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Showing 181 to 200 of 1831 Records
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2017 (5) TMI 1657
Quashing of clause 9.5.1.2 of the excise policy and to set aside the notice dated 17.03.2017 inviting tenders - Validity of appointment of respondent No.3 as an exclusive L-1BF licensee - Haryana Liquor License (Amendment) Rules, 2017 - Held that:- The Financial Commissioner had the power to make rules regulating the number of wholesale licences in the State of Haryana as a composite whole. It did so by making rule 24(i-eeee), which prescribes that there would be only one wholesale licence for the State of Haryana.
The Financial Commissioner has by the impugned provisions in the policy and the rules protected the revenue by providing for a single wholesale licence. He cannot be faulted for that. The total revenue including licence fees and the levies under the Act in the previous Excise Year 2016-17 was only about ₹ 22 crores, whereas, under the present policy, the revenue already generated is over ₹ 62 crores - This brings us to the petitioners’ apprehension. It was submitted on behalf of the petitioners that the amended rule and the stipulation in the policy that there would be only one wholesale licence in the entire State of Haryana adversely affects the rights of the petitioners and those similarly situated. The prejudice, according to them, is that that the sole wholesaler can pick and choose and dictate commercial terms at will. If there were more licensees the competition would safeguard the sellers and buyers interests as well.
The State, we will presume, even in the trade and business of liquor must act fairly and impartially and not arbitrarily. We will presume that in granting liquor licences and permits the State cannot adopt a pick and choose policy and must throw the field open to all those who are otherwise eligible. In the present excise policy, the State has permitted every eligible party to bid. It has not discriminated against or in favour of any party. The essential criteria for the appointment of the wholesaler is the value of the bid - The challenge to the policy and to the rule on the ground that the appointment of a sole wholesaler in respect of an L-1BF Licence would adversely affect the commercial interests of those who he deals with or those who must deal with him, such as, the petitioners is not well founded. As we noted earlier, theoretically it is possible that the commercial interests of certain dealers and manufacturers will be affected, in as much as, the sole wholesaler will have the choice of who it would deal with. The sole wholesaler would also be entitled to grant better facilities to some of the dealers. That, however, would not render the policy illegal - The contractor is not bound to consider the application of every party for the supply of material required for the construction of the buildings. The contractor is entitled to obtain the material from such parties as it desires and on such terms and conditions that the contractor desires. The suppliers of the material would not be entitled to compel the contractor to afford them an opportunity of supplying the material. The rules of the game that apply to a State or an instrumentality of the State do not apply to such contractors.
The State is entitled to deal in liquor to the exclusion of all others. We will presume that when it parts with its privilege it is bound to consider the claims of all the parties who are eligible to acquire this privilege. Once the State parts with this privilege and vests it in a private party, the rules of the game that apply to the State cease to operate. The licensees are thereafter entitled to operate the licences as they please so long as they do not violate any provision of law and so long as they abide by all the terms and conditions of the licences. The State Government may impose conditions upon the licensees. However, so long as the State does not place any such restriction, the licensee is entitled to procure the stock from and sell it to any party and on any terms and conditions, save those stipulated in the policy or the licence.
Petition dismissed.
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2017 (5) TMI 1656
Disallowance of deduction u/s 80-IC - job work got done outside the specified Area, i.e., Himachal Pradesh, and on the trading receipt from sale of unused papers - Held that:- Tribunal while adjudicating the appeal relating to the Assessment Year 2010-11 had relied upon its earlier decision in the assessee's own case for the Assessment Years 2005-06 to 2009-10, holding that it squarely covered the issue in the present case and as a result, dismissed the appeal filed by the revenue.
As submitted by the parties that the said order was subject matter of appeal before this Court wherein, this Court had remanded the matter to the Tribunal for fresh adjudication after affording an opportunity of hearing to the parties [2017 (4) TMI 1062 - PUNJAB & HARYANA HIGH COURT]. Accordingly, the present appeal stands disposed of in the same terms.
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2017 (5) TMI 1655
Deduction u/s 80P(2)(a)(i) in respect of interest earned on fixed deposits with Nationalised Banks - Held that:- In the present appeal is against the claim of deduction under section 80P(2)(a)(i) of the Act on interest income received from fixed deposits with Bank of India, HDFC Bank, State Bank of India and Development Credit Bank.
