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Income Tax - Case Laws
Showing 281 to 300 of 9304 Records
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2022 (12) TMI 1009
TDS u/s 194I - payments made to various members of the society - disallowance u/s 40(a)(ia) - Assessee had made certain payments in respect of compensation for alternative accommodation given to various members of the Housing Society under the development agreement made with the society and the members - HELD THAT:- We find that issue in dispute is squarely covered by the decision of this Tribunal in assessee’s own case[2022 (4) TMI 1482 - ITAT MUMBAI ] as held that payments made by assessee under no circumstances can be construed to be coming within the meaning of “Rent” as provided under section 194I. Thus we are of the considered opinion that compensation paid by the assessee to the tenants towards alternative accommodation not being in the nature of rent as defined in section 194I, there is no requirement for deduction of tax under the said provisions. Therefore, the disallowance made under section 40(a)(ia) of the Act cannot be sustained - Appeal file by the assessee is allowed.
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2022 (12) TMI 1008
Penalty u/s 271AAB - Validity of notice issued u/s 274 - whether the notice issued u/s 274 r.w.s. 271AAB of the Act suffers from fatal error and technical defect thereby not providing an opportunity to the assessee to plead his case? - HELD THAT:- For levying penalty u/s 271AAB AO needs to primarily issue notice u/s 274 of the Act so for initiating proceedings u/s 271AAB.
From Notice issued to the assessee we find that there is no mention about various conditions provided u/s 271AAB - AO has very casually used the proforma used for issuing notice before levying penalty u/s 271(1)(c) of the Act for the concealment of income or furnishing of inaccurate particulars of income. Except mentioning the section 271AAB of the Act in the notice, it does not talk anything about the provisions of section 271AAB. Therefore, certainly such notice has a fatal error and technically is not a correct notice in the eyes of law because it intends to penalize an assessee without spelling about the charge against the assessee.
Respectfully following the judgement of decision of R. Elangovan [2018 (4) TMI 1553 - ITAT CHENNAI] and Ravi Mathur [2018 (6) TMI 1128 - ITAT JAIPUR] wherein the matter written in the body of the notice issued u/s 274 of the Act does not refer to the charges of provision of section 271AAB of the Act makes the alleged notice defective and invalid and thus deserves to be quashed. Since the penalty proceeding itself has been quashed the impugned penalty stands deleted. Thus the assessee succeeds on legal ground challenging the validity of notice issued u/s 274 r.w.s. 271AAB of the Act. - Decided in favour of assessee.
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2022 (12) TMI 1007
Rectification of mistake u/s 254 - mistake apparent from record - non-consideration of the decision of jurisdictional High Court or of Supreme Court - submitted that ground raised by the assessee challenging the non-issuance of notice under 143(2) was not adjudicated by the coordinate bench of the Tribunal - HELD THAT:- We find that the Hon’ble Supreme Court in NTPC [1996 (12) TMI 7 - SUPREME COURT] held that legal issue can be raised for the first time before the Tribunal, so long as the relevant facts are on record in the assessment proceedings for that issue.
It is evident that the aforesaid decision of the Hon’ble Supreme Court was not taken into consideration by the coordinate bench while rendering decision in respect of ground No. 1 raised by the assessee. In ACIT vs Saurashtra Kutch Stock Exchange Ltd.[2008 (9) TMI 11 - SUPREME COURT] held that non-consideration of the decision of jurisdictional High Court or of Supreme Court can be said to be a ‘mistake apparent from record’, which could be rectified under section 254(2) - Therefore, respectfully following the aforesaid decision in Saurashtra Kutch Stock Exchange Ltd. (supra), we deem it appropriate to recall the findings rendered by the coordinate bench of the Tribunal, in respect of ground No. 1, in the exercise of the power conferred under section 254(2) of the Act. Miscellaneous Applications by the assessee are allowed.
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2022 (12) TMI 1006
Reopening of assessment u/s 147 - addition in respect of shifting of profit - HELD THAT:- As client code has been changed with a few clients which pertain to groups which are apparently related to each other and in one case related to the appellant also cannot be a mere coincidence. Such transactions cannot be held to be genuine as they fail the test of human probabilities.
The above finding of the learned CIT(Appeals) is not rebutted by the assessee by placing any contrary material on record. Therefore, see no reason to interfere in the order of the learned CIT(Appeals) and the same is affirmed. - Decided against assessee.
