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Showing 361 to 380 of 1478 Records
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2016 (3) TMI 1126
Transfer pricing adjustment - comparable selection - Held that:- 12 companies out of 13 sought by the assessee are required to be excluded from the list of comparables where as the company Bodhtree Consulting Ltd. is accepted as a good comparable of software development services provided by the assessee. Accordingly, we direct the TPO/A.O to exclude 12 companies as mentioned in para 25 of the order of the co-ordinate bench (supra) from the set of comparables and recomputed the ALP after considering the claim of risk adjustment as well as the benefit of tolerance range of + / - 5% as per the proviso to section 92C(2).
Rejection of travel expenses incurred in foreign currency from the export turnover - computation of deduction u/s 10A - Held that:- This issue is covered by the decision of the Hon'ble jurisdictional High Court of Karnataka in the case of CIT V Tata Elxsi Ltd & Others (2011 (8) TMI 782 - KARNATAKA HIGH COURT ) wherein it has been held that while computing the exemption u/s 10A, if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded from the total turnover in the denominator.
Disallowance of interest paid to Telelogic Sweden (AE) - revenue or capital - Held that:- Though the assessee has failed to establish that the acquisition of fixed assets was made out of its own free reserves, however we find that there is a substance in the alternate plea of the assessee that the addition if any can be made only in respect of addition to the fixed assets post issuance of debentures because prior to the receipt of the debenture proceeds the borrowed fund cannot be utilized for the purpose of purchasing the asset. Accordingly, we direct the Assessing Officer to verify the exact date of acquisition of the fixed assets and then to decide the issue of disallowance of interest only in respect of the fixed assets acquired post issuance of debentures or payment of which is made post issuance of debentures.
Disallowance of rent equalization amount - Held that:- We allow the claim of the assessee on this issue regarding rent equilisation amount.
Disallowance of consultancy charges - Held that:- When the DRP has already directed the Assessing Officer to afford an opportunity to the assessee to present its case and relevant evidence, then we do not find any reason to interfere with the finding of the DRP. The learned Authorised Representative has submitted that the Assessing Officer has not given effect to the directions of the DRP. Accordingly, we direct the Assessing Officer to reconsider this issue after giving an opportunity of hearing to the assessee.
Disallowance of the ratio adopted by the assessee for apportionment of the common expenses - Held that:- We find that the common expenses are invariably in the nature of head office expenses and on account of salary of the office staff and other expenses relating to head office. Therefore these common expenses have no direct or proximate relation with the ratio of the turnover. When the assessee has been consistently following the apportionment of common expenses on the basis of head count ratio then without giving any finding that this method of apportionment resulting in distortion of profits, the Assessing Officer is not justified in rejecting the same and applying some other method. In view of the above facts and circumstances and following the rule of consistency, we decide this issue in favour of the assessee and delete the addition.
Set off of unabsorbed depreciation of earlier year for computation of deduction under Section 10A allowed. See CIT vs. M/s.Biocon Ltd. [2014 (12) TMI 838 - ITAT BANGALORE ]
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2016 (3) TMI 1125
Assessment u/s 153A - Addition of interest - Held that:- We have already discussed the scope of assessment u/s 153A in the case of Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT]and RRJ Securities Pvt.Ltd. (2015 (11) TMI 19 - DELHI HIGH COURT) have arrived at the conclusion that completed assessment can be interfered with by the Assessing Officer while making the assessment u/s 153A only on the basis of some incriminating material unearthed during the course of search or requisition of document. Admittedly, no incriminating material relating to interest expenditure was unearthed during the course of search or requisition of documents and, therefore, in our opinion, the disallowance of interest was out of the purview of the assessment u/s 153A. In the absence of incriminating material, the Assessing Officer should reiterate the completed assessment
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2016 (3) TMI 1124
Condonation of delay - Held that:- Considering the material facts available on record, more specifically, the reasons of delay, as the employee, who was earlier handling the tax matters of the assessee company, while leaving the job of the assessee company, did not handover the relevant papers either to the assessee or to the next person, which caused delay, cannot be overlooked, therefore, considering the totality of facts, supported by an affidavit, and the factual matrix, by taking a lenient view, the delay is condoned.
