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Income Tax - Case Laws
Showing 81 to 100 of 735 Records
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2019 (9) TMI 1479 - ITAT DELHI
Maintainability of appeal - low tax effect - HELD THAT:- Appeals of the Revenue are dismissed as non-maintainable as the tax effect involved in the appeals is below ₹ 50 lakhs. However, it is made clear that the Department is at liberty to file Miscellaneous Application for recalling of the order, if the tax effect is found to be more than the prescribed limit of ₹ 50,00,000/- or any of the conditions etc., as available in the amendment carried out in para 10 of Circular No. 3/2018, dated 20.08.2018, is made out. Appeal of Revenue is dismissed.
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2019 (9) TMI 1476 - ITAT COCHIN
Penalty proceedings u/s 272A(2)(c) r.w.s. 274 - assessee non - furnishing the information called for u/s 133(6) - HELD THAT:- On identical facts the Cochin Bench of the Tribunal in the cases of Kakoor Service Co-operative Bank Ltd. [2018 (1) TMI 548 - ITAT COCHIN] had held that the penalty imposed u/s 272A(2)(c) of the Act is valid. Assessee has not offered any valid reason for not furnishing the information called for u/s 133(6) of the Act.
AO has mentioned that when they had approached, the assessee Society, for seeking information u/s 133(6) of the Act, there was total lack of co-operation on the part of the assessee society as well as threat (reference order imposing penalty u/s 272A(2)(c) in appeals.
Since there is no reasonable cause furnished by the assessee as mentioned u/s 273B of the IT Act for non furnishing of information sought by the ITO(intelligence) u/s 133(6) of the Act, the order imposing penalty cannot be quashed. - Decided in favour of revenue.
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2019 (9) TMI 1475 - ITAT PUNE
Excess Cane Price Paid to Sugarcane Suppliers - HELD THAT:- In view of the statement made by both the sides that the facts in the present appeal are identical, the issue relating to excess sugarcane price paid by the assessee is restored to the file of Assessing Officer with similar directions as above in the case of Majalgaon Sahakari Sakhar Karkhana Ltd. [2019 (3) TMI 906 - ITAT PUNE] - AO shall decide the issue after affording reasonable opportunity of being heard to the assessee in accordance with law. Thus, the relevant grounds raised by the assessee on this issue are allowed for statistical purposes.
Sale of Sugar at Concessional rates - HELD THAT:- As relying on Majalgaon Sahakari Sakhar Karkhana Ltd. [2019 (3) TMI 906 - ITAT PUNE] in view of the above order by Co-ordinate Bench this issue is restored back to the file of Assessing Officer for de-novo adjudication in similar terms. The Assessing Officer shall grant reasonable opportunity of being heard to the assessee in accordance with law. Thus, the relevant grounds raised by the assessee on this issue are allowed for statistical purposes.
C-class membership fee - It is the case of the assessee that the fee received by the assessee constitutes a capital receipt and the same is not taxable - HELD THAT:- After going through the contents we find the AO erroneously assumed that the same, being collected by the assessee, is of revenue nature. Whereas the assessee holds the same is capital nature. Without deciding the nature of the receipt, the ld. CIT(A) confirmed the addition made by the Assessing Officer.
The said issue is required to be remitted to the file of the AO for one more round of adjudication. Accordingly, the Assessing Officer is directed to examine the precedents on this issue and conduct of the assessee in treating the same as capital nature in the earlier/later assessment year. Therefore, we are of the opinion that this issue relates to the C-class membership fee is required to be remanded to the file of the Assessing Officer for fresh adjudication.
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2019 (9) TMI 1473 - ITAT CHENNAI
Bogus LTCG - company in which the assessee invested is a penny stock company - HELD THAT:- This Tribunal is of the considered opinion that the matter needs to be re-examined by the Assessing Officer. Accordingly, orders of both the authorities below are set aside and the issue raised by the assessee with regard to deduction u/s 10(38) of the Act is remitted back to the file of the AO. AO shall examine the matter as directed by this Tribunal in the case of Kanhaiyalal & Sons (HUF) [2019 (2) TMI 1640 - ITAT CHENNAI] and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee.
