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Income Tax - Case Laws
Showing 41 to 60 of 7776 Records
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2021 (12) TMI 1422
TP Adjustment - comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee as engaged in the business of providing Software Development Services, Provision of Technical Support Services and Provision of Sales and Marketing support services to its Associate Enterprises (AEs) need to be deselected.
Amortization of goodwill as operating expenses while computing the operating margin of provisions of sales and marketing - contention of the appellant before DRP that amortization of goodwill is treated as operating cost depreciation on the same should be allowed as a deduction u/s 32 - HELD THAT:- DRP rejected the claim by returning finding that the amortization of goodwill debited to P&L account was allowed as a deduction and no claim u/s 32 was made in the return of income. No fallacy in the findings of the Hon’ble DRP as the claim for deduction of depreciation only on AO being satisfied with the fulfillment of the condition laid down u/s 32 of the I.T. Act. Thus, we do not find any merit in the ground of appeal no.5 and 6. Accordingly, the ground of appeal no.5 and 6 stands dismissed.
Denying grant of risk adjustments - HELD THAT:- The assessee has not demonstrated as to how the difference in risk undertaken by a bank in advancing a loan to a borrower as compared to the risk involved in a loan advanced by RBI to a bank or by a bank to another bank is similar to the difference between the risk undertaken by the comparable company and the risk undertaken by the assessee. Hence, the difference between the Prime Lending Rate and the Bank Rate cannot be considered as a reliable and accurate measure of the Risk adjustment required to be made. In the absence of a reliable and accurate measure of the risk difference between the assessee and the comparables, no risk adjustment can be granted.
Deduction of education cess from computation of taxable income - HELD THAT:- we note that the assessee paid Education Cess while computing the taxable income under normal provision of the I.T. Act. The Hon’ble High Court of Bombay in the case of Sesa Goa Ltd. [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.
Thus the issue of “education cess‟ is an allowable expenditure as per provisions of Section 40(a)(ii) of the Act and placing reliance on the decision (supra.), we direct the Assessing Officer to allow deduction in respect of Education Cess paid by the assessee. Accordingly, the additional ground of appeal no.1 raised by the assessee is allowed.
Levy of interest u/s 234C - HELD THAT:- This additional ground of appeal is consequential in nature. Once the default within the meaning of section 234C takes place, levy of interest is automatic and mandatory, is not open to challenge in the appeal proceedings. Hence, we do not find any merit in the said additional ground of appeal no.2 and the same is dismissed.
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2021 (12) TMI 1421
TP Adjustment - Comparable adjustment - application of turnover filter - HELD THAT:- We hold that the 8 companies listed in Sl.No.(a) to (i) in paragraph -13 of this order, which the assessee seeks exclusion and whose turnover in the current year is more than Rs.200 Crores should be excluded from the list of comparable companies. This Tribunal in the case of Barracuda Networks India Private Limited [2022 (5) TMI 322 - ITAT BANGALORE] has also reiterated the application of turnover filter on the same lines as indicated above.
This Tribunal in the case of Barracuda Networks India Private Limited [2022 (5) TMI 322 - ITAT BANGALORE] has excluded R.S.Software (India) Ltd., from the list of comparable companies on the ground that the related party transaction of this company was above 15%. Following the said decision, we direct exclusion of R.S.Software (India) Ltd. from the list of comparable companies.
Determining the ALP, the TPO did not allow proper adjustment towards Risk Adjustment, Capacity utilization adjustment and working capital adjustment - We find that identical reasons assigned by the TPO for not allowing working capital adjustment was a subject matter of consideration by this Tribunal in the case of Barracuda Networks India Private Limited [2022 (5) TMI 322 - ITAT BANGALORE] and this Tribunal following the decision in case of Huawei Technologies India Pvt. Ltd. [2018 (10) TMI 1796 - ITAT BANGALORE] held that working capital adjustment has to be allowed to the assessee and directed the TPO/AO to examine the claim of the assessee in the light of the details of working capital adjustment furnished by the assessee which is given as annexure to this order.