The said issue is squarely covered by the order of the Tribunal in ITO Vs. Niphad Nagari Sahakari Patsanstha Ltd. [2015 (1) TMI 1004 - ITAT PUNE] wherein the Tribunal had held that the assessee is entitled to claim deduction under section 80P(2)(a)(i) on the interest income received by it on bank fixed deposits. The relevant findings of the Tribunal are reproduced at page 9 of the appellate order but are not being reproduced for the sake of brevity. Following the same parity of reasoning, we find no merit in the grounds of appeal raised by the Revenue and hence the same are thus dismissed. - Decided against revenue.
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2017 (5) TMI 1654
Penalty levied u/s 271AAA - assessee makes declaration of the undisclosed income in the statement recorded u/s 132(4) admitting the undisclosed income - assessee has not specified the manner in which such income has been arrived as well as not substantiated the manner of earning such income - Held that:- It is not in dispute here that the assessee has admitted in his statement u/s 132(4) of the Act during the course of search and paid due tax thereon. It is also an uncontroverted facts that assessee has never been asked to substantiate the undisclosed income declared.
Assessee has categorically denied and that he has been asked to substantiate the manner of earning undisclosed income and unless asked assessee did not have any opportunity to explain it. Revenue also could not explain that specific question was asked and assessee did not furnish the answer. The condition regarding specifying and substantiating the manner in which undisclosed income has been earned is always difficult for the assessee for obvious reason that no records of such income are kept in a meticulous manner.
Generally, no person usually keeps the evidences of undisclosed income which has not been recorded in the regular books of account. The Hon'ble Gujarat High Court in CIT Vs. Mahendra C. Shah [2008 (2) TMI 32 - GUJARAT HIGH COURT] has held that assessee having declared the value of diamonds in his statement u/s 132(4) and paid due tax thereon, he was entitled to immunity from penalty according to explanation 5 to section 271(1)(c) of the Act. - Decided in favour of assessee.
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2017 (5) TMI 1653
Reopening of assessment - non supply of reasons to believe - Held that:- In case the assessee demands the reasons recorded for reopening of assessment the Assessing Officer is duty bound to supply the reasons and then decide the objections if any filed by the assessee against the Notice issued under Section 148 prior to the framing of reassessment. Thus in the facts and circumstances of the case, when this issue has not been raised and considered by the authorities below, we remit this issue to the record of the CIT (Appeals) for adjudication as per law. Since the issue of validity of the reopening has been remitted to the record of the CIT (Appeals) therefore the other grounds raised on merit are also remitted to the record of the CIT (Appeals) for consideration and adjudication on merit. - Decided in favour of assessee for statistical purpose.
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2017 (5) TMI 1652
Penalty u/s 271D r.w.s. 274 - assessee has received loans from certain creditors in cash, amounting to ₹3,00,000/- - assessment under section 153C r.w.s. 153A - Held that:- If at all to believe the contentions of the assessee, what the assessee did with those advances of ₹.50,000/- + 2,00,000/- stated to have received from Shri Natesan so that the assessee was put to take loan for repayment of the above amount.
As rightly noticed by the authorities below, the assessee has no pressure from Shri Natesan to get back the money. The first advance was given on 01.04.2007 and second advance on 31.12.2007. The same were settled on 31.03.2008. When Shri Natesan could wait for one whole year, i.e., from 01.04.2007 to 31.03.2008, it is not palatable that he would not have waited for another 3 to 4 days, if the assessee had to repay the amount by cheque. It could be clearly established that no such emergency/urgency existed for the assessee to take loan in cash. Since the assessee having failed to establish such material evidence to show that there was urgency for the assessee to avail of loan in cash, the amount taken from the relatives clearly fall under the provisions of section 269SS of the Act and definitely would not come under the exception clause of section 271D.
