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Income Tax - Case Laws
Showing 41 to 60 of 641 Records
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2021 (3) TMI 1360
Unpaid service tax - addition u/s 43B - assessee contended that the service tax unpaid was never claimed as an expenditure / deduction in the profit and loss account warranting disallowance u/s 43B - whether it has claimed as deduction in the profit and loss account was never examined by the AO and the CIT(A) without giving an opportunity to the A.O. by placing reliance on the additional evidence allowed the appeal of the assessee? - HELD THAT:- AR does not have any grievance for remitting the issue to the A.O. to examine whether the unpaid service tax has been claimed as a deduction in the profit and loss account. This issue is restored to the files of the A.O. The A.O. is directed to examine whether the assessee had claimed the unpaid service tax as an expenditure / deduction in the profit and loss account. In the event the same is not claimed as a deduction / expenditure, the A.O. shall not invoke the provisions of section 43B in view of the judgment in the case of CIT v. Knight Frank (India) Pvt. Ltd. [2016 (8) TMI 1096 - BOMBAY HIGH COURT] - Appeal filed by the Revenue is allowed for statistical purposes.
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2021 (3) TMI 1357
Deduction towards Recovery of Bad Debts of Rural Branches - bad debts written-off relating to rural branches were not claimed as deduction in the earlier years since the credit balance in the provision for bad and doubtful debts relating to rural branches had always been more than the bad debts written off relating to rural branches - HELD THAT:- Before us, it is admitted position that similar issue arose before Tribunal in assessee’s own case for AY 2008-09 [2020 (2) TMI 1350 - ITAT MUMBAI] wherein the matter was decided in assessee’s favor subject to certain verification of by Ld. AO.Since issue is identical, respectfully following the above decision, this issue is principally decided in assessee’s favor subject to verification by Ld. AO on similar lines. This ground stand allowed for statistical purposes.
Disallowance u/s 40(a)(ia) - During survey on one of the branches of the assessee, it was found that the assessee did not deduct TDS in certain cases where interest credited / paid exceeded basic exemption limit. The failure to do so would attract disallowance of interest expenditure u/s 40(a)(ia) - HELD THAT:- It has been submitted before us that evidence to the satisfaction of Ld. AO for reasons of non-deduction tax such as Form 15G/15H etc. could not be furnished since considerable period of time had lapsed. The Ld. AR submitted that tax was automatically deducted by the systems and hence the chances of non-deduction without adequate reasons were remote.
Upon due consideration of factual matrix, the bench deem it fit to grant another opportunity to the assessee to furnish requisite evidences before Ld. AO in support of non-deduction of tax at source or alternatively prove applicability of second proviso to Sec. 40(a)(ia). This ground stand allowed for statistical purposes.
Applicability of Sec.115JB to the assessee Bank - HELD THAT:- We find that the issue of applicability of Section 115JB (prior to its amendment by virtue of Finance Act, 2012) to Banking Company governed by the provisions of Banking Regulation Act, 1949 is squarely covered in assessee’s favor by the decision of Hon’ble High Court of Bombay in assessee’s own case for AY 2005-06[2019 (5) TMI 355 - BOMBAY HIGH COURT] - A copy of the same is on record. The Ld. DR is unable to controvert the same. Therefore, no fault could be found in the impugned order, in this regard.
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2021 (3) TMI 1355
Exemption u/s 11 & 12 - charitable activity u/s 2(15) - assessee is carrying on the activities of medical relief for eradication and education of HIV AIDS patients - Whether the activity of the Assessee did not cease to be a ‘charitable acitivity’ for the purposes of Section 2(15) because the Assessee charged a ‘management fee’ for defraying its administrative expenses? - HELD THAT:- As decided in own case [2019 (7) TMI 1448 - DELHI HIGH COURT] assessee is a company registered under Section 25 of the Companies Act. It gives 85% of the donation received by it to the Government of India for HIV Aids and only 15% of its total donation is given to other societies for awareness and treatment of poor HIV Patients. The entire amount spent by the Assessee is through societies and trusts. It also runs its own project for the welfare of HIV and AIDS patients. In the above circumstances it has been held that merely because the Assessee charges management fees to defray the administrative costs it would not make its essential activity a business activity.- Decided against revenue.