Grant of risk adjustment - Though the assessee has given a general note with regard to assessee’s right to claim risk adjustment while computing ALP, no specific details have been given with regard to allowing risk adjustment. In this scenario, we are of the view that it would be just and appropriate to remand the issue to AO/TPO with a direction to the assessee to furnish computation of risk adjustment and the basis of claim for deduction on account of risk adjustment. The TPO will consider the same after affording the assessee opportunity of being heard and allow adjustment on account of risk, in accordance with law. In this regard, we find that the DRP has not called for the computation of manner of risk adjustment and has merely proceeded to hold that the risk adjustment cannot be granted unless it is established that differences has a material effect on the margin of the comparable companies and computation can be made on reliable data without calling for working of risk adjustment. Such conclusions in our view cannot be sustained.
Adjustment towards capacity utilization - In case appropriate adjustments cannot be made to the uncontrolled transaction, due to lack of data, then in order to read the provisions of transfer pricing regulations in harmony, the adjustments should be made on the tested party. On the question of the data and method of computation of under utilization capacity adjustment, the tribunal held that the claim depends on acceptability of such adjustments being concerted, being reasonably accurate in mechanism for such adjustments, and as long as such an adjustment mechanism can be found, no objection can be taken to the adjustment. The tribunal held that once it is accepted that the assessee has underutilized capacity during the subject AY and is accordingly factually and legally eligible to an adjustment for the same, such a benefit cannot be denied to the assessee only for the reason that the data about comparable companies is not available. Requiring the assessee to produce such a data which is not available in public domain would tantamount to requiring the Appellant to perform an impossible task. The only way to get the data in the current case, would be where the TPO collates the same from the comparable companies by exercising his powers under section 133(6)
We are of the view that it would be just and appropriate to set aside this issue to the AO/TPO by directing the assessee to furnish required details and in the event of the assessee not being in a position to get the required details, request the TPO to exercise his powers under section 133(6) of the Act and call for the required details form the comparable companies and if he finds that the capacity utilization differs between the assessee and the comparable companies, to allow appropriate adjustment as per the relevant provisions of law and in accordance with the guidelines laid down above.
Selecting foreign AE as a tested party was an appropriate method of determining ALP and the Revenue authorities were not justified in rejecting the plea of the assessee - The facts of the Assessee’s case is similar to the case decided by the Hon’ble Madras High Court Virtusa Consulting Services Pvt. Ltd [2021 (2) TMI 378 - MADRAS HIGH COURT] in as much as the Assessee had in its Transfer Pricing Study chosen the foreign AE as a tested party and the TPO refused to examine the said claim. The decision of the Hon’ble Madras High Court being the only decision available on the issue of a High Court, judicial discipline requires us to follow the same in preference to the decisions of Tribunal to the contrary. Following the aforesaid decision of the Hon’ble Madras High Court, we remand the issue with regard to foreign AE being chosen as a tested party to the TPO for fresh consideration. The relevant ground of appeal of the assessee in this regard is treated as allowed for statistical purposes.
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2021 (12) TMI 1420
Validity of draft assessment order passed in violation section 144C - AO treating the draft order as final order by issuing the notice of demand under section 156 the Act and notice initiating penalty proceeding under section 271(1)(c) - HELD THAT:- As per section 144C of the Act, it is mandatory for the Ld.AO to pass Draft Assessment Order in accordance with the procedure laid down therein. We have noticed that the coordinate Bench in the case of Suretex Prohphylactics (India) Ltd., [2021 (4) TMI 120 - ITAT BANGALORE] considered similar issue.
In the present case, the AO passed the draft assessment order u/s. 143(3) r.w.s. 144C(13) of the Act on 21.12.2016 which is accompanied with demand notice issued u/s. 156 of the Act dated 21.12.2016 and it is also noticed that in the draft assessment order itself, the AO recorded the statement as stating that Demand notice issued accordingly. Penalty proceedings u/s. 271(1)(c) are initiated separately for the additions made.
Being so, it is observed that the draft assessment order passed by the AO is without following the due process of law as enumerated in the judgment in the case of Vijay Television [2014 (6) TMI 540 - MADRAS HIGH COURT]
Since the order passed by the AO is without following the due process of law and it cannot survive in the eyes of law, accordingly we quash the impugned assessment order before us. Appeal by the assessee is allowed.
