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Showing 121 to 140 of 944 Records
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2020 (8) TMI 825 - ITAT DELHI
TDS u/s 194H OR 194J - Disallowance 40(a)(ia) on account of trade offers - HELD THAT:- As relying on own case [2020 (2) TMI 1038 - ITAT DELHI] Relationship between the assessee and HCL is that of principal to principal and not that of principal to agent. The discount which was offered to distributors is given for promotion of sales. This element cannot be treated as commission. There is absence of a principal-agent relationship and benefit extended to distributors cannot be treated as commission under Section 194H of the Act. As regards to applicability of Section 194J of the Act, the Assessing Officer has not given any reasoning or finding to the extent that there is payment for technical service liable for withholding under Section 194J.
Marketing activities have been undertaken by HCL on its own. Merely making an addition under Section 194J without the actual basis for the same on part of the Assessing Officer is not just and proper. The Ld. DR’s contention that discounts were given by way of debit notes and the same were not adjusted or mentioned in the invoice generated upon original sales made by the assessee, does not seem tenable after going through the invoice and the debit notes. In fact, there is clear mentioned about the discount for sales promotion. Thus, on both the account the addition made by the Assessing Officer does not sustain.
Disallowance on account of trade price protection extended to distributors against reduction in prices of hands - HELD THAT:- As requisite confirmations were filed before the Assessing Officer. Thus, this expenditure is allowable as revenue expenditure under Section 37(1) of the Act since it has been incurred wholly and exclusively for business and same cannot be questioned by the Assessing Officer. Ground is allowed.
Disallowance of marketing expenditure incurred on account of issuance of handsets on free of cost basis - depreciation to be allowed on such handsets as an alternate plea if the free of cost handsets are held to be in the nature of capital expenditure - HELD THAT:- As decided in own case [2020 (2) TMI 1038 - ITAT DELHI] relying on the present assessment year, the assessee is engaged in manufacture, import and sale of mobile handsets. The assessee has given mobile handsets to its employees, dealers, sale personnel etc. for free of cost and thus no longer owned the said handsets. Thus, the said cost was rightly taken as business expenditure by the assessee and was rightly reduced from the inventory.
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2020 (8) TMI 824 - MADHYA PRADESH HIGH COURT
Short transition of input tax credit - transition to GST regime - HELD THAT:- The issue has been decided by various High Courts as well as by the Apex Court, this court deems it proper to direct the petitioner to file a fresh representation annexing all the judgments cited before this court within a period of seven days before the Jurisdictional Commissioner from the date of receipt of certified copy of the order - Reliance can be placed in the case of Adfert Technologies Pvt. Ltd. Vs. Union of India [2019 (11) TMI 282 - PUNJAB AND HARYANA HIGH COURT ].
Petition disposed off.
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2020 (8) TMI 823 - HIMACHAL PRADESH HIGH COURT
Interest u/s 244-A - delayed payment of excess tax paid - Monetary limit to maintain appeal - Whether ITAT was right in law in directing the department to pay compensation in the shape of simple interest on the amount due at the rate at which the assessee otherwise would have been entitled to without appreciating the fact that assessee was duly paid interest u/s 244A on delayed refund upto the date of issue of refund? - HELD THAT:- As decided in M/S. HEG. LIMITED [2009 (12) TMI 35 - SUPREME COURT] the interest on the delayed refund becomes part of the principle amount and the delayed interest includes the interest for not refunding the principle amount. Accordingly, it also includes the interest on the delayed refund.
Revenue Authorities have been directed vide Notification dated 08.08.2019 to file appeals in income tax cases before the High Court where the monetary limit is less than ₹ 1.00 crore and where it is above the said amount, that shall not be a subject matter of appeal before the High Court. But in the Notification dated 11th July, 2018, there is an exception to the effect that in certain circumstances, an appeal should be contested on merits notwithstanding the fact that the tax effect entailed is less than ₹ 1.00 crore.
