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Income Tax - Case Laws
Showing 1 to 20 of 366 Records
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2020 (7) TMI 836 - ITAT KOLKATA
Bogus purchase - information of Sales Tax Department and consequential disallowance of freight and lorry hire charges - HELD THAT:- No reason to come to a conclusion that the purchases in this case of an intermediary are fake or bogus. We find that all the parties in question are registered with the VAT Authorities and that payments have been made through cheques. Except for the fact that the assessee could not be found by the Inspector of the Income Tax Department for service of notice and the mention by the Sales tax Authorities that there is mis-match in the numbers of trucks and that some are non-transport trucks, the revenue has no evidence whatsoever to support this disallowance. When one to one reconciliation of purchase and sales is made by the assessee, no disallowance can be made. Quantitative reconciliation of stock is not challenged by the Revenue. Hence, in view of the above discussion, we delete the addition made on account of bogus purchases. Consequently, the disallowance made on account of transport payments are also deleted.
Rejection of the books of the accounts by the AO - HELD THAT:- We find that the AO his order rejected the books of accounts for the sole reason that he came to the conclusion that the purchases were bogus. As we have held otherwise, the rejection of books of accounts by the Assessing Officer is bad in law. Even otherwise, we find that though the Assessing Officer rejected the books of accounts, the entire assessment has been based on these very books of accounts only. Thus we allow Ground No. 4 of the assessee.
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2020 (7) TMI 835 - RAJASTHAN HIGH COURT
Validity of reopening proceedings u/s 147/148 - During pendency of the writ petition, it appears that assessment order came to be passed and challenging the order passed by the learned Single Judge, the present appeal has been filed.
HELD THAT:- In the present Special Appeal came to be filed seeking to challenge the subsequent order passed in assessment.
We are afraid, we cannot entertain the appeal since the appellant has alternative efficacious remedy of appeal/challenge before the learned Single Judge, if so advised.
In view of the subsequent development, the present appeal has been rendered infructuous and the same stands dismissed as having become infructuous. The appellant is at liberty to seek remedy against the order of assessment as the assessee may advice. All pending applications also stand dismissed.
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2020 (7) TMI 829 - ITAT MUMBAI
Income deemed to accrue or arise in India - addition on account of alleged royalty taxable u/s 9 (l)(vi) of the Income Tax Act, 1961 read with article 12(3) of India Switzerland Double Taxation Avoidance Agreement - HELD THAT:- As decided in assessee's own case 2013-14, [2020 (11) TMI 466 - ITAT MUMBAI] we uphold the plea of the assessee and delete the impugned addition. No other issues were pressed before us. In any event, the other points raised in the appeal were in the nature of consequential levies. Decided in favour of assessee.
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2020 (7) TMI 825 - ITAT KOLKATA
Addition u/s 56(2)(vii) v/s 69 unexplained investment - HELD THAT:- DR fails to dispute the clinching fact that the impugned addition u/s 56(2)(vii) never formed subject matter of assessee’s grounds in the lower appellate proceedings nor any such issue had arisen in the assessment order. This tribunal’s co-ordinate bench’s decision in Bikram Singh [2016 (4) TMI 822 - ITAT DELHI] CIT(A) was not empower to enhance an income on an issue which was not the subject matter of the assessment. CIT(A) cannot touch upon an issue which does not arise from the order of the assessment and was outside the scope of the order of the assessment.
Thus direct the Assessing Officer to delete the impugned addition. Assessee’s appeal is allowed.
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2020 (7) TMI 824 - ITAT DELHI
Income deemed to accrue or arise in India - royalty receipt - consideration received by the Appellant from supply/distribution of its copyrighted software products - DTAA between India and Ireland ('AADT) - Whether right to use' the copyright in the software? - HELD THAT:- The issue arising in the present appeal is identical to the issue raised in assessee’s own case in Assessment Year 2013-14 [2018 (12) TMI 112 - ITAT DELHI] and applying the ratio laid down by the Jurisdictional High Court in Infrasoft Ltd. [2013 (11) TMI 1382 - DELHI HIGH COURT], we hold that the receipt from sale of software by the assessee was not in the nature of ‘Royalty’ under Article 12 of DTAA between India and Ireland. Since the treaty provisions are more beneficial, there is no merit in adjudicating the issue vis-àvis amended provisions of section 9(1)(vi) - Ground of appeal raised by the assessee are thus allowed.