The assessee is also directed to remain vigilant in future. Before we part with, it is made clear that the delay in the present appeal has been condoned to the peculiar facts of the case, therefore, may not be quoted as precedent.
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2016 (3) TMI 1123
Bogus purchases - Held that:- Undisputedly, the books of accounts of the assessee are audited as per the provisions of the law. There is also no dispute that the auditors have not qualified, the purchases made by the assessee during the year under consideration. It is also an admitted fact that no adverse inference has been drawn in so far as sales are concerned. We find that in the audit report, the auditors have mentioned that they examined purchase and sales register. We also find that the trading accounts are quantified.
There is no denying that the purchases of the assessee are made from small “raddiwallas” therefore, it is not practically possible to have purchases supported by bills. Secondly, it is equally not possible to furnish details of such small “raddiwallas”.
Therefore in our considered opinion, treating 15% of the total purchases as bogus purchases is unjustifiable and the action of the A.O is totally erroneous on the peculiar facts of the case in hand.There may be some room for some inflation in the purchases and the estimation of the profit by the First Appellate Authority appears to be reasonable and pragmatic. We, therefore, decline to interfere with the findings of the ld. CIT(A), all the appeals of the revenue and the assessee are accordingly dismissed.
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2016 (3) TMI 1122
Valuation (Central Excise) – Appellant PSU unit had removed goods to their sales outlets under Administrative Pricing Mechanism but revenue rejected the same and demand raised by applying Section 4(4)(b)(iii) of CEA,1944 and Section 4(1)(b)ibid in two distinct period for valuation purpose – no reason to interfere with the impugned judgment - Apex court dismissed the appeal against the decision of tribunal [2007 (8) TMI 137 - CESTAT, BANGALORE] wherein tribunal had accepted the valuation as per the assessee and set aside the demand.
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2016 (3) TMI 1121
Transfer pricing adjustment - AO rejecting functional (capacity utilization) adjustment - Capacity adjustment should be allowed in whose hands? - Held that:- The authorities below have adjusted the operating costs of the assessee in allowing the capacity adjustment. As against that, the correct course of action provided under the law is to adjust the operating costs of the comparable and their resultant operating profit. There is hardly need to accentuate that there can be no estoppel against the law. Once the law enjoins for doing a particular thing in a particular manner alone, it is not open to anyone to adopt a contrary or different approach. As the authorities below have adopted a course of action in allowing adjustment, which is not in consonance with law, we cannot approve the same. The impugned order is set aside and the matter is restored to the file of the TPO/AO for giving effect to the amount of idle capacity adjustment in the operating profit of the comparables and not the assessee.
How to compute capacity utilization adjustment under TNMM - Held that:- the capacity utilization adjustment has to be granted where there has been under utilization or lower utilization of the capacity. In the facts of the present case, we deem it appropriate to remit the issue back to the file of Assessing Officer to decide this issue afresh after considering the submissions of the assessee, documents on record and decisions of the Tribunal. Accordingly, ground no. 2 raised in the appeal is allowed for statistical purpose.
Selection of comparable - Held that:- the comparables F I Sofex Limited and Fortune Informatics Limited although were having loss in the year of comparison but whether they were consistent loss making companies has not been ascertained by the TPO before rejecting the same. A company is said to be bad comparable if it is a consistent loss making entity. Accordingly, we are of the opinion that this issue needs a revisit to the Assessing Officer. The Assessing Officer after considering the submissions of the assessee and documents on record shall decide the issue afresh in the light of the decisions discussed above. Accordingly, this ground of appeal of the assessee is allowed for statistical purpose.
Benefit of ± 5% in transfer pricing adjustment u/s. 92C(2) - Held that:- In view of the newly inserted sub-section (2A) to section 92C the assessee is not eligible to claim the benefit of ± 5% in the variation between the arithmetical mean of the assessee and the comparables and entities. Moreover, the ld. AR of the assessee has conceded that this issue is to be decided against the assessee in the light of amended provisions. - Decided against assessee
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2016 (3) TMI 1120
Prayer for revised assessment for the Assessment Year CST 2013-2014 - ‘C’ forms, ‘F’ forms and export turnover - Held that: - since the petitioner could not produce ‘C’ forms, ‘F’ forms and export turnover, the respondent had passed the impugned order without considering the same. In these circumstances, in the interest of justice, the petitioner given an opportunity to produce ‘C’ forms, ‘F’ forms before the respondent. - matter remanded to the respondent for fresh consideration - The petitioner directed to produce ‘C’ forms, ‘F’ forms’ and export turnover within a week from and on receipt of the statutory forms, the respondent directed to decide the matter afresh, on merits and in accordance with law, after giving due opportunity to the petitioner - writ petition disposed off.