Monetary limit to prefer an appeal before High Court is less than ₹ 1.00 crore, but if there is a valid question, where an Order, Notification, Instruction or Circular is to be challenged as illegal or ultra vires, an appeal could be filed before the High Court. In the present case, no such exception is available to the appellant. Appeal dismissed.
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2020 (8) TMI 822 - MADRAS HIGH COURT
Overdue interest on non performing assets - Taxability on accrual basis - Revenue recognition - HELD THAT:- The earliest among the decisions on the said point in favour of the assessee is by the High Court of Karnataka in the case of CIT Vs. Canfin Homes Ltd [2011 (8) TMI 178 - KARNATAKA HIGH COURT] . Also see THE LUDHIANA CENTRAL CO-OP. BANK LTD., LUDHIANA [2018 (11) TMI 442 - PUNJAB AND HARYANA HIGH COURT]
The Revenue, in the raised identical contentions as raised before us stating that the case of the assessee was to be dealt with for the purpose of taxability as per the provisions of the Act and not as per the provisions of the RBI Act, which was the accounting method that the assessee was supposed to follow. The contention was rejected on the ground that even under the Act, interest income had not accrued. The Court further noted that the submission of the Revenue was entirely based on the judgment of the Hon’ble Supreme Court in the case of Southern Technologies Ltd., and proceeded to explain as to what was the decision and the effect of the said decision with regard to the assessee/cooperative bank in the paragraph quoted above. The above mentioned decision in the case of Vasisth Chay Vyapar Ltd [2010 (11) TMI 88 - DELHI HIGH COURT] was affirmed by the Hon’ble Supreme Court in the [2018 (3) TMI 56 - SUPREME COURT]. In the light of the above discussion, the substantial question of law framed in this case has to be necessarily answered in favour of the assessee and against the Revenue.
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2020 (8) TMI 821 - ITAT BANGALORE
Rectification of mistake - Deemed dividend u/s 2(22)(e) - assessee company had taken a loan from another company - decision of Hon'ble Supreme Court was also not considered by the Tribunal while passing the order - HELD THAT:- We notice that the Tribunal has not examined applicability of the binding decision of Hon'ble jurisdictional High Court rendered in the case of Sarva Equity Pvt. Ltd [2014 (4) TMI 788 - KARNATAKA HIGH COURT] and also did not consider decision rendered by Hon'ble Supreme Court in the case of Madhur Housing and Development Co. [2017 (10) TMI 1279 - SUPREME COURT]. Hence non-consideration of both the above decisions would result in a mistake apparent from record as held by Hon'ble Supreme Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ltd. [2008 (9) TMI 11 - SUPREME COURT]. The learned Authorised Representative has also pointed out that the Tribunal has misquoted the share holding pattern of the assessee company by observing that 2% of shares were held by M/s. Shree Hanuman Jute Mills Private Limited which is also a mistake apparent from record.
We are of the opinion that there is merit in the petition filed by the assessee. Since the mistakes goes to the root of the matter, we are of the view that impugned order passed by the Tribunal deserves to be recalled. Misc. Petition filed by the assessee is allowed.
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2020 (8) TMI 820 - ITAT DELHI
Legality of the assessment made on non-existence entity - assessee bank got amalgamated with other bank - HELD THAT:- The issue in dispute in the instant case being squarely covered by the decision of the Hon’ble Supreme Court in the case of Maruti Suzuki Ltd [2019 (7) TMI 1449 - SUPREME COURT] we set aside the order of the Ld. CIT(A) on the issue in dispute and hold that assessment made on non-existent entity is void ab initio and hence same is quashed. - Decided in favour of assessee.
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2020 (8) TMI 819 - ITAT BANGALORE
Assessment u/s 153C - HELD THAT:- Search was carried out in the case of M/s. Adarsh Developers and incriminating documents were found and seized in the course of search and those incriminating documents had a bearing on the assessee’s total income and therefore, AO of the searched person has recorded his satisfaction and provided the seized material to the AO of the assessee.
No infirmity in the order of CIT(A) in both years as per which it was held by CIT(A) that there is no merit in this claim of the assessee that there was lack of jurisdiction and that legal requirements were not complied with and the principles of law were not applied and hence, on this issue, we decline to interfere in the order of CIT(A) on this issue in both the years and accordingly, ground No.3 is rejected in both years.