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2022 (12) TMI 1005
Capital gain computation - transfer expenses as per Section 48 - Transfer expenses were not incurred wholly & exclusively for the purpose of transfer of shares - HELD THAT:- In the present case, the service of M/s Signal Hills has been utilized for sale of share s of private limited company shares exclusively; further the payment has been made by banking channel as against the invoice raised by M/s Signal hills. There is nothing on record to suggest or no material brought on record by the A.O. to suggest that that transfer expenses were not incurred wholly & exclusively for the purpose of transfer of shares held by the Assessee in companies M/s. Knowlarity Communications Pvt. Ltd. (Singapore) & M/s. Knowlarity Communications Pvt. Ltd. (India). On the other hand the Ld. CIT(A) has partly agreed with the Assessee by not doubting the transaction per se.
By following the ratio laid down by the Jurisdiction High Court in the case of Kausalya Devi [2018 (4) TMI 1137 - DELHI HIGH COURT] we are of the opinion that, the expenses incurred by the Assessee is allowable transfer expenses as per Section 48 of the Act and both the Lower authorities have committed an error in disallowing the expense incurred by the Assessee. - Decided in favour of assessee.
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2022 (12) TMI 1004
Unexplained deposits in bank account - assessee stated that the money was withdrawn for the purpose of making investment in house property, however, that could not be materialized - CIT(Appeals) has treated 1/3rd of such sum being available for redeposit - HELD THAT:- As undisputedly the assessee had withdrawn out of his bank account a sum of Rs. 16,44,000/-. Out of this amount the assessee has claimed that he had deposited a sum of Rs. 10,96,500/-. Therefore, the authorities below were not justified in confirming the addition to the extent of Rs. 5,48,500/-.
Revenue has not brought any material to suggest that the money as withdrawn by the assessee was utilized for any other purpose. Even if it is presumed that 1/3rd of such amount was utilized for house-hold expenses, still the assessee had 2/3rd of such amount.
Therefore, Assessing officer was not justified in making the addition of the entire amount and the learned CIT(Appeals) was not justified in restricting the relief to the extent of 1/3rd of the total amount. Assessee appeal allowed.
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2022 (12) TMI 1003
Revision u/s 263 by CIT - unexplained credits/investment - HELD THAT:- Only assessment order is available and no other details have been filed by the assessee, which could indicate that whether any enquiry has been conducted by the Ld. AO regarding the issues raised/referred in the show cause notice issued u/s. 263 of the Act. Perusal of the assessment order shows that the Ld. AO rejected the book results and estimated the profits. Estimation of profit is an exercise, which is confined to the P & L account, but if there are any other credits in the bank account or any expenditure debited to the P & L account, which are not in the nature of expenditure then necessary enquiry has to be done about such unexplained credits/investment.
Under these given facts and circumstances of the case, we find that since the Ld. AO failed to make any such enquiry in this regard, therefore, we do not find any infirmity in the finding of the Ld. PCIT setting aside the assessment orde u/s. 143(3) to be framed afresh considering the finding given in the impugned order. Thus, all the grounds raised by the assessee are dismissed.
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2022 (12) TMI 1002
Revision u/s 263 - order barred by limitation - Whether date of dispatch be regarded as the date of the order? - HELD THAT:- As per the understanding arrived at with the postal department, a person from the said Department visits the Income-Tax Department on a daily basis for collection of posts, and who again provides a receipt to the despatch clerk in token of his acceptance of the article for post. Needless to add that the said record, evidencing the delivery of the posts to the postal department, which acts as the Revenue’s agent for delivery of it’s communications, etc., and which would be retained only by its’ dispatch section, is not available.
The despatch register also does not bear either the date of delivery to the postal department or the receipt number/date per which it stands delivered thereto. Further, it is not shown that all the Dak of 31/3/2015, which ranges from serial no. 5248 to 5301, was dispatched along with, i.e., only on 07/4/2015, several days later, which could be the case if the person from the postal department indeed did not visit the Income-tax department all this while. Further still, i.e., in case of non-visit of the concerned person from the postal department, which would require suitable confirmation in this regard being issued by the postal department, dak of the intervening days, i.e., 01/04/2015 to 07/04/2015, i.e., five working days later, would also have been dispatched on the same day, i.e., 07/4/2015, besides requiring a confirming statement from the head of the despatch section, on which he is liable to be questioned.
