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Income Tax - Case Laws
Showing 81 to 100 of 640 Records
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2021 (2) TMI 1139 - ITAT DELHI
Unexplained cash in the bank account maintained with HDFC account - assessee could not explain the source of such cash deposits in the bank account maintained with HDFC account on the ground that assessee could not explain the source of such cash deposits - CIT(A) upheld the action of the AO - HELD THAT:- It is the submission of assessee that such cash deposit is out of the realisation of sundry debtors and out of sale proceeds of the closing stock lying with the assessee apart from some opening cash in hand. It is also his submission that given an opportunity the assessee is in a position to explain the source of such cash deposit so made in the bank account. Restore the issue to the file of the AO with a direction to grant one final opportunity to the assessee to substantiate its case and decide the issue as per fact and law. Thus hold and direct accordingly. Grounds raised by the assessee are accordingly allowed for statistical purposes.
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2021 (2) TMI 1138 - ITAT PUNE
Disallowance u/s. 14A r.w. Rule 8D(2) - disallowance offered by the assessee suo-moto - HELD THAT:- Assessee reflects the share capital, reserves and surplus to an extent of ₹ 32,38,52,976/- which is admittedly more than the investments made. Further, we note that Note No. 9 in Assets clearly discloses the Non-Current Assets to an extent of ₹ 16,18,55,626/- showing that the assessee made investments during the year under consideration out of which ₹ 1,00,00,000/- invested in government bonds. It is needless to say that the investments made in government bonds yield no dividend but only interest.
It is a settled proposition that if the own funds are more than the investments made should be presumed that the assessee made investments from its own funds. As discussed above, the assessee made investments to the tune of ₹ 15.18 crores in the year under consideration, to which the Balance Sheet as on 31-03-2012 clearly shows as non-current investments, and also shows own funds at ₹ 32,38,52,976/- which is more than the investments made. Therefore, the interest expenses disallowed under Rule 8D(2)(ii) is not maintainable. The disallowance relating to 0.5% of investments to the tune of ₹ 6,47,273/- is confirmed. Thus, suo-moto disallowance made by the assessee under Rule 8D(2)(ii) of ₹ 12,20,303/- and the enhanced disallowance made by the Assessing Officer of ₹ 3,31,763/- totaling to ₹ 15,52,067/- requires to be deleted for the reasons indicated above and the disallowance under Rule 8D(2)(iii) is confirmed. Thus, the order of CIT(A) is set aside and the ground Nos. 1 to 4 raised by the assessee are partly allowed.
Deduction paid towards Education Cess under Finance Act while computing the taxable income - HELD THAT:- The Hon’ble High Court of Bombay in the case of Sesa Goa Limited [2020 (3) TMI 347 - BOMBAY HIGH COURT] was pleased to hold that the Education Cess is an allowable expenditure as per the provision of the I.T. Act. - we direct the AO to allow deduction in respect of Education Cess paid by the assessee. Accordingly, the additional ground raised by the assessee is allowed.
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2021 (2) TMI 1137 - ITAT DELHI
Ex-parte appeal decided by CIT-A - AR submitted that the Ld. CIT(A) has dismissed all the appeals without giving adequate opportunity to the assessee of being heard - DR vehemently argued that the assessee should not be permitted to take advantage of their carelessness and non cooperative approach and that the appeals of the assessee deserved to be dismissed in view of the failure of the assessee to establish their claims with documentary evidences before both the Lower Authorities - HELD THAT:- Having heard both the parties and duly taking note of the fact that both the parties have agreed that these appeals can be restored to the office of the Ld. CIT(A), for the cause of substantial justice, we deem it expedient to restore all the captioned appeals to the file of the Ld. CIT(A) for being adjudicated upon afresh by passing a speaking order after giving proper opportunity to the assessee to present their cases. We also direct the assessees to fully co-operate during the course of the first appellate proceedings failing which the Ld. CIT(A) shall be at liberty to proceed ex-parte qua the assessees in accordance with law. Assesee all the appeals stand allowed for statistical purposes.