Set off of brought forward losses - addition made by the AO u/s 14A - HELD THAT:- Quantum of loss for the present year is dependent upon the decision of CIT(A) in the first appeal for AY 2010-11 in which the assessee has challenged the addition made by the AO u/s 14A. Similarly, the Assessment Order for Assessment Year 2011-12 is available and as per the same, the assessee claimed loss in this year but the AO made addition u/s 14A of the Act and determined the net loss for that year and hence, the quantum of loss for the present year year is also dependent upon the decision of CIT(A) in first appeal for Assessment Year 2011-12 which is still pending before learned CIT(A).
Quantum of carry forward of loss in the present year is also depending upon the final decision of CIT(A) in Assessment Year 2012-13 which is still pending before CIT(A). Assessment Order for Assessment Year 2012-14 and as per the same, the assessee declared a positive income which is accepted by the AO as no addition was made in this year but as against the claim of the assessee for higher amount of brought forward losses for earlier three years as noted above, the AO set off the losses determined by him as carry forward in Assessment Year 2012-13 and determined the net taxable income for this year and therefore, the final amount of carry forward of losses for the present year is also depending upon the decision of CIT(A) in the first appeal for this year and earlier three years which are still pending before CIT(A).
Not allowing MAT credit under section 115JAA - HELD THAT:- Decision of both lower authorities that no MAT credit is available but since the assessee has claimed brought forward losses in Assessment Year 2014-15 which is held to be Nil by the AO as per the AO, the amount of MAT credit available in the present year is also depending upon the result in the earlier years which are pending before learned CIT(A). Hence, we feel it proper to restore back for a fresh decision. Appeals of the assessee are partly allowed for statistical purposes.
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2020 (8) TMI 818 - ITAT MUMBAI
Expenditure on replacement of Jigs and fixtures - Revenue or capital expenditure - current repairs - HELD THAT:- We find that the issue in dispute is squarely covered in favour of the assessee as decided in TVS MOTORS LIMITED [2019 (7) TMI 750 - MADRAS HIGH COURT] claim being considered as current repairs, the same would fall under Section 31 of the Act as current repairs. Also see SUNBEAM AUTO LTD. [2012 (6) TMI 59 - DELHI HIGH COURT] - Decided against revenue.
Computing deduction u/s.80HHC - whether the ld. CIT(A) was justified in treating certain receipts as not forming part of the total turnover - HELD THAT:- Receipts from Dividends, Income from Units, Interests and Profit on sale of investments are merely income from other sources and not business income of the assessee and hence, cannot form part of profits and gains of business of the assessee. We also find that the aforesaid four receipts do not have any link in any manner whatsoever with the export activities of the assessee. We find that the deduction u/s.80HHC of the Act is given in respect of export sale proceeds that were brought into India in convertible foreign exchange and the profit derived attributable thereon alone would be eligible for deduction u/s.80HHC of the Act. We also find that the CBDT vide its Circular in Para 32.10 explaining the amendments to the Finance (No.2) Act, 1991 had categorically clarified that the receipts like interest, commission etc., do not have any element of turnover. Accordingly, the amendment was made to remove the said items from the profits of the business w.e.f. 01/04/1992 pertaining to A.Y.1992-93 onwards. Hence, the intention of the legislature is very clear and it is without any ambiguity and it could be safely concluded that the aforesaid four receipts do not form part of total turnover. We also find that the ld. CIT(A) had placed reliance on the decision of the Hon’ble Jurisdictional High Court to support its contention in the case of Kantilal Chhotalal [2000 (7) TMI 41 - BOMBAY HIGH COURT] - no infirmity in the order of the ld. CIT(A) granting relief to the assessee. - Decided against revenue.
