being lessor than that of the FMV. Considering the facts narrated by the Sri Mehta, we find that the AO conducted necessary enquiries in to various aspects of the said purchase transactions and opined to make addition on account of „excess premium‟ only and invoked the provisions of section 56 of the Act and not on account of the said share purchase transactions involving Zensar, KEC, Spencer and Co Ltd. Therefore, we find no error in the order of the AO, whether of legal or factual nature on that account.- Decided in favour of assessee.
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2015 (12) TMI 1614
Deemed dividend addition u/s 2(22)(e) - Held that:- As decided in assess;s own case in AY 2005-06 if the share premium amount is taken out of Reserves and Surplus, the assessee is having negative balance under the head profit and loss account which means that it has accumulated losses for the year ending 31.3.2005, which lead to only logical conclusion that there cannot be any question of deemed dividend. The findings of the Ld. CIT(A) are accordingly reversed. The AC) is directed to delete the addition made on account of deemed dividend u/s. 2(22)(e) of the Act. - Decided in favour of assessee
Assessment u/s 153A - whether an addition which is not on the basis of incriminating material as found during the search operation can be made where the assessment has attained finality? - Held that:- Addition made is not based on the incriminating material during the search and the assessment which is already attained finality cannot be disturbed. The additional ground also decided in favour of assessee.
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2015 (12) TMI 1613
Double disallowance u/s.40(a)(ia) - prohibition of carrying forward losses u/s 79 - amalgamation - Held that:- We find that the assessee has itself disallowed and added to its income ₹ 12,30,374/- while filing the return of income on the basis of note in clause 17(f) of the tax audit report as per Table A (supra). We further note from the comparative statement of disallowance u/s.40(a)(ia) of the Act that the A.O. again disallowed and added ₹ 17,97,259/- to the income of assessee as stated in para 6 of the A.O. order, the break up of which is given in Table B (supra). The ld. CIT(A) while disposing of the appeal before him allowed relief in respect of ₹ 5,76,899/-as mentioned in Table B (Total B) meaning thereby that double disallowance in respect of ₹ 12,20,360/- (Rs.12,15,060 + 5300) as which stands added to the total income of the assessee suo motto on the basis of tax audit report. On the basis of these facts, it is apparent that the disallowance in respect of ₹ 12,20,360/- has been made twice, first by the assessee on his own and secondly by the A.O. We, therefore, delete the disallowance/addition - Decided in favour of assessee
Rejection of assessee’s claim for setting off of brought forward losses - Held that:- As decided in COMMISSIONER OF INCOME TAX Versus SELECT HOLIDAY RESORTS PVT LTD. [2013 (1) TMI 187 - DELHI HIGH COURT] as during the earlier period 98% of the assessee’s share were held by IIPL the holding company, which was amalgamated with the assessee company. However, after merger of the shareholder of the IIPL continued to be shareholder in the assessee company. Thus, the shareholders beneficially entitled to 98% of the shares continued to be same. In these circumstances, prohibition of carrying forward losses placed by Section 79 does not operate. The same issue was also come up before Karnataka High Court in the case of CIT vs. AMCO Power System Ltd.[2015 (10) TMI 2385 - KARNATAKA HIGH COURT ] has affirmed the same.- Decided in favour of assessee
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2015 (12) TMI 1612
Addition u/s 68 - peak credit theory application - Held that:- We find from the copy of the account of the Syndicate Bank in the books of the assessee that the all deposits were of less than ₹ 50,000/- and the money was regularly withdrawn in cash by the assessee. In the present circumstances the addition of entire amount of deposits into bank of ₹ 29,79,700/- was wrong and cannot be sustained. We find reasoning in the submissions of the ld.AR that in such scenario where the regular deposits and withdrawals from the bank were made for the purpose of business of the assessee, the income could be assessed on the basis of peak cash credit only.