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2019 (9) TMI 1472 - ITAT MUMBAI
TP Adjustment - Comparable selection - HELD THAT:- Assessee is primarily engaged in the provision of IT and ITES sector as per disclosure made in the Annual report of the assessee company. The ld. TPO observed that as per TP study report, the assessee is an ITES company. It is providing ITES services to M/s. Zenta Global Ltd. Barbados (ZGL). ZGL is a wholly owned subsidiary of M/s. Zenta Group (LLC), USA. The assessee company is owned by outsourcing Mauritius-1 Ltd., and outsourcing Mauritius-2 Ltd., in the ratio of 51:49.
M/s. Excel Infoways Ltd. is functionally not comparable with that of the assessee company. Apart from this, we find that M/s. Excel Infoways Ltd. had earned super normal profit of 243.69% on which ground also, this comparable deserves to be excluded from the list of comparables with that of the assessee company.
Disallowance of interest paid on delayed payment of TDS - HELD THAT:- AO merely states that such interest payment on delayed payment of TDS is inadmissible under statute and disallowed accordingly. This goes to prove that it was never the case of the ld. AO to have even remotely contemplated / categorizing the payment of interest to be penal in nature. Hence, there is no need in the instant case to look into the fact as to whether the said payment of interest of delayed payment of TDS could be penal in nature so as to be disallowed in the light of the provisions of Explanation to Section 37(1) of the Act.
We find that the main crux of the argument of the ld. DR was that there is no penalty provision provided in the statement for delayed payment of TDS. In this regard, the ld. AR rightly clarified before us that the statute indeed provides for levy of penalty u/s.271C of the Act for such violation. Hence, the argument of the ld. DR deserves to be dismissed and accordingly, we do not find any infirmity in the order of the ld. DRP granting relief to the assessee in this regard. Accordingly, the ground No.2 raised by the revenue for A.Y.2009-10 is dismissed.
Deduction u/s.10A - Foreign exchange gain earned as a result of hedging contracts, Octroi refund AND Income received on sale of old papers and cartons - in the opinion of the ld. AO, they are not linked or connected with the export activity of the assessee and hence, they are not eligible for deduction u/s.10A - HELD THAT:- It is not in dispute that the foreign exchange gain earned as a result of hedging contracts, Octroi refund and Income received on sale of old papers and cartons were earned by the assessee from this eligible undertaking eligible for deduction u/s.10A of the Act. Infact the ld. AR also submitted during the course of hearing that this is the only undertaking available with the assessee. Hence, as per the specific provisions of Section 10A(4) the entire profits of the business of the eligible undertaking shall be eligible for deduction in the proportion of export turnover to total turnover. We find that the ld. DRP had duly considered this aspect while granting relief to the assessee, which in our considered opinion, does not call for any interference.
Addition of interest received from HDFC bank on the basis of information received in form 26AS - HELD THAT:- DRP had granted relief to the assessee by accepting its contentions and had also observed that it would be impossible for the assessee to prove that it had not received any interest from HDFC bank. We are inclined to accept to these observations of the ld. DRP in as much as the assessee cannot be directed to prove the negative.
In the instant case, the assessee had categorically stated before the ld. AO itself that it had never earned any interest income from HDFC bank and had also adduced evidences in the form of its bank statements, books of accounts, balance sheet to demonstrate the same. This has not been rebutted by the ld. AO. The ld. AO had also not made any verification from HDFC bank to understand the real facts.
Assessee had taken efforts by addressing the letter to HDFC bank asking them to revise their annual information return submitted to the Income Tax Department by removing the alleged interest transactions with corresponding TDS in the name of assessee. The assessee had adduced evidences in this regard before the lower authorities and hence, we find that the ld. DRP was right in deleting the addition made towards alleged interest from HDFC bank.
Non granting deduction u/s.10A in respect of disallowance made u/s.40(a)(ia) and addition on account of advances written off - HELD THAT:- Once any disallowance is made in respect of eligible undertaking of the assessee, it would only go to increase the profits of such eligible undertaking, consequently it would be eligible for enhanced deduction u/s.10A of the Act thereby making the entire exercise revenue neutral. We find that the Central Board of Direct Taxes in its Circular No.37/2016 dated 02/11/2016 had duly clarified the same, which is not reiterated herein for the same of brevity. Accordingly, we hold that assessee is entitled for enhanced deduction u/s.10A in respect of aforesaid two additions / disallowances.