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2020 (8) TMI 817 - ITAT DELHI
Assessment framed u/s.153A - Whether incriminating material found during the course of search? - addition on account of unaccounted purchases, undisclosed income from professional services and disallowances of preliminary expenses - HELD THAT:- There is no incriminating material found during the course of search for preliminary expenses or for payment of profession services or alleged bogus purchases. The Assessing Officer himself observed that all these issues were raised during the course of assessment proceedings and there is no specific material pertaining to Assessment Years 2006-07 and 2007-08.
Only an inference has been drawn based on subsequent inquiries relevant for the Assessment Years 2009-10 and 2010-11 in the impugned Assessment Year, otherwise there is no whisper of any incriminating material qua these assessment years. It is a well settled within the jurisdiction of the Delhi High Court that where for any of the assessment years falling within 6 years preceding the year in which search took place, the assessments which are not pending or had attained finality before the date of search, the additions can be made only on the basis of incriminating material found during the course of search qua that assessment year, i.e., the material should pertained to that Assessment Year - see MEETA GUTGUTIA PROP. M/S. FERNS ‘N’ PETALS [2017 (5) TMI 1224 - DELHI HIGH COURT]
As none of the additions made by the Assessing Officer in the impugned Assessment Years 2006-07 and 2007-08 are based on any incriminating material found during the course of search pertaining to these assessment years, and therefore, we hold that these additions are beyond the scope of assessment framed u/s.153A/143(3). On this legal ground alone, the additions made by the Assessing Officer are deleted. - Decided in favour of assessee.
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2020 (8) TMI 816 - ITAT DELHI
Unexplained jewellery u/s 69A r.w.s. 115BBE - search proceedings - certain jewellery was found from the premises of the assessee and out of which part of the jewellery was seized by the Income-tax Department. - HELD THAT:- To support the availability of the jewellery, the assessee has filed a copy of the valuation report prepared during the course of the search in calendar year 2007, which is a document of the Department having evidential value akin to a copy wealth tax return or VDIS declaration.
Not agreeing with DR that slight mismatch in the name of the jewellery articles, should not be allowed just because the jewellery weight found during search of 2007 is not supported by wealth tax returns. In the case of the assessee, the wealth of the assessee was less than the threshold amount of wealth liable to wealth tax and therefore the assessee did not file the wealth tax return.
So if the wealth tax return is not filed by the assessee, then in our opinion the inventory of the jewellery found and seized during the course of the search in calendar year 2007 and valuation report of the same prepared by the Departmental Valuer, is one of the document prepared under statutory rules and regulations and cannot be brushed aside.
Total weight of the jewellery found and seized during the course of the search in calendar year 2007 is more than the jewellery found during the current search, and therefore respectfully following the decision of the Tribunal in the case of Rajkumar B Agarwal [2019 (1) TMI 687 - ITAT PUNE] no addition of unexplained jewellery under section 69A of the Act is warranted in the case of the assessee just due to minor mismatch in the items of the jewellery found in the current search and the jewellery found during the search on 18/02/2007.- Decided in favour of assessee.
Deduction for maintenance charges paid in respect of flat let out - HELD THAT:- Since the assessee has already added back the maintenance expenses under the head “profit and gains of the business and profession” and this amount has not been claimed under that income from house property, the contention of the Assessing Officer that the assessee has claimed flat maintenance expenses in the profit and loss account is factually incorrect and thus no addition can be made on this ground. Finding of CIT(A) of confirming the disallowance is against the factual record and therefore it is set aside. Addition upheld by the learned CIT(A) is accordingly deleted. - Decided in favour of assessee.
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2020 (8) TMI 815 - ITAT DELHI
TP Adjustment - re-computation of operating margin by the TPO - TPO excluded FOREX Fluctuation, Domestic Revenue and Prior period expenses - HELD THAT:- As relying on own case we direct the AO/ TPO to consider FOREX Fluctuation as income to be in operating in nature while working out the profit margin of the appellant.
Prior period expenses - As decision of the Co-ordinate Bench in the case of Tupperware India Pvt. Ltd. [2014 (10) TMI 429 - ITAT DELHI] wherein the Tribunal has held that prior period expenses are not to be considered as part of operating expenses for the purpose of calculating the operating margin.
