|
Advanced Search Options
Income Tax - Case Laws
Showing 41 to 60 of 768 Records
-
2022 (6) TMI 1405
Miscellaneous Application that the Ground No. 4 in the original appeal in respect to addition on account of production development expenses has not been addressed which admittedly needs consideration by us. Hence, the application is allowed.
Registry is directed to list the matter for hearing on 24.04.2022 solely for consideration of the Ground No. 4 raised for A.Y. 2014-15. Since both the parties were present before the court when the matter was heard and the date fixed for hearing, services the notice to the respective parties by the Registry is hereby dispensed with.
MA filed by the Revenue is allowed.
-
2022 (6) TMI 1404
Assessment u/s 153A - Absence of any incriminating material during the course of search - addition u/s 68 - HELD THAT:- CIT(A) has referred purchase/work contract and purchase invoices along with the statement recorded u/s 132(4) holding that because of contrary statements of employees, nature of invoices constituent incriminating material and such facts were not existed at the time of original assessment made in the case of the assessee. No reason to interfere in the decision of the ld. CIT(A), therefore, this ground of appeal of the assessee stand dismissed.
Disallowing film production related expenses - Confirming expenses claimed on account of film production as inflated and bogus - HELD THAT:- To sustain the disallowance it is necessary to have supporting evidences and documents, in the case of the assessee, basis of additions were only retracted statement of the employees which had no strong evidential value. There was no positive material on record brought by the A.O to substantiate that in fact assessee had inflated its expenses by overbilling. AO has only relied on the retracted statement and there was no independent material /evidences to substantiate the same.
A.O has not made further investigation to contrary prove the claim of occurrence of fire as claimed by the aforesaid party. We consider that the decision of ld. CIT(A) to sustain the addition of Rs.5 lac pertaining to the production expenses merely based on retracted statement was contrary to the surroundings facts and material and not justified, therefore, we direct the A.O to delete the addition.
Disallowance of Personal Expenses - A.O has disallowed payment made for J.W. Mariot Hotel Membership. -as claimed that hotel was used for holding meetings with the parties related to production of the films - HELD THAT:- We observe that the part of the hotel facility for personal use cannot be ruled out however, looking to the fact that the impugned addition was merely made on the basis of the retracted statement without fully linking with specific evidences, therefore we restrict such disallowance to 50% of Rs.2,81,265/-. Therefore, this ground of appeal of the assessee is partly allowed.
Expenditure towards production - HELD THAT:- The assessee has also produced ledger account and supporting documents before the assessing officer during the course of assessment proceedings to substantiate these facts that the said amount was not claimed as deduction in the books of the assessee during the year consideration, however the assessing officer failed to prove contrary. Revenue could not controvert the finding of the ld. CIT(A), therefore ,this ground of appeal of the Revenue stand dismissed.
Unsecured loan u/s 68 - loan taken from 5 parties pertaining to Sh.Bhanwarlal Jain Group - HELD THAT:- In the case of the assessee A.O has also failed to controvert the submission of the assessee supported with the relevant material. In the light of the facts and findings of coordinate bench in the Nemichand Jain case as supra, we find that the issue raised before the Tribunal in this year pertaining to the case of the assessee are similar to the case of Nemichand P. Jain. The A.O. had made the impugned addition merely relying upon the retracted statements and failed to corroborate the same with any relevant supporting evidence/material , therefore, addition to be deleted. Decided in favour of assessee.
Disallowance of bogus expenses - expenses as Recee expenses for the different films which comprising Air fare and Travelling Visa fees and Insurance Hotels etc - HELD THAT:- is observed that disallowance was made on doubtful basis without linking to specific seized material demonstrating that claim of the assessee is totally bogus. There is no material brought on record to support the complete disallowances of such expenses. As the nature of personal element cannot be ruled out therefore, we restrict the disallowance to the 50%.
Addition being salary paid to employee in cash - HELD THAT:- It is undisputed fact that lower authority has made impugned addition merely on the sole basis of retracted statement without corroborating the allegation of payment of the such salary in cash with any relevant evidence/supporting material .We don’t find any justification in the decision of ld. CIT(A). Accordingly, this ground of appeal of the assessee is allowed.
Payment towards foreign shooting expenses - HELD THAT:- A.O had not disproved the aforesaid material facts of incurring expenses by the assessee for shooting of the film at London and claim of tax rebate of Rs.3.65 cr. Therefore, we do not find any infirmity in the decision of the ld. CIT(A). Accordingly, this ground of appeal of the Revenue stand dismissed.