AO framed the assessment ex-parte without giving an opportunity to the assessee, whereas the ld.CIT(A) dismissed the appeal of the assessee after rejecting the contentions of the assessee of applying peak credit theory or presumptive tax scheme under section 44AD of the Act. Under the present circumstances, we are of the opinion that ends of justice would be met if the assessee is brought to tax on the basis of peak credit worked out on the basis of deposits and withdrawals. Accordingly, we set aside the order of ld.CIT(A) and direct the AO to assess the income of the assessee on the basis of peak credit theory in the bank account of the assessee after affording a reasonable opportunity of hearing to the assessee. - Decided in favour of assessee for statistical purposes.
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2015 (12) TMI 1611
Penalty u/s 271(1)(c) - disallowance of salary and tenant accommodation charges - Held that:- Neither at the time of assessment stage nor at the time of penalty proceedings or even during appeal proceedings, the assessee has rebutted the findings of the ld.AO, by any documentary evidence that, it has actually incurred any genuine expenditure under the head salary, or tenant accommodation charges. Once the ld.AO has proved that the vouchers of these expenses are not reliable at all, the assesee could have produced some of the employees and the tenants before the ld.AO to disprove the findings. As the assesee failed to do so, the belief that the claim of expenses under the head salary and tenant accommodation charges are not genuine, strengthens. Moreover, the assesse had agreed for an adhoc disallowance in respect of the technical errors to buy peace and to avoid litigation. - Decided against assessee
Addition u/s 68 - Held that:- In the present case, ostensibly, the assessee had furnished the details of the loan taken from the 8 parties along with the PAN numbers before the ld.CIT(A). It was submitted before the Ld.CIT(A) that due to unavoidable circumstances, the assessee could not produce the third part evidences i.e., confirmation letters etc., at the time of assessment proceedings. The ld.CIT(A) instead of remanding the details furnished by the assessee to the ld.AO, rejected the same without giving any cogent reasons. Further it is observed that the ld.AO has not recorded his satisfaction in respect of the cash credits The aforesaid features does not establish that the cash credits shown in the books of accounts remained unexplained. Therefore we are inclined to delete the penalty levied by the ld.AO on the cash credits - Decided against revenue
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2015 (12) TMI 1610
Penalty u/s 271(1)(c) - addition on account of remission of liability u/s 41(1)- Held that:- Assessee has admitted in its written submissions before the authorities below that, there was no likely hood of these payments being made to the suppliers(creditors). The assessee therefore, has surrendered, in view of detection made by the Ld.AO. Had it been the intention of the assessee to make full and true disclosure of its income, it would have filed the return declaring an income inclusive of the amount, which was surrendered later during the course of the assessment proceedings. Consequently, it is clear that the assessee had no intention to declare its true income. The AO, in our view, has recorded a categorical finding that he was satisfied that the assessee had concealed true particulars of income and is liable for penalty proceedings under Section 271(1) (c ).
We therefore following the ratio in the case of MAK Data Pvt. Ltd. (2013 (11) TMI 14 - SUPREME COURT ), uphold the view of the Ld.CIT(A) that, in the absence of any explanation in respect of the surrendered income, the first part of clause (A) of Explanation 1 is attracted. - Decided against assessee
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2015 (12) TMI 1609
Revision u/s 263 - erroneous computation of Book Profit u/s. 115JB - undisclosed claim of donation - whether order passed by the AO as not only erroneous but also prejudicial to the interest of the Revenue? - Held that:- We find that vide letter dated 7th December, 2012, the assessee has furnished (a) ledger account of donation u/s. 80G alongwith donation receipts (b) copy of acknowledgement of return of income and balance sheet and profit and loss account of M/s. Shantilal Shanghvi Foundation alongwith all its schedule. This reply is placed at page-20 of the Paper Book and from pages 23 to 38, we find the receipts of donation to M/s. Shantilal Shanghvi Foundation.
