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Showing 121 to 140 of 1478 Records
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2016 (6) TMI 1361 - ITAT MUMBAI
TP Adjutment - software development services provided to the Associated Enterprises (AE) - selection of TNMM as MAM by TPO - comparable election - HELD THAT:- Infosys Ltd. should not be considered as part of comparables as it is a giant in the area of development of software and it assumes all risks, leading to higher profit and cannot be compared with the company which is a captive unit of its parent company assuming only limited currency risk. See AGNITY INDIA TECHNOLOGIES (FORMERLY GENBAND PVT. LTD.) VERSUS INCOME-TAX OFFICER, [2010 (11) TMI 852 - ITAT DELHI]
Bodhtree Consulting Ltd there is no doubt that margin of this company has been fluctuating from (-) 50.4% to (+) 79.13%. Further perusal of the above chart shows that turnover of the company remain in the range of 10 crore to 22 crores but margin of the said company has been fluctuating between (-) 50.4% to (+) 79.13%. Such a huge variation in the margins despite the fact that scale of operation did not change that much, shows that the business circumstances of the assessee company were not normal and said company indeed passed through unusual or abnormal business circumstances. Under these circumstances, we do not find this company as a safe and reliable to be used as a comparable company.
Sonata Software Ltd. related party transactions to sales ratio is more than 40% during the A.Y. 2009-10, but keeping in view request of Ld. CIT-DR and to meet ends of justice, we find it appropriate to send it back to the file of the AO/TPO to compute the same properly and exclude it from the list of comparables if ratio of RPT to Sales is found to be more than 25%. The assessee shall be free to raise any legal or factual issue with respect to this comparable. The AO/TPO shall give adequate opportunity of hearing to the assessee to submit requisite details and evidences and case laws in support of its claim, which shall be taken into consideration on objective basis before deciding this issue afresh.
Working Capital Adjustment - MERCER CONSULTING (INDIA) PVT. LTD. VERSUS DCIT, CIRCLE-2, GURGAON [2014 (7) TMI 715 - ITAT DELHI] held that the issue of working capital would be relevant only when there is a situation of inventory remaining tied up or receivables being held up. The assessee contests the non-granting of the working capital adjustment - This issue could not have been brushed aside by the lower authorities in the manner as has been done in this case. Ample details have already been filed by the assessee before lower authorities, therefore, in all fairness and justice we send this issue to the file of the AO/TPO who shall consider this decision and shall give an adequate opportunity of hearing to the assessee to file further details and evidences as may be required and considered appropriate by the assessee and shall decide this issue afresh on objective basis after considering the details and evidences as may be placed on record by the assessee.
Addition on account of notional interest on the alleged overdue receivables from AEs of the assessee company - HELD THAT:- Tribunal for the earlier year and find that identical issue has been decided by the Tribunal in A.Y. 2007- 08 [2016 (1) TMI 1415 - ITAT MUMBAI] we find that no independent source was searched or relied upon by the him. It is a fact that the agreements with the third parties did not contain any clause for charging interest for delayed payment. Thus, the matter has its own peculiarities. The assessee has entered in to agreement with the AE.s. and value of the transaction will have to be decided. The arguments of factoring of delayed payment in the value of service cannot be brushed aside especially when it is found that the OPTC margin earned by the assessee was 29.41 % and it was quite higher than the parties compared with i.e.app.15% - in the interest of justice interest rate should be fixed at LIBOR+200 points for the delayed payments received by the assessee from its AE.s. for the period as mentioned in the agreements.AO is directed to recalculate the interest amount accordingly - we send this issue back to the file of the AO/TPO with the directions to follow the order of the Tribunal for A.Y. 2007-08 and to compute upward adjustment to be made accordingly on account of interest.