The deposition of the despatch clerk, who would not be only staff in that section, so that his absence, assuming so, would not stall matters, may be required to clarify matters. On this being asked by the Bench, Shri Gotru was unable to even state the name of the concerned staff/clerk; rather, stating that it would not be possible for him to do so. What, then, one may ask, is the basis to say that the IO was indeed received for despatch on 31/3/2015, the date on which it is entered in the despatch register – a grossly incomplete record, no basis for entry/s in which is shown, with even the identity of the person maintaining the same being conspicuous by its absence, and nothing to exhibit it as an authenticated document, justifying the entries therein.
This Bench has recently passed an order in Suresh Kumar Upadhya & Sons [2022 (7) TMI 123 - ITAT JABALPUR] similarly received by the assessee on 13/4/2017, i.e., 13 days later, was not considered by the Bench as liable to be construed as not made on the date of the order, i.e., 31/3/2017. This is as the date of dispatch (07/4/2017) could not by itself be regarded as the date of the order, even as explained in CIT v. Mohammed Meeran Shahul Hameed [2021 (10) TMI 363 - SUPREME COURT] as claimed by the assessee. No other material was brought on record by the assessee, so that the Tribunal held that the presumption of regularity of official acts u/s. 114(e) of the Indian Evidence Act, shall hold. There could be, it explained, several stages before the despatch of an order.
We, in view of the foregoing, hold the impugned revision order as not passed on 31/03/2015, so that it is barred by time u/s. 263(2). The same, as well as the ensuing assessment, disputed by the Revenue, accordingly, fail. It is not necessary therefore to travel to the other Grounds of the Assessee’s appeal or that by the Revenue, with, as afore-said, the arguments before us being limited to the status of the revision order as a valid order in law in view of the challenge to it being within the time prescribed by law.
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2022 (12) TMI 1001
Penalty u/s 271(1)(c) - addition was made on basis of undeclared short term capital gain for sale of property - observation made by the revenue during search - revised return was submitted and income was declared before issuance of notice u/s 153A - HELD THAT:- In annexure ‘A-21’ in search documents, the said property was not in the list. So it cannot be said the incriminating documents. The assessee revised its return and took the benefit of rectification is mistake apparent from the record. The revised return was submitted and income was declared before issuance of notice u/s 153A.
As submitted by assessee the whole issue is depicted in a manner that the said income was declared during revised return before finding by the revenue. So, considering the revised return of the assessee there is no concealment of inaccurate particular of income. He relied on the order of the Coordinate Bench of the ITAT Jaipur. [2019 (3) TMI 2008 - ITAT JAIPUR] - Further the ld. Sr. DR has not able to produce any contrary judgment related to the submission of the ld. Counsel. Accordingly, the penalty levied by the ld. is quashed. - Decided in favour of assessee.
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2022 (12) TMI 1000
Penalty u/s 271AAB - Non specification of charge - Penalty imposed on undisclosed income - surrender of income during search - As argued AO did not specify clause of section 271AAB of the Act under which the penalty was initiated i.e. whether it is for clause (a) or (b) or which clause (c) of section 271AAB(1) - HELD THAT:- As evident from the show cause notice u/s 274 read with section 271AAB of the Act that the AO was not clear i.e whether it is for the clause (a) or clause (b) or clause (c) of section 271AAB(1) - Where the ld. CIT(A) and the AO failed to note that the surrendered income is not always undisclosed income. In the present case the assessee declared income which includes surrendered income on 16.01.2017. There is no any doubt or question whether the income disclosed by the assessee is undisclosed income in the terms of definition u/s 271AAB(1) of the Act has to be considered.
On perusal of the statement recorded u/s 132(4) we observe that the income incriminating materials were found during the search is admitted and the assessee on all occasions has voluntary surrendered income by simply accepting the figure has stated by the search team.
CIT(A) and the AO failed to note that the assessee herself has explained the source of income by stating that out of cash surrender during the search at Rs. 50,000/- was withdrawn from the bank account of the assessee and Rs. 1,00,000/- was withdrawn by husband of the assessee and the remaining was past savings. We observe that as per the specific definition of undisclosed income in explanation (c) to section 271AAB of the Act.,the amount of Rs. 2,22,492/- being the cash available as consequences of her saving and gifts on various occasions cannot be considered as undisclosed income and the source of income explained by the assessee herself. In the statement recorded u/s 132(4) of the Act was not disputed or disproved by the AO.