Thus, it can be seen that in response to a specific query, the assessee has filed all the related details alongwith supporting evidences. Therefore, it cannot be said that the AO has not examined this issue during the course of assessment proceedings. The decisions relied upon by the Ld. DR are altogether on different set of facts. The AO has thoroughly examined the claim and most importantly the ratio laid down by the Hon’ble Supreme Court in the case of Apollo Tyres Ltd [2002 (5) TMI 5 - SUPREME Court ] squarely apply on the facts of the case. We, therefore, set aside the order of the Principal CIT and restored that of the AO made u/s. 143(3) of the Act. - Decided in favour of assessee
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2015 (12) TMI 1602
Entitlement to deduction under Section 80IA - Held that:- In a batch of cases, in CIT Vs. Eastman Exports Global Clothing (P) Ltd. [2015 (1) TMI 830 - MADRAS HIGH COURT] this Court had followed the decision rendered in Velayudhaswamy Spinning Mills (P) Ltd. Vs. Assistant Commissioner of Income Tax, [2010 (3) TMI 860 - Madras High Court] held that the provisions of section 80-IA(5) treating undertaking as a separate sole source of income cannot be applied to a year prior to the year in which the assessee opted to claim relief under section 80-IA for the first time. Depreciation and carry forward loss relief to the unit which claims deduction under section 80-IA, cannot be notionally carried forward and set off against the income from the year in which the assessee started claiming deduction under section 80-IA - Decided in favour of the assessee and against the Revenue
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2015 (12) TMI 1592
Penalty u/s 271(1)(c) - no return of income was submitted by the assessee for the assessment year under consideration - Held that:- Concealment of particulars of income, if any, has to be seen with reference to the return and not in any other manner and as that where no return is filed, it cannot be said that assessee had concealed the particulars of income. The context in which language used by the Legislature showed that it is the act of commission of default which is subject to penalty and not the act of omission. Explanation 3 to section 271(1)(c) of the Act, is not applicable to the existing assessee. See Yeshwant B. Chigteri Versus Assistant Commissioner Of Income-Tax [1999 (12) TMI 137 - ITAT PUNE] - Decided in favour of assessee
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2015 (12) TMI 1589
Exemption u/s 11 - pharmacy shop in hospital premises - activity of running a pharmacy shop as incidental to attainment of the objects of the trust - charitable trust - Held that:- Identically, Hon’ble jurisdictional High Court in Baun Foundation Trust vs Chief Commissioner (2012 (4) TMI 172 - BOMBAY HIGH COURT ) wherein, identically, the activity of chemist of was held to be incidental or ancillary to the dominant object and purpose to run a hospital. The Hon’ble Court held that running a chemist shop is not the dominant object for the purpose trust, therefore, the assessee’s application was allowed u/s 10(23C) (via) of the Act, by holding that application of approval cannot be rejected on the ground that running of a shop in the hospital is incidental for the purposes of the hospital.
In the present appeal also, the chemist shop is part and partial of the hospital being incidental/ancillary to achieve the objects of the hospital, therefore, following the aforesaid decisions and also the case of Franciscan Sisters of St. Joseph’s Society (2014 (1) TMI 1754 - ITAT CHENNAI) wherein, running of pharmacy by the assessee society as integral part of running a hospital, ratio laid down in DIT (E) vs Agri-horticulture Society (2004 (7) TMI 44 - MADRAS High Court) we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals), more specifically when Karuna Medical Society the pharmacy shop is integral part and partial of the hospital. - Decided in favour of assessee.