It is not the case of the assessee that the assessee was under bankruptcy or under any emergency situation; she borrowed money from the relatives to meet the expenses or so. In this case, the situation of the assessee was to repay that money she already received from the so called Shri Natesan. To repay the money of ₹.2,50,000/-, which was already received by the assessee, what was the necessity of taking loan of ₹.3,00,000/-, was not at all explained by the assessee either before the Addl. CIT during the course of penalty proceedings or before the ld. CIT(A) during the appellate proceedings or even before the Tribunal. - decided against assessee
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2017 (5) TMI 1651
Capacity under-utilization adjustment - assessee has claimed the adjustment on account of under-utilisation of capacity and particularly on account of cost of employees and cost of rental which remained unutilized - Held that:- The assesseehas not given the proper details as well as evidences to show the level of capacity of utilization of the assessee as well as comparable companies. The learned Authorised Representative of the assessee has submitted that it was not feasible for the assessee to give all the details of the comparable companies regarding capacity utilization. We do not find any merit in the claim of the assessee when the assessee failed to produce the relevant details regarding the level of capacity utilization of each and every comparable company in comparison to the assessee's capacity utilization. Therefore in the absence of necessary details and evidences, this ground of the assessee's appeal is rejected.
TPA - determination of Arm's Length Price (ALP) - Comparable selection - turnover and size are relevant factor for selecting the comparable companies for the purpose of determining the ALP however a proper parameter of turnover has to be applied - Held that:- Tribunal is taking a consistent view of applying the turnover filter of 10 times of assessee's turnover on both sides for selecting the comparable companies. Further the RPT is also a relevant factor for selecting comparable companies though the comparable price should be uncontrolled and unrelated however it is not possible to find a company without having RPT therefore, in due course of consideration and in analyzing this issue, this Tribunal has taken a view that a tolerance range of 5% to 25% can be considered depending upon the availability of the comparable companies. Accordingly, in normal course 15% of RPT can be a tolerance range for selection of comparable entity. Since the TPO has not applied and also not given the details of turnover as well as RPT of the comparable. Therefore we are of the considered opinion that the entire issue of TP Adjustment requires a fresh consideration at the level of TPO.
Provision towards Long Term Retention Bonus - AO held that this amount is a provision and accordingly he has added back the said amount to the income of the assessee - Held that:- We find that even if provision is made towards the accrued bonus on account of length of service of the employee then the actual payment may be made in the subsequent year or in future but the liability cannot be treated as uncertain. Therefore in view of the decision in the case of Bharat Earth Movers [2000 (8) TMI 4 - SUPREME COURT] the provision made towards accrued long term retained bonus is an allowable claim. Accordingly, the Assessing Officer is directed to allow the claim of the assessee after verification of the quantum which has accrued as a bonus to the employees though the payment may be paid in future.
Rent equilisation provision - AO found that the amount is a provision and cannot be recognized as a certain liability - Held that:- Though the assessee has debited a sum of ₹ 11,86,981 as part of rent expenditure however, no record has been furnished by the assessee to show how this liability has arisen and what is the basis of this liability. We further note that the assessee has even not filed the rent agreement under which this liability is claimed to be discharged by the assessee in future. In the case on hand, the assessee has failed to produce the primary evidence on the basis of which the liability has been recognized and provision is made. Accordingly, we do not find any reason to interfere with the orders of the authorities below qua this issue.
Disallowance under Section 14A r.w. Rule 8D on account of interest as well as common administrative expenses - Held that:- We find that when the assessee has not shown any interest expenditure in the profit and loss account then no disallowance is called for on account of interest expenditure under Section 14A - As regards, the administrative expenditure that the assessee has claimed that it has not incurred any expenditure for earning the exempt income however, we find that in the investment portfolio of assessee there is a significant change and movement. The balance as on 31.3.2007 was ₹ 30,85,00,000 which has been reduced to ₹ 7,06,00,000 which shows a significant change in the investment portfolio and the assessee has taken a decision to sell the securities/shares during the year under consideration. The decision of making fresh investment or selling the existing investment is taken at a very high level of management therefore it cannot be accepted that the assessee has not incurred any expenditure for earning the dividend income. Accordingly, when there is a change and reshuffling in the investment portfolio then the indirect expenditure is bound to be incurred which is allocable to the tax exempt income - we confirm the disallowance made by the Assessing Officer on account of administrative expenses and delete the disallowance made by the Assessing Officer on account of interest expenditure.
Disallowance of provision towards creditor - AO noted that the assessee has not complied with the TDS provision as required under Section 40(a)(ia) - Held that:- As regards the telephone expenses payable to Tata Teleservices, we find that though the amount was not paid till date however if the amount was accrued during the year then the claim of expenditure cannot be disallowed on the ground of non-deduction of TDS as the TDS provisions are not applicable on such expenditure. Accordingly, this amount of ₹ 20,00,000 is an allowable claim.