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2020 (7) TMI 823 - ITAT KOLKATA
Revision u/s 263 - effect of omission of clause (i) of section 92BA w.e.f 01.04.2017 - meaning of “omission” - Specified domestic transactions referred to in clause (i) of section 92BA - reference to Transfer Pricing Officer (TPO) - HELD THAT:- As in respect of specified domestic transactions which is referred to clause (i) of section 92BA of the Act, which was omitted with effect from 01.04.2017 and the effect of such “omission” of clause (i) of section 92BA means that this provision never existed in the statute book, hence reference to TPO was bad in law.
As the issue is squarely covered in favour of the assessee by the decision of Coordinate Bench in the case of M/s Raipur Steel Casting India (P) Ltd. [2020 (6) TMI 629 - ITAT KOLKATA] and there is no change in facts and law and the Revenue is unable to produce any material to controvert the above said findings of the Co-ordinate Bench. Therefore, respectfully following the decision of Co-ordinate Bench on the technical issue narrated above we allow appeal of the assessee.
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2020 (7) TMI 822 - ITAT MUMBAI
TP adjustment made on account of intra-group services - assessee has purportedly received support services from its regional headquarter primarily in the areas of management of human resources, sale, debt management and collection, advertisement and marketing, legal services, etc. - TPO applied ‘benefit test’ on the intra-group services received by the assessee and determined the ALP of such services at ‘Nil’ - HELD THAT:- We find that the TPO has failed to properly analyse the support services received by the assessee from its regional headquarter - The settled legal position now is that the ALP of intra group services cannot be determined at ‘Nil’. The ‘benefit test’ analysis which was earlier accepted has now been held to be redundant. The Tribunal in the case of Merck Ltd. [2016 (3) TMI 1105 - ITAT MUMBAI] has held the concept of ‘benefit test’ as irrelevant. The Tribunal held that by applying befit test ALP of intra-group services cannot be determined at ‘Nil’. Thereafter, in various decisions by the Tribunal the application of benefit test analysis has been rejected. Thus, we deem it appropriate to restore the issue back to the file of TPO for fresh adjudication and for determination of ALP of intra-group services by applying most appropriate method specified in section 92C of the Act. Ground No.1 of the appeal is thus, allowed for statistical purposes.
Adjustment in respect of reimbursement of expenses - Since we have restored ground No.1 to the TPO, we deem it appropriate to restore ground No.2 of the appeal as well, to the TPO for de-novo adjudication after affording reasonable opportunity of hearing to the assessee.
Adjustment made in respect of loans extended by the assessee to domestic group companies, held as ‘deemed International Transaction’ - HELD THAT:- A bare perusal of the meaning of “international transaction” defined in section 92B (1) would show that a transaction would fall within the ambit of international transaction if, either or both the associated enterprises are nonresident. In the present case none of the AEs i.e. neither the assessee nor the domestic group companies with which the assessee had entered into transaction are non-residents. All the companies are domestic entities and are subject to tax under the provisions of the Act.
In the present case, the authorities below have failed to take note of the fact that the transactions in question are within domestic entities only. No overseas entity is involved in the transaction. Unless the conditions set out in subsection (1) are satisfied, the provisions of subsection (2) cannot be invoked. The authorities below in the present case have erred in invoking deeming fiction solely on the premise that since shareholders of overseas holding company are holding shares of the assessee and AEs, ‘in substance’ the transaction between the assesse and the domestic group entities would fall within the ambit of “deemed international transaction”. Deeming provisions cannot be invoked by expanding the latitude of expressions used in the section. The authorities below have failed to take into consideration the fact that all group entities are companies incorporated in India having separate legal existence. Except for common shareholding, no material has been relied on by the TPO/DRP to substantiate that the transaction between the entities was influenced by the overseas holding company.