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2021 (12) TMI 1418
Income deemed to accrue or arise in India - receipts of the appellant are in the nature of "Royalties" within the ambit of Explanation 2 to section 9(i)(vi) and Article 12(3) of the India-USA Double Taxation Avoidance Agreement ("DTAA") - HELD THAT:- We find force in the contention of the ld. counsel for the assessee. A similar quarrel was considered and decided by this Tribunal [2021 (10) TMI 1389 - ITAT DELHI] we direct the Assessing Officer to treat the income of the assessee as not liable to tax in India. Appeal of assessee allowed.
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2021 (12) TMI 1415
Validity of Assessment Order - Necessity of following the mandatory procedure prescribed u/s 144C and 144C(5) to C(13) and without awaiting directions from the DRP - HELD THAT:- The material on record indicates that the year 2021 being a non-leap year comprising of only 28 days and the Draft Assessment Order having been issued on 16.02.2021, the petitioner had time upto a period of 30 days i.e., upto 18.03.2021 to file objections as required u/s 144C(2)(b) - petitioner filed objections before both the DRP as well as the Assessing Officer on 16.03.2021 i.e., within the prescribed period of 30 days.
Respondent No.1 – AO clearly fell in error in neither considering the objections nor awaiting directions from the DRP and has erroneously proceeded to pass the impugned Assessment Order dated 26.04.2021, which is clearly in violation and contravention to the mandatory procedure prescribed under Section 144(C)5 to (C)13 of the IT Act and without awaiting further directions from the DRP and as such, the impugned Assessment Order dated 26.04.2021 deserves to be quashed.
Petitioner is also right in his contention that during the pendency of the present petition, the DRP has passed the impugned order at Annexure – Q dated 24.11.2021 disposing of the case on the sole / simple ground that the matter is pending before this Court, which is clearly erroneous in as much as in view of my finding above that the impugned Assessment Order itself is illegal, arbitrary and deserves to be quashed, the subsequent order at Annexure – Q passed by the DRP also deserves to be quashed and DRP be directed to proceed further in accordance with law as contemplated under Section 144(C)5 to (C)13 of the IT Act by considering the objections dated 16.03.2021 filed by the petitioner.
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2021 (12) TMI 1414
Assessment u/s 153C - sufficient incriminating material seized during the search action - During the search, various evidences were collected, which explained inter alia, the modus operandi of the "business of providing accommodation entries in the nature of bogus sales and unsecured loans" - HELD THAT:- Admission was given when corroborative evidence was unearthed during the course of search. All these clinching and corroborative evidences along with the statements given during the search constitute incriminating evidence against the appellant. Even the appellant, Shri Anoop Y. Jain (part of statement reproduced by AO in para 5 of the assessment order), Shri Manish S Jain and Shri Sachin Pareek had accepted the entire modus operandi during the course of search in statement recorded u/s. 131 of the Act.
In this case, therefore, there are ample incriminating evidences/documents recovered during the course of search. Even otherwise, the Hon'ble Delhi High Court in the case of M/s. Nau Nidh Overseas Pvt. Ltd. [2017 (3) TMI 108 - DELHI HIGH COURT] has held that statement of a third party recorded during course of search proceedings u/s 132(4), constitutes 'material on record' for purposes of section 153C of the Act. This way, ld DR reiterated the findings of ld CIT(A).
We note that issue under consideration is squarely covered against the assessee by the judgment of Division Bench in 1, in the case of Shri Rajendra Sohan Lal Jain [2021 (12) TMI 867 - ITAT SURAT] whereby the issue relating to Commission @ 0.02%, Commission on import @0.20% and Commission on loan @ 0.50% were adjudicated by upholding the order of ld CIT(A) as held no evidence is filed by the assessee on record to prove the fact that the assessee entered into hedging contract with the Banker, the evidence found in the form of e-mail and other evidences show the facts otherwise. Therefore, the submissions made by the assessee do not inspire confidence. None of the case laws relied by the ld AR for the assessee is helpful to the assessee as there was sufficient incriminating material seized during the search action on the assessee on the basis of which it is clearly proved that the assessee is in the business of entry provider.
Thus we dismiss the appeal of the assessee.