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2019 (9) TMI 1465 - ITAT BANGALORE
Grant of registration u/s 80G(5)(vi) denied - genuineness of the activities for grant of approval under section 80G(5)(vi) of the Act cannot be verified - assessee was granted registration under section 12AA - HELD THAT:- The object of grant of recognition under section 80G is to promote charitable activities and to mobilize resources which can be generated by the assessee trust from the potential donors as well as public at large. Therefore, denial of recognition under section 80G merely for the fact that the activities have not been carried out by the assessee trust and thus cannot be verified is not appropriate.
CIT(E) has not spelt out non-fulfillment of any of the conditions specified under section 80G(5) of the Act, therefore, it is not a case where any of the conditions specified for grant of approval have not been fulfilled by the assessee trust. - Decided in favour of assessee.
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2019 (9) TMI 1464 - ITAT BANGALORE
Weighted deduction u/s 35(2AB) - Assessee claimed deduction on scientific research expenses incurred by it @ 200% - AO noticed that the assessee has not furnished Form No.3CL issued by DSIR, New Delhi,the prescribed authority certifying the expenses incurred on scientific research - AO restricted the claim of revenue expenditure to 100% and disallowed capital expenditure - also rejected the alternative claim of the assessee to allow depreciation on the capital expenditure - HELD THAT:- In the instant case, the year under consideration being asst. year 2014-15, the same would fall prior to 1/4/2016 and hence the tax authorities are not justified for insisting on production of Form NO.3CL for allowing deduction u/s 35(2AB) of the Act. Accordingly, we set aside the order passed by the ld CIT(A) and direct the AO to allow the deduction @ 200% of the expenditure incurred by the assessee, after examining the claim from the books of accounts. - Decided in favour of assessee.
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2019 (9) TMI 1416 - ITAT PUNE
Ex-parte - no notice of hearing was received by assessee - Assessee prevented by sufficient cause from non-appearance as they have not received notice - due date for filing the return of income in the case under section 139(4) was 31.03.2014 as against 31.03.2013 mentioned in the order of Tribunal - HELD THAT:- The Tribunal [2019 (1) TMI 875 - ITAT PUNE] had decided the present appeals following the case of Humayun Suleman Merchant Vs. CCIT [2016 (9) TMI 70 - BOMBAY HIGH COURT]. The appeals of applicants were decided ex-parte in view of the issue being decided by the Hon’ble Bombay High Court (supra) - find merit in the plea of applicants and the order of Tribunal is recalled for regular hearing. The Registry is directed to fix the appeals in regular course and issue notice to both the parties. The Miscellaneous Applications filed by the applicants are thus, allowed.
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2019 (9) TMI 1415 - ITAT CHENNAI
Revision u/s 263 - difference between sale consideration actually paid and the guideline value fixed by the Government - addition in respect of the provisions of section 56(2)(vii) - HELD THAT:- Difference between sale consideration actually paid and the guideline value fixed by the Government in the present case being only ₹ 24/- lakhs, the stamp duty variation would be only in the range of ₹ 2.4 lakhs. Where the assessee has already spent ₹ 1,44,00,000/- and registration cost of nearly ₹ 14.4 lakhs and additional ₹ 2.4 lakhs admittedly would not be challenged by the assessee, especially when considering the rigmarole in respect of filing the appeal for reduction of the stamp duty valuation. But that cannot be the ground for making a direct addition in respect of the provisions of section 56(2)(vii) of the Act.
Government of Tamil Nadu has found that the guideline value fixed earlier with effect from 01.04.2012 was very much on the higher side and it consequently reduced the same in 2017, which clearly shows that the assessee should be given the benefit of the revised valuation. Once the revised valuation is taken into consideration, the guideline value in respect of the property would be lower than the actual consideration paid by the assessee. This is also not the case where any evidence of on-money payment has been found - addition as directed by the ld.PCIT in his order u/s.263 of the Act is unsustainable, when the guideline value as prescribed by the Government of Tamil Nadu with effect from June,2017 is taken into consideration. - Decided in favour of assessee.