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2021 (2) TMI 1135 - ITAT MUMBAI
TP Adjustment - payment made towards SAP ERP implementation - HELD THAT:- Cost paid by the assessee for implementation of SAP ERP system without any mark–up cannot be treated as nil by applying the benefit test. It is for the assessee to decide whether a particular system or investment would be beneficial to him or not. The Transfer Pricing Officer certainly cannot step into the shoes of the assessee or the Assessing Officer to evaluate the business expediency of a cost incurred for business purpose and the benefit derived. His job is to determine the arm's length price by adopting any one of the prescribed methods.
In the facts of the present case, though, the Transfer Pricing Officer has stated that he has adopted CUP method for determining the arm's length price, however, in reality, he has determined the arm's length price at nil on purely ad–hoc basis by stating that the assessee has not derived any benefit. Moreover, the allegations of the Transfer Pricing Officer and learned Commissioner (Appeals) that the assessee has failed to furnish supporting evidence to establish its claim is found to be baseless as the assessee has furnished sufficient documentary evidences not only to prove the implementation of SAP ERP system but also the benefit derived by it from such system. Moreover, when the Transfer Pricing Officer has accepted the payment made towards SAP ERP implementation in the earlier years, there is no reason to deny the same in the current year by determining the arm's length price at nil.
In any case of the matter, it is a fact on record that the assessee has implemented the SAP ERP system and is utilizing it for its business purpose. The Transfer Pricing Officer has also stated that SAP ERP system is a necessary tool for carrying out business works. That being the case, the determination of arm's length price at nil, that too, on ad–hoc basis is unsustainable. Accordingly, we have no hesitation in deleting the addition made on account of transfer pricing adjustment.
Disallowance u/s 14A - disallowance of interest expenditure under rule 8D(2)(ii) - HELD THAT:- No interest disallowance should be made when the assessee has surplus interest free fund available with it. Secondly, only those investments which have yielded exempt income during the year should be considered for disallowance under rule 8D(2)(iii).
On a perusal of impugned order of learned Commissioner (Appeals), we find that the assessee had made a submission that as against the interest free surplus funds available of ₹ 281,90,44,000, investment stood at ₹ 150,85,55,000 - assessee had sufficient interest free fund available with it to take care of the investment. Therefore, as per the settled legal principles, no disallowance of interest expenditure can be made under rule 8D(2)(ii). Hence, the disallowance made under rule 8D(2)(ii) has to be deleted. As regards disallowance of administrative expenditure under rule 8D(2)(iii), we direct the Assessing Officer to compute such disallowance by taking into account only those investments which have yielded dividend income during the year. In this regard, the Assessing Officer is directed to verify the correctness of disallowance computed by the assessee at ₹ 3,91,961.79. This ground is disposed off accordingly.
Disallowance u/s 43B - leave encashment paid - HELD THAT:- We find that while deciding the issue in assessee’s own case for the assessment year 2007–08, the Tribunal [2016 (5) TMI 1546 - ITAT MUMBAI] has restored the issue to the Assessing Officer for fresh adjudication. Facts being identical, following the aforesaid decision of the Co–ordinate Bench, we restore the issue to the Assessing Officer for fresh adjudication. Ground is allowed for statistical purposes.
Disallowance of depreciation claimed on the WDV of the royalty expenditure - HELD THAT:- We find that the royalty expenditure incurred by the assessee in the assessment year 2001–02 was held to be of capital in nature. However, the Tribunal directed the Assessing Officer to allow depreciation on such expenditure. Therefore, when depreciation has been allowed to the assessee on the expenditure incurred on royalty in the preceding assessment years, consequential benefit of depreciation has to be allowed to the assessee in the impugned assessment year as well. The ground raised by the assessee is allowed.
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2021 (2) TMI 1134 - ITAT MUMBAI
Penalty u/s 271(1)(c) - Addition u/s 43B - Assessee voluntarily offered to tax the outstanding MVAT and sales tax liability as its income - HELD THAT:- We find that learned CIT(A) is totally wrong in holding that just because 43B liability is shown by tax audit report penalty has to be fastened upon the assessee.
The assessee has furnished all particulars there is no concealment or furnishing of inaccurate particular of income. Just because assessee's claim is not accepted the same does not ipso facto lead to levy of penalty. Similarly, there is small difference between 26AS and income returned. This is also very minor and the assessee does not deserve to be visited with the rigour of penalty. We are of the considered opinion that assessee's conduct is not contumacious and his claims are not mala fide. Hence, assessee should not be visited with rigour of penalty. Accordingly, we set aside the orders of the authorities below and delete the penalty. Appeal filed by the assessee stands allowed.