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2016 (3) TMI 1119
Gain arising from sale of shares - capital gain or business income - Held that:- There is categorical finding that the Department had been accepting the stand that the assessee was consistently investing in shares and the capital gains, offered by the assessee was assessed either as long term gain or short term gain while passing order u/s 143(3) of the Act. Identical was the situation for A.Ys.2005-06 and 2006-07 framed u/s 143(3) of the Act and the same were found exempted u/s 10(38) of the Act. These findings of the ld. Commissioner of Income Tax (Appeals) as well as of this Tribunal were not contradicted before us, thus, in the absence of any contrary material, on the principle of consistency, the Department is not expected to take a Uturn and assess the income as business income. So far as the contention of the ld. DR and also the observation of the ld. Commissioner of Income Tax (Appeals) that there was a profit motive, we are not impressed by this submission, because, every investor invest the money for gain and not for loss.
In the basis of principle of judicial discipline, consistency has to be followed and once in a particular year, if any view is taken, in the absence of any contrary material, no contrary view is to be taken as finality to the litigation is also a principle which has to be followed. Before us, no contrary facts or any adverse material was brought on record by the Revenue, therefore, on the principle of consistency also, the assessee is having a good case in her favour. - Decided in favour of assessee.
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2016 (3) TMI 1118
Addition made on account of capital gain worked out by assessee on account of sale of agricultural land - nature of land - Held that:- In the present case, the purchaser of the property was a company by name M/s. Olympia Infra Tech (P) Limited which is a registered company under the Companies Act, 1956. The property sold is situated in Navalur which is a suburb in Chennai, it is situated in Kanchipuram Districtt, Tamil Nadu, located south of the city of Chennai, along the Old Mahabalipuram Road. Navalur is located between Sholinganallur and Siruseri and is around 6 kms. from Sholinganallur and comes under Thirporur taluk. The place was once a village but with the advent of Information Technology Companies and the rapid development of the Old Mahabalipuram, it has become a bustling suburban. Navalur is an upcoming residential area with many number of Flats coming up, mostly professionals from Information Technology companies renting and buying apartments. As detailed above, the property sold by the assessee is in the midst of development activities being carried out by builders in promoting housing/ Information Technology corridors, and no agricultural activities were being carried out either by the assesse nor by others in that area, the property is described as a mango grove as per the copy of the sale deed/patta, chitta adangal produced. In view of the same, the sale price received for the property has increased manifold which a normal agricultural land will not fetch. The price is in accordance with the development activities and changes happening in the nature of the land from agricultural to that of housing.
If we consider the above facts and circumstances of the present case as a whole and an overall view is to be taken in deciding whether the land was an agricultural land, we would come to a conclusion that the property cannot be considered as Agricultural land, though the circumstance that the land is classified as Agricultural in the revenue records and the Village Panchayat President, Navallur, has certified that the land is away from municipality. In our view the other circumstances pointed out above outweighs all of the circumstances in favour of the Revenue and on the basis of those circumstances, we are inclined to conclude that the property was not an agricultural land as there is no proof carrying on agricultural activities in the said land.
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2016 (3) TMI 1117
Cenvat credit - construction service, erection, commissioning and installation service, works Contract service, consultancy engineer's service, business auxiliary services and business support services - services used for erection of BTS Towers - Held that:- services of construction and works contract are excluded from the definition of input service, therefore the Cenvat Credit on the said two services are disallowed. As regard other services there is a dispute between the Ld. Commissioner and the appellant that some of the services like design service, technical testing and analysis service are in fact business auxiliary service and business support service, which needs verification by the adjudicating authority. However, irrespective of difference of service whether it is design service, technical testing and analysis service or business auxiliary service and business support service, the same for not falling under the exclusion category, therefore the credit cannot be denied on these services. Similarly, the services like erection, commissioning and installation and consultancy engineer’s service are also not excluded in the amended definition of input service. Therefore in my considered view, except the construction service and works contract service the credit on other services are admissible.