Thus grievance of the assessee is accepted as genuine and as such the order of the ld. CIT(A) sustaining the penalty is hereby quashed. - Decided in favour of assessee.
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2022 (12) TMI 999
Disallowance of depreciation in respect of asset given on lease - the lessee has been given only right to use the asset for the terms of the lease on payment of specified lease rent for a lease period of 10 years - HELD THAT:- We find that the coordinate bench of the Tribunal in assessee’s own case in Reliance Corporate IT Park Ltd. [2019 (6) TMI 1489 - ITAT MUMBAI] while deciding similar issue in favour of the assessee following the ratio of the Hon'ble Supreme Court in the case of ICDS [2013 (1) TMI 344 - SUPREME COURT] we are of the considered view that the assessee is entitled for depreciation on the leased asset as per provisions of section 32(1) - CIT(A) after considering relevant facts has rightly deleted additions made by the AO towards disallowance of depreciation, hence, we are inclined to uphold the findings of the Ld CIT(A) and reject the ground taken by the Revenue.
Transfer pricing adjustment qua the comparables - benchmarking the international transaction pertaining to ‘provision of ITeS services’ - HELD THAT:- Companies functionally dissimilar with that of assessee need to be deselected from final list.
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2022 (12) TMI 998
TP adjustment - comparable selection - functional Dissimilarity - HELD THAT:- When an extra ordinary event takes place by way of amalgamation, then that company cannot be considered as a comparable.
Companies functionally dissimilar with that of assessee and with huge turnover need to be deselected from final list.
Interest on outstanding receivables - as submitted DRP had bench marked the international transaction by taking the Short Term deposit rate of SBI - HELD THAT:- DRP had restricted the charging of interest for the delayed period after allowing the reasonable period of 30 days. Accordingly, the Assessing Officer / TPO was directed to recompute the interest based on delay period. We do not find any error in the said finding recorded by the DRP.
Rate of interest, the assessee had raised the alternative argument of applying the Libor plus as the outstanding amount is receivable in foreign currency - In the present case, the receivable from A.E. was Rs.1,47,99,409/-, which is almost 1/8th of the total turnover of the assessee. In view of the above and respectfully following the decision of Kusum Health Care [2017 (4) TMI 1254 - DELHI HIGH COURT] we restrict the levy of interest on outstanding receivables to Libor plus 250 points. The other arguments raised by the Revenue supporting the charging of bank rate interest on the short term deposit is left open to be decided in appropriate case. Accordingly, these grounds are partly allowed.
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2022 (12) TMI 997
Income deemed to accrue or arise in India - referral fees earned by Singapore Branch Office - AO proceeded to bring to tax the referral fee treating it as FTS taxable at 10% as per Article 12 of DTAA between India and Switzerland - Whether not taxable in India u/s.5(2) r.w.s. 9(1)(i) - whether the said fee is taxable in India as fee for technical services u/s.9(1)(vii)? - HELD THAT:- As decided in assessee own case [2018 (2) TMI 969 - ITAT MUMBAI] referral activity was undertaken outside India and assessee's Mumbai branch (PE) had no role to play in the performance of the referral activity, the referral fee earned by CSDB could not be construed to be attributable to assessee‟s PE in India and thus, the DRP rightly applied Article 7 of Indo- Swiss Double Taxation Avoidance Agreement (DTAA) and held the same to be non-taxable in India. The aforesaid conclusion of the DRP is hereby affirmed. - Decided in favour of assessee.
Addition of taxability of interest income in respect of transaction between two branches of the same legal entity - HELD THAT:- As in assessee’s own case for A.Yrs. 2013-14 and 2014-15 [2019 (5) TMI 733 - ITAT MUMBAI] decided tax is not deductible from such interest payable by the PE in India to the overseas head office of a foreign bank and there is no question of making disallowance of such interest expenditure by invoking the provisions of section 40(a)(i) - Decided against revenue.