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2021 (2) TMI 1132 - ITAT MUMBAI
Penalty u/s 271G - assessee failed to furnish documents as required under the Rule 10D(1) and sub-section (3) of the section 92D in respect of the international transactions entered into by it - HELD THAT:- Respectfully follow the view taken by the Tribunal in the case of Navinchandra Exports Pvt. Ltd. [2017 (11) TMI 1307 - ITAT MUMBAI] wherein it was observed that considering the practical difficulties involved in furnishing the segmental details of AE transactions and non-AE transactions in the diamond industry, penalty under Sec. 271G could not be justifiably imposed. Before parting, we may herein observe, that the Tribunal in its aforesaid order had observed that considering the reasonable cause for non-furnishing of the segmental details of the AE transactions and non-AE transactions because of the peculiar nature of the trade in diamond industry, penalty u/s. 271G even otherwise could not have been imposed as per the mandate of Sec. 273B.
No infirmity emerges from the order of the CIT(A) who had rightly vacated the penalty imposed by the TPO under Sec. 271G - Decided against revenue.
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2021 (2) TMI 1131 - ITAT AMRITSAR
Ex-parte assessment order by AO and CIT-A - HELD THAT:- The present case it is an admitted fact that the A.O. passed the assessment order ex parte and the Ld. CIT(A) also passed the impugned order ex parte . It is noticed that the Ld. CIT(A) mentioned in the impugned order that various notices were issued to the assessee but there was no compliance and that the latest notice was issued on 07/08/2018 for compliance on 14/08/2018. Nothing is brought on record to substantiate that the notices issued either by the A.O. or by the Ld. CIT(A) were served upon the assessee. It is well settled that nobody should be condemned, unheard as per the maxim, "audi alteram partem".
We therefore keeping in view the principles of natural justice deem it appropriate to set aside this case back to the file of Ld. A.O. to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.
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2021 (2) TMI 1129 - ITAT PUNE
Addition towards excess stock - GP estimation - HELD THAT:- As examined the trading account of the assessee split in two parts, i.e. before survey and after survey. If the amount of surrender of ₹ 5.76 lakh is excluded, the rate of gross profit in both the periods comes to roughly 17% each. In order to bring down the value of closing stock as on the date of survey from market price to cost price, the amount of gross profit is required to be unloaded from the market price taken by the survey team for ascertaining the excess value of stock purchased by the assessee. If such gross profit rate of 17% is applied to the market value of stock determined by the authorities as on the date of survey to ₹ 27.08 lakh, a reduction in the value of stock would be warranted to the tune of ₹ 4,60,360/- for finding out its cost price to the assessee. This amount of ₹ 4.60 lakh is, therefore, directed to be excluded from the addition of ₹ 8,81,692/- made and confirmed by the authorities in this regard.
Addition being difference in cash as per cash book and physical cash found at the time of survey - HELD THAT:- The survey team counted physical cash and tallied it with the cash in hand as per cash book. There was excess cash of ₹ 73,228/- which was accepted by the assessee as an additional income, but not offered for taxation in the return of income. The assessee made up the cash book later on to present that there was no difference. However, nothing of this sort was stated at the time of survey that the cash book was not complete or certain transactions were omitted to be recorded.Contention of the assessee for the acceptance of books of account produced after the date of survey, cannot be countenanced. Thus, the resultant addition on account of excess stock is hereby confirmed.
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2021 (2) TMI 1128 - ITAT DELHI
Estimation of income - Bogus purchases - HELD THAT:- As relying on M/S BECON CONSTRUCTIONS PVT. LTD. VERSUS ACIT, CENTRAL CIRCLE-8, NEW DELHI [2020 (12) TMI 988 - ITAT DELHI] we are of the view that Assessing Officer should retain the addition @ 9.25%. Appeal of revenue partly allowed.