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2015 (12) TMI 1586
Assessee’s claim of relief u/s 90 - CIT(A) erred in restricting the assessee’s claim of relief u/s 90 to the extent of tax payable in India on net income i.e difference between interest earned from M/s AHPL and interest paid on borrowings made for advancing the loans to M/s AHPL - Held that:- The provisions of sec. 90 of the Act and clauses of DTAA between India and Singapore clarify that tax credit to the extent of income derived in Singapore and offered to tax in India should be granted. Relief from double taxation is provided by abatement on the basis of mutual agreement between the two States concerned whereby the assessee is given relief by credit in a particular manner even though he is taxed in both the countries. Relief can be in the form of credit for tax payable in another country or by charging tax at lower rate. The procedure to be adopted by the Assessing Officer for granting relief is to determine in the first place, the total income of the person liable to tax in India in accordance with the provisions of the Act, and then allow relief as per the terms of the tax treaty entered with the other contracting country where the income has suffered double taxation. Article 25 of the DTAA between India and Singapore deals with relief to be granted in respect of double taxed income. The said Article restricts the allowability of credit to an amount not exceeding the tax payable in India in respect of such income from Singapore. In similar circumstances, the Mumbai Bench of the Tribunal in the case of JCIT vs Digital Equipments India Ltd [2004 (3) TMI 711 - ITAT MUMBAI ], has observed that credit of tax paid in USA cannot exceed the income tax liability payable in India in view of clause 25(2)(a) of DTAA between India and USA. Thus we remit this issue in dispute to the file of the Assessing Officer for reconsideration.
Addition towards loss on foreign exchange derivatives transactions - Hel that:- We remit this issue back to the file of the Assessing Officer. The Assessing Officer shall reconsider the issue afresh in the light of the above order of this Tribunal in Deputy Commissioner Of Income Tax Company Circle-I (1) , Chennai Versus M/s Asvini Fisheries Pvt Ltd [2016 (1) TMI 538 - ITAT CHENNAI] after giving adequate opportunity to the assessee wherein held Assessing Officer has to consider the foreign exchange derivative in proportion to export turnover as regular business transaction of the assessee. If the derivative transaction undertaken by the assessee is in excess of export turnover then that loss suffered in respect of that portion of excess transaction has to be considered as speculative loss only and that excess derivative transaction has no proximity with export turnover and the Assessing Officer is directed to compute accordingly. Further, the Assessing Officer has to see whether there is any premature cancellation of forward contract of foreign exchange and that transaction should be taken out for the purpose of considering the business loss and only the transactions which are completed to be considered for the purpose of determining the business loss from these foreign exchange forward contract. With this observation, we remand this issue to the file of the Assessing Officer for fresh consideration.
Addition u/s 14A - Held that:- We make it clear that if the assessee has already disallowed more than 5% of the exempted income, the same has to be sustained. Ordered accordingly. This ground of appeal is partly allowed.
Eligibility for deduction u/s 35D in respect of total expenditure incurred towards share issue - Held that:- Extension of the industrial undertaking cannot be considered as complete in the relevant previous year. Ld. CIT(Appeals) was justified in denying assessee claim under Section 35D of the Act for the impugned assessment year.
Disallowance u/s 40(a)(ia) on payment of catering charges to catering contractor - Held that:- This issue is squarely covered in favour of the assessee by the decision of Special Bench in the case of Merilyn Shipping and Transports vs Addl. CIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] wherein it was held that only the amount outstanding at the close of the financial year has to be disallowed u/s 40(a)(ia) of the Act. Being so, in our opinion, the Assessing Officer has to see whether any amount is outstanding at the close of the financial year and that portion is to be disallowed. Accordingly, this issue is remitted back to the file of the Assessing Officer with the above direction.
Disallowance u/s 40(a)(i) - payments made to non-residents in respect of which tax deduction has been made at lower rates without obtaining a certificate u/s 195(2)- Held that:- Assessee was right in effecting deduction of tax at source considering se 44BB of the Act. The disallowance was rightly deleted by the ld. CIT (Appeals)
Disallowance u/s 40(a)(i) in respect of dry-docking charges paid to Fair Mount Marine BV Netherlands - Held that:- The assessee took the plea for the first time that the said service was covered under Article 8A of DTAA before the CIT(A) and there was no such claim made before the Assessing Officer. In our opinion, the Assessing Officer has to examine the issue whether Article 8A of India-Netherlands DTAA is applicable to the assessee's case or not. Accordingly, this issue is remitted back to the file of the Assessing Officer for fresh consideration.