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2021 (3) TMI 1354
Disallowances of deduction claimed on account of interest expenditure claimed against interest income - HELD THAT:- The assessee has demonstrated from the record that the activity of the assessee of taking interest bearing loan and making advances to other parties is continued for the last so many years. The assessee in this activity has earned net positive interest income. In our view in such a case, there is no need to establish one to one nexus between each of the transaction of loan taken and loan advanced by the assessee. There transactions of taking unsecured loans otherwise has not been disputed by the Department.
Even the AO has not made any effort to verify the genuineness of the transaction by summoning the concerned parties either who have advanced loan to assessee or the parties have taken loan from the assessee. There is no allegation that the assessee has used the interest bearing funds for some other purposes. Under the circumstances, in our view, the assessee is entitled to set off the interest expenditure against the interest income earned by the assessee and the net of the same has rightly been offered by the assessee for taxation
Addition made by the Assessing Officer is ordered to be deleted - Decided in favour of assessee.
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2021 (3) TMI 1352
Deduction u/s 80P - HELD THAT:- A perusal of the decision of the Hon'ble Supreme Court in the case of The Mavilayi Service Co-operative Bank Ltd.[2019 (3) TMI 1580 - KERALA HIGH COURT] clearly shows that the Hon'ble Supreme Court has set aside the decision of the Full Bench of the Hon'ble Kerala High Court in the case of The Mavilayi Service Co-operative Bank Ltd. (supra).
Hon'ble Supreme Court has also further explained the decision in the case of Citizen Co-operative Society Ltd. in so far as the deduction that is given without any reference to any restriction or limitation cannot be restricted or limited by implication. In the circumstances in respectful obedience to the principles laid down by the Hon'ble Supreme Court in the case of The Mavilayi Service Co-operative Bank Ltd. (supra) the AO is directed to grant the assessee the benefit of deduction under Section 80P as claimed.
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2021 (3) TMI 1348
Restoration of the appeal which was dismissed for default since none appeared on 02.07.2019 on behalf of the appellant - HELD THAT:- Explanation given by the appellant for not been able to appear before the Tribunal on behalf of the assessee as appellant had received the notice of hearing for 24-5-2019 but unfortunately there was no sitting of the Bench on the same date due to summer vacation observed from 20th May, 2019 to 31st May, 2019.
Appellant had not received the notice of hearing fixing the hearing on 2-7-2019 and, therefore, the Authorised Representative Shri Rajesh C. Shah, C.A. could not attend the same. The Authorised Representative is also not a regular visitor of the Tribunal and, therefore, he had no such instruction, too.
The above explanation seems to be genuine and hence the order is recalled. Registry is directed to fix the matter for hearing on 05.04.2021. Since both the parties are present before us issuing notice in confirming fixing on the date of hearing is hereby dispensed with.
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2021 (3) TMI 1343
Deduction for payment u/s 37 of the Act towards donation to CM Relief Fund - Disallowance of claim as it cannot be treated as business expenditure and not even coincidental to the business carried on by the assessee - benefit of indexation while calculating long term capital gain - HELD THAT:- The substantial questions of law involved are covered by the decision of the Supreme Court in the case of Sri Venkata Satyanarayana Rice Mill Contractors [1996 (10) TMI 2 - SUPREME COURT]
Disallowance under Section 14A read with Rule 8D - HELD THAT:- Substantial question of law involved is covered by the decision of this Court in the case of CIT –v- Karnataka State Industries and Infrastructure Development Corpn. Ltd. [2015 (11) TMI 1631 - KARNATAKA HIGH COURT]
Entitled to the benefit of indexation while calculating long term capital gain which are to be considered for the purpose of computing tax liability under Section 115JB - HELD THAT:- Substantial question of law involved is covered by the decision of this Court in the case of Best Trading and Agencies Ltd. [2020 (9) TMI 94 - KARNATAKA HIGH COURT] and decision of this Court in the case of MSR and Sons Investments Ltd. [2011 (9) TMI 1127 - KARNATAKA HIGH COURT]
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2021 (3) TMI 1341
Gain on sale of land - nature of land - AO was of the opinion that since the land in question was situated within Municipal Limits of Faridabad, thus a capital asset chargeable to tax u/s. 45 (5) - HELD THAT:- The fact is that the assessment order was framed exparte. The documents filed before us show that the assessee has entrusted his counsel to furnish evidence before the first appellate authority but a perusal of the order of the first appellate authority show that the appellate proceedings were not properly attended.