Denial of deduction u/s 10A in respect of Bangalore unit acquired on slump sale - HELD THAT:- The position of law is very clear the benefit of deduction shall not be denied to the assessee merely because the undertaking was acquired by the slump sale. The deduction is attached to the undertaking and therefore should be allowed to the assessee provided other prescribed conditions are fulfilled. But there has been some confusion with regard to appreciation of factual evidences. It has been shown to us that complete evidences including agreement and other various evidences were available. But AO has mentioned in the assessment order that the agreement filed with the AO was not eligible and it was not properly stamped. No proper discussion has been made by the DRP also in its order. Under these circumstances, we find it appropriate to send this issue back to the file of the AO to enable him to make proper verification of facts and evidences to analyze the other prescribed conditions. The deduction cannot be denied merely on the ground that the unit was acquired under slump sale. The AO shall give adequate opportunity of hearing to the assessee before deciding this issue afresh. Thus, with these directions this issue is sent back to the file of the AO with the directions given above.
Reducing foreign currency expenses only from export turnover and not from total turnover while calculating the amount of deduction u/s 10A in respect of the other units - HELD THAT:- Respectfully following the decision of the Tribunal in assessee’s own case for the earlier years [2016 (1) TMI 1415 - ITAT MUMBAI] , we decide this issue in favour of the assessee and direct the AO to follow the orders of the earlier years. The AO should reduce the amount of impugned expenses incurred on foreign currency from export turnover as well as total turnover for computing the amount of deduction allowable u/s 10A. Thus, this ground is allowed.
Short credit of TDS, advance tax and as assessment tax - HELD THAT:- No serious objection was raised by the Ld. DR, in this regard. The AO is directed to give opportunity to the assessee to submit requisite details and evidences with regard to correct amount of TDS, Advance Tax and Self Assessment Tax paid by the assessee and after considering the same the AO shall give credit for the correct amount as per law and facts. This ground is treated as allowed for statistical purposes.
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2016 (6) TMI 1360 - CESTAT CHENNAI
CENVAT Credit - duty paying documents - credit disallowed on the ground that certain debit notes were issued by the appellant - HELD THAT:- There is no material on record to show that through the modus operandi of issuance of the debit note, the appellant had enabled the supplier to take refund of the duty element if any. The appellant when explains that the debit notes do not relate to duty element and the Cenvat credit was availed on input and input service used in the manufacture, in absence of evidence to the contrary, the adjudication fails - Credit allowed - appeal allowed - decided in favor of appellant.
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2016 (6) TMI 1359 - ITAT CHENNAI
Assessment of trust - assessee has paid the money to an approved institution engaged itself in charitable activity, the same is eligible for deduction while computing the taxable income - HELD THAT:- When the AO received a letter from the recipient-society claiming that they have no bank account in Axis Bank and the only one bank account is maintained with State Bank of India, this Tribunal is of the considered opinion that the AO ought to have given an opportunity to the assessee to respond to the above claim of recipient-society.
Since such an opportunity was not given to the assessee, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the AO after furnishing a copy of the letter dated 24.03.2014 to the assessee. The orders of the lower authorities are set aside and the Assessing Officer is directed to furnish a copy of the letter dated 24.03.2014 said to be received from the Society For Welfare Of The Handicapped Persons, Durgapur, Kolkata and thereafter decide the issue after giving reasonable opportunity to the assessee. It is made clear that this Tribunal is not commenting upon the merit of the addition made by the AO and it is for the AO to decide the same in accordance with law without being influenced by any of the observation made by the CIT(Appeals) and made by this Tribunal in this order. - Appeal of the assessee is allowed for statistical purposes.
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2016 (6) TMI 1358 - ITAT BANGALORE
TP Adjustment - comparable selection- TPO accepted TNMM adopted by the assessee-company as well as cost + margin as a profit level indicator but rejected the transfer pricing study report - HELD THAT:- Company functionally dissimilar cannot be compared with a company engaged in rendering of ITeS services. Depending on the skills required to perform ITES the comparability has to be done
Co-ordinate bench of Mumbai the case of Symphony Marketing Solutions India Pvt. Ltd. vs. ITO [2014 (2) TMI 83 - ITAT BANGALORE] wherein the Tribunal held that since the company has very low salary cost and outsourced most of its work and therefore, was held to be incomparable.