The findings of the lower authorities are based on conjectures and surmises. The authorities below have travelled too far to bring the transactions between the assessee and domestic entities within the domain of ‘deemed international transaction’ under section 92B (2) of the Act (prior to amendment). We find merit in ground no.3 of the appeal, according the same is allowed.
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2020 (7) TMI 821 - ITAT DELHI
TP Adjustment - working capital adjusted PLI of the comparables not considered - As per assessee PLI of the comparables after carrying out working capital adjustment, which is much less than the PLI the assessee - HELD THAT:- Though the assessee submitted working capital adjusted PLI of the comparables before Transfer Pricing Officer but same was not considered because unadjusted PLI of the assessee was higher than the average marginal comparables and resultantly, no adjustment was proposed to the international transaction of provision of information technology enabled services reported by the assessee
As the effect of the working capital adjustment has not been considered or examined by the lower authorities, we feel it appropriate to restore this limited issue whether the adjustment for delayed receivables from associated enterprises get subsumed in working capital adjustment, to the file of the learned Assessing Officer/Transfer Pricing Officer for adjudicating in accordance with law. It is needless to mention that assessee shall be afforded adequate opportunity of being heard. Appeal of the assessee is allowed partly for statistical purposes.
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2020 (7) TMI 818 - MADRAS HIGH COURT
Revision u/s 263 by CIT - whether the assessee was eligible for the claim u/s 54F? - HELD THAT:- AO records that after a thorough verification of all records, the same has been found to be correct and the assessment completed by accepting the return filed by the assessee. We find that nothing more is required to be recorded by the assessing officer, especially when the assessment file would contain all the material which has been produced by the assessee. In fact the bank details have been produced to show that the amount has been invested in Capital Gain Scheme Account in two banks viz., Bank of Maharashtra and UCO Bank and the banks have given letters dated 31.12.2015 to the said effect. Thus, we are of the view that there was no material to indicate that the assessment was an erroneous assessment in so far as it is prejudicial to the interest of the revenue.
The tribunal fell in error in not testing at the very first instance, as to whether the show cause notice issued by PICT was justifiable for assumption of jurisdiction under Section 263 of the Act. Thus, without addressing the moot point, the tribunal proceeded on a different footing. In fact, before the tribunal, the assessee raised a point about non applicability of SEBI guidelines, because the transaction was between an individual and the company. We find that there has been no adjudication on the said issue.
Assessee had also specifically contended that it was necessary to comply with Section 54F (iv) and if the assessee invests the entire consideration in capital gains scheme account as contemplated within the period, then, such investment shall be deemed to be only cost of new asset and exemption under Section 54F is automatic.
The assessee further contended that shares were sold for Rs.15 Crores on 18.01.2011 and before the due date for filing the return, the assessee had deposited into Capital Gains Scheme Account, LTCG and therefore, contended that as per Section 54F(iv), the assessee had duly complied with the condition for availing exemption. These issues were not adjudicated by the tribunal. Thus, we hold that the assumption of jurisdiction by the PCIT is erroneous and the order passed by the tribunal confirming such an order, calls for interference. Decided in favour of the Assessee.
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2020 (7) TMI 817 - ITAT MUMBAI
TP Adjustment - adjustment to the Arm’s Length Price of the assessee’s international transaction - Comparable selection - ‘Persistent loss’ making companies - HELD THAT:- A company can be accepted as comparable if it has not suffered persistent losses. The expression ‘persistent loss’ is not defined under the Act or the Rules framed thereunder. The expression has evolved in judicial rulings. One of the initial decisions of Tribunal supporting this principle is Bobst India (P.) Ltd. vs. Dy. CIT [2015 (12) TMI 684 - ITAT PUNE] ‘Persistent loss’ means losses in three consecutive financial years including the Financial Year corresponding to the Assessment Year under dispute and immediately two preceding Financial Years. The thumb rule of excluding persistent loss making company has been accepted in various judicial precedents over the period of time.