We have also given through the application for the admission of additional evidences. We are of the considered view that these documents go to the root of the matter. Therefore, in the interest of justice and fair play we deem it fit to restore the entire quarrel to the files of the AO. The assessee is directed to furnish all those documents before the AO and the AO is directed to decide the issue fresh after considering the documents and after giving a reasonable opportunity of being heard to the assessee.
Appeal filed by the assessee is treated as allowed for statistical purposes.
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2021 (3) TMI 1340
Addition u/s 69C - additions made on account of purchase from M/s. Artview Gems Private Limited holding its as "accommodation entry." - Appellant had purchased cut and polished diamonds from the aforesaid party in normal course of its business - HELD THAT:- In the present case, the assessee being in the business of manufacturing of jewellery required cut and polished diamonds as an essential material. The assessee purchased the diamonds from various entities as is evident from extracts of stock register of the assessee forming part of the paper book - AO doubting the existence of only one entity, i.e. M/s. Artview Gems Pvt. Ltd., held that the purchase of cut and polished diamonds by the assessee to be a bogus transaction and added the entire expenditure pertaining to the said transaction, under section 69C. In order to decide the issue arising in this appeal, it is relevant to analyze the provisions of section 69C.
Thus, as per the provisions of section 69C of the Act, in case the assessee fails to explain the source of expenditure or part thereof to the satisfaction of the AO, such expenditure shall be considered as unexplained expenditure and be deemed to be income of the assessee.
The documents of loans sanctioned by Merrill Lynch Wealth Management to the assessee are placed at Pages–41 & 45 of the paper book. From the aforesaid factual details forming part of the paper book, which have also not been denied by the learned DR, it is evident that sufficient funds were available with the assessee for making the payment to M/s. Artview Gems Pvt. Ltd. for the purchase of diamonds. Thus, we are of the view that provisions of section 69C of the Act are not applicable to the facts of the present case.
Further regarding the apprehension / allegation of the AO that M/s. Artview Gems Pvt. Ltd., is not a genuine entity, the AO neither discussed nor denied the submission dated 24th November 2017, filed by the entity before the AO at Mumbai, wherein the return of income for the assessment year 2015–16 of the said entity, copy of ledger account of the assessee as well as PAN details of the entity were furnished.
It is evident that the AO also has not denied the existence of said entity during the assessment year under consideration. Another basis of the AO to disallow the expenditure that caratage, clarity and colour were not mentioned in the invoice raised by M/s. Artview Gems Pvt. Ltd. also appears to be mere presumption, as the AO has not referred to any document of third-party having mention of such factors in transaction of purchase of diamonds. In view of the above findings, we find no reason to sustain the addition made by the AO and confirmed by the CIT(A), and least under section 69C of the Act. Accordingly, the grounds raised by the assessee are allowed.
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2021 (3) TMI 1335
Validity of notice - HELD THAT:- Since the petitioner has come at the notice stage itself, this Court may not be inclined to entertain this writ petition. Thereupon, the petitioner's counsel submitted that all the contentions of the petitioner may be left open. The petitioner has already given reply before the second respondent.
The second respondent shall give an opportunity of personal hearing to the petitioner and thereafter, pass orders in accordance with law. I make it clear that all the contentions of the petitioner are left open and have not gone into the merits of the matter.
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2021 (3) TMI 1334
Reopening of assessment u/s 147 - eligibility of reasons to believe - Approval u/s 151 - HELD THAT:- From the perusal of the reasons recorded for reopening the assessment, as furnished to the assessee, it is a fact that the said reasons communicated to the assessee were incomplete and no where in the reasons recorded, the failure on the part of the assessee to furnish full and true information necessary for the purpose of assessment was mentioned. When this was put to ld DR, he argued that the full text of the reasons recorded would be available in the assessment folder and that whatever is relevant to be given to the assessee had been duly furnished by the ld AO. We find that the ld DR had duly furnished the full text of the reasons recorded for reopening the assessment which was also duly placed before the competent authority while seeking approval in terms of section 151 of the Act. In the said full text of reasons, omission on the part of the assessee was mentioned as a general and vague statement without specifically pointing out as to what was the clear omission or failure on the part of the assessee in not furnishing the requisite information that was necessary for the assessment.