As regards Office Rent, since the assessee has not complied with the TDS provisions, therefore the provisions of Section 40(a)(ia) are attracted on this amount.
As regards repairs and maintenance payable to two different parties, again the Assessing Officer has recorded that the assessee has not complied with the provisions of TDS. Since the Assessing Officer has not discussed relevant provisions under Chapter XVII of IT Act under which the TDS is required to be deducted in respect of these amounts of expenditure therefore it is not clear how the provisions of Section 40(a)(ia) are applicable on this amount. Accordingly, we direct the Assessing Officer to properly examine the relevant provisions of Chapter XVII qua these payments on account of repairs and maintenance and then decide the issue.
As regards the staff welfare expenses, the Assessing Officer has disallowed this amount on the ground that it is a provision on estimate basis but no estimation has been provided by the assessee - if an amount has accrued in respect of staff welfare expenses then the payment of the same in future cannot be a ground for disallowance of expenditure. However, since the assessee has not provided the necessary details to show that this expenditure is already accrued on account of staff welfare, therefore we do not find any reason to interfere with the order of the Assessing Officer qua this issue. Appeal of the assessee is partly allowed.
TPA - Comparable selection - Held that:- Assessee is in the business of providing software development services, thus companies functionally dissimilar with that of assessee need to be deselected from final list.
Regarding software expenditure disallowed by treating the same as capital in nature - Held that:- We find that the details and nature of the expenditure is mentioned in the invoice / bills. However, the Assessing Officer has not conducted a proper enquiry and verification regarding the nature of expenditure incurred by the assessee from the invoices / bills. Accordingly in view of the facts and circumstances of the case, we set aside this issue to the record of the Assessing Officer for re-adjudication of this issue after verification of the invoices / bills as well as in the light of the decision of the Special Bench of the Tribunal in the case of Amway India Enterprises v. Dy. CIT [2008 (2) TMI 454 - ITAT DELHI-C].
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2017 (5) TMI 1650
Maintainability of the appeal before the ITAT in view of CBDT Circular No. 21 of 2015 dated 10.12.2015 - whether the tax effect has to be computed taking into account the surcharge and education cess? - Held that:- On combined reading of section 2(43) of the Act which defines tax to means income-tax chargeable under the provisions of this Act, Section 4 which is a charging section which states that income-tax shall be charged only where the Finance Act enacts that income shall be charged for any assessment year at rate or ratesspecified therein and Clause 2 of the Finance Act 2005 which provides that income-tax shall be charged at the rates specified in Part I of the First Schedule and such tax shall be increased by a surcharge for purposes of the Union calculated in each case in the manner provided therein, it is crystal clear that tax includes surcharge. Surcharge forms part of tax and is nothing else but tax. The surcharge therefore has to be included while computing the tax effect.
Coming to the issue of whether education cess is part of tax and whether the same has to be included while working out the tax effect clause 2 (11) of the Finance Act clearly provides that education cess is an additional surcharge for the purposes of the Union and thus the ratio decidendi of the Hon’ble Supreme Court decision KERALA VERSUS K. SRINIVASAN [1971 (11) TMI 2 - SUPREME COURT] will equally apply to education cess and the same is part of tax.
It is clear that surcharge and additional surcharge referred as education cess forms part of tax and are to be considered while working out the tax effect for determining threshold for filing the appeal by the Revenue in terms of CBDT Circular No. 21/2015 dated 10.12.2015.
In the instant case, where the tax is so computed after including surcharge and education cess, the tax effect would come to ₹ 10,06,362/- which is above the prescribed limit of ₹ 10 lacs for filing the appeal before the ITAT. Hence the subject appeal filed by the Revenue is clearly maintainable.
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2017 (5) TMI 1649
Life Insurance Service - demand of service tax of ₹ 412,78,78,686 for the period between October, 2010 and March, 2015 - Section 105 of FA - Held that:- A reading of the said provision indicates that it is retrospective and it is meant to apply to the Group Insurance Scheme of the members of the Army, Navy and Air Force during the period commencing from 10th September, 2004 to 1st February, 2017. Clearly, therefore, the impugned order passed by Respondent No. 2 cannot be sustained in view of the above statutory provision.