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2021 (2) TMI 1127 - ITAT CHENNAI
Reopening of assessment u/s 147 - notice issued u/s.148 before expiry of time limit for issue of notice u/s.143(2) - HELD THAT:- Respectfully following decisions of CIT Vs M/s.Qatalys Software Technologies Ltd. [2008 (7) TMI 240 - MADRAS HIGH COURT] and in the case of CIT vs. K.M Pachayappan [2007 (7) TMI 229 - MADRAS HIGH COURT], we are of the considered view that notice issued u/s.148 dated 23.09.2016, before the expiry of time limit for notice u/s.143(2) for the impugned assessment year is invalid and thus, consequent reassessment order passed u/s.143(3) r.w.s. 147 is null and void. Hence, we quash reassessment order passed by the Assessing Officer. - Decided in favour of assessee.
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2021 (2) TMI 1126 - AUTHORITY FOR ADVANCE RULINGS, NEW DELHI
Maintainability of advance ruling application u/s 245R - TDS u/s 192 - Applicant' a company incorporated in India seconds its employees from time to time on long term assignment to other BMW Group entities in various countries such as Germany. Japan, etc, under the terms of Reimbursement Agreement - Residential Status of the employees with whom the Applicant had made transactions - Whether transaction or issue was designed prima facie for avoidance of income tax? - salary of seconded employees - taxes were already paid by the employees in the host country - ruling on allowability or eligibility of claiming a credit to avoid double taxation - HELD THAT:- In Order to claim such bar under clause (iii) of Section 245R(2), there must be some necessary facts pointing to prima facie inference to a design to avoid tax by any illegal or improper means. No such fact has been brought on record by the revenue.
Obligation of the Applicant to deduct TDS under section 192 - As per the split payroll arrangement, part of the salary of the seconded employees was paid in India. The Applicant was deducting tax on such part salary paid in India. The Applicant has approached the Authority in respect of its obligation to deduct tax on salary paid to such employees for the years in which they qualify as non-resident in India and for taking credit for tax deducted in foreign country in their year of return to India. We, therefore do not find any merit in the objection raised of the Revenue that the transaction was designed prima facie for avoidance of tax. When the Applicant is merely enquiring about its obligation to deduct TDS or otherwise under section 192 of the Act, it cannot he said that the transaction was for avoidance of tax.
The objection of the revenue that there was no clarity of the residential status of the seconded employees is also not correct. There residential status con be ascertained from the period of stay outside India as mentioned in Annexure-I of the application - The revenue has contended that such credit can be taken only by the concerned employees and not by the Applicant as tax-deductor. The objection of the Revenue is on merit of the question which needs to be examined and decided upon in the course of merit hearing. These have no impact on admission of the case as they do not establish that the transaction was designed for avoidance of tax. Similarly, the objection of the revenue that the Applicant was bearing tax on foreign salary of such employees is also not a material fact to decide the admission of the case. In fact this issue has not been raised in the present application and the revenue is free to examine the matter on its merit.
In view of the above facts and discussions we do not find any merit in the objection of the Revenue that the transaction or issue was designed prima facie for avoidance of income tax. Accordingly. the objection or the revenue is rejected. application is admitted under section 245R(2)
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2021 (2) TMI 1113 - KARNATAKA HIGH COURT
Revision u/s 263 - disallowance under Section 40(a)(ia) - Tribunal hold that assumption of jurisdiction under Section 263 was correct - HELD THAT:- From close scrutiny of Section 263 it is evident that twin conditions are required to be satisfied for exercise of revisional jurisdiction under Section 263 of the Act firstly, the order of the Assessing Officer is erroneous and secondly, that it is prejudicial to the interest of the revenue on account of error in the order of assessment.
The aforesaid provision was considered by the Supreme Court in ‘MALABAR INDUSTRIAL COMPANY VS. CIT’ [2000 (2) TMI 10 - SUPREME COURT] and it was held that the phrase ‘prejudicial to the interests of the revenue’ has to be read in conjunction with an erroneous order passed by the Assessing Officer and every loss of revenue as a consequence of the order of the Assessing Officer cannot be treated as prejudicial to the interest of revenue. It was further held that where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, the order passed by the Assessing Officer cannot be treated as erroneous order prejudicial to the interest of the revenue.
it is the claim of the assessee that the assessee has not claimed the benefit of the disallowance under Section 40(a)(ia) of the Act for the Assessment Year in question ie., 2008-09 and the same was claimed in the previous Assessment Year ie., 2007-08. Therefore, in our opinion, the matter requires factual adjudication. The Tribunal has not adverted to the aforesaid aspect of the matter and has not considered the submission made by the assessee that the amount of ₹ 2,36,07,661/- was not a real amount but only the provision that was directly reversed.