Accommodation entry provided by Viking Media Entertainment Pvt. Ltd. - Addition made on the basis of retracted statement of the employees of the assessee - HELD THAT:- During the course of assessment the assessee has submitted the entire document, agreement invoices, bank statement in support of genuineness of transactions. It is undisputed fact that assessee had made the film “Baaghi” on the basis of remake of the telgue film “Varsham”. The A.O has purely relied upon the retracted statement without disproving the correctness of the supporting documents furnished by the assessee. No merit in the appeal of the Revenue.
-
2022 (6) TMI 1402
Assessment u/s 153A - Bogus exempt LTCG on sale of shares - incriminating material was found or not? - contention of the assessee is this that during the course of search no incriminating material was found from the premises of the appellant - CIT-A quashed proceedings initiated against assessee - HELD THAT:- We find that the assessee’s main contention of not having any incriminating material in the possession of the Ld. AO found during the course of search of the premises of the assessee which ought to have been the main basis of reopening of an unabated assessment and on the contrary addition has been made without due process of law has been taken into consideration in its proper perspective.
The ratio laid down in the case of Saumya construction [2016 (7) TMI 911 - GUJARAT HIGH COURT] and CIT vs. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] has been applied rightly by the CIT(A) in the case in hand keeping in view of the particular fact that even the Ld. AO admitted the fact of not having any incriminating material found during the search of the assessee’s premises.
Quashing of the proceeding by the Ld. CIT(A) initiated u/s 153A against the assessee applying the ratio laid down by the judicial forums as indicated hereinabove is just and proper so as to warrant interference.Decided against revenue.
-
2022 (6) TMI 1401
Allocation of the common expenses - CIT(A) accepting the cost of goods sold as the basis for allocation of the common expenses - assessee claiming deduction under section 10 (1) as engaged in the business of seed production, research, marketing of field and vegetable crops and wind power generation - HELD THAT:- It is pertinent to note that as rightly observed by the Ld. CIT(A) every methodology of estimation suffers from limitation and such limitations causing variations how to be smooth and on consistent application of the same principle.
CIT(A) was of the opinion that inasmuch as for the earlier assessment years the assessee adopted the basis of cost of goods sold as a reasonable method of apportionment of the agricultural and non-agricultural expenses out of the common expenses.
As both the cost of goods sold and also the turnover of different activities, to be the basis for allocation of the common expenses to have their own way and cess and variations, what is required is the following of the consistent method. Inasmuch as there is no dispute that the assessee has been consistently following the method by forgetting the common expenses on the basis of cost of goods sold, the rule of consistency demands that the same shall not be disturbed for a particular assessment year because it goes against the interest of Revenue. We, therefore, accept the reasoning adopted by the Ld. CIT(A) and hold that there is nothing wrong in the Ld. CIT(A) accepting the cost of goods sold as the basis for allocation of the common expenses.
Allowing the “provision for sales returns" - It is a fact that the assessee supplies seeds to its distributors located in the states of Kerala, Andhra Pradesh and Karnataka and after the season is complete the sales distributors identify the stock of seeds of various varieties which are not sold by the end of Ruby season of plantation.
No perversity in the findings of the Ld. CIT(A). In view of the seasonal nature of the business and also the short shelf life of the seeds, it is imperative for the assessee to take into account the quantity of unsold seats at the end of the year and the need to revalidate their further utility and to take them into stock in the next season. In the circumstances it cannot be said that the provision for sales returns is unascertained or unreasonable. With this view of the matter, we allow the contentions of the assessee and uphold the findings of the Ld. CIT(A).
Decided against revenue.
-
2022 (6) TMI 1399
Deduction u/s 80IC - substantial expansion - period of deduction limited to 10 years - definition of “initial assessment year” as contained in section 80IC(8)(v) - 10th year of claim of tax holiday - HELD THAT:- Following the decision in case of Pr. CIT Vs. M/s Aarham Softronics [2019 (2) TMI 1285 - SUPREME COURT] where the undisputed facts are that the assessee has started its business activity on 11.7.2005 falling between the period 7th January, 2003 and 1st April, 2012 in State of Himachal Pradesh and has carried out substantial expansion in the financial year 2011-12 and the year under consideration being the 10th year of claim of tax holiday, it shall be eligible for claim of deduction @ 100% and not 25% of profits and gains from its business as held by the lower authorities.