The entire information was very much available with the ld AO in the records which alone enabled him on bare perusal, to come to a conclusion that income of the assessee had escaped assessment. Hence in this scenario, how failure or omission could be attributed on the part of the assessee. Once there is no failure on the part of the assessee in providing requisite information, then the basic premise on which the entire reassessment was framed by recording reasons, vanishes in thin air. This makes the entire reassessment proceedings void abinitio. Moreover, we also find that the ld AO had triggered the reopening only based on verification of records. This goes to prove beyond doubt that there was absolutely no tangible material available with the ld AO to form a belief that income of the assessee had escaped assessment. On this count also, the reopening of the assessment deserves to be declared as bad in law.
We further find that the sanction obtained in terms of section 151 of the Act was not provided to the assessee along with the reasons recorded despite assessee asking for the same in writing before the ld AO. This, in our considered opinion, is against the settled principles of natural justice as reopening of an assessment is an extraordinary power available to the ld AO and it should not be done in a cavalier manner.
Since the reopening in the instant case had been done beyond 4 years from the end of the relevant assessment year, approval and sanction ought to have been granted only by ld PCIT alone. Hence this is a case where satisfaction of ld Additional CIT is also obtained in addition to the approval of ld PCIT, the said approval becomes invalid in terms of section 151 of the Act. It is trite law that if the law requires an act to be done in a particular manner, more particularly acts conferring jurisdiction like the present one, then, such act has to be done in that manner alone and the same cannot be compromised in any manner whatsoever.
Since reopening of assessment is quashed for more than one reason as enumerated above, we do not deem it fit to address the other legal issues raised by the ld AR as they would be purely academic in nature.
On merits also we find that the Act provides for a specific mechanism for computation of taxable profits of an insurance company and the taxable profits of an insurance company are required to be computed under the provisions of section 44 read with First Schedule to the Act which is a self contained code in itself. Rule 2 of First Schedule to the Act specifically provides that profits and gains of life insurance business is to be computed as per surplus / deficit disclosed by the actuarial valuation made in accordance with the Insurance Act, 1938.
The consolidated Revenue Account was prepared without segregating income/ expenses for policyholders as well as shareholders. Therefore, the said Form-1 reflected the surplus/ deficit of the business as a whole (i.e.. considering shareholders" as well as policyholders" account) since in those days there was no bifurcation of the accounts of insurance companies into policyholders and shareholders accounts.
Post introduction of IRDA Regulations, 2000. IRDA. the insurance regulator, has made specific rules for presentation of insurance accounts as prescribed in IRDA (Preparation of Financial statements and Auditor's Report of Insurance Companies) Regulations. 2002. Under these norms, profit & loss of life insurance company is divided into a technical account (policy holder's account represented in Form A-RA) also called as revenue account and non-technical account (shareholder's account represented as Form A-PL) also called Profit & Loss A/c. The technical account deals with all the transactions relating to and includes income from premium and expenditure in relation to the Policyholders account and related investment income.
For negative reserves are nothing but discounted value of estimated future net income of the Company which cannot be brought to tax in the year under consideration. Reliance is placed on Mumbai Tribunal Judgment in the case of ICICI Prudential Insurance Co. Ltd. vs. ACIT [2012 (11) TMI 13 - ITAT MUMBAI]wherein it was held that negative reserve disclosed in Form-1 does not give rise to distributable surplus.
As per IRDA (Actuarial Report and Abstract for Life Insurance Business) Regulations. 2016, the disclosure of negative reserves in the Form-1 is not required. Hence, this further proves the assessee's contention that negative reserves in Form-I is just a disclosure requirement. For the aforesaid cumulative reasons, it is respectfully submitted that the AO be directed to delete the addition of negative reserves - Decided in favour of assessee.