Imposition of penalty - Held that:- the issue relates to the interpretation of definition of input service and on most of the services credit is admissible and the credit is inadmissible in respect of construction and works contract service, only due to the reason that there is exclusion w.e.f.1.4.2011. In this facts and circumstances, I do not see any malafide intention on the part of the appellant. Therefore penalty of ₹ 25,000/- imposed by the lower authorities under Rule 25 is hereby set aside. - Decided partly in favour of appellant
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2016 (3) TMI 1115
Addition of deduction u/s. 80IB - computation of deduction - Held that:- As decided in assessee's own case for assessment years 2002-03, 2003-04 each of the unit had to be separately considered for working out deduction under Section 80-IA or 80-IB or 80HHC of the Act, once separate accounts were being maintained and there was no interlacing and interdependence. In the given case before us, assessee had positive gross total income. Therefore, each undertaking had to be considered separately for working out deduction under Section 80-IA of the Act, since the gross total income.
Tds u/s 195 - disallowance of commission paid to foreign agent without deduction of tax - Held that:- As noted from records that nonresidents were only procuring orders for assessee and following up payments and apart from that no other services were being rendered - Non-residents were not providing any technical services to assessee, payments made to them did not fall under category of royalty or fee for technical services under section 9(1 )(vi) . Even otherwise, since commission paid to non-residents was not taxable in India, assessee was not required to deduct tax at source while making said payments. See Faizan Shoes (P) Ltd case [2014 (1) TMI 440 - ITAT CHENNAI] - Decided in favour of assessee
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2016 (3) TMI 1114
Transfer pricing adjustment - most appropriate method for TP analysis - Held that:- It was fairly admitted that rate per hour is not available for strict comparison. It was also submitted that the assessee has not taken NASCOM rates as the basis in comparing the rate per hour. This indicates that assessee’s comparability under the CUP method is based on various assumptions of (a) estimating the offshore profits, (b) estimating number of employees, (c) estimating the working hours per employee per day per month, and then dividing the profit by so many assumptions/ numbers. This analysis of the assessee cannot be relied on as an external CUP. As can be seen from the above, there is no internal CUP which can be relied on in order to accept the CUP method. Therefore, in our view, the analysis undertaken by the assessee is not only faulty, but devoid of any data or proper analysis. In view of this, we have no option than to accept the TPO’s contention of TNMM as the most appropriate method. 5.8 Under section 92C of the Act, ALP has to be examined adopting the most appropriate method.
In view of absence of reliable data either to adopt Cost Plus Method or to analyse the data on the basis of CUP method, either internal CUP or external CUP, we are of the opinion that under given facts and circumstances of the case, TNMM is the only option available to the TPO to analyse the assessee’s transactions in order to arrive at the ALP. Therefore, we reject the assessee’s contentions on CUP/CPM as most appropriate method and approve the approach taken by the TPO for analyzing transactions under TNMM.
As the assessee contended that the reimbursement costs are included in the working , the actual working of TPO is not verifiable we restore the issue to the file of TPO to examine the computation again by excluding the reimbursement cost since it do not have any profit margin and also to consider whether the companies fail the RPT filter or not. Assessee should be given due opportunity and its working should be considered after due examination. The grounds relating to this issue are allowed for statistical purposes.