Extraordinary event like merger and de-merger will have an effect on the profitability of the company in the financial year in which such event takes place.
Allowability of benefit of tolerance margin - Deduction of +/– 5% under proviso to Sec.92C - HELD THAT:- An Explanation was added to section 92C(2) with retrospective effect from 1/10/2009. This Explanation was considered by IHG IT SERVICES (INDIA) (P.) LTD. [2013 (5) TMI 309 - ITAT DELHI] wherein it was held that the benefit of 5% tolerance margin would be available only if the variation is within the tolerance margin. Once the variation exceeds the tolerance margin, then no benefit of tolerance margin would be available to the assessee. Respectfully following the decision of the Special Bench, we direct the AO/TPO to grant the benefit of tolerance limit of 5% if the variation after passing the consequential order to the Tribunal is less than 5% and accordingly, the issue is restored to the file of the AO.
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2016 (6) TMI 1357 - ITAT CHANDIGARH
Accrual of expenses - Addition on account of financial assistance u/s 43B - Whether it is not a statutory liability and a voluntary liability agreed by the assessee to be paid to the families of the deceased employees of the assessee? - HELD THAT:- The assessee was liable to provide financial assistance to the family of deceased employees, the calculation of the quantum being also specified in the notification. So far there is no dispute. But we find that theAR has not been able to demonstrate before us with the help of evidence that such liability arose during the year. It has not been shown as to why liability on account of aforesaid four persons was created during the year. If the persons were deceased employees, no evidence to that effect was brought on record.
No basis of the calculation of the financial assistance provided to the four employees was brought on record. During the course of hearing before us, a specific query was raised by the Bench regarding the allowability of the claim of the impugned provision and the basis of the same in response to which the Ld. AR referred to the notification reproduced above and the voucher place at Paper Book page no. 21-24 and 14 respectively detailing the employees on account of whom the provision was created. This, we find, does not establish that the impugned provision of expense had accrued during the year and pertained to the year under appeal. Since the basic ingredient for allowability of an expense / claim, has not been satisfied by the assessee, the onus for which undoubtedly lies on the assessee, we hold that the provision created for financial assistance is not allowable - Decided against assessee.
Addition on account of service charges on gunny bags payable to Food and Supplies Department, Govt. of Haryana being payable for procurement of gunny bags by the said department - HELD THAT:- The facts in the present case, we find, are identical to that in the preceding year [2016 (6) TMI 1356 - ITAT CHANDIGARH] no document evidencing the creation of the charge was produced before us in the present case also, despite a specific query raised by the bench in this regard. The issue is covered by the order of the Hon’ble ITAT Bench Chandigarh in the preceding year and therefore respectfully following the same we hold that the provision for service charge is not allowable. - Decided against assessee.
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2016 (6) TMI 1356 - ITAT CHANDIGARH
Allowability of provision for service charge payable on gunny bags. - assessee created provision in the books for service charges on gunny bags payable to Food and Supplies Department, Govt. of Haryana - based on objection of C&AG - allowability u/s 37 - HELD THAT:- An item of expenditure should be entitled to deduction u/s 37 it must have been incurred for discharging a liability actually existing during the accounting period. The mere setting apart of an amount to meet a liability cannot bear the character of expenditure till the liability becomes real.
The provision of 1% on account of service charges of certain gunny bags procured from DFS Haryana, has been created by the assessee amounting to ₹ 20.11 lacs with no underlying agreement supporting the creation of the charge. No such document has been produced before us, even after a specific query raised by the Bench in this regard.