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2019 (9) TMI 1407 - ITAT MUMBAI
Income accrued in India - Permanent establishment of the Appellant Company under Article 5 of the DTAA between India and Mauritius - appellant-company is a non-resident company incorporated in Mauritius engaged in the business of shipping and declared income from shipping activities - assessee claimed that its place of effective management is located in Mauritius and hence as per Article -8, no income is taxable in India - HELD THAT:- Effective management can be only in between two contracting state is not correct and as per the facts narrated above, we are of the considered view that the effective management of the assessee is neither in Mauritius nor in India and we are in agreement with the views of Mr. Klaus Vogel, who is an eminent authority of International Taxation, that if the effective management of an enterprise is not in one of the contracting state, but is situated in the third state, the benefit of article-8, cannot be extended.
No new facts or contrary judgments have been brought on record before us by the Ld. AR in order to controvert or rebut the findings recorded by the Ld.CIT (A). Moreover, there are no reasons for us to deviate from the findings so recorded by the CIT (A). Therefore, we are of the considered view that the findings recoded by the Ld. CIT (A) are judicious and are well reasoned. Accordingly, we uphold the same.
Whether there exists any Agency PE or fixed place PE in India? - HELD THAT:- Co-ordinate Bench in the case of Bay Lines (Mauritius) [2018 (2) TMI 1524 - ITAT MUMBAI] has held that M/s Freight Connection India Pvt. Ltd. is an agent of independent status and hence it cannot be considered as constituting Agency PE of that assessee. The decision so rendered shall also apply to the instant case and accordingly, we hold that M/s Freight Connection India P. Ltd. shall not constitute Agency PE of the assessee.
Assessee does not have PE in India and its income being business income, it cannot be brought to tax in India.
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2019 (9) TMI 1403 - ITAT PUNE
Income from House Property - Annual Letting Value of the unsold units lying as Stock in Trade - notional income by way of ALV in respect of the unsold flats cannot be taxed in the hands of the assessee - appellant is engaged in the business of real estate development and the unsold flats are held as Stock in Trade and not as Investments - HELD THAT:- It is an undisputed fact that the assessee never let out the unsold flats held as stock-in-trade. It is the case of the AO that the provisions of sections 22 to 23 of the Act should be invoked for taxing the notional income on such flats.
As perused all the four grounds revolved around the provisions of sections 22 to 23 of the Act relating to the head of income i.e. income from house property. It is an undisputed fact the provisions of section 23(5) of the Act was amended by the Finance Act, 2017 w.e.f. 01.04.2018 and, therefore, these provisions will not come to the rescue of the AO for bringing the deemed income on such unsold flats to taxation under the head ‘income from house property’.
In absence of enabling the provisions of the Income Tax Act, calculating the notional income in respect of the properties which were not rented out and rental income was never earned actually, the Assessing Officer’s policy to tax such income is unsustainable in law in view of the various decisions cited in the preceding paragraphs of this order. Accordingly, the grounds raised by the assessee are allowed.
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2019 (9) TMI 1402 - ITAT MUMBAI
Reopening of assessment u/s 147 - bogus purchases - HELD THAT:- Recorded reasons state that the assessee had availed accommodation entries on bogus bills from M/s.Nice Diamonds and M/s. Nice Diamonds is belongs to group of Shri Bhanwarlal Jain where they have admitted in the course of the search that M/s. Nice Diamonds is managed by them and they are bogus hawala dealers. AO has reason to believe that income had escaped assessment based on the above information and formed an opinion by himself and there is no borrowed satisfaction. Thus respectfully following the case of CIT v. Rajesh Jhaveri Stock Brokers (P) Ltd. [2007 (5) TMI 197 - SUPREME COURT] we uphold the reopening made by the Assessing Officer u/s. 147.
Bogus purchases - estimation of profit element at 8% - CIT(A) held that only the profit element embedded in such purchases shown to have been made from the non-existing parties are to be brought to tax - HELD THAT:- We find that what advantage the assessee could have got on purchasing the diamonds in gray market was only 1% being the VAT, as the assessee made purchases in the grey market without paying VAT, but obtained only the accommodation entries. Further as per the report of the task group constituted by the Department of Commerce the margin in trading in the diamond industry was only 1 to 3%.