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2021 (12) TMI 1411
Reopening of assessment - applicability of the provisions of sections 148 and 148 A of the Income Tax Act, the new provisions which have been inserted by Finance Act 2021 with effect from 01.04.2021 - According to the petitioner, the Financial Act has substituted the provision of section 147 with effect from 01.04.2021 and the time limit has been set to issue the notice under section 148 which is extended by Notification No.20 of 2021 and 38 of 2021, there cannot be two parallel provisions applicable simultaneously - validity of Notification No.20 of 21 issued by the CBDT by purportedly exercising the powers conferred by section 3 (1) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.
HELD THAT:- Issue NOTICE to the respondents, returnable on 03.01.2022. Pleadings be completed and office of learned Additional Solicitor General shall be served through e-mail as well as speed post.
As the petitioner has made out a prima facie case, ad-interim order in terms of paragraph 7(d) till the returnable date.
Direct service is permitted. Service be effected directly by the petitioner through speed post. Soft copy shall be served upon the offices of the learned senior advocate, Mr.Manish Bhatt and learned Additional Solicitor General of India.
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2021 (12) TMI 1410
Reopening of assessment - applicability of the provisions of sections 148 and 148 A of the Income Tax Act, the new provisions which have been inserted by Finance Act 2021 with effect from 01.04.2021 - According to the petitioner, the Financial Act has substituted the provision of section 147 with effect from 01.04.2021 and the time limit has been set to issue the notice under section 148 which is extended by Notification No.20 of 2021 and 38 of 2021, there cannot be two parallel provisions applicable simultaneously - validity of Notification No.20 of 21 issued by the CBDT by purportedly exercising the powers conferred by section 3 (1) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.
HELD THAT:- Issue NOTICE to the respondents, returnable on 03.01.2022. Pleadings be completed and office of learned Additional Solicitor General shall be served through e-mail as well as speed post.
As the petitioner has made out a prima facie case, ad-interim order in terms of paragraph 7(d) till the returnable date.
Direct service is permitted. Service be effected directly by the petitioner through speed post. Soft copy shall be served upon the offices of the learned senior advocate, Mr.Manish Bhatt and learned Additional Solicitor General of India.
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2021 (12) TMI 1409
Reopening of assessment u/s 147 - assumption of jurisdiction itself is bad in law - reopening as beyond a period of four years - HELD THAT:- This is purely a question of law which arises for consideration as the reopening is beyond a period of four years and the reasons recorded do not, in any manner, say that there was anything that had been done on the part of the petitioner – assessee which has led to the income escaping the assessment. In absence of failure disclosed fully and truly all material facts, any reopening beyond a period of four years from the end of the assessment year 2014-15 is unsustainable. There is no whisper of the failure of the part of the petitioner of the true and full disclosure in the reasons which have been furnished and therefore, the petitioner has to be considered as a victim and with that being clear in the mind of the revenue also, this notice has been issued, and hence, this requires indulgence.
The present petition stands disposed of as withdrawn.
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2021 (12) TMI 1407
Allowable Revenue expenses u/s 37 - Business loss on account of permanent diminution in the value of the investment made in the equity shares in one of the subsidiaries of the assessee in USA - According to the AO this loss was not allowable u/s 37 since the expenditure could not have been considered as a revenue expenditure - HELD THAT:- Tribunal relying on the decisions of the Supreme Court and High Courts noted that under similar circumstances the expenditure incurred by the company were allowed. This was on the basis that the assessee company in order to expand its business world wide had setup subsidiaries in other countries. The investment made in such companies was seen as revenue expenditure since the purpose behind making the investment was only for expansion of the business. Applying this logic to the assessee in the present case, the Tribunal was of the opinion that such investment being in the nature of revenue expenditure was to be allowed under Section 37 of the Act.
Having perused the order passed by the AO and by the tribunal and having heard learned counsel for the revenue, we find no error in the view expressed by the tribunal. As noted, the assessee had made investment in its subsidiary company in order to expand its business with a view to earn higher profit. The investment was thus driven by business expediency. The tribunal therefore committed no error - No question of law arises.
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2021 (12) TMI 1406
Bogus LTCG - Addition u/s 68 - penny stock purchases - exemption u/s 10(38) denied - CIT-A deleted the addition - HELD THAT:- After due consideration of the findings of the learned CIT(A), we do not find any error in it. The shares were purchased long back in 2000-2001 and sold after retaining them for more than 10 years. There is nothing with the Assessing Officer to treat it as a bogus investment to earn profit in a short span of time. Therefore, the appeal of the Revenue is devoid of any merit and, accordingly, it is dismissed.