The impugned order is hereby set aside in light of the Section 105 of the Finance Act, 1994 as inserted by the Finance Act, 2017 - petition disposed off.
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2017 (5) TMI 1648
TPA - adjustment in value of international transaction - comparable selection - Held that:- The assessee is rendering services to industries operating in (1) Fertilizer, (2) Petro-Chemical, and (3) Refinery and Oil & Gas sector, thus companies functionally dissimilar to that of assessee need to be deselected from final list.
Risk adjustment - Held that:- The risk taken by an independent entity and the captive service provider are different and since the remuneration of the captive service provider is not linked with the performance, it is not a significant risk and, therefore, a suitable adjustment should be allowed. Accordingly, we restore the matter to the file of the Ld. TPO/AO for examination of the issue and provide suitable adjustment towards risk in accordance to the law. The assessee is directed to extend cooperation to the Ld. TPO in quantification of risk adjustment. Accordingly, this ground stands allowed for statistical purposes.
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2017 (5) TMI 1647
CENVAT Credit - outward freight for the purpose of transportation of their finished goods from their factory to customers as well as from depots to customers - Held that:- There were divergent views of different High Courts on the eligibility of cenvat credit on outward transport of goods from the place of removal upto the customer’s premises or the depots as the case may be - The present issue has been finally settled by the judgement of the Hon’ble Supreme Court in the case of Vasavadatta Cements Ltd.[2018 (3) TMI 993 - SUPREME COURT], where it was held that from 01.04.2008, with the aforesaid amendment, the CENVAT credit is available only upto the place of removal whereas as per the amended Rule from the place of removal which has to be upto either the place of depot or the place of customer.
Extended period of limitation - Held that:- As the Tribunal, the Hon’ble High Courts and the Hon’ble Supreme Court expressed different views at different stages on this issue, which was critical to decide the issue involved therein, the Apex Court decided that the extended period of limitation could not be invoked.
Penalties - Held that:- There was scope for the assessee to entertain the bonafide belief that the cenvat credit on the service tax paid on outward transportation up to the place of removal was available to them - the penalties imposed under Rule 15(3) of the Cenvat Credit Rules, 2004, are not warranted.
Appeal allowed in part.
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2017 (5) TMI 1646
Smuggling - poppy husk - NDPS Act - offence punishable under Section 15 of NDPS Act - Held that:- In the instant case, Form No.29 was not prepared on the spot and was admittedly filled in after delay of two days, which has not been explained by the prosecution. Therefore, prosecution has failed to prove beyond reasonable doubt that the sample of contraband which was examined by the Forensic Science Laboratory was the same which was alleged to have been recovered from the appellants at the time of the alleged recovery.
The next infirmity in the case of the prosecution is that the entire contents of the three bags were required to be put on a piece of paper of cloth in order to know the whole of the contents. Admittedly, the investigating officer did not follow the prescribed procedure and in this regard it is hard to believe that the whole of the contents of the bags were poppy husk.
Also, the drawing of the samples has to be in the presence and supervision of the Magistrate, which has not been followed in the present case.
The impugned judgment of conviction and order of sentence dated 20.07.2004, passed by the learned trial Court, is set aside and the appellants are acquitted of the charge framed against them - appeal allowed.
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2017 (5) TMI 1645
Offence under PMLA - anticipatory bail - Held that:- Allegations made against the petitioner and his son are serious in nature. Proceedings in terms of ECIR and IPC are distinct in nature and operate in different fields. Even though the offence falls under Part 'A' after the amendment and before the Amendment of 2013, it was under Part 'B' of the Schedule, still prima facie nature of the case can be looked into while deciding the anticipatory bail.
Petitioner was directed to join the proceedings by this Court passed in Civil Writ Petition. Thereafter on nine occasions, summons were issued to him, but he did not turn up and did not comply with the aforesaid order. The pleadings made in the present petition are conspicuously silent about the rigor of non-appearance in view of aforesaid order except a meagre recital in para No.5 of the petition that the aforesaid writ petition was disposed of and a review application is pending consideration.
In view of above, the conduct of the petitioner is not such which entitles him the extra ordinary relief of anticipatory bail. Consequently, the petition is dismissed.