In view of the preceding analysis, the matter requires factual adjudication. We are inclined to remit the matter. Therefore, it is not necessary for us to answer the substantial questions of law framed in the appeal.
The impugned order of tribunal is hereby quashed and the matter is remitted to the Tribunal for decision afresh in accordance with the observations made in this order.
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2021 (2) TMI 1112 - KARNATAKA HIGH COURT
Reopening of assessment u/s 147 - Whether the first re assessment order made u/s 143(3) r.w.s. 147 of the Act dated 17.02.2014 gets effaced when a subsequent re-assessment order was made u/s 143(3) r.w.s. 147 of the Act, on 22.03.2016, in respect of the same Assessment Year and on same facts? - HELD THAT:- It is well settled in law that when a subsequent order is passed in respect of the same assessment, the previous order of assessment passed by the Assessing Officer gets effaced. In the instant case, in view of the order dated 22.03.2016, the previous order of assessment passed by the Assessing Officer dated 17.02.2014 got effaced and therefore, the subsequent order passed by the Assessing Officer dated 22.03.2016 prevails. Therefore, the first substantial question of law is answered in favour of the assessee and against the revenue.
We are informed that against the subsequent order of assessment, the appeal is pending before the Commissioner of Income Tax (Appeals). Therefore, in the facts of the case, it is not necessary for us to answer the remaining substantial questions of law and the appeal is disposed of with liberty to the parties to raise all legal contentions as are admissible to them in law in the appeal, which is pending adjudication before the Commissioner of Income Tax (Appeals).
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2021 (2) TMI 1111 - MADRAS HIGH COURT
Validity of draft order u/s 144C passed by the Deputy Commissioner of Income Tax - whether the assessee is right in contending that the assessee's case was selected for a limited scrutiny and the reference to the TPO was beyond the scope of the scrutiny? - HELD THAT:- As rightly contended by Revenue the first respondent is not competent to check whether the value of the international transactions as furnished in Form 3CEB by a Chartered Accountant and return of income is correctly shown. Assessing Officer, being not competent to examine the said issue, necessarily, the case has to be referred to the TPO as per Section 92CA - the contention of the appellant/assessee that the case was selected for mere reconciliation is an incorrect interpretation. This is clear from the reason for which the case was selected for scrutiny and the issue arising there from. Thus, we find that there is no violation of the instructions issued by the CBDT.
In our considered view, the learned Single Bench rightly took note of these aspects as well as paragraph 3.4 of the CBDT Instruction No.15/2015, which states that the issue on which a reference was thought to be necessary, has to be explicitly mentioned in the Assessing Officer's letter seeking reference to the TPO and such letter of the Assessing Officer dated 17.07.2018, was found to have complied with the said condition.
We also agree and endorse the finding rendered by the learned Single Bench that the reason for selection of scrutiny by CASS was only for numerical reconciliation is a over simplification of the reason stated for selection. In fact, the learned Single Bench has observed that the officer might have been more detailed in the choice of words employed so as to specifically refer to the issue of total employee cost, however, non-reference to this, is not fatal, as the reason for selection by CASS has been produced and placed on record by the officer while seeking approval of a Principal Commissioner of Income Tax (PCIT) for reference to the TPO.
As Court noted that after the interim order, which was initially granted, was not extended, the Assessing Officer issued show cause notice dated 11.10.2019, the appellant/assessee submitted their reply dated 23.10.2019, enclosing various details on the computation of the ALP as sought for by the Assessing Officer. However, the affidavit filed in support of the writ petitions was silent with regard to these facts. Thus, the learned Single Bench rightly concluded that the appellant has not only cooperated and participated in the conduct of assessment, but has also filed objections before the DRP that are pending disposal. Hence, we are of the considered view that the learned Single Bench rightly dismissed the writ petitions and the order does not call for any interference.