Therefore, respectfully following the decision of PCIT vs Aarham Softronics (supra) wherein as held that its earlier decision in case of Classic Binding Industries [2018 (8) TMI 1209 - SUPREME COURT] doesn’t lay down correct law, the findings of the CIT(A) are set-aside and the matter is decided in favour of the assessee and against the Revenue and the grounds of appeal of the assessee are thus allowed.
Disallowance of claim of deduction u/s 80-IC on account of exchange rate fluctuation - as submitted by A/R that the difference in the foreign exchange rate is a part and parcel of income derived from eligible business and the same should be allowed - HELD THAT:- There is always a difference between the exchange rate at the time of booking of the invoices and the subsequent realization thereof at the time of receipt of payment and thus the exchange rate fluctuation is clearly flowing from the eligible business and, therefore eligible for deduction u/s 80-IC - As decided in case of DCIT vs. Ansysco [2016 (12) TMI 1764 - ITAT CHANDIGARH] wherein it was held that where the foreign exchange fluctuations relate to the export activity carried out by the assessee, the foreign exchange fluctuations is to be treated as trading receipts/receipts from manufacturing activity and which is eligible for claiming deduction u/s 80-IC - Assessee is eligible for claim of deduction u/s 80-IC in respect of foreign exchange fluctuations. Basis the invoices placed on record and following the Coordinate Bench decisions referred supra, the claim of the assessee is allowed.
Disallowance of expenditure related to gifts, charity and donations - given the fact that the assessee was eligible for claim of deduction u/s 80-IC to the extent of 25%, the amount of disallowance was restricted to 75% - HELD THAT:- Where the claim of the assessee has been allowed @ 100% instead of 25% u/s 80IC, even where the whole of the expenses are disallowed on merits, the profits so enhanced and adjusted taking into consideration the disallowance will be eligible for 100% tax holiday and thus, the assessee shall be eligible for relief. In the result, the ground of appeal is allowed.
-
2022 (6) TMI 1398
Disallowance u/s 14A r.w.r. 8D - Sufficiency of own funds - HELD THAT:- On perusal of the balance sheet of the assessee as on 31.03.2016 we observed that the assessee has share capital and reserves and surplus as on 1.04.2015 at 145173.31 lakhs and whereas the investments during the year under consideration stood at 1957.39 lakhs.
In the case of South Indian Bank Ltd. Vs. CIT [2021 (9) TMI 566 - SUPREME COURT] it has been held that if investments in securities is made out of common funds and the assessee has availed non-interest bearing funds larger than the investments made in tax-free securities then in such cases disallowance u/s 14A cannot be made. On observing the balance sheet, we find that the assessee has sufficient own funds much more than the investments. Thus we delete the disallowance made under Rule 8D(2)(ii) made - Decided against revenue.
Disallowance relating to prior period expenses - CIT-A deleted the addition - HELD THAT:- For the assessment year 2009-10 [2014 (11) TMI 1174 - ITAT DELHI] accepted the claim of the assessee for netting off of prior period income against prior period expenses. Decided against revenue.
-
2022 (6) TMI 1397
Disallowance u/s 40A(3) - cash payment to various suppliers exceeding specified limit - assessee could not prove that the cash payment was due to exceptional or under unavoidable circumstances - HELD THAT:- Upon perusal of documents, we find that that the assessee has not made cash payment directly to the suppliers but deposited the same directly into their bank accounts. In support, the assessee has placed on record bank deposit slips.
This is stated to have been done on the request of the suppliers and the suppliers themselves have furnished the bank account details to the assessee to ensure fast receipt of payment without delay. It could be also noted that genuineness of the payment or the existence of the suppliers is not under doubt. Assessee has placed on record complete details of suppliers along with their addresses, bank details with copies of deposits slips for each of payment transferred to them.
On the basis of all these documentary evidences, we are of the considered opinion that impugned disallowance is not justified on the facts and circumstances. Hence, by deleting the same, we allow the appeal.
-
2022 (6) TMI 1396
Disallowing depreciation on Air and Water Pollution Control Machine - Assessee has claimed depreciation at 100% of the actual cost and not on the valuation as per valuation report - principle of consistency - HELD THAT:- While analyzing the entry we have to see the description of plant as a whole and not the description of various items – small and big which go to constitute the plant. We have no doubt that the plant installed was the plant of air and water pollution control which was admittedly put to use after 30th September.