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2021 (3) TMI 1332
Direct Taxes Vivaad Se Vishwas Act, 2020 - HELD THAT:- We find that cross quantum appeals filed by the assessee and Revenue in which Form No. 3 has already been issued to the assessee under The Direct Taxes Vivaad Se Vishwas Act, 2020 are cross penalty appeals for assessment year 2009-10 arising out of the same quantum proceedings for assessment year 2009-10. In view of this as Form No 3 has already been issued to the assessee in quantum appeals of the assessee as well as the appeals of the Revenue in quantum proceedings as well as penalty proceedings are treated as withdrawn and hence dismissed.
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2021 (3) TMI 1331
Revision u/s 263 - Unexplained cash deposit - difference between ‘Lack of enquiry’ and ‘inadequate enquiry’ - HELD THAT:- It is for the Assessing Officer to decide the extent of enquiry to be made as it is his satisfaction as what is required under law. Reliance is placed on the decision of CIT v. Sunbeam Auto Ltd. [2009 (9) TMI 633 - DELHI HIGH COURT] wherein held that if there was any inquiry, even inadequate, that would not by itself, give occasion to the Commissioner to pass order u/s 263 of the Act, merely because the Commissioner has a different opinion in the matter and that only in cases where there is no enquiry, the power u/s 263 of the Act can be exercised. The ld. PCIT cannot pass the order u/s 263 of the Act on the ground that further/thorough enquiry should have been made by Assessing Officer.
If A.O. adopts one of the possible courses available in the scheme of the I.T. Act which results in any loss of revenue or when two views are possible and the A.O. adopts one of them with which the C.I.T. does not agree, then it would not be an order prejudicial to the interest of revenue for invoking the jurisdiction u/s. 263 - See MALABAR INDUSTRIAL CO. [2000 (2) TMI 10 - SUPREME COURT]
The order of the Ld. PCIT was definitely outside the purview of section 263 of the Act. As noted above, the exercise aimed at ascertaining the correct income of the assessee has been fulfilled by the Assessing Officer by exercising his quasi-judicial functions vis-a-vis passing the assessment order u/s.143(3) r.w.s 147 of the Act. Therefore, certainly it is not a case wherein adequate enquiries at the assessment stage were not carried out or assessment was made in haste. However, what is an opinion formed as a result of these enquiries and verification of the materials is something which is in exclusive domain of the Assessing Officer, and even if Ld. Pr. Commissioner does not agree with the results of such enquiries, the resultant order cannot be subjected to revision proceedings. - Decided in favour of assessee.
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2021 (3) TMI 1330
Reopening of assessment u/s 147 - whether the revenue is justified in reopening the assessment for the year under consideration? - claim of cost of acquisition, cost of improvement and deduction claimed u/s 54 of the Act is subject matter of present case - HELD THAT:- A plain reading of reasons recorded show that the c. Assessee in both the cases being the co-owners of the property situated at Navsari, which had been sold of on 27.06.2011 by way of registered sale deed and the consideration was ₹ 64,00,000/-. Both the assessee being co-owners of the property, had shown the amount of sale consideration received in their respective part, in their return of income and copy thereof has been placed on record.
The record indicates that the assessee had replied the query letter dated 13.02.2017 stating inter-alia that they have offered the long term capital gain for taxation after claiming deduction as per their share in the immovable property. Vide letter dated 12.03.2019, revenue had called for details with regard to claim of cost of acquisition, cost of improvement and claim u/s 54 of the Act and in pursuance of said letter, both the assessee had furnished necessary details vide letter dated 20.03.2019. It is the case of the revenue that on 19.03.2019, the reasons for reopening of the assessment had been recorded, whereas, the reply along with details had been received to their office on 22.03.2019. Under such circumstances, the day when reasons for reopening were recorded, no any details as called for were supplied by both the assessee.
We are of the view that the stand of the revenue with regard to non-filing of the necessary particulars are factually incorrect. It appears from the record that after the impugned notices issued under Section 148 of the Act, and before filing of the objections against the reasons recorded, both the assessee had furnished necessary details/documents in support of their claim of cost of acquisition, cost of improvement and deduction claimed under Section 54 of the Act.