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2017 (5) TMI 1644
Classification of income - Income from share transactions - business income OR capital gain - Period of holding - Held that:- Assessee has chosen to treat the shares held for more than 30 days under the head ‘investment’. The assessee has sufficient owned capital to make these investments. The dealings are primarily in listed securities and the assessee has undertaken delivery based transactions, albeit for shorter period of time, average holding period being 72 days. Although, we are conscious of the fact that the principal of res judicata do not apply to Income Tax proceedings, yet we are of the view that there ought to be uniformity in treatment and consistency when the facts and circumstances are identical. Moreover, latest CBDT Circular No.6/2016 which is clarificatory in nature applies to listed securities and directs AO not to disturb the stand taken by assessee provided the same is applied consistently - their cannot be any straight jacket formula to distinguish the same and further there cannot be any single decisive factor to determine the same but an overall view has to be taken keeping in mind peculiar facts and circumstances of the case.
We find ourselves in agreement with the view taken by CIT(A) that Appellant has carried out trading in shares as well as earned capital gains income on sale of shares which were held as investment. Accordingly, the treatment of gains as business income.
Disallowance u/s 14A - Held that:- Upon perusal of financial statement of the assessee, we find that the assessee has debited administrative expenditure of ₹ 3,45,491/- which is the maximum disallowance which the assessee can suffer. However, Ld. AO has made disallowance of ₹ 6,25,414/- towards the same which is not justified. Therefore, we delete disallowance of ₹ 3,45,391/- made u/r 8D(2)(i) while confirm the addition of ₹ 2,79,923/- made u/r 8D(2)(iii). This ground of revenue’s appeal partly succeeds.
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2017 (5) TMI 1643
Reopening of assessment u/s 148 - search conducted upon the Mukesh Choksi group, statement of Mukesh Choksi was recorded and in his statement he has admitted that he was providing accommodation entries to those who were interested to earn capital gain - Held that:- There is no finding with regard to the supply of statement of Mukesh Choksi to the assessee. Moreover, nothing is available on record, wherevfrom it could be inferred that assessee was ever allowed to cross-examine Mr. Mukesh Choksi. It is settled position of law that statement or the evidence which is being relied upon by the AO for making the addition in the hands of assessee, the same should be confronted to the assessee and the assessee should be allowed to cross-examine the witness in this regard.
From a careful perusal of the orders of lower authorities, it is quite evident that statement of Mr. Mukesh Choksi was relied on for making the addition, but assessee was never allowed to cross-examine him. AO was not justified in making addition in the hands of assessee, without allowing the assessee to cross-examine Mr. Mukesh Choksi, whose statement was relied upon for making the above additions. Accordingly set aside the order of CIT(Appeals) and restore the matter to the file of AO with a direction to first confront the statement of Mr. Mukesh Choksi to the assessee and allow him to cross-examine Mr. Mukesh Choksi to dig out the truth in this regard. - decided in favour of assessee for statistical purposes.
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2017 (5) TMI 1642
Revenue recognition - Addition on account of unaccrued revenue from the sale of prepaid cards and recognized in the books of account - Held that:- Assessee’s source of income is from the sale of pre-paid and post-paid cards/ connections and the method followed for recognition of the same is accrual and at par with that of the telecom industry in this year as well. In the earlier Assessment Years i.e. 2004-05 and 2006-07, in assessee’s own case the ITAT held the assessee company cannot appropriate the charges relating to available talk time to the exclusion of subscriber as long as it is under obligation to provide the said services. Therefore, the ITAT was of the opinion that CIT(A) in principle has rightly accepted the mode of revenue recognition by the assessee in those Assessment Year. - Decided against revenue.
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2017 (5) TMI 1641
Computation of deduction u/s 80IB - whether Section 80HHC and 80IB are independent of each other and therefore deductions under both the sections on the gross total income is to be computed independently and not on the reduced balance after taking into account the other deduction? - Held that:- Appellant has relied upon the decision of Commissioner of Income Tax vs. Mandideep Eng. & PKG. India (P) Ltd. [2006 (4) TMI 75 - SUPREME COURT] wherein held as - "Section 80HH and 80-I are independent of each other and therefore a new industrial unit can claim deduction under both the sections on the gross total income independently."
The respondent has pointed out that the same matter is referred to larger bench.