Clearly the assessee has not been able to establish incurring the liability in the first place. Therefore no question arises of incurring the expenses what to say about creating a provision of the same. The provision of section 37(1) are very clear and it is settled law that onus is on the assessee to establish having incurred any expenditure. Having failed on this ground alone, we therefore hold that the assessee is not entitled to claim allowance of expenditure on account of service charges. The basis of arriving at the figure of 20.11 lacs has also not been provided by the assessee. Therefore we hold that the assessee is not entitled to any allowance on account of provision created for service charge and we therefore uphold the order of CIT(A) in this behalf. - Decided against assessee.
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2016 (6) TMI 1355 - CALCUTTA HIGH COURT
Income from sale of shares - Capital gain or business income - assessee is interested in contending that he is an investor whereas the revenue is interested in contending that the assessee is a dealer in shares - HELD THAT:- Whether the assessee is a trader in shares or is an investor is essentially a question of fact. That question has been decided by both the CIT(A) and the learned Tribunal by holding that the assessee is an investor. That finding has now become final. We cannot interfere with the finding. Therefore, the questions formulated do not really arise for determination so far the aforesaid finding is not disturbed
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2016 (6) TMI 1354 - CALCUTTA HIGH COURT
Subject to deposit of ₹ 80 lakhs with the respondent financier within one week from date without prejudice to the rights and contentions of the respective parties, there will be an order of injunction restraining the respondent from transferring the securities under the rupee loan agreement dated 19th April, 2011.
Adjourned for three weeks.
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2016 (6) TMI 1352 - GUJARAT HIGH COURT
Demand u/s 201(1)/201(1A) - inquiry is time barred - period of limitation - HELD THAT:- The admitted facts emerging from the record are that as per sub-section (3) of section 201 which stood prior to 1.10.2014, the initiation of action for failing to deduct tax at source is barred by limitation. The amended sub-section(3) of section 201 with effect from 1.10.2014 enlarges the period of limitation to seven years which, as held by this Court in the case of Tata Teleservices [2016 (2) TMI 414 - GUJARAT HIGH COURT] cannot be applied retrospectively. For such reason, the petitions are allowed. The impugned notices dated 15.9.2015 are quashed. Petitions disposed of accordingly.
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2016 (6) TMI 1351 - ITAT CHENNAI
Exemption u/s 11 - charitable activities u/s 2(15)- income earned from auditorium - treatment of excess receipt over expenditure on the auditorium owned by the assessee - advancement of any other object of general public utility - whether a particular activity is in the nature of business or not ? - activities incidental to main objective - HELD THAT:- Supreme Court in the case of Thanthi Trust [2001 (1) TMI 80 - SUPREME COURT] held that the trust carried on the business of a newspaper and that business itself was held under trust. The charitable object of the trust was the imparting of education which falls u/s. 2(15) of the Act. The newspaper business was incidental to the attainment of the object of the trust, namely that of imparting education and the profits of the newspaper business are utilized by the trust for achieving the object of imparting education. In this case, there is no such nexus between the activities carried on and the objects of the assessee that can constitute an activity incidental to the attainment of the objects, namely, to promote cause of charity, mission activities, welfare, employment, diffusion of useful knowledge, upliftment and education and to create an awareness of self-reliance among the members of the public etc.
We are therefore, of the opinion that the observations of the Supreme Court must be understood and appreciated in the background of the fact in that case and should not be extended indiscriminately to all cases. Being so, we are inclined to hold that the assessee is not entitled for any exemption u/s. 11 of the I.T. Act.
Depreciation u/s 32 - HELD THAT:- Also assessee is not entitled for depreciation on the opening balance of written down value of the assets in the asst. year under consideration, which were purchased in earlier years and the cost of those assets have already considered as application of income in earlier asst. year while granting exemption u/s.11 of the Act. This issue is squarely covered by the decision of the Tribunal in the case of M/s. Kongunadu Arts & Science College Council [2015 (11) TMI 1119 - ITAT CHENNAI] - Decided against assessee.