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2015 (12) TMI 1575
Entitlement for exemption in terms of Section 80P(2)(a)(i) - whether assessee are not a Co-operative Banks but a Co-operative Societies? - Held that:- Taking note of the observations in the judgment in the case of M/s. The Quepem Urban Co-operative Credit Society Ltd., (2015 (6) TMI 573 - BOMBAY HIGH COURT ) to the effect that merely giving credit facilities to the members would not be a Co-operative Bank but continued to be a Co-operative Society and as there is no material on record that the respondents were giving any such credit facilities to the non members, we find that the observations in the said judgment in the case of M/s. The Quepem Urban Co-operative Credit Society Ltd., ( supra ) would be squarely applicable to the facts of the present case. As such, as no other contentions have been raised by the learned counsel appearing for the appellant, we find that the proposed substantial questions of law to that effect would not survive and does not require any further consideration
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2015 (12) TMI 1568
Disallowance u/s 40(a)(ia) - as per AO assessee has not filed Form No.15I/15J before the competent authority - Held that:- We have considered rival contentions and found from the record that assessee has duly obtained Form No.15-I from the recipient of the freight charges giving due particulars as per the requirement. This Form 15-I was also submitted by the assessee before the AO during scrutiny assessment. Merely because the same could not be filed before the CIT(A), the AO disallowed assessee’s claim which is not acceptable.
As decided CIT vs. Valibhai Khanbhai Mankad [2012 (12) TMI 413 - GUJARAT HIGH COURT] failure to comply such requirement by the payee may result into some other adverse consequences if so provided under the Act. However, fulfilment of such requirement cannot be linked to the declaration of tax at source. Any such failure therefore cannot be visualized by adverse consequences provided under section 40(a)(ia) of the Act - Decided in favour of assessee.
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2015 (12) TMI 1564
Rejection of books of accounts - trading addition - Held that:- During the course of survey, the diary as Annexure A-8 was found and impounded by the ld Assessing Officer where number of transactions were found unrecorded. The stock register has not been maintained by the assessee. Therefore, correct income of the business cannot be deduced in absence of rejection of books of account. Accordingly, the Assessing Officer was right in applying Section 145(3) of the Act. After rejecting the books of account, the ld Assessing Officer estimated the sale at ₹ 5.5 crores against ₹ 4,99,54,718/- and applied the same G.P. rate, which has been disclosed by the assessee, which is reasonable and estimated on the basis of discrepancies found during the course of survey. The assessee’s alternative argument is also not acceptable as the assessee has not correlated with the disclosure of excess stock with the entries made in the Annexure-A-8. The excess stock was in form of furniture. However, this was the discrepancy on unaccounted sale made by the assessee. There was no disclosure on account of excess cash during the course of survey. Accordingly we confirm the order of the ld CIT(A) on both the grounds.
Disallowance U/s 40 (a)(ia) - Held that:- The interest of ₹ 3,21,952/- was not payable as on 31/3/2009, therefore, the case laws referred by the assessee is squarely applicable. However, remaining interest amount of ₹ 27,81,388 was paid to M/s India Bulls Bank ltd. against the purchase of machinery. The ld CIT(A) had rightly capitalized the interest payment with the cost of plant and machinery and accordingly, was allowed depreciation on it. The assessee’s argument that there was no extension of existing business during the year is not substantiated with any evidence when interest cost is 27.81 lacs, then addition of assets is in crores, therefore, it is extension of business. Accordingly, we uphold the order of the ld CIT(A).
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2015 (12) TMI 1562
Transfer pricing adjustment - selection of comparables - Held that:- After exclusion of Celestial Biolabs Ltd. from the final set of comparables arrived at by the TPO, the arithmetic mean of the comparables, according to the assessee, would be 20.83% which is within the +5% range of 21.11% and the TP adjustment made by the AO/TPO is to be deleted. We, therefore set aside the issue to the file of the AO/TPO for verification of the assessee’s claim and decide the issue afresh in accordance with law, after providing reasonable opportunity of being heard to the assessee. The AO/TPO is also directed to recompute the working capital/risk adjustment as claimed by the assessee.