On the very same plant and machinery the very same A.O. has allowed balance depreciation of 50% in A.Y.2014-15 and that order is final. In view of this fact, we see no reason for lower authorities to disallow depreciation for A.Y.2013-14 the year in question.
Here there is no question of arguing that principle of resjudicata is not applicable and hence the finding of A.Y.2014-15 cannot be said to be binding in A.Y.2013-14. On the same plant and machinery the same A.O. in one year allows depreciation at the prescribed rate of 100% and in another year on the same machinery the same A.O. totally disallows the depreciation. This is most inconsistent, and illogical. Applying the principle of consistency as is firmly established by the decision in the case of Radhasoami Satsang [1991 (11) TMI 2 - SUPREME COURT] and Quest Investment Advisor Pvt. Ltd. [2018 (7) TMI 479 - BOMBAY HIGH COURT] the depreciation as claimed by the Assessee in the year in question i.e. A.Y.2013-14 is allowable.
Disallowing Selling and Distribution Expenses - A.O. considered the expenses at higher side, therefore disallowed to the extent of 2.95% - CIT-A restrict the disallowance at 1% of such expenses - HELD THAT:- In the present case it is worth noting that, higher commission than what is claimed in this year has been allowed in earlier and later years - no justification to make disallow of 1% and thereby retain addition - CIT(A) has specifically mentioned that he has perused relevant copies of accounts and bills etc. and has not found any defect in the accounts. Similarly the department has always accepted the accounts which are duly audited. No defect of any nature has been pointed out or proved.
The claim of the Assessee, in our view, cannot be said to be unreasonable. There was neither any material or basis before ld CIT(A) to make an adhoc disallowance of 1% of expenses - Decided in favour of assessee.
-
2022 (6) TMI 1394
Addition of interest income under the head income from other sources - Assessee in process of setting up of a plant - whether assessment is bad in law as the AO has exceeded his scope and there is lack of jurisdiction? - HELD THAT:- The assessee was in the process of setting up of a plant. AO took the view that the interest income is assessable under the head “Income from other sources” and the business loss claimed by the assessee should be capitalised. Accordingly he computed NIL income under the head business. Accordingly, the AO assessed entire interest income under the head income from other sources.
CIT(A) confirmed the assessment of interest income following the decision rendered in the case of Tuticorin Alkali Chemicals & Fertilisers Ltd [1997 (7) TMI 4 - SUPREME COURT]
CIT(A) has confirmed the assessment by following the decision rendered by Hon’ble Supreme Court. Accordingly, no reason to interfere with the order passed by Ld CIT(A).
Though the assessee has raised a legal ground challenging the scope of assessment proceedings, no material was placed before me in support of the said ground. Accordingly, reject the same.
Appeal filed by the assessee is dismissed.
-
2022 (6) TMI 1393
Rectification u/s 254 - registration u/s 12A - assessee filed application to CIT in Form No. 10A - assessee filed application in Form No. 10A on 31.03.2000 for grant of registration and on the basis of this application, the procedure of registration was set in motion - HELD THAT:- We observe that the CIT issued certain notices to the assessee on the basis of the application dated 31.03.2000 and the assessee too complied with those notices. Realizing that no decision was coming from CIT and more particularly being aware of the fact that there was a change in jurisdiction from ITO, Ward-2 to Circle-1(1), the assessee refiled a copy of the original application alongwith documentary evidences on 07.01.2004.
AR has pointed out that the filing on 07.01.2004 is a mere re-filing of documents to facilitate the registration process and there was no fresh application. We observe that the application was in fact filed on 31.03.2000 and not on 07.01.2004. We also find that it is not a case of revenue that the application dated 31.03.2000 was rejected by CIT as there is no such material produced before us. In such circumstances, therefore, there is no justification to grant registration from 01.04.2003. In fact, the CIT ought to have granted registration from 01.04.1999.
Direct the CIT(E) to rectify his order and grant registration from 01.04.1999. Appeal of assessee is allowed.