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2016 (6) TMI 1350 - BOMBAY HIGH COURT
TP adjustment - selection of comparable - functinal similarity - inclusion of 'SIRO Clinpharm Pvt. Limited' as a comparable - Tribunal while upholding the inclusion of 'SIRO Clinpharm Pvt. Limited' as a comparable, was justified in directing the Assessing Officer to make certain adjustment on account of different business model adopted by the said comparable - HELD THAT:- We are unable to understand how the Revenue could have any grievance to the impugned order of the Tribunal on the above account. Further, we find that the impugned order has relied upon the decision of the Tribunal in ITO Vs. M/s. Zydus Altana Healthcare Pvt. Ltd. [2010 (4) TMI 883 - ITAT MUMBAI] wherein on similar facts the Tribunal had restored the issue to the Assessing Officer to make suitable adjustment in view of M/s. Siro Clinpharm Pvt. Ltd. who conduct clinical trials on its own. No substantial question of law.
Depreciation on the assets of the assessee's Ankleshwar plant - the said assets had not been used by the assessee company - HELD THAT:- It is agreed position between the parties that the issue stands concluded against the Revenue in respect of same respondent – assessee relating to assessment year 2001-02. No substantial question of law.
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2016 (6) TMI 1349 - ITAT DELHI
Penalty u/s 271(1)(c) - rejection of books of account and made an estimate of profit rate of 4.9% to work out an addition - HELD THAT:- Estimate made by the AO, there is nothing to show that the assessee suppressed the income in any manner. This divulges that the addition has been made only on the basis of estimate made by the AO, which again stood reduced by the tribunal.
It is a settled legal position that when income is estimated, then, there can be no question of imposing penalty u/s 271(1)(c) of the Act. The Hon’ble Delhi High Court in CIT vs. Aero Traders Pvt. Ltd. [2010 (1) TMI 32 - DELHI HIGH COURT] has held that no penalty u/s 271(1)(c) can be imposed when income is determined on estimate basis.
Similar view has been taken in Harigopal Singh vs. CIT [2002 (8) TMI 65 - PUNJAB AND HARYANA HIGH COURT] and in CIT vs. Subhash Trading Company [1995 (11) TMI 37 - GUJARAT HIGH COURT]. In view of the foregoing precedents including the one from the Hon’ble jurisdictional High Court, it is apparent that when the bedrock of instant penalty is the estimate of income, the same cannot be sustained. Overturning the impugned order order for the deletion of penalty. - Decided in favour of assessee.
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2016 (6) TMI 1348 - ITAT DELHI
Disallowance of repairs and maintenance expenses - as per AO assessee had claimed 30% deduction on account of ‘Income from house property’ and, hence, repairs and maintenance expenses were not allowable - assessee earned rental income - claim of the assessee is that this property was not used for letting out and, hence, no disallowance be made to this extent - HELD THAT:- As the necessary details of expenses incurred in respect of the properties let out are not specifically available, it expedient to set aside the impugned order and restore the matter to the file of AO for restricting the deduction qua the properties used for the business purpose. The AO is directed to first identify the properties let out fully or partly and, then, disallow the repairs and maintenance expenses relatable to such let out properties. Needless to say, the assessee will be allowed a reasonable opportunity of being heard.
Addition of Administrative expenses - AO observed that the business income of the assessee from ‘Fun and fair game’ - HELD THAT:- AO has made an ad hoc 25% disallowance of expenses by observing that the revenue from the business was much less than the expenses incurred. Apart from that, he has not disputed the factum of the assessee having actually incurred these expenses for the purpose of its business. Simply because the business receipts are less, cannot be a reason to disallow the expenditure incurred otherwise for the purpose of business.