Deduction u/s 10A - expenditure incurred in foreign currency and telecommunication charges are to be excluded from the export turnover for the purpose of computation of deduction u/s. 10A - Held that:- The Hon’ble High Court of Karnataka in the case of CIT v. Tata Elxsi Ltd.(2011 (8) TMI 782 - KARNATAKA HIGH COURT ), held that whatever expenditure is excluded from the export turnover, has to be excluded from the total turnover as well. Respectfully following the decision of the Hon’ble jurisdictional High Court, we allow the alternate ground raised by the assessee in this regard.
Relief allowable u/s. 10A of the Act is to be computed after setting off the brought forward depreciation losses of the assessee - Held that:- The issue has to be set aside to the file of the Assessing Officer. Accordingly, we remit the issue to the Assessing Officer for fresh consideration and decision in accordance with the decision of the Chennai Bench of the Tribunal in the case of S.R.A. Systems Ltd. [2014 (3) TMI 357 - ITAT CHENNAI] wherein held un-absorbed depreciation has to be set-off before computing the exemption allowable u/s.10A & the assessee can claim deduction u/s.10A before setting off of brought forward losses
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2015 (12) TMI 1561
TDS u/s 194H - non deduction of tds - genuineness of the transaction - Held that:- Court is satisfied that such payments could not be characterized as brokerage only for the purposes of bringing it within the ambit of Section 194H of the Act. In that sense, the basic background facts concerning the MOU entered into by the Assessee with the VEEPL is no different from the MOU entered into by the Assessees in the similar cases with VEEPL as aforementioned. SEE Commissioner of Income Tax-IV v. Zebian Estate P. Ltd [2015 (11) TMI 932 - DELHI HIGH COURT] - Decided in favour of assessee
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2015 (12) TMI 1560
TPA - selection of comparables - Held that:- Kitco Limited transactions are primarily with government owned enterprises.Applying the preposition laid down in the case of M/s ThyssenKrupp Industries India Private Limited (2013 (11) TMI 930 - ITAT MUMBAI), we hold that Kitco Ltd., cannot be accepted as a comparable company. Hence the same is directed to be eleminated.
TCE Consulting Engineers Ltd.- the Comparable Company is involved in activities beyond engineering design. It is engaged in activities that extend from concept to commissioning. Whereas the assessee provides services as a captive unit to its overseas AEs. The diversified functions of this comparable company include pre-project activities, procurement assistance, project management, commissioning and coordination, inspection, construction and supervision. Further, there is no segmental accounting in the annual report of the Company which provides profitability, for the engineering design segment. Hence the same cannot be accepted as a comparable.
IBI Chematur Ltd. company undertakes substantial R&D activities (R&D expense 5.41% of turnover) which is not a function performed by the assessee. Hence this company cannot be accepted as a comparable.
Accuspeed Engineering Services India Limited and Development Consultants Private Limited - DRP has not given any reasons for rejecting these comparables. On examination of the papers on record, we are in agreement with the submissions of the ld. AR. Hence we direct the A.O to include this company as a comparable.
M N Dastur & Co. Private Limited - It is relevant to note that the Ld. TPO/DRP has accepted M N Dastur & Co. Pvt. Ltd., as a comparable in the assessee’s own case for assessment year 2009-10. Under such circumstances, we direct the A.O to include this company as a comparable.
Mott Macdonald Private Limited - this comparable company is involved in the provision of multi-disciplinary management and engineering consultancy services like business advice for development planning to engineering design to project management. It is engaged in planning, developing and delivering projects across many sectors such as energy, industry, water and environment to transport, buildings, urban infrastructure and social development. We observe that the Ld.DRP has not given any reasons for rejecting this comparable. We observe that the functions of this comparable company are diversified in nature. As we have rejected company like TEC on similar ground, this company also cannot be accepted as a comparable. Hence we direct the A.O not to include this company as a comparable
TCS E-Serve International Limited & TCS E-serve Limited - This company undertakes, customer service, transaction processes, collections, risk management, and analytics, and has created a lot of applications which are in the nature of intellectual property in terms of reconciliation software, fund transfers, etc. The company also undertakes software testing and validation activities. Possession of intellectual property rights has to be factored if such a company is to be taken as comparable. This cannot be done unless there is appropriate data. Further, from the TP study we observe that, this company is a wholly owned subsidiary of TCS E serve International Ltd. During the year under consideration, this company has made payments towards use of Tata brand. Consequentially use of the TCS brand has substantially increased the operating profits post acquisition. Hence we are of the opinion that this company cannot be taken as a comparable. We therefore direct to exclude this comparable.