-
2022 (6) TMI 1392
Scope of assessment u/s 153A - completed/unabated assessments - proof of incriminating material as found during search - addition u/s 68 - HELD THAT:- As in the case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] in its concluding paragraph has observed that, on the date of the search, the assessments for assessment years 2002-03, 2005-06 and 2006-07 already stood completed and the returns in these years were accepted u/s 143(1) of the Act and these acceptance of returns processed under Section 143(1) of the Act was construed by the Hon’ble Delhi Court as completion of assessments and this acceptance of return, according to the Hon’ble Delhi High Court, could be tinkered with if some incriminating material was found at the premises of the assessee.
In the present case AO was of the view that the assessee company was having assets of real value in lieu of shell company shares.
AO did not make any analytical investigation or recorded any specific findings. He has acted vaguely and recorded a general finding in a superficial manner touching upon large number of entities. His grievance is that in this year, the assessee has been possessing real assets which were ultimately procured by transacting with shell companies. There is no trail of those shell companies from where the assessee has raised equity capital for the first time or as to how the assessee has utilized the available funds in making investment in the assets of real value. The Assessing Officer just disbelieved the submissions of the assessee.
In assessment year 2008-09, when first time capital was raised, its genuineness was accepted by the Revneue. When over a period of time, capital has been used and an asset was created, then the source of such asset cannot be enquired into because it has already been accepted in the earlier year when capital was raised by the assessee. Apart from the above, AO has also not made reference to any seized material which has been fortified to believe that capital raised by the assessee in assessment year 2008-09, was through transactions with shell companies.
AO has failed to establish that the assessee has routed its unexplained money through shell companies. When, the Assessing Officer frames the assessment generally by making reference to various events without the help of any seized material no addition can be made u/s 153A of the Act. The assessment order does not even make any reference to the panchnama accepting the evidence found at the premises of the assessee.
CIT(A) has rightly held that there was no incriminating material seized during the course of search authorizing the Assessing Officer to make an addition in the assessment framed u/s 153A/143(3) - Decided against revenue.
-
2022 (6) TMI 1391
Rectification of mistake u/s 254 - AO made disallowance on account of application of section 14A r.w.r. 8D(2)(iii) and charged interest u/s 234A and 234B - Misc. application seeking rectification of order of the Tribunal stating that the Tribunal has wrongly presumed that in any case where there is an addition of more than Rs. 10 lakhs in a case selected under CASS prior written approval is needed from concerned CIT- HELD THAT:- Revenue by filing this Misc. application desires this Tribunal to review its own order, which in our considered opinion, the Tribunal does not have any power u/s 254(2) of the Act to review its order. The power vested with the Tribunal relates to the mistake apparent from record only.
Tribunal after considering the grounds raised in the appeal decided the appeal and passed the order. If the Revenue has any grievance against the order of the Tribunal, the Revenue can go before the Hon’ble High Court by filing appeal u/s 260A of the Act. The Tribunal cannot review its own order in the garb of power vested u/s 254(2) of the Act. Review of the order will tantamount to rehearing of the appeal which power is not vested with the Tribunal. The Tribunal after considering the submissions of both the parties has passed the order discussing the provisions of the law. In our opinion, there is no mistake much less apparent from record in the order of the Tribunal.
In the instant case the Tribunal has already given precise findings on law and facts as per all the materials / documents / evidences placed before it. Such finality of order cannot be disturbed u/s 254(2) of the Act petition in absence of any mistake apparent from record.
Hon'ble Jurisdictional High Court in the case of CIT Vs. Ramesh Electric & Trading Company [1992 (11) TMI 32 - BOMBAY HIGH COURT] has held that the scope of section 254(2) is limited to rectification of mistake apparent from record itself and not rectification in error of judgment - Misc. application filed by the Revenue is dismissed.
-
2022 (6) TMI 1388
Settlement of case by Income Tax Settlement Commission - petitioner was assessed before an authority in a different State - Writ Filled challenging Order of the Settlement Commission rejected on the ground that the petitioner was assessed before an authority in a different State - HELD THAT:- This Court in Mulberry Skills Ltd Vs. Settlement Commission [2020 (9) TMI 771 - MADRAS HIGH COURT] wherein a writ filed in identical circumstances, challenging an order of the Settlement Commission, came to be rejected on the ground that the petitioner was assessed before an authority in a different State. In that case the assessee in Karnataka, whereas, in the present case the Assessing Authority/R3, is in the State of Kerala. Writ appeal is dismissed leaving it open to the appellant to move the High Court of Karnataka if they are so advised
In this matter as well, it open to the petitioner to move the Kerala High Court, if they are so inclined. Writ Petition stands dismissed. Connected writ miscellaneous petitions are closed.