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2021 (2) TMI 1110 - MADRAS HIGH COURT
Addition u/s 68 - Onus to prove - whether evidence against the assessee lies and the assessee failed to discharge his initial burden on this account - Tribunal shifting the responsibility of proving genuineness of share application money to the Assessing Officer - whether mere furnishing list of person who have claimed to have advanced towards share capital thus constitute sufficient compliance on the part of the assessee? - HELD THAT:- Assessee has not discharged the legal obligation cast upon them to prove the genuineness of the transaction, the identity of the creditors and creditworthiness of the investors, who should have the financial capacity to make the investment in question to the satisfaction of the Assessing Officer so as to discharge the primary onus - Since the assessee did not discharge the primary onus cast upon them, the question of the Assessing Officer to investigate the creditworthiness of the creditors/subscribers would not arise in the case on hand.
We have no hesitation to conclude that the Tribunal erred in confirming the order passed by the CIT(A) by observing that merely because the share applicants are from Andhra Pradesh that cannot be a reason to disallow the claim of the assessee. The factual position being, the Assessing Officer did not do so, but disallowed the same on the ground that the assessee has not furnished any details, viz., the names and addresses of the persons, who paid the share capital advances, the cheque numbers, the name of the bank, PAN numbers etc. Thus, the order passed by the Tribunal calls for interference. Decided in favour of the Revenue
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2021 (2) TMI 1107 - AUTHORITY FOR ADVANCE RULINGS, NEW DELHI
Income accrued or deemed to accrue in India - marketing and advertising rights that have been granted under the MAA [Marketing and Advertising Agreement'] - rights under MAA - source of income was the game of cricket played in India - payment to be made by LG Electronics India Private Limited, a company incorporated in India (hereinafter called as 'LG India') to IDI Mauritius Limited, a company incorporated under the laws of Mauritius (hereinafter referred as 'IML') for grant of commercial rights under the 'Marketing and Advertising Agreement' - Whether payment to IML is taxable? - DTAA between India and Mauritius - HELD THAT:- Payment made by the Applicant under MAA was purely for advertisement and publicity of the brand name of the assessee and for promotion of its product during the Cricketing events of ICC and it was not "royalty" as defined in Article 12.3 of DTAA between India and Mauritius. These payments cannot, by any stretch of imagination, be said to relate to use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, any patent, trade mark, design or model, plan, secret formula or process or for information concerning industrial, commercial or scientific experience or for use of commercial equipments so as to constitute "royalty". The payment does not qualify as "Fee for Technical Services" as well; as no service was rendered in this case. The payments may constitute "business profits" in the hands of the recipient to which Article 7 of the DTAA would apply, but in the absence of any permanent establishment of the payee in India, is not chargeable to tax in India. Therefore, the payment made by the Applicant to IML for grant of commercial rights under MAA is not taxable in India as per the provisions of the DTAA between India and Mauritius.
Payments to non-resident sportsmen or sports associations - Obligation to withhold tax on payments made to IML for grant of commercial rights under the 'Marketing and Advertising Agreement ' - Payment made by the Applicant under the agreements is found to be payable to a non-resident sports association/institution in relation to game played in India. Had the sponsorship agreement not been sanctioned by ICC, neither the game could have been played in India nor could the payments have been made to IML in connection with the ICC Events. Further, all the rights transferred under the agreements were in respect of ICC Events and were pertaining to ICC only, particularly under GPA. Even under the MAA the trademark "ICC" was used in the advertisement, publicity campaigns etc. alongside the Applicant's logo which was held as incidental to the main services obtained by the Applicant under MAA. As the ICC did not undertake any financial transactions directly the payment for grant of rights under the agreements was received through the Group entities owned by ICC. In view of these facts we have no hesitation to hold that the payment made by the Applicant under the agreements with IML was income pertaining to a non-resident sports association or institution.
Force Majeure clause of MAA stipulated that if any ICC Events or Matches were abandoned, postponed or cancelled, the Company was not entitled to terminate the Agreement, but the payment of the Rights Fee attributable to that event can be deferred without any penalty until such time as that event was replayed. This also reinforces the nature of payment as guarantee money. Further, what is relevant to consider is not the nomenclature of the payment in the agreement but its real nature. From the above discussions we find that though the payment was mentioned as "right fee" in the agreement, its real nature was "guarantee fee".
All the conditions as stipulated in section 115BBA of the Act are found fulfilled in this case. And once these conditions are satisfied, the obligation of the Applicant to deduct tax u/s 194E of the Act was absolute. Unlike section 195 there is no condition in section 194E that the payment being made should be chargeable under the provisions of this Act. Therefore, there was no obligation on the Applicant to examine whether the payment made under MAA was chargeable to tax in India in the hands of IML. Even if the income of IML was notified as exempt u/s 10(39), it did not mitigate the obligation of the Applicant to deduct tax u/s 194E of the Act.