In our considered opinion, the issue is answered in favour of the assessee as on today on the basis of decision of the Supreme Court which has upheld the decision of this court.
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2017 (5) TMI 1640
Principle of netting off of interest against interest earned - Deduction claimed u/s 80HHC in respect of interest income forming part of ‘profits of the business' - Held that:- Even the case of Dhadda Exports (2016 (9) TMI 1251 - RAJASTHAN HIGH COURT) has been clarified in case of M/s Chordia Trading Corporation vs. Income Tax Officer [2016 (12) TMI 358 - RAJASTHAN HIGH COURT], even otherwise in view of the decision in case of ACG Associated Capsules Pvt Ltd. vs. Commissioner of Income Tax (2012 (2) TMI 101 - SUPREME COURT OF INDIA) and the decision of this court, the principle of netting off is required to be laid therefore, the issue is required to be answered in favour of the assessee against the department.
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2017 (5) TMI 1639
Calculation of deduction u/s 80HHC - inclusion of the DEPB receipt for calculation of deduction - Held that:- Similar facts had already been decided by the ITAT in favour of the assessee for the assessment year 2002-03 as held in the scheme of section 80HHC, the face value of DEPB cannot be reduced from the purchase cost but is separate income under section 28(iiib), which accrues at the time of making application pursuant to exports. Only the profit element on the sale of DEPB, that is the amount in excess of sale proceeds over the face value, is covered under section 28(iiid).
Exclude Sample Design and Development charges receipt for calculation of deduction u/s 80HHC - Held that:- As decided by the ITAT in assessee's own case we do not see any infirmity in the order of the ld. CIT(A) who rightly held that the receipts on account of sample design and development charges are export turnover and represents the business income of the assessee and thus, cannot be excluded as the receipt under Explanation (baa) of Section 80HHC of the Act.
Additional depreciation - Held that:- In the present case, it appears that inadvertently the assessee could not make the claim for additional depreciation before the AO but in the appellate proceedings before the ld. CIT(A) the assessee made the claim and furnished the additional evidences in support of its claim. It is well settled that the powers of the ld. CIT(A) are coterminous with the powers of the AO, therefore, considering the totality of the facts, we are of the view that the CIT(A) rightly directed the AO to examine the claim of the assessee and allow after verification. We do not see any valid ground to interfere with the findings of the ld. CIT(A).
Addition on account of Arm’s Length Price - Disallowance under wrong section - addition on the grounds that the payment of royalty is not wholly and exclusively for business purposes and has been made u/s 92C(4) read with section 92CA(4) - Held that:- The assessee derived benefit under the royalty agreement and it was accepted by the AO for the assessment year 2002-03. However, the only dispute raised by the AO in the said assessment year was as to whether the royalty payment was a capital expenditure or revenue expenditure. The said dispute has been settled by the ITAT vide aforesaid referred to order dated 30.03.2016 and it was held that the royalty payment was revenue expenditure and not the capital expenditure. In the present case, the royalty expenditure by the assessee was fully and exclusively incurred in the regular course of business and after incurring this expenditure the assessee declared profit @19% which was better than the GP rate of 12 & 16% declared by the comparables. Therefore, it was at arm’s length and the addition made by the AO was not justified which has rightly been deleted by the ld. CIT(A). - Decided against revenue
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2017 (5) TMI 1638
TDS liability on reimbursement of expenditure - TDS u/s 192 - salary expenditure of four employees deputed to the assessee for providing assistance in the area of management, to setting up of business, property selection and retail operations etc. - as held by the AO to be fee for technical services as per the provisions of the DTAA - Held that:- There was a service agreement drawn up and for providing such assistance between these two companies. It was essentially a joint venture. Having noted all the clauses in the agreement, the Tribunal rendered a finding of fact that there is no rendering of service within the meaning of the double tax avoidance treaty.
This was a clear case of deputing the officials / employees for the promotion of the business of the assessee which is Indian arm of M/S. Marks & Spencer PLC, UK. Since the said payment to the employees is already subjected to tax in India, therefore there is no question of treating the assessee in default for non deduction of tax at source. Once the facts were clear, as these, there was no illegality in the order of the Commissioner of Income Tax (Appeals) which was maintained by the Tribunal. The appeal of the Revenue was rightly dismissed by the Tribunal.
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9911796707