-
2022 (6) TMI 1386
TP adjustment - interest on trade receivables balances from associated enterprises by applying interest rate of 14.75% being SBI short term deposit interest rate - As per assessee if interest is charged, such interest should only be at LIBOR and not SBI short term deposit rates - HELD THAT:- In our view, in the present case, the outstanding receivables by the assessee are required to be benchmarked. It is an admitted fact that the outstanding receivables by the assessee are more than 30 days as held by the DRP.
In the light of the above, respectfully, following the decision of Zeta Interactive Systems (India) Pvt. Ltd. [2022 (6) TMI 1383 - ITAT HYDERABAD] we modify the order passed by the DRP and direct the TPO to compute by applying 6% interest rate on outstanding receivable at the year end as against 14.75% and recompute the adjustment to be made to the total income of the assessee.Appeal of the assessee is partly allowed.
-
2022 (6) TMI 1385
Denying of exemption u/s 11 by invoking the first proviso to section 2(15) - assessee argued that civil works carried out by him are not commercial in nature by mentioning that they are fund-raising activities - HELD THAT:- We are of the opinion that similar issue came for consideration before this Tribunal in the case of Zilla Nirmithi Kendra [2022 (2) TMI 1362 - ITAT BANGALORE] as held that the application of income generated by the business is not relevant consideration and what is relevant is whether the activity is so inextricably connected or linked with the objects of the trust that it could be considered as incidental to those objectives. It was contended by the assessee that the surplus funds generated from the construction business was spent towards charitable activities and therefore, the assessee is entitled for exemption under section 11(4). This contention is not acceptable. Initially, the assessee carried on the business itself which is not at all property held under trust. This activity is a business activity and the provisions of section 11(4A) is applicable. The tribunal held that there is no nexus between the activities carried on and the objects of the assessee that can constitute an activity incidental to the attainment of the objects, namely, to promote cause of charity, mission activities, welfare, employment, diffusion of useful knowledge, upliftment and education and to create an awareness of self reliance among the members of the public etc. Being so, the assessee is not entitled for any exemption under section 11. Decided against assessee. Also see M/S. NIRMITHI KENDRA case [2018 (11) TMI 117 - ITAT COCHIN]
Income tax liability - tax on income of a State - assessee being a State under Article 12 of the Constitution, is exempted from the levy of Union Tax under Article 289 of the Constitution - HELD THAT:- Assessee is not a State but it is registered as a Society and hence it is to be treated as an AOP or Trust for the purpose of Taxation.
The assessees Dakshina Kannada Nirmithi Kendra & Udupi Nirmithi Kendra are separate entities and distinct from state, having its own legal identity. It could sue or be sued in its own name. It has its own assets & liabilities. But only when the State Government decides that purpose of Nirmithi Kendra has been achieved and there is no need to continuation of this Nirmithi Kendra, then it may pass the order of dissolution of the same. In that event, the income, assets, liabilities of the Nirmithi Kendra will be vested with the State Government and not otherwise. Thus, it is apparent from the record that the Hon’ble Supreme Court has already dealt with this matter and we are completely agreeing with the argument of Ld. D.R. and the Article 289 of the Constitution cannot be applied to the assessee’s case. Accordingly, this additional ground of the assessee is dismissed.
Disallowance u/s 43B - AO disallowed an amount in respect of expenditure claimed towards labour cess outstanding - HELD THAT:- As per this Act, certain payments could be claimed as expenses in the year in which they have been paid and not in the year in which the liability to pay such sum was incurred. In other words, certain statutory expenses are allowed to be claimed in the year of payment only. In the case of this payment of it has not been paid within the due date of filing return of income and which was paid only on 21.3.2014 and the said payment cannot be allowed as in the assessment year under consideration. Accordingly, we dismiss this ground of the assessee in AY 2013-14. However, the assessee has liberty to claim on actual basis in the year in which it was paid.
Activities carried on by the assessee along with object clause of the Trust Deed - No infirmity in the order of the lower authorities in observing that the assessees’ herein carried out activities not in accordance with the object clauses mentioned in Trust Deed. Accordingly, this additional grounds in both cases are also dismissed.