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2021 (12) TMI 1403
TP Adjustment - comparable selection - functional dissimilarity - HELD THAT:- As assessee in engaged in the business of provision of Software Development Services (SWD services) and in development, design and implementation of software programmes. Assessee also acts as consultant on matters relating to IT enabled services to its wholly owned holding company, thus companies functionally dissimilar with that of assessee need to deselected .
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2021 (12) TMI 1400
Deduction of marketed-to-market loss - unexpired/unmatured for forex derivative contracts - Whether instruction given by CBDT dated 23.03.2010 can have a retrospective effect thereby negativity the effect of the judgement? - AO held that fees receivable in foreign exchange have been duly hedged by way of taking forward contract and such loss claimed by the assessee is a notional loss and contingent in nature - mercantile system of accounting on regular basis and the loss was recognised in its books of accounts, which is deductible under Section 37[1] - HELD THAT:- As on perusal of the circular, we find that it is not a possible direction by the Board to the AO rather Board under law cannot issue any such possible direction as the settled legal principle. AO is an independent authority and none can dictate him as to how and in what manner he is to complete the assessment. Conscious of this legal position, the Board in the instruction dated 23.3.2010 had stated that the Assessing Officer may follow the guidelines given in the said instruction. This is one more indication to say that the Assessing Officer is not bound over the instruction given by the Board.
Thus, the only contention of the revenue appears to be based upon instruction issued by the CBDT which cannot override a decision of the Hon’ble Supreme Court. Therefore, we are of the considered view that there is no error in the order passed by the Tribunal. That apart, it is rather doubtful as to whether such instruction given by CBDT dated 23.03.2010 can have a retrospective effect thereby negativity the effect of the judgement.
Respondent pointed out that identical issue was considered in the case of Principal Commissioner of Income Tax vs. Suzlon Energy Ltd. [2018 (2) TMI 1789 - GUJARAT HIGH COURT] and the Court held that the decision of the Tribunal in so far as deleting the disallowance being notional loss on outstanding foreign derivative contracts was approved by holding that the decision is in-conformity with the decision of the Hon’ble Supreme Court in Woodward Governor India [P] Ltd. & Ors. [2009 (4) TMI 4 - SUPREME COURT]. The revenue had filed a Special Leave Petition in Special Leave which was dismissed by order [2020 (1) TMI 1505 - SC ORDER] dated 17.01.2020. In the case of the same assessee, namely Suzlon Energy Limited, the Hon’ble Supreme Court in Principal Commissioner of Income Tax vs. Suzlon Energy Ltd. [2020 (2) TMI 1559 - SC ORDER] approved the decision of the High Court upholding the order of the Tribunal allowing the assessee’s claim of foreign exchange fluctuation loss on mark to market basis.
We find no grounds to interfere with the order passed by the Tribunal. Decided against the revenue.
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2021 (12) TMI 1399
Revision u/s 263 - Section 115JB of the Act applicability with respect to the disallowance u/s 14A - Tribunal held that Section 14A disallowance amount cannot be added to assessee's income for the purpose of computation of income under Section 115JB relying upon the decision of Vireet Investment (P) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] and also holding that issue of debatable and as such the CIT ought not to have taken up for revision under Section 263 - HELD THAT:- As Respondent submits that the issue, in as much as Section 115JB of the Act whether applicable with respect to the disallowance under Section 14A of the Act, is already covered on merits and as such examining the question whether CIT (Appeals) had jurisdiction to invoke Section 263 of the Act would render academic. No substantial question of law arises.
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2021 (12) TMI 1398
Reopening of assessment u/s 147 OR 153C r.w.s. 153A - additional grounds - As argued no failure on the part of the assessee to disclose fully and truly necessary facts for completion of the assessment - HELD THAT:- The assessee has raised additional grounds for both the assessment years. The issue raised in the additional grounds is that the assessment completed u/.s 147 r.w.s. 143 of the Act is bad in law. The contention of the assessee is that there was a search in the premises of M/s.Davanam Jewellers Private Limited and during the course of search, there were certain material found pertaining to the assessee. Assessment orders for A.Y. 2006-2007 and A.Y. 2007-2008 ought to have been completed u/s 153C r.w.s. 153A of the Act and not u/s 147 r.w.s. 143(3) of the Act
The issue raised in the additional grounds, namely, whether the assessment is to be completed u/s 147 or 153C of the Act has not been raised before the Income Tax Authorities. The issue raised in additional grounds is a jurisdictional issue, which goes to the root of the matter.