The company at Sr.No.1 has suffered losses in only one year and the companies at Sr. No.2 & 3 have incurred losses in two financial years. Thus, none of the above said three companies fall within the ambit of persistent loss making companies. The CIT (A) has directed the TPO to include AMI Computer (I) Ltd., Mercury Travels Ltd. and Nucleus Netsoft & GIS India Ltd. as these are not continuous loss making companies. We concur with the findings of CIT (A). The impugned order is upheld, ergo, the appeal of revenue is dismissed sans merit.
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2020 (7) TMI 816 - ITAT MUMBAI
TP Adjustment - comparable selection - TPO characterising the assessee as KPO - HELD THAT:- As assessee despite bringing the fact on record that Excel Infoways was excluded by DRP itself in AY 2012-13, the DRP upheld the order of TPO, without bringing material difference for the year under consideration to justify its inclusion. We have further noted that the TPO himself identify this company as back office services to its AE‟s. More over unusual business year is also not disputed by the TPO. Even otherwise this comparable was included by TPO by treating the assessee as KPO. The assessee has placed on record the annual report of this company.
We have carefully perused the annual report of this comparable company. Perusal of annual report of this comparable company shows that this company is engaged in providing business support service; IT enabled services and development of infrastructure facilities. Considering the segmental reporting of the comparable company, in our view this is not a valid comparable with the assessee which is engaged in providing non-binding investment advisory services. Therefore, we direct the TPO to exclude this comparable from the final set of comparable.
Considering the decision of Tribunal in assessee‟s own case for earlier year wherein three comparable namely Almond, Crisil and ICRA was considered as valid comparable. We have directed to exclude Excel Infoways Ltd on the basis of order of DRP for AY 2012-13 and our discussion therefore, we find that both the substantial ground of appeal are covered in favour of assessee. Considering the facts that we have allowed both the substantial ground of appeal in favour of assessee therefore, adjudication on the issue related with economic analysis has become academic.
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2020 (7) TMI 815 - MADRAS HIGH COURT
Stay of demand - Unexplained money u/s 69A - substantial credits in the bank accounts of the petitioner of demonetized notes - HELD THAT:- Both writ petitions have absolutely no merit and deserve to be dismissed in limine. The impugned order challenged has been passed by the Appellate Authority upon consideration of the merits as well as the financial and bank statements filed by the petitioner. The petitioner was directed to pay 25% of the tax demand within a specified time frame. The order also states that if the aforesaid direction was not complied with, the stay granted would stand revoked. No reason whatsoever to interfere with the attachment of the bank account.
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2020 (7) TMI 812 - ITAT INDORE
Late fees u/s 234E - processing the statement of tax deducted at source u/s 200A of the Act before the amendment was brought in w.e.f. 01.06.2015 in the provisions of section 200A of the Act - HELD THAT:- Fee u/s 234E of the Act was levied in the statements processed u/s 200A of the Act before 01.06.2015 i.e. before the amendment brought into effect from 01.06.2015 in section 200A of the Act thereby enabling the revenue authorities to raise demand in respect of levy of fees u/s 234E of the Act, Ld. CIT(A) erred in confirming the levy of late fees u/s 234E of the Act by the assessing officer.
Accordingly findings of CIT(A) in all these 10 appeals are reversed as we have recently taken a considered view against the revenue on earlier orders of Ld. CIT(A) wherein the identical orders by respective CIT(A) were passed and accordingly the revenue is directed to delete the levy of fees u/s 234E - Thus, common issue raised in these bunch of appeals is decided in favour of the assessee(s).
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2020 (7) TMI 811 - ITAT JAIPUR
Non adjudication of ground by Tribunal - validity of order passed by the Co-ordinate Bench - HELD THAT:- We find that ground no. 8 challenging the CIT-A order sustaining addition u/s 68 has not been adjudicated upon while passing the order [2020 (5) TMI 79 - ITAT JAIPUR]. Therefore, the order is recalled for the limited purposes of adjudication of Ground No. 8. The Registry is directed to fix the matter to hear the arguments on merits in due course.