Therefore, the assessee nowhere failed to disclose the necessary facts with regard to their assessment. It is an admitted fact that both the assessee have filed their return of income for the year under consideration, whereby, they had declared the amount received from the sale transactions and the claim with respect to cost of acquisition, cost of improvement and investment made in National Highway Authority for which they have claimed deduction under Section 54 of the Act. It is pertinent to note that while passing the order of disposing of objections against the reasons recorded, the authority failed to consider the necessary disclosures made in the return of income and the details / documents furnished by the assessee in pursuant of the query letter issued by the Assessing Officer.
We are of the view that while recording the reasons for reassessment, the Assessing Officer failed to consider the necessary details which were on the record and without application of mind, the Assessing Officer has recorded the reasons in mechanical manner. Thus, the reasons lack validity and Assessing Officer had proceeded on erroneous premise.
There is no basis or jurisdiction for the respondent to form a belief that income of assessee chargeable to tax for the year under consideration has excaped assessment within the meaning of Section 147 of the Act. - Decided in favour of assessee.
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2021 (3) TMI 1329
Deduction u/s 80P(2)(a)(i) - Whether the provisions of Section 80P(2)(a)(i) permit the claim for deduction relatable to the interest income earned from the advances to the staff/ employees as well as from the interest earned from savings bank account? - HELD THAT:- In the light of the judgment rendered by a Division Bench of this Court [2019 (6) TMI 1658 - MADRAS HIGH COURT] the above tax case appeal is allowed, the impugned order passed by the Tribunal is set aside and the matter is remanded to the Tribunal to be heard and decided afresh. The substantial questions of law raised are left open.
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2021 (3) TMI 1326
Assessment u/s 153A - Whether no incriminating material found in search? - HELD THAT:- As informed by the Revenue, that the issue, which arises in the present appeal, is covered by the judgement rendered in PARAM DAIRY LTD [2021 (2) TMI 764 - DELHI HIGH COURT]
Accordingly, the present appeal is disposed of in terms of the said judgement wherein held that in the audited report filed by the assessee along with the report, cash book, ledger, bank book etc. were mentioned; that the respondent assessee was maintaining books on TALLY Accounting Software which was seized during the search and was being treated as incriminating material; however, regular books of account of the assessee, by no stretch of imagination, could be treated as incriminating material to form basis of framing assessment under Section 153A read with Section 143(3) - also once an assessee does not receive a notice under Section 143(2) of the Act within the stipulated period, such an assessee can take it that the return filed by him has become final and no scrutiny proceeding are to be undertaken with respect to that return. Revenue appeal dismissed.
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2021 (3) TMI 1322
Reopening of assessment u/s 147 - Whether Tribunal is right in law in quashing the notice under section 148 of the Act and pursuant to assessment under section 147 and read with 143(3) of the Act is valid? - HELD THAT:- Ground No.1, i.e. with regard to reopening assessment under section 147, was given up by the assessee before the CIT(Appeals). Recording the submissions of the learned AR., the Commissioner of Income Tax (Appeals) dismissed the said ground. However, the Income Tax Appellate Tribunal took into consideration the said ground which was given up by the assessee before the Commissioner of Income Tax (Appeals) and held against the Revenue.
When the assessee themselves have given up the ground, the Income Tax Appellate Tribunal should not have taken into consideration the said ground and given a finding as against the Revenue. The common order passed by the Tribunal cannot be sustained on this ground alone.
We set aside the common order passed by the Income Tax Appellate Tribunal and remit the same to the Tribunal for fresh consideration. The Tribunal is directed to go into the merits of the matter and pass an order afresh on merits and in accordance with law.
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2021 (3) TMI 1321
TP adjustment - Comparable selection - HELD THAT:- There is no dispute between the parties about the assessee being engaged in software development business having carried out the corresponding international transactions with its overseas AE(s) thereby disclosing net cost + margin of 17.18%. It is thus purely an issue of the alleged wrongful exclusion and inclusion of comparable entities only.