-
2022 (6) TMI 1384
TDS u/s 195 - remittance of amount to the co-broker in Singapore - assessee company is an Indian broker for placement of reinsurances placed with insurers domicile in India to work in conjunction with overseas brokers - reinsurance contract is between Indian insurers and the non-resident insurance companies - HELD THAT:- From the perusal of the profit and loss account of the assessee, it is seen that it reflects only brokerage as its income. All the monies received by the Assessee from the Indian Insurance companies, i.e., Indian Cedents is held in a bank account which is classified as the “Client Money Account” and this is required to be maintained in accordance with Clause 27 of the Insurance Regulatory and Development Authority (Insurance Brokers) Regulations, 2013 read with Schedule V thereto.
The monies lying in this account are not assessee’s money and the assessee is only the trustee of the monies as per IRDAI Regulations and hence the monies are not available to it. Monies in this account are to be paid to the NRRs either directly or through co-brokers not later than 2 weeks from receipt thereof. This account is reflected in the balance sheet of the Assessee with a corresponding liability "Reinsurance Premium payable to Reinsurers" and hence to assume that said premium is Assessee’s income is fallacious.
CIT(A) has rightly held that, when assessee is merely a broker and does not have any ownership on the premium amount transferred to NRR, then there was no liability to deduct TDS for remitting the said amount to the co-broker in Singapore.
AO’s contention that assessee is DAPE of AB Singapore - The assessee has earned brokerage during FY 2015-16 (AY 2016-17) from 275 transactions for doing brokerage business with various NRRs without any involvement of AB Singapore and hence, assessee cannot be recognised as DAPE of AB Singapore.
Applicability of para 8 of Article 5 - As here it is not the case where assessee has any authority to conclude contracts on behalf of AB Singapore and conditions with respect to stock of goods are also not applicable. It is also not a case here that assessee secures order only on behalf of AB Singapore. Thus, Article 5 (8) is not applicable in the present case.
Applicability of Article 5(9) - In any case, assessee is an independent broker under IRDAI and has earned majority of brokerage (73%) from NRRs without having any transaction with AB Singapore or involvement of AB Singapore. Its activities are not wholly or exclusively devoted to AB - financial statements of the assessee for the relevant financial year i.e. FY 2015-16 have been filed. This break up of its revenue was filed before the Ld. CIT (A) as additional evidence which has been accepted by CIT (A)- as seen that assessee received brokerage from more than 76 NRRs and majority of them without involvement of AB Singapore. Thus, the condition of Article 5(9) is also not satisfied.
Thus hold:
Firstly, the assessee and AB Singapore are independent brokers facilitating payments between Cedants and NRRs.
Secondly, the premium paid by the assessee to NRRs through AB Singapore is not the income of AB Singapore, but a remittance of funds received by the assessee from insurer AICI for onward transfer to NRRs.
Thirdly, neither NRR nor co-broker AB Singapore have PE in India and thus, premium is not chargeable to tax in India.
Lastly, the assessee received its brokerage income from more than 76 NRRs and not done work wholly and exclusively for AB Singapore and hence, assessee is not a DAPE of AB Singapore.
Decided against revenue.
-
2022 (6) TMI 1383
TP Adjustment - Comparable selection - HELD THAT:- E-Zest Solutions Ltd - we deem it fit and proper to remand this issue back to the file of the CIT (A) for the purpose of considering afresh whether E-Zest Solutions Ltd is having functional dissimilarities with that of the assessee or not. The assessee is directed to produce all the financials including the Annual General Report and other documents to prove that E-Zest Solutions Ltd is functionally dissimilar to that of the assessee.
Comparables Acropetal Technologies (Seg)., ICRA Techno Analytics Ltd. and Persistent Systems & Solutions Ltd. Acropetal Technologies (Seg.) - Admittedly, once the assessee itself is making a case of inclusion of these 3 companies before the lower authorities and the CIT (A) based on the submission of the assessee is passing the order, then it cannot be stated that the assessee is aggrieved by the order passed by the CIT (A). Since the assessee is not aggrieved by the order passed by the CIT (A) with respect to inclusion of these three companies, therefore, the assessee does not have a right to challenge the order of the CIT (A) for exclusion of these companies before us.
Interest on receivables - CIT (A) fixing the interest at 8% - HELD THAT:- Outstanding receivable by the assessee from its AE, is required to be benchmarked, so as to ensure that they should not be any shifting of profit from assessee to its AE.