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2020 (7) TMI 808 - MADRAS HIGH COURT
ITAT remanding the matter back to AO - Whether the Tribunal was right in passing an order merely on the ground that the documents relied on by the Assessee was not available in the file? - HELD THAT:- Unfortunately, the Assessee, who was the appellant before the Tribunal was not present when the case was heard and he had also not engaged an Advocate, to argue on his behalf. The Tribunal records that its Registry placed a copy of the postal acknowledgement card to show that the notice has been served on the Assessee.
Assessee has filed the copies of the revenue records in the typed set of papers, and on perusal of the same, the seal of the Assessing Officer is found at the bottom of the photostat copies of the documents. Therefore, it is clear that the documents were part of the assessment file. Considering the fact that the Tribunal had proceeded ex parte on account of non-appearance of the Assessee, and though the Tribunal might have been justified by doing so, yet, considering the fact that the assessment order is of the year 2015, and the Assessing Officer has already perused the records and given relief to the Assessee, and the appeal filed by the Assessee before the Tribunal arises out of the order passed under Section 263 of the Act, this Court is of the view that the matter can be remanded back to the Tribunal for fresh decision on merits, after affording an opportunity to the Assessee.
Tax Case appeal is allowed, the impugned order is set aside and the matter is remanded back to the Tribunal for fresh decision on merits.
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2020 (7) TMI 792 - ITAT MUMBAI
Estimation of income - bogus purchases - 12.5% disallowance done by the assessing officer - CIT-A enhancing the disallowance to 100% as relying on case of Shoreline Hotels Pvt. Ltd [2018 (9) TMI 1248 - BOMBAY HIGH COURT] - addition in this case has been solely made by the assessing officer on the reasoning that upon enquiry by the sales tax Department it has been found that assessee is beneficiary of bogus purchases from the parties mentioned - HELD THAT:- It is settled law that case law cannot be considered in isolation of the context thereof. This is duly the ratio arising of out of the decision of Sun Engineering Works Pvt. Ltd. [1992 (9) TMI 1 - SUPREME COURT]. In the decision of Shorteline Hotels Pvt. Ltd. [2018 (9) TMI 1248 - BOMBAY HIGH COURT] considered was in context of the order passed by learned CIT(A) under section 263 of the income tax act, wherein the ITAT had upheld the order of the learned CIT, invoking his jurisdiction u/s. 263. The issue was expenditure incurred in the maintenance by a hotel. In contrast the present case is a case where the assessee is a dealer in steel and disallowance has been done by the Assessing Officer on a finding that the assessee has made purchases through grey market.
In our considered opinion by no stretch of imagination it can be said that there is any similarity in the facts upon which the honourable jurisdictional High Court has rendered the above said decision and the facts of the present case.
CIT has observed that assessee was asked to furnish stock register and item to item tally of purchase and sales. She further noted that assessee submitted that no stock register was maintained the purchases to sales cannot be tallied item-wise. We find that this observation of the learned CIT is in direct contrast with the finding of the assessing officer. Assessing officer has found that assessee has duly maintained the stock statement the purchases are duly mentioned therein. Be as it may when learned CIT is giving a finding that assessee has not been able to tally the sales to the purchases and as per the learned CIT the purchases are hundred percent bogus, then the natural corollary was that learned CIT should have rejected the sales as well. Since learned CIT has not done so the observations of the learned CIT do not support the case for 100% disallowance.
In the present case we find that the ratio of the decision in the case of M.Haji Adam & Co.[2019 (2) TMI 1632 - BOMBAY HIGH COURT] is duly applicable. In the said case honourable jurisdictional High Court had expounded that in case of trading concerns the addition on account of bogus purchases should be limited to the difference between the gross profit that is shown by the assessee on normal purchase as against the gross profit shown on bogus purchases.
Accordingly, we remit the issue to the file of the Assessing Officer to make the disallowance in accordance with the ratio of the decision of M.Haji Adam & Co. Appeal by the assessee is partly allowed.