Therefore, in the interests of justice and equity, we deem it appropriate, the same needs to be adjudicated first by the Income Tax Authorities. Accordingly, we restore the issue raised in the additional grounds to the files of CIT(A). At this point, we refrain from adjudicating the issue on merits. In the event, the CIT(A) decide the issue raised in additional grounds against the assessee, needless to state that the assessee is at liberty to file a fresh appeal raising all the issues raised in the original grounds and the additional grounds.
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2021 (12) TMI 1397
Late filing fee u/s 234E - default in furnishing statements - Intimation u/s 200A - HELD THAT:- Learned counsel for the petitioner brought to my attention the decision in M/s.Sarala Memorial Hospital v. Union of India and Another [2018 (12) TMI 1818 - KERALA HIGH COURT] wherein an identical question arose for consideration. After considering the statutory provisions and the implications of the amendment brought into the Act, it was held that the amendment would take effect only from 1st June, 2015 and is thus prospective in nature. It is submitted that the aforesaid judgment has become final and is binding upon the authorities.
The demand for late fees for the period till the first quarter of the assessment year 2015-16 is without authority. The demand in Ext.P1 to Ext.P15 intimations for the period from 2012-13 to the first quarter of assessment year 2015-16 is bereft of authority and cannot be legally sustainable.
Accordingly, we quash Ext.P1 to Ext.P15 intimations to the extent it demands late fee under section 234E for the period from 2011-12 till 01.06.2015.
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2021 (12) TMI 1394
Assessment u/s 153C - HELD THAT:- An assessment is valid even in absence of the foregoing incriminating material. Their lordships rather observe that whilst framing an assessment u/s 153A / 153C, AO is nowhere barred from taking cognizance of any other material as well.
Whether the assessee’s return(s) in issue would be treated as invalid being belated ones or not ? - Our reply is negative in assessee’s favour and against the department. This is because of the fact that the assessee had filed its return(s) under the Income Declaration Scheme, 2016 on 04.08.2016 followed by the search in issue dt.04.07.2017. Revenue’s argument that it had not filed any return in the corresponding assessment year u/s 139(1) we are of the opinion that the decision as to whether the income sought to be added as under the head “undisclosed income” has to be seen on the date of search only which purely stands satisfied in the facts of instant appeal. We further wish to observe here that the assessee’s returns filed under 2016 scheme stands stood duly accepted as there is no ground in Revenue’s pleadings to the contrary.
CIT-DR lastly contended that the assessee had not disclosed its IDBI bank account in the computation corresponding to the alleged returns filed in the year 2016 - We find no substances in the instant last argument as well since a perusal of the corresponding account documents indicate that the same had been opened only on 05.08.2016 and therefore, it could not be treated as an undisclosed bank account in assessment years 2010-11 to 2016-17 to say the least. So far as the last A.Y. 2017-18 is concerned, it is made clear that the relevant proceedings therein are in the search year itself only. We therefore decline the Revenue’s foregoing arguments in light of all the relevant facts and circumstances forming part of record before us. Revenue’s five appeals seeking to reverse the CIT(A)’s identical action quashing the impugned section 153C assessments fail accordingly.
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2021 (12) TMI 1391
Disallowance of interest on belated payment of non compete fees - CIT-A deleted the addition - as per AO CIT(A) erred in deleting disallowance of interest paid on non-compete fees without appreciating the fact that said expenditure is capital in nature and not to be allowed as revenue expenditure by specific legislative mandate vide section 28(va) - HELD THAT:- We find that the Ld. CIT(A) has deleted additions made by the AO towards disallowance of interest paid on belated payment of non-compete fees by following the decision of ITAT, Chennai Benches in assessee’s own case for assessment year 2000-01 where it was clearly held that liability to pay interest was contractual obligation and thus, the same is allowable expenditure u/s. 37(1) of the Act. The fact remains unchanged. The Revenue fails to bring on record any contrary judgments to counter findings of the Ld. CIT(A). Hence, we are inclined to uphold the findings of the Ld. CIT(A) and reject the ground taken by the Revenue.