Exclusion of foreign exchange fluctuation from the working of operating margins of the company - Held that:- We direct the AO/TPO to consider the foreign exchange gain or loss as part of the operating cost or revenue, as the case may be, for both the assessee as well for the comparable companies
Risk adjustment - Held that:- As found that the differential in the margin of the assessee and the comparables is beyond 5% bandwidth recognized in proviso to section 92C(2) of the Act, then adjustment is required to be made to the reported value of the assessee’s transaction with its AE. It is ordered accordingly
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2016 (3) TMI 1113
Eligibility of deduction u/s 80P(2) - Held that:- In the present case, it is undisputed that the amount in question, which was invested in SBI to earn interest, was not an amount due to any members. It was not the liability. It was also not shown as liability in their account. This amount, which is in the nature of profits and gains, was not immediately required by the assessee for lending money to the members, as there were no takers. Therefore, the assessee had deposited the money in SBI so as to earn interest. The said interest income was attributable to carrying on the business of banking and therefore it was liable to be deducted in terms of Section 80P(1) of the Act. See Tumkur Merchants Souharda Credit Cooperative Ltd [2015 (2) TMI 995 - KARNATAKA HIGH COURT] - Decided in favour of assessee
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2016 (3) TMI 1112
Restoration of appeal - seeking recall of CESTAT order - COD application was available on the date of dismissal of its appeal but was not brought to the notice of CESTAT - Held that:- it is evident from the said CESTAT order itself that CESTAT had granted liberty to the appellant to apply for restoration of appeal on production of necessary clearance from the COD and had not set any time limit for doing so. Thus, there is force in the contention of the appellant that the appeal should be restored as the clearance from COD has been produced. We have perused the COD clearances and find that it clearly states that ‘only on the penalty aspect the appellant may approach CESTAT’. Thus the appeal cannot be ordered to be restored except for the penalty aspect. As regards the contention of Reveue that unacceptably long time has elapsed since the appeal was dismissed, we may observe that CESTAT in its order dated 28.08.2006 did not set any time limit to seek restoration of appeal on production of COD clearance. Therefore, in the light of the specific provision in the impugned order, the restoration of appeal can be permitted only on production of necessary clearance from the COD and, by necessary implication, only to the extent it has been cleared by the COD. Hence the restoration of appeal is allowed only in relation to penalty .
Waiver of pre-deposit - Held that:- it is found that the entire amount of duty stands deposited and appropriated vide the impugned order in original. Thus, the appellant has a good case for complete waiver of pre deposit of penalty and we order accordingly staying recovery of the same during the pendency of the appeal. - ROA and stay application disposed of
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2016 (3) TMI 1111
Value of appeal - Held that:- since the value of appeal is less than ₹ 15,00,000/-, the CBEC has directed the appellant to withdraw the appeal; and, therefore, permission be accorded to withdraw the appeal. - Appeal dismissed as withdrawn
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2016 (3) TMI 1110
Registration u/s 12A - assessee contended before the CIT (A) that once the registration u/s 12A of the Act was granted to an assessee even at a later date, the same was applicable for the pending assessment proceedings for the earlier assessment years - Held that:- AO was not justified in taking a stand that registration u/s 12A was not applicable to the assessee for the AYs under dispute and the condonation petition for delay in filing the application for registration u/s 12A [for the AYs under dispute] has not yet been decided by the CBDT and, therefore, the total incomes of the assessee were to be assessed as per commercial principles. The CIT (A) was also not justified in taking a similar stand that of the AO, without taking cognizance and intention of the amendment to s. 12A of the Act. If no judicious or a liberal view is not taken either by the assessing authority or the appellate authority as in the case under consideration, the very purpose for which such an amendment to s. 12A of the Act enacted,in our view, would be defeated. - Decided in favour of assessee.
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2016 (3) TMI 1109
Treatment to income from letting - income from house property or business income - Held that:- In the present case, we find that one of the main object of the assessee was to run classes and to do educational activities and the property which has been let out by the assessee was a commercial property and was also used by the person to whom it was leased, for the purpose of educational activities. We further find that Hon’ble Gujarat High Court in the case of New India Industries (1992 (8) TMI 41 - GUJARAT High Court ) and after relying on various decisions has laid down various tests to determine the head of income under which the rental income is to be assessed. The tests inter alia lays down the principle that when an assessee derives income from a commercial asset which is capable of being used as a commercial asset and the asset would not cease to be commercial asset simply because temporarily it was not put to use or was let out to other person for his use, the income derived would be business income irrespective of the manner in which it is exploited by the owner of business.