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2020 (7) TMI 791 - ITAT MUMBAI
TP Adjustment - comparable selection - exclusion of ABC Bearings from the list of comparable company - HELD THAT:- ITAT Mumbai Bench in the case of Maersk Global Service Centre India Pvt. Ltd. [2011 (11) TMI 465 - ITAT MUMBAI] has held that the company having such a high brand value along with much higher turnover, in our considered opinion has been rightly excluded by the CIT(A). Undoubtedly, in the said circumstances, the ABC Company nowhere seems comparable with the company of the assessee. Moreover, the ABC had an exceptional year of performance which shows its best ever sale of ₹ 200.27 crores representing 24% of the growth. The said margin seems non comparable in view of the decision of Lubrizol Advanced Material Vs. DCIT [2015 (10) TMI 2692 - ITAT AHMEDABAD] - We also find that the ABC does not feature in the details search undertaken by the assessee on the database Prowess and Capitaline. The TPO nowhere rejecting the selection by assessee and no reason were given for the inclusion of ABC bearing.
We direct the DRP for the exclusion of the ABC Bearing for comparing from the list of comparable and to assess the transaction with the available comparable on record in accordance with law. Accordingly, the issue is decided in favour of the assessee against the revenue.
Working capital adjustment for comparable companies on the basis of the difference - Assessee has raised the TNMM method in determining the ALP for the international transaction entered into during the year - HELD THAT:- We direct them to allow the requisite adjustment on account of the impugned 'working capital' while determining the Arm's Length operating Margin of the Comparables." Accordingly, this issue is decided in favour of the assessee against the revenue.
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2020 (7) TMI 784 - ITAT MUMBAI
Charging of interest u/s. 234B - assessee submitted that the assessee since incurred huge losses in earlier years thus there is no liability to pay advance tax and therefore it is not liable to pay interest u/s. 234B - HELD THAT:- As decided in own case for the A.Y. 2009-10 decided the issue in favour of the assessee.
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2020 (7) TMI 782 - ITAT JABALPUR
Order under section 143(3) - selection of assessee’s return for the relevant year for scrutiny u/s. 143(3) - HELD THAT:- The selection of assessee’s return for the relevant year for scrutiny u/s. 143(3) of the Act was in compliance of the procedure laid down by CBDT for selection of cases for scrutiny for non-corporate assessees for f.y. 2006-07, and, thus, the assessment u/s. 143(3) dated 31.12.2007, which is the subject matter of the instant appeal, could not be impugned on that score. In this, he agreed with the ld. AM.
The assessment returned by the assessee as agricultural income, was assessable as such, and its assessment as income from other sources, in whole or in part, could not be sustained in law, i.e., in the facts and circumstances of the case, including the explanations furnished, and on the basis of material on record. In this, he agreed with the ld. JM.
The matter was accordingly listed for today instant, to dispose the appeal in accordance with the majority view after hearing the parties, who did not express any objection thereto. No other issue survives for adjudication in the instant appeal.
The appeal is accordingly decided on the aforesaid terms. In the result, the assesse’s appeal is partly allowed.
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2020 (7) TMI 777 - ITAT KOLKATA
Disallowance u/s 43B - disallowances of outstanding service tax liability - HELD THAT:- CIT(A) has rightly held that since the assessee has not debited the service tax in its profits and loss account therefore no disallowance can be made u/s 43B of the Act. Since the ld. CIT(A) has already directed to the AO stating that in subsequent years when the service tax liability has been settled at a lesser amount the assessee is duty bound to offer the difference for taxation, and the ld. CIT(A) directed the Assessing Officer to verify the same and if the assessee had not offered the difference for taxation then bring the same to taxation by invoking section 148 of the Act. We note that there is no infirmity in the direction given by the ld. CIT(A) therefore, we decline to interfere in the order passed by ld. CIT(A), his order on this issue, is hereby upheld and grounds of appeal raised by the revenue is dismissed.
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