Domestic revenue - Same cannot be taken into account for computing the operating profit as under the TP adjustments. The transactions and revenue related to the associated enterprises are considered to determine the arm’s length price of a transaction. In our considered view, if the domestic sale were to be taken into consideration, the bench marking analyses for determining the ALP of a transaction would be skewed. We accordingly confirmed the exclusion of domestic sales.
TPA - Comparable selection - Re-characterised the business of the assessee as KPO service provider and has considered companies engaged in the business of providing KPO service in the final set of comparable companies - HELD THAT:- We have carefully considered the outsource service agreement dated 20.02.2010 entered into between the appellant with its AE. We find that the scope of work carried out by the appellant is merely data processing/ data feeding - We further find that in A.Y 2011-12, the Tribunal in assessee’s own case has held that the appellant is not a KPO.
Considering the past and the future history of the appellant, we hold that the assessee is an ITES company, therefore, comparable companies which pertain to KPO service provider are directed to be excluded.
Comparable selection - Considering the appellant as ITES service provider companies functionally dissimilar with that of assessee need to e deselected from final list.
TPO has adopted RPT filter @ 25% - RPT filter in excess of 25% company should be excluded from final set of comparables.
Infosys BPO Ltd. need to be excluded as comparable
Eclerx Services Ltd. a company engaged in the provision of KPO service and therefore cannot be regarded as an appropriate comparable for benchmarking the international transactions of provision of BPO services
Exclusion of TCS E-Serve Ltd. - Brand value associated with TCS Consultancy reflected impacted TCS E-serve profitability in a very positive manner. This inference too in the opinion of Court, cannot be termed as unreasonable. The rationale for exclusion is therefore upheld.
Depreciation on computer written off - AO proposed to disallow the same as it was not an eligible expense - HELD THAT:- We have carefully perused the assessment order, we do not find anywhere that the claim of depreciation was denied by the AO. The only observation is in respect of the denial of deduction on account of it being a capital loss. We further find that the AO’s decision is pursuant to the directions of the DRP and it cannot be said that the AO has not followed the directions of the DRP. We therefore do not find any merit in this grievance of the assessee and the same is accordingly dismissed.
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2020 (8) TMI 814 - ITAT DELHI
Penalty u/s 271(1)(c) - defective notice - Capital gain computation - addition by invoking the provisions of section 50C - HELD THAT:- We find, the AO, in the instant case, made addition u/s 50C on account of difference between the stamp duty value and actual sales consideration received by the assessee on the sale of the property. A perusal of the notice issued u/s 274 r.w. section 271(1)(c), shows that the inappropriate words in the said notice has not been struck off and the said notice does not specify the limb under which the penalty was levied.
Similar view has been taken in various other decisions relied on by the ld. Counsel placed in the paper book. Since the inappropriate words in the notice has not been struck off, therefore, following the decision of the Hon’ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] and SSA's Emerald Meadows [2015 (11) TMI 1620 - KARNATAKA HIGH COURT] where the SLP filed by the Revenue has been dismissed, we hold that the penalty proceedings initiated by the AO are not in accordance with the law and, therefore, has to be quashed. We accordingly quash the penalty proceedings and direct the AO to cancel the penalty. Since the assessee succeeds on this legal ground, the grounds challenging the penalty on merit are not being adjudicated.
Medical expenses on director disallowed - AO noted that the assessee should have entered the perquisite in the hands of Shri Raman Kumra, the non-executive director which was not done in the instant case - HELD THAT:- CIT(A), in the instant case, has passed an ex parte order due to nonappearance of the assessee. A perusal of the paper book page 50 shows that the assessee has filed an adjournment application before the CIT(A) on 24th August, 2016 seeking adjournment of the case to 2nd September, 2016. However, the same was rejected by the CIT(A) and he passed the order on 26th August, 2016. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the CIT(A) with a direction to grant one more opportunity to the assessee to substantiate its case and decide the issue as per fact and law.