Disallowance of depreciation - Since the assessee was carrying on the business of Game and toy machines, the AO allowed depreciation on Games and toy machine - HELD THAT:- Once there are assets including Plant and machinery, vehicles, computers, etc., which are being used for the purpose of business from earlier years, the AO cannot disallow depreciation on such assets simply by presuming that such assets must not have been used for the purpose of business. AO has admitted that the assessee carried on the business activity of Game and toys. Unable to appreciate as to how this business under the given circumstances can be carried on without the plant and machinery, vehicle, computers, etc., all of which are necessary items for carrying on the business activity. In my considered opinion, the authorities below were not justified in restricting the depreciation on ad hoc basis when the assets were used for the business purpose. - Addition to be deleted.
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2016 (6) TMI 1347 - UTTARAKHAND HIGH COURT
Taxability of Amounts paid to the non-resident assessees /foreign companies for providing various services in connection with prospecting, extraction or production of mineral oil - Fees for technical services under Section 44D read with Explanation 2 to Section 9(1)(vii) OR payments be taxable on a presumptive basis under Section 44BB - HELD THAT:- As appellant would submit that the questions of law which are raised in this appeal are to be answered in favour of the appellant in view of the judgment of Apex Court in the Case of Oil And Natural Gas Corporation Limited vs. Commissioner of Income Tax and Another [2015 (7) TMI 91 - SUPREME COURT]. There is not much dispute about this proposition.
In such circumstances, the appeal is only to be allowed. Accordingly, we allow the appeal and answer the questions of law in favour of the appellant.
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2016 (6) TMI 1346 - ITAT CHENNAI
Disallowance of interest on borrowed funds - scrutiny assessment - direct nexus between the borrowed funds and the investment in the sister concerns - amount advanced to sister concerns was more than the amount borrowed, the entire interest was disallowed holding that the entire interest payment was attributable to the funds diverted to the sister concerns - Held that:- Even if we take for a while, that return benefit is not an essential requirement and it is sufficient if the holding company (assessee) has a deep interest in its subsidiary, the assessee should able to prove that the assessee’s subsidiary sister companies are sick or not having regular funds and are in dire need of help from the appellant company.
They being the group concerns, they could have independently approached the banks for funds on the basis of the financial strength of the assessee company. The same package of loans could have very well been obtained from the banks and individuals by the sister concerns, instead of routing through the assessee company and dumping the interest burden on it. Though, the revenue cannot dictate how the business houses should behave, but onus is on them to explain the circumstances, more so when the assessee wants to claim the expenditure attached to it. Therefore we hold that the assessee has failed to establish any commercial expediency for advancing interest-free loans to sister concerns. Under the above facts and circumstances, the disallowance made by the Assessing Officer was rightly confirmed by the CIT(A) and thus, we uphold the order of the ld. CIT(A) and dismiss the ground raised by the assessee.- Decided against assessee.
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2016 (6) TMI 1345 - ITAT MUMBAI
Allowability of depreciation of capital asset acquired for the purpose of carrying out charitable activities and set off of deficit of earlier years against the income of current year - Held that:- The assessee is claimed for setting off of excess income over expenditure against the deficit of earlier years is correct. No illegality or infirmity in the order passed by DIT. See COMMISSIONER OF INCOME-TAX VERSUS INSTITUTE OF BANKING PERSONNEL SELECTION [2003 (7) TMI 52 - BOMBAY HIGH COURT] - Decided against revenue.
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2016 (6) TMI 1344 - ITAT DELHI
Assessment u/s 153A - seized material to reassess the total income on the basis of search operation - Held that:- As no incriminating material unearthed during the search to proceed u/s 153A, addition made in both the cases u/s 153A read with section 143(3) is not sustainable in the eyes of law, hence deleted. See CIT vs. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT]. Consequently, both the appeals filed by the assessee are hereby allowed.