M/s.Mind Tree Ltd - We thus hold in this factual backdrop that the learned panel has rightly directed exclusion of M/s.Mindtree since lacking not only the reliable functional similarity but also having extraordinary events in the relevant time span in FY.2009-10. We therefore see no reason to accept the Revenue’s instant ground. The same stands rejected.
M/s.E-Infochips Bangalore Ltd., Kals Information Systems and Persistent Systems P. Ltd.- It transpires at the outset that this tribunal’s co-ordinate bench’s order in M/s.Pegasystems Worldwide India Pvt. Ltd. [2015 (10) TMI 2495 - ITAT HYDERABAD] has already held in the very assessment year i.e., AY.2010-11 that former twin entities are not functionally similar in software development activity; and therefore, are not to be taken as valid comparables.
M/s.Persistent Systems Ltd. as not a valid comparable in assessee’s line of business of international transactions in the relevant previous year. The same is directed to excluded therefore.
Interest of receivables - DRP’s directions take note of the TPO’s observations having merely proposed to charge interest @12% p.a. regarding the receivables exceeding the credit period of 30 days - Suffice to say, the DRP has admittedly directed the TPO to ascertain LIBOR rate for 12 months in FY.2009-10 without even indicating the corresponding comparables in the relevant segment involving the receivables in issue. We make it clear that Chapter-X in the Act is a special provision wherein each and every upward and downward adjustment ought to be made after analysing the array of comparables in the very segment than based on mere proposal lacking any uncontrolled transactions information. We thus deem it proper to delete the impugned arm’s length price for this precise reason alone. The assessee succeeds in its 10 to 12 substantive grounds and the Revenue’s corresponding second substantive ground is declined.
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2021 (3) TMI 1317
Validity of assessment u/s 153C - challenged jurisdiction of the AO assumed under section 153C of the Act on the ground that requisite addition contemplated under this section are not available in the present case -HELD THAT:- The orders of the CIT(A) in both the cases have attained finality as the appeals of the Revenue were dismissed on account of low tax effect involved in them
There is no necessity to record any finding, which otherwise not going to materially affect the assessee. It will be purely an academic issue. There is no tax liability in the hands of the assessee by virtue of taking cognizance under section 153C of the Act. Whatever tax liability fastened in the hands of both the assessee by the AO is concerned, that stands eliminated by virtue of order of the ld.CIT(A), and those orders have attained finality. Some documents ought to have been recovered which belong to the assessee, only thereafter, cognizance can be taken under section 153C.
We do not wish to indulge in academic discussion on the issue raised by the assessees in appeals. However, in case, in future some Misc.Application or otherwise, appeals of the Revenue are revived or restored to their original numbers, then both the assessees will be at liberty to raise this preliminary ground in their respective appeals before the Tribunal in shape of cross objection. It is also observed that our non-adjudication and non-consideration of this issue on merit will not cause or prejudice to the assessees or other assessees of this group in their respective appeals. With the above observation, both the appeals are dismissed.
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2021 (3) TMI 1316
TP Adjustment - comparable selection - HELD THAT:- It is pertinent to note that the comparables which were argued by the assessee to be excluded as a functionally dissimilar cannot be simplicitory included - as seen from annual report and the documents provided by the assessee before us that the functional profile was not properly verified by TPO / AO. Thus, it will be appropriate to direct the TPO to exclude these three comparables i.e. M/s Aptico Ltd.; Axis Integrated System Ltd. and Killik Agencies and Marketing Ltd.
As regards the inclusion prima facie after seeing the documentation of all the three companies it can be seen that the functional profile of each of the company were not exactly similar to the assessee company and besides that there are filters which was taken into account by the TPO during the reference proceedings has not been properly sufficient and comparable to the assessee company. Though the assessee pointed out that these companies have to be included, it needs proper verification as the data before us cannot convey as to how these comparables has to be accepted. Therefore, it will be appropriate to remand back the inclusions to the file of the TPO / Assessing Officer for through verification of these comparable companies and if found comparable, the same should be taken into account.
Working capital Adjustment - As issue from the perusal of the order of the TPO / Assessing Officer it can be seen that the computation of the working capital adjustment was not properly done and the same has to be done in accordance with the ALP margins. Therefore, we direct the TPO / Assessing Officer to re-compute the working capital adjustment as per the ALP margins.
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