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2020 (8) TMI 813 - ITAT DELHI
Disallowance u/s 14A r.w.r. 8D(2)(iii) - AO was not satisfied with this claim of the assessee and accordingly, he invoked rule 8D of the rules and made addition for 0.5% of the average value of the investment towards administrative expenses for earning exempt income in terms of rule 8D(2)(iii) of the rules - HELD THAT:- In the assessment year 2009-10, the AO recorded that the assessee made heavy investment for earning of the exempt income and expenses for running the exempt income like manpower, vehicle, telephone, use of Internet, computer and its depreciation, electricity etc. must have been incurred by the assessee. Tribunal found that the AO was not specific as to what exactly the probable expenditure in the matter. Tribunal also noted that the expenses in respect of the mutual funds were already deducted by the respective operators. Tribunal observed that the AO would have taken legal exercise to verify the correctness or otherwise of the certificate, that was issued by the asset management companies or Citibank.
In the year under consideration also the AO has recorded similar dissatisfaction and not made any attempt to carry out the exercise which was proposed by the Tribunal in assessment year 2009-10. In view of the identical dissatisfaction recorded by the AO, which has been held as not proper by the Tribunal we respectfully following the finding of the Tribunal in assessment year 2009-10, delete disallowance in dispute in instant year.
Disallowance on account of the personal expenses out of the vehicles, depreciation, telephone and telex and travelling expenses - AO has made disallowance at the rate of 1/10 of the expenses on estimate basis in view of the non-production of the logbook of the vehicles - HELD THAT:- AO has not pointed out any other defects in the vouchers under other heads of expenditure. We find that the assessee has already admitted 1/20th of the expenses against the disallowance made under the head vehicle maintenance, depreciation telephone and telex and travelling expenses, therefore we feel it appropriate to restrict the disallowance to 1/20th of the expenses under the heads corresponding to the disallowance which was made by the AO. - Appeal of the assessee is partly allowed.
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2020 (8) TMI 812 - ITAT MUMBAI
Income from House Property - Payment made to Mumbai Port Trust claimed by assessee u/s 23 - deduction of taxes levied by the local authorities - assessee is the owner of the property in question and the rent received by assessee - HELD THAT:- CIT(A) has observed that, the term local authority cannot be rigidly interpreted to mean only a local government as has been interpreted by the AO in this case. As such the Mumbai Port Trust has to be treated as a local authority u/s 23 of the Act.
It is specifically held that the payment made to the DPT is nothing to akin to the service tax levied by a local authority. CIT(A) has considered the decision of M/s Dwarkadas Marfatia and Sons Vs. Board of Trustees of the Port of Bombay [1989 (4) TMI 315 - SUPREME COURT] in which it is specifically held that the ground rent paid to the BPT in the nature of service tax levied by local authority and therefore eligible for deduction u/s 23 r.w.s. 27(vi) of the Act. Moreover, the issue has been dealt by the revenue for previous year also relevant to the A.Y. 2010-11. The claim of the assessee was allowed specifically in the circumstances when the assessment order was passed u/s 143(3) of the Act.
CIT(A) has examined number of aspects of the cases and by going through all the facts and circumstances, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Decided in favour of the assessee against the revenue.
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2020 (8) TMI 811 - ITAT MUMBAI
Levy of penalty u/s 271(1)(c) - gain on sale of shares - capital gain or business income - HELD THAT:- Assessee has offered his income from the sale and purchase of the shares transaction under the head of long/short term capital gain. AO treated the same as business income on seeing the voluminous transactions of the shares. No doubt the said finding was confirmed by CIT(A) but in fact there is no concealment of income or furnishing the inaccurate particulars of income.
The assessee showed his income from long/short term capital gain from his share purchase transaction. However, the same was not accepted and the income from the share transaction was treated as business income. These facts nowhere attract the penalty in view of the law settled in the case of Reliance Petroproduct . [2010 (3) TMI 80 - SUPREME COURT]. Taking into account all the facts and circumstances, we are of the view that the penalty is not liable to be sustainable in the eyes of law - Decided in favour of assessee.
Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT:- Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited [2020 (5) TMI 359 - ITAT MUMBAI]
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2020 (8) TMI 810 - ITAT MUMBAI
Dismissal of appeal for non-prosecution by CIT-A - Addition being part of fees received from life members,Treating entrance fees received from the ordinary members as taxable receipt, Addition towards the entrance fees received from the corporate members, Considering redemption/switch-out of units of mutual fund as business income, Credit for self - assessment tax not granted, Non-granting of deductions under Chapter VI-A from Gross Total Income, Non granting set off of brought forward unabsorbed depreciation, Not quantifying the brought forward 'long term capital loss' and 'short term capital loss' to be carried forward to subsequent Assessment Years - HELD THAT:- We find that it is incumbent upon the Ld. CIT(A) to pass an order on the merits of the case and not to dismiss the appeal for non-prosecution.
Accordingly in the interest of justice we remit the issue raised in the appeal the file of the Ld. CIT(A). Ld. CIT(A) is directed to consider the issue afresh and pass an order on the merits of the case after giving an opportunity of being heard to the assessee in accordance with law. Therefore, in the said circumstances, we are of the view that the order of the CIT(A) is not liable to be sustainable in the eyes of law, therefore, we set aside the finding of the CIT(A) on all the issues and restored the matter before the CIT(A) to decide the matter afresh by giving an opportunity of being heard to the assessee in accordance with law.
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2020 (8) TMI 809 - ITAT JAIPUR
Suppression of income - shifting of profit - Client code modification - fictitious profits/loss Addition made on account of transferring of fictitious profits/loss to other clients in the garb of client code modification - addition on basis the information received from ADIT Investigation and held that the assessee was involved in shifting out ascertained profits - HELD THAT:- AO has referred to the report of the Investigation Wing and general modus operandi - there is nothing on record in terms of any independent examination by the AO of the transactions undertaken by the assessee during the year wherein it has reported gross profits, summoning and examining the broker i.e, M/s C.M. Goenka Stock brokers Pvt Ltd and determining any involvement of assessee in such transactions.
M/s C.M. Goenka Stock brokers Pvt Ltd has also confirmed that there are certain inadvertent genuine punching errors which were modified as per guidelines laid down by SEBI vide Circular dated 6.02.2003, therefore, the puching errors happened at the broker end and not at the end of the assessee and there is nothing on record which suggest any involvement of assessee or the fact that such punching errors were done at the behest of the assessee. Accordingly, in the facts and circumstances of the case and following the decision of the Coordinate Bench in assessee’s own case [2019 (5) TMI 1794 - ITAT JAIPUR] the addition made by the AO is hereby deleted. - Decided in favour of assessee.
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2020 (8) TMI 808 - ITAT BANGALORE
TP Adjustment - correctness of determination of ALP in respect of an international transaction between the assessee and its AE of rendering software development services [SWD services] u/s. 92 - Comparable selection - HELD THAT:- The assessee rendered Software Development Services (SWD services) and marketing support services. During the previous year relevant to AY 2010-11, the assessee rendered SWD services to its Associated Enterprise [AE] thus companies functionally dissimilar with that of assessee need to be deselected from final list.
Working capital adjustment - not considering the advances received from AEs while computing the average trade payables - TPO is directed to consider the advance received from AE as trade payable and considered for working capital adjustment. It was held in the said decision that advances received from AE par take the character of trade payables which is to be adjusted against future invoice. The advance received from the AE dispenses with the necessity to borrow for working capital and has direct bearing on the profitability of the concerned. The grievance of the assessee is accordingly allowed. AO is directed to compute the working capital adjustment by considering the advances received from AE as part of the average trade payable.
Computation of OP/OC of the assessee - plea of the assessee is that OP/OC should be computed as done by the assessee by considering the retirement provision written back as part of operating expenditure - HELD THAT:- The assessee’s claim that for earlier AY its operating profit was considered after treating the provision for retirement benefit no longer required as part of operating expenses. This aspect was not verified either by the DRP/AO/TPO. Hence we deem it fit and appropriate to set aside the issue to TPO/AO for consideration of the claim of assessee with regard to past treatment of similar write back for computing its operating profit. The AO/TPO will afford opportunity of being heard to the assessee, before deciding the issue of determination of ALP in accordance with the directions contained in this order.