Disallowance of sales promotion expenses - assessee has claimed deferred revenue expenditure being 1/5th of total expenditure incurred for marketing expenses for product launch - AO has disallowed deferred revenue expenditure on the ground that, except as provided for amortization of expenses u/s. 35D, 35DD etc, no deduction can be allowed to other expenses - HELD THAT:- CIT(A) has allowed deduction claimed by the assessee towards expenditure incurred in the impugned assessment year by holding that once it has admitted fact that expenditure has been wholly and exclusively incurred for the purpose of business, then the same needs to be allowed as deduction as and when such expenditure has been incurred for the purpose of business. To this extent, we do not find any infirmity in the findings recorded by the Ld. CIT(A).
As regard the ground taken by the Revenue in light of the decision in the case of Goetz India Ltd. [2006 (3) TMI 75 - SUPREME COURT] we are of the considered view that restrictions imposed by the Hon’ble Supreme Court on the powers of Assessing Officer does not extend to the powers of appellant authority. The appellant authority itself entitles to admit any new claim even though such claim was not made before the AO by filing revised return of income. Therefore, we are of the considered view that there is no error in the reasons given by the ld. CIT(A) to entertain fresh claim made by the assessee in so far as deduction of total expenditure incurred for sales promotion activities. For all these reasons, we do not find any reason to interfere with the findings recorded by the Ld. CIT(A) and hence, we reject ground taken by the Revenue.
Computation of deduction u/s. 80HHC - Exclusion of excise duty/sales tax from total turnover for the purpose of computation of deduction u/s. 80HHC - HELD THAT:- We find that the Hon’ble Supreme Court in the case of Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME COURT] had considered an identical issue and held that excise duty/sales tax are not included in total turnover in the formula contended in section 80HHC(3) - CIT(A) after considering relevant facts and also by following the ratio laid down by the Hon’ble Supreme Court has directed the AO to exclude excise duty/sales tax from total turnover for computation of deduction u/s. 80HHC. The fact remains unchanged. The Revenue fails to bring on record any contrary judgments to support its arguments. Therefore, we are inclined to uphold the findings of the Ld. CIT(A) and reject ground taken by the Revenue.
Exclusion of DEPB license fees received from Government of India for computation of deduction u/s. 80HHC - HELD THAT:- We find that the issue is squarely covered in favour of the assessee by the decision of the Hon’ble Supreme Court in the case of Topman Exports vs CIT [2012 (2) TMI 100 - SUPREME COURT] where the Hon’ble Supreme Court clearly held that profit from transfer of DEPB license is entitled for deduction u/s. 80HHC - CIT(A) after considering relevant facts, and also by following the decision in the said case has directed the AO to recompute deduction u/s. 80HHC of the Act by considering profit from sale of DEPB license. We do not find any error or infirmity in the order of the Ld. CIT(A) and hence, we are inclined to uphold findings of the Ld. CIT(A) and reject grounds taken by the Revenue.
Disallowance of PE/ESI contribution on the ground that same cannot be allowed as deduction u/s. 43B - HELD THAT:- As assessee has paid employees’ contribution to PF and ESI on or before due date for filing return of income and thus, deleted addition made by the AO. We do not find any error in the reasons given by the Ld. CIT(A) to delete addition made towards disallowance of employees’ contribution to PF and ESI. Hence, we are inclined to uphold the finding of the Ld. CIT(A) and reject the ground taken by the Revenue.
Re-computation of deduction u/s. 80HHC based on book profits - AO has computed deduction u/s. 80HHC of the Act while computing book profit u/s. 115JB by taking into account profits and gains from business computed after making certain adjustments - HELD THAT:- We find that this issue is squarely covered in favour of the assessee by the decision of Hon’ble Supreme Court in the case of Ajanta Pharma Ltd [2010 (9) TMI 8 - SUPREME COURT] where the Hon’ble Supreme Court has clearly held that for the purpose of computing book profit, in terms of section 115JB, net profit as shown in profit and loss account have to be reduced by amount of profits eligible for deduction u/s. 80HHC and not by amount of deduction u/s. 80HHC of the Act.We find that this issue is squarely covered in favour of the assessee by the decision of Hon’ble Supreme Court in the case of Ajanta Pharma Ltd vs CIT, (supra), where the Hon’ble Supreme Court has clearly held that for the purpose of computing book profit, in terms of section 115JB, net profit as shown in profit and loss account have to be reduced by amount of profits eligible for deduction u/s. 80HHC and not by amount of deduction u/s. 80HHC of the Act.