MAT computation u/s 115JB - whether the provisions of Section 115 JB of the Act per se would be made applicable to a foreign company? - HELD THAT:- We find that Article 7(1) of the treaty prescribes that profits that were attributable to the PE would be taxable in India. The manner in which the AO had applied the provisions has the effect of not only bringing to tax the profits that are not attributable to the PE but also has the effect of taxing the other items not in accordance with the provisions of other Articles of the treaty.
Five items of income earned by CSSB which was sought to be covered by the ld. AO within the ambit of MAT are not included in the books of accounts drawn up by CSMB in India. Once a particular item is not at all included in the books of accounts which are drawn up in India, how can the same be subject matter of applicability of provisions of Section 115JB of the Act. Reliance in this regard is placed on the decision of Apollo Tyres Ltd. [2002 (5) TMI 5 - SUPREME COURT]. When the accounts of CSMB do not incorporate the aforesaid five items of income earned by CSSB, the department cannot impose MAT provisions by using the fiction which is contrary to the Banking Regulation Act, 1949. The provisions of Income Tax Act cannot require CSMB to re-write the accounts in a manner different than what is stipulated in the Banking Regulation Act, 1949. Hence, even on merits, the question of applying the MAT to CSSB’s income does not arise. Accordingly, the ground No.4 raised by the Revenue is dismissed.
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2022 (12) TMI 996
TP Adjustment - Software development segment - Comparable selection - application of turnover filter of Rs.200 crores - HELD THAT:- Bangalore Bench of the Tribunal in the case of BORQS Software Solutions Pvt. Ltd.[2021 (10) TMI 1351 - ITAT BANGALORE] has considered various judicial pronouncements on this issue including that of the Hon’ble High Courts wherein divergent views were taken with respect to the application of different filters. It was held by the Tribunal that application of turnover filter is justified on the basis of classification of companies as per the report of Dun and Bradstreet. As regards the specific plea of the learned DR that if turnover of a comparable company is less or more than 10 times the turnover of the assessee, then it cannot be considered as a comparable company, we find this plea was rejected in the case of Northern Operating Services Pvt Ltd. [2019 (2) TMI 1707 - ITAT BANGALORE]
We direct the AO / TPO to apply appropriate upper turnover filter and exclude above mentioned seven companies from the list of comparables.
R Systems International Limited - The issue is restored to the files of the AO / TPO. The AO / TPO is directed to exclude M/s R Systems International Limited, if it is found the said company has prepared financials for the year ending December 2016. It is ordered accordingly.
TP adjustment made under the MSS segment needs fresh TP analysis by the TPO. Accordingly, the issues restored to the files of the AO / TPO for conducting fresh TP study analysis in support services segment of the assessee. It is ordered accordingly
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2022 (12) TMI 995
TP Adjustment - comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee need to be deselected from final list of comparables.
Working capital adjustment - HELD THAT:- We Direct the Ld.TPO to delete the (-)ve Working Capital Adjustment computed under the software development segment.
Working Capital Adjustment computed under ITES segment, we direct the Ld.TPO to compute the working capital on actuals. Assessee is directed to provide all necessary details for both the segments in order to compute the Working Capital Adjustment on actuals by the Ld.TPO.
Recomputation of deduction u/s. 10AA reducing telecommunication expenses from the export turnover - HELD THAT:- Both sides submitted that this issue is no longer resintegra in lieu of the decision of Hon’ble Supreme Court in case of HCL Technologies Ltd. [2018 (5) TMI 357 - SUPREME COURT] Accordingly, we direct the Ld.AO / TPO to compute the deduction u/s. 10AA of the Act in accordance with the principles laid down by Hon’ble Supreme Court in case of HCL Technologies Ltd.(supra).
Disallowance of software expenses u/s. 40(a)(i) - HELD THAT:- AO disallowed the expenses by relying in case of Samsung Electronics Co. Ltd [2011 (10) TMI 195 - KARNATAKA HIGH COURT] The Ld.AR submitted that this decision has been reversed by Hon’ble Supreme Court in case of Engineering Analysis Centre of Excellence Pvt. Ltd [2021 (3) TMI 138 - SUPREME COURT] we direct the Ld.AO/TPO to verify the invoices raised against which the payments were made by assessee in the light of principles laid down by Hon’ble Supreme Court in the above referred case. The Ld.AO is directed to consider the claim in accordance with law by granting appropriate.