Application of 8% interest, though in strict sense, would be contrary to the principles of TP analysis as the transfer pricing officer was required to bring the comparable either internal comparable or the external comparable by applying CUP method and then fix the rate of interest on the delayed receivables from the AE. However, with a view to give a quietus to the issue , we are of the opinion that instead of 8% interest rate, rate of interest of 6% be applied on outstanding receivable at the year end .
In our considered opinion, the submission of the assessee that LIBOR+200 points require to be applied, cannot be upheld in these facts of the case , as it will amount to shifting of profit from assessee to its AE, which cannot be countenanced under Chapter X of the I.T. Act. Moreover, the rate of interest on loan transaction ( LIBOR + points ) cannot be equated with delayed receipt of the outstanding amount by assessee from its AE, as both stands on different premises having different purpose and nature. In fact if outstanding receivable are due for a longer period, then assessee would be required to deploy more resources either in the form of debt/equity to meet out the cash flow/working capital requirements. Ground partly allowed.
-
2022 (6) TMI 1382
Income deemed to accrue or arise in India - income from Information Technology Support Services and income from Management Services - royalty or Fees for Technical Services (FTS) - HELD THAT:- As relying on assessee's own case [2019 (7) TMI 402 - ITAT PUNE] Extant payment received by the assessee can neither be considered as royalty u/s 9(1)(vi) of the Act nor as fees for technical services and therefore, the same cannot be included in the total income of the assessee. Grounds No. 1 and 2 of the assessee's appeal are allowed.
-
2022 (6) TMI 1381
Assessment u/s 153A - incriminating material found at the time of search or not? - HELD THAT:- It is not in dispute that the impugned additions are devoid of any incriminating material whatsoever found at the time of search. There is not even a whisper of any incriminating evidence found at the time of search basis which the AO made the addition. The ratio laid down by the Hon’ble High Court of Delhi in the case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] squarely apply on the facts of the case. Appeal of assessee allowed.
-
2022 (6) TMI 1380
Condonation of delay filling appeal before ITAT - Revision u/s 263 - delay of 581 days - HELD THAT:- Once, the assessment order passed by the AO, went against the assessee, then she consulted a different professional, who advised her to file the appeal against the order of the PCIT u/s.263 which is clearly evident from the fact that in all proceedings, including assessment proceedings before the AO and revision proceedings before the PCIT and consequential assessment proceedings before the AO, she had appeared through her Authorized Representative and filed necessary details.
From the above sequence of events, it is very clear that subsequent filing of the appeal against the order of the PCIT passed u/s.263 is only an afterthought, but not a case of ignorance of law or unaware of provisions in filing of the appeal before the Tribunal against the order of the PCIT u/s.263 - Therefore, we are of the considered view that there is no merit in the reasons given by the assessee in her petition for condonation of delay in filing of the appeal.
As time and again, held that when merits and technicalities pitted against each other, then merit alone deserves to be prevailed, because, if you throw out a meritorious case out of judicial scrutiny on the grounds of technicalities, then you may deprive the right of the petitioner in pursuing their case. Various Courts have held that rules of limitation are not meant to destroy the rights of parties, they are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly, within the time bound prescribed under the Act.
Where, for the reasons beyond the control of the petitioner, the appeal could not be filed, then the Courts are well equipped with power to condone the delay, if the petitioner explains the delay in filing of the appeal with a reasonable cause. However, there is no law or mandate in the Act, to condone the delay in each and every case. But, it depends upon all facts of each case and the reasons given by the parties for condonation of delay.
One has to go by the facts of its own case and the reasons given by the petitioner for condonation of delay. In this case, on perusal of reasons given by the assessee for delay in filing of the appeal, we find that although it appears, the assessee is not deriving any benefit by not filing the appeal within the due date prescribed under the Act, but, from the contents of petition filed by the assessee, we could easily make out a case that the assessee has made an afterthought to file the appeal against the order of the PCIT u/s.263 only when she did not get a favourable order from the AO, consequent to the order passed by the PCIT u/s.263. Therefore, in our considered view, for these vague reasons, such huge delay of 581 days in filing of the appeal, cannot be condoned.
Reasons given by the assessee in her Affidavit does not come under reasonable cause as prescribed under the Act, for condonation of delay. Hence, we reject the petition filed by the assessee for condonation of delay and dismiss the appeal filed by the assessee.
........
|