Accentia Technologies Limited is into development of software products for healthcare. It is submitted by the ld.AR that Accentia Technologies Ltd is also engaged into diversified activities such as Knowledge Process outsourcing(KPO), Legal process outsourcing(LPO), Data process Outsourcing(DTO), high end software services. It is also submitted by the ld.AR that segmental information in respect of this company is not available. It has been further brought to our notice that this company has been rejected by the Ld.TPO in the earlier year. The company has also had business restructuring during the year under consideration thereby giving rise to extraordinary circumstances. For all these reasons we direct the Assessing Officer to exclude this company as a comparable.
E4e Healthcare Business Services Private Limited - . Functionally the company is into health care outsourcing services and in addition it also renders software development services. It is also observed that segmental information in respect of this company is not available. The company is also a 100% EOU, under STPI guidelines. We are therefore inclined to accept the contention of the assessee that this company should be excluded as a comparable. Hence we direct the Assessing Officer to do so.
Omega Healthcare Management Services Pvt. Ltd. - the financial data of the company is available on the database. The ld. TPO however did not give proper opportunity to the assessee to substantiate the inclusion of this company as a comparable. The issue was carried further before the Ld.DRP, and the Ld.DRP also did not comment upon the economic analysis of the company. We therefore set aside this issue of selecting this company, to be considered by the TPO as a comparable, and to include the same in the event it satisfies all the filters applied by the ld.TPO.
Techprocess Solutions Ltd. (Processing Services segment) - TPO has rejected the company on the ground that financial statement of the company was not available. The issue was carried further before the Ld.DRP, and the Ld.DRP also did not comment upon the economic analysis of the company. We therefore set aside this issue of selecting this company be considered by the TPO as a comparable, and to include the same in the event it satisfies all the filters applied by the ld.TPO.
Adjustment on account of Receivables - Held that:- It is brought to our notice that the assessee is a debt free company. In such circumstances it is not justifiable to presume that, borrowed funds have been utilized to pass on the facility to its AE’s. The revenue has also not brought on record that the assessee has been found paying interest to its creditors or suppliers on delayed payments.
In lieu of the discussions and the ratio laid down in the case of Kusum Healthcare Pvt. Ltd. [2015 (4) TMI 180 - ITAT DELHI ], we direct that no separate adjustment for interest on receivables are warranted in the hands of the assessee. Ground no. 3 of the assessee’s appeal is there by allowed. The assessee’s appeal stands disposed off accordingly.
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2015 (12) TMI 1553
Disallowance under Section 40(a)(ia) - assessee has not made any TDS at the time of payment and the recipient of the amount has submitted Form 15H on 10.04.2011 - Held that:- The fact is that the recipient of interest amount informed the assessee that she will file Form 15H. Accordingly, at the time of credit, the tax was not deducted. Subsequently Form 15H was filed on 10.04.2011, before the due date for depositing the amount in the Government account. When the recipient filed Form 15H, there is no liability on the part of the assessee to deduct tax. Admittedly, the tax was not deducted at the time of credit. However, before the due date for filing return of income, the recipient filed Form 15H. Therefore, on the date of filing of return of income, tax is not deductible on the amount paid to the recipient since Form 15H is filed. When there is no requirement for deduction of tax in view of filing of Form 15H by the recipient on 10.04.2011, this Tribunal is of the considered opinion that there cannot be any disallowance under Section 40(a)(ia) of the Act. Therefore, this Tribunal is unable to uphold the order of the lower authority and accordingly, the order of the lower authority is set aside and the addition is deleted.