Belated remittance of PF/ESI - HELD THAT:- As addition deleted by the Ld.CIT(A) by following the decision in case of CIT vs. Sabari Enterprises [2007 (7) TMI 169 - KARNATAKA HIGH COURT] and in the case of Spectrum Consultants India (P.) Ltd. [2013 (7) TMI 414 - KARNATAKA HIGH COURT] Subsequently, we note that in case of ESSAE TERAOKA PVT. LTD. [2014 (3) TMI 386 - KARNATAKA HIGH COURT] is followed same decision and deleted the disallowance made.
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2022 (12) TMI 994
Exemption u/s 11 - Receipt of donations - claim of the assessee was rejected on the ground that exemption u/s 11 of the Act is available to a trust which has been registered u/s 12AA and as the assessee is not registered u/s 12AA the authorities treated the assessee as a regular assessee and did not grant exemption u/s 11(1)(d) - HELD THAT:- The expression “income” for the purpose of Income Tax, includes voluntary contribution received by a trust created wholly or partly for charitable or religious purposes or an institution established wholly or partly for such purposes.
Any donation received by any trust or institution has to be treated as income. However, the scheme of Income Tax u/s 11 to 13 of the Act provides a mechanism for assessment of income from property held by a charitable or religious trust. A perusal of Section 11(1)(d) of the Act would indicate that if any voluntary contribution is being received by a trust or institution with a specific direction that such contribution will be part of corpus then, it will be credited to a separate account meant for construction of building or any infrastructure. In other words, it can be treated as a capital contribution towards the corpus of the trust.
Perusal of Section 12A of the Act would indicate that before claiming any exemption from taxability of income u/s 11 or 12 of the Act, the assessee should be registered with the Income Tax Department u/s 12A of the Act. Further Section 12AA of the Act provides a procedure for grant of registration. Since the assessee is not having any registration, the grant/non-grant of such registration is not in dispute, therefore, there is no necessity to make reference to Section 12AA
If we accept the proposition as canvassed by assessee, then the whole scheme of assessment of charitable institution/trust contemplated in Section 11 to 13 of the Act would become redundant. The arguments of the ld. Counsel for the assessee is that, it is not necessary that a trust/institution should be registered for availing benefit of Section 11(1)(d) of the Act. If an institution has demonstrated that donations were received towards corpus then automatically, it will become a capital receipt which is not taxable. However, we do not agree with these submissions because nowhere in the Act this proposition has been provided.
Decided against the assessee.
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2022 (12) TMI 993
TP Adjustment - Comparable selection - assessee has sought exclusion of Motilal Oswal Investment Advisor Pvt. Ltd. primarily on the ground that it is functionally different from the assessee and secondly it does not qualify RPT filter - HELD THAT:- Notably, while examining the functional similarity of the aforesaid comparable in assessee’s own case in assessment year 2009-10, the Tribunal had excluded this company as a comparable. However, while deciding Revenue’s appeal [2018 (4) TMI 1510 - DELHI HIGH COURT] the Hon'ble High Court, remanded the issue relating to comparability of this company to the Tribunal for fresh consideration. The reasons being, the Hon'ble High Court was of the opinion that the formula of percentage of RPT being equal to expenses paid to related parties divided by total expenditure multiplied by 100 cannot be applied only to one particular entity without applying the same procedure in respect of all other comparables, as, it may lead to a distorted picture.
As could be seen from the foresaid observations of the coordinate Bench, assessee’s contention that the RPT filter should be applied only with respect to the total expenditure did not find favour with the Bench. Thus, the claim of the assessee that this company was functionally different and also failed the RPT filter was rejected by the Bench. Basic facts relating to the comparability of this company, being more or less identical in the impugned assessment year, respectfully following the aforesaid decision of the co-ordinate Bench in assessee’s own case, we hold that Motilal Oswal Advisors Pvt. Ltd. being comparable to the assessee cannot be excluded.
IM+Capitals Ltd., formerly known as Brescon Corporate Advisors be excluded from the list of comparables.
M/s Keynote Corporate Services Ltd be excluded as functionally different from the assessee.