In the present case the source of income was the game of cricket played in India. Though the payments were described as rights money, in essence they were in the nature of guarantee money and were intricately connected with the cricketing event and the matches played in India. The close connection between the amount paid by the Applicant and the cricket matches played in India has never been denied. Thus the income of the Non-resident Sports Association had accrued in India under the provision of Section of the Act.
There was no requirement to ascertain that the amount paid under section 115BBA was chargeable to tax or not. Even if it was not chargeable it did not absolve the Applicant from the liability to deduct TDS under section 194E. This obligation was neither affected by the DTAA nor by the Notification issued by the CBDT as the benefit of the DTAA or the Notification could have been claimed only by the IML and not by the Applicant. We, therefore, hold that the Applicant was liable to withhold tax under section 194E of the Act on payments made to IML for grant of commercial rights under the 'Marketing and Advertising Agreement' in respect of games played in India.
Rate of withholding tax - whether on the stated facts and in law LG India is required to deduct tax at source on [he payment to IML for the commercial rights under the 'Marketing and Advertising Agreement ' at the rate of 10% plus applicable surcharge and cess as per the provisions of section of the Income-Tax Act, 1961 -The rate as prescribed in section 115A(1)(b)(AA) cannot be applied in the present case. The liability of the Applicant to deduct tax was u/s 194E of the Act in respect of the games played in India and the rate prescribed in this section was 10% which was increased to 20% with effect from 01/07/2012. Accordingly, the Applicant was required to deduct tax at the rate(s) as prescribed in section 194E of the Act at the relevant point of time. The Applicant cannot deduct tax at source at the rate prescribed under the treaty between Indian and Mauritius even if that rate is beneficial. As held by Hon'ble Supreme Court in the case of PILCOM [2020 (5) TMI 57 - SUPREME COURT] the obligation to deduct Tax at Source under Section 194E of the Act was not affected by the DTAA and it was only the recipient who can take the benefit of DTAA for the beneficial rate under the DTAA. So far as the Applicant is concerned, it was required to deduct Tax at Source at the rate(s) as prescribed under section 194E of the Act only.
Advance ruling:-
Que. 1 The payment made by the Applicant to IDI Mauritius Limited, for grant of commercial rights under the 'Marketing and Advertising Agreement' is not found taxable in India in the hands of IML as per the provisions of the DTAA between India and Mauritius.
Que. 2 LG India was obligated to withhold tax on payments made to IML for grant of commercial rights under the 'Marketing and Advertising Agreement' in respect of games played in India.
Que. 3 LG India was required to deduct lax at source on the payment to IML for the commercial rights under the 'Marketing and Advertising Agreement' in respect of games played in India at the rate as prescribed under section 194E of the Income-Tax Act, 1961.
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2021 (2) TMI 1106 - MADRAS HIGH COURT
Addition of inflated expenditure - Whether the inflated expenditure admitted by the assessee is to be allowed despite the fact that the assessee could not reconcile the statements nor could prove the same with supporting documentary evidence? - Tribunal remanding the issue back for verification of inflated expenditure for the assessment year 2011-12 while allowing relief for another assessment year 2010-11 when the facts are similar on the same issue? - HELD THAT:- Tribunal appears to have examined certain documents, which seemed to have been produced by the assessee for the first time before the Tribunal and the Tribunal proceeded to hold that a perusal of the sub-contract as also the invoice showed that the area was an estimated quantity only and therefore, the Tribunal found no reason to interfere disallow the expenditure.
Tribunal, while testing the correctness of the order passed by the CIT(A), is required to examine as to whether there is any error of fact or law committed by the CIT(A). In the assessee's case, both before the Tribunal and the CIT(A), the assessee could not reconcile the difference and for the first time, the assessee attempted to do so before the Tribunal.
Two options would be available to the Tribunal, the first being, in our opinion, the most effective, is to call for a remand report from the Assessing Officer based on the documents presented by the assessee before the Tribunal for the first time and the second option is to remand the matter to the Assessing Officer for a fresh consideration. The Tribunal did not exercise any one of the options, but proceeded to take note of certain documents placed before the Tribunal for the first time and granted relief to the assessee.