Disallowance u/s 36(1)(iii) - contention of the assessee is that addition of one more windmill does not amount to extension, it is only an expansion of the business - addition one more windmill to the existing business - Held that:- This Tribunal is of the considered opinion that when the assessee is admittedly in the business of generation of electricity through windmill and made addition of one more windmill, it is an extension of such existing business of generation of electricity through windmill. Therefore, the capital borrowed is for acquisition of asset for extension of the existing business or profession. When the assessee paid interest on the borrowed capital, which was used for acquisition of asset for extension of the existing business of generation of electricity through windmill, this Tribunal is of the considered opinion that the interest cannot be allowed as deduction till the capital asset acquired by the assessee is put to use. In this case, admittedly, the capital asset purchased is not put to use. Therefore, the CIT(Appeals) has rightly confirmed the addition made by the Assessing Officer.
Disallowance being the amount paid to Life Insurance Corporation of India, towards Narasu's Spinning Mills Employees Group Gratuity Fund - Held that:- An identical situation was considered by the Apex Court in the case of Textool Co. Ltd. (2009 (9) TMI 66 - SUPREME COURT ) wherein found that the real intention behind Section 36(1)(v) of the Act is that the employer should not have any control over funds of irrevocable trust created exclusively for the benefit of the employees. Since the Fund created by the LIC for the benefit of the employees of the assessee and contribution made by the assessee ultimately came back to the Employees Gratuity Fund, the Apex Court found that the conditions stipulated under Section 36(1)(v) of the Act is satisfied. In the case before us, the application made by the assessee is still pending before the Commissioner for approval and the amount was paid to the LIC. The assessee had no control over the Fund created by the LIC for the benefit of its employees. Since the assessee has no control over the funds and application is still pending before the Commissioner, this Tribunal is of the considered opinion that there is no reason to disallow the claim of the assessee. Since the funds of the assessee have gone out of the hands of the assessee and the assessee has no control over the funds, the dictum laid down by the Apex Court is squarely applicable to the facts of the case. Accordingly, we set aside the orders of the lower authorities and the addition made by the Assessing Officer to the extent of ₹ 46,71,233/- is deleted.
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2015 (12) TMI 1552
Addition on account of notional interest for Share Application Money paid to AE - TPA - Held that:- TPO has considered this transaction as a loan transaction by brushing aside the submissions of the learned AR of the assessee that this money was given as share application money and that too without giving any finding or indication any basis to say that this is a loan transaction.
TPO has not brought on record anything to show that any unrelated share applicant was to be paid any interest for the period between making the share application money payment and allotment of shares. Therefore even for this delay in allotment of shares also, the very foundation of impugned ALP adjustment is devoid of legally sustainable merits.
Hence we hold that the impugned ALP adjustment is devoid of merit and therefore deleted in both years because it was agreed by both sides that facts on this aspect are identical in both years.
Also as we have held that no ALP adjustment is to be made in the present case, the dispute raised by the revenue that such adjustment should be as per domestic PLR as against LIBOR rate approved by CIT (A) does not survive and therefore, the appeal of the revenue is liable to be rejected - Decided in favour of assessee.
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2015 (12) TMI 1551
Deduction u/s 80IA - Held that:- CIT(A) allowed the claim of the assessee for deduction u/s 80IA by following the binding judgment of the Madras High Court in Velayudhaswamy Spinning Mills (P) Ltd. (2010 (3) TMI 860 - Madras High Court ). This Tribunal is of the considered opinion that mere pendency of SLP before the Apex Court cannot be a reason for not following the judgment of the jurisdictional High Court. In other words, the judgment of the jurisdictional High Court is binding on all authorities in the States of Tamilnadu and Pondicherry. The CIT(A) has rightly allowed the claim of the assessee - Decided in favour of assessee
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