Working capital and risk adjustment - We agree with the assessee that considering the nature of risk undertaken by the assessee as well as the comparables, adjustment in specific cases has to be made to the margin of the comparables on account of risk profile, however, burden is entirely on the assessee to furnish required details regarding the risk profile of the comparables to ascertain the nature of risk being undertaken by the assessee and the comparables. Since, the required details regarding the risk profile of the comparables are not properly gone into either due to lack of details furnished by the assessee or otherwise, we are inclined to restore this issue to the Assessing Officer for considering assessee’s claim of risk adjustment after examining the material on record and in accordance with settled legal principles. Needless to mention, the Assessing Officer must provide reasonable opportunity of being heard to the assessee.
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2022 (12) TMI 992
Expenditure on Land Acquisition for Border Out Posts (BOPs) - Expenditure as a part of project cost during the course of business - expenditure for land acquisition and connection charges for electrification at Border Out Post for the client (Ministry of Home Affairs) during execution of Indo Bangladesh Border Fencing work (IBBE ) - assessee was executing the Border Out Post (i.e. BOP) works for the Ministry of Home Affairs (Gol) - as argued AO has admitted that no title of land was executed in the assessee’s favour and expenses were incurred on behalf of the third entity i.e. Ministry of Home Affairs thus added the same stating that it is of capital nature and not allowable as revenue nature - HELD THAT:- As evident that the amount incurred for land acquisition and the assessee Company was executing the Border Out Post (BOP) Works under Phase-11 as per MOU signed in between NPCC and MHA (GoI) on Dt. 14.07.2010. Serial No. 17 of MOU clearly state that, "Land Acquisition for al l BOPs will be made by NPCC and cost of the land acquisition shall be included in the cost estimates. BSP will provide necessary help to NPCC in land acquisition" and serial No.7 of the same MOU clearly mentioned that "NPCC shall hand over the BOPs and allied works after their completion to the designated agency nominated by MHA".
The expenditure incurred towards land acquisition compensation was part and parcel of the contact agreement and the same was included in the project cost. The expenditure on service connection charges were paid to Tripura State Electricity Board (TSEB), Agartala for border flood lighting works in the state of Tripura as per MOU signed between assessee and MHA (GoI) dt. 30.09.2009 and the estimates of the expenditure were revised in the 22nd/2010 HLEC meeting held on 17.09.2010 vide agenda item No. IBB/9. It is also evident that the assessee has booked the corresponding income against these expenses in its turnover in the profit and loss account during the year under consideration.
Hence, the expenditure done on behalf of MHA (GoI) as project cost was not asset creation in the name of the assessee company, and cannot be treated of capital nature. Therefore on the basis of above facts and legal position, we decline to interfere with the order of the ld. CIT(A) in deleting the addition. Appeal of the Revenue is dismissed.
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2022 (12) TMI 991
TP Adjustment - selection of MAM - lower authorities justification in rejecting the Cost Plus Method as the most appropriate method for purpose of benchmarking the international transactions relating to purchase of raw material - HELD THAT:- The ratio laid down in the case of Vishay Components India (P.) Ltd [2019 (2) TMI 1449 - BOMBAY HIGH COURT] wherein, it was held that when a particular method is accepted by the Department to determine the arm’s length price of international transactions in the absence of change of facts, the Department should benchmark the international transactions adopting the same method as most appropriate method.
In the present case also, it is not the case of the Department that there is difference in facts warranting a different view in the current assessment year regarding the selection of the most appropriate method for the purpose of benchmarking the international transactions.
We are of the considered opinion that the AO/TPO/DRP was not justified in rejecting the Cost Plus Method adopted by the assessee for the purpose of benchmarking the international transactions in the absence of difference in the facts of the case. Therefore, we remand the matter to the file of the AO/TPO with a direction to compute the arm’s length price of the international transactions by adopting the Cost Plus Method as the most appropriate method de novo after affording due opportunity of being heard to the assessee company.
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2022 (12) TMI 959
Deduction u/s 80P(2)(d) denied - interest earned deposits kept with Goa State Co/op. Bank Ltd. - HELD THAT:- The Pune Bench in Rena Sahakari Sakhar Karkhana Ltd. [2022 (1) TMI 419 - ITAT PUNE] held that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of a co-operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a co-operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The assessee is also a Cooperative society registered. Ergo, respectfully following the decision of the Division Bench, we overturn the impugned order and direct to grant deduction u/s.80P(2)(d) on the amount of interest earned from Co-operative Banks. Appeal allowed.
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9911796707