We do not agree with the procedure adopted by the Tribunal and without examining the fact situation, the Tribunal ought not to have granted relief especially when the assessee could not reconcile the difference before either the Assessing Officer or the CIT(A). Hence, we are of the considered view that the Tribunal ought to have remanded the matter to the Assessing Officer for a fresh consideration and ought not to have allowed the appeal. - Appeal of revenue allowed.
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2021 (2) TMI 1103 - DELHI HIGH COURT
Substantial question of law or fact - application for condonation of delay of 1350 days - HELD THAT:- There are concurrent findings of fact of the Assessing Officer, Commissioner of Income Tax (Appeals)-I and ITAT, and what the appellant is calling upon us to do, is to re-appreciate the evidence on the basis of which consistent findings, on the aspects from which the appellant is aggrieved, have been rendered.
Appellant however has contended that a substantial question of law arises because the Income Tax Authorities and the ITAT have ignored material evidence. It is contended that owing to plethora of material in public domain, of the project, of which the appellant has been found to have earned commission, having been scrapped, the possibility of the appellant being paid commission did not exist. Appeal dismissed as no substantial question of law.
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2021 (2) TMI 1095 - ITAT MUMBAI
Estimation of income - income from inflation of expenses - Assessment u/s 153A - search operation u/s.132 certain loose papers and digital forms were found and seized - HELD THAT:- It is not in dispute that assessee had resorted to inflation of expenses by making certain cheque payments and receiving back cash in return. It is not in dispute that the said cash had already also been utilised for the purpose of meeting business related expenses by the assessee. In this background what is to be taxed is only the left over portion of the cash remaining with the assessee on this subject mentioned transaction, being the profit element, which has been already accepted by the Hon’ble Income Tax Settlement Commission at 12% vide its order dated 28/06/2018 in assessee’s group company cases.
CIT(A) ought to have followed the same in view of identical facts in the assessee herein also. Accordingly, we direct the ld. AO to make an addition @12% of inflation of expenses for the relevant assessment year in line with the direction of the Hon’ble Income Tax Settlement Commission in assessee’s group company cases.
Addition towards on-money - addition u/s.68 towards on-money received by the assessee for sale of flats - HELD THAT:- It is not in dispute that the assessee had incurred certain business expenses out of such on-money which are kept outside the books of accounts. Hence, it will be just and fair that only the profit element embedded on any such undisclosed transaction could be brought to tax on an estimated basis.
The assessee had already pleaded that on-money transactions were offered by the assessee’s group concerns @12% of on-money receipts before the Hon’ble Income Tax Settlement Commission and the same has been accepted by the Settlement Commission. Hence, the data and information was indeed available with the ld. CIT(A) to have some rational basis to make profit estimation in the hands of the assessee herein by following 12% thereof from the order of Hon’ble Income Tax Settlement Commission. Accordingly, we direct the ld. AO to add only 12% of on-money receipts as undisclosed income of the assessee for the year under consideration.
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2021 (2) TMI 1092 - ITAT AHMEDABAD
Condonation of delay in filing Rectification application - delay in filing this appeal against ex-parte order on account of non-prosecution - HELD THAT:- The assessee has explained the reason for not filing the Miscellaneous Application within six months from the end of the month in which the order was passed as elaborated supported by an affidavit and copies of other documents/details. The assessee has also pointed out that previous tax consultant has not attended his tax matter satisfactorily and new tax consultant has obtained various documents, these circumstances and his ill health caused delay in filing this appeal against ex-parte order which was passed on account of non-prosecution. After taking into consideration the facts narrated by the assessee supported by an affidavit/documents it appears that there was reasonable cause for non-appearance and delay in filing the Miscellaneous Application against ex-parte order passed on account of non-prosecution.
Therefore, keeping in view of Rule 24 of the Income Tax (Appellate Tribunal, 1963) and after taking into consideration the decision of Hon’ble Jurisdictional High Court cited in the case of Dolphin Metal (India) Ltd. vs. ITO.[2021 (2) TMI 999 - GUJARAT HIGH COURT] we condone the delay in filing the Miscellaneous Application. Considering the above facts and findings, the Miscellaneous Application is allowed and the Registry is directed to list this case for hearing on 30th March, 2021.
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