Include foreign exchange gain as part of the turnover for computing deduction u/s. 80HHC
Additions made by the AO towards estimation of interest on loans given to sister concern.
TDS u/s 195 - disallowance of foreign agency commission u/s. 40(a)(i) - export commission paid to foreign agency without deducting TDS - HELD THAT:- In this case, on perusal of facts available on record, it was very clear that commission paid by the assessee to non-resident for procuring export orders is neither accrued in India nor taxable u/s. 9 of the Act as fees for technical services. Further, the business profits of a non-resident cannot be taxed in India unless such non-resident have permanent establishment in India. It was not the case of the AO that foreign agents have permanent establishment in India. Therefore, we are of the considered view that export commission paid to foreign agents cannot be disallowed u/s. 40(a)(i) of the Act, for non deduction of tax at source u/s. 195 of the Act. The Ld. CIT(A) after considering relevant facts has rightly deleted additions made by the AO. Hence, we are inclined to uphold the findings of the Ld. CIT(A) and reject ground taken by the Revenue.
Disallowance of foreign exchange fluctuation loss - HELD THAT:- We find that the Ld. CIT(A) has recorded categorical finding that the assessee had added back this item of expenditure as prior period expense being part of inadmissible items in the computation of total income for the assessment year 2010-11. The Ld. CIT(A) further recorded factual finding that once assessee itself has disallowed said item of expenditure by holing that it does not pertain to year under consideration, then no addition can be made towards said expenditure. Fact remains unchanged. The Revenue fails to bring on record any evidence to counter findings of fact recorded by the Ld. CIT(A). Hence, we are inclined to uphold the findings of the Ld. CIT(A) and reject ground taken by the Revenue.
Disallowance u/s 14A r.w.r. 8D - CIT-A deleted the addition - HELD THAT:- If no exempt income for the relevant assessment year, then no disallowance can be made by the AO towards expenditure u/s. 14A r.w.r. 8D of the Act, for assessment years 2011-12 & 2012-13. The CIT(A) after considering relevant facts has rightly deleted addition made by the AO u/s. 14A of the Act. Hence, we are inclined to uphold the findings of the ld. CIT(A) and reject the ground taken by the Revenue.
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2021 (12) TMI 1386
Assessment u/s 153A - Addition u/s 68 - HELD THAT:- On perusal of the seized material, it is seen that the material referred to in the Satisfaction note does not pertains to AY 2003-04 in most cases. It is further seen from the records that no seized material or statement has been relied upon by the AO while making the addition and that the addition was made when conditions of section 68 of the Act were not fulfilled during the post search proceedings and during the proceedings before the AO. Appeal is squarely covered by the judgment of this Court in Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT]
Accordingly, we find no merit in the present appeal. The same is dismissed.
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2021 (12) TMI 1385
Condonation of delay - delay of 331 days in filing the appeal - HELD THAT:- As in the case on hand, we are compelled to take a different view on account of prejudice which has been caused to the assessee due to this belated filing of appeal by the revenue. The period of limitation for filing the appeal lapsed on 21st January, 2020. Had the appeal been preferred by the department within the said time, the assessee had an option to go under the Director Tax Vivad-se-Biswas Act, 2020 and file an application before the concerned authority.
On account of the delay in filing the appeal, the assessee was not in a position to exercise such an option. That apart, we have perused the affidavit filed in support of the application for condonation of delay and we find that there is absolutely no reason assigned by the revenue to condone the inordinate delay of 331 days in filing the appeal.
Thus, both on the ground that no sufficient cause has been shown by the appellant/department and also on the ground that the assessee has been put to prejudice which cannot be remedied, we are not inclined to condone the inordinate delay in filing the appeal. Petition for condonation of delay dismissed.
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