Taking the average of the industry average i.e. 2% and the advantage which the assessee got from purchases from the gray market i.e. 1% towards VAT, in our view at best the disallowance can be made only at 3%. Therefore,profit element margin embedded in these purchase transactions should be taken @3% for these Assessment years i.e. A.Y.2011-12 & 2012-13. Accordingly, we direct the Assessing Officer to estimate the profit element @3% of the purchases treated as non-genuine and re-compute the income of the assessee for all these Assessment years.
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2019 (9) TMI 1399 - ITAT COCHIN
Revision u/s 263 - Disallowance u/s 40(a)(iib) - Electricity duty u/s. 3(1) of the KSED Act - CIT held that the amount debited towards Electricity Duty u/s. 3(1) of the KSED Act being an exclusive levy on the assessee which is a State Government undertaking by the State Government is to be disallowed u/s. 40(a)(iib) - HELD THAT:- In the present case, the Assessing Officer had not made the disallowance u/s. 40(a)(iib) - Without enquiring, the AO accepted the assessee’s claim. The failure on the part of the AO to make necessary enquiry rendered the assessment order erroneous which also resulted in loss to the revenue.
PCIT had observed in his order that the electricity duty u/s. 3(1) of the KSED Act falls under the purview of section 40(a)(iib) of the Act and it is to be disallowed u/s. 40(a)(iib) - order of the PCIT cannot be held as erroneous. The PCIT’s approach was correct. PCIT exercised his power conferred u/s. 263 in setting aside the assessment. AO has not considered the issue relating to the application of section 40(a)(iib) and he had accepted the claim without applying his mind. Hence, the order of the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, as it involves huge amount of tax - PCIT is justified in invoking the provisions of section 263. - Decided against assessee.
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2019 (9) TMI 1396 - ITAT JAIPUR
Undisclosed income on a/c of alleged unexplained cash found during the course of search - search and seizure u/s 132 and 133A - HELD THAT:- The assessee explained the source of cash as belongs to M/s. Adventure Global Tour LLP and also produced the cash book of the said concern to show the availability of cash with the said LLP. Once there is no incriminating material to show that the cash of ₹ 2,59,140/- found at 203 Ratna Sagar, MSB Ka Rasta, Johari Bazar belongs to the assessee and the said premises was not the business premises of the assessee and the assessee has explained the source of cash belongs to M/s. Adventure Global Tour LLP whose business premises is situated at 203 Ratna Sagar, MSB Ka Rasta, Johari Bazar, then in the absence of any contrary fact or material, the said explanation of the assessee cannot be brushed aside.
Assessee has discharged its onus in explaining the source of cash and the AO even failed to discharge his preliminary onus to establish that the cash found at a different premises not belonging to the assessee, belongs to the assessee. Thus the addition made by the AO is deleted. - Decided in favour of assessee.
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2019 (9) TMI 1392 - ITAT KOLKATA
Allowability of deduction u/s 80IA(4)(i) - HELD THAT:- This issue has been adjudicated against the assessee and in favour of the Revenue by the order of this Bench of the Tribunal in WEST BENGAL HOUSING INFRASTRUCTURE DEVELOPMENT CORPORATION [2019 (6) TMI 921 - ITAT KOLKATA] wherein held no such details provided by the assessee before the AO in claiming the said project in New Town is an integral part of highway project. Therefore, in our opinion, the assessee is not entitled to claim deduction u/s 80IA.
Interest on Treasury Account - Sum deposited Treasury Account of the State Government - Correspondence between the Government of West Bengal and the assessee - HELD THAT:- The correspondence, which lead to the assessee investing in the Government Treasury, the terms and conditions under which such deposits/investments were made, have to be examined. The type of accounts being maintained, their numbers etc. have to be examined only on such detailed enquiry, in our view it can be concluded as to whether the deposits/investments in question is a non-interest bearing deposits/investments or not - set aside the issue to the file of the AO for fresh adjudication in accordance with law. AO shall issue necessary notices to the Director of Treasury, Directorate of Treasury and Accounts and thereafter he shall, after examining all the necessary correspondence adjudicate the matter afresh in accordance with law. In the result this ground is allowed for statistical purposes.