In the present case the finding of ld. CIT(A) that asset is a commercial asset has not been controverted by Revenue. In such a situation, we do not find any infirmity in the order of ld. CIT(A) and for which we also find support by the recent decision of Hon’ble Calcutta High Court in the case of Shyam Burlap Co. Ltd. vs. CIT reported in (2015 (9) TMI 852 - CALCUTTA HIGH COURT ), wherein the Hon’ble High Court after taking into consideration that when the object in the memorandum permitted the assessee to carry on business in letting out properties and when 85% of the income was by way of deriving rent and lease, the income from letting was considered as business income of the assessee. In view of the aforesaid facts and relying on the aforesaid decisions of High Courts, we find no reason to interfere with the order of ld. CIT(A) and thus the ground of Revenue is dismissed.
Addition on account of unaccounted investment u/s.69 - Held that:- . In the present case, we find that A.O. had proceeded to disallow the expenses of labour on the basis of estimation and has not brought any material on record to demonstrate that the investment were not recorded in the books of account. On the other hand, before us, ld. A.R. has submitted that the expenses having been incurred in subsequent years and has also placed on record the copy of ledger account. The aforesaid statements of the assessee has not been controverted by the Revenue. In view of the aforesaid facts and more so, when the addition has been made on estimated basis and without bringing any material on record by Revenue to prove the incurring of expenses to towards labour by assessee, we are of the view that in the present case, no addition is called for. We thus direct the deletion of addition including that which is confirmed by the ld. CIT(A). In the result, this ground of Revenue is dismissed and ground of assessee in C.O. is allowed.
Addition on account of labour expenses - Held that:- In the present case, we find that A.O. has proceeded to disallow the expenses of labour on estimation basis. He has not brought any material on record to demonstrate that the expenses were incurred by the assessee. Before us, ld. A.R. has submitted that the expenses having been incurred in subsequent years. The aforesaid statement of the assessee has not been controverted by the Revenue.In view of the aforesaid facts and more so, when the addition has been made on estimated basis and without bringing any material on record by Revenue to prove the incurring of expenses towards labour by assessee, we are of the view that in the present case, no addition is called for.
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2016 (3) TMI 1108
Grant of one opportunity of being heard - Waiver of demand – Date of hearing fixed by the Tribunal – preceding the day of hearing, communication by the appellant that he was not well – Tribunal passed the order on the fixed date in absence of appellant – Held that: - the appellant filed the letter for his non-appearance. Therefore, one opportunity to be granted to the appellant and Tribunal to fix the date for hearing – appeal disposed off – decided in favor of appellant.
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2016 (3) TMI 1107
Demand of interest - Cenvat credit wrongly availed - inputs not used for the process of manufacture of excisable goods - credit was reversed before issuance of show cause notice - Held that:- by following the dictum of judgments of Karnataka High Court in the case of CCE&ST, Bangalore Vs. Bill Forge P. Ltd. [2011 (4) TMI 969 - KARNATAKA HIGH COURT] and Madras High Court in the case of CCE, Madurai Vs. Strategic Engineering (P) Ltd. [2014 (11) TMI 89 - MADRAS HIGH COURT], the demand is not justified. - Decided in favour of appellant with consequential relief
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2016 (3) TMI 1106
Penalty under section 271D - Held that:- Imposition of penalty under section 271D is neither automatic nor mandatory as section 273B provides that no penalty is imposable if the assessee proves that there was reasonable cause for failure in complying to the provisions of the Act. A conjoint reading of sections 269SS, 271D and 273B of the Act would demonstrate that every violation under section 269SS will not culminate in imposition of penalty under section 271D. If the assessee proves that there was reasonable cause for non–compliance to the relevant provision, then penalty cannot be imposed.
In other words, in a given case, if assessee shows reasonable cause for the failure, Assessing Officer is empowered under the Act to refrain from imposing penalty. In the present case after considering the explanation of the assessee in the context of facts and material on record, we are of the firm view that the assessee has proved that there was reasonable cause for accepting the cash loans. Further, the authority concerned, while imposing the penalty has not established that the transaction relating to acceptance of cash loan is either non–genuine or not bonafide. On careful analysis of the decision cited by the learned Authorised Representative, it is found that ratio laid down therein squarely applies to the facts of the present case. In the aforesaid view of the matter, we do not see any reason to upset the order of the learned Commissioner (Appeals). Accordingly, upholding the same, we dismiss the ground raised by the Department. - Decided in favour of assessee.
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