TDS u/s 195 - Disallowance of Project Specific Costs u/s 40(a)(i) - AO held that the assessee is liable to deduct tax at source as there are plethora of judicial precedents supporting the fact that TDS compliance is mandatory even if the expenditure is incurred by the way of reimbursements and that the payment made for right to use computer software was in the nature of royalty and hence chargeable to tax in India in the hands of the recipient non-resident - HELD THAT:- There cannot be a retrospective obligation to deduct tax at source and therefore as on the date when the assessee made payments to the non-resident for acquiring off-the-shelf software cannot be regarded as in the nature of royalty and therefore there was no obligation on the part of assessee to deduct tax at source. The payment would be in the nature of business profits in the hands of non-resident and since admittedly the non-resident does not have a Permanent Establishment in India, the sum in question is not chargeable to tax in the hands of non-resident. Consequently, the disallowance made u/s. 40(a)(ia) of the Act has to be deleted.
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2020 (8) TMI 807 - ITAT INDORE
Peak credit addition - addition by way of applying higher net profit rate - undisclosed bank account held with ICICI Bank - HELD THAT:- Physical stock and cash in hand in the regular books have been utilised for making un accounted sales. It is noteworthy that the assessee is carrying out of books sales transactions in the past also and till the date of peak bank balance on 28.2.2014 the profits earned on unrecorded sales have been offered to tax and they form part of the peak bank balance.
As against peak balance found in the bank account not disclosed in the regular books in the instant case three things have to be considered, firstly stock in hand available with the assessee, secondly cash in hand available in regular books and thirdly the undisclosed profit earned on the unaccounted sales till the date of peak balance which have been offered to tax. In the instant case the peak balance in the undisclosed ICICI bank account is much less than the total of stock in hand, cash in hand and unaccounted profits offered to tax. Considering judicial precedence find no inconsistency in the finding of Ld. CIT(A) deleting the peak credit addition.
Rejection of books of accounts - Addition made by enhancing net profit - AO applying net profit @2.5% as against the net profit disclosed by the assessee @0.73% - CIT-A deleted the addition - HELD THAT:- Action of the A.O rejecting the book results thereby invoking provisions of section 145(3) was not justified and so was also not justified in estimating the net profit on the regular turnover in the books of accounts @2.5% as against 0.73% offered by the assessee.
Application of 2.5% on undisclosed turnover cannot be equated to be applied on the regular turnover disclosed by the assessee. In the immediately preceding assessment year 2013-14 assessee has offered 0.91% as net profit rate which has been accepted by the revenue. No reason to interfere in the finding of Ld. CIT(A) deleting the addition of ₹ 67,76,734/- and we also find no justification in the action of the Ld. A.O rejecting the books of accounts u/s 145(3) of the Act. - Decided in favour of assessee.
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2020 (8) TMI 806 - ITAT MUMBAI
TP Adjustment - comparable selection - HELD THAT:- Appellant herein is engaged in the business of market development and dissemination of product information of speciality chemicals and polymers. It is also engaged in research and development activities and provides onsite technical and back-office support services. Companies functionally dissimilar with that of assessee need to be deselected from final list.
TDS u/s 195 - disallowance u/s 40(a)(i) - global support service charges paid - HELD THAT:- Payment made by the assessee cannot be considered as fees for technical services as defined under Article 12(4)(b) of the India–Singapore tax treaty and for this reason also we do not have to examine taxability of the same under section 9(1)(vii) of the Act. Moreover, it is a fact on record that the payment of global support service fee was made under the agreement which has continued from the year 2003. It is a matter of record that in the preceding assessment years though the assessee has paid global support service fees to EMCAP without deducting tax at source, no disallowance under section 40(a)(i) was ever made.
There being no difference in facts in the impugned assessment year, considering that the payment was made under the same contract, even, applying the rule of consistency, no disallowance under section 40(a)(i) can be made in the impugned assessment year. Accordingly, we delete the disallowance made by the Assessing Officer - Decided in favour of assessee.
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