Taxability of interest income on fixed deposit - AO has brought to tax this amount on the ground that the assessee failed to credit the interest on F.Ds to the P&L account and has directly deducted the same from project cost - HELD THAT:- On a query from the Bench, both parties agreed that the issue may be restored to the file of the AO, with a direction to verify the claim of the assessee that the amount in question has already been offered to tax. The AO is directed to verify this claim and if it is found that the assessee has not offered this interest on F.Ds to tax in its return of income and accounts, then he is directed to bring the same to tax.
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2019 (9) TMI 1389 - ITAT MUMBAI
Penalty u/s. 271G - assessee has entered into an international transactions with its AE and has failed to furnish documents or information as required u/s 92D(3) - main allegation of the revenue is that of non-furnishing of audited AE and non AE segmental as well as documents regarding choice of foreign entity as tested party - HELD THAT:- As noted that from the letter issued by revenue dated 07.09.2015 i.e. notice under section 92CA(2) read with section 92D(3) requiring information to be furnished in connection with the TP proceedings that a general notice is issued by the AO.
We noted that this issue has been considered in the case of CIT vs. Leory Somer & Controls (India) (P) Ltd. [2013 (9) TMI 761 - DELHI HIGH COURT] wherein it is held that when there is a general notice and no specific information of document which is required to be submitted by the assessee under section 92D(3) of the Act, is asked for, the penalty levied under section 271G cannot be sustained.
We noted that the assessee in the present case has made substantive compliance of the provisions of rule 10D, it is sufficient. The Legislature was conscious of this fact and, therefore, had specifically stipulated in section 92D(3) that the AO or the Commissioner (Appeals) may require a person to furnish any information or document in respect thereof and on failure of the said person to furnish the documentation within the specified time, penalty under section 271G can be imposed. Thus, for imposing penalty the Revenue must first mention the document and information, which was required to be furnished but was not furnished by the assessee within the specified time. The documentation or information should be one specified in rule 10D, which has been formulated in terms of section 92D(1).
Assessee has sufficiently complied with the requirement of Rule 10D(i) of the Rules and moreover the AO has not raised any specific issue which specific documents is not produced under section 92D(3), hence, we conclude that the assessee has furnished all the informations as asked for by the AO and unless and until a specific defect is pointed out in the submissions of documents, penalty under section 271G cannot be levied. We delete the penalty and allow the appeal of the assessee.
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2019 (9) TMI 1382 - BOMBAY HIGH COURT
Non-prosecution of Appeal - Maintainability of appeal on low tax effect - HELD THAT:- These appeals were on board on the last week as the tax effect indicated therein was less than the threshold limit provided in the CBDT Circular No.17 of 2019 dated 8th August, 2019. However, none appeared in support of these appeals. We had kept these appeals under the caption “for dismissal”.
Today also, none appeared in support of these appeals. It appears that the appellants are not interested in prosecuting these appeals. Hence, these appeals are dismissed for non-prosecution.
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2019 (9) TMI 1381 - ITAT MUMBAI
TP adjustment as regards the reinsurance commission received by the assessee from its AEs - TPO apportioning the total costs of “direct insurance broking segment‟ and “reinsurance segment‟ on a pro-rata basis of the respective incomes received from the said segments instead of taking actual cost - HELD THAT:- In case, the actual bifurcated details of the aforesaid segments viz. (i). reinsurance commission segment; (ii). direct insurance brokerage segment backed with supporting documentary evidence were available with the assessee and was furnished with the TPO, therein there was no justification on his part to have allocated the expenses on a pro rata basis of the respective incomes of the said segments. However, the said claim of the assessee as regards allocation of the expenses on actual basis in respect of the aforesaid segments cannot be accepted on the very face of it and would require necessary verification. Accordingly, we restore the issue to the file of the TPO who shall after making necessary verification as regards the authenticity of the allocation of expenses by the assesse on actual basis in the aforesaid segments shall redetermine the operating cost of the reinsurance segment. The Ground of appeal No. 2 & 6 are allowed for statistical purposes in terms of our aforesaid observations.