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2016 (6) TMI 1343 - SETTLEMENT COMMISSION, CUSTOMS AND CENTRAL EXCISE, MUMBAI
Smuggling - high value gold jewellery (studded with diamonds) - Baggage Rules - Jurisdiction of Settlement Commission to allow re-export of the clandestinely smuggled goods - Section 127B of the Customs Act, 1962
Held that:- It is noteworthy that since 26-10-1989, while Section 123(2) contained ‘gold’ and ‘manufactures thereof’ items ‘diamonds’ and ‘manufactures thereof’ were deleted and this position has remained so till date - The applicants further drawing attention to the seized goods, both from the person of Ms. Vihari Sheth and from the business premises of Shri. Jiten Sheth, state that as per Department’s valuation, value of gold in the total value of seized jewellery is around 8% showing pre-eminence of diamonds in the value of ornaments seized.
The jewellery has to be treated as 'manufacture of diamonds’ and out of the ambit of Section 123(2). In CCE, New Delhi v. Connaught Plaza Restaurant (P) Ltd. Case [2012 (12) TMI 149 - SUPREME COURT], Hon’ble Apex Court held that the common parlance test was the extension of general principle of interpretation of statute for deciphering mind of law maker. It was an attempt to discover intention of legislature from language used by it, keeping in mind, that language is at best imperfect instrument for expression of actual human thoughts.
Maintainability of application - Held that:- The Bench observes from the SCN that Revenue has not proposed any alternative classification of the goods in the SCN and therefore it cannot be said that the issue before Commission involves ‘interpretation of classification under Customs Tariff Act, 1975” and therefore bar as laid down under proviso to Section 127B(1) would not be applicable to the instant case - the Bench finds that the objections raised by Revenue relating to maintainability of the applications filed by the applicants are not sustainable and hence rejected.
The Bench upholds the allegations levelled against Ms. Vihari Sheth and Shri Jiten Sheth in the SCN dated 27-1-2014 relating to premeditated acts to smuggle dutiable goods into the country without payment of appropriate duties, and to facilitate its sale. The Bench holds that the goods totally valued at ₹ 2.45 crores and ₹ 2.05,21,000/- respectively are liable for confiscation under the provisions invoked in the SCN and Ms. Vihari Sheth and Mr. Jiten Sheth liable to penalties under the provisions invoked in the SCN.
The Bench settles the case of the applicants under Section 127C(5) of the Customs Act, 1962 - The immunities to the applicant/co-applicant are granted under Section 127H(1) of the Act.
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2016 (6) TMI 1342 - ITAT PUNE
TPA - Comparable selection - Rejection of a comparable company (Genesys International Corporation Ltd.) selected by the assessee in the transfer pricing study - Held that:- The Department cannot accept or reject comparables to suit its convenience. If the Department has chosen to include Genesys International Corporation Ltd. as comparable on the ground that GIS is a notified ITES in the case of companies which are engaged in the business of processing information relating to insurance claims and the company engaged in the business of voice based call centre services, the Department cannot raise plea that the Genesys International Corporation Ltd. is functionally not comparable in case where the assessee is in the business of developing and exporting of computerized embroidery design, emblem, art works, drawings, badges, and other allied services. Thus, in the facts of the case and the decisions of Tribunal discussed above, we accept the contention of the assessee and remit the file back to the TPO to consider Genesys International Corporation Ltd. as one of the comparables. Accordingly, ground nos. 2 and 4 raised in the concise grounds of appeal are allowed.
Capacity utilization - 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.
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2016 (6) TMI 1341 - GUJARAT HIGH COURT
Disallowance being 70% of the expenditure in respect of Physicians' Sample - allowable business expenses - Held that:- Perusal of the orders on record would demonstrate that the issue is primarily in the realm of appreciation of material on records. Even the Assessing Officer allowed part of the expenditure, thereby indicating that he would not averse to the expenditure in the nature of free samples being related to assessee's business. He only disputed the quantification. When Commissioner of Income Tax (Appeals) concurrently found sufficient reason to accept the assessee's claim, we do not see any question of law arising.
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