International transactions of the assessee forming part of the reinsurance segment - HELD THAT:- Not being able to persuade ourselves to subscribe to the order of the DRP which had upheld the transfer pricing analysis carried out by the TPO in respect of the non-AE transactions, therefore, set aside his order and restore the matter to the file of the TPO with a direction to carry out the transfer pricing analysis only in respect of reinsurance commission received by the assessee from its AEs during the year under consideration - substantial force in the claim of the assessee that the DRP had erred in giving direction to the TPO to compare the ratio of the operating profit to operating cost of the reinsurance commission segment of the assessee with the PLI of 27.96% of the 5 comparables on entity level. As the reinsurance commission segment of the assessee is to be benchmarked, therefore, the TPO ought to have carried out a comparability analysis on the basis of the PLI of the reinsurance commission segment of the said comparables. Accordingly, we further direct the TPO to confine the TP analysis in the course of the set aside proceedings only on the basis of the uncontrolled transactions of receipt of reinsurance commission by the aforesaid 5 comparables and not on the basis of their PLI worked out at an entity level. Grounds of appeal No. 1, 3, 4 & 5 are allowed.
ALP of the “common corporate costs" - TPO had taken the ALP of the aforesaid common corporate costs viz. “managerial services;‟ at nil, for two fold reasons, viz. (i). that, the assessee had not incurred any expenditure in respect of “managerial services‟; and (ii). that, no services in lieu of incurring of the impugned costs had been received by the assessee - HELD THAT:- We are afraid that as observed by us hereinabove, the very basis for taking the ALP of the aforesaid “common corporate costs‟ viz. “managerial services‟ at nil by the TPO falls beyond the scope and gamut of his limited jurisdiction. We thus not being persuaded to accept the upholding of the ALP of the “common corporate costs‟ viz. “managerial services‟ at nil by the DRP, set aside its order. Accordingly, the A.O is directed to take the ALP of the aforesaid “common corporate costs‟ viz. “managerial services‟ - Ground of appeal No. 8 is allowed.
Common corporate costs viz. I.T costs charged by the assessee in its accounts - HELD THAT:- Admittedly, the assessee had placed on record substantial documentary evidence with the TPO in order to substantiate its aforesaid claim of expense which however was not looked into by the TPO. Be that as it may, in our considered view, the very basis for taking the ALP of the aforesaid “common corporate costs‟ viz. “I.T costs‟ at nil by the TPO falls beyond the realm of his limited jurisdiction. In fact, we find that the TPO by embarking on the aforesaid exercise had clearly exceeded his jurisdiction and had tried to assume the jurisdiction as that of an A.O. We thus not being persuaded to accept the taking of the ALP of the “common corporate costs‟ viz. “I.T costs‟ at nil by the DRP, set aside its order. Accordingly, the A.O is directed to take the ALP of the aforesaid “common corporate costs‟ viz. “managerial services‟.Ground of appeal No. 9 is allowed.
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2019 (9) TMI 1379 - DELHI HIGH COURT
Draft order u/s 143 (3) r.w.s.144C - order in the name of the predecessor of the amalgamated company - amalgamation scheme informed to AO - HELD THAT:- As decided in MARUTI SUZUKI INDIA LIMITED [2019 (7) TMI 1449 - SUPREME COURT] despite the fact that the AO was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. No merit in the present appeal and no question arises for consideration.
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2019 (9) TMI 1355 - ITAT PUNE
Reopening of assessment u/s 147 - addition made by AO relates to the GP percentage based addition - HELD THAT:- As decided in JET AIRWAYS (I) LTD. [2010 (4) TMI 431 - HIGH COURT OF BOMBAY] Income in respect of which notice issued not found to be escaped income – Once the AO accepts that the income in respect of which he entertained reason to believe to have escaped assessment, was not in fact escaped income; he has no jurisdiction to reassess other items of income.
Considering the above settled nature of the issue and undisputed fact that the AO did not make any addition on account of reasons recorded by him while reopening the assessment, we are of the opinion that the reassessments made by the Assessing Officer are to be quashed as null and void. - Decided in favour of assessee.
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